/raid1/www/Hosts/bankrupt/TCR_Public/080731.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, July 31, 2008, Vol. 12, No. 181
Headlines
AB LIQUIDATING: Wants Court to Approve Liquidation Procedures
ADVANTA CORP: S&P Affirms 'BB-' LT Counterparty Credit Rating
AINSWORTH LUMBER: June 30 Balance Sheet Upside-Down by C$110.4 MM
AINSWORTH LUMBER: Names 7 Members to Post-Recapitalization Board
ALCATEL-LUCENT SA: Reports EUR1.1 Billion Net Loss for Q2 2008
ALCATEL-LUCENT SA: Chief Executive & Chairman to Quit from Posts
ALLEGHENY COUNTY HOSPITAL: S&P Cuts $758MM Bonds Rating to BB-
ALLEGHENY COUNTY HOSPITAL: S&P Puts 'BB' Rating Under Neg. Watch
ALL HOMES: Case Summary & Four Largest Unsecured Creditors
AMERICAN HOME: Sues ATIFI for Alleged Botched Wire Transfers
AMERICAN LAFRANCE: Resolves Contract Issues with FSA, et al.
AMERISOURCEBERGEN CORP: Moody's Raises Ba1 Debt Rating
AMERINET LLC: Case Summary & 20 Largest Unsecured Creditors
ARCAP 2005-1: S&P Keeps Two Low-B Ratings Under Negative Watch
BALDWIN 2006: Moody's Downgrades $35MM Notes to Ba2
BHM TECHNOLOGIES: Court Approves Gordon Brothers as Appraisers
BHM TECHNOLOGIES: Court Approves Gaiatech as Environ. Advisors
BIO-KEY INTERNATIONAL: Earns $168,000 in 2008 Second Quarter
BUILDING MATERIALS: In Talks with Lenders to Get Covenant Waivers
BUNGE LTD: Moody's Changes to Stable Outlook on Ba1 Rating
BUTCHER BOY: Case Summary & 16 Largest Unsecured Creditors
CFM CORP: Sells Operations and Major Assets to Monessen Hearth
CHRYSLER LLC: Fitch Junks Rating on Retail Financing Restriction
CLEAR CHANNEL: Completes $24 Billion Merger Deal with CC Media
CLEAR CHANNEL: 99.12% of Sr. Notes -- Valued at $639MM -- Tendered
CLEAR CHANNEL: Moody's Downgrades Sr. Unsec. Notes to Caa1
COVENANT TRANSPORTATION: Completes First Phase of Debt Refinancing
DIABLO GRANDE: Competing Bids for Assets Due August 13
DUNMORE HOMES: Travelers Casualty Objects to Plan Confirmation
DUNMORE HOMES: Wants to Make Non-Material Modifications to Plan
DUNMORE HOMES: Wants Settlement of Rabbi Trust Funds Dispute Ok'd
DURA AUTOMOTIVE: Lawrence Denton To Step Down as President & CEO
DURA AUTOMOTIVE: Names Tim Leuliette as President and CEO
DURA AUTOMOTIVE: Names S. Gilbert as Board of Directors Chairman
DURA AUTOMOTIVE: Pacificor LLC Reports 31.3% Equity Stake
FORD MOTOR: Raising Lease Prices on Trucks and SUVs on August 1
FREESCALE SEMICONDUCTOR: Posts $184MM Net Loss in 2008 2nd Qtr.
FRONTIER AIRLINES: Denver Employees to Bear Brunt of 606 Job Cuts
FRONTIER AIRLINES: Amends Aircraft Sale Contract with VTB Leasing
GENCORP INC: Files Form S-8 to Register 5MM Shares for Stock Fund
GENERAL MOTORS: To Continue Automotive Lease Incentives in August
GENERAL MOTORS: Plans to Cut 5,000 Jobs in North America
HANDLEMAN CO: Sells Music Operations in Canada and United Kingdom
HARRY RUDDY: Case Summary & 20 Largest Unsecured Creditors
HEADWATERS INC: Moody's Cuts SGL Rating on Likely Covenant Breach
HUDSON HIGH: S&P Lowers Two Notes Ratings; Keeps Negative Watch
HUISH DETERGENTS: Unilever Merger Cues S&P to Assign Neg. Watch
IL PALAZZO: Voluntary Chapter 11 Case Summary
IMPAC CMB: Moody's Publishes Underlying Ratings of 2003-2007 Notes
IRISON LOMONT: Case Summary & 24 Largest Unsecured Creditors
IVY LANE CDO: Moody's Downgrades Sr. Secured Notes Rating to C
JETBLUE AIRWAYS: Posts $7.0 Million Net Loss in 2008 2nd Quarter
J-C HAULING: Case Summary & 20 Largest Unsecured Creditors
JHT HOLDINGS: May Employ Kaye Scholer as Primary Counsel
JHT HOLDINGS: Gets OK to Engage Reinhart as General Counsel
KIMBALL HILL: Founder David K. Hill Dies of Cancer
KIMBALL HILL: Can Employ Neal Gerber as Bankruptcy Counsel
KIMBALL HILL: Wants to Employ Deloitte Tax as Tax Advisor
KLEROS REAL: Moody's Downgrades Ratings on $300MM Notes to Ba2
LARSEN'S 2020: Case Summary & 15 Largest Unsecured Creditors
LEAP WIRELESS: Unit Closes Exchange Offer for 9.375% Senior Notes
LEAP WIRELESS: Appoints AlbinMoschner as Chief Operating Officer
LE-NATURE'S INC: Emerges From Chapter 11 Protection
LEVEL 3 COMMS: Posts $33 Million Net Loss in 2008 Second Quarter
LOUISIANA-PACIFIC: S&P Chips Corp. Credit Rating to BB+ from BBB-
MAGNA ENTERTAINMENT: Lender Extends $40MM Facility to August 15
MANITOWOC CO: Moody's Assigns Ba2 Rating to Proposed Facility
MD ECONOMIC DEV'T: Moody's Keeps Rating on Housing Revenue Bonds
MERCURY COMPANIES: Titling Firms in Texas, Calif. & Arizona Closed
MERVYN'S LLC: Case Summary & 30 Largest Unsecured Creditors
ML CLO: Moody's Cuts Rating on $31MM Notes Due 2009 to Ca
MMM HOLDINGS: Moody's Hikes Sr. Debt Rating to B3; Outlook Stable
MORGAN STANLEY: S&P Cuts Seven Certs. Ratings on Weak Performance
NORTHWESTERN CORP: Court OKs Surplus Cash Distribution of Claims
PORTOLA PACKAGING: Restructuring Plan Cues S&P's Default Ratings
PREFERRED HEALTH: Moody's Upgrades Senior Debt Ratings to B3
PRIMECARE MEDICAL: Moody's Upgrades Financial Strength to Ba3
PRINTERS ROW: May Employ the Dykema Gosset PLLC as Counsel
PROGRESSIVE MOLDED: Creditors' Committee Taps Arent Fox as Counsel
QUICKSILVER RESOURCES: Moody's Affirms Ba3 Corporate Family Rating
RANDALL MARTIN: Files Amended Ch. 11 Plan And Disclosure Statement
RECYCLED PAPER: S&P Cuts $120MM Loan & $20MM Facility Rtngs to 'D'
R.H. SIMMONS: Case Summary & 17 Largest Unsecured Creditors
RICHARD PINKSTON: Voluntary Chapter 11 Case Summary
S & A RESTAURANT: Voluntary Chapter 7 Case Summary
S & A RESTAURANT: Bankruptcy Filing Surprises Biz Observers
SCO GROUP: Ordered to Return $2.55MM in Royalties to Novell
SECURITY CAPITAL: Moody's Ca-Rated Preference Shares on Review
SECURITY CAPITAL: S&P Retains 'C' Rating Under Negative Watch
SECURITY CAPITAL: Fitch Junks Ratings After Adverse CDO Losses
SEMGROUP LP: Liquidity Issues Spur SEC's Probe on SemGroup Energy
SEMGROUP LP: BofA Sues Co-Founder Tom Kivisto Over $15MM Loan
SEMGROUP LP: May Hire Kurtzman Carson as Claims and Notice Agent
SEMGROUP LP: Bominflot Wants Stay Lifted to Pursue Payment
SEMGROUP LP: JMA Energy Seeks $3.4 Mil. Payment on Purchased Oil
SHARPER IMAGE: CFO Rebecca Roedell, Counsel James Sander Resign
SHARPER IMAGE: U.S. Trustee Objects to Employment of DJM/Hilco
SKILLSOFT CORP: Moody's Upgrades Rating to B1; Outlook Stable
SOLUTIA INC: Incurs $16MM Net Loss in Quarter Ended June 30, 2008
SOLUTIA INC: ITC Probes Firms for Infringement of Flexys Patent
SOLUTIA INC: Registers 600 Million Stock and Debt Securities
SOLUTIA INC: Uncertainty Looms at Nylon Biz; Exploring Options
SPANSION LLC: S&P Holds 'B' Credit Rating; Changes Outlook to Neg.
SPLIT SECOND: Case Summary & Eight Largest Unsecured Creditors
ST. CHARLES PARISH: S&P Lifts GO Bonds Rating to 'A' from 'B-'
STANDARD PACIFIC: Provides Terms of Transferable Rights Offering
STERIGENICS INT'L: Moody's Affirms B3 CFR; Outlook Stable
STEVE CAVANAUGH: Case Summary & Seven Largest Unsecured Creditors
STOLLE MACHINERY: S&P Rates Proposed $299MM Credit Facilities 'B+'
STONEHEATH RE: A.M. Best $350MM 'bb+' Debt Rating Under Review
TERPHANE HOLDING: Moody's Cuts CFR to Caa2; Revises Outlook to Neg
TRINITY CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors
TRIZETTO GROUP: S&P Assigns 'B' Corp. Credit with Stable Outlook
VANTAGE LOFTS: Wants to Access CapSource's $15 Million DIP Loan
VERTICAL ABS: Fitch Cuts Five Notes Ratings and Removes Neg. Watch
VICORP RESTAURANTS: Wants Plan Filing Period Extended to Oct. 30
VONAGE HOLDINGS: Board Names Marc Lefar as Chief Executive Officer
WCI COMMUNITIES: Analysts See Bankruptcy Filing Next Week
WCI COMMUNITIES: Moody's Downgrades Ratings to Caa3, Ca
WEST PENN ALLEGHENY: Moody's Cuts Bond Rating to Ba3 from Ba2
WHITEHALL JEWELLERS: Committee Taps Moses & Singer as Counsel
WHOLE FOODS: S&P's Rtng Unmoved by Ruling on Wild Oats Acquisition
* Fitch: 2005-2007 Vintage RMBS Performance Falls in Recent Months
* S&P Takes Rating Actions on Various Synthetic CDO Transactions
* S&P: Global Packaging Sector to Stay Pressured the Rest of '08
* Rating Agencies Sued for Giving Municipalities Lower Ratings
* President Bush Signs New Housing Law; Law Takes Effect Oct. 1
* Jefferies Names Merola as Investment Banking Managing Director
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
AB LIQUIDATING: Wants Court to Approve Liquidation Procedures
-------------------------------------------------------------
AB Liquidating Corp., fka Adaptive Broadband Corporation, asks the
the U.S. Bankruptcy Court for the Northern District of California,
San Jose Division, to set a final record date and approve certain
procedures for distributions to shareholders, consistent with the
terms of the company's confirmed liquidating plan. AB Liquidating
anticipates that there will be approximately $3,040,000 available
for immediate distribution to shareholders.
This total excludes proceeds from the settlement of an outstanding
claim against another debtor in bankruptcy that are expected to
further increase distributions to shareholders by approximately
$800,000. The foregoing figures are preliminary estimates only.
AB Liquidating Corp. has requested that the Bankruptcy Court set a
final record date that is 40 days after entry of an order
approving the Motion. The record date will be utilized for the
purpose of determining the identity of shareholders for all
distributions under the Plan.
Headquartered in Sunnyvale, California, AB Liquidating Corp.
fka Adaptive Broadband Corporation provided technology for the
deployment of broadband wireless communication over the Internet.
The company filed for chapter 11 protection on July 26, 2001
(Bankr. N.D. Cal. Case No. 01-53685). David M. Bertenthal, Esq.,
at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP
represents the Debtor in its bankruptcy case. Cheryl Jordan,
Esq., at the Law Offices of Murray and Murray represents the
Official Committee of Unsecured Creditors. The Bankruptcy Court
confirmed the Debtor's chapter 11 Plan on Feb. 28, 2002, and the
Plan took effect on Sept. 6, 2002.
ADVANTA CORP: S&P Affirms 'BB-' LT Counterparty Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on Advanta
Corp. and its subsidiaries, including the 'BB-' long-term
counterparty credit rating on Advanta and the 'BB' long-term
counterparty credit rating on its operating subsidiary, Advanta
Bank Corp. At the same time, the outlook was revised to negative
from stable.
"The outlook revision reflects deterioration in Advanta's asset
quality beyond our expectations, as worsening economic conditions
pressure the company's small business clients," said Standard &
Poor's credit analyst Rian M. Pressman, CFA. For the three months
ended June 30, 2008, annualized net charge-offs as a percent of
average managed receivables were 8.38%, up significantly from
6.43% in the linked quarter and 3.48% in the prior year's
comparable quarter, exceeding S&P's expectations. (Managed
receivables shrank 3.1% on a linked-quarter basis, thus
contributing to the linked-quarter increase.) Managed receivables
30 or more days delinquent have also increased from the comparable
quarter last year, but the rate of increase appears to have
decreased on a linked-quarter basis. At June 30, 2008, 5.67% of
managed receivables were 30 or more days delinquent, up 294 basis
points from the prior year's comparable quarter, but only 37 bps
from the sequential quarter.
As a result, deteriorating asset quality has negatively affected
Advanta's profitability. The company earned $4.0 million in the
quarter; however, this was driven by the sale of 46,000 Class B
MasterCard Shares for $14.2 million, which offset an incremental
$4.5 million credit provision. Advanta has only 27,200 restricted
MasterCard shares remaining, so management's ability to use gains
from the sales of MasterCard shares to offset increased credit
provisions and decreased securitization income will be limited, in
S&P's view.
Similar to most issuers, Advanta's spreads on new asset-backed
issuances have increased, making asset-backed securities market
funding more cost prohibitive. (Advanta last issued ABS in June
2008; however, the company retained the entire issue.) Because
Advanta chose not to reissue some subordinated tranches that
matured in the second quarter, its 'AAA' ABS issuance capacity has
also been diminished and currently approximates $450 million.
However, balance sheet liquidity, including a cash and investment
security balance of $1.8 billion and deposits of $2.1 billion,
remains adequate, especially considering management's expectations
for fewer accounts originated in 2008.
Despite increased losses, Advanta has not triggered the cash-
trapping mechanism in its revolving securitization trust. If the
4.5% initial trigger were to be breached (Advanta currently has a
thin 30 bps excess spread cushion), it would initially need to add
$50 million in cash collateral, a reasonable number considering
current cash balances. (Cash-trapping requirements could increase
as the excess spread shrinks.)
The negative outlook reflects deteriorating economic conditions
and the effect this is having on Advanta's small business
borrowers and profitability. It also reflects current credit
market conditions, which have rendered the ABS markets cost
prohibitive for certain issuers. S&P could lower the rating
because of a combination of constraining factors beyond what S&P
currently anticipates: further asset quality deterioration,
funding capacity issues, cash trapping in Advanta's revolving
securitization trust, weak earnings, and deterioration in capital.
S&P could revise the outlook back to stable if Advanta can
successfully navigate difficult economic and credit market
conditions while maintaining adequate profitability, liquidity,
and capital, all supporting the rating.
AINSWORTH LUMBER: June 30 Balance Sheet Upside-Down by C$110.4 MM
-----------------------------------------------------------------
Ainsworth Lumber Co. Ltd. reported last week its financial results
for the second quarter ended June 30, 2008.
At June 30, 2008, the company's consolidated balance sheet showed
C$1.04 billion in total assets and C$1.15 billion in total
liabilities, resulting in a roughly C$110.4 million shareholders'
deficit.
Net loss for the quarter was C$34.2 million on sales of
C$111.4 million compared to net income of C$27.9 million on sales
of $157.5 million for the same period in 2007. The decrease in
sales is primarily the result of reduced shipment volumes due to
production curtailments.
On a year to date basis, net loss of C$122.4 million represented a
C$127.6 million decline from net income of C$5.2 million for the
six months ended June 30, 2007. The change in net loss is
attributable mainly to a C$118.3 million decrease in the
unrealized foreign exchange gain on long-term debt, a
C$41.9 million increase in tax expense, and financing transaction
costs of C$13.1 million incurred in the first half of 2008.
Sales for the six months ended June 30, 2008, decreased to
C$199.9 million as compared to C$292.6 million in the same period
of 2007.
Cash provided by operations for the quarter was C$369,000 compared
to C$4.5 million in the second quarter of 2007. For the year to
date, cash used in operating activities was C$40.1 million in 2008
compared to C$44.6 million in 2007.
Oriented strand board (OSB) market conditions continue to be
challenging, as the U.S. housing industry, a key driver of OSB
demand, remains in a protracted downturn. U.S. housing starts
continued to decline due to excess housing inventories and the
constriction of credit availability in light of the U.S. mortgage
credit market.
OSB shipment volumes of 485,618 msf in the second quarter of 2008
were 31% lower than in the same period of 2007 as a result of
reduced customer demand and plant closures. For the first six
months of 2008, OSB shipment volumes were 28% lower in 2008
compared to 2007. Production at the company's jointly-owned OSB
facility at High Level, Alberta was indefinitely curtailed as of
Dec. 20, 2007, and the mill remained closed throughout the first
half of 2008.
The company's Cook, Minnesota facility began an indefinite
production curtailment on Jan. 16, 2008. The company's Grande
Prairie, Alberta and 100 Mile, British Columbia OSB facilities
took temporary shutdowns totaling 38 days and 14.5 days of
production time, respectively, during the first quarter of 2008.
In addition, production at the company's Grand Rapids, Minnesota
facility has been indefinitely curtailed since September 2006.
Update on Proposed Recapitalization
On July 29, 2008, the company announced today that it has
successfully completed its previously announced recapitalization
transaction after receiving all necessary court, security holder,
term lender and regulatory approvals.
The Recapitalization became effective as of July 29, 2008. The
recapitalization was overwhelmingly approved on July 24, 2008, at
meetings of the holders of the company's common shares and holders
of its senior unsecured notes. The plan of arrangement giving
effect to the recapitalization was approved by the Supreme Court
of British Columbia on July 25, 2008.
The recapitalization is intended to significantly reduce long-term
debt and annual interest expense, and inject additional cash in
the company. Management believes that the debt reduction and
capital infusion will improve the company's ability to manage its
liquidity and the effects of the ongoing downturn in the U.S.
housing market.
As reported in the Troubled Company Reporter on July 24, 2008, the
recapitalization will accomplish a significant de-levering of
Ainsworths balance sheet. Ainsworths total debt -- consisting of
senior unsecured notes, term loans and equipment and financing
loans -- will be reduced from US$985.0 million -- or
C$1.01 billion -- as at March 31, 2008, to roughly
US$521.0 million or C$536.0 million, reducing annual interest
expense from approximately C$66.0 million to approximately
C$49.0 million. Under the recapitalization, Ainsworth will also
receive a substantial infusion of cash from the issuance of
US$200.0 million aggregate principal amount of new notes.
Going Concern Doubt
Due to the protracted downturn in the OSB market and the
significant long-term appreciation of the Canadian dollar against
the U.S. dollar, the company continued to experience negative
operating margins and net cash outflows on a year to date basis.
As a result, the company says its ability to continue as a going
concern is dependent on obtaining additional financing,
refinancing its capital structure and, ultimately, achieving
profitable operations.
About Ainsworth Lumber
Headquartered in Vancouver, British Columbia, Ainsworth Lumber Co.
Ltd. (TSX: ANS) -- http://www.ainsworth.ca/-- is a manufacturer
of engineered wood products, such as oriented strand board (OSB)
and specialty overlaid plywood. The company owns six OSB
manufacturing facilities, three in Canada, and three in northern
Minnesota.
The company also has a 50% ownership interest in an OSB facility
located in High Level, Alberta. Due to market conditions, the
company is presently operating three OSB facilities in Canada and
one OSB facility in Minnesota.
* * *
As reported by Troubled Company Reporter on July 1, 2008, Moody's
Investors Service assigned 'Caa3' ratings to Ainsworth Lumber Co.
Ltd.'s proposed new senior unsecured debt and upgraded the
company's corporate family rating to 'Caa2' from 'Ca'. The
upgrade reflects the company's announcement of a recapitalization
transaction to convert its existing unsecured notes into equity
and new debt, and the issuance of new debt to enhance liquidity.
AINSWORTH LUMBER: Names 7 Members to Post-Recapitalization Board
----------------------------------------------------------------
In a regulatory filing with the U.S. Securities and Exchange
Commission, Ainsworth Lumber Co. Ltd. disclosed that pursuant to
its recapitalization, these seven individuals will be appointed to
serve on the company's new Board of Directors:
* Robert Chadwick,
* Jay Gurandiano,
* Paul Houston,
* Morley Koffman,
* John Lacey,
* Gordon Lancaster, and
* Jonathan I. Mishkin
Ainsworth said the Recapitalization will become effective pursuant
to the company's Plan of Arrangement. The current Board of
Directors will be replaced by the New Board on the effective date
of the Recapitalization, which is expected to occur by July 29,
2008.
A schedule of the Proposed New Board Nominees Following the
Effective Date of the Recapitalization is available at no charge
at:
http://ResearchArchives.com/t/s?2fe4
As reported by the Troubled Company Reporter on June 23, 2008,
Ainsworth Lumber reached an agreement with its major financial
creditors regarding a recapitalization transaction.
The Recapitalization will accomplish a significant de-levering of
Ainsworth's balance sheet. Ainsworth's total debt -- consisting
of senior unsecured notes, term loans and equipment and financing
loans -- will be reduced from US$985 million -- or C$1,012 million
-- as at March 31, 2008, to roughly US$521 million or
C$536 million, reducing annual interest expense from approximately
C$66 million to approximately C$49 million. Under the
Recapitalization, Ainsworth will also receive a substantial
infusion of cash from the issuance of US$200 million aggregate
principal amount of new notes.
Management believes that the debt reduction and capital infusion
will improve Ainsworth's ability to manage the effects of the
ongoing downturn in the U.S. housing market and its ability to
attract and retain employees, customers and suppliers without
having to pursue other alternatives that could include the sale of
core assets or non-consensual proceedings under creditor
protection legislation. The successful implementation of the
Recapitalization is expected to be a significant positive step in
assisting the company in stabilizing its operations. If the
Recapitalization or another alternative transaction to address the
company's liquidity needs is not completed by the end of July
2008, the company may not be able to pay the interest on certain
series of the existing notes when the interest becomes due.
Under the recapitalization, the company's noteholders will
collectively receive 96% of the new common shares and common
shareholders will receive their pro rata share of 4% of the new
common shares and cashless warrants to receive additional new
common shares representing 8% of the new common shares, on a fully
diluted basis, if the company's equity market capitalization
exceeds USD1.2 billion before the expiry of the warrants.
Pursuant to the modifications, the term of the warrants will
expire after five years of the date of the recapitalization and
existing common shareholders as of the effective date of the
recapitalization will be given the right to receive their pro rata
share of 30.2% of the net proceeds received by the company, if
any, from any final adjudication or settlement of certain
litigation and claims against specified third parties.
Ainsworth also delivered to the U.S. Securities and Exchange
Commission copies of various agreements and other documents
related to the Recapitalization:
-- Noteholder Support Agreement dated June 16, 2008;
-- Backstop Commitment Letter dated June 16, 2008;
-- Shareholder Support Agreement for D. Allen Ainsworth, dated
June 16, 2008;
-- Shareholder Support Agreement for Catherine E. Ainsworth,
dated June 16, 2008;
-- Shareholder Support Agreement for Brian E. Ainsworth, dated
June 16, 2008;
-- Shareholder Support Agreement for Grant Forest Products
Corp., dated June 24, 2008;
-- Management Proxy Circular, dated June 24, 2008; and
-- Material Change Report, dated June 27, 2008
Full-text copies of the documents are available at no charge at:
http://ResearchArchives.com/t/s?2fe9
Issuance of Rollover Notes Due 2015
Pursuant to the Recapitalization, Ainsworth intends to exchange,
in part, US$150,000,000 aggregate principal amount of the
company's 11% Senior Unsecured Notes due 2015 -- Rollover Notes --
for all of Ainsworth's outstanding:
* Senior Unsecured Floating Rate Notes due October 1, 2010;
* 7.25% Senior Unsecured Notes due October 1, 2012;
* Senior Unsecured Floating Rate Notes due April 1, 2013;
* 6.75% Senior Unsecured Notes due March 15, 2014; and
* 6.75% Senior Unsecured Notes due March 15, 2014
Ainsworth is also offering to qualifying noteholders
US$200,000,000 aggregate principal amount of the company's 11%
Senior Unsecured Notes due 2015 on a private placement basis for
cash.
A full-text copy of the Form T-3 Ainsworth filed with the
Securities and Exchange Commission is available at no charge at:
http://ResearchArchives.com/t/s?2fea
About Ainsworth Lumber
Headquartered in Vancouver, British Columbia, Ainsworth Lumber Co.
Ltd. (TSX: ANS) -- http://www.ainsworth.ca/-- is a manufacturer
of engineered wood products, such as oriented strand board (OSB)
and specialty overlaid plywood. The company owns six OSB
manufacturing facilities, three in Canada, and three in northern
Minnesota.
The company also has a 50% ownership interest in an OSB facility
located in High Level, Alberta. Due to market conditions, the
company is presently operating three OSB facilities in Canada and
one OSB facility in Minnesota.
Ainsworth Lumber Co. Ltd.'s consolidated balance sheet at
March 31, 2008, showed C$1.05 billion in total assets and
C$1.12 billion in total liabilities, resulting in a roughly
C$75.2 million total stockholders' deficit.
* * *
As reported by Troubled Company Reporter on July 1, 2008, Moody's
Investors Service assigned 'Caa3' ratings to Ainsworth Lumber Co.
Ltd.'s proposed new senior unsecured debt and upgraded the
company's corporate family rating to 'Caa2' from 'Ca'. The
upgrade reflects the company's announcement of a recapitalization
transaction to convert its existing unsecured notes into equity
and new debt, and the issuance of new debt to enhance liquidity.
Going Concern Doubt
As reported by Troubled Company Reporter on June 18, 2008,
the company believes that there exists reasonable doubt about the
its ability to continue as a going concern because of the
its current liquidity position and forecasted operating cash
flows and capital requirements for the next 12 months.
In addition, the decline in demand for OSB in the U.S. residential
housing market and the significant appreciation of the Canadian
dollar against the U.S. dollar led to negative operating margins.
Under the company's existing long-term and current indebtedness,
over the remainder of 2008 the company must provide for interest
payments of approximately C$62.0 million and principal payments of
C$8.5 million. Under these circumstances, the company has
significant liquidity risk.
ALCATEL-LUCENT SA: Reports EUR1.1 Billion Net Loss for Q2 2008
--------------------------------------------------------------
Alcatel-Lucent S.A. posted EUR1.102 billion in net losses on
EUR4.1 billion in net revenues for the second quarter ended
June 30, 2008.
During the second quarter, the CDMA activity declined at a higher
pace than the company had planned. This was due, to a large
extent, to a strong reduction in the capital expenditure of a key
customer in North America. Although there are new opportunities
in other geographic areas, the uncertainty regarding spending in
North America has led the company to take more cautious mid-term
assumptions in this activity.
This resulted in a goodwill impairment charge of EUR810 million,
which is reflected in the reported net loss of EUR1.102 billion or
EUR0.49 per diluted share for the second quarter.
"Looking beyond the non-cash impairment charge, operationally we
made good progress against our turnaround plan in the second
quarter, delivering top-line and an adjusted operating margin in
line with our expectations," Patricia Russo, CEO, commented.
"First, revenue performance came in at the higher end of our
guidance, posting sequential growth of slightly more than 6%. We
were able to fully absorb the material decline in CDMA, achieving
year-over-year growth of close to 2% at constant Euro/US$ exchange
rate, thanks to the strong growth of our Enterprise and Services
operating segments and good performance in most of our other
carrier activities. Of particular note, GSM/W-CDMA/WiMAX
continued to enjoy strong, double-digit growth year-over-year. In
addition, our activities in convergence grew for the first time
since completing the merger and we saw slight growth in our
wireline activities.
"Second, our adjusted gross margin is in the mid thirties, which
is in line with our overall guidance for the year. Factoring out
the impact of one-time gains, our gross margin increased by 150
basis points year-over-year, reflecting a more stringent pricing
discipline and the impact of our product costs reduction programs.
Sequentially, it declined 90 basis points, in spite of higher
volumes, reflecting to a large extent a negative shift in the
product and geographic mix.
"Finally, we continue to make good progress in reducing our fixed
costs. Our operating expenses declined 8.6% year-over-year and
1.7% sequentially. As a result, we achieved higher adjusted
operating margins in all three business segments, with break-even
performance in the carrier segment and high single-digit operating
margins in the Enterprise and Services segments."
Market and Outlook
"In our outlook for the second quarter and full year, we were
prudent in our view of the telecommunications equipment market due
to the macroeconomic environment and the resulting potential for
lower capital spending in the U.S.," Ms. Russo continued. "Over
the past three months, the global macroeconomic environment has
further deteriorated and the economic slowdown has begun to spread
to Europe. Although not evident yet, we believe this could impact
somewhat the capital expenditure decisions of certain European
customers, especially in fixed access.
"At the same time, we are seeing a stronger-than-expected demand
for GSM/W-CDMA mobile access in emerging markets, especially in
Asia. In addition, we feel positive about our prospects in China,
both in 2G and 3G (including CDMA EV-DO) for the fourth quarter
and next year. Finally, we now see a stronger than initially
expected demand in Services, especially in network operations and
network integration. Against this mixed backdrop, we continue to
anticipate that the global telecommunications equipment and
related services market should be flat in 2008 at constant
currency."
"With approximately half of the company’s revenue in U.S. dollar
or dollar-linked currencies, Alcatel-Lucent reiterates its
previous guidance for the full year 2008 revenue. Expressed in
current Euro rate and due to the reduction in the value of the
dollar since 2007, revenue should be down in the low to mid
single-digit range. The company continues to expect an adjusted
gross margin in the mid thirties and an adjusted operating margin
in the low to mid single-digit range in percentage of revenue in
full year 2008. For the third quarter 2008, Alcatel-Lucent
expects its revenue to be flat to slightly down sequentially,
followed by a strong ramp in the fourth quarter."
Net Debt Position
The net debt position was EUR415 million as of June 30, 2008,
compared with EUR30 million as of March 31, 2008. The increase in
net debt of EUR385 million primarily reflects an increase in non
operating working capital requirements mainly related to the bonus
payments which were concentrated in the second quarter, cash
outflow related to restructuring plans (EUR166 million), our cash
contribution to pensions (EUR112 million) and a slightly higher-
than-anticipated cash income tax payment
(EUR48 million).
Based on the outlook for revenue and adjusted operating margin,
Alcatel-Lucent expects its year-end 2008 net debt to be materially
reduced compared to the level at the end of June 2008.
As of June 30, 2008, Alcatel-Lucent SA had EUR30.94 billion in
total assets, EUR20.98 billion in total liabilities and
EUR9.96 billion in total shareholders' liability.
About Alcatel-Lucent
Headquartered in Paris, France, Alcatel-Lucent S.A. --
http://www.alcatel-lucent.com/-- provides solutions that enable
service providers, enterprises and governments worldwide to
deliver voice, data and video communication services to end
users.
Alcatel-Lucent maintains operations in 130 countries, including,
Austria, Germany, Hungary, Italy, Netherlands, Ireland, Canada,
United States, Costa Rica, Dominican Republic, El Salvador,
Guatemala, Peru, Venezuela, Indonesia, Australia, Brunei and
Cambodia.
* * *
Alcatel-Lucent continues to carry Ba3 Corporate Family and
Senior Debt ratings, Not-Prime for short term debt, as well as
B2 ratings for subordinated debt with negative outlook from
Moody's Investors Service. The ratings were were affirmed in
April 2008.
Alcatel-Lucent's Long-Term Corporate Credit rating and Senior
Unsecured Debt still carry Standard & Poor's Ratings Services'
BB rating. Its Short-Term Corporate Credit rating stands at B.
ALCATEL-LUCENT SA: Chief Executive & Chairman to Quit from Posts
----------------------------------------------------------------
Alcatel-Lucent SA disclosed changes to its leadership and Board of
Directors. The company also announced its quarterly results and
demonstrated improvements to its operational results for the third
straight quarter. The Company reported that it is making steady
progress on the strategy the company laid out last fall.
To pave the way for a fully aligned governance and management
model going forward, the company announced these changes to its
management team and Board of Directors:
* Non-Executive Chairman Serge Tchuruk has decided to step
down on October 1, 2008;
* CEO Pat Russo has decided to step down no later than the
end of the year, and at the Board's request will continue
to run the company until a new CEO is in place to effect a
smooth transition and maintain the continuity of the
company's business;
* The Board will commence a search for a new non-executive
Chairman and CEO immediately;
* The Board is also initiating a process to change the
composition of the Board to a smaller group that will
include new members.
"The merger phase is now behind us. I am proud that Alcatel-
Lucent has become a world leader in a technology which is
transforming our society. It is now time that the company
acquires a personality of its own, independent from its two
predecessors. The Board must also evolve and the Chairman should
give the first example, which I have decided to do," said
Mr. Tchuruk.
"I am very pleased with the progress we are making especially in
light of a difficult market environment," said Ms. Russo. "Our
strategy is taking hold and our results are demonstrating good
operational progress. That said, I believe it is the right time
for me to step down. The company will benefit from new leadership
aligned with a newly composed Board to bring a fresh and
independent perspective that will take Alcatel-Lucent to its next
level of growth and development in a rapidly changing global
market."
"I have every desire to ensure a smooth transition of leadership
within the company and I have informed the Board of my
determination to work closely with them until the end of the year
or sooner if a successor is named, and we are in agreement on this
approach. I have great confidence in Alcatel-Lucent and believe
this to be a company with tremendous potential," added Ms. Russo.
Now that the company has moved beyond the transitional phase of
the merger, the Board has determined to restructure itself in a
way consistent with the company's needs going forward. As part of
this process the Board will reduce the size of its membership over
time while adding several new members with strong industry
expertise. To initiate this process, Henry Schacht announced that
he will resign from the Board immediately believing that, being a
former CEO, he should not remain beyond the transitional stage of
the merger. Mr. Schacht was the CEO of Lucent Technologies prior
to Ms. Russo becoming CEO in January 2002.
About Alcatel-Lucent
Headquartered in Paris, France, Alcatel-Lucent S.A. --
http://www.alcatel-lucent.com/-- provides solutions that enable
service providers, enterprises and governments worldwide to
deliver voice, data and video communication services to end
users.
Alcatel-Lucent maintains operations in 130 countries, including,
Austria, Germany, Hungary, Italy, Netherlands, Ireland, Canada,
United States, Costa Rica, Dominican Republic, El Salvador,
Guatemala, Peru, Venezuela, Indonesia, Australia, Brunei and
Cambodia.
* * *
Alcatel-Lucent continues to carry Ba3 corporate family and
senior debt ratings, not-prime for short term debt, as well as
b2 ratings for subordinated debt with negative outlook from
Moody's Investors Service. The ratings were were affirmed in
April 2008.
Alcatel-Lucent's Long-Term corporate credit rating and senior
unsecured debt still carry Standard & Poor's Ratings Services'
BB rating. Its short-term corporate credit rating stands at B.
ALLEGHENY COUNTY HOSPITAL: S&P Cuts $758MM Bonds Rating to BB-
--------------------------------------------------------------
Fitch Ratings has downgraded West Penn Allegheny Health System's
$758 million outstanding series 2007A bonds (issued by Allegheny
County Hospital Development Authority) to 'BB-' from 'BB'. Fitch
has also placed the bonds on Rating Watch Negative.
The rating downgrade reflects a material reduction in WPAHS'
profitability history and near term expectations, following the
system's announcement today of a $73 million charge against
earnings, the bulk of which constitutes a write-down of patient
accounts receivable. Although WPAHS is in the process of
determining the portion of the adjustment that pertains to fiscal
periods prior to 2008, the adjustment significantly lowers
previously reported profitability and debt service coverage
figures for the 2008 fiscal year just ended, as well as for
earlier fiscal years.
While results have not been released for the year ended June 30,
2008, Fitch expects that if an appropriate portion of the
adjustment were applied to WPAHS' nine month results (period ended
Mar. 31, 2008), it would materially worsen the reported operating
loss of $14.7 million and similarly reduce reported earnings
before interest, depreciation, and amortization of $89.2 million.
Profitability margins and debt service coverage ratios would be
correspondingly affected. An additional concern is the erosion in
unrestricted cash and investments that has occurred since June 30,
2007. Through the nine months ended March 31, 2008, days cash on
hand, as calculated per the system's recent bond indenture,
declined to 55 days from over 80 days.
The Rating Watch Negative reflects the possibility of a further
rating downgrade, following Fitch's analysis of results for the
full fiscal year and of the fiscal 2009 budget, as well as its
review of several financial improvement initiatives currently
being developed and implemented by consultants engaged by the
system's new management team.
Headquartered in Pittsburgh, Pennsylvania, WPAHS is a large,
integrated health system with six hospitals and other related
entities that primarily serve Allegheny County and its five
surrounding counties. WPAHS' flagships are the 665-licensed bed
Allegheny General Hospital and the 512-licensed bed Western
Pennsylvania Hospital. Total revenues in fiscal 2007 were
approximately $1.5 billion. Disclosure to Fitch and to
bondholders has been provided on a quarterly basis through the
nationally recognized municipal securities information
repositories and consists of an in depth management discussion and
analysis, income statement, balance sheet, cash flow statement,
and utilization statistics.
ALLEGHENY COUNTY HOSPITAL: S&P Puts 'BB' Rating Under Neg. Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB' rating on
Allegheny County Hospital Development Authority, Pennsylvania's
bonds, issued for West Penn Allegheny Health System, on
CreditWatch with negative implications pending a meeting with
management in September.
After the meeting, S&P expect, at a minimum, to revise the outlook
to negative from stable, however, the rating could also be lowered
as well. This action affects $758.7 million series 2007A fixed-
rate health system revenue bonds.
"This action reflects significant and unexpected management
turnover, failure to meet financial projections supplied last year
at the time of the system's debt restructuring, and the July 28
announcement that West Penn's financial statements will be
negatively adjusted by $73 million largely due to overstated
accounts receivable," said Standard & Poor's credit analyst
Cynthia Keller Macdonald.
Within the past year, West Penn has experienced turnover in many
key positions at the system level including the CEO as well as the
chief operating officer and chief financial officer. In addition,
there have been changes in leadership at West Pennsylvania
Hospital and Alle-Kiski Medical Center. While these management
changes are not necessarily a negative rating factor, the rapidity
of change and number of key management positions that have turned
over at West Penn, may prove to be disruptive. In addition, there
are likely to be major strategic changes under new leadership,
which S&P will need to evaluate and factor into our rating
decision.
West Penn did not meet stated profitability targets for fiscal
year 2007. In addition, fiscal year 2008 financial performance is
significantly below target with a $14.7 million operating loss
through nine months ended March 31, 2008, compared with a
$10.1 million operating loss through the comparable period in
fiscal year 2007. The original forecast for fiscal year 2008
projected a $21 million gain from operations and a $42.8 million
positive bottom line. Through March 31, 2008, West Penn has
earned $12 million on the bottom line that should generate about
2.3x debt service coverage. More troubling is West Penn's
liquidity, which has dropped by more than half since fiscal 2007
year-end with a slim 36 days' cash on hand available as of
March 31, 2008.
Finally, West Penn announced on Monday that independent
consultants have identified $73 million of negative adjustments
that must be made to its financial statements. Details are not
yet available regarding accounting treatment and which, if any,
fiscal years will be affected in addition to fiscal year 2008.
However, it is clear that West Penn's revenue has been overstated
historically, especially during the past several years as growth
in charity care and denials have not been properly reflected in
net revenue. Management has also hired independent consultants
that are in the midst of developing recommendations for expense
reductions and improved efficiencies in order to return the
organization to profitability. Specific management actions have
not yet been fully formulated, but will also be discussed in
September.
West Penn operates six hospitals and serves a six-county service
area in and around Pittsburgh, Pennsylvania. The system admitted
more than 77,000 inpatients in 2007. Inpatient volumes have
increased during fiscal year 2008, even as the system continues to
face intense competition from 'AA-' rated University of Pittsburgh
Medical Center.
ALL HOMES: Case Summary & Four Largest Unsecured Creditors
----------------------------------------------------------
Debtor: All Homes, LLC
27 Merrick Avenue
Merrick, NY 11566
Bankruptcy Case No.: 08-73979
Related Information: The Debtor's affiliate, PB 60 Corp., filed
for Chapter 11 protection on June 2, 2008
(Bankr. E.D. N.Y. Case No. 08-72867).
Chapter 11 Petition Date: July 25, 2008
Court: Eastern District of New York (Central Islip)
Judge: Robert E. Grossman
Debtor's Counsel: Craig Heller, Esq.
(hellerverdi@aol.com)
Heller & Verdi
1975 Hempstead Turnpike
Suite 209
East Meadow, NY 11554
Tel: (516) 542-9426
Fax: (516) 542-5977
Total Assets: $1,785,000
Total Debts: $2,717,000
Debtor's list of its four largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Intercounty Home Sales Inc. Bank Loan $375,000
c/o Alan Weinreb, Esq.
6800 Jericho Turnpike
Suite 207 West
Syosset, NY 11791
Sam Glass, Esq. Bank Loan $355,000
62 Nichols Court, Suite 302
Hempstead, NY 11550
Amora Homes Bank Loan $550,000
c/o Sam Glass, Esq. Secured:
62 Nichols Court, Suite 302 $325,000
Hempstead, NY 11550 Unsecured:
$225,000
Alert Group Inc. and $206,000
Fleet Holdings LLC
c/o Michale C. Manniello, Esq.
115 Eileen Way, Suite 103A
Syosset, NY 11791
AMERICAN HOME: Sues ATIFI for Alleged Botched Wire Transfers
------------------------------------------------------------
American Home Mortgage Corp., doing business as American Brokers
Conduit, filed a complaint against Attorney's Title Insurance
Fund, Inc., alleging that ATIFI's settlement agent, Velazquez &
Associates, P.A., converted certain wire transfers for AHM Corp.,
for its own use.
ATIFI provides title insurance and related services in connection
with real estate closings, including the issuance of "Closing
Protection Letters" for the benefit of proposed secured lenders
in connection with the real estate transactions.
Emmanuel Antoine applied for a mortgage for the acquisition of
real property known as 1200 Brickell Bay Drive, #1920, Miami
Florida 33130 for $630,000. Mr. Antoine obtained mortgage
funding through AHM Corp. in two mortgages:
Mortgage Principal Amount
-------- ----------------
First Mortgage $504,000
Second Mortgage 120,000
ATIFI engaged Velazquez & Associates as its settlement agent, to
conduct the closing of the Antoine Transaction. Consequently,
Velazquez & Associates issued commitments to insure title through
ATIFI prior to December 18, 2006. ATIFI issued two Closing
Protection Letters for the benefit of AHM Corp., on December 11
and 14, 2006.
In connection with the Antoine Transactions, on December 18,
2006, AHM Corp. sent wire transfers to Velazquez & Associates'
escrow account for $636,281. The wire transfers were received by
Velazquez & Associates.
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington Delaware, tells the U.S. Bankruptcy Court for the
District of Delaware that Velazquez & Associates failed to conduct
and close the Antoine Transaction, in accordance with the
instructions and directions of AHM Corp.
Velazquez & Associates used the wire transfers for purposes
unrelated to the Antoine Transaction and otherwise converted the
wire transfers for its own use or to the benefit of other third
parties unrelated to AHM Corp. or the Antoine Transaction, Ms.
Morgan complains.
Under the terms and provisions of the First and Second Closing
Protection Letters, ATIFI owes AHM Corp. $636,281, for the actual
loss incurred by AHM Corp. as a result of the failures and
defalcations of Velazquez & Associates, Ms. Morgan asserts.
In light of these, AHM Corp. demands judgment in its favor
for $636,281, together with costs, pre- and post-judgment
interest from December 19, 2006, and reasonable attorney's fees.
About American Home
Based in Melville, New York, American Home Mortgage Investment
Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a
mortgage real estate investment trust engaged in the business of
investing in mortgage-backed securities and mortgage loans
resulting from the securitization of residential mortgage loans
originated and serviced by its subsidiaries.
American Home Mortgage and seven affiliates filed for chapter 11
protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047
through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite,
Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt &
Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC
acts as the Debtors' claims and noticing agent. The Official
Committee of Unsecured Creditors selected Hahn & Hessen LLP as
its counsel. As of March 31, 2007, American Home Mortgage's
balance sheet showed total assets of $20,553,935,000, total
liabilities of $19,330,191,000.
(American Home Bankruptcy News, Issue No. 41; Bankruptcy
Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN LAFRANCE: Resolves Contract Issues with FSA, et al.
------------------------------------------------------------
American LaFrance, LLC, entered into separate Court-approved
stipulations with these three parties for the resolution of
certain issues concerning contracts assumption and rejection under
the Third Amended Plan of Reorganization:
1. Freightliner of San Antonio
2. City of Phoenix
3. CCS Holdings, Inc.
The Debtor and Freightliner of San Antonio agree to the Debtor's
assumption, in their entirety, of (a) 60 purchase orders for
condor trucks for the City of San Antonio, (b) a sale and
repurchase agreement for 15 vehicles, and (c) a dealer agreement.
The Debtor will assume 60 condor trucks with Serial Nos. Z69214
through Z69274.
The Parties agree that the trucks bearing Serial Nos. Z69230-
Z69258 and Z69261, excluding Serial No. Z69245, have already been
delivered, paid for, and no longer constitute inventory of the
Debtor. Those Trucks are being assumed in order to protect any
ongoing warranty obligations associated with those vehicles.
The Debtor acknowledges one Dealer Agreement between it and FSA
and one dealer agreement that covers the Debtor's dealership
areas in San Antonio and Laredo, Texas. The Debtor has settled
its prepetition flooring credits with FSA as well as the interim
carrying costs under the Sale and Repurchase Agreement as of
April 23, 2008. The postpetition Interim Carrying Costs that
accrued after April 23 will be cured by the Debtor by assuming
the Agreement. FSA reserves the right to assert and settle the
cure cost.
Under the FSA Stipulation, all warranty liabilities are being
assumed under the Plan and all asserted cure costs are withdrawn
by FSA. As FSA intends to order 60 additional chassis for the
City of San Antonio, FSA will use its best efforts to maximize
the price increase necessary for the Debtor to deliver the order
and incur a profit. FSA avers that it will not add additional
chassis markup to the order.
The Debtor and the City of Phoenix also stipulated that the
Debtor agree to:
(a) complete, no later than December 31, 2008, all necessary
modifications to the CAFS shaft and resolve other service
issues on fire pumper trucks already in the Phoenix fleet
according to a schedule to be developed in conjunction
with Phoenix Fire Shop personnel;
(b) deliver to the City the remaining trucks and extend the
standard three-year warranty on the remaining trucks to
six years; and
(c) cancel delivery of the trucks bearing VIN Nos. Z37010,
Z37014, Z37015, and Z68273.
Upon fulfillment of the Debtor's obligations, the City agree to:
(a) pay the full contract price for $369,192 for the truck
bearing VIN No. 531065;
(b) purchase at full contract price pegged at $372,884 per
truck four reserve trucks already in the City's possession
bearing Phoenix Vin Nos. 731014/X36033, 731015/X36035,
731016/X36036, and 731017/X36037;
(c) contingent upon final inspection, accept delivery of and
pay full contract price for the remaining trucks; and
(d) waive any and all claims against the Debtor arising from
late delivery of the Trucks.
Moreover, the Debtor and CCS Holdings, Inc., agree to extend the
time for the Debtor to determine whether to assume or reject its
sublease agreement with CCS. By July 31, 2008, the Debtor will
have either (i) assumed the Sublease, (ii) located a suitable
subtenant for the Sublease and thus assume it, or (iii) reject
the Sublease.
Pending approval by the U.S. Bankruptcy Court for the District of
Delaware, the City of Billingham and the Debtor agree to a
modification of the automatic stay for the City to use, sell or
dispose a customer pumper truck and apply the proceeds from the
Truck to the City's asserted claims in full satisfaction of the
Claims. To recall, the City has refused to accept the delivery of
the Truck it purchased from the Debtor for $362,408 for alleged
defects. However, the Debtor disputed the City's revocation and
refused to refund the $362,408, which led to the City's assertion
of a secured claim for $200,000 and an unsecured claim for
$206,152.
Headquartered in Summerville, South Carolina, American LaFrance
LLC -- http://www.americanlafrance.com/-- is one of the
oldest fire apparatus manufacturers and one of the top six
suppliers of emergency vehicles in North America. The company
filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del.
Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers,
Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead
Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey,
Branzburg & Ellers LLP, are the Debtor's proposed local counsel.
Pepper Hamilton, LLP is the proposed counsel of the Official
Committee of Unsecured Creditors. In its schedules of assets and
debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in
total assets and $89,065,038 in total debts.
American LaFrance's Third Amended Plan of Reorganization became
effective July 23, 2008.
(American LaFrance Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
AMERISOURCEBERGEN CORP: Moody's Raises Ba1 Debt Rating
------------------------------------------------------
Moody's Investors Service upgraded the senior unsecured debt
ratings of AmerisourceBergen Corporation (ABC) to Baa3 from Ba1.
The rating outlook is stable. At the same time, Moody's withdrew
the company's Ba1 Corporate Family Rating, the Ba1 Probability of
Default Rating, the SGL-1 rating and the LGD assignments. This
concludes Moody's rating review that was initiated on January 29,
2008.
Diana Lee, a Senior Credit Officer at Moody's said, "ABC's rating
upgrade is based on Moody's expectation that management will
adhere to a conservative acquisition strategy, improve margins and
sustain credit ratios that are consistent with an investment grade
rating." We expect ABC to continue buying back shares as well as
pursue moderate-sized acquisitions, but fund these initiatives
largely with excess cash.
The Baa3 ratings are also supported by our expectation that for
fiscal 2008, free cash flow (after dividends) will come in at $400
million to $475 million, although much of this will be generated
during the fourth quarter because of very high working capital
needs during the first half of fiscal 2008. The upgrade further
anticipates that ABC will maintain sufficient liquidity to fund
its operating needs, especially as the combination of lower
inventory levels and moderate cash balances now result in higher
peak intra-period working capital requirements.
In order to sustain ongoing margin expansion, we believe that
management will need to continue its focus on cost reductions,
growth in its specialty division as well as the purchase of more
generic drugs for its customers.
Ratings upgraded:
AmerisourceBergen Corporation:
Senior unsecured notes to Baa3 from Ba1
Ratings withdrawn:
AmerisourceBergen Corporation:
Ba1 Corporate Family Rating
Ba1 PDR
SGL-1 Speculative Grade Liquidity Rating
AmerisourceBergen Corporation, headquartered in Chesterbrook, PA,
is one of the nation's leading wholesale distributors of
pharmaceutical products and related services.
AMERINET LLC: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: AmeriNet, LLC
3111 West Martin Luther King Boulevard
Suite 100
Tampa, FL 33607
Bankruptcy Case No.: 08-11058
Type of Business: The Debtor is an electronic transaction
processor focusing on electronic funds
transfer, commonly known as eChecks. Through
its extended architecture, the Debtor offers its
clients access to a variety of resources
including originating banks, positive and
negative files, and consumer ID validation.
See http://www.debit-it.com/
Chapter 11 Petition Date: July 25, 2008
Court: Middle District of Florida (Tampa)
Judge: Catherine Peek McEwen
Debtor's Counsel: Lynn Welter Sherman, Esq.
(lsherman@hwhlaw.com)
Hill Ward & Henderson P.A.
P.O. Box 2231
Tampa, FL 33601
Tel: (813) 221-3900
Fax: (813) 221-2900
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
Debtor's list of its 20 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Vesta Corporation Trade Debt $3,151,119
11950 Southwest Garden Place
Portland, OR 97223
Duke University Trade Debt $558,321
705 Broad Street
P.O. Box 90040
Durham, NC 27712
Midwest Family Mutual Trade Debt $206,068
Insurance Company
3033 Campus Drive
Plymouth, MN 55441
University of Wisconsin Trade Debt $179,517
La Crosse
Prestonwood Baptist Church Trade Debt $140,845
Verotel Merchant Services B.V. Trade Debt $126,786
Gateway Church Southlake Texas Trade Debt $122,108
FINCO Premium Finance Co. Trade Debt $104,145
Internet Billing Trade Debt $88,424
Internet Payment Solutions Inc. Trade Debt $74,127
Victory Outreach Trade Debt $64,157
Keynetics Trade Debt $58,159
Commonwealth Trade Debt $54,167
Liberty Wireless Trade Debt $50,146
Nautilus Inc. (PSE) Trade Debt $45,824
SouthEast Christian Church of Trade Debt $41,541
Jefferson County
Iuniverse Trade Debt $32,451
Louisiana State University Trade Debt $31,737
Precis Trade Debt $31,563
Dixie Sporting Goods Co., Inc. Trade Debt $29,609
ARCAP 2005-1: S&P Keeps Two Low-B Ratings Under Negative Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on two
classes from ARCap 2005-1 Resecuritization Trust on CreditWatch
with negative implications. Concurrently, the ratings on three
other classes remain on CreditWatch with negative implications,
where they were placed on May 28, 2008.
The Creditwatch placements follow a preliminary analysis of the
transaction, which included an examination of the current credit
characteristics of the assets in the pool. The commercial
mortgage-backed securities that collateralize the transaction have
a weighted average rating of 'B'. The preliminary analysis
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.
Standard & Poor's will the resolve the CreditWatch negative
placements following a full analysis of the transaction.
Ratings Placed on Creditwatch Negative
ARCap 2005-1 Resecuritization Trust
Collateralized debt obligation certificates
Rating
------
Class To From
----- -- ----
G BBB+/Watch Neg BBB+
H BBB/Watch Neg BBB
Ratings Remaining on Creditwatch Negative
ARCap 2005-1 Resecuritization Trust
Collateralized debt obligation certificate
Class Rating
----- ------
J BBB-/Watch Neg
K BB/Watch Neg
L B/Watch Neg
BALDWIN 2006: Moody's Downgrades $35MM Notes to Ba2
---------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible further downgrade the rating on these notes issued by
Baldwin 2006 Segregated Portfolio:
Class Description: U.S. $35,000,000 Variable Floating Rate Notes
Due 2046
Prior Rating: A2, on review for possible downgrade
Current Rating: Ba2, on review for possible downgrade
Class Description: U.S. $25,500,000 Variable Floating Rate Notes
Due 2046
Prior Rating: Baa2, on review for possible downgrade
Current Rating: B3, on review for possible downgrade
Class Description: U.S. $18,000,000 Variable Floating Rate Notes
Due 2046
Prior Rating: Baa3, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
Class Description: U.S. $51,000,000 Variable Floating Rate Notes
Due 2038
Prior Rating: Ba1, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
Class Description: U.S. $7,000,000 Variable Floating Rate Notes
Due 2046
Prior Rating: Ba2, on review for possible downgrade
Current Rating: Caa3, on review for possible downgrade
Class Description: U.S. $15,000,000 Class A Variable Floating Rate
Notes Due 2046
Prior Rating: Ba2, on review for possible downgrade
Current Rating: Caa3, on review for possible downgrade
Class Description: U.S. $15,000,000 Variable Floating Rate Notes
Due 2046, consisting of Class A-1 and Class A-2
Class A-1:
Prior Rating: Baa3, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
Class A-2:
Prior Rating: Ba1, on review for possible downgrade
Current Rating: Caa3, on review for possible downgrade
According to Moody's, the rating action reflects increased
deterioration in the credit quality of the underlying portfolio.
BHM TECHNOLOGIES: Court Approves Gordon Brothers as Appraisers
--------------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Michigan approved the application of BHM Technologies Holdings,
Inc. and its debtor-subsidiaries to employ Gordon Brothers Assets
Advisors, LLC, as appraisers in their Chapter 11 cases. The Court
ordered that Gordon Brothers will be compensated in accordance
with the Retention Agreement and will submit a final fee
application.
Thomas Scotti, managing director and chief operating officer of
Gordon Brothers in Boston, Massachusetts, informs the Court that
the firm conducted a lengthy conflicts analysis process to
determine whether it had any conflicts or other relationships that
might cause it not to be disinterested or to hold or represent an
interest adverse to the Debtors' estates.
Mr. Scotti says that neither he, the company, nor any of its
officers or directors insofar as he has been able to ascertain,
has any connection with parties-in-interest not identified in its
original disclosure.
The Debtor's Official Committee of Unsecured Creditors raised
limited objections, including:
(i) any proposal that would allow the firm not to maintain
records of time spent for its professional services
rendered; and
(ii) any proposal that would exempt Gordon from submitting
interim and final fee applications pursuant to Section 327
of the Bankruptcy Code.
Paul R. Hage, Esq., at Jaffe Raitt Heuer & Weiss, P.C., in
Southfield Michigan, relates the Committee is in the process of
reviewing the requested fees of Gordon. Pending the review, the
Committee reserves the right to object to the reasonableness of
those fees.
Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc.--
http://www.browncorp.com/-- manufactures and sells automobile
parts including air bags and electrical systems. It has
manufacturing facilites in Mexico and operates under Brown Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D.
Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay
Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R.
Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
BHM TECHNOLOGIES: Court Approves Gaiatech as Environ. Advisors
--------------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Michigan approved the application of BHM Technologies Holdings,
Inc. and its debtor-subsidiaries to hire GaiaTech Incorporated as
environmental consultant in their Chapter 11 cases.
The Official Committee of Unsecured Creditors opposes the
retention of GaiaTech to the extent it allows the firm to (i) not
bill the Debtors by the hour, and (ii) not to file interim and
final fee applications.
Paul R. Hage, Esq., at Jaffe Raitt Heuer & Weiss, P.C., in
Southfield Michigan, adds the Committee is in the process of
reviewing the requested fees of GaiaTech, and pending the review,
reserves the right to object to the reasonableness of the fees.
Meanwhile, Christer L. Setterdahl, senior vice president of
GaiaTech Incorporated, in Chicago, Illinois, has submitted to the
Court a declaration asserting that the firm has conducted a
lengthy conflicts analysis process to determine whether it had
any conflicts or other relationships that might cause it not to
be disinterested or to hold or represent an interest adverse to
the Debtor's estates.
To check and clear potential conflicts of interest, the firm
reviewed its client relationships to determine whether it had any
relationships with any of the parties included in a BHM or BHM
related schedule or any party who is entitled to notice in any of
the BHM cases.
Ms. Setterdahl says that based on her review, neither she, the
Company, nor any of its officers or directors insofar as I have
been able to ascertain, has any connection with the Additional
Parties-in-Interest, except that the Company has previously been
engaged to perform certain services in wholly unrelated matters
Fairfiled MFG Co., Inc., Guardian, Industrial Control Repair,
Jackson Metal Services, JFC, and PSC Fabricating, each of which
is a party-in-interest in the cases.
Ms. Setterdahl clarifies to the Committee that the firm will file
a final fee application setting forth, in detail, a description
of work performed, a description of payments received from the
Debtors for its work and a detailed accounting of expenses.
Headquartered in Ionia, Michigan, BHM Technologies Holdings Inc.--
http://www.browncorp.com/-- manufactures and sells automobile
parts including air bags and electrical systems. It has
manufacturing facilites in Mexico and operates under Brown Corp.
BHM Technologies Holdings, Inc. and 14 affiliates filed separate
voluntary petitions under Chapter 11 on May 19, 2008 (Bankr. W.D.
Mich. Lead Case No. 08-04413). Hannah Mufson McCollum, Esq., Kay
Standridge Kress, Esq., Robert S. Hertzberg, Esq., and Leon R.
Barson, Esq. of Pepper Hamilton LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
bankruptcy, it listed estimated assets and debts to be both
between US$100 million and US$500 million.
The Debtors have until Sept. 16, 2008, to exclusively file their
bankruptcy plan. (BHM Technologies Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
BIO-KEY INTERNATIONAL: Earns $168,000 in 2008 Second Quarter
------------------------------------------------------------
On July 28, 2008, BIO-key International Inc. disclosed its
financial results for the second quarter ended June 30, 2008.
BIO-key International reported net income of $168,000 for the
quarter ended June 30, 2008, compared to a net loss of $915,000
for the quarter ended March 31, 2008.
Total revenue from continuing operations for the quarter ended
June 30, 2008, was $3.6 million, an increase of 40.9% from the
$2.5 million reported for the quarter ended March 31, 2008. The
increase in revenues during the second quarter of 2008 was
primarily driven by strong and record growth in BIO-key's
Biometrics business.
For the quarter ended June 30, 2008, Biometric revenues were
$1.2 million compared to $353,000 in the previous quarter.
Revenues from BIO-key's Law Enforcement business increased 7.8% to
$2.4 million in the second quarter compared to $2.2 million in the
first quarter of 2008.
In commenting on the quarter's performance, Tom Colatosti, BIO-key
chairman said, "These financial results are a milestone event for
the company. Indeed, within our emerging industry, few of our
peers can match our achievement of GAAP profitability. Our
results reflect the efficacy of our strategy, the superiority of
our technology, the rising market interest in biometrics and
mobile solutions and the commitment of our people."
BIO-key's gross margin for the second quarter of 2008 was 88.2%
compared to 82.6% for the previous quarter. The increase in gross
margin was primarily attributable to an increase in the mix of
biometric revenues reflecting the software license model of the
biometrics business. Operating expenses from continuing
operations for the second quarter of 2008 decreased by 5.8% to
$2.9 million compared to the quarter ended March 31, 2008.
Six Months Results
Total revenue from continuing operations for the six months ended
June 30, 2008, increased 18.2% to $6.1 million from the
corresponding period in 2007.
BIO-key's net loss for the six months ended June 30, 2008, was
approximately $700,000 compared to net income of approximately
$800,000 for the six months ended June 30, 2007. Net income in
2007 included a gain of $4.1 million as a result of the sale of
the company's Fire/EMS Services division to ZOLL Data Systems.
Consolidated cash and cash equivalents at June 30, 2008, was
$600,000.
About BIO-key International
Headquartered in Wall, New Jersey, BIO-key International Inc. (OTC
BB: BKYI) -- http://www.bio-key.com/-- develops and delivers
advanced identification solutions and information services to law
enforcement departments, public safety agencies, government and
private sector customers.
BIO-key International Inc.'s consolidated balance sheet at
March 31, 2008, showed $12.6 million in total assets, $8.9 million
in total liabilities, and $6.9 million in redeemable convertible
preferred stock, resulting in a roughly $3.3 million stockholders'
deficit.
Going Concern Doubt
Carlin, Charron, & Rosen LLP, in Westborough, Massachusetts,
expressed substantial doubt about BIO-key International 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
substantial net losses in recent years, and accumulated deficit at
Dec. 31, 2007.
BUILDING MATERIALS: In Talks with Lenders to Get Covenant Waivers
-----------------------------------------------------------------
Building Materials Holding Corporation has been discussing with
its lenders for a temporary waiver of financial covenants
contained in the company's credit facility, in order to preserve
access to liquidity under the credit facility, and an amendment to
the credit facility to better reflect market conditions.
The company disclosed that based on preliminary evaluation of
financial information for its second quarter ended June 30, 2008,
it was out of compliance with financial covenants contained in the
company's credit facility relating to minimum net worth and
minimum earnings before interest, taxes, depreciation and
amortization. Failure to comply with these covenants constitutes
an event of default under the credit facility. As a result, the
lenders under the credit facility will have the right to cause all
amounts borrowed to become due and payable immediately and cease
further borrowings by the company under the credit facility.
The company related that significant and ongoing correction in
single-family housing starts well as costs associated with closing
underperforming business units has negatively affected the
company's operating performance, which is the primary determinant
of covenant compliance.
There is no assurance these negotiations will result in a waiver
and an amendment acceptable to BMHC and the lenders. However,
BMHC expects that it will reach agreement with its lenders on both
the appropriate waiver and the amendment in a timely manner and
that its business operations will not be affected.
As of July 28, 2008, there was $29 million outstanding on the
revolver and $340 million outstanding on the term loan.
About Building Materials Holding Corporation
Based in San Francisco, California, Building Materials Holding
Corporation (NYSE:BLG) -- http://www.bmhc.com-- provides
residential construction services and building products to
professional homebuilders and contractors in western and southern
regions of the United States. It operates through two business
segments: SelectBuild and BMC West. SelectBuild provides framing
and other construction services to high-volume homebuilders in key
markets. BMC West markets and sells building materials,
manufactures building components and provides construction
services to professional builders and contractors through a
network of 41 distribution facilities and 60 manufacturing
facilities. It provides construction services and building
products in 16 single-family residential construction markets. In
November 2006, SelectBuild acquired the remaining 49% interest in
BBP companies. In March 2007, BMHC's subsidiary, SelectBuild
Construction Inc., acquired the remaining 27% of Riggs Plumbing
LLC.
Lenders Reduces Amount and Maturity of Credit Facility
As reported in the Troubled company Reporter on March 5, 2008,
Building Materials reached an agreement to amend its senior
secured credit facility as:
(1) the company's revolving line of credit was reduced to
$200,000,000 -- from $500,000,000, the revolver matures
on Nov. 10, 2011; and
(2) the maturity of the company's term loan was shortened to
Nov. 10, 2011 -- from Nov. 10, 2013.
Wells Fargo Bank and J.P. Morgan Securities acted as Joint Lead
Arrangers and Joint Book Managers and Wells Fargo Bank served as
Administrative Agent for the transaction.
* * *
As reported in the Troubled Company Reporter on May 23, 2008,
Moody's Investors Service lowered the ratings of Building
Materials Holding Corporation, including its corporate family
rating to B3 from B2, its probability-of-default rating to Caa1
from B3, and its first-lien bank credit facility rating to B3
(LGD-3, 32%) from B2 (LGD-3, 39%). The ratings outlook remains
negative.
BUNGE LTD: Moody's Changes to Stable Outlook on Ba1 Rating
----------------------------------------------------------
Moody's Investors Service changed the outlook for Bunge Ltd.'s
long-term debt to stable from negative, including the guaranteed
debt of subsidiaries rated Baa2; and the preferred stock of Bunge
Ltd., rated Ba1. The rating outlook for the senior long-term debt
of Corn Products International, Inc., rated Baa2, also was changed
to stable from negative. The stabilized rating outlook is in
response to Bunge's improving earnings and cash flow profile, the
expected operating and financial benefits from its pending
acquisition of Corn Products, and an adequate approach to
liquidity management, despite a significant increase in debt
levels associated with rising working capital requirements.
Bunge's earnings and cash flows, as well as fixed charge coverage
measures, have reached record levels over the past year, driven
primarily by improved agribusiness and fertilizer results. In the
first half of 2008, earnings and cash flow before changes in
working capital benefited from stronger margins in agribusiness
and improved fertilizer profitability stemming from record high
commodity prices for soybeans and corn, which have doubled in the
past year; an 8% increase (last twelve months) in overall
commodity volumes, led by agribusiness and food products; and a
rebound in the Brazilian farm economy and strong demand for
fertilizer. Crush margins in oilseed processing have risen, and
price increases have been sustained in Bunge's wheat milling and
edible oils operations, which should help offset higher input
costs.
In addition, the pending acquisition of Corn Products will be
favorable to Bunge's operational and financial position, adding a
strong presence in the corn value chain, broader geographic and
product line diversification, and more than $4 billion of equity
to the combined balance sheet based on the equity financing. Going
into the second half of 2008, a strong performance can be expected
for Bunge, although soybean and corn prices have recently declined
modestly, which could adversely affect fertilizer operations.
However, working capital carrying costs, rising energy costs, and
a potential slow down in demand by agribusiness customers in
response to rising prices could have a negative impact on results.
Despite the benefit of stronger earnings and cash flow coverages,
Bunge's merchandising and processing operations are highly working
capital intensive, particularly in rising price markets, requiring
financing for inventories and collateral posting to meet margin
calls on its futures hedging activities. As a result, the
company's cash flow from operations after working capital changes
has been consistently negative. Total debt has increased
significantly, rising more than $2 billion since the end of 2006.
As such, working capital management will continue to be a
challenge for Bunge.
At the same time, Bunge's readily marketable inventories (RMI)
have increased in value, and the company's core debt has remained
fairly steady, excluding working capital-related borrowings.
Moody's analysis recognizes that RMIs provide liquidity support
and that higher working capital needs will reverse and should
self-liquidate in the event of a decline in commodity prices and
reduced merchandising opportunities, as has happened in the past.
>From a leverage perspective, RMIs can also be viewed a providing
some partial offset to rising debt levels and financial leverage.
Moody's will continue to analyze Bunge's financial leverage both
before and after an adjustment for RMIs, the latter at an ongoing
level of 50% of its total disclosed RMIs. A haircut to total
disclosed RMIs as a debt offset is appropriate, given the
volatility of commodity prices and cash flows, the need for
inventories in Bunge's core oilseed processing operations,
changing working capital needs, and uncertainty over the timing
and realized values in orderly liquidation scenarios.
In light of market volatility and high working capital demands,
backup liquidity will remain a key element of Bunge's investment
grade profile. Moody's believes that Bunge manages its liquidity
adequately, primarily via a group of committed bank credit
facilities sized to meet margin calls and other large stress
liquidity events, even as it benefits from the asset support
provided by its RMIs. However, these facilities have
conditionality features that could affect access to liquidity in
adverse situations. In addition, changing market and working
capital demands, particularly when commodity prices rise, could
challenge the company's ability to access new funding sources and
expand its merchandising and processing franchises. Bunge will
have to stay out in front of these rising requirements. To date,
the company has continued to successfully access new liquidity,
including $950 million in new three-year financings during the
first quarter of 2008. In that regard, continued discipline in
managing the level of its merchandising activities and access to
alternative liquidity, as well as adverse liquidity events, could
all be drivers in future outlook or rating changes for Bunge.
Headquartered in White Plains, New York, Bunge Ltd. is a leading
global agribusiness company with operations primarily in commodity
grain processing and fertilizer production.
BUTCHER BOY: Case Summary & 16 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Butcher Boy Meat, Deli & Catering, Inc.
1073 Rock Boulevard
Sparks, NV 89431
Bankruptcy Case No.: 08-51266
Type of Business: The Debtor retails food and meat products.
See http://www.butcherboy.us/
Chapter 11 Petition Date: July 25, 2008
Court: District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Stephen R. Harris, Esq.
(steve@renolaw.biz)
Belding Harris & Petroni, Ltd.
417 West Plumb Lane
Reno, NV 89509
Tel: (775) 786-7600
Fax: (775) 786-7764
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
Debtor's list of its 16 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Calvada Food Sales Goods & Services $199,038
950 Southern Way
Sparks, NV 89431
U.S. Foodservice Goods & Services $185,738
850 North Hills Boulevard
Reno, NV 89506
American Express Litigation $107,596
P.O. Box 360001
Fort Lauderdale, FL 33336-0001
Bank of America Credit Line $97,473
Pacific Seafood Goods & Services $93,527
Sysco - Sacramento Goods & Services $85,913
Wells Fargo Credit Line $70,263
Capital One Credit Line $64,462
Western Nevada Cattle Feeders Goods & Services $57,679
Sierra Pacific Power Co. Goods & Services $24,373
Chase Bank Credit Line $43,167
Sierra Meat Co. Goods & Services $18,981
Ribeiro Companies Lease Payments $15,125
Camelot Party Rentals Goods & Services $14,587
St. Mary's Health Plans Goods & Services $13,787
Bonanza Produce Co. Goods & Services $12,524
CFM CORP: Sells Operations and Major Assets to Monessen Hearth
--------------------------------------------------------------
Monessen Hearth Systems Company acquired the key assets of CFM
Corporation, including the Vermont Castings and Majestic
Fireplaces brands.
The asset purchase agreement was accepted by CFM Corporation and
approved by U.S. courts on June 30, 2008, and Canadian courts on
July 3, 2008. CFM Corporation's U.S. and Canadian operations have
been under creditor protection since April 9, 2008, when
protective orders were granted under Canada's Companies' Creditors
Arrangement Act and under Chapter 11 of the U.S. Bankruptcy Code.
CFM Corporation has continued to carry on business during the
restructuring period.
Under the terms of the purchase agreement, MHSC will acquire CFM
Corporation's operations and assets in Bethel, Vermont and
Randolph, Vermont. The assets purchased include plants,
machinery, equipment, receivables, inventory, certain contracts
and intellectual property, among other specific items. MHSC also
acquires all shares held in the capital of CFM Mexico.
"We are very excited to be adding the Vermont Castings and
Majestic lines to our extensive selection of fireplace and hearth
products," Dave Barrett, president and CEO of MHSC, said. "These
brands are exceptionally well-respected in the marketplace, and
have a loyal following among distributors, dealers, retailers and
consumers."
The acquisition by MHSC will ensure these two well-established
brand lines will continue to be offered to their loyal customer
bases.
About Monessen Hearth Systems Company
Based in Paris, Kentucky, Monessen Hearth Systems Company is a
North American supplier of fireplaces, stoves, hearths and related
remote technology products. MHSC manufactures a complete series
of Direct Vent, B-Vent, Vent-Free and Wood Burning products,
including log sets, fireplaces, inserts and stoves. Established
in 1993, MHSC's four brands include: Martin Hearth & Heating;
Monessen; Lexington Forge; and Ambient Technologies. MHSC's
flagship 280,000 sq. ft. manufacturing facility employs over
350 people.
About CFM Corporation
Headquartered in Mississauga, Ontario, CFM Corporation --
http://www.cfmcorp.com/-- fka CFM Majestic takes its business to
hearth. The company makes hearth-related products for new homes
and remodeling jobs. It offers gas and wood-burning fireplaces,
freestanding stoves, gas log sets, and space heaters. Brands
include Majestic Fireplaces and Vermont Castings. CFM also makes
barbecues and related items and outdoor garden accessories. The
company imports indoor and outdoor space heaters from South Korea.
CFM sells its products to utility companies, builders, remodelers,
and retailers. Facing a cash crunch, CFM was acquired by the
Ontario Teachers' Pension Plan in 2005.
CHRYSLER LLC: Fitch Junks Rating on Retail Financing Restriction
----------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating of Chrysler
LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The
downgrade reflects Chrysler's restricted access to economic retail
financing for its vehicles, which is expected to result in a
further step-down in retail volumes. Lack of competitive
financing is also expected to result in more costly subvention
payments and other forms of sales incentives. Fitch is also
concerned with the state of the securitization market and the
ability of the automakers to access this market on an economic
basis over the near term, given the steep drop in residual values,
higher default rates, higher loss severity being experienced and
jittery capital markets.
Chrysler Financial is currently in the midst of renewing its
financing facilities. The higher costs associated with any
renewal will make it more challenging to provide competitive and
economic financing of retail sales. Given the challenges in the
bank, auto and capital markets, it is unlikely that third-party
financing will step in to fully replace lost volumes. Higher
sales incentives are also unlikely to close this gap, resulting in
lower production volumes at Chrysler.
Fitch expects that Chrysler's liquidity will remain adequate for
the next 12 months, and the company has moved aggressively to
reduce its fixed cost structure. However, the rapid decline in
industry sales volumes, coupled with the continuing steep rise in
commodity prices, will continue to result in negative cash flow at
least through 2009. In the event that 2009 industry volumes
remain flat or deteriorate versus 2008, Fitch expects that
Chrysler could reach minimum required levels to finance ongoing
operations in the second half of 2009. This could be accelerated
in the event that suppliers or retail customers become concerned
with Chrysler's financial condition and restrict trade credit or
reduce retail purchases. Liquidity was recently boosted by a
$2 billion term loan, but further financing is unlikely and any
asset divestitures are limited.
Chrysler's sales volumes have plummeted in 2008, reflecting weak
economic conditions, a product lineup that remains misaligned with
market demand, and strategic efforts to reduce inventories and
daily rental volumes. New products, including a refreshed minivan
lineup and the Dodge Journey, have been insufficient to offset
industry conditions. Chrysler should benefit from the re-
introduction of the Dodge Ram in late 2008, but recessionary
conditions in the housing market and high gas prices will limit
the benefits of this re-launch until the housing market recovers.
Chrysler continues to experience strong growth in exports.
Chrysler's pipeline over the near term is relatively modest, and
the company's product lineup will lag the industry's shift to
smaller, fuel efficient vehicles. Chrysler's limited financial
resources represent a distinct competitive disadvantage over the
near term as the industry experiences a period of rapid product
migration and technological change. Alliances are expected to
remain a key strategic effort as Chrysler seeks to leverage its
tangible and intangible assets, and reduce capital investment.
Fitch has downgraded Chrysler as:
-- IDR to 'CCC' from 'B-';
-- Senior secured first-lien bank loan to 'B/RR1' from
'BB-/RR1';
-- Senior secured second-lien bank loan to 'CC/RR6' from
'CCC/RR6'.
CLEAR CHANNEL: Completes $24 Billion Merger Deal with CC Media
--------------------------------------------------------------
Clear Channel Communications, Inc. disclosed the completion of a
merger, on July 30, 2008, with an indirect wholly owned subsidiary
of CC Media Holdings, Inc., a corporation formed by a private
equity group co-led by Bain Capital Partners, LLC and Thomas H.
Lee Partners, L.P. The total transaction is valued at
approximately $24 billion.
As a result of the merger, which was approved at a special
shareholders meeting held on July 24, 2008, Clear Channel's
shareholders are entitled to receive either $36.00 in cash,
without interest, or one share of CC Media Class A common stock
for each share of Clear Channel common stock held. The private
equity group has informed Clear Channel that CC Media will not
issue any shares of additional equity consideration in exchange
for shares of Clear Channel for which shareholders have elected to
receive the cash consideration.
"Today is a great day for our loyal and patient shareholders and,
importantly, puts our company in the financial and operational
position to continue to lead beneficial change in both of our core
businesses. We are deeply grateful to our loyal employees who
have remained focused and generated terrific results through their
hard work and dedication," Mark Mays, Chief Executive Officer of
Clear Channel Communications, Inc., said.
"We are pleased to have closed the acquisition of Clear Channel in
partnership with Bain Capital Partners, the Clear Channel
management team and major public shareholders such as Highfields
Capital Management and Abrams Capital," Scott Sperling, Co-
President of Thomas H. Lee Partners, L.P. said. "Clear Channel's
strong leadership position in the radio and outdoor advertising
business provides advertisers with an unparalleled platform from
which to cost effectively reach their target audiences locally and
nationwide. We look forward to working with our management
partners to continue building this great company."
"We are very happy to have completed the purchase of Clear
Channel," John Connaughton, a Managing Director at Bain Capital,
added. "We continue to be impressed with the company's strong
management team and its leadership position across its markets and
media formats. We look forward to working with Thomas H. Lee
Partners, Clear Channel management, and major public shareholders
such as Highfields Capital Management and Abrams Capital to
continue to strengthen Clear Channel's competitive franchise and
drive value over the long term."
Clear Channel common stock would cease trading on the New York
Stock Exchange at market close on July 30, 2008, and would no
longer be listed.
Shareholders of Clear Channel will receive instructions and a
letter of transmittal by mail from Mellon Investor Services, LLC,
the paying agent, concerning how to deliver their shares for
payment. Shareholders of record should not surrender their stock
certificates without first completing a letter of transmittal.
Shareholders who hold their shares in "street name" through a bank
or broker should contact their bank or broker to determine what
action they must take.
About Clear Channel
San Antonio, Texas-based Clear Channel Communications Inc. (NYSE:
CCU) -- http://www.clearchannel.com/-- is a diversified media
company operating in three business segments: radio broadcasting,
Americas outdoor advertising, international outdoor advertising,
which contributed to 50%, 21%, and 26%, respectively, during the
year ended Dec. 31, 2007. The company owns 717 core radio
stations, 288 non-core radio stations operating in the United
States. It also owns about 209,000 Americas outdoor advertising
display faces and approximately 687,000 international outdoor
advertising display faces. In addition, it had equity interests
in various international radio broadcasting companies. As of
Feb. 13, 2008, the company sold 217 non-core radio stations. In
March 2008, the company announced that it has completed the sale
of its Television Group to Newport Television LLC.
As disclosed in the Troubled Company Reporter on July 30, 2008,
in-line with prior guidance, Fitch Ratings has downgraded the
Issuer Default Rating and outstanding debt rating of Clear Channel
Communications, Inc. as: IDR to 'B' from 'BB-'; and Senior
unsecured non-guaranteed notes to 'CCC/RR6' from 'BB-'.
Fitch has also removed Clear Channel from Rating Watch Negative,
where it was originally placed on Oct. 26, 2006. The Rating
Outlook is Negative. Additionally, Fitch has withdrawn all
existing ratings of Clear Channel.
As reported by the Troubled Company Reporter on June 20, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Clear Channel Communications Inc. to 'B' from 'B+' based
on the proposed financing of the company's pending leveraged
buyout by the private equity group co-led by Thomas H. Lee
Partners L.P. and Bain Capital Partners LLC.
At the same time, S&P removed all the ratings from CreditWatch,
where they had been placed with negative implications on Oct. 26,
2006, following the company's announcement that it was exploring
strategic alternatives to enhance shareholder value, including a
possible sale of the company. The outlook is stable.
At the same time, Standard & Poor's assigned its 'B' bank loan
rating and '3' recovery rating on Clear Channel's $16.1 billion of
new senior secured credit facilities. The '3' recovery rating
indicates S&P's expectation for meaningful (50% to 70%) recovery
of principal and pre-petition interest in the event of a payment
default.
S&P also assigned its 'CCC+' rating on the company's $2.3 billion
of new senior unsecured notes, with a recovery rating of '6',
indicating its expectation for negligible (0% to 10%) recovery in
the event of a payment default.
At the same time, S&P lowered its rating on the company's
$5.1 billion of existing senior unsecured notes to 'CCC+' from
'B-' and assigned a recovery rating of '6' on these issues.
The 'B-' rating on the company's existing 8% senior notes due
November 2008 at its AMFM Operating Inc. subsidiary remains on
CreditWatch with negative implications pending the completion of
the company's tender offer for these notes.
S&P lowered the rating on Clear Channel's existing $750 million of
7.65% senior notes due 2010 to 'CCC+' from 'B-' and assigned a
recovery rating of '6', reflecting the potential for this issue to
remain outstanding until maturity.
CLEAR CHANNEL: 99.12% of Sr. Notes -- Valued at $639MM -- Tendered
------------------------------------------------------------------
In connection with the completion of the merger with BT Triple
Crown Merger Co., Clear Channel Communications, Inc. reported the
expiration and final results of its tender offer to purchase any
and all of its subsidiary AMFM Operating Inc.'s outstanding 8%
Senior Notes due 2008 (CUSIP No. 158916AL0). The tender offer and
consent solicitation was made pursuant to the terms and conditions
set forth in the AMFM Offer to Purchase and Consent Solicitation
Statement for the Notes dated Dec. 17, 2007, and the related
Letter of Transmittal and Consent.
The tender offer and consent payment deadline expired at 8:00 a.m.
New York City time on July 30, 2008. The aggregate principal
amount of the Notes validly tendered (and not validly withdrawn)
was $639 million, representing approximately 99.12% of outstanding
Notes.
AMFM has accepted for purchase all of the Notes validly tendered
(and not validly withdrawn) in the tender offer. AMFM has paid to
The Depository Trust Company the total consideration payable to
holders in the tender offer, and Global Bondholder Services
Corporation, the depositary for the tender offer, has irrevocably
instructed The Depository Trust Company to pay the full tender
offer consideration, plus accrued interest, to the tendering
holders. The total consideration paid to validly tendering
holders will reflect the actual date of payment.
Citi acted as the lead dealer manager for the tender offer and
lead solicitation agent for the consent solicitation and Deutsche
Bank Securities Inc. and Morgan Stanley & Co. Incorporated acted
as co-dealer managers for the tender offer and co-solicitation
agent for the consent solicitation. Global Bondholder Services
Corporation acted as the depositary and Information Agent for the
tender offer and the consent solicitation.
About Clear Channel
San Antonio, Texas-based Clear Channel Communications Inc. (NYSE:
CCU) -- http://www.clearchannel.com/-- is a diversified media
company operating in three business segments: radio broadcasting,
Americas outdoor advertising, international outdoor advertising,
which contributed to 50%, 21%, and 26%, respectively, during the
year ended Dec. 31, 2007. The company owns 717 core radio
stations, 288 non-core radio stations operating in the United
States. It also owns about 209,000 Americas outdoor advertising
display faces and approximately 687,000 international outdoor
advertising display faces. In addition, it had equity interests
in various international radio broadcasting companies. As of
Feb. 13, 2008, the company sold 217 non-core radio stations. In
March 2008, the company announced that it has completed the sale
of its Television Group to Newport Television LLC.
As disclosed in the Troubled Company Reporter on July 30, 2008,
in-line with prior guidance, Fitch Ratings has downgraded the
Issuer Default Rating and outstanding debt rating of Clear Channel
Communications, Inc. as: IDR to 'B' from 'BB-'; and Senior
unsecured non-guaranteed notes to 'CCC/RR6' from 'BB-'.
Fitch has also removed Clear Channel from Rating Watch Negative,
where it was originally placed on Oct. 26, 2006. The Rating
Outlook is Negative. Additionally, Fitch has withdrawn all
existing ratings of Clear Channel.
As reported by the Troubled Company Reporter on June 20, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Clear Channel Communications Inc. to 'B' from 'B+' based
on the proposed financing of the company's pending leveraged
buyout by the private equity group co-led by Thomas H. Lee
Partners L.P. and Bain Capital Partners LLC.
At the same time, S&P removed all the ratings from CreditWatch,
where they had been placed with negative implications on Oct. 26,
2006, following the company's announcement that it was exploring
strategic alternatives to enhance shareholder value, including a
possible sale of the company. The outlook is stable.
At the same time, Standard & Poor's assigned its 'B' bank loan
rating and '3' recovery rating on Clear Channel's $16.1 billion of
new senior secured credit facilities. The '3' recovery rating
indicates S&P's expectation for meaningful (50% to 70%) recovery
of principal and pre-petition interest in the event of a payment
default.
S&P also assigned its 'CCC+' rating on the company's $2.3 billion
of new senior unsecured notes, with a recovery rating of '6',
indicating its expectation for negligible (0% to 10%) recovery in
the event of a payment default.
At the same time, S&P lowered its rating on the company's
$5.1 billion of existing senior unsecured notes to 'CCC+' from
'B-' and assigned a recovery rating of '6' on these issues.
The 'B-' rating on the company's existing 8% senior notes due
November 2008 at its AMFM Operating Inc. subsidiary remains on
CreditWatch with negative implications pending the completion of
the company's tender offer for these notes.
S&P lowered the rating on Clear Channel's existing $750 million of
7.65% senior notes due 2010 to 'CCC+' from 'B-' and assigned a
recovery rating of '6', reflecting the potential for this issue to
remain outstanding until maturity.
CLEAR CHANNEL: Moody's Downgrades Sr. Unsec. Notes to Caa1
----------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating
and B2 Probability of Default Rating to Clear Channel
Communications, Inc. In addition, Moody's assigned a B1 rating to
Clear Channel's new $15.77 billion senior secured credit
facilities and a Caa1 rating to its proposed $2.31 billion
guaranteed senior unsecured notes. Moody's also downgraded the
company's legacy senior unsecured notes to Caa1 from Baa3 and
affirmed the SGL2 speculative grade liquidity rating. The rating
outlook is stable. This concludes Moody's review of Clear
Channel's ratings, which was initiated on October 26, 2006 in
connection with the company's announcement that its Board of
Directors was evaluating various strategic alternatives to enhance
shareholder value.
Moody's has taken these rating actions:
Issuer: Clear Channel Communications, Inc.
Corporate Family Rating -- Assigned B2
Probability of Default Rating -- Assigned B2
$2.0 Billion 6-year Senior Secured Revolving Facility --
Assigned B1 (LGD 3, 33%)
$1.115 Billion 6-year Senior Secured Tranche A Term Loan
Facility -- Assigned B1 (LGD 3, 33%)
$10.7 Billion 7.5-year Senior Secured Tranche B Term Loan Facility
-- Assigned B1 (LGD 3, 33%)
$705.638 Million 7.5-year Senior Secured Tranche C Term Loan
Facility -- Assigned B1 (LGD 3, 33%)
$750 Million 7.5-year Senior Secured Delayed Draw Term Loan 1
Facility -- Assigned B1 (LGD 3, 33%)
$500 Million 7.5-year Senior Secured Delayed Draw Term Loan 2
Facility -- Assigned B1 (LGD 3, 33%)
$980 Million Senior Cash Pay Notes due 2016 -- Assigned Caa1
(LGD 5, 79%)
$1.330 Billion Senior Toggle Notes due 2016 -- Assigned Caa1
(LGD 5, 79%)
Existing Senior Unsecured Bonds -- Downgraded to Caa1 (LGD 6, 91%)
from Baa3
Multiple Seniority Shelf -- Rating Withdrawn
Outlook -- To Stable from Ratings Under Review
Speculative Grade Liquidity Rating -- Affirmed SGL2
Issuer: Chancellor Media Corporation of Los Angeles
Senior Unsecured -- Rating Withdrawn
Issuer: CCCI Capital Trust I
Preferred Stock Shelf -- Rating Withdrawn
Issuer: CCCI Capital Trust II
Preferred Stock Shelf -- Rating Withdrawn
Issuer: CCCI Capital Trust III
Preferred Stock Shelf -- Rating Withdrawn
Clear Channel's B2 Corporate Family Rating reflects the company's
high debt-to-EBITDA leverage (8.2x pro forma for the trailing
twelve months ended March 31, 2008 and incorporating Moody's
standard adjustments) and the substantial interest burden
resulting from the $24.5 billion leveraged buyout of the company
by private equity sponsors. Moreover, the rating incorporates the
company's very modest free cash flow-to-debt metric pro-forma for
the completion of the buyout. Somewhat mitigating these high
financial risks, however, are the dominant scale of the company,
its strong and leading market position in the radio and outdoor
advertising businesses within the U.S., good operating margins and
substantial geographic diversity in its domestic and international
businesses. Additionally, Moody's believes that the financing
structure -- including the option to PIK interest on the $1.33
billion senior unsecured toggle notes, a $2 billion revolving
credit facility which is expected to remain largely undrawn, $1.25
billion of committed delayed draw term loan facilities available
to support the 2009 bond maturity and the 7.65% notes due 2010,
and minimal required term loan amortization until 2010 -- offers
some noteworthy flexibility to manage cash flows should earnings
not meet expectations.
The B2 rating also incorporates the weak prospects for the radio
industry, which Moody's believes is mature, faces strategic
threats from alternative media and is under secular and cyclical
pressures. The outdoor advertising sector has had favorable growth
trends and is relatively more resilient but not completely immune
to the impact of the current economic environment. Notably,
neither the ratings nor the rating outlook incorporate the
potential for a precipitous fall-off in advertising and the
company's revenue base stemming from a severe economic downturn.
Moody's expects Clear Channel will generate positive (albeit
modest) free cash flow (assuming cash payment of interest on the
PIK toggle notes) over the intermediate term and utilize it to
moderately reduce debt. Moody's also expects the company to use
proceeds from asset sales to pay down debt.
The Caa1 rating of Clear Channel's legacy senior notes that remain
outstanding reflects their subordination to the material amount of
the company's new senior secured credit facilities and the new
senior notes as the collateral package will be structured so as to
not trigger the equal and ratable clause under the indentures
governing the existing senior notes.
Clear Channel Communications, Inc., with its headquarters in San
Antonio, Texas, is a global media and entertainment company
specializing in mobile and on-demand entertainment and information
services for local communities and premiere opportunities for
advertisers. The company's businesses include radio and outdoor
displays. Clear Channel's revenues for year ending December 31,
2007 were $6.8 billion.
COVENANT TRANSPORTATION: Completes First Phase of Debt Refinancing
------------------------------------------------------------------
Covenant Transportation Group Inc. completed the first step in a
refinancing of a substantial portion of its long-term debt. The
remainder of the refinancing is expected to be completed during
the third quarter of 2008.
Covenant Transportation Group's senior vice president and
treasurer, M. David Hughes, made the following comments: "Over the
past several months, we have been evaluating alternatives to our
prior financing arrangements. Our goals for new financing
included the following:
-- minimizing the number and restrictiveness of financial
covenants to give us more flexibility in executing our
turnaround efforts;
-- obtaining a better advance rate against certain assets to
improve liquidity in view of an expectation of increased
tractor purchases in late 2008 and 2009, eliminating the
uncertainty surrounding renewal of the securitization
facility in future periods, and maintaining reasonable
borrowing costs.
We are very pleased to disclose a major step in this process
through closing an approximately $200 million secured revenue
equipment financing facility with Daimler Truck Financial and
accompanying amendments to our existing revolving credit
facility."
Prior Long-Term Financing
Prior to June 30, 2008, the company's credit facilities consisted
of a $190 million revolving credit facility secured by revenue
equipment and certain other assets, and a $60 million accounts
receivable securitization. The primary advantage of these
facilities was relatively low borrowing costs, measured by the
applicable margin over identified interest rates. The primary
disadvantages included multiple financial and other covenants in
the revolving credit facility, a lower advance rate against
equipment than could be achieved through lenders that specialize
in financing tractors and trailers, and a lack of long-term
commitment to continuation of the securitization facility by the
lender given the uncertain nature of the conduit securitization
market over the past several quarters. At June 30, 2008, the
company would have had approximately $26 million of available
borrowing capacity under these facilities and would have been in
default of applicable financial covenants.
June 30 Daimler Truck Financing
On June 30, 2008, the completed the first step in its refinancing
plan by entering into a revenue equipment financing arrangement
with Daimler Truck Financial. The new Daimler facility is limited
to a maximum of $200 million of original face amount of funding
outstanding at any one time. As notes or leases under the Daimler
facility are paid off, the retired amount becomes available for
re-borrowing under the facility.
The company has funded approximately $122 million under the
Daimler facility, secured by existing tractors. This funding was
used to retire the entire $65 million in borrowing under its
revolving credit facility well as to provide approximately
$51 million in cash collateral to secure all of its outstanding
standby letters of credit. After those uses, the company retained
approximately $2.6 million of cash. The notes included in the
Daimler funding are due in monthly installments with final
maturities at various dates ranging from August 2008 to
December 2011. The annual interest rate on the June 30 Daimler
borrowing is 6%, fixed for the expected useful life of the
equipment, and the advance rate on the collateral was 100% of net
book value.
The Daimler facility is available to fund new tractors expected to
be delivered in 2008 and 2009. After capital expenditures in 2007
and the first half of 2008, the company expect to replace
approximately 713 tractors and 200 refrigerated trailers during
the next 6 months and 1,800 tractors in 2009, for net capital
expenditures of approximately $39 million for the remainder of
2008 and $83 million for 2009. The Daimler facility includes a
commitment to fund most or all of the expected tractor purchases.
The annual interest rate on the new equipment is approximately 200
basis points over the like-term rate for U.S. Treasury Bills, and
the advance rate is 100% of the tractor cost. A leasing
alternative is also available.
The Daimler facility contains certain requirements regarding
payment, insurance of collateral, and other matters, but does not
have any financial or other material covenants or events of
default.
"The company appreciates the strong support from Daimler Truck
Financial, one of the most respected and knowledgeable sources of
equipment financing in the market," Mr. Hughes continued.
Amendment of Revolving Credit Facility and
Securitization Facility
In addition to closing the Daimler facility, the company entered
into amendments with its revolving credit and securitization
providers. The amendments to its revolving credit facility were:
(i) to authorize the Daimler financing and release the lenders'
liens on any collateral securing the Daimler financing;
(ii) to reduce the maximum borrowing limit under the revolving
credit facility from $190 million to $81 million;
(iii) to limit the aggregate outstanding amount of revolving
loans under the Credit Agreement to $30 million;
(iv) to fix the letter of credit availability at $51 million,
secured by cash collateral;
(v) to waive, through Aug. 29, 2008, any default that may have
otherwise occurred as a result of any failure to comply
with a leverage ratio contained in the credit agreement;
and
(vi) to reduce the advance rate against revenue equipment
collateral under the revolving credit facility to the
lesser of:
-- 85% of the appraised, net orderly liquidation value of
any eligible revenue equipment; or
-- 70% of the net book value of any eligible revenue
equipment that was not appraised. After the amendments,
the company has approximately $22 million of borrowing
capacity under the revolving credit facility plus
$2.6 million in unrestricted cash remaining from the
Daimler funding.
"The main amendments to our accounts receivable securitization
facility were to waive any defaults that would have occurred as a
result of cross-defaults to the revolving credit facility," said
Mr. Hughes. "The securitization waiver was for the same term as
the revolving credit facility waiver. The term of the
securitization facility expires on Dec. 2, 2008, and it is unknown
whether a renewal period will be offered.
Expectations Regarding Future Financing
"We continue to actively explore alternatives for achieving a
favorable overall long-term financing package," Mr. Hughes added.
"In the next several days, we expect to close an approximately
$8 million mortgage financing secured by the body shop and excess
acreage near our Chattanooga headquarters. We also are seeking an
additional $25 million to $35 million in similar financing secured
by other terminal locations. Also in the third quarter of 2008,
we expect to either obtain an asset-based loan facility secured by
accounts receivable, excess revenue equipment, and perhaps real
estate, or to negotiate a renewal of the present securitization
facility accompanied by a more permanent amendment to the
revolving credit facility. We are working diligently with our
lending group to address our financing needs in a proactive and
productive manner."
About Covenant Transportation
Based in Chattanooga, Tennessee, Covenant Transportation Group
Inc. (Nasdaq/NMS:CVTI) is the holding company for several
transportation providers that offer premium transportation
services for customers throughout the United States. The
consolidated group includes operations from Covenant Transport and
Covenant Transport Solutions of Chattanooga, Tennessee; Southern
Refrigerated Transport of Texarkana, Arkansas; and Star
Transportation of Nashville, Tennessee.
DIABLO GRANDE: Competing Bids for Assets Due August 13
------------------------------------------------------
Bill Rochelle of Bloomberg News reports that Diablo Grande LP is
seeking other bidders to submit offers by Aug. 13, 2008, in
connection with the sale of certain assets.
As reported in the Troubled Company Reporter on July 17, 2008,
Housing Source Partners Inc., a real estate developer in Pismo
Beach, California, is under contract for sale of the Debtor's
assets for $25 million plus the assumption of debts for the
Debtor's real estate property.
The Debtor was allowed by the U.S. Bankruptcy Court for the
Eastern District of California to auction its assets, but no
official order approving its proposed bidding procedures has been
issued.
Under the contract, Housing Source will pay $24 million for
the Debtor's main real property and the Debtor may or may not sell
the land to Housing Source for $1 million.
House Source will be entitled to a 2% break-up fee of the purchase
price plus a $200,000 withdrawal fee, if lender Royal Bank of
Scotland Group Plc will not consent to the sale. The bank pledged
to provide $1,000,000 in financing to the Debtor.
According to Bloomberg, the Debtor is requiring bidders with the
two highest initial offers to deliver their final bid on Aug. 18,
2008. The Debtor and the Official Committee of Unsecured
Creditors will pick the best offer the following day.
Another bidder is required in the event the two initial offers are
insider, Bloomberg notes.
About Diable Grande
Patterson, California-based Diablo Grande LP owns 33,000-acre real
property and runs a resort hotel with golf courses and convention
center. Diablo Grande LP's general partner is Diablo Grande Inc.
with Donald Panoz as president. It filed for chapter 11
protection on March 10, 2008 (Bankr. E.D. Calif. Case No. 08-
90365). Judge Robert S. Bardwil is presiding the case. Ori Katz,
Esq., and Michael H. Ahrens, Esq., at Sheppard Mullin Richter &
Hampton LLP, represents the Debtor in its restructuring efforts.
When the Debtor filed for bankruptcy, it listed assets of between
$50 million and $100 million and debts of between $50 million and
$100 million.
DUNMORE HOMES: Travelers Casualty Objects to Plan Confirmation
--------------------------------------------------------------
Travelers Casualty and Surety Company of America asks the U.S.
Bankruptcy Court for the Eastern District of California to deny
confirmation of the First Amended Plan of Liquidation of Dunmore
Homes, Inc., unless Article 14 is modified.
The Debtor's First Amended Plan of Liquidation contemplates the
transfer of all its assets to a liquidation trust, free and clear
of all liens, claims and interests. Travelers asserts that it
objects to the confirmation of the Debtor's Plan in its present
form, because the "injunction language" contained in Article 14
of the Plan is overbroad.
Specifically, Article 14 states that:
14.1 Binding Effect of Plan. The provisions of the
confirmed Plan will bind the Debtor, the Liquidation Trustee,
any entity acquiring property under the Plan, and any creditor
or interest holder, whether or not the claim of that creditor
is impaired under the Plan, and whether or not the creditor
has accepted or rejected the Plan. All claims and debts will
be as fixed and adjusted pursuant to the Plan.
14.2 Vesting of Property in Liquidation Trust. Upon the
Effective Date, a title to all property of the Estate in will
vest in the Liquidation Trust and will be vested in the
Liquidation Trust free and clear of all liens, claims, and
interests of any person...
14.3 Property Free and Clear. Except as otherwise provided
in the Plan or the confirmation order, all property that will
vest in the Liquidation Trust will be free and clear of all
Claims, Liens, interests, charges, and other encumbrances of
creditors or interests holders...
Mr. Schexnayder argues that the "Effects of Confirmation"
language in Article 14 and elsewhere in the Plan would have the
effect of forfeiting other parties' rights in property, without
affording adequate notice and opportunity to be heard. He
contends that the Plan and Disclosure Statement are ambiguous as
to just what "assets" the Debtor claims are in its estate.
"Such ambiguity causes the Plan not to give the fair notice
required," Mr. Schexnayder says.
Travelers is an unsecured creditor in the Debtor's Chapter 11
case, and has a claim valued at $28,865,237. It has voted in
favor of the Plan in Class 3.
"Travelers believes that minor modifications to language of plan,
either in the nature of clarifications, or to add a claim
resolution procedure for disputed interests in property, can
resolve Travelers objection, if the Debtor so chooses, and permit
the modified Plan to proceed to confirmation," Mr. Schexnayder
tells the Court.
Travelers issued numerous bonds, including subdivision performance
and payment bonds in favor of Dunmore Homes, Inc., and its
subsidiaries, whereby Travelers guaranteed payment and performance
obligations in connection with a variety of developments.
In connection with the bonds, Dunmore California and its
principal, Sidney Dunmore, executed an indemnity agreement in
favor of Travelers. Under the Indemnity Agreement, Mr. Dunmore
granted Travelers a security interest, which subsequently
attached and was later perfected in his 2007 federal income tax
refund amounting to $12,900,000. Mr. Dunmore granted Dunmore
California a security interest in his 2007 Tax Refund.
Pursuant to a September 10, 2007 purchase agreement, Dunmore
Homes, Inc., as incorporated in New York, assumed the obligations
of Dunmore California to Travelers. The Debtor has asserted that
it is the assignee of that security interest granted to Dunmore
California. The Debtor has previously claimed that the security
interest is property of its bankruptcy estate.
As of the Petition Date, many of the Bonded Projects have not
been completed. As a result, Travelers has been required to
respond under the bonds and to pay numerous claims, according to
Chad L. Schexnayder, Esq., at Jennings Haug & Cunningham LLP, in
Phoenix, Arizona. One subdivision bond obligee who has placed
performance demand on Travelers is the City of Fresno, relating
to a bond written for Dunmore Montecito LLC. In connection with
the project, Dunmore Montecito posted two certificates of deposit
as security for its obligations under a subdivision agreement for
Tract 5461, the same subdivision agreement under which the City
of Fresno has placed performance demand on Travelers.
Based in Granite Bay, California, Dunmore Homes Inc. is a
privately-owned homebuilder. The company filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533).
Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski
Stang Ziehl & Jones LLP, represent the Debtor in its restructuring
efforts. The Official Committee of Unsecured Creditors has
selected Morrison & Foerster LLP as its counsel in this bankruptcy
proceeding.
In January 2008, the U.S. Bankruptcy Court for the Southern
District of New York ordered the transfer of Debtor's Chapter 11
case to the U.S. Bankruptcy Court for the Eastern District of
California, Sacramento Division. The Debtor filed its plan of
liquidation and an accompanying disclosure statement on March 21,
2008.
The Debtor disclosed $20,743,147 in total assets and $250,252,312
in total debts in its schedules of assets and liabilities filed
with the Court.
(Dunmore Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DUNMORE HOMES: Wants to Make Non-Material Modifications to Plan
---------------------------------------------------------------
Dunmore Homes, Inc. asks the U.S. Bankruptcy Court for the Eastern
District of California for permission to make certain immaterial
modifications to its First Amended Plan of Liquidation to reflect
its entry into a settlement agreement with the Chapter 7 trustee
of DHI Development, Inc. The Non-Material Plan Modifications
include:
(1) the addition of section 8.2 which includes a summary of
the terms of the DHI Settlement Agreement;
(2) revisions to section 7.4 and conforming revisions to
section 4.05 of the Liquidating Trust Agreement to provide
the Liquidation Trustee with authority to implement and
perform under the Settlement Agreement; and
(3) additional definitions to conform to the definitions in
the Settlement Agreement.
Simultaneous with that request, the Debtor delivered to the Court
on July 22, 2008, a Proposed Second Amended Plan of Liquidation
containing the modifications and a modified liquidation trust
agreement, a full-text copy of which is available for free at:
http://bankrupt.com/misc/2ndAmendedBlackline.pdf
Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP,
in San Francisco, California, relates that modifications also
necessitated conforming revisions to the Liquidation Trust
Agreement, which will be established pursuant to the Plan with
Leon Szlezinger as liquidation trustee.
A full-text copy of the modified Liquidation Trust Agreement is
available for free at:
http://bankrupt.com/misc/LiquidationTrustBlackline.pdf
The Debtor maintains that the Modifications are not material and
do not adversely impact creditors. Rather, the Modifications
will benefit creditors of the Debtor's and DHI's estates, Ms.
Grassgreen says.
Ms. Grassgreen notes that the Debtor will be submitting its brief
in support of confirmation of the Second Amended Plan and in
response to objections to confirmation no later than August 5,
2008. The Debtor may seek approval of further modifications in
the Confirmation Brief.
Accordingly, the Debtor asks the Court to approve the
Modifications and deem the proposed Second Amended Plan of
Liquidation accepted by creditors who voted in favor of the First
Amended Plan.
The Court will convene a hearing on August 12, 2008 to consider
confirmation of the Debtor's Plan of Liquidation.
Based in Granite Bay, California, Dunmore Homes Inc. is a
privately-owned homebuilder. The company filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533).
Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski
Stang Ziehl & Jones LLP, represent the Debtor in its restructuring
efforts. The Official Committee of Unsecured Creditors has
selected Morrison & Foerster LLP as its counsel in this bankruptcy
proceeding.
In January 2008, the U.S. Bankruptcy Court for the Southern
District of New York ordered the transfer of Debtor's Chapter 11
case to the U.S. Bankruptcy Court for the Eastern District of
California, Sacramento Division. The Debtor filed its plan of
liquidation and an accompanying disclosure statement on March 21,
2008.
The Debtor disclosed $20,743,147 in total assets and $250,252,312
in total debts in its schedules of assets and liabilities filed
with the Court.
(Dunmore Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DUNMORE HOMES: Wants Settlement of Rabbi Trust Funds Dispute Ok'd
-----------------------------------------------------------------
Dunmore Homes, Inc. and Thomas Aceituno, in his capacity as the
Chapter 7 trustee of DHI Development, Inc., ask the U.S.
Bankruptcy Court for the Eastern District of California to approve
a settlement agreement they entered into, pursuant to Rule 9019 of
the Federal Rules of Bankruptcy Procedure, with respect to the
parties' entitlement to certain Rabbi Trust Funds.
The Debtor acquired all the assets and assumed all the liabilities
of Dunmore Homes California in September 2007. Dunmore California
later changed its name to DHI, a California corporation, and is
wholly owned by Sidney B. Dunmore. Among the assets transferred
to the Debtor by Dunmore California was the Dunmore Homes
Executive Nonqualified Excess Benefit Plan, a Rabbi Trust with a
balance of approximately $1,500,000. The DHI estate has claimed
that the Rabbi Trust was not transferred to Dunmore Homes as part
of the September 2007 Sale, and that the Rabbi Trust is property
of the DHI estate.
DHI commenced a voluntary petition for relief under Chapter 7 of
the Bankruptcy Code in April 2008. Mr. Aceituno is the duly
appointed Chapter 7 Trustee of DHI.
In order to resolve their dispute in relation to the Rabbi Trust
Funds, the parties engaged in negotiations regarding potential
solutions that would benefit both their estates. The Official
Committee of Unsecured Creditors was actively involved in the
parties' negotiations.
The parties have ultimately reached a settlement agreement, which
provides for these terms:
(a) Review and Objection to Claims -- In accordance with the
Plan, the Liquidation Trust and the Chapter 7 Trustee will
coordinate their claims objections so that the claims in
the DHI Chapter 7 case and the Dunmore Chapter 11 case are
scheduled in both cases at the same date and time. The
Liquidation Trust will be responsible for handling
objections where identical or similar claims are filed in
both cases. the Chapter 7 Trustee will be responsible only
for claims filed in the DHI Case which are not filed in
the Debtor's case.
(b) Payment of Claims -- All claims allowed in the Debtor's
case and the DHI case and all claims which are allowed
only in the Debtor's case will be paid from funds in the
Liquidation Trust, pro rata, in accordance with the Plan.
In no event will the aggregate amount of distributions
paid to creditors exceed the balance of the Rabbi Trust
Funds as of the effective date of the Plan, less $200,000
and any contributions made by the Chapter 7 Trustees to
the Liquidation Trust.
(c) Litigation by the Parties -- The Debtor will be
responsible for attempting to collect from Mr. Dunmore on
a promissory note with a disputed balance of roughly
$11,000,000 which he owes to Dunmore California and all
matters relating to the Note, including a $4,000,000
reduction in the balance due on the Note in June 2007 and
the $12,900,000 tax refund allegedly due to Mr. Dunmore.
The Chapter 7 Trustee will be responsible for attempting
to collect from Mr. Dunmore for any fraudulent transfers
which might have been made to Mr. Dunmore by Dunmore
California, and on any other claims which either Dunmore
California or the Debtor has against Mr. Dunmore. The
Debtor agrees to assign to the DHI estate any claims and
causes of action which it holds against Mr. Dunmore based
on illegal or improper distributions to him under state
law, but excluding claims based on the Note, the Note
Reduction, and the Tax Refund, and excluding the Assigned
Creditor Claims. The Chapter 7 Trustee will also be
responsible for attempting to collect any amounts due to
the DHI Estate from anyone else who received avoidable
transfers from Dunmore California, or who received a
benefit from avoidable payments made by Dunmore
California.
(d) Coordination of Litigation Activities -- The Parties will
coordinate their litigation efforts, including the
retention of legal and non-legal professionals, to avoid
unnecessary duplication of efforts.
(e) Settlement of Claims Regarding the Rabbi Trust -- In
exchange for the Debtor's payment of $200,000 to the DHI
Estate, the Chapter 7 Trustee and the DHI Estate agree to
release any claim against the Rabbi Trust or any portion
of it. The balance of the Rabbi Trust funds will be
transferred into the Liquidation Trust to be distributed
in accordance with the Plan.
(f) Funds Received by the DHI Estate -- The Litigation Fund
will be paid within 30 days after the Effective Date of
the Settlement Agreement. The Fund will be used to
finance litigation against Mr. Dunmore and anyone else who
may be liable to the DHI estate.
(g) Effectiveness of Agreement -- The Settlement Agreement
will become effective upon the entry of a final order
confirming Debtor Dunmore's Plan, and final orders in both
the Dunmore case and the DHI case approving the
Settlement Agreement.
Ms. Grassgreen contends that the economic benefits of the
Settlement Agreement to both the Debtor and DHI are substantial.
Pursuant to the Settlement Agreement, the Chapter 7 Trustee has
agreed to compromise his claims to approximately $1,500,000 of
Rabbi Trust Funds and to permit the Liquidation Trust to
investigate, pursue and litigate certain claims which arguably
belong to both estates. In exchange, the Debtor has agreed to
pay the Chapter 7 Trustee $200,000 from the Rabbi Trust Funds to
enable the Chapter 7 Trustee to investigate, pursue and litigate
the claims that he retains under the Settlement Agreement. Any
recoveries by the Chapter 7 Trustee, after payment of
administrative expenses, will be paid to the Liquidation Trust.
Thus, the net assets of both the DHI estate and the Debtor's
estate will be transferred to the Dunmore Homes Liquidation
Trust, and all creditors with allowed claims in either cases will
be paid pro rata from the Liquidation Trust.
Ms. Grassgreen contends that the Settlement Agreement avoids
lengthy and costly litigation over the Rabbi Trust Funds.
Based in Granite Bay, California, Dunmore Homes Inc. is a
privately-owned homebuilder. The company filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533).
Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski
Stang Ziehl & Jones LLP, represent the Debtor in its restructuring
efforts. The Official Committee of Unsecured Creditors has
selected Morrison & Foerster LLP as its counsel in this bankruptcy
proceeding.
In January 2008, the U.S. Bankruptcy Court for the Southern
District of New York ordered the transfer of Debtor's Chapter 11
case to the U.S. Bankruptcy Court for the Eastern District of
California, Sacramento Division. The Debtor filed its plan of
liquidation and an accompanying disclosure statement on March 21,
2008.
The Debtor disclosed $20,743,147 in total assets and $250,252,312
in total debts in its schedules of assets and liabilities filed
with the Court.
(Dunmore Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DURA AUTOMOTIVE: Lawrence Denton To Step Down as President & CEO
----------------------------------------------------------------
Lawrence A. Denton would be leaving DURA Automotive Systems,
Inc., at the end of 2008, after successfully leading the company
through its reorganization and emergence from Chapter 11.
Mr. Denton served as President and Chief Executive Officer of the
company since 2003 and as Chairman of the company's board of
directors since 2005.
Nick G. Preda, DURA's vice president and chief financial officer,
said in a regulatory filing with the Securities and Exchange
Commission that Mr. Denton will continue to serve as a consultant
to the company during a transition period ending Dec. 31, 2008.
During the transition period, Mr. Denton will continue to be paid
his current base salary and will continue to receive all employee
and executive benefits he currently receives from the company,
Mr. Preda related. Specifically, Mr. Denton is entitled to,
among other things:
(a) a cash bonus of $800,000 in recognition of his leading the
company through its emergence from Chapter 11 bankruptcy
proceedings;
(b) all vested accrued benefits as of December 31, 2008 in
accordance with the provisions of the company's benefit
plans, including his vested account balance under the
company's 401(k) retirement plan, his vested accrued
benefit under the company's defined benefit retirement
plan and his vested accrued benefit under the company's
2003 Supplemental Executive Retirement Plan;
(c) conversion of any company owned life insurance policies
covering him to individual policies;
(d) a cash severance payment equal to $1,600,000, of which
$626,667 will be payable in a lump sum on Jan. 2, 2009 and
the remainder will be payable in a lump sum on
July 2, 2009;
(e) health coverage and his eligible dependents at the same
cost paid by other executive employees of the company for
a period of up to 18 months.
(f) a title to his company car; and
(g) reimbursement for his reasonable legal fees in connection
with the transition of his employment relationship and to
continue to maintain Mr. Denton's coverage under the terms
of the company's directors' and officers' liability
insurance policy.
According to Mr. Preda, Mr. Denton has agreed that he will be
subject to the non-competition and non-solicitation provisions
contained in the company's 2003 Supplemental Executive Retirement
Plan through December 31, 2009, subject to certain understandings
regarding the scope of his obligations.
Rochester Hills, Michigan-based DURA Automotive Systems Inc.
(Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent
designer and manufacturer of driver control systems, seating
control systems, glass systems, engineered assemblies, structural
door modules and exterior trim systems for the global automotive
industry. The company is also a supplier of similar products to
the recreation vehicle and specialty vehicle industries. DURA
sells its automotive products to North American, Japanese and
European original equipment manufacturers and other automotive
suppliers.
The company has three locations in Asia -- China, Japan and Korea.
It has locations in Europe and Latin-America, particularly in
Mexico, Germany and the United Kingdom.
The Debtors filed for chapter 11 petition on Oct. 30, 2006,
(Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq.,
Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at
Kirkland & Ellis LLP are lead counsels for the Debtors' bankruptcy
proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron,
Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors'
co-counsels. Baker & McKenzie acts as the Debtors' special
counsel. Togut, Segal & Segal LLP is the Debtors' conflicts
counsel. Miller Buckfire & Co., LLC is the Debtors' investment
banker. Glass & Associates Inc., gives financial advice to the
Debtor. Kurtzman Carson Consultants LLC handles the notice,
claims and balloting for the Debtors and Brunswick Group LLC acts
as their Corporate Communications Consultants for the Debtors.
As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total
assets and $1,623,632,000 in total liabilities.
On April 3, 2008, the Court approved the Debtors' revised
Disclosure Statement explaining their revised Chapter 11 plan of
reorganization.
(Dura Automotive Bankruptcy News, Issue No. 60; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DURA AUTOMOTIVE: Names Tim Leuliette as President and CEO
---------------------------------------------------------
DURA Automotive Systems, Inc.'s board of directors has named
Timothy D. Leuliette president and CEO effective July 16, 2008.
He succeeds Larry Denton, who elected to leave the company after
successfully leading DURA through a 20-month reorganization and
emergence from Chapter 11.
Mr. Leuliette, who was elected chairman of DURA upon its emergence
from bankruptcy on June 27, 2008, will relinquish that role to
Steven Gilbert. Mr. Gilbert is senior managing director and
chairman of Sun Group (USA) and is also chairman of the board of
Gilbert Global Equity Partners, L.P., a billion dollar private
equity fund. Mr. Leuliette, who founded Leuliette Partners LLC, a
financial services and investment company in January 2008, was
previously chairman and CEO of Metaldyne Corp. and co-chairman and
co-CEO of that company's parent Asahi Tec Corp.
"The DURA team did a tremendous job of positioning the company for
the future," said Mr. Leuliette. "DURA has emerged as strong
global company with a solid balance sheet, a lean, low-cost global
manufacturing footprint and leading-edge technologies. I want to
thank Larry for his leadership and vision in getting the company
to this point. I am pleased and proud to join the DURA team and
look forward to working with the company's 13,000 employees to
build an even stronger company."
"Tim brings tremendous experience and is an excellent choice to
lead DURA," said Denton, who has been president and CEO since 2003
and chairman since 2005. "I am proud of the dedication and
support of our worldwide team, our customers, our suppliers and
other key partners. Together we were able to build a strong
foundation that positioned DURA to grow in the global marketplace.
I wish the team the best as it moves forward with its innovation
and growth objectives."
Mr. Denton will stay on and advise the company during the
transition.
Rochester Hills, Michigan-based DURA Automotive Systems Inc.
(Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent
designer and manufacturer of driver control systems, seating
control systems, glass systems, engineered assemblies, structural
door modules and exterior trim systems for the global automotive
industry. The company is also a supplier of similar products to
the recreation vehicle and specialty vehicle industries. DURA
sells its automotive products to North American, Japanese and
European original equipment manufacturers and other automotive
suppliers.
The company has three locations in Asia -- China, Japan and Korea.
It has locations in Europe and Latin-America, particularly in
Mexico, Germany and the United Kingdom.
The Debtors filed for chapter 11 petition on Oct. 30, 2006,
(Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq.,
Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at
Kirkland & Ellis LLP are lead counsels for the Debtors' bankruptcy
proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron,
Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors'
co-counsels. Baker & McKenzie acts as the Debtors' special
counsel. Togut, Segal & Segal LLP is the Debtors' conflicts
counsel. Miller Buckfire & Co., LLC is the Debtors' investment
banker. Glass & Associates Inc., gives financial advice to the
Debtor. Kurtzman Carson Consultants LLC handles the notice,
claims and balloting for the Debtors and Brunswick Group LLC acts
as their Corporate Communications Consultants for the Debtors.
As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total
assets and $1,623,632,000 in total liabilities.
On April 3, 2008, the Court approved the Debtors' revised
Disclosure Statement explaining their revised Chapter 11 plan of
reorganization.
(Dura Automotive Bankruptcy News, Issue No. 60; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DURA AUTOMOTIVE: Names S. Gilbert as Board of Directors Chairman
----------------------------------------------------------------
DURA Automotive Systems, Inc., disclosed in a regulatory filing
with the Securities and Exchange Commission that the company's
Board of Directors elected Steven J. Gilbert as chairman.
Mr. Gilbert replaces Timothy Leuliette upon DURA's emergence
from bankruptcy on June 27, 2008. Mr. Leuliette will continue to
serve as a director of the company.
Mr. Gilbert, 61, is Senior Managing Director and Chairman of Sun
Group (USA), an investment firm, and is Chairman of the Board of
Directors of Gilbert Global Equity Partners, L.P., a private
equity fund. From 1992 to 1997, he was the Founder and Managing
General Partner of Soros Capital L.P. Mr. Gilbert has 35 years
of experience in private equity investing, investment banking and
law. Mr. Gilbert has served as a director on the boards of more
than 25 companies over the span of his career, including Office
Depot, Inc., Magnavox Electronic Systems Company, Affinity
Financial Group, Inc., GTS-Duratek and Parker Pen Limited.
During a meeting held on July 11, 2008, the DURA Board authorized
these annual compensation arrangements for the company's
directors:
Chairman of the Board of Directors $85,000
Chairman of the Audit Committee $80,000
Chairman of the Compensation Committee $80,000
Non-executive officer directors $75,000
Executive officer directors $0
The Board also approved the payment of a $195,000 cash bonus to
Theresa L. Skotak, DURA's chief administrative officer, in
recognition of her contributions in leading the company through
its reorganization and emergence from Chapter 11.
Rochester Hills, Michigan-based DURA Automotive Systems Inc.
(Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent
designer and manufacturer of driver control systems, seating
control systems, glass systems, engineered assemblies, structural
door modules and exterior trim systems for the global automotive
industry. The company is also a supplier of similar products to
the recreation vehicle and specialty vehicle industries. DURA
sells its automotive products to North American, Japanese and
European original equipment manufacturers and other automotive
suppliers.
The company has three locations in Asia -- China, Japan and Korea.
It has locations in Europe and Latin-America, particularly in
Mexico, Germany and the United Kingdom.
The Debtors filed for chapter 11 petition on Oct. 30, 2006,
(Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq.,
Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at
Kirkland & Ellis LLP are lead counsels for the Debtors' bankruptcy
proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron,
Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors'
co-counsels. Baker & McKenzie acts as the Debtors' special
counsel. Togut, Segal & Segal LLP is the Debtors' conflicts
counsel. Miller Buckfire & Co., LLC is the Debtors' investment
banker. Glass & Associates Inc., gives financial advice to the
Debtor. Kurtzman Carson Consultants LLC handles the notice,
claims and balloting for the Debtors and Brunswick Group LLC acts
as their Corporate Communications Consultants for the Debtors.
As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total
assets and $1,623,632,000 in total liabilities.
On April 3, 2008, the Court approved the Debtors' revised
Disclosure Statement explaining their revised Chapter 11 plan of
reorganization.
(Dura Automotive Bankruptcy News, Issue No. 60; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DURA AUTOMOTIVE: Pacificor LLC Reports 31.3% Equity Stake
---------------------------------------------------------
Pacificor LLC and its affiliates reported in a Schedule 13D
filing with the Securities and Exchange Commission that they are
deemed to beneficially own 2,262,724 shares of DURA Automotive
Systems, Inc.'s common stock:
No. of Equity
Reporting Entity Shares Owned Stake
--------------- ------------ ------
Pacificor LLC 2,262,724 31.3%
Pacificor Fund LP 401,328 5.5%
Pacificor II LP 357,724 5.0%
Pacificor Offshore Fund Ltd. 410,027 5.7%
Michael Klein Administrative Trust 2,262,724 31.3%
Pacificor Insurance Fund LP 0 0%
As of June 27, 2008, about 7,234,060 shares of DURA common stock
were outstanding.
Pursuant to DURA's Revised Joint Plan of Reorganization, DURA
issued, in the aggregate, 2,262,724 shares of Common Stock to
Pacificor LLC and its affiliates, 1,093,645 shares of which were
issued to discretionary accounts managed by Pacificor in exchange
for unsecured claims arising from ownership of $60,472,000 in
principal amount of DURA's 8.625% senior unsecured notes plus
unpaid interest.
Also pursuant to the Plan, DURA issued, in the aggregate, 907,017
shares of Series A Redeemable Voting Manditorily Convertible
Preferred Stock to Pacificor, 447,538 shares of which were issued
to discretionary accounts managed by Pacificor. The Convertible
Preferred Stock is not a registered security under the Securities
and Exchange Act of 1934, as amended.
Andrew B. Mitchell, CEO and chief investment officer of Pacificor
LLC, said that:
-- 357,724 shares of Common Stock were issued to Pacificor
Fund II pursuant to the Plan in exchange for unsecured
claims arising from ownership of $19,780,000 in principal
amount of DURA's 8.625% senior unsecured notes plus unpaid
interest;
-- 410,027 shares of Common Stock were issued to Pacificor
Offshore in exchange for unsecured claims arising from
ownership of $22,672,000 in principal amount of DURA's
8.625% senior unsecured notes of DURA plus unpaid interest;
and
-- 401,328 shares of Common Stock were issued to Pacificor
Fund pursuant to the Plan in exchange for unsecured claims
arising from ownership of $22,191,000 in principal amount
of 8.625% senior unsecured notes of DURA plus unpaid
interest.
Rochester Hills, Michigan-based DURA Automotive Systems Inc.
(Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent
designer and manufacturer of driver control systems, seating
control systems, glass systems, engineered assemblies, structural
door modules and exterior trim systems for the global automotive
industry. The company is also a supplier of similar products to
the recreation vehicle and specialty vehicle industries. DURA
sells its automotive products to North American, Japanese and
European original equipment manufacturers and other automotive
suppliers.
The company has three locations in Asia -- China, Japan and Korea.
It has locations in Europe and Latin-America, particularly in
Mexico, Germany and the United Kingdom.
The Debtors filed for chapter 11 petition on Oct. 30, 2006,
(Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq.,
Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at
Kirkland & Ellis LLP are lead counsels for the Debtors' bankruptcy
proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron,
Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors'
co-counsels. Baker & McKenzie acts as the Debtors' special
counsel. Togut, Segal & Segal LLP is the Debtors' conflicts
counsel. Miller Buckfire & Co., LLC is the Debtors' investment
banker. Glass & Associates Inc., gives financial advice to the
Debtor. Kurtzman Carson Consultants LLC handles the notice,
claims and balloting for the Debtors and Brunswick Group LLC acts
as their Corporate Communications Consultants for the Debtors.
As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total
assets and $1,623,632,000 in total liabilities.
On April 3, 2008, the Court approved the Debtors' revised
Disclosure Statement explaining their revised Chapter 11 plan of
reorganization.
(Dura Automotive Bankruptcy News, Issue No. 60; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
FORD MOTOR: Raising Lease Prices on Trucks and SUVs on August 1
---------------------------------------------------------------
Ford Motor Co. is changing its leasing business plan to raise
lease prices of the Ford F-150 and Super Duty pickups, and the
Ford Explorer and Sport Trac SUVs, effective Aug. 1, 2008, The
Wall Street Journal's John D. Stoll and Matthew Dolan report.
Ford informed dealers through an e-mailed memo that the move is
necessary for Ford's financing subsidiary, Ford Motor Credit Co.,
to curb losses incurred in the second quarter of 2008.
WSJ relates that the memo said that extreme losses has sparked
Ford Credit to take on off-lease vehicles, adjusting residuals
mid-quarter on the following vehicle lines. Off-lease vehicles
are vehicles returned to the dealer after a lease has expired. A
normal lease period runs between 24 months and 36 months, although
some leases are extended.
According to a press release, Ford Motor Credit reported a net
loss of $1.427 billion in the second quarter of 2008, down
$1.489 billion from net income of $62 million a year earlier. On
a pre-tax basis, Ford Motor Credit reported a loss of $2.380
billion, compared with earnings of $112 million in the previous
year. Excluding a $2.1 billion impairment charge for operating
leases, Ford Motor Credit incurred a pre-tax loss of $294 million
in the second quarter of 2008.
The decrease in pre-tax earnings primarily reflected the
impairment charge for operating leases, higher depreciation
expense for leased vehicles, and higher provision for credit
losses. These were offset partially by the non-recurrence of
net losses related to market valuation adjustments from
derivatives, higher financing margin, a gain related to the sale
of approximately half of our ownership interest in our Nordic
operations, and lower operating costs.
During the second quarter of 2008, higher fuel prices and the weak
economic climate in North America resulted in a pronounced shift
in consumer preferences from full-size trucks and traditional
sport utility vehicles to smaller, more fuel-efficient vehicles.
This shift in consumer preferences combined with a weak economic
climate caused a significant reduction in auction values for used
full-size trucks and traditional sport utility vehicles.
In addition, Ford Motor Credit completed its quarterly North
America operating lease review and projected that lease-end
residual values would be significantly lower than previously
expected for full-size trucks and traditional sport utility
vehicles. As a result of these market factors and Ford Motor
Credit's portfolio review, Ford Motor Credit determined a pre-tax
impairment charge of $2.1 billion was required.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Dec. 12, 2006,
Standard & Poor's Ratings Services affirmed its 'B' bank loan and
'2' recovery ratings on Ford Motor Co.
As reported in the Troubled Company Reporter on Dec. 7, 2006,
Fitch Ratings downgraded Ford Motor Company's senior unsecured
ratings to 'B-/RR5' from 'B/RR4'.
As reported in the Troubled Company Reporter on Dec. 6, 2006,
Moody's Investors Service assigned a Caa1, LGD4, 62% rating to
Ford Motor Company's $3-billion of senior convertible notes due
2036.
FREESCALE SEMICONDUCTOR: Posts $184MM Net Loss in 2008 2nd Qtr.
---------------------------------------------------------------
Freescale Semiconductor Inc. reported a net loss of $184.0 million
for the second quarter ended June 27, 2008, compared with a net
loss of $288.0 million in the corresponding period in 2007.
Net sales for the second quarter of 2008 were $1.5 billion,
compared to $1.4 billion in the second quarter of 2007. Higher
net sales were driven by a 41% increase in Cellular Product net
sales and 19% in Networking and Multimedia net sales, partially
offset by lower sales related to decreasing production in the U.S.
automotive industry.
The company reported an operating loss of $137.0 million for the
second quarter of 2008, compared to an operating loss of
$268 million during the second quarter of 2007.
Excluding reorganization of business charges and non-cash purchase
accounting expenses of $371.0 million in the second quarter of
2008, and $427.0 million in the second quarter of 2007 related to
the company's acquisition by a private equity consortium in
December 2006, operating earnings were $234.0 million during the
second quarter of 2008, compared to operating earnings of
$159.0 million during the second quarter of 2007.
Six Months Results
Net sales were $2.9 billion in the first half of 2008 compared to
$2.7 billion in the first half of 2007. Higher net sales were
driven primarily by a 29% increase in Cellular Product net sales,
and 8% in Networking and Multimedia net sales partially offset by
lower sales related to decreasing production in the U.S.
automotive industry.
The company had a net loss of $429.0 million in the first half of
2008 compared to a net loss of $827.0 million in the first half of
2007.
Liquidity and Capital Resources
Cash, cash equivalents and short-term investments were
$1.2 billion at June 27, 2008, compared to $751.0 million at
Dec. 31, 2007. Of the $1.2 billion of cash and cash equivalents
and short-term investments held at June 27, 2008, $173.0 million
was held by the company's U.S. subsidiaries and approximately
$1.0 billion was held by the company's foreign subsidiaries.
Capital expenditures were $159.0 million for the first six months
of 2008, compared with $164.0 million in the same period of 2007.
Net cash used for financing activities was $95.0 million and
$22.0 million for the first half of 2008 and 2007, respectively.
During the first half of 2008, the company utilized $67.0 million
to repurchase a portion of its outstanding Senior Subordinated
Notes, Fixed Rate Notes and Floating Rate Notes, and $28.0 million
to make additional long-term debt and capital lease payments.
Cash used for financing activities during the first quarter of
2007 primarily consisted of long-term debt and capital lease
payments.
At June 27, 2008, the company had a senior secured credit facility
that included (i) a $3.5 billion term loan, including letters of
credit and swing line loan sub-facilities ("Term Loan"), and (ii)
a revolving credit facility with a committed capacity of
$750.0 million. The Term Loan will mature on Dec. 1, 2013. The
Revolver will be available through Dec. 1, 2012, at which time all
outstanding principal amounts under the Revolver will be due and
payable.
At June 27, 2008, approximately $3.4 billion was outstanding under
the Term Loan, and there were no borrowings outstanding under the
Revolver. The company had $18.0 million in letters of credit
outstanding under the Revolver at June 27, 2008.
The company had an aggregate principal amount of approximately
$5.8 billion in senior notes outstanding at June 27, 2008,
consisting of (i) $492.0 million of floating rate notes maturing
in 2014, (ii) $1.5 billion of 9.125% / 9.875% PIK-election notes
maturing in 2014 ("Toggle Notes"), (iii) approximately
$2.3 billion of 8.875% notes maturing in 2014, and (iv)
approximately $1.5 billion of 10.125% senior subordinated notes
maturing in 2016.
Balance Sheet
At June 27, 2008, the company's consolidated balance sheet showed
$14.7 billion in total assets, $11.9 billion in total liabilities,
and $2.8 billion in total stockholders' equity.
The company's consolidated balance sheet at June 27, 2008, also
showed strained liquidity with $3.1 billion in total current
assets available to pay $9.3 billion in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended June 27, 2008, are available for
free at http://researcharchives.com/t/s?302d
About Freescale Semiconductor
Headquartered in Austin, Texas, Freescale Semiconductor Inc.
(NYSE: FSL) -- http://www.freescale.com/ -- designs and
manufactures embedded semiconductors for the automotive, consumer,
industrial, networking and wireless markets. The company has
design, research and development, manufacturing or sales
operations in more than 30 countries.
* * *
As reported in the Troubled Company Reporter on Feb. 15, 2008,
Fitch Ratings revised the rating outlook on Freescale
Semiconductor Inc. to negative from stable and affirmed these
ratings: (i) issuer default rating at 'B+'; (ii) senior secured
bank revolving credit facility at 'BB+/RR1'; (iii) senior secured
term loan at 'BB+/RR1'; (iv) senior unsecured notes at 'B/RR5';
and (v) senior subordinated notes at 'CCC+/RR6'.
FRONTIER AIRLINES: Denver Employees to Bear Brunt of 606 Job Cuts
-----------------------------------------------------------------
Frontier Airlines has informed 606 employees that they will be
affected by the company's planned job cuts to deal with weakening
economy and rising fuel costs, The Denver Post reported.
The 606 employees include:
* 37 workers from the customer service facility in Las Cruces
in New Mexico;
* 113 administrative workers in Colorado; and
* 456 flight attendants, pilots and other workers at the
Denver International Airport.
As previously reported, Frontier announced it will phase out
seven aircraft from its Airbus fleet in mid-August and trim
seating capacity by 17% in September 2008.
In an e-mail to the Las Cruces Sun-News, Frontier spokesman Steve
Snyder said the 37 workers who received the two-month
notifications may not lose their jobs "if we can find other
solutions."
Frontier's Las Cruces call center has been in operation for eight
years. Despite the imminent job cuts, Las Cruces' operations
will continue with its more than 100 employees.
According to Mr. Snyder, the airline's future decisions "will
likely be guided . . . by the price of oil." Hence, another
spike in the price of oil could result in additional layoffs,
according to the reports.
Frontier Confirms Employees' Pay Cuts
Mr. Snyder confirmed to The Las Cruces Sun-News that across the
board pay reductions have taken effect for all employees within
the company.
Specifically, the CEO took a 20% pay cut, while the rest of the
vice-presidents took a reduction of up to 20%. Non-represented
employees had up to 10% of their salaries reduced, Mr. Snyder
told the newspaper. Frontier is in negotiated concessions with
it's unions as well, the report said.
Frontier's Internal Memo
9News.com reported that it obtained a copy of Frontier's internal
memo relating to the job cuts "from an anonymous source."
The memo stated:
"It's hard to believe it has only been about a month since we
announced our Chapter 11 reorganization. It seems like a
lifetime ago with all the work that has taken place in such a
short time, and we are only at the beginning of a long journey
that will have its ups and downs. Some of the more recent 'ups'
include the fact that we continue to see great demand for our
product. We can also tell you that we have shared the story of
our future with more than 40 potential investors, and the
reception has been quite positive. In addition, the bankruptcy
proceedings and the creditors' committee meetings have been very
smooth and absent of controversy.
However, at this critical time when we are trying to secure DIP
financing, we must show these potential investors and the
creditors' committee a viable business plan that will allow us to
operate in this challenging environment of rising oil costs.
They need to see that we are doing everything possible in
relation to fuel costs and to improve Frontier Airlines Holdings,
Inc. bottom line. Since we have entered bankruptcy, fuel has
increased from $107/barrel to over $122/barrel. This represents
an annual increase in expenses of nearly 75 million dollars.
Unfortunately, these increases are no longer offset by fuel
hedges as our hedging agreements became invalid when we entered
bankruptcy.
Therefore, we need to make some significant changes to our cost
structure in order to achieve a non-fuel cost per available seat
mile (CASM) of 5.8 cents. We have aggressively been eliminating
non-labor expenses as well as requesting cost reductions from our
suppliers and vendors. Unfortunately, we cannot reach our CASM
ex fuel goal by only reducing non-labor expenses. As a point of
necessity, we are going to have to reduce our labor and benefit
expenses very quickly. We recently announced pay cut reductions
for the entire Frontier Airlines Holdings, Inc. officer group
effective May 1. In addition, We are now asking that all
employees also take a pay reduction through September 2008. At
that time, we will review our financial situation and the market
conditions again. We will also be suspending the 401(k) match
for this period of time.
Frontier Airlines Inc. has been meeting with all of their union
groups to ask for their assistance in helping the Holding Group
achieve our cost goals. Historically, Frontier Airlines
unionized and non-union employee groups have pulled together
during the tough times. We are proud to say that once again,
most of Frontier Airlines union leaders have taken the urgency of
the situation to heart and are doing their part to help guide us
through the tougher times. Both the pilot's union (FAPA) and the
dispatcher's union (TWU) have tentatively agreed to the terms of
the concessions and will be meeting with their membership to
review the details of the proposed concessions. Those
concessions will still require ratification by the members.
At this time Frontier Airlines has not been able to reach a
tentative agreement with the leadership for the Teamsters Union
that represents their mechanics. However, because of the
challenges we face, we must still move forward.
Managers will be meeting with all of our employees during the
upcoming week to provide a detailed explanation of the specific
pay cuts for each workgroup.
We know that the news will be difficult for many of you, and
we know that everyone has been working extremely hard. Please be
patient as we work through these challenging times together. In
addition, we want to emphasize to you that we will revisit these
changes in September, and depending on the situation with fuel
and our own financials, we will decide if we are able to restore
a portion or all of the wage levels.
We want to also apologize for this letter coming out this
evening. Our intention was to send this letter at the beginning
of the workday so that your management would be present to
discuss and answer any questions. Unfortunately, the press
received information late today informing them of these temporary
wage reductions. As we hope you are all aware we have tried to
be proactive and forthright in all of our dialogue with you. In
this spirit we felt that the letter should be sent out
immediately.
Even though we are facing many headwinds we are still as focused
as ever and encouraged by the vast amount of progress that we
have made during the last eight months. Without the dedication
and hard work by all of you this would not be the case.
Your support continues to be invaluable and appreciated. Thank
you for your support in this effort. Again, we know how hard
this is for everyone, and we hope you understand that we would
not be asking for these pay reductions if it wasn't absolutely
necessary for the longer term viability of Frontier Airlines
Holdings Inc."
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 14
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 $1,126,748,000 and total debts
was $933,176,000.
FRONTIER AIRLINES: Amends Aircraft Sale Contract with VTB Leasing
-----------------------------------------------------------------
Frontier Airlines Holdings Inc. entered into a Letter of Intent
with VTB Leasing to sell six of Frontier's 47 Airbus A319 aircraft
to VTB Leasing for onward lease to Rossiya Airlines.
This agreement amends an earlier agreement where VTB Leasing was
to purchase two A319 and two A318 aircraft. Under the revised
agreement, VTB Leasing will not take delivery of the originally
agreed upon two A318 aircraft to be delivered in August and will
instead purchase an additional six A319 aircraft in August.
Frontier Airlines has also reached an agreement on other sale
leaseback transactions that further supplement its liquidity
position. In total, Frontier will realize approximately
$80 million in net proceeds from these transactions.
"This is another major step forward in strengthening our cash
position as we manage through our reorganization," Sean Menke,
Frontier president and chief executive officer, said. "These
aircraft transactions, combined with the financing announced last
week and other liquidity initiatives the Company has realized
since early July, represent substantial progress in our
reorganization efforts."
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 14
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 $1,126,748,000 and total debts
was $933,176,000.
GENCORP INC: Files Form S-8 to Register 5MM Shares for Stock Fund
-----------------------------------------------------------------
GenCorp Inc. filed with the U.S. Securities and Exchange
Commission a Registration Statement on Form S-8 for the purpose of
registering an additional 5,000,000 shares of the company's common
stock, par value $0.10 per share, issued in the GenCorp Stock Fund
pursuant to the GenCorp Retirement Savings Plan.
GenCorp disclosed that the proposed maximum offering price per
share is $7.44; and the proposed maximum aggregate offering price
is $37,200,000.
A full-text copy of the Form S-8 filed by the company is available
at no charge at:
http://ResearchArchives.com/t/s?2fee
About GenCorp
Headquartered in Rancho Cordova, Calif., GenCorp Inc. (NYSE: GY)
-- http://www.GenCorp.com/-- is a leading technology-based
manufacturer of aerospace and defense products and systems with a
real estate segment that includes activities related to the
entitlement, sale and leasing of the company's excess real estate
assets.
As reported by the Troubled Company Reporter on July 7, 2008, at
May 31, 2008, the company's consolidated balance sheet showed
$994.0 million in total assets, $1.0 billion in total liabilities,
and $9.5 million in redeemable common stock, resulting in
shareholders' deficit of $33.4 million.
* * *
As reported in the Troubled Company Reporter on March 13, 2008,
Standard & Poor's Ratings Services affirmed its ratings, including
the 'B+' corporate credit rating, on GenCorp Inc. At the same
time, the outlook was revised to negative from stable.
GENERAL MOTORS: To Continue Automotive Lease Incentives in August
-----------------------------------------------------------------
General Motor Corp.'s decision to continue offering car leasing
incentives in August amid rising costs spurred the drop of its
share trading price, on Wednesday, by 60 cents, or 5%, to $11.30,
The Associated Press reports.
GM's move followed an announcement by its financing subsidiary,
GMAC LLC, on Tuesday that it would cease lease deal extensions to
Canadian consumers with lowest credit ratings, including buyers
who fall in the lowest two of six credit-rating categories, The
Wall Street Journal quotes George Fowler, general manager of
Superior Buick Pontiac GMC in Dearborn, Michigan.
AP related that GM's shares fell to $11.28 early Wednesday before
the $11.30 closing price. In the past 52 weeks, GM's shares have
traded between $8.81 and $43.20.
Big car makers are restricting their vehicle-leasing terms to curb
rising costs related to low used-vehicle values, WSJ's John Stoll
reports. As disclosed in the Troubled Company Reporter on
July 29, 2008, Chrysler LLC's financial arm, Chrysler Financial,
will cease offering vehicle lease alternatives in the U.S. to
focus more on financing vehicle purchases. 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 reports that a dealer observed that lease prices will be so
high that consumers won't be willing to agree to terms.
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: Plans to Cut 5,000 Jobs in North America
--------------------------------------------------------
General Motors Corp. intends to pare 5,000 jobs or 15% of its
salaried workforce in the U.S. and Canada by the end of 2008, to
save annual costs by $10 billion, Bloomberg News reports, citing
people familiar with the matter.
As disclosed in the Troubled Company Reporter on July 16, 2008,
GM expects to generate approximately $10 billion of cumulative
cash improvements by the end of 2009, versus original plans,
through a number of internal operating changes and other actions.
An estimates reduction of $1.5 billion in 2009 is expected by GM's
plans to further reduce salaried headcount in the U.S. and Canada
in the 2008 calendar year, which will be achieved through normal
attrition, early retirements, mutual separation programsand other
separation tools. In addition, health care coverage for U.S.
salaried retirees over 65 will be eliminated, effective Jan. 1,
2009.
Affected retirees and surviving spouses will receive a pension
increase from GM's over funded U.S. salaried plan to help offset
costs of Medicare and supplemental coverage. And there will be no
new base compensation increases for U.S. and Canadian salaried
employees for the remainder of 2008 and 2009.
Beyond these moves, which also impact GM executives, additional
actions are being taken. There will be no annual discretionary
cash bonuses for the company's executive group in 2008. With the
elimination of the annual cash bonus, combined with GM's long-term
incentives which are driven by GM stock price performance to
assure alignment with its stockholders, GM's executive group will
have a significant reduction in their cash compensation
opportunity for 2008. For the company's top executive officers,
it represents a reduction in their cash compensation opportunity
of 75% to 84%.
These benefit changes, salaried headcount reductions and other
related savings will result in an estimated reduction in cash
costs of more than 20%, or $1.5 billion in 2009.
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.
HANDLEMAN CO: Sells Music Operations in Canada and United Kingdom
-----------------------------------------------------------------
Handleman Company entered into definitive agreement to sell its
Canadian music operations to Anderson Merchandisers L.P. to
address the changes under way in the music industry.
The sale includes Handleman's music inventory and other selected
assets related to its Canadian operations. Anderson will also be
retaining Handleman's Canadian workforce of approximately
230 employees. Completion of the sale will occur shortly after
receipt of Canadian regulatory approval, which the parties expect
to receive in the near future.
In June, Handleman disclosed its decision to exit the North
American music business and entered into a definitive agreement
pursuant to which it sold music inventory and selected other
assets related to its Wal-Mart business in the U.S. to Anderson.
Since then, Handleman has been working with its other U.S. music
customers to assist them in achieving a smooth transition to other
music suppliers. This transition is progressing and is expected
to be substantially completed by the end of August.
Separately, Handleman reached an agreement in principle to sell a
majority of its assets and operations of its United Kingdom
subsidiary to a subsidiary of Tesco PLC. Completion of that
transaction is expected in the coming weeks. Tesco is expected to
retain a majority of Handleman's UK-based employees once the
contemplated transaction is complete. Handleman UK Limited has
been a leading UK-based distributor and store merchandiser of
books, music, computer games and other products.
Handleman has also closed on the sale of its Artist to Market
Distribution unit to Eurpac Service Inc. A2M is an independent
music distributor that works directly with branded artists and
artists' management to streamline the supply chain and deliver new
music product to the marketplace. Handleman's other businesses,
which are not involved in or affected by the transactions
announced today, will continue normal operations as it explores
opportunities to maximize value for the benefit of the Company's
stakeholders. These other businesses are Crave Entertainment
Group Inc., a full-service distributor of video game software,
hardware, and related accessories and a specialty video game
publisher, and REPS LLC, a national in-store merchandiser.
Handleman has retained the investment banking firm W.Y. Campbell &
Company for the purpose of exploring a sale or other strategic
options for Crave and REPS.
"We are continuing to make good progress in our efforts to
complete the wind-down of our North American music business,
operate our ongoing businesses, and explore opportunities to
maximize the value of other assets and operations for the benefit
of our stakeholders," Albert A. Koch, president and chief
executive officer of Handleman, said. "We continue to explore how
best to maximize the economic return to our shareholders."
Handleman will consider a distribution to the company's
shareholders of cash proceeds generated from the asset
dispositions in excess of what is needed to satisfy the company's
obligations. Whether there will be any excess cash proceeds for
distribution to shareholders is subject to a number of material
risks and uncertainties that may prevent any such distribution
from occurring. In addition, the company is exploring other
alternatives to maximize shareholder recoveries. Accordingly,
while the company believes that a cash distribution is a
possibility, actual results may differ from current estimates,
perhaps materially. The company will provide information about
future cash distributions, if any, at the time as it believes that
they are reasonably estimable.
About Anderson Merchandisers L.P.
Headquartered in Amarillo, Texas, Anderson Merchandisers L.P. --
http://www.amerch.com/-- is a privately held company that
distributes pre-recorded music, movies, and books. The company
service retail stores throughout the United States. Anderson
Merchandisers L.P. is part of Anderson Media, which was
established in 1917. The company has more than 4,000 associates
across all 50 states, and Puerto Rico.
About Tesco PLC
Headquartered in United Kingdom, Tesco PLC (LON:TSCO) --
http://www.tesco.com/-- is an international retailer. The United
Kingdom segment includes the start-up operations for establishing
the operations in the United States. Its rest of Europe segment
includes the Republic of Ireland, Hungary, Poland, the Czech
Republic, Slovakia and Turkey. The Asia reporting segment includes
Thailand, South Korea, Malaysia, China and Japan.
About Handleman Company
Handleman Company (Pink Sheets: HDLM) is a category manager and
distributor of prerecorded music and console video game hardware,
software and accessories to leading retailers in the United
States, United Kingdom, and Canada. As a category manager, the
Company manages a broad assortment of titles to optimize sales and
inventory productivity in retail stores. Services offered include
product selection, direct-to-store shipments, marketing and in-
store merchandising.
Indenture Amendment and Waiver
As reported in the Troubled Company Reporter on May 22, 2008,
Handleman Company has entered into a sixth amendment to its credit
agreements to establish financial covenants and reduces the size
and cost of its credit facility without impacting liquidity. The
size of the revolving credit facility has been reduced from
$223 million to $163 million.
The lenders also waived defaults in the provisions:
(i) requiring Handleman to retain an investment banker by
March 31, 2008 for the purpose of exploring strategic
options with respect to specified discrete businesses,
(ii) prohibiting Handleman from maintaining more than
$2,000,000 in Deposit Accounts in the United Kingdom for
more than one Business Day prior to the date hereof,
(iii) requiring Handleman to deliver control agreements to the
Administrative Agent with respect to all Deposit Accounts
maintained by any Credit Party in the United Kingdom by
April 15, 2008, and
(iv) requiring Handleman to provide a Fiscal Plan for 2010,
2011 and 2012 by May 5, 2008.
As of May 14, 2008, Handleman had $63.3 million in debt
outstanding within its credit agreements.
HARRY RUDDY: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Harry Ruddy
Marry Ruddy
188 East Bayberry Road
Islip, NY 11751
Bankruptcy Case No.: 08-74024
Chapter 11 Petition Date: July 28, 2008
Court: Eastern District of New York (Central Islip)
Judge: Dorothy Eisenberg
Debtors' Counsel: Richard J. McCord, Esq.
(rmccord@certilmanbalin.com)
Certilman Balin Adler & Hyman LLP
90 Merrick Avenue
East Meadow, NY 11554
Tel: (516) 296-7801
Fax: (516) 296-7111
http://www.certilmanbalin.com/
Total Assets: $3,845,500
Total Debts: $12,958,365
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/nyeb08-74024.pdf
HEADWATERS INC: Moody's Cuts SGL Rating on Likely Covenant Breach
-----------------------------------------------------------------
Moody's Investors Service lowered the speculative grade liquidity
rating of Headwaters Incorporated to SGL-3 from SGL-1 and changed
the company's rating outlook to stable from positive. The
lowering of the speculative grade liquidity rating was prompted by
the company's announcement that there is a possibility that it
could violate financial covenants under its senior credit facility
as early as the September 30, 2008 quarter and that, to avoid a
covenant breach, it will seek to amend the covenant or, if
necessary, replace the facility. Moody's believes the covenant
pressure is somewhat transitory as it is due to the combination of
high capital expenditures for the development of Headwaters' coal
cleaning business, which should increasingly contribute to
earnings, and stable to lower EBITDA in the company's other
businesses. While the prospects for the company getting an
amendment are fairly high, Moody's speculative grade liquidity
ratings, by design, do not assume the cooperation of lenders when
it comes to amendments or arranging a replacement credit facility,
and therefore, the SGL-3 rating, denoting adequate liquidity, is a
better indication of Headwaters' short-term liquidity risk.
Furthermore, the SGL-3 rating reflects the likelihood of negative
free cash flow in 2008 and the fact that availability under the
$60 million revolver was only $16 million as of June 30.
The change in the company's rating outlook reflects a deeper and
longer-than-expected decline in the company's Building Products
segment due to the retrenchment of the U.S. housing market. The
reduced income and cash flow from Building Products, the company's
largest segment, make it unlikely the company will be upgraded in
the next 12-24 months and, hence, the outlook was changed to
stable from positive.
Moody's previous rating action for Headwaters was in March 2007,
when the rating outlook was changed to positive. That revision
correctly anticipated the ramp-up of the company's coal cleaning
operation, which was profitable in the most-recent quarter, the
impact due to the winding down of the very profitable coal synfuel
business, and the downward pressure on the Building Products
segment, but underestimated the magnitude and duration of the
impact of the ongoing residential construction downturn on this
important segment.
These ratings were affected by this action:
Speculative grade liquidity rating -- to SGL-3 from SGL-1
Rating outlook -- to stable from positive
The following ratings were not changed:
Corporate family rating -- B1
Guaranteed senior secured (first lien) credit facilities -- Ba2
(LGD2, 22%). The credit facilities include a $60 million
revolving credit facility maturing September 2009 and a term loan
B facility maturing April 30, 2011.
Headwaters Incorporated, headquartered in South Jordan, Utah, is a
diversified company providing products, technologies and services
to the energy and construction materials industries. For the
twelve months ended June 30, 2008, Headwaters had sales of
$974 million.
HUDSON HIGH: S&P Lowers Two Notes Ratings; Keeps Negative Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on seven
classes of notes from Hudson High Grade Funding 2006-1 Ltd. and
Libertas Preferred Funding III Ltd. S&P placed four of the
lowered ratings on CreditWatch with negative implications, and two
remain on CreditWatch negative. At the same time, S&P withdrew
its rating on the class S notes from Hudson High Grade Funding
2006-1 Ltd. following their complete paydown on the July 2, 2008,
payment date.
The downgrades and CreditWatch placements follow S&P's receipt of
notifications from the transactions' trustees that the controlling
noteholders intend to liquidate the collateral and terminate the
deals.
Both deals have experienced an event of default as a result of the
failure of an overcollateralization-based EOD trigger. Libertas
Preferred Funding III Ltd. is a hybrid collateralized debt
obligation of asset-backed securities that was collateralized at
the time of the initial rating by mezzanine residential mortgage-
backed securities and other structured finance assets. Hudson
High Grade Funding 2006-1 Ltd. is a cash flow CDO of ABS that was
collateralized by RMBS and other structured finance assets at the
time of the initial rating.
Ratings Lowered and Remaining on Creditwatch Negative
Hudson High Grade Funding 2006-1 Ltd.
Rating
------
Class To From
----- -- ----
A-1 B-/Watch Neg BB-/Watch Neg
A-2 CCC-/Watch Neg CCC+/Watch Neg
Ratings Lowered and Placed on Creditwatch Negative
Libertas Preferred Funding III Ltd.
Rating
------
Class To From
----- -- ----
I super senior B-/Watch Neg BB-
I-J CCC-/Watch Neg B+
II CCC-/Watch Neg B-
III CCC-/Watch Neg CCC+
Rating Lowered and Removed from Creditwatch Negative
Rating
------
Class To From
----- -- ----
Hudson High Grade Funding 2006-1 Ltd. B CC CCC-/Watch Neg
Rating Withdrawn
Rating
------
Class To From
----- -- ----
Hudson High Grade Funding 2006-1 Ltd. S NR AA/Watch Neg
NR -- Not rated.
HUISH DETERGENTS: Unilever Merger Cues S&P to Assign Neg. Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed all of the ratings on
Huish Detergents Inc., including the 'B' corporate credit rating,
on CreditWatch with positive implications. As a result, S&P
expects to either affirm or raise the ratings on completion of its
review. As of March 31, 2008, the company had $895 million of
debt.
The CreditWatch listing is based on the announcement that the
company will merge with Unilever's North American laundry
business, which is being acquired by Vestar Capital Partners, who
also own Huish Detergents. The transaction is expected to close
in 2008. On completion of the transaction, the combined company
will be renamed The Sun Products Corp. and will have annual sales
exceeding $2 billion.
"Standard & Poor's review will include an analysis of the
company's new capital structure, liquidity, expected operating
performance, and integration risk," said Standard & Poor's credit
analyst Patrick Jeffrey. "We expect this transaction to be
deleveraging and enhance its business profile through additional
brands and greater scale," he continued.
Mr. Neil DeFeo, former CEO of Playtex Products Inc. and Remington
Products Co., will be the CEO of the new company. Defeo has a
successful track record of improving company performance and
competing with larger branded consumer products companies.
IL PALAZZO: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Il Palazzo I at Arrowhead Ranch, L.L.C.
6685 W. Beardsley Road, #255
Glendale, AZ 85308
Bankruptcy Case No.: 08-09187
Chapter 11 Petition Date: July 23, 2008
Court: District of Arizona (Phoenix)
Judge: Redfield T. Baum Sr.
Debtors' Counsel: Steven N. Berger, Esq.
(snb@engelmanberger.com)
Engelman Berger, P.C.
One Columbus Plaza, Suite 700
3636 N Central Avenue
Phoenix, AZ 85012-1985
Tel: (602) 271-9090
Fax: (602) 222-4999
http://www.engelmanberger.com/
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor did not file a list of 20 largest unsecured creditors.
IMPAC CMB: Moody's Publishes Underlying Ratings of 2003-2007 Notes
------------------------------------------------------------------
Moody's Investors Service published the underlying ratings on
notes that are guaranteed by the financial guarantors identified
below. The underlying rating reflects the intrinsic credit quality
of the notes in the absence of the guarantee. The current ratings
on the below notes are consistent with Moody's practice of rating
insured securities at the higher of the guarantor's insurance
financial strength rating or any underlying rating that is public.
Complete rating actions are as follows:
Issuer: Impac CMB Trust Series 2003-1 Collateralized Asset-Backed
Bonds, Series 2003-1
Class Description: Class 1-A-1 Notes due 2033
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: A1
Class Description: Class 2-A-1 Notes due 2033
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: A1
Issuer: Impac CMB Trust Series 2003-4 Collateralized Asset-Backed
Bonds, Series 2003-4
Class Description: Class 1-A-1 Notes due 2033
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: A1
Issuer: Impac CMB Trust Series 2004-6 Collateralized Asset-Backed
Bonds, Series 2004-6
Class Description: Class 2-A Notes due 2034
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Issuer: Impac CMB Trust Series 2004-7 Collateralized Asset-Backed
Bonds, Series 2004-7
Class Description: Class 2-A Notes due 2034
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Issuer: Impac CMB Trust Series 2004-8 Collateralized Asset-Backed
Bonds, Series 2004-8
Class Description: Class 1-A Notes due 2034
Current Rating: B1
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: B3
Class Description: Class 2-A-1 Notes due 2034
Current Rating: A1
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: A1
Class Description: Class 2-A-2 Notes due 2034
Current Rating: B1
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: B1
Issuer: Impac CMB Trust Series 2004-9 Collateralized Asset-Backed
Bonds, Series 2004-9
Class Description: Class 2-A Notes due 2034
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Issuer: Impac CMB Trust Series 2004-10 Collateralized Asset-Backed
Bonds, Series 2004-10
Class Description: Class 1-A-1 Notes due 2034
Current Rating: A3
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: A3
Class Description: Class 1-A-2 Notes due 2034
Current Rating: B1
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: B3
Class Description: Class 2-A Notes due 2034
Current Rating: B1
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: B2
Issuer: Impac CMB Trust Series 2004-11 Collateralized Asset-Backed
Bonds, Series 2004-11
Class Description: Class 1-A-1 Notes due 2034
Current Rating: Aaa
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: Aaa
Class Description: Class 1-A-2 Notes due 2034
Current Rating: B1
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: B1
Issuer: Impac CMB Trust Series 2005-3 Collateralized Asset-Backed
Bonds, Series 2005-3
Class Description: Class A-3 Notes due 2035
Current Rating: Aaa
Financial Guarantor: Financial Guaranty Insurance Company (B1,
negative outlook)
Underlying Rating: Aaa
Issuer: Impac CMB Trust Series 2005-5 Collateralized Asset-Backed
Bonds, Series 2005-5
Class Description: Class A-3W Notes due 2035
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Issuer: Impac CMB Trust Series 2005-6 Collateralized Asset-Backed
Bonds, Series 2005-6
Class Description: Class 1-A-1 Notes due 2035
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Class Description: Class 1-A-2 Notes due 2035
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Issuer: Impac CMB Trust Series 2005-7 Collateralized Asset-Backed
Bonds, Series 2005-7
Class Description: Class A-1 Notes due 2035
Current Rating: Aa2
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aa2
Class Description: Class A-2 Notes due 2035
Current Rating: Aa2
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aa2
Issuer: Impac Secured Assets Corp. Mortgage Pass-Through
Certificates, Series 2004-3
Class Description: Class 2-A-1 Notes due 2034
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Class Description: Class 2-A-2 Notes due 2034
Current Rating: Aaa
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Aaa
Issuer: Impac Secured Assets Corp. Mortgage Pass-Through
Certificates, Series 2005-2
Class Description: Class A-1W Notes due 2035
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: A1
Issuer: Impac Secured Assets Corp. Mortgage Pass-Through
Certificates, Series 2006-3
Class Description: Class A-1 Notes due 2036
Current Rating: Aa3
Financial Guarantor: Ambac (Aa3,negative outlook)
Underlying Rating: Ba3
Issuer: Impac Secured Assets Corp. Mortgage Pass-Through
Certificates, Series 2006-5
Class Description: Class 2-A Notes due 2036
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Baa2
Issuer: Impac Secured Assets Corp. Mortgage Pass-Through
Certificates, Series 2007-2
Class Description: Class 1-AM Notes due 2037
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Ba2
Class Description: Class 2-A Notes due 2037
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Baa2
Issuer: Impac Secured Assets Corp. Mortgage Pass-Through
Certificates, Series 2007-3
Class Description: Class AM Notes due 2037
Current Rating: Aa3
Financial Guarantor: Ambac Assurance Corporation (Aa3, negative
outlook)
Underlying Rating: Ba2
IRISON LOMONT: Case Summary & 24 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Irison Lomont Jones
aka Premier Capital Investment Group Inc.
fdba Blak Ice Rrocords Inc.
fdba Ice Cold Blakjak Productions Inc.
42094 21st Street West
Lancaster, CA 93536
Bankruptcy Case No.: 08-15318
Chapter 11 Petition Date: July 27, 2008
Court: Central District Of California (San Fernando Valley)
Judge: Kathleen Thompson
Debtors' Counsel: Patricia Depew, Esq.
(patricia@depewlaw.com)
Law Offices of Patricia S. Depew
1801 Century Park E, Ste. 2400
Los Angeles, CA 90067
Tel: (310) 284-8494
Fax: (310) 288-8180
http://www.depewlaw.com
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at
http://bankrupt.com/misc/califcb08-15318.pdf
IVY LANE CDO: Moody's Downgrades Sr. Secured Notes Rating to C
--------------------------------------------------------------
Moody's Investors Service downgraded the ratings of two classes of
notes issued by Ivy Lane CDO Ltd., and left on review for possible
further downgrade the rating of one of these classes of notes as
follows:
Class Description: U.S.$350,000,000 Class A-1 Floating Rate Senior
Secured Notes Due 2046-1
Prior Rating: Baa3, on review for possible downgrade
Current Rating: B3, on review for possible downgrade
Class Description: U.S.$50,000,000 Class A-2 Floating Rate Senior
Secured Notes Due 2046-1
Prior Rating: Caa2, on review for possible downgrade
Current Rating: C
Ivy Lane CDO Ltd. is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities. On
March 26, 2008, the transaction experienced an event of default
caused by a failure of Class A Principal Coverage Ratio to be
greater than or equal to the required amount set forth in Section
5.1(h) of the Indenture dated May 18, 2006. That event of default
is continuing. Also, Moody's has received notice from the Trustee
that it has been directed by a majority of the controlling class
to declare the principal of and accrued and unpaid interest on the
Notes to be immediately due and payable.
The rating actions taken today reflect continuing deterioration in
the credit quality of the underlying portfolio and the increased
expected loss associated with the transaction. Losses are
attributed to diminished credit quality on the underlying
portfolio.
As provided in Article V of the Indenture during the occurrence
and continuance of an Event of Default, the Controlling Class may
be entitled to direct the Trustee to take particular actions with
respect to the Collateral. The severity of losses may depend on
the timing and choice of remedy to be pursued by the Controlling
Class. Because of this uncertainty, the rating of the Class A-1
Notes issued by Ivy Lane CDO Ltd. is on review for possible
further action.
JETBLUE AIRWAYS: Posts $7.0 Million Net Loss in 2008 2nd Quarter
----------------------------------------------------------------
JetBlue Airways Corp. reported a net loss of $7.0 million for the
second quarter ended June 30, 2008, compared with net income of
$21.0 million in the same period of 2007.
Operating revenues for the quarter totaled $859.0 million,
representing growth of 17.7% over operating revenues of
$730.0 million in the second quarter of 2007. The increase in
operating revenues was primarily due to a 14%, or $96.0 million,
increase in passenger revenues.
Operating revenue per available seat mile for the quarter
increased 13% over the same period in 2007. The company's
average fares for the quarter increased 13% over 2007 to $138,
while load factor declined 2.9 points to 80.6% from a year ago.
Operating expenses increased 28%, or $181.0 million, over the same
period in 2007, primarily due to higher fuel prices and increased
capacity. Operating capacity increased 4% to 8.4 billion
available seat miles due to having 13 additional average aircraft
in service during 2008. Operating expenses per available seat
mile increased 23% to 9.99 cents for the three months ended
June 30, 2008. Excluding fuel, cost per available seat mile for
the three months ended June 30, 2008, was 5% higher compared to
the same period in 2007.
Operating income for the three months ended June 30, 2008, was
$21.0 million compared to $73.0 million for the same period last
year.
Interest expense decreased 4%, or $3.0 million, to $53.0 million
primarily due to the impact of lower interest rates and the
retirement of debt associated with sold aircraft partially offset
by the financing of 15 additional aircraft.
Pre-tax loss for the quarter was $10.0 million, compared with pre-
tax income of $43.0 million in the year-ago period.
Liquidity and Capital Resources
At June 30, 2008, the company had unrestricted cash and cash
equivalents of $846.0 million compared to cash and cash
equivalents of $190.0 million at Dec. 31, 2007. Cash flows from
operating activities were $105.0 million for the six months ended
June 30, 2008, compared to $219.0 million for the six months ended
June 30, 2007. The decrease in operating cash flows was primarily
the result of a 50% higher price of fuel in 2008 compared to 2007.
At June 30, 2008, the company had no lines of credit other than
one short-term borrowing facility for certain aircraft predelivery
deposits. At June 30, 2008, the company had $30.0 million in
borrowings outstanding under this facility.
At June 30, 2008 the company had total long-term debt and capital
lease obligations, indluding current maturities, of $3.3 billion,
compared to $3.0 billion at Dec. 31, 2007.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$6.5 billion in total assets, $5.1 billion in total liabilities,
and $1.4 billion in total stockholders' equity.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $1.3 billion in total current
assets available to pay $1.4 billion in total current liabilities.
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?3030
About JetBlue Airways
Based in Forest Hills, New York, JetBlue Airways Corporation
(Nasdaq: JBLU) -- http://www.jetblue.com/-- is a passenger
airline that provides customer service primarily on point-to-
point routes. As of June 30, 2008, the company operated a fleet
of 106 Airbus A320 aircraft and 36 EMBRAER 190 aircraft, of which
83 were owned, 55 were leased under operating leases and four were
leased under capital leases.
JetBlue currently serves 53 cities with 600 daily flights.
* * *
As reported in the Troubled Company Reporter on July 24, 2008,
Moody's Investors Service downgraded the Corporate Family and
Probability of Default Ratings of JetBlue Airways Corp. to Caa2
from Caa1, as well as the ratings of its outstanding corporate
debt instruments and certain Enhanced Equipment Trust
Certificates. The outlook is negative.
J-C HAULING: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: J-C Hauling Company, Inc.
P.O. Box 12
Millstadt, IL 62260
Bankruptcy Case No.: 08-31662
Type of Business: The Debtor provides transportation services.
See: http://www.jchauling.com/
Chapter 11 Petition Date: July 29, 2008
Court: Southern District of Illinois (East St Louis)
Judge: Kenneth J. Meyers
Debtors' Counsel: Donald M. Samson, Esq.
(dnldsamson@yahoo.com)
226 W Main Street, Suite 102
Belleville, IL 62220
Tel: (618) 235-2226
Fax: (618) 235-0037
Estimated Assets: Less than $50,000
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/illsb08-31662.pdf
JHT HOLDINGS: May Employ Kaye Scholer as Primary Counsel
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave JHT
Holdings Inc. and its debtor-affiliates authority to employ Kaye
Scholer LLP as their primary restructuring counsel.
Through a separate motion, the Debtors have sought and obtained
Court approval to engage Pepper Hamilton LLP as local counsel and
Reinhart Boerner Van Deuren S.C. as co-restructuring counsel and
general corporate counsel in the bankruptcy case. Kaye and
Reinhart have assured the Court that they will make every effort
to avoid duplication of their services.
Kaye is responsible to advise the Debtors with respect to their
rights, powers, and duties as debtors-in-possession in the
continued management and operation of their businesses and
properties, among others.
A year prior to the bankruptcy filing, the Debtors paid Kaye
$1,512,470, including $1,500,294 for fees, $12,176 for expenses,
and a $250,000 retainer.
Kaye's hourly rates range from $600 to $895 for partners, $595 to
$685 for counsel, $290 to $645 for associates, and $130 to $$255
for legal assistants.
The Debtors have maintained that Kaye is a disinterested person
within the meaning of Section 101(14) of the U.S. Bankruptcy Code.
About JHT Holdings
Headquartered in Kenosha, Wisconsin, JHT Holdings Inc. --
http://www.jhtholdings.com/-- and its affiliates provide over-
the-road transportation of various types of motor vehicles,
including commercial trucks and cars.
The Debtors have non-debtor foreign affiliates in Canada and
Mexico. Another Mexican affiliate, Mexicana Logistics, S.A. de
C.V. is owned 50% by JHT Holdings and 50% by Gustavo Vildosola, a
Mexican national with no connection to the Debtors.
JHT Acquisition Corp. owns all of the outstanding stock of JHT
Holdings. JHT Acquisition is a holding company owned by a group
of investors, MTGLQ Investors, L.P., D.B. Zwirn Special
Opportunities Fund, L.P., ZM Private Equity Fund I, Spectrum
Investment Partners, L.P. and Stonehouse Investment Company LLC.
The company and 16 of its affiliates filed for chapter 11
protection on June 24, 2008 (Bankr. D. Del. Lead Case No. 08-
11267). David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at
Pepper Hamilton, LLP, represent the Debtors in their restructuring
efforts. The U.S. Trustee has appointed members to the Official
Committee of Unsecured Creditors to serve in this case. Pachulski
Stang Ziehl & Jones LLP represents the Creditors' Committee. When
the Debtors filed for protection against their creditors, they
listed assets and debts between $100 million to $500 million.
JHT HOLDINGS: Gets OK to Engage Reinhart as General Counsel
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave JHT
Holdings Inc. and its debtor-affiliates authority to hire Reinhart
Boerner Van Deuren s.c. as their general outside corporate
counsel, conflicts of interest counsel, and co-restructuring
counsel.
Through a separate motion, the Debtors have sought and obtained
Court approval to engage Pepper Hamilton LLP as local counsel and
Kaye Scholer LLP as primary restructuring counsel in the
bankruptcy case. Kaye and Reinhart have assured the Court that
they will make every effort to avoid duplication of their
services.
The Debtors have related that they want to employ Reinhart under a
general retainer because of the extensive legal services that will
be required in the chapter 11 case.
The Debtors paid Reinhart a retainer of $112,500 on March 13,
2008; $75,000 on March 24, 2008; $37,500 on March 28, 2008;
$50,000 on April 17, 2008; $82,629 on May 9, 2008; and $90,038 on
June 6, 2008, on account of professional services rendered and to
be rendered and disbursements to be incurred in the case.
Reinhart's fees currently range from $270 to $425 for
shareholders, $190 to $265 per hour for associates, and $120 to
$170 for legal assistants.
The Debtors have submitted that Reinhart, its shareholders, and
associates are "disinterested persons" within the meaning of
section 101(14), as modified by section 1107(b) of the U.S.
Bankruptcy Code.
About JHT Holdings
Headquartered in Kenosha, Wisconsin, JHT Holdings Inc. --
http://www.jhtholdings.com/-- and its affiliates provide over-
the-road transportation of various types of motor vehicles,
including commercial trucks and cars.
The Debtors have non-debtor foreign affiliates in Canada and
Mexico. Another Mexican affiliate, Mexicana Logistics, S.A. de
C.V. is owned 50% by JHT Holdings and 50% by Gustavo Vildosola, a
Mexican national with no connection to the Debtors.
JHT Acquisition Corp. owns all of the outstanding stock of JHT
Holdings. JHT Acquisition is a holding company owned by a group
of investors, MTGLQ Investors, L.P., D.B. Zwirn Special
Opportunities Fund, L.P., ZM Private Equity Fund I, Spectrum
Investment Partners, L.P. and Stonehouse Investment Company LLC.
The company and 16 of its affiliates filed for chapter 11
protection on June 24, 2008 (Bankr. D. Del. Lead Case No. 08-
11267). David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at
Pepper Hamilton, LLP, represent the Debtors in their restructuring
efforts. The U.S. Trustee has appointed members to the Official
Committee of Unsecured Creditors to serve in this case. Pachulski
Stang Ziehl & Jones LLP represents the Creditors' Committee. When
the Debtors filed for protection against their creditors, they
listed assets and debts between $100 million to $500 million.
KIMBALL HILL: Founder David K. Hill Dies of Cancer
--------------------------------------------------
David K. Hill, founder and executive chairman of Kimball Hill
Homes, Inc., died of cancer on July 26, 2008, at the age of 67.
Mr. Hill has been at the helm of Kimball Hill Homes since 1969.
Under his leadership, Kimball Hill Homes has grown into one of
the largest privately held home building companies in the United
States, the company noted in its Web site.
Mr. Hill has served on numerous industry-related executive
committees. He helped create the Housing Finance Division of the
National Association of Home Builders (NAHB), co-founded the Home
Mortgage Access Corporation, chaired the Mortgage Roundtable and
served on the FNMA Advisory Board.
Mr. Hill and his father, Kimball Hill, have both been inducted
into the National Association of Home Builders (NAHB) Housing
Hall of Fame – an award program that recognizes individuals who
have made significant and lasting national contributions to the
Housing industry in the United States as well as to the National
Association of Home Builders, the company's Web site noted.
"It is with great sadness that the Company mourns the passing of
its respected and beloved founder, former CEO and Chairman of the
Board, David K. Hill," Kimball Hill Homes states in a press
release.
"David will be remembered as a man who lived life with passion --
passion for his Company, his community and most significantly,
for his family."
About Kimball Hill
Based in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento
and Tampa, in five regions: Florida, the Midwest, Nevada, the
Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007 reflected
total assets of $795,473,000 and total debts $631,867,000.
The Debtors have until Aug. 21, 2008, to exclusively file a
bankruptcy plan. (Kimball Hill Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
KIMBALL HILL: Can Employ Neal Gerber as Bankruptcy Counsel
----------------------------------------------------------
Kimball Hill Inc. and its debtor-affiliates obtained authority
from the U.S. Bankruptcy Court for the Northern District of
Illinois to employ Neal, Gerber & Eisenberg LLP, as their special
counsel, effective as of June 16, 2008.
Prior to the date of bankruptcy, Neal Gerber represented the
Debtors in connection with the formation of, and complex
transactions involving, certain joint venture interests -- the
Urban JVs.
Because Neal Gerber is familiar with the Urban JVs and the
complexity of the transactions at issue, the Debtors asserted that
hiring the firm to provide them with general corporate advice and
legal services in line with their disposition of Urban JVs
will allow them to save on time and the cost of educating other
counsel. Obtaining a substitute counsel at this juncture would
only prejudice their estates, the Debtors related.
Neal Gerber is expected to advise and represent the Debtors in
documenting the sale transactions of these joint venture equity
interests affiliated with the Debtors:
a) 33% membership interest in Parkside Associates, LLC, owned
by Kimball Hill Urban Centers Chicago One, L.L.C.,
b) 23.75% membership interest in Stateway Associates, LLC,
owned by Kimball Hill Stateway, Inc., and
c) 49% membership interests in Mitchell Urban Partners, LLC,
owned by Kimball Hill Urban Centers Chicago Two, L.L.C.
The firm will be compensated for its legal services on an hourly
basis pursuant to its ordinary and customary hourly rates:
Professional Hourly Rate
------------ -----------
Partners $430 - $575
Associates $300 - $350
Paraprofessionals $200 - $250
During the 90 days prior to the date of bankruptcy, Neal Gerber
received from the Debtors $64,455 in payment for services
performed and expenses incurred in the ordinary course of
business.
As of the date of bankruptcy, Neal Gerber received a retainer of
$6,437 as advance against expenses for services in the
preparation of the Chapter 11 cases, which will be applied to
postpetition compensation and expense reimbursement, as may be
allowed by the Court.
Thomas C. Wolford, Esq., a partner at Neal Gerber, in Chicago,
Illinois, assures the Court that his firm does not hold or
represent any interest adverse to the Debtors on matters for
which the firm will be employed.
About Kimball Hill
Based in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento
and Tampa, in five regions: Florida, the Midwest, Nevada, the
Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007 reflected
total assets of $795,473,000 and total debts $631,867,000.
The Debtors have until Aug. 21, 2008, to exclusively file a
bankruptcy plan. (Kimball Hill Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
KIMBALL HILL: Wants to Employ Deloitte Tax as Tax Advisor
---------------------------------------------------------
Kimball Hill Inc. and its debtor-affiliates seek authority from
the U.s. Bankruptcy Court for the Northern District of Illinois to
employ Deloitte Tax LLP as their tax consultants and advisors
effective as of the date of bankruptcy.
The Debtors acknowledge that Deloitte Tax is widely recognized
for tax consulting and advisory services, as well as tax return
preparation and compliance services to clients in a variety of
industries. Deloitte Tax also has extensive experience in
delivering tax consulting and advisory services in various
Chapter 11 cases. As a result of the firm's previous employment
with the Debtors, it has also gained considerable knowledge about
the Debtors' businesses, which are necessary for the performance
of the certain proposed services.
Accordingly, the Debtors entered into an letter of engagement
with Deloitte Tax on March 19, 2008, in contemplation of certain
services the firm is to render for the Debtors' benefit. As the
Debtors' tax consultants and advisors, Deloitte Tax will:
(a) advise the Debtors regarding the tax aspects of the
restructuring and bankruptcy emergence process, including
analysis of the tax workplan;
(b) advise the Debtors on the cancellation of debt income for
tax purposes under Section 108 of the Internal Revenue
Code;
(c) advise the Debtors on post-restructuring tax attributes
and the absorption of those attributes based on the
Debtors' operating projections;
(d) assist the Debtors in the preparation of tax-basis
balance sheets;
(e) advise the Debtors on the potential effect of
"Alternative Minimum Tax" in various post-emergence
scenarios; and
(f) advise the Debtors on the effects of tax rules pertaining
to the post-bankruptcy net operating loss carryovers and
limitations on their utilization.
A full-text copy of the Deloitte Tax Letter of Engagement is
available for free at:
http://researcharchives.com/t/s?3031
To assist them with respect to tax refunds received prior to the
Petition Date, the Debtors asked Deloitte Tax to prepare their
consolidated federal and state income tax returns, including
those of their affiliates and joint-ventures.
Deloitte Tax will be paid for its services on an hourly basis
according to these rates, subject to the Court's approval:
Professional Hourly Rate
------------ -----------
Partner/Director $680
Senior Manager $550
Manager $460
Senior Associate $340
Tax Compliance Services
The Debtors subsequently engaged Deloitte Tax to prepare their
2007 federal and state income tax returns under a letter of
engagement dated April 22, 2008, a full-text copy of which is
available for free at:
http://researcharchives.com/t/s?3032
The parties estimate that related fees will range between
$135,000 and $155,000. Fees for services to the Debtors'
affiliates and joint ventures are expected at $5,500 per entity.
The Debtors may seek additional services in connection with the
2007 federal and state income tax returns preparation. As
provided for in the April 22 engagement, additional services will
be charged according to these rates:
Professional Hourly Rate
------------ -----------
Partner/Director $395 -- $593
Senior Manager $300 -- $450
Manager $240 -- $360
Senior Associate $165 -- $248
Deloitte Tax will also seek reimbursement of necessary expenses
incurred in the performance of certain services for the Debtors'
benefit.
During the 90 days prior to the bankruptcy filing, the Debtors
paid Deloitte Tax approximately $280,000 for tax consulting and
advisory services performed and expenses incurred. Of this
amount, $72,024 remains as of date of bankruptcy against which the
firm will apply any postpetition amounts.
David Hoffman, a partner at Deloitte Tax, assures the Court that
his firm does not hold any prepetition claims against the
Debtors, and is a "disinterested person" as the term is defined
pursuant to Section 101(14) of the U.S. Bankruptcy Code.
About Kimball Hill
Based in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento
and Tampa, in five regions: Florida, the Midwest, Nevada, the
Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007 reflected
total assets of $795,473,000 and total debts $631,867,000.
The Debtors have until Aug. 21, 2008, to exclusively file a
bankruptcy plan. (Kimball Hill Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
KLEROS REAL: Moody's Downgrades Ratings on $300MM Notes to Ba2
--------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade, the following notes issued by Kleros Real
Estate CDO IV, Ltd.:
Class Description: U.S. $300,000,000 Class A-1 First Priority
Senior Secured Floating Rate Notes Due December 2050
Prior Rating: Aa1, on review for possible downgrade
Current Rating: A1, on review for possible downgrade
Class Description: U.S. $300,000,000 Class A-2 Second Priority
Senior Secured Floating Rate Delayed Draw Notes Due December 2050
Prior Rating: Baa2, on review for possible downgrade
Current Rating: Ba2, on review for possible downgrade
Class Description: U.S. $250,000,000 Class A-3 Third Priority
Senior Secured Floating Rate Notes Due December 2050
Prior Rating: B2, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
Class Description: U.S. $52,000,000 Class A-4 Fourth Priority
Senior Secured Floating Rate Notes Due December 2050
Prior Rating: Caa2, on review for possible downgrade
Current Rating: Ca
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool, consisting primarily of structured
finance securities.
LARSEN'S 2020: Case Summary & 15 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Larsen's 2020 Executive Offices, LLC
2020 NE 163 St. # 300
North Miami Beach, FL 33162
Bankruptcy Case No.: 08-20441
Chapter 11 Petition Date: July 28, 2008
Court: Southern District of Florida (Miami)
Judge: Robert A. Mark
Debtors' Counsel: Zach B. Shelomith, Esq.
(zshelomith@lslawfirm.net)
Leiderman Shelomith, P.A.
2699 Stirling Rd. # C401
Ft Lauderdale, FL 33312
Tel: (954) 920-5355
Fax: (954) 920-5371
http://www.lslawfirm.net
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flasb08-20441.pdf
LEAP WIRELESS: Unit Closes Exchange Offer for 9.375% Senior Notes
-----------------------------------------------------------------
Leap Wireless International, Inc. disclosed the successful closing
by its operating subsidiary, Cricket Communications, Inc., of its
offer to exchange its outstanding unregistered 9.375% unsecured
senior notes due 2014, which were originally issued on June 6,
2007, in a private placement pursuant to Rule 144A and Regulation
S under the Securities Act of 1933, for an equal principal amount
of a new issue of 9.375% unsecured senior notes due 2014
registered under the Securities Act.
The exchange offer expired at 5:00 p.m. EDT on Tuesday, June 17,
2008. During the offering period, the entire $350 million
aggregate principal amount of original notes was tendered pursuant
to the exchange offer. Cricket has accepted all tendered original
notes and, in exchange, has issued to former holders of original
notes a like principal amount of new notes. As a result, all
original notes have been cancelled.
Based in San Diego, Leap Wireless International Inc. (Nasdaq:
LEAP) -- http://www.leapwireless.com/-- is a leading provider of
innovative and value-driven wireless communications services.
With the value of unlimited wireless services as the foundation of
its business, Leap pioneered its Cricket(R) service. The company
and its joint ventures now operate in 23 states and hold licenses
in 35 of the top 50 U.S. markets. Through its affordable, flat-
rate service plans, Cricket offers customers a choice of unlimited
voice, text, data and mobile Web services.
* * *
As reported in the Troubled Company Reporter on June 24, 2008,
Moody's Investors Service assigned a Caa1 rating to Leap Wireless
International Inc.'s $200 million convertible notes, due 2014.
Moody's also assigned a B2 corporate family rating to Leap
Wireless International Inc. Rating outlook is Stable.
As disclosed in the Troubled Company Reporter on June 23, 2008,
Standard & Poor's Rating Services assigned its 'CCC' rating to
Leap Wireless International Inc.'s proposed $200 million of
convertible senior notes due 2014, with a '6' recovery rating,
indicating the expectation for negligible (0%-10%) recovery in the
event of a payment default. At the same time, S&P assigned a 'B-'
rating to funding unit Cricket Communications Inc.'s proposed
$200 million of senior notes due 2015 with a '4' recovery rating,
indicating the expectation for average (30%-50%) in the event of a
payment default. These are being issued under Rule 144A with
registration rights. S&P also affirmed San Diego-based Leap's
existing ratings, including its 'B-' corporate credit rating. The
outlook is stable.
LEAP WIRELESS: Appoints AlbinMoschner as Chief Operating Officer
-----------------------------------------------------------------
Leap Wireless International, Inc. disclosed changes in the
responsibilities for two of its senior executives.
Albin F. Moschner has been appointed chief operating officer,
reporting to Doug Hutcheson, president and chief executive
officer, effective immediately. Mr. Moschner, who has directed
the Company's sales and marketing activities as Leap's executive
vice president and chief marketing officer, will retain those
responsibilities and will now also lead the information technology
and technical operation functions, as well as supply chain
management. He will also be responsible for leading efforts
designed to drive further customer penetration and increase the
financial performance of the company's existing and newly launched
markets.
The company also related that Executive Vice President and Chief
Technical Officer Glenn Umetsu will now lead major strategic
programs and projects for the company, including new market
launches across the business. This role includes not only the
network build-out activities, but also the establishment of sales
and distribution plans for new markets. Additionally, Mr. Umetsu
will lead the company's technology planning and provide support as
the business continues major system expansion and improvements to
support expected growth.
"I am pleased to announce this alignment of the company's
leadership structure as we continue to position the Company for
future growth and development," said Mr. Hutcheson. "Al and Glenn
have played key roles in doubling the size of our business since
2005 and will help lead our efforts to double the size of the
business once again. This step, in addition to the recent
appointments of Walter Berger as chief financial officer and Bill
Ingram as senior vice president leading our strategic and business
development activities, allows for executive leadership and focus
on the major priorities for the company."
Mr. Moschner has served as the company's executive vice president
and chief marketing officer since January 2005, having previously
served as senior vice president, marketing from September 2004 to
January 2005. Before joining the company, Mr. Moschner was
president of Verizon Card Services from December 2000 to November
2003. Prior to joining Verizon, Mr. Moschner was president and
chief executive officer of OnePoint Services, Inc. a
telecommunications company that he founded and was acquired by
Verizon in December 2000.
Mr. Moschner was also a principal and the vice chairman of Diba,
Inc., a development stage internet software company ultimately
bought by Sun Micro Systems in 1997. Mr. Moschner served as
senior vice president of operations, a member of the board of
directors and ultimately president and CEO of Zenith Electronics
from October 1991 to July 1996. Mr. Moschner holds a master's
degree in electrical engineering from Syracuse University and a
bachelor's degree in electrical engineering from the City College
of New York.
In connection with the appointment, Mr. Moschner will receive an
annual base salary of $500,000 and is eligible to receive a target
performance bonus of 90% of his annual base salary, with bonus
payouts based on company and individual performance. In addition,
the company agreed to grant Mr. Moschner 20,000 restricted shares
of the company's common stock at a purchase price of $0.0001 per
share and options to purchase 25,000 shares of the company's
common stock pursuant to the company's 2004 Stock Option,
Restricted Stock and Deferred Stock Unit Plan, with such awards to
be granted following the company's release of its financial
results for the quarter ended June 30, 2008.
Prior to joining Leap in 2000, Mr. Umetsu was vice president of
engineering for Cellular One in the San Francisco Bay Area. In
this capacity, he was responsible for engineering, switch and cell
site operations for this joint venture of AT&T Wireless and Air
Touch. Before Cellular One, Mr. Umetsu held various managerial
positions for McCaw Communications and AT&T Wireless Services,
including vice president, technical coordination for the Los
Angeles and Houston regions and vice president, engineering. He
also served as executive vice president, operations with RAM
Mobile Data, and held numerous managerial positions with PacTel
Cellular, AT&T Advanced Mobile Phone Service, Northwestern Bell,
and the US Air Force Communications Service. Mr. Umetsu is a
graduate of Brown University, where he received a B.A. in
mathematics and economics.
Based in San Diego, Leap Wireless International Inc. (Nasdaq:
LEAP) -- http://www.leapwireless.com/-- is a leading provider of
innovative and value-driven wireless communications services.
With the value of unlimited wireless services as the foundation of
its business, Leap pioneered its Cricket(R) service. The company
and its joint ventures now operate in 23 states and hold licenses
in 35 of the top 50 U.S. markets. Through its affordable, flat-
rate service plans, Cricket offers customers a choice of unlimited
voice, text, data and mobile Web services.
* * *
As reported in the Troubled Company Reporter on June 24, 2008,
Moody's Investors Service assigned a Caa1 rating to Leap Wireless
International Inc.'s $200 million convertible notes, due 2014.
Moody's also assigned a B2 corporate family rating to Leap
Wireless International Inc. Rating outlook is Stable.
As disclosed in the Troubled Company Reporter on June 23, 2008,
Standard & Poor's Rating Services assigned its 'CCC' rating to
Leap Wireless International Inc.'s proposed $200 million of
convertible senior notes due 2014, with a '6' recovery rating,
indicating the expectation for negligible (0%-10%) recovery in the
event of a payment default. At the same time, S&P assigned a 'B-'
rating to funding unit Cricket Communications Inc.'s proposed
$200 million of senior notes due 2015 with a '4' recovery rating,
indicating the expectation for average (30%-50%) in the event of a
payment default. These are being issued under Rule 144A with
registration rights. S&P also affirmed San Diego-based Leap's
existing ratings, including its 'B-' corporate credit rating. The
outlook is stable.
LE-NATURE'S INC: Emerges From Chapter 11 Protection
---------------------------------------------------
Le-Nature's Inc. and its debtor-affiliates emerged from protection
under Chapter 11 of the Bankruptcy Code, Bloomberg News reports.
The second amended joint Chapter 11 plan of liquidation for the
Debtors is now effective, the report says.
As reported in the Troubled Company Reporter on July 16, 2008, the
amended plan was filed by the Official Committee of of Unsecured
Creditor, together with the Ad Hoc Committee of Secured Lenders
and the Ad Hoc Committee of Senior Subordinated Noteholders on
April 9, 2008.
The Hon. M. Bruce McCollough of the United States Bankruptcy
Court for the Western District of Pennsylvania confirmed the
amended plan on July 8, 2008. He held that the amended plan
complies within the meaning of Section 1129 of the Bankruptcy
Code.
On April 10, 2008, Judge McCollough held that the Committees'
disclosure statement contains adequate information in accordance
to Section 1125 of the Bankruptcy Code.
The amended plan provides for the liquidation of the Debtors'
assets including the investigation and prosecution of estate
causes of action, by a liquidation trust to be performed under the
amended plan and a liquidation trust agreement. The amended plan
contains a settlement with, among other things:
i) unsecured creditors, the holders of 48 percent of $150
million in subordinated notes, and
ii) the holders of 62 percent of the $278 million in secured
bank debt.
The plan further provides that subordinated debt holders will
recover nothing until secured creditors receive $110 million.
The amended plan classifies interests against and claims in the
Debtors in 6 classes. The classification of interests and claims
are:
Treatment of Interests and Claims
Class Type of Claims Treatment
----- -------------- ---------
1 lenders secured impaired
claims
2 other secured impaired
claims
3 priority non-tax unimpaired
claims
4A lenders unsecured impaired
claims
4B general unsecured impaired
claims
4C unsecured senior impaired
subordinated notes
claims
5 subordinated impaired
litigation claims
6 interests
Under the amended plan, secured creditors would receive almost
everything in the event the Debtors do not recover anything beyond
approximately $30 million in jewels confiscated by government
investigators. However, a $129 million recovery would give
subordinated debt holders 10 percent, with 46 percent for secured
creditors and 17 percent for unsecured creditors.
A full-text copy of the Committee's second amended joint Chapter
11 plan of reorganization is available for free at:
http://ResearchArchives.com/t/s?2f7c
About Le-Nature's Inc.
Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. --
http://www.le-natures.com/-- makes bottled waters, teas, juices
and nutritional drinks. Its brands include Kettle Brewed Ice
Teas, Dazzler fruit juice drinks and lemonade, and AquaAde
vitamin-enriched water.
Four unsecured creditors of Le-Nature's filed an involuntary
chapter 7 petition against the company on Nov. 1, 2006 (Bankr.
W.D. Pa. Case No. 06-25454). On Nov. 6, 2006, two of Le-Nature's
subsidiaries, Le-Nature's Holdings Inc., and Tea Systems
International Inc., filed voluntary petitions for relief under
chapter 11 of the Bankruptcy Code. Judge McCullough converted Le
Nature's Inc.'s case to a chapter 11 proceeding. The Debtors'
cases are jointly administered. The Debtors' schedules filed with
the Court showed $40 million in total assets and $450 million in
total liabilities.
Douglas Anthony Campbell, Esq., Ronald B. Roteman, Esq., and
Stanley Edward Levine, Esq., at Campbell & Levine, LLC, represents
the Debtors in their restructuring efforts. The Court appointed
R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq.,
Richard M. Pachulski, Esq., Stan Goldich, Esq., Ilan D. Scharf,
Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub LLP, represent the Chapter 11 Trustee.
David K. Rudov, Esq., at Rudov & Stein, and S. Jason Teele, Esq.,
and Thomas A. Pitta, Esq. at Lowenstein Sandler PC, represent the
Official Committee of Unsecured Creditors. Edward S. Weisfelner,
Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown
Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion
McDonough & Lucas represent the Ad Hoc Committee of Secured
Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq.
at Kramer Levin Naftalis & Frankel LLP, represent the Ad Hoc
Committee of Senior Subordinated Noteholders.
LEVEL 3 COMMS: Posts $33 Million Net Loss in 2008 Second Quarter
----------------------------------------------------------------
On July 24, 2008, Level 3 Communications Inc. disclosed financial
results for its second quarter ended June 30, 2008.
The net loss for the second quarter 2008 was $33.0 million,
including a $96.0 million gain on the sale of the company's Vyvx
advertising distribution business. This compares to a net loss of
$202.0 million for the second quarter 2007.
Consolidated revenue was $1.09 billion for the second quarter
2008, an increase of 4 percent compared to $1.05 billion for the
second quarter 2007.
"Our strong second quarter results reflect Core Network Services
growth and our continued focus on reducing network costs and
operating expenses," said James Crowe, president and chief
executive officer of Level 3. "We generated positive Free Cash
Flow and now expect to be Free Cash Flow positive for the
remainder of the year. And as previously announced, we expect to
be Free Cash Flow positive for the full year 2009."
Consolidated Adjusted EBITDA was $251.0 million in the second
quarter 2008, a 30 percent increase from $193.0 million for the
second quarter 2007. Consolidated Adjusted EBITDA is defined as
net income/(loss) from the consolidated condensed statements of
operations before income taxes, total other income/(expense), non-
cash impairment charges, depreciation and amortization and non-
cash stock compensation expense.
Sale of Vyvx Advertising Distribution Business
On June 5, 2008, the company completed the sale of its Vyvx
advertising distribution business to DG FastChannel Inc. Level 3
has retained ownership of Vyvx's core broadcast business,
including the Vyvx Services Broadcast Business' content
distribution capabilities. Level 3 received gross proceeds at
closing of approximately $129.0 million in cash.
Free Cash Flow
During the second quarter 2008, unlevered cash flow was positive
$126.0 million, versus negative $64.0 million in the second
quarter 2007. Consolidated free cash flow for the second quarter
2008 was positive $4.0 million, versus negative $141.0 million for
the second quarter 2007.
As of June 30, 2008, the company had cash and marketable
securities of approximately $666.0 million.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$10.0 billion in total assets, $9.03 billion in total liabilities,
and $968.0 million in total stockholders' equity.
About Level 3 Communications
Headquartered in Broomfield. Colorado, Level 3 Communications Inc.
(Nasdaq: LVLT) -- http://www.level3.com/-- is a provider of
fiber-based communications services. Level 3 offers a portfolio
of metro and long haul services over an end-to-end fiber network,
including transport, data, internet, content delivery and voice.
* * *
Moody's Investor's Service assigned these ratings to Level 3
Communications Inc. on June, 2006: 'Caa1' long-term corporate
family rating, 'Caa2' senior unsecured debt rating, 'Caa3'
subordinated debt rating, 'Caa1' probability of default rating and
gave a stable outlook. The rating actions still hold to date.
LOUISIANA-PACIFIC: S&P Chips Corp. Credit Rating to BB+ from BBB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings, including
its corporate credit rating, on Louisiana-Pacific Corp. to 'BB+'
from 'BBB-' and placed all ratings on CreditWatch with negative
implications.
The rating actions reflect prospects for greater-than-expected
deterioration in LP's available cash balances to a level that is
no longer consistent with the previous rating.
"With our expectations that the housing downturn will last through
2009, we also believe the company will need to refinance its
$125 million upcoming maturity to retain its cash reserve in the
targeted range of $250 million to $300 million," said Standard &
Poor's credit analyst Pamela Rice.
LP is paying $48 million to settle anti-trust litigation,
investing $70 million to acquire a Brazilian oriented strandboard
company and $35 million in a laminated veneer lumber joint
venture. In addition, it is required to cash collateralize its
letters of credit and any borrowings under its U.S. revolving
credit facility, and its portfolio of auction-rate securities
remains illiquid. However, S&P expects the company to take
substantial measures to conserve cash through the remainder of the
downturn, including drastically cutting capital spending and
potentially reducing its dividend.
To resolve the CreditWatch, S&P will assess the company's planned
efforts to preserve its targeted liquidity and its likely
financial performance over the next two years. Possible outcomes
of our review include affirming LP's 'BB+' corporate credit rating
with a negative outlook or lowering the corporate credit rating to
'BB'. S&P will also need to determine the rating on the company's
$200 million senior unsecured notes based on its speculative-grade
recovery methodology.
MAGNA ENTERTAINMENT: Lender Extends $40MM Facility to August 15
---------------------------------------------------------------
Magna Entertainment Corp. obtained an extension of the maturity
date of its $40 million senior secured revolving credit facility
with a Canadian chartered bank to Aug. 15, 2008.
Headquartered in Aurora, Ontario, Magna Entertainment Corp.
(Nasdaq: MECA)(TSX: MEC.A) --
http://www.magnaentertainment.com/
-- acquires, develops, owns and operates horse racetracks and
related pari-mutuel wagering operations, including off-track
betting facilities. The company also develops, owns and operates
casinos in conjunction with its racetracks where permitted by law.
At March 31, 2008, the company's consolidated balance sheet showed
$1.2 billion in total assets, $914.9 million in total liabilities,
and $318.2 million in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on March 20, 2008,
Ernst & Young LLP in Toronto, Canada, expressed substantial doubt
about Magna Entertainment Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006. The auditing
firm pointed to the company's recurring operating losses and
working capital deficiency.
MANITOWOC CO: Moody's Assigns Ba2 Rating to Proposed Facility
-------------------------------------------------------------
Moody's Investors Service affirmed the Ba2 Corporate Family and
Probability of Default ratings of The Manitowoc Company, Inc.
following its announced syndication of a new credit facility to
fund its acquisitions of Enodis plc. Moody's also assigned a Ba2
rating to the proposed $2.925 billion senior secured bank credit
facility and lowered the senior unsecured notes to B1 from Ba3.
The outlook remains stable.
Manitowoc recently announced that it is acquiring Enodis plc for
approximately $2.7 billion including the assumption of Enodis' net
debt in an all cash transaction. Enodis has agreed to Manitowoc's
proposal. This final offer by Manitowoc followed its last bid of
$2.4 billion, which was increased from $2.1 billion to counter
Illinois Tool Works, Inc.'s proposal of $2.3 billion. Enodis is a
global supplier of food and beverage equipment supporting the
restaurant, convenience store, supermarkets and institutional end
markets. Manitowoc will use a combination of a significant amount
of cash on hand and proceeds from the proposed $2.925 billion
senior secured credit facility to fund this acquisition.
Moody's is maintaining a Ba2 corporate family rating for
Manitowoc. Over the past several years the company's financial
metrics have improved to levels that could be supportive of a
higher corporate family rating. The company's strong operating
performance has resulted from continued favorable global
infrastructure construction end markets, the main driver for
Manitowoc's crane business; domestic residential construction is a
very small portion of the company's end market demand. Despite
this favorable operating trend, the proposed acquisition could
increase Manitowoc's overall debt upwards of $2.7 billion and
partially offset the improvement that has occurred in its
financial metrics. Key credit metrics on a pro forma basis for
2007 will likely erode in the following manner when compared to
Manitowoc's LTM March 31, 2008 actual results: EBITA margin to
below 13% from 13.9%; debt/EBITDA could exceed 4.0x from 0.9x; and
EBIT/interest expense may near 4.0x from 13.1x (all ratios
adjusted per Moody's methodology). The pro forma credit metrics
should improve by 2009 as Manitowoc continues to benefit from its
healthy backlog of crane orders, growth in international
restaurant equipment sales and potential synergy savings
associated with the transaction. Moody's expects free cash flow
will be used to reduce acquisition debt, which should help to
restore Manitowoc's credit metrics over time.
Constraining Manitowoc's corporate family rating is the
significant integration risk associated with such a large
acquisition. Also, the company must contend with potential anti-
trust issues, commodity price and foreign exchange volatility,
cyclicality of the construction end markets, and a softening of
the domestic restaurant industry. While Moody's believes that a
slowing in the company's end markets would result in some erosion
of its pro forma financial metrics, these metrics would likely
remain at levels that are supportive of the Ba2 corporate family
rating based on Manitowoc's leading market position within the
crane and food service equipment businesses, commitment to reduce
debt, and ample liquidity.
The stable outlook reflects Moody's expectation that even with the
Enodis acquisition Manitowoc will continue to follow prudent
financial policies historically embraced by management
characterized by debt reduction and ample liquidity.
The following ratings/assessments were affected by this action:
Corporate family rating affirmed at Ba2;
Probability of default rating affirmed at Ba2;
$2.925 billion senior secured credit facility assigned Ba2 (LGD3,
44%); and,
$150 million senior unsecured notes due 2013 downgraded to B1
(LGD6, 91%) from Ba3 (LGD4, 66%).
Enodis is a global supplier of food and beverage equipment
supporting the restaurant, convenience store, supermarkets and
institutional end markets. Sales totaled about $1.6 billion
(equivalent) for FY07 ended September 29, 2007.
The Manitowoc Company, Inc., based in Manitowoc, Wisconsin, is a
global manufacturer with operations in over 20 countries. The
company provides a diverse array of capital goods and equipment
within its three core business segments -- cranes and related
products, foodservice equipment, and marine operations. Revenues
for the twelve months ended March 31, 2008 totaled about
$4.2 billion.
MD ECONOMIC DEV'T: Moody's Keeps Rating on Housing Revenue Bonds
----------------------------------------------------------------
Moody's Investors Service affirmed the B2 rating on the Maryland
Economic Development Corporation's Senior Student Housing Revenue
Bonds (University of Maryland, Baltimore Project), Series 2003A.
Approximately $33.47 million of the original $34.40 million
remains outstanding. The rating affirmation at the B2 rating
category reflects the high occupancy achieved during the 2007-08
academic year and continuing positive involvement of the property
manager, MEDCO, and the University in stabilizing the project.
However, the project's financial position remains weak, as
demonstrated by the below 1.0x coverage level achieved in fiscal
year 2007.
CREDIT STRENGTHS:
-- High occupancy of 97% and 96% for the Fall 2007 and Spring
2008 respectively.
-- The willingness and involvement by the University to provide
various resources in an effort to stabilize the project.
-- Strong oversight by MEDCO, as both issuer for the bonds and
owner of the project.
CREDIT CHALLENGES:
-- The debt service reserve fund and repair and replacement
fund continue to be under-funded.
-- Absence of a long-term financial or legal commitment from
the University, the University System of Maryland, or the State of
Maryland.
RECENT DEVELOPMENTS/RESULTS:
Although the project had to tap the debt service reserve fund in
order to make its debt service payment on October 1, 2006, all
subsequent principal and interest payments have been made without
any taps on reserves. The reserve fund remains under-funded and
the project may have to access it in the future to meet debt
service coverage. Occupancy for Fall 2007 and Spring 2008 is
reported to be 97% and 96% respectively, approximately unchanged
from the prior year. During the academic year 2007-08 management
successfully increased rents by 7%, despite the already
competitive off-campus market for student housing. The rent
increase did not have adverse affect on occupancy as the project's
location and included amenities are considered more favorable than
those offered by the competing off-campus projects. Although the
project has increased rates another 6% for the 2008-09 academic
year, management reports the facility is currently 96% leased as
of 7/25/08. Despite these positive steps taken by MEDCO, the
University and Capstone, we believe that the economics of the
project continue to remain weak, as demonstrated by the below 1.0x
debt service coverage for fiscal year 2008 and the deficiencies in
both the debt service reserve fund and the repair and replacement
reserve fund.
Outlook
The rating outlook remains stable at the B2 rating level.
MERCURY COMPANIES: Titling Firms in Texas, Calif. & Arizona Closed
------------------------------------------------------------------
Mercury Companies, Inc.'s titling operations in Arizona, Texas and
California shut down for good Wednesday, as a result of financial
problems at the parent company, various reports say.
Steve Hart at the Press Democrat in California reports that
Financial Title Co. shut down all of its offices in the state
after Mercury Cos. reportedly lost its line of credit.
Nancy Sarnoff at Houston Chronicle says United Title of Texas
closed all of its offices in the state.
Chris Casacchia at Phoenix (Ariz.) Business Journal says there was
no prior warning or notice when Mercury shuttered Arizona Title
Agency. The agency had not notified state government agencies of
its closure as of press time, Mr. Casacchia notes.
Ms. Sarnoff says Mercury, in a memo to employees, indicated that
"the decision was precipitated by an unexpectd, and in our
opinion, unwarranted and unjustified act by our syndicate of
banks, which deprived us of the cash we needed to sustain and to
continue those operations."
Ms. Sarnoff says Mercury, in the memo, indicated it is
coordinating with First American Title, the insurance underwriter,
to ensure all escrows are safe and all closings throughout the
Arizona, Texas and California offices will take place.
According to Mr. Hart, a recorded message at several Financial
Title offices in California's Sonoma County referred callers to
First American.
No. of Offices Closed
---------------------
Financial Title 57
United Title of Texas 27
Arizona Title 7
Mr. Hart reports that California's state Department of Insurance
sent examiners at Financial Title's offices to make sure escrow
funds were handled property. The state Department of Insurance
regulates the escrow industry.
Darrel Ng, spokesperson for the department, said they are not
aware of any funds being misappropriated, Mr. Hart relates. Mr.
Ng added that the closure was not a result of state enforcement
action, according to Mr. Hart.
First American said in a formal statement the current housing
market conditions have forced Financial Title "into this very
unfortunate situation."
Mr. Casacchia says Arizona Title was ranked 14 among title
agencies in insurable transactins in 2007. In September 2007,
Arizona Title merged with two sister companies -- Title Guaranty
Agency and American Heritage Title Agency. Despite staff
reductions and consolidations, the moves were not enough, Mr.
Casacchia notes.
Arizona Title operated 26 offices in 2005. On its last day of
operations, seven offices were open, Mr. Casacchia says.
About Mercury Companies
Mercury Companies Inc., is the national leader of independent
title agency organizations. Founded in 1947, Mercury Companies
began doing business as a title and abstracting company in
Colorado.
Mercury operates a network of 546 offices and 5,629 employees
throughout the continental United States. It reported
$431,500,000 in total assets and $1,004,000,000 in total revenue
as at January 1, 2007.
MERVYN'S LLC: Case Summary & 30 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Mervyn's Holdings, LLC
aka Mervyn's
22301 Foothill Blvd.
Hayward, CA 95541
Bankruptcy Case No.: 08-11586
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Mervyn's Holdings, LLC 08-11586
Mervyn's Brands, LLC 08-11588
Type of Business: The Debtors are softgoods department stores that
sell name-brand and private label fashions and
home accents. See http://www.mervyns.com
Chapter 11 Petition Date: July 29, 2008
Bankruptcy Court: United States Bankruptcy Court
District of Delaware
824 North Market Street
6th Floor
Wilmington, Delaware 19801
Tel. No.: (302) 252-2915
Bankruptcy Judge: The Honorable Kevin Gross
Debtors'
Bankruptcy Counsel: Howard S. Beltzer, Esq.
Wendy S. Walker, Esq.
Morga Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Tel: (212) 309-6000
Fax: (212) 309-6001
http://www.morganlewis.com/
Debtors'
Local Counsel: Mark D. Collins, Esq.
Daniel J. DeFranceschi, Esq.
Christopher M. Samis, Esq.
L. Katherine Good, Esq.
Richards Layton & Finger, P.A.
One Rodney Square, P.O. Box 551
920 North King Street
Wilmington, DE 19801
Tel: (302) 651-7700
Fax: (302) 651-7701
http://www.RLF.com/
Debtors'
Financial Advisor: Miller Buckfire & Co., LLC
Debtors' Claims
Agent: Kurtzman Carson Consultants, L.L.C.
2335 Alaska Avenue
El Segundo, CA 90245
Tel.: (888) 733-1446
U.S. Trustee: Roberta A. DeAngelis
Region 3
J. Caleb Boggs Federal Bldg.
844 King Street, Suite 2207
Wilmington, Delaware 19801
Tel: (302) 573-6491
Fax: (302) 573-6497
Mervyn's, LLC's Financial Condition:
Estimated Assets: $500,000,000 to $1,000,000,000
Estimated Debts: $500,000,000 to $1,000,000,000
Debtors' Consolidated List of 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Levi Strauss & Co. trade debt $12,758,951
Attn: Robert Hanson,
President, & Loreen Zakem,
President of Levi Wholesale
1155 Battery St.
San Francisco, CA 94111
Tel: (415) 501-4168,
(415) 501-4805
Fax: (415) 501-3907
Wicked Fashions trade debt $6,054,960
Attn: David Khyn, President
222 Bruce Reynolds Blvd.
Fort Lee, NJ 07024
Tel: (201) 242-5900
Fax: (201) 242-8466
Nike USA, Inc. trade debt $4,723,327
Attn: Mark Parker, President
One Bowerman Dr.
Beaverton, OR 97005
Tel: (800) 344-6453
Fax: (503) 671-6374
Vans, Inc. trade debt $2,903,656
Attn: Steve Murray, President
110 Sycamore Ave.
Larkspur, CA 94939
Tel: (888) 691-8889
Fax: (714) 889-6776
Fashion Resource (TCL) trade debt $2,652,329
Attn: Gerard Guez, CEO
3151 East Washington Blvd.
Los Angeles, CA 90023
Tel: (323) 780-8250
Fax: (323) 780-0751
Hanes Brand-Hanes UW trade debt $2,593,847
Attn: Rich Noll, CEO
1000 E. Hanes Mill Rd.
Winston-Salem, NC 27105
Tel: (336) 519-6707
Fax: (336) 519-335
Lolly Togs trade debt $2,578,248
Attn: Richard Sutton, CEO
100 W. 33rd St., Ste. 1012
Tel: (212) 502-6098
Fax: (212) 268-5160
VF Jeanswear, Inc. trade debt $2,002,818
Attn: Bankruptcy Department
P.O. Box 21488
Greensboro, NC 27420
Tel: (800) 353-9692
Fax: (336) 332-5408
Jansport, Inc./VF Outdoor trade debt $1,735,339
Attn: Steve Munn, President
2011 Fallon Dr.
San Leandro, CA 94577
Tel: (510) 614-4030
(510) 614-4000
Fax: (510) 614-4025
Hanes Brand-Playtex trade debt $1,375,829
Attn: Legal Department
P.O. Box 807
Rural Hall, NC 27046
Tel: (336) 519-6034
Fax: (336) 519-2705
Vanity Fair Mills, Inc. trade debt $1,288,882
Attn: Anne Jardine, President
Department/Chain
136 Madison Ave.
New York, NY 10016
Tel: (212) 696-1110
Fax: (212) 725-5684
Agron, Inc. trade debt $1,269,258
Attn: Legal Dept.
2440 S. Sepulveda Blvd.
Los Angeles, CA 90064
Tel: (310) 473-7223
Fax: (310) 312-1753
Mattel, Inc. trade debt $1,194,324
Attn: Robert Eckert, Chairman
of the Board/CEO, and Carol
Levine, Vice-President
333 Continental Blvd.
El Segundo, CA 90245
Tel: (310) 252-5000
Fax: (310) 252-3671
B&Y Global Sourcing trade debt $1,050,563
Attn: Norbert Baroukh
237 W. 30th St.
Los Angeles, CA 90007-3319
Tel: (213) 744-9955
Hanes Brand-Bali/Barely There trade debt $1,011,962
Attn: Brian Hottinger
2612 168th Ave., S.E.
Bellevue, WA 98008-5512
Tel: (425) 653-2334
Fax: (425) 653-2335
Rosetti Handbags & Accessories trade debt $1,002,738
Attn: Lena Jones, President
10 W. 33rd St., Ste. 312
New York, NY 10001
Tel: (646) 839-7912
Fax: (212) 279-3224
Humphreys Accessories, LLC trade debt $981,415
Attn: Jeffrey Spiegel, CEO &
President
120 W. 45th St., 38th Fl.
New York, NY 10036
Tel: (212) 768-8800
Fax: (212) 768-8585
Delta Galil USA/Wundies D trade debt $977,890
Attn: Tom Witthuhn, CEO
150 Meadowland Pkwy., 2nd Fl.
Secaucus, NJ 07094
Tel: (201) 902-0055
Fax: (201) 902-0070
Byer California trade debt $971,812
Attn: Alan Byer, Owner &
President
66 Potero Ave.
San Francisco, CA 94103
Tel: (415) 626-7844
Fax: (415) 626-7865
Volumecocomo trade debt $923,470
Attn: Chris Chang, CEO
4160 Bandini Blvd.
Vernon, CA 90023
Tel: (213) 763-6111
Fax: (323) 881-1859
Vida Shoes International, Inc. trade debt $904,407
29 W. 56th St.
New York, NY 10019
Tel: (212) 246-1900
Fax: (212) 581-9609
Williamson-Dickie trade debt $894,181
Manufacturing, Inc.
Attn: Phillip Williamson,
President
319 Lipscomb
Fort Worth, TX 76104
Tel: (817) 336-7201
Fax: (817) 810-4454
Jockey International, Inc. trade debt $870,437
Attn: Bob Nolan, President
2300 60th St.
Kenosha, WI 53141
Tel: (262) 658-8111
Fax: (262) 653-3079
Roytex, Inc. trade debt $856,407
Attn: Legal Dept.
16 E. 34th St.
New York, NY 10016
Tel: (212) 686-3500
Fax: (212) 686-4336
Hanes Brand-Socks trade debt $723,062
P.O. Box 2765
Winston Salem, NC 27102
Tel: (336) 519-4930
Fax: (336) 519-8313
KWDZ Manufacturing, LLC/ trade debt $722,185
Knitworks
337 S. Anderson St.
Los Angeles, CA 90033-3742
Tel: (323) 526-6526
Fax: (323) 526-3528
Stony Apparel Corp. trade debt $721,618
1500 S. Evergreen Ave.
Los Angeles, CA 90023
Tel: (323) 981-4241
Fax: (323) 981-9095
The Van Heusen Co. trade debt $680,654
Attn: Manny Chirico, Chairman
& CEO, & Allen Sirkin,
President & COO
200 Madison Ave.
New York, NY 10016
Tel: (212) 381-3500
Fax: (212) 381-3970
Bijoux International trade debt $678,682
1280 Jersey Ave.
North Brunswick, NJ 08902
Tel: (732) 828-3886
Fax: (732) 828-3953
Combine International trade debt $674,538
354 Indusco Ct.
Troy, MI 48083
Tel: (248) 585-9900
Fax: (248) 585-8641
ML CLO: Moody's Cuts Rating on $31MM Notes Due 2009 to Ca
---------------------------------------------------------
Moody's Investors Service downgraded these notes issued by ML CLO
Series 1998-Pilgrim America-2:
Class Description: U.S. $14,000,000 Class B-1 Fixed Rate Third
Senior Secured Notes due 2009
Prior Rating: Caa1
Current Rating: Ca
Class Description: U.S. $31,000,000 Class B-2 Floating Rate Third
Senior Secured Notes due 2009
Prior Rating: Caa1
Current Rating: Ca
Class Description: U.S. $10,000,000 Class C Fixed Rate Fourth
Senior Secured Notes due 2009
Prior Rating: Ca
Current Rating: C
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool and insufficient par coverage.
MMM HOLDINGS: Moody's Hikes Sr. Debt Rating to B3; Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service has upgraded the senior debt ratings of
MMM Holdings, Inc. (MMM), NAMM Holdings, Inc. (NAMM), and
Preferred Health Management Corporation (PHMC) to B3 from Caa1
following the announcement that the company has renegotiated the
terms of its credit facility. The rating agency also upgraded
MMM's corporate family rating to B3 from Caa1 and the insurance
financial strength ratings of MMM Healthcare and PrimeCare Medical
Network to Ba3 from B1. The outlook on the ratings is stable.
This rating action concludes the review that was announced on
June 17, 2008 when Moody's placed the ratings under review with
direction uncertain. At that time, the rating agency indicated
that the focus of its review would be the progress or terms of any
renegotiation of the credit facility, as well as, the
sustainability of recent earnings improvement and membership
growth.
According to the rating agency, the terms of the amendment and
waiver to MMM's credit agreement include the immediate prepayment
of $50 million of debt, the amendment of certain financial
covenants, and the lenders waiving compliance by MMM of all past
defaults related to violation of covenants. Previously, Moody's
stated that although the company was in compliance with all
financial covenants entering 2008, the combination of the decline
in medical membership experienced during 2007, the lower than
expected debt amortization that occurred in 2007, and the tight
Debt to EBITDA covenant limit in 2008 would make it difficult for
MMM to be in compliance with this covenant by the end of 2008.
Moody's commented that the newly negotiated terms and the $50
million prepayment have significantly lessened this threat.
Moody's also noted that although the new terms of the credit
agreement require MMM to incur greater interest expense and pay an
amendment fee, these were not considered onerous.
The rating agency noted that MMM's financial results through May
2008 indicate that the company continues to make progress in
addressing the high medical utilization and costs in its Puerto
Rico operations. In particular, MMM has reversed the membership
decline it experienced in 2007 with membership gains during the
first five months of 2008. The company has also improved its
operating results to historical norms, with medical loss ratios at
or below 82%. According to Moody's, although the company was in
technical default of some of the financial covenants during 2007,
the company continued to make all required principal and interest
payments, including an excess principal payment of approximately
$20 million made on March 28, 2008.
Moody's said that if MMM maintains net income margins above 3%,
demonstrates net membership growth into 2009, maintains debt to
EBIT below 3 times and EBIT interest coverage above 4 times, and
is able to improve its risk based capital on a sustained basis of
at least 100% CAL, then the ratings may be upgraded. However, if
there is deterioration in MMM's liquidity profile, a membership
loss of 25% or more, if debt to EBIT increases above 4 times or if
there is a breach in any of the financial covenants in its credit
agreement, then the ratings will be downgraded.
The following ratings were upgraded with a stable outlook:
MMM Holdings, Inc. -- senior secured debt rating to B3 from Caa1;
corporate family rating to B3 from Caa1;
NAMM Holdings, Inc. -- senior secured debt rating to B3 from Caa1;
Preferred Health Management Corporation -- senior secured debt
rating to B3 from Caa1;
MMM Healthcare, Inc. -- insurance financial strength rating to Ba3
from B1;
PrimeCare Medical Network, Inc. -- insurance financial strength
rating to Ba3 from B1.
MMM Healthcare offers Medicare Advantage products exclusively to
eligible participants in Puerto Rico. NAMM is a medical management
company that operates in California and Illinois. Its regulated
operating subsidiary, PrimeCare Medical Network, Inc., consists of
10 owned IPAs in Southern California that contract with major
health care benefit companies on a capitated basis to provide
medical care to commercial and Medicare members.
Aveta, Inc., the parent company of MMM, PHMC and NAMM, is a
privately-owned company incorporated in Delaware and headquartered
in Fort Lee, New Jersey. As of March 31, 2008, Aveta (as Aveta
Holdings, LLC) reported stockholders' equity of ($12) million and
approximately 197,500 Medicare members. For the first three months
of 2008, total revenues were $485 million.
Moody's insurance financial strength ratings (IFSR) are opinions
about the ability of insurance companies to punctually repay
senior policyholder claims and obligations.
Moody's corporate family rating is an opinion of a corporate
family's ability to honor all of its financial obligations and is
assigned to a corporate family as if it had a single class of debt
and a single consolidated legal entity structure.
MORGAN STANLEY: S&P Cuts Seven Certs. Ratings on Weak Performance
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on seven
classes of commercial mortgage pass-through certificates from
Morgan Stanley Capital I Trust 2005-IQ10. Concurrently, S&P
affirmed its ratings on the remaining classes from this
transaction.
The downgrades reflect the weakened performance of several loans
in the pool, including eight loans on the servicer's watchlist
with reported debt service coverage below 1.0x. The watchlist
also indicated deterioration in the performance of the 10th-
largest loan, Cortana Mall, which is discussed below. In
addition, three loans (4.9% of the mortgage pool balance) will
have projected DSCs below 0.9x when their initial interest-only
periods end.
The rating affirmations reflect credit enhancement levels that
provide adequate support through various stress scenarios.
As of the July 15, 2008, remittance report, the collateral pool
consisted of 208 loans with an aggregate balance of $1.51 billion,
down from 210 loans with a balance of $1.55 billion at issuance.
Capmark Finance Inc. is the master servicer for 127 loans secured
by a variety of commercial real estate property types with a
balance of $1.35 billion (89.5% of the pool); National Consumer
Cooperative Bank is the master servicer for 81 loans secured by
residential cooperative apartments with a balance of $0.15 billion
(10.5% of the pool). Financial reporting information was
available for 99% of the mortgage pool. Excluding the residential
cooperative mortgage loans, Standard & Poor's calculated a
weighted average DSC of 1.55x for the pool, the same as at
issuance.
There are eight loans in the pool, totaling $23.2 million (1.5%),
that have reported DSCs lower than 1.0x. The loans are secured
primarily by a variety of office, industrial, and multifamily
properties, with an average balance of $2.9 million and an average
decline in DSC of 68% since issuance. There is one delinquent
loan totaling $6.7 million (0.5%) with the special servicer, J.E.
Robert Co. Inc. The trust has experienced no losses to date.
Details of the specially serviced loan are:
-- The Corte Freccia loan ($6.7 million, 0.5%) is secured by
a 29,611-sq.-ft. unanchored retail center built in 2005 in
Glendale, Arizona. The loan was transferred to the
special servicer due to payment default in May 2008. The
borrower brought the loan current but then subsequently
failed to make its July 2008 payment. Once the borrower
is current for three consecutive payments, the loan will
be transferred back to the master servicer. The property
is performing with a 95% occupancy rate, and it maintained
a DSC of 1.32x as of June 16, 2008. No loss is
anticipated on this asset.
Capmark reported a watchlist of 25 loans with an aggregate
outstanding balance of $478.9 million (31.8%). NCB reported a
watchlist of five loans with an aggregate outstanding balance of
$12.0 million (0.8%). The largest loan on Capmark's watchlist and
the largest loan in the pool is the 195 Broadway loan. The loan
is secured by a 914,594-sq.-ft. office building in lower
Manhattan. The loan was placed on the watchlist because the DSC
had fallen to 0.92x as of March 31, 2008, from 1.25x on Dec. 31,
2007. The low DSC is due to higher repair and maintenance
expenses and additional tenant improvement costs associated with
build-outs for new tenants. Physical occupancy was reported to
be 78% as of Dec. 31, 2007. However, a new lease for 181,068 sq.
ft. will bring the building's physical occupancy to nearly 100% by
October 2008.
The third-largest loan on Capmark's watchlist and the 10th-largest
loan in the pool is the Cortana Mall loan. This loan had credit
characteristics consistent with those of an investment-grade
obligation at issuance, but its operating performance has since
declined significantly. The Cortana Mall loan has a trust and
whole-loan balance of $36.7 million (2.4%). The loan is secured
by a 349,646-sq.-ft. retail center built in 1976 in Baton Rouge,
Louisiana. Standard & Poor's adjusted value for this loan is 39%
lower than at issuance, primarily due to decreased revenues
because of higher vacancies and lower rental rates. As a result,
DSC had declined to 1.33x as of Dec. 31, 2007, from 1.55x at
issuance.
The top 10 loans have an aggregate outstanding balance of
$715.9 million (47.5%) and a weighted average DSC of 1.52x, down
from 1.61x at issuance. The largest and 10th-largest loans are on
the servicer's watchlist, as discussed above. Standard & Poor's
reviewed property inspections provided by the master servicer for
all of the assets underlying the top 10 exposures. One was
characterized as "excellent," and the remaining properties were
characterized as "good."
Standard & Poor's stressed the loans on the watchlists, along with
other loans with credit issues, as part of its pool analysis. The
resultant credit enhancement levels support the lowered and
affirmed ratings.
Ratings Lowered
Morgan Stanley Capital I Trust 2005-IQ10
Commercial mortgage pass-through certificates series 2005-IQ10
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
H BB+ BBB- 3.34%
J BB BB+ 3.08%
K B+ BB 2.57%
L B BB- 2.18%
M B- B+ 1.80%
N CCC+ B 1.54%
O CCC B- 1.16%
Ratings Affirmed
Morgan Stanley Capital I Trust 2005-IQ10
Commercial mortgage pass-through certificates series 2005-IQ10
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 20.54%
A-1A AAA 20.54%
A-2 AAA 20.54%
A-3-1FL AAA 20.54%
A-3-1 AAA 20.54%
A-3-2 AAA 20.54%
A-AB AAA 20.54%
A-4A AAA 29.67%
A-4B AAA 20.54%
A-J AAA 11.94%
B AA 9.88%
C AA- 9.11%
D A 7.44%
E A- 6.55%
F BBB+ 5.26%
G BBB 4.49%
X-1 AAA N/A
X-2 AAA N/A
X-Y AAA N/A
N/A -- Not applicable.
NORTHWESTERN CORP: Court OKs Surplus Cash Distribution of Claims
----------------------------------------------------------------
NorthWestern Corporation disclosed that the U.S. Bankruptcy Court
for the District of Delaware has approved the company's motion
allowing it to make, to the holders of former debt and allowed
unsecured claims, a surplus distribution in cash, rather than
Stock and Accruals, from the disputed claims reserve established
under NorthWestern's confirmed Plan of Reorganization from the
company's 2004 Chapter 11 reorganization.
The Participating Creditors will receive their pro rata share of
the surplus distribution exclusively in cash unless they elect to
receive their share of the surplus distribution in Stock and
Accruals. The election to receive Stock and Accruals, rather than
cash, must be made by Aug. 22, 2008. Those Participating
Creditors who do not timely make the election will receive their
share of the surplus distribution in cash rather than Stock and
Accruals. This distribution will fully distribute all shares and
associated dividends and interest from the Creditors Reserve.
The Creditors' Reserve holds 2,362,618 shares of NorthWestern's
common stock, which is listed on the New York Stock Exchange under
the ticker symbol "NWE", plus cash dividends and interest in
respect of such shares.
The Bankruptcy Court authorized NorthWestern to repurchase shares
of New Common Stock from the Creditors' Reserve which will allow
the Creditors' Reserve to make the surplus distribution in cash.
NorthWestern contemplates that the surplus distribution will be
made in late August or September 2008.
The surplus distribution will be made to unsecured creditors and
debt holders in Class 7 and Class 9 under the Plan except that the
holders of quarterly income preferred securities will not receive
any recovery under the surplus distribution but instead will
receive their distribution from a separate fund under a Global
Settlement approved by Order of the Bankruptcy Court, dated
July 14, 2008.
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.
PORTOLA PACKAGING: Restructuring Plan Cues S&P's Default Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Portola Packaging Inc. to 'D' from 'CCC-'. In addition,
S&P lowered the senior unsecured ratings to 'D' from 'C'. The
downgrades follow Portola's announcement that it is restructuring
its capital structure through a prepackaged Chapter 11 bankruptcy
filing. Before the default, the rating on Portola's $180 million
8.25% senior unsecured notes was two notches below the corporate
credit rating and the recovery rating was '6', indicating the
expectation for negligible (0% to 10%) recovery in the event of a
payment default.
The company will continue to operate its facilities and offices in
the ordinary course of business while it restructures its balance
sheet and expects ongoing business relationships with trade
creditors, customers, and employees will not be affected.
"Importantly, the restructuring contemplates that all obligations
owed to trade creditors, suppliers, customers, and employees in
the ordinary course of business will be unimpaired and unaffected
by the restructuring," said Standard & Poor's credit analyst Henry
Fukuchi.
Pursuant to the restructuring, holders of the senior notes will
receive 100% of the common stock of the reorganized Portola in
exchange for their claims. Wayzata is expected to be Portola's
controlling shareholder when it emerges from Chapter 11. The
company expects the restructuring to be finalized through a
voluntary prepackaged bankruptcy filing under Chapter 11 of the
U.S. Bankruptcy Code beginning in early September 2008. The
company anticipates that the restructuring process will be
completed by the end of October 2008.
With annual sales of about $284 million, Batavia, Illinois-based
Portola produces tamper-evident plastic closures on packaging
applications for noncarbonated beverages such as dairy drinks,
fruit juices, and water; cosmetics; and food products.
PREFERRED HEALTH: Moody's Upgrades Senior Debt Ratings to B3
------------------------------------------------------------
Moody's Investors Service has upgraded the senior debt ratings of
MMM Holdings, Inc. (MMM), NAMM Holdings, Inc. (NAMM), and
Preferred Health Management Corporation (PHMC) to B3 from Caa1
following the announcement that the company has renegotiated the
terms of its credit facility. The rating agency also upgraded
MMM's corporate family rating to B3 from Caa1 and the insurance
financial strength ratings of MMM Healthcare and PrimeCare Medical
Network to Ba3 from B1. The outlook on the ratings is stable.
This rating action concludes the review that was announced on
June 17, 2008 when Moody's placed the ratings under review with
direction uncertain. At that time, the rating agency indicated
that the focus of its review would be the progress or terms of any
renegotiation of the credit facility, as well as, the
sustainability of recent earnings improvement and membership
growth.
According to the rating agency, the terms of the amendment and
waiver to MMM's credit agreement include the immediate prepayment
of $50 million of debt, the amendment of certain financial
covenants, and the lenders waiving compliance by MMM of all past
defaults related to violation of covenants. Previously, Moody's
stated that although the company was in compliance with all
financial covenants entering 2008, the combination of the decline
in medical membership experienced during 2007, the lower than
expected debt amortization that occurred in 2007, and the tight
Debt to EBITDA covenant limit in 2008 would make it difficult for
MMM to be in compliance with this covenant by the end of 2008.
Moody's commented that the newly negotiated terms and the $50
million prepayment have significantly lessened this threat.
Moody's also noted that although the new terms of the credit
agreement require MMM to incur greater interest expense and pay an
amendment fee, these were not considered onerous.
The rating agency noted that MMM's financial results through May
2008 indicate that the company continues to make progress in
addressing the high medical utilization and costs in its Puerto
Rico operations. In particular, MMM has reversed the membership
decline it experienced in 2007 with membership gains during the
first five months of 2008. The company has also improved its
operating results to historical norms, with medical loss ratios at
or below 82%. According to Moody's, although the company was in
technical default of some of the financial covenants during 2007,
the company continued to make all required principal and interest
payments, including an excess principal payment of approximately
$20 million made on March 28, 2008.
Moody's said that if MMM maintains net income margins above 3%,
demonstrates net membership growth into 2009, maintains debt to
EBIT below 3 times and EBIT interest coverage above 4 times, and
is able to improve its risk based capital on a sustained basis of
at least 100% CAL, then the ratings may be upgraded. However, if
there is deterioration in MMM's liquidity profile, a membership
loss of 25% or more, if debt to EBIT increases above 4 times or if
there is a breach in any of the financial covenants in its credit
agreement, then the ratings will be downgraded.
These ratings were upgraded with a stable outlook:
MMM Holdings, Inc. -- senior secured debt rating to B3 from Caa1;
corporate family rating to B3 from Caa1;
NAMM Holdings, Inc. -- senior secured debt rating to B3 from Caa1;
Preferred Health Management Corporation -- senior secured debt
rating to B3 from Caa1;
MMM Healthcare, Inc. -- insurance financial strength rating to Ba3
from B1;
PrimeCare Medical Network, Inc. -- insurance financial strength
rating to Ba3 from B1.
MMM Healthcare offers Medicare Advantage products exclusively to
eligible participants in Puerto Rico. NAMM is a medical management
company that operates in California and Illinois. Its regulated
operating subsidiary, PrimeCare Medical Network, Inc., consists of
10 owned IPAs in Southern California that contract with major
health care benefit companies on a capitated basis to provide
medical care to commercial and Medicare members.
Aveta, Inc., the parent company of MMM, PHMC and NAMM, is a
privately-owned company incorporated in Delaware and headquartered
in Fort Lee, New Jersey. As of March 31, 2008, Aveta (as Aveta
Holdings, LLC) reported stockholders' equity of ($12) million and
approximately 197,500 Medicare members. For the first three months
of 2008, total revenues were $485 million.
Moody's insurance financial strength ratings (IFSR) are opinions
about the ability of insurance companies to punctually repay
senior policyholder claims and obligations.
Moody's corporate family rating is an opinion of a corporate
family's ability to honor all of its financial obligations and is
assigned to a corporate family as if it had a single class of debt
and a single consolidated legal entity structure.
PRIMECARE MEDICAL: Moody's Upgrades Financial Strength to Ba3
-------------------------------------------------------------
Moody's Investors Service has upgraded the senior debt ratings of
MMM Holdings, Inc. (MMM), NAMM Holdings, Inc. (NAMM), and
Preferred Health Management Corporation (PHMC) to B3 from Caa1
following the announcement that the company has renegotiated the
terms of its credit facility. The rating agency also upgraded
MMM's corporate family rating to B3 from Caa1 and the insurance
financial strength ratings of MMM Healthcare and PrimeCare Medical
Network to Ba3 from B1. The outlook on the ratings is stable.
This rating action concludes the review that was announced on
June 17, 2008 when Moody's placed the ratings under review with
direction uncertain. At that time, the rating agency indicated
that the focus of its review would be the progress or terms of any
renegotiation of the credit facility, as well as, the
sustainability of recent earnings improvement and membership
growth.
According to the rating agency, the terms of the amendment and
waiver to MMM's credit agreement include the immediate prepayment
of $50 million of debt, the amendment of certain financial
covenants, and the lenders waiving compliance by MMM of all past
defaults related to violation of covenants. Previously, Moody's
stated that although the company was in compliance with all
financial covenants entering 2008, the combination of the decline
in medical membership experienced during 2007, the lower than
expected debt amortization that occurred in 2007, and the tight
Debt to EBITDA covenant limit in 2008 would make it difficult for
MMM to be in compliance with this covenant by the end of 2008.
Moody's commented that the newly negotiated terms and the $50
million prepayment have significantly lessened this threat.
Moody's also noted that although the new terms of the credit
agreement require MMM to incur greater interest expense and pay an
amendment fee, these were not considered onerous.
The rating agency noted that MMM's financial results through May
2008 indicate that the company continues to make progress in
addressing the high medical utilization and costs in its Puerto
Rico operations. In particular, MMM has reversed the membership
decline it experienced in 2007 with membership gains during the
first five months of 2008. The company has also improved its
operating results to historical norms, with medical loss ratios at
or below 82%. According to Moody's, although the company was in
technical default of some of the financial covenants during 2007,
the company continued to make all required principal and interest
payments, including an excess principal payment of approximately
$20 million made on March 28, 2008.
Moody's said that if MMM maintains net income margins above 3%,
demonstrates net membership growth into 2009, maintains debt to
EBIT below 3 times and EBIT interest coverage above 4 times, and
is able to improve its risk based capital on a sustained basis of
at least 100% CAL, then the ratings may be upgraded. However, if
there is deterioration in MMM's liquidity profile, a membership
loss of 25% or more, if debt to EBIT increases above 4 times or if
there is a breach in any of the financial covenants in its credit
agreement, then the ratings will be downgraded.
These ratings were upgraded with a stable outlook:
MMM Holdings, Inc. -- senior secured debt rating to B3 from Caa1;
corporate family rating to B3 from Caa1;
NAMM Holdings, Inc. -- senior secured debt rating to B3 from Caa1;
Preferred Health Management Corporation -- senior secured debt
rating to B3 from Caa1;
MMM Healthcare, Inc. -- insurance financial strength rating to Ba3
from B1;
PrimeCare Medical Network, Inc. -- insurance financial strength
rating to Ba3 from B1.
MMM Healthcare offers Medicare Advantage products exclusively to
eligible participants in Puerto Rico. NAMM is a medical management
company that operates in California and Illinois. Its regulated
operating subsidiary, PrimeCare Medical Network, Inc., consists of
10 owned IPAs in Southern California that contract with major
health care benefit companies on a capitated basis to provide
medical care to commercial and Medicare members.
Aveta, Inc., the parent company of MMM, PHMC and NAMM, is a
privately-owned company incorporated in Delaware and headquartered
in Fort Lee, New Jersey. As of March 31, 2008, Aveta (as Aveta
Holdings, LLC) reported stockholders' equity of ($12) million and
approximately 197,500 Medicare members. For the first three months
of 2008, total revenues were $485 million.
Moody's insurance financial strength ratings (IFSR) are opinions
about the ability of insurance companies to punctually repay
senior policyholder claims and obligations.
Moody's corporate family rating is an opinion of a corporate
family's ability to honor all of its financial obligations and is
assigned to a corporate family as if it had a single class of debt
and a single consolidated legal entity structure.
PRINTERS ROW: May Employ the Dykema Gosset PLLC as Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
granted Printers Row, LLC permission to employ Schwartz Cooper
Chartered as the Debtor's counsel until July 13, 2008 and Dykema
Gosset PLLC thereafter.
On July 14, 2008, Schwartz Cooper ceased active
operations,
and most of its attorneys, including all the attorneys expected to
represent Debtor, have joined Dykema. Debtor will refer to
Schwartz Cooper through July 13, 2008, and Dykema Gosset PLLC at
all times thereafter, as the "Law Firm."
The Law Firm will mainly advise the Debtor with respect to its
powers and duties as debtor and debtor-in-possession as it manages
its property and operates its business and properties, as well as
perform all other necessary legal services in connection with the
Debtor's bankruptcy case.
Before the petition date, the Debtor paid Schwartz Cooper a total
of $50,000 for professional services to be rendered and charges
and disbursements to be incurred by Schwartz Cooper on behalf of
the Debtor.
The Law Firm's professionals currently bill:
Hourly Rate
-----------
Partners and Of Counsel $290-$590
Associates $260-$280
Paralegals, legal assistants
and support staff $200
Richard M. Bendix, Esq. a principal at Schwartz Cooper, who has
joined the firm of Dykema Gossett PLLC after Schwartz Cooper's
close of active operations last July 13, 2008, assured the Court
that the Law Firm does not hold or represent any interest adverse
to the Debtor or the Debtor's estate and that the firm is a
"disinterested person" as that term in defined in Section 101(14)
of the Bankruptcy code.
Mr. Bendix further told the Court, however, that as of July 3,
2008, the Debtor's business records have been withheld from the
Debtor, and have not been reviewed by either himself or the Law
Firm. Mr. Bendix added that the Debtor's management, having only
only recently acquired ownership of the Debtor, has not reviewed
the Debtor's business records.
Mr. Bendix can be reached at:
Richard M. Bendix, Jr., Esq.
10 South Wacker Drive
Suite 2300
Chicago, IL 60606
Tel: (312) 627-5673
Fax: (312) 876-1155
email: rbendix@cykema.com
Headquartered in Chicago, Illinois, Printers Row LLC owns and
operates Hotel Blake. The company filed for Chapter 11 protection
on July 3, 2008 (Bankr. N.D. Ill. Case No. 08-17301). When the
Debtor filed for protection against it creditors, it listed assets
and debts of between $50 million to $100 million.
PROGRESSIVE MOLDED: Creditors' Committee Taps Arent Fox as Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors for Progressive
Molded Products Inc. and its debtor-affiliates seeks the U.S.
Bankruptcy Court for the District of Delaware's authority to
retain Arent Fox LLP as counsel, nunc pro tunc to July 7, 2008.
As the Committee's counsel, Arent Fox will, among other things:
(a) assist, advise and represent the Committee in its
consultation with the Debtors relative to the
administration of their Chapter 11 cases;
(b) assist, advise and represent the Committee in analyzing
the Debtors' assets and liabilities, investigate the
extent and validity of liens and participate in and
review any proposed asset sales or dispositions;
(c) attend meetings and negotiate with the representatives of
the Debtors;
(d) assist the Committee in the review, analysis and
negotiation of any plan of reorganization and any
negotiation of the disclosure statement;
(e) assist the Committee in the review, analysis, and
negotiation of any financing or funding agreements;
(f) take all necessary action to protect and preserve the
interests of the Committee, including, without limitation,
the prosecution of actions on its behalf, negotiations
concerning all litigation in which the Debtors are
involved, and review and analysis of all claims filed
against the Debtors' estate;
(g) prepare on behalf of the Committee all necessary motions,
applications, answers, orders, reports and papers in
support of positions taken by the Committee; and
(h) perform all other necessary legal services in these
cases.
Arent Fox will be compensated in accordance with the firm's
customary rates:
Professional Rate/Hour
------------ ---------
Partners $455-$790
Of Counsel $455-$750
Associates $290-$515
Paraprofessionals $145-$260
Arent Fox intends to apply for allowance of compensation and
reimbursement of expenses in accordance with the applicable
provisions of the Bankruptcy Code.
Andrew I. Silfen, partner and chair of Financial Restructuring
Group at Arent Fox LLP, assured the Court that his firm is a
disinterested party as the term is defined in Section 101(14) of
the Bankruptcy Code, and have no interest adverse to the
Committee, the Debtors and their creditors.
About Progressive Molded
Ontario, Canada-based Progressive Molded Products Inc. -- designs
and manufactures component parts for General Motors Corp., Ford
Motor Company and Chrysler, LLC. Its interior automotive
subsystems are used for the "Big Three" automakers' top-selling
platforms, including lightweight trucks, SUVs, mini-vans, cross-
over vehicles, and passenger cars.
The company and three of its affiliates filed for creditor
protection under Chapter 11 of the U.S. Bankruptcy Code before the
United States Bankruptcy Court for the District of Delaware on
June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq.
and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton &
Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq.,
and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt &
Taylor represent the Debtors in their restructuring efforts.
The Progressive Molded Products entities also commenced parallel
restructuring proceedings under the Companies' Creditors
Arrangement Act before the Ontario Superior Court of Justice
(Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A.
Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F.
Morrison at Ernst & Young, Inc., has been appointed CCAA monitor
and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his
solicitor.
QUICKSILVER RESOURCES: Moody's Affirms Ba3 Corporate Family Rating
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating (LGD 4; 59%) for
Quicksilver Resources Inc.'s pending $700 million 5 year second
lien term loan and affirmed its Ba3 Corporate Family and Ba3
Probability of Default Ratings. Under Moody's Loss Given Default
methodology, and in light of much higher than expected sustained
first secured bank borrowings, Moody's downgraded KWK's rating on
$475 million of senior unsecured notes to B1 (LGD 4; 59%) from Ba3
(LGD 4; 54%). The notes will be granted a second lien on KWK's oil
and gas properties to rank pari passu with the new $700 million
term loan. Quicksilver's senior subordinated note ratings were
affirmed at B2 though the LGD ratings were adjusted to (LGD 5;
88%) from (LGD 5; 83%). The outlook was changed to negative from
stable.
The negative outlook reflects Moody's expectation that leverage
will be somewhat higher and, especially, stay high significantly
longer than expected, after KWK closes its pending $1.3 billion
acquisition of Barnett Shale properties. Substantial capital
spending in excess of cash flow through next year will hamper
reduction of sharply elevated leverage on reserves, with potential
reduction likely to come from potential reserve growth rather than
debt reduction. Regaining a stable outlook would hinge on sound
year-end 2008 unit economics on reserve replacement, solid
quarter-to-quarter production growth commensurate with ongoing
organic capital spending and the current Barnett acquisition
capital expended, and declining debt per unit of production
through 2009.
The prior stable outlook had assumed significant leverage
reduction by year-end 2008. Quicksilver had carried a positive
outlook when it recently issued senior unsecured notes under the
expectation that growth would predominantly be organically driven.
The outlook was changed to stable earlier this month with the
announced Barnett acquisition due to the unexpected scale and
associated leverage of the acquisition. Instead, Moody's expects
leverage to remain high through 2009. It appears that KWK's
intended $500 million in asset sales by year-end 2009 may cover
the cash flow shortfall after capital outlays rather than
materially reduce debt.
The ratings could be sensitive to continued strong price support
of cash flows in light of as much as $1.2 billion of capital
spending next year, as discussed publicly by KWK, and receiving a
strong production response from its 2008 and 2009 capital
spending. The ratings may also be sensitive to KWK following
through on its plan to raise $500 million next year with asset
sales, though the unknown factor now is the level of cash flow
loss that would entail.
KWK's liquidity rating is affirmed at SGL-3. However, this assumes
that heavy growth capital spending would be curtailed to the
degree possible to suit 2009 cash flows should price realizations
materially decline. The SGL-3 also assumes that KWK will soon
increase the current $1 billion borrowing base under its $1.450
billion committed bank revolver. In a materially lower price
environment, the SGL-3 liquidity rating might gain support from
KWK's 2009 asset sale program.
Leverage has surged due to the combined leveraging impact of (a)
capital spending during the rest of 2008 that is expected to
exceed cash flow, (b) 2009 capital spending that expected to far
exceed cash flow, and (c) the $1 billion of debt to be incurred to
fund Quicksilver's pending $1.3 billion acquisition of oil and gas
reserves and undeveloped acreage in Fort Worth Basin (Barnett
Shale) of Texas. While the acquisition intensifies Quicksilver's
holdings in the Barnett Shale, which may enhance its unit
economics in the basin, it also further concentrates Quicksilver's
property base in one basin.
Based on the current proven reserves and production, the purchase
price for the 350 Bcfe of acquired Barnett properties (58.333
million barrels oil-equivalent, or Boe; 40% proven developed) is
notably high at $22.41/Boe (excluding heavy development costs) and
$174,300/Boe per currently flowing Boe of production.
Consideration includes $1 billion in cash and $307 million in
Quicksilver common stock. The cash portion will be funded with a
$700 million 5 year second secured term loan and borrowings of
approximately $300 million from Quicksilver's existing first
secured borrowing base bank revolver. The recently issued senior
unsecured notes will be granted second lien status pari-passu with
the new $700 million term loan.
As a result of the Barnett acquisition, Moody's estimates that
Quicksilver's leverage on proven developed (PD) reserves increases
to approximately $13/PD Boe compared to $7/PD Boe prior to the
transaction. Based on pro-forma debt, Moody's estimate of KWK
production by mid-year 2008, and KWK's announced 45 mmcfe/day of
acquired Alliance production, we estimate that the leverage per
unit of average daily production surged to approximately
$50,000/Boe per day from $31,400/Boe per day before the Alliance
acquisition. KWK believes its standalone production is rising
substantially in third quarter, which would significantly reduce
pro-forma leverage on production.
While the acquired Alliance properties are near Quicksilver's
existing position in the Barnett Shale and provide a good
strategic fit, the transaction increases the level of
Quicksilver's concentration in this one geographic area. It also
places a strain on what was already a full program of development
on Quicksilver's existing acreage both in the Barnett Shale and in
prospective areas elsewhere.
Quicksilver Resources Inc. is headquartered in Fort Worth, Texas.
RANDALL MARTIN: Files Amended Ch. 11 Plan And Disclosure Statement
------------------------------------------------------------------
Randal Martin Home Higley Park LLC delivered to the United States
Bankruptcy Court for the District of Arizona an amended Chapter 11
plan of reorganization and disclosure statement explaining that
plan, Bill Rochelle of Bloomberg News reports.
According to Bloomberg, the plan contemplates for the payment of
two of its secured creditors the value of their collateral over 20
years with interest at most 6.5% at the prime rate.
Bloomberg relates that one of the Debtor's secured creditor
asserted $22.2 million in claims but the Debtor valued it at
$2.2 million, while the other creditor asserted $6.6 million in
claims but the Debtor valued it at $4.4 million.
Under the plan, unsecured creditors will be paid $400,000 in
installment basis over four year, Bloomberg says. Unsecured
creditors hold roughly $1.4 million in claims excluding
deficiencies of the secured lenders.
About Randall Martin
Headquartered in Scottdale, Arizona, Randall Martin Home Higley
Park LLC builds homes. The company filed for Chapter 11
protection on March 25, 2008 (Bankr. D. Ariz. Case No.08-03097).
Michael W. Carmel, Esq., at Michael W. Carmel Limited, represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection against its creditors, it listed total assets of
$9,096,698 and total debts of $33,810,936.
RECYCLED PAPER: S&P Cuts $120MM Loan & $20MM Facility Rtngs to 'D'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered the rating on Chicago,
Illinois-based Recycled Paper Greetings' $120 million first-lien
term loan and $20 million revolving credit facility to 'D' from
'CC', while the '2' recovery rating on the facility remains
unchanged. The ratings downgrade reflects the expiration of the
45-day grace period, in which the company had to receive a cure or
waiver to avoid a cross-default under the first-lien credit
facilities. RPG did not affect a cure or obtain a waiver during
this period, and is still working on an overall capital structure
solution with its lenders and financial sponsor. Subsequent to
this rating action, S&P are discontinuing public surveillance on
RPG.
R.H. SIMMONS: Case Summary & 17 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: R.H. Simmons LLC
aka Hanky Panky, Inc.
aka L.L.C. R.H.Simmons
P.O. Box 2121
Orange Beach, AL 36561-2121
Bankruptcy Case No.: 08-12670
Type of Business: The company builds and develops
residential homes.
Chapter 11 Petition Date: July 25, 2008
Court: Southern District of Alabama (Mobile)
Debtor's Counsel: Marcus E. McDowell, Esq.
(mmcdowell@wbblaw.com)
P.O. Box 400
Bay Minette, AL 36507
Tel: (251) 937-7024
Fax: (251) 937-6190
Total Assets: $0
Total Debts: $9,078,137
A copy of R.H. Simmons LLC's schedules with its list of 20 largest
unsecured creditors is available for free at:
http://bankrupt.com/misc/alsb08-12670.pdf
RICHARD PINKSTON: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Richard Pinkston
3275 Faxton Court
Simi Valley, CA 93063
Bankruptcy Case No.: 08-09365
Related Information: An affiliate of the Debtor, Stonecast
Walls LLC, filed for Chapter 11 protection
on March 11, 2008 (Bankr. D. Ariz.
Case No. 08-02473).
Chapter 11 Petition Date: July 25, 2008
Court: District of Arizona (Phoenix)
Judge: George B. Nielsen Jr.
Debtor's Counsel: J. Kent Mackinlay, Esq.
(kmackinlay@qwest.net)
Warnock, Mackinlay & Associates, PLLC
1019 South Stapley Drive
Mesa, AZ 85204
Tel: (480) 898-9239
Fax: (480) 833-2175
Estimated Assets: $1,000,000 to $100,000,000
Estimated Debts: $1,000,000 to $100,000,000
The Debtor did not file a list of his 20 largest unsecured
creditors.
S & A RESTAURANT: Voluntary Chapter 7 Case Summary
--------------------------------------------------
Lead Chapter 7 Debtor: S & A Restaurant Corp.
6500 International Pkwy., Ste. 1000
Plano, TX 75093
Bankruptcy Case No.: 08-41898
Debtor-affiliates filing separate Chapter 7 petitions:
Entity
------
Bennigan's Club of Dallas-Shiloh, Inc.
Bennigan's Club of Fort Worth, Inc.
Bennigan's Club of Mesquite, Inc.
Bennigan's Club of Tyler, Inc.
Bennigan's Gift Card, Inc.
Bennigan's of Las Vegas, Inc.
Bennigan's of Laurel, Inc.
Bennigan's of Maryland, Inc.
Bennigan's of Roosevelt Field, Inc.
Bennigan's of Security, Inc.
Bennigan's of Waldorf, Inc.
S & A Properties Corp.
Steak and Ale Club of Mesquite, Inc.
Steak and Ale No. 108 Club
Steak and Ale of Alabama, Inc.
Steak and Ale of California, Inc.
Steak and Ale of Colorado, Inc.
Steak and Ale of Columbia, Inc.
Steak and Ale of Delaware, Inc.
Steak and Ale of Florida, Inc.
Steak and Ale of Georgia, Inc.
Steak and Ale of Illinois, Inc.
Steak and Ale of Indiana, Inc.
Steak and Ale of Little Rock, Inc.
Steak and Ale of Louisiana, Inc.
Steak and Ale of Massachusetts, Inc.
Steak and Ale of Michigan, Inc.
Steak and Ale of Minnesota, Inc.
Steak and Ale of Missouri, Inc.
Steak and Ale of New Jersey, Inc.
Steak and Ale of New Mexico, Inc.
Steak and Ale of Ohio, Inc.
Steak and Ale of Oklahoma City No. 1, Inc.
Steak and Ale of Pennsylvania, Inc.
Steak and Ale of Tennessee, Inc.
Steak and Ale of Texas, Inc.
Steak and Ale of Virginia, Inc.
Steak and Ale of West Virginia, Inc.
Type of business: The Debtors own and operates restaurants. See
http://www.bennigans.com/
http://www.steakandale.com,and
http://www.steakandalerestaurants.com
Chapter 7 Petition Date: July 29, 2008
Court: Eastern District of Texas (Sherman)
Judge: Brenda T. Rhoades
Debtor's Counsel: J. Michael Sutherland, Esq.
Email: msutherland@ccsb.com
Carrington Coleman Sloman & Blumenthal
901 Main St., Ste. 5500
Dallas, TX 75202-3767
Tel: (214) 855-3315
Fax: (214) 855-1333
http://www.ccsb.com/
S & A Restaurant Corp's Financial Condition:
Estimated Assets: $100,000,000 to $500,000,000
Estimated Debts: $10,000,000 to $50,000,000
S & A RESTAURANT: Bankruptcy Filing Surprises Biz Observers
-----------------------------------------------------------
Technomic Inc., provider of proprietary management consulting
solutions and shared-cost, common-interest research, said that
the sudden timing of Bennigan's Grill & Tavern and its affiliates'
Chapter 7 filing may have surprised many industry observers, but
the difficulties facing S & A Restaurant Corp. and many other
casual dining chains have been readily apparent for some time.
As reported in the Troubled Company Reporter yesterday, almost 40
of Metromedia Restaurant Group filed on July 29, 2008, for
chapter 7 liquidation with the U.S. Bankruptcy Court for the
Eastern District of Texas.
About 200 Bennigan's Franchising Co. and Steak & Ale stores were
shut down affecting at least 9,200 workers.
"These restaurants share many subtle and complex challenges that
extend beyond this difficult economic climate," Ron Paul,
president of Technomic, said. "To some extent, they've become
victims of their own success--a mature category with too many
units and not enough differentiation, at least in the eyes of
consumers."
According to Technomic, the top 20 casual dining chains in the
category in which Bennigan's operated had unit growth of 45%
during the recent five-year period, well beyond the growth in
demand.
Recent Technomic research on the segment also identified factors
that have helped some casual-dining operators remain successful,
while others have stumbled. Those factors include strong unit
economics, excellent execution in food quality and service, and
the ability to convey a strong price and value perception with
consumers, regardless of the total amount spent.
"In terms of achieving differentiation, it's hard to underestimate
the importance of the food element," Mr. Paul said. "Consumers
are naturally drawn to unique, signature menu items. When the
chain can also layer in excitement through new or limited-time
offerings, they help create an environment where consumers want to
come back. A good experience can generate all-important buzz
around the concept."
According to The Associated Press, Morningstar analyst John Owens
said several chains expanded quickly, making it more difficult for
customers to differentiate between them and forcing many companies
to cut prices to lure diners.
"Bennigan's was the weakest of the major players," Mr. Owens said,
according to AP.
Separately, Bankruptcy Law360 reports that bankruptcy and
franchising attorneys have said when Bennigan's and Steak & Ale
closed outlets in a Chapter 7 bankruptcy filing, the franchise
started a process that may end up being far more complicated than
the average liquidation.
The AP says Jeffry Davis, Esq., at Mintz Levin in San Diego,
California, who is not involved in the filing, said he was
surprised the company didn't file for Chapter 11, which would have
allowed it to reorganize and remain open, and instead filed to
liquidate its assets. "Typically, at that point, management sees
no way to improve the business within a reasonable period of time
to allow it to go forward," he told AP. "To me it's really
indicative of the economy."
About Metromedia
John Werner Kluge is a German-American entrepreneur and a
billionaire. He is best known as a television industry mogul in
the United States. Mr. Kluge's major move into media was by
purchasing stock in the Metropolitan Broadcasting Company in the
mid-1950s. Mr. Kluge is chairman, CEO and president of holding
company, Metromedia.
East Rutherford, New Jersey-based Metromedia Restaurant Group --
http://www.metromediarestaurants.com/-- is part of Metromedia
Company -- a multi-concept, table-service restaurant group. -- is
a multi-concept table-service restaurant group, with more than 800
Bennigan's(R), Bennigan's SPORT(TM), Steak and Ale(R), Ponderosa
Steakhouse(R) and Bonanza(TM) Steakhouse restaurants in the U.S.
and abroad. Its restaurants, representing four of the most well-
known brands in the restaurant industry, serve more than 160
million guests a year. The company operates nearly 1,000
restaurants in the United States and abroad, which are comprised
of Bennigan's, Steak and Ale, Ponderosa Steakhouse and Bonanza
Steakhouse. Bennigan's restaurants are based on the taverns of
Ireland and were founded in 1976. Steak and Ale restaurants are
inspired by old-fashioned English country inns and were founded in
1966. Ponderosa Steakhouse and Bonanza Steakhouse operate
together as one large restaurant concept. The company franchises
its Bennigan's, Ponderosa Steakhouse and Bonanza Steakhouse
restaurants.
SCO GROUP: Ordered to Return $2.55MM in Royalties to Novell
-----------------------------------------------------------
U.S. District Judge Dale Kimball in Salt Lake City ordered SCO
Group Inc. to turn over to Novell Inc. some $2.55 million in
royalties from a licensing agreement with Sun Microsystems Inc.,
Susan Decker and Steven Church of Bloomberg News report.
The court ruled that SCO wasn't authorized to enter into the
licensing agreement with Sun Microsystems, the report said. Judge
Kimball rejected other royalty claims by Novell over a Microsoft
Corp. contract, according to the report.
Novell originally asked for more than $20 million, SCO said,
according to the Bloomberg report.
Background to the Novell Suit
The TCR - Intellectual Property Dispute reported on April 4, 2008,
that the U.S. District Court for the District of Utah was set to
commence trial on April 28, 2008 in The SCO Group Inc.'s copyright
infringement suit against Novell Inc.
On Jan. 20, 2004, SCO filed suit against the Company in the Third
Judicial District Court of Salt Lake County, State of Utah. The
company later removed the action to the Utah District Court.
SCO's original complaint alleged that the company's public
statements and filings regarding the ownership of the copyrights
in UNIX and UnixWare have harmed SCO's business reputation and
affected its efforts to protect its ownership interest in UNIX and
UnixWare.
The Utah District Court dismissed the original complaint, but
allowed SCO to file an amended complaint, which SCO did on July 9,
2004. On July 29, 2005, the company filed an answer to the
amended complaint alleging slander of title and breach of
contract, and seeking declaratory actions and actual, special and
punitive damages.
On Feb. 3, 2006, SCO filed a second amended complaint alleging
violation of the non-competition provisions of the agreement under
which the company sold its Unix business to SCO, failure to
transfer all of the Unix business, copyright infringement, and
unfair competition. SCO seeks to require Novell to assign all
copyrights that it has registered in UNIX and UnixWare to SCO, to
prevent it from representing that it has any ownership interest in
the UNIX and UnixWare copyrights, to require it to withdraw all
representations made regarding its ownership of the UNIX and
UnixWare copyrights, and to cause it to pay actual, special and
punitive damages in an amount to be proven at trial.
On March 10, 2006, the company moved to stay the case pending the
outcome of arbitration between the Company and SuSE Linux GmbH in
the International Court of Arbitration in France. On Aug. 21,
2006, the District Court ordered that claims related to the SuSE
arbitration should be stayed but the case should proceed with the
rest of the claims.
The company has also moved for summary judgment asking the
District Court to rule that:
(1) it retained the UNIX and UnixWare copyrights;
(2. SCO has not met its burden of establishing special
damages on its slander of title claim;
(3) the company retained broad rights to waive SCO's contract
claims against International Business Machines Corp.,
and;
(4) the portion of SCO's contract and unfair competition
claims based on non-competition provisions should not
proceed to a jury trial.
SCO has filed its own motions for summary judgment seeking a
ruling that it owns the UNIX and UnixWare copyrights, and that the
company's retained rights are much narrower than claimed. The
District Court heard the foregoing motions on May 31, 2007 and
June 4, 2007, and took all motions under advisement. (Intellectual
Property Reporter, July 9, 2007)
On Aug. 10, 2007, the District Court granted summary judgment
determining that the company owns the UNIX copyrights. The
District Court also ruled that the company is entitled to certain
royalties SCO received from Sun Microsystems Inc. and Microsoft
Corp. through their licenses.
The Debtors' chapter 11 petition filing on Sept. 14, 2007,
automatically stayed the action in the Utah Court. On Oct. 4,
2007, the company moved to lift the automatic stay of the suit.
(Intellectual Property Reporter, Oct. 11, 2007)
The Bankruptcy Court allowed the company to proceed with the
trial for the purpose of determining how much is owed to the
company from the license royalties. Judge Kimball ruled in favor
of Novell on July 16.
The civil case is SCO Group Inc. v. Novell Inc., 04cv139,
U.S. District Court for the District of Utah (Salt Lake City).
Exclusive Filing Extensions
The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District
of Delaware extended the period at which The S.C.O. Group Inc. and
S.C.O. Operations Inc. can exclusively file their chapter 11 plan
through Aug. 11, 2008.
The Debtors' exclusive period for soliciting acceptances of the
plan was also extended through Oct. 13, 2008.
The Debtors believe that cause exists to have their deadlines
extended, because, among other things, the ruling of the District
Court of Utah will resolve a substantial unresolved contingency,
regarding the amount, if any, of the Debtors' liability to Novell,
Inc. The ruling will, therefore, help all parties complete the
final negotiations and documentation for their deal.
The Deal reports that the Debtors' needed time to discuss and
formulate an investment scheme with Stephen Norris & Co. Capital
Partners LLP, a privately held equity firm.
About Novell
Based in Waltham, Mass., Novell Inc. (NASDAQ: NOVL) --
http://www.novell.com/-- develops, implements, and supports mixed
source and open source software for use in business solutions.
Its business units segments include: Open Platform Solutions,
Identity and Security Management, Systems and Resource Management,
and Workgroup. Pursuant to an agreement and plan of merger, dated
Aug. 1, 2007, Novell acquired 100% of Senforce Technologies, Inc.
In March 2008, the company completed the acquisition of PlateSpin
Ltd.
About The S.C.O. Group
Headquartered in Lindon, Utah, The S.C.O. Group Inc. (Nasdaq:
SCOX) fka Caldera International Inc. -- http://www.sco.com/--
provides software technology for distributed, embedded and
network-based systems, offering SCO OpenServer for small to
medium business and UnixWare for enterprise applications and
digital network services.
The company has office locations in Australia, Austria,
Argentina, Brazil, China, Japan, Poland, Russia, the United
Kingdom, among others.
The company and its affiliate, SCO Operations Inc., filed for
Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead
Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur
Spector, Esq., at Berger Singerman P.A., represent the Debtors in
their restructuring efforts. James O'Neill, Esq., and Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the
Debtors' Delaware and conflicts counsels. Epiq Bankruptcy
Solutions LLC, acts as the Debtors' claims and noticing agent.
The United States Trustee failed to form an Official Committee of
Unsecured Creditors in these cases due to insufficient response
from creditors. The Debtors' schedules showed total assets of
$9,549,519 and total liabilities of $3,018,489.
SECURITY CAPITAL: Moody's Ca-Rated Preference Shares on Review
--------------------------------------------------------------
Moody's Investors Service has placed the B2 insurance financial
strength ratings of XL Capital Assurance Inc., XL Capital
Assurance (U.K.) Limited and XL Financial Assurance Ltd. under
review with direction uncertain. In the same rating action,
Moody's placed the ratings of Security Capital Assurance Ltd.
(NYSE: SCA -- preference shares at Ca) and a related financing
trust on review for possible downgrade.
The rating action was prompted by SCA's announcement that it has
reached an agreement with XL Capital Ltd. providing for the
termination, elimination or commutation of certain reinsurance,
guarantees and other agreements with XL and its affiliates in
return for a payment by XL of $1.775 billion in cash and 8 million
shares of XL Class A ordinary shares. SCA also announced it has
reached an agreement with Merrill Lynch & Co., Inc. for the
termination of eight credit default swaps on ABS CDOs written by
XLCA in return for a $500 million cash payment to Merrill Lynch.
Moody's noted that the Master Agreement has been approved by the
New York Insurance Department and the Bermuda Monetary Authority.
The Merrill Agreement has also been approved by the New York
Insurance Department. Prior to today's rating action, the rating
outlook for SCA and its subsidiaries was negative.
Moody's ratings on securities that are guaranteed or "wrapped" by
a financial guarantor are generally maintained at a level equal to
the higher of a) the rating of the guarantor (if rated at the
investment grade level), or b) the published underlying rating. In
accordance with current rating agency policy, following Moody's
June 20, 2008 rating action on XLCA and XLFA which lowered their
ratings to below the investment grade level, Moody's withdrew
ratings on XLCA and XLFA-wrapped securities for which there was no
published underlying rating. Should the guarantors' ratings
subsequently move back into the investment grade range or should
the agency subsequently publish the associated underlying rating,
Moody's would reinstate previously withdrawn ratings on those
wrapped instruments. For further information please see Moody's
recently published special comment entitled: Assignment of Wrapped
Ratings When Financial Guarantor Falls Below Investment Grade (May
6, 2008).
According to Moody's, the review with direction uncertain on the
insurance financial strength ratings of XLCA and XLFA reflects the
significant improvement to SCA's capital adequacy position and
upward pressure on the ratings that would occur following the
successful completion of the aforementioned transactions, as well
as the likelihood of downgrades if the transactions fail to be
completed. The Master Agreement and Merrill Agreement are expected
to close in early August 2008, and are subject to the completion
of an announced $2.5 billion capital raise by XL and other
customary closing conditions. XL announced this morning that it
has priced offerings of its equity and equity units totaling $2.5
billion. If the contemplated transactions are successfully
completed, Moody's will likely change the rating review from
direction uncertain to a review for possible upgrade. However,
Moody's stated that the insurance financial strength ratings are
likely to remain non-investment grade at the conclusion of our
rating review given the continued uncertainty with respect to
SCA's remaining mortgage-related exposures and currently impaired
franchise.
The review for possible downgrade of SCA's preferred ratings
reflects the potential for the insurance financial strength
ratings to be lowered in the unlikely event that the Master
Agreement and Merrill Agreement fail to close by August 15, 2008,
which would have an impact on those ratings due to their
subordinated status relative to policyholder claims. Upon the
successful closing of the Master Agreement and Merrill Agreement,
Moody's will likely confirm the current ratings on SCA's preferred
securities with a negative outlook.
The rating agency stated that SCA is expected to record
significant reserve charges on its mortgage-related exposures
during 2Q2008, including both second-lien RMBS and ABS CDOs. This
reserving activity will result in both XLCA and XLFA reporting
negative statutory capital at quarter-end. However, the
transactions contemplated by the Master Agreement and the Merrill
Agreement will, if completed, result in the companies having
positive statutory capital and result in a significant improvement
in their capital adequacy positions, in Moody's opinion. In
addition, SCA has announced it has commuted its outbound
reinsurance with RAM Reinsurance Company Ltd and a portion of
inbound reinsurance with Financial Security Assurance Inc. (the
remainder of which will be moved from XLFA to XLCA). SCA has also
earmarked $820 million for the purpose of commuting, terminating,
amending or restructuring existing agreements with certain CDS
bank counterparties who have signed the Master Agreement.
Moody's stated that the ratings review will focus on: 1) the
successful closing of the Master Agreement and the Merrill
Agreement; 2) the subsequent risk-adjusted capital adequacy
position of XLCA and XLFA; 3) prospective dividend capacity of the
operating companies and preferred share dividend policy going
forward; and 4) an assessment of SCA's franchise value and future
business prospects.
With respect to the Merrill Agreement, Moody's noted that the
negotiated settlement has some elements that are typically
associated with a distressed exchange. Moody's anticipates that it
will further analyze the terms of the Merrill Agreement to
determine whether a distressed exchange has occurred, though any
conclusions reached from this analysis would not have an impact on
the ratings under review.
LIST OF RATING ACTIONS
The following ratings have been placed on review with direction
uncertain:
XL Capital Assurance Inc. -- insurance financial strength at B2;
XL Capital Assurance (U.K.) Limited -- insurance financial
strength at B2; and
XL Financial Assurance Ltd -- insurance financial strength at B2.
The following ratings have been placed on review for possible
downgrade:
Security Capital Assurance Ltd -- provisional rating on senior
debt at (P)Caa3, provisional rating on subordinated debt at (P)Ca
and preference shares at Ca; and
Twin Reefs Pass-Through Trust -- contingent capital securities at
Caa2.
OVERVIEW OF SECURITY CAPITAL ASSURANCE
Security Capital Assurance Ltd is a Bermuda-domiciled holding
company whose primary operating subsidiaries, XL Capital Assurance
Inc. and XL Financial Assurance Ltd, provide credit enhancement
and protection products to the public finance and structured
finance markets throughout the United States and internationally.
SCA has announced that it will formally change its corporate name
to Syncora Holdings Ltd on August 4, 2008. XLCA and XLFA will be
renamed Syncora Guarantee Inc. and Syncora Guarantee Re Ltd,
respectively.
SECURITY CAPITAL: S&P Retains 'C' Rating Under Negative Watch
-------------------------------------------------------------
Standard & Poor's Ratings Services said its 'BBB-' financial
strength ratings on XL Capital Assurance Inc. and XL Financial
Assurance Ltd. remain on CreditWatch with negative implications,
following Security Capital Assurance Ltd.'s announcement on
July 28, 2008, of a proposed $1.8 billion capital injection and
8-million-share contribution by XL Capital Ltd. and the
commutation of the credit default swaps totaling $3.74 billion
that were in dispute with Merrill Lynch & Co. Inc.
As part of ongoing efforts to strengthen the financial condition
of the companies, it was also announced that XLCA's management
will continue discussions with swap counterparties to commute,
terminate, or restructure the remaining credit default swaps
portfolio.
"While these actions would help to stabilize the capital position
of XLCA and XLFA, the ratings remain on CreditWatch because we
believe there is execution risk in management's strategy,
including possible regulatory intervention, and that business
prospects for the companies remain challenging," said Standard &
Poor's credit analyst David Veno.
The companies' franchise, in S&P's view, continues to be impaired
due to their scaled-back underwriting activity, concerns that
arose around SCA's ability to address its subsidiaries' capital
needs, and questions relating potential CDS losses. Should
management prove unsuccessful in implementing a new business
strategy and commuting its CDS exposure, notwithstanding a
strengthened financial position, S&P believes that XLCA and XLFA
would effectively be in runoff, in which case the ratings could be
further lowered.
Ratings List
XL Capital Assurance Inc.
XL Capital Assurance (U.K.) Ltd.
XL Financial Assurance Ltd.
Issuer Credit Rating
Local Currency BBB-/Watch Neg/--
Financial Strength Rating
Local Currency BBB-/Watch Neg/--
Financial Enhancement Rating
Local Currency BBB-/Watch Neg/--
Security Capital Assurance Ltd.
Long Term C/Watch Neg/--
SECURITY CAPITAL: Fitch Junks Ratings After Adverse CDO Losses
--------------------------------------------------------------
Fitch Ratings has downgraded these ratings on Security Capital
Assurance Ltd. and its financial guaranty insurance subsidiaries:
XL Capital Assurance Inc.
XL Capital Assurance (U.K.) Ltd.
XL Financial Assurance Ltd.
-- Insurer financial strength to 'CCC' from 'BB'.
Security Capital Assurance Ltd.
-- Long Term Issuer Rating to 'CCC-' from 'B-';
-- $250 million Fixed/Floating Series A Perpetual Non-cumulative
Preference Shares to 'CCC-' from 'CCC'.
Twin Reefs Pass-Through Trust
-- $200 million Pass-Through Trust Securities to 'CCC-' from
'B'.
Fitch has also placed all ratings on Rating Watch Evolving.
The downgrade of SCA and its financial guaranty subsidiaries
reflect significant adverse loss development in the company's
structured finance collateralized debt obligation and residential
mortgage-backed securities case basis loss reserves as of June 30,
2008. As a result, SCA's New York-based insurance subsidiary,
XLCA, will report negative statutory surplus and SCA's Bermuda-
based reinsurance subsidiary, XLFA, will report negative total
statutory capital and surplus as of June 30, 2008. Negative
statutory capital could result in some form of regulatory
intervention. If regulatory intervention were to occur, Fitch
would expect to downgrade SCA's IFS ratings to reflect a 'default'
status.
In an effort to address the challenges and shore up the financial
strength of these entities, SCA has announced it has negotiated
settlements with Merrill Lynch & Co., Inc. and XL Capital Ltd. on
July 28, 2008. While the XL and ML agreements are expected to
close concurrently in early August 2008, Fitch believes there is
material execution risks tied to closing the agreements. In
addition to customary closing conditions, the agreements are
subject to the successful completion of a public offering of
equity and equity units by XL. Further, SCA or XL may choose to
terminate their agreement if closing does not occur by Aug. 15,
2008.
With respect to ML, SCA has stated it has entered into an
agreement with ML and Merrill Lynch International under which the
parties agreed to terminate eight SF CDO transactions executed as
credit default swaps totaling $3.74 billion in exchange for a
payment from XLCA of $500 million to MLI. Additionally, SCA
announced it will receive final payment of about $1.9 billion from
XL in a settlement to terminate any exposure XL had to SCA from
its facultative reinsurance contract, excess of loss reinsurance
contract and unlimited guaranty in support of any losses payable
on SCA's pre-August 2006 financial guaranty portfolio.
The agreements with ML and XL, if executed, are capital accretive
from the standpoint of SCA. In addition to proceeds received from
XL, the final payment in settlement of any ML claims is
significantly less than the reserves posted by SCA as of June 30,
2008. Therefore, if the ML transaction is finalized, SCA should
be able to release a significant level of reserves, thereby
allowing its statutory capital to return to a positive value.
Additionally, the ML CDS transactions were highly capital-
intensive under Matrix, Fitch's proprietary financial guaranty
capital model. If the ML transactions were to be fully
terminated, SCA's simulated modeled losses would decline
significantly.
Partly offsetting the benefits of the XL and ML agreements, Fitch
is currently evaluating the extent to which the significant
decline in the credit quality of SCA's RMBS insured portfolio
during the second quarter of 2008 will increase the level of
claims-paying resources targeted under Matrix for SCA.
The Rating Watch Evolving reflects:
-- The uncertainty noted above related to execution of the ML
and XL settlements;
-- The potential positive implications of enhancements to SCA's
financial and capital position if the settlement agreements
are executed, which could cause SCA's ratings to be upgraded
several rating categories; and
-- Rating implications tied to Fitch's ultimate viewpoint
related to the nature of the negotiations surrounding the
noted settlements and terminations.
Regarding the last point, given the perceived favorable terms of
the ML and XL settlements agreements from SCA's perspective, as
well as SCA's deteriorating financial condition as settlement
negotiations were taking place, Fitch may consider the settlements
as 'distressed' under its ratings methodology. In this instance,
Fitch would potentially downgrade the existing IFS rating of XLCA
and XLFA to a 'default' status upon execution of the ML
settlements. This would reflect what Fitch would effectively view
as an economic default on those obligations similar to a
distressed debt exchange. Immediately following that action,
Fitch would then upgrade the 'post-settlement' IFS rating for XLCA
and XLFA to a level reflective of its future financial strength,
which would improve significantly as a result of the settlements.
Fitch expects to come to its conclusion on the nature of the
settlements at the time the settlements are executed.
Any 'post settlement' ratings assessment of SCA would incorporate
not only the improvement in SCA's capital position, but also
Fitch's view of various qualitative factors. These would include
SCA's franchise value and business outlook, which appear to be
highly uncertain due to the negative implications from SCA's
exposure to mortgage-related credits.
SCA is a Bermuda domiciled holding company whose primary operating
subsidiaries, XLCA and XLFA, provide insurance, reinsurance, and
financial products and services throughout the United States and
internationally. For March 31, 2008, SCA reported consolidated
GAAP assets of $3.8 billion and shareholders equity of
approximately $348 million. On an aggregated basis net par
outstanding totaled $155 billion as of March 31, 2008. As
announced by the company, SCA will formally change its corporate
name to Syncora Holdings Ltd. on Aug. 4, 2008. On that date XLCA
and XLFA will change their names to Syncora Guarantee Inc. and
Syncora Guarantee Re Ltd. respectively.
SEMGROUP LP: Liquidity Issues Spur SEC's Probe on SemGroup Energy
-----------------------------------------------------------------
The Securities and Exchange Commission is looking into SemGroup
Energy Partners, L.P., and its disclosure regarding the liquidity
issues of its parent, SemGroup LP. SemGroup Energy, which did
not seek protection under Chapter 11, is the publicly trading arm
of SemGroup LP.
Specifically, the SEC, according to Tulsa World, told SemGroup
Energy that it will examine its documents and information related
to SemGroup LP's cash-flow problems and hedging mistakes that
culminated in the parent's bankruptcy filing.
The SEC's inquiry stems from the numerous shareholder lawsuits
filed against SemGroup Energy, its parent, and their officers and
directors, alleging, among other things, that:
* SemGroup, its parent, and the D&O failed to disclose that
between February 20 and May 8, 2008, the parent was engaged
in high-risk crude oil hedging transactions that could
affect its ability to continue as a going concern; or
* the parent was suffering from liquidity problems.
SemGroup Energy also said in a filing with the SEC that it
received Grand Jury subpoenas from the U.S. Attorney's Office in
Oklahoma City, Oklahoma, directing the company to produce
financial and other records.
The Wall Street Journal, quoting a person familiar with SemGroup
LP's trading, related the company was an active trader that used
"risky, complicated trading techniques including options trades
that exposed it to greater risks if the market made big moves."
The company disclosed with the Court in its Chapter 11 Petition
that it lose $2,400,000,000 in oil futures transactions.
The Journal said creditors and bondholders are looking for
evidence that SemGroup LP was engaging in trading that wasn't
authorized or part of its normal hedging activities. "What
disturbed lenders most is that there was a lot more trading
activity going on than what they believed was the case," Susheel
Kirpalani, Esq., at Quinn Emanuel Urquhart Oliver & Hedges LLP,
told the Journal. Mr. Kirpalani, according to the Journal, is
seeking to represent the unsecured creditors of SemGroup LP.
Before SemGroup LP's Chapter 11 filing on July 22, 2008, SemGroup
Energy severed its ties with its parent. SemGroup Energy
shareholders Manchester Securities Corp., and Alerian Finance
Partners, LP, took control of the company on July 18.
In a statement, Thomas Kivisto, co-founder and former chief
executive officer of SemGroup LP, told the media that he cannot
answer any pressing questions now that an investigation is under
way, Tulsa World related. He, however, assured SemGroup
employees that "they will will regain their trust in what they
initially believe in" as facts regarding the collapse are
unveiled.
As of July 25, 2008, SemGroup Energy's common stock trades at
$7.55 a piece.
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. 3; 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: BofA Sues Co-Founder Tom Kivisto Over $15MM Loan
-------------------------------------------------------------
Bank of America sued Tom Kivisto, co-founder and former chief
executive officer of SemGroup LP, in the U.S. District Court for
the Northern District of Oklahoma, in connection with a
$15,000,000 loan extended by the Bank to Mr. Kivisto in May 2006.
BofA alleged that reports relating to the financial difficulties
within SemGroup resulted to a drop in the stock prices of
SemGroup's affiliate, SemGroup Energy Partners, L.P., by 51.8% in
one day. The reports, added with the information that Mr.
Kivisto had been replaced as president and chief executive
officer of SemGroup, quality as a "material adverse change
relating to the value of the security interest in SemGroup and
Mr. Kivisto," BofA asserted.
The occurrence of a material adverse effect on the condition of
the borrower, guarantor, or the SemGroup partnership constitutes
a default under the provisions of the Credit Agreement, Joe
Edwards, Esq., at Day, Edwards, Propester, & Christensen, P.C.,
in Oklahoma City, Oklahoma, argued on behalf of BofA.
Mr. Edwards asserted that Mr. Kivisto owed BofA $12,800,000, as
well as $47,303 in interest on the Loan.
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. 3; 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: May Hire Kurtzman Carson as Claims and Notice Agent
----------------------------------------------------------------
SemGroup L.P. and its debtor-affiliates have more than 5,000
creditors in their Chapter 11 cases, according to John H. Knight,
Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware,
proposed counsel for the Debtors. It will be time-consuming and
burdensome for the U.S. Bankruptcy Clerk's Office to send notices
to those creditors, and to receive, docket, and maintain proofs of
claim, he contended.
Thus, at the Debtors' behest, the U.S. Bankruptcy Court permitted
them to employ Kurtzman Carson Consultants, LLC, as their claims,
noticing and balloting agent, as well as their solicitation and
disbursing agent.
According to Mr. Knight, KCC is a nationally recognized
specialist in complex Chapter 11 cases, and has vast experience
in noticing and claims administration. KCC is well qualified to
assist the Debtors' Chapter 11 case in terms of noticing, claims
processing, and other administrative tasks, he added.
As claims, noticing, and balloting agent, KCC will:
(a) notify potential creditors of the Debtors' Chapter 11
filing and set the first meeting of creditors pursuant to
Section 341(a) of the Bankruptcy Code;
(b) notify parties-in-interest of requests for first day
relief, as well as the first day hearing agenda;
(c) prepare and serve documents on the Debtors' behalf;
(d) maintain copies of the Debtors' schedules of assets and
liabilities and their statements of financial affairs;
(e) notify creditors of their claims;
(f) docket all claims received and maintain the official claims
register on behalf of the Bankruptcy Clerk's Office;
(g) maintain an updated mailing list for all entities that have
filed proofs of claim or proofs of interest;
(h) provide public access for examination of copies of the
proofs of claim or proofs of interest;
(i) create and maintain a public access website containing
relevant case information;
(j) record all claims transfers pursuant to Rule 3001(e) of the
Federal Rules of Bankruptcy;
(k) comply with conditions and requirements prescribed by the
Clerk's Office or the Court;
(l) provide other claims processing, noticing, balloting, and
related administrative services;
(m) record all transfers of claims and provide any notices of
those transfers as required by Rule 3001 of the Federal
Rules of Bankruptcy Procedure;
(n) make changes in the Claims Register pursuant to Court
order;
(o) upon completion of the docketing process for all claims
received by the Clerk's Officer, turn over to the Clerk's
Office copies of the Claims Register for review;
(p) maintain the official mailing list for each Debtor of all
entities that have filed a proof of claim;
(q) establish and maintain a case Web site with case
information, including key dates, service lists, and free
access to the case docket within three days of docketing;
(r) if requested, assist with, among other things, the
solicitation and the calculation of votes and distributions
as required in furtherance of confirmation and consummation
of any plan of reorganization; and
(s) 30 days prior to the close of the Chapter 11 cases, submit
an order dismissing the firm as the Court's agent and
terminating the firm's services upon completion of its
duties.
KCC will charge the Debtors for its services in accordance with a
services agreement, entered into by the parties on July 20, 2008.
James M. Le, chief operating officer for KCC, assures the Court
that neither KCC nor its employees has any adverse interest to
the Debtors' estates. He adds that KCC is a "disinterested
person" as the term is defined in Section 101(14).
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. 3; 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: Bominflot Wants Stay Lifted to Pursue Payment
----------------------------------------------------------
Bominflot Atlantic, L.L.C., which markets bunker fuel to marine
vessels, entered into a sale contract with Debtor SemMaterials,
L.P., on July 8, 2008, for the sale of 7,507 barrels of fuel oil,
totaling $837,015. At SemMaterials' direction, the Fuel Oil was
transferred from Bominflot's Shore Tank 603 to Shore Tank 701,
located at a tank storage facility in Chesapeake, Virginia. The
transfer took place from July 9 to July 10.
Pursuant to the invoice of the transaction, payment was due on
July 18. Upon learning of the Debtors' liquidity troubles,
Eugene Owen, Bominflot's vice-president, called SemMaterials to
confirm whether the Invoice will be paid, Carl D. Neff, Esq., at
Fox Rothschild LLP, in Wilmington, Delaware, related. Kevin
Clement, SemMaterials' vice-president of supply and marketing,
informed Mr. Owen that the Invoice will be paid in full on
July 18, in accordance with the contractual terms on the Invoice.
On July 18, SemMaterials furnished Bominflot with a copy of a
completed and approved wire transfer request dated July 17, for
$837,015.
Mr. Neff stated that SemMaterials approved the wire transfer
request at a time when its ability to consummate the transfer of
funds was highly questionable. Bominflot relied on the wire
transfer request and SemMaterials's representations, and deferred
any further action to take control of the Fuel Oil. However, on
July 18, Bominflot requested the tank storage facility to hold
any transfer of the Fuel Oil pending Bominflot's exercise of its
legal and equitable remedies.
Mr. Neff related that when the wire transfer failed to occur,
Bominflot demanded the immediate return of the Fuel Oil.
Bominflot determined that SemMaterials had no intention to pay
the Invoice or return the Fuel Oil. On July 21, Bominflot
commenced a proceeding in the Circuit Court for the City of
Chesapeake, Virginia, seeking (i) to compel the return of the
Fuel Oil under applicable state law; (ii) to enforce its
reclamation rights; (iii) damages for breach of contract; and
(iv) damages for fraud and conversion.
Mr. Neff argued that SemMaterials misrepresented its solvency,
and engaged in activities that created a constructive trust under
Virginia law. He stated that recent volatility in the energy
markets has caused a material deterioration in the value of
Bominflot's interest in the Fuel Oil.
Accordingly, Bominflot asked the U.S. Bankruptcy Court for the
District of Delaware to lift the automatic stay under Section
362(d)(1) of the Bankruptcy Code, and demands that SemMaterials
provide adequate protection, in the form of cash payments in
compensation for decrease in value of the interest in the
property, or additional or replacement liens.
Bominflot also filed with the Bankruptcy Court a notice of claim
reclamation in the Debtors' Chapter 11 cases.
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. 3; 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: JMA Energy Seeks $3.4 Mil. Payment on Purchased Oil
----------------------------------------------------------------
JMA Energy Company, L.L.C., sells and markets oil and gas from
wells in the State of Oklahoma, pursuant to various operating
agreements and pooling orders of the Oklahoma Corporation
Commission. Under an agreement between JMA Energy and SemCrude,
L.P., SemCrude will remit payments to JMA Energy for purchased
oil on the 20th day of the month following the delivery of the
oil. JMA Energy has sold oil to SemCrude since August 2004.
Representing JMA Energy, Michael J. Joyce, Esq., at Cross &
Simon, LLC, in Wilmington, Delaware, told the U.S. Bankruptcy
Court for the District of Delaware that $3,465,347 is due for oil
sold in June and July 2008, which amount includes $249,423 for
taxes payable by the Debtors to the state of Oklahoma.
Pursuant to Section 548 of the Oklahoma Oil and Gas Owners' Lien
Act, JMA Energy holds a security interest in the Purchased Oil,
which extends to all proceedings resulting from any sale of the
Purchased Oil, Mr. Joyce stated. Any cash received by SemCrude
under the sale of the Purchased Oil constitutes cash collateral,
he asserted.
JMA Energy has not consented to any sale of that cash collateral,
Mr. Joyce told the Court. He conceded that if SemCrude uses
payment from the sale of the Purchased Oil, JMA Energy may lose
its security interest. SemCrude has not informed JMA Energy of
any disposition of the Purchased Oil, he added.
Accordingly, JMA Energy asked the Court to:
(i) determine that it holds a valid first and prior security
interest and lien in the Purchased Oil and the proceeds
from any sale or disposition of the Purchased Oil;
(ii) determine the amount of its secured claim, and that
proceeds from any sale of Purchased Oil can only be
used to pay JMA Energy, and are not property of
SemCrude's estate;
(iii) segregate and sequester the property subject to its
security interest;
(iv) require SemCrude to provide an accounting regarding the
sale and disposition of the Purchased Oil, identifying
any unsold oil in SemCrude's possession, the entity
that acquired oil, the terms of the sale, the status of
payments in connection with the sale; and
(v) require SemCrude to turn over all property representing
the Purchased Oil, or any cash, funds on deposit, or
other proceeds related to the Purchased Oil.
JMA Energy has filed with the Court a notice of lien perfection
of the security interest in the Debtors' Chapter 11 cases.
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. 3; 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.
SHARPER IMAGE: CFO Rebecca Roedell, Counsel James Sander Resign
---------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission dated July 7, 2008, Rebecca Roedell, executive vice-
president and chief financial officer, of Sharper Image
Corporation, now known as TSIC, Inc., informed the SEC that she
will resign from her position, effective July 18, 2008.
On July 2, 2008, Ms. Roedell disclosed that James Sander,
Sharper's senior vice-president and general counsel, stepped down
from his position and left the Company, effective July 2.
About Sharper Image
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at
Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the
Debtor in its restructuring efforts. An Official Committee of
UnsecuredCreditors has been appointed in the case. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000.
The Court extended the exclusive period during which the Debtor
may file a Plan through and including Sept. 16, 2008. Sharper
Image sought and obtained the Court's approval to change its name
to "TSIC, Inc." in relation to an an Asset Purchase Agreement by
the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands,
LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital,
LLC.
(Sharper Image Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SHARPER IMAGE: U.S. Trustee Objects to Employment of DJM/Hilco
--------------------------------------------------------------
Roberta A. DeAngelis, Acting United States Trustee for Region 3,
objects to the retention by The Sharper Image Corp., now known as
TSIC Inc., of a joint venture, composed of DJM Asset Management,
LLC, and Hilco Real Estate, as exclusive real estate consultant,
nunc pro tunc to June 16, 2008.
The U.S. Trustee objects to the Application because the Debtor,
DJM and Hilco have represented to the Office of the U.S. Trustee
that the Joint Venture is not an entity with an existence
separate and distinct from DJM and Hilco. Thus, the Joint
Venture is an agreement between DJM and Hilco to share profits
and losses associated with the proposed engagement.
Compensation and reimbursement paid to estate professionals
employed under Section 327(a) of the Bankruptcy Code is allowable
as an administrative expense, pursuant to Section 503(b)(2).
However, Section 504(a) of the Bankruptcy Code prohibits persons,
who are compensated or reimbursed under Section 503(b)(2)(4),
from sharing that compensation with another person.
The U.S. Trustee maintains the Joint Venture between DJM and
Hilco is an agreement by the two firms to share the compensation
paid to the Joint Venture in connection with the proposed
engagement. The proposed employment of the Joint Venture runs
counter to the plain language of Section 504(a), the U.S. Trustee
insists, citing In re Winstar Communications, Inc., 378 B.R. 756
(Bankr. D. Del. 2007) (Carey, J.), which rejected fee sharing
arrangement.
Accordingly, the U.S. Trustee asks the U.S. Bankruptcy Court for
the District of Delaware to deny the Application.
About Sharper Image
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at
Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the
Debtor in its restructuring efforts. An Official Committee of
UnsecuredCreditors has been appointed in the case. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000.
The Court extended the exclusive period during which the Debtor
may file a Plan through and including Sept. 16, 2008. Sharper
Image sought and obtained the Court's approval to change its name
to "TSIC, Inc." in relation to an an Asset Purchase Agreement by
the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands,
LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital,
LLC.
(Sharper Image Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SKILLSOFT CORP: Moody's Upgrades Rating to B1; Outlook Stable
-------------------------------------------------------------
Moody's upgraded SkillSoft Corporation's corporate family rating
to B1 from B2, senior secured debt ratings to B1 from B2, and
probability of default rating to B2 from B3. Simultaneously,
Moody's upgraded the company's speculative grade liquidity rating
to SGL-1 from SGL-2. The ratings outlook is stable.
The rating upgrade reflects SkillSoft's operating performance
improvements over the last 12 months, coupled with the successful
integration of its NETg acquisition, as well as improved credit
metrics as a result of EBITDA expansion and debt repayments from
solid free cash flow generation.
Ratings upgraded include:
Corporate Family Rating to B1 from B2
Probability of Default Rating to B2 from B3
$25 million senior secured revolving facility to B1 (LGD-3, 34%)
from B2 (LGD-3, 33%)
$175 million senior secured term loan to B1 (LGD-3, 34%) from B2
(LGD-3, 33%)
Speculative grade liquidity rating to SGL-1 from SGL-2
The ratings outlook is stable.
SkillSoft's B1 corporate family rating reflects the company's
growing market position as a provider in the niche, albeit
growing, e-learning content and solutions space, robust library of
courseware offerings, large and diverse customer base coupled with
high levels of multi-year contracts, which provides revenue and
cash flow visibility, and the general growing presence of web-
based learning solutions in corporate training budgets.
The rating is supported by the company's low leverage, very good
liquidity, and solid operating cash flow generation driven by high
levels of recurring subscription revenue streams, increased non-
cancelable revenue backlog, and successful integration of its NETg
acquisition without material customer losses. The rating is
constrained by SkillSoft's relatively small size in the highly
competitive and fragmented corporate learning and development
market with very low barriers to entry and the non-critical nature
of its product offerings, which is highly susceptible to demand
curtailment particularly in a challenging macroeconomic
environment. In addition, market maturation or heightened industry
competition could prompt further acquisition activity which could
reduce liquidity and financial flexibility.
The stable outlook reflects Moody's expectation that SkillSoft
will continue to maintain its solid market position in the e-
learning space and generate strong operating profits and free cash
flows. The stable outlook also reflects Moody's expectation that
any share repurchase activity will remain within free cash flow
levels and accompanied with a proportionate amount of debt
reduction.
SkillSoft's SGL-1 speculative grade liquidity rating reflects the
company's very good liquidity position. The rating considers the
company's historically large cash balance of $105 million and $25
million of borrowing capacity under its senior secured credit
facility as of April 2008, as well as the expectation of solid
free cash flow generation at or close to current levels.
Additionally, the SGL-1 rating is supported by Moody's expectation
that the company will be in compliance with the financial covenant
under its senior secured credit agreement with adequate cushions
over the next four quarters. Finally, the rating also reflects
Moody's expectations of share repurchase activity within free cash
flow levels and the possibility of small `tuck-in' acquisitions.
U.S. operations headquartered in Nashua, New Hampshire, SkillSoft
is a leading e-learning content and learning management system
("LMS") software solutions provider to enterprise, government and
small to medium-sized business customers. The company's primary
product offerings primarily consist of a robust set of e-learning
content offerings including business skill, IT proficiency, and
compliance courseware, a proprietary web-based LMS, and online
referenceware for business and IT books. For the last twelve month
("LTM") period ended April 30th, 2008, the company reported
revenues and EBITDA (Moody's adjusted) of approximately $306
million and $91 million, respectively.
SOLUTIA INC: Incurs $16MM Net Loss in Quarter Ended June 30, 2008
-----------------------------------------------------------------
Solutia Inc. reported net sales of $1,095,000,000 for the second
quarter of 2008, a 20% increase over net sales of $911,000,000
for the same period in 2007. Approximately 8% of this increase
is attributable to the consolidation of Flexsys sales beginning
on May 1, 2007, following Solutia's acquisition of the remaining
50% share of its former joint venture. On a pro forma basis,
adjusting 2007 second quarter sales to include Flexsys, sales
increased 14% over the prior year.
Solutia had a consolidated loss of $16,000,000 for the second
quarter 2008 compared to income from continuing operations of
$27,000,000 for the same period in 2007. Solutia's results were
impacted by certain events affecting comparability totaling an
after-tax loss of $33,000,000 in 2008 and an after-tax gain of
$10,000,000 in 2007. After consideration of these special items
in both periods, income held steady at $17,000,000 in the second
quarter of 2008 or $0.28 per share, despite increased depreciation
and amortization expense, higher interest cost and higher stock
compensation expense.
"We are pleased to report solid second quarter growth, driven by
strong volumes and price increases across our businesses," said
Jeffry N. Quinn, chairman, president and chief executive officer
of Solutia Inc. "Importantly, even though the escalation of raw
materials accelerated in the second quarter compared to the first,
our focused pricing actions and strong market positions allowed us
to recover a significant percentage of this cost increase. We
also continued to benefit from our geographically diverse
business, as international growth -- particularly in China -- more
than offset softening domestic markets."
Mr. Quinn added, "In addition to producing strong results during
the second quarter, we announced two important strategic
developments which will have the potential to further enhance our
transformation to a high-margin pure play specialty chemical
company. We retained HSBC to review strategic alternatives for
the Nylon business, and laid the foundation for a key longer-term
growth opportunity by establishing our Saflex Photovoltaic
business."
Reported consolidated EBITDA for the second quarter decreased to
$67,000,000 from $110,000,000 in 2007. After taking into
consideration events affecting comparability and non-cash stock
compensation expense (as detailed below in the summary of events
affecting comparability) of net charges totaling $51,000,000 and
net gains totaling $26,000,000 for 2008 and 2007, respectively,
Adjusted EBITDA increased to $118,000,000 from $84,000,000. On a
pro forma basis, including Flexsys results for April 2007 on a
100% basis, Adjusted EBITDA in the second quarter 2008 increased
$25,000,000 from $93,0000,000 over the prior year.
The most significant adjustment in the current quarter was a
negative margin impact from the selling of inventory that was
fair valued at the time of emergence as required by fresh start
accounting. This impact was a non-cash charge of $49,000,000.
The company's June 30, 2008 balance sheet showed $4.7 billion in
total assets, $3.7 billion in total liabilities, and $1.7 billion
in stockholders' equity.
Unallocated and Other
After taking into consideration unusual charges and gains and
decreases in equity earnings as a result of the Flexsys
acquisition, corporate and other expenses were down $15,000,000
compared to the second quarter 2007 predominantly due to lower
adjustments to the company's LIFO inventory valuation allowance.
Cash Flow
Cash from operations before reorganization activities for
six months ended June 2008 was a usage of $63,000,000. This
included a $204,000,000 increase in inventory and trade accounts
receivable, of which approximately 60% is due to escalating raw
material and energy costs and the company's implementation of
related price increases. This increase in working capital was
partially offset by improved supplier payment terms.
Outlook
The company is raising its full-year 2008 adjusted EBITDA guidance
to a range of $400,000,000 to $425,000,000 from its previous
estimate of $375,000,000 to $400,000,000.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
manufactures and sells chemical-based materials, which are used in
consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
(Solutia Bankruptcy News, Issue No. 129; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SOLUTIA INC: ITC Probes Firms for Infringement of Flexys Patent
---------------------------------------------------------------
Flexsys(R) America L.P., a subsidiary of Solutia Inc., said that
the United States International Trade Commission has voted to
institute an investigation of certain rubber antidegradants,
antidegradant intermediates, and products containing the same.
The respondents named in the case are: Sinorgchem Co., Shandong;
Korea Kumho Petrochemical Co., Ltd. (KKPC); Kumho Tire Co., Inc.;
and Kumho Tire USA, Inc. This investigation is based upon a
complaint filed by Flexsys on May 12, 2008, which asserts that the
importation of Sinorgchem's 4-ADPA or any antidegradants made from
its 4-ADPA into the U.S. violates section 337 of the U.S. Tariff
Act, due to Sinorgchem's infringement upon Flexsys' patents for
the production of 4-ADPA intermediates.
"This action is one example of the aggressive measures we are
taking to prevent our competitors from illegally misappropriating
our patented technologies," said Jim Voss, senior vice president
of Solutia Inc. and president of Flexsys. "We will continue to
protect Flexsys' significant investment in manufacturing processes
by enforcing our legal rights on a global scale."
In this case, Flexsys seeks an exclusion order barring the
importation of Sinorgchem's 4-ADPA as well as 6PPD made from
Sinorgchem's 4-ADPA into the U.S., including that manufactured by
KKPC.
The technology at issue in this case relates to environmentally
friendly methods for preparing compounds used in the manufacture
of rubber products such as tires, belts and hoses. These
compounds prevent premature degradation of rubber due to exposure
to sun, heat, ozone and other factors. One such antidegradant is
6PPD, which is manufactured and sold by Flexsys under the brand
name Santoflex(r) 6PPD. The material known as 4-ADPA is an
intermediate compound used in the production of 6PPD.
Flexsys also has a civil patent infringement case against Kumho
Tire, KKPC and Sinorgchem, which is currently pending in U.S.
District Court for the Northern District of Ohio.
Flexsys products play an important role in the manufacture of
tires and other rubber products, such as belts, hoses, seals
and footwear. Flexsys is a global business with offices,
manufacturing facilities and technology centers around the world.
Flexsys has annual sales of more than $650,000,000, about two-
thirds of which take place outside the U.S.
Flexsys Unit to Halt Wales Manufacturing by Year-End
The Troubled Company Reporter related on June 19, 2008, that
Flexsys(r) intends to cease manufacturing at its facility in
Ruabon, Wales, by the end of 2008, with complete site exit by the
end of 2011.
"This action is part of our strategy to strengthen the profitable,
market-leading positions that Flexsys holds across most of its
portfolio, while taking steps to limit our exposure in smaller
product lines where Flexsys is no longer cost competitive," said
Jim Voss, president of Flexsys and senior vice president of
Solutia Inc.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
manufactures and sells chemical-based materials, which are used in
consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
(Solutia Bankruptcy News, Issue No. 129; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SOLUTIA INC: Registers 600 Million Stock and Debt Securities
------------------------------------------------------------
Solutia Inc. has filed Amendment No. 1 to its Form S-3
registration statement under the Securities Act of 1933 with the
U.S. Securities and Exchange Commission. Solutia amends the
Registration Statement, as necessary, to delay its effective date
until further amendments, which specifically states that the
Registration Statement will thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until the Registration Statement will become
effective on a date determined by the SEC.
The prospectus, subject to completion, dated July 16, 2008, is
available for free at http://ResearchArchives.com/t/s?302f
As previously reported, Solutia has the authority to issue a
total of 600,000,000 shares of capital stock consisting of:
-- 500,000,000 shares of Common Stock at $0.01 per share; and
-- 100,000,000 shares of Preferred Stock at $0.01 apiece
As of March 31, 2008, Solutia has 60,763,046 shares of issued and
outstanding Common Stock, and no shares of Preferred Stock have
been issued and outstanding.
* * *
Solutia has filed a notice of effectiveness of its Form S-3 with
the SEC. The effectiveness date is July 25, 2008.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
manufactures and sells chemical-based materials, which are used in
consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
(Solutia Bankruptcy News, Issue No. 129; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SOLUTIA INC: Uncertainty Looms at Nylon Biz; Exploring Options
--------------------------------------------------------------
The future of Solutia, Inc.'s nylon business continues to be
uncertain, Brazoria County, Texas-based The Facts reports, citing
Dan Jenkins, spokesperson of Solutia, who said that it could be
months before HSBC Securities (USA), Inc., could find a solution.
Solutia has retained HSBC Securities to explore strategic
alternatives with respect to its nylon business, which generated
net sales of $1,892,000,000 in 2007, accounting for 51% of
Solutia's total revenue.
HSBC is tasked to explore strategies for Solutia, which including
keeping its nylon business, selling it or possibly creating a
joint venture with another company, Mr. Jenkins said, according
to The Facts. "They're starting to put together some of their
documentation."
According to Mr. Jenkins, demand continues to be strong for
nylon. However, he said , the company is evaluating its nylon
business because energy costs and the costs for the raw materials
to make it, much of it petroleum-based, are rising.
CEO Jeffry Quinn said the company is considering strategic
alternatives for its nylon business at a time when demand for
nylon is high. Mr. Quinn and Jonathon P. Wright, senior vice
president of Solutia Inc. and president of the company's
integrated nylon division, have said they are mulling on giving
up the nylon business to other firms who may be able produce
nylon more cheaply.
Mr. Wright said that the cost of the raw materials to make nylon
is becoming a drain on Solutia's other businesses. "If the price
of oil went back to 2002 levels, then the nylon division would be
more profitable, and we probably would think about staying in the
business," he told the Pensacola News Journal.
Solutia's nylon business operates six plants and includes the
Chocolate Bayou plant, located in Alvin, Texas and Gonzalez
Plant, Pensacola Florida. Paul Zawila, Solutia's environmental
health and safety lead at Chocolate Bayou, said the plant employs
about 525 people as well as 350 contractors. The Gonzalez plant
has 1,500 employees.
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
manufactures and sells chemical-based materials, which are used in
consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
(Solutia Bankruptcy News, Issue No. 129; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SPANSION LLC: S&P Holds 'B' Credit Rating; Changes Outlook to Neg.
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Spansion Inc. and revised the ratings outlook to
negative from stable. At the same time, Standard & Poor's lowered
the issue rating on Spansion LLC's $625 million floating rate
notes due 2013 to 'B+' from 'BB-', and revised the recovery rating
on the issue to '2', indicating the expectation of substantial
(70% to 90%) recovery in the event of a payment default, from '1'.
Standard & Poor's also affirmed the issue ratings and recovery
ratings on the company's unsecured debt.
"The rating actions reflect expectations that market conditions
will prevent material improvement in the company's profitability,
pressuring its free cash flows, and leading to higher leverage and
declining liquidity," said Standard & Poor's credit analyst Bruce
Hyman.
The ratings on Spansion Inc. reflect the company's high leverage,
its exposure to the very competitive NOR flash semiconductor
industry and significant capital spending and debt amortization
payment in coming quarters. These are somewhat offset by its good
market position and a low cost structure, and its currently
adequate, although declining, liquidity.
Sunnyvale, California-based Spansion is a major supplier of "NOR"
flash semiconductors used in mobile phones, consumer and
automotive electronics, networking and telecommunications
equipment, and computer peripherals. Spansion holds a low-30%
market share, about equal to principal competitor Numonyx B.V.
SPLIT SECOND: Case Summary & Eight Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Split Second Towing & Transport, Inc.
P.O. Box 1794
Seffner, FL 33583
Bankruptcy Case No.: 08-11066
Type of Business: The Debtors offers tow truck, recovery, roadside
assistance and heavy equipment transportation
services to Tampa, Florida and its surrounding
areas. See http://www.sstowing.com/
Chapter 11 Petition Date: July 25, 2008
Court: Middle District of Florida (Tampa)
Judge: Michael G. Williamson
Debtor's Counsel: Miriam L. Sumpter Richard, Esq.
(miriam@freshstartlawfirm.com)
Fresh Start Law Firm, Inc.
505 East Jackson Street, Suite 303
Tampa, FL 33602
Tel: (813) 387-7724
Fax: (813) 387-7727
Total Assets: $60,027
Total Debts: $1,123,976
A copy of Split Second Towing & Transport, Inc.'s petition is
available for free at:
http://bankrupt.com/misc/flmb08-11066.pdf
ST. CHARLES PARISH: S&P Lifts GO Bonds Rating to 'A' from 'B-'
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its standard long-term
rating and underlying rating on St. Charles Parish Hospital
Service District No. 1, Louisiana's general obligation bonds to
'A' from 'B-' based on the establishment of a deposit trust
agreement whereby collections from the unlimited ad valorem
property tax securing the bonds will flow directly from the tax
collector to a trustee for the exclusive benefit of bondholders.
The outlook is stable.
Standard & Poor's received a legal opinion that states that the
creation of the DTA effectively transfers the property of the
dedicated ad valorem property tax collections to the trustee.
Consequently, the funds collected by the sheriff's department and
deposited with the trustee would not be considered property of the
district in the event of a Chapter 9 bankruptcy filing by the
hospital district. In addition, the DTA precludes the district
from diverting the pledged property tax revenues, even
temporarily, to supplement the hospital's operations.
The hospital district continues to exhibit the same weak operating
and financial profile that led to its downgrade to deep
speculative grade in December 2007; however, the establishment of
the DTA effectively mitigates these operational risks as well as
the concern that pledged property tax revenues may be interrupted
due to bankruptcy protection, or diversion to operations.
"We believe that the DTA will remain in place and that any future
potential amendments to include additional GO debt will maintain
the credit characteristics currently supporting the agreement,"
said Standard & Poor's credit analyst Horacio Aldrete-Sanchez.
The GO bonds are secured by an unlimited ad valorem tax pledge on
all taxable property within the district which is coterminous with
St. Charles Parish, Louisiana.
St. Charles Parish is located in southern Louisiana, about 25
miles west of New Orleans, with an estimated population of 54,945,
a 9.3% increase over the population in 2004.
STANDARD PACIFIC: Provides Terms of Transferable Rights Offering
----------------------------------------------------------------
Standard Pacific Corp. disclosed the terms of its transferable
rights offering of common stock. The company will issue
transferable subscription rights to purchase approximately
50,000,000 shares of the company's common stock to all of its
common stockholders of record as of July 28, 2008. The rights
offering is being made pursuant to the Investment Agreement, dated
as of May 26, 2008, as amended, between the company and MP CA
Homes LLC, an affiliate of MatlinPatterson Global Advisers LLC.
Pursuant to the Investment Agreement, MP CA Homes will serve as a
standby purchaser in the rights offering and purchase, in the form
of preferred stock, the common stock equivalent of all shares not
purchased through the exercise of subscription rights by the
company's other stockholders. Each of the company's stockholders
as of the record date will receive one subscription right for each
share of common stock held as of the record date, which
subscription right will entitle the stockholder to purchase 0.7
shares of common stock at $3.05 per full share.
No fractional shares will be issued in the rights offering. The
rights are transferable and are expected to be admitted for
trading on the New York Stock Exchange under the symbol "SPF RT".
The rights offering will expire at 5:00 p.m. New York City time on
August 22, 2008, unless it is extended.
Important Dates:
Last Day to Buy Stock and Receive Rights July 23, 2008
Shares Trade Ex-Rights July 24, 2008
Record Date July 28, 2008
Subscription Period From Aug. 4, 2008
To Aug. 22, 2008 (1)
Last Day Rights May Be Traded Aug. 21, 2008 (1)
Expiration Date Aug. 22, 2008 (1)
(1) Unless the rights offering is extended.
A copy of the prospectus supplement relating to the rights
offering along with additional materials related to the rights
offering will be mailed to the Company's stockholders as of the
record date as soon as practicable on or about Aug. 4, 2008.
Stockholders may also obtain a copy of the prospectus supplement
from the information agent for the rights offering:
The Altman Group
1200 Wall Street West, 3rd Floor
Lyndhurst, NJ 07071
Toll Free: (866) 864-4946
Banks and Brokers: (201) 806-7300
Credit Suisse Securities (USA) LLC is acting as Dealer Manager for
the rights offering.
Special Stockholder Meeting
Standard Pacific disclosed that a special meeting of stockholders
will be held on Aug. 18, 2008, at 10:30 a.m. local time at the
company's corporate office in Irvine, California, for the purpose
of:
(i) approving the conversion of shares of the company's
outstanding Senior Convertible Preferred Stock into
Series B Junior Participating Convertible Preferred
Stock, the issuance of Series B Junior Participating
Convertible Preferred Stock upon the exercise of the
company's outstanding Warrant and the issuance of common
stock upon the conversion of the Series B Junior
Participating Convertible Preferred Stock,
(ii) approving the company's Amended and Restated Certificate
of Incorporation, and
(iii) amending the company's 2008 Equity Incentive Plan.
The company's Board of Directors has fixed the close of business
on July 9, 2008, as the record date for the determination of
stockholders entitled to receive notice of and to vote at the
special meeting and any postponement or adjournment thereof.
About Standard Pacific Corp.
Headquartered in Irvine, California, Standard Pacific Corp.
(NYSE:SPF) -- http://www.standardpacifichomes.com/-- operates
in
many of the largest housing markets in the country with operations
in major metropolitan areas in California, Florida, Arizona, the
Carolinas, Texas, Colorado and Nevada. The company also provides
mortgage financing and title services to its homebuyers through
its subsidiaries and joint ventures, Standard Pacific Mortgage
Inc., SPH Home Mortgage, Universal Land Title of South Florida and
SPH Title.
Below Investment Grade Ratings
As reported in the Troubled Company Reporter on May 22, 2008,
Fitch Ratings has downgraded Standard Pacific Corp.'s ratings as:
(i) issuer default rating to 'B-' from 'B+'; (ii) senior unsecured
to 'B-/RR4' from 'B+/RR4'; (iii) unsecured borrowings under its
bank revolving credit facility to 'B-/RR4' from 'B+/RR4'; and (iv)
senior subordinated debt to 'CCC/RR6' from 'B-/RR6'.
As reported in the Troubled Company Reporter on May 20, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Standard Pacific Corp. to
'B-' from 'B+'. At the same time, S&P lowered the subordinated
debt rating to 'CCC' from 'B-' and placed all ratings on the
company on CreditWatch with negative implications. These actions
affect approximately $1.3 billion of unsecured notes.
As reported in the Troubled Company Reporter on May 15, 2008,
Moody's lowered the ratings of Standard Pacific Corp., including
its corporate family rating to B2 from B1, its senior unsecured
notes to B2 from B1, and its senior subordinated notes to Caa1
from B3. The SGL-3 liquidity assessment was affirmed. The
ratings outlook is negative.
STERIGENICS INT'L: Moody's Affirms B3 CFR; Outlook Stable
---------------------------------------------------------
Moody's Investors Service changed the ratings outlook of
Sterigenics International, Inc. to stable from negative. Moody's
also affirmed the existing ratings, including the B3 Corporate
Family Rating.
The stabilization of the outlook primarily reflects year-over-year
growth in customer volumes and reduction in expansion capital
expenditures, both of which have aided an improvement in the
liquidity profile of the company over the past year. The stable
outlook also incorporates the expectation that the new ethylene-
oxide facility in China should begin to contribute positive EBITDA
by early 2009. The stability of the ratings is predicated on the
company maintaining adequate liquidity over the next twelve
months.
Despite the expected reduction in growth-related capital
expenditures, Moody's believes on-going maintenance capital
spending remains significant and will continue to constrain
consistent free cash flow generation. The B3 Corporate Family
Rating also reflects the company's relatively small revenue base,
customer concentration and risks associated with the highly
sensitive nature of the company's raw materials, including
radioactive isotopes and toxic gases. The ratings are supported by
Sterigenics' leading market position in the contract sterilization
market, relatively modest financial leverage, and favorable EBITDA
margins. In addition, the company benefits from the high barriers
to entry to the contract sterilization market and high customer
switching costs.
Ratings Affirmed/ LGD point estimates revised:
$30 million senior secured revolving credit facility due 2011, B3
(LGD3, 34%)
$290 million senior secured term loan B due 2013, B3 (LGD3, 34%)
Corporate Family Rating, B3
Probability of Default Rating, Caa1
The outlook is stable.
Please refer to the latest credit opinion on Sterigenics posted on
Moodys.com.
Sterigenics, headquartered in Oak Brook, IL, is a provider of
contract sterilization and ionization services for medical
devices, food safety and advanced materials applications. The
company operates 41 facilities in North America, Europe and Asia.
For the twelve months ended March 31, 2008, the company recognized
net revenue of approximately $245 million.
STEVE CAVANAUGH: Case Summary & Seven Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Steve Cavanaugh L.P.
P.O. Box 384
Belgrade, MT 59714
Bankruptcy Case No.: 08-61002
Chapter 11 Petition Date: July 25, 2008
Court: U.S. Bankruptcy Court, District of Montana (Butte)
Debtor's Counsel: James A. Patten, Esq.
(japatten@ppbglaw.com)
Patten Peterman, Bekkedahl, & Green
Suite 300, The Fratt Building
2817 2nd Avenue North
Billings, MT 59101
Tel: (406) 252-8500
Fax: (406) 294-9500
Total Assets: $9,760,326
Total Debts: $4,199,123
Debtor's list of its seven largest unsecured creditors:
Entity Claim Amount
------ ------------
Rolling Glen Ranch $200,000
P.O. Box 384
Belgrade, MT 59714
R&S Johnson $46,963
3603 Lost Creek Road
Anaconda, MT 59711
Holmes & Turner $41,760
1283 North 14th Avenue, Suite 201
Bozeman, MT 59715
WGM Group $31,170
CB Richard Ellis $17,500
AMEC Geomatrix $17,101
Broadwater County Treasurer $3,807
STOLLE MACHINERY: S&P Rates Proposed $299MM Credit Facilities 'B+'
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its issue-level and
recovery ratings to Stolle Machinery Co. LLC's proposed
$299 million senior secured credit facilities. At the same time,
S&P affirmed its 'B+' long-term corporate credit rating on Stolle.
In addition, S&P withdrew ratings on the company's former credit
facilities, which were refinanced.
The new facility consists of a $30 million revolver and a
$269 million first-lien term loan. The credit facilities are
rated 'BB' with a recovery rating of '1', indicating that lenders
can expect very high (90%-100%) recovery in the event of a payment
default.
Proceeds from the new credit facilities, along with a senior
subordinated term loan facility and additional equity, were used
to finance the acquisition of Stolle by investment funds managed
by a private equity sponsor, GSO Capital Partners L.P. and its
affiliates. The outlook is stable.
"The ratings on Stolle reflect the company's highly leveraged
financial profile and weak business profile given the limited size
and scope of its operations, offset somewhat by the company's
strong market position," said Standard & Poor's credit analyst
Robyn Shapiro.
Centennial, Colorado-based Stolle is the market leader in
manufacturing can-making equipment, primarily supplying the
beverage industry. Following the acquisition in late 2004 of
Sequa Can, the company has a significant share of the installed
base of can-making equipment in which it competes. Although the
can consumption end market is not cyclical, S&P expect demand in
North America (where about 40% of the roughly 250 billion beverage
cans produced annually are consumed) to be relatively flat.
However, longer-term trends are good because beverage can usage
should grow in emerging markets such as Asia. Still, equipment
replacement and the addition of new lines may be lumpy because
can-maker capital expenditures have the potential to exhibit
variability.
The stable outlook reflects our expectations of continued growth
and a financial policy that supports current credit quality.
Stolle should be able to generate some free cash flow for debt
reduction. S&P could revise the outlook to negative or lower the
ratings if free cash flow generation is lower than expected.
Additionally, a negative outlook or a downgrade could result from
shareholder-friendly actions that are not consistent with its
expectations at the current rating.
STONEHEATH RE: A.M. Best $350MM 'bb+' Debt Rating Under Review
--------------------------------------------------------------
A.M. Best Co. has placed the debt rating of "bb+" on $350 million
non-cumulative perpetual preferred securities issued by Stoneheath
Re, a Cayman Islands exempted company, under review with negative
implications.
Stoneheath Re is licensed as a restricted Class B reinsurer under
the laws of the Cayman Islands and was formed to provide multi-
year reinsurance capacity to certain insurance and reinsurance
subsidiaries of XL Capital Ltd (Cayman Islands).
The terms of the reinsurance agreement between Stoneheath Re and
XL Capital provide that upon a payment by the issuer to the ceding
insurers, triggered by a catastrophic event, XL Capital will issue
and deliver to Stoneheath Re Series D preference ordinary shares
of XL Capital in an amount equal to the payment made by Stoneheath
Re. Cash from the issuance of preferred securities by Stoneheath
Re, which previously had been deposited into a trust account and
subsequently disbursed as claim payments, will be replaced by the
XL preferred securities.
The under review status is to align the rating of Stoneheath Re's
preferred securities with the rating of XL Capital's existing
preferred stock issuances. The change in review status follows XL
Capital's recently announced agreement with Security Capital
Assurance Ltd (Bermuda) and XL Capital's subsequent capital action
plan. The agreement provides for XL Capital to pay $1.775 billion
in cash and issue eight million Class A ordinary shares to SCA in
exchange for the commutation of certain reinsurance agreements and
as a result, the elimination of certain guarantees from XL Capital
to SCA. Concurrently, XL Capital plans to issue ordinary shares
and equity security units totaling approximately $2.5 billion to
offset the SCA payment, with any excess expected to be injected as
capital into certain XL Capital members.
Accordingly, the rating will remain under review with negative
implications pending the successful completion of XL Capital's
capital action plan and further assessment of additional negative
effects, if any occur.
TERPHANE HOLDING: Moody's Cuts CFR to Caa2; Revises Outlook to Neg
------------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating
of Terphane Holding Corporation to Caa2 from B3. The outlook is
negative. Additional instrument ratings are detailed below.
The downgrade in the Corporate Family Rating reflects the
continued deterioration in credit metrics and operating
environment and lack of liquidity. The company has been negatively
impacted by a lack of contractual cost pass throughs, unfavorable
exchange rates and rising resin prices. The credit metrics have
deteriorated below the stated rating triggers and free cash flow
is negative. Terphane does not have a committed revolver and the
company is facing significant debt maturities within the next
twelve months. The company has maintained uncommited lines of
short term financing in Brazil. Moody's also notes that there is
an absence of visibility into the company's operations and
projections.
Moody's took the following ratings actions for Terphane Holding
Corporation:
- Downgraded the $76.5 million senior secured notes, due 2009,
to Caa2 LGD 4, 57% from B3 LGD 5, 74%
- Downgraded the $6.5 million senior secured notes, due 2009, to
Caa2 LGD 4, 57% from B3 LGD 5, 74%
- Downgraded Corporate Family Rating to Caa2 from B3
- Downgraded Probability of Default Rating to Caa2 from B2
The ratings outlook is negative.
The Expected Family Recovery Rate was revised to 43% with no
deficiency claim on the instruments given that the bulk of the
company's assets and operating income are in Brazil.
For further detail, refer to Moody's credit opinion on Terphane
Holding Corporation available on Moodys.com.
Terphane Holding Corporation is a manufacturer of specialty
polyester films with technical support and manufacturing
operations in North America and South America. Headquartered in
Cabo de Santo Agostinho, Pernambuco, Brazil, Terphane Holding
Corporation, Inc. had revenues of roughly $100 million for the
twelve months ended March 31, 2008.
TRINITY CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Trinity Construction, Inc.
2820 Townsgate Road, Suite 206
Westlake Village, CA 91361
Bankruptcy Case No.: 08-15279
Debtor-affiliate filing separate Chapter 11 petition:
Entity Case No.
------ --------
Dennis M. McCoy & Sons Inc. 08-15278
Type of Business: The Debtors are contractors for
construction projects.
Chapter 11 Petition Date: July 25, 2008
Court: Central District Of California (San Fernando Valley)
Judge: Geraldine Mund
Debtors' Counsel: Leslie A. Cohen, Esq.
(lcohen@linerlaw.com)
Liner Yankelevitz Sunshine & Regenstreif LLP
1100 Glendon Avenue, 14th Floor
Los Angeles, CA 90024
Tel: (310) 500-3500
Fax: (310) 500-3501
Estimated Assets Estimated Debts
---------------- ---------------
Trinity $500,000 to $1,000,000 to
Construction, Inc. $1,000,000 $10,000,000
Dennis M. McCoy and $10,000,000 to $10,000,000 to
Sons Inc. $50,000,000 $50,000,000
A. Trinity Construction, Inc. does not have any unsecured
creditors who are not insiders.
B. Dennis M. McCoy & Sons Inc.'s list of its 20 largest
unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Miller Equipment Company Trade Debt $183,197
P.O. Box 2956
Lancaster, CA 93539
Wyoming Machinery Trade Debt $173,151
P.O. Box 2335
Casper, WY 82602
Arnolds Machinery Company Trade Debt $117,706
2975 West 2100 South
Salt Lake City, UT 84119
CMI Transportation Inc. Trade Debt $113,439
Homax Sales Inc. Trade Debt $83,034
Rosemead Oil Products Trade Debt $73,808
Johnson Machinery Trade Debt $72,565
Honnen Equipment Company Trade Debt $64,780
Lawrence Matheney - Tax Collector Taxes $42,740
EMS Trade Debt $37,771
Hoss Equipment Company Trade Debt $31,401
Constructive Protective Services Trade Debt $30,394
A.J. Acosta Trade Debt $26,041
Canyon Tire Sales Trade Debt $25,263
Energy Transportation Trade Debt $25,000
Schwartz Oil Trade Debt $22,109
L&H Industrial Inc. Trade Debt $21,381
Fleetpride Trade Debt $20,134
Dust Control Inc. Trade Debt $20,000
M.R. Tudor Trade Debt $19,985
TRIZETTO GROUP: S&P Assigns 'B' Corp. Credit with Stable Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Newport Beach, California-based TriZetto Group
Inc., a leading provider of enterprise solutions to health care
payers. The outlook is stable.
At the same time, S&P assigned its 'BB-' bank loan and '1'
recovery rating, indicating the expectation for very high (90%-
100%) recovery in the event of a payment default, to TriZetto's
$457.5 million senior secured financing. The credit facility
consists of a $65 million credit facility, a $77.5 million term
loan A, and a $315 million term loan B. The initial borrower of
the facility is TZ Merger Sub Inc. Subsequent to close, TZ Merger
Sub Inc. will merge with TriZetto Group Inc., which will succeed
as borrower. All ratings are based on preliminary offering
statements and are subject to review upon final documentation.
Proceeds from the first-lien term loan, along with $187.5 million
of senior unsecured notes (unrated), will be used to partially
finance the buyout of TriZetto by an investor group led by Apax
Partners, along with BlueCross BlueShield of Tennessee and The
Regence Group. The investor group is also contributing
$954.5 million in equity, about $164 million of which is in the
form of preferred stock, and $72 million of which is related to
auction-rate securities held by the company that, when sold, may
be applied to reduce the equity contribution.
"The stable outlook reflects our expectation that the company's
solid position in its niche market and positive industry trends
should enable some modest improvement in its financial profile,"
said Standard & Poor's credit analyst Lucy Patricola.
VANTAGE LOFTS: Wants to Access CapSource's $15 Million DIP Loan
---------------------------------------------------------------
Vantage Lofts, LLC asks the United States Bankruptcy Court for the
District of Nevada for authority to obtain up to $15,000,000 in
postpetition financing from CapSource, Inc., as lender.
The Debtor told the Court that it needs to access, on the interim,
$1,000,000 in financing to fund the initial administrative
expenses to commence further construction on a residential
condominium project located in 145 and 201 S. Gibson Road in
Henderson, Nevada. The project is presently incomplete and the
insurance premium for it is due and in need of immediate payment.
Before it filed for bankruptcy in June 2008, Scripps Investments &
Loans, Inc. provided at least $57,450,00 in construction loan at
13% interest to fund the project. But Scripps Investments amended
the terms of the loan, wherein two separate loans were created.
The loan was split into a mezzanine loan funded by:
-- Scripps Investment for $32,450,000 at 17% interest; and
-- Stearns Bank for $25,000,000 at 9% interest.
The loan is secured by a deed of trust dated Aug. 8, 2005, which
were recorded with the Clark County Recorder's Office on Aug. 15,
2005. But the Debtor closed on the loan.
Scripps Investment funded the initial phase of the construction of
the project but Stearn Bank failed to deliver any cash to the
Debtor citing a "budget bust" on the project, which prompted the
Debtor to seek more financing.
The Debtor has used about $64,000,000 on the project.
The DIP loan will be used to pay, other than administrative
expenses on the project, costs of insurance, legal fees incurred
by professionals and other expenses with regard to securing of
financing and protection of the assets.
The DIP loan, which carries a 4% loan fee, incurs 12% interest
rate per annum. The repayment of the DIP loan will be guaranteed
by the Debtor and certain officials of Slade Development, Inc.
Slade Development is the manager of the Debtor.
To secure its DIP obligation, CapSource will be granted first-
priority senior-secured "priming" lien on the Debtor's project.
About Vantage Lofts
Based in Las Vegas, Nevada, Vantage Lofts LLC --
http://www.vantagelofts.com/-- owns more than 110 unit high-end
condominium project located in Henderson, Nevada. The
company file for Chapter 11 protection on June 20, 2008 (Bankr. D.
Nev. Case No.08-16586). Matthew L. Johnson, Esq., Matthew L.
Johnson & Associates P.C., represents the Debtor in its
restructuring efforts. The U.S. Trustee for Region 17 has not
appointed creditors serve on an Official Committee of Unsecured
Creditors. When the Debtor filed for protection against its
creditors, it listed total assets of $45,100,104 and total debts
of $72,459,622.
On March 27, 2008, the Court appointed James H. Donell as
receiver.
VERTICAL ABS: Fitch Cuts Five Notes Ratings and Removes Neg. Watch
------------------------------------------------------------------
Fitch Ratings downgraded and removed from Rating Watch Negative
five classes of notes issued by Vertical ABS CDO 2006-1,
Ltd./Corp. These rating actions are effective immediately:
-- $478,834,727 class A-S1VF notes to 'CCC' from 'BBB+';
-- $56,000,000 class A-1 notes to 'CC' from 'BBB';
-- $108,500,000 class A-2 notes to 'CC' from 'BB+';
-- $31,895,691 class A-3 notes to 'C' from 'B+';
-- $30,226,631 class B notes to 'C' from 'CCC'.
Vertical 2006-1 is a hybrid cash flow and synthetic structured
finance collateralized debt obligation that closed on April 25,
2006 and is managed by Vertical Capital, LLC. Presently 78.7% of
the portfolio is comprised of 2005, 2006 and 2007 vintage U.S.
subprime residential mortgage-backed securities, 1.8% consists of
2005, 2006 and 2007 vintage U.S. SF CDOs and 2.3% is comprised of
2005, 2006 and 2007 vintage U.S. Alternative-A RMBS.
The downgrades are a result of collateral deterioration within the
portfolio, specifically subprime RMBS, Alt-A RMBS, and SF CDOs
with underlying exposure to subprime RMBS. Since Fitch's last
review of Vertical 2006-1 on Nov. 21, 2007, approximately 89.4% of
the portfolio has been downgraded and 9.5% of the portfolio is
currently on Rating Watch Negative. 86% of the portfolio is now
rated below investment grade, with 51.3% being rated 'CCC+' and
below. Fitch notes that, overall, 87.4% of the assets in the
portfolio now carry a rating below the rating it assumed in
November 2007. The negative credit migration experienced since
the last review on Nov. 21, 2007 has resulted in the Weighted
Average Rating Factor deteriorating to 37.4 from 4.7, breaching
its covenant of 4.6, as of the June 3, 2008 trustee report.
The collateral deterioration has caused the class A-2
overcollateralization ratio to decline to 76.2%, relative to a
trigger of 107%, causing interest proceeds to be diverted to the
reserve account to reduce the remaining unfunded facility
commitment amount after paying class A-2 interest. Since February
2008 and December 2007, payment of interest to the class A-3 and B
notes, respectively, has been made in kind by writing up the
principal balance of each class by the amount of interest owed.
Fitch does not currently expect the class B and C notes to receive
any payments going forward.
The classes are removed from Rating Watch, as Fitch believes
further negative migration in the portfolio will have a lesser
impact on the classes. Additionally, Fitch is reviewing its SF
CDO approach and will comment separately on any changes and
potential rating impact at a later date.
The ratings on the class A-S1VF, A-1 and A-2 notes address the
timely receipt of scheduled interest payments and the ultimate
receipt of principal as per the transaction's governing documents.
The ratings on the class A-3 and B notes address the ultimate
receipt of interest payments and ultimate receipt of principal as
per the transaction's governing documents.
VICORP RESTAURANTS: Wants Plan Filing Period Extended to Oct. 30
----------------------------------------------------------------
Vicorp Restaurants Corp. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware to extend
their exclusive periods to:
a) file a Chapter 11 plan until Oct. 30, 2008, and
b) solicit acceptances of that plan until Dec. 29, 2008.
A hearing is set for Aug. 12, 2008, at 2:00 p.m., to consider the
Debtors' request. Objections, if any, are due Aug. 5, 2008, at
4:00 p.m.
The Debtors tell the Court that they need sufficient time to
formulate and draft a Chapter 11 plan and disclosure statement
describing the plan, then present their conclusions to various
creditors. The Debtors expect to complete and file the plan and
disclosure statement within the extended filing period.
The Debtors' initial exclusive periods to file a Chapter 11 plan
is set to expire on Aug. 1, 2008.
About VICORP Restaurants
Based in Denver, Colorado, VICORP Restaurants Inc. --
http://www.vicorpinc.com/-- operates two restaurant concepts
under proven and well-recognized brands, Village Inn and Bakers
Square. Founded in 1958, VICORP has 343 restaurants in 25 states,
consisting of 250 company-operated restaurants and 93 franchised
restaurants. Known for its strong breakfast heritage, Village Inn
has been serving its signature breakfast items like one-of-a-kind
skillet dishes and made-from-scratch pancakes for 50 years. In
addition, Village Inn offers traditional American fare for lunch
and dinner.
The company and its affiliates filed for Chapter 11 protection on
April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Donna L.
Culver, Esq., at Morris Nichols Arsht & Tunnell, and Kimberly
Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A.
Robinson, Esq., at Reed Smith LLP, represents the Debtors in their
restructuring efforts. The Debtors selected The Garden City
Group, Inc. as their claims agent. The U.S. Trustee for Region 3,
appointed seven members to the Official Committee of Unsecured
Creditors in the Debtors' cases. Abhilash M. Raval, Esq., Dennis
Dunne, Esq., and Samuel Khalil, Esq., at Milbank Tweed Hadley &
McCloy LLP, represent the Committee in these case.
When the Debtors filed for protection from their creditors, they
listed estimated assets and debts of $100 million to $500 million.
VONAGE HOLDINGS: Board Names Marc Lefar as Chief Executive Officer
------------------------------------------------------------------
Vonage Holdings Corp. disclosed that its board of directors has
appointed Marc Lefar chief executive officer of Vonage. Mr. Lefar
replaces interim CEO Jeffrey Citron, who had assumed the
additional role in April of 2007. Mr. Citron will assume the role
of non-executive chairman of the board and serve as a consultant
on long-term strategy.
The Wall Street Journal stated that the appointment came as the
Internet phone provider transitions from dealing with immediate
financial and legal crises to longer-term strategic challenges.
In a press statement, Mr. Citron said: "I believe there is no
better person than [Mr. Lefar] to lead Vonage at this time. He
possesses a wealth of telecom experience and a strong mix of
strategy, finance and operating skills. His marketing expertise
is second to none. The board believes he will bring a fresh
perspective to addressing the opportunities and challenges ahead
and will help the company to realize future growth and
profitability."
"[Mr. Citron] and the talented Vonage team have helped to change
the way people think about communication," Mr. Lefar said.
"Moving forward, we will continue to improve the customer
experience from end to end. A friendly user experience combined
with meaningful, intuitive features will accelerate growth and
improve loyalty."
For more than four years, Mr. Lefar served as chief marketing
officer of Cingular Wireless, nka AT&T Mobility. During his
tenure, the company's customer base more than tripled and
subscriber churn declined by nearly 50%. He played a critical
role in the successful integration of AT&T Wireless, launched the
Raising the Bar advertising campaign and drove product initiatives
that yielded several billion dollars in new revenues. After
leaving Cingular, Lefar founded Marketing Insights, a technology
and media consultancy.
WSJ said that Mr. Lefar's bigger challenge is to make Vonage well-
known in the competitive telecom market, where cable companies
have become a major player in the home phone market and consumers
are increasingly dropping landlines for wireless services. He
will have to top the new competition from several companies
including T-Mobile USA, the wireless carrier that unveiled a
$10 home phone service, WSJ added.
In a statement, the company stated that prior to joining Cingular,
Mr. Lefar was executive vice president, marketing and value-added
services at Cable & Wireless Global. He also held senior
leadership roles at Verizon Wireless and GTE Wireless. Lefar
started his career at Procter & Gamble.
Vonage also disclosed last week that it entered into a commitment
letter to raise up to $215 million in a private debt refinancing.
The company will use those proceeds along with some cash on hand
to repay its existing debt which could come due on December 16,
2008.
"We believe this arrangement will eliminate much of the
uncertainty surrounding our financial prospects and demonstrates
our commitment to enhancing the long-term value of our business,"
said Jeffrey Citron.
About Vonage Holdings Corp.
Headquartered in Holmdel, New Jersey, Vonage Holdings Corp.
(NYSE:VG) -- http://www.vonage.com/-- provides broadband
telephone services with nearly 2.6 million subscriber lines. The
company's Residential Premium Unlimited and Small Business
Unlimited calling plans offer consumers unlimited local and long
distance calling, and features like call waiting, call forwarding
and voicemail for a flat monthly rate. Vonage's service is sold
on the web and through national retailers including Best Buy,
Circuit City, Wal-Mart Stores Inc. and Target and is available to
customers in the U.S., Canada and the United Kingdom.
As reported in the Troubled Company Reporter on May 12, 2008,
Vonage Holdings Corp.'s balance sheet at March 31, 2008, showed
$458.3 million in total assets and $540.5 million in total
liabilities, resulting in an $82.2 million stockholders' deficit.
Vonage Holdings reported a generally accepted accounting
principles or GAAP net loss of $9 million for the quarter ended
March 31, 2008, down from a loss of $72 million reported in the
first quarter 2007.
Going Concern Doubt
BDO Seidman, LLP, in Woodbridge, New Jersey, raised substantial
doubt as to Vonage Holdings Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006.
As reported by the Troubled Company Reporter on May 12, 2008 that
Vonage Holdings's balance sheet at March 31, 2008, showed $458.3
million in total assets and $540.5 million in total liabilities,
resulting in an $82.2 million stockholders' deficit.
WCI COMMUNITIES: Analysts See Bankruptcy Filing Next Week
---------------------------------------------------------
Analysts said Chapter 11 bankruptcy protection is certain for WCI
Communities Inc., after the company reported it has defaulted on
credit deals and has lost more than $184 million this year, news-
press.com reports.
The report quotes Jack McCabe, a real estate industry consultant,
as saying: "I would put the odds for bankruptcy at 80-20 and that
may be conservative. My guess is that on Tuesday or next
Wednesday, they will be filing Chapter 11."
Mr. McCabe said that in that case, the company would attempt to
reorganize and restructure its debt by selling property to pay
debt, the report adds.
The company, news-press.com says, was unable to meet debt
requirements that it have $150 million in cash and equivalents
available, resulting in a default of its revolving credit, term
loan and condominium tower construction loan agreements.
The report notes that WCI faces a midnight Monday deadline to
exchange $125 million in debt -- which it has said it can't pay --
for new debt. The deadline for the exchange offer is August 4.
WCI is offering to replace $125 million in 4% notes with new notes
that offer 17.5% interest and the right to purchase about 33.7
shares of company stock -- at 1 cent each -- for each $1,000 in
debt. Those shares couldn't be purchased until August 2009, the
report pointed out.
WCI, according to the report, expected the debt holders would take
the exchange because the new debt pays a higher rate and grants
the right to buy shares of company stock for next to nothing - one
year from now.
News-press.com, citing Vicki Bryan, senior high yield analyst at
Gimme Credit, an independent research service on corporate bonds,
said the bank defaults likely will derail that. The banks would
have to grant a waiver on the debt agreements before the note
exchange could proceed, the report indicated.
Ms. Bryan said should the company opt to file Chapter 11, it will
benefit the banks, which would be first in line to be paid but
will disfavor the customers with deposits on new homes or condos
who would be among last in line, the report pointed out.
Mr. McCabe said the company's slim hope to avoid bankruptcy is
finding a way to go forward with the debt exchange, the report
added.
Financial Results
In a press statement, WCI reported a net loss of $100.2 million,
compared with net loss of $33.2 million in the second quarter of
2007.
For the six month period ended June 30, 2008, the net loss totaled
$184.3 million compared with a loss of $49.0 million during the
first half of 2007.
For the three and six months ended June 30, 2008, combined
Traditional and Tower Homebuilding gross new orders increased by
12.5% and 8.7% to 243 units and 578 units, while the aggregate
value of gross new orders declined by 6.3% and 10.0% compared to
the three and six months ended June 30, 2007.
Cash Flow, Financial Position and Balance Sheet
For the three and six months ended June 30, 2008, cash flow from
operating activities totaled $169.3 million and $236.7 million,
compared to $(16.1) million and $86.3 million in the same periods
a year ago. The company continues to expect cash flow from
operations to exceed $300 million for the full year.
The ratio of net debt to net capitalization increased to 86.4% at
June 30, 2008 compared to 80.5% at Dec. 31, 2007. As a result of
the mandatory prepayment terms in its senior secured revolving
credit agreement, the total commitments under that facility were
reduced by $44.4 million to $605.6 million through a prepayment
with the net cash proceeds from the closing of the Tuscany Reserve
asset sale on May 15, 2008. Subsequently, as required under the
Revolver loan agreement, the total commitments were further
reduced to $600.0 million on July 1, 2008. In addition, the sale
of Tuscany Reserve resulted in an $18.9 million mandatory
prepayment of the senior secured term loan which completely
satisfied the July 1, 2008, scheduled amortization requirement
under the facility. As of June 30, 2008, net of $46.3 million in
letters of credit, the company has approximately $101.6 million
available commitments under our senior secured credit facility
which was further limited by borrowing base availability which was
an estimated $30.0 million at June 30, 2008, plus $61.1 million of
cash and cash equivalents. Due to its focus and success of
selling unsold completed inventory, the impact of impairments to
its inventory, and the impact of significant reductions in
inventory additions, its borrowing capacity may be limited by the
availability determined through our borrowing base as calculated
under the Revolver and Term Loan agreements, which is currently
less than the available loan commitments.
In addition, the company's lenders are currently obtaining
appraisals on its properties in the borrowing base, and while only
a portion of those appraisals are complete, in some cases the
appraisals reflect values that are lower than book value, having
the effect of further limiting our borrowing base capacity and
resulting in the loss of additional borrowing capacity. These
lower than expected appraisal values could potentially trigger a
mandatory repayment obligation in future periods. Thus far, the
company has received appraisals on assets totaling approximately
$700 million of which aggregate appraisal values exceed 95% of
book value, however, the ratio of appraised value to book value
received to date may or may not represent the ratio of appraised
value of remaining inventory.
In Default
Because the company was unable to provide notice on July 22, 2008,
to its senior lenders that the company had the minimum required
liquidity in cash and available commitments of $150.0 million on a
proforma basis giving consideration the impact of satisfying the
repayment of the notes due on Aug. 5, 2008 for cash, the company
is now in default under its Revolver, Term Loan and tower
construction loan agreements. As a result, the company's access
to additional liquidity from the Revolver has been suspended
pending the resolution of this repayment obligation and completion
of the proposed bank facility amendments.
At June 30, 2008, the company's balance sheet showed total
assets
of $2,178,179,000, total liabilities of $1,940,573,000 and
shareholders' equity of $237,606,000.
About WCI Communities
WCI Communities Inc. (NYSE: WCI) -- http://www.wcicommunities.com/
-- named America's Best Builder in 2004 by the National
Association of Home Builders and Builder Magazine, has been
creating amenity-rich, master-planned lifestyle communities since
1946. Florida-based WCI caters to primary, retirement, and
second-home buyers in Florida, New York, New Jersey, Connecticut,
Maryland and Virginia.
The company offers traditional and tower home choices with prices
from the high-$100,000s to more than $10.0 million and features a
wide array of recreational amenities in its communities. In
addition to homebuilding, WCI generates revenues from its
Prudential Florida WCI Realty Division, and title businesses, and
its recreational amenities, as well as through land sales and
joint ventures. The company currently owns and controls
developable land on which the company plans to build over 15,000
traditional and tower homes.
The company operates in three principal business segments: Tower
Homebuilding, Traditional Homebuilding, which includes sales of
lots, and Real Estate Services, which includes real estate
brokerage and title operations.
* * *
As disclosed in the Troubled Company Reporter on May 23, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on WCI Communities Inc. to 'CC' from 'CCC'. Concurrently,
S&P lowered its ratings on $650 million of subordinated notes to
'C' from 'CC'. The outlook remains negative.
WCI Communities Inc. still carries Moody's Investors Service's
Caa2 corporate family and Caa3 senior subordinate ratings.
Outlook is negative.
Going Concern Doubt
Ernst & Young LLP, in Miami, Florida, expressed substantial doubt
about WCI Communities Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007.
Holders of the company's $125.0 million, 4.0% Contingent
Convertible Senior Subordinated Notes due 2023 have an option of
requiring the company to repurchase the convertible notes at a
price of 100.0% of the principal amount on Aug. 5, 2008. Pursuant
to certain amendments in the company's revolving credit facility
and Senior Term Loan Agreement, the company will need to have
sufficient liquidity after giving effect to, on a pro forma basis,
the repurchase of the convertible notes.
The company does not anticipate having sufficient liquidity to
satisfy bank covenant liquidity tests. If the company is unable
to obtain an amendment or waiver, issue exchange securities, or
otherwise satisfy its obligations to repurchase the convertible
otes, the convertible note holders would have the right to
exercise remedies specified in the Indenture, including
accelerating the maturity of the convertible notes, which would
result in the acceleration of substantially all of the company's
other outstanding indebtedness.
In addition, if the company is determined to be in default on the
convertible notes, it may be prohibited from drawing additional
funds under the revolving credit facility, which could impair its
ability to maintain sufficient working capital.
WCI COMMUNITIES: Moody's Downgrades Ratings to Caa3, Ca
-------------------------------------------------------
Moody's Investors Service lowered all of the ratings of WCI
Communities, Inc., including its corporate family rating to Caa3
from Caa2, Probability of Default rating to Caa3/LD (limited
default) from Caa2, and the ratings on its existing issues of
senior subordinated notes to Ca from Caa3. Moody's also assigned a
prospective Caa3 rating to the up to $400 million of proposed new
Senior Secured (second lien) Notes. In addition, Moody's assigned
a speculative grade liquidity rating of SGL-4 to WCI Communities.
The ratings outlook is negative.
WCI is currently attempting to complete a simultaneous Exchange
Offer and Refinancing Transaction. In the Exchange Offer, WCI
proposes to exchange its $125 million of 4% Contingent Convertible
Senior Subordinated Notes due 2023 with a new issue of
$125 million of 17.5% Senior Secured (third lien) Notes due 2012,
which are not rated by Moody's, plus warrants to purchase 33.7392
shares of WCI common for each $1000 bond. The new third lien notes
will be payment-in-kind (PIK) for the life of the notes.
Concurrently with the Exchange Offer, the company will attempt a
Refinancing Transaction in order to issue up to $400 million of
Senior Secured (second lien) Notes, with proceeds going toward
paying down the company's first lien debt, consisting of the
Senior Secured Revolving Credit Facility, Senior Secured Term
Loan, and Tower Construction Loan Facility. Moody's notes that the
two transactions, i.e., the Exchange Offer and the Refinancing
Transaction, are interdependent. If the company is unsuccessful in
completing the Exchange Offer before August 5, 2008, the $125
million of 4% Contingent Convertible Senior Subordinated Notes
will become putable for cash to the company at par on that date.
Were this to happen, the company would need to seek other
restructuring alternatives. The $125 million third lien notes (for
the Exchange Offer) may possibly be upsized later, most likely
after August 5, to as much as approximately $322 million in order
to accommodate potential exchange offers for up to 75% of the
outstanding balances of the existing issues of 9 1/8%, 7 7/8%, and
6 5/8% Senior Subordinated Notes. These latter transactions are
contemplated to occur after the Exchange Offer and Refinancing
Transaction are completed.
Moody's considers the Exchange Offer to constitute a distressed
exchange and has changed the PDR to Caa3/LD to reflect a "limited
default."
The downgrade of WCI's corporate family rating and the negative
ratings outlook reflect the uncertainty surrounding the success of
the two transactions, the continuing weak operating conditions in
the company's primary end market -- Florida, the uncertainty
regarding the future cash flows from the company's tower
operations, the company's limited ability to use the cash flow
generated by operations for anything other than first lien debt
pay down, the elevated debt leverage, and tight liquidity. The
rating also takes into consideration the PIK feature of the new
second lien notes in the proposed Refinancing Transaction. Moody's
views the PIK period of two semi annual payments for the up to
$400 million of second lien notes to be a relatively short window,
given that Moody's does not expect homebuilders to begin showing
any significant improvement in their credit metrics before early
in the next decade.
The SGL-4 rating indicates that the company's liquidity position
is "weak." The SGL rating takes into consideration internal and
external liquidity, covenant compliance, and the availability of
alternate liquidity sources, and tends to be more volatile than
long-term ratings. Although Moody's expects WCI Communities to
generate as much as $300 million of cash flow from operations in
2008, the near term liquidity needs dominate the projected cash
flow generation. In terms of external liquidity, if the company is
successful in completing the proposed transaction, its senior
secured revolving credit facility (due June 11, 2010) is expected
to be reduced to approximately $436 million, out of which $286
million is anticipated to become a non-revolving portion and $150
million to continue to be available on a revolving basis. The
financial covenants governing the credit facility are expected to
include ratio of appraised asset value to loans at a minimum of 2
times and the requirement that the company satisfies at least one
of the following tests: (i) EBITDA to fixed charges, at a minimum
of 0.50x; (ii) cash flow from operations to cash interest expense,
at a minimum of 1.00x; or (iii) minimum liquidity of $50 million
at all times. WCI Communities assets are largely encumbered and
the company does not possess easy-to-monetize assets, such as a
large base of accounts receivable or equipment, which could be
sold in the event cash needs to be raised quickly. The company
could sell land parcels to alleviate liquidity pressures, however,
it is possible that these land sales would be at a loss.
The following ratings/assessments were affected:
Corporate family rating, downgraded to Caa3 from Caa2;
Probability of Default rating, downgraded to Caa3/LD from Caa2;
Up to $400 million of Senior Secured (second lien) Notes, assigned
Caa3 (LGD3, 43%);
Existing senior sub debt ratings downgraded to Ca (LGD5, 80%) from
Caa3 (LGD5, 81%);
Speculative grade liquidity rating, assigned SGL-4.
Headquartered in Bonita Springs, Florida, WCI Communities, Inc. is
a fully integrated homebuilding and real estate services company
with 60 years of experience in the design, construction, and
operation of leisure-oriented, amenity-rich master planned
communities targeting affluent homebuyers. Revenues and
consolidated earnings for the six months ended June 30, 2008 were
approximately $367 million and $(184) million, respectively.
WEST PENN ALLEGHENY: Moody's Cuts Bond Rating to Ba3 from Ba2
-------------------------------------------------------------
Moody's Investors Service downgraded the bond rating for West Penn
Allegheny Health System to Ba3 from Ba2 and placed the rating on
Watchlist for potential further downgrade, affecting $759 million
of outstanding Series 2007 bonds.
While there is a significant amount of information still to be
provided, Moody's said it believes a rating downgrade at this time
is supported by:
(1) Announcement of a large $67 million accounts receivable
writeoff. While the writeoff itself is "non-cash" in nature and
cumulative, the writeoff implies that revenue and operating income
in prior years was overstated. Importantly, under a new and more
conservative revenue recognition policy, future revenue will be
recognized at a lower level.
(2) Financial performance declined in FY 2008 even prior to the
change in revenue recognition.
(3) Unrestricted cash (excluding project funds) declined to
$154 million (37 days of cash) as of March 31, 2008, compared with
$200 million as of fiscal yearend 2007.
The Watchlist action relates to the significant degree of
uncertainty regarding the system's future operating performance,
ability to improve performance, and projected cash levels. Moody's
believes the following issues are the key drivers to the rating
and expects to review these issues with management:
(1) Current operating performance under a new revenue
recognition policy and revised fiscal year 2009 budget, which will
clarify the magnitude of the system's operating true losses and
define the "starting point" for turnaround initiatives;
(2) Details of and feasibility of achieving recommendations by
consultants and ability to implement strategies of a new
management team. The system has a new senior management team and
has retained numerous consultants, all with prior experience in
hospital turnarounds.
(3) Verification of current unrestricted cash position and
assessment of near-term cash needs, including an analysis of
pension funding requirements, capital spending (which has been
largely put on hold under new management) and ability to use
project funds to reimburse for prior capital spending.
Upon completion of Moody's review, Moody's expects to issue a more
detailed report.
WHITEHALL JEWELLERS: Committee Taps Moses & Singer as Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Whitehall
Jewelers Holdings, Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware for
permission to retain Moses & Singer LLP as its counsel.
Separately, the Committee also asks the Court to retain Mahoney
Cohen & Company, CPA, P.C. as its financial advisor.
As the Committee's counsel, Moses & Sing will:
a) consult with the Debtors' counsel concerning the
administration of the cases;
b) assist the Committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the
Debtors, the operation of the Debtors' business, and any
other matter relevant to these cases;
c) represent the Committee before the Court and advise it
regarding any pending litigation, hearings, motions, and
decisions of the Court;
d) review, analyze and advise the Committee concerning all
applications, motions, orders, statements of operations and
schedules filed with the Court by the Debtors or third
parties;
e) assist the Committee in preparing pleadings in support of
positions taken by the Committee, as well as preparing
witnesses and review documents in this regard;
f) assist the Committee in plan negotiations, plan formulation
and the solicitation and the filing with the Court of
acceptances and rejections of any Chapter 11 plan;
g) assist the Committee in connection with any sale of the
Debtors or their assets; and
h) perform other legal services as may be required in the
interest of the creditors herein represent by the Committee.
Moses & Singer's professionals and their compensation rates are:
Professionals Designations Hourly Rates
------------- ------------ ------------
Alan Kolod, Esq. Partner $790
Mark N. Parry, Esq. Partner $655
Alan E. Ganza, Esq. Partner $615
Lawrence, L. Ginsburg, Esq. Partner $580
Christopher J. Caruso, Esq. Partner $455
Declan Butvick, Esq. Associate $455
Alan Kolod, Esq., a member at firm, assures the Court that the
firm does not hold any interests adverse to the Debtors' interest
or their estate and is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
Mr. Kolod can be reached at:
Alan Kolod
Moses & Singer LLP
Chrysler Building, 405 Lexington Avenue
New York, New York 10174
Tel: (212) 554-7800
Fax: (212) 554-7700
http://mosessinger.com/
About Whitehall Jewelers
Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings,
Inc. -- http://www.whitehalljewellers.com/-- own and operate 375
stores jewelry stores in 39 states. Whitehall is owned by hedge
funds Prentice Capital Management and Millennium Partners LP, both
of New York, and Holtzman Opportunity Fund LP of Wilkes-Barre, Pa.
The company operates stores in regional and regional shopping
malls under the names Whitehall and Lundstrom. The Debtors'
retail stores operate under the names Whitehall (271 locations),
Lundstrom (24 locations), Friedman's (56 locations, and Crescent
(22 locations). As of June 23, 2008, the Debtors have about 2,852
workers.
The company and its affiliates, Whitehall Jewelers Inc., filed for
Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case
No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski,
Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl &
Jones, LLP, and Scott K. Rutsky, Esq., at Proskauer Rose LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as their claims, noticing
and balloting agent. 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 total assets of total assets of $207,100,000 and total
debts of $185,400,000.
WHOLE FOODS: S&P's Rtng Unmoved by Ruling on Wild Oats Acquisition
------------------------------------------------------------------
Standard & Poor's Ratings Services said a federal appeals court
ruling that effectively reverses a lower court decision approving
last year's acquisition of Wild Oats Markets Inc. has no immediate
impact on the ratings on Austin, Texas-based Whole Foods Market
Inc. (BB+/Negative/--). Although the ruling remands the case back
to the U.S. District Court for the District of Columbia, S&P do
not see it changing the company's daily operations or its
continued integration of the Wild Oats stores. Wild Oats has
effectively been deconstructed since the acquisition. Whole Foods
divested the 35 Henry's Farmers Market and Sun Harvest stores
formerly operated by Wild Oats, and at the end of the second
quarter (April 13, 2008), Whole Foods had closed a net 12 Wild
Oats stores and rebranded 27 others. Nevertheless, S&P will
monitor the events of any future legal proceedings and react
accordingly.
* Fitch: 2005-2007 Vintage RMBS Performance Falls in Recent Months
------------------------------------------------------------------
Performance among 2005-2007 vintage U.S. prime jumbo RMBS has
deteriorated in recent months due primarily to layering risk,
according to Fitch Ratings in a new report.
Though delinquency levels in prime jumbo pools remain a fraction
of subprime levels, the comparably smaller levels of credit
protection make prime transactions sensitive to the recent
performance deterioration.
Like its subprime and Alt-A counterparts, risk layered loans are
the primary driver behind the decline in prime jumbo RMBS
performance. While the prime borrowers' stronger credit profile
should help limit further performance deterioration, Senior
Director Grant Bailey says that the recent increase in roll-rates
from performing to delinquency status, particularly among 2005-
2007 vintages, is a concern.
'While there has been positive selection in the collateral
attributes of the remaining performing borrowers as the highest-
risk borrowers drop out of the picture, the increased market
stress is outweighing any benefit from the positive selection,'
said Bailey. 'However, positive selection among the remaining
performing borrowers may soon begin to stabilize and improve the
roll-rates from the performing to the delinquent buckets.'
Over the next several weeks, Fitch will be conducting rating
reviews of Prime pools issued between 2005-2007. The extent and
the rate of the portfolio deterioration associated with many of
these transactions will likely result in direct downgrades for a
significant number of subordinate and mezzanine bonds from these
vintages. While the negative rating pressure on some senior
classes has grown, the relationship of credit protection to
projected losses is expected to generally allow for those classes
determined to be under rating pressure to be placed on Rating
Watch at this time. Performance trends and developments in the
second half of 2008 will likely determine the need for rating
action for those senior classes identified as currently under
negative rating pressure and Fitch will closely monitor potential
mitigants to further deterioration.
* S&P Takes Rating Actions on Various Synthetic CDO Transactions
----------------------------------------------------------------
Standard & Poor's Ratings Services took these rating actions on
various U.S. synthetic collateralized debt obligation
transactions:
-- S&P lowered 20 ratings, one of which remains on
CreditWatch with negative implications;
-- S&P affirmed six ratings and removed them from CreditWatch
negative;
-- S&P placed two ratings on CreditWatch negative;
-- S&P raised three ratings and removed one from CreditWatch
positive; and
-- S&P withdrew four ratings.
S&P reviewed the ratings on all of the classes that it had
previously placed on CreditWatch negative to determine the
appropriate rating action. If the synthetic rated
overcollateralization ratio was lower than 100% at the current
date and at a 90-day-forward projected date, S&P lowered the
rating on the tranche. If the SROC ratio was lower than 100% at
the current date at the lower rating level and above 100% at a 90-
day-forward projected date, S&P lowered the rating on the tranche
and left it on CreditWatch negative. If the SROC ratio was above
100% at the current rating level, we affirmed the rating. The
upgraded tranches had SROC ratios above 100% at the higher rating
levels.
The rating withdrawals followed termination of the respective
notes.
Ratings List
ABACUS 2005-4 Ltd.
Rating
------
Class To From
----- -- ----
C A+ A+/Watch Neg
ABACUS 2006-9 Ltd.
Rating
------
Class To From
----- -- ----
A-1 CCC- BBB/Watch Neg
A-2 CC BBB-/Watch Neg
B CC BB/Watch Neg
C CC B+/Watch Neg
Aphex Capital NSCR 2007-4 Ltd.
Rating
------
Class To From
----- -- ----
A-2 AA+ AAA/Watch Neg
ARLO VII Ltd.
2007-CSTON-7B-1
Rating
------
Class To From
----- -- ----
CSTON-7B1 AA AA/Watch Neg
ARLO VII Ltd.
2007-CSTON-7B-1X
Rating
------
Class To From
----- -- ----
CSTON-7B1X AA AA/Watch Neg
ARLO VII Ltd.
2007-CSTON-7C-1
Rating
------
Class To From
----- -- ----
CSTON-7C-1 A A/Watch Neg
Camber Master Trust Series 10
Rating
------
Class To From
----- -- ----
Series 10 AAA/Watch Neg AAA
Camber Master Trust Series 9
Rating
------
Class To From
----- -- ----
Series 9 AAA/Watch Neg AAA
Credit and Repackaged Securities Ltd.
2006-12
Rating
------
Class To From
----- -- ----
Notes BB BB+/Watch Neg
Credit Default Swap - Swap Risk Rating-Portfolio CDS Reference
#: 230681
MAPLES 2007-12
Rating
------
Class To From
----- -- ----
Tranche BBBsrp BBB+srp/Watch Neg
Eirles Two Ltd.
211
Rating
------
Class To From
----- -- ----
211 BBB A-
Eirles Two Ltd.
210
Rating
------
Class To From
----- -- ----
Series 210 BBB A-
Eirles Two Ltd.
209
Rating
------
Class To From
----- -- ----
Series 209 A- AA-
Kiawah (New York) Trust Series 2007-1
Rating
------
Class To From
----- -- ----
Notes BBB+ A-/Watch Neg
Morgan Stanley ACES SPC
2006-36
Rating
------
Class To From
----- -- ----
A AA+ AAA/Watch Neg
Morgan Stanley ACES SPC
2007-19
Rating
------
Class To From
----- -- ----
A AA- AA/Watch Neg
PARCS Master Trust
2007-6 Calvados Units
Rating
------
Class To From
----- -- ----
Trust Unit BBB- BBB/Watch Neg
PARCS Master Trust
2007-8 Calvados Units
Rating
------
Class To From
----- -- ----
Trust Unit AA- AA/Watch Neg
PARCS Master Trust
2007-25 Point Green Units
Rating
------
Class To From
----- -- ----
Trust Unit AA+/Watch Neg AAA/Watch Neg
Primoris SPC Ltd.
B2-7
Rating
------
Class To From
----- -- ----
Notes NR BBB/Watch Neg
Primoris SPC Ltd.
B3-7
Rating
------
Class To From
----- -- ----
Notes NR BBB/Watch Neg
Primoris SPC Ltd.
A3-7
Rating
------
Class To From
----- -- ----
Notes NR BBB+/Watch Neg
Primoris SPC Ltd.
F1-10
Rating
------
Class To From
----- -- ----
Notes CCC BB-/Watch Neg
Primoris SPC Ltd.
A3-10-2
Rating
------
Class To From
----- -- ----
Notes NR A-/Watch Neg
Rutland Rated Investments
Rumson 2006-1 (Series 36)
Rating
------
Class To From
----- -- ----
A1-L AAA AAA/Watch Neg
A3-L AA AA/Watch Neg
Seawall 2007-1 Ltd.
Rating
------
Class To From
----- -- ----
D-1 BBB- BBB+/Watch Neg
Seawall SPC
Seawall SPC - Series 2007-1 D2 (CDO Bond)
Rating
------
Class To From
----- -- ----
D-2 BB BBB-
TIERS Missouri Floating Rate Credit Linked Trust Series 2007-1
Rating
------
Class To From
----- -- ----
Certs BBB+ A-/Watch Neg
Tiers Wolcott Synthetic CDO Floating Rate Credit Linked
Trust
Series 2007-28
Rating
------
Class To From
----- -- ----
Certificat AA- A/Watch Pos
Tiers Wolcott Synthetic CDO Floating Rate Credit Linked Trust
Series 2007-29
Rating
------
Class To From
----- -- ----
Certificat A+ A
Tiers Wolcott Synthetic CDO Floating Rate Credit Linked Trust
Series 2007-30
Rating
------
Class To From
----- -- ----
Certificat A- BBB+
* S&P: Global Packaging Sector to Stay Pressured the Rest of '08
----------------------------------------------------------------
Credit quality in the global packaging sector should remain under
pressure for the remainder of 2008, particularly for those
companies lacking meaningful geographic diversity, according to a
report published by Standard & Poor's Ratings Services titled
"Industry Report Card: Global Packaging Companies Struggle With
Raw Material Pressures."
While packaging demand is considered recession resistant, recent
earnings trends show lower volumes in rigid and flexible plastic
packaging for dairy, beverages, and foods. Consumers in the U.S.
pulled back on spending at grocery and convenience stores in light
of high gas prices, rising prices of dairy, meat, and other food
items, and subprime mortgage woes.
About 35% of U.S. packaging companies have a well-diversified
global geographic footprint, and the metal and glass packaging
companies, in particular, benefit from strong demand growth in
Eastern Europe, Asia, and Latin America that offsets mature demand
in the U.S. From a macro standpoint, domestic economic growth
remains anemic with first quarter real GDP revised to 1%.
According to Standard & Poor's economic research, the U.S. economy
is expected to fall into a mild recession after the stimulus
package runs its course this summer, with the low point for GDP
comparisons likely to come in early 2009. S&P's economists expect
economic growth to improve by late 2009 and through 2010.
"The biggest challenge facing plastic packaging companies is the
unprecedented increase in raw material prices, namely polyethylene
and polystyrene. We expect these price hikes to hurt earnings and
working capital for most companies in the second half of 2008,"
said Standard & Poor's credit analyst Liley Mehta.
One of the major resin producers, Dow Chemical Co., announced on
May 28, 2008, that effective June 1 it would raise the price of
all of its products by up to 20% depending upon their exposure to
energy cost inflation. Less than one month later, Dow announced a
second round of broad-based pricing actions, indicating that it
would raise prices by another 25% and that freight surcharges
would be added to shipments by truck and rail. The record prices
for crude oil, which reached highs above $140 per barrel, and
natural gas, at $13 per million Btu, are driving the price
escalation in plastic resins. Prices of crude oil and natural gas
have slid down in the past week to around $125 and $10,
respectively, although still at elevated levels. Most companies
remain focused on cost reduction measures and various productivity
improvements in an effort to offset inflationary cost pressures.
* Rating Agencies Sued for Giving Municipalities Lower Ratings
--------------------------------------------------------------
Connecticut Attorney General Richard Blumenthal, joined by mayors
and first selectmen from across the state, sued on July 30, 2008,
the three national credit rating agencies for allegedly giving
municipalities artificially low credit ratings, costing taxpayers
millions of dollars in unnecessary bond insurance and higher
interest rates.
Blumenthal's lawsuit names Moody's Corporation, Fitch, Inc. and
The McGraw-Hill Companies, parent company of Standard & Poor's.
The lawsuit is the first court action in an investigation --
ongoing since late Fall of 2007 -- that is continuing as to
possible antitrust violations, consumer protection and potentially
other violations by credit rating agencies, bond insurers and
related entities.
All three credit rating agencies systematically and intentionally
gave lower credit ratings to bonds issued by states,
municipalities and other public entities as compared to corporate
and other forms of debt with similar or even worse rates of
default, Blumenthal alleges.
As a result of these deceptive and unfairly low ratings,
Connecticut's cities, towns, school districts, and sewer and water
districts have been forced to spend millions of taxpayer dollars
to purchase bond insurance to improve their credit rating, or pay
higher interest costs on their lower rated bonds.
"We are holding the credit rating agencies accountable for a
secret Wall Street tax on Main Street -- millions of dollars
illegally exacted from Connecticut taxpayers," Blumenthal said.
"Connecticut's cities and school districts have been forced to
spend millions of dollars, unconscionably and unnecessarily, on
bond insurance premiums and higher interest rates as a result of
deceptive and deflated credit ratings. Their debt was rated much
lower than corporate debt despite their much lower risk of default
and higher credit worthiness.
"Studies done by all three agencies themselves since 1999 show
that public bonds default far less often than corporate bonds with
similar, higher credit ratings. In fact, public bonds with low
ratings have lower default rates than the highest rated corporate
bonds. They have maintained the dual standard to financially
benefit bond insurers, investors and ultimately themselves.
"This rating charade created a Wall Street shell game constructed
by the ratings agencies for the benefit of the bond insurers --
which enabled the bond insurers to profit from unnecessary
premiums and interest paid by taxpayers. All three rating
agencies admit and acknowledge -- in their own studies conducted
as long as nine years ago -- that states and cities have virtually
zero risk of defaulting on loans. Despite their own conclusions,
the credit rating agencies purposely concocted a dual rating
system, enabling them to impose lower ratings on municipalities
than corporations that are far more likely to default.
The lawsuit quotes one senior Moody's credit analyst stating, "I
think there is clearly a mismatch between the default data and
people's perception of the risk associated with municipal
credits."
Blumenthal said, "The credit rating agencies and bond insurers
have enjoyed enormous profits, at the expense of taxpayers, as a
result of this deceptive dual rating system. The harm to
taxpayers across the country is real and substantial. We demand
that the dual standard, anti-taxpayer system be stopped and that
the rating agencies pay money back to municipalities, as well as
penalties and disgorgement of funds. Most important, we seek to
end Wall Street's unconscionable costly secret tax on towns and
cities.
"Today's action has highly significant national implications for
taxpayers across the country, which is why I have been contacting
colleagues in other states."
Blumenthal's lawsuit, filed in coordination with Department of
Consumer Protection Commissioner Jerry Farrell, Jr., alleges the
credit rating agencies violated the Connecticut Unfair Trade
Practices Act by intentionally misrepresenting and omitting
material facts that caused bond issuers in Connecticut to purchase
bonds at higher interest rates.
Connecticut's cities, towns, school districts, sewer and water
districts, and other public entities hire and pay credit rating
agencies to provide a fair and honest opinion of the issuer's
ability to meet its financial obligations on the bond. Each of
the credit rating agencies purport to measure risk of nonpayment.
Driven by improper considerations, the rating agencies failed to
provide that fair and honest opinion, Blumenthal said.
Expenses paid by taxpayers for bond insurance and higher interest
rates would have been unnecessary if the rating agencies fairly
and honesty rated public bonds -- based on the likelihood public
bond issuers would pay back their bonds on time.
One central reason for the continued underrating was the
coordinated efforts of the bond insurers to convince Moody's to
maintain the dual rating system. In 2006, as Moody's considered
changing its practices and rate public debt on the same scale as
corporate debt, an Ambac executive wrote "did we know this was
coming -- at first blush this looks pretty serious to me. . . .
This is cutting at the heart of our industry. . . . While we in
the industry might agree with the default/loss conclusion (this is
in part the basis of our success and ability to leverage as high
as we are), to lay it out there like this could be very
detrimental."
Another Ambac executive responded, ". . . we know that hardly
anybody reads the Moody's special reports so it didn't matter.
However, if they actually assign the higher ratings [to the public
debt], that's a totally different story. . . ." After the bond
insurers met with Moody's most senior executives they reported
back that "Mtg. went well . . . we were preaching to the choir."
Moody's dropped any plans to change from its dual rating system.
Blumenthal's lawsuit details how the credit rating agencies'
practices have harmed towns and cities statewide:
STANDARD AND POOR'S
* From 2003 through 2006, the City of Hartford issued six
general obligation bonds, and between 2004 and 2005, the City of
Norwich issued two general obligation bonds. S&P gave each of
Hartford's bonds an "A" credit rating and Norwich's bonds an "A+."
As a result of S&P's deliberate underrating of public bonds,
Hartford taxpayers paid a total of $925,000 in bond insurance
premiums to receive a higher "AAA" rating, and Norwich paid
$63,000 for their "AAA" rating.
* From 2006 through 2007, the Town of Windsor issued two
general obligation bonds. S&P gave each of Windsor's bonds a "AA"
rating. As a result of S&P's deliberate underrating, Windsor
taxpayers paid $43,000 in bond insurance premiums to receive the
"AAA" rating from S&P.
MOODY'S
* From 2003 through 2008, the City of New Haven issued nine
general obligation bonds, and from 2002 through 2006, the City of
East Hartford issued five general obligation bonds. Moody's gave
each of New Haven's bonds an "A3" rating and each of East
Hartford's bonds an "A1" rating. As a result of Moody's deliberate
underratings, New Haven taxpayers paid a total of $2.2 million in
unnecessary bond insurance premiums to receive a higher "Aaa"
rating, and East Hartford taxpayers paid over $150,000 for their
"Aaa" bond insurer credit rating.
* Between 2003 and 2006, the Town of Bethany also issued two
general obligation bonds. Moody's gave each of Bethany's bonds an
"A1" rating. As a result of Moody's deliberate underrating,
Bethany paid over $33,000 in bond insurance premiums to receive a
"Aaa" rating.
FITCH
* From 2003 through 2007, the City of Bridgeport issued 10
general obligation bonds, and from 2002 through 2007, the Town of
Tolland issued six general obligation bonds. Fitch gave each of
Bridgeport's bonds an "A-" rating and each of Tolland's bonds
either a "AA" or "AA-" credit rating. As a result of Fitch's
deliberate underrating of public bonds, Bridgeport paid a total of
$2.7 million in unnecessary bond insurance premiums to receive a
higher "AAA" rating from Fitch. Tolland taxpayers paid over
$120,000 for their "AAA" bond insurer credit rating.
* Between 2002 and 2006, the Borough of Naugatuck issued five
general obligation bonds. Fitch rated four of these bonds and
gave each of the bonds it rated a "AA-" rating. As a result of
Fitch's deliberate underrating of public bonds, Naugatuck
taxpayers paid a total of over $31,000 in bond insurance premiums
to receive the "AAA" rating from Fitch.
Blumenthal thanked members of his office who worked on the
investigation -- Assistant Attorneys General Matthew Budzik, Gary
Becker and George O'Connell; Paralegal Lorraine Measer and legal
intern Rachael Payne, under the direction of Assistant Attorney
General Michael Cole, Chief of the Attorney General's Antitrust
Department.
A full-text copy of the complaint against Standard and Poor's is
available at no charge at:
http://www.ct.gov/ag/lib/ag/antitrust/s&pcomplaint7308.pdf
A full-text copy of the complaint against Moody's is available at
no charge at:
http://www.ct.gov/ag/lib/ag/antitrust/moodycomplaint73008.pdf
A full-text copy of the complaint against Fitch is available at no
charge at:
http://www.ct.gov/ag/lib/ag/antitrust/fitchcomplaint073008.pdf
McGraw-Hill Responds to Lawsuit
In response to a lawsuit filed by the Connecticut Attorney
General, The McGraw-Hill Companies, which owns Standard & Poor's,
said:
"The lawsuit filed in Connecticut this morning is simply a case of
a state attempting to use litigation to dictate what bond rating
it receives.
"The claims asserted by the Attorney General violate First
Amendment rights -- which courts around the country have
repeatedly ruled apply to rating agencies and their opinions --
and would result in an erosion of analytical independence and
undermine investor confidence in the market by allowing ratings to
be determined by governmental mandate or the threat of litigation.
"S&P is committed to providing investors and the market with
independent and quality ratings opinions. We have worked -- and
will continue to work -- closely with market participants and
government officials to identify ways we can strengthen our
ratings systems, while protecting the independence of our
opinions.
"The suit is without merit and we will vigorously defend against
it."
* President Bush Signs New Housing Law; Law Takes Effect Oct. 1
---------------------------------------------------------------
MarketWatch reports that President George Bush signed into law
Wednesday a housing bill passed by Congress aimed at stabilizing
the shaky housing market.
The housing bill will allow homeowners who cannot afford their
monthly payments to refinance into government-backed loans through
the Federal Housing Administration; but their lenders and loan
servicers have to agree.
"We look forward to putting in place new authorities to improve
confidence and stability in markets and to provide better
oversight for Fannie Mae and Freddie Mac," said White House
spokesman Tony Fratto. "The Federal Housing Administration will
begin to implement new policies intended to keep more deserving
American families in their homes."
The new law extends a line of credit to Fananie Mae and Freedie
Mac, the two U.S. government sponsored mortgage finance
enterprises, modernizing the FHA, increasing the loan limit for
FHA loans and increasing conforming-loan limits for Fannie Mae and
Freddie Mac.
The housing law also creates a new regulator for Fannie Mae and
Freddie Mac called the Federal Housing Finance Agency. James
Lockhart, who has served for more than two years as director of
the Office of Federal Housing Enterprise Oversight, will be
director of FHFA.
Reuters adds that proponents of the rescue package contend the
survival of Fannie Mae and Freddie Mac is vital to help turn
around the ailing housing market. The two companies hold or
guarantee nearly half of the $12 trillion in outstanding U.S.
mortgages.
The refinance law goes into effect on Oct. 1.
* Jefferies Names Merola as Investment Banking Managing Director
----------------------------------------------------------------
The Jefferies investment bank disclosed that Frank A. Merola has
joined as a managing director in the recapitalization &
restructuring group of the firm's Investment Banking Division.
Mr. Merola has more than 20 years of experience in business
reorganization and bankruptcy as an attorney with Stutman Treister
& Glatt P.C., a Los-Angeles based boutique law firm. He will be
based in the Los Angeles office of Jefferies & Company Inc., the
principal operating subsidiary of Jefferies Group Inc.
In a joint statement, Michael J. Henkin and Steven R. Strom, Co-
Heads of Jefferies' Recapitalization & Restructuring advisory
practice, commented: "[Mr.] Merola brings to Jefferies experience,
insight, and instincts that will benefit all of our restructuring
clients. With the next cycle of defaults just beginning, the
addition of Frank to the Jefferies team rounds out our national
presence and augments our ability to provide senior-level
professionals to all of our restructuring clients."
"I am very excited about the opportunity to join Jefferies," said
Mr. Merola. "The platform at Jefferies provides me with a full
selection of tools to recapitalize or restructure our clients."
With more than 40 banking professionals working on active
engagements, Jefferies' Recapitalization & Restructuring group is
the core component of the firm's Investment Banking Division.
Jefferies has advised on some of the recent in- and out-of-court
restructurings, including those for Bally Total Fitness, Movie
Gallery, Summit Global Logistics, Solutia, Federal Mogul
Corporation and Revere Industries. So far this year, Jefferies'
Recapitalization & Restructuring group has either completed or
continues to work on 27 engagements valued at more than
$40 billion. In 2007, the group worked with clients on more than
30 transactions, representing over $70 billion in value.
As a restructuring lawyer, Mr. Merola has advised debtors,
creditors, acquirors and equity holders in both Chapter 11 and
out-of-court restructurings across a range of industries. Prior
clients include Sirius Satellite Radio, Harbinger Capital
Partners, Apollo Capital Management and Prentice Copley Investment
Group. Mr. Merola has developed a sub-specialty advising parties
in casino restructurings and bankruptcies, including Tropicana
Hotel & Casino, Trump Hotel & Casino Resorts, Aladdin Hotel &
Casino, Sands Atlantic City, Resort at Summerlin, Gold River Hotel
& Casino and Arizona Charlies. In 2007, Mr. Merola was recognized
as co-recipient of the Large Company Transaction of the Year Award
by the Turnaround Management Association for his work with USA
Capital First Trust Deed Fund LLC. He graduated cum laude with a
BS in Business Administration from Georgetown University, and a JD
from University of California at Los Angeles School of Law.
About Jefferies
Headquartered in New York City, Jefferies is an investment bank
and institutional securities firm, has served growing and mid-
sized companies and their investors for over 45 years. Jefferies
has more than 25 offices around the world, Jefferies provides
clients with capital markets and financial advisory services,
institutional brokerage, securities research and asset management.
The firm is a provider of trade execution in equity, high yield,
convertible and international securities for institutional
investors and high net worth individuals. Jefferies & Company
Inc. is the principal operating subsidiary of Jefferies Group Inc.
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
------------------------------------------------------------
Recent Chapter 11 cases filed with assets and liabilities below
$1,000,000:
In Re Michigan Coin-Op Vending, Inc.
Bankr. E.D. Mich. Case No. 08-57619
Chapter 11 Petition filed July 22, 2008
See http://bankrupt.com/misc/mieb08-57619.pdf
In Re Mary E. Robbins, MD dba Women's Health Clinic
Bankr. N.D. Ala. Case No. 08-82189
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/alnb08-82189.pdf
In Re Devlin & Robinson, P.C.
Bankr. N.D. Ga. Case No. 08-73871
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/ganb08-73871.pdf
In Re Strug, LLC
Bankr. N.D. Ill. Case No. 08-18900
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/ilnb08-18900.pdf
In Re MDC Systems, Inc.
Bankr. E.D. Penn. Case No. 08-14669
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/paeb08-14669.pdf
In Re L.W. Enterprises, Inc.
Bankr. W.D. Penn. Case No. 08-24806
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/pawb08-24806.pdf
In Re The Phoenix Group, Inc.
dba Jill Flink Fine Art
Bankr. E.D. N.C. Case No. 08-04934
Chapter 11 Petition filed July 23, 2008
Filed as Pro Se
In Re Cookeville Marble & Granite, Inc.
Bankr. M.D. Tenn. Case No. 08-06300
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/tnmb08-06300.pdf
In Re Ain't It Great, Inc.
aka Rick's Famous BBQ
Bankr. N.D. Tex. Case No. 08-33501
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/txnb08-33501.pdf
In Re Image Vision & Laser Center, PLLC
Bankr. N.D. Tex. Case No. 08-33503
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/txnb08-33503.pdf
In Re Judith Lynn Sweet
aka Judith L. Addi
aka Judith L. Sweet-Addi
dba American Asphalt & Concrete, Inc.
aka Dba Gold Star Spec. Painting
dba American Demolition
Bankr. E.D. Va. Case No. 08-14349
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/vaeb08-14349.pdf
In Re Wellsburg Flower Shop, Inc.
Bankr. N.D. W.V. Case No. 08-01121
Chapter 11 Petition filed July 23, 2008
See http://bankrupt.com/misc/wvnb08-01121.pdf
In Re Chapman Netsystems, Inc.
Bankr. D. Ariz. Case No. 08-09305
Chapter 11 Petition filed July 24, 2008
See http://bankrupt.com/misc/azb08-09305.pdf
In Re Rodney J. Burch, Sr.
dba Burch Mechanical
Bankr. S.D. Miss. Case No. 08-02167
Chapter 11 Petition filed July 24, 2008
See http://bankrupt.com/misc/mssb08-02167.pdf
In Re Baral Cuisine, LLC
Bankr. D. N.J. Case No. 08-23792
Chapter 11 Petition filed July 24, 2008
See http://bankrupt.com/misc/njb08-23792.pdf
In Re Duemilla, Inc.
Bankr. W.D. Penn. Case No. 08-24855
Chapter 11 Petition filed July 24, 2008
See http://bankrupt.com/misc/pawb08-24855.pdf
In Re Jo Ann Vassallo
aka Jo A. Vassallo
Bankr. E.D. Calif. Case No. 08-30115
Chapter 11 Petition filed July 24, 2008
Filed as Pro Se
In Re 5244 Oakridge Trust
Bankr. E.D. Calif. Case No. 08-30095
Chapter 11 Petition filed July 24, 2008
Filed as Pro Se
In Re Jeffrey David Stewart
Bankr. N.D. Okla. Case No. 08-11665
Chapter 11 Petition filed July 24, 2008
Filed as Pro Se
In Re Sierra Consumer Acceptance
Bankr. E.D. Calif. Case No. 08-14374
Chapter 11 Petition filed July 24, 2008
Filed as Pro Se
In Re Krause International Corp.
Bankr. M.D. Tenn. Case No. 08-06368
Chapter 11 Petition filed July 24, 2008
See http://bankrupt.com/misc/tnmb08-06368.pdf
In Re James Edward Dukes
Bankr. M.D. Tenn. Case No. 08-06399
Chapter 11 Petition filed July 24, 2008
See http://bankrupt.com/misc/tnmb08-06399.pdf
In Re Blaze Realty, LLC
Bankr. D. Ariz. Case No. 08-09345
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/azb08-09345.pdf
In Re H.C. Landings, LLC
Bankr. D. Ariz. Case No. 08-09350
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/azb08-09350.pdf
In Re Martel Investors, LLC
dba Rio Lounge & Grill
Bankr. C.D. Calif. Case No. 08-15297
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/cacb08-15297.pdf
In Re Spa-Riffic, LLC
Bankr. C.D. Calif. Case No. 08-19304
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/cacb08-19304.pdf
In Re Les Worley & Sons, Inc.
Bankr. N.D. Calif. Case No. 08-43949
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/canb08-43949.pdf
In Re Wing City Grille, LLC
Bankr. M.D. Fla. Case No. 08-11090
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/flmb08-11090.pdf
In Re In Kim
Bankr. D. Md. Case No. 08-19543
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/mdb08-19543.pdf
In Re CapitolCare Environmental Services, Inc.
Bankr. D. Md. Case No. 08-19569
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/mdb08-19569.pdf
In Re CC1921 Enterprise, Inc.
Bankr. D. N.J. Case No. 08-23913
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/njb08-23913.pdf
In Re Shawn D. Thomas
aka Shawn D. Thomas, O.D.
Bankr. W.D. Penn. Case No. 08-24890
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/pawb08-24890.pdf
In Re Immanuel African Baptist Church
Bankr. E.D. Wis. Case No. 08-28062
Chapter 11 Petition filed July 25, 2008
Filed as Pro Se
In Re S.C. Resort Properties, LLC
Bankr. D. S.C. Case No. 08-04363
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/scb08-04363.pdf
In Re Greater Columbia Funeral Services, Inc.
dba Greater Columbia Funerals & Cremations
Bankr. D. S.C. Case No. 08-04371
Chapter 11 Petition filed July 25, 2008
See http://bankrupt.com/misc/scb08-04371.pdf
In Re Pro/Line Panels, Inc.
Bankr. N.D. Ala. Case No. 08-82246
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/alnb08-82246.pdf
In Re NAFFCCA, Inc.
Bankr. D.C. Case No. 08-00514
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/dcb08-00514.pdf
In Re Kalamira Properties, Inc.
Bankr. M.D. Fla. Case No. 08-11193
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/flmb08-11193.pdf
In Re Florida's Best Tortilla Factory, Inc.
dba Tortilleria Valle
Bankr. M.D. Fla. Case No. 08-11194
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/flmb08-11194.pdf
In Re Dupont West, Inc.
dba Black Dog Pub
Bankr. N.D. Ind. Case No. 08-12488
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/innb08-12488.pdf
In Re D&R Construction Co., Inc.
Bankr. E.D. N.C. Case No. 08-05034
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/nceb08-05034.pdf
In Re A. Richard Miskoff D.O., P.A.
Bankr. D. N.J. Case No. 08-24053
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/njb08-24053.pdf
In Re Precision Service, Inc.
aka Precision Service Plumbing & Heating
Bankr. D. N.M. Case No. 08-12416
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/nmb08-12416.pdf
In Re KFM Food Market, LLC
dba Shop Right
Bankr. W.D. Penn. Case No. 08-24915
Chapter 11 Petition filed July 28, 2008
See http://bankrupt.com/misc/pawb08-24915.pdf
In Re Glenn Edward Maske & Diana Renee Maske
Bankr. C.D. Calif. Case No. 08-14366
Chapter 11 Petition filed July 28, 2008
Filed as Pro Se
In Re US Global Nanospace
aka US Global Aerospace, Inc.
aka Caring Products International, Inc.
Bankr. D. Nev. Case No. 08-51273
Chapter 11 Petition filed July 28, 2008
Filed as Pro Se
In Re Cynthia, LLC
Bankr. S.D. Fla. Case No. 08-20488
Chapter 11 Petition filed July 29, 2008
See http://bankrupt.com/misc/flsb08-20488.pdf
In Re Scramblers, Inc.
Bankr. W.D. Mo. Case No. 08-61403
Chapter 11 Petition filed July 29, 2008
See http://bankrupt.com/misc/mowb08-61403.pdf
In Re Richard M. Kerger
Bankr. N.D. Ohio Case No. 08-33967
Chapter 11 Petition filed July 29, 2008
See http://bankrupt.com/misc/ohnb08-33967.pdf
In Re Construction Unlimited, Inc.
fdba Construction Labor Demolition, Inc.
Bankr. S.D. Ohio Case No. 08-57189
Chapter 11 Petition filed July 29, 2008
See http://bankrupt.com/misc/ohsb08-57189.pdf
In Re River Run Cove Land Development Co., Inc.
Bankr. E.D. Calif. Case No. 08-30357
Chapter 11 Petition filed July 29, 2008
Filed as Pro Se
In Re Sloan & Webb Implement Co.
Bankr. E.D. Tenn. Case No. 08-13721
Chapter 11 Petition filed July 29, 2008
See http://bankrupt.com/misc/tneb08-13721.pdf
In Re All Hallows Eve Operating, Inc.
Bankr. N.D. Tex. Case No. 08-33590
Chapter 11 Petition filed July 29, 2008
See http://bankrupt.com/misc/txnb08-33590.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Raphael M. Palomino, Shimero R. Jainga, Ronald C. Sy, Joel
Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino
Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph
Medel C. Martirez, Ma. Cristina I. Canson, Christopher G.
Patalinghug, and Peter A. Chapman, Editors.
Copyright 2008. All rights reserved. ISSN: 1520-9474.
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
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