/raid1/www/Hosts/bankrupt/TCR_Public/080729.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 29, 2008, Vol. 12, No. 179
Headlines
ALLIED SECURITY: Blackstone Deal Won't Affect S&P's 'B' Rating
ALPHA MEDIA: S&P Junks Corp. Credit Rating on Weak Performance
AMERICAN COLOR: Wants Kirkland & Ellis as Lead Bankruptcy Counsel
AMERICAN AXLE: Posts $644.3 Million Net Loss in 2008 2nd Quarter
AMERICAN COLOR: Court Approves Kurtzman Carson as Noticing Agent
AMERICAN COLOR: Gets Court Interim Order to Use Cash Collateral
AMERICAN COLOR: Obtains Interim Order to Use 135MM DIP Financing
AMERICAN COLOR: Wants Kirkland & Ellis as Bankruptcy Lead Counsel
AMERICAN LAFRANCE: Court Declares Ch. 11 Plan Effective July 23
AMR CORP: S&P Cuts Ratings on Neg. Cash Flow; Outlook Negative
ANSONIA CDO 2006-1: Moody's Cuts Rating on Class H Notes to Ba2
ARCAP 2004-RR3: S&P Lowers Ratings on 13 Classes; Puts Neg. Watch
ARCHIMEDES FUNDING: Fitch Junks Ratings on Three Classes of Notes
ARGUS CORPORATION: CTO Cues TSX to Delist Securities on August 22
ATA AIRLINES: Taps Paradigm Tax as Property Tax Consultant
ATA AIRLINES: Taps Ryan Inc. as Special Excise Tax Consultant
ATA AIRLINES: May Employ Starman Bros. as Auctioneer
AUTOMOTIVE PROFESSIONALS: Bids for Run-Off of Service Pacts Sought
BANC OF AMERICA: Moody's Cuts Ratings on 71 Tranches Issued
BIOMETRX INC: Inks Asset Purchase Agreement with Sequiam Corp.
BOSCOV'S DEPARTMENT: Mirrors Mervyn's Financial Demise, Media Says
CHRYSLER LLC: Arm Halts Lease Operations; To Cut 1,000 Employees
CITIGROUP MORTGAGE: Moody's Cuts Ratings on 32 Tranches on Loans
CLAIRES STORES: Moody's Downgrades PD Rating to Caa1
CREST 2003-2: Moody's Affirms Ba1 Ratings on Class E-1 & E-2 Notes
CRYSTAL RIVER: Fitch Trims Ratings to 'C' on Two Note Classes
CT CDO: S&P Affirms Low-B Ratings on Four Collateralized Debts
DANA CORP: Appoints Keith Wandell as Board of Directors Member
DANA CORP: Visteon Insists on $9.8MM Claim for Product Recall
DELPHI CORP: Appaloosa Balks at GM Participating in Adversary Suit
DELPHI CORP: Allowed to Pursue $2.55B Fraud Claim vs. Appaloosa
DELPHI CORP: Negotiating New or Amended Plan with GM and Committee
DELPHI CORP: WTC, Panel Want Plan Confirmation Order Revoked
DELPHI CORP: Wants Plan-Filing Deadline Extended to October 31
DVA ARENA: Voluntary Chapter 11 Case Summary
DIMENSIONS HEALTH: Fitch Holds 'CC' Rtng on $74.5MM Revenue Bonds
DOMTAR CORP: S&P Lifts Corp. Credit & Debt Rtngs on Improved Fin'l
DOWNEY FINANCIAL: S&P Chips Rating to 'BB+/B' and Keeps Neg. Watch
ENERGY PARTNERS: Names Steve Longon as Chief Operating Officer
ENVIROSOLUTIONS HOLDINGS: Moody's Affirms Debt Rating at Caa2
EXPRESSJET HOLDINGS: Gets NYSE Share Price Non-Compliance Notice
FEDDERS CORP: Suit Against Directors, Lenders Ongoing, Report Says
FENDER MUSICAL: Moody's Puts Negative Outlook to B1 and B2 Ratings
FIRST HERITAGE: FDIC Named Receiver; Mutual of Omaha Takes Control
FNB NEVADA: FDIC Closes Bank, Mutual of Omaha Takes Control
FREMONT INVESTMENT: Fitch Withdraws Rtngs on CSI's Debt Assumption
FRONTIER AIRLINES: Gets $75MM DIP Financing Offer from Perseus LLC
G-FORCE 2005-RR: S&P Lowers Certificates Ratings on 14 Classes
G-FORCE 2005-RR2: S&P Cuts 14 Certificate Ratings After Review
G-FORCE CDO: S&P Junks Ratings on Two Classes; Removes Neg. Watch
GATEHOUSE MEDIA: Moody's Lowers Corp. Family Rating to Caa1
GAYLORD ENTERTAINMENT: Moody's Affirms Low-B and Junk Ratings
GENERAL MOTORS: To Offer Discounts on Vehicle Sales Until July 31
GENERAL MOTORS: To Cut Production at Four Plants on September 29
GENERAL MOTORS: Appaloosa Balks at Participation on Delphi Suit
GENERAL MOTORS: Negotiating New or Amended Plan for Delphi Corp.
GEMINI AIR: To Auction Assets on August 12
GOODY'S FAMILY: Files Ch. 11 Plan Disclosure Statement
GOODY'S FAMILY: Skadden Arps Approved as Bankruptcy Counsel
GRAMERCY REAL ESTATE CDO 2005-1: Moody's Affirms Low-B Ratings
GRAMERCY REAL ESTATE CDO 2006-1: Moody's Affirms Low-B Ratings
HOLLINGER INC: CTO Prompts TSX to Delist Securities on August 22
I-MANY INC: Has Until August 22 to Comply with Market Value Rule
IAC/INTERACTIVECORP: Amends Cash Tender Offer for 7% Senior Notes
IBIS TECHNOLOGY: Fails to Maintain NASDAQ Minimum Market Value
INTERPUBLIC GROUP: S&P Puts 'B+' Rating on $335MM Credit Facility
IXIS REAL: S&P Puts Default Ratings on Two Certificate Classes
JOURNAL REGISTER: Inks Forbearance Pact; Conway Del Genio In
JOURNAL REGISTER: Forbearance Deal w/ Lenders Cue S&P's 'D' Rtngs
LEVITT AND SONS: DIP Administrator Taps PTS Inc. as Appraiser
LEVITT & SONS: Court Sets Disclosure Statement Hearing for Aug. 13
LEVITT AND SONS: Wants Form of Woodbridge Pact Notice Approved
LEXINGTON PRECISION: Court Sets August 15 as Claims Bar Date
LNR CDO IV: Moody's Cuts to Low-B Ratings on Four Classes of Notes
LNR CDO: S&P Cuts 12 Certificates Ratings; On Negative Watch
LNR CDO: S&P Junks Ratings on Four Certificates Classes
LNR CDO: S&P Cuts Ratings on Three Certificate Classes to 'CCC-'
LNR CDO: S&P Downgrades Ratings on 12 Certificate Classes
MAGNOLIA FINANCE II: Moody's Rates Class E $6.4MM Notes Ba2
MERVYN'S LLC: Bankruptcy Filing "in the Next Few Days," WSJ Says
MORTGAGES LTD: KML Hurls New Allegations, Wants Case Trustee Named
MOTIVNATION INC: TrixMotive Unit Files for Chapter 7 Bankruptcy
MRS. FIELDS: Agrees with Committee to Amend Restructuring Term
MULTICELL TECH: May 31 Balance Sheet Upside-Down by $2,815,298
NEONODE INC: Given Until Dec. 30 to Comply with Bid Protocol
NEWCASTLE CDO: Fitch Holds 'BB' Rating on $23.718MM Class L Notes
NOMURA ASSET: Moody's Cuts Ratings on 111 Tranches of Loan Trusts
NOMURA ASSET: Moody's Puts Junk Ratings on Five Classes of Trusts
NORTHEAST BIOFUELS: S&P Cuts $140MM Term Loan Rating to B- from B
NORTHWEST AIRLINES: S&P Trims Rating to 'B' on Expected Losses
NORTHWESTERN CORP: Asks Court to Allow Surplus Distribution
PANAVISION INC: S&P Puts 'B-' Corp. Credit Rating Under Neg. Watch
PAPPAS TELECASTING: Former CEO Harry Pappas Balks at $5MM Facility
PGT INC: Launches $30MM Rights Offering to Apply Indenture Change
PORTOLA PACKAGING: Moody's Junks Ratings on Restructuring Plan
QUICKSILVER RESOURCES: S&P Rates Proposed $700MM Term Loan 'B+'
RED SHIELD: Gets Final OK to Access Chittenden's $13 Million Loan
SEMGROUP LP: Seeks Schedules and Statements Filing Extension
SEMGROUP LP: Has About $13 Million Payable to Hiland Holdings
SEMGROUP ENERGY: March 31 Balance Sheet Upside-Down by $54.6MM
SEMGROUP LP: Various Entities Discloses Financial Exposure
SENSATA TECH: Moody's Assigns Caa2 to $2.8BB Subordinated Notes
SIRIUS SATELLITE: FCC Approves XM Satellite Merger in a 3-2 Vote
SPECTRUM BRANDS: Moody's Reinstates B1 Rating to $50MM LC Facility
TALLSHIPS FUNDING: Collateral Slide Cues Fitch's Seven Rating Cuts
TERWIN ASSET: Collateral Sale Set for August 19
TI ACQUISITION: Files for Bankruptcy Protection in Georgia
TI ACQUISITION: Case Summary & 20 Largest Unsecured Creditors
UAL CORP: Shares Gain Two-Year High as $2.7BB Loss Beats Estimates
UAL CORP: Expected Heavy Losses Cue S&P to Cut Rtngs to B- from B
VERTIS HOLDINGS: Seeks Court Okay to Hire Weil Gotshal as Counsel
VERTIS HOLDINGS: Can Hire Kurtzman Carson as Notice Agent
VERTIS HOLDINGS: Obtains Interim Order to Use Cash Collateral
VERTIS HOLDINGS: Gets Interim Order to Use $380MM DIP Financing
WACHOVIA CORP: Moody's Cuts Bank's Financial Strength Rating to B
WELLMAN INC: Reorganization Plan is Inadequate, BoNY Says
WELLMAN INC: Wants Plan-Filing Period Extended Through October 15
WENDY'S INT'L: Changes Executives Related to Triarc Cos. Merger
WORNICK COMPANY: Reorganization Plan Declared Effective July 10
W.R. GRACE: Gets Court's OK to Use $59MM from Insurance Policies
W.R. GRACE: Equity Committee Says No to JP Morgan's Interest Hike
XM SATELLITE: FCC Approves Sirius Satellite Merger in a 3-2 Vote
* S&P Lowers Ratings on 15 Classes from Eight US Subprime RMBS
* S&P Chips Ratings on 22 Cert. Classes of from 13 Subprime RMBS
* S&P Cuts Rtngs. on 74 Cert. Classes from 56 Various RMBS Issuers
* S&P Lower Airlines' Ratings After Heavy Losses
* S&P Says Distress Ratio Shoots Up from 13.7% to 23.5% in July
* S&P: US Investment-Grade Composite Credit Spread Up to 275 Bps
* Large Companies with Insolvent Balance Sheets
*********
ALLIED SECURITY: Blackstone Deal Won't Affect S&P's 'B' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that the rating and
outlook on Allied Security Holdings LLC (B/Stable/--) are
currently unaffected by the company's announcement that it
will be acquired by The Blackstone Group. Although details of the
transaction, including the purchase price and financing, have not
been announced, S&P assume the transaction, which is expected to
close in August, will result in credit metrics remaining close to
current levels. For the 12 months ending March 31, 2008, Allied's
leverage was about 5.7x pro forma for the April acquisition of
HR Plus.
However, if the company's credit metrics deteriorate due to the
transaction, operating performance weakens as a result of
challenging economic conditions so that leverage approaches 6x, or
financial policy becomes more aggressive, S&P could revise the
outlook to negative.
ALPHA MEDIA: S&P Junks Corp. Credit Rating on Weak Performance
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating, as well as its issue-level ratings, on Alpha Media Group
Inc.; the corporate credit rating was lowered to 'CCC+' from 'B'.
The rating outlook is negative. The New York-based men's
lifestyle publisher had $159.4 million of debt as of March 31,
2008.
"The ratings downgrade is based on the company's weak operating
performance, rising debt leverage, shrinking liquidity, and the
difficulty that we believe Alpha Media will face over the near
term in remaining in compliance with its aggressive schedule of
tightening leverage covenants," said Standard & Poor's credit
analyst Hal Diamond. "We believe that the price of obtaining
covenant relief could be a sharp increase in fees and borrowing
costs, which could strain the company's liquidity."
EBITDA declined 17% in the 12 months ended March 31, 2008, as a
result of lower high-margin Maxim newsstand sales, increased
losses in its Blender magazine, lower online profitability, and
increased costs required to implement the company's business
strategies. Standard & Poor's is concerned that deteriorating ad
demand in the magazine publishing industry, with advertising pages
down 8.2% in the second quarter, could continue to undermine
operating performance. Maxim's advertising pages increase of 1%
in the second quarter of 2008 was offset by a decline of 27% for
Blender, suggesting that second-quarter operating performance
could come under pressure. S&P also expect newsstand sales to
come under pressure given consumer belt tightening.
The rating reflects Alpha Media's earnings concentration, with
Maxim, the larger of its two magazines, accounting for nearly all
of EBITDA. Strong competition in the men's lifestyle magazine
niche from the Internet and other entertainment sources is another
key issue. The company depends somewhat on mature and cyclical
print advertising revenues, which account for two-thirds of sales.
Total debt to EBITDA increased to 6.0x at March 31, 2008, from
5.0x the prior year. EBITDA coverage of interest expense narrowed
to 2.0x in the 12 months ended March 31, 2008, from 2.4x the year
before. Discretionary cash flow was positive at roughly
$7 million over the same period as a result of low working capital
and capital spending requirements. S&P believes that
discretionary cash flow could be negative over the next year given
weak ad demand and potentially lower circulation, and could be
further aggravated by higher interest costs if the company needs
to negotiate an amendment to its credit facility.
AMERICAN COLOR: Wants Kirkland & Ellis as Lead Bankruptcy Counsel
-----------------------------------------------------------------
ACG Holdings, Inc. and its debtor-affiliates seek from the U.S.
Bankruptcy Court for the District of Delaware authority to employ
Kirkland & Ellis LLP, as their lead attorneys, nunc pro tunc to
July 15, 2008, pursuant to an engagement letter dated
August 21, 2007.
Kirkland & Ellis has represented the ACG Debtors with respect to
restructuring matters since August 21, 2007. Thus, Kirkland &
Ellis is familiar with the ACG Debtors' businesses and many of the
potential legal issues that may arise in the context of their
bankruptcy proceedings. The ACG Debtors believe that Kirkland &
Ellis is both well-qualified and uniquely able to represent them.
As the ACG Debtors' lead counsel, Kirkland & Ellis will, among
other things:
(a) advise the ACG Debtors with respect to their powers and
duties in the continued management and operation of their
business and properties;
(b) negotiate and prepare, on behalf of the Debtors -- and
obtain approval of -- a disclosure statement and
confirmation of a Chapter 11 plan;
(c) represent the ACG Debtors in connection with obtaining
postpetition financing; and, advise them regarding tax
matters;
(d) attend meetings and negotiate with representatives of the
creditors and other parties-in-interest;
(e) advise the ACG Debtors in connection with any potential
sale of assets; and
(f) appear before the Court -- and any appellate courts -- to
represent the interests of the Debtors' estates and take
all necessary actions to protect and preserve those
interests;
The ACG Debtors also agreed to pay Kirkland & Ellis in accordance
with the firm's customary hourly rates:
Professional Hourly Rates
------------ ------------
Partners $500 to $975
Of Counsel $380 to $870
Associates $275 to $595
Paraprofessionals $120 to $260
The firm's Paul M. Basta and Ray C. Schrock are the professionals
tasked to have primary responsibility for providing services to
the ACG Debtors.
Mr. Kellick informed the Court that as of bankruptcy filing, the
ACG Debtors have advanced Kirkland & Ellis its retainer on
several occasions, totaling $763,597.
Paul M. Basta, a partner at Kirkland & Ellis, assured the Court
that his firm is a "disinterested person", as defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors they listed estimated assets $100 million to
$500 million and estimated debts of $500 million to $1 billion.
AMERICAN AXLE: Posts $644.3 Million Net Loss in 2008 2nd Quarter
----------------------------------------------------------------
American Axle & Manufacturing Holdings Inc. reported a net loss of
$644.3 million for the second quarter ended June 30, 2008,
compared with net income of $34.6 million in the same period last
year.
Net sales were $490.5 million in the second quarter of 2008 as
compared to $916.5 million in the second quarter of 2007. Sales
in the second quarter of 2008 were adversely affected by the 87-
day International UAW strike as well as a reduction in consumer
demand for the company's major full-size truck and SUV programs
for GM and Chrysler and the company's mid-size light truck and SUV
programs for GM.
On Feb. 25, 2008, the International United Automobile, Aerospace
and Agricultural Implement Workers of America (UAW) called a
strike at the company's original five facilites in Michigan and
New York upon expiration of the four-year master labor agreement
between the company and the International UAW. The strike was
resolved on May 23, 2008, when UAW represented associates at these
locations ratified the master and local labor agreements.
The company estimates the adverse impact of the strike on net
sales in the second quarter of 2008 was $274.9 million.
Gross profit (loss) was a loss of $527.9 million in the second
quarter of 2008 as compared to profit of $113.7 million in the
second quarter of 2007. Gross margin was negative 107.6% in the
second quarter of 2008 as compared to 12.4% in the second quarter
of 2007. The decrease in gross profit and gross margin in the
second quarter of 2008 reflects the impact of the International
UAW strike, lower sales, and special charges and other non-
recurring operating costs totaling $517.8 million.
The special charges and other non-recurring operating costs
include $131.2 million for the Special Separation Program (SSP)
offered to all UAW represented associates at the company's
original locations, $6.1 million in termination benefits for
associates represented by the International Association of
Machinists, $329.9 million in asset impairments, indirect
inventory obsolescence and idled leased assets, $19.1 million for
signing bonuses, $18.0 million relating to supplemental
unemployment benefits to be payable to current UAW represented
associates during the new labor agreements, a $6.4 million special
charge for salaries workforce reductions, and $7.4 million for
plant closure costs and charges.
Gross profit in the second quarter of 2007 includes $7.0 million
in special charges, primarily related to attrition program
activity.
Operating income (loss) was a loss of $572.8 million in the second
quarter of 2008 as compared to income of $59.5 million in the
second quarter of 2007. Operating margin was negative 116.8% in
the second quarter of 2008 as compared to 6.5% in the second
quarter of 2007. The company estimates the reduction in
operating income resulting from the strike in the second quarter
of 2008 to be $86.6 million.
Income tax expense was $59.1 million in the second quarter of 2008
as compared to $5.3 million in the second quarter of 2007.
Net cash used in operating activities in the second quarter of
2008 was $84.2 million as compared to net cash provided by
operating activities of $224.8 million in the same period last
year. Capital spending for the second quarter of 2008 was
$33.6 million as compared to $33.0 million in the second quarter
of 2007. Reflecting the impact of this activity and dividend
payments of $8.2 million, the company's free cash flow use of
$123.7 million in the second quarter of 2008 compared to
$183.8 million of positive free cash flow in the second quarter of
2007.
The company's results in the first half of 2008 were a net loss of
$671.3 million. This compares to net earnings of $50.3 million in
the second half of 2007. Net sales in the first half of 2008 were
$1.1 billion as compared to $1.7 billion in the first half of
2007. The company's operating loss in the first half of 2008 was
$609.5 million as compared to operating income of $95.9 million
for the first half of 2007. For the first half of 2008, the
company estimates the reduction in sales and operating income
resulting from the International UAW strike to be $414.0 million
and $129.4 million, respectively.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheeet showed
$2.5 billion in total assets, $2.2 billion in total liabilities,
and $315.3 million in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended June 30, 2008, are available for
free at http://researcharchives.com/t/s?301b
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- is a world
leader in the manufacture, engineering, design and validation of
driveline and drivetrain systems and related components and
modules, chassis systems and metal-formed products for trucks,
sport utility vehicles, passenger cars and crossover utility
vehicles. In addition to locations in the United States
(Michigan, New York, Ohio and Indiana), the company also has
offices or facilities in Brazil, China, Germany, India, Japan,
Luxembourg, Mexico, Poland, South Korea, Thailand and the United
Kingdom.
* * *
As reported in the Troubled Company Reporter on June 30, 2008,
Moody's Investors Service lowered American Axle & Manufacturing
Holdings Inc.'s Corporate Family Rating to B1 from Ba3, as well
as the senior unsecured rating to B1 from Ba3 on American Axle &
Manufacturing Inc.'s notes and term loan. The outlook is stable.
The Speculative Grade Liquidity Rating also has been lowered to
SGL-3 from SGL-2.
AMERICAN COLOR: Court Approves Kurtzman Carson as Noticing Agent
----------------------------------------------------------------
Vertis Holdings, Inc., and ACG Holdings, Inc., separately sought
and obtained from the U.S. Bankruptcy Court for the District of
Delaware the authority to employ Kurtzman Carson Consultants LLC
as their claims and noticing agent.
Vertis and ACG has entered into a merger agreement and
comprehensive restructuring plan, on May 22, 2008. The
restructuring and merger are intended to improve the combined
company's financial strength and expand the scope of products and
services offered to its customers.
According to John V. Howard, Jr., secretary of Vertis, an
estimated 65,000 creditors have interests in Vertis' Chapter 11
cases. The noticing, receiving, docketing and maintaining of
proofs of claims of this volume, would be time consuming and
burdensome on the part of the Clerk's Office, Mr. Howard notes.
Patrick W. Kellick, executive vice president, chief financial
officer and secretary of American Color Holdings, Inc., says a
potential 1,000 creditors are expected to have interest in ACG's
bankruptcy proceedings. The Bankruptcy Clerk's Office may not be
able to undertake all these tasks that is why a notice and claims
agent is necessary, Mr. Kellick tells Judge Sontchi.
As Vertis' and ACG's claims agent, Kurtzman Carson will, among
other things:
(a) notify all creditors of Vertis' and ACG's filing of
Chapter 11 petitions, and of the companies' first meetings
of creditors pursuant to Section 341(a) of the Bankruptcy
Code;
(b) notify all the companies' potential creditors of the
existence and amount of their claims;
(c) furnish creditors a form for the filing of claims;
(d) docket all claims received in Vertis and ACG's bankruptcy
cases, and maintain the companies' official claims
registers on behalf of the Clerk's Office;
(e) record all transfers of claims in Vertis' and ACG's
chapter 11 proceedings, and provide notices to parties-in-
interest as required by Rule 3001 of the Federal Rules of
Bankruptcy Procedure; and
(f) turn over to the Bankruptcy Clerk's Office copies of the
companies' claims registers for review.
Kurtzman Carson will be paid separately by each of the estates in
accordance with its customary hourly rates:
Professional Hourly Rate
------------ -----------
Clerical $45 - $65
Project Specialist $80 - $140
Consultant $145 - $225
Senior/Senior Managing Consultant $230 - $295
Technology/Programming Consultant $130 - $195
Aside from the professional fees, Vertis and ACG will separately
reimburse Kurtzman Carson for expenses incurred.
Sheryl Betance, director of restructuring of Kurtzman Carson,
assures the Court that her firm does not have interest adverse to
the Vertis and ACG bankruptcy estates, and has not represented
any entities or individuals in connection with the companies'
Chapter 11 case, other than American Color Graphics.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than 1 billion.
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors they listed estimated assets $100 million to
$500 million and estimated debts of $500 million to $1 billion.
AMERICAN COLOR: Gets Court Interim Order to Use Cash Collateral
---------------------------------------------------------------
ACG Holdings, Inc., and its debtor-affiliates sought and obtained
on July 16, 2008, interim authority from the U.S. Bankruptcy Court
for the District of Delaware, to use the cash collateral of its
bridge facility lenders and secured noteholders. The prepetition
secured parties have consented to ACG's use of Cash Collateral in
the ordinary course of business, pursuant to a budget from
July 18, 2008, to October 10, 2008.
Absent the Cash Collateral, ACG's trade creditors will cease to
provide it goods and services on credit, and CAG would be unable
to pay its payroll and direct operating expenses, or obtain goods
and services needed to run its business in the ordinary course,
according to Sean T. Greecher, Esq., at Young Conaway Stargatt &
Taylor, LLP, in Wilmington, Delaware.
Prior to bankruptcy filing, ACG obtained financing under four
facilities and credit agreements, consisting of:
(a) a $95,000,000 first lien credit facility agreement,
dated as of May 5, 2005, among ACG, Bank of America, as
administrative agent and Letter of Credit issuer and other
financial institutions;
(b) a $19,265,000 amended and restated bridge facility
intercreditor agreement, amended as of June 4, 2008, among
ACG, the Bridge Facility Lenders and Special Situations
Investing Group, Inc., as administrative and collateral
agent;
(c) approximately $280,000,000 in second lien notes under an
amended and restated second lien indenture, dated as of
November 14, 2007, among American Color Graphics, Inc., as
borrower, ACG, as guarantor, and the Bank of New York as
trustee; and
(d) a $35,000,000 revolving trade receivables facility,
under the Receivables Securitization Facility, dated as
of September 26, 2006, by and among ACG Finance, a
wholly-owned non-Debtor subsidiary of ACG, the Bank of
America, N.A., as administrative agent and certain other
lenders.
As of bankruptcy filing, the aggregate outstanding amounts of
ACG's receivables include:
* $24,165,914, as owned by ACG Finance, which were purchased
from ACG. ACG Finance has agreed to sell to the ACG
Holdings, Inc., and to cause the Receivables Lenders to
release, all right, title and interest in the Receivables
Portfolio for $20,445,417, plus related expenses, pursuant
to the terms of a purchase agreement.
* $20,400,000 under a non-Debtor trade receivables facility,
secured by a first priority lien on substantially all of the
assets of non-Debtor American Color Graphics Finance, LLC.;
* $36,080,000 of the principal balance due and owing under the
First Lien Credit Agreement; and
* $18,891,405 in outstanding amount of undrawn letters of
credit issued under the First Lien Credit Agreement.
As adequate protection, the Bridge Facility Agent and the Secured
Noteholders Trustee will receive:
-- valid, perfected and enforceable security interest
effective July 16, 2008, as permitted by Section 364(c) of
the Bankruptcy Code, which will secure payment of the
Bridge Facility and Secured Note Adequate Protection
obligations;
-- an administrative claim under Sections 503(b)(1), 507(a)
and 5047(b) of the Bankruptcy Code for the amount afforded
with Adequate Protection, subject to the carve-out expenses
and superpriority claims granted to the debtor-in-
possession credit facility lenders, and superior to the
secured noteholders' superpriority claims; and
-- payment of all pre- and postpetition legal fees and
expenses, to prevent the Cash Collateral from potential
depreciation and deterioration.
With respect to the DIP Collateral, the Prepetition Secured
Parties will (i) take no action to foreclose upon or recover, or
exercise remedies, with respect to the Adequate Protection
Obligations, or against any DIP collateral, (ii) be deemed to
have consented to any release of the DIP collateral and not take
any action to perfect security interests in it, (iii) not seek to
terminate the Cash Collateral or obtain additional Adequate
Protection or litigate the priming of the Bridge Facility Agent
and the Secured Noteholders' Trustee's liens.
Judge Christopher Stonchi will convene a final hearing on August
13, 2008, at 11:00 a.m., to consider the ACG Debtors' request.
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors they listed estimated assets $100 million to
$500 million and estimated debts of $500 million to $1 billion.
AMERICAN COLOR: Obtains Interim Order to Use 135MM DIP Financing
----------------------------------------------------------------
On an interim basis, Judge Christopher S. Sontchi of the U.S.
Bankruptcy Court for the District of Delaware, authorized American
Color Graphics, Inc., as borrower, to enter into a $135,000,000
postpetition financing facility on a superpriority administrative
claim and first priority priming lien basis, dated as of July 15,
2008, with ACG Holdings, Inc., as guarantor, Bank of America,
N.A., as administrative agent and L/C Issuer and a consortium of
other lenders.
The DIP Facility is comprised of:
-- $135,000,000 revolving loan facility; and
-- up to $20,000,000 of sublimits for standby letters of
credit to be issued the DIP Agent and the L/C Issuer.
Debtors Need Cash
According to Patrick W. Kellick, chief financial officer of ACG
Holdings, Inc., the Debtors need access to DIP financing:
* to ensure that the Prepackaged Plan remains on course and
that the Debtors' operations are not negatively effected;
* for the continuous operation of their business in an
orderly manner, maintaining business relationships with
vendors, suppliers, and customers, paying employees;
* to satisfy other working capital and operational needs
which are necessary to minimize disruption to the Debtors'
business operations; and
* to ensure that they can consummate their restructuring
and merger plans.
The Search for Financing
The Debtors retained Lehman Brothers, Inc., as their financial
advisor. For the Debtors to acquire credit and financing
facilities, Lehman assisted in conducting market testing,
considering credit markets and reviewing certain strategic
options. The Debtors, among other things, sought to (i) sell
their business, (ii) exchange some or all of the ACG Second Lien
Notes for other securities, (iii) obtain waivers or amendments
from the requisite lenders under the First Lien Credit Facility,
the A/R Facility and the ACG Second Lien Notes, (iv) incur
additional indebtedness above currently permitted levels, and (v)
refinance the First Lien Credit Facility and the A/R Facility.
The Debtors had to either (i) search for a third party to
refinance the First Lien Credit Facility and A/R Facility and
provide the incremental financing required during their Chapter
11 cases; or (ii) risk a potentially distracting and costly
priming and adequate protection dispute that would defeat the
expeditious nature their prepackaged Chapter 11 cases,
Mr. Kellick notes.
Absent 20 financial institutions' interest in providing a
commitment for their potential standalone restructuring, the
Debtors determined that the First Lien Credit Facility Lenders,
were the best and only resource for their DIP Financing.
Terms of DIP Financing
Under the DIP Facility, the ACG Debtors' obligations are secured
by:
(a) a first priority lien on all unencumbered property of the
Debtors and the proceeds of avoidance actions;
(b) a second priority lien on all assets of the Debtors
subject to valid, perfected and unavoidable liens or to
valid and unavoidable liens in existence as of, and
perfected subsequent to, the Petition Date, as permitted
by Section 546(b) of the Bankruptcy Code; and
(c) a first priority priming lien on all of the assets of the
Debtors that are subject to existing liens.
A full-text copy of the DIP Agreement is available for free at:
http://bankrupt.com/misc/ACG_DIPFinancing.pdf.
The significant terms of the proposed DIP Credit Agreement are:
Borrower: American Color Graphics, Inc.
Administrative
Agent: Bank of America, N.A.
Guarantor: ACG Holdings, Inc.
Bookrunner and
Arranger: Bank of America Securities LLC
DIP Facility: * DIP Revolving Facility: $135,000,000,
subject to Borrowing Base availability.
* DIP L/C Sub-Facility: Of the DIP
Revolving Facility, up to $20,000,000
may be used for letters of credit.
Availability: Up to $135,000,000 may be
drawn under the DIP Facility through the
Maturity Date.
Purpose: (i) Support ACG's working capital and
other corporate purposes, (ii) pay the
DIP Agent's fees and expenses and the
DIP Lenders their adequate protection
payments, (iii) refinance all letters
of credit outstanding under the First
Lien Credit Facility; (iv) refinance
all hedge agreements entered into with
any First Lien Credit Facility
Lenders, and (vi) pay certain
prepetition claims in the ordinary
course of business.
Maturity Date: The earliest of:
(i) October 15, 2008;
(ii) the effective date of the ACG's
Prepackaged Plan of Reorganization;
and
(iii) the acceleration of the loans and
the termination of the DIP Facility.
Interest Rate: Base Rate, subject to a 6% floor, plus 5%,
payable in arrears on the second day of
each month.
Fees: The Borrower has agreed to these fees:
* Commitment Fee: equal to 0.50% per annum
on the unused amount of the DIP Loan
Commitments.
* Letter of Credit Fees: equal to 7% per
annum on the outstanding face amount of
each standby Letter of Credit payable
monthly.
* DIP Facility Fee: equal to $800,000.
* DIP Arrangement Fee: equal to $200,000.
Carve-Out: The liens and claims granted under the DIP
Orders are subject to payment of the
"carve-out expenses", which means:
(a) amounts payable to the U.S. Trustee
and any fees payable to the Clerk of
the Bankruptcy Court; and
(b) the unpaid fees and expenses, up
to $2,750,000, of the Debtors' and
Creditors Committee's professionals;
and
(c) in the event of a conversion of
the Chapter 11 cases to Chapter 7, the
fees and expenses, up to $50,000, of a
Chapter 7 trustee and any professional
retained by the trustee.
Events of Default: The events of default include:
* non-payment of principal and interest;
* misrepresentations;
* default under the negative covenants;
* unremedied default;
* cross-default to certain other loans;
* case dismissal or Chapter 7 conversion;
* subordination of DIP Lenders' liens;
* use of Cash Collateral is terminated;
* unauthorized payment of prepetition
debts; and
* change of control, etc.
A full-text copy of the Interim DIP Financing Order is available
for free at http://bankrupt.com/misc/ACGDIP_InterimORD.pdf.
Upon the Court's final approval of the DIP Facility, the DIP
Lenders will be granted a lien on the proceeds of Avoidance
Actions. As primary beneficiaries of avoidance actions, the
general unsecured creditors will be paid in full pursuant to the
ACG's Prepackaged Plan. The only impaired Class of claims
entitled to vote on the prepackaged plan voted overwhelmingly to
accept the plan, which contains a waiver of all Avoidance
Actions.
A final hearing to consider the ACG Debtors' request is slated on
August 13, 2008, at 11:00 a.m.
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors they listed estimated assets $100 million to
$500 million and estimated debts of $500 million to $1 billion.
AMERICAN COLOR: Wants Kirkland & Ellis as Bankruptcy Lead Counsel
-----------------------------------------------------------------
ACG Holdings, Inc. and its debtor-affiliates seek from the U.S.
Bankruptcy Court for the District of Delaware the authority to
employ Kirkland & Ellis LLP, as their lead attorneys, nunc pro
tunc to July 15, 2008, pursuant to an engagement letter dated
August 21, 2007.
Kirkland & Ellis has represented the ACG Debtors with respect to
restructuring matters since August 21, 2007. Thus, Kirkland &
Ellis is familiar with the ACG Debtors' businesses and many of the
potential legal issues that may arise in the context of their
bankruptcy proceedings. The ACG Debtors believe that Kirkland &
Ellis is both well-qualified and uniquely able to represent them.
As the ACG Debtors' lead counsel, Kirkland & Ellis will, among
other things:
(a) advise the ACG Debtors with respect to their powers and
duties in the continued management and operation of their
business and properties;
(b) negotiate and prepare, on behalf of the Debtors -- and
obtain approval of -- a disclosure statement and
confirmation of a Chapter 11 plan;
(c) represent the ACG Debtors in connection with obtaining
postpetition financing; and, advise them regarding tax
matters;
(d) attend meetings and negotiate with representatives of the
creditors and other parties-in-interest;
(e) advise the ACG Debtors in connection with any potential
sale of assets; and
(f) appear before the Court -- and any appellate courts -- to
represent the interests of the Debtors' estates and take
all necessary actions to protect and preserve those
interests;
The ACG Debtors also agreed to pay Kirkland & Ellis in accordance
with the firm's customary hourly rates:
Professional Hourly Rates
------------ ------------
Partners $500 to $975
Of Counsel $380 to $870
Associates $275 to $595
Paraprofessionals $120 to $260
The firm's Paul M. Basta and Ray C. Schrock are the professionals
tasked to have primary responsibility for providing services to
the ACG Debtors.
Mr. Kellick informed the Court that as of bankruptcy filing, the
ACG Debtors have advanced Kirkland & Ellis its retainer on
several occasions, totaling $763,597.
Paul M. Basta, a partner at Kirkland & Ellis, assured the Court
that his firm is a "disinterested person", as defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors they listed estimated assets $100 million to
$500 million and estimated debts of $500 million to $1 billion.
AMERICAN LAFRANCE: Court Declares Ch. 11 Plan Effective July 23
---------------------------------------------------------------
American LaFrance, LLC, has successfully emerged from Chapter 11
after a little over five months in bankruptcy. The effective
date of the Debtor's Third Amended Plan of Reorganization
occurred on July 23, 2008, Christopher A. Ward, Esq., at
Polsinelli Shalton Flanigan Suelthaus PC, in Wilmington,
Delaware, stated in a notice to the Court.
The Court confirmed the Debtor's Plan May 23, 2008.
Pursuant to the occurrence of the Plan Effective Date, the bar
date for filing administrative claims is September 8, 2008.
Damages arising from the Debtor's rejection of an executory
contract will be treated as a general unsecured claim. Any party
asserting a claim for damages must file a request to the Court no
later than September 8, 2008.
Any professional seeking compensation or reimbursement of
expenses pursuant to Sections 327, 328, 330, 331,503(b) and 1103
of the Bankruptcy Code must also file final fee applications no
later than September 8, 2008. Objections to any filed final fee
applications should be served no later than October 1, 2008. The
Court will consider the final fee applications in a hearing
scheduled for October 27, 2008. Any professional fees and
reimbursements or expenses incurred by the Debtor subsequent to
the Effective Date may be paid without application to the Court.
ALF's Operational Changes
In a separate press statement dated July 11, 2008, American
LaFrance announced a major re-organization of its business.
The re-organization includes the creation of a new Fire Business
Unit headed by Jim Eshleman, newly promoted to Vice President.
Under Eshleman, American LaFrance fire truck production will be
consolidated in the company's existing plants in Ephrata,
Pennsylvania and Hamburg, New York. In addition to several
pending new vocational business ventures, vocational trucks will
continue to be produced for existing customers in the company's
Summerville, South Carolina facility.
The company also announced permanent and temporary reductions of
employment in all its facilities to secure its imminent exit from
Chapter 11.
American LaFrance is a leading manufacturer of fire, rescue and
vocational vehicles. Through its predecessor entities, the
Company is one of the oldest fire apparatus manufacturers in the
United States, dating back to its founding in 1832. The Company
operates four manufacturing facilities with over 200 dealership
locations throughout North America.
Patriarch Partners' Statement
"American LaFrance management is currently completing
documentation for exciting new business ventures," Lynn Tilton,
chief executive of Patriarch Partners Agency Services, LLC,
American LaFrance's parent company, stated in a press release.
"These initiatives are instrumental to the decision to
rationalize facilities and processes for anticipated ramp of new
lines of production. The Company also plans to significantly
broaden its focus beyond domestic borders into the global
market," Ms. Tilton added.
Headquartered in Summerville, South Carolina, American LaFrance
LLC -- http://www.americanlafrance.com/-- is one of the
oldest fire apparatus manufacturers and one of the top six
suppliers of emergency vehicles in North America. The company
filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del.
Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers,
Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead
Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey,
Branzburg & Ellers LLP, are the Debtor's proposed local counsel.
Pepper Hamilton, LLP is the proposed counsel of the Official
Committee of Unsecured Creditors. In its schedules of assets and
debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in
total assets and $89,065,038 in total debts.
AMR CORP: S&P Cuts Ratings on Neg. Cash Flow; Outlook Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on AMR
Corp. (B-/Negative/B-3) and subsidiary American Airlines Inc. (B-
/Negative/--), including lowering the long-term corporate credit
ratings on both entities to 'B-' from 'B', and removed the ratings
from CreditWatch, where they had been placed with negative
implications May 22, 2008. The outlook is negative. S&P affirmed
the 'B-3' short-term rating on AMR and removed the rating from
CreditWatch.
The downgrade reflects expected heavy losses and negative
operating cash flow caused by record high fuel prices. S&P also
lowered ratings on most enhanced equipment trust certificates of
American, in some cases by more than one notch. Ratings on
airport revenue bonds that we consider equivalent to unsecured
debt were not lowered, as they are already rated 'CCC+', which is
the rating to which S&P lowered unsecured debt. All ratings were
removed from CreditWatch, where they were placed with negative
implications on May 22, 2008, as part of an industrywide review.
"We expect AMR to report a heavy loss this year, which we estimate
could exceed $2 billion [before charges for asset writedowns and
gains on sale of assets], because of very high and volatile,
albeit recently reduced, fuel prices," said Standard & Poor's
credit analyst Philip Baggaley. AMR reported a net loss of
$1.45 billion (including $55 million of employee severance costs
and a $1.1 billion charge to write down the value of its MD80 and
Embraer RJ-135 fleets) in the second quarter of 2008. American is
accelerating fleet modernization to replace fuel-thirsty MD80s
with new B737-800s, but this will take a long time, as its fleet
includes more than 300 MD80s.
Ratings on Fort Worth, Texas-based AMR and subsidiary American
Airlines reflect participation in the competitive, cyclical, and
capital-intensive airline industry; a heavy debt and retiree
obligation burden; and substantial capital spending needs to
modernize the airline's fleet. Satisfactory near-term liquidity,
with $5.1 billion of unrestricted cash and short-term investments
at June 30, 2008, and substantial market positions in the U.S.
domestic, trans-Atlantic, and Latin American markets (though a
minimal presence in the Pacific) are positives.
The 'B-' corporate credit rating is predicated on AMR incurring a
heavy loss in 2008, which could exceed $2 billion, and a
substantial but reduced loss next year. S&P also anticipates that
AMR will experience a reduction in its unrestricted cash and
short-term investments from the $5.1 billion at June 30, 2008.
The negative
outlook reflects our concern that a potential continuation of
heavy losses could erode liquidity. If S&P expects that losses
will continue at the current rate or it projects that unrestricted
cash will decline below $3 billion in 2009, S&P would likely lower
the rating.
ANSONIA CDO 2006-1: Moody's Cuts Rating on Class H Notes to Ba2
---------------------------------------------------------------
Moody's Investors Service downgraded five classes of Notes issued
by Ansonia CDO 2006-1 Ltd. as:
-- Class D, $16,134,000, Fixed Rate Notes Due 2046, downgrade to
A3 from A2
-- Class E, $18,151,000, Fixed Rate Notes Due 2046, downgrade to
Baa1 from A3
-- Class F, $24,201,000, Fixed Rate Notes Due 2046, downgrade to
Baa3 from Baa1
-- Class G, $30,252,000, Fixed Rate Notes Due 2046, downgrade to
Ba1 from Baa2
-- Class H, $26,218,000, Fixed Rate Deferrable Interest Notes
Due 2046, downgrade to Ba2 from Baa3
Moody's is downgrading the Notes, which were placed on review for
possible downgrade on May 16, 2008, due to realized losses and
deteriorating pool performance.
In addition, on July 17, 2008 Moody's downgraded the senior long-
term rating of the swap counterparty, Merrill Lynch Capital
Services, Inc., to A2 from A1 and affirmed its short-term rating
at P-1. This triggered a Collateral Rating Downgrade Event.
Moody's anticipates the swap counterparty will cure the Collateral
Rating Downgrade Event as specified in the related legal
documentation. As such, there are no ratings ramifications from
the swap counterparty downgrade applied to this rating action.
As of the June 30, 2008 distribution date, the transaction's
aggregate collateral balance has decreased to $799.2 million from
$806.7 million at issuance, due to $7.6 million in losses from
four CMBS transactions (CSFB 2003-C5 Class P, CSFB 2004-C3 Class
P, JPMCC 2004-C1 Class NR, LB-UBS 2003-C7 Class T, and MLMT 2004-
MKB1 Class Q). The Notes are currently collateralized by 121
classes of CMBS securities from 33 separate transactions (94.0% of
the pool balance), seven REIT unsecured debt securities (5.0%),
and two classes from one CRE CDO Re-Remic transaction (1.0%).
Since issuance, among the Moody's rated securities (38.9%), there
have been no upgrades and two downgrades to CMBS securities; there
have been no upgrades and one downgrade to REIT unsecured debt
securities; and there have been no rating changes to CRE CDO
securities. Credit estimates were performed on 52 non-Moody's
rated CMBS classes (61.1%).
Moody's uses a weighted average rating factor (WARF) as an overall
indicator of the credit quality of a CDO transaction. Based on
Moody's analysis, the current WARF is 4,538 compared to 4,254 at
issuance. Moody's reviewed the ratings or performed credit
estimates on all the collateral supporting the Notes. The
distribution is as follows: A1-A3 (0.0% compared to 0.1% at
issuance), Baa1-Baa3 (10.1% compared to 9.6% at issuance), Ba1-Ba3
(19.3% compared to 18.4% at issuance), B1-B3 (26.7% compared to
30.2% at issuance), and Caa1-NR (43.9% compared to 41.7% at
issuance).
The CMBS securities are from pools securitized between 1998 and
2006. The two largest vintage exposures are 2004 (35.9%) and 2005
(23.2%). The five largest CMBS exposures are GSMS 2006-GG6
(10.3%), CSFB 2005-C6 (9.7%), ML-CFC 2006-3 (6.8%), CSFB 2004-C3
(6.7%), and WBCMT 2005-C19 (6.4%).
ARCAP 2004-RR3: S&P Lowers Ratings on 13 Classes; Puts Neg. Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 13
classes from ARCap 2004-RR3 Resecuritization Inc. and removed them
from CreditWatch with negative implications, where they were
placed on May 28, 2008. Concurrently, S&P affirmed its 'AAA'
rating on class X.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for CMBS securities, as detailed in "Recovery Rates For CMBS
Collateral In Resecuritization Transactions," published May 28,
2008.
According to the trustee report dated July 21, 2008, the
transaction's current assets included 54 classes ($467.2 million,
100%) of commercial mortgage-backed securities pass-through
certificates from 18 distinct transactions issued between 1998 and
2004. Only Chase Manhattan Bank-First Union National Bank
Commercial Mortgage Trust's series 1999-1 ($108.1 million, 23%)
represents an asset concentration of 10% or more of total assets.
The aggregate principal balance of the assets and liabilities
totaled $467.2 million, down from $545.4 million at issuance. Of
the $78.2 million reduction in principal balance, $12.3 million
was due to principal losses realized on first-loss CMBS assets,
which currently represent $10 million (2%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'BB-'
rated obligations. Standard & Poor's rates $219.1 million (47%)
of the assets. S&P reanalyzed its outstanding credit estimates
for the remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
ARCap 2004-RR3 Resecuritization Inc.
CMBS pass-through certificates
Rating
------
Class To From
----- -- ----
A-2 AA- AAA/Watch Neg
B A- AA/Watch Neg
C BBB A/Watch Neg
D BBB A-/Watch Neg
E BBB- BBB+/Watch Neg
F BB+ BBB/Watch Neg
G BB+ BBB-/Watch Neg
H BB- BB+/Watch Neg
J B+ BB/Watch Neg
K B BB-/Watch Neg
L B- B+/Watch Neg
M CCC B/Watch Neg
N CCC- B-/Watch Neg
Rating Affirmed
ARCap 2004-RR3 Resecuritization Inc.
CMBS pass-through certificates
Class Rating
----- ------
X AAA
ARCHIMEDES FUNDING: Fitch Junks Ratings on Three Classes of Notes
-----------------------------------------------------------------
Fitch Ratings has upgraded two classes and downgraded three
classes of notes issued by Archimedes Funding III, Ltd. These
rating actions are effective immediately.
-- $2,580,672 class C-1 notes upgraded to 'AAA' from 'AA';
-- $43,871,422 class C-2 notes upgraded to 'AAA' from 'AA';
-- $4,786,408 class D-1 notes downgraded to 'CCC/DR3' from
'B-/DR2';
-- $22,017,479 class D-2 notes downgraded to 'CCC/DR3' from
'B-/DR2';
-- $16,273,788 class D-3 notes downgraded to 'CCC/DR4' from
'B-/DR3'.
Archimedes III is a static cash flow transaction collateralized by
a portfolio of high yield bonds and leveraged loans. The
transaction closed on Nov. 2, 1999 and is managed by West Gate
Horizons Advisors, LLC. Archimedes III exited its reinvestment
period in November 2004. As of the June 20, 2008 trustee report,
approximately 87.4% of the portfolio is comprised of senior
secured loans, 7.7% is senior secured debt, and 4.9% is senior
unsecured debt. Currently, approximately 9.1% of the portfolio is
on Rating Watch Negative and 15.5% has a Negative Outlook.
The upgrades to the classes C-1 and C-2 notes, collectively the
class C notes, are a result of the class B notes paying in full in
August 2007. Since then, almost 50% of the class C notes have
been redeemed, significantly decreasing their remaining risk
despite an increase in defaults within the portfolio. As of the
June 20, 2008 trustee report, defaulted securities comprised
approximately $11.5 million, or 12.7%, of the remaining portfolio,
compared to approximately $7.4 million, or 2.9% of the portfolio
at the last review in September 2006. During that same period,
the class C overcollateralization test has increased to 160.6%
from 117.3%. Even though principal proceeds are projected to
continue to be used to pay part of class D current interest, the
remaining performing portfolio provides enough credit enhancement
to support a 'AAA' rating for class C notes. On the last payment
date in May 2008, $426,768 of principal proceeds was used to pay
class D interest.
The classes D-1, D-2 and D-3 notes, collectively the class D
notes, are downgraded because they are not expected to receive
full principal repayment by maturity. The class D OC test has
decreased to 83.3% as of the June 20, 2008 trustee report, from
97.5% at last review. Fitch believes the class D notes will
continue to receive timely interest because the C OC test is not
expected to fail. However, this will be at the detriment to their
return of principal, as principal proceeds will be used to cover
any interest proceed shortfall. Fitch expects the ultimate
recovery of the classes D-1 and D-2 notes to be in the 'DR3' range
and the D-3 notes to be in the 'DR4' range based on the risk
profile of the current portfolio and the remaining balances of the
class D notes. The D-3 notes have a lower expected recovery
despite receiving distributions pro-rata with the D-1 and D-2
notes because of its lower coupon, resulting in lower total future
cash flows relative to its remaining outstanding principal
balance.
The ratings of the class C and D 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.
Fitch reviewed this transaction in accordance with its updated
criteria released on April 30, 2008 for Corporate CDOs. At that
time, Fitch noted it would be reviewing its ratings accordingly to
establish consistency for existing and new transactions. As part
of this review, Fitch makes standard adjustments for any names on
Rating Watch Negative or Outlook Negative, reducing such ratings
for default analysis purposes by two and one notch, respectively.
Included in this review, Fitch conducted cash flow modeling to
measure the breakeven default rates relative to the cumulative
default rates associated with the current ratings of the note
liabilities. The cash flow model incorporates the transaction's
structural features and updated default timing and interest rate
scenarios.
ARGUS CORPORATION: CTO Cues TSX to Delist Securities on August 22
-----------------------------------------------------------------
Toronto Stock Exchange will delist the securities of Argus
Corporation Limited at the close of market on Aug. 22, 2008, for
failure to meet the continued listing requirements of TSX.
Trading of the securities of the company is halted due to the
imposition of a Cease Trade Order by the Ontario Securities
Commission. In addition, the securities have been suspended from
trading by TSX effective immediately.
Pursuant to an Order issued on July 21, 2008, by the Ontario
Superior Court of Justice, Commercial List, Argus Corporation, by
its receiver and manager, interim receiver and monitor, RSM
Richter Inc., has been authorized by the Court to consent to the
delisting of the company's Class A Preference Shares Series $2.50
(Symbol: AR.PR.A), Class A Preference Shares Series $2.60 (Symbol:
AR.PR.D) and Cumulative Class B Preference Shares Series 1962
(Symbol: AR.PR.B).
Argus Corporation Limited (TSX: AR) based in Toronto, Ontario, is
an investment and holding company founded in 1945 by its President
E. P. Taylor with minority partners Colonel W. Eric Phillips and
Wallace McCutcheon and other investors.
The Ontario Superior Court of Justice on April 25, 2005, issued a
receivership order at the behest of Ravelston Corporation Limited
and Ravelston Management Inc., Argus Corporation Limited, 509643
N.B. Inc., 509644 N.B. Inc., 509645 N.B. Inc., 509646 N.B. Inc.,
and 509647 N.B. Inc. RSM Richter Inc. was appointed as receiver
effective April 20, 2005. At same date, the Court issued a
Companies' Creditors Arrangement Act (Canada) order, which took
effect on April 20, 2005.
The CCAA stay was extended several times. In mid-July, 2008, the
Court further extended the Debtors' CCAA stay to Nov. 30, 2008.
Documents on the CCAA proceeding can be obtained for free at
http://www.rsmrichter.com/Restructuring/Ravelston.aspx
ATA AIRLINES: Taps Paradigm Tax as Property Tax Consultant
----------------------------------------------------------
ATA Airlines Inc., seeks the U.S. Bankruptcy Court for the
Southern District of Indiana's approval to employ Paradigm
Tax Group, LLC as its property tax consultant.
ATA Airlines selected the firm because of its experience in
performing real and personal property tax review, and presenting
tax appeal cases to assessors and assessment boards.
Paradigm is tasked to review ATA Airlines' tax assessment and
liabilities on real and personal properties owned and leased by
the airlines in the United States. If needed, the firm will also
negotiate with the assessors and agencies, and file appeals to
reduce the airlines' tax liabilities.
Paradigm will be paid 35% of the property tax cash savings
resulting from ATA Airlines' actual payment of a reduced
liability or receipt of a cash refund. No fee will be due
unless actual cash savings have been realized by the airlines.
"Should the assessment be phased-in or transitional, the fee will
be based on a percentage of the aggregate tax cash savings for
the phased-in or transitional duration, which would equal the
first year tax cash savings if there was no phase-in," says Terry
Hall, Esq., at Baker & Daniels LLP, in Indianapolis, Indiana.
"Should services rendered by Paradigm result in any prior years'
tax cash savings or any penalty or interest cash savings, fees
for those prior years' cash savings will be based on this same
structure," Ms. Hall adds.
Paradigm has not been paid a retainer in connection with the
proposed employment.
Richard Archer, managing consultant of Paradigm Tax, assures the
Court that his firm does not hold or represent interest adverse
to ATA Airlines and its estate, and is a "disinterested person,"
as defined in Section 101(14) of the Bankruptcy Code, and as
modified by Section 1107(b).
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News, Issue No. 87; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Taps Ryan Inc. as Special Excise Tax Consultant
-------------------------------------------------------------
ATA Airlines Inc., seeks the U.S. Bankruptcy Court for the
Southern District of Indiana's approval to employ Ryan Inc., as
its special excise tax consultant.
Terry Hall, Esq., at Baker & Daniels LLP, in Indianapolis,
Indiana, says ATA selected Ryan Inc., because of its extensive
experience with federal excise fuel and general excise taxes.
The firm is also familiar with ATA Airlines' federal and state
tax situation in light of its previous employment with the
airlines, she adds.
In connection with the prepetition employment, which commenced in
September 2004, as of the Petition Date, Ryan Inc. was owed
$76,779 for services rendered. However, Ryan Inc., withdrew its
claim in consideration for the proposed employment of the firm,
according to Ms. Hall.
As special excise tax consultant, Ryan Inc., will assist ATA
Airlines in minimizing its federal excise fuel taxes as well as
its general excise taxes incurred in Hawaii. The firm is tasked
to review those taxes for open statutory periods for each tax
paid through April 3, 2008, and obtain refunds from the taxing
authorities.
In case Ryan Inc., obtains any cash refunds including interest
and penalties, it will be paid 40% of the first $1,000,000, of
cash tax refunds received by ATA Airlines. The firm will also
get 35% of the cash tax refunds that exceed $1,000,000, as
actually received by the airlines from taxing authorities or
vendors.
Ryan Inc., is allowed to seek legal services in connection with
its employment, however, it will shoulder the expenses incurred
for those services. The firm has not received a retainer from
ATA Airlines.
James Kranjc, principal of Ryan Inc., assures the Court that his
firm does not have any interest adverse to ATA Airlines and its
estate, and is a "disinterested person," as defined in Section
101(14) of the Bankruptcy Code, and as modified by Section
1107(b).
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News, Issue No. 87; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: May Employ Starman Bros. as Auctioneer
----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
granted ATA Airlines Inc. permission to employ Starman Bros.
Auctions Inc. to market and auction its remaining aircraft-related
equipment and other assets.
As reported in the Troubled Company Reporter on July 17, 2008, ATA
Airlines selected Starman because of the firm's extensive
experience in marketing and liquidating aviation-related assets.
Starman previously handled the liquidation of those types of
asset for other airlines, including Midway and Northwest
Airlines.
If the proposed employment is approved, Starman Bros., would be
assigned to coordinate an auction in Indianapolis, Dallas and
Hawaii.
In exchange for its services, Starman Bros., will get a
commission equal to 5% of the gross sale proceeds in excess of
$5,000,000, and 4% of the first $5,000,000 in gross sale
proceeds. The firm is also entitled to reimbursement of up to
$30,000, for the cost it may incur in advertising the auctions
and is permitted to charge buyers a 5% premium on the gross
proceeds of any sale.
Steve Starman, president of Starman Bros., assured the Court that
his firm does not hold or represent any interest adverse to ATA
Airlines' estate.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News, Issue No. 87; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
AUTOMOTIVE PROFESSIONALS: Bids for Run-Off of Service Pacts Sought
------------------------------------------------------------------
Frances Gecker, the appointed Chapter 11 Trustee for Automotive
Professionals Inc., is seeking proposals from insurance carriers
to run-off approximately 74,500 extended warranty vehicle service
contracts.
Insurance carrier must be rated (A-) by A.M. Best and Co. in order
to qualify. Completed bids must be delivered by Aug. 18, 2008, at
4:00 p.m. A complete and acceptable run-off and servicing deal is
subject to court approval.
Bid packages can be obtained from Steven Victor of Development
Specialist, Inc., at 70 W. Madison, Suite 2300 in Chicago,
Illinois.
About Automotive Professionals
headquartered in Schaumburg, Illinois, Automotive Professionals
Inc. -- http://www.apiprotection.com/-- administers vehicle
service contract programs. The company filed for Chapter 11
protection on April 13, 2007 (Bankr. N.D. Ill. Case No.07-06720).
Erich S. Buck, Esq., Kenneth G. Kubes, Esq., and Stephen, T. Bobo,
Esq., at Reed Smith, LLP, represent the Debtor. The U.S. Trustee
for Region 11 appointed five creditors to serve on an Official
Committee of Unsecured Creditors. Arnstein & lehr LLP represents
the Committee in this case. When the Debtor filed for protection
against their creditors, it listed total assets of $62,034,259 and
total debts of $10,735,949.
BANC OF AMERICA: Moody's Cuts Ratings on 71 Tranches Issued
-----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 71
tranches from 10 Alt-A transactions issued by Banc of America.
Three tranches were placed on review for possible downgrade.
Additionally, 9 senior tranches were confirmed at Aaa. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, Alt-A mortgage loans.
Ratings were downgraded, in general, based on higher than
anticipated rates of delinquency, foreclosure, and REO in the
underlying collateral relative to credit enhancement levels.
Certain tranches were confirmed due to additional enhancement
provided by structural features. The actions described are a
result of Moody's on-going review process.
Complete rating actions are:
Issuer: Banc of America Alternative Loan Trust, Mortgage Pass-
Through Certificates, Series 2005-8
-- Cl. B-2, Downgraded to Baa1 from A2
-- Cl. B-3, Downgraded to B1 from Baa2
Issuer: Banc of America Funding 2006-7 Trust, Mortgage Pass-
Through Certificates, Series 2006-7
-- Cl. T2-A-1, Downgraded to A2 from Aaa
-- Cl. T2-A-2, Downgraded to A2 from Aaa
-- Cl. T2-A-3, Downgraded to Baa1 from Aaa
-- Cl. T2-A-4, Downgraded to Baa1 from Aaa
-- Cl. T2-A-5, Downgraded to Aa2 from Aaa
-- Cl. T2-A-6, Downgraded to Ba1 from Aaa
-- Cl. T2-A-7, Confirmed at Aaa
-- Cl. T2-A-8, Downgraded to Baa3 from Aaa
-- Cl. T2-A-A, Downgraded to Ba2 from Aa1
-- Cl. T2-A-B, Downgraded to Ba2 from Aaa
-- Cl. T2-M-1, Placed on Review for Possible Downgrade,
currently B1
Issuer: Banc of America Funding 2006-H Trust
-- Cl. 5-A-1, Downgraded to Baa1 from Aaa
-- Cl. 5-A-2, Downgraded to B1 from Aaa
-- Cl. 6-A-1, Downgraded to Baa1 from Aaa
-- Cl. 6-A-2, Downgraded to B1 from Aaa
-- Cl. M-1, Placed on Review for Possible Downgrade, currently
B2
Issuer: Banc of America Funding 2006--8T2 Trust
-- Cl. A-1, Downgraded to Aa1 from Aaa
-- Cl. A-2, Downgraded to Aa1 from Aaa
-- Cl. A-3, Downgraded to A1 from Aaa
-- Cl. A-4, Downgraded to A2 from Aaa
-- Cl. A-5, Downgraded to Ba1 from Aa1
-- Cl. A-6, Downgraded to A2 from Aaa
-- Cl. A-7, Downgraded to Ba1 from Aa1
-- Cl. A-8, Downgraded to Baa2 from Aaa
-- Cl. A-9, Downgraded to Baa1 from Aaa
-- Cl. A-10, Downgraded to A2 from Aaa
-- Cl. A-11, Downgraded to Baa3 from Aa1
-- Cl. M-1, Placed on Review for Possible Downgrade, currently
B2
Issuer: Banc of America Funding 2007-1 Trust, Mortgage Pass-
Through Certificates, Series 2007-1
-- Cl. T-A-1A, Downgraded to A3 from Aaa
-- Cl. T-A-1B, Downgraded to A3 from Aaa
-- Cl. T-A-2, Downgraded to Baa2 from Aaa
-- Cl. T-A-3A, Downgraded to Ba1 from Aaa
-- Cl. T-A-3B, Downgraded to Ba1 from Aaa
-- Cl. T-A-4, Downgraded to Ba2 from Aaa
-- Cl. T-A-5, Downgraded to Ba1 from Aaa
-- Cl. T-A-6, Downgraded to B3 from Aa1
-- Cl. T-A-7, Downgraded to Ba3 from Aaa
-- Cl. T-A-8, Downgraded to Ba2 from Aaa
-- Cl. T-A-9, Downgraded to Ba1 from Aaa
-- Cl. T-A-10, Downgraded to Ba2 from Aaa
-- Cl. T-A-11, Downgraded to B3 from Aa1
-- Cl. T-M-1, Downgraded to Caa2 from B3
-- Cl. T-M-2, Downgraded to Ca from B3
Issuer: Banc of America Funding 2007-3 Trust
-- Cl. T-A-1A, Confirmed at Aaa
-- Cl. T-A-1B, Downgraded to A1 from Aaa
-- Cl. T-A-2, Downgraded to A3 from Aaa
-- Cl. T-A-3A, Downgraded to Baa2 from Aaa
-- Cl. T-A-3B, Downgraded to Baa2 from Aaa
-- Cl. T-A-4, Downgraded to Baa3 from Aaa
-- Cl. T-A-5, Confirmed at Aaa
-- Cl. T-A-6, Downgraded to Aa1 from Aaa
-- Cl. T-A-7, Downgraded to Ba1 from Aaa
-- Cl. T-A-8, Downgraded to Aa1 from Aaa
Issuer: Banc of America Funding 2007-4 Trust
-- Cl. T-A-1A, Downgraded to Aa3 from Aaa
-- Cl. T-A-1B, Downgraded to Aa3 from Aaa
-- Cl. T-A-2, Downgraded to A2 from Aaa
-- Cl. T-A-3, Downgraded to A3 from Aaa
-- Cl. T-A-4, Downgraded to Baa1 from Aaa
-- Cl. T-A-6, Downgraded to Baa2 from Aaa
-- Cl. T-A-7, Confirmed at Aaa
-- Cl. T-A-P2, Downgraded to Baa2 from Aaa
-- Cl. T-M-1, Downgraded to Ba3 from Baa1
Issuer: Banc of America Funding 2007--2 Trust
-- Cl. T-A-1A, Confirmed at Aaa
-- Cl. T-A-1B, Confirmed at Aaa
-- Cl. T-A-2, Downgraded to Aa3 from Aaa
-- Cl. T-A-3, Confirmed at Aaa
-- Cl. T-A-4, Downgraded to Baa1 from Aaa
-- Cl. T-A-5, Confirmed at Aaa
-- Cl. T-A-6, Downgraded to Baa2 from Aaa
Issuer: Banc of America Funding Corporation, Mortgage Pass-Through
Certificates, Series 2005-E
-- Cl. 7-A-2, Downgraded to Aa3 from Aaa
-- Cl. 8-A-2, Downgraded to Aa3 from Aaa
-- Cl. 9-A-1, Downgraded to Aa2 from Aaa
-- Cl. 9-X, Downgraded to Aa2 from Aaa
-- Cl. DB-2, Downgraded to Caa2 from B3
-- Cl. DB-3, Downgraded to Ca from Caa1
Issuer: Banc of America Funding Corporation, Mortgage Pass-Through
Certificates, Series 2005-F
-- Cl. 2-A-2, Downgraded to A1 from Aa1
-- Cl. 2-X, Confirmed at Aaa
-- Cl. 3-A-2, Downgraded to A1 from Aa1
-- Cl. 4-A-2, Downgraded to A1 from Aaa
-- Cl. 5-A-2, Downgraded to A1 from Aaa
-- Cl. 6-A-2, Downgraded to A1 from Aa1
BIOMETRX INC: Inks Asset Purchase Agreement with Sequiam Corp.
--------------------------------------------------------------
BioMETRX Inc., its wholly owned subsidiary bioMETRX Florida Inc.
and Biometrics Investors, LLC entered on July 8, 2008, into an
Asset Purchase Agreement whereby the company through bioMETRX
Florida Inc. acquired certain assets of Sequiam Corporation from
Biometrics Investors.
Biometrics Investors was Sequiam's senior secured lender.
Biometrics Investors acquired these assets as a result of a
default by Sequiam in its obligations and Biometrics Investors's
subsequent foreclosure of the assets securing said obligations.
The company acquired from Biometrics Investors substantially all
of the physical and intangible assets of certain subsidiaries of
Sequiam.
As consideration for these assets, the company issued to
Biometrics Investors 300 shares of the company's Series A
Convertible Preferred Stock of which 44 are immediately vested and
the balance vests upon the happening of certain events more
specifically described in the Certificate of Designation. Each
share of Preferred Stock converts into shares of the company's
common stock at the rate of 30,900 shares for each share of
Preferred Stock, subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other
similar transactions occurring after the original issue date of
the Preferred Stock.
As a condition to the company acquiring these assets, Biometrics
Investors has converted a Convertible Note issued by the company
to Biometrics Investors in the principal amount of $250,000 into
1,388,889 shares of the company's common stock and 1,388,889
common stock purchase warrants exercisable for a term of five (5)
years at an exercise price of $1.00 per share.
A full-text copy of the Certificate of Designation regarding the
Series A Convertible Preferred Stock is available for free at:
http://researcharchives.com/t/s?3014
A full-text copy of the Asset Purchase Agreement dated as of
July 8, 2008, is available for free at:
http://researcharchives.com/t/s?3015
About BioMETRX Inc.
Headquartered in Jericho, New York, BioMETRX Inc. (OTC BB: BMRX)
-- http://www.biometrx.net/-- through its wholly owned
subsidiaries, designs, develops, engineers and markets biometrics-
based products for the consumer home security, consumer
electronics, medical records and medical products markets.
BioMETRX Inc.'s consolidated balance sheet at March 31, 2008,
showed $1,362,809 in total assets and $4,357,487 in total
liabilities, resulting in a $2,994,678 stockholders' deficit.
Going Concern Doubt
Wolinetz, Lafazan & Company, P.C., in Rockville Centre, New York,
expressed substantial doubt about BioMetrx Inc.'s ability to
continue as a going concern after auditing the company's financial
statements for the year ended Dec. 31, 2007. The auditing frim
reported that the company's operations have generated recurring
losses and cash flow deficiencies for the years ended Dec. 31,
2007, and 2006. In addition, the auditing firm said that as of
Dec. 31, 2007, the company has a significant working capital
deficit and stockholders' deficit.
BOSCOV'S DEPARTMENT: Mirrors Mervyn's Financial Demise, Media Says
------------------------------------------------------------------
Boscov's Department Store, LLC, is reportedly nearing bankruptcy
joining Mervyn's LLC, which in recent days have been trying to
persuade vendors to continue shipping merchandise for the back-to-
school season.
The Deal, citing other reports, says that both Mervyn's and
Boscov's share the same concerns -- halted deliveries and
withdrawn financing. The Deal's Terry Brennan described both
retailers as "throwbacks."
Vicki M. Young of WWD Business relates that, according to sources,
CIT Group Inc.'s trade finance group suspended future orders to
Boscov's but will continue supporting the retailer's back orders.
A Boscov's officer said the company will be closing
underperforming stores but will retain its Binghamton, New York
branch, Jeff Platsky of the Press & Sun Bulletin states. Merry
Harris, Binghamton, New York chief economic development officer,
said that Boscov's is renewing its lease in Binghamton, Press &
Sun Bulletin says.
Regional Stores Are Dying
Customers of regional department stores like Boscov's are leaving
for discount stores and nationwide chains, Press & Sun Bulletin
notes, citing Buxbaum Group retail consultant, Stevan Buxbaum.
Mr. Buxbaum commented that regional department stores are
vanishing, according to Press & Sun Bulletin.
The Deal reports that in the last 20 years, regional chains have
entered into mergers and acquisitions. In 2005, the Federated
Department Stores bought May Department Stores and created Macy's
Inc. The Deal notes that Boscov's bought 10 May stores, but
reportedly has had limited success with them.
Boscov's and Mervyn's are also facing fierce competition from
bigger players like J.C. Penney Co., Target Corp. and Wal-Mart
Stores Inc.
Mervyn's May File for Chapter 11
The Troubled Company Reporter said on July 22, 2008, 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. Mervyn's lender, CIT Group, 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.
About Mervyns LLC
Mervyns LLC -- 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.
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. 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.
About Boscov's Department Store
Reading, Pennsylvania-based Boscov's Department Store, LLC --
http://www.boscovs.com/-- operates about 50 department stores
that anchor malls mainly in Pennsylvania and five other mid-
Atlantic states. It employs about 10,000 workers. Boscov's
increased its store count by 25% with its purchase of about 10
stores from Macy's, Inc. (formerly Federated Department Stores) in
2006. The stores sell men's, women's, and children's apparel,
shoes, and accessories, as well as jewelry, cosmetics, housewares,
appliances, toys, and sporting goods. It also operates an online
store. Boscov's was founded by Solomon Boscov in 1911 and is
owned by the families of Albert Boscov and Edwin Lakin.
CHRYSLER LLC: Arm Halts Lease Operations; To Cut 1,000 Employees
----------------------------------------------------------------
Chrysler LLC's financial arm, Chrysler Financial, will cease
offering vehicle lease alternatives in the U.S. to focus more on
financing vehicle purchases, various reports say.
According to the reports, the unit will stop offering leases
starting August 1. Chrysler's decision stems from trouble
taunting its unit's lease business, particularly in the borrowing
and selling end, WSJ adds.
WSJ relates that Chrysler Financial has been trying to persuade
more than 20 banks to renew a $30 billion credit facility but was
unable to do so because of the jittery state of potential lenders
and Chrysler's own uncertain financial situation.
WSJ relates that for years, auto makers have offered leases as a
way of enticing consumers into getting new vehicles. Monthly
payments for leasing customers is lower than taking out loans to
buy cars outright, WSJ adds.
Leases, according to WSJ, poses a big risk for finance units such
as Chrysler Financial. These operations need to borrow billions
of dollars, because they buy and own the vehicles to be leased,
WSJ indicates.
Job Cut
WSJ, citing a memo sent to employees, states that Chrysler LLC is
planning to reduce 1,000 salaried jobs by September 30 in an
effort to cut costs amid a deep slump in U.S. auto sales.
HR head Nancy Rae, WSJ says, an incremental manpower reduction
will be required to deal with the current market conditions.
The slash in jobs is an addition to the disclosed reductions and
will be accomplished through a combination of attrition, buyouts,
early retirements and involuntary layoffs, WSJ points out.
According to the memo, WSJ adds, Chrysler's liquidity position in
the first half remained unchanged compared with December as a
result of previous production cuts, asset sales and cost-cutting
efforts.
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 MORTGAGE: Moody's Cuts Ratings on 32 Tranches on Loans
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 32
tranches from 7 Alt-A transactions issued by Citigroup Mortgage
Loan Trust. Additionally, 5 senior tranches were confirmed at
Aaa. The collateral backing these transactions consists primarily
of first-lien, fixed and adjustable-rate, Alt-A mortgage loans.
Ratings were downgraded, in general, based on higher than
anticipated rates of delinquency, foreclosure, and REO in the
underlying collateral relative to credit enhancement levels.
Certain tranches were confirmed due to additional enhancement
provided by structural features. The actions described are a
result of Moody's on-going review process.
Complete rating actions are:
Issuer: Citigroup Mortgage Loan Trust Inc. 2005-7
-- Cl. 1-A1, Downgraded to Baa1 from Aaa
-- Cl. 1-A2, Downgraded to A3 from Aaa
-- Cl. 1-A3, Downgraded to A3 from Aaa
-- Cl. 1-A4, Downgraded to A3 from Aaa
-- Cl. 1-AIO1, Downgraded to A3 from Aaa
-- Cl. 1-AIO2, Downgraded to A3 from Aaa
Issuer: Citigroup Mortgage Loan Trust Series 2005-10
-- Cl. I-A12B, Downgraded to A1 from Aaa
-- Cl. I-A34B, Downgraded to A1 from Aaa
-- Cl. I-A5B, Downgraded to A1 from Aaa
Issuer: Citigroup Mortgage Loan Trust 2006-AR3
-- Cl. 2-A12B, Downgraded to Baa3 from Aa1
-- Cl. 2-A34B, Downgraded to Baa3 from Aa1
-- Cl. 2-1AX, Confirmed at Aaa
-- Cl. 2-2AX, Confirmed at Aaa
Issuer: Citigroup Mortgage Loan Trust 2006-AR6
-- Cl. 2-A4, Downgraded to Aa3 from Aaa
Issuer: Citigroup Mortgage Loan Trust 2007-AR1
-- Cl. A1, Confirmed at Aaa
-- Cl. A2, Confirmed at Aaa
-- Cl. A3, Confirmed at Aaa
-- Cl. A4, Downgraded to Ba1 from Aaa
Issuer: Citigroup Mortgage Loan Trust 2007-AR7
-- Cl. A1A, Downgraded to A2 from Aaa
-- Cl. A134B, Downgraded to B1 from Aa1
-- Cl. A2A, Downgraded to Baa2 from Aaa
-- Cl. A2B, Downgraded to B1 from Aa1
-- Cl. A3A, Downgraded to A1 from Aaa
-- Cl. A4A, Downgraded to A2 from Aaa
-- Cl. A5A, Downgraded to A2 from Aaa
-- Cl. A5B, Downgraded to B1 from Aa1
-- Cl. 3IO, Downgraded to A1 from Aaa
-- Cl. 4IO, Downgraded to A2 from Aaa
Issuer: Citigroup Mortgage Loan Trust 2007-OPX1
-- Cl. A-1A, Downgraded to A2 from Aaa
-- Cl. A-1B, Downgraded to A2 from Aaa
-- Cl. A-2, Downgraded to A3 from Aaa
-- Cl. A-3A, Downgraded to A3 from Aaa
-- Cl. A-3B, Downgraded to A3 from Aaa
-- Cl. A-4A, Downgraded to Baa1 from Aaa
-- Cl. A-4B, Downgraded to Baa1 from Aaa
-- Cl. A-5A, Downgraded to A3 from Aaa
-- Cl. A-5B, Downgraded to A3 from Aaa
CLAIRES STORES: Moody's Downgrades PD Rating to Caa1
----------------------------------------------------
Moody's Investors Service downgraded Claire's Stores, Inc.'s,
ratings, including its probability of default rating to Caa1 from
B3 and speculative grade liquidity rating to SGL-4 from SGL-3. In
addition, Claire's long term ratings were placed on review for
further possible downgrade. The downgrade to Caa1 reflects
Claire's weak operating performance over the past two quarters
that has led to deterioration in its debt protection measures. In
particular, EBITA to interest expense fell to 0.9 times for the
lagging twelve month period ending May 3, 2008. The review for
further possible downgrade reflects the high likelihood that
Claire's debt protection measures will get worse given the
challenging economic environment which makes the company highly
susceptible to further earnings and cash flow pressure.
For the LTM period ending May 3, 2008, Claire's unadjusted EBITDA
fell to $248 million which was well below Moody's expectations and
fiscal 2007 results. As a result, EBITA to interest weakened to
0.9 times and debt to EBITDA rose to 8.8 times. This earnings
shortfall has also pressured the company's cash flow requiring
Claire's to choose to accrete rather than pay cash interest under
its senior PIK toggle notes. Earnings shortfalls also make it
highly likely that the company will become a permanent borrower
under its revolving credit facility over the next twelve months.
The downgrade to SGL-4 reflects Claire's weak liquidity given its
current level of free cash flow deficits and the high likelihood
that the company will continue to generate free cash flow
deficits. Despite the company's electing to defer cash interest
under its PIK toggle notes, Moody's believes that Claire's will
likely remain free cash flow negative which will result in
sustained levels of permanent borrowings under its revolving
credit facility. While the company appears to have enough
availability under its $200 million revolving credit facility to
fund its free cash deficit over the next twelve months,
unfavorable operating results and/or working capital changes
during the period could rapidly absorb this availability. Despite
the company's operating and liquidity challenges, positive
consideration is given to the fact that there are no near-term
scheduled debt maturities, and the fact that Claire's revolving
credit facility has no financial covenants.
Moody's review for downgrade will focus on the company's near term
operating performance, level of cash flow burn, as well as the
likelihood that it will sustain a level of permanent borrowings
under its revolver. Moody's review will also focus on the overall
economic environment and its impact on mall traffic, consumer
confidence, and discretionary spending.
These ratings are downgraded and placed on review for further
possible downgrade:
Probability of default rating to Caa1;
Corporate family rating to Caa1;
$200 million senior secured revolving credit facility to B2
from B1;
$1,450 million senior secured term loan to B2 from B1;
Senior unsecured notes to Caa2 from Caa1;
Senior subordinated notes to Caa3 from Caa2.
This rating is downgraded:
Speculative grade liquidity rating to SGL-4 from SGL-3.
The current LGD assessments remain subject to change.
Claire's Stores, Inc., headquartered in Pembroke Pines, Florida,
is the leading specialty retailer of value-price jewelry and
fashion accessories for pre-teens, teenagers, and young adults. It
operates 3,053 stores in North America and Europe. Revenues for
the LTM period ending May 3, 2008 were about $1.5 billion.
CREST 2003-2: Moody's Affirms Ba1 Ratings on Class E-1 & E-2 Notes
------------------------------------------------------------------
Moody's Investors Service affirmed 11 classes of Notes issued by
Crest 2003-2 Ltd. as follows:
-- Class A-1, $113,660,037, Floating Rate Notes Due 2018,
affirmed at Aaa
-- Class A-2, $6,671,868, Fixed Rate Notes Due 2018, affirmed at
Aaa
-- Class A-3, $20,000,000, Fixed Rate Notes Due 2018, affirmed
at Aaa
-- Class B-1, $2,000,000, Floating Rate Notes Due 2038, affirmed
at Aaa
-- Class B-2, $46,750,000, Fixed Rate Notes Due 2038, affirmed
at Aaa
-- Class C-1, $2,000,000, Floating Rate Deferrable Interest
Notes Due 2038, affirmed at Aa2
-- Class C-2, $27,250,000, Fixed Rate Deferrable Interest Notes
Due 2038, affirmed at Aa2
-- Class D-1, $3,875,000, Floating Rate Deferrable Interest
Notes Due 2038, affirmed at A3
-- Class D-2, $25,375,000, Fixed Rate Deferrable Interest Notes
Due 2038, affirmed at A3
-- Class E-1, $250,000, Floating Rate Deferrable Interest Notes
Due 2038, affirmed at Ba1
-- Class E-2, $17,625,000, Fixed Rate Deferrable Interest Notes
Due 2038, affirmed at Ba1
Moody's is affirming the Notes above due to stable pool
performance.
As of the June 30, 2008 distribution date, the transaction's
aggregate collateral balance has decreased to $319.3 million from
$325.0 million at issuance, due to $5.9 million in pay-downs to
the Class A-1 and Class A-2 Notes. The Notes are currently
collateralized by 69 classes of CMBS securities from 38 separate
transactions (87.2% of the pool balance), five REITs (6.9%), eight
credit tenant lease (CTL) securities (3.4%), one CRE CDO class
(1.6%), and two B-notes (0.9%).
Since issuance, among the Moody's rated securities (62.2%), there
have been 12 upgrades and three downgrades to the CMBS securities;
and one upgrade and no downgrades to the REIT securities. Credit
estimates were performed on non-Moody's rated securities (37.8%).
Moody's uses a weighted average rating factor (WARF) as an overall
indicator of the credit quality of a CDO transaction. Based on
Moody's analysis, the current WARF is 998 compared to 1,090 at
last review and 1,142 at issuance. Moody's reviewed the ratings
or performed credit estimates on all the collateral supporting the
Notes. The distribution is as follows: Aaa-Aa3 (4.4% compared to
1.0% at issuance), A1-A3 (5.0% compared to 3.5%), Baa1-Baa3 (27.2%
compared to 25.5%), Ba1-Ba3 (60.5% compared to 63.5%), B1-B3 (2.2%
compared to 6.5%), and Caa1-NR (0.7% compared to 0.0%).
The CMBS securities are from pools securitized between 1997 and
2003. The two largest vintage exposures are 2003 (52.5%) and 2002
(29.9%). The five largest CMBS exposures are GSMS 2003-C1 (4.8%),
GMACC 2003-C2 (4.7%), WBCMT 2003-C5 (4.7%), JPMCC 2003-ML1A (4.7%)
and LB-UBS 2003-C1 (4.7%).
CRYSTAL RIVER: Fitch Trims Ratings to 'C' on Two Note Classes
-------------------------------------------------------------
Fitch Ratings has downgraded 9 and removed 8 classes from Rating
Watch Negative from notes issued by Crystal River CDO 2005-1 Ltd.
These rating actions are effective immediately:
-- $37,638,384 Class A Notes to 'A' from 'AAA';
-- $44,750,000 Class B Notes to 'BBB' from 'AAA', and removed
from Rating Watch Negative;
-- $20,500,000 Class C Notes to 'BBB-' from 'AA', and removed
from Rating Watch Negative;
-- $42,500,000 Class D-1 Notes to 'BB' from 'A', and removed
from Rating Watch Negative;
-- $10,000,000 Class D-2 Notes to 'BB' from 'A', and removed
from Rating Watch Negative;
-- $23,250,000 Class E Notes to 'B' from 'BBB', and removed from
Rating Watch Negative;
-- $25,293,749 Class F Notes to 'CCC' from 'BB+', and removed
from Rating Watch Negative;
-- $10,884,375 Class G Notes to 'C' from 'BB', and removed from
Rating Watch Negative;
-- $4,809,375 Class H Notes to 'C' from 'BB-', and removed from
Rating Watch Negative.
Fitch's rating actions reflect the significant collateral
deterioration within the portfolio, specifically subprime
residential mortgage backed securities and structured finance
collateralized debt obligation CDOs with underlying exposure to
subprime RMBS. Since the last review conducted in November 2007,
approximately 48.8% of the portfolio has been downgraded. The
portion of the portfolio rated below investment grade is now 95.9%
with 29.9% rated 'CCC+' or lower.
The collateral deterioration has caused the class F
overcollateralization tests to fall to 125.7% and fail the 128.6%
trigger. As a result, interest proceeds that would otherwise be
payable to the class G and H notes are being diverted to the class
A notes in reduction of the class A note principal amount.
The classes are removed from Rating Watch as Fitch believes
further negative migration in the portfolio will have a lesser
impact on these classes. Additionally, Fitch is reviewing its SF
CDO approach and will comment separately on any changes and
potential rating impact at a later date.
Crystal River is an arbitrage cash flow CDO that closed on
Nov. 30, 2005 and is managed by Hyperion Crystal River Capital
Advisors, LLC. Crystal River's portfolio is comprised of
commercial mortgage backed securities (43.8%), subprime RMBS
(24.5%) all of which is 2005 vintage, prime RMBS (10.8%), and
Alternative-A RMBS (20.9%), of which 2.9% is pre-2005 vintage and
18.0% is 2005 vintage.
The ratings of the class A, B, C, D-1, and D-2 notes address the
likelihood that investors will receive full and timely payments of
interest as well as the aggregate outstanding amount of principal
by the stated maturity date, per the transaction's governing
documents. The ratings of the class E, F, G, and H notes address
the likelihood that investors will receive ultimate interest
payments, as well as the aggregate outstanding amount of principal
by the stated maturity date, per the transaction's governing
documents.
CT CDO: S&P Affirms Low-B Ratings on Four Collateralized Debts
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on four
classes from CT CDO III Ltd. Concurrently, S&P affirmed its
ratings on 10 classes. Concurrently, S&P removed all 14 ratings
from CreditWatch with negative implications, where they were
placed on May 28, 2008.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for CMBS securities, as detailed in "Recovery Rates For CMBS
Collateral In Resecuritization Transactions," published May 28,
2008.
According to the trustee report dated June 20, 2008, the
transaction's current assets included 21 classes ($327 million,
100%) of commercial mortgage-backed securities pass-through
certificates from 13 distinct transactions issued between 1996 and
1999. The following CMBS transactions represent an asset
concentration of 10% or more of total assets:
--- Deutsche Mortgage and Asset Receiving Corp.'s series
1998-C1 ($74 million, 23%)
--- GMAC Commercial Mortgage Securities Inc.'s series 1998-C2
($72.8 million, 22%)
--- GMAC Commercial Mortgage Securities Inc.'s series 1997-C1
($43.5 million, 13%).
The aggregate principal balance of the assets totaled
$327 million, down slightly from $341.3 million at issuance, while
the aggregate liabilities totaled $328.5 million, down slightly
from $341.3 million at issuance. Of the $14.3 million reduction
in aggregate asset principal balance, $1.4 million was due to
principal losses realized on first loss CMBS assets, which
currently represent $43.5 million (13%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'BB+'
rated obligations. Excluding first-loss CMBS assets, the current
asset pool exhibits credit characteristics consistent with 'BBB'
rated obligations. Standard & Poor's rates $86.8 million (27%) of
the assets. S&P reanalyzed its outstanding credit estimates for
the remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
CT CDO III Ltd.
Collateralized debt obligations
Rating
------
Class To From
----- -- ----
A-2 AA+ AAA/Watch Neg
B AA- AA/Watch Neg
M B- B/Watch Neg
N CCC- B-/Watch Neg
Ratings Affirmed and Removed from Creditwatch Negative
CT CDO III Ltd.
Collateralized debt obligations
Rating
------
Class To From
----- -- ----
A-1 AAA AAA/Watch Neg
C A A/Watch Neg
D A- A-/Watch Neg
E BBB+ BBB+/Watch Neg
F BBB BBB/Watch Neg
G BBB- BBB-/Watch Neg
H BB+ BB+/Watch Neg
J BB BB/Watch Neg
K BB- BB-/Watch Neg
L B+ B+/Watch Neg
DANA CORP: Appoints Keith Wandell as Board of Directors Member
--------------------------------------------------------------
Keith E. Wandell, president and chief operating officer of Johnson
Controls, Inc. has been appointed to the Dana Holding Corporation
Board of Directors, Executive Chairman John Devine disclosed.
"Over the past two decades, Keith has been instrumental in the
exceptional growth and success at Johnson Controls," Mr. Devine
said. "We welcome the operational experience and leadership
perspective he will bring to Dana's Board of Directors."
Mr. Wandell, 58, joined Johnson Controls, a global, diversified,
multi-industrial company, in 1988. He began his Johnson Controls
career as plant manager of the company's Toledo, Ohio, battery
division facility. Mr. Wandell subsequently advanced through a
number of increasingly significant positions within the division,
including director of materials and distribution, vice president
of operations, and general manager of the battery and automotive
divisions. From 1997 to 2003, he served as president of the
battery division. In 2003, Mr. Wandell was named executive vice
president of the automotive business. In 2006, he was promoted
to his current role of president and chief operating officer,
with responsibility for the company's three businesses: Automotive
Experience, Building Efficiency, and Power Solutions.
Mr. Wandell earned a Bachelor of Science degree in business
administration from Ohio University, and a master's degree in
business administration from the University of Dayton. He is
past vice chairman of the Michigan Minority Business Development
Council and is a director for several Johnson Controls joint
ventures.
Mr. Wandell will serve on the Nominating and Corporate Governance
Committee of the Dana Board.
Financials Webcast
Dana Holding Corporation will announce its 2008 second-quarter and
six-month financial results on Thursday, Aug. 7, 2008. At 10 a.m.
ET, on that date, Executive Chairman John Devine, Chief Executive
Officer Gary Convis, and Executive Vice President and Chief
Financial Officer Jim Yost will host a conference call and
supporting Web cast to discuss these results and answer related
questions.
Participants may listen to the audio portion of the conference
call either through audio streaming online or by telephone. Slide
viewing is only available online via a link provided on the Dana
investor Web site:
http://phx.corporate-ir.net/phoenix.zhtml?c=66043&p=irol-irhome
To dial into the conference call, domestic locations should call
1-888- 311-4590 (Conference I.D. # 55462661). International
locations should call 1-706-758-0054 (Conference I.D. #55462661).
Please ask for the Dana Holding Corporation Financial Webcast and
Conference Call. Phone registration will be available beginning
at 9:30 a.m. ET.
An audio recording of this conference call will be available
after 5 p.m. ET on August 7. To access this recording, please
dial 1-800-642-1687 (U.S. or Canada) or 1-706-645-9291
(international) and enter the conference I.D. number 55462661.
A Web cast replay will also be available after 5 p.m. ET on
August 7. This replay may be accessed via the Dana investor Web
site.
About DANA
Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/--
designs and manufactures products for every major vehicle producer
in the world, and supplies drivetrain, chassis, structural, and
engine technologies to those companies. Dana employs 46,000
people in 28 countries. Dana is focused on being an essential
partner to automotive, commercial, and off-highway vehicle
customers, which collectively produce more than 60 million
vehicles annually.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets
and $7,665,000,000 in total debts resulting in a total
shareholders' deficit of $534,000,000.
Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day,
in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq.,
Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in
Cleveland, Ohio, represent the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represens the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on
Aug. 31, 2007. On Oct. 23, 2007, the Court approved the
adequacy of the Disclosure Statement explaining their Plan.
Judge Burton Lifland of the U.S. Bankruptcy Court for the
Southern District of New York entered an order confirming the
Third Amended Joint Plan of Reorganization of the Debtors on
Dec. 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of Jan. 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News, Issue No. 79; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
* * *
As reported in the Troubled Company Reporter on Feb. 12, 2008,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Dana Holding Corp. following the company's
emergence from Chapter 11 on Feb. 1, 2008. The outlook is
negative. At the same time, Standard & Poor's assigned Dana's
$650 million asset-based loan revolving credit facility due 2013 a
'BB+' rating (two notches higher than the corporate credit rating)
with a recovery rating of '1', indicating an expectation of very
high recovery in the event of a payment default. In addition, S&P
assigned a 'BB' bank loan rating to Dana's $1.43 billion senior
secured term loan with a recovery rating of '2', indicating an
expectation of average recovery.
The TCR reported on Feb. 18, 2008, that Moody's Investors Service
affirmed the ratings of the reorganized Dana Holding Corporation
as: Corporate Family Rating, B1; Probability of Default Rating,
B1. In a related action, Moody's affirmed the Ba3 rating on the
senior secured term loan and raised the rating on the senior
secured asset based revolving credit facility to Ba2 from Ba3.
The outlook is stable. The financing for the company's emergence
from Chapter 11 bankruptcy protection has been funded in line with
the structure originally rated by Moody's in a press release dated
Jan. 7, 2008.
DANA CORP: Visteon Insists on $9.8MM Claim for Product Recall
-------------------------------------------------------------
Visteon Corporation insists that it is entitled to the payment of
$9,800,000 as a result of the 2003 product recall of vehicles
manufactured by Ford Motor Company, which contained air filters
produced by Dana Corp. and its debtor-affiliates.
As disclosed in the Troubled Company Reporter on July 4, 2008, the
Reorganized Debtors ask the U.S. Bankruptcy Court for the Southern
District of New York to disallow Visteon Corporation's Claim No.
15037, asserting a $9,800,000 reimbursement for Visteon's
purported losses related to a vehicle recall by Ford.
Michael C. Hammer, Esq., at Dickinson Wright PLLC, in Ann Arbor,
Michigan, asserts that further evidence will show that Visteon
suffered damages aggregating $9,800,000 as a result of the
unauthorized change in the properties used in the manufacture of
the air filters, which lead to the recall.
Mr. Hammer relates that from 2002 to 2004, one of the Reorganized
Debtors' affiliate, Wix-Helsa Filtration Technologies, Inc., sold
to Visteon engine air filters treated with a proprietary resin
compound coating for use in certain of Visteon's air induction
systems supplied to Ford. In 2004, Wix-Helsa was sold to AAG
OPCO Corp., which later became Affinia Group. The Affinia
Entities assumed the obligations and liabilities of the
Reorganized Debtors with respect to the contracts with Visteon.
According to Mr. Hammer, the contracts prohibited the Debtors
from making any change in the design and processing of the air
filters unless otherwise instructed by Visteon. The contracts
also required the Debtors to conform to the quality control
standards and inspection system at the time of sale and delivery,
which Visteon and its customer Ford have established. However,
Mr. Hammer relates that the Debtors changed the production
process, materials and performance characteristics of the air
filters without notice or approval by Visteon. Sometime in 2003,
Ford began receiving complaints about under hood fires in certain
of its vehicles using the Air Filters.
Despite the Debtors' repeated denials that it did not make any
changes to the air filter, in January 2004, they disclosed to
Visteon that they changed the air filter paper material
manufacturing and treatment process including the resin package
resulting in an increase in the sodium content of the air filter
paper, Mr. Hammer further relates. The change caused the air
filter paper to smolder causing under hood fires in certain Ford
vehicles.
Mr. Hammer tells the Court that the Affinia Entities maintain
that they have not assumed the air filter contracts and therefore
are not liable with respect to the recall. Accordingly, Visteon
asserts that the Reorganized Debtors are liable for the recall
damages.
For the reasons stated, Visteon asks the Court to allow its
claim.
Preferred Stock Dividend
The Board of Directors of Dana Holding Corporation authorized the
payment of a dividend to shareholders of 4.0% Series A Convertible
Preferred Stock and 4.0% Series B Convertible Preferred Stock. A
cash payment of $1.00 per share for the period from June 1, 2008,
through Aug. 31, 2008, will be payable on Sept. 2, 2008, to
preferred shareholders of record at the close of business on
Aug. 1, 2008.
About DANA
Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/--
designs and manufactures products for every major vehicle producer
in the world, and supplies drivetrain, chassis, structural, and
engine technologies to those companies. Dana employs 46,000
people in 28 countries. Dana is focused on being an essential
partner to automotive, commercial, and off-highway vehicle
customers, which collectively produce more than 60 million
vehicles annually.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets
and $7,665,000,000 in total debts resulting in a total
shareholders' deficit of $534,000,000.
Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day,
in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq.,
Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in
Cleveland, Ohio, represent the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represens the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on
Aug. 31, 2007. On Oct. 23, 2007, the Court approved the
adequacy of the Disclosure Statement explaining their Plan.
Judge Burton Lifland of the U.S. Bankruptcy Court for the
Southern District of New York entered an order confirming the
Third Amended Joint Plan of Reorganization of the Debtors on
Dec. 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of Jan. 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News, Issue No. 79; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
* * *
As reported in the Troubled Company Reporter on Feb. 12, 2008,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Dana Holding Corp. following the company's
emergence from Chapter 11 on Feb. 1, 2008. The outlook is
negative. At the same time, Standard & Poor's assigned Dana's
$650 million asset-based loan revolving credit facility due 2013 a
'BB+' rating (two notches higher than the corporate credit rating)
with a recovery rating of '1', indicating an expectation of very
high recovery in the event of a payment default. In addition, S&P
assigned a 'BB' bank loan rating to Dana's $1.43 billion senior
secured term loan with a recovery rating of '2', indicating an
expectation of average recovery.
The TCR reported on Feb. 18, 2008, that Moody's Investors Service
affirmed the ratings of the reorganized Dana Holding Corporation
as: Corporate Family Rating, B1; Probability of Default Rating,
B1. In a related action, Moody's affirmed the Ba3 rating on the
senior secured term loan and raised the rating on the senior
secured asset based revolving credit facility to Ba2 from Ba3.
The outlook is stable. The financing for the company's emergence
from Chapter 11 bankruptcy protection has been funded in line with
the structure originally rated by Moody's in a press release dated
Jan. 7, 2008.
DELPHI CORP: Appaloosa Balks at GM Participating in Adversary Suit
------------------------------------------------------------------
A-D Acquisition Holdings, LLC, and Appaloosa Management L.P.
oppose the participation of General Motors Corporation as party-
in-interest with respect to Delphi Corp.'s $2,550,000,000
adversary complaint against Appaloosa and other Plan Investors.
As disclosed in the Troubled Company Reporter on July 15, 2008, GM
sought authority from the U.S. Bankruptcy Court for the Southern
District of New York to participate in the adversary proceedings
filed by Delphi Corp. against Appaloosa, Management, L.P., et al.
GM wants to participate in the proceedings as a "party-in-
interest."
Delphi's ties with Appaloosa, et al., soured after Delphi sought
funding of the $2,825,000,000 of its $6,100,000,000 exit debt
financing facility from General Motors, its primary customer. The
lenders, including GM, were ready to close April 4, but the
financing agreements have been terminated after Appaloosa, et al.,
pulled out from their commitment to provide $2,550,000,000 of
equity financing to Delphi.
Douglas P. Baumstein, Esq., at White & Case LLP, in New York,
says that ADAD and AMLP anchor their opposition on GM's failure
to adequately define what a "party in interest" means, given that
it seeks to participate in the adversary proceeding in a limited
capacity, yet it seeks rights afforded only to full parties to a
proceeding without undertaking the obligations of a party.
Mr. Baumstein admits that some of the relief sought by GM is
acceptable, "but much of the relief it seeks goes well beyond
that to which a party in interest is entitled," Mr. Baunstein
says.
Mr. Baumstein anticipates that at this time, GM does not seek to
intervene in the proceedings, however, it seeks court authority
to (i) appear before the Court on any matter arising in the
Adversary Proceeding, including hearings and chamber conferences,
(ii) participate in any settlement discussions, mediation
sessions and arbitrations regarding the Adversary Proceeding, and
(iii) participate in the discovery process, including through the
review of documents produced and attendance at depositions.
Mr. Baumstein argues that GM is not entitled to participate so
as to fully monitor the progress and status of the Adversary
Proceeding and to permit involvement in activities likely to
affect or overlap with a new plan, contrary to the relief it
seeks. Mr. Baumstein then cites the grounds for ADAH and AMLP's
objections:
(1) GM should only be permitted to appear in the litigation so
long as it limits itself to the role of observer and does
not duplicate effort or unduly burden the parties.
It is not clear that GM is willing to limit its role, as
GM seeks to participate in the action by appearing
before the Court on "any matter arising in the Adversary
Proceeding" including by appearing at the chambers'
conferences. This right is inconsistent with the
monitoring function GM purports to seek.
(2) There is no basis for GM's request to participate in any
settlement negotiations.
GM has articulated no concrete interest or right of its
own that is at stake in this proceeding. Instead, GM
purports to seek participation on a limited basis in
order to inform its own position in negotiations of a
modified or new plan of reorganization that is not
before this Court in this proceeding.
(3) GM should not be permitted to seek discovery without first
intervening as a party.
The right to serve discovery requests is one reserved to
full parties at an action, which GM is not and does not
seek.
Harbinger Del-Auto Investment Company Ltd. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated have joined in Appaloosa's
objection. Both parties request the Court to deny GM's motion to
participate in the adversary proceeding as party-in-interest.
About GM
Based 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.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 138; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Allowed to Pursue $2.55B Fraud Claim vs. Appaloosa
---------------------------------------------------------------
Judge Robert Drain of the U.S. Bankruptcy Court for the Southern
District of New York denied Appaloosa Management, L.P., and other
investors' motions for dismissal of the $2.55 billion lawsuits
filed by Delphi Corporation against them.
Delphi sued Appaloosa and seven other parties, which include
Merrill Lynch, UBS Securities and Goldman Sachs, after they
withdrew from their commitment to provide exit equity financing
for Delphi, which was supposed to exit bankruptcy in April 2008.
The David Tepper-led Appaloosa terminated their $2.55-billion
investment agreement after Delphi allowed General Motors Corp. to
fund up to $2,825,000,000 of its $6,100,000,000 exit debt
financing. Appaloosa, et al., argued that Delphi was barred
under their Equity Purchase and Commitment Agreement to enter
into transactions with GM outside the ordinary course of
business.
Appaloosa moved for the dismissal of the lawsuits, saying that
Delphi cannot seek specific performance of the Plan Investors
under the EPCA because Delphi itself cannot allege that it is
presently ready, willing and able to perform under the EPCA.
Delphi terminated its $6-billion debt financing agreements with
other investors after Appaloosa, et al., terminated the EPCA on
April 4.
According to The Wall Street Journal, Judge Drain ruled that
Delphi can pursue its fraud claim against Appaloosa. Judge
Drain, according to the report, dismissed a portion of Delphi's
complaint, but he rejected most of the defendants' arguments.
Delphi said that Appaloosa defrauded the Court, the Debtors and
various stakeholders by affirmatively stating that it had every
intention of performing its obligations to the Debtors under the
EPCA when, in fact, it had no such intention. David Tepper
testified before the Court that the Plan Investors will fully
honor their commitments, which led to the Court's approval of
Delphi's Joint Plan of Reorganization, which consummation
required the $2.55 billion financing from the Plan Investors.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Negotiating New or Amended Plan with GM and Committee
------------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
bankruptcy cases of Delphi Corp. and its debtor-affiliates says it
is actively negotiating with the Debtors to reach mutually
acceptable modification of the current Joint Plan of
Reorganization of the Debtors, following Appaloosa Management,
L.P., et al.'s decision to back out from their $2,550,000,000 exit
financing agreement, and in light of the Debtors' pending lawsuit
against Appaloosa, et al.
Committee counsel Edward M. Fox, Esq., at K&L Gates, LLP, in New
York, says that if the negotiations don't achieve the resolution,
it will pursue its adversary proceeding, seeking the revocation
of the order confirming the Plan, which the Committee says it
accepted based upon the "promissory fraud of Appaloosa."
As reported in the Troubled Company Reporter on July 15, 2008,
General Motors Corp., in its request to join as party-in-interest
in Delphi's adversary proceedings against Appaloosa, et al., said
it is a major constituent of a new plan under negotiation together
with Delphi and Creditors Committee. GM has been asked to provide
major support through financial contributions, subsidies and
loans, its counsel Michael P. Kessler, Esq., at Weil, Gotshal &
Manges LLP, in New York, disclosed.
GM also had said its interest in participating in the
$2,550,000,000 lawsuits is in the litigation's representation of
a significant asset of the Debtors' estates. The terms and
conditions of a modified or new plan will depend, in part, on the
value ascribed to the litigation and the disposition of any
recoveries from the litigation, Mr. Kessler said.
About GM
Based 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.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 138; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: WTC, Panel Want Plan Confirmation Order Revoked
------------------------------------------------------------
Wilmington Trust Company, as indenture trustee to $2,000,000,000
of notes issued by Delphi Corp. and its debtor-affiliates, and the
Official Committee of Unsecured Creditors in the case asks the
Hon. Robert Drain of the U.S. Bankruptcy Court for the Southern
District of New York to revoke his January 25, 2008 order
confirming the Debtors' Joint Plan of Reorganization after
allegations that Appaloosa Management, L.P., et al., had engaged
in fraudulent conduct that would not enable Delphi to consummate
the Plan.
Wilmington Trust points out that the Court, in its July 18, 2007
order signing the EPCA, acknowledged that the Plan Investors'
investment was an "integral . . . component of the Plan." The
Debtors, however, have been unable to emerge from bankruptcy
pursuant to the terms of the Plan after Appaloosa and other
parties terminated their commitment to provide $2,550,000,000 in
equity exit financing pursuant to the Equity Purchase and
Commitment Agreement.
On behalf of WTC, Edward M. Fox, Esq., at K&L Gates LLP, in New
York, argues the Plan Confirmation Order should be revoked,
noting that Debtors acknowledge and concede, in their lawsuits
against the Plan Investors, that the Order was procured by fraud.
Mr. Fox notes the Debtors have alleged that ADAH defrauded the
Court, the Debtors and various stakeholders by affirmatively
stating that it had every intention of performing its obligations
to the Debtors under the EPCA when, in fact, it had no such
intention.
Aside from several agreements that expressly obligate ADAH and
the other Plan Investors to provide equity financing, Mr. Fox
notes that David Tepper, the principal of ADAH and Appaloosa, at
a Dec. 6, 2007 hearing to consider approval of amendments to the
EPCA, testified that the Plan Investors will use their reasonable
best effort to consummate the transactions. "But in the fact
that, and the same thing I said before, you know, you make a
handshake you make a handshake, it's what it is," Mr. Tepper
said.
WTC notes that the Court, in approving the EPCA and thereafter
confirming the Plan, relied on Mr. Tepper's statements that ADAH
fully intended to honor its commitments.
Wilmington Trust is the successor indenture trustee for senior
notes and debentures issued by Delphi pursuant to an Indenture
dated as of April 28, 1999, all of which remain outstanding: (i)
$500,000,000 in aggregate principal amount of 6.55% Notes Due
2006; (ii) $500,000,000 in aggregate principal amount of 6.5%
Notes Due May 1, 2009; (iii) $500,000,000 in aggregate principal
amount of 6.50% Notes Due 2013; and (iv) $500,000,000 in
aggregate principal amount of 7.125% Debentures Due May 1, 2029.
The Committee tells the Court that Appaloosa and its principal
David Tepper has defrauded Delphi, the Committee, all other
parties-in-interest, and the Court by making numerous promises to
remain committed to the Plan and to use its best efforts to
consummate the Plan while at the same time, covertly discussing
and then executing a strategy to ensure the Plan's demise. For
falsely promising to be an equity investor in the reorganized
Debtors, Appaloosa has extracted from the estate and its
stakeholders in excess of $60,000,000 in fees and millions more in
expense reimbursements, with a claim pending for another
$82,500,000 on account of Alternative Transaction Fee.
The committee says that Appaloosa's motive was greed. The fraud
occurred when Appaloosa made numerous promises that were untrue
about its commitment to the Plan and the emergence of the Debtors
from bankruptcy.
"Known as the "king" of "vulture investors," or those who
capitalize on distressed assets for financial gain, Appaloosa and
Mr. Tepper in particular, has amassed a fortune by investing in
companies in Chapter 11 and then realizing a healthy financial
gain as a result," the Committee states. "Although such tactics
could be hailed as reflecting shrewd business sense, the law
stops short of sanctioning them where, as here, they are based
upon fraud."
As per terms of the EPCA, Appaloosa recouped another $21,200,000
in commitment fees from the Debtors, for a total of $35,000,000
in fees even before any capital had been committed. Appaloosa
anticipated receiving the balance of its fees once the disclosure
statement was approved, the Committee points out.
To avoid having to comply with its promised commitments under the
August EPCA, Appaloosa stalled by using the financial markets as
an excuse to spend the next five months renegotiating the August
EPCA. Appaloosa had no intention of living up to its promises -
it was simply using the worsening financial markets as cover for
its pre-planned exit.
By inducing Delphi, its stakeholders, and the Court to rely on
its promises, Appaloosa both secured the court approval, and
clinched multi-million dollar payday for itself, the Committee
states.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 138; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Wants Plan-Filing Deadline Extended to October 31
--------------------------------------------------------------
Delphi Corp. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to extend their
exclusive periods to:
(a) file a plan of reorganization through and including
Oct. 31, 2008; and
(b) solicit acceptances of that Plan through and including
Dec. 31, 2008.
John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Chicago, Illinois, tells the Court that on April 4, 2008,
the Debtors announced that although they had met the conditions
required to substantially consummate the Plan, including
obtaining $6,100,000,000 of exit financing, Delphi's Plan
Investors refused to participate in a closing.
As disclosed in the Troubled Company Reporter on May 7, 2007, the
Debtors obtained an extension, subject to certain exceptions, of
their exclusive right under Section 1121 of the Bankruptcy Code to
file one or more reorganization plans until 30 days after
substantial consummation of the Plan and the exclusive right to
solicit and obtain acceptances for those plans 90 days after
substantial consummation of the plan by entry of the Order Under
Section 1121(d) of the Bankruptcy Code. The Order, however,
extended the Debtors' exclusive right to file a plan, as between
the Debtors and the Statutory Committees, through and including
Aug. 31, 2008, and the right to solicit a plan, as between the
Debtors and the Statutory Committees, through and including Oct.
31, 2008, Mr. Butler recalls.
On May 16, 2008, Delphi filed complaints for damages and specific
performance against the Plan Investors who refused to participate
in the closing that would have led to Delphi's successful
emergence from Chapter 11. The Debtors nevertheless continue to
work with their stakeholders to achieve their goal of emerging
from Chapter 11 as soon as practicable, Mr. Butler says.
Out of an abundance of caution and to ensure clarity with their
stakeholders, including their customers and suppliers, the
Debtors seek an extension of the Exclusive Periods to prevent any
lapse in exclusivity between the Debtors and the Statutory
Committees, Mr. Butler clarifies.
Mr. Butler explains that a further extension of the Exclusive
Periods, Mr. Butler says, is justified by the significant
progress the Debtors have made toward emerging from Chapter 11.
After obtaining confirmation of the First Amended Plan, the
Debtors secured exit financing and met all other conditions to
the effectiveness of the Plan and Investment Agreement and were
prepared to emerge from Chapter 11.
Since April 30, 2008, Mr. Butler notes, the Debtors have
continued to make progress toward emerging from Chapter 11 in
three major areas:
(i) The Debtors have engaged in a reaffirmation process with
respect to the business plan contained in the Disclosure
Statement. That process includes an analysis, among other
things, of the impact of an unprecedented increase in
global commodity costs and reduction of projected North
American automobile industry production volumes;
(ii) The Debtors have explored their exit financing
possibilities in capital markets that remain turbulent;
and
(iii) The Debtors have entered into complex negotiations with
the Statutory Committees and General Motors Corp. with
respect to potential modifications of the Plan that will
enable Delphi to emerge from chapter 11 as soon as
reasonably practicable, thereby moving forward so that the
Debtors can focus solely on their business operations and
mitigate the damages caused by the Plan Investors.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 137; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
DVA ARENA: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: DVA Arena, LLC
15 Paradise Plaza, Ste. 347
Sarasota, FL 34239
Bankruptcy Case No.: 08-11099
Type of Business: The Debtor owns and operates a hockey sports
arena.
Chapter 11 Petition Date: July 25, 2008
Court: Middle District of Florida (Tampa)
Debtor's Counsel: Buddy D. Ford, Esq.
115 N. MacDill Ave.
Tampa, FL 33609-1521
Tel: (813) 877-4669
Fax: (813) 877-5543
E-mail: Buddy@tampaesq.com
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $10,000,000 to $50,000,000
The Debtor did not file a list of its largest unsecured creditors.
DIMENSIONS HEALTH: Fitch Holds 'CC' Rtng on $74.5MM Revenue Bonds
-----------------------------------------------------------------
Fitch Ratings has affirmed the rating of 'CC' on $74.5 million
Prince George's County, Maryland, project and refunding revenue
bonds, series 1994, issued on behalf of Dimensions Health
Corporation and Subsidiaries.
The affirmation of 'CC' reflects the current relative stability of
DHC's financial profile due to the ongoing financial support of
the state of Maryland and Prince George's county, and indications
of an effort to provide long-term stabilization of DHC's
operations by finding a new owner for the system. In its audited
financial statements for year ending 2007, the system received a
'going concern' comment citing the system's reliance on
governmental support, limited cash reserves, substantial pension
liabilities and substantial capital needs. The system has
received similar opinions from its auditors for the last three
fiscal years.
For fiscal year ending June 2007, the system produced an operating
income of $14 million and $17.5 million in excess income,
including $29.9 million in governmental grants. DHC's operating
margin declined to 3.7% from 4.6% in 2006 while the excess margin
declined to 4.6% from 9.6% in the prior year. Both liquidity and
debt ratios continue to deteriorate. The system has 16.9 days of
cash, a 1.9% cushion ratio and 20.6% cash-to-debt ratio. In
addition, there is a negative fund balance of $8.1 million
primarily due to the recording of $44 million of unfunded pension
liabilities. Operating grants from the state and county totaling
almost $50 million since 2006 have subsidized DHC's operations for
fiscal years 2006 and 2007, but a long-term solution is critical
to provide long-term stability for this system.
DHC serves as one of two safety net hospitals in Washington
metropolitan area, providing for the essential health care needs
of the economically depressed, underinsured and uninsured regional
population. Fitch believes that the essentiality of DHC's role in
serving the medical needs of the region provides some confidence
that the possibility of imminent bond default or hospital closure
is unlikely. In May 2008, the Governor of Maryland signed a bill
which provided for funding for the system through operating grants
through fiscal year 2008.
Other conditions of the bill include the establishment of an
independent authority charged both with the assignment of finding
a new owner for DHC, and with negotiating with the state and the
county to commit to providing funds to help fund long-delayed
capital needs to assist in the acquisition. It has recently been
announced that both the state of Maryland and Prince George's
County have formalized a long term funding agreement, conditional
upon the successful transfer of the system to a new owner. Fitch
believes that both the state and the county will continue to
provide subsidies to DHC for the near term, but final resolution
for a long-term solution is not expected quickly.
As of June 30, 2007 Dimensions' debt service reserve fund was
fully funded at approximately $8.6 million and all debt service
payments are current. Dimensions Health System had $341 million in
total revenues at the end of fiscal year 2007.
DOMTAR CORP: S&P Lifts Corp. Credit & Debt Rtngs on Improved Fin'l
------------------------------------------------------------------
Standard & Poor's Ratings Services raised the long-term corporate
credit rating on Montreal-based Domtar Corp. and its subsidiary
Domtar Inc. to 'BB' from 'BB-'. The outlook is stable.
At the same time S&P raised the issue-level ratings on Domtar's
senior secured debt to 'BBB-' from 'BB+'. The '1' recovery
rating, indicating the expectation for a very high (90%-100%)
recovery in the event of a payment default, is unchanged. S&P
also raised the issue ratings on the company's senior unsecured
debt to 'BB-' from 'B+'. The '5' recovery rating, indicating
modest (10%-30%) recovery in the event of default, is unchanged.
"The upgrade reflects significant improvement in the company's
financial risk profile in the past year and management's
commitment to ongoing debt reduction," said Standard & Poor's
credit analyst Jatinder Mall.
The ratings also reflect Domtar's leading market position in the
North American uncoated freesheet market and good cost profile.
They are constrained, however, by declining demand for UFS;
volatile prices for commodity paper, pulp, and lumber products;
and a weak lumber business.
The company has a leading market share of the consolidated UFS
industry in which the top five producers make up about 80% of
industry capacity. The industry faces challenging market
conditions because S&P expects demand for UFS to continue to
decline for the foreseeable future due to electronic substitution.
In response, the industry has become much more disciplined and
has been closing capacity to maintain a balanced market.
The stable outlook reflects our expectations that while demand for
UFS will continue to decline, the market will remain balanced and
Domtar will continue generating good cash flows and reduce debt
further. An upgrade would require a combination of improved
profitability and further deleveraging to about 2.5x. Given the
company's current business risk and financial risk profiles, there
would have to be an accelerated decline in demand leading to a
leverage ratio of more than 4x before we downgraded the company.
DOWNEY FINANCIAL: S&P Chips Rating to 'BB+/B' and Keeps Neg. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
rating on Downey Financial Corp. to 'BB+/B' from 'BBB-/A-3'. The
rating will remain on CreditWatch Negative where it was placed on
June 3, 2008.
"This action was taken in response to our increasing concerns
about the substantial negative effect California's deteriorating
housing market is having on Downey's credit performance, financial
profile, and capitalization," said Standard & Poor's credit
analyst Robert B. Hoban, Jr.
Downey's asset quality was already greatly strained, and credit
deterioration continues to be rapid and unabated. Nonperforming
assets at the end of June had grown to $1.4 billion
(11.16% of assets), up 45% from the previous quarter's already
very high level. Downey's concentration in California and its
level of exposure to the more at-risk 2006-2007 vintage mortgages
is likely to result in continued asset quality problems and
heightened loss severity. That said, Downey's high provisioning
levels since mid-2007 have built loan-loss reserves to what, in
more normal times, would be considered very strong levels (6.5% of
loans plus other real estate owned, and 52% of NPAs). Downey's
capital and reserve levels should allow it to absorb credit losses
above even our current pessimistic projections.
Nevertheless, if NPA growth does not soon slow materially, or if
loss rates rise above current projections, it would greatly impair
the thrift's ability to overcome its asset-quality problems. In
addition, another loss on the scale of second-quarter 2008 is
likely to threaten the thrift's regulatory "well-capitalized"
designation. Although Downey's good funding profile and lack of
brokered deposits should limit the direct impact of the thrift
having only an "adequate" regulatory capitalization designation,
we are concerned about possible negative fallout affecting
Downey's liquidity or regulatory status.
The rating and CreditWatch incorporate S&P's expectation that
Downey will continue to maintain adequate risk-adjusted capital
measures and good funding and liquidity. The rating also takes
into account Downey's proactive and conservative management and
its focus on prime lending, which has seen it through several
economic and credit cycles.
The ratings on Downey can withstand performance for the remainder
of 2008 that is on par with the losses experienced in the second
half of 2007, barring any change to the company's other credit
fundamentals.
Resolution of the CreditWatch will be based on the pace of NPA
growth and loss severity during the next few months. If during
that time the current pace of NPA growth continues, if losses on
NPAs exceed S&P's current expectations, or if reserve coverage or
capital leverage deteriorates materially, S&P will lower the
ratings. Also, if Downey suffers adverse liquidity trends or
regulatory action, S&P would lower the ratings. If NPA levels
flatten and loss severity continues to fall within its
expectations, then S&P would affirm the ratings.
ENERGY PARTNERS: Names Steve Longon as Chief Operating Officer
--------------------------------------------------------------
Energy Partners, Ltd. disclosed that Steve Longon has been named
Executive Vice President and Chief Operating Officer of the
company. Mr. Longon will oversee all aspects of EPL's operations,
including exploration, drilling and production, and will report
directly to Richard A. Bachmann, EPL's Chairman and CEO.
Mr. Longon joined EPL as Senior Vice President of Drilling and
Engineering in July 2007, and was named its Senior Vice President
of Drilling, Engineering and Production in February 2008. In
addition to setting strategy and direction for the company as a
member of senior management, Mr. Longon has been responsible for
all aspects of the company's drilling, engineering and production
functions. Prior to joining EPL, Mr. Longon was with Dominion
Exploration & Production, Inc. in its New Orleans office serving
as General Manager of Production and Operations, with
responsibility for their operations on the Shelf, in the deepwater
Gulf of Mexico and onshore South Louisiana. During his earlier
years with Dominion, he played a key role in the integration and
management of substantial resource assets in the Arklatex area,
South Texas and the Texas Gulf Coast.
Prior to his position with Dominion, Mr. Longon had served as
manager in a variety of GOM operational roles for Vastar
Resources, Inc. From 1979 to 1993, Mr. Longon worked for ARCO in
positions of increasing responsibility, primarily in the GOM and
onshore Texas and south Louisiana. Mr. Longon is a Summa Cum
Laude graduate with a B.S. in Chemical Engineering from the
University of Southwestern Louisiana.
"Steve Longon's 29 years of relevant experience in the GOM both on
the Shelf and in deepwater has brought significant breadth and
depth of operational knowledge to EPL," Richard A. Bachmann, EPL's
Chairman and CEO, commented. "Steve is well respected in the
industry and has been an excellent addition to our management
team. I expect Steve's proven leadership skills and versatile
skill set will continue to enhance the execution of our business
strategy. Our Board of Directors joins me in enthusiastically
congratulating Steve on his new appointment."
Energy Partners Ltd. (NYSE: EPL) -- http://www.eplweb.com/-- is
an independent oil and natural gas exploration and production
company based in New Orleans, Louisiana. Founded in 1998, the
company's operations are focused along the U.S. Gulf Coast, both
onshore in south Louisiana and offshore in the Gulf of Mexico.
At March 31, 2008, the company's consolidated balance sheet showed
$815.7 million in total assets, $709.5 million in total
liabilities, and $106.2 million in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on March 4, 2008,
Standard & Poor's Ratings Services said that ratings on Energy
Partners Ltd. (B/Negative/--) would not be immediately affected by
several recent developments. The company announced $100.0 million
in noncash, pretax impairment charges, largely related to
mechanical failures, early depletion, and production difficulties
in fields located in its Western offshore area. Its leverage
metrics have weakened year-over-year, with debt per proved barrel
currently above $11 on an adjusted basis. And it has seen feeble
drilling and reserve replacement results in 2007.
As reported in the Troubled Company Reporter on March 3, 2008,
Moody's Investors Service downgraded Energy Partners Ltd.'s
Corporate Family Rating to Caa1 from B3, its Probability of
Default to Caa1 from B3, and the ratings on its $300.0 million
senior unsecured fixed rate notes and $150.0 million senior
unsecured floating rate notes to Caa2 (LGD 4, 67%) from Caa1
(LGD 4, 65%). The downgrade reflects EPL's continued weak capital
productivity, especially as evidenced by its 2007 results,
negative sequential quarterly production trends, and continued
high financial leverage. The rating outlook remains negative.
ENVIROSOLUTIONS HOLDINGS: Moody's Affirms Debt Rating at Caa2
-------------------------------------------------------------
Moody's Investors Service affirmed its debt ratings of
EnviroSolutions Holdings, Inc. and EnviroSolutions Real Property
Holdings, Inc. (both EnviroSolutions); corporate family and
probability of default, each of Caa2, senior secured of Caa1. The
outlook is stable.
The change in outlook to stable follows the resolution of the
liquidity pressures that commenced in the fall of 2007 when
EnviroSolutions fell out of compliance with one of the financial
covenants in its credit facility. Access to the facility was
critical for the company as it faced cash requirements related to
the build-out and start up of new facilities as well as a
significant earn-out payment that became payable in May 2008. The
company has taken actions to resolve these issues, including
extending the payment period for the earn-out obligation, amending
its revolving credit agreement in a way that regains access to the
facility, and receiving a sizeable equity contribution to help
fund an expected free cash flow deficit over the next 12 to 18
months.
The affirmation of the ratings reflects Moody's belief that
significant improvement in the company's earnings and free cash
flow performance over the next 12 to 24 months is not likely
because of the current challenging demand environment and
significant capital expenditures. Moody's also believes that it
will take many months for EnviroSolutions to contract a
significant portion of the incremental transfer station capacity
that it is creating in the NY/NJ metro market by completing the
build-out of its DART (Doremus Avenue Recycling and Transfer)
facility in Newark, N.J. This will extend the period required to
realize the anticipated returns on this investment.
The Caa2 corporate family rating reflects the expectation that
margins and funds from operations will remain weak over the next
12 to 24 months because of continuing soft demand for the
company's waste services and because of relatively lower pricing
power than that of its larger peers. EnviroSolutions sources a
majority of its revenue under multi-year contracts with municipal
customers. This provides less flexibility to raise prices than do
shorter-term commercial agreements. Moody's also anticipates
significant negative free cash flow over this period as
EnviroSolutions expands the DART facility. However, the
combination of cash on hand and leasing of certain equipment
should cover the next 12 months free cash flow deficit, although
with little cushion to absorb a shortfall from its forecasted
earnings.
The stable outlook reflects the belief that downside risk in the
credit has been moderated with the resolution of the liquidity
pressures, and that the funding arrangements that have been
arranged should provide EnviroSolutions with adequate financial
flexibility until its operating trends improve. The company
should maintain compliance with the revised financial covenants
over at least the next 12 to 18 months. Moody's believes that
credit metrics are not likely to improve significantly over this
period; however, liquidity is adequate for EnviroSolutions to
maintain its current operations and fund its existing capital
investment plans. The ratings could be downgraded if EBITDA was
to decline from the LTM March 31, 2008 level, or if maintaining
compliance with financial covenants becomes questionable. The
ratings could be upgraded if credit metrics meaningfully improve
from LTM March 31, 2008 levels or if EnviroSolutions demonstrates
the ability to sustain positive free cash flow.
Outlook Actions:
Issuer: EnviroSolutions Holdings, Inc.
-- Outlook, Changed To Stable From Negative
Issuer: EnviroSolutions Real Property Holdings, Inc.
-- Outlook, Changed To Stable From Negative
LGD Assessments:
Issuer: EnviroSolutions Real Property Holdings, Inc.
-- Senior Secured Bank Credit Facility, Changed to LGD3, 36%
from LGD3, 40%
Headquartered in Manassas, Virginia, EnviroSolutions Holdings,
Inc. is an integrated solid waste management company with a
presence in Virginia, Maryland, New Jersey, Kentucky, West
Virginia and the District of Columbia. The company's assets
include three landfills, four transfer stations and several
hauling and collection operations.
EXPRESSJET HOLDINGS: Gets NYSE Share Price Non-Compliance Notice
----------------------------------------------------------------
ExpressJet Holdings Inc. received formal notification from NYSE
Regulation Inc. that it is not in compliance with the New York
Stock Exchange $1.00 average share price continued listing
standard. The standard requires that the average price per share
of common stock be at least $1.00 per share over a 30-day trading
period.
This notification is subsequent to the stock being moved to
trading on the NYSE's Arca market under a non-regulatory trading
halt condition called a sub-penny halt. The company's common
stock will continue trading on the NYSE Arca market until it
trades above $1.10 per share for an entire trading day.
Under the NYSE rules, ExpressJet must return to compliance with
the $1.00 average share price continued listing standard within
6 months to avoid delisting. The company intends to do so and is
pursuing various solutions to satisfy the standard, including the
suspension of unprofitable, branded flying operations on Sept. 2,
2008, and the achievement of $100 million in cost savings
initiatives related to the amended capacity purchase agreement
with Continental Airlines Inc. which became effective on July 1,
2008. Additional alternatives that may be reviewed include a
reverse stock split, which would require ExpressJet stockholder
approval.
ExpressJet has already made progress related to its cost savings
measures including instituting a wage and benefit reduction of up
to 5% for its management and clerical employees that became
effective July 16, 2008, and offering various early out and
company sponsored leave programs.
Indenture Amendment
ExpressJet also disclosed its plans to unilaterally amend the
indenture governing its 4.25% convertible notes due 2023 in order
to provide improved terms and additional flexibility for the
noteholders. These benefits will apply to any noteholder holding
the notes on Aug. 2, 2008, after the consummation of the exchange
offer that is being conducted as required by the indenture. Under
the current indenture, noteholders may require the company to
exchange their notes on Aug. 1, 2008, and the company has begun
the required exchange offer with the intention to satisfy the
obligation wholly in shares of common stock. Those noteholders
who retain their notes will automatically receive the benefits of
the unilateral amendment, including:
-- security based on a pro-rata amount of collateral appraised
at approximately $181 million, including approximately
$96 million in spare parts and $85 million of spare engines;
-- coupon increased from 4.25% to 11.25% over the remaining
note term; and
-- an additional put right in three years or on Aug. 1, 2011.
The amount of collateral will be based on the ratio of the
aggregate principal of notes outstanding on Aug. 2, 2008 to
$128.2 million, the aggregate principal amount of notes
outstanding. The terms of this additional put right will be
identical to those for the current rights under the indenture for
Aug. 1 of 2008, 2013 and 2018.
The trustee under the indenture is supportive of the company's
decision to provide noteholders additional flexibility and
improved terms beyond the Aug. 1, 2008 put date. These
amendments, however, must be reviewed and approved by the trustee
before becoming effective.
The company will report its second quarter financial results and
provide a further strategic update on Wednesday, Aug. 6, 2008, at
10:00 a.m. EDT.
About ExpressJet Holdings Inc.
Based in Houston, Texas, ExpressJet Holdings Inc. (NYSE:XJT) --
http://www.expressjet.com/-- operates several divisions designed
to leverage the management experience, efficiencies and economies
of scale present in its subsidiaries, including ExpressJet
Airlines Inc. and ExpressJet Services LLC. ExpressJet Airlines
serves 166 destinations in North America and the Caribbean with
approximately 1,450 departures per day. Operations include
capacity purchase and pro-rate agreements for mainline carriers;
providing clients customized 50-seat charter options; and
ExpressJet branded flying, providing non-stop service to markets
concentrated in the West, Midwest and Southeast regions of the
United States. ExpressJet Services is the North American partner
to three major European original equipment manufacturers and
provides composite, sheet metal, interior and thrust reverser
repairs throughout five facilities in the United States.
FEDDERS CORP: Suit Against Directors, Lenders Ongoing, Report Says
------------------------------------------------------------------
Arnold Rexroad, president of Local 105 of the Stove, Furnace and
Allied Appliances Workers union in the late 1990s said it doesn't
surprise him to know that Fedders Corp. is being sued by a group
of creditors in federal bankruptcy court, Effingham (Ill.) Daily
News reports.
As reported by the Troubled Company Reporter on April 4, 2008, The
Official Committee of Unsecured Creditors in Fedders and its
debtor-affiliates' Chapter 11 cases formally filed a lawsuit
against certain of the Debtors' directors, officers and lenders
alleged to have caused up to $150 million in damages to the
Debtors.
According to a report by the Effingham Daily News, attorneys for
the creditors' group divide the defendants into three groups;
insiders, and outside directors. The insiders include Executive
Chairman Sal Giordano Jr., Chief Executive Officer Michael
Giordano, Executive Vice President for Administration Kent Hansen,
Senior Vice President Peter Gasiewicz and Vice President Warren
Emley. Sal Jr. and Michael Giordano are father and son.
The report cited Mr. Rexroad as saying "When the boys (Giordano's
sons) took over, it started falling apart...By the time I was
president (of Local 105), I was telling my members to start
looking because things weren't looking good."
The lenders named in the suit include Goldman Sachs and Bank of
America. They are accused of approving bad loans to pocket large
fees and bonuses out of the transaction.
Sharon Levine, Esq., at Lowenstein Sandler, attorney for the
creditors, accuses the insiders of greedily extracting money from
the Debtor for personal use even at a time when the Debtor was
falling apart. Outside directors are accused of not doing
anything to stop the insiders. The suit seeks compensatory,
consequential and punitive damages.
The case is still pending, according to a clerk at U.S. Bankruptcy
Court in Delaware, where the bankruptcy petition was filed,
Effingham Daily News stated.
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.
FENDER MUSICAL: Moody's Puts Negative Outlook to B1 and B2 Ratings
------------------------------------------------------------------
Moody's Investors Service affirmed Fender Musical Instruments
Corporation's ratings while at the same time revising its rating
outlook to stable from negative. The affirmation of the ratings
and stabilization of the outlook reflects the company's improved
operating performance following the debt financed acquisition of
KMC in December 2007.
The affirmation of the ratings reflects the company's improved
credit metrics in the face of continuing weak discretionary
consumer spending and higher raw material costs. For example, at
June 30, 2008, we expect pro forma leverage (measured as adjusted
debt/EBITDA) to be less than a half turn higher than pre
acquisition leverage and, based on the company's performance for
the first six months of 2008, leverage at the end of 2008 is
expected to approximate pre acquisition leverage.
"The stable outlook reflects Moody's expectation that the company
will be able to materially maintain its operating performance and
improved credit metrics despite the expected continuation of weak
discretionary consumer spending for the foreseeable future" Kevin
Cassidy, senior credit officer at Moody's Investors Service, said.
These ratings/assessments were affirmed:
-- Corporate family rating at B1;
-- Probability of default ratings at B1;
-- $200 million senior secured term loan at B2 (LGD4, 58%);
-- $100 million senior secured delayed draw term loan at B2
(LGD4, 58%)
Headquartered in Scottsdale, Arizona, Fender Musical Instruments
Corporation develops, manufactures and distributes musical
instruments, principally guitars, to wholesale and retail outlets
throughout the world. The company's revenue for the 12 months
ended March 31, 2008, approximated $525 million.
FIRST HERITAGE: FDIC Named Receiver; Mutual of Omaha Takes Control
------------------------------------------------------------------
First National Bank of Nevada in Reno, Nevada, and First Heritage
Bank, N.A., in Newport Beach, California -- owned by First
National Bank Holding Company in Scottsdale, Arizona -- were
closed [Satur]day by the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation (FDIC) was named
receiver.
On July 11, 2008, the Office of Thrift Supervision closed IndyMac
Bank, F.S.B., of Pasadena, California. The FDIC was named
conservator. IndyMac Bank had total assets of $32.01 billion and
total deposits of $19.06 billion as of March 31, 2008.
The FDIC entered into purchase and assumption agreements with
Mutual of Omaha Bank in Omaha, Nebraska, to take over all of the
deposits and certain assets of the First National Bank of Nevada,
Reno (also operating as First National Bank of Arizona, which
recently merged into it), and First Heritage Bank, N.A., Newport
Beach, California.
The 28 offices of the two banks will reopen on [today] as branches
of Mutual of Omaha Bank. All depositors, including those with
deposits in excess of the FDIC's insurance limits, will
automatically become depositors of Mutual of Omaha Bank for the
full amount of their deposits. Depositors will continue to be
insured with Mutual of Omaha Bank so there is no need for
customers to change their banking relationship to retain their
deposit insurance.
Over the weekend, customers of the banks can access their money by
writing checks or using ATM or debit cards. Checks drawn on the
banks will be processed normally. Loan customers should continue
to make loan payments as usual.
Of the 10 institutions that have failed over the past two years,
this is the second time in which another bank acquired all of the
failing banks' insured and uninsured deposits. Mutual of Omaha
Bank's acquisition of all deposits was the "least costly"
resolution for the Deposit Insurance Fund compared to all
alternatives because the expected losses to uninsured depositors
were fully covered by the premium paid for the banks' franchises.
As of June 30, 2008, First National of Nevada had total assets of
$3.4 billion and total deposits of $3.0 billion. First Heritage
Bank had total assets of $254 million and total deposits of
$233 million.
In addition to assuming all of the deposits of the banks, Mutual
of Omaha Bank will purchase approximately $200 million of assets
from the receiverships. Mutual of Omaha Bank will pay the FDIC a
premium of 4.41 percent to assume all the deposits. The FDIC will
retain the remaining assets for later disposition.
First Heritage Bank, N.A., Newport Beach, California, had three
branches; its clientele was comprised primarily of corporations.
First National Bank of Nevada, with 25 branches, also operated as
First National Bank of Arizona. It is not affiliated with
National Bank of Arizona, Zions Bancorporation or its affiliates.
The cost of the transactions to the Deposit Insurance Fund is
estimated to be $862 million. The failed banks had combined
assets of $3.6 billion, 0.03 percent of the $13.4 trillion in
assets held by the 8,494 institutions insured by the FDIC.
First National Bank of Nevada is the first bank to be closed in
Nevada since Frontier Savings Association, Las Vegas, on Dec. 14,
1990. The bank closed most recently in California was IndyMac
Bank, F.S.B., Pasadena, on July 11, 2008. This year, a total of
seven FDIC-insured banks have been closed.
About FDIC
Congress created the Federal Deposit Insurance Corporation in 1933
to restore public confidence in the nation's banking system. The
FDIC insures deposits at the nation's 8,494 banks and savings
associations and it promotes the safety and soundness of these
institutions by identifying, monitoring and addressing risks to
which they are exposed. On the Net: http://www.fdic.gov/
About the OCC
Headquartered in Washington, D.C., The Office of the Comptroller
of the Currency charters, regulates, and supervises all national
banks. It also supervises the federal branches and agencies of
foreign banks. The OCC has four district offices plus an office
in London to supervise the international activities of national
banks. On the Net: http://www.occ.treas.gov/
About First Heritage Bank
First Heritage Bank, N.A., is an independent, locally-owned bank
with branches in Everett, Lynnwood, Marysville, Monroe, Arlington,
and Snohomish. It specialize in small business, real estate, and
minority lending. On the Net: http://www.firstheritage.net/
FNB NEVADA: FDIC Closes Bank, Mutual of Omaha Takes Control
-----------------------------------------------------------
First National Bank of Nevada in Reno, Nevada, and First Heritage
Bank, N.A., in Newport Beach, California -- owned by First
National Bank Holding Company in Scottsdale, Arizona -- were
closed [Satur]day by the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation (FDIC) was named
receiver.
On July 11, 2008, the Office of Thrift Supervision closed IndyMac
Bank, F.S.B., of Pasadena, California. The FDIC was named
conservator. IndyMac Bank had total assets of $32.01 billion and
total deposits of $19.06 billion as of March 31, 2008.
The FDIC entered into purchase and assumption agreements with
Mutual of Omaha Bank in Omaha, Nebraska, to take over all of the
deposits and certain assets of the First National Bank of Nevada,
Reno (also operating as First National Bank of Arizona, which
recently merged into it), and First Heritage Bank, N.A., Newport
Beach, California.
The 28 offices of the two banks will reopen on [today] as branches
of Mutual of Omaha Bank. All depositors, including those with
deposits in excess of the FDIC's insurance limits, will
automatically become depositors of Mutual of Omaha Bank for the
full amount of their deposits. Depositors will continue to be
insured with Mutual of Omaha Bank so there is no need for
customers to change their banking relationship to retain their
deposit insurance.
Over the weekend, customers of the banks can access their money by
writing checks or using ATM or debit cards. Checks drawn on the
banks will be processed normally. Loan customers should continue
to make loan payments as usual.
Of the 10 institutions that have failed over the past two years,
this is the second time in which another bank acquired all of the
failing banks' insured and uninsured deposits. Mutual of Omaha
Bank's acquisition of all deposits was the "least costly"
resolution for the Deposit Insurance Fund compared to all
alternatives because the expected losses to uninsured depositors
were fully covered by the premium paid for the banks' franchises.
As of June 30, 2008, First National of Nevada had total assets of
$3.4 billion and total deposits of $3.0 billion. First Heritage
Bank had total assets of $254 million and total deposits of
$233 million.
In addition to assuming all of the deposits of the banks, Mutual
of Omaha Bank will purchase approximately $200 million of assets
from the receiverships. Mutual of Omaha Bank will pay the FDIC a
premium of 4.41 percent to assume all the deposits. The FDIC will
retain the remaining assets for later disposition.
First Heritage Bank, N.A., Newport Beach, California, had three
branches; its clientele was comprised primarily of corporations.
First National Bank of Nevada, with 25 branches, also operated as
First National Bank of Arizona. It is not affiliated with
National Bank of Arizona, Zions Bancorporation or its affiliates.
The cost of the transactions to the Deposit Insurance Fund is
estimated to be $862 million. The failed banks had combined
assets of $3.6 billion, 0.03 percent of the $13.4 trillion in
assets held by the 8,494 institutions insured by the FDIC.
First National Bank of Nevada is the first bank to be closed in
Nevada since Frontier Savings Association, Las Vegas, on Dec. 14,
1990. The bank closed most recently in California was IndyMac
Bank, F.S.B., Pasadena, on July 11, 2008. This year, a total of
seven FDIC-insured banks have been closed.
About FDIC
Congress created the Federal Deposit Insurance Corporation in 1933
to restore public confidence in the nation's banking system. The
FDIC insures deposits at the nation's 8,494 banks and savings
associations and it promotes the safety and soundness of these
institutions by identifying, monitoring and addressing risks to
which they are exposed. On the Net: http://www.fdic.gov/
About the OCC
Headquartered in Washington, D.C., The Office of the Comptroller
of the Currency charters, regulates, and supervises all national
banks. It also supervises the federal branches and agencies of
foreign banks. The OCC has four district offices plus an office
in London to supervise the international activities of national
banks. On the Net: http://www.occ.treas.gov/
About FNB Nevada
First National Bank in Nevada provides financial services in the
Southwest to customers. On the Net: http://www.fnbnevada.com/
FREMONT INVESTMENT: Fitch Withdraws Rtngs on CSI's Debt Assumption
------------------------------------------------------------------
Fitch Ratings has withdrawn its ratings on Fremont Investment &
Loan as:
-- Long-term Issuer Default Rating of 'CC';
-- Long-term deposit rating of 'CCC'/RR4;
-- Short-term deposit rating of 'C';
-- Short-term IDR of 'C';
-- Individual rating of 'F';
-- Support rating of '5';
-- Support floor of 'NF'.
Fitch's action follows the announcement that CapitalSource Inc.
(rated 'BBB-' by Fitch) has assumed all the deposit liabilities of
FIL through its wholly-owned subsidiary, CapitalSource Bank.
Fitch will no longer provide ratings or analytical coverage on
Fremont Investment & Loan.
FRONTIER AIRLINES: Gets $75MM DIP Financing Offer from Perseus LLC
------------------------------------------------------------------
Frontier Airlines Holdings Inc. received a $75 million in post-
petition debtor-in-possession financing commitment from Perseus
LLC, a private investment firm based in Washington, D.C. with
offices in Evergreen, Colorado, New York and Munich that invests
in numerous buyout and growth equity transactions in the United
States, Canada, and Western Europe.
Perseus has also agreed to serve as equity sponsor for Frontier's
plan of reorganization, allowing Perseus to purchase 79.9% of the
equity in the reorganized company for $100 million. The DIP
facility and plan sponsorship are subject to bankruptcy court
approval and to various conditions.
"This statement is a major boost to Frontier and builds momentum
toward its emergence from bankruptcy as a viable enterprise,"
Sean Menke, Frontier president and chief executive officer, said.
"The $75 million commitment in DIP financing from Perseus is a
significant vote of confidence in the employees of Frontier, our
product and business plan. Despite the current challenges facing
the airline industry, these transactions help point the way
towards Frontier's emergence from bankruptcy as a competitive,
sustainable airline."
"We are enthusiastic about the opportunity to invest in the future
of Frontier," Brian Leitch, senior managing director of Perseus,
said. "We believe that Frontier has the highest-quality
affordable coach product in the domestic airline industry. We are
impressed by Frontier's excellent employees and friendly customer
service, well as the numerous product characteristics that
distinguish Frontier from its competitors. Industry data supports
our conclusion that when given a choice, the majority of coach
travelers prefer Frontier over the competitive options. The
airline industry is in a state of transition and some degree of
turmoil. Although Frontier has been buffeted by recent fuel price
increases and certain other issues, we believe that Frontier has
proven that it deserves a chance to succeed in this challenging
market, and we are proud to help it do so."
"We have named our acquisition affiliate Go Flip Go, L.L.C, as a
symbol of our desire to encourage and preserve Frontier's unique
cultural attributes," Mr. Leitch continued. "Of course, we also
want to support Larry, Hector, Grizwald, Jack, Sally, the penguins
and all the other Frontier animals."
Frontier filed a motion on July 25 with the U.S. Bankruptcy Court
for the Southern District of New York. Upon court approval,
Perseus will provide funding under the proposed DIP credit
facility in two installments to support the company's working
capital needs.
The proposed DIP funding, coupled with Frontier's negotiations
with partners to improve liquidity, reduce expenses, and preserve
cash, is expected to provide sufficient working capital for the
Company's operations. The company continues to work with its
partners and employees to obtain additional liquidity, reduce
expenses and enhance revenues.
"We are grateful that many of our key vendors and business
partners, as well as all of our employees, have stepped up and
made financial sacrifices to help provide Frontier with a lot of
staying power," Mr. Menke said. "Through a variety of
transactions and business initiatives, we have improved our
liquidity over a very short period of time. All of this support
reaffirms the fundamental business changes we have been making
since the beginning of the year. We continue to adjust capacity
and realign our route network to leverage our brand strengths and
market awareness during a period of severe industry turmoil."
About Frontier Airlines Inc.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel,
Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst
and Company is the Debtors' Communications Advisors. At
Dec. 31, 2007, Frontier Airlines Holdings Inc. and its
subsidiaries' total assets was US$1,126,748,000 and total debts
was US$933,176,000.
G-FORCE 2005-RR: S&P Lowers Certificates Ratings on 14 Classes
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 14
classes from G-FORCE 2005-RR LLC and removed them from CreditWatch
with negative implications, where they were placed on May 28,
2008. Concurrently, S&P affirmed its 'AAA' rating on the class X
certificate.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for CMBS securities, as detailed in "Recovery Rates For CMBS
Collateral In Resecuritization Transactions," published May 28,
2008.
According to the trustee report dated July 23, 2008, the
transaction's current assets included 41 classes ($457.7 million,
100%) of commercial mortgage-backed securities pass-through
certificates from 15 distinct transactions issued between 1998 and
2000. Only GMAC Commercial Mortgage Securities Inc.'s series
1999-C1 ($83.4 million, 18%) and Chase Commercial Mortgage
Securities Corp.'s series 1998-2 ($74.8 million, 16%) represent
asset concentrations of 10% or more of total assets. The
aggregate principal balance of the assets and liabilities totaled
$457.7 million, down from $502.9 million at issuance. Of the
$45.2 million reduction in principal balance, $7.7 million was due
to principal losses realized on first loss CMBS assets, which
currently represent $19.1 million (4%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'BB-'
rated obligations. Standard & Poor's rates $85 million (19%) of
the assets. S&P reanalyzed its outstanding credit estimates for
the remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
G-FORCE 2005-RR LLC
CMBS pass-through certificates
Rating
------
Class To From
----- -- ----
A-1 A AAA/Watch Neg
A-2 A AAA/Watch Neg
B BBB AA/Watch Neg
C BB+ A/Watch Neg
D BB+ A-/Watch Neg
E BB+ BBB+/Watch Neg
F BB BBB/Watch Neg
G BB- BBB-/Watch Neg
H B- BB+/Watch Neg
J CCC+ BB/Watch Neg
K CCC BB-/Watch Neg
L CCC- B/Watch Neg
M CCC- B-/Watch Neg
N CCC- CCC+/Watch Neg
Rating Affirmed
G-FORCE 2005-RR LLC
CMBS pass-through certificates
Class Rating
----- ------
X AAA
G-FORCE 2005-RR2: S&P Cuts 14 Certificate Ratings After Review
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 14
classes from G-Force 2005-RR2 Trust and removed them from
CreditWatch with negative implications, where they were placed on
May 28, 2008. Concurrently, S&P affirmed its ratings on four
other classes.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for CMBS securities, as detailed in "Recovery Rates For CMBS
Collateral In Resecuritization Transactions," published May 28,
2008.
According to the trustee report dated June 25, 2008, the
transaction's current assets included 127 classes ($862.1 million,
100%) of pass-through certificates from 24 distinct commercial
mortgage-backed securities transactions issued between 1998 and
2002. None of the assets represents a concentration of 10% or
more of total assets. The aggregate principal balance of the
assets and liabilities totaled $862.1 million, down from
$996.4 million at issuance. Of the $134.3 million reduction in
principal balance, $44.3 million was due to principal losses
realized on first-loss CMBS assets, which currently represent
$143 million (17%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics are consistent with 'B+'
rated obligations. Excluding first-loss CMBS assets, the current
asset pool exhibits credit characteristics consistent with 'BB'
rated obligations. Standard & Poor's rates $393.4 million (46%)
of the assets. S&P reanalyzed its outstanding credit estimates
for the remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
G-Force 2005-RR2 Trust
CMBS pass-through certificates
Rating
------
Class To From
----- -- ----
A-3FL AA+ AAA/Watch Neg
A-4A A- AAA/Watch Neg
A-4B A- AAA/Watch Neg
B BBB- AA-/Watch Neg
C BB+ BBB+/Watch Neg
D BB BBB/Watch Neg
E B+ BBB-/Watch Neg
F B BB+/Watch Neg
G CCC- BB-/Watch Neg
H CCC- B+/Watch Neg
J CCC- B/Watch Neg
K CCC- B-/Watch Neg
L CCC- CCC+/Watch Neg
M CCC- CCC/Watch Neg
Ratings Affirmed
G-Force 2005-RR2 Trust
CMBS pass-through certificates
Class Rating
----- ------
A-1 AAA
A-2 AAA
N CCC-
X AAA
G-FORCE CDO: S&P Junks Ratings on Two Classes; Removes Neg. Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on eight
classes from G-Force CDO 2006-1 Ltd. and removed them from
CreditWatch with negative implications, where they were placed on
May 28, 2008. Concurrently, S&P affirmed its ratings on five
classes and removed two of the affirmed ratings from CreditWatch
with negative implications.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for commercial mortgage-backed securities, as detailed in
"Recovery Rates For CMBS Collateral In Resecuritization
Transactions," published May 28, 2008.
According to the June 25, 2008, trustee report, the transaction's
current assets included 87 classes ($674.5 million, 80%) of CMBS
pass-through certificates from 39 distinct transactions issued
between 1997 and 2006. None of the CMBS transactions represent an
asset concentration of 10% or more of total assets. The current
assets also included seven classes ($147.6 million, 18%) from G-
FORCE 2005-RR2 Trust, which is a CMBS resecuritization, and two
commercial real estate loans ($18.3 million, 2%). The aggregate
principal balance of the assets totaled $840.4 million, down from
$880.4 million at issuance, while the aggregate liabilities
totaled $869.3 million, down from $880.4 million at issuance. Of
the $40 million reduction in the aggregate asset principal
balance, $34.5 million was due to principal losses realized on
first-loss assets, which currently represent $168.4 million (20%)
of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'BB+'
rated obligations. Excluding first-loss assets, the current asset
pool exhibits credit characteristics consistent with 'BBB' rated
obligations. Standard & Poor's rates $600.9 million (72%) of the
assets. S&P reanalyzed its outstanding credit estimates for the
remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
G-Force CDO 2006-1 Ltd.
Collateralized debt obligations
Rating
------
Class To From
----- -- ----
B AA AA+/Watch Neg
C A+ AA/Watch Neg
D BBB+ A+/Watch Neg
E BBB- A/Watch Neg
F BB+ A-/Watch Neg
G B+ BBB/Watch Neg
H CCC+ BBB-/Watch Neg
J CCC- BB+/Watch Neg
Ratings Affirmed and Removed from Creditwatch Negative
G-Force CDO 2006-1 Ltd.
Collateralized debt obligations
Rating
------
Class To From
----- -- ----
SSFL AAA AAA/Watch Neg
JRFL AAA AAA/Watch Neg
Ratings Affirmed
G-Force CDO 2006-1 Ltd.
Collateralized debt obligations
Class Rating
----- ------
A-1 AAA
A-2 AAA
A-3 AAA
GATEHOUSE MEDIA: Moody's Lowers Corp. Family Rating to Caa1
-----------------------------------------------------------
Moody's Investors Service downgraded GateHouse Media Operating,
Inc.'s Corporate Family rating to Caa1 from B2 and its Probability
of Default rating to Caa2 from B3 reflecting Moody's heightened
concern regarding the company's near-term liquidity and the
likelihood that GateHouse will face a default under its credit
agreement, absent an amendment or equity cure.
Ratings downgraded:
Senior secured first lien revolving credit facility -- to Caa1,
LGD3, 34% from B2, LGD3, 35%
Senior secured term loan B -- to Caa1, LGD3, 34% from B2, LGD3,
35%
Senior secured term loan C -- to Caa1, LGD3, 34% from B2, LGD3,
35%
Senior secured delayed draw term loan -- to Caa1, LGD3, 34% from
B2, LGD3, 35%
Corporate Family rating -- to Caa1 from B2
Probability of Default rating -- to Caa2 from B3
The rating outlook is negative.
This concludes the review for possible downgrade which was
initiated in April 2008.
The downgrade reflects Moody's heightened concern that GateHouse
could face a near-term default under the financial covenants of
its loan agreement, absent an amendment or another equity cure
from its largest owner (Fortress Investment Group LLC).
The negative outlook reflects GateHouse's very tight liquidity
profile, its reliance upon proposed asset sales to provide
financial flexibility, the probability that the company's
softening same-store sales may worsen closer to the double digit
declines experienced by many of the nation's large newspaper
publishing companies, and Moody's concern that current market
valuations may prove insufficient to provide full recovery to
lenders, in a distress scenario. In addition, the negative outlook
incorporates concern that GateHouse's management team will
continue its fast pace of acquisition activity in the face of
recessionary-like market conditions.
At the end of March 2008, GateHouse reported liquid resources of
approximately $25 million, comprised of $11 million in cash and
$14 million in undrawn availability under its $40 million
revolving credit facility. However, Moody's estimates that
GateHouse's financial covenants will effectively constrain the
company from drawing more than a de minimus amount of debt under
its revolver, further squeezing its liquidity profile, which is
exacerbated by the funding needs of a $10 million seller
promissory notes due November 2008 and a $21 million bridge
facility due May 2008 (subject to extensions through August 2009).
At the end of March 2008, GateHouse's credit agreement-defined
results provided the company with a modest 3% cushion within its
total leverage financial ratio tests. Moody's considers it highly
questionable whether GateHouse will be able to comply with this
covenant test over the near term without the benefit of proceeds
from asset sales or another equity cure from its largest
shareholder.
Headquartered in Fairport, New York, GateHouse Media Operating,
Inc. is a leading US publisher of local newspapers and related
publications. Pro forma for the acquisition of the Morris assets,
the company recorded sales of approximately $753 million for the
twelve month period ended March 30, 2008.
GAYLORD ENTERTAINMENT: Moody's Affirms Low-B and Junk Ratings
-------------------------------------------------------------
Moody's Investors Service assigned Gaylord Entertainment Company
an SGL-2 Speculative Grade Liquidity Rating indicating good
liquidity. At the same time, Moody's affirmed all existing
ratings of Gaylord. The outlook remains stable.
Rating assigned:
-- Speculative Grade Liquidity Rating of SGL-2
The ratings affirmed are and LGD point estimates adjusted;
-- Corporate family rating of B2
-- Probability of default rating of B2
-- $225 million 6.75% senior global notes due Nov. 15, 2014
at Caa1 (LGD 5, 80%) previously Caa1 (LGD 5, 81%)
-- $350 million 8.00% senior global notes due Nov. 15, 2013
at Caa1 (LGD 5, 80%) previously Caa1 (LGD 5, 81%)
-- The outlook is stable
The SGL-2 speculative grade liquidity rating reflects Moody's view
that Gaylord's liquidity is good. Moody's expects that the
company's internally generated cash and cash balances should be
sufficient in funding working capital fluctuations, required
amortization, and maintenance capital expenditures over the next
twelve months. The company's $1.0 billion bank credit facility,
which expires on March 9, 2010, should provide sufficient
liquidity to meet its commitments until the recently opened
Gaylord National resort begins to contribute to revenues and cash
flow. The bank facility has several financial covenants although
Moody's believes that over the next 12 months the cushion under
these covenants will be adequate. In addition, with the majority
of assets pledged as security to the bank facility lenders there
would be limited alternate sources of liquidity in a distress
situation.
Headquartered in Nashville, Tennessee, Gaylord Entertainment
Company is a diversified hospitality and entertainment company.
Gaylord owns and operates several convention centers and resorts
that include the Gaylord Opryland in Nashville, The Gaylord Palms
in Kissimmee, Florida, and The Gaylord Texan in Dallas. The
company's newest resort, the Gaylord National in Washington, D.C.,
was opened in March 2008. For the 12 months ended March 31, 2008,
the company generated revenue of approximately $761 million.
GENERAL MOTORS: To Offer Discounts on Vehicle Sales Until July 31
-----------------------------------------------------------------
General Motors Corp. will offer employee discounts to non-
employees on a limited basis to augment its sales amid slump in
the U.S. auto industry, The Wall Street Journal reports.
As reported in the Troubled Company Reporter on July 2, 2008, in
GM's June sales results, the company related that despite the
significant decline of industry market volume and the limited
availability of some of GM's most popular models, GM dealers in
the United States delivered 265,937 vehicles in June, down 8%
(18.5% unadjusted). Truck sales declined 6%.
WSJ, citing GM sales chief Mark LaNeve, says, all GM employees in
the U.S. can give out one employee discount, between now and the
end of July, to anyone who considers purchasing a new vehicle.
According to Mr. LaNeve, a better way to promote our products is
to give an additional incentive to buy GM, WSJ states.
WSJ indicates that GM is already offering attractive discounts and
financing plans on most of its vehicles in July as it struggles to
rebound from deep sales declines in the first half of 2008.
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.
GENERAL MOTORS: To Cut Production at Four Plants on September 29
----------------------------------------------------------------
General Motors Corp. spokesman Tony Sapienza disclosed that the
automaker is planning to terminate one shift at truck plants in
Moraine, Ohio, and Shreveport, Louisiana, on September 29, Greg
Bensinger of Bloomberg News reports. The action will displace
1,760 of the 4,000 workers and chip the forecasted 300,000 output
by 117,000, on an annual basis as consumers shift to cars and
crossovers from SUVs due to rising fuel prices.
According to Bloomberg News, Mr. Sapienza said that the company
also intends to pare the hourly production rates at SUV facilities
in Silao, Mexico, and Mishawaka, Indiana.
As disclosed in the Troubled Company Reporter on July 16, 2008,
GM said it is taking further steps to adapt its business to
rapidly changing market conditions, marked by the weak U.S.
economy, record high fuel prices, shifts in consumer vehicle
preferences, and the lowest U.S. industry sales volumes in a
decade.
For liquidity planning purposes, GM is using assumptions of U.S.
light vehicle industry volumes of 14.0 million units in 2008-2009
which are significantly below trend. Other planning assumptions
include lower U.S. share of approximately 21% and continued
elevated average oil price estimates ranging from $130 to $150 per
barrel by 2009. Based on those assumptions, GM is taking actions
to further reduce structural cost, and generate cash, with the
goal of maximizing liquidity.
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.
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.
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.
* * *
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.
GENERAL MOTORS: Appaloosa Balks at Participation on Delphi Suit
---------------------------------------------------------------
A-D Acquisition Holdings, LLC, and Appaloosa Management L.P.
oppose the participation of General Motors Corporation as party-
in-interest with respect to Delphi Corp.'s $2,550,000,000
adversary complaint against Appaloosa and other Plan Investors.
As disclosed in the Troubled Company Reporter on July 15, 2008,
GM sought authority from the U.S. Bankruptcy Court for the
Southern District of New York to participate in the
adversary proceedings filed by Delphi Corp. against Appaloosa,
Management, L.P., et al. GM wants to participate in the
proceedings as a "party-in-interest."
Delphi's ties with Appaloosa, et al., soured after Delphi sought
funding of the $2,825,000,000 of its $6,100,000,000 exit debt
financing facility from General Motors, its primary customer. The
lenders, including GM, were ready to close April 4, but the
financing agreements have been terminated after Appaloosa, et al.,
pulled out from their commitment to provide $2,550,000,000 of
equity financing to Delphi.
Douglas P. Baumstein, Esq., at White & Case LLP, in New York,
says that ADAD and AMLP anchor their opposition on GM's failure
to adequately define what a "party in interest" means, given that
it seeks to participate in the adversary proceeding in a limited
capacity, yet it seeks rights afforded only to full parties to a
proceeding without undertaking the obligations of a party.
Mr. Baumstein admits that some of the relief sought by GM is
acceptable, "but much of the relief it seeks goes well beyond
that to which a party in interest is entitled," Mr. Baunstein
says.
Mr. Baumstein anticipates that at this time, GM does not seek to
intervene in the proceedings, however, it seeks court authority
to (i) appear before the Court on any matter arising in the
Adversary Proceeding, including hearings and chamber conferences,
(ii) participate in any settlement discussions, mediation
sessions and arbitrations regarding the Adversary Proceeding, and
(iii) participate in the discovery process, including through the
review of documents produced and attendance at depositions.
Mr. Baumstein argues that GM is not entitled to participate so
as to fully monitor the progress and status of the Adversary
Proceeding and to permit involvement in activities likely to
affect or overlap with a new plan, contrary to the relief it
seeks. Mr. Baumstein then cites the grounds for ADAH and AMLP's
objections and supporting with contentions:
(1) GM should only be permitted to appear in the litigation so
long as it limits itself to the role of observer and does
not duplicate effort or unduly burden the parties.
It is not clear that GM is willing to limit its role, as
GM seeks to participate in the action by appearing
before the Court on "any matter arising in the Adversary
Proceeding" including by appearing at the chambers'
conferences. This right is inconsistent with the
monitoring function GM purports to seek.
(2) There is no basis for GM's request to participate in any
settlement negotiations.
GM has articulated no concrete interest or right of its
own that is at stake in this proceeding. Instead, GM
purports to seek participation on a limited basis in
order to inform its own position in negotiations of a
modified or new plan of reorganization that is not
before this Court in this proceeding.
(3) GM should not be permitted to seek discovery without first
intervening as a party.
The right to serve discovery requests is one reserved to
full parties at an action, which GM is not and does not
seek.
Harbinger Del-Auto Investment Company Ltd. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated have joined in Appaloosa's
objection. Both parties request the Court to deny GM's motion to
participate in the adversary proceeding as party-in-interest.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 138; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
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.
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.
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.
* * *
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.
GENERAL MOTORS: Negotiating New or Amended Plan for Delphi Corp.
----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
bankruptcy cases of Delphi Corp. and its debtor-affiliates says it
is actively negotiating with the Debtors to reach mutually
acceptable modification of the current Joint Plan of
Reorganization of the Debtors, following Appaloosa Management,
L.P., et al.'s decision to back out from their $2,550,000,000 exit
financing agreement, and in light of the Debtors' pending lawsuit
against Appaloosa, et al.
Committee counsel Edward M. Fox, Esq., at K&L Gates, LLP, in New
York, says that if the negotiations don't achieve the resolution,
it will pursue its adversary proceeding, seeking the revocation
of the order confirming the Plan, which the Committee says it
accepted based upon the "promissory fraud of Appaloosa."
As reported in the Troubled Company Reporter on July 15, 2008,
General Motors Corp., in its request to join as party-in-interest
in Delphi's adversary proceedings against Appaloosa, et al., said
it is a major constituent of a new plan under negotiation together
with Delphi and Creditors Committee. GM has been asked to provide
major support through financial contributions, subsidies and
loans, its counsel Michael P. Kessler, Esq., at Weil, Gotshal &
Manges LLP, in New York, disclosed.
GM also had said its interest in participating in the
$2,550,000,000 lawsuits is in the litigation's representation of
a significant asset of the Debtors' estates. The terms and
conditions of a modified or new plan will depend, in part, on the
value ascribed to the litigation and the disposition of any
recoveries from the litigation, Mr. Kessler said.
About Delphi
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional headquarters
in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
March 31, 2007, the Debtors' balance sheet showed $11,446,000,000
in total assets and $23,851,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their proposal
to provide $2,550,000,000 in equity financing to Delphi.
(Delphi Bankruptcy News, Issue No. 138; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
About GM
Based 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.
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.
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.
* * *
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.
GEMINI AIR: To Auction Assets on August 12
------------------------------------------
Gemini Air Cargo Inc. and its debtor-affiliates are selling a
portion of or substantially all of their assets, subject to bigger
and better offers on Aug. 12, 2008, at 10:00 a.m., Eastern Time.
The sale will be held at U.S. Bankruptcy Court at 1410 Claude
Pepper Federal Building, 51 Southwest First Avenue, Miami,
Florida.
The Debtors propose to (i) sell the assets free and clear of
liens, claims, encumbrances and interest, and (ii) assume and
assign certain executory contracts and unexpired leases to the
purchasers of the assets.
The U.S. Bankruptcy Court for the Southern District of Florida is
set to consider the assets sale on the same date.
Parties interested in the auction participation may contact the
Debtors' counsel Berger Singerman PA.
Objections to the sale may be submitted not later than 4:00 p.m.
on Aug. 8, 2008, to:
1. Gemini Air Cargo Inc.
Attn: Lawrence Kahn
44965 Aviation Drive, Suite 300
Dulles, VA 20166
2. Berger Singerman PA
Attn: Jordi Guso, Esq.
200 South Biscayne Boulevard, Suite 1000
Miami, FL 33131
3. Cole Scotz Miesel Forman & Leonard PA
Counsel for Laurus Special Master Fund Ltd.
Attn: Stuart Komrower, Esq. and Gerald Gline, Esq.
Court Plaza North
25 Main Street
Hackensack, New Jersey 07601
4. Genovese Joblove & Battista PA
Local Counsel for Laurus Special Master Fund Ltd.
Attn: Glenn D. Moses, Esq.
100 Southeast Second Street, 44th Floor
Miami, FL 33131
5. Greenberg Taurig LLP
Counsel for Bayside Gemini Recorvery LLC
Attn: Nancy A. Mitchell, Esq.
200 Park Avenue
New York, NY 10166
6. Brett H. Miller, Esq.
Morrison Forrester
Counsel for Official Committee of Unsecured Creditors
230 Park Avenue, 29th Floor
New York, NY 10169
Based in Dulles Virginia, Gemini Air Cargo, Inc. --
http://www.geminiaircargo.com/-- provides airfreight services.
It operates cargo schedules and charters on a wet-lease basis.
The Debtor and its debtor-affiliates filed for Chapter 22
protection on June 18, 2008, (Bankruptcy S.D. Fla. Case No.: 08-
18175 to 08-18179) Paul Steven Singerman, Esq. at Berger Singerman
P.A. represents the Debtors in their restructuring efforts. The
Debtor's financial condition as of the petition date showed
estimated assets and debts of $100 million to $500 million.
The Debtor and its debtor-affiliate first filed for chapter 11
protection on March 15, 2006, (Bankr. S.D. Florida Case Nos. 06-
10870 and 06-10872). Kourtney P. Lyda, Esq., at Haynes and Boone,
LLP, represents the Debtor. The Debtors emerged from bankruptcy
five months later.
GOODY'S FAMILY: Files Ch. 11 Plan Disclosure Statement
------------------------------------------------------
Goody's Family Clothing Inc. and its subsidiaries filed a
Disclosure Statement with respect to the Joint Plan of
Reorganization Proposed by Goody's Family Clothing Inc. and
Subsidiary Debtors, Debtors in Possession, and the Official
Committee of Unsecured Creditors, with the U.S. Bankruptcy Court
for the District of Delaware.
If confirmed, the Plan will implement a compromise and settlement
among the Debtors, their pre-petition senior lender, their pre-
petition junior lenders including PGDYS Lending LLC and GMM
Capital LLC, and the Official Committee of Unsecured Creditors.
The Debtors will be reorganized pursuant to the Plan, if
confirmed, and will continue in operation, achieving the
objectives of Chapter 11 for the benefit of their creditors,
customers, suppliers, employees and communities. The Committee is
a proponent of the Plan.
"We appreciate the support of our vendor community, customers and
employees during this Chapter 11 process," Paul White, Goody's
chief executive officer, said. "We are encouraged by the
Committee's support of the Plan and we look forward to the Court's
consideration of the Disclosure Statement, scheduled for Aug. 25,
2008."
"If the Disclosure Statement is approved by the Court, Goody's
intends to solicit votes from its creditors concerning the Plan
and, subject to the voting results, to thereafter proceed to seek
Court confirmation of the Plan," Mr. White added.
About Goody's Family
Headquartered in Knoxville, Tennessee, Goody's Family Clothing
Inc. -- http://www.shopgoodys.com/-- operates chains of clothing
stores. The company is owned by Goody's Holdings Inc., a non-
debtor entity. As of May 31, 2008, the company operates 355
stores in several states with approximately 9,868 personnel of
which 170 employees are covered under a collective bargaining
agreement.
The company and 19 of its affiliates filed for Chapter 11
protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08-11133).
Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps
Slate Meagher & Flom LLP, represent the Debtors. When the Debtors
filed for protection against their creditors, they listed assets
and debts between $100 million and $500 million.
As of May 3, 2008, the Debtors' records reflected total assets of
$313,000,000 -- book value -- and total debts of $443,000,000.
GOODY'S FAMILY: Skadden Arps Approved as Bankruptcy Counsel
-----------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
gave Goody's Family Clothing Inc. and its debtor-affiliates
permission to employ Skadden, Arps, Slate, Meagher & Flom LLP as
their bankruptcy counsel.
As reported in the Troubled Company Reporter on July 10, 2008,
Skadden Arps is expected to:
a) advise the Debtors with respect to their powers and duties
as debtor-in-possession in the continued management and
preparations of their business and properties;
b) attend meetings and negotiating with representatives of
creditors and other parties in interest and advise and
consult on the conduct of the cases, including all of the
legal and administrative requirements of operating in
Chapter 11;
c) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on
behalf of the Debtor's estates, the defense of any actions
commenced against those estates, negotiations concerning
litigation in which the Debtors may be involved and
objections to claims filed against the estates;
d) prepare, on behalf of the Debtors, motions, applications,
answers, orders, reports, and papers necessary to the
administration of the estates;
e) prepare and negotiate on the Debtors' behalf plan(s) of
reorganization, disclosure statement, and all related
agreements and documents and take any necessary action on
behalf of the Debtors to obtain confirmation of the plan(s);
f) advise the Debtors in connection with any sale of assets;
g) perform other necessary legal services and provide other
necessary legal advice to the Debtors in connection with
these Chapter 11 cases; and
h) appear before the Court, any appellate courts, and the U.S.
Trustee and protecting the interest of the Debtors' estates
before the Courts and the U.S. Trustee.
The firms' professionals and their compensation rates are:
Designations Hourly Rates
------------ ------------
Partner and Of Counsel $680-$950
Counsel/Special Counsel $640-$765
Associates $340-$625
Legal Assistants $170-$265
Gregg M. Galardi, Esq., a member of the firm assures 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. Gregg can be reached at:
Gregg M. Galardi, Esq.
Skadden Arps Slate Meagher & Flom LLP
One Rodney Square
Wilmington, DE 19899
Tel: (302) 651-3000
Fax: (302) 651-3001
http://www.skadden.com/
About Goody's Family
Headquartered in Knoxville, Tennessee, Goody's Family Clothing
Inc. -- http://www.shopgoodys.com/-- operates chains of clothing
stores. The company is owned by Goody's Holdings Inc., a non-
debtor entity. As of May 31, 2008, the company operates 355
stores in several states with approximately 9,868 personnel of
which 170 employees are covered under a collective bargaining
agreement.
The company and 19 of its affiliates filed for Chapter 11
protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08-11133).
The U.S. Trustee for Region 3 appointed seven creditors to serve
on an Official Committee of Unsecured Creditors. When the Debtors
filed for protection against their creditors, they listed assets
and debts between $100 million and $500 million.
As of May 3, 2008, the Debtors' records reflected total assets of
$313,000,000 -- book value -- and total debts of $443,000,000.
About Goody's Family
Headquartered in Knoxville, Tennessee, Goody's Family Clothing
Inc. -- http://www.shopgoodys.com/-- operates chains of clothing
stores. The company is owned by Goody's Holdings Inc., a non-
debtor entity. As of May 31, 2008, the company operates 355
stores in several states with approximately 9,868 personnel of
which 170 employees are covered under a collective bargaining
agreement.
The company and 19 of its affiliates filed for Chapter 11
protection on June 9, 2008 (Bankr. D. Del. Lead Case No.08-11133).
Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps
Slate Meagher & Flom LLP, represent the Debtors. The Debtors
selected Logan and Company Inc. as their claims agent. The U.S.
Trustee for Region 3 appointed seven creditors to serve on an
Official Committee of Unsecured Creditors. When the Debtors filed
for protection against their creditors, they listed assets and
debts between $100 million and $500 million.
As of May 3, 2008, the Debtors' records reflected total assets of
$313,000,000 -- book value -- and total debts of $443,000,000.
GRAMERCY REAL ESTATE CDO 2005-1: Moody's Affirms Low-B Ratings
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings of 11 classes of
Notes issued by Gramercy Real Estate CDO 2005-1 Ltd. as:
-- Class A1, $513,000,000, Floating Rate Notes Due 2035,
affirmed at Aaa
-- Class A2, $57,000,000, Floating Rate Notes Due 2035, affirmed
at Aaa
-- Class B, $102,500,000, Floating Rate Notes Due 2035, affirmed
at Aa2
-- Class C, $47,000,000, Floating Rate Deferrable Interest Notes
Due 2035, affirmed at A1
-- Class D, $12,500,000, Floating Rate Deferrable Interest Notes
Due 2035, affirmed at A2
-- Class E, $16,000,000, Floating Rate Deferrable Interest Notes
Due 2035, affirmed at A3
-- Class F, $16,000,000, Fixed Rate Deferrable Interest Notes
Due 2035, affirmed at Baa1
-- Class G, $18,500,000, Floating Rate Deferrable Interest Notes
Due 2035, affirmed at Baa2
-- Class H, $28,000,000, Fixed Rate Deferrable Interest Notes
Due 2035, affirmed at Baa3
-- Class J, $49,500,000, Floating Rate Deferrable Interest Notes
Due 2035, affirmed at Ba2
-- Class K, $35,000,000, Floating Rate Deferrable Interest Notes
Due 2035, affirmed at B2
Moody's is affirming this transaction due to overall stable pool
performance based on the Trustee Report dated June 30, 2008 and
information from the Collateral Manager.
Gramercy Real Estate CDO 2005-1 Ltd. is a collateralized debt
obligation backed primarily by a portfolio of whole loans and
mezzanine loans. Based on the Trustee Report dated June 30, 2008,
the transaction's aggregate bond balance totals $1.0 billion, the
same as at issuance. The ramp-up period ended on Nov. 10, 2005.
The transaction is in compliance with all the applicable
collateral quality and coverage tests.
The rating actions reflect Moody's evaluation of the expected loss
associated with each class of Notes based on the level of
subordination under the notes and the credit quality of the
underlying collateral pool.
GRAMERCY REAL ESTATE CDO 2006-1: Moody's Affirms Low-B Ratings
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings of 11 classes of
Notes issued by Gramercy Real Estate CDO 2006-1 Ltd. as:
-- Class A1, $500,000,000, Floating Rate Notes Due 2041,
affirmed at Aaa
-- Class A2, $171,250,000, Floating Rate Notes Due 2041,
affirmed at Aaa
-- Class B, $95,000,000, Floating Rate Notes Due 2041, affirmed
at Aa2
-- Class C, $33,750,000, Floating Rate Deferrable Interest Notes
Due 2041, affirmed at A1
-- Class D, $20,000,000, Floating Rate Deferrable Interest Notes
Due 2041, affirmed at A2
-- Class E, $26,250,000, Floating Rate Deferrable Interest Notes
Due 2041, affirmed at A3
-- Class F, $20,000,000, Fixed Rate Deferrable Interest Notes
Due 2041, affirmed at Baa1
-- Class G, $20,000,000, Floating Rate Deferrable Interest Notes
Due 2041, affirmed at Baa2
-- Class H, $17,500,000, Fixed Rate Deferrable Interest Notes
Due 2041, affirmed at Baa3
-- Class J, $22,750,000, Floating Rate Deferrable Interest Notes
Due 2041, affirmed at Ba2
-- Class K, $16,000,000, Floating Rate Deferrable Interest Notes
Due 2041, affirmed at B2
Moody's is affirming this transaction due to overall stable pool
performance based on the Trustee Report dated June 30, 2008 and
information from the Collateral Manager.
Gramercy Real Estate CDO 2006-1 Ltd. is a collateralized debt
obligation backed primarily by a portfolio of whole loans and
mezzanine loans. Based on the Trustee Report dated June 30, 2008,
the transaction's aggregate bond balance totals $1.0 billion, the
same as at issuance. The ramp-up period ended on May 21, 2007.
The transaction is in compliance with all the applicable
collateral quality and coverage tests.
The rating actions reflect Moody's evaluation of the expected loss
associated with each class of Notes based on the level of
subordination under the notes and the credit quality of the
underlying collateral pool.
HOLLINGER INC: CTO Prompts TSX to Delist Securities on August 22
----------------------------------------------------------------
Toronto Stock Exchange will delist the Securities of Hollinger
Inc. at the close of market on Aug. 22, 2008, for failure to meet
the continued listing requirements of TSX. The securities of the
company are halted from trading due to the imposition of a Cease
Trade Order by the Ontario Securities Commission. In addition,
the Securities have been suspended from trading by TSX effective
immediately.
Hollinger Inc. and Ernst & Young Inc., its monitor, have been
authorized to consent to the delisting of the company's
Retractable Common Shares (Symbol: HLG.C) and Exchangeable Non-
Voting Preference Shares Series II (Symbol: HLG.PR.B), pursuant to
an Order issued on July 21, 2008, by The Ontario Superior Court of
Justice under the Companies' Creditors Arrangement Act.
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.
I-MANY INC: Has Until August 22 to Comply with Market Value Rule
----------------------------------------------------------------
I-many Inc. received a notice from the Listing Qualifications
division of the NASDAQ Stock Market indicating that the company's
common stock is subject to potential delisting from the NASDAQ
Global Market because the market value of the company's common
stock was below $50 million for 10 consecutive business days, and,
therefore, did not meet the requirement set forth in NASDAQ
Marketplace Rule 4450(b)(1)(A).
The Rule and the notice relate only to the eligibility of I-many's
securities to remain listed on the NASDAQ Global Market and do not
affect I-many's satisfaction of the listing requirements of the
NASDAQ Capital Market. If I-many cannot meet the requirements for
continued listing on the NASDAQ Global Market, I-many intends to
apply to transfer its common stock to the NASDAQ Capital Market.
The notice from the Listing Qualifications division further stated
that the company is also not in compliance with an alternative
test, NASDAQ Marketplace Rule 4450(b)(1)(B), which requires total
assets and total revenue of $50 million each for the recently
completed fiscal year or two of the last three recently completed
fiscal years.
In accordance with NASDAQ Marketplace Rule 4450(e)(4), I-many will
be provided a period of 30 calendar days, or until Aug. 22, 2008,
to regain compliance with the Rule and continue listing its common
stock on the NASDAQ Global Market. If at any time before Aug. 22,
2008, the market value of I-many's common stock is $50 million or
more for a minimum of 10 consecutive business days or longer
period as the NASDAQ staff may require in some circumstances, the
company will achieve compliance with the Rule.
If I-many has not regained compliance with the Rule by Aug. 22,
2008, the NASDAQ staff will issue a letter notifying the company
that its common stock will be delisted from the NASDAQ Global
Market. At that time, the company may appeal the determination to
a Listing Qualifications Panel.
If I-many makes an application to transfer its securities to the
NASDAQ Capital Market by Aug. 22, 2008, NASDAQ will stay any
delisting proceedings pending review of the application. I-many
believes it meets the criteria to transfer to the NASDAQ Capital
Market.
About I-many(R)
Headquartered in Edison, New Jersey, I-many Inc. (NASDAQ:IMNY) --
http://www.imany.com/-- provides contract management software and
services for the enterprise. With hundreds of customers across 21
industries worldwide, I-many is enabling businesses to manage the
entire contract life cycle, from pre-contract processes and
contract management to active compliance and contract
optimization. The result is an end-to-end solution that provides
greater levels of insight into contract performance, allowing
companies to improve profitability and achieve a measurable return
on investment. For more information, please visit.
IAC/INTERACTIVECORP: Amends Cash Tender Offer for 7% Senior Notes
-----------------------------------------------------------------
IAC/InterActiveCorp has amended its cash tender offer for any and
all of its outstanding 7% Senior Notes due 2013 (CUSIP Nos.
902984AD5 & 902984AC7/ISINs US902984AD51, US902984AC78 &
USU9033KAA26) and related consent solicitation to amend the
indenture governing the Notes.
The tender offer and consent solicitation are made upon the terms
and subject to the conditions set forth in the Amended and
Restated Offer to Purchase and Consent Solicitation Statement
dated July 24, 2008, and the related Amended and Restated Letter
of Transmittal and Consent. Those documents more fully set forth
the terms of the tender offer and consent solicitation.
Holders who previously have tendered Notes do not need to retender
their Notes or take any other action in response to the amendment.
The tender offer will expire at Midnight, New York City time, on
Monday, Aug. 11, 2008, unless extended or earlier terminated by
IAC. In order to be eligible to receive the Total Consideration
for tendered Notes, holders must validly tender and not validly
withdraw their Notes at or prior to 5:00 p.m., New York City time,
on Monday, Aug. 4, 2008, unless extended or earlier terminated by
IAC. Tendered Notes may not be withdrawn and consents may not be
revoked after the Consent Time except under very limited
circumstances.
The total consideration offered for each $1,000 principal amount
of Notes validly tendered and not validly withdrawn prior to the
Consent Time, and accepted for payment pursuant to the tender
offer and consent solicitation will be determined as specified in
the tender offer and consent solicitation documents and will be
equal to:
-- the present value on the Settlement Date of all future cash
flows on such Notes to Jan. 15, 2013, the maturity date of
the Notes, calculated in accordance with standard market
practice as described in the Amended Offer to Purchase,
based on the assumptions that the principal amount of the
Notes would be repaid in full on the Maturity Date and that
the yield to the Maturity Date is equal to the sum of:
(i) the yield on the 3.625% U.S. Treasury Note due Dec. 31,
2012, as calculated by the Dealer Manager in accordance
with standard market practice, based on the bid-side
price for the Reference Security, as of 2:00 p.m., New
York City time, on July 28, 2008, the tenth business day
immediately preceding the scheduled Expiration Time,
unless such pricing determination time is extended, as
displayed on the Bloomberg Government Bond Trader, Page
BBT5, plus
(ii) 100 basis points; minus
-- any accrued and unpaid interest from the most recent
interest payment date preceding the Settlement Date to, but
excluding, the Settlement Date.
The Total Consideration includes a consent payment of $30 per
$1,000 principal amount of the Notes, which will be payable only
in respect of the Notes purchased in the tender offer that are
tendered prior to the Consent Time. Holders who validly tender
their Notes after the Consent Time and prior to the Expiration
Time will not be eligible to receive the consent payment pursuant
to the tender offer and consent solicitation, and accordingly will
only be eligible to receive an amount equal to the Total
Consideration less the consent payment pursuant to the tender
offer and consent solicitation. Holders whose Notes are accepted
for payment in the tender offer will also be paid accrued and
unpaid interest, if any, from the most recent interest payment
date preceding the Settlement Date to, but excluding, the
Settlement Date.
Concurrently with the tender offer, IAC is soliciting consents to
proposed amendments to the indenture governing the Notes, which
would eliminate substantially all of the restrictive covenants and
certain events of default provisions, eliminate certain provisions
relating to mergers and consolidations of and transfers of assets
by the IAC and make certain conforming and related changes to the
indenture and the Notes. However, because IAC has obtained
consents in accordance with the previously announced Notes
Exchange and Consent Agreement in respect of an amount of Notes
sufficient to approve the proposed amendments in accordance with
the indenture, the delivery of additional consents pursuant to the
consent solicitation is not required to approve the proposed
amendments. Holders may not tender their Notes without also
delivering consents or deliver consents pursuant to the consent
solicitation without also tendering their Notes.
IAC expects to pay for any Notes purchased pursuant to the tender
offer and consent solicitation in same-day funds promptly
following the Expiration Time.
The tender offer and consent solicitation are subject to the
satisfaction of certain conditions, including:
(i) the Spin-Off Condition, which requires that all conditions
precedent to the proposed spin-offs to IAC's stockholders
will have been satisfied or waived by IAC and the
distribution of shares of Interval Leisure Group Inc. will
have occurred prior to the Expiration Time; and
(ii) the Indenture Condition, which requires that the
supplemental indenture implementing the proposed amendments
will have been executed by the indenture trustee. The
tender offer is no longer conditioned on any minimum amount
of Notes being tendered.
IAC is amending the terms of the tender offer and consent
solicitation as set forth in the Amended Offer to Purchase
pursuant to the Notes Exchange and Consent Agreement. In
connection with this agreement, IAC stated that the issuance and
exchange of new notes of Interval Acquisition Corp. for Notes
pursuant to the agreement, together with the offer to purchase and
consent solicitation as amended, are being made in connection with
the spin-off of ILG, and are intended to give rise to a succession
event for credit derivatives purposes.
IAC has retained Morgan Stanley & Co., Incorporated to act as the
Dealer Manager for the tender offer and the Solicitation Agent for
the consent solicitation. Questions regarding the tender offer
and the consent solicitation may be directed to Morgan Stanley at
(800) 624-1808 (toll-free) or (212) 761-1941 (collect) (Attn:
Liability Management). Requests for documentation may be directed
to MacKenzie Partners, Inc., the Information Agent for the tender
offer and consent solicitation, at (800) 322-2885 (toll-free) or
(212) 929-5500 (collect).
About IAC
IAC/InterActiveCorp (Nasdaq: IACI) -- http://iac.com/-- operates
a portfolio of specialized and global brands in the sectors:
Retailing, which includes the United States and International
segments; Services, which includes the Ticketing, Lending, Real
Estate, Teleservices and Home Services reporting segments; Media &
Advertising, and Membership & Subscriptions, which includes the
Vacations, Personals and Discounts reporting segments.
* * *
As reported in the Troubled Company Reporter on June 16, 2008,
Standard & Poor's Ratings Services said that its ratings on
IAC/InterActiveCorp, including the 'BB' corporate credit rating,
remain on CreditWatch with negative implications, where they were
initially placed on Nov. 5, 2007, following IAC's announcement
that it planned to divide itself into five publicly traded
companies.
IBIS TECHNOLOGY: Fails to Maintain NASDAQ Minimum Market Value
--------------------------------------------------------------
Ibis Technology Corporation received an letter from the Nasdaq
Stock Market dated July 23, 2008 notifying the company that it has
not maintained a minimum market value of publicly held shares
(MVPHS) of the company's Common Stock of $5,000,000 as required by
Nasdaq Marketplace Rule 4450(a)(2).
The company disclosed that it received a letter on April 23, 2008
from Nasdaq advising that, for the previous 30 consecutive
business days, the MVPHS of the Common Stock had not maintained
the minimum $5,000,000 requirement over the previous 30
consecutive days. The company was provided 90 calendar days from
the letter date, or until July 22, 2008, to regain compliance. In
its most recent letter, Nasdaq provided formal notification that,
because the company had not regained compliance with the rule, the
matter serves as an additional basis for delisting and the Nasdaq
Listing Qualifications Panel will consider the matter in rendering
a determination regarding the company's continued listing on the
Nasdaq Global Market.
The company participated in a Panel hearing on June 5, 2008 to
address the delayed filing of the company's Form 10-K and Form 10-
Q, as well as additional compliance concerns. Subsequently, the
company has filed the required reports and provided additional
information as requested by the Panel. The Panel is currently
considering the company's request for continued listing. The
company has until July 30, 2008 to present its views to the Panel
in writing with respect to MVPHS deficiency. There can be no
assurance the Panel will grant the company's request for continued
listing.
On June 13, 2008, the company disclosed that it received a letter
from Nasdaq notifying the company that the company's Common Stock
had not maintained the minimum bid price required by Nasdaq
Marketplace Rule 4450(a)(5). The company disclosed that it
received a letter on Dec. 10, 2007 from Nasdaq advising that, for
the previous 30 consecutive business days, the bid price of the
Common Stock had closed below the minimum $1.00 per share
requirement. The company was provided 180 calendar days from the
letter date, or until June 9, 2008, to regain compliance.
On June 3, 2008, the company disclosed that it received a letter
from Nasdaq dated May 29, 2008 informing the company that it did
not comply with the minimum $10,000,000 stockholders' equity
requirement, as required by Marketplace Rule 4450(a)(3).
On April 22, 2008, the company disclosed that it received a Nasdaq
letter dated April 16, 2008 advising that Nasdaq had not received
the company's Annual Report on Form 10-K for the fiscal year ended
Dec. 31, 2007, as required by Nasdaq Marketplace Rule 4310(c)(14).
On May 23, 2008, the company disclosed that it received a letter
from Nasdaq dated May 19, 2008 informing the company that Nasdaq
had not received the company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2008, as required by Nasdaq
Marketplace Rule 4310(c)(14). On May 28, 2008, the company filed
its Form 10-K for the year ended Dec. 31, 2008 and, on June 2,
2008, filed Amendment No. 1 to correct certain inadvertent
omissions. The company filed its Form 10-Q on July 11, 2008.
About Ibis Technology Corporation
Headquartered in Danvers, Massachusetts, Ibis Technology
Corporation (NASDAQ: IBIS) –- http://www.ibis.com-- develops,
manufactures and markets SIMOX-SOI implantation equipment for the
worldwide semiconductor industry.
INTERPUBLIC GROUP: S&P Puts 'B+' Rating on $335MM Credit Facility
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its issue-level and
recovery ratings to Interpublic Group of Cos. Inc.'s $335 million
unsecured revolving credit facility due 2011. This senior
unsecured debt was assigned an issue-level rating of 'B+' and a
recovery rating of '4', indicating our expectation of average
(30%-50%) recovery in the event of a payment default.
The 'B+' corporate credit rating reflects Interpublic's high
leverage, relatively weak discretionary cash flow, and
profitability measures that are below those of peers. The
company's large portfolio of advertising and communications
services brands, its broad geographic and business diversity, its
return to organic revenue growth after a period of net client
losses, and very strong cash balances partially offset these
factors. The New York City-based global advertising agency
holding company had approximately $2.2 billion in debt outstanding
as of March 31, 2008.
IXIS REAL: S&P Puts Default Ratings on Two Certificate Classes
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings to 'D' on
two classes of mortgage pass-through certificates from IXIS Real
Estate Capital Trust's series 2006-HE2 and 2006-HE3.
The downgrades reflect the deteriorating performance of the
collateral pools as monthly net losses continue to significantly
outpace monthly excess interest cash flows, resulting in the
complete write-down of the overcollateralization for these deals.
This O/C deficiency caused principal write-downs to class B-4 from
series 2006-HE2 and class B-5 from series 2006-HE3, which prompted
us to downgrade these classes to 'D'.
As of the June 2008 distribution period, cumulative realized
losses were 5.32% (series 2006-HE2) and 3.95% (2006-HE3) of the
original principal balances. Total delinquencies and severe
delinquencies (90-plus days, foreclosures, and REOs) were 58.01%
and 45.13% of the current principal balance for series 2006-HE2,
respectively, and 47.54% and 38.11% of the current principal
balance for series 2006-HE3, respectively. These transactions
have outstanding pool factors of approximately 55.64% (2006-HE2)
and 67.73% (2006-HE3).
As of the June 2008 remittance period, the affected classes had
incurred realized losses as follows (series; class; realized
loss):
-- 2006-HE2; B-4; $2,655,821; and
-- 2006-HE3; B-5; $2,353,189.
Subordination, O/C, and excess interest cash flow provide credit
support for these deals. The collateral originally consisted of
subprime fixed- and adjustable-rate mortgage loans secured by one-
to four-family residential properties.
Ratings Lowered
IXIS Real Estate Capital Trust
Mortgage pass-through certificates
Rating
------
Series Class To From
------ ----- -- ----
2006-HE2 B-4 D CC
2006-HE3 B-5 D CC
JOURNAL REGISTER: Inks Forbearance Pact; Conway Del Genio In
------------------------------------------------------------
Journal Register Company entered into a Forbearance Agreement and
Amendment No. 3 to the Amended and Restated Credit Agreement dated
as of Jan. 25, 2006, as amended, between the company, the lenders
party thereto and JPMorgan Chase Bank, N.A., as Administrative
Agent. Under the terms of the Forbearance Agreement, for the
period from July 24 through Oct. 31, 2008, interest under the
Credit Agreement will accrue but not be paid, and the lenders will
forbear from exercising certain remedies with respect to these
interest payments.
As a condition to the Forbearance Agreement, the company has
agreed that, during the Forbearance Period, lender's commitments
to make further extensions of credit, including new letters of
credit or swingline loans, are suspended, although certain
existing letters of credit can be renewed, and certain cash
management procedures will apply. In addition, certain
restrictive covenants, including covenants with respect to asset
sale proceeds, indebtedness, acquisitions and dispositions, will
be amended.
Conway Del Genio On Board
As contemplated by the Forbearance Agreement, the Company has
engaged Conway, Del Genio, Gries & Co., LLC to provide certain
financial services to the company. As part of the engagement, the
company has appointed Robert Conway, a principal of CDG, to the
newly created position of Chief Restructuring Officer.
Company Halts SEC Disclosures
On July 22, 2008, the company filed a Form 15 with the Securities
and Exchange Commission to deregister its common stock and suspend
its reporting obligations under the Securities Exchange Act of
1934, as amended. The company expects the deregistration to
become effective within 90 days of filing with the SEC.
As a result of filing the Form 15, the company's obligation to
file certain reports and forms including forms 10K, 10Q and 8K has
been suspended and upon effectiveness will cease. The common
stock may continue to be quoted on the "Pink Sheets," however,
there can be no certainty of such quotation as it will only take
place to the extent that market makers decide to make a market in
the Company's shares.
Headquartered in Yardley, Pennsylvania, Journal Register Company
(PINKSHEETS:JRCO) -- http://www.journalregister.com-- owns and
operates 27 daily newspapers and 368 non-daily publications as of
Dec. 31, 2006. The company also operates 239 individual websites
that are affiliated with the company's daily newspapers, non-daily
publications and its network of employment websites. All of the
company's operations are clustered in seven geographic areas:
Greater Philadelphia, Michigan, Connecticut, Greater Cleveland,
New England, and the Capital-Saratoga and Mid-Hudson regions of
New York. The company owns JobsInTheUS, a network of 19
employment websites and three commercial printing operations. The
company's total paid circulation is approximately 616,000 daily,
635,000 Sunday and its total non-daily distribution is
approximately 6.4 million. In February 2007, the company sold two
of its New England Cluster daily community newspapers to Gatehouse
Media.
* * *
As reported in the Troubled Company Reporter on May 8, 2008,
Standard & Poor's Ratings Services lowered its rating on Journal
Register Co.; the corporate credit rating was lowered to 'CCC'
from 'B-'. The ratings were removed from CreditWatch, where they
were placed with negative implications on April 7, 2008. The
rating outlook is negative.
JOURNAL REGISTER: Forbearance Deal w/ Lenders Cue S&P's 'D' Rtngs
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and other ratings for Journal Register Co. to 'D'. The action
follows the company's announcement that it has entered into a
forbearance agreement with lenders, which includes a provision
whereby interest under the credit agreement will accrue and will
not be paid for the period July 24, 2008 through Oct. 31, 2008.
S&P views this event as a meaningful departure from the original
terms of the credit agreement, resulting in 'D' corporate credit
and issue-level ratings under our criteria.
In addition, S&P revised its recovery rating on the company's
first-lien credit facility to '4', indicating that lenders can
expect average (30% to 50%) recovery in the event of a default,
from '3'. The revised recovery rating reflects a lowering of its
assumed default emergence multiple to 5x due to a deteriorating
operating environment in the newspaper sector.
LEVITT AND SONS: DIP Administrator Taps PTS Inc. as Appraiser
-------------------------------------------------------------
Soneet R. Kapila, as chief administrator for certain Debtors that
are borrowers under a DIP Loan Agreement with Wachovia Bank,
National Association, seeks authority from the U.S. Bankruptcy
Court for the Southern District of Florida to employ Preferred Tax
Service, Inc., as his real estate tax appraiser, nunc pro tunc to
June 17, 2008.
Cynthia C . Jackson, Esq., at Smith Hulsey & Busey, in
Jacksonville, Florida, counsel for the Chief Administrator,
relates that Preferred Tax's personnel are experienced with
assessing ad valorem tax values in the counties where the
Wachovia Debtors' projects are located.
Preferred Tax will assist Mr. Kapila in carrying out his duties,
including providing tax consulting services and assisting Mr.
Kapila in connection with real estate tax litigation appeals for
five of the Wachovia Debtors' residential communities -- Seasons
at Laurel Canyon, located in Cherokee County, Georgia; Seasons at
Lake Lanier, located in Hall County, Georgia; Seasons at Seven
Hills and Waterstone at Seven Hills, both located in Paulding
County, Georgia; and Seasons at Prince Creek, located in Horry
County, South Carolina.
According to Ms. Jackson, Preferred Tax will be paid for its real
estate tax appraisal services on a contingency fee basis in an
amount equal to 30% of the net property tax savings achieved for
the Wachovia Debtors.
Any payments to Preferred Tax will be made from funds advanced
under the Debtors' DIP Financing Agreement.
Roy Swartzberg, a certified residential appraiser in the State of
Georgia and property tax consultant at Preferred Tax, assures the
Court that the firm and its individual employees do not hold or
represent any interest adverse to the Debtors, their creditors or
estates. Preferred Tax is a disinterested person, as the term is
defined in Section 101(14) of the U.S. Bankruptcy Code, he
attests.
Preferred Tax has no connection with any creditors or any other
parties-in-interest or their attorneys or accountants in the
Debtors' Chapter 11 cases, or the United States Trustee, Mr.
Swartzberg tells the Court.
About Levitt and Sons
Based in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors have filed a Chapter 11 joint plan of liquidation on
June 27, 2008. (Levitt and Sons Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/
or 215/945-7000)
LEVITT & SONS: Court Sets Disclosure Statement Hearing for Aug. 13
------------------------------------------------------------------
The Honorable Raymond B. Ray of the U.S. Bankruptcy Court for the
Southern District of Florida will consider the adequacy of Levitt
and Sons LLC and its debtor-affiliates' Disclosure Statement
explaining the Joint Liquidating Chapter 11 Plan filed by the
Debtors and the Official Committee of Unsecured Creditors on
Aug. 13, 2008, at 9:30 a.m.
Any party-in-interest who opposes Disclosure Statement have until
August 6 to file written objections to the Court.
The Debtors delivered its Liquidation Plan to the Court last
June 27, 2008. As reported in the Troubled Company Reporter on
July 4, 2008, the Debtors seek to wind down its homebuilding
operations. "It's abundantly clear and fair to say that Levitt
and Sons willnot reorganize," said Paul Singerman, Esq., the
company's counsel. "It's just an awful market for residential
developers."
The Liquidation Plan designates claims of the company's creditors
into specific classes and provides for the corresponding
treatment for each claim class. A Plan Administrator will be
appointed to oversee the contemplated winding down process of the
Levitt and Sons business.
About Levitt and Sons
Based in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors have filed a Chapter 11 joint plan of liquidation.
(Levitt and Sons Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
LEVITT AND SONS: Wants Form of Woodbridge Pact Notice Approved
--------------------------------------------------------------
Levitt and Sons LLC and its debtor-affiliates, and the Official
Committee of Unsecured Creditors ask the U.S. Bankruptcy Court for
the Southern District of Florida to approve the manner and method
of notice of their settlement agreement with Woodbridge Holdings
Corporation, formerly known as Levitt Corporation and the sole
member of Levitt and Sons, LLC.
The Debtors and Creditors Committee will file a separate motion
for the approval of the Woodbridge Settlement Agreement.
The Debtors and Creditors Committee believe it important to
establish the method and manner of notice of the Woodbridge
Settlement Motion in advance of the filing and service of that
Motion.
On the Debtors' behalf, Paul Steven Singerman, Esq., at Berger
Singerman, P.A., in Miami, Florida, relates that Woodbridge holds
these claims against the Debtors:
* Claim against LAS for $85,500,000 related to certain
intercompany loans and advances made by Woodbridge since
2005, which Woodbridge asserts is partially secured
through the right of set-off against certain tax refunds.
* Claim against certain of the Debtors for $4,000,000
related to various claims assigned to Woodbridge by former
employees of the Debtors.
* A portion of the Intercompany Loan of roughly $7,900,000
for which Woodbridge asserts recoupment in relation to
certain income taxes that Woodbridge asserts it paid for
on behalf of the Debtors for the year 2006, which are
subject of a tax refund.
* A secured claim for $3,300,000 in connection with a
certain loan made by Woodbridge to LAS for the acquisition
of certain notes and mortgages related to properties sold
by the Debtors that were originally to be financed by
HomeBanc, which loan is secured by a pledge of notes,
mortgages and proceeds from LAS to Woodbridge.
* A contingent claim against certain of the Debtors for
$13,000,000 related to certain liability that Woodbridge
may have in respect of certain infrastructure bonds that
were issued in favor of the Debtors and that were
guaranteed by Woodbridge.
* An administrative claim for certain shared services
provided by Woodbridge to the Debtors from the inception
of their Chapter 11 cases. As of February 29, 2008, the
Administrative Expense Claim is roughly $1,400,000, and
continues to increase by $100,000 per month thereafter.
The Creditors Committee has conducted an investigation of certain
claims and causes of action of the Debtors' estates against
Woodbridge, certain of its non-debtor affiliates, and certain
officers and directors of Woodbridge and the Debtors. As a
result of the investigation, the Creditors Committee asserts
these claims and causes of action against Woodbridge:
(a) A $11,000,000 claim related to an income tax refund that
is expected to be due and issued to Woodbridge as the
parent holding company for the Debtors, in connection with
losses generated by the Debtors in 2007 that are being
carried back to obtain a refund of taxes paid by the
Debtors in 2005 on income earned by the Debtors in 2005.
(b) A $7,900,000 claim related to an income tax refund that is
expected to be and issued to Woodbridge as the parent
holding company for the Debtors, in connection with losses
generated by the Debtors in 2007 that are being carried
back to obtain a refund in respect of taxes paid on income
earned by the Debtors in 2006.
(c) A claim for the recharacterization of the Intercompany
Loan from debt to equity.
(d) Claims and causes of action under Chapter 5 of the
Bankruptcy Code for the avoidance and recovery of certain
transfers made by one or more of the Debtors to Woodbridge
and certain of its affiliates and former employees.
Woodbridge has asserted defenses to all the claims and causes of
action.
After engaging in lengthy negotiations, the Creditors Committee,
Woodbridge and the Debtors have executed a settlement agreement
dated June 27, 2008.
One of the critical and necessary elements of the Woodbridge
Settlement is the entry by the Court of a third party release and
injunction in favor of Woodbridge and certain parties related to
Woodbridge. The Release/Injunction will be in exchange for,
among other things, a payment to the Debtors' estates of
$12,500,000, plus a waiver of the Administrative Expense Claim in
an amount of not less than $1,500,000.
Given the critical nature of the Release/Injunction to the
Woodbridge Settlement, the Debtors and the Creditors Committee
want to insure that full, fair and proper notice of the
Settlement Motion and the Release/Injunction be provided to all
creditors and parties-in-interest in the Debtors' Chapter 11
cases.
Approval of the Woodbridge Settlement Motion is a condition
precedent to the effective date of the Joint Plan, Mr. Singerman
adds.
The Debtors and the Creditors Committee propose to serve the
Woodbridge Settlement Motion and Notice of Hearing to eight
groups, including all parties listed on the Debtors' Master
Service List; all creditors on the creditor matrix; all parties
with contracts to purchase homes or land from the Debtors; and
persons or entities who have been named as defendants in
adversary proceedings initiated by the Debtors.
The Debtors and Creditors Committee also propose to publish
notice of the Settlement Motion and Hearing Notice on the
National Edition of USA Today.
Wachovia Responds
Wachovia Bank, National Association, does not oppose to the Court
approving the Joint Settlement Notice Motion of the Debtors and
Creditors Committee. Wachovia, however, notifies the Court that
as a result of certain claims and causes of action it has against
Woodbridge, it will likely object to the merits of the Settlement
Motion. Wachovia makes its position known to the Court to the
extent of any impact on the determination of the appropriate
scheduling of the Settlement Motion hearing.
According to Robert N. Gilbert, Esq., at Carlton Fields, P.A., in
West Palm Beach, Florida, Wachovia also wishes to ensure that
sufficient information is provided by the settlement parties to
allow it to be properly evaluated before the Settlement Motion
hearing.
While a copy of the Settlement Agreement has not yet been filed
with the Court, the Joint Settlement Notice Motion does indicate
that the Settlement Motion will include an involuntary release of
all third party claims against Woodbridge and certain related
entities, and that this release is a "critical and necessary"
element of the Settlement, Mr. Gilbert notes.
Mr. Gilbert argues that an involuntary release of third party
claims is improper in the Eleventh Circuit. He adds that without
knowing the true value of Woodbridge's claims against the Debtors
and vice versa, it will not be possible to determine if the
Settlement Agreement actually accrues any value to the Debtors'
creditors.
In exchange of the involuntary release, creditors have a right to
know if the infusion of cash will have any real impact on their
recoveries, Mr. Gilbert asserts.
Wachovia thus asks the Court to require:
(i) the Debtors and Woodbridge to produce, at the time of the
service of the Settlement Motion, to Wachovia and any
other party requesting documentation, any and all
documentation within the Debtors' possession that pertains
to their and Woodbridge's claim against each other; and
(ii) the proponents of the Settlement Motion to serve, at the
time of the service of the Settlement Motion, a copy of
the Settlement Agreement to all parties receiving service
of the motion.
About Levitt and Sons
Based in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors have filed a Chapter 11 joint plan of liquidation on
June 27, 2008. (Levitt and Sons Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/
or 215/945-7000)
LEXINGTON PRECISION: Court Sets August 15 as Claims Bar Date
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
has set Aug. 15, 2008, 5:00 p.m., Eastern Time, as the last day
wherein creditors of Lexington Precision Corp. and Lexington
Rubber Group Inc. may file proofs of claim.
The Court has also established Sept. 29, 2008, 5:00 p.m., Eastern
Time, as the Government Bar Date.
The bar dates only apply to the proofs of claim that arose prior
to April 1, 2008.
For inquiries on proofs of claims filing, please contact:
The Lexington Claims Processing Center
Tel (866) 212-0222 (toll-free)
(646) 282-2500.
About Lexington Precision
Headquartered in New York City, Lexington Precision Corp. --
http://www.lexingtonprecision.com/-- manufactures tight-tolerance
rubber and metal components for use in medical, automotive, and
industrial applications. As of Feb. 29, 2008, the companies
employed about 651 regular and 22 temporary personnel.
The company and its affiliate, Lexington Rubber Group Inc., filed
for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead
Case No.08-11153). Richard P. Krasnow, Esq., at Weil, Gotshal &
Manges, represents the Debtors in their restructuring efforts.
The Debtors selected Epiq Bankruptcy Solutions LLC as claims
agent. The U.S. Trustee for Region 2 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors.
When the Debtors filed for protection against their creditors,
they listed total assets of $52,730,000 and total debts of
$88,705,000.
LNR CDO IV: Moody's Cuts to Low-B Ratings on Four Classes of Notes
------------------------------------------------------------------
Moody's Investors Service downgraded the ratings of seven classes
of Notes issued by LNR CDO IV Ltd. as:
-- Class E, $72,058,000, Floating Rate Deferrable Interest Notes
Due 2043, downgraded to Baa2 from Baa1
-- Class F-FL, $25,000,000, Floating Rate Deferrable Interest
Notes Due 2043, downgraded to Baa3 from Baa2
-- Class F-FX, $31,046,000, Floating Rate Deferrable Interest
Notes Due 2043, downgraded to Baa3 from Baa2
-- Class G, $78,063,000, Floating Rate Deferrable Interest Notes
Due 2043, downgraded to Ba1 from Baa3
-- Class H, $90,073,000, Floating Rate Deferrable Interest Notes
Due 2043, downgraded to Ba3 from Ba1
-- Class J, $38,031,000, Floating Rate Deferrable Interest Notes
Due 2043, downgraded to B1 from Ba2
-- Class K, $64,052,000, Floating Rate Deferrable Interest Notes
Due 2043, downgraded to B2 from Ba3
Moody's is downgrading seven classes due to realized losses and
deteriorating pool performance.
As of the June 30, 2008 distribution date, the transaction's
aggregate collateral balance has decreased to $1,596.6 million
from $1601.4 million at issuance, due to $4.8 million in losses
from these CMBS transactions (CCMSC 1997-2 Class J, CSFB 1998-C2
Class J, DLJCM 1998-CF2 Class C, LBUBS 2003-C5 Class T, and CD
2005-CD1 Class Q). The Notes are currently collateralized by 154
classes of CMBS securities from 38 separate transactions.
Since issuance, among the Moody's rated securities (46.9% of the
pool balance), there have been one upgrade and seven downgrades to
the CMBS securities. Credit estimates were performed on non-
Moody's rated securities encompassing 80 CMBS classes (53.1%).
Moody's uses a weighted average rating factor (WARF) as an overall
indicator of the credit quality of a CDO transaction. Based on
Moody's analysis, the current WARF is 4,236 compared to 3,935 at
issuance. Moody's reviewed the ratings or performed credit
estimates on all the collateral supporting the Notes. The
distribution is as follows: Baa1-Baa3 (1.1% compared to 1.1% at
issuance), Ba1-Ba3 (30.8% compared to 31.1% at issuance), B1-B3
(28.7% compared to 29.4% at issuance), and Caa1-NR (39.4% compared
to 38.4% at issuance).
The CMBS securities are from pools securitized between 1997 and
2006. The two largest vintage exposures are 2005 (77.7%) and 1998
(7.5%). The five largest CMBS exposures are GCCFC 2005-GG5
(10.1%), WBCMT 2005-C21 (7.9%), CDB 2005-C1 (7.6%), JPMCC 2005-
CIBC13 (7.3%), and GSMS 2005-GG4 (7.2%).
LNR CDO: S&P Cuts 12 Certificates Ratings; On Negative Watch
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 12
classes from LNR CDO III Ltd.'s series 2005-1 and removed them
from CreditWatch with negative implications, where they were
placed on May 28, 2008.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for CMBS securities, as detailed in "Recovery Rates For CMBS
Collateral In Resecuritization Transactions," published May 28,
2008, on RatingsDirect.
According to the trustee report dated June 25, 2008, the
transaction's current assets included 198 classes ($902.3 million,
99%) of pass-through certificates from 52 distinct commercial
mortgage-backed securities transactions issued between 1997 and
2004. None of the assets represents a concentration of 10% or
more of total assets. The current assets also included one
commercial real estate loan ($9.9 million, 1%). The aggregate
principal balance of the assets totaled $912.2 million, down from
$1.099 billion at issuance, while the aggregate principal balance
of the liabilities totaled $920 million, down from $1.099 billion
at issuance. Of the $187 million reduction in the aggregate
principal balance of the assets, $7.8 million was due to principal
losses realized on first loss CMBS assets, which currently
represent $228.5 million (25%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics are consistent with 'B'
rated obligations. Excluding first-loss CMBS assets, the current
asset pool exhibits credit characteristics consistent with 'BB-'
rated obligations. Standard & Poor's rates $596.5 million (65%)
of the assets. S&P reanalyzed its outstanding credit estimates
for the remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
LNR CDO III Ltd.
Collateralized debt obligations series 2005-1
Rating
------
Class To From
----- -- ----
A AA+ AAA/Watch Neg
B A+ AA/Watch Neg
C BBB+ A/Watch Neg
D BBB A/Watch Neg
E-FL BBB- BBB+/Watch Neg
E-FX BBB- BBB+/Watch Neg
F-FL BBB- BBB/Watch Neg
F-FX BBB- BBB/Watch Neg
G BB+ BBB-/Watch Neg
H CCC- BBB-/Watch Neg
J CCC- BB/Watch Neg
K CCC- B/Watch Neg
LNR CDO: S&P Junks Ratings on Four Certificates Classes
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 14
classes from LNR CDO IV Ltd.'s series 2006-1 and removed them from
CreditWatch with negative implications, where they were placed on
May 28, 2008.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. Its review incorporated
Standard & Poor's revised recovery rate assumptions for commercial
mortgage-backed securities, as detailed in "Recovery Rates For
CMBS Collateral In Resecuritization Transactions," published May
28, 2008.
According to the June 25, 2008, trustee report, the transaction's
current assets included 154 classes ($1.597 billion, 100%) of CMBS
pass-through certificates from 38 distinct transactions issued
between 1997 and 2006. Only Greenwich Capital Commercial Funding
Corp.'s series 2005-GG5 ($161.1 million, 10%) represents an asset
concentration of 10% or more of total assets. The aggregate
principal balance of the assets totaled $1.597 billion, down from
$1.601 billion at issuance, while the aggregate principal balance
of the liabilities totaled $1.601 billion, which has not changed
since issuance. All of the $4.7 million reduction in the
aggregate principal balance of the assets since issuance was due
to principal losses realized on first-loss CMBS assets, which
currently represent $466.6 million (29%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'B-' rated
obligations. Excluding first-loss CMBS assets, the current asset
pool exhibits credit characteristics consistent with 'B+' rated
obligations. Standard & Poor's rates $780.6 million (49%) of the
assets. S&P reanalyzed its outstanding credit estimates for the
remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
LNR CDO IV Ltd.
Collateralized debt obligations series 2006-1
Rating
------
Class To From
----- -- ----
A AA AAA/Watch Neg
B-FL BBB+ AA/Watch Neg
B-FX BBB+ AA/Watch Neg
C-FL BBB- A/Watch Neg
C-FX BBB- A/Watch Neg
D-FL BB+ A-/Watch Neg
D-FX BB+ A-/Watch Neg
E BB- BBB+/Watch Neg
F-FL B BBB/Watch Neg
F-FX B BBB/Watch Neg
G CCC BBB-/Watch Neg
H CCC- BB+/Watch Neg
J CCC- BB/Watch Neg
K CCC- BB-/Watch Neg
LNR CDO: S&P Cuts Ratings on Three Certificate Classes to 'CCC-'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 12
classes from LNR CDO V Ltd.'s series 2007-1 and removed them from
CreditWatch with negative implications, where they were placed on
May 28, 2008.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. Its review incorporated
Standard & Poor's revised recovery rate assumptions for commercial
mortgage-backed securities, as detailed in "Recovery Rates For
CMBS Collateral In Resecuritization Transactions,"
published May 28, 2008.
According to the June 23, 2008, trustee report, the transaction's
current assets included 114 classes ($761 million, 100%) of CMBS
pass-through certificates from 22 distinct transactions issued in
2006. Only Banc of America Commercial Mortgage Trust 2006-4
($78.7 million, 10%) represents an asset concentration of 10% or
more of total assets. The aggregate principal balance of the
assets totaled $761 million, down slightly from $761.2 million
at issuance, while the aggregate principal balance of the
liabilities totaled $761.2 million, which has not changed since
issuance. All of the $288,307 reduction in the aggregate
principal balance of the assets since issuance was due to
principal losses realized on first-loss CMBS assets, which
currently represent $265.7 million (35%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'B-' rated
obligations. Excluding first-loss CMBS assets, the current asset
pool exhibits credit characteristics consistent with 'B+' rated
obligations. Standard & Poor's rates $392.9 million (52%) of the
assets. S&P reanalyzed its outstanding credit estimates for the
remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
LNR CDO V Ltd.
Collateralized debt obligations series 2007-1
Rating
------
Class To From
----- -- ----
A AA+ AAA/Watch Neg
B A+ AA/Watch Neg
C-FL BBB+ A+/Watch Neg
C-FX BBB+ A+/Watch Neg
D BBB- A/Watch Neg
E BB+ A-/Watch Neg
F BB BBB+/Watch Neg
G B+ BBB/Watch Neg
H B- BBB-/Watch Neg
J CCC- BB+/Watch Neg
K CCC- BB/Watch Neg
L CCC- BB-/Watch Neg
LNR CDO: S&P Downgrades Ratings on 12 Certificate Classes
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 12
classes from LNR CDO VI Ltd.'s series 2007-2 and removed them from
CreditWatch with negative implications, where they were placed on
May 28, 2008.
The rating actions follow S&P's analysis of the transaction,
including an examination of the current credit characteristics of
the transaction's assets and liabilities. S&P's review
incorporated Standard & Poor's revised recovery rate assumptions
for commercial mortgage-backed securities, as detailed in
"Recovery Rates For CMBS Collateral In Resecuritization
Transactions," published May 28, 2008.
According to the June 20, 2008, trustee report, the transaction's
current assets included 132 classes ($1.103 billion, 100%) of CMBS
pass-through certificates from 28 distinct transactions issued in
either 2006 or 2007. The following CMBS transactions represent
asset concentrations of 10% or more of total assets:
-- Greenwich Capital Commercial Funding Corp.'s series 2007-
GG9 ($149.7 million, 14%);
-- GE Commercial Mortgage Corp. Series 2007-C1 Trust ($116.6
million, 11%); and
-- Wachovia Bank Commercial Mortgage Trust's series 2007-C31
($110.9 million, 10%).
The aggregate principal balance of the assets totaled
$1.103 billion, compared with $1.103 billion at issuance, while
the aggregate principal balance of the liabilities totaled
$1.103 billion, which has not changed since issuance. All of the
$300,074 reduction in the aggregate principal balance of the
assets since issuance was due to principal losses realized on
first-loss CMBS assets, which currently represent $349.6 million
(32%) of the asset pool.
S&P's analysis indicates that the current asset pool exhibits
weighted average credit characteristics consistent with 'B-' rated
obligations. Excluding first-loss CMBS assets, the current asset
pool exhibits credit characteristics consistent with 'BB-' rated
obligations. Standard & Poor's rates $608.1 million (55%) of the
assets. S&P reanalyzed its outstanding credit estimates for the
remaining assets.
Ratings Lowered and Removed from Creditwatch Negative
LNR CDO VI Ltd.
Collateralized debt obligations series 2007-2
Rating
------
Class To From
----- -- ----
A-1 AA+ AAA/Watch Neg
A-2 AA+ AAA/Watch Neg
B A+ AA/Watch Neg
C BBB A+/Watch Neg
D BBB- A/Watch Neg
E BB+ A-/Watch Neg
F BB BBB+/Watch Neg
G B+ BBB/Watch Neg
H CCC+ BBB-/Watch Neg
J CCC- BB+/Watch Neg
K CCC- BB/Watch Neg
L CCC- BB-/Watch Neg
MAGNOLIA FINANCE II: Moody's Rates Class E $6.4MM Notes Ba2
-----------------------------------------------------------
Moody's Investors Service affirmed the ratings of two tranches of
Notes issued by Magnolia Finance II plc series 2007-2 as follows:
-- Class D, $67,840,000, Variable Floating Rate Notes Due 2052,
affirmed at Baa3
-- Class E, $6,400,000, Variable Floating Rate Notes Due 2052,
affirmed at Ba2
Moody's is affirming the Notes above due to overall stable pool
performance.
Magnolia Finance II plc series 2007-2 is a collateralized debt
obligation backed by a portfolio of synthetic CMBS securities.
Currently, the transaction has an aggregate credit default swap
notional amount of $74.2 million, the same as at issuance. The
total return swap and credit default swap counterparty is Credit
Suisse, Cayman Islands Branch (parent Credit Suisse, senior
unsecured Aa1; short term P-1, stable outlook).
The reference portfolio of CMBS securities are from pools
securitized in 2005 (42.2%) and 2006 (57.8%).
The rating action reflects Moody's evaluation of the expected loss
associated with the Notes based on the current credit quality on
the underlying reference obligations considering the reduced time
to maturity and the senior unsecured ratings of the swap
counterparty and the total return swap counterparty.
MERVYN'S LLC: Bankruptcy Filing "in the Next Few Days," WSJ Says
----------------------------------------------------------------
The Wall Street Journal reports that the department store chain of
Mervyn's LLC will file for bankruptcy protection in the next few
days if it fails to secure a cash infusion.
According to the Journal, Mervyn's, which operates 177 stores,
experienced trouble with sharp declines in sales particularly in
California and Arizona. The Journal reported that Mervyn's has
lost key funding from financing companies.
As reported in the Troubled Company Reporter on July 22, 2008,
Mervyn's lender, CIT Group Inc., stopped providing financing in
the spring, causing the retainer's vendors to get nervous and
begin withholding shipments.
TCR also disclosed on July 24, 2008, that Cerberus Capital
Management has sold its stake in Mervyn's LLC in an undisclosed
transaction to Florida-based investment firm, Sun Capital
Partners, leaving the firm with a 15% interest in the real-estate
company that leases space to Mervyn's.
The Journal, citing Lee Diercks, managing director at Clear
Thinking Group LLC, a financial-advisory and restructuring firm,
says that most of the manufacturers and wholesalers are cautious
with these types of challenged retailers.
WSJ relates that a filing by Mervyn's would follow those of
several other retailers that have sought bankruptcy protection
this year, including Steve & Barry's LLC, cataloger Lillian Vernon
and home-products chain Linens 'n Things.
If Mervyn's is liquidated, it would mean another blow to mall
owners, which have seen a wave of store closings in the past year,
WSJ indicates. Vacancies at malls in 76 major U.S. markets rose
to 6.3% in the second quarter, WSJ states, the highest level since
early 2002, according to real-estate-research firm Reis Inc. WSJ
relates that the International Council of Shopping Centers
estimates that 144,000 stores will shutter their doors in 2008, up
7% from last year and the biggest increase in the 14 years the
group has been tracking the figures.
About Mervyns LLC
Mervyns LLC -- 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.
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. Cerberus, et al., put up about $400,000,000 in
equity and financed the rest.
MORTGAGES LTD: KML Hurls New Allegations, Wants Case Trustee Named
------------------------------------------------------------------
KML Development is trying to convince the U.S. Bankruptcy Court
for the District of Arizona that Mortgages Ltd.'s case requires an
appointment of a chapter 11 trustee, Phoenix Business Journal's
Jan Buchholz reports.
Real estate developer, KML, reasoned that new attorneys and
leadership engaged in the Debtor's case "cannot adequately
consider the interest of all parties," Business Journal notes,
citing a court document.
KML, Business Journal reports, said that Mortgages Ltd. had not
fully provided the developer with more than $100,000,000 in loan
commitment. KML added that its attorneys were notified only after
the loan commitment signing that Mortgages Ltd. was short of funds
for KML's real estate project. Mortgages Ltd. said it had no
reserved funds, Business Journal quotes KML's motion as stating.
The allegations of KML, which signed funding agreement with the
Debtor on its Roosevelt Gateway project in Phoenix, Arizona and
Mosaic project in Tempe, Arizona, have not been mentioned in past
lawsuits against Mortgages Ltd., Business Journal says. None of
the projects have broken ground, Business Journal adds.
KML noted a report by a trustee for an SMC Revocable Trust
disclosing that Mortgages Ltd.'s former interim president, Laura
Martini, received $1,500,000 in commission above her 2007 pay,
Business Journal relates. Ms. Martini's commission was based on
questionable loans, the report adds. KML stated that those loans
may have arose from the construction loan fraudulently made to
Mosaic, Business Journal writes, citing KML's motion.
Mortgages Ltd. chairman and sole shareholder, Scott M. Coles,
owns the SMC Revocable Trust, according to Business Journal. The
Troubled Company Reporter mentioned that Mr. Coles was found dead
at his home in Phoenix on June 2, 2008. The company called for a
conference call June 10 with borrowers, investors and business
partners to discuss the company's future. Ms. Martini was
subsequently appointed to serve as interim president.
Business Journal relates that according to the Maricopa County
Medical Examiner, Mr. Coles committed suicide. Mr. Coles' death
left interested parties including borrowers, investors, and
creditors of Mortgages Ltd. to argue over their claims. Business
Journal relates that payments to investors have been suspended.
Business Journal notes that Grace Communities previously asked the
Court to name a case trustee but put its motion on hold after
Mortgages Ltd. elected Richard Feldheim as president. Ms. Martini
was demoted to loan officer, according to the report. Business
Journal reveals that Morris Aaron was terminated as advisor
following complaints filed with the Court alleging conflict of
interest.
The Court is set to hear KML's motion on Aug. 6, 2008, Business
Journal says.
About Mortgages Ltd.
Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/--
originates, invests in, sells and services its own short-term
real-estate secured loans on properties within the state of
Arizona in the US. It underwrites loans for commercial,
industrial and residential properties for acquisition,
entitlement, development, construction and investment.
Mortgages Ltd. was the subject of an involuntary chapter 7
petition dated June 20, 2008, filed by KGM Builders Inc. -- a
contractor for Grace Communities, a borrower of the company --
before the U.S. Bankruptcy Court for the District of Arizona.
Central & Monroe LLC and Osborn III Partners LLC, divisions of
Grace Communities, sought the appointment of an interim trustee
for Mortgages Ltd. in the chapter 7 proceeding.
Mortgages Ltd. is also facing lawsuits filed by Grace Communities
and Rightpath Limited Development Group for its alleged failure to
fully fund loans. Mortgages Ltd. denied the charges. It has
filed a motion to dismiss the Rightpath suit.
The Debtor's case was converted to a Chapter 11 proceeding on
June 24, 2008 (Bankr. Ariz. Case No. 08-07465). Judge Sarah
Sharer Curley presides over the case. Carolyn Johnsen, Esq., and
Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C.
replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as
counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total
assets of $358,416,681 and total debts of $350,169,423.
MOTIVNATION INC: TrixMotive Unit Files for Chapter 7 Bankruptcy
---------------------------------------------------------------
George R. Lefevre, CEO of MotivNation Inc., said the company's
principal operating subsidiary, TrixMotive Inc., filed for Chapter
7 bankruptcy "to stabilize [the parent company's] ongoing
operations and protect the parent company from additional
expenditures to keep MotivNation operational."
MotivNation intends to diversify its markets sector.
"This is a new beginning in the process of shifting its
operational focus and to diversify in our troubling sector," added
Mr. Lefevre. "After evaluating our various business lines, we
decided to take immediate steps to shut down money-losing
operations and focus on developing positive cash flow business
opportunities. The best course of action for MotivNation is to
exit certain parts of its businesses and move in a new direction."
TrixMotive Bankruptcy
A customer of TrixMotive filed a petition for Chapter 7 under the
Bankruptcy Code and the trustee in bankruptcy to consumate the
claim it sought in December 2005.
On Dec. 7, 2005, a customer of TrixMotive filed a lawsuit in the
Superior Court of Santa Clara County of California against
TrixMotive claiming for breach of contract and warranty,
intentional and negligence misrepresentation for a customized
vehicle. The plaintiff sought $98,827 in compensatory damages and
other unspecified damages plus interest, lawyers' fees and costs.
In a Sept. 22, 2006, hearing, the arbitrator awarded that the
plaintiff will recover from the company the price of the
refrigerator and microwave which were ordered and paid for by the
plaintiff but not installed in the vehicle, and that all other
claims of plaintiff are denied as to the company. The Plaintiff
rejected the arbitration award on Oct. 19, 2006. During the
second quarter of 2007, there was a settlement court appearance by
which the company and the Plaintiff agreed to settle the claim in
the amount approximately of $2,000.
About MotivNation Inc.
Headquarted in Irvine, California, MotivNation Inc. --
http://www.MotivNation.com-- provide services that cater to the
custom motorcycle and automotive enthusiast, including the sale,
manufacture, converting, customization, armor protecting, and
installation of custom-built automotive and motorcycles, auto
parts and accessories, as well as restoration, repair, and
servicing.
At March 31, 2008, the company's balance sheet showed total assets
of $290,474 and total liabilities of $6,489,381 resulting in a
stockholders' deficit of $6,198,907.
Going Concern Doubt
On May 12, 2008, Spector Wong & Davidian LLP in Pasadena,
California, expressed substantial doubt about MotivNation Inc.'s
ability to continue as a going concern after auditing the
company's financial statements for the periods ended Dec. 31, 2007
and 2006. The auditor pointed out to the company's recurring
losses, substantial working capital and stockholders' deficit and
negative cash flows from operations.
MRS. FIELDS: Agrees with Committee to Amend Restructuring Term
--------------------------------------------------------------
On June 6, 2008, Mrs. Fields Famous Brands LLC announced a plan of
reorganization through an out-of-court exchange offer or a "pre-
packaged" Chapter 11 filing and a plan of reorganization confirmed
under the United States Bankruptcy Code, as amended .
In connection with the Restructuring, the company, along with Mrs.
Fields Financing Company Inc. and Mrs. Fields' Original Cookies
Inc. (MFOC) entered into a binding Restructuring Term Sheet dated
June 2, 2008, with certain unaffiliated investors holding Mrs.
Fields' 9% and 11-1/2% Senior Secured Notes due 2011 providing for
an offer by Mrs. Fields to exchange the Notes for cash, new debt
and new equity as described in the Term Sheet.
On June 3, 2008, certain members of a committee of unaffiliated
investors holding the Notes, including those investors who are
parties to the Term Sheet, entered into support agreements with
Mrs. Fields and and MFOC. The Support Agreements provide that the
signatories thereto will support the Restructuring as set forth in
the Term Sheet and that Mrs. Fields and the members of the
Committee will negotiate and enter into definitive documentation
regarding the Exchange Offer in order to permit to commence by
June 30, 2008.
On July 7, 2008, the company filed a Current Report on Form 8-K to
report that the Exchange Offer was not commenced on June 30, 2008,
as originally anticipated, but rather was expected to commence
within the next few weeks. In that filing, the company noted that
although members of the Committee and their respective advisors
continue to work together to complete the definitive documentation
needed to proceed with the Exchange Offer, the members of the
Committee, through their counsel, advised the company that they
were reserving their right to terminate their obligations under
the Term Sheet by reason of the Exchange Offer not having been
commenced on June 30, 2008.
As of July 11, Mrs. Fields and the Committee reached an agreement
to amend the Term Sheet. The Term Sheet Amendment, among other
things, reconfirms the parties' support for the previously
announced Restructuring and establishes July 21, 2008, as the
target date for commencing the Exchange Offer, subject to an
automatic extension until July 31, 2008, if the parties are
working in good faith to implement the Restructuring. The Term
Sheet Amendment also establishes additional milestones that would
need to be met by Mrs. Fields for the Committee to continue to be
obligated to support the Restructuring.
A full-text copy of the Amendment to Restructuring Term Sheet,
dated as of July 11, 2008, entered into by Mrs. Fields Famous
Brands LLC and Mrs. Fields Financing Company Inc. with certain
holders of its Senior Secured Notes, is available for free at:
http://researcharchives.com/t/s?3012
A full-text copy of the Notice of Termination, dated July 10,
2008, from Stephen Russo to Mrs. Fields Companies Inc. and Mrs.
Fields Famous Brands LLC, is available for free at:
http://researcharchives.com/t/s?3013
About Mrs. Fields Famous Brands
Mrs. Fields Famous Brands LLC -- http://www.mrsfields.com/--
is a well established franchisor in the premium snack food
industry, featuring Mrs. Fields(R) and TCBY(R) as the company's
core brands. As of March 29, 2008, the company's franchise
systems operated through a network of 1,278 retail concept
locations throughout the United States and in 21 foreign
countries.
As reported in the Troubled Company Reporter on May 20, 2008,
Mrs. Fields Famous Brands LLC's consolidated balance sheet at
March 29, 2008, showed $147.2 million in total assets and
$247.2 million in total liabilities, resulting in a $100.0 million
member's deficit.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 18, 2008,
KPMG LLP, in Salt Lake City, expressed substantial doubt about
Mrs. Fields Famous Brands LLC's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 29, 2007. The auditing firm
pointed to the company's recurring net losses, negative cash flows
from, and net member's deficit at Dec. 29, 2007.
MULTICELL TECH: May 31 Balance Sheet Upside-Down by $2,815,298
--------------------------------------------------------------
Multicell Technologies Inc.'s consolidated balance sheet at
May 31, 2008, showed $1,251,395 in total assets, $2,254,546 in
total liabilities, and $1,812,147 in Series B redeemable
convertible preferred stock, resulting in a $2,815,298
stockholders' deficit.
At May 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $109,632 in total current assets
available to pay $1,509,205 in total current liabilities.
The company reported a net loss of $303,384 on revenue of $44,482
for the second quarter ended May 31, 2008, compared with a net
loss of $586,753 on revenue of $34,381 in the same period ended
May 31, 2007.
The increase in revenue is primarily due to the increase in
license revenue from Corning and Eisai. The primary reason for
the decreased loss is due to the decrease in operating expenses.
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?3016
Going Concern Doubt
As reported in the Troubled Company Reporter on April 3, 2008,
Hansen, Barnett & Maxwell, P.C., expressed substantial doubt about
MultiCell Technologies Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Nov. 30, 2007.
The auditing firm reported that the company suffered losses from
operations and had negative cash flows from operating activities
during the years ended Nov. 30, 2007, and 2006, and as of Nov. 30,
2007, the company had a working capital deficit and a
stockholders' deficit.
About MultiCell Technologies
Headquartered in Lincoln, Rhode Island, MultiCell Technologies
Inc. (OTC BB: MCET.OB) -- http://www.MultiCelltech.com/-- is a
developer of therapeutic products, and a supplier of immortalized
human cell lines for drug discovery applications. With its
majority-owned subsidiary MultiCell Immunotherapeutics, Inc.,
MultiCell is working to commercialize new therapeutics for the
treatment of degenerative neurological diseases, metabolic and
endocrinological disorders, and infectious diseases. MultiCell
Immunotherapeutics is located in San Diego, California.
NEONODE INC: Given Until Dec. 30 to Comply with Bid Protocol
------------------------------------------------------------
Neonode Inc. disclosed that on July 3, 2008, the company received
a Nasdaq Staff deficiency letter from The NASDAQ Stock Market
Listing Qualifications Department stating that for the last 30
consecutive business days, the bid price of the company's common
stock has closed below the $1.00 minimum required for continued
inclusion under Marketplace Rule 4310(c)(4). The notice further
states that pursuant to Marketplace Rule 4310(c)(8)(D), the
company will be provided 180 calendar days (or until Dec. 30,
2008) to regain compliance. If, at anytime before Dec. 30, 2008,
the bid price of the company's common stock closes at $1.00 per
share or more for a minimum of 10 consecutive business days, the
company may regain compliance with the Rule.
The notice indicates that, if compliance with the Minimum Bid
Price Rule is not regained by Dec. 30, 2008, the NASDAQ staff will
determine whether the company meets the Nasdaq Capital Market
initial listing criteria as set forth in Marketplace Rule 4310(c),
except for the bid price requirement. If the company meets the
initial listing criteria, the NASDAQ staff will notify the company
that it has been granted an additional 180 calendar day compliance
period. If the company is not eligible for an additional
compliance period the NASDAQ staff will provide written
notification that the company's securities will be delisted.
Furthermore, the company disclosed that it received a staff
determination letter from NASDAQ on July 1, 2008, stating that the
company's common stock is subject to delisting from the NASDAQ
Capital Market indicating that it had failed to comply with
Marketplace Rule 4310(c)(3)(B), 4310(c)(3)(A) or 4310(c)(3)(C),
requiring the company maintain a market value of listed securities
of at least $35,000,000, stockholders' equity of $2,500,000 or net
income from continuing operations of $500,000 in the most recently
completed fiscal year or in two of the last three most recently
completed fiscal years.
The company has submitted a request to have a hearing to the
NASDAQ Listing Qualifications Panel. This request stays the
delisting of the company's securities pending the hearing and a
determination by the Panel with the company continuing to trade
its securities under the ticker symbol "NEON" on the NASDAQ board.
There can be no assurance that the Panel will grant the Company's
request for continued listing.
About Neonode Inc.
Neonode Inc. (Nasdaq: NEON) -- http://www.neonode.com/-- is a
Swedish mobile communication company that specializes in optical
finger based touch screen technology. The company designs and
develops mobile phones under its own brand and licenses its
patented touch screen technologies, zForce(TM) and neno(TM) to
third parties. Neonode USA, which is based in San Ramon, Calif.,
markets Neonode's products within North America, Latin America and
China and is the exclusive licensor of the Neonode Intellectual
Property.
As reported in the Troubled company Reporter on May 29, 2008,
Neonode Inc.'s consolidated balance sheet at March 31, 2008,
showed total assets of $13.9 million and total liabilities of
$23.4 million, resulting in a roughly $9.4 million of total
stockholders' deficit.
Going Concern Doubt
BDO Feinstein International AB, in Stockholm, Sweden, expressed
substantial doubt about Neonode Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. the auditing firm
pointed to the company's recurring losses, negative cash flows
from operations, and working capital deficiency.
NEWCASTLE CDO: Fitch Holds 'BB' Rating on $23.718MM Class L Notes
-----------------------------------------------------------------
Fitch Ratings has affirmed all classes of Newcastle CDO IX 1, Ltd.
and Newcastle CDO IX LLC as:
-- $33.540 million class S notes at 'AAA';
-- $379.500 million class A-1 notes at 'AAA';
-- $115.500 million class A-2 notes at 'AAA';
-- $37.125 million class B notes at 'AA+';
-- $33.000 million class C notes at 'AA';
-- $20.625 million class D notes at 'AA-';
-- $24.750 million class E notes at 'A+';
-- $18.562 million class F notes at 'A';
-- $18.562 million class G notes at 'A-';
-- $21.656 million class H notes at 'BBB+';
-- $21.656 million class J notes at 'BBB';
-- $19.593 million class K notes at 'BBB-';
-- $23.718 million class L at 'BB'.
Fitch does not rate the $29.187 million class M notes or the
$51.566 million preferred shares.
Despite the large decline in the reinvestment cushion since the
last review, Fitch's affirmation of the above classes is based on
the transaction maintaining an adequate reinvestment cushion,
remaining within its other transaction covenants, and passing
Fitch's property value decline stress scenarios. The deal was
reviewed as approximately 17% of the portfolio has turned over
since the last review.
Deal Summary:
Newcastle CDO IX is an $825,000,000 revolving commercial real
estate cash flow collateralized debt obligation that closed on
May 8, 2007. As of the June 18, 2008 trustee report and based on
Fitch categorizations, the CDO was substantially invested as:
commercial mortgage whole loans/A-notes (11.9%), B-notes (27.3%),
CRE mezzanine loans (28.4%), corporate debt (9.9%), real estate
bank loans (REBLs: 12.5%), commercial mortgage backed securities
(CMBS: 8.1%), CRE CDO (1.7%) and cash (0.2%). The CDO is also
permitted to invest in asset backed securities, credit tenant
lease loans, real estate investment trust debt, CRE trust
preferred securities, and synthetic securities.
The portfolio is selected and monitored by Newcastle Investment
Corp. Newcastle CDO IX has a five-year reinvestment period during
which, if all reinvestment criteria are satisfied, principal
proceeds may be used to invest in substitute collateral. The
reinvestment period ends in May 2012.
Performance Summary:
Since Fitch's last review, the poolwide-expected loss has
increased to 30.25% from 20.375%. As a result, the CDO has below-
average reinvestment flexibility with 2.625% of cushion remaining
to its current PEL covenant of 33.75%. The current PEL covenant
is based upon the in-place weighted average spread of 3.07% in
accordance with the transaction's WAS/PEL matrix.
The increase in PEL is primarily attributable to the addition of
two new risky property type loans (8.9%) and one highly leveraged
B-note (0.7%); and the application of Fitch's corporate Portfolio
Credit Model on the corporate debt and REBL assets and the interim
surveillance stacking model methodology on the CMBS and CRE CDO
assets within the portfolio. In addition, a few assets in the
portfolio have suffered declines in their net cash flows and/or
experienced slower than expected progress in realizing their
business plans. Six of the loans in the portfolio have exercised
extension options.
Since the last review, one CRE loan and four corporate debt
securities were removed from the pool, while three new CREL
(9.5%), one CRE CDO class (1.7%), and two REBLs (6.18%) were
added. The CREL assets added to the pool include a construction
loan, a home site land loan, and a highly leveraged B-note on a
portfolio of limited service hotels. The assets added to the pool
have a significantly higher weighted average expected loss than
the assets that were removed from the pool.
The overcollateralization and interest coverage ratios of all
classes have remained above their covenants, as of the June 19,
2008 trustee report. However, the OC ratios have declined since
Fitch's last review due to the default of the Buffets bank loan
(2.4%). The IC ratios have increased due to the portfolio now
being fully invested.
Collateral Analysis:
The CDO is comprised of approximately 67.7% CREL and 32.3% CUSIP
securities. The majority of the CREL collateral continues to be
mezzanine loans and B-notes, generally subordinate within the
loan's capital structure. The CUSIP portion of the collateral
consists of three CMBS securities from two separate transactions
(8.1%), one CRE CDO class (1.7%), and eight corporate debt/real
estate bank loans, including the defaulted Buffets loan (2.4%).
Fitch has concerns about the deterioration in performance of the
Resorts International portfolio (1.9%) and the Radisson San Juan
Hotel (1.7%). Both properties have experienced significant
decline in performance compared to the prior year. The rake bonds
of the Radisson San Juan in the CGCMT 2006-FL2 transaction have
been placed on Rating Watch Negative by Fitch.
As of the June 2008 trustee report and per Fitch categorizations,
the CDO is within all its property-type covenants. Hotel loans
comprise the largest percentage at 26.0%. Retail loans have the
next highest percentage at 13.4%. The CDO is also within all its
geographic location covenants. Many of the assets in the CDO are
secured by multiple property portfolios dispersed throughout
various locations in the U.S.
The pool has average loan diversity relative to other CRE CDOs.
Fitch's Loan Diversity Index is currently 436 compared to the LDI
covenant of 571.
Asset Manager:
NCT is rated 'CAM1-' by Fitch as a manager of commercial real
estate CDOs. Newcastle's collateralized asset manager rating can
be attributed to its real estate and structured finance management
staff. Newcastle CDO IX is their tenth CDO. CDOs are issued to
provide Newcastle with match term funding.
Newcastle Investment Corp. is a publicly traded REIT (NYSE: NCT)
formed in July 2002 as a successor to Fortress Investment Corp.
Newcastle is externally managed by Fortress, with access to all of
Fortress' infrastructure and resources.
NOMURA ASSET: Moody's Cuts Ratings on 111 Tranches of Loan Trusts
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 111
tranches from 17 Alt-A transactions issued by Nomura. Four
tranches continue to remain on review for further possible
downgrade. Additionally, 19 senior tranches were confirmed at
Aaa. The collateral backing these transactions consists primarily
of first-lien, fixed and adjustable-rate, Alt-A mortgage loans.
Ratings were downgraded, in general, based on higher than
anticipated rates of delinquency, foreclosure, and REO in the
underlying collateral relative to credit enhancement levels.
Certain tranches were confirmed due to additional enhancement
provided by structural features. The actions described are a
result of Moody's on-going review process.
Complete rating actions are:
Issuer: Nomura Asset Acceptance Corporation Alternative Loan
Trust, Series 2005-AP3
-- Cl. A-2, Confirmed at Aaa
-- Cl. A-IO, Confirmed at Aaa
-- Cl. A-3, Downgraded to Aa1 from Aaa
-- Cl. A-4, Downgraded to Aa2 from Aaa
-- Cl. A-5, Downgraded to Aa2 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-AR4
-- Cl. I-A, Downgraded to Aa2 from Aaa
-- Cl. II-A, Downgraded to Aa1 from Aaa
-- Cl. III-A-2, Downgraded to A3 from Aaa
-- Cl. III-A-1, Downgraded to Aa2 from Aaa
-- Cl. IV-A-1, Confirmed at Aaa
-- Cl. IV-A-2, Downgraded to A3 from Aaa
-- Cl. V-A-1, Confirmed at Aaa
-- Cl. V-A-2, Confirmed at Aaa
-- Cl. V-A-3, Confirmed at Aaa
-- Cl. V-A-4, Downgraded to A3 from Aaa
-- Cl. M-5, Downgraded to C from Caa3
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-AR5
-- Cl. I-A-2, Downgraded to Aa2 from Aaa
-- Cl. II-A-2, Downgraded to Aa2 from Aaa
-- Cl. III-A-4, Downgraded to Aa2 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-AR6
-- Cl. I-A, Downgraded to Baa3 from Aaa
-- Cl. II-A-1, Downgraded to Aa1 from Aaa
-- Cl. II-A-2, Downgraded to Ba1 from Aaa
-- Cl. III-A-1, Downgraded to Aa3 from Aaa
-- Cl. III-A-2, Downgraded to Ba1 from Aaa
-- Cl. IV-A-1, Downgraded to Aa3 from Aaa
-- Cl. IV-A-2, Downgraded to Ba1 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AF1
-- Cl. I-A-1A, Confirmed at Aaa
-- Cl. I-A-1B, Confirmed at Aaa
-- Cl. I-A-IO, Confirmed at Aaa
-- Cl. I-A-4, Downgraded to Ba2 from Aaa
-- Cl. I-A-5, Downgraded to Ba1 from Aaa
-- Cl. I-A-2, Downgraded to Baa1 from Aaa
-- Cl. I-A-3, Downgraded to Baa3 from Aaa
-- Cl. II-A, Downgraded to Ba2 from Aaa
-- Cl. III-A-2, Downgraded to B1 from Aaa
-- Cl. III-A-1, Downgraded to Aa2 from Aaa
-- Cl. IV-A-1, Downgraded to Aa2 from Aaa
-- Cl. IV-A-2, Downgraded to Ba3 from Aaa
-- Cl. V-A, Downgraded to Ba2 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AF2
-- Cl. I-A-1, Confirmed as Aaa
-- Cl. I-A-2, Downgraded to A3 from Aaa
-- Cl. I-A-4, Downgraded to Ba3 from Aaa
-- Cl. I-A-5, Downgraded to Ba3 from Aaa
-- Cl. I-A-6, Downgraded to Ba2 from Aaa
-- Cl. I-A-3, Downgraded to Baa3 from Aaa
-- Cl. II-A, Downgraded to Ba3 from Aaa
-- Cl. III-A-1, Downgraded to A1 from Aaa
-- Cl. III-A-2, Downgraded to B2 from Aaa
-- Cl. IV-A, Downgraded to B1 from Aaa
-- Cl. V-A-1, Downgraded to Ba2 from Aaa
-- Cl. V-A-2, Downgraded to Caa1 from Aaa; Placed Under Review
for further Possible Downgrade
-- Cl. V-M-2, Downgraded to Ca from Caa2
-- Cl. V-M-1, Downgraded to Caa3 from Caa1
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AP1
-- Cl. A-1, Confirmed at Aaa
-- Cl. A-2, Downgraded to Aa2 from Aaa
-- Cl. A-3, Downgraded to Aa3 from Aaa
-- Cl. A-4, Downgraded to A1 from Aaa
-- Cl. A-5, Downgraded to A1 from Aaa
-- Cl. A-IO, Confirmed at Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AR1
-- Cl. I-A, Downgraded to Baa3 from Aaa
-- Cl. II-X, Confirmed at Aaa
-- Cl. II-A-1, Confirmed at Aaa
-- Cl. II-A-2, Confirmed at Aaa
-- Cl. II-A-3, Downgraded to Ba1 from Aaa
-- Cl. III-A, Downgraded to Baa3 from Aaa
-- Cl. IV-A, Downgraded to Baa3 from Aaa
-- Cl. V-A-1, Downgraded to Aa2 from Aaa
-- Cl. V-A-2, Downgraded to Baa2 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AR2
-- Cl. I-A, Downgraded to Ba2 from Aaa
-- Cl. II-X, Downgraded to Aa3 from Aaa
-- Cl. II-A-1, Downgraded to Aa3 from Aaa
-- Cl. II-A-2, Downgraded to Aa3 from Aaa
-- Cl. II-A-3, Downgraded to Ba3 from Aaa
-- Cl. III-A-1, Downgraded to A1 from Aaa
-- Cl. III-A-2, Downgraded to Ba1 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AR3
-- Cl. A-1A, Downgraded to Baa2 from Aaa
-- Cl. A-1B, Downgraded to B3 from Aaa
-- Cl. A-2, Downgraded to Baa3 from Aaa
-- Cl. A-3A, Downgraded to Baa2 from Aaa
-- Cl. A-3B, Downgraded to B2 from Aaa
-- Cl. A-4A, Downgraded to Baa2 from Aaa
-- Cl. A-4B, Downgraded to B3 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-AR4
-- Cl. A-1A, Downgraded to Ba3 from Aaa
-- Cl. A-2, Downgraded to B1 from Aaa
-- Cl. A-3, Downgraded to B2 from Aaa
-- Cl. A-4A, Downgraded to B1 from Aaa
-- Cl. A-1B, Downgraded to Caa1 from Aaa; Placed Under Review
for further Possible Downgrade
-- Cl. A-4B, Downgraded to Caa1 from Aaa; Placed Under Review
for further Possible Downgrade
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-WF1
-- Cl. A-1, Confirmed at Aaa
-- Cl. A-2, Confirmed at Aaa
-- Cl. A-3, Downgraded to Aa1 from Aaa
-- Cl. A-4, Downgraded to Aa2 from Aaa
-- Cl. A-5, Downgraded to Aa3 from Aaa
-- Cl. A-6, Downgraded to Aa2 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2007-1
-- Cl. I-A-1A, Downgraded to Aa3 from Aaa
-- Cl. II-A-1, Downgraded to A3 from Aaa
-- Cl. I-A-1B, Downgraded to Aa3 from Aaa
-- Cl. I-A-2, Downgraded to A2 from Aaa
-- Cl. II-A-2, Downgraded to Baa1 from Aaa
-- Cl. II-A-3, Downgraded to Baa2 from Aaa
-- Cl. II-A-4, Downgraded to Baa2 from Aaa
-- Cl. II-M-1, Downgraded to Caa3 from B3
-- Cl. II-M-2, Downgraded to Ca from Caa1
-- Cl. II-M-3, Downgraded to Ca from Caa1
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2007-2
-- Cl. A-1A, Downgraded to A3 from Aaa
-- Cl. A-1B, Downgraded to Baa3 from Aaa
-- Cl. A-2, Downgraded to Baa1 from Aaa
-- Cl. A-3, Downgraded to Baa1 from Aaa
-- Cl. A-4, Downgraded to Baa1 from Aaa
-- Cl. A-5, Downgraded to A3 from Aaa
-- Cl. A-6, Downgraded to Ba2 from Aaa
-- Cl. A-7, Downgraded to Ba3 from Aaa
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2007-3
-- Cl. M-1, Downgraded to Ca from B3
Issuer: Nomura Home Equity Loan, Inc. Home Equity Loan Trust,
Series 2006-AF1
-- Cl. A-1, Confirmed at Aaa
-- Cl. A-2, Downgraded to A1 from Aaa
-- Cl. A-3, Downgraded to Ba1 from Aaa
-- Cl. A-4, Downgraded to Ba2 from Aaa
Issuer: Nomura Home Equity Loan, Inc. Home Equity Loan Trust,
Series 2007-1
-- Cl. I-A-1, Confirmed at Aaa
-- Cl. I-A-2, Downgraded to A1 from Aaa
-- Cl. I-A-3, Downgraded to Ba1 from Aaa
-- Cl. I-A-4, Downgraded to Ba3 from Aaa
-- Cl. II-2-A-4A, Downgraded to B2 from Aaa
-- Cl. II-2-A-1A, Downgraded to Ba3 from Aaa
-- Cl. II-2-A-2, Downgraded to Caa1 from Aaa
-- Cl. II-2-A-3, Downgraded to Caa1 from Aaa
-- Cl. II-2-A-1B, Downgraded to Caa1 from Aaa
-- Cl. II-2-A-4B, Downgraded to Caa3 from Aaa
-- Cl. II-1-A, Downgraded to B3 from Aaa; Placed Under Review
for further Possible Downgrade
-- Cl. II-M-1, Downgraded to Ca from Caa1
-- Cl. II-M-2, Downgraded to Ca from Caa1
NOMURA ASSET: Moody's Puts Junk Ratings on Five Classes of Trusts
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of five
mezzanine tranches from 2 Alt-A transactions issued by Nomura.
The collateral backing these transactions consists primarily of
first-lien, fixed and adjustable-rate, Alt-A mortgage loans.
Ratings were downgraded, in general, based on higher than
anticipated rates of delinquency, foreclosure, and REO in the
underlying collateral relative to credit enhancement levels. The
actions described are a result of Moody's on-going review process.
Complete rating actions are:
Nomura Asset Acceptance Corporation, Alternative Loan Trust,
Series 2006-AR4
-- Class M-1 downgraded from B3 to Caa3;
-- Class M-2 downgraded from Caa1 to Ca;
-- Class M-3 downgraded from Caa1 to Ca;
-- Class M-4 downgraded from Caa1 to Ca;
Nomura Home Equity Loan, Inc. Home Equity Loan Trust, Series 2007-
1
-- Class II-M-3 downgraded from Caa3 to Ca.x
NORTHEAST BIOFUELS: S&P Cuts $140MM Term Loan Rating to B- from B
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Northeast
Biofuels LLC's $140 million senior secured term loan to 'B-' from
'B'. At the same time, Standard & Poor's removed the rating from
CreditWatch with negative implications. The outlook is negative.
The company is building, and will operate, a 100 million gallon
per year dry-mill ethanol facility in Fulton, New York.
The downgrade results from further delays in construction,
negative amendments to the credit agreement, and the elimination
of the crush margin hedging agreement. In July 2008, Northeast
Biofuels entered into a second waiver, consent, and amendment
agreement with the project lenders.
Even if the plant achieves construction completion by the amended
date, higher gross level of debt and the decrease in the period of
operations prior to debt maturity raise ongoing debt service
payments and refinancing risk at maturity. In the current
volatile market, where corn prices fluctuate widely and ethanol is
currently priced at a discount to gasoline, Northeast Biofuels
may have difficulty servicing its fixed obligations with funds
from operations. The amended agreement may free up some cash to
service debt over the next year, but the rating would be lowered
further if it is apparent that the project lacks sufficient funds
to meet its fixed obligations over a twelve-month period. The
outlook could change to stable if the project is able to pay down
a significant portion of debt and improve cash flows going
forward.
NORTHWEST AIRLINES: S&P Trims Rating to 'B' on Expected Losses
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Northwest Airlines Corp. and subsidiary Northwest Airlines Inc.
(both rated B/Negative/--), including lowering the long-term
corporate credit ratings on both entities to 'B' from 'B+', and
removed the ratings from CreditWatch, where they had been placed
with negative implications April 15, 2008. The outlook is
negative.
The downgrade reflects expected losses and reduced or negative
operating cash flow caused by high fuel prices. S&P also lowered
our ratings on enhanced equipment trust certificates, in some
cases by more than one notch.
"We expect Northwest to report a loss this year, which could
exceed $500 million, because of high, albeit recently somewhat
reduced, fuel prices," said Standard & Poor's credit analyst
Philip Baggaley. Northwest reported a second-quarter 2008 net
loss of $377 million, but managed a profit of $170 million
excluding a net noncash impairment charge of $547 million. That
result, the best among peer "legacy carriers," was aided by
$250 million of gains on fuel hedges that will apply to future
periods. Although the airline's performance was relatively good,
the earnings and cash flow outlook is still weak in absolute terms
and S&P expects unrestricted cash ($3.3 billion at June 30, 2008)
to trend downward for the remainder of the year.
Northwest, like other large U.S. airlines, is reducing capacity in
the domestic market, retiring aircraft, and shifting some flying
to regional partner airlines. S&P now expects Northwest's
"mainline" capacity to decline about 8% year-over-year by the
fourth quarter, following earlier capacity reductions in its 2005-
2007 bankruptcy reorganization. This, along with capacity
reductions by other airlines, should improve somewhat the balance
of supply and demand in the U.S. domestic market, allowing
Northwest to raise its fares further. However, the weak U.S.
economy will likely constrain the extent of fare hikes, and S&P
does not expect that the higher fares will be sufficient to avoid
a loss this year if fuel prices remain high. Northwest has also
reduced international flying to a lesser degree, though its
aircraft used on those routes are, on average, much newer than its
domestic fleet.
Ratings on Eagan, Minnesota-based Northwest Airlines Corp. and its
Northwest Airlines Inc. subsidiary are based on participation in
the competitive, cyclical, and capital-intensive airline industry;
and substantial capital spending needs to modernize the airline's
fleet. Adequate near-term liquidity and cost reductions achieved
in bankruptcy are positives.
In April 2008, Northwest entered into a merger agreement with
Delta Air Lines Inc. (B/Watch Neg/--). The proposed merger would
create a more comprehensive route network, with opportunities for
revenue and cost synergies, but entails risks in integrating
employee groups and information systems, and will result in higher
labor costs.
S&P's 'B' corporate credit rating is predicated on an expected
material loss in 2008, which could exceed $500 million. If
heavier losses in 2008 and 2009 or a bank covenant violation that
requires repayment of the credit facility cause an erosion in
unrestricted cash and short-term investments below $2.5 billion,
S&P could lower our rating.
NORTHWESTERN CORP: Asks Court to Allow Surplus Distribution
-----------------------------------------------------------
NorthWestern Corporation asks the United States Bankruptcy Court
for the District of Delaware for authority to make a surplus
distribution from the disputed claims reserve in cash -- instead
of stock and accruals -- to holders of allowed claims within Class
7 and 9, other than holders of QUIPS claims.
A hearing is set for July 30, 2008, at 2:30 p.m., to consider the
Debtor's request. Objections, if any, are due July 23, 2008, by
4:00 p.m.
The surplus distribution came after the Debtor's settlement of the
last of the disputed claims wherein the disputed claims reserve
was formed under the Debtor's confirmed Chapter 11 plan of
reorganization. Following the consummation of the settlement, the
Debtor expects that the reserve will hold at least $2.3 million
shares of new common stock as well as cash dividends and interest
in respect of such stock.
As reported in the Troubled Company Reporter on July 11, 2008,
the Court approved a settlement agreement by and among the Debtor,
Magten Asset Management, Law Debenture Trust Company of New York
and the Plan Committee that resolves the litigation related to
claims of holders of quarterly income preferred securities in the
Debtor's Chapter 11 bankruptcy case.
In addition, the relief request will enable the Debtor to purchase
shares of new common stock held in the disputed claims reserve to
facilitate the distributions in cash.
About NorthWestern Energy
Based in Sioux Falls, South Dakota, NorthWestern Corporation
(Nasdaq: NWEC) -- http://www.northwesternenergy.com/-- is a
provider of electricity and natural gas in the Upper Midwest and
Northwest, serving approximately 650,000 customers in Montana,
South Dakota and Nebraska. The Debtor filed for Chapter 11
petition on Sept. 14, 2003 (Bankr. D. Del. Case No. 03-12872)
Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and
William E. Chipman, Jr., Esq., at Greenberg Traurig LLP, and Jesse
H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul,
Hastings, Janofsky & Walker LLP, represent the Debtor in its
restructuring efforts. Kurtzman Carson Consultants LLC serves as
the Debtor's notice and claims agent.
NorthWestern filed a plan of reorganization and disclosure
statement with the U.S. Bankruptcy Court for the District of
Delaware. The Court confirmed the Plan on Oct. 8, 2004, and the
Court's order was entered on Oct. 20, 2004. On Nov. 1, 2004,
NorthWestern's plan of reorganization became effective and the
company emerged from Chapter 11.
* * *
Moody's Investors Service placed NorthWestern Corporation's senior
unsecured bank credit facility rating at the Ba2 in December 2007.
The ratings still holds to date.
PANAVISION INC: S&P Puts 'B-' Corp. Credit Rating Under Neg. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
Panavision Inc., including the 'B-' corporate credit rating, on
CreditWatch with negative implications.
"The CreditWatch listing reflects our concern over the company's
narrowing margin of compliance with financial covenants as these
covenants tighten," explained Standard & Poor's credit analyst
Tulip Lim.
The covenants tighten in the third and fourth quarter of 2008, and
then again in the fourth quarter of 2009. The company's margin of
compliance with financial covenants could be jeopardized this year
if operating performance does not improve. In 2009, the company
must grow EBITDA at a robust pace because covenants step down
sharply in the fourth quarter. Studios have accelerated
production activity because of concern over a potential Screen
Actor Guild strike. This, in addition to cost-containment
efforts, has contributed to Panavision's revenue increasing 9% in
the first five months, and EBITDA increasing 12%. However, we are
concerned that overall production activity may weaken and that
unease about the potential interruption of a SAG strike has slowed
some feature film production.
At March 31, 2008, the company had $12 million drawn under its
$35 million revolving credit facility. The entire balance is not
available for draw down because of the company's relatively modest
margin of compliance with its covenants. Panavision's debt
maturities, excluding capital lease payments, are approximately
$8.5 million in 2008 and $9.0 million in 2009, relating to minimum
requirements of its first-lien term loan and its General Electric
Capital Corp. loan. Panavision has reduced capital spending, but
expenditures still remain sizable, contributing to its negative
discretionary cash flow over the past few years. If negative
discretionary cash flow widens, the company may need to borrow
under the revolving credit facility or seek additional sources of
financing, which could further reduce its margin of compliance
with covenants.
In resolving the CreditWatch listing, S&P will discuss with
management its near- to intermediate-term earnings prospects, and
its ability to meet its covenant requirements and funding needs.
PAPPAS TELECASTING: Former CEO Harry Pappas Balks at $5MM Facility
------------------------------------------------------------------
Bill Rochelle of Bloomberg News reports that Harry J. Pappas,
former chief executive officer of Pappas Telecasting Inc. and its
debtor-affiliates, objected to the final approval of the Debtor's
request to obtain up to $5 million in financing.
According to Bloomberg, Mr. Pappas argued that there is no power
to bar him from asserting claims he has personally against the
lenders. Mr. Pappas contends that the chief restructuring officer
has no right to sign an agreement proposing to waive claims
against the lenders, the report notes.
As reported in the Troubled Company Reporter on July 9, 2008, the
Court authorized the Debtors to access, on an interim basis, up to
$1.5 million in postpetition financing from a consortium of
financial institution led by Fortress Credit Corp., as
administrative agent, under a revolving credit facility.
A final hearing is for July 30, 2008, to consider the Debtors'
request, the report says.
Judge Peter Walsh also authorized the Debtors to access Fortress
Credit's cash collateral.
The Debtors and Fortress Credit entered into a credit agreement
dated March 1, 2006, as amended and restated, which established
term loans to provide working capital and for other purposes to
the Debtors or the committee. The Debtors owed roughly
$303.5 million plus accrued and unpaid interest to Fortress Credit
as of the Debtors' bankruptcy filing.
Fortress agreed to provide a committed $5 million senior secured
superpriority DIP financing on a final basis. The DIP facility
incurs interest rate at one month LIBOR plus 5%.
The DIP loan will be used to, among other things (i) fund working
capital requirements, (ii) pay interest accrued on the DIP loan,
and (iii) pay fees and expenses of the administrative agent
including professional advisors' fees.
The DIP loan contains customary and appropriate events of default.
Fortress Credit will be paid $10,000 administrative fee per month
as part of the transaction.
The DIP loan is subject to carve-out for payments to professionals
advisor to the Debtors and fees required to be paid to the clerk
of the Bankruptcy Court and the U.S. Trustee. There is a $500,000
carve-out for payment to professionals advisor retained by the
Debtors.
To secure their DIP obligations, Fortress Credit will be granted
superpriority claims status over any and all administrative
expenses under Section 503(b) and 507(b) of the Bankruptcy Code.
About Pappas Telecasting
Fresno, California-based Pappas Telecasting Inc., aka KMPH, aka
KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and
its affiliates are broadcasting companies. Founded in 1971, their
stations reach over 15% of all U.S. households and over 32% of
Hispanic households.
Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008
(Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the
Debtors in their restructuring efforts. Administar Services Group
LLC is the Debtors' notice and claims agent. The Debtors listed
$100 million to $500 million in assets and debts when they filed
for bankruptcy.
Harry J. Pappas, the CEO and chairman of Pappas Telecasting and
its debtor-affiliates, was the subject of a petition for Chapter 7
liquidation filed by creditors before the U.S. Bankruptcy Court
for the District of Delaware. Mr. Pappas' wife Stella was also
subject of the involuntary petition. The petitioning creditors
are Fortress Credit Opportunites I LP, Fortress Credit
Opportunites II LP, Ableco Finance LLC and Silver Oak Capital.
John H. Knight, Esq., at Richards Layton & Finger, represents the
Fortress Creditors. Adam G. Landis, Esq., at Landis Rath & Cobb
LLP, in Wilmington, represents Ableco and Silver Oak.
According to Bloomberg, the Debtors listed assets with a book
value of $460 million and debt of $537 million, including inter-
corporate debt.
PGT INC: Launches $30MM Rights Offering to Apply Indenture Change
-----------------------------------------------------------------
PGT Inc.'s board of directors declared a special dividend
consisting of rights to purchase shares of the company's common
stock with an aggregate value of approximately $30 million.
"We have a long history of successfully outperforming the overall
housing market, particularly in down periods where a
differentiated product offering and high levels of service make a
substantial difference," Rod Hershberger, president and chief
executive officer of PGT, said. "Equity capital raised in this
rights offering will help us continue our market share gains and
drive strong performance through geographic expansion, new product
introductions and improved manufacturing capabilities."
"The proceeds from this offering, together with the cash we have,
provide us with ample flexibility to continue outperforming the
market and expand our business," Mr. Hershberger added.
In addition to a debt repayment PGT made in the second quarter
from operating cash flow, a portion of the net proceeds from the
rights offering will be used to repay indebtedness and effectuate
the amendment to PGT's Second Amended and Restated Credit
Agreement.
This amendment, among other things, relaxes certain financial
covenants and provides the company with greater financial and
operating flexibility.
PGT will distribute to each holder of record of the company's
common stock as of close of business on Aug. 4, 2008, at no
charge, one non-transferable subscription right for every four
shares of common stock. Each whole subscription right will
entitle its holder to purchase one share of PGT's common stock at
the subscription price of $4.20 per share. PGT expects to
distribute the subscription rights to stockholders on or about
Aug. 6, 2008, after the registration statement relating to the
rights offering is declared effective by the United States
Securities and Exchange Commission. The rights offering will
expire at 5:00 p.m. on Sept. 4, 2008, unless extended by PGT's
board of directors.
The rights offering will be made only by means of a prospectus.
When available, copies of the prospectus may be obtained from:
PGT Inc.
Attn: Corporate Secretary
1070 Technology Drive
North Venice, FL 34275
Tel. (941) 480-1600
About PGT Inc.
Headquartered in North Venice, Florida, PGT Inc. (NASDAQ:PGTI)
-- http://www.pgtindustries.com/-- fka JLL Window Holdings,
Inc., is a manufacturer and supplier of residential impact-
resistant windows and doors. The company offers a range of
customizable aluminum and vinyl windows and doors, and porch-
enclosure products. The company manufactures these products in a
variety of styles, including single hung, horizontal roller,
casement and sliding glass doors, and it also manufactures sliding
panels used for enclosing porches. All of PGTI's products carry
the PGT brand, and its consumer-oriented products carry an
additional, trademarked product name, including WinGuard and Eze-
Breeze. The company's impact-resistant products, which are
marketed under the WinGuard brand name, combine heavy-duty
aluminum or vinyl frames with laminated glass that provide
protection from hurricane-force winds and wind-borne debris. On
Feb. 20, 2006, PGTI sold its NatureScape product line.
PORTOLA PACKAGING: Moody's Junks Ratings on Restructuring Plan
--------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating
of Portola Packaging, Inc. to Caa3 from Caa1 and changed the
outlook for the ratings to negative from stable. The company's
Probability of Default Rating was lowered to Ca from Caa1.
Additional instrument ratings are detailed.
The downgrades were prompted by Portola's statement that it
intends to file for bankruptcy, which is reflective of
deteriorating business conditions, higher input costs, and
liquidity constraints. The company has disclosed its intention to
seek a Chapter 11 bankruptcy. Portola also disclosed that it has
reached an agreement with 80% of the holders of the senior notes
due 2012 to exchange these notes for common stock in the
reorganized company. Minnesota investment firm Wayzata Investment
Partners LLC is expected to provide a $10 million bridge loan to
fund the restructuring. Portola has faced ongoing business
challenges, including weak demand, negative changes in mix and
inflationary pressures, which have pressured volumes and margins.
In addition, on June 30, 2008, Portola received a notice of
default and reservation of rights from the lender for its
$60 million senior secured revolving credit facility. The notice
was prompted by the company's June 23, 2008 filing stating that it
was investigating accounting irregularities at its China
subsidiaries, which may require a restatement of financial
statements which would lower net income by approximately
$2.5 million.
Today, Moody's took these rating actions:
-- Downgraded and withdrew the $60 million Guaranteed Senior
Secured Revolver due 2009, to B3 (LGD2, 13%) from B1 (LGD 2,
11%)
-- Downgraded the $180 million Guaranteed Senior Unsecured Notes
due 2012, to Ca (LGD4, 56%) from Caa2 (LGD4, 65%)
-- Downgraded the Corporate Family Rating to Caa3 from Caa1
-- Downgraded the Probability of Default Rating to Ca from Caa1
-- The rating outlook was changed to negative from stable.
The Ca Probability of Default Rating (PDR) reflects the very high
probability of default in the near-term. Moody's believes that
the overall family recovery (Loss Given Default Assessment) for
Portola will be approximately 60%, which is somewhat better than
the standard 50% family recovery. As a result of the slightly-
higher-than-average recovery rate, the Corporate Family Rating is,
at Caa3, one notch higher than the PDR. The Ca rating on the
Guaranteed Senior Unsecured Notes reflects a sizable expected loss
for this class of debt. The B3 rating for the Senior Secured
Revolver is one notch lower than that indicated by Moody's Loss-
Given-Default methodology but is believed to be more indicative of
the small losses likely to be incurred by the lender as a result
of the company's bankruptcy and restructuring. The proximity to
default was also a factor in adjusting the Revolver rating
downward to B3.
Headquartered in Batavia, Illinois, Portola Packaging, Inc.
designs, manufactures, and markets a broad range of products and
services including tamper evident plastic closures, bottles, and
related equipment and services for the dairy, fruit juice, bottled
water, sports drinks, and other non-carbonated beverage markets.
Portola had consolidated revenue of approximately $280 million for
the 12 months ended Feb. 29, 2008.
QUICKSILVER RESOURCES: S&P Rates Proposed $700MM Term Loan 'B+'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Quicksilver Resources Inc.'s (BB-/Stable/--) proposed $700 million
senior secured second-lien term loan due in 2013. At the same
time, S&P assigned a recovery rating of '5' to the loan,
indicating its expectation of modest (10% to 30%) recovery in the
event of a payment default. S&P also raised the rating on
Quicksilver's existing $475 million notes due in 2015, which are
now pari passu with the term loan and will be secured with second-
lien on assets, to 'B+' from 'B', and S&P revised the recovery
rating on the notes to '5' from '6'. Ratings on the company's
other debt are unchanged.
"The company will use proceeds from the term loan to fund a
portion of its recent $1.3 billion acquisition of Barnett Shale
properties," credit analyst Ben Tsocanos said.
Quicksilver will fund the balance of the purchase price with about
$300 million of credit facility borrowings and $300 million of
common stock. Pro forma for the acquisition, Quicksilver had
about $2.2 billion of debt as of March 31, 2008.
RED SHIELD: Gets Final OK to Access Chittenden's $13 Million Loan
-----------------------------------------------------------------
The Hon. Louis H. Kornreich of the United States Bankruptcy Court
for the District of Maine authorized Red Shield Environmental LLC
and RSE Pulp & Chemical LLC to obtain, on a final basis, up to
$13,128,242 in debtor-in-possession financing from lender
Chittenden Trust Company, dba Chittenden Bank, owing at least
$4,883,524 in claims including interest and fees.
Judge Kornreich also authorized the Debtors' to use the lender's
cash collateral.
The committed $13,128,242 in financing consists of:
i) a $7,000,000 term loan for Red Shield, and
ii) a $5,000,000 revolving line of credit and a $1,128,242 term
loan for RSE Pulp.
Chittenden also agreed to provide a new $1,248,531 term loan,
which is secured by a first lien on all assets of the Debtors
pursuant to Section 364(d)(1) of the Bankruptcy Code, in the
aggregate to fund portions of the Debtors' cash flow budget from
June 30, 2008, to July 25, 2008.
A full-text copy of the Debtors' cash flow budget is available for
free at:
http://ResearchArchives.com/t/s?2fb3
To secure the Debtors' DIP obligations, the bank will be granted
valid, binding and enforceable mortgages, security interests in
and liens upon the prepetition collateral and all assets of the
Debtors, which security interests, mortgages and liens shall be
senior and prior to all other liens, security interests and
claims. Moreover, all postpetition debt will have superpriority
expenses status over all other administrative expenses within the
meaning of Section 507(b) of the Bankruptcy Code.
The Debtors agreed to pay a host of fees including a $25,000
origination fee to Chittenden in connection with the financing.
However, Chittenden will waive the fee if the Debtor pays all
amounts under the new term loan before Aug. 15, 2008.
The DIP facility is subject to a $100,000 carve-out for payments
to professional advisors employed by the Debtors.
The DIP facility contains customary and appropriate events of
defaults.
About Red Shield
Headquartered in Old Town, Maine, Red Shield Environmental, LLC --
http://www.redshieldenv.com/-- provides renewable energy for on-
site consumption. The company and its affiliates, RSE Pulp &
Chemical, LLC, filed for Chapter 11 protection on June 27, 2008
(Bankr. D. Maine Lead Case No.08-10634 and 08-10634). Robert J.
Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection against their creditors, they listed assets between
$50 million and $100 million, and debts between $1 million and
$10 million.
SEMGROUP LP: Seeks Schedules and Statements Filing Extension
------------------------------------------------------------
SemGroup L.P. and its debtor-affiliates asked the U.S. Bankruptcy
Court for the District of Delaware to extend their time to
file their Schedules and Statements until Oct. 20, 2008.
John H. Knight, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, the Debtors' proposed counsel, told Judge
Brendan L. Shannon that the Debtors must compile information from
their books and records relating to their numerous assets and
contracts, as well as more than 1,500 creditors. Assembling
information within 30 days will be a burden to the Debtors, and
may adversely impact the Debtors' business operations, he said.
Mr. Knight added that substantial time and work is required for
the Debtors to prepare the Schedules and Statements, given the
complexity of their affairs. The Debtors anticipate that they
require an additional 60 days to complete the Schedules.
About SemGroup L.P.
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC. Margot B.
Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer
LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson &
Corroon LLP, represent the Debtors' prepetition lenders.
The Debtors' consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* * *
On July 25, 2008, the Troubled Company Reported that Fitch Ratings
downgraded the ratings of SemGroup, L.P., SemCrude L.P, and
SemCAMS Midstream Co. and simultaneously withdrawn all ratings.
The withdrawn ratings include Issuer default Rating D assigned to
SemGroup, L.P., SemCrude, L.P., and SemCAMS Midstream Co. Fitch
Ratings has downgraded, removed from Rating Watch Negative,
and simultaneously withdrawn (a) SemGroup, L.P.'s Senior unsecured
to 'C' from'B/RR3'; (b) SemCrude L.P.'s Senior secured working
capital facility to 'CCC' from 'BB-/RR1'; Senior secured revolving
credit facility to 'CC' from 'B+/RR1'; and Senior secured term
loan B to 'CC' from 'B+/RR1'; and (c) SemCAMS Midstream Co.
(SemCAMS) Senior secured working capital facility to 'CCC' from
'BB-/RR1'; Senior secured revolving credit facility to 'CC' from
'B+/RR1'; and Senior secured term loan B to 'CC' from 'B+/RR1'.
Also, Moody's Investors Service downgraded SemGroup, L.P.'s
Corporate Family Rating to Ca from Caa2, its Probability of
Default Rating to D from Caa3, its senior unsecured rating to C
(LGD 5; 86%) from Ca (LGD 4; 69%), and its first secured bank
facilities to Caa3 (LGD 3; 38%) from B3 (LGD 2; 21%). These
actions affect rated cross guaranteed debt at parent SemGroup and
its subsidiaries SemCams Holding Company and SemCrude, L.P.
Further, Fitch Ratings lowered the Issuer Default Ratings of
SemGroup, L.P., SemCrude L.P, and SemCAMS Midstream Co. to 'D'
following the bankruptcy petition by SemGroup and most of units on
July 22, 2008. These ratings are removed from Rating Watch where
they were placed on July 17, 2008. The bank facility and
securities ratings of SemGroup and units remain on Rating Watch
Negative pending a review of the bankruptcy court petition.
SEMGROUP LP: Has About $13 Million Payable to Hiland Holdings
-------------------------------------------------------------
Hiland Holdings GP, LP, and Hiland Partners, LP, updated the
status of the Partnership's product sales to certain affiliates of
SemGroup, L.P., in response to the bankruptcy of SemGroup, L.P.
and certain of its affiliates.
In the Partnership's public filings with the U.S. Securities and
Exchange Commission, the Partnership has historically sold natural
gas liquids and condensate that are produced at its Bakken and
Badlands plants and gathering systems to SemGroup. The
Partnership currently has an account receivable of approximately
$8 million from SemGroup relating to product sales made during
June 2008 and estimates additional uninvoiced product sales of
approximately $5 million from July 1 through July 18, 2008. Any
potential accounts receivable write-off related to the
Partnership's exposure to SemGroup is not expected to cause the
Partnership to be out of compliance with its covenants under its
credit facility or impact its liquidity position in any material
respect.
The Partnership has made temporary arrangements for its product
sales while assessing its options in light of SemGroup's
bankruptcy. The Partnership does not anticipate that the
SemGroup bankruptcy will cause it to lower its distribution
guidance or impede the execution of its current growth capital
expenditure program.
About the Hiland Companies
Enid, Oklahoma-based Hiland Partners, LP (NASDAQ: HLND) --
http://www.hilandpartners.com/-- gathers, compresses, dehydrates,
treats, processes and markets natural gas, and fractionates, or
separates, natural gas liquids, or NGLs. The Partnership also
provides air compression and water injection services for use in
oil and gas secondary recovery operations. The Partnership's
operations are primarily located in the Mid-Continent and Rocky
Mountain regions of the United States. Hiland Partners, LP's
midstream assets consist of fourteen natural gas gathering systems
with approximately 2,030 miles of gathering pipelines, five
natural gas processing plants, seven natural gas treating
facilities and three NGL fractionation facilities. The
Partnership's compression assets consist of two air compression
facilities and a water injection plant.
Hiland Holdings GP, LP owns the two percent general partner
interest, 2,321,471 common units and 3,060,000 subordinated units
in Hiland Partners, LP, and the incentive distribution rights of
Hiland Partners, LP.
About SemGroup L.P.
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC. Margot B.
Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer
LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson &
Corroon LLP, represent the Debtors' prepetition lenders.
The Debtors' consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* * *
On July 25, 2008, the Troubled Company Reported that Fitch Ratings
downgraded the ratings of SemGroup, L.P., SemCrude L.P, and
SemCAMS Midstream Co. and simultaneously withdrawn all ratings.
The withdrawn ratings include Issuer default Rating D assigned to
SemGroup, L.P., SemCrude, L.P., and SemCAMS Midstream Co. Fitch
Ratings has downgraded, removed from Rating Watch Negative,
and simultaneously withdrawn (a) SemGroup, L.P.'s Senior unsecured
to 'C' from'B/RR3'; (b) SemCrude L.P.'s Senior secured working
capital facility to 'CCC' from 'BB-/RR1'; Senior secured revolving
credit facility to 'CC' from 'B+/RR1'; and Senior secured term
loan B to 'CC' from 'B+/RR1'; and (c) SemCAMS Midstream Co.
(SemCAMS) Senior secured working capital facility to 'CCC' from
'BB-/RR1'; Senior secured revolving credit facility to 'CC' from
'B+/RR1'; and Senior secured term loan B to 'CC' from 'B+/RR1'.
Also, Moody's Investors Service downgraded SemGroup, L.P.'s
Corporate Family Rating to Ca from Caa2, its Probability of
Default Rating to D from Caa3, its senior unsecured rating to C
(LGD 5; 86%) from Ca (LGD 4; 69%), and its first secured bank
facilities to Caa3 (LGD 3; 38%) from B3 (LGD 2; 21%). These
actions affect rated cross guaranteed debt at parent SemGroup and
its subsidiaries SemCams Holding Company and SemCrude, L.P.
Further, Fitch Ratings lowered the Issuer Default Ratings of
SemGroup, L.P., SemCrude L.P, and SemCAMS Midstream Co. to 'D'
following the bankruptcy petition by SemGroup and most of units on
July 22, 2008. These ratings are removed from Rating Watch where
they were placed on July 17, 2008. The bank facility and
securities ratings of SemGroup and units remain on Rating Watch
Negative pending a review of the bankruptcy court petition.
SEMGROUP ENERGY: March 31 Balance Sheet Upside-Down by $54.6MM
--------------------------------------------------------------
SemGroup Energy Partners, L.P.'s consolidated balance sheet at
March 31, 2008, showed $262.0 million in total assets and
$316.6 million in total liabilities, resulting in a $54.6 million
partners' deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $5.8 million in total current
assets available to pay $16.1 million in total current
liabilities.
The company reported net income of $9.8 million on service
revenues of $40.2 million for the first quarter ended March 31,
2008.
These results compare to pre-IPO predecessor results of a net loss
of $12.3 million on revenues of $8.6 million for the quarter ended
March 31, 2007. The predecessor did not record any revenue
associated with the gathering and transportation and terminalling
and storage services provided on an intercompany basis, but did
recognize the costs of providing such services.
The company generated $19.0 million in earnings before interest,
taxes, depreciation and amortization, or EBITDA, for the first
quarter of 2008, and distributable cash flow of $15.7 million.
Kevin Foxx, SemGroup Energy Partners president and chief executive
officer, said, "We're pleased that 2008 is off to a great start.
SGLP's results were driven by three factors: strong storage
demand; an increase in transportation volumes at long-haul rates;
and 41 days of earnings contribution from the asphalt terminalling
and storage facilities that we acquired on February 20th of this
year."
On March 31, 2008, the net book value of the company's property,
plant and equipment was $244.8 million compared with
$102.2 million on Dec. 31, 2007, which reflects the impact of the
asphalt terminalling and storage facilities acquired.
"SGLP remains on track to increase our per unit annual cash
distribution rate for 2008 by $0.40 to $0.50 over the fourth
quarter 2007 annualized rate of $1.35 per unit," Foxx said.
Liquidity and Capital Resources
Net cash used in investing activities was $380.5 million for the
three months ended March 31, 2008, compared to $9.0 million for
the three months ended March 31, 2007. This increase is primarily
attributable to the purchase of the SemMaterials, L.P's asphalt
assets in February 2008 for approximately $379.3 million.
Net cash provided by financing activities was $355.0 million for
the three months ended March 31, 2008, as compared to
$21.1 million for the three months ended March 31, 2007. Net cash
provided by financing activities for the three months ended
March 31, 2008, is primarily comprised of net borrowings under the
company's credit facility of $205.4 million and proceeds from the
February 2008 public offering, net of offering fees, of
$161.2 million, and is offset by distributions paid of
$9.4 million for the three months ended March 31, 2008.
At March 31, 2008, the company had approximately $305.0 million of
availability under its $350.0 millionrevolving credit facility.
Purchase of Asphalt Assets
On Feb. 20, 2008, the company purchased land, receiving
infrastructure, machinery, pumps and piping and 46 liquid asphalt
cement and residual fuel oil terminalling and storage facilities
from SemMaterials, L.P., a subsidiary of SemGroup, L.P. (the
company's parent), for aggregate consideration of $379.5 million,
including $700,000 of acquisition-related costs.
For accounting purposes, the acquisition has been reflected as a
purchase of assets, with the acquired asphalt assets recorded at
the historical cost of SemMaterials, which was approximately
$145.5 million, with the additional purchase price of
$234.0 million reflected in the statement of changes in partners'
capital as a distribution to SemGroup, L.P.
In conjunction with the purchase of the acquired asphalt assets,
the company amended its existing credit facility, increasing its
borrowing capacity to $600 million. The amended credit facility
is comprised of a $350.0 revolving credit facility and a
$250.0 million term loan facility and will mature on July 20,
2012.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?3017
About SemGroup Energy Partners
Tulsa, Oklahoma-based SemGroup Energy Partners, L.P. (Nasdaq:
SGLP) -- http://www.SGLP.com/-- owns and operates a diversified
portfolio of complementary midstream energy assets. SemGroup
Energy Partners provides crude oil and liquid asphalt cement
terminalling and storage services and crude oil gathering and
transportation services.
On July 22, 2008, the company's parent, SemGroup, L.P., filed a
voluntary petition for reorganization under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware. Various subsidiaries of SemGroup, L.P.
also filed voluntary petitions for reorganization under Chapter 11
of the Bankruptcy Code on such date. None of the company, the
general partner of the company, nor any of the subsidiaries of the
company or the general partner were included in the bankruptcy
filings.
SEMGROUP LP: Various Entities Discloses Financial Exposure
----------------------------------------------------------
Various entities disclose financial exposure in relation to the
bankruptcy petition of SemGroup L.P. and its debtor-affiliates
filed under chapter 11 of the U.S. Bankruptcy Code and the
Companies' Creditors Arrangement Act (Canada).
A. Sunoco Logistics
Sunoco Logistics Partners L.P., believes it has minimal credit
exposure to SemGroup LP and its affiliates. Affiliates of Sunoco
Logistics conduct business with SemCrude LP for the purchase and
sale of crude oil. Sunoco Logistics has a net-out agreement with
SemCrude LP, pursuant to which receivables and payables are set-
off. As of the chapter 11 filing date of SemGroup and its debtor-
affiliates, Sunoco Logistics estimates that it is in a net payable
position with SemCrude LP, with limited credit exposure, if any.
B. ARC Resources
ARC Resources Ltd., a subsidiary of ARC Energy Trust, has a
potential exposure of $26.2 million from oil sales for the months
of June and July 2008 to SemGroup, L.P.'s subsidiary, SemCanada
Crude Company, for the marketing of a portion of ARC's oil
production. ARC is not certain of what portion if any of the
$26.2 million is collectible but in any case the amount is not
considered material to ARC's operations and overall financial
position.
C. Crescent Point Energy
Crescent Point Energy Trust said it has a potential exposure to
SemCanada Crude Company, a Canadian subsidiary of SemGroup, L.P.,
relating to the marketing of a portion of the Trust's crude oil
and liquids production. The contract pertaining to the majority
of the production volumes purchased by SemCanada was previously
terminated and does not represent an ongoing exposure for the
Trust.
Crescent Point's exposure is listed in SEMGroup's U.S. bankruptcy
filing as $42.5 million based on SEMGroup's forecasts of prices
and production volumes. The Trust expects the actual exposure to
be closer to $30 million based on its most recent estimates. As
of this date, the Trust is not able to quantify the portion, if
any, of the exposure that will be collected, but in any case the
amount is not considered material to Crescent Point's operations
and overall financial position.
Crescent Point expects 2008 to be a record year with production
forecast to average 36,250 boe/d and exit over 37,500 boe/d. The
Trust continues to expect record cash flow for 2008 and does not
expect the potential exposure to SemCanada to materially impact
its cash flow expectations. The Trust will not be revising its
cash flow guidance for the year.
D. Petroflow Energy
Petroflow Energy, Ltd., said it has a potential exposure to
SemCrude, L.P. and SemGas, L.P., subsidiaries of SemGroup, L.P.,
relating to the marketing of a portion of the Company's crude oil,
liquids and natural gas production.
Certain SemGroup contracts, which are held by Petroflow's working
interest partner, pertain to the majority of the oil production
volumes produced by Petroflow and approximately 20% of the
natural gas volumes.
Petroflow's current exposure is limited to amounts uncollected for
June and July production up to July 22, 2008 amounting to
approximately $3.2 million. Petroflow is not able to quantify the
portion, if any, of the exposure that will be collected, but in
any case the amount is not considered material to Petroflow's
operations and overall financial position.
Ongoing production revenues will be governed by the terms of
Chapter 11 of the US Bankruptcy Code and the Company expects to be
paid under normal industry terms for production in this time
frame. Petroflow is actively seeking alternative arrangements
with other oil and gas purchasers as well as working with SemGroup
in a plan that may see all debts paid on a timely basis. SemGroup
listed assets of $6.14 billion and liabilities of $7.53 billion in
its US bankruptcy filing.
E. Plains All American
Plains All American Pipeline, L.P. reiterated statements made in a
press release issued July 17, 2008, that it does not expect to
have any material credit exposure to SemGroup, L.P. and its
affiliates.
The trade debt amounts attributed to PAA in such bankruptcy
filings were gross amounts and, as noted in the bankruptcy
filing, are "Subject to Set-Off." However, the presence of such
amounts in SemGroup, L.P.'s bankruptcy filing (and subsequent
media reports reciting such gross amounts) have precipitated
calls from PAA's stakeholders and customers seeking
clarification.
As indicated in the SemGroup filings, PAA has various
arrangements in place to mitigate credit exposure, such as net-
out agreements that allow for set-off of payables and receivables
between counterparties.
F. TEPPCO Partners
TEPPCO Partners, L.P. confirmed that its subsidiary, TEPPCO Crude
Oil, LLC, is listed as one of the unsecured creditors in the
bankruptcy filing by SemGroup, L.P. and certain of its North
American subsidiaries. Through an existing netting agreement for
crude oil sold to and purchased from a subsidiary of SemGroup,
TEPPCO's credit exposure has historically been minimal. While a
review of the bankruptcy filings is still ongoing, based on
historical arrangements TEPPCO does not expect any future material
impact as a result of the SemGroup bankruptcy nor does it expect
any future material credit exposure to SemGroup. SemGroup has
represented less than 3.0% of the partnership's current crude oil
gathering volumes.
G. Tortoise Capital Advisors
Tortoise Capital Advisors, LLC, the investment adviser for
Tortoise Energy Infrastructure Corp., Tortoise Energy Capital
Corp., and Tortoise North American Energy Corp., has evaluated the
impact of recent adverse developments related to SemGroup, L.P.
Sem Parent is a private, diversified energy midstream company that
transports, stores and markets multiple energy products. A
subsidiary of Sem Parent is the general partner of SemGroup Energy
Partners, L.P., or SGLP, a publicly traded master limited
partnership that stores and transports crude oil and asphalt. On
July 21, 2008, Manchester Securities and Alerian Capital
Management assumed control of the general partner of SGLP.
SGLP derives a substantial portion of its revenues from Sem
Parent. On July 22, 2008, Sem Parent filed Chapter 11 bankruptcy
due to claimed liquidity issues. SGLP has not filed for
bankruptcy and is not included in Sem Parent's filing. As a
result of these events, Sem Parent's 8.75% Senior Notes declined
in value from approximately 96.5% of par on July 16, 2008
to approximately 11.5% of par on July 23, 2008. SGLP's common
unit price traded from a close of $22.80 per unit on July 16,
2008 to a close of $8.00 per unit on July 23, 2008.
TYN owns approximately $9.3 million par value of Sem Parent's
8.75% Senior Notes. As of July 16, 2008, TYG, TYY and TYN owned
342,162; 436,774; and 37,000 units of SGLP, respectively.
Combined, the Sem Parent Notes and SGLP units represented 0.69% of
TYG's total assets, 1.27% of TYY's total assets and 4.3% of TYN's
total assets, as of July 16, 2008.
TYN's investment in Sem Parent Notes is expected to represent an
unsecured claim in the Sem Parent bankruptcy. TYN has ceased
accruing interest income on the Sem Parent Notes and has reserved
against its existing unpaid interest. The recovery of the par
value and unpaid interest on the Sem Parent Notes is uncertain at
this time. TYN reflects Sem Parent Notes on its balance sheet at
fair value, as determined by TYN according to its valuation policy
and procedures.
TYN's July 17, 2008 net asset value of $24.82 reflected the
Sem Parent Notes at 29.5% of par value.
SGLP's board has indicated that it is too early to determine the
appropriate distribution for the quarter. SGLP operates more
than 1,000 miles of pipeline, and owns or leases more than 13
million barrels of storage and other transportation assets.
"Given the geographic significance of its assets, we continue to
believe SGLP's fee-based energy infrastructure assets retain
intrinsic value and are an important component of the midstream
energy industry," said Tortoise Capital Advisors' Managing
Director Zachary Hamel.
Tortoise Capital Advisors is monitoring the impact the Sem
Parent bankruptcy may have on other portfolio holdings for each
of the funds, and is presently unaware of any material impact or
diminution in value that has occurred as a result of these
events.
"We expect TYG, TYY and TYN to maintain their current distribution
to stockholders and to grow those distributions over the long
term, despite the Sem Parent bankruptcy," said the funds' Chief
Financial Officer, Terry Matlack. "Although these investments
represented 4.3% of TYN's total assets as of July 16, 2008, we
believe TYN's 90.8% distributable cash flow payout ratio
for the six months ended May 31, 2008 should provide cushion to
maintain our distributions. In addition, we remain in compliance
with all of our leverage coverage ratios."
About Sunoco
Sunoco Logistics Partners L.P., headquartered in
Philadelphia, -- http://www.sunocologistics.com/-- is a master
limited partnership formed to acquire, own and operate refined
product and crude oil pipelines and terminal facilities, including
those of Sunoco, Inc. The Eastern Pipeline System consists of
approximately 1,800 miles of primarily refined product pipelines
and interests in four refined products pipelines, consisting of a
9.4% interest in Explorer Pipeline Company, a 31.5% interest in
Wolverine Pipe Line Company, a 12.3% interest in West Shore Pipe
Line Company and a 14.0% interest in Yellowstone Pipe Line
Company. The Terminal Facilities consist of 9.2 million shell
barrels of refined product terminal capacity and 22.8 million
shell barrels of crude oil terminal capacity (including 15.9
million shell barrels of capacity at the Texas Gulf Coast
Nederland Terminal). The Western Pipeline System consists of
approximately 3,700 miles of crude oil pipelines, located
principally in Oklahoma and Texas, a 55.3% interest in Mid-Valley
Pipeline Company and a 43.8% interest in the West Texas Gulf Pipe
Line Company and a 37.0% interest in the Mesa Pipe Line System.
About ARC Energy
ARC Energy Trust is one of Canada's largest conventional oil
and gas royalty trusts with an enterprise value of approximately
$7.5 billion. The Trust expects full year 2008 oil and gas
production to average approximately 64,000 barrels of oil
equivalent per day from six core areas in western Canada.
ARC Energy Trust units trade on the TSX under the symbol AET.UN
and ARC Resources exchangeable shares trade under the symbol ARX.
About Crescent Point Energy
Crescent Point Energy Trust (TSX: CPG.un) --
http://www.crescentpointenergy.com/-- offers commodity price risk
management programs. The Trust hedges (on a rolling three year
basis) crude oil and natural gas prices, along with the
U.S./Canadian dollar exchange rate, to provide stability to
revenues, cash flows and distributions. The Trust also hedges
interest rates and power prices to provide stability to input
costs.
About Petroflow Energy Ltd.
Petroflow Energy Ltd. -- http://www.petroflowenergy.com/-- is an
independent oil and natural gas company that explores, develops
and produces hydrocarbon reserves primarily in the mid-continent
region.
About PAA Pipeline
Houston, Texas-based Plains All American Pipeline, L.P. (NYSE:
PAA) -- http://www.paalp.com/-- is a master limited partnership
engaged in the transportation, storage, terminalling and marketing
of crude oil, refined products and liquefied petroleum gas and
other natural gas related petroleum products. Through its 50%
ownership in PAA/Vulcan Gas Storage LLC, the partnership is also
engaged in the development and operation of natural gas storage
facilities.
About TEPPCO Partners
TEPPCO Partners, L.P., (NYSE: TPP) -- http://www.teppco.com/--
has an enterprise value of approximately $5 billion, is a
diversified energy logistics company with operations that span
much of the continental United States. TEPPCO owns and operates
an extensive network of assets that facilitate the movement,
marketing, gathering and storage of various commodities and
energy-related products. Texas Eastern Products Pipeline Company,
LLC, the general partner of TEPPCO Partners, L.P., is owned by
Enterprise GP Holdings and is based in Houston, Texas.
About Tortoise Capital Advisors, LLC
Tortoise Capital Advisors, LLC is a pioneer in the capital
markets for master limited partnership investment companies and a
leader in closed-end funds and separately managed accounts
focused on MLPs in the energy infrastructure sector. As of
June 30, 2008, the adviser had approximately $2.7 billion of
assets under management.
About SemGroup L.P.
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC. Margot B.
Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer
LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson &
Corroon LLP, represent the Debtors' prepetition lenders.
The Debtors' consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 1; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* * *
On July 25, 2008, the Troubled Company Reported that Fitch Ratings
downgraded the ratings of SemGroup, L.P., SemCrude L.P, and
SemCAMS Midstream Co. and simultaneously withdrawn all ratings.
The withdrawn ratings include Issuer default Rating D assigned to
SemGroup, L.P., SemCrude, L.P., and SemCAMS Midstream Co. Fitch
Ratings has downgraded, removed from Rating Watch Negative,
and simultaneously withdrawn (a) SemGroup, L.P.'s Senior unsecured
to 'C' from'B/RR3'; (b) SemCrude L.P.'s Senior secured working
capital facility to 'CCC' from 'BB-/RR1'; Senior secured revolving
credit facility to 'CC' from 'B+/RR1'; and Senior secured term
loan B to 'CC' from 'B+/RR1'; and (c) SemCAMS Midstream Co.
(SemCAMS) Senior secured working capital facility to 'CCC' from
'BB-/RR1'; Senior secured revolving credit facility to 'CC' from
'B+/RR1'; and Senior secured term loan B to 'CC' from 'B+/RR1'.
Also, Moody's Investors Service downgraded SemGroup, L.P.'s
Corporate Family Rating to Ca from Caa2, its Probability of
Default Rating to D from Caa3, its senior unsecured rating to C
(LGD 5; 86%) from Ca (LGD 4; 69%), and its first secured bank
facilities to Caa3 (LGD 3; 38%) from B3 (LGD 2; 21%). These
actions affect rated cross guaranteed debt at parent SemGroup and
its subsidiaries SemCams Holding Company and SemCrude, L.P.
Further, Fitch Ratings lowered the Issuer Default Ratings of
SemGroup, L.P., SemCrude L.P, and SemCAMS Midstream Co. to 'D'
following the bankruptcy petition by SemGroup and most of units on
July 22, 2008. These ratings are removed from Rating Watch where
they were placed on July 17, 2008. The bank facility and
securities ratings of SemGroup and units remain on Rating Watch
Negative pending a review of the bankruptcy court petition.
SENSATA TECH: Moody's Assigns Caa2 to $2.8BB Subordinated Notes
---------------------------------------------------------------
Moody's Investors Service assigned a Caa2 rating to Sensata
Technologies B.V.'s EUR141 million subordinated notes due 2014,
which replaces Sensata's existing EUR141 million term loan
maturing 2013. In a related rating action, Moody's affirmed the
following ratings: corporate family rating - B3; probability of
default rating - B3, senior secured credit facility - B1, senior
unsecured notes - Caa1; and, senior subordinated notes - Caa2.
The company's speculative grade liquidity rating remains at SGL-2.
The outlook is stable.
The company's B3 corporate family rating reflects the lack of
deleveraging as the company continues to face challenging economic
environments. Key leverage metrics through the twelve months of
March 31, 2008 were as follows: debt/EBITDA near 9.0x times and
EBITA/interest of 1.2 times (all ratios adjusted per Moody's
methodology). The high leverage results from the initial
acquisition of Sensata by Bain Capital, LLC ("Bain") in April 2006
augmented by a series of debt-financed acquisitions since then.
Moody's had expected some level of debt repayment beyond mandatory
term loan amortization, which would have partially offset some of
the negative impact from foreign exchange translation on the
company's euro-denominated debt. The strong euro relative to the
U.S. dollar is resulting in higher debt balances on Sensata's
consolidated balance sheet adding to the high leverage. This
leveraged capital structure could hinder the company's financial
flexibility as some of the company's end markets face increasing
economic pressures. Additionally, the slowing U.S. economy is
negatively impacting the domestic housing market, a key source of
revenue for its controls business. While a significant portion of
Sensata's business is derived from sensors used on automobiles,
the company is less affected by declining auto sales than
traditional auto parts suppliers because of the increasing content
of electronics on vehicles. These weaknesses are balanced against
the company's good liquidity, global presence, and growing
exposure to several other end markets including aerospace and
telecommunications.
The stable outlook reflects Sensata's good liquidity and ability
to generate free cash flow as it faces a slowing U.S. economy,
which is negatively impacting some of its key end markets.
These ratings/assessments were affected by this action:
Corporate family rating affirmed at B3;
Probability of default rating affirmed at B3;
Senior secured credit facility affirmed at B1 (LGD2, 28%);
$450 million senior unsecured notes due 2014 affirmed at Caa1
(LGD5, 73%);
EUR245 million senior subordinate notes due 2016 affirmed at Caa2
(LGD6, 90%); and,
EUR141 million senior subordinate notes due 2014 assigned Caa2
(LGD6, 90%).
The company's speculative grade liquidity rating of SGL-2 is
unchanged.
Sensata Technologies B.V., incorporated under the laws of The
Netherlands and headquartered in Attleboro, Massachusetts, designs
and manufactures sensors and electronic controls. Sensata is a
global designer, manufacturer, and marketer of customized and
highly-engineered sensors and control products. Revenues for the
twelve months ended March 31, 2008 totaled about $1.5 billion.
SIRIUS SATELLITE: FCC Approves XM Satellite Merger in a 3-2 Vote
----------------------------------------------------------------
The Wall Street Journal reports that the Federal Communications
Commission approved in a 3-2 vote Sirius Satellite Radio Inc.'s
buyout of XM Satellite Radio Holdings Inc.
WSJ relates that Republican Commissioner Deborah Taylor Tate
removed the last barrier to the merger's completion by voting to
approve the deal. To secure her vote, the companies voluntarily
agreed to pay a combined $19.7 million in fines to settle FCC rule
violations; including locating towers in unapproved locations and
selling radios which exceeded power limits, WSJ indicates.
WSJ, citing Ms. Tate, says that she waited until she was satisfied
that the enforcement part of the deal was completed before voting
in favor of the merger and FCC Chairman Kevin Martin had signed
off on it.
Mr. Martin said that the deal would be positive for consumers and
the general public and that subscribers would have more choices in
pricing and channels now than they had in the past, WSJ adds.
As part of the deal, WSJ relates, the companies have agreed to:
-- a three-year price cap well as promising to bring
interoperable radios to the market within a year;
-- a la carte pricing so that subscribers will have more
choices over which stations they receive; and
-- set aside 8% of their total channels for educational and
minority-owned channels.
WSJ, points out that the companies agreed to most of those
conditions a month ago, when Mr. Martin first proposed that the
agency approve the deal.
The FCC will now launch an inquiry into whether satellite radio
companies must include technology in their radio receivers that
would allow subscribers to also hear new digital channels from
local radio stations, WSJ adds.
About XM Satellite Radio
Headquartered in Washington, D.C., XM Satellite Radio Holdings
Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite
radio company. The company broadcasts live daily from studios in
Washington, DC, New York City, Chicago, Nashville, Toronto and
Montreal. The company also provides satellite-delivered
entertainment and data services for the automobile market through
partnerships with General Motors, Honda, Hyundai, Nissan, Porsche,
Subaru, Suzuki and Toyota.
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
As reported in the Troubled Company Reporter on May 14, 2008, the
company's balance sheet at March 31, 2008, showed $1.5 billion in
total assets and $2.3 billion in total liabilities, resulting in a
$839.4 million total stockholders' deficit.
SPECTRUM BRANDS: Moody's Reinstates B1 Rating to $50MM LC Facility
------------------------------------------------------------------
On July 22, 2008, Moody's Investors Service inadvertently withdrew
its B2 rating on Spectrum Brands' $50 million synthetic letter of
credit facility. Rather than being withdrawn, the synthetic LOC
should have been upgraded to B1, consistent with the upgrade on
Spectrum's secured credit facility. The rating action has no
impact on any other rating or LGD assessment/point estimate, all
of which are affirmed.
This rating was reinstated and upgraded and assessment revised as:
-- $50 million synthetic letter of credit facility due 2013 to
B1 (LGD 2, 13%) from B2 (LGD2, 29%);
These ratings were affirmed and assessments revised:
-- Corporate family rating at Caa1;
-- Probability-of-default rating at Caa2;
-- $700 million 7.375% senior subordinated bonds due 2015 at
Caa3 (LGD4, 62%);
-- $350 million variable rate toggle senior subordinated notes
due 2013 at Caa3 (LGD4, 62%); and
-- $1.55 billion senior secured credit facility due 2013 at B1
(LGD 2, 13%)
Headquartered in Atlanta, Georgia, Spectrum Brands, Inc. is a
global consumer products company with a diverse product portfolio
that includes consumer batteries, lawn and garden chemicals,
household insect control products, and electric shaving and
grooming equipment. The company manufactures batteries, home and
garden chemicals, and specialty pet supplies at 52 manufacturing
facilities located in the U.S., Europe, Latin America, and China
while rechargeable batteries, electric shaving and grooming
equipment, and portable lighting products are mostly sourced from
third party suppliers located in China and Japan. Spectrum
reported sales of over $2 billion for the 12 months ended March
2008.
TALLSHIPS FUNDING: Collateral Slide Cues Fitch's Seven Rating Cuts
------------------------------------------------------------------
Fitch Ratings has downgraded and removed from Rating Watch
Negative seven classes of notes issued by Tallships Funding Ltd.
These rating actions are effective immediately:
-- $683,139,946 Advance Swap to 'CCC' from 'BBB';
-- $241,000,000 Revolver to 'CCC' from 'BBB';
-- $357,716,917 class A-1 notes to 'CC' from 'B+;
-- $64,587,777 class A-2 notes to 'CC' from 'B-;
-- $50,973,806 class B notes to 'C' from 'CCC';
-- $39,432,476 class C notes to 'C' from 'CC';
-- $31,009,538 class D notes to 'C' from 'CC'.
Fitch's rating actions reflect the significant collateral
deterioration within the portfolio, specifically subprime RMBS.
Since the last review conducted in November 2007, approximately
84.2% of the portfolio has been downgraded. The portion of the
portfolio rated below investment grade is now 75.3% and 17.0% of
the portfolio is currently on Rating Watch Negative.
The collateral deterioration has caused each of the class A, B, C
and D overcollateralization tests to fall below 100% and fail
their respective triggers. The failures of these tests are
diverting interest proceeds that would otherwise be payable to the
class B, C, and D notes, to the outstanding revolving credit
agreement borrowings. Consistent with the current ratings, Fitch
expects the class B, C, and D notes to receive only capitalized
interest payments in the future with no ultimate principal
recovery.
The classes are removed from Rating Watch as Fitch believes
further negative migration in the portfolio will have a lesser
impact on these classes. Additionally, Fitch is reviewing its SF
CDO approach and will comment separately on any changes and
potential rating impact at a later date.
Tallships Funding is an arbitrage hybrid synthetic and cash
collateralized debt obligation which closed Dec. 14, 2006, and is
managed by Bear Stearns Asset Management. Tallships Funding has
an unfunded super senior liquidity facility consisting of an
advance swap and a revolving credit agreement. There are also
five classes of funded notes and the proceeds are secured by cash
securities and a CDS Collateral Asset Account. In the case of
credit event and floating amount event, losses are covered first
by the CDS Collateral Asset Account, then the revolving credit
agreement, and finally the advance swap.
The portfolio is composed of subprime RMBS (70.7%), SF CDOs
(22.3%), Alt-A RMBS (0.9%), Prime RMBS (1.4%), and Non-SF CDOs
(4.7%). Subprime RMBS of the pre-2005, 2005, 2006, and 2007
vintages account for approximately 4.7%, 31.1%, 34.7%, and 0.2% of
the portfolio, respectively. SF CDOs of the pre-2005, 2005, 2006,
and 2007 vintages account for approximately 2.8%, 7.5%, 11.5% and
0.5%, respectively.
The rating of the super senior liquidity facility addresses the
likelihood that investors will receive full and timely payments of
interest and commitment fees on the drawn and unfunded amounts,
respectively, as well as the stated balance of any drawn amounts
by the stated maturity date in accordance with the governing
documents. The ratings of the A-1 and A-2 notes address the
likelihood that investors will receive full and timely payments of
interest, as well as the stated balance of principal, by the
stated maturity date pursuant to the governing documents. The
ratings of the class B, C and D notes address the likelihood that
investors will receive ultimate interest payments, as well as the
stated balance of principal, by the stated maturity date in
accordance with the governing documents.
TERWIN ASSET: Collateral Sale Set for August 19
-----------------------------------------------
A collateral sale will be held at 10:00 a.m., on Aug. 19, 2008, at
the offices of Vinson & Elkins LLP at 666 Fifth Avenue, 26th Floor
in New York. Terwin Asset Management LLC and and its unit, Terwin
Money Management LLC, signed a pledge and security agreement dated
Jan. 17, 2008, with Shinsel Bank, Limited, a Japanese company.
The PSA secures Shinsel's loaned amounts to the Debtors'
affiliate, Terwin Advisors LLC, under an amended and restated loan
agreement dated Nov. 11, 2005.
The collateral consists of the Terwin Asset's ownership interests
in Specialized Loan Servicing LLC pledged to Shinsel representing
74.4% of the total outstanding ownership of SLS. Terwin Asset
pledged the collateral as security for certain debts under loan
documents, including a principal of $50,000,000. Pursuant to the
PSA, the secured portion of the debts is about $40,000,000.
The Debtor is in default under the loan documents as of June 30,
2008, including principal and interest of at least $55,377,777,
plus certain other fees and charges.
The collateral is to be sold subject to these terms and
conditions:
1. prospective bidders must register attendance at the sale.
The winning purchaser will be required to pay within the
48 hours of the public sale by cash, cashier's check or
other immediately available funds;
2. the secured party reserves the right to bid for and
purchase the collateral and to pay in whole, or in part,
by crediting the purchase price against the balance of
unpaid debt;
3. all of the collateral will be sold as a block and will
not be divided or sold in any lesser amounts. The
collateral is offered as-is, where-as, and with all
faults. The secured party makes no guarantee or warranty
as to the quantity, quality, condition, right, title,
interest or description of the collateral;
4. all prospective bidders must present a $5,000,000
cashier's check to the secured party prior to Aug. 18,
2008, at 5:00 p.m. that will be held in escrow pending
the closing of the sale. The deposit will be forfeited
by any winning bidder to the secured party as liquidated
damages in the even the winning bidder fails to pay the
balance of its winning bid within 48 hours of the sale
conclusion. No more than three business days after the
closing of the sale, the secured party will return the
deposits to the unsuccessful bidders. In advance of
bidding, each prospective bidder also must provide
evidence. No offers may be withdrawn once made, but no
sale will be final until accepted in writing by the
secured party or its agent.
5. the secured party reserves the right to announce other
terms and conditions as it may deem to be commercially
reasonable at the sale, including minimal bid increments.
The secured party further reserves the right to cancel or
adjourn the sale;
6. each prospective bidder must demonstrate that it is either
(a) an investment company, money management firm or
"qualified institutional buyer" within the meaning of Rule
144A under the Securities act of 1933, as amended, or (b)
an institutional "accredited investor" within the meaning
of Regulation D under the Securities Act.
7. the purchaser will be required to provide written
representation addressed to the secured party stating
that it is (a) acquiring the collateral for investment
purposes, and not as a representative of other purchasers,
and not with a view to distribution or resale of the
collateral in violation of the Securities Act, (b) is a
highly sophisticated investor with the knowledge and
experience in financial and business matters, (c) has
independently evaluated and conducted an in-depth detailed
analysis on the sale of the collateral, and (d) has
independently concluded that it is financially able to
bear the risks indefinitely, among others.
8. the purchaser must demonstrate to the secured party and
its counsel's satisfaction that the purchase of the
collateral complies with all state and federal laws;
9. in addition to the collateral, the Debtor owns other
assets in which it has granted a security interest to the
secured party for the loan documents.
10. the sale of the collateral is subject to all liens,
security interests, charges, and encumbrances of any kind,
including those liens and security interests on the
collateral granted to the secured party under a loan
agreement dated Oct. 27, 2003, by the Terwin Asset,
Shinsel, and Merrill Lynch Mortgage Capital, Inc. The
underlying property of SLS may be subject to other liens
and encumbrances, including those in favor of the secured
party granted under an amended and restated loan and
security agreement dated May 14, 2008, with SLS, and an
amended and restated receivables loan agreement dated
May 14, 2008, with SLS Funding LLC and SLS, together the
SLS loans;
11. prospective bidders will not have any right to (a) any
forbearance of any kind or any waiver or postponement of
any right or remedy of secured party under the loan
documents, the 2003 loan, of the SLS loans, or (b) any
other amendment to any term or condition contained in
those loans; and
12. consummation of the sale will be made immediately upon
receipt of full payment by transfer of collateral.
Terwin Asset is entitled to an accounting of the unpaid debt
accrued by the collateral that the secured party intends to sell.
The Terwin Asset may request an accounting from Mark E. Rubin at
Chanin Capital Partners at 55 East, 52nd Street, 31st Floor in New
York, (212) 277-0133, or mrubin@chanin.com
About Terwin
Terwin Money Management LLC, --
https://www.terwinmoneymanagement.com/ -- a registered investment
advisor, is a wholly-owned subsidiary of Terwin Asset Management
LLC, the asset management arm of The Winter Group. TMM's focus is
the management of credit related MBS and ABS in structured
vehicles such as CDOs. Glacier Funding CDO I was issued in March
2004, Cascade Funding CDO I was issued in July 2004 and Glacier
Funding CDO II was issued in October 2004. Athos Funding Ltd.
closed May 16, 2005 and Northwall Funding CDO I closed May 17,
2005. Glacier Funding CDO III closed July 29, 2005. Glacier
Funding CDO IV closed April 12, 2006 and Tazlina Funding CDO I
closed June 1, 2006. Bering CDO I closed August 15, 2006 and
Kefton CDO I closed December 14, 2006. Glacier V closed March 27,
2007 and Tazlina Funding CDO II closed May 10, 2007.
TI ACQUISITION: Files for Bankruptcy Protection in Georgia
----------------------------------------------------------
Dawn McCarty of Bloomberg News reports that TI Acquisition LLC
filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy
Code before the U.S. Bankruptcy Court for the Northern District of
Georgia.
The company did not state reasons why it filed for bankruptcy,
Mrs. McCarty notes.
According to Bloomberg, the company listed assets of $42.3 million
and debts of $55.7 million. The company owes at least $10 million
in the aggregate to unsecured creditors, the report says.
The company's list of 20 unsecured creditors includes, among other
things, Honeywell Nylon LLC asserting $3.2 million in claims;
Southern Polymer Inc., $1.3 million; and Domo, $1.1 million,
Bloomberg says. Largest secured claim holder, Bank of America NA,
is owed $28.6 million, the report adds.
Headquartered in Dalton, Georgia, TI Acquisition LLC dba Templeton
Carpet Mills -- http://www.templetoncarpet.com-- makes carpets
and textiles.
TI ACQUISITION: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: TI Acquisition, LLC
dba Thomas Industries
dba Monticello Floors
dba Mattel
dba Superior Yarn Technology
dba Mattel Carpet & Rug
dba Thomas Industries
dba Templeton Carpet Mills
1900 Willowdale Road
Dalton, GA 30720
Bankruptcy Case No.: 08-42370
Type of Business: The Debtor manufactures carpets and textiles.
Chapter 11 Petition Date: July 27, 2008
Court: Northern District of Georgia (Rome)
Debtors' Counsel: Richard T. Klingler, Esq.
(rtklingler@kkflawfirm.com)
Kennedy, Koontz & Farinash
320 North Holtzclaw Avenue
Chattanooga, TN 37404-2305
Tel: (423) 622-4535
Fax: (423) 622-4583
http://kkflawfirm.com/
Estimated Assets: $10 million to $50 million
Estimated Debts: $50 million to $100 million
Consolidated Debtors' List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Honeywell Nylon, LLC $3,213,604
P.O. Box 905210
Charlotte, NC 28290
Southern Polymer, Inc. $1,326,415
Dept. AT 952064
Atlanta, GA 31192
Domo
$1,148,311
Bau 3101-AM Jaupttor
Deutschland
Beaulieu security: 22,793 $995,067
1502 Coronet Drive
Dalton, GA 30720
PRopex, Inc. $870,245
P.O. Box 48
Lagrange, KY 40031
Textile Rubber And possessory lien; $455,312
Chemical Co. security: 1,171
P.O. BOX 116911
Atlanta, GA 30368
FR Thomas, LLC $412,500
1420 W. Canal St., Ste. 250
Littleton, CO 80120
Nylene Canada $311,013
200 McNab Street
Arnipor, On Canada K7S 3P2
Great Wolf Resorts customer deposit $302,810
CTGW, LLC
122 W. Washington Ave.
Madison, WI 53703
Mattex $285,677
P.O.Box 112470
Techno Park
Jebel Ali, Dubai
United Arab Emirates
Mass Polymers Corp. $257,184
P.O. BOX 845572
Boston, MA 02284
SA Resort LLLP customer deposit $222,207
c/o BJW-Dallas
17814 Davenport Road
Dallas, TX 75252
Nylene Canada Inc. $157,978
P.O. BOX 57056
Toronto, On Canada M5W
D & L Looper & Clip Co. $148,442
164 Cherokee Drive NE
DALTON, GA 30721
Colbond, Inc. $132,908
Dept 49996
Atlanta, GA 31192
Syncot Plastics, Inc. $125,161
P.O. Box 69
Cramerton, NC 28032
D & W Paper Tube, Inc. $122,575
P.O. BOX 1484
Chatsworth, GA 30705
Solutia, Inc. $115,878
P.O. Box 75098
Charlotte, NC 28275
Poston of Dalton, Inc. possessory lien $106,310
P.O. Box 945 security: $675
Dalton, GA 30722
Johnson Controls, Inc. $105,232
P.O. Box 905240
Charlotte, NC 28290
UAL CORP: Shares Gain Two-Year High as $2.7BB Loss Beats Estimates
------------------------------------------------------------------
UAL Corp.'s shares rose 69% to $8.41 at 4 p.m. of July 22, 2008,
New York time in Nasdaq Stock Market composite trading, the
highest since emerging from Chapter 11 in early 2006, Bloomberg
News reports. Investor confidence was boosted after United
Airlines' parent reported a $2,729,000,000 net loss that was
narrower than analysts' when some costs are excluded, Bloomberg
adds. UAL also said it will let go of more than 7,000 employees
by the end of 2009 to offset increasing fuel costs.
UAL's new financing deal with JPMorgan is also expected to
increase the company's cash position by $1,000,000,000, amidst
high fuel prices and upcoming lower demand. UAL reported that it
has $2,899,000,000 in cash and cash equivalents as of June 30,
2008.
MarketWatch says UAL reported better-than-feared loss of $1.19 a
share, compared to a $1.85 a share expected by analysts polled by
FactSet Research.
Six of the eight largest U.S. airlines have now reported second
quarter results, increasing the group's aggregate net loss to
$5,800,000,000:
Airline Net Income (Loss)
------- -----------------
AMR ($1,448,000,000)
UAL ($2,729,000,000)
Delta ($1,044,000,000)
Continental ($3,000,000)
Southwest Not Yet Reported
Northwest Not Yet Reported
US Airways ($567,000,000)
JetBlue ($7,000,000)
Players in the airline industry have blamed escalating fuel
costs. UAL said that gains from continued revenue growth were
insufficient to offset the more than 55% increase in average fuel
price per gallon. Despite a 17.7% growth in operating revenues,
JetBlue Airways Corp., reported a meek $3,000,000 loss,
acknowledging that revenue gains were not keeping pace with "the
extraordinary increase in the price of jet fuel."
According to The Wall Street Journal, the net losses of JetBlue,
US Airways Group, and UAL weren't as deep as Wall Street had
predicted, as their sales rose on healthy passenger traffic,
higher ticket prices and additional fees to passengers.
While UAL has expressed concerns over the airline industry's
challenges due to skyrocketing prices of fuel, US Airways
Chairman and CEO Doug Parker said, "Despite our disappointing
results, we are pleased with the early performance of our a la
carte initiatives as we are seeing strong early sales in our
Choice Seats program and encouraging revenue trends from our new
first and second checked bag policies." He added, "We are also
encouraged by our industry's response to the current economic
environment."
Northwest Airlines Corp. and Southwest Airlines Co. are scheduled
to post their second quarter results this week.
About UAL Corporation
Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA)
-- http://www.united.com/-- is the holding company for United
Airlines, Inc. United Airlines is the world's second largest
air carrier. The airline flies to Brazil, Korea and Germany.
The company filed for chapter 11 protection on Dec. 9, 2002
(Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen,
Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and
Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the
Debtors in their restructuring efforts. Fruman Jacobson, Esq.,
at Sonnenschein Nath & Rosenthal LLP represented the Official
Committee of Unsecured Creditors before the Committee was
dissolved when the Debtors emerged from bankruptcy.
Judge Eugene R. Wedoff confirmed the Debtors' Second Amended
Plan on Jan. 20, 2006. The company emerged from bankruptcy
protection on Feb. 1, 2006.
(United Airlines Bankruptcy News, Issue No. 162; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
* * *
The Troubled Company Reporter said on June 2, 2008, that Fitch
Ratings has revised the Rating Outlook for UAL Corp. and its
principal operating subsidiary United Airlines, Inc. to Negative
from Stable. Debt ratings for both entities have been affirmed
as: UAL & United Issuer Default Ratings at 'B-'; United's secured
bank credit facility (Term Loan and Revolving Credit Facility) at
'BB-/RR1'; and Senior unsecured rating for United at 'CCC/RR6'.
The TCR said on July 22, 2008, that 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.
UAL CORP: Expected Heavy Losses Cue S&P to Cut Rtngs to B- from B
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on UAL
Corp. and subsidiary United Air Lines Inc. (both rated B-
/Negative/--), including lowering the long-term corporate credit
ratings on both entities to 'B-' from 'B', and removed the ratings
from CreditWatch, where they had been placed with negative
implications May 22, 2008, as part of an industrywide review. The
outlook is negative.
The downgrade reflects expected heavy losses and sharply reduced
operating cash flow caused by high and volatile fuel prices. S&P
also lowered certain ratings on United enhanced equipment trust
certificates, but selected debt issues were not lowered, due to
improving collateral coverage that offset increased United default
risk.
"UAL currently has adequate near-term liquidity, with $2.9 billion
of unrestricted cash and short-term investments at June 30, 2008,
and subsequent actions that have raised significant added
liquidity, but S&P expect heavy losses, which could be well above
$1 billion this year, based on its current fuel price and revenue
outlook, with further, albeit reduced, losses in 2009," said
Standard & Poor's credit analyst Philip Baggaley. UAL reported
a second-quarter loss of $233 million (including $82 million of
severance costs but before about $2.5 billion of goodwill write-
off and various other largely noncash special charges), consistent
with a pattern of much worse year-over-year earnings performance
from U.S. airlines.
United, like its peers, is shrinking its domestic operations and
grounding older aircraft to trim its losses. United will reduce
its domestic mainline (nonregional) capacity by 15.5% to 16.5% in
the fourth quarter of this year, one of the sharpest reductions in
the industry, and is also shrinking international flying, though
to a much lesser extent. This, along with capacity reductions
by other airlines, should improve somewhat the balance of supply
and demand, particularly in the U.S. domestic market, allowing
United to raise its fares further. However, this effort will face
headwinds in the form of a weak U.S. economy, and S&P does not
expect that the higher fares will be sufficient to avoid a heavy
loss this year and reduced, but still substantial, deficit in
2009 if fuel prices remain very high.
The corporate credit rating on UAL reflects subsidiary United Air
Lines' participation in the price-competitive, cyclical, and
capital-intensive airline industry; very high fuel costs, which
have not been fully recovered by raising fares; and a highly
leveraged financial profile. These weaknesses are mitigated by
United's extensive and well-positioned route system and by
reductions in labor costs and financial obligations achieved in
bankruptcy reorganization. Chicago-based United is the second-
largest U.S. airline, with strong positions in the Midwest and
western U.S. and on trans-Pacific routes and a solid position on
trans-Atlantic routes.
S&P's 'B-' corporate credit rating anticipates heavy losses in
2008, which could be well over $1 billion. The negative outlook
reflects our concern that continued substantial losses could erode
UAL's liquidity. If unrestricted cash and short-term investments
fall below $2.5 billion, S&P could lower ratings.
VERTIS HOLDINGS: Seeks Court Okay to Hire Weil Gotshal as Counsel
-----------------------------------------------------------------
Vertis Holdings, Inc. and its debtor-affiliates seek from the U.S.
Bankruptcy Court for the District of Delaware the authority to
employ Weil, Gotshal & Manges LLP as their counsel.
Prior to bankruptcy filing, Weil Gotshal represented Vertis in
respect of the potential restructuring of its financial
obligations, and the preparation for the commencement of Vertis'
Chapter 11 case. This representation has resulted in firm's
familiarity with Vertis' businesses, financial affairs,
and capital structure, John V. Howard, Jr., secretary of Vertis,
notes.
Mr. Howard says the services of Weil Gotshal under a general
retainer are appropriate and necessary to enable Vertis to
implement its contemplated restructuring and reorganization. As
Vertis' attorneys, Weil Gotshal will, among other things:
(a) take all necessary actions to protect and preserve the
estates of Vertis;
(b) prepare, on behalf of Vertis, all necessary motions,
applications, answers, orders, reports, and other papers
in connection with the administration of Vertis'
bankruptcy estates;
(c) take all necessary or appropriate actions in connection
with a plan of reorganization and related disclosure
statement, required in Vertis bankruptcy proceedings; and
(d) perform all other necessary legal services in connection
with the prosecution of Vertis' Chapter 11 cases.
According to Mr. Howard, Weil Gotshal has received a retainer and
an advance against expenses for services to be performed in
preparation and prosecution of Vertis' bankruptcy cases. Within
a year prior to bankruptcy filing, Vertis paid Weil Gotshal
$5,432,469, for professional services performed, and $148,186,
for expenses incurred, as advance payments to cover estimated
charges for the period from February 2008 through bankruptcy
filing, Mr. Howard states. As of July 16, 2008, Weil Gotshal has
a remaining credit balance in favor of Vertis amounting to
$1,232,232, he adds.
As Vertis' counsel, Weil Gotshal will be paid at its customary
hourly rates:
Professional Hourly Rates
------------ ------------
Members and Counsel $650 to $950
Associates $355 to $595
Paraprofessionals $155 to $290
The law firm also intends to seek reimbursement for expenses
incurred in connection with its representation of Vertis.
Gary T. Holtzer, a member of Weil Gotshal, assured the Court that
his firm is a "disinterested person", as defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than 1 billion.
VERTIS HOLDINGS: Can Hire Kurtzman Carson as Notice Agent
---------------------------------------------------------
Vertis Holdings, Inc., and ACG Holdings, Inc., separately sought
and obtained from the U.S. Bankruptcy Court for the District of
Delaware the authority to employ Kurtzman Carson Consultants LLC
as their claims and noticing agent.
Vertis and ACG has entered into a merger agreement and
comprehensive restructuring plan, on May 22, 2008. The
restructuring and merger are intended to improve the combined
company's financial strength and expand the scope of products and
services offered to its customers.
According to John V. Howard, Jr., secretary of Vertis, an
estimated 65,000 creditors have interests in Vertis' Chapter 11
cases. The noticing, receiving, docketing and maintaining of
proofs of claims of this volume, would be time consuming and
burdensome on the part of the Clerk's Office, Mr. Howard notes.
Patrick W. Kellick, executive vice president, chief financial
officer and secretary of American Color Holdings, Inc., says a
potential 1,000 creditors are expected to have interest in ACG's
bankruptcy proceedings. The Bankruptcy Clerk's Office may not be
able to undertake all these tasks that is why a notice and claims
agent is necessary, Mr. Kellick tells Judge Sontchi.
As Vertis' and ACG's claims agent, Kurtzman Carson will, among
other things:
(a) notify all creditors of Vertis' and ACG's filing of
Chapter 11 petitions, and of the companies' first meetings
of creditors pursuant to Section 341(a) of the Bankruptcy
Code;
(b) notify all the companies' potential creditors of the
existence and amount of their claims;
(c) furnish creditors a form for the filing of claims;
(d) docket all claims received in Vertis and ACG's bankruptcy
cases, and maintain the companies' official claims
registers on behalf of the Clerk's Office;
(e) record all transfers of claims in Vertis' and ACG's
chapter 11 proceedings, and provide notices to parties-in-
interest as required by Rule 3001 of the Federal Rules of
Bankruptcy Procedure; and
(f) turn over to the Bankruptcy Clerk's Office copies of the
companies' claims registers for review.
Kurtzman Carson will be paid separately by each of the estates in
accordance with its customary hourly rates:
Professional Hourly Rate
------------ -----------
Clerical $45 - $65
Project Specialist $80 - $140
Consultant $145 - $225
Senior/Senior Managing Consultant $230 - $295
Technology/Programming Consultant $130 - $195
Aside from the professional fees, Vertis and ACG will separately
reimburse Kurtzman Carson for expenses incurred.
Sheryl Betance, director of restructuring of Kurtzman Carson,
assures the Court that her firm does not have interest adverse to
the Vertis and ACG bankruptcy estates, and has not represented
any entities or individuals in connection with the companies'
Chapter 11 case, other than American Color Graphics.
About American Color Graphics
American Color Graphics Inc. -- http://www.americancolor.com/--
is one of North America's largest and most experienced full
service premedia and print companies, with eight print locations
across the continent, six regional premedia centers, photography
studios nationwide and a growing roster of customer managed
service sites. The company provides solutions and services such
as asset management, photography, and digital workflow solutions
that improve the effectiveness of advertising and drive revenues
for their customers.
The company filed and its four affiliates filed for Chapter 11
protection on July 15, 2008 (Bank.D.Del. Case No. 08-11467).
Pauline K. Morgan, Esq. and Sean T. Greecher ,Esq., at Young,
Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors they listed estimated assets $100 million to
$500 million and estimated debts of $500 million to $1 billion.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than 1 billion.
VERTIS HOLDINGS: Obtains Interim Order to Use Cash Collateral
-------------------------------------------------------------
To address their working capital needs and fund their
reorganization efforts, Vertis Holdings Inc. and its debtor-
affiliates sought and obtained Judge Christopher S. Sontchi of
the U.S. Bankruptcy Court for the District of the District of
Delaware's authority, on an interim basis, to the use of cash
collateral of their prepetition term lenders, GECC Capital
Markets Group, Inc. -- as sole lead arranger and prepetition
agent -- and certain lender parties, in accordance with a budget
from July 18 to October 10, 2008.
The Prepetition Lenders have consented to Vertis' use of Cash
Collateral in the ordinary course of business, subject to certain
adequate protection liens and payments, Mark D. Collins, Esq., at
Weil, Gotshal & Manges LLP, in New York, relates.
As of bankruptcy filing, Vertis and their Prepetition Lenders are
parties to a $250,000,000 Credit Agreement, dated as of Dec. 22,
2004, pursuant to which the Prepetition Lenders stipulated to
extend revolving and term credit facilities to, and issue letters
of credit for, Vertis, from time to time, including, among other
things:
(i) revolving credit advances by revolving lenders for up to
$200,000,000, including letters of credit; and
(ii) a "last out" term loan facility by term lenders for
$50,000,000.
As of the Petition Date, Vertis was indebted to the Prepetition
Lenders for about $222,000,000.
Pursuant to a U.S. Security Agreement dated December 7, 1999,
Vertis granted the Prepetition Lenders, first priority liens and
security interests in substantially all of the Debtors' assets.
Vertis and Vertis Receivables II, LLC, are parties to an "A/R
Sale and Servicing Agreement" dated November 25, 2005, under
which Vertis agreed to sell substantially all of their accounts
receivable to Vertis Receivables. To finance the receivables
purchases, Vertis Receivables entered an agreement with the
Prepetition Lenders on November 25, pursuant to which the
Prepetition Lenders agreed to make advances in exchange for the
issuance of $130,000,000, in variable rate notes secured by,
among other things, (i) the accounts receivable, (ii) the A/R
Sale and Servicing Agreement, (iii) certain of Vertis
Receivables' accounts, and (iv) certain collateral within the
accounts. As of the Petition Date, approximately $92,000,000,
remains outstanding under the A/R Funding and Administration
Agreement, which was set to expire December 22, 2008.
Vertis issued various amounts in Notes pursuant to four
indentures:
Outstanding
Indenture Amount Secured By Amount
--------- ------ ---------- -----------
9 3/4% Indenture $350,000,000 second-priority $350,000,000
(Vertis Second interest and
Lien Notes) lien
10 7/8 Indenture 350,000,000 subordinated by 350,000,000
(Vertis Senior all obligations
Notes) to Prepetition
Lenders and
and Vertis Second
Lien Noteholders
13 1/2 Indenture 294,000,000 unsecured 293,500,000
(Senior Subordinated
Noteholders)
Mezzanine Notes 249,500,000 unsecured
Adequate Protection
Vertis will provide adequate protection for the interests of the
Prepetition Lenders, the Prepetition Term Lenders, Securitization
Provider, and the Vertis Second Lien Noteholders in the Cash
Collateral:
Party Adequate Protection Priority
----- ------------------- --------
Prepetition Lenders Replacement liens to Of equal priority
and Securitization secure repayment of with DIP Liens.
Provider agreement expenses,
diminution of the
value of Collateral;
and, superpriority
administrative
claim under Section
507(b) of the
Bankruptcy Code.
Prepetition Term Term replacement lien Junior to the DIP
Lenders to secure claim Liens
against diminution of
the value of the
Collateral,
administrative claim
under Section 507(b),
cash payments and
unimpaired treatment
under Plan of
Reorganization.
Vertis Second Replacement lien to Pari passu with
Lien Noteholders secure claim against DIP Liens
diminution of the
value of the
Collateral.
Judge Stonchi will convene a final hearing on August 13, 2008, at
11:00 a.m., to consider the Vertis Debtors' request.
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than 1 billion.
VERTIS HOLDINGS: Gets Interim Order to Use $380MM DIP Financing
---------------------------------------------------------------
Vertis Holdings, Inc., and its debtors-affiliates sought and
obtained the U.S. Bankruptcy Court for the District of Delaware's
interim authority on July 16, 2008, to obtain urgently-needed
postpetition financing for $380,000,000, to:
(a) finance the ordinary costs of their operations;
(b) maintain business relationships with their vendors,
suppliers and customers;
(c) meet payroll obligations and make capital expenditures;
and
(d) satisfy other working capital and operational needs.
Prior to bankruptcy filing, Vertis and Lazard Freres & Co., their
proposed financial advisor, surveyed various sources of
postpetition financing, including financing from Vertis'
prepetition lenders, GECC Capital Markets Group, Inc. -- as sole
lead arranger and prepetition agent -- and certain lenders party,
Mark D. Collins, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates. One of the postpetition financing proposals
received by Vertis was from General Electric Capital Corporation,
as administrative agent and collateral agent for itself and
certain other financial institutions -- the DIP Lenders.
In exploring their options, Vertis recognized its obligations to
the Prepetition Lenders are secured by substantially all of its
real and personal property, so that, either (i) the liens of the
Prepetition Lenders would have to be primed to obtain
postpetition financing, or (ii) Vertis would have to find a
postpetition lender willing to extend credit that would be junior
to the liens of the Prepetition Lenders, Mr. Collins told the
Court.
Because the Prepetition Lenders advised Vertis' representatives
that they would not consent to be primed by another lender group,
borrowing from another postpetition lender or lending group that
required security senior to that of all the Prepetition Lenders
likely could only be accomplished through an extended, contested
hearing on whether the requirements of Section 364(d) of the
Bankruptcy Code had been satisfied.
In light of these, the DIP Lenders, who also comprise certain of
the Prepetition Lenders, were willing to extend postpetition
financing priming their own prepetition security interests.
Ultimately, Vertis concluded that a DIP credit agreement proposed
by the DIP Lenders is desirable because, among other things, the
DIP Credit Agreement permits Vertis to secure the postpetition
financing required for its reorganization without having to prime
the Prepetition Lenders through an extended, contested hearing.
Moreover, the DIP Lenders' proposal offers the most attractive
combination of quality, pricing, fees, and covenant flexibility.
The DIP Credit Agreement
Vertis and GE Capital engaged in extensive, arm's-length
negotiations with respect to the terms and conditions of the DIP
Credit Agreement. Importantly, the DIP Credit Agreement provides
that Vertis may draw funds immediately -- on an interim basis --
to meet their administrative and operational obligations in the
period leading up to confirmation of Vertis' Reorganization
Cases.
The salient terms of the DIP Credit Agreement are:
Borrower: Vertis Holdings Inc.
Administrative
Agent and Lender: General Electric Capital Corporation
Guarantors: The direct and indirect domestic
subsidiaries of Vertis that are debtors and
debtors-in-possession.
DIP Facility: Up to $380,000,000 credit facility
consisting of:
(1) a $50,000,000 term loan -- DIP Term
Loan A;
(2) a $200,000,000 term loan -- DIP Term
Loan B; and
(3) a $130,000,000 revolving credit
facility.
There are two sub-facilities under the DIP
Credit Facility:
(a) a $45,000,000 sub-facility that will
be available for the issuance of
letters of credit; and
(b) a $25,000,000 sub-facility will be
available for swing loans.
Purpose: Vertis may use the proceeds of:
(1) the DIP Term Loan A to repurchase all
accounts receivable and related
property previously conveyed to Vertis
Receivables II, LLC;
(2) the DIP Term Loan B, to pay in cash,
the outstanding balance of a
Prepetition Revolving Credit Advances
plus Prepetition Letter of Credit
Obligations; any remaining amounts will
be used to repay portion of the DIP
Revolving Credit Facility.
(3) the DIP Revolving Facility, to,
among other things:
* make adequate protection payments set
forth in a restructuring agreement;
* pay administrative expenses for goods
and services, and pay amounts owing
to the DIP Agent and the DIP Lenders
under the DIP Credit Facility.
Interest Rate: The Base Rate -- a floating rate of
interest per annum equal to the higher of
the rate publicly quoted -- plus the
Applicable Margin -- 4.50% per annum
payable monthly in arrears.
Fees: -- unused line fee for 0.50% per annum;
and
-- Letter of Credit fee for 2.75% per
annum.
Carve-Out: The claims and liens are subject and
subordinate in each case only to, in the
event of the occurrence and during the
continuance of an Event of Default, the
payment of:
(x) allowed and unpaid professional fees
and disbursements incurred by Vertis
and any statutory committees in an
aggregate amount not in excess of
$1,000,000 -- plus all unpaid
professional fees and disbursements
incurred prior to the occurrence of an
Event of Default to the extent allowed
by the Court at any time;
(y) in the event of conversion, reasonable
fees and expenses of a Chapter 7
trustee not exceeding $50,000; and
(z) fees pursuant to 28 U.S.C. Section
1930.
Maturity: The DIP Facility will mature on the
earlier of (a) October 13, 2008, or (b)
the effective date of any confirmed plan
of reorganization Vertis' Chapter 11 case.
Priority and Liens: Subject to the Carve-Out, the DIP Liens:
* will constitute first-priority perfected
liens and security interests, pursuant
to Section 364 of the Bankruptcy Code
in substantially all of Vertis' assets
and their purchased facility assets;
* will be senior and prime (i) the
Prepetition Liens, the Vertis Second
Liens and the A/R Obligations
Prepetition Liens, (ii) the Prepetition
Term Replacement Lien and the Vertis
Second Lien Noteholders' Replacement
Lien, and (iii) any claims asserted
against Vertis as of the Petition Date;
* will be pari passu in priority to the
Prepetition Agent/Revolver Replacement
Lien and the Securitization Provider's
Replacement Lien; and
* will be junior in priority to any and
all valid, perfected, enforceable and
unavoidable liens in existence as of the
Petition Date.
Events of Default: The Events of Default include:
* non-payment of principal and interest;
* misrepresentations;
* default under the negative covenants;
* unremedied default;
* cross-default to certain other loans;
* case dismissal or Chapter 7 conversion;
* subordination of DIP Lenders' liens;
* use of Cash Collateral is terminated;
* unauthorized payment of prepetition
debts;
* change of control, etc.
Until payment in full of all of the obligations of Vertis with
respect to the DIP Credit Facility and the Prepetition Credit
Agreement -- and termination of the DIP Lenders' commitments
under the DIP Credit Facility -- and until the time Vertis'
Prepetition Lenders are allowed in full without the possibility
of any further challenge, all liens and security interests of the
Prepetition Agent and Prepetition Lenders will remain valid and
enforceable with the same continuing priority.
Notwithstanding any payment of the Prepetition Obligations, the
Prepetition Liens will continue in full force and effect and will
secure the full and timely payment of the DIP Obligations, until
the payment in full of all of the DIP Obligations and the
termination of the DIP Lenders' commitments under the DIP Credit
Facility.
Judge Sontchi held that the Prepetition Agent will immediately
share dominion and control with the DIP Agent with respect to
each depository account of Vertis or other third party that was
subject to a deposit account control agreement with the
Prepetition Agent as of the Petition Date.
The Court modified the automatic stay provisions of Section 362
of the Bankruptcy Code, to the extent necessary to permit the DIP
Agent and the DIP Lenders to exercise, upon the occurrence of an
Event of Default, all remedies provided for in the DIP Credit
Documents.
The Court will convene the Final DIP Financing Hearing on
August 13, 2008, at 10:00 a.m. (prevailing Eastern Time).
Objections must be filed and served no later than August 6, at
5:00 p.m. (prevailing Eastern time).
A full-text copy of the Court's DIP Interim Order, which is
integrated with the Cash Collateral Order, for Vertis, is
available for free at:
http://bankrupt.com/misc/VertisDIP_InterimORD.pdf
About Vertis Holdings Inc.
Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. --
http://www.vertisinc.com/-- is a provider of targeted print
advertising and direct marketing solutions to America's retail and
consumer services companies.
The company and its six affiliates filed for Chapter 11 protection
on July 15, 2008 (Bank.D.Del. Case No. 08-11460). Gary T.
Holtzer, Esq. and Stephen A. Youngman, Esq. at Weil, Gotshal &
Manges LLP represent as the Debtors lead counsels and Mark D.
Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton
& Finger, P.A. represent as their Delaware local counsels. When
the Debtors filed for protection from their creditors they listed
estimated assets between $500 million and $1 billion and estimated
debts of more than 1 billion.
WACHOVIA CORP: Moody's Cuts Bank's Financial Strength Rating to B
-----------------------------------------------------------------
Moody's Investors Service downgraded its ratings on Wachovia
Corporation (senior debt to A1 from Aa3) and on its lead bank,
Wachovia Bank N.A. (financial strength rating to B from B+ and
long-term deposits to Aa2 from Aa1). Wachovia's Prime-1 short-
term ratings were affirmed. Wachovia Bank N.A.'s deposit and debt
ratings benefit from a one notch lift because Moody's believes the
bank enjoys high systemic support. Following the downgrade,
Moody's maintained a negative outlook on Wachovia's ratings.
Moody's said that the downgrade and negative outlook were driven
mainly by a sizable increase in its loss expectations on
Wachovia's $122 billion adjustable-rate-mortgage (option-ARM)
portfolio. Previously, Moody's ratings on Wachovia incorporated
base life-time losses of $8.5 billion on the option-ARM portfolio.
Now, the rating incorporates base life-time losses on this
portfolio of approximately $16 billion. The provisioning
associated with Moody's loss estimates raises the possibility that
Wachovia could report losses into 2009. Moody's believes that
Wachovia has the pre-provision earnings and capital resources to
absorb these losses and still maintain "well-capitalized"
regulatory capital levels. However, reporting losses over this
extended period, coupled with the recent significant capital
markets volatility, has reduced Wachovia's financial flexibility
to take initiatives to fully replenish its capital should there be
other unexpected events.
Moody's added that the negative outlook reflects that the option-
ARM portfolio has become a particularly volatile asset class for
Wachovia and constitutes 25% of its loans. The portfolio is
sensitive to home price depreciation and an additional increase to
Moody's loss expectations cannot be ruled out.
In explaining the increase in the base life-time loss assumption,
Moody's stated that previous loss expectations were subjectively
moderated because the portfolio historically produced minimal
losses even in periods of home price depreciation and job losses.
Given the portfolio's recent performance, Moody's no longer
believes this is appropriate. Therefore, the updated life-time
expected losses are driven by the same framework as for others'
mortgage portfolios.
Factors that contribute to the sizable expected life-time losses
for Wachovia's option-ARM portfolio include 1) substantial home
price depreciation in major markets -- 68% of the portfolio is in
the problematic markets of California and Florida, 2) over 55% of
the portfolio was originated in 2006 or 2007, vintages in which
losses have been appreciably higher, 3) a high percentage of the
portfolio was brokered even though it was underwritten internally
at the fully indexed rate, and 4) the average FICO score of 661
hovers just above subprime.
"Falling home values have undermined a historical strength of the
portfolio, which was its sound appraisal process," said Moody's
Senior Vice President Sean Jones. "With home prices falling
sharply, and with more customers having no equity in their homes,
more loans are defaulting, and there is greater severity of loss
on those loans that default," added Mr. Jones.
Moody's stated that, as with other banks, Wachovia's ratings also
incorporate life-time loss expectations on Wachovia's commercial
real estate portfolio and further marks against assets in its
investment banking operations, as well as lower net earnings
because of higher loan loss provisions in other asset classes such
as auto loans. Nevertheless, the rating agency emphasized that the
great majority of expected losses incorporated in the current
ratings stem from Wachovia's option-ARM portfolio.
Moody's believes Wachovia's recent capital initiatives help
support its ratings. These include raising $8.05 billion of
capital during the second quarter of 2008 and its announcement
today that it will cut its dividend from $840 million a quarter to
$100 million. These initiatives increase the comfort that
Wachovia's regulatory "well-capitalized" levels will not be
breached even if life-time losses on the option-ARM portfolio were
40% higher than Moody's base line expected loss of $16 billion.
The dividend initiative also means the robust liquidity profile of
Wachovia Corporation is further improved.
Wachovia recorded a $6.1 billion non-cash goodwill impairment
charge that contributed to the $8.7 billion net operating loss in
the second quarter of 2008. Moody's said that the charge had no
impact on our liquidity and capital analysis of Wachovia. Moody's
evaluates capital by excluding goodwill.
Moody's said its ratings on Wachovia are supported by a robust
liquidity profile at both the holding company and at the bank.
Wachovia's cash position at the holding company is large, allowing
it to meet potential cash obligations into 2011 even if it
received no dividends from its bank subsidiaries. Moody's also
believes that Wachovia Bank is a net overnight lender into the
system as opposed to being a net overnight borrower. In addition,
Wachovia Bank has sizable unutilized capacity at the Federal Home
Loan Banks.
Moody's cited Wachovia's still enviable direct banking franchise
centered on the East Coast of the United States as a rating
strength. Regarding U.S. deposits, Wachovia is the third largest
U.S. bank, and its market share on the East Coast is high.
Ratings downgraded were:
Downgrades:
..Issuer: Central Fidelity Capital Trust I
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: Congress Financial Capital Company
....Senior Unsecured Regular Bond/Debenture, Downgraded to A1 from
Aa3
..Issuer: CoreStates Capital I
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: CoreStates Capital II
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: CoreStates Capital III
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: First Fidelity Bancorporation
....Preferred Stock Preferred Stock, Downgraded to A3 from A2
..Issuer: First Union Capital I
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: First Union Capital II
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: First Union Capital III
....Preferred Stock Shelf, Downgraded to (P)A2 from (P)A1
..Issuer: First Union Institutional Capital I
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: First Union National Bank of Florida
....Subordinate Regular Bond/Debenture, Downgraded to Aa3 from Aa2
..Issuer: Golden West Financial Corporation
....Issuer Rating, Downgraded to A1 from Aa3
....Senior Unsecured Regular Bond/Debenture, Downgraded to A1 from
Aa3
..Issuer: Meridian Bancorp, Inc.
....Multiple Seniority Shelf, Downgraded to (P)A3, (P)A2 from
(P)A2, (P)A1
..Issuer: South Carolina National Corporation
....Subordinate Medium-Term Note Program, Downgraded to A2 from A1
..Issuer: SouthTrust Bank
....Subordinate Regular Bond/Debenture, Downgraded to Aa3 from Aa2
..Issuer: SouthTrust Bank of Georgia, N.A. (Old)
....Subordinate Regular Bond/Debenture, Downgraded to A2 from A1
..Issuer: SouthTrust Corporation
....Subordinate Regular Bond/Debenture, Downgraded to A2 from A1
..Issuer: Wachovia Bank, N.A.
....Bank Financial Strength Rating, Downgraded to B from B+
....Issuer Rating, Downgraded to Aa2 from Aa1
....OSO Senior Unsecured OSO Rating, Downgraded to Aa2 from Aa1
....Multiple Seniority Bank Note Program, Downgraded to Aa3, Aa2
from Aa2, Aa1
....Multiple Seniority Medium-Term Note Program, Downgraded to
Aa3, Aa2 from Aa2, Aa1
....Subordinate Bank Note Program, Downgraded to Aa3 from Aa2
....Subordinate Conv./Exch. Bond/Debenture, Downgraded to Aa3 from
Aa2
....Subordinate Regular Bond/Debenture, Downgraded to Aa3 from Aa2
....Senior Unsecured Bank Note Program, Downgraded to Aa2 from Aa1
....Senior Unsecured Deposit Note/Takedown, Downgraded to Aa2 from
Aa1
....Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Aa2
from Aa1
....Senior Unsecured Regular Bond/Debenture, Downgraded to Aa2
from Aa1
....Senior Unsecured Deposit Rating, Downgraded to Aa2 from Aa1
..Issuer: Wachovia Bank, N.A. (Old)
....Senior Unsecured Bank Note Program, Downgraded to Aa3 from Aa2
....Senior Unsecured Medium-Term Note Program, Downgraded to Aa3
from Aa2
....Senior Unsecured Regular Bond/Debenture, Downgraded to Aa3
from Aa2
..Issuer: Wachovia Capital Trust I
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: Wachovia Capital Trust II
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: Wachovia Capital Trust III
....Preferred Stock Preferred Stock, Downgraded to A3 from A2
....Preferred Stock Shelf, Downgraded to (P)A2 from (P)A1
..Issuer: Wachovia Capital Trust IV
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: Wachovia Capital Trust IX
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
..Issuer: Wachovia Capital Trust V
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
..Issuer: Wachovia Capital Trust VII
....Preferred Stock Shelf, Downgraded to (P)A2 from (P)A1
..Issuer: Wachovia Capital Trust VIII
....Preferred Stock Shelf, Downgraded to (P)A2 from (P)A1
..Issuer: Wachovia Capital Trust X
....Preferred Stock Preferred Stock, Downgraded to A2 from A1
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
..Issuer: Wachovia Capital Trust XI
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
..Issuer: Wachovia Capital Trust XII
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
..Issuer: Wachovia Capital Trust XIII
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
..Issuer: Wachovia Capital Trust XIV
....Preferred Stock Shelf, Downgraded to (P)A2 from (P)A1
..Issuer: Wachovia Capital Trust XV
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
..Issuer: Wachovia Corporation
....Junior Subordinated Shelf, Downgraded to (P)A2 from (P)A1
....Multiple Seniority Medium-Term Note Program, Downgraded to A2,
A1 from A1, Aa3
....Multiple Seniority Shelf, Downgraded to (P)A3, (P)A1 from
(P)A2, (P)Aa3
....Preferred Stock Preferred Stock, Downgraded to A3 from A2
....Preferred Stock Shelf, Downgraded to (P)A3 from (P)A2
....Subordinate Medium-Term Note Program, Downgraded to A2 from A1
....Subordinate Regular Bond/Debenture, Downgraded to A2 from A1
....Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to A1
from Aa3
....Senior Unsecured Medium-Term Note Program, Downgraded to A1
from Aa3
....Senior Unsecured Regular Bond/Debenture, Downgraded to A1 from
Aa3
..Issuer: Wachovia Corporation (Old)
....Multiple Seniority Shelf, Downgraded to (P)A2, (P)A1 from
(P)A1, (P)Aa3
....Subordinate Regular Bond/Debenture, Downgraded to A2 from A1
....Senior Subordinated Regular Bond/Debenture, Downgraded to A2
from A1
....Senior Unsecured Regular Bond/Debenture, Downgraded to A1 from
Aa3
..Issuer: Wachovia Preferred Funding Corp.
....Preferred Stock Preferred Stock, Downgraded to A3 from A2
..Issuer: Western Financial Bank, F.S.B.
....Subordinate Regular Bond/Debenture, Downgraded to Aa3 from Aa2
..Issuer: World Savings Bank, FSB
....Bank Financial Strength Rating, Downgraded to B from B+
....Issuer Rating, Downgraded to Aa2 from Aa1
....OSO Senior Unsecured OSO Rating, Downgraded to Aa2 from Aa1
....Senior Unsecured Regular Bond/Debenture, Downgraded to Aa2
from Aa1
....Senior Unsecured Deposit Rating, Downgraded to Aa2 from Aa1
Outlook Actions:
..Issuer: Central Fidelity Capital Trust I
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Congress Financial Capital Company
....Outlook, Changed To Negative From Rating Under Review
..Issuer: CoreStates Capital I
....Outlook, Changed To Negative From Rating Under Review
..Issuer: CoreStates Capital II
....Outlook, Changed To Negative From Rating Under Review
..Issuer: CoreStates Capital III
....Outlook, Changed To Negative From Rating Under Review
..Issuer: First Fidelity Bancorporation
....Outlook, Changed To Negative From Rating Under Review
..Issuer: First Union Capital I
....Outlook, Changed To Negative From Rating Under Review
..Issuer: First Union Capital II
....Outlook, Changed To Negative From Rating Under Review
..Issuer: First Union Capital III
....Outlook, Changed To Negative From Rating Under Review
..Issuer: First Union Institutional Capital I
....Outlook, Changed To Negative From Rating Under Review
..Issuer: First Union National Bank of Florida
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Golden West Financial Corporation
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Meridian Bancorp, Inc.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: South Carolina National Corporation
....Outlook, Changed To Negative From Rating Under Review
..Issuer: SouthTrust Bank
....Outlook, Changed To Negative From Rating Under Review
..Issuer: SouthTrust Bank of Georgia, N.A. (Old)
....Outlook, Changed To Negative From Rating Under Review
..Issuer: SouthTrust Corporation
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Bank, N.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Bank, N.A. (Old)
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust I
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust II
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust III
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust IV
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust IX
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust V
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust VII
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust VIII
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Capital Trust X
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Corporation
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Corporation (Old)
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Wachovia Preferred Funding Corp.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Western Financial Bank, F.S.B.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: World Savings Bank, FSB
....Outlook, Changed To Negative From Rating Under Review
Wachovia Corporation is headquartered in Charlotte NC. Its
reported assets as of June 30, 2008 were $812 billion.
WELLMAN INC: Reorganization Plan is Inadequate, BoNY Says
---------------------------------------------------------
Bank of New York, N.A., asks the U.S. Bankruptcy Court for the
Southern District of New York to deny approval of the
disclosure statement explaining the terms of Wellman, Inc. and its
debtor-affiates' Joint Plan of Reorganization, saying it provides
inadequate information about the $185,000,000 secured debt the
Debtors owed to the bank on behalf of the first lien lenders.
Jonathan Hook, Esq., at Haynes and Boone, LLP, in New York, says
the Debtors did not discuss in the Disclosure Statement certain
critical issues and failed to provide adequate information on:
(1) the valuation of the plant, property and equipment
serving as collateral for the $185,000,000, and the
ongoing litigation relating to the valuation of the PPE;
(2) whether or not the First Lien Lenders will elect to have
their loan treated as fully secured under Section 1111(b)
of the Bankruptcy Code to the extent it is undersecured;
(3) the structure of the note to be given to Bank of New
York as payment for the loan; and
(4) the Debtors' ability to obtain exit financing and the
cost of that financing.
(5) the ability of the reorganized Debtors to carry debt
comprised of (a) the Exit Financing, (b) the BNY Note, and
(c) other debt;
(6) a liquidation analysis;
(7) estimated recoveries;
(8) the amount of administrative, priority and unsecured
claims; and
(9) the estimated recovery from avoidance actions and other
litigation.
Mr. Hook notes that Section 1125(a) of the Bankruptcy Code
requires that the Disclosure Statement provide creditors with
"adequate information" sufficient to enable a hypothetical
reasonable investor, typical of holders of claims or interests of
the class, to make an informed judgment about the Plan.
A court may also refuse approval of a disclosure statement if the
plan is patently unconfirmable, in order to avoid the burden and
expense of plan distribution and vote solicitation, Mr. Hook
adds, citing In re Phoenix Petroleum Co., 278 B.R. 385, 394
(Bankr. E.D. Pa. 2001).
According to Mr. Hook, the Disclosure Statement does not explain
that the Plan will likely be unfeasible if the Firs Lien Debt is
found by the Court to be fully secured. "Instead, the
placeholder disclosure statement intimates that the Plan
proponents will be willing and able to seek confirmation of the
Plan regardless of the Court's valuation of the [collateral]," he
points out.
According to Mr. Hook, there is no indication the Debtors will be
able to secure exit financing, especially if the Court determines
the loan is fully secured against the collateral and the First
Lien Lenders make an election.
"Even if exit financing can be secured, the terms of such
financing may be so onerous as to render it impracticable, since
the exit financing lender could not be granted a first lien on
the collateral such lien must be retained by Bank of New York on
behalf of the first lien lenders," Mr. Hook contends.
BNY says it appreciates that the DIP Lenders have imposed tight
deadlines on the Debtors concerning approval of the Disclosure
Statement and confirmation of the Plan. However, given that the
Disclosure Statement contains inadequate and misleading
information, BNY asserts that the document, in its present form,
should not be approved.
The Debtors previously filed a request seeking determination by
the Court that the replacement value of the collateral of BNY is
only $70,827,000.
Eastman Chemical Objection
Eastman Chemical Company asks the Court to deny approval of the
Disclosure Statement, saying it provided inaccurate information
about Wellman's claims for infringement against the company.
Wellman sued Eastman Chemical for allegedly manufacturing and
selling resins that infringe on its patents. The lawsuit is
pending in the U.S. District Court for the District of Delaware.
Pedro Jimenez, Esq., at Jones Day, in New York, says the Debtors
exaggerated the value of the infringement claims by estimating
them at $60,000,000. He points out that by doing so, the second
lien lenders (Class 3) and holder of general unsecured claims
(Class 4) were not provided accurate information about the nature
and possible success of the litigation, which is critical to
their decisions to either accept or reject the Plan.
"Under the Plan, Class 3 and Class 4 look to the proceeds of a
distribution trust for a significant percentage of their proposed
recoveries," Mr. Jimenez says. "Although the Debtors have yet to
describe the retained causes of action to be contributed to the
distribution trust, we assume that the infringement claims will
be among those causes of action contributed."
Pursuant to the Plan, a distribution trust will be set up to
prosecute various litigation claims. Ninety percent of the
beneficial interests from the trust will be issued to the Second
Lien Lenders while the remaining 10% will be issued to holders of
general unsecured claims.
To make the disclosure statement adequate, Mr. Jimenez suggests
that the Debtors must:
(1) disclose before the voting deadline on the Plan whether
or not the litigation is to be contributed to the
distribution trust;
(2) explain the speculative and uncertain value of the
litigation as well as the possibility that the
litigation may result in zero recovery;
(3) add information in the Disclosure Statement about the
possibility of Eastman's successful prosecution of its
counterclaims in the litigation seeking to invalidate
the patents, as well as the detrimental effect Eastman's
success would have on the business of the reorganized
Debtors; and
(4) provide more accurate information about the percentage
of Wellman's revenues and margins currently attributable
to the PET resin allegedly protected by the patents.
Terms of the Plan
As previously disclosed, the Plan provides that First Lien Lenders
will receive new notes with face amount equivalent to the value
of their collateral. The Second Lien Lenders will receive (i)
all of new stock, except shares reserved for management pursuant
to an incentive plan, (ii) 90% of ownership of recoveries from
causes of action filed on behalf of the Debtors, and (iii) rights
to buy $80,000,000 in notes convertible into 64% percent of
stock. General unsecured claimants will receive 10% of the
proceeds from causes of action.
About Wellman
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. 18; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
WELLMAN INC: Wants Plan-Filing Period Extended Through October 15
-----------------------------------------------------------------
Wellman, Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to extend the periods
during which they have the exclusive right to file a Chapter 11
plan through Oct. 15, 2008, and to solicit acceptances of that
plan through Dec. 15, 2008.
Jonathan Henes, Esq., at Kirkland & Ellis LLP, in New York, says
the brief extension would allow the Debtors to formulate an
alternative plan in case their proposed Chapter 11 Joint Plan of
Reorganization would not be confirmed.
To recall, the Debtors filed on June 25, 2008, their proposed
Plan, which provides for the continued operation of their
business. The Debtors are required to have the Plan confirmed by
the Court until Sept. 15, 2008, pursuant to the amended Credit
Agreement they reached with their DIP lenders.
According to Mr. Henes, there is risk involved if the exclusive
filing period expires before the expected confirmation date, and
the Plan not being confirmed by the Court in the end.
"The [Debtors] would be forced to operate their business in the
current challenging economic environment while attempting to
confirm the Plan or formulate a new plan, assessing competing
plans, and contending with the destabilizing impact that such
events would have on the business, employees, vendors and
customers," says Jonathan Henes, Esq., at Kirkland & Ellis LLP,
in New York.
The Court will convene a hearing to consider the proposed
extension on July 31, 2008.
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. 18; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
WENDY'S INT'L: Changes Executives Related to Triarc Cos. Merger
---------------------------------------------------------------
Triarc Companies Inc. disclosed that after the closing of its
pending merger with Wendy's International Inc.:
-- J. David Karam will assume the position of president of
Wendy's;
-- Stephen D. Farrar will assume the position of chief
operating officer of Wendy's; and
-- Ken C. Calwell will assume the position of chief marketing
officer of Wendy's.
The merger of Wendy's and Triarc is expected to close in the
second half of 2008.
In assuming the role of president of Wendy's after the closing,
Mr. Karam will succeed Kerrii B. Anderson, who serves as both
president and chief executive officer. On April 24, 2008, Roland
Smith, Triarc's chief executive officer, will also assume the
position of chief executive officer of Wendy's. Mr. Farrar will
succeed Dave Near, who will resume his role as a leading Wendy's
franchisee. Mr. Calwell will succeed Paul Kershisnik, who was
named interim chief marketing officer in February 2008.
Mr. Kershisnik will continue in his role as interim CMO through
the closing of the merger and then plans to work closely with
Calwell in a senior leadership role in marketing.
Mr. Karam is a minority shareholder and serves as president of
Cedar Enterprises Inc., which owns and operates 135 Wendy's Old
Fashioned Hamburgers restaurants in Indianapolis, Las Vegas, San
Antonio, Hartford and Seattle. Cedar Enterprises is also the
parent company of Syrus Ltd., which provides information
processing services designed to increase operating productivity
and financial performance for nearly 20% of the Wendy's franchise-
operated restaurants throughout the country.
As a franchisee, Mr. Karam was the recipient of the Founders Award
in 1990, honoring R. David Thomas, and the Diamond Award for the
National Marketer of the Year in 1998. Prior to joining Cedar
Enterprises Inc., he was a senior auditor at Touche & Ross, nka
Deloitte. He holds a BSBA in accounting from The Ohio State
University and completed the Owner President Management Program at
the Harvard University Graduate School of Business Administration.
In connection with joining Wendy's as President, Mr. Karam will
relinquish management of the day-to-day operations of Cedar
Enterprises and its subsidiaries and resign from their respective
boards of directors. Mr. Karam will continue as a minority
shareholder of Cedar Enterprises and will dispose of his interest
in Syrus Ltd.
Mr. Farrar returned to Wendy's in April 2008 as chief of North
American Operations in the U.S. and Canada after retiring in 2006.
In his role, he is responsible for improving restaurant operations
at company and franchise restaurants in all three U.S. regions and
Canada. During his 26-year career with Wendy's, Mr. Farrar served
in a variety of roles where his achievements included helping to
establish Wendy's Service Excellence(TM) program, pioneering
Wendy's Super Value Menu(R), creating a human resources planning
and development system, and developing numerous planning and
control systems to reduce costs. He was one of the system's most
respected leaders and seasoned operators with a track record that
earned him a Wendy's Hall of Famer distinction. Before joining
Wendy's, Mr. Farrar held various positions at Restaurant
Profitability Analysts, Pelican's Restaurants, Ten Tex Food, Steak
and Ale Restaurants, and McDonald's. He attended the University
of Texas, Arlington.
Mr. Calwell served as chief marketing officer-executive vice
president, marketing, research and development at Domino's Pizza
Inc., where he was responsible for the leadership of all national
marketing, brand strategy, advertising, new product development,
database marketing, media, field marketing, pricing, marketing
research, R&D, CRM, and sports and event marketing. Prior to
joining Domino's in 2001, Mr. Calwell served as vice president,
new product marketing, researching, and planning at Wendy's.
Previously, Mr. Calwell held various marketing positions in the
Frito-Lay and Pizza Hut divisions of PepsiCo Inc. and at The
Pillsbury Company. He holds an M.B.A. from Indiana University and
a B.B.A. from Washburn University.
"A key element in realizing the great potential of the Wendy's
brand and generating enhanced value for shareholders is to build a
premier team that will drive a performance-based culture grounded
in Wendy's heritage of quality and operational excellence," Roland
Smith stated. "With the appointment of three high-caliber and
well respected individuals to key leadership roles, we are taking
an important first step toward improving Wendy's performance and
achieving our growth objectives. With extensive backgrounds in
the Wendy's organization and years of operating experience, these
executives are uniquely qualified to help lead Wendy's during the
next phase of growth and development. This is certainly a very
exciting time to be part of the Wendy's family."
"Together with Kerrii Anderson, I wish to thank [Mr.] Near for
playing an integral part in Wendy's operational initiatives over
his two years as COO, and we look forward to his ongoing
contributions as he returns to his previous role as a leading
franchisee of Wendy's restaurants in Austin, Texas," Mr. Smith
continued. I also want to thank Paul Kershisnik who led Wendy's
marketing initiatives over the last several months and will
continue to lead the team through closing of the merger."
On April 24, 2008, Triarc and Wendy's signed a definitive merger
agreement for an all-stock transaction in which Wendy's
shareholders will receive a fixed ratio of 4.25 shares of Triarc
Class A Common Stock for each share of Wendy's common stock they
own. The transaction will bring together Arby's and Wendy's, two
quick service restaurant brands. The combined systems will have
approximately 10,000 restaurant units and pro forma annual system
sales of more than $12 billion.
About Triarc Companies Inc.
Headquartered in New York City, Triarc Companies Inc.
(NYSE:TRY.B/TRY) -- http://www.triarc.com/-- is a holding company
and, through its subsidiaries, is currently the franchisor of the
Arby's restaurant system and the owner of approximately 94% of the
voting interests, 64% of the capital interests and at least 52% of
the profits interests in Deerfield & Company LLC, an asset
management firm. The Arby's restaurant system is comprised of
approximately 3,600 restaurants, of which, as of Dec. 31, 2006,
1,061 were owned and operated by the company's subsidiaries.
Deerfield & Company LLC, through its wholly-owned subsidiary,
Deerfield Capital Management LLC, is a Chicago-based asset manager
offering a diverse range of fixed income and credit-related
strategies to institutional investors with about
$13.2 billion under management as of Dec. 31, 2006.
About Wendy's International
Based in Dublin, Ohio, Wendy's International Inc. (NYSE:
WEN) -- http://www.wendysintl.com/-- is one of the world's
largest and most successful restaurant operating and franchising
companies, with more than 6,300 Wendy's Old Fashioned Hamburgers
restaurants in North America and more than 300 international
Wendy's restaurants.
At Dec. 30, 2007, the company's balance sheet showed total assets
of $1.79 billion, total liabilities of $0.99 billion, and total
shareholders' equity of $0.80 billion.
* * *
As reported in the Troubled Company Reporter on April 28, 2008,
Moody's Investors Service stated that it continues the review for
possible downgrade the ratings of Wendy's International Inc.'s
after the announcement that Triarc Companies Inc. and Wendy's have
signed a definitive merger agreement for an all-stock transaction.
Ratings on review for further possible downgrade are: (i)
corporate family rating at Ba3; (ii) probability of default rating
at Ba3; (iii) senior unsecured notes rating at Ba3; (iv) senior
unsecured shelf rating at (P)Ba3; (v) subordinated shelf at (P)B2;
and (vi) preferred stock shelf at (P)B2.
Standard & Poor's Ratings Services said that its ratings on
Wendy's International Inc., including the 'BB-' corporate credit
rating, would remain on CreditWatch, where they had been placed
with negative implications on April 26, 2007.
WORNICK COMPANY: Reorganization Plan Declared Effective July 10
---------------------------------------------------------------
Kim Martin Lewis, Esq., at Dinsmore & Shohl LLP, counsel for the
Reorganized Debtors The Wornick Company and its debtor-affiliates,
informed interested parties that the effective date of the
Debtors' joint plan of reorganization occurred on July 10, 2008.
Based in Cincinnati, The Wornick Company --
http://www.wornick.com/-- is a leading supplier of individual
and group military field rations to the Department of Defense. In
addition the company continues to extend its core capabilities to
commercial markets where its customers include, but are not
limited to, Kraft Foods, Inc., Gerber Products Company, as well as
retail and grocery outlets including Walgreens Co., 7-Eleven, The
Kroger Co., Publix Super Markets and Meijer.
Wornick specializes in the production, packaging, and distribution
of shelf-life, shelf-stable, and frozen foods in flexible pouches
and semi-rigid products. The firm's two main lines of business
are military rations (approximately 70% of revenues) and co-
manufacturing for leading food brands (30%). The company produces
both individual (including MRE) and group rations (including
Unitized Group Rations-A or UGR-A) for the U.S. military. MREs
comprise about 65% of military revenues.
The company and and five of its affiliates filed for Chapter 11
protection on Feb. 14, 2008 (Bankr. S.D. Ohio, Case No. 08-10654).
Donald W. Mallory, Esq., Kim Martin Lewis, Esq., and Patrick
Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in
their restructuring efforts. The Debtor selected Kurtzman Carson
Consultants LLC as claims, noticing and balloting agent. An
official committee of unsecured creditors has not been appointed
in these cases. The company listed between $100 million and $500
million assets and between $100 million and $500 million in debts
in its bankruptcy filing.
On June 27, 2008, the U.S. Bankruptcy Court for the Southern
District of Ohio in Cincinnati confirmed Wornick's Amended Joint
Plan of Reorganization dated April 4, 2008.
W.R. GRACE: Gets Court's OK to Use $59MM from Insurance Policies
----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
authorized W.R. Grace Co. and its debtor-affiliates to borrow a
maximum of $59,000,000 against the value of certain company owned
life insurance polices to provide an additional source of
liquidity for the operation of their businesses and their
emergence from Chapter 11.
As reported in the Troubled Company Reporter on July 8, 2008, for
a number of years, the Debtors have held, as a financial product,
COLI policies insuring the lives of a number of their past and
present employees. In October 2007, the Court authorized the
Debtors to surrender the COLI policies for their cash surrender
value to support liquidity requirements for operations and for
emergence from Chapter 11. David M. Bernick, P.C., Esq., at
Kirkland & Ellis LLP, in Chicago, Illinois, however, relates that
the Debtors subsequently determined that it was more tax efficient
to dispose of the policies in 2008.
As of March 31, 2008, the Debtors had COLI policies, excluding
split-dollar policies, with an aggregate cash surrender value of
approximately $73,700,000. According to Mr. Bernick, the Debtors
are in the process of surrendering policies with a cash surrender
value of approximately $8,100,000. As regards the remaining
$65,600,000 of COLI policies, he says the Debtors are reviewing a
potential opportunity to sell the policies on terms more
favorable than surrender. The review will likely take several
months, he contends.
To be able to meet possible liquidity needs, while retaining the
option of a possible favorable sale transaction, the Debtors
determined it would be in their best interest to seek permission
to borrow against the COLI policies, with an eye to eventual sale
or surrender of policies, depending on which alternative is more
financially favorable, Mr. Bernick tells the Court.
The COLI policies permit the owner to borrow against their cash
surrender value. The COLI borrowing terms, which include credit
of part of the interest to the value of the policies, are
generally more favorable than those available under the Debtors'
DIP Facility, Mr. Bernick contends, thus could be used either in
lieu of DIP Facility debt, or to replace DIP Facility debt if
liquidity requirements necessitate borrowing under the DIP
Facility before the Court's approval of borrowing under the COLI
policies.
"The Debtors propose to make COLI loans in amounts not greater
than 90% of the policies' values, because loans for higher
percentages of the cash surrender value tend to erode the value
of the policies," Mr. Bernick told the Court. "This would give
the Debtors additional liquidity available of approximately
$59,000,000."
The documentation for loans under COLI policies generally require
that the borrowers grant security interests in the policies to
secure the loans. The COLI policies are not pledged as security
for any other obligations of the Debtors and a recent amendment
of the DIP Facility documents permits the borrowings under the
COLI policies, Mr. Bernick said.
In addition, Mr. Bernick contended that the availability of COLI
loans enables the Debtors to retain the option of a possible sale
of the COLI policies for a higher return than their cash
surrender value. "If the sale option proves not to be favorable,
the Debtors can terminate the policies for their net cash
surrender value," he said. "Thus, the potential borrowing
requested herein is fair and reasonable."
About W.R. Grace
Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The Company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee
of Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on January 14, 2008.
At Dec. 31, 2006, the W.R. Grace's balance sheet showed total
assets of $3,620,400,000 and total debts of $4,189,100,000.
As of November 30, 2007, W.R. Grace's balance sheet showed total
assets of $3,335,000,000, and total debts of $3,712,000,000.
(W.R. Grace Bankruptcy News, Issue No. 162; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
W.R. GRACE: Equity Committee Says No to JP Morgan's Interest Hike
-----------------------------------------------------------------
The Official Committee of Equity Holder supports W.R. Grace Co.
and its debtor-affiliates in their request for the disallowance of
JP Morgan Chase, N.A.'s demand for additional interest payments.
A hearing is set for Sept. 18, 2008, to rule on the issue.
Giving in to the demands of JP Morgan would cause the asbestos
personal injury settlement entered into by the Debtors, and the
asbestos, creditor, and equity holder constituents, to fail,
Philip Bentley, Esq., at Kramer Levin Naftalis & Frankel LLP, in
New York, argues on behalf of the Equity Committee. He says the
Equity Committee has made significant concessions despite its
continued belief that equity holders would receive significantly
greater distributions if the asbestos claim estimation process
were litigated to conclusion.
The Equity Committee is not prepared to agree to provide the
Lenders a higher rate of postpetition interest than the
Negotiated Bank Default Interest Rate provided under the asbestos
settlement, Mr. Bentley tells Judge Fitzgerald. "Any further
dilution of equity's proposed distribution would make the
economics of the Settlement disadvantageous to equity holders,"
he argues. "If any such modifications were made, the Equity
Committee would have no choice but to withdraw its support for
the Settlement, causing the Settlement to fail."
The Lenders are currently demanding payments for accrued
postpetition interest at 7.77% rather than at 6.09% interest
through the end of 2005 and at the prime rate for later periods
as proposed in the asbestos settlement. An increase in the
interest rate would mean additional payment of about
$100,000,000. According to Bloomberg News, the non-default rate
was 5.77% at the outset of the Chapter 11 case.
Under the plan of reorganization proposed by the Debtors,
existing shareholders will retain their stock, although diluted
by warrants and shares securing the Debtors' obligation to make
future payments.
Creditors' Committee Sides with Lenders
The Official Committee of Unsecured Creditors, however, argue
that the Debtors are solvent, and, that the roughly $100,000,000
in additional postpetition interest payable to the Lenders does
not diminish the payout to any other creditor.
The Debtors currently have a market capitalization between
$1,600,000,000 and $2,000,000,000, and have committed to the
asbestos settlement, which preserves more than $1,000,000,000 of
value for the Debtors' existing equity holders, Lewis Kruger,
Esq., at Stroock & Stroock & Lavan LLP, in New York, on behalf of
the Creditors' Committee, tells Judge Fitzgerald.
"The issue . . . is not whether the Debtors' solvency has been
judicially determined or whether the proposed asbestos settlement
addresses solvency, but rather that the settlement expressly
provides the Debtors' equity holders with a recovery at the
expense of the commercial creditors," Mr. Kruger argues.
According to Mr. Kruger, the Debtors' unwillingness to pay the
additional interests aims to preserve a deal they have with the
equity holders. "This perverse result violates the absolute
priority rule and is the polar opposite of 'equitable'," he
argues. "There are no equitable considerations that warrant
depriving the bank debt holders of default interest where their
prepetition contracts provide for it."
"By the time the plan of reorganization is confirmed, presumably
in 2009, the Debtors will have enjoyed the use of the bank debt
holders' money for nearly eight years and, correspondingly, the
bank debt holders have been deprived of the use of that money
during that lengthy period of time," Mr. Kruger asserts. Despite
the Debtors' description of the default rate as "exorbitant," the
credit agreements provide for only a 24% difference between the
contract default rate and the base contract rate, which is not
exorbitant, he contends.
Mr. Kruger tells Judge Fitzgerald that the Creditors' Committee
has not and will not support a plan of reorganization, like the
one contemplated by the Asbestos Settlement, that fails to
provide for payment of appropriate postpetition interest to the
members of its constituency.
The Creditors' Committee, in defense of the Lenders, complain that
the Asbestos Settlement deprive the Lenders of their right to
payment of postpetition interest at the contract default rate and
is also inadequate in the manner in which postpetition interest
is to be paid to the estates' trade creditors.
The Debtors' proposed reorganization plan provides that unsecured
creditors will be paid in full with interest.
Lenders Insist on Additional Interest Payments
The Lenders and JP Morgan ask the Court to overrule the Debtors'
objection to their Claims arguing that, because the Debtors are
solvent, the Lenders are entitled to payment of postpetition
interests at the contract default rate.
Adam Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington,
Delaware, echoes the Creditors' Committee's point that the
Asbestos Settlement propose to divide the Debtors' reorganization
value among all constituencies, including the preservation of
more than $1,000,000,000 for equity holders. He notes that an
additional feature of the settlement limits the Lenders'
$500,000,000 prepeption principal claims to an amount less than
the contractual default rate presumed in the circumstance of a
solvent debtor.
In attempting to limit the Lenders' postpetition interest
recovery, Mr. Landis argues that the Debtors are trying to have
it both ways -- depriving the Lenders of postpetition default
interest by claiming that there is no solvency determination to
justify its award, at the same time letting equity holders keep
almost $2,000,000,000 of value without any solvency
determination.
Mr. Landis asserts that the parties should not waste their time
and money or the energies of the Court over the argument that the
Lenders have no right to postpetition interest in the absence of
a solvency determination. "If the Debtors insist that the
Lenders must establish solvency as a condition precedent to
establishing their entitlement to postpetition interest, so be
it; the Bank Lenders are prepared to do so," he tells Judge
Fitzgerald.
"If the Debtors want their shareholders to retain their interests
through this shift and gift, value must shift a second time --
approximately $100,000,000 must move to the Bank Lenders from
equity's $2,000,000,000 of value," Mr. Landis asserts.
"Otherwise, the now-unfiled plan that will implement the Proposed
Asbestos Settlement will violate the absolute priority rule
because it will let equity keep $100,000,000 that belongs to the
Bank Lenders."
About W.R. Grace
Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The Company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee
of Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on January 14, 2008.
At Dec. 31, 2006, the W.R. Grace's balance sheet showed total
assets of $3,620,400,000 and total debts of $4,189,100,000.
As of November 30, 2007, W.R. Grace's balance sheet showed total
assets of $3,335,000,000, and total debts of $3,712,000,000.
(W.R. Grace Bankruptcy News, Issue No. 162; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
XM SATELLITE: FCC Approves Sirius Satellite Merger in a 3-2 Vote
----------------------------------------------------------------
The Federal Communications Commission approved in a 3-2 vote
Sirius Satellite Radio Inc.'s buyout of XM Satellite Radio
Holdings Inc.
WSJ relates that Republican Commissioner Deborah Taylor Tate
removed the last barrier to the merger's completion by voting to
approve the deal. To secure her vote, the companies voluntarily
agreed to pay a combined $19.7 million in fines to settle FCC rule
violations; including locating towers in unapproved locations and
selling radios which exceeded power limits, WSJ indicates.
WSJ, citing Ms. Tate, says that she waited until she was satisfied
that the enforcement part of the deal was completed before voting
in favor of the merger and FCC Chairman Kevin Martin had signed
off on it.
Mr. Martin said that the deal would be positive for consumers and
the general public and that subscribers would have more choices in
pricing and channels now than they had in the past, WSJ adds.
As part of the deal, WSJ relates, the companies have agreed to:
-- a three-year price cap well as promising to bring
interoperable radios to the market within a year;
-- a la carte pricing so that subscribers will have more
choices over which stations they receive; and
-- set aside 8% of their total channels for educational and
minority-owned channels.
WSJ, points out that the companies agreed to most of those
conditions a month ago, when Mr. Martin first proposed that the
agency approve the deal.
The FCC will now launch an inquiry into whether satellite radio
companies must include technology in their radio receivers that
would allow subscribers to also hear new digital channels from
local radio stations, WSJ adds.
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
About XM Satellite Radio
Headquartered in Washington, D.C., XM Satellite Radio Holdings
Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite
radio company. The company broadcasts live daily from studios in
Washington, DC, New York City, Chicago, Nashville, Toronto and
Montreal. The company also provides satellite-delivered
entertainment and data services for the automobile market through
partnerships with General Motors, Honda, Hyundai, Nissan, Porsche,
Subaru, Suzuki and Toyota.
As reported in the Troubled Company Reporter on July 25, 2008,
At June 30, 2008, the company's consolidated balance sheet showed
$1.7 billion in total assets, $2.9 billion in total liabilities,
and $60.2 million in minority interest, resulting in a roughly
$1.2 billion stockholders' deficit.
* * *
As reported in the Troubled Company Reporter on March 28, 2008,
Standard & Poor's Ratings Services said its ratings on XM
Satellite Radio Holdings Inc. and XM atellite Radio Inc.
(CCC+/Watch Developing/--) remain on CreditWatch with developing
implications, where S&P originally placed them on March 4, 2008,
due to S&P's concerns over standalone refinancing risks XM might
face if its merger with Sirius Satellite Radio Inc. (CCC+/Watch
Developing/--) wasn't approved.
* S&P Lowers Ratings on 15 Classes from Eight US Subprime RMBS
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 15
classes of mortgage pass-through certificates from eight U.S.
subprime residential mortgage-backed securities transactions
issued by various issuers. Additionally, S&P affirmed the ratings
on 31 classes of certificates from the eight deals, one of which
was concurrently removed from CreditWatch negative.
The lowered ratings reflect the most recent months of performance
data on the underlying deals. Credit enhancement for all eight
deals is provided by subordination, overcollateralization, and
excess interest; however, O/C has eroded to $0 for all of the
reviewed deals. Of the 15 lowered ratings, eight were lowered to
'D' due to recent principal write-downs on the respective
balances, which first occurred during the May or June 2008
remittance period. The amount of principal write-downs on the
defaulted classes totaled approximately $3.83 million as of the
June 2008 reporting period. The remaining seven lowered ratings
reflect current and projected credit support that is not
sufficient at the previous rating levels.
As of the June 2008 remittance period, the seasoning of the
reviewed deals ranged from 46 months (People's Choice Home Loan
Securities Trust Series 2004-2) to 73 months (Morgan Stanley Dean
Witter Capital I Inc.'s series 2002-HE1). Serious delinquencies
ranged from 10.98% (Option One Mortgage Loan Trust 2003-3) to
26.7% (Morgan Stanley Dean Witter Capital I Inc.'s series 2002-
HE1) of the current principal balances, while cumulative losses
ranged from 1.52% (Option One Mortgage Loan Trust 2003-3) to 3.71%
(People's Choice Home Loan Securities Trust Series 2004-2) of the
original principal balances. The paid down pool factors of the
eight transactions range from 5.81% (Morgan Stanley Dean Witter
Capital I Inc.'s series 2002-HE1) to 12.15% (People's Choice Home
Loan Securities Trust Series 2004-2) of the original principal
balances.
S&P removed its rating on class M-2 from Home Equity Asset Trust
2003-3 from CreditWatch with negative implications, where it was
placed on Jan. 2, 2008. While the class is now supported by 'B-'
and 'D' rated classes, there is sufficient credit enhancement
provided by subordination and monthly excess interest to maintain
the 'BB-'. Recent losses on this transaction have improved; the
six-month average is approximately $218,274 compared to a
12-month average of $264,302.
The affirmations on the remaining 30 classes from the eight
transactions reflect current and projected credit support
percentages that are sufficient to support the certificates at
their current rating levels as of the June 2008 distribution
period.
Ratings Lowered
Home Equity Asset Trust 2003-3
Series 2003-3
Rating
Class CUSIP To From
----- ----- -- ----
B-1 22541N3U1 D CCC
Home Equity Asset Trust 2003-4
Series 2003-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 22541QDZ2 D CCC
Home Equity Asset Trust 2003-6
Series 2003-6
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 22541QTV4 D CCC
Home Equity Asset Trust 2004-1
Series 2004-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 437084BA3 D CC
Home Equity Asset Trust 2004-3
Series 2004-3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 437084CH7 CCC B
B-3 437084CK0 D CC
Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE1
Series 2002-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 61746WPZ7 B BB-
B-1 61746WQA1 D CC
Option One Mortgage Loan Trust 2003-3
Series 2003-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-6 68400XBQ2 D CCC
M-4 68400XBN9 B BB
M-5 68400XBP4 CCC B
People's Choice Home Loan Securities Trust Series 2004-2
Series 2004-2
Rating
------
Class CUSIP To From
----- ----- -- ----
M8 71085PBC6 D CCC
M7 71085PBB8 CC B-
M6 71085PBA0 CCC BB
M5 71085PAZ6 CCC BBB
Rating Affirmed and Removed from Creditwatch Negative
Home Equity Asset Trust 2003-3
Series 2003-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 22541N3T4 BB- BB-/Watch Neg
Ratings Affirmed
Home Equity Asset Trust 2003-3
Series 2003-3
Class CUSIP Rating
----- ----- ------
M-3 22541N5J4 B-
M-1 22541N3S6 AA
Home Equity Asset Trust 2003-4
Series 2003-4
Class CUSIP Rating
----- ----- ------
M-1 22541QDV1 AA
M-2 22541QDW9 A
M-3 22541QDX7 BBB-
B-1 22541QDY5 B
Home Equity Asset Trust 2003-6
Series 2003-6
Class CUSIP Rating
----- ----- ------
M-2 22541QTT9 B+
M-1 22541QTS1 AA
M-3 22541QTU6 B
Home Equity Asset Trust 2004-1
Series 2004-1
Class CUSIP Rating
----- ----- ------
M-1 437084AV8 AA
M-2 437084AW6 BBB
M-3 437084AX4 BB
B-1 437084AY2 B
B-2 437084AZ9 CCC
Home Equity Asset Trust 2004-3
Series 2004-3
Class CUSIP Rating
----- ----- ------
M-1 437084CE4 AA
B-2 437084CJ3 CCC
M-3 437084CG9 BB
M-2 437084CF1 A
Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE1
Series 2002-HE1
Class CUSIP Rating
----- ----- ------
M-1 61746WPY0 A
Option One Mortgage Loan Trust 2003-3
Series 2003-3
Class CUSIP Rating
----- ----- ------
M-3 68400XBM1 BBB
M-2 68400XBL3 AA-
M-1A 68389FDR2 AA
M-1 68400XBK5 AA+
A-4 68389FDQ4 AAA
A-2 68400XBJ8 AAA
A-1 68400XBH2 AAA
People's Choice Home Loan Securities Trust Series 2004-2
Series 2004-2
Class CUSIP Rating
----- ----- ------
M3 71085PAX1 A+
M2 71085PAW3 AA
M1 71085PAV5 AA+
M4 71085PAY9 A
* S&P Chips Ratings on 22 Cert. Classes of from 13 Subprime RMBS
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 22
classes of mortgage pass-through certificates from 13 U.S.
subprime residential mortgage-backed securities transactions from
various issuers. We removed two of the lowered ratings from
CreditWatch with negative implications, and four additional
ratings remain on CreditWatch with negative implications. In
addition, we affirmed two other ratings and removed them from
CreditWatch with negative implications. Lastly, S&P affirmed its
ratings on 97 other classes of certificates from these deals and
14 additional transactions. In total, S&P analyzed 30
transactions for this review.
The downgrades reflect the performance of the respective
underlying collateral pools as of the June 2008 remittance period;
projected credit support levels based on the transactions'
delinquency pipelines; and the amount of projected losses compared
with the expected credit support.
S&P lowered its rating on class B-1 from Morgan Stanley Dean
Witter Capital I Inc. Trust 2001-NC3 because it experienced
principal write-downs totaling $1.08 million during the May and
June 2008 reporting periods. For the remaining downgraded
classes, current credit support and projected credit enhancement
based on the amount of delinquencies in the respective pools was
insufficient at the prior rating levels. Credit support for these
deals has deteriorated in recent months, and the level of
delinquencies and actual loss severities indicate that the pattern
of losses could continue. The 12-month loss severities for the 12
downgraded deals for which loss severity data was available
averaged 70.4%, and in light of the low pool factors of the
affected deals, S&P don't expect the loss severities to decrease.
The pool factors range from 2.88% of the respective current pool
balances for Morgan Stanley Dean Witter Capital I Inc. Trust 2001-
AM1 to 13.27% for Morgan Stanley ABS Capital I Inc. Trust 2004-
HE5. The seasoning of the affected deals ranged from 46 months
(Morgan Stanley ABS Capital I Inc. Trust 2004-HE7) to 83 months
(Saxon Asset Securities Trust 2001-2) as of the June 2008
distribution date. Serious delinquencies ranged from 9.25% (Long
Beach Mortgage Loan Trust Series 2004-1) to 35.76% (Morgan Stanley
Dean Witter Capital I Inc. Trust 2001-NC2).
The 'AA' ratings on classes A-1 and A-2 from Fremont Home Loan
Trust 1999-3 remain on CreditWatch with negative implications
because Ambac Assurance Corp. (AA/Watch Neg/--) insures these
bonds, while the 'AA' ratings on classes A-1 and A-2 from Option
One/CTS Mortgage Loan Trust 1996-1 remain on CreditWatch negative
because MBIA Insurance Corp. (AA/Watch Neg/--) insures these
bonds. The ratings on these classes reflect the higher of the
current rating on the respective monoline insurer and the
underlying rating on the respective transaction, which is based on
the transaction's inherent credit support.
The 97 rating affirmations reflect current and projected credit
support percentages that are sufficient to support the
certificates at their current rating levels as of the June 2008
distribution period.
Ratings Lowered
Long Beach Mortgage Loan Trust 2004-1
Series 2004-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B 542514FF6 B- BB
Morgan Stanley ABS Capital I Inc. Trust 2004-HE2
Series 2004-HE2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 61744CCY0 BBB BBB+
B-2 61744CCZ7 B BBB
B-3 61744CDA1 CCC BBB-
Morgan Stanley ABS Capital I Inc. Trust 2004-HE3
Series 2004-HE3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 61744CDN3 CCC BBB-
Morgan Stanley ABS Capital I Inc. Trust 2004-HE5
Series 2004-HE5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 61746RHJ3 B BBB
B-3 61746RHK0 CCC BBB-
Morgan Stanley ABS Capital I Inc. Trust 2004-HE7
Series 2004-HE7
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 61744CGJ9 BBB BBB+
B-2 61744CGK6 BB BBB
B-3 61744CGL4 CCC BB-
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-AM1
Series 2001-AM1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 61746WJE1 CCC B
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC2
Series 2001-NC2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 61746WHY9 B AA+
M-2 61746WHZ6 CCC BBB
B-1 61746WJA9 CC B
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
Series 2001-NC3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 61746WLB4 BB A
B-1 61746WLC2 D CCC
Option One Mortgage Loan Trust 2002-1
Series 2002-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 68389FCC6 AA AAA
Saxon Asset Securities Trust 2001-2
Series 2001-2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 805564JS1 CCC BBB
B-1 805564JT9 CC CCC
Saxon Asset Securities Trust 2002-1
Series 2002-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B 805564KY6 CCC B
Ratings Lowered and Removed from Creditwatch Negative
Fremont Home Loan Trust 2002-1
Series 2002-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 35729PAD2 BBB- AAA/Watch Neg
Saxon Asset Securities Trust 2001-3
Series 2001-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 805564KE0 A AA/Watch Neg
Ratings Remaining on Creditwatch Negative
Fremont Home Loan Trust 1999-3
Series 1999-3
Class CUSIP Rating
----- ----- ------
A-1 35729BAE1 AA/Watch Neg
A-2 35729BAF8 AA/Watch Neg
Option One/CTS Mortgage Loan Trust 1996-1
Series 1996-1
Class CUSIP Rating
----- ----- ------
A-1 683971AA3 AA/Watch Neg
A-2 683971AB1 AA/Watch Neg
Ratings Affirmed and Removed from Creditwatch Negative
Cityscape Home Equity Loan Trust 1997-B
Series 1997-B
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1F 178779CN2 BB BB/Watch Neg
Fremont Home Loan Trust 2002-1
Series 2002-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 35729PAC4 AAA AAA/Watch Neg
Ratings Affirmed
Cityscape Home Equity Loan Trust 1997-B
Series 1997-B
Class CUSIP Rating
----- ----- ------
A-6 178779BV5 AAA
A-7 178779BW3 AAA
M-1F 178779BY9 AA+
M-2F 178779BZ6 A
M-2A 178779CB8 BBB
Cityscape Home Equity Loan Trust 1997-C
Series 1997-C
Class CUSIP Rating
----- ----- ------
A-3 178779CR3 AAA
A-4 178779CS1 AAA
M-1F 178779CU6 AA
M-2F 178779CV4 BBB
M-1A 178779CX0 AAA
M-2A 178779CY8 AA
B-1A 178779CZ5 BBB
EquiVantage Home Equity Loan Trust 1997-1
Series 1997-1
Class CUSIP Rating
----- ----- ------
A-3 29476YAS8 A-
A-4 29476YAT6 A-
A-5 29476YAU3 BBB
Fremont Home Loan Trust 2002-1
Series 2002-1
Class CUSIP Rating
----- ----- ------
M-3 35729PAE0 CCC
M-4 35729PAF7 CCC
Home Equity Asset Trust 2002-1
Series 2002-1
Class CUSIP Rating
----- ----- ------
A-2 22541NAB5 AAA
A-3 22541NAC3 AAA
A-4 22541NAD1 AAA
M-1 22541NAG4 AA+
M-2 22541NAH2 BB
Home Improvement & Home Equity Loan Trust 1996-C
Series 1996-C
Class CUSIP Rating
----- ----- ------
HE:B-1 393505NU2 AA
Home Improvement & Home Equity Loan Trust 1996-D
Series 1996-D
Class CUSIP Rating
----- ----- ------
HE:B-1 393505QF2 A
Home Improvement & Home Equity Loan Trust 1996-F
Series 1996-F
Class CUSIP Rating
----- ----- ------
HE:B-1 393505SB9 AA+
Long Beach Mortgage Loan Trust 2000-1
Series 2000-1
Class CUSIP Rating
----- ----- ------
AF-3 542514AC8 AAA
AF-4 542514AD6 AAA
AV-1 542514AH7 AAA
M-1 542514AE4 B
Long Beach Mortgage Loan Trust 2001-4
Series 2001-4
Class CUSIP Rating
----- ----- ------
II-A1 542514BQ6 AAA
II-A3 542514BS2 AAA
Long Beach Mortgage Loan Trust 2004-1
Series 2004-1
Class CUSIP Rating
----- ----- ------
A-1 542514FD1 AAA
A-2 542514FE9 AAA
M-1 542514EU4 AAA
M-2 542514EV2 AAA
M-3 542514EW0 AAA
M-4 542514EX8 AAA
M-5 542514EY6 AAA
M-6 542514EZ3 AAA
M-7 542514FA7 AA+
M-8 542514FB5 AA
M-9 542514FC3 BBB-
Money Store Trust 1998-B (The)
Series 1998-B
Class CUSIP Rating
----- ----- ------
AF-7 60935BDX4 AAA
AF-9 60935BDZ9 AAA
AV 60935BEA3 AAA
BH 60935BEK1 BB
Morgan Stanley ABS Capital I Inc. Trust 2004-HE2
Series 2004-HE2
Class CUSIP Rating
----- ----- ------
M-1 61744CCV6 AA
M-2 61744CCW4 A
M-3 61744CCX2 A-
Morgan Stanley ABS Capital I Inc. Trust 2004-HE3
Series 2004-HE3
Class CUSIP Rating
----- ----- ------
A-2 61744CDE3 AAA
A-4 61744CDG8 AAA
M-1 61744CDH6 AA
M-3 61744CDK9 A-
B-1 61744CDL7 BBB+
B-2 61744CDM5 BBB
M-2 61744CDJ2 A
Morgan Stanley ABS Capital I Inc. Trust 2004-HE5
Series 2004-HE5
Class CUSIP Rating
----- ----- ------
M-1 61746RHE4 AA
M-2 61746RHF1 A
M-3 61746RHG9 A-
B-1 61746RHH7 BBB+
Morgan Stanley ABS Capital I Inc. Trust 2004-HE7
Series 2004-HE7
Class CUSIP Rating
----- ----- ------
M-1 61744CGD2 AA+
M-2 61744CGE0 AA
M-3 61744CGF7 AA-
M-4 61744CGG5 A
M-5 61744CGH3 A-
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-AM1
Series 2001-AM1
Class CUSIP Rating
----- ----- ------
M-1 61746WJD3 BBB
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC3
Series 2001-NC3
Class CUSIP Rating
----- ----- ------
M-1 61746WLA6 AAA
Morgan Stanley Dean Witter Capital I Inc. Trust 2001-NC4
Series 2001-NC4
Class CUSIP Rating
----- ----- ------
M-1 61746WLL2 AA+
M-2 61746WLM0 A
Option One Mortgage Loan Trust 2000-5
Series 2000-5
Class CUSIP Rating
----- ----- ------
A 68389FBH6 AAA
Option One Mortgage Loan Trust 2002-1
Series 2002-1
Class CUSIP Rating
----- ----- ------
A 68389FCB8 AAA
M-2 68389FCD4 BBB
M-3 68389FCE2 BB
Saxon Asset Securities Trust 2000-2
Series 2000-2
Class CUSIP Rating
----- ----- ------
MF-1 805564FZ9 AA+
MF-2 805564GA3 A
Saxon Asset Securities Trust 2000-3
Series 2000-3
Class CUSIP Rating
----- ----- ------
MF-1 805564GS4 AA+
MF-2 805564GT2 A
Saxon Asset Securities Trust 2001-2
Series 2001-2
Class CUSIP Rating
----- ----- ------
AF-5 805564JL6 AAA
AF-6 805564JM4 AAA
AV-1 805564JN2 AAA
M-1 805564JR3 AA
X-IO 805564JU6 AAA
Saxon Asset Securities Trust 2001-3
Series 2001-3
Class CUSIP Rating
----- ----- ------
AF-6 805564KJ9 AAA
AV-1 805564KA8 AAA
M-2 805564KF7 CCC
X-IO 805564KH3 AAA
Saxon Asset Securities Trust 2002-1
Series 2002-1
Class CUSIP Rating
----- ----- ------
AF-5 805564KQ3 AAA
AF-6 805564KR1 AAA
AV-1 805564KS9 AAA
AV-2 805564KT7 AAA
M-1 805564KW0 AA
M-2 805564KX8 BBB
Structured Mortgage Asset Residential Trust, Series 93-1
Series 1993- 1
Class CUSIP Rating
----- ----- ------
AX 863573QS3 AAA
AY 863573QT1 AAA
BF 863573QY0 AAA
BY 863573QV6 AAA
G 863573QK0 AAA
* S&P Cuts Rtngs. on 74 Cert. Classes from 56 Various RMBS Issuers
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 74
classes of mortgage pass-through certificates from 56 U.S.
subprime residential mortgage-backed securities transactions from
various issuers.
All of the 74 downgrades to 'D' follow principal write-downs on
the respective classes. Of the 74 defaulted classes, one class
was downgraded from the 'B' rating category, eight were downgraded
from the 'CCC' rating category, and 65 were downgraded from the
'CC' rating category. The class balances from these classes first
incurred realized losses during the May or June 2008 remittance
period.
As of the June 2008 reporting period, the amount of principal
write-downs to the defaulted class balances totaled approximately
$457.17 million.
Ratings Lowered
Aegis Asset Backed Securities Trust
Series 2005-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B5 00764MHQ3 D CC
B6 00764MHR1 D CC
Aegis Asset Backed Securities Trust Mortgage Pass
Through
Certificates Series 2005-4
Series 2005-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B6 00764MGT8 D CC
Fremont Home Loan Trust 2005-1
Series 2005-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 35729PJM3 D CCC
Fremont Home Loan Trust 2005-2
Series 2005-2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 35729PLY4 D CC
Fremont Home Loan Trust 2006-C
Series 2006-C
Rating
------
Class CUSIP To From
----- ----- -- ----
M11 35729TAR3 D CC
GSAMP Trust 2005-WMC1
Series 2005-WMC1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 362341QD4 D CC
GSAMP Trust 2006-FM1
Series 2006-FM1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 362334PV0 D CC
GSAMP Trust 2006-FM2
Series 2006-FM2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 36245DAV2 D CC
GSAMP Trust 2006-HE2
Series 2006-HE2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 362334LY8 D CC
GSAMP Trust 2006-HE3
Series 2006-HE3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 36244KAW5 D CCC
GSAMP Trust 2006-HE4
Series 2006-HE4
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 362439AU5 D CCC
GSAMP Trust 2006-HE5
Series 2006-HE5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 362437AU9 D CC
GSAMP Trust 2006-NC2
Series 2006-NC2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 362463AR2 D CC
Home Equity Asset Trust 2005-1
Series 2005-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 437084HZ2 D CC
Home Equity Asset Trust 2005-7
Series 2005-7
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 437084PN0 D CC
Home Equity Asset Trust 2005-8
Series 2005-8
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 437084QQ2 D CC
Home Equity Asset Trust 2005-9
Series 2005-9
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 437084RK4 D CC
B-5 437084RL2 D CC
Home Equity Asset Trust 2006-2
Series 2006-2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 437084TX4 D CCC
B-4 437084TZ9 D CC
Home Equity Asset Trust 2006-3
Series 2006-3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 437084VE3 D CCC
B-4 437084VD5 D CCC
Home Equity Asset Trust 2006-5
Series 2006-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 437096AT7 D CC
Home Equity Asset Trust 2006-6
Series 2006-6
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 437097AT5 D CC
B-3 437097AS7 D CC
Home Equity Asset Trust 2006-7
Series 2006-7
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 43709NAS2 D CC
B-2 43709NAR4 D CC
Home Equity Asset Trust 2006-8
Series 2006-8
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 43709QAS5 D CC
Home Equity Asset Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 43710LAR5 D CC
JPMorgan Mortgage Acquisition Corp. 2006-HE1
Series 2006-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 46626LGR5 D CC
M-11 46626LGS3 D CC
JPMorgan Mortgage Acquisition Corp. 2006-WMC1
Series 2006-WMC1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 46626LJE1 D CC
JPMorgan Mortgage Acquisition Trust 2006-HE3
Series 2006-HE3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 46629VAP0 D CC
JPMorgan Mortgage Acquisition Trust 2006-RM1
Series 2006-RM1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 46629NAQ6 D CC
M-8 46629NAP8 D CC
M-10 46629NAR4 D CC
JPMorgan Mortgage Acquisition Trust 2006-WMC2
Series 2006-WMC2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 46628TAP6 D CC
M-8 46628TAN1 D CC
JPMorgan Mortgage Acquisition Trust 2006-WMC3
Series 2006-WMC3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 46629KAQ2 D CC
M-8 46629KAP4 D CC
JPMorgan Mortgage Acquisition Trust 2006-WMC4
Series 2006-WMC4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 46630BAR7 D CC
M-9 46630BAQ9 D CC
Long Beach Mortgage Loan Trust 2005-3
Series 2005-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 542514PG3 D CC
Long Beach Mortgage Loan Trust 2005-WL1
Series 2005-WL1
Rating
------
Class CUSIP To From
----- ----- -- ----
III-B1 542514MP6 D CC
Long Beach Mortgage Loan Trust 2006-1
Series 2006-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 542514RY2 D CC
Long Beach Mortgage Loan Trust 2006-10
Series 2006-10
Rating
------
Class CUSIP To From
----- ----- -- ----
B 54251YAR9 D CC
Long Beach Mortgage Loan Trust 2006-11
Series 2006-11
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 542512AR9 D CC
Long Beach Mortgage Loan Trust 2006-2
Series 2006-2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 542514UD4 D CC
M-8 542514UC6 D CC
Long Beach Mortgage Loan Trust 2006-3
Series 2006-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 542514UW2 D CC
M-9 542514UV4 D CC
Long Beach Mortgage Loan Trust 2006-4
Series 2006-4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 54251MAQ7 D CC
Long Beach Mortgage Loan Trust 2006-5
Series 2006-5
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 54251PAQ0 D CC
Long Beach Mortgage Loan Trust 2006-6
Series 2006-6
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 54251RAQ6 D CC
Long Beach Mortgage Loan Trust 2006-7
Series 2006-7
Rating
------
Class CUSIP To From
----- ----- -- ----
M-10 54251TAQ2 D CC
Long Beach Mortgage Loan Trust 2006-8
Series 2006-8
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 54251UAR7 D CC
Long Beach Mortgage Loan Trust 2006-9
Series 2006-9
Rating
------
Class CUSIP To From
----- ----- -- ----
B-1 54251WAR3 D CC
Long Beach Mortgage Loan Trust 2006-WL2
Series 2006-WL2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 542514SN5 D CC
Long Beach Mortgage Loan Trust 2006-WL3
Series 2006-WL3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-8 542514TE4 D CCC
Option One Mortgage Loan Trust 2006-3
Series 2006-3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 68389BAR4 D CC
SG Mortgage Securities Trust 2006-FRE1
Series 2006-FRE1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-11 81879MBH1 D CC
M-10 81879MBG3 D CC
SG Mortgage Securities Trust 2006-FRE2
Series 2006-FRE2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-9 784208AP5 D CC
M-10 784208AQ3 D CC
Terwin Mortgage Trust 2005-2HE
Series 2005-2HE
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 881561QC1 D CCC
Terwin Mortgage Trust 2005-8HE
Series 2005-8HE
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 881561US1 D B
Terwin Mortgage Trust 2006-3
Series 2006-3
Rating
------
Class CUSIP To From
----- ----- -- ----
II-M-4 881561W67 D CC
Terwin Mortgage Trust Series TMTS 2005-10HE
Series 2005-10HE
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 881561VM3 D CC
Terwin Mortgage Trust Series TMTS 2005-16HE
Series 2005-16HE
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 881561ZW7 D CC
B-1 881561ZV9 D CC
Terwin Mortgage Trust Series TMTS 2005-6HE
Series 2005-6HE
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 881561TH7 D CC
Terwin Mortgage Trust Series TMTS 2005-14HE
Series 2005-14HE
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 881561XY5 D CC
B-3 881561XZ2 D CC
* S&P Lower Airlines' Ratings After Heavy Losses
------------------------------------------------
Standard & Poor's Ratings Services lowered the long-term corporate
credit ratings on air carriers AMR Corp., UAL Corp. and Northwest
Airlines Corp. and their respective subsidiaries American Airlines
Inc., United Air Lines Inc., and Northwest Airlines Inc. The
downgrades reflect expectations for heavy losses and, at best,
reduced cash flow in the face of record-high fuel prices.
As part of an ongoing industrywide review, Standard & Poor's:
Lowered the long-term corporate credit ratings on AMR
(B-/Negative/B-3) and American (B-/Negative/--), to 'B-' from 'B',
and removed the ratings from CreditWatch, where they had been
placed with negative implications May 22, 2008. The 'B-3' short-
term rating on AMR was affirmed and removed from CreditWatch.
Lowered the long-term corporate credit ratings on UAL
(B-/Negative/--) and United (B-/Negative/--) to 'B-' from 'B', and
removed the ratings from CreditWatch, where they had been placed
with negative implications May 22, 2008.
Lowered the long-term corporate credit ratings on Northwest
Airlines Corp. (B/Negative/--) and Northwest Airlines Inc.
(B/Negative/--) to 'B' from 'B+', and removed the ratings from
CreditWatch, where they had been placed with negative implications
April 15, 2008.
The downgrades on all three airlines were based on increased risk
to liquidity from projected losses and were not specifically
related to recently announced second-quarter earnings. In fact,
all three companies reported earnings that met-or bettered-Wall
Street expectations. It should also be noted that, looking at the
overall credit picture and assuming fuel doesn't spike up
significantly, S&P think liquidity at all three is adequate for at
least the next several quarters.
In the case of Fort Worth, Texas-based AMR, heavy debt and
retiree-obligation burdens, and substantial spending needs to
modernize the airline's fleet also weigh on the company. On the
plus side, the company had $5.1 billion of unrestricted cash and
short-term investments as of June 30, and substantial market
positions in the U.S. domestic, trans-Atlantic, and Latin American
markets.
For UAL, high fuel costs that haven't been fully offset by raising
fares, and a highly leveraged financial profile are burdens.
However, these are mitigated by the Chicago-based company's
extensive and well-positioned route system and reductions in labor
costs and financial obligations through bankruptcy reorganization.
Eagan, Minnesota-based Northwest, like the other airlines, is
reducing capacity in the U.S. domestic market, retiring aircraft,
and shifting some flying to regional partner airlines. Along with
capacity reductions across the industry, this should improve
somewhat the balance of supply and demand in the market and allow
Northwest to raise its fares further. However, the weak U.S.
economy will likely constrain fare hikes, and S&P don't expect
higher fares to be sufficient to help Northwest avoid a loss this
year if fuel prices remain high.
In any event, planned capacity reductions by all three airlines
should have a benefit, though probably not enough to offset higher
fuel prices. The major headwind to the expected revenue gains is,
clearly, the economy. The companies have said that bookings are
encouraging, but the time horizon for projecting bookings is not
very long at this point in the year.
Negative Outlooks Remain
Standard & Poor's kept negative outlooks on all three airlines.
This means that, looking out over roughly the next year, S&P see
at least a 1-in-3 chance that the ratings will decline further.
But it should be noted that while we're not excluding the
possibility of the bankruptcy of a major airline, S&P did not
assume such an outcome in our analysis of revenue trends.
Should a Chapter 11 filing occur, however, we do see an overall
greater risk of liquidation for all U.S. airlines than in past
filings (as in those following the attacks of Sept. 11, 2001). In
some cases, there will be less left to fix. Companies have in
many cases offloaded pension obligations or are able to stretch
them out over longer periods under new pension legislation, thus
making them less onerous. Labor give-backs have already been
substantial, thus making it harder to find and make labor-cost
reductions. On top of that-and perhaps counterintuitively-the
strength of the aircraft market in some ways runs against
companies' ability to reorganize.
In short, if an airline in Chapter 11 owns a fleet of newer
planes, creditors might be more inclined to ask for the keys,
repossess the planes, and sell them to airlines in other
countries. Additionally, a Chapter 11 filing does nothing to fix
high fuel costs, the principal challenge facing airlines.
* S&P Says Distress Ratio Shoots Up from 13.7% to 23.5% in July
---------------------------------------------------------------
After declining for the past three months, the Standard & Poor's
distress ratio has shot up to 23.5% in July from 13.7% last month,
said an article. The article, which is titled "U.S. Distressed
Debt Monitor: Detroit's Dilemmas Propel Distress (Premium),"
says that this is the largest month-over-month increase in the
distress ratio, expanding just under 10% since last month.
"This increase puts the distress ratio at its highest level since
March 2003," noted Diane Vazza, head of Standard & Poor's Global
Fixed Income Research Group. "It runs alongside the recent rise
in speculative-grade spreads, which were at 763 bps on July 15
from 626 bps a month earlier."
By debt volume, the finance companies and media and entertainment
sectors take the lead, each accounting for $45.9 billion (28.8%)
of the total. When looking at the distress ratio based on
outstanding debt, however, the finance company sector is at a
stratospheric high of 81.7%. This means that nearly 82% of the
speculative-grade debt in this sector is attributable to companies
trading at distressed levels. It is important to note that 90% of
the distressed issues in this sector are from GMAC LLC and Ford
Motor Credit Co.
The automotive sector saw the largest month-over-month increase as
a proportion of all distressed credits, expanding 10.5% to
constitute 14% of all distressed issues outstanding, up from only
3.4% of the total last month. This is primarily the result of 26
issues attributed to Ford Motor Co. and General Motors Corp.
entering this month's distressed list.
* S&P: US Investment-Grade Composite Credit Spread Up to 275 Bps
----------------------------------------------------------------
Standard & Poor's U.S. investment-grade composite credit spread
widened rather sharply to 275 basis points, more than 80% wider
than the five-year moving average and 35% wider than at the
beginning of the year. With continued pressure on financial
institutions and banks, investment-grade credit spreads are
expected to remain range-bound at present high levels.
Standard & Poor's U.S. speculative-grade composite credit spread
echoes this trend, widening to 738 bps from 721 bps on Wednesday.
By comparison, this is 28% wider than the start of the year and
74% wider than the five-year moving average. Speculative-grade
credit spreads are poised for continued volatility, commensurate
with an escalation in speculative-grade defaults over the course
of this year.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Total Shareholders
Working
Assets Equity Capital
Company Ticker ($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.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***