/raid1/www/Hosts/bankrupt/TCR_Public/080717.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, July 17, 2008, Vol. 12, No. 169
Headlines
AMERICAN COLOR: Moody's Cuts Probability of Default Rating to D
AAC GROUP: Gets Consents to Proposed Indenture Amendments
ADELPHIA COMMS: Settles General Dynamics' $34 Million Claim
ALESCO FINANCIAL: IndyMac Failure to Cost $86MM Loss on Investment
AMERIGAS PARTNERS: Moody's Hikes Corporate Family Rating to Ba2
AMR CORP: Incurs $1.4 Billion Net Loss in Second Quarter 2008
APPALACHIAN REGIONAL: Fitch Cuts $74.51MM Bonds Rating to BB-
APPLICA PET: S&P Withdraws Ratings on Planned Salton-Spectrum Deal
AQUILA INC: Fitch Lifts & Withdraws Ratings After Closed GPEI Deal
ATA AIRLINES: Wants to Auction Remaining Aircraft-Related Assets
ATA AIRLINES: Allowed to Auction Chicago, Indianapolis Properties
ATA AIRLINES: Taps Starman Bros. to Sell Aircraft-Related Assets
ATLANTIC YARNS: New Brunswick Writes Down C$37.5 Mil. in Loans
AUBURN MEMORIAL: NY Court Confirms Chapter 11 Bankruptcy Plan
BASIC ENERGY: Grey Wolf Investors Snub Merger, Terminate Deal
BASIC ENERGY: Merger Kill Cues Moody's to Confirm Ba3 Ratings
BEAR STEARNS: Inks Supplemental Indentures with JPMorgan Chase
BSSP SERIES: S&P Junks Rating on Class A-5 Certificates
CALPINE CORP: Rosetta Wants Conference on Summary Judgment Plea
CBRE REALTY: Fitch Affirms 'BB' Rating on $20.25MM Class K Notes
CHAPARRAL ENERGY: Edge Petroleum Merger Cues S&P's Positive Watch
CHASE COMMERCIAL: Fitch Lifts $22.2MM Class H Certs. Rating to B+
CHRYSLER AUTOMOTIVE: Moody's to Review Ratings for Likely Cut
CINCINNATI BELL: Names Brian Ross COO; Gary Wojtaszek CFO
CIT GROUP: Completes $2BB Sale of Home Lending Assets to Lone Star
DAIMLERCHRYSLER FIN'L: Moody's to Review Ratings for Likely Cut
DAVE & BUSTER'S: S&P Lifts Corporate Credit Rating to B from B-
DAWAHARES LEXINGTON: Committee Wants Case Converted to Chapter 7
DELTA AIR: Incurs $1 Billion Net Loss in Second Quarter 2008
DIABLO GRANDE: Housing Source to Buy Assets for $25 Million
DIABLO GRANDE: Gets Approval to Tap $1 Million DIP Fund from RBS
EAU TECHNOLOGIES: WS Advances $600,000 to Purchase Common Stock
EMPORIA PREFERRED: Fitch Holds 'BB' Rating on $18.585MM Notes
ENRON CORP: Court Approves $13 Million Abbey Claim Compromise
ENRON CORP: EPMI Inks Pact Resolving CalPex Claim
ENRON CORP: 5th Cir. Court Affirms Dismissal of 10 Investor Cases
ENRON CORP: Resolves $15 Million MARAD Claim Through Stipulation
EOS AIRLINES: Names Bouchier, Stoneman as Administrators in U.K.
EPICEPT CORP: Prices Public Offering of 2 Million Shares of Stock
FIELDSTONE MORTGAGE: Judge Schneider Confirms Revised Plan
FORD MOTOR: Moody's Holds Neg Outlook on Corporate Family Rating
GEORGIA GULF: To Pay $1MM to Cure Default on 7-1/8% Senior Notes
GENERAL MOTORS: Moody's Reviews Low B and C Ratings for Likely Cut
GENERAL MOTORS: Posts Record Quarterly Sales in LAAM Region
GMAC LLC: Gets 10-Yr Waiver from FDIC to Dispose of Banking Unit
GREY WOLF: Shareholders Snub Merger with Basic, Terminate Deal
GREY WOLF: Merger Kill Cues Moody's Ba3 Corporate Family Rating
HAMILTON CREEK: Case Summary & Five Largest Unsecured Creditors
HAMNER HOLDINGS: Case Summary & Seven Largest Unsecured Creditors
HANCOCK FABRICS: U.S. Trustee Protests Joint Chapter 11 Plan
HOLOGIC INC: Moody's Affirms Ba3 Corporate Family Rating
HUNTSMAN CORP: Hexion Acquisition Proposal Gets EC Conditional Nod
IDLEAIRE TECHNOLOGIES: $26 Mil. Sale to Noteholder Group Approved
INDYMAC BANCORP: Failure Hurts Investor Alesco's TruPS Portfolio
INTELSAT CORPORATION: Moody's Assigns B3 Ratings to $1.2BB Notes
INTELSAT CORP: S&P Puts 'BB-' Rating on $658MM 9.25% Senior Notes
JIM PALMER: Case Summary & 27 Largest Unsecured Creditors
JOHN DAVID SAMS: Case Summary & Six Largest Unsecured Creditors
JP MORGAN COMMERCIAL: Fitch Affirms Ratings on Stable Performance
KB HOME: Elects Robert Johnson to Board of Directors
L-1 IDENTITY: S&P Assigns 'BB-' Corp. Credit with Negative Outlook
LABELCORP HOLDINGS: S&P Rates Proposed $190MM Facilities 'B+'
LANDSOURCE COMMUNITIES: Court Denies Proposed $1.1 B DIP Financing
LINENS N THINGS: Court Approves $2.6MM Severance Plan Continuation
LODGENET INTERACTIVE: To Report Debt Reduction in 2nd Qtr. Results
LUMINENT MORTGAGE: Releases Data on Projected Portfolio Cash Flows
LUMINENT MORTGAGE: Directors Cohen, Johnston and Piovanetti Resign
MCDERMOTT INTERNATIONAL: Moody's Hikes Ba3 Corporate Family Rating
MICHAEL MEISNER: To be Charged with Contempt by Case Trustee
METROPOLITAN HEALTH: S&P Affirms 'B(Fair)' and 'bb' Ratings
MICROMET INC: Board Adopts Director Compensation Policy
MORGAN STANLEY: S&P Affirms 'BB' Rating on Class II Notes
NEW CENTURY COS: Amends Note to Waive Penalties & Default Interest
NORTH BAY: May Access North Healthcare's $1 Million DIP Fund
OSYKA CORP: To Ink Settlement With J. Aron Over Sale Procedures
PARMLEY COVE: Case Summary & Largest Unsecured Creditor
PERFORMANCE TRANS: Cases to be Converted to Ch. 7, Court Says
PERFORMANCE TRANS: May Use Cash Collateral Until July 9
PHOENIX DIVERSIFIED: Case Trustee Wants Owner Declared in Contempt
PIERRE FOODS: Moody's Assigns D Rating After Bankruptcy Filing
PILGRIM'S PRIDE: Divests Tray-Pack Chicken Biz, Cuts 600 Positions
PIPER RESOURCES: Court Extends CCAA Protection Until July 22
PLASTECH ENGINEERED: Court Extends Plan-Filing Period to July 31
PLASTECH ENGINEERED: Parties Balk at Unsecured Reclamation Claims
PRUDENTIAL AMERICANA: Judge Markell Approves Reorganization Plan
QUALITY DISTRIBUTION: Moody's Junks B3 Corporate Family Rating
RESIDENTIAL CAPITAL: FDIC Gives GMAC 10-Yr Waiver on Banking Unit
RESIDENTIAL CAPITAL: S&P Lifts Counterparty Credit Rtng to CCC+/C
SALTON INC: S&P Withdraws Ratings After Proposed Spectrum Deal
SARATOGA RESOURCES: Completes $105 Million Cash Buyout of Harvest
SEA CONTAINERS: Employees Have Until August 25 to File Claims
SEA CONTAINERS: SCL Panel Still Not Convinced of Pension Pact OK
SHOE PAVILION: Files for Chapter 11 Protection in California
SHOE PAVILION CORP: Case Summary & 20 Largest Unsecured Creditors
SPRINT NEXTEL: In Initial Talks with SK Telecom on Joint Venture
TORRENT ENERGY: Gets Final Okay to Access YA Global's $4.5MM Loan
TRIAD GUARANTY: S&P Withdraws Ratings at Company's Request
US SHIPPING: Anthony Guzzo Resigns as Chief Accounting Officer
VERTIS INC: Moody's Assigns Default Rating after Bankruptcy Filing
WHITEHALL JEWELERS: Court OKs Auction, Except on Break-Up Fee Term
WYOMING ETHANOL: Wants to Tap Standard Bank's $10.1 Mil. DIP Fund
WYOMING ETHANOL: Unit May Use DIP Fund to Finish Idaho Plant
WYOMING ETHANOL: Disclosure Statement Hearing Reset to August 13
WYOMING ETHANOL: Section 341(a) Meeting Slated for July 29
XCOPPER SERVICES: Unsecured Creditors Claim C$1MM, Trustee Says
* Fitch Says Fuel Prices Draining US Airline Industry's Liquidity
* S&P Downgrades Ratings on 93 Clases of 26 RMBS Transactions
* S&P Puts Default Ratings on 40 Note Classes from Five CDOs
* S&P: Expenditure Cutbacks Protect Alabama's Fiscal Stability
* U.S. SEC's Emergency Order on Naked Short Selling Starts July 21
* Marc B. Hankin and Heather D. McArn Join Jenner & Block New York
* Stuart Gollin Joins Willamette as Bankruptcy Practice Director
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
AMERICAN COLOR: Moody's Cuts Probability of Default Rating to D
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Moody's Investors Service downgraded American Color Graphics,
Inc's. (ACG) Probability of Default rating to D from Ca ,
following the company's statement that it has filed a voluntary
petition for reorganization under Chapter 11 of the Bankruptcy
Code, accompanied by a pre-packaged plan of reorganization, the
terms and conditions of which have been accepted by its
noteholders. Moody's plans to withdraw all of ACG's ratings
shortly.
Details of the rating actions are:
Rating downgraded, subject to withdrawal:
-- Probability of Default rating to D from Ca
Ratings affirmed, subject to withdrawal:
-- Corporate Family rating -- Ca
-- $280 million senior second priority notes due 2010 -- C,
LGD5, 78%
Headquartered in Brentwood, Tenneessee, American Color Graphics,
Inc. is a leading provider of print and pre-media services. The
company recorded sales of $429 million for the LTM period ended
Dec. 31, 2007.
AAC GROUP: Gets Consents to Proposed Indenture Amendments
---------------------------------------------------------
American Achievement Corporation and its immediate parent company,
AAC Group Holding Corp. received, as of 5:00 P.M., New York City
time, on July 3, 2008, the requisite consents to the proposed
amendments to applicable indenture governing certain Notes issued
by the companies.
American Achievement got the consent of holders of a majority of
American Achievement's outstanding 8.25% Senior Subordinated Notes
due 2012 (CUSIP No. 02369AAE8). AAC Group Holding Corp. got the
consent of holders of a majority of AAC Group Holding Corp.'s
outstanding 10.25% Senior Discount Notes due 2012 (CUSIP No.
000305AB8).
The proposed amendments eliminate or modify substantially all of
the restrictive covenants, the obligation to offer to repurchase
Notes upon a change of control, certain events of default and
related provisions in each indenture and, with respect to Notes
for which consents are delivered, require each company to redeem
such Notes in connection with the closing of the previously
announced transaction between Herff Jones Inc. and American
Achievement Group Holding Corp., the indirect parent of American
Achievement and AAC Group Holding, if certain conditions are met.
As a result of the receipt of the requisite consents, on July 9,
2008, each company entered into a supplemental indenture
incorporating the applicable proposed amendments to the applicable
indenture. As a result of the execution of the Supplemental
Indentures, withdrawal rights have terminated.
Each company is waiving the requirement that holders deliver their
consents prior to the Consent Date in order to be eligible to
receive the consent fee. Holders of Notes who validly deliver
consents at any time at or prior to the expiration date of 5:00
P.M., New York City time, on July 15, 2008, unless extended, will
be eligible to receive the consent fee.
About American Achievement
Based in Austin, Texas, American Achievement Corp. is an indirect
wholly-owned subsidiary of AAC Group Holding Corp., which is
itself a wholly-owned subsidiary of American Achievement Group
Holding Corp. American Achievement Group Holding Corp., AAC Group
Holding Corp., and American Achievement Corp. are treated as
entities under common control.
American Achievement Group Holding Corp., AAC Group Holding Corp.,
and American Achievement Corp. manufacture and supply class rings,
yearbooks and other graduation-related scholastic products for the
high school and college markets and of recognition products, such
as letter jackets, and affinity jewelry designed to commemorate
significant events, achievements and affiliations. Products are
and services are marketed primarily in the United States and
operates in four reporting segments; class rings, yearbooks,
graduation products and other.
As reported in the Troubled Company Reporter on May 22, 2008,
Moody's Investors Service affirmed American Achievement Group
Holding Corp.'s Corporate family rating at B3; Probability-of-
default rating at B3; and $189 million (current value) senior PIK
notes due 2012 at Caa2 (LGD5, 87%).
Moody's also affirmed AAC Group Holding Corp.'s $124 million
(current value) senior discount notes due 2012 at Caa1 (LGD4,
63%), American Achievement Corporation's $150 million senior
subordinated notes due 2012 at B2 (LGD3, 34%); $40 million senior
secured revolving credit facility due 2010 at Ba3 (LGD1, 7%); and
$87 million senior secured term loan due 2011 at Ba3 (LGD1, 7%).
The outlook is changed to developing from stable.
ADELPHIA COMMS: Settles General Dynamics' $34 Million Claim
-----------------------------------------------------------
Adelphia Communications Corp. and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Southern District of New York to
authorize and approve a settlement agreement they entered into
with General Dynamics Government Systems Corp. and Amroc
Investments, LLC, the subsequent purchaser of General Dynamics'
Claim No. 89100.
Devon Mobile Communications, L.P., entered into a Master Services
Agreement with General Dynamics. Adelphia Communications
Corporation, owning 49.9% of limited partnership of Devon,
guaranteed the payment of Devon's obligations under the Agreement.
However, due to the cessation of the Reorganized Debtors' funding,
Devon failed to pay General Dynamics who then filed Claim No.
89100 against the Reorganized Debtors for $34,908,731.
After engaging in extensive negotiations, the parties stipulate
that:
a) Claim No. 89100 will be allowed as an other unsecured
claim against ACOM for $30,568,000;
b) Within 25 days after the Court's approval of the
Settlement Agreement, the Reorganized Debtors will cause
all distributions due to Amroc on account of Claim No.
89100 to be made other than the distributions of CVV
Interests. The distribution of CVV Interests will be made
in August 2008;
c) Amroc and the Reorganized Debtors will exchange mutual
releases.
By entering into the Settlement, the Reorganized Debtors note
that they will avoid all possible costs that would be incurred if
the disputes were to be fully litigated in court.
About Adelphia Comms
Based in Coudersport, Pennsylvania, Adelphia Communications
Corporation (OTC: ADELQ) -- http://www.adelphia.com/--
is a cable television company. Adelphia serves customers in 30
states and Puerto Rico, and offers analog and digital video
services, Internet access and other advanced services over its
broadband networks. The company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr &
Gallagher represents the Debtors in their restructuring efforts.
PricewaterhouseCoopers serves as the Debtors' financial advisor.
Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin,
Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of
the Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision LLC. The RME Debtors filed for chapter 11
protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622
through 06-10642). Their cases are jointly administered under
Adelphia Communications and its debtor-affiliates' chapter 11
cases.
The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended
Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That
plan became effective on Feb. 13, 2007. (Adelphia Bankruptcy
News, Issue No. 188; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
ALESCO FINANCIAL: IndyMac Failure to Cost $86MM Loss on Investment
------------------------------------------------------------------
Alesco Financial Inc. will record a loss of about $86 million on
investments in IndyMac Bancorp Inc. debt, the Associated Press
reported.
The loss was tied to Alesco's investment in collateralized debt
obligations issued by IndyMac, the report added.
IndyMac's banking unit, IndyMac Bank FSB, was seized by the Office
of Thrift Supervision on July 11.
Shares of Alesco fell 19 cents, or 13.6%, to $1.19 in morning
trading on Tuesday, AP stated. According to AP, earlier in the
session, shares hit an all-time low of $1.08.
Alesco shares sold for $1.14 as of the close of trading at the New
York Stock Exchange on July 16. The company's shares closed at
$1.38 the previous day.
In a press statement, Alesco Financial provided an update on its
trust preferred securities portfolio, including the expected
impact to AFN of the seizure of IndyMac Bancorp.
In June 2008, IndyMac elected to defer its interest payments on
$125 million aggregate principal amount of trust preferred
securities held in eight collateralized debt obligation, or CDO,
transactions in which AFN is an equity investor.
The IndyMac deferral triggered the over-collateralization tests in
five of these eight CDOs. The trigger of an over-collateralization
test in a CDO means that AFN, as a holder of equity securities,
will no longer receive current distributions of cash in respect of
its equity interests until sufficient cash flow is paid to senior
debt holders in the CDOs to cure the over-collateralization tests.
Subsequent to the IndyMac deferral, four additional banks elected
to defer interest payments on their trust preferred securities,
which has resulted in the over-collateralization tests being
triggered in two additional CDOs in which Alesco holds equity
interests. One of the CDO over-collateralization failures has
since been cured, bringing the total number of AFN's CDOs in over-
collateralization to six as of June 30, 2008.
AFN expects three of the six affected CDOs to cure the
over-collateralization failures and recommence making equity
distributions within 3 to 6 quarters and the other three to do so
within 20 to 35 quarters.
These cashflow projections assume zero recovery of principal or
interest on any of the currently deferring or defaulted securities
and no additional deferrals.
For the year ended Dec. 31, 2007, and the quarter ended March 31,
2008, the six affected CDOs contributed $36.2 million, or 43%, and
$8.4 million, or 41%, of AFN's adjusted earnings for such periods.
The aggregate principal amount of trust preferred securities in
deferral as of June 30, 2008, is $282.3 million, representing
approximately 5.5% of AFN's consolidated trust preferred
securities portfolio and an aggregate of $4.5 million in quarterly
interest payments to the eight CDOs in which AFN invests, of which
AFN's proportionate share is approximately $3.1 million, or about
$0.05 per diluted AFN common share per quarter.
AFN anticipates that the seizure of IndyMac will cause AFN to
record a realized tax loss of approximately $86 million, which is
equal to AFN's proportionate share of the $125 million of IndyMac
securities held by the eight CDOs.
The realized tax loss is expected to significantly offset AFN's
expected taxable income for the year ending Dec. 31, 2008,
including the non-cash income relating to the CDOs that are
failing overcollateralization tests as of June 30, 2008.
AFN is evaluating its overall portfolio for changes in fair value
in connection with the preparation of its second quarter financial
results, which AFN expects to announce on Aug. 5, 2008.
As of June 30, 2008, AFN has available unrestricted cash of
approximately $120 million. During June 2008, AFN sold a
subsidiary that owned approximately $87.5 million notional of
credit default swap positions for $70.4 million in cash. As a
result of this sale transaction, the $69.3 million of counterparty
margin included in AFN's March 31, 2008, unrestricted cash balance
is no longer subject to counterparty or market risk.
"The failure of IndyMac is indicative of the stress that the
banking sector is under at the time and is likely to be under for
the foreseeable future," James McEntee, president and CEO of AFN,
said.
"IndyMac's failure has significantly impacted our portfolio;
however, as a result of our strong liquidity position, we continue
to believe we have the ability to be patient and to manage through
these difficult times."
About Indymac Bancorp
Headquartered in Pasadena, California, IndyMac Bancorp Inc.
(NYSE:IMB) -- http://www.indymacbank.com/-- is the holding
company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that
originates mortgages in all 50 states of the United States.
Indymac Bank provides financing for the acquisition, development,
and improvement of single-family homes. Indymac also provides
financing secured by single-family homes and other banking
products to facilitate consumers' personal financial goals.
IndyMac specialized in making and selling so-called Alt-A mortgage
loans, a category of loans to consumers more credit worthy than
subprime borrowers but typically without the complete
documentation of income or assets necessary to receive a prime-
rate loan. The company facilitates the acquisition, development,
and improvement of single-family homes through the electronic
mortgage information and transaction system platform that
automates underwriting, risk-based pricing and rate locking via
the internet at the point of sale. Indymac Bank offers mortgage
products and services that are tailored to meet the needs of both
consumers and mortgage professionals. Indymac operates through
two segments -- mortgage banking and thrift.
The company was ranked the ninth-largest U.S. mortgage lender in
2007 in terms of loan volume, The Wall Street Journal says, citing
trade publication Inside Mortgage Finance.
About Alesco Financial
Headquartered in Philadelphia, Alesco Financial Inc. (NYSE: AFN)
-- http://www.alescofinancial.com/-- is a specialty finance real
estate investment trust (REIT). The company is externally managed
by Cohen & Company Management LLC, a subsidiary of Cohen Brothers
LLC (which does business as Cohen & Company), an alternative
investment management firm, which, since 2001, has provided
financing to small and mid-sized companies in financial services,
real estate and other sectors.
* * *
As reported in the Troubled Company Reporter on May 9, 2008, the
company received written notice from the trustees of Kleros Real
Estate I, II, and III that each CDO has experienced an event of
default. These events of default resulted from the failure of
certain additional overcollateralization tests due to credit
rating agency downgrades. The events of default provide the
controlling class debtholder in each CDO with the option to
liquidate all of the MBS assets collateralizing the particular
CDO. The proceeds of any such liquidation would be used to repay
the controlling class debtholder.
On May 1, 2008, the company received written notice from the
trustee of Kleros Real Estate III that the controlling class
debtholder has submitted a notice of liquidation. Although
liquidation of the underlying collateral has not yet occurred,
once the liquidation process commences the company will no longer
able to include the liquidated assets and the related income as a
component of its REIT qualifying assets and income.
As of May 9, 2008, the controlling class debtholders of
Kleros Real Estate I and II have not exercised their rights to
liquidate either CDO. Since the company is not receiving any cash
flow from its investments in any of the Kleros Real Estate CDOs,
the events of default and liquidation notices do not have any
further impact on the company's cash flows.
However, the assets of the Kleros Real Estate I, II and III CDOs
and the income they generate for tax purposes are a component of
the company's REIT qualifying assets and income. If more than one
of the Kleros Real Estate CDOs is liquidated the company may have
to deploy additional capital into REIT qualifying assets in order
to continue to qualify as a REIT. If the company is not able to
invest in sufficient other REIT qualifying assets, its ability
to qualify as a REIT could be materially adversely affected.
AMERIGAS PARTNERS: Moody's Hikes Corporate Family Rating to Ba2
---------------------------------------------------------------
Moody's Investors Service upgraded AmeriGas Partners, LP's
corporate family rating and probability of default rating to Ba2
from Ba3. Moody's also upgraded the partnership's 7.25% senior
unsecured notes due 2015 and 7.125% senior unsecured notes due
2016 to Ba3 (LGD 4, 69%) from B1 (LGD 5, 71%).
Moody's does not rate the 8.875% senior unsecured notes, the
senior unsecured bank facilities or approximately $150 million of
first mortgage notes. The outlook is stable.
"Moody's upgraded AmeriGas' ratings to reflect the substantial
progress the partnership has made in reducing leverage and
improving its operational performance, despite the challenges of
rising propane prices and customer conservation," Pete Speer,
Moody's vice-president and senior analyst, commented. "The
upgrade is also based on Moody's expectation that management
continues its conservative financial policies, including how the
partnership funds future acquisitions within the propane sector."
AmeriGas' Ba2 CFR reflects its leading market position, geographic
diversification, low financial leverage and solid distribution
coverage. The partnership is the largest retail marketer of
propane in the United States and services approximately 1.3
million propane customers from locations in 46 states.
Through its AmeriGas Cylinder Exchange (ACE) program, it is the
second largest retail distributor of propane cylinders for grills.
The ratings are also supported by management's long-term track
record and the stable ownership provided by UGI Corporation.
The Ba2 rating also considers the continued challenges of
operating in the propane distribution business which remains
highly fragmented and competitive. The substantial increase in
propane prices in recent years has encouraged more conservation
and higher price sensitivity by customers. This trend, combined
with warmer than normal winters, has made organic growth very
difficult.
Moody's believes that these challenges, combined with the inherent
expectations of MLP unit holders for distribution growth, make
industry consolidation particularly attractive and heightens the
acquisition event risk for the propane sector over the medium
term. While AmeriGas has participated in industry consolidation,
its acquisitions in recent years have been relatively small
transactions.
If the partnership were to complete a more significant
acquisition, Moody's would expect AmeriGas to use a substantial
amount of equity funding and that any increases in leverage would
be temporary and managed down to levels consistent with a Ba2
rating.
Headquartered in Valley Forge, Pennsylvania, AmeriGas Partners, LP
is a publicly traded master limited partnership based.
AMR CORP: Incurs $1.4 Billion Net Loss in Second Quarter 2008
-------------------------------------------------------------
AMR Corporation, the parent company of American Airlines, Inc.,
reported a net loss of $1.4 billion for the second quarter of
2008, or $5.77 per share. The current quarter results compare to
a net profit of $317 million for the second quarter of 2007, or
$1.08 per diluted share.
The second quarter results include special charges as previously
disclosed in AMR's Form 8-K filing with the Securities and
Exchange Commission on July 2. These include a $1.1 billion non-
cash accounting charge to write down the value of certain aircraft
and related long-lived assets to their estimated fair value and a
charge of approximately $55 million of a total $70 million
expected for severance-related costs resulting from the company's
system-wide capacity reductions in the fourth quarter of this
year. The remainder of the severance-related charge is expected
to be taken in the third quarter. Excluding these special
charges, AMR reported a second quarter net loss of $284 million,
or $1.13 per share.
Record jet fuel prices contributed significantly to the company's
loss in the second quarter of 2008. AMR paid $3.19 per gallon for
jet fuel in the second quarter compared to $2.09 a gallon in the
second quarter of 2007, a 53% increase. As a result, the company
paid $838 million more for fuel in the second quarter of 2008 than
it would have paid at prevailing prices from the prior-year
period.
"Our company continues to be severely challenged by the fuel
crisis that has afflicted our entire industry, and we expect these
difficulties to continue for the foreseeable future," said AMR
Chairman and CEO Gerard Arpey. "Clearly, our second quarter
results were disappointing, but I am also pleased with our efforts
as a company to take difficult but necessary steps to manage
through this uncertainty. While we believe the airline industry
cannot continue in its current form at today's record fuel prices,
we also believe our decisions and hard work by employees in recent
years have better prepared us to face these challenges. We remain
committed to taking action -- whether that relates to capacity
reductions, revenue enhancements, fleet changes or other efforts
to improve our financial foundation -- as we work to secure our
long-term future."
AMR highlighted additional actions it has taken in response to the
ongoing challenges of record fuel prices and a softer economy.
The company has obtained $720 million in new financing through a
number of transactions, including the sale of certain aircraft
that will remain in the company's fleet through a lease agreement,
and through newly issued mortgage debt that is secured by
aircraft. Of the new financing, approximately $500 million was
received in July and will be recorded in the company's cash
balance in the third quarter of 2008.
In addition, AMR has decided to retire all 34 of its A300 aircraft
by the end of 2009, compared to the previous retirement schedule
that extended through 2012. In 2008, AMR will retire 30 MD-80s,
10 A300s and 26 Saab turbo-prop aircraft, and will retire or
remove from service 37 regional jets. The remaining A300s will be
retired in 2009, which is expected to result in capacity
reductions next year. A s it begins to replace its MD-80 fleet,
the company continues to expect to take delivery of 70 more-fuel-
efficient 737-800 aircraft in 2009 and 2010.
Given the current industry environment, AMR has decided to place
on hold its planned divestiture of American Eagle, its regional
affiliate, until industry conditions are more stable and
favorable. AMR continues to believe that a divestiture makes
sense in the long term for AMR, American, American Eagle and their
stakeholders but AMR also believes that a divestiture is not
sensible amid current conditions.
Operational Performance
AMR reported second quarter consolidated revenues of approximately
$6.2 billion, an increase of 5.1% year over year. American's
mainline passenger revenue per available seat mile (unit revenue)
increased by 7.0% in the second quarter compared to the year-ago
quarter. Mainline capacity, or total available seat miles, in the
second quarter decreased by 2.2% compared to the same period in
2007.
American's mainline load factor -– or the percentage of total
seats filled -- was 82.5% during the second quarter, compared to
83.6% in the second quarter of 2007. American's second-quarter
yield, which represents average fares paid, increased 8.5%
compared to the second quarter of 2007, its 13th consecutive
quarter of year-over-year yield increases.
American's mainline cost per available seat mile (unit cost),
excluding special items, increased 19.3% in the second quarter
compared to the same period in 2007, largely due to higher fuel
expense. Excluding fuel and special items, mainline unit costs in
the second quarter of 2008 increased by 5.1% year over year.
Balance Sheet Update
AMR ended the second quarter with $5.5 billion in cash and short-
term investments, including a restricted balance of $434 million.
The second quarter 2008 cash balance includes $220 million
received through financings involving aircraft mortgage and sale-
leaseback transactions. The $500 million in additional aircraft
financing was received after the second quarter ended and will be
applied to AMR's third quarter 2008 cash balance.
AMR continues to expect the previously announced sale of American
Beacon Advisors, Inc., valued at $480 million in total
consideration, to be completed in the third quarter of 2008. At
the end of the second quarter of 2007 AMR had $6.4 billion in cash
and short-term investments, including a restricted balance of
$470 million.
AMR's total debt, which it defines as the aggregate of its long-
term debt, capital lease obligations, the principal amount of
airport facility tax-exempt bonds, and the present value of
aircraft operating lease obligations, was $15.2 billion at the end
of the second quarter of 2008, compared to $17.3 billion at the
end of the second quarter of 2007.
AMR's net debt, which it defines as total debt less unrestricted
cash and short-term investments, was $10.1 billion at the end of
the second quarter of 2008, compared to $11.4 billion at the end
of the second quarter of 2007.
As of July 15, AMR had contributed $78 million to its employees'
defined benefit pension plans in 2008. AMR has contributed more
than $2 billion to its employee defined benefit pension plans
since the beginning of 2002.
Guidance
A. Mainline and Consolidated Capacity
Following its capacity reduction announcement in May, AMR expects
its full-year mainline capacity to decrease by 3.4% in 2008
compared to 2007, with a 5.7% reduction in domestic capacity and a
0.7% increase in international capacity compared to 2007 levels.
On a consolidated basis, AMR expects full-year capacity to
decrease by 3.7% in 2008 compared to 2007.
AMR expects mainline capacity in the third quarter of 2008 to
decrease by 2.7% year over year. It expects consolidated capacity
to decrease by 3.0% in the third quarter of 2008 compared to the
prior-year period.
AMR has said on May 21, 2008, that it expects system-wide capacity
to decline by 7.0% to 8.0% in the fourth quarter of 2008 compared
to fourth quarter 2007 levels, with fourth quarter mainline
domestic capacity expected to decline by 11.0% to 12.0% and
fourth quarter regional affiliate capacity expected to decline by
10.0% to 11.0% compared to the same period in 2007.
Beyond the expected 2009 capacity reductions resulting from the
retirement of the A300s, given current fuel price and economic
trends, the company expects to make additional capacity reductions
in 2009.
B. Fuel Expense and Hedging
While the cost of jet fuel remains very volatile, AMR is planning
for an average system price of $3.81 per gallon in the third
quarter of 2008 and $3.42 a gallon for all of 2008. AMR has 35.0%
of its anticipated third quarter 2008 fuel consumption capped at
an average crude equivalent of $95 per barrel (jet fuel equivalent
of $2.92 per gallon), with 34.0% of its anticipated full-year
consumption capped at an average crude equivalent of
$82 per barrel (jet fuel equivalent of $2.60 per gallon).
Consolidated consumption for the third quarter is expected to be
772 million gallons of jet fuel.
C. Mainline and Consolidated Unit Costs
For the third quarter of 2008, mainline unit costs are expected to
increase 26.1% compared to the third quarter of 2007, while third
quarter consolidated unit costs are expected to increase 25.7%
compared to the third quarter of 2007.
In the third quarter of 2008, mainline unit costs excluding fuel
are expected to increase 3.6% year over year while consolidated
unit costs excluding fuel are expected to increase 3.9% from the
third quarter of 2007.
Full-year mainline unit costs are expected to increase 21.5% in
2008 compared to 2007, while full-year consolidated unit costs are
expected to increase 21.2% in 2008 compared to 2007.
AMR expects mainline unit costs excluding fuel to be 4.1% higher
in 2008 versus 2007, while 2008 consolidated unit costs excluding
fuel are expected to increase 4.6% year over year.
A full-text copy of the company's second quarter 2008 results is
available for free at http://ResearchArchives.com/t/s?2f8c
About AMR Corp.
Headquartered in Forth Worth, Texas, AMR Corporation (NYSE:
AMR) operates with its principal subsidiary, American Airlines
Inc. -- http://www.aa.com/-- a worldwide scheduled passenger
airline. At the end of 2006, American provided scheduled jet
service to about 150 destinations throughout North America, the
Caribbean, Latin America, including Brazil, Europe and Asia.
American is also a scheduled airfreight carrier, providing
freight and mail services to shippers throughout its system.
Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two
regional airlines, American Eagle Airlines Inc. and Executive
Airlines Inc., and does business as "American Eagle." American
Beacon Advisors Inc., a wholly owned subsidiary of AMR, is
responsible for the investment and oversight of assets of AMR's
U.S. employee benefit plans, as well as AMR's short-term
investments.
* * *
As reported in the Troubled Company Reporter-Latin America on
March 26, 2008, Standard & Poor's Ratings Services revised its
outlook on the long-term ratings on AMR Corp. (B/Negative/B-3)
and subsidiary American Airlines Inc. (B/Negative/--) to
negative from positive. S&P also lowered its short-term rating
on AMR to 'B-3' from 'B-2' and affirmed all other ratings on AMR
and American.
On July 15, 2008, the TCR said that Moody's Investors Service
placed the debt ratings of AMR Corp. and its subsidiaries under
review for possible downgrade. The company has an outstanding B2
corporate family rating. The review includes the ratings for
certain equipment trust certificates and enhanced equipment Trust
Certificates of American Airlines, Inc.
Likely Bankruptcy Filing This Year
As reported in the Troubled Company Reporter on June 5, 2008,
AMR Corp., parent of American Airlines, is considered a possible
chapter 11 candidate and could tumble over into chapter 11
bankruptcy this year, Stockhouse.com said, citing record prices in
oil.
AMR has said report of possible bankruptcy filing is unfounded.
Stockhouse.com noted that although AMR is the world's largest
airline, it is now a small cap stock, with a market value of only
$1.8 billion. The report also notes that AMR has $9.3 billion in
debt and may not have the money to cover its debt service as the
year passes.
The TCR said on May 26, 2008, Jamie Baker, an analyst at J.P.
Morgan, said U.S. airline industry stands to post a collective
$7,200,000,000 in operating losses in 2008. The results would be
wider than an initial forecast of $4,600,000,000 loss, the analyst
said.
Mr. Baker, in his research note, said though investors, management
and analysts may talk about airlines acting collectively to reduce
capacity to firm up revenue, the reality is that they are more
likely to dig in and try to outlast each other.
U.S. Airways has the highest risk of bankruptcy, followed by
Northwest Airlines, United Air Lines' parent UAL Corp., AMR Corp.,
JetBlue, Continental Airlines, AirTran, Delta Air Lines, Alaska
Air Lines and Southwest Airlines.
APPALACHIAN REGIONAL: Fitch Cuts $74.51MM Bonds Rating to BB-
-------------------------------------------------------------
Fitch Ratings downgraded to 'BB-' from 'BB+' the rating on
$74,510,000 Kentucky Economic Development Finance Authority
refunding and improvement revenue bonds (Appalachian Regional
Healthcare, Inc.), series 1997. The Rating Outlook is Stable.
The downgrade to 'BB-' reflects the effect of two strikes at
Appalachian Regional Healthcare by two separate unions within the
past 15 months. The second strike, a nurses strike that lasted
from October 2007 through December 2007, resulted in more than
$20 million in costs, and, as a result, ARH's operating margin for
the 11 months ending May 31, 2008 was a negative 3.9% on losses of
$18.5 million. Bottom line losses after including investment
income totaled $14.9 million. The losses in fiscal 2008 will
further weaken ARH's already light liquidity position. Management
indicated that ARH will begin fiscal 2009 with approximately
$38 million in cash which translates to a weak 31.2 days cash on
hand, a 2.7 times cushion ratio and 37.3% cash to debt, all of
which are all below Fitch's non-investment-grade median.
Furthermore, Fitch is concerned that given the 31.2 DCOH is
significantly below the reported days in accounts receivable of
57.6 days for the 11-month interim period, the organization does
not have enough liquidity relative to expenses to cover its
revenue cycle.
ARH's negative volume trends continued through fiscal 2008 and
reflect the challenges of ARH's service area. The majority of
ARH's facilities are located in rural communities in Kentucky and
West Virginia and have below-average socioeconomic and demographic
wealth indicators, resulting in a very high governmental payor mix
(Medicare and Medicaid made up a combined 63.2% of gross revenues
in fiscal 2007). An additional negative credit factor is the
challenge that ARH faces in meeting the capital needs of its
system given its financial performance and limited liquidity. ARH
capital spending, on average, has been roughly equal to its
depreciation expense each year. Management acknowledged that
capital spending will slow due to ongoing operating and liquidity
pressures, which Fitch views negatively.
The Stable Outlook reflects positive monthly operating results in
each of the five months since the strike ended. This has helped
reduce the operating losses from $23 million when the strike ended
in December 2007 to $18.5 million as of May 31, 2008. Supporting
the positive operations are improvements to physician recruitment
and efforts to improve ARH's revenue cycle. For fiscal 2009, ARH
has budgeted for a 1.4% positive operating margin, with operating
income of $7.5 million. A key rating driver for ARH will be
meeting its budget numbers in fiscal 2009.
ARH is headquartered in Lexington and comprises nine acute care
hospitals, psychiatric services, 12 outpatient clinics, and other
related health care businesses located throughout eastern Kentucky
and West Virginia. ARH covenants to disclose only annual
financial information and utilization statistics to the Nationally
Recognized Municipal Securities Information Repositories.
APPLICA PET: S&P Withdraws Ratings on Planned Salton-Spectrum Deal
------------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on small
appliance manufacturer Salton Inc. and its wholly owned
subsidiary, Applica Pet Products LLC, including the 'B+' corporate
credit ratings on both entities. These ratings were based upon
Salton Inc.'s proposed acquisition of the global pet business from
Spectrum Brands Inc. (CCC+/Watch Pos/--). Proceeds from the
proposed bank loan facility to Applica Pet were to finance the
acquisition by Salton. On July 14, 2006, both parties announced
that it terminated the sale agreement, thus S&P are withdrawing
all related ratings.
AQUILA INC: Fitch Lifts & Withdraws Ratings After Closed GPEI Deal
------------------------------------------------------------------
Fitch Ratings upgraded and removed from Rating Watch Positive the
ratings of Aquila, Inc. as:
-- Issuer Default Rating to 'BBB-' from 'BB-';
-- Sr. secured to 'BBB' from 'BB+';
-- Sr. unsecured to 'BBB-' from 'BB-'.
Fitch has withdrawn the ratings with ILA's completion of its
merger with Great Plains Energy, Inc. (GXP, not rated by Fitch)
and simultaneous sale of select utility properties to Black Hills
Corp. ('BBB' IDR). GXP will assume all of ILA's outstanding debt.
Fitch placed ILA's ratings on Ratings Watch Positive in June 2007
on the news of the sale of assets to Black Hills Corp. and the
merger with GXP.
ATA AIRLINES: Wants to Auction Remaining Aircraft-Related Assets
----------------------------------------------------------------
ATA Airlines, Inc. seeks permission from the U.S. Bankruptcy Court
for the Southern District of Indiana to conduct separate auctions
of its remaining aircraft-related equipment and miscellaneous
assets.
Aircraft-related assets slated for auction include rotables,
shelving, ground service equipment, among other things. Also up
for auction are ATA Airlines' properties currently stored in its
warehouse at 2413 North Support Road-DFW Airport, in Texas. The
auctions will be conducted in Indianapolis, Dallas and Hawaii.
Assets that have been approved by the Court for sale or
disposition, and are subject of pending sales are not included in
the proposed auctions. Also not included are assets that have
been identified in the Requests for Proposal issued by ATA
Airlines on June 10, 2008, except those the airlines decides not
to include in a private or stalking horse bid sale.
The RFPs
The RFP Assets consist of separate packages of aircraft parts and
related equipment, grouped together by aircraft type. In the
RFPs, the Debtor solicited bids for entire packages and indicated
that it would not accept bids for individual pieces of equipment.
If the Debtor receives no interest, or insufficient interest, for
any or all of the RFP Property Packages, then the RFP Assets in
the RFP Property Packages that are in the possession of the
Debtor will be included in the proposed auction.
If the Debtor receives bids on any of the RFP Property Packages
which, in its business judgment, will result in an ultimate sale
that will generate a greater amount of net sales proceeds than
would be received in an auction of the property, the Debtor
reserves the right to sell the applicable RFP Property
Packages in a private or stalking horse sale, subject to
Bankruptcy Court approval.
Auctions
ATA Airlines intends to conduct an auction of its assets located
in Indianapolis on September 10 and 11, 2008, 10:00 a.m., Eastern
time, at 4555 West Bradbury, in Indianapolis, Indiana.
Meanwhile, its properties in Dallas are slated for auction on
September 4 and 5, 2008, 10:00 a.m., Central time, at 2413 North
Support Road-DFW Airport, in Dallas, Texas.
ATA says it will hold an auction in Hawaii simultaneous with the
auction its proposed auctioneer, Starman Bros. Auctions Inc.,
will conduct for Aloha Airlines, Inc. The date and venue for the
auction has not yet been set. However, when the information is
determined, the Debtor will file a notice containing the
information with the Bankruptcy Court and other notice parties.
ATA Airlines proposes to conduct the auctions pursuant to these
terms:
(1) The sale is to be conducted without reserve and no item
is subject to a reserve price. All buyers are required
to pay the entire price, including tax after the sale is
completed.
(2) Buyers have 72 hours from the time of the auction to
remove the property that have been sold to them, and
will be liable for all expenses of storage if they fail
to do so within that period.
(3) Bidders are not allowed to operate any equipment unless
allowed by ATA Airlines. If permission is granted,
the bidder agrees that the operation is at his own risk,
and will indemnify the airlines and Starman Bros., for
loss, injury or damage that may occur as a result of the
operation.
(4) No agent or representative of ATA Airlines and Starman
Bros., is authorized to make warranty or representation
as to the property subject for sale. The airlines and
the auctioneer will not be liable for any incorrect
description or defect on any item or lot.
(5) In case a buyer fails to comply with the terms of the
sale, Starman Bros., has the right to resell the
purchased items, and any deposits made will be
forfeited. In the event the property is resold, the
forfeiting buyer will be held liable for any deficiency
or costs resulting from the resale as well as any other
damages sustained by ATA Airlines.
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, 2008 (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. The Debtors have until July 31, 2008, to
exclusively file their bankruptcy plan.
(ATA Airlines Bankruptcy News, Issue No. 86; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Allowed to Auction Chicago, Indianapolis Properties
-----------------------------------------------------------------
ATA Airlines, Inc. obtained approval from the U.S. Bankruptcy
Court for the Southern District of Indiana to auction off its
properties located in its facilities in Chicago and Indianapolis.
As reported in the Troubled Company Reporter on June 25, 2008, the
properties slated for auction include vehicles, computer
equipment, office furnishings and supplies, among other things.
Aircraft-related assets are not included in the auctions.
ATA Airlines will conduct an auction of its properties in Chicago
starting at 10:00 a.m., Central time, on July 24, 2008, at 6648
S. Narragansett Avenue, in Bedford Park, Illinois. Meanwhile,
its properties in Indianapolis are slated for auction beginning
at 10:00 a.m., Eastern Time, on July 22, 2008, at 7337 West
Washington, Buildings 2 and 3, in Indianapolis, Indiana.
Pyramid Auction Services, Inc., as auctioneer, has been required
to file a report of the sale within seven days after the
auctions, and furnish counsel for the U.S. Trustee, the Official
Committee of Unsecured Creditors and JPMorgan Chase Bank, N.A., a
copy of the report. It has also been required to file with each
report an affidavit listing the commission received and costs
reimbursed.
No further hearing is required to approve the results of the
auctions, or authorize the payment of commission and
reimbursement of expenses to Pyramid Auction, unless an objection
to the reports and affidavits is filed within five days after
their issuance.
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, 2008 (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. The Debtors have until July 31, 2008, to
exclusively file their bankruptcy plan.
(ATA Airlines Bankruptcy News, Issue No. 86; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Taps Starman Bros. to Sell Aircraft-Related Assets
----------------------------------------------------------------
ATA Airlines, Inc. seeks approval from the U.S. Bankruptcy Court
for the Southern District of Indiana to employ Starman Bros.
Auctions Inc. to market and auction its remaining aircraft-related
equipment and other assets.
ATA Airlines selected Starman because of the firm's extensive
experience on marketing and liquidating aviation-related assets.
Starman previously handled the liquidation of those types of
asset for other airlines, including Midway and Northwest
Airlines.
If the proposed employment is approved, Starman Bros., would be
assigned to coordinate an auction in Indianapolis, Dallas and
Hawaii.
In exchange for its services, Starman Bros., will get a
commission equal to 5% of the gross sale proceeds in excess of
$5,000,000, and 4% of the first $5,000,000 in gross sale
proceeds. The firm is also entitled to reimbursement of up to
$30,000, for the cost it may incur in advertising the auctions
and is permitted to charge buyers a 5% premium on the gross
proceeds of any sale.
Steve Starman, president of Starman Bros., assures the Court that
his firm does not hold or represent any interest adverse to ATA
Airlines' estate.
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, 2008 (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. The Debtors have until July 31, 2008, to
exclusively file their bankruptcy plan.
(ATA Airlines Bankruptcy News, Issue No. 86; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATLANTIC YARNS: New Brunswick Writes Down C$37.5 Mil. in Loans
--------------------------------------------------------------
The government of New Brunswick, Canada wrote off about
C$37.5 million relating to the Companies Creditors Arrangement Act
proceeding of Atlantic Yarns of Atholville and Atlantic Fine Yarns
of Pokemouche, Tim Jaques of The Tribune reports.
New Brunswick Business Minister, Greg Byrne, said "it was case of
lose some or lose it all," The Tribune states.
The government wrote down $21.6 million owed by Atlantic Yarns,
and C$15.9 million owed by Atlantic Fine Yarns, The Tribune says.
After the writedown, Atlantic Fine Yarns will still owe
$23.6 million plus C$2.6 million guaranteed loans, and Atlantic
Yarns will still owe C$15 million, The Tribune writes.
Atlantic Yarns and Atlantic Fine Yarns were closed since they
filed for protection under CCAA last year, The Tribune notes.
Both companies were offered a reopening in August 2008, the report
adds.
The Debtors' bankruptcy plan was approved by the Court of Queen's
Bench in late June 2008. GE Capital Canada Equipment Financing
Inc., which was initially against the plan had eventually
consented to the plan, The Tribune relates.
The Debtors will have C$18 million in working capital, The Tribune
notes.
Mr. Bryne asserted that the Debtors "have been strong employers in
the region" and helping them was the best option done by the
government, The Tribune reports. The government understands that
it is not the only creditor in the case but said that it will
support the Debtors' plan of reinvesting in and reopening of their
operations, The Tribune notes.
Mr. Byrne said that there is hope for the Debtor's future through
Canada's pending trade agreements with South American countries,
passage of Outward Processing Initiative that grants more
favorable tariff rates for clothes made of Canadian yarn to enter
the market, The Tribune relates.
As reported in the Troubled Company Reporter on Oct. 31, 2007,
Atlantic Yarns Inc. and Atlantic Fine Yarns have filed for
bankruptcy protection. The companies and a certain trustee had
met with representatives of the Communications, Energy and
Paperworkers Union of Canada to negotiate about future concerns.
Union representative Pat Roy had revealed that at that meeting,
workers were told of the companies' need to restructure and that
within 30 days, the companies will determine whether to cut jobs
or close down mills. Mr. Byrne had said that a pending trade
agreement with Peru or Columbia could help the companies gain
access to foreign markets.
Atlantic Yarns received loans and guarantees of about
C$37.0 million, while Atlantic Fine Yarns got around
C$41.5 million.
About Atlantic Yarns
New Brunswick, Ontario-based Atlantic Yarns Inc. manufactures
cotton and poly cotton yarns. The company produces contamination
free yarn using cotton from the United States. It produces open
end and ring spun carded and combed yarns. The company generates
annual sales of $10 million to $50 million. Atlantic Yarns and
Atlantic Fine Yarns are sister companies and have been receiving
subsidy from provincial taxpayers since they opened in 1998.
AUBURN MEMORIAL: NY Court Confirms Chapter 11 Bankruptcy Plan
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of New York
confirmed on July 10, 2008, Auburn Memorial Hospital's Amended
Joint Plan of Reorganization, allowing the Debtors to emerge from
Chapter 11 bankruptcy protection. The hospital filed a voluntary
petition for protection under Chapter 11 of the U.S. Bankruptcy
Code in April 2007.
Auburn Memorial's bankruptcy plan represents a fair settlement
that ensures the long-term financial health of the institution.
Under its provisions, distributions to creditors will begin
immediately. Furthermore, all pensions for employees and retirees
remain fully funded and guaranteed by the federal government.
Radian Asset Assurance Inc. objected to the Debtors' plan and
sought for continuance of the July 10, 2008 confirmation hearing.
Radian later withdrew the request.
The Debtor has until September 30, 2008, to use the cash
collateral of their prepetition lenders.
"The [Auburn Memorial] board of trustees and management team are
very grateful for the support shown by hospital employees and
physicians as well as local foundations, elected officials, labor
unions, and the public," said Scott Berlucchi, president and CEO
of Auburn Memorial. "[Auburn Memorial] will continue to serve the
community well into the future because we worked together to solve
the financial issues confronting the hospital," he added.
Auburn Memorial continued to function throughout the financial
restructuring process under a long-term operational strategy
initiated before the Chapter 11 filing. The efforts tied to the
strategy have proven successful with operations on track and on
budget for 2008 and the number of in-patient admissions and out-
patient services up significantly. No employee layoffs occurred
as a result of the Chapter 11 process.
For more information about AMH and its emergence from Chapter 11
bankruptcy protection, contact:
Beverly Miller
Director of community relations
Tel: (315) 255-7239
As reported by the Troubled Company Reporter, Auburn Memorial
Hospital filed for chapter 11 protection on April 24, 2007, with
the U.S. Bankruptcy Court for the Northern District of New York.
Two of the Debtor's affiliates, Auburn Memorial Companies, Inc.,
and A.M.H. Properties, Inc., also filed for bankruptcy.
According to the TCR, The Ithaca Journal said the action was done
to address and resolve the liens recently filed against the Debtor
real property by the Pension Benefit Guaranty Corporation. The
Debtor also hopes to restructure its obligations owed to certain
other creditors under chapter 11.
According to the Post-Standard, the Debtor had $20 million in
unsecured debt, $13.8 million of which it owes to its employees'
pension system, when it filed for bankruptcy.
Before filing for bankruptcy, the Debtor had initiated a long-term
restructuring plan that aims to guide its operations as well as
provide a framework for the Debtor to emerge as a financially
sound company, the Ithaca Journal related.
The Ithaca Journal further related that although the hospital had
taken steps to address financial losses for the fiscal years 2004
to 2006, it accrued debt that weakened its finances and caused
recent cash flow difficulties. The report said First Niagara
Bank, Alliance Bank, and Cayuga Bank pledged debtor-in-possession
financing for the Debtors to continue operations while under the
bankruptcy process.
Headquartered in Auburn, New York, Auburn Memorial Hospital --
http://www.auburnhospital.com/-- is a community-focused hospital
that delivers a full range of acute, outpatient and preventive
care services for Cayuga County and the surrounding Finger Lakes
region of central New York.
BASIC ENERGY: Grey Wolf Investors Snub Merger, Terminate Deal
-------------------------------------------------------------
Grey Wolf Inc. terminated its merger agreement with Basic Energy
Services Inc. Grey Wolf disclosed that its proposed merger did
not receive sufficient votes from Grey Wolf shareholders at its
special meeting of shareholders held July 15.
As reported in the Troubled Company Reporter on July 14, 2008,
Precision Drilling Trust said it will ask Grey Wolf's board
of directors to reconsider its $10.00 per share buyout offer if
Grey Wolf shareholders reject a proposed merger with Basic.
In light of this development, the board of directors of Grey Wolf
plans to review the company's alternatives for enhancing
shareholder value. This review will include an update to the
company's existing strategic plan and will encompass consideration
of continued internal growth by remaining independent,
acquisitions, mergers, sale of the company, strategic alliances,
joint ventures and financial alternatives.
The board has engaged UBS Investment Bank as its independent
financial advisor to assist the Company in conducting this review.
"Grey Wolf remains fully committed to enhancing shareholder value.
After thorough consideration, Grey Wolf's board believed that the
addition of Basic's complementary business and assets would have
been an excellent strategic fit for us and would have created
significant value," Thomas P. Richards, chairman, president and
CEO of Grey Wolf, said.
"The board will now continue to consider other alternatives to
enhance shareholder value and it will do so in an environment of
strong commodity prices, a related strengthening in the onshore
U.S. lower 48 drilling market and the potential inherent in Grey
Wolf's asset base," Mr. Richards continued.
The company cautions shareholders that there is no assurance that
the review will result in any specific transaction and no
timetable has been set for its completion. The company does not
intend to disclose developments relating to this review unless and
until its board approves a specific agreement or transaction.
The company will also take a pre-tax charge to earnings of
approximately $17.00 million or approximately $.05 per diluted
share during the third quarter of this year as a result of the
shareholder vote and related termination of the merger agreement.
About Precision Drilling Trust
Precision Drilling Trust (NYSE:PDS and TSX:PD.UN) is an
unincorporated open-ended investment trust established under the
laws of the Province of Alberta, Canada.
About Grey Wolf
Headquartered in Houston, Texas, Grey Wolf Inc. (AMEX: GW) --
http://www.gwdrilling.com/-- provides turnkey and contract oil
and gas land drilling services in the best natural gas producing
regions in the United States with a current drilling rig fleet of
121, which will increase to 123 with the expected addition of two
new rigs in 2008.
About Basic Energy Services
Headquartered in Midland, Texas, Basic Energy Services Inc.
(NYSE:BAS) -- http://www.basicenergyservices.com/-- operates in
the major oil and gas producing markets in the US including
South Texas, the Texas Gulf Coast, the Ark-La-Tex region, North
Texas, the Permian Basin of West Texas, the Mid Continent,
Louisiana Inland Waters and the Rocky Mountains. Founded in
1992, Basic Energy has more than 4,600 employees in 11 states.
In the Dominican Republic, Basic Energy controls power companies
Cepm, Cespm and Ege Haina.
BASIC ENERGY: Merger Kill Cues Moody's to Confirm Ba3 Ratings
-------------------------------------------------------------
Moody's Investors Service confirmed the ratings for Basic Energy
Services, Inc. following the company's statement that it has
terminated its proposed merger with Grey Wolf, Inc.
The confirmed ratings for Basic are the Ba3 corporate family
rating, the Ba3 probability of default rating, the B1 (LGD 5, 74%)
senior unsecured note rating, and the Ba1 (LGD 2,19%) rating on
the senior secured revolving credit facility. This concludes the
review for possible upgrade initiated on April 21, 2008 in
response to the merger statement with GW. The outlook is stable.
Simultaneously, Moody's withdrew the ratings for Horsepower
Holdings, Inc., the entity formed to be the holding company to
facilitate the merger with GW. The ratings being withdrawn for
HHI are the Ba2 CFR, the Ba2 PDR, the Ba1 (LGD 3, 39%) to the
proposed first lien credit facilities, and the SGL-2 rating.
The confirmation of the Ba3 CFR follows the termination of the
merger with GW that it resulted from the GW shareholders voting
against the merger. Basic has disclosed that has terminated the
merger agreement and will resume its strategy prior to the merger
statement. The Ba3 continues to reflect Basic's position a
leading provider of workover services in the North American market
as well as its conservative financial policies.
Basic Energy Services, Inc. is headquartered in Midland, Texas.
BEAR STEARNS: Inks Supplemental Indentures with JPMorgan Chase
--------------------------------------------------------------
The Bear Stearns Companies Inc. entered into:
(i) a Second Supplemental Indenture, dated effective as of
June 30, 2008, with JPMorgan Chase & Co. and The Bank of
New York, as trustee (to the Indenture, dated as of May 31,
1991, between Bear Stearns and The Bank of New York, as
trustee, as amended);
(ii) a Supplemental Indenture, dated effective as of June 30,
2008, with JPMorgan Chase and The Bank of New York, as
trustee (to the Indenture, dated as of Nov. 14, 2006,
between Bear Stearns and The Bank of New York, as trustee);
(iii) a Third Supplemental Indenture, dated effective as of June
30, 2008, with JPMorgan Chase and The Bank of New York, as
trustee (to the Indenture, dated as of Dec. 16, 1998,
between Bear Stearns and The Bank of New York, as trustee,
as amended);
(iv) a First Amendment, dated as of June 30, 2008, with,
JPMorgan Chase and The Bank of New York, as trustee (to the
Preferred Securities Guarantee Agreement, dated as of May
10, 2001).
In addition, on June 30, 2008, JPMorgan Chase entered into a
Preferred Stock Guarantee, dated effective as of June 30, 2008.
Pursuant to the Supplemental Indentures, JPMorgan Chase fully and
unconditionally guaranteed the timely and complete payment when
due, whether by acceleration or otherwise, of all liabilities and
obligations of Bear Stearns in its capacity as issuer of these
securities:
(i) BearLink Alerian MLP Select Index ETN;
(ii) Principal Protected Sector Selector Notes Linked to a
Basket of U.S. Sector Exchange Traded Funds Due February
2008;
(iii) Principal Protected Notes Linked to the S&P 500 Index Due
October 2008;
(iv) Principal Protected Notes Linked to the Nasdaq-100 Index
Due December 2009;
(v) Principal Protected Notes Linked to the S&P 500 Index Due
November 2009;
(vi) Principal Protected Notes Linked to the Dow Jones
Industrial Average Due March 2011;
(vii) Medium-Term Notes, Linked to a Basket of Three
International Equity Indices Due August 2010; and
(viii) all other Bear Stearns' long-term debt issued under an
effective registration statement under the Securities Act
of 1933, as amended.
Pursuant to the Trust Preferred Guarantee, JPMorgan Chase fully
and unconditionally guaranteed the timely and complete payment
when due, whether by acceleration or otherwise, of all liabilities
and obligations of Bear Stearns in its capacity as guarantor of
the preferred securities of Bear Stearns Capital Trust III, a
Delaware statutory business trust.
Pursuant to the Preferred Stock Guarantee, JPMorgan Chase fully
and unconditionally guaranteed to each holder of the
(a) 6.15% Cumulative Preferred Stock, Series E, par value $1.00
per share;
(b) 5.72% Cumulative Preferred Stock, Series F, par value $1.00
per share;
(c) 5.49% Cumulative Preferred Stock, Series G, par value $1.00
per share the due and punctual payment of (i) any
accumulated and unpaid dividends that have been properly
declared by the board of directors of Bear Stearns on the
Preferred Stock out of funds legally available therefor,
(ii) the aggregate of the liquidation amount payable by
Bear Stearns upon the Preferred Stock upon a voluntary or
involuntary dissolution, winding-up or liquidation of Bear
Stearns and (iii) the amount payable by Bear Stearns on
redemption of the Preferred Stock upon shares of Preferred
Stock duly called for redemption, as and to the extent
applicable (without duplication of amounts theretofore paid
by Bear Stearns) when and as the same shall become due and
payable, according to the terms of the Preferred Stock as
set forth in the applicable certificate of designations,
which set forth the designation, rights and privileges of
the applicable series of Preferred Stock with respect to
which the guarantee is granted, regardless of any defense,
right of setoff or counterclaim that Bear Stearns may have
or assert.
As a result of the Guarantees, pursuant to Rule 3-10 of Regulation
S-X and Rule 12h-5 under the Securities Exchange Act of 1934, as
amended, Bear Stearns will cease to separately file current and
periodic reports with the Securities and Exchange Commission under
the Exchange Act. Those guaranteed securities that are listed on
the New York Stock Exchange or the American Stock Exchange, as
applicable, will continue to be so listed.
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'.
BSSP SERIES: S&P Junks Rating on Class A-5 Certificates
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on two
classes of certificates from BSSP Series 2005-11. Additionally,
S&P affirmed its ratings on three other classes from the same
transaction. The five classes had an original total principal
balance of approximately $49.54 million, and have a current
balance of approximately $27.80 million.
The certificates from BSSP Series 2005-11 are collateralized by 25
classes from nine underlying transactions issued by Washington
Mutual Mortgage Securities Corp. and Wells Fargo Home Mortgage in
2002 and 2003. The collateral for the underlying transactions
consists primarily of U.S. residential prime jumbo first-lien
mortgage loans with interest rates that start to adjust after a
specified initial fixed-rate period. Subordination provides
credit support for the classes in the underlying transactions.
S&P reviewed the underlying transactions in April 2008.
S&P downgraded classes A-4 and A-5 from BSSP Series 2005-11 to
reflect projected losses to the underlying classes due to
delinquent loans in the underlying transactions' delinquency
pipelines. To date, cumulative losses in BSSP Series 2005-11
total approximately $165,000, or 0.32% of the initial aggregate
certificate balance.
Ratings Lowered
BSSP Series 2005-11
Rating
------
Class To From
----- -- ----
A-4 BB- BB
A-5 CCC B
Ratings Affirmed
BSSP Series 2005-11
Class Rating
----- ------
A-1 AA
A-2 A
A-3 BBB
CALPINE CORP: Rosetta Wants Conference on Summary Judgment Plea
---------------------------------------------------------------
Rosetta Resources Inc., an independent oil-and-gas company, said
that in accordance with local court rules, it filed a letter with
the Bankruptcy Court in New York setting the legal deficiencies in
Calpine Corporation's claims, and requesting a required conference
with the Court prior to filing a motion for summary judgment in
Rosetta's favor as to all claims by Calpine Corporation.
Although Rosetta continues to vigorously prepare its defense on
the merits to Calpine's claims, Rosetta is seeking dismissal of
the action given that the uncontradicted evidence respecting the
transaction by which Rosetta acquired the oil and gas business
conducted by Calpine Corporation's subsidiaries establishes that
Calpine Corporation did not transfer any property to Rosetta and
is legally prohibited from challenging transfers made to Rosetta
by Calpine subsidiaries Calpine Fuels Corporation and Calpine Gas
Holdings LLC.
In its letter to the Bankruptcy Court, Rosetta sets three main
legal arguments as to why the Court should enter judgment in favor
of Rosetta on each of Calpine's claims:
* Calpine's claims legally fail because the lawsuit was
filed solely in the name and on behalf of Calpine
Corporation, which, under the transaction structured by
Calpine's outside professionals, never transferred or
conveyed any of the oil and gas business to Rosetta
Resources, Inc., the only defendant named in the suit.
Rather, Calpine Fuels and Calpine Gas Holdings, both
subsidiaries of Calpine Corporation and separate legal
entities, conveyed to Rosetta their ownership interests in
the even-further remote subsidiaries that held the assets
and personnel comprising the oil and gas business;
* Calpine's claims are also legally barred because the oil
and gas properties actually owned by Calpine Corporation
were never transferred to Rosetta Resources Inc. Instead,
Calpine Corporation contributed its properties to these
even-further remote subsidiaries of Calpine Corporation's
wholly-owned Calpine Gas Holdings. These subsidiaries,
together with subsidiaries of Calpine Fuels, were
subsequently transferred to Rosetta Resources Inc.
Calpine's complaint ignores the specific seller entities
involved in the transaction and other key critical facts
and, as such, Calpine is completely incapable of
demonstrating in its lawsuit that Rosetta Resources Inc.
itself received any asset or property that Calpine owned
or held; and
* Calpine's claims also should be denied in their
entirety because certain safe-harbor provisions of the
Bankruptcy Code exempt certain "settlement payments" made
pursuant to a securities contract from fraudulent transfer
claims, including the transfers challenged by Calpine
Corporation in this litigation, given Rosetta Resources
Inc.'s status as a "financial participant" as defined by
the Bankruptcy Code.
In addition, Rosetta also informed the Court it would be
filing a motion to disqualify PA Consulting, the professionals
who had advised Calpine during its bankruptcy and whose Todd
Filsinger is currently serving as Calpine's Interim Chief
Operating Officer, for violation of the applicable ethical rules.
In the lawsuit, PA Consulting, which maintains a nearly singular
focus on the power industry, was rendering opinions regarding the
valuation of the oil and gas Exploration & Production business
Calpine's subsidiaries conveyed. Due to the discretionary bonus
that Calpine promised PA Consulting for Mr. Filsinger's services,
PA Consulting has a vested interest in ensuring a successful
outcome in this lawsuit in violation of New York's ethical rules.
Randy Limbacher, President and CEO of Rosetta stated, "While
Rosetta has completed a number of depositions and has received
the opinions of Calpine's retained experts and has found nothing
to change its view that the Calpine lawsuit is frivolous, the
legal defects in Calpine Corporation's claims described in
Rosetta's letter to the Court demonstrate dramatically how the
true facts differ from those alleged by Calpine in its complaint,
not just in how the transfer occurred, but in claiming that
Calpine did not receive fair value in the transaction.
Nevertheless, until this lawsuit is dismissed, we will continue
to fully protect Rosetta's and its shareholders' interests by
vigorously defending against what Rosetta truly believes are
frivolous claims by Calpine arising out of a transaction that
Calpine's board and an extensive group of professionals
thoroughly vetted, reviewed, and approved."
About Rosetta
Rosetta Resources Inc.(Nasdaq:ROSE) --
http://www.rosettaresources.com/-- is an independent oil and
gas company engaged in acquisition, exploration, development and
production of oil and gas properties in North America. Our
operations are concentrated in the Sacramento Basin of California,
South Texas, the Gulf of Mexico and the Rocky Mountains. Rosetta
is a Delaware corporation based in Houston, Texas.
About Calpine Corporation
Based in San Jose, California, Calpine Corporation (OTC Pink
Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers
and communities with electricity from clean, efficient, natural
gas-fired and geothermal power plants. Calpine owns, leases and
operates integrated systems of plants in 21 U.S. states and in
three Canadian provinces. Its customized products and services
include wholesale and retail electricity, gas turbine components
and services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.
The company and its affiliates filed for chapter 11 protection on
Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard
M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq.,
and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the
Debtors in their restructuring efforts. Michael S. Stamer, Esq.,
at Akin Gump Strauss Hauer & Feld LLP, represents the Official
Committee of Unsecured Creditors. As of Aug. 31, 2007, the
Debtors disclosed total assets of $18,467,000,000, total
liabilities not subject to compromise of $11,207,000,000, total
liabilities subject to compromise of $15,354,000,000 and
stockholders' deficit of $8,102,000,000.
On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC,
and Silverado Geothermal Resources, Inc., filed voluntary chapter
11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198).
On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another
affiliate, also filed a voluntary chapter 11 petition (Bankr.
S.D.N.Y. Case No. 07-12967).
On June 20, 2007, the Debtors filed their Chapter 11 Plan and
Disclosure Statement. On Aug. 27, 2007, the Debtors filed their
Amended Plan and Disclosure Statement. Calpine filed a Second
Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a
Third Amended Plan. On Sept. 25, 2007, the Court approved the
adequacy of the Debtors' Disclosure Statement and entered a
written order on September 26. On Dec. 19, 2007, the Court
confirmed the Debtors' Plan. The Amended Plan was deemed
effective as of January 31, 2008.
CBRE REALTY: Fitch Affirms 'BB' Rating on $20.25MM Class K Notes
----------------------------------------------------------------
Fitch Ratings has affirmed all classes of CBRE Realty Finance CDO
2006-1 Ltd./LLC as:
-- $375,000,000 class A-1 floating-rate notes at 'AAA';
-- $33,000,000 class A-2 floating-rate notes at 'AAA';
-- $34,500,000 class B floating-rate notes at 'AA';
-- $15,000,000 class C floating-rate notes at 'A+';
-- $13,500,000 class D floating-rate notes at 'A+';
-- $9,000,000 class E floating-rate notes at 'A-';
-- $10,500,000 class F floating-rate notes at 'A-';
-- $13,500,000 class G floating-rate notes at 'BBB+';
-- $4,500,000 class H floating-rate notes at 'BBB+';
-- $24,000,000 class J floating-rate notes at 'BBB-';
-- $20,250,000 class K fixed rate notes at 'BB'.
Fitch's affirmations are based on the transaction maintaining an
adequate reinvestment cushion, remaining within its other
transaction covenants, and passing Fitch's property value decline
stress scenarios. The deal was reviewed as approximately 17% of
the portfolio has turned over since the last review.
Deal Summary:
CBRE 2006-1 is a $600,000,000 revolving commercial real estate
cash flow collateralized debt obligation that closed on March 28,
2006. As of the June 19, 2008 trustee report and based on Fitch
categorizations, the CDO was substantially invested as: commercial
mortgage whole loans/A-notes (54.1%), CRE mezzanine loans (17.8%),
CMBS (16.2%), B-notes (11.5%), and uninvested proceeds (0.5%).
The CDO is also permitted to invest in credit tenant lease loans,
and CRE CDO securities.
The portfolio is selected and monitored by CBRE Realty Finance
Management, LLC. CBRE 2006-1 has a five year reinvestment period
during which, if all reinvestment criteria are satisfied,
principal proceeds may be used to invest in substitute collateral.
The reinvestment period ends April 2011.
Asset Manager:
CBRF is the external advisor to the collateral manager for CBRE
2006-1. CBRF is a direct subsidiary of CBRE|Melody & Co., which
is in turn a subsidiary of CB Richard Ellis (NYSE: CBG). In
addition to serving as a collateralized debt obligation manager,
CBRF is also the external manager for CBRE Realty Finance, Inc., a
publicly traded real estate investment trust (NYSE: CBF).
CBRF uses Midland Loan Services, Inc. (rated 'CPS1' as a primary
servicer, 'CMS1' as a master servicer, and 'CSS1' as a special
servicer by Fitch) and GEMSA Loan Services, LP (rated 'CPS1' as a
primary servicer and 'CMS1-' as a master servicer by Fitch) for
primary, master, and special servicing of its CDO collateral.
Performance Summary:
As of the June 19, 2008 trustee report, the as-is poolwide
expected loss for CBRE 2006-1 has decreased slightly to 25.000%
from 25.875% at the last review in September 2007. This decrease
is primarily due to the payoff of two loans with an above-average
expected loss. The pool's improvement was muted by the
application of Fitch's interim surveillance methodology to the
rated securities portion of the portfolio (16.2%) and the addition
of one highly leveraged hotel loan (4.2%). The CDO continues to
have below average reinvestment flexibility with 6.625% of
cushion.
The tighter cushion is somewhat mitigated by the pool's
approximately 67.5% concentration of long-term, fixed-rate loans
and securities. These loans have a weighted average life of 4.3
years and are less likely to repay during the reinvestment period.
Since the last review in September 2007, three commercial real
estate loans were repaid (14.0%); while five new CRELs (17.2%)
were added to the pool. The loans added to the pool had a lower
weighted average expected loss than the loans that were paid off.
The overcollateralization and interest coverage ratios of all
classes have remained above their covenants, as of the June 19,
2008 trustee report.
Collateral Analysis:
The CDO is comprised of approximately 83.4% CRE loans, including
54.1% whole loans/A-notes, 17.8% mezzanine loans, and 11.5% B-
notes. Fitch and the asset manager include any future funding
obligation within its classification of the assets. Currently,
$4.8 million of future funding obligations exist within the CDO.
Per the June 19, 2008 trustee report and based on Fitch
categorizations, the CDO contains 35.6% of collateral backed by
office properties. Hotel and non-traditional property types loans
comprise 28.4% of the CDO. The CDO is also within all its
geographic covenants.
The Fitch Loan Diversity Index is 326 compared to the covenant of
364, which represents average diversity as compared to other CRE
CDOs.
CHAPARRAL ENERGY: Edge Petroleum Merger Cues S&P's Positive Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' corporate credit
rating on oil and gas exploration and production company Chaparral
Energy Inc. on CreditWatch with positive implications following
the announcement that Chaparral has entered into a definitive
merger agreement with Edge Petroleum Corp.
S&P placed the 'B-' rating on Chaparral's senior unsecured debt on
CreditWatch with developing implications. The rating is
contingent on the final capital structure and asset value
supporting the unsecured debt.
"The positive CreditWatch on Chaparral's corporate credit rating
reflects the expected improvement to the company's liquidity and
financial profile due to the merger with Edge, as well as the sale
of $150 million series B convertible preferred stock and a new
credit facility with up to a $1 billion borrowing base," said
Standard & Poor's credit analyst Paul Harvey.
Pro forma debt to EBITDA would improve to around 3.5x, or about 4x
if preferred equity is treated as debt, from 6x at Dec. 31, 2007.
Further, Chaparral's production and cash flows should benefit from
the more rapidly producing Edge properties, which will lower
Chaparral's pro forma reserve life to around 18 years from 24. In
addition, liquidity will benefit from debt repayment via the
proceeds of the series B preferred stock as well as from the
expanded borrowing base.
Standard & Poor's will resolve the CreditWatch listings when the
merger closes. Positive rating actions would require Chaparral to
successfully close the merger with Edge without significantly
altering its projected debt leverage or expected liquidity.
CHASE COMMERCIAL: Fitch Lifts $22.2MM Class H Certs. Rating to B+
-----------------------------------------------------------------
Fitch Ratings upgraded Chase Commercial Mortgage Securities
Corp.'s, commercial mortgage pass-through certificates, series
1998-2, as:
-- $72.9 million class D to 'AAA' from 'AA+';
-- $19 million class E to 'AAA' from 'AA-';
-- $57.1 million class F to 'BBB+' from 'BBB-';
-- $12.7 million class G to 'BBB-' from 'BB+';
-- $22.2 million class H to 'B+' from 'B'.
Fitch also affirmed these classes:
-- $306.4 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $63.4 million class B at 'AAA';
-- $69.7 million class C at 'AAA';
-- $9.5 million class I at 'B-'.
The $13.3 million class J is not rated by Fitch. Class A-1 has
paid in full.
The upgrades are due to additional paydown of 20 loans (32%)
including the largest loan in the deal, 75 State St., since
Fitch's last rating action. In total, 19 loans representing 29%
of the deal are defeased. As of the June 2008 distribution date,
the transaction's aggregate principal balance has paid down 49% to
$646.2 million from $1.27 billion at issuance.
In addition, twenty-eight loans (62%) of the pool are scheduled to
mature in 2008, and the weighted-average coupon for the non-
defeased maturities is 6.72%. The largest maturing loan (19.9%)
is secured by a retail property located in Towson, Maryland. The
property continues to show improved performance since issuance.
The servicer reported year-end 2007 DSCR is 1.94x and the property
is 95% occupied.
The transaction is concentrated by loan size with the largest loan
and top-five largest loans representing 20% and 38% of the pool,
respectively. According to servicer provided operating
statements, the performance of the largest loan and the top-five
loans has improved since issuance.
There is currently one specially serviced loan (1%) in the deal.
The loan is secured by an office property located in Bingham
Farms, Michigan. The loan transferred to the special servicer in
May 2008 due to imminent default as the borrower indicated the
loan would not payoff at maturity July 1, 2008. The property's
occupancy has declined as a result of tenant vacancies and a weak
market. The borrower continues to market the vacant space at the
property. As of March 2008, the property was 51% occupied.
Five loans (2.8%) are identified as Fitch loans of concern as a
result of declines in occupancy and performance. Four (2.6%) of
the five loans are scheduled to mature in 2008, and have interest
rates ranging from 6.85% to 7.00%.
CHRYSLER AUTOMOTIVE: Moody's to Review Ratings for Likely Cut
-------------------------------------------------------------
Moody's Investors Service is reviewing the ratings of Chrysler
Automotive LLC for possible downgrade. Ratings under review
include Chrysler's B3 Corporate Family Rating, B1 senior secured
first lien term loan rating, and Caa1 senior secured second lien
term loan rating.
The review is focusing on the degree to which Chrysler's
operational initiatives will successfully address both the U.S.
auto market's shift away from trucks and SUV's towards cars and
crossovers, as well as the weakness in overall demand.
"Although Chrysler is being pretty aggressive in adjusting its
operating structure to accommodate current market conditions,"
Bruce Clark, senior vice president with Moody's said, "its biggest
challenge will be in building enough profitability in its car and
crossover portfolio to offset the rapidly eroding earnings profile
of its truck and SUV portfolio."
A key consideration in Moody's review will be the degree to which
Chrysler maintains adequate liquidity to cover all cash
requirements until it can transition to an operating model that is
more focused on cars and crossovers.
Chrysler Automotive LLC is headquartered in Auburn Hills,
Michigan.
CINCINNATI BELL: Names Brian Ross COO; Gary Wojtaszek CFO
---------------------------------------------------------
Cincinnati Bell Inc. named Brian Ross as the company's chief
operating officer and Gary Wojtaszek as its new chief financial
officer. Mr. Ross previously held the position of chief financial
officer for Cincinnati Bell. Both Mr. Ross and Mr. Wojtaszek will
report to Jack Cassidy, president and chief executive officer.
As chief operating officer, Mr. Ross will oversee the daily
management and performance of sales, marketing, and operating
activities across all of Cincinnati Bell's business segments.
Wojtaszek, as chief financial officer, will be responsible for
Cincinnati Bell's corporate accounting, finance, treasury, and tax
functions, as well as investor relations and corporate
communications.
Since joining Cincinnati Bell in 1995 as assistant treasurer, Mr.
Ross has held a variety of management positions including vice
president of finance and accounting for Cincinnati Bell Wireless
and senior vice president of finance and accounting for Cincinnati
Bell Inc. He was named chief financial officer in 2004. Mr. Ross
serves on the boards of the KnowledgeWorks Foundation, Ursuline
Academy, and Diamond Fiber Composites Inc. In addition, he is on
the boards of the Cincinnati Equity Fund and the New Markets Fund,
which provide funding for the City of Cincinnati's urban renewal
initiatives. Mr. Ross holds a bachelor's degree in economics,
mathematics and statistics from Miami University and a master's
degree in statistics from the University of California at
Berkeley.
Mr. Wojtaszek most recently served as the senior vice president,
treasurer, and chief accounting officer for the Laureate Education
Corporation in Baltimore, Md., where he was responsible for global
controller and treasurer functions. Previously, he was the vice
president of finance and principal accounting officer for Agere
Systems Inc., a leading manufacturer of integrated circuits used
in telecommunications and networking equipment, hard-disk drives,
and other devices. Mr. Wojtaszek holds a bachelor's degree in
economics and history from Rutgers University and a master's
degree in finance and accounting from Columbia University.
About Cincinnati Bell
Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:
CBB) -- http://www.cincinnatibell.com/-- provides integrated
communications solutions including local, long distance, data,
Internet, and wireless services. In addition, the company
provides office communications systems as well as complex
information technology solutions including data center and managed
services to businesses ranging in size from start-up companies to
large enterprises.
Cincinnati Bell conducts its operations through three business
segments: Wireline, Wireless, and Technology Solutions.
* * *
At March 31, 2008, the company's consolidated balance sheet showed
$2.0 billion in total assets and $2.7 billion in total
liabilities, resulting in a $660.3 million total stockholders'
deficit.
CIT GROUP: Completes $2BB Sale of Home Lending Assets to Lone Star
------------------------------------------------------------------
CIT Group Inc. completed the sale of its Home Lending assets and
received substantially all of the $1.8 billion of the cash
proceeds from the disposal. The servicing operation and final
cash payment remain on schedule to close in the first quarter of
2009.
As reported in the Troubled Company Reporter on July 3, 2008, CIT
Group agreed to sell:
-- its Home Lending business, consisting of $9.3 billion in
assets and related servicing operations, to Lone Star
Funds for $1.5 billion in cash and the assumption of $4.4
billion of outstanding debt and other related liabilities,
-- as well its approximately $470 million manufactured
housing portfolio to Vanderbilt Mortgage and Finance Inc.
for approximately $300 million.
The servicing centers, which employ approximately 300 people, are
located in Marlton, New Jersey and Oklahoma City, Oklahoma.
CIT Group also disclosed that its board of directors declared a
regular quarterly cash dividend of $0.10 per share on its
outstanding common stock. The common stock dividend is payable on
Aug. 29, 2008, to shareholders of record on Aug. 15, 2008.
CIT's board also declared quarterly cash dividends of $0.396875
per share on the company's Series A preferred stock, $1.297250 per
share on the company's Series B preferred stock and $1.093750 per
share on the company's Series C preferred stock.
The preferred stock dividends are payable on Sept. 15, 2008, to
holders of record on Aug. 29, 2008.
About Lone Star Funds
Headquartered in Dallas, Texas, Lone Star Funds --
http://www.lonestarfunds.com/-- uses its reserves of Texas gold
to round up distressed companies around the world. The company's
investments fall into five categories: asset acquisition,
corporate acquisition, company sponsorship, refinancing and
recapitalization, and development.
About CIT Group
Headquartered in New York City, CIT Group Inc. (NYSE: CIT) --
http://www.cit.com/-- is a commercial finance company that
provides financial products and advisory services to more than one
million customers in over 50 countries across 30 industries. A
leader in middle market financing, CIT has more than $80 billion
in managed assets and provides financial solutions for more than
half of the Fortune 1000. A member of the S&P 500 and Fortune
500, it maintains leading positions in asset-based, cash flow and
Small Business Administration lending, equipment leasing, vendor
financing and factoring.
The CIT brand platform, Capital Redefined, articulates its value
proposition of providing its customers with the relationship,
intellectual and financial capital to yield infinite
possibilities.
As reported in the Troubled Company Reporter on March 25, 2008,
CIT Group drew upon its $7.3 billion in unsecured U.S. bank
credit facilities to repay debt maturing in 2008, including
commercial paper, and to provide financing to its core commercial
franchises.
The company failed to draw from its normal operational funding
after ratings firms downgraded the bank's debt.
* * *
As reported in the Troubled Company Reporter on June 2, 2008,
Moody's Investors Service downgraded the senior unsecured rating
of CIT Group, Inc. to Baa1 from A3 and affirmed its Prime-2 short-
term rating. CIT's long-term ratings remain on review for
possible downgrade.
DAIMLERCHRYSLER FIN'L: Moody's to Review Ratings for Likely Cut
---------------------------------------------------------------
Moody's Investors Service placed the ratings of DaimlerChrysler
Financial Services Americas LLC, which has a B1 corporate family
rating, under review for possible downgrade. This action follows
Moody's statement that it is reviewing the ratings of Chrysler
Automotive LLC, which has a B3 corporate family rating, for
possible downgrade.
The review of Chrysler Financial's ratings primarily reflects the
operating challenges of its affiliate, Chrysler Automotive.
Because Chrysler Financial has extensive business connections and
common ownership with Chrysler Automotive, Moody's links the
ratings of the two firms.
The two-notch differential between the ratings reflects Moody's
view that the creditors of Chrysler Financial have a lower
expected loss than do the creditors of Chrysler Automotive in the
event of default.
Moody's review of Chrysler Financial's ratings will consider the
potential effects of Chrysler Automotive's operating prospects on
Chrysler Financial's operating performance, capital, and
liquidity. Moody's will also examine Chrysler Financial's asset
quality and profitability, given significant deterioration in used
car values and higher auto loan delinquencies. Moody's expects to
complete its review within 90 days.
DaimlerChrysler Financial Services Americas LLC, is headquartered
in Farmington Hills, Michigan.
DAVE & BUSTER'S: S&P Lifts Corporate Credit Rating to B from B-
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Dallas-
based Dave & Buster's Inc., including the corporate credit rating,
to 'B' from 'B-'. At the same time, S&P placed the ratings on
CreditWatch with positive implications.
"The upgrade reflects the enhanced credit metrics from improved
operating performance over the past two years," explained Standard
& Poor's credit analyst Charles Pinson-Rose. The CreditWatch
action comes as the parent company, Dave & Buster's Holdings Inc.,
filed an S-1 for a possible IPO.
DAWAHARES LEXINGTON: Committee Wants Case Converted to Chapter 7
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Dawahare's of
Lexington LLC asked the U.S. Bankruptcy Court for the Eastern
District of Kentucky to convert the Debtor's chapter 11 case to a
chapter 7 liquidation proceeding, Jamie Mason of The Deal relates.
The Committee told Judge Joseph M. Scott, Jr., that the conversion
would benefit the interests of the estate, The Deal says. The
Committee also wanted the Court to prevent the Debtor from further
use of cash collateral to prevent deterioration in the value of
the estate, The Deal notes.
The Troubled Company Reporter said on June 24, 2008, that Judge
Scott gave interim approval to access its lender's cash
collateral.
The TCR reported on July 4, 2008, that the Debtor will shutter and
pursue a liquidation of its 22 remaining Dawahare's and Cat Bird
Seat stores. The liquidation began July 14 and is expected to end
September 30. About 400 employees are affected. The Deal relates
that Hilco LLC is the Debtor's stalking horse bidder for the 22
stores.
The Committee continued that a chapter 11 liquidation of all of
the Debtor's assets will result in an administratively insolvent
estate, by $1 million, The Deal states. An insolvent estate is
not able to pay unsecured claims of at least $7 million, the
Committee asserted, The Deal states.
The Debtors have proposed a $35,000 break-up fee, plus 1% of
inventory value, according to the Deal.
About Dawahare's of Lexington
Lexington, Kentucky-based Dawahare's of Lexington LLC, dba
Dawahares and Catbird Seat -- http://www.dawahares.com/--
operates a chain of clothing stores in Kentucky, Tennessee, and
West Virginia. The company filed for Chapter 11 bankruptcy
protection on May 30, 2008 (Bankr. E.D. Ky. Case No. 08-51381).
Judge Joseph M. Scott, Jr., presides over the case. Thomas Bunch,
II, Esq., and W. Thomas Bunch, Sr., Esq., at Bunch & Brock,
represent the Debtor in its restructuring efforts. Jay Indyke,
Esq., at Cooley Godward Kronish LLP is counsel to The Official
Committee of Unsecured Creditors. When the Debtor filed for
bankruptcy, it listed total assets of $10,023,124 and total debts
of $9,280,821.
DELTA AIR: Incurs $1 Billion Net Loss in Second Quarter 2008
------------------------------------------------------------
Delta Air Lines Inc.'s net loss for the June 2008 quarter was
$1.0 billion, or $2.64 per diluted share, including special
charges of $1.2 billion. Excluding special charges, net income
for the quarter ended June 30, 2008, $137 million, or $0.35 per
diluted share. There was more than $1 billion year-over-year
increase in fuel input costs related to higher prices.
Delta's merger with Northwest Airlines is targeted to close during
the fourth quarter of 2008. The company expects about
$2 billion in annual merger-related synergies by 2012 with cash
integration costs of about $600 million over three years.
As of June 30, 2008, Delta had $4.3 billion in unrestricted
liquidity, including $1 billion available under its revolving
credit facility.
"When faced with the challenge of unprecedented fuel prices, Delta
distinguished itself by reacting quickly and decisively with
strong topline growth, domestic capacity rationalization, cost
initiatives, fuel hedging, and a focus on preserving liquidity –-
while continuing to run a great airline and deliver exceptional
customer service" said Richard Anderson, Delta's chief executive
officer. "With our talented employees, revenue momentum, a solid
balance sheet, and our game-changing merger with Northwest, we are
well positioned to seize opportunities in the current environment
and strengthen our leadership position as the global airline of
choice."
Second Quarter Financial Results
In March, Delta announced it had recalibrated its 2008 business
plan with a focus on preserving liquidity in light of the
significant increase in crude oil prices. During the June
quarter, as fuel prices continued to rise, the airline reevaluated
its flight schedule, targeting additional reductions in capacity.
Delta now expects system capacity for the second half of 2008 to
be down 4% compared to 2007, with domestic capacity down 13% and
international capacity up 14%. The company is now targeting to
remove the equivalent of 100 regional aircraft from the system by
the end of the year. Through aggressive revenue and cost
initiatives, including expansion of its international network and
utilization of its fuel hedge strategy, the company expects to
cover about $3 billion of the estimated $4 billion raw impact of
higher fuel input costs in 2008.
Delta said it expects to end the year with a liquidity position of
$3.2 billion, including $1 billion available under its revolving
credit facility.
"The fact that we mitigated nearly 80% of the impact of higher
fuel input cost this quarter while improving our liquidity is a
testament to both the strength of our action plan and the can-do
spirit of the Delta people," said Edward Bastian, Delta's
president and chief financial officer. "Unprecedented fuel prices
have created a real crisis in the airline industry, and Delta has
been a leader in responding with quick, decisive action."
Merger with Northwest
In April, Delta announced an agreement to merge with Northwest
Airlines –- creating a formidable, long-term competitor with the
revenue-generating power of a diverse global network combined with
a best-in-class cost structure and solid balance sheet. The
companies are targeting to close the merger by the end of 2008.
Initial synergy estimates for the merger were based on a high-
level approach. Since that time, the companies have formed teams
to plan the integration of the two airlines and to review the full
benefits of the merger taking a very detailed, bottom-up approach.
Delta forecasts $500 million in synergies in 2009, increasing up
to the full run-rate of about $2.0 billion in annual synergies by
2012. In addition, estimated cash integration costs have been
refined and are expected to be about $600 million over three
years.
The companies have achieved several significant milestones on the
path toward closing the merger and completing a seamless
integration of the airlines, including:
-- reaching an unprecedented pre-merger joint collective
bargaining agreement between the Delta and Northwest
units of the Air Line Pilots Association. This four-year
agreement through 2012, which includes a process to
establish an integrated pilot seniority list upon the
closing of the merger, will give Delta the full ability to
realize network and fleeting synergies. Pilots at both
companies will receive pay raises and an equity stake in
the combined company. The tentative agreement is subject
to ratification by both airlines' pilot groups, which is
expected by mid-August.
-- announcing a post-merger organizational structure and the
executives who will hold key leadership positions in the
combined airline.
-- forming 25 joint Delta-Northwest teams to plan integration
activities and drive synergy achievement. These teams,
which cover areas from operations to corporate support,
are prioritizing integration activities with a focus on
optimizing synergies and planning for a seamless
operational and customer transition to the new Delta.
-- scheduling special meetings of Delta and Northwest
stockholders to obtain the necessary stockholder
approvals to close the merger. The meetings will be held
on Sept. 25, 2008 in Atlanta (Delta) and New York
(Northwest).
Revenue Momentum
June 2008 quarter revenue improved 10%, or almost $500 million,
year over year. Based on the most recently available ATA data,
Delta achieved a revenue premium to the industry –- its
consolidated length of haul adjusted passenger unit revenue
(PRASM) was 102% of industry average PRASM (excluding Delta) for
the first five months of the year. Delta said it reached its goal
of closing the PRASM gap to the industry a year ahead of schedule.
Revenue from Cargo operations increased 36% year over year due to
significantly improved yields and higher volume, particularly in
international markets. Other, net revenue grew $177 million, or
45%, reflecting an increase in passenger fees, growth in third-
party Maintenance Repair and Overhaul (MRO) business, and
additional revenue from the SkyMiles program.
Cost Discipline
Delta's operating expenses increased $2.1 billion, or 46%,
compared to the June 2007 quarter, which reflects special charges
of $1.3 billion and a more than $1 billion increase in costs due
to higher fuel prices, partially offset by fuel hedging gains.
Excluding the special charges described below, Delta's operating
expenses increased 17%, or $782 million. Non-operating expenses,
excluding special items, declined 40%, or $50 million, in the June
2008 quarter due to FAS 133 mark-to-market on hedges and lower
effective interest rates.
Delta's mainline unit cost (CASM5) increased 51% to 15.67 cents
for the June 2008 quarter compared to the prior year period,
reflecting special charges and the significant increase in fuel
costs. Excluding fuel expense and special items, mainline CASM
increased 1% to 7.03 cents compared to the June 2007 quarter.
Special and Reorganization Items
Delta recorded special charges totaling $1.2 billion in the June
2008 quarter, including a $1.1 billion non-cash charge, net of a
$119 million tax benefit, related to the impairment of goodwill
and other intangibles. This charge represented the finalization
of the $6.1 billion impairment charge taken in the March 2008
quarter and reflects the completion of impairment testing,
including third party valuation procedures. Additional special
charges included a $96 million severance charge for the previously
announced voluntary workforce reduction programs and a $6 million
charge related to facilities restructuring.
In the second quarter of 2007, Delta recorded income of
$1.3 billion from reorganization and related items, primarily due
to the discharge of claims and liabilities in connection with its
bankruptcy proceedings and the adoption of fresh start reporting.
Liquidity Position
At the end of the June 2008 quarter, Delta had $3.3 billion in
unrestricted cash, cash equivalents and short-term investments,
including $671 million of cash collateral deposits received from
counterparties to fuel hedging contracts. Delta has an additional
$1 billion available under its revolving credit facility,
resulting in a total unrestricted liquidity of $4.3 billion. At
June 30, the company is in full compliance with all financial
covenants.
Delta had $261 million in capital expenditures during the June
2008 quarter, with $222 million for investments in aircraft, parts
and modifications.
Fuel Hedging
During the June 2008 quarter, Delta hedged 49% of its fuel
consumption resulting in an average fuel price of $3.13 per
gallon. Delta realized $313 million in gains on fuel hedge
contracts settled during the quarter.
June 2008 Quarter Highlights
During the June 2008 quarter, Delta continued the positive
momentum in its business, demonstrating its ongoing commitment to
maintain strong employee relations and deliver an industry-leading
customer experience.
-- The National Mediation Board announced that a decisive
majority –- more than 60% -– of eligible Delta flight
attendants rejected representation by the Association of
Flight Attendants/Communication Workers of America,
enabling Delta to continue a direct relationship with its
flight attendants;
-- The U.S. Department of Transportation issued a final order
granting antitrust immunity for six-way alliance
activities in trans-Atlantic markets for SkyTeam members
Air France, Alitalia, CSA Czech Airlines, Delta, KLM Royal
Dutch Airlines and Northwest Airlines, enabling the
carriers to offer customers more choice in flight
schedules, travel times, services and fares;
-- Delta demonstrated continued commitment to superior
operational performance by ranking in the top two of its
competitive set for on-time performance for the last 12
months and by reducing the number of mishandled bags by
32% year-over-year in the June quarter.
-- Achievement of operational performance goals resulted in
$10 million in Shared Rewards payments to Delta employees
during the quarter;
-- Readers of Executive Travel magazine rated Delta the best
airline in 2008 for domestic first class service, Crown
Room Clubs and the SkyMiles program, demonstrating Delta's
progress toward being the global airline of choice. They
also preferred Delta to any other U.S. airline when
traveling to Africa, the Middle East and Canada;
-- Delta strengthened its international expansion strategy by
exercising options for two B777-200LR for delivery in
early 2010;
-- Delta received the prestigious 2008 Green Cross for Safety
Medal from The National Safety Council, which recognizes
organizations and their leaders for outstanding
achievements in safety and health, community service and
responsible citizenship;
-- Delta enhanced customer check-in options by partnering
with the Transportation Security Administration to launch
paperless mobile check-in for domestic travel on Delta
and Delta Connection flights departing from Delta's main
terminal at LaGuardia Airport; and
-- Delta was the first U.S. airline to launch a comprehensive
in-flight recycling program. Delta's program has
successfully diverted 322 tons of waste since June 2007
and funded an EarthCraft home for Habitat for Humanity,
one of Delta's Force for Global Good partners.
Ancillary Businesses
Delta's ancillary businesses include TechOps, the largest airline
MRO organization in North America, serving more than 100 aviation
and airline customers around the world, and DAL Global Services,
which provides general aviation services, training and technical
services, and staffing to airlines including Delta. The MRO
business increased operating revenue more than 60% year over year
in the June quarter and continued to post double-digit margins.
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; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
DIABLO GRANDE: Housing Source to Buy Assets for $25 Million
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of California
gave authority to the owner of Diablo Grande LP to auction the
Debtor's assets in mid-August 2008, The Deal's Ben Fidler states.
No official order approving the Debtor's proposed bidding
procedures has been issued, The Deal adds.
At a July 10, 2008 hearing, the Court also authorized the Debtor
to use Royal Bank of Scotland Group Plc's $1 million debtor-in-
possession financing, The Deal notes.
According to The Deal, Housing Source Partners Inc., a real estate
developer in Pismo Beach, Calif., was designated as stalking horse
bidder. Housing Source, The Deal says, offered $25 million plus
assumption of debts for the Debtor's real estate property,
including an "unentitled agricultural land" also referred as
"conservation land" and is subject to a settlement with certain
environmental groups, The Deal notes.
Diablo, The Deal relates, believes that the conservation land has
a significant value. Hence, the Debtor drafted an asset purchase
agreement that will allow Diablo to exclude the conservation land
from the sale and sell it to another buyer, The Deal reports.
Under the sale agreement, Housing Source will pay $24 million for
the Debtor's main real property and the Debtor may or may not sell
the land to Housing Source for $1 million, The Deal notes.
If RBS won't consent to the sale, Housing Source is entitled to a
$200,000 withdrawal fee. Housing Source will get a break-up fee
of 2% of the purchase price if it loses to another bidder, The
Deal writes, citing court documents.
Three bids types will be accepted during the sale: single bids for
either the real estate or the conservation land, or combined bids
for both properties, The Deal notes. Minimum overbids for the
real estate starts at $24.78 million, $1.07 for the conservation
land, and $25.6 million for both the real estate and conservation
land, according to The Deal.
Eric Starr, Esq., at Starr Finley LLP is counsel to Housing
Source.
About Diable Grande
Patterson, California-based Diablo Grande LP owns 33,000-acre real
property and runs a resort hotel with golf courses and convention
center. Diablo Grande LP's general partner is Diablo Grande Inc.
with Donald Panoz as president. It filed for chapter 11
protection on March 10, 2008 (Bankr. E.D. Calif. Case No. 08-
90365). Judge Robert S. Bardwil is presiding the case. Ori Katz,
Esq., and Michael H. Ahrens, Esq., at Sheppard Mullin Richter &
Hampton LLP, represents the Debtor in its restructuring efforts.
When the Debtor filed for bankruptcy, it listed assets of between
$50 million and $100 million and debts of between $50 million and
$100 million.
DIABLO GRANDE: Gets Approval to Tap $1 Million DIP Fund from RBS
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of California
gave Diablo Grande LP permission to draw from Royal Bank of
Scotland Group Plc's $1 million debtor-in-possession financing,
Ben Fidler of The Deal writes.
The Court also approved the Debtor's proposed bidding procedures
under which Housing Source Partners Inc. is designated as stalking
horse bidder, The Deal notes. Housing Source offered to buy the
Debtor's main real property and a "conservation land" for
$25 million, The Deal adds.
The Debtor may draw from the RBS's DIP facility on July 31, 2008,
or at any later date if the stalking horse bid is withdrawn or the
lender doesn't accept winning bid at the auction, The Deal says.
RBS's DIP facility, maturing Aug. 15, 2008, is priced at 30-day
LIBOR plus 425 basis points, The Deal relates. The DIP facility
also includes an unspecified $30,000 fee.
About Diablo Grande
Patterson, California-based Diablo Grande LP owns 33,000-acre real
property and runs a resort hotel with golf courses and convention
center. Diablo Grande LP's general partner is Diablo Grande Inc.
with Donald Panoz as president. It filed for chapter 11
protection on March 10, 2008 (Bankr. E.D. Calif. Case No. 08-
90365). Judge Robert S. Bardwil is presiding the case. Ori Katz,
Esq., and Michael H. Ahrens, Esq., at Sheppard Mullin Richter &
Hampton LLP, represents the Debtor in its restructuring efforts.
When the Debtor filed for bankruptcy, it listed asset between
$50 million and $100 million and debts between $50 million and
$100 million.
EAU TECHNOLOGIES: WS Advances $600,000 to Purchase Common Stock
---------------------------------------------------------------
Water Science LLC advanced $600,000 to EAU Technologies, Inc., in
anticipation of an exercise of a portion of its warrants to
purchase company common stock. On June 27, 2008, WS exercised a
portion of its warrants and the company agreed to issue 461,538
shares of common stock to WS, at an exercise price of $1.30 per
share. The warrants were issued as part of the $4.2 million
financing transaction disclosed in May 2007.
The May 15, 2007 press release stated that in a transaction that
saw no further dilution in the fully diluted number of common
shares of the company, the parties agreed to modify 8.4 million
warrants held by Peter Ullrich and WS, which were received in
earlier financings. In addition, WS committed to exercise with a
"put" on up to 3,230,769 of the shares subject to the warrants, or
up to $4.2 million. After lowering the price of the warrants to
take into consideration the recent 90-day market average and an
average price that met the needs of Mr. Ullrich, EAU was able to
secure critical financing to assist the Company in moving towards
self sufficiency. Mr. Ullrich is the owner of WS, Latin America's
exclusive licensee of EAU's Empowered Water(TM) technologies. Mr.
Ullrich has provided approximately $10.0 million to EAU through
prior debt and equity financings, and this transaction brings his
total support to $14.2 million. Mr. Ullrich is EAU's largest
shareholder, and he joined EAU's Board of Directors on April 16,
2007.
About EAU Technologies
Based in Kennesaw, Ga. EAU Technologies Inc., fka as Electric
Aquagenics Unlimited Inc. (OTC BB: EAUI) -- http://www.eau-x.com/
-- is a supplier of Electrolyzed Water Technology and other
complementary technologies with applications in diverse
industries.
EAU Technologies Inc.'s consolidated balance sheet at March 31,
2008, showed $4,739,062 in total assets and $12,160,382 in total
liabilities, resulting in a $7,421,320 total stockholders'
deficit.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 8, 2008,
HJ & Associates, LLC, in Salt Lake City, expressed substantial
doubt about EAU Technologies Inc., fka Electric Aquagenics
Unlimited Inc.'s ability to continue as a going concern after
auditing the company's financial statements for the years ended
Dec. 31, 2007, and 2006. The auditing firm pointed to the
company's working capital and stockholders' deficits.
EMPORIA PREFERRED: Fitch Holds 'BB' Rating on $18.585MM Notes
-------------------------------------------------------------
Fitch affirmed seven classes of notes issued by Emporia Preferred
Funding III, Ltd./LLC. These rating actions are effective
immediately:
-- $100,000,000 class A-1 notes affirmed at 'AAA';
-- $40,000,000 class A-2 notes affirmed at 'AAA';
-- $132,580,000 class A-3 notes affirmed at 'AAA';
-- $26,845,000 class B notes affirmed at 'AA';
-- $37,170,000 class C notes affirmed at 'A';
-- $20,650,000 class D notes affirmed at 'BBB';
-- $18,585,000 class E notes affirmed at 'BB'.
Emporia III is a collateralized loan obligation that closed
March 15, 2007 and is managed by Emporia Capital Management, LLC.
Emporia III has a revolving portfolio of middle market loans. The
revolving period is scheduled to end in April 2013.
The notes are affirmed as the portfolio has performed within
Fitch's expectations since the closing date. Approximately 18.9%
of the collateral is publicly rated by at least one agency, with
1.9% of the assets currently on rating watch negative by at least
one agency, and an additional 5.8% on outlook negative. When
factoring in Fitch's shadow ratings performed on the remainder of
the portfolio, the average collateral credit quality is 'B-' which
remains within the transaction covenant of 'B-/CCC+' factored in
Fitch's analysis at transaction close. As of the latest trustee
report dated June 2, 2008 there were no defaulted assets in the
portfolio. Additionally, all overcollateralization and interest
coverage tests were passing their minimum required levels as of
the latest trustee report, and all coverage tests have increased
since the transaction closed.
Approximately 87.5% of the loans in Emporia III's portfolio are
senior secured loans, with the other 12.5% being second lien
loans. The top three industry concentrations in Emporia III's
portfolio are business services (11.3%), food, beverage, and
tobacco (11.1%), and healthcare (10.3%). The largest 5 obligors
in the portfolio represent roughly 6.5% of the collateral balance.
The single largest obligor represents 1.4% of the collateral pool.
The ratings of the class A-1 notes, class A-2 notes, class A-3
notes, and class B notes address the likelihood that investors
will receive full and timely payments of interest, as per the
transaction's governing documents, as well as the stated balance
of principal by the stated maturity date. The ratings of the
class C, class D, and class E notes address the likelihood that
investors will receive ultimate and compensating interest
payments, as per the transaction's governing documents, as well as
the stated balance of principal by the stated maturity date.
ENRON CORP: Court Approves $13 Million Abbey Claim Compromise
-------------------------------------------------------------
At the behest of Enron Creditors Recovery Corp., the U.S.
Bankruptcy Court for the Southern District of New York approved a
compromise for Claim No. 25413 filed by Abbey National Treasury
Services.
Claim No. 25413 arose from the 6.31% senior secured notes
aggregating $475,000,000 in principal amount and the 6.19% senior
secured notes aggregating EUR515,000,000 in principal amount
issued by Marlin Water Trust, and Marlin Water Capital Corp.
Abbey purchased $50,000,000 of the U.S. Dollar Notes and
EUR55,000,000 of the Euro Notes. During the Petition Date, Abbey
sold its U.S. Dollar Notes for $8,875,000 and EUR25,000,000 of
its Euro Notes for EUR4,250,000, and the remaining EUR30,000,000
for EUR5,137,500.
Abbey filed Claim No. 13585 in October 2002 against the Debtors
alleging a claim in the amount of the Abbey-Marlin Notes plus
interest, less the amounts Abbey received for the sale of the
Notes. Enron objected to the Claim on the grounds that the Claim
has no merit.
After filing the Claim, Enron and Abbey determined that Claim No.
13585 did not conform with the Bankruptcy Code or the Bar Date
Order with respect to the Euro Notes, which were not denominated
in lawful currency of the United States as of the Petition Date.
Additionally, they agreed that Claim No. 13585 included incorrect
calculation dates.
In January 2007, the Court granted Abbey leave to amend Claim No.
13585 to convert the amount asserted on the Euro Marlin Notes
into U.S. Dollars, reduce the amount of prepetition interest
asserted by Abbey, and file an amended claim. Abbey then filed
Claim No. 25413 seeking recovery of $84,349,437, which includes
$2,311,643 of prepetition interest, plus postpetition interest.
In a desire to resolve Claim No. 25413 and any causes of action
that may arise regarding the Abbey-Marlin Notes, the parties
engaged in extended arm's-length negotiations between Enron and
Abbey over several months. As a result, the parties entered into
a settlement agreement, under which:
(a) Claim No. 25413 will be allowed as a Class 4 General
Unsecured Claim for $13,000,000 against Enron; and
(b) the parties will mutually release one another from all
claims or causes of action related to the Abbey-Marlin
Notes.
About Enron Corp.
Based in Houston, Texas, Enron Corporation filed for chapter 11
protection on Dec. 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033)
following controversy over accounting procedures, which caused
Enron's stock price and credit rating to drop sharply.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represent
the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represent the Official Committee of
Unsecured Creditors.
The Debtors filed their Chapter Plan and Disclosure Statement on
July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended
Plan and on the same day the Court approved the adequacy of the
Disclosure Statement. On July 15, 2004, the Court confirmed the
Debtors' Modified Fifth Amended Plan and that plan was declared
effective on Nov. 17, 2004. (Enron Bankruptcy News, Issue No.
210; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ENRON CORP: EPMI Inks Pact Resolving CalPex Claim
-------------------------------------------------
Enron Power Marketing, Inc., and American Electric Power Service
Corporation, et. al., ask the U.S. Bankruptcy Court for the
Southern District of New York to approve a settlement resolving
the allocation of funds with respect to Claim No. 9112, filed by
the California Power Exchange Corporation, for $16,221, plus
certain unliquidated amounts.
Other parties to the settlement are:
* Avista Energy, Inc.
* Bonneville Power Administration
* Chevron Energy Solutions, L.P.
* Energy Services Ventures, Inc.
* Constellation Energy Commodities Group, Inc.
* Shell Energy North America (US), L.P.
* CSW Energy Services, Inc.
* FPL Power Marketing, Inc.
* LSGT Gas Company LLC
* Equilon Enterprises LLC
* MIECO, Inc.
* Mirant Energy Trading, LLC
* Nevada Power Company
* Powerex Corp.
* Public Service Company of New Mexico
* QST Enterprises
* Reliant Energy Services, Inc.
* Sacramento Municipal Utility District
* Sempra Energy Trading LLC
* Sierra Pacific Power Company
* Western Area Power Administration - Sierra Nevada Region
* Western Area Power Administration - Colorado River Storage
* Williams Gas Marketing, Inc.
The Settlement Agreement specifically provides that:
(1) the distributions on account of the Funds, in connection
with Claim No. 9112, will be made by the Clerk of the
Bankruptcy Court, in accordance with the Distribution
Schedule;
(2) future distributions on account of Claim No. 9112 will be
made by EPMI, or its successor, in accordance with the
Distribution Schedule; and
(3) EPMI and the Defendant Parties will have limited mutual
releases with respect to Claim No. 9112.
Enron's counsel, Michael S. Etkin, Esq., at Lowenstein Sandler,
PC, in New York, tells the Court that the creation of a steering
committee of three Defendant Parties lead to the negotiation
process and the vetting of various methods of allocation and
distribution of the Funds.
The Settlement Agreement is not intended to hinder the Defendant
Parties from becoming an opt-in participant to a Court-approved
settlement between the Debtors and the Federal Energy Regulatory
Commission in connection with Claim No. 9112, Mr. Etkin assures
the Court. The Court had capped the maximum amount of Claim No.
9112 as an unsecured claim at $17,500,000.
Mr. Etkin explains that if any Defendant Party becomes an Opt-In
Participant, and does not waive any right to payment in
connection with the Enron-FERC Settlement, that Defendant Party
is required to forfeit any payment received pursuant to the
Settlement Agreement, for redistribution to the other Defendant
Parties.
Mr. Etkin states that the Settlement Agreement clarifies that the
Distribution Schedule is intended solely for the resolution of
the adversary proceeding and the allocation of the Funds for
Claim No. 9112, and the compromise is solely for the distribution
on Claim No. 9112. The Distribution Schedule will not be
considered as an admission, establishing precedent, or applicable
to any proceeding or agreement other than the Settlement
Agreement, Mr. Etkin clarifies.
With specific regard to the negotiations among the Defendant
Parties, the defendants invited to participate were those who
answered the complaint and:
(a) did not default in connection with the complaint;
(b) did not waive their right to participate in the allocation
of Claim No. 9112; or
(c) did not formally acknowledge that they were not entitled
to any allocation.
Mr. Etkin relates that only one entity that answered the
complaint -- LG&E Energy Marketing, Inc. -- did not participate
in the negotiations. Subsequent to the Defendant Parties
reaching a resolution, LG&E asked the Steering Committee for a
copy of the Settlement Agreement. Aside from LG&E, the Steering
Committee is unaware of any other defendant who has not
defaulted, waived its right, or acknowledged that it has no right
to the allocation.
Mr. Etkin maintains that the Settlement Agreement falls within
the range of reasonableness, and represents a benefit to
creditors and all parties, and is in the best interests of the
estate.
About Enron Corp.
Based in Houston, Texas, Enron Corporation filed for chapter 11
protection on Dec. 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033)
following controversy over accounting procedures, which caused
Enron's stock price and credit rating to drop sharply.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represent
the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represent the Official Committee of
Unsecured Creditors.
The Debtors filed their Chapter Plan and Disclosure Statement on
July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended
Plan and on the same day the Court approved the adequacy of the
Disclosure Statement. On July 15, 2004, the Court confirmed the
Debtors' Modified Fifth Amended Plan and that plan was declared
effective on Nov. 17, 2004. (Enron Bankruptcy News, Issue No.
210; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ENRON CORP: 5th Cir. Court Affirms Dismissal of 10 Investor Cases
-----------------------------------------------------------------
The U.S. Court of Appeals for the Fifth Circuit affirmed the U.S.
District Court for the Southern District of Texas' dismissal of
10 cases arising from the collapse of the Enron Corporation,
which cases were filed by former Enron Corp. investors against
former Enron management, Enron's former accounting firm,
as well as certain financial institutions.
The dismissed cases are:
* Ahlich et al. v. Arthur Anderson LLP et al.,
* Bullock et al. v. Arthur Anderson LLP et al.,
* Adams et al. v. Anderson et al.,
* Guy et al. v. Arthur Anderson LLP et al.,
* Delgado et al. v. Fastow et al.,
* Rosen et al. v. Fastow et al.,
* Pearson et al. v. Fastow et al.,
* Choucroun et al. v. Arthur Anderson LLP et al.,
* Jose et al. v. Anderson et al., and
* Odam et al. v. Enron et al.
Fleming & Associates LLP represents the plaintiffs in the
investor cases.
District Judge Melinda Harmon dismissed the Fleming cases with
prejudice after finding that they were preempted by the
Securities Litigation Uniform Standards Act. The Fleming
plaintiffs sought to bring claims under state securities law only,
and the District Court held that SLUSA preempts all those state
claims.
Fleming appealed Judge Harmon's order arguing that the District
Court had no authority to dismiss their cases with prejudice
because it lacked subject matter jurisdiction over them. Fleming
pointed out that "related to" bankruptcy jurisdiction was the
sole basis for federal jurisdiction over its state law claims,
and thus, federal jurisdiction ceased to exist over them upon the
confirmation of Enron's Plan of Reorganization.
Appellate Court Judge Emilio M. Garza held that Section 1334
does not expressly limit bankruptcy jurisdiction upon plan
confirmation. Other Circuit Courts agreed, holding that "if
'related to' jurisdiction actually existed at the time of . . .
removal" subsequent events "cannot divest the district court of
that subject matter jurisdiction." Judge Garza pointed out that
Fleming cannot point to a single case in which the Fifth Circuit
have held that plan confirmation divests a District Court of
bankruptcy jurisdiction over pre-confirmation claims, based on
pre-confirmation activities that properly had been removed
pursuant to "related to" jurisdiction. Thus, the Fifth Circuit
held that the District Court had bankruptcy jurisdiction over
the Fleming plaintiffs' claims at the time it dismissed them with
prejudice.
Judge Garza said that, applying the principles used in In re
WorldCom, 308 F. Supp. 2d at 238, the Fleming cases plainly fall
within the definition of a "covered class action," and therefore
SLUSA preempts their claims unless some other consideration saves
them from preemption.
In a last-ditch effort to salvage their preempted claims, the
Fleming plaintiffs argued that preempting their claims lead to an
"absurd result" that contravenes SLUSA's purposes and places
SLUSA on a collision course with the multi-district litigation,
Judge Garza notes. "The Fleming plaintiffs are incorrect."
Judge Garza explained that the stated purpose of SLUSA is "to
prevent" not to preserve "certain State private securities class
action lawsuits alleging fraud from being used to frustrate the
objectives of the Private Securities Litigation Reform Act. He
added that Fleming ignores the fact that 172 of their 196
plaintiffs are before the Southern District of Texas by virtue of
direct filing or direct removal, not the MDL.
Accordingly, the Fifth Circuit held that the District Court
properly dismissed the Fleming cases with prejudice.
"The Fleming firm purports to represent several hundred clients
with claims arising out of Enron's collapse, but, according to
Judge Garza, Fleming's performance "has been less than
exemplary."
A full-text copy of the Fifth Court Opinion is available at no
charge at http://researcharchives.com/t/s?2f80
About Enron Corp.
Based in Houston, Texas, Enron Corporation filed for chapter 11
protection on Dec. 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033)
following controversy over accounting procedures, which caused
Enron's stock price and credit rating to drop sharply.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represent
the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represent the Official Committee of
Unsecured Creditors.
The Debtors filed their Chapter Plan and Disclosure Statement on
July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended
Plan and on the same day the Court approved the adequacy of the
Disclosure Statement. On July 15, 2004, the Court confirmed the
Debtors' Modified Fifth Amended Plan and that plan was declared
effective on Nov. 17, 2004. (Enron Bankruptcy News, Issue No.
210; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ENRON CORP: Resolves $15 Million MARAD Claim Through Stipulation
----------------------------------------------------------------
Enron Creditors Recovery Corp., and the U.S. Department of
Transportation, Maritime Administration, entered into a
stipulation -- approved by the U.S. Bankruptcy Court for the
Southern District of New York -- that resolves a $15 million-
claim.
The stipulation provides that Claim No. 24788 will be reduced,
with prejudice, to $15,741,677, representing the outstanding
principal amount of the Corinto Bonds as of April 16, 2008, plus
the interest to accrue and become due under the amortization of
the Corinto Bonds. The Claim will be further reduced, with
prejudice, upon payment on Oct. 15, 2008, to the Corinto
Bondholders of the principal and interest with respect to the
Corinto Bonds. Following the verification of payment on April 15,
2009, with respect to the Corinto Bonds, the Claim will
be deemed withdrawn, with prejudice.
If prior to the withdrawal of Claim No. 24788, (i) an event of
default occurs, and (ii) the amount contained in the Reserve Fund
is insufficient to reimburse MARAD for out-of-pocket amounts,
then, the amount of the Claim will be the amount of the
deficiency, and the Claim will be allowed in that amount.
No funds need to be reserved in the Disputed Claims Reserve on
account of Claim No. 24788 and MARAD will look solely to the Tax
Refund for recovery. The Internal Revenue Service will pay Enron
an amount equal to (a) the sum of the Tax Refund and the Reserve
Fund, plus accrued interest, minus $15,741,677. The IRS will
also pay an amount equal to the October 2008 Payment and an
amount equal to the balance of the Tax Refund, plus accrued
interest, following April 15, 2009. Upon payment of the Tax
Refund, the IRS will be released from all obligations.
The Letter of Credit will be deemed withdrawn, without prejudice
to MARAD's limited right to a setoff against the Tax Refund. The
Stipulation will have no effect on MARAD's rights in connection
with the Reserve Fund or against Empresa Energetica Corinto,
Ltd., or any other person not a party to the Stipulation.
Enron also withdraws its objection to Claim No. 24788.
About Enron Corp.
Based in Houston, Texas, Enron Corporation filed for chapter 11
protection on Dec. 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033)
following controversy over accounting procedures, which caused
Enron's stock price and credit rating to drop sharply.
Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen,
Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler,
Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP,
Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L.
Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represent
the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy LLP represent the Official Committee of
Unsecured Creditors.
The Debtors filed their Chapter Plan and Disclosure Statement on
July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended
Plan and on the same day the Court approved the adequacy of the
Disclosure Statement. On July 15, 2004, the Court confirmed the
Debtors' Modified Fifth Amended Plan and that plan was declared
effective on Nov. 17, 2004. (Enron Bankruptcy News, Issue No.
210; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
EOS AIRLINES: Names Bouchier, Stoneman as Administrators in U.K.
----------------------------------------------------------------
The directors of EOS Airlines Inc. appointed Goeffrey Wayne
Bouchier and Andrew Gordon Stoneman of Menzies Corporate
Restructuring as joint administrators of EOS' U.K. business.
Members of EOS may obtain a copy of Form 2.18B, notice of
extension of time period and a copy of the joint administrator's
proposals from:
Joint Administrators
Menzies Corporate Restructuring
43-45 Portman Square
London, UK W1H 6LY
Pursuant to Article 14(2)(a) of the UNCITRAL Model Law on Cross-
Border Insolvency as set out in the Cross-Border Insolvency
Regulations 2006, a court order dated July 2, 2008, has directed
the joint administrators of EOS Airlines to notify foreign
creditors that a copy of the joint administrators' proposals can
be obtained from http://www.kccllc.net/eosairlines
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. Joseph M. Vann, Esq., and Robert A.
Boghosian, Esq., at Cohen Tauber Spievack & Wagner P.C. in New
York, represent the Committee in this case.
Menzies Corporate Restructuring has been appointed as joint
administrators in the U.K.
When the Debtor filed for protection against it creditors, it
listed total assets of $70,233,455 and total debts of $34,858,485.
EPICEPT CORP: Prices Public Offering of 2 Million Shares of Stock
-----------------------------------------------------------------
EpiCept Corporation priced the public offering of 2 million shares
of its common stock at $0.25 per share and five-year warrants to
purchase up to 2 million shares of common stock at an exercise
price of $0.39 per share. EpiCept will receive approximately
$0.5 million in net proceeds from the offering.
As reported in the Troubled Company Reporter on June 30, 2008,
EpiCept disclosed a public offering of up to 10 million shares of
its common stock, par value $0.0001 per share, warrants to
purchase up to 10 million shares of its common stock and the
issuance of such shares upon exercise of the warrants. EpiCept
intends to use the net proceeds it receives to meet its working
capital needs and general corporate purposes through July 2008 and
to pay certain fees owed to Hercules Technology Growth Capital
Inc.
In July 8, TCR said that EpiCept Corporation priced a public
offering of approximately 8 million shares of its common stock at
$.25 per share and five-year warrants to purchase up to
approximately 8 million shares of common stock at an exercise
price of $.39 per share. EpiCept will receive approximately
$1.9 million in net proceeds from the offering.
Rodman & Renshaw LLC, a subsidiary of Rodman & Renshaw Capital
Group Inc. acted as the exclusive placement agent for the
offering.
The proposed public offering is being made pursuant to an
effective registration statement, and may be made only by means of
a prospectus and prospectus supplement. A copy of the prospectus
supplement relating to the common stock and warrants can be
obtained from:
Rodman & Renshaw LLC
1270 Avenue of the Americas
New York, NY 10020
Tel (212) 356-0549
About EpiCept Corporation
Based in Tarrytown, New York, EpiCept Corporation (NASDAQ:EPCT) --
http://www.epicept.com/-- is a specialty pharmaceutical company
focused on the development of pharmaceutical products for the
treatment of cancer and pain. The company has a portfolio of five
product candidates in active stages of development. It includes
an oncology product candidate submitted for European registration,
two oncology compounds, a pain product candidate for the treatment
of peripheral neuropathies and another pain product candidate for
the treatment of acute back pain. The two wholly owned
subsidiaries of the company are Maxim, based in San Diego,
California, and EpiCept GmbH, based in Munich, Germany, which are
engaged in research and development activities.
EpiCept Corp.'s consolidated balance sheet at March 31, 2008,
showed a stockholders' deficit of $15,570,000, compared to a
deficit of $14.1 million at Dec. 31, 2007.
Going Concern Doubt
Deloitte & Touche LLP, in Parsippany, New Jersey, expressed
substantial doubt about EpiCept Corp.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's recurring losses from operations and
stockholders' deficit.
The company disclosed in its Form 10-Q for the first quarter ended
March 31, 2008, that to date it has not generated any meaningful
revenues from the sale of products and may not generate any such
revenues for a number of years, if at all. As a result, the
company has an accumulated deficit of $176,926,000 as of March 31,
2008, and may incur operating losses for a number of years.
FIELDSTONE MORTGAGE: Judge Schneider Confirms Revised Plan
----------------------------------------------------------
The Hon. James F. Schneider of the U.S. Bankruptcy Court for the
District of Maryland confirmed Fieldstone Mortgage Company's
revised plan of reorganization.
The Debtor filed its reorganization plan on April 14, 2008, and
filed a revised plan on July 11, 2008. The Court entered an order
approving the Debtor's disclosure statement describing the plan on
May 30, 2008.
Tarrant County, City of Memphis, Harris County, Grayson County,
City of Frisco and United States Department of Housing and Urban
Development jointly filed preliminary objections to the revised
plan. Liberty Mutual Insurance Company filed a preliminary and
final objections to the revised plan, which Liberty subsequently
withdrew.
The Official Committee of Unsecured Creditors filed a preliminary
objection to the revised plan. The objections of the Creditors'
Committee was resolved by making further revisions to the revised
plan.
Treatment of Claims
Class 1 obligations claims is unimpaired by the revised plan and
holders are conclusively presumed to have accepted the revised
plan. Class 2 convenience claims and class 3 general unsecured
claims have voted to accept the revised plan. Class 4 equity
interests and class 5 510 claims are deemed to have rejected the
revised plan.
Class 2 claims will receive 35% of the amount of allowed
convenience claim. Class 3 claims will receive its pro rate share
of the beneficial interest in the plan trust. The beneficial
interests in the plan trust are not transferable.
Plan trust is created to carry out certain provisions of the plan.
Two trustees under a plan trust agreement are selected by the
Debtor and the other by the Creditors' Committee.
Revesting of Assets
After the effective date of the plan, the reorganized Debtor will
continue to exist as a separate legal entity. On and after the
effective date, all property and assets of the estate of the
Debtor, except trust assets and other assets acquired in
connection with the revised plan, will vest in the reorganized
Debtor under the revised plan.
About Fieldstone Mortgage
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. The Debtor's
schedules showed total assets of $14,465,348 and total debts of
$121,342,790.
FORD MOTOR: Moody's Holds Neg Outlook on Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service is maintaining its negative outlook on
the ratings of Ford Motor Company, which has a B3 Corporate Family
Rating, and Ford Motor Credit Company, whose Senior Unsecured
Rating is B1.
The business prospects for the North American auto industry
continue to deteriorate as the economy weakens and fuel prices are
sustained at record high levels. With product offerings overly
weighted in trucks and SUV's, the Big-3 U.S. auto makers,
including Ford, are particularly vulnerable in this environment.
Moody's ratings and outlook for Ford have considered the
likelihood that the company will not be able to achieve break-even
earnings through 2009, and that the company will continue to
experience a combined automotive operating cash burn for 2008 and
2009 that will exceed $12 to $14 billion.
The ratings have also considered that Ford's $40.6 billion
liquidity position, consisting of $28.7 billion in cash and
$11.9 billion in availability under committed credit facilities,
provides an incremental level of financial flexibility for the
company during this challenging period.
Moody's will continue to monitor developments in Ford's efforts to
adjust its business profile to contend with the evolving market
conditions. The rating outlook remains negative. Absent
developments that indicate that Ford will be able to maintain an
adequate liquidity profile, while implementing restructuring
actions that improve earnings and cash flow and rebuild its long
term product competitiveness, the ratings could be subject to
downgrade.
Headquartered in Dearborn, Michigan, Ford Motor Company is a
leading global automotive manufacturer.
GEORGIA GULF: To Pay $1MM to Cure Default on 7-1/8% Senior Notes
----------------------------------------------------------------
Georgia Gulf Corporation entered into a settlement agreement with
certain holders of its 7-1/8% senior notes due 2013 who submitted
a notice of default on June 6, 2008. The company has agreed to
pay $1.4 million of the legal fees of the signing holders.
Approval of the lenders under the company's bank credit agreement
is required for the consent fee payment and the 2003 Indenture
amendment.
In connection with the settlement agreement, the signing holders
have delivered to the trustee for the 7-1/8% notes a notice of
withdrawal of the notice of default dated June 6, 2008, and the
company and those holders will file for dismissal of the related
litigation.
In connection with, among other things, the payment will result in
the dismissal of the litigation and certain restrictions and
obligations of the signing holders with regard to their holdings
of the company's securities.
The company intends to solicit the consents of all holders of the
7-1/8% notes to the amendment and has agreed to pay a fee of
$1.5 million to all consenting note holders pro rata to their
respective holdings.
The signing holders and an additional holder of the notes, who
together hold a majority in principal amount of the 7-1/8% notes,
have delivered to the company consents to an amendment to the
related indenture. The amendment, once effective, will amend
certain covenants in the indenture, and provide a waiver of
defaults, if any.
About Georgia Gulf
Headuqratered in Atlanta, Georgia, Georgia Gulf Corporation
(NYSE:GGC) -- http://www.ggc.com/-- manufactures and markets two
integrated product lines: chlorovinyls and aromatics. The
company's primary chlorovinyls products are chlorine, caustic
soda, vinyl chloride monomer, vinyl resins and vinyl compounds,
and itsaromatics products are cumene, phenol and acetone. GGC
operates through four segments: chlorovinyls; window and door
profiles and mouldings products; outdoor building products, and
aromatics. On Oct. 3, 2006, GGC completed the acquisition of
Royal Group Technologies Limited, a North American manufacturer
and marketer of vinyl-based building and home improvement
products.
* * *
As reported in the Troubled company Reporter on May 12, 2008,
Standard & Poor's Ratings Services lowered its ratings on Georgia
Gulf Corp. by one notch, including its corporate credit rating to
'CCC+' from 'B-'. The outlook is negative.
GENERAL MOTORS: Moody's Reviews Low B and C Ratings for Likely Cut
------------------------------------------------------------------
Moody's Investors Service is reviewing the ratings of General
Motors Corporation for possible downgrade. Ratings under review
include its B3 Corporate Family Rating, B3 Probability of Default
Rating, Ba3 rating for secured debt, and Caa1 rating for senior
unsecured debt.
The review is focusing on the degree to which GM's recently
disclosed initiatives to boost liquidity by $15 billion, combined
with its $24 billion in cash and $7 billion in committed credit
facilities, will cover the substantial cash requirements the
company will face until it adequately adjusts it production and
pricing structure to accommodate the US auto market's shift away
from trucks and SUVs.
The company must also contend with the possibility of overall
automotive demand remaining depressed through 2009 due to
continued record-high fuel costs, a soft economy, and
deteriorating consumer confidence.
GM's Speculative Grade Liquidity rating was lowered to SGL-2 from
SGL-1. The lower rating reflects Moody's view that despite the
fact that the company's liquidity is more than adequate to cover
all requirements over the coming twelve months and could be
further enhanced, the magnitude and duration of the company's
operating cash burn will not be supportive of the highest
Speculative Grade Liquidity rating.
The ratings of GMAC (B3/Negative) and ResCap (Ca/Rev. Pos.
downgrade) are not affected by these actions.
"Despite the very constructive nature of the initiatives announced
by GM," Bruce Clark, senior vice president with Moody's said, "the
company will continue to face the significant challenge of
building enough profitability in its car and crossover portfolio
to make up for the earnings that will no longer be generated on
the truck and SUV side."
"Establishing an adequate level of profitability throughout a car
portfolio that has historically been priced at a significant
discount relative to competing models from Asia will be a
difficult and long-term undertaking. GM will likely face a
sizable cash burn until it gets this part of the equation right,"
Mr. Clark continued.
Headquartered in Detroit, Michigan, General Motors Corporation is
the world's second-largest automotive manufacturer.
GENERAL MOTORS: Posts Record Quarterly Sales in LAAM Region
-----------------------------------------------------------
General Motors Latin America, Africa and Middle East (GM LAAM)
region broke another record in Q2 2008 selling 346,100 vehicles,
up 52,100 units over the same period in 2007. GM's volume
increase of nearly 18 percent for the quarter again exceeded the
industry growth rate of 13 percent. In addition, GM's market share
in the region climbed to 17.5 percent for the quarter, up 0.7
share points year-over-year.
Maureen Kempston Darkes, GM group vice president and president of
GM LAAM said, "The strong performance of GM's global products in
our markets, combined with our strong local manufacturing
presence, is enabling us to grow our sales volume and market share
faster than the industry in these emerging markets."
Brazil, Chile, Egypt and the North Africa markets posted all-time
quarterly GM sales records. Egypt saw triple-digit growth of
nearly 110 percent. Second quarter GM sales records were set by
Argentina, Ecuador and the Middle East.
"Strong demand for our Chevrolet products, such as the Chevrolet
Corsa, Celta and Aveo fueled our growth throughout the region,"
Kempston Darkes continued. Those vehicles continued as the top
three sellers across the region in Q2 2008, representing 40
percent of GM sales.
For the first half of 2008, GM sold 670,100 units in the Latin
America, Africa and Middle East region. This represents an
increase of nearly 19 percent, or 105,700 units, year-over-year.
GM's market share through June stands at 17.5 percent, up nearly a
share point over the first half of 2007. Collectively, GM sales
were up a total of 36 percent in Africa, 17 percent in South
America and 7 percent in the Middle East.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
At March 31, 2008, GM's balance sheet showed total assets of
$145,741,000,000 and total debts of $186,784,000,000, resulting in
a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31,
2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000,
respectively.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
* * *
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corporation and
General Motors of Canada Limited Under Review with Negative
Implications. The rating action reflects the structural
deterioration of the company's operations in North America brought
on by high oil prices and a slowing U.S. economy.
Standard & Poor's Ratings Services is placing its corporate credit
ratings on the three U.S. automakers, General Motors Corp., Ford
Motor Co., and Chrysler LLC, on CreditWatch with negative
implications, citing the need to evaluate the financial damage
being inflicted by deteriorating U.S. industry conditions--largely
as a result of high gasoline prices. Included in the CreditWatch
placement are the finance units Ford Motor Credit Co. and
DaimlerChrysler Financial Services Americas LLC, as well as GM's
49%-owned finance affiliate GMAC LLC.
As related in the Troubled Company Reporter on June 5, 2008,
Standard & Poor's Ratings Services said that its ratings on
General Motors Corp. (B/Negative/B-3) are not immediately affected
by the company's announcement that it will cease production at
four North American truck plants over the next two years. These
closures are in response to the re-energized shift in consumer
demand away from light trucks. GM previously said only one shift
was being eliminated at each of the four truck plants. Production
is being increased at plants producing small and midsize cars, but
the cash contribution margin from these smaller vehicles is far
less than that of light trucks.
GMAC LLC: Gets 10-Yr Waiver from FDIC to Dispose of Banking Unit
----------------------------------------------------------------
GMAC Financial Services on Wednesday said the Federal Deposit
Insurance Corporation has granted a 10-year extension of GMAC
Bank's current ownership by extending the existing disposition
requirement that was established in connection with the sale of a
majority stake in GMAC.
The Wall Street Journal's Aparajita Saha-Bubna says the FDIC's
decision was a much needed boost for GMAC, which allows the
financing arm of General Motors Corp. to raise funds at
competitive rates.
GM owns a 49% stake in GMAC after selling 51% of GMAC to a group
of investors led by Cerberus Capital Management LP in 2006 for
about $14 billion.
"We are very pleased with the FDIC's prompt action on our waiver
request," said GMAC Chief Executive Officer Alvaro G. de Molina.
"The long-term extension granted by the FDIC will permit us to
strengthen GMAC Bank, which provides an important source of
funding for mortgage and automotive financing activities.
"This development along with the successful completion of the
global refinancing announced last month helps to enhance
flexibility during this turbulent market environment," said de
Molina.
The FDIC's action includes requirements related to capital levels
at GMAC Bank and the company as a whole.
"It's a positive on the funding side," said Richard Hofmann, an
analyst at independent research firm CreditSights, according to
the Journal. Mr. Hofmann, the Journal quotes, said GMAC Bank has
"become a more critical funding source for the company as the
credit crisis has heightened," citing that "[a] bank is an easier
way to bring in funding at a very competitive price."
GMAC Bank, according to the Journal, is a so-called industrial-
loan corporation, which are FDIC-supervised lenders that offer a
way for commercial firms to own banks without being regulated by a
federal banking agency.
According to the Journal, when Cerberus bought a 51% GMAC stake,
the FDIC had imposed a moratorium on the approval of banks owned
by nonfinancial companies, like Wal-Mart Stores Inc., to allow
Congress to debate the issue of mixing banking and commerce.
Despite the freeze, the Journal continues, the FDIC granted
Cerberus and GMAC's application because of "the unique
circumstances" of GM's restructuring. In exchange, GMAC and
Cerberus were to satisfy one of several conditions by November:
-- sell GMAC Bank;
-- have the bank cease using FDIC insurance; or
-- register as a bank holding company.
If none of these terms could be achieved, Cerberus would have to
get an FDIC waiver, the Journal says.
FDIC Waiver Good for Rescap Too
According to the Journal, as the credit crunch has made short-term
financing costly and scarce, GMAC Bank's $15.3 billion in deposits
and $10.8 billion in Federal Home Loan Bank advances have become
increasingly important sources of stable, low-cost funding,
particularly for Residential Capital LLC, GMAC's struggling
mortgage subsidiary.
Mr. Hofmann, the Journal relates, said the FDIC waiver is
important for ResCap because it has difficulty getting funds on an
unsecured basis.
"Look at GMAC bank, it's loaded up with mortgages," the Journal
quotes Mr. Hofmann as saying.
The Journal says more than two-thirds of GMAC Bank's $30.3 billion
assets as of the first quarter were made up of mortgage assets as
prime loans, which are made to those with strong credit. GMAC
Bank accounted for about 30% of ResCap's funding in 2007, the
Journal says.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit
of GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
* * *
As reported by the Troubled Company Reporter on June 4, 2008,
Fitch Ratings has downgraded the long-term Issuer Default Rating
of GMAC LLC and related subsidiaries to 'BB-' from 'BB'. Fitch
has also downgraded GMAC's unsecured long-term ratings to 'B+'
from 'BB-', reflecting the potential for reduced recovery in a
default scenario should the company encumber assets.
Additionally, Fitch has affirmed the 'B' short-term ratings. The
Rating Outlook remains Negative.
As reported in the Troubled Company Reporter on April 25, 2008,
Moody's Investors Service downgraded GMAC LLC's senior rating to
B2 from B1; the rating remains on review for further possible
downgrade. This action follows Moody's rating downgrade of ResCap
LLC, GMAC's wholly owned residential mortgage unit, to Caa1 from
B2.
GREY WOLF: Shareholders Snub Merger with Basic, Terminate Deal
--------------------------------------------------------------
Grey Wolf Inc. terminated its merger agreement with Basic Energy
Services Inc. Grey Wolf disclosed that its proposed merger did
not receive sufficient votes from Grey Wolf shareholders at its
special meeting of shareholders held July 15.
As reported in the Troubled Company Reporter on July 14, 2008,
Precision Drilling Trust said it will ask Grey Wolf's board
of directors to reconsider its $10.00 per share buyout offer if
Grey Wolf shareholders reject a proposed merger with Basic.
In light of this development, the board of directors of Grey Wolf
plans to review the company's alternatives for enhancing
shareholder value. This review will include an update to the
company's existing strategic plan and will encompass consideration
of continued internal growth by remaining independent,
acquisitions, mergers, sale of the company, strategic alliances,
joint ventures and financial alternatives.
The board has engaged UBS Investment Bank as its independent
financial advisor to assist the Company in conducting this review.
"Grey Wolf remains fully committed to enhancing shareholder value.
After thorough consideration, Grey Wolf's board believed that the
addition of Basic's complementary business and assets would have
been an excellent strategic fit for us and would have created
significant value," Thomas P. Richards, chairman, president and
CEO of Grey Wolf, said.
"The board will now continue to consider other alternatives to
enhance shareholder value and it will do so in an environment of
strong commodity prices, a related strengthening in the onshore
U.S. lower 48 drilling market and the potential inherent in Grey
Wolf's asset base," Mr. Richards continued.
The company cautions shareholders that there is no assurance that
the review will result in any specific transaction and no
timetable has been set for its completion. The company does not
intend to disclose developments relating to this review unless and
until its board approves a specific agreement or transaction.
The company will also take a pre-tax charge to earnings of
approximately $17.00 million or approximately $.05 per diluted
share during the third quarter of this year as a result of the
shareholder vote and related termination of the merger agreement.
About Precision Drilling Trust
Precision Drilling Trust (NYSE:PDS and TSX:PD.UN) is an
unincorporated open-ended investment trust established under the
laws of the Province of Alberta, Canada.
About Grey Wolf
Headquartered in Houston, Texas, Grey Wolf Inc. (AMEX: GW) --
http://www.gwdrilling.com/-- provides turnkey and contract oil
and gas land drilling services in the best natural gas producing
regions in the United States with a current drilling rig fleet of
121, which will increase to 123 with the expected addition of two
new rigs in 2008.
GREY WOLF: Merger Kill Cues Moody's Ba3 Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service confirmed Grey Wolf, Inc.'s ratings
following the company's statement that it has terminated its
merger with Basic Energy Services, Inc.
The confirmed ratings are the Ba3 corporate family rating, the Ba3
probability of default rating, and the B1 (LGD 4, 61%) rating on
the senior unsecured convertible notes. This concludes the review
for possible upgrade initiated on April 21, 2008 in response to
the statement of the merger with Basic Energy. The outlook is
developing.
Simultaneously, Moody's withdrew the ratings for Horsepower
Holdings, Inc., the entity formed to be the holding company to
facilitate the merger with Basic Energy. The ratings being
withdrawn for HHI are the Ba2 CFR, the Ba2 PDR, the Ba1 (LGD 3,
39%) to the proposed $925 million of first lien credit facilities,
and the SGL-2 rating.
The developing outlook for GW reflects the uncertainty surrounding
the company's initiation of a strategic review to enhance
shareholder value following the shareholder's vote against the
merger with Basic Energy. GW has already received a competing bid
to buy the company from Precision Drilling Trust; however, GW's
management is evaluating all alternatives.
There is no specific timetable for the completion of this review
and it will consider remaining independent, completing
acquisitions, mergers, a sale of the company, strategic alliances,
joint ventures, and financial alternatives. Resolution of the
outlook will depend on the final decision by GW's Board of
Directors regarding its strategy and what the potential impact
will be to the note holders.
The confirmation of the Ba3 reflects the company's conservative
financial policies evidenced by its very low leverage and history
of carrying significant cash balances. In addition, the Ba3
reflects the company's focus as a natural gas driller with a fleet
contains a large number of rigs that can perform complex drilling
which is important to the very hot unconventional resource plays
in North America.
Given the capital deployed to these plays by a number of
exploration and production companies and the supportive natural
gas price outlook, Moody's expects drilling activity to remain
strong into 2009. This will likely keep day rates and utilization
healthy, thus driving earnings and cash flows that will result in
credit metrics in line with the Ba rated peer group.
The Ba3 CFR remains restrained by the company's comparatively
small scale relative to other Ba3 rated drillers and oilfield
services companies. The Ba3 also considers the inherent
volatility in the drilling business which is tied to commodity
prices and the capital spending patterns of the E&P sector, as
well as the company's concentration in the more volatile North
American market.
Grey Wolf is headquartered in Houston, Texas.
HAMILTON CREEK: Case Summary & Five Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Hamilton Creek, LLC
62 First St., 4th Fl.
San Francisco, CA 94105
Bankruptcy Case No.: 08-31285
Chapter 11 Petition Date: July 16, 2008
Court: Northern District of California (San Francisco)
Judge: Thomas E. Carlson
Debtor's Counsel: Robert G. Harris, Esq.
Email: rob@bindermalter.com
Law Offices of Binder and Malter
2775 Park Ave.
Santa Clara, CA 95050
Tel: (408) 295-1700
http://www.bindermalter.com/
Estimated Assets: $50,000,000 to $100,000,000
Estimated Debts: $50,000,000 to $100,000,000
Debtor's Five Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
United Commercial Bank real estate; value $900,000
711 Van Ness of security: $450,000
San Francisco, CA 94102
Default Resolution Network Trustee and $43,961
209 Kearny St., 2nd Fl. Recording Fees
San Francisco, CA 94108
San Mateo County Tax Collector Property Taxes $11,319
555 County Ctr., 1st Fl.
Redwood City, CA 94063-1665
Orrick Herrington & Sutcliffe, Attorneys Fees $5,650
LLP
Reuben & Junius, LLP Attorneys Fees $1,976
HAMNER HOLDINGS: Case Summary & Seven Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Hamner Holdings, LP
P.O. Box 6216
Laguna Niguel, CA 92607
Bankruptcy Case No.: 08-14044
Type of Business: The Debtor is engaged in real estate business.
Chapter 11 Petition Date: July 14, 2008
Court: Central District Of California (Santa Ana)
Judge: Robert N. Kwan
Debtor's Counsel: Robert P. Goe, Esq.
E-mail: kmurphy@goeforlaw.com
Goe & Forsythe, LLP
660 Newport Center Drive, Suite 320
Newport Beach, Ca 92660
Tel: (949) 467-3780
Fax: (949) 721-0409
http://goeforlaw.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's seven largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/cacb08-14044.pdf
HANCOCK FABRICS: U.S. Trustee Protests Joint Chapter 11 Plan
------------------------------------------------------------
Roberta A. DeAngelis, acting Unites States Trustee for Region 3,
asks the United States Bankruptcy Court for the District of
Delaware to deny confirmation of the Joint Consolidated Plan of
Reorganization of Hancock Fabrics Inc. and its debtor-affiliates.
Separately, 17 ad valorem tax appraisal agencies in the state of
Texas object to the confirmation of the Debtors' Plan due to their
non-compliance with the provisions under Section 1129(b)(1) and
(2)(A) of the Bankruptcy Code:
The U.S. Trustee complains that the exculpation clause and the
provisions for limitation of liability in the Plan acquits
several parties from liability, including the Debtors' non-debtor
affiliates, members, stockholders, advisors, agents, attorneys
and other professionals, for several events related to
prepetition, postpetition and non-bankruptcy related conduct, as
well as, future events yet to have occurred in the context of the
confirmation of the Plan.
Richard L. Schepacarter, Esq., trial attorney for the Office of
the U.S. Trustee, in Wilmington, Delaware, asserts that the
Debtors must show that for each party seeking to obtain
exculpation:
1. an identity of interest between the debtor and the third
party, so that a suit against the non-debtor is, in
essence, a suit against the debtor or will deplete assets
of the estate;
2. substantial contribution by the non-debtor of assets to the
reorganization;
3. the essential nature of the injunction to the
reorganization to the extent that, without the injunction,
there is little likelihood of success;
4. an agreement by a substantial majority of creditors to
support the injunction, specifically if the impacted class
or classes "overwhelmingly" votes to accept the plan; and
5. provision in the plan for payment of all or substantially
all of the class or classes affected by the injunction.
The U.S. Trustee further complains that the Plan allows for the
reasonable fees and expenses of the Ad Hoc Equity Committee to be
paid but improperly asserts that no party may object to the fees
or expenses on the grounds that the Ad Hoc Equity Committee --
the unofficial committee formed by certain holders of stock
interests in Hancock Fabrics, Inc., that was in existence from
the Petition Date through the date the Official Committee of
Equity Security Holders was appointed -- or its professionals did
not make a substantial contribution to the reorganization cases.
According to Mr. Schepacarter, Section 503(b)(3)(D) and (b)(4) of
the Bankruptcy Code provides for the allowance of administrative
expenses of a committee other than the committee appointed under
Section 1102 provided that that committee has made a substantial
contribution to the debtor's bankruptcy case. He asserts that
the Plan provision allowing the Ad Hoc Committee's Fees should be
stricken and the Ad Hoc Equity Committee or its Professionals
should file with the Court an appropriate and legally sufficient
application for payment of administrative expenses in accordance
with applicable law that satisfies and meets the prescripts of
Sections 503(b)(3)(D) and 503(b)(4) and any relevant case law.
Plan
As reported in the Troubled Company Reporter on July 4, 2008, the
Debtors delivered on June 10, 2008, to the Court a joint
consolidated Chapter 11 plan of reorganization.
Under the plan, among other things, general unsecured creditors
will receive cash equal to 104.93% of their claims.
The Debtors' Plan is financed in part by a rights offering to
raise $20,000,000. The offering to current shareholders is for
five-year floating rate notes to be secured by a lien on assets
junior to the bank financing. Hancock will have the right for the
first year to pay interest with more notes.
The sale of the $20,000,000 in notes is being backstopped by
Sopris Capital Partners LP, Berg & Berg Enterprises, LLC, and
Trellus Management, which are obligated to purchase any of the
notes not bought by shareholders.
The Debtors have also secured a $100,000,000 commitment for a exit
revolving credit from General Electric Capital Corp. The
commitment will expire if Hancock won't have the Chapter 11 plan
confirmed and won't emerged from reorganization by August 29,
2008.
A full-text copy of the Debtors' Plan is available for free at:
http://bankrupt.com/misc/HancockReorgPlan.pdf
The Court scheduled a hearing to consider confirmation of the
Debtors' Plan for July 22, 2008, at 10:00 a.m., Eastern Time.
Objections, if any, were due July 15,2008, 4:00 p.m., Eastern
Time.
About Hancock Fabrics
Headquartered in Baldwyn, Mississippi, Hancock Fabrics Inc.
(OTC: HKFIQ) -- http://www.hancockfabrics.com/-- is a specialty
retailer of a wide selection of fashion and home decorating
textiles, sewing accessories, needlecraft supplies and sewing
machines. Hancock Fabrics is one of the largest fabric retailers
in the United States, currently operating approximately 400 retail
stores in approximately 40 states. The company employs
approximately 7,500 people on a full-time and part-time basis.
Most of the company's employees work in its retail stores, or in
field management to support its retail stores.
The company and six of its debtor-affiliates filed for chapter 11
protection on March 21, 2007 (Bankr. D. Del. Lead Case No.
07-10353). Robert J. Dehney, Esq., at Morris, Nichols, Arsht &
Tunnell, represent the Debtors. The U.S. Trustee for Region 3
appointed five creditors to serve on an Official Committee of
Unsecured Creditors. As of Sept. 1, 2007, Hancock
Fabrics disclosed total assets of $159,673,000 and total
liabilities of 122,316,000.
(Hancock Fabric Bankruptcy News, Issue No. 36, Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
HOLOGIC INC: Moody's Affirms Ba3 Corporate Family Rating
--------------------------------------------------------
Moody's Investors Service assigned Baa3 ratings to Hologic, Inc.'s
amended and restated $800 million senior secured credit
facilities, a portion of which will be used to finance the
acquisition of Third Wave Technologies.
At the same time, Moody's affirmed Hologic's existing ratings.
The ratings outlook is stable. Moody's expects to withdraw the
ratings on Hologic's existing facilities upon the closing of the
Third Wave transaction.
Moody's affirmation is based on our expectation that Hologic will
continue to generate relatively good cash flow, which should
enable the company to repay debt associated with this transaction
over a two to three year period. Moody's also recognizes the
strategic fit of this transaction as Third Wave's pending HPV test
will be a natural extension of Hologic's ThinPrep pap tests.
Although Moody's did not anticipate an acquisition of this size so
soon after the Cytyc transaction, Hologic's relatively rapid
repayment of debt provides some flexibility at the current rating
level. Although cash flow generation has been favorable, a
significant portion of this repayment was attributed to option
exercise proceeds as well as excess cash from the Cytyc financing.
The stable outlook assumes that Hologic will: (1) refrain from
other debt-financed acquisitions until it has repaid a significant
portion of the debt associated with Third Wave; and (2) de-
leverage such that the company can achieve and sustain free cash
flow to debt greater than 10%.
Ratings assigned:
Hologic, Inc.
-- Baa3 (LGD2, 11%) $400 million Amended Senior Secured Term
Loan A, due 2012
-- Baa3 (LGD2, 11%) $200 million Amended Senior Secured Term
Loan B, due 2013
-- Baa3 (LGD2, 11%) $200 million Amended Senior Secured
Revolving Credit Facility, due 2012
Ratings affirmed:
-- Ba3 Corporate Family Rating
-- Ba3 Probability of Default Rating
-- SGL-2 Speculative Grade Liquidity Rating
-- Ratings affirmed but to be withdrawn upon transaction close:
-- Baa3 (LGD1, 9%) Existing Senior Secured Term Loan A, due 2012
-- Baa3 (LGD1, 9%) Existing Senior Secured Term Loan B, due 2013
-- Baa3 (LGD1, 9%) Existing Senior Secured Revolving Credit
Facility, due 2012
Hologic is a leading developer, manufacturer and supplier of
diagnostic and medical imaging systems primarily dedicated to
serving the healthcare needs of women. The company is focused on
mammography and breast care technologies as well as on
osteoporosis assessment.
In October 2007, Hologic completed the acquisition of Cytyc, a
medical device company that develops, manufactures and markets
diagnostic and surgical products that address a range of women's
health applications including cervical cancer screening, treatment
of excessive menstrual bleeding and radiation treatment of early-
stage breast cancer.
HUNTSMAN CORP: Hexion Acquisition Proposal Gets EC Conditional Nod
------------------------------------------------------------------
The European Commission issued a decision that would permit Hexion
Specialty Chemicals, Inc.'s acquisition of Huntsman Corp.,
contingent on, among other things, divestment of a portion of the
company's global specialty epoxy resins business to a purchaser
approved by the European Commission.
Background
As reported by the Troubled Company Reporter on July 13, 2007,
Huntsman agreed to a definitive merger agreement with Hexion
Specialty, pursuant to a transaction with a total value of
approximately $10.6 billion, including the assumption of debt.
Under the terms of the agreement, Hexion will acquire all of the
outstanding common stock of Huntsman for $28 per share in cash.
The agreement also provides that the cash price per share to be
paid by Hexion will increase at the rate of 8% per annum beginning
270 days from July 12, 2007.
Huntsman has terminated the merger agreement with Basell AF
believing that the Hexion transaction was a superior proposal.
The Hexion deal was unanimously approved by the board of directors
of Huntsman.
The transaction is subject to customary closing conditions,
including regulatory approval in the U.S. and in Europe, well as
the approval of Huntsman shareholders. Entities controlled by
MatlinPatterson and the Huntsman family and a Huntsman charitable
trust, who collectively own approximately 57% of Huntsman's common
stock, have agreed to vote in favor of the transaction.
The transaction is not subject to a financing condition and
commitments have been obtained by Hexion for all necessary debt
financing from affiliates of Credit Suisse and Deutsche Bank AG.
Hexion will have up to 12 months, subject to a 90 day extension by
the Huntsman board under certain circumstances, to close the
transaction.
Merrill Lynch & Co. and Cowen and Company LLC acted as financial
advisors to Huntsman. Vinson & Elkins L.L.P. and Shearman and
Sterling LLP acted as legal advisors to Huntsman.
The Delaware Court of Chancery has granted Huntsman Corporation's
request to expedite the Court's review of Hexion Specialty
Chemicals Inc.'s efforts to abandon Hexion's pending merger with
Huntsman. The trial will begin on Sept. 8, 2008.
Extension of Merger Termination Date
On Jan. 29, 2008, the TCR reported that Hexion informed Huntsman
that it will exercise its right to extend the termination date by
90 days from April 5 to July 4, 2008.
On April 5, 2008, Hexion Specialty Chemicals Inc. exercised an
option under its merger agreement with Huntsman Corporation dated
as of July 12, 2007, extending the merger agreement termination
date by 90 days, to July 4, 2008.
The TCR related on July 3, 2008, Huntsman's board of directors,
unanimously, provisionally authorized Huntsman Corp. to exercise
its right to extend the merger agreement with Hexion Specialty by
an additional 90 days to Oct. 2, 2008, as permitted by the terms
of the merger agreement.
Hexion's Lawsuit to Cancel Merger
On June 19, the TCR reported that Hexion and related entities
filed a suit in the Delaware Court of Chancery to cancel the
agreement. Hexion said in the suit that it believes that the
capital structure agreed to by Huntsman and Hexion for the
combined company is no longer viable because of Huntsman's
increased net debt and its lower than expected earnings. While
both companies individually are solvent, Hexion believes that
consummating the merger on the basis of the capital structure
agreed to with Huntsman would render the combined company
insolvent.
Comments and Responses
Hexion said that the company and Apollo Management L.P. received a
letter from Peter Huntsman, Huntsman Corporation's president and
CEO, stating that their actions were inconsistent with the terms
of the merger agreement.
Huntsman is violating its obligations to Huntsman Corp. by seeking
to cancel the transaction, Bloomberg relates according to Mr.
Huntsman. Mr. Huntsman reportedly stated that the actions appear
to be a blatant attempt to deprive its shareholders of the
benefits of the Merger Agreement that was agreed to nearly a year
ago.
Huntsman's Countersuit
Reports say Huntsman has filed a countersuit against Apollo
Management and two of its founders in Texas state court, alleging
interference with its merger with Hexion Specialty Chemicals, an
Apollo company. Huntsman is seeking a jury trial in Texas to
determine liability for "actual damages exceeding USD 3 bn, plus
exemplary damages," according to Plasteurope (Germany).
In response, Hexion said: "It is unfortunate that Huntsman has
chosen to file a baseless lawsuit against Apollo and to personally
sue two of its principals. Huntsman's Texas suit violates a clear
provision of the merger agreement which requires that any
litigation be brought exclusively in the State of Delaware. As we
alleged in our suit, primarily due to Huntsman's underperformance,
we believe that consummating the merger on the basis of the
capital structure agreed to with Huntsman would render the
combined company insolvent. In fact, Huntsman's suit does not
dispute that the combined company would be insolvent. We believe
Huntsman's lawsuit is wholly without merit."
About Huntsman Corporation
Headquartered in Salt Lake City, Utah, Huntsman Corporation
(NYSE:HUN) -- http://www.huntsman.com/-- is a manufacturer of
differentiated chemical products and inorganic chemical products.
The company operates in four segments: Polyurethanes, Materials
and Effects, Performance Products and Pigments. Its products are
used in a range of applications, including those in the adhesives,
aerospace, automotive, construction products, durable and non-
durable consumer products, electronics, medical, packaging, paints
and coatings, power generation, refining, synthetic fiber, textile
chemicals and dye industries.
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at March 31, 2008,
showed the company had total assets of $4.2 billion and total
liabilities of $5.5 billion, resulting in a shareholders' deficit
of $1.3 billion.
IDLEAIRE TECHNOLOGIES: $26 Mil. Sale to Noteholder Group Approved
-----------------------------------------------------------------
The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District
of Delaware approved the sale of IdleAire Technologies Corp. to
noteholder group IdleAire Acquisition Company LLC for about $26
million, Jamie Mason writes for The Deal. Sale objections were
settled during a July 11, 2008 hearing, The Deal notes.
The Deal relates that during a July 9, 2008 auction, the sole
competing bidder, Zohar Motorcycles Inc., lost to the noteholder
group as designated stalking horse bidder. Zohar Motorcycles is
an affiliate of Patriarch Partners LLC, The Deal says.
The Troubled Company Reporter said on June 2, 2008, that the
Debtor agreed to sell its assets for $10 million, including
assumption of certain liabilities to the noteholder group. The
group's $10 million offer was subsequently raised to
$17.5 million, plus assumption of debts, The Deal states.
The noteholder group is composed of, among others, Airlie
Opportunity Master Fund Ltd., Kenmont Special Opportunities Master
Fund LP, Miesque Fund Limited, SV Special Situations Master Fund
Ltd., Pierce Diversified Trading Strategy Fund LLC, Whitebox
Hedged High Yield Partners LP, Wilfrid Aubrey Growth Fund LP and
Wilfrid Aubrey International Limited.
About IdleAire
Knoxville, Tennessee-based IdleAire Technologies Corp. --
http://www.idleaire.com/-- is a privately held corporation
founded in June 2000 and has not been profitable since inception.
It manufactures and services an advanced travel center
electrification system providing heating, ventilation & air
conditioning, Internet and other services to truck drivers parked
at rest stops. The company delivers its services to long-haul
drivers through its patented Advanced Travel Center
Electrification(R) system, or ATE system, comprised of an in-cab
service module connected to an external heating, ventilation and
air conditioning unit, or HVAC unit, mounted on a truss structure
above parking spaces. IdleAire has 131 locations in 34 states and
employs about 1,200 people.
The company filed chapter 11 petition on May 12, 2008 (Bankr. D.
Del. Case No. 08-10960). Judge Kevin Gross presides over the
case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine,
Esq., and William David Sullivan, Esq., at Sullivan Hazeltine
Allinson, LLC represent the Debtor in its restructuring efforts.
John Monaghan, Esq., at Holland & Knight LLP is co-counsel to the
Debtor. The Debtor selected Kurtzman Carson Consultants LLC as
claim, noticing and balloting agent. The U.S. Trustee for Region
3 appointed three creditors as members of the Official Committee
of Unsecured Creditors. Saul Ewing LLP represents the Creditors'
Committee.
As reported in the Troubled Company Reporter on June 30, 2008, the
Debtor's summary of schedules showed total assets of $152,398,370
and total debts of $373,220,369.
INDYMAC BANCORP: Failure Hurts Investor Alesco's TruPS Portfolio
----------------------------------------------------------------
Alesco Financial Inc. will record a loss of about $86 million on
investments in IndyMac Bancorp Inc. debt, the Associated Press
reported.
The loss was tied to Alesco's investment in collateralized debt
obligations issued by IndyMac, the report added.
IndyMac's banking unit, IndyMac Bank FSB, was seized by the Office
of Thrift Supervision on July 11.
Shares of Alesco fell 19 cents, or 13.6%, to $1.19 in morning
trading on Tuesday, AP stated. According to AP, earlier in the
session, shares hit an all-time low of $1.08.
Alesco shares sold for $1.14 as of the close of trading at the New
York Stock Exchange on July 16. The company's shares closed at
$1.38 the previous day.
In a press statement, Alesco Financial provided an update on its
trust preferred securities portfolio, including the expected
impact to AFN of the seizure of IndyMac Bancorp.
In June 2008, IndyMac elected to defer its interest payments on
$125 million aggregate principal amount of trust preferred
securities held in eight collateralized debt obligation, or CDO,
transactions in which AFN is an equity investor.
The IndyMac deferral triggered the over-collateralization tests in
five of these eight CDOs. The trigger of an over-collateralization
test in a CDO means that AFN, as a holder of equity securities,
will no longer receive current distributions of cash in respect of
its equity interests until sufficient cash flow is paid to senior
debt holders in the CDOs to cure the over-collateralization tests.
Subsequent to the IndyMac deferral, four additional banks elected
to defer interest payments on their trust preferred securities,
which has resulted in the over-collateralization tests being
triggered in two additional CDOs in which Alesco holds equity
interests. One of the CDO over-collateralization failures has
since been cured, bringing the total number of AFN's CDOs in over-
collateralization to six as of June 30, 2008.
AFN expects three of the six affected CDOs to cure the
over-collateralization failures and recommence making equity
distributions within 3 to 6 quarters and the other three to do so
within 20 to 35 quarters.
These cashflow projections assume zero recovery of principal or
interest on any of the currently deferring or defaulted securities
and no additional deferrals.
For the year ended Dec. 31, 2007, and the quarter ended March 31,
2008, the six affected CDOs contributed $36.2 million, or 43%, and
$8.4 million, or 41%, of AFN's adjusted earnings for such periods.
The aggregate principal amount of trust preferred securities in
deferral as of June 30, 2008, is $282.3 million, representing
approximately 5.5% of AFN's consolidated trust preferred
securities portfolio and an aggregate of $4.5 million in quarterly
interest payments to the eight CDOs in which AFN invests, of which
AFN's proportionate share is approximately $3.1 million, or about
$0.05 per diluted AFN common share per quarter.
AFN anticipates that the seizure of IndyMac will cause AFN to
record a realized tax loss of approximately $86 million, which is
equal to AFN's proportionate share of the $125 million of IndyMac
securities held by the eight CDOs.
The realized tax loss is expected to significantly offset AFN's
expected taxable income for the year ending Dec. 31, 2008,
including the non-cash income relating to the CDOs that are
failing overcollateralization tests as of June 30, 2008.
AFN is evaluating its overall portfolio for changes in fair value
in connection with the preparation of its second quarter financial
results, which AFN expects to announce on Aug. 5, 2008.
As of June 30, 2008, AFN has available unrestricted cash of
approximately $120 million. During June 2008, AFN sold a
subsidiary that owned approximately $87.5 million notional of
credit default swap positions for $70.4 million in cash. As a
result of this sale transaction, the $69.3 million of counterparty
margin included in AFN's March 31, 2008, unrestricted cash balance
is no longer subject to counterparty or market risk.
"The failure of IndyMac is indicative of the stress that the
banking sector is under at the time and is likely to be under for
the foreseeable future," James McEntee, president and CEO of AFN,
said.
"IndyMac's failure has significantly impacted our portfolio;
however, as a result of our strong liquidity position, we continue
to believe we have the ability to be patient and to manage through
these difficult times."
About Alesco Financial
Headquartered in Philadelphia, Alesco Financial Inc. (NYSE: AFN)
-- http://www.alescofinancial.com/-- is a specialty finance real
estate investment trust (REIT). The company is externally managed
by Cohen & Company Management LLC, a subsidiary of Cohen Brothers
LLC (which does business as Cohen & Company), an alternative
investment management firm, which, since 2001, has provided
financing to small and mid-sized companies in financial services,
real estate and other sectors.
About Indymac Bancorp
Headquartered in Pasadena, California, IndyMac Bancorp Inc.
(NYSE:IMB) -- http://www.indymacbank.com/-- is the holding
company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that
originates mortgages in all 50 states of the United States.
Indymac Bank provides financing for the acquisition, development,
and improvement of single-family homes. Indymac also provides
financing secured by single-family homes and other banking
products to facilitate consumers' personal financial goals.
IndyMac specialized in making and selling so-called Alt-A mortgage
loans, a category of loans to consumers more credit worthy than
subprime borrowers but typically without the complete
documentation of income or assets necessary to receive a prime-
rate loan. The company facilitates the acquisition, development,
and improvement of single-family homes through the electronic
mortgage information and transaction system platform that
automates underwriting, risk-based pricing and rate locking via
the internet at the point of sale. Indymac Bank offers mortgage
products and services that are tailored to meet the needs of both
consumers and mortgage professionals. Indymac operates through
two segments -- mortgage banking and thrift.
The company was ranked the ninth-largest U.S. mortgage lender in
2007 in terms of loan volume, The Wall Street Journal says, citing
trade publication Inside Mortgage Finance.
* * *
As reported by the Troubled Company Reporter on July 11, 2008,
Standard & Poor's Ratings Services lowered its rating on Indymac
Bancorp and its subsidiaries, including lowering the counterparty
credit rating on Indymac, to 'CCC/C' from 'B/C'. "We took this
action because we believe that Indymac's weakened financial
profile and exposure to deteriorating housing markets leaves its
creditworthiness severely impaired," said Standard & Poor's credit
analyst Robert B. Hoban, Jr.
On July 9, the TCR said Fitch Ratings downgraded the long-term
Issuer Default Ratings of Indymac Bancorp to 'CC' from 'B-'; and
the long-term Issuer Default Ratings of Indymac Bank FSB to 'CCC'
from 'B'. The downgrade follows IMB's disclosure that, according
to its regulators, the bank is no longer 'well capitalized'.
Concurrent with this rating action, Fitch has removed all ratings
from Rating Watch Negative. The Rating Outlook is Negative for
IMB.
INTELSAT CORPORATION: Moody's Assigns B3 Ratings to $1.2BB Notes
----------------------------------------------------------------
Moody's Investors Service assigned ratings to approximately
$1.2 billion of new debt instruments issued by Intelsat
Corporation, an indirect wholly-owned subsidiary of Intelsat, Ltd.
At the same time, Moody's also affirmed Intelsat's Caa1 corporate
family rating, Caa1 probability of default rate and SGL-3
speculative grade liquidity rating while maintaining the stable
ratings outlook.
The rating action was prompted by refinance activity resulting
from required change of control offers applicable to debt
instruments that were outstanding prior to Intelsat's recent
acquisition by private equity investors.
This third and final step in a multi-stage transaction, with steps
one and two having been the subject of Moody's June 24, 2008, and
July 1, 2008, press releases, in the names of Intelsat (Bermuda),
Ltd., and Intelsat Jackson Holdings, Ltd., respectively.
As was the case in the initial two steps, since this transaction
substitutes debt being "put" back to Intelsat Corporation with
similarly sized and structured replacements (albeit with minor
modifications to coupons that increase by 25 basis points in each
instance), the transaction is assessed as being neutral to
Intelsat's Caa1 CFR, Caa1 PDR and SGL-3 speculative grade rating,
with no consequent modification to existing ratings or loss given
default assessments of individual debt instruments.
Applicable ratings on debt instruments being completely refinanced
will be withdrawn in due course. With no change to the credit
profile of the company expected to occur over the near term, the
outlook continues to be stable.
Instruments rated:
Issuer: Intelsat Corporation
-- $658 million 9.25% Senior Notes due August 15, 2014, Rated B3
(LGD3, 32%)
-- $581 million 9.25% Senior Notes due June 15, 2016, Rated B3
(LGD3, 32%)
Headquartered in Pembroke, Bermuda, Intelsat Ltd. is the world's
leading fixed satellite service operator and is privately held by
BC Partners Holdings Limited, Silver Lake Partners and certain
other equity investors.
INTELSAT CORP: S&P Puts 'BB-' Rating on $658MM 9.25% Senior Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'BB-' issue-rating
and a '1' recovery rating to Intelsat, Corp.'s $658 million 9.25%
senior notes due 2014 and $581 million 9.25% senior notes due
2016. The '1' recovery rating indicates the expectation for very
high (90%-100%) recovery in the event of a payment default.
Intelsat Corp. is an indirect subsidiary of Bermuda-based
Intelsat, Ltd. The corporate credit rating on parent Intelsat,
Ltd. is 'B' and remains unchanged and the outlook is stable.
Intelsat is the largest provider of fixed satellite communications
services worldwide, supplying voice, data, and video connectivity
globally through its fleet of 53 owned satellites.
Proceeds from the new debt will be used to finance the repayment
of the issuer's outstanding $658 million 9.25% term loan due 2014
and $581 million 9.25% term loan due 2016 and pay related fees and
expenses. The ratings are based on preliminary terms and
conditions and are subject to review of final documentation.
The ratings on Intelsat reflect a highly leveraged financial
profile that allows for limited financial flexibility in the
medium term and overwhelms very attractive business
characteristics. A strong business risk profile reflects the
company's global scale, strong geographic diversification, and
strong revenue backlog that provides for significant cash flow
visibility. This fundamentally sound business profile enables the
company to support such high levels of leverage at this rating.
JIM PALMER: Case Summary & 27 Largest Unsecured Creditors
---------------------------------------------------------
Lead Debtor: Jim Palmer Trucking
9730 Derby Drive
MIssoula, MT 59808
Bankruptcy Case No.: 08-60922
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Jim Palmer Equipment, Inc. 08-60892
Jim Palmer Equipment II, LLC 08-60893
Type of Business: The Debtors provide transportation services.
See: http://www.jimpalmertrucking.com/
Chapter 11 Petition Date: July 15, 2008
Court: U.S. Bankruptcy Court, District of Montana (Butte)
Debtors' Counsel: James A. Patten, Esq.
(japatten@ppbglaw.com)
The Fratt Building, Suite 300
2817 2nd Avenue N.
Billings, MT 59101
Tel: (406) 252-8500
Fax: (406) 294-9500
http://www.lawyers.com/ppbglaw/
Total Assets: $11,897,554
Total Debts: $12,089,808
Consolidated Debtors' List of 27 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Stieg & Associates Ins Inc. $287,353
2180 Overland Avenue
Billings, MT 59108
Northwest Peterbilt $232,114
P.O. Box 8207
Missoula, MT 59807
National Lease $196,543
Ameriquest Transport
P.O. Box 828997
Philadelphia, PA 19182
Volvo Financial Services security: $560,000 $191,594
Les Schwab Tires $104,151
Bridgestone/Firestone Inc. $84,960
Qualcomm Incorporated $79,880
Kansas Dept. of Revenue $74,307
Great West Casualty $64,852
Company
Transport Equipment $53,345
Pre Pass $45,228
Oliver Rubber Co., LLC $36,716
Galusha Higgins & Galusha $27,302
Days Inn Missoula $27,091
Rainer Fruit Company $23,654
Cascade Freight Inc. $27,256
Petro Stopping Ctrs, LP $20,033
Thermo King Northwest, Inc. $16,784
Pitney Bowes Purchase Pwr $15,110
Allstate Peterbilt $12,995
of Cincinnati
Kenworth Sales-Missoula $12,667
St. Patrick Hospital $12,447
Blue Beacon International $10,615
GMAC security: $16,600 $8,442
Missouri Department of $8,270
Revenue
State of Arkansas/Dept. of $6,437
Finance Revenue Division
Stemilt Growers Inc. $5,887
JOHN DAVID SAMS: Case Summary & Six Largest Unsecured Creditors
---------------------------------------------------------------
Debtors: John David Sams
Susan Lynn Sams
Route 1 Box 14-B
Fort Spring, WV 24970
Tel: (304) 645-4240
Bankruptcy Case No.: 08-50183
Type of Business: The Debtors are engaged in land-based logging.
Chapter 11 Petition Date: July 14, 2008
Court: Southern District of West Virginia (Beckley)
Debtor's Counsel: George L. Lemon, Esq.
Email: georgelemon@verizon.net
122 1/2 N. Court Street
P.O. Box 1250
Lewisburg, WV 24901
Tel: (304) 645-3773
Total Assets: $5,221,700
Total Debts: $649,169
A list of the Debtors' largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/wvsb08-50183.pdf
JP MORGAN COMMERCIAL: Fitch Affirms Ratings on Stable Performance
-----------------------------------------------------------------
Fitch Ratings has affirmed JP Morgan Commercial Mortgage Finance
Corp., commercial mortgage pass-through certificates, series 2000-
C10 as:
-- $28.5 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $31.4 million class B at 'AAA';
-- $29.5 million class C at 'AAA';
-- $9.2 million class D at 'AAA';
-- $23.1 million class E at 'AAA';
-- $10.2 million class F at 'AAA';
-- $14.8 million class G at 'A';
-- $14.8 million class H at 'BBB-';
-- $7.4 million class J 'at 'BB-';
-- $5.5 million class K at 'B+';
-- $7.4 million class L at 'B-'.
The $1.4 million class M remains at 'C/DR5'. Fitch does not rate
the $1.5 million class Q. Class A1 has been repaid in full.
The affirmations are a result of stable pool performance and
minimal paydown since Fitch's last rating action. As of the June
2008 distribution date, the transaction's aggregate principal
balance has been reduced 21% to $584.8 million from $740.1 million
at issuance. In total, 48 loans (46.7%) are defeased. There are
no delinquent or specially serviced loans.
Fitch has identified 15 loans (4.1%) as Fitch loans of concern due
to declining performance. The largest Fitch loan of concern
(0.6%) is secured by a 172-room extended stay hotel in Decatur,
Georgia. The performance of the property has declined due to weak
local economic conditions. Servicer reported debt service
coverage ratio was 0.9 times with 88% occupancy rate as of year-
end 2007, compared to a DSCR of 1.52x with occupancy rate of 95.4%
at issuance.
The second largest Fitch loan of concern (0.5%) is secured by a
194 unit manufactured housing community in Randolph, North
Carolina. The performance of the property continues to
deteriorate due to declining occupancy. Servicer reported DSCR
was 0.79x with 70% occupancy rate as of YE 2007, compared to a
DSCR of 1.39x with occupancy rate of 95% at issuance.
There are no loan maturities or anticipated repayment dates in
2008. 43% of the pool is scheduled to mature in 2009, 71.2% of
which is already defeased. The remaining 28 non-defeased maturing
loans (12.4% of the pool) have a weighted average mortgage coupon
of 8.36%. Of the 95 remaining non-defeased loans in the pool, 76
(86.1%) reported YE 2007 financials with a weighted average DSCR
of 1.46x.
KB HOME: Elects Robert Johnson to Board of Directors
----------------------------------------------------
Robert L. Johnson was unanimously elected as KB Home board of
director, bringing the total number of directors to 11.
"[Mr. Johnson] is one of the premier business leaders in America
today," said Stephen Bollenbach, chairman of the board of KB Home.
"One of the true measures of a leader is someone who not only has
answers but who asks the right questions and always looks for ways
to improve and innovate. Having had the privilege of serving with
him on the board of directors for Hilton Hotels, I know firsthand
the caliber of thinking he brings to the table."
"[Mr. Johnson] has an incredible and unique depth of experience in
real estate, finance and brand-building that will be invaluable as
KB Home moves forward from the current housing market," said
Jeffrey Mezger, president and chief executive officer of KB Home.
"His fresh perspective and visionary ideas will help to guide us
as we build on our 50-year history to create the future of KB
Home."
Mr. Johnson is founder and chairman of The RLJ Companies, a
business network that owns or holds interests in a diverse
portfolio of companies in the financial services, real estate,
hospitality/restaurant, professional sports, film production,
gaming and recording industries.
Mr. Johnson is also the majority owner of the Charlotte Bobcats,
the National Basketball Association's franchise located in
Charlotte, North Carolina.
Prior to forming The RLJ Companies, Mr. Johnson was founder and
chief executive officer of Black Entertainment Television, the
first African American-owned company publicly traded on the New
York Stock Exchange, which was acquired by Viacom Inc. in 2001.
Mr. Johnson continued to serve as chief executive officer of BET
until 2006. Before founding BET in 1979, Mr. Johnson served as
vice president of government relations for the National Cable &
Telecommunications Association, a trade association representing
more than 1,500 cable television companies.
Mr. Johnson serves on the Lowe's Companies, Inc. board of
directors, the IMG Worldwide, Inc. board of directors, the Strayer
Education, Inc. board of directors, the NBA Board of Governors,
The Johns Hopkins University board of trustees, the Deutsche Bank
Advisory Committee, the Wal-Mart Diversity Committee, and The
Business Council. He previously served on the board of directors
for US Airways, Hilton Hotels Corporation, General Mills, United
Negro College Fund, and the National Cable Television Association,
and on the board of trustees for the American Film Institute.
Mr. Johnson is a graduate of the University of Illinois and holds
a master's degree from the Woodrow Wilson School of Public and
International Affairs at Princeton University.
About KB Home
Based in Los Angeles, California, KB Home (NYSE: KBH) --
http://www.kbhome.com/-- is one of the largest homebuilders in
the United States. The company has operating divisions in 13
states.
At May 31, 2008, the company's consolidated balance sheet showed
$4.8 billion in total assets, $3.5 billion in total liabilities,
and $1.3 million in total stockholders' equity.
For the six-months ended May 31, 2008, the company reported a
consolidated net loss of $524.1 million on total revenues of
$1.4 billion, compared with a net loss of $121.1 million on total
revenues of $2.8 billion in the comparable six-month period ended
May 31, 2007.
* * *
The Troubled Company Reporter said on May 21, 2008, that Standard
& Poor's Ratings Services lowered its corporate credit and senior
note ratings on KB Home to 'BB' from 'BB+'. S&P also lowered its
rating on the company's senior subordinated notes to 'B+' from
'BB-'. The outlook remains negative. The rating actions affect
$2.15 billion of rated notes.
The TCR on June 11, 2008, said that Moody's Investors Service
lowered all of the ratings of KB Home, including its corporate
family rating to Ba2 from Ba1, the ratings on its various issues
of senior unsecured notes to Ba2 from Ba1, and the rating on its
subordinated notes to B1 from Ba2. At the same time, a
speculative grade liquidity rating of SGL-2 was assigned. The
outlook remains negative.
On June 12, 2008, the TCR said that Fitch Ratings has affirmed KB
Home's Issuer Default Rating and other outstanding debt ratings as
IDR 'BB+'; Senior unsecured 'BB+'; Unsecured bank credit facility
'BB+'; and Senior subordinated debt 'BB-'. The Rating Outlook
remains Negative.
L-1 IDENTITY: S&P Assigns 'BB-' Corp. Credit with Negative Outlook
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Stamford, Connecticut-based L-1 Identity
Solutions Inc., a provider of identity solutions and services to
the public and private sectors. The outlook is negative.
"At the same time, we assigned issue-level ratings to L-1's senior
secured financing and senior convertible notes. We assigned the
issue-level rating on the company's $350 million senior secured
bank facility at 'BB+', with a '1' recovery rating, indicating
that lenders can expect very high (90%-100%) recovery in the event
of a payment default," said Standard & Poor's credit analyst David
Tsui. The secured financing consists of a $100 million revolving
credit facility and a $250 million term loan A, both due 2013.
S&P also assigned the issue-level rating on the company's
$175 million senior convertible notes due 2027 at 'BB-', with a
'4' recovery rating, indicating that lenders can expect average
(30%-50%) recovery in the event of a payment default. All ratings
are based on preliminary offering statements and are subject to
review upon final documentation.
Proceeds from the $250 million first-lien term loan and
$49 million drawn from the $100 million revolving credit facility,
along with $120 million of common stock issuance will be used to
fund the purchase of unrated Digimarc Corporation, also a supplier
of secure identity solutions.
L-1 is a provider of identity solutions and services that enable
governments, law enforcement agencies and businesses to enhance
security, reduce identity theft and protect personal privacy. The
company has transformed itself in the past few years from a niche
vendor into a leading consolidator in the identity and biometric
area via a number of acquisitions. It now has a more diverse
suite of products and services targeting global markets including
government entities and commercial customers.
The ratings reflect the company's short operating history at its
current level, dependence on government spending, a highly
acquisitive growth strategy, and high leverage, partly offset by
L-1's leading position in a high growth niche market, a portfolio
of biometrics products and services, and revenue visibility from
long-term contracts.
LABELCORP HOLDINGS: S&P Rates Proposed $190MM Facilities 'B+'
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to LabelCorp Holdings Inc. The outlook is stable.
At the same time, S&P assigned a 'B+' bank loan rating and a
recovery rating of '2' to LabelCorp Holdings' and York Label
Canada Ltd.'s proposed $190 million senior secured credit
facilities, based on preliminary terms and conditions. The
ratings indicate that lenders can expect substantial recovery (70%
to 90%) in the event of a payment default. Transaction proceeds
will be used to finance the acquisition of LabelCorp Holdings Inc.
by Diamond Castle Holdings LLC, repay existing debt, and for
related fees and expenses.
Pro forma for the transaction, Omaha-based LabelCorp Holdings is
expected to have total debt outstanding of about $273 million at
closing.
On June 12, 2008, LabelCorp Holdings entered into a definitive
agreement to be acquired by Diamond Castle Holdings. If completed
as proposed, the financing plan will include $165 million senior
secured term loans, $25 million revolving credit facilities,
$47.8 million in senior subordinated notes, and $47.8 million in
junior subordinated debt. The equity contribution will consist of
10% of common equity and 90% of perpetual payment-in-kind
preferred equity. The company expects to close the transaction on
approximately Aug. 1, 2008, subject to customary closing
conditions.
"The ratings reflect LabelCorp's vulnerable business risk profile,
incorporating its relatively narrow scope of operations in the
highly fragmented North American prime labels segment of the
packaging industry and moderate customer concentration," said
Standard & Poor's credit analyst Henry Fukuchi. "The company also
has risks associated with an acquisitive growth strategy, low
geographic diversification, and a highly leveraged financial
profile. These negatives are partially offset by leading market
positions in the pressure sensitive prime label segment of the
label market and long-standing relationships with brand name key
customers."
With pro forma annual revenues of about $252 million, LabelCorp is
a leading manufacturer of pressure sensitive prime labels for the
consumer products, wine and spirits, food and beverage, and
pharmaceutical end markets.
LANDSOURCE COMMUNITIES: Court Denies Proposed $1.1 B DIP Financing
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The U.S. Bankruptcy Court for the District of Delaware has denied
LandSource Communities Development LLC's proposed $1,185,000,000
debtor-in-financing from Barclays Bank, PLC, and a syndicate of
lenders who previously loaned the Debtors over $1,000,000,000
before the Petition Date.
According to Bloomberg News, the Hon. Kevin J. Carey held an
eight-hour hearing and eventually ruled that he wouldn't allow
the DIP Loan, which had provided for a roll-up of the Debtors
$1,050,000,000 of prepetition debt owed to the First Lien Lenders.
Judge Carey, according to the same report, gave lenders and the
Official Committee of Unsecured Creditors until July 18 to come
up with an alternative financing arrangement.
The Second Lien Lenders and the Creditors Committee vigorously
objected to many terms of the DIP Loan package. The Debtors and
the First Lien Lenders responded that the contentions contained
mischaracterizations and baseless allegations. Nevertheless, the
Court gave the objectors an opportunity to come up with a beter
proposal.
Committee: Size of DIP Loan Illusory;
Loan Only Benefits Existing Lenders
On behalf of the Official Committee of Unsecured Creditors, Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los
Angeles, California, tells the Court the $1,185,000,000 debtor-
in-possession financing sought by LandSource and its affiliates
should not be approved because:
(a) the Debtors' existing First Lien Lenders and the
essentially identical syndicate of lenders providing the
DIP Financing are the primary beneficiaries of the loan
package, which provides for a roll-up of up to
$1,050,000,000 in prepetition first lien debt; and
(b) the Lenders nonetheless demand a dizzying package of
benefits for the First Lien Lenders as purported "adequate
protection" for the alleged "injury" to their interests
resulting from the DIP Financing.
"By way of background, this is a liquidating real estate case,"
Ms. Jones says. She notes the Debtors have no resources to
acquire new real estate -- the Debtors are simply in the process
of readying for sale the real estate they currently own. The
package, she avers, is designed to (a) give the First Lien
Lenders a dominating position over the Committee concerning the
inevitable liquidation to follow and (b) insure that the First
Lien Lenders receive the entire recovery from the unencumbered
assets that currently exist. While valuation work is just
commencing, the value of of the unencumbered assets grabbed by
the First Lien Lenders could easily exceed $100,000,000, she
asserts.
The Committee believes the DIP Financing is being used simply to
recycle cash to the Lenders at exorbitant pricing to the
prejudice of all other creditor constituencies. A court should
only approve DIP financing, if the debtor actually needs the
financing for some purpose other than enhancing the secured
creditors' position in the bankruptcy case, Ms. Jones asserts.
This consideration, she contends, is fundamental in the Debtors'
Chapter 11 cases because the size of the DIP Financing is largely
illusory, and the cost of any DIP Financing actually required is
simply staggering.
The DIP Facility is comprised of (i) a revolving credit facility
of $135,000,000 including an L/C subfacility of up to $35,000,000
and swingline facility of up to $10,000,000, and (ii) a junior
secured term loan, comprising of a roll-up of up to
$1,050,000,000 of prepetition debt to the First Lien Lenders.
This $135,000,000 is itself, however, is something of a fiction,
as the Debtors are required to sell an extensive amount of real
estate collateral -- whose value will exceed the $135,000,000 DIP
Facility -- during the same period. She also notes the part of
postpetition revolving credit facility will be used to replace
$30,000,000 in letters of credit issued prepetition.
Ms. Jones adds the DIP Financing rates and fees charged "border
on unconscionable:"
-- the First Lien Lenders are entitled to receive more than
double the interest rate spread on the rolled-up
$1,000,000,000 prepetition term loan than they were
receiving prepetition;
-- there are two commitment fees and a fee of 6% of all L/Cs
outstanding as of the Petition Date;
-- there are prepayment premiums payable on money not even
borrowed; and
-- there are additional undisclosed commitment fees set forth
in a confidential Fee Letter.
Moreover, Ms. Jones asserts that the Roll-Up cannot be approved,
citing that roll-ups are antithetical to fundamental bankruptcy
principles. She claims that the proposed roll-up is "simply an
attempted asset/ leverage grab" by the Lenders, Ms. Jones
asserts. "The Debtors' contention that rolling $1 billion in
prepetition debt into an administrative claim is necessary as
'adequate protection' for the First Lien Lenders under these
circumstances is absurd on its face."
The Roll-Up has only one purpose which has nothing to do with any
traditional justification for "adequate protection" -- to
prejudice the interests of junior creditors, Ms Jones avers.
She notes the DIP Facility fails to satisfy all four prongs set
in In re Vanguard Diversified, Inc., 31 B.R. 364,366 (Bankr.
E.D.N.Y. 1983): (1) that the debtor' business operations would
fail absent the proposed financing, (2) that it is unable to
obtain alternative financing on acceptable terms, (3) that the
proposed lender will not accept less preferential terms, and (4)
that the proposed financing is in the general creditor body's
best interest. She points out:
(i) Virtually the entirety of the DIP Financing is to directly
enhance the value of the First Lien Lenders' Real Estate
collateral for sale or simply refinance the prepetition
L/Cs
(ii) The Second Lien Lenders initially vehemently opposed the
Roll-Up, silenced only by threats of litigation because
their opposition allegedly violates the terms of their
Intercreditor Agreement.
(iii) The only beneficiaries of the Roll-Up are the First Lien
Lenders.
Ms. Jones also points out the DIP Financing Motion is unclear
with respect to:
-- whether the Lenders are seeking to prime existing
mechanic's liens; and
-- with respect to the treatment to be afforded to the claims
of subcontractors and vendors arising from postpetition
services provided to the Debtors.
The Creditors Committee opposes to any proposal that would prime
the mechanic's liens. The Committee asserts mechanic's liens in
existence as of the Petition Date should be preserved, subject to
any challenge with respect to the mechanic's liens perfection and
avoidability.
The Committee filed, together with its objection to the DIP
Financing, the transcript of its deposition of Donald L. Kimball,
senior vice president and chief financial officer of The Newhall
Land and Farming. The Committee obtained the Court's approval to
file the document under seal because it is subject to a
confidentiality agreement.
2nd Lien Agent Demands Adequate Protection
The Bank of New York Mellon, administrative agent under the
$244,000,000 Prepetition Second Lien Agreement, points out
-- the Second Lien Lenders still have not received from the
Debtors any go-forward adequate protection package, which
should provided as a matter of law if the Chapter 11 cases
are to continue; and
-- The DIP Loan package provides overwhelming control to the
First Lien/DIP Lenders over every aspect of the Chapter 11
cases and near tripling of the interest rate margin on the
$1,050,000,000 of debt proposed to be "rolled-up" over the
current contract interest rate on the debt.
Counsel to BNY Mellon, Andrew N. Rosenberg, Esq., at Paul, Weiss,
Rifkind, Wharton & Garrison LLP, in New York, says the
overwhelming control given to the First Lien Lenders and DIP
lenders -- over the composition of management, budget, asset
sales, contracts -- leaves the Debtors with few alternatives for
restructuring. If overwhelming control is granted to those
parties, it is unlikely that the Debtors can conduct their
Chapter 11 cases in accordance with their fiduciary duties to all
creditors and pursue a consensual plan process that will maximize
distributions to constituents, Mr. Rosenberg asserts.
BNY Mellon asks the Court to include grant a limited adequate
protection package to the Second Lien Lenders:
(a) superpriority claim pursuant to Section 507(b) of the
Bankruptcy Code, to the extent of diminution in collateral
value during the Chapter 11 cases, junior to the
superpriority claims of the First Lien Agent and the DIP
Lenders;
(b) junior replacement liens on all collateral currently
included in the Second Lien Lenders' Collateral package;
(c) execution by the Debtors of a customary engagement letter
for financial advisors to the Second Lien Agent plus a
success fee payable solely from any recovery to the
Second Lien Lenders;
(d) current payment of reasonable fees and expenses of
Delaware and New York counsel retained by the Second Lien
Agent, as well as an expert retained to appraise the
Collateral, after submission of an invoice to the Debtors,
with copies to the United States Trustee, the DIP Agent
and the Committee;
(e) current payment of administration fees to the Second Lien
Agent in respect of the Second Lien Credit Agreement;
(f) copies of all reports and other materials delivered by the
Debtors to the DIP Agent and other reports, information
and materials as reasonably requested by the Second Lien
Agent from time to time; and
(g) reasonable access for the Second Lien Agent's counsel,
financial advisors and expert consultants to the
collateral, officers of the Debtors and financial advisors
to the Debtors, in each case to the same extent the access
is provided to the DIP Agent.
Mechanic's Lien Holders, Others
Oppose Priming
Holders of mechanic's liens West Park Landscape Inc., Altfillisch
Contractors, Inc., Oberg Contracting Corp., Oakridge Landscape
Inc., John Burgeson Contractors Inc., Southern Sun Constructions
Company, Icon Constructors, Inc., Pacific Advanced Civil
Engineering, Hunsaker & Associates, Psomas & Associates,
and Independent Construction Company do not consent to the
priming of their "valid" liens. Amtech Elevator Services says
that there is no legal basis to afford the DIP Lenders a priming
lien. Poe asserts that the Debtors did not, and will unlikely be
able to, demonstrate how they will provide adequate protection in
exchange for the priming of the liens because there is no other
property of the Debtors' estates with sufficient equity available
to adequately protect its lien rights.
PCL Construction Services, Inc., also asks the Court to provide
it with adequate protection for its inchoate liens in the
property owned by the Debtor LNR-Lennar Washington Square, LLC.
The Los Angeles County Tax Collector and Los Angeles County Tax
Assessor, a secured creditor with valid tax liens, argues that
its Liens should also be treated as permitted liens and should
not be capped. Miami-Dade County Tax Collector filed, but later
withdrew, its objection. Miami-Dade said that they it has
resolved with the Debtors as to a dispute with respect to payment
of prepetition ad valorem taxes.
Lennar Supports Liens Holders
Lennar Homes of California, one of the equity owners of
LandSource, agrees that the proposed treatment of mechanic's
liens is unclear and concurs that it would be inappropriate for
the proposed DIP Financing to prime valid mechanic's liens
recognized under applicable state law and Section 546(b) of the
Bankruptcy Code.
David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington,
Delaware, avers mechanic's liens cannot be primed unless the
creditors are provided adequate protection, which would be a
particularly difficult showing since the roll up purports to
subordinate them to approximately $1,000,000,000 of secured debt.
Lennar cedes that even a meticulous review of the DIP Financing
Motion would not warn one that mechanic's liens might be primed.
Lennar, thus, avers any ruling by the Court should contain
language appropriately preserving the rights of any valid
mechanic's lien creditors.
Lennar says is not purporting to speak on behalf of the Debtors.
Rather, it speaks in its own stead in order to comment, briefly,
on one particular aspect of the proposed DIP Financing.
LandSource Says DIP Loan to Enable Restructuring
LandSource explains that it decision to enter into the DIP
Agreement was borne of necessity and is a rational, commercially
reasonable choice to maximize the value of its assets. It saysit
thoroughly tested the credit markets and aggressively pursued all
possible avenues of liquidity. The unwillingness of any
potential lender to extend credit other than on a secured,
priming basis left the Debtors with few options, asserts Mark D.
Collins, Esq., at Richards, Layton & Finger, PA, in Wilmington,
Delaware.
According to Mr. Collins, contrary to the assertions in the
Creditors Committee and the Second Lien Lenders, the Debtors made
the reasonable business decision that "bet the company"
litigation on the first day of their cases was unwarranted by the
minimal advantages of the proposals received from potential
third-party lenders.
According to Mr. Collins, the "blunderbuss" objections of the
Committee and Second Lien Agent focus on the perceived
shortcomings of the DIP Agreement, many of which were the very
same terms that the Debtors would have had to accept if they had
selected one of the other two proposals tendered and engaged in a
priming war. Other purported shortcomings do not exist; instead
they have been created by the Committee's misunderstanding of the
terms of the DIP Agreement, he asserts.
The new financing will facilitate the Debtors' reorganization and
enable them to avoid the immediate liquidation of their assets,
Mr. Collins asserts. The Debtors have exercised their judgment
in good faith and on an informed basis, and the Objections offer
no evidence to the contrary. Mr. Collins points out that absent
constructive input from the Committee, the Debtors have little
ability to obtain the types of modifications to the DIP Agreement
that might resolve potential objections.
The Committee, Mr. Collins adds, misconstrues the Chief
Restructuring Officer provisions of the DIP Agreement. Although
the Debtors are required to file an application to retain a CRO
acceptable to the Postpetition Lenders, the ultimate decision
maker with respect to all aspects of the CRO's retention is the
Court, he points out.
Mr. Collins also says the First Lien Lenders are entitled to
adequate protection to the extent there is a diminution in the
value of their interest in their prepetition collateral. The
adequate protection has been provided to protect against a
diminution of the $1,000,000,000 secured interest of the First
Lien Prepetition Lenders during the Chapter 11 cases as well as
from the priming liens supporting the $135,000,000 Revolving
Credit Facility.
In response to the individual creditor objections, the Debtors
and the DIP Lenders have included in the proposed Final Order a
provision that "Permitted Liens," as defined in the DIP Credit
Agreement, will include any valid, enforceable, perfected and
non-avoidable Liens that were the subject of the Individual
Creditor Objections. The Debtors believe that the added
provision resolves each of the Individual Creditor Objections.
The Debtors reached out to certain of the objecting parties --
including the Committee -- but heard nothing until after the
Objections were filed with the Court. The Debtors continue to
hope for a consensual resolution of the Committee's objections.
The Debtors are ready to demonstrate to the Committee that the
DIP Agreement was the best possible result of intense, difficult
negotiations during the period leading up to the commencement of
the Chapter 11 cases and that the decision to enter into the DIP
Agreement was a prudent and reasonable exercise of the Debtors'
business judgment in light of all the facts and circumstances.
DIP Agent Denies Unencumbered
Assets Available for Unsecured Creditors
Barclays Bank, PLC, administrative agent under the Prepetition
First Lien Credit Agreement and the DIP Credit Agreement, says
the DIP Financing is the only viable means by which the Debtors
can continue to fund their operations, preserve the going concern
value of their assets, and have an opportunity to propose a
feasible Chapter 11 plan.
Edwin J. Harron, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, says that absent the DIP Loan, the
Debtors will be unable to continue their business and their
assets will be liquidated. Barclays warns that, if this happens,
it won't consent to any further use of its collateral and will
immediately seek to enforce its rights under the DIP Credit
Agreement and the First Lien Credit Agreement.
Like the Debtors, Barclays assert that the Committee and the
Second Lien Lenders have engaged in untrue and inaccurate
statements and characterizations of the DIP Financing.
Mr. Harron avers the Committee's assertions -- among others, that
the creditor body would be better off liquidating the Debtors'
assets immediately -- rests upon the dubious assumption that
unidentified allegedly unencumbered assets would have a value
sufficient to provide a recovery to unsecured creditors. "This
is the height of recklessness for those who are purporting to act
as fiduciaries for unsecured creditors". The Committee's
argument that roll-ups are "antithetical to fundamental
bankruptcy principles" is contrary to numerous cases where courts
in District have approved roll-ups, Mr. Harron further points
out.
Barclays asserts the DIP Agreement should be approved in all
respects.
First Lien Agent Seeks To
Strike BoNY Mellon's Objection
Barclays Bank ask the Court to strike BNY Mellon's objections as
it constituted a breach under their Intercreditor Agreement.
Edwin J. Harron, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, explains the terms of the Intercreditor
Agreement prohibit the Second Lien Lenders from challenging any
DIP Financing supported by the First Lien Lenders, including by
filing and pursuing the Second Lien Objections.
Mr. Harrons asserts that BNY's violations have caused, and
continue to cause, substantial harm to the First Lien Lenders.
In order to mitigate, and to avoid exacerbating, this harm, and
in order for the Court to avoid rewarding the Second Lien Agent's
willful violation of its contractual obligations, Barclays
asserts the Court should strike the Objection.
On behalf of BNY Mellon, Andrew N. Rosenberg, Esq., counters that
BoNY Mellon has the right to object to certain portions of the
Debtors' DIP Financing Motion. He notes the Intercreditor
Agreement expressly authorizes BoNY Mellon and the Second Lien
Lenders to object to "any ancillary agreements or arrangements
regarding Cash Collateral use or the DIP Financing that are
materially prejudicial to their interest."
Mr. Rosenberg says Barclays is seeking to eviscerate that
provision from the Intercreditor Agreement by labeling every
ancillary non-financial point a "key deal point" and then
concluding that they are one and the same. Mr. Rosenberg asserts
that if this definition is accepted, and the ancillary is defined
to simply mean important to Barclays, then every onerous point
that Barclays would by definition not be ancillary. According to
Mr. Rosenberg, ancillary means as not directly related to the
extension of credit, not immaterial or unimportant.
BoNY Mellon, thus, asserts it has contained to its objection to
that which is proscribed by the Intercreditor Agreement.
About LandSource Communities
LandSource Communities Development LLC, which operates in Arizona,
California, Florida, New Jersey, Nevada and Texas, is involved in
the planning and development of master planned communities and
transforming undeveloped land into ready-to-build home sites and
commercial properties. With the exception of one development
project in Marina del Rey, California, LandSource does not build
homes or commercial properties.
LandSource and 20 of its affiliates filed for chapter 11
bankruptcy protection before the U.S. Bankruptcy Court for the
District of Delaware on June 8, 2008 (Lead Case No. 08-11111).
The Debtors are represented by Marcia Goldstein, Esq., at Weil
Gotshal & Manges in New York, and Mark D. Collins, Esq., at
Richards Layton & Finger in Wilmington, Delaware. Lazard Freres &
Co. acts as the Debtors' financial advisors, and Kurtzmann Carson
Consultants serves as the Debtors' notice and claims agent.
According to the Troubled Company Reporter on May 22, 2008,
LandSource sought help from its lender consortium to restructure
$1.24 billion of its debt. LandSource engaged a 100-bank lender
group led by Barclays Capital Inc., which syndicates LandSource's
debt. LandSource had received a default notice on that debt from
the lender group after it was not able to timely meet its payments
during mid-April. However, LandSource failed to reach an
agreement with its lenders on a plan to modify and restructure its
debt, forcing it to seek protection from creditors.
The Debtors' exclusive plan filing period expires on Oct. 6, 2008.
(LandSource Bankruptcy News, Issue No. 6;
http://bankrupt.com/newsstand/or 215/945-7000).
LINENS N THINGS: Court Approves $2.6MM Severance Plan Continuation
------------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
authorized Linens 'N Things and its debtor-affiliates to implement
the Severance Plan for non-insider employees at, and supporting up
to 100 additional stores, in addition to the Closing Stores, that
may become subject to store closing sales, up to a maximum of
$2,500,000 of severance plan payments without prejudice to the
Debtors' rights to seek further authority. The Court noted that
the order is based on the record of the hearing, and the testimony
of Michael F. Gries, the Debtors' interim chief executive officer
and chief restructuring officer.
The Court convened a hearing on June 19, 2008, at 12:00 p.m.
to consider the Debtors' request.
Prior to the ruling, Roberta A. DeAngelis, acting United States
Trustee for Region 3, said that the Debtors provided a vague
outline of the terms of the proposed severance plan. She asserted
that the Debtors failed to attach a copy of the Severance Plan to
their request, and to include:
-- any information regarding the identity of the specific
individuals covered under the Severance Plan;
-- the identity of individuals, who in the future may be
covered under the plan;
-- the participants' respective salaries, or length-of-service
with the company;
-- whether the individuals are covered under any other bonus
programs; and
-- other specific information, which would allow parties-in-
interest to properly evaluate the Severance Plan.
Aside from its insufficient information, Ms. DeAngelis said she
objected to proposal because the Debtors failed to accord proper
meaning to the new limitations imposed by Section 503(c)(3) of
the Bankruptcy Code. She added that the Debtors fail to
acknowledge controlling Third Circuit law, which prohibited or
limited them from paying their employees severance as an
administrative expense based upon a length-of-service calculation,
where the work -- which formed the basis of the payments --
occurred prepetition.
The Court reminded the Debtors that no payments will be made,
pursuant to the Severance Plan, to any of their employees above
the level of district manager absent further Court order.
An employee will not be considered "terminated," and will not be
entitled to receive a severance payment in the event that (i) the
Debtors' Chapter 11 case is converted to a Chapter 7 case, and
(ii) substantially all of the Debtors' assets are sold and the
employee is not employed by the purchaser in position earning
compensation equal to at least 90% of that employee's
compensation immediately prior to the sale.
The Court further ruled that any payments made to any employee on
account of the Severance Plan will be reduced dollar-for-dollar
by any "store line" bonus payments, including "shrinkage" related
bonus payments beginning on June 19, 2008, and going forward,
made to the employee pursuant to the Court's final order allowing
the Debtors to pay Store Line Bonuses.
Linens 'N Things has secured a $700 million debtor-in-possession
financing from General Electric Capital Corp. The company plans
to be out of chapter 11 by the end of the year, on this timetable:
09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan
10/14/2008 DIP Facility Deadline for Disclosure Statement
Approval
11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan
11/28/2008 DIP Facility Deadline for Entry of a Confirmation
Order
Linens 'N Things is represented by Richards, Layton & Finger,
P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries &
Co., LLC serves as the retailer's restructuring advisor until
substantial consummation of a chapter 11 plan. Conway Del Genio's
Michael F. Gries acts as the Debtors' chief restructuring officer
and interim CEO. Kurtzman Carson Consultants LLC acts as the
Debtors' claims agent.
A Noteholder Committee has been formed and is represented by
Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl
& Jones.
(Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LODGENET INTERACTIVE: To Report Debt Reduction in 2nd Qtr. Results
------------------------------------------------------------------
LodgeNet Interactive Corporation, in a statement advising about
the release its second quarter financial results on July 29, 2008,
said it reduced long-term debt during the second quarter from
$630.2 million at March 31, 2008, to $616.6 million at June 30,
2008; and that cash and cash equivalents at June 30, 2008, was
approximately $15.5 million. As of June 30, the company's $50
million revolver portion of its Credit Facility was unused.
"While the economy and the travel industry are facing near-term
challenges, we remain focused on delivering on our free cash flow
target range for 2008," said Scott C. Petersen, LodgeNet president
& chief executive officer. "The flexibility of our business model
allows us to actively manage our capital investment plan and
balance sheet and as a result we reduce long-term debt by more
than $13 million during the Second Quarter. We prudently reduced
capital investment levels and operating expenses during the second
quarter and have taken similar steps for the Third Quarter as we
have adjusted our capital investment target down to $15 million.
We believe these initiatives will put us in a position to further
reduce our long-term debt levels and remain within our debt
covenants for the balance of the year."
About LodgeNet Interactive Corp.
Based in Sioux Falls, South Dakota, LodgeNet Interactive Corp.
(Nasdaq: LNET) -- http://www.lodgenet.com/-- provides media and
connectivity solutions designed to meet the unique needs of
hospitality, healthcare and other guest-based businesses.
LodgeNet Interactive serves more than 1.9 million hotel rooms
representing 9,900 hotel properties worldwide in addition to
healthcare facilities throughout the United States.
The company's services include: Interactive Television Solutions,
Broadband Internet Solutions, Content Solutions, Professional
Solutions and Advertising Media Solutions. LodgeNet Interactive
Corporation owns and operates businesses under the industry
leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks.
LodgeNet Interactive Corp.'s consolidated balance sheet at
March 31, 2008, showed $675.5 million in total assets and
$759.1 million in total liabilities, resulting in a $83.6 million
total stockholders' deficit.
* * *
As reported in the Troubled Company Reporter on June 17, 2008,
Standard & Poor's Ratings Services placed its ratings, including
the 'B+' corporate credit rating, on LodgeNet Interactive Corp.
(formerly LodgeNet Entertainment Corp.) on CreditWatch with
negative implications.
LUMINENT MORTGAGE: Releases Data on Projected Portfolio Cash Flows
------------------------------------------------------------------
Luminent Mortgage Capital, Inc. disclosed last week that it has
updated its principal and interest cash flows on its portfolio of
mortgage-backed securities for new prepayment, default and
severity assumptions as well as June 2008 distribution data.
Principal and interest cash flows on its portfolio of mortgage-
backed securities is estimated to be $84.3 million over the next 5
years.
As of July 9, 2008, substantially all of Luminent's portfolio of
mortgage-backed securities that do not serve as collateral for
non-recourse collateralized debt obligations, is pledged as
collateral to the $182.6 million of repurchase agreement financing
Luminent had outstanding with an affiliate of Arco Capital
Corporation Ltd.
A full-text copy of the Supplemental Financial Information
containing information on the company's projected portfolio cash
flows is available for free at:
http://researcharchives.com/t/s?2f81
About Luminent Mortgage
Headquartered in San Francisco, Luminent Mortgage Capital Inc.
(OTC: LUMC) -- http://www.luminentcapital.com/-- is a real estate
investment trust or REIT, which, together with its subsidiaries,
has invested in two core mortgage investment strategies.
Under its Residential Mortgage Credit strategy, the company
invests in mortgage loans purchased from selected high-quality
providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA.
Under its Spread strategy, the company invests primarily in U.S.
agency and other highly-rated single-family, adjustable-rate and
hybrid adjustable-rate mortgage-backed securities.
On March 28, 2008, the company disclosed its intention, subject to
shareholder approval, to restructure the company from a REIT to a
publicly-traded partnership or PTP.
Going Concern Doubt
Grant Thornton LLP, in Philadelphia, expressed substantial doubt
about Luminent Mortgage Capital Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007.
Grant Thornton said Luminent Mortgage has lost $721.0 million for
the year ended Dec. 31, 2007, which included $481.7 million in
impairment losses on mortgage-backed securities. The company also
recorded $21.3 million in corporate, state and U.S. federal income
taxes due to its inability to meet the threshold for tax benefit
recognition as it related to its qualification as a REIT.
As reported in the Troubled Company Reporter on June 5, 2008,
Luminent Mortgage's consolidated balance sheet at March 31, 2008,
showed $3.8 billion in total assets, $4.0 billion in total
liabilities, and $148,000 in minority interest, resulting in a
$223.2 million total stockholders' deficit.
LUMINENT MORTGAGE: Directors Cohen, Johnston and Piovanetti Resign
-----------------------------------------------------------------
Luminent Mortgage Capital Inc. disclosed in a regulatory
Securities and Exchange Commission filing that Messrs. Craig
Cohen, Jay A. Johnston and Francesco N. Piovanetti have resigned
as directors of the company.
About Luminent Mortgage
Headquartered in San Francisco, Luminent Mortgage Capital Inc.
(OTC: LUMC) -- http://www.luminentcapital.com/-- is a real estate
investment trust or REIT, which, together with its subsidiaries,
has invested in two core mortgage investment strategies.
Under its Residential Mortgage Credit strategy, the company
invests in mortgage loans purchased from selected high-quality
providers within certain established criteria as well as
subordinated mortgage-backed securities and other asset-backed
securities that have credit ratings below AAA.
Under its Spread strategy, the company invests primarily in U.S.
agency and other highly-rated single-family, adjustable-rate and
hybrid adjustable-rate mortgage-backed securities.
On March 28, 2008, the company disclosed its intention, subject to
shareholder approval, to restructure the company from a REIT to a
publicly-traded partnership or PTP.
Going Concern Doubt
Grant Thornton LLP, in Philadelphia, expressed substantial doubt
about Luminent Mortgage Capital Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007.
Grant Thornton said Luminent Mortgage has lost $721.0 million for
the year ended Dec. 31, 2007, which included $481.7 million in
impairment losses on mortgage-backed securities. The company also
recorded $21.3 million in corporate, state and U.S. federal income
taxes due to its inability to meet the threshold for tax benefit
recognition as it related to its qualification as a REIT.
As reported in the Troubled Company Reporter on June 5, 2008,
Luminent Mortgage's consolidated balance sheet at March 31, 2008,
showed $3.8 billion in total assets, $4.0 billion in total
liabilities, and $148,000 in minority interest, resulting in a
$223.2 million total stockholders' deficit.
MCDERMOTT INTERNATIONAL: Moody's Hikes Ba3 Corporate Family Rating
------------------------------------------------------------------
Moody's Investors Service upgraded the corporate family ratings of
both McDermott International Inc. and J Ray McDermott, S.A. to Ba2
from Ba3 and upgraded their probability of default ratings to Ba3
from B1.
At the same time, Moody's upgraded the universal shelf rating of
McDermott International to B2 from B3 and upgraded the senior
unsecured revenue bonds backed by McDermott Inc. to B1 from B2.
Finally, Moody's confirmed the Ba2 senior secured debt rating of J
Ray McDermott and the Baa3 senior secured rating of Babcock and
Wilcox Power Generation Group, Inc. The outlook for all companies
is positive. This concludes the review for upgrade initiated on
June 12, 2008.
The upgrade of McDermott International and J Ray McDermott's
corporate family ratings with positive outlooks reflects Moody's
expectation that end market demand for the companies' respective
business segments are likely to remain favorable into the medium
term.
Moody's believes McDermott International and J Ray McDermott are
likely to produce continued strong operating results and sustain
key credit metrics at levels supportive of the outlook direction.
Ratings could be moved higher should the companies continue to
execute on their strong backlogs and maintain ample amounts of
liquidity and conservative balance sheets as they any pursue
strategic growth initiatives.
The confirmation of the facility ratings at Babcock and Wilcox and
J Ray McDermott considers the increase in size of the revolving
credit facilities for borrowing purposes which has occurred at
each of these entities within the past year, while junior ranking
unfunded pension liabilities have been reduced.
Upgrades:
Issuer: J. Ray McDermott, S.A.
-- Corporate Family Rating, Upgraded to Ba2 from Ba3
-- Probability of Default Rating, Upgraded to Ba3 from B1
Issuer: McDermott International Inc.
-- Corporate Family Rating, Upgraded to Ba2 from Ba3
-- Probability of Default Rating, Upgraded to Ba3 from B1
-- Multiple Seniority Shelf, Upgraded to (P)B2, LGD 5, 88% from
(P)B3, LGD 5, 88%
Issuer: Beaver (County of) PA, Industrial Devel Auth
-- Senior Unsecured Revenue Bonds, Upgraded to B1, LGD 5, 75%
from B2, LGD 5, 72%
Confirmations:
Issuer: Babcock & Wilcox Power Generation Gr, Inc.
-- Senior Secured Bank Credit Facility, Confirmed at Baa3 (to
LGD 2, 12% from LGD 1, 6%)
Issuer: J. Ray McDermott, S.A.
-- Senior Secured Bank Credit Facility, Confirmed at Ba2 (to LGD
3, 30% from LGD 2, 22%)
Outlook Actions:
Issuer: Babcock & Wilcox Power Generation Gr, Inc.
-- Outlook, Changed To Positive From Rating Under Review
Issuer: J. Ray McDermott, S.A.
-- Outlook, Changed To Positive From Rating Under Review
Issuer: McDermott International Inc.
-- Outlook, Changed To Positive From Rating Under Review
Moody's assesses the ratings for McDermott International and J Ray
McDermott using two separate corporate family ratings given the
distinct financing arrangements the company has established for
its operating entities. McDermott International's credit profile
is assessed based on its consolidated results excluding J Ray
McDermott, which is considered stand alone and has its own
corporate family rating (Ba2).
Moody's said it would review its two corporate family rating
construct should the company alter its financing arrangements in a
way that consolidated bank lines at the parent and promoted the
fluid availability of financial resources between the various
entities.
J Ray McDermott's backlog continues to rise as it benefits from
its leading market position and strong demand for offshore oil and
gas infrastructure. Moody's expects industry fundamentals are
likely to remain solid into the medium term supporting the
company's prospects for ongoing revenue growth. As well, J Ray
McDermott continues to demonstrate a disciplined bidding process
evidenced by its favorable operating margins and improving mix of
contracts in its backlog.
The expected growth in operating cash flow supports the ratings
upgrade and maintenance of positive rating momentum. J Ray
McDermott's good liquidity profile and conservative capital
structure provides further ratings support and mitigates the
downside risk associated with project execution risks and its
concentration of activity in cyclical end markets.
While a portion of J Ray McDermott's growing cash balances and
debt capacity may be used to pursue strategic growth initiatives,
including acquisition activity, Moody's believes J Ray McDermott
has capacity to absorb reasonable amounts of integration and
execution risks within context of its current rating and outlook.
McDermott International's corporate family rating principally
reflects the operations of Babcock and Wilcox and BWX Technologies
Inc., and includes their intermediate holding company, McDermott
Inc. Profitability and cash flows have continued to improve
following Babcock and Wilcox's emergence from an asbestos-related
bankruptcy in early 2006 as periodic restructuring charges and
asbestos claims have receded (pro-forma consolidation of Babcock
and Wilcox before Feb 2006).
Moody's expects demand for the company's services are likely to
remain firm through the near term. Good visibility into this time
horizon is provided by the company's strong market position, large
installed base of equipment and recurring nature of much of its
revenue base as well as current backlog levels.
Moreover, Moody's believes Babcock and Wilcox's growth prospects
may strengthen into the medium term driven by demand for new power
generation and increased customer environmental spending
requirements. The rating remains tempered by the company's
relatively small size, geographic concentration, and project
execution risk.
Currently strong levels of liquidity and relatively low levels of
leverage provide key offsets to these risks. Similar to J Ray
McDermott, McDermott International's rating also considers the
potential that it may pursue strategic growth initiatives through
Babcock and Wilcox and BWXT, although Moody's expects any related
expenditures would be undertaken while preserving its liquidity
and capital strengths.
Headquartered in Houston, Texas, McDermott International Inc. is
an international energy services company that provides
engineering, fabrication, installation and facilities management
services to energy and power companies and to the U.S. government.
MICHAEL MEISNER: To be Charged with Contempt by Case Trustee
------------------------------------------------------------
Michael Bakst, chapter 7 trustee, intends to ask a federal court
to find Michael Meisner, owner of bankrupt Phoenix Diversified
Investment Corp., in contempt, Alexandra Clough writes for the
Palm Beach Post. Mr. Bakst wants the court to force Mr. Meisner
to provide financial information regarding Phoenix Diversified.
The Troubled Company Reporter said on May 22, 2008, that Mr.
Meisner filed a personal chapter 11 bankruptcy on May 21, 2008. A
group of investors had filed an involuntary chapter 7 petition
against Phoenix Diversified after learning the fund manager is
insolvent and owes roughly $30,000,000 to more than 200 investors.
The Palm Beach Post relates that some 140 investors are asserting
more than $140 million in claims against Phoenix Diversified.
Mr. Meisner said that investors may recover some or even all of
their investments if Mr. Bakst would play ball, Palm Beach Post
notes. In an e-mail, Mr. Meisner alleged that the case trustee is
not handling the case in the best interest of lenders, Palm Beach
Post relates. Mr. Meisner added that Mr. Bakst isn't willing to
consider "lucrative" offers for the Debtor's special proprietary
trading software, the report says.
Mr. Bakst explained that what he received are offers to engage in
joint venture with the Debtor and raise funds from new investors,
which the case trustee said won't happen, Palm Beach Post notes.
Mr. Bakst maintained that he won't allow the Debtor to do business
with any investor pointing that Mr. Meisner had refused to provide
financial information on the Debtor pursuant to a court order,
Palm Beach Post says. Mr. Meisner may be asked to pay fines and
serve in prison if he continues to cooperate, the report reveals.
Mr. Meisner's counsel, Scott Hecker, Esq., said that Mr. Bakst's
request is going nowhere, according to the report.
Mr. Bakst said that Mr. Meisner must cooperate and has to show
where all of the investors money went, Palm Beach Post reports.
Court documents showed that Mr. Meisner received $470,597 in
salary in 2006, $1.3 million in 2007, and $260,000 up until
Phoenix Diversified filed for bankruptcy, Palm Beach Post notes.
Mr. Meisner also owns $1.6 million in real property. His monthly
expenses averages $17,380 according to court documents, Palm Beach
Post says.
A public sale of Phoenix Diversified's assets is set for July 20,
2008 in West Palm Beach, according to the report.
About Phoenix Diversified Investment
Phoenix Diversified Investment Group is a commodities investment
firm based in Boca Raton, Florida owned by Michael Meisner. Lewis
Freeman, of Lewis B. Freeman & Partners in Miami, is a court-
appointed receiver in the case against Phoenix Diversified. The
company faced an involuntary chapter 7 petition filed by a group
of investors after learning that the company is insolvent. About
200 investors asserted claims of more than $140 million against
the Debtor.
About Michael Meisner
Michael A. Meisner in Boca Raton, Florida filed a chapter 11
petition on May 19, 2008 (Bankr. S.D. Fla. Case No. 08-16502).
Judge Paul G. Hyman, Jr., presides over the case. Sherri B.
Simpson, Esq., at Law Offices of Sherri B. Simpson, P.A.,
represents the Debtor in his restructuring efforts. He listed
estimated assets of $1 million to $10 million and estimated debts
of $1 million to $10 million when he filed for bankruptcy.
METROPOLITAN HEALTH: S&P Affirms 'B(Fair)' and 'bb' Ratings
-----------------------------------------------------------
A.M. Best Co. has affirmed the financial strength rating of
B(Fair) and issuer credit rating of "bb" of Metropolitan Health
Plan (Minneapolis, MN). The outlook for both ratings is negative.
Concurrently, A.M. Best has withdrawn the ratings and assigned a
category NR-4 (company request) to MHP. This is in response to
management's request that MHP be removed from A.M. Best's
interactive rating process.
The rating affirmations reflect MHP's limited market, low level of
capitalization and unfavorable underwriting results. MHP has a
limited market; it is licensed only in select counties in
Minnesota, with a heavy enrollment concentration in Hennepin
County. The capitalization level of MHP is considered low. MHP
has reported unfavorable underwriting results for the last four
years, which has contributed to its decreased capitalization.
MICROMET INC: Board Adopts Director Compensation Policy
-------------------------------------------------------
The Board of Directors of Micromet, Inc. adopted a Director
Compensation Policy on June 27, 2008 that supersedes any prior
Policy adopted by the Board.
1. Scope
Non-employee members of the Board of the Company will be eligible
to receive cash compensation and equity awards as set forth in
this Policy. Such compensation and awards will be paid or be
made, as applicable, automatically and without further action of
the Board, unless such non-employee director declines to receive
such compensation or awards by notice to the company. This Policy
will remain in effect until it is revised or rescinded by further
action of the Board.
2. Cash Compensation
Annual Retainer
Each non-employee director will be eligible to receive an annual
retainer of $20,000 for service on the Board. In addition, the
Chairman of the Board shall be eligible to receive an annual
retainer of $85,000 for service on the Board. The annual retainer
shall be paid in quarterly installments within thirty (30) days
after the end of each calendar quarter.
Meeting Stipends
Each non-employee director will receive a stipend of $1,500 for
each Board meeting attended in person and $1,000 for each
committee meeting attended in person. In addition, each non-
employee director shall receive such stipends with respect to
telephonic Board meetings and committee meetings if such
telephonic meetings last approximately two hours or longer. The
meeting stipends will be paid on a quarterly basis within thirty
(30) days after the end of each calendar quarter.
Expense Reimbursements
The Company shall reimburse non-employee directors for reasonable
expenses incurred to attend meetings of the Board or its
committees. Any travel expenses shall be reimbursed in accordance
with the company's standard travel policy. The travel expenses
will be reimbursed within thirty (30) days after receipt by the
Company of an invoice together with originals or copies of
receipts showing the payment of such expenses.
Limitations for Members of Audit Committee
Members of the Audit Committee may not directly or indirectly
receive any compensation from the company other than their
directors' compensation in accordance with this Policy.
3. Equity Compensation
Initial Awards
On the effective date of his or her election or appointment to the
Board, each non-employee director, other than the Chairman of the
Board, automatically will be granted a non-qualified stock option
to purchase 35,000 shares of company common stock. On the
effective date of his or her election or appointment as Chairman
of the Board, the Chairman of the Board automatically will be
granted a non-qualified stock option to purchase 70,000 shares of
the company's common stock.
Committee Chair Awards
On the date of each annual meeting of the company's stockholders,
(i) the Chairman of the Audit Committee automatically shall be
granted a non-qualified stock option to purchase 7,500 shares of
Company common stock, (ii) the Chairman of the Compensation
Committee automatically will be granted a non-qualified stock
option to purchase 5,000 shares of Company common stock, and (iii)
the Chairman of the Nominating & Corporate Governance Committee
automatically will be granted a non-qualified stock option to
purchase 2,500 shares of common stock.
Annual Awards
On the date of each annual meeting of the company's stockholders,
each non-employee director, other than the Chairman of the Board,
automatically will be granted a non-qualified stock option to
purchase 15,000 shares of company common stock, and the Chairman
of the Board automatically will be granted a non-qualified stock
option to purchase 30,000 shares of the company's common stock.
Terms of Stock Option Awards
General Terms
The stock options described in this Policy will be granted under
and shall be subject to the terms and provisions of the company's
Amended and Restated 2003 Equity Incentive Award Plan, as amended
from time to time, and shall be granted subject to the execution
and delivery of award agreements, including attached exhibits, in
substantially the same forms approved by the Board, setting forth
the vesting schedule applicable to such awards and such other
terms as may be required by the 2003 Plan.
Exercise Price
The exercise price of each option granted to a non-employee
director will be the closing price of a share of common stock of
the company on the date of grant (or if the stock market was
closed on the date of grant, on the last trading day preceding the
date of grant).
Vesting of Initial Awards
Options granted as Initial Awards to non-employee directors will
become vested in equal installments at the end of each calendar
month over a period of three years from the date of grant, such
that each stock option shall be 100% vested on the third
anniversary of its date of grant, subject to a director's
continuing service on the Board through such dates. No portion of
an option which is unexercisable at the time of a non-employee
director's termination of membership on the Board shall thereafter
become exercisable.
Vesting of Committee Chair Awards and Annual Awards
Options granted as Committee Chair Awards and as Annual Awards
will become vested in equal installments at the end of each
calendar month over a period of one year from the date of grant,
such that each stock option shall be 100% vested on the first
anniversary of the date of grant, subject to a director's
continuing service on the Board through such date. No portion of
an option which is unexercisable at the time of a non-employee
director's termination of membership on the Board will thereafter
become exercisable.
About Micromet Inc.
Micromet Inc. (Nasdaq: MITI) -- http://www.micromet-inc.com/-- is
a biopharmaceutical company developing novel, proprietary
antibodies for the treatment of cancer, inflammation and
autoimmune diseases. Four of its antibodies are currently in
clinical trials, while the remainder of the product pipeline is in
preclinical development.
Going Concern
The company disclosed in its Form 10-Q for the first quarter of
2008, that as of March 31, 2008, the company had an accumulated
deficit of $170.8 million, and its expects to continue to incur
substantial, and possibly increasing, operating losses for the
next several years. The company says that these conditions create
substantial doubt about the company's ability to continue as a
going concern.
MORGAN STANLEY: S&P Affirms 'BB' Rating on Class II Notes
---------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on the class
IA notes issued by Morgan Stanley ACES SPC's series 2006-26, a
synthetic corporate investment-grade collateralized debt
obligation transaction, to 'AA' from 'AA-' and removed it from
CreditWatch with negative implications, where it was placed on
June 13, 2008. At the same time, S&P affirmed its 'BB' rating on
the class II notes and removed it from CreditWatch with negative
implications.
The upgrade and affirmation reflect a restructuring of the
transaction in which trades were made to the reference portfolio
that have improved the overall credit quality of the deal and have
increased the synthetic rated overcollateralization figures for
the tranches to more than 100%.
Rating Raised and Removed from Creditwatch Negative
Morgan Stanley ACES SPC
Series 2006-26
Rating
------
Class To From
----- -- ----
IA AA AA-/Watch Neg
Rating Affirmed and Removed from Creditwatch Negative
Morgan Stanley ACES SPC
Series 2006-26
Rating
------
Class To From
----- -- ----
II BB BB/Watch Neg
NEW CENTURY COS: Amends Note to Waive Penalties & Default Interest
------------------------------------------------------------------
Pursuant to a letter agreement between New Century Companies, Inc.
and CAMOFI Master DDC, subject to the company's performance of its
obligations under the Letter Agreement and the execution of
further documentation to be prepared in connection with the Letter
Agreement, CAMOFI has agreed to waive certain penalties and
default interest which have been accrued under the transaction
documents previously entered into with CAMOFI, including a 12%
Senior Secured Convertible Promissory Note due Feb. 20, 2009, in
the original principal amount of $3,500,000, Security Agreement,
an Amended and Restated Registration Rights Agreement, and a
Subsidiary Guaranty.
Pursuant to the Letter Agreement, the company will issue an
amended and restated Note in the principal amount of $2,950,000
with a new maturity date of Aug. 1, 2010. Additionally, under the
Letter Agreement:
1. Commencing on Aug. 1, 2008, and continuing thereafter on the
first business day of every month for the next 24 months, the
company will pay to CAMOFI $70,000, allocated first to the
payment of interest and second to the payment of principal on
the Amended Note.
2. On or before Aug. 22, 2008, the company will deposit $140,000
into a controlled account satisfactory to CAMOFI, and the
company will take all actions necessary to ensure that so long
as any amounts remain outstanding under the Amended Note,
there will be no less than $140,000 in such controlled
account.
3. Within three business days, the company will issue to CAMOFI
five year warrants, entitling CAMOFI to purchase (i) 725,000
shares of Common Stock at an exercise price of $0.10 per
share, and (ii) 725,000 shares of Common Stock at an exercise
price of $0.20 per share. The shares of Common Stock issuable
upon exercise of the Warrants, will have been previously
registered such that all of such Warrant Shares will be freely
tradable by CAMOFI immediately upon CAMOFI's exercise of the
applicable Warrant. The Warrants will replace the previously
issued warrants to CAMOFI.
4. Within three business days, the company will issue to CAMOFI a
certificate representing 725,000 freely tradable shares of the
company's common stock.
5. The company will timely deliver or cause to be delivered such
other documents, instruments or agreements, opinions of
counsel, as CAMOFI will reasonably request to enable it to
make a public sale of the 675,000 shares of Common Stock
previously delivered to CAMOFI by the company.
6. The company will (i) retain a restructuring advisor
satisfactory to CAMOFI upon terms and conditions satisfactory
to the company and CAMOFI, and (ii) continue the engagement of
such restructuring advisor until any and all amounts owing by
the company to CAMOFI have been repaid.
About New Century Cos.
Headquartered in Santa Fe Springs, California, New Century
Companies Inc. -- http://www.newcenturyinc.com/-- acquires, re-
manufactures and sells pre-owned computer numerically controlled
machine tools to manufacturing customers. The company provides
rebuilt, retrofit and remanufacturing services for numerous brands
of machine tools. It also manufactures original equipment CNC
large turning lathes and attachments under the trade name Century
Turn. CNC machines use commands from on-board computers to
control the movements of cutting tools and rotation speeds of the
parts being produced. New Century sells its services by direct
sales and through a network of machinery dealers across the United
States. Its customers are generally medium to large-sized
manufacturing companies in various industries, where metal cutting
is an integral part of their businesses.
New Century Companies Inc.'s consolidated balance sheet at
March 31, 2008, showed $2,621,511 in total assets and $4,530,121
in total liabilities, resulting in a $1,908,610 total
stockholders' deficit.
Going Concern Doubt
Squar, Milner, Peterson, Miranda & Williamson, LLP, raised
substantial doubt on the ability of New Century Companies, Inc.,
to continue as a going concern after it audited the company's
financial statements for the year ended Dec. 31, 2007.
The auditor reported that the company has an accumulated deficit
of around $11,233,000, a working capital deficit of around
$1,425,000 and was in default on its convertible debt.
NORTH BAY: May Access North Healthcare's $1 Million DIP Fund
------------------------------------------------------------
The Hon. Jeff Bohm of the U.S. Bankruptcy Court for the Southern
District of Texas gave North Bay General Hospital Inc. interim
approval to tap $1 million in postpetition financing, The Deal
relates, citing Debtor counsel, Michael Durrschmidt, Esq., at
Hirsch & Westheimer PC. The Debtor is specifically authorized to
draw amounts at $250,000 increments from the DIP fund, The Deal
states.
Northern Healthcare Corp. LLC, which provided the Debtor
$5 million in exit financing during its first bankruptcy case in
2005, agreed to extend $1 million to the Debtor when the hospital
again filed for bankruptcy on July 8, 2008. Northern Healthcare
is now owed $5.07 million in secured debt, court documents
disclosed, The Deal notes.
Northern Healthcare's DIP fund carries an interest rate of 2.8
basis points per day and is secured by the Debtor's receivables,
The Deal notes.
Based on the report, the Court set a final hearing on the DIP
facility on July 29, 2008. The U.S. Trustee's request for
appointment of a patient care ombudsman will also be heard on
July 29, The Deal adds.
On the same day the hospital filed its recent bankruptcy, a
creditor demanded $160,000 judgment as part of the the Debtor's
2005 bankruptcy case, The Deal quotes Mr. Durrschmidt as stating.
Mr. Durrschmidt disclosed that, on behalf of Special Care Hospital
Management Corp., a federal Marshall gave North Bay a writ of
execution of judgment issued by the U.S. District Court for the
District of Texas in Corpus Christi, The Deal writes.
Mr. Durrschmidt said that his client is eyeing a going-concern
sale, according to The Deal.
Mr. Stacy, who was named as North Bay's president and director on
June 30, 2008, filed the second chapter 11 petition on the
Debtor's behalf, The Deal reports.
About North Bay
North Bay General Hospital, Inc. operates a 75-bed acute care
medical facility on a 6-acre site in Aransas Pass, Texas. It
employs about 206 workers. The hospital filed its chapter 11
petition on Feb. 9, 2005 (Bankr. S.D. Texas Case No. 05-32121).
Judge Jeff Bohm presides over the case. Daniel F. Patchin, Esq.,
and Michael Leppert, Esq., at McClain, Leppert & Maney, P.C.,
represent the Debtor in its restructuring effort. The Debtor
listed assets between $1 million and $10 million and debts between
$1 million and $10 million. The Debtor's unsecured creditors
received 110% recovery under its bankruptcy plan.
The hospital again filed its chapter 11 petition on July 8, 2008
(Bankr. S.D. Texas Case No. 08-20368). Michael J Durrschmidt,
Esq., at Hirsch & Westheimer, represents the Debtor in its
restructuring efforts. Judge Jeff Bohm presides over the case.
When the Debtor filed its second chapter 11 petition, it listed
$10 million to $50 million in assets and $10 million to
$50 million in debts. The Deal said that the hospital valued
itself at $10.6 million in its 2008 bankruptcy filing.
OSYKA CORP: To Ink Settlement With J. Aron Over Sale Procedures
---------------------------------------------------------------
Osyka Corp. entered into another comprise with secured lender J.
Aron & Co. relating to procedures for the sale of Osyka's assets,
Bill Rochelle of Bloomberg News reports.
The recent issue surfaced after Legado Resources LLC made a
$67 million offer to purchase Osyka's assets before the July 10
auction, Mr. Rochelle says. A hearing is set for July 21, 2008,
to consider approval of the settlement, he relates.
Osyka previously entered into a settlement agreement with J. Aron
in connection to the allocation of a minimum "strike price" of at
least $67 million, as reported in the Troubled Company Reporter on
April 14, 2008. J. Aron has agreed to put off its $66.5 million
credit bid as part of the agreement, the TCR said.
As reported in the Troubled Company Reporter on April 28, 2008,
the Court approved Osyka's proposed bidding procedures for the
sale of its assets.
According to Bloomberg, Legado has the option to offer a bid of at
least $81 million by July 23, 2008. In the event Osyka consummate
the sale to another bidder, Legado will be paid a $1 million
break-up, the report notes.
Bloomberg relates that the sale is connected to a process for
approving a reorganization plan.
As reported in the Troubled Company Reporter on June 30, 2008,
Osyka delivered to the United States Bankruptcy Court for the
Southern District of Texas a joint Chapter 11 plan and disclosure
statement explaining that plan.
A hearing is set for July 17, 2008, at 1:30 p.m., to consider the
adequacy of Osyka's disclosure statement.
The plan contemplates the reduction of the Debtors' overall debt
and payment obligations by at least $82 million associated with
corporate liabilities in order to realign their capital structure.
The plan further provides more liquidity to the Debtors to
continue to operate their business as a viable economic entity.
Among other things, each holder of allowed general unsecured
claims will get its pro rata share of:
i) $200,000 in excess cash collateral, and
ii) 50% of the net recovery, receive from the BIP Holdings
LLC litigation, if any, after all allowed claims are paid.
The BIP litigation is the causes of action arose out of the
assignment of two sale and conveyance in 2006, between the
Osyka and BIP, with respect to the sale of certain oil and
gas leases and real property.
A full-text copy of the disclosure statement is available for
free at http://ResearchArchives.com/t/s?2eca
A full-text copy of the Chapter 11 plan of reorganization is
available for free at http://ResearchArchives.com/t/s?2ecb
About Osyka Corporation
Headquartered in Houston, Texas, Osyka Corporation --
http://www.osyka.com/-- is an oil and gas company. The company
filed for Chapter 11 protection on March 3, 2008 (Bankr. S.D. Tex.
Case No.08-31467). H. Rey Stroube, III, Esq., represents the
Debtor in its restructuring efforts. No Official Committee of
Unsecured Creditors has been appointed in this case to date.
As reported in the Troubled Company Reporter on June 18, 2008,
the Debtors' summary of schedules showed total assets of
$109,754,313 and total debts of $83,792,755.
PARMLEY COVE: Case Summary & Largest Unsecured Creditor
-------------------------------------------------------
Debtor: Parmley Cove, LLC
99 Signature Place
Lebanon, TN 37087
Bankruptcy Case No.: 08-05997
Chapter 11 Petition Date: July 15, 2008
Court: Middle District of Tennessee (Nashville)
Judge: Marian F Harrison
Debtors' Counsel: Steven L. Lefkovitz, Esq.
(Stevelefkovitz@aol.com)
Law Offices Lefkovitz & Lefkovitz
618 Church Street, Suite 410
Nashville, TN 37219
Tel: (615) 256-8300
Fax: (615) 250-4926
Total Assets: $800,000
Total Debts: $1,300,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/tennmb08-05997.pdf
PERFORMANCE TRANS: Cases to be Converted to Ch. 7, Court Says
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
says Performance Transportation Services Inc. and its debtor-
affiliates' Chapter 11 cases will be converted to cases under
Chapter 7 of the Bankruptcy Code without further notice or hearing
if no party-in-interest will object to a proposed order converting
the cases.
As reported in the Troubled Company Reporter on June 16, 2008,
Black Diamond Commercial Finance, L.L.C., agent for the
Performance Transportation Inc. and its debtor-affiliates'
postpetition secured lenders, asked the U.S. Bankruptcy Court for
the Western District of New York to immediately convert the
Debtors' Chapter 11 cases to Chapter 7.
The Court authorized Black Diamond Commercial Finance, L.L.C.,
agent for the Debtors' postpetition secured lenders, to submit
the proposed order granting the conversion motion on one business
day's notice to certain key stakeholders. Black Diamond sought
conversion of the cases after a default by the Debtors under the
DIP Facility and the continuing losses incurred by the Debtors
while under Chapter 11. The strike by held by its International
Brotherhood of Teamsters-represented employees put a nail to PTS
II's coffin, as the strike forced PTS' main customers to move
their business to other car haulers.
While Chapter 11 allows management to continue running day-to-day
operations of the debtor and provides an opportunity to
restructure, Chapter 7 mandates the appointment of a trustee, who
will administer the estate and liquidate its assets.
The Hon. Michael J. Kaplan, however, notes that pending
conversion, the Debtors will remain in the possession and
management of their businesses and assets pursuant to the
Bankruptcy Code, with all of the rights, powers and duties of
debtors-in-possession. Jeff Cornish and John Stalker remain
officers duly authorized to act on the Debtors' behalf.
Similar conversion requests were filed by (i) the U.S. Trustee
and (ii) CIT Group/Business Credit, Inc. and Bayerische Hypo-und
Vereinsbank AG, New York, the revolving lenders under the First
Lien Credit Agreement. The U.S. Trustee, however, had proposed
either the conversion or dismissal of the Chapter 11 cases.
DIP Lender Opposes Dismissal of Cases
Black Diamond asks the Court to deny the U.S. Trustee's request
to dismiss the Chapter 11 cases as an alternative to converting
the bankruptcy cases to cases under Chapter 7.
William J. Brown, Esq., at Phillips Lytle LLP, in Buffalo, New
York, reiterates that following a hearing on Black Diamond's
emergency request for conversion, the Court authorized Black
Diamond to submit a proposed order granting the conversion motion
on one business day's notice to certain key stakeholders.
Mr. Brown further relates that Black Diamond has been in
discussions with, among others, the U.S. Trustee, the Debtors
and, more recently, certain other parties-in-interest regarding
the details of the proposed conversion order and a related
stipulated order regarding the funding of the Chapter 7
liquidation.
Mr. Brown tells the Court that the U.S. Trustee's proposal will
be moot, if and when the Court approves Black Diamond's
conversion request.
The Court has already ruled as "moot" the conversion request by
CIT and HVB.
About Performance Transportation
Performance Transportation Services Inc. is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America, and operates under three key
transportation business lines including: E. and L. Transport,
Hadley Auto Transport and Leaseway Motorcar Transport.
The company and 13 of its affiliates previously filed for Chapter
11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06-
00107). The U.S. Bankruptcy Court for the Western District of New
York confirmed the Debtors' plan on Dec. 21, 2006, and that plan
became effective on Jan. 29, 2007. Garry M. Graber, Esq. of
Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day
represented the Debtors in their restructuring efforts. When the
Debtor filed for protection from their creditors it reported more
than $100,000,000 in total assets. It also disclosed owing more
than $100,000,000 to at most 10,000 creditors, including $708,679
to Broadspire and $282,949 to General Motors of Canada Limited.
The company and its debtor-affiliates filed their second Chapter
11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746
thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents
the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve
as the Debtors' local counsel. The Debtors' claims and balloting
agent is Kutzman Carson Consultants LLC. (Performance
Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Services
Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PERFORMANCE TRANS: May Use Cash Collateral Until July 9
-------------------------------------------------------
Performance Transportation Services Inc. and its debtor-affiliates
sought the authority of the U.S. Bankruptcy Court for the Western
District of New York to immediately and temporarily use cash
collateral, nunc pro tunc to June 11, 2008, to wind down their
operations and protect the collateral securing their obligations
under their debtor-in-possession financing agreement and
prepetition secured credit facilities. The Debtors will also use
the cash collateral to satisfy certain payroll-related obligations
of their Canadian entities.
Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York,
tells the Court that the Debtors no longer have access to
financing because, as previously reported, they have defaulted
on their DIP agreement.
The Court entered orders authorizing the Debtors to use cash
collateral until July 9.
A. Budget for June 11 to 25, 2008:
Chapter 7 - Liquidation Cost
Through June 25, 2008
Salaries
Terminal $53,164
Corporate 46,570
Adjustment 11,700
------
Sub-total 111,435
Non-Salary
Corporate office expenses 4,571
Terminal rent -
Terminal communications and data -
Security services 250,000
-------
Sub-total 254,571
-------
Total $366,006
The Debtors are required to secure Black Diamond Commercial
Finance, L.L.C.'s, consent prior to paying each expense that
exceeds $20,000. The Debtors' additional request for the use
of cash collateral to satisfy certain payroll and benefits-
related obligations not contained in the budget, including
Canadian and Unites States payroll and prescription benefits,
was denied. Amounts the Debtors spent before June 18, 2008,
were capped at $250,000.
B. Budget for June 26 to July 2:
Chapter 7 - Liquidation Budget
Expenditure Budget
For Seven Days June 26 to July 2, 2008
Salaries $53,373
Other administrative costs 141,601
Contingency 73,478
-------
Total $268,452
The Debtors are required to secure Black Diamond's consent
prior to paying each expense that exceeds $20,000, and any
amount classified as contingency in the budget.
C. Budget for July 3 to 9:
Chapter 7 - Liquidation Budget
Expenditure Budget
For Seven Days July 3 to July 9, 2008
Salaries $52,330
Other administrative costs 92,976
Contingency 308,043
-------
Total $453,349
The Debtors are required to secure Black Diamond's consent
prior to paying each expense that exceeds $20,000, and any
amount classified as contingency in the budget.
About Performance Transportation
Performance Transportation Services Inc. is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America, and operates under three key
transportation business lines including: E. and L. Transport,
Hadley Auto Transport and Leaseway Motorcar Transport.
The company and 13 of its affiliates previously filed for Chapter
11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06-
00107). The U.S. Bankruptcy Court for the Western District of New
York confirmed the Debtors' plan on Dec. 21, 2006, and that plan
became effective on Jan. 29, 2007. Garry M. Graber, Esq. of
Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day
represented the Debtors in their restructuring efforts. When the
Debtor filed for protection from their creditors it reported more
than $100,000,000 in total assets. It also disclosed owing more
than $100,000,000 to at most 10,000 creditors, including $708,679
to Broadspire and $282,949 to General Motors of Canada Limited.
The company and its debtor-affiliates filed their second Chapter
11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746
thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents
the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve
as the Debtors' local counsel. The Debtors' claims and balloting
agent is Kutzman Carson Consultants LLC. (Performance
Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Services
Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PHOENIX DIVERSIFIED: Case Trustee Wants Owner Declared in Contempt
------------------------------------------------------------------
Michael Bakst, chapter 7 trustee, intends to ask a federal court
to find Michael Meisner, owner of bankrupt Phoenix Diversified
Investment Corp., in contempt, Alexandra Clough writes for the
Palm Beach Post. Mr. Bakst wants the court to force Mr. Meisner
to provide financial information regarding Phoenix Diversified.
The Troubled Company Reporter said on May 22, 2008, that Mr.
Meisner filed a personal chapter 11 bankruptcy on May 21, 2008. A
group of investors had filed an involuntary chapter 7 petition
against Phoenix Diversified after learning the fund manager is
insolvent and owes roughly $30,000,000 to more than 200 investors.
The Palm Beach Post relates that some 140 investors are asserting
more than $140 million in claims against Phoenix Diversified.
Mr. Meisner said that investors may recover some or even all of
their investments if Mr. Bakst would play ball, Palm Beach Post
notes. In an e-mail, Mr. Meisner alleged that the case trustee is
not handling the case in the best interest of lenders, Palm Beach
Post relates. Mr. Meisner added that Mr. Bakst isn't willing to
consider "lucrative" offers for the Debtor's special proprietary
trading software, the report says.
Mr. Bakst explained that what he received are offers to engage in
joint venture with the Debtor and raise funds from new investors,
which the case trustee said won't happen, Palm Beach Post notes.
Mr. Bakst maintained that he won't allow the Debtor to do business
with any investor pointing that Mr. Meisner had refused to provide
financial information on the Debtor pursuant to a court order,
Palm Beach Post says. Mr. Meisner may be asked to pay fines and
serve in prison if he continues to cooperate, the report reveals.
Mr. Meisner's counsel, Scott Hecker, Esq., said that Mr. Bakst's
request is going nowhere, according to the report.
Mr. Bakst said that Mr. Meisner must cooperate and has to show
where all of the investors money went, Palm Beach Post reports.
Court documents showed that Mr. Meisner received $470,597 in
salary in 2006, $1.3 million in 2007, and $260,000 up until
Phoenix Diversified filed for bankruptcy, Palm Beach Post notes.
Mr. Meisner also owns $1.6 million in real property. His monthly
expenses averages $17,380 according to court documents, Palm Beach
Post says.
A public sale of Phoenix Diversified's assets is set for July 20,
2008 in West Palm Beach, according to the report.
About Michael Meisner
Michael A. Meisner in Boca Raton, Florida filed a chapter 11
petition on May 19, 2008 (Bankr. S.D. Fla. Case No. 08-16502).
Judge Paul G. Hyman, Jr., presides over the case. Sherri B.
Simpson, Esq., at Law Offices of Sherri B. Simpson, P.A.,
represents the Debtor in his restructuring efforts. He listed
estimated assets of $1 million to $10 million and estimated debts
of $1 million to $10 million when he filed for bankruptcy.
About Phoenix Diversified Investment
Phoenix Diversified Investment Group is a commodities investment
firm based in Boca Raton, Florida owned by Michael Meisner. Lewis
Freeman, of Lewis B. Freeman & Partners in Miami, is a court-
appointed receiver in the case against Phoenix Diversified. The
company faced an involuntary chapter 7 petition filed by a group
of investors after learning that the company is insolvent. About
200 investors asserted claims of more than $140 million against
the Debtor.
PIERRE FOODS: Moody's Assigns D Rating After Bankruptcy Filing
--------------------------------------------------------------
Moody's Investors Service lowered the probability of default
rating of Pierre Foods, Inc. to D from Ca/LD, following the
company's statement that it and its subsidiaries have filed
voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy code.
The company's long-term ratings were confirmed and its speculative
grade liquidity rating was affirmed. The rating outlook is
stable. This rating action concludes the review for possible
downgrade that initially began on May 28, 2008 and was
subsequently continued on June 2nd, July 1st and July 14th.
Moody's will withdraw the company's ratings due to the bankruptcy
filing shortly.
Rating lowered:
-- Probability of default rating to D from Ca/LD
Ratings confirmed, and LGD percentages revised:
-- Corporate family rating at Ca
-- $40 million senior secured revolving credit facility maturing
2009 at Caa3 (LGD3, 42%)
-- $227 million senior secured term loan facility maturing 2010
at Caa3 (LGD3, 42%)
Rating confirmed, and LGD rating and percentage revised:
-- $125 senior subordinated notes maturing 2012 at C (LGD6, 90%)
Rating affirmed:
-- Speculative Grade Liquidity rating at SGL-4
High and rising protein and raw materials costs severely hurt
Pierre's profitability. Adding back unusual charges and
impairments, reported operating profit was only $20 million (3.1%
of sales) for the fiscal year ended March 1, 2008, down from a
margin of 5.7% in the prior year.
The majority of Pierre's are not protected from commodity exposure
via either market-related pricing contracts or USDA Commodity
Reprocessing Program. Profitability has also been hurt, to a
lesser extent, by sales of net lower-margin products in the Zartic
business and by outsourcing as a result of the destruction of the
Hamilton, Alabama facility.
As a consequence, debt to EBITDA for fiscal 2008, proforma for
unusual items, was 19.8 times. The company defaulted under its
bank financial covenants and later failed to pay a scheduled
interest payment to its bank lenders on June 30, 2008.
On July 8th, the agent for the bank lenders delivered a Payment
Blockage Notice to Pierre and to the Trustee under Pierre's June
30, 2004 senior subordinated indenture. The Payment Blockage
Notice prohibited Pierre from making any payment or distribution
of assets on account of the senior subordinated obligations,
including the interest payment on the senior subordinated notes
scheduled for July 15, 2008.
Pierre has received a commitment for up to $35 million of debtor-
in-possession financing from certain funds managed by Oaktree
Capital Management L.P., and is in restructuring discussions with
Oaktree affiliates that may involve the conversion of the
company's debt into equity.
Headquartered in Cincinnati, Ohio, Pierre Foods, Inc. is a
manufacturer, marketer and distributor of processed food
solutions, focusing on formed, pre-cooked and ready-to-cook
protein products, compartmentalized meals and hand-held
convenience sandwiches.
Revenues for fiscal year ended March 1, 2008 were approximately
$643 million. The company was purchased by Madison Dearborn
Partners and certain members of Pierre's management on June 30,
2004.
PILGRIM'S PRIDE: Divests Tray-Pack Chicken Biz, Cuts 600 Positions
------------------------------------------------------------------
Pilgrim's Pride Corporation disclosed plans to consolidate the
tray-pack chicken business from its El Dorado, Arkansas,
processing plant into six other case-ready facilities. After the
transition, which is expected to be completed within 60 days, the
El Dorado facility will operate as a supply plant.
Approximately 600 of the 1,215 positions at the El Dorado plant
will be eliminated by Sept. 19, 2008. Most of the positions
eliminated will be hourly jobs in chicken processing. Contract
growers and employees in live operations will not be affected.
Pilgrim's Pride will provide transition programs to employees
whose positions are eliminated to assist them in securing new
employment, filing for unemployment and other applicable benefits.
"Since March, we have been conducting a thorough review of all our
production facilities to ensure we are operating as efficiently as
possible in response to the unprecedented challenges facing our
company and our industry," Clint Rivers, Pilgrim's Pride president
and chief executive officer," said.
"We are confident that the changes disclosed, which conclude the
formal review of our operations, will help position Pilgrim's
Pride as a stronger competitor," he said. "By consolidating the
tray-pack volume from El Dorado into our six remaining case-ready
plants, we can position our entire case-ready division to operate
more efficiently."
"As a supply plant, our El Dorado facility will be able to take
full advantage of its efficient live-production cost structure to
help us deliver even better value to our customers," he concluded.
In April, Pilgrim's Pride acknowledged that the El Dorado plant
was among those being reviewed for possible closure or
consolidation. Over the past several months, the company had been
working with elected officials and the union representing members
at the plant to improve its financial performance. However, union
members recently rejected proposed benefits changes that would
have made the plant more competitive.
Separately, the company also disclosed plans to close its
distribution center in El Paso, Texas within the next 60 days.
That facility employs approximately 34 people. After the closing,
Pilgrim's Pride will operate a total of six distribution centers
in Texas, Arizona and Utah.
"While the decision to close or consolidate locations is always
difficult, we believe the actions we are announcing today are
absolutely necessary for our business and our company," said
Mr. Rivers.
The company does not expect to incur any material financial
charges related to the statements.
About Pilgrim's Pride
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(NYSE: PPC) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. Pilgrim's Pride employs about 40,000
people and has major operations in Texas, Alabama, Arkansas,
Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania,
Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with
other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
* * *
As reported in the Troubled Company Reporter on July 14, 2008,
Moody's Investors Service downgraded the ratings of Pilgrim's
Pride Corporation, including the company's corporate family rating
and probability of default rating to B1 from Ba3. The rating
outlook is stable. This rating action concludes the review for
possible downgrade begun on April 16, 2008.
PIPER RESOURCES: Court Extends CCAA Protection Until July 22
------------------------------------------------------------
Piper Resources Ltd. requested and was granted an adjournment of a
July 15, 2008 CCAA court proceedings until July 22, 2008, which
extended its stay under CCAA protection until that date.
On Feb. 17, 2008, Piper was granted protection under the Companies
Creditors' Arrangement Act by an Initial Order from the Alberta
Court of Queen's Bench which stayed its creditors from enforcing
their rights until March 17, 2008. The protection was extended by
subsequent court orders on March 17, 2008, April 28, 2008 and
June 12, 2008. The June 12, 2008, court order extended the
protection to July 15, 2008.
While under CCAA protection, the board of directors maintains its
usual role and management of the company remains responsible for
the day to day operations. The materials filed to date in the
CCAA proceedings are available by contacting the Monitor at
(403) 298-5999 or by e-mail at piper@deloitte.ca.
Headquartered in Calgary, Alberta, Piper Resources Ltd. is a non-
listed exploration, development and production company pursuing
conventional oil and natural gas opportunities in western Canada.
The company's core areas are focused in the Peace River arch area
of northwestern Alberta, with operated production in the
Gordondale, Pouce Coupe and Sinclair areas.
On Feb. 15, 2008, Piper Resources Ltd. obtained creditor
protection under the Companies Creditors Arrangement Act (Canada)
pursuant to an Order from the Alberta Court of Queen's Bench.
Piper Resources engaged Tristone Capital Inc. as its financial
advisor to pursue strategic alternatives for the company in
conjunction with the CCAA proceedings.
PLASTECH ENGINEERED: Court Extends Plan-Filing Period to July 31
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
approved the request by Plastech Engineered Products Inc. and its
debtor-affiliates and major parties-in-interest to further extend
the exclusive period within which the Debtors may file one or more
reorganization plans, or a motion to extend the Plan Period
through July 31, 2008. The Plan Period was previously extended
until July 11.
The Debtors' exclusive Solicitation Period for Plan acceptances
is until Aug. 4, 2008.
The parties-in-interest include Chrysler, LLC, Goldman Sachs
Credit Partners L.P., as Agent to the Prepetition First Lien Term
Lenders, the Steering Committee of First Lien Term Loan Lenders,
and the Official Committee of Unsecured Creditors.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
Joel D. Applebaum, Esq., at Clark Hill PLC, represents the
Official Committee of Unsecured Creditors.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
PLASTECH ENGINEERED: Parties Balk at Unsecured Reclamation Claims
-----------------------------------------------------------------
Parties-in-interest Basell USA, Inc., Empire Electronics,Inc., and
Acord Holdings, LLC, oppose Plastech Engineered Products Inc. and
its debtor-affiliates' request to deem reclamation claims
unsecured.
As reported in the Troubled Company Reporter on June 5, 2008, the
Debtors previously sought to reject 75 reclamation demands
from certain vendors and suppliers. The Debtor said that the
reclamation claimants will presumably seek administrative expense
treatment pursuant to Section 546 of the U.S. Bankruptcy Code on
account of their Reclamation Claims, which aggregate $17,800,000.
The Debtors are authorized under Section 546(h) -- subject
to the limitations imposed by any Court order and the prior
rights of holders of security interests in the goods or the
proceeds of the goods under (a) the Debtors' proposed DIP
financing, and (b) the prepetition secured financing agreements
to return to vendors goods that were delivered prepetition -- for
an offset of the purchase price of the goods against the vendors'
prepetition claims.
Basell USA contends the facts asserted by the Debtors relative to
the value of assets, and the nature and extent of secured claims
requires an evidentiary hearing or adversary proceeding. The
Debtors' requested relief, Basell maintains, is for a denial of
its administrative claim and expense status, making the motion
and requested relief appear to be inconsistent.
The Debtors previously objected Basell's Reclamation Demand dated
Feb. 8, 2008, on the ground that "goods . . were subject to the
prior rights of holders of a security interest in the goods or
their proceeds."
Scott A. Chernich, Esq., counsel to Basell, at Foster, Swift,
Collins & Smith, P.C., in Lansing, Michigan, citing Norton
Journal of Bankruptcy Law and Practice, asserts that, "[A]ll that
need be shown under Section 503(b)(9) of the Bankruptcy Code is
that goods were sold to the debtor within the 20 days prior to
filing and that this obligation remains unpaid. . . . Now,
notwithstanding the existence of a superior lien, the 503(b)(9)
claimholder will receive the administrative claim."
For their part, Empire Electronics and Acord Holdings complain
that the Debtors have not neither provided any evidence that the
goods subject to the reclamation demand were consumed prior to
receiving the demand, nor that the goods were subject to prior
rights of security interest holders.
Basell claims $1,532,214 as administrative expense, while Empire
Electronics asserts a $51,055 administrative claim. Acord
asserted $849,065 as prepetition claim, $283,092 of which
represents goods delivered within 20 days prior to the date of
bankruptcy.
Acord further asserts its claims are secured by liens on tooling
under the Michigan Special Tools Lien Act, pursuant to which
Acord is entitled to a right to setoff up to the amount owed to
the Debtors. Acord discloses it has payables to the Debtors as
of the Petition Date.
Debtors: Reclamation Goods Part of Lenders' Collateral
The Debtors maintain that the goods the dissenting creditors
sought to repossess under each of their reclamation demands
comprise the liquid collateral that secure the Prepetition
Secured Lenders' prior rights:
(i) $100,000,000 Revolving Credit Facility, with a first
priority lien;
(ii) $265,000,000 First Lien Term Loan Credit Agreement, with a
second priority lien;
(iii) $100,000,000 Second Lien Term Loan Credit Agreement, with
a lien junior to the First Lien Term Lenders' second
lien.
Pursuant to a Court-approved Settlement Agreement with the
Prepetition Secured Parties, all of the liens on the Debtors'
property, with respect to the prepetition secured loans were
deemed legal, valid, binding, perfected and non-avoidable. The
Prepetition Secured Lenders even will not receive full payment
for allowed secured claims on the liquid collateral, the Debtors
inform.
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Wilmington, Delaware, cites In re Dana Corp., 367 B.R.
409, 421, where the Court held reclamation claims "valueless"
because the goods remained subject to either prepetition
indebtedness or were pledged to the DIP Lenders.
Given these arguments, the Debtors seek that the Court disallow
the Reclamation Claims as administrative or secured claims,
subject to the creditors' right to contend that their claims are
entitled to administrative priority under Section 503(b)(9) of
the Bankruptcy Code.
A list of the reclamation claims is available for free at:
http://researcharchives.com/t/s?2d52
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
Joel D. Applebaum, Esq., at Clark Hill PLC, represents the
Official Committee of Unsecured Creditors.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
PRUDENTIAL AMERICANA: Judge Markell Approves Reorganization Plan
----------------------------------------------------------------
Prudential Americana Group exited a debt restructuring it entered
in November 2007. Judge Bruce Markell of the U.S. Bankruptcy for
the District of Nevada approved CEO Mark Stark's reorganization
plan.
"It was a huge amount of work to manage the reorganization while
at the same time running a company in the most challenging real
estate environment Las Vegas has ever seen," Mr. Stark said.
"During the eight month process of reorganizing, I worked very
hard to keep all my agents and employees in the loop to help
retain my top people well as keep the rumors at bay," related Mr.
Stark.
"This company was built on core values and long-term thinking," he
said. "Our people were informed about every step of the process
with open and honest communication. As a result, they supported
the company, believed in the plan and look forward to our future
successes."
During its reorganization, Prudential Americana Group remained the
top real estate company in Las Vegas with more than double the
sales of its nearest competitor in both 2007 and 2008.
"We are continuing our commitment of partnering with the brightest
talent available in the market," Mr. Stark said. "Last week the
company merged with O'Keefe and Casto, an independent Las Vegas
real estate firm. Nearly two dozen agents of the firm's agents
are now part of Prudential Americana Group, bringing its total to
nearly 1,100 in Southern Nevada.
Mr. Stark said part of the company's reorganization success is due
to a commitment from its franchisor, Prudential Real Estate
Affiliates Inc. The company offered its support during the
reorganization and has joined the company as a minority partner.
According to Mr. Stark, Prudential Americana Group's ability to
reorganize in the face of a difficult real estate environment
shows that the market is down, but not out.
"With all market changes, opportunity arises," he said. "Many are
now realizing that there is a great opportunity to do well in this
market by taking advantage of the downturn. It will not be down
forever."
Mr. Stark said he believes the market correction has helped weed
out those agents and brokers who weren't serious about the
business and may not have been as effective as those who survived
the shift.
"The key change I have seen in the business environment is that it
is no longer acceptable to be mediocre in this profession,". he
said. "All ships rise in high tides. The business players of the
future will have to provide true value to their clients or they
will simply not survive."
Provisions of the Plan
As reported in Troubled Company Reporter on Jul 9, 2008, the plan
provides for a resolution of a dispute among the Debtors
and their outside brokers and agents who were made to believe that
Prudential Americana continues to be Las Vegas' largest brokerage
firm although its size has substantially shrunk in the past three
years, Business Press says. Prudential Americana planned to pay
in full a $70,000 in referral payments owed to brokers and agents,
the report states.
Judge Markell said that the Debtors have not justified their
preferential treatment to outside brokers and agents, Business
Press says. Under the plan, the Debtors would pay roughly 5.5
cents on the dollar on $15.5 million owed to other unsecured
creditors, Business Press writes.
Mark Stark, CEO and owner, was to remain in control of the Debtors
in exchange for a $500,000 investment and write-off of
$1.6 million he loaned to the Debtors in 2007, Business Press
says. Affiliates would invest $7.1 million in loans and new
equity of 40% under the plan, Business Press noted.
Peninsula Capital Partners which is owed $14.5 million would get
$800,000 under the plan. Peninsula Capital counsel, Richard
Holly, Esq., at Santoro, Driggs, Walch, Kearney, Holley &
Thompson, alleged that Prudential Americana filed for bankruptcy
to reduce its loan and to keep it atop the market, Business Press
states.
Prudential Americana disclosed that its value has dwindled down
from $24.3 million to $3.7 million, impairing the security of
Peninsula Capital, Business Press says.
Under the plan, Zions First National Bank would be satisfied
through the first mortgage it holds, Business Press reports.
About Prudential Americana
Las Vegas-based Americana Holdings LLC, dba Prudential Americana
Group Realtors(R), -- http://americanagroup.net/-- is owned by
Stark 2004 Inc., a Nevada corporation. Until Nov. 5, 2007, the
ownership of Holdings was divided between Stark 2004 Inc. (1%) and
Stark 2000 LLC, a Nevada limited liability company (99%). Stark
2000's ownership interest in Holdings was conveyed to Stark 2004
to streamline the ownership and enable more certain tax treatment
on account of the bankruptcy cases. Holdings owns 100% of each
of: (i) Americana; (ii) A-Title, (iii) Americana MJV 2006 LLC; and
(iv) Remembrance LLC. Chapter 11 petitions have not been filed by
the latter two companies. Remembrance is a defunct company that
will be dissolved under state law.
A-Title LLC was incorporated on Nov. 8, 2001, and 100% owned by
Holdings. A-Title owns 37.5% of Equity Title LLC. It is not the
managing member, and holds only a passive equity position in
Equity Title. As co-maker of certain secured notes, it has filed
a Chapter 11 bankruptcy petition with the other entities that are
co-makers of the notes.
Americana LLC is a party to a Real Estate Brokerage Franchise
Agreement dated March 24, 1999, as amended, between The Prudential
Real Estate Affiliates Inc. as franchisor and Americana as
franchisee. Americana is 100% owned by Holdings. Americana is
the operating entity of the Debtor group, and also owns 100% of
each of (i) Referral; and (ii) SPO Payroll LLC, a company that is
defunct and will be dissolved under state law.
American Eagle Referral Service LLC is 100% owned by Americana and
acts as its own brokerage and hires inactive agents and words to
procure referred clients from these agents. These clients are
referred into Americana LLC to facilitate a real estate
transaction and a referral fee is paid to Referral for this
business. Referral subsequently has an agreement with the agents
for a percentage of the referral compensation that is paid.
A-Title, Americana, Americana Holdings, and Referral filed for
chapter 11 bankruptcy on Nov. 27, 2007 (Bankr. D. Nev. Lead Case
No. 07-17844) with A-Title as lead-debtor. Rob Charles, Esq., and
Susan M. Freeman, Esq., at Lewis and Roca LLP represent the Debtor
in their restructuring efforts. When the Debtors filed for
bankruptcy, they listed assets and liabilities between $1 million
to $100 million.
QUALITY DISTRIBUTION: Moody's Junks B3 Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family and
probability of default ratings of Quality Distribution (QDI) to
Caa1 from B3 and changed the ratings outlook to stable from
negative.
The downgrades reflect the weakened economic environment that has
begun to impact QDI's shipping volumes. In March and April 2008
volumes declined 5%, though the company raised prices 3%, which
helped partially offset the volume decline. In Moody's view
economic weakness will continue impacting QDI's operating
performance at least into early 2009 and will cause free cash flow
generation at approximately a break even level.
For the last 12-month period ended March 31, 2008, the company's
leverage ratio was 7.6 times on a Moody's adjusted basis; although
this metric should improve in fiscal year 2008 due to the full
year impact of Boasso, which was acquired in December 2007, low
likelihood now exists of QDI's earnings improving over 2008 such
that leverage would decline materially below the 7.0 times level.
The stable outlook reflects QDI's leading position in the tank
truck market and an adequate liquidity profile. As of March 31,
2008 QDI had cash of $2.7 million and borrowing availability of
$55.5 million under its asset-backed revolving credit facility. A
minimum fixed charge covenant test on the revolving credit
facility would apply if availability were to decline below
$20 million.
The stable outlook also reflects cost-cutting measures, including
a 17% headcount reduction that QDI has recently undertaken in
response to weaker shipping volumes. The company's ability to
reduce costs and remain efficient while managing through the soft
demand period, and turning around unprofitable affiliates recently
acquired, will impact the potential for upward ratings momentum
once volumes return and free cash flow turns materially positive.
These ratings that have been downgraded:
-- Corporate family rating to Caa1 from B3
-- Probability of default to Caa1 from B3
-- $135 million senior unsecured floating rate notes due 2012 to
Caa2 LGD 4, 61% from Caa1 LGD 4, 58%,
-- $125 million senior subordinate 9% notes due 2010 to Caa3 LGD
5, 88% from Caa2 LGD 5, 88%.
Quality Distribution, LLC and its parent holding company, Quality
Distribution, Inc., are headquartered in Tampa, Florida. The
company is a leading transporter of bulk liquid and dry bulk
chemicals. Apollo Management, L.P. owns approximately 52% of the
common stock of Quality Distribution, Inc.
RESIDENTIAL CAPITAL: FDIC Gives GMAC 10-Yr Waiver on Banking Unit
-----------------------------------------------------------------
GMAC Financial Services on Wednesday said the Federal Deposit
Insurance Corporation has granted a 10-year extension of GMAC
Bank's current ownership by extending the existing disposition
requirement that was established in connection with the sale of a
majority stake in GMAC.
The Wall Street Journal's Aparajita Saha-Bubna says the FDIC's
decision was a much needed boost for GMAC, which allows the
financing arm of General Motors Corp. to raise funds at
competitive rates.
"We are very pleased with the FDIC's prompt action on our waiver
request," said GMAC Chief Executive Officer Alvaro G. de Molina.
"The long-term extension granted by the FDIC will permit us to
strengthen GMAC Bank, which provides an important source of
funding for mortgage and automotive financing activities.
"This development along with the successful completion of the
global refinancing announced last month helps to enhance
flexibility during this turbulent market environment," said de
Molina.
The FDIC's action includes requirements related to capital levels
at GMAC Bank and the company as a whole.
"It's a positive on the funding side," said Richard Hofmann, an
analyst at independent research firm CreditSights, according to
the Journal. Mr. Hofmann, the Journal quotes, said GMAC Bank has
"become a more critical funding source for the company as the
credit crisis has heightened," citing that "[a] bank is an easier
way to bring in funding at a very competitive price."
GMAC Bank, according to the Journal, is a so-called industrial-
loan corporation, which are FDIC-supervised lenders that offer a
way for commercial firms to own banks without being regulated by a
federal banking agency.
According to the Journal, when Cerberus bought a 51% GMAC stake,
the FDIC had imposed a moratorium on the approval of banks owned
by nonfinancial companies, like Wal-Mart Stores Inc., to allow
Congress to debate the issue of mixing banking and commerce.
Despite the freeze, the Journal continues, the FDIC granted
Cerberus and GMAC's application because of "the unique
circumstances" of GM's restructuring. In exchange, GMAC and
Cerberus were to satisfy one of several conditions by November:
-- sell GMAC Bank;
-- have the bank cease using FDIC insurance; or
-- register as a bank holding company.
If none of these terms could be achieved, Cerberus would have to
get an FDIC waiver, the Journal says.
FDIC Waiver Good for Rescap Too
According to the Journal, as the credit crunch has made short-term
financing costly and scarce, GMAC Bank's $15.3 billion in deposits
and $10.8 billion in Federal Home Loan Bank advances have become
increasingly important sources of stable, low-cost funding,
particularly for Residential Capital LLC, GMAC's struggling
mortgage subsidiary.
Mr. Hofmann, the Journal relates, said the FDIC waiver is
important for ResCap because it has difficulty getting funds on an
unsecured basis.
"Look at GMAC bank, it's loaded up with mortgages," the Journal
quotes Mr. Hofmann as saying.
The Journal says more than two-thirds of GMAC Bank's $30.3 billion
assets as of the first quarter were made up of mortgage assets as
prime loans, which are made to those with strong credit. GMAC
Bank accounted for about 30% of ResCap's funding in 2007, the
Journal says.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit
of GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
* * *
As disclosed in the Troubled Company Reporter on June 18, 2008,
Moody's Investors Service assigned ratings of Caa2 and Caa3 to
Residential Capital LLC (ResCap)'s senior secured and junior
secured bonds, respectively. These bonds were issued as part of
ResCap's bond exchange which was completed on June 4, 2008. The
ratings of ResCap's unsecured senior debt and unsecured
subordinate debt were affirmed at Ca and C, respectively. Ratings
are under review for downgrade. Separately the senior unsecured
rating of GMAC LLC was downgraded to B3 from B2 with a negative
outlook.
As disclosed in the Troubled Company Reporter on June 9, 2008,
Fitch Ratings has downgraded Residential Capital LLC's long- and
short-term Issuer Default Ratings to 'D' from 'C' following
completion of the company's distressed debt exchange. Fitch has
also removed ResCap from Rating Watch Negative, where it was
originally placed on May 2.
RESIDENTIAL CAPITAL: S&P Lifts Counterparty Credit Rtng to CCC+/C
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its counterparty credit
rating on Residential Capital LLC to 'CCC+/C' from 'SD' (selective
default). The outlook is negative.
S&P also assigned issue and recovery ratings to Residential
Capital LLC's $1.67 billion, 8.5% senior secured guaranteed notes
due 2010; its $4.0 billion, 9.625% junior secured guaranteed notes
due 2015; and its unsecured debt. Residential Capital LLC's senior
secured notes (second lien) were rated 'CCC+', equal to the long-
term counterparty credit rating, with a recovery rating of '3'
indicating expectations for a meaningful recovery (50%-70%) in the
event of default. Residential Capital LLC's junior secured notes
(third lien) were rated 'CCC-', two notches below the long-term
counterparty credit rating of 'CCC+', with a recovery rating of
'6', indicating expectations for a negligible recovery (0%-10%) in
the event of a default. Residential Capital LLC's unsecured debt
was rated 'CCC-', two notches below the long-term counterparty
credit rating of 'CCC+', with a recovery rating of '6', indicating
expectations for negligible recovery (0%-10%) in the event of a
default.
"The counterparty credit rating reflects Residential Capital LLC's
still-strong market position in its core residential mortgage
banking businesses, and its geographic diversification. However,
these positives are overwhelmed by developments in the mortgage
business in general and at Residential Capital LLC more
specifically," said Standard & Poor's credit analyst John K.
Bartko, C.P.A. The company's exposures to high-risk asset types
and its wholesale funding profile resulted in massive valuation
and loss charges, while the wholesale funding presented additional
challenges as the company navigated through a liquidity crisis.
Indeed, various support efforts on the part of GMAC LLC (B/Watch
Neg/C) and ultimate parents General Motors Corp. (GM; B/Watch
Neg/--) and Cerberus (unrated) are the reasons for Residential
Capital LLC's solvency to date. Finally, Residential Capital LLC
executed on a debt exchange that S&P considered distressed and
coercive. S&P therefore lowered its rating on Residential Capital
LLC to 'SD' (selective default) on June 4, 2008, while the
affected debt issuances were lowered to 'D'. The exchange
highlights the company's precarious position.
Residential Capital LLC operates as a global real estate finance
company, and since inception, its operations have been separate
and distinct from those of its parent company, GMAC. Residential
Capital LLC is an indirect wholly-owned subsidiary of GMAC which
itself is 51% owned by a consortium led by Cerberus FIM Investors
LLC and 49% by GM. It is a noncaptive finance company, and
although GMAC management has expressed no intention, S&P assume
that GMAC could divest its stake in Residential Capital LLC.
Residential Capital LLC's debt exchange reduced scheduled debt
maturities and decreased funding costs, affording the company
about two years before sizable unsecured debt matures. However,
mortgage market turmoil does not appear to be abating and
therefore the outlook is negative. The company remains highly
vulnerable to issues related to out-of-favor mortgage assets and
to reduced support capacity and/or willingness on the part of
GMAC, GM, and Cerberus.
SALTON INC: S&P Withdraws Ratings After Proposed Spectrum Deal
--------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on small
appliance manufacturer Salton Inc. and its wholly owned
subsidiary, Applica Pet Products LLC, including the 'B+' corporate
credit ratings on both entities. These ratings were based upon
Salton Inc.'s proposed acquisition of the global pet business from
Spectrum Brands Inc. (CCC+/Watch Pos/--). Proceeds from the
proposed bank loan facility to Applica Pet were to finance the
acquisition by Salton. On July 14, 2006, both parties announced
that it terminated the sale agreement, thus S&P are withdrawing
all related ratings.
SARATOGA RESOURCES: Completes $105 Million Cash Buyout of Harvest
-----------------------------------------------------------------
Saratoga Resources Inc. completed the acquisition of Harvest Oil &
Gas LLC and The Harvest Group LLC.
Under the terms of the acquisitions, Saratoga paid an aggregate of
$105,683,000 in cash and issued 4,900,000 shares of Saratoga
common stock for 100% of ownership of both Harvest companies.
Pursuant to the terms of the acquisitions, a portion of the cash
paid was applied to retire all existing bank debt of Harvest and a
portion of the cash paid and shares of stock issued were applied
to eliminating an existing net profits interest in Harvest's
properties.
Financing for the Harvest acquisition was provided through a $97.5
million second lien senior note facility and a $25 million first
lien senior revolving credit facility. Pursuant to the terms of
the second lien note facility, Saratoga issued a warrant to
purchase an aggregate of 805,515 shares of common stock at $0.01
per share.
Macquarie Americas Corp., a subsidiary of Macquarie Group,
received 3,300,000 of the shares of common stock issued pursuant
to the acquisition, or approximately 20.8% of the outstanding
shares after the acquisition.
"We are extremely pleased to have completed the Harvest
acquisitions and associated financing and look forward to
continuing to develop what we believe is a very promising
portfolio of properties and a great first step in implementing our
plan to acquire, develop and operate strategic oil and gas
properties with unrealized value," Thomas Cooke, chairman and CEO
of Saratoga, stated. "Most of the Harvest team will stay in
Covington where we will grow our presence as well as open an
office in Houston."
About Harvest Oil & Gas LLC and The Harvest Group LLC
Based in Covington, Louisiana, Harvest owns, manages and operates
producing oil and gas properties in South Louisiana onshore and
the state waters of the Gulf of Mexico. Proved reserves of
Harvest totaled 67.3 bcfe or 66% gas versus oil based on a Jan. 1,
2008, third-party engineering report. Average daily net
production of Harvest for May 2008 was 1,656 bopd and 4,467
mcfgpd, or 2,401 boepd or 31% gas versus oil.
About Saratoga Resources Inc.
Based in Austin, Texas, Saratoga Resources Inc. (OTCBB: SROE) is
an energy development company. Saratoga's focus is on the
acquisition, development and exploration of energy resources while
maintaining operations and environmental standards. The company's
operations and operating assets are focused in the U.S. gulf coast
region.
As reported in the Troubled Company Reporter on May 29, 2008,
Saratoga Resources Inc.'s consolidated balance sheet at March 31,
2008, showed $1,097,429 in total assets and $1,927,268 in total
liabilities, resulting in a $845,606 total stockholders' deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $49,402 in total current assets
available to pay $1,927,268 in total current liabilities.
Going Concern Doubt
Saratoga had a cash balance of approximately $184 and a working
capital deficit of approximately $1,877,866 at March 31, 2008.
Saratoga during 2008 had limited capital resources and limited
operating revenues to support its overhead.
Saratoga is dependent upon its principal shareholder to provide
financing to support operations and ongoing cost control measures
to minimize negative cash flow.
SEA CONTAINERS: Employees Have Until August 25 to File Claims
-------------------------------------------------------------
The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware, at Sea Containers Ltd. and its debtor-
affiliates' request, issued a supplemental order establishing Aug.
25, 2008, as the bar date to file proofs of claim for current or
former employees holding, or wishing to assert claims against the
Debtors. Judge Carey also approved the proposed revised Bar Date
Notice and Proof of Claim form.
With respect to any employee residing in Great Britain that is
subject to the jurisdiction of the Courts of England & Wales, the
Employee Bar Date will apply solely to these claim categories:
(a) claims set forth under Category 5 of Schedule 6 for the
United Kingdom Insolvency Act 1986, which include certain
claims for remuneration and holiday remuneration;
(b) claims set forth under Sections 502(b)(7) and 507(a)(4) of
the Bankruptcy Code, which include certain claims for
damages resulting from termination of an employment
contract, and wages, salaries or commissions, like
vacation, severance and sick leave pay; and
(c) any other claims for remuneration, wages, salaries,
commissions, bonuses, overtime pay, vacation pay, holiday
pay, severance, deferred compensation, medical or sick
leave pay, health, insurance, savings and workers'
compensation benefits, reimbursable expenses, relocation
expenses, incentive payments, withholdings, deductions,
and benefits or deferred compensation relating to any
retirement or pension plan.
Judge Carey ruled that claims based solely on amounts, which are
or may be payable by the Debtors, the Sea Containers 1983 Pension
Scheme or the Sea Containers 1990 Pension Scheme as a result of,
or in connection with, current or former participation in either
of the Pension Schemes, will not be subject to the Employee Bar
Date.
The Court noted that (i) pursuant to the original Bar Date Order,
the current order will not apply to the Pension Trustees, which
are subject to the General Bar Date with respect to all claims
under the Pension Schemes, and (ii) an employee need not assert a
claim against the Debtors solely on a participation interest in
the Pension Schemes.
Judge Carey also directed the Debtors to publish the Revised Bar
Date Notice in the English edition of The London Times, at least
once 30 days prior to the Employee Claims Bar Date.
About Sea Containers
Based in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady,
Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in
their restructuring efforts.
The Official Committee of Unsecured Creditors and the Financial
Members Sub-Committee of the Official Committee of Unsecured
Creditors of Sea Containers Ltd. is represented by William H.
Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,
Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s
Official Committee of Unsecured Creditors is represented by
attorneys at Willkie Farr & Gallagher LLP.
In its schedules filed with the Court, Sea Containers disclosed
total assets of $62,400,718 and total liabilities of
$1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 45;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SEA CONTAINERS: SCL Panel Still Not Convinced of Pension Pact OK
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Sea Containers
Ltd. and its debtor-affiliates' Chapter 11 cases tell the
Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware that it still does not want the pension
scheme agreements approved because the amounts involved are
"unreasonable."
Post-Trial Submission:
Evidentiary Record Supporting
Pension Settlement Approval
A. Debtors
At Judge Carey's direction, the Debtors filed with the Court a
summary of the evidentiary record that supports their request for
approval of the Pension Settlement, specifically evidence
concerning:
(1) the Debtors' exercise of their business judgment in
analyzing and settling the Pension Claims;
(2) the Pension Settlement being more favorable to the
bankruptcy estates than various reasonable litigation
outcomes;
(3) the applicability of English Pensions Law to the Pension
Claims;
(4) Sea Containers Limited's present liability to the Pension
Schemes in amounts exceeding the settlement amount;
(5) the SCL Group's other participating employers' liability
to the Pension Schemes and SCL's exposure to future
Financial Support Directions, or FSDs, in connection with
pension liabilities, defined as debt;
(6) the liability of other entities in the SCL group under
future FSDs;
(7) the extent to which the Pension Settlement enables the
Debtors to achieve key goals, and obtain important
benefits that are unavailable absent settlement;
(8) the reasonableness of Neville Hosegood's calculations of
the debt under Section 75 of the Pensions Act 1995;
(9) the Pension Schemes' investment allocation and rates of
return, and their lack of relevance to the Debtors' buy-
out liability;
(10) the reasonableness of the equalization reserve component
of the Pension Settlement;
(11) the reasonableness of the administrative claim for
postpetition expenses incurred by the Pension Schemes;
(12) the FSDs' non-violation of the automatic stay and the
Official Committee of Unsecured of Sea Containers
Limited's awareness of the FSD proceedings; and
(13) the Pension Settlement not constituting a sub rosa plan
of reorganization.
The Debtors also pointed out that the Pension Settlement (i) is
the only realistic option for resolving the Pension Claims, (ii)
was the product of vigorous negotiations between the parties over
a lengthy period of time, (iii) facilitates the Debtors'
objectives, and (iv) provides additional protections to the
Debtors. They insist that rejection of the Pension Settlement
would put the bankruptcy estates at risk of severe consequences.
B. SCSL Committee and Pension Trustees
The Official Committee of Unsecured Creditors of Sea Containers
Services Limited, and the Trustees of the Pension Schemes also
submitted to the Court a summary of the evidentiary record that
supports the Debtors' request for approval of the Pension
Settlement, specifically evidence:
(1) showing that U.K. has the most significant relationship
to the valuation of the Pension Schemes' claims;
(2) concerning applicable U.K. pensions law;
(3) showing that the Pension Claims are reasonable, including
grounds that:
-- the buy-out basis is the appropriate measure for
valuing pension scheme liabilities, where the employer
is insolvent;
-- whether a Section 75 trigger has occurred or not is
irrelevant to the calculation of the Pension Claims;
and
-- the FSDs issued against SCL are based on the Pension
Schemes' buy-out deficits;
(4) showing the Pension Schemes' actuary's buy-out
calculations are reasonable because:
-- the Pension Schemes' actuary's estimates are
consistent with the U.K. buy-out market;
-- the SCSL Committee's expert opined that the
assumptions underlying the buy-out calculations are
reasonable;
-- the buy-out calculations performed by PwC are
consistent with Mercer Human Resource
Consulting, Ltd.'s calculations;
-- the purported "proposal" from Lucida PLC provides no
basis to conclude that the Pension Settlement is
unreasonable; and
-- of the SCL Committee's unsuccessful efforts to
discredit Mr. Hosegood's calculations;
(5) showing the 1983 Pension Scheme's December 31, 2005,
actuarial valuation and December 31, 2006, actuarial
report do not reflect the scheme's current funding
position because:
-- the 1983 Pension Scheme's statutory funding objective
and technical provisions as reflected in the 2005
Actuarial Valuation do not take into account the
Debtors' insolvency; and
-- the 1983 Pension Scheme's technical provisions as
reflected in the 2006 Actuarial Report do not take
into account the Debtors' insolvency;
(6) concerning the inapplicability of the investment
allocation and prudent investor rate proposed by the SCL
Committee's experts:
-- John Parks of Navigant Consulting, Inc., is not
qualified to render an opinion concerning the proper
investment allocation for U.K. pension schemes;
-- Mr. Parks' proposed investment allocation for the
Pension Schemes is neither prudent nor reasonable;
-- the 2007 edition of the Purple Book, a joint
publication of the Pensions Regulator and the Pension
Protection Fund, does not provide any support for
Mr. Parks' proposed investment allocation; and
-- the prudent investor rate has no relevance to the
valuation of the Pension Claims; and
(7) showing that the FSDs were not procured through a
violation of the automatic stay because:
-- the Pensions Regulator focused on the Pension Schemes'
financial condition prior to the Petition Date;
-- issuance of the FSDs does not implicate the automatic
stay;
-- the Debtors did not then, and do not now, contend that
issuance of the FSDs constitutes a violation of the
automatic stay;
-- the SCL Committee's awareness of, and involvement in
the FSD process; and
-- the SCSL Committee's actions before the Pensions
Regulator were necessitated by the Debtors' opposition
to the FSDs.
SCL Committee Still Not Convinced
on Pension Settlement's Approval
In its post-trial submission, the SCL Committee argues that the
Settlement Amount assumes a statutory entitlement that does not,
and may not exist, and that it was calculated using improper
methodology by an interested party.
The SCL Committee also asserts, among other things, that:
(1) the Pension Trustees' contribution demands do not trigger
a present Section 75 buy-out liability, and are invalid
in any event;
(2) Mr. Hosegood did not employ the methodology required by
Section 75 and Regulation 5(12) of the Occupational
Pension Schemes Regulations 2008 in calculating the
buy-out debt;
(3) even under English law, the Court is not bound by Mr.
Hosegood's calculation of the Section 75 buy-out debt,
and is free to consider the work of other actuaries in
determining the Pension Claims;
(3) allowing the Pension Schemes to establish the quantum of
the Pension Claims through their own actuary violates
U.S. policy;
(4) where no Section 75 debt has been triggered, and the
services agreement between SCL and SCSL, does not provide
an indemnity for a Section 75 debt, the actual damage
measure -- as calculated on the technical provisions or
under the prudent investor rule -- is the proper measure
of the Pension Claims;
(5) if English law applies, Mr. Hosegood's calculation on the
technical provisions is the proper measure of the scheme
deficit;
(6) Mr. Hosegood's technical provisions calculation assumed
SCL's insolvency and status as a Chapter 11 debtor-in-
possession;
(7) the Pension Claims arise, and may be allowed only against
Sea Containers Services, Limited;
(8) the FSDs were procured and issued in violation of the
automatic stay, and should not be accorded comity;
(9) the Pension Settlement's treatment of the Pension
Schemes' expenses as administrative costs is
unreasonable;
(10) the Pension Settlement's proposed process for resolving
the purported equalization claim is inappropriate, and
the equalization reserve is unreasonable;
(11) the Pension Settlement must be rejected as a sub rosa
plan of reorganization; and
(12) the Pension Settlement's common-currency term restricts
the plan, and violates the sub rosa rule.
SCL Committee Ignores Court's Directions
At the close of the hearing held May 29, 2008, to consider the
approval of the Pension Settlement, parties were instructed to
submit "abbreviated" post-trial submissions, which were to
comprise basically of citations to the record that support the
various points they want to highlight to the Court.
In response to a question by counsel for the Debtors as to
whether the Court envisioned the submissions taking the form of a
"suggested set of findings and conclusions," the Court clarified
that the submissions should "not even [be] that formal," though
"more like that than a legal brief."
The Debtors' counsel, Yosef Riemer, Esq., at Kirkland Ellis LLP,
confirmed to the Court that the parties had obtained a copy of
the post-trial submission in the New Century bankruptcy case to
which the Court referred, and had agreed to submit their post-
trial submissions based on the New Century model on June 27. No
party objected to Mr. Riemer's statement.
In compliance with the Court's direction, the SCSL Committee and
the Debtors filed their post-trial submissions based on the New
Century model, relates David B. Stratton, Esq., at Pepper
Hamilton LLP, in Wilmington, Delaware. The SCL Committee,
however, filed a "formal legal brief that contained substantive
legal arguments and citations to case law," Mr. Stratton says.
Although the SCSL Committee does not believe that the SCL
Committee's post-trial brief will have any impact on the outcome
of the Settlement Request, the extent to which the SCL Committee
has completely and unfairly disregarded the Court's directions
compels the SCSL Committee to bring the matter to Judge Carey's
attention, Mr. Stratton points out.
Mr. Stratton asserts that the SCSL Committee fully recognizes
that the added cost and delay of additional briefing at this late
stage would very likely outweigh any marginal benefit to the
Court. Therefore, the SCSL Committee tells the Court, it is not
seeking an opportunity to submit a response to the SCL
Committee's post-trial brief.
"The [SCSL] Committee is confident that the Court will even the
playing field by disregarding arguments to which the [SCSL]
Committee has not had the opportunity to respond," Mr. Stratton
says.
About Sea Containers
Based in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady,
Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in
their restructuring efforts.
The Official Committee of Unsecured Creditors and the Financial
Members Sub-Committee of the Official Committee of Unsecured
Creditors of Sea Containers Ltd. is represented by William H.
Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,
Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s
Official Committee of Unsecured Creditors is represented by
attorneys at Willkie Farr & Gallagher LLP.
In its schedules filed with the Court, Sea Containers disclosed
total assets of $62,400,718 and total liabilities of
$1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 45;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SHOE PAVILION: Files for Chapter 11 Protection in California
------------------------------------------------------------
Shoe Pavilion, Inc. and its wholly-owned subsidiary, Shoe Pavilion
Corporation, filed voluntary petitions for relief under Chapter 11
of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the
Central District of California.
Christopher Scinta of Bloomberg News, citing papers filed with the
Court, says Shoe Pavilion listed assets of $61,000,000 and debts
of $27,000,000. Shoe Pavilion traded 16.5 cents on July 16, 2008,
New York time in Nasdaq Stock Market, giving the company a market
value of $1,570,000, he notes.
According to the company's regulatory filing with the Securities
and Exchange Commission, the Debtors will continue to operate
their business as "debtor-in-possession" under the jurisdiction of
the Court.
On June 19, 2008, Shoe Pavilion received a written notice from The
Nasdaq Stock Market indicating that the company fails to comply
with the minimum bid price requirement for continued listing on
the Nasdaq Global Market because the bid price of its common stock
has closed below the Nasdaq minimum bid price listing requirement
of $1.00 per share for 30 consecutive business days. The company
has until Dec. 16, 2008, to regain compliance with the Nasdaq
minimum bid price requirement.
Shoe Pavilion reported total assets of $60,994,000 and total
debts of $42,180,000, for the quarter period ended March 29, 2008.
A full-text copy of the company's Form 10-Q is available for free
at http://ResearchArchives.com/t/s?2f8b
Headquartered in Sherman Oaks, California, Shoe Pavilion, Inc.
(NasdaqGM: SHOE) -- http://www.shoepavilion.com/-- sells branded
footwear and accessories. The company operates 115 stores in
Washington, Oregon, California, Arizona, Nevada, Texas and New
Mexico.
SHOE PAVILION CORP: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Shoe Pavilion Corporation
13245 Riverside Drive, Suite 450
Sherman Oaks, CA 91423
Bankruptcy Case No.: 08-14941
Type of Business: The Debtor is engaged in the retail of footwear
and accessories.
Chapter 11 Petition Date: July 15, 2008
Court: Central District Of California (San Fernando Valley)
Judge: Maureen Tighe
Debtor's Counsel: Ron Bender, Esq.
Email: rb@lnbrb.com
10250 Constellation Blvd., Suite 1700
Los Angeles, CA 90067
Tel: (310) 229-1234
Estimated Assets: $50 million to $100 million
Estimated Debts: $10 million to $50 million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Gilbert West, Inc. $456,001
P.O. Box 89-4417
Los Angeles, CA 90189
Tel: (909) 393-7575
New Balance Athletic $324,302
P.O. Box 31978
Hartford, CT 06150-1978
Tel: (800) 343-4648, Ext. 2294
Attn: Linda Corbin
Bordon Shoe Company $309,562
4335 E. Valley Blvd.
Los Angeles, CA 90032
Tel: (323) 227-5100
Attn: Joe Corpus
Ad Marketing, Inc. $253,045
1801 Century Park East
Suite 20th Floor
Los Angeles, CA 90067
Tel: (310) 203-8400
Attn: Tim Beltzer
Asics American Corpo $196,166
Bozzolo, Inc. $193,216
Grant Thorton LLP $161,306
Meynard Trading Comp $161,040
Arthur J. Gallagher $142,732
Ad Art, Inc. $131,889
Adidas Sales, Inc. $128,513
121 Retail Ventures $127,372
Ellis Contracting $125,063
Clarks of England $120,700
Carrini, Inc. $120,360
Reebok International $117,583
Diesel USA $111,212
Keds Corporation $100,165
Blue Cross of California $97,726
Naturalizer (Brown Shoe) $95,310
SPRINT NEXTEL: In Initial Talks with SK Telecom on Joint Venture
----------------------------------------------------------------
Sprint Nextel Corp. and SK Telecom Co. Ltd. are in preliminary
discussion to create a strategic partnership aimed to develop new
handsets and services, The Wall Street Journal says.
WSJ, citing people familiar with the matter, states, the companies
have considered the idea of SK Telecom making a minority
investment in Sprint, but they aren't discussing an outright
merger. Last fall, Sprint rejected a $5 billion investment offer
by SK Telecom and Providence Equity Partners, The Journal
indicates.
Any investment, according to WSJ, resulting from the current talks
would likely be smaller. WSJ adds that Sprint has a market
capitalization of $26 billion, about double of SK Telecom's market
capitalization of $13.8 billion.
The strategic-partnership negotiations are at an early stage and
may not result in any agreements between the companies, WSJ said
quoting one of the people.
WSJ relates that Sprint shares soared in July 14 afternoon trading
after a CNBC report said SK Telecom was in talks to buy Sprint.
Shares closed up 9.4% at $9.04 in 4 p.m. trading on the New York
Stock Exchange, WSJ adds.
About SK Telecom Co. Ltd.
Based in Seoul, South Korea, SK Telecom Co. Ltd. (SEO:017670) --
http://www.sktelecom.com/-- is a wireless telecommunications
services provider. The company had approximately 22 million
subscribers as of Dec. 31, 2007. SK Telecom provides services,
including cellular voice services; wireless data services, and
digital convergence and new businesses. The company provides
wireless voice transmission services to its subscribers through
its cellular networks and also offers wireless global roaming
services though service agreements with various foreign wireless
telecommunications service providers. SK Telecom also provides
wireless data transmission services, including wireless Internet
access services, which allow subscribers to access a range of
online digital contents and services, well as to send and receive
text and multimedia messages, using their mobile phones.
About Sprint Nextel
Sprint Nextel Corp. -- http://www.sprint.com/-- offers a
comprehensive range of wireless and wireline communications
services bringing the freedom of mobility to consumers, businesses
and government users. Sprint Nextel is widely recognized for
developing, engineering and deploying innovative technologies,
including two robust wireless networks serving about 54 million
customers at the end of the fourth quarter 2007; industry-leading
mobile data services; instant national and international walkie-
talkie capabilities; and a global Tier 1 Internet backbone.
* * *
As reported in the Troubled Company Reporter on May 2, 2008,
Standard & Poor's Rating Services lowered its corporate credit and
senior unsecured ratings on Sprint Nextel Corp. to 'BB' from
'BBB-' and removed the ratings from CreditWatch with negative
implications. The outlook is stable.
TORRENT ENERGY: Gets Final Okay to Access YA Global's $4.5MM Loan
-----------------------------------------------------------------
The Hon. Elizabeth Perris of the U.S. Bankruptcy Court for the
District of Oregon authorized Torrent Energy Corp. and its debtor-
affiliates to obtain, on a final basis, up to $4.5 million in
debtor-in-possession financing from YA Global Investment LP, as
lender.
As reported in the Troubled Company Reporter on June 11, 2008, the
Debtors were permitted to borrow up to $1.34 million, on the
interim. The proceeds of the loan will be used for working
capital purposes -- including payment of professional services
fees, salaries, and operating expenses. Furthermore, the proceeds
will also be used to pay the promissory note issued by the Debtors
to lender on May 15, 2008, in the amount of $207,854 plus accrued
interest, payment of certain subsidiary debt, and other purposes,
as approved by lender.
The facility will bear interest at 12% per annum.
According to court documents, the DIP facility is subject to
carve-outs for payments to professional advisors to the Debtors or
the committee, and fees required to be paid to the U.S. Trustee
and clerk of the Bankruptcy Court. There is a $250,000 carve-out
for payments of fees and expenses incurred by professional
advisors retained by the Debtors or the committee.
To secure the Debtors' DIP obligations, the lender will be granted
a lien on substantially all of the Debtors' assets. The liens
will have priority and senior secured status over all other claims
and interests.
The DIP lien contains customary and appropriate events of
defaults. Failure to confirm a plan of reorganization is an event
of default. As reported in the Troubled Company Reporter on July
9, 2008, the Debtor submitted to the Court a Chapter 11 plan of
reorganization and a disclosure statement explaining that plan.
The Plan is expected to include a rights offering, under which the
shareholders of the Debtors will have the opportunity to purchase
a minimum of $2 million of additional new equity, subject to
Bankruptcy Court approval and other conditions.
As reported in the Troubled Company Reporter on June 5, 2008, the
Debtors are party to an investment agreement, dated as of June
28, 2006, with YA Global, formerly Cornell Capital Partners, L.P.
Under the agreement, the Debtors issued to YA Global 25,000 shares
of Series E Convertible Preferred Stock.
According to the Debtors' regulatory filing with the Securities
and Exchange Commission, on July 1, 2008, the Debtors failed to
make a mandatory redemption payment required under the terms of
the investment agreement, upon which YA Global may require the
Debtors to redeem all or any portion of their preferred stock.
About Torrent Energy
Headquartered in Portland, Oregon, Torrent Energy Corporation fka
iRV Inc. -- http://www.torrentenergy.com/-- engages in natural
gas exploration. The company and two of its affiliates filed for
Chapter 11 protection on June 2, 2008 (Bankr. D. Ore Led Case
No.08-32638 through 08-32640). Jeanette L. Thomas, Esq., at
Perkins Coie LLP, represents the Debtors in their restructuring
efforts. The U.S. Trustee for Region 18 has not appointed
creditors to serve on an Official Committee of Unsecured
Creditors.
The Debtors' consolidated balance sheets listed total assets of
$35,955,866 and total debts of $23,073,091 for the quarterly
period ended Dec. 31, 2007.
TRIAD GUARANTY: S&P Withdraws Ratings at Company's Request
----------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'BB-' counterparty
credit and financial strength ratings on Triad Guaranty Insurance
Corp. and its 'B-' counterparty credit rating on Triad Guaranty
Inc. at the company's request.
All these ratings had been on CreditWatch with negative
implications since Feb. 13, 2008. S&P had lowered all of these
ratings by four notches on July 3, 2008.
"The speculative-grade ratings reflected the tremendous
uncertainty regarding Triad's ultimate paid claims," explained
Standard & Poor's credit analyst James Brender. "Significant
operating losses in 2008 and 2009 will deplete a material portion
of Triad's capital base, but S&P believe Triad will be able to
satisfy its policyholder obligations. The holding company faces
some liquidity risk, but S&P expect that Triad's ending book value
will be significantly greater than its outstanding debt."
The uncertainty in S&P's forecast stems from both macroeconomic
conditions and some issues specific to Triad. The S&P Case-
Shiller 20-city composite has declined 17.8% since its peak in
July 2006, and it believe it will fall further. Unemployment is
also a concern. The unemployment rate jumped to 5.5% in May.
Since April 2008, S&P's forecasts for all mortgage insurers assume
a rise in the unemployment rate to almost 6% by 2009, but
unemployment above that level would probably result in more claims
for mortgage insurance than it anticipate.
Triad's insured loan portfolio contains a low percentage of
borrowers with credit scores below 620, but it also features
exposure to untested mortgage products. If actual claim rates are
even moderately greater than S&P's expectations, there is a
material probability that Triad will be unable to pay its claims.
The resolution of a disputed reinsurance treaty will have a
material impact on Triad's claims-paying resources. The coverage
of $95 million becomes available if Triad's combined ratio exceeds
100% and its risk-to-capital ratio is above 25%. Both conditions
were satisfied at the end of the first quarter, but the reinsurer
declared the treaty terminated because of an alleged covenant
violation by Triad. The parties have submitted the matter for
arbitration. The present value of the treaty is about $80 million
because Triad would have to make some future premium payments to
receive payment for reinsured losses.
Standard & Poor's cannot determine the likely outcome from the
arbitration. In S&P's base case, Triad's ending statutory capital
would be $363 million if it receives the full amount of coverage.
Alternatively, the company's capitalization would only be
$283 million if it receives nothing for the treaty.
Triad's competitive position, management, operating performance,
and enterprise risk management were not important factors in our
rating actions on July 3, 2008, because S&P viewed the company as
being in run-off. Management has limited options for influencing
Triad's ability to pay its claims with the important exception of
loss mitigation. Triad needs to either maintain adequate
personnel for loss mitigation and premium collection functions or
outsource those operations.
US SHIPPING: Anthony Guzzo Resigns as Chief Accounting Officer
--------------------------------------------------------------
Anthony Guzzo resigned effective July 7, 2008, as the vice
president—chief accounting officer of U.S. Shipping Partners, L.P.
in order to accept employment with another company. Mr. Bergeron,
the partnership's vice president—chief financial officer, will
assume Mr. Guzzo's duties as chief accounting officer.
About U.S. Shipping
U.S. Shipping Partners L.P. (NYSE: USS) -- http://www.usslp.com/
-- is a leading provider of long-haul marine transportation
services, principally for refined petroleum products,
petrochemical and commodity chemical products, in the U.S.
domestic "coastwise" trade. The partnership's existing fleet
consists of eleven tank vessels: six integrated tug barge units;
one product tanker; three chemical parcel tankers and one ATB that
was delivered in June 2007 and entered service in July 2007.
At March 31, 2008, the partnership's consolidated balance sheet
showed $707.2 million in total assets, $544.8 million in total
liabilities, $50.9 million in noncontrolling interest in joint
venture, and $111.5 million in total partners' capital.
* * *
As reported in the Troubled Company Reporter on May 15, 2008,
Moody's Investors Service lowered its debt ratings of U.S.
Shipping Partners L.P. -- Corporate Family and Probability of
Default, each to Caa3 from Caa1, senior secured to Caa2 from B3
and second lien senior secured to Ca from Caa3. The rating
outlook is negative.
VERTIS INC: Moody's Assigns Default Rating after Bankruptcy Filing
-----------------------------------------------------------------
Moody's Investors Service has downgraded Vertis, Inc's.
Probability of Default rating to D from Ca , following the
company's statement that it has filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code,
accompanied by a pre-packaged plan of reorganization, the terms
and conditions of which have been accepted by its noteholders.
Moody's plans to withdraw all of Vertis's ratings shortly.
Details of the rating actions are:
Vertis Inc.
Rating downgraded, subject to withdrawal:
-- Probability of Default rating to D from Ca
Ratings affirmed, subject to withdrawal:
-- Corporate Family rating -- Ca
-- $350 million 9.75% secured second lien notes due 2009 --
Caa2, LGD2, 23%
-- $350 million 10.875% senior notes due 2009 -- Ca, LGD4, 69%
-- $284 million 13.5% senior subordinated notes due 2009 -- C,
LGD6, 91%
Headquartered in Baltimore, Maryland, Vertis Inc. is a leading
provider of integrated advertising products and marketing
services. The company recorded fiscal 2007 revenues of
$1,365 million.
WHITEHALL JEWELERS: Court OKs Auction, Except on Break-Up Fee Term
------------------------------------------------------------------
The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District
of Delaware approved the bidding procedures proposed by Whitehall
Jewelers Holdings Inc. and its debtor-affiliates except on the
part regarding the break-up fee, The Deal's Jamie Mason writes,
citing Moses & Singer LLP, counsel to the Official Committee of
Unsecured Creditors.
The Troubled Company Reporter said on July 1, 2008, that the
Debtors requested the Court, among others, for authority to enter
into an asset purchase agreement with Great American Group LLC,
Hudson Capital Partners LLC and Silverman Jeweler Consultants
Inc.; and to approve payment of a break-up fee of $940,000 payable
from the proceeds of a sale to or conducted by a competing bidder.
Judge Gross found that the break-up fee wasn't set as an
appropriate administrative expense and is not in the best interest
of the estate, Mr. Kolod said, The Deal relates.
The stalking horse bidder group may not participate in the auction
after the break-up was denied, The Deal quotes Mr. Kolod as
stating.
The stalking horse bidders had agreed to pay the Debtors 55.5% of
inventory valued between $169 million and $177 million, The Deal
notes. Should the inventory's value fall between $138 million and
$145 million, the stalking horse bidders will pay 53.5%, The Deal
adds. With these agreement, the Debtors could get around
$73.8 million to $98.2 million, The Deal suggests.
The Committee said that the sale process won't maximize the value
of the assets saying the sale is forced, The Deal notes. The
Committee also asserted that the sale schedule is "unreasonably
truncated," The Deal relates.
Accord to The Deal, Mr. Kolod doesn't know whether the Debtor will
look for another stalking horse bidder.
Judge Gross scheduled the public sale for July 31, 2008, at 11:00
a.m. at the offices of Proskauer Rose LLP. A sale hearing is
slated for Aug. 8, 2008, at 10:00 a.m. Objections to the sale are
due Aug. 6, 2008, at 10:00 a.m. Bids are due either on July 27 or
July 28, 2008. Due to the denial of the break-up fee, the
initially set minimum bid of at least 2% higher than the stalking
horse offered is canceled.
Consigned Goods
The Deal states that the disposal of the Debtor's $63 million
consigned items has not been resolved yet. Judge Gross will
decide on this matter at a July 24 hearing, according to a court
document. Mr. Kolod said that Judge Gross allowed the Debtor to
proceed with the sale amid uncertainties on the consignment good,
The Deal notes.
About Whitehall Jewelers
Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings,
Inc. -- http://www.whitehalljewellers.com/-- own and operate 375
stores jewelry stores in 39 states. Whitehall is owned by hedge
funds Prentice Capital Management and Millennium Partners LP, both
of New York, and Holtzman Opportunity Fund LP of Wilkes-Barre, Pa.
The company operates stores in regional and regional shopping
malls under the names Whitehall and Lundstrom. The Debtors'
retail stores operate under the names Whitehall (271 locations),
Lundstrom (24 locations), Friedman's (56 locations, and Crescent
(22 locations). As of June 23, 2008, the Debtors have about 2,852
workers.
The company and its affiliates, Whitehall Jewelers Inc., filed for
Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case
No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski,
Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl &
Jones, LLP, and Scott K. Rutsky, Esq., at Proskauer Rose LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as their claims, noticing
and balloting agent. Alan Kolod, Esq., at Moses & Singer LLP,
represents The Official Committee of Unsecured Creditors.
When the Debtors' filed for protection against their creditors,
they listed total assets of total assets of $207,100,000 and total
debts of $185,400,000.
WYOMING ETHANOL: Wants to Tap Standard Bank's $10.1 Mil. DIP Fund
-----------------------------------------------------------------
Wyoming Ethanol LLC and its debtor-affiliates last week asked
permission from the U.S. Bankruptcy Court for the District of
Wyoming in Cheyenne to access $10.1 million of its proposed
$24 million debtor-in-possession facility from Standard Bank Plc.
The Debtor also asked the Court's interim permission to use
lenders' cash collateral.
Standard Bank's DIP facility carries an interest rate of 4% plus
LIBOR and is guaranteed by the Debtor's non-bankrupt parent
company, Renova Energy Plc in the U.K.
The DIP facility's interest rate would be added 200 basis points
upon an event of default. It also carries 1% upfront commitment
fee, 1% unused line fee, and 1% closing fee on the $24 million
loan amount, The Deal's Terry Brennan states.
No final hearing on the DIP facility has been set.
Prepetition Capitalization
On June 28, 2007, the Debtors entered into a certain credit
agreement with the lenders and Standard Bank as prepetition line
of credit issuer, lead arranger and administrative agent.
Pursuant to the credit agreement, the prepetition lenders will
provide to the Debtors a revolving facility in the maximum
principal amount of $2.8 million and a term loan in the maximum
principal amount of $37.2 million. The Debtors' obligations to
the prepetition lenders under the credit facilities are secured
by: (a) substantially all of their personal property; (b) a
mortgage on REID's ground lease; (c) a mortgage on the Renova
Energy Inc. parcel; (d) a mortgage on the real property on which
Wyoming Ethanol's ethanol facility is located; (e) Renova UK's
equity interests in REI; and (f) an assignment of agreements,
plans and permits by REI and REID.
As of the petition date, the loan balance under the credit
agreement was about $28 million with a further $1.5 million drawn
under the revolving credit facility.
The Debtors own certain assets not encumbered by the prepetition
lenders' liens, including (i) real property located in Fountain,
co-owned by REI, (ii) 85 acres of land adjacent to the Wyoming
Facility owned by Wyoming Ethanol, and (iii) REI's 3% membership
interest in Bridgeport Ethanol LLC. The estimated value of these
assets is about $750,000. These assets will serve as additional
security for the proposed postpetition financing.
Renova UK guaranteed, among other things, all of the principal and
interest on the loans made to the Debtors under the credit
agreement, and all of the other Obligations.
Objections to DIP Facility
The U.S. Trustee Charles McVay said that under the Debtor's
interim DIP motion, unsecured creditors will shoulder payment of
loans owed to prepetition lenders, The Deal notes. Mr. McVay said
that other creditors' claims get wiped out through awarding
Standard Bank superpriority status under the DIP agreement, The
Deal says, citing court documents.
Creditor TIC-The Industrial Co. Wyoming Inc., which asserted
$476,850 in unsecured claim, claimed that unsecured creditors
expecting payment will be paid with nothing under the DIP
agreement, The Deal relates. TIC added that the Debtor does not
require the DIP fund. The DIP facility "will eliminate the
recovery of unsecured creditors in the the opening weeks of [the
case] before a [creditors'] committee is even formed, TIC
maintained, The Deal says.
About Wyoming Ethanol
Wyoming Ethanol, LLC, Renova Energy (ID), LLC, and Renova Energy,
Inc., the U.S.-based subsidiaries of Renova Energy plc,
manufacture ethyl and ethanol alcohol. Wyoming Ethanol owns and
operates an ethanol plant in Torrington, Wyoming and REID owns a
partially completed ethanol plant in Heyburn, Idaho. The Debtor
and its affiliates filed separate chapter 11 bankruptcy petitions
before the June 19, 2008 (Bankr. D. Wyo. Lead Case No. 08-20345).
Paul Hunter, Esq., in Cheyenne, and Thomas R. Califano, Esq., and
Vincent J. Roldan, Esq., at DLA Pipers US LLP represent the
Debtors. Wyoming Ethanol, LLC disclosed $10 million to $50
million in estimated assets and $10 million to $50 million in
debts when it filed for bankruptcy.
Renova Energy plc (RVA: AIM) -- http://www.renovaenergy.com/-- is
a U.K.-based renewable fuel company investing in a well
established integrated ethanol marketing, distribution and
production business in the Rocky Mountain and Northwest regions of
the USA. The company was admitted to trading on AIM, part of the
London Stock Exchange, in June 2005. Renova Energy Plc is a non-
bankrupt entity.
WYOMING ETHANOL: Unit May Use DIP Fund to Finish Idaho Plant
------------------------------------------------------------
Renova Energy (ID) LLC, debtor-affiliate of Wyoming Ethanol LLC,
obtained permission from the U.S. Bankruptcy Court for the
District of Wyoming in Cheyenne to borrow from Indiana E85
Distribution Co., LLC an amount not to exceed $25,000 under an
Idaho debtor-in-possession facility agreement. Upon entry of a
final order, REID is authorized to borrow from the lender an
amount not to exceed $250,000.
REID told the Court that its Idaho plant is merely 75% complete.
Because of the the incomplete nature of its Idaho plant,
unfavorable credit market conditions, and current problems in the
ethanol industry, REID said it has been unable to obtain
alternative financing.
The Court has set a final hearing on the Idaho DIP facility motion
for July 21, 2008. Objections are due July 17, 2008.
About Wyoming Ethanol
Wyoming Ethanol, LLC, Renova Energy (ID), LLC, and Renova Energy,
Inc., the U.S.-based subsidiaries of Renova Energy plc,
manufacture ethyl and ethanol alcohol. Wyoming Ethanol owns and
operates an ethanol plant in Torrington, Wyoming and REID owns a
partially completed ethanol plant in Heyburn, Idaho. The Debtor
and its affiliates filed separate chapter 11 bankruptcy petitions
before the June 19, 2008 (Bankr. D. Wyo. Lead Case No. 08-20345).
Paul Hunter, Esq., in Cheyenne, and Thomas R. Califano, Esq., and
Vincent J. Roldan, Esq., at DLA Pipers US LLP represent the
Debtors. Wyoming Ethanol, LLC disclosed $10 million to $50
million in estimated assets and $10 million to $50 million in
debts when it filed for bankruptcy.
Renova Energy plc (RVA: AIM) -- http://www.renovaenergy.com/-- is
a U.K.-based renewable fuel company investing in a well
established integrated ethanol marketing, distribution and
production business in the Rocky Mountain and Northwest regions of
the USA. The company was admitted to trading on AIM, part of the
London Stock Exchange, in June 2005. Renova Energy Plc is a non-
bankrupt entity.
WYOMING ETHANOL: Disclosure Statement Hearing Reset to August 13
----------------------------------------------------------------
Judge Peter McNiff of the U.S. Bankruptcy Court for the District
of Wyoming in Cheyenne moved a hearing to consider the adequacy of
Wyoming Ethanol LLC's disclosure statement from July 8, 2008, to
Aug. 13, 2008 in order to hear the Debtor's debtor-in-possession
facility motion, The Deal's Terry Brennan writes.
A separate story on the DIP facility is in today's copy of the
Troubled Company Reporter.
Treatment of Claims
The plan provides for the transfer of assets relating to the
Renova Energy (ID) LLC's incomplete ethanol plant in Idaho to
reduce claims against Renova Energy Inc. The plan also provides
for the restructuring of of REI's and Wyoming Ethanol's financial
affairs.
Supporting lenders will receive restructured senior secured debt
obligations of the reorganized Debtors. Holders of other secured
claims, which the Debtors estimate to be negligible, will either
be paid in full, be given collateral, or be provided other
treatment as may be agreed.
The secured claims of mechanic lienholders against REI parcel will
be unimpaired under the plan.
An amount of cash will be provided under the plan for unsecured
critical vendors. The Debtors believe the cash will provide a
full recovery for the unsecured critical vendors.
Claims of general unsecured creditors, expected to be negligible,
will be discharged under the plan for no consideration. There
will be no distribution for shareholders as well.
The Deal relates that the Debtor filed its bankruptcy plan and
accompanying disclosure statement on June 25, 2008. Under the
plan, The Deal says that Standard Bank would gain ownership under
a debt-for-equity swap. Unsecured Creditors won't get anything
under the plan, The Deal adds.
About Wyoming Ethanol
Wyoming Ethanol, LLC, Renova Energy (ID), LLC, and Renova Energy,
Inc., the U.S.-based subsidiaries of Renova Energy plc,
manufacture ethyl and ethanol alcohol. Wyoming Ethanol owns and
operates an ethanol plant in Torrington, Wyoming and REID owns a
partially completed ethanol plant in Heyburn, Idaho. The Debtor
and its affiliates filed separate chapter 11 bankruptcy petitions
before the June 19, 2008 (Bankr. D. Wyo. Lead Case No. 08-20345).
Paul Hunter, Esq., in Cheyenne, and Thomas R. Califano, Esq., and
Vincent J. Roldan, Esq., at DLA Pipers US LLP represent the
Debtors. Wyoming Ethanol, LLC disclosed $10 million to $50
million in estimated assets and $10 million to $50 million in
debts when it filed for bankruptcy.
Renova Energy plc (RVA: AIM) -- http://www.renovaenergy.com/-- is
a U.K.-based renewable fuel company investing in a well
established integrated ethanol marketing, distribution and
production business in the Rocky Mountain and Northwest regions of
the USA. The company was admitted to trading on AIM, part of the
London Stock Exchange, in June 2005. Renova Energy Plc is a non-
bankrupt entity.
WYOMING ETHANOL: Section 341(a) Meeting Slated for July 29
----------------------------------------------------------
The United States Trustee for Region 19 fixed a meeting of
creditors of Wyoming Ethanol LLC and its debtor-affiliates at
10:00 a.m., on July 29, 2008, at 308 West 21st Street, Second
Floor in Cheyenne, Wyoming.
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.
About Wyoming Ethanol
Wyoming Ethanol, LLC, Renova Energy (ID), LLC, and Renova Energy,
Inc., the U.S.-based subsidiaries of Renova Energy plc,
manufacture ethyl and ethanol alcohol. Wyoming Ethanol owns and
operates an ethanol plant in Torrington, Wyoming and REID owns a
partially completed ethanol plant in Heyburn, Idaho. The Debtor
and its affiliates filed separate chapter 11 bankruptcy petitions
before the June 19, 2008 (Bankr. D. Wyo. Lead Case No. 08-20345).
Paul Hunter, Esq., in Cheyenne, and Thomas R. Califano, Esq., and
Vincent J. Roldan, Esq., at DLA Pipers US LLP represent the
Debtors. Wyoming Ethanol, LLC disclosed $10 million to $50
million in estimated assets and $10 million to $50 million in
debts when it filed for bankruptcy.
Renova Energy plc (RVA: AIM) -- http://www.renovaenergy.com/-- is
a U.K.-based renewable fuel company investing in a well
established integrated ethanol marketing, distribution and
production business in the Rocky Mountain and Northwest regions of
the USA. The company was admitted to trading on AIM, part of the
London Stock Exchange, in June 2005. Renova Energy Plc is a non-
bankrupt entity.
XCOPPER SERVICES: Unsecured Creditors Claim C$1MM, Trustee Says
---------------------------------------------------------------
Grant Thornton Limited, appointed trustee in the bankruptcy case
of X-Copper Services Inc., said in its preliminary report that
claims submitted to the trustee consist of C$138,899 secured
claims, C$2,000 preferred claims, C$0 contingent claims, and
C$1,177,721 unsecured claims.
The Debtor's operations ceased on May 28, 2008, and the trustee
did not carry on any aspects of the business.
The trustee reported on the various assets of the Debtor. Other
assets of the Debtor consist of certain intellectual property,
including trademarks, a Web site, various telephone numbers and a
client list.
The inventory consists of about 6,000 active files and customer
lists. The trustee said it was not in a position to estimate any
value to these assets.
The company had only used office furniture and computers with
little value. The trustee determined that the cost of realization
would exceed the value of these assets and abandoned them. The
trustee confirmed the value of these assets with Infinity Assets,
a licensed auction and appraisal company.
The company operated out of leased premises in nine locations in
Canada, except Unionville and Oshawa locations. The principal of
the company owns the buildings at the Unionville and Oshawa
locations. As there were no operating funds, the trustee
disclaimed all leases and shortly after, the company filed for
bankruptcy.
At December 2007, outstanding receivables were stated at book
value of C$274,264. However, the trustee understands that some of
the accounts were collected prior to the date of bankruptcy. The
trustee is reviewing company records and determining any
outstanding receivables as of the date of bankruptcy.
The trustee received C$18,000 cash from a bank account at the date
of bankruptcy. The trustee has sent letters to various banks
requesting an update with respect to the accounts and to have all
funds forwarded to the trustee. The trustee understands that the
bank accounts were being operated on lines of credits.
On June 6, 2008, the trustee submitted an advertisement in local
newspapers requesting interested parties to submit bids for the X-
Copper assets by July 4, 2008. The trustee initiated an expedited
sale process in order to retain the value of the assets.
The trustee has compiled a sales package for interested bidders
and has distributed the sales packages to a number of parties.
There has been considerable interest in purchasing the business of
X-Copper, the trustee reported.
A full-text copy of the trustee's preliminary report is available
for free at http://ResearchArchives.com/t/s?2f84
The Troubled Company Reporter related on July 7, 2008, that when
X-Copper declared bankruptcy at the end of May 2008, several
thousand clients found themselves suddenly without legal
services. Many of those clients had paid for legal services in
advance and had no warning that the company was going to default
on those services. As Ontario's regulator of legal services, the
Law Society of Upper Canada will investigate the circumstances
that led to the company's bankruptcy. The investigation will
allow it to determine if any disciplinary action is warranted.
About X-Copper
Headquartered in Ontario, Canada, X-Copper Services Inc. --
http://www.xcopper.com/-- is a paralegal firm specializing in
fighting traffic tickets. The company has offices in Toronto,
Barrie and Ottawa.
* Fitch Says Fuel Prices Draining US Airline Industry's Liquidity
-----------------------------------------------------------------
Liquidity and credit quality are again at the forefront as the
critical determinants of the U.S. airline industry's economic
viability, according to Fitch Ratings.
The sheer magnitude of increasing energy prices and resulting weak
cash flows make further industry consolidation unworkable.
Indeed, the mechanism for industry capacity rationalization is now
financial distress and carrier liquidation as opposed to merger
and acquisition activity. Over the second half of 2008, more
forced take-out of domestic capacity is likely as ongoing fuel
cost pressures drain liquidity to distressed levels at all but the
most cash-rich carriers.
Fitch expects that all of the U.S. legacy carriers will experience
rapid erosion of cash levels in the post-Labor Day period. This
erosion could threaten their survival if adverse fuel trends
continue, and multiple bankruptcies and liquidations are
increasingly likely looking ahead to 2009.
'The U.S. industry's current structure is unsustainable in the
current fuel environment,' said William Warlick, Senior Director,
Fitch Ratings.
As the airlines begin reporting uniformly weak Q2 results, fixed-
income investors should pay close attention to the cash-raising
options still available to the legacy carriers. Also key will be
management's candor with respect to the viability of various
liquidity-enhancing options.
Fitch Ratings' 'Airline Credit Navigator' is a periodic report
designed to provide investors with a summary of key airline
industry credit and operating trends, recent industry financial
developments, liquidity, cash flow, fleet plans and financing
activity. Key credit and operating trends for each of the major
U.S. airlines are provided in the report. This edition seeks to
provide investors insight into longer-term trends in the context
of the upcoming earnings season.
* S&P Downgrades Ratings on 93 Clases of 26 RMBS Transactions
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 93
classes from 26 residential mortgage-backed securities
transactions backed by U.S. Alternative-A mortgage loan collateral
issued in 2006 and 2007. S&P removed 74 of the lowered ratings
from CreditWatch with negative implications. Concurrently, S&P
lowered its rating on one additional class and placed it on
CreditWatch negative. Lastly, S&P affirmed its ratings on 57
classes and removed them from CreditWatch negative.
The downgrades reflect S&P's opinion that projected credit support
for the affected classes is insufficient to maintain the previous
ratings, given its current projected losses as stated in
"Projected Losses For U.S. Alt-A RMBS Issued In First Half 2007,"
published May 28, 2008, and "S&P Provides Projected Losses For
U.S. Alt-A RMBS Issued In 2006," published April 29, 2008, on
RatingsDirect. S&P arrived at its estimated projected losses for
the Alt-A RMBS deals using the analysis outlined in "Standard &
Poor's Revised Default And Loss Curves For U.S. Alt-A RMBS
Transactions," published Dec. 19, 2007, on RatingsDirect.
This article describes the approach S&P used to develop a forward-
looking default curve. Using each transaction's current level of
loans in foreclosure, S&P apply the periodic growth rates derived
from the curve to project future foreclosures. At each point in
time, S&P take a percentage of the foreclosures as losses and
assume a loss severity depending on the type of collateral in the
transactions.
For this analysis, S&P assumed a loss severity of 34% for U.S.
Alt-A RMBS transactions backed by fixed-rate loans and long-reset
hybrid collateral (loans with fixed-rate periods of at least five
years); S&P assumed a loss severity of 35% for transactions backed
by mortgage loans that have a negative amortization feature; and
S&P assumed a loss severity of 35% for transactions secured by
adjustable-rate collateral and short-reset hybrid collateral
(loans with fixed-rate periods under five years).
Additionally, S&P assumed that the loans that are currently
classified as real estate owned will be liquidated over the next
eight months. S&P estimated the lifetime projected losses by
adding these losses to the actual losses that the transactions
have experienced to date. As part of its analysis, S&P considered
the characteristics of the underlying mortgage collateral as well
as macroeconomic influences. For example, the risk profile of the
underlying mortgage pools influences our default projections,
while the outlook for housing price appreciation and the health of
the housing market influences its loss severity assumptions.
The lowered ratings reflect our assessment of credit support under
three constant prepayment rate scenarios. The first scenario
utilizes the lower of the lifetime or the 12-month CPR. The
second utilizes a CPR of 6.00%, which is very slow by historical
standards. The third scenario uses a CPR that is double the CPR
used in the first scenario. This allows us to see how the
transactions would be affected in different CPR environments. S&P
assumed a constant default rate for each pool. Because S&P's
analysis focused on each individual class with varying maturities,
prepayment scenarios may cause an individual class or the
transaction itself to prepay in full before it incurs the entire
loss projection. Slower prepayment assumptions lengthen the
average life of the mortgage pool, which increases the likelihood
that total projected losses will be realized. The longer a class
remains outstanding, however, the more excess spread it generates.
S&P took into account the paydown of each class when evaluating
the ratings. For example, if a senior class is scheduled to pay
down in the next 15 months, S&P only allocated 15 months of losses
in the analysis of that class. Additionally, if the transactions
utilized excess spread as a form of credit enhancement, S&P only
allocated 15 months of excess spread.
To assess the creditworthiness of each class, S&P reviewed the
individual delinquency and loss trends of each transaction for
changes, if any, in risk characteristics, servicing, and the
ability to withstand additional credit deterioration. In order to
maintain a rating higher than 'B', a class had to absorb losses in
excess of the base-case assumption S&P assumed in its analysis.
For example, a class may have to withstand 115% of our base-case
loss assumption in order to maintain a 'BB' rating, while a
different class may have to withstand 125% of S&P's base-case loss
assumption to maintain a 'BBB' rating. S&P affirmed a rating at
'AAA' if the rating can withstand approximately 150% of its base-
case loss assumptions under its analysis, subject to individual
caps and qualitative factors assumed on specific transactions.
S&P determined the caps by limiting the amount of remaining
defaults to 85% of the current pool balances.
S&P lowered its rating on class 2-A-1C from HarborView Mortgage
Loan Trust 2007-2 and placed it on CreditWatch with negative
implications due to the downgrade and placement of the 'AA' rating
on Ambac Assurance Corp., the insurance provider for this bond, on
CreditWatch negative. The transaction has insufficient inherent
credit support to maintain this bond at the 'AAA' rating level.
To date, including the classes listed below and actions on both
publicly and confidentially rated classes, S&P have resolved the
CreditWatch placements of the ratings on 268 classes from 51 U.S.
RMBS Alt-A transactions from the 2006 and 2007 vintages.
Currently, S&P's ratings on 786 classes from 112 U.S. RMBS Alt-A
transactions from the 2006 and 2007 vintages are on CreditWatch
negative.
Ratings Lowered and Removed from Creditwatch Negative
Alternative Loan Trust 2007-HY2
Series 2007-HY2
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A 02148LAA0 BBB AAA/Watch Neg
2-A 02148LAB8 BBB AAA/Watch Neg
American Home Mortgage Investment Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-3 026932AE3 A AAA/Watch Neg
Bear Stearns ALT-A Trust 2007-3
Series 2007-3
Rating
------
Class CUSIP To From
----- ----- -- ----
I-A-2 07387RAB4 BB AAA/Watch Neg
Bear Stearns Asset Backed Securities I Trust 2006-ST1
Series 2006-ST1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 073886AA1 BB AAA/Watch Neg
A-2 073886AB9 BB AAA/Watch Neg
Bear Stearns Asset Backed Securities I Trust 2007-AC1
Series 2007-AC1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 07389XAB9 A AAA/Watch Neg
A-3 07389XAC7 A AAA/Watch Neg
Bear Stearns Asset Backed Securities I Trust 2007-AC2
Series 2007-AC2
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 073854AA9 A AAA/Watch Neg
A-2 073854AB7 A AAA/Watch Neg
Bear Stearns Asset Backed Securities I Trust 2007-AC3
Series 2007-AC3
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 07386VAB6 A AAA/Watch Neg
A-1 07386VAA8 A AAA/Watch Neg
CSMC Mortgage-Backed Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-6B 126378AM0 AA AAA/Watch Neg
Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-5 25151YAH2 A AAA/Watch Neg
M-1 25151YAK5 BB AAA/Watch Neg
Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB4
Series 2006-AB4
Rating
------
Class CUSIP To From
----- ----- -- ----
A-3 251513AV9 AA- AAA/Watch Neg
A-4B 251513AZ0 BBB+ AAA/Watch Neg
A-4C 251513BA4 BBB+ AAA/Watch Neg
GSAA Home Equity Trust 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
AF3 3622EUAC0 BBB+ AAA/Watch Neg
AF4B 3622EUAV8 BBB AAA/Watch Neg
AF5B 3622EUAW6 BBB- AAA/Watch Neg
AF6B 3622EUAG1 BBB- AAA/Watch Neg
HarborView Mortgage Loan Trust 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
1A-1A 41164LAA7 A AAA/Watch Neg
IndyMac IMSC Mortgage Loan Trust 2007-F1
Series 2007-F1
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-2 456671AB2 AA AAA/Watch Neg
2-A-2 456671AD8 AA AAA/Watch Neg
IndyMac INDB Mortgage Loan Trust 2006-1
Series
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 45661JAF0 BBB AA+/Watch Neg
M-3 45661JAG8 BB AA-/Watch Neg
Lehman XS Trust 2007-11
Series 2007-11
Rating
------
Class CUSIP To From
----- ----- -- ----
A2 525249AB4 AA AAA/Watch Neg
A4 525249AD0 AA AAA/Watch Neg
A5 525249AE8 BB AAA/Watch Neg
Merrill Lynch Alternative Note Asset Trust, Series 2007-AF1
Series 2007-AF1
Rating
------
Class CUSIP To From
----- ----- -- ----
AV-2 59024KAY9 BBB- AAA/Watch Neg
Merrill Lynch Mortgage Investors Trust Series 2006-A4
Series 2006-A4
Rating
------
Class CUSIP To From
----- ----- -- ----
I-A 590214AA0 AA AAA/Watch Neg
II-A 590214AB8 AA AAA/Watch Neg
III-A-2 590214AD4 AA AAA/Watch Neg
IV-A-2 590214AF9 AA AAA/Watch Neg
V-A 590214AG7 AA AAA/Watch Neg
X-A 590214AH5 AA AAA/Watch Neg
Morgan Stanley Mortgage Loan Trust 2007-1XS
Series 2007-1XS
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-1 61752JAA8 BBB AAA/Watch Neg
1-A-2 61752JAB6 BBB AAA/Watch Neg
2-A-2 61752JAD2 A AAA/Watch Neg
2-A-3 61752JAE0 BBB AAA/Watch Neg
2-A-4B 61752JAG5 BBB AAA/Watch Neg
2-A-4C 61752JAJ9 BBB AAA/Watch Neg
2-A-5 61752JAK6 BBB AAA/Watch Neg
2-A-6 61752JAL4 BBB AAA/Watch Neg
MortgageIT Securities Corp. Mortgage Loan Trust, Series 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-1 61915YAA9 BB AAA/Watch Neg
2-A-1-5 61915YAF8 BB AAA/Watch Neg
2-A-1-7 61915YAH4 BB AAA/Watch Neg
Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
A-6 655378AJ6 BBB AAA/Watch Neg
A-7 655378AF4 BBB AAA/Watch Neg
RALI Series 2006-QA10 Trust
Series 2006-QA10
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 74922NAA7 BBB- AAA/Watch Neg
A-3 74922NAC3 BBB- AAA/Watch Neg
Residential Asset Securitization Trust 2007-A5
Series 2007-E
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-1 76114HAA3 AA AAA/Watch Neg
1-A-7 76114HAG0 AA AAA/Watch Neg
2-A-1 76114HAH8 AA AAA/Watch Neg
2-A-2 76114HAJ4 AA AAA/Watch Neg
2-A-4 76114HAL9 AA AAA/Watch Neg
2-A-6 76114HAN5 AA AAA/Watch Neg
TBW Mortgage-Backed Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-3 87222EAC2 AA- AAA/Watch Neg
A-4 87222EAD0 A AAA/Watch Neg
A-5 87222EAE8 BBB AAA/Watch Neg
A-6 87222EAF5 BBB AAA/Watch Neg
A-7B 87222EAW8 BBB AAA/Watch Neg
A-8 87222EAH1 BBB AAA/Watch Neg
Terwin Mortgage Trust 2007-2ALT
Series 2007-2ALT
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1B 88157JAL8 BBB AAA/Watch Neg
A-2 88157JAB0 BB AAA/Watch Neg
A-3 88157JAC8 BB AAA/Watch Neg
Washington Mutual Mortgage Pass-Through Certificates WMALT
Series
2007-OC2
Series 2007-OC2
Rating
------
Class CUSIP To From
----- ----- -- ----
A-4 93936LAD9 AA AAA/Watch Neg
A-5 93936LAE7 BB AAA/Watch Neg
Washington Mutual Mortgage Pass-Through Certificates WMALT Series
2006-7 Trust
Series 2006-7
Rating
------
Class CUSIP To From
----- ----- -- ----
A-3 93935HAF4 A- AAA/Watch Neg
A-4 93935HAG2 A- AAA/Watch Neg
A-5 93935HAH0 A- AAA/Watch Neg
A-6 93935HAJ6 A- AAA/Watch Neg
A-7 93935HAK3 A- AAA/Watch Neg
Rating Lowered and Placed on Creditwatch Negative
HarborView Mortgage Loan Trust 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
2A-1C 41164LAD1 AA/Watch Neg AAA
Ratings Lowered
Bear Stearns ALT-A Trust 2007-3
Series 2007-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 07387RAC2 B BB
M-2 07387RAD0 CCC B
CSMC Mortgage-Backed Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-5B 126378AK4 AA AAA
Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 25151YAL3 BB- BB+
M-3 25151YAM1 B+ BB
M-4 25151YAN9 B BB-
M-5 25151YAP4 B- B+
M-6 25151YAQ2 CCC B
Lehman XS Trust 2007-11
Series 2007-11
Rating
------
Class CUSIP To From
----- ----- -- ----
M1 525249AG3 B+ BB+
M2 525249AH1 B BB
M3 525249AJ7 B- BB-
M4 525249AK4 CCC B
Terwin Mortgage Trust 2007-2ALT
Series 2007-2ALT
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 88157JAE4 CC CCC
M-3 88157JAF1 D CC
M-4 88157JAG9 D CC
Washington Mutual Mortgage Pass-Through Certificates WMALT Series
2007-OC2
Series 2007-OC2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 93936LAF4 B+ BB
M-2 93936LAG2 B BB-
M-3 93936LAH0 B- B
Ratings Affirmed and Removed from Creditwatch Negative
Bear Stearns Asset Backed Securities I Trust 2006-AC5
Series 2006-AC5
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 073856AB2 AAA AAA/Watch Neg
A-3 073856AC0 AAA AAA/Watch Neg
CSMC Mortgage-Backed Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-1D 126378AD0 AAA AAA/Watch Neg
1-A-2A 126378AE8 AAA AAA/Watch Neg
1-A-2B 126378AF5 AAA AAA/Watch Neg
1-A-3 126378AG3 AAA AAA/Watch Neg
1-A-4 126378AH1 AAA AAA/Watch Neg
1-A-5A 126378AJ7 AAA AAA/Watch Neg
1-A-6A 126378AL2 AAA AAA/Watch Neg
Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB2
Series 2006-AB2
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 251511AA9 AAA AAA/Watch Neg
A-2 251511AB7 AAA AAA/Watch Neg
A-3 251511AC5 AAA AAA/Watch Neg
A-5B 251511AF8 AAA AAA/Watch Neg
A-7 251511AH4 AAA AAA/Watch Neg
A-8 251511AK7 AAA AAA/Watch Neg
Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB4
Series 2006-AB4
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1A 251513AQ0 AAA AAA/Watch Neg
A-1C 251513AT4 AAA AAA/Watch Neg
A-2 251513AU1 AAA AAA/Watch Neg
GSAA Home Equity Trust 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
AV1 3622EUAA4 AAA AAA/Watch Neg
AF2 3622EUAB2 AAA AAA/Watch Neg
IndyMac IMSC Mortgage Loan Trust 2007-F1
Series 2007-F1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-X 456671AF3 AAA AAA/Watch Neg
IndyMac INDB Mortgage Loan Trust 2006-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 45661JAA1 AAA AAA/Watch Neg
A-2 45661JAB9 AAA AAA/Watch Neg
A-3A 45661JAC7 AAA AAA/Watch Neg
A-3B 45661JAD5 AAA AAA/Watch Neg
M-1 45661JAE3 AA+ AA+/Watch Neg
Lehman XS Trust 2007-11
Series 2007-11
Rating
------
Class CUSIP To From
----- ----- -- ----
A1 525249AA6 AAA AAA/Watch Neg
A3 525249AC2 AAA AAA/Watch Neg
Merrill Lynch Mortgage Investors Trust Series 2006-A4
Series 2006-A4
Rating
------
Class CUSIP To From
----- ----- -- ----
A-R 590214AJ1 AAA AAA/Watch Neg
Morgan Stanley Mortgage Loan Trust 2007-1XS
Series 2007-1XS
Rating
------
Class CUSIP To From
----- ----- -- ----
2-A-1 61752JAC4 AAA AAA/Watch Neg
MortgageIT Securities Corp. Mortgage Loan Trust, Series 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
2-A-1-1 61915YAB7 AAA AAA/Watch Neg
2-A-1-2 61915YAC5 AAA AAA/Watch Neg
2-A-1-3 61915YAD3 AAA AAA/Watch Neg
2-A-1-4 61915YAE1 AAA AAA/Watch Neg
Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2007-2
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1B 655378AB3 AAA AAA/Watch Neg
TBW Mortgage-Backed Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 87222EAA6 AAA AAA/Watch Neg
A-2 87222EAB4 AAA AAA/Watch Neg
Washington Mutual Mortgage Pass-Through Certificates WMALT Series
2006-7 Trust
Series 2006-7
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1A 93935HAA5 AAA AAA/Watch Neg
A-1B 93935HAB3 AAA AAA/Watch Neg
A-2B 93935HAD9 AAA AAA/Watch Neg
A-2C 93935HAE7 AAA AAA/Watch Neg
Washington Mutual Mortgage Pass-Through Certificates WMALT Series
2007-2 Trust
Series 2007-2
Rating
------
Class CUSIP To From
----- ----- -- ----
I-A-2 93936HAB2 AAA AAA/Watch Neg
I-A-3 93936HAC0 AAA AAA/Watch Neg
I-A-5 93936HAE6 AAA AAA/Watch Neg
I-A-7 93936HAG1 AAA AAA/Watch Neg
I-A-8 93936HAH9 AAA AAA/Watch Neg
I-A-9 93936HAJ5 AAA AAA/Watch Neg
I-A-10 93936HAK2 AAA AAA/Watch Neg
I-A-12 93936HAM8 AAA AAA/Watch Neg
I-A-15 93936HBK1 AAA AAA/Watch Neg
2-A-2 93936HAP1 AAA AAA/Watch Neg
2-A-4 93936HAR7 AAA AAA/Watch Neg
3-A-2 93936HAT3 AAA AAA/Watch Neg
3-A-5 93936HAW6 AAA AAA/Watch Neg
C-X 93936HAX4 AAA AAA/Watch Neg
C-P 93936HAY2 AAA AAA/Watch Neg
C-PPP 93936HBD7 AAA AAA/Watch Neg
* S&P Puts Default Ratings on 40 Note Classes from Five CDOs
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings to 'D' on
40 classes of notes from five collateralized debt obligation
transactions--ACA ABS 2007-2 Ltd., Bonifacius Ltd., Hartshorne CDO
I Ltd., Lancer Funding II Ltd., and Tricadia CDO 2006-7 Ltd.--
following the liquidation of the transactions' portfolio
collateral. Six of the lowered ratings were on CreditWatch
negative before the downgrades.
ACA ABS 2007-2 and Hartshorne CDO I Ltd. are both hybrid CDOs
backed predominantly by mezzanine residential mortgage backed
securities; Lancer Funding II Ltd. and Tricadia CDO 2006-7 Ltd.
are both hybrid CDOs of structured CDOs; and Bonifacius Ltd. is a
cash flow CDO backed predominantly by high-grade RMBS securities.
The deals had previously experienced events of default, and
subsequently the controlling noteholders had voted to accelerate
the maturity of the notes and liquidate the collateral assets.
The downgrades follow notice from the trustees that the
liquidation of the portfolio assets is complete and the available
proceeds have been distributed to the noteholders. The trustees
have indicated that the proceeds of the liquidations were
insufficient to pay down the balances of any of the notes from the
five affected transactions in full.
Rating Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
ACA ABS 2007-2 Ltd. X D CCC-/Watch Neg
ACA ABS 2007-2 Ltd. A1S(VFN) D CC
ACA ABS 2007-2 Ltd. A1M D CC
ACA ABS 2007-2 Ltd. A1J D CC
ACA ABS 2007-2 Ltd. A2 D CC
ACA ABS 2007-2 Ltd. A3 D CC
ACA ABS 2007-2 Ltd. B1 D CC
ACA ABS 2007-2 Ltd. B2 D CC
Bonifacius Ltd. A-1M D CCC/Watch Neg
Bonifacius Ltd. A-1Q D CCC/Watch Neg
Bonifacius Ltd. A-1J D CC
Bonifacius Ltd. A-2 D CC
Bonifacius Ltd. A-3 D CC
Bonifacius Ltd. A-4 D CC
Bonifacius Ltd. B D CC
Bonifacius Ltd. C D CC
Bonifacius Ltd. D D CC
Hartshorne CDO I Ltd. X D CCC-/Watch Neg
Hartshorne CDO I Ltd. A-1S D CC
Hartshorne CDO I Ltd. A-1J D CC
Hartshorne CDO I Ltd. A-2 D CC
Hartshorne CDO I Ltd. A-3 D CC
Hartshorne CDO I Ltd. B1 D CC
Hartshorne CDO I Ltd. B2 D CC
Hartshorne CDO I Ltd. B3 D CC
Lancer Funding II Ltd. X D CCC-/Watch Neg
Lancer Funding II Ltd. A1S D CC
Lancer Funding II Ltd. A1J D CC
Lancer Funding II Ltd. A2 D CC
Lancer Funding II Ltd. A3 D CC
Lancer Funding II Ltd. B D CC
Tricadia 2006-7 Ltd. A-1Unf D CC
Tricadia 2006-7 Ltd. A-1Funded D CC
Tricadia 2006-7 Ltd. A-X D CCC-/Watch Neg
Tricadia 2006-7 Ltd. A-2 D CC
Tricadia 2006-7 Ltd. B D CC
Tricadia 2006-7 Ltd. C D CC
Tricadia 2006-7 Ltd. D D CC
Tricadia 2006-7 Ltd. E D CC
Tricadia 2006-7 Ltd. F D CC
* S&P: Expenditure Cutbacks Protect Alabama's Fiscal Stability
--------------------------------------------------------------
Alabama's economy may have slowed recently due to rising gas
prices and a contracting manufacturing segment, but the state's
constitutional provisions that mandate expenditure cutbacks
protect fiscal stability in the event of revenue shortfalls,
according to a reported entitled, "State Review: Alabama,"
published today by Standard & Poor's Ratings Services.
"Despite Alabama's limited revenue-raising flexibility, we expect
the state will make necessary adjustments through proration in
mid-fiscal 2009 should sales and income tax projections prove too
optimistic," said Standard & Poor's credit analyst Sussan Corson.
"Furthermore, we expect that, while higher oil and gas prices
could continue to pressure sales tax growth and the automobile
manufacturers, in the near term higher mineral prices should
benefit oil and gas revenue that flows into the state's general
fund," Ms. Corson added.
The report discusses in detail the factors supporting the 'AA'
general obligation debt rating on Alabama, including its large and
diversifying economic base, dedicated revenue streams for capital
projects and debt service, and low GO debt burden.
Alabama's economy is anchored by several regional economic
centers, including Huntsville, Birmingham, Mobile, and the state
capital, Montgomery. In the past several years, the state has
experienced economic development spurred by the automotive
industry, with 18% of total manufacturing jobs in transportation
equipment manufacturing. Alabama's economic base has diversified
in the past decade with growth in high-tech and defense-related
industries in the Huntsville area and health care and business
services in the Birmingham and Mobile metropolitan statistical
areas.
* U.S. SEC's Emergency Order on Naked Short Selling Starts July 21
------------------------------------------------------------------
The U.S. Securities and Exchange Commission issued an emergency
order to enhance investor protections against "naked" short
selling in the securities of Fannie Mae, Freddie Mac, and primary
dealers at commercial and investment banks.
The SEC's order will require that anyone effecting a short sale in
these securities arrange beforehand to borrow the securities and
deliver them at settlement.
In addition to this emergency order, the SEC will undertake a
rulemaking to address these issues across the entire market.
"The SEC's mission to protect investors, maintain orderly markets,
and promote capital formation is more important now than it has
ever been," said SEC Chairman Christopher Cox. "[The] Commission
action aims to stop unlawful manipulation through 'naked' short
selling that threatens the stability of financial institutions.
We will continue our vigorous commitment to investors by working
within the SEC and in close cooperation with our regulatory
counterparts to promote the continued health and vibrancy of our
markets."
The Commission's emergency order, pursuant to its authority under
Section 12(k)(2) of the Securities Exchange Act of 1934, will be
effective at 12:01 a.m. ET on July 21, 2008, and will terminate at
11:59 p.m. ET on July 29, 2008.
The Commission may extend the order to continue it in effect
thereafter if the Commission determines that the continuation of
the order is necessary in the public interest and for the
protection of investors, but for no more than 30 calendar days in
total duration.
The securities identified in the Commission's order are:
Company Ticker Symbol(s)
------- ----------------
BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc. GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JPM
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM
* Marc B. Hankin and Heather D. McArn Join Jenner & Block New York
------------------------------------------------------------------
Marc B. Hankin joined Jenner & Block on July 14 as a partner in
its New York office.
Mr. Hankin is a bankruptcy lawyer with experience representing
debtors, secured creditors, lenders, creditors' committees, and
other parties in corporate reorganizations.
Heather D. McArn, also a bankruptcy lawyer, is joining the firm as
special counsel on August 4.
"The addition of [Mr. Hankin] and [Ms. McArn] to our New York
office will add significant experience to our growing Bankruptcy,
Workout and Corporate Reorganization Practice," Susan C. Levy,
managing partner of Jenner & Block.
Mr. Hankin had been counsel in the Bankruptcy and Reorganization
Group of Shearman & Sterling in New York City. He had worked at
that firm since joining as an associate in 1994. Between 1992 and
1994, he was a law clerk for Chief Judge Burton R. Lifland of the
U.S. Bankruptcy Court for the Southern District of New York.
Among his clients have been Spiegel and Eddie Bauer in their
Chapter 11 cases; Citigroup in connection with Dana Corporation's
Chapter 11 case; and HSBC Bank USA in connection with many
subprime mortgage originators.
"I am delighted to join Jenner & Block and help further build its
world-class bankruptcy practice," Mr. Hankin said.
Mr. Hankin received his J.D., with honors, from the University of
Connecticut School of Law in 1992 and his bachelor's degree from
Yale College in 1989.
Ms. McArn completed a clerkship for Judge Arthur J. Gonzalez in
the U.S. Bankruptcy Court for the Southern District of New York.
Between 2004 and 2006, she was a court advocate for victims of
domestic violence in Birmingham, Alabama.
Before that, Ms. McArn was an associate for several years in the
Bankruptcy and Reorganization Department of Paul Weiss Rifkind
Wharton & Garrison in New York. Between 1994 and 1996, she was a
law clerk to Chief Judge Lifland in the U.S. Bankruptcy Court.
Ms. McArn received her J.D., cum laude, from Vermont Law School in
1992. She received a master's degree in urban planning from
Columbia University in 1988 and a bachelor's degree in political
economy from Tulane University in 1986.
Mr. Hankin and Ms. McArn are the second and third bankruptcy
lawyers to move to Jenner & Block this year. On Jan. 1, 2008,
Patrick J. Trostle joined the Firm as a New York partner.
About Jenner & Block
Jenner & Block LLP -- http://www.jenner.com/-- has a substantial
transactional and corporate practice, which focuses on mergers and
acquisitions, securities, finance, private equity, real estate,
tax, environmental, insurance, commercial law, technology,
intellectual property, bankruptcy and reorganization, labor and
employment, executive compensation, government contacts, health
care and associations. Founded in 1914, Jenner & Block has more
than 460 attorneys located in Chicago, Dallas, New York and
Washington, DC.
* Stuart Gollin Joins Willamette as Bankruptcy Practice Director
----------------------------------------------------------------
Willamette Management Associates named Stuart A. Gollin, Esq. as
the firm's principal and director of the firm's reorganization and
bankruptcy services. Mr. Gollin will be based in the firm's New
York office.
"I am excited to join a firm that is the caliber of Willamette,"
said Gollin. "Willamette has an excellent reputation among
corporations and financial professionals alike."
Mr. Gollin will be working with clients in providing services such
as business turnarounds, bankruptcy and insolvency, litigation
support and forensic accounting, finance, mergers and
acquisitions, structuring and restructuring of financial
instruments, financial accounting and reporting, SEC matters, and
financial planning and control.
"Corporate bankruptcies are usually very complex," said Bob
Schweihs, managing director. "Stuart, an expert in this field,
will be able to help our clients navigate this difficult process
to reach a successful conclusion with their transaction or
litigation matters."
Known for its independence and the thoroughness of business
valuation analysis, Willamette analysts have been involved in a
wide range of financial and valuation related issues. Both
domestically and internationally, courts have relied upon the
expert testimony of Willamette analysts.
Prior to joining Willamette, Gollin was partner in charge of
bankruptcy and insolvency at a regional accounting firm.
Mr. Gollin received a B.B.A. in Accounting and Economic Statistics
and is a CPA and a Certified Insolvency and Reorganization Advisor
(CIRA).
Founded in 1969, Willamette Management Associates --
http://www.willamette.com/-- is recognized as a premier
professional services firm in the disciplines of business
valuation and security analysis, intangible asset and intellectual
property valuations, forensic accounting, economic damages/lost
profits analysis, and financial advisory services. With offices in
principal cities across the country, we serve clients nationwide.
Our clients range from substantial closely held companies to
multinational corporations and include the banking industry, the
accounting profession, the legal community, and government and
regulatory agencies.
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
Recent Chapter 11 cases filed with assets and liabilities below
$1,000,000:
In Re Eddy-Bell Commercial Properties, LLC
Bankr. D. Conn. Case No. 08-21278
Chapter 11 Petition filed July 3, 2008
See http://bankrupt.com/misc/ctb08-21278.pdf
In Re All Plumbing and Heating, Inc.
Bankr. W.D. Wash. Case No. 08-14248
Chapter 11 Petition filed July 7, 2008
See http://bankrupt.com/misc/wawb08-14248.pdf
In Re Flagstaff Fairway Estates Partners, LLC
Bankr. D. Ariz. Case No. 08-08371
Chapter 11 Petition filed July 8, 2008
See http://bankrupt.com/misc/azb08-08371.pdf
In Re P.J. Commerce, LLC
Bankr. C.D. Calif. Case No. 08-18372
Chapter 11 Petition filed July 8, 2008
See http://bankrupt.com/misc/cacb08-18372.pdf
In Re Nevada Platinum & Gold Mining Corp.
Bankr. D. Nev. Case No. 08-17443
Chapter 11 Petition filed July 8, 2008
See http://bankrupt.com/misc/nvb08-17443
In Re Ryan Property Management, LLC
dba Ryan South Realty, LLC
Bankr. N.D. Ala. Case No. 08-82018
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/alnb08-82018.pdf
In Re South Ga. Freight Express, Inc.
Bankr. M.D. Ga. Case No. 08-70967
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/gamb08-70967.pdf
In Re Place Next Door, Inc.
Bankr. W.D. Mich. Case No. 08-06012
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/miwb08-06012.pdf
In Re Danny's Place, Inc.
Bankr. M.D. N.C. Case No. 08-51121
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/ncmb08-51121.pdf
In Re Cetus Mortgage, Ltd.
Bankr. D. Nev. Case No. 08-51131
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/nvb08-51131.pdf
In Re Tizus, Inc.
Bankr. N.D. N.Y. Case No. 08-12221
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/nynb08-12221.pdf
In Re GRQ Investments, Inc.
Bankr. C.D. Calif. Case No. 08-20138
Chapter 11 Petition filed July 9, 2008
Filed as Pro Se
In Re Satanand Sharma
aka Stan Sharma
Bankr. S.D. Tex. Case No. 08-10368
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/txsb08-10368.pdf
In Re Clary's Restaurant, Inc.
Bankr. S.D. Tex. Case No. 08-80326
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/txsb08-80326.pdf
In Re Beltway Pizza, Inc.
aka Domino's Pizza
Bankr. E.D. Va. Case No. 08-14001
Chapter 11 Petition filed July 9, 2008
See http://bankrupt.com/misc/vaeb08-14001.pdf
In Re Estates Internationale, LLC
Bankr. M.D. Fla. Case No. 08-10261
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/flmb08-10261.pdf
In Re EJR Properties Management, LLC
aka Montebello Ristorante
Bankr. D. Maine Case No. 08-20797
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/meb08-20797.pdf
In Re Town Branch Builders, Inc.
Bankr. W.D. N.C. Case No. 08-10538
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/ncwb08-10538.pdf
In Re Town Branch Developers, Inc.
Bankr. W.D. N.C. Case No. 08-10539
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/ncwb08-10539.pdf
In Re S&G Investment Solutions Group, LLC
Bankr. W.D. Wash. Case No. 08-43295
Chapter 11 Petition filed July 10, 2008
Filed as Pro Se
In Re Elliott Outdoors, Inc.
Bankr. W.D. Tenn. Case No. 08-12466
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/tnwb08-12466.pdf
In Re Universal Collision Center, LLC
Bankr. E.D. Va. Case No. 08-14053
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/vaeb08-14053.pdf
In Re Bonita R. Cowen
aka Bonnie R. Cowen
Bankr. W.D. Va. Case No. 08-71292
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/vawb08-71292.pdf
In Re Ludivina A. Floresca
Bankr. W.D. Wash. Case No. 08-14343
Chapter 11 Petition filed July 10, 2008
See http://bankrupt.com/misc/wawb08-14343.pdf
In Re Cafe Gallente, Inc.
dba Cafe Galante
Bankr. M.D. Fla. Case No. 08-10324
Chapter 11 Petition filed July 11, 2008
See http://bankrupt.com/misc/flmb08-10324.pdf
In Re ZPL Group, LLC
Bankr. D. Nev. Case No. 08-51155
Chapter 11 Petition filed July 11, 2008
See http://bankrupt.com/misc/nvb08-51155.pdf
In Re Inner Circle Renovation, Inc.
Bankr. N.D. Ohio Case No. 08-15332
Chapter 11 Petition filed July 11, 2008
See http://bankrupt.com/misc/ohnb08-15332.pdf
In Re 323, Inc.
Bankr. S.D. N.Y. Case No. 08-12681
Chapter 11 Petition filed July 11, 2008
Filed as Pro Se
In Re Brad L. Coyne
Bankr. C.D. Calif. Case No. 08-20302
Chapter 11 Petition filed July 11, 2008
Filed as Pro Se
In Re Christopher Reginald Seymour
Bankr. D. Md. Case No. 08-19028
Chapter 11 Petition filed July 11, 2008
Filed as Pro Se
In Re John H. Viser III & Associates
Bankr. W.D. Tenn. Case No. 08-26809
Chapter 11 Petition filed July 11, 2008
See http://bankrupt.com/misc/tnwb08-26809.pdf
In Re Grand Tastings, LLC
Bankr. N.D. Tex. Case No. 08-33381
Chapter 11 Petition filed July 11, 2008
See http://bankrupt.com/misc/txnb08-33381.pdf
In Re Furnishings,?Reliable?Home
aka Reliable Home Furnishings
Bankr. D. Md. Case No. 08-19068
Chapter 11 Petition filed July 12, 2008
See http://bankrupt.com/misc/mdb08-19068.pdf
In Re Michael G. Smith
dba Smith's Grocery
Bankr. E.D. Mich. Case No. 08-56789
Chapter 11 Petition filed July 12, 2008
See http://bankrupt.com/misc/mieb08-56789.pdf
In Re 180 CHD, LLC
Bankr. D. Conn. Case No. 08-50628
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/ctb08-50628.pdf
In Re I Am Guarded Security Systems, Inc.
Bankr. S.D. Fla. Case No. 08-19677
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/flsb08-19677.pdf
In Re Word of Faith Full Gospel Church, Inc.
Bankr. W.D. Ky. Case No. 08-32980
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/kywb08-32980.pdf
In Re Nicholas G. Dezes
Bankr. D. Md. Case No. 08-19109
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/mdb08-19109.pdf
In Re 31260 Wakefield, LLC
Bankr. E.D. Mich. Case No. 08-56924
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/mieb08-56924.pdf
In Re Homeland Security Strategies of Florida, Inc.
Bankr. S.D. N.Y. Case No. 08-22986
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/nysb08-22986.pdf
In Re National Health System, Inc.
Bankr. M.D. Penn. Case No. 08-02507
Chapter 11 Petition filed July 14, 2008
See http://bankrupt.com/misc/pamb08-02507.pdf
In Re Community Tree & Landscaping Service, Inc.
Bankr. S.D. Fla. Case No. 08-19801
Chapter 11 Petition filed July 15, 2008
See http://bankrupt.com/misc/flsb08-19801.pdf
In Re John Henry Sites
Bankr. D. Md. Case No. 08-19174
Chapter 11 Petition filed July 15, 2008
See http://bankrupt.com/misc/mdb08-19174.pdf
In Re Hidden Valley Veterinary Hospital, Inc.
Bankr. E.D. Penn. Case No. 08-14495
Chapter 11 Petition filed July 15, 2008
See http://bankrupt.com/misc/paeb08-14495.pdf
In Re William Leland Edney
Bankr. C.D. Calif. Case No. 08-14080
Chapter 11 Petition filed July 15, 2008
Filed as Pro Se
In Re International Group Investment, Inc.
Bankr. S.D. Fla. Case No. 08-19753
Chapter 11 Petition filed July 15, 2008
Filed as Pro Se
In Re Sunset Restaurants, LP
Bankr. C.D. Calif. Case No. 08-20495
Chapter 11 Petition filed July 15, 2008
Filed as Pro Se
In Re Jeweltex Enterprises, Inc.
dba Sam's Fine Jewelry
Bankr. N.D. Tex. Case No. 08-33407
Chapter 11 Petition filed July 15, 2008
See http://bankrupt.com/misc/txsb08-33407.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Raphael M. Palomino, 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 ***