/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080526.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, May 26, 2008, Vol. 12, No. 124 Headlines ACE SECURITIES: S&P Lowers Ratings on 59 Certificate Classes AIRTRAN HOLDINGS: JPMorgan Analyst Expects Airline Bankruptcies AMERICAN APPAREL: LaSalle Bank Waives Covenant Violation in Deal AMERICAN APPAREL: Appoints William T. Gochnauer as Interim CFO AMERICAN AXLE: UAW Members Ratify Tentative Labor Agreements AMERICAN COLOR: Unveils Merger and Restructuring Plans with Vertis AMERICAN HOME: Natixis Files Repurchase Agreement Breach Complaint AMERICAN LAFRANCE: Court Confirms 3rd Amended Reorganization Plan AMERICAN LAFRANCE: Amends List of Contracts to Assume AMERICAN LAFRANCE: Wants More Time to Decide on Summerville Lease AMERICAN LAFRANCE: To Pay $1,971,792 Due on Pneu-Mech's Claim AIG INC: Moody's Cuts Senior Unsecured Debt Rating to Aa3 AMERICO LIFE: Moody's Reviewing Ba1 Sr. Debt Rating for Upgrade ANGEL MARTINEZ: Case Summary & Largest Unsecured Creditor ASPEN TECHNOLOGY: Defers Financials Filing Due to Acctg. Errors BAG'N BAGGAGE: Files Schedules of Assets and Liabilities BEAR STEARNS: Gets Breach of Contract Lawsuit from HQ Landowner BIRCH MOUNTAIN: Posts C$6.2 Million Net Loss in 2008 First Quarter BHM TECHNOLOGIES: Court Authorizes Use of Lenders' Cash Collateral BHM TECHNOLOGIES: Negotiates Plan Term Sheet with AEP & Lenders BLUE WATER: Bankruptcy Court Approves Disclosure Statement BODISEN BIOTECH: Earns $1.8 Million in 2008 First Quarter BONITA DONOVAN: Case Summary & 17 Largest Unsecured Creditors BRIAN PETERSEN: Case Summary & 9 Largest Unsecured Creditors BRIAN MEULEN: Case Summary & 9 Largest Unsecured Creditors CORPORATE EXPRESS US: Moody's to Review B2 Sr. Subordinate Rating CALFRAC WELL: S&P Affirms 'B+' Long-Term Corporate Credit Rating CALPINE CORP: Kenneth Derr to Resign as Calpine's Board Member CAMBIUM LEARNING: Fin'l Statements Delay Cues S&P's Ratings Cut CEDAR FUNDING: Owner to Put Firm Under Chapter 11 Protection CFM U.S.: Gets Final Court Approval to Use Lender's $8 Mil. Loan CFM U.S.: U.S. Trustee Selects Seven-Member Creditors Committee CHARYS HOLDING: Files Schedules of Assets and Liabilities CHINA HUAREN: MS Group Expresses Going Concern Doubt CLARIENT INC: Jim Agnello to Resign as Chief Financial Officer COMMUNICATION INTELLIGENCE: GHP Horwath Raises Going Concern Doubt DELTA FINANCIAL: Former Workers Sue for Unpaid Overtime, Damages DELTA FINANCIAL: Former Employees Seek Claim Filing Extension DELTA FINANCIAL: Court Okays Incentive Plan for Remaining Workers DIAMOND CREEK: Case Summary & 11 Largest Unsecured Creditors DIAMOND CREEK: Files for Ch. 11 After Lender Attempts Foreclosure DIAMOND GLASS: Extends by Two Weeks All Bid & Auction Deadlines EARTH BIOFUELS: March 31 Balance Sheet Upside-Down by $63 Million EL PASO: Prices $600 Million Offering of 7.25% Senior Notes EL PASO: Moody's Affirms Ba3 Ratings; Outlook Remains Positive EL PASO: Fitch Rates Proposed $500MM Unsecured Sr. Notes BB+ EL PASO: S&P Puts 'BB-' Rating on $500MM Senior Unsecured Notes ENCORE ACQUISITION: Moody's Changes Outlook to Developing ENCORE ACQUISITION: Search for Biz Options Won't Affect S&P's Rtng ENERGAS RESOURCES: Losses Cue Murrell Hall's Going Concern Doubt ENVIRONMENTAL SERVICE: Stan Lee Expresses Going Concern Doubt EPICEPT CORP: Names Robert Savage and John V. Talley to Board FACT CORPORATION: Child Van Expresses Going Concern Doubt FEDDERS CORP: Indoor Air-Quality Assets Sold to Tomkins for $25MM FEDDERS CORP: Exclusive Plan Filing Period Moved to May 31 FLEETWOOD CAPITAL: S&P Rates Trust Preferred Securities "D" FORD CREDIT: S&P Assigns 'BB+' Rating on $112.9MM Class D Notes FORD CREDIT: Fitch Assigns 'BB' Rating on $112.9MM Class D Trusts FORD MOTOR: Is Neutral on Trancinda's Tender Offer of $8.50/Share FORD MOTOR: Heightened Industry Concerns Cue S&P's Outlook Change FORGITRON LLC: Gets Green Light to Borrow $165,000 from KeyBank FORGITRON LLC: Hires Buckley King as Bankruptcy Counsel FORGITRON LLC: Hires Parkland Group as Financial Advisors FORGITRON LLC: U.S. Trustee Appoints 5-Member Creditors' Panel FRONTIER AIRLINES: Panel Taps Houlihan Lokey as Financial Advisor FRONTIER AIRLINES: Section 341(a) Meeting Slated for June 13 GENERAL MOTORS: S&P Holds 'B' Credit Rating on Enough Liquidity GLOBAL TOWER: Fitch Holds 'B' Rating on $73.45MM Class G Certs. GOLDEN SPRINGS: Voluntary Chapter 11 Case Summary GREENSHIFT CORP: March 31 Balance Sheet Upside-Down by $21.7MM HAMILTON GARDENS: S&P Puts Default Ratings on Seven Cert. Classes HARTFORD MEZZANINE: Fitch Affirms 'B' Rating on $38.75MM Loans HSI ASSET: S&P Slashes Certificates Rating to 'D' from 'CC' INTERSTATE BAKERIES: Wants to Reject Missouri, et al. Leases IBIS TECHNOLOGY: Gets Nasdaq Notice for Late Filing of Financials ISCO INTERNATIONAL: Secures $2.5MM Credit Facility from Lenders JAMES RIVER: S&P Revises Outlook to Developing from Negative JEVIC TRANSPO: Laid-Off Workers Sue, Alleges WARN Act Violations KIK CUSTOM: S&P Slices LT Corporate Credit Rating to CCC+ from B- KRISTINA STALCUP: Case Summary & 18 Largest Unsecured Creditors LANDING DEVELOPMENT: U.S. Trustee Forms Five-Member Committee LANDING DEVELOPMENT: Taps Sussman Shank as Bankruptcy Counsel LEAR CORP: S&P Holds 'B+' Rating and Removes Negative Watch LEVITT AND SONS: Receiver to Hold Home Sales for LAS Depositors LEVITT AND SONS: Affiliates Want UFC Title to Turn Over Funds LEVITT AND SONS: Shelby Wants to Sell 26-Acre Property for $13.7MM LEVITT AND SONS: Hearing on Plan-Filing Extension Set June 5 LINENS N THINGS: Wants Genuity as Investment Banker LINENS N THINGS: Wants to Employ Michael Gries as CEO & CRO MACKLOWE PROPERTIES: Inks $3.9BB Sale Pact with Boston Properties MAHMOUD SHABEHPOUT: Case Summary & 12 Largest Unsecured Creditors MAGELLAN AEROSPACE: Lender Extends Payment Deadline to June 24 MAGNA ENTERTAINMENT: Amends & Extends Financing Arrangements MANUFACTURED HOUSING: S&P Junks Rating on Class IA Certificates MARCAL PAPER: Buyer Ordered to Pay $1.5 Million to U.S. Agencies MASTR ASSET: S&P Puts Default Ratings on Four Certificate Classes MERGE HEALTHCARE: Expects $20 Mil. Proceeds from Private Placement MIDNIGHT PROPERTIES: Files List of Largest Unsecured Creditors NANO SUPERLATTICE: Recurring Losses Cue VB&T's Going Concern Doubt NEFF CORP: Weak Performance Prompts Moody's to Junk Ratings NEXCEN BRANDS: Amends Bank Loan Facility; Sees Cash Deficiency NEXCEN BRANDS: Gets Nasdaq Delisting Notice on 10Q Filing Delay NEXCEN BRANDS: Denies Likely Business Collapse and Bankruptcy NEXCEN BRANDS: Roy Jacobs Starts Probe on Likely SEC Violations NORTEK INC: Completes $750MM Offering of 10% Senior Secured Notes NORTEK INC: S&P Holds 'B-' Rating After Completed Refinancing NRG ENERGY: Unsolicited Calpine Buyout Cues Fitch's Evolving Watch NRG ENERGY: Calpine Buyout Offer Cues S&P's Negative CreditWatch OAKLAND VIEW: Section 341(a) Meeting Scheduled for June 12 OAKLAND VIEW: Junior Creditors Ask Equal Relief with Cathay Bank OPENWAVE SYSTEMS: Receives Delisting Notice from Nasdaq PAPPAS TELECASTING: Wants Access to Lenders' Cash Collateral PAPPAS TELECASTING: Wants to Use Chairman's $2 Million DIP Fund PAPPAS TELECASTING: Can Hire Administar as Claims Agent PARKER DRILLING: Moody's Upgrades Corporate Family Rating to B1 PDQ ACQUISITIONS: Case Summary & 12 Largest Unsecured Creditors PIPER RESOURCES: Unable to File Fin. Report After CCAA Petition PLASTECH ENGINEERED: Treasury Dept. Seeks to Set off Tax Debts PLASTECH ENGINEERED: GM's Tooling Request Hearing Moved to June 2 PLASTECH ENGINEERED: Has Court Nod to Wind Down Canadian Unit PRIMEDIA INC: Redeems $2.5 Million of 8% Senior Notes Due 2013 QUIGLEY COMPANY: Parent Company Asked to Produce Documents QUIGLEY COMPANY: Allianz Demands Production of Documents RAFAELLA APPAREL: Moody's Cuts CFR to B2; Outlook Still Negative RAFAELLA APPAREL: S&P Places 'B' Credit Rating Under Neg. Watch RH DONNELLEY: Holders Tender $550.5 Million in Old Notes RIO VISTA: Posts $2.1 Million Net Loss in 2008 First Quarter RIVERSIDE ENERGY: S&P Lifts Rating on $368.5MM Term Loan to BB- ROCKY MOUNTAIN: S&P Lifts Rating on $264.9MM Secured Loan to BB- SAINT MICHAEL MOTOR: Case Summary & 20 Largest Unsecured Creditors SAKS INC: Moody's Upgrades Corporate Family Rating to B1 SALLY BEAUTY: March 31 Balance Sheet Upside-Down by $753.3 Million SIX FLAGS: Fitch Junks Issuer Default Rating SPECTRUM BRANDS: Salton Sale Cues Moody's to Review Junk Ratings SPRINT NEXTEL: Poor Credit Metrics Cue Fitch to Affirm Ratings SS&C TECHNOLOGIES: Board Elects Campbell Dyer as Director SYMBION INC: S&P Affirms Ratings and Changes Outlook to Negative TENNECO INC: S&P Holds 'BB-' Rating and Removes Negative Watch TRIANT HOLDINGS: Has 120 Days to Comply with TSX Listing Standards US EAGLES: Case Summary & Five Largest Unsecured Creditors USG CORP: Asbestos PI Trust Files Annual Report Ending Dec. 2007 VERAZ NETWORKS: Gets Nasdaq Notice Regarding Delayed Financials VALLEJO CITY: Files Chapter 9 Bankruptcy Petition in Sacramento VALLEJO CITY: Case Summary & 18 Largest Unsecured Creditors VERTIS INC: Unveils Merger and Restructuring Plans with ACG VISTEON CORP: Launches Tender Offer of $344 Mil. of 8.25% Notes VISTEON CORP: Moody's Affirms Debt & Corp. Family Ratings at B3 WCH INC: Delivers Schedules of Assets and Liabilities WCH INC: Selects Doan Nguyen as Bankruptcy Counsel WCH INC: Section 341(a) Meeting Continued June 11 WCH INC: Must Stop Using Cash Collateral, IRS Says WELLCARE HEALTH: Realigns Workforce by Eliminating 208 Positions WELLMAN INC: Hearing on Panel's Stay Request Deferred to June 17 WELLMAN INC: Lenders Defer Deadline for Bid Protocol Approval WICKES FURNITURE: Wants to File Chapter 11 Plan Until September 1 WORNICK COMPANY: DDJ Management Unit Acquires All Assets XM SATELLITE: In Talks with MLB on Amendment to $120MM Escrow Pact ZIFF DAVIS: Files 2nd Amended Disclosure Statement & Plan ZIFF DAVIS: Judge Issues Written Approval of Disclosure Statement ZIFF DAVIS: Committee Can Hire BMC as Communications Agent ZIFF DAVIS: Allowed to Pay FileFront $1,500,000 as APA Cure ZIFF DAVIS: Noteholders Object to Perella as Panel's Fin. Advisor * S&P Downgrades Ratings on 93 Classes from 59 US NIM Securities * S&P Lowers Ratings on 95 Classes from 78 US RMBS Transactions * S&P Says Doubt in Pension Benefits Spurs Seniors to Seek Options * 28 Defaults Affect $18.9 Billion Debt Through May, S&P Says * S&P Chips Ratings on 125 Classes of US RMBS from 27 Transactions * S&P Says Profitability Among US Banks Remained Generally Weak * S&P Places Ratings on Nine US Airlines Under Negative Watch * BOND PRICING: For the Week of May 19 - May 23, 2008 ********* ACE SECURITIES: S&P Lowers Ratings on 59 Certificate Classes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 59 classes of mortgage pass-through certificates issued by nine Ace Securities Corp. Home Equity Loan Trust, Specialty Underwriting and Residential Finance Trust, FBR Securitization Trust, and GE-WMC Asset-Backed Pass-Through Certificates transactions. All of the affected deals were issued in 2005. Concurrently, S&P placed its ratings on 24 classes on CreditWatch with negative implications and affirmed its ratings on all remaining classes from 10 deals. The lowered ratings reflect adverse collateral performance that has caused monthly losses to exceed monthly excess interest. As of the April 2008 remittance period, cumulative losses, as a percentage of the original pool balances, ranged from 1.17% (Specialty Underwriting and Residential Finance Trust Series 2005-AB2) to 4.77% (GE-WMC Asset-Backed Pass-Through Certificates Series 2005-2). The dollar amount of loans in the transactions' delinquency pipelines strongly suggests that monthly losses will continue to exceed excess interest, thereby further compromising credit support. Severe delinquencies for the downgraded transactions, as a percentage of the current pool balances, ranged from 4.20% (Ace Securities Corp Home Equity Loan Trust Series 2005-SN1) to 45.49% (Ace Securities Corp. Home Equity Loan Trust Series 2005-HE5). These deals are seasoned between 28 months (FBR Securitization Trust 2005-4 and GE-WMC Asset-Backed Pass-Through Certificates Series 2005-2) and 37 months (Ace Securities Corp Home Equity Loan Trust Series 2005-SN1). S&P placed its ratings on 24 classes from six transactions on CreditWatch negative. While each of the certificate classes placed on CreditWatch negative may lack what S&P believe to be a sufficient amount of credit enhancement in excess of projected losses, subsequent rating actions will not occur until additional analysis is completed. S&P expect to further evaluate the date of projected defaults versus the date of payment in full, and the relationships between projected credit support and projected losses throughout the remaining life of each certificate. S&P affirmed its ratings on the remaining classes from these nine series based on loss coverage percentages that are sufficient to maintain the current ratings despite the negative trends in the underlying collateral for many of the deals. Subordination, overcollateralization, and excess spread provide credit support for four of the affected deals. Subordination and excess spread provide credit support for the six other deals, for which overcollateralization has been completely eroded. The collateral for these transactions consists primarily of subprime, adjustable- and fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Ace Securities Corp Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-HE3 M-6 B BB- 2005-HE3 M-7 CCC B- 2005-HE3 B-1 CC CCC 2005-HE5 M-5 B BBB+ 2005-HE5 M-6 B- BB 2005-HE5 M-7 CCC BB- 2005-HE5 M-8 CCC B+ 2005-HE5 M-9 CCC B 2005-HE5 M-10 CCC B- 2005-HE5 B-1 CC CCC 2005-HE5 B-2 CC CCC 2005-HE6 M-5 B BBB- 2005-HE6 M-6 CCC BB 2005-HE6 M-7 CCC BB 2005-HE6 M-8 CCC B 2005-HE6 M-9 CCC B- 2005-HE6 M-11 CC CCC 2005-HE6 B-1 CC CCC FBR Securitization Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-2 M-4 B A+ 2005-2 M-5 CCC A 2005-2 M-6 CCC BBB 2005-2 M-7 CCC BB 2005-2 M-8 CC B 2005-2 M-9 CC B 2005-2 M-10 D CCC 2005-3 M-3 CCC BB 2005-3 M-4 CCC BB- 2005-3 M-5 CCC B+ 2005-3 M-6 CCC B 2005-3 M-7 CCC B- 2005-3 M-8 CC CCC 2005-3 M-9 CC CCC 2005-3 M-10 CC CCC 2005-4 M-4 CCC BB 2005-4 M-5 CCC BB 2005-4 M-6 CCC B+ 2005-4 M-7 CCC B 2005-4 M-8 CC B- 2005-4 M-9 CC CCC 2005-4 M-10 CC CCC 2005-4 M-11 CC CCC 2005-4 M-12 D CCC GE-WMC Asset-Backed Pass-Through Certificates Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-2. M-5 B A+ 2005-2 M-6 B- A+ 2005-2 B-1 CCC A 2005-2 B-2 CCC A- 2005-2 B-3 CCC BBB+ 2005-2 B-4 CC BB+ 2005-2 B-5 CC B 2005-1 M-6 CCC A+ 2005-1 B-1 CCC A 2005-1 B-2 CCC A- 2005-1 B-3 CCC BBB+ 2005-1 B-4 CC BBB 2005-1 B-5 CC BBB- Specialty Underwriting and Residential Finance Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-AB2 M-5 BBB A 2005-AB2 M-6 BB BBB 2005-AB2 B-1 B BB 2005-AB2 B-2 CCC B Ratings Placed on Creditwatch Negative Ace Securities Corp. Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-HE5 M-2 AA/Watch Neg AA 2005-HE5 M-3 AA/Watch Neg AA 2005-HE5 M-4 AA-/Watch Neg AA- FBR Securitization Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-2 M-1 AA+/Watch Neg AA+ 2005-2 M-2 AA/Watch Neg AA 2005-2 M-3 AA-/Watch Neg AA- 2005-3 AV1 AAA/Watch Neg AAA 2005-3 AV2-3 AAA/Watch Neg AAA 2005-3 AV2-4 AAA/Watch Neg AAA 2005-3 M-1 AA-/Watch Neg AA- 2005-3 M-2 BBB+/Watch Neg BBB+ 2005-4 AV1 AAA/Watch Neg AAA 2005-4 AV2-2 AAA/Watch Neg AAA 2005-4 AV2-3 AAA/Watch Neg AAA 2005-4 AV2-4 AAA/Watch Neg AAA 2005-4 M-1 AA+/Watch Neg AA+ 2005-4 M-2 A+/Watch Neg A+ 2005-4 M-3 BBB+/Watch Neg BBB+ GE-WMC Asset-Backed Pass-Through Certificates Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-2 M-2 AA/Watch Neg AA 2005-2 M-3 AA/Watch Neg AA 2005-2 M-4 AA/Watch Neg AA 2005-1 M-3 AA/Watch Neg AA 2005-1 M-4 AA/Watch Neg AA 2005-1 M-5 AA-/Watch Neg AA- Ratings Affirmed Ace Securities Corp Home Equity Loan Trust Transaction Class Rating ----------- ----- ------ 2005-HE3 A-1A AAA 2005-HE3 A-1B AAA 2005-HE3 A-2C AAA 2005-HE3 M-1 AA+ 2005-HE3 M-2 AA 2005-HE3 M-3 A 2005-HE3 M-4 BBB 2005-HE3 M-5 BBB- 2005-HE3 M-8 CCC 2005-HE3 M-9 CCC 2005-SN1 A-1 AAA 2005-SN1 A-2 AAA 2005-SN1 M-1 AA+ 2005-SN1 M-2 A+ 2005-SN1 M-3 A- 2005-SN1 M-4 BBB+ 2005-HE5 A-1 AAA 2005-HE5 A-2B AAA 2005-HE5 A-2C AAA 2005-HE5 M-1 AA+ 2005-HE6 A-1 AAA 2005-HE6 A-2B AAA 2005-HE6 A-2C AAA 2005-HE6 A-2D AAA 2005-HE6 M-10 CCC FBR Securitization Trust Transaction Class Rating ----------- ----- ------ 2005-2 AV1 AAA 2005-2 AV2-3A AAA 2005-2 AV2-3B1 AAA 2005-2 AV2-3B2 AAA GE-WMC Asset-Backed Pass-Through Certificates Transaction Class Rating ----------- ----- ------ 2005-2 A-1 AAA 2005-2 A-2b AAA 2005-2 A-2c AAA 2005-2 A-2d AAA 2005-2 M-1 AA+ 2005-1 A-1 AAA 2005-1 A-2b AAA 2005-1 A-2c AAA 2005-1 M-1 AA+ 2005-1 M-2 AA+ Specialty Underwriting and Residential Finance Trust Transaction Class Rating ----------- ----- ------ 2005-AB2 A-1B AAA 2005-AB2 A-1C AAA 2005-AB2 A-1D AAA 2005-AB2 M-1 AA+ 2005-AB2 M-2 AA 2005-AB2 M-3 AA- 2005-AB2 M-4 A+ 2005-AB2 B-3 CCC AIRTRAN HOLDINGS: JPMorgan Analyst Expects Airline Bankruptcies --------------------------------------------------------------- Christopher Hinton at MarketWatch reports that Jamie Baker, an analyst at J.P. Morgan, on Monday said U.S. airline industry stands to post a collective $7,200,000,000 in operating losses in 2008. The results would be wider than an initial forecast of $4,600,000,000 loss, the analyst said. According to MarketWatch, Mr. Baker, in his research note, said though investors, management and analysts may talk about airlines acting collectively to reduce capacity to firm up revenue, the reality is that they are more likely to dig in and try to outlast each other. MarketWatch relates the JPMorgan analyst noted that capacity cuts have falled far short of what executives have said are necessary. Mr. Baker, MarketWatch says, indicated that another round of airline bankruptcy -- even among the legacy carriers -- is a question of when rather than if. According to the report, Mr. Baker said U.S. Airways has the highest risk of bankruptcy, followed by Northwest Airlines, United Air Lines' parent UAL Corp., AMR Corp., JetBlue, Continental Airlines, AirTran, Delta Air Lines, Alaska Air Lines and Southwest Airlines. Mr. Baker, the report adds, said credit card companies could pose more significant risk to airlines than debt. He explained the credit card companies could impose unilateral holdbacks, which will toll on a carrier's liquidity and cash balances. Bloomberg News on Wednesday reported that analysts at Soleil Securities Corp. say there's a potential Chapter 11 filing by AMR by 2009, and UAL some time after that. In the Red Except for Southwest, the major U.S. Airlines posted net losses for the period ended March 31, 2008: Net Income for Period Ended ----------------------------------- March 31, 2008 March 31, 2007 -------------- -------------- US Airways ($236,000,000) $66,000,000 Northwest ($4,139,000,000) ($292,000,000) UAL ($537,000,000) ($152,000,000) AMR ($328,000,000) $81,000,000 JetBlue ($8,000,000) ($22,000,000) Continental ($80,000,000) $22,000,000 AirTran ($34,813,000) $2,158,000 Delta ($6,261,000,000) $155,000,000 Alaska Air ($24,000,000) ($3,700,000) Southwest $34,000,000 $93,000,000 Balance Sheet at March 31, 2008 ----------------------------------- Total Assets Total Debts ------------ ----------- US Airways $8,013,000,000 $6,435,000,000 Northwest $21,032,000,000 $17,746,000,000 UAL $23,813,000,000 $21,647,000,000 AMR $28,766,000,000 $26,277,000,000 JetBlue $6,050,000,000 $4,721,000,000 Continental $12,542,000,000 $11,071,000,000 AirTran $2,198,009,000 $1,783,470,000 Delta $26,755,000,000 $22,804,000,000 Alaska Air $4,379,800,000 $3,520,600,000 Southwest $18,031,000,000 $10,846,000,000 On April 14, Northwest announced an agreement to merge with Delta. United and US Airways are also in talks for a possible merger. Continental was initially eyed as a top merger partner for United. Small and medium-sized carriers have tumbled one after the other into bankruptcy. Aloha Airlines commenced bankruptcy proceedings in Hawaii in March and later ceased operations. ATA Airlines Inc. ceased operations and filed for chapter 11 protection on April 2, and Skybus Airlines Inc. tumbled into bankruptcy on April 5. Frontier Airlines went belly up and filed for chapter 11 on April 14. EOS Airlines filed a chapter 11 petition on April 26. Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 56 U.S. destinations. * * * To date, AirTran Holdings Inc. carries Moody's Investors Service 'B3' long-term corporate family and 'Caa2' senior unsecured debt ratings. Outlook is Stable. AMERICAN APPAREL: LaSalle Bank Waives Covenant Violation in Deal ---------------------------------------------------------------- American Apparel Inc. received a waiver from the LaSalle Bank for its covenant violation under a revolving credit facility. At March 31, 2008, American Apparel failed to meet certain covenants under its credit facility with the bank and private investment firm. The bank debt covenant violations specifically relate to: -- the capital expenditures and fixed charges covenants; -- covenants relating to late reporting of monthly financial statements for the quarter ended March 31, 2008; -- cash advances to subsidiaries greater than $2,000 in total; -- the asset purchase of a fabric dyeing and finishing plant without prior notice to the bank; -- the incurrence of a loan by the company's Japanese subsidiary of $1,000; and -- another restriction prohibiting the company from incurring capital expenditures in excess of $5,000 during the quarter. The company indicates that as a consequence of the debt covenant violations, the company also violates the cross-default covenant of its financing agreement with the private investment firm. The bank and the private investment firm have the right to accelerate the repayment of the outstanding indebtedness under the credit facilities upon violation of any debt covenant. The company expects to be in violation of these debt covenants in future periods. The company's latest 10-Q filing disclosed that during July 2007, the Company replaced its revolving credit facility of $62.5 million with a revolving credit facility of $75.0 million from LaSalle Bank. The secured revolving credit facility with LaSalle Bank of $75 million matures on the earlier of July 2012 or 30 days prior to the maturity of the term loan with from private investment firm SOF Investments (unless the term loan is refinanced on terms acceptable to LaSalle Bank). As of March 31, 2008, the company is also in violation of the covenant under the $51.0 million term loan with SOF Investments. About American Apparel Inc. Headquartered in Los Angeles, California, American Apparel Inc. (AMEX:APP) -- http://www.americanapparel.net/-- fka Endeavor Acquisition Corp, is a manufacturer, distributor, and retailer of branded fashion basic apparel. As of May 15, 2008, American Apparel employed more than 7,000 people and operated 187 retail stores in 15 countries, including the United States, Canada, Mexico, United Kingdom, Belgium, France, Germany, Italy, the Netherlands, Sweden, Switzerland, Israel, Australia, Japan and South Korea. American Apparel also operates a wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at http://store.americanapparel.net. AMERICAN APPAREL: Appoints William T. Gochnauer as Interim CFO -------------------------------------------------------------- American Apparel Inc. appointed William T. Gochnauer as interim chief financial officer, effective immediately. Prior to American Apparel, Mr. Gochnauer had been interim chief financial officer at Red Envelope Inc., a catalog and online retailer of upscale gifts, since 2006. From 2005 to 2006, Mr. Gochnauer had been a financial consultant at Excelligence Learning Corporation, a manufacturer and distributor of early childhood and learning products. During 2005, he was also interim chief financial officer of RF Industries Ltd., a manufacturer and distributor of electronic components. Mr. Gochnauer began his career in public accounting at KPMG, is a Certified Public Accountant, and has held CFO and controller positions at a number of public and private companies over the course of a career that spans more than 35 years. Ken Cieply, the company's outgoing chief financial officer, has stepped down to pursue other opportunities. He has agreed to make himself available to assist in the transition. Mr. Cieply has over 20 years of experience in textile and apparel related businesses, and was a key member of the executive team that led Gildan Activewear's initial public offering in 1998. Mr. Cieply joined American Apparel in June 2006. American Apparel also has employed Berglass + Associates, an executive search firm with more than 25 years of experience and a focus in the consumer goods sector, to help identify a permanent chief financial officer. In anticipation of Mr. Cieply's departure, American Apparel has been interviewing candidates for the CFO position for the past several months. The company expects to disclose the appointment of a permanent CFO in the next three to six months. "We're very pleased that [Mr.] Gochnauer is joining us to assist in our transition in being a public company," Dov Charney, American Apparel's CEO stated. "[Mr. Gochnauer's] extensive experience with SEC reporting and Sarbanes-Oxley compliance will be an enormous help. With him onboard, we will be able to more quickly build out our accounting staff to support the company's increased reporting responsibilities and the future growth of our business." "[Mr.] Cieply played an important role in getting American Apparel to where it is today," Mr. Charney continued. "His impressive pedigree in apparel was a key reason I asked him two years ago to come down to Los Angeles to help take our business to the next level. With American Apparel now having become a public company, we wish [Mr.] well in his future endeavors as he returns to his family and home in Montreal, Canada." About American Apparel Inc. Headquartered in Los Angeles, California, American Apparel Inc. (AMEX:APP) -- http://www.americanapparel.net/-- fka Endeavor Acquisition Corp, is a manufacturer, distributor, and retailer of branded fashion basic apparel. As of May 15, 2008, American Apparel employed over 7,000 people and operated 187 retail stores in 15 countries, including the United States, Canada, Mexico, United Kingdom, Belgium, France, Germany, Italy, the Netherlands, Sweden, Switzerland, Israel, Australia, Japan and South Korea. American Apparel also operates a wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at http://store.americanapparel.net. AMERICAN AXLE: UAW Members Ratify Tentative Labor Agreements ------------------------------------------------------------ American Axle & Manufacturing Holdings, Inc. disclosed that the tentative agreements reached with the International UAW on May 16, 2008, covering approximately 3,650 AAM associates at five facilities in Michigan and New York, have been ratified. As reported in the Troubled Company Reporter on May 19, 2008, under the tentative agreement, the auto parts supplier is offering workers a wage of $18.50 per hour and a wage "buy down" of $105,000. The wage "buy down" is compensation to aid workers in the transition to lower pay. Axle is offering noncore workers, which are those that aren't involved in actual manufacturing, $14.55 per hour, and skilled trades workers $26 per hour. "AAM is pleased to announce the ratification of a new collective bargaining agreement with the International UAW," AAM Co-Founder, Chairman & CEO Richard E. Dauch said. "This new contract provides AAM and its UAW-represented workforce the opportunity to transition through a most difficult period of structural change in the domestic automotive industry. We look forward to the prompt resumption of normal manufacturing operations at our original U.S. locations." AAM expects to have its plants running production during the week of May 26, 2008. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on April 4, 2008, Moody's Investors Service placed American Axle & Manufacturing Holdings, Inc.'s Ba3 Corporate Family Rating under review for downgrade. AMERICAN COLOR: Unveils Merger and Restructuring Plans with Vertis ------------------------------------------------------------------ Vertis Inc. dba Vertis Communications and American Color Graphics Inc. disclosed merger and comprehensive restructuring plans that will strengthen their finances, expand their North American footprint, and improve the already unparalleled products and services offered to their customers. The focal point of the comprehensive restructuring plans is the agreement between Vertis and American Color, two printing and premedia companies in North America, to merge American Color's operations into Vertis' nationwide marketing and printing services platform. The merger will allow both companies to enrich their core manufacturing capabilities relevant to the production of advertising inserts and newspaper products. It will also enable them to make an unprecedented scope of premedia and workflow solutions available to their customers. Additionally, the companies have entered into agreements with holders of more than two-thirds of the outstanding principal amount of each of the 9.75% Senior Secured Second Lien Notes due 2009, the 10.875% Senior Notes due 2009, and the 13.5% Senior Subordinated Notes due 2009 of Vertis, and the holders of a majority of the outstanding principal amount of the 10% Secured Second Lien Notes due 2010 of American Color, to exchange their bonds for an aggregate of $550 million in new notes and substantially all of the new equity in the combined company. The companies expect additional holders of the ACG Notes and Vertis Notes to enter into agreements this week. Vertis has also entered into agreements with its principal stockholders and the holders of a substantial majority of the Vertis Holdings Mezzanine Notes to support the transaction. The agreement on the terms of the consensual financial restructurings would reduce the combined company's debt obligations by approximately $725 million (excluding Vertis Holdings Mezzanine Notes) before transaction fees and expenses. In addition, the more than $240 million in Vertis Holdings Mezzanine Notes will no longer be an obligation of the company after the transaction closes. The companies and the consenting noteholders have entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business. The companies expect to launch a formal solicitation of consent for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days. Consents will be due approximately 30 days after the companies launch the solicitation. Upon receiving the consents, the companies would commence prepackaged Chapter 11 proceedings in order to implement their plans and consummate the merger. The proceedings are expected to conclude in late summer. "Vertis' mission has always been to find the best way to provide for and serve our clients and this comprehensive restructuring plan ensures our customers will continue to benefit from industry- leading products and services," Mike DuBose, chairman and CEO of Vertis, said. "The plan, which includes the merger, the note exchanges and new financing will strengthen the company's finances and enable Vertis to better compete in today's challenging environment." "With the combined capabilities of both companies, we will extend our ability to respond to the needs of our customers and will be even better positioned to compete in a complex market," Steve Dyott, Chairman and CEO of American Color, commented. "Throughout the process, our customers will continue to enjoy the high level of customer focus to which they have become accustomed. At completion, they will benefit from the additional strengths and reach of a coast-to-coast service provider. We are excited about the opportunities ahead for our customers, employees and other stakeholders." Under the terms of the merger agreement, Mike DuBose will become chairman and CEO of the combined company. Steve Dyott will remain to facilitate the integration of the two companies. Once the merger closes, which is expected to occur in late summer, American Color will become a wholly owned subsidiary of Vertis. The merger will integrate American Color's eight offset and flexographic print facilities, one Total Market Coverage facility, six premedia facilities, and numerous managed service sites into Vertis. In addition, American Color's premedia capabilities include sophisticated design, color and brand management services for the packaging market, plus a vast array of business and workflow solutions technologies. The combination of these operations and capabilities with Vertis' 17 advertising insert production facilities, world-class premedia, direct marketing, media placement, technology and creative services will offer clients benefits including enhanced solutions and production capacity. "The combined company will realize significant synergies as the operations are restructured to increase operational efficiencies and improve service offerings across the platform and product lines," Mr. DuBose said. "The merger provides the combined company with a deeper talent pool, improved financial strength, and a wider reach to ensure all of our customers receive the best products and services in the industry," Mr. DuBose added. "It's a natural fit and one we know our business partners and customers will appreciate." Mr. DuBose and Mr. Dyott both said it will be business as usual at Vertis and American Color while the companies implement the plans. The companies will continue to provide a full range of products and solutions to their customers with an ongoing focus on quality and service. A full-text copy of the Agreement and Plan of Merger is available for free at http://ResearchArchives.com/t/s?2c86 About Vertis Inc. Headquartered in Baltimore, Vertis Inc., doing business as Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's leading retail and consumer services companies. About American Color American Color Graphics, Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced full service premedia and print companies, with eight print locations across the continent, six regional premedia centers, photography studios nationwide and a growing roster of customer managed service sites. The company provides solutions and services such as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. * * * As reported in the Troubled Company Reporter on March 10, 2008, American Color Graphics Inc. disclosed in a regulatory filing dated March 5, 2008, that certain provisions of the company's existing first lien bank credit facilities were amended or waived to temporarily waive through and including June 6, 2008, any default under such bank credit facilities resulting from non- compliance with the first lien coverage ratio covenant in each such bank credit facility as of Sept. 30 and Dec. 31, 2007, and March 31, 2008, for all purposes of such bank credit facilities. AMERICAN HOME: Natixis Files Repurchase Agreement Breach Complaint ------------------------------------------------------------------ Natixis Real Estate Capital Inc., formerly known as IXIS Real Estate Capital Inc., filed a complaint against American Home Mortgage Investment Corp. and its debtor-affiliates asserting that the Debtors breached a master repurchase agreement by failing to turn over certain funds related to Unreleased Loans. The complaint, filed May 9, 2008, seeks declaratory and injunctive reliefs and unspecified monetary damages. Natixis and the Debtors are parties to a master repurchase agreement dated July 15, 2005, and a custodial and disbursement agreement dated January 29, 2007. Under the Repurchase Agreement, the Debtors will sell to Natixis certain eligible Mortgage Loans at a price set by the Repurchase Agreement. Natixis will resell and the Debtors will repurchase the Mortgage Loans on a specific date at a price in excess of what Natixis paid for the Mortgage Loans. The Debtors are required to segregate and pay to Natixis all funds collected on loans that Natixis owns by way of the Repurchase Agreement, and direct investors withholding payment in connection with purported purchases of certain Unreleased Loans to make payments directly to Natixis. Natixis learned that certain investors purchased unreleased loans from the Debtors by making payments directly to the Debtors. These Unreleased Loans, however, were subject to bailee letters, which provide that Natixis will not release its interest in the loans unless payment is made to Natixis, Neil B. Glassman, Esq., at Bayard P.A., in Wilmington, Delaware, says. Mr. Natixis says the Debtors' financial problems caused them to default under the Repurchase Agreement. Accordingly, Natixis served a notice of default and reservation of rights to the Debtors. However, notwithstanding the Default Notice, the Debtors failed to turn over funds they received from certain investors relating to certain Unreleased Loans owned by Natixis. In addition, certain investors who have withheld payment in connection with purported purchases of certain Unreleased Loans have indicated to Natixis that they will not make payments to Natixis without further direction from the Debtors. The Debtors, however, have been uncooperative in providing direction to the investors, Mr. Glassman says. Moreover, the Debtors have not provided an accounting for the funds without which Natixis cannot determine if all amounts the Debtors received on the unreleased loans have been paid to Natixis as required by the Repurchase Agreement, Mr. Glassman says. In October 2007, Natixis asked the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay so it could terminate the servicing of the Mortgage Loans and transfer the servicing from the Debtors to a new servicer and recover mortgage files from the Debtors necessary to effectuate the transfer of the servicing. Natixis and the Debtors resolved the lift stay request and entered into a settlement agreement providing the transfer of servicing and the mortgage files. Mr. Glassman asserts that the Debtors' failure to comply with Natixis' requests has created an actual, justiciable controversy between the parties, Mr. Glass asserts. He adds that the Debtors have breached the Repurchase Agreement and related agreements by refusing to direct the investors to pay funds due by the investors with respect to the Unreleased Loans. He also asserts that the Debtors have exercised and assumed an unauthorized right of ownership and control over property belonging to Natixis since they refuse to comply with Natixis' demands to turn over all funds the Debtors received from the investors. Accordingly, Natixis asks the Court: (a) to declare that the unreleased loans and the funds received by the Debtors from the investors on behalf of Natixis are property of Natixis, and that the Debtors are obligated to immediately remit it into the accounts designated by Natixis; (b) to compel the Debtors to provide Natixis with an accounting of, and immediately transfer, all funds received by the Debtors from the investors with respect to the Unreleased Loans; (c) to compel the Debtors to direct the investors to pay funds relating to the Unreleased Loans to Natixis; (d) for monetary damages resulting from the Debtors' breaches of the Repurchase Agreement and their fiduciary duties, the conversion of the funds they received from investors, and the unjust enrichment as a result of refusing and failing to turn over the Unreleased Loans funds they received from investors; (e) to lift the automatic stay as the Court deems just and proper; and (f) to impose a constructive trust on all the funds received by the Debtors from investors with respect to the Unreleased Loans. Mr. Glassman says that because of the Debtors' precarious financial situation, each day increases Natixis' risk that it will not be able to recover the funds with respect to the Unreleased Loans. 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. 37; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Court Confirms 3rd Amended Reorganization Plan ----------------------------------------------------------------- Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware held a hearing on May 22, 2008, to consider confirmation of the American LaFrance, LLC's Third Amended Plan of Reorganization and entered a Confirmation Order on May 23, 2008, after finding that the Debtor's Plan complied with the confirmation requirements of the Bankruptcy Code. Lynn Tilton, CEO of Patriarch Partners, stated "This is just another milestone in the long history of this epic 175 year old manufacturing company. With many of its legacy difficulties now in its past , this great American legacy is prepared to move forward continuing its build of the best known truck brands in the industry. By having obtained an extension of $40 million of new credit in connection with its exit from bankruptcy, ALF is in a strong financial position to well service its customers." American LaFrance counsel Christopher Ward of Polsinelli Shalton Flanigan Suelthaus P.C. told Reuters that the company foresees its exit from bankruptcy "within the next few weeks." Late in April, American LaFrance related that its creditors voted overwhelmingly in favor of the company's Plan. More than 86% of the General Unsecured creditors in Class 4 voted in favor of the Plan. In addition, 100% of the Convenience class in Class 5 approved the plan as did all of the Secured Lenders in Class 1. William Snyder, Chief Restructuring Officer of American LaFrance, LLC, has said the Official Committee of Unsecured Creditors played a primary role in rallying support for the Plan among creditors across all classes. The Company has been in bankruptcy for fewer than 17 weeks. Confirmation Requirements At the confirmation hearing, the Debtor stepped Judge Shannon through the 16 requirements for confirmation of the Plan pursuant to Section 1129(a) of the Bankruptcy Code: (1) The Plan complies with Section 1129(a)(1) because: -- The Plan complies with the classification requirements of Section 1122 of the Bankruptcy Code because all Claims or Interests within a particular class are substantially similar to the other Claims or Interests in that class or are part of a class approved as reasonable and necessary for administrative convenience. -- The Plan complies with the requirements set forth in Section 1123(a)(1)-(7) of the Bankruptcy Code. -- The rejection of executory contracts and unexpired leases provided for under the Plan complies with Sections 365 and 1123(b)(2) of the Bankruptcy Code. (2) The Plan complies with Section 1129(a)(2) because the Debtor has complied with all of the provisions of the Bankruptcy Code and the Bankruptcy Rules governing notice and related matters in connection with the Plan, the Disclosure Statement, and all other matters considered by the Bankruptcy Court in their cases. (3) The Plan complies with Section 1129(a)(3) because the Plan and the Disclosure Statement are the products of consensual and extensive negotiations among the Debtor, the Official Committee of Unsecured Creditors, and the Prepetition Lenders. (4) The Plan complies with Section 1129(a)(4) because payments made or to be made by the Debtor to Professionals for services or costs and expenses incurred have been approved by, or are subject to the approval of, the Bankruptcy Court. (5) The Plan complies with Section 1129(a)(5) because the Debtor has identified the post-confirmation officers and directors of the Debtor. (6) Section 1129(a)(6) is inapplicable because the Plan does not provide for the change of any rates controlled by a governmental regulatory commission, and the Debtor was never subject to any commissions. (7) The Plan complies with the requirements of Section 1129(a)(7) because impaired Classes of Claims under the Plan have met the statutory voting thresholds required to accept the Plan and (ii) confirmation of the Plan would provide each holder of an Allowed Claim with a recovery that is not less than such holder would receive pursuant to liquidation of the Debtor under Chapter 7. (8) The Plan complies with the requirements of Section 1129(a)(8) because all classes permitted to vote on the Plan have voted to accept the Plan. (9) The Plan complies with the requirements of Section 1129(a)(9) because the Plan provides for payment of claims and other claim treatment as to which the holders of Claims have agreed upon in writing. (10) The Plan satisfies Section 1129(a)(10) because Classes of Impaired Claims, Class 4 and Class 5, have accepted the Plan without including any acceptances of the Plan by any insider, in those Classes. In addition, Class 1 has voted to accept the Plan. (11) The Plan complies with Section 1129(a)(11) because the Plan provides for a distribution to creditors in accordance with the priority scheme of the Bankruptcy Code and the terms of the Plan. The Disclosure Statement is (i) persuasive and credible; (ii) has not controverted by other persuasive evidence or challenged in any objections to the confirmation; (iii) are based upon reasonable and sound assumptions; and (iv) establishes that the Plan is feasible. (12) The Plan complies with the requirements of Section 1129(a)(12) because all the fees payable under Section 1930 of the Judiciary Code have been paid or the Plan provides for the payment of all related fees on the Effective Date of the Plan. (13) Section 1129(a)(13) is inapplicable since the Debtor has no retirees to whom it must continue payment of retiree benefits post-confirmation. (14) Section 1129(a)(14), which addresses domestic support obligations, does not apply to the Debtor. (15) Section 1129(a)(15), which concerns individual debtors, does not apply to the Debtor. (16) The Plan complies with Section 1129(a)(16) because the Confirmation Order would provide that any transfers of property contemplated by the Plan would be made in accordance with any applicable non-bankruptcy law. The Court held that the Plan satisfies the requirements of Section 1129(d) as its purpose is not the avoidance of taxes or the avoidance of the requirements of Section 5 of the Securities Act of 1933, and no governmental unit has requested that the Court deny Plan confirmation on that basis. Objections Resolved Among the parties that filed objections to the confirmation to the Plan are Pneu-Mech Systems Manufacturing, LLC, INCAT Systems, Inc. and Dassault Systems Americas Corp., RT Jedburg Commerce Park, LLC, Freightliner of San Antonio, Ltd., City of Bellingham and Southwest Emergency Response Team. Several creditors also disputed the assumption of certain contracts under the Plan. All objections to the Plan that have been withdrawn, waived, deferred or settled, and all reservations of rights pertaining to the confirmation of the Plan are overruled on their merits, the Court ruled. The Debtor entered into separate agreements with these creditors to resolve their disputes: Creditor Settlement Terms -------- ---------------- Freightliner of San Antonio The Debtor' settlement with Freightliner of San Antonio is to filed with the Court. INCAT Systems and Dassault The Debtor will assume the end- user license agreement and any service agreement entered into with INCAT Systems Dassault and simultaneously pay to INCAT and Dassault $458,550 as cure costs. Upon payment by the Debtor, INCAT and Dassault will provide the Debtor their written consent for the Contract assumption. Thurston County Fire The Debtor will assume sale District #11 order nos. 60199 and 60200 at the Effective Date of the Plan. Clayton County, Georgia The Debtor will assume four ambulance contracts and three pumpers of Clayton County and will deliver the Clayton Ambulances within four weeks after May 23, 2008. Clayton County agreed to withdraw its cure objection and its objection to the Debtor's proposed rejection of its contracts. Hi-Tech Emergency Vehicle The rejection damages claims of Service, Inc. Hi-Tech will not ignored by virtue of the Plan, but will be deemed to be Class 4 unsecured claims. ACE USA/Westchester On or before the Effective Date, Insurance Company the Debtor will execute a new form of indemnity agreement, which will incorporate all existing and future obligations in favor of ACE USA/Westchester on the same terms as the agreement of indemnity dated January 9, 2006. The Debtor will assume all outstanding obligations to ACE, including indemnification obligations and the bonds issued in connection with the 2006 Indemnity Agreement. The letter of credit previously issued by the Debtor in favor of ACE, will continue in full force and effect and will continue to secure any and all obligations arising under the 2006 or 2008 Indemnity Agreements. The Court acknowledged a potential RT Jedburg Unsecured Claim. Judge Shannon ruled that if a Class 4 claim in favor of RT Jedburg becomes Allowed pursuant to the agreed order regarding modified assumption of lease between RT Jedburg and the Debtor, about $3,000,000 of RT Jedburg's Allowed Class 4 Claim will receive a 22.5% dividend contemplated by the Plan only if all other Allowed Class 4 Claims including the $5,000,000 of such RT Jedburg Claim 4 Claim been paid a full 22.5% dividend. The Trustee will make appropriate reserve for RT Jedburg's Class 4 Claim if the Trust makes any distributions prior to the allowance of RT Jedburg's Claim. Contract Assumption Other than with respect to contracts with "Unresolved Assumption Issues," Judge Shannon authorized the Debtor to assume each executory contract and unexpired lease it has identified and assign them to the Reorganized Debtor pursuant to the Plan and Section 365(a) of the Bankruptcy Code. A list of the Debtor's Contracts for Assumption under the Confirmed Plan is available at: http://bankrupt.com/misc/ALF_AssumedContractsunderPlan.pdf "Unresolved Assumption Issues" refer to, among other things, dispute in the amount of any cure payment or the Debtor's liability to assume certain contracts and leases. The Court maintains jurisdiction over the Unresolved Assumption Issues. The Court will conduct post-confirmation hearings to address those Issues," Judge Shannon clarified. By virtue of confirmation of its Third Amended Plan of Reorganization, the Debtor withdrew its motion to sell substantially all of its assets. A full-text copy of the American LaFrance Confirmation Order is available for free at: http://bankrupt.com/misc/ALF_ConfirmationOrder.pdf About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. Pepper Hamilton, LLP is the proposed counsel of the Official Committee of Unsecured Creditors. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. (American LaFrance Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Amends List of Contracts to Assume ----------------------------------------------------- American LaFrance, LLC amended its original motion to assume contracts under its Third Amended Plan of Reorganization in order to identify the contracts it intends to assume or reject. American LaFrance, LLC, previously filed a motion to assume contracts under its Third Amended Plan of Reorganization and certain Plan Supplements that contained the list of the Contracts to be assumed. Christopher A. Ward, Esq., at Polsinelli Shalton Flanigan Suelthaus P.C., in Wilmington, Delaware, proposed co-counsel to the Debtor, relates that upon extensive review and analysis of the Contracts, the Debtor has determined not to pursue assumption of certain Contracts included in the Contract Assumption Motion. The Debtor thus amends the original Assumption Motion under Plan in order to identify the Contracts it intends to assume or reject. The Contracts that the Debtor seeks to assume include: * 200+ Condor Dealer Contracts, * 160+ Fire Contracts, * 30+ Fire Dealer Contracts, * 8 Purchase Contracts, and * 100+ Miscellaneous Contracts. A schedule of the Contracts for assumption is available for free at http://bankrupt.com/misc/ALF_ContractstobeAssumed.pdf Under the Amended Assumption Motion, the Debtor noted it intended to either assume, reject, or defer assuming or rejecting no later than June 30, 2008, the Summerville Real Property Contract and the Summerville Real Property Sublease. The Debtor subsequently notified the U.S. Bankruptcy Court for the District of Delaware that the inclusion of the Summerville Lease in the Contracts Lists was an error, and the treatment of the Summerville Lease will be addressed only in connection with the pending motion to extend lease decision. The Contracts that were previously listed as assumed but for which the Debtor seeks to reject at present pursuant to the Amended Assumption Motion are: * 120+ Fire Contracts, * 38 Ambulance Contracts, * 13 Purchase Orders, * 8 Condor Dealer Contracts, * 1 Fire Dealer Contract, and * 27 Miscellaneous Contracts. A list of the Contracts to be rejected is available for free at: http://bankrupt.com/misc/ALF_ContractstobeRejected.pdf Mr. Ward clarifies that the inclusion of any contract on the Lists will not constitute neither an admission on the Debtor's part that the subject Contract is executory or unexpired nor an admission that the Contract will indeed be assumed or assigned pursuant to the Plan. If counterparties to the Contracts have already objected to the Cure Notices served with respect to the Asset Sale Motion, the Debtor will treat the already pending objection as if it were filed to the Amended Motion and the counterparty need not object further. Condor Purchase Orders In a supplemental filing, the Debtor seeks the Court's authority to reject Condor Purchase Orders, a complete list of the 500+ Condor Contracts to be rejected is available for free at: http://bankrupt.com/misc/ALF_RejectedCondorContracts.pdf The Debtor also seeks the Court's permission to assume 36 Condor Truck Contracts, a list of which is available for free at: http://bankrupt.com/misc/ALF_AssumedCondorContracts.pdf Mr. Ward relates that the Debtor completed its financial analysis on the Condor contracts as of May 20, 2008, and has determined that certain of the Condor Purchase Orders has to be rejected because the fulfillment of the Rejected Condor Purchase Contracts would mean losses for the Debtor. The Debtor believes that rejection of the Condor Purchase Orders would: * allow it adequate time to renegotiate the terms of the Rejected Condor Purchase Orders, the completion of which would be an economic benefit of its estate; * provide sufficient notice to the counterparties to respond to the Rejected Condor Purchase Orders; and * provide additional time for the counterparties to calculate rejection damages and weigh the damages against the Debtor's proposed revisions purchase orders. The Debtor also believes that additional negotiations with its dealers, customers and counterparties, it may be able to complete majority of the Rejected Condor Purchase Orders under restructured deal terms. Accordingly, the Debtor asks the Court to schedule a hearing to consider the rejection of Condor Purchase Orders after the confirmation hearing. More Creditors Respond In separate filings, seven creditors oppose the Debtor's decision to either assume or reject their contracts pursuant to the First Amended Assumption Motion under Plan. The Objecting Parties are: * Red-D-Arc * Freightliner of San Antonio * Empire Truck Sales, LLC, * Campbell Supply Company, LLC * Truck Centers, Inc. * eGroup * Clayton County, Georgia * City of Camilla, Georgia * Hi-Tech Emergency Vehicle, Inc. Red-D-Arc tells the Court that it entered into an extended term rental program with the Debtor for certain welding and welding related equipment. Red-D-Arc says that under the Contract, the Debtor failed to make lease payments totaling to $12,936. The Debtor must identify as the cure amount and the payment default of $12,936 due under the Contract before it can proceed to assume the Contract, Kathleen M. Miller, Esq., at Smith, Katzenstein & Furlow LLP, in Wilmington, Delaware, counsel to Red-D-Arc, contends. Freightliner of San Antonio objects to the Debtor's First Amended Assumption Motion to the extent that the Debtor seeks to assume (i) anything less than all three of the Condor Dealer contracts in their entirety; (ii) any of the Contracts without first paying all cure costs; and (iii) any of the Contracts free and clear of all liens, claims, encumbrances and interests; and (iv) any of the Contracts without adequate assurance of future performance by the purchaser. Representing Empire Truck Sales, LLC, Rafael X. Zahralddin- Aravena, Esq., at Elliot Greenleaf, in Wilmington, Delaware, tells the Court that the Debtor is not evidencing a sound business judgment in its intent to reject 12 fire truck contracts entered into with Empire Truck Sales when it previously wanted to assume the Contracts pursuant to its Assumption Motion. Accordingly, Empire Trucks ask the Court to deny the Debtor's impending rejection of the Contracts and imparts to the Debtor that it is in its best interests to assume the Contracts as one of the fire trucks is scheduled to be delivered by September 2008. Campbell Supply adopts the arguments laid by Empire Truck in order to preserve its rights in the Campbell Contracts with the Debtor. Beth Ranson asserts on behalf of eGroup that eGroup is entitled for the payment or the return of the hardware it sold to the Debtor and the services it rendered under a service and hardware contract. Clayton County, for its part, complains of the Debtor's failure to give adequate notice of its impending rejection of Clayton County's ambulance and apparatus contracts. As the Debtor only has a legal title to the Contracts pursuant to Section 541(d) of the Bankruptcy Code, the Debtor cannot reject those Contracts, Clayton County argues. The City of Camilla asks for the Court to make clear that the First Amended Assumption Motion under the Plan does not alter the terms of the purchase contract it entered into with the Debtor and that any assumption must give the City and the Debtor the same rights and obligations presently embodied in the Contract. On the Debtor's impending assumption of its fire truck contract, Truck Centers, Inc., stresses that the Debtor should not resurrect a contract it previously rejected pursuant to the First Omnibus Motion to Reject Certain Executory Contracts. Instead, TCI would like the Debtor to assume the Forman Fire District Contract as the Fire District still wishes to accept the fire truck. The Objecting Creditors thus ask Judge Brendan Linehan Shannon to, among others: -- compel the Debtor to cure all defaults due under the Contracts before assuming them; -- direct the Debtor to provide adequate assurance of future performance; -- deny the Debtor's decision to rejection or assumption of the applicable Contracts; and -- determine that the Debtor's any impending assumption does not in any way, impair the rights of the Parties under the applicable Contracts. Debtor Updates on Status of Objections The Debtor relates that to address the objections filed against its First Amended Assumption Motion under the Plan, it revised its response to incorporate the latest Objections as well as to provide information on the status of the previously filed Objections. To the extent an Objection is not resolved prior to the confirmation hearing, the Debtor will ask the Court to consider the subject objections at a hearing to be held after confirmation of the Plan. The Debtor informs the Court that it has resolved objections lodged by 17 parties, pertaining to cure amounts and rejection of the contracts pursuant to the First Amended Assumption Motion under the Plan. The Debtor has agreed to entitled these Parties with these cure amounts: Party Cure Amount ----- ----------- Oracle USA, Inc. $699,631 GGS Information Services, Inc. 104,670 Apple Rock Advertising & Promotion, Inc. 24,500 South Carolina Electric & Gas Co. 8,556 International Business Machines 5,600 SCE&G and GGS Information's requests for adequate assurance of future performance will be addressed at the confirmation hearing. Also, the Debtor and IBM resolved the objection to the IBM Agreement as moot. The Contracts of these Parties rejected pursuant to the First Amended Assumption Motion: * City of Strongville * Children's Hospital of Akron * City of Columbus, Ohio Fire Truck A * City of Columbus, Ohio Fire Truck B * Harrison County Fire Protection District * City of Plantation, Florida * United Telephone Company of the Carolinas, d/b/a Embarq * Kootenay Boundary Regional Fire District Fire Rescue Pursuant to a Court-approved stipulation, KBRFR and the Debtor agree that the alleged KBRFR Contract is rejected as of May 16, 2008. KBRFR will make no motion or claim for any alleged rejection damages. The Debtor is authorized to remove the Contract from any lists of contracts to be rejected and assigned as part of any sales process. In the case of Southwest Emergency Response Team, the Debtor will include in the confirmation order language addressing Southwest's Objections. The contract of Diehl and Sons, Inc., doing business as New York Freightliner's, to produce 25 vehicles is rejected pursuant to the Plan Supplement and Assumption Motion. The Debtor is assuming the dealership agreement, of which no objection has been directed. On the other hand, the Debtor's future assignment of the City of Cambrige, Ontario, Canada's contract will be governed by the terms of the Contract. Deferred Objections Meanwhile, as of May 22, 2008, the Debtor has identified 27 Objections whose individual resolution will be set on hearings yet to be determined by the Court and upon agreement of the concerned parties. The Debtor stresses that these Parties' Cure Objection, separately filed by Vogelpohl Fire Equipment, Inc., have been resolved and each Vehicle Contract has not been completed and therefore commissions, if due, have not been earned: * USEC * City of Winchester * The Southwest Council of Governments * The Village of Pomeroy * City of West Carrollton * Tri-Community Joint Fire District The Debtor clarifies that if the Cure Objection under the Dealer and Services Agreement of Vogelpohl Fire is not resolved prior to the confirmation hearing, the Debtor will request a hearing regarding the cure amount at a later date. The Debtor will continue to negotiate with the opposing counsel. With regards to the City of Phoenix, Arizona's seven vehicle contracts the Debtor is assuming, adequate assurance of future performance will be addressed at the confirmation hearing. The Debtor has rejected the Vehicle Contract of the City pursuant to the First Amended Assumption Motion. The Debtor reiterates that objections on the penalties concerning the production of a vehicle is not a cure objection under Section 365 of the Bankruptcy Code. Penalties, if owing, will be paid when the vehicles are delivered to these Parties: * City of Phoenix, Arizona * City of Columbus, Indiana * Hi-Tech Emergency Vehicle Service, Inc. * Augusta County, Virginia * Village of Larchmont, New York * Town of Buckeye, Arizona Also, Hi-Tech's assertion of rejection damages will be addressed at a later date. The requests for adequate assurance of future performance will be addressed at the confirmation hearing. If the cure amount is not resolved prior to the confirmation hearing, the Debtor will ask for a hearing, at a later date, regarding the cure amounts of these parties: * Clay Volunteer Fire Department, Inc. * Red-D-Arc * City of Camilla Georgia * Village of Larchmont, New York CCS Holdings, Inc., and the Debtor agree to seek the resolution of the proposed treatment of the sublease and CCS Holdings' Objection at a later date. The Debtor does not believe that the Town of Shadeland and Fire Service, Inc.'s Contracts have expired or was terminated. The Debtor will seek a Court hearing on Shadeland's Objections. The Debtor also intend to ask the Court for hearing on issues of these Parties at a later date: * Truck Centers, Inc. * Empire Trucks * Campbell Supply Company, LLC * eGroup * Chelan County With regards to the Debtor's seeking to assume the APA of Daimler Trucks North America LLC,formerly known as Freightliner LLC, the Debtor and Freightliner agree that all issues regarding the Assumption Motion as it applies to APA and the termination date of the TSA are reserved and will be addressed at a date after the confirmation hearing. Furthermore, the parties reserve all their rights, arguments, and positions with regard to the assumption or rejection of any executory contracts between them. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. Pepper Hamilton, LLP is the proposed counsel of the Official Committee of Unsecured Creditors. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. (American LaFrance Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Wants More Time to Decide on Summerville Lease ----------------------------------------------------------------- American LaFrance, LLC, entered into a lease with RT Jedburg Commerce Park, LLC, dated August 4, 2006, for office and manufacturing warehouse space located at 1090, 1116 and 1124 Newton Way, in Berkeley County, South Carolina, also known as the Summerville Lease. The Debtor originally included the Summerville Lease on its Assumption Motion under the Third Amended Plan of Reorganization. Since the Debtor and RT Jedburg failed to resolve the issues surrounding the Summerville Lease, the Debtor says it needs additional time to (a) determine whether to assume or reject the Lease; and (b) if it determines that the Lease should be rejected, to move its manufacturing operations out of the leased premises. In order to carry out its plans, the Debtor asks Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware to extend the time by which it must decide to assume or reject the Summerville Lease, through and including August 25, 2008. Section 365(d)(4)(A) of the Bankruptcy Code states that an unexpired lease of nonresidential property under which the debtor is the lessee will be rejected and the trustee will immediately surrender the non-residential real property to the lessor, if the trustee does not assume or reject the unexpired lease by the earlier of: (i) the date that is 120 days after the date of the order for relief; or (ii) the date of the entry of an order confirming a plan. In the event the Court does not extend the deadline for the Debtor to assume or reject the Summerville Lease, the Debtor asks Judge Shannon to allow it to reject the Lease and vacate the Leased Premises by August 25, 2008. The Debtor contends that absent renegotiation of certain lease provisions to render the terms of the Lease more in line with the market conditions, the rejection of the Lease is in the best interest of its estate and its creditors. The Debtor maintains that the confirmation of its Plan is not dependent on the timing of the lease assumption or rejection schedule because the projections show that it can meet all of its post-confirmation obligations with or without operations at the Lease Premises. Parties Respond RT Jedburg contends that the Summerville Motion is the Debtor's novel approach towards the assumption of the Summerville Lease without removing the $3.5 million in mechanic liens of unpaid Capex vendors imposed against the Summerville Property. Bonnie Glantz Fatell, Esq., at Blank Rome LLP, in Wilmington, Delaware, asserts that the Debtor does not have a plethora of real estate leases to analyze so it does not need additional time to decide to whether assume or reject the Summerville Lease. Ms. Fatell notes that the Debtor has admitted in its deposition that it does not need time to decide whether it wants the Summerville Lease since a month before the Petition Date, it has already decided that the Summerville Lease was unacceptable as is written. The Debtor's last hour request for an extension of time is wholly disingenuous as it has decided long ago to reject the Lease, she says. RT Jedburg believes that since it did not accept the Debtor' proposed Lease modifications and absorb the $3.5 million in liens, the Debtor now resorts to asking the Court for a 90-day extension so that it can either persuade RT Jedburg to accept the Lease modifications or receive additional time to vacate the Summerville Property. Neither of these reasons, however, constitute cause for an extension, Ms. Fatell emphasizes. RT Jedburg avers that the Debtor has to solve the conundrum arising out of the Summerville Lease but it can not do so in the illegal manner in its Motion for an extension of the lease decision period. Pneu-Mech Systems Manufacturing, LLC, for its part, objects to the Summerville Motion and asserts that Section 365(d)(4) requires: (i) the Debtor to either assume or reject an unexpired lease of non-residential real property by the confirmation of a plan of reorganization; and (ii) that, upon rejection, the Debtor immediately surrender possession of the non-residential real property. On Pneu-Mech's behalf, Charlene D. Davis, Esq., at Bayard, P.A., in Wilmington, Delaware, asserts that the Debtor's request to reject the Lease and remain at the Summerville Facility up to and including August 25, 2008 is directly contrary to the "immediate surrender" language in Section 365(d)(4)(A) that also calls for not resorting to state law. She notes that the Summerville Facility has been central to the Debtor's effort to consolidate plants and its business plan in general. A move therefore, could require a shutdown of the Debtor's operations for up to five months and could cost the Debtor as much as $15,000,000 and the loss of existing employees. Given the mechanic's liens asserted by various vendors, the Debtor may be unable to remove installed equipment and systems, Pneu-Mech notes. To the extent the Debtor tries to remove the Painting Installation in which Pneu-Mech asserts a mechanic's lien for $2,072,749, Pneu-Mech will seek to enjoin the removal unless the Debtor performs consistently with South Carolina law. Accordingly, Pneu-Mech asks the Court to deny the Debtor's lease extension request. The Official Committee of Unsecured Creditors informs the Court that it has discussed with the Debtor its concerns regarding the Summerville Motion and in particular, its concern that the Debtor did not take any action that would impair the treatment proposed for unsecured creditors under the Plan or otherwise imperil the Debtor's restructuring efforts. The Committee understands that a consensual resolution of some or all of the objections to the Summerville Motion is likely. And while the Committee has not yet seen the final terms of any proposed settlement, it has reiterated to the Debtor its concerns and reservation of rights to ensure that it may be heard regarding the Summerville Motion and any proposed settlement. Debtor Talks Back The Debtor reiterates that it needs additional time to develop strategies of vacating the Summerville Property and weigh the costs of moving out against the costs of assuming the Lease. In response to RT Jedburg's and Pneu-Mech's suggestion that "cause" can only be found where there are an exceptional number of real property leases, the Debtor argues that cause exists since the operations conducted on the Summerville Lease premises are significant to its ongoing business plan. The Summerville Facility is the single largest manufacturing facility operated by the Debtor, and the number of processes undertaken in it and the economic impact of the estate of assuming a 20-year obligation necessitates the Debtor's need for additional time to determine with more certainty the economic impact of relocating those processes, Mr. Ward avers. The Debtor has not had sufficient time to evaluate the value of the Leases and to complete its comparison of the costs and benefits of assumption with rejection, as it is confronted on a daily basis with challenges and emergency issues in its 110-day tenure as a debtor-in-possession, Mr. Ward reiterates. The Debtor maintains several leaseholds, and the treatment of the Summerville Lease will impact the Debtor's operations at other leased facilities. If the Debtor rejects the Summerville Lease, the Debtor may relocate or transfer manufacturing capacity to other existing facilities. Mr. Ward tells the Court that the Debtor paid postpetition rent and other lease obligations and has pledged to escrow rent and taxes during its post-confirmation tenancy. On the other hand, he notes, RT Jedburg has not suffered damages not compensable under the Bankruptcy Code. RT Jedburg does not make any allegations of the damage, nor has it produced evidences that any of the damages will not be adequately compensated under the Bankruptcy Code, he adds. The Debtor maintains its headquarters at the Summerville Facility and conducts extensive product assembly at the Premises, thus it is infeasible that the Debtor could surrender the Leased Premises to RT Jedburg without an orderly removal of its property, Mr. Ward elaborates. Parties Resolve Dispute Subsequently, in a Court-approved stipulation, the Debtor and RT Jedburg agree that: * The Summerville Lease will be assumed as of the Effective Date of the Plan based on the terms of this stipulation; * The Debtor is obligated to and will continue to pay timely early occupancy rent due under the Lease; * The Lease will be modified on the Assumption Effective Date, according to the stipulation, while the other existing terms an conditions of the Lease will remain in full force and effect; * The "term" of the Lease will be modified as a period of 60 months and will commence on the Assumption Effective Date, which will be called the rent commencement date; * During the Term, the Debtor will provide to RT Jedburg: (i) unaudited quarterly financial statements for the first two years of the Term; (ii) unaudited annual financial statements for each year of the Term; and (iii) annual audited financial statements for each year of the Term if unaudited statements are required of the Debtor by a party other than RT Jedburg; * The Debtor will be required to have completed all work that is required to obtain a permanent certificate of occupancy permitting installation of equipment and furnishings and operation of the Summerville Premises no later than August 31, 2008. The Debtor will be required to receive the Certificate of Occupancy from Berkeley County no later than October 31, 2008; * To protect RT Jedburg from the consequences of the Debtor failing to have the Certificate of Occupancy filed, RT Jedburg will have an allowed Class 4 unsecured claim for $8,000,000; * On or before the Effective Date, the Debtor will pay $131,091 to RT Jedburg for unpaid prepetition rent and charges; * The Debtor will use its best efforts to remove and to have recorded against the Premises each of these mechanics' lien currently existing against the Premises: -- on or before July 31, 2008 for the liens asserted by Pneu-Mech System Mfg. Inc., AME Inc., and Pro Tech; and -- on or before December 31, 2008, for the mechanics' liens asserted by North Mississippi Conveyor Co., Southern Pump & Tank, and Electric Specialties. RT Jedburg will cooperate with the Debtor in removing the liens excluding the payment of funds by RT Jedburg; * On or before the Effective Date of the Plan, the Debtor will enter into a written escrow agreement with RT Jedburg which will contain $3,605,449 for the benefit of RT Jedburg. The Debtor will be allowed to use the Amount to pay these mechanic liens against the Premises: Lienholder Lien Amount ---------- ----------- Pneu-Mech System Mfg. $2,126,266 North Mississippi Conveyor 121,959 Pro-Tech 282,413 Electrical Specialists 152,905 AME Inc. 862,691 Southern Pump & Tank 59,312 If the mechanic liens asserted by the Lien Holders are not removed and releases of those liens are not recorded against the Premises by the dates set, RT Jedburg will be entitled to draw from the Mechanic Lien Escrow all or any portion of the Amount needed to satisfy the liens and to reimburse RT Jedburg for its costs and expense incurred in obtaining removal of the liens. * On the Effective Assumption Date, the Debtor will pay $100,000 to RT Jedburg for all expenses and fees incurred by RT Jedburg with respect to the Debtor's Chapter 11 case; * The Debtor assures RT Jedburg that GE Capital has no lien or claim on any of the machinery or assets of the Debtor located at the Premises; and * RT Jedburg's Objections are deemed withdrawn and all reservations of rights pertaining to the Plan are overruled. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. Pepper Hamilton, LLP is the proposed counsel of the Official Committee of Unsecured Creditors. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. (American LaFrance Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: To Pay $1,971,792 Due on Pneu-Mech's Claim ------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the District of Delaware, American LaFrance, LLC, and Pneu-Mech Systems Manufacturing, LLC, agreed that the Debtor will pay Pneu-Mech: (i) $1,971,792 representing principal and interest due on Pneu-Mech's claim; (ii) $120,000 for Pneu-Mech's professional fees; and (iii) $365 as per day interest from May 22, 2008 onwards. The Stipulation serves as the global settlement to all of the parties' outstanding issues. To note, Pneu-Mech has filed limited objections to the Debtor's Assumption Motion under the Plan, lodged a confirmation objection to the Debtor's 3rd Amended Plan of Reorganization, and has opposed the Debtor's request for time to decide on the Summerville Lease. Pneu-Mech also filed a $2,000,000 mechanic's lien against the Debtor. Upon delivery of the Cure Payment, Pneu-Mech will: -- release its mechanic's liens and file a notice of termination; -- commence work necessary to complete the installation of the painting system at the Summerville Facility pursuant to certain prepetition agreements; and -- commence and complete the process required to install the painting system to permit the Debtor to obtain a permanent certificate of occupancy at the Summerville Facility by August 31, 2008. The Debtor and Pneu-Mech will exchange mutual releases of all claims with respect to Pneu-Mech's prepetition work. The Debtor agree not to sue Pneu-Mech for payments made by the Debtor to Pneu-Mech prior to the Petition Date and the Cure Payment. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. Pepper Hamilton, LLP is the proposed counsel of the Official Committee of Unsecured Creditors. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. (American LaFrance Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AIG INC: Moody's Cuts Senior Unsecured Debt Rating to Aa3 --------------------------------------------------------- Moody's Investors Service has downgraded the senior unsecured debt rating of American International Group, Inc. (NYSE: AIG) to Aa3 from Aa2. The rating agency has also downgraded the ratings of several subsidiaries, including those whose ratings have relied on material support from the parent company, as well as those with significant exposure to the US residential mortgage market. These rating actions largely conclude the reviews for possible downgrade announced by Moody's on May 9 and May 15, 2008, following AIG's announcement of a $7.8 billion net loss for the first quarter of 2008. The rating outlook for AIG (parent company) is negative, reflecting the company's exposure to further volatility in the US mortgage market as well as uncertainty surrounding the strategic direction for AIG Financial Products Corp. (AIGFP). When announcing the review for possible downgrade, Moody's said that the review process could lead to a rating downgrade of one or two notches at the parent company. Today's one-notch downgrade reflects AIG's sizable mortgage related losses and write-downs to date. Over the past two quarters, AIG has recorded after-tax unrealized market valuation losses exceeding $13 billion on mortgage-exposed credit default swaps (CDS) at AIGFP, and after- tax realized capital losses exceeding $5 billion, largely from other-than-temporary impairment (OTTI) of residential mortgage- backed securities (RMBS) held by AIG's Domestic Life and Retirement Services (DLRS) subsidiaries. Also during this period, AIG posted to its equity account more than $9 billion in after-tax unrealized depreciation of investments, again mostly RMBS. Moody's noted that AIG's ultimate economic losses on CDS and RMBS may be materially smaller than estimated market values would suggest. In response to these losses and write-downs, AIG has raised more than $20 billion of capital during May 2008 -- a clear positive for creditors, in Moody's view. The new issuance includes approximately $7.5 billion of common stock, $5.9 billion of equity units (hybrids) and $6.9 billion of junior subordinated debentures (hybrids). The hybrid securities have been designed to receive significant equity treatment for financial leverage calculations. "The recent issuance of common stock and hybrids enhances the company's capital and liquidity profiles," said Moody's Bruce Ballentine, lead analyst for AIG. "The fresh capital restores some of the equity that was eroded by declining market values of CDS and RMBS, and it will help AIG to absorb economic losses that may develop over time." As part of the rating action, Moody's also downgraded the insurance financial strength ratings (IFSRs) of the DLRS companies to Aa2 from Aa1. These entities hold a majority of AIG's RMBS, both through their securities lending collateral and directly. Moody's expects that AIG will allocate a portion of its new capital to life insurance subsidiaries whose statutory capital has been reduced by OTTI of RMBS. The rating outlook on these companies is stable. "AIG's DLRS group is a leading US life insurer, with a diversified product portfolio and multi-faceted distribution network," said Laura Bazer, lead analyst for these operations. "The stable outlook reflects Moody's view that, at the current rating level, these companies could likely withstand some degree of additional market value fluctuations and potential economic losses related to RMBS." Moody's also downgraded to Aa3 from Aa2 the IFSRs of the Commercial Insurance Group companies as well as AIG UK Limited and American International Assurance Company (Bermuda) Limited. These IFSRs previously received some uplift from the ownership and support of AIG. The downgrades reflect the fact that the strength of the parental support has diminished somewhat, as indicated by the parent company downgrade. Moody's believes that all of these operating companies can now support their Aa3 IFSRs through their own intrinsic financial strength. As a result, the rating outlook for these entities is stable. Over the next few days, Moody's will update its credit opinions on AIG and its major operating units to explain the current rating rationale for each, along with factors that could change the ratings up or down. Moody's last rating actions on these entities took place on May 9 and May 15, 2008, when the respective ratings were placed on review for possible downgrade. Moody's has downgraded these ratings and assigned a negative outlook: * American International Group, Inc. -- long-term issuer rating to Aa3 from Aa2, senior unsecured debt to Aa3 from Aa2, subordinated debt to A1 from Aa3, senior unsecured debt shelf to (P)Aa3 from (P)Aa2, subordinated debt shelf to (P)A1 from (P)Aa3, preferred stock shelf to (P)A2 from (P)A1; * AIG Capital Trusts I & II -- backed trust preferred stock shelf to (P)A1 from (P)Aa3; * AIG Life Holdings (US), Inc. -- backed senior unsecured debt to Aa3 from Aa2; * AIG Program Funding, Inc. -- backed senior unsecured debt shelf to (P)Aa3 from (P)Aa2; * AIG Retirement Services, Inc. -- backed senior unsecured debt to Aa3 from Aa2, backed preferred stock to A2 from A1; * American General Capital II -- backed trust preferred stock to A1 from Aa3; * American General Institutional Capital A & B -- backed trust preferred stock to A1 from Aa3; * Capital Markets subsidiaries -- AIG Financial Products Corp., AIG Matched Funding Corp., AIG-FP Capital Funding Corp., AIG-FP Matched Funding Corp., AIG-FP Matched Funding (Ireland) P.L.C., Banque AIG -- backed senior unsecured debt to Aa3 from Aa2. Moody's has downgraded these ratings and assigned a stable outlook: * AIG UK Limited -- backed insurance financial strength to Aa3 from Aa2; * American International Assurance Company (Bermuda) Limited -- insurance financial strength to Aa3 from Aa2; * Commercial Insurance Group subsidiaries -- AIG Casualty Company; AIU Insurance Company; American Home Assurance Company; American International Specialty Lines Insurance Company; Commerce and Industry Insurance Company; National Union Fire Insurance Company of Pittsburgh, Pennsylvania; New Hampshire Insurance Company; The Insurance Company of the State of Pennsylvania -- insurance financial strength to Aa3 from Aa2; * Domestic Life Insurance & Retirement Services subsidiaries -- AIG Annuity Insurance Company, AIG Life Insurance Company, American General Life and Accident Insurance Company, American General Life Insurance Company, American International Life Assurance Company of New York, The United States Life Insurance Company in the City of New York, The Variable Annuity Life Insurance Company -- insurance financial strength to Aa2 from Aa1. Moody's has confirmed these ratings and assigned a stable outlook: * AIG SunAmerica funding agreement-backed note programs -- AIG SunAmerica Global Financing Trusts, ASIF I & II, ASIF III (Jersey) Limited, ASIF Global Financing Trusts -- senior secured debt at Aa2; * AIG SunAmerica subsidiaries -- AIG SunAmerica Life Assurance Company, First SunAmerica Life Insurance Company, SunAmerica Life Insurance Company -- insurance financial strength at Aa2. Moody's has affirmed these rating with a negative outlook: * AIG General Insurance (Taiwan) Co., Ltd. -- insurance financial strength at A1. Moody's has affirmed these ratings with a stable outlook: * American International Group, Inc. -- short-term issuer rating at Prime-1; * AIG Financial Products Corp. -- backed short-term debt at Prime-1; * AIG Funding, Inc. -- backed short-term debt at Prime-1; * AIG Liquidity Corp. -- backed short-term debt at Prime-1; * AIG Matched Funding Corp. -- backed short-term debt at Prime-1; * AIG SunAmerica subsidiaries -- AIG SunAmerica Life Assurance Company, First SunAmerica Life Insurance Company, SunAmerica Life Insurance Company -- short-term insurance financial strength at Prime-1; * Transatlantic Holdings, Inc. -- senior unsecured debt at A2; senior unsecured debt shelf at (P)A2, subordinated debt shelf at (P)A3; * Transatlantic Reinsurance Company -- insurance financial strength at Aa3. These ratings remain on review for possible downgrade: * AGFC Capital Trust I -- backed preferred stock at A3; * AIG Edison Life Insurance Company -- insurance financial strength at Aa2; * American General Finance Corporation -- long-term issuer rating at A1, senior unsecured debt at A1; * American Life Insurance Company -- insurance financial strength at Aa2; * ILFC E-Capital Trusts I & II -- backed preferred stock at A3; * International Lease Finance Corporation -- senior unsecured debt at A1; * Mortgage Guaranty subsidiaries -- United Guaranty Commercial Insurance Company of North Carolina, United Guaranty Mortgage Indemnity Company, United Guaranty Residential Insurance Company, United Guaranty Residential Insurance Company of North Carolina -- backed insurance financial strength at Aa2. AIG, based in New York City, is a leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. The company is engaged through subsidiaries in General Insurance, Life Insurance & Retirement Services, Financial Services and Asset Management. AIG reported total revenues of $14.0 billion and a net loss of $7.8 billion for the first quarter of 2008. Shareholders' equity was $79.7 billion as of March 31, 2008. AMERICO LIFE: Moody's Reviewing Ba1 Sr. Debt Rating for Upgrade --------------------------------------------------------------- Moody's Investors Service placed the Baa1 insurance financial strength (IFS) rating of Americo Financial Life and Annuity Insurance Company (Americo Financial) and the Ba1 senior unsecured debt rating of Americo Life, Inc. (Americo) on review for possible upgrade. Americo Financial is a wholly-owned subsidiary of Americo, and Americo is a wholly-owned subsidiary of privately- held Financial Holding Corporation. According to Moody's Vice President-Senior Credit Officer, Scott Robinson, "Americo has been able to successfully implement its niche marketing strategy, whereby it concentrates its sales, marketing, and product development efforts on a few chosen market segments." Robinson added that "the company's successful track record combined with a solid balance sheet--with very manageable exposure to subprime-related investments or other structured investments that have been under pressure--has placed upward pressure on the rating." The rating agency said that Americo's credit strengths include strong statutory capital adequacy, moderate financial leverage, a sound investment portfolio, and a sizeable block of profitable life insurance policies. In addition, the company's private ownership allows management to maintain a long-term focus on profitability. Moody's also noted that Americo's strengths are mitigated by its relatively small scale of operations, concentration of distribution through a single, independent channel, and potential statutory earnings volatility due to its niche market focus. Moody's said that the review for possible upgrade will focus on an evaluation of the company's financial flexibility in light of its recently announced acquisition as discussed below, the company's capital position, and the diversification among the company's different product lines. Moody's also noted that during the review period it will evaluate the progress of the company's integration of Financial Industries Corporation (FIC), the parent company of Investors Life Insurance Company of North America. On May 15, 2008, shareholders of FIC approved the plan of merger with Americo. These ratings were placed on review for possible upgrade: * Americo Financial Life and Annuity Insurance Company: insurance financial strength at Baa1 * Americo Life, Inc.: senior unsecured debt at Ba1 The last rating action on the companies was on January 19, 2007 when Moody's affirmed the Baa1 IFS ratings of Americo Financial and the Ba1 senior unsecured debt rating of Americo. The outlook on the ratings was changed to positive from stable for both companies. Americo and Americo Financial are based in Kansas City, Missouri. As of March, 31, 2008, Americo Financial reported total statutory assets of approximately $3.8 billion and capital of about $243 million. ANGEL MARTINEZ: Case Summary & Largest Unsecured Creditor --------------------------------------------------------- Debtor: Angel Luis Colon Martinez Urb. Playa Del Sur 40 Calle Velero Ensenada, PR 00647 Bankruptcy Case No.: 08-02394-11 Chapter 11 Petition Date: April 18, 2008 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Nydia Gonzalez Ortiz, Esq. Bufete Santiago & Gonzalez 11 Calle Betances Yauco, PR 00698 Tel: 787 267-2205 e-mail: ecf@santiago-gonzalez.com Total Assets: $1,983,795 Total Debts: $807,019 Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ CRIM Trade Debt $3,380 PO Box 28 Calle Amarillo #1738, Suite 202 San Juan, PR 00926 ASPEN TECHNOLOGY: Defers Financials Filing Due to Acctg. Errors --------------------------------------------------------------- Aspen Technology Inc. was delayed in the preparation of its restated financial statements to be included in its Form 10-K filing for the period ended June 30, 2007 and its Form 10-Q for the period ended Sept. 30, 2007 due to errors the company identified in its accounting for sales of installments receivable. After those errors were identified, the Audit Committee of its Board of Directors and its management also determined to engage in a detailed review of other accounts in the company's financial statements. In addition, the Audit Committee of its Board of Directors appointed a new independent registered public accounting firm on March 12, 2008 for the fiscal year ending June 30, 2008. On April 11, 2008, the company filed its Form 10-K for the period ended June 30, 2007 and its Form 10-Q for the period ended Sept. 30, 2007. However, as a result of the concentration of resources on completing the preparation of its restated financial statements to be included in the Form 10-K for the period ended June 30, 2007 and its Form 10-Q for the period ended Sept. 30, 2007, as well as delays in completing its financial reporting for the quarter ended Dec. 31, 2007, the company was not able to file its Form 10-Q for the period ended Dec. 31, 2007, within the prescribed time period, and also were not able to timely file its Form 10-Q for the period ended March 31, 2008. Based in Cambridge, Massachusetts, Aspen Technology Inc. (Nasdaq: AZPN) -- http://www.aspentech.com/-- provides process optimization software and services. AspenTech's integrated aspenONE(TM) solutions enable manufacturers to reduce costs, increase capacity, and optimize operational performance end-to-end throughout the engineering, plant operations, and supply chain management processes. * * * Moody's Investor Service placed the company's long-term corporate family rating at B2 and its equity-linked rating at Caa1 in October 2001. These ratings still hold to date with a stable outlook. BAG'N BAGGAGE: Files Schedules of Assets and Liabilities -------------------------------------------------------- Bag'n Baggage, Ltd., delivered to the U.S. Bankruptcy Court for the Northern District of Texas its schedules of assets and liabilities, disclosing: Schedule Total Assets Total Liabilities -------- ------------ ----------------- A. Real Property B. Personal Property $13,281,246 C. Property Claimed as Exempt D. Creditors Holding $14,680,126 Secured Claims E. Creditors Holding $253,991 Unsecured Priority Claims F. Creditors Holding $4,826,352 Unsecured Non- Priority Claims ------------ ----------------- TOTAL $13,281,246 $19,760,470 About Bag'n Baggage Bag'n Baggage -- http://www.bagnbaggage.com/-- is a retailer of travel and business gear for more than 35 years. The company and its stores offer luggage and travel goods including Tumi, Hartmann, Victorinox, Rimowa. The company operates 34 stores in upscale malls and lifestyle centers located in 11 states -- including Texas, Florida, California, Arizona, Washington, Massachusetts, North Carolina, Virginia, Pennsylvania, Nevada and Hawaii -- trading under the names Bagn Baggage, Malm Luggage, Niccolo & Mafeo and Houston Trunk Factory. Bag'n Baggage and related entity, 900 Corp., filed for Chapter 11 Bankruptcy protection on May 4, 2008, in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division (Case Nos. 08- 32096 and 08-32097). The Debtors are represented by Carol E. Jendrzey, Esq., Lindsey Doherty Graham, Esq., and Mark Edward Andrews, Esq., at Cox Smith Matthews, Inc., in San Antonio, Texas. Bag'n Baggage, Ltd., is seeking to sell substantially all of its assets to KCP Opportunity Fund I, L.P., which has been named by the Court as "stalking horse" bidder. KCP Opportunity Fund I did not disclose its offer for the Debtors' assets, but intends to maintain Bag'n Baggage as a going concern. A sale hearing will be held June 6, 2008, in Dallas. BEAR STEARNS: Gets Breach of Contract Lawsuit from HQ Landowner --------------------------------------------------------------- 383 Madison LLC, property owner of The Bear Stearns Companies Inc.'s headquarters in New York City, has filed a lawsuit with the New York State Supreme Court against the company on breach of contract, several papers report. According to the lawsuit, Bear Stearns failed to give the landowner the right to make the first bid for the company's building, Emily Chasan of Reuters writes. Dow Jones relates that Bear Stearns didn't notify 383 Madison that JPMorgan Chase & Co. was buying the building under a takeover agreement. The plaintiff claims that JPMorgan was given the right to buy the building for $1.1 billion, which was way below the fair market value of the building. The plaintiff has also named JPMorgan as one of the defendants. According to the paper, JPMorgan spokesman Joseph Evangelisti stated that 383 Madison's claims will not hold in court. Rough Estimates of Bear Stearns Impact on JPMorgan Separately, JPMorgan CEO Jamie Dimon, in a statement for investors, said net losses expected through 2009 after the Bear Stearns acquisition is $300 million. Also, JPMorgan has identified positions for 40% of Bear Stearns staff, indicating that roughly 60% will be displaced. Mr. Dimon concluded that the Bear Stearns merger integration is proceeding well, but is challenging in current market environment. Although, it remains an excellent opportunity for shareholder value in long run. About Bear Stearns New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BIRCH MOUNTAIN: Posts C$6.2 Million Net Loss in 2008 First Quarter ----------------------------------------------------------------- Birch Mountain Resources Ltd. reported a net loss of C$6.2 million in the first quarter ended March 31, 2008, compared with a net loss of C$3.6 million in the same period last year. During the first quarter of 2008, the company generated revenues from limestone and trucking sales of C$281,000, compared to C$859,000 in 2007. The company said that market conditions for construction products were slow in the first quarter owing to the prolonged cold winter weather. Only key quarry staff and minimal rental equipment was retained to contain costs. Cost of sales were C$1,369,000 during the first quarter of 2008. This compares with cost of sales of C$875,000 during the first quarter of 2007. Total expenses increased to C$5.2 million during the first quarter of 2008 from C$3.7 million during the same period of 2007. Indirect quarry costs totaled C$533,000, versus C$551,000 in the first quarter of 2007. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed C$89.9 million in total assets, C$73.6 million in total liabilities, and C$16.3 million in total stockholders' equity. Going Concern Doubt Birch Mountain Resources Ltd. disclosed in its report on Form 6-K which was filed with the U.S. Securities and Exchange Commission on May 20, 2008, that the company currently has insufficient revenue to meet its yearly operating and capital requirements. The company has incurred operating losses since its inception in 1995, and as of March 31, 2008, has an accumulated deficit of C$48.2 million. Losses are from costs incurred in the early operation and development of the Muskeg Valley Quarry and the Hammerstone Project, exploration of mineral opportunities and mineral technology research. Future operating losses may occur as a result of the continued operation of the Muskeg Valaley Quarry and development of the Hammerstone Project. The company has a working capital balance at March 31, 2008, of C$2.1 million, a decrease of approximately C$5.5 million from Dec. 31, 2007. The company has formally engaged RBC Capital Markets to assist in the evaluation of strategic alternatives, which includes discussing debt and equity strategies for its immediate and medium term capital needs. To the extent the company raises additional capital by issuing equity or convertible debt securities, ownership dilution to shareholders will result. The company believes the foregoing factors raise substantial doubt about the company's ability to continue as a going concern. About Birch Mountain Headquartered in Calgary, Canada, Birch Mountain Resources Ltd. (TSX and AMEX: BMD) -- http://www.birchmountain.com/-- operates the Muskeg Valley Quarry, an early production stage limestone quarry that produces limestone aggregate products for sale to customers in the Athabasca Oil Sands region of northeastern Alberta. The company is engaged in the regulatory approval process for the Hammerstone Project which will expand the Muskeg Valley Quarry and add an integrated limestone processing complex to provide manufactured limestone-based products such as quicklime, as well as related environmental services such as spent lime recalcining. BHM TECHNOLOGIES: Wants to Obtain $45,000,000 in DIP Financing -------------------------------------------------------------- BHM Technologies Holdings, Inc., and its debtor-subsidiaries seek the authority of the United States Bankruptcy Court for the Western District of Michigan to obtain up to $45,000,000 in postpetition financing. Pursuant to a Credit and Guarantee Agreement, dated May 19, 2008, certain of the prepetition lenders will provide the Debtors with funds for working capital and general corporate purposes. The funds for working capital and general corporate purposes included up to $30,000,000 upon interim approval of the DIP Loan by the Honorable Scott W. Dales. The DIP Lenders require the Debtors to promptly complete their restructuring under Chapter 11. The Debtors are required to file a plan and disclosure statement by July 3, 2008, and obtain confirmation of the plan by October 1, 2008. Ray VanderKooi, chief financial officer of the BHM Technologies, relates that without immediate access to credit, the Debtors will not have sufficient liquidity to provide working capital during the Chapter 11 cases to provide customers, employees, vendors, suppliers and other key constituencies with confidence that the Debtors have sufficient resources available to maintain their operations in the ordinary course. "Absent this new liquidity, I believe that the Debtors' ability to maximize the value of their estates and reorganize successfully would be jeopardized, and the Debtors would risk the loss of their going- concern value to the direct detriment of all parties in interest," he said. Mr. VanderKooi asserts that the DIP Facility provided by a syndicate of prepetition lenders, with Lehman Commercial Paper, Inc., as administrative agent, constitutes the best alternative available under the circumstances. Terms of Consensual Plan Agreed As of the Petition Date, the Debtors owe $255,700,000 to lenders under the First Lien Credit Agreement, dated as of July 21, 2006. The Debtors are also owe $72,000,000 to lenders under the Second Lien Credit Agreement, dated as of July 21, 2006. Lehman Commercial Paper, Inc., acted as administrative agent for the First Lien Lenders. LCPI acted as initial agent and SAC Domestic Investments is the successor administrative agent for the Second Lien Lenders. The larger holders that make up the First Lien Lenders comprise the DIP lending syndicate. Before the Petition Date, the Debtors were engaged in intensive, arm's-length negotiations with the First Lien Agent and, more recently, the Second Lien Agent, concerning the terms of a consensual global restructuring among the Debtors; the First Lien Lenders; the Second Lien Lenders; and the Debtors' equity sponsor, Atlantic Equity Partners IV, L.P. These discussions have resulted in a term sheet, which represents the material terms and conditions under which the Debtors may move forward to successfully emerge from Chapter 11 with a significantly reduced balance sheet. The Term Sheet has been agreed to by claimants holding a majority in dollar amount of the First Lien Lenders' aggregate claims and the Second Lien Lenders' aggregate claims. Further, two plan support agreements have been entered into prior to the Petition Date: (1) a Plan Support Agreement between and among the Debtors, certain of the First Lien Lenders and certain of the Second Lien Lenders; and (2) a Plan Support Agreement between the Debtors' equity sponsor, AEP, and LCP as administrative agent for the First Lien Lenders. The Plan Support Agreements are a major step forward in the context of a global restructuring, relates Robert S. Hertzberg, Esq., at Pepper Hamilton, LLP, in Detroit, Michigan. The Term Sheet provides two alternatives -- the "New Money" alternative and the "No New Money" alternative, both of which contemplate the cancellation of the existing stock of BHM. In the "No New Money" alternative, the First Lien Lenders will obtain 89% of the common stock of Reorganized BHM, and the unsecured creditors 11%. In the "New Money" alternative, Atlantic Equity Partners will invest $12,500,000 to purchase 27% of the primary common stock of reorganized BHM, with the First Lien Lenders getting 65% of the common stock, and the general unsecured creditors receiving 8% of the common stock, in exchange for their claims. A filing of a plan inconsistent with the Term Sheet is an event of default under the DIP Facility. Principal Terms of DIP Financing The DIP Facility provides for these terms: Borrower: BHM Technologies, LLC Administrative Agent: Lehman Commercial Paper, Inc. Total Facilities: The DIP Facility consists of a term loan and a revolving loan in an aggregate principal amount up to $45,000,000, subject to reductions. Use of Proceeds: The proceeds of the DIP Facility will be used for (a) working capital and general corporate purposes of the Debtors, including but not limited to, professional fees and expenses, in accordance with the Budget, (b) to provide cash collateral for the renewal or extension of the irrevocable letter of credit in the amount of $300,000 in connection with the Debtors' workers' compensation insurance, (c) to pay transaction costs, fees and expenses in connection with the DIP Facility and (d) to provide adequate protection to the First Lien Lenders. Term: The DIP Facility will mature November 20, 2008, and can be extended once by up to 90 days with the consent of the DIP Lenders upon the satisfaction of certain conditions. Interest Rates: The Debtors will pay interest at the rate of ABR plus 5.25% (where ABR is the greater of the Prime Rate or 0.5 of 1% plus the Federal Funds Effective Rate) or LIBOR plus 6.25% per annum. Default Interest Rate: During an Event of Default, the DIP Facility will bear interest at an additional 2%. Fees: The Debtors will pay: * a commitment fee computed at the rate of 0.50% per annum on the average daily amount of the Available Revolving Credit Commitment of the Revolving Credit Lender during the period for which payment is made, payable monthly in arrears on the last day of each month; * 1.0% upfront market fee and an additional 1% upfront market fee of the amount of any additional Commitments; * $250,000 facility fee payable to the DIP Agent; * $10,000 per month agency fee payable to the DIP Agent; and * Fees of the DIP Agent and the DIP Lenders, including fees of counsel, and reasonable costs and expenses. DIP Liens: As security for the DIP Obligations, the DIP Agent will receive, subject only to the Carve-Out: (i) First Lien On Unencumbered Property. Pursuant to Section 364(c)(2) of the Bankruptcy Code, a valid, binding, continuing, enforceable, fully- perfected first priority lien on, and security interest in, all real and personal, tangible and intangible prepetition and postpetition property and assets of the Debtors, that are unencumbered, with the exception of Avoidance Actions. (ii) Liens Junior To Certain Existing Liens. (iii) Liens Priming Prepetition Lenders' Liens. (iv) Liens Senior To Certain Other Liens. Superpriority Claims: The DIP Lenders will be granted a superpriority administrative claim under Section 364(c)(1) against the Debtors and the property of their estates with priority over any and all administrative expenses, adequate protection claims and all other claims against the Debtors. Carve Out: Carve Out will mean (i) all fees required to be paid to the Bankruptcy Clerk and to the Office of the United States Trustee under 28 U.S.C. Section 1930(a), and (ii) all unpaid professional fees and expenses charged for services performed prior to the giving of an Event of Default notice by the DIP Agent, and (b) up to $1,000,000 in unpaid professional fees and expenses incurred by the Debtors and the Committee after the date the notice. Covenants: The DIP Agreement contains usual covenants, including, but not limited to, delivery of audited and unaudited financial statements, balance sheets and cash flow statement. The DIP Agreement also contains usual negative covenants. EBITDA covenants are: Period EBITDA ------ ------ May 2008 $500,000 June 2008 $750,000 July 2008 $1,000,000 Each Month Thereafter The greater of $1,500,000 or 15% of cumulative EBITDA Events of Default: The DIP Agreement contains usual Events of Default, including, dismissal or conversion of the Debtors' Chapter 11 cases; filing of a plan of reorganization inconsistent with the Term Sheet, withdrawal or abandonment of the Reorganization Plan without the consent of the DIP Lenders and the DIP Agent; entry of an order denying confirmation of the Reorganization Plan; termination of guarantees; change of control; and failure of the Debtors to: (i) by the 45th day after the Petition Date, file the Reorganization Plan and Initial Disclosure Statement, (ii) by the 90th day after the Petition Date, obtain an order approving the Initial Disclosure Statement, or (iii) by the 135th day after the Petition Date obtain an order confirming the Reorganization Plan. Reservation of Rights: Subject to Section 364(e), if the Plan Support Agreements are terminated, the findings and conclusions in the Interim and Final Orders concerning (i) valuation, (ii) the adequate protection of the Second Lien Lenders and (iii) the Intercreditor Agreement will not be binding on the Second Lien Agent or the Second Lien Lenders. The Court will conduct a hearing to consider final approval of the DIP Facility on June 10, 2008 at 1:30 p.m, prevailing Eastern time. Objections to the DIP Financing must be received by the Court, and counsel to the Debtors, the DIP Agent and the First Lien Agent by not later than June 3, 2008 at 11:59 p.m., prevailing Eastern time. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc. -- http://www.browncorp.com/-- manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Michigan on May 19, 2008 (Lead Case No. 08- 04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton, LLP represent the Debtors in their restructuring efforts. When the Company filed for bankruptcy, it listed estimated assets and debts to be both between $100 million and $500 million. BHM TECHNOLOGIES: Court Authorizes Use of Lenders' Cash Collateral ------------------------------------------------------------------ The United States Bankruptcy Court for the Western District of Michigan has entered an interim order allowing BHM Technologies Holdings, Inc., and its debtor-subsidiaries to use the cash collateral of their lenders. Ray VanderKooi, chief financial officer of the BHM Technologies Holdings, Inc., relates the Debtors require access to their cash and the proceeds of existing accounts receivable and inventory to operate their businesses and preserve their value as going concerns. He, however, relates these essential items are prepetition collateral, as well as collateral under the $45,000,000 DIP Facility and, therefore, may not be used in support of the Debtors' ongoing business activities absent compliance with Section 363 of the Bankruptcy Code. As of the Petition Date, the Debtors owe $255,700,000 to lenders under the First Lien Credit Agreement, dated as of July 21, 2006. The Debtors also owe $72,000,000 to lenders under the Second Lien Credit Agreement, dated as of July 21, 2006. Lehman Commercial Paper, Inc., acted as administrative agent for the First Lien Lenders. LCPI acted as initial agent and SAC Domestic Investments is the successor administrative agent for the Second Lien Lenders. The Debtors granted the First Lien Lenders first priority liens in and against substantially all of their assets, and granted the Second Lien Lenders second priority liens in and against the same assets. The Debtors believe the First Lien Lenders are undersecured and that the Second Lien Lenders are unsecured based on the value of the Debtors' assets, relates the Debtors' counsel Robert S. Hertzberg, Esq., at Pepper Hamilton LLP, in Detroit, Michigan. The First Lien Lenders have agreed to be primed only by the DIP Facility. Some of the First Lien Lenders comprise the DIP Lenders. The larger holders that make up the First Lien Lenders are the DIP Lenders. BHM and the Prepetition Agents are parties to an Intercreditor Agreement, pursuant to which the liens and security interests granted in favor of the Second Lien Agent were subordinated to the liens and security interests of the First Lien Agent. Section 6.1 of the Agreement provides the Second Lien Agent will not raise any objection to the use of cash collateral or any DIP financing. Section 6.3 provides that the Second Lien Agent retains the right to seek "adequate protection in the form of a Lien on . . . additional collateral, which Lien will be subordinated to the Liens securing the First Lien Obligations and such Cash Collateral use or DIP Financing. . .", but no other form of adequate protection. Pursuant to the Intercreditor Agreement, the Debtors propose to provide the Second Lien Lenders adequate protection solely in the form of replacement liens on an interim basis. These replacement liens are junior to the DIP Liens, the First Lien Adequate Protection Liens and the liens held by the First Lien Lenders. The Debtors believe that this interim grant of adequate protection is sufficient to protect the interests, if any, of the Second Lien Agent and the Second Lien Lenders in their prepetition collateral, and that the Second Lien Agent and the Second Lien Lenders do not require, nor are they entitled to, any form of adequate protection in the context of final approval of the DIP Facility and the Debtors' continued use of cash collateral. In addition, as adequate protection for their interests in their collateral, the First Lien Agent will be granted: (i) perfected replacement security interest in and lien on all of the Collateral, to the extent of Diminution in First Lien Value, subject and subordinate only to (i) the Permitted Prepetition Liens, (ii) the DIP Liens and (iii) the Carve Out; (ii) superpriority claims as provided in section 507(b) of the Bankruptcy Code, against the Debtors and all property of their estates, in an amount equal to the Diminution in First Lien Value, if any, with priority in payment over any and all administrative expenses of the kinds specified or ordered pursuant to any provision of the Bankruptcy Code, subject and subordinate only to (i) the Carve Out, and (ii) the Superpriority Claims granted in respect of the DIP Obligations; and (iii) adequate protection payments in amounts equal to (i) on the date of the closing of the DIP Agreement, all accrued and unpaid fees and expenses payable to or for the benefit of the First Lien Agent and the First Lien Lenders under the First Lien Loan Documents. The grant of the Interim Second Lien Adequate Protection Liens to the Second Lien Lenders will not imply that the prepetition liens of the Second Lien Agent have any value or are entitled to adequate protection, or that the Interim Second Lien Adequate Protection Liens have any value, and will serve only to secure the diminution in value, if any, after the Petition Date of the Second Lien Lenders' interest, if any, in the Prepetition Collateral. The Interim Second Lien Adequate Protection Liens will expire upon entry of the Final DIP Order. The Court will conduct a hearing to consider final approval of the Debtors' request on June 10, 2008 at 1:30 p.m, prevailing Eastern time. Objections are due June 30. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc. -- http://www.browncorp.com/-- manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Michigan on May 19, 2008 (Lead Case No. 08- 04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton, LLP represent the Debtors in their restructuring efforts. When the Company filed for bankruptcy, it listed estimated assets and debts to be both between $100 million and $500 million. BHM TECHNOLOGIES: Negotiates Plan Term Sheet with AEP & Lenders --------------------------------------------------------------- BHM Technologies Holdings, Inc., and its subsidiaries; Atlantic Equity Partners IV, L.P., the largest shareholder of the Debtors; Lehman Commercial Paper, Inc., the administrative agent for the lenders owed $255,700,000 under the First Lien Credit Agreement and the lenders who will provide $45,000,000 in postpetition loan; and SAC Domestic Investments, administrative agent for lenders owed $72,000,000 under the Second Lien Credit Agreement, negotiated a term sheet for the proposed restructuring of the Debtors. The parties have outlined the principal economic terms of a restructuring to be accomplished through a joint Chapter 11 plan of reorganization to be proposed by BHM Technologies Holdings, BHM Technologies LLC, and their direct and indirect domestic subsidiaries. The Plan will proved for two alternatives for the restructuring of the Debtors' balance sheet, a "New Money" alternative which is the preferred alternative, and a "No New Money" alternative which is the "fallback option." In each alternative, all classes of claims and interests will be unimpaired, except for these classes: (a) Class S-3 (Secured Claims for First Lien Debt), will receive a secured Term Loan and 6,265,350 shares of new common stock in BHM Technologies Holdings; (b) Class U-2 (Ongoing Operations Unsecured Creditors) will receive payment in full over specified periods of time, without interest; (c) Class U-4 (General Unsecured Claims) will receive 771, 120 shares of new common stock; and (d) Class E-2 (Existing Equity Interests in BHM) will receive nothing on account of its equity interests. In the "No New Money" alternative, the common stock distributions will result -- assuming Class U-4 votes to the Plan -- in Class S-3 holding 89% of the primary equity of the reorganized BHM Technologies Holdings and Class U-4 Holding 11.00%. In this alternative, Class S-3 will also receive options to purchase new common stock, subject to the First Lien/ Second Lien Settlement. In the "New Money" alternative, Atlantic Equity Partners will invest $12,500,000 to purchase on the effective date of the Plan 2,602,530 shares of new common stock and warrants to purchase 1,701,000 shares of new common stock. AEP's new common stock will represent 27% of the primary common stock of the reorganized Parent, subject to the AEP/Second Lien Settlement. The investment will be placed in escrow at the commencement of the Chapter 11 cases. Under the "New Money" alternative, Class S-3 will hold 65.00% and Class U-4 will hold 8.00% of the primary new common stock, and Class S-3 (Secured Claims for First Lien Debt) will receive additional securities in the form of preferred stock. No other class' treatment will be changed. The Plan will set forth both alternatives. The Plan will specify that the Debtors will seek first to confirm the "New Money" alternative. If the United States Bankruptcy Court for the Western District of Michigan confirms the "New Money" alternative, the Debtors will proceed to consummate it. If the Bankruptcy Court does not confirm the "New Money" alternative, or the Debtors fail to consummate it, or if it is withdrawn or abandoned, or not available to the Debtors, the Debtors will seek confirmation of the "No New Money" alternative. In soliciting acceptances for the Plan, the ballots will not provide for separate votes on the two alternatives. An acceptance of the Plan will be deemed to be an acceptance of either alternative. The Plan Term Sheet also provides for these terms: * Exit Financing. BHM Technologies LLC will obtain exit financing of up to $35,000,000, which will refinance the DIP Credit Agreement. The exit financing will provide up to a $35,000,000 revolving commitment, with a $5,000,000 letter of credit sub-limit. The exit financing is anticipated to have the same pricing as the DIP Credit Agreement, but subject to market conditions, and will mature on the third anniversary of the Plan Effective Date. * Term Loan. BHM Technologies LLC will issue a term loan in the aggregate principal amount of $92,500,000, which will be distributed pro rata to holders of Secured Claims for First Lien Debt. The Term Loan will bare interest at LIBOR rate (subject to a minimum LIBOR Rate of 4.00%) plus 6.25% with interest periods of one, three and six months. The TERM loan will mature on the fifth anniversary of the Plan Effective Date. * Board of Directors. If the "No New Money" Alternative is confirmed, the board of directors of Parent will be comprised of five directors, consisting of, initially (i) the Chief Executive Officer of Parent or, if the individual serving as CEO on the Plan Effective Date will cease to be CEO, a replacement director elected by a majority of the remaining directors, and (ii) four individuals designated prior to the confirmation hearing on the plan by holders of a majority in dollar amount of First Lien Debt. If the "New Money" alternative is confirmed, the Board will be comprised of up to seven directors, with the five selected directors and (i) so long as AEP beneficially owns at least 20% of the shares of new common stock, two directors appointed by AEP, or (ii) so long as AEP, beneficially owns less than 20% but at least 10% of the share, one director appointed by AEP. On the Plan Effective Date, AEP may appoint Mr. Thomas Berglund and Mr. Roberto Buaron as AEP Directors. Other potential appointees by AEP are Johnn Dezio, James Grover and Emilio S. Pedroni. * Warrants. The warrants to be issued will have an exercise price of $13.88 and will expire on the seventh anniversary of issuance. * New Preferred Stock. If the "New Money" alternative is confirmed by the Bankruptcy Court, the reorganized Parent will issue $78,750,000 in new preferred stock. Parent Preferred will have dividends of 10% through the fourth anniversary of issuance, and 13% thereafter. Parent preferred will be senior to all other capital stock of Parent with respect to dividends and liquidation. * New Common Stock. The reorganized Parent will issue shares of new common stock on the Plan Effective Date. * Management Equity Plan. Under either alternative, there will be allocated sufficient shares of new common stock to provide a management equity plan with 9% of the new common stock on a fully diluted basis. * Outside Director Plan. The Plan will provide for the grant of options to purchase shares of new common stock representing 1% of the new common stock on a fully diluted basis for the purpose of attracting and compensating outside directors. * Retention of Senior Management. BHM Technologies Holdings contemplates the retention of all or substantially all its present senior management. * Releases. The Plan will provide for general mutual releases by the Debtors, the First Lien Agent, each Second Lien Agent, the holders of the First Lien Debt, the holders of the Second Lien Debt, and the equity holders. * First Lien/Second Lien Settlement. The First Lien Agent, for the ratable accounts of the First Lien Lenders, will deliver and assign to the Current Second Lien Agent, for the ratable benefit of all Second Lien Lenders (i) $287,406 plus an additional amount equal to the lesser of (A) $100,000 and (B) the legal fees and expenses incurred by the Second Lien Agent in connection with the Debtors' Chapter 11 cases and (ii) (A) if the "No New Money" Alternative is authorized, the Class S-3 Option or (B) if the "New Money" alternative is authorized (x) shares representing $3,750,000 in issue price of Parent Preferred and (y) the share of New Common Stock attributable to First Lien deficiency claims. * AEP Second Lien Settlement. If the "New Money" alternative is confirmed, in consideration of the releases provided for AEP and its personnel, AEP will assign and deliver to the Second Lien Agent, for the ratable benefit of all Second Lien Lenders, shares of New Common Stock equal to the number of shares of new common stock received by the holders of Class U-4 General unsecured claims other than in respect of the First Lien Deficiency Claims and Second Lien Debt; provided that the maximum shares assigned will not exceed 24,098 shares. Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc. -- http://www.browncorp.com/-- manufactures and sells automobile parts including air bags and electrical systems. It has manufacturing facilites in Mexico and operates under Brown Corp. BHM Technologies Holdings, Inc. and 14 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Michigan on May 19, 2008 (Lead Case No. 08- 04413). Hannah Mufson McCollum, Esq., Kay Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R. Barson, Esq. of Pepper Hamilton, LLP represent the Debtors in their restructuring efforts. When the Company filed for bankruptcy, it listed estimated assets and debts to be both between $100 million and $500 million. BLUE WATER: Bankruptcy Court Approves Disclosure Statement ---------------------------------------------------------- Judge Marci B. McIvor of the U.S. District Court for the Eastern District of Michigan approved the Disclosure Statement explaining the Joint Plan of Liquidation filed by Blue Water Automotive Systems, Inc., and its affiliates, after finding that the Disclosure Statement contained adequate information for creditors to make informed judgment to vote on the Plan. Approval of the Disclosure Statement will allow the Debtors to proceed with the solicitation of acceptances of the Plan. Judge McIvor set June 10, 2008, as the deadline to return ballots on the Plan and file objections to the confirmation of the Plan. A hearing to consider confirmation of the Plan will be on June 18. As reported by the Troubled Company Reporter on May 22, Citizens Bank; CIT Group/Equipment Financing, Inc., and CIT Capital USA, Inc.; and IHB, Inc., formerly known as Injectronics, Inc., challenged the adequacy of the information provided in the Debtors' Disclosure Statement. General Motors Corp., the CIT Entities, and General Electric Capital and GELCO Corporation, doing business as GE Fleet Services, also lodged Disclosure Statement objections. GM pointed out that the Disclosure Statement does not adequately disclose, and that the Joint Plan of Liquidation does not adequately protect GM's rights under the Accommodation Agreement it entered with the Debtors on March 17, 2008. The Accommodation Agreement provides that GM will purchase from the Debtors certain Supplier Owned Tooling and equipment used in the manufacture of component parts for GM, Aaron M. Silver, Esq., at Honigman Miller Schwartz and Cohn LLP, in Detroit, Michigan, said. Mr. Silver asserted the Plan described in the Disclosure Statement is not confirmable since the Plan improperly strips GM of set-off and recoupment rights. Representing The CIT Group/Equipment Financing, Inc., and CIT Capital USA, Inc., Shalom L. Kohn, Esq., at Sidley Austin LLP, in Chicago, Illinois, asserted that the Disclosure Statement accompanying the Debtors' Joint Plan of Liquidation is insufficient because it fails to state exactly which assets are to be sold. Secured creditors cannot fairly decide whether they would prefer to vote for a plan, which proposes to sell assets, or object to it. The Plan, Mr. Kohn said, also appears to deprive the CIT Entities of their rights under Section 1129(b)(2)(A) and Section 363(k) to credit bid its debt in connection with a sale. Representing General Electric Capital and GELCO Corporation, doing business as GE Fleet Services, Elena Lazarou, Esq., at Reed Smith LLP, in New York, said the Disclosure Statement does not provide creditors any insight as to the value of the Debtors' assets and, most importantly, the expected proceeds available for distribution. Ms. Lazarou pointed out that, without information regarding the proposed purchaser, GE does not have adequate assurance of its ability to perform under the Agreements. Pursuant to the Plan, specific equipment secured creditors are to receive, at the Debtors' election, cash in the amount of their collateral value or transfer of title to their collateral. Ms. Lazarou said the Debtors do not ascribe any collateral values nor a basis for timetable or procedure for determining the values. She said the Disclosure Statement's provision that the creditors holding specific equipment secured claims totaling $452,757 is grossly understated as GE alone is owed by the Debtors no less than $2,900,000 pursuant to the agreements classified as specific equipment secured claims. The Debtors' Plan contemplates the sale of substantially all of the Debtors' assets and equity interests on or before June 30, 2008. Before the Disclosure Statement approval hearing, the Debtors filed an amended Disclosure Statement to disclose that the proposed sale excludes one piece of real property located at Yankee Road in St. Clair, Michigan, and any assets not critical to the operation of their businesses. The Debtors further disclosed that they will submit one Plan with the treatment to apply to each Debtor. To the extent there are remaining assets after the Sale in any Debtor, the Debtors said a separate Creditors' Trust will be established for each Debtor. The Debtors further disclosed in the amended Disclosure Statement that they owe $55,414 to creditors holding construction lien filed claims. The amended Disclosure Statement provides that the Plan cannot be confirmed if the DIP Facility Claim will not be paid in full in cash on or prior to the effective date of the Plan. A full-text copy of the Amended Disclosure Statement is available for free at http://bankrupt.com/misc/bw_amendedDS.pdf About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operations in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of US$100 million to US$500 million. The Debtors filed their Liquidation Plan on May 9, 2008. The Court will convene a hearing May 23 to consider approval of the Disclosure Statement explaining the Plan, for voting purposes. The Court will hold a hearing June 18, 2008, to consider confirmation of the Plan. (Blue Water Automotive Bankruptcy News, Issue No. 16, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BODISEN BIOTECH: Earns $1.8 Million in 2008 First Quarter --------------------------------------------------------- Bodisen Biotech Inc. reported net income of $1.8 million, on net revenue of $908,519 for the first quarter ended March 31, 2008, compared with a net loss of $1.5 million, on net revenue of $5.0 million in the same period in 2007. Results for the first quarter of 2008 other income of $2.2 million, as compared to other expense of $67,197 for three months ended March 31, 2007. The change is primarily due to a bad debt recovery of approximately $2.2 million during the three months ended March 31, 2008. The company attributed the significant decrease in revenue to a much smaller customer base in the three months ended March 31, 2008, as compared to March 31, 2007, as well as a snow storm that occurred in the first quarter of 2008, which affected crop plantings and led to a decrease in the use of fertilizer. The company's gross profit declined to $341,231 for the three months ended March 31, 2008, compared to $2.0 million for the three months ended March 31, 2007. The company incurred net operating expenses of $841,603 for the three months ended March 31, 2008, compared to $3.5 million for the three months ended March 31, 2007. Operating expenses for the three months ended March 31, 2007, were higher than normal due to a $1.4 million allowance for bad debts recorded during that period. The decrease was also due to an overall reduction in overhead due to the decrease in sales. Liquidity and Capital Resources As of March 31, 2008, the company had $768,400 of cash and cash equivalents compared to $617,046 as of Dec. 31, 2007. Operating activities provided net cash of $24,017 for the three months ended March 31, 2008, compared to net cash used for operating activities of $4.0 million for the three months ended March 31, 2007. This decrease in the use of cash in operating activities is principally due to the increase in net income from operations and receipts of customer payments. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $55.3 million in total assets, $1.3 million in total liabilities, and $54.0 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?2c65 Going Concern Disclaimer Morgenstern, Svoboda & Baer, CPAs, P.C., in New York, expressed substantial doubt about Bodisen Biotech 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 said that the company is subject to potential claims as a result of certain law suits filed by investors against the company. Shareholder Actions In late 2006, various shareholders of the company filed eight purported class actions in the U.S. District Court for the Southern District of New York against the company and certain of its officers and directors, asserting claims under the federal securities laws. The complaints contain allegations about prior financial disclosures and its internal controls and a prior, now- terminated relationship with a financial advisor. The eight actions are Stephanie Tabor vs. Bodisen Inc., et al., Case No. 06-13220 (filed November 2006), Fraser Laschinger vs. Bodisen Inc., et al., Case No. 06-13254 (filed November 2006), Anthony DeSantis vs. Bodisen Inc., et. al., Case No. 06-13454 (filed November 2006), Yuchen Zhou vs. Bodisen Inc., et. al., Case No. 06-13567 (filed November 2006), William E. Cowley vs. Bodisen Inc., et. al., Case No. 06-13739 (filed December 2006), Ronald Stubblefield vs. Bodisen Inc., et. al., Case No. 06-14449 (filed December 2006), Adam Cohen vs. Bodisen Inc., et. al., Case No. 06- 15179 (filed December 2006) and Lawrence M. Cohen vs. Bodisen Inc., et. al., Case No. 06-15399 (filed December 2006). Plaintiffs have not specified an amount of damages they seek. Last year, the Court consolidated each of the actions into a single proceeding. In 2008, defendants in the action, including the company, filed motions to dismiss the proceeding and to strike certain allegations in the complaint. The Court has not scheduled a hearing on these motions. Because these consolidated actions are in an early stage, the Company cannot comment on whether an adverse outcome is probable or otherwise. While the Company believes it has meritorious defenses to each of these actions and intends to defend them vigorously, an adverse outcome in one or more of these matters could have a material adverse effect on its business, financial condition, results of operations or liquidity. China Natural Gas Share Dispute In 2007, Ji Xiang, a shareholder of China Natural Gas, and son of its chairman and chief executive officer, instituted litigation in the Chinese court system in Shaanxi province challenging the validity of the company's ownership of 2,063,768 shares of China Natural Gas common stock. The company obtained these shares in September 2005 in a share transfer agreement, and asserts that it has fully performed its obligations under the agreement and is entitled to own the shares. The parties in the Chinese litigation have submitted their evidence and now await a decision from the Chinese court. Also, in January 2008, the same shareholder instituted litigation in a Utah state court against Yangling Bodisen Biotech Development Co. Ltd. and Interwest Transfer Co., China Natural Gas's transfer agent, seeking to prevent the company from selling its shares in China Natural Gas. Plaintiff has obtained an order from the Utah court provisionally preventing the company from selling the China Natural Gas shares pending a decision on the merits of the underlying dispute. The company said it intends to vigorously and thoroughly defend itself against this claim. While the company believes it will prevail in these litigation matters and establish its right of ownership to the China Natural Gas shares, an adverse outcome could have a material adverse effect on its business, financial condition, results of operations or liquidity. About Bodisen Biotech Headquartered in Shaanxi province, China, Bodisen Biotech Inc. (Other OTC: BBCZ.PK) -- http://www.bodisen.com/-- is a Delaware corporation which manufactures liquid and organic compound fertilizers, pesticides, insecticides and agricultural raw materials certified by the Petroleum Chemical Industry Administrative office of China, Shaanxi provincial government and Chinese government. BONITA DONOVAN: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Bonita Nix Donovan 800 Fla. Blvd. Neptune Beach, FL 32266 Bankruptcy Case No.: 08-bk-02133 Chapter 11 Petition Date: April 18, 2008 Court: Middle District of Florida (Jacksonville) Debtor's Counsel: Albert H. Mickler, Esq. Bryan K. Mickler, Esq. 5452 Arlington Expressway Jacksonville, FL 32211 Tel: 904-725-0822 court@planlaw.com Total Assets: $1,465,004 Total Debts: $2,731,740 Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Countrywide Home Loans Residence; value $645,813 450 American St. of security: $450,156 Simi Valley, CA 93065 Daniel and Robin Wahby Vacant lot; value 625,937 Gerald and Barbara Fletcher of security: $400,000 c/o C. Randolph Coleman, Esq. 9250 Baymeadows Rd. #450 Jacksonville, FL 32256 Countrywide Home Loans Condo; value of 400,000 450 American St. security: $110,000 Simi Valley, CA 93065 Bank of America Townhomes; value 364,000 475 Crosspoint Pkwy of security: $357,000 Getzville, NY 14068 Townhomes; value 90,327 of security: $357,000; value of senior lien: $364,000 Bank of America Townhomes; value 230,947 4161 Piedmont Pkwy of security: $357,000; Greensboro, NC 27410 value of senior lien: $454,327 Condominium; value 49,114 of security: $135,000; value of senior lien: $94,181 Internal Revenue Service 2005-7 taxes 100,000 Bank of America Credit card 30,719 Hfc Check credit or 21,638 Line of credit Amex Credit Card 21,664 Thd/Cbsd Charge account 18,030 Usaa Savings Bank Credit card 16,595 Chase Credit card 9,586 Usaa Federal Savings Bank Vehicle; value 8,944 of security: $6,025 Shell/Citi Credit card 866 Premier Properties Realty Condo; value of 684 security: $110,000; value of senior lien: $400,000 HSBC Bank Credit card 570 South Beach Townhomes Townhomes; value of 500 security: $357,000; value of senior lien: $685,274 BRIAN PETERSEN: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Brian Alexander Petersen 183 Hornsby Rd Laramie, WY 82070 Bankruptcy Case No.: 08-20239 Chapter 11 Petition Date: April 26, 2008 Court: District of Wyoming (Cheyenne) Debtor's Counsel: Paul Hunter, Esq. 2616 Central Avenue Cheyenne, WY 82001 Tel: 307-637-0212 e-mail: attypaulhunter@prodigy.net Total Assets: $1,576,513 Total Debts: $754,166 Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Fifth Third Bank $30,079; Box 630778 value of collateral: Cincinnati, OH 27,500 45263-0778 Citicards 18,240 PO Box 6000 The Lakes, NV 89163-6000 GE Money 17,313; P O Box 530913 value of collateral: Atlanta, GA 30353 17,000 1st Equity 13,367 Washington Mutual 11,519 Beneficial 5,460 Ivinson Memorial Hospital 719 Advanced Medical Imaging Consultants 637 Emergency Physicians 244 BRIAN MEULEN: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------------ Debtors: Brian Lee Vander Meulen 3720 Boiling Springs Road, Ste F-151 Boiling Springs, SC 29316 Catherine Ann Vander Meulen 932 Nantahala Drive Chesnee, SC 29323 Bankruptcy Case No.: 08-02710 Chapter 11 Petition Date: May 5, 2008 Court: District of South Carolina (Spartanburg) Debtors' Counsel: Robert H. Cooper 3523 Pelham Road, Suite B Greenville, SC 29615 Tel: (864) 271-9911 e-mail: bknotice@thecooperlawfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 Debtor's 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Credit card 62,212 PO Box 6426 (+ unknown amount) Carol Stream, IL 60197-6426 Bank of America Credit card 36,900 PO Box 15710 Wilmington, DE 19886-5710 Amex Business Credit card 29,112 American Express (+ unknown amount) PO Box 650448 Dallas, TX 7526-0448 Quixtar MBNA Credit card 21,000 Advanta Business Credit card 15,100 Citibank Card Credit card 12,043 MBNA Credit card 11,055 Chase Bankcard Credit card 6,423 San Diego County Credit Union Credit card 6,100 Bank of America Credit card 6,017 Discover Credit card 5,063 CORPORATE EXPRESS US: Moody's to Review B2 Sr. Subordinate Rating ----------------------------------------------------------------- Moody's Investors Service put the ratings of Corporate Express N.V. (CFR at Ba3) under review with direction uncertain. The rating action follows the recent announcements that: (i) Staples Inc. (rated Baa1 under review for possible downgrade by Moody's) launched an unsolicited public offer of EUR8.00 per ordinary share in cash for Corporate Express, and (ii) Corporate Express announced a business combination with Lyreco SAS (unrated by Moody's), in which Corporate Express acquires Lyreco for 102.5 million new ordinary shares of Corporate Express and Eur900 million in cash and vendor notes, subject amongst other things to approval by Corporate Express' shareholders. Moody's believes that shareholders will over the coming weeks consider the merits of the two transactions. Corporate Express expects to convene a shareholders' EGM to approve the Lyreco transaction during the second half of June and the initial acceptance period for Staples' offer runs out on June 27. It appears that under the terms of the offer document Staples would not be bound by its offer if the Lyreco transaction becomes binding for Corporate Express. Moody's views the unsolicited offer from Staples as an important incremental step in Staples' ongoing effort to acquire Corporate Express. Should shareholders eventually accept Staples' offer and Corporate Express' debt remain outstanding, Moody's will evaluate the level of Staples' explicit or implicit support for Corporate Express' notes and adjust the rating as warranted. Moody's notes that the Lyreco transaction has been structured by the company with the intent to maintain the current Ba3 CFR. The rating agency believes that there is a good chance that this objective can be achieved. However, depending on Moody's review of the equity characteristics of the vendor loan and the near-term operating environment for the combined entity, pressure on the outlook could ensue. Ratings under review are: Corporate Express NV: * Corporate Family Rating: Ba3 * Sr Sec Bank Credit Facility -Dom Curr: Ba2 * Bkd Subordinate -Dom Curr: B2 Buhrmann US Inc. (now Corporate Express US Finance Inc.) : * Bkd Senior Subordinate: B2 Corporate Express N.V. headquartered in Amsterdam, The Netherlands, is an international business-to-business services and distribution group, supplying office products and graphics systems and related services to the business market. The company reported net sales revenue of EUR5,631 million in the year to 31 December 2007. CALFRAC WELL: S&P Affirms 'B+' Long-Term Corporate Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit rating on Calgary, Alberta-based Calfrac Well Services Ltd. The outlook is stable. Standard & Poor's also affirmed the 'B+' senior unsecured debt rating on Calfrac Holdings L.P. The '3' recovery rating on the senior unsecured debt was unchanged, indicating an expectation for meaningful (50%-70%) recovery in the event of a payment default. "The affirmation follows our review of Calfrac's consolidated business risk and financial risk profiles, which remains consistent with the 'B+' rating," said Standard & Poor's credit analyst Jamie Koutsoukis. "The company's conservative balance sheet, and its ability to generate consistent and strong EBITDA margins, have resulted in the financial risk profile being stronger than the business risk profile, which itself is limited by the company's participation in the cyclical oilfield services sector and the high competition level in a fragmented market," Ms. Koutsoukis added. Calfrac is an oilfield services provider to exploration and production companies in western Canada, the Rocky Mountains, Oklahoma, Arkansas, Mexico, Argentina, and Russia. It provides fracturing and well stimulation services to the oil and gas industry, which increase the production of hydrocarbons from wells. It provides both conventional hydraulic fracturing and hydraulic fracturing to produce natural gas found in coal, also known as coal bed methane fracturing. Calfrac also offers stimulation, coiled tubing, acidizing, nitrogen, and cementing services. The stable outlook reflects S&P's expectation that Calfrac will continue to fund its planned initiatives largely through internally generated cash flows, without deviating from financial polices or deteriorating cash flow protection metrics. An outlook revision to positive would depend on Calfrac improving its business risk profile by further strengthening the diversity of its operations, specifically in the U.S.; generating competitive margins in new markets; and maintaining its margins and market position in western Canada. At present, the company's business risk profile is weaker than its financial risk profile; strengthening the business risk profile while maintaining the financial risk profile could lead to an upgrade. Although not likely in the near-to-medium term, a negative rating action could occur if the company's financial risk profile were to weaken more quickly than those of its peers, as a result of a market slowdown or industry overbuild, or if total debt-to-EBITDA were to reach more than 2.5x. CALPINE CORP: Kenneth Derr to Resign as Calpine's Board Member -------------------------------------------------------------- Calpine Corporation reported that Kenneth Derr has notified the Company of his intention to resign as a director. Mr. Derr tendered his resignation in order to focus his time and energies on other business and personal matters. With Mr. Derr's resignation, the Board of Directors will have eight members. "We thank [Mr. Derr] for his steadfast service and for his many contributions to the Board and to the Company, especially during our very successful reorganization," said William J. Patterson, Chairman of Calpine's Board of Directors. "He is a talented colleague who stepped forward in a time of great need for Calpine and brought valuable and extensive experience to the Company. We wish him well in all of his future endeavors." Mr. Derr was Chairman of the Board of Calpine from November 2005 until January 2008 and has been a Calpine director since May 2001. In addition, Mr. Derr served as Acting CEO prior to the tenure of current CEO Robert P. May. Mr. Derr retired as the Chairman and Chief Executive Officer of Chevron Corporation in 1999, a position that he held since 1989, after a 39-year career with the company. "It has been an honor and a privilege to have served as a director of Calpine and to have helped guide the Company as it regained its strong footing," said Mr. Derr. "I believe that Calpine is well positioned for the future and I wish them every success." About Calpine Corporation Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. On Dec. 19, 2007, the Court confirmed the Debtors' Plan. The Amended Plan was deemed effective as of January 31, 2008. CAMBIUM LEARNING: Fin'l Statements Delay Cues S&P's Ratings Cut --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Natick, Massachusetts-based Cambium Learning Inc., including its corporate credit rating, to 'B-' from 'B'. Ratings remain on CreditWatch with negative implications, where they were placed on Dec. 6, 2007. Cambium had total debt of $191 million at March 31, 2008. "The downgrade reflects the company's delay in delivering its financial statements for the year ended Dec. 31, 2007, and weak operating performance, which may impair liquidity," explained Standard & Poor's credit analyst Hal F. Diamond. The delay results from the alleged theft of several million dollars from Cambium over the past few years by the company's former budget director. The company has received a limited waiver and amendment for the extension of covenant requirements for financial statement reporting from its banks until July 15, 2008. A continued delay in filing could lead to an event of default unless the company receives subsequent extensions. "We will resolve the CreditWatch listing," added Mr. Diamond, "pending a review of the company's operations, cash flow, and liquidity following the delivery of its audited financials and our review of the filings." CEDAR FUNDING: Owner to Put Firm Under Chapter 11 Protection ------------------------------------------------------------ David Nilsen, owner of real estate investor Cedar Funding, told the Monterey Herald that he intends to file for Chapter 11 protection in order to shield the company a while from civil lawsuits coming from its own investors. These investors, the Monterey Herald relates, have been accusing Mr. Nilsen of fraud, of mishandling of finances, making insider loans, and even employing Ponzi schemes in the company's operations. These problems have been compounded by regulatory crackdowns. Mr. Nilsen repudiates these claims, says the Monterey Herald. He insists that he hasn't done any fraudulent activity, and he even shifts the blame to his opponents' counsel, as the Herald notes. According to him, the controversies came when investors and regulators began to get worried as a result of the country's credit and mortgage crisis. He further added that these investors are actually protected by various real estate interests. "They don't need attorneys. . . [A]ll they need is patience," the Monterey Herald quotes Mr. Nilsen as saying. He explained that bringing the company into a Chapter 11 ordeal would shrink the investors' interests by as much as 75 percent and would rack up more professional fees. The Herald notes that a bid had been put up for a receiver to control the company's $160 million loan portfolio. A majority of the company's investors however, are not ready to put the company into receivership, Mr. Nilsen admitted. Based in Monterey, California, Cedar Funding handles a complete range of loans, including residential, income properties, commercial and land. These loans are funded with both institutional and private funds. The company specializes in aggressive growth investments and handles over 8 million dollars in investor funds. CFM U.S.: Gets Final Court Approval to Use Lender's $8 Mil. Loan ---------------------------------------------------------------- The Hon. Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware authorized CFM U.S. Corporation and CFM Majestic U.S. Holdings Inc. to obtain, on a final basis, up to $8,000,000 -- including a $500,000 letter of credit subfacility -- under a senior secured debtor-in-possession revolving credit facility with Bank of Montreal, as lender. As reported in the Troubled Company Reporter on April 17, 2008, Judge Carey gave the Debtors permission to access, on an interim basis, the DIP credit facility of the lender. The Debtors said the DIP loan will terminate on June 30, 2008. The loan agreement contains conditional and appropriate events of default. Amanda M. Winfree, Esq., at Ashby & Geddes, P.A., said the DIP loan is subject to a $260,000 carve-out for payments to professional advisors to the Debtors and any statutory committee appointed in these cases; and the U.S. Trustee and Clerk of Court fees. The Debtors will pay a host of fees including a non- refundable commitment fee of $150,000, noted Ms. Winfree. To secure all obligations, the lender is granted superpriority administrative claims on overall other costs and expenses of administration of any kind as adequate protection. All obligations of the Debtors are unconditionally guaranteed by each subsidiary of the Debtors -- including CFM U.S., CFM Holdings, CFM Canada, 2089451 Ontario Limited and Temcomex, S.A. de C.V. -- according to the DIP agreement. The Debtors said that they owed approximately $25,000,000 to the lender under a prepetition credit agreement dated Nov. 21, 2007, as amended. About CFM Headquartered in Huntington, Indiana, CFM U.S. Corp. -- http://www.majesticproducts.com/-- manufactures two product categories: Hearth and Heating Products and Barbecue and Outdoor Products. The company and its affiliate, CFM Majestic U.S. Holdings, Inc., filed for Chapter 11 protection on April 9, 2008 (Bankr. D. Del. Lead Case No.08-10668). William Pierce Bowden, Esq., at Ashby & Geddes, represents the Debtors. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and debts of between $100 million and $500 million. CFM U.S.: U.S. Trustee Selects Seven-Member Creditors Committee --------------------------------------------------------------- The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in the Chapter 11 bankruptcy proceedings of CFM U.S. Corporation and CFM Majestic U.S. Holdings Inc. The creditors committee members are: 1) Sheet M etal Workers' National Pension Fund Attn: Kenneth Colombo 601 North Fairfax Street, Suite 425 Alexandria, Virginia 22314 Tel: (703) 739-7018 Fax: (703) 683-0932 2) Talyuen M anufacturing Ltd. Attn: Mr. Wing Chung Wong Unit 701-703, 7/F., Enterprise Square Two 3 Sheung Yuet Road Kowloon Bay, Hong Kong Tel: (852) 2300-1263 Fax: (852) 2388-7060 3) Callisto Limited Attn: Fred Kandel 101 Old M ill Road, Building 300 Cartersville, Georgia 30120 Tel: (770) 606-8903 Fax: (770) 605-0469 4) Macsteel Service Centers USA, Inc. Attn: Paul M. Gallaty 888 San Clemente Drive, Suite 250 Newport Beach, California 92660 Tel: (949) 219-9702 Fax: (949) 219-9703 5) Specialty Gaskets, Inc. Attn: Steven A. Stefaniak 6400 Shawson Drive, Suite 1 Mississauga, Ontario L5T IL8 Tel: (905) 564-0807 Fax: (905) 564-4812 6) Harbor Packaging, Inc. Attn: James K. Sorenson 13100 Danielson Street Poway, California 92064 Tel: (858) 513-1800 Fax: (858) 513-0800 7) Block Steel Corporation Attn: David B. Rabinowitz 6101 W. Oakton Skokie, Illinois 60077 Tel: (847) 966-3000 Fax: (847) 583-7241 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About CFM Headquartered in Huntington, Indiana, CFM U.S. Corp. -- http://www.majesticproducts.com/-- manufactures two product categories: Hearth and Heating Products and Barbecue and Outdoor Products. The company and its affiliate, CFM Majestic U.S. Holdings, Inc., filed for Chapter 11 protection on April 9, 2008 (Bankr. D. Del. Lead Case No.08-10668). William Pierce Bowden, Esq., at Ashby & Geddes, represents the Debtors. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and debts of between $100 million and $500 million. CHARYS HOLDING: Files Schedules of Assets and Liabilities --------------------------------------------------------- Charys Holding Co., Inc. submitted to the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities and statement of financial affairs, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property B. Personal Property $818,880 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding $57,763,130 Unsecured Priority Claims F. Creditors Holding $228,653,430 Unsecured Nonpriority Claims ---------- ----------- TOTAL $818,880 $286,416,560 A full-text copy of the Debtor's schedules is available for free at http://ResearchArchives.com/t/s?2c72 A full-text copy of the Debtor's statement of financial affairs is available for free at http://ResearchArchives.com/t/s?2c73 Headquartered in Atlanta, Georgia, Charys Holding Co., Inc.,-- http://www.charys.com/-- provides remediation & reconstruction and wireless communications & data infrastructure. The company and its Crochet & Borel Services, Inc. subsidiary filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. Del. Case No.08- 10289). Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in these cases to date. CHINA HUAREN: MS Group Expresses Going Concern Doubt ---------------------------------------------------- In an annual report filed with the U.S. Securities and Exchange Commission, Edison-based MS Group CPA LLC raised substantial doubt on the ability of China Huaren Organic Products, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor stated that the company's subsidiary incurred a significant loss from operations in the fourth quarter of year 2007 and had no sales revenue in 2008. In its annual report, the company disclosed that during the fourth quarter of 2007, the sales revenue of its subsidiary, Jilin Huaren Organic Product Co., Ltd., dropped down significantly and incurred net loss. The company added that Jilin Huaren had no sales revenue in the first three months of 2008. As of Dec. 31, 2007, the company had $76,658 cash and equivalents and $4,521,106 of net trade receivables to fund short-term working capital requirements, but these net trade receivables are all owed by one debtor and had been outstanding for more than nine months. The company posted a net income of $211,940 on total revenues of $7,449,370 for the year ended Dec. 31, 2007, as compared with a net income of $420,581 on total revenues of $2,188,146 in the prior year. At Dec. 31, 2007, the company's consolidated balance sheet showed $10,656,418 in total assets, $1,753,069 in total liabilities, and $8,903,349 in total stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2bdd About China Huaren China Huaren Organic Products, Inc., through its indirect wholly owned subsidiary, Jilin Huaren Organic Product Co., Ltd., develops, produces, and sells a wide array of organic foods and healthcare and cosmetic products. CLARIENT INC: Jim Agnello to Resign as Chief Financial Officer -------------------------------------------------------------- Clarient, Inc. disclosed that its Senior Vice President and Chief Financial Officer, Jim Agnello, will step down from that position. Mr. Agnello is expected to continue to serve as Chief Financial Officer until his successor is appointed and to remain with the company as an employee or consultant for a transitional period. Commenting on Jim's resignation, Clarient CEO Ron Andrews said, "[Mr. Agnello] came into a challenging environment two years ago and has established a financial infrastructure upon which we can now build. I would like to thank [Mr. Agnello] for his efforts to move us closer to profitability as demonstrated by our recent achievements in the first quarter of 2008. [Mr. Agnello] has also been influential in building an underlying culture which has been instrumental in sustaining our growth. We anticipate that we will be in a position to announce [his] successor in the near future, and we appreciate [his] commitment to stay on to help ensure a seamless transition. We wish [him] the very best in his future endeavors." Substantial Doubt As reported in the Troubled Company Reporter on April 10, 2008, KPMG LLP in Costa Mesa, Calif., raised substantial doubt about Clarient, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses, negative cash flows from operations, and working capital and net capital deficiencies. In addition, KPMG said it is not probable that the company can remain in compliance with the restrictive monthly financial covenant in its bank credit facility. For the year ended Dec. 31, 2007, the company posted an $8,757,000 net loss on $42,995,000 of revenues as compared with a $16,135,000 net loss on $27,723,000 of revenues for the same period in 2006. At Dec. 31, 2007, the company's balance showed $26,881,000 in total assets and $31,670,000 in total liabilities, resulting in a $4,789,000 stockholders' deficit. The company's balance sheet at Dec. 31, 2007, also showed strained liquidity with $15,545,000 in total current assets available to pay $26,665,000 in total current liabilities. In its latest Form 10-Q filed with the Securities and Exchange Commission, Clarient's balance sheet as of March 31, 2008, showed total assets of $30.2 million and total liabilities of $32.7 million, resulting in total stockholders' deficit of $2.5 million. About Clarient Based in Aliso Viejo, Calif., Clarient, Inc. (NASDAQ: CLRT) -- http://www.clarientinc.com/-- is a comprehensive cancer diagnostic company providing cellular assessment and cancer characterization to three major customer groups: community pathologists, academic researchers and university hospitals, and bio pharmaceutical companies. COMMUNICATION INTELLIGENCE: GHP Horwath Raises Going Concern Doubt ------------------------------------------------------------------ Denver-based GHP Horwath, P.C., raised substantial doubt on the ability of Communication Intelligence Corporation to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's significant recurring operating losses and accumulated deficit. The company posted a net loss of $3,399,000 on total revenues of $2,145,000 for the year ended Dec. 31, 2007, as compared with a net loss of $3,286,000 on total revenues of $2,342,000 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $6,475,000 in total assets, $2,694,000 in total liabilities, and $3,781,000 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, showed strained liquidity with $1,731,000 in total current assets available to pay $2,598,000 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?293a About Communication Intelligence Founded in 1981 and headquartered in Redwood Shores, Calif., Communication Intelligence Corporation (OTC BB: CICI.OB) -- http://www.cic.com/-- and its joint venture, Communication Intelligence Computer Corporation, develops and markets electronic signature solutions and biometric signature verification for business process automation in the financial industry worldwide. The company also supplies natural input/text entry software for handheld computers and smartphones. It supplies its core technologies in two categories, Transaction and Communication Enabling Technologies, and Natural Input Technologies. The company's products include SignatureOne, iSign, and Jot multi-lingual handwriting recognition software. DELTA FINANCIAL: Former Workers Sue for Unpaid Overtime, Damages ---------------------------------------------------------------- Douglas Pontius, Gina Young, Steven Feldman and the 242 other former employees of Debtors Delta Financial Corporation and Delta Funding Corporation, have commenced an adversary proceeding to recover unpaid overtime wages and pursue payment for related damages. The Former Employees had sought and obtained the permission of the U.S. Bankruptcy Court for the District of Delaware to file an adversary proceeding to assert collective action claims or class action claims against the Debtors under the Fair Labor Standards Act and equivalent state law for overtime wages and benefits. The Former Employees consist of: 1. the 178 former employees that are part of an action for overtime wages claims, under the FLSA, in the United States District Court for the Western District of Pennsylvania in 2004; 2. the 58 former employees that are part of an action for overtime wages claims, under the FLSA and the state laws of New York and Ohio, in the U.S. District Court for the Eastern District of New York in 2007; and 3. nine other members joined the Classes after the Petition Date. The Former Employees sought damages and attorneys' fees: Action Damages Sought Attorneys' Fees ------ -------------- --------------- Pennsylvania Action $2,362,229 $640,533 New York Action 1,826,200 75,427 Postpetition Plaintiffs 259,018 14,267 As ruled by the Bankruptcy Court, the Former Employees will dismiss the Pennsylvania Action and the New York Action following the commencement of the Adversary Proceeding. The dismissal of the Actions will not prejudice the rights of the Former Employees, the FLSA claimants, the Official Committee of Unsecured Creditors or the Debtors in any way. The Class Actions The Adversary Proceeding involves two class actions -- the New York Class Action and the Ohio Class Action. The New York Class is defined as all persons who were employed by the Delta Financial and Delta Funding as loan officers in the State of New York between August 21, 2001, and the Petition Date and worked more than 40 hours in any week during the Period without overtime compensation. The New York Class representative is Mr. Feldman. The Former Employees believe Delta Financial and Delta Funding employed no less than 100 loan officers at their New York branch offices during the Period. The Ohio Class is defined as all persons who were employed by Delta Financial and Delta Funding as loan officers in the State of Ohio between August 21, 2005 and the Petition Date and worked more than 40 hours in any week during the Period without overtime compensation. The Ohio Class representative is Ms. Young. The Former Employees believe that Delta Financial and Delta Funding employed at least 100 loan officers in their Ohio branch offices during the Period Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington, Delaware, contends Delta Financial and Delta Funding improperly classified the Former Employees as exception to overtime wage provisions of the FLSA. Delta Financial and Delta Funding directed the Former Employees to work in excess of 40 hours per week. The Former Employees customarily did so, he asserts. Under the FLSA, the New York Labor Law and the Ohio Minimum Fair Wage Standards Law, the overtime rate is one and one half times the employees hourly pay rate, Mr. Loizides says. Delta Financial and Delta Funding are liable, under the Ohio Revenue Code, to the Ohio Class for liquidated damages in an amount equal to six percent of the wages, or $200, whichever is greater, Mr. Loizides adds. The Former Employees, on behalf of the FLSA claimants, ask the Court to grant, among others: 1. a priority claim in favor of all Former Employees that worked for Delta Financial and Delta Funding within 180 days of the Petition Date equal to their unpaid overtime wages; 2. judgment against Delta Financial and Delta Funding for an amount equal to the Former Employees' unpaid back wages at the applicable overtime rate; 3. an equal amount to the overtime wage damages as liquidated damages; and 4. judgment against Delta Financial and Delta Funding that their violations of the FLSA were willful. Ms. Young and Mr. Feldman, on behalf of their Classes, ask the Court to certify their Class Actions, and appoint them to represent their Classes. About Delta Financial Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors' amended consolidated quarterly financial condition as of Sept. 30, 2007, showed $7,223,528,000 in total assets and $7,108,232,000 in total liabilities. It has $19,954,295 in assets and $12,842,277 in debts as of March 31, 2008. The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Court extended until June 16, 2008, the period during which the Debtors have the exclusive right to file a plan of reorganization or liquidation. (Delta Financial Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). DELTA FINANCIAL: Former Employees Seek Claim Filing Extension ------------------------------------------------------------- Douglas Pontius, Gina Young, Steven Feldman and the group of 242 former employees of Delta Financial Corp. and its debtor- affiliates ask the U.S. Bakruptcy Court for the District of Delaware for two more weeks to file the proof of claim as directed by the Court. The Court had permitted Pontius, et al. to file an adversary proceeding to assert class action claims against the Debtors. In connection with the Court's grant, the Court directed Pontius, et al. to file, on or before May 2, a single claim for all overtime claims that are subject to or putatively subject to the Adversary Proceeding. Pontius, et al. timely filed the proof of claim. However, Pontius, et al, were not able to submit original signatures from the lead plaintiffs Ms. Young and Messrs. Pontius and Feldman. Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington, Delaware, relates it is not clear whether Pontius, et al. are required to obtain original signatures from Debtors. He says the Court's order is silent on the issue, and as a class proof of claim is involved, it is not entirely clear that client signatures are required. Under the Court's order, the claims asserted in the Proof of Claim are to be adjudicated in the Adversary Proceeding. About Delta Financial Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors' amended consolidated quarterly financial condition as of Sept. 30, 2007, showed $7,223,528,000 in total assets and $7,108,232,000 in total liabilities. It has $19,954,295 in assets and $12,842,277 in debts as of March 31, 2008. The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Court extended until June 16, 2008, the period during which the Debtors have the exclusive right to file a plan of reorganization or liquidation. (Delta Financial Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). DELTA FINANCIAL: Court Okays Incentive Plan for Remaining Workers ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved an incentive plan designed to compensate five employees left to help wind down to operations of Delta Financial Corp. and its debtor- affiliates. After streamlining their workforce, the Debtors have been effectively employing only five employees who are needed to help wind down the Debtors' operations and held with the claims review and implementation of a liquidating Chapter 11 plan. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, related that employee morale is understandably low and an incentive plan is necessary to ensure the Debtors have the staffing necessary to efficiently and timely achieve their objectives in Chapter 11. Pursuant to Section 503(c)(3) of the Bankruptcy Code, the Debtors asked the Court to approve an incentive plan designed to compensate the five employees, subject to these performance objectives: (a) converting the Debtors' accounting system to a computer- based system; (b) winding down the employee benefit plans; (c) filing tax returns that will seek refunds; (d) filing a plan of liquidation or reorganization; and (e) providing information and documentation sufficient to support claim determinations. The payments under the Incentive Plan are contingent on the employees satisfying quantifiable objectives that the Debtors designed to move the estate through the bankruptcy process, ensuring that the employees are held accountable. The total amount the Debtors would pay to the five employees combined will not exceed $165,000. The amount is far less than the estate would have to pay if the Debtors' professionals will be the one to perform the additional responsibilities, Mr. Carignan says. The proposed bonuses in the Incentive Plan are equal to 33% of each Plan Employee's salary from December 17, 2007 through August 1, 2008. The Debtors will pay the bonus within five days after the Plan Employee's termination. To receive their Incentive Payments, Plan Employees should remain employed through the later of (a) the filing of a plan of reorganization or liquidation or (b) August 1, 2008. The Debtors will not require Plan Employees to remain with them beyond August 15, 2008, to receive their Incentive Payment, even if a plan of reorganization or liquidation is not filed by that time. The Debtors intend to file a plan of liquidation before August 1, 2008. About Delta Financial Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors selected Morrison & Foerster LLP as their general bankruptcy counsel and David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors hired AlixPartners LLP as their claims agent. The Official Committee of Unsecured Creditors retained Landis Rath & Cobb LLP as its Delaware counsel. The Debtors' amended consolidated quarterly financial condition as of Sept. 30, 2007, showed $7,223,528,000 in total assets and $7,108,232,000 in total liabilities. It has $19,954,295 in assets and $12,842,277 in debts as of March 31, 2008. The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Court extended until June 16, 2008, the period during which the Debtors have the exclusive right to file a plan of reorganization or liquidation. (Delta Financial Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). DIAMOND CREEK: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Diamond Creek Partners, Ltd. 130 Diamond Creek Pl., Ste. 1 Roseville, CA 95747 Bankruptcy Case No.: 08-25342 Type of Business: The Debtor is a land developer. Chapter 11 Petition Date: May 25, 2008 Court: Eastern District of California (Sacramento) Judge: Thomas Holman Debtor's Counsel: George C. Hollister, Esq. 655 University Ave., Ste. 200 Sacramento, CA 95825 Tel: (916) 488-3400 Total Assets: $50 million to $100 million Total Debts: $1 million to $10 million Debtor's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jane Crocker $5,501,728 151 Glenwood Ave. Atherton, CA 94027 The Sackheim Trust $1,200,000 Attn: Babette Sackheim 134 Lansdowne Drive Madison, AL 35758 Norman Mackay $685,754 2500 El Camino Real, Ste. 210 Palo Alto, CA 94306-1791 Misty Dailey $576,729 9354 Ringe Circle Elk Grove, CA 95624 Norman Mackay $518,247 2500 El Camino Real, Ste. 210 Palo Alto, CA 94306-1791 Centex Homes, Inc. $500,000 Attn: George Rudolf, Esq. 2050 Main St., Ste. 600 Irvine, CA 92614 Larry Buckle $250,000 1541 10th Ave. Sacramento, CA 95818 Trust Co. of America $150,000 Placer County Tax Collector $60,670 Hefner Stark & Marois $60,491 Standard Pacific Homes $15,000 DIAMOND CREEK: Files for Ch. 11 After Lender Attempts Foreclosure ----------------------------------------------------------------- Diamond Creek Partners Ltd. filed for Chapter 11 protection with the U.S. Bankruptcy Court for the Eastern District of California, the Granite Bay reports. The bankruptcy filing was intended to stop its main secured lender, Umpqua, from foreclosing on its 31-acre village project in Roseville, California, relates the Granite Bay. Umpqua wanted to recover $26.9 million it loaned to the Debtor. That loan already became due, says Granite Bay. Stephen Des Jardin, the developer and owner of Diamond Creek, told the Granite Bay that it was trying to refinance that debt when Umpqua "unfortunately behaved that way." According to Granite Bay, the Debtor has until July 24 to file its plan of reorganization. Based in Roseville, California, Diamond Creek Partners Ltd. develops real estate property. DIAMOND GLASS: Extends by Two Weeks All Bid & Auction Deadlines --------------------------------------------------------------- Diamond Glass Inc. said that in response to requests from potential bidders for additional time to conduct due diligence in the sale of substantially all of its assets and that of DT Subsidiary Corp., it agreed to extend for two weeks all deadlines for submitting bids and participating in the auction. Under the new schedule: (a) letters of intent will be due on June 10, (b) bids will be due 12 noon on Tuesday, June 17, (c) the auction will be conducted beginning at 9 a.m. at the offices of Young, Conaway, Stargatt & Taylor in Wilmington, Delaware on Thursday, June 19, and (d) the sale hearing will be held on Friday, June 20 at 1 p.m. in the United States Bankruptcy Court for the District of Delaware. The new schedule, reflected in an agreed order submitted in the Company's chapter 11 case, also resolves a motion filed under seal by Belron International Limited and Belron US Inc. seeking to have the Court order a similar extension. Belron filed its motion after the Company initially refused Belron's request to extend the deadlines. "Although we did not want to delay the auction, we changed our position after determining that other potential bidders could make good use of the additional time, and that no bidders were seeking to delay the June 30 closing date," Company President Bill Cogswell explained. The Company's debtor-in-possession financing facility expires on June 30. Thus, a delayed closing would have raised financial issues for the Company's operations in July. As previously reported by the Troubled Company Reporter on April 30, 2008, the Court approved proposed bidding procedures for the sale of substantially all of the assets of Diamond Glass Inc. and DT Subsidiary Corp. As reported in the TCR on April 22, 2008, the Debtors, in consultation with its financial advisor NatCity Investments Inc., considered a number of potential sales and restructuring alternatives in order to develop a plan that would maximize value for their creditors and to ensure survivability. On the bankruptcy filing date, the Debtors entered into an asset purchase agreement with a stalking horse bidder under which the bidder would acquire substantially all of the Debtors' assets. Pursuant to the purchase agreement, the stalking horse bidder agreed to provide consideration for the assets equal to $34 million in the form of a credit bid, plus assumed liabilities. The Debtors explained that, in order to participate in the bidding process, a person or entity interested in all or portions of the assets must first deliver to the Debtors an executed confidentiality agreement. Qualified competing bids must be sent to the offices of Young Conaway Stargatt & Taylor, The Brandywine Building, 1000 West Street, 17th Floor, in Wilmington, Delaware. All bids must be submitted to these parties: Diamond Glass Inc. Attn: William Cogswell, President 220 Division Street Kingston, PA 18704 -- or -- Foley & Lardner LLP Attn: Michael P. Richman, Esq. 90 Park Avenue New York, NY 10016 -- or -- Young Conaway Stargatt & Taylor LLP Attn: Michael Nestor, Esq. The Brandywine Building 1000 West Street, 17th Floor Wilmington, DE 19801 About Diamond Glass Based in Kingston, Pennsylvania, Diamond Glass Inc. -- http://www.diamongtriumph.com/and http://www.daimondtriumphglass.com/-- is a provider of automotive glass replacement and repair services. The company and and its debtor-affiliate DT Subsidiary Corp., filed for Chapter 11 bankruptcy petition on April 1, 2008 (Bankr. D. Del. Lead Case No. 08-10601). Michael P. Richman, Esq., at Foley & Lardner LLP, and Donald J. Bowman Jr., Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy protection, they listed assets of between $10 million and $50 million and debts of between $100 million and $500 million. EARTH BIOFUELS: March 31 Balance Sheet Upside-Down by $63 Million ----------------------------------------------------------------- Earth Biofuels Inc.'s consolidated balance sheet at March 31, 2008, showed $76.9 million in total assets, $139.8 million in total liabilities, $135,000 in redeemable preferred stock liability, resulting in a $63.0 million total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $3.8 million in total current assets available to pay $139.8 million in total current liabilities. The company reported a net loss of $9.7 million, on sales revenue of $7.4 million for the first quarter ended March 31, 2008, compared with a net loss of $25.7 million, on sales revenue of $6.6 million in the same period a year ago. The increase in total revenue is primarily the result of increased sales of liquified natural gas, due to new contracts obtained during 2007. Cost of sales for the three months ended March 31, 2008, decreased $300,000, or 5.0%, to approximately $6.0 million from approximately $6.3 million for 2007. Cost of goods sold is mainly affected by the cost of biodiesel, vegetable oil, natural gas and other raw materials. The decrease in cost of sales is primarily the result of decreased sales of biodiesel, and resulting decrease in purchases of feedstock. Compensation for the three months ended March 31, 2008, decreased approximately $3.1 million, or 61.0%, related primarily to reduction in work force and reduction in the company's shares issued to employees in 2008. Other selling, general and administrative expenses for the three months ended March 31, 2008, decreased approximately $100,000 from approximately $3.4 million for the same period in 2007. Depreciation and amortization for the three months ended March 31, 2008, decreased to $677,000 from $952,000 for the same period in 2007. The decrease in depreciation and amortization is related primarily to purchases of plant and equipment. Interest expense related primarily to term debt facilities for the three months ended March 31, 2008, was approximately $5.2 million. 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?2c6d Going Concern Disclaimer Montgomery Coscia Greilich LLP, in Plano, Tex., expressed substantial doubt about Earth Biofuels 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 operating losses and working capital deficit. Earth Biofuels Inc. has limited financial resources. The company also has an accumulated deficit of $213.9 million, negative current ratios and negative tangible net worth at March 31, 2008. About Earth Biofuels Headquartered in Dallas, Texas, Earth Biofuels Inc. (OTC BB: EBPF) -- http://www.earthbiofuels.com/-- is engaged in the domestic production, supply and distribution of alternative based fuels consisting of biodiesel and liquid natural gas. Biodiesel is a non-toxic biodegradable diesel fuel made from soybean and other vegetable oils, and used recycled oils and fats. Earth utilizes vegetable oils such as soy and canola oil as raw material for the production of biodiesel fuel. Earth also produces and distributes liquefied natural gas, which is natural gas in its liquid form. Liquid natural gas is primarily methane with only small amounts of other hydrocarbons. EL PASO: Prices $600 Million Offering of 7.25% Senior Notes ----------------------------------------------------------- El Paso Corporation priced its pubic offering of $600 million of senior notes due June 1, 2018, with a coupon of 7.25%. El Paso expects closing to occur on May 30, 2008. The notes were offered under El Paso's shelf registration statement. Net proceeds from the offering will be approximately $595 million. El Paso plans to use the net proceeds from the sale of the notes for general corporate purposes, including the repayment of debt maturing during the remainder of 2008. Pending the use of the proceeds for other purposes, El Paso intends to apply the net proceeds to reduce outstanding borrowings under El Paso's revolving credit facility and under the revolving credit facility of El Paso's subsidiary, El Paso Exploration & Production Company. Upon issuance, the notes will be senior unsecured obligations of El Paso and will rank equally in right of payment with other existing and future unsecured senior indebtedness of El Paso. The notes will not be guaranteed by any of El Paso's subsidiaries or unconsolidated affiliates. The offering is being made only by means of a prospectus and related prospectus supplement, a copy of which may be obtained from: Deutsche Bank Securities Inc. No. 60 Wall Street New York, NY 10005 Tel (800) 503-4611 About El Paso Headquartered in Houston, Texas, El Paso Corporation (NYSE: EP) -- http://www.elpaso.com/-- provides natural gas and related energy products. El Paso owns North America's largest interstate natural gas pipeline system and one of North America's largest independent natural gas producers. The company's consolidated balance sheet at Dec. 31, 2007, showed strained liquidity with $1.71 billion in total assets available to pay $2.41 billion in total current liabilities. EL PASO: Moody's Affirms Ba3 Ratings; Outlook Remains Positive -------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 corporate family (CFR) and probability of default ratings (PDR) for El Paso Corporation (EP, the parent company), the Ba1 (LGD 2, 26%) secured credit facility rating, and the Baa3 rating for all four of its majority- owned pipeline subsidiaries (El Paso Natural Gas company, Southern Natural Gas, Tennessee Gas Pipeline Company, and Colorado Interstate Gas Company). Simultaneously, Moody's assigned a Ba3 (LGD 4, 51%) rating to EP's proposed $500 million notes offering while affirming the Ba3 (LGD 4, 51%) ratings on the existing senior notes at the parent. The outlook remains positive. Proceeds from the new notes offering will be used to repay revolver borrowings under EP's $1.5 billion corporate revolver, repay a portion of the outstandings under the company's revolver at El Paso Exploration and Production (EPEP), and refinance maturing debt. The outlook remains positive, reflecting the company's progress in reducing its consolidated leverage and the continued improvement in its overall credit metrics. While the company has achieved some of the targeted metrics required for an upgrade, Moody's believes the momentum for an upgrade has slowed a bit as a result of the company's desire to carry higher levels of debt than originally expected when the positive outlook was assigned. The momentum for an upgrade has also been slowed due to very heavy capital spending plans at both the E&P and pipelines businesses. Combined with the increase in its stock dividend and announced stock repurchase authorization for $300 million (if actually executed), the company may end up outspending cash flow for 2008 and possibly in 2009, depending on commodity prices. Further, the positive outlook reflects the need to see a trend of organic operating performance and capital productivity from the company's reconfigured E&P property base. While reserves and production grew in 2007, a large part of that was the result of the People's acquisition, and therefore is not a clear indicator of organic performance. An upgrade would likely occur if the company maintains its high 1.0x EBIT/Interest metric while demonstrating that the significant spending for the E&P (EPEP) business has resulted in solid capital productivity evidenced by sound reserve replacement at competitive costs, while also mounting consistent sequential quarterly production gains. Barring any acquisition activity, 2008 year-end results will provide a good indication of the company's overall capital productivity on the reconfigured property base following the People's acquisition completed in 2007, the Texas Gulf Coast asset sale in 2008 and the growing emphasis on the international segment, which is expected to be the recipient of approximately 21% of the 2008 E&P capex. An upgrade would also consider the company's spending plans for 2009 and whether it would result in the outspending of cash flow and the nature in which it would be funded. The company has indicated that it has about $4.0 billion of committed projects in the backlog for its pipeline business, with the possibility of it growing. Moody's also notes that some of these projects may not ultimately go forward due to competitive reasons or sharp cost escalation. However, if the company incurs additional debt to fund its 2008 capital spending or to fund any equity repurchases, it could result in the outlook reverting back to stable. A move to stable outlook would also be considered if the spending plan for 2009 indicates a sharp rise in debt funding to build out some of the pipeline projects, or if the E&P business is unable to mount positive momentum despite the high amount of capital being deployed to it this year. The affirmation of the Ba3 CFR reflects the company's overall scale and diversification of the both the pipeline and E&P businesses. The pipeline business consists of a substantial network of regulated gas pipelines which is connected to most of the major markets throughout the country. The pipeline subsidiaries, which are rated Baa3 by Moody's, provide a much more stable part of the company's earnings than the E&P, which is essential for the ratings given the still high level of parent level debt (more than $6.0 billion pro forma for the notes offering). The company also benefits from the cash flows generated by its 66.8% owned Master Limited Partnership (MLP), El Paso Pipeline Partners, LP. and the ability to sell assets to the MLP and raise cash for capital spending and/or debt reduction. The Ba3 rating also considers the higher risk profile of the E&P business and its growing contribution to EP's consolidated earnings and cash flows. On a stand-alone basis, Moody's views the E&P business as a strong B1 profile under Moody's E&P methodology and is expected to generate more than 50% of earnings and cash flows. Although the company has reconfigured its property base to what may be a more durable productive base, it is a bit too early to tell if the organic production and capital productivity trends are sustainable, especially in the face of a $1.7 billion spending plan for 2008. The SGL-3 reflects the expectation that the company will outspend its cash flow over the next four quarters to fund its aggressive capital spending program. The level of outspend could be higher if commodity prices were to moderate during the year. The SGL-3 also reflects the availability under the company's $1.5 billion revolving credit facility at the parent, which is expected to be largely undrawn at close of the notes offering and be available for capex funding prior to any additional asset drop downs to the MLP, and the expectation that EP will remain well within the facilities maintenance covenants. El Paso Corporation is headquartered in Houston, Texas. EL PASO: Fitch Rates Proposed $500MM Unsecured Sr. Notes BB+ ------------------------------------------------------------ Fitch Ratings has assigned a rating of 'BB+' to El Paso's Corp.'s proposed issuance of $500 million in unsecured senior notes. Proceeds from the issuance will be used for general corporate purposes, including the repayment of debt maturing during the remainder of 2008. In addition, El Paso intends to apply the net proceeds to reduce outstanding borrowings under its revolving credit facility and under the revolving credit facility of its El Paso Exploration & Production Co. subsidiary. El Paso's Outlook remains Stable. El Paso's ratings reflect the consistency in the company's credit profile given the improvements at the company's upstream business and the cash flow stability and risk profile benefits derived from its pipeline portfolio. Upstream operations continue to benefit from robust commodity prices providing the backdrop for strong performance over the near term. Pipeline operations have continued to produce stable EBITDA and cash flows and materially enhance the consolidated credit profile and El Paso's ratings. Capital expenditure requirements remain significant, and longer- term credit considerations will likely revolve around the cash flow trends and operating performance of the subsidiary businesses. El Paso owns North America's largest interstate natural gas pipeline network comprised of approximately 44,000 miles of pipe, 220 Bcf of storage capacity, and an LNG import facility with 1.2 Bcf per day of send-out capacity. The upstream operations are focused on exploration, development and production of natural gas, oil, and NGLs in the U.S., Brazil and Egypt. At year end 2007, the E&P business held 3.1 Tcfe of proved natural gas and oil reserves. EL PASO: S&P Puts 'BB-' Rating on $500MM Senior Unsecured Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to El Paso Corp.'s issuance of $500 million of senior unsecured notes. The outlook is positive. In addition, Standard & Poor's assigned the senior unsecured notes a '5' recovery rating. The '5' recovery rating indicates that lenders can expect modest (10%-30%) recovery in the event of a payment default. As of March 31, 2008, El Paso had $12.7 billion of total debt. "The ratings on El Paso reflect a satisfactory overall business risk profile, which includes the stability of the company's interstate natural gas pipeline systems, somewhat offset by the risks associated with its exploration and production segment and a significantly improved, although still aggressive, financial profile," noted Standard & Poor's credit analyst William Ferara. The outlook on El Paso is positive. The positive outlook on El Paso reflects the potential for upward ratings movement, given additional debt repayment, improved E&P performance, and resulting strengthened credit metrics. "Failure to meet upstream targets, greater-than-expected capital spending, weakening credit-protection measures, or deteriorating liquidity could dampen upward ratings prospects," he continued. ENCORE ACQUISITION: Moody's Changes Outlook to Developing --------------------------------------------------------- Moody's Investors Service changed Encore Acquisition Company's outlook to developing from negative in response to Encore's announcement that it is exploring strategic alternatives to increase shareholder value, including, but not limited to, a sale or a merger of the company. Encore has engaged Lehman Brothers Inc. as its financial advisor. The rating action reflects the possible ratings implications of the strategic actions currently being evaluated by the company, which, depending on the nature of the transaction ultimately executed, could result in a ratings affirmation, upgrade, or downgrade. Moody's will continue to monitor the company's deliberations and will determine the effect on Encore's ratings once the board of directors has concluded on a course of action. Encore's corporate family rating and probability of default rating are Ba3 and its senior subordinated notes are rated B1 (LGD 5, 81%). Moody's does not rate either Encore's or Encore Energy Partners Operating LLC's senior secured credit facilities. Rated debt includes Encore's B1 rated $150 million of 6-1/4% Senior Subordinated Notes due 2014, $300 million of 6% Senior Subordinated Notes due 2015, and $150 million of 7-1/4% Senior Subordinated Notes due 2017. If Encore were to be acquired, the ratings could be positively or negatively affected depending on the credit profile of the buyer and how the acquisition is funded. Moody's notes that the subordinated notes contain a change of control provision which allows the noteholders to put the bonds back to the company upon a merger or consolidation at 101% of par plus accrued interest. However, to the extent that the company is not sold, Encore could decide to pursue other shareholder-friendly options that could result in a ratings downgrade. In June 2007, Moody's moved Encore's outlook to negative to reflect the company's high leverage after its acquisition of properties from Anadarko and the uncertainty surrounding the eventual apportionment of assets and debt between the parent and its new MLP. Moody's notes that since that time Encore used property divestitures and proceeds from the Encore Energy Partners IPO to reduce consolidated debt balances. Production has also remained steady and prices have been amply strong to support Encore's high production costs and elevated reserve replacement costs. Encore Acquisition Company is an independent exploration and production company headquartered in Forth Worth, Texas. Encore also owns the general partner interest and approximately 67 percent of the common units of Encore Energy Partners LP, a publicly traded E&P MLP. ENCORE ACQUISITION: Search for Biz Options Won't Affect S&P's Rtng ------------------------------------------------------------------ Standard & Poor's Ratings Services said that Encore Acquisition Co.'s (BB-/Stable/--) ratings and outlook would not immediately change following the company's announcement that it is pursuing strategic alternatives. The effect of the sale of the company on Encore's ratings, the likelihood of which is uncertain, would depend on the credit profile of the acquirer and on the funding of the acquisition. ENERGAS RESOURCES: Losses Cue Murrell Hall's Going Concern Doubt ---------------------------------------------------------------- In a letter dated Apr. 30, 2008, Murrell, Hall, McIntosh & Co., PLLP, raised substantial doubt about the ability of Energas Resources Inc., to continue as a going concern after it audited the company's financial statements for the year ended Jan. 13, 2008. The auditor pointed to the company's recurring losses from operations. In an Amendment No. 1 of its form 10-KSB filing with the Securities and Exchange Commission for the fiscal year ended Jan. 31, 2008, the company posted a net loss of $1,469,335 on total revenues of $444,027 for the year ended Jan. 13, 2008, as compared with a net loss of $1,516,282 on total revenues of $644,360 in the prior year. At Jan. 13, 2008, the company's consolidated balance sheet showed $3,886,097 in total assets, $561,054 in total liabilities, and $3,325,043 in total stockholders' equity. The company's consolidated balance sheet at Jan. 13, 2008, showed strained liquidity with $81,230 in total current assets available to pay $419,427 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2bed About Energas Resources Based in Oklahoma City, Okla., Energas Resources Inc. (OTCBB: EGSR) -- http://www.energasresources.com/-- operates, develops, produces, explores and acquires petroleum and natural gas properties in the United States through its wholly owned subsidiaries, A.T. Gas Gathering Systems Inc. and TGC Inc. In addition, the company owns and operates natural gas gathering systems, located in Oklahoma and Kentucky, which serve wells operated by the company for delivery to a mainline transmission system. ENVIRONMENTAL SERVICE: Stan Lee Expresses Going Concern Doubt ------------------------------------------------------------- Stan J.H. Lee, CPA, CMA, raised substantial doubt on the ability of Environmental Service Professionals Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed company's losses from operations. The company posted a net loss of $21,468,106 on total revenues of $581,803 for the year ended Dec. 31, 2007, as compared with a net loss of $564,589 on total revenues of $82,319 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $1,789,245 in total assets and $5,224,682 in total liabilities, resulting in $3,435,437 stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $1,074,301 in total current assets available to pay $3,980,748 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2bee About Environmental Service Headquartered in Palm Springs, Calif., Environmental Service Professionals Inc., fka Glas-Aire Industries Group Ltd. (OTC BB: EVSP.OB) -- http://www.espusa.net/-- provides mold and moisture management, providing limited mold and allergen survey services for single family, multi-tenant residential and commercial buildings. As of June 30, 2007, the company converted its current franchises into independent contractors under the CEHI program program through its AHI subsidiary. EPICEPT CORP: Names Robert Savage and John V. Talley to Board -------------------------------------------------------------- EpiCept Corporation held an Annual Meeting of Stockholders on Wednesday. Represented at the meeting, either in person or by proxy, were 45,067,048 shares of common stock of the company, out of a total of 51,295,304 shares of common stock entitled to vote at the meeting, or greater than 50%, constituting a quorum. The stockholders reelected, by a plurality of the votes cast, Robert G. Savage and John V. Talley to the Board of Directors of the company. They will serve until the Annual Meeting of Stockholders in 2011 and until their respective successors are elected and qualified. The stockholders also adopted a resolution to ratify the Audit Committee's selection of Deloitte & Touche LLP as the Corporation's Independent Registered Public Accounting Firm for the year ending Dec. 31, 2008. The stockholders also authorized an amendment to the company's Certificate of Incorporation, effective May 21, 2008, to increase the number of authorized shares of capital stock to 180,000,000 shares (including an increase of the number of authorized shares of common stock from 75,000,000 to 175,000,000). A full-text copy of the Third Amended and Restated Certificate of Incorporation is available for free at http://ResearchArchives.com/t/s?2c6f 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 March 31, 2008, showed a stockholders' deficit of $15,570,000, compared to a deficit of $14.1 million at Dec. 31, 2007. * * * 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. Going Concern Disclaimer Deloitte & Touche LLP, in Parsippany, N.J., expressed substantial doubt about EpiCept Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and stockholders' deficit. The company disclosed in its Form 10-Q for the first quarter ended March 31, 2008, that to date it has not generated any meaningful revenues from the sale of products and may not generate any such revenues for a number of years, if at all. As a result, the company has an accumulated deficit of $176,926,000 as of March 31, 2008, and may incur operating losses for a number of years. FACT CORPORATION: Child Van Expresses Going Concern Doubt --------------------------------------------------------- In a letter dated Apr. 14, 2008, Salt Lake City-based Child, Van Wagoner & Bradshaw, PLLC, raised substantial doubt on the ability of FACT Corporation to continue as a going concern after it audited the company's financial statements for the year ended Dec.1, 2006. The auditor pointed to the company's cash flow constraints, accumulated deficit, and recurring losses from operations. In a second amendment to the annual report on Form 10-KSB for the fiscal year ended Dec.1, 2006, which now includes the report of its current auditors with respect to the fiscal year ended Dec.31, 2006, the company posted a net loss of $840,533 on total revenues of $1,803,579 for the year ended Dec.1, 2006, as compared with a net loss of $923,995 on total revenues of $713,655 in the prior year. At Dec.1, 2006, the company's balance sheet showed $2,288,681 in total assets and $3,991,808 in total liabilities, resulting in $1,703,126 stockholders' deficit. The company's consolidated balance sheet at Dec.1, 2006, also showed strained liquidity with $771,195 in total current assets available to pay $1,917,583 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2bde About FACT Corporation Calgary, Canada-based FACT Corporation, (OTC BB: FCTOA.OB) -- www.factfoods.com/ -- through its wholly owned subsidiary, Food and Culinary Technology Group, Inc., operates primarily in the functional food industry in the United States. The company develops, licenses, and supplies functional bake mixes. It holds rights to produce dough and batter-based functional food products, including breads, bagels, pastas, pizza shells, sweet baked goods, snack bars, and confectionery, as well as other foods derived from a dough, batter, or mix. FACT Corporation sells its premixes and products under Nutrition First brand name to manufacturers, distributors, and food service clients, who incorporate the premix into finished products to market and sell to the end consumer under their own retail brand. The company also offers a line of home-use retail baking mixes for cookies, brownies, and other products. Founded in 1982, it was formerly known as Capital Reserve Corporation and changed its name to FACT Corporation in 2002. FEDDERS CORP: Indoor Air-Quality Assets Sold to Tomkins for $25MM ----------------------------------------------------------------- The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware authorized Fedders Corp. and its debtor- affiliates to sell "Indoor Air-Quality Assets" and stock to Tomkins Industries Inc., Tomkins Finance PLC, Air System Components Investments China Limited and Ruskin Air Management Limited. Tomkins et al. agreed to purchase the Debtors' assets for $25 million, as reported in the Troubled Company Reporter on May 5, 2008. Judge Shannon approved proposed bidding procedures for the sale of assets of the Debtors on May 14, 2008. The Debtors intended to divest these assets: a) Indoor Air-Quality Businesses of IAQ Debtors -- Fedders International Inc., Herrmidifier Company Inc., Trion Inc., Envirco Corporation -- and non-debtor Trion Limited and b) stock of Trion GmbH and Fedders Indoor Air Quality (Suzhou) Co., Ltd. IAQ Debtors and Trion Limited entered into an asset purchase agreement dated April 25, 2008, with Tomkins et al. With approval of the Court, the Debtors can now proceed in drafting a proposed Chapter 11 plan for the benefit of their creditors, according to person with knowledge of the matter. About Fedders Corporation Based in Liberty Corner, New Jersey, Fedders Corporation -- http://www.fedders.com/-- manufactures and markets air treatment products, including air conditioners, air cleaners, dehumidifiers, and humidifiers. The company has production facilities in the United States in Illinois, North Carolina, New Mexico, and Texas and international production facilities in the Philippines, China and India. The company and several affiliates filed for Chapter 11 protection on Aug. 22, 2007, (Bankr. D. Del. Lead Case No. 07-11182). The law firm of Cole, Schotz, Meisel, Forman & Leonard P.A.; and Norman L. Pernick, Esq., Irving E. Walker, Esq., and Adam H. Isenberg, Esq., at Saul Ewing LLP, represent the Debtors in their restructuring efforts. The Debtors have selected Logan & Company Inc. as claims and noticing agent. The Official Committee of Unsecured Creditors is represented by Brown Rudnick Berlack Israels LLP. When the Debtors filed for protection from its creditors, it listed total assets of $186,300,000 and total debts of $322,000,000. The Debtors have sought an extension of their exclusive plan filing period until May 31, 2008. FEDDERS CORP: Exclusive Plan Filing Period Moved to May 31 ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware further extended the exclusive periods of Fedders Corporation and its debtor-affiliates to: a) file a Chapter 11 plan until May 31, 2008; and b) solicit acceptances of that plan until July 30, 2008. As reported in the Troubled Company Reporter on April 18, 2008, the Debtors explained to the Court that another extension of the exclusive plan-filing period will provide the Debtors with the opportunity to complete the asset sale process and consummate all of the closings contemplated by that process, and then, develop, negotiate, and ultimately confirm a consensual plan. About Fedders Corporation Based in Liberty Corner, New Jersey, Fedders Corporation -- http://www.fedders.com/-- manufactures and markets air treatment products, including air conditioners, air cleaners, dehumidifiers, and humidifiers. The company has production facilities in the United States in Illinois, North Carolina, New Mexico, and Texas and international production facilities in the Philippines, China and India. The company filed for Chapter 11 protection on Aug. 22, 2007, (Bankr. D. Del. Case No. 07-11182). Its debtor-affiliates filed for separate Chapter 11 cases. Norman L. Pernick, Esq., Irving E. Walker, Esq., and Adam H. Isenberg, Esq., of Saul, Ewing, Remick & Saul LLP, represent the Debtors in their restructuring efforts. The Debtors have selected Logan & Company Inc. as claims and noticing agent. The Official Committee of Unsecured Creditors is represented by Brown Rudnick Berlack Israels LLP. When the Debtors filed for protection from its creditors, it listed total assets of $186,300,000 and total debts of $322,000,000. FLEETWOOD CAPITAL: S&P Rates Trust Preferred Securities "D" ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the trust preferred securities issued by Fleetwood Capital Trust to 'D' from 'CC' after the parent company, Fleetwood Enterprises, elected to defer related dividends. The 'CCC+' corporate credit rating and 'CCC-' subordinated rating assigned to Fleetwood Enterprises were not affected by the downgrade of the preferred securities. "Fleetwood is a market leader in the recreational vehicle and factory-built housing industries, but faces significant operational challenges because record high fuel prices, weak consumer sentiment, and a more constrained consumer finance environment continue to negatively affect demand for the company's RVs," said credit analyst James Fielding. "Additionally, a glut of discounted conventional housing inventory in key markets suppresses sales of factory-built homes." The negative outlook acknowledges difficult market conditions that are likely to continue to suppress the sale of RVs and factory- built homes in the foreseeable future. S&P would lower its ratings further if liquidity pressures increase as a result of material operating cash flow deficits or a leveraged refinancing of the 5% convertible notes. Conversely, S&P would consider revising its outlook to stable or an upgrade if industry trends stabilize, liquidity strengthens, and Fleetwood demonstrates the ability to generate sustainable profits at lower production levels. FORD CREDIT: S&P Assigns 'BB+' Rating on $112.9MM Class D Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Ford Credit Auto Owner Trust 2008-C's $5.758 billion asset-backed notes series 2008-C. The ratings reflect: -- The characteristics of the pool being securitized; -- The credit enhancement in the form of subordination, cash, and excess spread that is augmented through the yield supplement overcollateralization amount; -- The extensive securitization performance history of Ford Motor Credit Co. (B/Stable/B-3); -- The timely interest and principal payments made under stressed cash flow modeling scenarios appropriate to the rating categories; and -- The transaction's legal structure. Ratings Assigned Ford Credit Auto Owner Trust 2008-C Class Rating Type Interest Amount Legal final rate maturity ------------ ---- -------- ------ ----------- A-1 A-1+ Senior 2.7762 $1,400,000,000 June 15, 2009 A-2a AAA Senior 3.7200 $400,000,000 Jan. 15, 2011 A-2b AAA Senior * $1,320,000,000 Jan. 15, 2011 A-3 AAA Senior ** $1,582,000,000 June 15, 2012 A-4a AAA Senior 5.1600 $360,600,000 April 15, 2013 A-4b AAA Senior *** $300,000,000 April 15, 2013 B A+ Sub 6.0400 $169,300,000 Sept. 15, 2013 C BBB+ Sub 7.0000 $112,900,000 Jan. 15, 2014 D BB+ Sub 8.4900 $112,900,000 Nov. 15, 2014 * One-month LIBOR plus 0.90%. ** One-month LIBOR plus 1.42%. *** One-month LIBOR plus 1.75%. Sub -- Subordinate. FORD CREDIT: Fitch Assigns 'BB' Rating on $112.9MM Class D Trusts ----------------------------------------------------------------- Fitch rated these Ford Credit Auto Owner Trust 2008-C: -- $1,400,000,000 2.77620% class A-1 'F1+'; -- $400,000,000 3.72% class A-2a 'AAA'; -- $1,320,000,000 Floating-Rate class A-2b 'AAA'; -- $1,582,000,000 Floating-Rate class A-3 'AAA'; -- $360,600,000 5.16% class A-4a 'AAA'; -- $300,000,000 Floating-Rate class A-4b 'AAA'; -- $169,300,000 6.04% class B 'A'; -- $112,900,000 7.04% class C 'BBB'; -- $112,900,000 8.49% class D 'BB'. FORD MOTOR: Is Neutral on Trancinda's Tender Offer of $8.50/Share ----------------------------------------------------------------- The Board of Directors of Ford Motor Company has determined that Ford will express no opinion and is neutral with respect to Tracinda Corporation's tender offer to purchase up to 20 million shares of Ford's common stock at a price of $8.50 per share, net to the seller in cash. As reported in the Troubled Company Reporter on May 14, 2008, the Board recommended that its stockholders take no action at this time in response to the announcement by Tracinda that it has commenced a tender offer to acquire up to 20 million shares of Ford's common stock at a price of $8.50 per share. On April 2008, Tracinda disclosed that it will make a cash tender offer for up to 20 million shares of common stock of Ford at a price of $8.50 per share. The offer price represents a 13.3% premium over Ford's closing stock price of $7.50 on April 25, 2008 and a 38.7% premium over Ford's closing stock price on April 2, 2008, the day upon which Tracinda began accumulating shares in the company. The shares to be purchased pursuant to the offer represent approximately 1% of the outstanding shares of Ford common stock. Tracinda Corporation, of which Kirk Kerkorian is the sole shareholder, currently owns 100 million shares of Ford common stock, which represents approximately 4.7% of the outstanding shares. Tracinda's average cost for such shares is approximately $6.91 per share. Upon completion of the offer, Tracinda would beneficially own 120 million shares of Ford common stock, or approximately 5.6% of the outstanding shares. The shares sought in the tender offer represent just less than 1% of Ford's outstanding common stock. According to the Schedule TO filed by Tracinda on May 9, 2008, Tracinda's tender offer will expire on June 9, 2008 at 5 p.m., New York City time, unless the offer is extended. Additional information regarding the Board's determination on the tender offer, including a copy of Ford's statement on Schedule 14D-9, in which Ford responds to Tracinda's tender offer, is available without charge at http://ResearchArchives.com/t/s?2c87 The Board and management of Ford remain committed to enhancing value for all of Ford's stockholders by continuing to execute the four key priorities of its business plan: aggressively restructure to operate profitably at the current demand and changing model mix; accelerate the development of new products that customers want and value; finance the plan and improve the balance sheet; and work together effectively as one team to leverage global resources. Ford will continue to communicate with stockholders regarding these matters. 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. FORD MOTOR: Heightened Industry Concerns Cue S&P's Outlook Change ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Ford Motor Co. and related entities, including Ford Motor Credit Co. and FCE Bank PLC, to negative from stable. At the same time, S&P affirmed the 'B' long-term and 'B-3' short-term ratings on Ford and Ford Credit, and the 'B+/B-3' ratings on FCE. The outlook change reflects heightened concerns about industry challenges in North America after Ford revised upward the amount of cash it expects to use from its global automotive operations over the next two years and said it no longer expects to return the automotive business to profitability by 2009. "The negative outlook should be understood to mean that we could place our ratings on CreditWatch at any time and subsequently lower them," said Standard & Poor's credit analyst Robert Schulz, "given the possibility of further adverse developments in the severely challenged North American auto sector." Reflecting the weaker prospective cash flows, Ford also said it plans to take a fixed-asset impairment in the second quarter, but did not disclose the size of the expected charge. Ford expects a cumulative global automotive cash outflow of between $14 billion and $16 billion, including the cost of employee separations, from 2007 through 2009 compared to earlier guidance of between $12 billion and $14 billion. Ford had previously reduced its cash use guidance from $15 billion to $17 billion after making progress on its cost structure. However, sluggish U.S. light-vehicle demand and, in particular, the shift away from the more profitable SUVs and pickups, which accelerated in April, will result in greater cash use. Sharply higher costs for steel and other raw materials represent another industry concern. S&P previously estimated that Ford would use $8 billion to $10 billion of cash in its global automotive operations, including cash restructuring expenses, during 2008. This remains S&P's expectation, but S&P are now concerned that cash use could improve only moderately in 2009. S&P expect the company to move to a net debt position in 2008. S&P believe Ford's liquidity remains adequate despite the prospective cash use and ongoing restructuring efforts. But if lower-than-expected U.S. light-vehicle sales persist through 2009 or higher fuel prices cause an even more dramatic shift away from light trucks, Ford's liquidity could reach undesirable levels by late 2009. This could occur even if Ford continues to make progress on its turnaround program in North America and auto operations outside North America remain improved contributors. The ratings on Ford, including the 'B' corporate credit rating, reflect the multiple challenges the company faces in stemming cash losses from its North American automotive operations. These challenges include overcapacity, fierce competition, adverse customer shifts away from more profitable vehicle segments, and sliding demand because of the weak U.S. economy. S&P expect U.S. light-vehicle sales to be 14.8 million units in 2008, the lowest in a decade and down from 16.1 million units in 2007. Ford also continues to lose market share in the U.S., although much of its share loss in the past year resulted from deliberate reductions in sales to daily rental fleets. More recently, Ford's market share has been affected by the customer shift toward car segments in which it has a smaller share. Ford's response to these challenges is a multiyear restructuring plan involving additional cost-cutting and capacity reductions. Ford said it will pursue further capacity reductions at its light- truck plants in response to eroding demand for SUVs and pickups. As with past restructuring efforts, the ultimate success depends largely on whether the company can stabilize its market share at a level consistent with its future capacity. Product mix shifts add another layer of complexity, as it remains difficult and costly to convert light-truck capacity to car or crossover utility vehicle capacity. Separately, Ford also said that it is neutral on the tender offer by Kirk Kerkorian's Tracinda Corp., which would increase Tracinda's equity stake to about 5.6% from the current 4.7%. This is not currently a factor in S&P's ratings because they do not believe it portends a major shift in Ford's turnaround strategy. Ford's outlook is negative. S&P could place its ratings on CreditWatch at any time and subsequently lower them, given the possibility of further adverse developments in the severely challenged North American auto sector. For example, if lower- than-expected U.S. light-vehicle sales persist through 2009 or higher fuel prices cause an even more dramatic shift away from light trucks, Ford's liquidity could reach undesirable levels by late 2009. This could occur even if Ford continues to make progress on its turnaround program in North America and auto operations outside North America remain improved contributors. S&P do not expect to revise the outlook back to stable within the next year, given the economic outlook, ongoing turnaround plan execution risk, and potential pressure on liquidity. Longer term, S&P could consider a stable outlook if industry conditions stabilize and Ford is able to significantly reduce its cash burn heading into its 2010 retiree health care savings. FORGITRON LLC: Gets Green Light to Borrow $165,000 from KeyBank --------------------------------------------------------------- The Hon. Randolph Baxter of the U.S. Bankruptcy Court for the Northern District of Ohio granted Forgitron LLC and Hadgitron LLC authority, on a final basis, to borrow up to $165,000 from KeyBank National Association and to continue using KeyBank's cash collateral. Representing the Debtors, Harry W. Greenfield, Esq., at Buckley King, LPA, in Cleveland, Ohio, told the Court the Debtors needed the funds to pay necessary administrative expenses, like taxes, utilities and professionals. The Debtors' operations have been shut down since April 2007, and the Debtors are seeking to sell substantially all of their assets. According to Mr. Greenfield, the Debtors lack any collections of accounts receivable or other funds with which to pay postpetition administrative expenses. KeyBank's postpetition loans are the only means by which the Debtors realistically can ensure that their estates will not be administratively insolvent. The Official Committee of Unsecured Creditors appointed in the Debtors' cases tried to block the approval of the DIP loan. That objection was later withdrawn. Forgitron is a party to a Revolving Credit and a Term Loan Note dated August 10, 2005, pursuant to which KeyBank advanced funds to Forgitron secured by, among other things, security interests in substantially all of Forgitron's business assets. Upon the Debtors' bankruptcy filing, Forgitron owed in respect of Forgitron Note #1 $10,000,000 to KeyBank. Forgitron is also party to a Promissory Note dated July 2, 2007, pursuant to which KeyBank advanced $150,000 to Forgitron. The principal amount remains outstanding and due as of the Petition Date. Hadgitron is a party to a Construction Loan Note dated December 1, 2005, pursuant to which KeyBank advanced funds to Hadgitron secured by, among other things, a mortgage on Hadgitron's real property located in Kershaw County, South Carolina. As of the Petition Date, Hadgitron owed $3,950,000 to KeyBank. The obligations to KeyBank under the prepetition notes are secured by the Debtors' assets. The DIP loan will incur interest at a fixed rate of 9% per annum. To secure the DIP loans, the Court held that KeyBank will be granted first priority liens on all unencumbered assets of the Debtors and "priming" liens on all encumbered assets of the Debtors, pursuant to 11 U.S.C. Sections 364(c)(2) and 364(d). The DIP loans will be treated as administrative claims having superpriority under 11 U.S.C. Section 364(c)(1). The Debtors will grant KeyBank adequate protection liens pursuant to Sections 361 and 363(e) of the Bankruptcy Code to protect the Lender's interest in the collateral. The Lender's liens are subject and subordinate in all respects to certain "Carve-Out Expenses," which consist of fees required to be paid to the Office of the United States Trustee pursuant to 28 U.S.C. Section 1930(a), and (b) compensation for services rendered or reimbursement of expenses incurred by professionals hired in the bankruptcy cases. About Forgitron and Hadgitron Forgitron LLC was formed in 2005 to manufacture aluminum wheels for Accuride Corporation pursuant to the terms of a supply agreement between the parties, under which Accuride was to purchase 12,000 units per month from Forgitron. Using Accuride as a base, Forgitron planned to expand its operations to provide wheels to other customers. Ultimately, Accuride refused to accept delivery of wheels manufactured by Forgitron, and Forgitron ceased all business operations in April 2007. Hadgitron LLC is the owner of real property located at 30 Hengst Drive, Camden, South Carolina, which it leases to Forgitron. The Real Property served as the base of Forgitron's business operations until the operations shut down in April 2007. The Debtors filed for chapter 11 on March 15, 2008, before the U.S. Bankruptcy Court for the Northern District of Ohio (Case Nos. 08-11762 and 08-11763). The Debtors are represented by Harry W. Greenfield, Esq., in Buckley King, LPA. Forgitron, LLC disclosed $10 million to $50 million in estimated assets and debts when it filed for bankruptcy. FORGITRON LLC: Hires Buckley King as Bankruptcy Counsel ------------------------------------------------------- Forgitron LLC and Hadgitron LLC won permission from the Hon. Randolph Baxter of the U.S. Bankruptcy Court for the Northern District of Ohio to employ Buckley King LPA as their bankruptcy counsel. Buckley King will advise the Debtors of their rights, powers and duties in the management of their affairs. The firm will assist the Debtors in negotiating a plan or plans of reorganization or liquidation, and advise the Debtors in connection with any proposed sale of all or a portion of their assets. Harry W. Greenfield, Esq., a member at Buckley King; Jeffrey C. Toole, a shareholder; Dov Y. Frankel, an associate, will primarily represent the Debtors. Mr. Greenfield will be paid $400 an hour; Mr. Toole will be paid $300 an hour; and Mr. Frankel $240 an hour. Mr. Greenfield attests the firm does not represent any interest adverse to the Debtors or their estates. Buckley King provided services to Epsilon Management Corp., an affiliate of the Debtors, before the Petition Date. The retainer and certain other fees were paid by the Debtors. To reach Mr. Greenfield: Harry W Greenfield 600 Superior Ave E Suite 1400 Cleveland, OH 44114 Tel: (216) 363-1400 Fax: 216-579-1020 E-mail: bankpleadings@bucklaw.com About Forgitron and Hadgitron Forgitron LLC was formed in 2005 to manufacture aluminum wheels for Accuride Corporation pursuant to the terms of a supply agreement between the parties, under which Accuride was to purchase 12,000 units per month from Forgitron. Using Accuride as a base, Forgitron planned to expand its operations to provide wheels to other customers. Ultimately, Accuride refused to accept delivery of wheels manufactured by Forgitron, and Forgitron ceased all business operations in April 2007. Hadgitron LLC is the owner of real property located at 30 Hengst Drive, Camden, South Carolina, which it leases to Forgitron. The Real Property served as the base of Forgitron's business operations until the operations shut down in April 2007. The Debtors filed for chapter 11 on March 15, 2008, before the U.S. Bankruptcy Court for the Northern District of Ohio (Case Nos. 08-11762 and 08-11763). The Debtors are represented by Harry W. Greenfield, Esq., in Buckley King, LPA. Forgitron, LLC disclosed $10 million to $50 million in estimated assets and debts when it filed for bankruptcy. FORGITRON LLC: Hires Parkland Group as Financial Advisors --------------------------------------------------------- The Hon. Randolph Baxter of the U.S. Bankruptcy Court for the Northern District of Ohio granted Forgitron LLC and Hadgitron LLC permission to employ Parkland Group Inc. as their financial advisors. The firm will advise the Debtors on the amount, and probable sources, of net operating income that the Debtors can reasonably expect to have available in the future for payment of its obligations under any confirmed plan of reorganization. The firm will also advise the Debtors on alternative sources of debt or equity funding, and on various alternatives for the structure and ownership of the reorganized Debtors. The firm will also provide valuation services. Laurence Goddard, president of Parkland, serves as lead consultant. The firm will be paid on an hourly basis. Mr. Goddard will receive $375 an hour; Mark Kozel $275 an hour; and David Cesar $280 an hour. Parkland rendered services to the Debtors before their bankruptcy filing. Parkland received a $15,000 retainer as part of the prepetition engagement. Mr. Goddard attests that his firm and its professionals have no connection with the Debtors, their creditors or any other parties- in-interest; and that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Forgitron and Hadgitron Forgitron LLC was formed in 2005 to manufacture aluminum wheels for Accuride Corporation pursuant to the terms of a supply agreement between the parties, under which Accuride was to purchase 12,000 units per month from Forgitron. Using Accuride as a base, Forgitron planned to expand its operations to provide wheels to other customers. Ultimately, Accuride refused to accept delivery of wheels manufactured by Forgitron, and Forgitron ceased all business operations in April 2007. Hadgitron LLC is the owner of real property located at 30 Hengst Drive, Camden, South Carolina, which it leases to Forgitron. The Real Property served as the base of Forgitron's business operations until the operations shut down in April 2007. The Debtors filed for chapter 11 on March 15, 2008, before the U.S. Bankruptcy Court for the Northern District of Ohio (Case Nos. 08-11762 and 08-11763). The Debtors are represented by Harry W. Greenfield, Esq., in Buckley King, LPA. Forgitron, LLC disclosed $10 million to $50 million in estimated assets and debts when it filed for bankruptcy. FORGITRON LLC: U.S. Trustee Appoints 5-Member Creditors' Panel -------------------------------------------------------------- Pursuant to Section 1102(a) of the Bankruptcy Code, Habbo G. Fokkena, the United States Trustee for Region 9, appointed five parties to the official committee of unsecured creditors in the bankruptcy cases of Forgitron LLC and Hadgitron LLC: 1) ENGINEERED PRODUCTION SYSTEMS DIV. ENGINEERED PRODUCT SALES CORP. c/o Kenneth B. Klein 574 S. Shasta Way Orange, CA 92869-5242 Tel: (714) 532-2742 Fax: (714) 633-8016 2) METALLURGICAL TECHNOLOGIES, INC., P.A. c/o Barbara L. Pendergrass 160 Bevan Drive Mooresville, NC 28115 Tel: (704) 663-5108 Fax: (704) 662-0898 3) ENPROTECH MECHANICAL SERVICES c/o John L. Head, VP Finance 2200 Olds Avenue Lansing, MI 48915 Tel: (517) 319-5384 Fax: (517) 319-6212 4) ORMET PRIMARY ALUMINUM CORPORATION c/o Tommy Temple P O Box 176 43840 State Route 7 Hannibal, OH 43931 Tel: (740) 483-2776 Fax: (740) 483-2662 5) ALFE HEAT TREATING, INC. c/o Penny S. Cook 10630 W. Perimeter Road Fort Wayne, IN 46809 Tel: (260) 747-9422 Fax: (260) 747-9618 W. O. BLACKSTONE & CO., INC., and THE GEARHISER LAW FIRM INC. were originally appointed to the Committee, but which later stepped down. Hahn Loeser & Parks LLP in Cleveland, Ohio, represents the Committee. About Forgitron and Hadgitron Forgitron LLC was formed in 2005 to manufacture aluminum wheels for Accuride Corporation pursuant to the terms of a supply agreement between the parties, under which Accuride was to purchase 12,000 units per month from Forgitron. Using Accuride as a base, Forgitron planned to expand its operations to provide wheels to other customers. Ultimately, Accuride refused to accept delivery of wheels manufactured by Forgitron, and Forgitron ceased all business operations in April 2007. Hadgitron LLC is the owner of real property located at 30 Hengst Drive, Camden, South Carolina, which it leases to Forgitron. The Real Property served as the base of Forgitron's business operations until the operations shut down in April 2007. The Debtors filed for chapter 11 on March 15, 2008, before the U.S. Bankruptcy Court for the Northern District of Ohio (Case Nos. 08-11762 and 08-11763). The Debtors are represented by Harry W. Greenfield, Esq., in Buckley King, LPA. Forgitron, LLC disclosed $10 million to $50 million in estimated assets and debts when it filed for bankruptcy. FRONTIER AIRLINES: Panel Taps Houlihan Lokey as Financial Advisor ----------------------------------------------------------------- The Statutory Committee of Unsecured Creditors of Frontier Airlines Inc., seeks permission from the U.S. Bankruptcy Court for the Southern District of New York to retain Houlihan Lokey Howard Zukin & Capital Inc., as its financial advisors, nunc pro tunc to bankruptcy filing date. The Committee believes that Houlihan Lokey, an international investment banking and financial advisory firm, is well-qualified to be its financial advisors, in light of the firm's substantial expertise in financial restructuring in the airline and related industries. Houlihan Lokey will: * analyze business plans and forecasts of the Debtors; * evaluate the Debtors' assets and liabilities; * assess the Debtors' financial issues and options concerning (i) the sale of the Debtors, either in whole or in part; and (ii) the Debtors' Chapter 11 plan of reorganization or liquidation; * analyze and review the Debtors' financial and operating statements; * provide financial analyses as the Committee may require; * assist in the determination of an appropriate capital structure for the Debtors; * evaluate the Debtors' debt capacity in light of its projected cash flows; * assist with a review of the Debtors' employee benefit programs, including key employee retention, incentive, pension and other post-retirement benefit plans; * analyze strategic alternatives available to the Debtors; * assist in the review of claims and with the related reconciliation, estimation, settlement and litigation; * assist the Committee in identifying potential alternative sources of liquidity in connection with any debtor-in- possession financing or Chapter 11 plan; * represent the Committee in certain negotiations with the Debtors and third parties; * provide testimony in Court or on behalf of the Committee with respect to certain issues; and * provide other financial and investment banking services to the Committee as may be agreed upon. Pursuant to an engagement letter, Houlihan Lokey's compensation will include: -- a monthly fee of $150,000; -- a transaction or deferred fee, payable by the Debtors in an amount equal to 1.5% of the aggregate consideration paid by the Debtors, pursuant to a Plan, on account of allowed unsecured claims; and -- reimbursement of necessary out-of-pocket expenses. Houlihan Lokey will utilize the services of Simat, Helliesen & Eichner, Inc., as an industry consultant. There will be no additional fees payable under the Engagement Letter that is associated with the retention of SH&E. Christopher R. Di Mauro, a managing director at Houlihan Lokey, assures the Court that his firm is not related to the Debtors or any parties-in-interest. Moreover, Houlihan Lokey does not hold or represent any interest adverse to the Debtors, their estates and creditors. In the same manner, SH&E president David H. Treitel discloses that his firm is a "disinterested person" as that term is defined in Section 101(4) of the Bankruptcy Code. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. The company and its affiliates operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D.N.Y. Case No. 08-11297 through 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Epiq Bankruptcy Solutions serves as the Debtors' notice and claims agent. The Official Committee of Unsecured Creditors is represented by Wilmer Cutler Pickering Hale and Dorr LLP. At Dec. 31, 2007, Frontier Airlines and its subsidiaries' total assets was US$1,126,748,000 and total debts was US$933,176,000. The Debtors have until Aug. 8, 2008, to exclusively file a chapter 11 plan. (Frontier Airlines Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Section 341(a) Meeting Slated for June 13 ------------------------------------------------------------ Diana G. Adams, United States Trustee for Region 2, will convene a meeting of Frontier Airlines Holdings Inc.'s creditors on June 13, 2008, at 1:30 p.m., at 4th Floor, 80 Broad Street in New York. This is the first meeting of Frontier's creditors required under Section 341(a) of the Bankruptcy Code. 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 Debtors under oath about Frontier's financial affairs and operations that would be of interest to the general body of creditors. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. The company and its affiliates operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D.N.Y. Case No. 08-11297 through 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Epiq Bankruptcy Solutions serves as the Debtors' notice and claims agent. The Official Committee of Unsecured Creditors is represented by Wilmer Cutler Pickering Hale and Dorr LLP. At Dec. 31, 2007, Frontier Airlines and its subsidiaries' total assets was US$1,126,748,000 and total debts was US$933,176,000. The Debtors have until Aug. 8, 2008, to exclusively file a chapter 11 plan. (Frontier Airlines Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: S&P Holds 'B' Credit Rating on Enough Liquidity --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 17, 2008, as a result of the strike at American Axle & Manufacturing Holdings Inc. The outlook on GM is negative. At the same time, S&P raised its issue-level rating on GM's senior unsecured notes to 'B' from 'B-', and assigned recovery ratings of '4', indicating the expectation for average (30% to 50%) recovery in the event of a payment default. The rating actions reflect the extension of our recovery ratings to all speculative-grade unsecured debt issues. The rating affirmation reflects S&P's view that GM's liquidity is currently adequate, taking account of the company's negative cash use in North America and ongoing restructuring efforts. However, "The negative outlook should be understood to mean that we could place the ratings on CreditWatch at any time and subsequently lower them," said Standard & Poor's credit analyst Robert Schulz, "given the possibility of further adverse developments in the severely challenged North American auto sector." A primary example would be GM's inability to manage lower-than-expected U.S. light-vehicle sales through 2009, along with more dramatic and accelerated shifts away from light trucks, which could push GM's liquidity toward undesirable levels. This could occur even if GM continues to make progress on its turnaround program in North America and auto operations outside North America remain improved contributors. The ratings on GM reflect primarily the risks and lack of visibility related to the company's North American automotive operations. GM faces two very serious challenges in the North American market: weak industry demand in 2008 and possibly 2009, and adverse customer shifts away from more profitable vehicle segments. These negative developments are coming as GM is in the midst of addressing its high cost structure and improving its product mix in North America. We expect U.S. light-vehicle sales to be about 14.8 million units in 2008, the lowest in more than a decade and down from 16.1 million units in 2007. GM also continues to lose market share in the U.S., although much of its share loss in the past year resulted from deliberate reductions in sales to daily rental fleets. More recently, GM's market share has been affected by the shift toward car segments in which it has a smaller share. GM's response to these challenges is a multiyear restructuring plan, a major element of which is the four-year labor contract reached last fall with the United Auto Workers. S&P consider the UAW contract to be a substantial long-term positive development for GM's turnaround efforts in North America, and S&P believe GM has traction on its broader cost-reduction plan. However, the large retiree health care cost savings from the contract do not begin to accrue until 2010, and as with past restructurings, the ultimate success of the turnaround plan depends largely on whether the company can stabilize its market share at a level consistent with its future capacity. In the interim, GM will continue to use substantial cash in its automotive operations in 2008, and likely in 2009. The causes of this include deteriorating volume and mix in North America and cash restructuring costs. The automotive finance and insurance operations of 49%-owned GMAC LLC are expected to remain profitable in 2008, albeit at lower levels than in past years. But GMAC's Residential Capital LLC mortgage unit has had very poor results recently, and this will continue to depress GM's net income. S&P's lowering of GMAC's and Residential Capital's ratings had no effect on the ratings on GM. GM is not required to support Residential Capital, but is offering to backstop a portion (estimated at $367 million) of a $750 million first-loss position in a $3.5 billion secured facility offered to Residential Capital by GMAC. Although manageable, this is a contingent call on GM's liquidity. A default by Residential Capital would not directly affect any of GM's financing agreements. Under the terms of the sale of a majority stake in GMAC in late 2006, GM agreed to forgo dividends from GMAC for a period of time, so S&P already had no expectation that GMAC would make cash payments to GM. On various important labor fronts, S&P are concerned about the difficulties that bankrupt supplier Delphi Corp. has experienced in emerging from bankruptcy. S&P still do not expect the comprehensive costs to GM of resolving its exposure to Delphi to strain GM's liquidity, even if GM does not receive any cash consideration upon Delphi's emergence. S&P would reassess this view if GM found it necessary to fund any significant portion of Delphi's eventual emergence with cash beyond the ongoing plant and wage subsidies GM has agreed to provide. Separately, the $200 million that GM has agreed to pay to American Axle to defray a portion of the costs of American Axle's labor settlement is another diversion of cash outside GM, but does not affect GM's rating. GM has also eliminated the potential for labor disruptions this fall in Canada with the recently concluded preliminary agreement with the Canadian Auto Works union well in advance of the contract expiration. GM's outlook is negative. S&P do not expect to revise the outlook to stable within the next year, given the economic outlook, ongoing turnaround plan execution risk, and pressure on liquidity. Longer term, S&P could consider a stable outlook if industry conditions stabilize and GM is able to significantly reduce its cash burn heading into its 2010 retiree health care savings. S&P do not expect GM to provide any significant capital to GMAC or indirectly to Residential Capital, nor is GM required to do so. In addition, S&P do not believe there are any rating triggers or other mandatory calls on GM's cash caused by a GMAC or Residential Capital downgrade or in the event that Residential Capital were to default. GLOBAL TOWER: Fitch Holds 'B' Rating on $73.45MM Class G Certs. --------------------------------------------------------------- Fitch Ratings has affirmed the Global Tower series 2007-1, commercial mortgages pass-through certificates as: -- $77,750,000 class A-FX at 'AAA'; -- $120,000,000 class A-FL at 'AAA'; -- $45,200,000 class B at 'AA'; -- $45,200,000 class C at 'A'; -- $45,200,000 class D at 'BBB'; -- $16,950,000 class E at 'BBB-'; -- $56,500,000 class F at 'BB'; -- $73,450,000 class G at 'B'. The affirmations are due to the stable performance of the collateral since issuance. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 2,059 wireless communication sites securing one fixed-rate loan. As of the April 2008 distribution date, the aggregate principal balance of the notes remains unchanged at $440.25 million since issuance. The notes are interest-only for the entire five-year period. As part of its review, Fitch analyzed the financial statements of the issuer, GTP Acquisition Partners I, LLC, as well as trustee reports provided by the servicer, Midland Loan Services. As of March 31, 2008, aggregate annualized run rate revenue increased to $87.2 million, a 9.4% increase from issuance. Over the same period, the Fitch adjusted net cash flow increased 5.9% since issuance. The actual servicer-reported debt service coverage ratio is 2.03 times, compared to 1.84x at issuance. The tenant type concentration is stable. As of April 1, 2008, total revenue contributed by telephony tenants was 85.9% compared to 85.6% at issuance. GOLDEN SPRINGS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Lead Debtor: Golden Springs, LLC 12200 San Servando Ave. North Port, FL 34287 Bankruptcy Case No.: 08-07311 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- The Springs Development Group, LLC 08-07312 Type of Business: The Debtors are real estate developers. Chapter 11 Petition Date: May 22, 2008 Court: Middle District of Florida (Ft. Myers) Debtors' Counsel: Harley E. Riedel, Esq. E-mail: hriedel.ecf@srbp.com Stichter, Riedel, Blain & Prosser 110 East Madison St., Ste. 200 Tampa, FL 33602 Tel: (813) 229-0144 http://www.srbp.com Golden Springs, LLC's Financial Condition: Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtors did not file a list of its largest unsecured creditors. GREENSHIFT CORP: March 31 Balance Sheet Upside-Down by $21.7MM -------------------------------------------------------------- Greenshift Corporation's consolidated balance sheet at March 31, 2008, showed $50.6 million in total assets, $71.1 million in total liabilities, and $1.1 million in minority interest, resulting in a $21.7 million total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $8.2 million in total current assets available to pay $39.1 million in total current liabilities. The company reported a net loss of $3.8 million, on revenue of $6.6 million for the first quarter ended March 31, 2008, compared with a net loss of $4.3 million, on revenue of $1.0 million in the same period a year ago. Revenue for the three months ended March 31, 2008 included: -- $2.6 million in equipment and technology sales; -- $3.7 million in culinary oil sales; and, -- $331,371 in sales of corn oil for biofuel production. In the comparable period of last year, revenues were comprised of $588,070 from equipment sales and $418,138 from culinary oil production and sales. Cost of revenues for the three months ended March 31, 2008, were $4.8 million, or 72.9% of revenue compared to $909,078, or 90.3% of revenue for the same period in 2007. Included within cost of revenue is depreciation and amortization expense of $100,103 and $48,251 for the three months ended March 31, 2008, and 2007, respectively. Gross profit for three months ended March 31, 2008, was $1.8 million, representing a gross margin of 27.1%. This compared to $97,130 or 9.7%, in the comparable period of the prior year. The company attributed the increase in gross margin to the company's changed business operations during 2007 as well as the development and early stage nature of those operations during the first half of 2007. Operating expenses for the three months ended March 31, 2008, were $1.3 million compared to $3.2 million for the same period in 2007. Included in the three months ended March 31, 2008, was $304,017 in stock-based compensation as compared to approximately $2.0 million for the three months ended March 31, 2007. Interest expense for the three months ended March 31, 2008, was approximately $1.3 million as compared to approximately $1.0 million for the same period in 2007. This increase was mostly due to the debt service of the debt financing associated with the company's biodiesel equipment sales and culinary oil sales businesses. Gain from the change in the fair market value of derivative liabilities was $319,829 for the three months ended March 31, 2008, compared with a loss of $436,180 for the three months ended March 31, 2007. Amortization of deferred financing costs and debt discounts was $1.1 million and $1.5 million, respectively. 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?2c6e Going Concern Disclaimer Rosenberg Rich Baker Berman & Company, in Bridgewater, N.J., expressed substantial doubt about GreenShift Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and working capital deficit position. The company had a working capital deficit of $30.9 million at March 31, 2008. About GreenShift Corporation Headquartered in New York, GreenShift Corporation (OTC BB: GERS) -- http://www.greenshift.com/-- develops and commercializes clean technologies that facilitate the efficient use of natural resources. The company accomplishes this by developing and integrating new technologies into existing agricultural production facilities, by selling equipment and services based on those technologies, and by using those technologies to directly produce and sell biomass-derived oils and fuels. HAMILTON GARDENS: S&P Puts Default Ratings on Seven Cert. Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings to 'D' on seven classes from Hamilton Gardens CDO II Ltd., a collateralized debt obligation of asset-backed securities transaction collateralized predominantly by mezzanine classes of residential mortgage-backed securities and other structured finance transactions. S&P removed six of the lowered ratings from CreditWatch with negative implications. S&P lowered the ratings on the notes following notice from the trustee that the transaction has liquidated its portfolio assets and distributed proceeds to the noteholders. The proceeds were insufficient to pay down the balances of the notes in full. Ratings Lowered and Removed from Creditwatch Negative Rating ------ Transaction Class To From ----------- ----- -- ---- Hamilton Gardens II A-1A D BBB+/Watch Neg Hamilton Gardens II A-1B D B+/Watch Neg Hamilton Gardens II A-1C D B-/Watch Neg Hamilton Gardens II A-2 D CCC/Watch Neg Hamilton Gardens II B D CCC-/Watch Neg Hamilton Gardens II C D CCC-/Watch Neg Rating Lowered Rating ------ Transaction Class To From ----------- ----- -- ---- Hamilton Gardens II D D CC HARTFORD MEZZANINE: Fitch Affirms 'B' Rating on $38.75MM Loans -------------------------------------------------------------- Fitch has affirmed all classes of Hartford Mezzanine Investors I CRE CDO 2007-1 as: -- $137,500,000 class A-1 at 'AAA'; -- $50,000,000 class A-2 at 'AAA'; -- $52,500,000 class A-3 at 'AAA'; -- $35,000,000 class B at 'AA'; -- $10,000,000 class C at 'A+'; -- $10,000,000 class D at 'A'; -- $15,000,000 class E at 'A-'; -- $25,000,000 class F at 'BBB+'; -- $20,000,000 class G at 'BBB'; -- $21,250,000 class H at 'BBB-'; -- $23,750,000 class J at 'BB'; -- $38,750,000 class K at 'B'. Fitch's affirmation of the above classes is based on the stability of its performance parameters including maintaining an adequate reinvestment cushion and remaining within its other transaction covenants. Deal Summary: HMI I 2007-1 is a $500,000,000 revolving commercial real estate cash flow collateralized debt obligation that closed on Aug. 8, 2007. As of the effective date and based on Fitch categorizations, the CDO was substantially invested as: commercial real estate mezzanine loans (42.8%), commercial mortgage whole loans/A-notes (40.2%), B-notes (10.3%), CMBS (3.0%), real estate bank loans (1.2%), and uninvested proceeds (2.6%). The CDO is also permitted to invest in REIT debt, Trust Preferred Securities, and CRE CDO securities. The portfolio is selected and monitored by Hartford Investment Management Company and Key Real Estate Equity Capital, Inc. HMI I 2007-1 has a five-year reinvestment period during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends in August 2012. Asset Manager: HIMCO is an active investor in junior portions of first mortgages, mezzanine investments, whole loans, CMBS, and other structured loan participations. Key is affiliated with one of the largest real estate services companies in the U.S., focusing on acquisition, development, and bridge financing, with 36 offices throughout the country. This is each asset manager's first CRE CDO. Performance Summary: HMI I 2007-1 became effective on May 2, 2008. As of the effective date, the as-is poolwide expected loss has improved slightly to 31.250% from 32.875% at close. As a result, the CDO continues to have above average reinvestment flexibility with 14.750% of cushion based on its current weighted average spread of 2.76%. The WAS has decreased slightly from 3.02% at close. The CDO's covenanted Fitch PEL varies depending on the in-place WAS. Based on the trustee reported WAS, the PEL covenant can range from 42.000% to 46.000% (the WAS/PEL matrix). Since closing, two commercial real estate loans were paid off (2.7), and ten new CREL loans (28.3%) were added to the pool. The loans added to the pool were of consistent credit quality with the portfolio at closing. Additionally, two new rated securities (4.2%) were added, including one CMBS (3%) rated 'A' and one real estate bank loan (1.2%) rated 'BB-'. The overcollateralization and interest coverage ratios of all classes have remained above their covenants, as of the April 23, 2008 trustee report. Collateral Analysis: The CDO is comprised of approximately 96% commercial real estate loans, including 42.8% mezzanine loans, 40.2% whole loans/A-notes (a significant increase from 17.7% at close), and 10.3% B-notes. As of the effective date, and based on Fitch categorizations, the CDO is within all property type covenants. Office loans comprise the largest percentage of assets in the pool at 39.4%. The transaction's exposure to hotel loans is low relative to other CRE CDOs at 7.8%. The CDO has some exposure to nontraditional property types, including land at 10.3%. The CDO is also within all its geographic covenants. The Fitch Loan Diversity Index is 465 compared to the covenant of 625, which represents average diversity as compared to other CRE CDOs. Per the CDO covenants, no single obligor can be greater than 10% of the target par amount. Rating Definitions: The ratings on the class A-1, A-2, A-3, and B notes address the likelihood that investors will receive full and timely payments of interest, per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings on the class C, D, E, F, G, H, J, and K notes address the likelihood that investors will receive ultimate interest payments, as well as the aggregate outstanding amount of principal, by the stated maturity date, per the governing documents. Upgrades during the reinvestment period are unlikely given the pool could still migrate to the PEL covenant. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch. Fitch will continue to monitor and review this transaction and will issue an updated Snapshot report after each committed review. The surveillance team will conduct a review whenever there is an approximately 15% change in the collateral composition, or semi- annually. HSI ASSET: S&P Slashes Certificates Rating to 'D' from 'CC' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M-8 and M-9 certificates from HSI Asset Securitization Corp. Trust 2006-WMC1 to 'D' from 'CC.' S&P downgraded the class M-8 and M-9 certificates because they had realized cumulative losses of $5,656,663.13 and $6,312,000, respectively, as of the May 2008 remittance period. To date, the transaction has experienced $47.983 million in cumulative realized losses. Subordination, excess interest, and overcollateralization provide credit support for the transaction. At issuance, the collateral backing the deals consisted of subprime fixed- and adjustable-rate fully amortizing first-lien mortgage loans secured by one- to four-family residential properties. INTERSTATE BAKERIES: Wants to Reject Missouri, et al. Leases ------------------------------------------------------------ Pursuant Sections 105(a) and 365(a) of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, Interstate Bakeries Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Missouri to reject five unexpired non-residential real property leases in four locations, as of these proposed rejection dates: Location Rejection Date -------- -------------- 65160 County Rd., Hollister, Missouri 5/15/2008 240 N. Waterman Ave., San Bernardino, California 5/15/2008 1712 Riverside Rd., Rockford, Illinois 5/30/2008 301 Bloomington Rd., Champaign, Illinois 6/5/2008 1710 McCalla Ave., Knoxville, Tennessee 6/5/2008 J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that based on a valuation analysis conducted, the Debtors have determined that each Lease does not have any marketable value beneficial to their estates. The substantial costs associated with the Leases constitute an unnecessary drain on the Debtors' cash resources, Mr. Ivester says. Rejecting the Leases will eliminate any further taxes and possible administrative charges to be incurred; hence, the rejection will favorably affect the cash flow and assist in the Debtors' future operations, Mr. Ivester maintains. Mr. Ivester notes that any personal property remaining in each of the Premises after the Rejection Dates are deemed abandoned to the landlord of each Lease. The Landlord will be entitled to remove or dispose of the property. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh-baked bread and sweet goods, under various national brand names, including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R). Currently, IBC employs more than 25,000 people and operates 45 bakeries, as well as approximately 800 distribution centers and approximately 800 bakery outlets throughout the country. The company and eight of its subsidiaries and affiliates filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No. 04 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6% senior subordinated convertible notes due Aug. 15, 2014) in total debts. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan expired on November 8. On Jan. 25, 2008, the Debtors filed their First Amended Plan and Disclosure Statement. On Jan. 30, 2008, the Debtors received Court approval of the First Amended Disclosure Statement. IBC confirmed that it has not received any qualifying alternative proposals for funding its plan of reorganization in accordance with the Court-approved alternative proposal procedures. As a result, no auction was held on Jan. 22, 2008, as would have been required under those procedures. The deadline for submission of alternative proposals was Jan. 15, 2008. (Interstate Bakeries Bankruptcy News, Issue No. 98; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). IBIS TECHNOLOGY: Gets Nasdaq Notice for Late Filing of Financials ----------------------------------------------------------------- Ibis Technology Corporation said that it received a letter from the Nasdaq Stock Market dated May 19, 2008 informing the Company that Nasdaq had not received the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, as required by Nasdaq Marketplace Rule 4310(c)(14). Accordingly, Nasdaq notified the Company that the Nasdaq Listing Qualifications Panel will consider the matter in rendering a determination regarding the Company's continued listing on the Nasdaq Global Market. The Company previously announced that it received a Nasdaq letter dated April 16, 2008 advising that Nasdaq had not received the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as required by Nasdaq Marketplace Rule 4310(c)(14). On March 31, 2008, the Company requested a 15-day extension to file its Form 10-K, as permitted by Rule 12b-25 of the Securities Exchange Act of 1934, as amended, to allow its independent registered public accounting firm additional time to review the Company's financial statements for the year ended December 31, 2007 in order to afford sufficient time to conduct an impairment analysis with respect to the Company's assets. The Company was unable to file by the extension deadline, which triggered the Nasdaq determination letter. On April 23, 2008, the Company appealed the Nasdaq determination by requesting a hearing before the Panel, which automatically stayed the delisting of the Company's Common Stock pending the Panel's review and determination. The hearing is scheduled for June 5, 2008 at 9:30 am. The Company is cooperating fully to ensure that the review of the Company's financial statements for the year ended December 31, 2007, by its independent registered public accounting firm is completed as quickly as possible and the Form 10-K will be filed shortly thereafter. As a result of the delay in filing its Form 10-K, the Company was unable to timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008. The Company intends to file the Form 10-Q as soon as reasonably practicable after the filing of the Form 10-K. Although the Company anticipates filing these reports promptly, there can be no assurance the Panel will grant the Company's request for continued listing. On April 28, 2008, the Company announced that it had received a Nasdaq letter dated April 23, 2008 notifying the Company that for the last 30 consecutive trading days, the Company's common stock had not maintained the minimum market value of publicly held shares of $5,000,000, as required for continued inclusion by Nasdaq Marketplace Rule 4450(a)(2). The Company has been provided 90 calendar days, or until July 22, 2008, to regain compliance. The MVPHS of Common Stock must be $5,000,000 or greater for a minimum of 10 consecutive trading days to comply. If compliance with Nasdaq Marketplace Rule 4450(a)(2) cannot be demonstrated by July 22, 2008, the Nasdaq Staff will provide written notification that the Common Stock will be delisted. At that time, the Company may appeal the Staff's determination to a Panel. The Nasdaq letter indicated that the Company may transfer its securities to the Nasdaq Capital Market if the Company satisfies the inclusion requirements for that market. If the Company submits a transfer application and pays the applicable fees by July 22, 2008, the initiation of the delisting proceedings will be stayed pending the Staff's review of the application. If the Staff does not approve the Company's transfer application, the Staff will provide written notification that its securities will be delisted. In addition, the Company previously announced that it received a letter on December 10, 2007 from Nasdaq advising that, for the previous 30 consecutive business days, the bid price of the Common Stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Global Market pursuant to Nasdaq Marketplace Rule 4450(a)(5). Nasdaq stated in its letter that in accordance with Nasdaq Marketplace Rule 4450(e)(2), the Company has been provided 180 calendar days from the letter date, or until June 9, 2008, to regain compliance with the minimum bid price requirement. The bid price of the Common Stock must close at $1.00 per share or more for a minimum of 10 consecutive business days to achieve compliance. If the Company does not regain compliance with the minimum bid price requirement by June 9, 2008, the Nasdaq Staff will provide the Company with written notification that the Common Stock will be delisted from the Nasdaq Global Market. At that time, the Company may appeal the delisting determination to a Panel pursuant to applicable Nasdaq rules. Alternatively, Nasdaq Marketplace Rule 4450(i) may permit the Company to transfer the Common Stock to the Nasdaq Capital Market if the Common Stock satisfies all criteria, other than compliance with the minimum bid price requirement, for initial inclusion on such market. In the event of such a transfer, the Nasdaq Marketplace Rules provide that the Company will be afforded an additional 180 calendar days to comply with the minimum bid price requirement while listed on the Nasdaq Capital Market. Company Expects Substantial Doubt Comment On May 15, 2008, Ibis Chief Financial Officer William J. Schmidt informed the Securities and Exchange Commission that the company anticipates that it will record an impairment loss on certain long-lived assets, as well as certain of its patents, of $1.6 million and record a charge to increase the reserve for obsolescence of inventory of $1.8 million for the fourth quarter of 2007. In addition, Mr. Schmidt says, Ibis expects that, in the audit report on its financial statements as of and for the year ended December 31, 2007, its independent auditor KPMG LLP will express substantial doubt about Ibis' ability to continue as a going concern. About Ibis Technology Ibis Technology Corporation (Nasdaq GM: IBIS) -- http://www.ibis.com/-- is a provider of oxygen implanters for the production of SIMOX-SOI (Separation-by-Implantation-of-Oxygen Silicon-On-Insulator) wafers for the worldwide semiconductor industry. Headquartered in Danvers, Massachusetts, Ibis Technology is traded on Nasdaq under the symbol IBIS. ISCO INTERNATIONAL: Secures $2.5MM Credit Facility from Lenders --------------------------------------------------------------- ISCO International Inc. secured an agreement in principle for a new $2.5 million credit facility with its lenders. The line is expected to expire on Aug. 1, 2010, and borrowings on the line will be charged a 9.5% interest rate. ISCO would borrow on the line immediately, using a portion of the proceeds to repay the outstanding $500,000 short-term debt to lenders related to the receivables factoring arrangement, including accrued interest. "This credit line indicates validation of our plan and provides us the capital resources we need to implement our strategy," said Gordon Reichard, Jr., chief executive officer of ISCO. "We will accelerate our realignment of the company around key growth initiatives and transition our focus to sales and marketing activities that most effectively implement our go-to-market strategy." "We expect to disclose an investor call for early June to review our plan with our investors," Mr. Reichard said. "I am pleased to see the buy in from our lenders and investors, and appreciate their continued support of our company." Changes in Board of Directors ISCO welcomed Stephen McCarthy to its board of directors. Mr. McCarthy served as Tellabs' executive vice president of Global sales, services and marketing from 2004 through 2007. Previously at Tellabs, he served as Sr. VP of Operations and Services, Sr. VP Optical Networking, Sr. VP Global Marketing and Sr. VP of Global Solutions and Services. Prior to Tellabs, Mr. McCarthy was Sr. VP of ADP's Major accounts division, and from 1989 through 1997 he held executive positions in both marketing and sales at Ameritech. Mr. McCarthy has a Bachelor of Science degree in Finance from the University of Illinois and an MBA from DePaul University. "As we evolve our company, this addition shows the deliberate, continuing diversification of our board to support our market- focused plans for the future," Ralph Pini, chairman of the board of directors, said. "His experience, perspective and judgment should provide great benefit to our company. We are very pleased to welcome him aboard." ISCO also reported the resignation of John Thode from the board of directors. Mr. Thode was CEO of ISCO until November 2007 when he joined a large Fortune 500 company, but continued to serve on ISCO's board of directors until May 2008. Additionally, Jim Fuentes also resigned, both as a director and an employee. Mr. Fuentes was a member of the board of directors since 2003 and became chief strategy officer after the acquisition of Clarity Communication Systems Inc. by ISCO during January 2008. "First and foremost, I'd like to thank [Mr. Thode] and [Mr. Fuentes] for their assistance in getting me up to speed here at ISCO since I joined two months ago," Mr. Reichard said. "We are making profound changes to our company and business model. This process often includes the departures of some good people. Please join me in wishing them thanks for their contributions and only success in the future." In addition to Mr. Fuentes' departure, ISCO disclosed the departure of Frank Cesario, its chief financial officer since 2002. "Frank has been with the company a long time and has been key to managing through the many tough transitions that have occurred over the years," Mr. Pini said. "Over the past 60 days, Frank has provided the support and invaluable insight regarding all aspects of the company allowing us to create the new plan we are about to embark upon," said Mr. Reichard. "[Mr. Cesario] has a great future in front of him and I know everyone wishes him the best." The company is in the advanced stages of the CFO selection process and will make a statement at the appropriate time." About ISCO International Based in Elk Grove Village, Illinois, ISCO International Inc. (AMEX: ISO) -- http://www.iscointl.com/-- is a supplier of RF management and interference-control solutions for the wireless telecommunications industry. Going Concern Disclaimer Grant Thornton LLP, in Chicago, expressed substantial doubt about ISCO International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that the company incurred a net loss of approximately $6.4 million during the year ended Dec. 31, 2007, and, as of that date, the company's accumulated deficit was approximately $171.0 million. The auditing firm also said that the company has consistently used, rather than provided, cash in its operations. JAMES RIVER: S&P Revises Outlook to Developing from Negative ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on James River Coal Co. to developing from negative. All ratings, including the 'CCC' corporate credit rating, were affirmed. The developing outlook means ratings can be raised, lowered or affirmed. "The outlook revision reflects the expected improvement in the company's earnings and liquidity in the second half of this year," said Standard & Poor's credit analyst Sherwin Brandford. S&P expect James River to yield realized prices above $80 per ton on approximately 1 million tons of its uncommitted coal. Still, risk continues to exist that the company will not produce as much coal as it expects, making it unable to yield the potential high margins on the uncommitted coal, and thus hindering its near-term liquidity. The ratings on James River reflect the company's small size, high operating costs, capital-intensive operations, and limited geographic diversity. The ratings also reflect the challenges of operating in the Central Appalachian region, which is increasingly expensive and difficult to mine because of mature, thinning seams, escalating costs, and stringent permitting and safety regulations. James River is a relatively small coal producer with about three quarters of its production coming from Central Appalachia. The company has 15 underground mines, 11 surface mines, and 10 preparation plants located in eastern Kentucky and Indiana. The company's performance has suffered from the soft coal-pricing environment that led to Central Appalachian producers locking in coal prices for 2007 and 2008 at less than $50 per ton from more than $60 per ton at the beginning of 2006. Although spot prices have been above $80 for much of this year, the company will only marginally benefit from these higher price levels because of the lower priced contracts. At the same time, James River has had escalating costs in areas that include explosives, diesel, steel, and regulatory compliance. As a result, the company's operating margins and its cost profile remain poor. S&P could revise the outlook to positive if liquidity improves in the near term as a result of the company being able to meet its production and pricing expectations for the second half of 2008, and the company receives commitments on a large percentage of its 2009 output at favorable prices relative to costs. However, if the company's production falls short of expectations, resulting in a dramatic deterioration in its liquidity position, S&P could revise the outlook to negative or lower the ratings. JEVIC TRANSPO: Laid-Off Workers Sue, Alleges WARN Act Violations ---------------------------------------------------------------- Jevic Transportation, Inc. allegedly violated federal labor law when the trucking company abruptly terminated approximately 1,200 employees shortly before it sought bankruptcy protection, according to lawyers for workers who sued the company Wednesday in Delaware federal court. The lawsuit was filed on behalf of former Jevic employees Casimir Czyzewski and Jeffrey Oehlers, who worked at the company's Delanco, N.J., facility. According to the Complaint, the company was required by the federal Worker Adjustment and Retraining Notification (WARN) Act to give at least 60 days advance written notice of the employee terminations and continue paying certain wages, salary, and benefits during the notice period in accordance with federal law. The former employees are represented by Adam T. Klein, Jack A. Raisner, and Rene S. Roupinian, of Outten & Golden LLP, of New York. The workers' lawyers will seek to have the lawsuit certified as a class action that includes all persons who were terminated without cause at Jevic Transportation facilities on or about May 19, 2008. The suit seeks WARN Act-required wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions, and other benefits that would have been paid or covered during the notice period, and attorneys' fees and litigation-related costs. The defendants are Jevic Transportation, Inc., Jevic Holding Corp., Creek Road Properties, LLC, and Sun Capital Partners, Inc. Attorney Jack A. Raisner, of Outten & Golden LLP, said, "We allege that the Jevic Transportation employees are entitled to the protections of the WARN Act. Employers bound by the WARN Act and other labor laws cannot be allowed to compound the difficulties of abruptly laid-off employees." The case is "Casimir Czyzewski, Jeffrey Oehlers, et al., v. Jevic Transportations, Inc., Jevic Holding Corp., Creek Road Properties, LLC and Sun Capital Partners, Inc.," in U.S. Bankruptcy Court for the District of Delaware; Case No. 08-11006-BLS; Adversary Proceeding No. 08-50662-BLS. Attorney Contact: Jack A. Raisner, Outten & Golden LLP, New York, (212) 245-1000, http://www.outtengolden.com. About Jevic Transportation Inc. 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 of the units have assets nor operations. The company and its affiliates filed for chapter 11 protection on May 20, 2008 (Bankr. D. Del. Case No. 08-11008). Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg & Ellers, in Wilmington, Delaware, represents Jevic Transportation. KIK CUSTOM: S&P Slices LT Corporate Credit Rating to CCC+ from B- ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Concord, Ontario-based consumer products manufacturer KIK Custom Products Inc. to 'CCC+' from 'B-'. At the same time, S&P lowered the issue rating on the first-lien debt two notches to 'CCC+' from 'B', as well as the issue rating on the second-lien debt one notch to 'CCC-' from 'CCC'. The outlook is negative. S&P also revised the recovery rating on the first-lien debt to '3' from '2', indicating its reduced expectations of recovery in a default scenario to meaningful (50%-70%) from substantial (70%-90%). The recovery rating on the second-lien debt is unchanged at '6', indicating a negligible (0%-10%) recovery in a default scenario. "This downgrade and revision to the recovery rating reflect our view that KIK's very weak operating performance and liquidity position, as well as high debt leverage, have resulted in a higher risk of default," said Standard & Poor's credit analyst Lori Harris. KIK's operating cash flow remains constrained by its heavy debt burden and poor operating results. With negative free cash flow expected for 2008, the company may need outside cash injections and divestiture proceeds to support the business. For analytical purposes, Standard & Poor's bases its rating conclusions on an operational and financial review of the parent company, KCP Holdings Inc. "The ratings on KIK reflect the company's very weak liquidity position, highly leveraged capital structure, poor operating results, integration challenges with previous acquisitions, customer concentration, and its participation in the mature and highly competitive North American personal care and household products industries," Ms. Harris added. KIK holds the position of the largest contract manufacturer of consumer products and the second-largest bleach manufacturer in North America. The negative outlook reflects S&P's expectations that KIK's operating performance, credit ratios, and liquidity position will remain very weak in 2008, driven by soft EBITDA, elevated debt levels, and negative free cash flow. S&P could lower the ratings if the company's liquidity position does not improve soon. There is no likelihood of S&P's revising the outlook to stable this year unless KIK strengthens its liquidity position significantly and meaningfully reduces leverage. KRISTINA STALCUP: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Kristina Dyann Stalcup 1404 Laurel Road Knoxville, TN 37738 Bankruptcy Case No.: 08-31971 Type of Business: The Debtor has interests in Above the Smoke LLC, Anakeesta HOA, Anakeesta LLC, Anakeesta Village LLC, Chalet Rentals of the Smokies, and The Smokies Group HOA. She previously filed for chapter 11 petition on Aug. 11, 2005 (Bankr. E.D. Tenn. Case No. 05-34324) (J. Stair). Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Tennessee (Knoxville) Judge: Richard Stair Jr. Debtor's Counsel: Edward J. Shultz, Esq. Ayres & Parkey P.O. Box 23380 Knoxville, TN 37933 Tel: (865) 637-1181 Fax: (865) 637-6050 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sevier County Trustee Property Taxes $34,835 125 Court Avenue, Suite 202E Sevierville, TN 37862 Business License $2,494 Tax Internal Revenue Service Income Tax $23,537 Special Procedures Branch Liability Attn.: Bankruptcy Section 801 Broadway Nashville, TN 37203 Payroll Taxes $9,482 Dorothy Stalcup Personal Loan $18,000 1404 Laurel Road Gatlinburg, TN 37738 RBM HPR, Inc. Maintenance Fees $18,000 Mason Clinton, President 511 Parkway Gatlinburg, TN 37738 Harry Fisher Personal Debt $9,200 Molly Brownlee Personal Loan $7,220 American Express Charge Card $7,018 Citi Cards Charge Card $6,548 Vick Engineering & Surveying Professional $5,565 Services Tennessee Department of Revenue Sales Tax $5,463 Denise Scotti Personal Loan $3,000 Blalock Lumber Company Services Provided $2,040 City of Gatlinburg Property Taxes $1,665 Ed Dodgen Professional $1,600 Services Jim Sheffer - City Storage Rent $1,600 Baskins Creek Apartment, LLC Rent $1,050 AT&T Advertising Advertising $976 Clearwater Drilling Co. Services Provided $600 LANDING DEVELOPMENT: U.S. Trustee Forms Five-Member Committee ------------------------------------------------------------- The United States Trustee for Region 18 named five creditors as members of the official committee of unsecured creditors of Landing Development LLC and its debtor-affiliates. The members are: 1. Superfloors Inc. C/O Mr. Wayne Lindquist, Credit Manager 6911 SOUTH 196th Street Kent, WA 98032 Tel: (253) 872-6064 2. Turnkey Building Products, LLC C/O Mr. Tony Caranica 275 Beavercreek Road C-141 Oregon City, OR 97045 Tel: (971) 246-0040 3. PR Drywall, LLC C/O Mr. Ron Byrd, President 2730 Southeast 39th Loop Suite East Hillsboro, OR 97123 Tel: (503) 439-0436 4. Frame Tech Group C/O Mr. Arie Muller, President 5160 Southwest Beaverton-Hillsdale Hwy Portland, OR 97221 Tel: (503) 209-0423 5. AK Painting, LLC C/O Mr. Aleksandr Kruzhkov 3908 Northeast 35 Circle Vancouver, WA 98661 Tel: (971) 570-1058 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Milwaukie, Oregon-based Landing Development LLC, aka Volare at Eagle Landings and aka Marnella Homes, -- http://www.marnellahomes.com/-- is a home builder. Tony Marnella Inc. is the sole member of Landing Development. Anthony L. Marnella is the president and manager of Tony Marnella Inc. The company, together with Tony Marnella Inc. and Anthony Lawrence Marnella, filed chapter 11 petition on April 14, 2008 (Bankr. D. Ore. Case Nos. 08-31686, 08-31685 and 08-31688). Judge Trish M. Brown presides the case. Susan S. Ford, Esq., at Sussman Shank LLP represents the Debtors in their restructuring efforts. They listed $10 to $50 million in assets and debts when they filed for bankruptcy. LANDING DEVELOPMENT: Taps Sussman Shank as Bankruptcy Counsel ------------------------------------------------------------- Landing Development LLC and its debtor-affiliates asked the U.S. Bankruptcy Court for the District of Oregon for authority to employ Sussman Shank LLP as its counsel. The firm is expected to render all legal services necessary in the case. Sussman Shank indicated willingness to serve as counsel to the Debtors. The firm's billing rates are $225 to $360 for partners, $260 to $320 for special counsels, $185 to $240 for associates, $80 to $160 for paralegals, and $85 for legal assistants. Partner Susan S. Ford, Esq., bills $315 per hour. The Debtors assured the Court that the firm has no connection with creditors or other adverse party or its attorneys. The firm can be reached at: Sussman Shank LLP 1000 Southwest Broadway, Suite 1400 Portland, Oregon 97205 Tel: (503) 227-1111 Fax: (503) 248-0130 Milwaukie, Oregon-based Landing Development LLC, aka Volare at Eagle Landings and aka Marnella Homes, -- http://www.marnellahomes.com/-- is a home builder. Tony Marnella Inc. is the sole member of Landing Development. Anthony L. Marnella is the president and manager of Tony Marnella Inc. The company, together with Tony Marnella Inc. and Anthony Lawrence Marnella, filed chapter 11 petition on April 14, 2008 (Bankr. D. Ore. Case Nos. 08-31686, 08-31685 and 08-31688). Judge Trish M. Brown presides in the case. Susan S. Ford, Esq., at Sussman Shank LLP represents the Debtors in their restructuring efforts. They listed $10 to $50 million in assets and debts when they filed for bankruptcy. LEAR CORP: S&P Holds 'B+' Rating and Removes Negative Watch ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating and certain other ratings on Lear Corp. and removed them from CreditWatch with negative implications, where they were placed on March 17, 2008, as a result of the American Axle & Manufacturing Holdings Inc. (BB/Watch Neg/--) strike. The outlook is stable. At the same time, Standard & Poor's raised its issue-level rating on Lear's senior unsecured notes to 'B+' from 'B-', and assigned a recovery rating of '4' to this debt, indicating the expectation for average (30%-50%) recovery in the event of a payment default. The rating actions reflect the extension of S&P's recovery ratings to all speculative-grade unsecured debt issues. "The rating affirmation and stable outlook reflect our view that Lear's credit measures will remain within our expectations for the ratings in the face of very challenging North American auto sector conditions in 2008 and perhaps 2009," said Standard & Poor's credit analyst Lawrence Orlowski. In the first quarter of 2008, which was affected by the American Axle strike, net sales increased by $75 million year-over-year and pretax income rose by $27 million over the year-earlier period. The improvement in profitability reflects savings from restructuring initiatives and the driving of commercial settlements. The ratings on Lear reflect a highly leveraged financial risk profile--currently strong for the rating--combined with a weak business risk position that is dominated by the intense competitive pressures of the global auto supply industry. Lear has a solid market position in the global auto seating supply sector (79% of revenues) and is a player in the electrical/electronics auto supply market. The outlook is stable because the company has shown significant improvement in expanding cash flow and earnings. But S&P expect the operating environment for auto suppliers to remain difficult in 2008, with Lear's leverage and heavy dependence on the U.S. auto manufacturers making the company especially vulnerable to negative developments. Even if the company's financial profile weakens in 2008, S&P expect it to remain broadly consistent with the current rating metrics of adjusted debt to EBITDA of less than 4x and FFO to debt of 15%. To reach the upper end of S&P's expected debt to EBITDA metric, Lear's EBITDA would have to drop an estimated 30% from the levels of the 12 months ended March 29, 2008. S&P could revise the outlook back to negative if industry conditions deteriorate more than expected and if reduced production and higher raw material prices significantly impair profitability. LEVITT AND SONS: Receiver to Hold Home Sales for LAS Depositors --------------------------------------------------------------- In an effort to deliver completed homes to disappointed buyers who lost their deposits when Levitt and Sons LLC and its debtor- affiliates filed for bankruptcy late last year, court-appointed receiver Andrew J. Bolnick and his legal counsel, Weissman, Dervishi, Borgo & Nordlund, P.A., conducted a series of private sales events May 19, 20 and 22 that gave homebuyers the first opportunity to purchase finished homes at one of four Levitt and Sons communities in Florida. The Honorable Robert A. Rosenberg of the Broward Circuit Court 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 Nov. 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." Working with legal counsel Weissman, Dervishi, Borgo & Nordlund, P.A., Mr. Bolnick 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 for approval before the U.S. Bankruptcy Court for the Southern District of Florida. 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 were: * May 19, 2008 -- Cascades of Groveland, Groveland, Lake County * May 20, 2008 -- Jesup's Reserve, Winter Springs, Seminole County * May 20, 2008 -- Turtle Creek, St. Cloud, Osceola County * May 22, 2008 -- Cascades at River Hall, Alva, Lee County Complete detail listings of homes for sale and floor plan can be obtained at 305-789-4282 or 888-754-7030, and http://www.levittreceivership.com About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: Affiliates Want UFC Title to Turn Over Funds ------------------------------------------------------------- Debtor Regency Hills by Levitt and Sons, LLC, asks the U.S. Bankruptcy Court for the Southern District of Florida to direct UFC Title Insurance Agency, LLC, as custodian, to turn over certain funds it holds in escrow to the Debtor. The Funds constitute proceeds of the sale of a home on Lot 305 in Hartwood Reserve, in Lake County, Florida, sold to Jose A. Feliciano. Regency Hills believes that the sale proceeds of approximately $267,000, including interest, were placed, and remain in UFC's escrow account, as its title agent. The Debtor also believes that there are no liens on the Home and therefore, asserts that it is entitled to the Funds in its entirety. In the event that UFC can establish that liens against the Home exist, Regency Hills seeks language in the Court's order authorizing UFC to withhold an amount sufficient to satisfy the liens, turn over the balance to the Debtor, and provide any and all information that evidences or tends to evidence the liens for the Debtor's review. If, after review, Regency Hills determines that the liens identified by UFC are invalid, the Debtor urges the Court to conduct a hearing to determine the validity and amount of the lien. If the Court determines that the lien is valid, Regency Hills asks the Court to compel UFC to satisfy that lien in full. If the Court determines that the lien is invalid, Regency Hills asserts that UFC should turn over the retained part of the Fund to the Debtor. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: Shelby Wants to Sell 26-Acre Property for $13.7MM ------------------------------------------------------------------ Levitt and Sons LLC's debtor-affiliate, Levitt and Sons of Shelby County LLC, asks the U.S. Bankruptcy Court for the Southern District of Florida: (a) to approve a purchase and sale agreement, dated May 2, 2008, for a certain property of LAS Shelby County, with potential purchaser Hyneman Companies, LLC, joined by Debtors Bowden Building Corp. and Levitt and Sons of Tennessee, LLC, to the extent they own any of the Property; (b) to approve uniform proposed bidding and sale procedures with respect to the proposed sale; (c) for authority to reimburse the Purchaser's expenses; and (d) for authority to sell the Property, free and clear of liens, claims, liabilities, encumbrances and other interests. LAS Shelby County holds title to a property, consisting of approximately 26.1 acres of land located in Shelby County, Tennessee, and 224 lots located in five subdivisions, Concord Estates, Huntington Oaks, Pemberton Meadows, Peterson Ridge, and Sycamore Trace, Jordi Guso, Esq., at Berger Singerman, P.A., in Miami, Florida, relates. The Debtors intend to sell the Shelby Property as promptly as possible, consistent with the due process requirements of Sections 363 and 365 of the U.S. Bankruptcy Code. Accordingly, the Debtors entered into Purchase Agreement with Hyneman Companies, which contemplates that: * Hyneman will pay LAS Shelby County $13,715,000 for the Property; * Hyneman will assume certain related documents, developer rights and contracts; and * Hyneman will assume responsibility for installation and privatization of improvements to be constructed in connection with each subdivision of which the Property is comprised. A full-text copy of the Hyneman Purchase Agreement is available for free at http://researcharchives.com/t/s?2c76 Under the Purchase Agreement, LAS Shelby County has reserved its right to accept a higher and better offer for the Property. According to Mr. Guso, LAS Shelby County has previously exposed the Property to an appropriate competitive sale process, and the contemplated sale, subject to higher and better offers, will facilitate a further competitive process to achieve the highest and best offer. Bidding Procedures LAS Shelby County proposes that all bids must be submitted in writing no later than June 10, 2008, at 4:00 p.m., Florida time. Qualified bidders must submit bids for all of the Property. Any party wishing to submit a competitive bid must comply with these procedures: (a) Deliver not later than the deadline a copy of the initial written purchase offer to Hyneman, its counsel, counsel for Regions Bank, N.A., and counsel for the Official Committee of Unsecured Creditors, in substantially the same form as the Agreement, with an additional redlined copy to show changes made. LAS Shelby County, upon consultation with the Creditors Committee, may accept modifications to the Agreement submitted by a prospective purchaser who otherwise complies with the Bidding Procedures if it determines that the proposed modifications result in a higher and better offer. However, (i) if the competing bids include different economic terms, LAS Shelby County, in consultation with the Creditors Committee, may evaluate those bids before an auction for the sole purpose of determining and announcing the highest and best bid, and (ii) the overbid is otherwise a qualified competing bid. (b) Each bidder must simultaneously place a $250,000 deposit in escrow in the trust account of counsel for LAS Shelby County. The Deposit will be refundable if the Qualified Competing Bid is not deemed the highest and best bid. The Initial Deposit will be conditionally non-refundable as to the second highest bidder. (c) Each bidder must simultaneously provide evidence reasonably satisfactory to LAS Shelby County and the Creditors Committee demonstrating its financial ability to close and to consummate an acquisition of the Property. (d) The Initial Overbid or the initial Qualified Competing Bid for all the Property must exceed the Purchase Price by at least $300,000. (e) At the Auction, the initial successive overbid, if any, for all the Property will be made in an increment of not less than $150,000 of cash consideration in excess of the Initial Overbid. All additional overbids will be in increments of not less than $50,000 in excess of the last submitted, highest qualified bid. (f) The successful bidder will close on or before the 11th day after the Sale is approved. LAS Shelby County will be authorized to accept the second highest bid as a back-up bid and will be permitted to close on the Back-Up Bid in the event that the Successful Bidder does not timely close. (g) If Hyneman is the second highest bidder, it will act as the Back-Up Bidder if the Successful Bidder does not close for any reason; and the Initial Deposit will be held until the closing and consummation of the Successful Bidder's acquisition of the Property, but only if the closing date is not extended or is extended with the Successful Bidder's written consent. If Hyneman is not the first or second highest bidder, it will, at its election, have the right to stand as an additional back-up buyer at its last and final bid amount, if the Successful or Back-Up Bidders do not close for any reason. If Hyneman elects to serve as the additional Back-Up Bidder, then the Initial Deposit will be held until the closing and consummation of the Successful Bidder's acquisition of the Property, at which time the Initial Deposit will be returned to the Purchaser. If Hyneman closes, then the Initial Deposit will be applied to the purchase of the Property. If Hyneman chooses not to serve as additional Back-Up Bidder, then the Initial Deposit, plus interest, will be returned to it. In the event Hyneman is not the Successful Bidder, LAS Shelby County seeks authority to reimburse the proposed buyer up to $137,150 in reasonable, actual and fully documented expenses. LAS Shelby Counter proposes to allow that payment as an administrative expense priority in the Debtors' estate to be paid from the closing proceeds. Mr. Guso maintains that certain buyer protection, including break-up fees and expense reimbursement, made in connection with possible higher and better offers will provide more benefit to the Debtors' estates by encouraging higher bidding. LAS Shelby County agrees to shell out up to $275,000, or 1% of the proposed purchase price, for Buyer Protections amounts -- $137,500 for the Break-Up Fee and up to $137,500 for Expense Reimbursement. That amount is reasonable, appropriate and within the Debtor's sound business judgment under the circumstances because it will serve to maximize the value LAS Shelby County will recover through the Sale, Mr. Guso avers. Auction If more than one Qualified Bid is received by June 10, the Debtors will hold an Auction at the offices of Berger Singerman, P.A., located at 350 East Las Olas Blvd., Suite 1000, in Fort Lauderdale, Florida, at 10:00 a.m., on June 12, 2008. Other than Hyneman, only persons or entities submitting Qualified Competing Bids will be eligible to bid at the Auction. In its discretion and in consultation with the Creditors Committee, LAS Shelby County may establish rules to govern the Auction in accordance with any of the Bidding Procedures. LAS Shelby County intends to use the Sale proceeds as the basis for a plan under a liquidating Chapter 11 process. Therefore, the Sale is in contemplation of a plan and thus, the transfer of the Property to the Successful Bidder and the resulting transactions are exempt from any transfer, sales, stamp or similar tax in all necessary jurisdictions as it relates to the instant sale, pursuant to Section 1146(c) of the Bankruptcy Code, Mr. Guso asserts. Final Hearing The Court will conduct a final hearing on June 16, 2008, to consider approval of the highest and best bid for the Property. The Successful Bidder will be presented for Court approval at the Sale hearing. Any party who disputes the sale request must file a written objection to the Court no later than June 13. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: Hearing on Plan-Filing Extension Set June 5 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida will convene a hearing on June 5, 2008, to consider a request by Levitt and Sons LLC and its debtor-affiliates for an extension of their exclusive plan-filing periods. The Debtors had asked the Court to further extend their exclusive period to file a plan of reorganization through June 27, 2008, and their exclusive period to solicit acceptances of that plan through Sept. 30, 2008. As reported in the Troubled Company Reporter on May 14, 2008, the Debtors prepared a proposed plan, as to which the Official Committee of Unsecured Creditors has had substantial input, the Debtors related. The Creditors Committee is likely to be a co- proponent of the plan. The collaboration between the Debtors and the Creditors Committee with respect to the terms of a plan are ongoing, said the Debtors. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Wants Genuity as Investment Banker --------------------------------------------------- Linens 'n Things and its debtor-affiliates seek the authority of the United States Bankruptcy Court for the District of Delaware to employ Genuity Capital Markets as investment banker, nunc pro tunc to the Petition Date. According to Francis M. Rowan, the Debtors' chief financial officer, the Debtors need Genuity to assist them in connection with one or more transactions by which a third party acquires: -- a majority or more of the issued and outstanding securities of Linens 'n Things Canada I Company and Linens 'n Things Center, Inc.; or -- an interest in Linens Canada in a matter that is in form and substance satisfactory to the Debtors. Mr. Rowan notes that a divestiture does not include a sale by the Debtors or Center of the equity securities of Linens Canada or an interest in the Canadian business to a U.S. special purpose acquisition company to the extent Genuity did not have a role in the SPAC transaction. The Debtors submit that a successful Divestiture is the best way to maximize the value of the Company's Canadian assets. To that end, Mr. Rowan tells the Court that Genuity has been working since February 2008 contacting and soliciting interest from potential interested parties. "Primarily strategic parties involved in the North American retail industry were contacted with access to detailed financial and operational information for those parties who executed a non- disclosure agreement," Mr. Rowan says. "Select parties have also been granted access to a data room, in addition to receiving presentations from management." Genuity will assist and advise the Debtors with various services in connection with a Divestiture. Genuity will: (a) review possible strategic options with respect to the Divestiture and provide advice regarding the appropriate form and structure of a Divestiture transaction; (b) provide a range of estimated sale proceeds from a Divestiture; (c) prepare marketing materials including a confidential memorandum describing the operations and assets of Linens Canada, the procedures to be followed by prospective purchasers, a form of confidentiality agreement for execution by recipients of confidential information, and a list of qualified potential purchasers; (d) as authorized by the Debtors, contact selected potential purchasers and solicit expressions of interest; (e) assist in identifying and assembling the contents of a data room and generally to supervise the due diligence activities conducted by potential purchasers; (f) evaluate and assess from a financial and market point of view any offer for the Debtors including any potential synergies available to the prospective purchaser; (g) assist in all aspects of any negotiations with potential purchasers including, if requested, participating directly in the negotiations; (h) advise and assist management in connection with any presentations to any prospective purchaser; (i) if requested, provide an opinion in accordance with its customary practice as to the fairness of inadequacy of any proposed Divestiture from a financial point of view; (j) work with the Debtors' legal, accounting, and tax advisors in completing a Divestiture; and (k) perform other services that the Debtors and Genuity mutually agree. Mr. Rowan tells the Court that the Debtors chose Genuity to act as investment banker in connection with the Divestiture because Genuity is a leading independent investment banking firm specializing in complex merger and aquisition and financing transactions. Specifically, Genuity has: -- substantial experience with, and knowledge of, companies involved in the retail industry; -- extensive knowledge of potential strategic buyers interested in the Debtors' industry; and -- substantial sell-side investment banking transaction experience. Genuity has served as an investment banker in a number of bankruptcy matters including, as financial advisor to a steering committee of $1.2 billion senior unsecured note holders in the financial restructuring of Tembec, Inc. The Debtors will pay Genuity a transaction fee equal to 1% of the Divestiture value or the aggregate fair market value of any securities issued and all other consideration paid to or received by the Debtors. The Transaction Fee may also be payable to Genuity if, within 12 months after termination of the engagement, either (i) a Divestiture is consummated or (ii) the Debtors or a subsidiary or other affiliate of the Debtors enters into an agreement with any person that subsequently resulsts in a Divestiture. Whether or not a Divestiture occurs, the Debtors will reimburser genuity for all reasonable out-of-pocket expenses incurred by Genuity. All fees will be paid to Genuity concurrently with the completion of a Divestiture. Reimbursable expenses will be payable by the Debtors upon receipt of Genuity's invoices, which will be submitted to the Debtpors monthly for approva and payment. Jamie Nagy, a member of Genuity, assures the Court that Genuity is a "disinterested person" within the meaning og Section 101(14) of the Bankruptcy Code and holds no interest materially adverse to the Debtors. 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 Michael Gries as CEO & CRO ----------------------------------------------------------- Linens 'n Things and its debtor-affiliates seek the authority of the United States Bankruptcy Court for the District of Delaware to approve an engagement agreement between them and Conway Del Genio Gries & Co., LLC. Pursuant to the Engagement Agreement, Michael F. Gries will serve as the Debtors' interim chief executive officer and chief restructuring officer. Additional individuals provided by CDG will provide other critical management services to the Debtors. Francis M. Rowan, the Debtors' senior vice president and chief financial officer, tells the Court that Mr. Gries' and CDG's services are necessary in the Chapter 11 cases because the Debtors need sophisticated executives with extensive Chapter 11 turnaround experience to guide them with their restructuring. CDG will manage all aspects of the Debtors' Chapter 11 cases leading to a possible refinancing, restructuring, or modification of all of the Debtors' existing debt, other obligations, or equity. CDG will also manage the Debtors' day to day operations including business strategy, supplier relationships, expansion or contraction of the retail footprint, and all employee related matters. In this regard, Mr. Gries has been appointed CRO by the Debtors' Board of Directors effective upon the commencement of the bankruptcy cases. To provide restructuring management services to the Debtors, CDG will, among other things: (a) perform general due diligence on the Debtors, which will include gathering and analyzing data, evaluating the Debtors' existing financial forecasts and budgets, and discussing the information with other members of management; (b) review the Debtors' current liquidity forecast, and assist other members of management in modifying and updating the forecast based upon current information, CDG's observations and other information, including monthly and annual forecasts; (c) lead the Debtors' efforts in structuring and obtaining additional working capital financing, identifying potential lenders and, contact those lenders; (d) prepare a strategic evaluation of the Debtors and their business units; (e) lead the Debtors in the development of a business plan; (f) organize the Debtors' resources and activities so as to effectively and efficiently plan, coordinate and manage the restructuring process; (g) review the Debtors' business strategies and plans to identify potential savings opportunities, and lead the implementation of those savings or improvements; (h) assist the Debtors in the design, preparation and presentation of a formal restructuring proposal; and (i) review the Debtors' organizational and decision-making infrastructure, including internal reporting processes to improve the efficiency and timeliness of decision-making and progress against company wide goals and initiatives. As CRO, Mr. Gries, and other CDG personnel assisting him, will: (a) addressing all operational issues as they arise; (b) manage all supplier relationships; (c) implement operational changes, including store openings and closings; (d) manage inventory purchasing and the supply of merchandise to the Debtors' stores; (e) address promotional and advertising strategies, and determine the appropriate strategy for the Debtors' business going forward; and (f) implement any necessary supply chain changes. Pursuant to the Engagement Agreement, CDG will be: -- paid at the monthly rate of $200,000, payable in advance; -- paid monthly in arrears for reimbursement of expenses; -- entitled to a fee of $3,000,000, payable in cash upon the completion of the Debtors' restructuring; and -- entitled to indemnity to the extent set forth in the Engagement Agreement. Mr. Gries informs the Court that CDG does not have a prepetition claim against the Debtors. He discloses that as of the Petition Date, CDG held the postpetition pro rata portion of the current monthly fee of $193,333, which was paid by the Debtors pursuant to the Engagement Agreement. Mr. Gries assures the Honorable Christopher S. Sontchi that CDG is a disinterested person as defined by 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) MACKLOWE PROPERTIES: Inks $3.9BB Sale Pact with Boston Properties ----------------------------------------------------------------- Boston Properties Inc. entered into agreements with entities affiliated with Macklowe Properties to acquire the General Motors Building and a portfolio of other assets located in New York City consisting of 540 Madison Avenue, 125 West 55th Street and Two Grand Central Tower for an aggregate purchase price of approximately $3,949,000,000. The purchase price consists of approximately $1,465,500,000 in cash, the issuance to one of the selling entities of $10,000,000 of common units of limited partnership interest in Boston Properties Limited Partnership, and the assumption of about $2,473,500,000 of fixed rate debt. The debt that is expected to be assumed as part of the transactions consists of: A. General Motors Building * an aggregate principal amount of $1,900,000,000 of secured and mezzanine loans having a weighted average interest rate of 5.97% per annum, all of which mature in September 2017; Boston Properties intends to acquire the lenders' interest in a portion of the mezzanine loans having an aggregate principal amount of $294,000,000 B. 540 Madison Avenue * two secured loans having an aggregate principal amount of $120,000,000 and a weighted average interest rate of 5.28% per annum, each of which matures in July 2013 C. 125 West 55th Street * an aggregate principal amount of $263,500,000 of secured and mezzanine loans having a weighted average interest rate of 6.31% per annum, all of which mature in March 2010 D. Two Grand Central Tower * a $190,000,000 secured loan having a per annum interest rate of 5.10%, which matures in July 2010 Boston Properties expects to consummate the acquisitions through one or more joint ventures with financial partners. The identity of the partners and the specific terms and conditions of the joint venture arrangements have not been finalized, but Boston Properties expects that it will ultimately own an economic interest of up to approximately 49% in the venture(s) and provide customary property management and leasing services. The closing of the acquisitions is expected to occur in multiple steps, with the acquisition of the General Motors Building expected to close in June 2008 and the acquisition of the remaining assets occurring thereafter. Boston Properties has posted a deposit in the form of a letter of credit in the amount of $165,000,000. The closing of the acquisitions is subject to customary conditions and termination rights for transactions of this type. Boston Properties, however, warned that there can be no assurance that the closings will occur on the terms currently contemplated or at all. The General Motors Building is an approximately 2,000,000 rentable square foot office building located at the corner of 5th Avenue and Central Park South in New York City. The 540 Madison Avenue is a 39-story building located at Madison Avenue at 55th Street that contains approximately 292,000 rentable square feet. The 125 West 55th Street is a 23-story building, spanning from 55th to 56th Streets between Avenue of the Americas and Seventh Avenue, that contains approximately 591,000 rentable square feet. Two Grand Central Tower is a 44-story mid-block tower that runs from 44th to 45th Street between Lexington and Third Avenue and contains approximately 664,000 rentable square feet. Goldman Sachs and Morgan Stanley are acting as financial advisors to Boston Properties and the investors in these transactions, and Lehman Brothers and Deutsche Bank are also advising Boston Properties. Proskauer Rose LLP and Goodwin Procter LLP are rendering legal and tax advice to Boston Properties. About Boston Properties 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 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 12,000,000 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 $5,800,000,000, and Fortress about $1,200,000,000, plus accrued interest. Both of the debts, secured by Mr. Macklowe's $7,000,000,000 real property in Manhattan, originally matured Feb. 9, 2008. MAHMOUD SHABEHPOUT: Case Summary & 12 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Mahmoud Shabehpout 4341 W. North Avenue Chicago, IL 60639 Bankruptcy Case No.: 08-10730 Type of Business: The Debtor. Chapter 11 Petition Date: April 29, 2008 Court: Northern District of Illinois (Chicago) Judge: Judge Eugene R. Wedoff Debtor's Counsel: Peter C. Nabhani Law Office of Robert Habib 77 W. Washington Street, #411 Chicago, IL 60602 Tel: (312) 201-1421 Fax: (312) 673-2110 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Eagle Bank Bank Bank Loan $828,739 Attn: Ken Petropoulos 1040 East Lake Street Hanover Park, IL 60133 American Express Credit card $27,491 P.O. Box 981537 El Paso, TX Unifund Co. Credit Card $11,900 10751 Techwoods Circle Cincinatti, OH 45242 Alpine Capital Investment Credit Card $5,425 Portage Auto Parts Trade Debt $5,946 Chase Credit Card $4,654 Gloria Gonzalez Tennant Dispute $4,350 Asset Acceptance Credit Card $845 State Collection Service Utility Collection $250 NCO Financial SBC Collection $69 HSBC Bank Credit Card $62 Ann Arbor Credit Business Telephone Account $41 MAGELLAN AEROSPACE: Lender Extends Payment Deadline to June 24 -------------------------------------------------------------- Magellan Aerospace Corporation obtained a 30-day extension to the current term of its credit agreement to June 24, 2008. As part of the extension, the company is in negotiations with the bank to increase the credit facility limit by $20 million and to extend the agreement term to May 23, 2009. To date the negotiations have been positive with respect to proposed amendments to the credit facility. The company is also in discussions with the chairman of the board of the company to extend his guarantee for the additional term and to cover the additional amount of credit facility. Magellan expects to use a portion of the additional credit facility capacity to retire the Bridge Loan for $15 million due July 31, 2008, which it borrowed in January 2008 to partially fund the repayment of the 8.5% convertible unsecured subordinated debentures on Jan. 31, 2008. About Magellan Aerospace Corporation Headquartered in Ontario, Canada, Magellan Aerospace Corporation (TSE:MAL) -- http://www.magellan.aero/-- is a diversified supplier of components to the aerospace industry. Through its wholly owned subsidiaries, the company designs, engineers and manufactures aeroengine and aerostructure components for aerospace markets, advanced products for military and space markets, and complementary specialty products. Magellan also supports the aftermarket through supply of spare parts, as well as performing repair and overhaul services. The company has two product groupings: aerostructures and aeroengines. The company has operating units throughout Canada, the United States and the United Kingdom. Waiver Subsequent to March 31, 2008, the company received a waiver with respect to financial covenant ratios of current assets to current liabilities and of tangible net worth. As at March 31, 2008, was not in compliance with respect to the these covenants as a result of the required adoption of CICA Handbook Section 3031, "Inventories" that resulted in adjustments to the opening inventory, capital assets, other assets and retained earnings. MAGNA ENTERTAINMENT: Amends & Extends Financing Arrangements ------------------------------------------------------------ Magna Entertainment Corp. amended certain of its financing agreements such as the extension of: * the maturity date of its $40 million senior secured revolving credit facility with a Canadian chartered bank from May 23, 2008 to July 30, 2008 (subject to certain acceleration provisions); * the maturity date of its bridge loan facility with a subsidiary of MI Developments Inc., MEC's controlling shareholder, from May 31, 2008 to Aug. 31, 2008 (subject to certain acceleration provisions) and increasing the maximum commitment available from $80 million to $110 million; and * the due date of its $100 million repayment requirement under the Gulfstream Park project financing with the MID Lender from May 31, 2008 to Aug. 31, 2008 (subject to certain acceleration provisions). On Sept. 12, 2007, MEC's Board of Directors approved a debt elimination plan designed to eliminate MEC's net debt by Dec. 31, 2008 by generating funding from asset sales, entering into strategic transactions involving certain of MEC's racing, gaming and technology operations, and a possible future equity issuance. Although MEC continues to implement its debt elimination plan, the sale of assets contemplated under the debt elimination plan is taking longer than originally contemplated and the success of the debt elimination plan is not assured. On March 31, 2008, MID announced that it had received a reorganization proposal on behalf of various shareholders of MID, including entities affiliated with the Stronach Trust, MID's controlling shareholder. The MID Reorganization Proposal contemplates, among other things, MID calling by May 30, 2008, a special meeting of shareholders to consider the proposal and closing the transaction no later than July 30, 2008. The MID Reorganization Proposal is subject to certain material conditions, some of which are beyond MID's control, and there can be no assurance that the transaction contemplated by the MID Reorganization Proposal, or any other transaction, will be completed. Senior Bank Facility Amendments The maturity date of the Senior Bank Facility has been extended from May 23, 2008 to July 31, 2008; provided, however, that if the MID Reorganization Proposal does not proceed for any reason, the maturity date will be accelerated to a date that will be fourteen days prior to the accelerated maturity dates of the facilities with the MID Lender. In connection with the amendment and extension of the Senior Bank Facility, MEC incurred a fee of $670,000. Bridge Loan Amendments The maximum commitment available under the Bridge Loan has been increased from $80 million to $110 million and MEC is now permitted to redraw amounts that it repaid prior to May 23, 2008 (approximately $21.5 million). The maturity date of the Bridge Loan has been extended from May 31, 2008 to Aug. 31, 2008; provided, however, that if the MID Reorganization Proposal does not proceed for any reason, the maturity date will be accelerated to one month after the date on which MID gives notice to MEC that the MID Reorganization Proposal is not proceeding. In connection with the amendment and extension of the Bridge Loan, MEC incurred a fee of $1.1 million (1.0% of the increased maximum commitment). If the MID Reorganization Proposal has not been approved by Aug. 1, 2008 or if the Bridge Loan maturity date is accelerated, there will be an additional arrangement fee of 1.0% of the then current commitment. Project Financing Amendments In connection with the amendments to the Bridge Loan. MEC and the MID Lender also amended the project financing facilities provided to Gulfstream Park and Remington Park. These amendments included extending the deadline for repayment of at least $100 million under the Gulfstream Park project financing facility from May 31, 2008 to Aug. 31, 2008 (during which time any repayments made under either facility will not be subject to a make-whole payment). If the Bridge Loan maturity date is accelerated, the deadline for repayment of the $100 million will also be accelerated to the same date. Special Committee Process Consideration of the amendments to the financing arrangements with the MID Lender was supervised by the Special Committee of MEC's board of directors consisting of Jerry D. Campbell (Chairman), Anthony J. Campbell and William J. Menear. The approval of MEC's board followed a favorable recommendation of the Special Committee. The Special Committee retained independent legal advisors to assist it in its deliberations in respect of these transactions. MEC will file a material change report as soon as practicable after issuing this press release. The material change report will be filed less than 21 days prior to the closing of the loan amendments. The timing of the material change report is, in MEC's view, both necessary and reasonable because the terms of the amendments were settled and approved by MEC's board of directors on May 22, 2008, and MEC requires immediate funding to address its short-term liquidity needs. Statement from MID John Simonetti, MID's Chief Executive Officer, stated, "With the implementation of its Debt Elimination Plan taking longer than anticipated, MEC will not be in a position to repay the bridge loan or a portion of the Gulfstream Park project financing as originally contemplated. Recently, certain MID shareholders brought forward a reorganization proposal that would deal with our MEC investment, including the MEC bridge loan and project financings. This proposal is currently being considered by MID's Special Committee of independent directors and, in the circumstances, we believe that it is in the best interests of MID to enter into these amendments." As to the Reorganization Proposal, MID says it is supported by over 50% of MID's Class A shareholders and approximately 95% of Class B shareholders. The proposed reorganization would be carried out by way of a court-approved plan of arrangement under Ontario law, requiring at least two-thirds of the votes cast by each class of MID's shareholders in favour of the proposal at a special meeting of shareholders to consider the proposal. In addition, the reorganization would be subject to applicable regulatory approvals, including those contained in Multilateral Instrument 61-101. The proposed reorganization is also conditional on, among other things, Magna International Inc.'s participation in the proposed transaction. The Reorganization Proposal contemplates MID calling by May 30, 2008 a special meeting to consider the reorganization and closing the transaction no later than July 30, 2008. The MID Board has not yet made any decisions or recommendations with respect to the Reorganization Proposal and has constituted a Special Committee of the Board to review and make recommendations relating thereto. The proposal is subject to certain material conditions, some of which are beyond MID's control, and there can be no assurance that the transaction contemplated by the Reorganization Proposal will be completed. About MID MID is a real estate operating company focusing primarily on the ownership, leasing, management, acquisition and development of a predominantly industrial rental portfolio for Magna International Inc. and its subsidiaries in North America and Europe. MID also acquires land that it intends to develop for mixed-use and residential projects. MID holds a controlling interest in MEC, North America's number one owner and operator of horse racetracks, based on revenue, and one of the world's leading suppliers, via simulcasting, of live horse racing content to the growing intertrack, off-track and account wagering markets. About Magna Entertainment Headquartered in Aurora, Ontario, Magna Entertainment Corp. (Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/ -- acquires, develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. * * * As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. MANUFACTURED HOUSING: S&P Junks Rating on Class IA Certificates --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Manufactured Housing Contract Trust Pass-Thru Cert Series 2000-3's class IA certificates and on two classes of certificates issued by Madison Avenue Manufactured Housing Contract Trust 2002-A. Concurrently, S&P affirmed the other outstanding ratings assigned to the Madison transaction. The downgrades reflect further declines in credit enhancement resulting from the continued deterioration of performance of the underlying pools of manufactured housing contracts, which were originated by GreenPoint Credit LLC. For the series 2000-3 transaction, as of the April 2008 distribution date, the group I pool factor was 28.34%; cumulative net losses, which continue to exceed original expectations at an increasing rate, amounted to 25.01% of the original group I pool balance; and loans that were 60-plus days delinquent represented 1.51% of the current pool balance. In addition, subordination is declining as class IM-1 continues to experience principal write- downs. S&P lowered the class IM-1 rating to 'D' on Aug. 28, 2007, as a result of liquidation-loss interest shortfalls. The Madison transaction, as of the April 2008 distribution date, had a 48.81% pool factor; cumulative net losses, which continued to exceed original expectations at an increasing rate, amounted to 19.59% of the original pool balance; and 60-plus-day delinquent loans represented 0.35% of the current pool balance. In addition, overcollateralization, currently at $1.76 million (0.50% of the current pool balance), continues to decline because it is being used to cover losses. Furthermore, due to the sequential payment structure of this transaction, none of the subordinate certificates have received principal payments to date. Standard & Poor's will continue to monitor these transactions to determine whether further rating actions are warranted. Ratings Lowered Manufactured Housing Contract Trust Pass-Thru Cert Series 2000-3 Pass-through certificates series 2000-3 Rating ------ Class To From ----- -- ---- IA CCC BB Madison Avenue Manufactured Housing Contract Trust 2002-A Asset-backed certificates series 2002-A Rating ------ Class To From ----- -- ---- B-1 B- B+ B-2 CCC- CCC Ratings Affirmed Madison Avenue Manufactured Housing Contract Trust 2002-A Asset-backed certificates series 2002-A Class Rating ----- ------ A-1 AAA A-2 AAA A-IO AAA M-1 A+ M-2 BBB+f MARCAL PAPER: Buyer Ordered to Pay $1.5 Million to U.S. Agencies ---------------------------------------------------------------- Bankruptcy Law 360 reports that the Hon. Morris Stern of the U.S. Bankruptcy Court for the District of New Jersey approved a settlement agreement between Marcal Paper Mills Inc. and 1. the state of New Jersey, on behalf of the New Jersey Department of Environmental Protection (NJDEP); and 2. the United States Government on behalf of the Environmental Protection Agency (EPA), the Department of the Interior (DOI), and the National Oceanic and Atmospheric Administration (NOAA). The Court directed the Debtor's would-be buyer to pay $1,500,000 to resolve the $946,000,000 claim of the government agencies, Bankruptcy Law says. As reported in the Troubled Company Reporter on May 12, 2008, the Lower Passaic River Study Area Cooperating Parties Group asks the Bankruptcy Court to reject that settlement agreement. The Bankruptcy Court had approved the sale of Marcal Paper's assets to NexBank, SSB, in its capacity as agent for the second lien lenders, and the purchaser has formed Marcal Paper Mills LLC and its subsidiary Marcal Manufacturing LLC. The group notes that the proposed Settlement Agreements are between the Purchasers and the state of New Jersey and the U.S. Government. The group says NJDEP should withdraw or withhold its consent to the Settlement pointing to, among others, the lack of evidence that the negotiation process was candid, open or that the bargaining leading to the settlement was balanced. Terms of the Settlement The TCR said on April 22, that under the terms of the settlement, NJDEP agrees to waive the filing of any administrative claims against the Debtor in connection with Kaofin material, a fiber clay product, stored at the Top Soil Depot Inc. superfund site. Furthermore, the NJDEP will not assert any future claim with respect to Kaofin material against the Debtor, its shareholders and any of its officers, including Kaofin material located on the property of Top Soil. Approval of the NJDEP agreement is one of the last open issues that must be resolved in order to complete the sale of substantially all of the Debtor's assets to an affiliate of NexBank SSB for approximately $160,000,000. The group asserts an $816,100 claim against the Debtor representing the Debtor's allotted share of the expenses relating to the study of certain environmental contamination for the Diamond Alkali Superfund Site in New Jersey, which includes a seventeen mile stretch of the Lower Passaic River and its tributaries from the Dundee Dam to Newark Bay known as the Lower Passaic River Study Area. The group notes that the U.S. Government also filed a proof of claim for more than $946,000,000 on behalf of the United States Environmental Protection Agency, the Department of Interior and the National Oceanic and Atmospheric Administration relating to response costs already incurred, and to be incurred, by those agencies with respect to the Site. The group notes that under the terms of the EPA Settlement, the U.S. Governmetn would have received a $3,000,000 allowed unsecured claim against the Marcal bankruptcy estate. At the time, Marcal estimated that, under its proposed reorganization plan, allowed unsecured claims would receive roughly 52% of the amount of the claim, i.e., approximately $1,500,000. The group contends that the EPA has not provided any factors, formulation, allocation theory or other support justifying a payment of $1,080,000 for EPA and $420,000 for the DOI and NOAA. The grop alleges that the settlement was negotiated behind closed doors, and the group was not allowed to participate in the negotiation process, despite the fact that the settlement purports to extinguish the group's CERCLA contribution rights against the Purchasers. The group is represented in the Debtor's cases by Robert N. Michaelson, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP in New York, and William H. Hyatt, Jr., Esq., Emily L. Won, Esq., and Karyllan Dodson Mack, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP in Newark, New Jersey. About Marcal Paper Mills Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- is a privately-held, fourth generation family business. Founded in 1932, it employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The company produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from- home use in hotels, restaurants, hospitals, offices and factories. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. The Debtors selected Logan and Company Inc. as claims agent. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor disclosed total assets of $178,626,436 and total debts of $178,890,725. MASTR ASSET: S&P Puts Default Ratings on Four Certificate Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of mortgage pass-through certificates from MASTR Asset Backed Securities Trust's series 2006-HE1, 2006-HE3, 2006-WMC3, and 2006-WMC4 to 'D' from 'CC'. S&P downgraded the classes because as of the May 2008 remittance period, the affected classes had incurred realized losses, as follows (series; class; realized loss): -- 2006-HE1; M-11; $1,538,084.99; -- 2006-HE3; M-11; $2,807,292.25; -- 2006-WMC3; M-8; $1,823,367.83; and -- 2006-WMC4; M-10; $5,263,403.88. Subordination, excess interest, and overcollateralization provide credit support for these transactions. At issuance, the collateral backing these deals consisted of subprime fixed- and adjustable-rate fully amortizing first-lien mortgage loans secured by one- to four-family residential properties. Ratings Lowered MASTR Asset Backed Securities Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-HE1 M-11 D CC 2006-HE3 M-11 D CC 2006-WMC3 M-8 D CC 2006-WMC4 M-10 D CC MERGE HEALTHCARE: Expects $20 Mil. Proceeds from Private Placement ------------------------------------------------------------------ Merge Healthcare Incorporated entered into a securities purchase agreement and related agreements with Merrick RIS, LLC, for a $20 million in financing through a private placement. Pursuant to the terms of the private placement, the company intends to sell: (i) a $15 million senior secured term note due 2010 and 6,800,000 shares of the company's common stock as partial consideration for the term note, and (ii) 14,285,715 shares of the company's common stock at a price per share of $0.35. The private placement was made pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended. The private placement is scheduled to close on or about June 3, 2008, subject to customary closing conditions and the delivery of the shareholder notice. After giving effect to the payment of certain transactions costs, closing fees and the payment of prepaid interest, the net proceeds of the private placement to the company will equal approximately $16.6 million. The term note will bear interest at 13.0% per annum, payable quarterly. The company is required to prepay at the closing the first two interest payments. The principal amount of the term note will be payable in a single installment on the second anniversary date of the closing of the transaction. Merrick may require the Company to redeem the term note in full if a change of control occurs. If the change of control results in the payment of consideration to the company's shareholders equal to or exceeding $1.75 per share, the redemption price of the term note shall be at par. If such consideration is less than $1.75 per share, the redemption premium will be: (i) 120% of par if the change of control occurs within one year of the closing date, or (ii) 118% of par if the change of control occurs anytime thereafter. The term note may also be voluntarily prepaid at 120% of par at any time. The term note contains various operating and financial covenants, including a requirement that the company have positive adjusted EBITDA for the last fiscal quarter of 2008 and cumulatively thereafter through the term of the note. The term note also contains event of default provisions including, but not limited to, failure to pay, breach of financial or operating covenants, and certain events of bankruptcy or insolvency. The term note will be a senior secured obligation and will be senior to the company's existing and future indebtedness. The term note will be secured by all of the Company's United States and Canadian assets. In connection with the private placement, Merrick shall be entitled to designate five persons to replace five of the eleven current directors on the company's Board of Directors, effective immediately upon the closing of the private placement. The company has also agreed that Merrick will continue to have the right to designate five persons to be nominated for election to the Board of Directors in the future, subject to reduction upon a decrease in Merrick's ownership percentage in the company. The company has entered into a registration rights agreement in connection with the private placement pursuant to which it has agreed to register with the Securities and Exchange Commission for public resale the common stock under certain circumstances. The company amended its Rights Agreement so that the private placement and related transactions do not trigger the distribution of rights under the plan. The term note and the shares of the company's common stock to be issued in the private placement will not be registered under the Securities Act, or any state securities laws and once issued may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The term note and shares of the company's common stock are being sold pursuant to an exemption from the registration requirements of the Securities Act afforded by Regulation D of the Securities Act. Resale of the term note and the shares of the company's common stock will be restricted. Securities Class Action Settlement Merge Healthcare also entered into an agreement in principle with the plaintiff in the consolidated securities class action suits filed against Merge Healthcare. The agreement in principle provides for the settlement, release and dismissal of all claims asserted against Merge and the individual defendants in the litigation. In exchange, Merge Healthcare has agreed to a one time cash payment of $3,025,000 to the plaintiff and Merge's primary and one of its excess D&O insurance carriers have agreed to a one time cash payment of $12,975,000 to the plaintiff, for a total of $16 million. The settlement is subject to, among other things, the closing of the financing described above, the drafting and execution of the final settlement documents, and the approval of the settlement by the court. Nasdaq Marketplace Rules Exception In connection with the private placement, the company received from the Nasdaq Listing Qualifications Department an exception from compliance with certain of the Nasdaq Marketplace Rules. The Nasdaq's Marketplace Rules require, among other things, listed companies to obtain shareholder approval prior to the sale or issuance of common stock in connection with a transaction: (i) other than a public offering, involving the sale, issuance or potential issuance by a listed company of common stock equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock and (ii) that would result in a change in control of the listed company under the Nasdaq rules. However, it is possible to obtain an exception to these requirements if a listed company is in financial distress. Due to its immediate cash concerns, the Company determined that delaying the transaction in order to seek shareholder approval would jeopardize its financial viability. As a result, the company requested and received a waiver from the shareholder approval rules from the Nasdaq's Listing Qualifications Department in order to proceed with the transaction without receipt of prior shareholder approval. The Audit Committee of the Board of Directors expressly authorized the company to obtain and rely on this exception under the Nasdaq rules. The company is also notifying all of its shareholders of this transaction by mail prior to the issuance of the common stock. Commenting on the financing and the agreement in principle, the Company's President and Chief Executive Officer, Mr. Rardin, stated, "We are pleased that Merrick has partnered with the Company and provided this financing package. The financing should provide us with the necessary liquidity as we continue our attempts to grow our revenues and align expenses with the revenues of the business and regain our position as a growing and profitable provider of healthcare diagnostic imaging software and services. This financing combined with the ongoing cost reduction plans that started with the February restructuring and the refocusing of the business on the North America RIS-PACS and teleradiology markets and the Cedara OEM business allows the company to focus on its core strengths. Additionally, we look forward to the strategic advice and counsel Merrick will provide to the Company as we move forward." Mr. Rardin further stated "The agreement in principle to settle the securities class action is another significant step forward for Merge Healthcare, especially when coupled with the previously announced agreement in principle to settle the Company's derivative action. We are excited that we can now focus on the go forward strategy of Merge Healthcare." About Merge Healthcare Headquartered in Milwaukee, Wisconsin, Merge Healthcare Inc. (Nasdaq: MRGE; TSX: MRG) -- http://www.mergehealthcare.com/-- is a developer of medical imaging and clinical software applications and developmental tools. The company develops medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. Possible Bankruptcy As reported in the Troubled Company Reporter on May 16, 2008, if adequate funds are not available or are not available on acceptable terms, the company will likely not be able to fund its new teleradiology business, take advantage of unanticipated opportunities, develop or enhance services or products, respond to competitive pressures, or continue as a going concern beyond June 30, 2008, and may have to seek bankruptcy protection. Going Concern Disclaimer As reported in the Troubled Company Reporter on April 29, 2008, KPMG LLP in Chicago expressed substantial doubt about Merge Healthcare Incorporated's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and negative cash flows. The company says it has generated losses from operations over the past nine consecutive quarters and the company currently has no credit facility. As a result, the company is currently completely dependent on available cash and operating cash flow to meet its capital needs. MIDNIGHT PROPERTIES: Files List of Largest Unsecured Creditors -------------------------------------------------------------- Midnight Properties LLC filed with the U.S. Bankruptcy Court for the Northern District of Alabama a list of its largest unsecured creditors, disclosing: Creditor Claim Amount -------- ------------ Gulf Coast Community Bank $580,500 40 North Palafox Street Pnesacola, FL 32502 Peoples Bank $569,600 811 Second Avenue Southwest Secured Value Cullman, AL 35055 $1,200,000 Pinnacle Bank $479,863 PO Box 1388 Secured Value Jasper, AL 35502 $1,900,000 AB&T National Bank $477,443 PO Box 5737 Secured Value Dothan, AL 36302 $975,000 Merchants Bank (LOC) $462,980 900 Second Avenue Southwest Cullman, AL 35055 Bancorp South $320,000 PO Box 789 Tupelo, MS 38802 Exchange Bank $272,655 Merchants Bank $185,380 SunSouth Bank $111,908 Secured Value $425,000 Becker & Poliakoff $35,240 Windemere Condominiums $32,870 The Continental Group $18,710 Beach Club Parcel 5 $17,370 Covenant Consulting Group LLC $12,830 Bella Vita Condominiums $12,480 Mariner Pass Owners Association $11,270 Portofino Tower One HOA $11,260 Beach Club Parcel 6 $10,105 Portofino Master HOA $3,780 Smart Resort Co LLC $3,200 Cullman, Alabama-based Midnight Properties LLC and its affiliates -- http://www.midnightproperties.com/-- are property investment companies that specialize in beach front condominiums and homes located throughout the Alabama Gulf Coast and Florida panhandle. The company and three affiliates, Joseph H. Canaday, Jr. aka Josh Canaday, Edward A. Canaday, and Michael M. Knight, filed for chapter 11 protection on April 15, 2008 (Bankr. N.D. Ala. Case Nos. 08-81143 through 08-81146). Judge Jack Caddell presides in the case. Garland C. Hall, III, Esq., at Chenault, Hammond & Hall represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed assets and debts of between $10 million and $50 million. NANO SUPERLATTICE: Recurring Losses Cue VB&T's Going Concern Doubt ------------------------------------------------------------------ New York-based VB&T Certified Public Accountants, PLLC, raised substantial doubt on the ability of Nano Superlattice Technology, Inc. to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's recurring losses in the current and prior years, which are mainly due to the costs of developing and perfecting the proprietary new nano-coating technology. "As of Dec. 31, 2007, the company's current assets exceeded its current liabilities by about $957,297. The company has been incurring losses since it began business in 2004. These losses and the fact that the company has received financing from its President, which could be discontinued at any time, leaves doubt about its ability to continue as a going concern," the management stated. The management added that the company has positive cash flow from the sale of computer peripheral and consumer electronics, but this has been offset by the equipment purchases and direct costs related to the nano coating technology. The company may raise additional funding through borrowings from financial institutions and defer the amounts due under the credit line. The company posted a net loss of $120,822 on net sales of $9,429,345 for the year ended Dec. 31, 2007, as compared with a net loss of $193,280 on net sales of $9,469,590in the prior year. At Dec. 31, 2007, the company's balance sheet showed $13,779,679 in total assets, $9,017,723 in total liabilities, and $4,761,956 in total stockholders' equity. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2bec About Nano Superlattice Headquartered in Taiwan, Nano Superlattice Technology Inc. (OTC BB: NSLT) -- formerly Wigwam Development Inc., was incorporated on July 20, 1998, under the laws of the State of Delaware. The company owns 100% of the capital stock of Superlattice Technology Inc. -- BVI, a British Virgin Islands company. Superlattice Technology Inc. -- BVI owns 98.1% of the capital stock of Nano Superlattice Technology Inc. -- Taiwan. The company develops and produces nano-scale coating technology to be applied to various mechanical tools and metal surfaces for sales to manufacturers in the computer, mechanical and molding industries. Nanotechnology, or molecular manufacturing, is a technological process designed to allow products to be manufactured lighter, stronger, smarter, cheaper, cleaner and more precisely than they would otherwise be. NEFF CORP: Weak Performance Prompts Moody's to Junk Ratings ----------------------------------------------------------- Moody's Investors Service downgraded the ratings of Neff Corp. - corporate family rating to Caa1 from B3; probability of default to Caa1 from B3; second lien, senior secured bank credit facility to Caa1 from B3; and senior unsecured notes to Caa3 from Caa2. These rating actions result from the weaker than expected operating performance following the leveraged acquisition of Neff by Lightyear Capital LLC, which closed on May 31, 2007. The rating outlook remains negative. Neff's Caa1 corporate family rating reflects the deterioration in key credit metrics resulting from lower than expected equipment rental rates in its major regional markets of Florida and California and reduced demand for earth moving equipment. Neff's current operating performance is below Moody's expectation following its acquisition by Lightyear, resulting in a highly leveraged capital structure. Key credit metrics have weakened over the last twelve months through March 2008 relative to the company's pro forma 2007 results: debt/EBITDA increasing to 6.0x from 4.6x; EBITA/avg. assets dropping to 5.2% from 13%; and EBITDA/interest expense contracting to 0.5x from 2.5x (as adjusted per Moody's Methodology). Neff continues to face important operational and financial challenges over the intermediate term. These challenges include: 1) managing through a downturn in the equipment rental cycle which is hurting operating profits; 2) the continued need to fund and maintain its rental fleet; and 3) weakened credit metrics. The company's highly leveraged capital structure constrains financial flexibility as the company manages through the downturn in rental demand. Neff' is now positioned as one of the more leveraged company in Moody's universe of rated equipment rental companies. Notwithstanding planned fleet reduction to repay debt, Moody's believes that Neff's operating performance relative to its capital structure is consistent with the Caa1 rating category. Moody's acknowledges the relative strength of resale prices of used equipment, primarily due to foreign demand. However, the rating also reflects the possibility of other equipment rental companies ramping-up used equipment sales, leading to price softening. The negative outlook reflects a continuation of the difficult operating environment in Neff's primary markets of Florida and California. The ratings for the second lien term loan and unsecured notes reflect the overall probability of default of the company, to which Moody's assigns a PDR of Caa1. The Caa1 rating assigned to the $290 million second lien, senior secured bank credit facility (rated the same as the corporate family rating) reflects a junior claim relative to the first lien, ABL revolving credit facility. The second lien term loan benefits from a priority of payment over the senior unsecured notes in a liquidation scenario. The Caa3 rating assigned to the $230 million senior unsecured notes (rated two notches below the corporate family rating) reflects its junior priority of payment relative to the company's revolving credit facility and second lien term loan. These ratings/assessments were affected by this action: * Corporate family rating downgraded to Caa1 from B3; * Probability of default lowered to Caa1 from B3; * $290 million second lien, senior secured bank credit facility due 2014 downgraded to Caa1 (LGD4, 56%) from B3 (LGD4, 58%); and, * $230 million 10.0% Guaranteed senior unsecured notes due 2015 downgraded to Caa3 (LGD5, 88%) from Caa2 (LGD5, 88%). The company's speculative grade liquidity rating remains unchanged at SGL-3. Neff Corp. is a multi-regional equipment provider with 66 branches in 14 states predominately throughout the mid-Atlantic, southern and western regions of the United States. Revenues for the twelve months ended March 2008 totaled about $318 million. NEXCEN BRANDS: Amends Bank Loan Facility; Sees Cash Deficiency -------------------------------------------------------------- NexCen Brands Inc. amended its existing bank credit facility with BTMU Capital Corporation in January 2008 in connection with its acquisition of Great American Cookies. As reported in a Form 8-K filed on Jan. 29, 2008, with the Securities and Exchange Commission, the amendments will allow the company to borrow an additional $70 million to finance a portion of the purchase price for the Cookie Acquisition. The total amount outstanding under the facility as of March 31, 2008, was $178 million. The January 2008 amendments were effected through a series of documents, including an Omnibus Amendment. Security Agreement Supplement In addition, company subsidiaries involved in the Cookie Acquisition entered into a Security Agreement Supplement, dated Jan. 29, 2008, which amended the Security Agreement that was signed when the bank credit facility was originally established in March 2007. A. Changes in Lockbox Accounts In light of first quarter 2008 performance and revised, preliminary cash flow forecasts prepared in May 2008 following the hiring of a new chief financial officer in late March 2008, management focused attention on terms of the amendments that had not been discussed in the company's prior public filings. Specifically, these terms included various changes to the priority of cash distributions from "lockbox accounts" established in connection with the bank credit facility, as well as an accelerated redemption feature applicable to $35 million of the $70 million that was borrowed in January 2008 in connection with the Cookie Acquisition. This $35 million borrowing is also referred to as the "Factory Note" because it is secured by the cookie dough factory that was acquired in the Cookie Acquisition. Pursuant to the bank credit facility, substantially all of the revenues earned by the company's franchise and brand management businesses are collected in "lockbox accounts" and are disbursed on a periodic basis pursuant to the terms of the Security Agreement (as it has been supplemented since March 2007). The distributions to the company were intended to cover ordinary course operating expenses of the company's franchise and brand management businesses. The January 2008 amendments subordinated a portion of these distributions to the company to the payment of certain amounts to the bank lenders, including accrued but unpaid interest and required principal amortization payments under the bank credit facility. B. Changes in Cash Distribution Priorities The January 2008 amendments provided that after payment of this subordinated amount to the company, all remaining collected cash from the company's franchise businesses and the cookie dough factory not needed to operate those businesses (and without regard to corporate overhead or expenses of the company's brand management businesses) would be applied to reduce the then- outstanding principal amount of the Factory Note until the Factory Note is repaid in full. These changes to the cash distribution priorities in the bank credit facility were intended to provide the lenders with greater assurance of receiving regular interest and principal amortization payments and to accelerate repayment of the Factory Note, which matures in January 2013. In addition, they have the effect of substantially reducing the amount of operating cash flow from the company's franchise businesses and the cookie dough factory that will be available to the Company prior to repayment of the Factory Note for payment of corporate overhead and other expenses not directly incurred by the company's franchise businesses and the cookie dough factory. C. Reduction of Outstanding Principal Amount The Security Agreement Supplement also provides that if the outstanding amount of the Factory Note is more than $5 million on Oct. 17, 2008, a principal payment will be required to reduce the outstanding principal amount to $5 million. The Security Agreement Supplement gives the lender the option to extend this accelerated principal repayment obligation to July 2009. As of March 31, 2008, the outstanding principal amount of the Factory Note was approximately $33 million. Likely Cash Shortfall Based on preliminary projections, the company expects that without changes to the frequency of the lockbox account disbursements under its bank credit facility or other measures that might enhance its liquidity, the company could face a cash shortfall in mid- to late-June 2008 and again in August 2008. Based on these projections, which include the company making its scheduled debt service payments, the company estimates that the maximum amount of the cash deficiency could be approximately $7 million to $10 million through Oct. 17, 2008, prior to the principal repayment on the Factory Note. The company also will need additional cash to make the required principal payment on the Factory Note on Oct. 17, 2008, and the company currently estimates that the payment will be approximately $21 million. The company is continuing to review and refine its cash forecasts, and the amounts outlined above are subject to changes, uncertainties and risks, including the uncertainties of future events. About NexCen Brands Nexcen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/ -- 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 Athlete's Foot and Shoebox New York -- sell retail footwear and accessories. Five are quick-service restaurants -- Marble Slab Creamery, MaggieMoo's, 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. The 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. * * * A. Substantial Doubt As reported by the Troubled Company Reporter on May 21, 2008, 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, that this substantial doubt also may have existed at the time the company filed its 2007 10-K. The audit committee of the company's 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 KPMG's audit report dated March 20, 2008, or its report dated March 20, 2008 on the effectiveness of internal control over financial reporting as of Dec. 31, 2007, as contained in the company's 2007 10-K. B. Strategic Alternative Review NexCen also announced that it 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 company's lender. In addition, the company will take immediate steps to reduce operating expenses. NEXCEN BRANDS: Gets Nasdaq Delisting Notice on 10Q Filing Delay --------------------------------------------------------------- NexCen Brands Inc. received a Nasdaq Staff Determination letter dated May 20, 2008, from the Nasdaq Stock Market stating that the company is not in compliance with the filing requirements for continued listing as set forth in Marketplace Rule 4310(c)(14) and, therefore, its common stock is subject to delisting. The letter was issued in accordance with Nasdaq procedures due to the delayed filing of the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 with the Securities and Exchange Commission. In response to the letter, the company will request a hearing before the Nasdaq Listing Qualifications Panel. Pending a decision by the Panel, the company's common stock will remain listed on The Nasdaq Stock Market. However, there can be no assurance that the Panel will grant the company's request for continued listing. On May 21, 2008, the Troubled Company Reporter said that the company would 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 company's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2007. The company said it is committed to resolving these issues as quickly as possible. Todd Slater at Lazard Capital Markets LLC said it will withdraw coverage of NexCen stock after after that the company's disclosure of "serious concerns," Meg Tirell of Bloomberg News relates. About NexCen Brands Nexcen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/ -- 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 Athlete's Foot and Shoebox New York -- sell retail footwear and accessories. Five are quick-service restaurants -- Marble Slab Creamery, MaggieMoo's, 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. The 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. * * * A. Substantial Doubt As reported by the Troubled Company Reporter on May 21, 2008, 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, that this substantial doubt also may have existed at the time the company filed its 2007 10-K. The audit committee of the company's 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 KPMG's audit report dated March 20, 2008, or its report dated March 20, 2008 on the effectiveness of internal control over financial reporting as of Dec. 31, 2007, as contained in the company's 2007 10-K. B. Strategic Alternative Review NexCen also announced that it 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 company's lender. In addition, the company will take immediate steps to reduce operating expenses. NEXCEN BRANDS: Denies Likely Business Collapse and Bankruptcy ------------------------------------------------------------- William Walkowiak, NexCen Brands Inc. vice president of investor relations said that the company is not likely to go out of business, Bloomberg News' Meg Tirrell relates. Mr. Walkowiak added that a chapter 11 bankruptcy filing isn't possible, the report says. This response came after the company disclosed in a filing with the Securities and Exchange Commission that NexCen could face a cash shortfall in mid- to late-June 2008 and again in August 2008. The company estimated that the maximum amount of the cash deficiency could be approximately $7 million to $10 million through Oct. 17, 2008. The company also revealed an amended to its bank credit facility that, among others, requires the company to reduce its outstanding principal amount to $5 million if the outstanding amount of a $35 million "Factory Note" is more than $5 million on Oct. 17, 2008. A story on the bank credit facility amendment and likely cash shortfall is reported in today's Troubled Company Reporter. Today's TCR also carries news on NexCen's receipt of delisting notice from Nasdaq. About NexCen Brands Nexcen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/ -- 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 Athlete's Foot and Shoebox New York -- sell retail footwear and accessories. Five are quick-service restaurants -- Marble Slab Creamery, MaggieMoo's, 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. The 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. * * * A. Substantial Doubt As reported by the Troubled Company Reporter on May 21, 2008, 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, that this substantial doubt also may have existed at the time the company filed its 2007 10-K. The audit committee of the company's 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 KPMG's audit report dated March 20, 2008, or its report dated March 20, 2008 on the effectiveness of internal control over financial reporting as of Dec. 31, 2007, as contained in the company's 2007 10-K. B. Strategic Alternative Review NexCen also announced that it 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 company's lender. In addition, the company will take immediate steps to reduce operating expenses. NEXCEN BRANDS: Roy Jacobs Starts Probe on Likely SEC Violations --------------------------------------------------------------- Roy Jacobs & Associates is investigating possible securities violations relating a disclosure by NexCen Brands Inc. that revealed that an amended loan agreement entered into in January 2008, which provided funding for the company's acquisition of Great American Cookies. That agreement reportedly contained a provision requiring that the company repay $30 million of the borrowing by Oct. 17, 2008. According to Roy Jacobs, this was not revealed in disclosures made on Jan. 29, 2008, announcing the amended loan agreement, or in the company's Annual Report on Form 10-K dated March 20, 2008. A story on the bank credit facility amendment and likely cash shortfall is reported in today's Troubled Company Reporter. In addition, Roy Jacobs pointed to the company's belief that a "going concern" warning is appropriate, viz. that there is substantial doubt about the company's ability to continue as a going concern, and that this substantial doubt may have existed at the time of the filing of the company's Form 10-K. Upon announcement of this completely unforeseen adverse news, NexCen's shares dropped over 76% percent in heavy trading, wiping out the majority of the shareholders' value, Roy Jacobs said. Roy Jacobs is calling investors who purchased NexCen stock from Jan. 30, 2008 through and including May 16, 2008, and are interested in discussing investor rights, to contact Roy L. Jacobs. Mr. Jacobs assured that he will personally speak with investors at no cost or obligation. About NexCen Brands Nexcen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/ -- 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 Athlete's Foot and Shoebox New York -- sell retail footwear and accessories. Five are quick-service restaurants -- Marble Slab Creamery, MaggieMoo's, 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. The 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. * * * A. Substantial Doubt As reported by the Troubled Company Reporter on May 21, 2008, 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, that this substantial doubt also may have existed at the time the company filed its 2007 10-K. The audit committee of the company's 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 KPMG's audit report dated March 20, 2008, or its report dated March 20, 2008 on the effectiveness of internal control over financial reporting as of Dec. 31, 2007, as contained in the company's 2007 10-K. B. Strategic Alternative Review NexCen also announced that it 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 company's lender. In addition, the company will take immediate steps to reduce operating expenses. NORTEK INC: Completes $750MM Offering of 10% Senior Secured Notes ----------------------------------------------------------------- Nortek Inc. completed the private placement of $750 million of 10% Senior Secured Notes due 2013. The gross proceeds is expected to be $742.2 million. The notes were issued and sold in a private Rule 144A offering to institutional investors. The company has also entered into a new senior secured asset-based revolving credit facility which provides for revolving credit financing of up to $350 million, subject to borrowing base availability, with a maturity of five years, including both a letter of credit and swingline loan sub-facility. In addition, until the ABL Facility collateral agent has completed a collateral audit, availability under the ABL Facility will initially be limited to $175 million. Nortek intends to use the net proceeds from the Notes offering, together with proceeds of borrowings under the ABL Facility, to repay all of the outstanding indebtedness and accrued interest under its existing senior secured credit facility. "We are pleased with the positive response to the Notes offering by investors and the ABL Facility," Richard L. Bready, Nortek's chairman and chief executive officer, said. About Nortek Inc. Headquartered in Providence, Rhode Island, Nortek Inc. -- http://www.nortek-inc.com/-- is a manufacturer of innovative, branded residential and commercial ventilation, HVAC and home technology convenience and security products. Nortek offers products including: range hoods, bath fans, indoor air quality systems, medicine cabinets and central vacuums, heating and air conditioning systems, and home technology offerings, including audio, video, access control, security and other products. Nortek is a wholly owned subsidiary of Nortek Holdings Inc., which is a wholly owned subsidiary of NTK Holdings Inc. NORTEK INC: S&P Holds 'B-' Rating After Completed Refinancing ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'B-' corporate credit rating, on Nortek Inc. and its parent, NTK Holdings Inc. At the same time, S&P removed the ratings from CreditWatch where they were placed with negative implications on April 21, 2008. In addition, S&P withdrew its ratings on the company's $900 million senior credit facilities, which were repaid with proceeds from Nortek's recent $750 million 10% senior secured note issue and borrowings under its new $350 million asset-based revolving credit facility. The outlook is negative. "The affirmation follows completion of the refinancing, which helps to mitigate our concerns regarding the company's near-term liquidity as the new notes and ABL provide for looser covenants," said Standard & Poor's credit analyst Pamela Rice. Nortek was facing financial covenants under the senior credit facilities that tightened over the next 12 months. Nevertheless, we expect Nortek's financial profile to remain weak for at least the next several quarters because of the challenging operating conditions in its new construction and remodeling markets. The ratings on Providence, Rhode Island-based Nortek reflect its heavy debt burden, very aggressive financial policies, competitive, cyclical markets, and ongoing cost pressures. The ratings also reflect Nortek's product, customer, end market, and geographic diversity and its ability to generate relatively sizable free cash flow. NRG ENERGY: Unsolicited Calpine Buyout Cues Fitch's Evolving Watch ------------------------------------------------------------------ Fitch Ratings has placed all its ratings of NRG Energy Inc., including the Issuer Default Rating of 'B', on Rating Watch Evolving following NRG's unsolicited offer to acquire Calpine Corp (CPN, not rated by Fitch) in a stock-for-stock transaction. Evolving signifies that Fitch may upgrade, downgrade or affirm NRG's ratings pending future information and analysis. Ratings placed on Rating Watch Evolving: -- IDR at 'B'; -- Senior secured term loan B at 'BB/RR1'; -- Senior secured revolving credit facility at 'BB/RR1'; -- Senior notes at 'B+/RR3'; -- Convertible preferred stock at 'CCC+/RR6'. Approximately $8.7 billion of debt is affected. The Watch Evolving status reflects both the unresolved nature of the offer and, should the transaction proceed, the uncertainty of the acquisition's impact on NRG's credit profile. Concerns and uncertainties include CPN's response to the unsolicited offer, the possibility of higher competing offers, and the absence of final terms and pricing. Fitch expects to resolve this Rating Watch when and if the transaction occurs. As more details about the combined company's cash flows, generation fleet, debt and capital structure emerge, Fitch may revise the Watch status. Leverage may still remain a ratings concern even in the face of an all-stock transaction given likely earnings dilution. A combined NRG/CPN would have roughly 45,000 MWs of generating capacity located in the South Central U.S., Northeastern U.S., Texas and California. The combined company would be the largest competitive generator in the world. Fitch revised NRG's Rating Outlook to Positive in December 2007 based on its improving credit profile and favorable fundamentals for the competitive generator sector. Should the transaction not be consummated, NRG's Outlook would likely return to Positive. NRG ENERGY: Calpine Buyout Offer Cues S&P's Negative CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on NRG Energy Inc. on CreditWatch with negative implications and its 'B' corporate credit rating on Calpine Corp. on CreditWatch with positive implications. These rating actions follow the disclosure that NRG's board, via a private letter to the Calpine board, made an all-stock offer to purchase 100% of the outstanding shares of Calpine at an exchange ratio of 0.534 shares of NRG for each share of Calpine. It is not clear how long it would take before a formal transaction is agreed upon, if at all. However, NRG's letter to Calpine's board says that NRG anticipates it will be able to conduct its further necessary confirmatory due diligence within a three-week period. "Although formal discussions between the two companies are just commencing and the terms of the deal could change, based on the current all-stock proposal, we think that NRG's acquisition of a much less hedged and more leveraged Calpine would likely result in the combined company being rated either 'B+' or 'B'," said Standard & Poor's credit analyst Swami Venkataraman. "However, the transaction has both strengths and weaknesses that may potentially drive ratings outside this range, although we consider that an unlikely outcome at this stage." The most important determinant of the final rating outcome is the deal's final financing structure and S&P's view of the financial performance of the combined company. The all-stock transaction structure currently proposed is clearly the least detrimental to NRG's credit quality, but the final transaction structure is uncertain. In its press release, Harbinger Capital called the offer a "good starting point." If NRG agrees to a significantly higher valuation for Calpine, the dilution implied by an all-stock transaction may be unacceptable to NRG's shareholders and a final deal may potentially involve incremental debt. Under the terms of Calpine's exit financing, change of control is an event of default. Thus, an acquisition by NRG could require refinancing or repricing of Calpine's debt, which was committed before the credit crunch and carries attractive pricing compared to current market conditions. An increased cost of borrowing of about $6 billion of Calpine's emergence financing would be a credit negative. OAKLAND VIEW: Section 341(a) Meeting Scheduled for June 12 ---------------------------------------------------------- The United States Trustee for Region 15 will convene a meeting of creditors of Oakland View LLC at 1:00 p.m., on June 12, 2008, at Room 105, 21051 Warner Center Lane in Woodland Hills, California. 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. Valencia, California-based Oakland View LLC was established to purchase and develop a 79.29 acre tract in Vasquez Canyon in Santa Clarita, California. The property has 63 lots suitable for residential development. The company filed chapter 11 on April 16, 2008 (Bankr. C.D. Calif. Case No. 08-12383) after it encountered financial problems and issues with its lenders. Judge Kathleen Thompson presides the case. The Law Offices of T. Edward Malpass represents the Debtor in its restructuring efforts. The Debtor listed assets between $10 million and $50 million and debts between $1 million and $10 million when it filed for bankruptcy. OAKLAND VIEW: Junior Creditors Ask Equal Relief with Cathay Bank ---------------------------------------------------------------- The junior lienholders of Oakland View LLC filed with the U.S. Bankruptcy Court for the Central District of California a response to Cathay Bank's motion to dismiss the chapter 11 case of Oakland View LLC with a 180-day refiling prohibition. The junior lienholders are Lie Der Chou, Su-Chin Chen Tsou, Eric P.H. Liu, Ernest Tham, Ya Xian Zhu, Sarah Shum, Jason Woo, Tina Lee, and Global Investment Group Inc. The junior lienholders related to the Court that Cathay Bank claims to hold beneficial interest under a first position deed of trust against a real property which consist of a 63-lot (79.29 acres), residential subdivision commonly known as Western Terminus of Meadstone Road, Forest Park in Santa Clarita, California. The Cathay Trust Deed secured an underlying obligation of $3,300,000, and was recorded against the property on Aug. 5, 2005. The junior lienholders, in turn, hold beneficial interests under certain deeds of trust against the property, particularly: a. certain deed of trust dated March 7, 2006, in favor of Eric P.H. Liu, Ernest Tham, Lie Der Chou, and Ya Xian Zhu, which was first recorded against the property on March 14, 2006. That trust deed secures an underlying obligation of $1,200,000. By way of assignment, Sarah Shum and Jason Woo acquired certain beneficial interests under that trust deed; b. certain deed of trust dated May 2, 2006, in favor of Eric P.H. Liu was recorded against the property on May 15, 2006. That trust deed secures an underlying obligation of $200,000; c. certain deed of trust dated Aug. 4, 2006, in favor of Global Investment Group Inc., which was recorded against the property on Aug. 11, 2006. That trust deed secures an underlying obligation of $400,000, which is cross- collateralized by a deed of trust against a real property commonly known as 19-lot residential subdivision on the south side of Southern Oaks Drive, at the southern terminus of Old Stone Way in Stevenson Ranch, California. d. certain deed of trust dated Sept. 4, 2006, in favor of Su-Chin Chen Tsou, recorded against the property on Sept. 8, 2006. That trust deed secures an underlying obligation of $350,000, which is cross-collateralized by a deed of trust against the Oakridge Property. By way of assignment, Tina Lee acquired a beneficial interest under that trust deed; e. certain deed of trust dated July 6, 2007, in favor of Ya Xian Zhu, which was recorded against the property on July 11, 2007. The trust deed secures an underlying obligation in the amount of $105,000. By way of assignment, a certain declarant acquired a beneficial interest under that trust deed. Notices of Default On Dec. 21, 2007, Lie Der Chou issued a notice of default against the property in connection with defaults under the July 6, 2007 trust deed. A nonjudicial foreclosure sale was subsequently scheduled for April 17, 2008. However, Oakland View commenced a bankruptcy case on April 16, 2008, in order to stay the sale. On Feb. 26, 2008, Cathay Bank issued a notice of default against the property in connection with defaults under the Cathay Trust Deed. Junior lienholders were informed that if Cathay Bank is granted the relief requested in the motion, the bank intends to proceed with its nonjudicial foreclosure sale as expeditiously as possible. Junior Lienholders' Request The junior lienholders said that if the Court grants Cathay Bank relief it requested in the motion, that relief should be granted in its entirety as to the junior lienholders as well. This is to, among other things, prevent Cathay Bank from obtaining unfair advantage against the junior lienholders in connection with their respective pending nonjudicial foreclosure sales. According to the junior lienholders, granting relief only to Cathay Bank and allowing it to proceed to sale first would be unfair and inequitable to them. Wright Finlay & Zak LLP is counsel to the junior lienholders. About Oakland View Valencia, California-based Oakland View LLC was established to purchase and develop a 79.29 acre tract in Vasquez Canyon in Santa Clarita, California. The property has 63 lots suitable for residential development. The company filed chapter 11 on April 16, 2008 (Bankr. C.D. Calif. Case No. 08-12383) after it encountered financial problems and issues with its lenders. Judge Kathleen Thompson presides the case. The Law Offices of T. Edward Malpass represents the Debtor in its restructuring efforts. The Debtor listed assets between $10 million and $50 million and debts between $1 million and $10 million when it filed for bankruptcy. OPENWAVE SYSTEMS: Receives Delisting Notice from Nasdaq ------------------------------------------------------- Openwave Systems Inc. said that as a matter of NASDAQ standard procedure, and due to the previously announced delay in filing its Form 10-Q for the quarter ended March 31, 2008, it received on May 20, 2008, a NASDAQ Staff Determination indicating that the Company has failed to comply with the filing requirement for continued listing set forth in NASDAQ Marketplace Rule 4310(c) (14), and that its securities are, therefore, subject to delisting from the NASDAQ Global Select Market. This filing requirement for continued listing mandates the Company to make on a timely basis all filings with the Securities and Exchange Commission, as required by the Securities Exchange Act of 1934, as amended. As announced in a press release and disclosed in a Form 12b-25 on May 12, 2008, the Company is unable to file its Form 10-Q for the quarter ended March 31, 2008 pending the conclusion of an internal investigation being conducted under the direction of the Audit Committee of the Board of Directors, with the assistance of independent counsel, into allegations made by an employee relating to attempts by certain members of senior management to manage financial results. To date, the investigation has not reached any conclusion that the company's previously issued financial statements and earnings releases were materially misleading. The Company intends to timely request a hearing before the NASDAQ Listing Qualifications Panel to appeal the Staff Determination, and the delisting action will be automatically stayed pending the Panel's decision. The Company's stock will continue to be listed on NASDAQ until the Panel issues its decision and during any extension that is allowed by the Panel. There can be no assurance that the Panel will grant the Company's request for continued listing. About Openwave Headquartered in Redwood City, California, Openwave Systems Inc. (Nasdaq:OPWV) -- http://www.openwave.com/-- is an independent provider of software products and services for the communications industry. The Company provides its customers with software and services that enable them to launch revenue generating content and communications services, such as messaging, gateway, client and location businesses. Openwave has two primary categories of products: server software and client software. Server software is integrated at the edge and core of operator networks to enable access to content and media, messaging and location. Client software is embedded in mobile phones that allow handset manufacturers and operators to create and render service interfaces for mobile browsing, messaging, and content services. PAPPAS TELECASTING: Wants Access to Lenders' Cash Collateral ------------------------------------------------------------ Pappas Telecasting Inc. and its debtor-affiliates asked permission from the U.S. Bankruptcy Court for the District of Delaware to access their prepetition lenders' cash collateral. The Debtors related that obtaining access to the cash collateral will help them preserve and maintain the going-concern value of their assets and sell them in an orderly manner and return them to creditors. A. Prepetition Credit Agreement Substantially all of the Debtors' assets are subject to security interests and liens in favor of Fortress Credit Corp., as agent for the prepetition lenders. Virtually all of the Debtors' cash constitutes the prepetition lenders' cash collateral. The Debtors, Fortress, and prepetition lenders entered into a credit agreement dated March 1, 2006, as amended and restated, which established term loans to provide working capital and for other purposes to the Debtors. Since the bankruptcy filing, the Debtors are liable to the agent and prepetition lenders under the credit agreement in the amount of $303,574,665, plus accrued and unpaid interest and fees. B. Inability to Pay and Asset Sale The Debtors are presently unable to pay their debts and have determined that they are unlikely to do so in the future. Hence, the Debtors commenced the bankruptcy case in order to sell substantially all of their assets on a going concern basis as soon as practicable and wind down their business. The Debtors believe that the immediate sale of their businesses is critical to preserving their value for the benefit of creditors and stakeholders. In 2007, the Debtors related that they began marketing and sale process of their assets. The Debtors intend to finalize the sale process during the pendency of their chapter 11 case. About Pappas Telecasting Fresno, California-based Pappas Telecasting Inc., aka KMPH, aka KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and its affiliates are broadcasting companies. Founded in 1971, their stations reach over 15% of all U.S. households and over 32% of Hispanic households. Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008 (Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the Debtors in their restructuring efforts. Administar Services Group LLC is the Debtors' notice and claims agent. The Debtors listed $100 million to $500 million in assets and debts when they filed for bankruptcy. Harry J. Pappas, the CEO and chairman of Pappas Telecasting and its debtor-affiliates, was the subject of a petition for Chapter 7 liquidation filed by creditors before the U.S. Bankruptcy Court for the District of Delaware. Mr. Pappas' wife Stella was also subject of the involuntary petition. The petitioning creditors are Fortress Credit Opportunites I LP, Fortress Credit Opportunites II LP, Ableco Finance LLC and Silver Oak Capital. John H. Knight, Esq., at Richards Layton & Finger, represents the Fortress Creditors. Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington, represents Ableco and Silver Oak. PAPPAS TELECASTING: Wants to Use Chairman's $2 Million DIP Fund --------------------------------------------------------------- Pappas Telecasting Inc. and its debtor-affiliates asked permission from the U.S. Bankruptcy Court for the District of Delaware to access $2,000,000 debtor-in-possession fund from Harry J. Pappas. The Debtors said that their prepetition lenders, headed by Fortress Credit Corp., would not agree to provide DIP financing on terms reasonably acceptable to the Debtors. Mr. Pappas, the Debtors said, agreed to advance a new loan to them on a junior, non-priming secured basis, until Nov. 7, 2008, which may be extended. The Debtors already asked the Court for permission to use prepetition lenders' cash collateral. A story on that is in today's Troubled Company Reporter. Mr. Pappas' DIP facility bears an annual interest rate of LIBOR, plus 5%. If an event of default occurs, the interest rate would increase by 2%. Inability to Pay and Asset Sale The Debtors are presently unable to pay their debts and have determined that they are unlikely to do so in the future. Hence, the Debtors commenced the bankruptcy case in order to sell substantially all of their assets on a going concern basis as soon as practicable and wind down their business. The Debtors believe that the immediate sale of their businesses is critical to preserving their value for the benefit of creditors and stakeholders. In 2007, the Debtors related that they began marketing and sale process of their assets. The Debtors intend to finalize the sale process during the pendency of their chapter 11 case. About Pappas Telecasting Fresno, California-based Pappas Telecasting Inc., aka KMPH, aka KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and its affiliates are broadcasting companies. Founded in 1971, their stations reach over 15% of all U.S. households and over 32% of Hispanic households. Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008 (Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the Debtors in their restructuring efforts. Administar Services Group LLC is the Debtors' notice and claims agent. The Debtors listed $100 million to $500 million in assets and debts when they filed for bankruptcy. Harry J. Pappas, the CEO and chairman of Pappas Telecasting and its debtor-affiliates, was the subject of a petition for Chapter 7 liquidation filed by creditors before the U.S. Bankruptcy Court for the District of Delaware. Mr. Pappas' wife Stella was also subject of the involuntary petition. The petitioning creditors are Fortress Credit Opportunites I LP, Fortress Credit Opportunites II LP, Ableco Finance LLC and Silver Oak Capital. John H. Knight, Esq., at Richards Layton & Finger, represents the Fortress Creditors. Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington, represents Ableco and Silver Oak. PAPPAS TELECASTING: Can Hire Administar as Claims Agent ------------------------------------------------------- Pappas Telecasting Inc. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Administar Services Group LLC as their claims, noticing, and balloting agent. The Debtors told the Court that it is necessary and in the best interests of their creditors and estates to engage Administar as outside agent to the Bankruptcy Clerk. The firm will, among others, assist in the mailing of the Debtors' disclosure statement, plan, and ballots and in maintaining and tallying ballots in connection with the voting of the plan. The Debtors said that they anticipate hundreds of entities needed to be served with various notices, pleadings, and other documents filed in the case. Adminstar will help expedite the distribution of the notices and relieve the Clerk from the administrative burden of processing the notices. Administar's present hourly rates are $195 to $215 for presidents and senior vice presidents, $135 to $175 for vice presidents and executive consultants, $95 to $135 for senior bankruptcy and bankruptcy consultants, $75 to $95 for senior bankruptcy analysts and bankruptcy analysts, and $35 to $55 for administrative and operations personnel and call center attendants. Prior to the bankruptcy filing, the Debtors paid the firm $25,000 as a deposit for services and expenses rendered. The firm can be reached at: Administar Services Group LLC 8475 Western Way, Suite 110 Jacksonville, FL 32256 http://www.administarllc.com/ About Pappas Telecasting Fresno, California-based Pappas Telecasting Inc., aka KMPH, aka KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and its affiliates are broadcasting companies. Founded in 1971, their stations reach over 15% of all U.S. households and over 32% of Hispanic households. Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008 (Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the Debtors in their restructuring efforts. The Debtors listed $100 million to $500 million in assets and debts when they filed for bankruptcy. Harry J. Pappas, the CEO and chairman of Pappas Telecasting and its debtor-affiliates, was the subject of a petition for Chapter 7 liquidation filed by creditors before the U.S. Bankruptcy Court for the District of Delaware. Mr. Pappas' wife Stella was also subject of the involuntary petition. The petitioning creditors are Fortress Credit Opportunites I LP, Fortress Credit Opportunites II LP, Ableco Finance LLC and Silver Oak Capital. John H. Knight, Esq., at Richards Layton & Finger, represents the Fortress Creditors. Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington, represents Ableco and Silver Oak. PARKER DRILLING: Moody's Upgrades Corporate Family Rating to B1 --------------------------------------------------------------- Moody's Investors Service upgraded Parker Drilling Company's Corporate Family Rating and Probability of Default Rating to B1 from B2. The rating on Parker's 9.625% senior unsecured notes due 2013 remains unchanged at B2 (LGD 4, 55% changed to LGD 4, 62%). The rating outlook is stable. The upgrade of Parker's Corporate Family Rating reflects: (i) the company's track record in maintaining conservative financial policies, including maintaining low leverage metrics, with debt/EBITDA of less than 2.0x sustained over the past two years; (ii) the increased earnings power of the company as a result of its rig upgrade and newbuild program; (iii) the successful expansion and solid performance of its rental tools business; (iv) a relatively improved liquidity profile, primarily reflecting its new upsized revolving credit facility, the settlement of its Kazakhstan tax assessment and its withdrawal from its Saudi Arabian joint venture, which indemnified Parker from any remaining claims related to the surviving business; and (v) an overall favorable outlook for the drilling and services market, with strength in international and U.S. land markets anticipated to help offset relatively weaker conditions in the shallow water U.S. offshore market. The rating on Parker's senior unsecured notes remains unchanged at B2 due to the increase in secured debt in the company's capital structure. The B2 note rating reflects the contractual subordination of the notes to Parker's new senior secured credit facility (unrated), which consists of an $80 million revolver and a delayed draw $50 million term loan. The ratings remained tempered by Parker's relatively small size, its significant exposure to political risk due to its international focus, an aggressive capital spending program, which has outstripped operating cash flow and is expected to continue to be a significant use of cash flow over the near to medium term, and Parker's exposure to periods of low utilization and dayrates, as well as down time between contracts, due to the inherent cyclical nature of the drilling industry and Parker's geographical sprawl. The stable rating outlook assumes that Parker will maintain conservative fiscal and operating policies. The current ratings have minimal flexibility for materially increased leverage. While over the near term Moody's expects that Parker's debt levels to increase in order to partially fund its newbuild program, we expect that the company's financial leverage will not increase materially. Moody's believes there is limited upside at this time for Parker's ratings given the recent rating action, the company's relatively small size, the highly volatile and cyclical nature of its U.S. barge drilling business, the capital intensity of the contract drilling sector, and the inherent business and political risks from its international operations. Materially increased leveraged or significant delays or costs overruns in the company's newbuild program could negatively pressure the ratings. Downgrades: Issuer: Parker Drilling Company * Senior Unsecured Regular Bond/Debenture, Downgraded to LGD4, 62% from LGD4, 55% Upgrades: Issuer: Parker Drilling Company * Probability of Default Rating, Upgraded to B1 from B2 * Corporate Family Rating, Upgraded to B1 from B2 Parker Drilling Company is headquartered in Houston, Texas. PDQ ACQUISITIONS: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: P.D.Q. Acquisitions, LLC 801 S. Broad Street Brooksville, FL 34601 Bankruptcy Case No.: 08-07227 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Avalon Investment Corp. of Hernando 08-07228 DDD Ranch, Inc. 08-07229 Jet Bead, Inc. 08-07230 T.C.B. Acquisitions, LLC 08-07231 Chapter 11 Petition Date: May 21, 2008 Court: Middle District of Florida (Tampa) Judge: Catherine Peek McEwen Debtors' Counsel: Edmund S. Whitson, III, Esq. E-mail: edmund.whitson@akerman.com Akerman Senterfitt P.O. Box 3273 401 E. Jackson St. Tampa, FL 33601-3273 Tel: (813) 223-7333 Fax: (813) 223-2837 http://www.akerman.com/ Estimated Assets Estimated Debts ---------------- --------------- P.D.Q. Acquisitions, LLC $1 million to $1 million to $10 million $10 million Avalon Investment Corp. of $10 million to $10 million to Hernando $50 million $50 million DDD Ranch, Inc. Less than $100,000 to $50,000 $500,000 Jet Bead, Inc. $500,000 to Less than $1 million $50,000 T.C.B. Acquisitions, LLC $10 million to $1 million to $50 million $10 million A. P.D.Q. Acquisitions, LLC's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Whitney National Bank $2,250,000 35388 U.S. Hwy. 19 N. Palm Harbor, FL 34684 Capital City Bank $1,986,446 P.O. Box 900 Tallahassee, FL 32302 Regions Bank $280,337 P.O. Box 188 Houghton, MI 49931-0188 Hernando County Tax Collector $191,266 Pasco County Tax Collector $4,923 B. Avalon Investment Corp. of Hernando's Three Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pasco County Tax Collector $21,622 P.O. Box 276 Dade City, FL 33526-0276 Carol Floyd $165,376 P.O. Box 595 Land O'Lakes, FL 34639 Ground Down Engineering, Inc. $19,600 9232 Rhea Drive Odessa, FL 33556 C. DDD Ranch, Inc's Two Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carol Floyd $329,184 P.O. Box 595 Land O Lakes, FL 34639 Hernando County Tax Collector $813 20 N. Main St., Rm. 112 Brooksville, FL 34601-2892 D. Jet Bead, Inc's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Peninsula Bank $907,500 3100 South McCall Road Englewood, FL 34224 Capital One Bank $3,733 P.O. Box 650007 Dallas, TX 75265-0007 Citrus County Tax Collector $7,375 210 N. Apopka Ave., Ste. 100 Inverness, FL 34450 E. T.C.B. Acquisitions, LLC did not file a list of its largest unsecured creditors. PIPER RESOURCES: Unable to File Fin. Report After CCAA Petition --------------------------------------------------------------- Piper Resources Ltd. disclosed the filing of its Notice of Default in accordance with the Canadian Securities Administrators Notice 57-301. The notice relates to the company's failure to file its Dec. 31, 2007 audited annual financial statements. As required by the Alberta Securities Commission, the 57-301 Notice is reprinted in its entirety as: 1. Piper is unable to file its annual financial statements for the year ended Dec. 31, 2007 by April 29, 2008; 2. The reason for the default is due to the uncertainty caused by the company being in protection under the Companies Creditors' Arrangement Act; 3. Piper expects to file the annual financial statements when the uncertainty caused by the CCAA process has been resolved; 4. June 29, 2008, is the date that is two months after the filing deadline for the annual financial statements of the company. The relevant security commissions or regulators may impose an issuer cease trade order if the financial statements are not filed by that time. Piper understands that an issuer cease trade order may be imposed earlier if the company fails to file its bi-weekly Default Status Reports on time; 5. Piper intends to file Default Status Reports as required by the 57-301 Notice as long it remains in default of the financial statement requirement; 6. The company was initially granted protection from its creditors under CCAA by the Alberta Court of Queens' Bench on Feb. 15, 2008. Piper has received subsequent Court orders extended the stay of protection under CCAA until June 12, 2008. The company intends to file material change reports containing the same information it provides to creditors at the same time the information is provided to creditors throughout the period in which Piper is in default; and 7. There is no other material information concerning the affairs of Piper that has not generally been disclosed. About Piper Resources Headquartered in Calgary, Alberta, Piper Resources Ltd. is a non- listed exploration, development and production company pursuing conventional oil and natural gas opportunities in western Canada. The company's core areas are focused in the Peace River arch area of northwestern Alberta, with operated production in the Gordondale, Pouce Coupe and Sinclair areas. On Feb. 15, 2008, Piper Resources Ltd. obtained creditor protection under the Companies Creditors Arrangement Act (Canada) pursuant to an Order from the Alberta Court of Queen's Bench. Piper engaged Tristone Capital Inc. as its financial advisor to pursue strategic alternatives for the company in conjunction with the CCAA proceedings. PLASTECH ENGINEERED: Treasury Dept. Seeks to Set off Tax Debts -------------------------------------------------------------- Deborah Benedict Waldmeir, assistant attorney general at The Michigan Department of Treasury, relates that the business activities of Plastech Engineered Products Inc.'s affiliate, Plastech Romulus, Inc., resulted in liabilities to the Treasury for single and use tax liabilities that were accrued prepetition. She discloses that the Treasury has filed priority and unsecured tax claims for the tax liabilities against Plastech Romulus for $493,276 and $21,306. On the other hand, Plastech Romulus has filed its 2005 and 2006 Michigan business tax returns claiming refunds for $379,341 and $446,688, due to the application of 2005 and 2006 Michigan Economic Growth Authority credits. The Treasury has put an administrative hold on a portion of the 2005 tax refund and the full amount of the 2006 tax refund equal to the amount of Treasury's prepetition tax claims, pending a decision on the Motion, Ms. Waldmeir. Section 553 of the Bankruptcy Code provides that a creditor may offset a mutual debt owing by a creditor to the debtor that arose before the commencement of the case against a claim of the creditor against the debtor that arose before the commencement of the case. Accordingly, the Treasury asks the Court to allow set-off of the Plastech Romulus' prepetition tax liabilities owed to the Treasury by application of the prepetition tax refunds. 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: GM's Tooling Request Hearing Moved to June 2 ----------------------------------------------------------------- General Motors Corporation and Plastech Engineered Products Inc. and its debtor-affiliates have again agreed to adjourn the preliminary hearing on General Motors' request for contingent relief from the automatic stay to recover tooling. The U.S. Bankruptcy Court for the Eastern District of Michigan approved the parties' request and will convene on June 2, 2008 at 1:00 p.m. to discuss General Motors' 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. 21; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000) PLASTECH ENGINEERED: Has Court Nod to Wind Down Canadian Unit ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan gave authority to Plastech Engineered Products Inc. and its debtor-affiliates to enter into transactions in connection with the wind-down of LDM Technologies Company. The Debtors previously informed the Court that they have concurred with dissenting parties -- Active Mould & Design, Limited, and Radiance Mold & Engineering, Inc. -- for entry of an order approving the wind-down. As reported in the Troubled Company Reporter on May 6, 2008, the Debtors sought permission to: (1) enter into certain transactions in connection with the wind-down of their foreign non-Debtor affiliate, LDM Technologies Company, a New Brunswick company; (2) enter into a related accommodation agreement with LDM and their customers General Motors Corporation, Ford Motor Company, Chrysler LLC, on behalf of itself and Chrysler Motors LLC, and Chrysler Canada, Inc.; (3) enter into a letter agreement by and between LDM and Plastech regarding the provision of management services; (4) approve payment of $1,000,000 by LDM to Plastech upon satisfaction of certain terms and conditions as more fully set forth in the Accommodation Agreement; and (5) authorize the sale of certain assets on the terms set forth in the Accommodation Agreement. The Debtors explained that LDM is currently experiencing financial difficulties and has determined that an orderly wind-down of its operations is necessary. LDM may effectuate the wind-down by initiating a Companies' Creditors Arrangement Act proceeding in the Ontario Superior Court of Justice (Commercial List). The Debtors told the Court that in connection with the wind-down and financing, the resources of Plastech's management team are necessarily required as the majority of LDM's corporate activity occurs through its parent Plastech. As the parent of LDM, Plastech's approval of the sale or release of certain Tooling and Equipment may be required. As all or substantially all of the purchase orders associated with LDM are issued by and payable to Plastech, both Plastech's and the Court's approval may be necessary to consummate any sales, releases or transfers of assets from LDM to the Customers. 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) PRIMEDIA INC: Redeems $2.5 Million of 8% Senior Notes Due 2013 -------------------------------------------------------------- Primedia Inc. redeemed all of its outstanding 8% Senior Notes due 2013 (CUSIP No. 74157KAJ0), representing an aggregate principal amount of $2,576,000. The redemption price of the notes was 104% of the outstanding aggregate principal amount, plus accrued and unpaid interest thereon until the redemption date. None of the notes will remain outstanding and the Indenture generally will cease to be of further effect on or after the mARCH 15, 2008 Redemption Date. The company did not incur any early termination penalties in connection with the redemption of the notes beyond the 4% redemption premium reflected in the redemption price. Headquartered in Atlanta, PRIMEDIA Inc.(NYSE: PRM) -- http://www.primedia.com/-- through its Consumer Source Inc. operation, is an integrated media business that provides advertising supported print and online consumer guides for the apartment and new home industries. Consumer Source publishes and distributes more than 38 million guides -- such as Apartment Guide and New Home Guide -- to approximately 60,000 U.S. locations each year through its proprietary distribution network, DistribuTech. The company also distributes category-specific content on its leading websites, including ApartmentGuide.com, NewHomeGuide.com and Rentals.com, a comprehensive single unit real estate rental site. At March 31, 2008, the company's consolidated balance sheet showed $251.3 million in total assets and $388.1 million in total liabilities, resulting in a $136.8 million total stockholders' deficit. QUIGLEY COMPANY: Parent Company Asked to Produce Documents ---------------------------------------------------------- Allianz Global Risks U.S. Insurance Company, fka Allianz Insurance Company, and Allianz Underwriters Insurance Company, fka Allianz Underwriters Inc., asked the U.S. Bankruptcy Court for the Southern District of New York to compel Pfizer Inc., parent company of Quigley Company Inc., to produce documents responsive to an amended second subpoena dated May 13, 2008. The Hon. Stuart M. Bernstein will hear the matter on June 10, 2008, at 10:00 a.m. Objections must be submitted before the close of business on June 3, 2008. White and Williams LLP is counsel to the Allianz entities. About Quigley Company Quigley Company Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 of the United States Bankruptcy Code on Sept. 3, 2004 (Case No. 04-15739-SMB) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. The Court approved the Debtor's fifth amended disclosure statement early April 2008. QUIGLEY COMPANY: Allianz Demands Production of Documents -------------------------------------------------------- Allianz Global Risks U.S. Insurance Company, fka Allianz Insurance Company, and Allianz Underwriters Insurance Company, fka Allianz Underwriters Inc., asked the U.S. Bankruptcy Court for the Southern District of New York to compel the Debtor to: (i) provide responsive and complete answers to an amended second set of interrogatories directed to the Debtor by Allianz entities, and (ii) produce non-privileged documents responsive to an amended second request to the Debtors by Allianz entities. The Hon. Stuart M. Bernstein will hear the matter on June 10, 2008, at 10:00 a.m. Objections must be submitted before the close of business on June 3, 2008. White and Williams LLP is counsel to the Allianz entities. About Quigley Company Quigley Company Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 of the United States Bankruptcy Code on Sept. 3, 2004 (Case No. 04-15739-SMB) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. The Court approved the Debtor's fifth amended disclosure statement early April 2008. RAFAELLA APPAREL: Moody's Cuts CFR to B2; Outlook Still Negative ---------------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of Rafaella Apparel Group, Inc. to B2. The rating outlook remains negative. The downgrade reflects the company's continued weak top line growth and profitability, high leverage, and concern that it will now take much longer than anticipated to return to historic levels. Rafaella's revenue and profitability has been significantly impacted by decreased sales to the former May/Federated stores and a mix shift to its lower margin private label business. Although the May/Federated declines appear to have been stabilized, the weak economic environment is having a negative effect on the women's apparel industry as a whole. For Rafaella, this has meant declining sales as retail customers order less product to decrease inventories, and an increase in markdown allowances. Debt-to-EBITDA as of March 31, 2008 (calculated using Moody's standard analytic adjustments) increased to 5.3 times, which is more consistent with the B2 rating and significantly higher than the level cited in Moody's credit opinion dated December 3, 2007 that would prompt a downgrade. Given the ongoing weak sales environment, Moody's expects that Rafaella will likely sustain weaker credit metrics, including leverage and fixed charge coverage, over the next twelve months. The negative outlook reflects Moody's continued concerns regarding Rafaella's ability to grow revenues and to stabilize declining operating margins - notably if caused by an inability to execute on its plan to strengthen the Rafaella brand, or generally to grow its branded business, during a time when the macroeconomic environment remains challenging. These ratings were downgraded: * Corporate Family Rating, to B2 from B1 * Probability of Default Rating, to B2 from B1 * Second lien senior secured notes due June 2011, to B3 (LGD4, 64%) from B2 (LGD4 62%) The rating outlook is negative. Rafaella Apparel Group, Inc. based in New York, NY, is a designer, sourcer, and marketer of a full line of women's career and casual sportswear separates under the Rafaella brand. For the LTM period ended March 31, 2008, the company reported net sales of approximately $182 million. RAFAELLA APPAREL: S&P Places 'B' Credit Rating Under Neg. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B' corporate credit rating, on apparel maker Rafaella Apparel Group Inc. on CreditWatch with negative implications. This means that the ratings could be lowered or affirmed following resolution of the CreditWatch. The New York City-based apparel company had about $128 million debt outstanding at March 31, 2008. The CreditWatch listing follows the company's recent third quarter results for the period ended March 31, 2008, that show continued deterioration in credit protection measures as a result of significant contraction in its EBITDA base. "We are concerned about the company's ability to maintain adequate cushion on the financial covenants for its revolving credit facility, and about its dependence on Macys Inc. and the department store channel, especially in light of the weakening industry trends and the soft retail environment," said Standard & Poor's credit analyst Susan Ding. For the 12 months ended March 31, 2008, EBITDA declined by over 30% while leverage increased to 7x from 5.4x a year ago. "We expect the remainder of 2008 will continue to be very difficult for the company as retailers continue to pull back on fall orders and the company attempts to revitalize its brand positioning," said Ms. Ding. During the March 2008 quarter, Rafaella amended its financial covenants because of the likelihood that the company would not be in compliance for the March quarter. While the company did receive an amendment for this period, Standard & Poor's is concerned that covenants would continue to be very tight for the next several quarters. RH DONNELLEY: Holders Tender $550.5 Million in Old Notes -------------------------------------------------------- R.H. Donnelley Corporation (NYSE: RHD) released Friday the interim results of the exchange offers by R.H. Donnelley Inc. to issue its 11.75% Senior Notes due May 15, 2015 in exchange for a portion of the Company's outstanding notes. As of 5:00 p.m., New York City time, on May 21, 2008, a total of $550.5 million principal amount of Old Notes had been tendered in the exchange offers. The Company and RHDI also announced that RHDI has extended the early participation deadline for each of the exchange offers until 12:00 midnight, New York City time, on June 6, 2008, which is the expiration time of the exchange offers unless extended by RHDI. Holders of Old Notes whose tenders are accepted by RHDI will receive, subject to proration, the applicable total exchange amount: Principal amount of New Notes for each $1,000 principal amount of applicable Old Notes Title of Outstanding Maximum Notes of the Amount Principal Early Total Company to Offered for Exchange Participation Exchange be Exchanged Exchange* Amount Amount Amount ------------ --------- --------- ------------- -------- 6.875% Senior Notes due 2013 $35,000,000 $652.50 $30.00 $682.50 6.875% Series A-1 Senior Discount Notes due 2013 $50,000,000 $652.50 $30.00 $682.50 6.875% Series A-2 Senior Discount Notes due 2013 $90,000,000 $652.50 $30.00 $682.50 8.875% Series A-3 Senior Notes $300,000,000 $675.00 $30.00 $705.00 due 2016 8.875% Series A-4 Senior Notes $225,000,000 $670.00 $30.00 $700.00 due 2017 * For purposes of the exchange offers, the amount offered for exchange with respect to the 6.875% Senior Notes due 2013, the 8.875% Series A-3 Senior Notes due 2016 and the 8.875% Series A-4 Senior Notes due 2017 reflects the aggregate principal amount outstanding at March 31, 2008, and the amount offered for exchange with respect to the 6.875% Series A-1 Senior Discount Notes due 2013 and the 6.875% Series A-2 Senior Discount Notes due 2013 reflects the aggregate principal amount at maturity. Holders of the Old Notes who validly tender their Old Notes prior to the Early Participation Deadline, as extended, and whose Old Notes are accepted for exchange, will be entitled to receive an early participation amount of $30.00 in principal amount of New Notes per $1,000 principal amount of Old Notes accepted for exchange. RHDI has not extended the withdrawal deadline for tenders of Old Notes and holders no longer have the right to withdraw any Old Notes previously tendered or tendered through the Expiration Date. In the event that the principal amount of Old Notes of any series tendered prior to the Expiration Date exceeds the maximum amount offered for exchange for that series, Old Notes will be accepted on a pro rata basis by series according to the principal amount of such series validly tendered prior to the Expiration Date and accepted for exchange. Final proration of tenders of the Old Notes will be determined based on the total amount of Old Notes of each series validly tendered and accepted for exchange. Consummation of the exchange offers is subject to certain conditions, including, without limitation, the successful completion of an amendment to RHDI's credit facility and certain additional conditions, which must also be satisfied or waived in the applicable exchange offer. The exchange offers are only being made, and copies of the exchange offer documents will only be made available, to holders of Old Notes that have certified certain matters to RHDI, including their status as either "qualified institutional buyers", as that term is defined in Rule 144A under the Securities Act of 1933, or persons other than "U.S. persons", as that term is defined in Rule 902 under the Securities Act of 1933. Eligible Holders may request documents by contacting the information agent, MacKenzie Partners, Inc., at (toll-free) 800-322-2885 or (collect) 212-929-5500. The New Notes have not been and are not expected to be registered under the Securities Act of 1933 or any state securities laws. Therefore, the New Notes may not be offered or sold in the United States absent registration or any applicable exemption from the registration requirements of the Securities Act of 1933 and any applicable state securities laws. Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. -- http://www.rhdonnelley.com/ -- (NYSE: RHD) publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. * * * As reported in the Troubled Company Reporter on May 13, 2008, Moody's Investors Service assigned a B1 rating to R.H. Donnelley Inc.'s proposed $488 million senior unsecured notes and a Ba1 rating to Dex Media West LLC's proposed senior secured credit facilities, while affirming R.H. Donnelley Corporation's B1 Corporate Family rating, in connection with a proposed note exchange and refinancing. Fitch Ratings also affirmed the Issuer Default Ratings on R.H. Donnelley Corp, R.H. Donnelley, Inc., Dex Media, Inc., Dex Media East and Dex Media West at 'B+'. Fitch expects to rate the amended RHDI credit facility 'BB+/RR1' and the proposed DXW credit facility 'BB+/RR1'. The Rating Outlook has been changed to Negative from Stable. RIO VISTA: Posts $2.1 Million Net Loss in 2008 First Quarter ------------------------------------------------------------ Rio Vista Energy Partners L.P. reported a net loss of $2.1 million, on revenues of $3.1 million, for the first quarter ended March 31, 2008, compared with a net loss of $470,000, on revenues of $679,000 in the same period of 2007. For the first quarter of 2008, revenues consisted of $2.1 million from Regional Enterprises Inc.'s transportation and terminaling business, and $988,000 from the company's oil and gas operations and related midsteam assets in the State of Oklahoma. For the first quarter of 2007, revenues were derived solely from the operations of the company's remaining LPG transportation business, which was sold in Decmber 2007. In July 2007, Rio Vista acquired Regional Enterprises Inc. and in November 2007, Rio Vista acquired certain oil and natural gas producing properties and related assets in the State of Oklahoma formerly owned by GM Oil Properties Inc., Penny Petroleum Corporation and GO LLC. Beginning March 1, 2008, Rio Vista Operating LLC became the operator of the Oklahoma assets and employed approximately six employees, consisting of four field workers and two office staff personnel as of such date. The above acquisitions were funded by a combination of debt, private placements of Rio Vista common units and proceeds from the sale of the company's LPG related assets. During November 2007, Rio Vista completed a private placement of common units raising gross proceeds of $4,000,000. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $49.0 million in total assets, $39.1 million in total liabilities, and $9.9 million in total partners' capital. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $4.6 million in total current assets available to pay $15.7 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?2c6b Going Concern Disclaimer Burton McCumber & Cortez L.L.P., in Brownsville, Tex., expressed substantial doubt about Rio Vista Energy Partners L.P.'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 ability to generate sufficient cash flow to pay its expenses and its current debt obligations as they become due and its dependence on Penn Octane to continue as a going concern. If Penn Octane's and the company's cash flows are not adequate to pay their obligations, Penn Octane or Rio Vista may be required to raise additional funds to avoid foreclosure by creditors. About Rio Vista Energy Based in Houston, Rio Vista Energy Partners L.P. (Nasdaq: RVEP) -- http://www.riovistaenergy.com/-- is a master limited partnership focused primarily on acquiring and developing oil and gas exploration, production and transportation assets. Through its subsidiaries, the company currently owns certain leasehold interests of oil and gas producing properties and associated pipeline gathering systems in East Central Oklahoma. The company is also engaged in liquid bulk storage, transloading and transportation of chemicals and petroleum products. Penn Octane Corporation (OTC BB: POCC) owns 75.0% of Rio Vista GP LLC, the general partner of Rio Vista Energy Partners L.P. RIVERSIDE ENERGY: S&P Lifts Rating on $368.5MM Term Loan to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating to 'BB-' from 'B' on Riverside Energy Center, LLC.'s $368.5 million senior secured term loan and the Rocky Mountain Energy Center LLC's $264.9 million senior secured term loan, due 2011. The outlook is stable. "Calpine Corp.'s emergence from bankruptcy has removed our credit concerns regarding these projects," said Standard & Poor's credit analyst Terrence Marshall. "This emergence, along with the projects' steady operational and fiscal performance, led to the raised rating." Rocky Mountain Riverside are power generation projects that are wholly owned, indirect subsidiaries of Calpine Corp. (B/Stable). The recovery rating is '1'. Rocky Mountain, located in Weld County, Colorado, is a 601 megawatt natural gas fired, combined-cycle power generation plant that sells substantially all of its output to Public Service Co. of Colorado (BBB+/Stable/A-2) through 2014. Thereafter, it will then sell PSCo 90 MW for three years. Riverside, located in Beloit, Wisconsin, is a 617 MW natural gas fired, combined-cycle electric generating plant that sells output to Wisconsin Power & Light Co. (A-/Stable/A-2) and Madison Gas & Electric Co. (AA-/Stable/A-1+) under contracts through 2013. ROCKY MOUNTAIN: S&P Lifts Rating on $264.9MM Secured Loan to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating to 'BB-' from 'B' on Riverside Energy Center, LLC.'s $368.5 million senior secured term loan and the Rocky Mountain Energy Center LLC's $264.9 million senior secured term loan, due 2011. The outlook is stable. "Calpine Corp.'s emergence from bankruptcy has removed our credit concerns regarding these projects," said Standard & Poor's credit analyst Terrence Marshall. "This emergence, along with the projects' steady operational and fiscal performance, led to the raised rating." Rocky Mountain Riverside are power generation projects that are wholly owned, indirect subsidiaries of Calpine Corp. (B/Stable). The recovery rating is '1'. Rocky Mountain, located in Weld County, Colorado, is a 601 megawatt natural gas fired, combined-cycle power generation plant that sells substantially all of its output to Public Service Co. of Colorado (BBB+/Stable/A-2) through 2014. Thereafter, it will then sell PSCo 90 MW for three years. Riverside, located in Beloit, Wisconsin, is a 617 MW natural gas fired, combined-cycle electric generating plant that sells output to Wisconsin Power & Light Co. (A-/Stable/A-2) and Madison Gas & Electric Co. (AA-/Stable/A-1+) under contracts through 2013. SAINT MICHAEL MOTOR: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Saint Michael Motor Express 141 Law Rd. Jackson, TN 38305 Bankruptcy Case No.: 08-11838 Type of Business: The Debtor provides refrigerated trucking services. Chapter 11 Petition Date: May 22, 2008 Court: Western District of Tennessee (Jackson) Debtor's Counsel: Henry C. Shelton, Esq. Email: henry.shelton@arlaw.com Adams and Reese LLP 80 Monroe Ave., Ste. 700 Brinkley Plaza Memphis, TN 38103-2467 Tel: 524-5271 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Transportation Alliance Bank, $1,200,000 Inc. P.O. Box 150100 Ogden, UT 84403 Flying J Insurance Services $244,825 4185 Harrison Blvd., Ste. 201 Ogden, UT 84403 H & P Leasing, Inc. $148,714 P.O. Box 8257 Pearl, MS 39288 Tennessee Dept. of Labor & $100,000 Workforce Development Fireman's Fund Insurance $90,000 Comdata Network $84,500 Pinacle $44,000 Qualcomm $34,101 Liberty Mutual Insurance $28,158 Jackson Medical Center General $22,420 Simmons Tire Co. $20,147 Tennessee Dept. of Safety Fuel Tax $15,482 Safety Wilma Allen, Trustee $7,642 Workcare Resources $4,030 Methodist Hospital, Inc. $3,802 Howard Johnson $3,167 Fedex $2,996 Memphis Brake Service $2,819 Sunteck Transport $2,692 Kentucky Fuel Tax $2,500 SAKS INC: Moody's Upgrades Corporate Family Rating to B1 -------------------------------------------------------- Moody's Investors Service upgraded the ratings of Saks Inc., including its corporate family rating to B1 from B2. The rating outlook is stable. The upgrade primarily reflects improvement in Saks' key credit metrics resulting from the company's progress in growing sales, improving operating performance and cash flow generation, and reducing debt. Performance improvements have stemmed from the company's ability to maintain comparable store sales growth, reduce corporate overhead, as well as improve merchandise assortments by store. These ratings were upgraded: * Corporate family rating to B1 from B2 * Probability of default rating to B1 from B2 * 7% Global notes due 12/01/2013 to B2 (LGD5, 74%) from B3 (LGD5, 72%) * 7.5% Bonds due 12/01/2010 to B2 (LGD5, 74%) from B3 (LGD5, 72%) * 2% Convertible notes due3/15/2024 to B2 (LGD5, 74%) from B3 (LGD5, 72%) * 8.25% notes due 11/15/2008 to B2 (LGD5, 74%) from B3 (LGD5, 72%) * 7.375% Bonds due 2/15/2019 to B2 (LGD5, 74%) from B3 (LGD5, 72%) * 9.875% Notes due 10/01/2011 to B2 (LGD5, 74%) from B3 (LGD5, 72%) The B1 corporate family rating reflects the company's solid position in the luxury retail segment, good liquidity, and strong credit metrics. The ratings are also supported by the company's positive comparable store sales growth, merchandising improvements, and quality of its real estate locations. These strong factors are offset by the company's slim operating margin, high cash flow seasonality, and small scale in terms of revenue. Further constraining the ratings is increased competition among retailers, and high business risk which exposes the company to potential performance volatility due to fashion and economic risk. The stable outlook reflects Moody's expectation that the company will maintain its credit metrics at current levels, and that it will maintain good liquidity and that its financial policy will not become more aggressive. Saks Incorporated, headquartered in New York, NY, operates 54 Saks Fifth Avenue luxury department stores, 48 Off Fifth off-price stores and 95 Club Libby Lu specialty stores. Total revenues for the last twelve months ended May 3, 2008 were approximately $3.3 billion. SALLY BEAUTY: March 31 Balance Sheet Upside-Down by $753.3 Million ------------------------------------------------------------------ Sally Beauty Holdings Inc.'s consolidated balance sheet at March 31, 2008, showed $1.4 billion in total assets, $2.1 billion in total liabilities, and $6.2 million in stock options subject to redemption, resulting in a $735.3 million total stockholders' deficit. The company reported GAAP net earnings of $12.4 million for the fiscal 2008 second quarter ended March 31, 2008, compared to $11.0 million for the fiscal 2007 second quarter. For the fiscal 2008 second quarter, adjusted net earnings were $17.9 million, after adjusting for $5.5 million in non-cash interest expense from marked-to-market changes in the fair value of the company's interest rate swaps. For the fiscal 2007 second quarter, adjusted net earnings were $12.1 million, after adjusting for $1.1 million in non-cash interest expense. On a GAAP basis, net earnings for the six months ended March 31, 2008, increased by 88.6% to $26.7 million, compared to $14.2 million for the six months ended March 31, 2007. For the six months ended March 31, 2008, adjusted net earnings were $35.9 million, after adjusting for $9.1 million in non-cash interest expense from marked-to-market changes in the fair value of the company's interest rate swaps. For the six months ended March 31, 2007, adjusted net earnings were $14.6 million, , after adjusting for $400,000 for non-cash interest expense net of tax. "Consolidated net sales for the fiscal 2008 second quarter were $643.0 million, an increase of 5.6% over the fiscal 2007 second quarter, and same store sales grew 2.8%," stated Gary Winterhalter, president and chief executive officer. "We are pleased with the company's second quarter results. Given the greater exposure to the U.S. retail consumer in our Sally Beauty Supply segment, I am encouraged by same store sales increases that have strengthened since our December quarter. "We are excited about the marketing and merchandising initiatives planned for Sally Beauty Supply, including the exclusive merchandising agreement in the U.S. and Canada for certain hair extension products promoting Paris Hilton. "The Sally segment acquisition of Pro-Duo, N.V., a 40-store beauty supply chain located in Belgium, France and Spain, is a critical step in our international expansion plan. For the Beauty Systems Group segment, same store sales growth was solid in the second quarter, and we believe that our initiatives are in place to return BSG to historical levels of profitability during fiscal 2008, while implementing operating margin improvements for future years." Net Sales Consolidated net sales for the fiscal 2008 second quarter were $643.3 million compared to $609.3 million in the fiscal 2007 second quarter. The company's consolidated same store sales increased by 2.8% during the fiscal 2008 second quarter over the fiscal 2007 second quarter. For the six months ended March 31, 2008, consolidated sales were $1.3 billion compared to $1.2 billion for the six months ended March 31, 2007, an increase of 4.8%, which included a 2.4% consolidated same store sales increase. Gross Profit For the fiscal 2008 second quarter, consolidated gross profit was $298.4 million and gross profit as a percentage of sales was 46.4% compared to 46.5% in the fiscal 2007 second quarter. For the six months ended March 31, 2008, consolidated gross profit was $604.6 million, and gross profit, as a percentage of sales, was 46.5% compared to $567.5 million or 45.8% for the six months ended March 31, 2007. Selling, General and Administrative Expenses For the fiscal 2008 second quarter, selling, general and administrative (SG&A) expenses were $221.1 million, or 34.4% of sales, versus $212.2 million, or 34.8% of sales, in the fiscal 2007 second quarter. SG&A expense increases for the fiscal 2008 second quarter included $3.5 million of costs related to acquired businesses and increased rent expense of approximately $2.3 million, primarily for new stores. SG&A expenses for the fiscal 2008 second quarter also included $1.6 million of share-based compensation compared to $600,000 in the fiscal 2007 second quarter. SG&A expenses for the six months ended March 31, 2008, were $445.6 million, or 34.3% of sales, versus $425.4 million, or 34.3% of sales for the six months ended March 31, 2007. The $20.2 million increase included $12.1 million of costs related to acquired businesses and $1.5 million of retention incentives for Beauty Systems Group direct sales consultants affected by the L'Oreal contractual changes during fiscal 2007. In addition, SG&A expenses for the six months ended March 31, 2008, included $7.2 million of share-based compensation expense compared to $6.3 million in the fiscal 2007 second quarter. Pro-Duo Acquisition for the Sally Beauty Supply Segment On May 7, 2008, the company acquired Pro-Duo, N.V., a 40-store beauty supply chain located in Belgium, France and Spain for 19.3 million Euros, or approximately $29.8 million, subject to certain adjustments. The acquisition was funded through $29.8 million in cash and borrowings on the company's asset-based revolving loan facility (ABL) and the assumption of 2.7 million Euros, or approximately $4.0 million, of debt from Pro-Duo. Interest Income, Net Interest expense, net of interest income, for the fiscal 2008 second quarter was $47.6 million and included $8.6 million of non- cash expense related to the company's interest rate swap transactions. Fiscal 2007 second quarter interest expense of $42.9 million included $1.7 million of non-cash expense for the marked-to-market change in fair value for interest rate swap transactions. Interest expense for the six months ended March 31, 2008, net of interest income, was $94.1 million, including $14.3 million of non-cash interest expense related to the interest rate swaps, compared to $62.1 million, including $700,000 of non-cash interest expense related to the interest rate swaps, for the six months ended March 31, 2007. Provision for Income Taxes Income taxes were $5.5 million for the fiscal 2008 second quarter and $14.5 million for the six months ended March 31, 2008. The company's effective tax rate for fiscal 2008 is currently projected to be approximately 35.5%. Adjusted EBITDA Adjusted EBITDA increased 10.6%, or $7.6 million, for the fiscal 2008 second quarter to $79.0 million, compared to $71.4 million for the fiscal 2007 second quarter. For the six months ended March 31, 2008, Adjusted EBITDA increased by 12.0% to $166.2 million, compared to $148.4 million, for the six months ended March 31, 2007. Liquidity and Capital Resources Cash and cash equivalents as of March 31, 2008, was $31.4 million. As of March 31, 2008, the company had $317.8 million available for additional borrowings under its ABL facility, subject to base limitations, as reduced by outstanding letters of credit. The company's debt, excluding capital leases totaled approximately $1.77 billion as of March 31, 2008, as compared to approximately $1.76 billion as of March 31, 2007. For the six months ended March 31, 2008, the company's capital expenditures totaled $25.7 million and are currently projected to be approximately $60.0 million for the 2008 fiscal year, excluding acquisitions. 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?2c6a About Sally Beauty Based in Denton, Texas, Sally Beauty Holdings Inc. (NYSE: SBH) -- http://www.sallybeautyholdings.com/-- is an international specialty retailer and distributor of professional beauty supplies. Through the Sally Beauty Supply and Beauty Systems Group businesses, the company sells and distributes through over 3,500 stores, including approximately 200 franchised units, throughout the United States, the United Kingdom, Canada, Puerto Rico, Mexico, Japan, Ireland, Spain and Germany. Beauty Systems Group stores, branded as CosmoProf or Armstrong McCall stores, along with its outside sales consultants, sell up to 9,800 professionally branded products including Paul Mitchell, Wella, Sebastian, Goldwell, and TIGI which are targeted exclusively for professional and salon use and resale to their customers. SIX FLAGS: Fitch Junks Issuer Default Rating -------------------------------------------- Fitch Ratings has downgraded these ratings: Six Flags Inc. -- Issuer Default Rating to 'C' from 'B-'. -- Senior unsecured notes (including the 4.5% convertible notes) to 'C/RR5' from 'CCC/RR6' -- Preferred stock to 'C/RR6'from 'CCC-/RR6'. Six Flags Theme Park Inc. -- IDR to 'C' from 'B-' -- Secured bank credit facility to 'CCC/RR1' from 'BB-/RR1'. The recovery rating of Six Flags Inc's senior unsecured notes reflects an average of the recovery ratings for each note based on the potential recovery from the proposed exchange offer. The ratings have also been placed on Rating Watch Negative, reflecting the expectation that upon execution of the proposed note exchange (scheduled for June 16, 2008) the IDR will be downgraded to Restricted Default ('RD'). Six Flags announced on May 14 an offer to exchange Six Flags senior unsecured notes for Six Flags Operations Inc. senior unsecured notes. Six Flags stated that the new notes would not exceed $400 million. Based on the exchange offer, there is a potential to exchange approximately $500 million in existing senior note debt at an incremental interest expense of no higher than $4 million plus transaction fees. While this transaction does not materially change leverage or interest coverage, it could eliminate a substantial portion of the company's 2010 maturities and have a positive affect on the credit profile. However, under Fitch's criteria, the exchange offer represents a Distressed Debt Exchange. A DDE results when an exchange offer has a material reduction in terms and is de facto necessary even if voluntary. If the exchange is executed as proposed, Fitch would lower the IDR on Six Flags and SFTP to 'RD' reflecting the DDE. Subsequently, Fitch expects to upgrade the IDR on Six Flags and SFTP to 'CC', assign a 'CC' IDR to SFO, rate the proposed $400 million notes at SFO 'C/RR5', upgrade the secured bank credit facility to 'CCC+/RR1', and downgrade the Six Flags senior unsecured notes to 'C/RR6' from 'C/RR5'. The Recovery Ratings on the new SFO notes and the existing Six Flags notes reflect better recovery prospects due to the structural seniority the new SFO notes would have in the capital structure relative to the existing Six Flags notes. Fitch estimates there would be no recovery for the Six Flags notes and the mandatorily convertible preferred stock under a distressed scenario. The expected 'CC' IDR, subsequent to the 'RD' downgrade, reflects the material refinancing risks posed by the August 2009 PIERs maturity. In Fitch's view the most likely remedies that the company could pursue to address the PIERs maturity could constitute a technical default or outright default. The company has stated that there are potential Delaware Law restrictions on the redemptions of the PIERs. In addition, a non-payment default on the PIERs would trigger a default on the bank credit facility, and without a bank credit facility amendment or waiver would in turn trigger a default on the senior unsecured notes. Fitch emphasizes that the current and expected IDRs are driven by the DDE and the potential for an RD on the PIERs. Fitch's view of the company's capacity to remain a going concern and its view of the overall credit profile are relatively unchanged. Fitch anticipates Six Flags' IDR could be raised to 'B-' after the company addresses the PIERs maturity and demonstrates improved operating results including solid summer attendance and planned cost cuts and sponsorship/licensing revenues (which could have a cumulative 30%-40% positive impact on EBITDA). However, a 'CCC' IDR is possible given the execution risk, potential for cyclical pressures, weather-related problems, and liquidity concerns. As of March 31, 2008, the company is at breakeven on an interest coverage basis, and leverage is approximately 13.2 times, both of which are very concerning. Fitch believes the company's goals of cost cutting and increasing revenues could be achievable. Achievement of these targets could materially improve interest coverage and leverage. A cyclical or weather-related decline in attendance or if the company is unable to execute on these revenue and cost opportunities over which it has more control may further heighten refinancing risk. The company's liquidity has been sufficient to cover operating costs in the off-season, invest in its parks and enable it to continue to attempt its turnaround in 2008. Liquidity as of March 31, 2008 consisted of $12.6 million in cash and approximately $130 million in unused revolver capacity. The company also announced its deferral of the PIERs May 2008 dividend (approximately $5.2 million per quarter). This will help to preserve additional liquidity by reducing fixed charges. While this action is a negative for PIERs holders Fitch notes that it appears to be within the provisions stipulated in the security documents. Fitch expects that the first quarter of 2008 represented the lowest point in the company's liquidity for the year and expects meaningful positive cash flows for the next two quarters, which would go toward reducing the current credit facility balance and to building up liquidity to fund its off- season in fourth-quarter 2008 and first-quarter 2009. SPECTRUM BRANDS: Salton Sale Cues Moody's to Review Junk Ratings ---------------------------------------------------------------- Moody's Investors Service placed the Caa1 corporate family rating and Caa1 probability of default rating of Spectrum Brands under review following the announcement yesterday that Spectrum has entered into a definitive agreement to sell its Global Pet business to Applica Pet Products, a subsidiary of Salton, Inc., for over $900 million. "The combination of high leverage, declining operating performance trends, and limited financial flexibility are the principal constraints on Spectrum's rating" said Kevin Cassidy, Vice President/Senior Credit Officer at Moody's Investors Service. At the same time, product diversification and the general stability of the Global Pet division, which has helped offset the decline in the Home and Garden and Global Batteries and Personal Care businesses, support Spectrum's ratings. "While the transaction may arguably diminish the company's credit profile due to the sale of its most stable business, it should improve Spectrum's financial flexibility as secured debt will be reduced by close to $700 million, resulting in a reduction of both senior leverage (a little less than 1 turn) and total leverage (about .5 turns) and increased head room under financial covenants" noted Cassidy. The transaction should also improve the company's liquidity profile as it will pay down a portion of its $300 million ABL facility. The review will focus on the company's strategy to reverse the negative operating trends over the past couple of years (notwithstanding recent improvements) in its Home and Garden and Global Batteries and Personal Care businesses and possible strategic capital structure alternatives. If the transaction closes without any material modifications, the ratings on the secured credit facility (term loan and synthetic letter of credit) and the ratings on both traunches of subordinated debt would likely be affirmed or possibly upgraded. Moody's said an upgrade to the instrument ratings may occur if the CFR and PDR are affirmed due to the change in the capital structure with a significant decrease in secured debt relative to unsecured debt. The LGD assessments are also subject to change, the direction of which is uncertain. Ratings on review for possible downgrade: * Corporate family rating at Caa1; * Probability of default rating at Caa1; Ratings affirmed: * $700 million 7.375% senior subordinated bonds due 2015 at Caa3 (LGD 5, 83%); * $350 million variable rate toggle senior subordinated notes due 2013 at Caa3 (LGD 5, 83%); * $1.55 billion senior secured revolving credit facility due 2013 at B2 (LGD 2, 29%); * $50 million synthetic letter of credit facility due 2013 at B2 (LGD 2, 29%) Headquartered in Atlanta, Georgia, Spectrum Brands, Inc. is a global consumer products company with a diverse product portfolio including consumer batteries, lawn and garden, electric shaving and grooming, and household insect control. Spectrum reported sales of $2 billion for the twelve months ended March 2008. SPRINT NEXTEL: Poor Credit Metrics Cue Fitch to Affirm Ratings -------------------------------------------------------------- Fitch has affirmed the ratings for Sprint Nextel Corporation and its subsidiaries as: Sprint Nextel Corporation -- Issuer default rating at 'BB+'; -- Senior Unsecured Notes at 'BB+'; -- Short-Term Issuer Default Rating at 'B'; -- Commercial paper at 'B'; Sprint Capital Corporation -- IDR at 'BB+'; -- Senior Unsecured Notes at 'BB+'; Nextel Communications Inc.; -- Issuer default rating at 'BB+'; -- Senior Unsecured Notes at 'BB+'; US Unwired Inc; -- IDR at 'BB+'; -- Second Priority Secured Notes at 'BB+'; Alamosa Delaware Inc.; -- IDR at 'BB+'; -- Senior Unsecured Notes at 'BB+'. In addition, all of the ratings have been removed from Rating Watch Negative. The Rating Outlook on Sprint Nextel and its subsidiaries is Negative. Approximately $23 billion of debt is affected by Fitch's action. The rating affirmation considers the past deterioration to Sprint Nextel's credit metrics and the continued challenged financial performance resulting from numerous operational issues. Additionally, the past consumer sentiment toward Sprint Nextel and the positive momentum experienced by Verizon Wireless and AT&T Wireless exacerbate the challenges that the company faces in improving its competitive position, particularly considering the high industry postpaid penetration rates and weakening economy. While first-quarter operating performance was within the lowered expectations, churn, ARPU and subscriber addition metrics were all at their lowest points since the merger with further pressure expected on ARPU throughout at least 2008. As a result, wireless revenue and EBITDA declined by 9% and 25%, respectively, in the first quarter. Sprint has indicated that postpaid subscriber declines will only improve marginally in the second quarter. The company expects to be free cash flow positive for the balance of the year with EBITDA performance stabilizing by year end. Over at least the medium term, the WiMAX partnership Sprint Nextel announced on May 7, 2008 is positive by mitigating the financial risks associated with costs to build-out and operate a new network. Sprint Nextel will also be reimbursed for any WiMAX capital and operating costs from April 1 until the transaction closes with a mix of cash and secured promissory notes. In addition, in Fitch's view this will give management more time to focus on addressing the challenges within its core operations. The Negative Outlook reflects Fitch's concern with the limited visibility into whether the company's current turnaround initiatives will stabilize the operations. Sprint Nextel also faces uncertain outcomes relative to iPCS litigation and spectrum rebanding, which could further affect the company's operations, both financially and operationally. Based on the above factors, if Sprint Nextel cannot show material improvements in operational metrics during the second half of 2008, a one-notch downgrade is likely as credit metrics would experience further erosion beyond current expectations. At the end of first-quarter 2008, leverage was 2.4 times. Fitch expects leverage to rise to approximately 3x by the end of 2008. As a result of its past operational difficulties and reflecting the deterioration in financial performance, Sprint Nextel took steps to conserve liquidity and reduce refinancing risk. These actions included the suspension of its $300 million annual dividend and a $2.5 billion drawdown on its revolver. Cash and marketable securities at the end of first-quarter 2008 was $4.8 billion. Current maturities include $1.3 billion due in November 2008 and $600 million due in May 2009. The 2008 maturity was recently called for redemption. Pro forma for the $337 million reduction in the letter of credit and $50 million commercial paper repayment subsequent to the end of the first quarter, Sprint Nextel had approximately $1.2 billion of borrowing capacity under its $6 billion credit facility that matures in 2010. Fitch expects the company to potentially seek further reductions to its $2.2 billion LOC as additional progress is made with spectrum rebanding. While Fitch does not expect Sprint Nextel to breach its credit facilities financial covenant of 3.5x in the near term, further erosion to its subscriber operating metrics during 2008 will materially reduce its covenant cushion. As of the first quarter, the financial covenant ratio was 2.9x. Because of these factors, Fitch believes the company will likely enter into discussions with its bank group at some point to negotiate amendments to its credit facilities or potentially refinance to a new facility with a longer dated maturity. If this were to occur, the bank group could likely require any of these: fee increases, more restrictive covenants, reduction to commitment, or guarantees and/or security interests in Sprint Nextel operating subsidiaries. Fitch believes the company has limited flexibility in the near term to reduce the overall size of its facility given the recent drawdown and on-going LOC requirements. Bond indentures effectively restrict secured debt to standard carve-outs plus 15% of net tangible assets. Absent any further credit deterioration or events beyond current expectations, if Sprint Nextel's credit facility became secured, Fitch would expect to maintain its current IDR ratings and increase the notching of the credit facility to reflect its priority position in the capital structure. At the completion of the merger in 2005, Sprint Nextel Corp. jointly and severally guaranteed the Nextel obligations on a senior unsecured basis. The supplemental indenture also allowed that Sprint Nextel could be released from its guarantee upon the sale of substantially all of Nextel's assets. At this time, Fitch believes the Sprint Nextel Corp. guarantee to Nextel's unsecured senior notes is fully supported since: the integration is effectively complete with the billing system conversion; and Sprint Nextel remains currently committed to the iDEN network to deliver Direct Connect Push-To-Talk (PTT) services. However, Fitch remains concerned with the past erosion to all facets of the iDEN business that has caused significant degradation to its cash flow generation and the uncertain longer- term commitment to the iDEN platform due to the new deployment of the QChat PTT services on CDMA. If the company continues to struggle with adding iDEN-only subscribers, which Fitch believes is likely, Sprint Nextel could face mounting shareholder pressure over the challenges associated with the iDEN business, although any disposition of the iDEN assets would be challenging and uncertain. Potential barriers include: the current level of integration, the prohibitive costs to shutter the iDEN network, the viability of a standalone iDEN business, and spectrum rebanding issues. Fitch will continue to monitor the operational prospects of the iDEN assets and the potential implications of further subscriber-base erosion to assess the level of risk to Nextel bondholders. SS&C TECHNOLOGIES: Board Elects Campbell Dyer as Director --------------------------------------------------------- The Board of Directors of SS&C Technologies Inc. elected Campbell R. Dyer as a director of the company. The board of directors of its parent company, SS&C Technologies Holdings, Inc., elected Mr. Dyer as a director of Holdings. Mr. Dyer was appointed to the Audit Committees of both the company and Holdings. Todd R. Newnam resigned from the board of directors of SS&C and the board of directors of Holdings both effective immediately. Mr. Newnam was a member of the Audit Committees of the company and Holdings. Mr. Dyer currently serves as a Principal in the Technology Buyout Group of The Carlyle Group, which he joined in 2002. Prior to joining Carlyle, Mr. Dyer was an associate with the private equity firm William Blair Capital Partners (now Chicago Growth Partners) and an investment banking analyst in the M&A Group of Bowles Hollowell Conner & Co. (now Wachovia Securities). He also serves on the board of directors of Open Solutions, Inc. As of March 31, 2008, affiliates of Carlyle held 38,355,712 shares of the common stock of Holdings, or 72.1% of the outstanding shares of Holdings' common stock. The Carlyle Stockholders, Holdings and William C. Stone, the chief executive officer of the Company and Holdings, are parties to a Stockholders Agreement, dated as of November 23, 2005, as amended. Pursuant to the Stockholders Agreement, the Carlyle Stockholders are entitled to nominate four directors to the six-member board of directors of Holdings, and each Stockholder agrees to vote all shares of common stock owned or held of record by such Stockholder to elect such nominees. In the event of the resignation of a director designated by the Carlyle Stockholders, each Stockholder agrees to vote all shares of common stock owned or held of record by such Stockholder for the individual designated by the Carlyle Stockholders to fill such vacancy. Mr Dyer is one of the nominees of the Carlyle Stockholders. Headquartered in Windsor, Conn., SS&C Technologies Inc. -- http://www.ssctech.com/-- delivers investment and financial management software and related services focused exclusively on the financial services industry. * * * Todate SS&C Technologies Inc. still carries Moody's Investors Service's "Caa1" senior subordinate rating assigned on Oct. 25, 2005. SYMBION INC: S&P Affirms Ratings and Changes Outlook to Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Symbion Inc. to negative from stable. At the same time, S&P affirmed the ratings on the company, including the 'B' corporate credit rating. "The outlook revision reflects recently disappointing financial results and our concern that the company's recent business challenges may prevent it from achieving a financial risk profile more consistent with the rating," said Standard & Poor's credit analyst David Peknay. Standard & Poor's also assigned a 'CCC+' issue-level rating and a '6' recovery rating on Symbion's proposed $175 million senior unsecured payment-in-kind toggle notes. The 'CCC+' issue-level rating is two notches below the corporate credit rating on the company, and the '6' recovery rating reflects the expectation for negligible (0% to 10%) recovery of principal and pre-petition interest in the event of a payment default. The rating on Nashville, Tennessee-based Symbion reflects the company's narrow operating focus as an owner and operator of surgical facilities, third-party reimbursement risks, a fairly aggressive growth strategy, and a large debt burden. Favorable industry demand and a diverse payor base partially mitigate these risk factors. Symbion currently operates or owns interests in 56 freestanding ambulatory surgical centers and three surgical hospitals in the U.S. TENNECO INC: S&P Holds 'BB-' Rating and Removes Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and certain other ratings on Tenneco Inc. and removed them from CreditWatch with negative implications, where they were placed on March 17, 2008, as a result of the American Axle & Manufacturing Holdings Inc. (BB/Watch Neg/--) strike. The outlook is stable. At the same time, Standard & Poor's raised its issue-level rating on Tenneco's senior unsecured notes to 'BB-' from 'B+', and assigned recovery ratings of '4' to this debt, indicating the expectation for average (30%-50%) recovery in the event of a payment default. The issue-level rating on Tenneco's senior subordinated notes remains at 'B', and a recovery rating of '6' was assigned to this debt, indicating the expectation for negligible (0%-10%) recovery in the event of a payment default. The rating actions reflect the extension of S&P's recovery ratings to all speculative-grade unsecured debt issues. "The rating affirmation and stable outlook reflect our view that Tenneco's credit measures will remain within our expectations for the rating level in the face of very challenging conditions for the North American auto sector in 2008 and perhaps 2009," said Standard & Poor's credit analyst Lawrence Orlowski. For the rating, we expect that adjusted debt to EBITDA will remain less than 4x and funds from operations about 15%. Reflecting the impact from the American Axle strike, net sales and operating income in the first quarter were $1.56 billion and $39 million, respectively, compared with $1.4 billion and $49 million in the year-earlier quarter. The ratings on Tenneco reflect the company's weak business profile and highly leveraged but still stable financial profile. Tenneco's credit measures were generally stable in the 12 months ended March 31, 2008. The company benefits from good diversity among its customers, business platforms, and regions of operation. However, Tenneco is still exposed to declining vehicle production by its large customers, General Motors Corp. and Ford Motor Co. Credit measures should remain consistent with the rating despite industry conditions that include production cuts by some customers and raw-material price pressures. S&P could revise the outlook to negative if industry challenges prevent Tenneco from generating free cash flow or if leverage rises to much more than 4x, which could occur if EBITDA fell about 10% from current levels, perhaps as a result of reduced production and unrecovered raw material costs. TRIANT HOLDINGS: Has 120 Days to Comply with TSX Listing Standards ------------------------------------------------------------------ Triant Holdings Inc. disclosed that the Toronto Stock Exchange granted the company 120 days to comply with all requirements for continued listing. The company related that TSX is reviewing its common shares with respect to meeting the continued listing requirements. This review only relates to the current market capitalization of the common shares of the company, which is below the TSX minimum requirement. The company is in compliance with all other TSX requirements. The company will also consider alternatives available to it for maintaining liquidity in a secondary market for the common shares of the company, one of which may be applying for listing on the TSX Venture Exchange. Triant Holdings Inc. (TSX: TNT) -- http://www.triant.com/--is into equipment health monitoring, advanced fault detection and sophisticated data analysis technology. The company's industry focus is the semiconductor industry where it provides innovative Advanced Process Control software solutions that enable its customers to improve their productivity and lower their manufacturing costs. US EAGLES: Case Summary & Five Largest Unsecured Creditors ---------------------------------------------------------- Debtor: U.S. Eagles Logistics, LLC 365 Cedar Trail Ln. Harvest, AL 35749 Bankruptcy Case No.: 08-02472 Chapter 11 Petition Date: May 22, 2008 Court: Northern District of Alabama (Birmingham) Judge: Tamara O Mitchell Debtor's Counsel: Daniel D. Sparks, Esq. Email: ddsparks@csattorneys.com 1800 Financial Ctr. 505 North 20th St. Birmingham, AL 35203 Tel: (205) 795-6588 Total Assets: $12,000,763 Total Debts: $5,842,675 Debtor's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bluebridge International $2,700,000 General Trading & Contracting Co. P.O. Box 6328 Salmiya, Kuwait 22074 Tel: (965) 571-6404 Eddie Pressley $730,000 365 Cedar Trail Lane Harvest, AL 35749 Terry Hall $90,000 6946 Woodcreek Lane Rex, GA 30273 The Hogan Firm $4,950 First Insurance Funding Corp. $3,837 USG CORP: Asbestos PI Trust Files Annual Report Ending Dec. 2007 ---------------------------------------------------------------- Philip A. Pahigian, Lewis R. Sifford, and Charles A. Koppelman, Trustees of the USG Asbestos Personal Injury Settlement Trust that was created pursuant to the confirmed Joint Plan of Reorganization of USG Corp. and its debtor-affiliates, submitted an annual report for the year beginning January 1, 2007, through December 31, 2007. Funded in accordance with the Plan, the PI Trust aims to assume all responsibility of the PI Trust Claims, and to use the assets of the PI Trust to pay both present and future asbestos claimants, in a way that PI Trust Claim holders are treated fairly, equitably, and reasonably in light of the finite assets available to satisfy the claims. Trust Administration Kathleen Campbell Davis, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, counsel for the PI Trust, told the U.S. Bankruptcy Court for the District of Delaware that Mr. Koppelman replaced Thomas M. Thully, who resigned from his position as a PI Trustee on January 17, 2008. Mr. Pahigian served as the Managing Trustee of the Trust during the Reporting Period. Analysis Research Planning Consulting served as the Trust's executive director. Campbell & Levine, LLC, of Pittsburgh, Pennsylvania, and Wilmington, Delaware, is the Trust's general counsel. For the fiscal year 2007, the Plan Trustees held formal meetings in accordance with the requirements of the PI Trust Agreement. In attendance at the meeting were the Trustees, representatives of the Trust Advisory Committee, and Dean M. Trafelet, the Future Claims Representative. The TAC members are Russell W. Budd, John D. Cooney, Theodore Goldberg, Steven Kazan, Perry Weitz, and Joseph F. Rice. The Plan Trustees also held regularly scheduled weekly teleconferences, met individually with PI Trust advisors, held executive sessions and special purpose meetings, and devoted considerable time to Trust matters outside of scheduled meetings. The Trustees' other activities in 2007 included: * preparing for the timely transfer of the trust assets; * receiving and deploying the trust assets with investment managers; * designing and implementing processes to receive, process, and pay claims pursuant to the Trust Distribution Procedures; and * communicating with personal injury claimants regarding the processing of claims, and continual monitoring of the claims and investment processes. Ms. Davis said that all distributions related to the compensation and expense reimbursements for the Trustees, the TAC, and the FCR, were made in accordance with the Trust Agreement guidelines and applicable bylaws. Compensation for Trustees and Trust Advisors Compensation and expenses incurred by the Plan Trustees, the TAC members, the FCR, and their professionals totaled $1,382,624 for the year ended December 31, 2007: Fees Expenses Retainer -------- -------- -------- Plan Trustees $756,329 $41,566 $185,000 FCR 91,488 16,342 0 FCR's Counsel 49,827 4,087 0 TAC Members 88,000 26,067 0 TAC Counsel 123,090 4,750 0 Claims Processing & Investment Management The Trustees selected the Delaware Claims Processing Facility to process the PI Trust claims. The Trust retained Campbell & Levine, LLC, of Pittsburgh, Pennsylvania, and Wilmington, Delaware, as its general counsel. Cambridge Associates, LLC, in Boston, Massachusetts, continues to serve as the PI Trust's investment advisor; and advises the Trustees on asset allocation, cash flow modeling, and the selection and oversight of individual investment managers for the investable portions of the Trust's portfolio. Pursuant to the recommendation of Cambridge Associates; the currently anticipated timing of the liquidity needs of the Trust to pay claims; and the Trust's status as a federal tax paying "qualified settlement fund," the Trust's investable assets are allocated among investment types in these percentages: * 85% of the invested assets are committed to tax-exempt fixed income products, with 64.7% allocated to intermediate-term municipal bonds and 35.3% allocated to short-term municipal bonds; and * 15% of the invested assets are committed to equity investments, with 33.33% allocated to managers investing in U.S. equities and 66.7% allocated to managers investing in non-U.S. equities. The Trust also retained: * Northern Trust, Mercator, Hansberger, Southeastern (Longleaf Partners International Fund), and Gryphon as non-U.S. equity managers; * Northern Trust as U.S. equity manager; * BlackRock, Schroders, Morgan Stanley, Northern Trust and M.D. Sass as intermediate-term municipal bond managers; and * BlackRock and Columbia as short-term municipal bond managers. Northern Trust also served as custodian for the PI Trust's investment accounts. In 2007, the Trustees regularly met with Cambridge Associates for updates and reports on the investments and to review investment performance and investment strategy. The Trustees also met at least once with each investment manager and to review performance and investment strategy. During the Reporting Period, the Trust prepared for the timely transfer of assets from the Debtors and other transferors; received the assets and deployed them to the Trust custodians and investment managers; and monitored the investments on a continual basis. Summary of Claims The Trustees note that the PI Trust began to accept and process unliquidated claims on February 19, 2007. As of December 31, 2007, the Trust received and processed 413 prepetition Liquidated PI Trust Claims and paid 423 claims. From the 423 claims paid, 69 are malignancy claims and 354 are non-malignancy claims. After application of the payment percentage and applicable sequencing adjustment, the Trust paid about $8,000,000 to asbestos victims as settlement of their prepetition Liquidated PI Trust Claims. The malignant to non-malignant ratio of the Prepetition Liquidated PI Trust Claims paid in number was 1/5 and the malignant to non-malignant ratio of the prepetition Liquidated Trust Claims in dollars paid was 4/1. In 2007, the Trust received 123,783 Unliquidated PI Trust Claims for processing and paid 5,281 claims. From those paid claims, 504 were malignancy claims and 4,777 were non-malignancy claims. After application of the payment percentage and applicable sequencing adjustment, the Trust paid about $35,000,000 to asbestos victims to settle their Unliquidated PI Trust Claims. The malignant to non-malignant ratio of Unliquidated PI Trust Claims paid in number was 1/9 and the malignant to non-malignant ratio of the Unliquidated PI Trust Claims in dollars paid was 2/1. A summary of the claims processing procedures and policies is available at the Trust's Web site: http://www.usgasbestostrust.com A full-text copy of the PI Trust's 2007 Annual Report is available for free at: http://bankrupt.com/misc/USGPITrust2007Report.pdf About USG Corporation Based in Chicago, Ill., USG Corporation -- http://www.usg.com/-- through its subsidiaries, manufactures and distributes building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. * * * As reported in the Troubled Company Reporter on Feb. 29, 2008, Moody's Investors Service downgraded the debt ratings of USG to Ba2 reflecting the ongoing pressure on the company's financial performance caused by the sharp contraction in the new home construction market. At the same time a corporate family rating of Ba2 and a speculative grade rating of SGL-2 were assigned. The ratings outlook is negative. As reported by the TCR on Feb. 1, 2008, USG reported fourth quarter 2007 net sales of $1.2 billion and a net loss of $28 million. As reported by the TCR on March 12, 2008, Standard & Poor's Ratings Services affirmed its ratings for USG Corp., including its 'BB+' corporate credit and senior unsecured debt ratings. All ratings were removed from CreditWatch, where they were placed with negative implications on Jan. 30, 2008. The outlook is negative. VERAZ NETWORKS: Gets Nasdaq Notice Regarding Delayed Financials --------------------------------------------------------------- Veraz Networks, Inc. said that on May 21, 2008, it received a written Staff Determination Notice from The NASDAQ Stock Market, stating that Veraz is not in compliance with NASDAQ's Marketplace Rule 4310(c)(14) because it did not timely file its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008 with the Securities and Exchange Commission, and that its common stock is therefore subject to delisting from NASDAQ. On May 16, 2008, Veraz filed a Form 12b-25 with the SEC relating to the late filing of its Form 10-Q. Veraz continues to work to be in a position to file the Form 10-Q as soon as practicable but is unable to predict when that might be. NASDAQ rules permit a company that has received a delisting notification to request a hearing with the NASDAQ Listing Qualifications Panel to appeal the staff's determination to delist its stock. Veraz intends to request such a hearing. There can be no assurance that the Panel will grant Veraz's request for continued listing. Pending a decision by the Panel, Veraz's shares will remain listed on NASDAQ. In a regulatory filing dated May 16, 2008, with the Securities and Exchange Commission, Veraz Assistant Secretary Eric C. Schlezinger notes that the SEC had notified Veraz that it is conducting a confidential informal inquiry. "Our Board of Directors appointed a special committee to oversee an independent investigation into the matters raised by the SEC informal inquiry. We are continuing to investigate the matters raised by the SEC informal inquiry. As a result, we would not be able to file our Quarterly Report on Form 10-Q by the required deadline without unreasonable effort or expense. We are not currently aware of any facts that would cause us to change our results of operations for either the quarter ended March 31, 2008, or any prior period. We currently anticipate filing our Quarterly Report on Form 10-Q within the period permitted by the rule," Mr. Schlezinger says. The company previously disclosed that revenues for the first quarter of 2008 were $27.9 million. First quarter IP product revenues of $20.7 million increased 18% over the first quarter of 2007. For the quarter of 2008, the company posted a net loss of $3.1 million, including $1.1 million in stock-based compensation expense, as compared to the first quarter of last year with a net loss $1.2 million, including $0.5 million in stock-based compensation expense. About Veraz Networks Veraz (Nasdaq:VRAZ) is a global provider of voice infrastructure solutions for wireline and wireless service providers. Service providers use the Company's products to transport, convert and manage data and voice traffic over both legacy time-division multiplexing (TDM), networks and Internet protocol (IP), networks, while enabling voice- over-IP (VoIP), and other multimedia services. Veraz's products consist of its bandwidth optimization products and its Next Generation Network (NGN), switching products. The Company's bandwidth optimization products include its DTX family of digital circuit multiplication equipment (DCME), products and its I-Gate 4000 family of standalone media gateways. Veraz's NGN solution includes its ControlSwitch product family based on the IP multimedia subsystem (IMS), architecture, as well as its I-Gate 4000 family of media gateways. VALLEJO CITY: Files Chapter 9 Bankruptcy Petition in Sacramento --------------------------------------------------------------- The city of Vallejo in California filed a petition for protection under Chapter 9 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of California, Sacramento Division, on May 23, 2008. It was assigned case number 2008-26813. The City Council unanimously authorized filing the petition at its May 6, 2008 meeting. In a news statement, the city said the Chief Judge of the United States Court of Appeals for the Ninth Circuit will designate a judge to preside over its case in the next few days. The city intends to continue normal business operations throughout the bankruptcy process. As reported by the Troubled Company Reporter on May 8, the city's top officials unanimously voted for the city to file for Chapter 9 bankruptcy protection. The TCR related on May 14 that unions representing police and firefighters have offered to reduce members' salaries by up to $10,000,000 to keep the city from going under. Vallejo is facing a $13.2 million 2007-2008 general fund operating deficit and a negative funding balance of $9 million on June 30. Salaries and benefits of police officers and fire fighters make up nearly 75% of the city's general fund, ABC7's Carolyn Tyler reported. Police officers and fire fighters groups have agreed to a 6.5% salary cut until March 2009 and give up a current 1.7% raise and 11% in scheduled raises. Other city employees would contribute a 3% salary cut but get comp time in exchange. The public safety officers would also give up 10% in scheduled increases over the next two years. City Councilwoman Joanne Shivley, however, said the city needs a long term solution. "[T]here is more that needs to be cut than simply salaries. There are benefits that are overly generous," Ms. Shivley said. In March, the city council approved a tentative agreement that temporarily kept the city afloat. The council reached an interim pact with the Vallejo Police Officers Association and the International Federation of Firefighters in relation to a contract that expires June 30. Under the agreement, Vallejo police and firefighters will give up 6.5% of an 8.5% raise they received in 2007. The city council also approved resolutions to prevent the city from filing for bankruptcy by the end of March. Despite of this, officials weren't able to reach an agreement after they were set to present a long-term financial plan by April 22, 2008. At a special meeting on February 13, Rob Stout, Vallejo City's finance director, indicated to the city council that the city's financial situation has worsened and the city is facing a $10,149,939 budget deficit. Mr. Stout pointed to the slowing economy, and noted the decrease in sales tax and excise tax, the decrease in transfer tax as a result of the housing market decline, and the decrease in development fees. Mr. Stout noted a $4.25 million increase in program cost for a fire abritration case related to minimum staffing. Mr. Stout also pointed to expenditure increases including increased activity inthe Police department, Fire department academy expenses, and retiree buy out. At the February 13 meeting, the city counsel studied a draft fiscal emergency plan, which includes these expenditure reductions: -- deep rollbacks in City salaries to 5% lower than June 30, 2007, effective with the pay period beginning March 29, 2008; -- elimination of 30 general fund budgeted positions; and -- service changes in the Police, Fire and Public Works Departments, including staff reductions. In documents filed with the Court, Vallejo disclosed between $500 million and $1 billion in estimated assets, and between $100 million to $500 million in estimated debts. According to Vallejo's comprehensive annual report for the year ended June 30, 2007, the city has $983 million in assets and $358 million in debts. Vallejo's largest creditors are the California Public Employees Retirement System, which is owed $135 millin in retiree health benefits and $83 million in unfunded pension plan benefits. The city also owed more than $40 million to the Union Bank of California, N.A., and $27 million to Wells Fargo Bank, as trustee, related to certain bonds. Chapter 9 of the Bankruptcy Code provides for reorganization of municipalities, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts. The purpose of chapter 9 is to provide a financially distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan, according to information at http://www.uscourts.gov/ Although similar to other chapters in some respects, chapter 9 is significantly different in that there is no provision in the law for liquidation of the assets of the municipality and distribution of the proceeds to creditors. A liquidation or dissolution would violate the Tenth Amendment to the U.S. Constitution and the reservation to the states of sovereignty over their internal affairs. Due to the severe limitations placed upon the power of the bankruptcy court in chapter 9 cases -- which is required by the Tenth Amendment and the Supreme Court's decisions in cases upholding municipal bankruptcy legislation -- the bankruptcy court generally is not as active in managing a municipal bankruptcy case as it is in corporate reorganizations under chapter 11. The functions of the bankruptcy court in chapter 9 cases are generally limited to: -- approving the petition, if the debtor is eligible, -- confirming a plan of debt adjustment, and -- ensuring implementation of the plan. As a practical matter, however, the municipality may consent to have the court exercise jurisdiction in many of the traditional areas of court oversight in bankruptcy, to obtain the protection of court orders and eliminate the need for multiple forums to decide issues. Bloomberg News has related that bankruptcy was to be the city's "last, best option" after negotiations with unions proved unsuccessful. "Nobody wants bankruptcy, but there doesn't appear to be a whole lot of options left. . . [W]e are going to be out of money by June 30. It's all a numbers game now," Bloomberg has quoted Joanne Schivley, one of the council members, as saying. About the City of Vallejo Vallejo -- http://www.ci.vallejo.ca.us/GovSite/-- is a city in Solano County. As of the 2000 census, the city had a total population of 116,760. It is located in the San Francisco Bay Area on the northern shore of San Pablo Bay. VALLEJO CITY: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------- Chapter 9 Debtor: City of Vallejo, California City Hall 555 Santa Clara St Vallejo, CA 94590 Bankruptcy Case No.: 08-26813 Type of Business: The Debtor is a city in Solano County, California in the US. As of the 2000 census, it had a total population of 116,760. It was named for General Mariano Guadalupe Vallejo. See http://www.ci.vallejo.ca.us/ Chapter 9 Petition Date: May 23, 2008 Court: Eastern District of California (Sacramento) Debtor's Counsel: Marc A. Levinson, Esq. 400 Capitol Mall, Ste. 3000 Sacramento, CA 95814-4407 Tel: (916) 447-9200 Estimated Assets: $500 million to $1 billion Estimated Debts: $100 million to $500 million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ California Public Employees retiree health $135,396,000 Attn: Peter Mixon, Esq. benefits Retirement System P.O. Box 942707 Sacramento, CA 94229-2707 Tel: (916) 795-3797 unfunded pension $83,904,816 plan benefits ( safety and miscellaneous) Wells Fargo Bank, Trustee bond trustee re: $27,300,000 Attn: Cecil D. Bobey 333 Market Street, 18th Floor MAC: A0119-181 San Francisco, CA 94105 Tel: (415) 371-3357 Union Bank of California, N.A. bond trustee and $26,209,756 Attn: BetteJean McCole, Vice bond insurer re: President 2001, 2002, 2003 E-mail: COPS BetteJean.McCole@uboc.com Special Assets Division 445 South Figueroa St. G04-421 Los Angeles, CA 90071 bond insurer re: $23,185,000 2000 COPS Vallejo Citizens Transit Corp. trade debt $7,856,557 Attn: Jon Monson 1850 Broadway Vallejo, CA 94589 Tel: (707) 863-8980 MBIA bond insurer re: $4,115,000 Attn: Jerry Murray 1999 COPS 113 King Street Armonk, NY 10504 Tel: (914) 765-3171 Watry Design trade debt (paid $2,944,963 Attn: John Purinton from restricted 1700 Seaport Blvd., Ste. 210 revenues) Redwood City, CA 94063 BCM Construction trade debt (paid $1,535,691 Attn: Kurtis Carman from restricted 2990 Hwy. 32, Ste. 100 revenues) Chico, CA 95973 Tel: (530) 342-1722 Valley Power Systems trade debt (paid $1,499,306 Attn: Robert Humphreys from restricted 1755 Adams Ave. revenues) San Leandro, CA 94577 Tel: (510) 635-8991 North Bay Construction, Inc. trade debt (paid $1,230,610 Attn: Steve Geney from restricted 431 Payran St., P.O. Box 6004 revenues) Petaluma, CA 94955 Tel: (707) 763-2891 Blue & Gold Fleet, L.P. trade debt (paid $942,000 (Baylink) from restricted Attn: Taylor Safford revenues) 100 North Point, Ste. 145 San Francisco, CA 94133 Tel: (415) 705-8200 MPA Leasing Corp. capital lease re: $925,862 Attn: Mark Pressman 2001 site & facility 351 California St., Ste. 1000 lease San Francisco, CA 94104 Tel: (415) 421-8900, 212 (ext.) J.A. Gonsalves & Son trade debt (paid $923,320 Construction from restricted Attn: J.A. Gonsalves revenues) 1100 Soscol Ferry Rd., Ste. 2 Napa, CA 94588 Tel: (707) 258-6261 DMJM Harris trade debt (paid $753,390 Attn: Daniel S. Hartman from restricted 2025 Gateway Place, Ste. 190 revenues) San Jose, CA 95110 Tel: (408) 490-2001 Harris & Associates trade debt (paid $717,544 Attn: Robert Guletz from restricted 120 Mason Circle revenues) Concord, CA 94520 Tel: (925) 827-4900 Winzler & Kelly Consulting trade debt (paid $702,604 Attn: Matt Weber from restricted 417 Montgomery St., Ste. 700 revenues) San Francisco, CA 94104 Tel: (415) 283-4970 Soares Pipeline, Inc. trade debt (paid $627,411 Attn: Manuel Soares from restricted 18550 Melrose Ave. revenues) Hayward, CA 94541 Tel: (510) 278-7850 Redwood Coast Petroleum trade debt (paid $560,000 Attn: Robert Barbieri from restricted 455 Yolanda Ave. revenues) Santa Rosa, CA 95404 Tel: (707) 546-0766 Valley Slurry, Inc. trade debt (paid $500,000 Attn: Mike Wallen from restricted P.O. Box 1620 revenues) West Sacramento, CA 95691 Tel: (916) 373-1500 VERTIS INC: Unveils Merger and Restructuring Plans with ACG ----------------------------------------------------------- Vertis Inc., dba Vertis Communications, and American Color Graphics Inc. disclosed merger and comprehensive restructuring plans that will strengthen their finances, expand their North American footprint, and improve the already unparalleled products and services offered to their customers. The focal point of the comprehensive restructuring plans is the agreement between Vertis and American Color, two printing and premedia companies in North America, to merge American Color's operations into Vertis' nationwide marketing and printing services platform. The merger will allow both companies to enrich their core manufacturing capabilities relevant to the production of advertising inserts and newspaper products. It will also enable them to make an unprecedented scope of premedia and workflow solutions available to their customers. Additionally, the companies have entered into agreements with holders of more than two-thirds of the outstanding principal amount of each of the 9.75% Senior Secured Second Lien Notes due 2009, the 10.875% Senior Notes due 2009, and the 13.5% Senior Subordinated Notes due 2009 of Vertis, and the holders of a majority of the outstanding principal amount of the 10% Secured Second Lien Notes due 2010 of American Color, to exchange their bonds for an aggregate of $550 million in new notes and substantially all of the new equity in the combined company. The companies expect additional holders of the ACG Notes and Vertis Notes to enter into agreements this week. Vertis has also entered into agreements with its principal stockholders and the holders of a substantial majority of the Vertis Holdings Mezzanine Notes to support the transaction. The agreement on the terms of the consensual financial restructurings would reduce the combined company's debt obligations by approximately $725 million (excluding Vertis Holdings Mezzanine Notes) before transaction fees and expenses. In addition, the more than $240 million in Vertis Holdings Mezzanine Notes will no longer be an obligation of the company after the transaction closes. The companies and the consenting noteholders have entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business. The companies expect to launch a formal solicitation of consent for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days. Consents will be due approximately 30 days after the companies launch the solicitation. Upon receiving the consents, the companies would commence prepackaged Chapter 11 proceedings in order to implement their plans and consummate the merger. The proceedings are expected to conclude in late summer. "Vertis' mission has always been to find the best way to provide for and serve our clients and this comprehensive restructuring plan ensures our customers will continue to benefit from industry- leading products and services," Mike DuBose, chairman and CEO of Vertis, said. "The plan, which includes the merger, the note exchanges and new financing will strengthen the company's finances and enable Vertis to better compete in today's challenging environment." "With the combined capabilities of both companies, we will extend our ability to respond to the needs of our customers and will be even better positioned to compete in a complex market," Steve Dyott, Chairman and CEO of American Color, commented. "Throughout the process, our customers will continue to enjoy the high level of customer focus to which they have become accustomed. At completion, they will benefit from the additional strengths and reach of a coast-to-coast service provider. We are excited about the opportunities ahead for our customers, employees and other stakeholders." Under the terms of the merger agreement, Mike DuBose will become chairman and CEO of the combined company. Steve Dyott will remain to facilitate the integration of the two companies. Once the merger closes, which is expected to occur in late summer, American Color will become a wholly owned subsidiary of Vertis. The merger will integrate American Color's eight offset and flexographic print facilities, one Total Market Coverage facility, six premedia facilities, and numerous managed service sites into Vertis. In addition, American Color's premedia capabilities include sophisticated design, color and brand management services for the packaging market, plus a vast array of business and workflow solutions technologies. The combination of these operations and capabilities with Vertis' 17 advertising insert production facilities, world-class premedia, direct marketing, media placement, technology and creative services will offer clients benefits including enhanced solutions and production capacity. "The combined company will realize significant synergies as the operations are restructured to increase operational efficiencies and improve service offerings across the platform and product lines," Mr. DuBose said. "The merger provides the combined company with a deeper talent pool, improved financial strength, and a wider reach to ensure all of our customers receive the best products and services in the industry," Mr. DuBose added. "It's a natural fit and one we know our business partners and customers will appreciate." Mr. DuBose and Mr. Dyott both said it will be business as usual at Vertis and American Color while the companies implement the plans. The companies will continue to provide a full range of products and solutions to their customers with an ongoing focus on quality and service. A full-text copy of the Agreement and Plan of Merger is available for free at http://ResearchArchives.com/t/s?2c86 About American Color American Color Graphics, Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced full service premedia and print companies, with eight print locations across the continent, six regional premedia centers, photography studios nationwide and a growing roster of customer managed service sites. The company provides solutions and services such as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. About Vertis Inc. Headquartered in Baltimore, Vertis Inc., doing business as Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's leading retail and consumer services companies. * * * As reported in the Troubled Company Reporter on May 5, 2008, Moody's Investors Service revised Vertis Inc.'s Probability of Default rating to Ca/LD from Ca, while affirming its Ca Corporate Family rating, following the company's April 30 announcement that its second lien noteholders agreed to forbear from exercising their rights and remedies under the indenture governing the second lien notes. The rating outlook is stable. Going Concern Disclaimer As reported in the Troubled Company Reporter on April 4, 2008, Deloitte & Touche LLP, in Baltimore, Maryland, expressed substantial doubt about Vertis Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm said that the company has incurred recurring net losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. VISTEON CORP: Launches Tender Offer of $344 Mil. of 8.25% Notes --------------------------------------------------------------- Visteon Corporation commenced a tender offer for up to $344 million of its 8.25% notes due August 2010. Each Eligible Holder who tenders Old Notes in the tender offer is required, as a condition to such Eligible Holder's participation in the tender offer, to purchase a principal amount of Visteon's new 12.25% senior notes due 2016 equal to 60% of the aggregate principal amount of Notes purchased from such Eligible Holder pursuant to the tender offer at a purchase price equal to 91.621% of the principal amount thereof. The tender offer and offering of New Notes are being made only to holders of the Old Notes that are qualified institutional buyers and institutional accredited investors inside the United States, and to certain non-U.S. investors located outside the United States. The total consideration for each $1,000 principal amount of Old Notes validly tendered and not withdrawn pursuant to the tender offer is $978.30. Eligible Holders must validly tender and not withdraw Old Notes and commit to purchase the applicable amount of New Notes on or prior to 5 p.m., New York City time, on June 2 in order to be eligible to receive the Total Consideration for such Notes purchased in the tender offer. The Total Consideration includes an early tender payment of $40 per $1,000 principal amount of Notes payable in respect of Old Notes validly tendered and not withdrawn on or prior to the Early Tender Deadline. The tender offer will expire at 11:59 p.m., New York City time, on June 16, 2008, unless extended or earlier terminated by Visteon. Holders who validly tender their Old Notes and commit to purchase the applicable amount of New Notes after the Early Tender Date and on or prior to the Expiration Date will be eligible to receive an amount, paid in cash, equal to the Total Consideration less the $40 Early Tender Payment per $1,000 principal amount of Old Notes tendered. Tenders of Old Notes may be withdrawn at any time before the Early Tender Deadline, but not thereafter, unless Visteon reduces either the principal amount of the Old Notes subject to the tender offer or the Total Consideration or withdrawals are otherwise required by law to be permitted. Prior to launching the tender offer, Visteon had discussions with Eligible Holders of approximately $201 million in aggregate principal amount of the Old Notes regarding the proposed terms and conditions of the tender offer and the offering of New Notes. Based on such discussions, Visteon believes that such holders intend to tender all of their Old Notes pursuant to the terms of the tender offer and purchase the required amount of New Notes. Eligible Holders whose Old Notes are accepted for payment in the tender offer shall receive accrued and unpaid interest in respect of such purchased notes from the last interest payment date to, but not including, the settlement date for the tender offer and the offering of New Notes, which is expected to be June 18, 2008, unless the tender offer is extended by Visteon, assuming all conditions to the tender offer have been satisfied or waived. In the event of an over-subscription of the tender offer, Old Notes tendered on or prior to the Expiration Date will be subject to proration. Visteon's obligation to accept for payment and to pay for Old Notes validly tendered and not withdrawn pursuant to the tender offer is conditioned upon: (a) the tender of no less than $300 million in aggregate principal amount of Old Notes, (b) the consummation of the concurrent offering of New Notes to the Eligible Holders and the satisfaction by each Eligible Holder tendering Old Notes of such Eligible Holder's obligation to purchase its applicable amount of New Notes in the concurrent note offering, and (c) satisfaction of certain general conditions. The New Notes will be senior unsecured obligations of Visteon Corporation and will be guaranteed by certain of its U.S. subsidiaries. The New Notes will mature on Dec. 31, 2016, and will bear interest at a rate per annum equal to 12.25%. The New Notes will include a put option pursuant to which a holder can require Visteon to repurchase all or a portion of such holder's New Notes on Dec. 31, 2013 at 100% of the principal amount thereof plus accrued and unpaid interest to such date. All or a portion of the New Notes can be redeemed by Visteon: (a) prior to Dec. 31, 2013, at par plus a make-whole premium and (b) on or after Dec. 31, 2013, at specified redemption prices, plus in each case accrued and unpaid interest, including, if applicable, liquidated damages on the principal amount of New Notes being redeemed. Based in Van Buren Township, Michigan, Visteon Corp. (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic, and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company's other corporate offices are in Shanghai, China; and Kerpen, Germany. The company has facilities in 26 countries and employs approximately 43,000 people. Visteon Corporation's balance sheet at March 31, 2008, showed total assets of $7.2 billion and total liabilities of $7.3 billion resulting in a total shareholders' deficit of about $136 million. * * * As reported in the Troubled Company Reporter on May 22, 2008, Standard & Poor's Ratings Services assigned its 'B-' issue-level rating and '5' recovery rating to Visteon Corp.'s proposed issuance of as much as $210 million in senior unsecured notes due 2016. The 'B-' issue-level rating is one notch below the corporate credit rating on the company, and the '5' recovery rating indicates the expectation for modest (10%-30%) recovery in the event of a payment default. To date, Visteon Corp. holds Moody's Investors Service's Caa2 senior unsecured debt rating, and Fitch Ratings Services' CC senior unsecured debt rating and CCC long-term issuer default rating. VISTEON CORP: Moody's Affirms Debt & Corp. Family Ratings at B3 --------------------------------------------------------------- Moody's Investors Service affirmed Visteon Corporation's debt ratings, including its Corporate Family Rating of B3, Probability of Default of B3, senior secured term loan rating of Ba3, senior unsecured notes of Caa2, and Speculative Grade Liquidity rating of SGL-3. In a related action, Moody's assigned a prospective rating to Visteon's proposed senior unsecured notes, (P)Caa1 (LGD4, 66%). The outlook remains negative. The new senior unsecured note will be combined with approximately $150 million of cash and used to tender for approximately $344 million of Visteon's existing senior unsecured notes due 2010. The transaction will result in a slight deleveraging of the company's balance sheet and will lessen debt maturity requirements in 2010. The new senior unsecured notes are expected to have a maturity of 2016. Subsequent to the proposed transaction Visteon will continue to maintain significant liquidity which should support the company's ongoing restructuring actions. The tender for the senior unsecured notes is not expected to change any of the terms and conditions of the company's existing debt. The new senior unsecured debt will have the benefit of guarantees from domestic subsidiaries, and will have certain covenant baskets aligned with the company's existing senior secured facilities. The subsidiary guarantees of the proposed notes support their Caa1 rating and the one-notch differential relative to the unguaranteed notes which remain rated Caa2. While the new senior unsecured note will have a higher coupon, the impact of the transaction will nominally decrease the company's cash interest expense. The transaction is viewed as supportive of the rating in that it will effectively address a portion of the company's 2010 debt maturities. The B3 Corporate Family Rating continues to recognize Visteon's weak credit metrics and the risk in executing a restructuring program which is essential to the company's long term viability. In part, the company's financial and operating challenges result from meaningful reductions in market share and build-rates by its largest customer, Ford, as well as challenging industry conditions affecting most auto makers and suppliers in North America. Visteon continues to improve its customer mix (sales to Ford's North American operations in the first quarter of 2008 represented about 12% of revenues) and book of new business awards. Nevertheless, pricing pressures in the industry remain significant, and continued cost reductions are necessary to ensure adequate returns are achieved. Even with this challenging operating environment, the company's rating is supported by its liquidity profile. Visteon's SGL-3 Speculative Grade Liquidity Rating represents adequate liquidity over the next 12 months. Cash at March 31, 2008 was $1.6 billion with about 85% of this cash located in North America. Negative free cash flow is expected in 2008 while Visteon executes it restructuring program, but Moody's expects the company's cash balances to be sufficient to cover the expected free cash flow burn over the next twelve months. Visteon had approximately, $177 million available under its $350 million ABL revolver, after LC usage. In addition the company maintained $162 million of availability under its European Securitization. A fixed charge coverage covenant becomes effective when availability under the revolving credit facility falls below $75 million, which is not expected. The rating also reflects a limited scope to develop incremental alternative liquidity arrangements given the extent of assets pledged. The negative outlook incorporates Moody's current view of the challenges facing Visteon in its North American markets, including expected lower vehicle production rates, continued market share erosion of its largest OEM customer, and the need to fully execute a major restructuring program. Ford's recent announcement of production declines for 2008 in North America further exemplifies these pressures. However, partially mitigating the impact of Ford's production decline is Visteon's improving customer mix away from Ford North America and ongoing restructuring efforts. For the LTM period ending March 31, 2008, Visteon's debt/EBITDA (including Moody's standard adjustments) approximated 5.6x. EBIT/interest coverage was approximately 0.6x, while EBITDA/Interest was approximately 2.3x. Visteon's performance is expected to remain at these levels over the near term, until the full effect of the restructuring initiatives take effect. Positive free cash flow is not expected until 2009. Ratings Assigned: * $210 million proposed new senior unsecured notes -- privately place without registration rights, (P)Caa1 (LGD4, 66%); * A prospective rating has been assigned pending confirmation of the final terms of the exchange transaction. If the transaction is completed in accordance with the currently proposed terms, the rating will be affirmed and the prospective designation removed. Ratings affirmed: Visteon Corporation * Corporate Family Rating, B3 * Probability of default, B3 * Secured bank term loan, Ba3 (LGD2, 19%); * Existing Unsecured notes, Caa2 (LGD6, 94%); * Shelf filings for unsecured, subordinated, and preferred, (P)Caa2 (LGD6, 94%), (P)Caa2 (LGD6, 97%), and (P)Caa2 (LGD6, 97%),respectively; * Speculative Grade Liquidity rating, SGL-3 Visteon Capital Trust I * Shelf filing trust preferred, (P)Caa2 (LGD6, 97%) The last rating action was on March 26, 2007 at which time the outlook was changed to negative. Visteon's $350 million revolving credit facility is not rated by Moody's. Visteon Corporation, headquartered in Van Buren Township, MI, is a global tier 1 automotive supplier focused on climate control systems, electronic/lighting products and interiors. Annual product revenues were $11.3 billion in 2007. The company has operations in 26 countries. WCH INC: Delivers Schedules of Assets and Liabilities ----------------------------------------------------- WCH Inc. submitted to the U.S. Bankruptcy Court for the Northern District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $10,010,000 B. Personal Property $628,894 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding $8,050,000 Unsecured Priority Claims F. Creditors Holding $4,636,985 Unsecured Nonpriority Claims ---------- ----------- TOTAL $10,638,894 $12,686,985 San Jose, California-based WCH Inc. sought protection under chapter 11 on April 9, 2008 (Bankr. N.D. Calif. Case No. 08- 51768). Jonathan Do, Esq., at Doan, Nguyen and Do represents the Debtor in its restructuring efforts. WCH INC: Selects Doan Nguyen as Bankruptcy Counsel -------------------------------------------------- WCH Inc. asked the U.S. Bankruptcy Court for the Northern District of California for permission to engage Jonathan Do, Esq., and Orrin Grover, Esq., at Doan, Nguyen and Do as its counsels. The Debtor told the Court that it made careful and diligent inquiry into the qualifications and competence of the two lawyers. Both lawyers and their firm have no connection with any creditor or party-in-interest in the case and hence, represent no interest adverse to the estate or to the Debtor. Both lawyers charge $250 per hour for their services. The Debtor paid the Mr. Do a $2,500 retainer and Mr. Grover a $15,000 retainer. San Jose, California-based WCH Inc. sought protection under chapter 11 on April 9, 2008 (Bankr. N.D. Calif. Case No. 08- 51768). The Debtor's schedules showed total assets of $10,638,894 and total liabilities of $12,686,985. WCH INC: Section 341(a) Meeting Continued June 11 ------------------------------------------------- The United States Trustee for Region 17 scheduled the continuation of a meeting of creditors in the bankruptcy case of WCH Inc. at 1:00 p.m., on June 11, 2008, at the San Jose Room 130, U.S. Federal Building, 280 South First Street in San Jose, California. This is the second 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. San Jose, California-based WCH Inc. sought protection under chapter 11 on April 9, 2008 (Bankr. N.D. Calif. Case No. 08- 51768). Jonathan Do, Esq., and Orrin Grover, Esq., at Doan, Nguyen and Do represents the Debtor in its restructuring efforts. The Debtor's schedules showed total assets of $10,638,894 and total liabilities of $12,686,985. WCH INC: Must Stop Using Cash Collateral, IRS Says -------------------------------------------------- The Internal Revenue Service of the United States of America asked the U.S. Bankruptcy Court for the Northern District of California to prohibit WCH Inc. from using cash collateral based on a declaration of Colbert Tang. The IRS related that a day after the Debtor filed for bankrutpcy, the Court filed an order appointing a patient care ombudsman as disclosed in the Tang Declaration. The IRS claimed that WCH owes unpaid federal tax liabilities totaling $7,322,908, as also disclosed in the Tang Declaration. Of that tax obligation, $2,819,539 is secured and comprises unpaid employment tax liabilities for the second, third and fourth quarters of both 2001 and 2002 and the first quarter of 2003. The IRS' priority claims consists of unpaind employment and unemployment taxes for 2003 through 2008 in the amount of $3,457,463. The IRS has a general unsecured claim of $1,045,904. These tax claims are recorded in Santa Clarita County, California. On April 14, 2008, Mr. Tang, as insolvency advisor of IRS, sent a letter to the Debtor's counsel, Jonathan Do, Esq., requesting that the Debtor cease using cash collateral without the Court's approval. On behalf of the IRS, Mr. Tang asserted that once a debtor files for chapter 11 relief, the debtor is prohibited from using cash collateral to pay creditors unless each entity with an interest in the cash collateral consents to its use, or the Court authorizes its use. According to Mr. Tang, the Debtor not only used cash collateral without the Court's approval as required by Section 363 of the Bankruptcy Code, but it also failed to provide adequate protection to the IRS for the diminishing value of the amount of security to which its lien attaches. About WCH Inc. San Jose, California-based WCH Inc. sought protection under chapter 11 on April 9, 2008 (Bankr. N.D. Calif. Case No. 08- 51768). Jonathan Do, Esq., and Orrin Grover, Esq., at Doan, Nguyen and Do represents the Debtor in its restructuring efforts. The Debtor's schedules showed total assets of $10,638,894 and total liabilities of $12,686,985. WELLCARE HEALTH: Realigns Workforce by Eliminating 208 Positions ---------------------------------------------------------------- WellCare Health Plans Inc. eliminated 208 positions, or approximately 5% of its workforce to realign its workforce to respond to changing business conditions. The realignment resulted from the rising medical benefits expenses and costs associated with a continuing fraud investigation by federal and state regulators, The Wall Street Journal relates. In a press statement, Wellcare stated that most of the reductions were in its Florida and New York Medicaid sales operations, but some corporate and regional support functions were also affected. WellCare remains committed to the Florida and New York Medicaid programs, and incremental investments are being made in these states to expand the provider networks for its Medicaid and Medicare products. In addition, the company has more than 200 open positions for which it continues to recruit. "Making personnel changes such as we've done is difficult," said Heath Schiesser, president and chief executive officer of WellCare Health Plans Inc. "However, it is our obligation to deploy our resources as efficiently and effectively as possible. Our approximately 3800 associates consider it an honor and privilege to serve our more than 2.4 million members nationwide. About WellCare Health Plans Headquartered in Tampa, Florida, WellCare Health Plans Inc. (NYSE: WCG) -- http://www.wellcare.com/-- provides managed care services exclusively for government-sponsored healthcare programs, focusing on Medicaid and Medicare. For the first nine months of 2007, the company reported approximately $4.0 billion in total revenue. As of Sept. 30, 2007, shareholder's equity was $771 million and total medical membership was approximately 1.4 million members. * * * As reported in the Troubled Company Reporter on May 6, 2008, Standard & Poor's Ratings Services said that its 'B+' counterparty credit rating on WellCare Health Plans Inc. remains on CreditWatch, where it was placed on Oct. 25, 2007, with negative implications. WELLMAN INC: Hearing on Panel's Stay Request Deferred to June 17 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York moved the hearing to consider the requests of the Official Committee of Unsecured Creditors appointed in the bankruptcy cases of Wellman Inc. and its debtor-affiliates to June 17, 2008. As reported in the Troubled Company Reporter on May 1, 2008, the Creditors Committee asked the Court to issue a ruling recognizing that the automatic stay was vacated by consent of the Debtors on the Petition Date. The panel also asked for the Court's approval to investigate the Debtors regarding a refinancing transaction in 2004, which had resulted in the Debtors accumulating secured debt. The Court also extended to June 29, 2008, the deadline for challenging the stipulations or other provisions in the final order approving the Debtors' bankruptcy loan. As condition for extending the deadline, the Creditors Committee must file a challenge to the perfection of the liens held by Bank of New York on or before June 8, 2008. At the behest of the Creditors Committee, the Debtors, Deutsche Bank Trust Company Americas, Bank of New York and Wilmington Trust Company, the Court gave them about three weeks to consensually resolve those issues raised by the panel. Parties must file their objections to the Creditors Committee's request to vacate the stay a week before the hearing, as well as their opposition to the proposed investigation four days prior to the hearing. Deutsche Bank serves as the administrative and collateral agent for the Prepetition Revolving Credit Agreement and the DIP Credit Agreement. Meanwhile, Bank of New York and Wilmington succeeded Deutsche Bank as agents for the First and Second Lien Senior Credit Agreements dated February 10, 2004. Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]: WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. WELLMAN INC: Lenders Defer Deadline for Bid Protocol Approval ------------------------------------------------------------- Wellman, Inc., and its debtor-affiliates disclosed that their DIP lenders have granted the Debtors an additional two-week extension -- until June 19, 2008 -- to obtain approval of their bidding procedures by the U.S. Bankruptcy Court for the Southern District of New York. As reported in the Troubled Company Reporter on May 20, 2008, the lenders granted an additional one-week extension, until June 5, 2008, by which the debtors may have their bidding procedures approved by the Court. All other terms of the DIP financing remain the same. The company, in consultation with its stakeholders, is continuing to evaluate offers and restructuring alternatives, including a plan of reorganization, in an effort to maximize the value of the debtors' business on a going concern basis. The Debtors are involved in a dynamic process and believe the majority of their stakeholders think a plan of reorganization is preferable to a sales process. The extension will provide Wellman with additional time to continue discussions with their stakeholders and interested parties to develop the terms of a plan of reorganization. "We are encouraged by the progress we have made on our plan of reorganization," Mark Ruday, Wellman's Chief Executive Officer stated. "We appreciate the support our DIP lenders have provided by extending our deadlines for filing bidding procedures to enable us to work towards this plan of reorganization. A plan of reorganization is the most attractive alternative for Wellman's stakeholders including its customers, suppliers and employees. We will continue to work with our stakeholders to be in a position to file a plan of reorganization in the shortest possible time period." As reported in the Troubled Company Reporter on April 11, 2008, the Court approved the $225,000,000 of DIP Financing from a group of lenders led by Deutsche Bank Securities Inc., as lead arranger and bookrunner; Deutsche Bank Trust Company Americas, as administrative agent; JPMorgan Chase Bank, N.A., as syndication agent; and General Electric Capital Corp., LaSalle Business Credit, LLC, and Wachovia Finance Corp., as co-documentation agents. The Credit Agreement dated Feb. 26, 2008, required the Debtors to: (i) obtain within 90 days after the Petition Date an order from the Bankruptcy Court (a) approving bidding procedures, (b) scheduling bidding deadline, auction date and sale hearing date, and (c) establishing procedures under Sections 364 and 365 of the Bankruptcy Code for the Wellman Sale and the assignment and assumption of certain contracts related thereto; (ii) obtain an order approving the Wellman Sale by July 31, 2008; and (iii) close the sale within 15 days of the later of (i) the entry of the Sale Order, and, if a stay of the order is pending, the date the order becomes final and non-appealable, if during the time of the stay, a bond has been issued. Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]: WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. WICKES FURNITURE: Wants to File Chapter 11 Plan Until September 1 ----------------------------------------------------------------- Wickes Holdings LLC and Wickes Furniture Company Inc. ask the United States Bankruptcy Court for the District of Delaware to extend the exclusive periods to: a) file a Chapter 11 plan until Sept. 1, 2008; and b) solicit acceptances of that plan until Oct. 31, 2008. The extension will provide sufficient time to the Debtors to liquidate all their inventory and leases. The Debtors say the will file a proposed Chapter 11 liquidating plan or some alternative form of resolution of these cases once all assets are disposed. In April 2008, Hilco Joint Venture -- Hilco Merchant Resources LLC, SB Capital Group LLC, Tiger Capital Group LLC and Planned Furniture Promotions, Inc. -- concluded the "going-out-of- business" sale at 37 of the stores owned by the Debtors. The GOB sale at the Debtors' six remaining open stores in Oregon is expected to complete by June 30, 2008, the Debtors says. As reported in the Troubled Company Report on Feb. 29, 2008, the store closing commenced on March 1, 2008, at all stores of the Debtors located in California, Illinois, Indiana and Nevada, wherein at least $75 million of furniture and accessories will be liquidated. A hearing is set for June 26, 2008, at 1:30 p.m., to consider approval of the Debtors' extension request. Objections, if any, are due June 19, 2008, at 4:00 p.m. Briefly Noted On March 28, 2008, the Court authorized the Debtors to access, on a final basis, up to $30,000,000 in debtor-in-possession financing from a syndicate of lenders led by Wells Fargo Retail Finance LLC, as administrative agent. The proceeds of the loan will be used for working capital and general corporate purposes. As reported in the Troubled Company Reporter on Feb. 12, 2008, the committed $30,000,000 secured credit facility will mature and become due on June 3, 2008, unless the Debtors deliver a Chapter 11 plan to Wells Fargo within that time. As of the Debtors' bankruptcy filing, they owed $23,164,019 to Wells Fargo under a revolving loan -- including roughly $4,000,000 in letters of credit. About Wickes Furniture Based in Wheeling, Illinois, Wickes Furniture Company, Inc. -- http://www.wickesfurniture.com/-- is one of the leading furniture retailers in the U.S. with 43 retail stores serving greater Chicago, Los Angeles, Las Vegas, and Portland. Founded in 1971, Wickes offers attractive room packages featuring complete living rooms, dining rooms, bedrooms as well as bedding, home entertainment, accessories and accent furniture. Wickes employs over 1,700 employees and offers products from leading furniture and bedding manufacturers. The company and two of its debtor-affiliates filed for Chapter 11 protection on Feb. 3, 2008 (Bankr. D. Del. Lead Case No. 08- 10213). Donald J. Detweiler, Esq., at Greenberg Traurig LLP, represents the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims, noticing and balloting agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Margaret M. Manning, Esq., at Whiteford Taylor & Preston in Wilmington, Delaware, represents the Committee in these cases. When the Debtors filed for protection from their creditors, they listed consolidated estimated assets of $10 million to $50 million, and estimated debts of $50 million to $100 million. WORNICK COMPANY: DDJ Management Unit Acquires All Assets -------------------------------------------------------- Erik Larson of Bloomberg News reports that Viren Acquisition Corp., designated as "stalking-horse" bidder, produced the best and highest offer for the sale of substantially all assets of Wornick Co. and its debtor-affiliates. Viren Acquisition, an entity created by secured lender DDJ Capital Management LLC, is the only qualified bidder, Mr. Larson said. Another competitor, Sopakaco Inc., was excluded from the bidding because it was denied access to information by the Debtors that was necessary for Sopakco to obtain financing, he notes. A final hearing to approve the sale is set for June 25, 2008. As reported in the Troubled Company Reporter on Feb. 21, 2008, the Debtors asked the U.S. Bankruptcy Court for the Southern District of Oregon to sell substantially all of their assets to Viren Acquisition, subject to higher and better offers. On Feb. 12, 2008, the Debtors and the DDJ Entities entered into a Restructuring Support Agreement under which the Debtors' financial restructuring will be implemented through the sale of all the equity of the reorganized Wornick pursuant to a chapter 11 plan of reorganization. In connection with the RSA, the Debtors have arranged up to $35 million in post-petition secured financing. The Debtors signed the Purchase Agreement with Viren Acquisition, an entity controlled by DDJ Capital Management and DDJ Total Return Loan Fund, L.P., and an ad-hoc group of noteholders who collectively hold more than 50% of the principal amount of $125,000,000 in 10-7/8% Senior Secured Notes due 2011 issued by Wornick. Papers filed in court did not disclose the actual purchase price offered by Viren. The Debtors also asked the Court to: (a) approve procedures for consideration of alternative investment or sale proposals to effect the Debtors' financial restructuring; (b) approve a proposed break-up fee and expense reimbursement; (c) schedule an auction and hearing to approve the sale; and (d) establish procedures relating to the assumption or assignment of executory contracts and unexpired leases and the form and manner of the proposed notice of cure amounts. According to the Debtors, competing offers must be more than the aggregate of the value of the sum of: -- $50,000,000, plus the amount the Debtors actually owe under their $35 million DIP Facility, plus the amount owed under their prepetition secured loan agreement still with the DDJ Entities, excluding a Make-Whole Premium and Redemption Fee payable under the Prepetition Facility; -- $4,000,000, the amount of the Excluded Portion payable under the Prepetition Facility; -- the aggregate amount of assumed liabilities; plus -- $2,250,000, the amount of the Break-Up Fee; plus -- $1,000,000, the maximum amount of the Expense Reimbursement; plus -- a $2,000,000 the Initial Overbid. Headquartered in Cincinnati, The Wornick Company -- http://www.wornick.com/-- is a leading supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods, Inc., Gerber Products Company, as well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semirigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D.O., Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. XM SATELLITE: In Talks with MLB on Amendment to $120MM Escrow Pact ------------------------------------------------------------------ XM Satellite Radio Holdings Inc.'s multi-year agreement with Major League Baseball requires it to maintain $120 million in escrow for the benefit of MLB or furnish other credit support in such amount. This credit support was previously provided through a surety bond which expires June 30, 2008. On May 16, 2008, the company provided $120 million for an escrow arrangement for the benefit of MLB to replace the expiring surety bond. The company is continuing to have discussions with MLB about this escrow and related matters and there may be further developments. The escrow funds were from current operating cash and on May 15, 2008, XM borrowed the remaining $62.5 million available under its $250 million revolving credit facility with a group of banks. This escrow arrangement, which the company intends to replace with a letter of credit, surety bond or other similar arrangement, reduces the company's unrestricted cash liquidity, and could have an adverse effect on its financial position if the company is not able to replace the escrow arrangement with a letter of credit, surety bond or other similar arrangement. Interest under the company's revolving credit facility is currently 6.00% and is based on the prime rate. All amounts drawn under the facility are due on May 5, 2009, and are secured by a lien on substantially all of its assets. In February 2008, XM executed an amendment to the facility to provide that the facility will survive its pending merger with Sirius Satellite Radio Inc. In addition, XM expects to execute an amendment to the facility to provide that the $75 million in cash and cash equivalents the company is required to maintain at all times is lowered to $50 million for a period of 90 days. XM continues to have access to the $150 million credit facility provided by General Motors Corp., which may be used only for payments to GM and which matures in December 2009. XM expects to begin utilizing the General Motors credit facility in June 2008. Provided that XM meets the revenue, expense and cash flow projections of its current business plan, the company expects to be fully funded and not need additional liquidity to continue operations beyond its existing assets, credit facilities and cash generated by operations; its current business plan is based on estimates regarding expected future costs, expected future revenue and assumes the refinancing or renegotiating of certain of its obligations as they become due, including the maturity of its existing credit facilities and $400 million of convertible notes in 2009 and the MLB escrow arrangement. The company costs may exceed or its revenues may fall short of XM's estimates, the estimates may change, and future developments may affect its estimates. Any of these factors may increase the company's need for funds, which would require it to seek additional (including replacement) financing, which financing may not be available on favorable terms or at all, to continue implementing XM's current business plan. In addition, XM may seek additional financing, such as the sale of additional equity and debt securities, to undertake initiatives not contemplated by its current business plan or for other business reasons, or seek to refinance or renegotiate certain of its other obligations. A full-text copy of the amendment to the credit facility is available for free at http://ResearchArchives.com/t/s?2c77 Headquartered in Washington, D.C., XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite radio company. The company broadcasts live daily from studios in Washington, DC, New York City, Chicago, Nashville, Toronto and Montreal. The company also provides satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota. At March 31, 2008, the company's consolidated balance sheet showed $1.7 billion in total assets, $2.7 billion in total liabilities, $60.2 million in minority interest, resulting in a $1.1 billion total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 28, 2008, Standard & Poor's Ratings Services said its ratings on XM Satellite Radio Holdings Inc. and XM atellite Radio Inc. (CCC+/Watch Developing/--) remain on CreditWatch with developing implications, where S&P originally placed them on March 4, 2008, due to S&P's concerns over standalone refinancing risks XM might face if its merger with Sirius Satellite Radio Inc. (CCC+/Watch Developing/--) wasn't approved. ZIFF DAVIS: Files 2nd Amended Disclosure Statement & Plan --------------------------------------------------------- Ziff Davis Media Inc. and its debtor-affiliates delivered to the United States Bankruptcy Court for the Southern District of New York, a blacklined version of their Second Amended Joint Chapter 11 Plan of Reorganization, a full-text copy of which is available for free at: http://bankrupt.com/misc/Blackline_2ndAmendedPlan.pdf If their Plan is not confirmed, the Debtors note that their Chapter 11 cases may be converted to a Chapter 7 liquidation. However, the Debtors believe that a liquidation under Chapter 7 would cause a substantial diminution in their estates. Thus, the Debtors assert that the creditors' acceptance and the Court's confirmation of the Plan affords the greatest realization on their assets. Meanwhile, at the 11th Annual Electronic Gaming Summit, Ziff Davis Media CEO Jason Young said that the company's restructuring process will be wrapped up in June, Kotaku.com reports. The company's $400,000,000 debt will then be reduced to $57,000,000, which will give Ziff sufficient cash flow to invest back in its products like 1Up, EGM and GameVideos, Mr. Young told Kotaku.com. About Ziff Davis Holdings Inc. Ziff Davis Holdings Inc. -- http://www.ziffdavis.com/-- is the ultimate parent company of Ziff Davis Media Inc. Ziff Davis Media Inc. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. O'Melveny & Meyers LLP is the Committee's primary counsel. The Debtors disclosed $144,224,155 in total assets and $441,406,545 in total liabilities, in schedules of assets and debts filed with the Court. The Debtors delivered to the United States Bankruptcy Court for the Southern District of New York, a Joint Chapter 11 Plan of Reorganization, on March 26, 2008. The Plan confirmation hearing is scheduled for June 25, 2008 at 10:00 a.m., prevailing Eastern time. (Ziff Davis Bankruptcy News, Issue No. 11, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: Judge Issues Written Approval of Disclosure Statement ----------------------------------------------------------------- Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York issued a written order on May 7, 2008, approving the Disclosure Statement outlining the Joint Chapter 11 Plan of Reorganization of Ziff Davis Media Inc. and its debtor- affiliates. The Court directed the Debtors to distribute solicitation packages to all holders of claims entitled to vote before May 15, 2008. Ballots are due June 9, 2008. The Debtors may, after consultation with the Ad Hoc Senior Secured Note Holder Group, extend the Voting Deadline, if necessary, without further order of the Court, to June 12, 2008, at the lates, by publishing the extension on http://www.bmcgroup.com/ziffdavis At the Disclosure Statement hearing, Mark K. Thomas, Esq., at Winston & Strawn LLP, in New York, said that the consensual Plan leaves an extremely fair, equitable and extraordinary dividend on the table for out of the money constituents both on the unsecured subordinated bondholders level and the trade creditor committee level. Mr. Thomas also related that the Debtors volunteered to meet with the Official Committee of Unsecured Creditors and the Ad Hoc Committee of Unsecured Noteholders. During their meeting, the Debtors presented their revised forecasts for 2008, 2009 and 2010, and explained what was really happening to the business. Also at that meeting, it was agreed on by the parties and their advisors that a long stay in Chapter 11 would be detrimental to the company, hence the consensual Plan. Mr. Thomas commended all the parties that cooperated with the Debtors. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. O'Melveny & Meyers LLP is the Committee's primary counsel. The Debtors disclosed $144,224,155 in total assets and $441,406,545 in total liabilities, in schedules of assets and debts filed with the Court. The Debtors delivered to the United States Bankruptcy Court for the Southern District of New York, a Joint Chapter 11 Plan of Reorganization, on March 26, 2008. The Plan confirmation hearing is scheduled for June 25, 2008 at 10:00 a.m., prevailing Eastern time. (Ziff Davis Bankruptcy News, Issue No. 11, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: Committee Can Hire BMC as Communications Agent ---------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy case of Ziff Davis Media Inc. and its debtor-affiliates sought and obtained the authority of the U.S. Bankruptcy Court for the Southern District of New York to retain BMC Group, Inc., as communications agent, nunc pro tunc to April 25, 2008. The Committee and the Debtors filed a stipulation regarding creditor access to information pursuant to Sections 105(a), 1102(b)(3), and 1103(c) of the Bankruptcy Code. On April 23, 2008, the Court approved the Stipulation. The Committee's application to retain BMC is in accordance with the Stipulated Order, Hal Goldstein, co-chairman of the Committee, said. Retaining BMC, will assist the Committee in fulfilling its obligations under Section 1102(b)(3), add to the effective administration of the Debtors' Chapter 11 cases, and reduce the overall expense of administering the cases, stated Hal Goldstein, co-chairman of the Creditors Committee. As the Committee's communications agent, BMC is expected to: (a) establish and maintain an internet-accessed Web site that provides, without limitation: -- general information concerning the Debtors, including access to docket filings and general information concerning significant parties in the cases; -- highlights of significant events in the cases; -- a calendar with upcoming significant events in the cases; -- access to the claims docket as and when established by the Debtors or any claim agent retained in the cases; -- a general overview of the Debtors' Chapter 11 process; -- press releases issued by each of the Committee and the Debtors; -- a non-public registration form for creditors to request "real time" case updates via electronic mail; -- a non-public form to submit creditor questions, comments and requests for access to information; -- responses to creditor questions, comments and requests for access to information; provided, that the Committee may privately provide responses in the exercise of its reasonable discretion, including in the light of the nature of the information request and the creditor's agreements to appropriate confidentiality and trading constraints; -- answers to frequently asked questions; and -- links to other relevant websites; (b) distribute case updates via electronic mail for creditors that have registered for service on the Committee Web site; and (c) establish and maintain a telephone number and electronic mail address for creditors to submit questions and comments. According to Mr. Goldstein, the Committee selected BMC because of its reputation as one of the country's leading Chapter 11 administrators which specializes in noticing, claims processing, balloting and other administrative tasks necessary to operate bankruptcy cases effectively. Other Chapter 11 cases in which BMC has been retained as noticing and claims agent or information agent and created websites to provide access to information, include: -- Dana Corp., -- Musicland Holding Corp., -- USA Commercial Mortgage Co., and -- OCA, Inc. Payments to BMC are to be based upon BMC's submission of a billing statement to the Committee and the Debtors within 15 days of the end of each calendar month. The Committee and the Debtors will have 10 days to object to the monthly invoices. If an objection cannot be resolved, the Committee will schedule a hearing before the Court to consider the disputed invoice. Unless advised of an objection, the Debtors will pay each BMC invoice within 30 days after the 10th day after the receipt of the invoice, in the ordinary course of business. If an objection is raised to a BMC invoice, the Debtors will remit to BMC only the undisputed portion of the invoice and, if applicable, will pay the remainder to BMC upon the resolution of the dispute, as mandated by the Court. The fees and expenses incurred by BMC in the performance of its services will be treated as an administrative expense of the Debtors' Chapter 11 estates, and be paid by the Debtors in the ordinary course of business without further application to the Court, Judge Burton Lifland held. The breakdown of BMC's fees are: Print Mail and Noticing Services -------------------------------- Document/Mail File Production Setup $0 - $35 per file Basic one page notice $0.25 + actual postage Copy/print - additional pages $10 per page Finishing (collation, insertion) $0.05 Binding $1.25 each Postage At cost Certified Electronic Noticing $40 per 1,000 Certified Fax Service $0.15 per page Legal Notice Publication Actual Cost/Quote Claims Management ----------------- Claim Receipt, Processing, Docketing $4.50 each claim Claim Analysis and Reconciliation Applicable engagement support rate Database/System Access $250 per month Information Management ---------------------- Live Operator - Call Center $45 per hour Public Website Hosting $250 per month (includes site build) Secure Virtual Data Room Varies based upon requirements Solicitation ------------ Securities Research, Consulting Applicable consulting fees Tabulation (includes certification) $4.50 per ballot Distribution ------------ Check issuance; tax reporting $1.25 Issuance Stock, Notes, Warrants Quote Registrar Quote Document Management Services ---------------------------- Scanning and storage $0.25 per image Physical Document Storage $1.45 per box Electronic Upload/Download $0.08 per page (max $2.40 each) Consulting Support ------------------ Consultation/Build/Content Management $125 per hour Case Admin Managers $95 per hour Data Entry/Clerical $45 per hour The Debtors and their estates will indemnify and hold BMC, its officers, employees and agents harmless against any losses, claims, damages, judgments, liabilities and expense resulting from action taken or permitted by BMC in good faith, with due care and without gross negligence in reliance upon instructions or orders received from the Committee as to anything arising in connection with its performance under a BMC agreement. BMC's liability to the Committee or any person claiming through or under the Committee for any claim, loss, damages or expense of any kind, whether direct or indirect and unless due to gross negligence or willful misconduct, will be limited to the total amount billed or billable to the Committee for the portion of the particular work which gave rise to the loss or damage. Tinamarie Feil, president of BMC's client services, assures the Court that BMC has and represents no interest adverse to the interests of the Committee or the Debtors' estates. BMC is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. O'Melveny & Meyers LLP is the Committee's primary counsel. The Debtors disclosed $144,224,155 in total assets and $441,406,545 in total liabilities, in schedules of assets and debts filed with the Court. The Debtors delivered to the United States Bankruptcy Court for the Southern District of New York, a Joint Chapter 11 Plan of Reorganization, on March 26, 2008. The Plan confirmation hearing is scheduled for June 25, 2008 at 10:00 a.m., prevailing Eastern time. (Ziff Davis Bankruptcy News, Issue No. 11, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: Allowed to Pay FileFront $1,500,000 as APA Cure ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Ziff Davis Media Inc. to assume an asset purchase agreement dated November 4, 2005, with MBPS.COM, Inc., FileFront LP and Todd Faulk and Derek Labian. Judge Burton Lifland also authorized the Debtors to pay FileFront $1,500,000, in full satisfaction of a cure amount with respect to the APA. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. O'Melveny & Meyers LLP is the Committee's primary counsel. The Debtors disclosed $144,224,155 in total assets and $441,406,545 in total liabilities, in schedules of assets and debts filed with the Court. The Debtors delivered to the United States Bankruptcy Court for the Southern District of New York, a Joint Chapter 11 Plan of Reorganization, on March 26, 2008. The Plan confirmation hearing is scheduled for June 25, 2008 at 10:00 a.m., prevailing Eastern time. (Ziff Davis Bankruptcy News, Issue No. 11, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: Noteholders Object to Perella as Panel's Fin. Advisor ----------------------------------------------------------------- The Unofficial Group of Holders of Floating Rate Senior Secured Notes of Ziff Davis Media Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the Southern District of New York to deny the request of the Official Committee of Unsecured Creditors to retain Perella Weinberg Partners LP as financial advisor. The Committee filed with the Court an application to retain Perella as its financial advisor, nunc pro tunc to March 14, 2008. The Application included a flat monthly fee of $100,000, and an additional fee of $1,100,000, in the event a qualifying restructuring transaction is accomplished by the Debtors, less 50% of the monthly fees earned after the first $300,000. Representing the Noteholders, Tracy L. Klestadt, Esq., at Klestadt & Winters LLP, in New York, presented to the Court a comparison of recoveries under the Debtors' initial Joint Chapter 11 Plan of Reorganization and their Second Amended Plan: Equity to Warrants to Class 5 Class 5 Unsecured Convenience Subordinated Subordinated Creditors Class Note Claims Note Claims Pool Recovery ------------ ------------ --------- ----------- Initial 11.2% No $500,000 100% Plan Second 10.0% Yes 1,250,000 50% Amended Plan Mr. Klestadt contends that the marginal difference in recovery, which results from the issuance of modest warrants with less stock to the Class 5 creditors and $750,000 more to the general unsecured creditors but one-half less to the convenience class, does not justify a "Transaction Fee" in excess of $1,000,000. "That would amount to a larger amount to be paid to [Perella] than was obtained by the creditors whose interests they were supposed to champion," Mr. Klestadt says. "Essentially, [Perella] is looking to be compensated on a transaction fee basis after the transaction has been formulated and agreed to, not before." Mr. Klestadt reasons out that the proposed compensation terms of Perella's retention are unreasonable and unsupported. In addition, the retroactive retention proposed by Perella is inappropriate under the circumstances, he asserts. "In actuality, no analysis is offered as to why [Perella] should be paid at least $1,400,000 in compensation assuming the Plan is confirmed, as currently scheduled, at the end of June 2008," Mr. Klestadt says. "In fact, [Perella] does not even intend to keep real time records for the services it performs." Mr. Klestadt points out that the only support offered for Perella's compensation structure is the statement that similar structures have been approved in other Chapter 11 cases. Mr. Klestadt notes that Perella is presently the holder of a claim against the Debtors for $477,000 for prepetition services performed in a similar role to that envisioned by its retention. He says that the declaration supporting the application alludes to Perella's willingness to waive the Perella Prepetition Claim only if Perella's compensation terms are approved. Committee Talks Back On behalf of the Committee, Michael J. Sage, Esq., at O'Melveny & Myers LLP, in New York, contends that the Ad Hoc Group's arguments are unwarranted. Mr. Sage tells the Court that the Committee was required to retain a financial advisor in order to fulfill its fiduciary duty to all unsecured creditors, a duty that gained importance given the Debtors' and the Ad Hoc Group's collective position that unsecured creditors were "out of the money." Mr. Sage argues that the Committee selected Perella because the firm's competitive fee structure, combined with its considerable knowledge base regarding the Debtors' businesses, offered the best value to the Committee and the Debtors' estates. "It is disingenuous and simply unfair to single Perella out from a field of three financial advisors with similar fee structures, particularly when all constituencies -- including the Ad Hoc Group -- are well aware of Perella's extensive involvement in these Chapter 11 cases," Mr. Sage points out. In addition, Mr. Sage says that the Ad Hoc Group's allegation that Perella's fees are not warranted is an example of "skewed factual assessment." "The Ad Hoc Group omits that, on information and belief, they considered an absolute zero recovery for unsecured creditors after the March 26 plan was filed, allegedly due to the Debtors' downward revision to its financial projections in early April 2008," Mr. Sage says. "As a consequence, it is inaccurate to suggest that Perella, in conjunction with the Committee, negotiated the consensual proposed plan of reorganization based solely on the March 26 plan when, in fact, the threat that the Ad Hoc Group would back away from those initial terms was very real." Mr. Sage further argues that Perella's presence and credible enterprise valuation, combined with its potential testimony at any plan confirmation hearing, undoubtedly played a role in bringing major constituencies, including the Ad Hoc Group, back to the negotiating table and obtaining a consensual resolution. "The Committee firmly believes that Perella added value for all unsecured creditors in these Chapter 11 Cases, and that without their efforts, the recovery for unsecured creditors could have been worse, or even nonexistent," Mr. Sage explains. Furthermore, Mr. Sage says that the Ad Hoc Group's alternative argument that Perella's nunc pro tunc retention is unjustified because of unwarranted delay is without merit and should be rejected. Accordingly, the Committee asks the Court to overrule the Ad Hoc Group's Objection. About Ziff Davis Media, Inc. Headquartered in New York city, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. Ziff Davis Holdings Inc. is the ultimate parent company of Ziff Davis Media Inc. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. When Ziff Davis filed for bankruptcy protection, it listed assets of between $100 million to $500 million and debts of $500 million to $1 billion. The Debtors delivered to the United States Bankruptcy Court for the Southern District of New York, a Joint Chapter 11 Plan of Reorganization, on March 26, 2008. The Plan confirmation hearing is scheduled for June 25, 2008 at 10:00 a.m., prevailing Eastern time. (Ziff Davis Bankruptcy News, Issue No. 12, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) * S&P Downgrades Ratings on 93 Classes from 59 US NIM Securities ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 93 classes from 59 U.S. net interest margin securities residential mortgage-backed securities transactions backed primarily by subprime and Alternative-A mortgage collateral issued in 2003, 2004, and 2005. Concurrently, S&P affirmed its ratings on seven classes from seven U.S. NIMS RMBS transactions backed primarily by subprime and Alt-A mortgage collateral also issued between 2003 and 2005. Additionally, S&P's rating on one class from one NIMS deal remains on CreditWatch with negative implications. Finally, we affirmed two additional ratings from two deals based on the ratings on their respective bond insurers. The distribution of the downgrades is as: -- S&P lowered 70 ratings from 43 transactions to 'CC'; -- S&P lowered 18 ratings from 17 transactions to 'CCC'; -- S&P lowered two ratings from two transactions to 'B-'; and -- S&P lowered three ratings from three transactions to 'B'. Standard & Poor's Surveillance Assumptions The primary source of payments to NIMS is the difference between the interest payments collected on the mortgages in the underlying transactions and the interest owed to the related RMBS, together with prepayment penalties and potential payments from derivative contracts. S&P believe that the current levels of delinquencies and losses occurring in the mortgage market have significantly reduced the levels of excess interest available to many of the NIMS transactions. S&P evaluated a number of factors for these U.S. RMBS NIMS transactions, in its cash flow analysis. These include: the amount and source of cash received from the underlying transactions; the rate at which the NIMS are repaying relative to our original projections; whether or not the NIMS have incurred actual interest shortfalls; and the outstanding principal balance relative to the amount of cash being received from its underlying transactions. The cash flow projections include the residual cash flows from each underlying U.S. RMBS transaction's cash flow stress run, as well as the projected proceeds from any cap contract, if applicable. The cash flow projections indicated whether or not, in our view, each NIMS class is likely to pay off and whether or not interest shortfalls are likely. Impact on Current Ratings Losses on the underlying U.S. subprime RMBS, and the timing of such losses, have a direct effect on the cash flows to the NIMS transactions. Once the level of overcollateralization for an underlying transaction falls below its target, the excess spread available to the NIMS transaction is reduced or eliminated, as it is used by the underlying transaction to cover current and previous losses and to rebuild overcollateralization to its target level. The three downgraded classes from the three 2003 U.S. NIMS RMBS transactions have an outstanding principal balance of approximately $1.205 million, or roughly 1.29% of their original principal amount. The three downgraded classes from the three 2004 U.S. NIMS RMBS transactions have an outstanding principal balance of approximately $4.312 million, or roughly 10.13% of their original principal amount. The 87 downgraded classes from the 53 2005 U.S. NIMS RMBS transactions have an outstanding principal balance of approximately $482.504 million, or roughly 24.94% of their original principal amount. Approximately 15.41% of the original 2003, 23.74% of the original 2004, and 51.09% of the original 2005 NIMS pool balances for the underlying transactions is outstanding. The three 2003, three 2004, and 53 2005 U.S. NIMS RMBS transactions are, by vintage, an average of 55 months, 40 months, and 31 months seasoned, respectively. According to S&P's original cash flow projections, these transactions should have already paid off. However, because of worse-than-expected performance of the underlying mortgages and the higher-than-expected prepayment speeds, these NIMS transactions did not receive the cash flow as originally projected. On average, the 2003 NIMS originally represented 5.95% of the original principal balance of the underlying deals; they currently represent 2.40% of the current balance of the underlying deals. Approximately 93.35% of the downgraded 2003 NIMS classes, as a percentage of the total $1.205 million in 2003 downgraded NIMS securities, were rated 'BBB' or lower before these rating actions. The resulting ratings on the downgraded classes from the 2003 transactions, as a percentage of the total $1.205 million in downgraded securities, are as: 2003 Vintage Rating (%) ------ --- CC 74.44 B- 25.56 On average, the 2004 NIMS originally represented 6.79% of the original principal balance of the underlying deals; they currently represent 2.17% of the current balance of the underlying deals. Approximately 44.52% of the downgraded 2004 NIMS classes, as a percentage of the total $4.312 million in downgraded 2004 NIMS securities, were rated 'BBB' or lower before these rating actions. The resulting ratings on the downgraded classes from the 2004 transactions, as a percentage of the total $4.312 million in downgraded securities, are as: 2004 Vintage Rating (%) ------ --- CC 44.52 CCC 55.48 On average, the 2005 NIMS originally represented 3.33% of the original principal balance of the underlying deals; they currently represent 2.33% of the current balance of the underlying deals. Moreover, approximately 81.19% of the downgraded 2005 NIMS classes, as a percentage of the total $482.504 million in downgraded 2005 NIMS securities, were rated 'BBB' or lower before these rating actions. The resulting ratings on the classes from the downgraded 2005 transactions, as a percentage of the total $482.504 million in downgraded securities, are as: 2005 Vintage Rating (%) ------ --- CC 61.91 CCC 19.46 B- 0.02 B 18.61 The downgrades reflect its opinion that the cash flow projections S&P ran at the time S&P assigned the original ratings to these classes indicated that many of these classes should have either paid in full already or should be ahead of their current payment levels. However, due to the worse-than-expected performance of the underlying transactions, as well as higher-than-projected losses and prepayment speeds, these NIMS transactions have not received the cash flows originally projected. The net impact is that these transactions currently have higher class balances than they were projected to have at this point, due, in its view, to the decreasing amount of cash flow that is being generated from the underlying deals. This scenario is exacerbated in structures where there are multiple NIMS classes. S&P believe that the sequential paydown structure of the NIMS compounds how far behind in paydown the lower-rated classes are relative to our projections. This, in turn, effectively prevents these lower-rated classes from receiving any cash flow until the NIMS classes senior to them are paid down. S&P are affirming its ratings on nine classes from nine 2005 NIMS transactions. These transactions are an average 33 months seasoned. S&P affirmed its ratings on the NIMS classes that are projected to pay in full under the aforementioned surveillance assumptions. Approximately 47.90% of the original pool balances of the underlying transactions for these 2005 NIMS transactions is outstanding. Approximately 26.07% of the 2005 NIMS classes with affirmed ratings and the one class with a rating on CreditWatch, as a percentage of the total $37.986 million in affirmed 2005 NIMS securities, were rated 'BBB' or lower before these rating actions. The affirmed ratings on these classes, as a percentage of the total $37.986 million in securities with affirmed ratings, are as: 2005 Vintage Rating (%) ------ --- BB 21.48 BBB- 1.97 BBB 2.62 A- 6.33 AA/Watch Neg 26.33 AAA 41.27 Bond-Insured Classes S&P affirmed its 'AAA' ratings on two classes from two deals (Option One Mortgage Securities Corp. NIM Trust 2005-1 and Ameriquest NIM Trust 2005-RN3) because they reflect the current rating of their bond insurer, FSA Insurance Co. (AAA/Stable/-- financial strength rating). In addition, the 'AA' rating on class B from Park Place NIM 2005-WHQN2 remains on CreditWatch negative because the rating is in line with the rating on its bond insurer, Radian Asset Assurance Inc. (AA/Watch Neg/-- financial strength rating). Standard & Poor's will continue to monitor the performance of the underlying subprime RMBS transactions and the related NIMS. S&P regularly review its assumptions as new information becomes available, and S&P will continue to revise its assumptions, publish updates, and keep market participants informed of changes. Ratings Lowered ABSC NIMs Trust 2005-HE3 Series 2005-HE3 Rating ------ Class CUSIP To From ----- ----- -- ---- A Notes 000778BK5 CC BBB- Aegis Net Interest Margin Trust 2005-4 Series 2005-4 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 007625AF3 CC A- N2 007625AG1 CC BBB- Asset Backed Funding Corporation NIM 2005-HE2 Ltd Series 2005-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 04544MAA4 CC A- N2 04544MAB2 CC BBB CMO Holdings II Ltd. Series 2005-3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 125879ED4 B- BBB- A-3 125879EE2 CCC BB CMO Holdings II Ltd. Series 2005-6 Rating ------ Class CUSIP To From ----- ----- -- ---- A-3 125879FK7 CC BB CMO Holdings II Ltd. Series 2005-17 Rating ------ Class CUSIP To From ----- ----- -- ---- A-3 125879FT8 CC BBB CMO Holdings II Ltd. Series 2005-8 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 125879GE0 CC BBB- A-3 125879GF7 CC BB CMO Holdings II Ltd. Series 2005-19 Rating ------ Class CUSIP To From ----- ----- -- ---- A-3 125879GK6 CC BBB CMO Holdings II Ltd. Series 2005-10 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 125879HP4 CC BBB- A-3 125879HR0 CC BB CMO Holdings II Ltd. Series 2005-20 Rating ------ Class CUSIP To From ----- ----- -- ---- A Notes B BBB B Notes CCC BB CMO Holdings II Ltd. Series 2005-HE11 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 125879JG2 CC A- A-2 125879JH0 CC BBB- A-3 125879JJ6 CC BB Countrywide Home Loan Trust 2005-16N Series 2005-16N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 126670SF6 CCC BBB Countrywide Home Loan Trust 2005-17N Series 2005-17N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 126670SH2 CCC BBB Countrywide Home Loan Trust 2005-5N Series 2005-5N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 1266734N9 CCC BBB Countrywide Home Loan Trust 2005-9N Series 2005-9N Rating ------ Class CUSIP To From ----- ----- -- ---- N 126670GL6 CCC BBB Countrywide Home Loan Trust 2005-AB4N Series 2005-AB4N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 126670RS9 CCC BBB Countrywide Home Loan Trust 2005-AB5N Series 2005 AB5N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 126670SB5 CC BBB Countrywide Home Loan Trust 2005-IM2 N Series 2005-IM2N Rating ------ Class CUSIP To From ----- ----- -- ---- Nts 126670GJ1 CC A- Countrywide Home Loan Trust 2005-IM3N Series 2005-IM3N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 126670PX0 CC A- CSFB NIMs Trust Heat 2005-4 NIM37 Series 2005-4 NIM Rating ------ Class CUSIP To From ----- ----- -- ---- A 12633PDL5 CC BBB B 12633PDM3 CC BBB- CWABS 2005-BC5N Series 2005-BC5N Rating ------ Class CUSIP To From ----- ----- -- ---- N-2 126670SL3 CC BBB- N-3 126670SM1 CC BB CWALT 2005-J4N Series 2005-J4N Rating ------ Class CUSIP To From ----- ----- -- ---- N-4 12667GUX9 CC BB FFML NIM Company 2005 FF9 Series 2005-FF9 Rating ------ Class CUSIP To From ----- ----- -- ---- C 31561RAB2 CCC BB+ FFMLT 2005-FF8-N Ltd. Series 2005-FF8-N Rating ------ Class CUSIP To From ----- ----- -- ---- N1 302446AA7 CCC BBB N2 302446AB5 CCC BB First Franklin CI-11 Series 2004-FFH4 Rating ------ Class CUSIP To From ----- ----- -- ---- N3 320282AC0 CC BB First Franklin CI-14 Series 2005-FFH3 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 32028YAA4 CC A N2 32028YAB2 CC BBB GE-WMC Mortgage Securities CI-NIM 2005-1 Ltd. Series 2005-1 Rating ------ Class CUSIP To From ----- ----- -- ---- N-1 36829AAA8 CC BBB N-2 36829BAA6 CC BB+ Greenwich Structured ARM Products CI 2005-6 Series 2005-6 Rating ------ Class CUSIP To From ----- ----- -- ---- N-1 39700XAA6 B BBB- N-2 39700XAB4 CCC BB GSAA Home Equity Trust 2005-NIM3 Series 2005-NIM3 Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 36242DT45 CCC BBB- GSAMP 2005-HE3-N Ltd. Series 2005-HE3-N Rating ------ Class CUSIP To From ----- ----- -- ---- N1 362423AA3 CCC BBB N2 362423AB1 CC BB GSAMP Trust 2004-WF-N Series 2004-WF-N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 36242DUB7 CC BBB- GSAMP Trust 2005-SD1-N Series 2005-SD1-N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes CC BBB GSAMP Trust 2005-WMC2-N Series 2005-WMC2N Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 362341F79 CC A- HASCO NIM Trust 2005-OPT1 Series 2005-OPT1 Rating ------ Class CUSIP To From ----- ----- -- ---- A Notes 418095AA3 B BBB IndyMac NIM INABS 2005-D Ltd. Series 2005-D Rating ------ Class CUSIP To From ----- ----- -- ---- N1 Notes 456606KD3 CC BBB- N2 Notes 456606KE1 CC BB+ IndyMac NIM Trust INABS 2005-C Series 2005-C Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 456606JG8 CC BBB- JPMAC NIM Trust 2005-FRE1 Series 2005-FRE1 Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 481233AA2 CC A- Long Beach Asset Holdings Corp. CI 2005-3 Series 2005-3 Rating ------ Class CUSIP To From ----- ----- -- ---- N-2 542394AB7 CC BBB+ N-3 542394AC5 CC BBB- Long Beach Asset Holdings Corp. CI 2005-WL1 Series 2005-WL1 Rating ------ Class CUSIP To From ----- ----- -- ---- N-1 542395AA6 CCC A N-2 542395AB4 CC BBB- N-3 54239WAA7 CC BB MASTR CI-10 Series 2005-HE1 Rating ------ Class CUSIP To From ----- ----- -- ---- N2 57643SAB7 CC BB+ MASTR CI-9 Series 2005-WMC1 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 57644BAA5 CC A+ N2 57644BAB3 CC A- Meritage CI-3 Series 2005-1 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 59001TAA9 CC A+ N2 59001TAB7 CC A+ N3 59001TAC5 CC BBB- Meritage CI-4 Series 2005-2 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 590018AA5 CC A+ N2 590018AB3 CC BBB- N3 590018AC1 CC BB Merrill Lynch Mortgage Investors NIM Trust Series 2005-OWN3 Series 2005-OWN3 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 59022MAP6 CC A- Merrill Lynch Mortgage Investors NIM Trust Series 2005-FF6 Series 2005-FF6 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 59022MAL5 CCC A- Merrill Lynch Mortgage Investors NIM Trust Series 2005-FFH1 Series 2005-FFH1 Rating ------ Class CUSIP To From ----- ----- -- ---- N1 59022MAN1 CC A- Park Place NIM 2005-WHQN2 Series 2005-WHQN2 Rating ------ Class CUSIP To From ----- ----- -- ---- A 70070AAA3 CC B- Park Place NIM 2005-WHQN4 Series 2005-WHQN4 Rating ------ Class CUSIP To From ----- ----- -- ---- A 700679AA1 CC BBB B 700679AB9 CC BBB- C 700679AC7 CC BB+ D 700679AD5 CC BB SAIL NIM Company Series 2005-HE3 Rating ------ Class CUSIP To From ----- ----- -- ---- A Notes 784002AJ6 CC BBB- B Notes 783898AE9 CC BB+ SASCO ARC Company Series 2003-5 Rating ------ Class CUSIP To From ----- ----- -- ---- A 80382SAR9 CC BBB- SASCO ARC Company Series 2004-23XS Rating ------ Class CUSIP To From ----- ----- -- ---- A 80382SDH8 CCC BBB+ SB Finance CI-05-ARW4 Series 2005-ARW4 Rating ------ Class CUSIP To From ----- ----- -- ---- N-1 78390YAA7 CCC A- N-2 CC BBB N-3 CC BBB- N-4 CC BB+ SB Finance NIM Trust 2005-HEN1 Series 2005-HEN1 Rating ------ Class CUSIP To From ----- ----- -- ---- Notes CC A- Securitized Asset Backed NIM Trust 2005-HE1 Series 2005-HE1 Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 81375XAQ7 CC BBB- Sharps SP I LLC Net Interest Margin 2005-AG1N Series 2005-AG1N Rating ------ Class CUSIP To From ----- ----- -- ---- N-A 820018CA5 CC BBB N-B 820018CB3 CC BB Sharps SP I LLC Net Interest Margin Trust 2003-2XSN Series 2003-2XSN Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 820018AF6 B- BBB Soundview CI-6 Series 2005-OPT4 Rating ------ Class CUSIP To From ----- ----- -- ---- N2 83610TAB0 CC BBB- N3 83610TAC8 CC BB+ N4 83610TAD6 CC BB Soundview NIM Trust 2005-OPT2 Series 2005-OPT2 Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 83611NAE6 CCC BBB- Terwin NIMs Trust TMTS 2003-8HE Series TMTS2003-8 Rating ------ Class CUSIP To From ----- ----- -- ---- Notes 881562AA0 CC BBB+ Rating Remaining on Creditwatch Negative Park Place NIM 2005-WHQN2 Series 2005-WHQN2 Class CUSIP Rating ----- ----- ------ B 70070AAB1 AA/Watch Neg Ratings Affirmed Ameriquest NIM 2005-RN10 Series 2005-RN10 Class CUSIP Rating ----- ----- ------ C Notes 030752AC3 BB Ameriquest NIM Trust 2005-RN3 Series 2005-RN3 Class CUSIP Rating ----- ----- ------ Notes 03075XAA9 AAA Countrywide Alternative Loan Trust 2005-IM1N Series 2005-IM1N Class CUSIP Rating ----- ----- ------ Notes 12668A5D3 BBB FFML NIM Company 2005 FF9 Series 2005-FF9 Class CUSIP Rating ----- ----- ------ B 31561NAD7 BBB- First NLC NIM Trust 2005-2 Series 2005-2 Class CUSIP Rating ----- ----- ------ Notes 32113JBK0 BBB- GSAMP Trust 2005-WF-N Series 2005-WF-N Class CUSIP Rating ----- ----- ------ Notes 362341J34 A- Option One Mortgage Securities Corp. NIM Trust 2005-1 Series 2005-1 Class CUSIP Rating ----- ----- ------ Notes 68389CBG5 AAA SB Finance NIM Trust 2005-WFHEN1 Series 2005WFHEN1 Class CUSIP Rating ----- ----- ------ Notes 78401NAG5 A- Sharps SP I LLC Net Interest Margin 2005 WF1 Series 2005 WF1 Class CUSIP Rating ----- ----- ------ N-B 820018BZ1 BB * S&P Lowers Ratings on 95 Classes from 78 US RMBS Transactions --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 95 classes from 78 U.S. residential mortgage-backed securities transactions backed by closed-end second-lien mortgage collateral to 'D'. Specifically, S&P lowered its ratings on 23 classes to 'D' from 'CC' and 69 classes to 'D' from 'CCC' from 78 deals. In addition, S&P lowered its rating on one class from one deal to 'D' from 'B'. Finally, S&P lowered its ratings on two classes from one deal to 'D' from 'BB'. The downgrades reflect the deteriorating performance of the collateral pools as monthly net losses continue to significantly outpace monthly excess interest cash flows, resulting in the complete write-down of the overcollateralization for these deals. Some of these transactions have already experienced a complete write-down to the principal balance of other subordinate classes over the past few months. The affected classes experienced principal write-downs during the April 2008 remittance period. As of the April 2008 distribution period, cumulative realized losses ranged from 6.96% (Structured Asset Securities Corp. Series 2005-S1) to 29.07% (CWABS Asset Backed Certificates Trust Series 2006-SPS1) of the original principal balances, and total delinquencies ranged from 13.48% (American Home Mortgage Investment Trust Series 2007-2) to 41.51% (Fremont Home Loan Trust Series 2006-B) of the current principal balances. Seasoning for these transactions ranged from 11 months (First Franklin Mortgage Loan Trust Series 2007-FFC) to 37 months (Structured Asset Securities Corp. Series 2005-S1), and these transactions have outstanding pool factors ranging from approximately 14.34% (Terwin Mortgage Trust Series 2005-3SL) to 84.94% (American Home Mortgage Investment Trust Series 2007-2). If delinquencies continue to translate into realized losses, S&P will likely take further negative rating actions on the other classes from these transactions. Subordination, O/C, and excess interest cash flow provide credit support for these deals. The collateral originally consisted of 30-year, fixed-rate, closed-end second-lien mortgage loans secured by one- to four-family residential properties. Ratings Lowered Ace Securities Corp. Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-ASL1 M-10 D CCC 2006-SL3 M-5 D CCC 2006-SL4 M-6 D CCC 2007-ASL1 M-8 D CC 2007-SL1 M-6 D CC 2007-SL1 M-7 D CC Alliance Bancorp Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2007-S1 M-3 D CC American Home Mortgage Investment Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-2 IV-M-3 D CCC 2006-2 IV-M-4 D CCC 2006-2 IV-M-5 D CCC 2006-3 IV-M-7 D BB 2006-3 IV-M-8 D BB 2006-3 IV-M-9 D B 2006-3 IV-M-10 D CCC 2007-2 II-M-1 D CCC 2007-2 II-M-2 D CC 2007-2 II-M-3 D CC 2007-2 II-M-4 D CC Bear Stearns Mortgage Funding Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-SL2 M-2 D CCC 2006-SL3. M-2 D CCC 2006-SL4. M-2 D CCC 2006-SL5 M-3 D CCC 2006-SL6 M-4 D CCC 2007-SL1 M-6 D CC 2007-SL2 M-5 D CC 2007-SL2 M-6 D CC C-BASS Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2007-SL1. B-4 D CC CWABS Asset Backed Certificates Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-SPS1 M-3 D CCC First Franklin Mortgage Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FFA M7 D CCC 2006-FFB M4 D CCC 2006-FFB M5 D CCC 2007-FFA M-5 D CC 2007-FFC B-3 D CC Fremont Home Loan Trust Rating ------ Transaction Class To From ----------- ----- -- 2006-B SL-M2 D CCC GSAA Home Equity Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-S1 I-M-5 D CCC GSAMP Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-S4 M-5 D CCC 2006-S6 M-2 D CCC Home Equity Mortgage Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-5 M-7 D CCC 2006-1 M-7 D CCC 2006-2. 1M-5 D CCC 2006-3. M-4 D CCC 2006-4 M-3 D CCC 2006-5 M-3 D CCC 2006-6 M-3 D CCC 2007-2. M-1 D CC 2007-2 M-2 D CC MASTR Second Lien Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-1 M-5 D CCC Merrill Lynch Mortgage Investors Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-SL1 B-3 D CCC 2007-SL1 B-3 D CC Morgan Stanley Mortgage Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-4SL B-2 D CCC 2006-10SL B-4 D CCC 2006-14SL B-5 D CCC Nomura Asset Acceptance Corporation Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-S1. B-1 D CCC 2006-S2 M-4 D CCC 2006-S3 M-4 D CCC 2006-S4 M-5 D CCC 2006-S5 M-2 D CCC 2007-S1. M-5 D CC Ownit Mortgage Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-OT1 B-1 D CCC SACO I Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-WM2 B-1 D CCC 2005-7 B-2 D CCC 2005-8 B-2 D CCC 2005-WM3 M-5 D CCC 2005-9 B-1 D CCC 2005-10 I-B-2 D CCC SACO I Trust 2006-2 2006-2 I-B-2 D CCC SACO I Trust 2006-3 2006-3 M-5 D CCC SACO I Trust 2006-6 2006-6 M-3 D CCC 2006-7 M-2 D CCC 2006-9 M-6 D CCC 2006-10 M-5 D CCC 2007-1 M-6 D CC SACO I Trust 2007-2 2007-2 B-1 D CC Structured Asset Securities Corporation Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-S1 B1 D CCC Structured Asset Securities Corporation Mortgage Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-S5 M7 D CCC 2005-S6 M9 D CCC Structured Asset Securities Corporation Mortgage Loan Trust 2006-1 2006-S1 M6 D CCC SunTrust Acquisition Closed-End Seconds Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2007-1 M-1 D CC Terwin Mortgage Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-3SL B-3 D CCC 2005-3SL B-4 D CCC 2005-11 I-B-3 D CCC 2005-13SL B-1 D CCC Terwin Mortgage Trust 2006-1 2006-1 II-M-3 D CCC 2006-HF-1 B-3 D CCC Terwin Mortgage Trust 2006-4SL 2006-4SL M-3 D CCC Terwin Mortgage Trust 2006-6 2006-6 I-M-3 D CCC 2006-6 II-M-1a D CCC 2006-6 II-M-1b D CCC 2006-8 I-M-3 D CCC 2006-8 II-M-2 D CCC Terwin Mortgage Trust 2006-10SL 2006-10SL M-2 D CCC 2006-12SL M-1 D CCC 2007-1SL M-1 D CC 2007-1SL M-2 D CC 2007-3SL M-3 D CC * S&P Says Doubt in Pension Benefits Spurs Seniors to Seek Options ------------------------------------------------------------------ Standard & Poor's Ratings Services has observed that looming uncertainties about Social Security, Medicare, and Medicaid and the relative unpopularity of defined benefit pension plans are spurring many U.S. seniors to seek new sources of retirement income. So it comes as no surprise that many seniors are turning to reverse mortgages for assistance. A reverse mortgage is essentially a home loan that enables borrowers to convert their home equity into a form of income. In a new report, Standard & Poor's examines the types of reverse mortgage products, the growth and changing demographics in the market, and the credit implications of reverse mortgages. The report also discusses how, as the reverse mortgage market advances, Standard & Poor's adjusts its rating assumptions to reflect and capture the changing risks in reverse mortgage securitizations. The article addresses the "payment structure and cash flow mechanics" principle discussed in "Principles-Based Rating Methodology For Global Structured Finance Securities," published May 29, 2007. "Fundamentally, reverse mortgages enable borrowers to access their home equity without having to make monthly mortgage payments," noted Standard & Poor's credit analyst Jeremy Schneider. "Because the borrower is not required to make any cash payments during the life of the loan, there's generally no credit risk associated with reverse mortgages. When lenders determine whether to issue a reverse mortgage, they look at the property's value and the borrower's age, generally 62 or older, and gender," Mr. Schneider added. There are two principal types of reverse mortgages: home equity conversion mortgages and jumbo reverse mortgages. The more common reverse mortgage product available to eligible borrowers is the HECM, which the Federal Housing Administration insures through the U.S. Department of Housing and Urban Development. HECMs make up the lion's share of the reverse mortgage market. HECMs are popular because of the insurance benefit that mitigates most of the lenders' risk associated with a reverse mortgage. However, HECM loans limit the amounts the borrower is able to borrow; this makes the program less attractive to borrowers with relatively high home values and creates an obstacle when borrowers want to borrow greater amounts. Homeowners who wish to borrow amounts that exceed the HECM loan limits are turning to a new product: jumbo reverse mortgages. These products are similar to traditional jumbo forward mortgages because they provide the option to borrow more than the amount allowable under the government-insured loan programs. The key difference for jumbo reverse mortgages is that, because they're not insured, lenders charge higher interest rates to compensate for the added risk. "As the demographics of the aging population change, reverse mortgage products continue to change as well," Standard & Poor's credit analyst Mike Dougherty commented. "The reverse mortgage, once a product designed to provide cash flow to those in need, appears to be making a presence as a 'luxury' and financial planning tool. As the first baby boomers are making the transition to retirement, they're seeking new products that cater to their individual needs," Mr. Dougherty said. "Standard & Poor's refines its rating assumptions and the stresses it uses to analyze securitizations as the reverse mortgage market evolves. Factors such as home price depreciation, the aging population, and the availability of more product options contribute to the need for analytical rigor when assigning a rating to a security backed by reverse mortgages," stated Standard & Poor's credit analyst Waqas Shaikh. "In response to this growing, changing market, Standard & Poor's continues to observe the key attributes of these mortgages and securitizations based on them, honing our analyses to make more accurate assessments," Mr. Shaikh noted. * 28 Defaults Affect $18.9 Billion Debt Through May, S&P Says ------------------------------------------------------------- Through May 13, 2008, there were 28 defaults, affecting debt worth $18.9 billion, said an article published by Standard & Poor's. The article, which is titled "Global Bond Markets-Weakest Links And Monthly Default Rates (Premium)," says that this already exceeds the 22 defaults recorded in all of 2007. In addition, it is just two shy of the 30 defaults in 2006. Of the 28 defaults, 27 were from the U.S., and one was from Canada. The U.S. also leads in the number of weakest links--entities that are closest to the default threshold-with 107 entities or 82%. "Our mean baseline forecast is for the U.S. speculative-grade default rate to escalate to 4.7% in the next 12 months from a 25- year low of 0.97% recorded at the end of 2007," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The increase in defaults reflects the unfolding recessionary conditions, weaker earnings prospects, and continued financial pressures that will increase lending constraints." Continued financial-market volatility, tightening credit conditions, an unfolding housing correction, dollar weakness, and the risk of a larger or a smaller impact of the fiscal stimulus package contribute to substantial variability in the default forecast. A material risk remains that defaults could be significantly more pronounced and severe, especially if the recession would be deeper and longer than expected. * S&P Chips Ratings on 125 Classes of US RMBS from 27 Transactions ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 125 classes of U.S. residential mortgage-backed securities from 27 transactions issued in the first half of 2007 backed by prime jumbo loan collateral. S&P removed 28 of the lowered ratings from CreditWatch with negative implications. In addition, S&P placed 156 ratings on CreditWatch negative. Finally, S&P affirmed its ratings on 13 classes and removed them from CreditWatch negative, and affirmed its ratings on 1,297 other outstanding U.S. prime jumbo RMBS classes issued in 2007. All of the ratings that were removed from CreditWatch were placed on CreditWatch on March 17, 2008. The classes affected by the negative rating actions represent an issuance amount of approximately $5.853 billion, or about 7.03% of the par amount of U.S. RMBS transactions backed by prime jumbo mortgage loans rated by Standard & Poor's in the first half of 2007. Standard & Poor's is reviewing its rated collateralized debt obligation transactions, asset-backed commercial paper conduits, and all rated structured investment vehicle and SIV-lite structures with exposure to these U.S. prime jumbo RMBS classes to determine if any ratings may be affected by these rating actions. 2007 Prime Jumbo Rating Actions The downgrades and CreditWatch placements reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the ratings at their previous levels, given our current projected losses. Loss Assumptions S&P are currently projecting lifetime losses of approximately 0.65%-0.70% of the original principal balance for 2007-vintage U.S. prime jumbo mortgages collateralizing Standard & Poor's rated securities issued during the first half of 2007. S&P calculated individual transaction projections by multiplying the current foreclosure amount by the rate of change that the foreclosure curve forecasted for the upcoming periods. Due to current market conditions, S&P are assuming that it will take approximately 18 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. S&P are assuming a loss severity of 23% for U.S. prime jumbo RMBS transactions. Finally, S&P assumed that the loans that are currently REO would be liquidated in equal amounts over the first eight periods and then added that amount to the projected loss from foreclosures. S&P used the 1999 prime jumbo vintage as its benchmark default curve to forecast the foreclosures for the 2007 vintage. The 1999 vintage experienced the most stress of any issuance year over the past 10 years (excluding recent years since 2005) in terms of foreclosures. S&P expect the losses in the 2007 vintage to significantly exceed those experienced by deals issued in 1999; however, in its opinion, the timing of the losses, and therefore the shape of the loss curve, is more likely to be similar to that of 1999 than to any subsequent year. The lowered ratings reflect S&P's assessment of the creditworthiness of each class and its ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P used in its analysis. For example, one prime jumbo class may have to withstand 150% of its projected loss assumption in order to maintain a 'BB' rating, while a different class may have to withstand losses of approximately 200% of its base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can generally withstand approximately 350% of its projected loss assumptions under its analysis. The rating actions announced today resolve all of the CreditWatch placements taken March 17, 2008, on the 2007 U.S. prime jumbo RMBS vintage. The 156 CreditWatch placements affect 'AAA' rated certificates and one 'AA+' rated certificate. Standard & Poor's will assess whether further rating actions are warranted by considering available credit enhancement for the certificates relative to the projected losses during the timeframe S&P expect the certificates to be outstanding. Factors Driving RMBS Rating Actions Monthly performance data reveals that delinquencies and foreclosures continue to increase for the 2007-vintage prime jumbo RMBS deals. As of the April 25, 2008, distribution date, serious delinquencies on all U.S. prime jumbo RMBS transactions issued during 2007 were 1.16%, up 180% since December 2007. During the same period, cumulative realized losses increased to 0.0098% from 0.0007%. In reviewing the 2007 prime jumbo RMBS transactions, S&P employed the surveillance assumptions announced on Jan. 15, 2008, which are described in "U.S. RMBS Surveillance, CDO Of ABS Assumptions Revised Amid Defaults, Negative Housing Outlook." S&P believe that the application of expected lifetime losses has become appropriate as the depth and duration of the housing downturn continues to increase. S&P lowered the ratings on those classes with expected lifetime losses that exceeded the credit enhancement available to 'CCC'. In addition, S&P lowered its ratings on many of the 2007-vintage certificates that were previously rated 'B' and 'CCC', and lowered its ratings on various pools with high levels of severely delinquent loans to 'CC', as our analysis revealed that these classes have a greater likelihood of default in the near future. The extent to which S&p adjusted the ratings was based on its view of each class' ability to withstand losses in excess of our projections. The table below details the classes with ratings lowered and ratings placed on CreditWatch negative as a percentage of the original balance of the total issuance amount affected ($5.853 billion). 2007 Vintage U.S. Prime Jumbo RMBS Total actions (%) by original balance Rating downgrades CreditWatch negative ------ ---------- -------------------- AAA 0.00 90.91 AA+ 0.39 0.05 AA 3.14 0.00 AA- 0.05 0.00 A+ 0.00 0.00 A 1.90 0.00 A- 0.05 0.00 BBB+ 0.00 0.00 BBB 1.38 0.00 BBB- 0.00 0.00 BB+ 0.05 0.00 BB 1.06 0.00 BB- 0.04 0.00 B+ 0.00 0.00 B 0.89 0.00 B- 0.07 0.00 CCC 0.00 0.00 Total 9.03 90.97 The table below details the classes with ratings lowered and ratings placed on CreditWatch negative as a percentage of the total number of classes with their ratings lowered or placed on CreditWatch. 2007 Vintage U.S. Prime Jumbo RMBS Total actions (%) by number Rating downgrades CreditWatch negative ------ ---------- -------------------- AAA 0.00 51.16 AA+ 1.78 0.36 AA 7.47 0.00 AA- 0.36 0.00 A+ 0.00 0.00 A 7.47 0.00 A- 0.36 0.00 BBB+ 0.00 0.00 BBB 8.54 0.00 BBB- 0.00 0.00 BB+ 0.36 0.00 BB 8.19 0.00 BB- 0.36 0.00 B+ 0.00 0.00 B 9.25 0.00 B- 0.36 0.00 CCC 0.00 0.00 Total 44.48 55.52 S&P will continue to evaluate individual transactions against its loss expectations and make individual adjustments when warranted. Changes in the market and economic conditions will continue to be monitored and incorporated into its assumptions as warranted. * S&P Says Profitability Among US Banks Remained Generally Weak --------------------------------------------------------------- First-quarter profitability among Standard & Poor's Ratings Services-rated large regional U.S. banks remained weak generally, but improved from universally poor fourth-quarter 2007 results, said in a report titled "For Large Regional U.S. Banks, Weak First-Quarter 2008 Results Represent Improvement." Despite poor credit performance and sizable credit costs, fundamental business lines performed reasonably well in the troubled economic environment. The Visa IPO saved the quarter for many banks. The very successful and highly anticipated IPO in a weak equity market raised proceeds that enabled banks to reverse the fourth-quarter litigation reserves. "The large regional banks continue to access the capital markets through hybrids, but they need to focus on generating adequate revenues to provide for losses to buffer their balance sheets--a tall order in this environment. Those that can't get capital or whose ratios continue to deteriorate will be in danger of a downgrade," said Standard & Poor's credit analyst Dan Teclaw. * S&P Places Ratings on Nine US Airlines Under Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on nine U.S. airlines on CreditWatch with negative implications, citing the potential severe financial damage from unprecedented high jet fuel prices. A 10th rated airline, Northwest Airlines Corp. (and its Northwest Airlines Inc. subsidiary, both rated B+/Watch Neg/--) is already on CreditWatch in connection with its proposed merger with Delta Air Lines Inc. (B/Watch Neg/--), whose CreditWatch status was revised to negative from positive. The other airlines placed on CreditWatch are AirTran Holdings Inc. (B-/Watch Neg/--), Alaska Air Group Inc. and its Alaska Airlines Inc. subsidiary (both rated B+/Watch Neg/--), AMR Corp. (B/Watch Neg/B-3) and its American Airlines Inc. subsidiary (B/Watch Neg/--), Continental Airlines Inc. (B/Watch Neg/B-3), JetBlue Airways Corp. (B-/Watch Neg/B-3), Southwest Airlines Co. (A-/Watch Neg/--), UAL Corp. and its United Air Lines Inc. subsidiary (B/Watch Neg/--), and US Airways Group Inc. and its US Airways Inc. and America West Airlines Inc. subsidiaries (each rated B- /Watch Neg/--). Ratings on 'AAA' rated, bond-insured enhanced equipment trust certificates are not included in the CreditWatch listing. "The dramatic increase in jet fuel prices has increased airline costs significantly over the past two months, and, if sustained, could threaten their liquidity and financial profiles," said Standard & Poor's credit analyst Philip Baggaley. "Although airlines will seek to recover the higher costs through additional fare hikes and higher fees, we believe that this will prove increasingly difficult in a weak U.S. economy," the analyst continued. The ability of each airline to withstand this stress varies from case to case, and S&P believe that Southwest Airlines, by far the strongest and best-hedged U.S. airline, and Alaska Air Group, which S&P recently downgraded and which has the industry's second- best fuel hedge position, are in a somewhat better position than others. S&P will review each company's prospects in view of the deteriorating industry outlook and their plans to respond. * BOND PRICING: For the Week of May 19 - May 23, 2008 ----------------------------------------------------- Issuer Coupon Maturity Bid Price ------ ------ -------- --------- AIRTRAN HOLDINGS 7.000% 7/1/2023 73.5000 BOWATER INC 9.500% 10/15/2012 61.8750 BOWATER INC 6.500% 6/15/2013 60.0000 BOWATER INC 9.375% 12/15/2021 60.0000 AMBAC INC 5.950% 12/5/2035 54.0000 AMBAC INC 6.150% 2/7/2087 32.2500 AMERICREDIT CORP 0.750% 9/15/2011 72.5000 AMERICREDIT CORP 2.125% 9/15/2013 66.7500 ALESCO FINANCIAL 7.625% 5/15/2027 59.1000 ANTIGENICS 5.250% 2/1/2025 45.4550 ATHEROGENICS INC 4.500% 9/1/2008 51.5000 ATHEROGENICS INC 4.500% 3/1/2011 11.6310 ATHEROGENICS INC 1.500% 2/1/2012 10.1250 ASSURED GUARANTY 6.400% 12/15/2066 74.0000 ALLEGIANCE TEL 11.750% 2/15/2008 7.3200 ALLEGIANCE TEL 12.875% 5/15/2008 6.8000 ALION SCIENCE 10.250% 2/1/2015 69.0000 LUCENT TECH 6.500% 1/15/2028 75.2500 AMD 6.000% 5/1/2015 66.9325 AMD 6.000% 5/1/2015 67.2350 AMER TISSUE INC 12.500% 7/15/2006 0.2500 AMES TRUE TEMPER 10.000% 7/15/2012 61.0000 AMBASSADORS INTL 3.750% 4/15/2027 52.0000 AMR CORP 9.200% 1/30/2012 70.0000 AM AIRLN EQ TRST 10.680% 3/4/2013 65.0000 AMERICAN AIRLINE 9.730% 9/29/2014 71.5000 AMR CORP 9.000% 9/15/2016 71.0000 AMERICAN AIRLINE 8.390% 1/2/2017 68.0400 AMR CORP 10.150% 5/15/2020 75.0000 AMR CORP 9.880% 6/15/2020 60.0510 AMR CORP 10.000% 4/15/2021 68.6630 AMR CORP 9.750% 8/15/2021 75.0000 EMPIRE GAS CORP 9.000% 12/31/2007 0.0090 ALERIS INTL INC 10.000% 12/15/2016 67.7500 ASHTON WOODS USA 9.500% 10/1/2015 55.5000 ASPECT MEDICAL 2.500% 6/15/2014 55.1210 ASPECT MEDICAL 2.500% 6/15/2014 55.0053 ALLTEL CORP 7.000% 3/15/2016 76.2500 ALLTEL CORP 6.800% 5/1/2029 63.0000 ALLTEL CORP 7.875% 7/1/2032 74.5000 AT HOME CORP 4.750% 12/15/2006 0.0100 AVENTINE RENEW 10.000% 4/1/2017 62.5000 BANK OF AMER CRP 4.500% 6/15/2028 77.7460 BANK NEW ENGLAND 8.750% 4/1/1999 8.0000 BUDGET GROUP INC 9.125% 4/1/2006 0.0100 BEARINGPOINT INC 3.100% 12/15/2024 42.6648 BEARINGPOINT INC 4.100% 12/15/2024 39.8401 BELL MICROPRODUC 3.750% 3/5/2024 70.2680 BALLY TOTAL FITN 13.000% 7/15/2011 68.0000 BANKUNITED CAP 3.125% 3/1/2034 42.5000 BURLINGTON NORTH 3.200% 1/1/2045 53.7360 NORTHERN PAC RY 3.000% 1/1/2047 51.0000 NORTHERN PAC RY 3.000% 1/1/2047 75.0000 BUFFETS INC 12.500% 11/1/2014 2.5000 BON-TON DEPT STR 10.250% 3/15/2014 75.5000 BORLAND SOFTWARE 2.750% 2/15/2012 68.7935 BORLAND SOFTWARE 2.750% 2/15/2012 68.3200 BRODER BROS CO 11.250% 10/15/2010 70.6250 BEAR STEARNS CO 6.000% 5/15/2037 85.0000 CAPMARK FINL GRP 6.300% 5/10/2017 73.0000 CROWN CORK &SEAL 7.500% 12/15/2096 80.6250 COMPUCREDIT 3.625% 5/30/2025 46.0000 COMPUCREDIT 5.875% 11/30/2035 38.5330 CLEAR CHANNEL 5.500% 9/15/2014 70.0000 CLEAR CHANNEL 4.900% 5/15/2015 66.2500 CLEAR CHANNEL 5.500% 12/15/2016 65.0000 CLEAR CHANNEL 6.875% 6/15/2018 69.2500 CLEAR CHANNEL 7.250% 10/15/2027 60.0000 CELL GENESYS INC 3.125% 11/1/2011 74.2360 COUNTRYWIDE HOME 5.000% 5/16/2013 69.8940 COUNTRYWIDE FINL 5.000% 5/11/2015 74.4000 COUNTRYWIDE HOME 5.900% 1/24/2018 65.0000 COUNTRYWIDE HOME 6.000% 1/24/2018 72.0000 COUNTRYWIDE HOME 5.500% 5/16/2018 67.5890 COUNTRYWIDE FINL 5.250% 5/11/2020 64.0610 COUNTRYWIDE FINL 5.250% 5/27/2020 63.1730 COUNTRYWIDE FINL 6.000% 3/23/2021 73.0000 COUNTRYWIDE FINL 6.000% 4/6/2021 69.5000 COUNTRYWIDE FINL 6.000% 4/13/2021 70.2980 COUNTRYWIDE FINL 6.125% 4/26/2021 68.2000 COUNTRYWIDE HOME 6.000% 5/16/2023 68.1300 COUNTRYWIDE FINL 6.000% 3/16/2026 61.2550 COUNTRYWIDE HOME 6.150% 6/25/2029 72.2660 COUNTRYWIDE HOME 6.200% 7/16/2029 63.5000 COUNTRYWIDE HOME 6.000% 7/23/2029 61.2660 COUNTRYWIDE FINL 6.000% 11/22/2030 58.8200 COUNTRYWIDE FINL 5.750% 1/24/2031 66.2980 COUNTRYWIDE FINL 5.800% 1/27/2031 67.7730 COUNTRYWIDE FINL 6.000% 11/14/2035 58.9790 COUNTRYWIDE FINL 6.000% 12/14/2035 58.8610 COUNTRYWIDE FINL 6.000% 2/8/2036 59.2790 COUNTRYWIDE FINL 6.300% 4/28/2036 65.3000 CHEMED CORP 1.875% 5/15/2014 76.5000 CHARMING SHOPPES 1.125% 5/1/2014 64.8750 CHS ELECTRONICS 9.875% 4/15/2005 99.9800 CHARTER COMM LP 5.875% 11/16/2009 67.0410 CHARTER COMM HLD 11.125% 1/15/2011 65.5000 CHARTER COMM HLD 10.000% 5/15/2011 63.0000 CHARTER COMM HLD 11.750% 5/15/2011 63.0000 CCH I LLC 11.125% 1/15/2014 57.9380 CCH I LLC 9.920% 4/1/2014 58.0000 CCH I LLC 10.000% 5/15/2014 58.0000 CHARTER COMM LP 6.500% 10/1/2027 55.3750 CIT GROUP INC 5.000% 11/15/2009 71.0000 CIT GROUP INC 4.700% 12/15/2009 75.0000 CIT GROUP INC 6.500% 3/15/2011 72.0000 CIT GROUP INC 5.250% 11/15/2011 68.5150 CIT GROUP INC 6.050% 5/15/2013 73.9790 CIT GROUP INC 5.200% 10/15/2013 69.5000 CIT GROUP INC 5.100% 11/15/2013 84.7010 CIT GROUP INC 5.050% 9/15/2014 72.0320 CIT GROUP INC 5.100% 10/15/2014 68.6250 CIT GROUP INC 5.750% 12/15/2015 72.6520 CIT GROUP INC 5.950% 9/15/2016 69.0200 CIT GROUP INC 6.050% 9/15/2016 72.2150 CIT GROUP INC 6.000% 11/15/2016 70.2000 CIT GROUP INC 5.800% 12/15/2016 68.2600 CIT GROUP INC 6.250% 8/15/2021 70.4700 CIT GROUP INC 6.150% 9/15/2021 67.4740 CIT GROUP INC 6.250% 9/15/2021 69.9250 CIT GROUP INC 6.250% 11/15/2021 70.0100 CIT GROUP INC 5.875% 12/15/2021 67.5000 CIT GROUP INC 6.100% 3/15/2067 52.0000 COLLINS & AIKMAN 10.750% 12/31/2011 0.0630 CLAIRE'S STORES 9.250% 6/1/2015 67.7500 CLAIRE'S STORES 9.625% 6/1/2015 59.0000 CLAIRE'S STORES 10.500% 6/1/2017 53.2500 COMERICA CAP TR 6.576% 2/20/2037 68.7500 CMP SUSQUEHANNA 9.875% 5/15/2014 71.5000 NEW PLAN REALTY 7.970% 8/14/2026 67.5500 NEW PLAN REALTY 7.650% 11/2/2026 66.2500 NEW PLAN REALTY 7.680% 11/2/2026 68.1250 NEW PLAN REALTY 6.900% 2/15/2028 67.6250 NEW PLAN REALTY 6.900% 2/15/2028 59.0000 NEW PLAN EXCEL 7.500% 7/30/2029 66.0000 NEW ORL GRT N RR 5.000% 7/1/2032 56.3332 CONSTAR INTL 11.000% 12/1/2012 60.2500 CONEXANT SYSTEMS 4.000% 3/1/2026 70.5250 COLOR TILE INC 10.750% 12/15/2001 99.9800 COMPLETE MGMT 8.000% 8/15/2003 0.0003 CARAUSTAR INDS 7.375% 6/1/2009 74.0000 CAPITALSOURCE 3.500% 7/15/2034 70.0000 CV THERAPEUTICS 3.250% 8/16/2013 73.5000 CITIZENS UTIL CO 7.050% 10/1/2046 71.5000 DELTA AIR LINES 9.875% 4/30/2008 49.0000 DELTA AIR LINES 8.000% 12/1/2015 57.0000 DELTA AIR LINES 10.500% 4/30/2016 49.0000 DECODE GENETICS 3.500% 4/15/2011 44.0000 DILLARD DEPT STR 7.750% 7/15/2026 82.0000 DILLARD DEPT STR 7.750% 5/15/2027 79.7500 DILLARDS INC 7.000% 12/1/2028 73.1000 DELTA MILLS INC 9.625% 9/1/2007 10.0000 DENDREON CORP 4.750% 6/15/2014 73.0000 DELPHI CORP 6.500% 8/15/2013 34.9380 DELPHI CORP 8.250% 10/15/2033 10.0000 DELPHI CORP 6.197% 11/15/2033 19.5000 DURA OPERATING 9.000% 5/1/2009 0.0100 DURA OPERATING 8.625% 4/15/2012 9.5000 ENCORE CAPITAL 3.375% 9/19/2010 73.5000 FORD MOTOR CRED 5.650% 11/21/2011 84.2100 FORD MOTOR CRED 5.650% 12/20/2011 74.8100 FORD MOTOR CRED 5.850% 1/20/2012 72.0000 FORD MOTOR CRED 6.250% 12/20/2013 72.0000 FORD MOTOR CRED 6.550% 12/20/2013 74.9800 FORD MOTOR CRED 5.650% 1/21/2014 72.4420 FORD MOTOR CRED 5.750% 1/21/2014 71.5450 FORD MOTOR CRED 5.750% 2/20/2014 66.5100 FORD MOTOR CRED 5.900% 2/20/2014 74.2870 FORD MOTOR CRED 6.050% 3/20/2014 74.0330 FORD MOTOR CRED 6.200% 4/21/2014 73.0000 FORD MOTOR CRED 6.800% 6/20/2014 74.0000 FORD MOTOR CRED 6.000% 11/20/2014 72.6090 FORD MOTOR CRED 6.000% 11/20/2014 75.6570 FORD MOTOR CRED 6.050% 12/22/2014 75.4120 FORD MOTOR CRED 6.050% 12/22/2014 72.0000 FORD MOTOR CRED 6.000% 1/20/2015 71.9600 FORD MOTOR CRED 6.150% 1/20/2015 74.0000 FORD MOTOR CRED 6.250% 1/20/2015 68.2200 FORD MOTOR CRED 6.000% 2/20/2015 70.0000 FORD MOTOR CRED 6.050% 2/20/2015 72.0000 FORD MOTOR CRED 6.100% 2/20/2015 70.3750 FORD MOTOR CRED 6.200% 3/20/2015 74.4290 FORD MOTOR CRED 6.250% 3/20/2015 73.0000 FORD MOTOR CRED 6.500% 3/20/2015 65.5000 FORD MOTOR CRED 6.800% 3/20/2015 72.0000 FORD MOTOR CRED 7.350% 3/20/2015 67.7550 FORD MOTOR CRED 7.350% 9/15/2015 75.1721 FORD MOTOR CRED 7.250% 7/20/2017 74.9190 FORD MOTOR CRED 7.400% 8/21/2017 71.0000 FORD MOTOR CO 6.500% 8/1/2018 72.5000 FORD MOTOR CO 7.125% 11/15/2025 71.0000 FORD MOTOR CO 7.500% 8/1/2026 71.5000 FORD MOTOR CO 6.625% 2/15/2028 65.0000 FORD MOTOR CO 6.625% 10/1/2028 66.1250 FORD MOTOR CO 6.375% 2/1/2029 65.6250 FORD MOTOR CO 7.450% 7/16/2031 73.7500 FORD MOTOR CRED 7.500% 8/20/2032 68.8210 FORD MOTOR CO 7.750% 6/15/2043 63.5000 FORD MOTOR CO 7.400% 11/1/2046 62.0000 FORD MOTOR CO 7.700% 5/15/2097 65.4000 FONTAINEBLEAU LA 10.250% 6/15/2015 72.6875 FRANKLIN BANK 4.000% 5/1/2027 30.2500 FIRST DATA CORP 5.625% 11/1/2011 57.0000 FIRST DATA CORP 4.700% 8/1/2013 49.5000 FIRST DATA CORP 4.850% 10/1/2014 45.0100 FIRST DATA CORP 4.950% 6/15/2015 48.5000 FAMILY GOLF CTRS 5.750% 10/15/2004 0.0100 FGIC CORP 6.000% 1/15/2034 16.7771 FEDDERS NORTH AM 9.875% 3/1/2014 5.0000 FINLAY FINE JWLY 8.375% 6/1/2012 40.5000 FINOVA GROUP 7.500% 11/15/2009 14.2500 FRONTIER AIRLINE 5.000% 12/15/2025 34.2500 FIBERTOWER CORP 9.000% 11/15/2012 78.1250 FULTON CAP TRUST 6.290% 2/1/2036 72.4600 FIVE STAR QUALIT 3.750% 10/15/2026 70.0000 FIVE STAR QUALIT 3.750% 10/15/2026 74.2300 BUILDING MAT COR 7.750% 8/1/2014 74.5000 MEDIANEWS GROUP 6.875% 10/1/2013 48.2500 MEDIANEWS GROUP 6.375% 4/1/2014 46.2500 GOLDEN BOOKS PUB 10.750% 12/31/2004 0.0100 GRANCARE INC 9.375% 9/15/2005 0.0100 GEORGIA GULF CRP 10.750% 10/15/2016 64.2500 GENERAL MOTORS 8.250% 7/15/2023 76.2500 GENERAL MOTORS 8.100% 6/15/2024 73.1250 GENERAL MOTORS 7.400% 9/1/2025 67.0000 GENERAL MOTORS 6.750% 5/1/2028 60.0000 GENERAL MOTORS 8.375% 7/15/2033 74.2500 GENERAL MOTORS 7.375% 5/23/2048 59.0000 GMAC 7.000% 1/15/2013 74.9400 GMAC 7.100% 1/15/2013 74.0000 GMAC 6.500% 2/15/2013 72.5950 GMAC 6.250% 3/15/2013 72.2640 GMAC 5.850% 5/15/2013 65.0000 GMAC 6.100% 5/15/2013 72.9170 GMAC 6.350% 5/15/2013 76.7810 GMAC 6.500% 5/15/2013 74.5000 GMAC 5.700% 6/15/2013 69.0450 GMAC 5.850% 6/15/2013 73.3490 GMAC 5.850% 6/15/2013 68.7800 GMAC 5.850% 6/15/2013 70.5000 GMAC 6.000% 7/15/2013 70.5230 GMAC 6.250% 7/15/2013 67.1100 GMAC 6.375% 8/1/2013 70.7700 GMAC 6.150% 9/15/2013 65.8200 GMAC 5.700% 10/15/2013 69.8000 GMAC 6.250% 10/15/2013 73.5000 GMAC 6.300% 10/15/2013 75.0000 GMAC 6.000% 11/15/2013 69.3300 GMAC 6.100% 11/15/2013 70.0000 GMAC 6.150% 11/15/2013 69.8400 GMAC 6.200% 11/15/2013 67.0000 GMAC 6.250% 11/15/2013 70.5530 GMAC 6.300% 11/15/2013 70.0000 GMAC 5.700% 12/15/2013 71.0000 GMAC 5.900% 12/15/2013 68.9860 GMAC 5.900% 12/15/2013 64.9340 GMAC 6.000% 12/15/2013 71.6670 GMAC 6.150% 12/15/2013 68.5000 GMAC 5.250% 1/15/2014 67.0000 GMAC 5.350% 1/15/2014 68.5000 GMAC 5.750% 1/15/2014 67.7300 GMAC 6.375% 1/15/2014 75.8200 GMAC 6.700% 5/15/2014 70.0000 GMAC 6.700% 5/15/2014 70.0800 GMAC 6.700% 6/15/2014 69.2900 GMAC 6.750% 6/15/2014 74.0000 GMAC 8.400% 8/15/2015 79.7750 GMAC 8.500% 8/15/2015 69.0000 GMAC 6.750% 7/15/2016 69.2000 GMAC 6.600% 8/15/2016 64.0900 GMAC 6.700% 8/15/2016 70.2400 GMAC 6.750% 8/15/2016 66.8900 GMAC 6.875% 8/15/2016 68.7300 GMAC 6.750% 9/15/2016 62.6250 GMAC 7.375% 11/15/2016 73.5000 GMAC 7.500% 11/15/2016 73.5500 GMAC 6.750% 6/15/2017 64.2190 GMAC 6.900% 6/15/2017 63.3400 GMAC 6.950% 6/15/2017 69.5000 GMAC 7.000% 6/15/2017 69.9080 GMAC 7.000% 7/15/2017 65.0000 GMAC 7.500% 8/15/2017 69.6090 GMAC 7.250% 9/15/2017 64.8600 GMAC 7.250% 9/15/2017 68.7650 GMAC 7.250% 9/15/2017 65.0000 GMAC 7.250% 9/15/2017 66.0000 GMAC 7.125% 10/15/2017 67.0000 GMAC 7.200% 10/15/2017 65.3900 GMAC 7.200% 10/15/2017 70.0000 GMAC 7.750% 10/15/2017 71.6740 GMAC 8.000% 10/15/2017 75.1250 GMAC 7.500% 11/15/2017 65.8800 GMAC 7.500% 11/15/2017 68.6880 GMAC 8.000% 11/15/2017 71.2500 GMAC 8.125% 11/15/2017 75.0000 GMAC 7.300% 12/15/2017 62.4800 GMAC 7.400% 12/15/2017 67.0810 GMAC 7.500% 12/15/2017 66.8090 GMAC 7.500% 12/15/2017 66.0500 GMAC 7.250% 1/15/2018 66.7570 GMAC 7.300% 1/15/2018 68.5000 GMAC 7.300% 1/15/2018 67.4960 GMAC 7.000% 2/15/2018 61.1250 GMAC 7.000% 2/15/2018 67.3080 GMAC 7.000% 2/15/2018 62.8750 GMAC 6.750% 3/15/2018 70.5000 GMAC 7.000% 3/15/2018 69.0000 GMAC 7.050% 3/15/2018 68.5000 GMAC 7.050% 3/15/2018 65.3600 GMAC 7.050% 4/15/2018 65.1550 GMAC 7.250% 4/15/2018 63.0000 GMAC 7.250% 4/15/2018 68.0000 GMAC 7.350% 4/15/2018 66.1250 GMAC 7.375% 4/15/2018 72.7500 GMAC 6.600% 5/15/2018 63.5000 GMAC 6.850% 5/15/2018 65.1000 GMAC 7.000% 5/15/2018 65.9010 GMAC 6.500% 6/15/2018 63.0000 GMAC 6.650% 6/15/2018 66.1060 GMAC 6.700% 6/15/2018 64.8000 GMAC 6.700% 6/15/2018 65.6030 GMAC 6.750% 7/15/2018 62.5000 GMAC 6.875% 7/15/2018 65.0400 GMAC 6.900% 7/15/2018 63.5400 GMAC 6.900% 8/15/2018 67.0000 GMAC 7.000% 8/15/2018 63.4820 GMAC 7.250% 8/15/2018 66.9200 GMAC 7.250% 8/15/2018 65.8500 GMAC 6.750% 9/15/2018 66.5630 GMAC 6.800% 9/15/2018 63.0170 GMAC 7.000% 9/15/2018 64.9120 GMAC 7.150% 9/15/2018 62.5000 GMAC 7.250% 9/15/2018 63.5370 GMAC 6.650% 10/15/2018 64.0000 GMAC 6.650% 10/15/2018 62.0000 GMAC 6.750% 10/15/2018 62.9530 GMAC 6.800% 10/15/2018 65.0000 GMAC 6.500% 11/15/2018 61.8160 GMAC 6.700% 11/15/2018 64.1700 GMAC 6.750% 11/15/2018 63.0080 GMAC 6.250% 12/15/2018 64.2500 GMAC 6.400% 12/15/2018 65.0700 GMAC 6.500% 12/15/2018 62.1200 GMAC 6.500% 12/15/2018 64.0000 GMAC 5.900% 1/15/2019 62.6120 GMAC 5.900% 1/15/2019 58.3500 GMAC 6.250% 1/15/2019 62.0990 GMAC 5.900% 2/15/2019 55.7700 GMAC 6.000% 2/15/2019 63.0000 GMAC 6.000% 2/15/2019 58.0000 GMAC 6.000% 2/15/2019 63.7500 GMAC 6.000% 3/15/2019 63.2000 GMAC 6.000% 3/15/2019 63.1000 GMAC 6.000% 3/15/2019 58.9900 GMAC 6.000% 3/15/2019 58.0000 GMAC 6.000% 3/15/2019 59.7500 GMAC 6.000% 4/15/2019 57.7500 GMAC 6.200% 4/15/2019 64.0000 GMAC 6.250% 4/15/2019 60.0000 GMAC 6.350% 4/15/2019 60.7100 GMAC 6.250% 5/15/2019 62.0550 GMAC 6.500% 5/15/2019 61.5610 GMAC 6.750% 5/15/2019 65.2900 GMAC 6.750% 5/15/2019 66.6480 GMAC 6.600% 6/15/2019 64.5000 GMAC 6.600% 6/15/2019 63.3300 GMAC 6.700% 6/15/2019 61.4440 GMAC 6.750% 6/15/2019 62.5000 GMAC 6.750% 6/15/2019 62.9100 GMAC 6.250% 7/15/2019 63.0000 GMAC 6.350% 7/15/2019 66.0000 GMAC 6.350% 7/15/2019 59.9800 GMAC 6.050% 8/15/2019 59.0200 GMAC 6.050% 8/15/2019 63.0000 GMAC 6.150% 8/15/2019 56.5000 GMAC 6.300% 8/15/2019 61.1600 GMAC 6.300% 8/15/2019 60.0900 GMAC 6.000% 9/15/2019 58.4100 GMAC 6.000% 9/15/2019 56.5500 GMAC 6.100% 9/15/2019 60.8750 GMAC 6.150% 9/15/2019 59.5600 GMAC 5.900% 10/15/2019 59.2000 GMAC 6.050% 10/15/2019 63.0000 GMAC 6.125% 10/15/2019 62.2000 GMAC 6.150% 10/15/2019 64.0000 GMAC 6.400% 11/15/2019 64.8000 GMAC 6.400% 11/15/2019 63.7420 GMAC 6.550% 12/15/2019 66.0000 GMAC 6.700% 12/15/2019 65.0000 GMAC 6.500% 1/15/2020 58.0000 GMAC 6.500% 2/15/2020 61.2600 GMAC 6.650% 2/15/2020 61.2600 GMAC 6.750% 3/15/2020 65.4720 GMAC 7.000% 2/15/2021 66.1400 GMAC 7.000% 9/15/2021 68.0000 GMAC 7.000% 9/15/2021 67.8700 GMAC 7.000% 6/15/2022 67.5000 GMAC 7.000% 11/15/2023 64.8750 GMAC 7.000% 11/15/2024 62.0700 GMAC 7.000% 11/15/2024 68.7000 GMAC 7.000% 11/15/2024 68.5000 GMAC 7.150% 1/15/2025 64.0000 GMAC 7.250% 1/15/2025 61.0000 GMAC 7.250% 2/15/2025 68.5000 GMAC 7.150% 3/15/2025 66.2500 GMAC 7.250% 3/15/2025 63.5410 GMAC 7.500% 3/15/2025 62.1220 GMAC 8.000% 3/15/2025 70.6600 OUTBOARD MARINE 10.750% 6/1/2008 10.0000 OUTBOARD MARINE 9.125% 4/15/2017 7.0000 REALOGY CORP 10.500% 4/15/2014 72.8750 REALOGY CORP 12.375% 4/15/2015 53.5000 HUNTINGTON NATL 5.375% 2/28/2019 69.8751 HUNTINGTON CAPIT 6.650% 5/15/2037 68.0000 COLUMBIA/HCA 7.500% 11/15/2095 73.7500 HERBST GAMING 8.125% 6/1/2012 22.5000 HERBST GAMING 7.000% 11/15/2014 21.5000 HARRAHS OPER CO 5.375% 12/15/2013 62.2500 HARRAHS OPER CO 5.625% 6/1/2015 58.0000 HARRAHS OPER CO 6.500% 6/1/2016 59.0000 HARRAHS OPER CO 5.750% 10/1/2017 56.2500 HUMAN GENOME 2.250% 8/15/2012 72.8750 HILTON HOTELS 7.500% 12/15/2017 73.2600 HINES NURSERIES 10.250% 10/1/2011 56.2500 K HOVNANIAN ENTR 8.875% 4/1/2012 71.0000 K HOVNANIAN ENTR 7.750% 5/15/2013 64.0000 K HOVNANIAN ENTR 6.500% 1/15/2014 72.2500 K HOVNANIAN ENTR 6.375% 12/15/2014 70.7500 K HOVNANIAN ENTR 6.250% 1/15/2015 72.2500 K HOVNANIAN ENTR 6.250% 1/15/2016 72.5000 K HOVNANIAN ENTR 7.500% 5/15/2016 72.2500 HERCULES INC 6.500% 6/30/2029 75.0000 HERCULES INC 6.500% 6/30/2029 80.5000 HUTCHINSON TECH 3.250% 1/15/2026 75.2500 HEADWATERS INC 2.500% 2/1/2014 68.0150 HAWAIIAN TELCOM 9.750% 5/1/2013 47.0000 HAWAIIAN TELCOM 12.500% 5/1/2015 30.5380 BORDEN INC 8.375% 4/15/2016 69.2500 BORDEN INC 9.200% 3/15/2021 56.0000 BORDEN INC 7.875% 2/15/2023 52.0500 IDEARC INC 8.000% 11/15/2016 69.6880 IMPERIAL CREDIT 9.875% 1/15/2007 0.0100 ION MEDIA 11.000% 7/31/2013 22.0000 ISOLAGEN INC 3.500% 11/1/2024 15.0000 INDALEX HOLD 11.500% 2/1/2014 70.0000 IRIDIUM LLC/CAP 10.875% 7/15/2005 0.6250 IRIDIUM LLC/CAP 11.250% 7/15/2005 1.0000 IRIDIUM LLC/CAP 13.000% 7/15/2005 1.1630 IRIDIUM LLC/CAP 14.000% 7/15/2005 0.7500 IT GROUP INC 11.250% 4/1/2009 0.2670 JETBLUE AIRWAYS 3.750% 3/15/2035 73.2500 JB POINDEXTER 8.750% 3/15/2014 78.5000 JONES APPAREL 6.125% 11/15/2034 66.0000 JP MORGAN CHASE 10.000% 7/31/2008 69.7500 JP MORGAN CHASE 10.900% 7/31/2008 69.4800 JP MORGAN CHASE 12.000% 7/31/2008 35.7000 JP MORGAN CHASE 9.500% 9/29/2008 70.0000 KEYSTONE AUTO OP 9.750% 11/1/2013 59.0000 KELLSTROM INDS 5.750% 10/15/2002 0.0100 KEMET CORP 2.250% 11/15/2026 70.0000 KEMET CORP 2.250% 11/15/2026 67.8720 KEYCORP CAP VII 5.700% 6/15/2035 78.6500 KIMBALL HILL INC 10.500% 12/15/2012 3.7500 KAISER ALUMINUM 9.875% 2/15/2002 0.0100 KAISER ALUMINUM 12.750% 2/1/2003 6.5000 KN CAP TRUST III 7.630% 4/15/2028 71.0000 K MART FUNDING 8.800% 7/1/2010 1.0000 KMART 95-K1 PT 8.990% 7/5/2010 0.0100 KMART 95-K3 PT 8.540% 1/2/2015 0.0100 KMART 95-K2 PT 9.780% 1/5/2020 0.0100 KRATON POLYMERS 8.125% 1/15/2014 63.5000 KELLWOOD CO 7.625% 10/15/2017 66.0000 LIBERTY MEDIA 4.000% 11/15/2029 56.0000 LIBERTY MEDIA 3.750% 2/15/2030 51.7500 LIBERTY MEDIA 3.500% 1/15/2031 56.0000 LIBERTY MEDIA 3.250% 3/15/2031 71.0000 LAZYDAYS RV 11.750% 5/15/2012 73.5000 LIFETIME BRANDS 4.750% 7/15/2011 72.2500 LEHMAN BROS HLDG 5.250% 9/14/2019 72.2500 LEHMAN BROS HLDG 5.400% 3/6/2020 71.1000 LEHMAN CAP VII 5.857% 5475600% 71.5000 LEINER HEALTH 11.000% 6/1/2012 0.1250 CHENIERE ENERGY 2.250% 8/1/2012 49.0000 LANDRY'S RESTAUR 7.500% 12/15/2014 73.5000 LIFECARE HOLDING 9.250% 8/15/2013 50.0000 LTV CORP 8.200% 9/15/2007 99.9800 EQUISTAR CHEMICA 7.550% 2/15/2026 68.5630 MILLENNIUM AMER 7.625% 11/15/2026 64.7500 MAJESTIC STAR 9.750% 1/15/2011 35.7500 MBIA INC 6.400% 8/15/2022 77.8440 MBIA INC 7.000% 12/15/2025 85.0000 MBIA INC 5.700% 12/1/2034 65.5000 MAGNA ENTERTAINM 7.250% 12/15/2009 51.7500 MAGNA ENTERTAINM 8.550% 6/15/2010 53.0000 MERRILL LYNCH 10.000% 3/6/2009 25.8500 MERRILL LYNCH 11.000% 4/28/2009 25.9900 MERRILL LYNCH 12.000% 3/26/2010 25.9300 MERISANT CO 9.500% 7/15/2013 72.0000 MERIX CORP 4.000% 5/15/2013 53.0000 METALDYNE CORP 11.000% 6/15/2012 38.0000 METALDYNE CORP 10.000% 11/1/2013 66.0000 MASONITE CORP 11.000% 4/6/2015 67.2500 KNIGHT RIDDER 4.625% 11/1/2014 70.5000 KNIGHT RIDDER 5.750% 9/1/2017 68.1200 KNIGHT RIDDER 7.150% 11/1/2027 68.0900 KNIGHT RIDDER 6.875% 3/15/2029 68.5000 MANNKIND CORP 3.750% 12/15/2013 43.8750 MOMENTIVE PERFOR 11.500% 12/1/2016 74.9500 MORRIS PUBLISH 7.000% 8/1/2013 61.2500 MOTOROLA INC 5.220% 10/1/2097 54.4240 MOA HOSPITALITY 8.000% 10/15/2007 75.0000 MOVIE GALLERY 11.000% 5/1/2012 28.5000 MRS FIELDS 9.000% 3/15/2011 73.7500 MORGAN STANLEY 10.000% 4/20/2009 19.5000 MORGAN STANLEY 10.000% 5/20/2009 20.3500 MORGAN STANLEY 8.000% 2/23/2037 73.0000 MILACRON ESCROW 11.500% 5/15/2011 75.5000 NORTH ATL TRADNG 9.250% 3/1/2012 61.5000 NEENAH FOUNDRY 9.500% 1/1/2017 69.0000 NEFF CORP 10.000% 6/1/2015 47.2500 NATL FINANCIAL 0.750% 2/1/2012 71.3430 NEKTAR THERAPEUT 3.250% 9/28/2012 71.6390 NELNET INC 7.400% 9/29/2036 70.0000 NATL STEEL CORP 8.375% 8/1/2006 0.0100 NORTHERN TEL CAP 7.875% 6/15/2026 69.0000 NTK HOLDINGS INC 0.000% 3/1/2014 44.2500 NORTEK INC 8.500% 9/1/2014 74.0000 GLOBAL HEALTH SC 11.000% 5/1/2008 0.3130 NUVEEN INVEST 5.500% 9/15/2015 71.0000 NORTHWESTERN CRP 7.960% 12/21/2026 3.7500 NORTHWST STL&WIR 9.500% 6/15/2001 0.0100 REALTY INCOME 5.875% 3/15/2035 70.8541 OCWEN CAP TRST I 10.875% 8/1/2027 77.0000 OMNICARE INC 3.250% 12/15/2035 72.1880 OAKWOOD HOMES 7.875% 3/1/2004 3.5000 AMER & FORGN PWR 5.000% 3/1/2030 51.7590 OSCIENT PHARM 3.500% 4/15/2011 40.6400 PAC-WEST TELECOM 13.500% 2/1/2009 0.0625 PANOLAM INDUSTRI 10.750% 10/1/2013 79.6250 VERIFONE HOLDING 1.625% 6/15/2012 75.0609 PCA LLC/PCA FIN 11.875% 8/1/2009 4.1900 RESTAURANT CO 10.000% 10/1/2013 72.0000 PALM HARBOR 3.250% 5/15/2024 47.2500 PLY GEM INDS 9.000% 2/15/2012 70.5000 PORTOLA PACKAGIN 8.250% 2/1/2012 62.5000 PROPEX FABRICS 10.000% 12/1/2012 4.0000 PRIMUS TELECOM 5.000% 6/30/2009 58.0000 PRIMUS TELECOM 3.750% 9/15/2010 34.7500 PRIMUS TELECOM 8.000% 1/15/2014 40.0000 POPE & TALBOT 8.375% 6/1/2013 14.0000 PANTRY INC 3.000% 11/15/2012 69.2340 NUTRITIONAL SRC 10.125% 8/1/2009 12.5000 POWERWAVE TECH 1.875% 11/15/2024 68.1960 POWERWAVE TECH 3.875% 10/1/2027 71.0350 POWERWAVE TECH 3.875% 10/1/2027 70.1840 PIXELWORKS INC 1.750% 5/15/2024 70.0000 QUALITY DISTRIBU 9.000% 11/15/2010 65.0000 RITE AID CORP 6.875% 8/15/2013 70.0000 RITE AID CORP 7.700% 2/15/2027 62.5000 RITE AID CORP 6.875% 12/15/2028 55.3000 RADNOR HOLDINGS 11.000% 3/15/2010 0.1250 RAIT FINANCIAL 6.875% 4/15/2027 56.4861 READER'S DIGEST 9.000% 2/15/2017 72.5251 RADIAN GROUP 5.625% 2/15/2013 79.5000 RADIAN GROUP 5.375% 6/15/2015 71.0000 RESIDENTIAL CAP 8.375% 6/30/2010 53.5000 RESIDENTIAL CAP 8.000% 2/22/2011 49.0000 RESIDENTIAL CAP 8.500% 6/1/2012 48.7500 RESIDENTIAL CAP 8.500% 4/17/2013 49.0000 RESIDENTIAL CAP 8.875% 6/30/2015 48.7500 REGIONS FIN TR 6.625% 5/15/2047 101.2710 RF MICRO DEVICES 0.750% 4/15/2012 75.1797 RF MICRO DEVICES 1.000% 4/15/2014 70.4000 RF MICRO DEVICES 1.000% 4/15/2014 68.3898 RH DONNELLEY 6.875% 1/15/2013 66.0000 RH DONNELLEY 6.875% 1/15/2013 66.2500 RH DONNELLEY 6.875% 1/15/2013 67.0000 DEX MEDIA INC 8.000% 11/15/2013 80.0630 RH DONNELLEY 8.875% 1/15/2016 69.0000 RH DONNELLEY 8.875% 10/15/2017 68.0969 RICKEL HOME CNTR 13.500% 12/15/2001 0.0100 ROTECH HEALTHCA 9.500% 4/1/2012 78.0000 RENTECH INC 4.000% 4/15/2013 50.6680 NEXTEL COMMUNIC 6.875% 10/31/2013 70.5000 SURGICAL CARE AF 10.000% 7/15/2017 69.0273 SPECIAL DEVICES 11.375% 12/15/2008 42.5000 SECURUS TECH 11.000% 9/1/2011 77.0000 SEARS ROEBUCK AC 7.500% 10/15/2027 72.3150 SEARS ROEBUCK AC 6.750% 1/15/2028 69.5000 SEARS ROEBUCK AC 6.500% 12/1/2028 66.5000 SEARS ROEBUCK AC 7.000% 6/1/2032 67.6970 SIX FLAGS INC 9.750% 4/15/2013 65.7890 SIX FLAGS INC 9.625% 6/1/2014 67.0000 SIX FLAGS INC 4.500% 5/15/2015 64.5000 SLM CORP 5.000% 3/15/2013 75.0000 SLM CORP 5.250% 9/15/2015 74.0000 SLM CORP 4.100% 12/15/2015 71.8770 SLM CORP 5.550% 3/15/2018 68.9000 SLM CORP 5.650% 3/15/2018 64.5370 SLM CORP 5.600% 6/15/2018 70.2190 SLM CORP 5.250% 3/15/2019 62.0000 SLM CORP 5.400% 3/15/2019 70.7001 SLM CORP 5.500% 3/15/2019 66.7200 SLM CORP 5.190% 4/24/2019 68.3140 SLM CORP 5.000% 6/15/2019 66.6780 SLM CORP 5.150% 6/15/2019 69.4130 SLM CORP 5.500% 6/15/2019 67.1750 SLM CORP 6.000% 6/15/2019 71.4000 SLM CORP 6.000% 6/15/2019 63.5900 SLM CORP 6.000% 9/15/2019 67.2960 SLM CORP 6.000% 9/15/2019 63.2290 SLM CORP 5.250% 6/15/2020 66.0000 SLM CORP 5.000% 9/15/2020 71.1160 SLM CORP 5.200% 12/15/2020 66.7330 SLM CORP 5.450% 12/15/2020 69.3600 SLM CORP 6.150% 3/10/2021 71.3196 SLM CORP 6.000% 6/15/2021 62.9930 SLM CORP 6.000% 6/15/2021 70.5000 SLM CORP 6.100% 6/15/2021 73.0690 SLM CORP 6.150% 6/15/2021 68.3750 SLM CORP 5.600% 3/15/2022 67.5570 SLM CORP 5.650% 6/15/2022 66.2765 SLM CORP 5.650% 6/15/2022 68.7280 SLM CORP 5.050% 3/15/2023 59.0000 SLM CORP 5.400% 3/15/2023 73.0270 SLM CORP 5.450% 3/15/2023 58.2480 SLM CORP 5.625% 1/25/2025 65.4030 SLM CORP 5.350% 6/15/2025 56.8860 SLM CORP 5.350% 6/15/2025 55.0410 SLM CORP 5.550% 6/15/2025 66.0330 SLM CORP 6.000% 6/15/2026 65.6250 SLM CORP 6.000% 6/15/2026 63.0000 SLM CORP 6.000% 12/15/2026 70.1040 SLM CORP 6.000% 12/15/2026 61.8500 SLM CORP 6.000% 12/15/2026 59.6640 SLM CORP 6.000% 12/15/2026 67.4610 SLM CORP 6.050% 12/15/2026 68.4150 SLM CORP 6.000% 3/15/2027 68.0620 SLM CORP 5.200% 3/15/2028 61.7000 SLM CORP 5.250% 3/15/2028 62.0770 SLM CORP 5.550% 3/15/2028 61.5990 SLM CORP 5.000% 6/15/2028 72.7060 SLM CORP 5.250% 6/15/2028 56.7500 SLM CORP 5.350% 6/15/2028 68.3400 SLM CORP 5.450% 6/15/2028 60.6180 SLM CORP 5.450% 6/15/2028 63.0850 SLM CORP 5.500% 6/15/2028 61.8560 SLM CORP 5.550% 6/15/2028 60.5000 SLM CORP 4.800% 12/15/2028 64.8000 SLM CORP 5.000% 12/15/2028 54.2910 SLM CORP 5.150% 12/15/2028 64.1690 SLM CORP 5.250% 12/15/2028 68.6100 SLM CORP 5.300% 12/15/2028 66.3750 SLM CORP 5.600% 12/15/2028 70.0000 SLM CORP 5.800% 12/15/2028 63.5450 SLM CORP 6.000% 12/15/2028 61.4000 SLM CORP 6.100% 12/15/2028 70.3520 SLM CORP 5.600% 3/15/2029 69.3340 SLM CORP 5.600% 3/15/2029 58.5650 SLM CORP 5.650% 3/15/2029 74.2670 SLM CORP 5.650% 3/15/2029 59.2500 SLM CORP 5.700% 3/15/2029 65.0890 SLM CORP 5.700% 3/15/2029 62.3300 SLM CORP 5.700% 3/15/2029 60.8920 SLM CORP 5.700% 3/15/2029 65.2050 SLM CORP 5.700% 3/15/2029 64.1030 SLM CORP 5.750% 3/15/2029 57.1300 SLM CORP 5.750% 3/15/2029 72.1390 SLM CORP 5.750% 3/15/2029 63.5460 SLM CORP 5.750% 3/15/2029 62.5000 SLM CORP 5.750% 3/15/2029 66.6000 SLM CORP 6.000% 3/15/2029 66.6860 SLM CORP 5.500% 6/15/2029 63.8610 SLM CORP 5.500% 6/15/2029 64.5020 SLM CORP 5.500% 6/15/2029 63.2990 SLM CORP 5.750% 6/15/2029 58.0750 SLM CORP 5.750% 6/15/2029 65.0330 SLM CORP 6.000% 6/15/2029 62.0540 SLM CORP 6.000% 6/15/2029 61.5790 SLM CORP 6.000% 6/15/2029 60.4500 SLM CORP 6.250% 6/15/2029 68.0400 SLM CORP 6.250% 6/15/2029 68.0360 SLM CORP 5.750% 9/15/2029 62.4690 SLM CORP 5.850% 9/15/2029 64.8350 SLM CORP 5.850% 9/15/2029 64.3940 SLM CORP 6.000% 9/15/2029 64.7360 SLM CORP 6.000% 9/15/2029 59.0930 SLM CORP 6.000% 9/15/2029 65.0100 SLM CORP 6.000% 9/15/2029 65.4200 SLM CORP 6.000% 9/15/2029 69.5300 SLM CORP 6.150% 9/15/2029 69.4060 SLM CORP 6.150% 9/15/2029 66.2400 SLM CORP 6.250% 9/15/2029 66.5000 SLM CORP 6.250% 9/15/2029 67.4320 SLM CORP 5.600% 12/15/2029 63.1900 SLM CORP 5.650% 12/15/2029 65.8600 SLM CORP 5.650% 12/15/2029 63.1520 SLM CORP 5.700% 12/15/2029 61.6080 SLM CORP 5.750% 12/15/2029 68.4100 SLM CORP 5.750% 12/15/2029 64.6460 SLM CORP 5.750% 12/15/2029 64.3370 SLM CORP 5.750% 12/15/2029 57.2990 SLM CORP 5.400% 3/15/2030 52.4320 SLM CORP 5.500% 3/15/2030 61.9730 SLM CORP 5.650% 3/15/2030 63.5750 SLM CORP 5.700% 3/15/2030 63.5780 SLM CORP 5.750% 3/15/2030 64.0820 SLM CORP 5.750% 3/15/2030 67.3800 SLM CORP 5.400% 6/15/2030 53.1060 SLM CORP 5.650% 6/15/2030 59.4500 SLM CORP 5.300% 9/15/2030 62.9470 SLM CORP 5.500% 12/15/2030 61.2730 SLM CORP 5.500% 12/15/2030 60.2060 SLM CORP 6.000% 6/15/2031 57.6560 SLM CORP 6.000% 6/15/2031 65.3750 SLM CORP 6.250% 9/15/2031 67.1020 SLM CORP 6.350% 9/15/2031 69.0850 SLM CORP 6.350% 9/15/2031 67.0070 SLM CORP 6.400% 9/15/2031 61.5650 SLM CORP 6.450% 9/15/2031 67.9440 SLM CORP 6.500% 9/15/2031 66.8260 SLM CORP 5.850% 12/15/2031 63.0860 SLM CORP 6.000% 12/15/2031 65.7660 SLM CORP 6.000% 12/15/2031 65.2730 SLM CORP 6.000% 12/15/2031 57.5030 SLM CORP 6.000% 12/15/2031 65.6330 SLM CORP 6.050% 12/15/2031 65.3200 SLM CORP 6.100% 12/15/2031 65.7500 SLM CORP 6.200% 12/15/2031 65.6530 SLM CORP 5.650% 3/15/2032 62.4710 SLM CORP 5.700% 3/15/2032 58.0350 SLM CORP 5.800% 3/15/2032 63.8000 SLM CORP 5.800% 3/15/2032 62.3220 SLM CORP 5.800% 3/15/2032 64.9564 SLM CORP 5.850% 3/15/2032 58.1940 SLM CORP 5.850% 3/15/2032 65.3876 SLM CORP 5.850% 3/15/2032 58.6870 SLM CORP 5.750% 6/15/2032 63.9590 SLM CORP 5.750% 6/15/2032 64.4210 SLM CORP 5.850% 6/15/2032 65.3858 SLM CORP 5.850% 6/15/2032 65.3858 SLM CORP 5.625% 8/1/2033 73.3000 SLM CORP 6.850% 7/7/2036 72.3607 SLM CORP 6.000% 3/15/2037 61.2500 SLM CORP 6.000% 3/15/2037 65.9390 SLM CORP 6.000% 3/15/2037 62.2500 SPECTRUM BRANDS 7.375% 2/1/2015 67.7500 STANDARD PACIFIC 9.250% 4/15/2012 64.8750 STANDRD PAC CORP 6.000% 10/1/2012 61.0000 STANDRD PAC CORP 6.250% 4/1/2014 73.2500 STANDARD PACIFIC 7.000% 8/15/2015 73.5000 SPANSION LLC 11.250% 1/15/2016 65.3645 SPANSION LLC 2.250% 6/15/2016 48.9736 STANLEY-MARTIN 9.750% 8/15/2015 47.0000 STATION CASINOS 6.500% 2/1/2014 65.2500 STATION CASINOS 6.875% 3/1/2016 63.7500 STATION CASINOS 6.625% 3/15/2018 61.0000 SERVICEMASTER CO 7.100% 3/1/2018 60.0000 SERVICEMASTER CO 7.450% 8/15/2027 40.5000 SAVVIS INC 3.000% 5/15/2012 74.9720 SWIFT TRANS CO 12.500% 5/15/2017 34.6250 TENET HEALTHCARE 6.875% 11/15/2031 72.3330 THERAVANCE INC 3.000% 1/15/2015 72.5600 TRANSMERIDIAN EX 12.000% 12/15/2010 66.7500 TOM'S FOODS INC 10.500% 11/1/2004 0.2580 TOUSA INC 9.000% 7/1/2010 60.0000 TOUSA INC 9.000% 7/1/2010 59.0000 TOUSA INC 7.500% 3/15/2011 10.5630 TOUSA INC 10.375% 7/1/2012 10.5630 TOUSA INC 7.500% 1/15/2015 9.3390 TOYS R US 7.375% 10/15/2018 73.5460 TRIBUNE CO 4.875% 8/15/2010 52.0000 TIMES MIRROR CO 7.250% 3/1/2013 33.0000 TRIBUNE CO 5.250% 8/15/2015 44.9900 TIMES MIRROR CO 7.500% 7/1/2023 37.0950 TIMES MIRROR CO 6.610% 9/15/2027 35.0000 TIMES MIRROR CO 7.250% 11/15/2096 40.5600 TRUMP ENTERTNMNT 8.500% 6/1/2015 58.0200 WIMAR OP LLC/FIN 9.625% 12/15/2014 53.0000 TRUE TEMPER 8.375% 9/15/2011 67.0000 TREX CO INC 6.000% 7/1/2012 63.8150 RJ TOWER CORP 12.000% 6/1/2013 1.0000 TEXAS UTIL ELEC 8.175% 1/30/2037 73.5000 UAL 1991 TRUST 10.020% 3/22/2014 47.5000 UAL 1995 TRUST 9.560% 10/19/2018 45.2500 UAL CORP 5.000% 2/1/2021 66.1250 UAL CORP 4.500% 6/30/2021 68.3528 UAL CORP 4.500% 6/30/2021 68.8770 US AIR INC 10.900% 1/1/2049 0.0100 US AIR INC 10.550% 1/15/2049 0.0100 US AIR INC 10.700% 1/15/2049 0.0100 UNIVERSAL STAND 8.250% 2/1/2006 0.0100 MISSOURI PAC RR 5.000% 1/1/2045 70.0000 CHIC EAST ILL RR 5.000% 1/1/2054 61.0000 USEC INC 3.000% 10/1/2014 71.2160 VISTEON CORP 7.000% 3/10/2014 70.0000 VERTIS INC 10.875% 6/15/2009 37.1250 VISKASE COS INC 11.500% 6/15/2011 74.5000 VIROPHARMA INC 2.000% 3/15/2017 72.5000 VICORP RESTAURNT 10.500% 4/15/2011 26.5000 VERENIUM CORP 5.500% 4/1/2027 63.4400 VERASUN ENERGY 9.375% 6/1/2017 66.3530 VERASUN ENERGY 9.375% 6/1/2017 67.0000 VESTA INSUR GRP 8.750% 7/15/2025 2.1250 WEBSTER CAPITAL 7.650% 6/15/2037 69.8750 WCI COMMUNITIES 9.125% 5/1/2012 43.0000 WCI COMMUNITIES 7.875% 10/1/2013 51.7500 WCI COMMUNITIES 6.625% 3/15/2015 40.0000 WCI COMMUNITIES 4.000% 8/5/2023 69.3750 WINSTAR COMM INC 10.000% 3/15/2008 0.0030 WINSTAR COMM INC 14.750% 4/15/2010 0.0020 WERNER HOLDINGS 10.000% 11/15/2007 0.0070 WILLIAM LYON 7.625% 12/15/2012 62.0000 WILLIAM LYON 10.750% 4/1/2013 63.9040 WILLIAM LYON 7.500% 2/15/2014 59.5000 WASH MUTUAL PFD 6.534% 3/29/2049 58.4695 WASH MUTUAL PFD 6.895% 6/29/2049 61.0149 WASH MUTUAL PFD 6.665% 12/31/2049 64.1107 WORNICK CO 10.875% 7/15/2011 65.5000 PEGASUS SATELLIT 9.750% 12/1/2006 0.1250 PEGASUS SATELLIT 12.500% 8/1/2007 0.1250 YOUNG BROADCSTNG 10.000% 3/1/2011 64.7500 YOUNG BROADCSTNG 8.750% 1/15/2014 58.7500 ********* 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 ***