/raid1/www/Hosts/bankrupt/TCR_Public/080722.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, July 22, 2008, Vol. 12, No. 173
Headlines
ABROCK LLC: Gets Court OK to Hire Eric Slocum as Bankr. Counsel
ACUSPHERE INC: Fails to Regain Compliance After 180-Day Provision
AMERICAN TOWER: Fitch Affirms 'BB+' Issuer Default Rating
AMERIQUEST: Moody's Cuts Ratings on 31 Tranches Backed by Loans
AMH HOLDINGS: Weaker Overall Financial Cues S&P's Negative Watch
AURA SYSTEMS: Posts $2,038,588 Net Loss in Quarter Ended May 31
BASELINE OIL: S&P's Rating Unmoved by TPL's Plan to Control Board
BERRY PLASTICS: S&P Junks Rating on $750MM Senior Secured Notes
BOYD GAMING: Low Revenues May Lower Ratings After Moody's Review
CARUSO HOMES: Can Obtain $1.3 MM DIP Financing from Jeffrey Caruso
CARUSO HOMES: Taps Alix Partners as Financial Advisors/Consultants
CARUSO HOMES: Taps Tenenbaum & Saas as Special Corporate Counsel
CASALE MARBLE: Section 341(a) Meeting Scheduled for August 20
CASTLE BRANDS: Eisner LLP Expresses Going Concern Doubt
CENTAUR LLC: Moody's Might Cut Ratings After Technical Default
CHET MORRISON: Moody's Assign B3 Corporate Family Rating
CHRYSLER LLC: Sees Rise in Financing Affiliate's Borrowing Costs
CITIGROUP INC: Posts $2.5 Billion Net Loss in 2008 Second Quarter
CKE RESTAURANTS: Moody's Affirms Ba3 Corporate Family Rating
CMT AMERICA: Secures $2.8MM Financing from Affiliate
CRESTED BUTTE: Holds Final Graduation; Closed for Good
CRM USA: A.M. Best Holds 'bb' Rating on $35MM 8.65% Jr. Sub. Debt
CROSSING PARK: Wants to Employ Smith Gambrell as Counsel
DAVID FURSMAN: Case Summary & 10 Largest Unsecured Creditors
DELTA AIR: Names Senior Team to Lead Merged Company
DELTA AIR: Slashes Domestic Services, Adds International Flights
DERECKTOR SHIPYARDS: Case Summary & 20 Largest Unsecured Creditors
DOLLARAMA GROUP: Moody's Assigns B1 Corporate Family Rating
DRUMMOND CO: S&P's BB- Rtng. Unmoved by Colombian Employees Strike
DUKE FUNDING: Moody's Assigns Junk Ratings on Four Notes Classes
DUKE FUNDING: Moody's Junks Ratings on Classes A-2 and B Notes
DUTCH HILL: Fitch Retains 'C' Ratings on Three Classes of Notes
EARL JENKINS: Case Summary & Five Largest Unsecured Creditors
EDGEWATER FOODS: Posts $1,062,990 Net Loss in Quarter Ended May 31
ELECTRO-CHEMICAL: Closes Sale to O'Shaughnessys; To Liquidate
EL PASO: Consistent Credit Profile Prompts Fitch to Hold Ratings
EMBARCADERO INSURANCE: A.M. Best Holds 'bb' Rating on $8MM Notes
ENERTECK CORP: Posts $1MM Net Loss for Year Ended Dec. 31, 2007
EXACT SCIENCES: Mulls Business Alternatives & Cost Reduction Plans
FEDDERS CORPORATION: Court Approves Disclosure Statement
FINANCIAL MEDIA: Earns $230,477 in Third Quarter Ended May 31
FORD MOTOR: Reduces Cost, Extends Buyout Project to 14 More Plants
GATEHOUSE MEDIA: S&P Cuts Ratings to B; On Negative Watch
GENERAL MOTORS: Dealer Council Shows Support, Acquires $1MM Shares
GTM HOLDINGS: S&P Trims Corporate Credit Rating to CCC- from B-
HOLLINGER INC: Allowed to Consent to OSC's Cease Trade Order
HOMETOWN COMMERCIAL: Fitch Puts 12 Low-B Ratings Under Neg. Watch
INDYMAC BANCORP: FDIC Taps Thacher Proffitt as Bank's Conservator
INTEGRETEL INC: Court Approves Sale of Payment One to Etelcharge
ISTAR FINANCIAL: Moody's Assigns Low-B Ratings to Stocks and Debt
JEFFERSON COUNTY: Moody's Reviews Caa3-Rated Revenue Warrants
KINGS ROAD: January 31, 2006 Balance Sheet Upside-Down by $577,288
LANA OCHS: Case Summary & 20 Largest Unsecured Creditors
LAZY DAYS: Moody's Sees Increased Probability of Default
LINENS N THINGS: Lenders Agree to $700MM DIP Loan Term Amendment
LINENS N THINGS: Wants Ernst & Young as Auditors
LUBBOCK MEDICAL: Scrambles for DIP Financing to Sidestep Sale
MEADE INSTRUMENTS: Earns $1.8MM in First Quarter Ended May 31
MERVYN'S LLC: May File for Chapter 11 as Shipments Halt, WSJ Says
METOKOTE CORP: S&P Rates Long-term Credit 'B+'; Outlook Neg.
METROPCS COMMS: S&P Lifts Ratings on Improved Financial Leverage
MOHAMMAD JAMEELUDDIN: Case Summary & 20 Unsecured Creditors
MORGAN STANLEY: Fitch Chips Ratings on Three Certificate Classes
MOVIDA COMMUNICATIONS: Sues Cozac to Recoup $2.2 Million From Sale
MTM TECHNOLOGIES: NASDAQ Allows Continued Capital Market Listing
MUZAK HOLDINGS: High Leverage Cues Moody's to Cut Caa1 Ratings
NCI BUILDING: S&P Affirms 'BB' Rating and Changes Outlook to Pos.
NORTHWEST AIRLINES: Delta Names Senior Team to Lead Merged Company
O&A INVESTMENT: Voluntary Chapter 11 Case Summary
ORION 2006-2: Fitch Trims 12 Notes Ratings on Collateral Decline
PCS EDVENTURES: HJ & Associates Expresses Going Concern Doubt
PETROLEUM REALTY: Voluntary Chapter 11 Case Summary
POWERMATE HOLDING: Wants Plan Filing Date Extended to Nov. 12
POWERMATE HOLDING: Panel Can Hire Buccino & Associates as Advisor
QUEENSMITH ENTERPRISES: Case Summary & 5 Largest Unsec. Creditors
RAVINE ROAD: Voluntary Chapter 11 Case Summary
RIVIERA HOLDING: Moody's Affirms B2 Rating; Outlook Negative
SCOTTISH RE: S&P Lifts Financial Rating After Pacific Deal
SIX FLAGS: To Report 2nd Quarter 2008 Results on August 4
STEVE & BARRY'S: Wants to Employ Epiq as Claims Agent
SUPERIOR OFFSHORE: Sells Assets to Infinity Investment for $67MM
SYNTAX-BRILLIAN: U.S. Trustee Forms Five-Member Creditors Panel
SYNTAX-BRILLIAN: Bankruptcy Filing Cues Nasdaq to Delist Stocks
TEXAS INDUSTRIES: Moody's Assigns Ba3 Ratings; Outlook Negative
TOUSA INC: Court OKs Expanded Services of Auditor Ernst & Young
TOUSA INC: Court Denies Cove Isle's Request for Bar Date Extension
TROPICANA ENT: Court Sets September 26 as General Claims Bar Date
TROPICANA ENT: Judge Carey Extends Removal Period Until December 3
TROPICANA ENT: Court OKs Resolution of Trustee Appointment Issues
TTM TECHNOLOGIES: Moody's Withdraws Low-B Ratings
UAL CORP: Stressed by Weak Airline Industry, Moody's Junks Rating
VALAIS RE: Moody's Assigns Low-B Ratings to Class A and C Notes
VISTA INTERNATIONAL: Case Summary & Two Largest Unsec. Creditors
WACHOVIA CORP: State Regulators Investigate Securities Division
WELLCARE HEALTH: To Restate Financials Due to Accounting Errors
WELLMAN INC: Sets $71MM of $185M BoNY Debt as Secured
WELLMAN INC: Creditors Panel Drops Appeal From Final DIP Order
WESTERN NONWOVENS: Hearing to Approve Asset Sale Set for Aug. 15
WHITEHALL JEWELERS: Proskauer Rose Approved as Bankruptcy Counsel
WISE METALS: S&P Holds 'CCC' Credit Rating with Developing Outlook
WILD EDIBLES: Case Summary & 20 Largest Unsecured Creditors
WORKFLOW MANAGEMENT: Moody's Junks Corporate Family Rating
WYNN RESORTS: Weak Gaming Market Cues Moody's Negative Outlook
ZUFFA LLC: S&P Holds 'BB-' Rating and Revises Outlook to Stable
* Moody's Negative Outlook Looms for Higher Education Sector
* Fitch: Managers Develops New Product Lines to Support Business
* Fitch: Global CMBS Performance Was Strong in 1st Half of 2008
* S&P Puts Ratings on Four Hybrid CDOs Under Negative CreditWatch
* S&P Says Potential Downgrades Count for This Month Stands at 745
* Large Companies with Insolvent Balance Sheets
*********
ABROCK LLC: Gets Court OK to Hire Eric Slocum as Bankr. Counsel
---------------------------------------------------------------
Abrock LLC sought and obtained authority from the U.S. Bankruptcy
for the District of Arizona to employ Eric Slocum Sparks PC as
counsel.
Eric Sparks, Esq. is expected to:
a) advice and assist the Debtor on its powers and duties as
debtor-in-possession in the continued operation of its
affairs;
b) provide legal advice and assistance to the Debtor as
necessary to preserve and protect assets, arrange for a
continuation of the working capital and other financing,
prepare all necessary applications, answers, orders, reports
and other legal documents, including the drafting of a plan
of reorganization and disclosure statement and other related
pleadings and documents;
c) provide other legal services as may be necessary during the
course of the bankruptcy proceedings.
Mr. Sparks, a shareholder and officer in Eric Slocum Sparks PC,
told the Court that the firm will be paid according to its
standard rates of:
Professional Hourly Rate
------------ -----------
Eric Slocum Sparks $275
Associates $100 to $150
Law Clerk $50 to $100
Paralegal $25 to $75
Mr. Sparks added that prior to the bankruptcy filing, the firm was
paid $1,039 for filing fees and $1,250 for its services.
Mr. Sparks assured the Court that his firm is disinterested as
that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Sparks can be reached at:
Law Offices of Eric Slocum Sparks P.C.
110 South Church Avenue, No. 2270
Tucson, Arizona 85701
Tel (520) 623-6330
Fax (520) 623-9157
Email eric@ericslocumsparkspc.com
Headquartered in Tucson, Arizona, Abrock LLC is doing site
developments. The company and three of its affiliates filed for
separate Chapter 11 protection on June 23, 2008, (Bankr. D. Ariz.
Lead Case No.: 08-07519). Eric Slocum Sparks, Esq. at Eric Slocum
Sparks PC represents the Debtors in their restructuring efforts.
Abrock LLC's financial condition at bankruptcy filing showed
total assets of $25,000,400 and total debts of $12,530,088.
ACUSPHERE INC: Fails to Regain Compliance After 180-Day Provision
-----------------------------------------------------------------
Acusphere, Inc. received on July 14, 2008, a letter from The
NASDAQ Stock Market LLC indicating that the company had not
regained compliance with NASDAQ's minimum bid price requirement
for continued listing of $1.00 per share, as set forth in
Marketplace Rule 4450(a)(5). As a result, the common stock of
Acusphere would be subject to delisting from The NASDAQ Global
Market unless the company requests a hearing before the NASDAQ
Listing Qualifications Panel.
Acusphere intends to request a hearing before the Panel, which
will stay the delisting of the company's common stock pending the
issuance of a decision by the Panel following the hearing. The
company expects that the hearing will be scheduled for late August
or early September 2008. At the hearing, the company will request
continued listing on either The NASDAQ Global Market or The NASDAQ
Capital Market, based upon its plan for demonstrating compliance
with the applicable listing requirements. Pursuant to the NASDAQ
Marketplace Rules, the Panel has the authority to grant the
company up to an additional 180 days from July 14, 2008, that
would be until Jan. 9, 2009, to implement its plan of compliance,
which could include a reverse stock split if the price has not
exceeded $1 per share for 10 consecutive business days by that
time. As a result, the company sees no need for a reverse stock
split prior to the hearing. There can be no assurance that the
Panel will grant the request of the company for continued listing
on The NASDAQ Stock Market. In the event the Panel denies the
request of the company for continued listing, the common stock of
the company may become eligible for quotation and trading on the
OTC Bulletin Board.
Acusphere disclosed on Jan. 11, 2008 that on the prior day, it
received a letter from NASDAQ advising that the bid price of the
common stock of the company had closed below the minimum $1.00 per
share requirement for continued inclusion on the NASDAQ Global
Market as set forth in NASDAQ Marketplace Rule 4450(a)(5) for the
previous 30 consecutive business days. In accordance with NASDAQ
Marketplace Rule 4450(e)(2), the company was provided 180 calendar
days, or until July 8, 2008, to regain compliance with the minimum
bid price requirement.
About Acusphere, Inc.
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) – http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
company are focused on developing proprietary drugs that can
offer significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
* * *
As reported in the Troubled Company Reporter on April 1, 2008
Deloitte & Touche LLP in Boston raised substantial doubt about the
ability of Acusphere, Inc. to continue as a going concern after it
audited the company's financial statements for the year ended Dec.
31, 2007. The auditor pointed to the company's recurring losses
from operations, negative cash flows from operations, and the
projected funding needed to sustain its operations.
AMERICAN TOWER: Fitch Affirms 'BB+' Issuer Default Rating
---------------------------------------------------------
Fitch Ratings has affirmed American Tower Corporation's long-term
Issuer Default Rating and senior unsecured ratings at 'BB+'. The
Rating Outlook is Stable.
AMT's ratings are underpinned by company's high margin, which was
67% for the last twelve months and reflective of the significant
scale, the favorable operating environment and the lower business
risk that results in a higher degree of expected financial
stability and cash flow sustainability. The stability and long-
term nature of the business makes any material changes in the
operating risk profile unlikely during the next several years.
Over the longer-term, Fitch expects American Tower as well as the
rest of the tower industry will benefit from the recent Advanced
Wireless Services and 700 MHz spectrum auctions. Fitch believes
the above characteristics more than offset AMT's sizable share
repurchase program and the higher financial leverage for its
rating category.
Fitch views AMT's liquidity position as strong relative to other
telecom companies due to the meaningful free cash flow generation,
its balance sheet cash and favorable maturity schedule relative to
their available liquidity. Free cash flow for the last twelve
months was in excess of $500 million. For 2008, with higher
capital spending expected for land purchases, new tower
construction and augmentation of existing sites, FCF levels should
be comparable to 2007. Cash and cash equivalents, including
restricted cash, was $172 million as of March 31, 2008.
AMT's internally generated liquidity position is strong as
evidenced by its cash position and FCF generation versus its
maturity schedule over the next several years. These debt
maturities include only $78 million of convertible debt from two
issuances due in 2010.
AMT's revolver capacity is considered below average as the company
has currently less than 50% capacity on its $1.25 billion credit
facility. As of March 31, 2008, AMT had drawn $650 million on its
revolver that matures in 2012. This is due in part to AMT's use
of its revolver to fund a portion of its share repurchases. In
March 2008, AMT entered into a new $325 million senior unsecured
term loan to repay existing revolver indebtedness. Share
repurchases since the initial inception back in 2005 have totaled
in excess of $2.2 billion. During 2008, AMT's Board of Directors
approved a new stock repurchase program to purchase up to an
additional $1.5 billion of its Class A common stock.
As a result, expectations are for debt to increase by at least
$400 million in 2008 with leverage likely staying in the mid 4
times range. Fitch would become more concerned if leverage
increased materially as a result of debt financed share
repurchases.
AMERIQUEST: Moody's Cuts Ratings on 31 Tranches Backed by Loans
---------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 31
tranches issued in seven transactions from the Ameriquest/Quest
Trust X shelf. The collateral backing each tranche consists
primarily of first lien adjustable-rate and fixed-rate "scratch
and dent" mortgage loans. In addition, Moody's is publishing the
underlying ratings of the three Class A notes for the Quest Trust
2006-X1 transaction.
The actions are part of an ongoing, wider review of all RMBS
transactions, in light of the deteriorating housing market and
rising delinquencies and foreclosures. Many "scratch and dent"
pools originated since 2004 are exhibiting higher than expected
rates of delinquency, foreclosure, and REO (Real Estate Owned, or
properties owned by lenders following foreclosure). The rating
adjustments will vary based on level of credit enhancement,
collateral characteristics, pool-specific historical performance,
quarter of origination, and other qualitative factors.
Complete rating actions are:
Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2004-X1
-- Cl. M-2, downgraded from Caa2 to Ca
Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2004-X2
-- Cl. M-5, downgraded from B3 to Caa3
Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2004-X3
-- Cl. M-4, downgraded from Ba3 to B2
-- Cl. M-5, downgraded from Caa1 to Caa3
-- Cl. M-6, downgraded from Caa3 to C
Issuer: Quest Trust 2005-X1
-- Cl. M-6, downgraded from Baa3 to Ba2
-- Cl. M-7, downgraded from Ba1 to Caa1
Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2005-X2
-- Cl. M-1, downgraded from Baa3 to Caa2
-- Cl. M-2, downgraded from Ba2 to Caa3
-- Cl. M-3, downgraded from B1 to Ca
-- Cl. M-4, downgraded from B3 to C
-- Cl. M-5, downgraded from Caa3 to C
-- Cl. M-6, downgraded from Ca to C
Moody's Investors Service has published the underlying ratings on
these three Class A notes issued by Quest Trust 2006-X1 that are
guaranteed by FGIC. The underlying rating reflects the intrinsic
credit quality of the notes in the absence of the guarantee. The
current ratings on these notes are consistent with Moody's
practice of rating insured securities at the higher of the
guarantor's insurance financial strength rating and any underlying
rating that is public.
Issuer: Quest Trust 2006-X1
Class Description: Class A-1 Notes
-- Current Rating: A2
-- Financial Guarantor: FGIC (B1, negative outlook)
-- Underlying Rating: A2
Issuer: Quest Trust 2006-X1
Class Description: Class A-2 Notes
-- Current Rating: B1
-- Financial Guarantor: FGIC (B1, negative outlook)
-- Underlying Rating: B2
Issuer: Quest Trust 2006-X1
Class Description: Class A-3 Notes
-- Current Rating: B1
-- Financial Guarantor: FGIC (B1, negative outlook)
-- Underlying Rating: Caa1
Issuer: Quest Trust 2006-X1
-- Cl. A-2, downgraded from A1 to B1
-- Cl. A-3, downgraded from A1 to B1
-- Cl. M-1, downgraded from A3 to Caa2
-- Cl. M-2, downgraded from Baa1 to Caa3
-- Cl. M-3, downgraded from Baa2 to Ca
-- Cl. M-4, downgraded from Baa3 to Ca
-- Cl. M-5, downgraded from Ba1 to C
Issuer: Quest Trust 2006-X2
-- Cl. A-2, downgraded from Aaa to A1
-- Cl. M-1, downgraded from Aa1 to Baa3
-- Cl. M-2, downgraded from Aa2 to Caa1
-- Cl. M-3, downgraded from Aa3 to Caa1
-- Cl. M-4, downgraded from A1 to Caa2
-- Cl. M-5, downgraded from A2 to Caa3
-- Cl. M-6, downgraded from A3 to Caa3
-- Cl. M-7, downgraded from Baa1 to Caa3
-- Cl. M-8, downgraded from Baa2 to Ca
-- Cl. M-9, downgraded from Baa3 to C
-- Cl. M-10, downgraded from Ba1 to C
AMH HOLDINGS: Weaker Overall Financial Cues S&P's Negative Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B-' corporate credit ratings, on AMH Holdings Inc. and its
operating subsidiary, Cuyahoga Falls, Ohio-based Associated
Materials Inc. on CreditWatch with negative implications.
The CreditWatch listing reflects AMH's weaker overall financial
profile resulting from the challenging operating conditions in its
new residential construction and remodeling end markets.
Furthermore, given S&P's concerns about the U.S. economy,
difficult credit markets, and cost inflation, it expects AMH's
operating performance to remain challenged for at least the next
several quarters. While liquidity is expected to be sufficient to
meet obligations in the near term, AMH will face increased debt
service requirements in September 2009 when interest expense under
its senior discount notes becomes due in cash, adding about
$50 million to annual debt service (paid semi-annually). In
addition, its $90 million revolving credit facility, which had
about $29 million outstanding at March 29, 2008, matures in April
2009.
In resolving the CreditWatch listing, S&P will discuss with
management its plans to address its near-to-intermediate term
liquidity position given the difficult operating and credit market
conditions that are expected to continue through this time.
AURA SYSTEMS: Posts $2,038,588 Net Loss in Quarter Ended May 31
---------------------------------------------------------------
Aura Systems Inc. reported a net loss of $2,038,588 on net
revenues of $235,560 for the first quarter ended May 31, 2008,
compared with a net loss of $1,363,28 on net revenues of $663,918
in the same period ended May 31, 2007.
The decrease is net revenues is attributable to a large initial
order from one customer, and a large reorder from another
customer, during the first quarter ended May 31, 2007, while both
of these customers had minimal orders in the current year period.
The increase in net loss in the current quarter is mainly as a
result of the lower sales in the current year quarter and the
increase in personnel.
The company has not yet achieved a level of AuraGen(R) sales
sufficient to generate positive cash flow. Accordingly, it has
depended on repeated infusions of cash in order to maintain
liquidity as it seeks to develop sales.
Balance Sheet
At May 31, 2008, the company's consolidated balance sheet showed
$5,102,400 in total assets, $4,021,538 in total liabilities, and
$1,080,862 in total stockholders' equity.
The company's consolidated balance sheet at May 31, 2008, also
showed strained liquidity with $1,859,599 in total current assets
available to pay $2,254,695 in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended May 31, 2008, are available for
free at http://researcharchives.com/t/s?2fa6
Going Concern Doubt
As reported in the Troubled Company Reporter on June 19, 2008, Los
Angeles-based Kabani & Company Inc. expressed substantial doubt
about Aura Systems Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Feb. 29, 2008. The auditing firm pointed to the
company's losses from operations.
During the three month periods ended May 31, 2008, and 2007, the
company incurred losses of $2,038,588 and $1,363,628, respectively
and had negative cash flows from operating activities of
$1,751,127 and $1,726,338, respectively. The company had an
accumulated deficit of $356,159,991 as of May 31, 2008.
About Aura Systems
Headquartered in El Segundo, California, Aura Systems Inc.
(OTC BB: AUSI) -- http://www.aurasystems.com/-- design, assemble
and sell the AuraGen(R), the company's patented mobile power
generator that uses the engine of a vehicle to generate power.
The AuraGen(R) delivers on-location, plug-in electricity for any
end use, including industrial, commercial, recreational and
military applications. The company began commercializing the
AuraGen(R) in late 1999. To date, AuraGen(R) units have been sold
in numerous industries, including recreational, utilities,
telecommunications, emergency/rescue, public works, catering, oil
and gas, transportation, government and the military.
The company filed for chapter 11 protection on June 24, 2005
(Bankr. C.D. Calif. Case No. 05-24550). Ron Bender, Esq., at
Levene Neale Bender Rankin & Brill LLP, represented the Debtor in
its restructuring efforts. When the Debtor filed for bankruptcy,
it reported $18,036,502 in assets and $28,919,987 in debts. The
recapitalized company emerged from Chapter 11 proceedings in
accordance with the reorganization plan confirmed by the
bankruptcy court and became effective on Jan. 31, 2006.
BASELINE OIL: S&P's Rating Unmoved by TPL's Plan to Control Board
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
independent exploration and production company Baseline Oil & Gas
Corp. (CCC+/Developing/--) would not immediately be affected by
the announcement that a majority investor, Third Point LLC,
intends to obtain control of the board through the conversion of
Baseline's 14% convertible notes into equity. Total debt will
decrease by approximately $50 million to approximately
$115 million, but the current rating and outlook are still
warranted given potential leadership changes and the company's
limited liquidity position.
BERRY PLASTICS: S&P Junks Rating on $750MM Senior Secured Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Berry
Plastics Group Inc. and its subsidiary Berry Plastics Corp. The
corporate credit rating on both companies was lowered to
'B-' from 'B'. The outlook is stable.
S&P also lowered the issue rating on the company's $750 million
second-priority senior secured notes due 2014 to 'CCC+' from 'B'
and revised the recovery rating to '5' from '4', indicating S&P's
expectation for a modest (10% to 30%) recovery in the event of a
payment default.
As of March 31, 2008, the Evansville, Indiana-based company had
about $4 billion of total adjusted debt outstanding.
"The rating action incorporates Berry's weaker-than-expected trend
of operating performance and cash flows and a highly leveraged
financial profile, which has deteriorated beyond our expectations
for the previous ratings," said Standard & Poor's credit analyst
Liley Mehta.
Berry's operating results in 2008 are hampered by unprecedented
increases in already elevated raw material costs and weak economic
conditions. These challenges would make it difficult for the
company to generate positive free cash from operations and
establish a trend of improvement in its credit measures in the
near term.
The rating on Berry Plastics Group and its subsidiary Berry
Plastics Corp. reflects the company's highly leveraged financial
profile and acquisition driven growth strategy, which offsets its
fair business profile with large market shares in niche segments,
a well-diversified customer base, and strong customer
relationships.
Berry ranks among the largest packaging companies in North
America, with leading positions in both the rigid and flexible
plastic packaging segments.
BOYD GAMING: Low Revenues May Lower Ratings After Moody's Review
----------------------------------------------------------------
Moody's Investors Service placed the ratings of Boyd Gaming
Corporation on review for possible downgrade. Ratings affected
include Boyd's Ba2 Corporate Family Rating and B1 senior
subordinated notes. The company's $4 billion revolving credit
facility is not rated. Boyd's SGL-2 Speculative Grade Liquidity
rating was affirmed.
The review is prompted by the decline in gaming revenues in the
Las Vegas Locals and Downtown Las Vegas market as a result of
slowing economic conditions and rising fuel and other costs
impacting consumer spending. The review also considers the
negative impact on Boyd's Blue Chip casino property from the
competing Four Winds casino that opened in August 2007, as well as
the investment burden related to its Echelon development project
on the Las Vegas Strip.
Moody's review will focus on Boyd's ability to maintain pro forma
debt/EBITDA at or below 5 times over the longer-term in light of
the evolving trends in the Las Vegas Locals, Downtown Las Vegas,
and Indiana gaming market. The company's financial and
development plans related to the recourse and non-recourse portion
of Echelon Place, its Las Vegas Strip development project, will
also be key to any rating decision. Boyd's debt/EBITDA for the
12-month period ended March 31, 2008 was about 4.3 times and is
expected to increase through 2010 as result of its planned
investment in Echelon.
The affirmation of SGL-2 considers that despite the company's
current challenges, Boyd will continue to generate positive cash
flow after interest, taxes, dividends and maintenance capital
expenditures. However, the company will be a net borrower through
fiscal 2010 as a result of its continued investment in Echelon.
Boyd currently has about $2.5 billion available on its $4 billion
revolver. The SGL-2 also acknowledges the company's large
portfolio of assets with a high degree of separability that
provides the company with the flexibility to access additional
capital in the unlikely event the company needs to address any
liquidity concerns over the next twelve months.
Boyd ratings placed on review for possible downgrade:
-- Corporate Family Rating at Ba2
-- Probability of Default Rating at Ba2
-- $250 million 7.125% senior subordinated notes due 2016 at B1
-- $300 million 7.750% senior subordinated notes due 2012 at B1
-- $350 million 6.750% senior subordinated notes due 2014 at B1
Boyd Gaming Corporation wholly-owns and operates gaming and
entertainment facilities located in Nevada, Mississippi, Illinois,
Louisiana, and Indiana. The company is also 50% partner in a
joint venture that owns a limited liability company, operating
Borgata Hotel Casino and Spa in Atlantic City, New Jersey, which
is accounted for using the equity method. The company also
entered into two joint ventures associated with its Echelon
development. Net revenue for the 12-month period ended March 31,
2008 was about $2.2 billion.
CARUSO HOMES: Can Obtain $1.3 MM DIP Financing from Jeffrey Caruso
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland granted
Caruso Homes Inc. and its debtor-affiliates authority to obtain a
$1.3 million postpetition financing from Jeffrey V. Caruso, the
Postpetition Lender, to be used in the operation of its
businesses.
As security for the Debtors' obligations, the Postpetition Lender
is granted, among other things:
a) subject to the Carve Out and the U.S. Trustee fees, a
priority claim over any and all administrative expense claims
specified under Section 503(b) of the Bankruptcy Code (other
than administrative claims of the Captain John Lenders and
Bank of America and any other allowed administrative expense
claims that the Court may determine are entitled to priority
under Section 507(b) of the Bankruptcy Code);
b) valid and perfected first priority senior security interests
in, and liens upon, all of the Debtor's unencumbered assets
as of the petition date, if any, subject, however, to the
"Adequate Protection Claims" of the Captain John Lenders and
Bank of America, as set forth in the Final Cash Collateral
Order;
c) valid and perfected security interests in and liens upon all
property of the Debtor (and the debtor-affiliates, but only
to the extent set forth in the Postpetition Credit Agreement
and as provided in this Order) subordinate to valid perfected
liens and security interests existing as of the petition
date.
The purchase and development of the Debtors' residential projects
were financed primarily through loans from nine institutional
lenders, each of whom has a first priority mortgage, deed of
trust or indemnity deed of trust on the real property owned by the
24 closely-held affiliated liability companies (the Project
Entities), as well as limited lien rights in Caruso Homes Inc. and
a guaranty from Jeffrey Caruso. In many instances, Caruso Homes
Inc. is the direct obligor of the loans from the lenders, with a
particular Project Entity executing a guaranty and granting a lien
on the specific project the lender is financing.
The Debtors' institutional lenders include: M&T Bank, Susquehanna
Bank, Bank of America, N.A., Wachovia Bank, N.A. (5 projects), PNC
Bank, National Association, MB&T Bank, Bradford Federal Bank,
Royal Bank of Canada and Meridian Bank. On several of the
projects there are also second mortgages held by sellers who
financed a portion of the purchase price of the projects.
Interest rate under the DIP facilility will be 5% p.a. The
maturity date of the DIP facility will be Dec. 31, 2008.
Headquartered in Crofton, Maryland, Caruso Homes Inc.
-- http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the
Debtors as counsel. When the Debtors filed for protection from
their creditors, they listed estimated assets of between
$1 million and $100 million, and estimated debts of more than
$100 million.
CARUSO HOMES: Taps Alix Partners as Financial Advisors/Consultants
------------------------------------------------------------------
Caruso Homes Inc. and its debtor-affiliates seek the permission of
the U.S. Bankruptcy Court for the District of Maryland to employ
Alix Partners LLP as financial advisors and consultants.
Alix Partners LLP's professionals bill:
Hourly Rates
------------
Managing Directors $650-$850
Directors $485-$650
Vice Presidents $335-$480
Associates $250-$340
Analysts $225-$250
Paraprofessionals $170-$200
In addition to hourly fees, Alix Partners will be compensated by
the payment of a Success Fee, based on the Enterprise Value of the
reorganized Debtors upon emergence from Chapter 11 as a going
concern.
The Enterpise Value will be calculated by adding total debt, plus
equity, plus total available line of credit as set forth in the
confirmed plan of reorganization for the reorganized Debtors.
Alix Partners shall be paid 0.75% of the first $25,000,000 of
Enterprise Value plus 1.5% of any additional Enterprise Value
between $25,000,000 and $50,000,000 plus 0.75% of any additional
Enterprise Value over $50,000,000.
On May 28, 2008, Alix Partners received a $200,000 retainer from
Jeff Caruso, sole owner of the Debtors, on behalf of the Debtors.
On June 20, 2008, Alix Partners received a $600,000 retainer from
Caruso Homes Inc. In the 90-day period preceding bankrupty
filing, Alix Partners incurred fees and expenses of $174,527.18
for professional services performed and expenses incurred on
behalf of the Debtors and extimated through June 23, 2008. These
fees and expenses were deducted from the retainers received,
leaving a retainer balance of $625,472.82.
John A. Dischner, a director at Alix Partners, tells the Court
that the firm does not hold or represent any interest adverse to
the Debtors or their estates, and that the firm is a
"disinterested person" as that term is defined in Sec. 101(14) of
the Bankruptcy Code.
Headquartered in Crofton, Maryland, Caruso Homes Inc.
-- http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the
Debtors as counsel. When the Debtors filed for protection from
their creditors, they listed estimated assets of between
$1 million and $100 million, and estimated debts of more than
$100 million.
CARUSO HOMES: Taps Tenenbaum & Saas as Special Corporate Counsel
----------------------------------------------------------------
Caruso Homes Inc. and its debtor-affiliates seek the permission of
the U.S. Bankruptcy Court for the District of Maryland to employ
Tenenbaum & Saas P.C. as special corporate and real estate
counsel. The Debtors selected Tenenbaum & Saas because the firm
has for years served as the Debtors' primary outside counsel and,
as a result, is familiar with the Debtors' business affairs and
legal structure.
Tenenbaum & Saas' professionals bill:
Hourly Rate
-----------
Partners $300-$450
Associates $200-$275
Paralegals $90-$150
Prior to bankruptcy filing, Tenenbaum & Saas received a $500,000
retainer from the Debtors, from which amount the firm has deducted
the sum of $209,168.64 in satisfaction of pre-petition services
rendered to the Debtors.
To the best of the Debtors' knowledge, Tenenbaum & Saas does not
have any connection with the United States Trustee, or any person
employed in the Office of the United States Trustee.
Headquartered in Crofton, Maryland, Caruso Homes Inc.
-- http://www.carusohomes.com/-- is a custom home builder. The
company and 24 of its debtor-affiliates filed for Chapter 11
protection on June 23, 2008 (D. Md. Lead Case No. 08-18254). Joel
I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the
Debtors as counsel. When the Debtors filed for protection from
their creditors, they listed estimated assets of between
$1 million and $100 million, and estimated debts of more than
$100 million.
CASALE MARBLE: Section 341(a) Meeting Scheduled for August 20
-------------------------------------------------------------
The United States Trustee for Region 21 will convene a meeting of
the creditors of Casale Marble Imports, Inc. on Aug. 20, 2008,
11:30 a.m., at room 870 of West Palm Beach bankruptcy court, at
1515 North Flagler Drive in Florida.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Delray Beach, Florida-based Casale Marble Imports, Inc. --
http://www.casalemarble.net/-- is a stone supplier. It operates
a 16,000 sq. ft. facility and hires 168 workers in 2007. The
Debtor currently has about 80 workers. It filed a chapter 11
petition on July 14, 2008 (Bankr. S.D. Fla. Case No. 08-19689).
Judge Paul G. Hyman, Jr., presides over the case. Paul L. Orshan,
Esq., represents the Debtor in its restructuring efforts. When
the Debtor filed for bankruptcy, it listed estimated assets of
$10,000,000 to $50,000,000 and estimated debts of $10,000,000 to
$50,000,000.
According to South Florida Business Journal, RBC Centura Bank, of
Toranto, is the Debtor's largest secured creditor and is owed
$8.4 million. The Debtor's assets are currently valued at about
$16.2 million, Business Journal added.
CASTLE BRANDS: Eisner LLP Expresses Going Concern Doubt
-------------------------------------------------------
New York-based Eisner LLP raised substantial doubt about Castle
Brands Inc.' ability to continue as a going concern after auditing
the company's financial statements for the year ended March 31,
2008.
The auditing firm said that the company has incurred significant
recurring operating losses, has not generated cash flows from
operations since its inception, and has senior notes due on
May 31, 2009.
The company has not generated positive cash flows from its
operating activities since inception. For the year ended
March 31, 2008, the company used cash of $19,954,958 in operating
activities. Also, the company had an accumulated deficit of
$87,546,011 as of March 31, 2008.
The company has $10,000,000 of senior notes payable due on May 31,
2009. In addition, its existing $5,000,000 stand-by credit
facility expires on Feb. 28, 2009. The inability to extend these
debt instruments on acceptable terms or find suitable alternative
sources of financing could have material adverse effects on the
company's operating results.
The company posted a net loss of $27,583,774 on net sales of
$27,325,168 for the year ended March 31, 2008, as compared with a
net loss of $16,557,350 on net sales of $25,164,038 in the prior
year.
Net sales increased $2,200,000, or 8.6%, in the fiscal year ended
March 31, 2008. Revenues per case increased 9% as part of the
company's overall pricing strategy. The company's increase in net
sales also reflects the inclusion of excise and VAT in sales to
its distributor in Ireland. Historically, sales in Ireland have
been made "in-bond," net of excise taxes. In September 2007 and
again in March 2008, the company made sales to its distributor in
Ireland "ex-bond" that included $1,900,000 and $400,000,
respectively, in excise taxes and VAT. This increase in excise
and VAT in sales to the distributor in Ireland was offset by a
change in route to market in the United Kingdom where the company
now sell "in-bond." This change resulted in a decrease of
$1,700,000 in excise and VAT taxes. These taxes are reflected in
both the company's revenues and cost of sales as an equal increase
to both.
International case sales volume was negatively impacted primarily
by the company's transition to a new distributor in the Republic
of Ireland as well as the timing of reorders in connection with
price increases and the re-launch of Boru. Specifically, the new
distributor has had difficulty in achieving broad based market
penetration. While the company anticipates a resolution to the
underlying issues, including the possible appointment of a new
distributor, which will be reached in the near term, the adverse
impact on its international sales is expected to continue at least
through the next two fiscal quarters.
Balance Sheet
At March 31, 2008, the company's balance sheet showed $42,136,926
in total assets, $27,038,957 in total liabilities, $309,810 in
minority interests, and $14,788,159 in total stockholders' equity.
A full-text copy of the company's 2008 annual report is available
for free at http://ResearchArchives.com/t/s?2f8d
The company is continuing to implement a plan supporting the
continued growth of existing brands that will be supported by a
variety of sales and marketing initiatives that the company
expects will generate cash flows from operations. As part of this
plan, the company intends to grow its business through continued
expansion to new markets and within existing markets, as well as
strengthening existing distributor relationships.
The company is also seeking additional brands and agency
relationships to leverage the existing distribution platform, as
well as a systematic approach to expense reduction, improvements
in routes to market and production cost containment to improve
existing cash flow.
Additionally, the company is actively seeking additional sources
of capital. Without sufficient additional capital or long term
debt and ultimately profitable operating results, the company will
not be able to continue as a going concern.
About Castle Brands
Castle Brands, Inc. (AMEX: ROX) -- http://www.castlebrandsinc.com/
-- manufactures, markets and sells spirit brands of vodka,
whiskey, rums, and liqueurs in the United States, Canada, Europe,
and the Caribbean. Its brands include Boru vodka, Gosling's rums,
Sea Wynde, Knappogue Castle Whiskey, Clontarf Irish whiskeys,
McLain & Kyne Bourbons, Brady's Irish cream liqueur, Celtic
Crossing liqueur, Pallini liqueurs, and Tierras Tequila. The
company distributes its products through wholesale distributors,
as well as beverage alcohol control agencies in the United States.
It sells its brands internationally, directly from the brand owner
to various retail establishments, including liquor stores, chain
stores, restaurants, and pubs. The company was founded in 1998
and is based in New York.
CENTAUR LLC: Moody's Might Cut Ratings After Technical Default
--------------------------------------------------------------
Moody's Investors Service placed all of its ratings for Centaur
LLC under review for possible downgrade, as Centaur did not meet
the bank loan covenant that requires the company to satisfy the
Pennsylvania gaming license eligibility requirements by July 15,
2008, the Pennsylvania Gaming Suitability Date as defined in the
bank agreement. As a result, Centaur is in technical default of
its bank agreement although the lenders have not taken any formal
action at this point and the project itself is reportedly on time
and on budget.
During its review period, Moody's will assess the lenders'
willingness to provide an amendment. It will also review the
terms and conditions of the potential amendment and its financial
implications for the company. Beyond the resolution of the
technical default, the review period will also allow the rating
agency to evaluate the nature of the delay and determine whether
it could jeopardize the on-time completion of the Valley View
Downs project. Additionally, Moody's will review the performance
of the Hoosier Park Racetrack and assess the company's ongoing
liquidity profile.
These ratings have been placed under review for possible
downgrade:
-- B3 Corporate Family Rating
-- B3 Probability of Default Rating
-- B1 Senior Secured First Lien Credit Facilities
-- Caa1 Second Secured Second Lien Term Loan
Centaur is a wholly-owned subsidiary of Centaur Gaming, LLC which,
in turn, is a wholly-owned subsidiary of Centaur, Inc. Centaur,
Inc. owns Hoosier Park, LP, Centaur Colorado, LLC, and Valley View
Downs, LP.
CHET MORRISON: Moody's Assign B3 Corporate Family Rating
--------------------------------------------------------
Moody's Investors Service assigned Chet Morrison Contractors, Inc.
(CMC) a B3 Corporate Family Rating and Probability of Default
Rating.
Moody's also assigned a B3 (LGD4, 50%) rating to its proposed
offering of $100 million of senior secured notes due 2013. The
offering proceeds will be used to refinance approximately $59
million of debt and fund $37 million of planned capital
expenditures. CMC is also negotiating a $30 million senior
secured revolving bank credit facility that is expected to be
undrawn at closing. The ratings are subject to a review of the
final documents and terms. The outlook is stable.
"The B3 rating reflects CMC's relatively small size and limited
track record in its E&P business and recently acquired offshore
well servicing business," Pete Speer, Moody's vice-president and
senior analyst commented. "A substantial portion of the company's
forecasted growth in earnings and cash flows are tied to
historically high oil and natural gas prices and its new well
servicing operations."
CMC is a privately owned and closely held company that was
incorporated in 1983 as a construction contractor serving energy
companies in the U.S. Gulf Coast region that has expanded its
services offerings and geographic reach since 2001. The company
provides construction, fabrication and subsea services to both
offshore and inland oilfield production assets and oilfield
pipeline infrastructure. In 2006, CMC acquired oil and gas
property interests and then purchased an offshore well servicing
company in April 2008 that primarily provides plugging and
abandonment services.
Approximately 25% of reported EBITDA for the last 12 months ended
May 31, 2008 came from oil and gas production. The company
forecasts a substantial increase in EBITDA for the fiscal year
ending Dec. 31, 2008 with the increase coming from continued
growth of oil and gas production at current elevated commodity
prices and additional EBITDA from its newly acquired well
servicing operations. Approximately 50% of forecasted EBITDA is
expected to come from oil and gas and 11% from well servicing,
with the remainder generated by its legacy construction, offshore
and inland services operations.
The B3 CFR considers CMC's limited history operating oil and gas
properties. While the company has reported production growth in
2008, there is insufficient historical information to assess CMC's
ability to maintain and grow production while replacing reserves
at competitive costs. EBITDA from oil and gas production is
subject to volatile commodity prices and these operations are
inherently capital intensive. In addition, the company's proved
developed non-producing and proved undeveloped reserves require
substantial future development expenditures to bring those
reserves to production. This future capital requirement leaves
little debt capacity on the company's proved reserves from Moody's
perspective.
The ratings also incorporate the volatility of demand for CMC's
core construction and services offerings and the inherent
performance and valuation uncertainty from its recent acquisition.
The construction business entails fixed price contracting risks
and is working capital intensive. The B3 CFR is supported by the
company's experienced management team, its customer relationships
with major E&P companies and its geographical diversification from
its Mexican operations and joint venture in Trinidad.
CMC expects to obtain a $30 million senior secured revolving bank
credit facility to provide for working capital needs. The
revolver will have a first lien claim on current assets. The
proposed senior secured notes will have a first lien claim on all
fixed and other non-current assets, with the exception of CMC's
Mexican subsidiary and its joint venture in Trinidad. The assets
in Mexico and the joint venture investment were about 12% of total
assets at Dec. 31, 2007. The company plans to make further
capital investments in Mexico during the remainder of 2008.
Despite the lack of a first lien claim on all the assets of CMC,
there does not appear to be a significant enough potential
deficiency in the collateral coverage for the senior secured notes
to result in a notching of the notes from the CFR, and therefore
the notes were assigned a B3 rating under Moody's Loss Given
Default methodology.
The outlook is stable based on Moody's expectations of favorable
market conditions for the company's core construction and services
operations. If market conditions were to weaken and reduce demand
for the company's services, if its oil and gas operations were to
consume significant capital with weak production response, or if
the company does not maintain adequate liquidity the ratings could
come under negative pressure.
CMC is based in Houma, Louisiana and is a wholly owned subsidiary
of Morrison Energy Group, LLC, which will be a co-issuer of the
senior secured notes.
CHRYSLER LLC: Sees Rise in Financing Affiliate's Borrowing Costs
----------------------------------------------------------------
Chrysler LLC's financing arm, Chrysler Financial is likely to see
its borrowing costs rise in early August when it rolls over about
$30 billion of short-term debt backed by the loans and leases it
makes, The Wall Street Journal reports.
The $30 billion deal, says WSJ, was arranged as a piece of the
roughly $62 billion package used to finance DaimlerChrysler AG's
sale of Chrysler to Cerberus Capital Management LP, which was
completed last August.
WSJ relates that the borrowing charges will make it difficult for
the company to offer low-interest loans to buyers and for dealers
to hold inventory.
It is unclear, WSJ states, how much Chrysler Financial will have
to pay in interest costs, but people familiar with the situation
said it would be well above the London interbank offered rate, or
Libor, a common benchmark for the loans. WSJ adds that Libor is
now about 2.8%, and the spread is expected to be well more than
one percentage point above that.
WSJ, citing people familiar with the offering, states that holders
of the debt include J.P. Morgan Goldman Sachs Group Inc.,
Citigroup Inc. and Morgan Stanley.
The higher financing costs could also complicate the restructuring
attempt of Cerberus, WSJ says. The financing tied to the sale of
Chrysler to Cerberus has been riddled with snags from the get-go,
WSJ adds. Banks that committed financing for the deal have had
particular trouble unloading their commitments, the Journal
states.
According to the Journal, bankers, led by J.P. Morgan Chase & Co.,
are pushing hard to persuade more than 20 banks to renew the
$30 billion credit facility that was issued by the auto-finance
company last year when it was carved out of the former Daimler AG.
The debt represents a sizable chunk of Chrysler Financial's
$70 billion portfolio in working capital, WSJ adds.
The Journal states that pressures on U.S. auto makers are piling
up amid a slumping economy and rising fuel prices. If Chrysler
Financial's costs go up, WSJ points out, the company will find it
harder to help dealers offer cheaper leases, something needed to
entice consumers who have lost their taste for many U.S. auto
product lines.
According to WSJ, the environment for selling short-term asset-
backed debt like this has been troublesome since the credit crisis
began last summer and most money-market fund managers began to shy
away from most complex, structured debt.
WSJ, citing Autodata Corp., indicates that Chrysler reported a 36%
decline in sales in June. The company has had trouble selling its
large sport-utility vehicles by Jeep and Dodge, as well as cars
like the Sebring, WSJ adds.
About Chrysler LLC
Based in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter June 24, 2008,
Moody's Investors Service affirmed the B3 Corporate Family Rating
and Probability of Default Rating of Chrysler LLC, but changed the
outlook to negative from stable. The change in outlook reflects
the increasingly challenging environment faced by Chrysler as the
outlook for US vehicle demand falls, and as high fuel costs drive
US consumers away from light trucks and SUVs, and toward more fuel
efficient vehicles.
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 reported in the Troubled Company Reporter on May 9, 2008,
Fitch Ratings downgraded the Issuer Default Rating of Chrysler
LLC to 'B' from 'B+', with a Negative Rating Outlook. Fitch has
also downgraded the senior secured bank facilities, including
senior secured first-lien bank loan to 'BB/RR1' from 'BB+/RR1';
and senior secured second-lien bank loan to 'CCC+/RR6' from
'BB+/RR1'. The recovery rating on the second lien was also
downgraded from 'BB+/RR1' to 'CCC+/RR6' based on lower asset value
assumptions and associated recoveries in the event of a stress
scenario.
CITIGROUP INC: Posts $2.5 Billion Net Loss in 2008 Second Quarter
-----------------------------------------------------------------
Citigroup Inc. disclosed Friday its results of operations for the
quarter ended June 30, 2008.
The company reported a net loss for the 2008 second quarter of
$2.5 billion. Solid results in the core franchise were offset by
write-downs and credit costs. Results include $7.2 billion in
pre-tax write-downs in Securities and Banking. Additionally,
credit costs increased $4.5 billion, mainly driven by Consumer
Banking in North America and Global Cards.
Second Quarter Highlights
-- Results improved substantially versus first quarter 2008 due
to lower write-downs and good performance in the core
franchise.
-- Total assets declined by $99 billion since first quarter
2008; approximately two-thirds from legacy assets.
-- Sale of non-strategic businesses on track; announced
CitiCapital, Diners Club International and CitiStreet
transactions.
-- Capital position improved as Tier 1 Capital ratio increased
to 8.7%; total allowance for loans, leases and unfunded
lending commitments increased to $22 billion.
-- Re-engineering efforts resulted in sequential decline in
headcount and expenses.
-- Headcount reduced by approximately 6,000 in the second
quarter and approximately 11,000 in the first half of 2008.
-- Net interest margin expanded 34 basis points versus the first
quarter 2008, to 3.18%.
-- Talent enhanced by strong new hires.
On July 11, 2008, the company announced the sale of its German
retail banking operation, which is expected to result in an
estimated after-tax gain of approximately $4 billion upon closing.
This is expected to result in a proforma increase to the second
quarter Tier 1 Capital ratio of approximately 60 basis points.
Management Comment
"We continue to demonstrate strength in our core franchise. We
cut our second quarter losses in half compared to the first
quarter. The cost of credit increased by 20% from the first
quarter, but write-downs in our Securities and Banking business
dropped by 42%. Additionally, headcount and expenses declined
sequentially. While there is still much to do, we are encouraged
by our progress in delivering on our commitment to the re-
engineering efforts," said Vikram Pandit, chief executive officer
of Citigroup.
"As part of our efforts to improve capital and balance sheet
efficiency, we reduced legacy assets substantially during the
quarter. We recently closed on the sale of CitiStreet and just
last Friday, announced the sale of our German retail banking
operation for a substantial gain. We continue to be focused on
building the strongest team by attracting world class leaders to
Citi and developing our current talent. This, combined with a
sharp focus on customer relationships in all regions and an
ongoing commitment to our strategic targets, will drive our
earnings power going forward," said Pandit.
Second Quarter Summary
Revenues were $18.7 billion, down 29% from the second quarter of
2007, largely driven by continued write-downs in Securities and
Banking sub-prime related direct exposures in fixed income markets
and a downward credit valuation adjustment related to exposure to
monoline insurers. Revenues were stable across other businesses.
The net interest margin increased 34 basis points versus first
quarter 2008 to 3.18%.
Global Cards GAAP revenues increased by 3%, driven by double-digit
growth in purchase sales and average loans outside North America,
partially offset by lower securitization results in North America.
Global Cards managed revenues increased 18%, driven by growth in
average managed loans, up 11%, and improved managed net interest
margin.
Consumer Banking revenues increased by 1%, driven by strong loan
and deposit growth, partially offset by lower investment sales.
Revenues were also affected by a $745 million net loss from the
mark-to-market on the mortgage servicing right (MSR) asset and
related hedge in North America.
In the Institutional Clients Group, Securities and Banking
revenues were down 94% to $539 million, due to substantial write-
downs and losses related to the credit markets. These include
write-downs of $3.4 billion on sub-prime related direct exposures,
downward credit value adjustments of $2.4 billion related to
exposure to monoline insurers, write-downs of $545 million on
commercial real estate positions, and write-downs of $428 million,
net of underwriting fees, on funded and unfunded highly leveraged
finance commitments.
Transaction Services revenues were up 30% to a record
$2.4 billion, driven by strong growth in customer liability
balances, up 15%, and assets under custody, up 13%.
Global Wealth Management revenues grew 4% on strength in banking
and lending revenues which were partially offset by a slowdown in
capital markets, particularly in Asia. Results reflected full
ownership of Nikko Cordial.
Operating expenses were $15.9 billion, up 9%, primarily due to
$446 million in repositioning charges and the absence of a $300
million litigation reserve release recorded in the prior-year
period. Expense growth also reflected the impact of recent
acquisitions. Expenses declined for the second consecutive
quarter, due to continued benefits from re-engineering efforts.
Credit costs of $7.2 billion primarily consisted of $4.4 billion
in net credit losses and a $2.5 billion net charge to increase
loan loss reserves. Net credit losses increased $2.4 billion,
primarily driven by residential real estate lending in North
America and Global Cards. The incremental net charge to increase
loan loss reserves of $2.0 billion was mainly due to residential
real estate in North America.
The effective tax rate on continuing operations was 52.2% versus
29.8% in the prior-year period. The increase in the tax rate was
due largely to higher tax rates in the jurisdictions where the
losses were incurred.
During the current quarter, Citi further strengthened its capital
position by issuing $4.9 billion of common stock and $8.0 billion
of preferred stock. Tier 1 capital ratio was 8.7% at quarter-end.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$2.1 trillion in total assets, $2.0 trillion in total liabilities,
and $136.6 billion in total stockholders' equity.
The balance sheet figures are preliminary.
In comparison, the company's consolidated balance sheet at
March 31, 2008, showed $2.2 trillion in total assets,
$2.1 trillion in total liabilities, and $128.2 billion in total
stockholders' equity.
A full-text copy of the company's quarterly financial data
supplement for the quarter ended June 30, 2008, is available for
free at http://researcharchives.com/t/s?2fb2
Share Price
The shares closed at $19.35 in New York Stock Exchange composite
trading on Friday, up $1.38, or 7.7 percent, to its four-week
high. They are up almost 20 percent this week, the best
performance since the company was formed in 1998, according to
Bloomberg News. Still, this is a 65.7% drop from the Citigroup's
previous high of $56.41 in December 2006.
The shares closed at $19.69 on Monday.
About Citigroup Inc.
Headquartered on New York City, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com/citigroup/-- a leading global financial
services company, has some 200 million customer accounts and does
business in more than 100 countries, providing consumers,
corporations, governments and institutions with a broad range of
financial products and services, including consumer banking and
credit, corporate and investment banking, securities brokerage,
and wealth management. The company's major brand names include
Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and
Nikko.
The company has reported three consecutive quarters of net losses
beginning the fourth quarter of 2007. Aggregate net losses for
the last three quarters totaled $17.4 billion.
CKE RESTAURANTS: Moody's Affirms Ba3 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service assigned an SGL-3 speculative grade
liquidity rating to CKE Restaurants Inc. (CKE) indicating adequate
liquidity. In addition, Moody's affirmed all ratings of CKE,
corporate family rating rated Ba3. The outlook remains negative.
Over the following 12 months Moody's expects CKE will generate
negative free cash flow as sizeable capital expenditures and
dividend payments are likely to exceed internal operating cash
generation. However, Moody's also believe internal cash flow
should comfortably cover working capital and maintenance capital
expenditures.
As of May 19, 2008, CKE had approximately $19 million of
unrestricted and $17 million of restricted cash on its balance
sheet. The company also had availability under its $200 million
revolver credit facility of about $103 million, after
incorporating $61 million of outstandings and $36 million of
letters of credit.
However, Moody's believes the cushion under the company's bank
covenant will be modest as operating performance is not likely to
materially improve and covenants step-down in the first quarter of
fiscal year 2010. As a result, the company may be required to
seek an amendment to maintain full access to its revolver absent
improved operating performance or lower debt levels. CKE's only
financial maintenance covenant under its revolving credit facility
is adjusted leverage which steps-down in May 2009 to 2.75 times
from a current level of 3.0 times.
The company's bank credit facility is secured by the capital stock
and certain assets of the borrower and its subsidiaries. The bank
agreement also allows for restricted payments that could include
share repurchases and dividends in aggregate, up to a certain
amount, provided that one of the conditions being the company
maintains a minimum of $25 million of availability under the
revolver.
CKE owns, operates, and franchises, approximately 3,101 quick-
service restaurants under the brand names Carl's Jr. and Hardees.
In addition, approximately 412 Carl's units are dual branded with
Greene Burritos, while 88 Hardees are dual-branded with Red
Burritos. Carl's has 410 company owned units and 752 franchised
units located in the Western U.S., with a concentration in
California, while Hardees reported ownership of 495 units and
franchised 1,428 with a concentration in the South Eastern U.S.
For the last 12-month period ending May 19, 2008, the company
generated revenues of about $1.57 billion.
CMT AMERICA: Secures $2.8MM Financing from Affiliate
----------------------------------------------------
CMT America Corp. obtained from an affiliate $2.8 million in
financing that it intends to use in buying $1.7 million of fresh
inventory to "maximize its wind-down efforts," Bill Rochelle of
Bloomberg News reports. The inventory would be supplied by
another affiliate, the report states.
CMT America Corp., aka Fairvane Corp., Urban Behavior, and
Weathervane, is a 70-store young women's clothing retailer. It
filed for Chapter 11 protection on July 13, 2008 (Bankr. D.Del.,
Case No. 08-11434). Robert S. Brady, Esq. at Young, Conaway,
Stargatt & Taylor, represents the Debtor. When the Debtor filed
for bankruptcy, it listed estimated assets of $10,000,000 to
$50,000,000, and estimated debts of $10,000,000 to $50,000,000.
CRESTED BUTTE: Holds Final Graduation; Closed for Good
------------------------------------------------------
Crested Butte Academy held its last commencement exercises in May
2008 and is now "closed for good," Beverly Corbell writes for The
Daily Sentinel.
The Sentinel says that Gary Garland, Steve Trippe and Derek Taka
pooled their funds and bought some of the school's assets to
continue classes in the Elevation Hotel just to allow 15 seniors
to graduate.
Mr. Garland asserted that the school had been struggling
financially since its inception 15 years earlier, The Sentinel
notes. In 2007, condominium developer, Cay Clubs Corp. of
Clearwater, Florida bought the school. The new owner, according
to The Sentinel, went bankrupt in March 2008 due to the housing
market slump.
The school employed about 40 staff and Mr. Garland hadn't
mentioned about what happened to them, The Sentinel says. Graham
Frey, the school's former headmaster, couldn't be reached for an
interview, The Sentinel relates.
According to Mr. Garland, it was previously planned to move the
school to Park City, Utah in order to save it. That plan didn't
work, The Sentinel quotes Mr. Garland as saying.
CRM USA: A.M. Best Holds 'bb' Rating on $35MM 8.65% Jr. Sub. Debt
-----------------------------------------------------------------
A.M. Best Co. has removed from under review with negative
implications and affirmed the financial strength rating of A-
(Excellent) and issuer credit rating of "a-"of Majestic Insurance
Company (San Francisco, CA). Concurrently, A.M. Best has removed
from under review with negative implications and downgraded the
FSR to B++(Good) from A-(Excellent) and ICR to "bbb" from "a-"of
Twin Bridges (Bermuda) Ltd. (Hamilton, Bermuda). Both companies
are subsidiaries of CRM Holdings, Ltd.(Hamilton, Bermuda) [NASDAQ:
CRMH].
Additionally, A.M. Best has removed from under review with
negative implications and affirmed the ICRs of "bbb-" of CRM
Holdings, Embarcadero Insurance Holdings, Inc. (San Francisco, CA)
and CRM USA Holdings, Inc. (Wilmington, DE). A.M. Best also has
removed from under review with negative implications and affirmed
the debt ratings of "bb" of the trust preferred securities of CRM
USA Holdings, Inc. and the "bb" of the surplus notes of
Embarcadero Insurance Holdings, Inc. The outlook assigned to all
ratings is negative.
These rating actions reflect Majestic's improved risk-adjusted
capitalization following the implementation of a capital re-
allocation plan by its ultimate parent, CRM Holdings, as well as
the execution of a quota share reinsurance arrangement with a
third party reinsurer. Furthermore, the issues that were faced by
an affiliate, Compensation Risk Managers
LLC (CRM LLC) with the New York Workers' Compensation Board have
been settled with no admission of wrong doing, fines or penalties.
However, CRM LLC has agreed to surrender its third party
administrator license. Despite this settlement, A.M Best remains
concerned regarding the financial flexibility at CRM Holdings
largely due to the significant decline in its valuation, as well
as the limited capital available through its insurance and non-
insurance subsidiaries.
The rating actions on Twin Bridges recognize the deterioration in
its risk-adjusted capitalization primarily due to stock dividends
made in the second quarter of 2008 to CRM Holdings as part of its
overall plan to re-allocate capital to Majestic.
These debt ratings have been affirmed and assigned a negative
outlook:
CRM USA Holdings, Inc.:
-- "bb" on $35 million 8.65% junior subordinated debt
securities, due 2036
Embarcadero Insurance Holdings, Inc.:
-- "bb" on $8 million LIBOR+ 4.2% surplus notes, due 2033
CROSSING PARK: Wants to Employ Smith Gambrell as Counsel
--------------------------------------------------------
Crossing Park Properties, LLC, asks the U.S. Bankruptcy Court for
the Northern District of Georgia for authority to employ Smith
Gambrell & Russell, LLP, as counsel, under a general retainer,
nunc pro tunc to June 2, 2008.
Smith Gambrell will advise the Debtor generally regarding matters
of bankruptcy law, including, but not limited to, the rights,
duties, obligations and remedies of the Debtor as debtor in
possession, both with regard to its assets and with respect to the
claims of its creditors; as well as perform other legal services
necessary to the Debtor's bankruptcy case.
Paul G. Durdaller, Esq., a partner at Smith, Gambrell & Russell,
LLP, assures the Court the firm does not represent any interest
adverse to the Debtor or its estate, and that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Mr. Durdaller further tells the Court that the Debtor has paid the
firm a $75,000 retainer, out of which $14,000 has been applied as
payment of invoices related to debt counseling or bankruptcy
including, without limitation, the preparation and filing of the
Debtor's Chapter 11 bankruptcy case.
Smith, Gambrell & Russell, LLP's professionals currently bill:
Hourly Rate
-----------
Partners and Counsel $300-$595
Associates $200-$335
Paralegals $155-$235
Based in Norcross, Ga., Crossing Park Properties, LLC, is engaged
in the real estate business. The company filed for Chapter 11
protection on June 2, 2008 (N.D. Ga. Case No. 08-70467). When the
Debtor filed for reorganization under Chapter 11, it listed
estmated assets of between $10 million and $50 million, and
estimated debts of between $10 million and $50 million.
DAVID FURSMAN: Case Summary & 10 Largest Unsecured Creditors
------------------------------------------------------------
Debtors: David Fursman
Laura Fursman
6919 E. Monterra Way
Scottsdale, AZ 85266
Bankruptcy Case No.: 08-08966
Chapter 11 Petition Date: July 18, 2008
Court: District of Arizona (Phoenix)
Judge: Randolph J. Haines
Debtors' Counsel: Daniel E. Garrison, Esq.
Email: dgarrison@stklaw.com
Shugart Thomson & Kilroy
3636 N. Central Ave., Suite 1200
Phoenix, AZ 85012
Tel: (602) 650-2085
Fax: (602) 296-0138
http://www.stklaw.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtors largest unsecured creditors is available for
free at:
http://bankrupt.com/misc/azb08-08966.pdf
DELTA AIR: Names Senior Team to Lead Merged Company
---------------------------------------------------
Delta Air Lines Inc. introduced to its employees the senior team
that will be responsible for leading the company after the closing
of its merger with Northwest Airlines Corp., marking another
important milestone toward the successful integration of the two
airlines.
Delta will combine the strengths of two best-in-class airlines to
create an industry-leading management team and ensure the seamless
transition of Northwest's operations into Delta over the next 12
to 24 months.
The team of officers will be led by Delta CEO Richard Anderson, an
18-year industry veteran, and will be comprised of highly
experienced operational, corporate and strategic leaders selected
from both companies to represent the respective strengths of Delta
and Northwest.
In addition, Delta announced the senior officers who will be
members of its Corporate Leadership Team. The CLT will have
overall responsibility for the strategy of the airline, including
major decision-making and overall supervision of the merger
process. The CLT, which will be effective upon the closing of
the merger, includes:
* Richard Anderson, CEO - Delta Air Lines
* Ed Bastian, President and CFO - Delta Air Lines; CEO and
President - NWA
* Mike Becker, EVP, Chief Operating Officer - NWA
* Mike Campbell, EVP - HR, Labor & Communications
* Steve Gorman, EVP - Operations
* Glen Hauenstein, EVP - Revenue & Network
* Ben Hirst, SVP - General Counsel
* Laura Liu, SVP - International
* Theresa Wise, SVP – Chief Information Officer
By naming its entire officer team in advance of the closing of the
merger, Delta has laid a strong foundation for the combined
airline to immediately begin capturing and exceeding the merger
synergies expected following the close of the transaction.
"We have assembled an incredibly talented officer team," said Mr.
Anderson. "Their diverse backgrounds and extensive experience,
both in and out of the airline industry, provide a solid
foundation for building a world-class airline focused on taking
care of our people, serving our customers, and giving a good
return to our shareholders."
Upon closing, NWA, Inc. will be an operating subsidiary of Delta.
Ed Bastian, who is Delta's current president and CFO, will also
become CEO and president of Northwest. Mike Becker, who is
currently senior vice president of Human Resources and Labor
Relations at Northwest, will become the new executive vice
president and chief operating officer of Northwest during the
transition period. As previously announced, Northwest's current
president and CEO, Doug Steenland, will leave to assume his seat
on the new Delta Board of Directors.
Each of the officers of the new NWA structure will be officers of
both NWA and Delta upon closing. "The officers named for both
Delta and NWA are leaders of the new Delta," said Mr. Bastian, who
will have leadership roles in both organizations. "The final
organizational structure will evolve over time, as the transition
to a single operating certificate is achieved. We will not
sacrifice revenue or cost-synergies by moving too quickly to
integrate. Combining these two great airlines will be a well-
planned, deliberate process."
The new Delta will be headquartered in Atlanta and will maintain a
significant long-term presence in Minnesota that includes both
operation and staff functions beyond the 12-24 month transition of
Northwest operations into Delta.
Mr. Anderson said, "We are already making great progress on our
integration planning and are well ahead of previously attempted
airline mergers in anticipation of gaining approval by the
Department of Justice later this year. Today's announcement
is another important milestone in solidifying the leadership of
the new Delta and accelerating the planning efforts that are
essential to achieving a seamless integration after the closing
of the merger. In light of the industry's current challenges,
including record high oil prices, it is clear we were smart to
proceed when we did because this merger will provide the
necessary revenue and cost synergies to better position the
combined carrier for success over the long-term."
Northwest's CEO Mr. Steenland concluded, "As the planning
continues and the transformation evolves, we ask that all Delta
and Northwest people remain focused on operating our respective
airlines. Thanks to the caliber of our people, we are confident
we will complete the most successful merger in airline history."
Delta in April announced that it is combining with Northwest in an
all-stock transaction to create America's premier global airline.
The new company will be called Delta and will be headquartered in
Atlanta. Combined, the company and its regional partners will
provide customers access to more than 390 destinations in 67
countries.
Together, Delta and Northwest will have more than $35,000,000,000
in aggregate annual revenues, operate a mainline fleet of nearly
800 aircraft, employ approximately 75,000 people worldwide, and
have one of the strongest balance sheets in the industry. The
merger is subject to the approval of Delta and Northwest
stockholders and regulatory approvals, which are targeted for
completion later this year.
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 104; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: Slashes Domestic Services, Adds International Flights
----------------------------------------------------------------
Delta Air Lines, Inc. is cutting approximately 6% of its domestic
capacity out of Atlanta, Georgia, in September 2008, the Atlanta
Journal-Constitution reports.
According to Delta, the flight cuts are part of the airline's
plan to reduce domestic flight capacity by 13% across its system.
The terminated services include international routes to Ottawa,
Canada, and Leon, Mexico, in August and September, where Delta
has decided to pull out its service entirely, says AJC.
The reduction in capacity will also mean fewer flights on routes
from Atlanta to cities including Ontario, California; Norfolk,
Virginia; Myrtle Beach, South Carolina, and Savannah, because
regional nonstop flights that bypass hubs "are not economical,"
Delta spokesman Kent Landers told AJC.
Delta will also cut its fleet by approximately 15 to 20 mainline
aircraft and 60 to 70 regional jets by the end of 2008, and will
reduce the number of regional carriers it uses.
Mr. Landers stated that a higher mix of international passengers
on Delta flights who are connecting to international flights,
means higher average fares that "better cover the cost of fuel."
As a result, Delta has added other international routes,
including a service from Atlanta to Stockholm, Sweden in June,
the newspaper reports.
In a report by TravelVideo.tv, Delta said it will launch a direct
service to the Kootenay Rockies of British Columbia, from Salt
Lake City in December 2008. Delta will utilize Canadian RJ 200
regional jets that accommodates 50 passengers for the new
service, according to the Web site.
Delta Ends Regional Flight Services
Delta is terminating its twice-daily nonstop flights between Los
Angeles and Eugene, Oregon as of September 1, 2008, NRToday.com
reports.
According to the report, Delta is pulling out the Eugene-Los
Angeles flight due to a canceled partnership with ExpressJet,
which operates the flights. Flights from Eugene to Salt Lake
City in Utah, however, will continue.
Effective immediately, Delta will also drop two daily flights
from Akron to Cincinnati, Ohio but will add a new daily flight to
Atlanta, according to Cleveland.com.
No more passenger flights from Salem Municipal Airport in Salem,
Oregon will be booked beyond October 10, airline officials
informed the city, SalemJournal.com says.
In a company statement, Delta informed officials of the cities
affected by the termination of regional flight, that cutting the
regularly scheduled passenger air services was part of its
strategy to "reduce select flights that cannot be profitable" in
light of skyrocketing fuel prices.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 104; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DERECKTOR SHIPYARDS: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Derecktor Shipyards Connecticut, LLC
dba Derecktor Shipyards
837 Seaview Ave.
Bridgeport, CT 06607
Bankruptcy Case No.: 08-50643
Type of Business: The Debtors are builders of yachts and
commercial vessels. See
http://www.derecktor.com/
Chapter 11 Petition Date: July 18, 2008
Court: District of Connecticut (Bridgeport)
Judge: Alan H.W. Shiff
Debtor's Counsel: James Berman, Esq.
Email: jberman@zeislaw.com
Zeisler and Zeisler
558 Clinton Ave.
P.O. Box 3186
Bridgeport, CT 06605
Tel: (203) 368-4234
http://www.zeislaw.com/
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $10,000,000 to $50,000,000
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Zepsa Industries, Inc. $723,291
1501 Westinghouse Blvd.
Charlotte, NC 28273
Laguna Associates, Inc. $250,964
206 S. Ave.
Fanwood, NJ 07023
Freeman Marine Equipment, Inc. $216,812
28336 Hunters Creek Rd.
Gold Beach, OR 97444
Aerogo, Inc. $209,790
Atlantic Detroit Diesel $201,616
Nigel Gee & Associates, Ltd. $182,511
Tech Air $138,793
Hydro Electrique Marine $130,691
Teak Decking Sys. $117,153
Mertonsteel, Ltd. $110,291
Soundown Corp. $106,121
Triangles Cables Pty. Ltd. $102,020
Aritex $89,834
Collins & Jewell Co. $89,250
K. Christian Steen Gmbh & Co. $89,057
Updike, Kelly & Spellacy, P.C. $87,751
Mckay Electrical $79,294
Gibbs & Cox, Inc. $72,695
Markey Machinery Co., Inc. $70,812
In-Mar Systems $63,258
DOLLARAMA GROUP: Moody's Assigns B1 Corporate Family Rating
-----------------------------------------------------------
Moody's Investors Service lowered Dollarama Group Holdings L.P.'s
speculative grade liquidity rating to SGL-3 from SGL-2, indicating
adequate rather than good liquidity. At the same time, Moody's
affirmed all other ratings of both Dollarama and its operating
subsidiary Dollarama Group L.P, including Dollarama's B1 corporate
family rating.
The lowering of company's liquidity rating signals Moody's belief
that pre-defined covenant step-downs in Group's bank facility will
cause the company to operate with reduced, albeit adequate,
headroom to its bank covenants through much of the next year. The
SGL-3 rating is supported by Moody's expectation that Dollarama is
likely to generate free cash flow through the next year
comfortably in excess of its $25 million in current debt
maturities and maintain full access to its $75 million unused
revolver. The affirmation of the company's long term ratings
reflects Moody's expectation that its operating performance and
key credit metrics are unlikely to deviate significantly from
current levels despite the potential that the overall retail
environment may become more challenging through the next year.
The outlook for all ratings remains stable.
These rating has been downgraded:
Issuer: Dollarama Group Holdings L.P.
-- Speculative Grade Liquidity Rating to SGL-3 from SGL-2
These ratings have been affirmed:
Issuer: Dollarama Group Holdings L.P.
-- Corporate family rating at B1
-- Probability of default rating at B1
-- Senior Subordinated Regular Bond/Debenture at B3 (to LGD5,
83% from LGD5, 84%)
Issuer: Dollarama Group L.P.
-- Senior Secured Bank Credit Facility at Ba1(to LGD2, 17% from
LGD2, 19%)
-- Senior Subordinated Regular Bond/Debenture at B2 (to LGD4,
61% from LGD4, 63%)
Dollarama Group Holdings L.P. is the parent of Dollarama Group
L.P, which is a leading extreme value retailer operating 530
stores primarily in Eastern Canada and the Atlantic Provinces with
revenue of roughly C$1 billion for the 12 months ended May 4,
2008. Both companies are headquartered in Montreal, Canada.
DRUMMOND CO: S&P's BB- Rtng. Unmoved by Colombian Employees Strike
------------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings and
outlook on Drummond Co. Inc. (BB-/Stable/--) are not immediately
affected by the company's announcement that members of the union
representing a majority of its Colombian employees declared a
strike at all operating locations. The strike effectively
suspends all Colombian operations, which are expected to account
for around 80% of Drummond's earnings this year.
S&P believe that despite the work stoppage, the two sides will
continue to negotiate in order to reach an agreement in a
relatively short time. Still, if the work stoppage were to
persist beyond a brief period, S&P could place the ratings on
Drummond on CreditWatch with negative implications.
Drummond's operating results have been strong so far this year,
benefiting from higher realized coal prices. As a result, S&P
expect substantial EBITDA growth during 2008 compared to 2007 and
a further strengthening of credit metrics. In addition, even if
the strike were to persist, the company has substantial cushion in
its existing financial covenants.
DUKE FUNDING: Moody's Assigns Junk Ratings on Four Notes Classes
----------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible further downgrade the ratings on these notes issued by
Duke Funding High Grade IV, Ltd.:
Class Description: $1,312,500,000 Class A-1 Senior Secured
Floating Rate Notes Due 2050
-- Prior Rating: Aa1, on review for possible downgrade
-- Current Rating: A2, on review for possible downgrade
Class Description: $61,500,000 Class A-2 Senior Secured Floating
Rate Notes Due 2050
-- Prior Rating: Aa2, on review for possible downgrade
-- Current Rating: Ba2, on review for possible downgrade
Class Description: $22,500,000 Class B-1 Senior Secured Floating
Rate Notes Due 2050
-- Prior Rating: Aa3, on review for possible downgrade
-- Current Rating: B1, on review for possible downgrade
Class Description: $19,500,000 Class B-2 Senior Secured Floating
Rate Notes Due 2050
-- Prior Rating: A1, on review for possible downgrade
-- Current Rating: B2, on review for possible downgrade
Class Description: $27,000,000 Class C-1 Junior Secured Floating
Rate Deferrable Interest Notes Due 2050
-- Prior Rating: Baa3, on review for possible downgrade
-- Current Rating: Caa3, on review for possible downgrade
In addition, Moody's also downgraded these notes:
Class Description: $27,000,000 Class C-2 Junior Secured Floating
Rate Deferrable Interest Notes Due 2050
-- Prior Rating: Ba1, on review for possible downgrade
-- Current Rating: Ca
Class Description: $12,000,000 Class D Mezzanine Secured Floating
Rate Deferrable Interest Notes Due 2050
-- Prior Rating: B3, on review for possible downgrade
-- Current Rating: Ca
Class Description: $18,000,000 Subordinated Notes Due 2050
-- Prior Rating: Ca
-- Current Rating: C
According to Moody's, the rating actions are the result of
deterioration in the credit quality of the transaction's
underlying collateral pool, which consists primarily of structured
finance securities.
DUKE FUNDING: Moody's Junks Ratings on Classes A-2 and B Notes
--------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible further downgrade the ratings on these notes issued by
Duke Funding High Grade V, Ltd.:
Class Description: $1,260,000,000 Class A-1 Senior Secured
Floating Rate Notes Due 2050
-- Prior Rating: A3, on review for possible downgrade
-- Current Rating: B1, on review for possible downgrade
Class Description: $108,000,000 Class A-2 Senior Secured Floating
Rate Notes Due 2050
-- Prior Rating: Ba2, on review for possible downgrade
-- Current Rating: Caa3, on review for possible downgrade
In addition, Moody's downgraded these notes:
-- Class Description: $78,000,000 Class B Senior Secured
Floating Rate Notes Due 2050
-- Prior Rating: B2, on review for possible downgrade
-- Current Rating: Ca
Class Description: $21,000,000 Class C Junior Secured Floating
Rate Deferrable Interest Notes Due 2050
-- Prior Rating: Ca
-- Current Rating: C
Class Description: $15,000,000 Class D Mezzanine Secured Floating
Rate Deferrable Interest Notes Due 2050
-- Prior Rating: Ca
-- Current Rating: C
Class Description: $18,000,000 Subordinated Notes Due 2050
-- Prior Rating: Ca
-- Current Rating: C
According to Moody's, the rating actions are the result of
deterioration in the credit quality of the transaction's
underlying collateral pool, which consists primarily of structured
finance securities.
DUTCH HILL: Fitch Retains 'C' Ratings on Three Classes of Notes
---------------------------------------------------------------
Fitch affirmed 1 and removed one class of notes issued by Dutch
Hill Funding II Ltd. from Rating Watch Negative. These rating
actions are effective immediately:
-- $70,795,099 class A-1 affirmed at 'AA' and removed from
Rating Watch Negative;
-- $21,200,000 class A-2 remains at 'A', Rating Watch Negative;
-- $64,400,000 class B remains at 'BB', Rating Watch Negative;
-- $32,035,070 class C remains at 'B', Rating Watch Negative;
-- $16,629,036 class D-1 remains at 'C';
-- $13,206,619 class D-2 remains at 'C';
-- $13,508,056 class D-3 remains at 'C'.
Dutch Hill II is a cash flow mezzanine structured finance
collateralized debt obligation that closed on May 2, 2007 and is
managed by TCW Investment Management Company. In addition to the
$400.8 million cash and synthetic portfolio, the issuer has
purchased credit protection on $253.9 million residential mortgage
backed securities. Short contracts were used to purchase
protection on mezzanine tranches of RMBS issued by the same issuer
as junior tranches that are held in cash or synthetic form. Dutch
Hill II has a three-year limited substitution period during which
only collateral sale proceeds may be reinvested.
This affirmation is the result of a Rating Watch review that Fitch
conducted to resolve the Rating Watch Negative status of all rated
notes of Dutch Hill II. In October 2007, Fitch placed all of the
classes of notes on Rating Watch Negative due to exposure to
subprime RMBS and structured finance collateralized debt
obligations issued between 2005 and 2007. Subsequently, in
November 2007, all classes were downgraded and remained on Rating
Watch Negative. Fitch maintained the Rating Watch Negative status
on this transaction in part because of the amount of the portfolio
that was on Rating Watch Negative as well as the short contracts
that serve as protection to a large portion of the portfolio.
At this time, Fitch affirmed the class A-1 notes due to the
significant delevering of this class primarily through principal
proceeds received by Dutch Hill II as a result of the termination
of portions the aforementioned short portfolio. Additionally,
some principal payments received from assets in the long portfolio
have been distributed as principal distributions to the class A-1
holders. On the May 15, 2008 distribution date, class A-1
noteholders received more than $77.6 million which was more than
half of the then outstanding balance of $148.4 million. As of the
trustee report dated June 15, there is approximately $24.7 million
of principal proceeds in the collection account, which will be
used to pay principal to the class A-1 notes on the next payment
date, Aug. 15, 2008.
As part of Fitch's analysis, the portfolio management strategy was
discussed with the asset manager. The manager had indicated that
assets in the short portfolio would continue to be terminated when
possible and any further principal proceeds received over the
remainder of the due period will also be paid to the class A-1
notes.
Due to the variability in future liquidations of the short
portfolio and future defaults and potential negative credit
migration in the long portfolio, classes A-2, B, C remain on
Rating Watch Negative.
The ratings of the class A-1, A-2 and B notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the stated
balance of principal by the legal final maturity date. The
ratings of the class C Loans, C, D-1, D-2 and D-3 notes address
the likelihood that investors will receive ultimate and
compensating interest payments, as per the governing documents, as
well as the stated balance of principal by the legal final
maturity date.
EARL JENKINS: Case Summary & Five Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Earl R. Jenkins
11409 Highland Farm Center
Potomac, MD 20854
Bankruptcy Case No.: 08-19291
Chapter 11 Petition Date: July 18, 2008
Court: District of Maryland (Greenbelt)
Judge: Thomas J. Catliota
Debtor's Counsel: James Greenan, Esq.
Email: jgreenan@mhlawyers.com
6411 Ivy Lane, Suite 200
Greenbelt, MD 20770
Tel: (301) 441-2420
http://www.mhlawyers.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/mdb08-19291.pdf
EDGEWATER FOODS: Posts $1,062,990 Net Loss in Quarter Ended May 31
------------------------------------------------------------------
Edgewater Foods International Inc. reported a net loss of
$1,062,990 on revenue of $264,942 for the third quarter ended
May 31, 2008, compared with a net loss of $464,685 on revenue of
$128,925 in the same period ended May 31, 2007.
Gross loss for the three months ended May 31, 2008, was
approximately $224,000, an increase of approximately $166,000 as
compared to gross loss of roughly $58,000, for the three months
ended May 31, 2007.
General and administrative expenses for the three months ended
May 31, 2008, were approximately $772,000, compared with
approximately $411,000 for the three months ended May 31, 2007.
Other expense for the three months ended May, 2008, was
approximately $60,000 as opposed to other income of approximately
$7,000 for the three months ended May 31, 2007.
Balance Sheet
At May 31, 2008, the company's consolidated balance sheet showed
$7,098,336 in total assets, $2,511,761 in total liabilities, and
$4,586,575 in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended May 31, 2008, are available for
free at http://researcharchives.com/t/s?2fa5
Going Concern Doubt
LBB & Associates Ltd. LLP, in Houston, expressed substantial doubt
about Edgewater Foods International Inc.'s ability to continue as
a going concern after auditing the company's consolidated
financial statements for the year ended Aug. 31, 2007. The
auditing firm pointed to the company's absence of significant
revenues, recurring losses from operations, and its need
for additional financing in order to fund its projected loss in
2008.
About Edgewater Foods
Based in Gaithersburg, Maryland, Edgewater Foods International
Inc. (OTC BB: EDWT) -- http://www.edgewaterfoods.com/-- is the
parent company of Island Scallops Ltd., a Vancouver Island
aquaculture company. Established in 1989, ISL operates a scallop
farming and marine hatchery business.
ELECTRO-CHEMICAL: Closes Sale to O'Shaughnessys; To Liquidate
-------------------------------------------------------------
Electro-Chemical Technologies Ltd. sold its assets to John and
Cheryl O'Shaughnessy pursuant to an Order of the Court in its
pending chapter 11 proceeding before the United States Bankruptcy
Court, Eastern District of Missouri. The closing of the sale was
effective July 15, 2008. ECT will shortly propose a plan of
liquidation, which will provide a process to quantify and validate
claims of its creditors and distribute available funds to
creditors and, if funds remain, to shareholders.
As reported in the Troubled Company Reporter on July 10, 2008, the
company disclosed that the auction of nine of its United States
patents in the field of "electrochemical activation of water" has
been completed and approved by the U.S. Bankruptcy Court for the
Eastern District of Missouri.
The successful bidders in the auction, John and Cheryl
O'Shaughnessy, submitted a final bid of $4,830,000 for the
purchase of the patent portfolio. The entire amount of the
$4,830,000 purchase price will be paid in cash. The bid was
approved by the Bankruptcy Court.
About Electro-Chemical Technologies Ltd.
Headquartered in St. Louis, Electro-Chemical Technologies Ltd.
(Pink Sheets: ELCHQ) -– http://www.ectltd.net/-- fka RSCECAT USA
Inc., sells technologically advanced electrochemical activation
devices.
The company -- http://www.ectrestructuring.com–- is undergoing
proceedings under Chapter 11 (Case No. 08-41098) before the United
States Bankruptcy Court for the Eastern District of Missouri.
The Debtor filed for Chapter 11 protection on Feb. 19, 2008,
(Bankr. E.D. Mo. Case No.: 08-41098). Steven Goldstein, Esq. of
Goldstein & Pressman P.C. represents the Debtor in its
restructuring efforts. The Debtor listed a total assets of
$55 and a total debts of $4,023,223.
EL PASO: Consistent Credit Profile Prompts Fitch to Hold Ratings
----------------------------------------------------------------
Fitch Ratings has affirmed the ratings of El Paso Corporation and
its core pipeline and exploration and production subsidiaries.
The Rating Outlook is Stable. Approximately $11.4 billion of debt
is affected.
The El Paso rating affirmations reflect the consistency in the
company's credit profile given the improvements at the company's
upstream business and the cash flow stability and risk profile
benefits derived from its pipeline portfolio. While in recent
years, El Paso has exited the merchant power business, downsized
its trading operations, and improved its balance sheet and lowered
debt for 4 straight years, these benefits are expected to moderate
as the company embarks on a transformative capital spending plan
which will significantly increase the size and scope of both its
pipeline system and its E&P portfolio.
Free cash flow is projected to be negative through 2011 and
spending is expected to be funded through additional debt
issuances at the parent company level, additional dropdowns to the
newly formed pipeline MLP, El Paso Pipeline Partners (NYSE: EPB),
and through asset sales. As such, Fitch expects El Paso's credit
metrics will remain relatively flat over the course of the growth
capital spending as the incremental EBITDA generated by the new
projects should offset the additional debt the company needs to
take on to complete the projects. Additionally, the company
recently announced a $300 million share buy-back plan, so equity
issuances remain unlikely.
Other considerations include project cost escalation, which
remains a risk for El Paso's planned investments, particularly on
the pipeline side where the industry has seen construction costs
rise dramatically in the last 9 to 12 month. This risk will
likely be offset in part by El Paso's push to share costs with its
construction contractors, contracted shippers, and with joint
venture partners. In addition, while improvements at the E&P
business have been made and commodity prices are clearly in the
company's favor for the foreseeable future, several issues still
remain including relatively high development costs for newer
investments.
The ratings at the pipeline subsidiaries are significantly
affected by the operating and financial affiliations each has with
El Paso. As subsidiaries of El Paso, El Paso has substantial
control over the pipelines operations and finances, including
distributions. Given this linkage the pipelines are all rated one
notch higher than El Paso, but ratings are still constrained given
what their stand alone credit metrics and business risk profiles
would indicate. The individual pipeline companies are generally
characterized by having moderate-to-low-risk operations providing
El Paso a stable financial base. Given the scale of the asset
base, El Paso's pipeline portfolio has access to most major North
American production basins and supply markets.
The ratings at El Paso Exploration & Production reflect similar
operating and financial affiliations with El Paso as well as the
significant collateral value of the secured credit facility. EPEP
operations have significantly improved with the company currently
in the process of upgrading its reserve portfolio while continuing
to focus on lowering its production costs. The ratings on the
secured credit facilities at EPEP and EP are notched one notch
higher than their respective IDRs to reflect the significant
recovery from the collateral used to secure the loans.
The Stable Outlook is indicative of the improvements in El Paso's
credit profile offset by the still significant leverage at the
parent company and the plans for increased capital expenditures at
all of El Paso's subsidiaries which is projected to keep credit
metrics relatively flat over the next few years.
Fitch affirmed these:
El Paso Corporation
-- IDR 'BB+';
-- $1.5 billion senior secured revolving credit facility (2012)
'BBB-';
-- $500 million unsecured letter of credit facility (2009)
'BB+';
-- $500 million senior unsecured revolving credit facility
(2011) 'BB+';
-- Senior unsecured notes and debentures 'BB+';
-- Perpetual preferred stock 'BB-'.
El Paso Energy Capital Trust I
-- Trust convertible preferred securities 'BB-'.
Colorado Interstate Gas Company (CIG)
-- Issuer Default Rating 'BBB-';
-- Senior unsecured debt 'BBB-'.
El Paso Natural Gas Company (EPNG)
-- Issuer Default Rating 'BBB-';
-- Senior unsecured debt 'BBB-'.
Southern Natural Gas Company (SNG)
-- Issuer Default Rating 'BBB-';
-- Senior unsecured debt 'BBB-'.
Tennessee Gas Pipeline Company (TGP)
-- Issuer Default Rating 'BBB-';
-- Senior unsecured debt 'BBB-'.
El Paso Exploration & Production Company (EPEP)
-- Issuer Default Rating 'BB+';
-- Senior secured revolving credit facility (2012) 'BBB-';
-- Senior unsecured debt 'BB+'.
El Paso owns North America's largest interstate natural gas
pipeline network comprised of approximately 44,000 miles of pipe,
220 Bcf of storage capacity, and an LNG import facility with 1.2
Bcf per day of send-out capacity. The company's upstream
operations included year-end 2007 estimated reserves of 3.1
trillion cubic feet equivalent of consolidated proven reserves.
EMBARCADERO INSURANCE: A.M. Best Holds 'bb' Rating on $8MM Notes
----------------------------------------------------------------
A.M. Best Co. has removed from under review with negative
implications and affirmed the financial strength rating of A-
(Excellent) and issuer credit rating of "a-"of Majestic Insurance
Company (San Francisco, CA). Concurrently, A.M. Best has removed
from under review with negative implications and downgraded the
FSR to B++(Good) from A-(Excellent) and ICR to "bbb" from "a-"of
Twin Bridges (Bermuda) Ltd. (Hamilton, Bermuda). Both companies
are subsidiaries of CRM Holdings, Ltd.(Hamilton, Bermuda) [NASDAQ:
CRMH].
Additionally, A.M. Best has removed from under review with
negative implications and affirmed the ICRs of "bbb-" of CRM
Holdings, Embarcadero Insurance Holdings, Inc. (San Francisco, CA)
and CRM USA Holdings, Inc. (Wilmington, DE). A.M. Best also has
removed from under review with negative implications and affirmed
the debt ratings of "bb" of the trust preferred securities of CRM
USA Holdings, Inc. and the "bb" of the surplus notes of
Embarcadero Insurance Holdings, Inc. The outlook assigned to all
ratings is negative.
These rating actions reflect Majestic's improved risk-adjusted
capitalization following the implementation of a capital re-
allocation plan by its ultimate parent, CRM Holdings, as well as
the execution of a quota share reinsurance arrangement with a
third party reinsurer. Furthermore, the issues that were faced by
an affiliate, Compensation Risk Managers
LLC (CRM LLC) with the New York Workers' Compensation Board have
been settled with no admission of wrong doing, fines or penalties.
However, CRM LLC has agreed to surrender its third party
administrator license. Despite this settlement, A.M Best remains
concerned regarding the financial flexibility at CRM Holdings
largely due to the significant decline in its valuation, as well
as the limited capital available through its insurance and non-
insurance subsidiaries.
The rating actions on Twin Bridges recognize the deterioration in
its risk-adjusted capitalization primarily due to stock dividends
made in the second quarter of 2008 to CRM Holdings as part of its
overall plan to re-allocate capital to Majestic.
These debt ratings have been affirmed and assigned a negative
outlook:
CRM USA Holdings, Inc.:
-- "bb" on $35 million 8.65% junior subordinated debt
securities, due 2036
Embarcadero Insurance Holdings, Inc.:
-- "bb" on $8 million LIBOR+ 4.2% surplus notes, due 2033
ENERTECK CORP: Posts $1MM Net Loss for Year Ended Dec. 31, 2007
---------------------------------------------------------------
EnerTeck Corporation posted a net loss of $1,004,399 on product
sales of $396,141 for the year ended Dec. 31, 2007, as compared
with a net loss of $639,049 on product sales of $641,419 in the
prior year.
During the years ended Dec. 31, 2007, and 2006, the company
incurred recurring net losses. In addition, at Dec. 31, 2007, the
company has an accumulated deficit of $17,876,742.
Management believes that sales revenues for 2007 were considerably
less than earlier anticipated primarily due to circumstances,
which have been corrected or are in the process of being corrected
and therefore should not reoccur in the future. Management
expects that both marine and trucking sales should show
significant increases in 2008. In addition, management is also
currently putting sales strategies in place to other industries in
an effort to increase revenues and cash flow.
Financing Plans
The company's continuation as a going concern is contingent upon
its ability to obtain additional financing and to generate
revenues and cash flow to meet its obligations on a timely basis.
Currently there are 4,936,550 warrants outstanding with a total
exercised value of $6,955,000. Of these, there are 2,426,650
warrants with an exercised value of $2,731,000, which will expire
during 2008. If a substantial number of these warrants are
exercised on or before the expiration date, this will provide
sufficient capital for the next 12 months. In addition, the
company has been able to generate working capital in the past
through private placements and believes that these avenues will
remain available to the company if additional financing is
necessary. No assurances can be made, however, that the warrants
will be exercised or that the company will be able to obtain such
other additional financing.
One customer represented 59.7% of the company's sale revenues for
the year ended Dec. 31, 2007, as compared with 80.8% of the
company's sales revenues for the year ended Dec. 31, 2006. The
company had a pending sale prepared for shipment, but had no
receivables outstanding for this major customer at year ended
Dec. 31, 2007, as compared with $264,000 in receivables from this
customer at year ended Dec. 31, 2006.
Balance Sheet
At Dec. 31, 2007, the company's balance sheet showed $3,660,715 in
total assets and $1,572,315 in total liabilities, resulting in a
$2,088,400 stockholders' deficit.
The company's consolidated balance sheet at Dec. 31, 2007, showed
strained liquidity with $540,822 in total current assets available
to pay $572,315 in total current liabilities.
A full-text copy of the company's 2007 annual report is available
for free at http://ResearchArchives.com/t/s?2f8e
About Enerteck
EnerTeck Corporation (OTC BB: ETCK.OB) -- http://www.enerteck.net/
-- through its wholly owned subsidiary, EnerTeck Chemical Corp.,
manufactures, sells, and markets fuel-borne, catalytic engine
treatment products for diesel engines. Its primary product,
EnerBurn, functions as an engine treatment application by removing
carbon deposits from the combustion surfaces of the engine and
reducing further carbon deposit buildup. EnerBurn is used in
diesel engines to enable fuel economy and minimize the emissions
of nitrogen oxide and microscopic airborne solid matter. The
company also offers various combustion enhancement and emission
reduction technologies for diesel fuel. Its products are used
primarily in on-road vehicles, locomotives, and diesel marine
engines in the United States and certain foreign markets. The
company was incorporated in 1935 and is based in Stafford, Texas.
EXACT SCIENCES: Mulls Business Alternatives & Cost Reduction Plans
------------------------------------------------------------------
EXACT Sciences Corporation is revising its corporate strategy to
take immediate actions to preserve existing cash while pursuing a
strategic alternative for the business.
Although the ongoing strategic evaluation process has not yet
resulted in a merger or acquisition offer, the company believes
that with recent regulatory clarity and Laboratory Corporation of
America(R) Holdings' (LabCorp) launch of their new stool-based DNA
(sDNA) screening test for colorectal cancer (CRC), EXACT Sciences
is better positioned to pursue a transaction. After considering
current market conditions, the current share price and the cost of
capital, and a potential delisting of the shares of EXACT Sciences
from NASDAQ, the company is implementing a set of cost reduction
measures rather than seeking to raise capital at this time. The
company believes that these actions, combined with the ongoing
efforts with collaborators on its sDNA technologies, will provide
EXACT Sciences with greater flexibility in its pursuit of
strategic alternatives.
As part of the cost reduction efforts of the company, EXACT
Sciences is suspending the clinical validation study of its
Version 2 technology, eliminating approximately eight positions,
and seeking the re-negotiation of certain fixed commitments.
EXACT Sciences anticipates that these initiatives will extend the
company's existing cash, based on current operating plans, at
least through the second quarter of 2009. The company expects to
record estimated restructuring charges ranging from approximately
$200,000 to $400,000 in the 3rd quarter of 2008 in connection with
one-time employee termination benefits, including severance,
outplacement and other fringe benefits. These estimated charges
will result in future cash expenditures. In addition, EXACT
Sciences may incur additional non-cash restructuring charges in
the 3rd quarter of 2008 related to write-downs of fixed assets or
other intangible assets after performing the requisite impairment
analysis.
"Based on our available cash and our determination not to raise
capital under existing conditions, we have made the difficult but
necessary decision to suspend our clinical study and engage in
other cost reduction efforts to extend the time period for
pursuing a strategic transaction," Jeffrey R. Luber, President &
CEO of EXACT Sciences, said. "We believe that our recent news of
a more clearly defined regulatory path for our technologies and
LabCorp's new product launch will assist us in our discussions
with potential acquirers and collaborators."
On July 14, 2008, LabCorp disclosed the launch of its new
laboratory developed CRC screening test based on the Vimentin
gene--a methylated DNA marker that in published studies was shown
to be associated with colorectal cancer. This single-marker test
replaces the prior 23-marker stool-based DNA testing service of
LabCorp, PreGen-Plus, that has been the subject of the U.S. Food
and Drug Administration inquiry. EXACT Sciences is entitled to
the same royalty structure relating to sales of the new CRC test
of LabCorp as it had on the prior sDNA-based testing service of
LabCorp.
About Exact Sciences Corporation
Headquartered in Marlborough, Massachusetts, Exact Sciences
Corporation (NASDAQ: EXAS) -- http://www.exactsciences.com/-- is
an applied genomics company that develops deoxyribonucleic acid
(DNA)-based technologies for use in the detection of cancer. The
company has selected colorectal cancer as the first application of
its technologies. The company has licensed certain of its
technologies, on an exclusive basis through December 2010, to
Laboratory Corporation of America Holdings (LabCorp) in connection
with a commercial testing service that is marketed in the United
States under the name PreGen-Plus. PreGen-Plus, which is based on
its Version 1 technology, is the non-invasive stool-based DNA
testing service of LabCorp for the detection of colorectal cancer
in the average-risk population. Royalties from the sales of
PreGen-Plus of LabCorp, and other license fees from it, represent
its primary source of revenue.
On March 31, 2008, the balance sheet of the company showed cash
and cash equivalents of $3,999,000, total assets of $14,595,000,
total liabilities of $7,593,000 and a total deficit of
approximately $165.2 million since its inception in February 1995.
It has retained Leerink Swann LLC to assist the Board of Directors
in its evaluation of strategic alternatives for the business,
including, but not limited to, the sale of EXACT or merger with
another entity. It employs 14 people after slashing its workforce
to half last year.
FEDDERS CORPORATION: Court Approves Disclosure Statement
--------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved a disclosure statement describing a joint Chapter 11 plan
of liquidation filed by Fedders Corp. and its debtor-affiliates on
June 6, 2008. The Court held that the disclosure statement
contains adequate information pursuant to Section 1125 of the
Bankruptcy Code.
The Court approved procedures the Debtors proposed for the
solicitation and tabulation of plan votes. Deadlines for voting
is Aug. 13, 2008, 5:00 p.m. (Eastern Time.)
The Court will convene a hearing on Aug. 21, 2008, at 12:00 p.m.
(Eastern Time) at 824 Market Street, 6th Floor in Wilmington,
Delaware, to consider confirmation of the Debtors' plan.
Objections, if any, are due Aug. 13, 2008, by 5:00 p.m.
As reported in the Troubled Company Reporter on June 12, 2008, the
Debtors received approximately 1,121 proofs of claim, totaling
$3,474,296,225, from their creditors before March 4, 2008.
Overview of the Plan
The Plan contemplates for the liquidation of all of the
Debtors' asset -- including net of certain fees and expenses --
and distribution of the proceeds to holders of allowed claims.
The Debtors remind the Court that they have divested several
assets of their affiliates, including:
a) Eubank Coil Company sold to National Oil Company, United
Refrigeration Inc. and Tersco Property Management Limited
for $2,340,000;
b) Fedders Islandaire Inc. sold to Robert E. Hansen, Jr., for
$7,900,000;
c) Fedders Addison Company Inc. sold to RG Adding LLC for
$14,400,000;
d) Fedders North America Inc. and Emerson Quiet Kool
Corporation sold to Elco Holdings Ltd. for $13,250,000; and
e) Indoor Air Quality business and stock of Trion GmbH sold to
Tomkins Industries Inc. for $25,000,000.
On Oct. 5, 2007, the Debtors obtained up to $33 million in debtor-
possession financing from Goldman Sachs Credit Partners under a
revolving credit facility. The facility will mature on July 31,
2008. The proceeds of the loan will be used to:
i) refinance in full all indebtedness under the revolving
facility;
ii) fund postpetition operating expenses incurred in the
ordinary course of business;
iii) pay fees and expenses associated with the
facility; and
iv) provide working capital.
The Joint Plan classified claims against and interests in the
Debtors in five classes. The classification of treatment of
claims and interests are:
Treatment of Claims and Interests
Type of Estimated
Class Claim Treatment Recovery
----- ------- --------- ---------
unclassified administrative unimpaired 100%
expense claims
unclassified priority tax unimpaired 100%
claims
1A-Q priority non- unimpaired 100%
tax claims
2A-Q term lenders impaired 55.9%
claims
3A-Q other secured impaired 100%
claims
4A-Q general unsecured impaired TBD
claims
5A-Q equity securities impaired cancelled
Each of recovery amounts for classes 2A-Q, 3A-Q and 4A-Q are
estimates. The actual recovery amounts will be used on a number
of consideration stated in the Plan, which cannot be determined at
present. Recovery depends primarily on recoveries under a lawsuit
and avoidance actions. These classes are entitled to vote to
accept or reject the Plan.
Holders of Class 2A-Q Term Lender Claims will be secured by a duly
perfected first priority lien on all of the property and assets of
the Debtors' estate, other than the unencumbered assets allocation
amount and the general unsecured claim liquidating trust assets.
On the Plan's effective date:
-- all of the Term Lenders liquidating trust asset will be
transfered to the Term Lenders liquidating trust;
-- beneficial interest in the Term Lenders liquidating trust
will be distributed to the Term Lenders; and
-- Term Lenders will be released from any and all claims,
liabilities and causes of actions of the Debtors.
In addition, the term lenders are entitled to vote their asserted
claim of at least $47,180,957 consist of (i) a $23,234,957 secured
claims, and (ii) a $23,946,000 in deficiency claim. Each term
lender has the right to vote separately its ratable portion of the
foregoing.
Holders of Class 3A-Q Other Secured Claims will receive, among
other things, the amount of the proceeds from the sale of any
collateral securing their claim. A portion of the allowed secured
claim will treated as an unsecured deficiency claim in class 4 if
the amount of the claim exceeds the value of the collateral
securing the claim.
Holders of Class 4A-Q General Unsecured Claims are entitled to
receive their pro rata share of the beneficial interests in the
GUC liquidating trust.
Holders of Class 5A-Q Equity Securities will not receive or retain
any property from the Debtors.
A full-text copy of the Disclosure Statement is available for free
at http://ResearchArchives.com/t/s?2db2
A full-text copy of the Joint Chapter 11 Plan of Liquidation is
available for free at http://ResearchArchives.com/t/s?2db3
Committee's Objection to Plan
As reported in the Troubled Company Reporter on July 4, 2008, the
Official Committee of Unsecured Creditors opposed the Debtors'
disclosure statement explaining the plan, saying that unsecured
creditors will receive virtually nothing from the Debtors'
estates.
The Committee pointed out that the plan prohibits it from (i)
spending any funds to prosecute a lawsuit except those obtained
directly from litigation proceeds and (ii) using the proceeds of
settlements to fund any litigation, according to the Committee.
In addition, the plan compels the Committee to settle some of its
strongest claims to recover monies the Debtors used to cover the
collateral of the their term lenders -- Sachs Credit Partners L.P.
and Highland Capital Management L.P.
Bank of America, N.A., General Electric Capital Corporation and
U.S. Bank National Association also objected to the Debtors'
Chapter 11 plan.
About Fedders Corporation
Based in Liberty Corner, New Jersey, Fedders Corporation --
http://www.fedders.com/-- manufactures and markets air
treatment products, including air conditioners, air cleaners,
dehumidifiers, and humidifiers. The company has production
facilities in the United States in Illinois, North Carolina, New
Mexico, and Texas and international production facilities in the
Philippines, China and India.
The company and several affiliates filed for Chapter 11 protection
on Aug. 22, 2007, (Bankr. D. Del. Lead Case No. 07-11182). The
law firm of Cole, Schotz, Meisel, Forman & Leonard P.A.; and
Norman L. Pernick, Esq., Irving E. Walker, Esq., and Adam H.
Isenberg, Esq., at Saul Ewing LLP, represent the Debtors in their
restructuring efforts. The Debtors have selected Logan & Company
Inc. as claims and noticing agent. The Official Committee of
Unsecured Creditors is represented by Brown Rudnick Berlack
Israels LLP. When the Debtors filed for protection from its
creditors, it listed total assets of $186,300,000 and total debts
of $322,000,000.
FINANCIAL MEDIA: Earns $230,477 in Third Quarter Ended May 31
-------------------------------------------------------------
Financial Media Group Inc. reported net income of $230,477 on net
revenues of $2,395,587 for the third quarter ended May 31, 2008,
compared with a net loss of $274,915 on net revenues of
$2,124,318 in the corresponding period last year.
The company attributes the increase in revenues during the three
months ended May 31, 2008, to the company's expanded effort in
marketing its Internet advertising and media services.
At May 31, 2008, the company's consolidated balance sheet showed
$4,656,961 in total assets, $4,334,174 in total liabilities, and
$322,787 in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended May 31, 2008, are available for
free at http://researcharchives.com/t/s?2fa7
Going Concern Doubt
As reported in the Troubled Company Reporter on Dec. 13, 2007,
Kabani & Company Inc. expressed substantial doubt about Financial
Media Group Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
year ended Aug. 31, 2007. The auditing firm pointed to the
company's accumulated deficit of $11,369,776 as of Feb. 29, 2008,
and net loss of $1,697,699 for the six months ended Feb. 29, 2008.
The company had an accumulated deficit of $11,134,500 as of
May 31, 2008.
About Financial Media
Headquartered in Irvine, Calif., Financial Media Group Inc. (OTC
BB: FNGP.OB) -- http://www.financialmediagroupinc.com/-- provides
Internet based media and advertising services through its
financial website and the company's newspaper "WallSt.net Digest."
The company provides a full array of customized investor awareness
programs such as audio and video of senior management interviews;
press releases; newsletter and editorials; small cap conferences
and seminars; email mailings and forums.
FORD MOTOR: Reduces Cost, Extends Buyout Project to 14 More Plants
------------------------------------------------------------------
Ford Motor Co. intends to further reduce its payrolls by expanding
its plant-by-plant buyout program to 14 more facilities in
Michigan and Ohio, The Wall Street Journal reports.
WSJ relates that Ford's buyout program which started in June at
two Kentucky and two Ohio manufacturing sites, will be expanded to
the additional facilities by mid-August.
WSJ says that on July 28, the buyouts will affect the Wayne
Assembly Plant, Michigan Truck, Dearborn Truck, AutoAlliance
International Inc. Plant, Rawsonville Powertrain, and the
Woodhaven and Livonia stamping plants in Michigan. The remaining
Michigan sites as the Sterling Axle, Van Dyke Transmission and
Romeo Engine plants will get the offer in mid-August, WSJ adds.
Packages, WSJ indicates, include a $15,000 tuition reimbursement
for four years; a $100,000 scholarship for family members and a
flat payment of $100,000 with six months of basic health care.
According to the Journal, widening the buyout program is among the
steps Ford is taking to address a steep decline in U.S. sales that
has forced the company to scrap its expectations of returning to
profitability in 2009. WSJ points out that Ford and its domestic
counterparts have been particularly affected by the rapid shift
among consumers away from pickup trucks and sport-utility vehicles
as gasoline prices have risen to more than $4 per gallon in the
U.S.
In the first wave of the expanded buyouts program, the incentives
will be offered to workers at the Ohio Assembly, Sandusky Parts,
Cleveland Casting, and Walton Hills, Ohio, stamping plants
starting Monday, WSJ states.
The plant-by-plant buyout program, WSJ relates, was launched after
Ford failed to reach its target of trimming about 8,000 workers
during a company-wide incentive offered earlier this year. About
4,200 chose the option, WSJ states.
Ford will disclose further details of its strategy when it
releases its second-quarter financial results on Thursday, WSJ
adds.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles
in 200 markets across six continents. With about 260,000
employees and about 100 plants worldwide, the company's core and
affiliated automotive brands include Ford, Jaguar, Land Rover,
Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company
provides financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region,
through Ford Japan Limited.
* * *
As reported in the Troubled Company Reporter on March 28, 2008,
Standard & Poor's Ratings Services said that the ratings and
outlook on Ford Motor Co. and Ford Motor Credit Co. (both rated
B/Stable/B-3) were not affected by Ford's announcement of an
agreement to sell its Jaguar and Land Rover units to Tata Motors
Ltd. (BB+/Watch Neg/--) for $2.3 billion (before $600 million of
pension contributions by Ford for Jaguar-Land Rover).
As reported in the Troubled Company Reporter on Feb. 15, 2008,
Fitch Ratings affirmed the Issuer Default Ratings of Ford Motor
Company and Ford Motor Credit Company at 'B', and maintained the
Rating Outlook at Negative.
As reported in the Troubled Company Reporter on Nov. 19, 2007,
Moody's Investors Service affirmed the long-term ratings of Ford
Motor Company (B3 Corporate Family Rating, Ba3 senior secured,
Caa1 senior unsecured, and B3 probability of default), but
changed the rating outlook to Stable from Negative and raised
the company's Speculative Grade Liquidity rating to SGL-1 from
SGL-3.
Moody's also affirmed Ford Motor Credit Company's B1 senior
unsecured rating, and changed the outlook to Stable from
Negative. These rating actions follow Ford's announcement of
the details of the newly ratified four-year labor agreement with
the United Auto Workers.
GATEHOUSE MEDIA: S&P Cuts Ratings to B; On Negative Watch
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on GateHouse Media Operating Inc. to 'B' from 'B+'. This
rating, along with all issue-level ratings on the company's debt,
remains on CreditWatch, where it was placed with negative
implications May 9, 2008.
At the same time, Standard & Poor's lowered its issue-level rating
on GateHouse's senior secured credit facilities to 'B' from 'BB-'.
The recovery rating on this debt was revised to '3', indicating
that lenders can expect meaningful (50% to 70%) recovery in the
event of a payment default, from '2'.
"The downgrade reflects our concerns about current newspaper
industry trends," said Standard & Poor's credit analyst Emile
Courtney. "In the June 2008 quarter, we expect advertising
revenue across most of the industry to decline in the mid-teens
percentage area. While historically performing better than
industry peers, S&P expects that GateHouse is not immune to these
trends. The 'B' rating assumes that EBITDA, pro forma for
acquisitions, could decline between 15%-20% over the near term and
in 2008."
The CreditWatch listing reflects that in the remaining five months
of 2008, GateHouse will need to repay its $10 million promissory
note to Morris Communications due November 30 and fully payoff any
outstanding revolver balances to avoid potentially violating its
leverage covenant in future periods. (If revolver borrowings are
zero, the leverage covenant does not apply.) S&P do not believe
the company will generate sufficient cash flow in the absence of a
dividend reduction to meet these financing needs.
S&P are also concerned that GateHouse could violate its leverage
covenant in the near term and would need to obtain an equity cure
from its 42% equity owner, Fortress Investment Group, to avoid an
event of default. S&P believe that the likelihood that Fortress
would provide an equity cure is very high. Even after an equity
cure, given its expectation for continued EBITDA declines over the
intermediate term, S&P expects the company to maintain leverage
above the bank's incurrence covenant level of 6.5x. Thus, S&P
expects that GateHouse will not have availability under its
$40 million revolving credit facility over the intermediate term.
In resolving the CreditWatch listing, S&P will track the company's
ability to remain in line with its financial covenants, current
operating trends, and near-term financing strategies, including
planned asset sales.
GENERAL MOTORS: Dealer Council Shows Support, Acquires $1MM Shares
------------------------------------------------------------------
General Motors Corp.'s 20-member dealer council snapped up
$1.1 million of the auto maker's stock, or 107,000 shares, to show
support for the GM's management team, and to take advantage of
what they see as a good value, The Wall Street Journal reports.
WSJ, citing Duane Paddock, one of the heads of the organization
and the owner of Paddock Chevrolet in Kenmore, New York, says the
shares were purchased at an average price of $9.88, reflecting a
strong return for the group.
GM shares, WSJ indicates, recently traded at $13.51, up 2.5% over
July 18's closing price. The stock has rallied from five-decade
lows in recent sessions as investors digest the auto maker's new
plan to raise $15 billion in liquidity through 2009 by cutting
costs, raising fresh financing and selling assets, WSJ states.
WSJ, quoting Mr. Paddock, relates that the dealer council decided
to buy the stock because GM has a solid leadership team in North
America, competitive products and an attractive position in the
heated fuel-economy race among leading auto makers. Mr. Paddock
also said GM stock was undervalued, WSJ adds.
Mr. Paddock stated that other dealers expressed support for the
dealer council by disclosing plans to purchase the stock,
according to WSJ.
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.
GTM HOLDINGS: S&P Trims Corporate Credit Rating to CCC- from B-
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Hickory, North Carolina-based sock manufacturer GTM
Holdings Inc. to 'CCC' from 'B-'. At the same time, S&P lowered
the issue rating on GTM's first-lien credit facilities to 'CCC',
from 'B' and lowered the recovery rating to '4', indicating the
expectation for average (30%-50%) recovery in the event of a
payment default, from '2'. The two-notch downgrade on the first-
lien facilities relates to S&P's downgrade of the company's
corporate credit rating to 'CCC' from 'B-' and S&P's revision of
the recovery rating to '4' from '2'.
Standard & Poor's also lowered the issue rating on GTM's second-
lien term loan to 'CC' from 'CCC', while S&P retained the '6'
recovery rating on this debt, indicating that lenders can expect
negligible (0%-10%) recovery in the event of a payment default.
S&P also removed all ratings from CreditWatch with negative
implications. Standard & Poor's placed them on CreditWatch
negative on April 18, 2008, reflecting its concerns regarding
GTM's ability to meet its financial covenants for fiscal 2008.
The outlook is now developing, meaning that S&P could raise,
lower, or affirm the ratings. As of March 31, 2008, GTM had about
$380 million in rated debt.
The ratings on GTM reflect the company's participation in the
highly competitive apparel industry, its narrow product focus, the
commodity nature of socks, customer concentration, and a highly
leveraged financial profile. The ratings also incorporated the
well-known Gold Toe brand. Standard & Poor's attributes a high
degree of business risk to the sock industry because of intense
competition, low barriers to entry, and the commodity nature of
these items.
The outlook on GTM is developing. "Standard & Poor's could
further lower the ratings if the company has violated its
covenants and has no access to its revolving credit facility for
working-capital purposes," noted Standard & Poor's credit analyst
Susan H. Ding. "Although unlikely, we could raise the ratings on
the company if it can restore ample cushion on its financial
covenants and operating measures stabilize," she continued.
HOLLINGER INC: Allowed to Consent to OSC's Cease Trade Order
------------------------------------------------------------
Hollinger Inc. disclosed that the Ontario Superior Court of
Justice issued an order authorizing the company and Ernst & Young
Inc., the company's court-appointed monitor, to consent to the
issuance of a cease trade order by the Ontario Securities
Commission and the delisting of the company's common shares and
Series II preference shares from the Toronto Stock Exchange.
Accordingly, the company and the monitor have consented to the
issuance of the cease trade order and the delisting of the shares.
The OSC has advised that it anticipates issuing the cease trade
order within the next several days. The shares will be suspended
from trading by the TSX upon the issuance of the cease trade
order. The TSX has advised that the delisting of the shares will
occur approximately 30 days after the issuance of the cease trade
order.
The cease trade order will apply to all securities of the company
but will contain carve-outs to permit trades in the company's
securities that are made:
(i) in connection with proceedings under the Companies'
Creditors Arrangement Act (Canada) and approved by the
Ontario Superior Court of Justice and, if required, related
proceedings under the U.S. Bankruptcy Code and approved by
the U.S. Bankruptcy Court;
(ii) for nominal consideration for the purpose of permitting a
holder to crystallize a tax loss; or
(iii) by or to an entity that qualifies as an accredited investor
as that term is defined under applicable Canadian
securities laws.
The cease trade order is being issued as a result of the company's
determination, in the interests of reducing its costs for the
benefit of its stakeholders, not to prepare and file annual
audited financial statements and other annual disclosure documents
in respect of the company's financial year ended March 31, 2008.
Consequently, after June 30, 2008, the company has been in default
of its continuous disclosure filing requirements under Canadian
securities laws.
Under the terms of the May 21, 2008, order issued pursuant to
proceedings under the CCAA, the company is in the process of
conducting a claims process for the company and its subsidiaries,
Sugra Ltd. and 4322525 Canada Inc., and will also do so for its
non-Applicant subsidiaries as part of their winding-up. Also,
under the May 21, 2008, CCAA order, retired justice John D. Ground
has been appointed as Litigation Trustee to administer the
company's litigation assets, assisted by an Advisory Committee,
and under the supervision of the monitor and the CCAA court.
Preliminary estimates prepared by the company, in conjunction with
the monitor, indicate that there is a significant risk that there
will not be adequate recoveries from the company's assets for
there to be any residual value for the Series II preference or
common shareholders of the company.
About Hollinger Inc.
Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX:
HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately
70.1% voting and 19.7% equity interest in Sun-Times Media Group
Inc., formerly Hollinger International Inc., a media company with
assets which include the Chicago Sun-Times newspaper and
Suntimes.com and a number of community newspapers and websites
serving communities in the Chicago area.
The company, along with two affiliates, 4322525 Canada Inc. and
Sugra Limited, filed separate Chapter 15 petitions on Aug. 1, 2007
(Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger
also initiated Court-supervised restructuring under the Companies'
Creditors Arrangement Act (Canada) on the same day.
Derek C. Abbott, Esq., and Kelly M. Dawson, Esq., at Morris,
Nichols, Arsht & Tunnell LLP, represents the Debtors in their U.S.
proceedings.
As reported in the Troubled company Reporter on Feb. 22, 2008,
Hollinger Inc.'s consolidated balance sheet at Dec. 31, 2007,
showed C$79.8 million in total assets and C$219.3 million in
total liabilities, resulting in a C$139.5 million total
stockholders' deficit.
HOMETOWN COMMERCIAL: Fitch Puts 12 Low-B Ratings Under Neg. Watch
-----------------------------------------------------------------
Fitch Ratings placed these classes of Hometown Commercial Capital
Trust 2006-1 on Rating Watch Negative:
-- $3.4 million class B at 'AA';
-- $1.7 million class C at 'AA-';
-- $3.2 million class D at 'A';
-- $4.3 million class E at 'BBB+';
-- $1.5 million class F at 'BBB';
-- $1.9 million class G at 'BBB-';
-- $1.1 million class H at 'BB+';
-- $560,000 class J at 'BB';
-- $746,000 class K at 'BB-';
-- $372,000 class L at 'B+';
-- $560,000 class M at 'B';
-- $559,000 class N at 'B-'.
In addition, Fitch places these classes of Hometown Commercial
Capital Trust 2007-1 on Rating Watch Negative:
-- $4.6 million class C at 'A';
-- $3.9 million class D at 'BBB+';
-- $1.5 million class E at 'BBB';
-- $1.8 million class F at 'BBB-';
-- $1.1 million class G at 'BB+';
-- $553,000 class H at 'BB';
-- $738,000 class J at 'BB-';
-- $368,000 class K at 'B+';
-- $554,000 class L at 'B';
-- $737,000 class M at 'B-'.
The Watch Negative placements are the result of a potential for
significant losses from loans currently in special servicing.
Hometown 2006-1 has 6 loans (24.3%) and Hometown 2007-1 has 9
loans (27.9%) with the special servicer. Six of the specially
serviced loans between the two transactions have the same the
sponsor. The sponsor is no longer able to operate the properties
and has put them up for sale as part of a larger portfolio sale
totaling 24 assets. The special servicer is currently negotiating
contracts to sell the assets. Recent analysis of the potential
proceeds from the sale of the assets indicates significant losses
are possible in both transactions.
The transactions are small balance CMBS with loan sizes ranging
from $960 thousand to $14.4 million. Multiple classes are being
placed on rating watch due to the size of the specially serviced
loans and the small size of the classes within the transaction.
The largest loan of the Hometown 2006-1 is expected to incur a
loss as are the top three loans in the Hometown 2007-1
transaction. Multiple notch downgrades are likely once final
liquidation proceeds are determined.
INDYMAC BANCORP: FDIC Taps Thacher Proffitt as Bank's Conservator
-----------------------------------------------------------------
Thacher Proffitt & Wood LLP was engaged as counsel to the Federal
Deposit Insurance Corporation as conservator of IndyMac Federal
Bank F.S.B., the newly formed federal savings bank that received
substantially all of the assets of IndyMac Bank F.S.B., which was
taken into receivership on July 11, 2008. This engagement
pertains to corporate and transactional matters relating to the
conservatorship.
The Thacher Proffitt team for this engagement is led by Stephen S.
Kudenholdt, chair of the Structured Finance practice group, and
partner Robert C. Azarow of the firm's Corporate and Financial
Institutions practice group.
Founded in 1848, Thacher Proffitt -- http://www.tpw.com/-- has
more than 250 lawyers in four locations - New York City,
Washington, DC, White Plains, New York, and Summit, New Jersey.
The company advises clients domestically and internationally on a
range of matters involving: banking, bankruptcy, compensation and
benefits, corporate and securities, international, litigation and
dispute resolution, real estate, structured finance, tax,
technology and intellectual property, and trusts and estates.
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.
INTEGRETEL INC: Court Approves Sale of Payment One to Etelcharge
----------------------------------------------------------------
Etelcharge.com said its acquisition of Payment One was approved by
the United States Bankruptcy Court for the Northern District of
California in San Jose.
As reported by the Troubled Company Reporter on June 20, 2008,
Etelcharge.com signed a definitive agreement to acquire roughly
98% of equity interests in PaymentOne from PaymentOne's majority
shareholder, The Billing Resource, dba Integretel Inc.
The decision of the Bankruptcy Court removes the most significant
substantive condition to the closing of the transaction. It is
anticipated that the additional customary closing conditions will
be satisfied and the acquisition consummated within 45 days.
Pursuant to the acquisition agreement, Etelcharge will receive, by
virtue of its acquisition of the Payment One equity, all of the
Payment One assets, customers, nationwide telco coverage, a
stellar employee base and technology developed over the past eight
years.
As reported by the TCR, the acquisition is targeted to close in
mid- to late-summer 2008. The closing is also subject to
satisfaction of other customary closing conditions, well as the
provision of certain capital and capital commitments by
Etelcharge.com to PaymentOne. After the closing, Etelcharge.com
has agreed to cause Payment One to convey to TBR approximately
$12.8 million of debt owed by TBR to PaymentOne, effectively
canceling this obligation.
"We are extremely pleased that the Bankruptcy Court rendered this
decision," stated Rob Howe, Etelcharge's Chairman and CEO.
"Our prospects now are extremely bright. Upon closing of the
acquisition, our client list will have grown a hundred-fold over
night, the prospects for new business are at our front door and we
are working with the most talented people I have met during my
tenure in the field of high technology. Of equal importance is the
transition from a small company generating modest revenue, to a
company generating $12 million in yearly revenue. The Payment One
acquisition will create the foundation for the future growth of
Etelcharge.com, which permits a 50 state strategy to expand our
payment processing business," Mr. Howe concluded.
About Etelcharge.com
Etelcharge.com (OTCBB: ETLC) -- http://www.Etelcharge.com/-- is a
Web 2.0 online payment system that provides online shoppers the
ability to charge approved transactions to their telephone bill.
The Etelcharge.com payment option is also for individuals without
a credit card, or even a bank account.
About PaymentOne
Headquartered in San Jose, California, PaymentOne --
http://www.paymentone.com/-- is an online payment company. Its
services for businesses include no-credit-card required billing
and payment services such as bill to phone, electronic check
processing, and micropayment capabilities. It provides network
operators with methods for billing customers for third-party
digital content as well as other services. The company also
offers real-time verification of credit information and customer
management.
About Integretel Inc.
Integretel -- http://www.integretel.com/-- provides a complete,
end-to-end solution for telecommunications service providers
seeking to outsource their billing support functions.
Integretel's service offerings include billing through the local
telephone bill, direct branded invoicing, online billing, major
credit card clearing and direct account debit together with an
array of complementary services such as customer care, validation
& fraud control, pre-pay account management and internet
reporting.
On Sept. 16, 2007, Integretel Inc. filed a voluntary petition to
reorganize under Chapter 11 in the U.S. Bankruptcy Court for the
Northern District of California.
ISTAR FINANCIAL: Moody's Assigns Low-B Ratings to Stocks and Debt
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of iStar
Financial to Baa3 from Baa2. The outlook remains negative. The
action follows the statement by the REIT of increased loan
provisions of $275 million expected in 2Q08. Moody's expects
iStar's non-performing assets and core earnings to continue to be
pressured over the near-term given the persistent instability of
the credit markets. The negative outlook reflects this
instability and the weakening economic environment.
In addition to the deterioration in asset quality, the rating
action reflects the higher leverage that resulted and remained
following the Fremont transaction in mid-2007. Moody's
affirmation of the ratings in May 2007 was predicated upon a
leverage-neutral financing of the Fremont acquisition.
Furthermore, the REIT's fixed charge coverage has remained low at
1.6X and Moody's expects the cushion between this metric and its
covenants will continued to narrow with the earnings pressure
iStar faces over the next few quarters.
Moody's stated that a stable outlook would be predicated on a
reduction in leverage below 3.0X, a stabilization of fixed charge
coverage of 2.0X, secured debt below 15 % and non-performing
assets as a percentage of gross assets closer to 4%. A rating
downgrade could result if fixed charge coverage (from core
operations, excluding gains on sale) deteriorates further, non-
performing assets exceed 8%, secured debt increases above 15% and
failure to reduce leverage closer to 2.7X.
These ratings were downgraded:
iStar Financial Inc.
-- Senior unsecured debt to Baa3 from Baa2
-- preferred stock to Ba2 from Ba1
-- senior debt shelf to (P)Baa3 from (P)Baa2
-- subordinated debt shelf to (P)Ba1 from (P)Baa3
-- preferred stock shelf to (P)Ba2 from (P)Ba1.
iStar Financial Inc. [NYSE: SFI] is a property finance company
that elects REIT status. iStar provides structured mortgage,
mezzanine and corporate net lease financing. iStar Financial is
headquartered in New York City, and had assets of $16.1 billion
and equity of $2.9 billion as of March 31, 2008.
JEFFERSON COUNTY: Moody's Reviews Caa3-Rated Revenue Warrants
-------------------------------------------------------------
Moody's Investors Service's continues to review the Caa3 rating on
Jefferson County's (AL) $3.2 billion in outstanding sewer revenue
warrants for possible downgrade.
In addition, these ratings also remain on review for possible
downgrade: the Baa1 rating on the county's $270 million in
outstanding general obligation debt; the Baa2 rating on the
county's $86.7 million in outstanding lease revenue warrants
issued through the Jefferson County Public Building Authority; the
Baa2 rating on the county's $996.8 million in limited obligation
school warrants; the Baa1 rating on $20.3 million in special tax
bonds issued by the Birmingham-Jefferson Civic Center Authority
(BJCCA) partially secured by the county's occupational tax; and
the Baa2 rating on $40.86 million in debt issued by BJCCA
partially secured by a beverage tax and lodging tax levied and the
collected by the county. Moody's is publishing this update report
given that 90 days has elapsed since the review for downgrade was
initiated yet we do not have sufficient new information to take
rating action at this time.
The sewer revenue debt remains under review as the county, the
liquidity banks, and bond insurers continue to actively negotiate
terms of repayment of approximately $825 million in variable rate
demand sewer bonds. On March 31, 2008, the county, banks and
insurers entered into a forbearance agreement in which the banks
agreed to refrain from demanding an April 1, 2008 quarterly
principal repayment on bank bonds, estimated to be approximately
$53 million in total. The agreements were subsequently extended
multiple times, and now expire on Aug. 1, 2008 and encompass both
the April 1 and July 1 principal payments. As part of the most
recent forbearance agreement, which was executed on May 31, 2008
to be in effect for a 60-day period, the county and its bond
insurers, XL Capital (rated B2/negative) and FGIC (rated
B1/negative), agreed to make a combined principal payment totaling
$21.6 million. The county has continued to make on-time interest
payments on both the variable rate demand sewer debt as well as on
$2.2 billion in outstanding auction rate securities.
The negotiations between the county, the liquidity banks and the
bond insurers continue, but no detailed proposal has been
presented at this time. Moody's will review any recovery plans
that are introduced by the county and presented to us, as well as
any further extension of the forbearance agreements beyond Aug. 1,
2008. While the county appears to be pursuing a solution that
does not involve bankruptcy, they maintain that filing remains an
option for them in order to manage the sewer enterprise's
financial crisis.
Given the continued threat of bankruptcy, the county's general
obligation and other non-sewer revenue debt remains on review for
possible downgrade. The county is the legal entity that issued
both the sewer debt and the other obligations, and would therefore
most likely have to file as a county and not solely as the issuer
of the sewer debt. Given the limited history of municipal
bankruptcy, Moody's is unable to determine what county revenues,
assets and debt obligations could be affected by bankruptcy
proceedings. Moody's also recently received the county's audited
financial statements for fiscal 2007 (ended Sept. 30, 2007) and we
believe that the county's general financial operations are
consistent with the current general obligation rating of Baa1. In
the event of an actual bankruptcy filing, we would review the
status of the rating again at that time.
KINGS ROAD: January 31, 2006 Balance Sheet Upside-Down by $577,288
------------------------------------------------------------------
Kings Road Entertainment Inc. filed with the U.S. Securities and
Exchange Commission on July 18, 2008, its consolidated financial
statements for the third quarter ended Jan. 31, 2006.
At Jan. 31, 2006, the company's consolidated balance sheet showed
$1,057,561 in total assets and $1,634,849 in total liabilities,
resulting in a $577,288 stockholders' deficit.
The company's consolidated balance sheet at Jan. 31, 2006, also
showed strained liquidity with $987,524 in total current assets
available to pay $1,634,849 in total current liabilities.
The company reported net income of $3,216 for the quarter ended
Jan. 31, 2006, as compared to a net loss of $144,228 for the
quarter ended Jan. 31, 2005. This increase of net income of
$147,444 results primarily from an increase in film revenues, and
a decrease in professional fees.
For the quarter ended Jan. 31, 2006, feature film revenues were
$120,639, as compared to $65,532 for the quarter ended Jan. 31,
2005. The increase of $55,107 results primarily from increased
revenues on distribution of the company's feature film library.
Costs and expenses decreased to $124,278 for the quarter ended
Jan. 31, 2006, as compared to $209,764 during the quarter ended
Jan. 31, 2005. This decrease of $85,486 is due primarily to a
decrease in professional fees.
For the nine month period ended Jan. 31, 2006, feature film
revenues were $393,517, as compared to $201,423 for the nine month
period ended Jan. 31, 2005. The increase of $192,094 results
primarily from increased revenues on distribution of the company's
feature film library and increased royalties from DVD
distribution.
Costs and expenses increased to $585,915 for the nine months ended
Jan. 31, 2006, as compared to $542,907 during the nine months
ended Jan. 31, 2005. This increase of $43,008 is due primarily to
an increase in Guild residual accruals and commission payment to
Eclectic Filmworks partially offset by a decrease in professional
fees.
The company had a net loss of $170,718 for the nine month period
ended Jan. 31, 2006, as compared to net loss of $341,473 for the
comparable period ended Jan. 31, 2005. This decreased net loss of
$170,755 results primarily from an increase in revenues on
distribution of the company's feature film library and increased
royalties from DVD distribution coupled with decreases in
professional fees.
Full-text copies of the company's consolidated financial
statements for the quarter ended Jan. 31, 2006, are available for
free at http://researcharchives.com/t/s?2fb0
Going Concern Doubt
At Jan. 31, 2006, the company has a deficit in working capital of
$647,325, has an accumulated deficit of approximately $25,858,000,
and has sustained recent losses from operations. The company
believes these conditions raise substantial doubt about the
company's ability to continue as a going concern.
About Kings Road
Based in Beverly Hills, Calif., Kings Road Entertainment Inc.
(OTC: KREN) is engaged primarily in the development, financing
and production of motion pictures for subsequent distribution in
theaters, to pay, network and syndicated television, on home
video, and in other ancillary media in the United States and
internationally. The company was incorporated in Delaware in 1980
and began active operations in January 1983 and released its first
motion picture in 1984.
Subsequent to the fiscal year ended April 30, 1996, the company
has produced no new films and has derived its film revenues almost
exclusively from the exploitation of films produced in prior
years.
The Securities and Exchange Commission is instituting a public
administrative proceeding to determine whether to revoke or
suspend for a period not exceeding 12 months the registration of
each class of the securities of Kings Road Entertainment, Inc. for
failure to make required periodic filings with the Commission.
LANA OCHS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtors: Lana M. Ochs
Joseph J. Ochs
198 Johnnycake Mountain Road
Burlington, CT 06013
Bankruptcy Case No.: 08-21359
Chapter 11 Petition Date: July 18, 2008
Court: District of Connecticut (Hartford)
Judge: Robert L. Krechevsky
Debtors' Counsel: Peter L. Lawrence, Esq.
Email: peter.lawrence.esq@sbcglobal.net
Lawrence & Jurkiewicz LLC
486 E. Main Street
Torrington, CT 06790
Tel: (860) 626-1333
Fax: (860) 626-1305
http://www.lawedj.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtors' largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ctb08-21359.pdf
LAZY DAYS: Moody's Sees Increased Probability of Default
--------------------------------------------------------
Moody's Investors Service downgraded Lazy Days' R.V Center, Inc.'s
ratings, including the Corporate Family Rating and Probability of
Default Rating to Caa2 from B3. Moody's also downgraded the
rating on the company's 11.75% senior unsecured notes to Caa3 from
Caa1. Lazy Days' SGL-4 Speculative Grade Liquidity rating was
affirmed. The rating outlook remains negative.
The downgrades reflect the company's declining operating
performance, which has led to weakening financial flexibility. In
Moody's view, there is an increase in the probability of default
and deterioration in fundamental value.
"Overall declines in consumer confidence and spending in the U.S.
have led to significant declines in recreational vehicle (RV) unit
sales," Mike Zuccaro, Moody's Analyst says. "As a result of
revenue and profitability declines, leverage has increased to
excessive levels with no material improvement expected over the
next 12 to 18 months." Liquidity also remains a concern, as the
company is highly reliant on its floor plan receivables facility
to finance working capital, free cash flow is negative, and
covenant compliance over the next few quarters is tenuous, at
best.
In Moody's opinion, given modest cash flow and the likelihood for
covenant violations, should performance continue to deteriorate,
Lazy Days' access to liquidity could be reliant on the floor plan
lenders' willingness to amend covenants. These concerns also
drive Moody's view for below average recovery levels should the
company require restructuring.
Lazy Days' ratings outlook continues to be negative, reflecting
weak liquidity and the potential for further declines in operating
performance and enterprise value due to weak economic conditions.
These ratings were downgraded:
-- Corporate Family Rating to Caa2 from B3;
-- Probability of Default Rating to Caa2 from B3;
-- Senior Unsecured Notes at to Caa3 (LGD 5, 83%) from Caa1 (LGD
5, 76%);
Headquartered near Tampa, Florida, Lazy Days is the largest single
site RV retailer in the world. Its products include new and pre-
owned Class A and Class C motor homes, conventional trailers and
fifth-wheel trailers. Revenues were about $760 million for the
LTM period ended March 31, 2008.
LINENS N THINGS: Lenders Agree to $700MM DIP Loan Term Amendment
----------------------------------------------------------------
Linens 'N Things and its debtor-affiliates seek the authority of
the United States Bankruptcy Court for the District of Delaware to
amend the agreement providing for the $700,000,000 debtor-in-
possession financing package from General Electric Capital
Corporation in order to avoid certain defaults.
The Debtors and the DIP Lenders agreed the proceeds from the DIP
Facility will be used to refinance about $370,000,000 in
outstanding prepetition debt to GE Capital and to fund the
Debtors' working capital and for other general corporate
purposes, pursuant to the DIP Budget, subject to permitted
variances. They also agreed to certain negative covenants
relating to the Debtors' compliance with the DIP Budget.
Mark D. Collins, Esq., at Richards, Layton & Finger P.A., in
Wilmington, Delaware, relates the Debtors' actual sales receipts
for the cumulative four-week periods ending on July 5 and July
12, 2008, were less than 90% of the budgeted sales receipts for
that periods, which violates their covenant.
The DIP Lenders have agreed to waive the specified defaults,
pursuant to an Amendment No. 1 and Waiver to Credit Agreement.
The pertinent terms of the DIP Amendment are:
-- The DIP Lenders agree to the waiver provided that it will
be rescinded if the Debtors fail to comply in full with
the provisions of the DIP Amendment;
-- The Debtors will pay a fee equal to 10 basis points on the
aggregate amount of the commitments under the DIP
Agreement;
-- Section 6.21 of the DIP Agreement will be amended to
provide that:
* the actual disbursement amount for any Cumulative Four
Week Period ending prior to August 1, 2008, may exceed
the budgeted disbursement amount for that period by no
more than 10%, and for any Cumulative Four Week Period
ending after August 1, may exceed the Budgeted
Disbursement Amount for that period by no more than 5%;
and
* actual sales receipts for any Cumulative Four Week Period
ending on or after August 1, will not be less than 95% of
the budgeted sales receipts for that period as set forth
in the Budget, and the actual inventory amount at any
time after August 1, will not be less than 95% of the
budgeted inventory amount;
-- The DIP Lenders will consent to an updated Budget delivered
by the Debtors, which will be deemed effective as of the
delivery date of delivery; and
-- Sections 8.01(p)(i) through 8.01(p)(xix) of the DIP
Agreement will be amended to modify certain deadlines with
respect to the:
* disposition of certain leases and related inventory for
any warehouse or retail locations for which the Debtors
have been unable to obtain an agreement extending the
time for assumption and rejection to no earlier than
March 31, 2008; and
* drafting, filing and confirmation of a plan of
reorganization that has been supported by the Official
Committee of Unsecured Creditors, and the ad hoc group of
the Debtors' noteholders.
A full-text copy of the proposed Revised Budget is available for
free at:
http://bankrupt.com/misc/LNT_13-Week_CashFlow_RevisedBudget.pdf
By obtaining a waiver of the Specified Defaults through the
proposed DIP Agreement, Mr. Collins asserts that the Debtors can
prevent the DIP Lenders from exercising any available remedies
under the DIP Agreement, including:
(i) terminating or restricting the DIP Lenders' commitments
under the DIP Facility;
(ii) terminating or restricting the Debtors' ability to use
cash collateral; or
(iii) declaring all amounts immediately due and payable under
the DIP Facility.
Mr. Collins notes that any of the remedies' results would be
devastating to the Debtors' business. As previously demonstrated
by the Debtors, the availability under the DIP Facility is
absolutely necessary to their ability to operate on a going-
forward basis, and to successfully reorganize their business.
Aside from a waiver from the negative covenants on sales receipts
for the cumulative four-week periods, the amendment of the
agreement providing for the Debtors' $700,000,000 DIP Credit
Facility provides for changes to the deadlines for drafting,
filing and confirmation of a plan of reorganization.
The Amendment provides that Sections 8.01(p)(i) through
8.01(p)(xix) of the DIP Agreement will be deleted in their
entirety and will be replaced by new provisions, which provide
that the Debtors will default on their DIP Facility if they fail
to:
-- deliver to the Agents, the Ad Hoc Committee of Noteholders
and the Official Committee of Unsecured Creditors a term
sheet for a proposed consensual plan of reorganization on
or prior to August 1, 2008;
-- assume relevant leases or obtain lease extension letters by
August 1, with respect to all of their warehouse locations,
and not less than 80% of the Debtors' retail locations,
other than the permitted store closings.
-- distribute to prospective liquidators "bid books" covering
the non-extended lease locations prior to August 8;
-- complete the auction for inventory at the non-extended
lease locations prior to August 27;
-- obtain Court's order approving the sale of the inventory at
the non-extended lease locations by August 28, and the
failure to consummate that sale by August 29;
-- deliver to the Agents by August 15 a term sheet reflecting
a proposed Consensual Plan of Reorganization, which is
likely be approved by the Court;
-- file the Plan and Disclosure Statement by August 29;
-- obtain approval of the Disclosure Statement by October 12;
-- complete the solicitation of the Plan and Disclosure
Statement by November 17; and
-- obtain a confirmation order by December 1.
A full-text copy of the Amendment to the DIP Agreement is
available for free at:
http://bankrupt.com/misc/LNT_1stAmended_DIP_Agreement.pdf
The Court will commence a hearing on July 24, 2008, at 2:00 p.m.,
to consider the Debtors' request to amend. Objections are due
July 23.
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.
(Bankruptcy News About Linens 'n Things, Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LINENS N THINGS: Wants Ernst & Young as Auditors
------------------------------------------------
Linens 'N Things and its debtor-affiliates seek the authority of
the United States Bankruptcy Court for the District of Delaware to
employ Ernst & Young, LLP as accountants and auditors to provide
certain accounting and auditing services, pursuant to the terms of
an engagement letter dated May 14, 2008.
As accountants, Ernst & Young will:
(a) audit and report on the consolidated financial statements
of the Debtors for the year ended December 27, 2008; and
(b) review the Debtors' unaudited interim financial
information before the they file their Form 10-Q;
Mark D. Collins, Esq., at Richards, Layton & Finger P.A., in
Wilmington, Delaware, relates that Ernst & Young is familiar with
the Debtors' books and records, business operations and corporate
structure because the firm has been employed as accountant and
auditors to the Debtors since April 12, 2007. He contends that
the familiarity will allow Ernst & Young to serve the bankruptcy
estates more efficiently than any other accounting firm without
Ernst & Young's knowledge and experience.
Pursuant to the terms and conditions of the Engagement Letter,
Ernst & Young will be paid based on its discounted hourly rates:
Partners and Principals $441
Senior Managers/Managers $341
Seniors $210
Staff $126
In addition, the Debtors will also reimburse Ernst & Young for
any direct expenses incurred in connection with its retention,
including reasonable and customary out-of-pocket expenses for
travel, meals, and accommodations.
Timothy Tracy, a partner at Ernst & Young, assures the Court that
his firm is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code, and holds no interest
materially adverse to the Debtors, their creditors, and
shareholders for the matters for which Ernst & Young is to be
employed.
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.
(Bankruptcy News About Linens 'n Things, Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LUBBOCK MEDICAL: Scrambles for DIP Financing to Sidestep Sale
-------------------------------------------------------------
Lubbock, Texas-Highland Medical Center LP, doing business as
Highland Community Hospital and Highland Medical Center is
scrambling to obtain debtor-in-possession financing to fund its a
reorganization, Terry Brennan of The Deal relates. The report
adds that the Debtor's effort to find DIP funds is intended to
"sidestep a $6 million sale."
Judge Robert Jones of the U.S. Bankruptcy Court for the Northern
District of Texas is set to conduct a bid procedures hearing
tomorrow, July 23. The Troubled Company Reporter reported on July
3, 2008, that the Debtor asked the Court for authority to publicly
sell the hospital for at least $6 million. Bids are due on July
30, 2008.
According to the Debtor's counsel, Max Tarbox, Esq., at McWhorter,
Cobb & Johnson LLP, the hospital intended to find funds by Friday,
July 18, 2008, The Deal notes. However, there were no DIP fund
motions filed during that day, The Deal reports. The Deal
couldn't reach Mr. Tarbox for a comment Friday. The Deal adds
that the Debtor planned to propose a hearing on the DIP financing
on July 23, the same day the bidding procedures will be heard.
Mr. Tarbox said that the Debtor rejected a private offer from an
undisclosed bidder saying it didn't meet the $6 million minimum
bid, The Deal writes.
Court documents, The Deal says, show that the hospital's assets
are worth about $7 million to $9 million, plus $6.3 million in
receivables and $8 million in inventory.
The sale faces several objections from secured creditors,
including CHS/Community Health Systems Inc. and Highland Health
Systems Inc., The Deal relates. Court documents show that CHS is
owed at least $5 million, The Deal notes.
Second Interim OK to Cash Collateral Use
The Deal states that Judge Jones gave the Debtor another interim
approval to use cash collateral until July 30, 2008. The Debtor
will use the cash to pay the Internal Revenue Service and lender
NS Fund I LLC $10,000 every month on a $1.5 million loan, The Deal
says. The IRS is owed $2.7 million in back taxes, according to
the report.
The TCR said on June 9, 2008, that the Court had given the Debtor
authority to use the cash collateral of its prepetition secured
lenders on an interim basis until June 18, 2008. The Debtor
intended to use the money to fund business operations and
bankruptcy costs as it seeks to sell its assets.
About Lubbock Medical
Lubbock, Texas-Highland Medical Center LP, doing business as
Highland Community Hospital and Highland Medical Center --
http://www.highlandcommunityhospital.com/-- is a 123-bed
hospital that provides general medical and surgical care for
inpatient, outpatient, and emergency room patients, and
participates in the Medicare and Medicaid programs. Highland
employs about 100 workers.
The Debtor filed for chapter 11 bankruptcy protection on May 31,
2008 (Bankr. N.D. Texas Case No. 08-50202) in order to find a
buyer that will continue the hospital's operations. Max R.
Tarbox, Esq., at McWhorter, Cobb & Johnson, LLP, represents the
Debtor as its bankruptcy counsel. When it filed for bankruptcy,
the Debtor disclosed between $10 million to $50 million in
estimated assets and between $10 million to $50 million in debts.
Judge Robert Jones appointed a patient ombudsman on July 8 to
assure adequate patient care at the behest of the U.S. Trustee,
William Neary.
MEADE INSTRUMENTS: Earns $1.8MM in First Quarter Ended May 31
-------------------------------------------------------------
Meade Instruments Corp. reported net income of $1.8 million for
the first quarter ended May 31, 2008, compared with a net loss of
$4.2 million in the same quarter of fiscal 2008. Excluding the
$4.5 million gain on the sale of the Weaver and Redfield brands,
the company would have reported a net loss of $2.7 million.
The company reported net sales of $12.0 million for the quarter
ended May 31, 2008, down 32% from net sales of $17.6 million in
the same period last year. The company attributed the decrease in
revenues to decreased sales of high end telescope products and
accessories related to the transfer of operations to Mexico, which
has not fully ramped up to meet market demand; a lack of sales
related to the Weaver and Redfield sports optics brands sold
during the quarter; and continued weakness in end market demand
for riflescopes. Due to the transition to Mexico, the company
ended the first quarter with a $3 million backlog for high-end
telescopes. The company expects to clear this backlog by the
third quarter of fiscal 2009.
The gross profit margin during the first quarter of fiscal 2009
increased by 11.0 percentage points to 21.4% of net sales,
compared with 10.4% of net sales in the same period last year.
The significant improvement in the gross profit margin was driven
primarily by the non-recurrence of inventory write-downs, deep
discounting and other items associated with the restructuring that
occurred during the first quarter of fiscal 2008. In addition,
the first quarter of fiscal 2009 was the first full quarter during
which the company manufactured substantially all of its high-end
telescopes in its newly opened Mexican manufacturing facility and
did not incur the higher overhead costs of its now-closed Irvine,
California manufacturing operations.
Selling, general and administrative expenses decreased by
approximately 6%, to $4.8 million, due to lower sales volumes and
reduced overhead. Research and development expenses also
decreased by 37% to $283,000 during the same period, due to the
headcount reductions related to the ongoing restructuring of the
company and controlled discretionary spending.
Also during the first quarter, the company sold its Weaver and
Redfield sports optics brands for gross proceeds of $8 million,
and used the cash to repay the company's domestic credit facility
balance.
"We are pleased to report that we have completed our first clean
quarter of manufacturing in Mexico, and early indications suggest
that the cost savings we projected last year are now
materializing," said Steve Muellner, president and chief executive
Officer of Meade. "Now that we have cleaned up our inventory and
transferred the manufacturing operations outside the U.S., we are
seeing an immediate positive impact on our company's gross
margins. In addition, with the planned reduction in global
headcount we have significantly reduced our SG&A expenditures.
Excluding the gain on the sale of Weaver and Redfield brands, our
first quarter net loss improved by $1.5 million, or 36%, from the
same quarter last year due to the turnaround initiatives we have
completed. And, although we believe the turnaround remains on
track, we will continue to implement headcount reductions,
facility consolidation and reductions in corporate overhead and
manufacturing costs to ensure that the turnaround maintains its
pace, and to reduce the corporate structure in line with our new
revenue model. At the same time, we are focusing on revenue
growth through select new product introductions."
Mr. Muellner continued, "Liquidity continues to be strong thanks
to the sale of the sports optics brands and related inventory
during the first and second quarters of fiscal 2009. With the
much-improved liquidity, reduced level of business complexity and
plans for further reductions in overhead costs, we believe that we
will have sufficient cash flow to support current operations
through fiscal 2009, and provide us with additional flexibility in
fiscal 2010. We recently amended our credit facility with Bank of
America and are now in compliance with all covenants. The company
is continuing to explore its strategic alternatives."
Liquidity and Capital Resources
During the three months ended May 31, 2008, the company funded its
operations principally by borrowing on its bank lines of credit,
proceeds of approximately $8.0 million from the sale of its Weaver
and Redfield brands and related assets and by utilizing its cash
on hand. Cash flow from operating activities was negatively
affected principally by losses for the period, excluding the gain
on its brand sales of approximately $4.5 million.
Working capital totaled approximately $19.7 million at May 31,
2008, compared to $17.0 million at Feb. 29, 2008.
The company had $4.7 million in cash at May 31, 2008, a slight
increase compared to $4.3 million at Feb. 29, 2008. Availability
under its domestic bank lines of credit at May 31, 2008 was
approximately $4.4 million. During the three months ended May 31,
2008, operations used approximately $2.1 million in cash,
offsetting the $8.0 million in proceeds from its sale of its
Weaver and Redfield brands and related assets..
Capital expenditures aggregated $86,000 and $44,000 for the three
month periods ended May 31, 2008, and 2007, respectively. The
company had no material capital expenditure commitments at May 31,
2008.
Balance Sheet
At May 31, 2008, the company's consolidated balance sheet showed
$40.9 million in total assets, $14.1 million in total liabilities,
and $26.8 million in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended May 31, 2008, are available for
free at http://researcharchives.com/t/s?2faf
Going Concern Doubt
As reported in the Troubled Company Reporter on June 24, 2008,
Moss Adams LLP, in Irvine, California, expressed substantial doubt
about Meade Instruments Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Feb. 29, 2008. The auditing frim
pointed to the company's declining revenues, recurring losses from
operations and accumulated deficit.
About Meade Instruments
Based in Irvine, Calif., Meade Instruments Corp. (Nasdaq GM: MEAD)
-- http://www.meade.com/-- is a designer and manufacturer of
optical products including telescopes and accessories for the
beginning to serious amateur astronomer. The company distributes
its products worldwide through a network of specialty retailers,
mass merchandisers and domestic and foreign distributors.
MERVYN'S LLC: May File for Chapter 11 as Shipments Halt, WSJ Says
-----------------------------------------------------------------
The Wall Street Journal's Peter Lattman reports that executives at
Mervyn's LLC in recent days have been trying to persuade vendors
to continue shipping merchandise for the back-to-school season.
Mr. Lattman, citing people familiar with the matter, says Mervyn's
lender, CIT Group Inc., stopped providing financing in the spring,
causing the retainer's vendors to get nervous and begin
withholding shipments.
If management's effort fails, Mervyn's could be forced to file for
bankruptcy protection as soon as this month and shut down, sources
told the Journal.
Mervyns -- http://www.mervyns.com/-- operates more than 177
stores in seven states, providing a mix of top national brands and
exclusive private labels. Mervyns stores have an average of
80,000 retail square feet, smaller than most other mid-tier
retailers and easier to shop, and are located primarily in
regional malls, community shopping centers, and freestanding
sites.
According to the Journal, Cerberus Capital Management and Sun
Capital Partners, along with three other partners -- including
real-estate investor Lubert-Adler -- bought Mervyn's from Target
Corp. in 2004 for $1,200,000,000. The Journal says Cerberus, et
al., put up about $400,000,000 in equity and financed the rest.
Since 2004, the private-equity owners have shut many stores, the
Journal says.
Two retail experts familiar with the bankruptcy planning at
Mervyn's told the Journal that the company's sales began to tumble
quickly as the real estate slide in California and Arizona.
According to the Journal, Mervyn's tried to cater to Hispanic
consumers, many of whom have been hurt by the downturn and job
losses in the mortgage and home-building industries.
Mr. Lattman says the private-equity owners wouldn't stand to take
much of a financial hit in a Mervyn's liquidation. He explains
that when the owners bought the company they structured the
$1,200,000,000 deal as two separate transactions -- one for the
retailer and a second one for the retailer's real estate. The
real-estate arm leased many of the stores to Mervyn's and has sold
and leased certain properties to other retailers. And through
sale-leaseback transactions and the appreciation of real-estate
values over the past several years, the buyers have more than
doubled their money on the real-estate investment, and profits
have far exceeded losses on the retailer, Mr. Lattman relates,
citing sources.
In a bankruptcy of the store operations, the real-estate arm would
become a creditor, Mr. Lattman adds.
The Journal says Macerich Co., a Santa Clara, Calif.-based real-
estate investment trust that owns 72 U.S. malls, is among Mervyn's
largest landlords. According to the Journal, Jim Sullivan, an
analyst with Green Street Advisors, said Macerich in December
agreed to buy 43 Mervyn's stores for $430,000,000, which allowed
Macerich to:
-- gain control of 13 Mervyn's stores in its own malls that
might have languished in any bankruptcy proceedings; and
-- sell the 30 stores in other malls to those landlords.
The Journal also notes that Boca Raton, Florida-based Sun Capital
Partners has been hit by the retail bankruptcy wave as Sun-owned
companies Wickes Furniture and Lillian Vernon went belly up this
year. Sun was also the largest shareholder of Sharper Image,
which is now in liquidation, the Journal notes. Other retailers
in Sun's portfolio, including discount chain Shopko and Anchor
Blue, are performing well, the Journal says, citing people
familiar with the firm.
METOKOTE CORP: S&P Rates Long-term Credit 'B+'; Outlook Neg.
------------------------------------------------------------
Standard & Poor's Ratings Services assigned MetoKote Corp. a long-
term corporate credit rating of 'B+' and a negative outlook. At
the same time, S&P assigned a rating of 'BB-', to its first-
priority bank facilities, one notch above the company's corporate
credit rating, and a recovery rating of '2'.
Lima, Ohio-based MetoKote applies industrial coatings designed to
inhibit the corrosion of automotive and industrial products. The
privately held company is controlled by its equity sponsor, J.P.
Morgan Partners, and does not file with the SEC. Total balance
sheet debt was $128 million at April 30, 2008.
The ratings on MetoKote reflect the company's highly leveraged
financial position and weak business risk profile as a participant
in the highly competitive and cyclical coating business serving
the automotive, agricultural, and construction markets.
MetoKote's sales are vulnerable to swings in demand and pricing
for coating activity because its operations are concentrated in
this niche segment. In addition, the company lacks significant
scope and scale in this fragmented sector, even though it is the
largest independent operator. MetoKote competes with the large,
captive coating operations of a number of original equipment
manufacturers, as well as with many small, single-plant companies.
It has limited geographic diversity, generating 74% of fiscal 2007
revenue in North America, and its concentrated customer base adds
further business risk.
The automotive OEM market, which accounts for about 45% of
MetoKote's revenues, is likely to remain very challenging in the
year ahead. The auto supplier industry is typically subject to
pricing pressures, weak volumes, and high material costs. In
addition, the financial performance of the auto supplier group is
vulnerable to the production cuts of some of its major customers,
several of which are financially weak.
Certain business characteristics somewhat alleviate these risks,
including MetoKote's contract structure with many customers and
the ability to design, build, install, and operate a complete
range of coating systems. Notably, MetoKote has exposure to a
number of non-auto-related markets such as agriculture, truck and
bus, and construction.
The negative outlook reflects our concern that MetoKote's recent
improvement in free cash flow and leverage may not be sustainable,
given auto industry challenges and the company's difficulty in
expanding its revenues and EBITDA. S&P could lower the ratings if
MetoKote looks likely to operate with EBITDA interest coverage
after capital expenditures of less than 2x or EBITDA margin under
18%. S&P could revise the outlook to stable if market conditions
improve and the recovery is sustained. This could strengthen
MetoKote's earnings and cash flow generation prospects, enabling
the company to reduce leverage. However, this scenario is less
likely because S&P do not expect significant near-term improvement
in the auto sector.
METROPCS COMMS: S&P Lifts Ratings on Improved Financial Leverage
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Richardson, Texas-based wireless provider MetroPCS Communications
Inc., including the corporate credit rating, which S&P raised to
'B' from 'B-'. The outlook is stable. As of March 31, 2008, the
company had $3 billion of total funded debt outstanding.
"The upgrade reflects the company's improving financial leverage,"
said Standard & Poor's credit analyst Catherine Cosentino.
Another factor is that S&P expect the business will continue to
experience good growth in subscribers, which will contribute to
overall improving operating cash flows despite start-up costs
associated with recent and planned market launches.
MOHAMMAD JAMEELUDDIN: Case Summary & 20 Unsecured Creditors
-----------------------------------------------------------
Debtors: Mohammad Jameeluddin
Nousheena Jameeluddin
3995 Hollyspring Drive
Corona, CA 92881
Bankruptcy Case No.: 08-18893
Chapter 11 Petition Date: July 18, 2008
Court: Central District Of California (Riverside)
Debtors' Counsel: Robert J. Curtis, Esq.
Email: rcurtis@curtislawgroup.com
Curtis Law Group
19700 Fairchild Road, Suite 380
Irvine, CA 92612
Tel: (949) 955-2211
Fax: (949) 955-2217
http://curtislawgroup.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtors' 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/cacb08-18893.pdf
MORGAN STANLEY: Fitch Chips Ratings on Three Certificate Classes
----------------------------------------------------------------
Fitch Ratings downgraded Morgan Stanley Capital I Trust 2006-IQ11,
commercial mortgage pass-through certificates as:
-- $8.1 million class J to 'BB' from 'BB+';
-- $4.0 million class K to 'BB-' from 'BB';
-- $4.0 million class L to 'B+' from 'BB-'.
Fitch also placed these classes on Rating Watch Negative:
-- $18.2 million class G at 'BBB';
-- $14.1 million class H at 'BBB-'.
In addition, Fitch affirmed these:
-- $27.0 million class A-1 at 'AAA';
-- $323.1 million class A-1A at 'AAA';
-- $162.9 million class A-2 at 'AAA';
-- $96.8 million class A-3 at 'AAA';
-- $490 million class A-4 at 'AAA';
-- $161.6 million class A-M at 'AAA';
-- $147.5 million class A-J at 'AAA';
-- Interest-only class X at 'AAA';
-- Interest-only class X-Y at 'AAA';
-- $30.3 million class B at 'AA';
-- $12.1 million class C at 'AA-';
-- $22.2 million class D at 'A';
-- $16.2 million class E at 'A-';
-- $14.1 million class F at 'BBB+'.
Fitch does not rate the $6.1 million class M, $6.1 million class
N, $2.0 million class O or $18.2 million class P.
The downgrade reflects the increase in specially serviced assets
since Fitch's last rating action, in addition to an increase in
Fitch's expected losses on the specially serviced assets. Class G
and class H may be downgraded if expected recoveries on the
specially serviced assets continue to decline or new loans become
specially serviced. As of the June 2008 distribution date, the
pool has paid down 2%, to $1.58 billion from $1.61 billion at
issuance.
Fitch has identified thirteen Loans of Concern (7.2%) including
five specially serviced assets (5.8%). The largest specially
serviced asset is an industrial property (3.5%) in Phoenix,
Arizona, which transferred to the special servicer when the single
tenant, LeNature, filed for bankruptcy and vacated the space. The
loan remains current under the forbearance agreement and loan
assumption negotiated in June 2008 by a wholly-owned subsidiary of
CB Richard Ellis Investors, LLC. The property is actively being
marketed for a replacement tenant.
The second largest Loan of Concern (1%) is a portfolio of two
retail properties, located in Michigan and New Jersey, and is
specially serviced. The portfolio transferred to special
servicing in June 2008 for monetary default.
The largest loan (10.1%) is secured by a 1.87 million square foot
office property in Chicago, Illinois. Occupancy as of December
2007 was 76%, in-line with issuance.
The second largest loan (6.0%) is secured by a retail mall located
in the Riverwalk district of San Antonio, Texas. Occupancy as of
December 2007 was 91% compared to 95% at issuance.
MOVIDA COMMUNICATIONS: Sues Cozac to Recoup $2.2 Million From Sale
------------------------------------------------------------------
Movida Communications Inc., a wireless telecommunications
provider, sued Cozac LLC seeking to collect a remaining
$2.2 million due under a sale of Movida's business, Bloomberg News
reports.
Movida did not have enough number of active subscribers to satisfy
the terms of the sale contract, Cozac retorted.
Cozac paid the initial payment of $600,000 but failed to transfer
a $1 million payment due after two months, the report relates.
As reported in the Troubled Company Reporter on June 25, 2008, the
the Debtor was authorized to sell its business to Cozac for
$2,800,000. In connection with the sale, Movida obtained
permission from the the Court to pay $113,000 executive bonuses to
10 officials and workers who helped in the liquidation of the
Debtor's assets,
Top executives were paid an aggregate amount of $47,500, with
$2,750 as the lowest.
About Movida Communications
Headquartered in Kansas City, Missouri, Movida Communications Inc.
-- http://www.movidacellular.com/-- now known formally as KCMVNO
Inc., is a wireless service provider that offers pay-as-you-go
wireless voice and data communications services using a national
providers digital network. The company filed for Chapter 11
protection on March 31, 2008 (Bankr. D. Del. Case No. 08-10600).
Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, represents the Debtor. When the Debtor
filed for protection from its creditors, it listed asstes between
$10 million to $50 million and debts between $50 million to $100
million. No trustee, examiner or official committee of unsecured
creditors has been appointed in this case.
MTM TECHNOLOGIES: NASDAQ Allows Continued Capital Market Listing
----------------------------------------------------------------
NASDAQ Listing Qualifications Panel granted the request of MTM
Technologies, Inc. for continued listing on the NASDAQ Capital
Market.
As previously disclosed, MTM Technologies received a delisting
notice from NASDAQ on May 14, 2008 and, pursuant to NASDAQ
procedures, requested a hearing before the Listing Qualifications
Panel. The hearing request stayed the suspension of trading and
delisting of the company's securities pending the issuance of the
Panel's decision. The Panel's hearing was held on July 10, 2008
and the decision was received by MTM Technologies on July 16,
2008.
"We are very pleased with the Panel's decision. Maintaining our
listing on NASDAQ is important for the operations and growth of
the business," stated Steve Stringer, President and chief
operating officer of MTM Technologies.
About MTM Technologies, Inc.
Headquartered in Stamford, Connecticut, MTM Technologies, Inc.
(NASDAQ: MTMCD) – http://www.mtm.com-- is a national provider of
innovative IT solutions and services to Global 2000 and mid-size
companies. Partnered with industry-leading technology providers
such as Cisco Systems, Citrix, Microsoft, HP, Sun Microsystems,
EMC, and Avaya, MTM Technologies offers comprehensive solutions in
the areas of access, convergence, consolidation, and
virtualization. In addition, MTM Technologies provides a broad
range of managed services, including system monitoring and
management, hosting, security management, IP telephony management,
and IT support, as well as IT staffing and training services.
MUZAK HOLDINGS: High Leverage Cues Moody's to Cut Caa1 Ratings
--------------------------------------------------------------
Moody's Investors Service downgraded Muzak Holdings, LLC's
corporate family rating to Caa2 from Caa1, and the probability of
default rating to Caa3 from Caa1. The ratings outlook was revised
to negative from developing.
The downgrade of the corporate family rating reflects Muzak's very
high leverage, inadequate interest coverage, and concerns over the
economic pressure on its retail and restaurant customers,
particularly given the discretionary nature of the company's
products. Moody's notes that the customer churn rate, although
improved from historical levels, did tick up in the March 2008
quarter. The two-notch downgrade of the probability-of-default
rating reflects Moody's concern over the company's ability to
satisfy $437 million of debt maturing in the March 2009 quarter.
Muzak, as disclosed, plans to address these maturities as part of
the proposed consolidation or combination with DMX, Inc. that is
contingent on a sale of the entities to an as yet unidentified
third party buyer. Although the recent DOJ approval of the merger
is a positive as it represented a significant hurdle, there is
still uncertainty over the viability of a sale transaction,
particularly given current market conditions. The rating derives
limited support from the company's positive cash flows and its
successful efforts to improve or stabilize customer churn rates
from historical levels. The negative outlook reflects the
significance of the near term maturities, notably given the
challenging credit markets, and the absence of cushion under
financial metrics to absorb shortfalls under expectations.
These ratings were downgraded:
Muzak Holdings, LLC
-- Corporate family rating, to Caa2 from Caa1;
-- Probability-of-default rating, to Caa3 from Caa1;
-- $25 million senior discount notes due 2010, to Ca (LGD5, 83%)
from Caa3 (LGD6, 96%).
Muzak LLC
-- $115 million guaranteed senior subordinated notes due 2009,
to Ca (LGD4, 66%) from Caa3 (LGD5, 86%).
These rating was affirmed:
Muzak LLC
-- $220 million guaranteed senior unsecured notes due 2009, to
Caa1 (LGD2, 26%). Point estimate revised from (LGD3, 45%).
The Ca rating for the senior discount notes and senior
subordinated notes reflect an overall probability of default
rating of Caa3 and a loss given default of LGD5 for the senior
discount notes and LGD4 for the senior subordinated notes.
Headquartered in Fort Mill, South Carolina, Muzak is a leading
provider of business music programming to numerous types of
businesses. The company also sells and installs equipment such as
sound systems, noise masking, and drive-thru systems. The company
reported sales of $250 million through the 12 months ended March
31, 2008.
NCI BUILDING: S&P Affirms 'BB' Rating and Changes Outlook to Pos.
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Houston,
Texas-based NCI Building Systems Inc. to positive from stable. At
the same time, S&P affirmed all ratings on the company, including
its 'BB' corporate credit rating.
"The outlook revision reflects the steady improvement in the
company's operating performance over the past several quarters due
to higher demand for its products and better operating margins, a
trend we expect will continue in the near term despite the
expected slowdown in commercial construction," said Standard &
Poor's credit analyst Thomas Nadramia. As a result, credit
metrics have improved to a level that S&P would consider to be
more consistent with a higher rating. Specifically, debt to
EBITDA has improved to below 3x, and funds from operations to
total debt to about 22%.
Despite S&P's expectation that commercial construction end-markets
will weaken somewhat over the next several quarters due to
recessionary pressures and a more difficult financing environment,
S&P believe NCI's highly variable cost structure should enable it
to maintain credit metrics around current levels, which are
consistent with a higher rating.
The ratings on NCI reflect the highly cyclical end-market demand
for its products, volatile raw-material costs (particularly for
steel), and intense competition. These factors are partially
mitigated by the company's national scale of operations and
distribution, favorable long-term trends for metal buildings, its
competitive cost position, and a consolidated financial profile
in line with the rating.
NCI is one of North America's largest integrated manufacturers and
marketers of metal products for the nonresidential construction
industry. It operates 44 manufacturing facilities in 18 states
and Mexico. The company's products include engineered building
systems (57% of sales for the six months ended April 27, 2008),
metal components (37%), and metal coil coating services (6%).
NORTHWEST AIRLINES: Delta Names Senior Team to Lead Merged Company
------------------------------------------------------------------
Delta Air Lines Inc. introduced to its employees the senior team
that will be responsible for leading the company after the closing
of its merger with Northwest Airlines Corp., marking another
important milestone toward the successful integration of the two
airlines.
Delta will combine the strengths of two best-in-class airlines to
create an industry-leading management team and ensure the seamless
transition of Northwest's operations into Delta over the next 12
to 24 months.
The team of officers will be led by Delta CEO Richard Anderson, an
18-year industry veteran, and will be comprised of highly
experienced operational, corporate and strategic leaders selected
from both companies to represent the respective strengths of Delta
and Northwest.
In addition, Delta announced the senior officers who will be
members of its Corporate Leadership Team. The CLT will have
overall responsibility for the strategy of the airline, including
major decision-making and overall supervision of the merger
process. The CLT, which will be effective upon the closing of
the merger, includes:
* Richard Anderson, CEO - Delta Air Lines
* Ed Bastian, President and CFO - Delta Air Lines; CEO and
President - NWA
* Mike Becker, EVP, Chief Operating Officer - NWA
* Mike Campbell, EVP - HR, Labor & Communications
* Steve Gorman, EVP - Operations
* Glen Hauenstein, EVP - Revenue & Network
* Ben Hirst, SVP - General Counsel
* Laura Liu, SVP - International
* Theresa Wise, SVP – Chief Information Officer
By naming its entire officer team in advance of the closing of the
merger, Delta has laid a strong foundation for the combined
airline to immediately begin capturing and exceeding the merger
synergies expected following the close of the transaction.
"We have assembled an incredibly talented officer team," said Mr.
Anderson. "Their diverse backgrounds and extensive experience,
both in and out of the airline industry, provide a solid
foundation for building a world-class airline focused on taking
care of our people, serving our customers, and giving a good
return to our shareholders."
Upon closing, NWA, Inc. will be an operating subsidiary of Delta.
Ed Bastian, who is Delta's current president and CFO, will also
become CEO and president of Northwest. Mike Becker, who is
currently senior vice president of Human Resources and Labor
Relations at Northwest, will become the new executive vice
president and chief operating officer of Northwest during the
transition period. As previously announced, Northwest's current
president and CEO, Doug Steenland, will leave to assume his seat
on the new Delta Board of Directors.
Each of the officers of the new NWA structure will be officers of
both NWA and Delta upon closing. "The officers named for both
Delta and NWA are leaders of the new Delta," said Mr. Bastian, who
will have leadership roles in both organizations. "The final
organizational structure will evolve over time, as the transition
to a single operating certificate is achieved. We will not
sacrifice revenue or cost-synergies by moving too quickly to
integrate. Combining these two great airlines will be a well-
planned, deliberate process."
The new Delta will be headquartered in Atlanta and will maintain a
significant long-term presence in Minnesota that includes both
operation and staff functions beyond the 12-24 month transition of
Northwest operations into Delta.
Mr. Anderson said, "We are already making great progress on our
integration planning and are well ahead of previously attempted
airline mergers in anticipation of gaining approval by the
Department of Justice later this year. Today's announcement
is another important milestone in solidifying the leadership of
the new Delta and accelerating the planning efforts that are
essential to achieving a seamless integration after the closing
of the merger. In light of the industry's current challenges,
including record high oil prices, it is clear we were smart to
proceed when we did because this merger will provide the
necessary revenue and cost synergies to better position the
combined carrier for success over the long-term."
Northwest's CEO Mr. Steenland concluded, "As the planning
continues and the transformation evolves, we ask that all Delta
and Northwest people remain focused on operating our respective
airlines. Thanks to the caliber of our people, we are confident
we will complete the most successful merger in airline history."
Delta in April announced that it is combining with Northwest in an
all-stock transaction to create America's premier global airline.
The new company will be called Delta and will be headquartered in
Atlanta. Combined, the company and its regional partners will
provide customers access to more than 390 destinations in 67
countries.
Together, Delta and Northwest will have more than $35,000,000,000
in aggregate annual revenues, operate a mainline fleet of nearly
800 aircraft, employ approximately 75,000 people worldwide, and
have one of the strongest balance sheets in the industry. The
merger is subject to the approval of Delta and Northwest
stockholders and regulatory approvals, which are targeted for
completion later this year.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents
the Debtors in their restructuring efforts. Timothy R. Coleman
at The Blackstone Group L.P. provides the Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provide the Official
Committee of Unsecured Creditors with legal advice. John
McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James
S. Feltman at Mesirow Financial Consulting, LLC, serve as the
Committee's financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007. On
Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on
Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors'
disclosure statement. In April 25, 2007, the Court confirmed the
Debtors' plan. That plan became effective on April 30, 2007. The
Court entered a final decree closing 17 cases on Sept. 26, 2007.
(Delta Air Lines Bankruptcy News, Issue No. 104; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases.
When the Debtors filed for bankruptcy, they listed $14.4 billion
in total assets and $17.9 billion in total debts. On Jan. 12,
2007 the Debtors filed with the Court their Chapter 11 Plan. On
Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure
Statement. The Court approved the adequacy of the Debtors'
Disclosure Statement on March 26, 2007. On May 21, 2007, the
Court confirmed the Debtors' Plan. The Plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
O&A INVESTMENT: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: O & A Investment Group, Inc.
c/o Robert Charbonneau
800 Brickell Avenue, Suite 902
Miami, FL 33131
Related Information: Lourdes Fernandez, president, filed the
petition on the Debtor's behalf.
Bankruptcy Case No.: 08-19962
Chapter 11 Petition Date: July 17, 2008
Court: Southern District of Florida (Miami)
Judge: Robert A Mark
Debtor's Counsel: Robert P. Charbonneau, Esq.
(rpc@ecccounsel.com)
Ehrenstein Charbonneau & Calderin
800 Brickell Avenue #902
Miami, FL 33131
Tel: (305) 722-2002
(rpc@ecccounsel.com)
Estimated Assets: $1 million to $10 million
Estimated Debts: $500,000 to $1 million
A list of the Debtor's largest unsecured creditors is available
for free at http://bankrupt.com/misc/fasb08-19962.pdf
ORION 2006-2: Fitch Trims 12 Notes Ratings on Collateral Decline
----------------------------------------------------------------
Fitch downgraded six classes and removes from Rating Watch
Negative 12 classes of notes issued by Orion 2006-2, Ltd. and
Orion 2006-2 LLC. These rating actions are effective immediately:
-- $900,000,000 Class A-1A Notes downgraded to 'CCC' from 'BB+'
and removed from Rating Watch Negative;
-- $40,000,000 Class A-1B Notes downgraded to 'CC' from 'BB' and
removed from Rating Watch Negative;
-- $30,150,000 Class S Notes downgraded to 'CC' from 'BB' and
removed from Rating Watch Negative;
-- $195,000,000 Class A-2 Notes downgraded to 'CC' from 'CCC+'
and removed from Rating Watch Negative;
-- $87,500,000 Class B-1 Notes downgraded to 'CC' from 'CCC' and
removed from Rating Watch Negative;
-- $40,000,000 Class B-2 Notes downgraded to 'CC' from 'CCC-'
and removed from Rating Watch Negative;
-- $58,000,000 Class C-1 Notes remains at 'CC' and is removed
from Rating Watch Negative;
-- $31,000,000 Class C-2 Notes remains at 'CC' and is removed
from Rating Watch Negative;
-- $50,028,228 Class D-1 Notes remains at 'CC' and is removed
from Rating Watch Negative;
-- $13,000,000 Class D-2 Notes remains at 'CC' and is removed
from Rating Watch Negative;
-- $10,500,000 Class E Notes remains at 'CC' and is removed from
Rating Watch Negative;
-- $21,371,050 Class X Notes remains at 'CC' and is removed from
Rating Watch Negative.
Orion 2006-2 is a hybrid structured finance collateralized debt
obligation that closed on Dec. 7, 2006 and is managed by NIBC
Credit Management, Inc. As of the trustee report dated June 10,
2008, 61.5% of the portfolio is comprised of 2005 and 2006 vintage
U.S. subprime residential mortgage-backed securities, 2.3%
consists of 2005-2007 vintage U.S. SF CDOs and 35.4% is comprised
of 2005 and 2006 vintage U.S. Alternative-A RMBS.
Fitch's rating actions reflect the significant collateral
deterioration within the portfolio, specifically subprime RMBS,
Alt-A RMBS, and SF CDOs with underlying exposure to subprime RMBS.
Since Nov. 21, 2007, approximately 52.4% of the portfolio has been
downgraded to ratings of 'CCC+' and lower, increasing the overall
portion of the portfolio rated 'CCC+' and lower to approximately
91.4%. The negative credit migration experienced since the last
review on Nov. 21, 2007 has resulted in the Weighted Average
Rating Factor deteriorating to 60.10 from 8.15, breaching its
covenant of 6.00, as of the June 10, 2008 trustee report.
The credit deterioration that has occurred to date is such that
almost all of the credit support to all of the rated classes of
notes is comprised of assets rated 'CCC+' and lower. Due to the
current state of the portfolio, it is expected that the class A-1A
notes may receive some future principal distributions, while no
further principal distributions are expected for all of the other
rated classes.
In December 2007, Orion 2006-2 went into acceleration as a remedy
to the Event of Default that occurred in November 2007. Due to
some conflicts between the priority of payments and subordination
sections of the Indenture, Wells Fargo, the trustee has filed an
Interpleader Complaint with the United States District Court to
have the court interpret how interest and principal distributions
should be made. Since the acceleration, all proceeds, remaining
after payments above and including A-1A interest as per the
priority of distributions, have been held in escrow until a court
decision is made. Upon resolution of this complaint, Fitch will
reassess the ratings on all classes of Orion 2006-2.
The ratings of the class A-1A, A-1B, A-2, B-1, and B-2 notes
address the timely receipt of scheduled interest payments and the
ultimate receipt of principal as per the transaction's governing
documents. The ratings on the class C-1, C-2, D-1, D-2, E, S and
X notes address the ultimate receipt of interest payments and
ultimate receipt of principal as per the transaction's governing
documents. The ratings are based upon the capital structure of
the transaction, the quality of the collateral, and the
protections incorporated within the structure.
PCS EDVENTURES: HJ & Associates Expresses Going Concern Doubt
-------------------------------------------------------------
HJ & Associates, LLC, in Salt Lake City, Utah, raised substantial
doubt about PCS Edventures!.com, Inc.'s ability to continue as a
going concern after auditing the company's financial statements
for the year ended March 31, 2008. The auditor pointed to the
company's recurring losses and negative cash flows from
operations.
The company posted a net loss of $723,224 on total revenues of
$3,827,689 for the year ended March 31, 2008, as compared with a
net loss of $1,924,349 on total revenues of $1,998,683 for the
year ended March 31, 2007.
Going Concern
Management believes that the company has a strong cash position as
well as other material assets. This position was enhanced through
the conversion of debt. However, the established source of
revenues is not sufficient to cover its operating cost. Although
the company has positive working capital, it has accumulated
significant losses and a deficit in stockholder's equity. The
combination of these items raises substantial doubt about its
ability to continue as a going concern.
During the fiscal year ended March 2008, the company continued
discussion with several target companies for possible merger and
acquisition activities. The company continued to strengthen its
strategic alliances with K'NEX, Science Demo, Fischer Technique,
MR Block, Integrating Technology, Minds I, Follette, Whole School,
Trudy Corporation and Eduwise for further product development and
enhancement. The company has also introduced the PCS Digital
Media Labs, which saw strong sales of approximately $327,600.
The company has recently engaged outside consultants in an effort
to strengthen its market positioning and product development
focus. To date, the company has continued to develop marketplace
strategy for the US market, as well as the international market.
Further, the company is still pursuing merger and acquisition
candidates and looking at various strategies to realign products
and develop new market channels.
Balance Sheet
At March 31, 2008, the company's balance sheet showed $2,834,516
in total assets, $651,420 in total liabilities, and $2,183,096 in
total stockholders' equity.
A full-text copy of the company's 2008 annual report is available
for free at http://ResearchArchives.com/t/s?2f8f
About PCS Edventures!.com
Based in Boise, Idaho, PCS Edventures.com, Inc. (OTC BB: PCSV.OB)
-- http://www.edventures.com/-- designs, develops, and markets
educational learning labs bundled with related technologies and
programs to the K-12 market worldwide. The company's products
include Academy of Engineering, Academy of Electric Engineering,
Academy of Science, Academy of Robotics, Edventures! Lab, and
Discover! Lab, which are site-license installations for classrooms
and learning programs; PCS BrickLab and Young Learner Building Box
for classrooms and learning programs; and Edventures! Online,
which is an Internet delivered educational experience that
supports its Edventures! Labs; and Discover! Labs site licenses,
as well as serves as a stand-alone home usage program. The
company markets its products and technologies to the public and
private school classrooms for pre-kindergarten through college,
after school market, and home school market. It has strategic
alliances with K'Nex Corporation, Science Demo, and GibsonTechEd.
PCS Edventures!.com, formerly known as PCS Education Systems,
Inc., was incorporated in 1994 and changed its name to PCS
Edventures!.com, Inc., in 2000.
PETROLEUM REALTY: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Petroleum Realty, L.L.C.
P.O. Box 508
Vicksburg, MS 39181
Bankruptcy Case No.: 08-02128
Chapter 11 Petition Date: July 18, 2008
Court: Southern District of Mississippi (Jackson Divisional
Office)
Debtor's Counsel: Jeffrey Kyle Tyree, Esq.
Email: jktyree@harrisgeno.com
Harris Jernigan & Geno, PPLC
P.O. Box 3380
Ridgeland, MS 39158-3380
Tel: (601) 427-0048
Fax: (601) 427-0050
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors.
POWERMATE HOLDING: Wants Plan Filing Date Extended to Nov. 12
-------------------------------------------------------------
Powermate Holding Corp. and its debtor-affiliates ask the Hon.
Kevin Gross of the United States Bankruptcy Court for the District
of Delaware to extend their exclusive periods to:
a) file a Chapter 11 plan until Nov. 12, 2008, and
b) solicit acceptances of that plan until Jan. 12, 2009.
A hearing is set for Aug. 14, 2008, at 2:00 p.m. to consider the
Debtors' request. Objections, if any, are due Aug. 7, 2008, by
4:00 p.m.
The Debtors tell the Court that they need additional time to
formulate a Chapter 11 plan. They devoted most of their time
completing the sale of substantially all of their assets and
prosecuting causes of action, the Debtors explain.
As reported in the Troubled Company Reporter on May 8, 2008, the
Court authorized the Debtors to sell certain assets for
$10 million to a group of purchasers including Homelite
Technologies Ltd., Tap Enterprises Inc., and MAT Industries,
pursuant to an asset purchase agreement date April 18, 2008.
The Debtors have commenced actions against retailers Home Depot
U.S.A. and Lowes Companies Inc. seeking to recover in the
aggregate amount of $7.8 million from failure to make required
payments to the Debtors.
The Debtors' initial exclusive periods to file a Chapter 11 plan
expired on July 15, 2008.
About Powermate
Headquartered in Aurora, Illinois, Powermate Corp. --
http://www.powermate.com/-- manufactures portable and home
standby generators, air compressors, and pressure washers.
Powermate Holding Corp. is the parent of Powermate Corp. In
turn, Powermate Corp. owns 100% of Powermate International Inc.
Powermate Corp. operates the companys assets located in the
United States. Powermate International has sales employees in
Hong Kong and the Philippines. Powermate Holding has no
employees or operations.
Powermate Holding has two other non-debtor subsidiaries,
Powermate Canadian Corp., located in Canada and Powermate S. de
R.L. de C.V., which is domiciled in Mexico.
The three companies filed for chapter 11 protection on March 17,
2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos,
Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt &
Taylor, represent the Debtors. The Official Committee of
Unsecured Creditors, which has seven creditor members, is
represented by Monika J. Machen, Esq., at Sonnenschein Nath
Rosenthal LLP.
On May 23, 2008, the Debtors' summary of schedules posted total
assets of $60,139,442 and total debts of $85,700,759.
POWERMATE HOLDING: Panel Can Hire Buccino & Associates as Advisor
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Powermate Holding
Corp. and its debtor-affiliates' Chapter 11 cases obtained
authority from the U.S. Bankruptcy Court for the District of
Delaware to retain Buccino & Associates Inc. as its financial
advisor.
Buccino & Associates is a strategic and financial consulting firm
that provides clients advisory services designed to enhance cash
flow and position companies for long-term profitability. The firm
also offers other services that include strategic and financial
assessment of business operations; turnaround consulting;
financial advisory services to lenders, creditors and other
economic stakeholders; crisis and interim management; valuation;
insolvency and reorganization services; corporate restructuring;
forensic analysis; litigation support and expert testimony.
Harry Malinowski, senior vice president and managing director of
Buccino's New York Office is leading the project assisted by
Christopher L. Picone, senior vice president and managing director
in the Chicago office.
Headquartered in Aurora, Illinois, Powermate Corp. --
http://www.powermate.com/-- manufactures portable and home
standby generators, air compressors, and pressure washers.
Powermate Holding Corp. is the parent of Powermate Corp. In
turn, Powermate Corp. owns 100% of Powermate International Inc.
Powermate Corp. operates the companys assets located in the
United States. Powermate International has sales employees in
Hong Kong and the Philippines. Powermate Holding has no
employees or operations.
The three companies filed for chapter 11 protection on March 17,
2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos,
Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt &
Taylor, represent the Debtors. The Official Committee of
Unsecured Creditors, which has seven creditor members, is
represented by Monika J. Machen, Esq., at Sonnenschein Nath
Rosenthal LLP. When the Debtors filed for protection from their
creditors, they listed estimated assets and debts between
$50 million and $100 million.
Powermate Holding has two other non-debtor subsidiaries,
Powermate Canadian Corp., located in Canada and Powermate S. de
R.L. de C.V., which is domiciled in Mexico.
QUEENSMITH ENTERPRISES: Case Summary & 5 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Queensmith Enterprises, LP
67782 Hwy. 111, Ste. B104-263
Cathedral City, CA 92234
Bankruptcy Case No.: 08-18958
Chapter 11 Petition Date: July 20, 2008
Court: Central District Of California (Riverside)
Judge: Peter Carroll
Debtor's Counsel: Robert P. Goe, Esq.
Email: kmurphy@goeforlaw.com
Goe & Forsythe, LLP
660 Newport Ctr. Dr., Ste. 320
Newport Beach, Ca 92660
Tel: (949) 467-3780
Fax: (949) 721-0409
http://www.goeforlaw.com/
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $1,000,000 to $10,000,000
Debtor's Five Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Anneliese Hellge $1,786,000
67782 Hwy. 111, Ste. B104-263
Cathedral City, CA 92234
Shirley Stalnaker $226,300
Attn: F.T. Gaits, Inc.
1775 E. Palm Cyn Dr.,
Ste. H-105
Palm Springs, CA 92264
William Stalnaker $105,600
Attn: F.T. Gaits, Inc.
1775 E. Palm Cyn Dr.,
Ste. H-105
Palm Springs, CA 92264
F.T. Gaits, Inc. $20,000
Paul Smist $924
RAVINE ROAD: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Ravine Road, L.P.
17 Ravine Road
Frazer, PA 19355
Related Information: The petition, on the Debtor's behalf, was
filed by Joseph D'Ascenzo, president of
D'Ascenzo Development Corp., the general
partner of Ravine Road, L.P.
Bankruptcy Case No.: 08-14546
Chapter 11 Petition Date: July 17, 2008
Court: Eastern District of Pennsylvania (Philadelphia)
Debtor's Counsel: Dimitri L. Karapelou, Esq.
(dkarapelou@ciardilaw.com)
Ciardi & Ciardi, P.C.
One Commerce Square, Suite 1930, 2005 Market St.
Philadelphia, PA 19103
Tel: (215) 557-3550
Fax: (215) 557-3551
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of its largest unsecured creditors.
RIVIERA HOLDING: Moody's Affirms B2 Rating; Outlook Negative
------------------------------------------------------------
Moody's Investor's Service revised Riviera Holding Corporation's
rating outlook to negative from stable. The company's B2
corporate family, B2 probability of default, and B2 senior secured
ratings were affirmed.
The outlook revision reflects larger than expected declines in
gaming revenues in the Las Vegas market and challenging operating
conditions in Colorado as a result of the smoking ban imposed
early this year. As a result of these challenges, the company's
revenues and earnings are expected to drop causing debt-to-EBITDA,
currently at about 5.5 times, to deteriorate.
The rating affirmation reflects the company's good locations and
operations in--what should be over the long term--fundamentally
good gaming markets, the location of the company's largest
property in the favorable regulatory jurisdiction of Nevada, and
its attractive location on the Las Vegas Strip. Additionally, the
company owns about 26 acres of land on the Las Vegas strip that
provides solid asset protection to debt holders. The affirmation
also reflects the company's adequate liquidity profile. Over the
next 12 months Riviera is expected cover interest and modest
capital spending from internally generated cash and available
unrestricted cash balances. Riviera's ratings also reflect above
average leverage relative to its small scale and limited property
diversification
Ratings affirmed and assessments adjusted
-- Corporate family rating at B2
-- Probability of default rating at B2
-- $225 million term loan at B2 (LGD 4, 51%) from B2 (LGD, 3,
49%)
-- $20 million revolving credit at B2 (LGD 4, 51%) from B2 (LGD
3, 49%)
Riviera Holdings Corporation, through its wholly owned subsidiary,
Riviera Operating Corporation, owns and operates the Riviera Hotel
and Casino on the Las Vegas Strip and the Riviera Black Hawk
Casino in Black Hawk, Colorado. About 61% of property-level
EBITDA is generated from the company's Las Vegas property. The
company generated net revenues of approximately $205 million in
2007.
SCOTTISH RE: S&P Lifts Financial Rating After Pacific Deal
----------------------------------------------------------
Standard & Poor's Ratings Services raised its financial strength
rating on Pacific Life Re (formerly known as Scottish Re Ltd.) to
'A' from 'CCC+' following the completed acquisition by Pacific
LifeCorp (A/Stable/A-1; Pacific Life) from Scottish Re Group Ltd.
(CCC-/Watch Neg/--). At the same time, the rating on Pacific Life
Re was removed from CreditWatch Positive where it had been placed
on June 10, 2008. The outlook is stable.
"The rating on Pacific Life Re is based on the full and
unconditional guarantee of its obligations issued by Pacific Life,
raising the rating on Pacific Life Re to that of its parent," said
Standard & Poor's credit analyst Mathew Carroll. "While we expect
Pacific Life Re to be strongly capitalized, its existing business
profile likely would limit a stand-alone financial strength rating
to the low-investment-grade range." Pacific Life's full and
unconditional guarantee supports the rating at the higher 'A'
level.
Pacific Life Re will provide reinsurance to life insurance and
annuity providers in the U. K. and Ireland and to insurers in
select markets in Asia. The Pacific Life Re operations will
consist of Scottish Re Ltd. and Scottish Re Holdings Ltd., which
Pacific LifeCorp purchased from Scottish Re as a part of the
acquisition. Substantially all of the international segment
business reinsured by other members within the Scottish Re Group
will be novated or recaptured by Pacific Life Re as a part of the
transaction.
The ratings and CreditWatch with negative implications on Scottish
Re's remaining operations remain unaffected by this transaction.
On July 16, 2008, the financial strength rating on the Scottish Re
operating group was revised to 'CCC+' from 'B-' reflecting greater
than expected deterioration in the group's financial flexibility
and liquidity as result of significant asset impairments and other
stresses. The ratings remain on CreditWatch with negative
implications.
The ratings of Pacific Life Re are expected to move in tandem with
those of Pacific LifeCorp. This is contingent upon the full and
unconditional guarantee of its obligations that has been provided
by Pacific LifeCorp. Pacific LifeCorp's stable outlook is based
on its sustained competitive position in the affluent individual
life and variable annuity markets, its track record of consistent
and profitable growth in its U.S. insurance operations, and its
extremely strong capitalization and liquidity. In addition,
Pacific LifeCorp is expected to maintain conservative financial
leverage at less than 20% and strong fixed charge coverage at over
8x, both considered good levels for the rating. The U.S.
insurance operations are expected to continue deliver strong sales
growth and sufficient cash flows for the holding company.
SIX FLAGS: To Report 2nd Quarter 2008 Results on August 4
---------------------------------------------------------
Six Flags, Inc. will report results for the quarter ended June 30,
2008, before the market opens on Monday, August 4, 2008.
The Company will hold a teleconference at 5:00 PM Eastern Time
that day for interested investors, analysts and portfolio
managers. Participants in the call will include Mark Shapiro,
President and CEO, and Jeffrey Speed, Executive Vice President and
CFO.
The teleconference will be broadcast live to all interested
persons as a listen-only Web cast on
http://investors.sixflags.com/ The Webcast will be archived for
one year.
About Six Flags Inc.
Headquartered in New York City, Six Flags Inc. (NYSE: SIX) --
http://www.sixflags.com/-- is the world's largest regional theme
park company with 21 parks across the United States, Mexico and
Canada. Founded in 1961, Six Flags has provided world class
entertainment for millions of families with cutting edge, record-
shattering roller coasters and appointment programming with events
like the popular Thursday and Sunday Night Concert Series. Now 47
years strong, Six Flags is recognized as the preeminent thrill
innovator while reaching to all demographics -- families, teens,
tweens and thrill seekers alike -- with themed attractions based
on the Looney Tunes characters, the Justice League of America,
skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank
Engine.
At March 31, 2008, Six Flags' consolidated balance sheet showed
$410.6 million stockholders' deficit, compared with $252 million
deficit at Dec. 31, 2007.
* * *
As related in the Troubled Company Reporter on May 26, 2008,
Fitch Ratings has downgraded these ratings: Issuer Default Rating
to 'C' from 'B-'; Senior unsecured notes (including the 4.5%
convertible notes) to 'C/RR5' from 'CCC/RR6'; and Preferred stock
to 'C/RR6'from 'CCC-/RR6'.
As disclosed Troubled Company Reporter on May 20, 2008, Standard &
Poor's Ratings Services placed its 'CCC+' corporate credit rating
and 'CCC-' senior unsecured rating on Six Flags Inc. on
CreditWatch with negative implications.
STEVE & BARRY'S: Wants to Employ Epiq as Claims Agent
-----------------------------------------------------
The United States Bankruptcy Court for the Southern District
of New York approved the application of Steve & Barry's, LLC, and
its debtor-affiliates to employ Epiq Bankruptcy Solutions, LLC, as
their claims and noticing agent, pursuant to the terms and
conditions of the Standard Bankruptcy Services Agreement between
the parties, dated June 24, 2008, effective as of the Petition
Date.
The Debtors estimate that they have more than 190,000 creditors.
Noticing, receiving, docketing and maintaining proofs of claim
from a large number of creditors may be unduly time-consuming and
burdensome for the Bankruptcy Clerk, Barry Prevor, Steve &
Barry's Manhattan LLC's chairman and secretary, tells the Court.
Epiq is a nationally recognized specialist in Chapter 11
administration and has vast experience in noticing and claims
administration in Chapter 11 cases, according to Mr. Prevor.
As Claims and Noticing Agent, Epiq will, among other things:
(a) notify all potential creditors of the filing of the
Debtors' Chapter 11 cases and of the setting of the first
meeting of creditors pursuant to Section 341(a) of the
Bankruptcy Code;
(b) assist and maintain an official copy of the Debtors'
schedules of assets and liabilities and statements of
financial affairs, listing the the Debtors' known
creditors and the amounts owed to them;
(c) design, maintain and operate in conjunction with the
Debtors a web site:
http://chapter11.eeqiqsystems.com/steve&barrys
as a centralized location where the Debtors will provide
information about their cases;
(d) docket all claims received, maintain the official claims
registering for the Debtors on behalf of the Bankruptcy
Clerk, and providing the Clerk with immediate web access
to the Claims Register upon request;
(e) assist with, among other things, the solicitation and the
calculation of votes and the distribution, as required in
furtherance of confirmation of a plan of reorganization;
and
(f) at the conclusion of the Debtors' Chapter 11 cases, box
and transport all original documents in proper format to
the Federal Records.
Pursuant to the Retention Agreement, Epiq will bill the Debtors
monthly and all invoices will be due and payable within 30 days
after receipt. Epiq may increase its prices, charges and rates
annually on January 2nd of each year. The Debtors reserve the
right to terminate the agreement on one month's written notice
based on any per annum increase of more than 5%, Mr. Prevor says.
The Retention Agreement provides for a $25,000 retainer to Epiq,
to be applied against the firm's final invoice for services
rendered. Any excess amount of the retainer will be refunded to
the Debtors.
Epiq's current rates for:
(i) Case Management Services (hourly rates)
Professional Rate Range Ave. Rate
------------ ---------- ---------
Clerk $40 - $60 $50
Case Manager (Level 1) $125 - $175 $142
IT Programming Consultant $140 - $190 $165
Case Manager (Level 2) $185 - $220 $202
Senior Case Manager $225 - $275 $247
Senior Consultant TBD TBD
(ii) Claims Management Services
Professional Rate
------------ ----
Database and System Access $0.10 per record
(No restriction on number of users) per month
Data Transfer $0.10 per creditor
Manual Claims Input $0.25 per claim
plus hourly rates
Document Storage Waived
To reduce the administrative expenses related to Epiq's
employment, the Debtors also obtained the Court's authority to
pay Epiq's fees and expenses in accordance with the provisions of
the Retention Agreement without the firm filing formal fee
applications.
Daniel C. McElhinney, senior vice president and director of
operations of Epiq, assures the Court that the firm does not have
or represent any interest materially adverse to the interests of
the Debtors by reason of any direct or indirect relationship to,
or connection with, any class of creditors of the Debtors, or for
any other reason.
However, Epiq may provide professional services to entities or
persons that may be creditors or parties-in-interest in the
Debtors' Chapter 11 cases, provided that these services do not
relate to the Debtors or their bankruptcy cases, Mr. McElhinney
informs the Court. Epiq may utilize services provided by vendors
that may be creditors or parties-in-interest of the Debtors, he
adds.
Epiq is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code, as modified by Section
1107(b) of the Bankruptcy Code, Mr. McElhinney maintains.
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy, it
listed $693,492,000 in total assets and $638,086,000 in total
debts.
(Steve & Barry's Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SUPERIOR OFFSHORE: Sells Assets to Infinity Investment for $67MM
----------------------------------------------------------------
The Hon. Wesley W. Steen of the United States Bankruptcy Court
for the Southern District of Texas authorized Superior Offshore
International Inc. to sell certain assets -- Gulf Diver III and
Gulf Diver VI, Superior Endeavor, and certain personal property --
in the aggregate of $67,150,000 to Infinity Investment Funds LLC,
free of liens and interests including all ad valorem tax, maritime
and carriage liens.
The purchase price will be deposited in an interest bearing trust
account maintained by the Debtor's counsel, Porter & Hedges LLP.
The Debtor will set aside $7,302,784 from the purchase price
for certain disputed liens. Andre Blaauw, a tort maritime lien
creditor, asserted on June 18, 2008, a $5,927,676 claim in the
Debtor's Superior Endeavor. Mr. Blaauw argued that he is entitled
to the same adequate protection of its lien as the maritime
contract lien creditors -- including Goodcrane Corporation, L&L
Oil, Cannata's Supermarket, Inc., Wilhelmsen Ships Service and
William Jacob Management -- that the Debtor proposed to provide
adequate protection by segregating up to $2,000,000 from the sale
proceeds to cover their liens.
According to Bloomberg News, the Debtors' assets were under
contract to three separate purchasers for at least $58,250,000.
The Debtor has divested its SAT3 System, a 12-Man 300 meter skid-
mounted saturation diving system to Cal Dive International Inc.
The asset was originally sold to Global Industries Offshore LLC
for $6,750,00.
Several parties filed objections to the sale including (i) Louis
Schaefer, Jr., and Schaefer Holdings, and (ii) Subtech offshore,
Ltd., Subtech Diving Ltd., and Subtech Marine, Ltd. Subtech's and
Schaefer's were withdrawn. All other objections were overruled.
About Superior Offshore
Headquartered in Houston Texas, Superior Offshore International
Inc. (Nasdaq: DEEP) -- http://www.superioroffshore.com/--
provides subsea construction and commercial diving services to the
offshore oil and gas industry. The company's construction
services include installation, upgrading and decommissioning of
pipelines and production infrastructure. The company operates a
fleet of seven service vessels and provides remotely operated
vehicles and saturation diving systems for deepwater and harsh
environment operations.
Superior Offshore International, Inc., filed for bankruptcy
protection on April 24, 2008 (Bankr. S.D. Tex. Case No. 08-32590).
The Debtor's listed total assets of $67,587,927 and total
liabilities of $54,359,884 in its schedules. David Ronald Jones,
Esq., and Joshua Walton Wolfshohl, Esq., at Porter & Hedges LLP,
represent the Debtor. The U.S. Trustee for Region 7 appointed
five creditors to serve on an Official Committee of Unsecured
Creditors. Douglas S. Draper, Esq., at Heller Draper Hayden
Patrick & Horn LLC, represent the Committee in this case.
As reported in the Troubled Company Reporter on June 23, 2008, the
Debtor's summary of schedules posted total assets of $67,587,927
and total debts of $54,359,884.
SYNTAX-BRILLIAN: U.S. Trustee Forms Five-Member Creditors Panel
---------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed
five creditors to serve on an Official Committee of Unsecured
Creditors of the Chapter 11 case of Syntax-Brillian Corporation
and its debtor-affiliates.
The creditors committee members are:
1) ESPN Inc.
Attn: Tony Waggoner
77 West 66th Street
New York, NY 10023
Tel: (212) 456-6080
Fax: (212) 456-6180
2) LG Electronics USA, Inc.
Attn: Joseph C. Song
1000 Sylvan Avenue
Englewood Cliffs, NJ 07632
Tel: (201) 816-2083
Fax: (201) 816-2092
3) Solar Link Technologies, Inc.
Attn: H.G. Robert Fong
4652 E. Brickell St.
Ontario, CA 91761
Tel: (213) 488-1400
Fax: (213) 236-9235
4) NVC Logistics Group, Inc.
Attn: Nicholas Krieger
1 Pond Road
Rockleigh, NJ 07647
Tel: (201) 767-0911
Fax: (201) 750-8759
5) AFN LLC
Attn: Jared Steven Palmer
1435 Lake Cook Road
Deerfield, IL 60015,
Tel: (224) 515-7018
Fax: (2240 -515-7518
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Tempe, Arizona, Syntax-Brillian Corporation
(Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and
markets LCD HDTVs, digital cameras, and consumer electronics
products include Olevia(TM) brand high-definition widescreen LCD
televisions and Vivitar brand digital still and video cameras.
Syntax-Brillian is the sole shareholder of California-based
Vivitar Corporation.
The company and two of its affiliates -- Syntax-Brillian SPE,
Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection
on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through
08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan,
Esq., at Greenberg Traurig LLP, represent the Debtors in their
restructuring efforts. The U.S. Trustee for Region 3 has yet to
appoint creditors to serve on an Official Committee of Unsecured
Creditors.
When the Debtors filed for protection against their creditors,
they listed total assets of $175,714,000 and total debts of
$259,389,000.
SYNTAX-BRILLIAN: Bankruptcy Filing Cues Nasdaq to Delist Stocks
---------------------------------------------------------------
Syntax-Brillian Corporation received a letter from the Nasdaq
Stock Market stating that the company's Nasdaq listing violations
and its July 8, 2008, filing for protection under Chapter 11 of
the U.S. Bankruptcy Code served as a basis for delisting its
securities.
The Nasdaq Listing Qualifications Hearings Panel has determined to
delist the company's stock from the Nasdaq Stock Market and will
suspend trading of the stock at the open of business Today, July
22, 2008. The company does not intend to appeal the Nasdaq
Listing Qualifications Hearings Panel's decision.
Headquartered in Tempe, Arizona, Syntax-Brillian Corporation
(Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and
markets LCD HDTVs, digital cameras, and consumer electronics
products include Olevia(TM) brand high-definition widescreen LCD
televisions and Vivitar brand digital still and video cameras.
Syntax-Brillian is the sole shareholder of California-based
Vivitar Corporation.
The company and two of its affiliates -- Syntax-Brillian SPE,
Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection
on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through
08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan,
Esq., at Greenberg Traurig LLP, represent the Debtors in their
restructuring efforts. The U.S. Trustee for Region 3 has yet to
appoint creditors to serve on an Official Committee of Unsecured
Creditors.
When the Debtors filed for protection against their creditors,
they listed total assets of $175,714,000 and total debts of
$259,389,000.
TEXAS INDUSTRIES: Moody's Assigns Ba3 Ratings; Outlook Negative
---------------------------------------------------------------
Moody's Investors Service changed Texas Industries' ratings
outlook to negative from stable and affirmed the company's Ba3
corporate family rating and probability of default rating, and Ba3
ratings for its senior unsecured notes and revolving credit
facility.
The revision of the outlook reflects the continued downturn in the
residential construction market, softening non-residential and
infrastructure markets, particularly in California, and resultant
negative effect on Moody's expectation for the company's volumes
and margins. Higher debt levels that are anticipated to result
from the company's substantive capital expenditure requirements
for the expansion of its Hunter, Texas cement plant also increase
credit risk over the intermediate term. The expected margin gains
that can be achieved from TXI's new Oro Grande cement plant, which
was completed in May 2008, may take longer to realize than
initially expected, given economic headwinds facing the company.
Moody's also notes that Texas Industries' current liquidity
position is somewhat constrained when estimated capital
expenditures are factored into future cash needs. However, its
liquidity could readily be improved with a suitable debt issuance
or expansion of bank facilities.
Texas Industries' Ba3 corporate family rating reflects the
company's favorable position in the two principal cement markets
in the U.S., the expectation of generally balanced supply and
demand balance in the company's Texas markets, improving operating
efficiencies and capacity additions resulting from expansion and
modernization of cement plants in California (Oro Grande) and
Texas (Hunter), high industry barriers to entry, and an
anticipated increasing, but acceptable debt level for the rating
category. Also considered in the ratings are the potential impact
from higher energy costs, which comprise approximately 40% of
TXI's total production cost structure for cement, and its
dependence on regional construction activity in Texas and
California.
Headquartered in Dallas, Texas, Industries, Inc. manufactures
cement, aggregates and ready-mixed concrete. The company serves
end-use markets such as public works, commercial, industrial,
institutional and residential construction sectors, and energy
markets, while generating approximately 82% of revenues in Texas
and 18% in California. In its fiscal year 2008, ending May 31,
Texas Industries generated over $1.0 billion in revenues.
TOUSA INC: Court OKs Expanded Services of Auditor Ernst & Young
---------------------------------------------------------------
Judge John K. Olson of the U.S. Bankruptcy Court for the Southern
District of Florida approved TOUSA Inc. and its debtor-affiliates'
supplemental application for the expansion of the scope of
services of their auditor, Ernst & Young LLP.
As reported in the Troubled Company Reporter on June 9, 2008, the
Debtors wanted Ernst & Young to provide services with respect
to:
(a) their state tax returns, nunc pro tunc to May 6, 2008; and
(b) agreed upon procedures with respect to certain incentive
bonus plan calculations, nunc pro tunc to May 19, 2008.
The State Tax Compliance Services and the Incentive Plan AUP
Services Agreement were also approved, subject to certain
modifications.
The State Tax Compliance Services would require Ernst & Young,
among other things, to:
-- review, or prepare upon request, and sign of state tax
returns for the year ended December 31, 2007; and
-- prepare apportionment factors for state tax purposes for
2007.
The Incentive Plan AUP Services include the performance of
agreed-upon procedures under the attestation standards of the
American Institute of Certified Public Accountants solely to
assist in evaluating the achievement of a target award under the
2007 CEO Annual Incentive Bonus Plan, dated July 24, 2007, as of
Dec. 31, 2007, Paul Steven Singerman, Esq., at Berger Singerman
P.A., in Miami, Florida, related.
Ernst & Young will be paid by its hourly rates for the State Tax
Compliance Services, and will be reimbursed for reasonable and
necessary expenses incurred. The applicable hourly rates were the
same rates for other tax services approved by the Original E&Y
Retention Order:
Nat'l. Exec. Director/Principal/Partner $700 to $925
Exec. Director/Principal/Partner $620 to $775
Manager/Senior Manager $450 to $700
Staff/Senior $180 to $360
Ernst & Young's fee with respect to the Incentive Plan AUP
Services is fixed at $3,500. In addition, the firm will seek
reimbursement for reasonable and necessary expenses incurred.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No.:
08-10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta,
Esq., at Kirkland & Ellis LLP and Paul Steven Singerman, Esq., at
Berger Singerman to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker and
financial advisor. Ernst & Young LLP is selected as the Debtors'
independent auditor and tax services provider. Kurtzman Carson
Consultants LLC acts as the Debtors' Notice, Claims & Balloting
Agent. The Official Committee of Unsecured Creditors hired
Patricia A. Redmond, Esq., and the law firm Stearns Weaver
Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA
Inc.'s financial condition as of Sept. 30, 2007, showed total
assets of $2,276,567,000 and total debts of $1,767,589,000. Its
consolidated detailed balance sheet as of Feb. 29, 2008 showed
total assets of $1,961,669,000 and total liabilities of
$2,278,106,000.
TOUSA's Exclusive Plan Filing Period expires October 25, 2008.
(TOUSA Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TOUSA INC: Court Denies Cove Isle's Request for Bar Date Extension
------------------------------------------------------------------
Judge John K. Olson of the U.S. Bankruptcy Court for the Southern
District of Florida denied without prejudice the request of Cove
Isle Community Association for an extension of the May 19, 2008,
Bar Date in the bankruptcy case of TOUSA Inc. and its debtor-
affiliates.
As reported in the Troubled Company Reporter on March 26, 2008,
the Court granted a request by the Debtors to establish May 19,
2008, at 5:00 p.m., as the last date and time parties-in-interest
can file proofs of claim against them.
As reported in the TCR on June 25, 2008, the Debtors informed the
Court that Cove Isle's request for an extension of the Bar Date
will defeat the purpose of the Bar Date Order.
In separate filings, Citicorp North America Inc., as
administrative agent; Wells Fargo Bank N.A., as successor
administrative agent pursuant to a Second Lien Credit Agreement,
dated July 31, 2007; and the Official Committee of Unsecured
Creditors join in the Debtors' objection to Cove Isle's request.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No.:
08-10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta,
Esq., at Kirkland & Ellis LLP and Paul Steven Singerman, Esq., at
Berger Singerman to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker and
financial advisor. Ernst & Young LLP is selected as the Debtors'
independent auditor and tax services provider. Kurtzman Carson
Consultants LLC acts as the Debtors' Notice, Claims & Balloting
Agent. The Official Committee of Unsecured Creditors hired
Patricia A. Redmond, Esq., and the law firm Stearns Weaver
Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA
Inc.'s financial condition as of Sept. 30, 2007, showed total
assets of $2,276,567,000 and total debts of $1,767,589,000. Its
consolidated detailed balance sheet as of Feb. 29, 2008 showed
total assets of $1,961,669,000 and total liabilities of
$2,278,106,000.
TOUSA's Exclusive Plan Filing Period expires October 25, 2008.
(TOUSA Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TROPICANA ENT: Court Sets September 26 as General Claims Bar Date
-----------------------------------------------------------------
Judge Kevin Carey of the U.S. Bankruptcy Court for the District
of Delaware has set Sept. 26, 2008, as the General Claims Bar Date
and Nov. 2, 2008, as the Governmental Bar Date in Tropicana
Entertainment LLC and its debtor-affiliates' Chapter 11 cases.
Before the Court entered the Bar Date Order, Credit Suisse, as
agent to the Lenders of LandCo Debtors Tropicana Las Vegas Resort
and Casino LLC and Tropicana Las Vegas Holdings LLC, objected to
the proposed Bar Dates to the extent it does not include language
permitting it to file a consolidated proof of claim on behalf of
the LandCo Lenders.
Accordingly, the Court also authorized and permitted, but does
not direct, Credit Suisse to file a single, consolidated proof of
claim in the Debtors' Chapter 11 cases on behalf of itself and
the LandCo Lenders in connection with all of the Claims arising
under or in connection with the Prepetition Financing Agreements.
Likewise, Credit Suisse, as agent for the Lenders of OpCo Debtors
Tropicana Entertainment LLC, Wimar Opco Intermediate Holdings,
LLC, CP Laughlin Realty LLC, Columbia Properties Vicksburg LLC
and JMBS Casino LLC, is authorized and permitted, but not
directed, to file a single, consolidated proof of claim in the
Debtors' Chapter 11 cases on behalf of itself and the OpCo
Lenders in connection with all of the Claims arising under or in
connection with the Prepetition Financing Documents.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq. at Richards Layton & Finger represent the Debtors in
their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. The Debtors' consolidated financial condition as
of Feb. 29, 2008, showed $2,845,847,596 in total assets and
$2,429,890,642 in total debts.
(Tropicana Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TROPICANA ENT: Judge Carey Extends Removal Period Until December 3
------------------------------------------------------------------
Judge Kevin Carey of the U.S. Bankruptcy Court for the District
of Delaware extended to Dec. 3, 2008, the deadline within which
Tropicana Entertainment LLC and its debtor-affiliates may remove
civil actions pursuant to Section 1452 of the Judiciary and
Judicial Procedures Code and Rule 9027 of the Federal Rules of
Bankruptcy Procedures.
As reported in the Troubled Company Reporter on July 7, 2008, the
extension will provide the opportunity to determine conclusively
which Actions the Debtors will remove. The Debtors and their
advisors will also be accorded additional time to analyze the
Actions and make the appropriate determinations concerning their
removal.
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, assured the Court that the rights of parties
to the Actions will not be prejudiced by an extension.
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq. at Richards Layton & Finger represent the Debtors in
their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. The Debtors' consolidated financial condition as
of Feb. 29, 2008, showed $2,845,847,596 in total assets and
$2,429,890,642 in total debts.
(Tropicana Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TROPICANA ENT: Court OKs Resolution of Trustee Appointment Issues
-----------------------------------------------------------------
Judge Kevin Carey of the U.S. Bankruptcy Court for the District
of Delaware approved the term sheet entered into by Tropicana
Entertainment LLC and its debtor-affiliates, the Ad Hoc Consortium
of Senior Subordinated Noteholders, the Official Committee of
Unsecured Creditors and William Yung III for the resolution of
certain the issues raised in the Trustee Motion.
Pursuant to the Term Sheet, the Noteholders' Trustee Motion will
be deemed withdrawn with prejudice, including the Creditors
Committee's joinder in support of the Motion. The Noteholders or
the Creditors Committee, however, is entitled to file a new
motion for the appointment of a trustee only (i) if based on the
postpetition conduct of the Debtors or Mr. Yung; and (ii) to
specifically enforce any obligations of Mr. Yung or non-debtor
Tropicana Casino and Resorts Inc.
The Term Sheet also provides that:
(i) the Noteholders will not conduct any discovery regarding
causes of action against Mr. Yung or TCR for a period of
75 days, except in the context of a new trustee motion;
(ii) neither Mr. Yung nor TCR will seek to conduct any
discovery regarding causes of action aimed at the
Noteholders for an identical time period;
(iii) the Debtors, Mr. Yung and entities controlled by him will
not oppose the Rule 2004 examination request sought by the
Creditors Committee with respect to potential causes of
action against Mr. Yung and any entities controlled by him;
and
(iv) the Debtors acknowledge that the Noteholders' documented
fees and expenses -- estimated on a non-binding basis to
be at $2,000,000, as of July 2, 2008 -- represent a
substantial contribution to the Debtors' estates pursuant
to Section 503(b)(3)(D) of the Bankruptcy Code that will
be paid in cash upon emergence.
A full-text copy of the July 2 Term Sheet is available for free
at http://bankrupt.com/misc/Tropicana_TrusteeMotnTermSheet.pdf
Creditors Committee Authorized To
Examine Debtors and Yung Parties
Judge Carey has also authorized the Creditors Committee to issue
subpoenas for the examination of the Debtors, Mr. Yung and
Columbia Sussex Corp. pursuant to Rule 2004 of the Federal Rules
of Bankruptcy Procedure. Each of the Debtors and the Yung
Parties are directed to produce the requested documents.
The parties have agreed in the Term Sheet, and are ordered, to
cooperate in good faith regarding the proper scope of certain
document and information requests and, to the extent practical,
to minimize duplication of efforts by the Creditors Committee and
the Litigation Committee of the board of Tropicana Entertainment
Holdings, LLC. In the event the parties are unable to reach
agreement, each of the parties reserves its rights to object to
specific discovery requests and the right to seek Court ruling.
Prepetition Lenders Support
William Yung's Resignation from Tropicana Board
The steering committee of Lenders under a Credit Agreement dated
Jan. 3, 2007, related that the Noteholders, the Creditors
Committee, the Debtors and William Yung relayed at an early
July 2008 hearing that they have reached a settlement on the
issues raised by the Noteholders in the Trustee Motion.
The salient terms of the Settlement are:
(a) Mr. Yung will resign from the board of Tropicana
Entertainment Holdings Corp. and its debtor subsidiaries
and affiliated Debtors;
(b) Mr. Yung will grant a limited proxy of his rights as 100%
direct or indirect shareholder of the Debtors; and
(c) The Debtors, the Noteholders, the Creditors Committee and
Mr. Yung will work cooperatively to seek approval of the
New Jersey Gaming Commission and the New Jersey Department
of Gaming Enforcement of the Debtors' retention of
Tropicana Casino and Resort of Atlantic City's gaming
operations, notwithstanding the Commission's earlier
revocation of the Debtors' licenses to operate the
Atlantic City Assets and the appointment of a trustee and
conservator for the Tropicana Atlantic City.
Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington,
Delaware, counsel of the Steering Committee, informed the Court
that the Steering Committee was not consulted on the negotiation
of the settlement and did not, in fact, receive a copy of the
proposed agreement. The Steering Committee's first notice of the
Settlement was the announcement made in Court, he said.
The Steering Committee said that it is supportive of Mr. Yung's
agreement to step away from any role in the Debtors' corporate
governance. The Steering Committee, however, does not support
the efforts of parties to the Settlement to convince the
regulatory authorities to allow the Debtors to retain the
Tropicana Atlantic City Assets. The Steering committee reserves
its rights to oppose those efforts.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq. at Richards Layton & Finger represent the Debtors in
their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. The Debtors' consolidated financial condition as
of Feb. 29, 2008, showed $2,845,847,596 in total assets and
$2,429,890,642 in total debts.
(Tropicana Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TTM TECHNOLOGIES: Moody's Withdraws Low-B Ratings
-------------------------------------------------
Moody's Investors Service has withdrawn these ratings for TTM
Technologies, Inc.:
-- Corporate Family Rating - B1
-- Probability of Default Rating -- B2
Moody's has withdrawn these ratings for business reasons because
this issuer has no rated debt outstanding.
UAL CORP: Stressed by Weak Airline Industry, Moody's Junks Rating
-----------------------------------------------------------------
Moody's Investors Service lowered the Corporate Family and
Probability of Default ratings of UAL Corp. (United) to Caa1 from
B2, the secured bank debt rating to B3 from B1 and certain
tranches of the Enhanced Equipment Trust Certificates (EETC) of
United Airlines, Inc. (United Airlines). Moody's affirmed the
SGL-3 Speculative Grade Liquidity Assessment. The rating outlook
is negative.
These rating actions reflect the prospects of a weakening
financial profile for United and the rest of the airline industry
in the face of persistently elevated fuel prices, as well as
potential revenue pressure as the domestic economy weakens. As
non-fuel operating costs for United are somewhat higher than
peers, partly due to the fleet age and the overhead from an
extensive route network, when combined with the unprecedented fuel
costs negative free cash flow at the airline is likely over the
near term. The cumulative effect of this negative cash flow and
net losses over time is expected to produce credit metrics more
characteristic of the Caa rating level.
Management has begun some aggressive actions to adapt to the
rapidly changing passenger airline environment including plans to
decrease capacity by removing 100 of its oldest aircraft (about
22% of the mainline fleet), workforce reductions and various
operating changes. Nonetheless, the company's ability to sustain
profitability and free cash flow will be difficult even at current
fuel prices, and particularly challenging at only modestly higher
fuel prices levels, which is a possible scenario. This is an
issue facing the entire industry. As well, it will be several
quarters before the full impact of United's actions and the
capacity reductions of other carriers can be fully determined.
The SGL-3 Speculative Grade Liquidity Rating reflects an adequate
liquidity profile. The amount of cash last disclosed by the
company of about $2.7 to 2.8 billion (before actions to increase
liquidity) and comparatively moderate scheduled debt maturities
and capital spending commitments provide near-term flexibility.
United also has a meaningful level of unencumbered assets
(aircraft being a large portion), which Moody's expects the
company to use to raise additional cash. United's liquidity is
expected to be sufficient in the near term.
Nonetheless, the company's ability to sustain its liquidity could
be pressured over the coming year. This is because the planned
workforce reductions will likely involve some cash costs and the
air traffic liability will reverse, and become as cash use, when
United enters the seasonally weaker winter months. Absent full
effectiveness of cost reduction actions, cash utilization rates
could be exacerbated should fuel prices rise only moderately
higher. This is the case with the other carriers as well. United
has obtained a waiver on compliance with the fixed charge covenant
associated with its $1.5 billion of bank loan facilities until
March 2009, with a ramp-up of the covenant during the following
four quarters. As well, under a material and adverse change,
United could face an increasing amount of cash holdback under the
terms of its credit card processing agreements, which would
further reduce the cash balance.
Historically, United Airlines has generated higher yields than
most competitors because of its extensive route network. The
company has increased its fuel hedging book which is now more
extensive than some other airlines, yet these hedges mostly expire
over the next several months. There are several planned
initiatives to increase ancillary revenues to improve performance,
including increasing ticket change fees, up-selling seats for
coach passengers and unbundling product offerings. These factors
are helpful, but not likely to be sufficient to offset the
pressures from fuel costs and potential revenue pressures from
economic weakening.
The EETC ratings reflect the lowered corporate family rating and
also the asset values of specific aircraft which secure the
various EETCs. The aircraft that secure the EETCs are generally
older aircraft, which may make their values more susceptible to
volatility if current market conditions persist. Aircraft demand
remains solid outside of North America with little recent change
in valuation as a result. Consequently, the principal driver of
EETC rating changes is the revised Corporate Family rating. The
2007-1 EETCs do benefit from cross collateralization, which
Moody's believes potentially enhances recovery.
The negative outlook reflects the continued business pressures
facing United, primarily due to the impact of higher fuel costs
and a weaker demand environment. Despite continued strong load
factors and the company's broad route network, competitive
pressures are likely to challenge United's efforts to implement
fare increases and fuel surcharges that will adequately offset the
increase in fuel costs. Consequently, unless fuel costs decline,
earnings are likely to deteriorate meaningfully and the company
would likely sustain meaningfully reduced cash flow from
operations.
The ratings could be lowered further if United is unable to stem
operating losses, if cash approaches the $2 billion level, or if
the credit card processors impose a meaningful increase in the
holdback. United's rating outlook could be stabilized with
sustained net profits and free cash flow.
Ratings affected are:
Issuer: Denver (City & County of) CO
-- Senior Unsecured Revenue Bonds, Downgraded to Caa2 from Caa1
Issuer: UAL Corporation
-- Probability of Default Rating, Downgraded to Caa1 from B2
-- Corporate Family Rating, Downgraded to Caa1 from B2
Issuer: United Air Lines, Inc.
-- Senior Secured Bank Credit Facility, Downgraded to B3 from B1
-- 2007-1 Senior Secured Pass-Through Certificates, Downgraded
as:
Class A Certificates, Downgraded to Ba1 from Baa2
Class B Certificates, Downgraded to B1 from Ba2
Class C Certificates, Downgraded to B2 from B1
Issuer: Denver (City & County of) CO
-- Senior Unsecured Revenue Bonds, to LGD5, 79% from LGD5, 86%
Issuer: United Air Lines, Inc.
-- Senior Secured Bank Credit Facility, to LGD3, 36% from LGD3,
42%
Headquartered in Chicago, Illinois, UAL Corp. is the parent of
United Airlines, Inc., one of the largest air carriers in the
world.
VALAIS RE: Moody's Assigns Low-B Ratings to Class A and C Notes
---------------------------------------------------------------
Moody's Investors Service assigned these ratings to Notes issued
by Valais Re Ltd.
-- Ba2 to the $64,000,000 Series 2008-1 Class A Principal At-
Risk Variable Rate Notes, due June 6, 2011.
-- B3 to the $40,000,000 Series 2008-1 Class C Principal At-Risk
Variable Rate Notes, due June 6, 2011.
Moody's ratings of the Notes address the ultimate cash receipt of
all required interest and principal payments, as provided by the
Notes' governing documents, and are based on the expected loss
posed to the Noteholders, relative to the promise of receiving the
present value of such payments.
The ratings of the Notes are based on Moody's analysis of the
probability of occurrence of earthquakes and hurricanes in North
America, earthquakes and typhoons in Japan, windstorms in Europe
and other worldwide perils over the risk period covered, as well
as the severity of losses should such events occur. In addition,
the ratings also consider the credit strength of the swap
counterparty and the effectiveness of the documentation in
conveying the risks inherent in the structure.
BNP Paribas, London Branch will manage the selection, acquisition
and disposition of collateral on behalf of the Issuer.
VISTA INTERNATIONAL: Case Summary & Two Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Vista International Development
112 N. Liberty St.
Jackson, TN 38301
Bankruptcy Case No.: 08-12582
Chapter 11 Petition Date: July 17, 2008
Court: Western District of Tennessee (Jackson)
Judge: G. Harvey Boswell
Debtors' Counsel: Timothy B. Latimer, Esq.
(ul@utleylatimer.com)
Utley & Latimer, P.C.
425 E. Baltimore
Jackson, TN 38301
Tel: (731) 424-3315
Fax: (731) 424-3501
http://utleylatimer.com/
Total Assets: $1,132,800
Total Debts: $1,405,984
A list of the Debtor's largest unsecured creditors is available
for free at
http://bankrupt.com/misc/tennwb08-12582.pdf
WACHOVIA CORP: State Regulators Investigate Securities Division
---------------------------------------------------------------
A team of regulators from more than five states investigated the
St. Louis headquarters of Wachovia Corp.'s securities division in
relation to its auction-rate bonds sales, reports say. The
regulators are from Missouri, Illinois, Massachusetts,
Pennsylvania, New Jersey and other states.
Missouri Secretary of State Robin Carnahan said in a statement the
investigation was prompted because Wachovia hasn't "fully
complied" with a Missouri probe on the matter. Investors have
filed complaints after they were unable to access money frozen
when firms in the auction-rate bonds market abandoned their
operations in February.
The team delivered more than a dozen subpoenas to the unit's
executives and agents on July 17 as part of its probe into sales
practices, internal evaluations of the auction-rate securities
market and marketing strategies.
Bloomberg News reports that up to $218 billion of auction-rate
bonds sold by student-loan providers, municipalities and closed-
end mutual funds remained frozen.
As reported by the Troubled Company Reporter on July 11, 2008,
based on current estimates, Wachovia Corp. expects to report an
after-tax loss available to common stockholders of $2,600,000,000
to $2,800,000,000 or $1.23 to $1.33 on a per share basis for the
second quarter of 2008, excluding goodwill impairment charges.
Management Changes
As reported by the TCR on June 5, 2008, Wachovia appointed Lanty
Smith as its interim chief executive officer, to succeed Kennedy
G. Thompson, who has fired by the board.
Wachovia's Board of Directors appointed Robert K. Steel, 56, as
the company's new Chief Executive Officer, President and member of
the Board of Directors, effective immediately. Mr. Smith will
continue in his role as Wachovia's Chairman of the Board. All
business unit and staff functions will report to Mr. Steel.
According to Forbes, many are speculating that Wachovia is being
prepped up for sale, especially given Mr. Steel's Goldman Sachs
ties.
As reported by the Troubled Company Reporter on June 25, 2008,
Wachovia hired Goldman to study its troubled portfolios of
mortgages. The Wall Street Journal reported that the bank's
engagement of Goldman means that it is likely weighing the market
value of those loans to eventually sell them. WSJ, citing market
observers, said the final price could mean losses for Wachovia
which prompted the bank to actually sell the loans. The sale of
the portfolios could also have implications for whether Wachovia
itself might be acquired, WSJ added.
As reported by the TCR on April 14, 2008, The Walls Street Journal
noted that Wachovia's need for additional capital came two months
after it raised $3.5 billion through a preferred-stock sale.
According to the report, Wachovia's trouble stemmed from its
$25,000,000,000 purchase of Golden West Financial Corp. nearly two
years ago. Golden West's loans -- the vast majority of which are
adjustable-rate mortgages loans -- were concentrated in
California, one of the hardest-hit housing markets in the U.S.
Wachovia announced that it lost $350,000,000 in the first quarter
due to $2,000,000,000 in asset write-downs and $2,100,000,000 in
new provisions against credit losses. Earnings in the same period
last year was $2,300,000,000.
About Wachovia Corporation
Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB)
-- http://www.wachovia.com/-- is one of the nation's diversified
financial services companies, with assets of $808.9 billion and
market capitalization of $53.8 billion at March 31, 2008.
Wachovia provides a broad range of retail banking and brokerage,
asset and wealth management, and corporate and investment banking
products and services to customers through 3,300 retail financial
centers in 21 states from Connecticut to Florida and west to Texas
and California, and nationwide retail brokerage, mortgage lending
and auto finance businesses. Clients are served in selected
corporate and institutional sectors and through more than 40
international offices. Its retail brokerage operations under the
Wachovia Securities brand name manage more than $1.1 trillion in
client assets through 18,600 registered representatives in 1,500
offices nationwide. Online banking is available at wachovia.com;
online brokerage products and services at wachoviasec.com; and
investment products and services at evergreeninvestments.com.
WELLCARE HEALTH: To Restate Financials Due to Accounting Errors
---------------------------------------------------------------
WellCare Health Plans Inc.'s board of directors determined to
restate its historical consolidated financial statements for the
fiscal years ended Dec. 31, 2004, 2005, and 2006, and to restate
its unaudited condensed consolidated financial statements for the
three-month periods ended March 31, 2007, and June 30, 2007.
The restatements relate to accounting errors which resulted in the
recording of inadequate liabilities for anticipated premium
refunds under certain provisions of:
a) the behavioral health component of the company's Medicaid
contract with the Florida Agency for Health Care
Administration;
b) the company's Healthy Kids contract with the Florida Healthy
Kids Corporation pursuant to which the company provides
health insurance for children whose family income renders
them ineligible for Medicaid; and
c) the company's Medicaid contract with the Illinois Department
of Health and Family Services to provide health care
services to the company's Illinois Medicaid members.
The company has concluded that it owes under these contracts an
additional aggregate refund of up to approximately $42 million as
of Dec. 31, 2006. This additional aggregate refund amounts to
less than 1% of the company's anticipated restated premium
revenues for the fiscal years ended Dec. 31, 2004, 2005 and 2006.
In addition, the company anticipates that it owe an additional
refund of up to approximately $4.5 million.
Among the anticipated impacts of the restatements, diluted
earnings per share for the six months ended June 30, 2007, is
expected to be reduced by approximately $0.10, or 5%, to $1.80
from the reported $1.90. For the year ended Dec. 31, 2006, EPS is
expected to be reduced by approximately $0.30, or 9%, to $3.13
from the reported $3.43. For the year ended Dec. 31, 2005, EPS is
expected to be reduced by approximately $0.12, or 9%, to $1.20
from the previously reported $1.32. For the year ended Dec. 31,
2004, EPS is expected to be reduced by approximately $0.22, or
14%, to $1.34 from the reported $1.56. In addition, the
restatements affect premium revenues, net income before income
taxes, net income, and other payables to government partners for
these periods.
"The board of directors and the entire management team are
committed to the highest standards of business conduct, compliance
and financial reporting and controls," Charles Berg, WellCare's
executive chairman, said. "The decision to restate historical
financial statements is an appropriate step in positioning the
company for the future."
The board, various board committees, and the company's new senior
management team are improving processes and procedures governing
internal control over financial reporting and other controls and
procedures. Certain remedial measures, including changes in
senior management, have been implemented, and others are underway.
Since January 2008, the company has appointed Charles Berg as
executive chairman; Heath Schiesser as president and chief
executive officer; Thomas O'Neil as senior vice president, general
counsel and secretary; Jonathan Rich as Senior vice president and
chief compliance officer; and Thomas Tran as senior vice president
and chief financial officer. In addition, the board has formed a
regulatory compliance committee and has restructured the reporting
line of the chief compliance officer to the CEO and the Regulatory
compliance committee.
"It is an honor and privilege for us to serve more than
2.4 million Medicaid and Medicare members nationwide," said Heath
Schiesser. "Our 3,900 associates across the country are dedicated
to working closely with our government clients, provider partners,
and communities to provide our members access to quality,
affordable health care services."
The board of directors' decision to restate the historical
consolidated financial statements was made on the basis of matters
addressed as part of the disclosed investigation of the special
committee of the board of directors and upon the recommendation of
the audit committee. In light of the restatements, the company
noted that its issued condensed consolidated financial unaudited
statements for fiscal years ended Dec. 31, 2004, 2005 and 2006,
and the issued condensed consolidated financial statements for the
three months ended March 31, 2007, and June 30, 2007, must no
longer be relied upon.
The Special Committee's review is ongoing. Although the company
can provide no assurances, at the present time, the company does
not believe that the work being performed by the special committee
will require any material adjustments to the company's issued
financial statements. The company intends to present the restated
financial statements and related financial information in its
Annual Report on Form 10-K for the year ended Dec. 31, 2007. The
company also expects to file its Quarterly Reports on Form 10-Q
for the third quarter of 2007 and the first quarter of 2008 and
any subsequently delayed reports at the time of, or shortly after,
the filing of the 2007 10-K. WellCare is unable to estimate the
timing of the filing of any of these reports. The company
continues to cooperate fully with federal and state government
authorities in their respective investigations.
The anticipated impact and amounts of the restatement do not
reflect or include any civil, criminal or administrative fines,
penalties, sanctions or interest that may be assessed by federal
and state governmental authorities. At this time, the company is
not able to estimate the amounts or the impact of such fines,
penalties, sanctions or interest, if any, that the company may
incur nor is it able to provide any assurance as to the magnitude
of any such fines, penalties, sanctions or interest or the periods
that might be affected.
A full text copy of the company's regulatory filing with the
Securities and Exchange commisssion is available for free at
http://ResearchArchives.com/t/s?2fbe
About WellCare Health Plans
Headquartered in Tampa, Florida, WellCare Health Plans Inc. (NYSE:
WCG) -- http://www.wellcare.com/-- provides managed care services
exclusively for government-sponsored healthcare programs, focusing
on Medicaid and Medicare. For the first nine months of 2007, the
company reported approximately $4.0 billion in total revenue. As
of Sept. 30, 2007, shareholder's equity was $771 million and total
medical membership was approximately 1.4 million members.
* * *
As reported in the Troubled Company Reporter on June 23, 2008,
Standard & Poor's Ratings Services lowered its counterparty credit
rating on WellCare Health Plans Inc. to 'B' from 'B+'. S&P also
said that the rating remains on CreditWatch, where it was placed
on Oct. 25, 2007, with negative implications.
WELLMAN INC: Sets $71MM of $185M BoNY Debt as Secured
-----------------------------------------------------
Wellman, Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to rule that the
replacement value of the collateral of Bank of New York, agent for
a syndicate of prepetition first lien lenders, is only
$70,827,000.
The Debtors are borrowers under a First Lien Credit Agreement
dated Feb. 10, 2004, pursuant to which the $185,000,000 principal
amount of a term loan is outstanding as of the Petition Date.
BONY, as successor agent to Deutsche Bank Trust Company Americas,
has a first lien on certain property, plant and equipment. The
PP&E consists of machinery, equipment and real estate located in
the Debtors' plants in St. Louis, Mississippi; and in Darlington
and Johnsonville, South Carolina.
Jonathan Henes, Esq., at Kirkland & Ellis LLP, in New York, says
the proposed valuation of BNY's collateral is important since the
Debtors intend to retain the properties for their business
operations after their emergence from bankruptcy.
Wellman's Chapter 11 plan of reorganization filed June 25, 2008,
contemplates that (x) Wellman will retain the PP&E and (z) BONY
will retain its liens on the PP&E and receive deferred cash
payments, the present value of which will equal to the value of
BONY's interest in the PP&E.
"To determine the appropriate amount of deferred cash payments to
be made to Bank of New York, the [properties] must be valued,"
Mr. Henes says.
The Debtors based the $70,827,000, on the appraisal conducted by
AccuVal Associates Incorporated. The amount, or whatever the
Court decides, would be treated as a secured claim and would be
paid in full over time with interest, pursuant to the Plan.
The Court will convene a valuation hearing on July 29. Concerned
parties have until July 25 to file their objections to the
proposed valuation.
The Debtors note that BONY does not have a lien on Wellman's
accounts receivable, customer lists, patents, trademarks,
goodwill or other intangibles; rather:
-- Deutsche Bank Trust Company America, agent for Wellman's
$225,000,000 debtor-in-possession financing facility, has
a first lien on the AR, Inventory and Intangibles; and
-- Wilmington Trust Company, as successor agent for the
$265,000,000 Second Lien Credit Agreement dated as of
Feb. 10, 2004, has a second lien on the AR, Inventory and
Intangibles.
"Thus, the replacement value of the PP&E, in accordance with
Sections 506(a) and 1129(b)(2)(A)(i)(II) of the Bankruptcy Code,
is the price a willing buyer in Wellman's line of business would
pay to purchase the PP&E, and only the PP&E, from a willing
seller," Mr. Henes asserts.
About Wellman Inc.
Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]:
WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and
markets packaging and engineering resins used in food and
beverage packaging, apparel, home furnishings and
automobiles. They manufacture resins and polyester staple fiber
a three major production facilities.
The company and its debtor-affiliates filed for Chapter 11
protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No.
08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP,
in New York City, represents the Debtors. Lazard Freres & Co.,
LLC, acts as the Debtors' financial advisors.
The United States Trustee for Region 2 has appointed seven members
to the Official Committee of Unsecured Creditors. Mark R.
Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's
bankruptcy counsel. FTI Consulting, Inc., acts as the panel's
financial advisors.
Wellman Inc., in its bankruptcy petition, listed total assets
of $124,277,177 and total liabilities of $600,084,885, as of
Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG,
Inc., listed assets between $500 million and $1 billion on a
stand-alone basis at the time of the bankruptcy filing.
Debtor-affiliates Fiber Industries Inc., Prince Inc., and
Wellman of Mississippi Inc., listed assets between $100 million
and $500 million at the time of their bankruptcy filings.
On a consolidated basis, Wellman Inc., and its debtor-affiliates
listed $561,200,000 in total assets and $774,100,000 in
liabilities as of March 31, 2008.
(Wellman Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
WELLMAN INC: Creditors Panel Drops Appeal From Final DIP Order
--------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
bankruptcy cases of Wellman Inc. and its debtor-affiliates has
withdrawn its appeal filed in the U.S. District Court for the
Southern District of New York.
The Creditors Committee appealed before the District Court to
review whether or not the U.S. Bankruptcy Court for the Southern
District of New York, which oversees the Debtors' bankruptcy
cases, erred in its final order approving the Debtors'
$225,000,000 postpetition financing. The panel contested the
final order on grounds that it allegedly granted adequate
protection to the lenders under the First and Second Lien Senior
Credit Agreements dated February 10, 2004, to the detriment of
unsecured creditors.
As reported by the Troubled Company Reporter on Feb. 26, 2008,
Deutsche Bank Trust Company of Americas, serves as administrative
agent and collateral agent; and Deutsche Bank Securities, Inc.,
serves as lead arranger and bookrunner for a syndicate of bank
lenders under the DIP Facility. The other members of the lending
consortium are:
* JPMorgan Chase Bank, National Association, as syndication
agent; and
* General Electric Capital Corporation, LaSalle Business
Credit, LLC, Wachovia Capital Finance Corporation (Central),
as co-documentation agents.
The DIP Facility will terminate on the earliest of:
-- 365 days after the Closing Date; and
-- the consummation date of any plan of reorganization in any
of the Debtors' Chapter 11 case.
Wellman filed a Chapter 11 plan of reorganization on June 25,
2008.
A full-text copy of the DIP Facility Agreement is available for
free at http://bankrupt.com/misc/wellman_$225MCreditPact.pdf
About Wellman Inc.
Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]:
WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and
markets packaging and engineering resins used in food and
beverage packaging, apparel, home furnishings and
automobiles. They manufacture resins and polyester staple fiber
a three major production facilities.
The company and its debtor-affiliates filed for Chapter 11
protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No.
08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP,
in New York City, represents the Debtors. Lazard Freres & Co.,
LLC, acts as the Debtors' financial advisors.
The United States Trustee for Region 2 has appointed seven members
to the Official Committee of Unsecured Creditors. Mark R.
Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's
bankruptcy counsel. FTI Consulting, Inc., acts as the panel's
financial advisors.
Wellman Inc., in its bankruptcy petition, listed total assets
of $124,277,177 and total liabilities of $600,084,885, as of
Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG,
Inc., listed assets between $500 million and $1 billion on a
stand-alone basis at the time of the bankruptcy filing.
Debtor-affiliates Fiber Industries Inc., Prince Inc., and
Wellman of Mississippi Inc., listed assets between $100 million
and $500 million at the time of their bankruptcy filings.
On a consolidated basis, Wellman Inc., and its debtor-affiliates
listed $561,200,000 in total assets and $774,100,000 in
liabilities as of May 31, 2008.
(Wellman Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
WESTERN NONWOVENS: Hearing to Approve Asset Sale Set for Aug. 15
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware will hold a
hearing on July 28 to consider approval of the proposed bidding
procedures for the sale of some of the assets of Western
Nonwovens, Inc. to an affiliate of Simmons Bedding Co. for
$5 million, Bill Rochelle of Bloomberg News reports.
As reported by the Troubled Company Reporter on July 15, 2008,
Western Nonwovens agreed to sell a substantial portion of its
assets to SBC Manufacturing Co. LLC. The sale includes the
Western Nonwovens' plants in Orlando, Florida; Sauget, Illinois;
and an option to purchase a plant in Carson, California. The
purchase agreement is subject to the approval of the Bankruptcy
Court. Definitive documents will be filed with the court, along
with bidding procedures noting that qualified bidders will be
provided an opportunity to make higher and better offers for the
purchase.
Aug. 15 is the tentative date for a hearing to approve the sale,
Mr. Rochelle said. Western Nonwovens expects the sale to complete
within 45 days.
Bid procedures for sale of assets not included in the sale to SBC
Manufacturing will also be filed with the court.
Western Nonwovens has reached an agreement with its lender to
provide debtor-in-possession financing, subject to Bankruptcy
Court approval, to fund its business operations while it completes
the sale process. The financing will provide the company the
necessary funds to continue operations in the normal course of
business; keeping all of the company's currently operating plants
open on normal schedules, and fulfilling customer orders.
Mr. Rochelle said the Debtor was given interim authority to borrow
$850,000 pending a final financing hearing on Aug. 4.
The transition of control should be concluded by the end of August
2008.
According to Bloomberg, the company listed assets of $28.4 million
and debts of $106.9 million. The company owes at least $70.6
million in secured debt, the report says.
About Western Nonwovens
Headquartered in Carson, California, Western Nonwovens, Inc. --
http://www.westernnonwovens.com-- manufactures nonwoven materials
and provides services to industries, including mattress,
automotive, retail apparel, filtration and furniture
manufacturers. Western Nonwovens Inc. and seven of its
affiliates filed voluntary petitions under Chapter 11 on July 14,
2008 (Bankr. D. Del., Case No. 08-11435). Representing the
Debtors is Laura Davis Jones, Esq. at Pachulski Stang Ziehl &
Jones LLP.
WHITEHALL JEWELERS: Proskauer Rose Approved as Bankruptcy Counsel
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
gave Whitehall Jewelers Holdings Inc. and its Debtor-affiliates
permission to employ Proskauer Rose LLP as their bankruptcy
counsel.
Separately, the Court also gave the Debtors authority to hire
Pachulski Stang Ziehl & Jones LLP as their co-counsel.
As reported in the Troubled Company Reporter on July 4, 2008,
Proskauer Rose is expected to:
a) advise the Debtors with respect to their powers and duties
as debtors-in-possession;
b) assist the Debtors in the preparation of their financial
statements, schedules of assets and liabilities, statements
of financial affairs and other reports and documentation
required under the Bankruptcy Code;
c) representing the Debtors at all hearing on matters
pertaining to their affairs as debtor-in-possession;
d) prosecuting and defending litigated matters that may arise
during these Chapter 11 cases;
e) counsel and represent the Debtors in connection with the
administration of claims and numerous other bankruptcy-
related matters arising from these Chapter 11 cases;
f) counsel the Debtor with respect to any general legal matters
relating to these Chapter 11 cases;
g) assist the Debtors in obtaining confirmation of a plan(s) of
reorganization, approval of a disclosure statement and all
matters related thereto; and
h) perform all other legal services that are necessary and
desirable for the efficient and economic administration of
the Debtor's Chapter 11 cases.
The firm's professionals and their compensation rates are:
Designations Hourly Rates
------------ ------------
partners $490-$975
senior counsel $350-$725
associates $180-$650
paraprofessional $70-$275
Scott K. Rutsky, Esq., a member of the firm, assured the Court
that the firm does not hold any interests adverse to the Debtors'
estates and is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code.
Mr. Rutsky can be reached at:
Scott K. Rutsky, Esq.
Pachulski Stang Ziehl & Jones, LLP
919 N. Market St., 17th Fl.
P.O. Box 8705
Wilmington, DE 19899-8705
Tel: (302) 652-4100
Fax: (302) 652-4400
http://www.pszyj.com/
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. 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). Epiq Bankruptcy Solutions LLC as their claims,
noticing and balloting agent. The U.S. Trustee for Region 3 has
not appointed creditors to serve on an Official Committee of
Unsecured Creditors.
When the Debtors' filed for protection against their creditors,
they listed total assets of total assets of $207,100,000 and total
debts of $185,400,000.
WISE METALS: S&P Holds 'CCC' Credit Rating with Developing Outlook
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed the 'CCC' corporate
credit rating on Wise Metals Group LLC. The outlook is
developing.
At the same time, S&P assigned a recovery rating of '6' to the
$150 million senior secured notes due 2012 issued by Wise Metals
Group LLC and Wise Alloys Finance Corp. The '6' recovery rating
indicates the expectation for negligible (0% to 10%) recovery in
the event of a payment default. The issue-level rating of 'CC'
was also affirmed.
Under the company's current capital structure, Wise Metals
maintains a $278 million borrowing-based revolving credit
facility, which S&P do not rate.
WILD EDIBLES: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Wild Edibles, Inc.
21-51 Borden Avenue
Long Island City, NY 11101
Bankruptcy Case No.: 08-12746
Type of Business: The Debtor sells seafood.
See: http://www.wildedibles.com/
Chapter 11 Petition Date: July 17, 2008
Court: Southern District of New York (Manhattan)
Judge: Robert E. Gerber
Debtors' Counsel: Marc A. Pergament, Esq.
(marc.pergament@psinet.com)
Weinberg, Gross & Pergament, LLP
400 Garden City Plaza, Suite 403
Garden City, NY 11530
Tel: (516) 877-2424
Fax: (516) 877-2460
Total Assets: $2,211,500
Total Debts: $2,090,915
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/nysb08-12746.pdf
WORKFLOW MANAGEMENT: Moody's Junks Corporate Family Rating
----------------------------------------------------------
Moody's Investors Service has downgraded Workflow Management,
Inc.'s ratings, while continuing the review for possible further
downgrade. Details of the rating actions are:
Ratings downgraded:
-- Corporate Family rating -- to Caa1 from B2
-- Probability of Default rating -- to Caa1 from B2
-- Senior secured first lien revolving credit facility, due 2010
-- to B2, LGD2, 27% from Ba3, LGD2, 29%
-- Senior secured first lien term loan facility, due 2011 -- to
B2, LGD2, 27% from Ba3, LGD2, 29%
-- Senior secured second lien term loan facility, due 2011 -- to
Caa2, LGD5, 71%, from B3, LGD5, 72%
-- Ratings remain under review for possible further downgrade.
The downgrades reflect Moody's continuing concern regarding
Workflow's squeezed liquidity profile, the pressure posed by its
tightening financial covenants, and Moody's forecast that the
company will be unable to make requisite term loan amortization
payments. Moreover, Moody's questions the company's ability to
obtain a waiver and amendment of the term loan on favorable terms
given ongoing tightness in credit market conditions.
At the end of March 2008, Workflow reported liquid resources of
approximately $20 million, comprised mainly of $19.5 million in
undrawn availability under its $40 million revolving credit
facility. However, according to Moody's calculations Workflow's
financial covenants precluded the company from drawing more than
$17 million under the revolver. Moody's considers that Workflow's
modest free cash flow will be insufficient to provide any
meaningful improvement to the company's liquidity.
At the end of March 2008, Workflow's minimum EBITDA and total
leverage financial ratio tests (Workflow's tightest covenants)
provided low- to mid-single-digit headroom under its credit
agreement-defined results. Moody's considers it unlikely that
Workflow will be able to comply with these covenants which are
scheduled to tighten considerably over the near term.
In February 2008, Workflow's sponsor (Perseus, LLC) provided the
company with an additional $39 million in capital (preferred
stock), the proceeds of which Workflow utilized, in part, to
prepay scheduled principal payments under its term loan through
the end of September 2008. Moody's questions whether Workflow
will be able to meet scheduled amortization of approximately
$7 million per quarter thereafter.
The review will assess (1) the likelihood that Workflow's lenders
will grant the company an amendment to provide covenant and
amortization relief, (2) the prospect that Workflow's owners will
be willing to continue providing the company with additional
capital, and (3) the probability that Workflow's management may
need to consider a larger-scale restructuring of the company's
balance sheet.
Headquartered in New York, New York, Workflow Management, Inc.
sources and distributes a full range of business print and
envelope related documents and services. For the LTM period ended
March 31, 2008, the company reported sales of approximately
$955 million.
WYNN RESORTS: Weak Gaming Market Cues Moody's Negative Outlook
--------------------------------------------------------------
Moody's Investors Service changed the rating outlook of Wynn
Resorts, Limited to negative. Wynn Resorts' Ba3 Corporate Family
Rating and long-term debt ratings were affirmed, as were the long-
term debt ratings of Wynn Las Vegas, LLC. Wynn Las Vegas is the
U.S. domestic operating subsidiary of Wynn Resorts.
The change in outlook to negative reflects the company's
significant exposure to the Las Vegas Strip gaming market which
has experienced comparable month declines since the beginning of
2008, and will likely see further declines through the remainder
of 2008. The negative outlook also acknowledges Wynn Resorts'
aggressive financial policy. In conjunction with a preliminary
second quarter 2008 earnings statement warning of further EBITDA
declines in Las Vegas, the company disclosed a $500 million
increase in its share repurchase authorization. At this point,
the company is authorized to repurchase $1.7 billion of common
stock. In addition to the above-mentioned factors, the negative
outlook considers that Wynn Resorts' Las Vegas Encore project
scheduled to be completed in late 2008, could open in a less than
favorable operating environment.
Ratings could be lowered if Las Vegas declines at an accelerated
rate and it appears that the company will not be able to achieve
and sustain debt/EBITDA below 6 times over the longer-term.
Debt/EBITDA for the 12-month period ended March 31, 2008 was about
five times. A stabilization in the Las Vegas market, along with
continued improvements in Macau and a financial policy consistent
with the current rating level, could result in an outlook revision
back to stable.
The ratings affirmation acknowledges Wynn Resorts' substantial
EBITDA growth in Macau, China which has more than offset the
recent EBITDA declines at the company's Las Vegas subsidiary.
Wynn Macau's property-level EBITDA for the three-month period
ended March 31, 2008 increased about 64% to almost $130 million
while Las Vegas' property-level EBITDA dropped 39% to $68 million.
The Ba3 Corporate Family Rating also acknowledges the quality,
popularity, and favorable reputation of Wynn Resorts' casino
properties, a factor that continues to distinguish the company
from most other gaming operators, and will likely benefit the
company during challenging economic times. Also considered is the
company's substantial liquidity. On a consolidated basis, Wynn
Resorts has $1.5 billion of cash and almost $1.9 billion of
revolver availability.
Wynn Resorts ratings affirmed:
-- Corporate Family Rating at Ba3
-- Probability of Default Rating at Ba3
-- $1 billion senior unsecured term loan due 2010 at B2 (LGD 6,
91%)
Wynn Las Vegas, LLC ratings affirmed:
-- $1.7 billion 6 5/8% first mortgage notes due 2014 at Ba2 (LGD
3, 38%)
Wynn Resorts, Limited currently owns and operates two casino hotel
resort properties, Wynn Las Vegas, which opened on April 28, 2005
and Wynn Macau, which opened on Sept. 6, 2006. In addition, the
company is constructing Encore at Wynn Las Vegas and Encore at
Wynn Macau. Encore at Wynn Las Vegas is expected to open in
December 2008. Encore at Wynn Macau is expected to open in the
first half of 2010. Wynn's net revenue for the 12-month period
ended March 31, 2008 was about $2.8 billion.
ZUFFA LLC: S&P Holds 'BB-' Rating and Revises Outlook to Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Las Vegas-based Zuffa LLC to stable from negative. Ratings on the
company, including the 'BB-' corporate credit rating, were
affirmed.
"The outlook revision reflects improved performance in recent
quarters," noted Standard & Poor's credit analyst Ben Bubeck.
"Specifically, the company's international operations have been
profitable thus far in 2008, following periods of substantial
losses in 2007 as the company ramped up its operations in the
U.K."
Overall pay-per-view revenues, which represent nearly 75% of total
revenues, have trended up in recent quarters, albeit largely due
to an increase in the number of events, higher pricing, and more
favorable contract terms, rather than an increase in the number of
buys. Profitability of PPV events has also improved in recent
periods. While the rating continues to reflect concerns around
the potential volatility of revenue and EBITDA margins,
particularly as the company actively pursues international
expansion, Zuffa's cash flow base has improved to the point that
the company's financial risk profile has sufficient cushion to
absorb a moderate level of volatility at the current rating.
The 'BB-' rating reflects the risk of revenue and cash flow
volatility given Zuffa's primarily event-driven business model,
its vulnerability to changing consumer tastes or the impact of
weak economic conditions on consumer discretionary spending, and a
relatively short operating history. These risks partly are offset
by the company's well-recognized Ultimate Fighting Championship
brand, healthy free cash flow conversion given strong EBITDA
margins and modest capital intensity, and moderate debt leverage.
While EBITDA margins have been extremely volatile over the past
two years, largely due to the expansion into the U.K., S&P's
rating and outlook incorporate the expectation that EBITDA margins
will track within a more consistent range going forward. Despite
improved performance in recent periods, both total debt to EBITDA
and EBITDA coverage of interest remain slightly weak for the
current rating. Still, given S&P's expectations for the remainder
of 2008, these metrics should trend more in line with the current
rating by the end of the year.
* Moody's Negative Outlook Looms for Higher Education Sector
------------------------------------------------------------
While reiterating its current stable outlook for the U.S. Higher
Education sector, Moody's Investors Service cautions that
conditions have worsened and that its rating outlook could turn
negative by 2009, according to a mid-year outlook issued to
reflect changing conditions.
"Despite current challenges, the U.S. higher education sector
retains formidable credit strengths and operates under a resilient
business model that limits the influence of individual customers
and suppliers, and largely prevents rapid deterioration of
revenues that can occur in sectors like heath care," Roger
Goodman, Moody's vice president and author of the report said.
"As in prior periods of economic weakness, most colleges and
universities enjoy relatively consistent student market demand and
have thus far sustained good pricing ability."
While the underlying positive factors have led Moody's to maintain
a stable outlook for now, a number of negative factors highlighted
in the rating agency's January outlook have worsened and may
worsen still more, prompting the publication of an updated
outlook.
"These include a generally bad economic environment that may
increase the financial needs of families and possibly influence
family choices among private, public four-year, and community
college options," Mr. Goodman said.
He said weak investment markets will likely drive investment
losses in endowment and weaken balance sheet strength at most
institutions. Moody's expects median endowment returns to be
negative for the first time since 2002, likely in the mid-single-
digit range for fiscal year 2008 for most institutions.
"Political scrutiny on tuition and wealth levels of colleges,
combined with dislocations in the student loan market, may also
limit willingness and ability of some institutions to use pricing
power to offset other declines in revenues and rising student aid
and energy costs," Mr. Goodman added.
He added that major fundraising campaigns and annual giving
programs will not likely perform up to expectations for the first
time in many years as the economy continues to limp along and
concentrated weakness in the financial industry could
disproportionately weaken philanthropic flows to higher education.
"Higher education is also the largest user of variable rate debt
in the municipal market, which, if capital market conditions
continue to be difficult, may create additional cost and liquidity
pressures," Mr. Goodman said.
* Fitch: Managers Develops New Product Lines to Support Business
----------------------------------------------------------------
With the current CDO asset manager landscape in the middle of
unprecedented stress and more companies exiting the sector in the
last year, managers are focusing on heightened surveillance, focus
on risk management, developing new product lines and ensuring that
the financial means and infrastructure are in place to support
business continuity, according to Fitch Ratings in a new report.
Although manager consolidation as begun, the magnitude of managers
exiting the business has yet to be fully realized. In light of
this sea change, CDO asset managers are adapting to changing
market conditions in a variety of ways to maintain stable funding
sources, investor bases, product performance, and raising new
capital. Longevity in the CDO management business, or alternative
forms of structured product management that may evolve, will
continue to rely on their core investment processes and asset type
expertise.
Market instability and a focus on potential manager impairment
have heightened the need to know in terms of how asset managers
are coping with challenges of the current market environment.
Fitch's report also highlights key areas of focus in
differentiating among CDO asset managers' ability and willingness
to continue to meet their portfolio management obligations.
* Fitch: Global CMBS Performance Was Strong in 1st Half of 2008
---------------------------------------------------------------
Fitch Ratings has said that global CMBS performance was strong
throughout 2007 and the first half of 2008.
"Global CMBS performance was positive in 2007, with 99.7% of
investment grade tranches remaining the same or being upgraded to
a new rating category," says Rodney Pelletier, Managing Director
in Fitch's European Structured Finance Group. "However, in the
second half of 2008, negative ratings actions are expected to
increase and the overall ratings outlook can be generally
classified as changing from stable to stable/negative."
"The more negative rating outlook for 2008 is primarily due to a
decline in global commercial property values, especially for UK-
based commercial real estate," says Charlotte Eady, Associate
Director in the agency's Performance Analytics team. "Whilst
occupational markets have remained resilient, continuing liquidity
issues could increase the likelihood and severity of a downturn in
the future."
"Upgrades outpaced downgrades 732 to 67, reflecting an upgrade-to-
downgrade ratio of 10.9 to one", says Stephanie Mah, Senior
Director in Fitch's Credit Markets Research Group. "This compares
to a net negative global ABS and global RMBS upgrade-to-downgrade
ratio of 0.14 to one and 0.57 to one, respectively."
The study includes detailed analysis and commentary on CMBS in the
US, European and Asia Pacific jurisdictions, and provides an
update on Fitch's outlook for each of these sectors.
* S&P Puts Ratings on Four Hybrid CDOs Under Negative CreditWatch
-----------------------------------------------------------------
Standard & Poor's placed its ratings on four hybrid collateralized
debt obligation transactions on CreditWatch with negative
implications. S&P placed a total of 16 ratings on CreditWatch.
Airlie LCDO I (AVIV LCDO 2006-3) Ltd., Pebble Creek LCDO 2007-2
Ltd., and Airlie LCDO II (Pebble Creek 2007-1) Ltd. predominantly
reference corporate loans and Exum Ridge CBO 2006-2 Ltd.
references corporate bonds.
The CreditWatch placements reflect the continued deterioration in
the credit quality of some of the corporate obligors that these
transactions reference. The credit deterioration is evidenced by
the increase in the number of credit events that these deals have
experienced because of their referenced corporate obligors.
Based on the most recent trustee reports that are available for
the transactions, Airlie LCDO II and Exum Ridge CBO 2006-2 Ltd.
reference four corporate obligors that have experienced credit
events, and Airlie LCDO I and Pebble Creek LCDO 2007-2 reference
three corporate obligors that have experienced credit events.
S&P will review the results of current cash flow runs generated
for the transactions to determine the level of future defaults the
tranches can withstand under various default timing and interest
rate stress scenarios while still paying all of the principal and
interest due. The results of these cash flow runs will be
compared with the projected default performance of the loans
referenced in the portfolio to determine whether the rating
currently assigned to each class of notes remains consistent with
the amount of credit enhancement currently available.
Ratings Placed on Creditwatch Negative
Rating
------
Transaction Class To From
----------- ----- -- ----
Exum Ridge CBO 2006-2 Ltd. A AAA/Watch Neg AAA
Exum Ridge CBO 2006-2 Ltd. B AA+/Watch Neg AA+
Exum Ridge CBO 2006-2 Ltd. C A/Watch Neg A
Exum Ridge CBO 2006-2 Ltd. D BBB/Watch Neg BBB
Exum Ridge CBO 2006-2 Ltd. E-1 BB/Watch Neg BB
Exum Ridge CBO 2006-2 Ltd. E-2 BB/Watch Neg BB
Airlie LCDO II
(Pebble Creek 2007-I) Ltd. C A/Watch Neg A
Airlie LCDO II
(Pebble Creek 2007-I) Ltd. D BBB/Watch Neg BBB
Airlie LCDO I
(Aviv LCDO 2006-3) Ltd. B-1 AAA/Watch Neg AAA
Airlie LCDO I
(Aviv LCDO 2006-3) Ltd. B-2 AAA/Watch Neg AAA
Airlie LCDO I
(Aviv LCDO 2006-3) Ltd. C A/Watch Neg A
Airlie LCDO I
(Aviv LCDO 2006-3)Ltd D BBB/Watch Neg BBB
Pebble Creek LCDO 2007-2 Ltd. B AAA/ Watch Neg AAA
Pebble Creek LCDO 2007-2 Ltd. C A/Watch Neg A
Pebble Creek LCDO 2007-2 Ltd. D BBB/Watch Neg BBB
Pebble Creek LCDO 2007-2 Ltd. E BB/Watch Neg BB
* S&P Says Potential Downgrades Count for This Month Stands at 745
------------------------------------------------------------------
The potential downgrade count for this month stands at 745,
according to an article published by Standard & Poor's. The
article, which is titled "Downgrade Potential Across Credit Grades
And Sectors (Premium)," says this is first time in the last 14
months that the number has decreased. However, the dip is largely
because a number of potential downgrades became actual downgrades,
not because of an improvement in those companies'
creditworthiness. This month's count is four fewer than
last month's all-time high.
The number of potential downgrades is 124 more than in the same
period a year ago, when a material erosion of the residential real
estate sector and large write-downs by financial institutions
sparked an upsurge of downgrade potential. Geographically, the
U.S. continues to top the list of potential bond downgrades, where
roughly a quarter of current ratings are at risk of downgrades.
"By sector, mortgage institutions recorded the highest ratio of
issuers with a negative bias relative to their total rated
universe, followed by brokerage companies and forest products and
building materials," said Diane Vazza, head of Standard & Poor's
Global Fixed Income Research Group. "This is unsurprising given
the weakness in the lending and housing markets." Further,
consumer discretionary sectors--including the media and
entertainment and consumer products sectors--are poised for
deterioration because of a lessening of credit availability and
weakening demand.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Total Shareholders
Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ -------- ------ ------ -------
ABSOLUTE SOFTWRE ABT 89 (2) 30
AFC ENTERPRISES AFCE 146 (51) (28)
APP PHARMACEUTIC APPX 1,087 (73) 227
BARE ESCENTUALS BARE 236 (76) 99
BLOUNT INTL BLT 407 (44) 138
CABLEVISION SYS CVC 9,180 (5,114) (476)
CENTENNIAL COMM CYCL 1,346 (1,058) 26
CHENIERE ENERGY CQP 1,923 (253) 108
CHENIERE ENERGY LNG 2,955 (65) 258
CHOICE HOTELS CHH 338 (142) (26)
CINCINNATI BELL CBB 2,034 (660) 32
COREL CORP CRE 256 (18) (30)
CROWN MEDIA HL-A CRWN 668 (661) (1)
CV THERAPEUTICS CVTX 228 (208) 156
CYBERONICS CYBX 136 (15) 110
DELTEK INC PROJ 179 (79) 32
DOMINO'S PIZZA DPZ 453 (1,451) 58
DUN & BRADSTREET DNB 1,632 (479) (177)
EINSTEIN NOAH RE BAGL 154 (29) 5
ENDEVCO INC EDVC 19 (5) (8)
EXTENDICARE REAL EXE-U 1,498 (43) (28)
GENCORP INC GY 994 (24) 67
GENERAL MOTORS GM 145,741 (39,674) (10,929)
HEALTHSOUTH CORP HLS 2,012 (1,065) (214)
HUMAN GENOME SCI HGSI 914 (49) 26
ICO GLOBAL C-NEW ICOG 608 (160) (49)
IMAX CORP IMAX 204 (95) (8)
IMAX CORP IMX 204 (95) (8)
INCYTE CORP INCY 237 (197) 193
INTERMUNE INC ITMN 236 (56) 166
IPCS INC IPCS 548 (47) 69
KNOLOGY INC KNOL 654 (52) (6)
LIFE SCIENCES RE LSR 199 (22) 6
LINEAR TECH CORP LLTC 1,504 (488) 1,004
MEDIACOM COMM-A MCCC 3,612 (296) (297)
MOODY'S CORP MCO 1,587 (903) (466)
NATIONAL CINEMED NCMI 490 (547) 51
NAVISTAR INTL NAV 11,614 (562) 1,415
NPS PHARM INC NPSP 187 (199) 97
PRIMEDIA INC PRM 251 (137) (6)
PROTECTION ONE PONE 655 (45) 0
RADNET INC RDNT 498 (78) 25
REDWOOD TRUST RWT 8,546 585 N.A.
REGAL ENTERTAI-A RGC 2,634 (186) 153
ROK ENTERTAINMEN ROKE 17 (25) (7)
RSC HOLDINGS INC RRR 3,412 (42) (65)
RURAL CELLULAR-A RCCC 1,350 (580) 137
SALLY BEAUTY HOL SBH 1,432 (729) 401
SEALY CORP ZZ 1,049 (115) 48
SONIC CORP SONC 776 (110) (31)
THERAVANCE THRX 300 (91) 219
UST INC UST 1,436 (391) 405
VALENCE TECH VLNC 27 (59) 11
VOYAGER LEARNING VLCY 917 (53) (637)
WARNER MUSIC GRO WMG 4,532 (103) (813)
WEIGHT WATCHERS WTW 1,095 (894) (252)
WESTMORELAND COA WLB 783 (178) (85)
WR GRACE & CO GRA 3,927 (285) 1,091
XERIUM TECHNOLOG XRM 925 (499) 0
SATELLITE -A XMSR 1,662 (1,038) (293)
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. 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.
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
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*** End of Transmission ***