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/raid1/www/Hosts/bankrupt/TCR_Public/080603.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, June 3, 2008, Vol. 12, No. 131 Headlines ACA ABS: Fitch Chips Rating on $6.385MM Class A-1SW Notes to BB+ ACACIA OPTION: Moody's Cuts Ratings on Notes, to Undertake Review ACE SECURITIES: S&P Lowers Ratings on 21 Classes of Certificates ACCUITY LLC: Moody's Puts Ratings Under Review for Possible Cut AIRTRAN HOLDINGS: Affiliate Defers Delivery of 18 Aircraft to 2014 ALLIED WASTE: Fitch Holds 'CCC+/RR6' Rating on Subordinated Notes ALOHA AIRLINES: Trustee to Auction Legal Claim in Mesa Air Suit ALON USA: Moody's Assigns B1 Rating to New Senior Loan Facility AMERICAN COLOR: Inks Deal on Ch. 11 Prepack Plan of Reorganization ARIEL WAY: Accountant Reports Errors in Cash Flow Statements ARRIVA PHARMA: Rival's Appeal Against Confirmation Order Trashed ARVINMERITOR INC: Moody's Affirms 'B1 Corporate Family Rating ASTRATA GROUP: Removes Anti-Dilution, Other Terms in Warrants ATA AIRLINES: U.S. Trustee Removes McGinley from Creditors Panel ATA AIRLINES: Panel Seeks Exemption from Sec. 1102(b)(3)(A) ATA AIRLINES: Asks Court to Employ Hostetler as Local Counsel AUSTIN JAMES: Case Summary & 20 Largest Unsecured Creditors AVENUE WEST: Case Summary & 20 Largest Unsecured Creditors BARBARA BEHM: Case Summary & 7 Largest Unsecured Creditors BEAR STEARNS: Turns Over Trading Documents to Aid SEC Inquiry BEAR STEARNS: Fitch Lifts Ratings After Merger with JPMorgan BEAR STEARNS: Moody's Rating Review Sustains Despite JPMorgan Deal BFC SILVERTON: Moody's Junks Rating on Up to $450MM Notes Due 2046 BIOLARGO INC: Posts $2,417,000 Net Loss in 2008 First Quarter BLUE WATER: June 18 Court Date to Confirm Second Amended Plan BLUE WATER: CIT Capital Wants Evidentiary Hearing on Plan BOMBAY CO: Files Disclosure Statement and Joint Chapter 11 Plan BRIDGEWATER POINTE: Court Sets Claim-Filing Deadline June 30 BRIDGEWATER POINTE: Gets Court OK to Hire Kevin Mele as Accountant BUNCH COMPANY: Voluntary Chapter 11 Case Summary BUSHNELL LOAN: Fitch's Withdraws Ratings After Restructuring CALPINE CORP: Fitch Publishes NRG/Calpine Asset Value Estimates CANAL POINT: Fitch Withdraws Ratings After Transaction Amendments CEDAR FUNDING: Case Summary & 20 Largest Unsecured Creditors CELESTICA INC: Moody's Holds Ratings and Revises Outlook to Stable CIFG GUARANTY: Capital Could Fall Below Min.; Fitch Junks Ratings CIT RV TRUST: S&P Junks Ratings on Two Note Classes CLARIENT INC: Appoints Raymond Land as CFO and Senior VP CLASS V: Moody's Cuts Ba3 Rating on $1.4 Billion Notes to Ca CLASS V: Deteriorating Credit Quality Cues Moody's Ratings Cut CLEARPOINT BUSINESS: Gets Nasdaq Notice on Listing Noncompliance COMMONWEALTH EDISON: Fitch Affirms 'BB+' Issuer Default Rating CORONA BOREALIS: S&P Puts Default Ratings on Two CDO Transactions CWALT INC: Moody's Chips Ratings to Ca on Two Certificate Classes DANIEL GUILLORY: Case Summary & Largest Unsecured Creditors DARCOMM NETWORK: Case Summary & Largest Unsecured Creditors DAWAHARES LEXINGTON: Closes 9 Shops After Bankruptcy Filing DAWAHARES LEXINGTON: Case Summary & 20 Largest Unsecured Creditors DEBORAH BRANNON: Case Summary & Largest Unsecured Creditors DEEPER CHRISTIAN: Case Summary & Largest Unsecured Creditors DEEP OCEAN: Voluntary Chapter 11 Case Summary DELPHI CORP: Expects to Borrow $254MM from Lender Group on June 9 DELPHI CORP: Sells Power Products Business Assets for $7.8 Mil. DIOGENES CDO: Moody's Lowers Ratings and Left Under Review DELPHI CORP: Completes $10MM Sale of Kettering Facility to Tenneco DELTA AIR: To Cut 1,000 More Jobs Than Initially Planned DELTA AIR: 60% of Flight Attendants Trash AFA Representation DELTA AIR: Joins Northwest in Filing Merger Pact Prospectus DRI CORP: Earns $722,000 in 2008 First Quarter Ended March 31 EOS AIRLINES: Cohen Tauber Approved as Committee's Counsel EOS AIRLINES: Files Schedules of Assets and Liabilities ESMARK INC: Board Remains Neutral, Will Weigh OAO Severstal Offer FIELDSTONE MORTGAGE: Judge Schneider Approves Disclosure Statement FORTUNOFF: Four Creditors Demand $379,789 Repayment of Goods FRANCESCHINI CONSTRUCTION: Voluntary Chapter 11 Case Summary FORD MOTOR: Tracinda Waives Tender Offer Term on Share Price Drop FORD MOTOR: Completes Sale of Jaguar & Land Rover to Tata Motors FRONTIER AIRLINES: In Talks with Expedia on Selling Tickets Online FRONTIER AIRLINES: Inks Credit Card Deal with First Data GE-WMC MORTGAGE: S&P Lowers Ratings of Certs. from CC to D GREEKTOWN CASINO: Continues $500 Million Expansion of Casino GREEKTOWN CASINO: Finalizing $150MM Loan, to Complete Project GREEKTOWN CASINO: Moody's Chips Ratings After Bankruptcy Filing GREEKTOWN CASINO: Bankruptcy Filing Cues S&P's Default Rating GREENWHICH CAPITAL: Moody's Junks Ratings on P and Q Trusts GSC PARTNERS: Moody's Lifts Rating to Baa3 from Ba3 on $10MM Notes GULFMARK OFFSHORE: Rigdon Deal Prompts Moody's to Affirm Ratings HANOVER INSURANCE: S&P Upgrades Credit Rating to BBB- from BB+ HEXCEL CORP: Moody's Affirms 'Ba3' Corporate Family Rating HIGHGATE ABS: Moody's to Review Ratings on Possible Further Cut HOME INTERIORS: To Cut 83 Night Jobs & 24 Management Positions HUBCO INC: Section 341(a) Meeting Set for Thursday HUNTER'S POINT: Owners Partner with Synergy Golf Course IMAC CDO: Moody's Cuts Notes Rating, to Undertake Review INDUSTRIAL DEVELOPMENT: Fitch Cuts Rating on $35MM Bonds to 'B' INTEREP NATIONAL: Judge Drain Approves Disclosure Statement JAM ENTERPRISES: Case Summary & 6 Largest Unsecured Creditors JAMES TRANSPORT: Case Summary & Largest Unsecured Creditors JETBLUE AIRWAYS: Prices 5.5% Convertible Debentures Offering JETBLUE AIRWAYS: Grants Options to Underwriters to Buy Debentures JETBLUE AIRWAYS: Fitch Rates $175MM Conv. Debentures 'CCC-/RR6' JEVIC TRANSPORTATION: Wants Access to CIT's $60,000,000 Facility JEVIC TRANSPORTATION: Wants to Hire Epiq as Claims Agent JONES WYCHE: Voluntary Chapter 11 Case Summary JP MORGAN: Moody's Places Low-B Ratings on Six Certificate Classes KEOKUK HEALTH: Moody's Affirms KAH's B3 Debt Rating KLEROS PREFERRED: Moody's Junks Rating on $144MM Notes Due 2052 KLEROS PREFERRED: Moody's to Review Caa1 Rating on $900MM Notes KLEROS PREFERRED: Moody's to Review Ca Rating on $300MM Notes KNOLLWOOD CDO: Moody's Cuts Rating on Notes, to Undertake Review LAKESIDE CDO: Moody's Cuts Notes Rating, to Undertake Review LEARNING CARE: Moody's Rates Proposed $215MM Sr. Facilities 'Ba3' LEINER HEALTH: To Sell Assets to NBTY Inc. for $230,000,000 LENOX CDO: Moody's to Review Caa2 Rating on $75MM Notes Due 2043 LEWER LIFE: A.M. Best Lifts IC Rating to bb+ with Stable Outlook LILLIAN VERNON: New Owner Launches Catalogs, Transfers Operations LINCOLN AVENUE ABS: Moody's to Review Ca Rating on $77M Notes LONGSHORE CDO: Moody's Cuts Ratings on Four Classes of Notes LONGSHORE CDO: Moody's to Review Rating on Notes for Likely Cut LUBBOCK MEDICAL: Case Summary & 19 Largest Creditors MADAKET FUNDING: Moody's to Review Ratings for Possible Downgrade MANASQUAN CDO: Moody's Cuts Notes Rating, Undertakes Review MANTOLOKING CDO: Moody's Cuts Notes Ratings, Undertakes Review MARATHON STRUCTURED: Moody's to Review Ratings for Likely Cut MARTIN ROMANO: Case Summary & 13 Largest Unsecured Creditors MEDIACOM COMMS: Fitch Affirms 'B' ID Rating with Stable Outlook MERIDIAN FURNITURE: Closes Shop After Owner Files for Chapter 7 MERRILL CORP: Moody's Cuts CF Rating to B2 on Annual Fin'l Results MESA AIR: Aloha Air Trustee to Auction Legal Claim in Suit MICHAELS STORES: May 3 Balance Sheet Upside-Down by $2.9 Billion MID OCEAN: Moody's to Review Ratings for Possible Downgrade MILLERTON ABS: Moody's to Review Ratings for Possible Further Cut MILLSTONE III: Moody's Cuts Ratings, Undertakes Review MIRANT CORP: Plan Bars AER-Alliance From Enforcing Rights MKP CBO: Moody's Cuts Notes Rating, Undertakes Review MKP CBO-V: Moody's Cuts Rating on Notes, to Undertake Review MT. LAUREL: Case Summary & 11 Largest Unsecured Creditors MUTEKI LTD: Moody's Assigns Ba2 Rating on $300MM Class A Notes NEONODE INC: Names Per Bystedt as Interim CEO and President NORTH SUNRISE: Case Summary & Eight Largest Unsecured Creditors NORTHWEST AIRLINES: Joins Delta in Filing Merger Pact Prospectus NPS PHARMACEUTICALS: Stockholders Approve 1998 Plan Amendments NRG ENERGY: Fitch Publishes Valuation of NRG/Calpine Asset Values OWENS-ILLINOIS: Fitch Lifts IDR to BB on Better Operating Results PATRICIA GILROY: Elderly Care Biz Foreclosed After Case Dismissal PREMIERE ACQUISITIONS: Case Summary & 40 Largest Unsec. Creditors PREMIER PROPERTIES: DeBartolo, Dominion Eye Metropolis Mall Asset PRICHARD HOUSING: Moody's Cuts Rating on $1.19M Bonds to Ba3 QUEBECOR WORLD: Settles Blue Heron's Prepetition Claim QUEBECOR WORLD: Court Approves Lease Agreement with Headlands QUEBECOR WORLD: Settles Dispute with Silvex Designs QUEBECOR WORLD: Modified Severance Program Approved by Court RESIDENTIAL ASSET: Fitch Junks Ratings on Paydown Performance RESIDENTIAL REINSURANCE: S&P Puts Low-B Ratings on Three Notes RIDGEWAY COURT: Moody's Lowers Ratings to Ba3 on Three Notes ROCKBOUND CDO: Moody's Trims Ratings to C on Four Note Classes RYAN PROPERTIES: Voluntary Chapter 11 Case Summary SARAH'S TENT: Case Summary & 20 Largest Unsecured Creditors SEARS HOLDINGS: Bad Operations Results Cue S&P's Negative Outlook SHARPS CDO: Fitch Slashes Ratings on Two Notes to CCC from A SLAVIC KOTSYUBCHUK: Case Summary & 20 Largest Unsecured Creditors SOLAFIDE INC: Case Summary & 20 Largest Unsecured Creditors SOURCE MEDIA: Moody's Puts All Ratings on Review for Possible Cuts TENNECO INC: Completes $10MM Buyout of Delphi's Kettering Plant TRANSMERIDIAN EXPLORATION: Gets Noncompliance Notice from AMEX THORNBURG MORTGAGE: Says Filing of 10-Q Will be Further Delayed TROPICANA ENTERTAINMENT: Has Until July 4 to File Schedules TROPICANA ENT: Can Hire Richards Layton as Bankruptcy Co-Counsel TROPICANA ENT: Noteholders and Panel Balk at $67MM DIP Financing UNITED AMERICAN: Earns $1.06 Million in Year Ended Dec. 31, 2007 UAL CORPORATION: Glenn Tilton Not Fit as Chairman, Teamsters Says VERMILLION INC: March 31 Balance Sheet Upside-Down by $16,555,000 VERTIS COMM: Inks Prepackaged Chapter 11 Plan of Reorganization VISTAR CORP: Moody's Withdraws Ratings After Debt Repayment WACHOVIA CRE: Fitch Affirms 'B-' Rating on $6.5MM Class O Notes WHITE BIRCH: S&P Cuts Rating to CCC+ on Weak Liquidity Position WHITE WATER: Not So Fast! Court Wants Buyer to Show Money WII COMPONENTS: Moody's Holds Ratings But Changes Outlook to Neg. WINNEBAGO INDUSTRIES: Idles Iowa Plant Amid RV Industry Slump Z TRIM: Bid Price Non-Compliance Prompts AMEX to Delist Securities * Fitch Takes Rating Actions on US Municipal and Corporate Bonds * S&P Says Restaurant Sectors Are Among Most Prone to Econ. Stir * Large Companies with Insolvent Balance Sheets ********* ACA ABS: Fitch Chips Rating on $6.385MM Class A-1SW Notes to BB+ ---------------------------------------------------------------- Fitch Ratings has downgraded one class of notes issued by ACA ABS 2003-2, Limited and wrapped by CIFG as: -- $6,385,725 class A-1SW to 'BB+' from 'A-' and placed on Rating Watch Negative. The rating action follows Fitch's downgrade of CIFG's Insurer Financial Strength rating to 'CCC' from 'A-'. Fitch also placed the IFS on Rating Watch Evolving. The ratings of the class A-1SW notes were previously based upon the rating of CIFG Assurance North America, the credit enhancement provider. The current ratings on the class A-1SW notes now reflect the unenhanced credit quality of these notes giving no benefit to the financial guaranty policy provided by CIFG. As per its press release, CIFG is actively seeking to remediate its SF CDO exposures to improve the company's capital position, hence the Rating Watch Evolving. Therefore, Fitch's ratings on the class A- 1SW notes no longer reflect any benefit for the financial guaranty policy provided by CIFG. The class A-1SW notes has the same priority of payments as the class A-1SD and A-1SU notes and therefore is downgraded to the unenhanced long-term credit rating assigned to these notes on Nov. 21, 2007 and Rating Watch status assigned on Feb. 27, 2008. ACA ABS 2003-2 is a collateralized debt obligation that closed Nov. 6, 2003 and is managed by Solidus Capital, LLC. The original portfolio was selected by ACA Management, LLC, and is comprised primarily of residential mortgage-backed securities, along with asset-backed securities, CDOs, commercial mortgage-backed securities, and real estate investment trust debt. The rating of the class A-1SW notes addresses the likelihood that investors will receive full and timely payments of interest, as per the transaction governing documents, as well as the aggregate outstanding amount of principal by the legal final maturity date. ACACIA OPTION: Moody's Cuts Ratings on Notes, to Undertake Review ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of five classes of notes issued by Acacia Option ARM 1 CDO, Ltd. and left on review for possible further downgrade ratings of four of these classes of notes. The notes affected by the rating action are: Class Description: US$380,000,000 Class A1S First Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: Aa3, on review for possible downgrade Current Rating: A1, on review for possible downgrade Class Description: US$40,000,000 Class A1J Second Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: A3, on review for possible downgrade Current Rating: Baa1, on review for possible downgrade Class Description: US$34,000,000 Class A2 Third Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: Baa1, on review for possible downgrade Current Rating: Ba1, on review for possible downgrade Class Description: US$16,000,000 Class A3 Fourth Priority Senior Secured Floating Rate Deferrable Interest Notes Due 2052 Prior Rating: Ba2, on review for possible downgrade Current Rating: B3, on review for possible downgrade Class Description: US$16,000,000 Class B Fifth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2052 Prior Rating: B2, on review for possible downgrade Current Rating: Ca The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on May 15, 2008, as reported by the Trustee, of an event of default caused by a failure of the Senior Credit Test to equal or exceed 100%, as required under Section 5.1(i) of the Indenture dated May 18, 2007. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken today reflect the increased expected loss associated with the tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default. Because of this uncertainty, the ratings assigned to the Class A1S, Class A1J, Class A2, and Class A3 Notes remain on review for possible further action. Acacia Option ARM 1 CDO, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. ACE SECURITIES: S&P Lowers Ratings on 21 Classes of Certificates ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 21 classes of pass-through certificates from six U.S. subprime residential mortgage-backed securities transactions issued by Ace Securities Corp. Home Equity Loan Trust, Specialty Underwriting and Residential Finance Trust, Park Place Securities Inc., and GE- WMC Mortgage Securities Trust; all of the downgraded deals were issued between 2003 and 2006. Concurrently, S&P placed its ratings on three classes from one deal on CreditWatch with negative implications and affirmed 30 ratings from four transactions. 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 1.43% (Specialty Underwriting and Residential Finance Trust's series 2003-BC4) to 5.60% (GE-WMC Mortgage Securities Trust 2006-1). Overcollateralization has been completely eroded for the six downgraded deals. The dollar amount of loans in the delinquency pipelines in these transactions 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 5.33% (Specialty Underwriting and Residential Finance Trust's series 2003-BC4) to 31.35% (Ace Securities Corp. Home Equity Loan Trust's series 2004-HE4). These deals are seasoned between 20 months (GE- WMC Mortgage Securities Trust 2006-1 and Ace Securities Corp. Home Equity Loan Trust's series 2006-FM1) and 52 months (Specialty Underwriting and Residential Finance Trust's series 2003-BC4). S&P placed its ratings on three classes from one transaction on CreditWatch negative. While each of the certificate classes with ratings placed on CreditWatch negative may lack what S&P believe to be a sufficient amount of credit enhancement in excess of projected losses, S&P will not take further rating actions until additional analysis is completed. S&P expect to further compare the projected default dates with the payment in full dates, and the relationships between projected credit support and projected losses throughout the remaining life of each certificate. S&P affirmed 30 ratings on four 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 and excess spread provide credit support for the six deals. The collateral for these transactions primarily consists 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 ----------- ----- -- ----- 2004-HE4 M-6 BB BB+ 2004-HE4 M-7 B BB 2004-HE4 M-8 CCC BB- 2004-HE4 M-9 CCC B 2004-HE4 M-10 CCC B- 2004-HE4 B D CCC 2006-FM1 M10 D CC GE-WMC Mortgage Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 B-3 D CC 2006-1 B-4 D CC 2006-1 B-5 D CC Park Place Securities Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-WHQ2 M-8 CCC A- 2005-WHQ2 M-9 CCC BBB- 2005-WHQ2 M-10 CCC B+ 2005-WHQ2 M-11 CC CCC 2005-WHQ2 M-12 D CCC 2005-WCW2 M-7 BBB A- 2005-WCW2 M-8 B BBB+ 2005-WCW2 M-9 CCC BB+ 2005-WCW2 M-10 CCC B 2005-WCW2 M-11 D CCC Specialty Underwriting and Residential Finance Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2003-BC4 B-3 D CCC Ratings Placed on Creditwatch Negative Park Place Securities Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-WHQ2 M-5 AA/Watch Neg AA 2005-WHQ2 M-6 AA/Watch Neg AA 2005-WHQ2 M-7 AA-/Watch Neg AA- Ratings Affirmed ACE Securities Corp. Home Equity Loan Trust Transaction Class Rating ----------- ----- ------ 2004-HE4 M-1 AA+ 2004-HE4 M-2 AA+ 2004-HE4 M-3 AA 2004-HE4 M-4 AA 2004-HE4 M-5 A- 2004-HE4 M-11 CCC Park Place Securities Transaction Class Rating ----------- ----- ------ 2005-WHQ2 A-1A AAA 2005-WHQ2 A-1B AAA 2005-WHQ2 A-2C AAA 2005-WHQ2 A-2D AAA 2005-WHQ2 M-1 AAA 2005-WHQ2 M-2 AA+ 2005-WHQ2 M-3 AA+ 2005-WHQ2 M-4 AA 2005-WCW2 A-1C AAA 2005-WCW2 A-1D AAA 2005-WCW2 A-2C AAA 2005-WCW2 A-2D AAA 2005-WCW2 M-1 AA+ 2005-WCW2 M-2 AA+ 2005-WCW2 M-3 AA 2005-WCW2 M-4 AA- 2005-WCW2 M-5 A+ 2005-WCW2 M-6 A Specialty Underwriting and Residential Finance Trust Transaction Class Rating ----------- ----- ------ 2003-BC4 A-3B AAA 2003-BC4 M-1 AA+ 2003-BC4 M-2 A 2003-BC4 M-3 A- 2003-BC4 B-1 BBB 2003-BC4 B-2 B ACCUITY LLC: Moody's Puts Ratings Under Review for Possible Cut --------------------------------------------------------------- Moody's Investors Service placed all the credit ratings of Source Media Inc. and Accuity LLC on review for possible downgrade. This rating action reflects Moody's expectations that 2008 revenue and EBITDA are likely to be significantly lower than previous expectations, primarily as a result of a decline in advertising revenues in the companies' mortgage and technology markets. Additionally, there is concern regarding the companies' ability to meet existing financial covenants under the senior secured credit facility for the remainder of 2008 and all of 2009 in light of management's revision of its forecasts combined with scheduled adjustments in covenant thresholds. An amendment, if approved, would likely increase the pricing on the credit facilities and further pressure cash flow. The review for possible downgrade will primarily focus on the companies' expected run rate operations, trends in their end markets, and the ability to secure an amendment so as to have sufficient financial flexibility and liquidity over the near to intermediate term. Notably, the review will explore Moody's concerns surrounding the company's ability to maintain compliance with the maximum total leverage ratio covenant which is scheduled to decrease to 3.75x as of June 30, 2008 and 3.25x as of Dec. 31, 2008; the minimum interest coverage ratio permitted will increase to 3.25x as of December 31, 2008. Moody's placed these ratings of Source Media Inc. on review for possible downgrade: -- $30 million senior secured revolver due 2009, B1 (LGD 3, 35%) -- $88.5 million senior secured term loan B due 2010, B1 (LGD 3, 35%) -- Corporate Family Rating, B1 -- Probability of Default Rating, B2 Moody's placed these ratings of Accuity LLC on review for possible downgrade: -- $5 million senior secured revolver due 2009, B1 (LGD 3, 35%) -- $61.8 million senior secured term loan B due 2010, B1 (LGD 3, 35%) -- Corporate Family Rating, B1 -- Probability of Default Rating, B2 Source Media and Accuity are both headquartered in New York City and are leading providers of information, data, and tools for professionals in the financial services and related technologies markets. Investcorp owns 100% of both companies. Combined revenues for the twelve month period ended March 31, 2008 were $200 million. AIRTRAN HOLDINGS: Affiliate Defers Delivery of 18 Aircraft to 2014 ------------------------------------------------------------------ AirTran Airways, a subsidiary of AirTran Holdings Inc., will defer the delivery of 18 Boeing 737-700 aircraft originally scheduled between 2009 through 2011 to 2013 through 2014. "As we stated during our first quarter earnings call, as a result of continuing record high fuel costs, we are reducing planned growth for September 2008, through at least 2009 from 10% to no more than flat," Bob Fornaro, AirTran Airways' president and chief executive, said. This transaction will accomplish a substantial portion of that plan," Mr. Fornaro added. "We appreciate the support of Boeing in this action as a part of their commitment to our long-term success." The airline operates 54 Boeing 737-700 series aircraft as well as 87 Boeing 717-200 aircraft, and has America's youngest all-Boeing fleet. The Boeing 737 is the a popular jet aircraft. The AirTran Airways' Boeing 737 seats 137 passengers and is equipped with Recaro seats in the airline's signature two-by-two award-winning Business Class of 12 seats and coach seats of 125 seats, with free XM Satellite Radio. Similar to the Boeing 717, the Boeing 737 aircraft features EasyFit overhead bins with plenty of storage space for passengers' carry-on bags. About AirTran Holdings Inc. 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. The outlook is stable. ALLIED WASTE: Fitch Holds 'CCC+/RR6' Rating on Subordinated Notes ----------------------------------------------------------------- Fitch Ratings has affirmed these ratings of Allied Waste Industries, Inc. and its Allied Waste North America and Browning- Ferris Industries subsidiaries, as: Allied Waste Industries: -- Issuer Default Rating at 'B+'; -- Senior unsubordinated at 'CCC+/RR6' Allied Waste North America: -- Issuer Default Rating at 'B+' -- Secured credit facility rating at 'BB+/RR1'; -- Senior unsecured rating at 'B/RR5'; Browning-Ferris Industries: -- Issuer Default Rating at 'B+'. In addition, Fitch has upgraded the ratings of AWNA's and BFI's senior secured notes and debentures to 'BB+/RR1' from 'BB/RR2'. The rating for AW's preferred stock, which had been 'CCC+/RR6', has been withdrawn, as the company's preferred shares have been automatically converted to common shares. Fitch's ratings apply to approximately $6.2 billion in debt and a $1.6 billion secured revolving credit facility. The Rating Outlook has been revised to Positive from Stable. The ratings for AW, along with its AWNA and BFI subsidiaries, reflect ongoing improvement in the non-hazardous waste services company's credit profile as it allocates free cash flow toward leverage reduction. Although industry volumes have declined somewhat as the U.S. economy has weakened, the pricing environment remains strong, and expectations are that margins should continue to expand over the near to medium term. AW's free cash flow could be constrained somewhat in 2008, however, as the company plans to make a total of $351 million in payments to the Internal Revenue Service this year in order to slow the accrual of interest on an outstanding tax payment that is currently in dispute. AW paid $196 million to the IRS in the first quarter, with the remaining $155 million expected to be paid later in the year. AW's volumes in 2008 are expected to decline between 1.5% and 3.0% overall due largely to the slowing U.S. economy. The company's roll-off container business and construction and demolition landfill volumes are expected to be particularly weak, along with some slowing of commercial collection volumes, as well. Pricing is generally expected to remain firm, however, with the company projecting a 4.5% increase in pricing in 2008. Pricing strength appears to be holding across the industry, as virtually all of AW's major competitors have transitioned to a focus on return on invested capital and margins, as opposed to volumes and market share when making pricing decisions. Recently, this has manifested itself most noticeably in stronger landfill pricing, which has, in turn, supported further increases in collection pricing, as landfills generally serve as the anchor for waste collection operations in a given location. Over the past several years, AW has used its free cash flow to strengthen its balance sheet. Debt declined to $6.7 billion at March 31 from a high of over $11 billion immediately following its acquisition of BFI in 1999. In the past year, debt has declined by $331 million, resulting in an improvement in EBITDA leverage to 4.0x at March 31 from 4.5x at March 31, 2007. The reduction in debt and several refinancings have driven a decline in interest expense, as well, with EBITDA interest coverage improving to 3.6x from 2.6x over the same period. Although leverage reduction could slow somewhat in the near term as the company borrows from its secured revolver to temporarily fund a portion of the aforementioned IRS payments, over the longer term, AW is expected to continue focusing on debt reduction until its capital structure is closer to that of its investment-grade competitors. AW's liquidity remains strong, with $45 million in cash and equivalents, augmented by $1.0 billion in secured revolver availability at March 31. The upgrade in the ratings of AW's senior secured notes and debentures reflects a decline in the level of secured debt outstanding over the past year. Although collateral coverage is stronger for the company's secured credit facility than for the secured notes and debentures, the combination of a reduction in outstanding term loan debt, which declined to $807 million at March 31 from $1.1 billion at March 31, 2007, as well as a decline in other secured debt to $4.3 billon from $4.6 billion over the same period, has improved the recovery prospects for holders of the company's secured notes and debentures. As a result, the rating for the secured notes and debentures has been upgraded to 'BB+/RR1' from 'BB/RR2'. Recovery prospects for holders of the company's senior unsecured notes and senior subordinated convertible debentures remain in-line with the existing ratings. The Positive outlook recommendation reflects Fitch's expectation of ongoing improvement in AW's credit profile over the longer term. Industry fundamentals are expected to remain favorable, promoting ongoing margin improvement and free cash flow growth. AW's demonstrated focus on balance sheet repair is expected to result in further leverage reduction, despite the need for some near term revolver borrowing related to the planned IRS payments. Although the IRS payments made this year will lessen some of the concern regarding the disputes' potential impact on the company's future cash needs, unfavorable verdicts in either of the two outstanding IRS cases could still result in significant future cash payments, as well. However, a final resolution to either case in unlikely in the near term. ALOHA AIRLINES: Trustee to Auction Legal Claim in Mesa Air Suit --------------------------------------------------------------- The Trustee in the bankruptcy of Aloha Airlines, Inc. is filing a motion to bring about an auction of the legal claim in its lawsuit againt Mesa Air Group, Associated Press reports. Attorney James Wagner says an auction likely would be held in the coming week, the report says. As reported by the Troubled Company Reporter on Oct. 19, 2006, Aloha Airlines, and Aloha Airgroup, Inc., said in a suit filed in a state Circuit Court that Mesa Air Group, Inc. received confidential information as a potential investor in the Company and used it improperly to enter Hawaii's inter-island market with intent to drive the Company out of business. The Company alleged that Mesa used its proprietary information to unethically compete in the Hawaii market by offering air fares that failed to cover Mesa's costs. Mesa's chief executive officer, Jonathan Ornstein, had stated more than once that Mesa's Go! airline can "fly empty" for five years with the profits from Mesa's Mainland operations, indicating that Mesa is not covering its costs and is ultimately motivated to offer unrealistic fares with intent to drive out competition from the Hawaii market. The Company also pointed out that according to other legal documents, Mesa's chief financial officer, George Murnane III, sent an e-mail message, stating that Mesa's entry would make "no sense" if Aloha remained in the inter-island market: "We definitely don't want to wait for them to die; rather we should be the ones to give them the last push." The Company had sought damages and injunctive relief to stop Mesa from competing unfairly, and threatening the jobs of the Company's 3,500 employees in Hawaii. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. On April 29, the Bankruptcy Court converted the Debtors' cases into chapter 7 liquidation proceedings. The next day, the United States Trustee appointed Dane S. Field to serve as chapter 7 trustee for the cases. About Mesa Air Mesa Air -- http://www.mesa-air.com-- operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. Mesa has 5,000 employees overall. Freedom Airlines currently operates 34 50-seat ERJ-145 and 7 76- seat CRJ-900 aircraft for Delta Connection. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. ALON USA: Moody's Assigns B1 Rating to New Senior Loan Facility --------------------------------------------------------------- Moody's has assigned a B1 and LGD 2 (25%) rating to the new senior secured term loan facility being established by a newly formed subsidiary of Alon USA Energy, Inc. The subsidiary will be called Alon Refining Krotz Springs, Inc. and will be the obligor of the new facility. Simultaneously, Moody's affirmed ALJ's B2 corporate family, B2 probability of default rating for Alon USA Energy, Inc., and B1, LGD 2 ratings on the existing Term Loan B facility (though the point estimate is going to 23% from 29%). The outlook is changed to positive from developing. The outlook change to positive from developing is partly due to the acquisition of the Krotz Springs refinery, which adds to ALJ's overall scale and diversification, making these metrics more in line with a higher rating. The addition of Krotz Springs will increase ALJ's total crude throughput capacity by nearly 50% and provides exposure to new markets, including northeast markets via the Colonial Pipeline. If the Krotz Springs refinery performs as expected, Moody's estimates it could account for between approximately 30% and 40% of consolidated EBITDA going forward. This would help reduce ALJ's reliance on its Big Spring refinery, which generated approximately 70% of consolidated EBITDA in 2007. The positive outlook also reflects the partial restart of ALJ's Big Spring refinery, the main cash flow generating asset for ALJ. The earlier developing outlook had reflected the shut-down of Big Spring in February 2008 since Big Spring had been generating the majority of ALJ's earnings and cashflows. While Moody's notes that Big Spring is running at about half capacity and only generating roughly break-even cash flows, the partial restart was achieved in a shorter than expected timeframe following the February explosion and is on target for full restart later this summer. The borrower of the new facilities, Alon Refining Krotz Springs, Inc., will be the direct owner of the Krotz Springs refinery. ARK will be a wholly owned subsidiary of a new holding company called Alon Refining Louisiana, Inc, which will be a wholly owned indirect subsidiary of ALJ. The new credit facility will consist of a $295 million 6-year term loan B facility which includes a $50 million Letter of Credit facility that will be used to support hedges for ARK. Proceeds from the new term loan along with $125 million of initial draws under a new $425 million ABL facility for ARK, an $80 million investment in the form of preferred stock from Alon Israel Oil Company, Ltd., the controlling shareholder of ALJ, and $25 million of cash from ALJ, will fund the acquisition the Krotz Springs refinery from Valero Corp. Under Moody's Loss Given Default methodology, the new credit facility are rated one notch above the family B2 CFR. Although the new credit facility is non-recourse to ALJ and is not guaranteed by any other subsidiary of ALJ, the underlying probability of default is viewed to be the same for both ARK and ALJ given that the same industry fundamentals. In addition, the new facility will have a first lien on the Krotz Springs refinery itself with a second lien on the working capital of that entity. A new $425 million asset backed revolving credit facility (not rated) will have a first lien on working capital and a second lien on the refinery. An upgrade of ALJ's CFR would require that the Krotz Springs refinery runs according to management's projections and ALJ is actually achieving steady debt reduction. While the $125 million of borrowings under the new ABL facility are expected to be repaid within the first quarter of ownership, an upgrade would need to see the term loan debt start to reduce at least according to the amortization schedule. Moody's views quick debt reduction to be very important while ARK will benefit from an off-take agreement with Valero and has hedges in place to help protect its gross margin over the next two and a quarter years. Under the off-take agreement, Valero will purchase all of the company's lower value, high sulfur diesel and light cycle oil from the Krotz Springs refinery for the next five years. After this period, ARK would have to find a buyer for these products, which require additional processing to convert into low sulfur products that can be sold in all markets unless ARK invests to add units at the refinery that can do further processing. An upgrade would also require Big Spring to be up and running to design specifications within the time and cost estimates management expects without having any significant setbacks and that refining margins have not deteriorated below mid-cycle levels. Conversely, the outlook would likely revert to stable in the event that the full restart of Big Spring is significantly delayed or costs are higher than expected, or if the Krotz Springs refinery is not meeting projected performance and the associated debt reduction is materially behind schedule, leaving ALJ's consolidated leverage high for the ratings, particularly if refining margins show the same weakness that occurred earlier this year. The B2 CFR is restrained by the track record of carrying higher than average leverage as measured on a debt/complexity barrel basis. After the debt funded acquisitions of Paramount and Edgington in 2006 and $100 million distributions to shareholders, ALJ was already highly leveraged at more than $600/bbl and increased its leverage with debt/complexity barrels of $642/bbl, which is higher than the average for the B2 rated refining peer group. A subsequent acquisition of retail sites increased overall debt and leverage, in spite of record refining margins that continued into the first half of 2007. The B2 CFR also reflects the inherent volatility of the refining business and the fluctuations in earnings and cash flows that could impact the company's ability to reduce its debt. While ALJ will put hedges in place to protect about 50% of expected gross margins, Moody's notes that these hedges are not perfect hedges, and still leave about 75% of total production unhedged and therefore exposed to margin volatility. However, Moody's also notes that the new facility includes a 100% excess cash flow sweep over the first 2.25 year hedge term which should facilitate faster debt reduction while the hedges are in place. Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products and owner and operator of convenience stores in the Southwestern and South Central U.S. The company owns and operates a complex sour crude oil refinery in Big Spring, Texas with a nelson complexity rating of 10.2 and crude oil throughput capacity of 70,000 barrels per day, lower complexity crude oil refinery in Paramount, California with a nelson complexity rating of 6.1 and crude oil throughput capacity of 90,000 barrels per day and an asphalt topping refinery in Willbridge, Oregon with a nelson complexity rating of 1.3 and crude oil throughput capacity of 12,000 barrels per day. Alon also operates more than 300 convenience stores in West Texas and New Mexico primarily under the 7-Eleven and FINA brand names. In addition, Alon supplies 800 additional FINA branded locations. After completing an IPO in 2005, the company remains majority owned (about 76%) by Alon Israel Oil Company, Ltd., an Israel based company. AMERICAN COLOR: Inks Deal on Ch. 11 Prepack Plan of Reorganization ------------------------------------------------------------------ American Color Graphics, Vertis Communications and 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. American Color and Vertis entered into agreements with an aggregate of approximately 72% of the outstanding principal amount of the 9.75% Senior Secured Second Lien Notes due 2009; 83% of the outstanding principal amount of the 10.875% Senior Notes due 2009; and 75% of the outstanding principal amount of the 13.5% Senior Subordinated Notes due 2009 of Vertis; and the holders of an aggregate of approximately 70% 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 transaction is also supported by Vertis' principal stockholders and the holders of over 95% of the outstanding principal amount of Vertis Holdings Mezzanine Notes. 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. "Gaining support from the overwhelming majority of both Vertis and ACG noteholders demonstrates their confidence in the successful outcome of our merger and restructuring plans," Mike DuBose, chairman and CEO of Vertis, said. "These agreements will expedite the process and we anticipate beginning collaborations with our new ACG colleagues in late summer to deliver truly comprehensive and effective marketing solutions that drive results." "In addition, these agreements and the support obtained have been received positively by our customers and suppliers and we are starting to see a return to more normalized relationships and terms with our valued vendor partners," Mr. DuBose stated. In addition to agreeing to support the prepackaged plans, in the restructuring agreements, the noteholders agreed to forbear from exercising remedies relating to the nonpayment of interest on any of the Vertis Notes. As a result, the company has decided it will not make its interest payments on June 1, 2008 or June 15, 2008. This will increase liquidity during the prepackaged reorganization. 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 votes for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days from May 22, 2008, the date the restructuring agreements were signed. Votes will be due approximately 30 days after the companies launch the solicitation. The agreements with the noteholders require them to vote in favor of the plan and ensure that the companies will achieve the two-thirds in amount threshold required for the bankruptcy court to confirm the plan. Upon receiving the requisite acceptances, 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. About Vertis Inc. Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's 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 May 29, 2008, Moody's Investors Service has affirmed the Ca corporate family rating for American Color Graphics Inc., while changing the probability of default rating to Ca from Ca/LD and lowering the rating on the company's second lien notes to C from Ca, after the company's statement of its planned merger with Vertis Inc. coupled with a comprehensive restructuring plan. ARIEL WAY: Accountant Reports Errors in Cash Flow Statements ------------------------------------------------------------ The management of Ariel Way, Inc. determined that the company's quarterly report on Form 10-QSB for the quarter ended March 31, 2008, may not be relied upon due to errors as advised by its independent registered public accountant, Bagell, Josephs, Levine & Company, LLC. The company proposes to file an amendment to its quarterly report on Form 10-QSB to correct such errors. According to a filing with the U.S. Securities and Exchange Commission, the independent registered public accountant disclosed that there were certain errors in the condensed consolidated statements of cash flows included in the Form 10-QSB for the quarter ended March 31, 2008, including errors in these cash flow items: changes in assets and liabilities - total adjustments; cash flows from investing activities - cash received in acquisition of company; cash flows from financing activities - proceeds from long-term debt, and that the financial statements for the period ended March 31, 2008. About Ariel Way Based in Vienna, Va., Ariel Way Inc. (OTC BB: AWYI) -- http://www.arielway.com/-- is a technology and services company for highly secure global communications, multimedia and digital signage solutions and technologies. The company is focused on developing innovative and secure technologies, acquiring and growing profitable advanced technology companies and global communications service providers and creating strategic alliances with companies in complementary product lines and service industries. Ariel Way Inc.'s consolidated balance sheet at March 31, 2008, showed $4,624,957 in total assets and $5,866,512 in total liabilities, resulting in a $1,241,555 total stockholders' deficit. Going Concern Doubt Bagell, Josephs, Levine & Company, LLC, in Marlton, N.J., expressed substantial doubt about Ariel Way Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm said that the company did not generate sufficient cash flows from revenues during the year ended Sept. 30, 2007, to fund its operations. Also at Sept. 30, 2007, the company had negative net working capital of $2,554,341. ARRIVA PHARMA: Rival's Appeal Against Confirmation Order Trashed ---------------------------------------------------------------- Judge Susan Illston of the U.S. District Court for the Northern District of California trashed AlphaMed Pharmaceuticals Corp.'s appeal against the order issued by the U.S. Bankruptcy Court for the Northern District of California confirming the chapter 11 reorganization plan of Arriva Pharmaceuticals Inc., Bankruptcy Law 360 reports. As reported in the Troubled Company Reporter on Dec. 21, 2007, the plan proposes to pay unsecured creditors in full or "something close" with a pool of $776,000 available to satisfy their claims. The Debtor secured $6 million in new financing to continue drug development. AlphaMed is in dispute with rival Arriva over a patent of an anti- emphysema drug, Bankruptcy Law adds. Arriva Granted Fusion Protein Patent Arriva said that it had been granted a patent in the U.S. related to a fusion protein with potential applications for treating respiratory diseases. The patent (United States Patent 7,247,704) covers compositions of matter and uses of Aeriva(TM), a fusion protein that combines Secretory Leukocyte Protease Inhibitor and recombinant alpha 1-antitrypsin. A similar patent was granted by the European Patent Office and will soon issue in several European countries, including the United Kingdom, France and Germany. "This is a strong patent in the field of fusion proteins, where there is a proven track record of commercial success," said Sue Preston, chief executive officer of Arriva. "This patent gives Arriva a significant advantage as we move forward with the development of therapies to address the needs of patients with respiratory disease." Aeriva(TM) is part of Arriva's pipeline of compounds focused on respiratory disease. The company is conducting human clinical trials with nebulized rAAT product to treat hereditary emphysema. The company has completed a Phase 1a safety study and a Phase 1b/2a proof-of-concept study. In addition, Arriva is developing inhaled ilomastat, a potent, broad-spectrum inhibitor of matrix metalloproteases that has shown to be active in a number of animal model systems of inflammation. Emphysema is a chronic respiratory disease where there is over- inflation of the air sacs (alveoli) in the lungs, causing a decrease in lung function, and often, breathlessness. About Arriva Pharmaceuticals Headquartered in Alameda, California, Arriva Pharmaceuticals Inc. -- http://www.arrivapharm.com/-- is a privately held biopharmaceutical company focused on the development and commercialization of anti-inflammatory therapies for the treatment of respiratory diseases. The Debtor is also known as AlphaOne Pharmaceuticals Inc. The Debtor filed for Chapter 11 bankruptcy protection on Aug. 29, 2007 (Bankr. N.D. Calif. Case No. 07-42767). Ori Katz, Esq., at Sheppard, Mullin, Richter and Hampton LLP represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million to $100 million. The Court has confirmed the Debtor's reorganization plan. ARVINMERITOR INC: Moody's Affirms 'B1 Corporate Family Rating ------------------------------------------------------------- Moody's affirmed the ratings of ArvinMeritor, Inc., Corporate Family Rating, B1; Probability of Default Rating, B1; senior secured bank credit facilities, Ba1; senior unsecured notes, B2; and Speculative Grade Liquidity Rating, SGL-2. The outlook is stable. On May 28, 2008 ArvinMeritor provided additional detail on its plan to spin off its Light Vehicle Systems business to ArvinMeritor shareholders with the Commercial Vehicle Systems business remaining with ArvinMeritor. The Company originally announced on May 6th that its board of directors had approved this plan. The name of the spun off LVS business will be Arvin Innovation, Inc. The announcement on May 28, 2008 outlined liabilities which will be transferred to Arvin Innovation, including certain pension and retiree medical liabilities, net asbestos liabilities, environmental, and other employee liabilities. Arvin Innovation is expected to have approximately $100 million of cash on hand at the closing of the transaction, and $200-250 million in borrowing arrangements with approximately $125 million drawn under these facilities. According to the Form-10, Arvin Innovation is expected to be in a position to make a cash payment to ArvinMeritor, as part of the transaction. Pro forma for March 31, 2008 this amount would have been approximately $100 million. This amount is expected to be used for debt repayment by ArvinMeritor. All of ArvinMeritor's existing senior unsecured debt is expected to remain with ArvinMeritor after the transaction, along with its existing senior secured bank credit facility. The B1 affirmation of ArvinMeritor's Corporate Family Rating reflects that while a certain amount of the company's diversity profile will be lost, a significant portion of revenues will continue to come from outside of North America and the company will continue to have good diversity in its end customer and product markets. ArvinMeritor's improving operating performance in the recent quarters, resulting from the benefits of the company's restructuring actions and a somewhat stable commercial vehicle market, is expected to support the current B1 corporate family rating. Subsequent to the spin off, ArvinMeritor should demonstrate improved operating performance as a result of restructuring and cost reduction initiatives in its CVS operations. These initiatives, combined with the company's already competitive market position in the commercial vehicle supplier sector, should enable it to better navigate industry cyclicality, regulatory requirements, and increasing raw material costs. At March 31, 2008, ArvinMeritor's LTM EBIT/Interest coverage was 1.4x and debt/EBITDA was 7.1x, both including Moody's standard adjustments. The company's recent quarterly performance has demonstrated the benefits of restructuring actions taken. ArvinMeritor has affirmed its previous fiscal 2008 guidance. However, Moody's expects that the opportunity for North American commercial vehicle production levels in 2008 to significantly outpace prior year levels is becoming increasingly uncertain given current general economic indicators and high fuel costs. Although this slowdown in end market demand could moderate the pace of improvement in the company's credit metrics during 2008, these measures should nevertheless become increasingly supportive of the B1 rating. Moreover, Moody's anticipates some level of industry pick up in 2009 due to the combination of pre-buy activity and fleet replacement. These ratings are affirmed: ArvinMeritor, Inc. -- Corporate Family Rating at B1 -- Probability of Default at B1 -- Senior Secured bank debt at Ba1 (LGD1, 7%) -- Senior Unsecured notes at B2 (LGD4 61%) -- Shelf unsecured notes at (P)B2 (LGD4 61%) -- Speculative Grade Liquidity rating, SGL-2 Arvin International PLC -- Unsecured notes guaranteed by ArvinMeritor, Inc. at B2 (LGD4 61%) The last rating action was in October 2007 at which time Moody's lowered ArvinMeritor's ratings. ArvinMeritor, Inc., headquartered in Troy, Michigan, is a global supplier of a broad range of integrated systems, modules and components serving light vehicles, commercial trucks, trailers, and specialty original equipment manufacturers as well as certain aftermarkets. Revenues in fiscal 2007 were approximately $6.4 billion. ASTRATA GROUP: Removes Anti-Dilution, Other Terms in Warrants ------------------------------------------------------------- Astrata Group Inc. entered into a Warrant Exchange Agreement, a Warrant Amendment Agreement, and a Preferred Stock Exchange Agreement, dated as of May 29, 2008, with each of the holders of certain warrants, and holders of certain series of preferred shares issued by the company relating to the company's Series A and Series B Preferred shares. The agreement has been approved by the company's Board of Directors and a majority of its shareholders. The Amended and Restated Rights Agreements eliminate the anti- dilution and cashless exercise provisions of the Series A and Series B warrants. In addition, the Amended and Restated Rights Agreements: * decrease the exercise price of the Series A and Series B warrants to $0.25/share, subsequently increasing the exchange ratio for each of the warrants respectively. Notwithstanding this, the decrease in exercise price is only available until June 17, 2008, is subject to the Holder exercising more than 25% of their current warrant holdings and subject to a lock- up for a one year period from the closing of this transaction and then a leak out over the next 12 month period whereby the Holder can not sell more than 1/12 of its total holdings during any one month period. The holders that elect to exercise more than 25% of their current warrant holdings may also participate in the Exchange Option in the Amended and Restated Rights Agreements. * modify the previous warrant securities so that the holders will exchange their warrants for Series C Preferred Shares, and the holders of Series A and Series B Preferred shares will exchange such shares for Series A-2 Preferred shares. * create a 20-day option for the Holders to execute their warrants under the new terms of the Amended and Restated Rights Agreements. * within the first 90 days upon execution of the Amended and Restated Rights agreements, the Company is obligated to use $150,000 for investor relations purposes. A full-text copy of the Preferred Stock Exchange Agreement is available for free at http://ResearchArchives.com/t/s?2d20 A full-text copy of the Warrant Exchange Agreement is available for free at http://ResearchArchives.com/t/s?2d21 A full-text copy of the Warrant Amendment Agreement is available for free at http://ResearchArchives.com/t/s?2d22 A full-text copy of the Lock-Up Agreement is available for free at http://ResearchArchives.com/t/s?2d23 About Astrata Group Headquartered in Costa Mesa, Calif., Astrata Group Inc. (OTC BB: ATTG.OB) -- http://www.astratagroup.com/-- is engaged in the telematics and Global Positioning System industry, focused on advanced location-based IT products and services that combine positioning, wireless communications, and information technologies. The company provides advanced positioning products, as well as monitoring and airtime services to industrial, commercial, governmental entities, academic/research institutions, and professional customers in a number of markets including surveying, utility, construction, homeland security, military, intelligence, mining, agriculture, marine, public safety, and transportation. Astrata Group Inc.'s consolidated balance sheet at Nov. 30, 2007, showed $4.7 million in total assets, $14.8 million in total liabilities, and $40,114 in minority interest, resulting in a $10.1 million total stockholders' deficit. Going Concern Doubt Squar, Milner, Peterson, Miranda & Williamson LLP, in Newport Beach, Calif., expressed substantial doubt about Astrata Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Feb. 28, 2007. The auditing firm noted that the company had negative working capital at Feb. 28, 2007, and incurred net loss and negative operating cash flow for the year ended Feb. 28, 2007. ATA AIRLINES: U.S. Trustee Removes McGinley from Creditors Panel ---------------------------------------------------------------- Nancy J. Gargula, the United States Trustee for Region 10, notifies the U.S. Bankruptcy Court for the Southern District of Indiana, that James McGinley had been removed from the Official Committee of Unsecured Creditors in the Chapter 11 case of ATA Airlines Inc., at Mr. McGinley's request. Mr. McGinley served as representative of Wilmington Trust Company to the Creditors Committee. As reported in the Troubled Company Reporter on April 21, 2008, Nancy J. Gargula appointed five members to the Creditors Committee. In view of the removal of Mr. McGinley as Wilmington Trust Company's representative in the Creditors Committee, the remaining four members of said Committee are: (1) Goodrich Corporation Attn: Beth E. Hansen 4 Coliseum Center 2730 W. Tyvola Rd. Charlotte, North Carolina 28217-4578 Tel: (704) 423-8679 Fax: (704) 423-7017 (2) Servisair USA Inc. Attn: Dino G. Noto 151 N. Point Drive Houston, Texas 77060 Tel: (281) 260-3913 Fax: (281) 999-3740 (3) Air Line Pilots Association Attn: Michael A. Gray 5333 S. Laramie Avenue, Suite 119 Chicago, Illinois 60638 Tel: (773) 284-4910 Fax: (773) 284-1866 (4) Association of Flight Attendants-CWA, AFL-CIO Attn: Rhonda Hogard 620 Liberty Court Bourbonnais, Illinois 60914 Tel: (815) 936-1238 Fax: (815) 936-1238 About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA is a wholly owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned subsidiary of New ATA Investment, Inc., which in turn, is a wholly owned subsidiary of Global Aero Logistics Inc. ATA Acquisition also owns another holding company subsidiary, World Air Holdings, Inc., which it acquired through merger on August 14, 2007. World Air Holdings owns and operates two other airlines, North American Airlines and World Airways. ATA Airlines and its affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind. Case No. 08-03675), citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The Debtor is represented in its Chapter 22 case by Haynes and Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel. The United States Trustee for Region 10 appointed five members to the Official Committee of Unsecured Creditors. Otterbourg, Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to the Committee. FTI Consulting, Inc., acts as the panel's financial advisors. (ATA Airlines Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). ATA AIRLINES: Panel Seeks Exemption from Sec. 1102(b)(3)(A) ----------------------------------------------------------- Section 1102(b)(3)(A) of the Bankruptcy Code provides that a committee of creditors appointed under Section 1102(a) should provide access to information to creditors holding claims of the kind represented by that committee. The Official Committee of Unsecured Creditors in the Chapter 11 case of ATA Airlines Inc. asks the U.S. Bankruptcy Court for the Southern District of Indiana not to require the panel to provide access to ATA Airlines Inc.'s confidential and privileged information to any creditor it represents. Proposed counsel for the Committee, Jeffrey Hokanson, Esq., at Hostetler & Kowalik, P.C., in Indianapolis, Indiana, says the proposed exemption from the requirement of Section 1102(b)(3)(A) is mutually beneficial to the Creditors Committee and ATA Airlines. Mr. Hokanson points out that ATA Airlines would be discouraged from giving confidential and nonpublic proprietary information to the Creditors Committee if there is a risk that those information would be shared to any creditor. He adds that the Creditors Committee then would not be able to fulfill its statutory obligations if it is denied access to those information. According to Mr. Hokanson, requiring the Creditors Committee to share with any creditor information subject to the attorney- client or other state, federal and jurisdictional law privilege, would also create serious problems. "If [ATA Airlines] and the Creditors Committee believe there is a risk that privileged information would be turned over to the creditors, with the possible loss of the relevant privilege at that time, the entire purpose of such privilege would be eviscerated," Mr. Hokanson argues, adding that the airlines and the Creditors Committee would likely fail to obtain the independent and unfettered advice and consultation that those privileges are designed to foster. Mr. Hokanson, however, clarifies that the proposed exemption does not mean the Creditors Committee would not be providing the creditors with public information concerning ATA Airlines. He adds that the airlines would also provide additional material information in a disclosure statement when it is time to solicit votes for its Chapter 11 plan from the creditors. About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines Inc., is a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA is a wholly owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned subsidiary of New ATA Investment, Inc., which in turn, is a wholly owned subsidiary of Global Aero Logistics Inc. ATA Acquisition also owns another holding company subsidiary, World Air Holdings, Inc., which it acquired through merger on August 14, 2007. World Air Holdings owns and operates two other airlines, North American Airlines and World Airways. ATA Airlines and its affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind. Case No. 08-03675), citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The Debtor is represented in its Chapter 22 case by Haynes and Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel. The United States Trustee for Region 10 appointed five members to the Official Committee of Unsecured Creditors. Otterbourg, Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to the Committee. FTI Consulting, Inc., acts as the panel's financial advisors. (ATA Airlines Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). ATA AIRLINES: Asks Court to Employ Hostetler as Local Counsel ------------------------------------------------------------- The Official Committee of Unsecured Creditors in ATA Airlines Inc.'s Chapter 11 bankruptcy case seeks the the authority of the U.S. Bankruptcy Court for the Southern District of Indiana to retain Hostetler & Kowalik, P.C., as its local counsel. The Creditors Committee selected Hostetler because of the firm's extensive experience. The firm was also recommended to the Creditors Committee by Otterbourg, Steindler, Houston & Rosen P.C., the panel's proposed lead counsel. As local counsel for the Creditors Committee, Hostetler will: (1) provide legal advice to the Creditors Committee concerning the panel's duties and powers in connection with the continued operation of the business and management of ATA Airlines, Inc.'s property; (2) examine the conduct of ATA Airlines' affairs; (3) examine ATA Airlines' officers, employees and other witnesses to determine if the airlines has made preferential transfers of its property; (4) assist the Creditors Committee in negotiating with ATA Airlines concerning the terms of its proposed Chapter 11 plan; and (5) provide other legal services for the Creditors Committee and Otterbourg when necessary. In exchange for its services, Hostetler will be paid on an hourly basis and will be reimbursed for any expenses it may incur in the rendition of its services. The firm's professionals and their hourly rates are: Partner/Senior Counsel $300 - $350 Associate $185 - $275 Paralegal $95 - $125 Jeffrey Hokanson, Esq., a member of Hostetler & Kowalik, P.C., assures the Court that his firm does not hold or represent any interest adverse to the Creditors Committee, ATA Airlines and its estate. He adds that the firm is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code. About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines Inc., is a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA is a wholly owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned subsidiary of New ATA Investment, Inc., which in turn, is a wholly owned subsidiary of Global Aero Logistics Inc. ATA Acquisition also owns another holding company subsidiary, World Air Holdings, Inc., which it acquired through merger on August 14, 2007. World Air Holdings owns and operates two other airlines, North American Airlines and World Airways. ATA Airlines and its affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind. Case No. 08-03675), citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The Debtor is represented in its Chapter 22 case by Haynes and Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel. The United States Trustee for Region 10 appointed five members to the Official Committee of Unsecured Creditors. Otterbourg, Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to the Committee. FTI Consulting, Inc., acts as the panel's financial advisors. (ATA Airlines Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). AUSTIN JAMES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Austin James Properties, LLC 169 Daniel Webster Highway Nashua, NH 03060 Bankruptcy Case No.: 08-11301 Chapter 11 Petition Date: May 13, 2008 Court: District of New Hampshire (Manchester) Debtor's Counsel: Steven M. Notinger, Esq. Donchess & Notinger PC 547 Amherst Street, Ste. 100 Nashua, NH 03063 Tel: (603) 886-7266 Fax: (603) 886-7922 E-mail: nontrustee@donchessnotinger.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's petition and 20 largest unsecured creditors is available at no charge at: http://bankrupt.com/misc/nhb08-11301.pdf AVENUE WEST: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Avenue West Express, Inc. 1033 A Hwy. 64 West Beebe, AR 72012 Bankruptcy Case No.: 08-13011 Chapter 11 Petition Date: May 19, 2008 Court: Eastern District of Arkansas (Little Rock) Debtor's Counsel: Frederick S. Wetzel, Esq. FREDERICK S. WETZEL, P.A. 200 North State Street, Suite 200 Little Rock, AR 72201 Tel: (501) 663-0535 E-mail: frederickwetzel@earthlink.net Total Assets: $920,727 Total Debts: $1,840,463 A list of the Debtor's petition and 20 largest unsecured creditors is available at no charge at: http://bankrupt.com/misc/areb08-13011.pdf BARBARA BEHM: Case Summary & 7 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Barbara Behm 801 E Edgeware Los Angeles, CA 90026 Bankruptcy Case No.: 08-16594 Chapter 11 Petition Date: May 13, 2008 Court: Central District of California (Los Angeles) Debtor's Counsel: Matthew E. Faler, Esq. 17330 Brookhurst St Ste 240 Fountain Valley, CA 92708 Tel: (714) 965-7800 Fax: (714) 965-7823 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's petition and seven largest unsecured creditors is available at no charge at: http://bankrupt.com/misc/cacb08-16594.pdf BEAR STEARNS: Turns Over Trading Documents to Aid SEC Inquiry ------------------------------------------------------------- Bear Stearns Companies Inc. intends to cooperate with the probe instigated by the U.S. Securities and Exchange Commission since March 2008 regarding its merger with JPMorgan Chase & Co., Kate Kelly of The Wall Street Journal reports citing people familiar with the matter. WSJ relates that Bear Stearns provided SEC with trading records with financial firms weeks before its fallout. Trading documents will help SEC in making sure there wasn't improper or unusual trading activity that contributed to Bear Stearns' collapse. As reported in the Troubled Company Reporter on March 17, 2008, Bear Stearns agreed to be bought by JPMorgan Chase for $2 per share, representing a 97.5% discount to Bear Stearns book value of $80.0 that the firm has reported. The Boards of Directors of both companies have unanimously approved the transaction. The transaction will be a stock-for-stock exchange. On March 25, JPMorgan increased the bid from $2 per share to $10 per share. WSJ discloses that more than any other firms, Goldman Sachs Group Inc., Citadel Investment Group and Paulson & Co., had high trading activity with Bear Stearns as trading partner, selling credit- default swaps in a frenzy. However, WSJ suggests that these actions don't indicate any improper activity. Although, Goldman unloaded swaps with Bear Stearns, it simultaneously raised trading exposure to Bear Stearns on certain transactions as they cut their risk on others, WSJ recounts. Manipulation, WSJ relates, will be difficult to establish since the trades industry is complicated and investors were already anxious over Bear Stearns' liquidity. SEC, Bear Stearns, Goldman, Citadel and Paulson didn't comment on the matter. Bear Stearns stockholders approved the investment bank's merger with JPMorgan Chase at a Special Meeting of Stockholders held May 29, 2008. Approximately 84% of shares voted were in favor of the merger, representing a substantial majority of Bear Stearns' outstanding common stock. The value of the transaction is about $1.4 billion, a large difference from the $25 billion market capitalization value in early 2007 before its demise. 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'. BEAR STEARNS: Fitch Lifts Ratings After Merger with JPMorgan ------------------------------------------------------------ JPMorgan Chase & Co. completed it acquisition of The Bear Stearns Companies, Inc. on May 30, 2008. As a result, Fitch Ratings has upgraded the ratings of BSC and removed them from Rating Watch Positive, where they were originally placed on March 17. As the direct and sole owner of BSC, JPM has assumed the capital structure of BSC. It is the opinion of Fitch that JPM will accord BSC the same managerial and financial resources that are available to its other wholly-owned subsidiaries. As such, the ratings of BSC have been aligned with those of JPM and its subsidiaries. Following the announcement of the proposed merger, Fitch upgraded the Issuer Default Ratings for BSC and its subsidiaries, and placed BSC's IDRs and debt ratings on Rating Watch Positive. These upgrades acknowledged JPMC's guarantee of all trading obligations and counterparty transactions of BSC and its subsidiaries, and JPM's assumption of operational oversight, both effective immediately. Under the Guaranty Agreement, the Guaranty Period ends 120 days after the merger has been consummated. Upon termination, the Guaranty ends for new liabilities, but remains in effect for obligations guaranteed during the Guaranty Period. The Guaranty did not cover BSC's bond debt and capital securities. However, these instruments are now components of JPM's capital structure. It has not been determined, which of these securities, if any, will be replaced with obligations under JPM's name. Fitch has upgraded these ratings and removed them from Rating Watch Positive: The Bear Stearns Companies Inc: -- Long-term IDR to 'AA-' from 'A-'; -- Short-term IDR to 'F1+' from 'F2'; -- Short-term debt to 'F1+' from 'F3'; -- Senior debt to 'AA-' from 'BBB'; -- Subordinated debt to 'A+' from 'BBB-' ; -- Preferred stock to 'A+' from 'BB+'; -- Individual to 'B' from 'F'. Bear Stearns Securities Corp.: -- Long-term IDR to 'AA-' from 'A-'; -- Short-term IDR to 'F1+' from 'F2'. Custodial Trust Company: -- Long-term IDR to 'AA-' from 'A'; -- Long-term deposits to 'AA' from 'BBB+'; -- Short-term IDR to 'F1+' from 'F2'; -- Short-term deposits to 'F1+' from 'F2'; -- Senior debt to 'AA-' from 'BBB'; -- Individual to 'B' from 'C'; -- Support to '1' from '2'. Bear Stearns Capital Trust III: -- Trust preferred stock to 'A+' from 'BB+'. Fitch has also withdrawn this rating: The Bear Stearns Companies Inc: -- Support '1'. The Rating Outlook is Stable for all ratings. BEAR STEARNS: Moody's Rating Review Sustains Despite JPMorgan Deal ------------------------------------------------------------------ Moody's Investors Service said on May 30 that it is continuing its review for possible upgrade on the debt and issuer ratings of The Bear Stearns Companies Inc. and subsidiaries. BSC's senior debt is rated Baa1. Its subordinated debt and preferred stock are rated Baa2 and Ba1, respectively. Moody's said that the review continues despite the fact that BSC will be acquired by JPMorgan Chase & Co. on that day. Moody's hasn't taken a rating action as at June 2. Moody's initially believed Bear Stearns Companies Inc. would be merged into JPMorgan Chase & Co. However, this is not occurring at the outset. Decisions regarding the legal structure continue to evolve. During the review Moody's will seek greater clarity on the interim and ultimate legal structure and evaluate the implications for the support of BSC creditors. Moody's noted that JPM's operating guarantee on BSC's subsidiaries will remain in place for 120 days after it purchases BSC. JPMorgan Chase & Co. is headquartered in New York, NY. Its reported assets at March 31, 2008 were $1.6 trillion. BFC SILVERTON: Moody's Junks Rating on Up to $450MM Notes Due 2046 ------------------------------------------------------------------ Moody's Investors Service downgraded the rating of one class of notes issued by BFC Silverton CDO, Ltd. as: Class Description: Up to US$450,000,000 Class A-1 Senior Variable Funding Floating Rate Notes Due 2046 Prior Rating: B3, on review with future direction uncertain Current Rating: C BFC Silverton CDO, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. The Trustee provided Moody's notice that an Event of Default had occurred under the Indenture. That Event of Default continues. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, certain parties to the transaction may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard, a majority of the Controlling Class directed the Trustee to proceed with the sale and liquidation of the Collateral in accordance with the Indenture. The Trustee subsequently notified Moody's that it sold all of the Collateral, made a final distribution and applied the proceeds of the liquidation in accordance with applicable provisions of the Indenture on March 28, 2008. In that distribution, according to the Trustee, the only noteholders to receive a distribution of liquidation proceeds were holders of Class A-1 Notes. Available funds were not sufficient to pay the Class A-1 Notes in full. The rating actions taken today reflect the changes in severity of loss associated with certain tranches and reflect the final liquidation distribution. BIOLARGO INC: Posts $2,417,000 Net Loss in 2008 First Quarter ------------------------------------------------------------- BioLargo Inc. reported a net loss of $2,417,000 for the first quarter ended March 31, 2008, compared with a net loss of $1,691,000 in the same period in 2007. The company generated no revenues from operations during the quarters ended March 31, 2008, and 2007. The company generated its first revenues in the third quarter of 2007. Until the commercialization of its products, the company says that its revenues will be uneven during the product testing period and as such, the company recorded no revenues in this quarter. The increase in net loss is primarily due to an increase in selling, general and administrative expenses offset by a decrease in interest expense. Selling, general and administrative expenses were $1,912,000 for the quarter ended March 31, 2008, as compared to $619,000 for the quarter ended March 31, 2007, an increase of $1,293,000. Interest expense totaled $191,000 for the quarter ended March 31, 2008, compared to $1,053,000 for the quarter ended March 31, 2007, a decrease of $862,000. This decrease is primarily attributable to the additional interest expense required to be recorded in connection with the March 2007 conversions of certain promissory notes to common stock. At March 31, 2008, the company's consolidated balance sheet showed $11,317,000 in total assets, $3,052,000 in total liabilities, and $8,265,000 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $598,000 in total current assets available to pay $2,716,000 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?2d1b Going Concern Doubt Jeffrey S. Gilbert, in Los Angeles, expressed substantial doubt about Biolargo 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 reported that the company has limited liquid resources, recurring losses, negative cash flow from operations. The company had a net loss of $2,417,000 for the quarter ended March 31, 2008, and an accumulated deficit of $37,430,000 as of March 31, 2008. The company disclosed that ultimately, its ability to continue as a going concern is dependent upon its ability to attract new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by commercializing products incorporating its BioLargo technology. About BioLargo Inc. Headquartered in Irvine, Calif., BioLargo Inc. (OTC BB: BLGO) -- http://www.biolargo.com/-- is currently engaged in pre- licensing and product evaluation with strategic partners to leverage a suite of patented and patent-pending intellectual property, the BioLargo technology. The BioLargo technology harnesses and delivers nature's best disinfectant - iodine - in a safe, efficient, environmentally sensitive and cost-effective manner. The BioLargo technology works by combining minerals with water from any source and delivering molecular iodine on demand, in controlled dosages, in order to balance efficacy of disinfectant performance with concerns about toxicity. When the BioLargo technology is incorporated in absorbent products, they also experience increased holding power and may experience increased absorption. BLUE WATER: June 18 Court Date to Confirm Second Amended Plan ------------------------------------------------------------- Judge Marci B. McIvor of the U.S. District Court for the Eastern District of Michigan will hold a hearing on June 18, 2008, to consider confirmation of the Second Amended Plan of Liquidation filed by Blue Water Automotive Systems, Inc., and its debtor affiliates. Judge McIvor approved the Second Amended Disclosure Statement explaining the Plan, giving way for the Debtors to start soliciting acceptances of their Plan. Ballots are expected to be submitted by June 10. The Debtors filed blacklined copies of the Second Amended Plan of Liquidation and the Disclosure Statement reflecting immaterial modifications. The blacklined copies of the Plan and Disclosure Statement are available for free at: * http://bankrupt.com/misc/bluewater_amendedPlan.pdf * http://bankrupt.com/misc/bluewater_2ndamendedDiscStat.pdf The Debtors' Plan contemplates a sale of substantially all of the Debtors' assets and equity interests, except for a piece of real property located at Yankee Road, in St. Clair, Michigan, on or before June 30, 2008. The Debtors entered into non-resourcing agreements with their major customers -- General Motors Corporation, Ford Motor Corporation, and Chrysler LLC, and certain of their affiliates. The Participating Customers, however, condition their entry into the non-resourcing agreements on the Debtors' satisfaction of these milestones: April 15, 2008 -- Debtors must obtain a letter of intent for a sale May 28, 2008 -- Debtors must obtain a definitive purchase sale agreement and file a motion to approve sale June 20, 2008 -- Debtors must obtain an order approving the sale June 30, 2008 -- Sale closing 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. (Blue Water Automotive Bankruptcy News, Issue No. 18, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BLUE WATER: CIT Capital Wants Evidentiary Hearing on Plan --------------------------------------------------------- Judge Marci B. McIvor of the U.S. District Court for the Eastern District of Michigan will convene a hearing on June 3, 2008, to consider a request by CIT Capital USA, Inc., lender of more than $40,000,000 of secured prepetition loans, for a prompt evidentiary hearing to determine whether the pending plan process should be permitted to continue as to Blue Water Properties, LLC. Judge McIvor, however, clarifies that the June 3 Hearing is not an evidentiary hearing. Shalom L. Kohn, Esq., at Sidley Austin LLP, in Chicago, Illinois, notes that the Plan proposed on behalf of BW Properties is "tainted by an irreparable conflict of interest," which "caused the interests of BW Properties and its creditors to be sacrificed for the benefit of Blue Water Automotive Systems, Inc., and particularly its major customers." As a result, everything now being done on behalf of BW Properties is irretrievably contaminated and should not be the basis for any judicial action, he tells the Court. Mr. Kohn adds that the Debtors' Chapter 11 cases does not have the leisure of deferral of the conflict problem. "Despite CIT's objection, the Debtors have engineered a forced march to confirm a plan, all in an attempt to deprive CIT of its rights under Section 363(k) of the Bankruptcy Code, rather than follow the far normal process of a Section 363 sale as potential bidders doubtless would have preferred," he says. Mr. Kohn asserts that there is an irreparable conflict of interest as to the filing of the Plan for BW Properties. He points out that: (a) There are five separate Debtors in the Chapter 11 cases, including BW Properties. The bankruptcy cases have not been substantively consolidated. (b) The requirements of the Bankruptcy Code, accordingly, must be separately satisfied as to each Debtor. (c) Accordingly, the people making the decisions on behalf of each estate have a fiduciary duty only to that estate, and are required to make decisions for the benefit of the creditors of that single estate, and not the benefit of any other debtor or its creditors or customers. (d) The same people who are making the decisions on behalf of BWASI have been making the decisions on behalf of BW Properties. Mr. Kohn notes that Michael Lord is chief executive officer of both Debtors. (e) If one examines the proposed Plan, it is obvious that the Plan was crafted solely for the benefit of BWASI, and not for the benefit of the creditors of BW Properties. Pursuant to a lease agreement dated May 17, 2006, between BW Properties, as landlord and BWASI, as tenant, of properties located in Tuscola, Sanilac, and St. Clair Counties, in Michigan. Under the Lease, BWASI pays to BW Properties $223,173 monthly in arrears as base rent plus additional rent. Pursuant to the Plan, BWASI is seeking to sell its inventory, receivables and equipment and BW Properties is planning to sell the real estate. Mr. Kohn asserts that if there have truly been arm's-length negotiation between BW Properties and BWASI, BW Properties would have insisted that BWASI assume the Lease, and have the Lease treated as one of the Assumed Contracts under the sale contract. However, he says, the Debtors, after recognizing the conflict of interest that might arise from amendment or rejection of the Lease, filed a plan that proposes to have BW Properties abandon all of its rights under the Lease and agree to sell its real estate under the Plan without any assurances as to what might be paid for the property. CIT asks the Court to conduct an evidentiary hearing into the facts and circumstances, which resulted in the filing of the Plan on behalf of BW Properties. CIT intends to find answers to these questions: 1. Who acted on behalf of BW Properties in deciding to join in the Plan? 2. Did any of the people who made the decision on behalf of BW Properties also have duties or interests with respect to BWASI, which would have made their decisions for BW Properties less than truly independent? 3. Did the decision makers for BW Properties have the benefit of advice of independent counsel and who was the counsel? 4. What negotiations were conducted between BW Properties and BWASI with respect to insisting that BWASI assume the Lease as written or as to allocation of the purchase price and who conducted the negotiations? 5. What input did BW Properties have into the formulation and conduct of the sale process, including the decisions to pursue a sale through a plan rather than a Section 363 sale? 6. Who are the other purported creditors of BW Properties, and is there another conflict of interest in failing to recognize them as properly creditors of BWASI, based on the undertakings under the Lease? 7. Why did BW Properties not ally itself with CIT with which it shared the common interest of seeking to maximize the return on BW Properties' assets, rather than allying itself with BWASI, whose interests are in minimizing the price paid for BW Properties' assets? Debtors Respond The Debtors believe that there is no justification for an expedited hearing prior to the Confirmation Hearing. Judy A. O'Neill, Esq., at Foley & Lardner LLP, in Detroit, Michigan, points out that the Court has already established the date for the Confirmation Hearing, which is the only proper time to revisit identical objections directed at the Plan. She adds that CIT cannot and has not demonstrated any conflict that could arise from the sale of the BW Properties' sole real estate assets to the same purchaser who is buying the assets of BWASI. Accordingly, the Debtors maintain that if CIT's objections are to be heard a second time, it must be in connection with the confirmation of the plan, as opposed to the vacuum in which CIT now seeks to have them heard. The only proper time for the objections is at the Confirmation Hearing, the Debtors conclude. CIT Talks Back CIT reiterates that, contrary to the Debtors' statements, its request to expedite is not an attempt at reconsideration since the objection related to BW Properties at the Disclosure Statement hearing were not the subject of a ruling on the merits so the rules restricting reconsideration do not apply. The Debtors have presented no argument as to why they will be prejudiced by an early resolution of the issues raised by CIT, Mr. Kohn insists. He avers that the Debtors' resistance to have CIT's objections decided immediately is but another example of a strategy "to paint the Court and the parties into a corner, so that the Court would be forced to approve an improper Plan A because the Debtors have not allowed enough time to implement a proper Plan B." 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 Plan contemplates a sale of substantially all of the Debtors' assets and equity interests, except for a piece of real property located at Yankee Road, in St. Clair, Michigan, on or before June 30, 2008. The Court will hold a hearing June 18, 2008, to consider confirmation of the Plan. (Blue Water Automotive Bankruptcy News, Issue No. 18, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BOMBAY CO: Files Disclosure Statement and Joint Chapter 11 Plan --------------------------------------------------------------- The Bombay Company Inc. and its debtor-affiliates, together with the Official Committee of Unsecured Creditors, as co-proponent, delivered to the United States Bankruptcy Court for the Northern District of Texas a Joint Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that plan on May 29, 2008. The Court will convene a hearing on July 2, 2008, at 10:30 a.m., to consider the adequacy of the Debtors' Disclosure Statement. The Debtors asked permission from the Court on Sept. 20, 2007, to borrow, on a final basis, up to $115 million in postpetition financing to fund their postpetition operations and liquidation from GE Corporate Lending and GE Canada Finance Holding Company. On Oct. 18, 2007, the Court approved the Debtors' DIP request. The Bombay Furniture Company of Canada Inc. - La Compagnie de Mobilier Bombay Du Canada Inc., sough protection from its creditors from the Ontario Superior Court of Justice on Sept. 20, 2007. On Sept. 20, 2007, the Debtors asked the Court to approve a proposed bidding procedures for the sale of substantially all assets, free and clear of all liens and interests, subject to better and higher offers. The Debtors accepted a bid by a joint venture comprised of Gordon Brothers Retail Partners LLC and Hilco Merchant Resources of 109.5% of actual cost value of the U.S. inventory. The Debtor also shared with Gordon Brothers in proceeds of the inventory liquidation after it recovered its investment plus an agreed return. On Oct. 11, 2007, the Debtors began negotiation with a Canadian bidder -- Benix & Co. and affiliates of Hilco Consumer Capital -- for the sale of their Canadian operations. The bidder offered to pay 110% of the cost value of the Canadian inventory and proposed to assume all of the obligations of the Debtors' Canadian assets. The sale of the Debtors' Canadian assets was approved by the Canadian Bankruptcy Court on Oct. 23, 2007. The Court approved on Oct. 26, 2007, a supplemental bidding procedures for the sale of lease designation rights and the Debtors' corporate headquarters. On Nov. 8, 2007, the Court authorized the Debtors to sell their headquarters to Goff Capital Inc. for $16,350,000. The Debtors realized at least $1.8 million in the disposition of lease designation rights. The Court approved on Jan. 23, 2008, the sale of the Debtors' intellectual property to Bombay Brands LLC for $2,000,000. The Debtors retained a 25% ownership in Bombay Brands. Overview of the Plan Under the Plan, the liquidation trustee will issue a share of common stock for The Bombay Company Inc. and become the sole shareholders, officer and director of The Bombay Company Inc. replacing its existing shareholders and company officers. All other shares of any class of stock of each of the Debtors will be canceled on the Plan's effective date. A liquidation trust will be created for the benefit of all creditors of the estates holding allowed claims. According to the Plan, the Debtors are expected to transfer any of their assets including (i) cash and accounts, (ii) litigation causes of action, (iii) ownership interest in Bombay Brands LLC, (iv) all other property interests, rights, claims, defenses and causes of action with respect to any and all non-debtor intercompany claims or the Debtors. Treatment of Claims and Interests Class Type of Claims Treatment ----- -------------- --------- unclassified administrative claims unclassified priority tax claims 1 priority-non-tax claims unimpaired 2 secured claims unimpaired 3 general unsecured claims impaired 4 subordinated claims impaired 5 intercompany claims impaired 6 interests impaired Classes 1, 2, 4, 5 and 6 are not entitled to vote on the proponents Chapter 11 Plan. Each holder in Class 1 will be paid 100% of the unpaid amount of allowed claim in cash after the distribution date. Holders may receive other less favorable treatment as may be agreed upon by the claimant and the liquidation trustee. At the liquidation trustee's option, holders of Class 2 Secured Claims are entitled to get, either: a) 100% of the net proceeds from the sale of relevant collateral, up to the unpaid allowed amount of the claims; b) the return of the relevant collateral; or c) an alternative treatment as leaves unaltered the legal, equitable and contractual rights of the holder of the allowed claim. Holders of Class 3 General Unsecured Creditors are expected to receive between 18.5% and 31.5% of the allowed amount of their claims, plus their pro rata share of any value realized from the interest in Bombay Brands and litigation causes of action, if any. Holders of classes 4, 5 and 6 will not receive any distribution from the Debtors. A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2d1d A full-text copy of the Joint Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?2d1e About Bombay Company Based in Fort Worth, Texas, The Bombay Company Inc., (OTC Bulletin Board: BBAO) -- http://www.bombaycompany.com/-- designs, sources and markets a unique line of home accessories, wall d,cor and furniture through 384 retail outlets and the Internet in the U.S. and internationally, including Cayman Islands. The company and five of its debtor-affiliates filed for Chapter 11 protection on Sept. 20, 2007 (Bankr. N.D. Tex. Lead Case No. 07-44084). Robert D. Albergotti, Esq., John D. Penn, Esq., Ian T. Peck, Esq., and Jason B. Binford, Esq., at Haynes and Boone, LLP, represent the Debtors. The U.S. Trustee for Region 6 apppionted seven creditors to serve on an Official Committee of Unsecured Creditor. Attorneys at Cooley, Godward, Kronish LLP act as counsel for the Official Committee of Unsecured Creditors. As of May 5, 2007, the Debtors listed total assets of $239,400,000 and total debts of $173,400,000. BRIDGEWATER POINTE: Court Sets Claim-Filing Deadline June 30 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Virginia set June 30, 2008 as the last date for entities possessing claims against Bridgewater Pointe Partners LLC to file their proofs of claim. In addition, government units are given until Nov. 17, 2008 to file their proofs of claim against the Debtor. Based in Moneta, Virginia, Bridgewater Pointe Partners LLC -- http://bridgewaterpointe.com/-- is a real estate developer. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on April 16, 2008, (Bankr. W.D. Va. Case No.: 08-70682 to 08-70684). No trustee or examiner has been appointed in these Chapter 11 cases. Bridgewater Pointe's financial condition at bankruptcy filing showed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. BRIDGEWATER POINTE: Gets Court OK to Hire Kevin Mele as Accountant ------------------------------------------------------------------ Bridgewater Pointe Partners LLC obtained permission from the U.S. Bankruptcy Court for the Western District of Virginia to employ Kevin A. Mele P.C. as its accountant The firm is expected to compile and prepare all accounting reports as required by a U.S. Trustee from the date of filing through the reorganization, liquidation and final disposition. Documents submitted to the Court did not disclose the firm's hourly rates. The Debtor however agreed to provide Mele P.C. with a $5,000, and to reimburse the firm for fees and expenses. Kevin A. Mele, a shareholder at the firm, assured the Court that the firm does not represent any interest adverse to the Debtor's estate. Based in Moneta, Virginia, Bridgewater Pointe Partners LLC -- http://bridgewaterpointe.com/-- is a real estate developer. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on April 16, 2008, (Bankr. W.D. Va. Case No.: 08-70682 to 08-70684). No trustee or examiner has been appointed in these Chapter 11 cases. Bridgewater Pointe's financial condition at bankruptcy filing showed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. BUNCH COMPANY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: The Bunch Company 7879 E. Beck Lane Scottsdale, AZ 85260 Bankruptcy Case No.: 08-06248 Type of Business: The Debtor is a single asset real estate company. Chapter 11 Petition Date: May 29, 2008 Court: District of Arizona (Phoenix) Debtor's Counsel: LYNDON B. STEIMEL LAW OFFICE OF LYNDON B STEIMEL 14614 N KIERLAND BLVD #N-135 SCOTTSDALE, AZ 85254 Tel (480) 367-1188 Fax (480) 367-1174 Email lyndon@steimellaw.com Estimated Assets: $1,000,001 - $10 million Estimated Debts: $1,000,001 - $10 million The Debtor did not file a list of its largest unsecured creditors. BUSHNELL LOAN: Fitch's Withdraws Ratings After Restructuring ------------------------------------------------------------ Fitch Ratings withdraws its ratings on Bushnell Loan Fund effective immediately as: -- $38,300,000 class A rated 'C'; -- $25,000,000 class B rated 'C/DR6'. The withdrawals are due to the completion of a restructuring and wind-up of the existing total rate of return collateralized loan obligation transaction into a new cash flow CLO. CALPINE CORP: Fitch Publishes NRG/Calpine Asset Value Estimates --------------------------------------------------------------- In light of NRG Energy Inc.'s unsolicited offer to purchase Calpine Corp., Fitch Ratings has published an estimation of the asset values of both NRG (rated 'B' with an Evolving Rating Outlook by Fitch) and Calpine. Fitch placed NRG on Rating Watch Evolving on May 22 due to the unresolved uncertainty of the impact on NRG's credit profile. CPN is not currently rated by Fitch. Fitch's analysis considers three potential scenarios: -- A high case using a stochastic model, which recognizes each asset's embedded option value; -- A low case using a deterministic or traditional dispatch model; and -- The midpoint between the high and low cases. Note that the valuations derived from Fitch's recovery analysis typically vary relative to market values. Realized valuations will likely differ from those presented here. Such analysis is a standard component of Fitch's rating methodology for all high-yield issuers. The ultimate ratings for a combined NRG/CPN issuer will be determined based on the details of the transaction, including expected cash flows, capital structure and covenants. To calculate these values, Fitch used an independent long-term forecast of regional power and fuel prices. Generating assets are valued on a dollar/kilowatt basis determined by the present value of future cash flows using a 10% discount rate. Fitch considers the dispatch model for each asset, projected market clearing prices in the relevant region and estimates of price volatility. Potential capacity revenues are not included. CANAL POINT: Fitch Withdraws Ratings After Transaction Amendments ----------------------------------------------------------------- Fitch Ratings withdraws its ratings on Canal Point I Ltd. and Canal Point II, Ltd. effective immediately as: Canal Point I, Ltd. -- $33,205,000 class A income notes rated 'CC'. Canal Point II, Ltd. -- $43,600,000 income notes rated 'CC'. The withdrawals are due to amendments to the transactions which included unanimous noteholder consent to withdraw the ratings. CEDAR FUNDING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Cedar Funding, Inc. 465 Tyler Street Monterey, CA 93940 Bankruptcy Case No.: 08-52709 Type of Business: The Debtor is a mortgage lender. See http://www.cedarfundinginc.com/ Chapter 11 Petition Date: May 26, 2008 Court: Northern District of California (San Jose) Judge: Marilyn Morgan Debtor's Counsel: Charles E. Logan, Esq. Email: court@loganatlaw.com 95 S. Market St., Ste. 660 San Jose, CA 95113 Tel: (408) 995-0256 Estimated Assets: Less than $50,000 Estimated Debts: $100 million to $500 million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Lawrence A. Weingarten $4,733,000 P.O. Box 928 Monterey, CA 93942 Steven M. Weingarten $3,573,000 31851 N. Mitchell Creek Ft. Bragg, CA 95437 Bruce D. Weingarten $3,461,000 4135 Crest Rd. Pebble Beach, CA 93953-3008 Esin Voskay $2,300,000 34 Miramonte Rd. Carmel Valley, CA 93924 Ben Compagno $1,585,000 27853 Crowne Point Drive Salinas, CA 93908 Anthony Foux $1,315,000 1701 Mandeville Cyn Rd. Los Angeles, CA 90049 Mark D. Bartindale $1,267,500 and/or 33 Asoleado Carmel Valley, CA 93924 Charles R. Smith, Jr. $1,200,000 and/or 200 Glenwood Circle, Ste. E 7 Monterey, CA 93940 Antonio Flores and/or $1,180,000 2 Dorey Way Monterey, CA 93940 David Salehinia, $1,073,000 7240 Lotus Way Aptos, CA 95003 Jan T. Swanberg $1,059,000 627 Hight St. Santa Cruz, CA 95060 Sandra J. Still $1,010,000 1513 Vallejo Street Seaside, CA 93955 David P. Rauen and/or $950,000 228 Oxford Way Santa Cruz, CA 95060-6449 Dennis H. Kuchta Accounting# $929,255 KU1BM P.O. Box 26903 San Francisco, CA 94126 Catherine C. Lau $885,000 24639 Cabrillo St. Carmel, CA 93923 Thomas M. Green $807,523 P.O. Box 223754 Carmel, CA 93922 Mal Bon Bauerschmidt $800,000 1131 10th Street Monterey, CA 93940 Harry McMurray $795,000 1245 Aguajito Rd. Monterey, CA 93940 Garden of Memories $794,000 Mem. Park 768 Abbott St. Salinas, CA 93901 Daniel R. Bierman, Sr. $791,500 201 Ohua Ave. Honolulu, HI 96815 CELESTICA INC: Moody's Holds Ratings and Revises Outlook to Stable ------------------------------------------------------------------ Moody's Investors Service affirmed Celestica Inc.'s corporate family (B1), senior subordinated notes (B3), and speculative-grade liquidity (SGL-2) ratings and revised the outlook to stable from negative. The outlook change to stable reflects Celestica's improved operating and financial performance over recent quarters with tangible improvements in profitability, cost reductions via its ongoing restructuring program, and continued free cash flow generation against the backdrop of challenging market conditions in the EMS space. Despite nearly $150 million in customer disengagements, Celestica maintained flat to slightly negative topline revenue and has been able to demonstrate operating margin expansion through greater operating efficiency, by focusing on more profitable programs, while consciously walking away from unprofitable customer relationships. In addition, cost rationalization and improved execution at the company's historically poor performing Mexican and European business units have started to show signs of stabilization and are expected to be breakeven to slightly accretive by year end 2008. The stable outlook also reflects Moody's expectations that Celestica will continue to demonstrate a stable credit profile as a result of better financial discipline, operating leverage enhancement resulting from a higher variable cost structure, improved customer service and meaningful program wins as evidenced by revenue growth, and continued generation of modest free cash flow. The B1 CFR reflects: (i) the continued excess capacity in the EMS sector; (ii) Celestica's sub-par asset utilization and ongoing business restructurings, which have totaled roughly $435 million since January 2005 (with an additional $50--$75 million remaining in fiscal 2008); (iii) expectations of continued pressure in the telecom and IT networking spaces as OEM consolidation combined with heightened competition from Asian outsourcers have negatively impacted volumes; (iv) the potential for prolonged restructurings, which inevitably would serve as a major distraction for management in an industry where management focus and execution are key competitive differentiations; (v) very thin operating margins (2.5% for LTM ended March 2008), albeit improved from historical levels, leaving little cushion for operational setbacks. The rating is also supported by the company's status as a Tier 1 EMS provider, solid liquidity position with approximately $1.1 billion of cash balances as of March 2008, improving financial leverage as measured by debt to EBITDA (Moody's adjusted) of 3.6x as of March 2008 compared to 3.8x at FYE 2006, and better working capital management leading to a reduction in the cash conversion cycle (47.5 days as of March 2008 compared to 50.6 for FYE 2006) as well as enhanced cash flow generation helping to mitigate lower revenue growth. These ratings were affirmed: -- Corporate Family Rating at B1 -- Probability of Default Rating at B1 -- $500 million 7.875% Senior Subordinated Notes due 2011 at B3 (LGD-5, 85%) -- $250 million 7.625% Senior Subordinated Notes due 2013 at B3 (LGD-5, 85%) -- Speculative Grade Liquidity Rating at SGL-2 Headquartered in Toronto, Canada, Celestica Inc. is a global provider of electronic manufacturing services to original equipment manufacturers in the information technology and communications industry. For the last twelve months ended March 31, 2008, the company generated revenues and EBITDA (Moody's adjusted to exclude restructuring charges) of $8.1 billion and $362 million, respectively. CIFG GUARANTY: Capital Could Fall Below Min.; Fitch Junks Ratings ----------------------------------------------------------------- Fitch Ratings has downgraded these Insurer Financial Strength ratings of CIFG Guaranty and its affiliates to 'CCC' from 'A-': CIFG Guaranty CIFG Assurance North America, Inc. CIFG Europe -- IFS to 'CCC' from 'A-'. Fitch has also placed the ratings on Rating Watch Evolving. The downgrade is based, in part, on recent conversations with CIFG's management, in which the company has indicated it could be at greater risk of falling below regulatory minimum capital requirements, if the company's loss provisions increase in future periods which could trigger an insolvency proceeding by regulators. If this were to occur, CIFG's entire $57 billion credit default swap portfolio, which is the primary form of execution for the company's entire collateralized debt obligation exposure (including investment grade corporate, high-yield corporate, and structured finance CDOs) would be subject to termination at current valuations. Based on current market valuations, Fitch does not believe CIFG would have sufficient claims-paying resources to meet these obligations, triggering a likely default of its insurance subsidiaries. CIFG is actively working to remediate these risks and if successful, the company's capital position and policyholders' prospects could be significantly improved. Fitch's IFS rating downgrade to 'CCC' reflects the weakness of CIFG's current financial position and indicate two possible conditions, consistent with Fitch's definition of a 'CCC' IFS rating. While obligations are still being met on a timely basis, there is a real possibility that ceased or interrupted payments could occur in the future as a result of the possible termination of CIFG's CDS exposures at current valuations. Fitch believes capacity for continued timely payments is reliant upon the successful remediation through commutation of the company's structured finance CDO exposures. The downgrade was also heavily influenced by Fitch's on-going review of CIFG's exposure to subprime mortgage collateral, with specific emphasis on residential mortgage-backed securities from the 2005 vintage year. CIFG maintains a very large concentration of SF CDOs that are comprised of 2005 vintage RMBS. Unlike other financial guarantors, CIFG's exposure to SF CDOs with underlying RMBS collateral was primarily comprised of mezzanine SF CDOs, which have material exposure to 2005 vintage subprime RMBS collateral, which was originally rated in the 'BBB' category and is now well below-investment grade. Furthermore, Fitch has incorporated the increased possibility that the company could breach regulatory minimum capital standards as a result of increasing reserves against its SF CDO exposures. CIFG's claims paying resources, which include the $1.5 billion capital infusion in late-2007 from its shareholders Caisse Nationale des Caisses d'Epargne et Prevoyance and Banque Federale des Banques Populaires, are currently modeled as being consistent with Fitch's standard for a below investment grade level of capital. Fitch expects the status of the ratings to be addressed over the very near-term pending resolution of its capital enhancement plan. If a regulator initiates insolvency proceedings and CIFG's CDS contracts terminate at current valuations, the company's IFS ratings would be considered in default. If CIFG successfully remediates the SF CDO exposures without impairing its capital base, Fitch believes there could be significant upward rating migration of the current IFS rating. Such action will need to consider the on-going business plan that ownership and management will formulate before resolution of a rating action can be determined. Fitch currently believes that expected losses on CIFG's insured SF CDOs will ultimately fall within a range of $2.6 to $3.6 billion. These totals reflect Fitch's current estimates of the range of future losses that CIFG would be expected to incur over the life of these transactions, stated on a present value basis. The range of outcomes reflects the unknown magnitude of U.S. residential mortgage losses on SF CDOs insured by CIFG. From a present value perspective, Fitch discounts the expected future loss rates by 5% over a two-year period for CDO-squareds, five years for mezzanine SF CDOs and seven years for high-grade SF CDOs. CIFG Guaranty, CIFG Assurance North America, Inc. and CIFG Europe are subsidiaries of CIFG Holding. CIFG Holding is directly owned by Banque Federale des Banques Populaires and Caisse Nationale des Caisses d'Epargne et Prevoyance, two large French banking groups. CIT RV TRUST: S&P Junks Ratings on Two Note Classes --------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B notes from CIT RV Trust 1998-A and 1999-A and on the class D notes from SSB RV Trust 2001-1. Concurrently, S&P affirmed the ratings assigned to the class A-5 notes from the series 1999-A transaction and the class A-5, B, and C notes from the series 2001-1 transaction. The downgrades reflect the declining credit enhancement and deteriorating performance of the underlying collateral, which consists of recreational vehicle loans that CIT acquired or originated. As of the April 2008 distribution date, the series 1998-A trust had a pool factor of 5.05%; a cumulative net loss rate of 7.75%; a six-month average recovery rate of 18.47%; and a 90-plus-day delinquency rate of 3.47% of the current pool balance. The 1998-A trust is also experiencing a growing principal shortfall carryover (currently $3.4 million). In addition, the rating on the certificate class, which provides the only remaining form of hard credit support to the class B notes, was set to 'D' in January 2006 due to an interest shortfall. S&P believe that the subordination provided by the certificate class will eventually be eroded and excess spread will continue to be insufficient to cover monthly net losses. As a result, the credit enhancement available to cover expected remaining losses for the series 1998-A transaction will continue to decline. The series 1999-A trust, as of the April 2008 distribution date, had a pool factor of 7.43%; a cumulative net loss rate of 8.27%, which is more than double our original expectations; a six-month average recovery rate of 50.51%; and a 90-plus-day delinquency rate of 3.77% of the current pool balance. In addition, the 1999- A trust is experiencing a growing principal shortfall carryover (currently $12.3 million). Furthermore, the rating on the certificate class, which provides the only remaining form of hard credit support to the class B notes, was set to 'D' in June 2005 due to an interest shortfall. Going forward, S&P believe that the certificate class will no longer be available to provide subordination, leaving excess spread as the only form of credit enhancement available to the class B notes. Currently, this transaction is not generating enough excess spread to cover monthly net losses. S&P expect this trend to continue, and therefore S&P anticipate that excess spread will be insufficient to cover projected remaining losses in this transaction. As a result, S&P believe there is a high likelihood that class B will eventually default. The series 2001-1 trust, as of the April 2008 distribution date, had a pool factor of 13.26%; a cumulative net loss rate of 6.81%; a six-month average recovery rate of 49.85%; and a 90-plus-day delinquency rate of 0.50% of the current pool balance. In addition, due to continuous draws to cover net losses, the reserve account has been reduced to $1.59 million (0.24% of the initial pool balance), which is below the required amount of $12.96 million (2.00% of the initial pool balance). In the past year, the reserve account was reduced by approximately $2.0 million, causing deterioration in credit enhancement for all classes, especially the class D notes, for which it provides the only form of hard credit support. It is expected that the reserve account will be completely depleted within the next year. As such, S&P believe the class D notes are highly likely to default. Standard & Poor's will continue to monitor these transactions to determine whether further rating actions are warranted. Ratings Lowered CIT RV Trust 1998-A Rating ------ Class To From ----- -- ---- B B- BB- CIT RV Trust 1999-A Rating ------ Class To From ----- -- ---- B CCC- B SSB RV Trust 2001-1 Rating ------ Class To From ----- -- ---- D CCC- BB+ Ratings Affirmed CIT RV Trust 1999-A Class Rating ----- ------ A-5 AAA SSB RV Trust 2001-1 Class Rating ----- ------ A-5 AAA B AA C A Other Outstanding Ratings CIT RV Trust 1998-A Class Rating ----- ------ Certs D CIT RV Trust 1999-A Class Rating ----- ------ Certs D CLARIENT INC: Appoints Raymond Land as CFO and Senior VP -------------------------------------------------------- Clarient, Inc. names veteran financial executive Raymond J. Land, 63, as Senior Vice President and Chief Financial Officer effective June 5, 2008. Mr. Land has more than 15 years experience as a public company CFO in life sciences and related businesses and more than 30 years experience in financial and general management positions. Land, who spent the last year as CFO of Safeguard Scientifics, replaces James Agnello, who resigned the CFO position earlier this month. "I would like to welcome Ray to the Clarient team," Clarient CEO Ron Andrews said. "Clearly, Ray has the experience and knowledge base to have an immediate impact on Clarient's financial processes as we continue to develop and improve the necessary finance and accounting systems to support our rapid growth. Ray's experience on Wall Street combined with his knowledge of SEC and Sarbanes Oxley reporting requirements make him an excellent addition to our leadership team. His experience in strategic planning and M&A in the genomics space brings an added opportunity for contribution as we assess a number of strategic opportunities to augment our current growth trajectory." Continuing, Mr. Andrews stated, "This is a natural transition given Safeguard's business model of hiring executives with operational experience to fill roles in partner companies as they become available. As CFO at Safeguard, Ray has been working with Clarient for almost a year now so he has a solid understanding of our business and therefore was an obvious candidate to fill our open CFO role." Mr. Land has more than 30 years of experience in financial positions where he had responsibility for the accounting, treasury, tax, investor relations, information technology and strategic planning functions. From 2006 to 2007, Mr. Land served as Executive Vice President and Chief Financial Officer of Medcenter Solutions, Inc., a global pharmaceutical marketing company specializing in online solutions. From 2005 until 2006, Mr. Land served as Senior Vice President and Chief Financial Officer of Orchid Cellmark Inc., a DNA testing service provider that generates genetic profile information by analyzing an organism's unique genetic identity. >From 1997 until 2005, Mr. Land was Senior Vice President and Chief Financial Officer of NASDAQ-traded Genencor International, Inc., a global diversified genomics and proteomics company that went public during his tenure and was acquired in a $1.2 billion transaction in 2005. From 1991 to 1996, he served as Senior Vice President and Chief Financial Officer for publicly traded West Pharmaceutical Services, Inc. Previously, Mr. Land was with Campbell Soup Company, Inc. where for nine years he held increasingly senior financial positions, including Vice President- Corporate Controller. Prior to joining Campbell Soup, he was with Coopers and Lybrand for nine years. Mr. Land is a Certified Public Accountant and has a BBA degree in accounting and finance from Temple University. Mr. Land serves on the board of Anika Therapeutics, Inc., as Chairperson of the Audit Committee. He is married and will relocate with his wife, Kathleen, to Southern California from his current home in the greater Philadelphia area. 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. 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. Going Concern 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. CLASS V: Moody's Cuts Ba3 Rating on $1.4 Billion Notes to Ca ------------------------------------------------------------ Moody's Investors Service has downgraded these note issued by Class V Funding IV (CDS Ref. No: CC3W00116) Class Description: $1,400,000,000 Initial Tranche Notional Amount Credit Default Swap with Attachment Point 30% and Exhaustion Point 100% -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. CLASS V: Deteriorating Credit Quality Cues Moody's Ratings Cut -------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of eight classes of notes issued by Class V Funding III, Ltd. as: Class Description: $39,200,000 Class S Notes due 2015 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Ca Class Description: $500,000,000 Class A1 Floating Rate Notes due 2052 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: Ca Class Description: $200,000,000 Class A2 Floating Rate Notes due 2052 -- Prior Rating: Ca -- Current Rating: C Class Description: $120,000,000 Class A3 Floating Rate Notes due 2052 -- Prior Rating: Ca -- Current Rating: C Class Description: $75,000,000 Class A4 Floating Rate Notes due 2052 -- Prior Rating: Ca -- Current Rating: C Class Description: $50,000,000 Class B Deferrable Floating Rate Notes due 2052 -- Prior Rating: Ca -- Current Rating: C Class Description: $35,000,000 Class C Deferrable Floating Rate Notes due 2052 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,000,000 Class Q Combination Notes due 2052 -- Prior Rating: Ca -- Current Rating: C Class V Funding III, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On Nov. 13, 2007 the transaction experienced an event of default caused by a failure of the Principal Coverage Ratio of Class A Notes to be greater than or equal to the required amount set forth in Section 5.1(d) of the Indenture dated Feb. 28, 2007. That event of default is continuing. The rating actions taken reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. CLEARPOINT BUSINESS: Gets Nasdaq Notice on Listing Noncompliance ---------------------------------------------------------------- ClearPoint Business Resources, Inc. received a letter from The Nasdaq Stock Market indicating that the company is not in compliance with Nasdaq Marketplace Rule 4310(c)(3) which requires the Company to maintain either: (i) $2,500,000 of stockholders' equity, (ii) $35,000,000 market value of listed securities or (iii) $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the last three most recently completed fiscal years. As a result of the company's non-compliance with Nasdaq Marketplace Rule 4310(c)(3), Nasdaq is reviewing the company's eligibility for continued listing of its securities on The Nasdaq Capital Market. To facilitate this review, the company must provide to Nasdaq, on or before June 6, 2008, a specific plan to achieve and sustain compliance with all The Nasdaq Capital Market listing requirements, including the time frame for completion of the plan. If Nasdaq determines that the company's plan does not adequately address the issues, then Nasdaq will provide written notification to the company that its securities will be delisted. At that time, the company would have the ability to appeal the decision to the Nasdaq Listing Qualifications Panel. Although the company is in the process of working on such plan, the company can offer no assurance that it will be able to provide to Nasdaq a plan which indicates its ability to both meet and sustain compliance with all Nasdaq listing requirements. About Clearpoint Business Based in Chalfont, Pa., ClearPoint Business Resources Inc., through its proprietary, technology-based iLabor network platform, provides its clients a comprehensive web-based portal to streamline the process involved in procurement and management of temporary labor through a network of ClearPoint-approved staffing vendors. Clearpoint Business Resources Inc.'s consolidated balance sheet at March 31, 2008, showed $10,264,003 in total assets and $26,251,109 in total liabilities, resulting in a $15,987,106 total stockholders' deficit. Going Concern At March 31, 2008, the company had an accumulated deficit of $47,402,395 and working capital deficiency of $15,935,072. For the three months ended March 31, 2008, the company incurred a net loss of $31,697,593. In addition, the company was in technical default of its debt and reporting covenants with Manufactures and Trader Trust Company and to date has not received a waiver for non-compliance with these financial and reporting covenants. The company said the foregoing matters raise substantial doubt about its ability to continue as a going concern. COMMONWEALTH EDISON: Fitch Affirms 'BB+' Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has affirmed the outstanding ratings of Exelon Corp. and its subsidiaries Exelon Generation Co., LLC, PECO Energy Co. and Commonwealth Edison. The Rating Outlook for Exgen is revised to Positive from Stable, while those of EXC, PECO and Comed remain Stable. EXC's ratings reflect the company's sound consolidated credit profile and the favorable competitive position and strong operating record of its wholesale electric generation business, Exgen, which accounts for the majority of earnings and cash flow. The ratings also anticipate reasonable rate treatment in Comed's pending rate case. The cost of meeting contractual obligations in the event of an extended generating outage is the primary credit risk. The potential for legislative interference in Pennsylvania following the expiration of rate caps in 2010 is also a credit concern, affecting PECO, but should not affect the ratings of EXC, Exgen or Comed. Exgen's credit profile is very strong and is expected to remain so for the foreseeable future. The positive rating outlook reflects leverage, interest coverage and profitability measures that are strong for the rating and business risk categories and compare favorably to its peer group. The strong credit profile primarily results from the low marginal cost of the company's largely nuclear electric generating portfolio combined with moderate debt. The nuclear generating portfolio should achieve a high level of dispatch in both high and low gas scenarios, which mitigates the merchant risk. Fitch assumes that management will balance the interests of bondholders and share owners when implementing its' value return policy, which includes using excess cash and debt capacity, largely at Exgen, to return funds to shareholders. PECO's financial condition is also sound, including adjusted debt- to-EBITDA of 2.1 times and EBITDA-to-interest of 8.1x in 2007. Going forward, credit measures are expected to weaken due to the decline in the collection of competitive transition charges and the associated carrying costs, but should remain supportive of the current ratings. The primary credit concern is the sizeable increase in generation costs that is likely in Pennsylvania following the expiration of generation rate caps in 2010 and the potential for legislation that would preclude full recovery of electricity supply costs. Current ratings assume full recovery of energy supply costs. The ratings of ComEd reflect the substantial reduction in business risk that resulted from the 2007 Illinois Settlement Agreement that provided for full commodity cost recovery and expectations of a reasonable outcome in the company's pending rate case that would improve its financial profile. The Illinois Commerce Commission staff is supporting a $269 million rate increase, which equates to approximately 75% of the company's revised request. Fitch considers the staff recommendation to be constructive. A final ICC decision is expected in September. Fitch has affirmed these ratings: Exelon Corp. -- Issuer Default Rating at 'BBB+'; -- Senior unsecured debt at 'BBB+'; -- Commercial paper at 'F2'; -- Short-term IDR at 'F2'. Exelon Generation Co., LLC -- IDR at 'BBB+'; -- Senior unsecured debt at 'BBB+'; -- CP at 'F2'; -- Short-term IDR at 'F2'. PECO Energy Co. -- IDR at 'BBB+'; -- First mortgage bonds at 'A'; -- Preferred stock at 'BBB+'; -- CP at 'F2'; -- Short-term IDR at 'F2'. PECO Energy Capital Trust III -- Preferred stock at 'BBB+'. PECO Energy Capital Trust IV -- Preferred stock at 'BBB+'. Commonwealth Edison Co. -- IDR at 'BB+'; -- Short-term IDR at 'B'; -- First mortgage bonds at 'BBB'; -- Senior unsecured debt at 'BBB-'; -- Preferred stock at 'BB'; -- CP at 'B'. ComEd Financing III -- Preferred securities at 'BB'. CORONA BOREALIS: S&P Puts Default Ratings on Two CDO Transactions ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings to 'D' on 15 classes from two collateralized debt obligation transactions, Corona Borealis CDO Ltd. and Mystic Point CDO Ltd., following the liquidation of the portfolio collateral. Both transactions are hybrid CDO of asset-backed securities transactions collateralized predominantly by mezzanine classes of residential mortgage-backed securities and other structured finance transactions. Both of the transactions had previously experienced events of default, and subsequently the controlling noteholders had voted to liquidate the assets. The current rating actions follow notice from the trustee that the liquidation of the portfolio assets is complete and that the available proceeds have been distributed to the noteholders. The trustee has indicated that for both of the transactions, the proceeds of the liquidation were insufficient to pay down the balances of any of the notes in full. Rating Actions Rating ------ Transaction Class To From ----------- ----- -- ---- Corona Borealis CDO Ltd. A-1A D BB/Watch Neg Corona Borealis CDO Ltd. A-1B D CCC-/Watch Neg Corona Borealis CDO Ltd. A-1C D CCC-/Watch Neg Corona Borealis CDO Ltd. S D CCC-/Watch Neg Corona Borealis CDO Ltd. A-2 D CCC-/Watch Neg Corona Borealis CDO Ltd. B D CCC-/Watch Neg Corona Borealis CDO Ltd. C D CC Corona Borealis CDO Ltd. D D CC Mystic Point CDO Ltd. A-1 D CCC/Watch Neg Mystic Point CDO Ltd. A-2 D CC Mystic Point CDO Ltd. A-X D CCC-/Watch Neg Mystic Point CDO Ltd. B D CC Mystic Point CDO Ltd. C D CC Mystic Point CDO Ltd. D D CC Mystic Point CDO Ltd. E D CC CWALT INC: Moody's Chips Ratings to Ca on Two Certificate Classes ----------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 2 tranches from CWALT, Inc. Mortgage Pass-Through Certificates, Series 2006- J7. The collateral backing the transaction consists primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans. The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going review process. Complete rating actions are: Issuer: CWALT, Inc. Mortgage Pass-Through Certificates, Series 2006-J7 -- Cl. 2-B-1, Downgraded to Ca from B1 -- Cl. 2-B-2, Downgraded to Ca from B2 DANIEL GUILLORY: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Daniel J. Guillory, III 122 S Sherrin Ave #3 Louisville, KY 40207 Bankruptcy Case No.: 08-32065 Chapter 11 Petition Date: May 19, 2008 Court: Western District of Kentucky (Louisville) Judge: Thomas H. Fulton Debtor's Counsel: Neil Charles Bordy, Esq. Seiller Waterman LLC 2200 Meidinger Tower 462 S 4th Street Louisville, KY 40202 Phone: 584-7400 E-mail: bordy@derbycitylaw.com U.S. Trustee: Joseph J. Golden Office of the U.S. Trustee 601 W. Broadway #512 Louisville, Ky 40202 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/kwd-0832065.pdf DARCOMM NETWORK: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Darcomm Supply, Inc. 3550 N. Central, Suite 800 Phoenix, AZ 85012 dba Darcomm Network Solutions, Inc. Bankruptcy Case No.: 08-05755 Type of business: Since 1984, Darcomm Network Solutions has been providing network design, equipment, integration, support, and carrier services to businesses throughout Arizona, New Mexico and Nevada. Darcomm's clients include American Express, Cable One, Fry's Food Stores, Infinity Outdoor Systems, Phelps Dodge, and the majority of school districts in Arizona. See: http://www.darcomm.com Chapter 11 Petition Date: May 17, 2008 Court: District of Arizona (Phoenix) Judge: George B. Nielsen Jr. Debtor's Counsel: Lawrence D. Hirsch, Esq. Hirsch Law Office, P.C. 5020 E. Shea Blvd., #150 Scottsdale, AZ 85254 Phone: 602-996-9544 Fax: 480-505-9707 E-mail: lhirsch@hirschlaw.net Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/a08-05755.pdf DAWAHARES LEXINGTON: Closes 9 Shops After Bankruptcy Filing ----------------------------------------------------------- Dawahares, Inc., will close nine of its 31 retail outlets after commencing a reorganization proceedings under chapter 11 of the U.S. Bankruptcy Code on May 30, 2008, The Lexington (Ky.) Herald- Leader reports. About 100 jobs will be affected by the store closings, the report says. The company will also scrap seven positions at its headquarters, Herald-Leader says, citing Harding Dawahare, the company's president. Dawahares will have about 400 employees after the closings, according to the report. The 101-year-old chain of clothing stores blamed the national economic downturn and competition from other retailers for its woes, Herald-Leader says. "The important thing is that we are going forward with 22 stores," Mr. Dawahare said, according to the report. "We believe that our plan to reorganize will work and that we will be a successful company in the future. "I am very confident it (the reorganization) will solve the problem," he said. According to the report, Mr. Dahaware said, year by year, the number of competitors has been increasing in Dawahare's markets, including national chain stores that can pay less for their merchandise because of their larger size. Those goods are then sold at the same prices as Dawahare's goods, he said. Mr. Dahaware said the company continues to lose market share, the report says. Herald-Leader reports that the Debtor will appear before the U.S. Bankruptcy Court in Lexington, Kentucky, on Thursday to seek permission to begin store-closing sales. The sales, expected to begin Friday, will be conducted by Gordon Brothers Group, a Boston-based company specializing in liquidations, Herald-Leader relates, citing W. Thomas Bunch, Sr., Esq., counsel to the Debtor. The sale is expected to be completed by July 31. Mr. Bunch told Herald-Leader that companies such as Dawahare's often choose to file for bankruptcy protection rather than simply closing unprofitable stores on their own because closing stores before their leases expire gives landlords a reason to sue, and that bankruptcy protects companies from having to pay damages in those instances. Herald-Leader says the stores to be closed are in Owensboro, Bowling Green, Paducah, Glasgow, Maysville, Mount Sterling, Campbellsville and Newport, Ky., and Bluefield, W.Va. The stores that will remain open, according to Herald-Leader, are four in Lexington, three in Louisville and one each in Corbin, Bardstown, Elizabethtown, Morehead, Hazard, Pikeville, Paintsville, Whitesburg, Richmond, South Williamson, Danville, Madisonville, Somerset, Middlesboro and Murray. Dawahares Inc. is a family owned and operated retail clothing chain with stores in Kentucky, Tennessee, and West Virginia. The company does business under the Dawahares name and as The Cat Bird Seat. DAWAHARES LEXINGTON: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Dawahare's of Lexington, LLC dba Dawahares dba Catbird Seat 1801 Alexandria Drive, Suite 148 Lexington, KY 40504 Bankruptcy Case No.: 08-51381 Type of Business: The Debtor sells family clothing in retail. See http://www.dawahares.com/ Chapter 11 Petition Date: May 30, 2008 Court: Eastern District of Kentucky (Lexington) Judge: Joseph M. Scott, Jr. Debtor's Counsel: W. Thomas Bunch, II, Esq. Email: tom@bunchlaw.com W. Thomas Bunch, Sr., Esq. Email: wtb@bunchlaw.com P.O. Box 2086 271 W. Short St., Ste. 805 Lexington, KY 40588-2086 Tel: (859) 254-5522 Total Assets: $10,023,124 Total Debts: $9,280,821 Debtor's 20 Largest Creditors: Entity Claim Amount ------ ------------ Dooney & Bourke $196,540 P.O. BOX 30468 Hartford, CT 06150 Ganz $119,485 60 Industrial Pkwy, Ste. 43 Cheektowaga, NY 14227-9903 Lanier Clothing $114,109 12564 Collection Center Dr. Chicago, IL 60693 Currents-Jeri Jo $108,484 Massive/String Theory, LLC $92,947 Chaps By Ralph Lauren $92,166 Fossil $85,860 Lucky $81,529 Hands On Originals $80,763 IZOD Womens Div. of PVH $75,481 E-Lo Sportswear $74,040 IZOD Sportswear $67,895 Rafaella Apparel Group, Inc $65,551 Polo Ralph Lauren $64,526 Milano Manhattan $50,039 San Malone $45,455 Logo Xpress $45,221 Columbia Sportswear Co. $43,176 Concorde Apparel Co. $43,127 Golden Touch Imports, Inc. $42,802 DEBORAH BRANNON: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------- Debtors: Deborah Diane Brannon 2985 Bannister Avenue Gilroy, CA 95020 David Lyndon Brannon dba B & B Fishing Supplies dba Diversified Pool Services Bankruptcy Case No.: 08-52413 Chapter 11 Petition Date: May 12, 2008 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: Mufthiha Sabaratnam, Esq. Law Offices of Sabaratnam and Assoc. 1300 Clay St. #600 Oakland, CA 94612 Phone: (510) 464-8000 E-mail: mufti@taxandbklaw.com Total Assets: $5,194,200 Total Debts: $4,171,403 A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/cnd08-52413.pdf DEEPER CHRISTIAN: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------ Debtors: Deeper Christian Life Ministry Inc. 103-19 Merrick Blvd. Jamaica, NY 11433 Bankruptcy Case No.: 1-08-42919 Type of business: The Debtor is a New York church of a congregation that was started by W.F. Kumuyi, a math lecturer at The University of Lagos, Nigeria in 1973. The congregation has its headquarters in Nigeria. See http://www.dclm.org/ Chapter 11 Petition Date: May 9, 2008 Court: Eastern District of New York (Brooklyn) Judge: Dennis E. Milton U.S. Trustee: Diana G. Adams Office of the United States Trustee 271 Cadman Plaza East Suite 4529 Brooklyn, NY 11201 Phone: (718) 422-4960 Debtor's Counsel: Bruce Weiner, Esq. Rosenberg Musso & Weiner LLP 26 Court Street Suite 2211 Brooklyn, NY 11242 Phone: (718) 855-6840 Fax: 718-625-1966 E-mail: rmwlaw@att.net Total Assets: $2,500,000 Total Debts: $1,503,000 The Debtor does not have any creditors who are not insiders. DEEP OCEAN: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Deep Ocean Expeditions, LLC 4601 Shilshoe Avenue Northwest Seattle, WA 98104 Bankruptcy Case No.: 08-13231 Description: Robert D. McCallum, general manager filed the petition on the Debtor's behalf. Chapter 11 Petition Date: May 28, 2008 Court: Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtor's Counsel: Christine M. Tobin, Esq. (ctobin@bskd.com) Bush Strout & Kornfeld 601 Union Street, Suite 5000 Seattle, WA 98101 Tel: (206) 292-2110 Fax: (206) 292-2104 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million A full copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/wawb08-13231-pet.pdf A full copy of the Debtor's unsecured creditor list is available for free at: http://bankrupt.com/misc/wawb08-13231-cred.pdf DELPHI CORP: Expects to Borrow $254MM from Lender Group on June 9 ----------------------------------------------------------------- According to The Detroit News, Delphi Corp. and its debtor- affiliates expect to borrow an additional $254,000,000 on June 9 from a group of lenders through a package administered by JPMorgan Chase & Co. As widely reported, the Hon. Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has approved the Debtors' request to amend its $4,100,000,000 DIP financing by: (i) increasing the amount of availability under the Tranche A revolving credit facility to $1,100,000,000 and decreasing the amount of the Tranche B term loan to $500,000,000; and (ii) increasing the principal amount of the Tranche C Loan by approximately $254,000,000. As the syndication effort proceeded, investor interest in participating in the Debtors' DIP Facility proved to be significantly stronger than previously expected, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, tells the Court. The Debtors anticipate the shift between the Tranche A and Tranche B borrowings will save several hundred thousand dollars in interest expense per month. Increase in the Tranche C Loan will provide Delphi an additional $100,000,000 revolving line of credit. Delphi previously expected that: (i) Tranche A would consist of a first priority revolving credit facility of up to $1,000,000,000, (ii) Tranche B would consist of a first priority term loan of up to $600,000,000 and (iii) Tranche C would consist of a second priority term loan of approximately $2,500,000,000. Citicorp is the lead syndicating agent of the $4,350,000,000 package, with Bank of America, GE Capital Corp., JP Morgan, Deutsche Bank Securities taking roles in arranging the financing. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 131; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Sells Power Products Business Assets for $7.8 Mil. --------------------------------------------------------------- The Business Journal of Milwaukee reports that Strattec Security Corp., along with Witte Automotive and Vehicle Access Systems Technology LLC, agreed to acquire certain assets and assume certain employee liabilities of Delphi Corp.'s Power Products business for $7,800,000. CNN discloses that under the deal, Strattec will acquire the North American portion of Delphi's Power Products business, while Witte will buy the European portion. Vehicle Access, a joint venture between Strattec, Witte, and ADAC Automotive, will be buying the Asian portion of the business. The assets to be acquired consist mostly of equipment and inventory. Moreover, Delphi's operations in Oak Creek will not be included in the acquisitions, BizTimes Daily reports. The Business Journal of Milwaukee notes that the deal is subject to terms under Delphi's bankruptcy court proceedings. Moreover, Strattec expects to complete the acquisition before the end of the year. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 130; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DIOGENES CDO: Moody's Lowers Ratings and Left Under Review ---------------------------------------------------------- The rating action on Class $8,000,000 Combination Securities Due 2014 appeared incorrectly and has been removed from the Press Release. Revised release follows: Moody's Investors Service has downgraded and left on review for possible downgrade these notes issued by Diogenes CDO II Ltd.: Class Description: Up to $364,800,000 Class A-1 Floating Rate Notes Due June 15, 2049; -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $90,000,000 Class A-2 Floating Rate Notes Due June 15, 2049; -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $60,000,000 Class B Floating Rate Notes Due June 15, 2049; -- Prior Rating: Aa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $22,800,000 Class C Deferrable Floating Rate Notes Due June 15, 2049; -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $32,100,000 Class D Deferrable Floating Rate Notes Due June 15, 2049; -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade In addition Moody's also announced that it has downgraded these notes: Class Description: $6,300,000 Class E Deferrable Floating Rate Notes Due June 15, 2049; -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of residential mortgage-backed securities. DELPHI CORP: Completes $10MM Sale of Kettering Facility to Tenneco ------------------------------------------------------------------ Delphi Automotive Systems LLC has completed the sale of certain ride control assets and inventory at Delphi's Kettering, Ohio facility to Tenneco Inc. Tenneco has agreed to pay approximately $10 million for existing ride control components inventory and approximately $9 million for certain machinery and equipment. Tenneco will also lease a portion of the Kettering facility from Delphi. As part of the deal, Tenneco has also acquired valuable excess manufacturing assets, which it intends to use to continue growing its OE ride control business globally. Tenneco has entered into a long-term supply agreement with General Motors Corporation to continue supplying passenger car shock and strut business to General Motors from the Kettering facility. "Tenneco's acquisition of these assets, and a committed book of business from GM, gives us an opportunity to further diversify our ride control business in North America with more passenger car business as well as strengthen our ride control manufacturing capabilities in other key markets," Neal Yanos, senior vice president and general manager, North America Original Equipment Ride Control, Tenneco, said. "The purchase is also a win for the Kettering community and employees since jobs will be maintained that otherwise would be lost," Mr. Yanos continued. "We're moving ahead with a strong local management team in place with the goal of growing the plant's book of business." Tenneco will employ approximately 400 hourly and salaried employees at the Kettering plant. In connection with the purchase agreement, Tenneco has entered into a five-year agreement with the International Union of Electrical Workers, which will represent the hourly workforce at the facility. The agreement was ratified by the IUE's rank and file in August 2007. About Tenneco Based in Lake Forest, Illinois, Tenneco Inc., (NYSE: TEN) -- http://www.tenneco.com/-- manufactures automotive ride and emissions control products and systems for both the original equipment market and aftermarket. Brands include Monroe(R), Rancho(R), and Fric Rot ride control products and Walker(R) and Gillet emission control products. The company has operations in Argentina, Japan, and Germany, with its European operations headquartered in Brussels, Belgium. The company has approximately 19,000 employees worldwide. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. * * * As reported in the Troubled Company Reporter on March 17, 2008, Standard & Poor's Ratings Services still expects to assign a 'B' corporate credit rating to Delphi Corp. if the company emerges from bankruptcy in early April. S&P has revised its expected issue-level ratings because changes to the structure of the proposed financings have affected relative recovery prospects among the various term loans. S&P's expected ratings are: -- The $1.7 billion "first out" first-lien term loan B-1 is expected to be rated 'BB-' (two notches higher than the expected corporate credit rating on Delphi), with a '1' recovery rating, indicating the expectation of very high (90%-100%) recovery in the event of payment default. -- The $2 billion "second out" first-lien term loan B-2 is expected to be rated 'B' (equal to the corporate credit rating), with a '4' recovery rating, indicating the expectation of average (30%-50%) recovery in the event of payment default. -- The $825 million second-lien term loan is expected to be rated 'B-' (one notch lower than the corporate credit rating), with a '5' recovery rating, indicating the expectation of modest (10%-30%) recovery in the event of payment default. As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection as: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. DELTA AIR: To Cut 1,000 More Jobs Than Initially Planned -------------------------------------------------------- Delta Air Lines, Inc. is cutting at least 1,000 more jobs than it previously planned because the number of employees who accepted voluntary severance offers exceeded the company's goal, The Associated Press reports. Delta spokesperson Betsy Talton told the AP that more than 3,000 volunteered for the package -- all of which Delta will accept. As previously reported, Delta executives had said at the 2008 JPMorgan Aviation and Transportation Conference in New York on March 18, 2008, that the Company would offer voluntary severance payouts to approximately 30,000 employees, which covers more than half of its work force, and cut U.S. capacity by an extra 5%. The airline's goal was to cut 2,000 frontline, administrative and management jobs through the severance program, attrition and other initiatives. Specifically, Delta offered approximately 30,000 eligible employees to opt for one of the two voluntary programs, including: -- the 60-Point Retirement Program for those who are already eligible for retirement or for those whose age and years of service add up to at least 60, with 10 or more years of service; and -- the Early Out Program for frontline employees with 10 or more years of service and for administrative and management employees with one or more years of service. Both programs offer a severance payment, travel privileges, and additional benefits to manage career transitions. Specifics differ based on age, retirement eligibility and years of service. The Company "will be working through plans to ensure our operations are covered and there could be future hiring for operational needs, depending on capacity needed," Ms. Talton said in a statement. In the March 18 Conference, Delta officials had said that the voluntary headcount reductions are part of the Company's effort to "proceed cautiously" in the current economic and fuel climate. As of the end of 2007, Delta had reduced their full-time employees by 55,044, according to the report. Initial Plan to Cut 30,000 Jobs As reported in the Troubled Company Reporter on March 19, 2008, Delta chief executive officer, Richard Anderson, and president and chief financial officer, Edward H. Bastian, wrote a statement on March 18, 2008, to the company's global staff discussing the company's move to address record fuel prices and the weakening U.S. economy. In the statement, the executives said that despite the significant momentum at Delta, the rapid increase in fuel costs to record highs and the weakening U.S. economy are placing pressure on the business. In the past three months, fuel prices have climbed nearly 20% and 2008 fuel bill is now expected to increase by nearly $900 million compared to the business plan (based on $90 per barrel fuel) and more than $2 billion over 2007. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: 60% of Flight Attendants Trash AFA Representation ------------------------------------------------------------ Delta Air Lines, Inc. has received notification from the National Mediation Board that a decisive majority -- more than 60% of eligible flight attendants -- rejected representation by the Association of Flight Attendants-Communication Workers of America in the representation election at Delta. The rejection will mean Delta's continuous direct relationship with its flight attendants. Should enough FA votes were mustered for AFA's representation, the union would have negotiated future employment terms and benefits with Delta on behalf of its members, The Wall Street Journal reports. "We are pleased that Delta's flight attendants clearly believe that our unique culture and direct relationship are worth preserving," said Delta CEO Richard Anderson in an official statement on Delta's Web site. "Delta continues to be the best advocate for its people, and our employees recognize the benefits of working together to enhance their careers and drive successful results for themselves and our company," Mr. Anderson said. Joanne Smith, senior vice president for Delta's In-Flight Service and Global Product Development, added, "This decision was one of the biggest our flight attendants faced in their career at Delta and it arose during some challenging times in our industry. Through all of these distractions -- soaring fuel costs, a softening economy and an unrelenting AFA campaign of scare tactics and inaccurate information -- the professionalism of all of our flight attendants shone as they maintained an unwavering focus on safety and service. This comes as no surprise however, because that is the Delta Difference; it is what sets us apart from the rest of this industry." "We have many exciting and challenging opportunities ahead of us. Together, with our employees, we will continue to make Delta a source of pride for our people and an airline that delivers great service to our customers," Ms. Smith said. AFA's Statement In a May 28, 2008 release, AFA said that Delta Air Lines flight attendants narrowly missed a chance to form a union. The AFA-CWA won the vast majority of the votes cast in an historic election for union representation, but federal rules requiring a majority turnout, coupled with an aggressive voter suppression campaign by Delta management, kept thousands from casting a vote. With only 5,306, or almost 40%, of eligible flight attendants voting, the National Mediation Board (NMB) would not certify the AFA-CWA as the Delta flight attendants' representative after the all votes were counted. Flight attendants are optimistic that a coming vote in connection with Delta's merger with Northwest will result in winning AFA-CWA representation. "Delta flight attendants took the next big step toward gaining a voice and a union contract," said Patricia Friend, AFA-CWA International president. "A larger portion of the Delta workforce than ever before voted for union representation. Those supporters, combined with strong union support at Northwest, will clearly be enough for the flight attendants to win union representation after the merger with Northwest is finalized." AFA-CWA cited management's voter suppression efforts as a critical factor in the outcome. "For months, Delta management has touted its commitment to the democratic process, yet never let up on their intimidation and coercion of voters. Their empty rhetoric cannot conceal their interference. The conditions surrounding election were neither free nor fair, as required by NMB statutes. Now it is up to the National Mediation Board to defend the Delta flight attendants' right to an election free of interference," said Friend. The election followed a campaign for AFA-CWA representation that began in late 2006 when a small group of Delta flight attendants began collecting the signatures necessary to call for an election. >From the time AFA-CWA filed for an election in February, Delta management has waged an aggressive campaign to discourage flight attendants from voting. Across the country, crew rooms were wallpapered with anti-union messages such as "Give a Rip, Don't Click, Don't Vote," instructing flight attendants to rip up their voting instructions from the NMB and not cast a ballot. In addition, supervisors attempted to pressure flight attendant activists into discontinuing their activities in support of union representation. AFA-CWA plans to file formal interference charges with the NMB by June 6, 2008. "Once again, management has failed to listen to what employees want," said Mark Stell, Delta flight attendant and AFA-CWA activist. "Going into this election, it was clear that Delta flight attendants wanted a union. We deserve a voice in our future and will not stop until we get a seat at the table. There is a light at the end of the tunnel however and that is the second chance we will get to become members of AFA-CWA when this merger is finalized. Until then, we will work with our colleagues at Northwest Airlines to make sure that flight attendants are not left behind as the merger progresses." Under current NMB rules, when one non-union work group merges with a union group, if 35% of combined workforce has union representation or signs a union card, a union election will automatically be called. That vote is expected to occur in early 2009. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: Joins Northwest in Filing Merger Pact Prospectus ----------------------------------------------------------- In a joint proxy statement or prospectus filed with the Securities and Exchange Commission dated May 20, 2008, and in line with the merger agreement between Delta Air Lines, Inc. and Northwest Airlines Corporation, the chief executive officers of both airlines Richard A. Anderson and Douglas M. Steenland urged Delta stockholders to vote during a special meeting to approve: * the issuance of shares of Delta common stock to Northwest stockholders; and * the amended Delta 2007 Performance Compensation Plan, which governs the employee equity issuance, to increase the number of shares of Delta common stock issuable after giving effect to the Delta shares issued in connection with the merger. "While the closing of the merger is not conditioned upon approval of the amendment to the Delta 2007 Performance Compensation Plan, failure to approve this amendment could affect the ability of the combined company to achieve the expected synergies in the expected timeframe," the CEOs noted. Similarly, in order to complete the merger, an affirmative vote of holders of a majority of the outstanding shares of Northwest common stock must vote to adopt the Merger Agreement, said Messrs. Anderson and Steenland. The Executives clarified that approval of other matters at the Northwest annual stockholders meeting -- including election of its directors, ratification of the appointment of its 2008 independent auditor, and an amendment to the Northwest 2007 Stock Incentive Plan -- is not a condition to the Merger. The separate meetings to be held by Delta and Northwest to obtain approvals of the Merger Agreements are still to be announced, the filing disclosed. A full-text copy of Delta and Northwest's joint prospectus on Form S-4 is available at no charge at: http://ResearchArchives.com/t/s?2d2b About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DRI CORP: Earns $722,000 in 2008 First Quarter Ended March 31 ------------------------------------------------------------- DRI Corp. reported net income of $722,000, on net sales of $17,025,000, for the first quarter ended March 31, 2008, compared with a net loss of $770,000, on net sales of $12,000,000, in the same period in 2007. Results for the first quarter of 2007 included a loss from discontinued operations of $177,000 related to the operations of Digital Audio Corp., which the company divested on April 30, 2007. The increase in net sales resulted from higher U.S. domestic sales of $980,000 and an increase in sales by the company's foreign subsidiaries of $4.0 million. At March 31, 2008, the company's consolidated balance sheet showed $44,498,000 in total assets, $22,556,000 in total liabilities, $718,000 in minority interest in consolidated subsidiary, and $21,224,000 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?2d1a Going Concern Doubt PricewaterhouseCoopers LLP, in Raleigh, N.C., expressed substantial doubt about DRI 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 reported that the company has insufficient cash resources to make payment in full on the outstanding balance of the domestic line of credit which matures June 30, 2008. The company has executed term sheets with potential lenders for the refinancing of the domestic line of credit and such lenders are in the process of performing due diligence reviews of the company's financial records and operations. About DRI Corp. Headquartered in Dallas, DRI Corporation (Nasdaq: TBUS) -- http://www.digrec.com/-- through its business units and wholly owned subsidiaries, manufactures, sells, and services information technology and surveillance technology products either directly or through manufacturers' representatives or distributors. Customers include municipalities, regional transportation districts, federal, state and local departments of transportation, and bus manufacturers. The company markets primarily to customers located in North and South America, Far East, Middle East, Asia, Australia, and Europe. EOS AIRLINES: Cohen Tauber Approved as Committee's Counsel ---------------------------------------------------------- The Hon. Adlai S. Hardin, Jr., of the United States Bankruptcy Court for the Southern District of New York approved Cohen Tauber Spievack & Wagner P.C. as counsel to the Official Committee of Unsecured Creditors of Eos Airlines Inc. The Committee says the firm is well qualified to represent it in the Debtor's Chapter 11 case. The firm has knowledge and expertise in the areas law relevant to this case. Cohen Tauber is expected to: a) assist and advise the Committee in its consultation with the Debtors relative to the administration of this case; b) attend meetings and negotiate with the Debtor's representatives; c) assist and advise the Committee in its examination and analysis of the conduct of the Debtor's affairs; d) assist and advise the Committee in the review analysis and negotiation of the disclosure statement accompanying any plan of reorganization; e) assist and advise the Committee in the review, analysis and negotiation of any financing or sale agreements; f) take all necessary actions to protect and preserve the Committee's interest, including: -- possible prosecution of actions on its behalf; -- if appropriate, negotiations concerning all litigation in which the Debtor is involved; and -- if appropriate, review and analysis of claims filed against the Debtor's estate; g) prepare on behalf of the Committee all necessary motions, applications, answers, orders, reports pleadings and papers in support of positions taken by the Committee; h) appear, as appropriate, before the Court, the appellate courts, and the United States Trustee, and to protect the interest of the Committee before those courts and before the United States Trustee; and i) perform all other necessary legal services in this case. The firm's professionals and their compensation rates are: Designations Hourly Rates ------------ ------------ Partners $475-$545 Associates $275-$350 Paraprofessionals $125-$155 Joseph m. Vann, Esq., an attorney of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About EOS Airlines Based in Purchase, New York, EOS Airlines, Inc. -- http://www.eosairlines.com/-- is a transatlantic airline. The company filed for Chapter 11 protection April 26, 2008 (Bankr. S.D.N.Y. Case No.08-22581). Stephen D. Lerner, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. The Debtor selected Kurztman Carson Consultants LLC as claims agent. The U.S. Trustee for Region 2 appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtor filed for protection against it creditors, it listed total assets of $70,233,455 and total debts of $34,858,485. EOS AIRLINES: Files Schedules of Assets and Liabilities ------------------------------------------------------- Eos Airlines Inc. delivered to the United States Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property B. Personal Property $57,707,999 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding $870,117 Unsecured Priority Claims F. Creditors Holding 15,539,875 Unsecured Nonpriority Claims ----------- ----------- TOTAL $57,707,999 $16,409,993 About EOS Airlines Based in Purchase, New York, EOS Airlines, Inc. -- http://www.eosairlines.com/-- is a transatlantic airline. The company filed for Chapter 11 protection April 26, 2008 (Bankr. S.D.N.Y. Case No.08-22581). Stephen D. Lerner, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. The Debtor selected Kurztman Carson Consultants LLC as claims agent. The U.S. Trustee for Region 2 appointed creditors to serve on an Official Committee of Unsecured Creditors. ESMARK INC: Board Remains Neutral, Will Weigh OAO Severstal Offer ----------------------------------------------------------------- Esmark Incorporated board of directors will examine and consider the OAO Severstal offer, consistent with its fiduciary duties and the company's obligations under its memorandum of agreement with Essar Steel Holdings Limited. The move was in response to Severstal's unsolicited tender offer to acquire all outstanding shares of Esmark common stock for $17 per share. On or before June 13, 2008, Esmark will advise shareholders whether the Esmark board recommends acceptance or rejection of the Severstal offer, expresses no opinion and remains neutral toward the Severstal offer or is unable to take a position with respect to the Severstal offer. Esmark urges its shareholders to take no action with respect to the Severstal offer until the Esmark board makes its recommendation. Based in Wheeling, West Virginia, Esmark Inc. (NASDAQ:ESMK) -- http://www.esmark.com-- formerly Wheeling-Pittsburgh Corporation, is a holding company that, together with its subsidiaries and joint ventures, produces steel and steel products using both integrated and electric arc furnace technology. The company's principal operating subsidiary is Wheeling-Pittsburgh Steel Corporation. The company produces flat rolled steel products for steel service centers, converters, processors, and the construction, container and agriculture industries. Its product offerings focus on higher value-added finished steel products, such as cold rolled products, fabricated products, and tin and zinc coated products. Higher value-added products comprised 60.8% of the company's shipments during the year ended Dec. 31, 2006. In addition, it produces hot rolled steel products, which represent the least processed of its finished goods. In March 2008, the company completed the sale of its minority equity interest in Wheeling-Nisshin Inc. to Nisshin Holding Inc. Going Concern Doubt On May 20, Deloitte & Touche LLP of Pittsburgh, Pennsylvania, wrote to the Board of Directors and stockholders of Esmark Incorporated that after auditing the company's financial statements for the year ended December 31, 2007, it has substantial doubt regarding the company's ability to continue as a going concern because the company has been unable to refinance its debt on a long-term basis. In its 2007 Annual Report, the company disclosed that its current revolving credit facilities are due and payable no later than September 30, 2008. The company's ability to refinance these obligations will be dependent on a number of factors including the company's ability to borrow funds from the same or alternative lenders in a difficult lending environment, the company's ability to forecast and generate cash flow from future operations and the company's ability to structure alternative capital transactions with third parties and, if necessary, obtain proceeds from the disposition of assets. On April 30, 2008, the company agreed to the material terms of a proposed tender offer and merger with Essar Steel Holdings Limited for the purchase of all of the outstanding common stock of the company for $17.00 per share. The company also entered into a binding commitment with Essar for a $110,000 term loan, the proceeds of which were used to repay the Company's outstanding term loan in the amount of $79 million and to provide additional liquidity to the Company. This proposed tender offer is subject to a 52-day "right to bid" period as set forth in the collective bargaining agreement with the USW which may or may not result in a competing bid or offer from another concern. If the proposed merger with Essar is terminated under certain circumstances, the company would be required to pay Essar a "breakage fee" of $20.5 million. On May 16, 2008, the USW publicly announced a demand that Esmark repudiate the Essar agreements and asserted that those agreements with Essar are in direct violation of the company's collective bargaining agreement with the USW. In a non-binding proposal dated May 20, 2008, OAO Severstal (Severstal) offered to acquire all of the outstanding common stock of the Company for $17.00 per share. Severstal also stated that they are prepared to enter into interim liquidity substitute financing arrangements upon entering into a mutually acceptable definitive merger agreement. Severstal represented that they have entered into an agreement that satisfies the successorship clause of the company's collective bargaining agreement and that the USW informed them that it will waive its right to bid provisions in the collective bargaining agreement with respect to the Severstal proposal. FIELDSTONE MORTGAGE: Judge Schneider Approves Disclosure Statement ------------------------------------------------------------------ The Hon. James F. Schneider of the U.S. Bankruptcy Court for the District of Maryland approved a disclosure statement explaining an amended chapter 11 plan filed by Fieldstone Mortgage Co. The amended plan and disclosure statement was filed May 30. The Court will convene a hearing on July 10, 2008, at 10:00 a.m., to consider confirmation of the Debtor's plan. Objections, if any, are due July 8, 2008. The plan is premised on the sale of the Debtor's business operations and the stock of reorganized Fieldstone to Ontario, Canada-based Planet Financial Group LLC, the owner of a mortgage originator and a mortgage servicing operation, for $1,200,000. Maryland's The Daily Record reports the plan resulted in part from a settlement approved in April with Fieldstone's parent, Credit- Based Asset Servicing and Securitization LLC. The plan groups claims against and interest in the Debtor under __ classes. The plan provides for this recovery to creditors and interestholders: Treatment of Claims and Interests Types of Estimated Class Claim Treatment Amount ----- -------- --------- --------- unclassified administrative $950,000 claims unclassified fee claims $850 unclassified priority tax claims $950 unclassified priority claims $1,055,000 1 obligations unimpaired $1,600,000 Claims 2 convenience impaired $55,500 claims 3 general unsecured impaired $35,000,000 claims 4 old equity impaired $0 interests 5 510 claims impaired none Classes 2 and 3 are entitled to vote for the plan, while classes 1, 4 and 5 deemed rejected the plan. On the effective date, holders of class 1 obligations claims will be deemed indefeasibly repaid in full. Each holder of Class 2 convenience claim will receive cash in an amount equal to 35% of its allowed claim after the plan's effective date. Maryland's The Daily Record says the Plan provides for a 3% recovery to unsecured claims. Moreover, each holder of class 3 unsecured claim will get its pro rata share of the periodic distribution from the disbursement account. Holder of class 5 510 claim will not receive any distribution under the plan. A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2d2d A full-text copy of the Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?2d2e Headquartered in Columbia, Maryland, Fieldstone Mortgage Co. -- http://www.fieldstonemortgage.com/-- is a direct lender that offers mortgage loans for multiple credit situations in the United States. In September 2007, Fieldstone was the target of a lawsuit by Morgan Stanley over 72 mortgages worth $26.5 million that had no, or late, payments. The company filed for chapter 11 bankruptcy on Nov. 23, 2007 (Bankr. D. Md. Case No. 07-21814) citing loan payment lapses and credit market woes. Joel I. Sher, Esq., at Shapiro, Sher, Guinot & Sandler represents the Debtor in its restructuring efforts. The U.S. Trustee for Region 4 has appointed creditors to serve on an Official Committee of Unsecured Creditors in this case. Christopher J. Giaimo, Esq., and Jeffrey Neil Rothleder, Esq., at Arent Fox LLP, represent the Committee in this case. According to its Schedules, total assets were $14,465,348 and total debts were $121,342,790. FORTUNOFF: Four Creditors Demand $379,789 Repayment of Goods ------------------------------------------------------------ Four creditors who delivered goods to Fortunoff Fine Jewelry and Silverware LLC and its debtor-affiliates within 20 days before the bankruptcy filing sought payment of their administrative expense claims aggregating $379,789. The Creditors are: Amount Creditors Asserted --------- -------- Treasure Garden, Inc. $102,074 Conair Corporation 108,836 Shade Trends, LTD. 38,000 Jinhua Good Way Import & Export Co. Ltd. 130,879 The Creditors informed the U.S. Bankruptcy Court for the Southern District of New York that they have separately sent reclamation demands to the Debtors. Moreover, the Creditors related that the Debtors have neither responded to the demands, nor returned the goods. The Creditors contended that they are entitled to administrative expense claims for the value of their goods pursuant to Section 503(b)(9) of the Bankruptcy Code. Debtors Respond On behalf of the Debtors, Frank A. Oswald, Esq., at Togut Segal & Segal LLP, in New York, said that the Debtors do not dispute that the Creditors will be entitled to administrative priority claims to the extent that their prepetition claims satisfy the requirements of Section 503(b)(9). However, there are no unencumbered funds available to pay the Creditors' claims at this time, Mr. Oswald informed Judge James M. Peck. Mr. Oswald noted that Section 503(b)(9) makes no mention of the timing by which the Creditors' Claims must be paid. There is nothing in the Section that even suggests that a claimant has a right to immediate payment, Mr. Oswald argued. "As payment of any such claims is not required to be made, if at all, until later in these cases, the Debtors should not be required to litigate the extent and amount of any priority claims asserted by the [Creditors]," Mr. Oswald contended. "Any such litigation should occur if and when all other 503(b)(9) administrative expense claims against the Debtors are resolved - that is, after it is determined that there are funds available to pay such claims, thus, justifying the time and expense necessary for the Debtors to review and have the opportunity to object to such claims." Mr. Oswald asserted that unless funds become available to pay the Claims, the Creditors, and others similarly situated, would not want to expend additional time and money to litigate similar issues as well. Mr. Oswald told the Court that based on the Debtors' preliminary analysis, the Section 503(b)(9) Claims in the Debtors' bankruptcy cases are estimated at between $4,000,000 and $9,000,000, depending on the applicable receipt date. Thus, he stated, even if the Term D Lenders' roughly $2,000,000 in cash collateral was available to pay the Section 503(b)(9) Claims, payment could only be made on a pro rata basis. "Assuming that the Term D Lenders' security interests in and liens on substantially all of the Debtors' assets are valid and not subject to any defenses, these cases are administratively insolvent, and there will be no assets available to pay 503(b)(9) claims," Mr. Oswald explained. "In sum, consideration of 503(b)(9) administrative expense claims should be deferred until such time, if any, that there are assets available to pay such claims." Accordingly, the Debtors asked the Court to defer ruling on the Creditors' request until all Section 503(b) administrative expense claims may be addressed in a uniform manner. Creditors Talk Back A. Jinhua On behalf of Jinhua, Anne Seelig, Esq., at Wu & Kao, in New York, informed Judge Peck that the Debtors have changed their earlier position of disputing the validity of both Jinhua's reclamation claim and administrative expense claim. She notes that the Debtors now do not dispute the validity of Jinhua's administrative expense claim or its entitlement to payment, but ask that the claim be "deferred." Ms. Seelig asserted that the Debtors' arguments should fail simply for lack of supporting financial data. "As of this date, [the Debtors'] arguments heavily rely and are based on the asset purchase agreement dated Feb. 4, 2008, arguing that all sale proceeds were paid over to the Senior Secured Prepetition and Postpetition [Debtors'] Lender," Ms. Seelig said. "However, [the Debtors have] not disclosed or provided any information or detail of the subject asset sale, such as whether the asset sale and Asset Purchase Agreement complied with and met the requirements of the Bankruptcy Code and the Uniform Commercial Code." Ms. Seelig noted that under the law, failure to disclose financial information or condition is deemed a material omission. She tells Judge Peck that the Debtors intentionally withheld information from the Creditors, and has promoted "motion practice" among the Creditors, which will be considered a bad- faith filing of bankruptcy. Ms. Seelig pointed out that to pay the Claims after notice and hearing would be simple and unburdensome; while waiting until the end of the Debtors' Chapter 11 cases would create an undue burden on Jinhua and the other Creditors. Accordingly, Jinhua asked the Court to order payment on Jinhua's administrative expense claim. B. Treasure Garden Representing Treasure Garden, Ronald A. Clifford, Esq., at Blakeley & Blakeley LLP, in Newport Beach, California, argued the Debtors have not distinguished which goods are subject to their prepetition credit agreement. "The Debtors have merely asserted that they granted the prepetition agent liens and security interest in substantially all of the Debtors' personal property," Mr. Clifford said. "Whether Treasure Garden's goods are included in 'substantially all of the Debtors' personal property' is never specifically stated, nor has Treasure Garden received any information from the Debtors specifically showing that its goods were subject to any floating liens." Without facts supporting the Debtors' contention that Treasure Garden's goods were subject to the floating lien, Treasure Garden has a valid reclamation claim, which includes a Section 503(b)(9) claim, Mr. Clifford pointed out. When goods subject to a reclamation demand are liquidated and the proceeds are used to pay the secured creditor's claim, the reclaiming seller's subordinated right is rendered valueless. Mr. Clifford explained to the Court that the Debtors' counsel has not been able to provide Treasure Garden with a final selling price for the goods. He notes that if the final selling price was substantially more than the prepetition debt, then Treasure Garden's reclamation claim would be valid in any case. In addition, Mr. Clifford revealed that the Debtors' counsel has not been able to provide any of the Creditors with any idea of what monies are available to pay administrative claims. "Without this information, the Debtors have failed to prove that the sale of substantially all of their assets did not result in funds sufficient to pay the reclamation claim of Treasure Garden, and further, that there are not enough proceeds to pay [Section 503(b)(9)] claims," Mr. Clifford explained. "The sale order as drawn is vague as to which goods were specifically sold to the buyer." Accordingly, Treasure Garden asked the Court to overrule the Debtors' objection and grant the relief requested by Treasure Garden. C. Shade Trends Shade Trends, LTD., made the same contentions as the other Creditors. Natu J. Patel, Esq., at The Patel Law Firm, P.C., in Irvine, California, contended that a holder of a prior perfected, floating lien on inventory is treated as a good faith purchaser with rights superior to those of a reclaiming seller. However, the Debtors do not distinguish which goods were subject to their prepetition credit agreement in the case. Moreover, the unavailability of funds does not preclude an order directing the administrative expenses to be paid as soon as the funds become available. About Fortunoff New York-based Fortunoff Fine Jewelry and Silverware LLC -- http://www.fortunoff.com/-- is a family owned business since 1922 founded by by Max and Clara Fortunoff. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and Source Financing Corp., filed for chapter 11 petition on Feb. 4, 2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in order to effectuate a sale to NRDC Equity Partners LLC, -- http://www.nrdcequity.com/-- a private equity firm that bought Lord & Taylor from Federated Department Stores. Due to the U.S. Trustee's objection, Fortunoff is backing out of its request to employ Skadden Arps Meagher & Flom LLC, as bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP, as their general bankruptcy counsel, but Skadden Arps will continue to serve the Debtors as special counsel in connection with the sale the Debtors' assets. Logan & Company, Inc., serves as the Debtors' claims, noticing, and balloting agent. FTI Consulting Inc. are the Debtors' proposed crisis manager. An Official Committee of Unsecured Creditors has been appointed in this case. Effective March 6, 2008, Morrison & Foerster LLP is counsel to the Creditors Committee in substitution of Otterbourg Steidler Houston & Rosen PC. Mahoney Cohen & Company, CPA, P.C., serves as financial advisor to the Creditors' Committee. In their schedules, Fortunoff Fine Jewelry listed $5,052,315 total assets and $136,626,948 total liabilities; Source Financing Corp. listed $154,680,100 total assets and $176,961,631 total liabilities; and M. Fortunoff of Westbury LLC listed $6,300,955 total assets and $119,985,788 total liabilities. The Debtors' exclusive period to file a plan of reorganization ends on June 3, 2008. (Fortunoff Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRANCESCHINI CONSTRUCTION: Voluntary Chapter 11 Case Summary ------------------------------------------------------------ Debtor: Franceschini Construction, Inc. 4507 West South Avenue Tampa, FL 33614 Bankruptcy Case No.: 08-07709 Description: Colen Franceschini, president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: May 29, 2008 Court: Middle District of Florida (Tampa) Debtor's Counsel: David W. Steen, Esq. (dwslaw@yahoo.com) David W Steen, PA 602 South Boulevard Tampa, FL 33606-2630 Tel: (813) 251-3000 Fax: 813-251-3100 Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full copy of the Debtor's petition with unsecured creditor list is available for free at: http://bankrupt.com/misc/flmb08-07709-pet.pdf FORD MOTOR: Tracinda Waives Tender Offer Term on Share Price Drop ----------------------------------------------------------------- Tracinda Corporation will waive the condition to its cash tender offer that the market price of shares of Ford Motor Company common stock does not decrease by 10% or more from the close of trading on May 8, 2008. Tracinda continues to believe in Ford’s management and turnaround efforts and remains committed to its offer for up to 20,000,000 shares of Ford common stock at a net per share offer price of $8.50. The offer is scheduled to expire at 5:00 p.m. New York City time on June 9, 2008 unless extended. As reported in the Troubled Company Reporter on April 29, 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. Tracinda also disclosed that the waiting period applicable to the tender offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired on May 23, 2008. Questions regarding the offer or requests for offer materials should be directed to the information agent, D. F. King & Co., Inc., at (212) 269-5550 for banks and brokerage firms or (800) 859-8511 for all others. Investment on Ford Fiesta Plant in Mexico Ford disclosed the new Ford Fiesta small car for North America will be produced at the company’s transformed Cuautitlán Assembly Plant beginning in early 2010 and a sporty European hatchback model is being added to the North American lineup alongside the popular sedan. Transformation of the facility near Mexico City begins this year, as the plant is converted from its current production of F-Series pickups for the Mexican market to small cars for all of North America. The Chihuahua Engine Plant, which builds I-4 engines, also will assemble diesel engines for light- and medium-duty trucks in a variety of global markets. In addition, through a joint venture with Getrag, Ford will establish a new transmission plant in Guanajuato to support various Ford products. Company officials disclosed the trio of investments jointly with Mexico President Felipe Calderón Hinojosa. The new multi-plant development effort represents a $3 billion U.S. investment, including the support of local suppliers. It is Mexico’s largest ever automotive investment. The moves are expected to create approximately 4,500 Ford jobs. Together with all direct and indirect employment at suppliers, the moves affect 30,000 jobs in Mexico. About Ford Motor Company 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: Completes Sale of Jaguar & Land Rover to Tata Motors ---------------------------------------------------------------- Ford Motor Company completed the sale of its Jaguar Land Rover operations to Tata Motors. As reported in the Troubled Company Reporter on March 27, 2008, Ford entered into a definitive agreement to sell its Jaguar and Land Rover operations to Tata Motors for $2.3 billion. At closing, Ford will then contribute up to $600 million to the Jaguar and Land Rover pension plans. The sale is the culmination of Ford's decision last August to explore strategic options for the Jaguar Land Rover business, as the company accelerates its focus on its core Ford brand and "One Ford" global transformation. It also allows Jaguar Land Rover to focus on delivering what is best for its business. As part of the overall sale agreement between Ford and Tata Motors, Ford will continue to supply Jaguar Land Rover with engines, stampings and technology, including a range of environmental technologies. Ford Motor Company wishes the Jaguar Land Rover management team, its employees and the new owners every success for the future. 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. FRONTIER AIRLINES: In Talks with Expedia on Selling Tickets Online ------------------------------------------------------------------ Expedia Inc.'s travel Web site Expedia.com ceased listing flights and selling tickets for Frontier Airlines Inc. after Frontier sought to restructure its contract with the online travel agency, The Denver Post reports. According to Denver Post, Frontier is in negotiations with Expedia with the aim of carving a new contract and getting its flights relisted. Bankruptcy laws allow debtors to cancel or try to restructure existing contracts. The Denver Post cites Frontier spokesman Steve Snyder, as saying: "I wouldn't describe it as any animosity between the two firms. But when you have an opportunity to restructure, you look at every single contract to see if you can turn something to your advantage." The report states that Frontier gets about 24% of its bookings from online travel firms such as Expedia, Orbitz, Priceline and Travelocity. Mr. Snyder declined to comment on whether Frontier is attempting to restructure contracts with other online travel firms, the report adds. According to Denver Post, Expedia spokeswoman Katie Deines said pulling Frontier off its Web site is the result of a business decision. The report relates that customers who have booked Frontier flights on Expedia or its affiliate hotels.com will not be affected. 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: Inks Credit Card Deal with First Data -------------------------------------------------------- Frontier Airlines and First Data disclosed an agreement with respect to the continued processing of Frontier's Visa and MasterCard charges without any interruption. The agreement provides First Data with appropriate protection for continuing its processing work for customer credit card purchases on a "business as usual" basis. "The statement is another important step as we navigate the Chapter 11 process," Frontier president and CEO Sean Menke, said. "The terms of the agreement are fair and reasonable to both parties, and we appreciate First Data's ongoing cooperation." "We are pleased to have come to an agreement with Frontier and will continue to work closely with them through this process," Ed Labry, president of First Data's USA division, said. Frontier is expected to file a motion with the Federal Bankruptcy Court in New York to approve the agreement in the next few days. 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. GE-WMC MORTGAGE: S&P Lowers Ratings of Certs. from CC to D ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 21 classes of pass-through certificates from six U.S. subprime residential mortgage-backed securities transactions issued by Ace Securities Corp. Home Equity Loan Trust, Specialty Underwriting and Residential Finance Trust, Park Place Securities Inc., and GE- WMC Mortgage Securities Trust; all of the downgraded deals were issued between 2003 and 2006. Concurrently, S&P placed its ratings on three classes from one deal on CreditWatch with negative implications and affirmed 30 ratings from four transactions. 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 1.43% (Specialty Underwriting and Residential Finance Trust's series 2003-BC4) to 5.60% (GE-WMC Mortgage Securities Trust 2006-1). Overcollateralization has been completely eroded for the six downgraded deals. The dollar amount of loans in the delinquency pipelines in these transactions 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 5.33% (Specialty Underwriting and Residential Finance Trust's series 2003-BC4) to 31.35% (Ace Securities Corp. Home Equity Loan Trust's series 2004-HE4). These deals are seasoned between 20 months (GE- WMC Mortgage Securities Trust 2006-1 and Ace Securities Corp. Home Equity Loan Trust's series 2006-FM1) and 52 months (Specialty Underwriting and Residential Finance Trust's series 2003-BC4). S&P placed its ratings on three classes from one transaction on CreditWatch negative. While each of the certificate classes with ratings placed on CreditWatch negative may lack what S&P believe to be a sufficient amount of credit enhancement in excess of projected losses, S&P will not take further rating actions until additional analysis is completed. S&P expect to further compare the projected default dates with the payment in full dates, and the relationships between projected credit support and projected losses throughout the remaining life of each certificate. S&P affirmed 30 ratings on four 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 and excess spread provide credit support for the six deals. The collateral for these transactions primarily consists 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 ----------- ----- -- ----- 2004-HE4 M-6 BB BB+ 2004-HE4 M-7 B BB 2004-HE4 M-8 CCC BB- 2004-HE4 M-9 CCC B 2004-HE4 M-10 CCC B- 2004-HE4 B D CCC 2006-FM1 M10 D CC GE-WMC Mortgage Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 B-3 D CC 2006-1 B-4 D CC 2006-1 B-5 D CC Park Place Securities Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-WHQ2 M-8 CCC A- 2005-WHQ2 M-9 CCC BBB- 2005-WHQ2 M-10 CCC B+ 2005-WHQ2 M-11 CC CCC 2005-WHQ2 M-12 D CCC 2005-WCW2 M-7 BBB A- 2005-WCW2 M-8 B BBB+ 2005-WCW2 M-9 CCC BB+ 2005-WCW2 M-10 CCC B 2005-WCW2 M-11 D CCC Specialty Underwriting and Residential Finance Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2003-BC4 B-3 D CCC Ratings Placed on Creditwatch Negative Park Place Securities Rating ------ Transaction Class To From ----------- ----- -- ---- 2005-WHQ2 M-5 AA/Watch Neg AA 2005-WHQ2 M-6 AA/Watch Neg AA 2005-WHQ2 M-7 AA-/Watch Neg AA- Ratings Affirmed ACE Securities Corp. Home Equity Loan Trust Transaction Class Rating ----------- ----- ------ 2004-HE4 M-1 AA+ 2004-HE4 M-2 AA+ 2004-HE4 M-3 AA 2004-HE4 M-4 AA 2004-HE4 M-5 A- 2004-HE4 M-11 CCC Park Place Securities Transaction Class Rating ----------- ----- ------ 2005-WHQ2 A-1A AAA 2005-WHQ2 A-1B AAA 2005-WHQ2 A-2C AAA 2005-WHQ2 A-2D AAA 2005-WHQ2 M-1 AAA 2005-WHQ2 M-2 AA+ 2005-WHQ2 M-3 AA+ 2005-WHQ2 M-4 AA 2005-WCW2 A-1C AAA 2005-WCW2 A-1D AAA 2005-WCW2 A-2C AAA 2005-WCW2 A-2D AAA 2005-WCW2 M-1 AA+ 2005-WCW2 M-2 AA+ 2005-WCW2 M-3 AA 2005-WCW2 M-4 AA- 2005-WCW2 M-5 A+ 2005-WCW2 M-6 A Specialty Underwriting and Residential Finance Trust Transaction Class Rating ----------- ----- ------ 2003-BC4 A-3B AAA 2003-BC4 M-1 AA+ 2003-BC4 M-2 A 2003-BC4 M-3 A- 2003-BC4 B-1 BBB 2003-BC4 B-2 B GREEKTOWN CASINO: Continues $500 Million Expansion of Casino ------------------------------------------------------------ Despite its bankruptcy filing, Detroit casino operator Greektown Holdings LLC and its debtor-affiliates declared that the $500 million expansion of its casino complex will continue, Online Gambling Paper reports, citing company representatives. Additionally, the Debtors assured that there won't be any employee lay-offs, the report says. "As we reorganize our business and complete our permanent casino construction with additional financing, the goal is a bigger and more viable Greektown Casino. With the support and confidence of our creditors, we have developed a plan to reorganize our business, and we will be implementing these action steps," the Paper quotes company board chairman Tom Miller as saying. The Debtors are engaged in the ongoing development of an expanded hotel and casino resort complex, containing an 1,200-seat live theatre, a 400-room hotel, 10 banquet or meeting rooms, two new restaurants, expanded parking, an additional 25,000 square feet of gaming space and other amenities at its current site under the terms of a development agreement among Greektown Casino, the City of Detroit and the Economic Development Corporation of the City of Detroit. In documents submitted to the Court, the Debtors said that they failed to comply with certain loan obligations with Merrill Lynch, Pierce, Fenner & Smith Inc., and consequently wasn't able to draw additional amounts from its credit line, relates the Paper. The Debtors relate that among others, uncertainty over the compliance of certain loan pacts and uncertainty of the source of needed borrowings have convinced them that it is in their best interest to immediately seek bankruptcy protection. Significant delays and cost overruns in connection with the completion of the expanded complex have also adversely affected the Debtors' businesses, the results of Greektown Casino's operations, and Greektown Holdings' financial condition and cash flow. Greektown Holdings estimates that it requires approximately $140 million of additional borrowings or equity contributions to complete the expanded complex. Simultaneously with their bankruptcy filing, the Greektown Entities have sought the Court's permission to obtain up to $150 million in postpetition financing from Merrill Lynch Capital Corporation and a syndicate of lenders. They have also sought access to the cash collateral of their prepetition lenders. About Greektown Holdings Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREEKTOWN CASINO: Finalizing $150MM Loan, to Complete Project ------------------------------------------------------------- Casino operator Greektown Holdings LLC and its debtor-affiliates is finalizing $150 million in additional financing for operations and to complete the construction of its new 400-room hotel and gaming floor expansion. "As we reorganize our business and complete our permanent casino construction with additional financing, the goal is a bigger and more viable Greektown Casino," said casino Management Board Chairman Tom Miller, who is also a member of the board of directors of the Sault Ste. Marie Tribe of Chippewa Indians, which own a majority stake in the company. "As we work through the reorganization process, the casino will continue to operate normally for all guests, player's club members, employees, vendors, suppliers and contractors." The company noted that Chapter 11 protection allows a company to reorganize its financial structure under the supervision of the U.S. Bankruptcy Court. "Entering Chapter 11 reorganization, Greektown Casino is a healthy, profitable business," said Van E. Conway of Conway MacKenzie & Dunleavy, a financial consulting firm working on Greektown Casino's reorganization. "Greektown Casino is finalizing debtor-in-possession financing that enables the company to complete its permanent casino and hotel, pay all obligations, and continue normal business operations during the entire process. This is really a great day for Greektown Casino because it's a new beginning." About Greektown Holdings Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREEKTOWN CASINO: Moody's Chips Ratings After Bankruptcy Filing --------------------------------------------------------------- Moody's Investors Service lowered Greektown Holdings, LLC's Probability of Default rating to D from Caa1 following the company's announcement that it voluntarily filed for Chapter 11 bankruptcy. Greektown's Corporate Family Rating was lowered to Ca from Caa1. The company's secured bank debt and senior note ratings were also lowered. In addition to acknowledging Greektown's decision to voluntarily file for Chapter 11 bankruptcy, this rating action completes the review process that was initiated on April 7, 2008. The review process was in response to heightened concerns regarding the company's ability to obtain the funds necessary to complete its permanent casino expansion and cure existing and potential financial covenant violations related to its loan agreement and its development agreement with the Michigan Gaming Control Board. These ratings were downgraded: -- Probability of Default rating to D from Caa1 -- Corporate Family rating to Ca from Caa1 -- $125 million revolver due 2010 to Caa2 (LGD-2, 30%) from B1 (LGD-2, 20%) -- $190 million term loan due 2012 to Caa2 (LGD-2, 30%) from B1 (LGD-2, 20%) -- $185 million 10.75% senior notes due 2013 to C (LGD-5, 86%) from Caa2 (LGD-5, 75%) Moody's plans to withdraw all the ratings of Greektown Holdings, LLC in the near future. Greektown Holdings, LLC, through its primary operating subsidiary Greektown Casino, LLC, operates the Greektown Casino in Detroit, Michigan. GREEKTOWN CASINO: Bankruptcy Filing Cues S&P's Default Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Greektown Holdings LLC to 'D', including the corporate credit rating, which was lowered from 'CCC+'. The ratings downgrade follows the announcement on May 30, 2008 that Greektown has filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Greektown had previously received a limited waiver (through June 30, 2008, or to July 31 under certain circumstances) with respect to covenants under its bank loan agreement, while it attempted to complete the sale of 40% of the company to Entertainment Interests Group. GREENWHICH CAPITAL: Moody's Junks Ratings on P and Q Trusts ----------------------------------------------------------- Moody's Investors Service downgraded the ratings of two classes and affirmed the ratings of 22 classes of Greenwich Capital Commercial Funding Corp. Commercial Mortgage Trust, Series 2006- GG7 as: -Class A-1, $57,413,791, affirmed at Aaa -Class A-2, $260,782,000, affirmed at Aaa -Class A-3, $101,915,000, affirmed at Aaa -Class A-AB, $125,000,000, affirmed at Aaa -Class A-4, $1,845,339,000, affirmed at Aaa -Class A-1-A, $95,000,359, affirmed at Aaa -Class A-M, $361,165,000, affirmed at Aaa -Class A-J, $261,845,000, affirmed at Aaa -Class X, Notional, affirmed at Aaa -Class B, $27,088,000, affirmed at Aa1 -Class C, $54,175,000, affirmed at Aa2 -Class D, $27,087,000, affirmed at Aa3 -Class E, $22,573,000, affirmed at A1 -Class F, $45,146,000, affirmed at A2 -Class G, $31,602,000, affirmed at A3 -Class H, $45,145,000, affirmed at Baa1 -Class J, $40,632,000, affirmed at Baa2 -Class K, $36,116,000 affirmed at Baa3 -Class L, $13,544,000, affirmed at Ba1 -Class M, $18,058,000, affirmed at Ba2 -Class N, $18,058,000, affirmed at Ba3 -Class O, $4,515,000, affirmed at B2 -Class P, $13,544,000, downgraded to Caa1 from B3 -Class Q, $9,029,000, downgraded to Caa2 from Caa1 Moody's is downgrading Classes P and Q due to Moody's increased projection of losses from specially serviced loans. As of the May 12, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.2% to $3.57 billion from $3.61 billion at securitization. The Certificates are collateralized by 134 mortgage loans ranging in size from less than 1.0% to 7.0% of the pool, with the top 10 loans representing 44.5% of the pool. The transaction includes one loan with an investment grade underlying rating, representing 5.6% of the pool. No loans have been liquidated from the pool. Currently there are four loans, representing 3.8% of the pool, in special servicing. The largest specially serviced loan is the West Oaks Mall Loan ($81.3 million -- 2.3%), which is secured by a 507,000 square foot shopping center located in Houston, Texas. The sponsor has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and the center is being managed under the control of a bankruptcy trustee. The center competes against two dominant malls as well as a newly constructed upscale factory outlet retail center. As of December 2007, in-line occupancy was 79.0% compared to 86.6% at securitization. Moody's is estimating significant losses from the four specially serviced loans. Nineteen loans representing 15.2% of the pool are on the master servicer's watchlist. The master servicer's watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. Moody's was provided with year-end 2006 and 2007 operating results for 98.0% and 48.9% of the pool, respectively. Moody's loan to value ("LTV") ratio is 106.3% compared to 109.9% at Moody's last full review in January 2008 and 103.8% at securitization. The loan with an underlying rating is the One New York Plaza Loan ($200.0 million -- 5.6%), which is secured by a 2,417,000 square foot, 50-story, Class A office building located in downtown Manhattan. The property was 99.0% leased as of December 2007 compared to 95% at securitization. Major tenants include Wachovia Securities (Moody's senior unsecured rating of parent, Wachovia Bank N.A. is Aa1, negative outlook; 54.1% NRA; lease expiration December 2014), The Goldman Sachs Group (Moody's senior unsecured rating Aa3, stable outlook; 23.1% NRA; lease expiration September 2009 and December 2010) and Fried Frank Harris (15.9% NRA; lease expiration February 2024). Moody's current underlying rating is Baa2, the same as at last review. The top three conduit loans represent 17.6% of the pool. The largest conduit loan is the Investcorp Retail Portfolio Loan ($248.4 million -- 7.0%), which represents a pari passu interest in a $312.2 million loan. The loan is secured by 29 retail properties totaling 2,798,308 square feet. The properties are located in Houston (15), Dallas (11) and San Antonio (3). The portfolio was 86.0% occupied as of December 2007 compared to 93.0% at securitization. Moody's LTV is 109.6%, the same as at last review. The second largest conduit loan is the J.P. Morgan International Plaza I & II Loan ($190.6 million -- 5.3%), which is secured by two office buildings totaling 756,900 square feet and located in Farmers Branch, Texas. The buildings are 100.0% leased to J.P. Morgan Chase (Moody's senior unsecured rating of parent, J.P. Morgan & Incorporated, is Aa2, stable outlook) through February 2018. Moody's LTV is 114.2%, the same as at last review. The third largest conduit loan is the 55 Corporate Drive Loan ($190.0 million -- 5.3%), which is secured by a three-building, 669,700 square foot office complex located in Bridgewater, New Jersey. The property is 100.0% leased to Aventis Inc. (Moody's senior unsecured rating of parent, Sanofi-Avenis, is A1, positive outlook) through November 2023. Moody's LTV is 107.7%, the same as at securitization. GSC PARTNERS: Moody's Lifts Rating to Baa3 from Ba3 on $10MM Notes ------------------------------------------------------------------ Moody's Investors Service upgraded these notes issued by GSC Partners CDO Fund II, Limited: The $10,000,000 Class B Floating Rate Subordinated Notes due 2013 -- Prior Rating: Ba3, on review for possible upgrade -- Current Rating: Baa3 According to Moody's, the rating action is the result of significant pay down of the notes and improvement in the senior coverage tests. GULFMARK OFFSHORE: Rigdon Deal Prompts Moody's to Affirm Ratings ---------------------------------------------------------------- Moody's Investors Service affirmed GulfMark Offshore, Inc.'s Ba3 corporate family rating and probability of default rating following the company's announcement of an agreement to purchase Rigdon Marine Corporation. Moody's also affirmed the B1 (LGD 5, 78%) rating on the company's $160 million of senior notes due 2014. However, Moody's notes that following the close of the transaction, the B1 rating of the senior notes could be downgraded to B2 due to the amount of senior secured debt that GulfMark is expecting to assume as part of the Rigdon acquisition. The outlook is stable. "Rigdon's relatively new fleet increases the quality and scale of GulfMark's asset base while providing an important entry into the Gulf of Mexico market," commented Pete Speer, Moody's Vice- President/Senior Analyst. "The strategic benefits of this acquisition and GulfMark's strong financial position outweighed Moody's concerns regarding the increased debt levels and the inherent valuation and integration risks of an acquisition of this size." Under the terms of the agreement, GulfMark will acquire 100% of Rigdon for $150 million in cash and approximately 2.1 million of common stock, as well as an assumption of $268 million of debt. In addition, GulfMark will incur $19 million in committed capital expenditures to complete the vessels currently under construction. The cash portion is expected to be financed through a combination of cash on hand and borrowings under GulfMark's $175 million senior secured credit facility. GulfMark's Ba3 CFR is supported by the growing scale and quality of its fleet as well as its stronger business profile following the acquisition. Rigdon is a private offshore support vessel company with operations largely focused on the U.S. Gulf of Mexico market. The acquisition enhances GulfMark's geographic diversification and reduces its reliance on its core North Sea operations. The Rigdon purchase will immediately increase GulfMark's fleet by 23 vessels that have been constructed within the past four years and with an additional six newbuilds under construction that are scheduled for delivery through September 2009. Moody's further notes that Rigdon's fleet appears to be well suited to service deepwater drilling activities and that a significant portion is currently under long-term contracts with customers. The ratings are restrained by the substantial increase in the company's leverage to levels above its Ba3-rated peers. As of March 31, 2008, Moody's estimates that Debt/LTM EBITDA and Debt/Capitalization increased from 1x and 19% to around 2.5x and 39% pro forma for the acquisition and additional debt, respectively. The company has stated its intention to use free cash flow to significantly reduce debt following the close of the transaction. The stable outlook assumes that the acquired operations achieve management's expectations and that GulfMark meets its forecasts for earnings, cash flows and debt reduction over the near to medium term. However, the ratings could be pressured if weaker than expected operational performance or market conditions reduce GulfMark's ability to internally fund its rather full capital spending commitments, the company further expands its newbuild fleet expansion commitments and/or the company doesn't maintain sufficient liquidity levels. GulfMark Offshore, Inc., headquartered in Houston, Texas, is a provider of offshore marine services primarily to oil and gas exploration and production firms in the North Sea, Southeast Asia, and the Americas. HANOVER INSURANCE: S&P Upgrades Credit Rating to BBB- from BB+ -------------------------------------------------------------- Standard & Poor's Ratings Services raised its counterparty credit rating on Hanover Insurance Group Inc. to 'BBB-' from 'BB+'. Standard & Poor's also said that it raised its counterparty credit and financial strength ratings on Hanover Insurance Co., Citizens Insurance Co. of America, and THG's other rated property/casualty affiliates to 'A-' from 'BBB+'. The outlook on THG and Hanover is stable. "The rating actions reflect the company's good competitive position and the successful execution of management's strategy to refocus the company on its property/casualty business," explained Standard & Poor's credit analyst John Iten. "They were also based on its improved operating performance, strong capital position, and very strong financial flexibility." Over the past two years, Hanover's underwriting results have improved significantly. Operating company capitalization at year- end 2007 was strong for the rating level. Another positive factor is the favorable outcome in 2007 of litigation in Louisiana over the flood exclusion language in Hanover's policies and its applicability to flooding caused by levee breaks during Hurricane Katrina. Offsetting factors include the geographic concentration of Hanover's personal lines business and a relatively high level of turnover among personal auto policyholders. In addition, Hanover has a relatively high expense structure that has positioned the company for profitable growth but leaves it somewhat vulnerable if premium volume were to decline as the soft market progresses. Hanover generates about 40% of personal lines premiums in Michigan, a state experiencing difficult economic conditions. The company's GAAP expense ratio improved in 2007 but continues to be somewhat high relative to peers. Hanover is a regional property/casualty insurer with a strong presence in Michigan and a good position in the Northeast. The company writes predominantly personal lines, which constituted about 61% of total net premiums written in 2007. Hanover also has a significant book of commercial business that is growing faster than the personal lines book. Standard & Poor's expects that Hanover's underwriting performance will remain strong in 2008. This expectation reflects anticipated further improvement in the expense ratio and some favorable prior- year loss reserve development, offset by a higher current accident-year loss ratio, driven primarily by deterioration in pricing in commercial lines. S&P also expect further improvement in the expense ratio in 2009. Net premiums written will likely grow in 2008 at a low-single- digit rate. Personal lines should benefit from an increase in policy count in personal auto and increased homeowner rates. Commercial lines premium volume will benefit from the sale of newer specialty products--recently augmented by the acquisition of two small specialty writers--though rate declines in standard commercial lines will partially offset this growth. Hanover's capital adequacy should improve further in 2008 because S&P expect dividends from Hanover's life company affiliate to meet THG's cash requirements, allowing Hanover to continue growing its surplus. Another source of cash for the holding company is its own substantial holdings of unaffiliated investments. S&P expect that financial leverage will remain very conservative in 2008. HEXCEL CORP: Moody's Affirms 'Ba3' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service affirmed Hexcel Corporation's corporate family and probability of default ratings of Ba3. At the same time, the rating agency lowered the rating on the company's senior secured bank credit facilities to Ba1 from Baa3, reflecting a proposed increase to the term loan. The larger amount of secured bank debt, while beneficial to the company's liquidity profile, caused recovery expectations on the bank debt to decline as it will represent a higher proportion of liabilities in downside scenarios. The B1 rating on the company's subordinated notes was not affected. The outlook remains stable. Hexcel has proposed to exercise a portion of an "accordion" feature in its bank credit agreement. This would increase the term loan by $80 million to a pro forma total of approximately $168 million. The company intends to use the proceeds to reduce outstandings under its $125 million revolving credit facility and for other general corporate purposes. At the end of March 2008, roughly $56 million had been borrowed and some $14 million of letters of credit were issued against the revolving credit commitment, leaving roughly $55 million of unused capacity. On a pro forma basis as of the same date, revolving credit usage would be reduced to nil, and, net of letter of credit utilization, unused capacity would be increased to $111 million. In Moody's opinion, Hexcel's revenue growth in 2008 could involve incremental working capital requirements, which, in addition to planned capital expenditures, could result in negative free cash flow for the year. Consequently, Moody's views the increase in the term loan as an enhancement to the company's liquidity profile as financial flexibility will be improved through the effective increase in untapped capacity under the revolving credit. Although there may be a slight increase in total indebtedness as a result of the incremental funding, the increase was not considered material in the context of the company's strong earnings and growth prospects over the intermediate term, modest leverage and solid interest coverage metrics. As a result, the Ba3 corporate family rating and stable outlook are unchanged. Ratings affirmed and up-dated loss given default assessment: -- Corporate Family, Ba3 -- Probability of Default, Ba3 -- $225 million senior subordinated notes, B1 (LGD-5, 72%) Ratings lowered with revised term loan amount and updated loss given default assessments: -- $125 million secured revolving credit facility, Ba1 (LGD-2, 17%) from Baa3 (LGD-2, 14%) -- $168 million secured term loan, Ba1 (LGD-2, 17%) from Baa3 (LGD-2, 14%) The last rating action was on April 28, 2008 at which time the corporate family rating was affirmed and ratings on the bank debt were upgraded. Hexcel Corporation, headquartered in Stamford, Connecticut, is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high-performance structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, used in commercial aerospace, space and defense, and certain industries. Revenues in 2007 were approximately $1.2 billion. HIGHGATE ABS: Moody's to Review Ratings on Possible Further Cut --------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Highgate ABS CDO, Ltd.: Class Description: US$601,200,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes Due 2046 Prior Rating: Aaa Current Rating: Baa3, on review for possible downgrade Class Description: US$71,918,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: B1, on review for possible downgrade Class Description: US$50,201,000 Class B Third Priority Secured Floating Rate Notes Due 2046 Prior Rating: Aa2 Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$9,018,000 Class C Fourth Priority Mezzanine Deferrable Secured Floating Rate Notes Due 2046 Prior Rating: A2 Current Rating: C Class Description: US$8,642,000 Class D Fifth Priority Mezzanine Deferrable Secured Floating Rate Notes Due 2046 Prior Rating: Baa2 Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. HOME INTERIORS: To Cut 83 Night Jobs & 24 Management Positions -------------------------------------------------------------- Dallas Business Journal reports that Home Interiors & Gifts Inc., will slash 83 night jobs at its Carrollton, Texas, warehouse effective July 31, 2008. In a filing with the Texas Workforce Commission, Home Interiors said affected employees will have the opportunity to move to the day shift instead of being laid off, the report relates. Home Interior will also slash 24 sales and management positions at its Carrollton facility, effective on the same date. "We anticipate that additional separations will occur; however, we do not currently know the date(s) on which these separations will occur," the company said in the filing, according to Dallas Business Journal. The report also relates that Home Interiors in April closed its Dallas Woodcraft Co. unit, which it acquired in the early 1980s. The Dallas plant employed 109 and will close its doors June 30, according to the Texas Workforce Commission, the report says. About Home Interiors Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc. -- http://www.homeinteriors.com/-- manufactures, imports and distributes indoor and outdoor home decorative accessories. The company and six of its affiliates filed for Chapter 11 protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.08-31961). Andrew E. Jillson, Esq., Cameron W. Kinvig, Esq., Lynnette R. Warman, Esq., and Michael P. Massad, Jr., Esq., at Hunton & Williams, LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 6 has appointed seven entities to serve on the Official Committee of Unsecured Creditors. When the Debtors file for protection against their creditors, they listed assets and debts between $100 million and $500 million. HUBCO INC: Section 341(a) Meeting Set for Thursday -------------------------------------------------- The United States Trustee for Region 7 will convene a meeting of creditors of HUBCO Inc. at 10:00 a.m., on Thursday, June 5, 2008, at 515 Rusk Avenue, Suite 3401, in Houston, Texas. 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. Houston, Texas-based HUBCO Inc. -- http://www.hubcoinc.com/-- manufactures textile products. It filed its chapter 11 petition on April 17, 2008 (Bankr. S.D. Texas Case No. 08-32465). Judge Jeff Bohm presides over the case. Margaret Maxwell McClure, Esq., represents the Debtor in its restructuring efforts. HUNTER'S POINT: Owners Partner with Synergy Golf Course ------------------------------------------------------- Gregory and Jeanette Bullock, owners of Hunter's Point Golf and Country Club, have reached an agreement to bring on Nevada-based Synergy Golf Course Management as a partner, IdahoStatesman.com reports. Pending approval by the U.S. Bankruptcy Court for the District of Idaho in Boise, the Bullocks expect to open the course to members on a limited basis this summer and to the public next spring, IdahoStatesman.com says. Chadd Cripe at IdahoStatesman.com says Hunter's Point, which was designed by renowned architect Gene Bates, should immediately become one of the state's top courses. "The reality of it is we're going to get there," Mr. Cripe quotes Mr. Bullock as saying. "It's just the road has changed direction, but you're still going to get to the end. You keep your eye on that and everything is going to be fine." According to IdahoStatesman.com, Ms. Bullock said, "This is not a white-flag situation." The development calls for 613 units -- a combination of single- family homes, patio homes, condos and townhomes. IdahoStatesman.com reports Hunter's Point has sold 160 lots so far. The golf club has sold all 50 of its charter memberships and the Bullocks hope for more sales when they make more memberships available, probably next spring. Synergy, which is headquartered in Sparks, Nevada, owns three courses in California and Nevada, IdahoStatesman.com says. Hunter's Point Golf Community, LLC, of Nampa, Idaho, filed for chapter 11 bankruptcy protection on May 16, 2008 before the U.S. Bankruptcy Court for the District of Idaho in Boise (Case No. 08- 00933). Gregory Bullock, its managing member, filed the petition on behalf of the Debtor. IdahoStatesman.com says owners Greg and Jeanette Bullock plan to file separately for their entity that owns the surrounding housing development. The Debtor is represented by Howard R. Foley, Esq., at Foley Freeman PLLC, in Meridian, Idaho. When it filed for bankruptcy, the Debtor disclosed $3,913,400 in total assets and $16,314,584 in total debts. IMAC CDO: Moody's Cuts Notes Rating, to Undertake Review -------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by IMAC CDO 2006-1, Ltd.: Class Description: US$75,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes due 2051 Prior Rating: A2, on review for possible downgrade Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$110,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Baa3, on review for possible downgrade Current Rating: Ca Class Description: US$16,000,000 Class B Third Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Ba3, on review for possible downgrade Current Rating: Ca Class Description: US$35,000,000 Class C Fourth Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: B1, on review for possible downgrade Current Rating: Ca Class Description: US$5,500,000 Class D Fifth Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: B2, on review for possible downgrade Current Rating: Ca Class Description: US$20,000,000 Class E Sixth Priority Senior Secured Deferrable Floating Rate Notes due 2051 Prior Rating: Ca Current Rating: C Class Description: US$20,000,000 Class F Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2051 Prior Rating: Ca Current Rating: C Class Description: US$3,500,000 Class G Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2051 Prior Rating: Ca Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. INDUSTRIAL DEVELOPMENT: Fitch Cuts Rating on $35MM Bonds to 'B' --------------------------------------------------------------- Fitch has downgraded to 'B' from 'A-' the rating on the $35 million convention center facilities excise tax revenue bonds, series 2005 (taxable) of the Industrial Development Authority of the County of Yavapai, Arizona. Fitch originally assigned an 'A-' rating to the bonds on Nov. 1, 2005. Bond proceeds were used to construct a 5,000 seat convention and events center in Prescott Valley and also provided for capitalized interest and a debt service reserve fund. The Rating Outlook is Negative. Fitch takes this action in response to an event of default reported by Well Fargo Bank, NA serving as trustee. According to the trustee, Prescott Valley Events Center LLC did not transmit funds required for the Oct. 1, 2007 debt service payment on the bonds. The trustee then drew upon the debt service reserve fund in the amount of $1,171,677.90 to make the required payment. The trustee reported these events, along with the borrower's reported failure regarding other obligations, in a letter to bondholders dated April 18, 2008. According to the trustee, sufficient funds were transferred for the April 1, 2008 debt service payment on the bonds. However, the debt service reserve fund has not been replenished. Fitch's action also reflects concern regarding declining transaction privilege tax revenues in Prescott Valley in recent months and the inability of the facility to generate any pledged net income that would contribute to debt service payments. Because of these two factors, Fitch has serious concerns regarding the sufficiency of pledged revenues to meet debt service requirements over the near term, at a minimum. Fitch will continue to monitor revenue generation over the coming months and may take additional rating action regarding the series 2005 bonds if necessary. The bonds are secured by a loan agreement to the borrower, Prescott Valley Events Center LLC, which constructed and operates the multipurpose events facility. Repayment resources include net operating income from the facility, as well as TPT revenues from the facility and those generated within a designated entertainment district in Prescott Valley. Further repayment support includes TPT revenues from an additional commercial area adjacent to the entertainment district. Fitch's rating relies primarily on this last source, as net operating income has yet to be realized and taxes from the facility and the designated entertainment district have provided insufficient revenue to cover debt service. Total pledged revenue is projected to provide just above one time coverage in fiscal 2009, but coverage could be jeopardized if TPT revenue falls below projected levels. Town-wide sales tax revenue is down 16% in fiscal 2008 through March from fiscal 2007 levels. Prescott Valley Events Center LLC was formed by Global Entertainment Corp. and Prescott Valley Signature Entertainment LLC to develop, construct, and operate the project. GEC is a sports entertainment and media company that operates in small to mid-sized markets and also owns the Western Professional Hockey League. PVSE is wholly owned by Fain Signature Group which is a privately held company that is a large commercial, industrial, and residential developer in Yavapai County. The project is located in the Town of Prescott Valley, Arizona, roughly 90 miles northwest of Phoenix. In keeping with the master plan to develop a town center in Prescott Valley, this events center anchors a designated entertainment district, which is comprised of numerous retail and restaurant concerns. INTEREP NATIONAL: Judge Drain Approves Disclosure Statement ----------------------------------------------------------- The Hon. Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York approved the Joint Disclosure Statement explaining the Joint Chapter 11 Plan of Reorganization Interep National Radio Sales Inc. and its debtor-affiliates filed on April 23, 2008. Judge Drain held that the Joint Disclosure Statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. The Court will hold a hearing on July 14, 2008, at 10:00 a.m., to consider confirmation of the plan. Confirmation objections, if any, are due July 7, 2008. Judge Drain also approved procedures the Debtors proposed for the solicitation and tabulation of plan votes. Deadline for voting on the plan is June 25, 2008. Overview of the Plan The Plan provides recoveries to creditors that may result in the payment in full of all allowed secured, priority and unsecured creditors. All existing equity interests of the Debtors -- including all existing preferred and common stock -- will be canceled and discharged, and the holders will receive no distribution under the Plan. In exchange for the notes, the noteholders will receive their pro rata share of: a) 100% of the New Common Stock of Reorganized Debtors, subject to dilution by up to 15% by additional shares or units of New Common Stock issued pursuant to a certain Employee Incentive Plan; and b) secured promissory notes in the aggregate principal amount of $40 million, which have a ten-year bullet maturity and provide for the payment-in-kind of interest until the maturity. As part of the Plan, a new board of directors for reorganized Debtors will be appointed and comprised of (i) a new Debtors' chief executive officer; and (ii) six directors to be nominated. The identities and affiliations of all board members will be disclosed before the plan confirmation hearing. Financing OCM Principal Opportunities Fund III, L.P., OCM Principal Opportunities Fund IIIA, L.P. and Silver Point Capital L.P. agree to provide $25 million in senior secured debtor-in-possession credit facility to the Debtors. The Debtors and the lenders are presently in talk in regards of the term of another exit facility of at most $50 million to finance payments of debts and provide additional capital. The lenders hold majority of the Debtors' 10% senior subordinated notes due July 1, 2008, in the amount of $99 million in the aggregate. Treatment of Claims Under the Plan, these creditors are expected to receive a 100% recovery including: -- administrative claims; -- priority tax claims; -- priority non-tax claims; -- secured claims; -- intercompany claims; and -- subsidiary equity interest. On the Plan effective date, each holder of noteholder claim, totaling $101,475,000, will receive a pro rata share of the new common stock, subject to dilution by 15% pursuant to a certain employee incentive plan, and new second lien notes. General Unsecured creditors holding $6,900,000 in claims will also receive a pro rata share and expect a 100% recovery of their claims. Holders of Section 510(b) Claims and Old Equity Interest will not receive any distribution. Claims will be canceled on the Plan effective date. A full-text copy of the Joint Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?2b14 A full-text copy of the Joint Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2b15 About Interep National Headquartered in New York, New York, Interep National Radio Sales, Inc. -- http://www.interep.com/-- are independent sales and marketing companies that specialize in radio, the Internet, television and complementary media. With 16 offices across the U.S., they serve radio and television station clients and advertisers in all 50 states and beyond. The company and 14 of its affiliates filed for Chapter 11 protection on March 30, 2008 (Bankr. S.D.N.Y. Lead Case No.08-11079). Erica M. Ryland, Esq., at Jones Day, represents the Debtors in their restructuring efforts. No Official Committee has been appointed in the cases to date. The Debtors selects Kurztman Carson Consultants LLC as claims, noticing and balloting agent. When the Debtor filed for protection from their creditors, it listed between $50 million and $100 million in asset and between $100 million and $500 million in debts. JAM ENTERPRISES: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: J.A.M. Enterprise, LP 128 East Main Street Evans City, PA 16033 Bankruptcy Case No.: 08-23589 Chapter 11 Petition Date: May 30, 2008 Court: Western District of Pennsylvania (Pittsburgh) Judge: M. Bruce McCullough Debtor's Counsel: Gary V. Skiba, Esq. Yochim, Skiba, Moore & Nash 345 West 6th Street Erie, PA 16507 Tel: (814) 454-6345 Fax: (814) 456-6603 E-mail: gskiba@yochim.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 Debtor's six largest unsecured creditors are: Entity Amount ------ ------ Uni-Marts, Inc. $1,304,346.73 477 East Beaver Avenue State College, PA 16801-5690 PNC Bank, NA $332,342.62 249 Fifth Ave. MAILSTOP P1-POPP-LB-7 Pittsburgh, PA 15222 SECURED VALUE: $49,657.34 Liberty Candy Company $37,000.00 920 Irwin Run Road West Mifflin, PA 15122 PA Department of Revenue $13,190.70 1200 Fulling Mill Road Middletown, PA 17057 Red Bull Distributing Pittsburgh $5,300.00 210 Commerce Park Drive Cranberry Twp., PA 16066 Waste Management $500.00 2421 West Peoria Ave., Ste 210 Phoenix, AZ 85029 JAMES TRANSPORT: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------- Debtor: James Transport, Inc. 3260 E Annadale Ave Fresno, CA 93725 Bankruptcy Case No.: 08-13108 Type of Business: The Debtor provides transportation services, including truckload, warehousing and brokerage. See: http://www.jamestransport.com Chapter 11 Petition Date: May 30, 2008 Court: Eastern District of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: Hagop T. Bedoyan, Esq. 5200 N Palm Ave #211 Fresno, CA 93704 Phone: (559) 225-6550 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/ced-0813108.pdf JETBLUE AIRWAYS: Prices 5.5% Convertible Debentures Offering ------------------------------------------------------------ JetBlue Airways Corporation disclosed the pricing of its public offering of 5.5% Convertible Debentures due 2038. The offering size was increased from $160 million to $175 million, divided into two series of debentures, each in the amount of $87.5 million. The sale of the debentures is expected to close on June 4, 2008 subject to various customary closing conditions. The debentures of one of the series will be convertible into shares of JetBlue's common stock at a conversion rate of 220.6288 shares per $1,000 principal amount of debentures (which is equivalent to a conversion price of approximately $4.53 per share), subject to adjustment. The debentures of the other series will be convertible into shares of JetBlue’s common stock at a conversion rate of 225.2252 shares per $1,000 principal amount of debentures (which is equivalent to a conversion price of approximately $4.44 per share), subject to adjustment. Both series of debentures will bear interest at a rate of 5.5% per annum payable on April 15 and October 15 of each year, beginning Oct. 15, 2008. Holders of one series of the debentures may require JetBlue to repurchase all or any portion the debentures on Oct. 15, 2013, and holders of the other series may require JetBlue to repurchase all of any portion of the debentures on Oct. 15, 2015. Morgan Stanley & Co. Incorporated and Merrill Lynch & Co. served as joint book-running managers for the debenture offering. JetBlue has granted the underwriters of the debentures a 30-day over-allotment option to purchase up to an additional $13.1 million principal amount of each series of debentures. The debentures will be general senior obligations of JetBlue, secured by two escrow accounts, one for each series of debentures. JetBlue plans to use the net proceeds from the offering to deposit in each escrow account a portion of the net proceeds equal to the sum of the first six scheduled semi-annual interest payments for the respective series of debentures. JetBlue intends to use the remaining net proceeds from the offering towards repayment of up to $175 million principal amount of its 3.5% convertible notes due 2033 which will become subject to repurchase by JetBlue at the holders’ option on July 15, 2008. To the extent there are remaining net proceeds, JetBlue intends to use them for general corporate purposes. About JetBlue Airways Based in Forest Hills, New York, JetBlue Airways Corporation (Nasdaq: JBLU) -- http://www.jetblue.com/-- is a passenger airline that provides customer service primarily on point-to-point routes. As of Dec. 31, 2007, the company served 53 destinations in 21 states, Puerto Rico, Mexico and the Caribbean. At Dec. 31, 2007, the company's consolidated balance sheeet showed $5.598 billion in total assets, $4.562 billion in total liabilities, and $1.036 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on May 23, 2008, Moody's Investors Service downgraded the corporate family rating of JetBlue Airways Corporation to Caa1 from B3, well as the ratings of its outstanding corporate debt instruments and selected classes of JetBlue's Enhanced Equipment Trust Certificates. The rating outlook is negative. JETBLUE AIRWAYS: Grants Options to Underwriters to Buy Debentures ----------------------------------------------------------------- JetBlue Airways Corporation entered into an underwriting agreement with Morgan Stanley & Co. Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc. on May 29, 2008, relating to the sale by the company of $87.5 million aggregate principal amount of 5.5% Convertible Debentures due 2038 and $87.5 million aggregate principal amount of 5.5% Convertible Debentures due 2038. Pursuant to the Convertible Debenture Underwriting Agreement, the company granted the Convertible Debenture Underwriters options to purchase up to an additional $13.1 million of the aggregate principal amount of the Debentures solely to cover over-allotments. Each of Series A Convertible Debentures and Series B Convertible Debentures will be issued under a senior subordinated indenture, dated as of March 16, 2005, between JetBlue Airways and Wilmington Trust Company, as trustee, supplemented by a supplemental indenture with respect to the Series A Convertible Debentures, to be dated as of June 4, 2008, between the company and the Trustee and a supplemental indenture with respect to the Series B Convertible Debentures, to be dated as of June 4, 2008, between the company and the Trustee. A full-text copy of the Underwriting Agreement for Debentures is available for free at http://ResearchArchives.com/t/s?2d24 Common Stock Offering and Share Lending Agreement Concurrently with the Debentures offering, on May 29, 2008, the company entered into a share lending agreement with Morgan Stanley Capital Services, Inc., pursuant to which the company will lend 44,864,059 shares of common stock, par value $0.01 per share, of the company to the Share Borrower, subject to certain adjustments set forth in the Share Lending Agreement, for a period ending on the earliest of: (i) the earlier to occur of (x) the first date as of which all of the Debentures have been converted, repaid, repurchased, redeemed or are otherwise no longer outstanding and (y) Oct. 15, 2038, or (ii) the date on which the Share Lending Agreement terminates in accordance with its terms. The Share Lending Agreement is guaranteed by Morgan Stanley. On May 29, 2008, JetBlue Airways entered into an underwriting agreement with Morgan Stanley & Co. Incorporated. Pursuant to and upon the terms of the Share Lending Agreement, the company will issue and lend to the Share Borrower 44,864,059 shares of Common Stock as a share loan, which are being offered to the public at $3.70 per share. The company will not receive any proceeds from the sale of the Borrowed Shares pursuant to the Share Lending Agreement but will receive a nominal lending fee of $0.01 per share for each share of Common Stock that it loans pursuant to the Share Lending Agreement. The Share Borrower, which is an affiliate of Morgan Stanley & Co. Inc., one of the Convertible Debenture Underwriters and the Common Stock Underwriter, will receive all of the proceeds from the sale of Borrowed Shares pursuant to the Share Lending Agreement. A full-text copy of the Underwriting Agreement for Common Stock is available for free at http://ResearchArchives.com/t/s?2d25 A full-text copy of the Share Lending Agreement is available for free at http://ResearchArchives.com/t/s?2d26 About JetBlue Airways Based in Forest Hills, New York, JetBlue Airways Corporation (Nasdaq: JBLU) -- http://www.jetblue.com/-- is a passenger airline that provides customer service primarily on point-to-point routes. As of Dec. 31, 2007, the company served 53 destinations in 21 states, Puerto Rico, Mexico and the Caribbean. At Dec. 31, 2007, the company's consolidated balance sheeet showed $5.598 billion in total assets, $4.562 billion in total liabilities, and $1.036 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on May 23, 2008, Moody's Investors Service downgraded the corporate family rating of JetBlue Airways Corporation to Caa1 from B3, well as the ratings of its outstanding corporate debt instruments and selected classes of JetBlue's Enhanced Equipment Trust Certificates. The rating outlook is negative. JETBLUE AIRWAYS: Fitch Rates $175MM Conv. Debentures 'CCC-/RR6' --------------------------------------------------------------- Fitch Ratings has assigned a rating of 'CCC-/RR6' to JetBlue Airways Corp.'s newly-issued $175 million in convertible debentures. The debentures, issued in a two-part offering, each with a 5.5% coupon, mature in 2038. JBLU may redeem the Series A debentures beginning in October 2013 and the Series B debentures beginning in October 2015. The conversion price for the Series A debentures is $4.53, while the conversion price for the Series B debentures is $4.44. JBLU will deposit cash in an escrow account equal to the first six interest payments for each series of debentures. Net proceeds from the debentures will be used to repay JBLU's outstanding 3.5% convertible notes due 2033. The Rating Outlook for JBLU is Negative. Fitch's ratings on JBLU reflect the dramatic run-up in jet fuel costs and growing evidence of a softening revenue outlook that will likely drive larger losses and weakened free cash flow during the remainder of 2008. Although the $300 million equity investment by Germany's Deutsche Lufthansa AG helped boost JBLU's liquidity position in the first quarter, Fitch expects cash balances to remain under pressure over the next several months as JBLU and the other U.S. airlines continue to trim unprofitable capacity in the face of unsustainably high jet fuel prices. While JBLU's fleet plan flexibility provides some opportunity to manage capacity growth lower in 2008 and 2009, additional cash- raising options are limited, and the carrier's liquidity cushion will likely be eroded somewhat as operating losses continue and debt maturities are met without the benefit of positive free cash flow. The 'B-' Issuer Default Rating reflects JBLU's highly-leveraged capital structure, its diminished cash flow generation capacity and its vulnerability to ongoing fuel and revenue shocks in an industry that remains unable to recover surging and largely uncontrollable energy costs through higher fares. Importantly, the rating also captures the fact that JBLU's current liquidity position is adequate to meet 2008 fixed obligations, but intense fuel cost pressure and worsening unit revenue comparisons through the year will likely reduce cash balances by year-end. In addition to scheduled aircraft-backed debt principal payments this year, JBLU will fund $175 million in convertible notes that investors can put back to the company on July 15. The current $175 million debenture issuance largely meets the cash requirement to fund that payment in July. Total scheduled debt maturities for the final three quarters of 2008 are $343 million. Besides the Lufthansa investment proceeds booked in January, liquidity will be supplemented by the sale of nine used Airbus A320 aircraft this year. These sales could generate as much as $100 million in cash after repayment of associated aircraft debt. All A320 and Embraer E190 aircraft deliveries for 2008 are financed, and JBLU announced on May 27 that it had successfully deferred the delivery of 21 A320s previously scheduled for delivery in 2009, 2010 and 2011. This deferral will reduce new financing requirements while supporting liquidity through better free cash flow and the return of some pre-delivery deposits. JEVIC TRANSPORTATION: Wants Access to CIT's $60,000,000 Facility ---------------------------------------------------------------- Jevic Transportation Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to borrow up to $60,000,000 in debtor-in-possession financing under a revolving credit facility from a syndicate of banks led by The CIT Group/Business Credit, Inc., as administrative agent for lenders. Other lenders are (i) Wachovia Bank, N.A., (ii) PNC Bank, N.A., (iii) LaSalle Bank Midwest National Association and (iv) BMO Capital Markets Financing Inc. The Debtors also seek the Court's permission to use their prepetition lenders' cash collateral until July 8, 2008. On July 28, 2006, the Debtors entered into a $101,200,000 secured, credit agreement, as amended, with CIT and certain other lenders. The facility consisted of a $85,000,000 revolving facility and a $16.2 million term loan. The term loan was eliminated and the revolving facility was reduced to $55 million. At Dec. 31, 2007, the Debtors have borrowed at least $25,4000 and $27,800,000 of letters of credit outstanding under the revolving facility. The Debtors have defaulted in their obligations on fixed charge coverage ratios as of Sept. 30, 2007, and Dec. 31, 2007. The Debtors entered into a forbearance agreement with the lenders that expired without extension on May 12, 2008. The proceeds of the DIP facility will be used to pay operating expenses including costs associated with the liquidation of the Debtors' business operations. According the DIP agreement, the loans will bear interest at prime rate plus 2.5%. The committed $60,000,000 facility will terminate and become due on Aug. 30, 2008. The DIP lien is subject to a $1,335,000 "carve-out" for payment of allowed professional fees retained by the Debtors and the committee. The Debtors agree to pay a host of fees including a $200,000 upfront fee and a $350,000 in deferred fee. Any fees will be afforded an administrative priority status under Section 503(b) of the Bankruptcy Code. A full-text copy of the Debtor-in-Possession Agreement is available for free http://ResearchArchives.com/t/s?2d31 A full-text copy of the Cash Collateral Budget is available for free at http://ResearchArchives.com/t/s?2d15 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. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors' filed for protection against their creditors, they listed assets and debts between $50 million to $100 million. JEVIC TRANSPORTATION: Wants to Hire Epiq as Claims Agent -------------------------------------------------------- Jevic Transportation Inc. and its debtor-affiliates ask the U.S. Bankruptcy court for the District of Delaware for permission to employ Epiq Bankruptcy Solutions LLC as their claims, noticing and balloting agent. Epiq Bankruptcy is expected to: a) prepare and serve required notices in these cases, including, without limitation, notice of commencement of the cases and the initial meetings of creditors under Section 341(a) of the Bankruptcy Code, notice of the claims bar date, notices of objections to claims and notices of hearings on a disclosure statement of plan of reorganization; b) prepare for filing with clerk's office an affidavit of service for notices served by Epiq; c) maintain copies of all proofs of claims and proofs of interest filed in these cases; d) maintain an official claims register by docketing all proofs of claims and proofs of interest in a claims database that includes the name and address of the claimant or interest holder, date the proofs of claim or proof of interest was received, claim number assigned to the proof of claim or proof of interest, the amount asserted in the proof of claim or proof of interest, and the classification of the claim; e) maintain a current mailing list for all entities that have filed proofs of claim or proofs of interest; f) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and give notice of such transfers as required by that rule; g) provide balloting and solicitation services, including preparing ballots, producing personalized ballots and tabulating ballots; and h) provide such other claim, noticing and balloting services as may be requested by the Debtors or the clerk from time to time. The firm's professionals and their compensation rates are: Designations Hourly Rates ------------ ------------ Senior Case Manager $203-$248 Case Manager (Level 1) $167-$198 IT Programming Consultant $126-$171 Case Manager (Level 2) $113-$158 Clerk $36-$54 To the best of the Debtors' knowledge, the firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. 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. The U.S. Trustee for Region 3 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors' filed for protection against their creditors, they listed assets and debts between $50 million to $100 million. JONES WYCHE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Jones Wyche Development Group Inc. 3473 South King Drive Chicago, IL 60616 Bankruptcy Case No.: 08-13415 Description: Larry Jones, president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: May 27, 2008 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: Melvin J. Kaplan, Esq. (grodriguez@financialrelief.com) Melvin J. Kaplan & Associates 14 East Jackson Boulevard Chicago, IL 60604 Tel: (312) 294-8989 Fax: (312) 294-8995 Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its unsecured creditors. JP MORGAN: Moody's Places Low-B Ratings on Six Certificate Classes ------------------------------------------------------------------ Moody's Investors Service has assigned definitive ratings to securities issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2008-C2. The provisional ratings issued on May 2, 2008 have been replaced with these definitive ratings: -- Class A-1 $23,396,000, rated Aaa -- Class A-2, $68,126,000, rated Aaa -- Class A-3, $105,514,000, rated Aaa -- Class A-4, $354,554,000, rated Aaa -- Class A-4FL, $145,000,000, rated Aaa -- Class A-SB, $54,460,000, rated Aaa -- Class A-1A, $65,075,000, rated Aaa -- Class A-M, $116,589,000, rated Aaa -- Class A-J, $61,209,000, rated Aaa -- Class B, $14,574,000, rated Aa1 -- Class C, $14,574,000, rated Aa2 -- Class D, $10,201,000 rated Aa3 -- Class E $10,202,000, rated A1 -- Class F, $13,116,000, rated A2 -- Class G, $11,659,000, rated A3 -- Class H, $16,031,000, rated Baa1 -- Class J, $14,574,000, rated Baa2 -- Class K, $14,573,000, rated Baa3 -- Class L, $8,745,000, rated Ba1 -- Class M, $4,372,000, rated Ba2 -- Class N, $5,829,000, rated Ba3 -- Class P, $4,372,000, rated B1 -- Class Q, $2,915,000, rated B2 -- Class T, $4,372,000, rated B3 -- Class X, $1,165,893,035*, rated Aaa * Approximate notional amount Moody's has withdrawn the provisional ratings of these class of certificates: -- Class A-2FL, $15,000,000, WR -- Class X-1, $0, WR KEOKUK HEALTH: Moody's Affirms KAH's B3 Debt Rating --------------------------------------------------- Moody's Investors Service affirmed Keokuk Area Hospital's B3 debt rating. This action affects approximately $6.5 million of outstanding Series 1998 revenue bonds issued by the City of Keokuk, IA. The outlook remains negative. Legal Security: The Series 1998 bonds are secured by a gross revenue pledge of KAH. KAH is the only member of the obligated group. KAH is a member of the Keokuk Health System, Inc. KAH represents approximately 72% of KHS total assets. Other affiliates of KHS include: Organized Delivery System, Inc. (ODS), a small local health plan; Tri-State Medical Group (TSMG), a local physician practice; and Keokuk Area Medical Equipment and Supply, Inc. Interest Rate Derivatives: None. Strengths *Improved operating performance in 2007. In audited fiscal year (FY) 2007, KAH recorded operating income of $478,000 (1.5% operating margin, after losses on disposition of property and equipment removed from results) and operating cash flow of $2.2 million (7.1% operating cash flow margin). In FY 2006, KAH recorded much weaker results (3.6% operating loss margin, 2.3% operating cash flow margin). The improved results in FY 2007 were due to an improved reimbursement formula for Medicare Dependent status hospitals and a 2.7% decline in operating expenses (due to a wage freeze and a decline in KAH's average length of stay). KAH continued to be profitable through the first five months of FY 2008 (0.3% operating margin). *Adequate debt ratios (4.3 times debt-to-cash flow, 2.1 times peak debt service coverage) due to improved operating performance in FY 2007. *Market leader in the City of Keokuk, IA, as the closest acute care providers are 50-staffed bed Fort Madison Community Hospital (19 miles north of Keokuk in Fort Madison, IA) and 15-staffed bed Memorial Hospital (16 miles east of Keokuk in Carthage, IL). Moreover, KAH faces very little physician competition in the area. Challenges *KAH has very thin liquidity. At fiscal year end (FYE) 2007, KAH's unrestricted cash measured $1.5 million, essentially unchanged from FYE 2006. Due to the decline in KAH's expense base, cash on hand improved very modestly to a still weak 19.0 days at FYE 2007 from 18.5 days at FYE 2006, while cash-to-debt increased to a modest 18.6% from 16.5%. KAH's liquidity position is a fundamental credit concern. KAH's unrestricted cash measured $1.8 million at February 29, 2008. *Small service area with struggling demographics in Lee County, IA. The county's population trend is stagnant-to-declining and its median income level is below state and national averages. Accordingly, KAH operates with a small patient base of just over 3,000 inpatient admissions and is very reliant on a handful of physicians for admissions. *Despite profitability in FY 2007 and in interim FY 2008, KAH has a track record of variable operating performance. The hospital has recorded operating losses in four of the last seven fiscal years. *Very modest capital spending in recent years, as KAH's capital spending ratio has averaged a low 0.3 times over the last five years. Consequently, KAH's average age of plant has increased steadily in recent years, measuring a high 16 years in FY 2007. Outlook The negative outlook reflects our concern that KAH's historically variable operating performance will continue to stress the hospital's already very thin liquidity. Given the track record of modest cash flow generation, it is unlikely that KAH will improve its liquidity position materially in the coming years. What could change the rating -- UP Material liquidity gains without additional debt; sustained improvement in operating margins What could change the rating -- DOWN Return to weaker operating margins or reduction in absolute unrestricted liquidity Key Adjustments Assumptions & Adjustments: -- Based on Keokuk Area Hospital financial report; -- First number reflects audited FY 2006 for the year ended September 30, 2006; -- Second number reflects audited FY 2007 for the year ended September 30, 2007; -- Losses on disposition of property and equipment removed from results ($9,918 in FY 2007, $515 in FY 2006); -- Investment returns smoothed at 6% * Inpatient admissions: 3,428; 3,297 * Total operating revenues: $30.6 million; $31.4 million * Moody's-adjusted net revenues available for debt service: $1.1 million; $2.5 million * Total debt outstanding: $9.3 million; $8.3 million * Maximum annual debt service (MADS): $1.2 million; $1.2 million * MADS Coverage with reported investment income: 0.93 times; 2.07 times * Moody's-adjusted MADS Coverage with normalized investment income: 0.94 times; 2.08 times * Debt-to-cash flow: 17.2 times; 4.3 times * Days cash on hand: 18.5 days; 19.0 days * Cash-to-debt: 16.5%; 18.6% * Operating margin: -3.6%; 1.5% * Operating cash flow margin: 2.3%; 7.1% Rated Debt Series 1998 Fixed Rate Hospital Revenue Bonds ($6.5 million outstanding), rated B3. KLEROS PREFERRED: Moody's Junks Rating on $144MM Notes Due 2052 --------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by Kleros Preferred Funding VIII, Ltd.: Class Description: US$2,400,000,000 Class A-1A First Priority Senior Secured Delayed Draw Floating Rate Notes Due 2052 Prior Rating: Aaa, on review for possible downgrade Current Rating: B1, on review for possible downgrade Class Description: US$150,000,000 Class A-1B Second Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: Aa2, on review for possible downgrade Current Rating: B2, on review for possible downgrade Class Description: US$180,000,000 Class A-2 Third Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: Aa3 on review for possible downgrade Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$144,000,000 Class A-3 Fourth Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: A1 on review for possible downgrade Current Rating: Ca Class Description: US$19,500,000 Class X Senior Secured Floating Rate Notes Due 2013 Prior Rating: Aaa Current Rating: Ca Class Description: US$52,500,000 Class B Fifth Priority Senior Secured Floating Rate Notes Due 2052 Prior Rating: A2 on review for possible downgrade Current Rating: Ca Class Description: US$26,500,000 Class C Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2052 Prior Rating: Baa3 on review for possible downgrade Current Rating: C Class Description: US$32,000,000 Class D Seventh Priority Mezzanine Deferrable Floating Rate Notes Due 2052 Prior Rating: Ba3 on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. KLEROS PREFERRED: Moody's to Review Caa1 Rating on $900MM Notes --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of five classes of notes issued by Kleros Preferred Funding VII, Ltd., and left on review for possible further downgrade the rating of one of these classes of notes as: Class Description: US$900,000,000 Class A-1 First Priority Senior Secured Delayed Draw Floating Rate Notes Due 2053; Prior Rating: A1, on review for possible downgrade Current Rating: Caa1, on review for possible downgrade Class Description: US$375,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2053; Prior Rating: B1, on review for possible downgrade Current Rating: Ca Class Description: US$75,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2053; Prior Rating: Caa3, on review for possible downgrade Current Rating: Ca Class Description: US$69,000,000 Class A-4 Fourth Priority Senior Secured Floating Rate Notes Due 2053; Prior Rating: Caa3, on review for possible downgrade Current Rating: Ca Class Description: US$41,000,000 Class B Fifth Priority Senior Secured Floating Rate Notes Due 2053; Prior Rating: Caa3, on review for possible downgrade Current Rating: Ca Kleros Preferred Funding VII, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On January 30, 2008 the transaction experienced an event of default caused by a failure of the Class A Sequential Pay Ratio to be greater than or equal to the required amount set forth in Section 5.1(h) of the Indenture dated April 5, 2007. That event of default is continuing. The rating actions taken today reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. Because of this uncertainty, the rating of the Class A-1 Notes issued by Kleros Preferred Funding VII, Ltd. is on review for possible further action. KLEROS PREFERRED: Moody's to Review Ca Rating on $300MM Notes ------------------------------------------------------------- Moody's Investors Service downgraded the ratings of seven classes of notes issued by Kleros Preferred Funding VI, Ltd., and left on review for possible further downgrade ratings of two of these classes of notes as: Class Description: US$1,000,000,000 Class A-1S-1A First Priority Senior Secured Delayed Draw Floating Rate Notes due May 2047 Prior Rating: Aaa, on review for possible downgrade Current Rating: B3, on review for possible downgrade Class Description: US$1,400,000,000 Class A-1S-1B First Priority Senior Secured Floating Rate Notes due May 2047 Prior Rating: Aaa, on review for possible downgrade Current Rating: B3, on review for possible downgrade Class Description: US$300,000,000 Class A-1S-2 Second Priority Senior Secured Floating Rate Notes due May 2047 Prior Rating: A3, on review for possible downgrade Current Rating: Ca Class Description: US$169,500,000 Class A-1J Third Priority Senior Secured Floating Rate Notes due May 2047 Prior Rating: Ba3, on review for possible downgrade Current Rating: Ca Class Description: US$56,000,000 Class A-2 Fourth Priority Senior Secured Floating Rate Notes due May 2047 Prior Rating: Caa1, on review for possible downgrade Current Rating: Ca Class Description: US$27,500,000 Class A-3 Fifth Priority Senior Secured Deferrable Floating Rate Notes due May 2047 Prior Rating: Ca Current Rating: C Class Description: US$32,000,000 Class B Sixth Priority Deferrable Senior Secured Floating Rate Notes due May 2047 Prior Rating: Ca Current Rating: C Kleros Preferred Funding VI, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On December 14, 2007 the transaction experienced an event of default caused by a failure of the Class A-2 Overcollateralization Ratio to be greater than or equal to the required amount set forth in Section 5.1(h) of the Indenture dated March 23, 2007. That event of default is continuing. The rating actions taken today reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. Because of this uncertainty, the rating of Class A-1S-1A and Class A-1S-1B Notes issued by Kleros Preferred Funding VI, Ltd. is on review for possible further action. KNOLLWOOD CDO: Moody's Cuts Rating on Notes, to Undertake Review ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by Knollwood CDO Ltd.: Class Description: Class A-1 First Priority Senior Secured Floating Rate Notes due January 8, 2039 Prior Rating: Aaa, on review for possible downgrade Current Rating: Baa3, on review for possible downgrade Class Description: Class A-2 Second Priority Senior Secured Floating Rate Notes due January 8, 2039 Prior Rating: A2, on review for possible downgrade Current Rating: B3, on review for possible downgrade Class Description: Class B Third Priority Senior Secured Floating Rate Notes due January 8, 2039 Prior Rating: Baa3, on review for possible downgrade Current Rating: Caa1, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: Class C Mezzanine Secured Floating Rate Notes due January 8, 2039 Prior Rating: Caa2, on review for possible downgrade Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. LAKESIDE CDO: Moody's Cuts Notes Rating, to Undertake Review ------------------------------------------------------------ Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Lakeside CDO II, Ltd. Class Description: Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2040 Prior Rating: Aaa Current Rating: Aa1, on review for possible downgrade Class Description: Class B Third Priority Secured Floating Rate Notes Due 2040 Prior Rating: Baa1, on review for possible downgrade Current Rating: Ba1, on review for possible downgrade Class Description: Class C Mezzanine Secured Floating Rate Notes Due 2040 Prior Rating: Ba3, on review for possible downgrade Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. LEARNING CARE: Moody's Rates Proposed $215MM Sr. Facilities 'Ba3' ----------------------------------------------------------------- Moody's Investors Service assigned Ba3 ratings to the proposed $215 million senior secured credit facilities of Learning Care Group, Inc. Concurrently Moody's assigned B2 Corporate Family and Probability of Default ratings to LCG. The outlook for the ratings is stable. Along with $55 million mezzanine tranche (not rated) and an additional $236 million of cash equity (including $20 million of PIK preferred at the Holdco), the capital will finance the acquisition of 60% of the equity by Morgan Stanley Private Equity. The remaining 40% of the company will continue to be owned by A.B.C. Learning Centres Limited. The total purchase consideration of $737 million, including rollover equity and performance-based earn-out payments, values the company at 10.5 times pro forma EBITDA of $70 million over the twelve months ended March 31, 2008 (including transaction fees). The ratings are constrained by relatively high financial leverage, expectations of weak free cash flow generation in the medium term and a relatively short operating history of a significant number of centers under the LCG umbrella (particularly La Petite Academy). The effect of financial leverage is exacerbated by the presence of operating lease obligations that are long-term in nature and inextricably linked to the company's child-care operations. The industry is fragmented and highly competitive, and, despite the regulated nature of center-based child-care, lacks significant barriers to entry. The ratings are further constrained by a history of significant growth through acquisitions. Nonetheless, the Corporate Family Rating of B2 are supported by LCG's brand diversity, a record of operational and margin improvements over the last five years, as well as investments in underperforming assets which resulted in improved center utilization. Although profitability and cash flow generation would likely be affected by the economic cycle and employment levels in particular, the effect of a downturn is likely to be moderate given the company's geographic diversification in the United States. The ratings also reflect the $236 million cash equity by Morgan Stanley Private Equity, which together with an additional $177 million of A.B.C. rollover equity and a further $50 million in earnouts constitute about 60% of the company's capital base. Upward pressure on the ratings would result if the company were to achieve sustainable adjusted debt to EBITDA ratios below 4.5 times, with free cash flow generation of the order of 5% of adjusted debt. Moody's assigned these ratings: -- B2 Corporate Family Rating; -- B2 Probability of Default Rating; -- Ba3 (LGD2, 24%) rated $40 million senior secured revolving credit facility due 2013; -- Ba3 (LGD2, 24%) rated $175 million senior secured term loan B due 2015; The ratings outlook is stable. The transaction is expected to be completed in June 2008. The ratings are contingent upon the receipt of executed documentation in form and substance acceptable to Moody's. Learning Care Group, Inc., based in Novi, Michigan, is the second largest provider of for-profit child care and early education services in the United States, including outside school hours care. LCG reported revenues of approximately $787 million in the twelve months ended March 31, 2008. LEINER HEALTH: To Sell Assets to NBTY Inc. for $230,000,000 ----------------------------------------------------------- Leiner Health Products, Inc., entered into an Asset Purchase Agreement for the sale of substantially all of its assets to NBTY, Inc., on May 30, 2008. NBTY will acquire the company for $230,000,000 plus assumption of certain liabilities. The Agreement is subject to higher or better offers that may be submitted by competing bidders in connection with a process conducted under the supervision of the bankruptcy court presiding over Leiner's chapter 11 bankruptcy case. If a higher or better offer is submitted, an auction will be conducted on June 9, 2008, in which case the terms of the Agreement may change. The NBTY Agreement provides for a purchase price adjustment downward if the amount of actual working capital at closing is less than $116,500,000, and for a purchase price adjustment upward if the amount of actual working capital at closing is greater than $126,500,000. Simultaneously with the execution of the Agreement, NBTY and Leiner also entered into an escrow agreement pursuant to which a portion of the purchase price is held in escrow until the closing of the purchase transaction. In addition to the bankruptcy court process, the transaction is subject to regulatory and other customary approvals. If no higher or better offer is submitted by a competing bidder, the purchase transaction contemplated by the Agreement is expected to close no later than September 2008. About Leiner Health Based in Carson, California, Leiner Health Products Inc. -- http://www.leiner.com/-- manufacture and supply store brand vitamins, minerals and nutritional supplements products, and over- the-counter pharmaceuticals in the US food, drug and mass merchant and warehouse club retail market. In addition to their primary VMS and OTC products, they provide contract manufacturing services. During the fiscal year ended March 31, 2007, the VMS business comprised approximately 61% of net sales. On March 20, 2007, they voluntarily suspended the production and distribution of all OTC products manufactured, packaged or tested at its facilities in the US. The company filed for Chapter 11 protection on March 10, 2008 (Bankr. D. Del. Lead Case No.08-10446). Jason M. Madron, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. Houlihan Lokey Howard & Zukin Capital, Inc., provides investment banking and financial advisory services to the Debtors. Garden City Group Inc. serves as the Debtors' noticing, claims and balloting agent. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors in these cases. The Committee is represented by Saul Ewing LLP as bankruptcy counsel, and FTI Consulting Inc., as financial advisors. As reported in the Troubled Company Reporter on April 10, 2008, the Debtors' schedules of assets and liabilities showed total assets of $133,412,547 and total debts of $477,961,526. LENOX CDO: Moody's to Review Caa2 Rating on $75MM Notes Due 2043 ---------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Lenox CDO, Ltd.: Class Description: US$70,000,000 Class A-1S First Priority Senior Secured Floating Rate Delayed Draw Notes due 2043-1 Prior Rating: Aaa, on review for possible downgrade Current Rating: Baa1, on review for possible downgrade Class Description: US$75,000,000 Class A-1J Second Priority Senior Secured Floating Rate Notes due 2043 Prior Rating: A1, on review for possible downgrade Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$2,000,000 Class A-2 Third Priority Senior Secured Floating Rate Notes due 2043 Prior Rating: A2, on review for possible downgrade Current Rating: Ca Class Description: US$31,000,000 Class B-1 Fourth Priority Senior Secured Floating Rate Notes due 2043 Prior Rating: A3, on review for possible downgrade Current Rating: Ca Class Description: US$14,000,000 Class B-2 Fourth Priority Senior Secured Fixed Rate Notes due 2043 Prior Rating: Baa1, on review for possible downgrade Current Rating: Ca Class Description: US$8,000,000 Class C Fifth Priority Senior Secured Floating Rate Notes due 2043 Prior Rating: Baa2, on review for possible downgrade Current Rating: Ca Class Description: US$10,000,000 Class D Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2043 Prior Rating: Ba2, on review for possible downgrade Current Rating: C Class Description: US$4,000,000 Class E-1 Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2043 Prior Rating: Caa1, on review for possible downgrade Current Rating: C Class Description: US$16,000,000 Class E-2 Seventh Priority Mezzanine Secured Deferrable Fixed Rate Notes due 2043 Prior Rating: Caa1, on review for possible downgrade Current Rating: C Class Description: US$30,000,000 Combination Securities due 2043 Prior Rating: Ba1, on review for possible downgrade Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. LEWER LIFE: A.M. Best Lifts IC Rating to bb+ with Stable Outlook ---------------------------------------------------------------- A.M. Best Co. has upgraded the issuer credit rating to "bb+" from "bb" and affirmed the financial strength rating of B(Fair) for Lewer Life Insurance Company. The outlook for both ratings is stable. The ICR upgrade reflects Lewer Life's improved earnings performance in its core group accident and health segment, long standing relationships in the student marketplace and adequate capitalization. Following several years of modest performance, Lewer Life reported strong results in 2007, with a return to profitability in its core group accident and health segment. The company has taken steps to improve earnings in this segment and continues to maintain strong relationships in this niche market. Partially offsetting these factors are the fluctuating net operating earnings, still high expense ratios in its group accident and health line and generally modest increases in net written premium, as reflected in its limited business profile. Lewer Life also maintains a relatively high concentration in collateralized mortgage obligations and has limited surrender protection on its annuity block. LILLIAN VERNON: New Owner Launches Catalogs, Transfers Operations ----------------------------------------------------------------- Jim Tierney at Multichannel Merchant reports that Current USA, which acquired Lillian Vernon in a bankruptcy-supervised asset sale, mailed about 600,000 catalogs to the Lillian Vernon house file last week as part of a "soft launch" of the catalog. Multichannel Merchant says the next catalog will be delivered in mid-June according to Tim Arland, president of Current USA. Multichannel Merchant relates that Current USA will transfer Lillian Vernon's merchandising, creative, marketing, and Internet operations to its headquarters in Colorado Springs, Colorado. Lillian Vernon's operations in Virginia Beach, Virginia -- which houses roughly 190 employees and includes the distribution center, call center, IT, and some human resources functions -- will be retained. "Our plans for Lillian Vernon are to maintain the brand name and heritage, run the business with a focus on profits for the Lillian Vernon brand, and leverage synergies and cost structure to accelerate profits for all of our consumer brands," Multichannel Merchant quotes Mr. Arland as saying. According to Multichannel Merchant, Mr. Arland said Lillian Vernon is part of the company's long-term plan to compete with an efficient cost model." He explained, "We will focus on the core customers and products of Lillian Vernon. We expect that the synergies between the brands will enable us to accelerate our profit model for all Current USA brands." As reported by the Troubled Company Reporter on April 7, 2008, the Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware authorized Current USA Inc., a subsidiary of Taylor Corporation, to acquire the assets of Lillian Vernon and its debtor-affiliates for $15.8 million. The purchased assets include merchandise valued at $10.4 million, customer information and brand name. Current USA was the successful bidder at an April 1 auction, beating Creative Catalog. It finalized the deal on April 3. As reported in the Troubled Company Reporter on March 18, 2008, the Debtors originally entered into a stalking-horse asset purchase agreement dated March 10, 2008, with Creative Catalog, wherein the Debtors' assets will be sold for $9,250,000, subject to certain purchase price reduction, if assets are sold before closing. The Debtors also asked the Court for permission to sell inventory valued at $10,400,000, including fixtures, equipment and personal property. About Lillian Vernon Based in Virginia Beach, Virginia, Lillian Vernon Corp. -- http://www.lillianvernon.com/-- and its affiliates are direct mail specialty catalog and online companies concentrating on the marketing of gifts, holiday products, toys and children's products, personal and home accessories, kitchen and houseware products and garden and outdoor products. They have developed a proprietary customer database containing information about its customers, including such data as order frequency, size and date of last order and type of products purchased. The database contains information with respect to over 27 million customers, gift recipients and people who have requested its catalogs. In the fiscal year ended Feb. 22, 2003, they published 33 catalog editions and mailed approximately 150,000,000 catalogs to past and prospective customers. They also offer products over the Internet. The company and six of its affiliates filed for Chapter 11 protection on Feb. 20, 2008 (Bankr. D. Del., Case No. 08- 10323). Ann C. Cordo, Esq., Daniel B. Butz, and Esq., J. Dehney, Esq. at Morris, Nichols, Arsht & Tunnell, L.L.P. represent the Debtors in their restructuring efforts. Lillian Vernon's parent, Sun Capital Partners Inc., a privately held investment company with offices in Boca Raton, Fla., is not included in the bankruptcy filing. The U.S. Trustee for Region 3 has appointed creditors to serve on an Official Committee of Unsecured Creditors in these cases. The company listed assets of $1 million to $100 million and debts of $1 million to $100 million in its bankruptcy filing. LINCOLN AVENUE ABS: Moody's to Review Ca Rating on $77M Notes ------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Lincoln Avenue ABS CDO, Ltd.: Class Description: US$1,094,000,000 Class A-1 Floating Rate Secured Notes due 2046 Prior Rating: Aa3, on review for possible downgrade Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$77,000,000 Class A-2 Floating Rate Secured Notes due 2046 Prior Rating: Baa3, on review for possible downgrade Current Rating: Ca Class Description: US$26,000,000 Class B Floating Rate Secured Notes due 2046 Prior Rating: Ba2, on review for possible downgrade Current Rating: Ca Class Description: US$21,000,000 Class C Deferrable Floating Rate Secured Notes due 2046 Prior Rating: B3, on review for possible downgrade Current Rating: C Class Description: US$19,000,000 Class D Deferrable Floating Rate Secured Notes due 2046 Prior Rating: Caa2, on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. LONGSHORE CDO: Moody's Cuts Ratings on Four Classes of Notes ------------------------------------------------------------ Moody's Investors Service downgraded the ratings of four classes of notes issued by Longshore CDO Funding 2007-3, Ltd., and left on review for possible further downgrade rating of one of these classes of notes as: Class Description: US$1,131,000,000 Class A-1 Floating Rate Notes Due 2052; Prior Rating: Ba2, on review for possible downgrade Current Rating: Caa2, on review for possible downgrade Class Description: US$50,000,000 Class A-2 Floating Rate Notes Due 2052; Prior Rating: B2, on review for possible downgrade Current Rating: Ca Class Description: US$43,600,000 Class A-3 Floating Rate Notes Due 2052; Prior Rating: Caa3, on review for possible downgrade Current Rating: Ca Class Description: US$37,700,000 Class B Floating Rate Notes Due 2052; Prior Rating: Caa3, on review for possible downgrade Current Rating: Ca Longshore CDO Funding 2007-3, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On February 8, 2008 the transaction experienced an event of default caused by a failure of the sum of the aggregate outstanding principal amounts of the Class A-1 Notes, the Class A- 2 Notes, and the Class A-3 Notes to be greater or equal to the required amount set forth in clause (vii) of the definition of "Event of Default" in Schedule 4 of the Trust Deed dated April 26, 2007. That event of default is continuing. The rating actions taken today reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. Because of this uncertainty, the rating of the Class A-1 Notes issued by Longshore CDO Funding 2007-3, Ltd. is on review for possible further action. LONGSHORE CDO: Moody's to Review Rating on Notes for Likely Cut --------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Longshore CDO Funding 2006-2, Ltd.: Class Description: US$870,000,000 Class A-1 Floating Rate Notes Due 2046 Prior Rating: Aa2, on review for possible downgrade Current Rating: B1, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$60,000,000 Class A-2 Floating Rate Notes Due 2046 Prior Rating: A3, on review for possible downgrade Current Rating: Ca Class Description: US$42,000,000 Class B Floating Rate Notes Due 2046 Prior Rating: Baa2, on review for possible downgrade Current Rating: Ca Class Description: US$8,000,000 Class C-1 Floating Rate Deferrable Interest Notes Due 2046 Prior Rating: B3, on review for possible downgrade Current Rating: C Class Description: US$5,000,000 Class C-2 Floating Rate Deferrable Interest Notes Due 2046 Prior Rating: Ca Current Rating: C Class Description: US$7,500,000 Class D Floating Rate Deferrable Interest Notes Due 2046 Prior Rating: Ca Current Rating: C Class Description: US$7,500,000 Preference Shares Prior Rating: Ca Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio, which consists of structured finance securities. LUBBOCK MEDICAL: Case Summary & 19 Largest Creditors ---------------------------------------------------- Debtor: Lubbock, Texas-Highland Medical Center, L.P. dba Highland Community Hospital dba Highland Medical Center 2412 50th St. Lubbock, TX 79412 Bankruptcy Case No.: 08-50202 Type of Business: The Debtor provides general medical and surgical care for inpatient, outpatient, and emergency room patients, and participates in the Medicare and Medicaid programs. See http://www.highlandcommunityhospital.com Chapter 11 Petition Date: May 31, 2008 Court: Northern District of Texas (Lubbock) Judge: Robert L. Jones Debtor's Counsel: Max Ralph Tarbox, Esq. McWhorter, Cobb & Johnson, LLP 1722 Broadway, P.O. Box 2547 Lubbock, TX 79408 Tel: (806) 762-0214 Fax: (806) 762-8014 Email: mrichburg@mcjllp.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $2,738,337 P.O. Box 249 Memphis, TN 38101 Tenet Healthcare Corp. $830,047 P.O. Box 809088 Dallas, TX 75380 Tel: (469) 893-2000 Medicare $559,185 P.O. Box 1602 Omaha, NE 68175 Luker Pharmacy Management $360,651 1072 FM 1888 Blanco, TX 78606 Community Health Systems $350,000 Attn: Nancy Beydler 7100 Commerce Way, Ste. 100 Brentwood, TN 37027 Tel: (615) 465-7246 Depuy Orthopaedics, Inc. $351,815 5972 Collection Ctr. Dr. Chicago, IL 60693 Tel: (800) 544-7899 Texas Emergency Room Services, $332,453 PA 7032 Collection Center Dr. Chicago, IL 60693 Tel: (214) 712-2452 Locumtenens.com $315,006 P.O. Box 532869 Atlanta, GA 30353 Tel: (800) 562-8663 Healthcare Management Systems $277,102 3102 West End Ave., Ste. 400 Nashville, TN 37203 Tel: (800) 692-3849 Hallmark Rehabilitation $223,843 International Health Systems $177,330 Shared Imaging $160,714 GE Healthcare Financial $159,047 Griffin Wink Advertising $122,793 Beckman Coulter Inc. $111,810 Owens and Minor $103,136 Rodney Franklin, MD $101,470 New Direct OP Couns. Center $82,567 Jakeco LOC LLC DBA $82,567 MADAKET FUNDING: Moody's to Review Ratings for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the ratings on these notes issued by Madaket Funding I, Ltd.: Class Description: US$500,000,000 Class A1M Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade Class Description: US$300,000,000 Class A1Q Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade Moody's also downgrade and left on review for possible further downgrade the ratings on the following notes: Class Description: US$50,000,000 Class A2 Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aa2, on review for possible downgrade Class Description: US$80,000,000 Class A3 Floating Rate Notes Due 2046 Prior Rating: Aaa, on watch for possible downgrade Current Rating: Baa3, on review for possible downgrade Class Description: US$28,000,000 Class A4 Floating Rate Notes Due 2046 Prior Rating: A2, on review for possible downgrade Current Rating: Caa1, on review for possible downgrade Additional, Moody's downgraded the follwoing notes: Class Description: US$19,000,000 Class B Deferrable Floating Rate Notes Due 2046 Prior Rating: Baa2, on review for possible downgrade Current Rating: Ca Class Description: US$10,000,000 Class C Deferrable Floating Rate Notes Due 2046 Prior Rating: Ba1, on watch for possible downgrade Current Rating: C Class Description: US$8,000,000 Class D Deferrable Floating Rate Notes Due 2046 Prior Rating: B3, on watch for possible downgrade Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. MANASQUAN CDO: Moody's Cuts Notes Rating, Undertakes Review ----------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on the following notes issued by Manasquan CDO 2005-1, Ltd: Class Description: US$195,000,000 Class A-ILA Floating Rate Notes Due 2045-1 Prior Rating: Aaa Current Rating: A1, on review for possible downgrade Class Description: US$23,000,000 Class A-1LB Floating Rate Notes Due 2045 Prior Rating: Aaa Current Rating: A3, on review for possible downgrade Class Description: US$42,000,000 Class A-2L Floating Rate Notes Due 2045 Prior Rating: Aa1 Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$9,500,000 Class A-3L Floating Rate Notes Due 2045 Prior Rating: A1 Current Rating: Ca Class Description: US$15,000,000 Class B-1 L Floating Rate Notes Due 2045 Prior Rating: A3 Current Rating: Ca Class Description: US$5,000,000 Class B-2L Floating Rate Notes Due 2045 Prior Rating: Baa2 Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MANTOLOKING CDO: Moody's Cuts Notes Ratings, Undertakes Review -------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on these notes issued by Mantoloking CDO 2006-1, Ltd. Class Description: US$166,250,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2046 Prior Rating: A3, on review for possible downgrade Current Rating: Ba1, on review for possible downgrade Class Description: US$40,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes due 2046 Prior Rating: Baa1, on review for possible downgrade Current Rating: Caa1, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$71,750,000 Class B Fourth Priority Senior Secured Floating Rate Notes due 2046 Prior Rating: Baa3, on review for possible downgrade Current Rating: Ca Class Description: US$26,000,000 Class C Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2046 Prior Rating: Ba1, on review for possible downgrade Current Rating: C Class Description: US$10,000,000 Class D Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2046 Prior Rating: Ba2, on review for possible downgrade Current Rating: C Class Description: US$23,500,000 Class E Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2046 Prior Rating: B1, on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MARATHON STRUCTURED: Moody's to Review Ratings for Likely Cut ------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade the ratings on these notes issued by Marathon Structured Finance CDO I, Ltd.: Class Description: US$15,000,000 Class C Deferrable Floating Rate Notes Due 2046 Prior Rating: A2, on review for possible downgrade Current Rating: A3, on review for possible downgrade Class Description: US$22,900,000 Class D Deferrable Floating Rate Notes Due 2046 Prior Rating: Baa2, on review for possible downgrade Current Rating: Ba2, on review for possible downgrade Class Description: US$17,000,000 Class E Deferrable Floating Rate Notes Due 2046 Prior Rating: Ba2, on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MARTIN ROMANO: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Martin A. Romano aka Marty Romano dba M. Romano Construction P.O. Box 2051 El Cajon, CA 92021 Bankruptcy Case No.: 08-04588 Chapter 11 Petition Date: May 28, 2008 Court: Southern District of California (San Diego) Judge: Laura S. Taylor Debtor's Counsel: William P. Fennell, Esq. Law Office of William P. Fennell, APLC 1111 Sixth Avenue #404 San Diego, CA 92101 Phone: 619-325-1560 Fax: 619-325-1558 E-mail: william.fennell@fennelllaw.com Estimated Assets: $1 million - $10 million Estimated Debts: $1 million - $10 million A copy of the Debtor's petition is available for free at http://bankrupt.com/misc/casb08-04588.pdf MEDIACOM COMMS: Fitch Affirms 'B' ID Rating with Stable Outlook --------------------------------------------------------------- Fitch Ratings has affirmed the 'B' Issuer Default Rating for Mediacom Communications Corporation and its wholly owned subsidiaries Mediacom LLC and Mediacom Broadband LLC. In addition Fitch has assigned a 'BB/RR1' rating to Mediacom Broadband LLC's $300 million incremental term loan E. Lastly, Fitch has upgraded Mediacom LLC's senior unsecured debt to 'B-/RR5' from 'CCC+/RR6'. Approximately $3.2 billion of debt as of March 31, 2008 is affected. The Rating Outlook for all of Mediacom's ratings is Stable. Fitch's ratings reflect Mediacom's relatively high leverage and an operating profile that continues to lag behind comparable cable multiple system operators. Mediacom's service penetration rates and ARPU profile trail industry leaders as well as comparable rural oriented cable operators. The ratings incorporate Mediacom's prospects to generate free cash flow during the current ratings horizon, which in turn can be used to de - lever its balance sheet. Fitch acknowledges Mediacom's history of debt funded share repurchases and expects that the use of anticipated future free cash flow generation will be balanced between funding continued share repurchases and improving Mediacom's credit profile by reducing debt. Mediacom doubled its share repurchase activity during 2007 and the prospect of continued aggressive shareholder friendly actions is a key rating issue going forward. Mediacom's board of directors has approved a new $50 million share repurchase authorization. Fitch expects the pace of share repurchases to moderate relative to 2007 levels. Additionally the ratings incorporate the increasing business risk attributable to Mediacom's credit profile stemming from the persistent competitive threat from direct broadcast satellite operators. Fitch acknowledges that Mediacom's rural and suburban service territory provides a buffer to the facilities based video competition from the large incumbent telephone companies as the telephone companies have concentrated their respective video deployments on larger metropolitan areas. Moreover the competitive overlap with Verizon Communications, Inc. and AT&T, Inc. is minimal. Fitch expects that Mediacom will face additional competitive pressures in its southeast markets as AT&T builds its U-verse network in the former BellSouth territories. Mediacom's ratings are supported by a stable liquidity position and Fitch's expectation of further revenue and RGU growth and diversification coupled with a continued penetration of the company's triple play offering as the company continues to close the existing penetration differential between its high speed data, digital video products and triple play service offering take rates with that of industry norms. Fitch believes that Mediacom's triple play service offering, coupled with the expansion of Mediacom high definition offering and the introduction of a higher and lower speed high speed data product tiers enhances Mediacom's competitive positioning. The 'RR1' Recovery Rating assigned to Mediacom LLC and Mediacom Broadband LLC's senior secured credit facilities indicates superior recovery prospects, which are based on the asset coverage of these loans. The 'RR5' Recovery Ratings assigned to the senior unsecured debt issued by Mediacom Broadband and Mediacom LLC reflect the diminished recovery prospects of bondholders at this level of the capital structure driven by the large amount of senior secured debt ahead of these bonds in the capital structure. The Stable Outlook incorporates Fitch's expectation that Mediacom's credit profile will continue to improve during 2008 driven by steady operating metrics, including subscriber growth, ARPU, revenue and EBITDA growth. Improvement within these metrics should lead to free cash flow generation during 2008 after considering elevated capital expenditures during 2008. Fitch expects Mediacom's capital expenditures to moderate during 2009 further positioning the company to strengthen free cash flow generation. The Stable Outlook also reflects Fitch's belief that Mediacom will become more balanced with its share repurchase policy. Fitch has affirmed these ratings with a Stable Outlook: Mediacom Communications Corporation -- IDR at 'B'. Mediacom Broadband LLC -- IDR at 'B'; -- Senior Unsecured Debt at 'B-/RR5'. Mediacom LLC -- IDR at 'B'. Mediacom Illinois LLC Mediacom Arizona LLC Mediacom Indiana LLC Mediacom California LLC Mediacom Minnesota LLC Mediacom Delaware LLC Mediacom Wisconsin LLC Mediacom Southeast LLC Mediacom Iowa LLC Zylstra Communications Corporation -- IDR at 'B' -- Senior secured at'BB/RR1'. MCC Georgia, LLC MCC Illinois, LLC MCC Iowa, LLC MCC Missouri, LLC -- IDR at 'B' -- Senior secured at 'BB/RR1'. Fitch has also upgraded these ratings: Mediacom LLC -- Senior unsecured to 'B-/RR5' from 'CCC+/RR6'. Additionally, Fitch has assigned these new ratings: MCC Georgia, LLC MCC Illinois, LLC MCC Iowa, LLC MCC Missouri, LLC -- $300 million incremental term loan E 'BB/RR1'. MERIDIAN FURNITURE: Closes Shop After Owner Files for Chapter 7 --------------------------------------------------------------- The Meridian furniture stores in San Luis Obispo, California, ceased operations after owner Eva Young filed for chapter 7 bankruptcy protection on May 28, 2008, SanLuisObispo.com reports. Ms. Young filed a Chapter 7 petition before the U.S. Bankruptcy Court for the Central District of California, SanLuisObispo.com says. The report did not provide information on Ms. Young's assets or debts. SanLuisObispo.com's Melanie Cleveland says Ms. Young struggled to keep her 17-year-old business afloat. SanLuisObispo.com could not reach Ms. Young for comment. MERRILL CORP: Moody's Cuts CF Rating to B2 on Annual Fin'l Results ------------------------------------------------------------------ Moody's Investors Service downgraded Merrill Corporation's corporate family rating to B2 from B1, and also downgraded Merrill Communications LLC's existing senior secured 1st lien credit facility rating to B1 from Ba3 and senior secured 2nd lien term loan ratings to Caa1 from B3, respectively. This action is prompted by a review of Merrill's annual financial results as well as an evaluation of Merrill's business operating environment, and serves to reiterate Moody's perspective in light of the company's anticipated performance over the next roughly 2-year timeframe. The B2 CFR reflects the continued overarching exposure of the company's operations to general economic conditions which over the rating horizon are expected to be weak. Specifically, the B2 CFR reflects the company's continued exposure to the variability of financial markets activity which is experiencing a significant downturn, with the consequent likelihood that over the near term, revenues and margin will come under pressure. In addition, the B2 CFR also reflects the impact of the weakening real estate market as well as the general longer term trend of replacing printed materials with digital media, offset somewhat by an increasing exposure to the company's DataSite virtual data room service. The rating is supported by Moody's expectation that Merrill will continue to generate modest to break-even amounts of free cash flow, and by the significant proportion of revenues that are contracted or expected to recur. With no sizeable near-term debt maturity, modest to break-even free cash flow generation and access to an adequately sized un- drawn committed revolving credit facility, liquidity over the next 4 quarters is assessed as being adequate. However, the background of general economic weakness may further impact financial results and stress financial covenants, in particular, that notably govern access to third party liquidity. The outlook for all ratings is negative, reflecting the view that weak general economic conditions over the rating horizon will leave Merrill challenged to maintain its current risk profile, and which in turn may warrant a further downward revision to its long term ratings over the near-to medium term. The potential of financial covenant stress is an important component of this viewpoint. Downgrades: Issuer: Merrill Corporation -- Probability of Default Rating, Downgraded to B2 from B1 -- Corporate Family Rating, Downgraded to B2 from B1 Issuer: Merrill Communications LLC -- Senior Secured First Lien Credit Facility and Term Loan, Downgraded to B1 (LGD3, 35%) from Ba3 (LGD3, 35%) -- Senior Secured Second Lien Term Loan, Downgraded to Caa1 (LGD5, 86%) from B3 (LGD5, 85%) Outlook Actions: Issuer: Merrill Corporation -- Outlook, Changed To Negative From Stable Issuer: Merrill Communications LLC -- Outlook, Changed To Negative From Stable Headquartered in St Paul, Minnesota, Merrill Corporation provides a range of document and data management services, litigation support, branded communication programs, fulfillment, imaging and printing services organized along two main business segments, Legal and Financial Transaction Services and Marketing and Communication Solutions. The company recorded revenues of approximately $1 billion for the fiscal year ended Jan. 31, 2008. MESA AIR: Aloha Air Trustee to Auction Legal Claim in Suit ---------------------------------------------------------- The Trustee in the bankruptcy of Aloha Airlines, Inc. is filing a motion to bring about an auction of the legal claim in its lawsuit againt Mesa Air Group, Associated Press reports. Attorney James Wagner says an auction likely would be held in the coming week, the report says. As reported by the Troubled Company Reporter on Oct. 19, 2006, Aloha Airlines, and Aloha Airgroup, Inc., said in a suit filed in a state Circuit Court that Mesa Air Group, Inc. received confidential information as a potential investor in the Company and used it improperly to enter Hawaii's inter-island market with intent to drive the Company out of business. The Company alleged that Mesa used its proprietary information to unethically compete in the Hawaii market by offering air fares that failed to cover Mesa's costs. Mesa's chief executive officer, Jonathan Ornstein, had stated more than once that Mesa's Go! airline can "fly empty" for five years with the profits from Mesa's Mainland operations, indicating that Mesa is not covering its costs and is ultimately motivated to offer unrealistic fares with intent to drive out competition from the Hawaii market. The Company also pointed out that according to other legal documents, Mesa's chief financial officer, George Murnane III, sent an e-mail message, stating that Mesa's entry would make "no sense" if Aloha remained in the inter-island market: "We definitely don't want to wait for them to die; rather we should be the ones to give them the last push." The Company had sought damages and injunctive relief to stop Mesa from competing unfairly, and threatening the jobs of the Company's 3,500 employees in Hawaii. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. On April 29, the Bankruptcy Court converted the Debtors' cases into chapter 7 liquidation proceedings. The next day, the United States Trustee appointed Dane S. Field to serve as chapter 7 trustee for the cases. About Mesa Air Mesa Air -- http://www.mesa-air.com-- operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. Mesa has 5,000 employees overall. Freedom Airlines currently operates 34 50-seat ERJ-145 and 7 76- seat CRJ-900 aircraft for Delta Connection. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. MICHAELS STORES: May 3 Balance Sheet Upside-Down by $2.9 Billion ---------------------------------------------------------------- Michaels Stores Inc.'s balance sheet at May 3, 2008, showed total assets of $1.6 billion and total liabilities of $4.5 billion, resulting in a total stockholders' deficit of $2.9 billion. Michaels Stores disclosed that for the first quarter ended May 3, 2008, net loss improved $3 million, from a net loss of $23 million in fiscal 2007 to a net loss of $20 million in fiscal 2008, due to reduced interest expense, largely offset by deleveraging of SG&A expenses. The company's cash balance at the end of the first quarter was $42 million, a decrease of $3 million compared to last year's first quarter ending balance of $45 million. Average inventory per Michaels store at the end of the first quarter of fiscal 2008, inclusive of distribution centers, was down 9.5% to $808,000 compared to $893,000 for the same period last year. The decrease in average inventory was due to appropriate management of inventory in light of the challenging sales environment, benefits from our Hybrid distribution method, and a favorable comparison against the timing of last year's merchandise resets. Capital spending for the quarter totaled $21 million, with $11 million attributable to real estate activities, such as new, relocated, existing and remodeled stores and $7 million for merchandise and financial system enhancements. First quarter debt level totaled $3.979 billion, a decrease of $97 million from last year's first quarter ending balance of $4.076 billion. As of May 28, 2008, availability under the company's revolving credit facility was approximately $500 million. Additionally, during the quarter, the company made its $5.9 million Term Loan amortization payment. During the first quarter, the company opened 17 new and relocated three Michaels stores, and also closed two Aaron Brothers stores. About Michael's Stores Headquartered in Inving, Texas, Michaels Stores Inc. (NA: MIK) -- http://www.michaels.com/-- is a specialty retailer of arts, crafts, framing, floral, wall decor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator. As of Nov. 28, 2007, the company owns and operates 964 Michaels stores in 48 states and Canada, 168 Aaron Brothers stores, 11 Recollections stores, and four Star Wholesale operations. MID OCEAN: Moody's to Review Ratings for Possible Downgrade ----------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by MID OCEAN CBO 2000-1 LTD.: Class Description: Class A-1L Floating Rate Notes Prior Rating: B3, on review for possible downgrade Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: Class B-1 6.9889% Notes Prior Rating: Ca Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MILLERTON ABS: Moody's to Review Ratings for Possible Further Cut ----------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by Millerton ABS CDO, Ltd.: Class Description: US$36,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2039 Prior Rating: Aaa Current Rating: Aa3, on review for possible downgrade Class Description: US$24,750,000 Class B Senior Secured Floating Rate Notes Due 2039 Prior Rating: Aa2 Current Rating: A3, on review for possible downgrade Class Description: US$16,500,000 Class C Secured Floating Rate Deferrable Notes Due 2039 Prior Rating: Baa2 Current Rating: B2, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: 12,500 Preference Shares (US$12,500,000 Aggregate Liquidation Preference) Prior Rating: Ba3 Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MILLSTONE III: Moody's Cuts Ratings, Undertakes Review ------------------------------------------------------ Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by Millstone III CDO, Ltd.: Class Description: US$2,000,000,000 Class A-1A Floating Rate Term Notes Due 2046 Prior Rating: Aaa, on review for possible downgrade Current Rating: Ba3, on review for possible downgrade Class Description: US$71,500,000 Class A-1B Floating Rate Delayed Draw Notes Due 2046 Prior Rating: Aa2, on review for possible downgrade Current Rating: B2, on review for possible downgrade Class Description: US$70,000,000 Class A-2 Floating Rate Notes Due 2046 Prior Rating: Aa3, on review for possible downgrade Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: U.S$20,000,000 Class B Floating Rate Notes Due 2046 Prior Rating: A2, on review for possible downgrade Current Rating: Ca Class Description: US$16,000,000 Class C Deferrable Floating Rate Notes Due 2046 Prior Rating: Ba1, on review for possible downgrade Current Rating: C Class Description: US$7,450,000 Class D-1 Deferrable Floating Rate Notes Due 2046 Prior Rating: B1, on review for possible downgrade Current Rating: C Class Description: US$5,550,000 Class D-2 Deferrable Fixed Rate Notes Due 2046 Prior Rating: B1, on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structure finance securities. MIRANT CORP: Plan Bars AER-Alliance From Enforcing Rights --------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Texas denied the request of AER NY-GEN, LLC and Alliance Energy Renewables, LLC to enforce the rights of AER NY-Gen under the Confirmation Order and Plan of Reorganization of Mirant Corp. and its debtor-affiliates; and, sustained the Alliance Entities' Objection which was filed under seal. The Court stated that the Membership Interest Purchase and Sale Agreement does not require Mirant New York to pay the costs of the Barrett Litigation, including whatever amounts may be required to obtain public access to the Reservoir via the Easement or otherwise. Prior to the ruling, Alliance argued that Mirant New York agreed in the PSA to ensure that Mirant NY-Gen, LLC's assets were as free and clear of liens, claims, encumbrances and interests as they would have been had Alliance acquired the assets through a sale under Section 363 of the Bankruptcy Code. Alliance reasoned out that Mirant New York's obligation under these provisions ran to ensure that the easement satisfied the license-related requirements of the Federal Energy Regulatory Commission. However, the Court pointed out that Alliance misperceives the power given a bankruptcy court by Section 363, which is limited to "cleansing" what a debtor owns from the claims, encumbrances and charges of third parties that are quantified as claims under Section 101(5) or 102(2) of the Bankruptcy Code. Neither Section 363 nor any other provision of the Bankruptcy Code gives the Bankruptcy Court the power to enhance or improve whatever ownership interest was held by the debtor prepetition that became property of the estate, the Court maintained. The Court cannot convert rights of Woodstone Lakes Development, LLC, Woodstone Toronto Development, LLC, and Woodstone Crestwood Development, LLC, into a claim since they are not creditors, the Court asserted. Whatever Woodstone's assertions regarding its rights respecting the easement do not amount to a "charge against or interest in property to secure payment of a debt or performance of an obligation," the Court noted. Because Woodstone's claims against NY Gen in a Barrett Litigation do not secure a debt or an obligation to perform, Woodstone cannot be asserting a lien. Moreover, Woodstone's claims against Mirant NY-Gen in the Barrett Litigation assert no right to payment and do not seek any performance from Mirant NY-Gen, the Court stated. Thus, Woodstone is not asserting a "claim" against Mirant NY-Gen in the Barrett Litigation. In the Barrett Litigation, Woodstone asserted its ownership interest as against a claim by Mirant NY-Gen that would limit that ownership interest, the Court said. Moreover, Woodstone's claims do not attach to Mirant NY-Gen's property. Rather, the issue posed in the Barrett Litigation is the extent to which Mirant NY- Gen's rights encumber Woodstone's property. Clearly, Woodstone is not asserting an "encumbrance" against Mirant NY-Gen's property, the Court stated. Woodstone claims no interest in the Easement, the Court noted. Rather, the easement is a burden on Woodstone's fee, and Woodstone seeks in the Barrett Litigation to determine only the extent of that burden, the Court averred. It is counter- intuitive to suggest that authority to sell property free of interests includes the ability to sell an interest in real property free of the underlying fee holder's ownership rights, the Court concluded. About Mirant Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant's investments in the Caribbean include three integrated utilities and assets in Jamaica, Grand Bahama, Trinidad and Tobago and Curacao. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed US$20,574,000,000 in assets and US$11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. On March 7, 2007, the Court entered a final decree closing 46 Mirant cases. Mirant NY-Gen LLC, Mirant Bowline LLC, Mirant Lovett LLC, Mirant New York Inc., and Hudson Valley Gas Corporation, were not included. On Feb. 15, 2007, Mirant NY-Gen filed its Chapter 11 Plan of Reorganization and on Feb. 22 filed a Disclosure Statement explaining that Plan. The Court approved the adequacy of Mirant NY-Gen's Disclosure Statement on March 22, 2007, and confirmed the Amended Plan on May 7, 2007. Mirant NY-Gen emerged from chapter 11 on May 7, 2007. On July 13, 2007, Mirant Lovett filed its Chapter 11 Plan of Reorganization. The Court confirmed Mirant Lovett's Plan on Sept. 19, 2007. Mirant Lovett emerged from bankruptcy on Oct. 2, 2007. (Mirant Bankruptcy News, Issue No. 138; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 26, 2007, Moody's Investors Service upgraded the ratings of Mirant Corporation (Mirant: Corporate Family Rating to B1 from B2) and its subsidiaries Mirant Mid-Atlantic, LLC (MIRMA: pass through trust certificates to Ba1 from Ba2), Mirant North America, LLC (MNA: senior unsecured to B1 from B2 and senior secured to Ba2 from Ba3) and Mirant Americas Generation, LLC (MAG: senior unsecured to B3 from Caa1). Additionally, Mirant's Speculative Grade Liquidity (SGL) rating was revised to SGL-1 from SGL-2. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. MKP CBO: Moody's Cuts Notes Rating, Undertakes Review ----------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by MKP CBO II, Ltd.: Class Description: $61,250,000 Class A-2 Senior Secured Floating Rate Revolving Notes, Due 2036 Prior Rating: Aa3, on review for possible downgrade Current Rating: Baa3, on review for possible downgrade Additionally, Moody's downgraded the following notes: (For any ratings down to Ca) Class Description: $18,000,000 Class B Second Priority Floating Rate Term Notes, Due 2036 Prior Rating: Ca Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MKP CBO-V: Moody's Cuts Rating on Notes, to Undertake Review ------------------------------------------------------------ Moody's Investors Service downgraded and left on review for possible downgrade the ratings on these notes issued by MKP CBO V, LTD.: Class Description: US$486,500,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due January 2046-1 Prior Rating: Aaa Current Rating: B1, on review for possible downgrade Class Description: US$94,500,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due January 2046 Prior Rating: Aa3, on review for possible downgrade Current Rating: B3, on review for possible downgrade Class Description: US$56,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due January 2046 Prior Rating: A3, on review for possible downgrade Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: US$10,500,000 Class C Mezzanine Secured Deferrable Floating Rate Notes Due January 2046 Prior Rating: Baa3, on review for possible downgrade Current Rating: Ca Class Description: US$7,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due January 2046 Prior Rating: Ba1, on review for possible downgrade Current Rating: Ca Class Description: US$19,250,000 Class E Mezzanine Secured Deferrable Floating Rate Notes Due January 2046 Prior Rating: Ba3, on review for possible downgrade Current Rating: Ca Class Description: US$5,000,000 Class F Mezzanine Secured Deferrable Floating Rate Notes Due January 2046 Prior Rating: Caa2, on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MT. LAUREL: Case Summary & 11 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: Mt. Laurel Investments, LP 480 Bogert Trail Palm Springs, CA 92264 Bankruptcy Case No.: 08-16491 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- 211 Investments, LP 08-16493 Chapter 11 Petition Date: June 2, 2008 Court: Central District Of California (Riverside) Judge: Meredith A. Jury Debtors' Counsel: William G. Barrett, Esq. 19138 Walnut Dr. Rowland Heights, CA 91748 Tel: (626) 854-2112 Mt. Laurel Investments, LP's Financial Condition: Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million A. Mt. Laurel Investments, LP's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hanford Investments unsecured loan $2,050,000 6217 Franklin, Ste. 553 Hollywood, CA 90028 BFT unsecured loan $180,000 6360 La Punta Los Angeles, CA 90068 Hanford Dev unsecured loan $130,000 6217 Franklin, Ste. 553 Hollywood, CA 90028 HH Dev, Inc. unsecured loan $113,552 B. 211 Investments, LP's Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hanford Dev unsecured loan $503,307 6217 Franklin, Ste. 553 Hollywood, CA 90028 Tel: (213) 989-1036 H. Investments, LP unsecured loan $343,338 419 N. Larchmont, Ste. 91 Los Angeles, CA 90004 Tel: (323) 460-4015 BFT unsecured loan $137,718 6360 La Punta Los Angeles, CA 90068 Tel: (760) 325-1877 HH Development, Inc. unsecured loan $104,003 KS Investments unsecured loan $40,650 GD Furniture unsecured loan $37,025 Alberni, LLC unsecured loan $30,650 MUTEKI LTD: Moody's Assigns Ba2 Rating on $300MM Class A Notes -------------------------------------------------------------- Moody's Investors Service has assigned these rating to Notes issued by Muteki Ltd. -- Ba2 to the $300,000,000 Series 2008-1 Class A Principal At- Risk Variable Rate Notes. The Moody's rating of the Notes addresses the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and is based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The rating of the Notes is primarily derived from the conclusion of analyses performed by Moody's of the occurrence probabilities of earthquakes in Japan over the risk period covered, as well as the amounts lost should such events occur. In addition, the rating also considers the credit strength of the swap counterparty, the credit strength of the sponsor, and the effectiveness of the documentation in conveying the risks inherent in the structure. Royal Bank of Canada, London Branch will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. NEONODE INC: Names Per Bystedt as Interim CEO and President ----------------------------------------------------------- Per Bystedt, Chairman of the Board of Directors, has assumed the role as Chief Executive Officer and President of Neonode Inc. Mikael Hagman resigned as Chief Executive Officer and President of the company effective May 22, 2008. Mr. Hagman also resigned from the company's Board of Directors. Mr. Bystedt will act as Chief Executive Officer on an interim basis while a search is conducted for Mr. Hagman's permanent replacement. Mr. Hagman has agreed to assist the company in a non-executive capacity for such time as may be requested by the Board of Directors. Mr. Hagman has served as the company's Chief Executive Officer and President since March 2007. Mr. Bystedt served as the company's Chief Executive Officer and President in 2005 and 2006. "Neonode has been in the forefront of touch screen technology since 2002 when it launched its first optical touch screen mobile phone, the Neonode N1," Mr. Bystedt commented. "Continuous advancements have been made since that time. The Neonode N2, the company's latest, widely acclaimed mobile phone is the product of the enhanced zforce(TM) touch screen technology and neno™ user interface." "We believe Neonode has the vital knowledge, drive and superior technology needed to secure its success," Mr. Bystedt continued. "The company is now moving forward, aligned with all major stakeholders, focusing on additional sales of the Neonode N2 and the licensing and further development of its technology. We strongly believe that our technologies offer features and capabilities currently unavailable on any of the other existing touch screen technologies." Mr. Bystedt made his first investment in Neonode in 2004 and remains a major shareholder in the company. Recently Mr. Bystedt invested $450,000 in a private placement the company closed with other accredited investors on May 21, 2008. Mr. Bystedt has held leadership positions at a number of companies, including Razorfish, Inc. where he was the Chairman of the Board of Directors from 1999 through 2000. Since 1997, Mr. Bystedt has been the Chief Executive Officer of Spray AB, an internet investment company. From 1998 through the present, Mr. Bystedt has served as a member of the Board of Directors of Axel Johnson AB a diversified Swedish trading company. About Neonode Inc. Neonode Inc. (Nasdaq: NEON) -- http://www.neonode.com/-- is a Swedish mobile communication company that specializes in optical finger based touch screen technology. The company designs and develops mobile phones under its own brand and licenses its patented touch screen technologies, zForce(TM) and neno(TM) to third parties. Neonode USA's main office is located in New York City. Neonode Inc.'s consolidated balance sheet at March 31, 2008, showed $13,960,000 in total assets and $23,401,000 in total liabilities, resulting in a $9,441,000 total stockholders' deficit. Going Concern Doubt BDO Feinstein International AB, in Stockholm, Sweden, expressed substantial doubt about Neonode Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. the auditing firm pointed to the company's recurring losses, negative cash flows from operations, and working capital deficiency. NORTH SUNRISE: Case Summary & Eight Largest Unsecured Creditors --------------------------------------------------------------- Debtor: North Sunrise Resort Motel, LLC dba North Sunrise Motel 669 Mandalay Avenue Clearwater Beach, FL 33767 Bankruptcy Case No.: 08-07829 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Jopela, LLC 08-07831 Lars-Olof Larsson and 08-07833 Ann-Christine Larsson Chapter 11 Petition Date: May 30, 2008 Court: Middle District of Florida (Tampa) Judge: K. Rodney May Debtors' Counsel: Susan H. Sharp, Esq. (ssharp.ecf@srbp.com) Stichter, Riedel, Blain & Prosser 110 East Madison Street, Suite 200 Tampa, FL 33602 Tel: (813) 229-0144 Fax: (813) 229-1811 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtors' list of its eight largest unsecured creditors: Entity Claim Amount ------ ------------ Amerpol $183,000 428 South Miner Street Bensenville, IL 60106 Pinellas County Tax Collector $34,677 P.O. Box 10832 Clearwater, FL 33757 Merchant Cash & Capital $12,590 45 West 36th Street, 8th Floor Tallahasee, FL 32314 Florida Department of Revenue $3,115 Cynergydata $638 Middleton Pest Control $347 First Data $59 Small Business Administration Undetermined NORTHWEST AIRLINES: Joins Delta in Filing Merger Pact Prospectus ---------------------------------------------------------------- In a joint proxy statement or prospectus filed with the Securities and Exchange Commission dated May 20, 2008, and in line with the merger agreement between Delta Air Lines, Inc. and Northwest Airlines Corporation, both carriers' chief executive officers Richard A. Anderson and Douglas M. Steenland urged Delta stockholders to vote during a special meeting to approve: * the issuance of shares of Delta common stock to Northwest stockholders; and * the amended Delta 2007 Performance Compensation Plan, which governs the employee equity issuance, to increase the number of shares of Delta common stock issuable after giving effect to the Delta shares issued in connection with the merger. "While the closing of the merger is not conditioned upon approval of the amendment to the Delta 2007 Performance Compensation Plan, failure to approve this amendment could affect the ability of the combined company to achieve the expected synergies in the expected timeframe," the CEOs noted. Similarly, in order to complete the merger, an affirmative vote of holders of a majority of the outstanding shares of Northwest common stock must vote to adopt the Merger Agreement, said Messrs. Anderson and Steenland. The Executives clarified that approval of other matters at the Northwest annual stockholders meeting -- including election of its directors, ratification of the appointment of its 2008 independent auditor, and an amendment to the Northwest 2007 Stock Incentive Plan -- is not a condition to the Merger. The separate meetings to be held by Delta and Northwest to obtain approvals of the Merger Agreements are still to be announced, the filing disclosed. A full-text copy of Delta and Northwest's joint prospectus on Form S-4 is available at no charge at: http://ResearchArchives.com/t/s?2d2b About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NPS PHARMACEUTICALS: Stockholders Approve 1998 Plan Amendments -------------------------------------------------------------- The stockholders NPS Pharmaceuticals Inc. approved an amendment to the company's 1998 Stock Option Plan to extend the term of the plan by four years until May 31, 2012. The Board of Directors previously adopted such amendment, subject to stockholder approval. Summary of the Amended 1998 Plan * Purpose The 1998 Plan was adopted to provide a means to secure and retain the services of present and future employees, directors, and consultants of NPS and to provide incentives for employees, directors and consultants to exert maximum efforts for the success of NPS and thereby promote the company's long-term interests, including growth in the value of its equity and enhancement of long-term stockholder value. * Administration The 1998 Plan is administered by the company's Board of Directors. The Board has full power and authority to interpret and construe the provisions of the 1998 Plan and, subject to the provisions of the 1998 Plan, to determine the persons to whom awards will be granted, the type of awards to be granted, the dates on which awards will be granted, the type, amount, and form of consideration in connection with awards to be granted, and the other terms and conditions of each award granted under the Plan. The Board may delegate administration of the 1998 Plan to a committee of at least two members of the Board and has delegated such administration to the Compensation Committee. The Compensation Committee has the powers to administer the 1998 Plan subject to such limitations as the Board provides. In order to maximize the company's ability to recognize a business expense deduction under Section 162(m) of the Internal Revenue Code in connection with compensation recognized by "covered employees" (defined in Section 162(m) as the chief executive officer and other four most highly compensated officers), the regulations under Section 162(m) require that the directors who serve as members of the Committee responsible for administering the 1998 Plan with respect to these covered employees must be "outside directors." The company has determined that the Compensation Committee currently consists of outside, non-employee directors. * Eligibility Incentive Stock Options may be granted under the 1998 Plan to employees (including executives) of NPS and any affiliates. Employees (including executives), directors and consultants of NPS are all eligible to receive Non-Statutory Stock Options awards under the 1998 Plan. In order to ensure that NPS will be able to deduct for tax purposes the compensation attributable to the exercise of options granted under the 1998 Plan, the 1998 Plan limits the maximum number of shares of Common Stock that may be covered by stock options issued under the 1998 Plan to one individual for any consecutive three calendar years to 750,000. ISOs granted to an employee owning 10% or more of the total combined voting power of NPS or any affiliate of NPS at the time of grant must have an exercise price of at least 110% of the fair market value of the stock subject to the option on the date of grant, and the term of the option may not exceed five years from the date of grant. For ISOs granted under the 1998 Plan, the aggregate fair market value determined at the time of grant of the shares of Common Stock with respect to which such options are exercisable for the first time by an optionee during any calendar year (under all such plans of NPS and its affiliates), may not exceed $100,000. As of April 1, 2008, six executive officers, six non-employee directors, and approximately 32 employees are eligible to participate in the 1998 Plan. Shares Available for Awards On March 3, 1998, the Board adopted the 1998 Stock Option Plan, which was subsequently approved by the stockholders on May 20, 1998. There were a total of 1,000,000 shares initially authorized for issuance under the 1998 Plan. Pursuant to Board and stockholder approval, this amount was increased to 3,000,000 shares in June 2000, to 4,900,000 shares in May 2002, and to 6,500,000 in August 2003. As of April 1, 2008, there were 4,041,315 shares subject to outstanding options granted under the company's 1998 Plan. If there is any change in the Common Stock subject to the 1998 Plan or subject to any option granted under the 1998 Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise), the 1998 Plan and options outstanding thereunder may be appropriately adjusted as to the type of security and the maximum number of shares subject to such plan, the maximum number of shares which may be granted to an employee during any calendar year, and the type of security, number of shares and price per share of stock subject to such outstanding awards in order to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of the grant. Terms of the Options * Permissible Terms of Options under the 1998 Plan Individual option grants may be more restrictive as to any or all of the permissible terms. a) Exercise Price; Valuation. The exercise price of ISOs and NSOs under the 1998 Plan may not be less than the fair market value of the Common Stock subject to the option as of the date of the option grant, and in some cases with respect to ISOs, as described above under "Eligibility", may not be less than 110% of such fair market value. b) Payment The exercise price of options granted under the 1998 Option Plan may be paid either: -- in cash at the time the option is exercised; -- by delivery of other Common Stock of NPS or a combination of cash and already owned Common Stock; -- through surrender of shares of Common Stock available for exercise under the Option; -- pursuant to a deferred payment arrangement; -- pursuant to a broker-assisted exercise same-day sales program; -- in any other form of legal consideration acceptable to the Board; or -- any combination. c) No Repricing Except for certain adjustments due to corporate transactions as described herein, the exercise price for any stock option (ISOs and NSOs) under the 1998 Plan may not be decreased after the grant of such stock option, and a stock option may not be surrendered as consideration in exchange for the grant of a new stock option with a lower exercise price. d) Option Exercise Options granted under the 1998 Plan may become exercisable, or vest, in cumulative increments as determined by the Board. The Board has the power to accelerate the time during which an option may be exercised, and options granted may contain provisions for accelerated vesting upon specified events or conditions. In addition, options granted under the 1998 Plan may permit exercise prior to vesting, but in such event, the optionee may be required to enter into an early exercise stock purchase agreement that allows NPS to repurchase shares not yet vested at their exercise price should the optionee leave the employ of NPS before vesting. e) Term The maximum term of ISOs and NSOs under the 1998 Plan is ten years, except that in certain cases, as described above under "Eligibility", the maximum term of ISOs is five years. ISO status terminates three months after termination of the optionee's employment with NPS or association as director or affiliate of NPS, unless (a) such termination is due to such person's permanent and total disability (as defined in the Internal Revenue Code of 1986, as amended), in which case the option may, but need not, provide that it may be exercised at any time within one year of such termination; (b) the optionee dies while serving, or within a three-month period of having served NPS or any affiliate of NPS, in which case the option may, but need not, be exercisable (to the extent that the option was exercisable at the time of the optionee's death) within twelve months of the optionee's death by the person or persons to whom the rights to such option pass by will or by the laws of descent and distribution; or (c) the option by its terms specifically provide otherwise. Individual options by their terms may provide for exercise within a longer period of time following termination of employment or the consulting relationship. Effect of Certain Corporate Events The 1998 Plan provides that, in the event of a specified type of merger or other corporate reorganization, the time during which options outstanding under the 1998 Plan become vested shall be accelerated and all outstanding Options shall become immediately exercisable upon such event. The acceleration of an award in the event of an acquisition or similar corporate event may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of NPS. Duration, Amendment, and Termination The Board may suspend or terminate the 1998 Plan without stockholder approval or ratification at any time or from time to time. Unless sooner terminated, the plan shall terminate at midnight, May 31, 2012. No options may be granted under the plan while the plan is suspended or after it is terminated. The Board may also amend the 1998 Plan at any time or from time to time. However, the Board may not, without the approval of the company's stockholders: -- modify the plan to the extent such modification requires stockholder approval in order for the plan to satisfy or continue to satisfy Sections 422 or 162(m) of the Code, if applicable, Rule 16b-3, or Nasdaq or other securities exchange listing requirements; -- increase the number of shares issuable under the 1998 Plan; -- decrease the minimum stock option exercise price set forth in the 1998 Plan; or -- permit repricing of outstanding options. The Board may submit any other amendment to the 1998 Plan for stockholder approval, including, but not limited to, amendments intended to satisfy the requirements of Section 162(m) of the Code regarding the exclusion of performance-based compensation from the limitation on the deductibility of compensation paid to certain employees. Restrictions on Transfer Except as otherwise provided by the Board, awards under the 1998 Plan are not transferable other than as designated by the participant by will or by the laws of descent and distribution. In general, ISOs may not be transferred by the optionee otherwise than by will or by the laws of descent and distribution and, during the lifetime of the optionee, may be exercised only by the optionee. NSOs may not be transferred except when transfer to a family member or related trust or partnership is authorized by express provision of the option grant agreement, by will or by the laws of descent and distribution or pursuant to a domestic relations order satisfying the requirements of Rule 16b-3 and, during the lifetime of the optionee, may be exercised only by the optionee, a valid family member, or a transferee pursuant to a domestic relations order. About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing specialty therapeutics company for gastrointestinal and endocrine disorders with high unmet medical need. The company is currently advancing two late-stage programs. Teduglutide, a proprietary analog of GLP-2, is in Phase 3 clinical development for intestinal failure associated with short bowel syndrome as GATTEX(TM) and in preclinical development for gastrointestinal mucositis and necrotizing enterocolitis. * * * As reported Troubled Company Reporter on May 14, 2008, the Audit Committee of the Board of Directors of NPS Pharmaceuticals, Inc., concluded, after consultation with management of the company and a review of the pertinent facts, that the previously reported financial statements contained in the company's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2007, should not be relied upon due to an error in the computation of the cash sweep premium interest expense associated with the Secured 8.0% Notes due on March 30, 2017. The company detected this error during the course of the preparation and review of the company's Quarterly Report on Form 10-Q for the period ended March 31, 2008. As a result of this error, the company understated accrued interest expense and retained deficit and overstated income taxes payable on the Consolidated Balance Sheet as of Dec. 31, 2007. Also, as a result of the error, the company understated interest expense and overstated income tax expense on the Consolidated Statement of Operations for the year ended Dec. 31, 2007. The company is currently working on restating the financial statements that were included in its Form 10-K for the year ended Dec. 31, 2007, and will file an amendment on Form 10-K/A to include the restated financial statements and related disclosures once they are completed. NPS Pharmaceuticals Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $231.8 million in total assets and $419.8 million in total liabilities, resulting in a $188.0 million total shareholders' deficit. NRG ENERGY: Fitch Publishes Valuation of NRG/Calpine Asset Values ----------------------------------------------------------------- In light of NRG Energy Inc.'s unsolicited offer to purchase Calpine Corp., Fitch Ratings has published an estimation of the asset values of both NRG (rated 'B' with an Evolving Rating Outlook by Fitch) and Calpine. Fitch placed NRG on Rating Watch Evolving on May 22 due to the unresolved uncertainty of the impact on NRG's credit profile. CPN is not currently rated by Fitch. Fitch's analysis considers three potential scenarios: -- A high case using a stochastic model, which recognizes each asset's embedded option value; -- A low case using a deterministic or traditional dispatch model; and -- The midpoint between the high and low cases. Note that the valuations derived from Fitch's recovery analysis typically vary relative to market values. Realized valuations will likely differ from those presented here. Such analysis is a standard component of Fitch's rating methodology for all high-yield issuers. The ultimate ratings for a combined NRG/CPN issuer will be determined based on the details of the transaction, including expected cash flows, capital structure and covenants. To calculate these values, Fitch used an independent long-term forecast of regional power and fuel prices. Generating assets are valued on a dollar/kilowatt basis determined by the present value of future cash flows using a 10% discount rate. Fitch considers the dispatch model for each asset, projected market clearing prices in the relevant region and estimates of price volatility. Potential capacity revenues are not included. OWENS-ILLINOIS: Fitch Lifts IDR to BB on Better Operating Results ----------------------------------------------------------------- Fitch Ratings has upgraded Owens-Illinois, Inc.'s IDR to 'BB' following the company's improved operating results in 2007 and year-to-date 2008. Other ratings within the capital structure have been upgraded as: Owens-Illinois, Inc.: -- Issuer Default Rating to 'BB' from 'B+'; -- Senior unsecured notes to 'BB-' from 'B-/RR6'; Owens Brockway Glass Container Inc. -- IDR to 'BB' from 'B+'; -- Senior secured credit facilities to 'BBB-' from 'BB+/RR1'; -- Senior unsecured notes to 'BB+' from 'BB/RR2'; OI European Group, B.V. -- Senior secured credit facility to 'BBB-' from 'BB+/RR1'; -- Senior unsecured notes to 'BB+' from 'BB/RR2'. In addition, Fitch has withdrawn these ratings: Owens-Illinois, Inc. -- Preferred stock 'B-/RR6'. Recovery ratings on all debt within the capital structure have been withdrawn based on the upgrade of the IDR and in accordance with Fitch's recovery ratings methodology. The Rating Outlook is Stable. Approximately $3.4 billion of debt is affected by the ratings action. The upgrade of the IDR is based on substantially improved operating performance in fiscal year 2007 and year-to-date 2008. A primary factor in Fitch's ratings action for OI is the stronger cash flow generation the company has produced over the last several quarters. OI produced $625 million of operating cash flow in 2007, compared to $111 million in 2006. The positive cash flow trend has continued in early 2008 as OI generated $21 million of operating cash in the first quarter compared to negative $40 million in first quarter 2007. In addition, the company's pricing and cost initiatives continue to achieve better than expected results. Profitability has improved with EBITDA margin expansion of 310 basis points from FY2006 to FY2007. EBITDA margin expanded 420 basis points to 22.3% for the first quarter of 2008, compared to the same period prior year. The sustained positive trend in operating results has offset the lost revenues and earnings from the divested plastics business sooner than Fitch anticipated. Ratings within the capital structure have been upgraded one notch for each class except the unsecured notes at Owens-Illinois, Inc. which were upgraded three notches to 'BB-' to reflect the overall improvement in credit support for this class and its structural subordination to the unsecured notes at Owens-Brockway. The two- notch difference between the senior secured credit facility and the IDR is supported by the facility's substantial collateralization and about $2.5 billion of unsecured and structurally subordinated debt beneath this class. OI's ratings are supported by the company's improved cash flow, industry leading margins, leading market positions, global footprint, technology leadership, and long-term customer relationships with large, stable customers. Ratings concerns remain focused on higher energy and fuel costs, a substantial portion of sales being derived from mature markets with slow volume growth, and to a lesser extent asbestos liabilities. OI's pricing discipline continues to be successful. The company has lost some volume as a result of this strategy, but the losses have been minor thus far. The profitability gains have been favorable. Segment operating profit margin increased several hundred basis points in three out of four regions in first quarter 2008 compared to the same period prior year. Profitability slipped slightly in North America for the same period. OI has had the most success in achieving its pricing objectives in Europe. In North America, where OI is the dominant glass container maker, the company has achieved fewer price increases. This is due in large part to the long-term nature of contracts used in the market. Further margin expansion could be forthcoming as a result of the pricing initiatives. OI has reviewed or renegotiated only a portion of its business globally and has yet to renegotiate pricing on a majority of business in North America, where only 18% of business has been renewed under the new pricing initiatives. Cost inflation could absorb some of the pricing gains and challenge the company's rapid improvement in profitability. Fitch believes the greatest risk to the company's performance continues to be energy and raw material cost inflation. OI's biggest energy exposure comes in the form of natural gas. Fuel is another large cost component, as shipping glass containers is expensive. This cost is likely to move higher in coming months with the rise in oil prices. OI's energy risks are somewhat mitigated through the use of hedging, as well as the global nature of its operations. Nevertheless, management currently estimates cost inflation of between $300 million and $375 million in 2008. OI is aggressively managing costs to offset and get ahead of inflation. The company continues to pull costs out of its manufacturing processes. Productivity and operating performance variance at the company's more than 80 facilities have been substantially improved. Measurable gains have been made through six-sigma and lean initiatives. In 2007, the company achieved nearly 1% of productivity improvement in operations. Management expects to achieve cost savings equivalent to 2% of sales when the current productivity initiatives are completed. Cash flow credit metrics should continue to improve in 2008 as Fitch anticipates higher operating and free cash flow. Fitch expects OI could achieve free cash flow of $450 million or more in 2008, after cash asbestos payments which are likely to remain elevated and capital expenditures of $400 million or more. Further deleveraging is possible through modest additional debt reduction and earnings growth. OI's liquidity profile is solid with $483 million of cash and $726 million of available revolver as of Mar. 31, 2008. The $1.2 billion of liquidity at the end of first quarter 2008, has since been reduced as OI used revolver capacity to retire $250 million of 7.35% unsecured notes at parent Owens-Illinois, Inc. that matured in May. Still, liquidity along with internal cash generation will be more than sufficient to meet cash obligations and modest debt maturities in 2008 and 2009. Amortization of the company's bank debt has been prepaid through December 2010 and no quarterly payments will be required until 2011. Fitch expects OI's total leverage ratio could decline to about 2.1 times by FYE 2008 compared to 2.5x at FYE 2007. PATRICIA GILROY: Elderly Care Biz Foreclosed After Case Dismissal ----------------------------------------------------------------- Traverse (Mich.) Record-Eagle reports that French Manor Inn on Seventh Street was foreclosed last week after Irwin Union Bank rejected the business' Chapter 11 bankruptcy plan. Record-Eagle's Melissa Domsic says owner Patricia Gilroy hopes an interested buyer will purchase the facility and prevent it from closing. The report says local elderly assisted-living home residents may face eviction as a result of the foreclosure. Record-Eagle says Norm Droste, Irwin Union Bank's lawyer, notified residents last week that the facility would be closed. Record- Eagle relates Mr. Droste served eviction notices last June, but they were dismissed because of the automatic stay in effect as a result of the bankruptcy filing. Union Bank sought conversion of the chapter 11 case to a case under chapter 7 in April 2008. That request was denied. The U.S. Bankruptcy Court for the Western District of Michigan in Grand Rapids, however, dismissed the case on May 5, 2008. Ms. Gilroy filed a motion to sell estate assets. That request was denied the same day the case was dismissed. According to Record-Eagle, 13th Circuit Judge Philip E. Rodgers said the business is no longer in bankruptcy, but its debt is approaching $2,000,000. Record-Eagle relates that Ms. Gilroy has said a potential purchaser is interested in operating the facility. Ms. Gilroy, however, won't disclose the potential buyer's identity, the report says. Mr. Droste said he was "not aware of any qualified buyers," the report adds. Record-Eagle relates that Mr. Droste said Judge Rodgers directed Ms. Gilroy to discontinue operating the facility and stop collecting rents from people and move them peacefully to new facilities. Mr. Droste said there was no eviction notice. The report says Ms. Gilroy's attorney, Ann Stringer-Velez, said she plans to file suit against Irwin Union Bank and Mr. Droste for serving the notices. Ms. Stringer-Velez called the action underhanded and unnecessary because of a possible sale, the report says. The report adds that Ms. Gilroy recently agreed to a voluntary foreclosure of a continued care home across the street that housed four residents. The report says Ms. Gilroy closed the place in April and helped residents find a new place to live. Particia A. Gilroy filed for Chapter 11 bankruptcy protection on June 30, 2006, before the U.S. Bankruptcy Court for the Western District of Michigan (Case No. 06-03035). Wallace H. Tuttle, Esq., at Wallace H. Tuttle, P.C., in Traverse City, Michigan, represented the Debtor. Upon filing for bankruptcy, Ms. Gilroy disclosed between $1,000,0001 to $10,000,000 in estimated assets and debts. PREMIERE ACQUISITIONS: Case Summary & 40 Largest Unsec. Creditors ----------------------------------------------------------------- Lead Debtor: Premiere Acquisitions, LLC 4650 N. Hwy. 89, Ste. D2 & D3 Flagstaff, AZ 86004 Bankruptcy Case No.: 08-06447 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Luxury Lofts, LLC 08-06454 Type of Business: The Debtors are real estate developers. Chapter 11 Petition Date: June 2, 2008 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum PCT Debtors' Counsel: Nancy J. March, Esq. Email: nmarch@dmyl.com Deconcini McDonald Yetwin & Lacy, P.C. 2525 E. Broadway Blvd., Ste. 200 Tucson, AZ 85716 Tel: (520) 322-5000 Fax: (520) 322-5585 http://www.dmyl.com -- and -- Shelton L. Freeman, Esq. Email: tfreeman@dmylphx.com Deconcini McDonald Yetwin & Lacy, P.C. 7310 N. 16th St. Ste. 330 Phoenix, AZ 85020 Tel: (602) 282-0500 Fax: (602) 282-0520 http://www.dmyl.com Premiere Acquisitions, LLC's Financial Condition: Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A. Premiere Acquisitions, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ L.P.'s Excavating, Inc. services $2,845,207 606 E. Frank Way Williams, AZ 86046 A. Minor Contracting, Inc. services $1,825,042 1071 Commerce Dr., Ste. A Prescott, AZ 86305 Arizona Public Service Co. services $961,162 Attn: Sylvia A. Sedillo P.O. Box 53920, STA 9996 Phoenix, AZ 85072-3920 RTR Paving & Resurfacing, services $339,665 LLC P.O. Box 30536 Flagstaff, AZ 86003-0536 Brown Tank & Steel services $259,154 P.O. Box 20781 Phoenix, AZ 85036 Martin & Martin Civil services $211,366 Engineers & Surveyors Roadsafe Traffic Systems services $120,604 Landmark Engineering & services $90,862 Surveying Paul Vedo services $77,451 The Construction Group services $56,545 Block-Lite Co., Inc. services $30,219 Landscape Connection T.L.C., services $27,315 Inc. Flagstaff Landscape Products, services $18,723 Inc. Sunstate Equipment Co. services $17,932 CNH Capital America, LLC services $15,000 Border Construction services $12,366 Specialties Rockstar Architects services $9,791 Intellicommunities services $7,160 William P. Ring, P.C. services $6,792 KKE Architects, Inc. services $6,114 B. Luxury Lofts, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ L.P.'s Excavating, Inc. services $2,845,207 606 E. Frank Way Williams, AZ 86046 A. Minor Contracting, Inc. services $1,825,042 1071 Commerce Dr., Ste. A Prescott, AZ 86305 Arizona Public Service Co. services $961,162 Attn: Sylvia A. Sedillo P.O. Box 53920, STA 9996 Phoenix, AZ 85072-3920 RTR Paving & Resurfacing, services $339,665 LLC P.O. Box 30536 Flagstaff, AZ 86003-0536 Brown Tank & Steel services $259,154 P.O. Box 20781 Phoenix, AZ 85036 Martin & Martin Civil services $211,366 Engineers & Surveyors Roadsafe Traffic Systems services $120,604 Landmark Engineering & services $90,862 Surveying Paul Vedo services $77,451 The Construction Group services $56,545 Block-Lite Co., Inc. services $30,219 Landscape Connection T.L.C., services $27,315 Inc. Flagstaff Landscape Products, services $18,723 Inc. Sunstate Equipment Co. services $17,932 CNH Capital America, LLC services $15,000 Border Construction services $12,366 Specialties Rockstar Architects services $9,791 Intellicommunities services $7,160 William P. Ring, P.C. services $6,792 KKE Architects, Inc. services $6,114 PREMIER PROPERTIES: DeBartolo, Dominion Eye Metropolis Mall Asset ----------------------------------------------------------------- IndyStar.com says DeBartolo Development is laying the groundwork to buy the Metropolis mall in Plainfield, Indiana, following the financial collapse of Premier Properties. IndyStar.com reports that Premier and founder Christopher P. White, developers of Metropolis and other real estate along Main Street in Plainfield, are facing various lawsuits and legal proceedings in state and federal courts. IndyStar.com says banks and other lenders have foreclosed on the Debtor's prime projects in several states, including Metropolis in Hendricks County. IndyStar.com relates that Dominion Capital Management, the lender that foreclosed on Mr. White's ownership rights in the Plainfield mall, has taken over the operation and hired CB Richard Ellis real estate for daily management of the mall. DeBartolo has a letter of intent to acquire Metropolis and other Premier real estate around the country, IndyStar.com says, citing Dominion's local attorney, Henry A. Efroymson, Esq., at Ice Miller. According to IndyStar.com, Mr. Efroymson said, "Dominion is very excited about working with DeBartolo on this project because it is a company with the financial capability to put together these deals." IndyStar.com said Dominion and DeBartolo are conducting due diligence to aid in the operations and a refinancing or sale. IndyStar.com reports that Scott Gray at Sitehawk said the interest among new retailers, restaurants and banks in finding space in Plainfield remains strong. Sitehawk was hired to market 85 acres of undeveloped Premier land across the street from the mall and to manage a 50,000-square-foot phase of the Plainfield Commons shopping center nearby, IndyStar.com says. Indianapolis, Indiana-based Premier Properties USA, Inc. -- http://www.ppusa.com/-- develops shopping centers and offices. The Debtor filed for chapter 11 bankruptcy protection on April 23, 2008, before the U.S. Bankruptcy Court for the Southern District of Indiana (Case No. 08-04607). William J. Tucker, Esq., represents the Debtor. When it filed for bankruptcy, the Debtor reported estimated assets and debts between $1 million and $10 million. PRICHARD HOUSING: Moody's Cuts Rating on $1.19M Bonds to Ba3 ------------------------------------------------------------ Moody's Investors Service downgraded the rating on $1,190,000 of outstanding Prichard Housing Corporation, First Mortgage Housing Revenue Bonds (Ridge Manor - Section 8 Assisted Elderly Project) Series 1998 to Ba3 from Ba1. The outlook remains stable. The downgrade is based on low debt service coverage levels, resulting from increasing property expenses and a lack of rental rate increases. Ridge Manor is a 120 - unit housing property located in Prichard, Alabama. The property contains 102 one-bedroom apartments and 18 two-bedroom apartments, and is intended for low-income elderly tenants. Rental rate increases at the property are limited by the annual adjustment factor and subject to approval by HUD. Strengths * Fully funded debt service reserve fund * Trustee-held funds with ample reserves, including a Surplus Fund, Replacement Reserve Fund and Refund Savings Fund. The Surplus Fund may be used to cure any deficiency in the Bond Fund. The Replacement Reserve and Refund Savings Funds are intended for property maintenance. * 97.5% occupancy rate as of February March, 2008 and a 50-person waiting list * Relatively short time until bond maturity in 9/1/2011. Bond maturity coincides with the expiration of the HAP Contract. * Rental rates are below Fair Market Rent, making future increases in rental rates possible. Property management has applied for HAP Contract Rent increases, and intends to do so again in the near future Challenges * Debt service coverage levels have declined. Audited financial statements show debt service coverage levels have declined from 0.76x (FY2005) to 0.53x (FY2006) and 0.57x (FY2007). These debt service coverage levels are in line with other Moody's-rated Section 8 properties at this rating level. * Increased property expenses. Property expenses have increased over the past four fiscal years. Even as management has taken steps to reduce controllable expenses, non-controllable operating expenses have continued to increase (for example, insurance premiums). * Rental revenue has been stagnant over the past three fiscal years. Property management has applied for HAP Contract Rent increases to remedy this challenge. Outlook The outlook on the bonds remains stable due to ample fund balances and management efforts to revive the property's financial solvency. The sizable Refund Savings and Replacement Reserve Fund balances are beginning to be used to pay extraordinary and other maintenance expenses, which may improve cash flow available for debt service. Key Statistics Current Occupancy: 98% Bond Maturity: Sept. 1, 2011 HAP Expiration: Sept. 1, 2011 Debt Service Coverage (FY2007): 0.57x Average Rent as % of FMR: 81% QUEBECOR WORLD: Settles Blue Heron's Prepetition Claim ------------------------------------------------------ Blue Heron Paper Company asked the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay and let it recoup certain amounts owed to them by Quebecor World Inc. and its debtor-affiliates. As of the bankruptcy filing, the Debtors owed Blue Heron $1,459,370 on account of paper products shipped prepetition. As a result of good faith negotiations, the parties entered into stipulation agreeing: (a) to set off rebates of $795,786 owed by Blue Heron to the Debtors prepetition against the obligations of the Debtors in the aggregate amount of $1,459,370 owing to Blue Heron prepetition; and (b) that in the final settlement of all amounts owing to Blue Heron by the Debtors, Blue Heron is granted an allowed Section 503(b)(9) administrative claim totaling $663,584, which claim will be paid pursuant to any plan of reorganization. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter-Europe on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Court Approves Lease Agreement with Headlands ------------------------------------------------------------- Quebecor World Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into a lease agreement with Headlands Realty Corp. As reported in the Troubled Company Reporter on May 29, 2008 The Debtors, through the operations of Debtor Quebecor World Logistics Inc., provide freight and logistics services to their customers. QW Logistics is currently in the process of relocating a consolidation facility in New Jersey. Michael J. Canning., Esq., at Arnold & Porter LLP, in New York, told the U.S. Bankruptcy Court for the Southern District of New York that as response to the increased demand for co-mailing services, the Debtors must be able to provide state-of-the-art co-mailing services to their customers. The Debtors are presently in the process of acquiring six state-of-the-art 30-Pocket SF505 Co-Mailer Systems. The Debtors intend to locate certain of the Co-Mailers to the Northeast United States. The Debtors currently do not own or lease any facilities in that area to support the installation of multiple Co-Mailers. Moreover, the Debtors have determined that they can realize certain efficiencies and cost savings, and consolidate and streamline their operations by locating certain of the Co-Mailers at the same facility as QW Logistics' Northeastern United States consolidation facility, Mr. Canning related. Accordingly, the Debtors are in need of additional real property that can serve as both a consolidation facility for QW Logistics and for the Co-Mailers. Mr. Canning related that the Debtors have determined that the facility best suited for the needs of both QW Logistics and the Debtors' co-mailing business is the site owned by Headlands Realty Corp., located at 13 Jensen Drive, in Franklin Township, Somerset County, New Jersey. Mr. Canning said that Quebecor World (USA) Inc. agreed to execute to Headlands a guaranty of lease dated April 8, 2008, pursuant to which QW USA agreed to unconditionally and guarantee the prompt payment of all rents and sums payable by QW Logistics and the performance by QW Logistics of each of the terms of the Lease. The initial term of the Lease commences on April 8, 2008, and ends on Oct. 31, 2020. QW Logistics will have the right to renew the Lease for four additional five-year terms at rates yet to be determined. The pre-based rent commencement date period is from April 8, 2008 to Sept. 30, 2008. QW Logistics' estimated monthly rental payment under the Lease during the initial rental period from May 1, 2009, to Sept. 30, 2013, will be $138,354. In addition, QW Logistics is required to make an advance payment of rent of $138,354 in connection with QW Logistics' entry into the Lease. QW Logistics is required to provide Headlands with a security deposit of $1,700,000 through a letter of credit, which will be reduced to $141,666 on each anniversary of the base rent commencement date for each year of the Lease's term. QW Logistics will have the right to construct or install certain tenant improvements. Headland will pay QW Logistics a tenant improvement allowance of $1,143,249. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter-Europe on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Settles Dispute with Silvex Designs --------------------------------------------------- Judge James M. Peck approved a stipulation resolving an action commenced by Silvex Designs Inc. before the U.S. District Court for the Southern District of New York against Quebecor World Inc., its debtor-affiliates and other parties for the loss of 1,000 pounds of jewelry valued at $332,872 upon delivery of the consignment to Silvex in Arizona. The Troubled Company Reporter said on April 1, 2008, that Silvex asked the Court to lift the automatic stay to pursue the District court action. The Debtors maintain a policy of insurance with Navigators Ins. Co., through Navigators Management (UK) Ltd., which was in effect at the time of the transaction giving rise to the District Court Action. To resolve their disputes, the parties entered into a stipulation providing that: (a) the automatic stay is modified for the sole purpose of determining the liability or damages of the Debtors to Silvex relating to the District Court Action, and only provided that Navigator continues to pay for any and all costs and liabilities in relation to Debtors' defense in the Action; (b) Silvex waives any claims it may have against the Debtors, including any claims to distribution in the Debtors' bankruptcy cases on account of damages or other recovery in connection with the Action, and the sole right and remedy of Silvex regarding the enforcement of any claims asserted in the Action will be limited to the proceeds available under the Insurance Policy; (c) Silvex waives any claims against the Debtors, other than any claim it may have against the insurance proceeds. Further, Silvex will not engage in any effort to collect any amount from entities indemnified by the Debtors; (d) Silvex further agrees that any settlement of the Action will include a general release of all claims against the Debtors, any Indemnified Parties, and the Debtors' insurers; (e) the automatic stay will be reinstated if Navigator notifies the Debtors' counsel that it will not pay for the costs of defending the Debtors in the Action or for any liabilities in relation to the Action. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter-Europe on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Modified Severance Program Approved by Court ------------------------------------------------------------ Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York authorized Quebecor World Inc. and its debtor-affiliates to implement their modified severance program. The Troubled Company Reporter related on May 29, 2008, that the Debtors sought the Court's permission to modify their severance program to: (a) a limited number of employees whom the Debtors have determined to be critical to an effective shutdown of the Northeast Graphics facility; (b) make certain critical employees, who are not eligible to receive 26 weeks of severance, be eligible for 26 weeks of severance; and (c) make certain critical employees already entitled to 26 weeks severance be eligible for an additional severance enhancement ranging from $2,000 or $10,000 per employee. When it entered the order approving the execution of the modified severance program, the Court, however, set these limitations: (a) The Debtors will provide advance notice of the specifics of the program for any facility other than the Northeast Graphics facility, including the number of employees to be included in the program and the aggregate costs potentially involved, at least 10 days prior to the announcement of the program to effected employees, to the Official Committee of Unsecured Creditors, the Ad Hoc Group of Noteholders, and the Administrative Agent for the Debtors' Prepetition Lenders, and the Office of the United States Trustee. (b) The Debtors will proceed with the implementation of the Modified Severance Program relative to the closure of other facilities if none of the Consent Parties notifies the Debtors of an objection to the proposed action after receipt of any additional information reasonably requested by any of the Consent Parties to consider the proposed implementation of the Modified Severance Program and the expiration of 10 days; or an earlier date that the Consent Parties provide the Debtor with written confirmation of their approval. Any payment to any employee under the Modified Severance Program, or prior Severance Programs, approved by the Court will be final and not subject to disgorgement. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter-Europe on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. RESIDENTIAL ASSET: Fitch Junks Ratings on Paydown Performance ------------------------------------------------------------- Fitch Ratings has downgraded one Residential Asset Mortgage Products and one Residential Asset Securities Corporation Net Interest Margin notes listed below: RAMP NIM 2005-NM5 Trust: -- $4.95 million class SB to 'C/DR6' from 'BBB-'. Underlying transaction: Residential Asset Mortgage Products 2005-RS6 RASC NIM 2005-NT2 Trust: - -$636,253 class SB1 to 'C/DR6' from 'BBB'. Underlying transaction: Residential Asset Securities Corporation 2005-KS2 The rating actions reflect actual pay-down performance of the NIM securities to date compared to initial projections, as well as, changes that Fitch previously made to its subprime loss forecasting assumptions for the underlying transactions. RESIDENTIAL REINSURANCE: S&P Puts Low-B Ratings on Three Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned senior secured debt ratings to three classes of variable-rate notes issued by Residential Reinsurance 2008 Ltd.: -- $125 million Class 1 Series 2008-1 variable-rate notes due June 6, 2011 rated 'BB'. -- $125 million Class 2 Series 2008-1 variable-rate notes due June 6, 2011 rated 'B'. -- $100 million Class 4 Series 2008-1 variable-rate notes due June 6, 2011 rated 'BB+'. The notes are the initial offerings under Res Re 2008's variable- rate note program. Res Re 2008 is a Cayman Islands exempted company licensed as a Class B insurer in the Cayman Islands. United Services Automobile Assoc. (USAA; AAA/Stable/--), a reciprocal interinsurance exchange domiciled in Texas and the ceding insurer, and certain of its affiliated companies have entered into three reinsurance agreements with Res Re 2008. The purpose for issuing the notes and entering into the reinsurance agreements is to provide USAA with a source of indemnified multi- year reinsurance capacity. "The ratings on the notes are based on the probability of attachment for each class as modeled by AIR Worldwide Corp.," said Standard & Poor's credit analyst Gary Martucci. The annualized probability of attachment, based on the sensitivity analysis, for the Class 1 notes is 2.15%; Class 2 notes, 5.08%; and Class 4 notes, 0.64%. The Class 1 and 2 notes are exposed to first and subsequent U.S. hurricanes and earthquakes, including fire following, on a per occurrence basis. The Class 1 notes will cover losses between the initial trigger amount of $2.00 billion and the initial exhaustion amount of $2.90 billion, and the Class 2 notes will cover losses between $1.25 billion and $2.00 billion. The Class 4 notes are exposed not only to the same natural perils as the Class 1 and 2 notes but also to severe thunderstorm and winter storm in the contiguous 48 states and the District of Columbia and to wildfire in California, though on an annual aggregate basis. The initial coverage portion of the Class 4 notes is within a layer running from $1.56 million to $1.95 billion and covers losses for which there is currently no existing insurance coverage at USAA. For an event to affect the Class 4 notes, USAA must incur a minimum of $35 million of paid losses. This is the first time severe thunderstorm, winter storm, and wildfire have been included in a Res Re issuance. From the perspective of contribution of losses to the layer by peril, the modeled results indicate that hurricane at 87% is by far the greatest risk, followed by severe thunderstorm at 8%. Wildfire is expected to contribute 1% of losses to the layer, and although wildfire can trigger a loss to the Class 4 noteholders, without losses resulting from other perils, by itself it is not expected to cause a loss of principal. The reinsurance agreement, which is effectively supported by the proceeds from the issuance of the notes, will provide USAA with a source of indemnified catastrophe coverage for hurricanes in 27 states and the District of Columbia and for earthquakes in all 50 states and the District of Columbia over a three-year risk period. RIDGEWAY COURT: Moody's Lowers Ratings to Ba3 on Three Notes ------------------------------------------------------------ Moody's Investors Service has downgraded the ratings of eight classes of notes issued by Ridgeway Court Funding II, Ltd. and left on review for possible further downgrade ratings of three of these classes of notes as: Class Description: Up to $840,000,000 Class A1A Floating Rate Notes Due June 2047 -- Prior Rating: Aa1, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $660,000,000 Class A1B Floating Rate Notes Due June 2047 -- Prior Rating: Aa1, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $450,000,000 Class A1C Floating Rate Notes Due June 2047 -- Prior Rating: Aa1, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $300,000,000 Class A1X Floating Rate Notes Due June 2047 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Ca Class Description: $225,000,000 Class A2 Floating Rate Notes Due June 2047 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $225,000,000 Class A3 Floating Rate Notes Due June 2047 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Class Description: $35,000,000 Class B Deferrable Floating Rate Notes Due June 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: $33,000,000 Class C Deferrable Floating Rate Notes Due June 2047 -- Prior Rating: Ca -- Current Rating: C Ridgeway Court Funding II, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. On Jan. 10, 2008 an event of default caused by the Principal Coverage Ratio relating to the Class A Notes falling below 97.5% pursuant Section 5.1(d) of the Indenture dated June 27, 2007 was reported by the trustee. That event of default is continuing. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the ratings assigned to the Class A1A Notes, Class A1B Notes, and Class A1C Notes remain on review for possible further action. ROCKBOUND CDO: Moody's Trims Ratings to C on Four Note Classes -------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of five classes of notes issued by Rockbound CDO I, Ltd., and left on review for possible further downgrade rating of one of these classes of notes as: Class Description: Up to $205,000,000 Class A1S Variable Funding Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $115,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $103,000,000 Class A2 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: C Class Description: $42,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: $23,000,000 Class B Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Rockbound CDO I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On Nov. 30, 2007 the transaction experienced an event of default caused by a failure of the Senior Credit Test to be satisfied as required under Section 5.1(h) of the Indenture dated July 26, 2007. That event of default is continuing. Also, Moody's has received notice from the Trustee that it has been directed by the Holders of a Majority of the Controlling Class to declare the principal of all of the Notes, together with all accrued and unpaid interest and Commitment Fees (including Defaulted Interest and Interest on such Defaulted Interest) to be immediately due and payable. The rating actions taken today reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. Because of this uncertainty, the rating of Class A1S Notes issued by Rockbound CDO I, Ltd is on review for possible further action. RYAN PROPERTIES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Ryan Properties, LLC 2800 Dickerson Road Reno, NV 89503 Bankruptcy Case No.: 08-50814 Description: Michael W. Peel, chief executive manager and president, filed the petition on the Debtor's behalf. Chapter 11 Petition Date: May 26, 2008 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Peter T. Combs, Esq. (petertoft@aol.com) 326 West Liberty Street Reno, NV 89501 Tel: (775) 322-8678 Total Assets: $1,910,006 Total Debts: $1,317,938 A copy of the Debtor's petition and a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/nv08-50814-pet.pdf SARAH'S TENT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Sarah's Tent LLC 3565 NE 207 St Ste A1 Aventura, FL 33180 Bankruptcy Case No.: 08-17075 Type of Business: The debtor operates a kosher grocery store. Chapter 11 Petition Date: May 29, 2008 Court: Southern District of Florida (Miami) Judge: Hon. A. Jay Cristol Debtor's Counsel: Stan L Riskin, Esq. (slriskin@aol.com) 8000 Peters Rd #A-200 Plantation, FL 33324 Telephone (954) 473-2200 Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10 Million A copy of the debtor's petition and a list of its 20 largest creditors is available for free at: http://bankrupt.com/misc/flsb08-17075.pdf SEARS HOLDINGS: Bad Operations Results Cue S&P's Negative Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Hoffman Estates, Illinois-based Sears Holdings Corp. and related entities to negative from stable. S&P also affirmed the corporate credit and bank loan ratings on Sears and the senior unsecured ratings on Sears Roebuck Acceptance Corp., Sears Canada Inc., and Sears DC Corp. "The outlook revision is based on Sears' disappointing operating results for the quarter ended May 3, 2008," said Standard & Poor's credit analyst Ana Lai, "with steep declines in sales and weak profitability." She also said that Standard & Poor's is concerned about management's ability to revive sales and improve profitability in a challenging economic and housing environment and an intensely competitive landscape. SHARPS CDO: Fitch Slashes Ratings on Two Notes to CCC from A ------------------------------------------------------------ Fitch Ratings has downgraded two classes of notes issued by SHARPS CDO I, Ltd/Corp. and wrapped by CIFG as: -- $255,162,729 class A-1 to 'CCC' from 'A-'; -- $9,450,471 class A-2 to 'CCC' from 'A-'. The rating action follows Fitch's downgrade of CIFG's Insurer Financial Strength rating to 'CCC' from 'A-'. Fitch also placed the IFS on Rating Watch Evolving. The ratings of the class A-1 and A-2 classes were previously based upon the rating of CIFG Assurance North America, the credit enhancement provider. The current ratings on the class A-1 and A- 2 notes now reflect the unenhanced credit quality of these notes giving no benefit to the financial guaranty policy provided by CIFG. As per its press release, CIFG is actively seeking to remediate its SF CDO exposures to improve the company's capital position, hence the Rating Watch Evolving. Therefore, Fitch's ratings on the class A-1 and class A-2 notes no longer reflect any benefit for the financial guaranty policy provided by CIFG. SHARPS I is a static cash flow collateralized debt obligation that closed on Dec. 15, 2006 and has no trading flexibility and no asset manager. Deutsche Bank Trust Company Americas is the trustee for this transaction. SHARPS I has a portfolio comprised primarily of Alternative-A residential mortgage-backed securities (89.95%) and prime RMBS (10.05%). Alt-A RMBS of the 2005 and 2006 vintages represent approximately 29.44% and 59.45% of the portfolio. On May 2, 2008, Fitch downgraded the class B, C, D and E notes to reflect collateral deterioration in the portfolio. Fitch's unenhanced rating on the class A-1 and A-2 notes reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS, Alt-A RMBS, and structured finance CDOs with underlying exposure to subprime RMBS. Since the transaction closed, approximately 63% of the portfolio has been downgraded net of upgrades, and another 40.9% of the portfolio is currently on Rating Watch Negative. Approximately 52.8% of the portfolio is rated below investment grade with 29.1% rated 'CCC' and lower. The negative credit migration is primarily attributable to credit deterioration in subprime RMBS bonds from the 2005, 2006 and 2007 vintages, coupled with significant downgrades in SF CDOs originated between 2005 and 2007. The ratings on classes A-1 and A-2 (class A notes) and the class B notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction governing documents, as well as the aggregate outstanding amount of principal by the legal final maturity date. The ratings of the class C, D and E notes address the likelihood that investors will receive ultimate interest payments, as per the transaction governing documents, as well as the aggregate outstanding amount of principal by the legal maturity date. SLAVIC KOTSYUBCHUK: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Slavic S. Kotsyubchuk Tanya F Kotsyubchuk P.O. Box 2281 Clackamas, Oregon 97015 Bankruptcy Case No.: 08-32366 Chapter 11 Petition Date: May 21, 2008 Court: District of Oregon Judge: Randall L. Dunn Debtors' Counsel: Charles E. Harrell, Esq. (harrell@gckattorneys.com) 700 Deborah Road #250 Newberg, Oregon 97132 Tel: (503) 538-8318 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/oreb08-32366.pdf SOLAFIDE INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Solafide, Inc. aka dba Union Foods Newscorp aka dba Union Foods aka dba Union Electronics 14524 Myford Road Irvine, California 92606 Tel: (714) 384-0223 Bankruptcy Case No.: 08-12484 Type of Business: The Debtor makes pasta and processed fruits. Chapter 11 Petition Date: May 5, 2008 Court: Central District of California (Santa Ana) Judge: Erithe A. Smith Debtors' Counsel: Douglas G. Boven, Esq. (dboven@reedsmith.com) 2 Embarcadero Center, Suite 2000 San Francisco, California 94111 Tel: (415) 543-8700 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A copy of the Debtor's petition is available for free at: http://bankrupt.com/misc/califcb08-12484.pdf SOURCE MEDIA: Moody's Puts All Ratings on Review for Possible Cuts ------------------------------------------------------------------ Moody's Investors Service placed all the credit ratings of Source Media Inc. and Accuity LLC on review for possible downgrade. This rating action reflects Moody's expectations that 2008 revenue and EBITDA are likely to be significantly lower than previous expectations, primarily as a result of a decline in advertising revenues in the companies' mortgage and technology markets. Additionally, there is concern regarding the companies' ability to meet existing financial covenants under the senior secured credit facility for the remainder of 2008 and all of 2009 in light of management's revision of its forecasts combined with scheduled adjustments in covenant thresholds. An amendment, if approved, would likely increase the pricing on the credit facilities and further pressure cash flow. The review for possible downgrade will primarily focus on the companies' expected run rate operations, trends in their end markets, and the ability to secure an amendment so as to have sufficient financial flexibility and liquidity over the near to intermediate term. Notably, the review will explore Moody's concerns surrounding the company's ability to maintain compliance with the maximum total leverage ratio covenant which is scheduled to decrease to 3.75x as of June 30, 2008 and 3.25x as of Dec. 31, 2008; the minimum interest coverage ratio permitted will increase to 3.25x as of Dec. 31, 2008. Moody's placed these ratings of Source Media Inc. on review for possible downgrade: -- $30 million senior secured revolver due 2009, B1 (LGD 3, 35%) -- $88.5 million senior secured term loan B due 2010, B1 (LGD 3, 35%) -- Corporate Family Rating, B1 -- Probability of Default Rating, B2 Moody's placed these ratings of Accuity LLC on review for possible downgrade: -- $5 million senior secured revolver due 2009, B1 (LGD 3, 35%) -- $61.8 million senior secured term loan B due 2010, B1 (LGD 3, 35%) -- Corporate Family Rating, B1 -- Probability of Default Rating, B2 Source Media and Accuity are both headquartered in New York City and are leading providers of information, data, and tools for professionals in the financial services and related technologies markets. Investcorp owns 100% of both companies. Combined revenues for the twelve month period ended March 31, 2008 were $200 million. TENNECO INC: Completes $10MM Buyout of Delphi's Kettering Plant --------------------------------------------------------------- Tenneco Inc. has finalized a purchase agreement with Delphi Automotive Systems LLC to acquire certain ride control assets and inventory at Delphi's Kettering, Ohio facility. The closing was effective May 30, 2008. Tenneco has agreed to pay approximately $10 million for existing ride control components inventory and approximately $9 million for certain machinery and equipment. The company will also lease a portion of the Kettering facility from Delphi. As part of the deal, Tenneco has also acquired valuable excess manufacturing assets, which it intends to use to continue growing its OE ride control business globally. Tenneco has entered into a long-term supply agreement with General Motors Corporation to continue supplying passenger car shock and strut business to General Motors from the Kettering facility. "Tenneco's acquisition of these assets, and a committed book of business from GM, gives us an opportunity to further diversify our ride control business in North America with more passenger car business as well as strengthen our ride control manufacturing capabilities in other key markets," Neal Yanos, senior vice president and general manager, North America Original Equipment Ride Control, Tenneco, said. "The purchase is also a win for the Kettering community and employees since jobs will be maintained that otherwise would be lost," Mr. Yanos continued. "We're moving ahead with a strong local management team in place with the goal of growing the plant's book of business." Tenneco will employ approximately 400 hourly and salaried employees at the Kettering plant. In connection with the purchase agreement, Tenneco has entered into a five-year agreement with the International Union of Electrical Workers, which will represent the hourly workforce at the facility. The agreement was ratified by the IUE's rank and file in August 2007. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. About Tenneco Based in Lake Forest, Illinois, Tenneco Inc., (NYSE: TEN) -- http://www.tenneco.com/-- manufactures automotive ride and emissions control products and systems for both the original equipment market and aftermarket. Brands include Monroe(R), Rancho(R), and Fric Rot ride control products and Walker(R) and Gillet emission control products. The company has operations in Argentina, Japan, and Germany, with its European operations headquartered in Brussels, Belgium. The company has approximately 19,000 employees worldwide. * * * As reported in the Troubled Company Reporter on May 26, 2008, 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. TRANSMERIDIAN EXPLORATION: Gets Noncompliance Notice from AMEX -------------------------------------------------------------- Transmeridian Exploration Inc. received notice from the American Stock Exchange indicating that the Company is not in compliance with certain of the AMEX's continued listing standards. Specifically, the AMEX has notified the company that it is not in compliance with Section 1003(a)(iv) of the AMEX Company Guide in that it has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the AMEX, as to whether such company will be able to continue operations or meet its obligations as they mature. This notice was based on a review by the AMEX of the company's Form 10-Q for the quarter ended March 31, 2008. The company has therefore become subject to the procedures and requirements of Section 1009 of the Company Guide. In order for the company to maintain its AMEX listing, the company must submit a plan by June 5, 2008 advising the AMEX staff how the Company intends to regain compliance with Section 1003(a)(iv) of the Company Guide by Aug. 20, 2008. The company has already informed the AMEX staff that it intends to make a timely submission to the AMEX in which it will outline the timeframe within which the company intends to cure the listing deficiency and to regain its compliance with the AMEX continued listing requirements. If the plan is accepted, the company may be able to continue its listing during the plan period, during which time the company will be subject to periodic reviews to determine whether it is making progress consistent with the plan. If the company fails to submit such a plan or if the plan is not accepted, the company will be subject to delisting proceedings. If the AMEX accepts the company's plan but the company is not in compliance with all of the continued listing standards of the Company Guide by Aug. 20, 2008, or if the company does not make progress consistent with the plan during the plan period, the AMEX staff will initiate delisting proceedings as appropriate. There can be no assurance that the AMEX staff will accept the company's plan of compliance or that, even if such plan is accepted, the Company will be able to implement the plan within the prescribed timeframe. The company may appeal a staff determination to initiate delisting proceedings. About Transmeridian Exploration Based in Houston, Transmeridian Exploration Inc. (AMEX: TMY) -- http://www.tmei.com/ -- is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. The company's primary oil and gas property is the South Alibek Field in the Republic of Kazakhstan covered by License 1557 and the related exploration and production contracts with the government of Kazakhstan. Transmeridian Exploration's consolidated balance sheet at March 31, 2008, showed $402.2 million in total assets, $341.2 million in total liabilities, and $92.5 million in redeemable convertible preferred stock, resulting in a $31.5 million total stockholders' deficit. Going Concern Doubt UHY LLP in Houston raised substantial doubt on Transmeridian's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's negative working capital, stockholders' deficit, and operating losses since its inception. The company had a net working capital deficit of approximately $56.2 million and a stockholders' deficit of approximately $31.5 million at March 31, 2008. Approximately 89.0% of the company's accounts payable at March 31, 2008, have been outstanding more than 120 days. THORNBURG MORTGAGE: Says Filing of 10-Q Will be Further Delayed --------------------------------------------------------------- Gabriel Madway of Thompson Financial News reports that Thornburg Mortgage Inc. said late yesterday it will need additional time to file its quarterly report on Form 10-Q for the first quarter. Thornburg Mortgage says it now expects to file its first quarter report and issue an earnings release by June 12. The company said that before it can finalize its 10-Q, it must, among other things, complete its valuation analysis and the accounting for its March 31 senior subordinated secured note transaction. According to the report, Thornburg also said it is requesting a 90-day extension, until Sept. 30, of the escrow agreement related to its preferred stock exchange offer. The extension would allow the $200 million currently held in escrow to be maintained to fund the exchange offer. Under the escrow agreement, the company would need the consent of each investor to retain its funds in escrow. Moreover, the mortgage lender said it was informed by the New York Stock Exchange that it is not in compliance with the NYSE's continued listing criteria because the average closing price of the company's common stock has been trading at less than $1 for 30 consecutive trading days. The company has notified the NYSE of its intent to cure the deficiency by implementing a reverse stock split. Shareholder approval of the reverse stock split is not required, Thornburg added. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable- rate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. At Dec. 31, 2007, the company's consolidated balance sheet showed $36.5 billion in total assets, $34.5 billion in total liabilities, and $2.00 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on March 10, 2008, Moody's Investors Service downgraded to Ca from Caa2 the senior unsecured debt, and to C from Ca the preferred stock ratings of Thornburg Mortgage, Inc. Thornburg's Ca unsecured debt rating remains under review for possible downgrade. The downgrades were in response to Thornburg's announcement that cross-defaults have been triggered under all of the REIT's repurchase agreements and secured loan agreements. Reverse repurchase agreements represent a key source of funding for the company. The TCR said on March 10 that Standard & Poor's Ratings Services lowered its issue ratings on Thornburg Mortgage Inc.'s senior unsecured debt to 'CC' from 'CCC+' and preferred stock to 'C' from 'CCC-'. Both issue ratings will remain on CreditWatch negative, where they were placed on March 3, 2008. The counterparty credit rating remains on selective default. Given Thornburg's limited financial resources, S&P believes the risk of default has increased further. The TCR also said on March 10 that, given Thornburg Mortgage, Inc.'s weakening credit profile stemming from defaults under the company's reverse repurchase agreements, Fitch has downgraded the Debtors' four ratings -- Issuer Default Rating to 'RD' from 'CCC'; -- Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'; -- Unsecured subordinate notes to 'C/RR6' from 'CC/RR6'; and -- Preferred stock to 'C/RR6' from 'CC/RR6'. TROPICANA ENTERTAINMENT: Has Until July 4 to File Schedules ----------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware extended the deadline for Tropicana Entertainment LLC and its debtor-affiliates to file their schedules of assets and liabilities and their statements of financial affairs, through July 4, 2008. As reported in the Troubled Company Reporter on May 12, 2008, Daniel J. DeFranceschi, Esq., at Richards Layton & Finger P.A., the Debtors' counsel, related that the Debtors will be able consolidate data from their business operations and creditors. The key accounting and legal personnel can focus their attention on critical operational and Chapter 11 compliance which will help the Debtors make a smooth transition into Chapter 11 and will help maximize the value of the Debtors' estates to the benefit of their creditors and all parties-in-interest. Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq. at Richards Layton & Finger represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. (Tropicana Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Can Hire Richards Layton as Bankruptcy Co-Counsel ---------------------------------------------------------------- Tropicana Entertainment LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Richards Layton & Finger P.A. as their bankruptcy co-counsel, nunc pro tunc to May 5, 2008. Richards Layton is expected to: (a) advise the Debtors of their rights, powers and duties as debtors and debtors-in-possession in the continued operation of their business and management of their properties; (b) take all necessary action to protect and preserve the Debtors' estates; (c) prepare, on behalf of the Debtors, all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; (d) pursue approval of confirmation of a plan of reorganization and approval of the corresponding solicitation procedures and disclosure statement; and (e) perform all other necessary legal services in connection with the Debtors' Chapter 11 cases. Mr. Yung informed the Court that Richards Layton has discussed with Kirkland & Ellis, the Debtors' proposed counsel, a division of responsibilities regarding representation of the Debtors; and has made every effort to avoid or minimize duplication of services in the Debtors' Chapter 11 cases. The Debtors will pay the firm its customary hourly rates in effect from time to time. The current standard hourly rates of the Richard Layton principal professionals and paraprofessionals designated to represent the Debtors are: Professional Hourly Rate ------------ ----------- Mark D. Collins $560 Daniel J. DeFranceschi $500 Paul N. Heath $400 Lee E. Kaufman $235 Ann Jerominski $175 The Debtors paid the firm a total retainer of $200,000 in connection with and in contemplation of their Chapter 11 filings. The Debtors propose that the retainer amount paid to Richards Layton and not expended for services prior to bankruptcy filing and disbursements be treated as an evergreen retainer to be held by the firm as security throughout the Debtors' Chapter 11 cases until the firm's fees and expenses are awarded by final order. Richards Layton assured the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. (Tropicana Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Noteholders and Panel Balk at $67MM DIP Financing ---------------------------------------------------------------- The Ad Hoc Consortium of Holders of 9-5/8% Senior Subordinated Notes due 2014 issued by Tropicana Entertainment LLC, and Tropicana Finance Corp., and the Official Committee of Unsecured Creditors filed their objections with U.S. Bankruptcy Court for the District of Delaware on Tropicana Entertainment LLC and its debtor-affiliates' request for the $67 million debtor-in- possession financing facility and the use of cash collateral. The Noteholders and Creditors Committee believe the DIP Financing is unnecessary. The Noteholders and Creditors Committee argue that the Debtors have not and cannot demonstrate a compelling need to enter into the DIP Financing for purposes other than to pay certain fees and payments to the Prepetition Secured Lenders. The Debtors have been granted access to $20,000,000 until the final DIP hearing. Thomas F. Driscoll III, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, on behalf of the Creditors Committee, notes that as of May 27, 2008, the Debtors have not borrowed on the Interim DIP Facility. In addition, the Debtors recently received a $24,000,000 tax refund that was not expected until June 2008. As a result, the Debtors have not and cannot demonstrate a compelling need to enter into the DIP Financing for purposes other than to pay postpetition interest to the Prepetition Lenders under the guise of adequate protection, Mr. Driscoll contended. Moreover, Onex Corporation have presented the Debtors with a proposal for DIP financing that would be junior to the Liens, less expensive with respect to fees and rates, and offers a more relaxed covenant package and a longer maturity date, Mr. Driscoll related. Under Section 364(d) of the Bankruptcy Code, the Debtors must demonstrate that they could not have obtained financing on a junior basis. Since the Debtors cannot satisfy their burden, they cannot be granted authority to obtain the DIP Financing, Mr. Driscoll pointed out. The Noteholders noted that the Debtors have limited cash resources. To permit the Debtors to pay more than $3 million in cash, as a fee, to the Secured Lenders on day one of the Debtors' Chapter 11 cases, plus what will likely exceed $10 million per month in adequate protection payments, would eviscerate any benefit derived by the Debtors' estates from the DIP Financing, James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, contends on the Noteholders' behalf. Certain of the Prepetition Secured Lenders are providing the DIP Financing, for which they will be paid an upfront cash fee of more than $2,000,000 and interest at a rate of 10.25% in order to pay themselves adequate protection, Mr. Carignan notes. As a matter of law, the Secured Lenders are not entitled to periodic adequate protection payments because they are oversecured and their collateral is not declining in value in any significant respect, Mr. Carignan asserted. The Noteholders also objected to certain other specific terms of the DIP Financing. They maintain that: * In light of the Noteholders' pending motion for the appointment of a trustee, it should not be an event of default under the DIP Facility if an interim or permanent trustee, receiver, responsible officer or examiner is appointed; * The grant of relief from the automatic stay to the DIP Lender upon an event of default should not be permitted; * The grant of a lien on avoidance action proceeds should not be permitted; and * The ability to amend, modify and supplement the DIP Facility without further Court authority should not be permitted. The Noteholders and Creditors Committee reserved their rights to, among other things, amend or supplement their Objections. Debtors Talk Back The Debtors have concluded that Silver Point Finance LLC's DIP financing proposal was the best -- and indeed the only -- available DIP financing at the time of their Chapter 11 filing. Thus, they obtained interim approval of the Silver Point DIP Financing. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, noted that during the period between the interim and final DIP Motion hearings, Tropicana has received an alternative, but currently uncommitted, DIP financing proposal from Onex. Consistent with their fiduciary duties, the Debtors are carefully considering the alternative proposal both from an economic and a practical perspective, Mr. Collins informed the Court. The Debtors are also working closely with the Creditors Committee to ensure a transparent and constructive process for evaluating the alternative proposal against the Silver Point DIP Financing, Mr. Collins said. While exploring alternative proposals, the Debtors, Creditors Committee and the Noteholders negotiated with Silver Point and the OpCo Lenders to modify certain terms of the Silver Point DIP Financing and the proposed adequate protection package for the OpCo Lenders, according to Mr. Collins. The discussions are ongoing. Mr. Collins maintained that as of May 27, 2008, the Silver Point DIP Financing is still the best, and the only, committed DIP financing available. No party has challenged the terms of the Silver Point DIP Financing as being unreasonable. He added that: * The Creditors Committee and Noteholders failed to address the importance of having available liquidity in a cash-driven business, like the gaming business. The Debtors must have sufficient available liquidity to support its gaming operations and to demonstrate to its employees, vendors and customers that they are viable entities capable of operating in the ordinary course of business during their Chapter 11 cases. * The Debtors made a substantial effort to obtain DIP financing, both on a priming and junior basis. Although the Debtors and other potential lenders have engaged in discussions since the interim hearing, only Onex remains in that process and the Debtors still have not received a binding commitment letter from Onex. Thus, at this time, the Debtors only have the mere suggestion of an alternative DIP financing proposal allegedly on better terms than the Silver Point DIP Financing. * The proposed adequate protection package for the OpCo Lenders is necessary and appropriate to ensure that the Debtors can continue to use the OpCo Lenders' Cash Collateral. The Debtors tell Judge Carey that they have revised their budget, reflecting the $24 million tax refund received. A full-text copy of the Revised Budget is available for free at: http://bankrupt.com/misc/Tropicana_RevisedBudget-SPDIP.pdf However, even including the tax refund, the Debtors believe that there is a valid business justification for obtaining additional available liquidity in the form of the DIP Financing. The Creditors Committee's and the Noteholders' other objections to the Final DIP Order must also be overruled, Mr. Collins asserted. Credit Suisse Reserves Right to Object Credit Suisse, for itself and as agent to the LandCo Lenders, reserved its rights to assert objections, and requested modifications, to any proposed DIP financing agreements and related documents. Credit Suisse wanted to ensure that the terms of those documents expressly acknowledge, are consistent with, and are subject to the rights of the LandCo Lenders, including their rights to adequate protection and other protections previously granted, or to be granted, to them in connection with the Debtors' consensual use of the lenders' Cash Collateral. The reservation of rights extended to any DIP financing proposed or contemplated by Onex in its May 23, 2008 statement, well as the Silver Point DIP Financing proposed by the Debtors in their DIP Financing Motion. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq. at Richards Layton & Finger represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. (Tropicana Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) UNITED AMERICAN: Earns $1.06 Million in Year Ended Dec. 31, 2007 ---------------------------------------------------------------- For the year ended Dec. 31, 2007, United American Corporation reported $1,061,945 of net income on $30,321,299 of sales as compared with a $614,269 net loss on $19,991,191 of sales for the same period in the prior year. The increase in revenue was primarily attributable to increases in sales of Voice-over-Internet-Protocol termination services in the company's brokered international telecom routes. A brokered route is one where the company purchases from a supplier who has direct termination capabilities with the local wire line and mobile operators in the country and re-sell the termination destination to its customers. At Dec. 31, 2007, the company's balance sheet showed $4,049,439 in total assets, $3,383,930 in total liabilities, and $665,509 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?2d03 Going Concern Doubt United American's ability to continue as a going concern for a reasonable period is dependent upon management's ability to raise additional interim capital and, ultimately, achieve continuously profitable operations. There can be no assurance that management will be able to raise sufficient capital, under terms satisfactory to the company, if at all. Customer Default In May 2008, Concentration Risk, the company's major customer, defaulted on its $1,400,000 payment. Since Concentration Risk was a major customer, accounting for over 99% of its revenues, the default in payment has placed considerable doubt that the company can continue its operations. The company's management is considering its options, including, but not limited to, legal action against the defaulting customer. Change in Auditor The company's board of directors approved on April 16, 2008, the dismissal of Michael Pollack, CPA, as its auditor. The board also engaged Madsen & Associates, CPA's Inc., to replace the departing auditor. About the Company Based in Mount St-Hilaire, Quebec, Canada, United American Corporation provides Voice-over-Internet-Protocol telecommunications services to wholesale providers worldwide. UAL CORPORATION: Glenn Tilton Not Fit as Chairman, Teamsters Says ----------------------------------------------------------------- The Teamsters Union asked fellow UAL Corp. shareholders to withhold their votes from Glenn Tilton as board chairman and from five members of the committee that sets executive compensation. In a letter to shareholders, Teamsters General Secretary-Treasurer C. Thomas Keegel said Mr. Tilton has pursued a "cut and run" business plan for United. UAL Corp. is the parent of United Airlines. Mr. Tilton's plan to liquidate strategic assets and to pursue a merger at any cost has eroded shareholder value and jeopardized the company's long-term growth, Mr. Keegel wrote. "We believe an independent chairman is required to provide the unfettered management oversight investors demand," Mr. Keegel wrote. "In our view, the board's failure to act as an effective check on Tilton's business strategy demonstrates the need for stronger independent board leadership." The Teamsters are also asking shareholders to withhold votes from director nominees W. James Farrell, Richard J. Almeida, James J. O'Connor, David J. Vitale and John H. Walker. They serve on the board's Human Resources Subcommittee, the group that sets pay for UAL's top executives. "Since emerging from bankruptcy in 2006, the Board has failed to effectively manage the company's executive compensation program," Keegel wrote. [Mr.] Tilton was awarded $39.7 million in total compensation after UAL Corp. emerged from bankruptcy protection in 2006. The Teamsters view United's maintenance division as one of the airline's few sources of profitability. Mr. Tilton's proposal to sell the maintenance division is potentially dangerous and disruptive. The International Brotherhood of Teamsters represents mechanics and related personnel at United Airlines. United's annual shareholder meeting will be held June 12. Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Issue No. 158; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on May 3, 2007, Fitch Ratings has affirmed the Issuer Default Ratings of UAL Corp. and its principal operating subsidiary United Airlines Inc. at B-. VERMILLION INC: March 31 Balance Sheet Upside-Down by $16,555,000 ----------------------------------------------------------------- Vermillion Inc.'s consolidated balance sheet at March 31, 2008, showed $17,555,000 in total assets and $34,110,000 in total liabilities, resulting in a $16,555,000 total stockholders' deficit. The company reported a net loss of $4,846,000, on total revenue of $53,000, for the first quarter ended March 31, 2008, compared with a net loss of $6,047,000, on total revenue of $21,000, in the same period in 2007. On Nov. 13, 2006, the company completed the sale of assets and liabilities of the company's protein research products and collaborative services business (the Instrument Business Sale) to Bio-Rad Laboratories Inc. The company expects to incur losses for at least the next year. Due to the Instrument Business Sale, the company will have limited revenues until its diagnostic tests are developed and successfully commercialized. 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?2d1c Going Concern Doubt PricewaterhouseCoopers LLP, in San Jose, Calif., expreesed substantial doubt about Vermillion 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 reported that the company has suffered recurring losses and negative cash flows from operations and has a net capital deficiency. At March 31, 2008, the company had an accumulated deficit of $243,988,000. Management believes that current available resources will not be sufficient to fund the company's planned expenditures over the next twelve months. About Vermillion Inc. Based in Fremont, California, Vermillion Inc. (Nasdaq: VRML) -- http://www.vermillion.com/-- is dedicated to the discovery, development and commercialization of novel high-value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion, along with its scientific collaborators, has diagnostic programs in oncology, hematology, cardiology and women's health. VERTIS COMM: Inks Prepackaged Chapter 11 Plan of Reorganization --------------------------------------------------------------- Vertis Inc., American Color Graphics and noteholders 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. Vertis and American Color entered into agreements with an aggregate of approximately 72% of the outstanding principal amount of the 9.75% Senior Secured Second Lien Notes due 2009; 83% of the outstanding principal amount of the 10.875% Senior Notes due 2009; and 75% of the outstanding principal amount of the 13.5% Senior Subordinated Notes due 2009 of Vertis; and the holders of an aggregate of approximately 70% 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 transaction is also supported by Vertis' principal stockholders and the holders of over 95% of the outstanding principal amount of Vertis Holdings Mezzanine Notes. 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. "Gaining support from the overwhelming majority of both Vertis and ACG noteholders demonstrates their confidence in the successful outcome of our merger and restructuring plans," Mike DuBose, chairman and CEO of Vertis, said. "These agreements will expedite the process and we anticipate beginning collaborations with our new ACG colleagues in late summer to deliver truly comprehensive and effective marketing solutions that drive results." "In addition, these agreements and the support obtained have been received positively by our customers and suppliers and we are starting to see a return to more normalized relationships and terms with our valued vendor partners," Mr. DuBose stated. In addition to agreeing to support the prepackaged plans, in the restructuring agreements, the noteholders agreed to forbear from exercising remedies relating to the nonpayment of interest on any of the Vertis Notes. As a result, the company has decided it will not make its interest payments on June 1, 2008 or June 15, 2008. This will increase liquidity during the prepackaged reorganization. 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 votes for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days from May 22, 2008, the date the restructuring agreements were signed. Votes will be due approximately 30 days after the companies launch the solicitation. The agreements with the noteholders require them to vote in favor of the plan and ensure that the companies will achieve the two-thirds in amount threshold required for the bankruptcy court to confirm the plan. Upon receiving the requisite acceptances, 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. 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. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. At Dec. 31, 2007, the company's consolidated balance sheet showed $528.2 million in total assets and $1.403 billion in total liabilities, resulting in a $875.1 million total stockholders' deficit. Going Concern Doubt 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. * * * As reported in the Troubled Company Reporter on May 29, 2008, Moody's Investors Service has affirmed the Ca corporate family rating for Vertis Inc., while changing the probability of default rating to Ca from Ca/LD, after the company's statement of a merger with American Color Graphics Inc. coupled with a comprehensive restructuring plan. VISTAR CORP: Moody's Withdraws Ratings After Debt Repayment ----------------------------------------------------------- Moody's Investors Service withdrew its ratings on Vistar Corporation. Moody's has withdrawn the ratings because its rated debt has been repaid in connection with the Performance Food Group Company transaction. Specifically, on May 27, 2008, Performance Food Group Company announced that its acquisition by affiliates of The Blackstone Group and Wellspring Capital Management was completed. Performance Food Group Company is being merged with Vistar. These ratings were withdrawn: -- Corporate family rating at B2; -- Probability-of-default rating at B2; -- Senior secured term loan at B3 (LGD5, 75%). Vistar, headquartered in Centennial, Colorado, is a food and food products distribution company. WACHOVIA CRE: Fitch Affirms 'B-' Rating on $6.5MM Class O Notes --------------------------------------------------------------- Fitch Ratings has affirmed all classes of Wachovia CRE CDO 2006-1 floating-rate notes as: -- $616,500,000 class A-1A at 'AAA'; -- $68,500,000 class A-1B at 'AAA'; -- $145,000,000 class A-2A at 'AAA'; -- $145,000,000 class A-2B at 'AAA'; -- $53,300,000 class B at 'AA'; -- $39,000,000 class C at 'A+'; -- $12,350,000 class D at 'A'; -- $13,650,000 class E at 'A-'; -- $24,700,000 class F at 'BBB+'; -- $16,900,000 class G at 'BBB'; -- $35,100,000 class H at 'BBB-'; -- $13,000,000 class J at 'BB+'; -- $14,950,000 class K at 'BB'; -- $9,100,000 class L at 'BB-'; -- $34,450,000 class M at 'B+'; -- $16,250,000 class N at 'B'; -- $6,500,000 class O 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 covenants. Deal Summary: Wachovia CRE CDO is a revolving commercial real estate cash flow collateralized debt obligation that closed on July 11, 2006. It was incorporated to issue $1,300,000,000 of floating-rate notes and preferred shares. Based on the April 17, 2008 trustee report and using Fitch categorizations, the CDO is substantially invested as follows: whole loans/A-notes (82%), B-notes and Junior Participations (6%), mezzanine loans (0.2%), and uninvested proceeds (11.8%). The CDO is also permitted to invest in commercial mortgage-backed securities, CRE CDOs, real estate investment trust debt, and synthetic assets. The collateral asset manager is Structured Asset Investors, LLC, a wholly owned subsidiary of Wachovia Corporation. An affiliate, Wachovia Bank N.A.'s Structured Finance Group, is serving as sub- advisor. SFG is responsible for selecting assets and monitoring the portfolio. Wachovia CRE CDO 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 September 2011. Collateral Asset Manager: The Structured Finance Group is a commercial real estate loan portfolio management team located within Wachovia Bank. SFG (rated 'CAM2-' as a CRE CDO asset manager by Fitch) focuses on providing non-recourse, transitional, and high leverage capital to the bank's CRE customer base. SFG benefits from the commercial bank's robust internal procedures and controls. Additionally, its lending activities are supported by the bank's commercial mortgage loan servicing unit Wachovia Securities (rated 'CPS2+/CMS2/CSS2' by Fitch). Performance Summary: Since the last review, the Fitch as-is poolwide expected loss has decreased slightly to 21.875% compared to the covenant of 25.875%. The CDO's reinvestment cushion of 4% remains below average. While no new loans have been purchased by the CDO since last review, three have been paid off (4.2%), including a prior Fitch Loan of Concern. The removal of these loans, which had a weighted average expected loss of 33.4%, resulted in the overall improved PEL. The majority of the loans remaining in the pool continue to progress towards stabilization; however, some loans have not met operating expectations. Expected losses for these loans were adjusted to account for their stalled or delayed business plans. Although the cushion is below average relative to other CRE CDOs, the expectation is that the portfolio will continue to be well diversified, weighted predominantly in whole loans and A-notes, and secured by traditional property types. Wachovia's CREL origination platform is diverse and well established. Additionally, the overcollateralization and interest coverage ratios of all classes have remained above their covenants, as of the April 2008 trustee report. Collateral Analysis: As of the April 2008 trustee report, the CDO is 88.1% invested in assets, including 7% allocated to future funding obligations. Due to loan payoffs, the percentage of whole loans and subordinate debt have both decreased slightly to 82% and 6.2%, respectively, since Fitch's last review. Uninvested proceeds have increased to 11.8% from 7.3% due to no new assets being purchased by the CDO since last review. As of the April 2008 trustee report and based on Fitch categorizations, the CDO is within all its property type covenants. Office loans comprise the largest percentage of assets at 31.8% with multifamily the second largest at 24.1%. Non- traditional property type concentrations consist of land at 12.8% and hotels at 10.5%. The CDO is also within all its geographic location covenants with the highest percentage of assets located in California at 29.1%. The pool has above average loan diversity relative to other CRE CDOs. Based on Fitch categorizations the pool currently consists of 64 loans and the Fitch Loan Diversity score is 203, compared to the covenant of 244. No loan represents more than 5% of the ramped portfolio. WHITE BIRCH: S&P Cuts Rating to CCC+ on Weak Liquidity Position --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Nova Scotia-based White Birch Paper Co. The corporate credit rating was lowered to 'CCC+' from 'B-'. The outlook is negative. "The downgrade reflects the company's weakened liquidity position because of unfavorable trends in the newsprint industry," said Standard & Poor's credit analyst Andy Sookram. "As a result, it is likely that the company will need additional equity contributions from its owners in order to remain compliant with bank facility covenants in the near term." While the company will likely benefit from recently announced sales price increases over the next few quarters, the sustainability of these increases is uncertain given weaker newsprint consumption in North America. As a result, it may be difficult for the company to remain in compliance with bank covenants without additional equity support. The ratings on White Birch reflect its limited product diversity, with a primary focus on the highly cyclical commodity newsprint market, high debt levels, and limited liquidity. These negatives far outweigh the company's low cost position and high capacity utilization rates. The negative outlook reflects our concern about White Birch's near-term liquidity position, including our expectation that the company could require additional capital contributions or may have to amend the credit facilities in a challenging market environment. In absence of a capital contribution or an amendment, S&P believe a financial restructuring is a distinct possibility in the next several quarters given current operating trends, including declining end market demand for newsprint, high input costs, and a strong Canadian dollar. WHITE WATER: Not So Fast! Court Wants Buyer to Show Money --------------------------------------------------------- The Hartford (Conn.) Courant relates that Nicholas J. Lenge of Budding Rose Realty LLC was slated to present evidence yesterday that he has the money to close on a deal to buy a 32-acre parcel property at the Powder Ridge Ski Area, known locally as Green Forty, in Middlefield, Connecticut. Mr. Lenge has offered to acquire Green Forty for $212,000, rivalling a $207,000 offer by the town of Middlefield, Courant says. The report relates that the U.S. Bankruptcy Court for the District of Connecticut originally scheduled the auction for the property last Wednesday. The Hon. Lorraine Murphy Weil, however, declined to accept Mr. Lenge's bid and, instead, directed Ronald I. Chorches, Esq., the court-appointed trustee for the 32-acre parcel, to determine if Mr. Lenge has the money. The Court moved the auction to Monday. Courant says Green Forty is an important parcel to the acquisition of Powder Ridge because it has water lines for snow-making. Powder Ridge was operated by White Water Mountain Resorts of Connecticut Inc., until the facility closed in 2006. "I'm not going to make the town bid against someone who might be using 'Monopoly' money," Courant quotes Judge Weil as saying. According to Courant staff writer Alaine Griffin, Robert White, Esq., counsel to Middlefield, pointed out Mr. Lenge failed to provide financial statements and a binding commitment letter from an entity licensed to do business in Connecticut, which documents were needed to proceed with the auction. Ms. Griffen relates that Mr. White has pointed out the address of Mr. Lenge's funding source -- Delta Global Funding -- is a United Parcel Service outlet in New Jersey. Mr. White said, "The fact that Delta Global Funding is a mail drop says something about its credibility." Courant reports that Middlefield is prepared to close the deal this week if the Court accepts its bid for the parcel. Ms. Griffin relates that in February, Mr. Lenge was grilled by the Court about his finances by attorneys for the town after his newly formed Budding Rose Realty submitted an after-deadline bid of $5.2 million for a 246-acre Powder Ridge ski area and another $350,000 for Green Forty, which bids were higher than the town's offer. Courant says Roberta Napolitano, trustee for Powder Ridge, accepted a $3.45 million offer from the town and Robert Switzgable, owner of Ski Sundown Inc. in New Hartford. Judge Weil approved the sale order but rejected the town's $97,000 offer for Green Forty, ordering the trustee to put the 32 acres back up for auction, according to Courant. The report says Mr. Chorches told Judge Weil that while he was not "100 percent sure" Mr. Lenge wasn't using "'Monopoly' money," Mr. Chorches said he had a $21,000 nonrefundable check from Mr. Lenge that Mr. Lenge risked losing if he did not close on the property deal next Wednesday. According to the report, Mr. Chorches said a woman he spoke with at Delta Global Funding said the money would be provided through Citizens Bank. She said she ran the business from her New Jersey home, the report adds. Anthony Novak, Esq., counsel to Kenneth R. Leavitt, owner of White Water, praised Mr. Chorches' plan to give Mr. Lenge until Wednesday to close, Courant relates. "[Mr. Lenge] certainly is a person who wants the property," Courant quotes Mr. Novak as saying. "He's got $21,000 at risk. He's going to do everything he can to close." According to the paper, Middlefield's failure to acquire the 32- acre property caused Mr. Switzgable to pull out of the deal in March. An auction on the 246 acres will be held June 21, the report says. Middlefield, Connecticut-based, White Water Mountain Resorts of Connecticut, Inc., doing business as Powder Ridge Ski Area, was thrown into bankruptcy after creditors Idaho Sewing For Sports, Inc., Snow Jam Boarding Co., and Northeast Aquatic Design, commenced involuntary chapter 7 proceedings against the company on April 6, 2007, before the U.S. Bankruptcy Court for the District of Connecticut in New Haven (Case No. 07-30763). Bonnie C. Mangan, Esq., in South Windsor, Connecticut, was originally appointed as Chapter 7 trustee. The case was later converted to chapter 11 on May 9, 2007. Roberta Napolitano in Bridgeport was appointed Chapter 11 trustee. The Chapter 11 trustee can be reached at: Roberta Napolitano 350 Fairfield Avenue Bridgeport, CT 06601 Tel: (203) 333-1177 An Official Committee of Unsecured Creditors has been appointed in the case. Douglas S. Skalka, Esq., Louis J. Testa, Esq., and Nancy B. Kinsella, Esq., at Neubert, Pepe & Monteith, P.C, in New Haven, represent the Committee. In its schedules filed with the Court, White Water disclosed $5,488,000 in total assets, and $4,651,501 in total debts. WII COMPONENTS: Moody's Holds Ratings But Changes Outlook to Neg. ----------------------------------------------------------------- Moody's affirmed WII Components Inc.'s ratings but changed the outlook to negative from stable after lowering its FYE 2008 EBITDA forecast for the company. Moody's expects WII's operating performance to continue to be hurt by weak home starts and poor remodeling and repair activity in conjunction with declining house prices and depressed consumer spending. While the rating agency continues to recognize several mitigating factors including the company's highly variable cost structure and its solid market position, it also believes that the prolonged downturn is likely to negatively impact WII's historically resilient EBITDA performance. Moody's now expects WII's total debt (including PIK Holdco notes)/EBITDA ratio to approach 7 times at the end of 2008. Additionally, Moody's noted that WII initiated cash distributions to its parent company, corresponding to a portion of the interest payments under the Holdco notes, with a negative impact on WII's free cash flow. Further negative pressures would be exerted if the company's liquidity, which is currently viewed as adequate by Moody's, deteriorates. Specifically, negative free cash flow on a twelve- month basis, the increasing utilization of the revolving credit facility or a financial covenant violation could result in a rating downgrade. Ratings affirmed: -- B2 Corporate Family Rating -- B2 Probability of Default Rating -- B1 Senior Unsecured Notes Rating (LGD assessment changed to LGD3/32% from LGD3/35%) WII is a leading manufacturer of hardwood cabinet doors and related components in the US, selling primarily to kitchen and bath cabinet original equipment manufacturers. Revenues for FYE 2007 were $249 million. WINNEBAGO INDUSTRIES: Idles Iowa Plant Amid RV Industry Slump ------------------------------------------------------------- Winnebago Industries, Inc., will idle production at the company's Charles City Manufacturing Facility, in Iowa, effective August 1, 2008. CCMF currently assembles Class C products which will be relocated to the company's Forest City facilities throughout the company's fourth quarter, ending August 30, 2008. The relocation will not affect the company's customers or product offerings. The company's board of directors approved the strategic manufacturing consolidation decision on May 30, 2008. An estimated 270 salaried and hourly employees at CCMF will be impacted by the idled facility. The company has affirmed that it will maintain a significant presence in the Charles City area, with approximately 190 employees remaining in the Company's Hardwoods Facility and Charles City Assembly Facility, which produces the Company's new Class B motor homes. As of September 1, 2007, Winnebago employed roughly 3,310 workers, roughly 2,630 of which were engaged in manufacturing and shipping functions, according to the company's annual report for the fiscal year ended August 25, 2007, filed on Form 10-K with the U.S. Securities and Exchange Commission. The company has notified affected employees of the decision on June 2, 2008. Winnebago Industries' management has offered employee support through its company sponsored Employee Assistance Program, and will coordinate support from state, regional and local agencies in an effort to assist with job placement, training and various other services and benefits available to dislocated workers. None of the company's employees are covered under a collective bargaining agreement, according to the annual report. Completed in the spring of 2004, CCMF went into production during a year of record breaking sales for the company and the motor home market, when increased capacity was needed to meet the greater demand resulting from a robust economy with low interest rates, high consumer confidence and a favorable environment for discretionary spending. Market conditions have dramatically changed since 2004. Total Class A and Class C motor home industry wholesale shipments are estimated by the Recreation Vehicle Industry Association to be 40,400 for calendar 2008. That represents a 42% decline in shipments when compared to the 69,300 motor homes delivered in calendar 2004. A declining United States economy, significantly increasing fuel prices, decreasing consumer confidence and a difficult lending environment have contributed to a decrease in overall motor home demand, with double digit retail sales declines for seven of the last eight consecutive months for the industry. The current conditions have necessitated capacity reductions for the company to more closely match market demand. The company believes these actions will better position it for a business environment that it expects will continue to be challenging. "In order for us to keep production in line with market demand, our employees in all locations -- Forest City, Charles City and Hampton -- have been significantly impacted throughout the last several months," said Winnebago Industries Chairman, CEO and President Bob Olson. "For example, in our third quarter ended May 31, 2008, production was reduced during 12 of the 13 weeks through either four-day work weeks or shutting down entire production lines for a week at a time, resulting in an extremely low capacity utilization rate of less than 35 percent for the quarter. Our CCMF employees worked very hard to get the plant up and running smoothly since construction began in 2003 and they have done an extraordinary job for us since that time. "Today I had to tell our 270 CCMF employees they will no longer have a job because they are a casualty of the economy. As a 38- year employee who has been through several industry downturns in the past, I know how devastating this can be for employees. So the decision to idle CCMF has been particularly painful. Unfortunately, it is necessary so that we more closely align our capacity with market demand. Winnebago Industries is certainly not alone with these market challenges. Regrettably, many manufacturers in the automotive/truck, motorcycle, marine, recreation vehicle and manufactured housing industries have been forced to idle plants or permanently close them in response to these significant challenges." The company intends to reopen CCMF in the future when the added capacity is needed. The company is evaluating if an impairment charge is required in the fourth fiscal quarter as a result of the idling of the facility, which currently has a net book value of approximately $9 million. Other associated costs with the idling of the plant to be recognized in the fourth quarter, are estimated at $1 million to $2 million. The company will continue to evaluate the need for additional right-sizing measures in accordance with market demand. Mr. Olson continued, "While the current economic environment is extremely challenging, the Company believes it is in a strong financial position with significant cash and investment balances, no debt, and with the benefit of a respected brand name known for its quality products. While current demand for recreation vehicles (RVs) has softened significantly, over the longer term, the motor home market should benefit from the increased popularity of RVs, demographic growth in the prime target market of people over age 50 and the broadening age range of people who are buying motor homes." Winnebago Industries reported net income of $2,517,000, on net revenues of $164,203,000 for the 13-week period ended March 31, 2008, down from $7,532,000 on net revenues of $199,014,000 for the 13-week period ended February 24, 2007. The company had $357,628,000 in total assets and $169,618,000 in total debts as at March 31, 2008. Winnebago Industries will host a conference call on Friday, June 20, 2008 at 9 a.m. Central Time (CT) to discuss the financial results for its third quarter of fiscal 2008 ended May 31, 2008. The company will release its financial results on June 20, 2008 at 6:00 a.m. CT. Winnebago Industries' conference call may be heard live via the company's Web site -- http://www.winnebagoind.com/investor.html The event will be archived and available for replay for the next 90 days. To access the replay, click on http://www.winnebagoind.com/investor.html About Winnebago Industries Winnebago Industries, Inc. (NYSE:WGO) is a leading U.S. manufacturer of motor homes which are self-contained recreation vehicles used primarily in leisure travel and outdoor recreation activities. The company builds motor homes under the Winnebago, Itasca and ERA brand names with state-of-the-art computer-aided design and manufacturing systems on automotive-styled assembly lines. The Company's common stock is listed on the New York and Chicago Stock Exchanges and traded under the symbol WGO. Options for the Company's common stock are traded on the Chicago Board Options Exchange. On the Net: http://www.winnebagoind.com/ Z TRIM: Bid Price Non-Compliance Prompts AMEX to Delist Securities ------------------------------------------------------------------ The American Stock Exchange notified Z Trim Holdings Inc. that the staff of the Amex has determined that the company is not in compliance with certain of Amex' continued listing standards. Specifically, based upon a review of the company's Form 10-Q for the period ended March 31, 2008, the Amex Staff determined that the company reported $5,970,000 of shareholders' equity, which is less than the $6,000,000 threshold for shareholders' equity after losses from continuing operations and net losses in its five most recent fiscal years as required by Section 1003(a)(iii) of the Company Guide. The Amex Staff further determined that the company has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Amex, as to whether the company will be able to continue operations and meet its obligations as they mature, in violation of Section 1003(a)(iv) of the Company Guide. The letter constitutes a "Deficiency Letter" pursuant to Section 1009 of the Amex Company Guide. Amex has provided the company the opportunity to submit a compliance plan to resolve the deficiencies. Amex has not initiated a delisting procedure or suspended trading in the company's common stock. "Certainly, we are disappointed to have to emphasize, again, the poor historical performance of our company," president, Steve Cohen stated. "However, as this deficiency relates to our past financial performance in combination with our reported current financial condition rather than to any deficiencies in our corporate governance and internal controls, this is old news and our investors and the investment community have been made aware of our financial health." "We remain confident in our ability to both capitalize our revitalized business model, well as capitalize on our recent successes in the marketplace," Mr. Cohen said. "We welcome the additional oversight that Amex provides and will work diligently to regain compliance with Amex listings standards. By building our business, we will simultaneously address Amex's concerns while building shareholder value." The company is in the process of reviewing the Amex staff's findings. In response to the Deficiency Letter, and as specifically directed by the Deficiency Letter, the company will submit a Plan, by June 30, 2008, advising the Amex of actions it has taken and will take that will bring it back into compliance with Section 1003(a)(iii) by Nov. 30, 2009, and 1003(a)(iv) by Nov. 28, 2008. Amex' Listing Qualifications Department management will evaluate the company's Plan, determine whether the company has made a reasonable demonstration of its ability to regain compliance within the allotted time and if the Company has so demonstrated, will accept the Plan. If the Plan is accepted, the company will be able to continue its listing during the Plan period, subject to periodic review of progress. If the Plan is not accepted, however, or if the company does not make progress consistent with the plan, or if the company is not in compliance upon closure of the Plan period, the Amex will initiate delisting proceedings. About Z Trim Holdings Inc. Based in Mundelein, Illinois, Z Trim Holdings Inc., (AMEX: ZTM) -- http://www.ztrim.com-- through its subsidiaries, produces, licenses, markets, and distributes its proprietary Z Trim, a natural food ingredient technology. It offers Z Trim fat replacement product to manufacturers, the food services industry, and consumers, well as to food institutions that supply to restaurants, hospitals, schools, and cafeterias. The company also operates NAT Web, a nutrition analysis tool Web site is an interactive, Web-based system designed to empower individuals to select a nutrient-rich diet; and offers self-defense courses and videos, focusing on personal safety and self-defense, including rape prevention. In addition, Z Trim Holdings manufactures and distributes pillows, blankets, and other bedding products to airlines, hospitals, government, and other commercial and institutional customers. The company was founded in 1994 as Circle Group Holdings Inc. and changed its name to Z Trim Holdings, Inc. in 2006. Going Concern Doubt As reported in the Troubled Company Reporter on May 5, 2008, Blackman Kallick LLP, raised substantial doubt about the ability of Z Trim Holdings 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 from operations and its need of additional financing to continue in operation. The company posted a net loss of $16,430,884 on total revenues of $616,848 for the year ended Dec. 31, 2007, as compared with a net loss of $14,625,317 on total revenues of $104,004 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $9,565,958 in total assets, $2,898,335 in total liabilities and $6,667,623 in total stockholders' equity. * Fitch Takes Rating Actions on US Municipal and Corporate Bonds ---------------------------------------------------------------- Concurrent with its rating action on CIFG Guaranty, CIFG Assurance North America, Inc., and CIFG Europe, Fitch Ratings has taken these rating actions on US municipal and corporate bonds insured by CIFG. -- CIFG insured bonds with underlying Fitch ratings lower than 'A-' have been downgraded to their underlying ratings; -- All CIFG insured bonds without underlying Fitch ratings are withdrawn. Fitch downgraded CIFG's Insurer Financial Strength rating to 'CCC' from 'A-' and placed it on Rating Watch Evolving. * S&P Says Restaurant Sectors Are Among Most Prone to Econ. Stir ---------------------------------------------------------------- As of May 15, 2008, the consumer products, media and entertainment, and retail/restaurants sectors remain most susceptible to economic and credit-market turbulence, according to an article published by Standard & Poor's. The article, which is titled "Stress In Corporate America: Consumer-Reliant Sectors Still Sing The Blues (Premium)," says that these sectors consistently lead risk in our lists of distressed companies, weakest links, and potential bond downgrades. "Weakness in the consumer products, media and entertainment, and retail/restaurants sectors is a result of U.S. consumers' diminished economic prospects," explained Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Consumer spending is critical to continued economic expansion, as it accounts for 70% of the U.S. GDP." These cyclical sectors rely heavily on consumer spending, which has recently declined after showing resilience in 2007. "We expect consumer spending to grow only 1.5% in 2008, a deceleration compared with 2.9% in 2007 and 3.1% in 2006," Ms. Vazza added. Many companies are running under tighter operating and profit margins because of rising input costs and slower consumer spending stemming from a weaker housing market. This raises concern about both the failure to meet financial covenants and growing financial leverage during a difficult economic environment. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Software ABT (3) 89 30 AFC Enterprises AFCE (40) 155 (20) APP Pharmaceutic APPX (73) 1,077 227 Ariad Pham ARIA (8) 101 65 Bare Escentuals BARE (76) 236 99 Blount Intl BLT (44) 407 138 CableVision System CVC (5,114) 9,180 (476) Centennial Comm CYCL (1,063) 1,343 14 Cheniere Energy CQP (228) 1,905 146 Cheniere Energy LNG (16) 2,962 428 Choice Hotels CHH (157) 328 (42) Cincinnati Bell CBB (668) 2,020 0 Claymont Stell PLTE (40) 158 80 Compass Minerals CMP (5) 820 201 Corel Corp. CRE (14) 266 (15) Crown Media HL CRWN (684) 676 4 CV Therapheutics CVTX (185) 259 177 Cyberonics CYBX (15) 136 (15) Cytori Therapeut CYTX (11) 18 2 Deltek Inc PROJ (86) 166 (28) Denny's Corp DENN (179) 381 74 Domino's Pizza DPZ (1,450) 473 51 Dun & Bradstreet DNB (437) 1,659 (192) Einstein Noah Re BACL (34) 149 4 Extendicare Real EXE-U (32) 1,440 (15) Gencorp Inc. GY (52) 995 77 General Motors GM (35,480) 148,883 (9,720) Healthsouth Corp. HLS (1,070) 2,051 (331) Human Genome Sci HGSI (12) 949 47 ICO Global C-New ICOG (131) 602 101 IDEARC Inc IAR (8,600) 1,667 205 IMAX Corp IMAX (85) 208 (8) IMAX Corp IMX (85) 208 (8) Incyte Corp INCY (160) 276 228 Indevus Pharma IDEV (86) 199 40 Intermune Inc ITMN (31) 262 209 IPCS Inc IPCS (40) 547 76 Knology Inc KNOL (35) 619 7 Life Sciences Re LSR (29) 502 1 Linear Tech Corp LLTC (564) 1,410 912 Lodgenet Interac LNET (48) 694 8 Maxxam Inc MXM (242) 544 120 Mediacom Comm-A MCCC (253) 3,615 (268) Moody's Corp MCO (784) 1,715 (360) National Cinemed NCMI (572) 464 67 Navistar Intl NAVZ (1,699) 10,786 164 Nexstar Broadcasting NXST (89) 709 (11) NPS Pharm Inc NPSP (188) 231 107 Primedia Inc PRM (129) 282 6 Protection One PONE (23) 673 6 Radnet Inc RDNT (53) 434 41 Regal Entertai-A RGC (119) 2,635 (2) Riviera Holdings RIV (48) 218 14 RSC Holdings Inc RRR (44) 3,460 (128) Rural Cellular-A RCCC (590) 1,350 110 Sally Beauty Hol SBH (745) 1,440 414 Sealy Corp. ZZ (113) 1,025 22 Sonic Corp SONC (102) 765 (27) Spectrum Brands SPC (141) 3,265 828 Theravance THRX (66) 162 101 Tribune Co TRB (3,514) 13,150 (805) UST Inc UST (292) 1,487 446 Valence Tech VLNC (61) 20 8 Virgin Mobile-A VM (410) 259 (173) Voyager Learning VLCY (53) 917 (637) Warner Music Gro WMG (47) 4,599 (764) Weight Watchers WTW (926) 1,046 (172) Westmoreland Coal WLB (178) 783 (85) WR Grace & Co. GRA (285) 3,927 (1,091) XM Satellite-A XMSR (1,038) 1,662 (293) ********* 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 ***