/raid1/www/Hosts/bankrupt/TCR_Public/080521.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 21, 2008, Vol. 12, No. 120
Headlines
ALOHA AIRLINES: GMAC Agrees to Pay Cargo Workers' Salaries
AMERICAN HOME: In Dispute with CDA, M&T Bank Over Chandler Loan
AMPEX CORP: March 31 Balance Sheet Upside-Down by $109.5 Million
ASARCO LLC: Wants to Extend Action Removal Deadline to October 10
ASARCO LLC: Gets Court Nod to Borrow $5 Million from JPMorgan
ASARCO LLC: Seeks to Disallow $89MM in American Limestone Claims
ATA AIRLINES: Gets Final OK to Use Lenders' Cash Collateral
ATA AIRLINES: Panel Wants Ottenbourg Steindler as Lead Counsel
ATA AIRLINES: Panel Taps FTI Consulting as Financial Advisors
ATA AIRLINES: Hires Pyramid to Handle Auction of Personal Assets
ATLANTIC EXPRESS: March 31 Balance Sheet Upside-Down by $52.8 Mil.
AMERICAN ACHIEVEMENT: S&P Puts B Corporate Credit Rating on Watch
AMERICAN AXLE: S&P Ratings Still on CreditWatch Pending Union Vote
BAG'N BAGGAGE: Wants to Hire Cox Smith as Attorney
BASELINE OIL: S&P Affirms CCC+ Corporate Credit Rating
BCE INC: Banks Propose Tougher Terms for $33 Billion Buyout
BCE INC: Satisfies CRTC Conditions on Disposal to Investor Group
BEACH HOUSE: Files Disclosure Statement and Chapter 11 Plan
BERKSHIRE INCOME: March 31 Balance Sheet Upside-down by $7 Million
BHM TECHNOLOGIES: Files for Chapter 11 Protection; Seeks Financing
BHM TECHNOLOGIES: Case Summary & 50 Largest Unsecured Creditors
BRANTLEY CAPITAL: Cash Distribution in Liquidation Plan Okayed
CARGO CONNECTION: Assets Foreclosed on YA Global Loan Default
CASTLE REALTY: Case Summary & 20 Largest Unsecured Creditors
CEDAR MANAGEMENT: Case Summary & 18 Largest Unsecured Creditors
CENTERPLATE INC: Obtains Amendment to Senior Credit Facility
CHRYSLER LLC: Aims to Reduce Supplier Cost, Not Profits
CLAIRE'S STORES: Uses PIK Toggles Option to Pay Interest in Bonds
COMPOSITE TECH: Posts $11.4 Mil. Net Loss in Qtr. Ended March 31
CONTINENTAL AIRLINES: Moody's Affirms B2 Corporate Family Rating
CREDIT SUISSE: S&P Affirms BB+ Rating on Class CSP-K Certificates
DELTA AIR: S&P Comments on the Effect of Northwest Merger
DESTINATOR TECHNOLOGIES: Chapter 15 Petition Summary
DOMINION HOMES: Posts $21.7 Million Net Loss in 2008 First Quarter
DORADO BECKVILLE: Cox Smith Approved as Affiliate's Counsel
DORADO BECKVILLE: Seeks Court OK on Gardere Wynne as Counsel
DORADO BECKVILLE: Files Schedules of Assets and Liabilities
DUNMORE HOMES: Disclosure Statement Hearing Adjourned to June 10
DUNMORE HOMES: Sidney Dunmore Seeks Protective Order
DECRANE AIRCRAFT: Moody's Reviewing Caa1 Rating on $150MM Loan
ENERSYS: Moody's Puts B2 Rating on Proposed Sr. Convertible Notes
EOS AIRLINES: Court Approves Kurztman Carson as Claims Agent
EPICEPT CORP: To Hold Annual Stockholders' Meeting on May 21
EQUISTAR CHEMICALS: March 31 Balance Sheet Upside-Down by $9.8BB
IRIDIUM LLC: Motorola Will Pay Nothing, Judge Rules
ETELOS INC: March 31 Balance Sheet Upside-Down by $6,645,000
FINANCIALCONTENT INC: Settles Jade Dispute to Avoid Bankruptcy
FORD MOTOR: Plans to Cut Truck Production in Michigan & Louisville
FOREST OIL: Moody's Rates $250MM Sr. Notes B1, Outlook Positive
FOREST OIL: S&P Lowers Senior Unsecured Notes Rating to B+
GAINEY CORP: S&P Cuts Long-Term Corporate Credit Rating to CC
GENERAL DATACOMM: March 31 Balance Sheet Upside-Down by $30.6 Mil.
GENERAL MOTORS: S&P Ratings Still on CreditWatch Pending UAW Vote
GMAC COMMERCIAL: S&P Cuts Rating on Class N Certificates at D
GMAC LLC: Agrees to Pay Salaries of Aloha Air's Cargo Employees
GO FIG: Judge Rendlen Converts Case to Chapter 7 Liquidation
HERBST GAMING: S&P Cuts Corporate Credit Rating to D
HOLMES BIOPHARMA: Capital Deficiency Disrupts Neb. Operation
HOME INTERIORS: Names Robin Crossman as New CEO
HOVNANIAN ENTERPRISES: Fitch Holds Junk Rating on Preferred Stock
HOVNANIAN ENTERPRISES: S&P Junks Rating on $1.5BB Sr. Unsec. Notes
IDLEAIRE TECH: Had Set Up Acquisition Firm; May Have Named Buyers
INVERNESS MEDICAL: S&P Puts CCC+ Rating on $780MM Series B Stock
JETBLUE AIRWAYS: Moody's Junks Corporate Family Rating to Caa1
JEVIC TRANSPORTATION: Files for Bankruptcy Due to Economic Slump
JEVIC TRANSPORTATION: Case Summary & 20 Largest Unsec. Creditors
KANSAS CITY SOUTHERN: Moody's Raises Corporate Family Rating to B1
KB HOME: S&P Cuts Corp. Credit & Senior Note Ratings to BB
KENNETH GOOD: Gets Court Ok to Hire Wright Ginsberg as Counsel
KENNETH GOOD: Files Schedules of Assets and Liabilities
KIMBALL HILL: Gets Court Nod to Use Lenders' Cash Collateral
KIMBALL HILL: Can Employ Kirkland & Ellis as Bankruptcy Counsel
KIMBALL HILL: Wants Action Removal Period Stretched to October 20
LAUREATE EDUCATION: S&P Puts CCC+ Rating on $310 Million Sr. Notes
LEAR CORP: S&P Ratings Still on CreditWatch Pending Union Vote
LEVITT AND SONS: Receiver Helps Homebuyers Recoup Lost Deposits
LEXINGTON PRECISION: Taps W.Y. Campbell as Financial Advisor
LID LTD: Sells Assets to Bidz.com et al. For $32,850,000
LIBERTY MUTUAL: S&P Rates $1.25 Billion Series C Jr. Notes BB+
LINENS N THINGS: Court Approves Auction Procedures for 120 Stores
LINENS N THINGS: Wants To Employ Protiviti as Advisors
LINENS N THINGS: Wants to Employ Asset Disposition Advisors
LINENS N THINGS: Wants to Hire Financo as Investment Banker
MACKLOWE PROPERTIES: Investor Group to Buy GM Building for $3.6BB
MANITOWOC CO: Enodis PLC Accepts $2.1 Billion Takeover Bid
MANITOWOC CO: Moody's Affirms Low-B Ratings; Outlook Stable
MERRILL LYNCH TRUST: S&P Assigns Low-B Ratings on Certificates
MERITAGE HOMES: Headed Towards Bankruptcy, Wall Street Paper Says
METALS USA: S&P Puts B- Corporate Credit Rating on CreditWatch
MOHEGAN TRIBAL: Moody's Lowers Corporate Family Rating to Ba2
MORTGAGE LENDERS: Seeks Aug. 6 Extension of Plan-Filing Period
MORTGAGE LENDERS: To Sell Loan Origination Management Software
MORTGAGE LENDERS: Confirms No Stake in Assets for Foreclosure
MOVIE GALLERY: Emerges From Chapter 11 Protection
MOVIE GALLERY: Has Court Nod to Assume 3,055 Real Property Leases
MOVIE GALLERY: Wants to Assume Inventec License Agreement
MOVIE GALLERY: Wants to Sell MovieBeam Assets to Dar Capital
M. VANINI: Section 341(a) Meeting Scheduled for Thursday
M. VANINI: May Hire Kluger Peretz as Bankruptcy Counsel
M. VANINI: Delivers Schedules of Assets and Liabilities
M. VANINI: Owes $6,900,000 to VirtualBank in Florida
MXENERGY HOLDINGS: S&P Affirms B Corporate Credit Rating
NEXCEN BRANDS: Delays 1Q 2008 10-Q & Expects to Amend 2007 10-K
NORCROSS SAFETY: S&P Withdraws B+ Corporate Credit Ratings
NORTHWEST AIRLINES: S&P Comments on Effect of Delta Merger
NOVASTAR MORTGAGE: S&P Junks Ratings on Five Classes of Certs.
OFI INCOME: Affirms Covenant Violations Possible in Future Periods
PLASTECH ENGINEERED: Wants to Auction Off Business & Other Assets
PLASTECH ENGINEERED: Epic Wants Adequate Protection for Equipment
PLASTECH ENGINEERED: Wants Claims Bar Date Fixed at June 30
PLASTECH ENGINEERED: Court Sets Admin. Claims Bar Date to May 30
PROPEX INC: Can Reject Chattanooga Office Leases with Raines Group
PROPEX INC: Court Extends Lease Decision Period Until August 15
R&B CONSTRUCTION: Wants to File Chapter 11 Plan Until October 1
RESTRUCTURED ASSET: S&P Junks Rating on $87.5 Million Certificates
SABINE PASS: Moody's Cuts Sr. Secured Notes Rating to B2
SCO GROUP: Wants Plan-Filing Exclusivity Date Extended
SHARPER IMAGE: Seeks Authority to Hire KPMG as Tax Consultant
SHARPER IMAGE: Allowed to Employ Conway Del Genio as Manager
SHARPER IMAGE: Can Retain Loughlin Meghji as Financial Advisor
SHARPER IMAGE: To Delay Filing of 2007 Annual Report
SHINDARA TAN: Case Summary & Eight Largest Unsecured Creditors
SMURFIT-STONE: Moody's Affirms Corporate Family Rating at B2
STEAKHOUSE PARTNERS: Sells Restaurants in Order to Pay Creditors
SUNNY DELIGHT: S&P Withdraws B- Rating
TARRAGON CORP: Candidate for Bankruptcy, Traders Newsletter Says
TENNECO INC: S&P Ratings Still on CreditWatch Pending Union Vote
TOUSA INC: To Receive $240 Million Income Taxes Refund
TOUSA INC: Falcone Group Eyes Possible Acquisition
UNITED RENTALS: Fitch Affirms B Rating on Unit's Subordinated Debt
UTSTARCOM INC: Earns $25.4 Million in 2008 First Quarter
VESTA INSURANCE: J. Gaines Settle with Texas Receivership Entities
VESTA INSURANCE: J. Gains Plan Trustee Seeks to Transfer Claims
VESTA INSURANCE: Court Allows XL Specialty to Pay Defense Expenses
WATERFORD GAMING: Moody's Cuts Corporate Family Rating to B1
WCI COMMUNITIES: Candidate for Bankruptcy, Traders Newsletter Says
WCI STEEL: Bought by OAO Severstal for $140 Million
WHX CORP: March 31 Balance Sheet Upside-Down by $74.9 Million
* S&P Says Lack of Savings Will Make it Tough for Old Americans
* Upcoming Meetings, Conferences and Seminars
*********
ALOHA AIRLINES: GMAC Agrees to Pay Cargo Workers' Salaries
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GMAC LLC, secured lender for Aloha Airlines Inc. and its debtor-
affiliates, will pay the salaries of the Debtors' cargo division
employees, CNNMoney.com reported.
The payment will cover the workers' salaries for services done
within the last two weeks of April. GMAC said that it will cover
employee wages for that period, but added the employees will have
to wait for their back pay, CNNMoney.com related.
The Debtors converted their bankruptcy case to Chapter 7
liquidation proceedings after those two weeks.
According to GMAC, funds for the back pay will be drawn from the
proceeds of the Debtors' sale of its cargo business to Saltchuk
Resources Inc. There is still uncertainty as to whether GMAC will
cover the employees' other benefits, CNNMoney.com said.
GMAC is willing to pay the cargo workers despite it not being
legally obligated, according to CNNMoney.com.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide. Cerberus Capital
Management LP bought 51% GMAC LLC stake from General Motors Corp.
on December 2006.
* * *
As reported in the Troubled Company Reporter on May 8, 2008, Fitch
Ratings downgraded the long-term Issuer Default Rating of GMAC LLC
and related subsidiaries to 'BB-' from 'BB'. Fitch has also
downgraded GMAC's unsecured long-term ratings to 'B+' from 'BB-',
reflecting the potential for reduced recovery in a default
scenario should the company encumber assets. Additionally, Fitch
has affirmed the 'B' short-term ratings. The Rating Outlook
remains Negative.
As reported in the Troubled Company Reporter on April 25, 2008,
Moody's Investors Service downgraded GMAC LLC's senior rating to
B2 from B1; the rating remains on review for further possible
downgrade. This action follows Moody's rating downgrade of ResCap
LLC, GMAC's wholly owned residential mortgage unit, to Caa1 from
B2.
About Aloha Airlines
Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines
Inc. -- http://www.alohaairlines.com/-- and its affiliates
are
carriers that fly passengers and freight to Hawaii's five major
airports, as well as to half a dozen destinations in the western
U.S. They operate a fleet of about 20 aircraft, all Boeing 737s,
including three configured as freighters.
This is the airline's second bankruptcy filing. Aloha filed for
Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No.
04-03063), and emerged from Chapter 11 bankruptcy protection in
February 2006.
The company and its affiliates filed again for Chapter 11
protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08-
00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven
Singerman, Esq., at Berger Singerman P.A., and David C. Farmer,
Esq., represent the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they listed
estimated assets and debts of $100 million to $500 million.
AMERICAN HOME: In Dispute with CDA, M&T Bank Over Chandler Loan
---------------------------------------------------------------
The Community Development Administration, a governmental unit of
the U.S. Department of Housing and Community Development, and
American Home Mortgage Investment Corp. and its debtor-affiliates
entered into a mortgage purchase agreement that allows the Debtors
to originate loans for the Maryland Mortgage Program.
Brett D. Fallon, Esq., at Morris James LLP, in Wilmington,
Delaware, relates that pursuant to the MPA, the Debtors are
required to deliver to CDA any mortgage loans free and clear of
all liens and encumbrances. CDA purchased 292 mortgage loans
from the Debtors. On September 26, 2007, M&T Bank, acting as
trustee for the CDA, sent a wire transfer for $400,325 to the
Debtors' bank account as purchase price of a loan the Debtors
previously made to Shawn Chandler and Lisa Estes.
Because proceeds from any sale and certain other funds are frozen
due to the Final Cash Collateral Order, the Debtors have not paid
the Sale Proceeds to the Debtors' warehouse lenders. Natixis
Real Estate Capital Inc., a warehouse lender to the Debtors, has
alleged that it holds a lien against the Chandler Loan and has
received no payment from the Debtors in connection with the
Chandler Loan. As the Debtors were parties to a credit facility
with Bank of America, it also asserted it has a lien on all of
the prepetition funds in the Bank Account.
Mr. Fallon relates that the CDA sent a letter dated October 29,
2007, asking the Debtors to file a motion to approve the sale of
the Loans by the Debtors to CDA or immediately return the funds
that were transferred into the Bank Account back to M&T Bank.
As of May 8, 2008, the Debtors have failed to either file the
requested motion or return the funds and Natixis continues to
claim that it holds a lien on the Chandler Loan, whereas it is
the CDA's position, pursuant to the MPA, it is the owner of the
Chandler Loan free and clear of all liens, Mr. Fallon says.
Accordingly, CDA and M&T Bank ask the Court to:
(a) declare that the CDA is the owner of the Loans and Notes
free and clear of any liens or other encumbrances by any
party, other than M&T Bank;
(b) declare (1) that the sale proceeds that were wired into
the Bank Account to purchase the Loans are being held in
a constructive trust for the CDA and M&T Bank, as trustee
under the Bond Resolution Trust Indenture, and (2) that
the CDA and M&T Bank hold an equitable priority lien
against the Sale Proceeds;
(c) direct the Debtors to making payments to Natixis or Bank
of America to terminate any liens and encumbrances that
may exist against the Loans and the Notes and require the
Debtors to repurchase the Loans from CDA and M&T Bank in
the event the Court finds that either the Chandler Loan or
the Estes Loan are encumbered by a lien in favor of
Natixis, BofA or any third party;
(d) declare that the Debtors were unjustly enriched by the
retention of the Sale Proceeds in the Bank Account;
(e) allow an administrative priority claim against the Debtors
in the amount of the Sale Proceeds;
(f) award compensatory damages to the CDA and M&T Bank,
including before and after judgment interest; and
(g) pay CDA's attorney's fees and expenses against the Debtors
retained in the adversary proceeding.
About American Home
Based in Melville, New York, American Home Mortgage Investment
Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a
mortgage real estate investment trust engaged in the business of
investing in mortgage-backed securities and mortgage loans
resulting from the securitization of residential mortgage loans
originated and serviced by its subsidiaries.
American Home Mortgage and seven affiliates filed for chapter 11
protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047
through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite,
Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt &
Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC
acts as the Debtors' claims and noticing agent. The Official
Committee of Unsecured Creditors selected Hahn & Hessen LLP as
its counsel. As of March 31, 2007, American Home Mortgage's
balance sheet showed total assets of $20,553,935,000, total
liabilities of $19,330,191,000.
The U.S. Bankruptcy Court for the District of Delaware extended
the exclusive periods for American Home Mortgage Investors Corp.
and its debtor-affiliates to file a plan of reorganization through
June 2, 2008; and solicit and obtain acceptances for that plan
through July 31, 2008.
(American Home Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AMPEX CORP: March 31 Balance Sheet Upside-Down by $109.5 Million
----------------------------------------------------------------
Ampex Corp.'s consolidated balance sheet at March 31, 2008, showed
$22.8 million in total assets and $132.3 million in total
liabilities, resulting in a $109.5 million total stockholders'
deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $22.0 million in total current
assets available to pay $67.1 million in total current
liabilities.
The company reported a net loss of $3.8 million, on total revenue
of $7.0 million, for the first quarter ended March 31, 2008,
compared with net income of $2.5 million, on total revenue of
$12.4 million, in the corresponding period last year.
Licensing revenue in the three months ended March 31, 2008,
totaled $2.5 million and in the three months ended March 31, 2007,
totaled $4.7 million, of which $1.9 million related to negotiated
settlements covering a prepayment of royalty obligations through
2011.
Product revenue generated by the company's Recorders segment
decreased to $3.0 million in the three months ended March 31,
2008, from $5.9 million in the three months ended March 31, 2007.
Total service revenue generated by the Recorders segment in the
three months ended March 31, 2008, was $1.5 million compared to
$1.8 million for the three months ended March 31, 2007.
As of May 15, 2008, the company has incurred legal costs of
$1.8 million in connection with the restructuring of its
liabilities, of which $1.2 million was incurred during the three
months ended March 31, 2008. The company expects to incur
significant additional reorganization costs during the remainder
of 2008 while the company is in chapter 11 which will be funded in
part by additional financing supplied by Hillside Capital Inc.
upon emergence.
The company reported an operating loss of $2.4 million in the
three months ended March 31, 2008, compared to an operating income
of $3.4 million for the three months ended March 31, 2007.
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?2c2d
About Ampex Corp.
Headquartered in Redwood City, Calif., Ampex Corp. --
http://www.ampex.com/-- is a licensor of visual information
technology. The company has two business segments: Recorders
segment and Licensing segment. On March 30, 2008, Ampex Corp. and
six affiliates filed for protection under Chapter 11 of the
Bankruptcy Code with the U.S. Bankruptcy Court for the Southern
District of New York (Case Nos. 08-11094 through 08-11100).
Matthew Allen Feldman, Esq., and Rachel C. Strickland, Esq., at
Willkie Farr & Gallagher LLP, represent the Debtors in their
restructuring efforts. The Debtors have also retained Conway
Mackenzie & Dunleavy as their financial advisors. In its
schedules of assets and liabilities filed with the Court, Ampex
Corp. disclosed total assets of $9,770,089 and total debts of
$82,488,054.
The Debtors have nine foreign affiliates that are incorporated
in seven countries -- one each in the United Kingdom, Japan,
Belgium, Colombia and Brazil and two each in Germany and Mexico.
With the exception of the affiliates located in the U.K. and
Japan, none of the other foreign affiliates conduct meaningful
business activity. As of March 30, 2008, none of the foreign
affiliates have commenced insolvency proceedings.
ASARCO LLC: Wants to Extend Action Removal Deadline to October 10
-----------------------------------------------------------------
ASARCO LLC and its debtor-affiliates ask the U.S. Bankruptcy Court
for the Southern District of Texas to further extend the deadline
within which they may remove pending civil actions, through and
including Oct. 10, 2008.
The Debtors say they need additional time to review their myriad
of lawsuits in various state and federal courts, many of which
are complex and may require individual analysis on each case, in
order for them to determine whether those lawsuits should be
removed. The Debtors add that an extension of the deadline would
aid in the economical administration of their estates.
About ASARCO
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
ASARCO and its debtor affiliates are scheduled to file a plan of
reorganization on June 10, 2008. (ASARCO Bankruptcy News, Issue
No. 72; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
ASARCO LLC: Gets Court Nod to Borrow $5 Million from JPMorgan
-------------------------------------------------------------
ASARCO LLC and its debtor-affiliates obtained authority from the
U.S. Bankruptcy Court for the Southern District of Texas to enter
into a $5,000,000 letter of credit facility with JPMorgan Chase
Bank, N.A., and pay a $15,000 up-front deposit to JPMorgan for due
diligence and documentation fees and expenses.
As reported in the Troubled Company Reporter on Apr. 16, 2008, the
salient terms of the JPMorgan Credit Facility are, among others:
Credit Facility: $5,000,000 twelve-month credit facility
for the issuance of letters of credit
Closing Date: On or before May 15, 2008
Collateral: Each letter of credit issued under the
Credit Facility and all fees and associated
expenses and all interests on any
unreimbursed draws will be secured by cash
collateral, to be provided in advance of the
issuance, in the amount of 110% of the face
amount of the Letter of Credit
Deposit: A $15,000 deposit will be used to cover
JPMorgan's reasonable, documented out-of-
pocket expenses, including reasonable fees,
time charges and expenses of its attorneys,
due diligence expenses, syndication
expenses, if any, consultants' fees and
expenses, if any, and travel expenses.
Additional deposits may be required. If the
Credit Facility is not consummated for
whatever reason, the unused portion of the
deposit will be returned to ASARCO.
Default Rate: After default, the Letter of Credit Fee will
be increased by 2% per annum.
In December 2005, the Court authorized ASARCO to signed a
$75,000,000 DIP loan facility with The CIT Group/Business Credit.
The CIT DIP Facility, which included a letter of credit sub-
facility for ASARCO's ongoing business needs, expired on its own
terms on Dec. 15, 2007. In light of ASARCO's cash reserves,
the CIT DIP Facility was not renewed, the Debtors said.
In this light, the CIT DIP Facility must be replaced by a new
stand-alone letter of credit facility, ASARCO asserted.
About ASARCO
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
ASARCO and its debtor affiliates are scheduled to file a plan of
reorganization on June 10, 2008. (ASARCO Bankruptcy News, Issue
No. 72; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
ASARCO LLC: Seeks to Disallow $89MM in American Limestone Claims
----------------------------------------------------------------
ASARCO LLC and its debtor-affiliates ask the U.S. Bankruptcy Court
for the Southern District of Florida to disallow Claim Nos. 18220,
18224 and 18225 filed by Rinker Materials South Central, Inc.,
seeking an aggregate of $89,856,298, for breaches under a contract
with American Limestone Company.
Shelby A. Jordan, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., in Corpus Christi, Texas, asserts that Contract names
ASARCO and American Limestone Company as parties and includes
strict no-assignment clauses. Rinker was unable to prove that it
is the assignee of the contract, Mr. Jordan says.
Rinker asserted that ASARCO breached the contract during the
force majeure period when ASARCO rejected the contract. Mr.
Jordan explains that on the date of bankruptcy, the Tennessee
Mines Division, which produced the ore products subject to the
contract, was shut down and ASARCO was in the midst of a four-
month-long labor strike. He says that under the force majeure
clause in the contract, ASARCO had no responsibilities to
American Limestone thus ASARCO is not liable to Rinker for breach
of contract. He adds that Rinker did not suffer any damages as a
result of the rejection of the contract.
The Official Committee of Unsecured Creditors of the Asbestos
Subsidiary Debtors and the Official Committee of Unsecured
Creditors of ASARCO join in ASARCO's objection.
Ready Mix Opposes Claims Objection
Ready Mix USA, LLC, asks the Court to overrule ASARCO's
objections to Claim Nos. 18220, 18224 and 18225.
Ready Mix is the transferee of the Claims after having purchased
certain assets from Rinker, including Rinker's pending claims
against ASARCO.
Arthur J. Spector, Esq., at Berger Singerman, P.A., in Fort
Lauderdale, Florida, argues that ASARCO's rejection of the
contract resulted in damages to Ready Mix. It is the contract
rejection that is the event of the breach, and damages naturally
flow thereafter, he maintains. Contrary to ASARCO's argument
that Rinker did not mitigate its damages, Mr. Spector says Rinker
did mitigate its damages by investing about $3,000,000 in the
Midway Quarry and Forks of the River Quarry to cover the
production shortfalls caused by the Tennessee Mines Division.
About ASARCO
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
ASARCO and its debtor affiliates are scheduled to file a plan of
reorganization on June 10, 2008. (ASARCO Bankruptcy News, Issue
No. 72; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Gets Final OK to Use Lenders' Cash Collateral
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
approved, on a final basis, the request of ATA Airlines, Inc., to
use secured lenders' cash collateral from the Petition Date to
September 30, 2008.
ATA Airlines intends to use the cash collateral for the payment
of the costs and expenses associated with the wind-down
operations of its business, the orderly liquidation of its
assets, and the conduct of its Chapter 11 case as provided in its
four-week budget for the period April 26 to May 23, 2008.
No later than 10 days before the last day covered by the budget
then in effect, ATA Airlines will deliver to the secured lenders,
JPMorgan Chase Bank, N.A., and the Official Committee of
Unsecured Creditors a proposed budget covering the subsequent
four-week period.
As adequate protection, ATA Airlines will grant the secured
lenders and JPMorgan, valid and perfected, replacement security
interests in and liens on all of its prepetition and postpetition
assets, excluding:
(1) the deposit accounts used exclusively for paying union
dues, payroll, payroll taxes, and other employee wage
and benefits;
(2) tax payments that are held in trust accounts maintained
by M&I Bank in the name of ATA Airlines; and
(3) equipment, excluding those that constitute prepetition
collateral, and the proceeds of any insurance for the
equipment; and
(4) causes of action arising under Chapter 5 of the
Bankruptcy Code against non-affiliates of ATA Airlines,
and its proceeds.
As further adequate protection, ATA Airlines will also provide
the secured lenders, JP Morgan and the Creditors Committee (i) a
13-week rolling cash flow projection, and (ii) a comparison
between the actual cash flows for the week immediately preceding
the week when the comparison is being delivered, and the
projected cash flows for that week.
The Creditors Committee previously objected to the proposed final
order submitted by ATA Airlines, saying it would permit the
secured lenders to obtain liens on ATA Airlines' postpetition
assets which were not subject to their prepetition liens, and
which might otherwise constitute the sole source for distribution
to unsecured creditors. The postpetition assets include:
(1) causes of action arising under Chapter 5 of the
Bankruptcy Code;
(2) the cause of action that ATA Airlines has asserted
against FedEx Corporation, which the airlines believes
may be one of the most valuable estate assets as well
as other causes of action that are not part of the
prepetition collateral;
(3) the return by third parties to ATA Airlines of about
$2,800,000 in cash deposits or prepaids;
(4) the return by third parties to ATA Airlines of about
$4,100,000, which they hold as cash collateral for
letters of credit; and
(5) ATA Airlines' Operating Certificate that may have
significant value.
The Creditors Committee also argued that the proposed final order
would compel ATA Airlines to use cash that is not subject to the
secured lenders' lien to pay the expenses provided in the cash
collateral budget. The panel was concerned that the unencumbered
funds that would be available for general unsecured creditors
would be used to fund the expenses of the secured lenders'
liquidation.
As part of the resolution of the objection filed by the Creditors
Committee, the Court ruled that the secured lenders will not have
any unsecured deficiency claim as to the first proceeds of those
causes of action against the non-affiliates of ATA Airlines up to
the lesser of (i) $7,500,000 and (ii) 10% of all allowed
prepetition unsecured claims other than the deficiency claim.
All other objections have been withdrawn or resolved.
A full-text copy of the Cash Collateral Order is available for
free at http://bankrupt.com/misc/ATAFinalCashCollateralOrder
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Panel Wants Ottenbourg Steindler as Lead Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors seeks the authority
of the U.S. Bankruptcy Court for the Southern District of Indiana
to retain Otterbourg, Steindler, Houston & Rosen, P.C., as its
counsel effective as of April 21, 2008.
The Committee believes that OSH&R is qualified to serve as its
counsel with its extensive experience in, and knowledge of,
business reorganizations, including liquidations and sales of
businesses under Chapter 11.
As lead counsel to the Committee, OSH&R is expected to:
* assist and advise the Committee in its consultation with the
Debtor relative to the Chapter 11 cases;
* attend meetings and negotiate with the representatives of
the Debtors and other parties-in-interest;
* assist and advise the Committee in its examination and
analysis of the conduct of the Debtor's affairs;
* assist the Committee in the review, analysis and negotiation
of any plan of reorganization or liquidation, asset
disposition proposals and disclosure statement accompanying
any plan that may be filed;
* assist the Committee in the review and analysis of any
financing agreements;
* take necessary and appropriate action to protect and
preserve the interests of the Committee, including:
-- possible prosecution of actions on its behalf;
-- negotiations in litigation in which the Debtor is, or
may be, involved; and
-- review and analysis of claims filed against the
Debtor;
* prepare on behalf on the Committee all necessary and related
documents in support of positions taken by the Committee;
* appear before the Bankruptcy Court, the appellate courts and
the U.S. Trustee, and to protect the interests of the
Committee; and
* perform other legal services.
OSH&R will be paid based on its hourly rates:
Partner or Counsel $530 - $795
Associate $245 - $575
Paralegal $175 - $205
The Committee will also reimburse OSH&R of its actual and
necessary expenses incurred in the course of rendering services
to the Committee.
Scott L. Hazan, Esq., a member at OSH&R, assures the Court that
OSH&R does not represent or hold an interest adverse to the
Debtor's estate and is a "disinterested person" within the meaning
of that term in Section 101(14) of the Bankruptcy Code.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Panel Taps FTI Consulting as Financial Advisors
-------------------------------------------------------------
Pursuant to Section 1103 of the Bankruptcy Code and Rule 2014(a)
of the Federal Rules of Bankruptcy Procedure, the Official
Committee of Unsecured Creditors in the bankruptcy case of ATA
Airlines, Inc. and its debtor-affiliates, seeks authority from the
U.S. Bankruptcy Court for the Southern District of Indiana to
retain FTI Consulting, Inc., as its financial advisor, nunc pro
tunc to the Debtors' bankruptcy filing.
The Committee asserts that the services of FTI are deemed
necessary to assess and monitor the efforts of the Debtors and
their professional advisors to maximize the value of their
estates.
As financial advisor, FTI will provide consulting and advisory
services to the Committee with respect to the Debtor's Chapter 11
case, including assistance in the review, evaluation and analysis
of:
* financial disclosures required by the Court, which include
schedules of assets and liabilities, statements of financial
affairs and monthly operating reports;
* the Debtor's short-term cash management procedures;
* financial information distributed by the Debtor to creditors
and others, including, but not limited to, cash flow
projections and budgets, cash receipts and disbursement,
asset and liability accounts and proposed related
transactions;
* avoidance actions, including fraudulent conveyances and
preferential transfers; and
* accounting and tax matters, along with expert witness
testimony on case-related issues, as required by the
Committee.
FTI is also expected to attend meetings and assist in discussions
with the Debtor, potential investors, banks, other secured
lenders, the Committee and other official committees, the U.S.
Trustee and other parties-in-interest and professionals.
FTI will be paid based on its hourly rates:
Senior Managing Directors $650 - $715
Directors/Managing Directors $475 - $620
Associates/Consultants $235 - $440
Administration/Paraprofessionals $100 - $190
FTI's senior managing director, Michael Eisenband, discloses that
his firm is not a creditor of the Debtor and does not hold
outstanding debt shares of the Debtor's stock.
According to Mr. Eisenband, FTI has neither provided services to
other parties which are adverse to the rights of the Committee
nor compromised its ability to continue consulting services;
hence, his firm is eligible to represent the Committee under
Section 1103(b) of the Bankruptcy Code.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Hires Pyramid to Handle Auction of Personal Assets
----------------------------------------------------------------
ATA Airlines, Inc., seeks permission from the U.S. Bankruptcy
Court for the Southern District of Indiana to employ Pyramid
Auction Services, Inc., as its auctioneer for the purpose of
marketing and auctioning its personal properties.
ATA Airlines selected Pyramid Auction because of its extensive
experience in analyzing, marketing and liquidating assets. The
firm is also familiar with ATA Airlines and its assets since it
was previously employed by the airlines to conduct auctions of
its property.
The airlines is vacating its leased facilities at various
airports around the world, and is shipping its personal
properties to three centralized locations in Dallas, Chicago and
Indianapolis, to facilitate the sale of those properties. If the
proposed employment is approved, Pyramid Auction would conduct an
auction in Indianapolis and subsequent auctions may be held in
the two other locations.
In exchange for Pyramid Auction's services, ATA Airlines will pay
the firm a 4% commission of the net proceeds of any sale. It
will also reimburse the firm a processing fee of 2.88% for any
purchase made by credit card, and up to $5,200 per auction for
the costs of advertising the auctions.
In addition, Pyramid Auction will separately charge buyers a 10%
buyer's premium on the gross proceeds of any sale, and will be
indemnified for any loss, casualty or liability in connection
with its employment.
James Pike, president of Pyramid Auction, in Avon, Indianapolis,
assures the Court that his firm does not hold or represent any
interest adverse to ATA Airlines' estate. He adds that the firm
is a disinterested person" as that phrase is defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
ATLANTIC EXPRESS: March 31 Balance Sheet Upside-Down by $52.8 Mil.
------------------------------------------------------------------
Atlantic Express Transportation Corp.'s consolidated balance sheet
at March 31, 2008, showed $194.7 million in total assets and
$247.5 million in total liabilities, resulting in a $52.8 million
total stockholders' deficit.
The company reported a net loss of $10.0 million for the third
quarter ended March 31, 2008, compared with a net loss of
$713,897 in the same period in 2007.
Revenues from school bus operations were $110.9 million for the
three months ended March 31, 2008, compared to $111.3 million for
the three months ended March 31, 2007, a decrease of $400,000, or
0.4%.
Revenues from paratransit and transit operations were
$11.1 million for the three months ended March 31, 2008, compared
to $11.2 million for the three months ended March 31, 2007, a
decrease of 0.2%.
Cost of operations of school bus operations was $100.8 million for
the three months ended March 31, 2008, compared to $96.8 million
for the three months ended March 31, 2007, an increase of
$4.0 million or 4.1%.
Cost of operations of paratransit and transit operations were
$10.1 million for the three months ended March 31, 2008, and 2007,
respectively.
Operating income from school bus operations was $1.3 million for
the three months ended March 31, 2008, compared to $6.1 million
for the three months ended March 31, 2007, a decrease of
$4.8 million, or 78.1%.
Operating loss from paratransit and transit operations was minimal
for the three months ended March 31, 2008, compared to a $100,000
operating loss for the three months ended March 31, 2007.
Interest expense was $11.3 million for the three months ended
March 31, 2008, compared to $6.8 million for the three months
ended March 31, 2007, an increase of $4.5 million, or 66.9%. The
increase was primarily due to a $4.6 million non-cash change in
fair market value of interest rate swap expense, $800,000 increase
in interest expense on the $185.0 million aggregate principal
amount of Senior Secured Floating Rate Notes due 2012 compared to
previous long-term borrowings, offset partially by a $200,000
decrease in senior credit facility interest and a $600,000
decrease in deferred financing expense.
Loss before provision for income taxes and discontinued operations
was $10.0 million for the three months ended March 31, 2008,
compared to a loss of $713,897 for the three months ended
March 31, 2007.
Liquidity and Capital Resources
At March 31, 2008, the company had long-term debt outstanding, net
of current portion, of $184.6 million, as compared to
$187.6 million at June 30, 2007.
At March 31, 2008, the company had a credit balance under its
$35.0 million senior credit facility of $3.4 million, and it had
$22.3 million of borrowing availability after $9.8 million of
reserves, based on the company's borrowing base calculations.
Approximately $9.3 million of the company's $10.0 million letter
of credit facility was used as of the same date.
On May 7, 2008, the company had a credit balance under its senior
credit facility of $3.1 million, and it had $17.8 million in
borrowing availability after $7.7 million of reserves, based upon
the company's borrowing base calculations.
The company believes that borrowings under its senior credit
facility, retrospective insurance credits received from its
insurance company together with its existing cash and cash flow
from operations may not be sufficient to fund the company's
anticipated liquidity requirements for the next twelve months and
the company would have to pursue additional funding alternatives,
including the sale of certain assets or operations, in order to
improve its liquidity position.
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?2c2f
About Atlantic Express
Headquartered in New York City, Atlantic Express Transportation
Corp. -- http://www.atlanticexpress.com/-- is a provider of
school bus transportation in the United States and the leading
provider in New York City.
The company has contracts with approximately 104 school districts
in New York, Missouri, Massachusetts, California, Pennsylvania,
New Jersey, and Illinois. For fiscal 2008, the company has a
contract to provide paratransit services in New York to physically
and mentally challenged passengers who are unable to use standard
public transportation. The company also provides other
transportation services, including fixed route transit, express
commuter line and charter and tour buses through its coach
services. As of March 31, 2008, the company had a fleet of
approximately 5,600 vehicles operating from approximately 50
facilities.
* * *
As reported in the Troubled Company Reporter on May 9, 2008,
Standard & Poor's Ratings Services lowered its ratings on Atlantic
Express Transportation Corp., including the long-term corporate
credit rating to 'CCC' from 'CCC+'. All ratings were removed from
CreditWatch, where they had been placed with negative implications
on Feb. 19, 2008. The outlook is now negative.
At the same time, S&P lowered the rating on the senior secured
debt rating to 'CCC', the same as the new corporate credit rating,
from 'CCC+'. S&P assigned a '4' recovery rating to this debt,
indicating expectations of average (30%-50%) recovery in the event
of a payment default.
AMERICAN ACHIEVEMENT: S&P Puts B Corporate Credit Rating on Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings for American
Achievement Corp., including the 'B' corporate credit rating, on
CreditWatch with developing implications. "Developing" indications
mean that the ratings may be raised, lowered, or
affirmed upon resolution of the CreditWatch placement.
"The CreditWatch listing follows the company's announcement on May
16, 2008 that the holders of the equity securities of American
Achievement Group Holding Corp., the parent company of American
Achievement Corp., have agreed to sell all of their equity
interests to privately owned Herff Jones Inc.," explained Standard
& Poor's credit analyst Michael Listner. The transaction is
subject to regulatory approval and customary closing conditions.
American Achievement Group Holding Corp. has received consent from
the holders of a majority of the company's 12.75% senior PIK notes
due 2012 to redeem the notes at a price of 101%, and to remove
substantially all of the restrictive and reporting covenants under
the indenture upon consummation of the transaction. The company
did not explicitly state its intentions regarding the 10.25%
senior discount notes at the intermediate holding level and the
8.25% senior subordinated notes at the operating company levels.
Both indentures, however, contain change of control provisions,
providing for the redemption of the notes at a price of 101%. If
the notes are repaid, we will
withdraw our corporate credit rating and all issue ratings for
American Achievement. Rating downside potential exists if for some
reason the transaction does not move forward.
AMERICAN AXLE: S&P Ratings Still on CreditWatch Pending Union Vote
------------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on General
Motors Corp. (GM), American Axle & Manufacturing Holdings Inc.
(Axle), Lear Corp., and Tenneco Inc. remain on CreditWatch with
negative implications, pending the outcome of a vote on the
tentative labor agreement between the United Auto Workers (UAW)
and Axle, and its review of the four companies' financial
profiles. The ratings on all four companies were placed on
CreditWatch negative on March 17, sparked by a work stoppage at
many of Axle's UAW-represented plants in New York and Ohio. Axle
and the UAW announced the tentative agreement on a new labor
contract, but did not disclose details.
Local unions were scheduled to vote on the agreement beginning
Monday and continuing through this week. If ratified, the new
four-year contract will end the strike, which began Feb. 25 and
led to reduced production of light trucks by GM over the past few
months.
According to media reports, under the tentative agreement, the UAW
has accepted a lower all-in wage and benefit package competitive
with that offered by the UAW at other U.S. auto supplier
competitors of Axle. In exchange, Axle is reportedly offering buy-
outs of up to $140,000 to reduce headcount and
buy-downs of up to $105,000 to ease the transition for remaining
UAW workers to the new wage level. (GM previously announced it had
agreed to fund $200 million of the amount needed for the wage
transition and buyouts.) Axle also reportedly will close two
forging plants under the agreement.
"We intend to resolve each company's CreditWatch listing within
the next two weeks," said Standard & Poor's credit analyst
Lawrence Orlowski. "We'll focus on the strike's direct effect on
liquidity, as well as the prospective performance of each company
for the remainder of 2008 and into 2009. We expect to resolve the
CreditWatch listings on Lear and Tenneco first because their
first-quarter results indicate that they have been less affected
by the strike," he continued.
BAG'N BAGGAGE: Wants to Hire Cox Smith as Attorney
--------------------------------------------------
Bag'n Baggage Ltd. and 900 Corp. ask the United States Bankruptcy
Court for the Northern District of Texas for permission to employ
Cox Smith Matthews Incorporated as attorney.
Cox Smith will:
a) take all necessary action to protect and preserve the
estates of the Debtors, including the prosecution of actions
on the Debtors' behalf, the defense of any action commenced
against the Debtors, the negotiation of disputes in which
the Debtors are involved, and the preparation of objections
to claims filed against the Debtors' assets;
b) prepare on behalf of the Debtors all necessary motions,
applications, answers, orders, and papers in connection with
the administration and prosecution of the Debtors' cases;
c) assist the Debtors in connection with any proposed sale of
assets pursuant to Section 363 of the Bankruptcy Code;
d) advise the Debtors in respect of bankruptcy, real estate,
regulatory, labor law, intellectual property, licensing, an
tax matters or other such services as requested; and
e) perform all other legal services in connection with cases.
The firm's professionals and their compensation rates are:
Professionals Designations Hourly Rates
------------- ------------ ------------
Mark E. Andrews, Esq. Shareholder $475
Carol E. Jendrzey, Esq. Shareholder $375
Lindsey D. Graham, Esq. Associate $235
Allison Seifert Paralegal $135
Mark E. Andrews, Esq., an attorney of the firm, assures the Court
that the firm is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code.
Headquartered in Dallas, Texas, Bag'n Baggage Ltd. --
http://www.bagnbaggage.com/-- sells traveling luggage and carry-
on bags. The company and its affiliate, 900 Corp., filed for
Chapter 11 protection on May 4, 2008 (Bankr. N.D. Tex. Lead
Case No.0832096). The U.S. Trustee for Region 7 has yet to
appoint creditors to serve on an Official Committee of Unsecured
Creditors. When the Debtors filed for protection against their
creditors, they listed assets and debts between $10 million and
$50 million.
BASELINE OIL: S&P Affirms CCC+ Corporate Credit Rating
------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on oil and
gas exploration and production (E&P) company Baseline Oil & Gas
Corp. to developing from positive and affirmed its ratings on the
company, including the 'CCC+' corporate credit rating.
The outlook revision is tied to the company's limited financial
flexibility under its revolving line of credit, which is the
result of mark-to-market adjustments for hedging obligations. As
of March 31, 2008, the company's hedging obligations resulted in
availability under the company's $20 million senior secured credit
facility of approximately $2 million. After its recent interest
payment, Baseline has a current cash and cash equivalents balance
of approximately $14 million.
"Although its liquidity position has eroded," said Standard &
Poor's credit analyst Amy Eddy, "we believe Baseline is likely to
enhance its liquidity in the near term either through an amended
credit facility or through improved production and operating
performance."
As of March 31, 2008, Houston-based Baseline had approximately
$165 million in total debt.
BCE INC: Banks Propose Tougher Terms for $33 Billion Buyout
-----------------------------------------------------------
Banks backing the $33 billion buyout of BCE Inc. attempted to
renegotiate the financing for the transaction, Peter Lattman of
the Wall Street Journal reports.
On June 30, 2007, the company agreed to a leveraged buyout by a
consortium of private equity investors led by Teachers Private
Capital, the private investment arm of the Ontario Teachers'
Pension Plan, Providence Equity Partners Inc., Madison Dearborn
Partners LLC, and Merrill Lynch Global Private Equity. The buyout
group agreed to pay C$42.75 ($42.62) a share for BCE.
On Friday, the banks presented a new set of terms to the buyers,
who viewed the new offer as an "evidence that the banks don't want
to close the deal," people familiar with the situation said,
according to the WSJ report. The new terms include higher
interest rates, and tighter restrictions.
The Quebec Superior Court has approved the plan of arrangement for
the privatization. The Quebec Court of Appeal hearing has
concluded and the court has indicated that it expects to render a
decision expeditiously, the company has said. BCE told
shareholders it expects the deal to close by June 30.
About BCE
Headquartered in Montreal, Quebec, BCE Inc. (TSX/NYSE: BCE) --
http://www.bce.ca/-- is a communications company, providing
comprehensive and innovative suite of communication services to
residential and business customers in Canada. Under the Bell
brand, the company's services include local, long distance and
wireless phone services, high-speed and wireless Internet access,
IP-broadband services, information and communications technology
services (or value-added services) and direct-to-home satellite
and VDSL television services. Other BCE holdings include Telesat
Canada and an interest in CTVglobemedia.
Bell Canada -- http://www.bell.ca/-- is a wholly owned subsidiary
of BCE Inc. Bell offers integrated information and communications
technology services to businesses and governments, and is the
Virtual Chief Information Officer to small and medium businesses.
* * *
As reported in the Troubled Company Reporter on Dec. 14, 2007,
Standard & Poor's Ratings Services kept its ratings on BCE Inc.
and its related entities on CreditWatch with negative
implications, pending the completion of the company's leveraged
buyout by a consortium of private equity investors led by Teachers
Private Capital as announced on June 30, 2007. As a result of the
proposed LBO, S&P expect reported debt to increase to about CDN$37
billion from about CDN$10 billion at Sept. 30, 2007.
As reported in the Troubled Company Reporter on Sept. 26, 2007,
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on BCE Inc. and wholly owned subsidiary Bell Canada
to 'BB-' from 'A-'.
BCE INC: Satisfies CRTC Conditions on Disposal to Investor Group
----------------------------------------------------------------
BCE Inc. received written confirmation from the Canadian
Radio-television and Telecommunications Commission that the
Commission's conditions set forth in its March 27, 2008 decision
to approve the proposed acquisition of BCE Inc. by an investor
group led by Teachers' Private Capital, the private investment arm
of the Ontario Teachers' Pension Plan, Providence Equity Partners
Inc., Madison Dearborn Partners, LLC, and Merrill Lynch Global
Private Equity, have been fulfilled with two minor exceptions.
In its letter of May 16, 2008, the CRTC requested that an amended
Principal Investors Agreement be filed with the Commission within
30 days addressing the mechanics of the appointment of an
independent member of the board of directors should certain
circumstances arise in the future. The CRTC's letter also
addresses an outstanding issue concerning the disposition of the
balance of the tangible benefits payable by BCE as a result of the
transaction, as a result of which BCE will now direct 10 per cent
of those benefits to the BCE New Media Trust.
BCE expects the transaction to close before the end of the second
quarter of 2008.
About BCE
Headquartered in Montreal, Quebec, BCE Inc. (TSX/NYSE: BCE) --
http://www.bce.ca/-- is a communications company, providing
comprehensive and innovative suite of communication services to
residential and business customers in Canada. Under the Bell
brand, the company's services include local, long distance and
wireless phone services, high-speed and wireless Internet access,
IP-broadband services, information and communications technology
services (or value-added services) and direct-to-home satellite
and VDSL television services. Other BCE holdings include Telesat
Canada and an interest in CTVglobemedia.
Bell Canada -- http://www.bell.ca/-- is a wholly owned subsidiary
of BCE Inc. Bell offers integrated information and communications
technology services to businesses and governments, and is the
Virtual Chief Information Officer to small and medium businesses.
* * *
As reported in the Troubled Company Reporter on Dec. 14, 2007,
Standard & Poor's Ratings Services kept its ratings on BCE Inc.
and its related entities on CreditWatch with negative
implications, pending the completion of the company's leveraged
buyout by a consortium of private equity investors led by Teachers
Private Capital as announced on June 30, 2007. As a result of the
proposed LBO, S&P expect reported debt to increase to about CDN$37
billion from about CDN$10 billion at Sept. 30, 2007.
As reported in the Troubled Company Reporter on Sept. 26, 2007,
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on BCE Inc. and wholly owned subsidiary Bell Canada
to 'BB-' from 'A-'.
BEACH HOUSE: Files Disclosure Statement and Chapter 11 Plan
-----------------------------------------------------------
Beach House Property LLC and Winners LLC delivered to the United
States Bankruptcy Court for the Southern District of Florida a
Joint Disclosure Statement dated May 15, 2008, explaining their
Joint Chapter 11 Plan of Reorganization.
Plan Overview
The proponents' Plan contemplates the liquidation of either Beach
House's real property or security interest in Winners. In the
event the property and interest remain unsold and allowed claims
are still unpaid 90 days after confirmation, the Debtors will hold
an absolute auction of the assets.
Alvin S. Goldstein, Esq., at Furr and Cohen, P.A., in Boca Raton,
Florida, will serve as disbursing agent under the Plan.
Indebtedness
On Feb. 16, 2006, Beach House closed on a $40,630,000 loan
with Marshall/BankFirst, of which the proceeds of the loan went
to (i) pay off the existing land loan of $18 million, (ii) create
a $3.6 million reserve for interest, and (iii) cover remaining
development and site demolition cost. At present, the Debtors
have drawn at least $39.5 million from the loan.
Treatment of Claims
All allowed administrative claims will be paid in full on the
plan's effective date.
Upon the sale of the property or the interest, creditors are
expected to receive the allowed amount of their claim including:
-- Marshall BankFirst, totaling $40,630,000;
-- Florida Demolition Inc., totaling $182,387;
-- Strotech Inc., totaling $311,361;
-- Prodigy Int'l Development Sales LLC, totaling $432,796; and
-- Gryphon Construction, totaling $100,000.
General Unsecured Creditors of the Debtors will be paid their pro
rata share from the remaining proceeds of the sale.
Holders of Equity Interests will be paid from the remaining
proceeds of the sale, if any, after all valid claims are
satisfied.
A full-text copy of the Joint Disclosure Statement is available
for free at http://ResearchArchives.com/t/s?2c31
A full-text copy of the Joint Chapter 11 Plan of Reorganization is
available for free at http://ResearchArchives.com/t/s?2c32
About Beach House
Headquartered in Surfside, Florida, Beach House Property, L.L.C.
owns various real estate properties. The Debtor commenced chapter
11 proceedings Feb. 15, 2008, before the U.S. Bankruptcy Court for
the Southern District of Florida in Miami (Case No. 08-11761).
Robert C. Furr, Esq., at Furr and Cohen in Boca Raton, Florida,
represents the Debtor. The U.S. Trustee for Region 21 has not
appointed creditors to serve on an Official Committee of Unsecured
Creditors. When it filed for bankruptcy, Beach House estimated
assets between $50 million and $100 million, and debts between
$10 million to $50 million.
BERKSHIRE INCOME: March 31 Balance Sheet Upside-down by $7 Million
------------------------------------------------------------------
Berkshire Income Realty, Inc. reported its results for the quarter
ended March 31, 2008. Financial highlights for the quarter ended
March 31, 2008:
* The Company's Funds From Operations for the quarter
ended March 31, 2008 were $1,775,535 as compared to
$1,282,587 for the quarter ended March 31, 2007. The
increase of $492,948 relates principally to favorable
increases in net operating income from property
operations. NOI for the quarter ended March 31, 2008 was
$9,923,637, an increase of $854,242, or 9.42%, from NOI of
$9,069,395 for the quarter ended March 31, 2007. The
increases in NOI were partially offset by increases in
interest expense of $646,017 related to increased levels of
first and second mortgage debt obtained to take advantage of
favorable interest rates in the debt market.
* For the quarter ended March 31, 2008, Berkshire reported net
income, before depreciation, of $1,015,209 as compared to
net income, before depreciation (including depreciation
reported as part of discontinued operations), of $871,256
for the quarter ended March 31, 2007, an increase of
$143,952. The increase in net income, before depreciation,
was primarily due to increases in rental revenue, offset by
smaller increases in expenses. Rental revenue increases can
be attributed to increases in rental rates at properties
which have undergone rehabilitation as well as general
increases in market rates at a majority of the properties.
Net loss for the quarter ended March 31, 2008 was
$(7,441,991) as compared to a net loss of $(6,907,532) for
the quarter ended March 31, 2007, an increase in loss of
$(534,459). In addition to the changes in net income, before
depreciation, the increase in net loss also reflects an
increase in depreciation expense (including depreciation
reported as part of discontinued operations) of $(678,411)
related to increases in depreciable assets including two
properties acquired during 2007 and capital improvements
related to rehabilitation projects at a few properties.
* The Company continues to implement an investment strategy
centered on the renovation and rehabilitation of properties
in its portfolio as well as identifying properties for
acquisition which would realize increases in value from
major renovation activities. Ongoing rehabilitation projects
continue to generate improved operating results as evidenced
by increased rent levels of newly renovated units placed
back into service at the completion of the renovation. The
Company continues to monitor the existing portfolio for
rehabilitation opportunities as well as considering
rehabilitation projects contemplated as part of the
Company's acquisition strategy for new properties.
Additionally, the Company considers ground up development
projects as an important component of its investment
strategy and is currently constructing a 143 unit garden
style multifamily apartment community on land it had
previously acquired for potential development purposes.
President and CFO, David Quade comments, "The operating results
for Berkshire Income Realty for the quarter ended March 31, 2008
were positive as evidenced by increased NOI. NOI benefited from
favorable rental income and occupancy trends in the majority of
our operating markets during the current quarter. We continue to
create value in our portfolio through our property management and
renovation and rehabilitation capabilities. Additionally, we are
developing a new multifamily apartment community on land
previously acquired by the Company. We believe this development
will add significant value to the Arboretum residential complex
when it comes online in late 2008 and management will continue to
pursue other development opportunities as they are identified by
the Company."
Funds From Operations
The Company has adopted the revised definition of FFO adopted by
the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT"). FFO falls within the definition of a
"non-GAAP financial measure" as stated in Item 10(e) of Regulation
S-K promulgated by the SEC. Management considers FFO to be an
appropriate measure of performance of an equity REIT. We calculate
FFO by adjusting net income (loss) (computed in accordance with
GAAP, including non-recurring items), for gains (or losses) from
sales of properties, real estate related depreciation and
amortization, and adjustment for unconsolidated partnerships and
ventures. Management believes that in order to facilitate a clear
understanding of the historical operating results of the Company;
FFO should be considered in conjunction with net income as
presented in the consolidated financial statements included
elsewhere herein. Management considers FFO to be a useful measure
for reviewing the comparative operating and financial performance
of the Company because, by excluding gains and losses related to
sales of previously depreciated operating real estate assets and
excluding real estate asset depreciation and amortization (which
can vary among owners of identical assets in similar condition
based on historical cost accounting and useful life estimates),
FFO can help one compare the operating performance of a company's
real estate between periods or as compared to different companies.
The Company's calculation of FFO may not be directly comparable to
FFO reported by other REITs or similar real estate companies that
have not adopted the term in accordance with the current NAREIT
definition or that interpret the current NAREIT definition
differently. FFO is not a GAAP financial measure and should not be
considered as an alternative to net income (loss), the most
directly comparable financial measure of the company's performance
calculated and presented in accordance with GAAP, as an indication
of its performance. FFO does not represent cash generated from
operating activities determined in accordance with GAAP and is not
a measure of liquidity or an indicator of the company's ability to
make cash distributions. The company believes that to further
understand its performance, FFO should be compared with its
reported net income and considered in addition to cash flows in
accordance with GAAP, as presented in its consolidated financial
statements.
FFO for the three months ended March 31, 2008 reflects an increase
over FFO for the three-month period ended March 31, 2007. The
increase is due mainly to increases in Net Operating Income of the
properties, which was offset in part by increases in interest
expense related to increased debt balances in the comparative
three-month periods ended March 31, 2008 and 2007. The increased
debt levels represent items of a variable nature during the
comparative periods that are not adjusted to determine FFO. Due to
the variable nature of items included in or excluded from net
loss, past FFO results should not be considered indicative of
future FFO results.
Deficit
As of March 31, 2008, the company had total assets of $511.6
million and total liabilities of $518.7 million, resulting in
total stockholders deficit of $7 million.
About Berkshire Income Realty
Berkshire Income Realty (AMEX: BIR_pa), (AMEX: BIRPRA), (AMEX:
BIR-A), (AMEX: BIR.PR.A) is a REIT whose objective is to acquire,
own, operate, and rehabilitate multifamily apartment communities.
The Company owns interests in twenty-five such multifamily
apartment communities, of which eight are located in the
Baltimore/Washington, D.C. metropolitan area, four are located in
Virginia, four are located in Houston, Texas, two are located in
Dallas, Texas, two are located in the Chicago, Illinois area and
one is located in each of Austin, Texas, Charlotte, North
Carolina, Atlanta, Georgia, Sherwood, Oregon and the Tampa,
Florida area.
BHM TECHNOLOGIES: Files for Chapter 11 Protection; Seeks Financing
------------------------------------------------------------------
BHM Technologies Holding Inc. and 14 of its affiliates filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code
blaming poor liquidity coupled with automobile sales slump,
Bloomberg News reports.
BHM Technologies and an affiliate of Lehman Brothers Inc.,
negotiated the terms and conditions of a plan of reorganization,
Bloomberg says. Lehman's affiliate is the agent for BHM
Technologies first-lien lenders, the report adds.
Financing is "crucial to maximizing the value for the debtors'
estates," Bloomberg quotes company official with knowledge of the
matter as saying. BHM Technologies is presently seeking court
approval to obtain financing from its first-lien lender.
Pursuant to court documents, BHM Technologies listed assets and
debts of more than $500 million, and secured debt of at least
$323.5 million.
Two units of BHM Technologies in Mexico did not file for
bankruptcy, Bloomberg notes.
Headquartered in Ionia, Michigan, BHM Technologies Holdings
Inc. manufactures and sells automobile parts including air bags
and electrical systems. The company also operates under Brown
Corp. -- http://www.browncorp.com/
BHM TECHNOLOGIES: Case Summary & 50 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: BHM Technologies Holdings, Inc.
401 South Steele St.
Ionia, MI 48846
Bankruptcy Case No.: 08-04413
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
The Brown Corp. of America 08-04412
BHM Technologies, LLC 08-04415
The Brown Co. International, LLC 08-04416
The Brown Co. of Ionia, LLC 08-04417
The Brown Co. of Moberly, LLC 08-04418
The Brown Co. of Waverly, LLC 08-04419
The Brown Corp. of Greenville, Inc. 08-04421
The Brown Realty Company, LLC 08-04422
Heckethorn Holdings, Inc. 08-04423
Heckethorn Manufacturing Co., Inc. 08-04425
Midwest Stamping, Inc. 08-04426
Midwest Stamping & Manufacturing Co. 08-04427
Morton Welding Holdings, Inc. 08-04428
Morton Welding Co., Inc. 08-04429
Type of Business: The Debtors are independent designers and
manufacturers of welded assemblies and machined
components for a customer base in a variety of
end markets, including automotive, construction,
agricultural, and lawn and garden. See
http://www.browncorp.com/
Chapter 11 Petition Date: May 19, 2008
Court: Western District of Michigan (Grand Rapids)
Judge: Scott W. Dales
Debtors' Counsel: Hannah Mufson McCollum, Esq.
Email: mccolluh@pepperlaw.com
Kay Standridge Kress, Esq.
Email: Kressk@pepperlaw.com
Robert S. Hertzberg, Esq.
Email: hertzbergr@pepperlaw.com
Pepper Hamilton, LLP
Ste. 3600, 100 Renaissance Ctr., 36th Fl.
Detroit, MI 48243
Tel: (313) 393-7306, (313) 393-7365,
(313) 393-7433
Fax: ((866) 738-9629
-- and --
Leon R. Barson, Esq.
Email: barsonl@pepperlaw.com
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Tel: (215) 981-4424
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
Debtors' Consolidated List of 50 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
SAC Domestic Investments, L.P. Debt $72,112,539
replacing Lehman Commercial
Paper, Inc. as agent for the
$65,000,000 second lien credit
agreement dated as of July 21,
2006
Attn: SAC Capital Advisors,
LLC
72 Cummings Point Rd.
Stamford, CT 06902
Fax: ((203) 890-2295
Pyper Tool & Engineering Trade Vendor $8,578,065
3003 Wilson Dr. N.W.
Grand Rapids, MI 49534-7565
Tel: (616) 791-9788
Fax: (616) 791-1040
Centerline Windsor, Ltd. Trade Vendor $5,507,127
415 Morton Dr.
Lasalle, ON N9J 3T8 Canada
Tel: (519) 734-8464
Fax: (519) 734-7408
Walker Tool & Die, Inc. Trade Vendor $4,034,978
2411 Walker Rd. N.W.
Grand Rapids, MI 49504-1377
Tel: (616) 453-5471
Fax: (616) 453-3765
Honda Trading America Customer Resale $2,910,329
19900 ST RT 739 Payables
Marysville, OH 43040
Tel: (937) 644-0125
Fax: (937) 644-8070
Kenwal Steel-Burns Harbor Trade Vendor $2,564,124
307 Tech Dr.
Burns Harbor, IN 46304
Tel: (219) 764-5800
Fax: (219) 763-7566
US Engineering Corp. Trade Vendor $1,856,016
2530 Thornwood S.W.
Grand Rapids, MI 49509-2149
Tel: (616) 530-9889
Fax: (616) 530-0523
Kenwal Steel Corp. Trade Vendor $1,534,880
8223 W. Warren Ave.
Dearborn, MI 48126
Tel: (313) 739-1000
Fax: (313) 739-1001
Royal Plastics, Inc. Trade Vendor $968,358
3765 Quincy
Hudsonville, MI 49426
Tel: (616) 667-4178
Fax: (616) 896-0290
Lincoln Electric Co. Trade Vendor $896,514
22801 Saint Clair Ave.
Cleveland, OH 44117
Tel: (216) 383-8027
Fax: (216) 383-4727
Leggett & Platt, Inc. Trade Vendor $779,546
Number 1 Leggett Rd.
Carthage, MO 64836
Tel: (417) 358-8131
Fax: (417) 358-8449
Trademark Die & Engineering Trade Vendor $765,460
8060 Graphic Dr.
Belmont, MI 49306
Tel: (616) 863-6660
Fax: (616) 863-6665
P.C. Campana, Inc. Trade Vendor $715,557
1374 East 28 TH
Lorain, OH 44055
Tel: (440) 246-6500
Fax: (440) 246-6609
Eclipse Tool & Die Trade Vendor $699,635
4713 Circuit CT
Wayland, MI 49348
Tel: (616) 877-3717
Fax: (616) 877-3712
Dundee Products Inc. Trade Vendor $575,608
14490 Stowell Rd.
Dundee, MI 48131
Tel: (734) 529-2441
Fax: (734) 529-5637
Modern Metal Products, Inc. Trade Vendor $554,990
35053 Eagle Way
Chicago, IL 60678-1350
Tel: (815) 877-9571
Fax: (815) 877-1070
Superior Roll Forming, Inc. Trade Vendor $554,480
5535 Wegman Dr.
Valley City, OH 44280
Tel: (330) 225-2500,
233 (ext.)
Fax: (330) 225-0888
General Motors Corp. Customer Resale $503,195
4100 S. Saginaw St. Payables
Flint, MI 48507-2605
Tel: (859) 243-7619
Fax: (602) 797-6596
Earle M. Jorgensen Co-Chicago Trade Vendor $488,476
75 Remittance Dr., Ste. 6477
Chicago, IL 60675-6477
Tel: (800) 323-4721
Fax: (800) 635-7629
Kenwal Steel-Tennessee, LLC Trade Vendor $476,221
8223 W. Warren Ave.
Dearborn, MI 48126
Tel: (313) 739-1079
Fax: (313) 739-2379
Miller Welding Supply, Inc. Trade Vendor $471,299
505 Grandville S.W.
Grand Rapids, MI 49503-4948
Tel: (616) 459-9461
Fax: (616) 459-4759
Bluff City Steel, LLC Trade Vendor $428,908
1175 Harbor Ave.
Memphis, TN 38113
Tel: (901) 946-1005
Fax: (901) 948-6266
Ford Motor Co. Customer Resale $414,907
Office of the General Counsel Payables
1 American Rd. Ste. 323WHQ
Dearborn, MI 48126
Tel: (313) 594-4032
Fax: (313) 337-3209
Ultimate Tooling, INC. Trade Vendor $383,575
2943 South Wilson Ct.
Walker, MI 49525
Tel: (616) 791-6740
Fax: (616) 791-6750
Olympic Steel Lafayette Trade Vendor $292,531
3600 N. Military Street
Detroit, MI 48210
Tel: (313) 584-6888,
(313) 894-4552
Fax: (313) 894-7930
Hascall Steel Co. cor 4165 Trade Vendor $291,098
4165 Spartan Ind Dr. S.W.
Grandville, MI 49418
Tel: (616) 531-8600
Fax: (616) 531-7555
EFC International, Inc. Trade Vendor $254,566
1940 Craigshire Blvd.
St. Louis, MO 63146
Tel: (314) 434-2888
Fax: (630) 539-7070
Bend All Automotive, Inc. Trade Vendor $251,628
575 Waydom Dr.
Ayr, ON NOB 1E0 Canada
Tel: (519) 623-2002
Fax: (519) 623-1489
Jemison Demsey Metal Trade Vendor $239,345
Metals USA-Flat Rolled-SP Trade Vendor $233,216
Jackson Tube Service, Inc. Trade Vendor $230,667
Metal-matic, Inc. Trade Vendor $218,104
First National Bank of Waverly Debt $217,612
and Oak Hill Financial
Services, Inc.
Pro Weld, Inc.
Steel Technologies Trade Vendor $209,510
Tomson Steel Co., Corp. Trade Vendor $198,045
Sika Corp. Trade Vendor $187,985
Marubeni-Itochu Steel Ame. Trade Vendor $183,715
Worthington Steel Co. Trade Vendor $177,802
Grenada Stamping/Assembly Trade Vendor $174,068
Decker Manufacturing, Inc. Trade Vendor $174,007
Pintura Estampado y Monta Trade Vendor $170,747
Carretera Celaya-Salamanca
E&E Manufacturing Co. Inc. Trade Vendor $168,491
B&J Specialty, Inc. Trade Vendor $167,612
Delphi Thermal & Interor Trade Vendor $162,043
Airgas Great Lakes Trade Vendor $160,204
CHS Automation Trade Vendor $146,820
Parthenon Metal Works, Inc. Trade Vendor $144,547
Mid South Wire Co. Trade Vendor $142,239
Art Technologies Trade Vendor $138,644
BRANTLEY CAPITAL: Cash Distribution in Liquidation Plan Okayed
--------------------------------------------------------------
Brantley Capital Corporation said that pursuant to the Plan of
Liquidation and Dissolution previously approved by shareholders,
the Board of Directors has approved a cash distribution of $.75
per share. The record date for the distribution is May 26, 2008.
The payment date for the distribution is May 28, 2008 and the ex-
dividend date is May 29, 2008.
As of May 15, 2008, Brantley has approximately $6,000,000 in cash
and does not hold any other material, non-cash assets. Subject to
the resolution of certain remaining contingent liabilities, the
Company's Board of Directors intends to approve one or more
additional cash distributions.
Brantley Capital Corporation (BBDC.PK) is a publicly-traded
business development company that previously provided equity and
long-term debt financing to small and medium-sized private
companies located in the United States. In April 2007, Brantley
Capital Corporation sold substantially all of its investment
assets. It is no longer engaged in any business activities except
for the purpose of winding up its business affairs.
CARGO CONNECTION: Assets Foreclosed on YA Global Loan Default
-------------------------------------------------------------
Cargo Connection Logistics Holding, Inc. achieved significant
relief from its secured debt in connection with a foreclosure by a
secured creditor. In April, the Company's largest secured
creditor, YA Global Advisors, assigned its interest to Pacer
Logistics, LLC, a subsidiary of Pacer Health Corporation.
On April 29, 2008, Pacer Logistics informed the Company that it
intended to foreclose on certain of the Company's assets. On May
13, 2008, the Company and Pacer Logistics entered into a Strict
Foreclosure and Transfer Agreement, pursuant to which the Company
acknowledged that it is in default of certain obligations, in the
aggregate amount of $3,670,389 to Pacer, as assignee of all right,
title and interest of YA Global Investments, LP, including as
assignee of Montgomery Equity Partners Ltd., with respect to the
Cargo Companies' obligations under the:
-- Secured Convertible Debenture, dated December 28, 2005,
issued to Montgomery in the principal amount of
$1,750,000;
-- Investor Rights Registration Agreement, dated December
28, 2005, by and between the Company and Montgomery;
-- Secured Convertible Debenture, dated February 13, 2006,
issued to Montgomery in the principal amount of $600,000;
-- Security Agreements, dated December 28, 2005, whereby the
Company and certain of its subsidiaries secured
obligations to Montgomery in the amount of $2,350,000;
and
-- Secured Convertible Debenture, dated November 17, 2007,
issued to YA Global, in the principal amount of $46,500.
The Outstanding Obligations are secured by certain assets of the
Cargo Companies. Pursuant to the Strict Foreclosure Agreement and
a related assumption agreement, all of the Outstanding Obligations
have been extinguished, and Pacer foreclosed on substantially all
the operating assets of the Company and Cargo Connection and
assumed certain liabilities of the Company, Cargo Connection and
Cargo International, including:
-- all obligations to Wells Fargo Bank, National
Association;
-- the obligations to HSBC Bank in connection with the HSBC
Loan, including in connection with all collateral
provided in connection therewith; and
-- the obligations to U.S. Small Business Administration
pursuant to a loan.
As a result of this foreclosure, the Company's operations will be
severely curtailed, and now will consist only of:
-- Cargo Connection Logistics - International, Inc. and its
assets;
-- Nuclear Material Detection Technologies, Inc. and its
assets;
-- Independent Transportation Group, LLC. and its assets;
and
-- the stock of Cargo Connection Logistics Corp., without
its former assets.
Scott Goodman, the Company's Chief Financial Officer, commented
that "ever since the Company's acquisition of Cargo Connection
Logistics Holding, Inc. three years ago, we have strived to
refinance or otherwise satisfy the legacy financing of the
Company. Pacer Logistics' decision to foreclose on the assets of
Cargo Connection Logistics Corp. has fully satisfied the Company's
debt, and has also allowed the Company to dispose of an additional
$1,000,000 of debt, thus allowing the Company to be relieved of
more than $4.5 million of debt. This has dramatically improved our
balance sheet, as well as a huge overhang on our stock."
Mr. Goodman continued his comments to state that "the Company
remains a fully reporting public company and that our stock will
continue to trade on the Over the Counter Bulletin Board, and our
continuing business consists of:
-- Cargo Connection Logistics - International, Inc. (Cargo
International), our Chicago-based international cargo
business;
-- Independent Transportation Group, LLC (ITG), a joint
venture with EmplifyHR Services, Inc., a Florida
corporation, in which the Company owns a majority
interest;
-- Nuclear Material Detection Technologies, Inc. (NMDT), our
development stage radiation detection product business;
and
-- Cargo Connection Logistics Corp., without its legacy
assets."
As a result of the foreclosure by Pacer on substantially all of
assets of Cargo Connection, the Company expects its future
revenues to decline significantly. As a result, despite related
decrease in debt and operating expenses, the Company expects to
generate losses from operations unless and until the Cargo
International operations and other operations begin to generate
positive cash flows in amounts exceeding the Company's overhead as
a public company.
The Company believes it is beginning to see the results of two
handling agreements it has obtained for Cargo International's
Illinois facility that became effective during the second quarter
of 2007. The Company's Cargo International operation has begun to
generate revenues, but in light of the foreclosure it will need to
continue to increase the revenue stream from its operations for
the Company to remain viable.
In order to maintain operating stability or growth over next year,
management believes that the Company will still have to manage
many conditions, other than the loss of the Cargo Connection
business, which are outside of its control, such as a general
decrease in demand for consumer products within the domestic
economy, which decreases demand for shipping, along with higher
energy costs, including fuel for the transportation-related
equipment and the energy required to operate facilities.
The company intends to seek out and to expand its existing
business and to acquire additional businesses, which it believes
with its much improved balance sheet will make the Company more
attractive to the investment community.
About Cargo Connection
Cargo Connection Logistics Holding Inc., formerly Championlyte
Holdings Inc. (OTC BB: CRGO.OB) -- http://www.cargocon.com/--
provides logistics solutions for partners through its network of
branch locations and independent agents in North America. Its
target base ranges from mid-sized to Fortune 100TM companies. The
company operates through its network of terminals and
transportation services and predominately as a non-asset based
transportation provider of truckload and less-than-truckload
transportation services. The company also provides logistics
services, which include U.S. Customs Bonded warehouse facilities,
container freight station operations, and a General Order
warehouse operation, which the company began to operate in the
latter part of the second quarter of 2006.
CASTLE REALTY: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Castle Realty Corp.
fka Real Estate Holding Corp.
1045 S. Edward Dr.
Tempe, AZ 85281
Bankruptcy Case No.: 08-05785
Chapter 11 Petition Date: May 19, 2008
Court: District of Arizona (Phoenix)
Debtor's Counsel: Alan A. Meda, Esq.
Email: ameda@stinson.com
Stinson Morrison Hecker, LLP
1850 N. Centra Ave., Ste. 2100
Phoenix, AZ 85004
Tel: (602) 279-1600
Fax: (602) 240-6925
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Allco Enterprises/Fairbridge unknown
Corp.
412 SW Jefferson Pkwy.
Ste. 201
Lake Oswego, OR 97035
ANMP unknown
James C. Sell, Receiver
1850 N. 95th Ave.
Phoenix, AZ 85037
Bodyzone unknown
2918 W. Virginia Ave.
Phoenix, AZ 85009
California Exotic Novelties unknown
California Sunshine Unger unknown
Fabrik
Clear Channel Broadcasting, unknown
Inc.
Dreamgirl Lingerie unknown
Earthly Body unknown
Fantasy Lingerie unknown
Kama Sutra Co. unknown
Leg Avenue, Inc. unknown
Love Toys, Inc. unknown
Marina Pacific Distributors unknown
Media Products unknown
Novelties by Nass-Walk, Inc. unknown
Pipedream Products unknown
Pulse Distribution, LLC unknown
Sin City Video unknown
Topco Sales Vast Resources unknown
Vibratex, Inc. unknown
CEDAR MANAGEMENT: Case Summary & 18 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Cedar Management, LLC
3233 Donald Douglas Loop S., Ste. A
Santa Monica, CA 90405
Bankruptcy Case No.: 08-16184
Type of Business: The Debtor develops real estate.
Chapter 11 Petition Date: May 6, 2008
Court: Central District Of California (Los Angeles)
Judge: Alan M. Ahart
Debtor's Counsel: Anthony J. Rothman, Esq.
Email: arothman@bbrooklaw.com
12424 Wilshire Blvd., Ste. 1120
Los Angeles, CA 90025
Tel: (310) 207-1494
Estimated Assets: $1 million to $10 million
Estimated Debts: $50 million to $100 million
Debtor's 18 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Keybank National Association $13,740,000
Attn: Bryant S. Delgadillo,
Esq.
1999 Ave. of the Stars,
Ste. 1700
Los Angeles, CA 90067
Redwood Mortgage Investors, $10,365,098
III
Attn: Matthew A. Crosby, Esq.
2785 Park Ave.
Santa Clara, CA 95050
Preferred Bank $8,200,000
Attn: Marica Z. Gordon, Esq.
1000 Wilshire Boulevard,
Ste. 1500
Los Angeles, CA 90017
Chinatrust Bank $7,500,000
Attn: Henley L. Saltzburg,
Esq.
12121 Wilshire Blvd., Ste. 600
Los Angeles, CA 90025
East West Bank $7,587,657
Attn: Miriam J. Golbert, Esq.
10350 Constellation Blvd.,
19th Flr.
Los Angeles, CA 90067
David Berg & Francis Quijada $750,000
Attn: Jeffrey B. Domine, Esq.
18150 Strathern St.
Reseda, CA 91335
Gary Hunter $646,000
3374 Floyd Terrace
Los Angeles, CA 90068
Jackson, DeMarco, Tidus, $609,833
Petersen, etc.
2030 Main St., Ste. 1200
Irvine, CA 92614
Thomas E. Beauregard, Sr. $492,600
Attn: Chris Daniels, Esq.
17024 Lassen St.
Northridge, CA 91325
North American Specialty $395,733
Insurance Co.
17024 Lassen St.
Northridge, CA 91325
MH Pacific, Inc. $383,486
Attn: Edward M. Picozzi, Esq.
32631 Highway 79
Warner Springs, CA 92086
Momotaz Begum $375,000
5158 Los Grandes Way
Los Angeles, CA 90027
Tabasco Interior, Inc. $286,560
Attn: Chris Daniels, Esq.
17024 Lassen St.
Northridge, CA 91325
Bassam Sharif $250,000
3871 Karen Lynn Dr.
Glendale, CA 91206
Fashion Furniture Rental, Inc. $228,258
Chicago Title Insurance Co. $152,000
Schmid Insulation Contractors, $118,773
Inc.
Leon Babadjanians $115,021
CENTERPLATE INC: Obtains Amendment to Senior Credit Facility
------------------------------------------------------------
Centerplate, Inc. obtained an amendment to its senior credit
facility. This amendment -- which among other things adjusts
several ratio requirements -- increases the company's financial
flexibility and enhances its ability to pursue attractive growth
opportunities and related capital investments in 2008.
As previously reported by the Troubled Company Reporter, the
company entered into a credit agreement on April 1, 2005, pursuant
to which General Electric Capital Corporation agreed to
provide up to $215 million of senior secured financing. The
financing is comprised of a $107.5 million term loan and a
$107.5 million revolving credit facility.
Among others, the Amendment provides that the company is not
allowed to make capital expenditures in excess of these amounts:
Maximum Total Maximum Total
Capital Expenditures Capital Expenditures
per Period, after per Period, prior to
the effective date the effective date
of New Service of New Service
Applicable Period Contract C Contract C
----------------- -------------------- --------------------
Fiscal Year 2005 $40,000,000 $40,000,000
Fiscal Year 2006 $35,000,000 $35,000,000
Fiscal Year 2007 $24,000,000 $24,000,000
Fiscal Year 2008 $51,700,000 $46,200,000
Fiscal Year 2009 $23,500,000 $29,000,000
Fiscal Year 2010 $25,000,000 $25,000,000
In connection with the amendment, the Board of Directors has
determined that it is prudent to eliminate the monthly dividend
payments. Accordingly, monthly payments to IDS unit holders will
consist solely of interest in the amount of $0.064 per IDS
beginning in June 2008.
The company expects to continue to pay the monthly interest on its
subordinated notes, although this payment could be deferred at any
time should the company not meet the ratios specified in the
credit agreement.
As previously announced, Centerplate has initiated a process to
evaluate a range of capital structure and other alternatives and
has engaged UBS Securities as the company's financial advisor to
assist in this process. Centerplate expects to complete the
evaluation process within the five-month timeframe provided by the
amendment.
Centerplate filed its Form 10-Q for the quarter ended April 1,
2008, a copy of which is available for free at:
http://ResearchArchives.com/t/s?2c2c
The filing was delayed due to the the process to evaluate a range
of capital structure and other alternatives for the company, as
well as the negotiations to amend its senior credit facility.
IDS unit holders are urged to review the Form 10-Q for additional
information on the company's credit agreement and the terms of the
amendment. A full-text copy of the Sixth Amendment to the Credit
Facility is available for free at:
http://ResearchArchives.com/t/s?2c2b
About Centerplate, Inc.
Headquartered in Stanford, Connecticut, Centerplate, Inc. (Amex:
CVP; TSX: CVP.un) -- http://www.centerplate.com-- crafts and
delivers extraordinary entertainment experiences in over 130
prominent sports, entertainment and convention center venues
across North America.
CHRYSLER LLC: Aims to Reduce Supplier Cost, Not Profits
-------------------------------------------------------
Chrysler LLC's Executive Vice President and Chief Procurement
Officer, John Campi, unveiled a plan to reduce Chrysler's
production component costs by 25% over the next three years.
However, Mr. Campi is not solely focused on the supplier's price,
instead he has set his sites on taking cost out of the entire
supply chain, which includes costs Chrysler has within its
operations and are part of the supply chain.
To that end, the collaborative cost-savings initiative, which he
outlined at an Original Equipment Suppliers Association Town Hall
on May 15, 2008, in Troy, Michigan, calls for Chrysler to
stabilize its production schedule; reduce engineering change
notices and reduce component proliferation. Mr. Campi explained
that these initiatives would help improve the cost structure of
both Chrysler and its suppliers; generate cost-savings that would
be shared equally (reducing the price Chrysler pays for
components) -- and perhaps most importantly, without impacting the
supplier's profits.
However, despite this welcomed news, Mr. Campi says that on more
than one occasion since he began discussing this plan, his message
has been misinterpreted. So in response, Mr. Campi clarifies the
assumption that suppliers would be forced to reduce their price if
they failed to achieve the 25% cost reduction.
"It is disappointing to find that the media can't seem to get the
message straight," Mr. Campi clarified. "So, let me set the
record straight.
"Not once in any public or private discussion have I ever
suggested that suppliers would have to reduce pricing to meet the
25% cost out challenge without our mutual objective of protecting
their profitability in dollars and percent. Our drive for cost
reduction will only be accomplished with collaboration between
Chrysler and our supply base. That simply cannot happen if it is
not mutually beneficial.
"This is really simple. First, I want to take cost out of what is
incurred by us and our supplier (25% target). Secondly, I want to
share equally with the supplier on each stepalong the way.
Schedule stability should drive significant savings for the
supplier potentialestimate of 8%. So, after stable orders can
be demonstrated, our supplier would saveapproximately 8% -- giving
us 4% and increasing their profits by approximately 4%.
"In summary, aprogram that suggests that we will take the savings
without having driven the cost out is doomed to failure before
launch. That would be just another typical cost reduction effort
that puts the burden on the suppliers without regard to the
obligation we have as OEMs to find mutually beneficial solutions.
I personally refuse to play that game. It simply will not help
the survival of this once great American industry."
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.
CLAIRE'S STORES: Uses PIK Toggles Option to Pay Interest in Bonds
-----------------------------------------------------------------
Claire's Stores Inc. informed its investors that it intends to pay
interest on $350 million of its bonds with additional debt rather
than cash, The Wall Street Journal reports.
WSJ notes that last year, Claire's issued some bonds with payment-
in-kind (PIK) toggles, which allowed the company to shut off cash
interest payments and issue more debt instead.
Claire's may be trying to conserve some cash as it looks to
execute its plans to expand its business abroad and increase
revenue, WSJ states according to John Lahman, a credit analyst at
KDP Investment Advisors.
However, WSJ adds that for Standard & Poor's Ratings Service,
Claire's move was indicative of ongoing performance difficulties
at the company.
WSJ, citing Reuters Loan Pricing Corp., relates that bonds of
Claire's Stores, which traded at 98 cents on the dollar in May
2007, have dived to 58.6 cents.
PIK Toggle Trend
WSJ indicates that a number of companies that issued debt with
easy terms are now making use of PIK toggle option to conserve
cash. That doesn't always mean the companies have serious
problems, but it is creating concern for investors, who fear
losing more money, WSJ states.
WSJ quoting Jamie Farnham, head of credit research at Metropolitan
West Asset Management, as saying: "Companies that have elected to
pay interest with additional debt are in cash-preservation mode,
and, fundamentally, that's not a good sign as their financials
could be deteriorating and there's not much lenders can do."
About Claire's Stores
Headquartered in Pembroke Pines, Florida, Claire's Stores Inc.
(NYSE: CLE) -- http://www.clairestores.com/-- is a specialty
retailer of value-priced jewelry and accessories for girls and
young women through its two store concepts: Claire's and Icing.
While the latter operates only in North America, Claire's operates
internationally. As of Dec. 1, 2007, Claire's Stores operated
3,061 stores in the United States, Canada, Puerto Rico, the Virgin
Islands, the United Kingdom, Ireland, France, Switzerland,
Austria, Germany, Spain, Portugal, Belgium, and the Netherlands.
Claire's Stores operates through its subsidiary, Claire's Nippon,
Co. Ltd., 202 stores in Japan as a 50:50 joint venture with AEON,
Co. Ltd. The company also franchises 162 stores in the Middle
East, Turkey, Russia, Poland, and South Africa.
* * *
As reported in the Troubled Company Reporter on May 6, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Claire's Stores Inc. to 'B-' from 'B'. At the same
time, S&P lowered the ratings on the company's $1.65 billion
senior secured credit facilities to 'B' from 'B+', its
$600 million senior unsecured notes to 'CCC+' from 'B-', and its
$335 million senior subordinated notes to 'CCC' from 'CCC+'. The
outlook is negative.
COMPOSITE TECH: Posts $11.4 Mil. Net Loss in Qtr. Ended March 31
----------------------------------------------------------------
Composite Technology Corp. reported a net loss of $11.4 million,
on total revenue of $21.5 million, for the second quarter ended
March 31, 2008, compared with a net loss of $11.1 million, on
total revenue of $8.4 million, in the same period ended March 31,
2007.
Cable product revenues increased $7.8 million, or 288.0%, to
$10.5 million for the second quarter ended March 31, 2008,
compared to the same period in the prior year.
Turbine product revenues increased to $10.2 million for the
quarter ended March 31, 2008, as compared to $5.5 million for the
quarter ended March 31, 2007,
Turbine service revenues increased to $755,126 for the quarter
ended March 31, 2008, as compared to $217,342 for the quarter
ended March 31, 2007.
Consolidated operating expenses increased $3.0 million or 32.0%
from $9.2 million in the quarter ended March 31, 2007, to
$12.2 million in the current quarter.
Interest expense decreased to $544,612 in the current quarter from
$1.6 million in the quarter ended March 31, 2007. The decrease is
due to decreases in non-cash amortization of debt discount and
lower cash interest paid on lower debt balances.
As of March 31, 2008, the company's debt balance consisted of
approximately $10.1 million principal at 8.0% interest, with
$1.9 million of unamortized debt discounts, for a net debt balance
of $8.2 million.
Liquidity and Capital Resources
Since inception, the company's principal sources of working
capital have been private debt issuances and equity financings.
At March 31, 2008, the company had $3.9 million of cash and cash
equivalents, which represented an decrease of $18.7 million from
Sept. 30, 2007. The decrease was due to cash used in operations
of $19.2 million, cash used in investing activities for the
purchase of property, plant and equipment of $2.3 million, offset
by $3.7 million provided by financing activities, primarily net
proceeds of $3.7 million from the exercise of warrants issued in
conjunction with the company's convertible note offering in
February 2007.
The company anticipates that sales of its ACCC conductor will not
be sufficient to sustain the company's newly combined operations
including the DeWind segment without sufficient wind turbine
orders with sizable customer advance payments of cash.
On May 12, 2008, the company received $10.0 million in cash from
Credit Suisse Securities (Europe) Ltd. in connection with an
equity financing of 13,333,333 shares of the company's common
stock.
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$142.2 million in total assets, $105.3 million in total
liabilities, and $36.9 million in total shareholders' equity.
The company's consolidated balance sheet at March 31, 2008, also
showed strained liquidity with $82.6 million in total current
assets available to pay $92.9 million in total current
liabilities.
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?2c33
Going Concern Disclaimer
Singer Lewak Greenbaum and Goldstein LLP, in Irvine, Calif.,
expressed substantial doubt about Composite Technology Corp.'s
ability to continue as a going concern after auditing the
company's consolidated financial statements for the year ended
Sept. 30, 2007. The auditing firm pointed to the company's
recurring losses from operations.
About Composite Technology
Based in Irvine, Calif., Composite Technology Corp. (OTC BB: CPTC)
-- http://www.compositetechcorp.com/-- develops, manufactures and
sells innovative high performance electrical transmission and
renewable energy generation products through its subsidiaries CTC
Cable Corp. and DeWind Inc.
CONTINENTAL AIRLINES: Moody's Affirms B2 Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service affirmed the B2 Corporate Family Rating
of Continental Airlines, Inc. as well as the ratings of its
outstanding corporate debt instruments and selected classes of
Continental's Enhanced Equipment Trust Certificates. The
Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-
2. The outlook has been changed to negative from stable.
Continental's ratings reflect its status as the fifth-largest
airline in the world measured by revenue passenger miles, with a
substantial international network reach that includes scheduled
passenger service throughout the Americas, and into Europe, the
Middle East and Asia. The company has well established positions
at its key hubs and has maintained a strong brand image that has
enabled it to sustain favorable yield trends in key markets. This
has been critical to supporting earnings as Continental does have
a slightly higher cost structure than certain peers that
reorganized under bankruptcy protection during the last several
years. Continental relatively young fleet of mainline aircraft,
many of which have been fitted with winglets to improve fuel
efficiency, is an important competitive advantage in the current
environment of high fuel costs. Nevertheless, the rapid run up in
fuel costs, which constitute the greatest single component of the
company's cost structure, is likely to adversely impact operating
performance going forward.
The negative outlook reflects Moody's expectation of deterioration
in Continental key credit metrics, such as interest coverage and
leverage during 2008, due primarily to high fuel costs and a
weakening economic environment. Despite continued strong load
factors, competitive pressures are likely to challenge
Continental's efforts to implement fare increases and fuel
surcharges to offset the increase in fuel costs. Consequently,
unless fuel cost pressures abate, earnings are likely to
deteriorate well beyond the results seen during the first quarter
of 2008, and the company could see negative operating cash flows
begin to erode its cash liquidity.
In lowering the Speculative Grade Liquidity rating to SGL-3,
Moody's noted that Continental should maintain an adequate
liquidity profile during the next 12 months despite the
expectation that cash losses from operations will represent an
increasing use of funds. The company faces other meaningful calls
on its cash---capital expenditures are expected to be
approximately $468 million (including approximately $147 million
in fleet related capital expenditures), debt maturities should
approximate $539 million, and pension contributions are
approximately $164 million in 2008. Importantly, Continental
maintains available cash liquidity that will provide flexibility
in meeting its funding needs in the coming months. At March 31,
2008 Continental reported $2.5 billion of unrestricted cash and
short term investments. While Continental does not maintain an
available bank credit facility, it is subject to certain covenants
under its credit card processing agreement with certain banks.
While the company has remained in compliance with those covenants,
sustained erosion of earnings and cash flow could erode the
cushion in complying with these covenants.
Continental's rating could be lowered if cash declines to less
than $2.0 billion, or if the company has sustained operating
losses or if the risk of breaching any financial covenants
increases meaningfully.
Continental's rating outlook could be stabilized with sustained
increases to revenues or reduced non-fuel costs, or a sustained
decline in fuel costs that increases cash from operations and
requires less meaningful draws on cash reserves to satisfy
maturing debt and capital spending requirements.
Downgrades:
Issuer: Continental Airlines, Inc.
* Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-2
Outlook Actions:
Issuer: Continental Airlines Finance Trust II
* Outlook, Changed To Negative From Stable
Issuer: Continental Airlines, Inc.
* Outlook, Changed To Negative From Stable
Continental Airlines, Inc. is headquartered in Houston, Texas.
CREDIT SUISSE: S&P Affirms BB+ Rating on Class CSP-K Certificates
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 12
classes of commercial mortgage pass-through certificates from
Credit Suisse First Boston Mortgage Securities Corp.'s series
2007-TFL2. The 12 nonpooled "CSP" certificates derive 100% of
their cash flows from the properties backing the CapitalSource
Portfolio loan.
The CapitalSource Portfolio loan has a balance of $241.3 million
and was contributed to the trust on a nonpooled basis. The loan is
secured by the fee interests in 62 skilled nursing facilities, one
assisted-living facility, and one long-term acute care hospital;
the properties are located in 20 states. The master servicer
reported year-end financial information for 62 (97%) of
these properties. Standard & Poor's revalued the collateral using
primarily year-end 2007 financial information, and the adjusted
NCF for this loan was $47.5 million, up 9% from its level at
issuance.
RATINGS AFFIRMED
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 2007-TFL2
Class Rating Credit enhancement (%)
----- ------ ----------------------
CSP-A1 AAA N/A
CSP-A2 AAA N/A
CSP-B AA+ N/A
CSP-C AA N/A
CSP-D AA- N/A
CSP-E A+ N/A
CSP-F A N/A
CSP-G BBB+ N/A
CSP-H BBB N/A
CSP-J BBB- N/A
CSP-K BB+ N/A
CSP-AX AAA N/A
N/A Not applicable.
DELTA AIR: S&P Comments on the Effect of Northwest Merger
---------------------------------------------------------
Standard & Poor's Ratings Services looks at how the proposed
merger between Delta Air Lines Inc. and Northwest Airlines Corp.
could affect the rest of the airline industry, its employees, and
the traveling public in a commentary. The commentary--"Would A
Delta-Northwest Merger Help Them Cope With Sky-High Fuel
Prices?"--is adapted from testimony by Standard & Poor's senior
airline credit analyst Philip Baggaley before the Aviation
Subcommittee of the U.S. House of Representatives, May 14, 2008.
The U.S. airline industry once again faces a financial crisis,
this time thanks to extremely high jet fuel prices and the weak
economy. In 2007, the 10 U.S. airlines S&P rate spent more than
$30 billion on jet fuel, higher than the previous year and more
than triple the level in 2002--but reported their best profits
since 1999. They cut nonfuel costs, including painful
restructuring in bankruptcy for many, and they were able to raise
fares and fill more seats. This year, a further surge in jet fuel
prices threatens to wipe out this progress, according to the
report.
U.S. airlines face a potential financial crisis if they cannot
offset the dramatic increase in fuel prices. "We believe the
proposed merger of Delta [B/Watch Pos/--] and Northwest [B+/Watch
Neg/--] offers potential financial gains, but also material
risks," said Mr. Baggaley. "Overall, it probably isn't as
beneficial as its supporters promise, or as dire as its critics
suggest. One way or another ticket prices are likely to rise if
fuel prices stay close to current levels or increase further."
DESTINATOR TECHNOLOGIES: Chapter 15 Petition Summary
----------------------------------------------------
Chapter 15 Debtor: Destinator Technologies, Inc.
fka Homeland Security Technology Corp.
95 Mural Street, 6th Fl.
Richmond Hill, L4B3G2
Ontario, Canada
Chapter 15 Petitioner: RSM Richter, Inc.
Chapter 15 Case No.: 08-11003
Debtor-affiliates filing separate Chapter 15 petitions:
Entity Case No.
------ --------
Destinator Technologies Intellectual 08-11004
Properties, Inc.
Destinator Technologies, Inc. (Canada) 08-11005
Type of Business: The Debtors provide global positioning system-
based location, navigation and asset tracking
products and technology solutions. See
http://www.destinatortechnologies.net/
On May 16, 2008, the Debtors applied for relief
under the Companies' Creditors Arrangement Act
of Canada, R.S.C. 1985, c. C-36, as amended.
This included the granting of a stay of
proceedings by the Superior Court of Ontario in
Canada to facilitate, inter alia, the
implementation of a marketing and sale process
with respect to the property and the business of
the Debtors.
Chapter 15 Petition Date: May 20, 2008
Court: District of Delaware (Delaware)
Judge: Christopher S. Sontchi
Petitioner's Counsel: Howard A. Cohen, Esq.
Email: howard.cohen@dbr.com
Drinker Biddle & Reath, LLP
1100 North Market St., Ste. 1000
Wilmington, DE 19801
Tel: (302) 467-4213
Fax: (302) 467-4201
-- and --
Mary Caloway, Esq.
Email: mcaloway@klettrooney.com
Buchanan Ingersoll & Rooney, PC
1000 West St., Ste. 1410
Wilmington, DE 19801
Tel: (302) 552-4209
Fax: (302) 552-4295
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
DOMINION HOMES: Posts $21.7 Million Net Loss in 2008 First Quarter
------------------------------------------------------------------
Dominion Homes Inc. posted a net loss of $21.7 million for the
first quarter ended March 31, 2008, compared with a net loss of
$11.5 million in the same period last year.
Revenues for the first quarter of 2008 were $24.9 million from the
delivery of 130 homes compared to $33.8 million from the delivery
of 165 homes during the first quarter of 2007. In addition to
delivering 35 fewer homes, the average delivery price of homes for
the first quarter of 2008 decreased to $191,200 compared to the
$204,400 average delivery price for homes delivered in the first
quarter of 2007.
The company reported a gross loss of $6.4 million during the first
three months of 2008, compared with gross profit of $2.7 million
in the corresponding period of 2007. As a percentage of net
revenues, gross profit for the first quarter of 2008 declined to
negative 25.5% compared to 8.0% for the first quarter of 2007.
One factor contributing to the decline in gross profit margin was
larger sales discounts, which increased to 11.8% of gross revenues
for the first quarter of 2008 compared to 6.8% of gross revenues
for the first quarter of 2007, thus reducing net revenue and
lowering the gross profit recognized per home closing. In
addition, during the first quarter of 2008 and 2007, the company
recorded non-cash charges to cost of real estate sold related to
real estate inventory impairment charges of $6.4 million and
$1.5 million, respectively.
Selling, general and administrative expenses held steady at
$8.7 million for the first quarter of 2008 compared to
$8.7 million for the first quarter of 2007. SG&A expenses in the
first quarter of 2008 included of $2.7 million of expense related
to legal, professional, consulting and insurance fees associated
with the company's pending merger agreement.
Interest expense was $6.6 million for the first quarter of 2008
compared to $5.4 million for the first quarter of 2007. The
increase is due to having a higher average borrowing rate and an
increase in average borrowings outstanding. As a result of the
company's higher borrowing rate, $93,000 more interest was
capitalized in the first quarter of 2008 than the first quarter of
2007.
The company's income tax expense for the first quarter of 2008 was
$0, compared to an income tax provision of $6,000 for the first
quarter of 2007. The 2007 provision consisted primarily of state
tax expense.
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$308.3 million in total assets, $244.4 million in total
liabilities, and $63.9 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?2c29
Going Concern Disclaimer
As reported in the Troubled Company Reporter on March 13, 2008,
PricewaterhouseCoopers LLP expressed substantial doubt about
Dominion Homes 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 auditor reported that the company suffered recurring losses
from operations and was not in compliance with certain financial
covenants included in the Credit Agreement.
On Jan. 18, 2008, the company entered into an agreement under
which affiliates of its two primary lenders, who also hold
warrants to purchase common shares, and BRC Properties Inc., the
company's largest shareholder, have offered to acquire all of the
outstanding common shares of the company other than those held by
the acquiring shareholders in a going private transaction.
In connection with the execution and delivery of the merger
agreement, on Jan. 18, 2008, Feb. 21, 2008, and April 11, 2008,
the company and all of the participating lenders under the Credit
Agreement entered into amendments pursuant to which the company's
lenders agreed to forbear until the earlier of June 30, 2008, or
termination of the merger agreement from exercising their rights
and remedies under the Credit Agreement to facilitate the
consummation of the merger.
The company said that there can be no assurance that the merger
will be completed prior to June 30, 2008, or that if it is not
completed, that the lenders will agree to any further
modifications of the existing Credit Agreement. If the company is
unable to negotiate waivers or amendments to these covenants from
the lenders, they could, among other remedies, continue to impose
the default interest rate, terminate the company's ability to make
any new borrowings, accelerate the payment of all existing
borrowings under the Credit Agreement and foreclose on their liens
on substantially all of the company's assets.
Possible Bankruptcy
If the lenders exercise their other remedies resulting from the
event of default, there is no assurance that the company would be
able to obtain financing to pay amounts owed under the Credit
Agreement and it is likely that the company would have to consider
seeking protection from its creditors under the federal bankruptcy
laws.
About Dominion Homes
Based in Dublin, Ohio, Dominion Homes Inc. (Nasdaq: DHOM) --
http://www.dominionhomes.com/-- builds a variety of new homes and
condominiums in Columbus, Ohio and Louisville and Lexington,
Kentucky, which are differentiated by size, price, included
features and available options.
DORADO BECKVILLE: Cox Smith Approved as Affiliate's Counsel
-----------------------------------------------------------
Dorado Operating Inc. obtained permission from the U.S. Bankruptcy
Court for the Northern District of Texas to hire Cox Smith
Matthews Incorporated as its counsel.
CSM will, among others, take necessary action to protect and
preserve the estate of the Debtor and perform other legal services
in connection with the chapter 11 case.
Dorado Operating told the Court that CSM is aware that DB Zwirn
Special Opportunities Fund LP is allegedly a secured creditor in
the case. CSM currently represents DB Zwirn as local counsel in a
case unrelated to the bankruptcy case. Dorado Operating assured
the Court that CSM's local counsel role for DB Zwirn does not
appear to present a conflict.
CSM was retained by Dorado Operating on April 2, 2008, to assist
it in preparing to file its voluntary bankruptcy petition. Dorado
Operating paid $70,000 retainer to CSM. The prepetition fees and
expenses generated by CSM totaled $34,385, and have been paid from
the retainer.
These professionals and paraprofessionals will assist Dorado
Operating in the case:
a. George H. Tarpley, Esq. Shareholder $525 per hour
b. Mark E. Andrews, Esq. Shareholder $475 per hour
c. M. Jermaine Watson, Esq. Associate $250 per hour
d. Allison Seifert Paralegal $135 per hour
The firm can be reached at:
Cox Smith Matthews Incorporated
112 E. Pecan Street, Suite 1800
San Antonio, Texas 78205
Tel: (210) 554-5500
Fax: (210) 226-8395
http://www.coxsmith.com/
Facts on Dorado Operating
Dorado Operating is a wholly owned subsidiary of Dorado
Exploration Inc., in Maryland. It is also a 99% limited partner
of Dorado Beckville Partners I LP, the lead debtor in the
bankruptcy case. The oil and gas properties of Beckville are
operated by Dorado Operating, pursuant to a contract operating
agreement.
As of March 31, 2008, Dorado Operating owes about $7.8 million to
third party vendors. As of March 13, 2008, Dorado Operating also
owes Dorado Exploration about $3.2 million.
Dorado Operating currently has a senior lien against oil and gas
production from Beckville's Griffith, Mims, and Crim wells located
in Rusk County, Texas and the Harris well in Panola County.
Beckville, in turn, owes about $4.3 million to Dorado Operating.
About Dorado Beckville
Dallas, Texas-based Dorado Beckville Partners I LP and Dorado
Operating Inc. -- http://www.doradoexploration.com/-- are
diversified oil and gas exploration and production companies
active in the East Texas Basin, the inland waters of South
Louisiana, and Western Alabama.
Beckville owns 64% to 75% of the working interest in each owned
gas unit. The properties owned by Beckville are operated by
Dorado Operating, a 99% limited partner of Beckville and a wholly
owned unit of Dorado Exploration Inc.
Beckville and Dorado Operating sought chapter 11 protection on
April 15, 2008 (Bankr. N.D. Texas Case Nos. 08-31796 and 08-
31800). Judge Barbara J. Houser presides the case. Marcus Alan
Helt, Esq., and Richard McCoy Roberson, Esq., at Gardere Wynne
Sewell LLP is counsel to Dorado Beckville. When Dorado Beckville
filed for bankruptcy, it listed $10 million to $50 million in
assets and debts. Dorado Beckville's schedules show total assets
of $32,289,155 and total liabilities of $31,419,576 and Dorado
Operating's schedules show total assets of $831,387 and total
liabilities of $13,122,417.
DORADO BECKVILLE: Seeks Court OK on Gardere Wynne as Counsel
------------------------------------------------------------
Dorado Beckville Partners I LP obtained permission from the U.S.
Bankruptcy Court for the Northern District of Texas to hire
Gardere Wynne Sewell LLP as its counsel.
Beckville told the Court that to ensure appropriate compliance
with its duties and obligations as a debtor-in-possession, it
needs the legal services of Gardere Wynne. Particularly, the firm
will, among others, advise Beckville of its powers and duties in
the management of its properties.
As of April 1, 2008, the firm's hourly rates are:
Richard M. Roberson, Esq. Partner $580
Marcus A. Helt, Esq. Associate $380
Michael S. Haynes, Esq. Associate $280
Beckville had paid $24,000 retainer to the firm.
Beckville assured the Court that it does not believe the firm has
any relationship that would raise a disqualification or conflict
of interest in the firm's engagement.
About Dorado Beckville
Dallas, Texas-based Dorado Beckville Partners I LP and Dorado
Operating Inc. -- http://www.doradoexploration.com/-- are
diversified oil and gas exploration and production companies
active in the East Texas Basin, the inland waters of South
Louisiana, and Western Alabama.
Beckville owns 64% to 75% of the working interest in each owned
gas unit. The properties owned by Beckville are operated by
Dorado Operating, a 99% limited partner of Beckville and a wholly
owned unit of Dorado Exploration Inc.
Beckville and Dorado Operating sought chapter 11 protection on
April 15, 2008 (Bankr. N.D. Texas Case Nos. 08-31796 and 08-
31800). Judge Barbara J. Houser presides the case. Cox Smith
Matthews Incorporated is counsel to Dorado Operating. When Dorado
Beckville filed for bankruptcy, it listed $10 million to $50
million in assets and debts. Dorado Beckville's schedules show
total assets of $32,289,155 and total liabilities of $31,419,576
and Dorado Operating's schedules show total assets of $831,387 and
total liabilities of $13,122,417.
DORADO BECKVILLE: Files Schedules of Assets and Liabilities
-----------------------------------------------------------
Dorado Beckville Partners I LP submitted to the U.S. Bankruptcy
Court for the Northern District of Texas its schedules of assets
and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ---------- -----------
A. Real Property $30,000,000
B. Personal Property 2,289,155
C. Property Claimed
as Exempt
D. Creditors Holding $25,438,162
Secured Claims
E. Creditors Holding -
Unsecured Priority
Claims
F. Creditors Holding 5,981,414
Unsecured Non-priority
Claims
---------- -----------
TOTAL $32,289,155 $31,419,576
Dorado Operating Inc., debtor-affiliate of Beckville, listed total
assets of $831,387 and total liabilities of $13,122,417 in its
schedules submitted to the Court.
About Dorado Beckville
Dallas, Texas-based Dorado Beckville Partners I LP and Dorado
Operating Inc. -- http://www.doradoexploration.com/-- are
diversified oil and gas exploration and production companies
active in the East Texas Basin, the inland waters of South
Louisiana, and Western Alabama.
Beckville owns 64% to 75% of the working interest in each owned
gas unit. The properties owned by Beckville are operated by
Dorado Operating, a 99% limited partner of Beckville and a wholly
owned unit of Dorado Exploration Inc.
Beckville and Dorado Operating sought chapter 11 protection on
April 15, 2008 (Bankr. N.D. Texas Case Nos. 08-31796 and 08-
31800). Judge Barbara J. Houser presides the case. Marcus Alan
Helt, Esq., and Richard McCoy Roberson, Esq., at Gardere Wynne
Sewell LLP represent the Debtors in their restructuring efforts.
DUNMORE HOMES: Disclosure Statement Hearing Adjourned to June 10
----------------------------------------------------------------
Judge Thomas C. Holman of the U.S. Bankruptcy Court for the
Eastern District of California has adjourned the hearing to
consider the adequacy of the Disclosure Statement explaining the
Plan of Liquidation of Dunmore Homes, Inc., to June 10, 2008, at
2:00 p.m.
The Disclosure Statement hearing was originally set for April 29,
2008.
As reported by the Troubled Company Reporter on April 28, 2008,
the Debtor delivered to the Cout a blackline version of its First
Amended Disclosure Statement and Plan of Liquidation dated April
22, 2008.
A full-text copy of the blackline version of the Dunmore Amended
Disclosure Statement and Plan of Liquidation is available for
free at http://bankrupt.com/misc/DunmoreBlacklinePlan&DS.pdf
About Dunmore Homes
Based in Granite Bay, California, Dunmore Homes Inc. is a
privately-owned homebuilder. The company filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533).
Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski
Stang Ziehl & Jones LLP, represent the Debtor in its restructuring
efforts. The Official Committee of Unsecured Creditors has
selected Morrison & Foerster LLP as its counsel in this bankruptcy
proceeding.
In January 2008, the U.S. Bankruptcy Court for the Southern
District of New York ordered the transfer of Debtor's Chapter 11
case to the U.S. Bankruptcy Court for the Eastern District of
California, Sacramento Division. The Debtor filed its plan of
liquidation and an
accompanying disclosure statement on March 21, 2008.
The Debtor disclosed $20,743,147 in total assets and $250,252,312
in total debts in its schedules of assets and liabilities filed
with the Court.
(Dunmore Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
DUNMORE HOMES: Sidney Dunmore Seeks Protective Order
----------------------------------------------------
Sidney B. Dunmore requested the U.S. Bankruptcy Court for the
Eastern District of California to enter a protective order
modifying the scope of examination under Rule 2004 of the Federal
Rules of Bankruptcy Procedure.
On behalf of Mr. Dunmore, Beth Ann R. Young, Esq., at Levene
Neale Bender Rankin & Brill LLP, in Los Angeles, California,
argues that the scope of examination under Rule 2004 of the
Federal Rules of Bankruptcy Procedure for Mr. Dunmore is broad
and limitless. "The 2004 Order obtained by the Official
Committee of Unsecured Creditors goes beyond the acceptable realm
of 'broad' and, in that regard, is burdensome and oppressive,"
she says.
"Indeed through the 2004 Order," she notes, "the Committee seeks
to examine [Sidney Dunmore] as an individual regarding almost
purely corporate matters, based upon records and information that
belong to Debtor or one of the subsidiaries in which Debtor is
the managing member"
Ms. Young reminds the Court all of Dunmore Homes' assets and
liabilities, including all its books and records maintained in
about 3,800 boxes, were sold in September 2007 to a new entity
called Dunmore Homes, Inc., New York. Thus, as a result of the
Sale, the Debtor has possession of about 3,800 boxes and records
that are requested to be produced by Mr. Dunmore individually.
"It would seem that the Committee seeks to examine Mr. Dunmore as
Debtor's and/or [DHI Development, Inc.'s] 'person most
knowledgeable' or custodian of records, although this is not
specifically articulated," Ms. Young contends. "And, in any
event, that is not possible in the context of the 2004 Order, nor
would it be appropriate in light of the Sale."
Mr. Dunmore elaborates that he does not have the requisite
possession, custody and control of documents responsive to the
requests. However, even if Mr. Dunmore did, Ms. Young says that
it is burdensome and oppressive to ask Mr. Dunmore to respond to
questions on behalf of an entity he no longer controls; provide
documents he no longer possesses' or speak on behalf of
"multitudes of individuals who have their own voice."
Accordingly, Mr. Dunmore asks the Court to enter a protective
order modifying the 2004 Order, limiting the scope of the
Committee's investigation only as to him individually, and those
documents in his possession, custody and control that are not
privileged.
Ms. Young notes that whether the Debtor intends to produce its
records to the Committee is beyond the scope of what Mr. Dunmore
can control.
About Dunmore Homes
Based in Granite Bay, California, Dunmore Homes Inc. is a
privately-owned homebuilder. The company filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533).
Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski
Stang Ziehl & Jones LLP, represent the Debtor in its restructuring
efforts. The Official Committee of Unsecured Creditors has
selected Morrison & Foerster LLP as its counsel in this bankruptcy
proceeding.
In January 2008, the U.S. Bankruptcy Court for the Southern
District of New York ordered the transfer of Debtor's Chapter 11
case to the U.S. Bankruptcy Court for the Eastern District of
California, Sacramento Division. The Debtor filed its plan of
liquidation and an
accompanying disclosure statement on March 21, 2008.
The Debtor disclosed $20,743,147 in total assets and $250,252,312
in total debts in its schedules of assets and liabilities filed
with the Court.
(Dunmore Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
DECRANE AIRCRAFT: Moody's Reviewing Caa1 Rating on $150MM Loan
--------------------------------------------------------------
Moody's Investors Service has placed all the ratings of DeCrane
Aircraft Holdings, Inc. on review for downgrade as a result of the
ongoing delay in delivery of the company's audited 2007 financial
statements. Moody's expects to conclude the review after the
audited financial statements have been received and considered.
The ratings that have been placed on review for downgrade:
-- $30 million guaranteed first lien revolving credit facility
due 2013 ... B1 LGD2, 26%
-- $195 million guaranteed first lien term loan due 2013 ...
B1 LGD2, 26%
-- $150 million guaranteed second lien term loan due 2014 ...
Caa1 LGD5, 78%
The ratings outlook has be placed on review from stable.
DeCrane Aircraft Holdings, Inc., headquartered in Columbus, OH, is
a leading provider of aircraft cabin interior systems and
components (including cabin interior furnishings, veneer, cabin
management systems, seating and composite components) for
business, VIP and head-of-state aircraft, and a provider of
aircraft retrofit, interior completion and refurbishment services.
Its customers include original manufacturers of business, VIP and
head-of-state aircraft, the U.S. and foreign militaries, and
aircraft repair, modification centers and completion centers.
ENERSYS: Moody's Puts B2 Rating on Proposed Sr. Convertible Notes
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of EnerSys -
corporate family rating at Ba3 and probability of default at Ba3.
Moody's also assigned a Ba1 rating to the company's proposed
senior secured credit facility, and a B2 rating to the proposed
senior unsecured convertible notes. As a result of EnerSys debt
being rated, the Ba3 corporate family rating will now be assigned
to EnerSys, the senior-most entity with rated debt in the
corporate structure. EnerSys Capital Inc.'s existing rating of Ba2
for its senior secured bank credit facility was not affected by
these rating actions and will be withdrawn once the new senior
secured credit facility closes. In a related rating action Moody's
changed EnerSys' outlook to positive reflecting strong operating
performance and solid debt coverage metrics.
EnerSys' Ba3 corporate family rating reflects the company's
leading market position in industrial batteries in addition to its
geographic breadth and customer diversity. The company's
proprietary thin plate pure lead technology and other proprietary
technology are expected to contribute to the company's continued
growth. For LTM December 2007, EnerSys' key credit metrics were as
follows: Debt/EBITDA at 3.5x; EBITA/interest expense near 2.8x;
and, funds from operations/debt of 21% (all ratios adjusted per
Moody's methodology). Tempering these strengths is the company's
dependence on key end markets including industrial forklifts and
telecommunications. Furthermore, the historical cyclicality of
capital spending in its end markets and the company's current
negative free cash flow constrain the corporate family rating as
well. Free cash flow/debt was negative 6.1% for the last twelve
months through December 30, 2007. The negative free cash is driven
primarily by working capital usage, reflecting the company's sales
growth. Also, the company is exposed to commodity price volatility
especially lead, which comprised approximately 33% of the
company's cost of goods sold for the first nine months of FY07 and
resulted in cost of sales increasing by $147 million during the
same time period.
The positive outlook reflects Moody's expectation that EnerSys'
debt protection measures will continue to improve over the next
twelve to eighteen months as the company benefits from the robust
demand in its end markets. Additionally, Moody's believes that the
company will improve its internal operating efficiencies and
reduce its working capital spend, which should translate into
robust free cash flow during the company's 2009 fiscal year. Free
cash flow is expected to be used for debt reduction. EnerSys'
financial flexibility is also being enhanced as it is diversifying
its funding sources away from an all bank capital structure with a
combination of bank debt and convertible notes.
The ratings for the proposed senior secured credit facility and
senior unsecured convertible notes reflect the overall probability
of default of the company, to which Moody's assigns a PDR of Ba3.
The Ba1 rating assigned to the $375 million senior secured credit
facility (rated two notches above the corporate family rating)
benefits from a priority of payment over the convertible notes in
a liquidation scenario. The B2 rating assigned to the proposed
$150 million senior unsecured convertible notes (rated two notches
below the corporate family rating) reflects its junior priority of
payment relative to the senior secured credit facility.
These ratings/assessments were affected by this action:
EnerSys:
-- Corporate family rating at Ba3;
-- Probability of default rating at Ba3;
-- $375 million senior secured credit facility assigned at Ba1
(LGD2, 27%); and,
-- $150 million senior unsecured convertible notes due 2038
assigned at B2 (LGD6, 92%).
EnerSys Capital Inc.
-- $453.2 million senior secured bank credit facility affirmed
Ba2 LGD2 (21%).
EnerSys is the world's largest manufacturer, marketer and
distributor of industrial batteries and also manufactures related
products such as chargers, power equipment and battery
accessories. Additionally, it provides related aftermarket and
customer-support services for industrial batteries. Revenues for
the fiscal year ended March 31, 2008 totaled approximately $2.0
billion.
EOS AIRLINES: Court Approves Kurztman Carson as Claims Agent
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave EOS Airlines Inc. permission to employ Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
As reported in the Troubled Company Reporter on May 8, 2008,
the firm will perform various noticing, claims management and
reconciliation, disbursement and other services, if necessary, at
the request of the Debtor or the Clerk's Office.
James M. Le, the chief operating officer at Kurtzman Carson, tells
the Court that it will receive from the Debtor a $15,000 evergreen
retainer for services to be rendered, as well as expense
reimbursement. Documents submitted to the Court did not disclose
the specific hourly consulting fees of the firm.
Mr. Le assured the Court that the firm is disinterested as that
term is defined in Section 101(14) of the U.S. Bankruptcy Code.
About EOS Airlines
Based in Staten Island, New York, Eos Airlines Inc. --
http://www.eosairlines.com/-- is a transatlantic airline that
offers flights between New Yorks John F. Kennedy International
Airport and London's Stansted Airport. As of April 26, 2008,
Eos operated 31 weekly flights between JFK and Stansted.
The company filed for Chapter 11 protection April 26, 2008
(Bankr. S.D.N.Y. Case No.08-22581). Stephen D. Lerner, Esq.,
at Squire Sanders & Dempsey, LLP, represents the Debtor in its
restructuring efforts. The U.S. Trustee for Region 2 has
appointed five creditors to serve on an Official Committee of
Unsecured Creditors. When the Debtor filed for protection
against it creditors, it listed total assets of $70,233,455
and total debts of $34,858,485.
In connection with the Chapter 11 bankruptcy filing, Menzies
Corporate Restructuring was appointed as joint administrators in
the U.K.
EPICEPT CORP: To Hold Annual Stockholders' Meeting on May 21
------------------------------------------------------------
Stockholders of EpiCept Corporation are invited to the Annual
Meeting of Stockholders on Wednesday, May 21, 2008, at 10:00 a.m.
EDT at the offices of Weil, Gotshal & Manges, LLP, 767 Fifth
Avenue, New York, New York.
EpiCept stockholders of record at the close of business on April
2, 2008 are entitled to vote at the Annual Meeting.
On April 8, 2008, a notice of the Annual Meeting with the 2008
Proxy Statement was mailed to all EpiCept stockholders of record
on the Record Date. Stockholders of record may grant a proxy with
respect to their shares on the internet or by mail. Voting
instructions appear on the proxy card attached to the 2008 Proxy
Statement. If you are an EpiCept stockholder of record and did not
receive a proxy card, please contact Mr. Robert Cook at (914) 606-
3500 .
Items to be Discussed During the Annual Meeting
Item One:
The first item to be discussed is the election of two directors as
Class III directors to hold office until the 2011 Annual Meeting
and until their respective successors are elected and qualified.
The two nominees for election at the Annual Meeting are listed
below with brief biographies. They are both currently EpiCept
directors.
Robert G. Savage has been a member of EpiCept's Board since
December 2004 and serves as the Chairman of the Board. Mr. Savage
has been a senior pharmaceutical executive for over twenty years.
He held the position of Worldwide Chairman of the Pharmaceuticals
Group at Johnson & Johnson and was both a company officer and a
member of the Executive Committee. He also served Johnson &
Johnson in the capacity of a Company Group Chairman and President
of Ortho-McNeil Pharmaceuticals. Most recently, Mr. Savage was
President of the Worldwide Inflammation Group for Pharmacia
Corporation and is presently President and CEO of Strategic
Imagery LLC, a consulting company which he is the principal of. He
has held multiple positions leading marketing, business
development and strategic planning at Hoffmann-La Roche and
Sterling Drug. Mr. Savage is a director of The Medicines Company,
a specialty pharmaceutical company, Noven Pharmaceuticals, a drug
delivery company and Panacos Pharmaceuticals, Inc., a development
stage biotechnology company. Mr. Savage received a B.S. in Biology
from Upsala College and an M.B.A. from Rutgers University.
John V. Talley has been EpiCept's President, Chief Executive
Officer and a Director since October 2001. Mr. Talley has more
than 29 years of experience in the pharmaceutical industry. Prior
to joining EpiCept, Mr. Talley was the Chief Executive Officer of
Consensus Pharmaceuticals, a biotechnology drug discovery start-up
company that developed a proprietary peptide-based combinatorial
library screening process. Prior to joining Consensus, Mr. Talley
led Penwest Ltd.'s efforts in its spin-off of its subsidiary
Penwest Pharmaceuticals Co. in 1998 and served as President and
Chief Operating Officer of Penwest Pharmaceuticals. Mr. Talley
started his career at Sterling Drug Inc., where he was responsible
for all U.S. marketing activities for prescription drugs, helped
launch various new pharmaceutical products and participated in the
1988 acquisition of Sterling Drug by Eastman Kodak Co. Mr. Talley
received his B.S. in Chemistry from the University of Connecticut
and completed coursework towards an M.B.A. in Marketing from New
York University, Graduate School of Business.
The Board recommends that holders of EpiCept common stock vote for
the election of Robert G. Savage and John V. Talley.
Item Two:
The second item to be discussed is the ratification of the
selection by the Audit Committee of the Company's Board of
Directors of Deloitte & Touche LLP as the independent registered
public accounting firm for the year ending December 31, 2008.
Deloitte & Touche LLP was EpiCept's independent registered public
accounting firm for the year-ended December 31, 2007. The Board
recommends that stockholders vote for the ratification of the
selection of Deloitte & Touche LLP as EpiCept's independent
registered public accounting firm for the year ended December 31,
2008.
Item Three:
The third item to be discussed is whether to amend the certificate
of incorporation to increase the number of authorized shares of
common stock to 180,000,000 shares. The Board approved the
submission to the stockholders of an amendment to EpiCept's Second
Amended and Restated Certificate of Incorporation to increase the
number of authorized shares of common stock of EpiCept from
80,000,000 (consisting of (i) 75,000,000 shares of common stock of
the Company, par value US$0.0001 per share, and (ii) 5,000,000
shares of preferred stock of the Company, par value US$0.0001 per
share) to 180,000,000 (consisting of (i) 175,000,000 shares of
common stock of the Company, par value US$0.0001 per share, and
(ii) 5,000,000 shares of preferred stock of the Company, par value
US$0.0001 per share). The Board recommends that stockholders vote
for the amendment of the certificate of incorporation to increase
the number of authorized shares of common stock.
Items Four and Five:
The fourth item to be discussed is whether to adjourn the Annual
Meeting to solicit additional proxies in the event there are
insufficient votes to approve Proposals 1, 2, or 3. If it is
necessary to adjourn the Annual Meeting and the adjournment is for
a period of less than 30 days, no notice of the time or place of
the reconvened meeting will be given to stockholders, other than
an announcement made at the Annual Meeting.
The fifth item to be voted upon is to authorize the persons named
on the proxy card to vote the shares represented thereby in
accordance with their best judgment in relation to any other
matters to come before the stockholders at the Annual Meeting. The
Company is aware of no such matters to be submitted to the
stockholders at the Annual Meeting.
Documents:
Stockholders may obtain copies of the annual report and all
complete board proposals on EpiCept's Website at
http://www.epicept.com/
These documents will also be available at the Annual Meeting.
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.
The Troubled Company Reporter reported on May 16, 2008, that
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.
EQUISTAR CHEMICALS: March 31 Balance Sheet Upside-Down by $9.8BB
----------------------------------------------------------------
Equistar Chemicals LP's consolidated balance sheet at March 31,
2008, showed $9.8 billion in total assets and $19.6 billion in
total liabilities, resulting in a $9.8 billion total partners' '
deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $1.9 billion in total current
assets available to pay $2.3 billion in total current liabilities.
Equistar is an indirect wholly owned subsidiary of Lyondell
Chemical Company. On Dec. 20, 2007, LyondellBasell Industries
indirectly acquired the outstanding common shares of Lyondell
Chemical Company and, as a result, Lyondell and Equistar became
indirect wholly owned subsidiaries of LyondellBasell Industries.
The consolidated statement of income for the three months ended
March 31, 2008, reflects post-acquisition depreciation and
amortization expense based on the new value of the related assets
and interest expense that resulted from the debt used to finance
the acquisition; therefore, the financial information for the
periods prior to and subsequent to the acquisition on Dec. 20,
2007, is not generally comparable.
The company reported a net loss of $547.0 million for the first
quarter ended March 31, 2008, compared with net income of
$11.0 million in the same period in 2007. The shift to a net loss
during the first quarter of 2008 was primarily due to
$386.0 million of interest expense on push-down debt and the
operating loss in the first quarter 2008 compared to operating
income in first quarter 2007.
Equistar's revenues of $3.8 billion in the first quarter of 2008
were 33.0% higher compared to revenues of $2.9 billion in the
first quarter of 2007, reflecting higher average sales prices,
partially offset by the effect of lower sales volumes.
Equistar's cost of sales of $3.9 billion in the first quarter 2008
was 43.0% higher compared to $2.7 billion in the first quarter of
2007. The increase was primarily due to higher raw material
costs, partially offset by lower operating costs. The higher raw
material costs reflected the effect of higher crude oil prices in
the first quarter of 2008 compared to the same period in 2007.
The lower operating costs in the first quarter of 2008 were due to
the absence of operating issues and related maintenance
experienced in the first quarter 2007.
Selling, general and administrative expenses were $70.0 million in
the first quarter of 2008 compared to $59.0 million in the first
quarter of 2007. The increase was primarily attributable to fees
incurred under Equistar's receivables sales agreement with
Lyondell reflecting higher utilization of that facility.
Equistar had an operating loss of $164.0 million in the first
quarter of 2008 compared to operating income of $63.0 million in
the first quarter of 2007. The decrease of $227.0 million was
primarily due to lower product margins as sales prices did not
increase as rapidly as raw material costs.
Interest expense was $3.0 million in the first quarter of 2008
compared to $54.0 million in the first quarter 2007. The decrease
of $51.0 million was primarily due to a decrease in debt, for
which Equistar is the primarily obligor, of approximately
$2.0 billion from the first quarter of 2007 to the first quarter
of 2008. Equistar also had $4.0 million in related party interest
expense in the first quarter of 2008 and recognized $386.0 million
of interest expense on push-down debt.
Liquidity and Capital Resources
At March 31, 2008, Equistar's long-term debt, under which Equistar
is the primary obligor, was $130.0 million, and there were no
current maturities. In addition, Equistar recognized in its
financial statements a total of $17.7 billion of acquisition-
related or push-down debt for which it is a guarantor, but is not
the primary obligor. As a result of recognizing the push-down
debt in its financial statements, Equistar has a $9.8 billion
deficit in partners' capital; however, Equistar does not expect
that it will be required to fund a substantial portion of the
push-down debt.
At March 31, 2008, Equistar had cash on hand of $20.0 million, and
the total amount available to borrowers under both the
$1.0 billion Senior Secured Inventory-Based Revolving Credit
Facility and the $1.15 billion Accounts Receivable Securitization
Facility totaled approximately $300.0 million, giving effect to a
total minimum unused availability requirement of $100.0 million
under the Accounts Receivable Securitization Facility and the
senior secured inventory-based credit facility. In addition,
Equistar has up to $1.88 billion available under the loan
agreement with a Lyondell subsidiary.
Equistar said it believes that its cash balances, cash generated
from operating activities, funds from lines of credit and cash
generated from funding under various liquidity facilities
available to Equistar through LyondellBasell Industries will be
adequate to meet anticipated future cash requirements, including
scheduled debt repayments, necessary capital expenditures, and
ongoing operations.
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?2c2a
About Equistar Chemicals
Headquartered in Houston, Texas, Equistar Chemicals LP, a wholly
owned subsidiary of Lyondell Chemical Company (NYSE: LYO) --
http://www.lyondell.com/-- produces ethylene, propylene and
polyethylene in North America and ethylene oxide, ethylene glycol,
high value-added specialty polymers and polymeric powder.
* * *
Equistar Chemicals LP's 7.55% senior unsecured notes carry Moody's
Investor Service's B3 rating, Standard & Poor's Ratings Service's
B+ rating and Fitch Ratings' BB+ rating.
IRIDIUM LLC: Motorola Will Pay Nothing, Judge Rules
---------------------------------------------------
On May 20, 2008, the Hon. James M. Peck of the United States
Bankruptcy Court for the Southern District of New York approved a
global settlement of disputes between Motorola, Inc., and Iridium,
LLC. Approval of this settlement resolves in Motorola's favor, at
no out of pocket cost to Motorola, all pending claims against the
Motorola arising out of Iridium's bankruptcy proceedings.
As reported in the Troubled Company Reporter, Iridium LLC was
forced to file for bankruptcy in 1999 after it failed to attract
customers willing to pay as much as $7 a minute to make phone
calls with Iridium phones. In a suit filed in 2000, creditors
accused Motorola of causing Iridium to execute contracts that
brought billions of dollars in revenue to Motorola
but were unfair to Iridium. They also alleged that Motorola
structured its contracts with Iridium so that Motorola owned the
valuable computer software running the satellite system. That
suit had been delayed pending resolution of the debt-recovery
dispute between the two groups. Motorola has denied the
accusations, noting that it also is a creditor of Iridium and was
forced to write off $2.5 billion in related losses.
"This is a favorable outcome for Motorola," Peter Lawson,
executive vice president and chief counsel for Motorola, said.
"We have always been confident in our litigation position, and
this resolution -- ending the entire case at no out of pocket cost
to Motorola -- confirms our confidence was well-founded. We are
pleased to conclude this matter and resolve all of Motorola's
exposure to claims in the Iridium bankruptcy court."
"This case has been hard fought throughout its long run, against
skilled and committed opponents," Anne McClain Sidrys, a partner
in Kirkland & Ellis, trial counsel for Motorola, commented. "It
is gratifying to bring the matter to a close."
Since 2001, the court-appointed statutory creditors' committee has
been actively pursuing claims against Motorola for voidable
preference, fraudulent conveyance, breach of contract and breach
of fiduciary duty, and sought more than $4 billion in total
damages. With the global settlement, Motorola will pay nothing.
This favorable resolution follows Motorola's victory in a first
phase trial conducted by Judge Peck from October 2006 to June
2007, which focused on certain essential elements -- solvency and
capital adequacy -- of the committee's $3 billion preference and
fraudulent conveyance claims. Judge Peck ruled entirely in favor
of Motorola in August 2007, and in September 2007 entered judgment
for Motorola on those claims.
At the same time, Judge Peck also set the committee's remaining
claims for trial. Rather than proceed to an expensive and time-
consuming further trial, the parties conducted comprehensive
settlement discussions, including a mediation held in February
2008. The global settlement approved by Judge Peck was the result
of those discussions.
Headquartered in Bethesda, Maryland, Iridium LLC, was a global
telecommunications services company, which filed for Chapter 11
bankruptcy on Aug. 13, 1999. Iridium LLC terminated the
provision of commercial service on March 17, 2000. The U.S.
Bankruptcy Court for the Southern District of New York approved
use by the company of its secured lenders' cash collateral to
commence the wind down of its operations and the sale of its
assets. In December 2000, Dan Colussy, an aviation industry
veteran, purchased the assets of Iridium LLC, for about $25
million. Iridium Satellite LLC resumed service in March 2001,
with cheaper prices. Among other customers, the U.S. Department
of Defense has signed a multi-year contract for unlimited airtime
for up to 20,000 government users.
ETELOS INC: March 31 Balance Sheet Upside-Down by $6,645,000
------------------------------------------------------------
Etelos Inc.'s consolidated balance sheet at March 31, 2008, showed
$1,437,000 in total assets and $8,082,000 in total liabilities,
resulting in a $6,645,000 total stockholders' deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $1,239,000 in total current assets
available to pay $6,147,000 in total current liabilities.
The company reported a net loss of $2,232,000, on revenue of
$24,000, for the first quarter ended March 31, 2008, compared with
a net loss of $369,000, on revenue of $105,000, in the same period
in 2007.
Reverse Merger Transaction
On April 23, 2008, Etelos Incorporated, a Washington corporation
(Etelos-WA), merged with and into Tripath Technology Inc., a
Delaware corporation. Prior to the merger, Tripath Technology
Inc. had been a debtor-in-possession in a Chapter 11 bankruptcy
proceeding in the United States Bankruptcy Court for the Northern
District of California. In connection with the bankruptcy
proceeding, all assets of Tripath were transferred to a trustee
for liquidation and all liabilities of Tripath were discharged.
Accordingly, at the time of the merger, Tripath had no assets or
liabilities.
The surviving corporation in the merger changed its name to Etelos
Inc. and its fiscal year to Dec. 31. Etelos Inc., as the
surviving corporation, will conduct the business and operations
previously conducted by Etelos-WA.
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?2c35
About Etelos Inc.
Headquartered in San Mateo, Calif., Etelos Inc. (OTC BB: ETLO) --
http://www.etelos.com/-- provides software solutions that assist
organizations to effectively use Web Applications to accomplish
their goals.
FINANCIALCONTENT INC: Settles Jade Dispute to Avoid Bankruptcy
--------------------------------------------------------------
FinancialContent Inc. concluded negotiations with Jade Special
Strategies and agreed to settle claims for the full and immediate
repayment of senior secured convertible promissory notes in the
amount of $1,165,000 by assigning the promissory notes to
FinancialContent Services Inc., the company's wholly owned
subsidiary, and by relinquishing ownership of FCS.
On March 15, 2008, the company had received a letter from Jade
Special Strategies demanding full and immediate repayment of the
promissory notes or alternatively the transfer of the assets of
FCS.
To date, the company had been unable to pay the promissory notes
by securing new financing or by selling the assets under terms
that were acceptable to all parties involved. In order to avoid
having the company placed into involuntary bankruptcy and
prolonging the lengthy and costly process of liquidating the
assets and distributing the proceeds, the company reached a
settlement by agreeing to assign the responsibility and ownership
of assets and debt to a related party that was satisfactory to
Jade Special Strategies.
While the settlement is expected to address the claims made by
Jade Special Strategies and to permit the company to continue
operating as a business entity, there is no assurance that the
settlement will enhance the value of the company's remaining
subsidiaries and assets and the value of its securities.
The settlement has been actualized in the form of a stock purchase
agreement along with an assignment and assumption and release
agreement which are expected to take effect within the next 30
days pursuant to the consents or authorizations of principal
shareholders and filed in accordance with regulations set forth by
the U.S. Securities and Exchange Commission.
For more information, please review the company's pre-14C filing
with the U.S. Securities and Exchange Commission at
http://www.sec.gov
About FinancialContent
Foster City, California-based FinancialContent Inc. (OTC: FCON) --
http://www.financialcontent.com/-- operates through two of its
wholly owned subsidiaries: FinancialContent Services Inc. and
StreetIQ.com Inc. FinancialContent Services, specializes in the
integration and delivery of financial data and tools into
Websites, corporate intranets and print media. From scrolling
tickers and stock charts to securities and exchange commission
(SEC) filings, corporate news and much more, it offers a complete
collection of market data that can be seamlessly integrated into
Websites. It packages financial data into discrete, manageable,
interactive content modules that are delivered through its Studio
platform. The content may be static or dynamically categorized,
filtered, searchable, and enabled for Web or wireless alerts. The
content may also be personalized by individuals or customized by
content administrators.
FORD MOTOR: Plans to Cut Truck Production in Michigan & Louisville
------------------------------------------------------------------
Ford Motor Co.'s Michigan and Louisville truck facilities will
close and cease producing vehicles in June and July, The
Associated Press, citing people familiar with the matter, reports.
AP relates that automakers usually shutter their car factories in
the U.S. for two weeks in July to retool for the next model year.
These tentative shutdowns will extend the normal retooling
closures.
According spokeswoman Angie Kozleski, Ford intends to reduce
production of big pickup trucks and sport utility vehicles due to
low demand and high gas prices, AP relates.
As reported in the Troubled Company Reporter on May 2, 2008,
higher gas prices are accelerating the industry-wide shift from
trucks and traditional sport utility vehicles to cars and
crossovers. At Ford, April sales for sport utility vehicles were
36% lower than a year ago and trucks were 19% lower.
In March 2008, Ford disclosed plans to further align its capacity
with demand at four U.S. manufacturing facilities as it works to
return its North American operations to profitability by 2009. In
January 2008, Ford planned to implement its cost reduction plan,
including plant closures and job cuts. The car company, intended
to close 16 plants and cut nearly 45,000 jobs in a bid to return
its North American automotive operations to profits.
The plan, which spans a five-year time frame, proposed to reduce
the number of vehicle platforms the company uses around the world
and increase the number of shared parts. Ford was set to spend
$17 billion cash over the next three years in restructuring and
its automotive operations.
AP discloses that Ford is intent in creating a smaller, more fuel-
efficient version of its best-selling F-150 pickup that is
expected to be launched in 2011, according unnamed sources.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region.
In Europe, the company maintains a presence in Sweden, and the
United Kingdom. The company also distributes its brands in
various Latin American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on March 28, 2008,
Standard & Poor's Ratings Services said that the ratings and
outlook on Ford Motor Co. and Ford Motor Credit Co. (both rated
B/Stable/B-3) were not affected by Ford's announcement of an
agreement to sell its Jaguar and Land Rover units to Tata Motors
Ltd. (BB+/Watch Neg/--) for $2.3 billion (before $600 million of
pension contributions by Ford for Jaguar-Land Rover).
As reported in the Troubled Company Reporter on Feb. 15, 2008,
Fitch Ratings affirmed the Issuer Default Ratings of Ford Motor
Company and Ford Motor Credit Company at 'B', and maintained the
Rating Outlook at Negative.
As reported in the Troubled Company Reporter on Nov. 19, 2007,
Moody's Investors Service affirmed the long-term ratings of Ford
Motor Company (B3 Corporate Family Rating, Ba3 senior secured,
Caa1 senior unsecured, and B3 probability of default), but changed
the rating outlook to Stable from Negative and raised the
company's Speculative Grade Liquidity rating to SGL-1 from SGL-3.
Moody's also affirmed Ford Motor Credit Company's B1 senior
unsecured rating, and changed the outlook to Stable from Negative.
These rating actions follow Ford's announcement of the details of
the newly ratified four-year labor agreement with the United Auto
Workers.
FOREST OIL: Moody's Rates $250MM Sr. Notes B1, Outlook Positive
---------------------------------------------------------------
Moody's Investors Service assigned a B1 (LGD 5; 72%) rating to
Forest Oil's (FST) pending $250 million 11-year senior unsecured
notes and affirmed its existing Ba3 corporate family, Ba3
probability of default rating, existing B1 (LGD 5; 72%) senior
unsecured note, and SGL-2 speculative grade liquidity ratings. The
note ratings are assigned under Moody's Loss Given Default
notching methodology. The rating outlook is moved up from stable
to positive. The outlook assumes that FST will not conduct
leveraging acquisitions.
Note proceeds along with working capital will repay at maturity
FST's $265 million of 8% Senior Notes due June 15, 2008. Liquidity
is good, with well over $1 billion in undrawn revolver
availability expected throughout the year and very strong bank
covenant coverage.
Moody's changed the rating outlook from stable to positive,
reflecting a more bondholder friendly profile, favorable pro-forma
production trends, strong organic reserve replacement volumes and
drillbit finding and development costs for the current ratings, a
currently acceptable leverage range for the ratings after
digesting the Houston Exploration acquisition, and a potential
pause before additional leveraging acquisitions. The positive
outlook also reflects FST's relatively competitive 2007 year
reserve replacement cost trends, greater production and prospect
portfolio risk diversification, and the further high grading of
the reserve base and debt reduction with divestitures.
The ratings are restrained by increased leverage due to FST's
heavy capital spending plan and debt funded closing this quarter
of its $281 million acquisition of 47,000 acres of lease rights in
FST's Ark-La-Tex operating region; FST's medium reserve and
production scale for the ratings; its Ba range metrics for unit
full-cycle costs, reserve replacement costs, and unit cash margin
coverage of reserve replacement costs (leveraged full-cycle
ratio); a need to see competitive drillbit reserve replacement
costs with the stepped up rate of capital spending, and inherent
event risk.
Over the last several years, FST has been shifting its strategy
away from material acquisitions towards a focus on heavy organic
spending to accelerate development and production of its existing
unconventional tight gas and conventional natural gas plays. This
follows a period of major portfolio transformations that involved
proportionately major acquisitions and divestitures as the firm
moved away from its historic roots in short-lived reserves in the
Gulf of Mexico and towards longer-lived onshore properties. Aside
from the leverage incurred while mounting that transition, the
asset base is now more bondholder friendly.
Forest recently completed the previously announced $281 million
acquisition of approximately 69,000 gross acres (47,000 net acres)
of producing assets located primarily in its Ark-La-Tex core
areas, with hoped for Haynesville Shale potential. The acquisition
adds an additional 500 identified drilling locations in East Texas
and North Louisiana to the company's drilling inventory in the
Ark-La-Tex area. The assets produced approximately 13 MMcfe/d in
2007 and contained an estimated 110 Bcfe of estimated proved
reserves.
Forest has now reestablished itself primarily as an exploitation
company and the acquisition concurs with the long established
Forest strategy of acquiring low risk producing assets and
creating value by improving operational efficiency drawing upon
FST's technical expertise in core producing areas. The Ark-La-Tex
acquisition primarily consists of the three main fields of
Jewett/McBee area, Woodardville field and Overton field. The main
geological formation target is the Cotton Valley tight sandstone
where FST has had long time exposure in neighboring areas. FST is
planning to expand its horizontal drilling and exploitation
expertise in Cotton Valley to the Travis Peak zones in the area.
The area also provides exposure to the Haynesville shale resource
play.
Forest is beginning to develop greater expertise in the resource
plays particularly with the recent success in the Utica Shale find
in the St. Lawrence Lowlands in Quebec. However, the move by FST
into the capital extensive resource plays where economical success
or failure can take years to materialize could still result in
substantial leverage increase impairing FST's short term financial
performance.
FST has announced a 26% increase in capital expenditure spending
for 2008 compared to previous guidance and, depending on
ultimately realized 2008 prices, may outspend cash flow modestly.
Forest continues to be acquisitive and recently increased its
revolver borrowing commitments from $1 billion to $1.8 billion.
Moody's anticipates that the revolver may be reduced to as low as
$1.4 billion after the note offering and subsequent asset sales.
The company has indicated it intends to fund the capital
expenditure deficit with future asset divestitures.
To be upgraded, FST will need to sustain favorable sequential
quarter production trends (pro-forma for any debt reducing
divestitures); modestly reduce leverage on proven developed (PD)
reserves, on total reserves, and on production; commit to support
further significant acquisitions with suitable equity funding; and
continue to demonstrate successful organic reserve replacement
trends at competitive costs.
Per Moody's Exploration and Production methodology, FST maps to a
Ba3 rating category. This reflects the firm's Ba reserve and
production scale and diversification, a Ba range leveraged full-
cycle ratio (cash-on-cash returns), a Ba range cash flow coverage
of debt after deducting sustaining capex from cash flow, and
competitive reserve replacement cost trends. The Ba metrics are
currently offset in the model by Caa rating range leverage on PD
and total reserves, total full-cycle costs, and reserve
replacement costs (though improving).
Forest has 3-year all sources cost of approximately $16.58/boe and
a 3-year drillbit cost of approximately $13.33/boe. While
historically high, we note that FST's 2007 reserve replacement
costs were stronger than previous years, and competitive with
sector 2007 costs. Total full-cycle costs are estimated to be in
the low-mid $30/boe range. Forest has a production cost of
approximately $8.39/boe (pro-forma for the Ark-La-Tex
Acquisition). G&A/boe, including significant capitalized G&A
expense, is estimated to be approximately $4.21/boe and interest
expense/boe to be approximately $4.54/boe.
Adjusted pro-forma leverage of approximately $8.35/boe of PD
reserves and $9.40/boe of total proven reserves (adding SFAS 69
future development costs to debt) remains high and maps to the Caa
and B range respectively. Though leverage may come down with
further divestitures, we believe it will remain elevated relative
to the current ratings. FST currently has approximately $608
million of secured debt under its upsized $1.8 billion revolver
and approximately $1.4 billion of senior unsecured notes (pro-
forma for new note offering). Future development costs are
expected to be approximately $1.3 billion prior to further assets
divestitures.
Forest Oil is an independent oil and gas exploration and
production company headquartered in Denver, Colorado.
FOREST OIL: S&P Lowers Senior Unsecured Notes Rating to B+
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
senior unsecured notes due 2019 of Forest Oil Corp. (BB-
/Positive/--) to 'B+' from 'BB-', and lowered the recovery rating
to '5', indicating its expectation for modest (10%-30%) recovery
in the event of a payment default, from '4'. The action followed
the announcement that Forest will add a proposed $250 million to
the facility, bringing the total to $1 billion. Proceeds from the
notes will be used primarily to repay $265 million in existing
notes that mature later this year. As of March 31, 2008, Denver-
based Forest had $1.8 billion in debt.
At the same time, S&P affirmed Forest's 'BB-' corporate credit
rating and revised the outlook to positive from stable. The
positive outlook reflects the company's improved capital
efficiency measures, better-than-average cost structure, and
prospects for solid production growth, as well as the recent
increase in Standard & Poor's natural gas and crude oil pricing
assumptions.
"As a result of the significant increase in Forest's borrowing
capacity under its senior secured revolving credit facility, there
is less residual value available for unsecured creditors in the
event of a payment default," said Standard & Poor's credit analyst
David Lundberg.
Forest is one of the larger speculative-grade independent
exploration and production companies S&P rates. Its producing
properties are well diversified across onshore Canada and the U.S.
GAINEY CORP: S&P Cuts Long-Term Corporate Credit Rating to CC
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Gainey
Corp., including lowering the long-term corporate credit rating to
'CC' from 'CCC+'. All ratings remain on CreditWatch with negative
implications, where they were placed on April 30, 2008.
"We lowered our rating on the Grand Rapids, Mich.-based trucking
company's $25 million secured revolver and $210 million secured
term loan to 'CC' from 'B-', the same level as the corporate
credit rating on Gainey. The rating remains on CreditWatch. We
revised the recovery rating on that debt to '4' from '2',
indicating that lenders can expect average (30%-50%) recovery in
the event of a payment default," S&P said.
"The rating actions reflect Gainey's ongoing difficulty meeting
payment obligations on a timely basis, complying with covenants,
and concerns over the company's earnings performance and liquidity
position over the next six months," said Standard & Poor's credit
analyst Anita Ogbara. Gainey is currently operating under a
forbearance period from its banks that expires on
June 2, 2008. As of March 31, 2008, the company was not in
compliance with its bank covenants. However, during the
forbearance period, covenant compliance has been waived.
"We will monitor Gainey's financial position and evaluate any
changes as additional information becomes available," S&P said.
GENERAL DATACOMM: March 31 Balance Sheet Upside-Down by $30.6 Mil.
------------------------------------------------------------------
General Datacomm Industries Inc.'s consolidated balance sheet at
March 31, 2008, showed $10,329,000 in total assets and
$41,008,000 in total liabilities, resulting in a $30,679,000 total
stockholders' deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $6,717,000 in total current assets
available to pay $35,751,000 in total current liabilities.
The company reported net income of $1,517,000 for the second
quarter ended March 31, 2008, versus net income of $3,110,000 in
the comparable period ended March 31, 2007.
Revenues for the three months ended March 31, 2008, decreased
$992,000, or 32.4%, to $2,066,000 from $3,058,000 reported for the
three months ended March 31, 2007. Product revenues decreased
$833,000, or 33.5%, while service revenues decreased by $159,000,
or 27.9%.
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?2c34
Going Concern Doubt
Eisner LLP, in New York, expressed substantial doubt about General
DataComm Industries Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Sept. 30, 2007. The auditing firm reported that
the company has both a working capital and stockholders' deficit
at Sept. 30, 2007, and has no current ability to obtain new
financing.
The company has no current ability to borrow additional funds. It
must, therefore, fund operations from cash balances, cash
generated from operating activities and any cash that may be
generated from the sale of non-core assets such as real estate and
others. The company has $28,306,954 of debentures including
accrued interest which mature on Oct. 1, 2008, which it is
presently unable to pay.
About General DataComm
Based in Naugatuck, Connecticut, General DataComm Industries Inc.
(Other OTC: GNRD.PK) -- http://www.gdc.com/-- provides secure,
NEBS-compliant networking for telcos, governments and businesses.
GDC's solutions help customers to bridge technologies, maximize
their investments in existing voice and data networks, and
transition to the newest network architectures.
GDC's product offerings enable legacy and DSL network access;
bandwidth management, multiprotocol label switching (MPLS), voice
over IP (VoIP), Ethernet, power over Ethernet (PoE), and wireless
networking, and are supported by services for network
installation, maintenance, operations, repair, enterprise security
management and complete network outsourcing.
GENERAL MOTORS: S&P Ratings Still on CreditWatch Pending UAW Vote
-----------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on General
Motors Corp. (GM), American Axle & Manufacturing Holdings Inc.
(Axle), Lear Corp., and Tenneco Inc. remain on CreditWatch with
negative implications, pending the outcome of a vote on the
tentative labor agreement between the United Auto Workers (UAW)
and Axle, and its review of the four companies' financial
profiles. The ratings on all four companies were placed on
CreditWatch negative on March 17, sparked by a work stoppage at
many of Axle's UAW-represented plants in New York and Ohio. Axle
and the UAW announced the tentative agreement on a new labor
contract, but did not disclose details.
Local unions were scheduled to vote on the agreement beginning
Monday and continuing through this week. If ratified, the new
four-year contract will end the strike, which began Feb. 25 and
led to reduced production of light trucks by GM over the past few
months.
According to media reports, under the tentative agreement, the UAW
has accepted a lower all-in wage and benefit package competitive
with that offered by the UAW at other U.S. auto supplier
competitors of Axle. In exchange, Axle is reportedly offering buy-
outs of up to $140,000 to reduce headcount and
buy-downs of up to $105,000 to ease the transition for remaining
UAW workers to the new wage level. (GM previously announced it had
agreed to fund $200 million of the amount needed for the wage
transition and buyouts.) Axle also reportedly will close two
forging plants under the agreement.
"We intend to resolve each company's CreditWatch listing within
the next two weeks," said Standard & Poor's credit analyst
Lawrence Orlowski. "We'll focus on the strike's direct effect on
liquidity, as well as the prospective performance of each company
for the remainder of 2008 and into 2009. We expect to resolve the
CreditWatch listings on Lear and Tenneco first because their
first-quarter results indicate that they have been less affected
by the strike," he continued.
GMAC COMMERCIAL: S&P Cuts Rating on Class N Certificates at D
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 10
classes of commercial mortgage pass-through certificates from GMAC
Commercial Mortgage Securities Inc.'s series 2004-C3.
At the same time, S&P affirmed its ratings on 11 classes from the
same series.
The downgrades reflect anticipated credit support erosion upon the
eventual resolution of the former fifth-largest loan exposure,
which is now classified as real estate owned (REO) and with the
special servicer. The affirmed ratings reflect credit enhancement
levels that provide adequate support through various stress
scenarios.
The Nashville Multifamily portfolio represents the fifth-largest
exposure in the transaction, with a total exposure of more than
$57.9 million. The assets were transferred to the special servicer
in May 2006 due to imminent default. An appraisal reduction amount
(ARA) of $20.8 million was applied to the loans in late September
2007. Three of the four properties are currently in contract to be
sold. The special servicer received a letter of intent earlier
this year regarding the sale of the fourth property; however, the
transaction was not completed and the asset remains unsold.
Standard & Poor's expects a significant loss upon the liquidation
of the Nashville Multifamily portfolio.
The other specially serviced asset is the North Houston Medical
Plaza loan, which is secured by an 85,471-sq.-ft. medical office
property in Houston, with an unpaid principal balance of $9.0
million and additional advances, including interest thereon,
totaling $151,394. The loan was transferred to the special
servicer in November 2006 due to imminent default. The property
was operating under a forbearance agreement until May 2008 and a
foreclosure sale is expected in June 2008.
There are 22 loans on the watchlist totaling $351.4 million,
including the largest exposure in the pool, the Houston Center.
The 21 other loans on the watchlist total $201.4 million (17%) and
include one of the top 10 exposures.
The Independence Tower loan is the eighth-largest loan in the pool
and has an outstanding balance of $34.8 million (3%). The loan is
secured by a 302,992-sq.-ft. office property in Chicago. The loan
appears on the watchlist because the property was 73% occupied as
of year-end 2007, down from 94% at year-end 2006. The property
reported a year-end 2007 debt service coverage (DSC) of 1.32x.
Fifteen loans ($126.2 million, 10.0%) have reported DSCs of less
than 1.10x. These loans are on the watchlist primarily because of
low occupancies or declines in DSC since issuance.
As of the May 12, 2007, remittance report, the collateral pool
consisted of 88 loans with an aggregate trust balance of $1.200
billion, compared with 92 loans totaling $1.251 billion at
issuance. The master servicer, Capmark Finance Inc., reported
financial information for 95% of the nondefeased loans.
Sixty-seven percent of the servicer-provided information was full-
year 2007 data. Using this information, Standard & Poor's
calculated a weighted average DSC of 1.75x, up from 1.63x at
issuance. All of the loans in the pool are current except for the
REO assets. In addition to the REO assets, there is one asset with
the special servicer, CWCapital Asset Management LLC. To date, the
trust has not experienced any principal losses.
The top 11 exposures secured by real estate have an aggregate
outstanding balance of $562.7 million (467) and a weighted average
DSC of 1.92x, up from 1.84x at issuance. This calculation excludes
the former fifth-largest asset, which is with the special
servicer. Standard & Poor's reviewed property inspections provided
by the master servicer for 10 of the assets underlying
the top 11 exposures. One property was characterized as "poor,"
three properties were characterized as "fair," two properties were
characterized as "excellent," and the remaining collateral was
characterized as "good."
Credit characteristics for the Houston Center and the Union
Station loans were consistent with those of investment-grade
obligations at issuance. The credit characteristics of the Houston
Center loan are no longer consistent with those of an investment-
grade obligation. Details of these two loans are
as follows:
-- The largest exposure in the pool, the Houston Center
loan, has a trust balance of $150.0 million (13%) and a
whole-loan balance of $269.7 million. The pari passu,
interest-only loan is secured by the fee interest in a
3.0-million-sq.-ft. office property in Houston. The loan
is on the master servicer's watchlist because a small
fire damaged the 16th floor of Tower 2 on July 31, 2007.
The damage is being repaired and the work is expected to
be completed in the near future. The loan will be removed
from the watchlist once the repairs are completed.
Occupancy was 94% as of Dec. 31, 2007, and the year-end
2007 DSC was 2.02x. Standard & Poor's adjusted value for
this loan is down 14% since issuance primarily because of
higher operating expenses.
-- The second-largest exposure in the pool, the Union
Station loan, has a balance of $57.0 million (5%). The
loan is secured by the leasehold interest in a
383,350-sq.-ft. retail and office property in Washington,
D.C. The collateral is part of the Union Station train
station, which serves as the main commuter hub for the
Washington, D.C., area and is one of the largest
tourist attractions in the city. For the period ending
Sept. 30, 2007, the DSC was 2.26x and occupancy was 98%.
Standard & Poor's adjusted value for this loan is
comparable to its level at issuance.
Standard & Poor's stressed the loans on the watchlist and the
other loans with credit issues as part of its analysis. The
resultant credit enhancement levels support the lowered and
affirmed ratings.
RATINGS LOWERED
GMAC Commercial Mortgage Securities Inc.
Commercial mortgage pass-through certificates series 2004-C3
Rating
Class To From Credit enhancement (%)
----- ---------------- ----------------------
D A- A 8.47
E BBB+ A- 7.43
F BBB BBB+ 6.13
G BBB- BBB 5.21
H B+ BB- 3.52
J B- B 3.26
K CCC+ B- 2.74
L CCC CCC+ 2.35
M CCC- CCC 1.99
N D CCC- 1.69
RATINGS AFFIRMED
GMAC Commercial Mortgage Securities Inc.
Commercial mortgage pass-through certificates series 2004-C3
Class Rating Credit enhancement (%)
----- ------ ----------------------
A-1A AAA 20.86
A-2 AAA 20.86
A-3 AAA 20.86
A-4 AAA 20.86
A-AB AAA 20.86
A-5 AAA 20.86
A-J AAA 13.95
B AA 11.34
C AA- 10.17
X-1 AAA N/A
X-2 AAA N/A
N/A Not applicable.
GMAC LLC: Agrees to Pay Salaries of Aloha Air's Cargo Employees
---------------------------------------------------------------
GMAC LLC, secured lender for Aloha Airlines Inc. and its debtor-
affiliates, will pay the salaries of the debtors' cargo division
workers, CNNMoney.com reported.
The payment will cover the employees' salaries for services done
within the last two weeks of April. GMAC said that it will cover
worker wages for that period, but added they will have to wait for
their back pay, CNNMoney.com related.
The Debtors converted their bankruptcy case to Chapter 7
liquidation proceedings after those two weeks.
According to GMAC, funds for back pay will be drawn from the
proceeds of the debtors' sale of its cargo business to Saltchuk
Resources Inc. There is still uncertainty as to whether GMAC will
cover the employees other benefits, CNNMoney.com said.
GMAC is willing to pay the cargo workers despite it not being
legally obligated, according to CNNMoney.com.
About Aloha Airlines
Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines
Inc. -- http://www.alohaairlines.com/-- and its affiliates
are
carriers that fly passengers and freight to Hawaii's five major
airports, as well as to half a dozen destinations in the western
U.S. They operate a fleet of about 20 aircraft, all Boeing 737s,
including three configured as freighters.
This is the airline's second bankruptcy filing. Aloha filed for
Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No.
04-03063), and emerged from Chapter 11 bankruptcy protection in
February 2006.
The company and its affiliates filed again for Chapter 11
protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08-
00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven
Singerman, Esq., at Berger Singerman P.A., and David C. Farmer,
Esq., represent the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they listed
estimated assets and debts of $100 million to $500 million.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide. Cerberus Capital
Management LP bought 51% GMAC LLC stake from General Motors Corp.
on December 2006.
* * *
As reported in yesterday's Troubled Company Reporter, Fitch
Ratings has downgraded the long-term Issuer Default Rating
of GMAC LLC and related subsidiaries to 'BB-' from 'BB'. Fitch
has also downgraded GMAC's unsecured long-term ratings to 'B+'
from 'BB-', reflecting the potential for reduced recovery in a
default scenario should the company encumber assets.
Additionally, Fitch has affirmed the 'B' short-term ratings. The
Rating Outlook remains Negative.
As reported in the Troubled Company Reporter on April 25, 2008,
Moody's Investors Service downgraded GMAC LLC's senior rating to
B2 from B1; the rating remains on review for further possible
downgrade. This action follows Moody's rating downgrade of ResCap
LLC, GMAC's wholly owned residential mortgage unit, to Caa1 from
B2.
GO FIG: Judge Rendlen Converts Case to Chapter 7 Liquidation
------------------------------------------------------------
The Hon. Charles E. Rendlen, III of the United States Bankruptcy
Court for the Eastern District of Missouri converted the Chapter
11 bankruptcy cases of Go Fig Inc. and its debtor-affiliates to
Chapter 7 liquidation proceedings.
Bruce E. Strauss at Merrick Baker & Strauss P.C. in Kansas City,
Missouri, will serve as interim Chapter 7 Trustee for the Debtors'
cases. Mr. Strauss will investigate the Debtors' uses of funds
and determine any fraudulent transfers.
Judge Rendlen finds that the Debtors have no business operations,
generates no income, and have little known assets.
On April 22, 2008, GE Money Bank FSB asked the Court to convert
the Debtors' cases on concern that they will not be unable to
propose a Chapter 11 plan of reorganization. GE Money has a
$25 million in claims against the Debtors.
Prior to the Debtors' bankruptcy filing, GE Money lends cash to
the Debtors and certain operating subsidiaries to fund their
business operations. Some of the funds have been transferred to
ALDC St. Louis LLC, an entity merged into Go Fig Inc. in 2007,
according to GE Money.
In 2007, Bessemer Venture Partners and it affiliated entities made
a $12 million equity investment in the Debtors, under which the
proceeds were used to pay off a $3 million equity interest of
Robert Moore, a former principal of the Debtors.
GE Money further says that the conversion will reduce
administrative expenses of various professional advisors to the
Debtors and maximize recoveries for the benefit of all creditors.
About Go Fig.
Headquartered in Phoenix, Arizona, Go fig., Inc. fka Advance Lipo
Dissolve Centers -- http://www.fig.com/-- provides medically
supervised body-shaping services, operating and managing 15
centers across the U.S. It employs more than 500 people. The
company and 11 of its affiliates filed for Chapter 11 protection
on Jan. 7, 2008 (Bankr. E.D. Mo. Lead Case No. 08-40116). Spencer
P. Desai, Esq., at Capes Sokol Goodman and Sarachan PC represents
the Debtors in their restructuring efforts. The U.S. Trustee for
Region 13 appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. Peter D. Kerth, Esq., at
Gallop, Johnson & Neumann L.C. represents the Committee in
these cases. When the Debtors filed for protection from their
creditors, they listed estimated assets and debts of $1 million
to $100 million.
HERBST GAMING: S&P Cuts Corporate Credit Rating to D
----------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Herbst Gaming Inc. to 'D' from 'CCC'. In addition, S&P
lowered its rating on the company's 7% senior subordinated notes
due 2014 to 'D' from 'CC'. These ratings were removed from
CreditWatch, where they were placed with negative implications
April 2, 2008.
The rating on Herbst's 8.125% senior subordinated notes due 2012
was lowered to 'C' from 'CC'. Also, S&P lowered the rating on
Herbst's senior secured credit facilities to 'CCC-' from 'B-'; the
recovery rating on the facilities was revised to '3', indicating
the expectation for meaningful recovery (50% to 70%) in the event
of a payment default, from '1'. The issue-level ratings on the
8.125% notes and credit facilities remain on
CreditWatch with negative implications.
The rating actions stem from the company's announcement on
May 16, 2008 that it did not make the May 15, 2008 interest
payment on the 7% notes, and that it would not make the June 1,
2008 interest payment on the 8.125% notes. Herbst has received a
payment blockage notice from the administrative agent under the
amended credit agreement, which states that no payments can be
made with respect to any of its subordinated notes as a result of
an event of default under its amended credit agreement. Herbst has
a 30-day grace period in which to make these interest payments
before it would be an event of default under the indentures.
"While a payment default has not occurred relative to the legal
provisions of the notes, we consider a default to have occurred
when a payment related to an obligation is not made, even if a
grace period exists, when the nonpayment is a function of the
borrower being under financial stress--unless we are confident
that the payment will be made in full during the grace period,"
explained Standard & Poor's credit analyst Melissa Long. "We
expect to lower the rating on the 8.125% senior subordinated notes
when Herbst misses the June 1, 2008 interest payment."
Herbst also stated that bank lenders agreed to forbear from
exercising certain rights and remedies as a result of the existing
defaults and other possible defaults under its amended credit
agreement through Sept. 30, 2008 (or earlier upon the occurrence
of events of default other than those specified in the forbearance
and standstill agreement, or a breach of the forbearance
agreement). Herbst continues to review financial and strategic
alternatives, which potentially include a recapitalization,
refinancing, restructuring, or reorganization of its obligations,
or a sale of some or all of its businesses.
HOLMES BIOPHARMA: Capital Deficiency Disrupts Neb. Operation
------------------------------------------------------------
Holmes Biopharma, Inc. said that its clinical research operations
in Omaha, Nebraska have been disrupted due to a working capital
deficiency. The Company's operating subsidiary has created a
strategy to continue operations in Kiev, Ukraine and Toronto,
Canada.
The Company has for several months been attempting to refinance
its clinical research subsidiary. Additional funding is needed
because of operating losses incurred during its start up period
combined with increased overhead created by strong growth in
sales. Weak equity and banking conditions worldwide have made this
process difficult and there is no guarantee that a refinancing is
possible in order to allow operations in Omaha to continue.
The Company will provide more information as it becomes available.
Based in Scottsdale, Arizona, Holmes Biopharma, Inc. --
http://www.holmesbiopharma.com-- through its subsidiary, Qualia
Clinical Services, Inc., operates as a contract research company.
It offers various services for the design, placement, performance,
and management of clinical trial programs. The company's service
capabilities include design of protocols, operations manuals,
identification and recruitment of trial investigators, initiation
of sites, monitoring, site visits and collection of data,
interpretation of trial results, and report preparation. It offers
services to support research and development of biotechnology,
pharmaceutical, and medical device companies in the United States
and Canada. The company was founded in 1998.
The company's consolidated balance sheet for the year ended Dec.
31, 2007 showed total assets of $2,922,130 and total liabilities
of $2,829,202.
HOME INTERIORS: Names Robin Crossman as New CEO
-----------------------------------------------
Home Interiors & Gifts, Inc., named Robin Crossman as its new
President and Chief Executive Officer. In this role, she will have
oversight of all day-to-day operations, and she will work with the
Board of Directors to execute the strategic direction for the
company as it reorganizes under and emerges from Chapter 11
protection.
Ms. Crossman brings a 20-year track record of success in the
direct selling business as an entrepreneur and executive in a wide
range of leadership positions. Most recently, she served as
President and Co-Chief Operating Officer of SUZANNE(TM), the
direct selling company she conceived and launched with Suzanne
Somers. Prior to starting SUZANNE, Ms. Crossman spent 14 years in
management at multilevel marketing leader Amway, where she held a
number of executive positions with responsibility for marketing,
strategy, brand management and business development. While there,
she transformed the company's smallest, least profitable brand
into its largest, most profitable line, and the first line to
reach sales of over one billion dollars.
She also introduced and championed new lines in the U.S. and in
international markets, and she led multiple strategic partnership
and licensing initiatives. Previously, Ms. Crossman also served as
President and Chief Innovation Officer for IdeaSphere Innovations.
IdeaSphere purchased Twinlab out of bankruptcy and successfully
revitalized its brands, including Twinlab, Ripped Fuel, Nature's
Herbs and Alvita teas.
"Home Interiors & Gifts has a rich heritage and strong reputation
as a direct selling company, and I'm looking forward to rolling up
my sleeves and getting to work," Ms. Crossman said. "I have deep
respect for the vision and philosophy of Mary Crowley, who started
this company more than 50 years ago with a strong faith-based
culture, and I intend to lead Home Interiors back to the future'
in a way that will honor her legacy."
Ms. Crossman will leverage her extensive experience in building
strong brands, creating strategic alliances and cultivating a "can
do" organizational spirit as she works with the company's nearly
100,000 Decorating Consultants and Directors across North America
and Puerto Rico.
"We are very pleased to have Robin join the team at Home Interiors
& Gifts," said Pat Daugherty, the company's Chairman of the Board.
"She is a proven visionary and leader with a personal,
enthusiastic approach that is contagious and motivating. Robin has
the perfect combination of direct selling experience, drive,
creativity and leadership skills to guide the company both during
reorganization and once we emerge from Chapter 11."
Home Interiors & Gifts is conducting normal business operations
and is continuing to serve its customers while focusing on
returning the business to profitability in the next few months.
About Home Interiors
Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc.
-- http://www.homeinteriors.com/-- manufactures, imports and
distributes indoor and outdoor home decorative accessories. The
company and six of its affiliates filed for Chapter 11 protection
on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.08-31961).
Andrew E. Jillson, Esq., Cameron W. Kinvig, Esq., Lynnette R.
Warman, Esq., and Michael P. Massad, Jr., Esq., at Hunton &
Williams, LLP, represent the Debtors in their restructuring
efforts. The U.S. Trustee for Region 6 has not appointed any
creditors to serve on an Official Committee of Unsecured Creditors
to date. When the Debtors file for protection against their
creditors, they listed assets and debts between $100 million and
$500 million.
HOVNANIAN ENTERPRISES: Fitch Holds Junk Rating on Preferred Stock
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB-/RR1' rating on Hovnanian
Enterprises, Inc.'s (NYSE: HOV) $600 million 11.5% senior secured
notes due 2013. In addition, Fitch affirms these ratings for HOV:
-- Issuer Default Rating (IDR) at 'B-';
-- Senior secured revolving credit facility at 'BB-/RR1';
-- Senior unsecured notes at 'B-/RR4';
-- Senior subordinated notes at 'CCC/RR6';
-- Series A perpetual preferred stock at 'CCC-/RR6'.
HOV's Rating Outlook is Negative.
Fitch's Recovery Rating (RR) of '1' on HOV's secured revolving
credit facility and senior secured second-lien notes indicates
outstanding (90%-100%) recovery prospects for holders of these
debt issues. The 'RR4' on HOV's senior unsecured notes indicates
average (30%-50%) recovery prospects for holders of these debt
issues. HOV's exposure to claims made pursuant to performance
bonds and the possibility that part of these contingent
liabilities would have a claim against the company's assets were
considered in determining the recovery for the unsecured debt
holders. The 'RR6' on HOV's senior subordinated notes and
preferred stock indicates poor recovery prospects (0%-10%) in a
default scenario. Fitch applied a liquidation value analysis for
these RRs.
HOV issued an aggregate principal amount of $600 million of 5-year
senior secured notes in a private placement. The company also
entered into an amendment to its revolving credit facility which
lowers the total commitments from $900 million to $300 million,
increases the amount of the collateral, and substantially
eliminates all but one of the maintenance covenants. The notes are
secured on a second-priority basis on substantially all the assets
owned by the company and guarantors of the notes to the extent
such assets secure obligations under the company's new revolving
credit facility. The company intends to use the net proceeds from
the offering of the notes to repay amounts outstanding under its
existing revolver ($325 million outstanding as of 1/31/08) and for
general corporate purposes.
In addition to the new debt offering, the company also recently
completed the issuance of 14 million shares at a price of $9.50
per share and net proceeds of $126 million. The company has
granted the underwriters an option to purchase up to an additional
2.1 million shares within a 30-day period to cover over-
allotments, if any. The combination of the debt and equity
issuance, together with the strong cash flow expected for the
second half of the year, should provide the company with
sufficient liquidity to fund working capital needs without
reliance on the revolving credit facility. While the company's
total debt position increases by approximately $275 million, HOV
is able to term out the outstandings under the revolver and will
have substantial cash on hand and a less restrictive covenant
structure which enhances the company's liquidity position.
The ratings and Outlook reflect the difficult U.S. housing
environment, current and expected negative trends in HOV's
operating margins and meaningful deterioration in credit metrics,
especially interest coverage, debt/EBITDA ratios and tangible net
worth. HOV was slower than most in braking its growth.
Consequently the inventories, although now starting to come down,
are still above comfort levels and debt leverage remains above the
company's targeted levels. While cash flow from operations only
totaled $62 million for all of its fiscal 2007, HOV generated $357
million of cash from operations during its fourth quarter,
allowing the company to pay down debt by $390 million from the
third-quarter of 2007. HOV generated about $16 million of cash
from operations during its fiscal 2008 first quarter and projects
that it will generate in excess of $300 million of cash flow in
2008.
HOV has been successful in reducing speculative built homes during
its fiscal 2008 first quarter, reducing the total by about 20.6%
versus fourth-quarter 2007 and down 42.4% compared to the peak
(third-quarter 2006). This represents about 4.7 started and unsold
homes per community. It is likely that finished spec homes would
be priced aggressively in order to move the inventory, to the
disadvantage of margins.
Future ratings and Outlook will be influenced by the economy and
broad housing market trends as well as company-specific activity,
such as land and development spending, general inventory levels,
speculative inventory activity (including the impact of high
cancellation rates on such activity), gross and net new-order
activity, debt levels and free cash flow trends and uses. The
possibility of the housing downturn continuing longer and becoming
deeper than currently anticipated could have broad ratings
implications for homebuilders.
HOVNANIAN ENTERPRISES: S&P Junks Rating on $1.5BB Sr. Unsec. Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issue-level rating
on Hovnanian Enterprises Inc.'s $1.5 billion senior unsecured
notes to 'CCC+' from 'B-'. Concurrently, S&P affirmed its 'B-'
corporate credit rating assigned to Hovnanian. All other ratings
remain unchanged. The outlook is negative.
"These rating actions follow the successful execution of
Hovnanian's $600 million senior secured note offering and
concurrent credit facility amendment, which we discussed in a
press release published last week," said Standard & Poor's credit
analyst George Skoufis.
The affirmation of the corporate credit rating acknowledges that,
despite the higher debt load and interest burden resulting from
this costly (11.5% coupon) refinancing, the recent senior secured
note and common equity issuances and the amended credit facility
enhance the company's currently weak liquidity position.
"Moreover, the looser bank covenants provide greater flexibility
as Hovnanian maneuvers through the difficult housing market
conditions, which will remain challenging well into 2009," Mr.
Skoufis said.
The recently completed financing transactions provide Hovnanian
with much-needed additional liquidity at this very challenging
point in the housing downturn; however, S&P expects market
conditions to remain difficult into 2009, which will continue to
put pressure on Hovnanian's operating results and could affect its
ability to generate cash, thereby subsequently eroding the
liquidity cushion the recent transactions have provided. S&P will
lower its ratings further if Hovnanian is unable to generate
sufficient discretionary cash flow from operations and maintain
adequate liquidity. Conversely, S&P would revise its outlook to
stable if operating trends stabilize, the company becomes
profitable again, and its liquidity position improves.
IDLEAIRE TECH: Had Set Up Acquisition Firm; May Have Named Buyers
-----------------------------------------------------------------
IdleAire Technologies Corporation might possibly have identified a
buyer for its assets before it filed for bankruptcy, The Knoxville
News Sentinel reported.
According to the Sentinel, when the Debtor filed for Chapter 11
protection with the U.S. Bankruptcy Court for the District of
Delaware, it reserved a corporate name "IdleAire Acquisition LLC"
with the Delaware Division of Corporations. Buyers may have been
set to buy the company, the Sentinel speculated.
As reported in the Troubled Company Reporter on May 19, 2008, the
Debtor already secured a $25 million debtor-in-possession credit
facility to provide funding for the company as it works through
its reorganization process.
The Chapter 11 process will allow the company to restructure its
debt and emerge under new ownership on a more financially solid
foundation.
IdleAire officials emphasized that the company has filed for
Chapter 11 reorganization, not Chapter 7 liquidation, noting there
was nothing in the company's petition to the court indicating any
plans for cessation of services.
About IdleAire Technologies
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. IdleAire has 131 locations
in 34 states and 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.
INVERNESS MEDICAL: S&P Puts CCC+ Rating on $780MM Series B Stock
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' rating on
Inverness Medical Innovations Inc.'s $780 million of series B
convertible perpetual preferred stock. This new preferred
stock was issued in conjunction with Inverness's purchase of
Matria Healthcare Inc., a leading provider of disease management
services, in a transaction valued at $1.2 billion.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit, 'BB' senior secured, and 'B-' subordinated debt ratings on
the company. The outlook is stable.
"We view the preferred stock as an intermediate equity content
hybrid security, with characteristics of both debt and equity.
Such securities are counted as 50% debt and 50% equity in our
leverage measures. Given that combined EBITDA for the two
companies is approximately $400 million, we estimate that
Inverness' adjusted pro forma leverage will be about 4.7x.
This compares favorably with our estimated leverage of 6.7x on
Sept. 30, 2007, and reflects both this acquisition and the
contributions of almost $1 billion from seven other acquisitions
completed between September 30 and the end of 2007," S&P said.
"The company could reduce leverage further if it successfully
forms a joint venture with a financial partner for its three
disease management businesses," said Standard & Poor's credit
analyst David Lugg. "However, credit will be considered for that
transaction when, and if, it occurs."
"Our rating on Waltham, Mass.-based Inverness reflects its high
leverage, appetite for acquisitive growth, emerging position as a
leading supplier of rapid diagnostic tests and ready access to
equity capital. More recently, the company has broadened its
business base by acquiring disease management service providers
Alere Medical, ParadigmHealth, and now, Matria Healthcare.
These specialty providers of oncology, cardiovascular, and women's
health disease management services complement Inverness's focus on
developing rapid diagnostic test for these therapeutic areas.
However, the success of this unproven concept in health care
services and products is far from certain," S&P said.
JETBLUE AIRWAYS: Moody's Junks Corporate Family Rating to Caa1
--------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating
of JetBlue Airways Corporation ("JetBlue") to Caa1 from B3, as
well as the ratings of its outstanding corporate debt instruments
and selected classes of JetBlue's Enhanced Equipment Trust
Certificates ("EETC"). The rating outlook is negative.
The rating downgrade reflect the weakening financial performance
of JetBlue, which despite its historic low cost business model has
reported successive quarterly net losses and deteriorating
financial metrics. The prospects for weakening operating profits,
driven in part by elevated fuel costs, are likely to erode the
company's liquidity profile at a time when JetBlue faces sizeable
calls on cash for scheduled aircraft deliveries as well as
upcoming debt maturities.
Although the company's efforts to slow capacity growth, are viewed
favorably in the current challenging operating environment,
profitability has declined and the company recorded a net loss for
the 4th quarter of 2007 and the 1st quarter of 2008. The company
has a fuel hedging program that is more extensive than that of
some other airlines, yet profitability has still been adversely
impacted by high fuel costs. Moody's notes that JetBlue's unit
costs, which have historically been meaningfully lower than other
airlines, have risen. This in part relates to the company's slower
growth rate, the increased complexity of operating a larger
network with multiple aircraft types, and the loss of maintenance
holidays on some of JetBlue's older A320 aircraft. JetBlue has
several planned initiatives to increase ancillary revenues to
improve performance, including incremental fees for preferred
seating assignments and baggage check fees. The company is also
constraining further capacity growth and has made plans to sell
surplus aircraft. While these actions may be helpful, the
company's ability to restore adequate levels of profitability and
cash flow generation will be challenged in the current high fuel
cost environment. Debt to EBITDA of 7.5x and EBIT to interest
expense of 1.1x for the 12 months to March 31, 2008 (both using
Moody's standard adjustments) weakened from the prior year and in
light of potential for negative free cash flow are no longer
consistent with a rating in the B range.
JetBlue's liquidity is currently adequate, but in light of cash
needs for scheduled aircraft deliveries and debt maturities could
weaken over the course of the coming year. The company received an
infusion of approximately $300 million earlier in 2008 through an
equity investment made by Deutsche Lufthansa AG in the company.
However, the company has a portion of its funds (approximately
$313 million at March 31, 2008) invested in auction rate
securities which it may not be able to readily monetize in the
current credit market environment. Excluding these securities, the
company's available liquidity is approximately $840 million. The
company faces approximately $620 million in planned capital
expenditures, including $150 million in non-aircraft spending, for
the remainder of 2008. JetBlue has received committed financing
for all 2008 aircraft deliveries. It also faces approximately $430
million in near term debt requirements. The company does not have
a committed bank credit facility available for cash drawings, and
thus is not subject to compliance with any specific financial
covenants. However, the company's credit card processing banks
have the right to increase the credit card holdback under certain
circumstances, which would increase JetBlue's cash requirements. A
material portion of JetBlue's assets are encumbered.
The rating actions on the EETCs consider the rating downgrade of
the underlying Corporate Family rating of JetBlue, the continuing
availability of liquidity facilities to meet interest payments for
18 months in the event of a JetBlue default, and the asset values
of specific aircraft which secure the various EETCs. The junior
classes of any EETC are generally more vulnerable to uncertainty
in recovery as they hold a first loss position. Yet because of
continued favorable valuation trends for A320 aircraft, Moody's
has not changed its view of relative recovery for JetBlue's EETCs
and the principal driver of the EETC rating changes is the
downgrade of JetBlue's corporate family rating. The ratings on the
senior tranches of the Series 2004-1 and 2004-2 Pass Through
Certificates reflect that they are supported by policies issued by
a Aaa rated monoline insurance company.
The negative outlook reflects the continued business pressures
facing JetBlue, primarily due to the impact of higher fuel costs
and a weak domestic demand environment. Despite continued strong
yield performance, competitive pressures are likely to challenge
JetBlue's efforts to implement fare increases and fuel surcharges
to offset the increase in fuel costs. Consequently, unless fuel
costs decline, earnings are likely to deteriorate meaningfully and
the company would likely sustain negative cash flow from
operations that would erode its liquidity.
JetBlue's rating could be lowered further if it is unable to stem
operating losses, if cash and short term investments falls below
$500 million, the company is unable to generate positive cash flow
from operations, or if the risk of credit card processors imposing
meaningful incremental holdback requirements increases.
JetBlue's rating outlook could be stabilized with sustained
increases to revenues or reduced non-fuel costs, or if a material
decline in fuel costs increases cash from operations and requires
less meaningful draws on cash reserves or incremental borrowing to
satisfy maturing debt and capital spending requirements.
Downgrades:
Issuer: JetBlue Airways Corp.
* Probability of Default Rating, Downgraded to Caa1 from B3
* Corporate Family Rating, Downgraded to Caa1 from B3
* Senior Secured Enhanced Equipment Trust, Downgraded to B2
from B1
* Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to
Caa3 from Caa2
Issuer: New York City Industrial Development Agcy, NY
* Senior Unsecured Revenue Bonds, Downgraded to Caa3 from Caa2
JetBlue Airways Corp., based in Forest Hills, New York, operates a
low-cost, point-to-point airline from a hub in New York.
JEVIC TRANSPORTATION: Files for Bankruptcy Due to Economic Slump
----------------------------------------------------------------
Jevic Transportation Inc. and two of its affiliates filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code,
citing economic downturn, tightening credit markets, and high fuel
and increasing insurance costs, various sources report.
President and chief executive officer David H. Gorman said in a
letter to customer on Monday, the company will continue operating
to deliver all freight within its system prior to closing. At
least 1,500 employees lost their jobs due to the filing.
Jevic Transportation intends to use at least $60 million
in financing from a consortium of lenders headed by CIT
Group/Business Credit Inc., Bloomberg quotes Mr. Gorman as saying.
Pursuant to court documents, Jevic Transportation listed assets
and debts between $50 million to $100 million.
Based in Delanco, New Jersey, Jevic Transportation Inc. --
http://www.jevic.com/-- provides trucking services. The company
has two units -- Jevic Holding Corp. and Creek Road Properties --
neither have assets nor operations.
JEVIC TRANSPORTATION: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Lead Debtor: Jevic Transportation, Inc.
700 Creek Rd.
Delanco, NJ 08075
Bankruptcy Case No.: May 20, 2008
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Jevic Holding Corp. 08-11006
Creek Road Properties, LLC 08-11007
Type of Business: The Debtors provides long-distance trucking
services. See http://www.jevic.com/
Chapter 11 Petition Date: May 20, 2008
Court: District of Delaware (Delaware)
Judge: Brendan Linehan Shannon
Debtors' Counsel: Domenic E. Pacitti, Esq.
Email: dpacitti@klehr.com
Klehr Harrison Harvey Branzburg & Ellers
919 Market St., Ste. 1000
Wilington, DE 19801
Tel: (302) 552-5511
Fax: (302) 426-9193
Estimated Assets: $50 million to $100 million
Estimated Debts: $50 million to $100 million
Debtors' Consolidated List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
T-Chek Systems, Inc. trade debt $1,530,517
14800 Charson Rd.
Eden Prairie, MN 55347
Irving Oil Corp. trade debt $321,920
190 Commerce Way
Portsmouth, NH 03801
American Express Travel trade debt $300,997
Management
Attn: American Express
P.O. Box 981540
El Paso, TX 79998-1540
Fax: (623) 492-5426
Attn: Becket & Lee
P.O. Box 3001
16 General Warren Blvd.
Malvern, PA 19355
Central Freight Lines, Inc. trade debt $298,768
5601 West Waco Drive
Waco, TX 76710
Hess Corp. trade debt $272,480
1185 Ave. of the Americas
New York, NY 10036
Sun Capital Partners management fee $250,000
Management IV, LLC
Attn: Sun Capital Partners,
Inc.
5200 Town Ctr.
Circle Ste. 600
Boca Raton, FL 33486
Automotive Rentals, Inc. trade debt $194,618
Cook County Collector real estate taxes $163,661
Goodyear Tire & Rubber trade debt $152,575
Prime, Inc. trade debt $138,087
Sun Logistics NYC, Inc. trade debt $111,450
Dell Marketing trade debt $110,560
Qualcomm, Inc. trade debt $108,973
Benton Express, Inc. trade debt $108,668
First Industrial, LP real estate lease $107,736
Interstate Dist. Co. trade debt $105,143
XRoads Solutions Group, LLC consulting services $103,020
GE Transportation Finance equipment financed $86,368
Pennsylvania Turnpike tolls $83,374
Commission
Volvo Financial Services equipment financed $82,365
KANSAS CITY SOUTHERN: Moody's Raises Corporate Family Rating to B1
-----------------------------------------------------------------
Moody's Investors Service raised the corporate family ratings of
Kansas City Southern (KCS) and Kansas City Southern de Mexico S.A.
de C.V. (KCSM, formerly TFM, S.A. de C.V.) to B1 from B2. At the
same time, Moody's has raised the ratings for KCS' subsidiary
Kansas City Southern Railroad's (KCSR) senior notes to B2 from B3,
and has raised the ratings of KCSM's senior notes to B1 from B2.
The ratings of KCSR's senior secured credit facilities have been
affirmed at Ba2. The rating outlook remains stable for all
issuers.
"KCS' debt ratings were upgraded primarily in recognition of the
company's demonstrated ability to improve profitability and
service metrics, while managing strong sales growth", according to
David Berge, Vice President at Moody's Investors Service. Moody's
expects that KCS' domestic (KCSR) and Mexican (KCSM) operations
will continue to grow and improve over the near term, allowing
credit metrics to improve to levels appropriate for B1 rated
companies through 2008, although debt will likely increase
coincidental with a heavy equipment purchase schedule.
KCSM and KCSR's operating performance have improved substantially
over recent years, as company management has undertaken successful
programs to upgrade locomotives and improve the railway networks'
fluidity. As a result, the company has experienced impressive
improvement in operating ratios (profitability) while growing its
revenue base, resulting in lower leverage and higher interest
coverage despite increased debt levels.
However, KSC operates under considerably higher financial leverage
when compared to other railroad competitors, with credit metrics
of EBIT to Interest and Funds From Operations to debt that remain
consistent with a speculative grade rating. KCSM is highly
sensitive to conditions in the Mexican economy and to Mexican
regulation. Nonetheless, the company operates a geographically
attractive concession in northeast Mexico with good growth
prospects, and has shown strong recent improvement in operating
performance. KCSM has significant ongoing capital spending
requirements, particularly for locomotives and line expansion,
which will likely increase debt and slow further improvements in
credit metrics. KCSR's north to south oriented railroad in the
central US, provides a good connections to Mexico and an
alternative to other large railroads to avoid the highly congested
rail yards.
Neither KCSR nor KCSM guarantees the other's debt, nor are the
obligations of KCSR and KCSM cross defaulted to each other.
The Ba2 rating of KCSR's senior secured credit facilities, two
notches above the corporate family rating, reflects the
substantial level of unsecured debt and other liabilities that are
junior in priority to the secured class of debt, per Moody's Loss
Given Default ('LGD') methodology. Recently, the proportion of
senior secured debt has grown in the company's debt structure,
mostly relating to increased equipment financing, and Moody's
believes this trend will continue gradually over the near term.
This implies a moderation of expected recovery that this class of
debt might achieve in the event of default. As such, the senior
secured debt no longer merits a three notch ratings lift per the
LGD methodology, and KCSR's senior secured facilities were not
upgraded along with the rest of the debt in the group.
The ratings on KCSR's senior unsecured notes were raised to B2
from B3, still one notch below the corporate family rating,
reflecting the junior priority of this class of debt to
approximately $437 million of senior secured debt obligations.
KCSM's senior notes have been upgraded to B1 from B2, the same as
the corporate family rating, as the senior unsecured obligations
of KCSM comprise a substantial majority of that company's debt
structure.
The stable outlook reflects Moody's expectations that the
company's sales growth will remain strong through 2008, despite
weakness in the U.S. economy in general, and that the strong
pricing environment will hold up through this period so that
yields continue to improve. Moody's expects the company's
operating ratio to remain at or below 80% for the near term. Also,
although debt is expected to increase over this period, credit
metrics are expected to improve somewhat as the result of improved
operating profitability and growth.
The rating could be raised following consistently strong free cash
flow at both KCSR and KCSM, with a sustainable Operating Ratio
below 80% and debt to EBITDA (using Moody's standard adjustments)
below 3.8 times at KCSR and KCSM. The ratings could be pressured
down following any unexpected shock to the rail system in either
the U.S. or in Mexico, or loss of fluidity determined by a
significant decline in velocity to below 20 mph. Deterioration of
credit metrics to levels such as debt to EBITDA of greater than 5
times or EBIT to interest coverage of less than 1.8 times would
also warrant a lower rating.
Upgrades:
Issuer: Kansas City Southern
Probability of Default Rating, Upgraded to B1 from B2
Corporate Family Rating, Upgraded to B1 from B2
Senior Unsecured Shelf, Upgraded to (P)B2 (LGD5, 73%) from
(P)B3
Senior Subordinated Shelf, Upgraded to (P)B3 (LGD6, 97%) from
(P)Caa1
Preferred Stock Preferred Stock, Upgraded to B3 (LGD6, 99%)
from Caa1
Issuer: Kansas City Southern Railway Company (The)
Senior Unsecured Regular Bond/Debenture, Upgraded to B2
(LGD5, 73%) from B3
Senior Unsecured Shelf, Upgraded to (P)B2 (LGD5, 73%) from
(P)B3
Senior Subordinated Shelf, Upgraded to (P)B3 (LGD6, 97%) from
(P)Caa1
Issuer: Kansas City Southern de Mexico, S.A. de C.V.
Corporate Family Rating, Upgraded to B1 from B2
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 from
B2
Affirmed:
Issuer: Kansas City Southern Railway Company (The)
Senior Secured Bank Credit Facility, at Ba2 (LGD2, 23%)
Kansas City Southern de Mexico, S.A. de C.V. owns the concession
to operate Mexico's northeast railway. The Kansas City Southern
Railway Company operates a Class I railroad in the south central
U.S. Both Kansas City Southern de Mexico, S.A. de C.V. and The
Kansas City Southern Railway are owned by Kansas City Southern.
KB HOME: S&P Cuts Corp. Credit & Senior Note Ratings to BB
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior note ratings on KB Home to 'BB' from 'BB+'. S&P also
lowered its rating on the company's senior subordinated notes to
'B+' from 'BB-'. The outlook remains negative. The rating actions
affect $2.15 billion of rated notes.
"The rating actions follow the company's weak first quarter and
reflect our anticipation that continued very difficult housing
market conditions may further stress KB Home's operations, which
are concentrated in some of the country's most challenging housing
markets," said credit analyst George Skoufis. "Given the current
conditions, KB Home's earnings and profitability, as well as its
already weak credit metrics, will likely continue to be
pressured."
The negative outlook reflects S&P's expectation that housing
conditions for KB Home and its peers will continue to deteriorate,
blocking efforts to rapidly right size operating platforms. S&P
would lower ratings further if housing market pressure and joint
venture obligations erode current liquidity. S&P would revise its
outlook back to stable if the company can
preserve its good liquidity position and housing conditions
stabilize.
KENNETH GOOD: Gets Court Ok to Hire Wright Ginsberg as Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas
authorized Kenneth Marston Good to employ Wright Ginsberg Brusilow
PC as its bankruptcy counsel, effective as of the bankruptcy
filing.
The Debtor related to the Court that it believes it would be most
efficient and in the best interest of the estate that the firm be
retained as counsel to perform extensive legal services necessary
in the case.
The primary attorneys who will represent the Debtor and their
standard hourly rates are:
Frank J. Wright, Esq. $600
Ashley Ellis, Esq. $425
Kim Moses, Esq. $250
The firm's other professionals are rated per hour: from $250 to
$600 for partners and attorneys of counsel, from $150 to $250 for
associates, and from $100 to $150 for paralegals.
The Debtor disclosed that it paid $25,000 to the firm as retainer.
The firm can be reached at:
Frank J. Wright, Esq.
Wright Ginsberg Brusilow PC
600 Signature Place
14755 Preston Road
Dallas, TX 75254
Tel: (972) 788-1600
Fax: (972) 239-0138
http://www.wgblawfirm.com/
About Kenneth Marston Good
Dallas, Texas-based Kenneth Marston Good is a real estate
developer with interests in real estate properties in Collin and
Denton County, Texas and Tulum, Mexico. Its real estate interests
are held both individually and through its interest in various
corporations and partnerships. The Debtor filed chapter 11
petition on April 15, 2008 (Bankr. E.D. Texas Case No. 08-40955).
Frank J. Wright, Esq., at Wright Ginsberg Brusilow PC represents
the Debtor in its restructuring efforts. The Debtor's schedules
show total assets of $209,273,646 and total liabilities of
$144,293,309.
KENNETH GOOD: Files Schedules of Assets and Liabilities
-------------------------------------------------------
Kenneth Marston Good filed with the U.S. Bankruptcy Court for the
Eastern District of Texas its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ---------- -----------
A. Real Property $42,250,000
B. Personal Property 167,023,646
C. Property Claimed
as Exempt
D. Creditors Holding $6,833,833
Secured Claims
E. Creditors Holding -
Unsecured Priority
Claims
F. Creditors Holding 137,459,476
Unsecured Non-priority
Claims
---------- -----------
TOTAL $209,273,646 $144,293,309
Dallas, Texas-based Kenneth Marston Good is a real estate
developer with interests in real estate properties in Collin and
Denton County, Texas and Tulum, Mexico. Its real estate interests
are held both individually and through its interest in various
corporations and partnerships. The Debtor filed chapter 11
petition on April 15, 2008 (Bankr. E.D. Texas Case No. 08-40955).
Frank J. Wright, Esq., at Wright Ginsberg Brusilow PC represents
the Debtor in its restructuring efforts.
KIMBALL HILL: Gets Court Nod to Use Lenders' Cash Collateral
------------------------------------------------------------
The Honorable Susan Pierson Sonderby of the U.S. Bankruptcy Court
for the Northern District of Illinois authorized, on a final
basis, Kimball Hill Inc. and its debtor-affiliates to use the cash
collateral of their prepetition lenders.
As reported in the Troubled Company Reporter on May 5, 2008, the
Debtors' use of the cash collateral will terminate if, among
other things, the Debtors fail to comply with the budget and the
obligation to make disbursements not materially inconsistent
with the budget.
Harris, N.A., the administrative agent and secured lender in the
Debtors' prepetition revolving credit facility, agreed to:
i) the Debtors' use of cash collateral; and
ii) the priming of their liens in favor of Kimball Hill, Inc.,
for a $51,851,594 intercompany loan.
Harris is owed at least $337,000,000 as of the date of the
Debtor's bankruptcy.
All of the Debtors' anticipated expenditures will be set in a
budget, in form and substance satisfactory to the agent of the
prepetition lenders and the Official Committee of Unsecured
Creditors in the Debtors' Chapter 11 cases.
In accordance with the cash collateral order, the Debtors
prepared a 13-week cash flow budget, for the period from the
Petition Date through the week ending July 18, 2008.
A full-text copy of the Cash Collateral Budget is available for
free at http://researcharchives.com/t/s?2c37
The Court ruled that, as adequate protection for any diminution in
value of their interest in the collateral, the prepetition
lenders are entitled to and will receive from the Debtors,
subject in all cases to the Carve-Out:
-- reimbursement of reasonable fees and expenses incurred by
the professionals for the Existing Prepetition Lender
Agent;
-- interest due under the Prepetition Credit Facilities at the
set non-default rates;
-- a replacement lien subject only to the liens granted to the
DIP Lender with respect to the DIP Facility on the
Collateral securing the DIP Loans, other than the
Unencumbered Assets;
-- a superpriority claim pursuant to Section 507(b) of the
Bankruptcy Code;
-- delivery by the Debtors of certain reporting materials; and
-- compliance with a set budget for the cash collateral.
The rights of the Creditors Committee to seek to recharacterize
any of the adequate protections afforded to the Prepetition
Lenders are preserved.
About Kimball Hill
Based in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento
and Tampa, in five regions: Florida, the Midwest, Nevada, the
Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007 reflected
total assets of $795,473,000 and total debts $631,867,000.
(Kimball Hill Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
KIMBALL HILL: Can Employ Kirkland & Ellis as Bankruptcy Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
approved the employment of Kirkland and Ellis LLP, as counsel for
Kimball Hill Inc. and its debtor-affiliates in their chapter 11
cases.
Kimball Hall Senior Vice President, Treasurer and Chief
Financial Officer Edward J. Madell, said that Kirkland & Ellis
has represented the Debtors with respect to corporate matters
since September 2005 and restructuring matters since January
2008. Thus, Kirkland & Ellis is familiar with the Debtors'
business and many of the legal issues that may arise in the
context of the Debtors' Chapter 11 cases.
As the Debtors' counsel, Kirkland & Ellis is expected to:
a. advise the Debtors with respect to their powers and duties
as debtors in possession in the continued management and
operation of their business and properties;
b. advise and consult on the conduct of the Chapter 11 cases,
including all of the legal and administrative
requirements of operating in Chapter 11;
c. attend meetings and negotiate with representatives of the
creditors and other partied in interest;
d. take all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the
Debtors' behalf, defending any action commenced against
the Debtors and representing the Debtors' interests in
negotiations concerning litigation in which the Debtors
are involved, including objections to claims filed against
the Debtors' estates;
e. prepare pleadings in connection with these Chapter 11
cases, including motions, applications, answers, orders,
reports, and papers necessary or otherwise beneficial to
the administration of the Debtors' estates;
f. represent the Debtors in connection with obtaining
postpetition financing;
g. advise the Debtors in connection with any potential sale
of assets;
h. appear before the Bankruptcy Court and any appellate
courts to represent the interests of the Debtors' estates
before those courts;
i. advise the Debtors regarding tax matters;
j. take any necessary action on behalf of the Debtors to
negotiate, prepare on behalf of the Debtors and obtain
approval of a disclosure statement and confirmation of a
Chapter 11 plan and all related documents; and
k. perform all other necessary legal services for the Debtors
in connection with the prosecution of these Chapter 11
cases, including:
* analyzing the Debtors' leases and contracts and the
assumptions, rejections, or assignments;
* analyzing the validity of liens against the Debtors; and
* advising the Debtors on corporate and litigation
matters.
Kirkland & Ellis' current hourly rates for contemplated services
to be rendered to the Debtors are:
Billing Category Hourly Rate
---------------- -----------
Partners $500 to $975
Of Counsel $380 to $870
Associates $275 to $595
Paraprofessionals $120 to $260
Paul M. Basta, Ray C. Schrock, and Catherine Peshkin, all
Kirkland & Ellis professionals, are presently expected to have
primary responsibility for providing services to the Debtors. In
addition, as necessary, other K&E professionals and
paraprofessionals may provide services to the Debtors.
Paul M. Basta, Esq., a partner at Kirkland & Ellis, assured the
Court that his firm is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code, and does not hold or
represent an interest adverse to the Debtors' estates. Moreover,
the firm has no connection to the Debtors, their creditors, or
their related parties except as may be disclosed, he adds.
Mr. Basta also disclosed that George Stamas, Esq., a partner at
Kirkland and Ellis, in Washington, D.C., is an outside director of
FTI Consulting, Inc., the financial advisors retained by the
Official Committee of Unsecured Creditors in the Debtors' Chapter
11 cases.
"Mr. Stamas owns 99,558 shares of FTI, which is less than 1/10 of
one percent of the company's ownership. Mr. Stamas will have no
role in the representation of the Debtors in these Chapter 11
cases," according to Mr. Basta.
He further disclosed that his firm represents vendors,
professionals, and parties-in-interest in matters not materially
adverse to the interest of the Debtors' estate. A list of those
vendors, professionals, and parties-in-interest is available for
free at http://researcharchives.com/t/s?2c39
About Kimball Hill
Based in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento
and Tampa, in five regions: Florida, the Midwest, Nevada, the
Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007 reflected
total assets of $795,473,000 and total debts $631,867,000.
(Kimball Hill Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
KIMBALL HILL: Wants Action Removal Period Stretched to October 20
-----------------------------------------------------------------
Kimball Hill Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Illinois to extend,
until Oct. 20, 2008, the time wherein they may file notices of
removal with respect to the pending actions, pursuant to Rule
9006(b) of the Federal Rules of Bankruptcy Procedure.
The Debtors are parties to certain civil actions pending in
various forums. The Debtors relate that they are involved in
approximately 70 Actions throughout the country in approximately
30 state and federal venues. The Actions involve a variety of
types of cases, including employment-related litigation and
administrative proceedings, contract disputes, product liability,
and personal injury cases, according to Ray C. Schrock, Esq., at
Kirkland & Ellis, in Chicago Illinois.
Section 1452 of the Judicial and Judiciary Procedures Code and
Rule 9027 of the Federal Rules of Bankruptcy Procedure govern the
removal of pending civil actions related to bankruptcy cases.
Section 1452(a) provides that a party may remove a claim or cause
of action in a civil action to the district court for the
district where that civil action is pending.
Bankruptcy Rule 9027 provides in relevant part that if the 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 only within the longest of (A) 90 days after the Petition
Date, (B) 30 days after entry of an order terminating a stay, if
the claim or cause of action in a civil action has been stayed
under Section 362 of the Bankruptcy Code, or (C) 30 days after a
trustee qualifies in a Chapter 11 reorganization case but not
later than 180 days after the order for relief. Bankruptcy Rule
9006 permits the court to extend the period to remove action
provided by Bankruptcy Rule 9027.
The statutory period within which the Debtors may file notices to
remove any of the Actions to the Bankruptcy Court is currently
scheduled to expire on July 22, 2008.
Mr. Schrock says the Debtors' decision regarding whether to seek
removal of any particular Action will depend on a number of
factors, including:
(a) the importance of the Action to the expeditious resolution
of their bankruptcy cases;
(b) the time it would take to complete the Action in its
current venue;
(c) the presence of federal questions in the proceeding that
increase the likelihood that one or more aspects
will be heard by a federal court;
(d) the relationship between the Action and matters to be
considered in connection with the Debtors' plan of
reorganization, the claims allowance process, and the
assumption or rejection of executory contracts; and
(e) the progress made to date in the Action.
To make the appropriate determination, the Debtors relate that
they have yet to analyze each Action in light of these factors.
The Debtors add that at the current stage of their Chapter 11
cases, they have not had an opportunity to determine which
Actions they will seek to remove.
Mr. Schrock informs the Court that prior to and since the
Petition Date, the Debtors and their advisors have focused on
activities that are critically important to their reorganization,
including, among other things, stabilizing and maintaining day-
to-day operations, developing and implementing an overall
business plan, and analyzing and negotiating contracts and
relationships with their customers and suppliers.
Consequently, he continues, because the Debtors have been
addressing such time-critical matters and because the Debtors'
management and professional advisors must balance assessment of
the Actions with active involvement in the Debtors' efforts to
reorganize, the Debtors have not had and most likely will not
have sufficient time to analyze the Actions and make the
appropriate determinations concerning their removal prior to the
statutory deadline.
The extension sought will provide the Debtors' management and
professional advisors sufficient time to permit them to consider,
and make fully informed decisions concerning, the removal of the
Actions; and will ensure that the Debtors can appropriately
exercise the valuable rights granted by Section 1452, Mr. Schrock
avers.
He maintains that the rights of parties to the Actions will not
be prejudiced by the extension request. Those parties can seek
to have the Actions remanded pursuant to Section 1452.
About Kimball Hill
Based in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento
and Tampa, in five regions: Florida, the Midwest, Nevada, the
Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007 reflected
total assets of $795,473,000 and total debts $631,867,000.
(Kimball Hill Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
LAUREATE EDUCATION: S&P Puts CCC+ Rating on $310 Million Sr. Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned ratings to Laureate
Education Inc.'s privately placed, Rule 144A $260 million 10%
senior unsecured notes due 2015 and $435.822 million 10.25% senior
toggle notes due 2015.
"The issues are rated 'B-' (one notch lower than the corporate
credit rating on Laureate) with recovery ratings of '5',
indicating our expectation for modest (10%-30%) recovery in the
event of a payment default," explained Standard & Poor's credit
analyst Hal Diamond.
S&P also assigned ratings to the company's $310 million 11.75%
senior subordinated notes due 2017 are rated 'CCC+', two notches
below the corporate credit rating, with a recovery rating of '6',
indicating S&P's expectation for negligible (0%-10%) recovery in
the event of a payment default. Proceeds will be used to refinance
the interim loans that were put in place to help finance the 2007
leveraged buyout of the company.
At the same time, we affirmed the 'B' corporate credit rating on
Laureate. The outlook is negative.
Baltimore, Md.-based Laureate Education operates a network of 74
for-profit college campuses located in 15 countries in Latin
America, Europe, and Asia. Total debt at Dec. 31, 2007, was
roughly $2.3 billion.
Laureate Education Inc.'s rating reflects high debt leverage and
weak cash flow protection as a result of its 2007 leveraged
acquisition. The ratings also consider the challenges inherent in
managing rapid expansion, and its debt-financed expansion plans.
These risks are only partially offset by the company's position in
the highly fragmented and competitive international postsecondary
education market.
LEAR CORP: S&P Ratings Still on CreditWatch Pending Union Vote
--------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on General
Motors Corp. (GM), American Axle & Manufacturing Holdings Inc.
(Axle), Lear Corp., and Tenneco Inc. remain on CreditWatch with
negative implications, pending the outcome of a vote on the
tentative labor agreement between the United Auto Workers (UAW)
and Axle, and its review of the four companies' financial
profiles. The ratings on all four companies were placed on
CreditWatch negative on March 17, sparked by a work stoppage at
many of Axle's UAW-represented plants in New York and Ohio. Axle
and the UAW announced the tentative agreement on a new labor
contract, but did not disclose details.
Local unions were scheduled to vote on the agreement beginning
Monday and continuing through this week. If ratified, the new
four-year contract will end the strike, which began Feb. 25 and
led to reduced production of light trucks by GM over the past few
months.
According to media reports, under the tentative agreement, the UAW
has accepted a lower all-in wage and benefit package competitive
with that offered by the UAW at other U.S. auto supplier
competitors of Axle. In exchange, Axle is reportedly offering buy-
outs of up to $140,000 to reduce headcount and buy-downs of up to
$105,000 to ease the transition for remaining UAW workers to the
new wage level. (GM previously announced it had agreed to fund
$200 million of the amount needed for the wage transition and
buyouts.) Axle also reportedly will close two forging plants under
the agreement.
"We intend to resolve each company's CreditWatch listing within
the next two weeks," said Standard & Poor's credit analyst
Lawrence Orlowski. "We'll focus on the strike's direct effect on
liquidity, as well as the prospective performance of each company
for the remainder of 2008 and into 2009. We expect to resolve the
CreditWatch listings on Lear and Tenneco first because their
first-quarter results indicate that they have been less affected
by the strike," he continued.
LEVITT AND SONS: Receiver Helps Homebuyers Recoup Lost Deposits
---------------------------------------------------------------
In an effort to deliver completed homes to disappointed buyers who
lost their deposits when Levitt and Sons filed for bankruptcy late
last year, court-appointed receiver Andrew J. Bolnick and his
legal counsel, Weissman, Dervishi, Borgo & Nordlund, P.A.,
disclosed a series of private sales events May 19, 20 and 22 that
will give these homebuyers the first opportunity to purchase
finished homes at one of four Levitt and Sons communities in
Florida. Broward Circuit Court Judge Robert A. Rosenberg has
approved the receiver's plan to offer credit towards the purchase
price on an already-built model or spec home for deposits
previously made to Levitt. Since filing for bankruptcy protection
on November 9, 2007, Levitt and Sons has left hundreds of buyers
without homes and the loss of millions of dollars in deposits.
"Sadly, many residents, primarily senior citizens over the age of
55, lost their chance for a new home and a new beginning," Mr.
Bolnick said. "These depositors who lost their down payment are
just another creditor in bankruptcy court, but to us, they are
valuable purchasers. We will do our best to credit them for their
initial down payment and get them into their homes."
The receiver team has devised a way to sell the existing home
inventory free and clear of liens and deliver marketable title, a
major concern of potential buyers. Each potential sales contract
is brought to the Court for approval. Once the sale is approved by
the Court, the liens are shifted by court order from the home to
the proceeds of the sale.
Models and spec homes tours are:
May 19, 2008, 1 p.m. Cascades of Groveland
Groveland, Lake County
May 20, 2008, 10 a.m. Jesup's Reserve
Winter Springs, Seminole County
May 20, 2008, 3 p.m. Turtle Creek
St. Cloud, Osceola County
May 22, 2008, 2 p.m. Cascades at River Hall,
Alva, Lee County
LEXINGTON PRECISION: Taps W.Y. Campbell as Financial Advisor
------------------------------------------------------------
Lexington Precision Corp. and its debtor-affiliates ask the United
States Bankruptcy Court for the Southern District of New York for
permission to employ W.Y. Campbell & Company as their financial
advisor.
As the Debtors' financial advisor, W.Y. Campbell will:
a) identify, review, evaluate and initiate potential financing
transactions or other transactions to the extent deemed
desirable by the Debtors;
b) review and analyze the assets and the operating and
financial strategies of the Debtors to the extent the firm
deems necessary, appropriate and feasible, or as the Debtors
may request;
c) assist in the definition of objectives related to value and
terms of a financing or transaction;
d) assist in identification of the Debtors' proprietary
attributes;
e) identify and solicit appropriate financing or transaction
parties;
f) prepare and distribute confidentiality agreements and
appropriate materials -- to include placement or offering
memorandums, management presentations, and other
documentation as may be required or appropriate;
g) the initiation of discussions and negotiations with
prospective financing or transaction parties;
h) assist the Debtors and its other professionals in reviewing
and evaluating the terms of any proposed transaction,
financing or other transaction, in responding thereto and,
if directed, in developing and evaluating alternative
proposals for a financing, transaction or other transaction;
i) review and analyze any proposals the Debtors receives from
third parties in connection with a transaction, financing or
other transaction;
j) assist and participate in negotiations with the parties in
interest in connection with a transaction, financing or
other transaction;
k) advise and attend meetings of the Debtors' Board of
Directors, creditor groups, official constituencies and
other interested parties, as the Debtors determines to be
necessary or desirable;
l) participate, if requested, in hearings before this Court or
any other court as the Debtors may request and provide
relevant testimony with respect to the matters described
herein and issues arising with respect thereto in connection
with any proposed chapter 11 plan;
m) assist the Debtors' internal and external counsel to enable
such counsel to provide legal advice to the Debtors, as
contemplated under the engagement letter, dated
April 1, 2008; and
n) render such other financial advisory and investment banking
services as may be reasonably requested by the Debtors in
connection with any of the foregoing.
The Debtors will pay a host of fees to the firm -- including a
$50,000 monthly cash advisory fee and a $650,000 exit fee upon the
Debtors' successful exit from Chapter 11.
Andre A. Augier, a managing director of the firm, assures the
Court that the firm is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
About Lexington Precision
Based in New York, Lexington Precision Corp. --
http://www.lexingtonprecision.com/-- manufacture tight-tolerance
rubber and metal components for use in medical, automotive, and
industrial applications. As of Feb. 29, 2008, the companies
employed about 651 regular and 22 temporary personel.
The company and its affiliate, Lexington Rubber Group Inc., filed
for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead
Case No.08-11153). Richard P. Krasnow, Esq., at Weil, Gotshal &
Manges, represents the Debtors in their restructuring efforts.
The Debtors selected Epiq Bankruptcy Solutions LLC as claims
agent. The U.S. Trustee for Region 2 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors.
When the Debtors filed for protection against their creditors,
they listed total assets of $52,730,000 and total debts of
$88,705,000.
LID LTD: Sells Assets to Bidz.com et al. For $32,850,000
--------------------------------------------------------
The Hon. James M. Peck of the United States Bankruptcy Court for
the Southern District of New York authorized L.I.D. Ltd. to sell
certain assets for $32,850,000, pursuant to an asset purchase
agreement dated May 14, 2008.
The Debtor entered into an agreement by and among Bidz.com Inc.,
AV Jewelry of New York, Fairway Diamond Inc., and Kiran Jewels
Inc. to acquire loose stone and finished jewelry inventory for
$32,850,000. Bidz.com et al. made a $2,748,000 deposit to the
Debtor's counsel, which was held in a non-interest bearing escrow
in the account of the Debtor's counsel.
The Debtor paid to the "stalking-horse" bidders:
i) Disons Gems Inc. $213,600,000 break up fee, which represent
2% of its $10,680,000 offer and
ii) GBC Inc./Simplexdiam Inc. $325,044, which also represents 2%
of its $16,252,220 bid.
A full-text copy of the Assets Purchase Agreement is available for
free at http://ResearchArchives.com/t/s?2c2e
About L.I.D
Headquartered in New York, L.I.D. Ltd., a jeweler, filed a chapter
11 petition on March 17, 2007 (Bankr. S.D. N.Y. Case No. 07-10725)
Avrum J. Rosen, Esq., at The Law Offices of Avrum J. Rosen and
Rochelle R. Weisburg, Esq., at Shiboleth, Yisraeli, Roberts &
Zisman LLP represent the Debtor in its restructuring efforts.
No case trustee, examiner, or official committee of unsecured
creditors has been appointed in the case. When the Debtor sought
protection from its creditors, it listed total assets of
$157,784,935 and total debts of $143,867,465.
LIBERTY MUTUAL: S&P Rates $1.25 Billion Series C Jr. Notes BB+
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' junior
subordinated debt rating to Liberty Mutual Group Inc.'s (LMGI)
Series C junior subordinated notes in an amount up to $1.25
billion with a scheduled maturity date of 2058.
Standard & Poor's also said that it placed this rating on
CreditWatch with negative implications.
Standard & Poor's had placed the ratings on LMGI and its insurance
affiliates on CreditWatch negative on April 23, 2008, following
the company's announcement that it has signed a definitive
agreement to purchase Seattle-based Safeco Corp. for about $6.2
billion in cash. That transaction should close in the third
quarter of 2008. LMGI intends to finance the purchase price
primarily with internally generated funds and with the proceeds
of this hybrid issue.
Standard & Poor's expects to either affirm or lower the ratings on
LMGI and Liberty once S&P has completed its analysis of Liberty's
operating company capitalization at year-end 2007 and pro forma
for the acquisition of Safeco. In addition, S&P expects to meet
with members of management to discuss in more detail their plans
for integrating Safeco into Agency Markets, the new
management structure, and the anticipated impact on Liberty's
financial results. "If pro forma capital adequacy remains strong
and we are satisfied that the integration process will proceed
smoothly, we are likely to affirm the ratings," said Standard &
Poor's credit analyst John Iten. "If our analysis indicates that
pro forma capital adequacy will be materially below the
appropriate level for the rating, we could lower the ratings. If
this occurs, we would probably not lower the ratings on LMGI and
Liberty by more than one notch."
LINENS N THINGS: Court Approves Auction Procedures for 120 Stores
-----------------------------------------------------------------
The Honorable Christopher S. Sontchi of the United States
Bankruptcy Court for the District of Delaware has approved a
protocol for Linens 'n Things and its debtor-affiliates to auction
off assets from 120 stores they intend to close. The Court-
approved protocol set a May 27 deadline to submit bids, and an
auction two days after the bid deadline.
The Debtors will seek the assistance of liquidation firms to
maximize the value of the (i) inventory and merchandise to be
included in the Store Closing Sales, and (ii) owned furniture,
fixtures and equipment in the Closing Stores.
The Debtors will continue to cooperate and provide access to all
previously contacted potential bidders, who seek to conduct
diligence, and any other potentially interested bidder. The
Debtors may select stalking horse bidders prior to the auction.
Two or more bidders who intend to form a joint venture are
required to obtain prior written approval from the Debtors. The
Debtors' consent will not constitute a finding of the Court that
the joint venture has acted in "good faith" as the term is used
under Section 363(m) of the Bankruptcy Code.
The Court will hold a hearing on May 16, 2008, at 12:00 p.m., to
consider approval of bid protections, including the proposed
break-up fee and expense reimbursement, to any stalking horse
bidder. Prior to that hearing, the Debtors will (i) notify all
potential bidders, the Official Committee of Unsecured Creditors,
the DIP Lender, the Indenture Trustee and the US Trustee, and
(ii) file a supplemental notice with the Court identifying the
stalking horse bidder or bidders, and any requests for bid
protections.
Deadline to submit bids is on May 27, 2008, at 4:00 p.m., Eastern
Time. Bids must be unconditional, and not contingent upon any
event. A proposed bid must be based on the terms and conditions
of the form of the proposed Agency Agreement, or to the extent
the Debtors have entered into a stalking horse agreement, all
proposed bids will be based upon the terms and conditions of that
stalking horse agreement.
The Auction will be conducted on May 29, 2008, at 10:00 a.m., at
the offices of Richards, Layton & Finger, P.A., at One Rodney
Square, 920 North King Street, in Wilmington, Delaware. The
Debtors will select the highest or best Bids at the conclusion of
the Auction, and after consultation with the DIP Lender, the
Committees, and the Indenture Trustee, subject to Court approval.
The sale hearing will be held on May 30 at 12:00 p.m. Deadline
for objections to the sale is on May 22.
The Debtors will serve the Auction and Store Closing Sales Notice
to:
-- Office of the U.S. Trustee;
-- counsel to the DIP Lender;
-- counsel to the Official Committee of Unsecured Creditors;
-- counsel to the ad hoc committee of the Debtors'
noteholders;
-- counsel to the indenture trustee for the Debtors'
outstanding bond issuance;
-- creditors holding the 30 largest unsecured claims against
the bankruptcy;
-- all parties known to be asserting a lien in the Debtors'
liquidation assets in the Closing Stores;
-- each of the Debtors' landlords for the Closing Stores;
-- all state attorneys general in states, in which the Closing
Stores are located;
-- various federal and state tax and environmental
authorities, including the Internal Revenue Service and the
Environmental Protection Agency;
-- all potential bidders; and
-- all entities requesting notice under Rule 2002 of the
Federal Rules of Bankruptcy Procedure.
According to the Troubled Company Reporter on May 14, 2008, the
Debtors, prior to the Petition Date, engaged in an in-depth
analysis to improve their overall financial performance, including
the closing of unprofitable stores. As a result, the Debtors
identified 120 stores as underperforming stores that should be
closed at the outset of the Chapter 11 cases to aid in
the reorganization efforts. The Debtors also want to ease
certain of the liquidity restraints by similar themed sales at
the Closing Stores by conducting an auction.
Proposed counsel for the Debtors, Mark D. Collins, Esq., at
Richards, Layton & Finger, P.A., in Wilmington, Delaware, asserts
that the proposed Store Closing Sales will dramatically reduce
the administrative costs associated with the Closing Stores, are
customary in Chapter 11 reorganizations, and are designed to
provide the maximum value to the bankruptcy estates. He adds
that the proceeds of the Store Closing Sales will benefit the
estates by reducing the Debtors' secured debt.
To maximize the value of the (i) inventory and merchandise to be
included in the Store Closing Sales, and (ii) owned furniture,
fixtures and equipment in the Closing Stores, the Debtors intend
to obtain assistance from certain liquidation firms. Mr. Collins
relates that prior to the Petition Date, the Debtors have
obtained signed confidentiality agreements from, and provided
substantial due diligence materials to, the Liquidation Firms.
On the Petition Date, the Debtors circulated a "Summary Request
for Proposal" to each of the Liquidation Firms, and requested the
firms that initial bids to act as the Debtors' agent to conduct
the Store Closing Sales, be submitted on May 8, 2008. The
Debtors intend to select and negotiate a "stalking horse" bid
from the initial bids submitted by the Liquidation Firms, and to
execute a stalking horse agency agreement prior to the hearing to
consider this request.
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, Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LINENS N THINGS: Wants To Employ Protiviti as Advisors
------------------------------------------------------
Linens 'n Things and its debtor-affiliates seek the authority of
the United States Bankruptcy Court for the District of Delaware to
employ Protiviti, Inc., as financial advisors, nunc pro tunc to
their bankruptcy filing date, on the terms set forth in an
engagement agreement, dated April 23, 2008.
The Debtors believe that Protiviti possesses the requisite
resources, and is well-qualified and uniquely able to assist in
their bankruptcy cases. Protiviti was engaged shortly prior to
the Petition Date to provide bankruptcy accounting and
administrative services to the Debtors.
As financial advisors, Protiviti will:
(a) prepare the schedules of assets and liabilities, and
statement of financial affairs for each of the Debtors;
(b) assist and guide the Debtors' accounting department with
respect to Chapter 11 protocols and policies;
(c) assist in preparing the Debtors' monthly operating
reports; and
(d) provide other financial advisory services.
The Debtors will pay Protiviti in its standard hourly rates:
Managing directors $410 to $470
Directors/associate directors $270 to $405
Senior managers/managers $250 to $330
Senior consultants/consultants $180 to $300
Administrative $90
The Debtors inform the Court that:
-- Protiviti will discount the standard hourly rates of
managing directors, directors and associate directors by
10%;
-- Michael Atkinson will serve as project managing director,
and that other senior staff consultants will be used as
necessary to complete Protiviti's work;
-- Protiviti received a $100,000 retainer prior to the
commencement of the bankruptcy cases;
-- Protiviti will be reimbursed for all reasonable out-of-
pocket expenses; and
-- Protiviti's professionals keep track of their billings in
six-minute increments with time charges allocated
consistent with the categories set forth by the Office of
the U.S. Trustee and the Local Rules of Bankruptcy Practice
and Procedure of the U.S. Bankruptcy Court for the District
of Delaware.
Given Protiviti's diverse practice and client base, Mr. Atkinson
discloses that the firm may represent clients in matters
unrelated to the Chapter 11 cases. However, he assures the Court
that Protiviti has never provided, and will not in the future
provide services to creditors or parties-in-interest in
connection with any matters relating to its representation.
Accordingly, he says that the firm is a "disinterested person" as
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, Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LINENS N THINGS: Wants to Employ Asset Disposition Advisors
-----------------------------------------------------------
Linens 'n Things and its debtor-affiliates seek the authority of
the United States Bankruptcy Court for the District of Delaware to
employ Asset Disposition Advisors, LLC, as asset disposition
advisors and consultant, nunc pro tunc to the Petition Date.
In a separate filing, the Debtors propose to sell certain
merchandise through auction procedures.
The Debtors believe that Asset Disposition's employment is in
their best interests because the firm will provide valuable
services in the Debtors' attempt to "maximize the realizable
value recovered for their businesses and assets."
Asset Disposition will, among other tasks:
(a) advise the Debtors regarding disposition of selected non-
core business assets relating to planned store closures;
(b) identify and contact proposed purchasers of select
business operations or assets, including stores selected
for closure;
(c) assist in preparing information package for distribution
to potential bidders;
(d) review bid proposals, and assist the Debtors in
negotiating various parties to ensure maximum recoveries
for the bankruptcy estates;
(e) consult with the Debtors and other retained advisors as to
the evaluation, valuation, and disposition of certain
intellectual property, and other tangible and intangible
assets; and
(f) attend meetings with the Debtors, DIP lenders, any
committee of creditors, and other parties-in-interest.
Asset Disposition will be paid in its customary hourly rates, and
reimbursed for out-of-pocket expenses incurred on the Debtors'
behalf:
Professional Hourly Rate
------------ -----------
Paul Traub $725
Barry Gold $675
Steven E. Fox, Sr. $650
Maura I. Russell $350
Consultants will be paid for their services at $600 to $310 per
hour, while support staff will be paid at $225 to $200 per hour.
Prior to the Petition Date, Asset Disposition was paid a retainer
amounting to $175,000, which will be maintained on an "evergreen"
basis, and replenished from time to time.
In the event of a successful outcome, Asset Disposition will be
paid with certain additional compensation, or "success fee," in
an amount to be agreed upon by the firm and the Debtors, and
subject to Court approval.
Paul Traub, a principal at Asset Disposition, assures Judge
Christopher Sontchi that the firm is a "disinterested person," as
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, Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LINENS N THINGS: Wants to Hire Financo as Investment Banker
-----------------------------------------------------------
Linens 'n Things and its debtor-affiliates seek the permission of
the United States Bankruptcy Court for the District of Delaware to
employ Financo, Inc., as investment banker, nunc pro tunc to the
Petition Date.
Francis M. Rowan, the Debtors' senior vice president and chief
financial officer, discloses that the Debtors engaged Financo as
their investment banker in April 2008 to assist them in
connection with certain transactions, including acquisition,
merger, consolidation and other business combinations. He notes
that because of its prepetition engagement, Financo acquired
significant knowledge of the Debtors' businesses and financial
affairs.
As an investment banker, Financo will (i) identify, update and
review with the Debtors, on an ongoing basis, a list of parties
that it believes might be interested in engaging business with
the Debtors, (ii) coordinate the delivery and analysis of the
Debtors' information to interested parties, and (iii) participate
on the Debtors' behalf in negotiations for those transactions.
Financo will also be available to meet with the Debtors' board of
directors to discuss any proposed transaction and its financial
implications.
Financo will be paid in four monthly advisory fee installments of
$50,000, and will be reimbursed for all reasonable expenses, not
exceeding $50,000. If a transaction occurs either during the
term of Financo's engagement, or at any time within 12 months
after its services were terminated, the Debtors will pay the firm
$1,250,000 upon closing the transaction.
William S. Susman, Financo's president and chief operating
officer, assures the Court that Financo is not connected with the
Debtors, their creditors, other parties-in-interest, and does not
represent any interest adverse to the Debtors, or their
bankruptcy estates.
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, Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
MACKLOWE PROPERTIES: Investor Group to Buy GM Building for $3.6BB
-----------------------------------------------------------------
An investment group that includes Boston Properties Inc., Goldman
Sachs Group Inc. and two Middle Eastern investors is in talks to
acquire the General Motors building along with up to three other
properties from New York developer Harry Macklowe for $3.6 billion
to $3.9 billion, The Wall Street Journal reports citing people
familiar with the matter.
WSJ, according to these people, says the consortium, which also
includes investors from Kuwait and Qatar, has contacted the
lenders on the GM building to discuss assuming the existing debt
on the tower and possible modifications to the loan terms.
WSJ indicates that the situation is unstable and could still fall
apart and other bidders could emerge.
WSJ notes that if the deal is certain, it would be the largest
U.S. commercial real-estate transaction of the year and a
tentative sign that the industry is stabilizing after being
pummeled for months by the credit crisis and signs of a weakening
economy.
Still, the price is lower than Mr. Macklowe and his creditors had
hoped to fetch, WSJ states. The deal would value the GM building
at around $2.8 billion, $200 million less than what his minimum
price had been, WSJ relates.
WSJ notes that the deal is designed to rescue Mr. Macklowe from
financial ruin, but it's not clear that this transaction will
resolve all his debts.
The GM Building is being marketed for Mr. Macklowe by Citigroup
Inc. and CB Richard Ellis Group Inc.
About Boston Properties Inc.
Headquartered in Boston, Massachusetts, Boston Properties Inc.
(NYSE:BXP) -- http://www.bostonproperties.com/-- is a fully
integrated self-administered and self-managed real estate
investment trust, and an owner and developer of office properties
in the United States. The company's properties are concentrated
in five markets: Boston, Washington, D.C., midtown Manhattan, San
Francisco and Princeton, New Jersey. The company conducts
substantially all of its business through its subsidiary, Boston
Properties Limited Partnership.
About Goldman Sachs Group Inc.
Headquaertered in New York City, The Goldman Sachs Group Inc.
(NYSE:GS) -- http://www.gs.com/-- is a global investment banking,
securities and investment management firm that provides a range of
services worldwide to a client base that includes corporations,
financial institutions, governments and high-net-worth
individuals. Its activities are divided into three segments:
Investment Banking, Trading and Principal Investments, and Asset
Management and Securities Services.
About Macklowe Properties
Headquartered in New York City, Macklowe Properties --
http://www.macklowe.com/-- is a real estate investment firm that
buys, develops, manages, and leases commercial office properties
and apartment buildings primarily in Manhattan. The company was
founded in the mid-1960s by chairman and CEO Harry B. Macklowe,
whose son, William Macklowe, serves as the company's president.
The company currently owns about 12 million square feet of office
space and 900 apartment units.
Lenders Waive Loan Default
As reported in the Troubled Company Reporter on May 5, 2008,
A spokesperson for Macklowe Properties founder stated Feb. 15,
2008, that Mr. Macklowe obtained a waiver extending the maturity
of his billions of dollars in debts owed to two major lenders,
Deutsche Bank AG and Fortress.
As previously reported by the TCR, Mr. Macklowe owes Deutsche Bank
about $5.8 billion, and Fortress about $1.2 billion, plus accrued
interest. Both of the debts, secured by Mr. Macklowe's $7 billion
real property in Manhattan, originally matured Feb. 9, 2008.
MANITOWOC CO: Enodis PLC Accepts $2.1 Billion Takeover Bid
----------------------------------------------------------
Manitowoc Co. disclosed that Enodis PLC has accepted its offer to
acquire Enodis for GBP1.08 billion or $2.1 billion, The Wall
Street Journals reports.
In a press statement on May 19, 2008, Manitowoc increased its
offer for Enodis in a transaction valued at approximately
$2.4 billion, including the assumption of Enodis' net debt which
is approximately $245 million as of March 29, 2008.
Enodis said in a statement that the new offer from Manitowoc will
be on largely the same terms as the Manitowoc's GBP948 million bid
on April 14, and will include the reinstatement of a $50 million
termination fee related to the enlarged group obtaining antitrust
clearances, WSJ relates.
In a statement, Manitowoc increased its $2.1 billion offer after
Illinois Tool Works Inc. disclosed its higher offer on May 8,
2008. The increased offer provides for a cash payment of
294 pence per Enodis share.
In addition, in advance of the closing of the transaction, Enodis
intends to pay a dividend of 2 pence per Enodis share in lieu of
an interim dividend in respect of the financial year ending
Sept. 30, 2008.
The increased offer will be implemented by way of a court-
sanctioned scheme of arrangement under the laws of the U.K. and is
expected to close in the second half of 2008. The transaction is
subject to court approval in the U.K., the approval of Enodis
shareholders, as well as regulatory approvals in various
jurisdictions and other conditions outlined in Manitowoc's
original offer.
"After the current recommended bid for Enodis on May 8, 2008, we
reconsidered our options carefully and reaffirmed that there is
significant strategic merit in bringing these two strong
organizations together, Glen E. Tellock, Manitowoc president and
chief executive officer, said. Our statement highlights that we
are determined to bring to bear the many benefits we believe a
combination will deliver."
"Our increased offer is at a 5.0% premium to ITW's offer and a
63.7% premium to Enodis' average closing price for the 12 months
ending April 8, 2008, Mr. Tellock added. As such, we believe
strongly that our revised offer represents superior value for
Enodis' shareholders. At the same time our revised offer still
meets our financial objectives of being EPS accretive in two years
and EVA positive in three years."
"After our initial offer, Manitowoc is proceeding expeditiously
with its regulatory filings," Michael Kachmer, president of
Manitowoc Foodservice, said. "As required, we have offered to
divest select ice assets in the United States, and we will
continue to comply with our obligations under the implementation
agreement. Regulatory clearances may be received in time for a
closing to take place as early as late August, but in any case we
have undertaken to achieve all clearances by October 11 as
outlined in our original offer."
Manitowoc believes that the successful integration of the two
businesses will result in improved growth prospects and the
opportunity to deliver significant synergies. Historical revenues
for the combined companies for the most recently completed
respective financial years exceeded $5.6 billion.
The transaction is subject to certain closing conditions,
including the approval of Enodis shareholders, regulatory
approvals in various jurisdictions and other customary closing
conditions for a U.K. scheme of arrangement. Regulatory clearances
may be received in time for closing to take place as early as late
August, but in any case we have undertaken to take the necessary
steps to obtain these approvals by October 11, 2008.
WSJ notes that on May 19, Enodis shares closed up 2.3% at
305 pence, and was up 0.2% in early morning trading in London,
indicating that shareholders aren't convinced Manitowoc's offer
will be the final price paid for the company.
According to WSJ, ITW, of Glenview, Illinois was considering its
position.
JPMorgan Cazenove is acting as financial adviser to Manitowoc, and
Rothschild is advising Enodis.
About Enodis plc
Headquartered in London, Enodis plc (LON:ENO) --
http://www.enodis.com/-- is engaged in the manufacture and sale
of commercial food equipment through its Global Foodservice
Equipment and Food Retail Equipment groups. The Global
Foodservice Equipment businesses provide primary cooking, ovens,
storage, preparation and holding, ice and beverage equipment to
restaurants and other customers worldwide. The Food Retail
Equipment operations provide walk-in cold storage and
refrigeration display cases to supermarkets and convenience stores
in North America. Its subsidiaries include Castel MAC S.p.A.,
Cleveland Range L.L.C, Cleveland Range Ltd., Enodis Corporation
and Fabristeel (M) Sdn Bhd.
About The Manitowoc Company Inc.
Headquartered in Maniwotoc, Wisconsin, The Manitowoc Company Inc.
(NYSE: MTW) -- http://www.manitowoc.com/-- provides lifting
equipment for the global construction industry, including lattice-
boom cranes, tower cranes, mobile telescopic cranes, and boom
trucks. As a leading manufacturer of ice-cube machines,
ice/beverage dispensers, and commercial refrigeration equipment,
the company offers the broadest line of cold-focused equipment in
the foodservice industry. In addition, the company is a provider
of shipbuilding, ship repair, and conversion services for
government, military, and commercial customers throughout the
maritime industry.
MANITOWOC CO: Moody's Affirms Low-B Ratings; Outlook Stable
-----------------------------------------------------------
Moody's Investors Service affirmed the ratings of The Manitowoc
Company, Inc. following the company's recent announcement that it
has increased its offer to acquire Enodis plc for approximately
$2.4 billion. The ratings include: corporate family rating - Ba2;
probability of default - Ba2; and, senior unsecured notes - Ba3
(LGD4, 66%). The rating outlook remains stable.
Manitowoc recently announced that it has increased its offer for
Enodis in a transaction valued at approximately $2.4 billion,
including the assumption of Enodis' net debt (approximately $245
million as of March 29, 2008). Manitowoc's increased bid follows
Illinois Tool Works, Inc.'s ("ITW") offer of $2.3 billion for
Enodis. Manitowoc's original bid totaled about $2.1 billion
including the assumption of Enodis' net debt. Cash for this
transaction will come from a combination of Manitowoc's existing
cash balance and new debt.
Moody's is maintaining a Ba2 corporate family rating for
Manitowoc. Over the past several years the company's financial
metrics have improved to levels that could be supportive of a
higher corporate family rating. The company's strong operating
performance has resulted from continued favorable global
infrastructure construction end markets, the main driver for
Manitowoc's crane business; domestic residential construction is a
very small portion of the company's end market demand. Despite
this favorable operating trend, Manitowoc's counteroffer for
Enodis is 5% higher than ITW's offer and could add upwards of $2.4
billion of additional debt. The higher level of debt would
partially offset the improvement that has occurred in its
financial metrics. Key credit metrics on a pro forma basis for
2007 will likely erode in the following manner when compared to
Manitowoc's LTM March 31, 2008 actual results: EBITA margin to
below 13% from 13.9%; debt/EBITDA exceeding 3.5x from 0.9x; and
EBIT/interest expense below 3.5x from 13.1x (all ratios adjusted
per Moody's methodology). Moody's notes that the pro forma credit
metrics should improve by 2009 as Manitowoc continues to benefit
from its healthy backlog of crane orders, growth in international
restaurant equipment sales and potential synergy savings
associated with the transaction. Moody's expects free cash flow
will be used to reduce acquisition debt, which should help to
restore Manitowoc's credit metrics over time.
Constraining Manitowoc's corporate family rating is the
significant integration risk associated with such a large
acquisition. Also, the company must contend with potential anti-
trust issues, commodity price and foreign exchange volatility,
cyclicality of the construction end markets, and a softening of
the domestic restaurant industry. Although the pro forma credit
metrics reflecting Manitowoc's current bid would position the
company solidly within the Ba2 rating category, Moody's recognizes
the risk that the company could increase its offer, and the
associated level of leverage, in response to a higher counteroffer
by ITW. Should circumstances result in Manitowoc making such an
offer, Moody's would reassess the likely impact on the company's
near- and intermediate-term financial profile and credit metrics.
While affirming the corporate family rating and probability of
default ratings, Moody's noted that under its Loss Given Default
methodology the structure of any new debt incurred to finance the
acquisition could still have an impact on the rating of
Manitowoc's existing $150 million senior unsecured notes due 2013.
If the company's proposed capital structure following the
acquisition contains a significant amount of secured debt, the
lower relative priority of the unsecured notes in the capital
structure could result in a downgrade of the rating on that
specific debt instrument. Moody's will evaluate the ratings on the
unsecured notes once the terms and conditions of the new debt are
finalized.
The stable outlook reflects Moody's expectation that Manitowoc
will continue to follow prudent financial policies historically
embraced by management characterized by debt reduction and ample
liquidity.
Enodis is a global supplier of food and beverage equipment
supporting the restaurant, convenience store, supermarkets and
institutional end markets. Sales totaled about $1.6 billion
(equivalent) for FY07 ended September 29, 2007.
The Manitowoc Company, Inc., based in Manitowoc, Wisconsin, is a
global manufacturer with operations in over 20 countries. The
company provides a diverse array of capital goods and equipment
within its three core business segments -- cranes and related
products, foodservice equipment, and marine operations. Revenues
for the twelve months ended March 31, 2008 totaled about $4.2
billion.
MERRILL LYNCH TRUST: S&P Assigns Low-B Ratings on Certificates
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Merrill Lynch Mortgage Trust 2008-C1's $948.8 million
commercial mortgage pass-through certificates series 2008-C1.
The preliminary ratings are based on information as of May 19,
2008. Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
The preliminary ratings reflect the credit support provided by the
subordinate classes of certificates, the liquidity provided by the
trustee, the economics of the underlying loans, and the geographic
and property type diversity of the loans. Classes A-1, A-2, A-3,
A-SB, A-4, A-1A, AF-A, AM, AM-A, AJ, and AJ-A are offered
publicly. The remaining classes are offered privately. Standard &
Poor's analysis determined that, on a weighted average
basis, the pool has a debt service coverage of 1.30x, a beginning
loan-to-value ratio (LTV) of 103.6%, and an ending LTV of 96.4%.
PRELIMINARY RATINGS ASSIGNED
Merrill Lynch Mortgage Trust 2008-C1
Class Rating Amount ($) Recommended Credit
----- ------ ---------- ------------------
A-1 AAA 18,179,000 30.000
A-2 AAA 55,593,000 30.000
A-3 AAA 65,593,000 30.000
A-SB AAA 32,365,000 30.000
A-4 AAA 326,361,000 30.000
A-1A AAA 43,777,000 30.000
AF-A AAA 150,000,000 14.125
AM AAA 71,156,000 20.000
AM-A AAA 6,254,000 20.000
AJ AAA 41,805,000 14.125
AJ-A AAA 3,675,000 14.125
B AA+ 10,673,000 13.000
C AA 11,860,000 11.750
D AA- 8,302,000 10.875
E A+ 8,301,000 10.000
F A 9,488,000 9.000
G A- 9,488,000 8.000
H BBB+ 10,674,000 6.875
J BBB 11,859,000 5.625
K BBB- 10,674,000 4.500
L BB+ 8,302,000 3.625
M BB 3,558,000 3.250
N BB- 3,557,000 2.875
P B+ 3,558,000 2.500
Q B 2,372,000 2.250
S B- 3,558,000 1.875
T NR 17,790,134 0.000
X * AAA 948,772,134 N/A
* Interest-only class with a notional amount. N/A-Not applicable.
MERITAGE HOMES: Headed Towards Bankruptcy, Wall Street Paper Says
-----------------------------------------------------------------
In a post at Seeking Alpha, Scott Weitz, the Chief Market
Strategist for Courtroom Traders, a Wall Street investment
newsletter, identified homebuilders that he thinks are close to
bankruptcy. Tarragon Corp., WCI Communities, Inc., and Meritage
Homes Corp. are publicly traded residential builders in the U.S.
that are "most likely to file Chapter 11 sooner rather than
later," according to him.
He predicts tough times for Tarragon's development division.
According to him, the general economic conditions do not bode well
for the company's ongoing plan to develop more than 14,600 homes.
He cited an executive quote from Tarragon's 2007 10-k that warns
of the company's questionable ability to comply with financial
covenants because of the crisis in the real estate credit markets.
For WCI Communities, he mentioned a quote from the most recent 10-
Q filing of the company, which warns of the company's fear that it
wouldn't have sufficient liquidity to satisfy bank covenant
liquidity tests.
Mr. Weitz considered Meritage Homes as the farthest from the brink
of Chapter 11 among the three. But he said, it is "in the fast
lane headed in that direction."
"They have no diversification of business activities outside of
residential development, and the regions they operate in are among
the hardest hit by the Real Estate fall out," according to him.
The Builder Magazine lists WCI as the 40th biggest homebuilder in
terms of total closings in 2006. Data for 2007 is yet
unavailable. The largest is D.R. Horton with 53,410 in closings
and revenue of $15.0 billion.
WCI recorded 2,215 closings and revenues of $2.0 billion.
Meritage is ranked 12th with 10,487 closings and revenue of $3.4
billion. Tarragon is not included in the list.
About Tarragon Corp.
Tarragon Corp. (NasdaqGS: TARR) -- http://www.tarragoncorp.com/--
and its subsidiaries engage in the development, ownership, and
management of real estate properties in the United States. It
operates in two divisions, a Real Estate Development Division
(Development Division) and an Investment Division. The
Development Division focuses on developing, renovating, building,
and marketing homes in high-density, urban locations and in
master-planned communities. The Investment Division owns and
operates a portfolio of stabilized rental apartment communities
located in Alabama, Connecticut, Florida, New Jersey, Texas, Rhode
Island, Tennessee, Maryland, Oklahoma, Michigan, and Georgia. The
company was founded in 1973 and is based in New York, New York.
As reported by the Troubled Company Reporter on April 14, 2008,
Grant Thornton LLP raised substantial doubt about the ability of
Tarragon to continue as a going concern after it audited the
company's financial statements for the year ended Dec. 31, 2007.
The auditing firm stated that as of Dec. 31, 2007 the company had
$1.1 billion in consolidated debt and had guaranteed additional
debt of its unconsolidated joint ventures totaling $31.6 million.
At Dec. 31, 2007, the company was not in compliance with certain
of its debt covenants.
The company's most recent 10-k filing provides this summary of
principal payments on loans due in each calendar quarter of 2008:
Three Months Ending
(in thousands)
-------------------------------------------
March 31 June 30 Sept. 30 Dec. 31 Total
2008 2008 2008 2008
Consolidated debt $109,816 $105,672 $54,954 $27,484 $297,926
matured
or maturing
during the period
less debt satisfied 84,272 36 37 40 84,385
subsequent
to Dec. 31, 2007
Remaining $25,544 $105,636 $54,917 $27,444 $213,541
consolidated
debt maturing
during the period
Debt of unconsolidated $- $$31,570 $- $- $ 31,570
joint ventures guaranteed
by Tarragon maturing during
the period
About WCI Communities Inc.
WCI Communities Inc. (NYSE: WCI) -- http://www.wcicommunities.com/
-- named America's Best Builder in 2004 by the National
Association of Home Builders and Builder Magazine, has been
creating amenity-rich, master-planned lifestyle communities since
1946. Florida-based WCI caters to primary, retirement, and
second-home buyers in Florida, New York, New Jersey, Connecticut,
Maryland and Virginia.
The company offers traditional and tower home choices with prices
from the high-$100,000s to more than $10.0 million and features a
wide array of recreational amenities in its communities. In
addition to homebuilding, WCI generates revenues from its
Prudential Florida WCI Realty Division, and title businesses, and
its recreational amenities, as well as through land sales and
joint ventures. The company currently owns and controls
developable land on which the company plans to build over 15,000
traditional and tower homes.
The company operates in three principal business segments: Tower
Homebuilding, Traditional Homebuilding, which includes sales of
lots, and Real Estate Services, which includes real estate
brokerage and title operations.
WCI Communities Inc. still carries Moody's Caa2 corporate family
and Caa3 senior subordinate ratings. Outlook is negative.
As reported by the TCR on May 13, 2008, Ernst & Young LLP, in
Miami, expressed substantial doubt about WCI Communities Inc.'s
ability to continue as a going concern after auditing the
company's consolidated financial statements for the year ended
Dec. 31, 2007.
As of March 31, 2008, the Company's debt obligations, principal
cash flows by scheduled maturity (dollars in thousands) are:
Fixed rate
----------
2008 2009 2010 2011 2012 Thereafter Total FMV
at
3/31/08
$125,000 $- $- $- $200,000 $490,000 $815,000 $423,468
Variable rate
-------------
2008 2009 2010 2011 2012 Thereafter Total FMV
at 3/31/08
$224,765 $20,525 $663,900 $- $- $- $909,190 $909,190
About Meritage Homes
Headquartered in Scottsdale, Ariz., Meritage Homes Corporation
(NYSE: MTH) -- http://www.meritagehomes.com/-- builds primarily
single-family homes across the southern and western United States
under the Meritage, Monterey and Legacy brands. Meritage has
active communities in Houston, Dallas/Ft. Worth, Austin, San
Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the California
East Bay/Central Valley and Inland Empire, Denver and Orlando.
Meritage Homes is the 12th largest homebuilder in 2006, Builder
Magazine says. Meritage had 10,487 U.S. home closings generating
$3,461,000 in revenues, according to data compiled by Builder.
Meritage Homes has reported four consecutive quarterly net losses
beginning in the second quarter ended June 30, 2007. At March 31,
2008, the company's consolidated balance sheet showed $1.6 billion
in total assets, $894.8 million in total liabilities, and $686.8
million in total stockholders' equity.
As reported in the TCR on Jan. 21, 2008, Moody's lowered the
ratings of Meritage Homes Corporation, including its corporate
family rating to B1 from Ba3, and its senior unsecured notes
rating to B1 from Ba3. The ratings outlook is negative.
METALS USA: S&P Puts B- Corporate Credit Rating on CreditWatch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B-' corporate credit rating, on Metals USA Holding Corp. and
its wholly owned subsidiary, Metals USA Inc. on CreditWatch with
positive implications.
The CreditWatch listing follows the recent filing of an S-1
registration statement by Houston-based Metals USA Holding to
raise equity. The company will use the proceeds to repurchase the
outstanding amount of payment-in-kind toggle notes. As a result,
the company's consolidated credit metrics would improve to a level
S&P would consider to be good for the current 'B-' rating,
with pro forma leverage of 5.4x from the March 31, 2008, level of
about 6.5x.
In resolving its CreditWatch listing, S&P will monitor the
developments of the planned IPO and also assess the company's
near- and intermediate-term business and financial strategies.
S&P could raise the ratings one notch if the IPO is completed as
planned and market conditions remain sufficiently favorable to
allow the company to keep its financial risk profile at a level
consistent with the higher rating.
MOHEGAN TRIBAL: Moody's Lowers Corporate Family Rating to Ba2
-------------------------------------------------------------
Moody's Investors Service lowered Mohegan Tribal Gaming
Authority's ("MTGA") ratings based on the expectation that the
company will not meet the leverage target necessary to maintain
its previous ratings. This rating action concludes the formal
review process that was initiated on February 11, 2008. A stable
rating outlook was assigned.
Ratings affected:
* Corporate family rating to Ba2 from Ba1
* Probability of default rating to Ba2 from Ba1
* Senior notes lowered to Ba1 (LGD-3, 33%) from Baa3
(LGD-3, 33%)
* Senior subordinated notes lowered to Ba3 (LGD-5, 82%) from
Ba2 (LGD-5, 82%)
MTGA's lower-than-expected operating results caused by a slowing
economy and increased competition in the Northeast US, along with
the continuation of a significant amount of debt-financed
development activity, will make it unlikely that the company will
be able to reduce debt/EBITDA to at or near 4.0 times over the
foreseeable future. Debt/EBITDA is currently at about 4.7 times,
and expected to peak at well above 6 times immediately prior to
the completion of its Project Horizon expansion, the final phase
of which is scheduled to open in the second half of 2010.
MTGA's stable outlook continue to acknowledge the favorable
demographics and growth prospects of its primary and secondary
market area as well as the good risk reward profile of its current
development activities. It also reflects our longer term
expectation that the company will eventually reduce leverage to a
level more appropriate for the current rating.
MTGA owns and operates a gaming and entertainment complex located
near Uncasville, Connecticut, known as Mohegan Sun, and a gaming
and entertainment facility offering slot machines and harness
racing in Plains Township, Pennsylvania, known as Mohegan Sun at
Pocono Downs. MTGA reported net revenues of $1.6 billion for the
latest 12-month period ended March 31, 2008.
MORTGAGE LENDERS: Seeks Aug. 6 Extension of Plan-Filing Period
--------------------------------------------------------------
Pursuant to Section 1121 of the Bankruptcy Code, Mortgage Lenders
Network USA, Inc., asks the U.S. Bankruptcy Court for the District
of Delaware to extend:
(a) its exclusive period to file a plan of reorganization
through and including August 6, 2008; and
(b) its exclusive period to solicit and obtain acceptances for
the Plan through and including October 6, 2008.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, relates that on March 12, 2008, the Debtor
filed its plan of liquidation and disclosure statement. Prior to
that filing, the Debtor gave the Plan's draft to the Official
Committee of Unsecured Creditors, which provided conceptual
comments and expressed an interest in commencing discussions
toward developing a consensual plan.
The Debtor believes that the Creditors Committee has been focused
largely upon attempting to complete the negotiation of the
resolution of that certain alleged claims and causes of action
against Residential Funding Company, LLC, and certain other key
parties-in-interest. While the Debtor supports the settlement
efforts, it notes that the efforts have significantly occupied
the time and attention of the Creditors Committee, which seeks to
complete said negotiations in advance of moving forward with the
plan process.
Ms. Jones relates that a meeting will be arranged to occur within
the next few weeks among the Creditors Committee, the Debtor, and
major creditor constituencies to address outstanding issues
between RFC and other key parties-in-interest. During the
pendency of the parties' negotiations, she notes, the Debtor has
continued to move forward with all other aspects of its
bankruptcy case.
MLN scheduled an April 23 hearing on the adequacy of the
information in the disclosure statement, a requisite for the
solicitation of votes and confirmation on the Plan. However, the
Disclosure Statement Hearing has been adjourned to a date yet to
be determined.
Cause exists to extend the exclusive periods pending confirmation
of the Plan, Ms. Jones asserts. She contends that the Debtor and
its professionals continue to work to ensure that bankruptcy case
proceeds forward to maximize the best interests of the creditors,
as evidenced by the filing of the Plan and Disclosure Statement.
She adds that the Debtor is also actively engaged in liquidating
its remaining assets, including its litigation claims.
In addition to continuing many efforts, the Debtor has also
accomplished these tasks since its prior extension requests:
-- continued in its leased equipment return/rejection efforts,
and resolved certain claims of equipment lessors;
-- resolved numerous requests for relief from the automatic
stay;
-- objected to numerous requests for approval and immediate
payment of administrative expense claims;
-- commenced the claims review process;
-- completed its initial analysis of prepetition transfers and
transactions, and commenced the process of recovering
potentially preferential transfers, pursuant to Section 547
of the Bankruptcy Code, by serving demand letters upon the
recipients of the payments; and
-- engaged in ongoing discovery and settlement discussions
with counsel for certain claimants that have filed an
adversary proceeding against the Debtor for the prosecution
of alleged violation of the Worker Adjustment and
Retraining Notification Act.
Judge Peter J. Walsh will convene a hearing on June 24, 2008, at
2:00 p.m., Eastern Time, to consider the Debtor's request.
Pursuant to Del.Bankr.LR 9006-2, the Debtor's Exclusive Periods
are automatically extended until the conclusion of that hearing.
About Mortgage Lenders Network
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering a
full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-
10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor.
Blank Rome LLP represents the Official Committee of Unsecured
Creditors. In the Debtor's schedules of assets and liabilities
filed with the Court, it disclosed total assets of $464,847,213
and total debts of $556,459,464.
The Debtor has sought extension of its exclusive period to file a
plan of reorganization through and including April 22, 2008. A
hearing on the request has been scheduled for March 25.
(Mortgage Lenders Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000).
MORTGAGE LENDERS: To Sell Loan Origination Management Software
--------------------------------------------------------------
Pursuant to Sections 363(b) and 363(f) of the Bankruptcy Code,
Mortgage Lenders Network USA, Inc., seek authority from the U.S.
Bankruptcy Court for the District of Delaware to sell its Lead
Management System/Software free and clear of all liens, claims and
encumbrances to Michael T. Collins for $7,500, in accordance with
an offer letter.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, relates that in the course of the Debtor's
business, its employees used the Software, which was designed to
manage retail loan origination leads generated from various
sources to ensure loan officers were working leads timely, and to
ensure that leads were not "lost". The Debtor wrote and created
the Software for its own use, however, as it is no longer
operating, it has no need for the Software, she notes.
Ms. Jones informs the Court that the Debtor received an offer
from Mr. Collins, the Debtor's former senior vice president of
retail, on the condition that the Software is operational, and in
working order. The Debtor believes that the offer is fair and
reasonable, and based on the limited target market for that type
of software.
The Debtor has also considered the costs associated with
marketing the Software. Accordingly, the Debtor also asks the
Court to approve the sale to Mr. Collins without further
marketing, notice or hearing.
About Mortgage Lenders Network
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering a
full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-
10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor.
Blank Rome LLP represents the Official Committee of Unsecured
Creditors. In the Debtor's schedules of assets and liabilities
filed with the Court, it disclosed total assets of $464,847,213
and total debts of $556,459,464.
The Debtor has sought extension of its exclusive period to file a
plan of reorganization through and including April 22, 2008. A
hearing on the request has been scheduled for March 25.
(Mortgage Lenders Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000).
MORTGAGE LENDERS: Confirms No Stake in Assets for Foreclosure
-------------------------------------------------------------
Mortgage Lenders Network USA, Inc., told the U.S. Bankruptcy Court
for the District of Delaware that the requests of various
financial institutions to lift the bankruptcy stay so they may
foreclose on properties subject to mortgages, are based on the
mistaken belief that the junior mortgages with respect to the
assets are currently property of the Debtor's bankruptcy estate.
LaSalle Bank, National Association, Southstar I, LLC,
CitiMortgage, Inc., PHH Mortgage Corporation, and Deutsche Bank
National Trust Company asked the Court to lift the automatic stay
with respect to parcels of real properties located at:
-- 16 Sandy Hollow Drive, in Waterford, Connecticut 06385;
-- 64 Marys Lane, in South Hampton, New York 11968;
-- 200-202 100th Avenue, in Hollis, New York 11423;
-- 208 E Townsend, in Milwaukee, Wisconsin 53212;
-- 534 Vermont Street, in Brooklyn, New York 11207;
-- 1144 Saint Lawrence Avenue, in Bronx, New York 10472;
-- 16144 88th Avenue, in Jamaica, New York 11432;
-- 3314 Colony, in Baldwin, New York 11510; and
-- 7705 Livingston Avenue, in Wauwatosa, Wisconsin
As reported by the Troubled Company Reporter on April 24, 2008,
Wells Fargo Bank, N.A., America's Servicing Company, Bank of New
York, Consumer Solutions, REO LLC, LaSalle Bank, N.A., and
Southstar I, LLC, sought termination of the automatic stay with
respect to parcels of real properties located at:
-- O4-16 Alton St., in Providence, Rhode Island 02908;
-- 19 Cliff Walk Dr, in Vallejo, California 94591;
-- 163 Brighton Pl, in Smyrna, Delaware 19977;
-- 765 East 226th Street, in Bronx, New York 10466;
-- 934 Magnolia LN, in Branchburg, New Jersey 08876;
-- 1222 Chehalem Drive, in Modesto, California 95350;
-- 2804 Bett Rd, in Coldwater, Mississippi 38618;
-- 4920 Sunnybrook Ave, in Buena Park, California 90621;
-- 6625 South Hermitage Avenue, in Chicago, Illinois 60636;
-- 7223 S 38th Dr, in Phoenix, Arizona 85041;
-- 7895 Rainey Dr, in Antioch, Tennessee 37013;
-- 10255 Barringer Foreman Road, in Baton Rouge, Lousiana; and
-- 17625W E Wind Ave, in Goodyear, Arizona 85338.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, contends that the Debtor has not had any
equitable interest in the Junior Mortgages since they were
assigned to other entities, and any possible legal interest was
transferred when new servicers were assigned. Thus, she asserts,
the Junior Mortgages are not property of the estate pursuant to
Section 541 of the Bankruptcy Code.
The financial institutions do not need to seek the Court's
approval to foreclose on properties, in which the Debtor holds no
interest, Ms. Jones notes. She adds that proposed actions against
properties that are not part of the bankruptcy estate are not
prohibited by the automatic stay, and the Court is not required to
consider requests that are not related to the estate property.
Ms. Jones declares that the Debtor does not oppose the financial
institutions's ability to foreclose on the Properties to the
extent that their recoveries are limited to the Properties
themselves. However, the Debtor reserves its right to challenge
any future liability or obligation alleged by financial
institutions related to either the Senior Mortgages or Junior
Mortgages.
About Mortgage Lenders Network
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering a
full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-
10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor.
Blank Rome LLP represents the Official Committee of Unsecured
Creditors. In the Debtor's schedules of assets and liabilities
filed with the Court, it disclosed total assets of $464,847,213
and total debts of $556,459,464.
The Debtor has sought extension of its exclusive period to file a
plan of reorganization through and including April 22, 2008. A
hearing on the request has been scheduled for March 25.
(Mortgage Lenders Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-
7000).
MOVIE GALLERY: Emerges From Chapter 11 Protection
-------------------------------------------------
Movie Gallery Inc. and its debtor-affiliates successfully emerged
from Chapter 11 bankruptcy protection on May 20, 2008. The
company officially concluded its Chapter 11 restructuring after
meeting all statutory requirements for its Second Amended Plan of
Reorganization.
Movie Gallery also closed its $100 million exit financing
facility.
The Debtors' Plan was confirmed by the United States Bankruptcy
Court for the Eastern District of Virginia, Richmond Division on
April 9, 2008.
"This is a great day for Movie Gallery and all of our customers,
employees and business partners," said Joe Malugen, Chairman,
President and Chief Executive Officer of Movie Gallery.
"Through this restructuring we have effectively addressed our
financial and operational challenges and laid a strong foundation
for the future success of Movie Gallery. The Company now has a
stronger balance sheet, cash to fund operations and a streamlined
store portfolio that will allow us to compete successfully in our
industry. The rapid and successful restructuring of Movie Gallery
is a testament to our outstanding partners and associates, and we
appreciate their hard work and dedication throughout this
process," Mr. Maligen added.
Movie Gallery's new seven-member Board of Directors includes:
-- Bob Fiorella
-- Mark Holliday
-- Joe Malugen
-- Thomas B. McGrath
-- Steven D. Scheiwe
-- Richard L. Shorten, Jr.
-- Neil Subin - Chairman of the Board of Directors
Effective May 20, Movie Gallery's existing shares of common stock,
its 11% senior notes and 9.625% senior subordinated notes have
been cancelled. Under the Plan, Movie Gallery is issuing new
common stock and new warrants, which will be distributed to
certain classes of unsecured creditors in accordance with the
Plan. Current shareholders are not eligible to receive
distributions of new common stock or any other distributions.
Movie Gallery Board of Directors
Bob Fiorella is currently an Independent Consultant working out of
Hermosa Beach, CA. Mr. Fiorella provides business development,
planning, marketing, and financial advice to small to medium-sized
companies in the media, entertainment, and consumer sectors.
Prior to becoming a consultant, Mr. Fiorella spent 16 years
working in finance for major media and entertainment corporations,
including 20th Century Fox Domestic Home Entertainment, Universal
Studios Inc., and The Walt Disney Company. Most recently, Mr.
Fiorella served as Sr. Vice President of Finance at 20th Century
Fox Domestic Home Entertainment. Mr. Fiorella received a
Bachelors degree in Economics from Cornell University and an MBA
from Anderson Graduate School of Management at UCLA.
Mark Holliday is currently a Partner and Portfolio Manager at
Camden Asset Management LP. Mr. Holliday focuses on distressed
and bankruptcy related special situations, and has served on
numerous ad-hoc and official creditor and equity committees.
Additionally, Mr. Holliday has post-reorganization board related
experience with Teletrac, Inc., Assisted Living Concepts, Inc.,
and Reptron Electronics, Inc., as well as the post-confirmation
Mirant Corp. litigation trust. Mr. Holliday received a Bachelors
degree in Economics from Northwestern University in 1990.
Joe Malugen co-founded Movie Gallery in 1985 and served as
Chairman of the Board and Chief Executive Officer until May 2008.
Mr. Malugen was appointed President effective January 4, 2002.
Prior to Movie Gallery's initial public offering in August 1994,
Mr. Malugen had been a practicing attorney in the states of
Alabama and Missouri since 1978, but spent a majority of his time
managing the operations of Movie Gallery beginning in early 1992.
Mr. Malugen received a B.S. degree in Business Administration from
the University of Missouri-Columbia, his J.D. from Cumberland
School of Law, Samford University and his LL.M. (in Taxation) from
New York University School of Law.
Thomas B. McGrath is currently a Senior Managing Director of
Crossroads Media, a private equity backed acquisition vehicle he
founded in 2005. In addition to founding Crossroads Media, Mr.
McGrath is currently the co-chairman of Screen Capital
International, a firm specializing in structuring and placing
financing transactions for the motion picture business. Mr.
McGrath came to these activities after ten years at the head of
the Viacom Entertainment Group, which included Paramount Pictures,
Paramount Television, Paramount Enterprises and associated
companies. Mr. McGrath is a board member of CineWorld UK,
Timeplay and V-Media and a special advisor to Thomson Electronics.
Mr. McGrath received a B.A., cum laude, from Harvard University
and an MBA from Harvard Business School.
Steven D. Scheiwe is currently the President of Ontrac Advisors,
Inc., where he provides analysis and management services to
private equity groups, privately held companies and funds managing
distressed corporate debt issues. Previously, Mr. Scheiwe was the
Chief Executive Officer of Teletrac, Inc., after serving as
General Counsel & Secretary. Mr. Scheiwe was also General Counsel
& Secretary of Premiere Page, Inc. Mr. Scheiwe currently serves on
the boards of Zemex Minerals Holdings, Inc., FiberTower
Corporation, Footstar, Inc., American Restaurant Group, Inc. and
Friedman's, Inc. Mr. Scheiwe received a Bachelors degree from the
University of Colorado and a J.D. from the Washburn University
School of Law.
Richard L. Shorten is the founder and principal and currently
serves as a Managing Member of Silvermine Capital Resources, LLC,
a consultancy and merchant banking boutique that negotiates and
syndicates numerous investment/restructuring transactions in
partnership with various small/medium sized hedge funds.
Previously, Mr. Shorten was an Executive Vice President and
Director at Graphnet, Inc. and a Senior Vice President at Viatel,
Inc. and Destia Communications, Inc. From 1992 to 1997, Mr.
Shorten was a Corporate Associate at Cravath, Swaine and Moore.
Mr. Shorten currently serves on the boards of AboveNet
Corporation, Infinia Corporation, and Enterprise Informatics, Inc.
Mr. Shorten has also served as a director of Mpower Communications
Corp. and Fibertower Corporation. Mr. Shorten received a
Bachelors degree in Economics from Colgate University and a J.D.
from Rutgers Law School.
Neil Subin is a Managing Director of Trendex Capital Management,
an Investment Advisor to and General Partner of private investment
funds focusing primarily on distressed and troubled companies.
Mr. Subin currently is a member of the Board of Directors of 360
Networks Corporation, Fibertower Corp., The Leap Wireless
International, Inc. Liquidating Trust, Federal-Mogul Corporation
and Metricom, Inc. In addition, Mr. Subin has been actively
involved in the formation of, and has served on, official and ad
hoc committees of debt and equity security holders in the
restructuring of dozens of companies. Mr. Subin received a
Bachelor of Arts degree from Brooklyn College.
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kurtzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Debtors' spokeswoman Meaghan Repko said that the company does
not expect to exit bankruptcy protection before the second quarter
of 2008. The Court confirmed the Debtors' Second Amended Chapter
11 Plan of Reorganization on April 9, 2008. (Movie Gallery
Bankruptcy News Issue No. 28; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Has Court Nod to Assume 3,055 Real Property Leases
-----------------------------------------------------------------
The Honorable Douglas O. Tice of the U.S. Bankruptcy Court for the
Eastern District of Michigan authorized Movie Gallery Inc. and
its debtor-affiliates to assume 3,055 real property leases as of
May 11, 2008.
A schedule of the Assumed Leases is available at no charge at:
http://researcharchives.com/t/s?2c22
Landlords Object
Five groups of landlords lamented that the Debtors have not
complied with their obligations to promptly cure or provide
adequate assurance that the arrearage will be cured and their
indemnity responsibilities will be met with respect to certain
leases.
The Landlords are:
Landlord Lease/Sublease Address
-------- ----------------------
The Oakley Corporation 783 South Orlando Avenue
Winter Park, Florida
AHG, Inc. 2061 N. Commercial Street
Harrisonville, Missouri
TSA Stores, Inc. 10887 W. Florissant
Ferguson, Missouri
JCE properties West City West City and Anna, Illinois;
LLC; JCE Properties, LLC; and Caruthersville, Missouri
BLP Lincoln Properties,
LLC; and Forbes DevCo
LLC
Southern Development of Colorado, Louisiana, Mississippi,
Mississippi, Inc. and Missouri, New Mexico, Arkansas,
SHAG of Mississippi, Inc. Oklahoma, Tennessee, Texas, and
Wyoming
Oakley asserted a cure amount of $15,741, while AHG claims a
$2,815 cure amount plus legal fees. TSA seeks the Debtors'
payment of $64,437 for pre- and postpetition amounts relating to
the Sublease. JCE and Southern Development of Mississippi did
not disclose their asserted cure amounts.
The Landlords asked the Court to condition the approval of the
Debtors' assumption motion upon the prompt payment of all pre-
and postpetition amounts due to them in accordance with Section
365(b)(1)(B) of he Bankruptcy Code.
In a separate order, the Court authorized the Debtors to reject
four real property leases:
Lessor/Sublessor Store Address Rejection Date
---------------- ------------- --------------
A.R. Moayad 2339 North Monroe St. April 30, 2008
Tallahassee, Florida
Birmingham Realty 2910 Morgan Road April 30, 2008
Co., Inc. Bessemer, Alabama
724 Associates 724 Souther Atherton St. May 30, 2008
1398 Massachusetts 1398 Massachusetts Ave. April 30, 2008
Avenue, LLC Arlington, Massachusetts
The Court has not yet issued its ruling with respect one real
property lease.
The cure amounts on account of the Assumed Leases will be paid in
accordance with the Plan; provided that all parties, including
without limitation, the Debtors, reserve their rights to object
to the Cure Amounts.
The responses and objections to the Debtors' request filed by
Southern Development of Mississippi and Shag of Mississippi; JCE
Properties West City, et al.; Forbes Devco et al.; AHG, Inc.; the
Oakley Corporation; and TSA Sports will be deemed to be
applications for allowance and payment of prepetition obligations
and administrative expenses under Section 365 on account of the
Assumed Leases, Judge Tice says. Objections to the applications
must be filed with the Court no later than June 9, 2008.
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kurtzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Court confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. (Movie Gallery Bankruptcy News
Issue No. 27; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Wants to Assume Inventec License Agreement
---------------------------------------------------------
Movie Gallery Inc. and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the Eastern District of Virginia to
assume and assign a definitive manufacturing, distribution, and
license agreement between M.G. Digital, LLC, and Inventec
Multimedia & Telecom, to Dar Capital Limited, in connection with
the proposed sale of substantially all of the assets of MovieBeam,
Inc.
The License Agreement is contingent on the closing of the
MovieBeam asset sale, Kimberly A. Pierro, Esq., at Kirkland &
Ellis LLP, in New York, says.
The License Agreement, among other things, appoints Inventec as
the exclusive distributor for the sale, distribution and delivery
of products associated with the MovieBeam service in certain
Asian territories.
The valuable proceeds from the closing of the transaction under
the proposed Purchase Agreement is a legitimate business reason
for the assumption and assignment of the License Agreement, Ms.
Pierro, says. The assignment of the License Agreement will allow
Inventec to be the exclusive distributor for MovieBeam products
with respect to Dar's future operation, she adds.
The Debtors believe that there are no defaults under the License
Agreement. Moreover, Inventec has not any filed any proofs of
claim with respect to the Agreement, Ms. Pierro notes.
If the transaction under the Purchase Agreement is not closed,
neither the Debtors nor Dar Capital will realize any value from
the assumption and assignment of the Lease Agreement, Ms. Pierro
tells the Court.
A full-text copy of the License Agreement is available for free
at http://researcharchives.com/t/s?2c21
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kurtzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Court confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. (Movie Gallery Bankruptcy News
Issue No. 27; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Wants to Sell MovieBeam Assets to Dar Capital
------------------------------------------------------------
Movie Gallery Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Virginia to approve a
purchase agreement between its affiliate M.G. Digital LLC and Dar
Capital, regarding the sale of the Debtors' MovieBeam franchise.
In early 2007, the Debtors acquired substantially all of the
assets, technology, network operations, and customers of
MovieBeam, Inc., which sold "set-top boxes" to consumers and
broadcasted movies for viewing on an on-demand basis.
On Dec. 15, 2007, the Debtors discontinued MovieBeam's operations
nationwide, resulting to:
i) the termination of all MovieBeam customer accounts and
credited customers;
ii) the sale to a third party of certain de minimis assets
related to MovieBeam; and
iii) the rejection of certain executory contracts connected with
the MovieBeam service to avoid further expenses.
Prior to discontinuing the MovieBeam service, the Debtors
commenced a marketing campaign to locate a purchaser for the
remaining MovieBeam assets. Through these marketing efforts, the
Debtors received interest from 14 different parties. After
careful consideration of various available alternatives, the
Debtors concluded that they would be able to maximize the value
of their estates by selling substantially all of the remaining
MovieBeam assets to Dar Capital Limited.
Pursuant to the terms of a purchase agreement, M.G. Digital, LLC,
will sell, among other things, tangible assets and all of M.G.
Digital's ownership rights to and interest in the intellectual
property used solely in connection with the MovieBeam service, to
Dar Capital for $2,250,000. Dar Capital has deposited $250,000
with an escrow agent.
A full-text copy of the Purchase Agreement is available for free
at http://researcharchives.com/t/s?2c20
Despite the Debtors' fulsome marketing process associated with
the Purchased Assets, they have been able to garner bids from
only one party -- Dar Capital, Michael A. Condyles, Esq., at
Kirkland & Ellis, LLP, in Richmond, Virginia, tells Judge Tice,
therefore, the Sale of the remaining MovieBeam assets warrants
approval without requiring a separate auction process.
Mr. Condyles maintains that the proposed Sale allows the Debtors
to monetize assets that are unnecessary to their core business
operations, and will maximize the value of the assets for the
benefit of the Debtors, their estates and their creditors. He
discloses that the Debtors have provided adequate and reasonable
notice of the proposed Sale to all parties-in-interest. He
assures the Court that Dar Capital is not an affiliate or
subsidiary of the Debtors and should be entitled to the
protection offered to "good-faith" purchasers with respect to the
Purchase Agreement within the meaning of Section 363(m) of the
Bankruptcy Code.
The Debtors propose that any security interests in the Purchased
Assets immediately attach to the net proceeds of the sale, in
compliance with the requirement of Section 363(f).
Dotcast Objects
The Court has approved a settlement between the Debtors and
Dotcast, Inc., regarding their dispute relating to Dotcast's
contention that it was a valid assignee of certain rights under a
certain license agreement. The Debtors determined that the
License Agreement does not represent a source of potential value
for their creditors and future operations; hence, the parties
agreed to reject the Agreement.
The settlement also resolved a civil action filed by Dotcast
against the Debtors for alleged infringement of U.S. Patent No.
6,433,835, through selling, offering for sale, and importing a
video distribution service known as MovieBeam (TM).
Dotcast contends that the Sale Motion violates the Settlement
Agreement because the Debtors:
* failed to comply with the required 14-day service of notice
to Dotcast and the required consent was sought on the day
prior to the Sale Motion hearing;
* did not clearly indicate whether the spreadsheets in the
Schedule of Assets are all of the Sale items; and
* have not disclosed the purpose of the Sale and the use of
the Assets.
Mark D. Taylor, Esq., at Kilpatrick Stockton LLP, in Washington,
DC, relates that after a preliminary review of the Schedule,
Dotcast found at least 45 Assets which are Dotcast items and are
subject to the restrictions of the settlement agreement.
According to Mr. Taylor, it appears as if Dar Capital is seeking
to establish a video distribution service, which is similar or
identical to MovieBeam, using the Assets protected by the
Settlement Agreement and Dotcast's intellectual property.
Accordingly, Dotcast asks the Court to deny the Debtors' request,
or, in the alternative, delay the Sale until the Debtors comply
with the Settlement Agreement.
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kurtzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Court confirmed the Debtors' Second Amended Chapter 11 Plan of
Reorganization on April 9, 2008. (Movie Gallery Bankruptcy News
Issue No. 27; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
M. VANINI: Section 341(a) Meeting Scheduled for Thursday
--------------------------------------------------------
The United States Trustee for Region 21 will hold a meeting of
creditors at 3:30 p.m. on Thursday, May 22, 2008, at Room 1021, 51
West First Avenue in Miami, Florida.
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.
Key Biscayne, Florida-based M. Vanini Investments Inc. is a real
estate holding company. It filed for chapter 11 protection on
April 16, 2008 (Bank. S.D. Fla. Case No. 08-14646). Judge Robert
A. Mark presides the case. David Brett Marks, Esq., and Eyal
Berger, Esq., at Kluger Peretz Kaplan & Berlin, P.L. represents
the Debtor in its restructuring efforts. The Debtor listed
between $10 million and $50 million in assets and between $1
million and $10 million in debts when it sought bankruptcy
protection.
M. VANINI: May Hire Kluger Peretz as Bankruptcy Counsel
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida
gave M. Vanini Investments Inc. permission to employ Michael D.
Seese and The Law Firm of Kluger, Peretz, Kaplan & Berlin PL as
the Debtor's counsel.
The firm, among others, will advise the Debtor regarding matters
of bankruptcy law in connection with the case.
The firm's hourly rates are: (i) members range from $350 to $600,
(ii) associates and of counsel range from $190 to $400, and (iii)
paralegals range from $115 to $180. The Debtor has paid $50,000
retainer to the firm. Mr. Seese's hourly rate is $450.
The Debtor told the Court that the firm is a disinterested person
as that term is defined in the Code.
The firm can be reached at:
The Law Firm of Kluger, Peretz, Kaplan & Berlin PL
Miami Center, Seventeenth Floor
201 S. Biscayne Blvd.
Miami, Florida 33131
Telephone: (305) 379-9000
Facsimile: (305) 379-3428
http://www.kpkb.com/
Key Biscayne, Florida-based M. Vanini Investments Inc. is a real
estate holding company with an estimated fair market value of
$16,800,000. It is a wholly owned subsidiary of GDP Investments
Inc. It filed for chapter 11 protection on April 16, 2008 (Bank.
S.D. Fla. Case No. 08-14646). Judge Robert A. Mark presides the
case. David Brett Marks, Esq., and Eyal Berger, Esq., at Kluger
Peretz Kaplan & Berlin, P.L. represents the Debtor in its
restructuring efforts. The Debtor's schedules show total assets
of $24,634,765 and total liabilities of $9,900,683.
M. VANINI: Delivers Schedules of Assets and Liabilities
-------------------------------------------------------
M. Vanini Investments Inc. filed with the U.S. Bankruptcy Court
for the Southern District of Florida its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ---------- -----------
A. Real Property $19,134,765
B. Personal Property 5,500,000
C. Property Claimed
as Exempt
D. Creditors Holding $9,900,683
Secured Claims
E. Creditors Holding -
Unsecured Priority
Claims
F. Creditors Holding -
Unsecured Non-priority
Claims
---------- -----------
TOTAL $24,634,765 $9,900,683
Key Biscayne, Florida-based M. Vanini Investments Inc. is a real
estate holding company. It filed for chapter 11 protection on
April 16, 2008 (Bank. S.D. Fla. Case No. 08-14646). Judge Robert
A. Mark presides the case. David Brett Marks, Esq., and Eyal
Berger, Esq., at Kluger Peretz Kaplan & Berlin, P.L. represents
the Debtor in its restructuring efforts.
M. VANINI: Owes $6,900,000 to VirtualBank in Florida
----------------------------------------------------
In a filing with the U.S. Bankruptcy Court for the Southern
District of Florida, M. Vanini Investments Inc. disclosed
information regarding its prepetition financing.
According to the Debtor, on Feb. 22, 2007, it borrowed about
$6,750,000 from VirtualBank, a division of Lydian Private Bank
pursuant to a security agreement. The Debtor said that it used
the funds to refinance real property it owned at 891 Harbor Drive
in Key Biscayne, Florida. VirtualBank holds a first priority lien
against the real property.
The Debtor said that it has always been current on the Virtual
Financing.
As of the bankruptcy filing, the principal balance the Debtor owed
Virtual was about $6,900,000.
Events Precipitating Bankruptcy
On Sept. 10, 2007, Armando E. Lacasa obtained a final judgment
against the Debtor in the amount $1,400,000. The final judgment
was recorded in Miami-Dade County, Florida. On or about March
2008, Mr. Lacasa caused the Sheriff of Miami-Dade to levy upon the
Debtor's real property and a Sheriff's sale of the property was
set for April 6, 2008.
In order to preserve the assets for the benefit of its creditors,
the Debtor sought protection under chapter 11 of the U.S.
Bankruptcy Code.
About M. Vanini
Key Biscayne, Florida-based M. Vanini Investments Inc. is a real
estate holding company with an estimated fair market value of
$16,800,000. It is a wholly owned subsidiary of GDP Investments
Inc. It filed for chapter 11 protection on April 16, 2008 (Bank.
S.D. Fla. Case No. 08-14646). Judge Robert A. Mark presides the
case. David Brett Marks, Esq., and Eyal Berger, Esq., at Kluger
Peretz Kaplan & Berlin, P.L. represents the Debtor in its
restructuring efforts. The Debtor's schedules show total assets
of $24,634,765 and total liabilities of $9,900,683.
MXENERGY HOLDINGS: S&P Affirms B Corporate Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on MXEnergy
Holdings Inc. to negative from stable, and affirmed the company's
'B' corporate credit rating. The revision follows the publication
of the company's third-quarter results, which exhibited a
significant decline in adjusted EBITDA.
The decline resulted from lower natural gas profits, reduced
volumes, and higher operating costs. As a result, key credit
metrics have declined considerably, with debt to EBITDA slightly
above 4x as of March 31, 2008. The company also amended its debt
covenants, including raising the average debt to EBITDA ratio to
5x from 4x and reducing the minimum interest coverage ratio to
1.4x from 1.6x, which are now less supportive of bondholder
protection. Liquidity could be strained by rising gas prices,
which will reduce availability under its revolving credit
facility.
The credit facility matures in December 2008, and will need to be
extended or replaced for ongoing liquidity needs. As of March 31,
2008, MXEnergy had $162 million of debt.
"The 'B' corporate credit rating on MXEnergy reflects its
vulnerable business risk profile and highly leveraged financial
profile," noted Standard & Poor's credit analyst William Ferara.
"Credit risks include management's acquisitive nature, a highly
leveraged capital structure, the lack of significant barriers to
entry or any major competitive advantages in the retail marketing
segment, relatively flat participation in retail choice programs
across the country, and newly implemented internal controls and
procedures," he continued.
The outlook on MXEnergy is negative. The outlook reflects weakened
credit metrics resulting from a significant decline in adjusted
EBITDA due to reduced gas margins and higher operating costs. It
also reflects the company's liquidity position which is under
pressure from rising gas prices. S&P could lower the rating if
adjusted EBITDA is below its expectations. S&P could also lower
the rating if the company makes additional debt-funded
acquisitions or market conditions deteriorate. S&P could revise
the outlook to stable if financial metrics and liquidity improve
to levels appropriate for the rating.
NEXCEN BRANDS: Delays 1Q 2008 10-Q & Expects to Amend 2007 10-K
---------------------------------------------------------------
NexCen Brands, Inc. (NASDAQ:NEXC) said that it will delay the
filing of its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2008 and that it expects to amend the companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2007.
The company filed a Current Report on Form 8-K on Monday which
provides more detail on these matters. A copy of the Form 8-K is
available for free at http://researcharchives.com/t/s?2c3b
In the course of preparing its first quarter 2008 10-Q and
following the appointment of its new Chief Financial Officer, the
company conducted a review of its prior public filings, including
the terms of the January 2008 amendments to its bank credit
facility. NexCens bank credit facility with BTMU Capital
Corporation was amended in January 2008 at the time of the
acquisition of the Great American Cookie business. The amendments
allowed NexCen to borrow an additional $70 million to finance a
portion of the acquisition purchase price and included an
accelerated-redemption feature applicable to $35 million of the
$70 million. Specifically, the amendments require that the $35
million be reduced to $5 million by October 17, 2008. The company
concluded that disclosures regarding the accelerated-redemption
feature of its bank credit facility, as well as other changes that
reduced the amount of cash available to the company for general
use, were not contained in the companys 2007 Annual Report on
Form 10-K or the January 29, 2008 Current Report on Form 8-K filed
in connection with the acquisition of Great American Cookies.
Substantial Doubt
Based on information that is now known, the company believes that
there is substantial doubt about its ability to continue as a
going concern, and pending completion of an independent review
discussed below, that this substantial doubt also may have existed
at the time the company filed its 2007 10-K. The company is
continuing to review all of the relevant facts and circumstances.
To assist in evaluating and resolving these matters, the audit
committee of the companys Board of Directors has retained
independent counsel to conduct an independent review of the
situation. The company has concluded that its 2007 financial
statements should no longer be relied upon and no reliance should
be placed upon KPMGs audit report dated March 20, 2008, or its
report dated March 20, 2008 on the effectiveness of internal
control over financial reporting as of December 31, 2007, as
contained in the companys 2007 10-K.
The company will determine what changes need to be made to its
2007 10-K and expects the changes may include additional footnote
disclosure in the audited financial statements regarding
amendments to its bank credit facility, footnote disclosure
regarding going concern considerations, and updates to certain
other disclosures relating to the amendments to the bank credit
facility and the companys liquidity and financial condition. KPMG
is also expected to amend its audit report dated March 20, 2008.
However, the company does not expect there to be any changes to
its 2007 financial results.
The company is notifying The Nasdaq Stock Market that it will not
timely file its first quarter 2008 10-Q with the Securities
Exchange Commission. As a result of the delayed filing, NexCen
will not be in compliance with the Nasdaq Marketplace Rule
4310(c)(14) that requires that the company timely file all
required reports with the SEC to satisfy continued listing.
The company intends to file its first quarter 2008 10-Q and to
amend its 2007 10-K, to the extent required, as promptly as
possible following the resolution of the aforementioned matters.
Strategic Alternative Review
NexCen also announced that the company is actively exploring all
strategic alternatives to enhance its liquidity, including
potential capital market transactions, the possible sale of one or
more of its businesses, and discussions with the companys lender.
In addition, the company will take immediate steps to reduce
operating expenses.
Preliminary Selected First Quarter 2008 Operating Results
The company also reported these preliminary financial results for
the first quarter ended March 31, 2008. First quarter 2008 results
reflect the significant number of acquisitions completed during
2007 and the acquisitions of Shoebox New York and Great American
Cookies completed in January 2008.
The company expects to report revenues of $13.9 million in the
first quarter of 2008 compared with $3.9 million in the first
quarter of 2007 and $10.2 million in the fourth quarter of 2007.
Additional preliminary first quarter results include:
* Royalty revenue of $5.6 million versus $2.2 million in the
first quarter last year.
* Licensing revenue of $3.7 million versus $1.6 million in the
prior year first quarter.
* Manufacturing (cookie-dough) revenue of $3.1 million from
Great American Cookies which was acquired in January 2008.
* Franchisee fee revenue of $1.6 million versus $0.1 million
in the first quarter last year.
* The pipeline of letters of intent for new franchise stores
grew during the first quarter from 151 to 410 stores.
* Total store count at the end of the first quarter was 1,905
stores.
NexCens prior guidance for its expected financial results for
2008 is no longer applicable.
About NexCen Brands
NexCen acquires and manages global brands, generating revenue
through licensing and franchising. We currently own and license
the Bill Blass and Waverly brands, as well as seven franchised
brands. Two franchised brands The Athletes Foot and Shoebox New
York sell retail footwear and accessories. Five are quick-
service restaurants Marble Slab Creamery, MaggieMoos, Pretzel
Time, Pretzelmaker, and Great American Cookies.
The company licenses and franchises its brands to a network of
leading retailers, manufacturers and franchisees that generate
$1.3 billion in retail sales in more than 50 countries around the
world. Our franchisees operate approximately 1,900 franchised
stores. Franchisee support and training is provided at NexCen
University, a state-of-the-art facility located in Atlanta.
NORCROSS SAFETY: S&P Withdraws B+ Corporate Credit Ratings
----------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on
Norcross Safety Products LLC and Safety Products Holdings Inc.,
including the 'B+' corporate credit ratings, and removed them from
CreditWatch, where they were placed with positive implications on
April 4, 2008. The ratings were withdrawn as a result of the
company's acquisition by Honeywell International Inc. (A/Stable/
A-1) for $1.2 billion.
NORTHWEST AIRLINES: S&P Comments on Effect of Delta Merger
----------------------------------------------------------
Standard & Poor's Ratings Services looks at how the proposed
merger between Delta Air Lines Inc. and Northwest Airlines Corp.
could affect the rest of the airline industry, its employees, and
the traveling public in a commentary. The commentary--"Would A
Delta-Northwest Merger Help Them Cope With Sky-High Fuel
Prices?"--is adapted from testimony by Standard & Poor's senior
airline credit analyst Philip Baggaley before the Aviation
Subcommittee of the U.S. House of Representatives, May 14, 2008.
The U.S. airline industry once again faces a financial crisis,
this time thanks to extremely high jet fuel prices and the weak
economy. In 2007, the 10 U.S. airlines S&P rate spent more than
$30 billion on jet fuel, higher than the previous year and more
than triple the level in 2002--but reported their best profits
since 1999. They cut nonfuel costs, including painful
restructuring in bankruptcy for many, and they were able to raise
fares and fill more seats. This year, a further surge in jet fuel
prices threatens to wipe out this progress, according to the
report.
U.S. airlines face a potential financial crisis if they cannot
offset the dramatic increase in fuel prices. "We believe the
proposed merger of Delta [B/Watch Pos/--] and Northwest [B+/Watch
Neg/--] offers potential financial gains, but also material
risks," said Mr. Baggaley. "Overall, it probably isn't as
beneficial as its supporters promise, or as dire as its critics
suggest. One way or another ticket prices are likely to rise if
fuel prices stay close to current levels or increase further."
NOVASTAR MORTGAGE: S&P Junks Ratings on Five Classes of Certs.
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 15
classes of home equity loan asset-backed certificates from
NovaStar Mortgage Funding Trust's series 2005-1, 2005-2, 2005-3,
and 2005-4. Additionally, we affirmed the ratings on the remaining
44 classes of certificates from these transactions.
The 15 lowered ratings reflect recent performance of the
underlying subprime home equity loans as of the April 2008
remittance period. While these deals have private mortgage
insurance policies provided by Mortgage Guaranty Insurance Corp.,
Radian Guaranty Inc., and/or PMI Mortgage Insurance Co., the
six-month average loss severities have been 58% for series
2005-1, 57% for series 2005-2, 45% for series 2005-3, and 40% for
series 2005-4 for loans liquidated during these periods.
Overcollateralization, excess interest, and subordination provide
additional credit enhancement. These series have seasoned between
28 months (series 2005-4) and 38 months (series 2005-1). As of the
April 2008 remittance period, series 2005-1, 2005-2, 2005-3, and
2005-4 have realized cumulative losses of 2.02%, 1.70%, 1.38%, and
1.57% of the original principal balances, respectively. The
monthly net losses have reduced overcollateralization below their
respective targets for all four deals. Total delinquencies were
34.02% for series 2005-1, 40.18% for series 2005-2, 40.59% for
series 2005-3, and 44.04% for series 2005-4 of the current
principal balances. These deals had pool factors of 18.27%,
25.65%, 35.03%, and 41.29% of the respective original principal
balances as of the April 2008 remittance period.
The affirmations on the remaining classes from these transactions
reflect loss coverage percentages that are sufficient at the
current rating levels as of the April 2008 distribution period.
RATINGS LOWERED
NovaStar Mortgage Funding Trust
Home equity loan asset-backed certificates
Rating
Transaction Class CUSIP To From
----------- ----- ----- -------------
2005-1 B-4 66987XGP4 B- BBB-
2005-2 M-10 66987WCW5 B BBB
2005-2 M-11 66987WCX3 CC BBB-
2005-3 M-7 66987XHD0 BBB- A+
2005-3 M-8 66987XHE8 BB A+
2005-3 M-9 66987XHF5 B A-
2005-3 M-10 66987XHG3 B- BBB+
2005-3 M-11 66987XHH1 CCC BBB
2005-3 M-12 66987XHJ7 CC BBB-
2005-4 M-7 66987WDL8 BBB A+
2005-4 M-8 66987WDM6 B+ A
2005-4 M-9 66987WDN4 B A
2005-4 M-10 66987WDP9 B- BBB+
2005-4 M-11 66987WDR5 CCC BBB
2005-4 M-12 66987WDS3 CC BBB-
RATINGS AFFIRMED
NovaStar Mortgage Funding Trust
Home equity loan asset-backed certificates
Transaction Class CUSIP Rating
----------- ----- ----- ------
2005-1 A-1A 66987XFZ3 AAA
2005-1 A-1B 66987XGA7 AAA
2005-1 A-2C 66987XGD1 AAA
2005-1 M-1 66987XGE9 AA+
2005-1 M-2 66987XGF6 AA
2005-1 M-3 66987XGG4 AA-
2005-1 M-4 66987XGH2 A+
2005-1 M-5 66987XGJ8 A+
2005-1 M-6 66987XGK5 A
2005-1 B-1 66987XGL3 A-
2005-1 B-2 66987XGM1 BBB+
2005-1 B-3 66987XGN9 BBB
2005-2 A-1A 66987WCF2 AAA
2005-2 A-1B 66987WCG0 AAA
2005-2 A-2C 66987WCK1 AAA
2005-2 A-2D 66987WCL9 AAA
2005-2 M-1 66987WCM7 AA+
2005-2 M-2 66987WCN5 AA
2005-2 M-3 66987WCP0 AA-
2005-2 M-4 66987WCQ8 A+
2005-2 M-5 66987WCR6 A+
2005-2 M-6 66987WCS4 A
2005-2 M-7 66987WCT2 A-
2005-2 M-8 66987WCU9 BBB+
2005-2 M-9 66987WCV7 BBB+
2005-3 A-1A 66987XGS8 AAA
2005-3 A-2C 66987XGV1 AAA
2005-3 A-2D 66987XGW9 AAA
2005-3 M-1 66987XGX7 AA+
2005-3 M-2 66987XGY5 AA+
2005-3 M-3 66987XGZ2 AA
2005-3 M-4 66987XHA6 AA
2005-3 M-5 66987XHB4 AA
2005-3 M-6 66987XHC2 AA-
2005-4 A-1A 66987WDQ7 AAA
2005-4 A-2B 66987WDB0 AAA
2005-4 A-2C 66987WDC8 AAA
2005-4 A-2D 66987WDD6 AAA
2005-4 M-1 66987WDE4 AA+
2005-4 M-2 66987WDF1 AA+
2005-4 M-3 66987WDG9 AA
2005-4 M-4 66987WDH7 AA
2005-4 M-5 66987WDJ3 AA-
2005-4 M-6 66987WDK0 AA-
OFI INCOME: Affirms Covenant Violations Possible in Future Periods
------------------------------------------------------------------
OFI Income Fund admitted it might not be in compliance with one or
more of its covenants in future periods which resulted in the
entire debt being classified as a current liability.
At March 31, 2008, the fund was not in compliance with its payout
ratio covenant contained in the credit agreement but has received
a waiver for the period ended March 31, 2008.
On May 15, the fund amended its credit agreement which decreased
the overall credit facilities available to the fund from $45,000
to $40,000 comprised of $36,000 non-revolving term loan and $4,000
revolving operating facility all of which are denominated in
Canadian dollars.
The credit facility comprised of $36,000 non-revolving term loan
and construction loan, and $9,000 revolving operating facility,
These facilities bear interest at a floating rate. The non-
revolving term loan bears interest at a weighted average rate of
6.5% for the three month period ended March 31, 2008, without
considering the impact of the interest rate swaps.
The revolving operating facility bears interest at a weighted
average rate of 6.5% for the three month period ended March 31,
2008.
The facilities are collateralized by a general security agreement
covering all present and future assets of the fund and its
subsidiaries.
The fund has available letters of credit under the operating
facility up to an aggregate amount outstanding at any time not
exceeding $1,500, of which $250 is used at March 31, 2008.
The fund paid $610 in interest for the three month period ended
March 31, 2008. Interest amounts received or paid on derivative
financial instruments are accounted for on the accrual basis and
are recognized as interest expense on long-term debt.
Financial Results
The fund recorded a net loss of $1.5 million for for the period
ended March 31, 2008, compared with net income of $1.5 million in
first quarter of 2007.
Cash flow from operating activities remained positive in the first
quarter of 2008, amounting to $0.4 million, but was down from
$4.2 million in the 2007 period, reflecting the quarter's net
loss.
OFI generated $0.2 million in distributable cash for the first-
quarter of 2008. Distributions of $1.7 million were declared on
the fund's publicly traded units during the period. No
distributions were declared to the holders of the Class B
Subordinated Exchangeable units.
In view of the uncertain outlook and specifically the effect of
the downturn in U.S. construction markets on OFI's business, the
Trustees suspended monthly distributions to unitholders effective
March 2008.
The fund intends to reinstate monthly distributions when OFI's
financial results sufficiently reflect improved conditions in the
markets for its products.
At March 31, 2008, the company's balance sheet showed total assets
C$185.0 million, total liabilities of C$106.8 million and total
unitholders' equity of C$78.2 million.
Management Change
On May 15, 2008, the company appointed Edward (Ted) Bowles as
president and chief operating officer of the fund. Mr. Bowles had
been chief operating officer since December 2007.
Prior to joining the fund, Mr. Bowles had extensive senior
management experience in manufacturing building construction
materials and industrial packaging in Canada and in the United
States.
About OFI Income Fund
Headquartered in Ontario, Canada, OFI Income Fund (TSX: OFB.UN) --
http://www.ofigroup.com/-- is an open-ended, limited-purpose
trust formed to indirectly acquire and hold a limited partnership
interest in OFI LP. OFI LP was formed to indirectly acquire, own
and operate the business of OFI Holdings Ltd.
PLASTECH ENGINEERED: Wants to Auction Off Business & Other Assets
-----------------------------------------------------------------
Plastech Engineered Products, Inc. and its debtor-subsidiaries
seek authority from the U.S. Bankruptcy Court for the Eastern
District of Michigan to:
-- set procedures in connection with a potential sale of some
or all of their business units and miscellaneous assets;
and
-- select stalking horse bidders in connection with sales,
and pay a break-up fee and make expense reimbursements to
these parties.
Should the Debtors pursue a sale, the Debtors will seek the
Court's approval of the sale at 9:30 a.m. on June 18, 2008.
The Debtors' business units include (i) their interior and
underhood business; (ii) the manufacture of plastic-based
automotive exteriors components; (iii) automotive stamping
manufacturing; and (iv) carpet installation business.
The Debtors' miscellaneous assets, include, but not limited to:
* 51% equity interest in TrimQuest LLC, a Michigan limited
liability company;
* stock or equity interest in any or all of Plastech's
direct or indirect subsidiaries;
* any of their plants or facilities; and
* any or all of their miscellaneous capital assets.
Plastech Entertains JCI's Offer &
Sale Of Other Units to Third Parties
Greg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP,
in Wilmington, Delaware, tells the Court the sale process and
bidding procedures are needed by the Debtors in furtherance of
their restructuring alternatives.
As previously reported, as part of their agreement to provide
$87,000,000 of DIP Financing, major customers General Motors,
Chrysler, LLC, Johnson Controls, Inc., and Ford Motor Company
have required the Debtors to, among other things:
(i) obtain Court approval of sale procedures by June 10, hold
an auction by July 16, and close the sale by July 31, if
they are pursuing a sale of their main businesses; or
(ii) file a Chapter 11 plan by May 31, if they are pursuing a
restructuring of their businesses.
Although the Debtors have maintained that a standalone plan of
reorganization may provide their creditors and equity
constituencies with greater value than a sale of substantially
all or some of their businesses, the Debtors' major creditor
constituencies have generally favored a potential sale
transaction of their interiors business to Johnson Controls, Inc.
and the sale of other business units, if possible, to third
parties, Mr. Galardi relates.
According to Mr. Galardi, the Debtors have been soliciting offers
for one or more of their Business Units and are seeking bids for
their Miscellaneous Assets. The Debtors have not yet accepted
any offers but are very close to obtaining offers that may result
in enough value for their constituencies to warrant their seeking
approval of one or more sales as an integral part of their
restructuring efforts.
Auction on June 16
The Debtors propose to enter into a staking horse agreement with
a bidder or bidders for one or more of the Business Units for
purposes of establishing a minimum acceptable bid at which to
begin an auction. The Debtors intend to:
(a) provide a stalking horse bidder with a fee of not greater
than 2.5% of the purchase price;
(b) set a deadline for the stalking horse bidder to waive or
satisfy any financial or due diligence conditions to
closing as of June 11, 2008;
(c) set June 13, 2008 prevailing Eastern time as the deadline
for any qualified bidder to submit a qualified bid for any
or all of the Debtors' assets or equity interests;
(d) allow bidders to make one or more credit bids of some or
all of their claims to the full extent permitted by
Section 363(k) of the Bankruptcy Code;
(d) schedule the auctions for any or all of the Debtors'
business units and miscellaneous assets as June 16, 2008;
and
(e) set the sale hearings on any qualified bids for which they
are prepared to seek Court approval to commence on
June 18, 2008, as may be adjourned or continued.
Mr. Galardi contends that the Bidding Procedures will enable the
Debtors to fully gauge the value of their businesses and assets
and compare that value to the value the Debtors believe might be
realized in a standalone plan of reorganization. The Debtors
believe they will will in a position to select stalking horse
bidders for the Interiors Business and the Exteriors Business by
May 22, 2008 at 12:00 noon.
Mr. Galardi argues that a break-up fee and expense reimbursement
to the stalking horse bidders will enable the Debtors to maximize
value for the Business Units and set a standard against which
other qualified bids and a standalone restructuring may be
measured. Qualified bids would only be entitled to receive to
those payments if:
(A) the bidder provides the Debtors with an executed asset
purchase agreement by June 11, 2008, that the Debtors
would be prepared to accept; and
(B) either (i) the asset purchase agreement contains no
financing or due diligence condition or (ii) the bidder
has advised the Debtors in writing that the condition has
been waived or satisfied.
A copy of the Debtors' proposed bidding procedures is available
for free at http://researcharchives.com/t/s?2c40
* * *
The Debtors asked the Court to shorten the notice period on their
request to establish the Bidding Procedures. Mr. Galardi
contends the shortened period is necessary to prevent immediate
injury to the Debtors as they may be unable to meet the deadlines
required by the Major Customers.
At the Debtors' behest, the Court (i) will convene a hearing on
May 23, 2008, at 11:30 a.m. (Eastern), to consider approval of
the Bidding Procedures, and (ii) set the deadline for submission
of objections to May 21, 2008 at 11:00 a.m.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PLASTECH ENGINEERED: Epic Wants Adequate Protection for Equipment
-----------------------------------------------------------------
Epic Equipment & Engineering, Inc., a vendor of Plastech
Engineered Products Inc. and its debtor-affiliates, asks the U.S.
Bankruptcy Court for the Eastern District of Michigan to direct
the Debtors to provide adequate protection for its collateral.
Frederic A. Berg, Esq., at Kotz, Sangster, Wysocki & Berg, P.C.,
in Detroit, Michigan, relates that Debtors possess Epic's
fabricated and delivered molds and related machinery and
equipment, used in the manufacture, assembly, and fabrication of
plastic parts related to the Debtors' automotive business. He
stresses that the once a vehicle program that uses the Equipment
is finished, the Equipment becomes obsolete as its value is
contingent on its ability to produce specific parts or components
for the Debtors's customers. As the continued use of the
Equipment and continued production of these parts by the Debtors
substantially decreases and impairs the Equipment's value, there
is no means by which Epic and the Court can monitor whether the
Debtors are properly maintaining and insuring the Equipment.
Mr. Berg says that as of May 2, 2008, the Debtors owe Epic
$501,025 for the Equipment plus accruing interest, costs, and
fees.
Michigan's Ownership Rights in Die Molds and Forms Act, provides
a moldbuilder with lien on the dies, molds and forms for the
amount that a customer or molder owes it for the fabrication,
repair or modification of the die, mold and form. Accordingly,
Epic has a properly first-priority lien and its interest is in
the nature of a statutory lien, which may not be challenged by a
trustee for the reason that the statutory liens were perfected
and enforceable as of the Petition Date.
Epic maintains that despite its liens, it has not received any
payment for any of the Equipment before date of bankruptcy nor has
the Debtors offered any adequate protection of Epic's security
interest in the Equipment. Furthermore, the Equipment continues
to decrease in value, and the collateral is at risk of losing all
of its value, Mr. Berg relates.
Epic asks the Court to lift the automatic stay to allow it to
pursue available remedies as to the Equipment, as the denial by
the Debtors of the adequate protection of the Equipment from
continued depreciation, constitutes cause under Section 362(d) of
the Bankruptcy Code. Furthermore, Epic asks the Court to direct
the Debtors to entitle it periodic cash payments or a replacement
lien to assure the value of its Equipment is not depleted during
the bankruptcy.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PLASTECH ENGINEERED: Wants Claims Bar Date Fixed at June 30
-----------------------------------------------------------
Plastech Engineered Products Inc. and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Eastern District of Michigan to:
(i) fix June 30, 2008, at 5:00 p.m., as the general bar date
within which certain proofs of claim against the Debtors
must be filed;
(ii) fix June 30, 2008, at 5:00 p.m., as the initial
administrative bar date within which administrative claim
requests against the Debtors must be filed;
(iii) fix July 30, 2008, at 5:00 p.m., as the governmental bar
date; and
(iv) establish procedures for the notice of the bar dates.
Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure
provides that "[t]he court shall fix . . . the time within which
proofs of claim or interest may be filed." Section 503(a) of the
Bankruptcy Code provides that "an entity may timely file a
request for payment of an administrative expense. . . ."
Furthermore, pursuant to Section 105, the Court may issue any
order "necessary or appropriate" to carry out, among other
things, the mandate of section 503(a).
A. General Bar Date
Parties, other than governmental units, which assert prepetition
claims against the Debtors, must file proofs of claim on or
before the General Bar Date. Proofs of claim be filed by
creditors of any of the Debtors on account of any claim arising
before the Petition Date except those creditors holding or
wishing to assert these types of claims:
* Claims listed in the the Debtors' schedules of assets and
liabilities that are not listed as contingent,
unliquidated or disputed and that are not disputed by the
holders thereof as to amount, classification or the
identity of the Debtor against whom the Claim is
scheduled;
* Claims on account of which a proof of claim has already
been properly filed with the Court against the correct
Debtor;
* Claims previously allowed or paid pursuant to an order of
the Court;
* Claims allowable under Sections 503(b) and 507(a)(1) of
the Bankruptcy Code as expenses of administration; and
* Claims of Debtors against other Debtors.
The Debtors ask the Court that any holder of an interest in any
of the Debtors, which interest is based exclusively upon the
ownership of common or preferred stock of any of the Debtors, not
be required to file a proof of interest, except for any other
transaction in the Debtors' securities, including a Claim for
damages or rescission based on the purchase or sale of the
Interests, for which the holder of interest must file a proof of
claim on or prior to the General Bar Date.
B. Governmental Bar Date
Any governmental units that are creditors holding or wishing to
assert "claims" arising before the Petition Date against any of
the Debtors must file proof of claims on or before the
Governmental Bar Date.
In addition, any interest Holder that is a governmental unit who
wishes to assert a Claim against any of the Debtors based on a
transaction in the Debtors' securities including a Claim for
damages or rescission based on the purchase or sale, of the
Interests, must file a proof of claim on or prior to the
Governmental Bar Date.
C. Rejection Bar Date
Proofs of claim for any rejection damages claims arising from the
rejection of any unexpired lease or executory contract of a
Debtor during the bankruptcy cases must be filed by the later of:
* 30 days after the effective date of rejection of the
executory contract or unexpired lease as provided by a
Court order or pursuant to a notice under Court-approved
procedures,
* any date set by another Court order, or
* the General Bar Date.
D. Initial Administrative Claims Bar Date
Requests for payment of an administrative claim first arising
from and after the date of bankruptcy through and including May
30, 2008, must be filed on or before June 30, 2007, by parties
holding an administrative claim under Sections 101(5) and 503(b)
of the Bankruptcy Code; including requests by non-Debtor parties
to agreements with any of the Debtors, for any amounts arising
under any of the Agreements from and after the bankruptcy filing
are due, owing and unpaid as of May 30, 2008.
The Debtors, however, ask to exclude these parties from filing an
administrative claim requests:
* Parties that have already properly filed an administrative
claim request with the Court or Donlin Recano & Company,
Inc., clearly setting forth that the party is asserting an
administrative claim;
* Parties whose administrative claim has been previously
allowed by a Court order;
* A Debtor or Debtors holding an administrative claim
against one or more other Debtors; and
* Professional advisors, including attorneys, financial
advisors, accountants, claims agents, retained by the
Debtors or the Creditors' Committee under Sections 327,
328, or 1103, of the Bankruptcy Code, whose administrative
claim is for services rendered and reimbursement of
expenses in these Chapter 11 cases.
The Debtors also seek to advise any holder of a 503(b)(9)
administrative claim which claim is required to be filed by
May 30, 3008, pursuant to a prior Court order (i) not to file an
administrative claim request and (ii) that their claims are not
covered by this request.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PLASTECH ENGINEERED: Court Sets Admin. Claims Bar Date to May 30
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan set
May 30, 2008, as the deadline wherein creditors of Plastech
Engineered Products Inc. and its debtor-affiliates may file
administrative expense claims under Section 503(b)(9) of the U.S.
Bankruptcy Code, or in the alternative, 30 days after the service
and publication of notice to creditors.
Asahi Kasei Plastics North America, Inc., CML Innovative
Technologies, Inc., and E.I. Du Pont De Nemours and Company have
concurred with the Debtors' request to set the Bar Date.
In addition, the Court authorized the Debtors:
(a) to implement procedures for the filing of Section 503(b)(9)
claims;
(b) on the form, manner, and sufficiency of the notice of
the Section 503(b)(9) bar date; and
(c) to pay valid Section 503(b)(9) claims of parties with whom
the Debtors continue to do business and agree to provide
trade terms by allowing Section 503(b)(9) claimants to
apply the Debtors' postpetition payments to unpaid
prepetition invoices.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PROPEX INC: Can Reject Chattanooga Office Leases with Raines Group
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Tennessee
authorized Propex Inc. and its debtor-affiliates to reject two
of their office leases with The Raines Group, Inc., effective
April 30, 2008.
As reported in the Troubled Company Reporter on May 8, 2008, the
Leases are:
(a) a lease between the Debtors, as lessee, and The Raines
Group, Inc., as managing agent for Chattanooga-Lee, LLC,
dated Feb.l 14, 2006, as amended on Oct. 5, and Dec. 24,
2007; and
(b) a lease between the Debtors and Raines Group, dated
Oct. 26, 2006, as amended on Dec. 24, 2007.
The Debtors vacated the leases on April 30, 2008, and will turn
over full and complete access of the lease premises to the
landlord on that date.
According to Edward L. Ripley, Esq., at King & Spalding, LLP, in
Houston, Texas, vacating and turning over the space provided
under the Leases, along with the rejection of the leases, will
save the Debtors approximately $5,230 each month. "Immediate
rejection of these leases is in the best interest of the Debtors'
estates," he says.
The Court gives The Raines Group until July 16, 2008, to file any
claims against the Debtors in relation to the lease rejections.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It is produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249).
The debtors' has selected Edward L. Ripley, Esq., Henry J. Kaim,
Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston,
Texas, to represent them. As of Sept. 30, 2007, the debtors'
balance sheet showed total assets of $585,700,000 and total debts
of $527,400,000. The Debtors' exclusive period to file a plan of
reorganization expires on May 17, 2008.
(Propex Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
PROPEX INC: Court Extends Lease Decision Period Until August 15
---------------------------------------------------------------
The Honorable John C. Cook of the U.S. Bankruptcy Court for the
Eastern District of Tennessee extended the time by which Propex
Inc. and its debtor-affiliates must assume or reject unexpired
leases and executory contracts, through and including Aug. 15,
2008.
As reported in the Troubled Company Reporter on April 29, 2008,
the Debtors are presently lessees under 15 unexpired non-
residential real property leases, including their corporate
headquarters located at Lee Highway, in Chattanooga, Tennessee.
Edward L. Ripley, Esq., at King & Spalding, LLP, in Houston,
Texas, relates that the Debtors are at an early stage of their
Chapter 11 cases, and are currently dealing with a variety of
important issues regarding the progression of their bankruptcy
proceedings.
The Order does not in any way precludes, limits or waives the
Debtors from subsequently disputing that any of the leases fall
within the definition of or are governed by Section 365(d)(4) of
the Bankruptcy Code.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It is produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249).
The debtors' has selected Edward L. Ripley, Esq., Henry J. Kaim,
Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston,
Texas, to represent them. As of Sept. 30, 2007, the debtors'
balance sheet showed total assets of $585,700,000 and total debts
of $527,400,000. The Debtors' exclusive period to file a plan of
reorganization expires on May 17, 2008.
(Propex Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
R&B CONSTRUCTION: Wants to File Chapter 11 Plan Until October 1
---------------------------------------------------------------
R&B Construction Inc. and Joy Built-Homes Inc. ask the United
States Bankruptcy Court for the Northern District of Georgia to
extend their exclusive periods to:
i) file a Chapter 11 plan until Oct. 1, 2008; and
ii) solicit acceptances of that plan until Nov. 30, 2008.
The Debtors need more time to reach an agreement with five secured
banks -- including Fairfield Financial, Bank of Atlanta, Branch
Bank & Trust, Key Bank, First Bank of Georgia dba First Bank
Mortgage -- which hold an aggregate of $13,154,953 in claim. The
claim represent 13.8% of the Debtors' $95 million debt to secured
lenders. At present, the Debtors have 40 secured lenders.
Through the closing of the sale of 44 houses and 33 lots, the
Debtors say they were able to pay secured debt of at least
$6.8 million. The Debtors are currently seeking Court approval
for the sale of seven additional houses. Since the Debtors'
bankruptcy filing, they have obtained authority from the Court for
the sale of at least 89 houses.
The Debtors have 464 houses, 1,200 developed subdivision lots and
1,700 additional undeveloped properties. They owed $45 million in
construction loans on houses and $50 million on loans in regard
with the properties.
The Debtors' exclusive right to file a plan will expire on June 3,
2008.
A hearing is set for May 29, 2008, at 11:00 a.m., in Courtroom
1203 in Atlanta, to consider approval of the Debtors' request.
About R&F Construction
Based in Jonesboro, Georgia, R&B Construction Inc. is a
homebuilder in Metro Atlanta, Alabama, and North West Florida.
The Debtor and a debtor-affiliate, Joy Built Homes Inc., filed
for chapter 11 protection on Feb. 4, 2008 (Bankr. N.D. Ga. Lead
Case No. 08-62023). James L. Paul, Esq., at Chamberlain,
Hrdlicka, White, Williams & Martin, represents the Debtors in
their restructuring efforts. The U.S. Trustee for Region 21 has
yet to appoint creditors to serve on an Official Committee of
Unsecured Creditors. When the Debtors filed for protection from
their creditors, they listed assets and debts between $100 million
and $500 million.
RESTRUCTURED ASSET: S&P Junks Rating on $87.5 Million Certificates
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the $87.5
million credit-linked certificates from Restructured Asset
Certificates w/Enhanced Returns (RACERS) Series 2006-18-C
(ABX_A_06_1_ii) to 'CCC' from 'A+'.
The downgrade reflects the May 16, 2008, lowering of the rating on
the reference obligation, the class M-5 home equity pass-through
certificates due Feb. 25, 2036, issued by Home Equity Asset Trust
2005-8 to 'CCC' from 'A+'.
RACERS 2006-18-C (ABX_A_06_1_ii) is a credit-linked transaction,
the rating on which is based on the lower of (i) the rating on the
underlying securities, RACERS Series 2006-15-A Trust's
certificates ('AAA'); and (ii) the lowest rating on the
obligations referenced under the credit default swap
trade (class M-5 from Home Equity Asset Trust 2005-8; 'CCC').
SABINE PASS: Moody's Cuts Sr. Secured Notes Rating to B2
--------------------------------------------------------
Moody's Investors Service downgraded Sabine Pass LNG, LP's
(Sabine)'s senior secured notes due 2013 and 2016 to B2 from Ba3.
The rating outlook is negative.
"The downgrade takes into account Moody's expectation that
Sabine's parent, Cheniere Energy Inc, will likely face a stressed
liquidity position starting in 2009 unless Cheniere is able to
generate sizeable cash flow through execution of a strategic
transaction or through a major shift in the global LNG business",
said Clifford Kim, Analyst at Moody's. He also added, "Cheniere's
90.6% ownership position in Sabine and extensive contractual
arrangements serve to link Cheniere's and Sabine's credit
quality".
In Moody's view, Cheniere is likely to face significant pressure
on its liquidity position by early 2009 since Cheniere's LNG
marketing activities are anticipated to generate substantially
lower than expected cash flows. Moody's expects continued high
international demand for LNG, growth in US regasification capacity
and construction delays in natural gas liquefaction will lead to
limited prospects for Cheniere's merchant LNG marketing business
over the next several years.
Additionally, Cheniere's constrained access to capital markets
further contributes to its dwindling liquidity position. While
Cheniere's recently executed $95 million credit facility provides
incremental cash, the credit facility's high cost and short
eighteen-month tenor provide only marginal credit support.
Moody's expects Cheniere will utilize a substantial portion of its
unrestricted cash to pay for capital expenditures, debt service,
and corporate overhead in 2008. Cheniere had unrestricted cash
totaling approximately $142 million at
March 31, 2008 and $297 million at December 31, 2007.
Moody's observes that Sabine represents most of Cheniere's
consolidated cash flows and operating assets. Additionally, Sabine
has extensive contractual arrangements with Cheniere and its
affiliates including the terminal use and operations and
maintenance agreements. These factors serve as strong incentives
to bring Sabine into a possible bankruptcy of Cheniere in order
for Cheniere to better control its estate. That being said,
Moody's also recognizes certain legal ring fencing provisions at
Sabine including an independent director and separateness
requirements. These ring fencing provisions constitute layers of
protection that could insulate Sabine from a potential Cheniere
bankruptcy; however, Moody's does not consider these provisions
sufficient to fully insulate Sabine and Cheniere's credit quality
will continue to have implications to Sabine's rating.
The negative outlook will consider Cheniere's ability to improve
its liquidity position and cash flow within the next six months.
Sabine's rating could come under additional negative pressure if
Cheniere utilizes its unrestricted cash faster than expected or is
unable to improve it's liquidity position during this period to
meet expected cash uses in 2009 and onward.
Additionally, Moody's will continue to evaluate implications of
Cheniere's financial situation on Sabine's operational performance
and Sabine's ability to complete Phase 2 construction, which is
scheduled to be finished toward the middle of 2009.
A rating upgrade is unlikely; however, a positive credit event
could include an improvement in Cheniere's liquidity such that
Cheniere is able to comfortably meet all its obligations over the
next several years without significant reliance on merchant LNG
related cash flows or external sources of cash. Additionally,
Sabine's rating could stabilize or improve if Sabine is able to
replace Cheniere with a creditworthy third party both in terms of
ownership and contractual arrangements.
Sabine Pass LNG L.P. was formed in 2004 to construct, own and
operate a liquefied natural gas (LNG) receiving terminal with an
aggregate regasification capacity of 4 Bcf/d. Sabine has signed
three 20-year Terminal Use Agreements (TUA's) for 100% of its
regasification capacity on a "take or pay" basis. Sabine is 90.6%,
indirectly-owned by Cheniere Energy, Inc (not rated).
SCO GROUP: Wants Plan-Filing Exclusivity Date Extended
------------------------------------------------------
The SCO Group, Inc., and S.C.O. Operations, Inc., ask the U.S.
Bankruptcy Court for the District of Maryland to extend, until
Aug. 11, 2008, their exclusive rights to file a Chapter 11 plan.
In addition, the Debtors ask the Court to extend their exclusive
rights to solicit creditor votes on that plan until Oct. 13, 2008.
This is the Debtors' second extension request.
The Debtors believe that cause exists to have their deadlines
extended, because, among other things, the ruling of the District
Court of Utah will resolve a substantial unresolved contingency,
regarding the amount, if any, of the Debtors' liability to Novell,
Inc. Such a ruling will, therefore, help all parties complete the
final negotiations and documentation for their deal.
On Jan. 20, 2004, the Company sued Novell for alleged bad faith
effort to interfere with the Company's rights to UNIX and
UnixWare(R). The complaint requested preliminary and permanent
injunctive relief and damages. It also required Novell to assign
to the Company all copyrights that Novell wrongfully registered.
On July 29, 2005, Novell filed a countersuit against the Company
for alleged slander of title, breach of contract, failure to remit
royalties and failure to conduct audit obligations. On Dec. 30,
2005, the Company moved to amend the complaint to assert copyright
infringement, unfair competition, and license breach claims.
The trial of the issues, however, was stayed as a result of the
Company's filing a voluntary petition for relief under Chapter 11
of the Bankruptcy Code on Sept. 14, 2007.
The bankruptcy court in Delaware has ruled that it will retain
jurisdiction over the constructive trust issue but lifted the stay
to allow Novell's claims for amounts due under the SCOsource
agreements and the Company's authority to enter into those
licenses to go to trial in federal court in Utah. Novell has
determined to file a motion for summary judgment on the issue of
whether the Company had the authority to enter into the SCOsource
licenses and the Company is briefing that motion.
The bankruptcy court in Delaware also ruled that the bankruptcy
stay applies to the SuSE arbitration proceeding pending in Europe.
A four-day bench trial was scheduled late in April 2008, in the
U.S. District Court in Utah, to address Novell's claims for
amounts due under the SCO source agreements and SCO Group's
authority to enter into those licenses.
Headquartered in Lindon, Utah, The S.C.O. Group Inc. (Nasdaq:
SCOX) fka Caldera International Inc.-- http://www.sco.com/--
provides software technology for distributed, embedded and
network-based systems, offering SCO OpenServer for small to
medium business and UnixWare for enterprise applications and
digital network services.
The company has office locations in Australia, Austria,
Argentina, Brazil, China, Japan, Poland, Russia, the United
Kingdom, among others.
The company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead
Case No. 07-11337). Epiq Bankruptcy Solutions LLC, acts as the
Debtors' claims and noticing agent. The United States Trustee
failed to form an Official Committee of Unsecured Creditors in
these cases due to insufficient response from creditors. The
Debtors' exclusive period to file a chapter 11 plan expires on
March 12, 2008. The Debtors' schedules of assets and
liabilities showed total assets of US$9,549,519 and total
liabilities of US$3,018,489.
As reported in the Troubled Company Reporter on Feb. 12, 2008,
the Court further extended the Debtors' exclusive periods to
file a Chapter 11 plan until May 11, 2008; and solicit
acceptances of that plan until July 11, 2008.
SHARPER IMAGE: Seeks Authority to Hire KPMG as Tax Consultant
-------------------------------------------------------------
The Sharper Image Corp. seeks the authority of the U.S. Bankruptcy
Court for the District of Delaware to employ KPMG LLP as its
tax consultants, nunc pro tunc to the Debtor's bankruptcy filing.
Sharper Image Corporation Chief Financial Officer Rebecca Roedell
relates that the Debtor has selected KPMG because of the firm's
extensive experience and knowledge in the fields of taxation,
accounting, auditing and tax advisory services for large
sophisticated companies both in chapter 11 as well as outside of
chapter 11, and its familiarity with the Debtor's business and
tax affairs. KPMG is willing to serve as tax consultants and to
perform the services requested, subject to this Court\u2019s
approval.
As the Debtor's tax consultants, KPMG will:
(a) rollforward of Internal Revenue Code Section 382
ownershifts from February 1, 2008 through the date
the Debtor emerges from bankruptcy;
(b) assist the Debtor in determining (i) whether the Debtor
will qualify under Section 382(l)(5) of the Internal
Revenue Code; and if so, (ii) whether Sections 382(l)(5)
or 382(l)(6) would be more beneficial for the company;
(c) determine the effects of attribute reduction under
Section 108(b) of the Bankruptcy Code;
(d) after accomplishing the first three services noted, assist
the Debtor in determining which elections, structuring
alternatives and Section 382(l)(5) and (1)(6) exceptions
would result in preservation of the most valuable tax
assets to the company;
(e) assist in the preparation of Bankruptcy Code Section
505(a) and section 505(b) prompt determination rules and
issues, as applicable;
(f) perform analyses to determine (i) which professional
fees and costs are currently deductible, capitalizable and
amortizable, or nondeductible; and (ii) the deductibility
of costs associated with rejecting any executory contracts
in bankruptcy; and
(g) provide other consulting, advice, research, planning or
analysis regarding tax issues as may be requested by
the Debtor from time to time.
The Debtor has employed KPMG as tax advisors since 2007. By
virtue of its prior engagement, KPMG is familiar with the books,
records, financial information and other data maintained by the
Debtor and is qualified to continue to provide advisory services
to the Debtor, Ms. Roedell asserts. Thus, retaining KPMG is an
efficient and cost effective manner in which the Debtor may
obtain the requisite services, she adds.
KPMG intends to charge for its tax consulting services at an
hourly rate plus reimbursement of actual and necessary expenses
incurred, applying a 20% discount to its customary hourly rates.
The standard hourly billing rates currently charged by KPMG for
tax consulting services rendered by its professionals and
discounted rates are:
Billing Category Standard Rates Discounted Rates
---------------- -------------- ----------------
Partner $725 to $875 $580 to $700
Tax Managing Director $700 to $850 $560 to $680
Senior Manager $600 to $850 $480 to $680
Manager $425 to $725 $340 to $580
Senior Associates $350 to $525 $280 to $420
Associates $275 to $300 $220 to $240
Paraprofessional $150 to $200 $120 to $160
Ms. Roedell informs the Court that the Debtor has also sought
authorization to employ Comyns, Smith, McCleary & Deaver LLP and
Brann & Isaacson to provide tax advisory services and sales and
use tax advice. Because of the nature of the Debtor's
operations, it is essential for the Debtor to employ these
professionals for the contemplated services, she adds. "The
roles of KPMG and such other professionals will be circumscribed
to the greatest extent possible to prevent the unnecessary and
inefficient duplication of services," Ms. Roedell maintains.
Michael Barton, a partner of KPMG, assures the Court that his
firm is a "disinterested person," as that term is defined in the
Bankruptcy Code, and holds no interest adverse to the Debtor and
its estate that would impair the firm's ability to objectively
perform professional services for the Debtor. He adds that KPMG
has no connection to the Debtor, its significant creditors, any
other party in interest, their attorneys, or accountants and the
KPMG partners and professionals.
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. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000. (Sharper Image
Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SHARPER IMAGE: Allowed to Employ Conway Del Genio as Manager
------------------------------------------------------------
The U.S. District Court for the District of Delaware authorized
Sharper Image Corp. to employ (i) Conway, Del Genio, Gries & Co.,
LLC to perform restructuring management services, and (ii) Robert
P. Conway as the Debtor's chief executive officer nunc pro tunc to
the Debtor's bankruptcy filing.
The Court held that the Debtor must file a motion for retention
to the Court in the event the Debtor seeks to have CDG personnel
assume executive officer positions that are different than the
positions disclosed in the Debtor's application for employment,
or to change the terms of engagement by either (i) modifying the
functions of the personnel, (ii) adding new personnel, or (iii)
altering or expanding the scope of the engagement.
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. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000. (Sharper Image
Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SHARPER IMAGE: Can Retain Loughlin Meghji as Financial Advisor
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
the Official Committee of Unsecured Creditors in the bankruptcy
case of Sharper Image Corp. to retain Loughlin Meghji + Company as
its financial advisor, nunc pro tunc to the Debtors' bankruptcy
filing.
Loughlin's aggregate liability for claims, liabilities or
expenses arising out of or related to the engagement will be
neither limited to the portion of fees giving rise to the
liability nor capped at the aggregate fees incurred by Loughlin
under the engagement, the Court said.
The aggregate contribution of all indemnified parties to any
losses, claims, damages, liabilities and expenses arising out of
or related to the engagement will not be limited to the amount of
fees actually received by Loughlin under the engagement.
Moreover, the limitation period tor the commencement of an action
arising out of or related to the engagement will not be governed
by any provision of the engagement letter between the Debtor and
Loughlin.
According to the Court, Loughlin will not be entitled to
indemnification, contribution or reimbursement pursuant to the
Engagement Letter for services other than those described in the
Engagement Letter, unless approved by the Court.
The Debtor's estate will have no obligation to indemnify
Loughlin, or provide contribution or reimbursement for any claim
or expense that is either: (i) judicially determined to have
arisen from Loughlin's gross negligence or willful misconduct,
(ii) for a contractual dispute in which Loughlin is alleged to
have breached its contractual obligations unless the Court
determines that indemnification, contribution or reimbursement
would be permissible, or (iii) settled prior to a judicial
determination as to the exclusions, but determined by the Court
to be a claim or expense for which Loughlin should not receive
indemnity, contribution or reimbursement under the terms of the
modified Engagement Letter.
If, before the earlier of (i) the entry of an order confirming a
Chapter 11 Plan, and (ii) the entry of an order closing the
Chapter 11 case, Loughlin believes that it is entitled to the
payment of any amounts by the Debtor's estate on account or the
estate's indemnification, contribution and reimbursement
obligations under the Engagement Letter, Loughlin must file an
application to the Court, and the estate may not pay any amount
before the entry of a Court-order approving the payment.
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. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000. (Sharper Image
Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SHARPER IMAGE: To Delay Filing of 2007 Annual Report
----------------------------------------------------
Rebecca L. Roedell, executive vice president and chief financial
officer of The Sharper Image Corporation, informs the Securities
and Exchange Commission that the company is not in a position
where it will be able to file its annual report on Form 10-K for
the year ended January 31, 2008 in a timely manner.
According to Ms. Roedell, the principal reason for the delay in
filing the annual report on Form 10-K relates to Sharper Image's
bankruptcy filing on February 19, 2008.
Sharper Image anticipates that it will reflect an operating loss
and a net loss for the year, which, in each case could be
significantly greater than in the prior year, due, in part, to
the substantial decline in sales, decreased margins due to
changes in the product mix, potential asset impairment charges,
potential tax asset write off charges, increased professional
fees, and costs related to the Chapter 11 filing, Ms. Roedell
says.
Ms. Roedell relates that Sharper Image is unable to provide a
reasonable estimate of its results as of April 15, 2008, since it
is unable to quantify the impact of potential transactions,
professional fees and costs associated with the Chapter 11
filing.
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. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000. (Sharper Image
Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SHINDARA TAN: Case Summary & Eight Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Shindara Puspita Tan
aka Shindara Jo
615 Harding Avenue
Monterey Park, CA 91754
Bankruptcy Case No.: 08-15512
Type of Business: The Debtor is a real estate investor.
Chapter 11 Petition Date: April 25, 2008
Court: Central District of California (Los Angeles)
Judge: Ellen Carroll
Debtor's Counsel: Michael Y. Lo, Esq.
Law Office of Michael Y. Lo
506 North Garfield Avenue, #280
Alhambra, CA 91801
Tel: (626) 289-8838
Total Assets: $4,368,265
Total Debts: $4,446,600
Debtor's Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Los Angeles County Property Tax $33,612
Tax Collector
P.O. Box 54018
Los Angeles, CA 90054-0018
1888-807-2111
Bank of America Credit Card $33,139
P.O. Box 15726
Wilmington, DE 19886-5726
1800-789-6685
Chase Credit Card $24,078
P.O. Box 94014
Palatine, IL 60094-4014
1800-945-2000
Citi Card Credit Card $16,306
P.O. Box 6940
The Lakes, NV 88901-6940
1800-283-7918
Countrywide Financial Credit Card $12,221
P.O. Box 94014
Palatine, IL 60094-4014
1888-200-6071
Discover Credit Card $9,001
P. O. Box 30395
Salt Lake City, UT 84130-0395
1900-347-2683
Mercedes Benz Financial Car Lease $5,990
P.O. Box 9001680 future
Louisville, KY 40290-1680 payments
Dick Larsen Property Tax $692
Treasurer Tax Collector
172 W. Third Street, 1st Floor
San Bernardino, CA 92415-0360
Tel: (909) 387-8308
SMURFIT-STONE: Moody's Affirms Corporate Family Rating at B2
------------------------------------------------------------
Moody's Investors Service downgraded Smurfit-Stone Container
Enterprises, Inc.'s (SSCE) speculative grade liquidity rating to
SGL-3 from SGL-2. All other ratings were affirmed. SSCE is the
main operating subsidiary of Smurfit-Stone Container Corporation,
a publicly traded containerboard manufacturer. The SGL-3 rating
indicates adequate liquidity. Moody's expects the company to rely
on external sources of committed financing as free cash flow will
likely be negative over the next four quarters.
SSCE maintains an $800 million senior secured bank credit facility
that is committed for a 5-year term through November 2009. At
March 31, 2008, aggregate outstanding amounts were $436 million,
with availability of approximately $223 million after considering
outstanding letters of credit. SSCE also maintains off-balance
sheet accounts receivable securitization facilities comprised of a
$450 million facility that is also committed through November
2009, and a C$70 million facility for Canadian operations.
Moody's believes the company's operating performance will continue
to be challenged by a slower US economy and high energy, freight,
fiber, and chemical costs. As a result, covenant compliance is
also expected to be tighter over the next four quarters. At March
31, 2008, the actual consolidated senior secured leverage ratio
was 1.96x versus a required ratio of 3.0x. The interest coverage
ratio was 2.8x versus a required ratio of 2.0x. Moody's expects
the company to manage a modest cushion under its covenant
compliance with a potential need to renegotiate covenant levels
over the near term.
On March 12, 2007, the company's corporate family rating was
downgraded to B2 from B1 due to an assessment of financial
performance and debt repayment capacity that causes Moody's to
view SSCE as a company that can generate free cash flow and repay
debt only when market conditions are quite robust. Over the recent
past, SSCE has been unable to reduce its debt load from internally
generated free cash flow. The company's debt reduction has been
made primarily through asset sales proceeds and business
divestitures. Even at current containerboard pricing levels, which
Moody's views as being reasonably healthy, SSCE is unlikely to
repay significant amounts of debt. If prices fall as demand
slackens, or inflationary cost pressures are greater than
expected, or the US economy further slows, the outlook may be
revised to negative.
Ratings Downgraded:
Issuer: Smurfit-Stone Container Enterprises, Inc.
* Speculative grade liquidity rating downgraded to SGL-3 from
SGL-2;
Rating Affirmed:
Issuer: Smurfit-Stone Container Enterprises, Inc.
* Corporate family at B2
* Senior secured term loan B at Ba2 (LGD2, 14%)
* Senior secured term loan C at Ba2 (LGD2, 14%)
* Senior secured bank credit facility at Ba2 (LGD2, 14%)
* Senior unsecured notes at B3 (LGD4, 68%)
* Outlook is stable
Issuer: Smurfit-Stone Container Canada, Inc.:
* Backed senior secured term loan C at Ba2 (LGD2, 14%)
* Outlook is stable
Issuer: Stone Container Finance Company of Canada:
* Backed senior unsecured at B3 (LGD4, 68%)
* Outlook is stable
Headquartered in Chicago, Illinois, Smurfit-Stone Container
Corporation is a publicly traded holding company that operates
through a wholly-owned subsidiary company, Smurfit-Stone Container
Enterprises, Inc. The company is an integrated producer of
containerboard and corrugated containers (paper-based industrial
packaging) and is a large collector, marketer, and exporter of
recycled fiber. The company also produces market pulp and kraft
paper.
STEAKHOUSE PARTNERS: Sells Restaurants in Order to Pay Creditors
----------------------------------------------------------------
Steakhouse Partners Inc. and its affiliates filed for Chapter 11
protection with the U.S. Bankruptcy Court for the Southern
District of Florida.
The Debtors said that the country's economic crisis coupled with
rising food prices made them unable to pay their creditors on
time, relates the Triangle Business Journal. In an effort to pay
their lenders, the Debtors intend to sell off their restaurant
branches.
The bankruptcy filing could make landlords close the restaurants,
the Journal reports, citing documents submitted to the Court.
Based in San Diego, California, Steakhouse Partners Inc. and its
affiliates -- http://www.paragonsteak.com/-- own and operate
steakhouse restaurants in the U.S. Their restaurants specialize
in complete steak and prime rib meals and also offer fresh fish
and other lunch and dinner dishes. They operate under the brand
names of Hungry Hunter's, Hunter Steakhouse, Mountain Jack's and
Carvers. Their menu also include fresh fish, seafood, pasta,
chicken, prime rib, steaks, appetizers and desserts.
As of Dec. 31, 2006, they operate 25 full-service steakhouse
restaurants located in eight states. They operates solely in
domestic market.
The company and its affiliates filed for Chapter 11 protection on
May 15, 2008 (Bankr. S.D. Calif. Lead Case No. 08-04147). Enid M.
Colson, Esq., at Liner Yankelevitz Sunshine & Regenstreif LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
consolidated total assets of $16,395,000 and total debts of
$26,010,000.
SUNNY DELIGHT: S&P Withdraws B- Rating
--------------------------------------
Standard & Poor's Ratings Services withdrew its corporate credit
rating on Sunny Delight Beverages Co. at the company's request.
Ratings List
To From
-- ----
Sunny Delight Beverages Co.
Corporate Credit Rating N.R. B-/Stable/--
TARRAGON CORP: Candidate for Bankruptcy, Traders Newsletter Says
----------------------------------------------------------------
In a post at Seeking Alpha, Scott Weitz, the Chief Market
Strategist for Courtroom Traders, a Wall Street investment
newsletter, identified homebuilders that he thinks are close to
bankruptcy. Tarragon Corp., WCI Communities, Inc., and Meritage
Homes Corp. are publicly traded residential builders in the U.S.
that are "most likely to file Chapter 11 sooner rather than
later," according to him.
He predicts tough times for Tarragon's development division.
According to him, the general economic conditions do not bode well
for the company's ongoing plan to develop more than 14,600 homes.
He cited an executive quote from Tarragon's 2007 10-k that warns
of the company's questionable ability to comply with financial
covenants because of the crisis in the real estate credit markets.
For WCI Communities, he mentioned a quote from the most recent 10-
Q filing of the company, which warns of the company's fear that it
wouldn't have sufficient liquidity to satisfy bank covenant
liquidity tests.
Mr. Weitz considered Meritage Homes as the farthest from the brink
of Chapter 11 among the three. But he said, it is "in the fast
lane headed in that direction."
"They have no diversification of business activities outside of
residential development, and the regions they operate in are among
the hardest hit by the Real Estate fall out," according to him.
The Builder Magazine lists WCI as the 40th biggest homebuilder in
terms of total closings in 2006. Data for 2007 is yet
unavailable. The largest is D.R. Horton with 53,410 in closings
and revenue of $15.0 billion.
WCI recorded 2,215 closings and revenues of $2.0 billion.
Meritage is ranked 12th with 10,487 closings and revenue of $3.4
billion. Tarragon is not included in the list.
About Tarragon Corp.
Tarragon Corp. (NasdaqGS: TARR) -- http://www.tarragoncorp.com/--
and its subsidiaries engage in the development, ownership, and
management of real estate properties in the United States. It
operates in two divisions, a Real Estate Development Division
(Development Division) and an Investment Division. The
Development Division focuses on developing, renovating, building,
and marketing homes in high-density, urban locations and in
master-planned communities. The Investment Division owns and
operates a portfolio of stabilized rental apartment communities
located in Alabama, Connecticut, Florida, New Jersey, Texas, Rhode
Island, Tennessee, Maryland, Oklahoma, Michigan, and Georgia. The
company was founded in 1973 and is based in New York, New York.
As reported by the Troubled Company Reporter on April 14, 2008,
Grant Thornton LLP raised substantial doubt about the ability of
Tarragon to continue as a going concern after it audited the
company's financial statements for the year ended Dec. 31, 2007.
The auditing firm stated that as of Dec. 31, 2007 the company had
$1.1 billion in consolidated debt and had guaranteed additional
debt of its unconsolidated joint ventures totaling $31.6 million.
At Dec. 31, 2007, the company was not in compliance with certain
of its debt covenants.
The company's most recent 10-k filing provides this summary of
principal payments on loans due in each calendar quarter of 2008:
Three Months Ending
(in thousands)
-------------------------------------------
March 31 June 30 Sept. 30 Dec. 31 Total
2008 2008 2008 2008
Consolidated debt $109,816 $105,672 $54,954 $27,484 $297,926
matured
or maturing
during the period
less debt satisfied 84,272 36 37 40 84,385
subsequent
to Dec. 31, 2007
Remaining $25,544 $105,636 $54,917 $27,444 $213,541
consolidated
debt maturing
during the period
Debt of unconsolidated $- $$31,570 $- $- $ 31,570
joint ventures guaranteed
by Tarragon maturing during
the period
About WCI Communities Inc.
WCI Communities Inc. (NYSE: WCI) -- http://www.wcicommunities.com/
-- named America's Best Builder in 2004 by the National
Association of Home Builders and Builder Magazine, has been
creating amenity-rich, master-planned lifestyle communities since
1946. Florida-based WCI caters to primary, retirement, and
second-home buyers in Florida, New York, New Jersey, Connecticut,
Maryland and Virginia.
The company offers traditional and tower home choices with prices
from the high-$100,000s to more than $10.0 million and features a
wide array of recreational amenities in its communities. In
addition to homebuilding, WCI generates revenues from its
Prudential Florida WCI Realty Division, and title businesses, and
its recreational amenities, as well as through land sales and
joint ventures. The company currently owns and controls
developable land on which the company plans to build over 15,000
traditional and tower homes.
The company operates in three principal business segments: Tower
Homebuilding, Traditional Homebuilding, which includes sales of
lots, and Real Estate Services, which includes real estate
brokerage and title operations.
WCI Communities Inc. still carries Moody's Caa2 corporate family
and Caa3 senior subordinate ratings. Outlook is negative.
As reported by the TCR on May 13, 2008, Ernst & Young LLP, in
Miami, expressed substantial doubt about WCI Communities Inc.'s
ability to continue as a going concern after auditing the
company's consolidated financial statements for the year ended
Dec. 31, 2007.
As of March 31, 2008, the Company's debt obligations, principal
cash flows by scheduled maturity (dollars in thousands) are:
Fixed rate
----------
2008 2009 2010 2011 2012 Thereafter Total FMV
at
3/31/08
$125,000 $- $- $- $200,000 $490,000 $815,000 $423,468
Variable rate
-------------
2008 2009 2010 2011 2012 Thereafter Total FMV
at 3/31/08
$224,765 $20,525 $663,900 $- $- $- $909,190 $909,190
About Meritage Homes
Headquartered in Scottsdale, Ariz., Meritage Homes Corporation
(NYSE: MTH) -- http://www.meritagehomes.com/-- builds primarily
single-family homes across the southern and western United States
under the Meritage, Monterey and Legacy brands. Meritage has
active communities in Houston, Dallas/Ft. Worth, Austin, San
Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the California
East Bay/Central Valley and Inland Empire, Denver and Orlando.
Meritage Homes is the 12th largest homebuilder in 2006, Builder
Magazine says. Meritage had 10,487 U.S. home closings generating
$3,461,000 in revenues, according to data compiled by Builder.
Meritage Homes has reported four consecutive quarterly net losses
beginning in the second quarter ended June 30, 2007. At March 31,
2008, the company's consolidated balance sheet showed $1.6 billion
in total assets, $894.8 million in total liabilities, and $686.8
million in total stockholders' equity.
As reported in the TCR on Jan. 21, 2008, Moody's lowered the
ratings of Meritage Homes Corporation, including its corporate
family rating to B1 from Ba3, and its senior unsecured notes
rating to B1 from Ba3. The ratings outlook is negative.
TENNECO INC: S&P Ratings Still on CreditWatch Pending Union Vote
----------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on General
Motors Corp. (GM), American Axle & Manufacturing Holdings Inc.
(Axle), Lear Corp., and Tenneco Inc. remain on CreditWatch with
negative implications, pending the outcome of a vote on the
tentative labor agreement between the United Auto Workers (UAW)
and Axle, and its review of the four companies' financial
profiles. The ratings on all four companies were placed on
CreditWatch negative on March 17, sparked by a work stoppage at
many of Axle's UAW-represented plants in New York and Ohio. Axle
and the UAW announced the tentative agreement on a new labor
contract, but did not disclose details.
Local unions were scheduled to vote on the agreement beginning
Monday and continuing through this week. If ratified, the new
four-year contract will end the strike, which began Feb. 25 and
led to reduced production of light trucks by GM over the past few
months.
According to media reports, under the tentative agreement, the UAW
has accepted a lower all-in wage and benefit package competitive
with that offered by the UAW at other U.S. auto supplier
competitors of Axle. In exchange, Axle is reportedly offering buy-
outs of up to $140,000 to reduce headcount and
buy-downs of up to $105,000 to ease the transition for remaining
UAW workers to the new wage level. (GM previously announced it had
agreed to fund $200 million of the amount needed for the wage
transition and buyouts.) Axle also reportedly will close two
forging plants under the agreement.
"We intend to resolve each company's CreditWatch listing within
the next two weeks," said Standard & Poor's credit analyst
Lawrence Orlowski. "We'll focus on the strike's direct effect on
liquidity, as well as the prospective performance of each company
for the remainder of 2008 and into 2009. We expect to resolve the
CreditWatch listings on Lear and Tenneco first because their
first-quarter results indicate that they have been less affected
by the strike," he continued.
TOUSA INC: To Receive $240 Million Income Taxes Refund
------------------------------------------------------
TOUSA, Inc., had indicated in its quarterly report on Form 10-Q,
filed with the U.S. Securities and Exchange Commission, for the
quarterly period ended Sept. 30, 2007 that it anticipated
receiving refunds of previously paid income taxes for 2005 and
2006.
The anticipated amount, net of a $5,600,000 liability for
unrecognized tax benefits, totaled $234,600,000 as of Sept. 30,
2007 and appeared as a $234,600,000 income tax receivable in
note 6 on the Form 10-Q, TOUSA Vice President and Chief
Accounting Officer Angela Valdes related in a regulatory filing
with SEC.
That amount was included in the $371,100,000 of "Other Assets" on
the Company's balance sheet as of Sept. 30, 2007.
Since Sept. 30, the Company has received tax refunds, or applied
those amounts to estimated 2008 state income taxes, of
substantially all of the approximately $240,200,000 gross amount
of the receivable, including a federal tax refund of
$207,300,000 from the carryback of its 2007 losses, which was
received on April 23, 2008, Ms. Valdes disclosed.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No.:
08-10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta,
Esq., at Kirkland & Ellis LLP and Paul Steven Singerman, Esq., at
Berger Singerman to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker and
financial advisor. Ernst & Young LLP is selected as the Debtors'
independent auditor and tax services provider. Kurtzman Carson
Consultants LLC acts as the Debtors' Notice, Claims & Balloting
Agent. The Official Committee of Unsecured Creditors hired
Patricia A. Redmond, Esq., and the law firm Stearns Weaver
Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA
Inc.'s financial condition as of Sept. 30, 2007,
showed total assets of $2,276,567,000 and total debts of
$1,767,589,000. Its consolidated detailed balance sheet as of
Feb. 29, 2008 showed total assets of $1,961,669,000 and total
liabilities of $2,278,106,000.
(TOUSA Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TOUSA INC: Falcone Group Eyes Possible Acquisition
--------------------------------------------------
Falcone Group is interested in acquiring full or joint control
TOUSA, Inc., South Florida Business Journal quotes sources
familiar with the matter.
According to Ed Duggan of South Florida Business Journal, Falcone
Group is familiar with TOUSA's business because it had a joint
venture with TOUSA before.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No.:
08-10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta,
Esq., at Kirkland & Ellis LLP and Paul Steven Singerman, Esq., at
Berger Singerman to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker and
financial advisor. Ernst & Young LLP is selected as the Debtors'
independent auditor and tax services provider. Kurtzman Carson
Consultants LLC acts as the Debtors' Notice, Claims & Balloting
Agent. The Official Committee of Unsecured Creditors hired
Patricia A. Redmond, Esq., and the law firm Stearns Weaver
Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA
Inc.'s financial condition as of Sept. 30, 2007,
showed total assets of $2,276,567,000 and total debts of
$1,767,589,000. Its consolidated detailed balance sheet as of
Feb. 29, 2008 showed total assets of $1,961,669,000 and total
liabilities of $2,278,106,000.
(TOUSA Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
UNITED RENTALS: Fitch Affirms B Rating on Unit's Subordinated Debt
------------------------------------------------------------------
Fitch Ratings has affirmed the long-term Issuer default Rating
(IDR) at 'BB-' for United Rentals, Inc. (NYSC: URI) and United
Rentals (North America) Inc. (URNA). The Rating Outlook is Stable.
Approximately $2.6 billion in debt is affected by this rating
action.
Fitch affirmed these ratings with a Stable Outlook:
United Rentals, Inc (URI)
-- Long-term IDR 'BB-'.
United Rentals (North America)
-- Long-term IDR 'BB-';
-- Senior secured credit facility 'BB';
-- Senior unsecured debt 'BB-';
-- Subordinated debt 'B'.
The rating affirmation reflects URI's strong core franchise and
leadership position in the equipment rental industry and improved
overall financial performance and capitalization. Ratings
constraints reflect seasonal and cyclical factors challenging the
industry and company's primarily secured borrowing profile.
Going forward, Fitch expects the economic environment to remain
challenging and equipment demand to soften. While near-term trends
are expected to continue to weaken gradually, Fitch is not
anticipating a substantial decline in underlying operating
performance.
The Rating Outlook assumes operating metrics, leverage ratios and
capitalization may weaken but remain appropriate for the rating
level. Significant deterioration in operating performance or
weakening of URI's overall financial profile could result in a
negative rating action.
UTSTARCOM INC: Earns $25.4 Million in 2008 First Quarter
--------------------------------------------------------
UTStarcom Inc. reported on Thursday financial results for the
first quarter of 2008.
Net income for the first quarter of 2008 was $25.4 million, as
compared to a net loss of $54.0 million in the first quarter of
2007.
Net sales for the first quarter of 2008 were $586.0 million as
compared to $476.0 million in the first quarter of 2007, due to
growth in the Personal Communications Division. Gross margins for
the first quarter of 2008 were 15.7% as compared to 15.8% in the
first quarter of 2007.
The operating loss for the first quarter of 2008 was $30.9 million
as compared to an operating loss of $52.3 million in the first
quarter of 2007.
The significant items in the first quarter 2008 net income
include:
-- A gain on sale of investments of $48.3 million including
Gemdale and Infinera
-- A net $8.5 million tax benefit in China primarily due to a
change in withholding tax laws
Cash, cash equivalents and short term investments was
$305.0 million at quarter end, while the total debt was
$36.0 million after paying off $290.0 million of convertible notes
and accrued interest during the quarter.
"During the first quarter we made progress in moving the company
forward in terms of both financial and operational results. Our
core areas of Multimedia Communications and Broadband continued to
win new business in key markets while the Personal Communications
Division's results benefited from the introduction of new high end
products."
Peter Blackmore, UTStarcom's president and chief operating
officer, went on to say, "while we are encouraged by this
quarter's developments, we recognize that this is only a step
along our turnaround path and we will continue to push for
improvements throughout the company's activities."
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$1.7 billion in total assets, $1.1 billion in total liabilities,
and $616.2 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?2c36
Going Concern Disclaimer
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 operations and significant debt obligations.
On March 3, 2008, the company repaid the convertible subordinated
notes of $289.5 million which included a principal payment of
$274.6 million and the accrued interest of $14.9 million.
The company reported an operating loss of $30.9 million for the
quarter ended March 31, 2008.
About UTStarcom Inc.
Headquartered in Alameda, Calif., UTStarcom Inc. (Nasdaq: UTSI) --
http://www.utstar.com/-- 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.
VESTA INSURANCE: J. Gaines Settle with Texas Receivership Entities
------------------------------------------------------------------
Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy
Procedure and Section 105 of the Bankruptcy Code, Kevin
O'Halloran, Plan Trustee for J. Gordon Gaines, Inc., asks the U.S.
Bankruptcy Court for the Northern District of Alabama to approve a
settlement agreement he entered into with Vesta Fire Insurance
Corporation, Vesta Insurance Corporation, Shelby Casualty
Insurance Company, The Shelby Insurance Company, Texas Select
Lloyds Insurance Company, and Select Insurance Services, Inc. --
the Texas receivership entities -- and Vesta Timber Co., LLC, with
respect to certain claims and disputes among the parties.
Gaines, a wholly owned subsidiary of Vesta Insurance Group, Inc.,
was a publicly held corporation with investments in the capital
stock of Vesta Fire as its principal assets. Vesta Fire owns a
substantial portion of membership interest in Vesta Timber, a
limited liability company located in Alabama. Prior to the
Petition Date, Vesta Fire and its insurance subsidiaries were
placed in rehabilitation proceedings in Texas, Florida and
Hawaii.
The Texas Receivership Action received an order of liquidation
from the Receivership Court resulting to the canceling of
policies relating to Vesta Fire and its other subsidiaries.
Prime Tempus, Inc., was appointed as the Special Deputy Receiver
for the Texas Receivership Entities.
Subsequently, the Special Deputy Receiver filed Claim No. 119 for
$14,617,006, on behalf of Vesta Fire, and Claim Nos. 121 to 124
for unspecified amounts on behalf of various Texas Receivership
Entities against Gaines.
To resolve their disputes, Mr. O'Halloran, Vesta Timber, and the
Texas Receivership Entities reached a compromise regarding the
Claims. The salient terms of the settlement are:
(a) The Special Deputy Receiver will pay Gaines $1,500,000.
(b) Vesta Fire is deemed to have an allowed unsecured claim
for $14,617,006 against Gaines. The Claim is satisfied
under the settlement based on certain transfers to Vesta
Insurance Group.
(c) The claims filed by the other Receivership Entities are
deemed withdrawn with prejudice.
(d) In satisfaction of Vesta Fire's Allowed Claim, Gaines
will transfer to Vesta Fire all of its right, title and
interest in its assets, excluding:
-- the cash on hand at Gaines on the effective date of
the Settlement Agreement;
-- Gaines' right to recover on its proof of claim filed
against Florida Select Insurance Agency;
-- the $1,500,000 settlement payment;
-- any cause of action against Gaines' present or former
directors, officers, or professionals;
-- any preference or fraudulent transfer causes of
action available to Gaines under Chapter 5 of the
Bankruptcy Code;
-- any claim by Gaines against Hawaii Insurance &
Guaranty Company;
-- certain excluded VIG Claims and tenant deposit;
-- any claim by Gaines against Florida Select;
-- amounts to which Gaines is due under the Services
Agreement; and
-- certain contingent assets.
(e) As a part of the transfer of Gaines' interest in property,
Gaines will transfer its proof of claim in the VIG Case
to the SDR.
(f) Gaines will grant Vesta Fire a 90% interest in the net
recovery, if any, from any claim asserted by Gaines or on
its behalf against any of its present or former officers,
directors or professionals.
(g) Once the claim process is finished and all allowed
unsecured claims and expenses of the case are paid, Gaines
will transfer 100% interest in the proceeds of the
remaining assets it retained.
(h) The parties will exchange mutual releases among
themselves.
Mr. O'Halloran asserts that the Settlement will produce a
substantial return to unsecured creditors in light of the
$1,500,000 payment that Gaines will receive. He notes that the
return to unsecured creditors is expected to increase if Gaines
receives a distribution on the Claim filed against its affiliate,
Florida Select. He adds that the Settlement limits Gaines'
liability to the Texas Receivership Entities without further
expense. The Settlement also removes any uncertainty and delay
regarding the potential litigation between the parties, and
eliminates the substantial costs of litigation, Mr. O'Halloran
tells Judge Bennett.
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors. In its schedules of
assets and liabilities, Vesta listed $14,919,938 in total assets
and $214,278,847 in total liabilities.
J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that
manages the company's numerous insurance subsidiaries and employs
the headquarters workers. The company filed for chapter 11
protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808).
Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP,
represent the Debtor in its restructuring efforts. In its
schedules of assets and liabilities, Gaines listed $19,818,094 in
total assets and $16,046,237 in total liabilities.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered an order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
Florida Select Insurance Agency Inc., an affiliate, filed for
chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No.
07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer &
Dobbs LLP, represents Florida Select. FSIA's exclusive period to
file a plan of reorganization expired Dec. 20, 2007. (Vesta
Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VESTA INSURANCE: J. Gains Plan Trustee Seeks to Transfer Claims
---------------------------------------------------------------
Kevin O'Halloran, in his capacity as Plan Trustee for J. Gordon
Gaines, Inc.'s Plan of Liquidation, seeks the authority of the
U.S. Bankruptcy Court for the Northern District of Alabama to
transfer records of three pending claims against Gaines to
Vesta Insurance Group, Inc.:
Claimant Claim No. Claim Amount
-------- --------- ------------
Crowe Chizek and Company LLC 160 $289,342
Madison Stearns, Inc. 30 82,807
EMB America, LLC 20 46,005
The proposed Claim Transfers, according to Mr. O'Halloran, are
without prejudice to the rights of Lloyd Whitaker, the Plan
Trustee for Vesta, to object to the Claims on grounds other than
the Claims (i) being untimely filed in Vesta's bankruptcy case,
or (ii) are rightfully claims against Gaines rather than Vesta.
Mr. O'Halloran says Madison Stearns' and Crowe Chizek's Claims
were withdrawn from Gaines' bankruptcy case in February 2008;
while EMB America agreed to withdraw its Claim, pursuant to an
agreement with the Gaines Plan Trustee.
Mr. O'Halloran discloses that the Claimholders have agreed:
(a) to the proposed Claim Transfers without prejudice to the
rights of Mr. Whitaker to object to the claims on grounds
other than certain excluded defenses; and
(b) that they have no claims in the Gaines Case.
The Claims need only be reflected as of record as pending claims
in Vesta's bankruptcy case, Mr. O'Halloran says.
VESTA INSURANCE: Court Allows XL Specialty to Pay Defense Expenses
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Alabama
authorized, but not required, XL Specialty Insurance Company to
advance or pay Defense Expenses to Insured Persons up to, but not
exceeding, the aggregate sum of $1,500,000.
XL Specialty issued Management Liability and Company Reimbursement
Policy No. ELU 090835-05 to Vesta Insurance Group, Inc., for the
claims-made policy period December 31, 2005, to December 31, 2006,
with an extension period of December 31, 2006, to December 31,
2007.
The maximum aggregate limit of liability for the coverage is
$25,000,000, inclusive of Defense Expenses.
In light of separate lawsuits and adversary proceedings, XL
agreed to advance defense expenses of various director defendants
and officer defendants of Vesta, pursuant to the Policy.
XL sought and obtained, in February 2007, the Court's authority
to advance payment of legal fees and expenses to certain of the
Debtors' directors and officers under the XL Policy, in excess of
the $500,000 cap. In November 2007, the Court permitted XL to
advance Defense Expenses to Insured Persons up to, but not
exceeding, $1,000,000.
Jennifer A. Harris, Esq., at Burr & Forman, LLP, in Birmingham,
Alabama, relates that as of April 21, 2008, XL has paid out
approximately $830,000 in Defense Expenses applicable to the
Court-approved $1,000,000 cap, representing charges incurred
through February 29, 2008.
Based on past monthly billings, XL projects that Defense Expenses
incurred in March 2008 and April 2008 may approach or even exceed
$75,000 per month. As a result, by the end of April, Defense
Expenses will approach the $1,000,000 cap, Ms. Harris tells Judge
Bennett.
For these reasons, XL seeks the Court's authority to advance
Defense Expenses under the Policy in excess of the $1,000,000
cap.
XL reserves its rights under the Policy and applicable law to
deny or limit coverage, subject to the terms of interim funding
agreements to be executed by the directors and officers seeking
advancement of their Defense Expenses after approval of XL's
request.
* * *
The Court authorized, but not required, XL Specialty to advance
or pay Defense Expenses to Insured Persons up to, but not
exceeding, the aggregate sum of $1,500,000.
The $1,500,000 Cap will not include any amounts previously paid
or authorized to be paid to Insured Persons under the Court order
in December 2007, but will include amounts allowed under the
Court orders in November 2007 and February 2008.
XL is not authorized to advance or pay Defense Expenses over and
above the $1,500,000 Cap, Judge Bennett ruled.
The Court clarified that the Order is without prejudice to the
filing of subsequent request for authorization to advance or pay
Defense Expenses incurred by Insured Persons under the Policy.
WATERFORD GAMING: Moody's Cuts Corporate Family Rating to B1
------------------------------------------------------------
Moody's Investors Service downgraded Waterford Gaming LLC's
corporate family rating to B1 from Ba3. Additionally, the
probability of default rating was downgraded to Ba3 from Ba2 and
the rating on the senior unsecured notes due 2014, issued by
Waterford and Waterford Gaming Finance Corp, was lowered to B1
from Ba3. The outlook is stable. The action, which concludes the
review process initiated on February 11, 2008, is based on Mohegan
Tribal Gaming Authority's (MTGA) current operating challenges and
expected increase in leverage due to continuous debt-financed
development activity, as well as the risk of lower cash
distributions to Waterford.
Waterford derives substantially all of its revenues from its
partnership interest in Trading Cove Associates ("TCA"), which
itself receives a revenue-based relinquishment fee equal to 5% of
the gross revenues of the Mohegan Sun casino owned by MTGA. The
rating downgrade considers a number of qualitative risk factors
including MTGA's potentially weaker revenues for the existing
portion of the Mohegan Sun casino operations submitted to the
relinquishment fee payments, Waterford's indirect and unsecured
access to cash flows, MTGA's ability to block all or part of the
relinquishment payments in the event of a payment or nonpayment
default, as well as the uncertainties with regards to the
quantification and recovery rate of relinquishment payment claims
in the event of MTGA's bankruptcy, reorganization or liquidation.
As a result, Waterford's corporate family rating is one notch
lower than MTGA's senior subordinated notes rating.
The rating outlook is stable, reflecting Moody's expectation that
Waterford will maintain solid leverage and interest coverage
ratios, and adequate liquidity, partly offsetting the
aforementioned structural risk factors.
Ratings downgraded:
* Corporate family rating to B1
* Probability of default rating to Ba3
* Rating on Senior Unsecured Notes due 2014 to B1 (unchanged
LGD 4/65%)
Waterford is a special purpose company formed solely for the
purpose of holding its 50% partnership interest, as a general
partner, in TCA, a Connecticut general partnership and the manager
(until January 1, 2000) and developer of the Mohegan Sun casino
located in Uncasville, CT. The Mohegan Sun casino is owned and
operated by the Mohegan Tribal Gaming Authority.
WCI COMMUNITIES: Candidate for Bankruptcy, Traders Newsletter Says
------------------------------------------------------------------
In a post at Seeking Alpha, Scott Weitz, the Chief Market
Strategist for Courtroom Traders, a Wall Street investment
newsletter, identified homebuilders that he thinks are close to
bankruptcy. Tarragon Corp., WCI Communities, Inc., and Meritage
Homes Corp. are publicly traded residential builders in the U.S.
that are "most likely to file Chapter 11 sooner rather than
later," according to him.
He predicts tough times for Tarragon's development division.
According to him, the general economic conditions do not bode well
for the company's ongoing plan to develop more than 14,600 homes.
He cited an executive quote from Tarragon's 2007 10-k that warns
of the company's questionable ability to comply with financial
covenants because of the crisis in the real estate credit markets.
For WCI Communities, he mentioned a quote from the most recent 10-
Q filing of the company, which warns of the company's fear that it
wouldn't have sufficient liquidity to satisfy bank covenant
liquidity tests.
Mr. Weitz considered Meritage Homes as the farthest from the brink
of Chapter 11 among the three. But he said, it is "in the fast
lane headed in that direction."
"They have no diversification of business activities outside of
residential development, and the regions they operate in are among
the hardest hit by the Real Estate fall out," according to him.
The Builder Magazine lists WCI as the 40th biggest homebuilder in
terms of total closings in 2006. Data for 2007 is yet
unavailable. The largest is D.R. Horton with 53,410 in closings
and revenue of $15.0 billion.
WCI recorded 2,215 closings and revenues of $2.0 billion.
Meritage is ranked 12th with 10,487 closings and revenue of $3.4
billion. Tarragon is not included in the list.
About Tarragon Corp.
Tarragon Corp. (NasdaqGS: TARR) -- http://www.tarragoncorp.com/--
and its subsidiaries engage in the development, ownership, and
management of real estate properties in the United States. It
operates in two divisions, a Real Estate Development Division
(Development Division) and an Investment Division. The
Development Division focuses on developing, renovating, building,
and marketing homes in high-density, urban locations and in
master-planned communities. The Investment Division owns and
operates a portfolio of stabilized rental apartment communities
located in Alabama, Connecticut, Florida, New Jersey, Texas, Rhode
Island, Tennessee, Maryland, Oklahoma, Michigan, and Georgia. The
company was founded in 1973 and is based in New York, New York.
As reported by the Troubled Company Reporter on April 14, 2008,
Grant Thornton LLP raised substantial doubt about the ability of
Tarragon to continue as a going concern after it audited the
company's financial statements for the year ended Dec. 31, 2007.
The auditing firm stated that as of Dec. 31, 2007 the company had
$1.1 billion in consolidated debt and had guaranteed additional
debt of its unconsolidated joint ventures totaling $31.6 million.
At Dec. 31, 2007, the company was not in compliance with certain
of its debt covenants.
The company's most recent 10-k filing provides this summary of
principal payments on loans due in each calendar quarter of 2008:
Three Months Ending
(in thousands)
-------------------------------------------
March 31 June 30 Sept. 30 Dec. 31 Total
2008 2008 2008 2008
Consolidated debt $109,816 $105,672 $54,954 $27,484 $297,926
matured
or maturing
during the period
less debt satisfied 84,272 36 37 40 84,385
subsequent
to Dec. 31, 2007
Remaining $25,544 $105,636 $54,917 $27,444 $213,541
consolidated
debt maturing
during the period
Debt of unconsolidated $- $$31,570 $- $- $ 31,570
joint ventures guaranteed
by Tarragon maturing during
the period
About WCI Communities Inc.
WCI Communities Inc. (NYSE: WCI) -- http://www.wcicommunities.com/
-- named America's Best Builder in 2004 by the National
Association of Home Builders and Builder Magazine, has been
creating amenity-rich, master-planned lifestyle communities since
1946. Florida-based WCI caters to primary, retirement, and
second-home buyers in Florida, New York, New Jersey, Connecticut,
Maryland and Virginia.
The company offers traditional and tower home choices with prices
from the high-$100,000s to more than $10.0 million and features a
wide array of recreational amenities in its communities. In
addition to homebuilding, WCI generates revenues from its
Prudential Florida WCI Realty Division, and title businesses, and
its recreational amenities, as well as through land sales and
joint ventures. The company currently owns and controls
developable land on which the company plans to build over 15,000
traditional and tower homes.
The company operates in three principal business segments: Tower
Homebuilding, Traditional Homebuilding, which includes sales of
lots, and Real Estate Services, which includes real estate
brokerage and title operations.
WCI Communities Inc. still carries Moody's Caa2 corporate family
and Caa3 senior subordinate ratings. Outlook is negative.
As reported by the TCR on May 13, 2008, Ernst & Young LLP, in
Miami, expressed substantial doubt about WCI Communities Inc.'s
ability to continue as a going concern after auditing the
company's consolidated financial statements for the year ended
Dec. 31, 2007.
As of March 31, 2008, the Company's debt obligations, principal
cash flows by scheduled maturity (dollars in thousands) are:
Fixed rate
----------
2008 2009 2010 2011 2012 Thereafter Total FMV
at
3/31/08
$125,000 $- $- $- $200,000 $490,000 $815,000 $423,468
Variable rate
-------------
2008 2009 2010 2011 2012 Thereafter Total FMV
at 3/31/08
$224,765 $20,525 $663,900 $- $- $- $909,190 $909,190
About Meritage Homes
Headquartered in Scottsdale, Ariz., Meritage Homes Corporation
(NYSE: MTH) -- http://www.meritagehomes.com/-- builds primarily
single-family homes across the southern and western United States
under the Meritage, Monterey and Legacy brands. Meritage has
active communities in Houston, Dallas/Ft. Worth, Austin, San
Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the California
East Bay/Central Valley and Inland Empire, Denver and Orlando.
Meritage Homes is the 12th largest homebuilder in 2006, Builder
Magazine says. Meritage had 10,487 U.S. home closings generating
$3,461,000 in revenues, according to data compiled by Builder.
Meritage Homes has reported four consecutive quarterly net losses
beginning in the second quarter ended June 30, 2007. At March 31,
2008, the company's consolidated balance sheet showed $1.6 billion
in total assets, $894.8 million in total liabilities, and $686.8
million in total stockholders' equity.
As reported in the TCR on Jan. 21, 2008, Moody's lowered the
ratings of Meritage Homes Corporation, including its corporate
family rating to B1 from Ba3, and its senior unsecured notes
rating to B1 from Ba3. The ratings outlook is negative.
WCI STEEL: Bought by OAO Severstal for $140 Million
---------------------------------------------------
Russian steel manufacturer OAO Severstal bought WCI Steel Inc. for
a maximum price of $140 million, the Russian Kommersant reports.
The Kommersant says that this is Severstal's fourth U.S. asset.
The deal was approved by the United Steel Workers union and
Severstal's shareholders. However, WCI's stock price plunged
around 45% at the purchase date.
WCI currently has debt of around $327 million. The Kommersant
also notes that there was uncertainty on how much of WCI's stock
the Russian steelmaker is going to assume. Analysts, Kommersant
relates, are cautious about the deal and said Severstal's
profitability will be affected by the sale.
About Severstal
Baed in Cherepovets, Russia, OAO Severstal --
http://www.severstal.com/-- is the country's largest steel
producer, with steel production of 17.1 million tons in 2005.
The Company owns Severstal North America, the fifth largest
integrated steel maker in the U.S. with 2005 production of 2.7
million tons, and Lucchini, Italy's second largest steel group
with 2005 production of 3.5 million tons. Severstal is one of
the world's lowest cost and most profitable steel producers,
with 2005 EBITDA per ton of around EUR150 per ton.
* * *
As of March 26, 2008, OAO Severstal carries Ba2 Corporate
Family, Senior Unsecured Debt and Probability-of-Default ratings
from Moody's Investor Service, which said the the outlook on all
ratings is stable.
The company also carries BB long-term Foreign and Local Issuer
Credit ratings from Standard & Poor's, which said the outlook is
stable.
Severstal carries BB- Issuer Default and Senior Unsecured
ratings from Fitch, which said the outlook is positive.
About WCI Steel
Headquartered in Warren, Ohio, WCI Steel Inc. (OTC: WCIS.PK) --
http://www.wcisteel.com/-- is an integrated steel maker producing
185 grades of flat-rolled custom and commodity steel products.
Its products include high carbon, alloy, ultra high strength, and
heavy-gauge galvanized steel. Major customers are steel
converters, processors, service centers, construction product
companies, and to a lesser extent, automobile manufacturers.
WCI Steel filed for chapter 11 protection on Sept. 16, 2003
(Bankr. N.D. Ohio Case No. 03-44662) and emerged from Chapter 11
in May 2006, under a plan proposed by 17 Noteholders led by
Harbinger Capital Partners Master Fund I, Ltd., that gave the
Noteholders $100,000,000 in new 8% Secured Notes and more than 98%
in equity of the reorganized steel company.
* * *
Moody's Investors Service placed WCI Steel Inc.'s senior secured
debt rating at 'Ca' in May 2003. The ratings still hold to date
with a negative outlook.
WHX CORP: March 31 Balance Sheet Upside-Down by $74.9 Million
-------------------------------------------------------------
WHX Corp.'s consolidated balance sheet at March 31, 2008, showed
$461.2 million in total assets and $536.1 million in total
liabilities, resulting in a $74.9 million total stockholders'
deficit.
The company posted a net loss of $6.2 million for the first
quarter ended March 31, 2008, compared with a net loss of
$8.5 million in the corresponding period last year.
Net sales for the first quarter of 2008 increased by
$59.4 million, or 50.4%, to $177.3 million, as compared to
$117.8 million in the first quarter of 2007. Bairnco, which was
acquired in April 2007, contributed $51.0 million in net sales for
the first quarter of 2008.
Net sales for the Precious Metal segment for the first quarter of
2008 increased $7.9 million or 21.0% to $45.7 million from
$37.8 million in the first quarter of 2007. The segment
experienced higher sales, from both higher precious metal prices
and increased market share.
In the first quarter of 2008, net sales for the Tubing segment
slightly increased to $29.6 million from $29.3 million in 2007.
Net sales for the Engineered Materials segment increased slightly
to $51.0 million from $50.7 million in the first quarter of 2007.
Gross profit of $40.8 million, an increase of $21.3 million from
the first quarter of 2007, was positively impacted by the
acquisition of Bairnco which contributed $16.1 million.
Selling, general and administrative (SG&A) expenses increased
$15.5 million to $34.3 million in the first quarter of 2008 from
$18.8 million in the 2007 quarter. The increase in SG&A expenses
relates principally to Bairnco, which was acquired in April 2007.
Additionally, an increase in employee costs was mostly offset by
lower audit and legal fees and a higher pension credit.
Income from operations increased $5.9 million to $6.5 million in
the first quarter of 2008 as compared to $577,000 in the same
period of 2007.
Interest expense for the first quarter of 2008 increased
$2.8 million to $10.4 million from $7.6 million in the first
quarter of 2007. Interest on Bairnco related debt accounted for
$3.6 million of the increase. The remaining reduction was due to
lower interest rates in the first quarter of 2008.
Realized and unrealized losses on derivatives were $1.6 million in
the first quarter of 2008, compared to $691,000 in the first
quarter of 2007. The derivative financial instruments utilized by
H&H are precious metal forward and future contracts, which are
used to economically hedge H&H's precious metal inventory against
price fluctuations. Increases in market price occurred in both
quarters, resulting in losses on derivatives. The reason for the
higher loss in the 2008 period is a higher rate of increase in
precious metal prices during the first quarter of 2008 as compared
to the 2007 period, offset by a reduced quantity of precious metal
under forward and future contracts.
In the first quarter of 2008, a tax provision of $811,000 was
recorded, and in the first quarter of 2007, a tax provision of
$709,000 was recorded. The company's tax provision is principally
for state and foreign taxes.
Liquidity
WHX is a holding company and has as its sole source of cash flow
distributions from its operating subsidiaries, H&H and Bairnco, or
other discrete transactions.
H&H's availability under its credit facilities as of March 31,
2008, was $17.3 million. Bairnco's Availability under its credit
facilities as of March 31, 2008, was $6.0 million.
On April 14, 2008, WHX filed an amended registration statement on
Form S-1 with the Securities and Exchange Commission for a
proposed rights offering to its existing stockholders. WHX
initially filed a registration statement on Oct. 18, 2007, and
subsequently filed amendments thereto dated Nov. 30, 2007, and
Dec. 21, 2007. The registration statement has not yet become
effective.
The proposed rights offering will be made through the distribution
of non-transferable subscription rights to purchase shares of
WHX's common stock, par value $0.01 per share, at a subscription
price to be determined. Assuming the proposed rights offering is
fully subscribed, the company could receive gross proceeds of
approximately $200.0 million, less expenses of the rights
offering. The proposed rights offering includes an
oversubscription privilege which permits each rights holder that
exercises its rights in full, to purchase additional shares of
common stock that remain unsubscribed at the expiration of the
offering.
The net proceeds of the proposed rights offering will be used to
(i) make partial payments to certain senior lenders to certain
wholly-owned subsidiaries of WHX or to contribute to the working
capital of such subsidiaries, (ii) redeem preferred stock which is
held by Steel Partners, and was issued by a wholly-owned
subsidiary of WHX, (iii) purchase shares of common stock of CoSine
Communications Inc. from Steel Partners, (iv) repay WHX
indebtedness to Steel Partners, and (v) repay indebtedness of
wholly-owned subsidiaries of WHX to Steel Partners.
Management believes that existing capital resources and sources of
credit, including the H&H credit facilities and the Bairnco credit
facilities, are adequate to meet its cash requirements during the
next 12 months.
Long-Term Debt
At March 31, 2008, the company had long-term debt outstanding of
$295.5 million, as compared to $296.6 million at Dec. 31, 2007.
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?2c30
About WHX Corp.
Based in White Plains, New York, WHX Corporation (Pink Sheets:
WXCP) -- http://www.whxcorp.com/-- is a holding company that
invests in and manages a group of businesses on a decentralized
basis. Apart from owning Handy & Harman, WHX acquired in
April 2007 Bairnco Corporation, which is a diversified
multinational company that operates business units in three
reportable segments: Arlon electronic materials, Arlon coated
materials and Kasco replacement products and services.
Handy & Harman is a diversified manufacturer and the "parent" of a
family of materials engineering and specialty manufacturing
companies. Its products include electronic components, specialty
fasteners, engineered materials, stainless steel tubing, specialty
tubing and fabricated precious metals, brazing soldering fluxes
and alloys of precious and non-precious metals. Handy & Harman's
strategic business units encompass three reportable segments:
precious metal, tubing and engineered materials.
* S&P Says Lack of Savings Will Make it Tough for Old Americans
---------------------------------------------------------------
The combination of rapidly approaching retirement and concerns
about post-retirement financial security has not translated into
more personal savings for most Americans, said Standard & Poor's
in a report. The report, titled "Older But Not Wiser: Why
Americans Remain Dangerously Unprepared For Retirement," finds
that the average American household savings rate remains near 0%.
This article is one of a series of articles on pensions and OPEB
liabilities that will appear in a special report in the May 26,
2008, issue of Standard & Poor's CreditWeek.
According to Standard & Poor's chief economist David Wyss, the
lack of saving has helped keep economic growth positive but will
make it more difficult for older Americans to finance their
retirement. Most Americans also continue to rely on the
government to provide for their retirement. Mr. Wyss noted that
although they say they're unsure about future Medicare and Social
Security benefits, they're doing little to increase their wealth
before retirement.
"One solution is likely to be more post-retirement work as more
retirees seek a so-called bridge job in early retirement," said
Mr. Wyss. "Unfortunately, health and labor market conditions
often prevent even those who intend to work from doing so. In
addition, in a weakening economy, bridge jobs could be harder to
find," he added.
Moreover, only 37% of Baby Boomers who are about to enter into the
post-employment world have a traditional pension coming from their
employer. That's down from 60% in 1983.
In addition, the shift to defined-contribution pensions--the most
common types of which are 401(k)s, IRAs, and 403(b)s--from
traditional defined-benefit ones has had mixed results. On the
plus side, the percentage of households with no pension coverage
has declined slightly, to 34% from 37% in 1983. However, in 2004,
the median 401(k) plan for people in the 55 to 64 age group was
worth only US$60,000--not enough to provide for much of a
retirement. (In 2006, the average 401k balance for people in
their 60s was $157,727.)
Mr. Wyss explained that the other problem for the near-retired is
the poor performance of the asset markets in recent years. The
S&P 500 will have its worst decade since the Depression if it
closes below 1469 at year-end 2009. "Retiring in a period like
such as this strains assets in the best case, and this is far from
the best case," noted Mr. Wyss. "Asset values have been declining,
while saving rates have hovered near 0%, and if older workers
aren't adding to their wealth and if their asset values are
falling, the prospects of a comfortable retirement are receding.
The average household had wealth equal to 558% of after-tax income
at year-end of 2007, down from 569% a year earlier and 618% at the
market peak in 1999," he concluded.
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
June 4-7, 2008
ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS
24th Annual Bankruptcy & Restructuring Conference
J.W. Marriott Spa and Resort, Las Vegas, Nevada
Contact: http://www.airacira.org/
June 12-14, 2008
AMERICAN BANKRUPTCY INSTITUTE
15th Annual Central States Bankruptcy Workshop
Grand Traverse Resort and Spa, Traverse City, Michigan
Contact: http://www.abiworld.org/
June 19 & 20, 2008
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Corporate Reorganizations
Contact: 800-726-2524; 903-595-3800;
http://www.renaissanceamerican.com/
June 24, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Fraud Panel
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org/
June 26-29, 2008
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains Bankruptcy Law Seminar
Jackson Hole, Wyoming
Contact: http://www.nortoninstitutes.org/
July 10, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Cynthia Jackson of Smith Hulsey & Busey
University Club, Jacksonville, Florida
Contact: http://www.turnaround.org/
July 10-13, 2008
AMERICAN BANKRUPTCY INSTITUTE
16th Annual Northeast Bankruptcy Conference
Ocean Edge Resort
Brewster, Massachussets
Contact: http://www.abiworld.org/events
July 29, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Employment Issues Following Hurricanes & Disasters
Centre Club, Tampa, Florida
Contact: http://www.turnaround.org/
July 31 - Aug. 2, 2008
AMERICAN BANKRUPTCY INSTITUTE
4th Annual Mid-Atlantic Bankruptcy Workshop
Hyatt Regency Chesapeake Bay
Cambridge, Maryland
Contact: http://www.abiworld.org/
Aug. 16-19, 2008
AMERICAN BANKRUPTCY INSTITUTE
13th Annual Southeast Bankruptcy Workshop
Ritz-Carlton, Amelia Island, Florida
Contact: http://www.abiworld.org/
Aug. 20-24, 2008
NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES
NABT Convention
Captain Cook, Anchorage, Alaska
Contact: http://www.nabt.com/
Aug. 26, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Do's and Don'ts of Investing in a Turnaround
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org//
Sept. 4-5, 2008
AMERICAN BANKRUPTCY INSTITUTE
Complex Financial Restructuring Program
Four Seasons, Las Vegas, Nevada
Contact: http://www.abiworld.org/
Sept. 4-6, 2008
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
Four Seasons, Las Vegas, Nevada
Contact: http://www.abiworld.org/
Sept. 17, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Real Estate / Condo Restructuring Panel
Marriott North, Fort Lauderdale, Florida
Contact: http://www.turnaround.org//
Sept. 24-26, 2008
INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION
IWIRC 15th Annual Fall Conference
Scottsdale, Arizona
Contact: http://www.ncbj.org/
Sept. 24-27, 2008
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
Desert Ridge Marriott, Scottsdale, Arizona
Contact: http://www.iwirc.org/
Sept. 30, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Private Equity Panel
Centre Club, Tampa, Florida
Contact: http://www.turnaround.org//
Oct. 9, 2008
TURNAROUND MANAGEMENT ASSOCIATION
TMA Luncheon - Chapter 11
University Club, Jacksonville, Florida
Contact: http://www.turnaround.org/
Oct. 28, 2008
TURNAROUND MANAGEMENT ASSOCIATION
State of the Capital Markets
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org//
Oct. 28-31, 2008
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott New Orleans, Louisiana
Contact: 312-578-6900; http://www.turnaround.org/
Oct. 30 & 31, 2008
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Physicians Agreements and Ventures
Contact: 800-726-2524; 903-595-3800;
http://www.renaissanceamerican.com/
Nov. 19, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Interaction Between Professionals in a
Restructuring/Bankruptcy
Bankers Club, Miami, Florida
Contact: 312-578-6900; http://www.turnaround.org/
Dec. 3-5, 2008
AMERICAN BANKRUPTCY INSTITUTE
20th Annual Winter Leadership Conference
Westin La Paloma Resort & Spa
Tucson, Arizona
Contact: http://www.abiworld.org/
May 7-10, 2009
AMERICAN BANKRUPTCY INSTITUTE
27th Annual Spring Meeting
Gaylord National Resort & Convention Center
National Harbor, Maryland
Contact: http://www.abiworld.org/
June 11-13, 2009
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort and Spa
Traverse City, Michigan
Contact: http://www.abiworld.org/
June 21-24, 2009
INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY &
BANKRUPTCY PROFESSIONALS
8th International World Congress
TBA
Contact: http://www.insol.org/
July 16-19, 2009
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Mt. Washington Inn
Bretton Woods, New Hampshire
Contact: http://www.abiworld.org/
Sept. 10-12, 2009
AMERICAN BANKRUPTCY INSTITUTE
17th Annual Southwest Bankruptcy Conference
Hyatt Regency Lake Tahoe, Incline Village, Nevada
Contact: http://www.abiworld.org/
Oct. 5-9, 2009
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Desert Ridge, Phoenix, Arizona
Contact: 312-578-6900; http://www.turnaround.org/
Dec. 3-5, 2009
AMERICAN BANKRUPTCY INSTITUTE
21st Annual Winter Leadership Conference
La Quinta Resort & Spa, La Quinta, California
Contact: 1-703-739-0800; http://www.abiworld.org/
Oct. 4-8, 2010
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
JW Marriott Grande Lakes, Orlando, Florida
Contact: http://www.turnaround.org/
BEARD AUDIO CONFERENCES
2006 BACPA Library
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
BEARD AUDIO CONFERENCES
BAPCPA One Year On: Lessons Learned and Outlook
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Calpine's Chapter 11 Filing
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http://www.beardaudioconferences.com/
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Carve-Out Agreements for Unsecured Creditors
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BEARD AUDIO CONFERENCES
Changes to Cross-Border Insolvencies
Audio Conference Recording
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Changing Roles & Responsibilities of Creditors' Committees
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Chinas New Enterprise Bankruptcy Law
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Clash of the Titans -- Bankruptcy vs. IP Rights
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Coming Changes in Small Business Bankruptcy
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BEARD AUDIO CONFERENCES
Corporate Bankruptcy Bootcamp: A Nuts & Bolts Primer
for Navigating the Restructuring Process
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BEARD AUDIO CONFERENCES
Dana's Chapter 11 Filing
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BEARD AUDIO CONFERENCES
Deepening Insolvency Widening Controversy: Current Risks,
Latest Decisions
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Diagnosing Problems in Troubled Companies
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Distressed Claims Trading
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BEARD AUDIO CONFERENCES
Distressed Market Opportunities
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Distressed Real Estate under BAPCPA
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Employee Benefits and Executive Compensation under the New
Code
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Equitable Subordination and Recharacterization
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Examining the Examiners: Pros and Cons of Using
Examiners in Chapter 11 Proceedings
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
BEARD AUDIO CONFERENCES
Fundamentals of Corporate Bankruptcy and Restructuring
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Handling Complex Chapter 11
Restructuring Issues
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Healthcare Bankruptcy Reforms
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
High-Yield Opportunities in Distressed Investing
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Homestead Exemptions under BAPCPA
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Hospitals in Crisis: The Insolvency Crisis Plaguing
Hospitals Across the U.S.
Audio Conference Recording
Contact: 240-629-3300;
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BEARD AUDIO CONFERENCES
IP Rights In Bankruptcy
Audio Conference Recording
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BEARD AUDIO CONFERENCES
KERPs and Bonuses under BAPCPA
Audio Conference Recording
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http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
New 'Red Flag' Identity Theft Rules
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
BEARD AUDIO CONFERENCES
Non-Traditional Lenders and the Impact of Loan-to-Own
Strategies on the Restructuring Process
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Partnerships in Bankruptcy: Unwinding The Deal
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Privacy Rights, Protections & Pitfalls in Bankruptcy
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Real Estate Bankruptcy
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Reverse Mergersthe New IPO?
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Second Lien Financings and Intercreditor Agreements
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Surviving the Digital Deluge: Best Practices in E-Discovery
and Records Management for Bankruptcy Practitioners
and Litigators
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Technology as a Competitive Advantage For Todays Legal
Processes
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
The Battle of Green & Red: Effect of Bankruptcy
on Obligations to Clean Up Contaminated Property
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
The Subprime Sector Meltdown:
Legal Developments and Latest Opportunities
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Twenty-Day Claims
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Using Virtual Data Rooms to Expedite Corporate Restructuring
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
BEARD AUDIO CONFERENCES
Using Virtual Data Rooms to Expedite M&A and Insolvency
Proceedings
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Validating Distressed Security Portfolios: Year-End Price
Validation and Risk Assessment
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
When Tenants File -- A Landlord's BAPCPA Survival Guide
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
* * *
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via e-mail
to conferences@bankrupt.com are encouraged.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr.,
Loyda I. Nartatez, Tara Marie A. Martin, 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 ***