/raid1/www/Hosts/bankrupt/TCR_Public/080801.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, August 1, 2008, Vol. 12, No. 182
Headlines
ADDISON CDO: Fitch Downgrades Ratings on Three Classes of Notes
AMERICAN HOME: Inks Terms of Founder/Ex-CEO's Voluntary Exit
AMERICAN HOME: Exclusive Plan Filing Period Extended to Aug. 19
AMPEX CORPORATION: Court Confirms Amended Joint Chapter 11 Plan
ASARCO LLC: Files Chapter 11 Reorganization Plan
BALDWIN REAL: Case Summary & Two Largest Unsecured Creditors
BASTILLE DEVELOPMENT: Voluntary Chapter 11 Case Summary
BROOKS & ASSOCIATES: Voluntary Chapter 11 Case Summary
BUCKINGHAM CDO: Moody's Junks $23.9MM D Notes and $7.5MM E Notes
BUILDING MATERIALS: S&P Puts 'B-' Corp. Credit Under Neg. Watch
CARIBBEAN RESTAURANTS: Moody's Downgrades CFR to Caa1 from B3
CAROL PRICE: Case Summary & Seven Largest Unsecured Creditors
CASTAIC 94: Case Summary & 10 Largest Unsecured Creditors
CENTENNIAL COMMS: S&P's 'B' Rating Unaffected by Strategic Review
CHC HELICOPTER: Extends Tender Offer for 7-3/8% Notes to Sept. 15
CHRYSLER LLC: Mulling Foreign Auto Tie Ups to Slash Costs
CHRYSLER LLC: Fitch Highlights Effect of Declining Resale Values
CHRYSLER LLC: S&P Cuts Rating; Keeps Watch on Bank Lines Renewal
CIPRICO INC: Case Summary & 20 Largest Unsecured Creditors
CLASS V FUNDING: Moody's Junks Ratings of Classes A-1 and B Notes
CMT AMERICA: Committee Taps Jager Smith as Counsel
COMMUNITY PROPERTIES: Voluntary Chapter 11 Case Summary
COMMUNITY PROPERTIES: Voluntary Chapter 11 Case Summary
COOPER PROPERTIES: Case Summary & Two Largest Unsecured Creditors
DLJ COMMERCIAL: Fitch Holds 'B-' Rating on $13.8MM Class B-6 Cert.
DLJ COMMERCIAL: Fitch Holds 'B-' Rating on $15.6MM Class B-7 Cert.
DOLAN MEDIA: Amends Credit Agreement with US Bank, Gets Waiver
DOLE FOOD: High Refinancing Risks Cue Fitch's Negative Watch
DUNMORE HOMES: Taberna Capital Objects to Plan Confirmation
DUNMORE HOMES: Sidney Dunmore Objects to Plan Confirmation
DUNMORE HOMES: City of Fresno Objects to Plan Confirmation
EMBS FUND IV: Moody's Junks $14MM A-2 Sr Sub, $20MM A-3 Sub Notes
EMBS FUND III: Moody's Junks Rating of $20MM A-3 Sub Notes
FIRST HORIZON: Moody's Cuts Classes II-A-1 and II-A-2 to B1
FORD MOTOR: Fitch Highlights Effect of Declining Resale Values
FORD MOTOR: S&P Cuts Rating to B- and Removes Negative Watch
FORT DENISON: S&P Keeps Junk Ratings on Four Note Classes
FRONTIER AIRLINES: Wants Hearing on Go Flip Investment Set Oct. 8
FRONTIER AIRLINES: Gets OK to Execute Amended First Data Contract
FRONTIER AIRLINES: Plan Filing Period Extended to August 13
FRONTIER AIRLINES: May Reject and Assume Leases Until November 6
GAYLORD ENTERTAINMENT: Secures New $1BB Secured Credit Facility
GENERAL MOTORS: Fitch Highlights Effect of Declining Resale Values
GENERAL MOTORS: S&P Cuts Rating to B- on Mounting Cash Losses
GERALD WIEGERT: Case Summary & Largest Unsecured Creditor
GOLDMAN SACHS: S&P Cuts Class B Notes Rating to B+ from BB+
GUITAR CENTER: Moody's to Review Low-B Ratings for Downgrade
HEADWATERS INC: Warns of Possible Debt Covenant Breach by Sept. 30
HEADWATERS INC: S&P Trims Rating to 'B+' on Weaker Earnings
HOME INTERIORS: Wants Plan Filing Deadline Extended to December 25
IDEARC INC: June 30 Balance Sheet Upside-Down by $8.4 Billion
IESI CORP: S&P Puts 'B+ Rating on US$45MM Industrial Revenue Bonds
JP MORGAN: Fitch Cuts Two Cert. Ratings on Increased Service Loans
LAND O'LAKES: S&P Puts 'BB' Credit Rating Under Positive Watch
LOS ROBLES: Moody's Junks $67.5MM A-3 Notes and $33MM B Notes
MANITOWOC CO: S&P Affirms 'BB' Long-Term Corp. Credit Rating
MAYRA VINAS: Case Summary & 20 Largest Unsecured Creditors
MERITAGE HOMES: Posts $23 Million Net Loss in 2008 Second Quarter
MERRILL LYNCH: Fitch Cuts $48.2MM Class M Certs. Rating to 'BB'
METROMEDIA CO: U.S. Trustee to Convene Sec. 341 Meeting Aug. 29
MORGAN & CO: Case Summary & 14 Largest Unsecured Creditors
MURRAY REAL ESTATE: Case Summary & Largest Unsecured Creditors
NATIONAL DRY: Court Approves Bid Procedures for Sale of Assets
NEIMAN MARCUS: Fitch Affirms 'B' ID Ratings with Stable Outlook
NORTHWESTERN CORP: Unsecured Creditors to Receive Payment in Cash
OMNICOM GROUP: Solicits Consents from Holders to Amend Indenture
PIERRE FOODS: U.S. Trustee Forms Seven-Member Creditors Committee
PROXYMED INC: U.S. Trustee Forms Four-Member Creditors Committee
PSS WORLD: S&P Rates $200MM Unsecured Convertible Debt 'BB-'
PULTE HOMES: Posts $158.4 Million Net Loss in 2008 Second Quarter
REGAL ENTERTAINMENT: June 26 Balance Sheet Upside-Down by $213MM
RH DONNELLEY: Lower Sales Rocking Deleveraging Effort, Fitch Says
S & A RESTAURANT: U.S. Trustee to Convene Sec. 341 Meeting Aug. 29
SEMGROUP LP: Wants to Access BofA's $250,000,000 DIP Financing
SEMGROUP LP: Term Loan Lenders Assert "Distinct" Prepetition Liens
SEMGROUP LP: Bankruptcy Impacts Independent Oil Producers
SEMGROUP LP: Selects Weil Gotshal as Bankruptcy Counsel
SEMGROUP LP: Celtic, et al. Disclose Financial Exposures
SIERRA MADRE: Moody's Cuts Ratings of $18MM Class E Shares to Ba2
SIRIUS SATELLITE: Completes Merger with XM Satellite
SIRIUS SATELLITE: Launches Equity Offerings, Inks Lending Pact
SIRIUS SATELLITE: Reports Preliminary Second Quarter 2008 Results
STEVE & BARRY'S: Cuts 125 Jobs, Reviews Memphis Store Opening
STEVE & BARRY'S: U.S. Trustee Schedules 341 Meeting for August 12
STEVE & BARRY'S: Committee Retains Loughlin Meghji + Co.
STEVE & BARRY'S: Wants to Pay Celebrity License Royalties
STILLWATER ABS: Moody's Junks Ratings of Three 2006-1 Notes
SYNTAX-BRILLIAN: U.S. Trustee Wants Chapter 11 Examiner Appointed
TOURMALINE CDO: Moody's Junks Ratings of 3 Floating Rate Notes
TRANSMERIDIAN EXPLORATION: Launches 12% Sr. Notes Exchange Offer
UNIVERSAL CITY DEV'T: Amends Senior Secured Credit Facility
UNIVERSAL CITY FLA: Credit Amendment Won't Affect S&P's 'B+' Rtng.
US STEEL: S&P Holds 'BB+' Rating and Changes Outlook to Stable
UST INC: June 30 Balance Sheet Upside-Down by $423.6MM
VALEANT PHARMACEUTICALS: Moody's Withdraws B2 Ratings
VALMONT INDUSTRIES: S&P Revises Outlook to Pos.; Holds All Ratings
VONAGE HOLDINGS: Commences Tender Offer for 5.0% Convertible Notes
WAVELAND - INGOTS: Fitch Junks Ratings on Two Note Classes
WHOLE FOODS: Appeals Court Wants Merger with Wild Oats Re-Examined
WCI COMMUNITIES: Posts $100.2 Million Net Loss in 2008 2nd Quarter
XM SATELLIE: Completes Merger with Sirius Satellite
XM SATELLITE: Launches Offering of $550MM Exchangeable Sr. Notes
ZVUE CORP: Posts $7,559,000 Net Loss in 2008 First Quarter
* Moody's: FASB No. 163 Unlikely to Affect Guarantors' Ratings
* Fitch: Auto Lease Plan Changes Sign of Declining Resale Values
* S&P: Issuers List for Possible Upgrade Fewer by 106 in 12 Months
* S&P Says Number of Companies in Default Reaches Global High
* S&P Lowers Ratings on Six Classes from Three US Prime Jumbo RMBS
* BOOK REVIEW: Working Together
*********
ADDISON CDO: Fitch Downgrades Ratings on Three Classes of Notes
---------------------------------------------------------------
Fitch Ratings upgraded three, affirmed three, and downgraded three
classes of notes issued by Addison CDO, Ltd./Corp. These rating
actions are effective immediately:
-- $24,405,084 Class II Senior Notes upgraded to 'AAA' from
'AA';
-- $15,000,000 Class III Mezzanine Notes upgraded to 'AA' from
'A';
-- $16,500,000 Class IVa Mezzanine Notes affirmed at 'BBB+';
-- $22,500,000 Class IVb Mezzanine Notes affirmed at 'BBB+';
-- $1,150,000 Class Va Mezzanine Notes downgraded to 'B/DR1'
from 'BBB';
-- $5,500,000 Class Vb Mezzanine Notes downgraded to 'B/ DR2'
from 'BBB';
-- $10,000,000 Class VIb Participation Notes affirmed at 'BBB-';
-- $5,000,000 Class A Combination Notes upgraded to 'AA' from
'A';
-- $20,000,000 Class C Combination Notes downgraded to 'CCC'
from 'B';
The rating actions reflect Fitch's view on the credit risk of the
rated notes following the release of its new Corporate CDO rating
Criteria.
Addison is a cash flow transaction that closed in October 2000 and
is managed by Pacific Investment Management Company LLC. Addison
is collateralized by an $88.6 million portfolio consisting of
87.2% senior secured leveraged loans and 12.8% unsecured high
yield bonds. In addition, the cash balance in the principal
collection account was approximately $9 million as of the latest
trustee report dated June 30, 2008. Since Fitch's last rating
action in September 2006, the average credit quality of the
portfolio has remained relatively stable at approximately 'B'.
However, assets rated 'CCC+' or lower have increased to 6.7% of
the portfolio from 1.6% as of the Aug. 31, 2006 trustee report due
to negative credit migration. Approximately 18.7% of the current
portfolio is on Rating Watch Negative, and 9.5% of the portfolio
is on Outlook Negative.
Addison exited its reinvestment period in late 2005, and there has
been significant de-levering of the liabilities since then. The
class I notes have been paid-in-full since Fitch's last rating
action, and only 37.5% of the original notional amount of the
class II notes remains outstanding. The class II and class III
notes currently have significant cushions against future
deterioration in the portfolio, and should continue to perform
even under severe credit conditions.
The amortization profile of the transaction's collateral has,
however, led to a declining weighted average spread within the
portfolio, currently calculated at 2.36% versus a minimum trigger
of 2.50%. Additionally, the current low-interest-rate environment
has led to a growing mismatch in interest proceeds received from
the portfolio of primarily floating-rate assets versus the
relatively high fixed-rate coupons due on a significant portion of
the liabilities. Fitch projects that, in certain stress
scenarios, future interest proceeds available to the transaction
fall short of the total required interest payments to the notes.
If such a shortfall occurs, the transaction's documents would
provide for principal proceeds, if available, to be diverted to
fulfill the interest requirements to the notes, reducing par
coverage for the junior notes in the transaction. Fitch believes
that the projected collateral performance, in addition to the
structural features of the transaction, enable the class IVa and
class IVb notes to maintain their current ratings. However, the
projected performance of the class Va and class Vb notes is
commensurate with a 'B' rating. The class Va notes are assigned a
higher DR rating than the class Vb notes due to proportionally
higher expected interest payments based on their relatively high
fixed-rate coupon.
The class VIb notes receive interest payments, paid pari-passu
with interest due on the class Va and class Vb notes, on a $6
million notional amount. The class VIb notes also receive
participating payments paid pari-passu with the equity tranche at
the bottom of the payment waterfalls. These notes are rated to
the ultimate receipt of their $10 million principal balance, in
addition to an internal rate of return on the original investment
of 4%. Fitch projects that the likelihood that future expected
distributions, combined with the $9.1 million received by the
class VIb notes to date, will be sufficient to meet the rating
criteria corresponding to a 'BBB-' rating.
The class A combination notes receive 15.2% of proceeds to the
class IVa notes, 100% of proceeds to the class Va notes, and 6% of
proceeds to the equity class. Similar to the class VIb notes,
these notes are rated to the ultimate receipt of their principal
balance and an IRR of 4%. The class A combination notes have
received almost $4.2 million in total proceeds to date, benefiting
from high fixed-rate coupons on the class IVa and Va notes. Fitch
projects that the likelihood of these notes receiving their
remaining $0.8 million and achieving a 4% IRR has improved, and
therefore the class A combination notes have been upgraded.
The class C combination securities receive 25.3% of proceeds to
the class III notes, 53.3% of proceeds to the class IVb notes, and
18.7% of proceeds to the equity class. These notes are rated to
the ultimate receipt of their principal balance and an IRR of
8.3%. The notes have received over $11.5 million in proceeds to
date. Due to the income streams already received by these notes,
and those projected to be received in the future, Fitch projects
that the likelihood of reaching the IRR requirement corresponds to
a 'CCC' rating.
The rating of the class II notes addresses the likelihood that
investors will receive full and timely payments of interest, as
per the governing documents, as well as the stated balance of
principal by the legal final maturity date. The ratings of the
class III, class IVa, class IVb, class Va, and class Vb notes
address the likelihood that investors will receive ultimate and
compensating interest payments, as per the governing documents, as
well as the stated balance of principal by the legal final
maturity date. The ratings of the class VIb, class A combination,
and class C combination notes address the likelihood that
investors will receive their stated balance of principal by the
legal final maturity date, as well as an IRR on the original
investment of 4%, 4%, and 8.3%, respectively.
Fitch released updated criteria on April 30, 2008 for Corporate
CDOs and, at that time, noted it would be reviewing its ratings
accordingly to establish consistency for existing and new
transactions. As part of this review, Fitch makes standard
adjustments for any names on Rating Watch Negative or Outlook
Negative, reducing such ratings for default analysis purposes by
two and one notch, respectively.
Included in this review, Fitch conducted cash flow modeling to
measure the breakeven default rates relative to the cumulative
default rates associated with the current ratings of the note
liabilities. The cash flow model incorporates the transaction's
structural features and updated default timing and interest rate
scenarios.
AMERICAN HOME: Inks Terms of Founder/Ex-CEO's Voluntary Exit
------------------------------------------------------------
American Home Mortgage and Investment Corporation and its
affiliates have agreed to the terms of Michael J. Strauss'
voluntary exit from the company, effective as of May 31, 2008.
Mr. Strauss is the Debtors' founder, and former chief executive
officer and chairman of the Board of Directors. Mr. Strauss'
employment with the Debtors is governed by a certain employment
agreement dated as of August 26, 1999, between him and American
Home Mortgage Holdings, Inc.
In consultation taken with the Official Committee of Unsecured
Creditors, the Debtors have focused on reducing costs following
the closing of the sale of their servicing business to AH
Mortgage Acquisition Co., Inc. In connection with those efforts,
the Debtors engaged Mr. Strauss in discussions regarding a
voluntary modification of his employment terms.
Subsequently, AHM Holdings' Board authorized the Debtors, among
other things, to terminate Mr. Strauss' employment as CEO,
effective as of May 31, 2008, in terms consistent with the
negotiations among the Debtors, Mr. Strauss, and the Creditors
Committee.
Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, and
Rules 6004, 6006 and 9019 of the Federal Rules of Bankruptcy
Procedure, the Debtors seek the authority of the U.S. Bankruptcy
Court for the District of Delaware to reject Mr. Strauss'
employment contract. The Debtors also ask the Court to approve
the parties' stipulation regarding the rejection.
The key terms of the stipulation are:
(a) The Employment Agreement is deemed rejected effective
May 31, and Mr. Strauss is deemed terminated without
cause;
(b) Mr. Strauss will have to file a proof of claim for damages
resulting from the rejection of his Employment Agreement
or any claim for severance by the earlier of:
* 45 days from the Court's approval of the Stipulation; or
* the first date set for hearing to consider approval of
the Debtors' disclosure statement;
(c) Mr. Strauss will be permitted to compete with the AHM
business from and after May 31, provided that he will not
be permitted to solicit or hire any of the Debtors'
current employee, other than his current assistant;
(d) Mr. Strauss will continue to receive health and welfare
benefits that are generally available to the Debtors'
employees. He may also continue to use his current office
space and secretarial support through the earlier of the
closing of a sale of the Debtors' headquarters in
Melville, New York, or the date the Debtors vacate that
offices. He will not, however, be entitled to vacation
pay, compensation or expense reimbursement from and after
May 31;
(e) Upon request, the Debtors will assist Mr. Strauss in the
transfer or forwarding of his e-mails, e-mail accounts and
phone numbers, and provide him access to the Debtors'
business records related to him; and
(f) Mr. Strauss will support the Debtors' efforts to maximize
the value of their bankruptcy estates, including sales of
assets and confirmation of a Chapter 11 plan.
James L. Patton, Jr., Esq., at Young, Conaway, Stargatt & Taylor,
LLP, in Wilmington, Delaware, tells the Court that the
Stipulation should be approved because its settlement lies well
within the range of reasonableness of the outcome if the parties
had not negotiated Mr. Strauss' voluntary termination, or if the
parties were to litigate the rejection of the Employment
Agreement.
Mr. Patton points out that the Stipulation resulted in the
consensual rejection of the Employment Agreement while retaining
Mr. Strauss' support in the ongoing wind-down of the Debtors'
business, and disposition of the Debtors' remaining assets.
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 HOME: Exclusive Plan Filing Period Extended to Aug. 19
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
the exclusive period within which American Home Mortgage
Investment Corp. and its debtor-affiliates may file a Chapter 11
plan through August 19, 2008; and their exclusive period to
solicit and obtain acceptances for that Plan through October 17.
The Debtors asked the Court to move their exclusive Plan
filing deadline to September 2, and solicitation period through
October 29. Bank of America, N.A., administrative agent for the
prepetition secured parties, however, argued that the length of
the Debtors' requested extension was unwarranted. The Official
Committee of Unsecured Creditors had also raised informal issues
regarding the Debtors' request for extension.
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).
AMPEX CORPORATION: Court Confirms Amended Joint Chapter 11 Plan
---------------------------------------------------------------
The Hon. Arthur J. Gonzalez of the United States Bankruptcy Court
for the Southern District of New York confirmed the first modified
third amended joint Chapter 11 plan of reorganization filed by
Ampex Corporation and its debtor-affiliates on July 9, 2008.
The Debtors are expected to emerge from bankruptcy within the next
few months. Upon emergence, the Debtors will have deleveraged
their capital structure and have access to new funding that will
be used, among other things:
i) for general working capital purposes, and
ii) to repay a portion of their outstanding senior notes.
Furthermore, the Debtors will have financing in place, if needed,
to satisfy future pension contributions to their defined benefit
plans.
As reported in the Troubled Company Reporter on July 24, 2008,
the Court granted the Debtors' request to modify their Third
Amended Joint Chapter 11 Plan of Reorganization dated June 8,
2008, and approved a proposed supplement to the disclosure
statement relating to the Plan, and other related relief.
The plan was modified, among other things, to revise certain
terms relating to lump sum cash payment elections by holders of
unsecured claims and certain conditions precedent to consummation
of the Plan. The Supplement contains a summary of the
modifications made to the Plan.
On July 9, 2008, the Debtors entered into a Plan Support Agreement
with the Official Committee of Unsecured Creditors. Under the
PSA, the Committee agreed to support the Plan and to urge holders
of unsecured claims to vote to accept the Plan, among other
things.
As reported in the Troubled Company Reporter on June 12, 2008,
the Committee filed an objection to the Debtors' earlier versions
of the disclosure statement and plan. The Committee argued that
the plan leaves unsecured creditors with minor equity share in the
reorganized Debtors.
As of March 30, 2008, the Debtors issued at least $59.6 million of
outstanding notes, wherein $6.9 million represents amounts due
under an agreement dated Feb. 28, 2002, as amended, entered into
between the Debtors and U.S. Bank, National Association. Under
the agreement, the Debtors issued 12% senior secured notes due
2008, which are secured by liens on the Debtors' future royalty
receipts. The remaining $52.7 million of outstanding indebtedness
represents Hillside Capital Incorporated Notes that were issued
in connection with its satisfaction of required contribution
obligation under the pension plans -- Ampex Corporation Retirement
Plan and Quantegy Media Retirement Plan.
The pension plans will not be terminated under the Debtors' Plan.
The Debtor will continue to fund the pension plans in accordance
with the minimum financing standards under the Internal Revenue
Code and the Employee Retirement Income Security Act of 1974. The
Debtors anticipate making pension plan contributions of at least
$52.9 million by 2013. As of Dec. 31, 2007, both pension plans
were underfunded by $57.7 million in the aggregate.
The First Modified Third Amended Plan classifies claims against
and interest in the Debtors in eight classes. The classification
and treatment of claims and interests are:
Treatment of Claims and Interests
Type of Estimated Estimated
Class Claims Treatment Amount recovery
----- ------- --------- --------- ---------
unclassified Administrative $100,000 100%
Expense Claims
unclassified Fee Claims $2,900,000 100%
unclassified Priority Tax $200,000 100%
Claims
1 Priority Non- unimpaired $0 100%
Tax Claims
2 Senior Secured impaired $6,900,000
Note Claims
3 Other Secured unimpaired $0 100%
Claims
4 Hillside impaired $11,000,000 100%
Secured
Claims
5 General impaired $51,600,000 10%
Unsecured
Claims
6 Existing Common impaired $0 0%
Stock
7 Existing impaired $0 0%
Securities
Laws Claims
8 Other Existing impaired $0 0%
Interests
If holder of Class 5 general unsecured creditors agrees to a
different treatment, holder will receive its pro rata share of the
unsecured claim distribution. Distributions of new common stock
will be made after the Plan's effective date. Hillside unsecured
deficiency claims, if any, will be deemed an allowed unsecured
claim in the amount of at least $41.7 million.
Holders of claims in classes 2, 4 and 5 are entitled to vote to
accept or reject the Plan.
A full-text copy of the First Modified Third Amended Joint Chapter
11 Plan of Reorganization dated July 9, 2008, is available for
free at:
http://ResearchArchives.com/t/s?3049
A full-text copy of the Third Amended Disclosure Statement dated
June 8, 2008, is available for free at:
http://ResearchArchives.com/t/s?2d9b
A full-text copy of the Supplement to the Disclosure Statement
with Respect to First Modified Third Amended Joint Chapter 11 Plan
of Reorganization, dated July 14, 2008, is available for free at:
http://researcharchives.com/t/s?2fcc
A full-text copy of the Plan Support Agreement dated July 9, 2008,
among the Debtors and the Committee is available for free at:
http://researcharchives.com/t/s?2fce
Headquartered in Redwood City, California, Ampex Corp. --
http://www.ampex.com/-- (Nasdaq:AMPX) is a licensor of visual
information technology. The company has two business segments:
Recorders segment and Licensing segment. The Recorders segment
primarily includes the sale and service of data acquisition and
instrumentation recorders (which record data and images rather
than computer information), and to a lesser extent mass data
storage products. The Licensing segment involves the licensing
of intellectual property to manufacturers of consumer digital
video products through their corporate licensing division.
On March 30, 2008, Ampex Corp. and six affiliates filed for
protection under Chapter 11 of the Bankruptcy Code with the U.S.
Bankruptcy Court for the Southern District of New York (Case
Nos. 08-11094 through 08-11100). Matthew Allen Feldman, Esq.,
and Rachel C. Strickland, Esq., at Willkie Farr & Gallagher LLP,
represent the Debtors in their restructuring efforts. The
Debtors have also retained Conway Mackenzie & Dunleavy as their
financial advisors. In its schedules of assets and liabilities
filed with the Court, Ampex Corp. disclosed total assets of
$9,770,089 and total debts of $82,488,054.
The Debtors have nine foreign affiliates that are incorporated
in seven countries -- one each in the United Kingdom, Japan,
Belgium, Colombia and Brazil and two each in Germany and Mexico.
With the exception of the affiliates located in the U.K. and
Japan, none of the other foreign affiliates conduct meaningful
business activity. As of March 30, 2008, none of the foreign
affiliates have commenced insolvency proceedings.
ASARCO LLC: Files Chapter 11 Reorganization Plan
------------------------------------------------
ASARCO LLC and 25 of its debtor affiliates filed with the U.S.
Bankruptcy Court for the Southern District of Texas a plan of
reorganization and a disclosure statement explaining the plan.
ASARCO's plan implements the previously announced sale of the
company's operating assets to Sterlite (USA), Inc., a subsidiary
of Sterlite Industries (India) Ltd., and Vedanta Resources plc.
Sterlite agreed to pay $2,600,000,000 for ASARCO's operating
assets. Proceeds from the sale will be used to fund the Plan.
The Plan also contains the framework of agreements that ASARCO is
formulating with its principal creditors -- the United States
government various states, its Official Committee of Unsecured
Creditors, a committee of asbestos creditors, and a
representative of potential future asbestos claimants.
Under the Plan, Class 1 Priority Claims will be unimpaired and
paid in full. Class 2 Secured Claims and Class 3 Bondholders
Claims are unimpaired if the Debtors elect to reinstate the
Claims, or impaired if the Debtors elect to pay the Claims with
cash. Class 2 Claims are mainly composed of federal taxing
authorities, government environmental agencies, including the
Environmental Protection Agency, and equipment lessors.
Impaired Classes of Claims under the Plan include:
-- Class 3 Trade and General Unsecured Claims,
-- Class 5 Unsecured Asbestos Claims,
-- Class 6 Toxic Tort Claims,
-- Class 7 Previously Settled Environmental Claims,
-- Class 8 Miscellaneous Federal & State Environmental Claims,
-- Class 9 Residual Environmental Claims,
-- Class 10 Allowed Late Filed Claims, and
-- Class 11 Subordinated Claims.
Asbestos Claims filed against the Asbestos Debtors -- Lac
d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement
Asbestos Products Company, Lake Asbestos Of Quebec, Ltd., and LAQ
Canada, Ltd. -- will be channeled to an asbestos trust to be
created pursuant to Section 524(g) of the Bankruptcy Code. The
Asbestos Trust will be funded by, among other things, proceeds
from several asbestos insurance policies, the asbestos claimants'
share from the Plan distributions, a part of the proceeds from
certain lawsuits, and 100% of the interests in reorganized Debtor
Covington Land Company.
Another trust will be created to address several environmental
claims in designated sites.
Interests in ASARCO will be canceled and will receive any
available funds after the Class 11 Claims have been paid in full.
Interests in the Asbestos Debtors and the other ASARCO
Debtor-affiliates will also be canceled. Holders of interests in
the Asbestos Debtors and the other ASARCO Debtor-affiliates will
not receive or retain any property under the Plan on account of
their Interests.
Joseph F. Lapinsky, ASARCO's president and chief executive
officer, said in a press statement that "[the] plan will allow
the company to emerge from bankruptcy in a manner that is fair to
all constituencies and puts ASARCO's assets under ownership of a
world-class global mining company. We acknowledge the hard work
over many months by all the parties in the bankruptcy case to
achieve this significant result," he added. "While we still need
court approval of our plan, we believe the end of this complex
bankruptcy finally is in sight."
A full-text copy of the ASARCO Plan is available for free at
http://researcharchives.com/t/s?3051
A full-text copy of the Disclosure Statement is available for
http://researcharchives.com/t/s?3052
Judge Schmidt will convene on Sept. 23, 2008, to consider
approval of the Disclosure Statement. Disclosure Statement
objections are due Sept. 13. A hearing to consider approval of
the ASARCO Plan is set for Nov. 17, 2008.
Asarco Inc., the 100% equity owner of ASARCO LLC, was also
granted Court authority to file a competing plan. The parent
has made known its intent to file a full-payment plan, which will
be financed by a $2,700,000,000 guarantee from American Mining
Corporation, and $1,000,000,000 cash ASARCO LLC has on hand.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
BALDWIN REAL: Case Summary & Two Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Baldwin Real Estate Corp.
108-118 Chestnut Street
Roselle, NJ 07203
Bankruptcy Case No.: 08-24191
Type of Business: The Debtor owns a real estate-bowling alley.
Chapter 11 Petition Date: July 30, 2008
Court: District of New Jersey (Newark)
Judge: Donald H. Steckroth
Debtors' Counsel: Robert F. Conley, Esq.
P.O. Box 1164
Newark, NJ 07101
Tel: (201) 797-9700
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/njb08-24191.pdf
BASTILLE DEVELOPMENT: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Bastille Development Corp.
524 Decatur Street
Brooklyn, NY 11233
Bankruptcy Case No.: 08-44872
Related Infr: The Debtor previously filed for Chapter 11
protection on Feb. 20, 2008 (Bankr. E.D. N.Y.
Case No. 08-40945).
Chapter 11 Petition Date: July 30, 2008
Court: Eastern District of New York (Brooklyn)
Judge: Dennis E. Milton
Debtor's Counsel: Miriam Lazofsky, Esq.
(mlazofsky@verizon.net)
103-14 Avenue M
Brooklyn, NY 11236-4510
Tel: (718) 531-1478
Fax: (718) 251-2155
Total Assets: $1,730,000
Total Debts: $977,000
The Debtor does not have any creditors who are not insiders.
BROOKS & ASSOCIATES: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Brooks & Associates LLP
50 Moran Pl.
Larchmont, NY 19538
Bankruptcy Case No.: 08-23065
Type of Business: The Debtor is a law firm.
Chapter 11 Petition Date: July 28, 2008
Court: Southern District of New York (White Plains)
Judge: Adlai S. Hardin Jr.
Debtor's Counsel: Keisha N. Dixon-Brooks, Esq.
50 Moran Place
Larchmont, NY 10538
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $500,000 to $1,000,000
Debtor's list of its largest unsecured creditor:
Entity
------
Borchert Genovesi, Laspina and Handicino, P.C.
19-02 Whitestone Expressway
Suite 302
Whitestone, NY 11357
BUCKINGHAM CDO: Moody's Junks $23.9MM D Notes and $7.5MM E Notes
----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade these notes issued by Buckingham CDO II Ltd.:
-- Class Description: Class A LT Notes;
Prior Rating: Aaa, on review for possible downgrade
Current Rating: Aa3, on review for possible downgrade
-- Class Description: Base Liquidity Advances;
Prior Rating: Aaa, on review for possible downgrade
Current Rating: Aa3, on review for possible downgrade
-- Class Description: U.S. $52,000,000 Class B Secured Floating
Rate Notes Due April 2041;
Prior Rating: Aaa, on review for possible downgrade
Current Rating: Ba3, on review for possible downgrade
-- Class Description: U.S. $32,500,000 Class C Secured Floating
Rate Notes Due April 2041;
Prior Rating: Aa2, on review for possible downgrade
Current Rating: B3, on review for possible downgrade
In addition, Moody's also has downgraded these notes:
-- Class Description: U.S. $23,900,000 Class D Deferrable
Floating Rate Notes Due April 2041; and
Prior Rating: A2, on review for possible downgrade
Current Rating: C
-- Class Description: U.S. $7,500,000 Class E Deferrable
Floating Rate Notes Due April 2041.
Prior Rating: Baa2, on review for possible downgrade
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 consisting primarily of structured
finance securities.
BUILDING MATERIALS: S&P Puts 'B-' Corp. Credit Under Neg. Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on San
Francisco, California-based Building Materials Holding Corp.,
including its 'B-' corporate credit rating, on CreditWatch with
negative implications. The CreditWatch placement follows the
company's recent announcement that, based on its preliminary
financial results for the second quarter ended June 30, 2008, it
was likely to be out of compliance with its minimum net worth and
minimum EBITDA covenants under its bank credit facility. As a
result, the company is in discussions with its lenders for a
temporary waiver and also an amendment to the credit facility to
better reflect current market conditions. While the company
expects to reach an agreement with its lenders in a timely manner,
no agreement has yet been reached.
"In resolving the CreditWatch listing, we will review BMHC's
liquidity position, including its ability to obtain covenant
waivers. S&P will also consider operating prospects for the
company, given continuing challenging industry conditions," said
Standard & Poor's credit analyst Andy Sookram.
CARIBBEAN RESTAURANTS: Moody's Downgrades CFR to Caa1 from B3
-------------------------------------------------------------
Moody's Investors Service downgraded Caribbean Restaurants, LLC's
Corporate Family Rating to Caa1 from B3, Probability of Default
rating to Caa1 from B3 and $210 million senior secured credit
facilities to B2 from B1. The rating outlook is stable.
The downgrade of CFR to Caa1 reflects Moody's belief that
Caribbean's declining operating performance in the past year such
as sluggish same store sales and deteriorating cash flow
generation will likely persist in the intermediate term, resulting
in weaker credit metrics that are more commensurate with a Caa1
rating category. Moody's expects that the key contributing factors
to the company's underperformance, such as recessionary economic
conditions in Puerto Rico, a high inflationary environment and the
ever-intensified competitions among quick service restaurants(QSR)
on the island, are likely to remain over the next 12-18 months,
thus keeping the company from improving its performance and credit
metrics within the rating horizon. The Caa1 CFR also incorporates
Caribbean's imminent refunding pressures as the existing credit
facilities will expire within one year. In addition, the financial
covenant cushion under its current credit agreement could become
tight again later this year, potentially limiting access to its
external source of liquidity. Given its current operating trend
and tightening of the covenant level in the next 12 months,
Moody's anticipates that Caribbean will face mounting pressures in
meeting these covenants. In addition, the higher capital
expenditure budget in FY2009, which Moody's views somewhat
aggressive, could further constrain the company's already weak
cash flow. The Caa1 CFR continues to incorporate the strong name
recognition and leading position of Burger King brand in the
Puerto Rico QSR segment, a seasoned management team and the
company's exclusive development agreement within Puerto Rico,
offset by its geographic concentration and limited scale and
revenue base.
The B2 rating on the senior secured credit facilities reflects the
facilities' perfected first lien priority security interest in
substantially all the assets of the company as well as guarantee
provided by its parent and subsidiaries. The B2 rating on the
facilities benefits from their priority position in the capital
structure relative to its substantial junior debt obligation such
as $73.5 million subordinated notes, lease obligation and trade
payables.
The stable outlook incorporates Moody's view that the operational
performance could further deteriorate in the near to medium term.
That said, Caribbean's leading market position in the QSR segment
in Puerto Rico combined with the management's extensive experience
in operating in a recessionary environment, should help the
company stabilize its operating performance. The outlook also
anticipates that the company will maintain adequate liquidity such
as a full access to its revolving credit facility. The rating
could be under downward pressure if the company's operating and
financial metrics were to experience further erosion and its
liquidity were to deteriorate, including negative free cash flow
for an extended period.
The rating action is as follows:
Caribbean Restaurants, LLC
Ratings downgraded:
Corporate Family Rating -- to Caa1 from B3
Probability of Default Rating -- to Caa1 from B3
$210 million senior secured credit facilities due July 2009 -- to
B2 (LGD3, 32%) from B1(LGD3, 32%)
Rating outlook: stable
For more information, please refer to an updated credit opinion on
Moodys.com.
Caribbean Restaurants, LLC (Caribbean), through an exclusive
territorial development agreement with Burger King Corporation, is
the sole franchisee of Burger King restaurants in Puerto Rico with
approximately 172 units as of fiscal year-end April 30, 2008.
CAROL PRICE: Case Summary & Seven Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Carol Price
1424 Peartree Lane
Bowie, MD 20721
Bankruptcy Case No.: 08-19669
Related Information: The Debtor previously filed for Chapter 11
protection on May 21, 2007 (Bankr. D. Md.
Case No. 07-14602).
Chapter 11 Petition Date: July 29, 2008
Court: District of Maryland (Greenbelt)
Judge: Paul Mannes
Debtor's Counsel: J. Michael Broumas, Esq.
(michael@broumas.com)
J. Michael Broumas, LLC
112 Wakely Terrace
Belair, MD 21014
Tel: (443) 451-5554
Fax: (443) 836-9163
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $500,000 to $1,000,000
Debtor's list of its seven largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Wachovia/ACS Student Loan $20,631
809 Glen Eagles Court, Suite 100
Towson, MD 21286
Edge Technologies Inc. Regular Claim $26,546
c/o Alexander Drew
Suite 420
Fairfax, VA 22030
Capital One Bank - Richmond Credit Card $2,907
P.O. Box 85520
Richmond, VA 23285
Capital One Bank - Glen Allen Credit Card $1,908
Lawrence Wachtel Regular Claim $1,789
HSBC N.V. Credit Card $1,217
Barclays Bank Delaware Credit Card $753
CASTAIC 94: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Castaic 94 Group, LLC
724 Corporate Center Drive
Suite 100
Pomona, CA 91768
Bankruptcy Case No.: 08-21439
Chapter 11 Petition Date: July 28, 2008
Court: Central District Of California (Los Angeles)
Judge: Richard M. Neiter
Debtor's Counsel: Lewis R. Landau, Esq.
(lew@landaunet.com)
23564 Calabasas Road, Suite 104
Calabasas, CA 91302
Tel: (888) 822-4340
Fax: (888) 822-4340
Estimated Assets: $1,000,000 to $100,000,000
Estimated Debts: $1,000,000 to $100,000,000
Debtor's list of its 10 largest unsecured creditors:
Entity Claim Amount
------ ------------
Sikand Engineering $663,027
15230 Burbank Boulevard, Suite 100
Van Nuys, CA 91411
LA County Department of Public Works $35,000
900 South Fremont Avenue
Alhambra, CA 91803
Brown Winfield Canzoneri Abram $31,239
300 South Grand Avenue, 14th Floor
Los Angeles, CA 90071
Richard Wirth & Associates $30,000
Cox Castle & Nicholson $8,458
Chicago Title Company $7,755
Fred Reiss, CPA $4,000
Carl Kymla $3,000
Gonzales Environmental $1,890
Robert Messinger $624
CENTENNIAL COMMS: S&P's 'B' Rating Unaffected by Strategic Review
-----------------------------------------------------------------
Standard & Poor's Ratings Services said its credit ratings and
outlook on Wall, New Jersey-based wireless services provider
Centennial Communications Corp. (B/Stable/--) are not immediately
affected by the company's recent announcement that it has
conducted a strategic review and is considering separating its
Puerto Rican operations from its U.S. operations. If and when
Centennial announces a more definitive plan, S&P would then
evaluate its effect on the ratings. S&P note that under the
change of control provisions of its debt, Centennial could be
required to tender for all existing debt if the company were to
split into two separate entities. Centennial has about
$2.0 billion in outstanding debt.
CHC HELICOPTER: Extends Tender Offer for 7-3/8% Notes to Sept. 15
-----------------------------------------------------------------
CHC Helicopter Corporation extended its cash tender offer for all
of its outstanding 7-3/8% Senior Subordinated Notes due 2014
(CUSIP No. 12541CAF1) and the related consent solicitation to
midnight, New York City time, on Sept. 15, 2008, unless further
extended or earlier terminated by CHC.
As reported in the Troubled Company Reporter on May 29, 2008, CHC
Helicopter Corporation commenced a cash tender offer for all
of its outstanding 7-3/8% Senior Subordinated Notes due 2014
(CUSIP No. 12541CAF1). Holders tendering their Notes will be
required to consent to proposed amendments to the Indenture and
the Notes, which would eliminate substantially all of the
restrictive covenants contained in the Indenture and the Notes
(except the covenants relating to change of control and asset sale
offers), eliminate certain events of default, modify the covenant
regarding mergers and consolidations, and modify or eliminate
certain other provisions, including certain provisions relating to
defeasance, contained in the Indenture and the Notes. Holders may
not tender their Notes without also delivering Consents and may
not deliver Consents without also tendering their Notes.
CHC also disclosed that 6922767 Canada Inc., an affiliate of a
fund managed by First Reserve Corporation, has, as permitted by
the Arrangement Agreement between the Purchaser and CHC dated
Feb. 22, 2008, notified CHC that it has extended the Outside Date
to Sept. 15, 2008.
CHC expects the acquisition of all of the outstanding Class A and
Class B shares of CHC to be completed by Sept. 15, 2008, however,
completion of the Arrangement remains subject to a number of
conditions, including receipt of transportation regulatory
approvals in Canada and Europe. CHC and the Purchaser continue
discussions with the applicable regulatory authorities.
Both the Purchaser and CHC retain the ability to extend the
Outside Date from time to time until Nov. 19, 2008, in accordance
with the terms of the Arrangement Agreement.
The consent payment deadline for the Offer and Consent
Solicitation has now passed and withdrawal rights have terminated.
Consequently tendered Notes may no longer be withdrawn and
consents delivered may no longer be revoked. Holders of Notes who
have not already tendered their Notes may do so at any time on or
prior to Expiration Date, but such holders will only be eligible
to receive the tender offer consideration of $1,035 per $1,000
principal amount of Notes.
Holders whose Notes are accepted for payment in the Offer will
receive accrued and unpaid interest in respect of such purchased
Notes from the last interest payment date to, but not including,
the payment date for Notes purchased in the Offer.
Other terms of the Offer and Consent Solicitation as set forth in
CHC's Offer to Purchase and Consent Solicitation Statement dated
May 27, 2008, and the Consent and Letter of Transmittal remain
unchanged.
As of July 28, 2008, approximately $391.3 million principal amount
of the Notes had been validly tendered and not withdrawn pursuant
to the Offer.
The completion of the Offer is not a condition to completion of
the Arrangement or the financing thereof. The Offer and the
Consent Solicitation are subject to the satisfaction or waiver of
certain conditions, including the closing of the Arrangement
having occurred or the Arrangement occurring substantially
concurrent with the Expiration Date.
Morgan Stanley & Co. Retained as Dealer Manager
CHC has retained Morgan Stanley & Co. Incorporated to act as
Dealer Manager and Solicitation Agent in connection with the Offer
and the Consent Solicitation. Morgan Stanley & Co. Incorporated
may perform the services contemplated by the Offer and the Consent
Solicitation in conjunction with its affiliates (including,
without limitation, its affiliates incorporated under the federal
laws of Canada). Persons with questions regarding the Offer or
the Consent Solicitation should contact Morgan Stanley & Co.
Incorporated at (800) 624-1808 (toll-free) or (212) 761-1941
(collect). Persons residing or incorporated in Canada should
contact Morgan Stanley Canada Limited at (416) 943-8417. Requests
for documentation may be directed to D.F. King & Co., Inc., the
Information Agent, which can be contacted at (212) 269-5550 (banks
and brokers, call collect) or (888) 869-7406 (all others, call
toll-free).
About CHC Helicopter Corporation
Headquartered in Richmond, British Columbia, in Canada, CHC
Helicopter Corporation (TSE:FLY.A)V7B - http://www.chc.ca/-- is a
commercial helicopter operator. The company, through its
subsidiaries, operates in over 30 countries, on all seven
continents and in most of the offshore oil and gas producing
regions of the world. The company's operating units are based in
the United Kingdom, Norway, the Netherlands, South Africa,
Australia and Canada. It provides helicopter transportation
services to the oil and gas industry for production and
exploration activities through its European and global operations
segments. It also provides helicopter transportation services for
emergency medical services and search and rescue activities and
ancillary services, such as flight training. The company's Heli-
One segment is a non-original equipment manufacturer helicopter
support company, providing repair and overhaul services, aircraft
leasing, integrated logistics support, helicopter parts sales and
distribution and other related services.
* * *
As reported in the Troubled Company Reporter on February 2008,
Moody's Investors Service placed under review for possible
downgrade the Ba3 corporate family rating and probability of
default rating for CHC Helicopter Corporation. The review also
covered the B1 (LGD 5, 72%) rating on CHC's $400 million senior
subordinated notes. These actions followed the statement that a
fund managed by First Reserve Corporation has entered into an
agreement to acquire CHC.
CHRYSLER LLC: Mulling Foreign Auto Tie Ups to Slash Costs
---------------------------------------------------------
Chrysler LLC is mulling potential joint ventures with foreign
counterparts to cut costs and to secure finances, The Wall Street
Journal reports, citing people familiar with the matter.
Reuters relates that Chrysler and Fiat SpA are negotiating
production and distribution deals, while Chrysler is discussing
plans with Tata Motors Ltd. relating to the sale and assembly of
Chryslers' Jeep Wrangler SUV in India and other Asian markets
through Tata Motors.
In April 2008, the Troubled Company Reporter disclosed that
Chrysler and Nissan Motor Co., Ltd., entered into two new
agreements for the supply of products between both companies.
Nissan agreed, in January, to supply Chrysler with a new car based
on the Nissan Versa sedan for limited distribution in South
America on an Original Equipment Manufacture basis in 2009.
According to WSJ, owner Cerberus Capital Management LP is seeking
ways to push Chrysler's turnaround plan, including joint ventures
with foreign auto makers. Chrysler is also restricting its costs
on development projects and reconsidering increasing production
plans for the fuel-efficient Phoenix auto engine.
As disclosed in the TCR on July 29, 2008, Chrysler's financial
arm, Chrysler Financial, will cease offering vehicle lease
alternatives in the U.S. to focus more on financing vehicle
purchases. In addition, Chrysler is planning to reduce 1,000
salaried jobs by September 30 in an effort to cut costs amid a
deep slump in U.S. auto sales.
About Chrysler LLC
Based in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter June 24, 2008,
Moody's Investors Service affirmed the B3 Corporate Family Rating
and Probability of Default Rating of Chrysler LLC, but changed the
outlook to negative from stable. The change in outlook reflects
the increasingly challenging environment faced by Chrysler as the
outlook for US vehicle demand falls, and as high fuel costs drive
US consumers away from light trucks and SUVs, and toward more fuel
efficient vehicles.
Standard & Poor's Ratings Services is placing its corporate credit
ratings on the three U.S. automakers, General Motors Corp., Ford
Motor Co., and Chrysler LLC, on CreditWatch with negative
implications, citing the need to evaluate the financial damage
being inflicted by deteriorating U.S. industry conditions--largely
as a result of high gasoline prices. Included in the CreditWatch
placement are the finance units Ford Motor Credit Co. and
DaimlerChrysler Financial Services Americas LLC, as well as GM's
49%-owned finance affiliate GMAC LLC.
As reported in the Troubled Company Reporter on May 9, 2008,
Fitch Ratings downgraded the Issuer Default Rating of Chrysler
LLC to 'B' from 'B+', with a Negative Rating Outlook. Fitch has
also downgraded the senior secured bank facilities, including
senior secured first-lien bank loan to 'BB/RR1' from 'BB+/RR1';
and senior secured second-lien bank loan to 'CCC+/RR6' from
'BB+/RR1'. The recovery rating on the second lien was also
downgraded from 'BB+/RR1' to 'CCC+/RR6' based on lower asset value
assumptions and associated recoveries in the event of a stress
scenario.
CHRYSLER LLC: Fitch Highlights Effect of Declining Resale Values
-----------------------------------------------------------------
The recent announcements by the financing arms of Chrysler LLC, GM
Corp. and Ford Motor Co. regarding the discontinuation or overhaul
of their auto lease programs underscores the impact of rapidly
declining vehicle resale values, according to Fitch Ratings.
Earlier this week Chrysler Financial, GMAC and Ford Motor Credit
announced significant changes to their auto lease businesses with
Chrysler Financial suspending their U.S. auto lease program all
together. GMAC announced it will stop subsidizing leases in
Canada and will eliminate certain lower credit quality borrowers
from consideration domestically. Ford announced significant
increases in lease rates for certain SUVs and trucks. All three
companies indicated that their decision was influenced by the
ongoing decay in the resale values of vehicles coming off lease.
Coincident with these declines, Fitch is currently completing a
review of its auto lease ratings with a focus on the 2007 and 2008
vintages. Fitch currently has 20 public ratings outstanding from
10 transactions representing approximately $7.2 billion in
principal outstanding from 2007 and 2008 U.S. captive finance
company issuances. The initial review is expected to be completed
over the next two to three weeks.
'As Fitch has noted, dramatic drops in the value of used cars is
impacting the entire auto ABS sector, but those declines are
having an amplified affect on the performance of auto lease
transactions,' said Managing Director and U.S. ABS group head
Kevin Duignan. 'Transactions from 2007 and 2008 may not have
built enough credit enhancement to offset the potential increase
in residual value losses while still maintaining coverage
consistent with Fitch's original ratings.'
U.S. captive finance companies, in particular, are experiencing
higher than expected residual value losses due to the steep drop
in the values of vehicles coming off lease especially for SUVs and
trucks. Fitch's base case residual value loss expectation for
these companies' auto lease ABS transactions has increased by
20-30% since the second half of 2007 as value declines
accelerated. However, current data suggests that actual declines
are exceeding this range in certain transactions with further
deterioration expected. 'While ratings in the auto lease sector
have traditionally been remarkably stable, the rapid rate of
decline in vehicle values over the past six months is
unprecedented and will put those ratings to the test,' said ABS
Senior Director Ravi Gupta.
About Chrysler LLC
Based in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter June 24, 2008,
Moody's Investors Service affirmed the B3 Corporate Family Rating
and Probability of Default Rating of Chrysler LLC, but changed the
outlook to negative from stable. The change in outlook reflects
the increasingly challenging environment faced by Chrysler as the
outlook for US vehicle demand falls, and as high fuel costs drive
US consumers away from light trucks and SUVs, and toward more fuel
efficient vehicles.
Standard & Poor's Ratings Services is placing its corporate credit
ratings on the three U.S. automakers, General Motors Corp., Ford
Motor Co., and Chrysler LLC, on CreditWatch with negative
implications, citing the need to evaluate the financial damage
being inflicted by deteriorating U.S. industry conditions--largely
as a result of high gasoline prices. Included in the CreditWatch
placement are the finance units Ford Motor Credit Co. and
DaimlerChrysler Financial Services Americas LLC, as well as GM's
49%-owned finance affiliate GMAC LLC.
As reported by the TCR on July 31, 2008, Fitch Ratings 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.
CHRYSLER LLC: S&P Cuts Rating; Keeps Watch on Bank Lines Renewal
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered the ratings on General
Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from
'B'. The ratings on GM and Ford were removed from CreditWatch
with negative implications, where they had been placed on June 20,
2008. Chrysler will remain on CreditWatch pending the renewal of
certain bank lines at DaimlerChrysler Financial Services Americas
LLC, which S&P expects to be completed in the next few days. If
the bank lines are renewed as expected, S&P would affirms the
ratings on Chrysler and DCFS and remove them from CreditWatch.
At the same time, S&P lowered the ratings on GMAC LLC, Ford Motor
Credit Co., and DCFS, also to 'B-' from 'B', and removed the
ratings on GMAC and Ford Credit from CreditWatch negative, where
they had also been placed on June 20, 2008. The ratings on DCFS
will remain on CreditWatch negative until its bank line renewal is
complete. S&P also lowered the corporate credit rating on FCE
Bank PLC, Ford Credit's European bank, to 'B' from 'B+'. The
outlooks on all the companies are negative. (The issuer credit
rating on GMAC's Residential Capital LLC mortgage unit
[CCC+/Negative/C] is not affected by these rating actions.)
The downgrades reflect mounting cash losses in GM's, Ford's, and
Chrysler's North American automotive operations and deteriorating
conditions in the U.S. auto market.
"We believe sharply lower U.S. light-vehicle demand and the recent
dramatic shift in demand away from large pickup trucks and SUVs
amid higher gas prices will complicate the turnaround efforts of
all three automakers and reduce their currently adequate liquidity
considerably over the next year and a half," said Standard &
Poor's credit analyst Robert Schulz. "This will leave them more
vulnerable to already adverse industry, economic, and credit
market conditions." The greatest threats to the ratings over the
next 18 months are the depth of economic weakness and the extent
of the demand shift away from light trucks in the U.S.
S&P estimates GM will use as much as $16 billion from its global
automotive operations this year, including cash restructuring
costs and costs related to bankrupt former unit Delphi Corp. Of
that amount, GM used $3.9 billion in the first quarter. S&P
estimate Ford will burn as much as $12 billion to $13 billion from
its global automotive operations this year, including cash
restructuring costs. Of that amount, Ford used $4.9 billion in
the first six months of 2008. Chrysler does not make its
financial results public, but S&P expects the company to
experience a net cash outflow from its automotive operations in
2008, its first full year since being acquired by Cerberus Capital
Management L.P. Aggressive fixed-cost reduction and conservative
industry sales assumptions have kept Chrysler at or above most of
its financial targets through the first quarter and likely through
the second quarter.
Liquidity for all three automakers is adequate for now, but will
be significantly reduced in the second half of this year and
during 2009 by continued heavy losses and cash outflows.
Industry sales, including those of pickups and SUVs, continue to
weaken, which will likely lead to higher cash losses for all three
automakers in the second half of the year. S&P expects U.S.
light-vehicle sales to be 14.4 million units in 2008, the lowest
in 15 years and down sharply from 16.1 million units in 2007. S&P
expects sales to fall further in 2009, to about 14.1 million
units, as the economy remains weak and housing prices and
consumers' access to credit remain under pressure. S&P estimates
that there is a 20% chance that auto sales in 2008 and 2009 will
plummet to 13.6 million and 11.7 million units, respectively,
which would present an overwhelming challenge for all three
Michigan-based automakers.
Another major headwind has been plummeting prices for used SUVs
and pickups, which is causing alarming losses on leasing
activities and will lead Ford Credit to be unprofitable for 2008,
even excluding a $2 billion charge booked in the second quarter.
GM and GMAC will likely take impairment charges in the upcoming
quarters.
There has been periodic speculation that the Michigan-based
automakers might eventually seek to reorganize under Chapter 11
bankruptcy protection. Managements at all three companies have
strongly denied any such intention and appear committed to
executing on their turnaround plans. Few of the automakers'
problems--including lower sales, adverse product mix shifts, and
high commodity costs--would be altered by a bankruptcy filing.
S&P believe the most likely trigger for a bankruptcy filing would
be cash reserves falling to dangerously low levels, rather than
the automaker's making a strategic choice to seek Chapter 11
reorganization.
The outlooks on each company and its financial unit reflect our
expectation that liquidity at each automaker will be almost halved
by cash losses in 2008 and 2009 but will not sink to dangerously
low levels, even if industry conditions do not materially improve
by the end of next year. S&P could revise the outlooks, or place
the ratings on CreditWatch and subsequently lower them, if it came
to believe that cash and short-term investments plus secured
revolving credit facility availability would drop below certain
levels before the end of 2009. This could occur if U.S. light-
vehicle sales drop well below 14 million units this year and next,
or if higher gas prices lead to an even more substantial decline
in light-truck demand beyond current levels. S&P could also lower
the rating on GM if GMAC loses access to the asset-backed
securitization markets for any extended period.
S&P does not expect to revise the outlook to stable or raise the
ratings within the next year, given the economic outlook, ongoing
turnaround plan execution risk, and potential pressure on
liquidity.
CIPRICO INC: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Ciprico, Inc.
7003 West Lake Street
Suite 400
Minneapolis, MN 55426
Bankruptcy Case No.: 08-43731
Type of Business: The Debtor is a provider of intelligent storage
software, solutions and appliances for
enterprise class IT servers, professional
workstations, and digital media workflows.
See http://www.ciprico.com/
Chapter 11 Petition Date: July 28, 2008
Court: District of Minnesota (Minneapolis)
Judge: Nancy C. Dreher
Debtor's Counsel: Clinton E. Cutler, Esq.
(ccutler@fredlaw.com)
Fredrikson & Byron, P.A.
200 South Sixth Street, Suite 4000
Minneapolis, MN 55402
Tel: (612) 492-7070
Fax: (612) 347-7077
Total Assets: $6,905,000
Total Debts: $7,814,000
Debtor's list of its 20 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bell Microproducts Goods & Services $316,134
12778 Collections Ctr. Dr.
Chicago, IL 60693
Arrow Electronics Inc. Goods & Services $188,813
BOA Chicago-NAC
13469 Collections Ctr. Dr.
Chicago, IL 60693
Plexus Services Corp. Goods & Services $185,018
2970 Paysphere Cir.
Chicago, IL 60674
Microland Electronics Goods & Services $120,088
Tracewell Systems Goods & Services $101,487
Partners in Europe Goods & Services $78,765
Nu Horizons Goods & Services $65,040
Health Partners Goods & Services $59,545
Northland Securities Goods & Services $49,650
Sanmina-SCI Corp. Goods & Services $43,932
Patni Goods & Services $37,140
Holualoa Heritage Office Goods & Services $26,330
TUV SUD America Goods & Services $25,122
Paul Devine Goods & Services $21,000
Du Fresne Manufacturing Co. Goods & Services $20,753
Ayrshire Electronics Goods & Services $18,624
Robert Half Technology Goods & Services $14,448
Maxim Integrated Products Goods & Services $12,890
Gigabyte Technology Co. Ltd. Goods & Services $9,500
Kell Container Corp. Goods & Services $8,944
CLASS V FUNDING: Moody's Junks Ratings of Classes A-1 and B Notes
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of three
classes of notes issued by Class V Funding, Ltd., and left on
review for possible further downgrade the ratings of two of these
classes of notes:
-- Class Description: U.S. $100,000,000 Class A-1 First
Priority Senior Secured Floating Rate Delayed Draw Notes due 2045
Prior Rating: Aa2, on review for possible downgrade
Current Rating: A2, on review for possible downgrade
-- Class Description: U.S. $41,000,000 Class A-2 Second
Priority Senior Secured Floating Rate Notes due 2045
Prior Rating: Baa3, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
-- Class Description: U.S. $30,000,000 Class B Third Priority
Secured Floating Rate Notes due 2045
Prior Rating: B3, on review for possible downgrade
Current Rating: C
Class V Funding, Ltd. is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities. On May
12, 2008, the transaction experienced an event of default caused
by a failure of Class A/B Overcollateralization Ratio to be
greater than or equal to the required amount set forth in Section
5.1(i) of the Indenture dated April 12, 2005. 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 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 ratings of the Class A-1
and A-2 Notes issued by Class V Funding, Ltd. are on review for
possible further action.
CMT AMERICA: Committee Taps Jager Smith as Counsel
--------------------------------------------------
The Official Committee of Unsecured Creditors of CMT America Corp.
asks the United States Bankruptcy Court for the District of
Delaware to retain Jager Smith P.C., as its counsel.
On July 25, 2008, Roberta A. DeAngelis, the U.S. Trustee for
Region 3, appointed five creditors to serve on an the Committee
including:
-- Chigle,
-- Gaze USA Inc.,
-- Simon Property Group, Inc.
-- The Taubman Company, and
-- Wellton Express International (Ontario) Inc.
As the Committee's counsel, the firm will:
a) advise the Committee and represent it with respect to
proposals and pleadings submitted by the Debtor or others to
the Court;
b) represent the Committee with respect to any plans of
reorganization of disposition of assets proposed in this
case;
c) attend hearings, draft pleadings and generally advocating
positions which further the interest of the creditors
represented by the Committee;
d) assist in the examination of the Debtor's affairs and review
of its operations;
e) advise the Committee as to the progress of the Chapter 11
case; and
f) perform other professional services as are in the best
interests of those represented by the Committee, including
without limitation those pursuant to Section 1103(c) of the
Bankruptcy Code.
The firm will be paid a blended $430 per hour for this engagement.
The firm's other professionals and their compensation rates are:
Professionals Designations Hourly Rates
------------- ------------ ------------
Bruce F. Smith, Esq. Partner $525
Steven C. Reingold, Esq. Partner $375
Michael J. Fencer, Esq. Associate $325
Bruce F. Smith, Esq., a partner at firm, assures the Court that
the firm does not hold any interest adverse to the Debtors' estate
and is a "disinterested person" as defined in Section 101(14) of
the Bankruptcy Code.
Mr. Smith can be reached at:
Bruce F. Smith, Esq.
Jager Smith P.C.
One Financial Center
Boston, Massachusetts 02111
Tel: (617) 951-0500
Fax: (617) 951-2414
http://www.jagersmith.com/
About CMT America
Headquartered in Farmington, Connecticut, CMT America Corp. aka
Fairvane Corp. is a 70-store women's clothing retailer. The
company filed for Chapter 11 protection on July 13, 2008 (Bankr.
D. Del. Case No.08-11434). Robert S. Brady, Esq., Young, Conaway,
Stargatt & Taylor LLP, represents the Debtor in its restructuring
efforts. The Debtor has selected Administar Services Group LLC as
its claims agent. When the Debtor filed for protection against
its creditors, it listed assets between $10 million and $50
million, and debts between $10 million and $50 million.
COMMUNITY PROPERTIES: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Community Properties, Inc.
aka Fountain Development Co., Ltd.
aka C & D Developing, Inc.
24165 IH-10 W., Ste. 217-411
San Antonio, TX 78257
Bankruptcy Case No.: 08-52132
Chapter 11 Petition Date: July 30, 2008
Court: Western District of Texas (San Antonio)
Judge: Leif M. Clark
Debtors' Counsel: Jesse Blanco, Jr., Esq.
(jesseblanco@sbcglobal.net)
P.O. Box 680875
San Antonio, TX 78268
Tel: (210) 509-6925
Fax: (210) 509-6903
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors.
COMMUNITY PROPERTIES: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Community Properties, Inc.
aka Fountain Development Co., Ltd.
aka C & D Developing, Inc.
24165 IH-10 W., Ste. 217-411
San Antonio, TX 78257
Bankruptcy Case No.: 08-52132
Chapter 11 Petition Date: July 30, 2008
Court: Western District of Texas (San Antonio)
Judge: Leif M. Clark
Debtors' Counsel: Jesse Blanco, Jr., Esq.
(jesseblanco@sbcglobal.net)
P.O. Box 680875
San Antonio, TX 78268
Tel: (210) 509-6925
Fax: (210) 509-6903
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors.
COOPER PROPERTIES: Case Summary & Two Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Cooper Properties, LLC
15036 Oxnard Street
Van Nuys, CA 91411
Bankruptcy Case No.: 08-15401
Chapter 11 Petition Date: July 30, 2008
Court: Central District Of California (San Fernando Valley)
Judge: Kathleen Thompson
Debtors' Counsel: David I Brownstein, Esq.
(db@brownsteinllp.com)
Brownstein & Brownstein LLP
21700 Oxnard St., Ste. 1160
Woodland, CA 91367
Tel: (818) 905-0000
Fax: (818) 593-3988
http://www.brownsteinllp.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/califcb08-15401.pdf
DLJ COMMERCIAL: Fitch Holds 'B-' Rating on $13.8MM Class B-6 Cert.
------------------------------------------------------------------
Fitch Ratings affirmed DLJ Commercial Mortgage Corp.'s commercial
mortgage pass-through certificates, series 1998-CF2, as:
-- Interest-only class S at 'AAA';
-- $55.7 million class A-3 at 'AAA';
-- $13.8 million class A-4 at 'AAA';
-- $41.5 million class B-1 at 'AAA';
-- $16.6 million class B-2 at 'AAA';
-- $52.6 million class B-3 at 'A+';
-- $11.1 million class B-4 at 'A-';
-- $22.2 million class B-5 at 'BB+';
-- $13.8 million class B-6 at 'B-'.
Fitch does not rate the $14.6 million class C certificates.
Classes A-1A, A-1B, and A-2 have paid in full.
Although credit enhancement has increased since Fitch's last
rating action due to loan payoffs and amortization, the pool's
high percentage of Fitch Loans of Concern (30%), coupled with a
high concentration of upcoming maturities or anticipated repayment
dates (61%), continues to warrant affirmations.
As of the July 2008 distribution date, the pool has paid down
78.2% to $242.0 million, from $1.11 billion at issuance. Though
an additional 21.3% has paid down since the last Fitch rating
action in June, the majority of the paydown (53%) was attributable
to loans that had defeased. Of the remaining 112 loans in the
pool, seven (7.1%) have defeased.
Sixty-nine loans, representing approximately 61% of the pool, are
scheduled to mature or have anticipated repayment dates throughout
the remainder of 2008. For those loans, the weighted average
coupon is 7.09%, the weighted average servicer-reported debt
service coverage ratio is 1.50 times, and the weighted average
Fitch stressed loan-to-value ratio is 91.6%. Of the 2008
maturity/ARD concentration, no loans have defeased.
There are currently four loans (5.5%) in special servicing, of
which one is 90 days delinquent (2.4%) and three are current
(3.1%). The largest specially serviced loan (2.4%) corresponds to
a 153-room hotel property located in Youngstown, Ohio which lost
its Holiday Inn flag in February 2008. The loan was transferred
to special servicing Jan. 31, 2007, and foreclosure proceedings
began after the borrower failed to pay the loan in full by
Dec. 31, 2007, as per the terms of a forbearance agreement
executed in May 2007. Fitch expects that losses from the asset
will be fully absorbed by the unrated class C certificates.
The second largest specially serviced loan is secured by a 172,825
sf industrial property located in Nashville, Tennessee. At this
time, Fitch does not expect the loan (1.9%) to accrue any losses.
The two smallest specially serviced loans, representing a combined
1.2% of the pool, are each secured by a multifamily property
located in suburbs of Detroit. The loans transferred to special
servicing after the July remittance date; as such, third party
reports and workout strategies are not yet available.
Fitch has identified 26 loans (29.6%) as Fitch Loans of Concern.
These include specially serviced loans, loans with debt service
coverage ratios below 1.0 times and loans with other performance
issues. Of the Fitch Loans of Concern, 19, representing 22.7% of
the pool, are scheduled to mature or anticipated to repay in 2008.
DLJ COMMERCIAL: Fitch Holds 'B-' Rating on $15.6MM Class B-7 Cert.
------------------------------------------------------------------
Fitch upgraded DLJ Commercial Mortgage Corp.'s commercial mortgage
pass-through certificates, series 1998-CG1:
-- $66.5 million class B-4 upgraded to 'AAA' from 'AA';
Fitch also affirmed these classes:
-- Interest-only class S at 'AAA'.
-- $35.0 million class B-1 at 'AAA';
-- $23.5 million class B-2 at 'AAA';
-- $15.6 million class B-3 at 'AAA';
-- $15.6 million class B-5 at 'A+';
-- $27.4 million class B-6 at 'BBB-';
-- $15.6 million class B-7 at 'B-'.
Fitch does not rate the $13.8 million class C certificates.
Classes A-1A, A-1B, A-1C, A-2, A-3, and A-4 are paid in full.
The upgrade is the result of increased credit enhancement due to
payoff of additional four loans, partial prepayments and scheduled
amortization since Fitch's last rating action. As of the July
2008 distribution date, the pool's aggregate certificate balance
has decreased 86.4% since issuance, to $213.0 million from
$1.56 billion. Eight loans (34.6%) have defeased, including a
shadow rated loan (11%) and two other top five loans (14%).
Four assets (5.1%) are currently in special servicing. The largest
asset (1.9%) is secured by a retail shopping center located in
Crowley, Louisiana which matured on April 1, 2008. The borrower
secured financing but could not close due to an issue with the
ground lessor. The master servicer approved a 90 day extension to
allow the borrower to resolve the issue. The property is 97%
occupied and had a servicer reported year-end 2007 DSCR of 1.62x.
The special servicer is in the process of preparing a forbearance
agreement.
The second largest specially serviced loan (1.8%) is secured by a
160 room unflagged two-story exterior corridor hotel located in
Tallahassee, Florida. The property was transferred to special
servicing as a result of declining performance and monetary
default. As of year-end 2007, the property was 42% occupied and
had a servicer reported DSCR of 0.38x.
The third specially serviced asset (0.8%) is secured by a two-
story office building located in Endicott, New York and is
currently 90 days delinquent. The property is located in the
vicinity of the IBM ground water plume in Endicott, New York and
occupancy continues to struggle. The property is currently 35%
occupied.
The fourth specially serviced asset (0.5%) is secured by a retail
property located in Jackson, Mississippi and is currently real
estate owned. The special servicer continues to market the
property and the vacant space. The property is currently 33%
occupied. Expected losses on the specially serviced assets are
anticipated to be absorbed by the non-rated class C.
Four non-defeased loans (4.2%) mature in 2008. The loans have a
weighted average coupon of 7.18%. Of the four loans, three
(3.27%) are specially serviced.
Three loans (5.6%) have ARD dates in 2008. The loans have a
weighted average coupon of 7.18%.
DOLAN MEDIA: Amends Credit Agreement with US Bank, Gets Waiver
--------------------------------------------------------------
Dolan Media Company amended its credit agreement with a lending
syndicate led by US Bank NA. The amendment waives the requirement
that the company apply 50% of the proceeds of the private
placement to the repayment of outstanding debt. It also lowers
the maximum leverage ratios and increases the interest rate
margins charged to the company on the loans under the credit
facility.
Dolan Media Company also disclosed that its subsidiary, American
Processing Company LLC has signed a definitive agreement to
purchase National Default Exchange. The amendment also approves
the NDEx acquisition.
The transaction will be funded by a significant portion, or all,
of a $64 million private placement of Dolan Media common stock and
by debt from the company's credit facility.
"This is an accretive and highly complementary transaction that
provides us with entry into three of the nation's largest states
in terms of their projected growth in mortgage defaults," said
Dolan Media chairman, president and chief executive officer James
P. Dolan. "NDEx is a well-respected company with an outstanding
management team and operating track record. It will broaden our
new market focus beyond acquisitions by providing us with the
resources and knowledge to launch operations in new states.
Adding NDEx's capabilities will strengthen our ability to pursue a
national footprint to address this problem and generate value for
our shareholders."
The closing of the acquisition is conditioned upon National
Default Exchange LP entering into a long-term exclusive services
agreement with Barrett Daffin Frappier Turner & Engel L.L.P., an
Addison, Texas, law firm which uses NDEx for processing services.
It is also conditioned upon termination of the waiting period
under the Hart-Scott-Rodino Act and satisfaction or waiver of
customary closing conditions. The company plans to make its Hart
Scott Rodino filing with the Federal Trade Commission and the
Department of Justice this week.
According to the first quarter 2008 Mortgage Bankers Association
delinquency survey, California, Texas and Georgia ranked first,
third and seventh, among the 50 states in estimated foreclosure
starts during the first quarter of 2008. In California, NDEx
provides its default processing services directly to lenders and
loan servicers. A license to practice law is not required to
manage the mortgage default processes in California. In most
other states, attorneys must oversee the matters.
"This transaction will establish APC's footprint in the state of
California, the largest and one of the most active default
management markets in the United States," APC president David
Trott noted. "Our primary focus in the year ahead will be on
integrating NDEx with APC and supporting the continued growth of
our operations. We welcome Mike Barrett and his outstanding NDEx
management team to APC and we look forward to their
contributions."
APC and NDEx each use proprietary automated workflow process
management systems that allow efficient and secure handling of
large numbers of cases. Mr. Trott said the Dallas processing
operations of NDEx would be maintained and that over time the best
aspects of the APC and NDEx technology platforms would be
combined.
"The combination of APC and NDEx builds a stronger, more efficient
company that is positioned to offer better service to clients,"
NDEx president Michael C. Barrett said. "Now that we will provide
default services in six states, we look forward to leveraging our
opportunities in technology, customer service and marketing to
further drive our business. We are extremely excited about the
future growth opportunities for our company."
After closing, Mr. Barrett will remain with NDEx as its president
and chairman emeritus. He also will remain as managing partner of
the law firm Barrett Daffin Frappier Turner & Engel.
Dolan Media said it plans to update its financial guidance during
the second quarter 2008 earnings call, scheduled for 3:30 p.m. CDT
Aug. 7, 2008.
Private Placement of Equity
Dolan Media also said it entered into a securities purchase
agreement for a $64.0 million private placement of 4.0 million
shares of its common stock at $16.00 per share. The company plans
to use a significant portion, or all, of the net proceeds of the
private placement to fund the acquisition of NDEx and to use any
remaining proceeds for other acquisitions, working capital and
other general corporate purposes.
Under the terms of the purchase agreement, the company is
obligated to file a registration statement covering re-sale of the
privately-placed shares and to cause a registration statement to
be effective within 120 days of the closing. The company has
agreed to pay to the purchasers cash penalties associated with any
failure to meet the registration deadline.
Allen & Company, New York, and Craig-Hallum Capital Group LLC,
Minneapolis, acted as placement agents for the equity transaction.
Dolan said that at the closing of the NDEx transaction, "We expect
to have a debt-to-pro forma adjusted EBITDA ratio of approximately
2.7 times, well within our comfort level. We believe that we can
reduce this ratio to less then two times by the end of next year."
About National Default Exchange
Based in Addison, Texas, National Default Exchange is a mortgage
default processing services company that provides mortgage default
processing services in Texas, California and Georgia, three of the
top 10 states experiencing prolific default-related activity.
NDEx also provides property title services and licenses
specialized software for the mortgage banking industry.
NDEx, established in Texas, launched its default processing
services in 2007 in the California market and entered Georgia
earlier this year.
About Dolan Media Company
Based in Minneapolis, Minnesota, Dolan Media Company (NYSE:DM) --
http://www.dolanmedia.com/-- is a provider of business
information and professional services to the legal, financial and
real estate sectors. Its Professional Services Division provides
specialized services to the legal profession through APC and also
through its Counsel Press, LLC unit. Counsel Press is the
provider of appellate services to the legal community. The
company's Business Information Division produces business
journals, court and commercial media and other publications,
operates web sites and conducts a broad range of events for
targeted professional audiences in each of the 21 geographic
markets that it serves across the United States.
American Processing Company LLC is the majority owned subsidiary
of Dolan Media Company that provides mortgage default processing
services in Michigan, Indiana and Minnesota.
DOLE FOOD: High Refinancing Risks Cue Fitch's Negative Watch
------------------------------------------------------------
Fitch Ratings has placed the ratings of Dole Food Company, Inc.,
Solvest Ltd., and Dole Holding Company, LLC on Rating Watch
Negative as:
Dole Food Company, Inc. (Operating Company)
-- Long-term Issuer Default Rating 'B-';
-- Secured asset-based revolving facility 'BB-/RR1';
-- Secured term loan B 'BB-/RR1';
-- Senior unsecured debt 'CCC+/RR5'.
Solvest Ltd. (Bermuda-based Subsidiary)
-- Long-term IDR 'B-';
-- Secured term loan C 'BB-/RR1'.
Dole Holding Company, LLC (Intermediate Holding Company)
-- Long-term IDR 'B-'.
This rating action affects Dole's approximate $2.4 billion in
consolidated debt at the quarter ended June 14, 2008.
The Negative Watch reflects Fitch's view that heightened
refinancing risks exists in the near-to-intermediate term for
Dole's 2009 and to a lesser extent its 2010 and 2011 maturities.
Despite meaningful recent improvement in the company's operating
performance, Fitch expects cash flow generation to remain strained
due to the inability to completely offset higher than normal fuel,
agricultural chemicals, and tariff related operating costs with
incremental pricing and hedging. While a reduction in European
Union banana tariffs could provide meaningful incremental cash
flow, a definitive resolution regarding the magnitude and timing
of such remains uncertain.
Dole's maturities include $350 million of 8 5/8% unsecured notes
due May 1, 2009, $400 million of 7 1/4% unsecured notes due June
15, 2010 and $200 million of 8 7/8% unsecured notes due March 15,
2011. After generating negative free cash flow annually since
2005, the company remained free cash flow negative during the
first half of fiscal 2008. While near-term liquidity provided by
cash on hand and availability on its asset-based revolver is
improving, it is still insufficient for paying off the 2009
maturity. These factors, in addition to uncertainty regarding the
ability and timing of divestitures, have resulted in the need for
Dole to explore other alternatives for dealing with the 2009
maturity.
Dole had approximately $243.1 million of liquidity, which includes
approximately $77.4 million of cash and $165.7 million available
on its $350 million asset-based revolver which expires in 2011, at
June 14, 2008. Assets-held-for-sale increased to $235.3 million
due to the company's formal decision to place its Fresh-Cut
Flowers operation up for sale. Dole's ability to incur
incremental debt is currently limited by the terms of its debt
agreements.
At this time, Dole plans to refinance at least some portion of the
2009 notes with unsecured financing by year end. Other
alternatives being considered by the company include amendment of
its secured bank facilities, additional equity from owner David H.
Murdock, or other forms of financing. Fitch believes that the
company's high financial leverage and negative free cash flow
during a period of tight credit conditions could limit its ability
to refinance these notes. The company has indicated that failure
to timely re-pay the 2009 notes could lead to an event of default
with potential serious impact on its overall liquidity.
Resolution of the Negative Watch could occur once the company
deals with the $350 million of unsecured notes maturing May 1,
2009. Further reductions in leverage, which might occur with a
considerable immediate reduction in EU banana tariffs, could
provide positive bias for the ratings. Unless free cash flow
generation improves considerably in the near-to-intermediate term,
Fitch also looks for Dole to articulate a plan for dealing with
its larger 2010 maturity. Additional downgrades of Dole's ratings
are likely if the company has not cured the 2009 maturity by year
end, if there is a material change in the company's capital
structure that results in reduced recovery prospects for Dole's
existing bondholders, or if leverage levels increase materially
from current levels.
Dole's ratings reflect the company's high financial leverage, and
the volatility and the lower margin commodity orientation of its
products, but consider the noticeable improvement in operating
performance and the resulting positive effect on leverage during
the first half of fiscal 2008. The ratings incorporate
expectations that cash proceeds from targeted asset sales will be
used to reduce secured bank debt during fiscal 2008, as mandated
by the terms of its bank credit facility. However, given
continued cost pressures, high working capital requirements and
the current level of capital investments, additional significant
near-term improvement in the company's credit statistics is not
anticipated.
For the latest 12 month period ended June 14, 2008, leverage was
6.8x times, down from 8.3x at Dec. 29, 2007. Interest coverage
was 1.9x and FFO fixed-charge coverage was 1.4x. Dole was in
compliance with its bank financial covenant, which requires
minimum quarterly fixed-charge coverage of 1x if its asset-based
loan availability is less than $35 million or 10% of the loan
commitment.
During the first half of fiscal 2008, Dole's sales grew 14% to
$3.7 billion and operating income increased 61% to $175 million.
The gains were driven by strong worldwide banana pricing,
increased volume sold in its European ripening and distribution
business and foreign exchange benefits. Operating activities used
$2.6 million of cash flow versus providing $25.5 million during
the same period last year, and capital expenditures were
$35.3 million, down from $44 million last year. Cash flow was
supplemented by $32 million of assets sales. On July 9, after the
end of the second fiscal quarter, Dole announced that it had
closed three asset sale transactions generating approximately
$100 million in cash. The company used $66 million to reduce the
outstanding balance on its asset-based revolver, which was
$180 million at quarter end, and $34 million to pay down its term
loan B, which totaled $220.5 million at quarter end.
Dole Food Company is the world's largest producer of fresh fruit
and fresh vegetables. The company markets a growing line of
value-added products and is one of the largest producers of fresh-
cut flowers in Latin America. At Dec. 29, 2007, 60% of Dole's
$6.9 billion in annual revenue was generated from outside of the
U.S. Dole's operations are fully integrated with the vast majority
of growing, harvesting, processing and packaging done in South
America and the Far East. At the end of fiscal 2007, Dole had
$4.6 billion of assets. Approximately 44% of its $1.5 billion in
tangible long-lived assets were located in the U.S. In 2007, Dole
had four operating segments which made the following contribution
to revenue: Fresh Fruit (68%), Fresh Vegetables (15%), Packaged
Foods (15%) and Fresh-Cut Flowers (2%).
Operating profit for Fresh Fruit was $107.6 million and for
Packaged Foods was $78.5 million in 2007. Fresh Vegetables lost
$21.7 million and Fresh-Cut Flowers lost $19.1 million during the
same period. The company's Fresh-Cut Flowers segment was
reclassified as discontinued operations during the second quarter
of fiscal 2008. Dole Foods is 100% owned by its chairman, David
H. Murdock of DHM Holdings, Inc.
DUNMORE HOMES: Taberna Capital Objects to Plan Confirmation
-----------------------------------------------------------
Taberna Capital Management LLC is the collateral manager for
holders of the securities issued pursuant to a junior
subordinated indenture between Dunmore Homes LLC and JP Morgan
Chase Bank N.A., as Trustee.
Taberna commenced an action in the Supreme Court for the State of
New York against Sidney B. Dunmore, Michael A. Kane, and DHI
Development f/k/a Dunmore Homes LLC, the predecessor-in-interest
of Dunmore Homes, Inc., asserting claims and causes of action for:
(a) breach of the Indenture; (b) tortious interference and fraud
by the Individual Defendants; and (c) breach of fiduciary duty,
unjust enrichment, and alter ego liability against Dunmore.
The Taberna Action was subsequently removed to the United States
District Court for the Southern District of New York. The Action
was stayed shortly after DHI filed a voluntary petition for
relief under Chapter 7 of the Bankruptcy Code in the U.S.
Bankruptcy Court for the Eastern District of California.
The claims in the Taberna Action assessed against the Individual
Defendants are currently proceeding in the District Court.
Taberna avers it has no objection to the provisions of the
Debtor's Plan that provide for the investigation and prosecution
of Causes of Action owned by the Debtor's estate as a means for
implementing the Plan and providing for recoveries for unsecured
creditors. However, the Taberna Action against the Individual
Defendants and DHI involves claims and causes of action that are
unique to Taberna and are not property of the Debtor or its
estate, Donna T. Parkinson, Esq., at Parkinson Phinney, in
Sacramento, California, argues. She says, "Taberna is not
willing to assign or transfer any of these claims or causes of
action to the Liquidation Trust and, as such, they remain outside
of the Plan and the jurisdiction of this Court."
While the Plan may provide for the prosecution of Causes of
Action that are property of the Debtor's estate and while the
Plan may also provide for the "voluntary" transfer by third party
creditors of their independent claims and causes of action to the
Liquidation Trust, Ms. Parkinson contends that the Court should
not sanction any provision of the Plan that seeks to interfere
with the rights and claims of Taberna as against third parties,
including rights and claims against the Individual Defendants in
the Taberna Action.
Based on these arguments, Taberna asks the U.S. Bankruptcy Court
for the Eastern District of California not to approve the Plan
unless the Debtor agrees that the Taberna Action and the
claims and causes of action asserted therein by Taberna are not
Causes of Action of the Debtor and its estate.
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: Sidney Dunmore Objects to Plan Confirmation
----------------------------------------------------------
Ron Bender, Esq., at Levene Neale Bender Rankin & Brill LLP, in
Los Angeles, California, argues on behalf of Sidney B. Dunmore
that the proposed injunction provisions in Dunmore Homes, Inc.'s
First Amended Plan of Liquidation are ambiguous and overbroad, and
violate rights of third parties to assert claims that may be
terminated pursuant to the Plan.
Mr. Bender notes that Mr. Dunmore may need to file his own
bankruptcy case as a result of, among other things, the
litigation arising out of the Debtor's Chapter 11 case. "While
[Mr. Dunmore] has been attempting to avoid that path, the First
Amended Plan or Proposed Second Amended Plan should not be used
as a basis to bar potential claims and causes of action that
would arise as a result of a bankruptcy filing by [Mr. Dunmore],"
Mr. Bender argues. "Accordingly, the First Amended Plan should
be revised to appropriately protect the rights and interests of
parties, including [Mr. Dunmore]."
In addition, Mr. Bender contends that the Proposed Second Amended
Plan, which was filed on July 22, 2008, may not even be properly
before the U.S. Bankruptcy Court for the Eastern District of
California at the scheduled confirmation hearing, in light of the
fact that it is premised upon a settlement agreement that has not
been approved by the Court. He says, "Additionally, problematic,
however, is that it fails to address any of the concerns
identified by [Mr. Dunmore] relative to the ambiguous and
overbroad scope of the injunction language and the potential
termination of rights and claims of parties without notice or
opportunity to be heard,"
"Accordingly, the Proposed Second Amended Plan similarly fails,"
Mr. Bender emphasizes.
Based on these arguments, Mr. Dunmore asks that the First Amended
Plan be revised so that the Debtor does not obtain an
impermissibly overbroad discharge, and specifically, to except
from the scope of the proposed injunctive relief, that any rights
and claims of Mr. Dunmore which he could assert against DHI
Development and the Debtor in the context of a bankruptcy is
preserved and exempted from any discharge.
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: City of Fresno Objects to Plan Confirmation
----------------------------------------------------------
The City of Fresno, a potential creditor or interest holder as
contemplated under Article 14.1 of the Dunmore Homes, Inc.'s First
Amended Plan of Liquidation and a party-in-interest pursuant to
Section 1109(b) of the Bankruptcy Code, asserts that the Debtor
has never provided it any notice of the Debtor's bankruptcy
proceeding, any matters set for hearing in the case, or the fact
that the Debtor claims a potential interest against the City.
Thomas H. Armstrong, Esq., of Fresno, California, relates that
the City never received a bankruptcy notice from the Debtor or
any indication that the Debtor was making a claim on certain
certificates of deposit worth $350,000 relating to a development
project.
Mr. Armstrong tells the U.S. Bankruptcy Court for the Eastern
District of California that the City's deputy attorney in
charge of bankruptcy matters first became aware of the Debtor's
claim to the Certificates of Deposit through its bankruptcy in
mid June 2008 when he was advised by an unrelated third party.
Accordingly, the City became aware of the Liquidating Plan and
upon review of the Plan, the City notes that it discovered that
the Debtor represents that it holds a potential claim against the
City.
Mr. Armstrong reminds the Court that the Debtor represented in
the Disclosure Statement that (1) in compliance with an agreement
with Dunmore Montecito LLC, it opened two certificates of deposit
accounts worth $350,000 to cover certain performance bonds and
that (ii) it is currently analyzing to what extent it is entitled
to the return of the funds and whether the funds are property of
its estate.
Mr. Armstrong contends that as the Debtor has disclosed the claim
against the City in its Disclosure Statement, the City is a
party-in-interest within the meaning of Section 1109(b), entitled
to notice in the case, and entitled to object to the Plan.
In light of these circumstances, the City objects to the Debtor's
Plan pursuant to Section 1129(a)(3) of the Bankruptcy Code under
the totality of the circumstances and asks the Court to deny the
Plan's confirmation.
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).
EMBS FUND IV: Moody's Junks $14MM A-2 Sr Sub, $20MM A-3 Sub Notes
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of three
classes of notes issued by Enhanced Mortgage-Backed Securities
Fund IV, Ltd., a market value CDO issuer. The rating actions are:
(1) US $130,000,000 Class A-1 Senior Notes Due February 2011
Current Rating: Ba2, on review for downgrade
Prior Rating: Baa2, on review for downgrade
(2) US $14,000,000 Class A-2 Senior Subordinated Notes Due
February 2011
Current Rating: Caa2, on review for downgrade
Prior Rating: B2, on review for downgrade
(3) US $20,000,000 Class A-3 Subordinated Notes Due February 2011
Current Rating: Ca
Prior Rating: Caa3, on review for downgrade
The rating action reflects the fact that an Early Liquidation
Event was triggered on July 28. As a result, portfolio assets
will be liquidated within the next 10 days to delever the
transaction's liabilities.
Moody's stated that it has observed continued deterioration in the
credit enhancement levels for the rated notes due to: 1) continued
price declines in the market value of the collateral portfolio in
recent weeks, and 2) increased disparity between the marked-to-
market values of the underlying assets and realized sales prices.
While the underlying assets are highly rated mortgage backed
securities, the unprecedented volatility and illiquidity in the
market for mortgage backed securities makes asset valuation highly
uncertain.
EMBS FUND III: Moody's Junks Rating of $20MM A-3 Sub Notes
----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of three
classes of notes issued by Enhanced Mortgage-Backed Securities
Fund III, Ltd., a market value CDO issuer. The rating actions
are:
(1) US $130,000,000 Class A-1 Senior Notes Due August 2008
Current Rating: Baa2, on review for downgrade
Prior Rating: A2, on review for downgrade
(2) US $14,000,000 Class A-2 Senior Subordinated Notes Due August
2008
Current Rating: B1, on review for downgrade
Prior Rating: Ba1, on review for downgrade
(3) US $20,000,000 Class A-3 Subordinated Notes Due August 2008
Current Rating: Caa3, on review for downgrade
Prior Rating: Caa1, on review for downgrade
The negative rating action reflects continued deterioration in the
credit enhancement levels for the rated notes due to: 1) continued
price declines in the market value of the collateral portfolio in
recent weeks, and 2) increased disparity between the marked-to-
market values of the underlying assets and realized sales prices.
While the underlying assets are highly rated mortgage backed
securities, the unprecedented volatility and illiquidity in the
market for mortgage backed securities makes asset valuation highly
uncertain.
FIRST HORIZON: Moody's Cuts Classes II-A-1 and II-A-2 to B1
-----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 42
tranches from 14 Alt-A transactions issued by First Horizon.
Additionally, 4 senior tranches were confirmed at Aaa. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, Alt-A mortgage loans.
Ratings were downgraded, in general, based on higher than
anticipated rates of delinquency, foreclosure, and REO in the
underlying collateral relative to credit enhancement levels.
Certain tranches were confirmed due to additional enhancement
provided by structural features. The actions described below are a
result of Moody's on-going review process.
Complete rating actions are:
Issuer: First Horizon Alternative Mortgage Securities Trust 2005-
AA11
Cl. I-A-1, Downgraded to A1 from Aaa
Cl. II-A-1, Downgraded to A2 from Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2005-
AA7
Cl. I-A-2, Downgraded to Aa3 from Aaa
Cl. II-A-2, Downgraded to Aa3 from Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2005-
AA9
Cl. I-A-1, Downgraded to A1 from Aaa
Cl. II-A-1, Downgraded to Aa3 from Aaa
Cl. III-A-1, Downgraded to Aa3 from Aaa
Issuer: First Horizon Mortgage Securities Trust 2005-AA12
Cl. I-A-2, Downgraded to A1 from Aaa
Cl. II-A-1, Downgraded to A1 from Aaa
Cl. III-A-2, Downgraded to A1 from Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
AA1
Cl. I-A-2, Downgraded to A2 from Aa1
Cl. II-A-2, Downgraded to A2 from Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
AA2
Cl. II-A-2, Downgraded to Baa2 from Aa1
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
AA3
Cl. A-2, Downgraded to Baa2 from Aa1
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
AA4
Cl. I-A-1, Downgraded to Aa1 from Aaa
Cl. I-A-2, Downgraded to Aa1 from Aaa
Cl. IV-AIO, Confirmed at Aaa
Cl. 2IO3, Confirmed at Aaa
Cl. 2AB3, Downgraded to Aa2 from Aa1
Cl. IV-A-2, Downgraded to Aa2 from Aa1
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
AA7
Cl. A-1, Downgraded to Aa3 from Aaa
Cl. A-2, Downgraded to Ba3 from Aa1
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
FA3
Cl. A-1, Downgraded to Aa1 from Aaa
Cl. A-2, Downgraded to Aa1 from Aaa
Cl. A-3, Downgraded to Aa1 from Aaa
Cl. A-4, Downgraded to Aa1 from Aaa
Cl. A-5, Downgraded to Aa1 from Aaa
Cl. A-7, Downgraded to Aa2 from Aa1
Cl. A-9, Downgraded to Aa1 from Aaa
Cl. A-10, Downgraded to Aa2 from Aa1
Cl. A-11, Downgraded to Aa1 from Aaa
Cl. A-12, Downgraded to Aa1 from Aaa
Cl. A-13, Downgraded to Aa1 from Aaa
Cl. A-PO, Downgraded to Aa1 from Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2006-
FA8
Cl. I-A-6, Downgraded to Aa3 from Aa1
Issuer: First Horizon Alternative Mortgage Securities Trust 2007-
AA2
Cl. I-A-1, Downgraded to Aa2 from Aaa
Cl. I-A-2, Downgraded to Ba3 from Aaa
Cl. I-A-3, Downgraded to Aa2 from Aaa
Cl. II-A-1, Downgraded to B1 from Aaa
Cl. II-A-2, Downgraded to B1 from Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2007-
FA2
Cl. I-A-4, Confirmed at Aaa
Issuer: First Horizon Alternative Mortgage Securities Trust 2007-
FA3
Cl. A-8, Confirmed at Aaa
Cl. A-9, Downgraded to Baa3 from Aa1
Cl. A-10, Downgraded to Baa3 from Aa1
A list of these actions including CUSIP identifiers may be found
at http://ResearchArchives.com/t/s?3043
FORD MOTOR: Fitch Highlights Effect of Declining Resale Values
---------------------------------------------------------------
The recent announcements by the financing arms of Chrysler LLC, GM
Corp. and Ford Motor Co. regarding the discontinuation or overhaul
of their auto lease programs underscores the impact of rapidly
declining vehicle resale values, according to Fitch Ratings.
Earlier this week Chrysler Financial, GMAC and Ford Motor Credit
announced significant changes to their auto lease businesses with
Chrysler Financial suspending their U.S. auto lease program all
together. GMAC announced it will stop subsidizing leases in
Canada and will eliminate certain lower credit quality borrowers
from consideration domestically. Ford announced significant
increases in lease rates for certain SUVs and trucks. All three
companies indicated that their decision was influenced by the
ongoing decay in the resale values of vehicles coming off lease.
Coincident with these declines, Fitch is currently completing a
review of its auto lease ratings with a focus on the 2007 and 2008
vintages. Fitch currently has 20 public ratings outstanding from
10 transactions representing approximately $7.2 billion in
principal outstanding from 2007 and 2008 U.S. captive finance
company issuances. The initial review is expected to be completed
over the next two to three weeks.
'As Fitch has noted, dramatic drops in the value of used cars is
impacting the entire auto ABS sector, but those declines are
having an amplified affect on the performance of auto lease
transactions,' said Managing Director and U.S. ABS group head
Kevin Duignan. 'Transactions from 2007 and 2008 may not have
built enough credit enhancement to offset the potential increase
in residual value losses while still maintaining coverage
consistent with Fitch's original ratings.'
U.S. captive finance companies, in particular, are experiencing
higher than expected residual value losses due to the steep drop
in the values of vehicles coming off lease especially for SUVs and
trucks. Fitch's base case residual value loss expectation for
these companies' auto lease ABS transactions has increased by
20-30% since the second half of 2007 as value declines
accelerated. However, current data suggests that actual declines
are exceeding this range in certain transactions with further
deterioration expected. 'While ratings in the auto lease sector
have traditionally been remarkably stable, the rapid rate of
decline in vehicle values over the past six months is
unprecedented and will put those ratings to the test,' said ABS
Senior Director Ravi Gupta.
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.
FORD MOTOR: S&P Cuts Rating to B- and Removes Negative Watch
------------------------------------------------------------
Standard & Poor's Ratings Services lowered the ratings on General
Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from
'B'. The ratings on GM and Ford were removed from CreditWatch
with negative implications, where they had been placed on June 20,
2008. Chrysler will remain on CreditWatch pending the renewal of
certain bank lines at DaimlerChrysler Financial Services Americas
LLC, which S&P expects to be completed in the next few days. If
the bank lines are renewed as expected, S&P would affirms the
ratings on Chrysler and DCFS and remove them from CreditWatch.
At the same time, S&P lowered the ratings on GMAC LLC, Ford Motor
Credit Co., and DCFS, also to 'B-' from 'B', and removed the
ratings on GMAC and Ford Credit from CreditWatch negative, where
they had also been placed on June 20, 2008. The ratings on DCFS
will remain on CreditWatch negative until its bank line renewal is
complete. S&P also lowered the corporate credit rating on FCE
Bank PLC, Ford Credit's European bank, to 'B' from 'B+'. The
outlooks on all the companies are negative. (The issuer credit
rating on GMAC's Residential Capital LLC mortgage unit
[CCC+/Negative/C] is not affected by these rating actions.)
The downgrades reflect mounting cash losses in GM's, Ford's, and
Chrysler's North American automotive operations and deteriorating
conditions in the U.S. auto market.
"We believe sharply lower U.S. light-vehicle demand and the recent
dramatic shift in demand away from large pickup trucks and SUVs
amid higher gas prices will complicate the turnaround efforts of
all three automakers and reduce their currently adequate liquidity
considerably over the next year and a half," said Standard &
Poor's credit analyst Robert Schulz. "This will leave them more
vulnerable to already adverse industry, economic, and credit
market conditions." The greatest threats to the ratings over the
next 18 months are the depth of economic weakness and the extent
of the demand shift away from light trucks in the U.S.
S&P estimates GM will use as much as $16 billion from its global
automotive operations this year, including cash restructuring
costs and costs related to bankrupt former unit Delphi Corp. Of
that amount, GM used $3.9 billion in the first quarter. S&P
estimate Ford will burn as much as $12 billion to $13 billion from
its global automotive operations this year, including cash
restructuring costs. Of that amount, Ford used $4.9 billion in
the first six months of 2008. Chrysler does not make its
financial results public, but S&P expects the company to
experience a net cash outflow from its automotive operations in
2008, its first full year since being acquired by Cerberus Capital
Management L.P. Aggressive fixed-cost reduction and conservative
industry sales assumptions have kept Chrysler at or above most of
its financial targets through the first quarter and likely through
the second quarter.
Liquidity for all three automakers is adequate for now, but will
be significantly reduced in the second half of this year and
during 2009 by continued heavy losses and cash outflows.
Industry sales, including those of pickups and SUVs, continue to
weaken, which will likely lead to higher cash losses for all three
automakers in the second half of the year. S&P expects U.S.
light-vehicle sales to be 14.4 million units in 2008, the lowest
in 15 years and down sharply from 16.1 million units in 2007. S&P
expects sales to fall further in 2009, to about 14.1 million
units, as the economy remains weak and housing prices and
consumers' access to credit remain under pressure. S&P estimates
that there is a 20% chance that auto sales in 2008 and 2009 will
plummet to 13.6 million and 11.7 million units, respectively,
which would present an overwhelming challenge for all three
Michigan-based automakers.
Another major headwind has been plummeting prices for used SUVs
and pickups, which is causing alarming losses on leasing
activities and will lead Ford Credit to be unprofitable for 2008,
even excluding a $2 billion charge booked in the second quarter.
GM and GMAC will likely take impairment charges in the upcoming
quarters.
There has been periodic speculation that the Michigan-based
automakers might eventually seek to reorganize under Chapter 11
bankruptcy protection. Managements at all three companies have
strongly denied any such intention and appear committed to
executing on their turnaround plans. Few of the automakers'
problems--including lower sales, adverse product mix shifts, and
high commodity costs--would be altered by a bankruptcy filing.
S&P believe the most likely trigger for a bankruptcy filing would
be cash reserves falling to dangerously low levels, rather than
the automaker's making a strategic choice to seek Chapter 11
reorganization.
The outlooks on each company and its financial unit reflect our
expectation that liquidity at each automaker will be almost halved
by cash losses in 2008 and 2009 but will not sink to dangerously
low levels, even if industry conditions do not materially improve
by the end of next year. S&P could revise the outlooks, or place
the ratings on CreditWatch and subsequently lower them, if it came
to believe that cash and short-term investments plus secured
revolving credit facility availability would drop below certain
levels before the end of 2009. This could occur if U.S. light-
vehicle sales drop well below 14 million units this year and next,
or if higher gas prices lead to an even more substantial decline
in light-truck demand beyond current levels. S&P could also lower
the rating on GM if GMAC loses access to the asset-backed
securitization markets for any extended period.
S&P does not expect to revise the outlook to stable or raise the
ratings within the next year, given the economic outlook, ongoing
turnaround plan execution risk, and potential pressure on
liquidity.
FORT DENISON: S&P Keeps Junk Ratings on Four Note Classes
---------------------------------------------------------
Standard & Poor's Ratings Services withdrew its rating on the
class S notes issued by Fort Denison Funding Ltd., a cash flow
collateralized debt obligation transaction that is collateralized
in large part by mezzanine tranches of residential mortgage-backed
securities and other structured finance transactions.
The rating withdrawal follows the complete paydown of the class S
notes on the July 2008 payment date. The class S notes had an
original issuance amount of $5.3 million. The ratings on the
other classes from this transaction are not affected by the
paydown of the S notes.
Rating Withdrawn
Fort Denison Funding Ltd.
Rating
------
Class To From
----- -- ----
S NR AA
Other Outstanding Ratings
Fort Denison Funding Ltd.
Class Rating
----- ------
A-1 CCC/Watch Neg
A-2A CC
A-2b CC
B CC
FRONTIER AIRLINES: Wants Hearing on Go Flip Investment Set Oct. 8
-----------------------------------------------------------------
Frontier Airlines Holdings Inc. and its subsidiaries ask the
U.S. Bankruptcy Court for the Southern District of New York to:
-- approve procedures for the solicitation and consideration
of proposals to make an equity investment in the Debtors,
and to refinance or replace the debtor-in-possession credit
facility;
-- approve termination fee and expense reimbursement
provisions in connection with a proposed investment
pursuant to an investment agreement among the Debtors and
Go Flip Go, L.L.C., an affiliate of Perseus, L.L.C.; and
-- set October 8, 2008, as the hearing date to consider
approval of the Proposed Investment, or of the successful
investment, pursuant to a proposed auction.
Proposed Investment Agreement
In accordance with the Secured Super-Priority Debtor-in-
Possession Credit and Guaranty Agreement, dated as of July 25,
2008, between Frontier Airlines Holdings Inc., and Perseus
L.L.C., the Lenders would extend to the Debtors $75,000,000 in
the aggregate, in two tranches of $40,000,000 and $35,000,000.
The funding of the second tranche is conditioned on, among other
things, the Court's approval of the Investment Agreement, under
which Perseus will pay Frontier $100,000,000 for 79.9% of the
equity of the reorganized Debtors.
As a principal term of the Investment Agreement, Frontier will
issue to Perseus a number of Class B Common Shares representing
79.9% of the total equity capital of Frontier Holdings, on a
fully diluted basis, for $100,000,000. Upon confirmation of the
Debtors' plan of reorganization, the Class A Shares and Class B
Shares will be Frontier's only outstanding equity securities.
The Class A and Class B Common Shares will be identical in all
respects, except that the holders of Class B Common Shares will
have the right to elect five directors to the board of directors
of Frontier Holdings, and will be entitled to special voting
rights, which include:
(1) no amendment to the articles or by-laws of Frontier will
be made without the consent of holders of Class B Common
Shares representing at least two-thirds of the outstanding
Class B Common Shares;
(2) so long as the number of Class B Common Shares exceeds the
number of Class A Common Shares, (i) issuance of equity
securities and (ii) voluntary liquidation, dissolution,
recapitalization, reorganization or similar transactions
will require the consent of a majority of the holders of
Class B Common Shares; and
(3) significant acquisitions or dispositions, sales, or asset
transfers; incurrence of significant debt; appointment or
dismissal of the chief executive officer, chief financial
officer and chief operating officer; certain dividends and
distributions; repurchases of equity securities; and
related transactions will require the consent of Perseus,
as long as it owns Class B of Common Shares representing
at least 30% of the outstanding Class B and Class A Common
Shares.
Upon confirmation of Frontier's Plan, the Debtors will enter
into a registration rights agreement, that will require them to
file a resale registration statement that permits free resale of
the Class A Common Shares into which the Class B Common Shares
are convertible, pursuant to Rule 415 of the Securities Act.
The board will be composed of nine directors, consisting of:
* five members designated by Perseus;
* one member designated by the statutory committee of
unsecured creditors;
* the chief executive officer of Frontier; and
* two members, neither of whom is an employee or an affiliate
of the Debtors or Perseus.
The Debtors will indemnify Perseus against any losses arising
from breach of the Investment Agreement, under which the Debtors'
maximum liability will not exceed $15,000,000, and subject to (i)
a $3,000,000 deduction, (ii) not applicable if Perseus has not
funded either tranche of the DIP Credit Facility, and (iii) not
applicable with respect to any loss resulting from a decline in
the value of the Frontier's stock that will be purchased by
Perseus.
Under certain circumstances, the Investment Agreement provides
for payment by Frontier Holdings to Perseus of:
(a) a termination fee of $3,000,000;
(b) an expense reimbursement in connection with Perseus'
exercise of its rights under the Agreement;
(c) termination damages equal to the excess fair value of
79.9% of the Reorganized Debtors over $100,000,000;
(d) a closing fee of $2,000, which will be credited against
the Investment Price; and
(e) an annual management fee of $1,000,000, for Perseus'
consulting and business advisory services provided to the
Debtors.
Perseus would be able to terminate the Investment Agreement upon
the occurrence of, among others, failure (i) to close on or prior
to September 30, 2009, and (ii) to obtain an Order confirming a
plan of reorganization acceptable to Go Flip Go, on or prior to
September 20, 2009.
A full-text copy of the proposed Investment Agreement is
available for free at:
http://bankrupt.com/misc/Frontier&GoFlipGo_InvestmentPact.pdf
Investment Proposal Protocol
The Debtors submit that the procedures for the solicitation of
proposals to make an equity investment in the Debtors is designed
to maximize recovery for the benefit of the Debtors' estates,
their creditors and other parties-in-interest.
Moreover, the Proposal Protocol was designed to balance the
Debtors' interest in ensuring that Perseus remains committed to
consummate the Investment, while preserving the opportunity to
attract higher or otherwise better proposals.
Pursuant to the proposed Protocol, a potential investor, other
than Perseus, may express their intent to participate by
delivering to the Court an executed confidentiality agreement;
current, audited financial statements; and a proposal outlining
the terms of the investment.
A Qualified Investor will deliver copies of their proposal, on or
before September 22, 2008, to:
* Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York 10017, Attention: Marshall S. Huebner; and
* Seabury Group LLC, 1350 Avenue of the Americas, 25th Floor,
New York, New York, 10019, Attention: Michael B. Cox.
Qualified Investors are required to, among other things, (i)
deliver a commitment to refinance the DIP Facility offered by
Perseus, together with an executable credit agreement, and (ii)
make a good faith-deposit of $7,500,000. The projected net cash
proceeds to the Debtors from the Binding Proposal must be no less
than the projected net cash proceeds available under the
Investment Agreement.
Upon coming up with a pool of Qualified Investors, the Debtors
will conduct an auction on the Qualified Investment Proposals on
September 25, 2008.
In consultation with the Official Committee of Unsecured
Creditors, the Debtors will review the Proposals presented at the
Auction, and identify the highest or otherwise best proposal for
the Investment. The Debtors will publish notices of the Auction
in the national edition of the Wall Street Journal.
Absent a Qualified Proposal or a Qualified Investor, no Auction
will be conducted, and Perseus' proposal, as specified in the
Investment Agreement, will constitute the Successful Proposal.
The Court will convene a hearing on Aug. 5, 2008, to consider
approval of the Debtors' request.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Gets OK to Execute Amended First Data Contract
-----------------------------------------------------------------
Judge Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York authorized Frontier Airlines
Holdings Inc. and its subsidiaries to perform under the Letter
Agreement dated as of July 9, 2008, with First Data Merchant
Services Corporation dba Sovereign Merchant Services.
The Debtors notified Judge Drain that they entered into a (i)
letter agreement dated July 9, 2008, with Sovereign Bank, First
Data Merchant Services Corporation d/b/a Sovereign Merchant
Services, and (ii) a merchant services airline bankcard agreement
dated Aug. 14, 2007, with First Data, as amended by the July 9
Letter Agreement.
According to Marshall S. Huebner, Esq., at Davis Polk & Wardwell,
in New York, while no objections have been filed to the Debtors'
request to perform under their agreements with First Data, the
statutory committee of unsecured creditors communicated some
concerns it had to the Debtors.
Accordingly, the Debtors, First Data and the Committee negotiated
the July 9 Letter Agreement to replace and supersede the letter
agreement dated as of May 23, 2008.
In full satisfaction and resolution of the Committee's concerns,
the Debtors and First Data agreed to these terms in the July 9
Letter Agreement:
(a) in lieu of a "holdback" for some of the time period
addressed in the May 23 Agreement, First Data will
receive, for that period, an accreting allowed
superpriority administrative claim pursuant to
Section 507(b) of the Bankruptcy Code;
(b) in the event that the Debtors enter into any debtor-in-
possession financing arrangement while First Data holds
the Superpriority Claim, the Superpriority Claim will be:
* pari passu with any superpriority administrative
claim granted in connection with any DIP Financing;
and
* subject to any "carve-outs" for the United States
Trustee, statutory and professional fees and related
items provided for in any the DIP Financing;
(c) in addition to other collateral provided for under the
Letter Agreement, First Data will have a valid, binding,
continuing, enforceable, fully-perfected first priority
senior security interest in and lien upon certain of
the Debtors' ground service equipment -- the GSE lien --
until its holdback reaches an agreed amount;
(d) so long as it is in place, the GSE Lien will not be
primed or made subordinate to any other lien on an
equipment without the written consent of First Data; and
(e) the GSE Lien and the Superpriority Claim will be released,
relinquished, extinguished and canceled automatically and
without further action by any party or the Court, by
operation of the terms of, and at the time set forth in,
the Letter Agreement.
First Data will promptly execute any and all documents
necessary to effectuate or evidence such release and
relinquishment of the GSE Lien and the Superpriority
Claim.
The Debtors' stated that this will result in immediate incremental
liquidity to the Debtors, and will provide them with a period,
commencing upon entry, during which they will receive 100% of
their VISA and MasterCard receipts, Mr. Huebner noted.
First Data will, between and including June 26, 2008, and
Sept. 30, 2008, receive an accreting allowed superpriority
administrative claim pursuant to Section 507(b) of the Bankruptcy
Code on the terms set forth in the Letter Agreement, the Court
said.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: Plan Filing Period Extended to August 13
-----------------------------------------------------------
Judge Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York extended Frontier Airlines Holdings
Inc. and its subsidiaries' exclusive periods to file a plan of
reorganization, through and including Aug. 13, 2008, when the
Court convenes a hearing to consider final approval of the
request.
Judge Drain directed the Debtors to promptly notify the Court, in
advance of the August 13 hearing, of any consensual resolutions
with respect to potential objections to their request.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre
& Benson LLP is the Debtors' Special Counsel, and Kekst and
Company is the Debtors' Communications Advisors. At Dec. 31,
2007, Frontier Airlines Holdings Inc. and its subsidiaries'
total assets was $1,126,748,000 and total debts was
$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FRONTIER AIRLINES: May Reject and Assume Leases Until November 6
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended the time within which Frontier Airlines Holdings Inc. and
its subsidiaries may assume or reject unexpired leases of non-
residential real property to and including Nov. 6, 2008.
As reported in the Troubled Company Reporter on July 11, 2008,
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York,
related that the Debtors can carefully identify, analyze and
evaluate each of the Leases in order to make informed decisions
about whether to assume or reject them.
The Court's order is without prejudice to the right of any
lessor under a Lease to ask the Court to fix an earlier date by
which the Debtors must decide on their Leases, Judge Robert D.
Drain ruled.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation
for passengers and freight. They operate jet service carriers
linking their Denver, Colorado hub to 46 cities coast-to-coast,
8 cities in Mexico, and 1 city in Canada, well as provide
service from other non-hub cities, including service from 10
non-hub cities to Mexico. As of May 18, 2007 they operated 59
jets, including 49 Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-
11297 thru 08-11299.) Hugh R. McCullough, Esq., at Davis Polk &
Wardwell, represents the Debtors in their restructuring efforts.
Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel,
Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst
and Company is the Debtors' Communications Advisors. At
Dec. 31, 2007, Frontier Airlines Holdings Inc. and its
subsidiaries' total assets was US$1,126,748,000 and total debts
was US$933,176,000.
(Frontier Airlines Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
GAYLORD ENTERTAINMENT: Secures New $1BB Secured Credit Facility
---------------------------------------------------------------
Gaylord Entertainment Co. entered into a new $1 billion senior
secured credit facility that refinances the company's current bank
debt and provides availability to fund the company's business
plan. The new facility matures in July 2012.
The new facility provides for $300 million of revolving credit
and a $700 million fully drawn term loan, both bearing interest at
a rate equal to LIBOR plus 2.50% or a base rate plus 0.50%, at
Gaylord's election. The credit facility is secured by a pledge of
the company's hotel properties and is guaranteed by certain of the
company's subsidiaries. The new credit facility also contains an
accordion feature in which the company can increase availability
by $400 million with the agreement of participating banks. The
credit facility was arranged by Banc of America Securities LLC,
Deutsche Bank Securities, Inc. and Wells Fargo Bank N.A.
"We are pleased to have completed the refinancing of our credit
facility, especially given the current volatile state of the
credit market," David Kloeppel, executive vice president and chief
financial officer for Gaylord Entertainment, said. "These
commitments are a signal of the confidence our bank group has in
our strategy and their recognition of the significant value of our
assets."
About Gaylord Entertainment
Headquartered in Nashville, Tennessee, Gaylord Entertainment
(NYSE: GET)-- http://www.GaylordEntertainment.com/-- is a
hospitality and entertainment company that owns and operates
Gaylord Hotels -- http://www.gaylordhotels.com/-- and the Grand
Ole Opry - http://www.opry.com/-- The company's entertainment
brands and properties include the Radisson Hotel Opryland, Ryman
Auditorium, General Jackson Showboat, Gaylord Springs, Wildhorse
Saloon, and WSM-AM.
* * *
As reported in the Troubled company Reporter on April 3, 2008,
Moody's Investors Service affirmed the B2 corporate family rating
of Gaylord Entertainment company. In addition, Moody's lowered
the senior unsecured note ratings to Caa1 from B3. The outlook is
stable.
GENERAL MOTORS: Fitch Highlights Effect of Declining Resale Values
------------------------------------------------------------------
The recent announcements by the financing arms of Chrysler LLC, GM
Corp. and Ford Motor Co. regarding the discontinuation or overhaul
of their auto lease programs underscores the impact of rapidly
declining vehicle resale values, according to Fitch Ratings.
Earlier this week Chrysler Financial, GMAC and Ford Motor Credit
announced significant changes to their auto lease businesses with
Chrysler Financial suspending their U.S. auto lease program all
together. GMAC announced it will stop subsidizing leases in
Canada and will eliminate certain lower credit quality borrowers
from consideration domestically. Ford announced significant
increases in lease rates for certain SUVs and trucks. All three
companies indicated that their decision was influenced by the
ongoing decay in the resale values of vehicles coming off lease.
Coincident with these declines, Fitch is currently completing a
review of its auto lease ratings with a focus on the 2007 and 2008
vintages. Fitch currently has 20 public ratings outstanding from
10 transactions representing approximately $7.2 billion in
principal outstanding from 2007 and 2008 U.S. captive finance
company issuances. The initial review is expected to be completed
over the next two to three weeks.
'As Fitch has noted, dramatic drops in the value of used cars is
impacting the entire auto ABS sector, but those declines are
having an amplified affect on the performance of auto lease
transactions,' said Managing Director and U.S. ABS group head
Kevin Duignan. 'Transactions from 2007 and 2008 may not have
built enough credit enhancement to offset the potential increase
in residual value losses while still maintaining coverage
consistent with Fitch's original ratings.'
U.S. captive finance companies, in particular, are experiencing
higher than expected residual value losses due to the steep drop
in the values of vehicles coming off lease especially for SUVs and
trucks. Fitch's base case residual value loss expectation for
these companies' auto lease ABS transactions has increased by
20-30% since the second half of 2007 as value declines
accelerated. However, current data suggests that actual declines
are exceeding this range in certain transactions with further
deterioration expected. 'While ratings in the auto lease sector
have traditionally been remarkably stable, the rapid rate of
decline in vehicle values over the past six months is
unprecedented and will put those ratings to the test,' said ABS
Senior Director Ravi Gupta.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
At March 31, 2008, GM's balance sheet showed total assets of
$145,741,000,000 and total debts of $186,784,000,000, resulting in
a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31,
2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000,
respectively.
* * *
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corporation and
General Motors of Canada Limited Under Review with Negative
Implications. The rating action reflects the structural
deterioration of the company's operations in North America brought
on by high oil prices and a slowing U.S. economy.
Standard & Poor's Ratings Services is placing its corporate credit
ratings on the three U.S. automakers, General Motors Corp., Ford
Motor Co., and Chrysler LLC, on CreditWatch with negative
implications, citing the need to evaluate the financial damage
being inflicted by deteriorating U.S. industry conditions--largely
as a result of high gasoline prices. Included in the CreditWatch
placement are the finance units Ford Motor Credit Co. and
DaimlerChrysler Financial Services Americas LLC, as well as GM's
49%-owned finance affiliate GMAC LLC.
As related in the Troubled Company Reporter on June 5, 2008,
Standard & Poor's Ratings Services said that its ratings on
General Motors Corp. (B/Negative/B-3) are not immediately affected
by the company's announcement that it will cease production at
four North American truck plants over the next two years. These
closures are in response to the re-energized shift in consumer
demand away from light trucks. GM previously said only one shift
was being eliminated at each of the four truck plants. Production
is being increased at plants producing small and midsize cars, but
the cash contribution margin from these smaller vehicles is far
less than that of light trucks.
GENERAL MOTORS: S&P Cuts Rating to B- on Mounting Cash Losses
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered the ratings on General
Motors Corp., Ford Motor Co., and Chrysler LLC, all to 'B-' from
'B'. The ratings on GM and Ford were removed from CreditWatch
with negative implications, where they had been placed on June 20,
2008. Chrysler will remain on CreditWatch pending the renewal of
certain bank lines at DaimlerChrysler Financial Services Americas
LLC, which S&P expects to be completed in the next few days. If
the bank lines are renewed as expected, S&P would affirms the
ratings on Chrysler and DCFS and remove them from CreditWatch.
At the same time, S&P lowered the ratings on GMAC LLC, Ford Motor
Credit Co., and DCFS, also to 'B-' from 'B', and removed the
ratings on GMAC and Ford Credit from CreditWatch negative, where
they had also been placed on June 20, 2008. The ratings on DCFS
will remain on CreditWatch negative until its bank line renewal is
complete. S&P also lowered the corporate credit rating on FCE
Bank PLC, Ford Credit's European bank, to 'B' from 'B+'. The
outlooks on all the companies are negative. (The issuer credit
rating on GMAC's Residential Capital LLC mortgage unit
[CCC+/Negative/C] is not affected by these rating actions.)
The downgrades reflect mounting cash losses in GM's, Ford's, and
Chrysler's North American automotive operations and deteriorating
conditions in the U.S. auto market.
"We believe sharply lower U.S. light-vehicle demand and the recent
dramatic shift in demand away from large pickup trucks and SUVs
amid higher gas prices will complicate the turnaround efforts of
all three automakers and reduce their currently adequate liquidity
considerably over the next year and a half," said Standard &
Poor's credit analyst Robert Schulz. "This will leave them more
vulnerable to already adverse industry, economic, and credit
market conditions." The greatest threats to the ratings over the
next 18 months are the depth of economic weakness and the extent
of the demand shift away from light trucks in the U.S.
S&P estimates GM will use as much as $16 billion from its global
automotive operations this year, including cash restructuring
costs and costs related to bankrupt former unit Delphi Corp. Of
that amount, GM used $3.9 billion in the first quarter. S&P
estimate Ford will burn as much as $12 billion to $13 billion from
its global automotive operations this year, including cash
restructuring costs. Of that amount, Ford used $4.9 billion in
the first six months of 2008. Chrysler does not make its
financial results public, but S&P expects the company to
experience a net cash outflow from its automotive operations in
2008, its first full year since being acquired by Cerberus Capital
Management L.P. Aggressive fixed-cost reduction and conservative
industry sales assumptions have kept Chrysler at or above most of
its financial targets through the first quarter and likely through
the second quarter.
Liquidity for all three automakers is adequate for now, but will
be significantly reduced in the second half of this year and
during 2009 by continued heavy losses and cash outflows.
Industry sales, including those of pickups and SUVs, continue to
weaken, which will likely lead to higher cash losses for all three
automakers in the second half of the year. S&P expects U.S.
light-vehicle sales to be 14.4 million units in 2008, the lowest
in 15 years and down sharply from 16.1 million units in 2007. S&P
expects sales to fall further in 2009, to about 14.1 million
units, as the economy remains weak and housing prices and
consumers' access to credit remain under pressure. S&P estimates
that there is a 20% chance that auto sales in 2008 and 2009 will
plummet to 13.6 million and 11.7 million units, respectively,
which would present an overwhelming challenge for all three
Michigan-based automakers.
Another major headwind has been plummeting prices for used SUVs
and pickups, which is causing alarming losses on leasing
activities and will lead Ford Credit to be unprofitable for 2008,
even excluding a $2 billion charge booked in the second quarter.
GM and GMAC will likely take impairment charges in the upcoming
quarters.
There has been periodic speculation that the Michigan-based
automakers might eventually seek to reorganize under Chapter 11
bankruptcy protection. Managements at all three companies have
strongly denied any such intention and appear committed to
executing on their turnaround plans. Few of the automakers'
problems--including lower sales, adverse product mix shifts, and
high commodity costs--would be altered by a bankruptcy filing.
S&P believe the most likely trigger for a bankruptcy filing would
be cash reserves falling to dangerously low levels, rather than
the automaker's making a strategic choice to seek Chapter 11
reorganization.
The outlooks on each company and its financial unit reflect our
expectation that liquidity at each automaker will be almost halved
by cash losses in 2008 and 2009 but will not sink to dangerously
low levels, even if industry conditions do not materially improve
by the end of next year. S&P could revise the outlooks, or place
the ratings on CreditWatch and subsequently lower them, if it came
to believe that cash and short-term investments plus secured
revolving credit facility availability would drop below certain
levels before the end of 2009. This could occur if U.S. light-
vehicle sales drop well below 14 million units this year and next,
or if higher gas prices lead to an even more substantial decline
in light-truck demand beyond current levels. S&P could also lower
the rating on GM if GMAC loses access to the asset-backed
securitization markets for any extended period.
S&P does not expect to revise the outlook to stable or raise the
ratings within the next year, given the economic outlook, ongoing
turnaround plan execution risk, and potential pressure on
liquidity.
GERALD WIEGERT: Case Summary & Largest Unsecured Creditor
---------------------------------------------------------
Debtor: Gerald A. Wiegert
3639 Emily Street
San Pedro, CA 90731
Bankruptcy Case No.: 08-21532
Chapter 11 Petition Date: July 30, 2008
Court: Central District Of California (Los Angeles)
Judge: Thomas B. Donovan
Debtors' Counsel: Todd B. Becker, Esq.
(veloz@toddbeckerlaw.com)
Law Offices of Todd B Becker
3750 E. Anaheim St., Ste. 100
Long Beach, CA 90804
Tel: (562) 495-1500
Fax: (562) 494-8904
http://toddbeckerlaw.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/califcb08-21532.pdf
GOLDMAN SACHS: S&P Cuts Class B Notes Rating to B+ from BB+
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the class
B notes issued by Goldman Sachs Asset Management CBO Ltd., an
arbitrage corporate high-yield collateralized bond obligation
transaction, and placed it on CreditWatch with developing
implications.
The lowered rating on the class B notes reflects an interest
shortfall of about $264,000 to this class on the July 10, 2008,
payment date. As the senior class notes outstanding in the
transaction (the class A notes were paid down in full on the
July 10, 2007, the class B notes are not permitted to defer
interest).
S&P placed its rating on the class B notes on CreditWatch
developing because its analysis leads us to believe that, while
the interest due on the class B notes may defer again on one or
more subsequent payment dates, the class B notes should ultimately
see their deferred interest and principal balance outstanding
repaid in full, barring additional defaults in the collateral
pool. The current balance of the class B notes is $8.96 million,
or approximately 22.25% of the initial balance, and the
nondefaulted assets outstanding have a par balance of
$20.54 million. The missed interest payment on the July 10, 2008,
payment date occurred after payments were made to the interest
rate hedge counterparty, which is senior to the class B notes in
the transaction's payment priority waterfall.
Rating Lowered and Put on Creditwatch Developing
Goldman Sachs Asset Management CBO Ltd.
Rating
------
Class To From Balance
----- -- ---- -------
B B+/Watch Dev BB+ $8,960,000
GUITAR CENTER: Moody's to Review Low-B Ratings for Downgrade
------------------------------------------------------------
Moody's Investors Service placed the long term debt ratings of
Guitar Center Inc. and related entities under review for possible
downgrade (probability of default rating of B3). The review for
possible downgrade is prompted by the company's sales and earnings
performance falling below Moody's expectations and the high
likelihood that earnings will remain pressured given increased
competition from Best Buy's entrance into musical instruments as
well as the overall domestic economic environment. The
speculative grade liquidity rating remains affirmed at SGL-3.
However Moody's will continue to monitor Guitar Center's liquidity
closely, and could lower this rating if liquidity deteriorates.
Moody's review for downgrade will focus on the company's near term
operating performance, level of cash flow generation, the
likelihood that Guitar Center will be able to sustain acceptable
levels of interest coverage and overall liquidity, as well as its
ability to maintain leverage at manageable levels. The review
will also focus on the company's ability to meet the one financial
covenant under its secured term loan facility which will begin to
be tested on the last day of any fiscal quarter starting October
1, 2008. In addition, Moody's review will focus on the change in
Guitar Center's competitive landscape due to Best Buy's entrance
into the musical instrument category. Moody's will also evaluate
the likely impact that the overall weak economic environment and
depressed consumer sales and confidence will have on discretionary
spending for things such as Guitar Center's products.
These ratings were placed on review for possible downgrade:
-- For Guitar Center Holdings, Inc. (ratings formerly domiciled
at VH AcquisitionCo):
Probability of default rating of B3;
Corporate family rating of B3.
-- For Guitar Center Inc.
Senior secured bank credit facility of B2.
This rating is affirmed:
-- For Guitar Center Holdings, Inc.:
Speculative grade liquidity rating of SGL-3.
The current LGD assessments remain subject to change.
Guitar Center, Inc. with headquarters in Westlake Village,
California, is the largest musical instrument retailer with 311
stores and a direct response segment. Revenues for the lagging
twelve months ending March 31, 2008 were about $2.3 billion.
HEADWATERS INC: Warns of Possible Debt Covenant Breach by Sept. 30
------------------------------------------------------------------
Headwaters Incorporated is considering amendments or refinancing
of its senior credit facility to assure compliance with its
covenants and to provide additional flexibility.
Headwaters stated that it has no debt repayment requirements until
2011 and is in compliance with all debt covenant requirements,
however, there is a possibility of noncompliance with certain
covenants early as the September 30 quarter, resulting from a
decrease in building products revenues during the construction
downturn and the level of capital expenditures the company was
investing in coal cleaning facilities.
The components of Headwaters' debt structure as of June 30, 2008,
include:
1. Credit Facility: Senior secured first lien term loan
Amount outstanding: $210 million
Interest Rate: LIBOR + 2%
Maturity: April 2011
2. Credit Facility: Senior revolving credit facility
($60.0 million available less outstanding
letters of credit of approximately
$9.2 million)
Amount Outstanding: 35 million
Interest Rate: Prime + 0.75%
Maturity: September 2009
3. Credit Facility: Convertible senior subordinated notes
Amount Outstanding: $332.5 million
Interest Rate: 2.5% and 2.875
Maturity: Junw 2011 and February 2014
About Headwaters Incorporated
Based in South Jordan, Utah, Headwaters Incorporated (NYSE:HW) --
http://www.headwaters.com/-- is a diversified company providing
products, technologies and services in three industries:
construction materials, coal combustion products and alternative
energy. In the construction materials segment, Headwaters
designs, manufactures, and sells architectural stone and resin-
based exterior siding accessories, and other products. In the CCP
segment, the company is a player in the management and marketing
of CCPs, including fly ash used as a substitute for portland
cement. In the alternative energy segment, Headwaters is focused
on reducing waste and increasing the value of energy feedstocks,
primarily in the areas of low-value coal and oil. In coal,
Headwaters owns and operates several coal cleaning facilities that
remove rock, dirt, and other impurities from waste or other low-
value coal, resulting in higher-value, marketable coal. It also
licenses technology and sells reagents to the coal-based solid
alternative fuel industry.
* * *
As reported in the Troubled Company Reporter on July 31, 2008,
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 Sept. 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.
HEADWATERS INC: S&P Trims Rating to 'B+' on Weaker Earnings
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Headwaters Inc. The corporate credit rating was lowered to 'B+'
from 'BB-'. The ratings remain on CreditWatch with negative
implications, where they were placed on May 13, 2008 because of
S&P's concerns that weaker-than-expected near-term earnings would
cause a decline in the company's liquidity position, resulting in
a narrowing of cushion under financial covenants.
The downgrade and continuing CreditWatch follows the company's
announcement that the residential construction downturn and
elevated capital spending for its coal cleaning facilities could
potentially cause it to violate certain of its financial covenants
as early as the Sept. 30, 2008 quarter. The company is
considering amending or refinancing its senior credit facility to
assure compliance with its covenants; however, credit markets
remain challenging. In addition, if the company successfully
addresses its potential covenant issue through an amendment or
refinancing, its interest costs will likely increase, somewhat
hampering near-term cash flow generation.
While S&P had incorporated the loss of revenue from Headwaters'
synthetic fuels business into our ratings, the company's financial
performance has been hurt by the deeper housing downturn and lower
remodeling spending. Although Headwaters expects cash from
operations in fiscal 2008 of $100 million, it also expects to have
$115 million in capital expenditures, well above its normal level,
mainly to build additional coal-cleaning facilities that should
begin to generate meaningful earnings and cash flow in fiscal
2009. However, in the near term, S&P are concerned that liquidity
could shrink further than it previously expected, given the
difficult operating conditions.
"In resolving the CreditWatch listing, we will discuss with
management its plans to amend or refinance its senior credit
facility, business outlook, financial projections, and cost-
savings initiatives," said Standard & Poor's credit analyst Pamela
Rice.
S&P could lower the ratings further if the company cannot address
its covenant compliance in a timely manner.
HOME INTERIORS: Wants Plan Filing Deadline Extended to December 25
------------------------------------------------------------------
Home Interiors & Gifts Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Texas to extend
their exclusive periods to:
a) file a Chapter 11 until Dec. 25, 2008, and
b) solicit acceptances of that plan until Feb. 23, 2009.
A hearing is set for Aug. 20, 2008, at 9:00 a.m., to consider the
Debtors' request. The hearing will take place at 1100 Commerce
Street, Earle Cabbell Building in Courtroom 1224 in Dallas, Texas.
The Debtors remind the Court that they filed on April 29, 2008,
a disclosure statement describing a Chapter 11 plan of
reorganization and planned to pursue confirmation of the plan,
on an expedited basis, but the Official Committee of Unsecured
Creditors opposed the plan. "[The Committee] believed the process
should be less hurried to afford creditors sufficient time to full
participate in the process," says Andrew E. Jillson, Esq., at
Hunton & Williams LLP in Dallas, Texas.
The Debtors are presently working to expand the terms contained in
the earlier version of its disclosure statement and plan. The
Debtors expect to deliver to the Court an amended version of the
disclosure statement and plan by Aug. 22, 2008.
To recall, a hearing is set for Aug. 21, 2008, at 9:00 a.m., to
consider the adequacy of the Debtors' disclosure statement. The
Plan contemplates the elimination the Debtors' non-operational and
other under performing business units. The Debtors will enter
into a revolving credit facility to provide necessary liquidity
for their operations.
The Debtors' initial exclusive period to file a Chapter 11 plan
will expire on Aug. 27, 2008.
About Home Interiors
Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc.
-- http://www.homeinteriors.com/-- manufactures, imports and
distributes indoor and outdoor home decorative accessories. It
was founded by Mary Crowley in 1957. Through its affiliates,
the company has a significant presence in Mexico, Puerto Rico,
and Canada. Annual revenue in 2007 reached US$300 million.
When Mary Crowley, died in 1986, her son, Don Carter continued
the business operation nearly debt-free. In a leveraged
transaction in 1998, private equity firm of Hicks, Muse, Tate,
and Furst acquired 66% of the parent company, which resulted in
the imposition of more than US$500 million in debt on the
Debtors. In the face of decreased sales and increased debt
load, bondholders canceled their debts in February 2006 in
exchange for receiving most of the outstanding equity of the
Debtors.
About 40% of the goods the Debtors sell are now acquired from
manufacturers in China. In the last decade, sales volume in the
U.S. has waned, but the Debtors reported that sales in Mexico
and Puerto Rico significantly increased.
The company and six of its affiliates filed for Chapter 11
protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.08-
31961). Andrew E. Jillson, Esq., Cameron W. Kinvig, Esq.,
Lynnette R. Warman, Esq., and Michael P. Massad, Jr., Esq., at
Hunton & Williams, LLP, represent the Debtors in their
restructuring efforts. The U.S. Trustee for Region 6 has
appointed seven creditors to serve on an Official Committee
of Unsecured Creditors. Richard A. Lindenmuth, at Boulder
International LLC, is designated as CRO. Munsch Hardt Kopf &
Harr PC represents the Committee in these cases. When the
Debtors file for protection against their creditors, they
listed assets and debts between $100 million and $500 million.
IDEARC INC: June 30 Balance Sheet Upside-Down by $8.4 Billion
-------------------------------------------------------------
Idearc Inc. disclosed Tuesday its financial results for the second
quarter and six months ended June 30, 2008.
At June 30, 2008, the company's consolidated balance sheet showed
$1.7 billion in total assets and $10.1 billion in total
liabilities, resulting in a $8.4 billion shareholders' deficit.
The company reported net income of $76.0 million for the second
quarter 2008, versus $109.0 million in the same period in 2007.
On an adjusted pro forma basis, which eliminates the impact of
transition and certain non-recurring costs, second quarter net
income was $87.0 million, a decrease of 31.5 percent versus the
same period in 2007.
The company reported second quarter 2008 multi-product revenues of
$759.0 million, a 5.7 percent decrease compared to the same period
in 2007. The company reported Internet revenue of $75.0 million
in the second quarter, a 2.7 percent increase compared to the same
period in 2007.
The company reported second quarter EBITDA of $299.0 million, a
17.9 percent decrease compared to the same period in 2007. The
company reported EBITDA margins of 39.4 percent in the second
quarter, compared to 45.2 percent in the same period 2007. On an
adjusted pro forma basis, second quarter EBITDA was
$316.0 million, a 19.2 percent decrease compared to the same
period in 2007. Adjusted pro forma EBITDA margins were 41.6
percent in the second quarter 2008, compared to 48.6 percent in
the same period in 2007.
Six Months Results
The company reported year-to-date net income of $187.0 million, an
11.8 percent decrease compared to the same period in 2007. On an
adjusted pro forma basis, year-to-date net income was
$203.0 million, a 17.5 percent decrease versus the same period in
2007.
On a year-to-date basis, Idearc reported multi-product revenues of
$1.5 billion, a 5.1 percent decrease compared to the same period
in 2007. Year-to-date Internet revenue was $148.0 million, a 5.0
percent increase compared to the same period in 2007.
The company reported year-to-date earnings before interest, taxes,
depreciation and amortization (EBITDA) of $658 million, an 8.4
percent decrease compared to the same period in 2007. Reported
year-to-date EBITDA margins were 43.0 percent, compared to 44.6
percent in the same period in 2007. On an adjusted pro forma
basis, year-to-date EBITDA was $683 million, an 11.3 percent
decrease compared to the same period in 2007. Adjusted pro forma
EBITDA margins were 44.7 percent, compared to 47.8 percent in the
same period in 2007.
Management's Comments
Scott W. Klein, the company's chief executive officer, said, "As I
complete my first sixty days with Idearc, I see opportunities
everywhere. The future is in our hands and we aren't going to
accept the economy as an excuse. It is clear that we have not
made the leap from operating as a division of Verizon to being a
stand alone public company. You will see us catch up quickly.”
"Our priorities are accelerating revenue growth; right-sizing
expenses; and, creating a high-performance culture. These
priorities can best be achieved by leveraging our key assets — our
customers, our sales force and employee base and our products. We
have already made significant changes that will improve
performance."
Free Cash Flow
Free cash flow for the six months ended June 30, 2008, was
$151.0 million based on cash from operating activities of
$176.0 million, less capital expenditure of $25.0 million.
Multi-Product Advertising Sales
Net multi-product advertising sales for the second quarter
declined 9.3 percent to $681.0 million compared to 2007.
On a year-to-date basis, net multi-product advertising sales
declined 7.8% to $1.4 billion compared to 2007.
Net multi-product advertising sales is a statistical measure which
allows a meaningful comparison of current publications to previous
publications; and should be distinguished from total operating
revenue, which on the company's financial statements is recognized
under the deferral and amortization method.
About Idearc Inc.
Headquartered in Dallas, Texas, Idearc Inc. (NYSE: IAR) --
http://www.idearc.com/-- provides yellow and white page
directories and related advertising products in the United States
and the District of Columbia. Products include print yellow
pages, print white pages, Superpages.com, Switchboard.com and
LocalSearch.com, the company's online local search resources, and
Superpages Mobile, its information directory for wireless
subscribers.
The company is the exclusive official publisher of Verizon print
directories in the markets in which Verizon is currently the
incumbent local exchange carrier. The company uses the Verizon
brand on its print directories in its incumbent markets, as well
as in its expansion markets.
* * *
As reported in the Troubled Company Reporter on June 17, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Idearc Inc. to 'B+' from 'BB'. S&P removed all ratings
from CreditWatch with negative implications, where they were
placed on March 28, 2008. At the same time, S&P lowered its
issue-level rating on Idearc's senior secured credit facilities to
'BB' from 'BBB-'. The recovery rating on these loans remains
unchanged at '1', indicating that lenders can expect very high
(90%-100%) recovery in the event of a payment default.
The outlook is stable.
S&P also lowered its issue-level rating on Idearc's senior
unsecured notes to 'B-' from 'BB-'. S&P revised the recovery
rating on these securities to '6' from '5'. The '6' recovery
rating indicates that lenders can expect negligible (0%-10%)
recovery in the event of a payment default.
IESI CORP: S&P Puts 'B+ Rating on US$45MM Industrial Revenue Bonds
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its issue and recovery
ratings to IESI Corp.'s US$45 million senior unsecured industrial
revenue bond, based on the preliminary reoffering circular dated
July 10, 2008. The IRB is rated 'B+', two notches below S&P's
long-term corporate credit rating on IESI, with a recovery rating
of '6'. The '6' recovery rating indicates an expectation of
negligible (0%-10%) recovery in the event of payment default. The
corporate credit rating on IESI is 'BB'. The outlook is stable.
"The ratings on IESI Corp. are based on the consolidated credit
profile of its parent, BFI Canada Income Fund, which exercises
management control and decision-making on IESI's business and
financial strategy," said Standard & Poor's credit analyst Greg
Pau. BFI Fund's credit profile reflects the limited diversity of
its operating subsidiaries, reliance on landfill expansion and
acquisitions for growth, and the constraint in financial
flexibility under the current income trust structure. These
factors are offset by favorable industry growth supported by
recession-resistant demand, relatively low exposure to the
cyclical construction and demolition segment, and an improving
market position in its selected regional markets.
Through its primary operating subsidiaries, IESI and BFI Canada
Holdings Inc., BFI Fund is a midsize participant in the highly
fragmented waste management business, ranking sixth largest in
North America by revenue. BFI Fund lacks diversity compared with
larger competitors such as Waste Management Inc. (BBB/Watch Neg/A-
2). This modest diversity is evident in BFI Fund's relatively
small number of landfills and narrower geographic reach.
The outlook is stable, reflecting that the recent deterioration in
financial measures and constraint in financial flexibility are
partly mitigated by stable industry operating conditions, a
continued focus on efficiency, and lower permit renewal risks.
S&P could lower the rating or revise the outlook on IESI if BFI
Fund's financial measures further deteriorate with adjusted debt
to EBITDA over 3.5x or adjusted FFO to debt below 20% on a
sustained basis, or if it materially increases its exposure to
the weak C&D and industrial segments. Conversely, S&P could raise
the rating or revise the outlook on IESI if BFI Fund's financial
flexibility materially improves through successful reduction in
distribution requirement and equity issuance. This could be
facilitated by its conversion to a corporation status, and
improvement in financial measures toward its original targets,
with adjusted debt to EBITDA below 2.5x or adjusted FFO to debt
over 30% on a sustained basis.
JP MORGAN: Fitch Cuts Two Cert. Ratings on Increased Service Loans
------------------------------------------------------------------
Fitch Ratings downgraded two classes of J.P. Morgan Commercial
Mortgage Finance Corp.'s mortgage pass-through certificates,
series 1999-C8 as:
-- $20.1 million class H to 'B' from 'BB';
-- $14.8 million class J to 'C/DR5' from 'CC/DR4'.
In addition, Fitch affirmed these classes:
-- $221.6 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $36.6 million class B at 'AAA';
-- $32.9 million class C at 'AAA';
-- $14.6 million class D at 'AAA';
-- $25.6 million class E at 'AAA';
-- $11.0 million class F at 'AAA';
-- $16.5 million class G at 'A-'.
Classes K and NR have been reduced to zero due to realized losses.
Class A-1 has paid in full.
The downgrades are due to an increase in specially serviced loans
(4.5%) and expected losses since Fitch's last rating action. The
specially serviced assets represent 10.0% of the pool. The losses
are based on declining occupancy and deteriorating market
conditions that are likely to negatively impact value on these
assets.
The affirmations are due to sufficient credit enhancement as the
result of scheduled amortization, loan repayment, and defeasance
since the last Fitch rating action (9.4%). Since issuance, 28
loans (41.7%) have defeased, including five of the top 10 loans
(24.2%). As of the July 2008 distribution date, the pool's
aggregate principal balance has been reduced 46.2% to
$393.6 million, from $731.5 million at issuance.
Four loans are currently in special servicing (10.0%). The
largest specially serviced loan (5.5%) is a 692-unit multifamily
property located in Rolling Meadows, Illinois, a suburb of
Chicago. The loan is current; however, default interest and late
charges remain outstanding. The property is currently listed for
sale. At this time, Fitch does not expect losses to the trust.
The second largest specially serviced loan (1.7%) is a 121,639
square foot office property located in Kansas City, Missouri. The
loan was transferred June 2, 2008 due to imminent default. As of
April 30, 2008, the property was 58% occupied, and the servicer-
reported debt service coverage ratio was 0.72 times as of year-end
2007. Losses are possible.
The two smallest specially serviced loans (2.7%) are office
properties located in St. Louis, Missouri, each of which
transferred to the special servicer Feb. 29, 2008 upon imminent
default. Though the larger of the two assets (1.5%) was fully
occupied as of Sept. 30, 2007, the property was not producing
sufficient cash flow to service the debt, with an annualized
servicer-reported DSCR of 0.87x. The smaller of the two St. Louis
properties (1.2%) was 57% occupied as of Sept. 30, 2007. At that
time, the property was generating sufficient cash flow to service
the debt, with an annualized DSCR of 1.17x. Phase II
environmental reports have been ordered on both properties due to
their former use as a railroad station. Appraisals have
additionally been ordered. Losses are possible.
Fitch has identified 13 loans (18.5%) as Fitch Loans of Concern.
These include specially serviced loans, loans with DSCRs below
1.0x, and loans with other performance issues. Of the Fitch Loans
of Concern, three (3.0%) are scheduled to mature or anticipated to
repay in 2008.
LAND O'LAKES: S&P Puts 'BB' Credit Rating Under Positive Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB' corporate
credit rating and other ratings on Land O'Lakes Inc. on
CreditWatch with positive implications. Arden Hills, Minnesota-
based Land O'Lakes had rated debt (adjusted for capitalized
operating leases, pension and postretirement benefit obligations,
and accounts receivable securitization) of about $783.4 million at
June 30, 2008.
"The CreditWatch placement follows Land O'Lakes' improvement in
operating results and credit measures," said Standard & Poor's
credit analyst Jayne Ross. "Our review will focus on the
company's ability to sustain operating performance and credit
metrics commensurate with a higher rating throughout the
agricultural cycle."
Land O'Lakes is a national farmer-owned food and agricultural
cooperative. The company is a leading marketer of a full line of
dairy-based consumer, foodservice, and food ingredient products
across the U.S.; serves its international customers with a variety
of food and animal feed ingredients; and provides farmers, local
cooperatives, and customers with an extensive line of agricultural
supplies and services.
LOS ROBLES: Moody's Junks $67.5MM A-3 Notes and $33MM B Notes
-------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade, these notes issued by Los Robles CDO, Ltd.:
-- Class Description: U.S. $112,500,000 Class A-1b Floating
Rate Notes Due August 12, 2047
Prior Rating: Aaa, on review for possible downgrade
Current Rating: Aa3, on review for possible downgrade
-- Class Description: U.S. $225,000,000 Class A-2 Floating Rate
Notes Due August 12, 2047
Prior Rating: Baa3, on review for possible downgrade
Current Rating: Ba3, on review for possible downgrade
-- Class Description: U.S. $67,500,000 Class A-3 Floating Rate
Notes Due August 12, 2047
Prior Rating: B3, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
-- Class Description: U.S. $33,000,000 Class B Floating Rate
Notes Due August 12, 2047
Prior Rating: Caa1, on review for possible downgrade
Current Rating: Caa3, on review for possible downgrade
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.
MANITOWOC CO: S&P Affirms 'BB' Long-Term Corp. Credit Rating
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' long-term
corporate credit rating on Manitowoc Co. Inc. The outlook is
stable.
Manitowoc, Wisconsin-based Manitowoc previously announced that it
had successfully bid on and subsequently filed appropriate
documentation under U.K. law for the acquisition of U.K.-based
Enodis PLC for about $2.7 billion, including that company's net
debt. At this time S&P have assigned its 'BB+' secured bank loan
rating to Manitowoc's $2.925 billion secured credit facilities.
S&P assigned a recovery rating of '2' to this debt, indicating
expectations of substantial recovery (70%-90%) of principal in the
event of a payment default.
Additionally, S&P have affirmed its 'BB' ratings on the company's
senior unsecured notes and removed them from CreditWatch, where
they were placed with negative implications on April 14, 2008.
This follows S&P's review of the structure of the company's senior
secured credit facilities. S&P have revised the recovery rating
on this debt to '4' from '3', indicating expectations of average
(30%-50%) recovery in the event of default. Although Manitowoc is
increasing the amount of secured debt to accommodate the Enodis
acquisition, a sufficient amount of collateral remains available
to provide for average recovery. S&P expect to withdraw ratings
on the existing $300 million secured bank loan when the
transaction closes in the fourth quarter of 2008 because the loan
will be retired.
"These rating actions reflect the enhanced business profile and
strong cash flow of the combined company as well as the
significant debt capacity incorporated in the existing rating--a
result of Manitowoc's considerable delevering over the past few
years," said Standard & Poor's credit analyst John R. Sico. "The
rating and outlook incorporate expectations that Manitowoc would
seek to aggressively expand its global presence in the food
service segment."
The ratings continue to reflect Manitowoc's diversified and
leading global positions in several segments, including the
cyclical construction and industrial end markets as well as the
more stable food service market. This profile is augmented by the
pending acquisition of Enodis, which is expected to modestly
enhance the company's business risk profile. Still, the ratings
take into account the company's aggressive financial risk profile
stemming from an aggressive acquisition policy.
The stable outlook reflects a strengthened business risk profile
following the addition of the Enodis business, offset by somewhat
greater financial risk and higher financial leverage incurred to
pay for the acquisition. Standard & Poor's expects Manitowoc to
maintain financial leverage within expected levels. The
cyclicality in the crane business remains a risk and S&P have
incorporated modest growth in sales and operating margins in its
forecast for crane operations. Any significant deceleration from
S&P's current expectations could result in a negative outlook or,
if the decline is more severe, a downgrade.
MAYRA VINAS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Mayra Macaraig Vinas
4048 Northwest 62nd Lane
Coral Springs, FL 33067
Bankruptcy Case No.: 08-04888
Chapter 11 Petition Date: July 30, 2008
Court: District of Puerto Rico (Old San Juan)
Debtor's Counsel: Juan A. Santos Berrios, Esq.
(jsantosb@prtc.net)
Juan A. Santos Berrios, PSC
P.O. Box 9102
Humacao, PR 00792-9102
Tel: (787) 285-1001
Fax: (787) 285-8358
Total Assets: $1,130,770
Total Debts: $1,238,182
A copy of Mayra Macaraig Vinas's petition is available for free
at:
http://bankrupt.com/misc/prb08-04888.pdf
MERITAGE HOMES: Posts $23 Million Net Loss in 2008 Second Quarter
-----------------------------------------------------------------
Meritage Homes Corporation reported a net loss of $23.0 million
for the second quarter ended June 30, 2008, due to continued
weakness in U.S. housing markets, which included real estate-
related and joint venture charges of $39.0 million (pre-tax).
Excluding these primarily non-cash impairments, the company
generated pretax income of $5.0 million in the second quarter of
2008. A little more than half of the second quarter impairment
charges were in California, Meritage's toughest market. By
comparison, the second quarter 2007 net loss of $57.0 million
included $80.0 million (pre-tax) of primarily non-cash real
estate-related and joint venture charges, plus an additional
$28.0 million (pre-tax) charge to impair goodwill.
Second quarter home closing revenue decreased to $373.9 million,
down 34% from $567.7 million in the prior year as a result of 25%
fewer closings and 12% lower average sale prices. Arizona and
Florida experienced the largest revenue percentage declines year
over year (-43% and -45%, respectively.)
"We've experienced three years of dramatically lower sales,
softening prices, tightening credit for homebuyers and rising
inventories, compounded recently by increased foreclosures and an
uncertain economic outlook," said Steven J. Hilton, chairman and
chief executive officer of Meritage. "However, our impairment
charges have trended lower over the last three quarters, and we
continue to benefit from our relatively strong position in Texas.
"We remain a build-to-order homebuilder, appealing primarily to
move-up buyers, but are re-positioning many of our communities to
attract buyers at lower price points, in response to demand for
more affordable homes. We're offering smaller homes with fewer
standard features, while still allowing customers the flexibility
to upgrade from a good selection of options, and make the house
distinctively their own," continued Mr. Hilton.
"We have wound down operations in Ft. Myers and Reno, consolidated
several divisions, continued to cut overhead expenses and reduced
our inventories to maximize operating profitability, maintain a
strong balance sheet and generate positive cash flow. We've
managed our financial position to improve liquidity, maintain
flexibility, and position Meritage for the eventual recovery in
our markets."
Due to lower impairment charges included in cost of sales,
homebuilding gross margins increased to 6.2% in the second quarter
2008 over the prior year's 1.7%. Excluding the real-estate
related charges in cost of sales for both years, second quarter
gross margins were 13.8% in 2008 compared to 15.6% in 2007. The
tighter margins before impairments reflect lower prices driven by
weak demand and intense competition, offset partially by cost
reductions achieved in materials and labor components.
Second quarter general and administrative expenses fell 27%, from
$28.0 million in 2007 to $21.0 million in 2008, excluding the
impact of $10.0 million received in a legal settlement. This
reduction resulted from savings in overhead expenses resulting
from continued cost controls, which held general and
administrative expenses to a small increase as a percentage of
revenue in 2008 before consideration of the legal settlement.
Texas Sales Soften Overall Decline in Net Orders
While second quarter net orders declined 15% year over year in
total, orders in Texas were down just 4%, compared to a 28%
average decline in other markets. Analysts attribute strong
economies, favorable climates, lower costs of living and robust
job growth as key factors that contributed to Houston, Dallas/Fort
Worth, Austin and San Antonio being four of the top ten fastest
growing metro areas last year. Meritage has a large and
established presence in these markets, and although some builders
have experienced weaker results, Meritage says it has gained
market share in the largest Texas markets over the last year,
according to reports from independent local housing market
analysts.
Order cancellation rate decreased to 29% of gross orders in the
second of quarter 2008, from 37% in the second quarter of 2007,
and only slightly increased sequentially from the first quarter
2008. While higher than historical averages, these 2008 rate show
a moderate improvement over those experienced throughout most of
2006 and 2007.
Positive Cash Flow
In a quarter that has traditionally been cash flow negative due to
seasonally higher construction activity and related costs,
Meritage generated $21.0 million positive cash flow from
operations in the second quarter 2008, driven mainly by inventory
reductions through home sales.
Meritage continued its long-established "asset light" strategy by
reducing total lot and land inventory by $26.0 million in the
quarter, even after taking into account modest lot acquisitions.
In addition, Meritage has reduced its total inventory of unsold
homes by $25.0 million during the quarter and reduced the number
of unsold homes by 48% from the peak in 2007, to a total of 725 at
June 30, 2008, with only 297 of those completed. Total unsold
homes at quarter-end represent 27% of total homes under
construction, compared to 30% at the end of the previous quarter.
In addition to generating positive cash flow from operations in
the quarter, the company completed a stock offering of 4.3 million
shares on April 25, 2008, raising $83.0 million, to end the
quarter with $115.0 million in cash and no bank debt.
The increased cash and reduced debt resulted in a lower net debt-
to-capital ratio of 41% at June 30, 2008, an improvement from 47%
at both the end of the previous quarter, and at June 30, 2007.
Notably, Meritage has no bonds maturing until 2014.
Meritage reduced its total lot supply by 11%, or almost 2,700
lots, during the quarter. The total supply of 21,902 lots
controlled at June 30, 2008, is 60% lower than the peak number of
lots controlled at September of 2005, representing approximately a
3.2-year supply based on trailing twelve months closings.
Approximately 57% of all lots are in Texas and 56% of total lots
are controlled under purchase or option contracts. Management
believes the combination of a shorter lot supply, use of option
and the large percentage of lots in the relatively stronger Texas
market should result in decreased future impairments.
Additionally, Meritage further reduced its exposure to joint
ventures, shrinking the company's investment in joint ventures to
$21.0 million at second quarter-end. Although joint ventures
remain a source of investor concern related to homebuilders,
management believes joint venture holdings currently represent
limited exposure to Meritage.
Opportunities to Improve Profitability
"Although our community count decreased to 213 at quarter end,
versus 220 at the beginning of the year, approximately 40% of our
communities outside of Texas have fewer than 25 remaining lots for
sale. As these older, low-margin lots are sold, our active
community count should contract over the next several quarters,"
Mr. Hilton explained.
"Our intent is to redeploy the cash generated from closing out
some of our low-margin communities to new higher-margin
communities with lower-priced lots, thereby improving our
homebuilding margins. Though we do not intend to increase our
leverage by significantly increasing our lot inventory, we are
looking for select opportunities to acquire small finished lot
positions in certain markets at deeply distressed prices, where we
believe we can earn near-normal returns at today's home prices.
We are targeting finished lots in well-located areas on which we
can immediately begin building and selling homes."
Mr. Hilton continued, "In some cases, we've been able to purchase
lots at or below their cost of improvements, with zero or negative
residual land value. We recently purchased lots at one-third to
one-half of their original cost, which we believe will allow us to
earn good margins at today’s home prices, which are substantially
lower than prices were at their peak."
Amendment of Credit Facility
At June 30, 2008, the company had no borrowings outstanding under
its credit facility. Meritage's liquidity, consisting of
borrowing capacity and cash, was $408.0 million, after considering
the most restrictive covenants in place at that time.
In July, Meritage and its bank group amended the company's credit
facility to loosen its most restrictive borrowing covenants and
modify its pricing structure. These modifications provide
additional covenant cushion by relaxing the minimum interest
coverage ratio and tangible net worth covenants, as well as the
maximum leverage ratio covenant, should the housing recession be
longer or deeper than anticipated. These modifications are
intended to provide the company greater flexibility to manage
through this homebuilding cycle. The credit facility was reduced
in size to $500.0 million, which management believes will be
sufficient to support current operations for the foreseeable
future.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$1.6 billion in total assets, $873.0 million in total liabilities,
and $746.8 million in total equity.
About Meritage Homes
Headquartered in Scottsdale, Arizona, Meritage Homes Corporation
(NYSE: MTH) -- http://www.meritagehomes.com/-- builds primarily
single-family homes across the southern and western United States
under the Meritage, Monterey and Legacy brands. Meritage has
active communities in Houston, Dallas/Ft. Worth, Austin, San
Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the California
East Bay/Central Valley and Inland Empire, Denver and Orlando.
The company was ranked by Builder magazine in 2007 as the 12th
largest homebuilder in the U.S. and ranked #803 on the 2008
Fortune 1000 list.
Meritage Homes has reported five consecutive quarterly net losses
beginning the second quarter ended June 30, 2007.
* * *
As disclosed in the Troubled Company Reporter on June 16, 2008,
Fitch Ratings has downgraded Meritage Homes Corporation's Issuer
Default Rating and other outstanding debt ratings as: IDR to 'B+'
from 'BB-'; and Senior subordinated debt to 'B-/RR6' from 'B'.
Fitch has also affirmed Meritage Homes' senior unsecured debt at
'BB-' and assigned a Recovery Rating of 'RR3'. The Rating Outlook
remains Negative.
MERRILL LYNCH: Fitch Cuts $48.2MM Class M Certs. Rating to 'BB'
---------------------------------------------------------------
Fitch has downgraded and removed from Rating Watch Negative these
class of Merrill Lynch Floating Trust, commercial mortgage pass-
through certificates as:
-- $48.2 million class M downgraded to 'BB' from 'BBB-'.
Additionally, Fitch affirmed these classes:
-- $650.3 million class A-1 at 'AAA';
-- $527.7 million class A-2 at 'AAA';
-- Interest-only class X-1A at 'AAA';
-- Interest-only class X-1B at 'AAA';
-- Interest-only class X-3A at 'AAA';
-- Interest-only class X-3B at 'AAA';
-- Interest-only class X-3C at 'AAA';
-- $55.4 million class B at 'AAA';
-- $48.9 million class C at 'AAA';
-- $32.6 million class D at 'AA+';
-- $75.3 million class E at 'AA';
-- $46.7 million class F at 'AA-';
-- $44.3 million class G at 'A+';
-- $40.6 million class H at 'A'.
-- $35.9 million class J at 'A-';
-- $36.3 million class K at 'BBB+'; and
-- $31.1 million class L at 'BBB'.
Class A-1A and class X-2 have paid in full. Fitch does not rate
classes TM, X-1TM, or X-2TM.
The downgrade of Class M is due to low leasing activity and the
upcoming maturity of the pool's third-largest loan, The Portals
III (4.4%). The Portals III loan is secured by a 506,608 sf
office building located in Washington, D.C. that was 100% vacant
when completed in 2006. Currently the building is 21% occupied.
At issuance, it was anticipated that the building would be 60%
occupied by December 2007. According to the master servicer,
several potential tenants are in negotiation. The building that
serves as the loan's collateral is part of The Portals mixed-use
development that also contains two other office buildings, a
hotel, and retail space. The two other office buildings in The
Portals development are 95.8% and 99.8% occupied. The loan's
initial maturity date was extended from July 11, 2008 to Jan. 10,
2009. There are no extension options after the January maturity.
As of the June 2008 distribution date, the transaction has paid
down by 30.3% since issuance. Five of the original 15 loans have
paid in full and two loans, have had partial releases of
collateral. There have been no losses to date, and there are no
delinquent or specially serviced loans. The three largest loans
are the Trizec Portfolio (45.5%), Lord & Taylor Portfolio (36.4%),
and The Portals III (4.4%). All loans, with the exception of The
Portals III maintain investment-grade shadow ratings.
The Lord & Taylor Portfolio loan is secured by 36 Lord & Taylor
retail stores across nine states and a 587,364 square foot
distribution center. The Sponsor, NRDC Equity Partners, is in the
process of re-positioning the stores by rebalancing their
merchandise, implementing a more modern advertising campaign, and
improving public area layout and design. The loan's initial
maturity date is Oct. 11, 2008, and there are three 1-year
extension options. The portfolio continues to demonstrate stable
performance, with cash flow as of YE 2007 increasing 1.6% over
Fitch's analysis from issuance.
The Trizec Portfolio loan's collateral consists of 20 office
properties with a total of 8 million sf located across five
states. Two properties have been released since issuance. The
portfolio's three largest tenants are the Pension Benefit Guaranty
Corp. (4.8%), Kellogg, Brown & Root (3.7%), and Continental
Airlines (2.9%). The loan's initial maturity date is October 11,
2008, and there are three 1-year extension options. Occupancy as
of YE 2007 is reported to be 82.4% on a portfolio basis, as
compared to 84.6% at issuance.
METROMEDIA CO: U.S. Trustee to Convene Sec. 341 Meeting Aug. 29
---------------------------------------------------------------
The U.S. Trustee will convene a meeting of the creditors of S & A
Restaurant Corp. and its debtor-affiliates on August 29, 2008.
This is the first meeting of creditors required under Sec. 341 of
the Bankruptcy Code in all bankruptcy cases. All creditors
are invited, but not required, to attend.
This Section 341 Meeting offers the one opportunity in a
bankruptcy proceeding for creditors to question a responsible
office of the Debtors under oath about the company's financial
affairs and operations that would be of interest to the general
body of creditors.
Based in Plano, Tex., S & A Restaurant Corp. --
http://www.metrogroup.com,http://www.steakandale.com,
http://www.steakandalerestaurants.com,http://www.bennigans.com/
-- and other affiliated entities operate the Bennigan's Grill &
Tavern, and the Steak & Ale restaurant chains under the Metromedia
Restaurant Group. Bennigan's Grill & Tavern is a chain of more
than 310 pub-themed restaurants offering sandwiches and burgers,
as well as ribs, steaks, and seafood. The Steak & Ale chain
offers a broader menu set in the atmosphere of an 18th century
English country inn. The Metromedia Restaurant Group, a unit of
closely held conglomerate Metromedia Company, is one of the
world's leading multi-concept table-service restaurant groups,
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 United States and abroad. MRG's annual U.S.
sales are estimated at $1,000,000,000.
S & A Restaurant and 38 of its affiliates filed Chapter 7 petition
under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex.
Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington
Coleman Sloman & Blumenthal, represents the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy,
they listed estimated assets of between $100,000,000 and
$500,000,000 and estimated debts of between $10,000,000 and
$50,000,000.
(Bennigan's and Steak & Ale Bankruptcy News, Issue No. 1;
Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
MORGAN & CO: Case Summary & 14 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Morgan & Company, Inc.
4921 Professional Court
Raleigh, NC 27609
Bankruptcy Case No.: 08-05066
Chapter 11 Petition Date: July 30, 2008
Court: Eastern District of North Carolina (Wilson)
Judge: A. Thomas Small
Debtor's Counsel: Trawick H. Stubbs, Jr., Esq.
(efile@stubbsperdue.com)
Stubbs & Perdue, P.A.
P.O. Box 1654
New Bern, NC 28563
Tel: (252) 633-2700
Fax: (252) 633-9600
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
Debtor's list of its 14 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Glen Hartman Real Estate - $353,360
10550 Arnold Palmer Drive Durham, NC
Raleigh, NC 27617
Robert Williams $200,000
4921 Professional Court
Raleigh, NC 27609
Phillips & Jordan Inc. Subdivision $189,000
8245 Chapel Hill Road
Cary, NC 27513
Haden Stanziale $44,256
Richard & Victoria Moore $36,000
Withers & Ravenel $24,875
SunTrust Visa $14,835
Terratech Engineers Inc. $5,118
BNK $3,322
GMAC $2,432
American Express $2,168
Law Offices of Legal Fees $2,029
Spencer H. Barrow
Capital One $1,195
Texaco/Shell $800
MURRAY REAL ESTATE: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Murray Real Estate Investment I, LLC
dba Beach Express Car Wash
1408 Harbour Walk Road
Tampa, FL 33602
Bankruptcy Case No.: 08-11361
Type of Business: The Debtor develops real estate property.
Chapter 11 Petition Date: July 30, 2008
Court: Middle District of Florida (Tampa)
Judge: Michael G. Williamson
Debtor's Counsel: David W. Steen, Esq.
(dwslaw@yahoo.com)
David W. Steen, P.A.
602 South Boulevard
Tampa, FL 33606-2630
Tel: (813) 251-3000
Fax: (813) 251-3100
Estimated Assets: $500,000 to $1,000,000
Estimated Debts: $1,000,000 to $10,000,000
A copy of Murray Real Estate Investment I, LLC's petition is
available for free at:
http://bankrupt.com/misc/flmb08-11361.pdf
NATIONAL DRY: Court Approves Bid Procedures for Sale of Assets
--------------------------------------------------------------
The Hon. Christopher S. Sontchi of the United States Bankruptcy
Court for the District of Delaware approved proposed bidding
procedures for the sale of certain assets of National Dry Cleaners
Inc. and its debtor-affiliates, subject to competitive bids.
The Debtors entered into an asset purchase agreement dated July 9,
2008, with USDC Kansas City, Inc., the designated stalking-horse
bidder.
Bidders are required to deliver offers along with a minimum good
faith deposit of $150,000, for the stalking horse assets by Aug.
13, 2008, at 4:00 p.m. (prevailing Eastern Time.) An auction will
take place on Aug. 15, 2008, at 10:00 a.m. (prevailing Eastern
Time) at the offices of Young Conaway Stargatt & Taylor, LLP, at
1000 West Street, 17th floor in Wilmington, Delaware.
During the auction, bidding will commence at the highest purchase
price, and then continue in increments of $50,000.
A sale hearing is set for Aug. 22, 2008, at 10:00 a.m. (prevailing
Eastern Time) to consider final approval. Objections, if any, are
due Aug. 13, 2008, at 4:00 p.m.
The sale is expected to close by Sept. 15, 2008.
USDC Kansas will be paid $100,000 break-up fee in the event the
Debtors consummate a sale to another party.
A full-text copy of the Debtors' proposed sale procedures is
available for free at http://ResearchArchives.com/t/s?3040
A full-text copy of the asset purchase and sale agreement is
available for free at http://ResearchArchives.com/t/s?2fdd
About National Dry
Headquartered in Phoenix, Arizona, National Dry Cleaners Inc. --
http://www.alphillips.com/and http://www.pridecleaners.com/--
aka Delia's Cleaners Inc. operates more than 300 dry cleaning
stores across the nation. The enterprise employs over 1,500
people. As of June 30, 2008, NDCI operated 231 dry cleaning
stores and 6 central dry cleaning and laundry plants in nine
states. Of the dry cleaning stores, 164 are drop stores, meaning
that the stores do not have dry cleaning or laundry equipment on
site, and 67 dry cleaning stores have the necessary equipment to
perform dry cleaning and laundry services on-site.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on July 7, 2008, (Bankr. D. Del. Case No.: 08-11382 to
08-11393). The Debtors selected Epiq Bankruptcy Solutions LLC as
their claims, notice and balloting agent.
The Debtors listed estimated assets of $10 million to $50 million
and estimated debts of $10 million to $50 million.
NEIMAN MARCUS: Fitch Affirms 'B' ID Ratings with Stable Outlook
---------------------------------------------------------------
Fitch Ratings has affirmed its ratings on Neiman Marcus, Inc. and
its subsidiary, The Neiman Marcus Group, Inc., as:
Neiman Marcus, Inc.
-- Issuer Default Rating 'B'.
The Neiman Marcus Group, Inc.
-- IDR 'B';
-- Secured revolving credit facility 'BB/RR1';
-- Secured term loan facility 'BB-/RR2';
-- Secured debentures 'BB-/RR2';
-- Senior unsecured notes 'B-/RR5';
-- Senior subordinated notes 'CCC+/RR6'.
The Rating Outlook is Stable. The company had $3.0 billion of
debt outstanding as of April 26, 2008.
The ratings reflect NMG's leadership position within the luxury
retail segment, with strong sales productivity and operating
metrics and debt reduction since the company's leveraged buyout.
This is balanced against the weak economic and market conditions
which has led to the recent deceleration in sales and margins.
Fitch expects credit metrics could weaken somewhat over the
intermediate term on continued top line softness.
NMG is the country's premier luxury department store chain, with
latest twelve month revenue of $4.6 billion. Over 70% of its
revenue is generated from its 40 full-line Neiman Marcus stores
and 24 clearance centers, while its two Bergdorf Goodman stores in
New York contribute over $500 million in sales or 12% of total
revenue. In total, the retail business accounts for 84% of
revenues and 81% of operating income and the remainder comes from
its direct Internet and catalog businesses. NMG retail stores are
highly productive and the company's sales per square foot at
$638 are well ahead of its two closest peers. A consistent focus
on its luxury customer through sales associate relationships and
narrowly distributed brands has driven strong loyalty and NMG has
generally outperformed its luxury retail peers on comparable store
sales growth over the past few years.
Since its LBO by Texas Pacific Group and Warburg Pincus in October
2005, NMG has repaid $350 million of its $1.975 billion term loan
with free cash flow and asset sales proceeds. EBITDA has
increased to $690 million for the LTM period ended April 26, 2008
from $543 million in fiscal 2006 (ending July 29, 2006). As a
result, adjusted debt/EBITDAR has declined to 4.7 times from 6.1x
over the same period. In addition, leverage based on an adjusted
debt/EBITDA basis has declined to 4.3x, below management's
targeted level of 4.5x.
However, given the current retail environment and the company's
desire to preserve liquidity, credit metrics are anticipated to
weaken somewhat in fiscal 2009 on reduced margins and limited debt
paydown. NMG's comparable store sales turned modestly negative in
February 2008. Luxury spending typically varies with swings in
asset values and business profitability and aspirational spending
tends to fall away with an economic downturn. As a result, gross
margins have been pressured due to a lower mix of full-priced
selling and increased markdown to clear excess inventory.
The ratings of the various classes of debt listed above reflect
their respective recovery prospects. Fitch's recovery analysis
assumes an enterprise value of $2.4 billion in a distressed
scenario. Applying this value across the capital structure
results in outstanding recovery prospects (over 90%) for the $600
million revolving credit facility, which has a first lien on
inventories and receivables. The $1.625 billion term loan and the
$121 million of secured debentures are secured by a first lien on
the company's fixed and intangible assets, and have superior
recovery prospects (70%-90%). The $700 million of senior
unsecured notes have below average recovery prospects (10%-30%)
and the senior subordinated notes have poor recovery prospects
(less than 10%).
NORTHWESTERN CORP: Unsecured Creditors to Receive Payment in Cash
-----------------------------------------------------------------
Erik Larson of Bloomberg News reports that the U.S. Bankruptcy
Court for the District of Delaware authorized NorthWestern Corp.
to use cash -- rather than new common stock -- to pay off claims
of former unsecured creditors pursuant to a certain global
settlement agreement.
On July 14, 2008, the Court approved the global settlement
agreement between the Debtors and certain creditors including:
i) Clark Fork and Blackfoot, LLC;
ii) Magten Asset Management Corporation;
iii) Law Debenture Trust Company of New York;
iv) Paul, Hastings, Janofsky & Walker LLP;
v) The Bank of New York; and
vi) Michael Hanson and Ernie Kindt.
According to Bloomberg, the cash from a reserve account created
will be used to pay disputed claims from the Chapter 11 bankruptcy
case. The exact amount to be used was not disclosed, the report
says.
The remaining unsecured creditors can choose to receive new common
stock other than cash, Bloomberg says. Creditors have until Aug.
22, 2008, to submit their requests, the report notes.
The reserve is expected to hold roughly $2.36 million shares, and
additional cash will be poured into the reserve by purchasing back
shares, Bloomberg says. When it was created, the reserve held
approximately 4.4 million shares of new common stock valued at
$140 million, the report notes.
Unsecured creditors recouped a part of $35.5 million shares of
common stock, under a Chapter 11 plan filed by the Debtor in 2004,
Bloomberg says.
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.
OMNICOM GROUP: Solicits Consents from Holders to Amend Indenture
----------------------------------------------------------------
Omnicom Group Inc. is seeking the consent of the holders of its
Zero Coupon Zero Yield Convertible Notes due 2032 to amend the
Notes and the related Indenture to, among other things:
(i) have noteholders waive their right to contingent cash
interest, if payable, from Oct. 31, 2008 through and
including Aug. 1, 2010; and
(ii) eliminate Omnicom's right to redeem the 2032 Notes prior to
Aug. 2, 2010. The consent solicitation will expire on
Aug. 28, 2008.
Pursuant to the consent solicitation, Omnicom will make a cash
payment equal to $25.00 per $1,000 aggregate principal amount of
Notes, promptly as practicable after the effective date of the
consent solicitation, to a noteholder who:
(i) has not, as of immediately after the close of business on
July 31, 2008, exercised its right pursuant to the
Indenture to require Omnicom to repurchase its Notes or, if
exercised, has withdrawn such exercise by the close of
business today, Aug. 1, 2008; and
(ii) has delivered and not withdrawn a valid consent to the
amendments described above prior to the close of business
on Aug. 28, 2008.
The consent solicitation is being made solely by the Consent
Solicitation Statement, copies of which are available by calling
Omnicom at (212) 415-3393.
About Omnicom Group
Headquartered in New York City, Omnicom Group Inc. (NYSE:OMC) --
http://www.omnicomgroup.com/-- is a marketing and corporate
communications company. Omnicom's specialty firms provide
advertising, strategic media planning and buying, digital and
interactive marketing, direct and promotional marketing, public
relations and other specialty communications services to over
5,000 clients in more than 100 countries.
PIERRE FOODS: U.S. Trustee Forms Seven-Member Creditors Committee
-----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed
seven creditors to serve on an Official Committee of Unsecured
Creditors of the Chapter 11 case of Pierre Foods Inc. and its
debtor-affiliates.
The creditors committee members are:
1) U.S. Bank National Association
Attn: Cindy Woodward
60 Livingston Avenue
St. Paul, MN 55107
Tel: (651) 495-3907
Fax: (651) 495-8100
2) Fidelity Puritan Fund
Attn: Nate Van Duzer
82 Devonshire Street, V13H
Boston, MA 02109
Tel: (617) 392-8129
Fax: (617) 392-1605
3) Federated High Income Bond Fund
Attn: Thomas Charles Scherr
1001 Liberty Avenue
Pittsburgh, PA 15222
Tel: (412) 288-7057
Fax: (412) 288-6737
4) Ares II CLO Ltd.
Attn: Joshua N. Bloomstein
2000 Avenue of the Stars, 12th Floor
Los Angeles, CA 90067
Tel: (310) 201-4100
Fax: (310) 201-4197
5) Americraft Carton, Inc.
Attn: Ernest L. George, Credit Manager
164 Meadowcroft Street
Lowell, MA 01852
Tel: (978) 459-9328
Fax: (978) 970-0360
6) Skidmore Sales & Distributing Co., Inc.
Attn: Douglas S. Skidmore
9889 Cincinnati-Dayton Road
West Chester, OH 45069
Tel: (513) 755-4200
Fax: (513) 755-4442
7) Genpak LP
Attn: Kristine Arthurs
285 Industrial Parkway South
Aurora, Ontario, L4G 3V8
Tel: (905) 727-0121
Fax: (905) 727-9129
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Cincinnati, Ohio, Pierre Foods Inc. --
http://www.pierrefoods.com-- manufactures and sells ready-to-cook
and pre-cook products. The company and and 13 of its affiliates
filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del.
Lead Case No.08-11469). Paul Noble Heath, Esq., at Richards,
Layton & Finger P.A., represents the Debtors in their restucturing
efforts. The Debtors selected Kurtzman Carson Consultants LLC as
their claims agent. When the Debtors filed for protection against
their creditors, they listed estimated assets between $500 million
and $1 billion, and estimated debts between $100 million and $500
million.
PROXYMED INC: U.S. Trustee Forms Four-Member Creditors Committee
-----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed
four creditors to serve on an Official Committee of Unsecured
Creditors of the Chapter 11 case of ProxyMed Inc. and its debtor-
affiliates.
The creditors committee members are:
1) United Health Group Inc.
Attn: Christopher J. Walsh
9900 Bren Road East
Minnetonka, MN 55343
Tel: (952) 936-7402
Fax: (952) 936-1973
2) Anthem Insurance Companies, Inc.
Attn: Katherine D. Mayberry
120 Monument Circle
Indianapolis, IN 46204
Tel: (317) 488-6102
Fax: (317) 488-6616
3) Aetna, Inc.
Attn: Eric B. Myers
980 Jolly Road, U13N
Blue Bell, PA 19422
Tel: (215) 775-6749
Fax: (860) 907-4416
4) CCB Acquisition, LLC
Attn: Anthony Levinson
Two Concourse Parkway, Suite 300
Atlanta, GA 30328
Tel: (404) 459-7201
Fax: (404) 250-4933
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About ProxyMed
Headquartered in Norcross, Georgia, ProxyMed Inc. fka MedUnite,
Inc. -- http://www.medavanthealth.com-- facilitates the exchange
of medical claim and clinical information. The company and two of
its affiliates filed for Chapter 11 protection on July 23, 2008
(Bankr. D. Del. Lead Case No.08-11551). Kara Hammond Coyle, Esq.,
and Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor,
L.L.P., represent the Debtors in their restructuring efforts.
The Debtors indicated $40,655,000 in total consolidated assets and
$47,640,000 in total consolidated debts as of December 31, 2007.
In its petition, ProxyMed Transaction Services, Inc. indicated
$10,000,0000 in estimated assets and $10,000,000 in estimated
debts.
PSS WORLD: S&P Rates $200MM Unsecured Convertible Debt 'BB-'
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its issue-level and
recovery ratings to Jacksonville, Florida-based PSS World Medical
Inc.'s $200 million senior unsecured convertible debt maturing in
2014. This debt was rated 'BB-' with a recovery rating of '5',
indicating the expectation for modest (10% to 30%) recovery in the
event of a payment default. The notes issuance could total as
much as $230 million if Goldman, Sachs & Co. exercises its option
to purchase up to an additional $30 million of notes.
At the same time, Standard & Poor's affirmed its other ratings on
PSS, including the 'BB' corporate credit rating. The rating
outlook remains stable.
S&P's ratings assume that the company will use proceeds of the
debt offering to repay its existing $150 million of 2.25%
convertible senior notes on or before their redemption date of
March 15, 2009, and to fund approximately $35 million of share
repurchases. Ratings on the $150 million of convertible debt will
be withdrawn once they are repaid. If the debt is not repaid by
March 15, 2009, S&P will reassess its rating and outlook on the
company.
"The 'BB' rating on PSS reflects the company's narrow operating
focus as a niche distributor of medical products to alternate-site
health care providers, the potential negative impact of the U.S.
economy on its customers, and the potential for a more aggressive
acquisition strategy and share repurchase activity," said Standard
& Poor's credit analyst Jesse Juliano. "Partially offsetting
these concerns are PSS's leading position in its niche markets,
identifiable opportunities for sales growth and improved
profitability, and significant supplier and client diversity."
While Standard & Poor's believes that PSS has established a solid
niche position, the company is narrowly focused and competes with
larger, more broad-based companies. The credit risks in the
company's customer base also are a concern; physician practices
and elder care business could experience increased reimbursement
and cost pressures. These pressures could lead to higher bad debt
for PSS or customer bankruptcies. However, PSS has effectively
managed through the weak U.S. economy to date; the company is
willing to walk away from unprofitable business.
Financial metrics are strong for the rating category and robust
relative to our medians for the 'BB' rating category. Pro forma
for the anticipated debt repayment in March 2009, EBITDA interest
coverage is expected to be well above the 4.6x median, and total
lease-adjusted debt to EBITDA is expected to be around 2.5x
(compared with the 3.2x median). The financial risk profile
provides some flexibility for unforeseen operating shortfalls,
moderate-size acquisitions to seize growth opportunities, or share
repurchase activity.
PULTE HOMES: Posts $158.4 Million Net Loss in 2008 Second Quarter
-----------------------------------------------------------------
Pulte Homes Inc. disclosed last week its financial results for its
second quarter ended June 30, 2008.
For the quarter, the company reported a net loss of
$158.4 million, compared with a $507.6 million net loss for the
prior year second quarter. The second quarter 2008 net loss
included $220.1 million of pre-tax charges related to inventory
impairments and other land-related charges. Impairments and land-
related charges for the prior year quarter were $749.4 million.
The second quarter 2008 also included a tax benefit of
$56.8 million, primarily due to an adjustment in the company's
deferred income tax assets.
Consolidated revenues for the quarter were $1.6 billion, a decline
of 20% from prior year revenues of $2.0 billion.
"The operating environment for homebuilding continued to
deteriorate during the second quarter of 2008," said Richard J.
Dugas, Jr., president and chief executive officer of Pulte Homes.
"The downward trend in home prices persisted, and the softness in
overall buyer demand remained a challenge for the industry,
leading to unsold inventory for both new and existing homes still
well above historical levels. Buyer confidence remains under
pressure, both from the weakness in housing as well as concerns
about the overall economy.
"In the face of these challenges," Mr. Dugas continued, "Pulte
continued to make progress against its goals of generating cash
from operations, reducing its cost structure and lowering its
inventory levels. During the second quarter of 2008, Pulte
generated significant positive cash flow, and ended the quarter
with a [$988.3 million] cash balance. The company also paid off
$313.0 million of its senior notes due 2009 during a recent tender
offer, and had no debt outstanding under its $1.6 billion
revolving credit facility at quarter end.
"We significantly reduced our overhead expense, and lowered both
our level of speculative inventory and number of controlled lots.
Pulte intends to be in a position to capitalize on opportunities
once stability in the housing sector begins to materialize."
Second Quarter Results
Revenues from homebuilding settlements in the second quarter
decreased 18% to $1.6 billion compared with $1.9 billion in last
year's second quarter. The change in revenue for the quarter
reflects an 8% decrease in closings to 5,438 homes, and an 11%
decrease in average selling price to $286,000.
Second quarter homebuilding pre-tax loss was $221.3 million,
compared with an $803.2 million pre-tax loss for the prior year
quarter. The pre-tax loss for the 2008 second quarter reflects a
decline in gross margins primarily related to the impact of
impairments recorded in connection with our land inventory.
Homebuilding SG&A expense decreased $118.0 million, or 40%,
compared with the prior year quarter. During the second quarter
of 2008, the company recorded $220.1 million of impairments and
land-related charges, including $153.6 million related to land
impairments, $20.1 million associated with the write-off of land
deposits and pre-acquisition costs, $44.7 million of impairments
of land held for sale and $1.7 million related to the company's
investment in unconsolidated joint ventures. For the prior year
quarter, these impairments and land-related charges totaled
$749.4 million.
Net new home orders for the second quarter were 5,133 homes,
valued at $1.4 billion, which represent declines of 32% and 42%,
respectively, from prior year second quarter results. Pulte
Homes' ending backlog as of June 30, 2008 was valued at
$2.4 billion (8,254 homes), compared with a value of $5.2 billion
(14,928 homes) at the end of last year's second quarter. At the
end of the second quarter 2008, the company's debt-to-
capitalization ratio was 48%, and on a net debt-to-capitalization
basis was 39%.
The company's financial services operations reported pre-tax
income of $10.8 million for the second quarter 2008, compared with
$6.6 million of pre-tax income for the prior year's quarter. The
increase in second quarter 2008 pre-tax income was partially due
to a shift in the mix of mortgage loans closed toward more
profitable agency-backed products. This was partially offset by a
26% decline in mortgage loans originated during the quarter
compared with the prior year quarter. The mortgage capture rate
for the quarter was 92%, compared with 93% for the same quarter
last year.
The company recorded an income tax benefit of $56.8 million for
the second quarter 2008, primarily due to an adjustment in the
company's deferred income tax assets. During the quarter, the
deferred income tax assets were increased from $105.9 million to
$169.9 million to reflect the current estimate of the amount
realizable from the carryback of the current year's net operating
loss to the 2006 tax year.
Six Month Results
For the six months ended June 30, 2008, Pulte Homes' net loss was
$854.6 million, compared with a $593.2 million net loss for the
prior year period. Consolidated revenues for the period were
$3.1 billion, down 21% from $3.9 billion for the first six months
of last year.
Revenues from homebuilding settlements for the period were
$3.0 billion, down 20% from the prior year. L ower revenues for
the period resulted from an 11% decrease in average selling price
to $290,000, combined with a 10% decrease in the number of homes
closed to 10,171.
Homebuilding pre-tax loss for the period was $926.5 million,
compared with a $951.6 million pre-tax loss for the prior year
period. The pre-tax loss for the period reflects a decline in
gross margins primarily related to the impact of impairments
recorded in connection with our land inventory.
For the first six months of 2008, the pre-tax income for Pulte's
financial services operations was $25.8 million compared with
$19.8 million in the prior year. The positive shift in the mix of
mortgage loans toward more profitable agency-backed products was a
significant reason for this increase in income.
Third Quarter 2008 Guidance
"For the third quarter of 2008 we are providing guidance in the
range from a net loss of $0.15 per share to breakeven from
continuing operations, exclusive of a tax benefit and any
additional impairments or land-related charges," said Dugas. "As
part of its ongoing balance sheet focus, after reducing its
outstanding senior debt by $313.0 million in the current quarter,
Pulte targets a cash position by the end of 2008 of $1.7 billion
to $1.9 billion."
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$8.6 billion in total assets, $5.1 billion in total liabilities,
and $3.5 billion in total stockholders' equity.
About Pulte Homes
Based in Bloomfield Hills, Michigan, Pulte Homes Inc. (NYSE: PHM)
-- http://www.pulte.com/-- is one of America's home building
companies with operations in 50 markets and 26 states. During its
58-year history, the company has delivered more than 500,000 new
homes. Pulte Mortgage LLC is also a nationwide lender offering
Pulte customers a wide variety of loan products and superior
service.
* * *
As reported in the Troubled Company Reporter on June 11, 2008,
Moody's Investors Service lowered all of the ratings of Pulte
Homes, Inc., including its corporate family rating to Ba2 from Ba1
and the ratings on its various issues of senior unsecured notes to
Ba2 from Ba1. At the same time, a speculative grade liquidity
rating of SGL-2 was assigned. The outlook remains negative.
REGAL ENTERTAINMENT: June 26 Balance Sheet Upside-Down by $213MM
----------------------------------------------------------------
Regal Entertainment Group disclosed last week its fiscal second
quarter ended June 26, 2008., and declared a cash dividend of
$0.30 per common share.
At June 26, 2008, the company had $2.7 billion in total assets and
$213.7 million in stockholders' deficit. This compares with total
assets of $2.6 billion and stockholders' deficit of $185.8 million
at March 27, 2008.
Net income was $13.8 million in the second quarter of 2008, which
included a $11.1 million after-tax loss on debt extinguishment,
compared to net income of $52.7 million in the second quarter of
2007, which benefitted from a $17.0 million after-tax gain on the
sale of the company's Fandango interest.
Total revenues for the second quarter ended June 26, 2008, were
$675.8 million compared to total revenues of $683.4 million for
the second quarter of 2007. Adjusted EBITDA (earnings before
interest, taxes, depreciation and amortization expense, gain on
sale of Fandango interest, net loss (gain) on disposal and
impairment of operating assets, share-based compensation expense,
joint venture employee compensation, loss on debt extinguishment
and minority interest and other, net) was approximately
$124.4 million, or 18.4% of total revenues, for the quarter ended
June 26, 2008. This compares with with Adjusted EBITDA of
$130.4 million for the second quarter ended June 28, 2007.
Regal’s Board of Directors also today declared a cash dividend of
$0.30 per Class A and Class B common share, payable on Sept. 19,
2008, to stockholders of record on Sept. 11, 2008.
"During the quarter we were able to quickly integrate the 400
screens acquired from Consolidated Theatres ahead of the summer
box office season and demonstrated an ability to control a number
of critical expense categories," stated Mike Campbell, chief
executive officer of Regal Entertainment Group.
About Regal Entertainment
Headquartered in Knoxville, Tennessee, Regal Entertainment Group
(NYSE: RGC) -- http://www.REGmovies.com/-- operates a
geographically diverse theatre circuit in the United States,
consisting of 6,776 screens in 551 locations in 39 states and the
District of Columbia.
* * *
As reported in the Troubled Company Reporter on March 13, 2008,
Moody's Investors Service affirmed Regal Entertainment Group's Ba3
corporate family and Ba3 probability of default ratings, and the
other instrument ratings following the company's offering of new
$190 million of 6.25% senior convertible notes due 2011. The
outlook remains stable.
RH DONNELLEY: Lower Sales Rocking Deleveraging Effort, Fitch Says
-----------------------------------------------------------------
R.H. Donnelley Corp's ability to deleverage remains a concern
following this morning's announcement of revised ad sales guidance
downward, according to Fitch Ratings. The challenge the company
faces in reducing leverage was highlighted in a piece published by
Fitch 'R.H. Donnelley Corp - Cost of Flexibility and Challenges of
Deleveraging' on July 28.
Fitch currently rates RHD and subsidiaries as:
RHD (Holding Company)
-- IDR 'B+';
-- Senior unsecured notes 'B-/RR6';
R.H. Donnelley, Inc. (RHDI; Operating Company; Subsidiary of RHD)
-- IDR 'B+';
-- Bank facility 'BB+/RR1';
-- Senior unsecured notes 'BB-/RR3'.
Dex Media, Inc. (DXI; Holding Company; Subsidiary of RHD)
-- IDR 'B+';
-- Senior unsecured notes 'B-/RR6'.
Dex Media East (DXE; Operating Company; Subsidiary of DXI)
-- IDR 'B+';
-- Bank facility 'BB+/RR1'.
Dex Media West (DXW; Operating Company; Subsidiary of DXI)
-- IDR 'B+';
-- Bank facility 'BB+/RR1';
-- Senior unsecured 'BB+/RR1';
-- Senior subordinated 'B/RR5'.
The Rating Outlook is Negative.
RHD now expects ad sales to decline between 7-8% in 2008 compared
to prior expectations of down in the mid-single digits. RHD's
adjusted earnings before interest taxes and depreciation guidance
was unchanged while its free cashflow guidance was revised to
between $475 and $525 from between $525 and $575 due to higher
interest costs. Net debt is still expected to be around
$9.5 billion.
Under these revised figures, RHD's expectations regarding leverage
is unchanged relative to prior guidance. However, while RHD
believes its is able to take out costs to offset much of the ad
sales declines, Fitch remains concerned regarding the scalability
of the cost structure longer-term and is cautious regarding the
company's ability to deleverage under the scenario where EBITDA
declines are sustained in the mid-single digits.
Fitch will continue to monitor operating performance closely for
more evidence regarding the cyclical and secular components of
revenue deterioration. Fitch estimates RHD can endure low-to-mid
single digit revenue declines and still de-lever the balance
sheet, albeit slower than previously anticipated. Going forward,
Fitch expects management will be exclusively focused on paying
down debt under the secured facilities, however, Fitch continues
to expect consolidated leverage levels to remain above
management's stated target of 6.0 times over the intermediate
term.
S & A RESTAURANT: U.S. Trustee to Convene Sec. 341 Meeting Aug. 29
------------------------------------------------------------------
The U.S. Trustee will convene a meeting of the creditors of S & A
Restaurant Corp. and its debtor-affiliates on August 29, 2008.
This is the first meeting of creditors required under Sec. 341 of
the Bankruptcy Code in all bankruptcy cases. All creditors
are invited, but not required, to attend.
This Section 341 Meeting offers the one opportunity in a
bankruptcy proceeding for creditors to question a responsible
office of the Debtors under oath about the company's financial
affairs and operations that would be of interest to the general
body of creditors.
Based in Plano, Tex., S & A Restaurant Corp. --
http://www.metrogroup.com,http://www.steakandale.com,
http://www.steakandalerestaurants.com,http://www.bennigans.com/
-- and other affiliated entities operate the Bennigan's Grill &
Tavern, and the Steak & Ale restaurant chains under the Metromedia
Restaurant Group. Bennigan's Grill & Tavern is a chain of more
than 310 pub-themed restaurants offering sandwiches and burgers,
as well as ribs, steaks, and seafood. The Steak & Ale chain
offers a broader menu set in the atmosphere of an 18th century
English country inn. The Metromedia Restaurant Group, a unit of
closely held conglomerate Metromedia Company, is one of the
world's leading multi-concept table-service restaurant groups,
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 United States and abroad. MRG's annual U.S.
sales are estimated at $1,000,000,000.
S & A Restaurant and 38 of its affiliates filed Chapter 7 petition
under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex.
Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington
Coleman Sloman & Blumenthal, represents the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy,
they listed estimated assets of between $100,000,000 and
$500,000,000 and estimated debts of between $10,000,000 and
$50,000,000.
(Bennigan's and Steak & Ale Bankruptcy News, Issue No. 1;
Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SEMGROUP LP: Wants to Access BofA's $250,000,000 DIP Financing
--------------------------------------------------------------
SemCrude, L.P., SemGroup, L.P., and their debtor-affiliates sought
the authority of U.S. Bankruptcy Court for the District of
Delaware to obtain $250,000,000 of senior secured superpriority
postpetition financing from Bank of America, as administrative
agent for a syndicate of lenders.
Pending final approval of the request, the Debtors sought
authority, on an interim basis, to borrow up to $150,000,000
under the DIP Facility to allow them to (i) meet all of their
administrative obligations during the early stages of their
Chapter 11 cases, and (ii) purchase inventory critical to the
operation of their businesses.
The Debtors previously obtained interim permission from the Court
to use until Aug. 15, 2008, the cash collateral encumbered by
liens granted to a group of lenders led by BofA who extended more
than $2,000,000,000 of prepetition loans to the Debtors. The DIP
Lenders, according to the Debtors' proposed counsel, Harvey R.
Miller, Esq., at Weil, Gotshal & Manges, LLP, in New York,
constitute a subset of the lenders under the Debtors' prepetition
loan agreements.
Mr. Miller related that the Debtors lack sufficient unencumbered
funds with which to operate their business on an ongoing basis.
The cash available under the Interim Cash Collateral Order is not
sufficient to operate the Debtors' business beyond a very short
term. In particular, he said the Debtors are unable to purchase
sufficient inventory for the operation of their businesses
without borrowing additional funds. The funds available under
the DIP Facility will be available to provide the Debtors with
working capital and funds for other general corporate purposes
solely in accordance with a weekly budget covering a 13-week
period. The Budget, however, will still be filed with the Court
on or before the hearing on the request for interim authority.
The salient terms of the DIP Credit Agreement are:
Borrower: SemCrude, L.P.
Administrative
Agent and Lender: Bank of America, N.A., as administrative
agent for a syndicate of lenders
Guarantors: SemOperating GP, L.L.C., SemGroup, L.P.,
and each of SemGroup's debtor subsidiaries
DIP Facility: A secured superpriority DIP credit facility
in an aggregate amount of $250,000,000,
with a sublimit of $150,000,000 for letters
of credit
Interest Rate: 1-month LIBOR, subject to a floor of 4.00%,
plus 6.00% or Prime, subject to a floor of
3.00%, plus 5.00%
Fees: The Debtors will pay an unused line fee of
1% for undrawn amounts under the DIP
Facility. The Debtors will also pay 6.00%
per annum on the outstanding face amount of
each letter of credit plus customary fees
for issuance, amendments, and processing
and a fronting fee equal to 0.25-1.00% per
annum.
Maturity: The DIP Facility will expire no later than
January 18, 2009, provided that the
maturity may be extended until April 18,
2009, upon the DIP Lenders' holding more
than 50% of the aggregate DIP Facility
commitments satisfaction that certain
conditions relating to the sale of the
Debtors' assets have been met.
Priority & Liens: BofA, for its own benefit and for the
benefit of the DIP Lenders, will be
granted:
(i) a perfected first priority lien on
and security interest in all
property of the Debtors' estates not
subject to valid, perfected, and
non-avoidable liens as of the
bankruptcy filing, other than the
Avoidance Actions, but subject to
the entry of a final DIP Order, any
proceeds or property recovered in
respect of any Avoidance Actions;
(ii) a perfected junior lien on all
property of the Debtors that is
subject to valid, perfected and
non-avoidable liens; and
(iii) a perfected first priority, senior
priming lien on and security
interest in all of the collateral
that is subject to existing liens
that secure the obligations of the
Debtors under or in connection with
the Prepetition Credit Agreement.
The obligations under the DIP Facility will
be entitled to superpriority claim status
in the Debtors' Chapter 11 cases. All of
the Debtors' obligations under the DIP
Facility will be senior to all obligations
under the Prepetition Credit Agreement.
Thus, the liens created under the DIP
Facility are priming liens with respect to
liens currently held by the Prepetition
Lenders.
Carve-Out: As provided under the Interim Cash
Collateral Order, refers to the statutory
fees payable to the U.S. Trustee, and after
the termination date of the Cash
Collateral, the payments of allowed
professionals fees and disbursements
incurred by the Debtors or any official
unsecured creditors committee provided that
the amount will not exceed $2,000,000.
Events of Default: [To be determined]
Conditions: The DIP Facility will be conditioned on,
among other things, BofA's receipt of an
initial Budget, receipts of all necessary
consents, finalization of satisfactory
legal documentation, and the Court's entry
of interim and final approvals of the DIP
Facility.
A full-text copy of the DIP Term Sheet is available for free at
http://bankrupt.com/misc/semgroup_DIPTermSheet.pdf
According to Mr. Miller, the Final DIP Agreement will set forth
milestones and timeframes, acceptable to BofA and the DIP
Lenders, for the successful completion of the sale of all or
substantially all of the Debtors' assets. Law Phelps,
spokesperson for SemGroup, told The Journal Record that
"discussions [on the proposed sale] are under way." He said "the
company has gotten lots of calls from people."
"We want to just keep running oil through the pipelines and keep
the business running as normally as possible while this orderly
asset sale is under way, because if you're a potential buyer of
assets, you'd much rather buy assets that have customers attached
to them, at the end of the pipeline, for example, and employees
who know how to run the system," the Journal Record further
quoted Mr. Phelps as saying.
Mr. Miller said the Debtors, BofA, and the DIP Lenders have
entered into letter agreements regarding fees in connection with
the postpetition financing. However, the Fee Letters were not
publicly disclosed due to the commercially sensitive nature of
the fees.
Judge Shannon will convene a hearing on July 31, 2008, to
consider approval of the request to obtain the DIP Facility.
Objections are due July 30.
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.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s 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. 4; 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: Term Loan Lenders Assert "Distinct" Prepetition Liens
------------------------------------------------------------------
A group of prepetition lenders who provided SemGroup L.P. and its
debtor-affiliates a $142,000,000 term loan asserted that their
claims are distinct from the claims of the other prepetition
lenders. The distinctions, according to the Term Loan Lenders'
counsel, Mark Minuti, Esq., at Saul Ewing, LLP, in Wilmington,
Delaware, may have substantial economic impact on the recoveries
of each lender categories, which may diverge significantly.
Mr. Minuti told the U.S. Bankruptcy Court for the District of
Delaware that the issues they presented are (i) broader in scope
than those that Bank of America, as administrative agent to the
prepetition lenders, is required to undertake, and (ii) reflect
conflicting interests among the Term Loan Lenders and the other
competing lender groups. Accordingly, the Term Loan Lenders
asserted that BofA is an unsuitable advocate for their interests.
The Term Loan Lenders sought separate representation of their
issued in the Debtors' Chapter 11 cases, and seek entitlement to
the payment of the fees and expenses they or their professionals
incur in connection with the Debtors' bankruptcy cases. Mr.
Minuti contended that the distinct rights and interests of the
Term Loan Lenders, as holders of a first priority lien on the
revolver/term priority collateral and second priority lien on the
working capital priority collateral, will require separate
representations and diligence throughout the Debtors' Chapter 11
cases.
The Debtors have obtained interim authority from the Bankruptcy
Court to use until Aug. 15, 2008, the cash collateral securing
more than $2,000,000,000 of prepetition loans extended by a group
of lenders led by Bank of America.
As adequate protection for any diminution in the value of the
cash collateral, the Debtors clarified that the Prepetition
Lenders will be granted a valid, perfected, replacement security
interest in and lien on all of the Collateral, including, without
limitation, subject to entry of a final DIP order, the proceeds
or property recovered in respect of the Avoidance Actions. The
Adequate Protection Liens will be subject and subordinate only
to:
(i) valid, perfected and enforceable prepetition liens, if
any, which are senior to the Prepetition Lenders' liens or
security interests as of the bankruptcy filing;
(ii) the liens granted to BofA, for its own benefit and for the
benefit of the DIP Lenders, and any liens on the
Collateral senior to BofA's liens; and
(iii) the Carve-Out.
To reduce the outstanding principal balance of the prepetition
indebtedness, the Debtors will pay to the Prepetition Lenders all
proceeds from a sale, lease or disposition of the Collateral,
after deducting necessary costs of the Debtors, provided that all
of the Debtors' obligations under the DIP Facility have been paid
in full, all commitments under the DIP Facility have been
terminated, and all outstanding letters of credit issued under
the DIP Facility have been cash collateralized.
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.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s 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. 4; 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: Bankruptcy Impacts Independent Oil Producers
---------------------------------------------------------
Small oil producers in Oklahoma, Kansas, and Texas, are hit the
greatest by SemGroup, L.P.'s bankruptcy filing, the Wall Street
Journal reported. SemGroup, which said it lost $2,400,000,000
from trading in the oil-futures market, collects oil from more
than 2,000 independent oil producers and operators in southwest
United States, and most of these independent producers have not
been paid for delivered oil since June or early July.
SemGroup, in its petition for protection under Chapter 11,
disclosed that it owes more than $1,300,000,000 to oil vendors.
SemGroup listed BP Oil Supply Co. as its largest unsecured
creditor with more than $159,000,000 in trade debt.
Since July 22, 2008, the day SemGroup sought bankruptcy
protection, until July 29, oil producers Dorado Oil Company, D.E.
Exploration, Inc., Mull Drilling Company, and Bominflot Atlantic,
Inc., filed reclamation notices demanding payment of oil they
delivered to SemGroup and its affiliates during the 45 days
before July 22. Other independent oil producers, including
Sunoco Logistics Partners, L.P., ARC Resources, Ltd., Petroflow
Energy, Ltd., and Hiland Holdings GP, LP, expressed that they
have million dollar collectibles from SemGroup for the delivery
of oil.
The Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 gives vendors rights to reclaim payment for goods delivered
to the debtor during the 45-day period before the debtor
commenced a Chapter 11 filing. The vendor has until the 20th day
after the Chapter 11 filing to deliver a reclamation demand to
the debtor. The BAPCPA also gives vendors the right to receive
an administrative expense claim for the value of goods delivered
within 20 days before the Chapter 11 filing provided that the
goods were sold "in the ordinary course of business."
Mike Terry, president of the Oklahoma Independent Petroleum
Association, told the Journal that "[t]here will be some oil
taken off the market." However, traders in the physical oil
market, according to the Journal, said any significant change to
the amount of crude shipped via SemGroup's pipelines isn't
expected to become apparent before August 2008.
According to Dow Jones Newswires, Semgroup's collapse has
illuminated the inner workings of the U.S.' energy markets.
Unlike oil futures that are listed on the New York Mercantile
Exchange, real barrels of crude oil change hands in thousands of
transactions daily in an opaque physical market dominated by
often secretive trading companies. Whether these firms will
retain their influence in the wake of SemGroup's bankruptcy
filing in the market remains to be seen, as key participants
along the energy supply chain scramble to keep oil flowing, the
report said.
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.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s 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. 4; 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: Selects Weil Gotshal as Bankruptcy Counsel
-------------------------------------------------------
SemGroup L.P. sought authority from the U.S. Bankruptcy Court for
the District of Delaware to employ Weil, Gotshal & Manges LLP, as
their bankruptcy counsel, nunc pro tunc to the bankruptcy filing.
The Debtors selected Weil Gotshal as their attorneys because of
the firm's extensive experience and knowledge in the rights of
debtors and creditors, and Chapter 11 business reorganizations.
As the Debtors' counsel, Weil Gotshal will:
(a) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution on behalf of
the Debtors' estates, the defense of any actions commenced
against those estates, negotiation of disputes, and the
preparation of objections to claims filed against the
estates;
(b) prepare, on the Debtors' behalf, necessary motions,
applications, answers, orders, reports and other legal
papers necessary to the administration of the
Debtors' estates;
(c) take all necessary or appropriate action in connection
with a Chapter 11 plan, disclosure statement, and all
related documents, as well as other actions as may be
required in the administration of the Debtors' estates;
and
(d) perform other necessary legal services in connection with
the Debtors' Chapter 11 cases.
Prior to the bankruptcy filing, Weil Gotshal received $1,100,000
from the Debtors for professional services performed and expenses
incurred, as an advanced payment to cover charges from July 10,
2008, to the bankruptcy filing. The Debtors will pay Weil Gotshal
professionals according to their customary hourly rates:
Professional Hourly Rates
------------ ------------
Members and Counsel $650 to $900
Associates $355 to $595
Paraprofessionals $155 to $290
The Debtors will also reimburse Weil Gotshal for any necessary
out-of-pocket expenses the firm incurs while providing services
for the Debtors.
Martin A. Sosland, Esq., at Weil Gotshal, assured the Court that
the members, counsel, and associates of Weil Gotshal are
"disinterested persons" as the term is defined under Section
101(14) of the Bankruptcy Code.
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.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.
The CCAA stay expires on Aug. 20, 2008.
SemGroup L.P.'s 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. 4; 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: Celtic, et al. Disclose Financial Exposures
--------------------------------------------------------
Various entities disclosed financial exposures to the bankruptcy
filing of SemGroup L.P. and its debtor-affiliates.
A. Celtic Exploration
Celtic Exploration Ltd. has potential financial exposure to
SemCAMS ULC, a Canadian subsidiary of U.S. based SemGroup LP,
relating to the marketing of a portion of the company's natural
gas and associated by-products production.
SemGroup filed a petition for reorganization under Chapter 11 of
the U.S. Bankruptcy Code. In addition, SemCAMS filed an
application to obtain an order under the Companies' Creditors
Arrangement Act (Canada) in the Court of Queen's Bench of Alberta
Judicial District of Calgary.
Celtic has a potential financial exposure of approximately
C$30,000,000 relating to natural gas and associated by-product
sales, net of processing costs. The Company is now marketing its
natural gas through an alternative purchaser, with the agreement
of SemCAMS. These new arrangements are effective immediately.
At this time, Celtic cannot determine the period within which or
the amount of the financial exposure that will ultimately be
collected.
Celtic is diligently pursuing all options available to recover the
amounts owing to the Company. Celtic has sufficient available
bank credit lines to finance the potential financial exposure,
without affecting the planned 2008 capital expenditure budget of
C$180,000,000. The amount of the potential financial exposure
represents approximately 17% of the Company's forecasted
annualized exit 2008 funds from operations of C$176,500,000.
This forecast is based on commodity price assumptions of US$96.00
per barrel for WTI oil and US$9.75 per mmbtu for NYMEX natural
gas. Applying the full potential financial exposure, Celtic's
debt to 2008 exit funds from operations ratio would remain under
1.0 times.
B. Iteration Energy
Iteration Energy Ltd. announced that it has potential exposure of
approximately C$16,000,000 to SemCanada Crude Company and SemCAMS,
both Canadian subsidiaries of SemGroup, L.P., relating to the
marketing of a portion of the Company's crude oil, natural gas
liquids and natural gas production.
SemCanada, togehter with SemCAMS, filed for creditor protection in
Canada under the CCAA. As of this date, the company is not able
to quantify the portion, if any, of the $16,000,000 exposure that
will be collectible.
C. Orleans Energy
Orleans Energy Ltd. announces that it has estimated potential
financial exposure of approximately $8,600,000 to SemCAMS ULC, a
Canadian subsidiary of SemGroup L.P., relating to the marketing of
a portion of the company's natural gas and natural gas liquids
sales for the month of June 2008 and for 22 days in July 2008.
The contract pertaining to the production volumes purchased by
SemCAMS has been terminated and does not represent an ongoing
exposure for Orleans.
As of the date of reporting, Orleans is not able to neither
determine the period within which nor quantify with certainty the
portion of the exposure that will be ultimately collected from
SemCAMS. However, the monetary exposure amount is not considered
significantly material to Orleans' overall financial position nor
is it anticipated to impair the company's ability to fund its
remaining 2008 capital expenditures program. Based on the
company's current market guidance projections, applying the full
potential financial exposure, Orleans' year-end net debt-to-2008
cash flow from operations would remain under one times. As of
the close of business on July 25, 2008, the company had
$17,680,000 of bank debt drawn against its available $65,000,000
operating credit facility in-place with a Canadian chartered
bank.
D. KA Fund Advisors
KA Fund Advisors, LLC has evaluated the impact of recent adverse
developments related to SemGroup, L.P. and its affiliate, SemGroup
Energy Partners, L.P., on the three publicly-traded funds it
manages:
* Kayne Anderson MLP Investment Company (KYN: 26.73, -0.21,
-0.8%),
* Kayne Anderson Energy Total Return Fund, Inc. (KYE: 26.98,
-0.36, -1.3%), and
* Kayne Anderson Energy Development Company (KED: 22.82,
+0.29, +1.3%).
Between July 16 and July 24, 2008, the net asset values per share
of KYN, KYE and KED decreased $0.04, $0.07 and $0.31 per share,
respectively, as a result of the decline in value of securities
issued by SemGroup and SGLP. For KYN and KYE, the impact is
equivalent to a decline in NAV of 0.2% compared to the NAV as of
July 10, 2008. For KED, the impact is equivalent to a decline in
NAV of 1.3% compared to the NAV as of May 31, 2008, the most
recently published NAV for KED.
SemGroup is a privately held, diversified energy midstream
company that transports, stores and markets multiple energy
products. SGLP, an affiliate of SemGroup, is a publicly-traded
master limited partnership that stores and transports crude oil
and asphalt. SGLP derives a substantial portion of its revenues
from SemGroup. On July 22, 2008, SemGroup filed Chapter 11
bankruptcy due to claimed liquidity issues. SGLP has not filed
for bankruptcy and is not included in SemGroup's filing. As a
result of these events, SemGroup's 8.75% Senior Notes declined in
value from approximately 96.5% of par on July 16, 2008 to
approximately 17% of par on July 24, 2008. SGLP's common unit
price has declined significantly from a close of $22.80 per unit
on July 16, 2008 to a close of $7.72 per unit on July 24, 2008.
As of July 24, 2008, KED no longer held any SemGroup debt or
any SGLP common units.
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.
SIERRA MADRE: Moody's Cuts Ratings of $18MM Class E Shares to Ba2
-----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade these notes issued by Sierra Madre Funding,
Ltd.:
-- Class Description: U.S. $57,500,000 Class A-2 Floating Rate
Notes Due 2039
Prior Rating: Aaa
Current Rating: Aa2, on review for possible downgrade
-- Class Description: U.S. $40,500,000 Class B Floating Rate
Notes Due 2039
Prior Rating: Aa2
Current Rating: Aa3, on review for possible downgrade
-- Class Description: U.S. $24,000,000 Class C Floating Rate
Notes Due 2039
Prior Rating: A3
Current Rating: Baa3, on review for possible downgrade
-- Class Description: U.S. $15,000,000 Class D Floating Rate
Notes Due 2039
Prior Rating: Baa2
Current Rating: B1, on review for possible downgrade
-- Class Description: U.S. $18,000,000 Class E Shares
Prior Rating: Ba1
Current Rating: Ba2, on review for possible downgrade
In addition, these notes have been placed on review for possible
downgrade:
-- Class Description: U.S. $400,000,000 Class A-1LT-a Floating
Rate Notes Due 2039
Prior Rating: Aaa
Current Rating: Aaa, on review for possible downgrade
-- Class Description: Up to U.S. $945,000,000 Class A-1LT-b
Floating Rate Notes Due 2039
Prior Rating: Aaa
Current Rating: Aaa, on review for possible downgrade
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.
SIRIUS SATELLITE: Completes Merger with XM Satellite
----------------------------------------------------
SIRIUS Satellite Radio Inc. and XM Satellite Radio Inc. completed
their merger, on July 29, 2008, resulting in the nation's premier
radio company. The new company plans to change its corporate name
to SIRIUS XM Radio Inc. The combined company's stock will
continue to be traded on the Nasdaq Global Select Market under the
symbol "SIRI."
SIRIUS XM Radio begins day one with over 18.5 million subscribers,
making it the second-largest radio company, based upon revenue, in
the country; and, based upon subscribers, the second largest
subscription media business in the U.S. With under 10%
penetration of the home and car market, the opportunity for
continued growth is significant.
"I am delighted to announce the completion of this exciting merger
between SIRIUS and XM," said Mel Karmazin, CEO of SIRIUS XM Radio.
"We have worked diligently to close this transaction and we look
forward to integrating our best-in-class management teams and
operations so we can begin delivering on our promise of more
choices and lower prices for subscribers."
"Every one of our constituencies is a winner. Combined, SIRIUS XM
Radio will deliver superior value to our shareholders. By
offering more compelling packages and the best content in audio
entertainment, we are well positioned for increased subscriber
growth. Our laser focus on subscribers will continue and
listeners can be assured that there will be no disruption in
service. We also believe that the completion of the merger will
eliminate any confusion that has been lingering in the
marketplace," added Mr. Karmazin.
XM shareholders will receive 4.6 shares of SIRIUS common stock for
each share of XM.
Competitive New Options for Consumers
SIRIUS XM Radio broadcasts more than 300 channels of programming,
including exclusive radio offerings from Howard Stern, Oprah, Opie
& Anthony and Martha Stewart, among others. SIRIUS XM Radio will
offer these expanded options to consumers through arrangements
with the world's leading automakers and its relationships with
nationwide retailers.
As a result of the merger, SIRIUS XM Radio will also be able to
offer consumers new packages in audio entertainment, including the
first-ever a la carte programming option in subscription media.
In addition to two a la carte options, the new packages will
include: "Best of Both," giving subscribers the option to access
certain programming from the other network; discounted Family
Friendly packages; and tailored packages including "Mostly Music"
and "News, Talk and Sports." The first of the new packages will
be available in the early Fall.
"One of the most exciting benefits of this transaction is the
ability to offer subscribers the option of expanding their
subscriptions to include the Best of Both services. Given the
respective popularity of exclusive programming on both SIRIUS and
XM, we expect many subscribers will upgrade their current
subscription," said Mr. Karmazin.
"The upside potential for both consumers and shareholders is huge.
Consumers have the ease of adding premier programming without
purchasing a new device. For shareholders, this kind of organic
growth is a key part of the company's future and the success we
expect to see," said Mr. Karmazin.
As promised when the merger was first announced, existing radios
will continue to work and every subscriber has the option of
maintaining their current service package.
Synergies Expected
SIRIUS XM Radio expects to begin realizing the synergies expected
from this transaction immediately.
"In addition to realizing significant potential revenue growth,
the management team will move quickly to capitalize on the
synergies that many analysts have predicted for this combination.
We expect to begin achieving those synergies without sacrificing
any of the world-class programming and marketing we are known
for," said Mr. Karmazin.
The company also reiterated guidance for the combined SIRIUS XM
Radio. Based upon a preliminary analysis, the combined company
expects to realize total synergies, net of the costs to achieve
such synergies, of approximately $400 million in 2009; to post
adjusted EBITDA exceeding $300 million in 2009; and to achieve
positive free cash flow, before satellite capital expenditures,
for the full year 2009. The company also expects that both
synergies and adjusted EBITDA will continue growing beyond 2009.
"We have all the tools necessary to begin executing as a combined
company with high aspirations for subscriber growth and greater
financial performance in part from the significant synergies that
we begin realizing literally -- on Day One. We are moving quickly
to integrate the operations," said Mr. Karmazin.
The corporate headquarters will be located in New York City and XM
Satellite Radio, the company's wholly-owned subsidiary, will
remain headquartered in Washington, DC.
Effective after the close of the market yesterday, trading in XMSR
common stock on the Nasdaq Global Select Market ceased.
About XM Satellite
Headquartered in Washington, D.C., XM Satellite Radio Holdings
Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite
radio company. The company broadcasts live daily from studios in
Washington, DC, New York City, Chicago, Nashville, Toronto and
Montreal.
The company also provides satellite-delivered entertainment and
data services for the automobile market through partnerships with
General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki
and Toyota.
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
As reported in the Troubled Company Reporter on May 14, 2008, the
company's balance sheet at March 31, 2008, showed $1.5 billion in
total assets and $2.3 billion in total liabilities, resulting in a
$839.4 million total stockholders' deficit.
SIRIUS SATELLITE: Launches Equity Offerings, Inks Lending Pact
--------------------------------------------------------------
SIRIUS Satellite Radio Inc. disclosed the commencement of an
offering of shares of its common stock. The common stock being
offered represent shares of SIRIUS common stock that SIRIUS will
be lending to affiliates of Morgan Stanley & Co. Incorporated and
UBS Investment Bank, the share borrowers, pursuant to share
lending agreements between SIRIUS and each of the share borrowers.
It is estimated that, based on current market values,
approximately $375,000,000 of SIRIUS common stock will be sold in
a fixed-price public offering, and up to approximately $65,000,000
of SIRIUS common stock will be sold from time to time at
prevailing market or negotiated prices. The exact number of
shares of SIRIUS common stock to be offered will depend on the
terms of the concurrent offering of exchangeable senior
subordinated notes and the hedging to be conducted by investors in
such notes. While the borrowed shares will be considered issued
and outstanding for corporate law purposes, SIRIUS believes that
under U.S. generally accepted accounting principles currently in
effect, the borrowed shares will not be considered outstanding for
the purpose of computing and reporting earnings (loss) per share
because the borrowed shares are required to be returned to SIRIUS.
The common stock offering is being conducted concurrently with a
private offering by XM Satellite Radio Inc. of $550 million
aggregate principal amount of Exchangeable Senior Subordinated
Notes due 2014, which will be exchangeable into shares of SIRIUS
common stock. The terms of the Notes, including the interest rate
and exchange ratio, will be determined at the time that such
offering is priced.
In connection with the common stock offering, SIRIUS will enter
into a share lending agreement with each of the share borrowers,
pursuant to which SIRIUS will lend shares to the share borrowers.
The share borrowers will sell a portion of the borrowed shares in
a fixed-price public offering expected to close concurrently with
the Notes offering. After the closing of the fixed- price
offering, the share borrowers will offer and sell the remaining
borrowed shares in one or more registered public offerings at
prevailing market or negotiated prices. Over the same period that
the share borrowers sell the remaining borrowed shares, the share
borrowers or their affiliates expect to purchase at least an equal
number of shares of SIRIUS common stock on the open market and/or
enter into derivative transactions providing it with a synthetic
long position equal to such number of shares.
SIRIUS will not receive any proceeds from the sale of its common
stock by the share borrowers other than a nominal loan fee equal
to $0.001 per share issued to the share borrowers. The share
borrowers will be required to return the borrowed shares pursuant
to the share lending agreements following the maturity date of the
Notes or their earlier retirement.
Morgan Stanley & Co. Incorporated and UBS Investment Bank will act
as sole underwriters for the sale of the borrowed shares. A
prospectus can be obtained by contacting:
Morgan Stanley & Co. Incorporated
Attention: Prospectus Department
180 Varick Street
New York, NY 10014
Email: prospectus@morganstanley.com
or
UBS Investment Bank
Attention: Prospectus Department
299 Park Avenue
New York, NY 10171
Telephone: (888) 827-7275
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
As reported in the Troubled Company Reporter on May 14, 2008, the
company's balance sheet at March 31, 2008, showed $1.5 billion in
total assets and $2.3 billion in total liabilities, resulting in a
$839.4 million total stockholders' deficit.
SIRIUS SATELLITE: Reports Preliminary Second Quarter 2008 Results
-----------------------------------------------------------------
SIRIUS Satellite Radio Inc. disclosed preliminary second quarter
2008 financial results, including a 25% increase in revenue to
$283 million, total subscribers in excess of 8.9 million and a 70%
decrease in its adjusted loss from operations.
As of June 30, 2008, SIRIUS had 8.924 million subscribers, an
increase of 25% from June 30, 2007 subscribers of 7.143 million.
Retail subscribers increased 7% in the second quarter 2008 to
4.677 million from 4.365 million in the second quarter 2007. OEM
subscribers increased 53% in the second quarter 2008 to 4.247
million from 2.778 million in the second quarter 2007. Total
gross subscriber additions for the quarter ended June 30, 2008,
were 1.029 million, compared to 1.002 million for the quarter
ended June 30, 2007 and 1.003 million for the quarter ended
March 31, 2008. During the second quarter 2008 SIRIUS added
279,820 new net subscribers, consisting of 246,221 from the OEM
channel and 33,599 from the retail channel.
Second quarter 2008 average monthly self-pay customer churn rate
was 1.6%, down from 2.1% in first quarter 2008. The second
quarter 2008 conversion rate is estimated to be approximately 48%,
up from the first quarter 2008 conversion rate of approximately
47%.
Total revenue for the second quarter 2008 is expected to be
approximately $283 million, an increase of 25% from the second
quarter 2007 total revenue of $226 million. Operating expenses,
excluding depreciation and stock based compensation, are expected
to remain approximately flat in the second quarter 2008 as
compared to the second quarter 2007. Second quarter 2008 adjusted
loss from operations is expected to be approximately $24 million,
an improvement of 70% from the adjusted loss from operations of
$79 million in the second quarter 2007.
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
As reported in the Troubled Company Reporter on May 14, 2008, the
company's balance sheet at March 31, 2008, showed $1.5 billion in
total assets and $2.3 billion in total liabilities, resulting in a
$839.4 million total stockholders' deficit.
STEVE & BARRY'S: Cuts 125 Jobs, Reviews Memphis Store Opening
-------------------------------------------------------------
Steve & Barry's Manhattan, LLC laid off 125 employees at its
Columbus west side distribution center, reports The Columbus
Dispatch.
In a filing with the Ohio Department of Job and Family Services,
Steve & Barry's disclosed that the job cuts were effective
July 18, 2008.
The company's 1.2 million-square-foot shipping center at 4545
Fisher Road employs up to 1,250 workers during peak periods, says
Business First of Columbus. It is currently unknown how many
workers remain on the facility's payroll.
In line with the company's plan to sell substantially all of its
assets, the company's spokeswoman, Wendi Kopsick, said no
decisions have been made on which or how many stores might be
closed, according to reports.
Meanwhile, the company's plan of opening a 28,000-square-foot
store in Memphis may not become a reality, says Einat Paz-Frankel
of Memphis Business Journal.
"We're carefully analyzing all store operations," Steve & Barry's
Rachel Brenner told the Memphis Journal. "No decisions have been
made about grand openings."
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy, it
listed $693,492,000 in total assets and $638,086,000 in total
debts.
(Steve & Barry's Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STEVE & BARRY'S: U.S. Trustee Schedules 341 Meeting for August 12
-----------------------------------------------------------------
Diana G. Adams, United States Trustee for Region 2, will convene
a meeting of the Official Committee of Unsecured Creditors of the
Chapter 11 cases of Steve & Barry's, LLC, and its debtor-
affiliates on August 12, 2008, at 2:00 p.m., Eastern Time, at 80
Broad Street, Fourth Floor, in New York.
This is the first meeting of Steve & Barry's creditors required
under Section 341(a) of the Bankruptcy Code.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtors under oath about Steve & Barry's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy, it
listed $693,492,000 in total assets and $638,086,000 in total
debts.
(Steve & Barry's Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STEVE & BARRY'S: Committee Retains Loughlin Meghji + Co.
--------------------------------------------------------
Loughlin Meghji + Company has been retained as the financial
advisor to the Official Committee of Unsecured Creditors of the
Chapter 11 cases of Steve & Barry's, LLC, and its debtor-
affiliates.
Loughlin Meghji's managing director, Kenneth A. Simon, heads the
engagement of the firm by the Committee. In addition to the
Debtors' case, the firm is also advising other creditors'
committees, including The Sharper Image committee. Past retail-
related assignments also include similar advisory roles for
Blockbuster, Kmart and Krispy Kreme, among others.
Headquartered in Port Washington, New York, Steve and Barry LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at
low prices for men, women and children. Founded in 1985, the
company operates 276 anchor and junior anchor shopping center
and mall-based locations throughout the U.S. At STEVE & BARRY'S
(R) stores, shoppers will find brands they can't find anywhere
else, including the BITTEN(TM) collection, the first-ever
apparel line created by actress and global fashion icon Sarah
Jessica Parker, and the STARBURY(TM) collection of athletic and
lifestyle apparel and sneakers created with NBA (R) star Stephon
Marbury.
Steve & Barry's, LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy, it
listed $693,492,000 in total assets and $638,086,000 in total
debts.
(Steve & Barry's Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
STEVE & BARRY'S: Wants to Pay Celebrity License Royalties
---------------------------------------------------------
Steve & Barry's, LLC, and its debtor-affiliates entered into
exclusive licensing agreements with several high-profile
personalities from the sports and entertainment industries to
offer signature branded lines of apparel at low prices beginning
in 2006.
The Celebrity License Agreements are critical to the Debtors.
The sales of celebrity-branded apparel have become a significant
source of revenue for the Debtors, accounting for more than 30%
of the total sales revenue in recent years. The Celebrity
Licensing Agreements also provide the Debtors with significant
"no cost" advertising and media exposure that simply cannot be
replicated, Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP,
in New York, the Debtors' proposed counsel, tells the United
States Bankruptcy Court for the Southern District of New York.
These celebrity brands have become synonymous with the Debtors
and are a significant part of their brand. The maintenance of
existing brands is critical to preserving the value of the
Debtors for all stakeholders, Mr. Waisman asserts.
The Debtors are concerned that their failure to satisfy any
obligations to the celebrity endorsers may result in negative
publicity, or worse.
To ensure that each celebrity licensor continues to promote and
support their brands, the Debtors seek the Court's authority to
pay royalty payments to certain celebrities -- Ben Wallace, a
professional basketball player; Laird Hamilton, a professional
surfer; and Venus Williams, a professional tennis player.
Mr. Waisman relates that according to the terms of the license
agreements with these celebrities, Ms. Williams and Messrs.
Hamilton and Wallace are entitled to certain royalty payments.
These royalty payments have accrued and are or will be due to be
paid:
Celebrity Royalty Amount Due Payment Due
--------- ------------------ -----------
Laird Hamilton $300,000 07/01/08
Ben Wallace 75,000 07/30/08
Venus Williams 250,000 07/30/08
Royalty payments are calculated on a quarterly basis and are due
30 days after the conclusion of the preceding full calendar
quarter.
The Debtors are seeking to sell all or substantially all of their
assets during the course of their Chapter 11 cases. The License
Agreements constitute significant assets of the Debtors' estates
and will likely be an important factor in any going-concern sale,
Mr. Waisman says.
The Debtors believe that the rights to each celebrity license are
worth millions of dollars. Consequently, the amounts that they
are now seeking to pay are relatively small in relation to the
value of the assets the Debtors seek to preserve, Mr. Waisman
relates.
Licensing Payments Cut into Profit Margins
According to The Wall Street Journal, the celebrity-branded
apparel lines boosted sales, accounting for roughly one-third of
fiscal 2007 sales. However, the related licensing payments cut
into profit margins.
The company's licensing agreement with Sarah Jessica Parker, says
the report, already has earned millions in licensing fees,
according to people familiar with her deal, reports WSJ.
As a private company, Steve & Barry's doesn't publicly disclose
financial results. A former executive informed WSJ that early
on, the company posted profit margins of between 10% and 15%.
Internal documents, however, show that in fiscal 2006, the
company recorded a loss of $53.3 million on sales of $405.7
million, the paper says.
WSJ further notes that questions are emerging about Steve &
Barry's practice of including some operating expenses -- like a
portion of store rents -- in a separate expense category meant to
reflect the cost of unsold inventory, which practice was
disclosed by people knowledgeable about the company's accounting
practices.
This practice, which began in 2004, allegedly benefited the
retailer in two ways:
(1) By shifting some expenses to the inventory category, Steve
& Barry's was pushing them further out into the future,
potentially boosting profits in the short-term.
(2) The practice potentially boosted the value of the
company's inventory, allowing the company to borrow more
as inventory is the collateral against which its lenders
extend credit.
"It is completely uncommon and unacceptable to burden the cost of
your goods with occupancy costs," said Stevan Buxbaum, executive
vice president of the Buxbaum Group, a retail liquidation and
turnaround firm, reports WSJ.
"Some retailers don't do it this way, I acknowledge. But it
mirrors what many do," says one Steve & Barry's executive,
according to the report. "It's industry practice, as far as I am
concerned."
STILLWATER ABS: Moody's Junks Ratings of Three 2006-1 Notes
-----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of four
classes of notes issued by Stillwater ABS CDO 2006-1, Ltd. and
left on review for possible further downgrade the rating of one of
these classes of notes:
-- Class Description: U.S. $520,000,000 Class A-1 First
Priority Senior Secured Floating Rate Term Notes Due 2046
Prior Rating: Aa3, on review for possible downgrade
Current Rating: A2, on review for possible downgrade
-- Class Description: U.S. $72,475,000 Class A-2 Second
Priority Senior Secured Floating Rate Term Notes Due 2046
Prior Rating: B2, on review for possible downgrade
Current Rating: Ca
-- Class Description: U.S. $26,000,000 Class A-3 Third Priority
Senior Secured Floating Rate Term Notes Due 2046
Prior Rating: B3, on review for possible downgrade
Current Rating: C
-- Class Description: U.S. $11,050,000 Class B Fourth Priority
Senior Secured Floating Rate Term Notes Due 2046
Prior Rating: Ca
Current Rating: C
Stillwater ABS CDO 2006-1, Ltd. is a collateralized debt
obligation backed primarily by a portfolio of structured finance
securities. On April 14, 2008, the transaction experienced an
event of default caused by a failure of the Class AB
Overcollateralization Ratio to be greater than or equal to the
required amount set forth in Section 5.1(i) of the Indenture dated
August 17, 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 reflect continuing deterioration in the
credit quality of the underlying portfolio and the increased
expected loss associated with the transaction. Losses are
attributed to diminished credit quality on the underlying
portfolio.
As provided in Article V of the Indenture during the occurrence
and continuance of an Event of Default, the Controlling Class may
be entitled to direct the Trustee to take particular actions with
respect to the Collateral. The severity of losses may depend on
the timing and choice of remedy to be pursued by the Controlling
Class. Because of this uncertainty, the rating of Class A-1 Notes
issued by Stillwater ABS CDO 2006-1, Ltd. is on review for
possible further action.
SYNTAX-BRILLIAN: U.S. Trustee Wants Chapter 11 Examiner Appointed
-----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, asks the Hon.
Brendan L. Shannon of the U.S. Bankruptcy Court for the District
of Delaware to appoint a Chapter 11 Examiner to oversee the
bankruptcy cases of Syntax-Brillian Corporation and its debtor-
affiliates, pursuant to Section 1104(c) of the Bankruptcy Code.
The Chapter 11 examiner will investigate:
i) the facts and circumstances surrounding the sudden decline
in the Debtors' assets;
ii) the bona fides and necessity of the proposed sale of the
substantially all of the Debtors' assets to TCV;
iii) the relationships among and between the Debtors, TCV Group,
Kolin, DigiMedia Technology Co., Ltd., including former and
present principals, officers and directors; and
iv) the ability and inclination of the Debtor's current
management to probe and pursue potential claims and causes
of action against the Debtors' former officers including
directors who selected the Debtor's current chief executive
officer and chief financial officer.
A hearing is set for Aug. 4, 2008, at 11:00 a.m., to consider the
U.S. Trustee's request. Objections, if any, are due Aug. 1, 2008,
by 12:00 noon.
The Debtors retort that appointing an examiner, at this stage,
is unnecessary because they -- together with the Securities and
Exchange Commission -- are presently conducting an investigation
what caused the unexpected decline in the value of their assets
and would only duplicate their efforts.
The U.S. Trustee argued that the appointment is appropriate on
grounds that the Debtors' fixed, liquidated, unsecured debts,
services, and taxes have exceeded $5 million. The appointment of
a Chapter 11 examiner is in the best interest of creditors, equity
holders and other interest of the Debtors' estates, the U.S.
trustee contends.
About Syntax-Brillian
Headquartered in Tempe, Arizona, Syntax-Brillian Corporation
(Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and
markets LCD HDTVs, digital cameras, and consumer electronics
products include Olevia(TM) brand high-definition widescreen LCD
televisions and Vivitar brand digital still and video cameras.
Syntax-Brillian is the sole shareholder of California-based
Vivitar Corporation.
The company and two of its affiliates -- Syntax-Brillian SPE,
Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection
on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through
08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan,
Esq., at Greenberg Traurig LLP, represent the Debtors in their
restructuring efforts. The U.S. Trustee for Region 3 has
appointed five creditors to serve on an Official Committee of
Unsecured Creditors.
When the Debtors filed for protection against their creditors,
they listed total assets of $175,714,000 and total debts of
$259,389,000.
TOURMALINE CDO: Moody's Junks Ratings of 3 Floating Rate Notes
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of six
classes of notes issued by Tourmaline CDO II Ltd., and left on
review for possible further downgrade the ratings of five of these
classes of notes:
-- Class Description: Up to U.S. $700,000,000 Class A-1 Senior
Variable Funding Floating Rate Notes, Due 2046
Prior Rating: Aa3, on review for possible downgrade
Current Rating: Ba1, on review for possible downgrade
-- Class Description: Up to U.S. $700,000,000 Class A-2 Senior
Floating Rate Notes, Due 2046
Prior Rating: Aa3, on review for possible downgrade
Current Rating: Ba1, on review for possible downgrade
-- Class Description: Up to U.S.$700,000,000 Class A-3 Senior
Floating Rate Notes, Due 2046
Prior Rating: Aa3, on review for possible downgrade
Current Rating: Ba1, on review for possible downgrade
-- Class Description: U.S.$100,000,000 Class B Senior Floating
Rate Notes, Due 2046
Prior Rating: A3, on review for possible downgrade
Current Rating: Caa2, on review for possible downgrade
-- Class Description: U.S.$90,000,000 Class C Senior Floating
Rate Notes, Due 2046
Prior Rating: Baa2, on review for possible downgrade
Current Rating: Caa3, on review for possible downgrade
-- Class Description: U.S.$32,000,000 Class D Mezzanine Floating
Rate Deferrable Notes, Due 2046
Prior Rating: Ca
Current Rating: C
Tourmaline CDO II Ltd. is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities. On
March 28, 2008, the transaction experienced an event of default
caused by a failure of Senior Par Value Coverage Ratio to be
greater than or equal to the required amount set forth in Section
5.1(d) of the Indenture dated March 30, 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 ratings of the Class A-1,
A-2, A-3, B and C Notes issued by Tourmaline CDO II Ltd. are on
review for possible further action.
TRANSMERIDIAN EXPLORATION: Launches 12% Sr. Notes Exchange Offer
----------------------------------------------------------------
Transmeridian Exploration Incorporated (Transmeridian) and
Transmeridian Exploration Inc. (TMEI) disclosed that they are
commencing an exchange offer relating to $290,000,000 aggregate
principal amount of TMEI's 12% Senior Secured Notes due 2010
(CUSIP Nos.: 89376NAC2, 89376NAA6, 89376NAB4, U87289AB7).
In the exchange offer, Transmeridian and TMEI are offering to
exchange $101 in cash (including a $30 consent payment) and $900
in principal amount of TMEI’s new 12% Senior Secured Notes due
2010 for each $1,000 principal amount of the Existing Notes. The
New Notes will have the same guarantors, coupon payment and
maturity date as the Existing Notes and will be equally and
ratably secured with the Existing Notes, but will not include a
right of holders to have their New Notes repurchased upon the
closing of the transactions between Transmeridian and United
Energy Group Limited, which were announced on June 11, 2008.
In conjunction with the exchange offer, Transmeridian and TMEI are
also soliciting consents to proposed amendments to the indenture
governing the Existing Notes and the security documents in respect
of the Existing Notes. Each holder of Existing Notes that gives a
valid consent on or prior to the consent payment deadline of 5:00
p.m., New York City time, on Aug. 7, 2008, unless extended, and
does not withdraw such holder's Existing Notes tendered in the
exchange offer, will receive the $30 consent payment for each
$1,000 principal amount of Existing Notes with respect to which a
consent is given. Holders that tender their Existing Notes will
be required to consent to the Proposed Amendments.
The exchange offer will expire at 12:00 midnight, New York City
time, on Aug. 21, 2008, unless extended. Tenders of the Existing
Notes may be withdrawn at any time prior to the execution by TMEI,
the guarantors of the Existing Notes and the trustee under the
indenture governing the Existing Notes of a supplemental indenture
implementing the Proposed Amendments, which is expected to occur
promptly after the requisite consents are received.
The exchange offer is subject to conditions including the receipt
of valid and unrevoked tenders from holders representing at least
90% of the aggregate principal amount of the Existing Notes,
excluding any Existing Notes held by UEGL (at least $222.2 million
in aggregate principal amount of the Existing Notes), the entry
into the Proposed Amendments, the successful completion of a
tender offer to be conducted by UEGL with respect to
Transmeridian's outstanding shares of senior preferred stock and
junior preferred stock, and other customary closing conditions.
The Proposed Amendments will require the receipt of consents from
a majority of the aggregate principal amount of the Existing
Notes, excluding any Existing Notes held by UEGL.
The successful completion of the exchange offer and related
consent solicitation is a condition precedent to the completion of
the transactions between Transmeridian and UEGL.
The exchange offer is being made, and copies of the exchange offer
documents will be provided, only to holders of the Existing Notes
that have certified in an eligibility letter certain matters to
Transmeridian, including their status as eligible holders who are
either "qualified institutional buyers," as that term is defined
in Rule 144A under the Securities Act of 1933, institutional
"Accredited Investors," as that term is defined in Regulation D
under the Securities Act of 1933, or persons other than "U.S.
persons," as that term is defined in Rule 902 under the Securities
Act of 1933. A confidential offering memorandum will be
distributed to eligible holders.
Based in Houston, Transmeridian Exploration Inc. (AMEX: TMY) --
http://www.tmei.com/ -- is an independent energy company
established to acquire and develop oil reserves in the Caspian Sea
region of the former Soviet Union. The company's primary oil and
gas property is the South Alibek Field in the Republic of
Kazakhstan covered by License 1557 and the related exploration and
production contracts with the government of Kazakhstan.
Transmeridian Exploration's consolidated balance sheet at March
31, 2008, showed $402.2 million in total assets, $341.2 million in
total liabilities, and $92.5 million in redeemable convertible
preferred stock, resulting in a $31.5 million total stockholders'
deficit.
Going Concern Doubt
UHY LLP in Houston raised substantial doubt on Transmeridian's
ability to continue as a going concern after auditing the
company's consolidated financial statements for the years ended
Dec. 31, 2007, and 2006. The auditing firm pointed to the
company's negative working capital, stockholders' deficit, and
operating losses since its inception.
The company had a net working capital deficit of approximately
$56.2 million and a stockholders' deficit of approximately
$31.5 million at March 31, 2008. Approximately 89.0% of the
company's accounts payable at March 31, 2008, have been
outstanding more than 120 days.
UNIVERSAL CITY DEV'T: Amends Senior Secured Credit Facility
-----------------------------------------------------------
Universal City Development Partners, Ltd. amended on July 28,
2008, the early maturity date feature in the amended and restated
credit agreement, (the senior secured credit facility) to April 1,
2010 unless both the 11.75% senior notes issued by UCDP, and the
floating rate senior notes and the 8.375% senior notes,
(collectively the May 2010 notes) issued by Universal City Holding
Co. I, Universal City Holding Co. II, UCFH 1 Finance, Inc. and
UCFH II Finance, Inc., (collectively UCHC), are refinanced or
repaid prior to that time.
Additionally, the interest rate on the senior secured credit
facility will increase from 3-month LIBOR plus 175 basis points to
3-month LIBOR plus 300 basis points, with a 3% floor on the LIBOR
rate. Prior to the amendment, the maturity date of the senior
secured credit facility was accelerated to December 1, 2009 if the
April 2010 notes were not refinanced or repaid at that time, or to
January 1, 2010 if May 2010 notes were not refinanced or repaid at
that time. The maturity date of the senior secured credit facility
remains at June 6, 2011 if the early maturity date feature is not
triggered.
UNIVERSAL CITY FLA: Credit Amendment Won't Affect S&P's 'B+' Rtng.
------------------------------------------------------------------
Standard & Poor's Ratings Services said that its rating on
Universal City Florida Holding Co. I (B+/Stable/--) is unaffected
by the company's amendment to its senior secured credit
facilities. The amendment gives Universal City more time and
flexibility to evaluate and plan its refinancing options in this
difficult credit environment by extending the early maturity
feature to April 1, 2010, unless the 11.75% senior notes, along
with the floating-rate senior notes and 8.375% senior notes both
due in May 2010, are refinanced or repaid prior to that time.
Prior to the amendment, the maturity date on the credit facilities
would have accelerated to Dec. 1, 2009 without a refinancing or
repayment of the April 2010 notes by that time, or to Jan. 1, 2010
without a refinancing or repayment of the May 2010 notes before
that date. The maturity date of the credit facilities remains at
June 6, 2011 if the early maturity date feature is not triggered.
As of March 31, 2008, the company had outstanding debt of about
$1.5 billion.
The interest rate on the credit facilities will increase to LIBOR
plus 300 basis points (from LIBOR plus 175 basis points) with a 3%
floor on the LIBOR rate. Despite the higher interest rate, pro
forma EBITDA coverage of interest and cash flow remain largely
unchanged.
S&P will closely monitor the company's future refinancing plan, as
it represents a key rating consideration.
US STEEL: S&P Holds 'BB+' Rating and Changes Outlook to Stable
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Pittsburgh, Pennsylvania-based United States Steel Corp. to stable
from negative while affirming its 'BB+' corporate credit rating.
The outlook revision reflects the company's improved financial
metrics under currently favorable steel market conditions, which
have been characterized by low import competition that has allowed
steel producers to realize high prices despite slowing demand in
some markets. Although S&P remain concerned that the company's
adjusted debt levels are high for this point in cycle, debt
maturities are manageable and liquidity is adequate. At June 30,
2008, total debt, adjusted for post-retirement obligation,
operating leases, and asset retirement obligations, was around
$5.3 billion, debt to EBITDA 2.2x and debt to capitalization was
45%.
Ratings on U.S. Steel reflect the integrated steel producer's
capital-intensive operations, exposure to highly cyclical and
competitive markets, increased cost of materials, a high degree of
operating leverage, and aggressive financial leverage.
"Still, the company maintains good liquidity, has a value-added
product mix, good scope and breadth of product and operations, and
benefits from its backward integration into iron ore and coke
production," said Standard & Poor's credit analyst Marie Shmaruk.
S&P expects that U.S. Steel will continue to seek growth
opportunities in a rapidly consolidating industry, focusing on
operations that enhance its overall cost profile. With its
business mix, diversity, and improved capital structure, the
company should be able to maintain adequate financial performance
through the next industry downturn. We could revise the outlook to
positive in the near term if current market conditions continue,
allowing the company to reduce and maintain adjusted debt to
EBITDA to 2x or below, and if management communicates a more
conservative financial policy, continues to reduce retiree
obligations, and demonstrates operating and cost flexibility over
a range of market cycles. However, given the cyclicality of the
industry, S&P are concerned about the increased debt levels and
post-retirement obligations incurred to realize growth
opportunities.
An outlook revision to negative could occur if a prolonged
cyclical downturn or protracted, significant pricing pressure from
low-price imports significantly weakens the financial profile of
U.S. Steel and restricts its ability to reduce its debt burden, or
if it aggressively pursues debt-financed acquisitions.
UST INC: June 30 Balance Sheet Upside-Down by $423.6MM
------------------------------------------------------
UST Inc. reported last week financial results for its second
quarter and six-months ended June 30, 2008.
At June 30, 2008, the company's consolidated balance sheet showed
$1.42 billion in total assets, $1.81 billion in total liabilities,
and $30.0 million in minority interest and put arrangement,
resulting in a roughly $423.6 million stockholders' deficit.
Net earnings declined 0.2 percent to $139.7 million versus
$140.0 million in the second quarter ended June 30, 2007.
For the second quarter ended June 30, 2008, net sales increased 3
percent to $506.2 million and operating income increased 4.4
percent to $237.7 million. During the quarter, the company
repurchased 1.3 million shares at a cost of $66.8 million.
"Despite a challenging U.S. economy, a significant mid-quarter
spike in gasoline prices and a meaningful increase in smokeless
tobacco competitive activity, UST exceeded its earnings
expectations for the quarter," said Murray S. Kessler, chairman
and chief executive officer. "We remain on track to deliver a 10
percent shareholder return for the year, despite the fact that the
company is increasing promotional support in the second half to
address premium smokeless tobacco volume trends in specific areas
of the country most impacted by current economic headwinds and
competitive activity."
Second quarter 2008 results include antitrust litigation and
Project Momentum related restructuring charges totaling
$2.7 million before income taxes. Second quarter 2007 results
include Project Momentum related restructuring charges and lease
charges recorded in connection with the sale of the company's
headquarters totaling $6.8 million before income taxes.
Adjusting for these items in each year, underlying second quarter
2008 operating income increased 2.5 percent to $240.5 million and
net earnings decreased 1.9 percent to $141.4 million.
For the six-month period ended June 30, 2008, net sales increased
4.3 percent to $978.9 million, operating income increased 11
percent to $450.6 million, and net earnings increased 7.1 percent
to $265 million. For the six-month period, the company
repurchased 3.7 million shares at a cost of $198.7 million.
About UST Inc.
Headquartered in Stamford, Connecticut, UST Inc. (NYSE: UST)
-- http://www.ustinc.com/-- is a holding company for its
principal subsidiaries: U.S. Smokeless Tobacco Company and Ste.
Michelle Wine Estates. U.S. Smokeless Tobacco Company is the
leading producer and marketer of moist smokeless tobacco products
including Copenhagen, Skoal, Red Seal and Husky. Ste. Michelle
Wine Estates produces and markets premium wines sold nationally
under 20 different labels including Chateau Ste. Michelle,
Columbia Crest, Stag's Leap Wine Cellars and Erath, as well as
exclusively distributes and markets Antinori products in the
United States.
VALEANT PHARMACEUTICALS: Moody's Withdraws B2 Ratings
-----------------------------------------------------
Moody's Investor's Service withdrew the ratings of Valeant
Pharmaceuticals International following Valeant's recent
redemption of its $300 million senior unsecured notes due 2011.
Moody's has withdrawn the ratings for Moody's business reasons.
Moody's added that the ratings were withdrawn because the issuer
has no rated debt outstanding.
These ratings have been withdrawn:
-- B2 Corporate Family Rating
-- B1 Probability of Default Rating
-- Ba3 (LGD3, 39%) rating on $300 million 7% senior unsecured
notes due 2011
Moody's does not rate Valeant's 3% convertible subordinated notes
of $240 million due 2010 or its 4% convertible subordinated notes
of $240 million due 2013.
Headquartered in Aliso Viejo, California, Valeant Pharmaceuticals
International [NYSE: VRX] is a multinational specialty
pharmaceutical company. Valeant reported approximately $872
million of total sales during 2007.
VALMONT INDUSTRIES: S&P Revises Outlook to Pos.; Holds All Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Valmont
Industries Inc. to positive from stable. At the same time, S&P
affirmed all ratings, including its 'BB+' corporate credit rating
on the Omaha, Nebraska-based company.
The outlook revision reflects the company's steady improvement in
operating performance over the past several quarters due to
continued higher demand for its products and improved pricing, a
trend S&P expects will continue in the near term despite the
expected slowdown in commercial construction. As a result, credit
metrics are likely to be maintained at a level that S&P would
consider to be more consistent with a higher rating, given the
company's business risk profile, with debt to EBITDA below 1.5x
and funds from operations to total debt around 45%. In addition,
Standard & Poor's was previously concerned with the potential for
margin compression due to rising commodity prices. However, the
company has continued to successfully manage raw material cost
volatility by quickly adjusting prices. Operating margins
improved to about 15% in the three months ended June 30, 2008
compared with 13.7% during the prior-year period.
"While we expect operating margins will retain some volatility
given the lag effect of adjusting prices to rapidly rising costs,
Valmont's operating margins should remain stable or improve over
the longer term given the company's low production costs and the
strong fundamental demand for many of its products," said Standard
& Poor's credit analyst Thomas Nadramia.
Valmont produces fabricated metal products, such as lighting and
traffic poles, utility poles for electricity transmission,
communication towers, agricultural irrigation equipment, and other
tubular products. In addition, the company produces concrete pole
structures and provides metal coating services. As a result, its
end-markets are subject to inherent volatility given the
cyclicality in retail and office construction, crop prices and
resulting farm income, and utility investment cycles. However,
the company's diversification across its market segments and
variable cost structure have helped to reduce earnings and cash
flow volatility, resulting in relatively steady operating results
throughout cyclical downturns. As a result, S&P believes the
company will be successful at keeping its strong credit measures
within a relatively narrow range over the near term.
The outlook is positive. The outlook incorporates our expectation
that Valmont will maintain credit metrics reflective of a higher
rating despite the likelihood that commercial construction and
infrastructure end-markets will weaken from current levels.
Specifically, S&P would expect Valmont to maintain debt to EBITDA
less than 2x and operating margins of greater than 12% throughout
the cycle. An outlook revision back to stable could occur if
near-term operating performance is impacted more than expected due
to steep, prolonged declines in commercial and infrastructure
construction activity, resulting in a weakening of credit measures
from current levels, making the prospects for an upgrade during
S&P's outlook time horizon seem less likely.
Specifically, a deterioration in operating margins to below 10%
and sustained debt to EBITDA of greater than 2x.
VONAGE HOLDINGS: Commences Tender Offer for 5.0% Convertible Notes
------------------------------------------------------------------
Vonage Holdings Corp. commenced a cash tender offer for any and
all of its outstanding 5.0% Senior Unsecured Convertible Notes due
2010. The tender offer is being made in connection with the
proposed refinancing of Vonage's debt announced last week.
Vonage is offering to purchase the notes at a price of $1,000 for
each $1,000 of principal amount of notes tendered, plus accrued
and unpaid interest up to, but not including, the date the notes
are paid pursuant to the offer. The tender offer is conditioned
upon $185,000,000 minimum principal amount of Notes being validly
tendered and not properly withdrawn, the receipt by Vonage of the
proceeds from a $95 million senior secured first lien credit
facility and the issuance by Vonage and its wholly owned
subsidiary, Vonage America Inc., as co-issuers, of $90 million of
convertible secured second lien notes contemplated by the
commitment letter, dated July 22, 2008, between Vonage and Silver
Point Finance, LLC and satisfaction of certain other conditions.
The tender offer will expire at midnight, Eastern Time on Aug. 27,
2008 unless extended. Any notes purchased pursuant to the tender
offer will be cancelled, and those notes will cease to be
outstanding. The complete terms and conditions of the tender offer
are set out in the Offer to Purchase, which will be filed with the
U.S. Securities and Exchange Commission today, July 30, 2008.
Vonage noteholders may obtain copies of all the offering
documents, including the Offer to Purchase, free of charge at the
SEC's website (www.sec.gov) or by directing a request to D.F. King
& Co., Inc., the Information Agent for the offer, at 48 Wall
Street, New York, NY 10005 and by telephone 212-269-5550, for
banks and brokers, or 1-888-628-9011 for others.
Vonage has retained Miller Buckfire & Co., LLC to act as Dealer
Manager in connection with the offer.
American Stock Transfer & Trust Company, LLC has been appointed to
act as the depositary for the offer, and D.F. King & Co., Inc. has
been appointed to serve as information agent. Neither the Board of
Directors of Vonage nor any other person makes any recommendation
as to whether holders of notes should tender their notes, and no
one has been authorized to make such a recommendation. Holders of
notes must make their own decisions as to whether to tender their
notes, and, if they decide to do so, the principal amount of notes
to tender.
Special Stockholders' Meeting
Vonage will hold a Special Stockholders' Meeting on Wednesday,
Aug. 20, 2008. The purpose of the meeting is to seek approval
pursuant to New York Stock Exchange requirements of the issuance
of Vonage common stock upon conversion of certain convertible debt
securities of Vonage. The meeting will begin at 10:00 a.m., local
time and will be held at Vonage Holdings Corp., 23 Main Street,
Holmdel, NJ 07733.
Stockholders of record at the close of business on Aug. 5, 2008,
are entitled to attend the 2008 Special Stockholders' Meeting and
vote their shares. In accordance with Vonage's security
procedures, all stockholders attending the Special Stockholders'
Meeting must present an acceptable form of photo identification
and proof of share ownership as of the close of business on Aug.
5, 2008.
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.
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.
WAVELAND - INGOTS: Fitch Junks Ratings on Two Note Classes
----------------------------------------------------------
Fitch Ratings has downgraded two and affirmed four classes of
notes issued by WAVELAND - INGOTS, LTD. These rating actions are
the result of Fitch's review process and are effective
immediately:
-- $47,826,595 class A-1 notes affirmed at 'AAA';
-- $120,612,694 class A-2 notes affirmed at 'AAA';
-- $14,500,000 class B-1 notes affirmed at 'A',
-- $10,000,000 class B-2 notes affirmed at 'A';
-- $34,777,783 class C-1 notes downgrade to 'CCC' from BBB';
-- $2,560,515 class C-2 notes downgrade to 'CCC' from 'BBB'.
The rating actions reflect Fitch's view on the credit risk of the
rated notes following the release of its new Corporate CDO rating
Criteria.
Waveland is a cash flow collateralized debt obligation, which
closed on June 24, 2003 and is managed by Pacific Investment
Management Company LLC. As of the July 9, 2008 trustee reports,
the transaction's portfolio was composed of 90% senior secured
leveraged loans, 2.4% senior secured bonds, 3.4% senior unsecured
bonds, and 4.7% synthetic investments. The total collateral
balance is $234.9 million with an additional $3.4 million of
proceeds in the principal collection account.
Since the last review in February of 2007, Waveland has entered
its amortization period and the manager has begun de-levering the
structure. To date, approximately $13 million of principal of
class A-1 and A-2 notes have been paid down. While the
amortization improved credit enhancement levels for all classes of
notes, the increase was not significant enough to offset the
effects of overall credit deterioration in the pool. As per the
July 9, 2008 trustee report, Fitch's weighted average rating
factor is 51.73, as compared to 49.01 in the Jan. 9, 2007 trustee
report, which was used in the prior review. The average rating of
the current portfolio is 'B+/B', with approximately 7.2% rated
'CCC or below'. At the time of the last review, only 3.2% of the
portfolio carried a 'CCC' rating. Additionally, approximately 26%
of the current pool is on Outlook Negative and 6.6% is on Rating
Watch Negative, indicating a strong possibility of further credit
migration and defaults. Defaulted assets constitute 2% of the
portfolio.
Available excess spread is used to pay the Mezzanine and
Additional Interest payments, which are applied towards the rated
balance of the class C-1 and C-2 notes. As of the last payment
date in June 2008, class C-1 notes received a total of $5,972,215
of Mezzanine and Additional Interest which was used to reduce the
principal of the notes. The class C-2 notes received $439,484 in
interest payments from Mezzanine and Additional Interest. As the
most subordinate notes in the structure, the class C notes are
highly dependent on available excess spread to be used for
payments of principal. Fitch projects that future distributions
to class C-1 and C-2 will diminish over time as the amount of
available excess spread declines due to the amortization of the
underlying collateral and future defaults assumed for various
rating level stresses. As a result, the likelihood of class C-1
and C-2 meeting their rating criteria is consistent with a 'CCC'
rating.
The ratings of the class A-1 and A-2 notes address the likelihood
that investors will receive full and timely payments of interest
on scheduled interest payment dates, as provided for within the
Indenture, as well as the stated balance of principal by the final
payment date. The ratings of the class B-1 and B-2 notes address
the likelihood that investors will receive ultimate and
compensating interest payments, as well as the stated balance of
principal by the final payment date. The rating to ultimate
interest addresses the full payment of deferred interest by the
final payment date. The ratings of the class C-1 and C-2 notes
address the return of principal and the basic interest amount by
the final payment date. The rating of the class C-1 and C-2 notes
assumes that all interest distributions in excess of the basic
interest amount are used to fulfill the principal amount with
respect to the Fitch rating of the class C-1 and C-2 notes.
Fitch released updated criteria on April 30, 2008 for Corporate
CDOs and, at that time, noted it would be reviewing its ratings
accordingly to establish consistency for existing and new
transactions. As part of this review, Fitch makes standard
adjustments for any names on Rating Watch Negative or Outlook
Negative, reducing such ratings for default analysis purposes by
two and one notch, respectively.
Included in this review, Fitch conducted cash flow modeling to
measure the breakeven default rates relative to the cumulative
default rates associated with the current ratings of the note
liabilities. The cash flow model incorporates the transaction's
structural features and updated default timing and interest rate
scenarios.
WHOLE FOODS: Appeals Court Wants Merger with Wild Oats Re-Examined
------------------------------------------------------------------
Bloomberg reports that the United States Court of Appeals for the
District of Columbia Circuit has held that Whole Foods Market
Inc.'s $565 million purchase of Wild Oats Markets Inc. must be
re-examined to determine whether it violated antitrust rules and
would hurt consumers.
In a 2-1 decision, Bloomberg relates, the appeals panel sent the
case back to the U.S. District Court for the District of Columbia
to reconsider its decision. According to various reports, the
appeals court held that the District Court improperly dismissed
Federal Trade Commission claims.
According to The Wall Street Journal, the ruling recalls legal
proceedings the merger went through and may give the FTC a try at
forcing Whole Foods to sell some operations to meet competitive
concerns raised by the merger.
As reported in the Troubled Company Reporter on Aug. 27, 2007,
Whole Foods and Wild Oats were legally cleared to proceed with
their merger as the U.S. Court of Appeals for the District of
Columbia has denied the FTC's request for a stay to preclude the
closing of the merger pending the FTC's appeal and has dissolved
the Aug. 20, 2007, administrative injunction, which had prevented
the transaction from going forward while the court considered the
FTC's motion.
Since the deal wrapped up in August 2007, Whole Foods, has sold 35
Wild Oats stores and closed 12, the Denver Business Journal
reports. Many other Wild Oats stores have been rebranded as Whole
Foods, Denver Business Journal adds.
In a statement, Whole Foods said it will appeal the decision. It
further stated: "Whole Foods Market is disappointed with this
decision as customers and team members have already received many
benefits from this merger. The company is evaluating its legal
options, which include seeking review by the entire Court of
Appeals."
Whole Foods said the company will continue business as usual and
not halt the ongoing integration of Wild Oats into its operations.
A full-text copy of the Court of Appeals' 58-page opinion is
available at no charge at:
http://ResearchArchives.com/t/s?303d
About Wild Oats Markets
Headquartered in Boulder, Colorado, Wild Oats Markets Inc. --
http://www.wildoats.com/-- is a natural and organic foods
retailer in North America with annual sales of approximately
$1.2 billion. Wild Oats Markets was founded in Boulder, Colorado
in 1987. Wild Oats Markets currently operates 110 stores in 24
states and British Columbia, Canada under four banners: Wild Oats
Marketplace (nationwide), Henry's Farmers Market (Southern
California), Sun Harvest (Texas), and Capers Community Market
(British Columbia).
About Whole Foods Market
Founded in 1980 in Austin, Texas, Whole Foods Market Inc. (NASDAQ:
WFMI) -- http://www.wholefoodsmarket.com/-- is a natural and
organic foods supermarket. Whole Foods Market employs more than
50,000 Team Members.
* * *
Moody's Investors Service placed Whole Foods Market Inc.'s long
term corporate family rating, probability of default rating; and
bank loan debt rating at 'Ba1' in February 2008. The ratings
still hold to date with a stable outlook.
WCI COMMUNITIES: Posts $100.2 Million Net Loss in 2008 2nd Quarter
------------------------------------------------------------------
WCI Communities, Inc. reported Tuesday its results for the second
quarter ended June 30, 2008.
For the three months ended June 30, 2008, WCI reported a net loss
of $100.2 million, compared with net loss of $33.2 million in the
second quarter of 2007.
Revenues for the second quarter of 2008 were $230.1 million,
compared with $241.2 million for the second quarter of 2007, a
4.6% decrease. Overall company gross margin for the second
quarter of 2008 was negative 15.7% versus negative 2.9% for 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.
Revenues decreased 36.6% to $367.1 million from $579.4 million in
the year earlier period. Gross margin as a percent of revenue was
negative 10.2% for the six months ended June 30, 2008, compared to
5.6% for the first six months 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, respectively.
Cancellations, defaults and rescissions increased for the three
and six month periods when compared to these same period in 2007,
resulting in a decline in the overall number of net new unit
orders. This decline in net new orders included Tower
Homebuilding contract defaults for the Oceanside tower in Florida
as well as Traditional homebuilding cancellations that were
initiated by the company, which on a combined basis contributed
160 and 190 cancellations for the three and six months ended
June 30, 2008, respectively. Absent the Oceanside defaults and
developer cancellations, aggregate net new orders increased for
the six months ended June 30, 2008, by 19.9% compared to the same
period in 2007.
Traditional Homebuilding
Second quarter 2008 revenues for Traditional Homebuilding,
including lot sales, fell 45.4% to $97.7 million from
$178.9 million for the second quarter of 2007. The company closed
186 homes compared with 217 for the same period a year ago.
For the six month period ended June 30, 2008, Traditional
Homebuilding revenues decreased 51.6% to $190.4 million. The
company closed 356 homes compared with 523 for the same period a
year ago.
Tower Homebuilding
For the three months ended June 30, 2008, revenues in the Tower
Homebuilding Division were $11.3 million, up from $2.1 million for
the same period a year ago. There was one tower completing
construction during the quarter compared with 7 towers under
construction and recognizing revenue during the second quarter
2007.
For the first half of 2008, revenues in the Tower Homebuilding
Division fell 80.9% to $14.6 million.
Real Estate Services
Revenues for the Real Estate Services Division for the second
quarter 2008 were $22.2 million, a 19.1% decrease from the
$27.4 million recorded for the same period a year ago. The
decline was primarily due to the slowing market for new and resale
homes during the quarter.
For the six month period, revenues in the Real Estate Services
Division totaled $39.5 million, down 25.5% from the $53.0 million
recorded for the six months ended June 30, 2007.
Other Items
Revenues for the Amenities Division for the second quarter 2008
were $18.5 million, almost even with the $18.4 million recorded in
the same period a year ago. Year to date, revenues were
$41.1 million and $41.0 million for 2008 and 2007, respectively.
Land sale revenues for the second quarter 2008 included the sale
of the Tuscany Reserve community in Naples Florida and totaled
$79.4 million compared with $12.6 million for the second quarter
of 2007.
Other Income and Expense
Other income and expense in the second quarter included a
$9.0 million non-cash mark-to-market gain on the interest rate
swap agreement that the company entered into in December 2005 to
hedge against interest rate fluctuations on its senior variable
rate bank debt. This second quarter non-cash gain directly offset
a comparable non-cash loss on the same hedging instrument in the
first quarter of 2008, resulting in other income of $1.1 million
on a year-to-date basis in 2008 compared to $1.3 million for the
first six months of 2007.
Selling, General, and Administrative
Selling, general, and administrative expenses including real
estate taxes declined $14.1 million or 28.3% to $35.7 million for
the second quarter 2008 versus $49.8 million in the second quarter
of 2007. On a year to date basis, SG&A declined $21.5 million or
22.2% to $75.2 million. The lower SG&A expenses in 2008 were
primarily due to reductions in salaries and benefits, as well as
reductions in sales and marketing expenses.
Liquidity and Capital Resources
For the three and six months ended June 30, 2008, cash flow from
operating activities totaled $169.3 million and $236.7 million
respectively, compared to $(16.1) million and $86.3 million,
respectively in the same periods a year ago.
As of June 30, 2008, the company had $61.1 million of cash and
cash equivalents and approximately $101.6 million of commitments
under its Revolving Credit Facility. Actual borrowing capacity,
however, is limited to an estimated $30.0 million, net of the
$46.3 million in outstanding letters of credit, due to the
restrictions under the terms of the company's borrowing base. In
addition, as a result of the default under its Revolving Credit
Facility on July 22, 2008, the company is prohibited from
borrowing at all under the Revolving Credit Facility.
Pursuant to certain amendments in the company's Revolving Credit
Facility and Senior Term Loan Agreement in January 2008, the
company will need to have sufficient liquidity and must not exceed
a certain amount of total debt after giving effect to, on a pro
forma basis, the mandatory repurchase of the company's
$125.0 million 4.0% Convertible Notes on Aug. 5, 2008.
In addition, the company is required 10 business days prior to the
date that any mandatory redemption or other principal payment is
due with respect to the Convertible Notes to deliver a certificate
certifying that no default or event of defaults under the
Revolving Credit Facility and Term Loan would exist before or
after giving effect to, on a pro forma basis, the repurchase of
the company's $125.0 million Convertible Notes.
The company is unable to deliver such certificate and on July 22,
2008, provided notice to the administrative agents under the
Revolving Credit Facility and the Term Loan of the occurrence of a
default. In view of this, the company is now in default under its
Revolver, Term Loan and tower construction loan agreements.
Exchange Offer/Possible Bankruptcy Filing
In July 2008, the company announced an exchange offer for all of
the Convertible Notes. Pursuant to the offer, the company offered
to exchange a unit, consisting of $1,000 principal amount of new
17.5% senior secured notes due 2012 and a warrant to purchase
33.7392 shares of WCI common stock, for each $1,000 principal
amount of the Convertible Notes. The Exchange Offer will expire
at 12:00 midnight EDT on Aug. 4, 2008, unless extended or
terminated by the company.
The Exchange Offer is also conditioned on the amendment and
restatement of the company's existing credit facilities and
issuance of new second lien notes. If the company is unable to
satisfy the obligations with respect to the Convertible Notes, the
company said it may be forced to file for bankruptcy.
Balance Sheet
At June 30, 2008, the company's consolidated balance sheet showed
$2.2 billion in total assets, $1.9 billion in total liabilities,
$25.5 million in minority interests, and $237.6 million in total
shareholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended June 30, 2008, are available for
free at http://researcharchives.com/t/s?303e
Going Concern Doubt
Ernst & Young LLP, in Miami, 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.
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 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.
* * *
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.
XM SATELLIE: Completes Merger with Sirius Satellite
---------------------------------------------------
SIRIUS Satellite Radio Inc. and XM Satellite Radio Inc. completed
their merger, on July 29, 2008, resulting in the nation's premier
radio company. The new company plans to change its corporate name
to SIRIUS XM Radio Inc. The combined company's stock will
continue to be traded on the Nasdaq Global Select Market under the
symbol "SIRI."
SIRIUS XM Radio begins day one with over 18.5 million subscribers,
making it the second-largest radio company, based upon revenue, in
the country; and, based upon subscribers, the second largest
subscription media business in the U.S. With under 10%
penetration of the home and car market, the opportunity for
continued growth is significant.
"I am delighted to announce the completion of this exciting merger
between SIRIUS and XM," said Mel Karmazin, CEO of SIRIUS XM Radio.
"We have worked diligently to close this transaction and we look
forward to integrating our best-in-class management teams and
operations so we can begin delivering on our promise of more
choices and lower prices for subscribers."
"Every one of our constituencies is a winner. Combined, SIRIUS XM
Radio will deliver superior value to our shareholders. By
offering more compelling packages and the best content in audio
entertainment, we are well positioned for increased subscriber
growth. Our laser focus on subscribers will continue and
listeners can be assured that there will be no disruption in
service. We also believe that the completion of the merger will
eliminate any confusion that has been lingering in the
marketplace," added Mr. Karmazin.
XM shareholders will receive 4.6 shares of SIRIUS common stock for
each share of XM.
Competitive New Options for Consumers
SIRIUS XM Radio broadcasts more than 300 channels of programming,
including exclusive radio offerings from Howard Stern, Oprah, Opie
& Anthony and Martha Stewart, among others. SIRIUS XM Radio will
offer these expanded options to consumers through arrangements
with the world's leading automakers and its relationships with
nationwide retailers.
As a result of the merger, SIRIUS XM Radio will also be able to
offer consumers new packages in audio entertainment, including the
first-ever a la carte programming option in subscription media.
In addition to two a la carte options, the new packages will
include: "Best of Both," giving subscribers the option to access
certain programming from the other network; discounted Family
Friendly packages; and tailored packages including "Mostly Music"
and "News, Talk and Sports." The first of the new packages will
be available in the early Fall.
"One of the most exciting benefits of this transaction is the
ability to offer subscribers the option of expanding their
subscriptions to include the Best of Both services. Given the
respective popularity of exclusive programming on both SIRIUS and
XM, we expect many subscribers will upgrade their current
subscription," said Mr. Karmazin.
"The upside potential for both consumers and shareholders is huge.
Consumers have the ease of adding premier programming without
purchasing a new device. For shareholders, this kind of organic
growth is a key part of the company's future and the success we
expect to see," said Mr. Karmazin.
As promised when the merger was first announced, existing radios
will continue to work and every subscriber has the option of
maintaining their current service package.
Synergies Expected
SIRIUS XM Radio expects to begin realizing the synergies expected
from this transaction immediately.
"In addition to realizing significant potential revenue growth,
the management team will move quickly to capitalize on the
synergies that many analysts have predicted for this combination.
We expect to begin achieving those synergies without sacrificing
any of the world-class programming and marketing we are known
for," said Mr. Karmazin.
The company also reiterated guidance for the combined SIRIUS XM
Radio. Based upon a preliminary analysis, the combined company
expects to realize total synergies, net of the costs to achieve
such synergies, of approximately $400 million in 2009; to post
adjusted EBITDA exceeding $300 million in 2009; and to achieve
positive free cash flow, before satellite capital expenditures,
for the full year 2009. The company also expects that both
synergies and adjusted EBITDA will continue growing beyond 2009.
"We have all the tools necessary to begin executing as a combined
company with high aspirations for subscriber growth and greater
financial performance in part from the significant synergies that
we begin realizing literally -- on Day One. We are moving quickly
to integrate the operations," said Mr. Karmazin.
The corporate headquarters will be located in New York City and XM
Satellite Radio, the company's wholly-owned subsidiary, will
remain headquartered in Washington, DC.
Effective after the close of the market yesterday, trading in XMSR
common stock on the Nasdaq Global Select Market ceased.
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
About XM Satellite
Headquartered in Washington, D.C., XM Satellite Radio Holdings
Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite
radio company. The company broadcasts live daily from studios in
Washington, DC, New York City, Chicago, Nashville, Toronto and
Montreal.
The company also provides satellite-delivered entertainment and
data services for the automobile market through partnerships with
General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki
and Toyota.
At June 30, 2008, the company's consolidated balance sheet showed
$1.7 billion in total assets, $2.9 billion in total liabilities,
and $60.2 million in minority interest, resulting in a roughly
$1.2 billion stockholders' deficit.
* * *
As disclosed in the Troubled Company Reporter on July 30, 2008,
Standard & Poor's Ratings Services said that its ratings on
Washington, D.C.-based XM Satellite Radio Holdings Inc. and
subsidiary XM Satellite Radio Inc., including the 'CCC+' corporate
credit rating, remain on CreditWatch with developing implications,
where S&P placed them on March 4, 2008.
The proposed merger between XM and Sirius Satellite Radio Inc.
(CCC+/Watch Dev/--) was approved by the FCC on July 25, 2008.
CreditWatch Developing indicates that S&P may raise, lower, or
affirm ratings. S&P could raise the ratings if the proposed
merger is accompanied by significant refinancing and cost
rationalization. S&P could lower the ratings with or without a
merger if sizable maturities are not addressed and if the company
cannot progress rapidly toward consistent positive discretionary
cash flow. S&P initially placed the ratings on CreditWatch on
Feb. 20, 2007, then with positive implications, based on the
company's definitive agreement to an all-stock "merger of equals"
with Sirius Satellite Radio.
At the same time, Standard & Poor's also assigned its 'CCC-'
rating to XM Satellite Radio Inc.'s proposed $550 million Rule
144A exchangeable senior subordinated notes due 2014, and placed
the rating on CreditWatch with developing implications, along with
the other ratings on the company.
XM SATELLITE: Launches Offering of $550MM Exchangeable Sr. Notes
----------------------------------------------------------------
XM Satellite Radio Holdings Inc. disclosed that XM Satellite Radio
Inc., its wholly-owned subsidiary, is launching an offering of
$550 million aggregate principal amount of exchangeable senior
subordinated notes due 2014. The Notes will be exchangeable into
shares of SIRIUS Satellite Radio Inc. common stock. The offering
of the Notes is part of a series of transactions to refinance
certain debt of XM in connection with the pending merger with
SIRIUS. The offering will be conditioned on the closing of the
merger which remains subject to the approval from the Federal
Communications Commission and satisfaction of other applicable
conditions.
SIRIUS has filed a registration statement with the Securities and
Exchange Commission to register the resale of the SIRIUS common
stock delivered upon exchange of the Notes.
The coupon, exchange rate and other terms of the Notes will be
determined at the time of pricing of the offering. The Notes will
be XM Radio's unsecured, senior subordinated obligations, will be
subordinated to any senior debt of XM Radio and will rank equally
with any future senior subordinated debt of XM Radio. The Notes
will be fully and unconditionally guaranteed by XM Satellite Radio
Holdings Inc. and each of XM Radio's subsidiaries which also
guarantee XM Radio's other indebtedness.
Concurrently with the offering of the Notes, SIRIUS will enter
into share lending agreements with share borrowers, pursuant to
which SIRIUS will lend shares to the share borrowers.
Concurrently with the offering of the Notes, the share borrowers
will sell the borrowed shares in a separate public offering. The
sale of the borrowed shares is intended to facilitate privately
negotiated derivative transactions by which investors in the Notes
will hedge their investment in the Notes. The share borrowers
will be required to return the borrowed shares pursuant to the
share lending agreement following the maturity date of the Notes
or their earlier retirement. The share borrowers will receive all
of the proceeds from the sale of the borrowed shares.
SIRIUS will not receive any proceeds from the offering of the
borrowed shares, but will receive a nominal lending fee from the
share borrowers. While the borrowed shares will be considered
issued and outstanding for corporate law purposes, SIRIUS believes
that under U.S. generally accepted accounting principles currently
in effect, the borrowed shares will not be considered outstanding
for the purpose of computing and reporting earnings (loss) per
share because the borrowed shares are required to be returned to
SIRIUS.
About SIRIUS Satellite
Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq:
SIRI) http://www.sirius.com/-- provides satellite radio services
in the United States. The company offers over 130 channels to its
subscribers 69 channels of 100.0% commercial-free music and 65
channels of sports, news, talk, entertainment, data and weather.
Subscribers receive the company's service through SIRIUS radios,
which are sold by automakers, consumer electronics retailers,
mobile audio dealers and through the company's website.
Headquartered in Washington, D.C., XM Satellite Radio Holdings
Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite
radio company. The company broadcasts live daily from studios in
Washington, DC, New York City, Chicago, Nashville, Toronto and
Montreal.
The company also provides satellite-delivered entertainment and
data services for the automobile market through partnerships with
General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki
and Toyota.
At June 30, 2008, the company's consolidated balance sheet showed
$1.7 billion in total assets, $2.9 billion in total liabilities,
and $60.2 million in minority interest, resulting in a roughly
$1.2 billion stockholders' deficit.
* * *
As disclosed in the Troubled Company Reporter on July 30, 2008,
Standard & Poor's Ratings Services said that its ratings on
Washington, D.C.-based XM Satellite Radio Holdings Inc. and
subsidiary XM Satellite Radio Inc., including the 'CCC+' corporate
credit rating, remain on CreditWatch with developing implications,
where S&P placed them on March 4, 2008.
The proposed merger between XM and Sirius Satellite Radio Inc.
(CCC+/Watch Dev/--) was approved by the FCC on July 25, 2008.
CreditWatch Developing indicates that S&P may raise, lower, or
affirm ratings. S&P could raise the ratings if the proposed
merger is accompanied by significant refinancing and cost
rationalization. S&P could lower the ratings with or without a
merger if sizable maturities are not addressed and if the company
cannot progress rapidly toward consistent positive discretionary
cash flow. S&P initially placed the ratings on CreditWatch on
Feb. 20, 2007, then with positive implications, based on the
company's definitive agreement to an all-stock "merger of equals"
with Sirius Satellite Radio.
At the same time, Standard & Poor's also assigned its 'CCC-'
rating to XM Satellite Radio Inc.'s proposed $550 million Rule
144A exchangeable senior subordinated notes due 2014, and placed
the rating on CreditWatch with developing implications, along with
the other ratings on the company.
ZVUE CORP: Posts $7,559,000 Net Loss in 2008 First Quarter
----------------------------------------------------------
ZVUE Corp. reported a net loss of $7,559,000 on total net revenue
of $862,000 for the first quarter ended March 31, 2008, compared
with a net loss of $2,920,000 on total net revenue of $390,000 in
the same period last year.
Advertising revenues incrased from $75,000 to $841,000, while
product revenues dropped from $315,000 to $21,000 during the
current period as no personal media players (PMP) were sold due to
the change in the company's hardware model to an Original
Equipment Manufacturer distribution model whereby the company
sources, bundles and sells portable media device units into retail
distribution with promotional themes.
The next scheduled OEM shipment is in late May 2008 when the
company's new ZVUE Spirit PMP will become available in Wal Mart's
retail stores. Wal Mart is the company's single largest customer
for its PMPs, the loss of which would have a material adverse
effect on the company's future results. The increase in
advertising revenues was primarily driven by ads on the company's
recently acquired eBaumsworld.com web site.
The net loss included non-cash charges related to web site cost
amortization and stock-based compensation totaling $2,978,000 and
$1,074,000 for the three months ended March 31, 2008, and 2007,
respectively.
Interest expense was $2,892,000 compared with $23,000 for the
three months ended March 31, 2007.
The interest expense during the current period includes $2,340,000
of non-cash amortization of debt discount associated with the
issuance of convertible debentures in October 2007. During the
three months ended March 31, 2008, no cash payments for interest
were made.
Cash and cash equivalents were $4,614,000 at March 31, 2008
compared to $4,766,000 at Dec. 31, 2007.
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$35,708,000 in total assets, $10,734,000 in total liabilities, and
$24,974,000 in total shareholders' equity.
The company's consolidated balance sheet at March 31, 2008, also
showed strained liquidity with $7,430,000 in total current assets
available to pay $7,587,000 in total current liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2d04
Going Concern Doubt
Salberg & Company, P.A., in Boca Raton, Florida, expressed
substantial doubt about ZVUE Corp.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's net loss of $18,188,833 and net cash used
in operations of $12,156,127 for the year ended Dec. 31, 2007, and
accumulated deficit of $41,218,007 at Dec. 31, 2007.
The company has incurred losses and negative cash flows from
operations and has an accumulated deficit at March 31, 2008, of
$48,777,000.
With the company's available cash of $4,614,000 at March 31, 2008,
and $3,673,000 available from a financing agreement with a related
party and the expected growth in its business, the company
believes that it will have sufficient funds and anticipated future
cash flows to continue in operation at least through the end of
2008.
About ZVUE Corp.
Based in San Francisco, ZVUE Corporation (Nasdaq: ZVUE)
-- http://www.zvue.com/-- is a global digital entertainment
company. ZVUE(TM) personal media players are mass-market priced
and currently available for purchase online and in Wal-Mart stores
throughout the U.S.
* Moody's: FASB No. 163 Unlikely to Affect Guarantors' Ratings
--------------------------------------------------------------
In a new report, Moody's Investors Service concludes that the
implementation of the recently issued Statement of Financial
Accounting Standards No. 60 (FAS 163) should not affect the
monolines' insurance financial strength or credit ratings.
According to the report, the standard's guidance on both claim
liabilities and revenue recognition should reduce diversity in the
guarantors' reporting and should also facilitate peer comparisons
among these financial statement users.
Vice President and Senior Accounting Analyst Wallace Enman said
that the 2009 implementation of FAS 163 will typically result in
"a modest deceleration in earnings patterns on that business for
which premium is received at inception (e.g., municipal business)
compared with previous accounting policies," and that this in turn
will be partially offset by (a) accelerated revenue recognition on
the installment-premium business and (b) by a minor decrease in
loss reserves, at least when compared with those of current
reserving practices.
"Although companies have yet to fully analyze the effects of FAS
163 on income and equity," he points out, "it is likely that -- on
an aggregate basis -- there will be a moderate reduction to GAAP
equity recorded as a cumulative-effect adjustment upon
implementation."
"The change in accounting will not affect the underlying economics
of the monolines," the analyst states, "so FAS 163 should not
alter our assessment of the guarantors' fundamental claims-paying
ability."
"Although the updated accounting guidance shouldn't directly
affect the economic character of the financial guaranty business,"
Mr. Enman adds, "there may be modest indirect impacts to the
industry upon implementation. Following significant losses from
mortgage-related and other exposures, the guarantors have thinner
equity cushions above triggers or covenants in financial contracts
to absorb any cumulative effect adjustments upon adoption.
Additionally, the reduction in equity upon adoption or decelerated
earnings after adoption could potentially hurt the firms'
attractiveness in the eyes of some investors."
The report is titled "Credit Implications of FAS 163 - FASB
Guidance on Financial Guarantee Industry Accounting."
* Fitch: Auto Lease Plan Changes Sign of Declining Resale Values
----------------------------------------------------------------
The recent announcements by the financing arms of Chrysler, GM and
Ford regarding the discontinuation or overhaul of their auto lease
programs underscores the impact of rapidly declining vehicle
resale values, according to Fitch Ratings.
Earlier this week Chrysler Financial, GMAC and Ford Motor Credit
announced significant changes to their auto lease businesses with
Chrysler Financial suspending their U.S. auto lease program all
together. GMAC announced it will stop subsidizing leases in
Canada and will eliminate certain lower credit quality borrowers
from consideration domestically. Ford announced significant
increases in lease rates for certain SUVs and trucks. All three
companies indicated that their decision was influenced by the
ongoing decay in the resale values of vehicles coming off lease.
Coincident with these declines, Fitch is currently completing a
review of its auto lease ratings with a focus on the 2007 and 2008
vintages. Fitch currently has 20 public ratings outstanding from
10 transactions representing approximately $7.2 billion in
principal outstanding from 2007 and 2008 U.S. captive finance
company issuances. The initial review is expected to be completed
over the next two to three weeks.
'As Fitch has noted, dramatic drops in the value of used cars is
impacting the entire auto ABS sector, but those declines are
having an amplified affect on the performance of auto lease
transactions,' said Managing Director and U.S. ABS group head
Kevin Duignan. 'Transactions from 2007 and 2008 may not have
built enough credit enhancement to offset the potential increase
in residual value losses while still maintaining coverage
consistent with Fitch's original ratings.'
U.S. captive finance companies, in particular, are experiencing
higher than expected residual value losses due to the steep drop
in the values of vehicles coming off lease especially for SUVs and
trucks. Fitch's base case residual value loss expectation for
these companies' auto lease ABS transactions has increased by
20-30% since the second half of 2007 as value declines
accelerated. However, current data suggests that actual declines
are exceeding this range in certain transactions with further
deterioration expected. 'While ratings in the auto lease sector
have traditionally been remarkably stable, the rapid rate of
decline in vehicle values over the past six months is
unprecedented and will put those ratings to the test,' said ABS
Senior Director Ravi Gupta.
* S&P: Issuers List for Possible Upgrade Fewer by 106 in 12 Months
------------------------------------------------------------------
This month's count of issuers poised for upgrades fell to 287, 13
fewer than June's count and 106 fewer than 12 months ago, said an
article published by Standard & Poor's. The article, which is
titled "Upgrade Potential Across Credit Grades And Sectors
(Premium)," says that by comparison, this is the lowest level in
the history of this report, including September 2004's 305
entities poised for upgrades and May 2008's tally of 292. On the
other hand, potential bond downgrades are still at their highest
level in 35 months at 745 entities.
"There has been a substantial decline in the total count of the
potential bond upgrades since July 2007, the beginning of
disruptions in the credit markets," noted Diane Vazza, head of
Standard & Poor's Global Fixed Income Research Group. "We expect
that the deceleration in potential bond upgrades this month will
likely diminish further as factors that support upward momentum
weaken."
The credit deterioration in the U.S. today compared with 12 months
ago is largely the reason for the drop in issuers poised for
upgrades, but Europe, albeit to a lesser extent, has echoed this
trend as well. Latin America, Eastern Europe/Middle East/Africa,
and Canada, on the other hand, have been relatively stable. As
global credit quality deteriorates, however, this stability is
likely to diminish as well.
* S&P Says Number of Companies in Default Reaches Global High
-------------------------------------------------------------
Globally, 20 companies (12 public and eight confidentially rated)
defaulted in the second quarter of 2008, according to an article
published by Standard & Poor's. The article, which is titled
"Quarterly Default Update And Rating Transitions (Premium)," says
that this is the highest number of defaults since the third
quarter of 2003 and only two fewer than the total number of
defaults for all of 2007.
The volume of rated debt affected by last quarter's defaults was
$18.05 billion. "This is significantly higher than the $8.55
billion recorded in 2007 though well below the most recent peak of
$25.1 billion in the fourth quarter of 2005," observed Diane
Vazza, head of Standard & Poor's Global Fixed Income Research
Group.
All the 20 defaults reported in the second quarter of 2008 were
domiciled in the U.S., with all but two coming from the
nonfinancial sector.
Globally, the corporate default rate for speculative-grade rated
entities moved to 0.51% at the end of the second quarter of 2008
from 0.16% for the same period in 2007. On a trailing-12-month
basis, the global speculative-grade default rate as of June 30,
2008, has reached a 29-month high of 1.44%, though it is below the
long-term (1981-2007) average of 4.35%, where it has stayed for 44
consecutive months.
Standard & Poor's also published another article, titled "
Second-Quarter 2008 Quarterly Default Synopses," that summarizes
each of the 20 second-quarter 2008 defaults. Also included are
the defaulting instruments for each company that was rated by
Standard & Poor's.
* S&P Lowers Ratings on Six Classes from Three US Prime Jumbo RMBS
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on six
classes of mortgage pass-through certificates from three U.S.
prime jumbo residential mortgage-backed securities transactions
issued in 2003 and 2004. At the same time, S&P affirmed its
ratings on 116 classes from the same transactions.
The downgrades reflect either current or projected credit support
levels that are not sufficient to support the certificates at
their previous rating levels. Class D-B-6 from Credit Suisse
First Boston Mortgage Securities Corp.'s series 2003-23, class D-
B-5 from CSFB Mortgage-Backed Trust Series 2004-8, and class B5
from Structured Asset Securities Corp.'s series 2004-18H all
experienced principal write-downs recently due to the depletion of
credit support, which prompted us to downgrade theses classes to
'D'. During recent months, these three deals have experienced
deterioration in credit support, and the dollar amount of loans in
their delinquency pipelines indicate that the pattern of losses
could continue.
As of the June 2008 distribution period, cumulative losses ranged
from 0.11% (Structured Asset Securities Corp's series 2004-18H) to
26% (Credit Suisse First Boston Mortgage Securities Corp.'s series
2003-23, loan group 2) of the original pool balances. Serious
delinquencies (90-plus days, foreclosures, and real estate owned)
ranged from 0.39% (CSFB Mortgage-Backed Trust Series 2004-8, loan
group 11) to 2.32% (Credit Suisse First Boston Mortgage Securities
Corp.'s series 2003-23, loan group 2) of the current pool
balances. The seasoning of these deals ranged from 42 months to
56 months as of the June 2008 distribution period.
The affirmations reflect actual and projected credit enhancement
percentages that are sufficient to support the current ratings. A
senior-subordinate structure provides credit support for these
transactions.
The collateral backing the certificates originally consisted of
15- to 30-year prime fixed- and adjustable-rate mortgage loans
secured by one- to four-family residential properties.
Ratings Lowered
Credit Suisse First Boston Mortgage Securities Corp.
Rating
------
Series Class To From
------ ----- -- ----
2003-23 D-B-6 D CCC
CSFB Mortgage-Backed Trust
Rating
------
Series Class To From
------ ----- -- ----
2004-8 B-5 CCC B
2004-8 D-B-4 B- BB-
2004-8 D-B-5 D CCC
Structured Asset Securities Corp.
Rating
------
Series Class To From
------ ----- -- ----
2004-18H B4 CCC B
2004-18H B5 D CCC
Ratings Affirmed
Credit Suisse First Boston Mortgage Securities Corp.
Series Class Rating
------ ----- ------
2003-23 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5 AAA
2003-23 I-A-6,I-A-7,I-A-10,I-A-11,I-A-14 AAA
2003-23 I-A-15,I-A-16,I-A-17,I-A-18,I-A-19 AAA
2003-23 I-A-20,I-A-21,I-A-22,II-A-1,II-A-2 AAA
2003-23 II-A-4,II-A-5,II-A-6,II-A-8,I-X,II-X AAA
2003-23 IP,A-P,III-A-2,III-A-3,III-A-4 AAA
2003-23 III-A-5,III-A-6,III-A-7,III-A-8 AAA
2003-23 III-A-9,III-A-10,III-A-11,III-A-12 AAA
2003-23 IV-A-1,V-A-1,VI-A-1,VII-A-1,VIII-A-1 AAA
2003-23 VII-X,VIII-X,III-X,D-X,III-P,D-P AAA
2003-23 C-B-1,D-B-1 AA
2003-23 D-B-2 A+
2003-23 C-B-2,D-B-3 A
2003-23 D-B-4 BBB+
2003-23 C-B-3 BBB
2003-23 C-B-4,D-B-5 BB
2003-23 C-B-5 B
CSFB Mortgage-Backed Trust
Series Class Rating
------ ----- ------
2004-8 I-A-1,I-A-2,I-A-3,I-A-4,I-A-5 AAA
2004-8 I-A-6,I-A-7,I-A-8,I-A-9,VIIIA-1 AAA
2004-8 VIII-A-2,VIII-A-3,VIII-A-4,VIII-A-5 AAA
2004-8 VIII-A-6,VIII-A-7,A-P,A-X,II-A-1 AAA
2004-8 IV-A-1,IV-A-2,IV-A-3,IV-A-4,IV-A-5 AAA
2004-8 IV-A-6,IV-A-7,IV-A-8,IV-X,D-X,VA-1 AAA
2004-8 V-A-2,VII-A-1,D-P,III-A-1,III-A-2 AAA
2004-8 III\u2014A-3,III-A-4,III-A-5,VI-A-1,VI-X AAA
2004-8 D-B-1,B-1 AA
2004-8 D-B-2,B-2 A
2004-8 D-B-3,B-3 BBB
2004-8 B-4 BB
2004-8 C-B-5 B
Structured Asset Securities Corp.
Series Class Rating
------ ----- ------
2004-18H A-3,A-4,A-5,A-IO1,A-IO2, AAA
2004-18H B1 AA
2004-18H B2 A
2004-18H B3 BBB
* BOOK REVIEW: Working Together
-------------------------------
Title: Working Together: 12 Principles for Achieving
Excellence in Managing Projects, Teams, and
Organizations
Author: James P. Lewis
Publisher: Beard Books
Paperback: 208 pages
List Price: US$34.95
Order your personal copy at
http://www.amazon.com/exec/obidos/ASIN/158798279X/internetbankrupt
Henry Berry of Turnarounds & Workouts said in December 2006:
Working Together is about the passionate implementation of a set
of management principles that were instrumental in the
development of new airplanes at the Boeing Company and, in
particular, the groundbreaking Boeing 777 aircraft.
The chief engineer of the Boeing 777 program when it was
undertaken in the early 1980s was Alan Mulally. He was soon
promoted to general manager of the project and, in 1986, was
named president of Commercial Airplanes. Mr. Mulally remained
with Boeing for 37 years, eventually leading Boeing Commercial
Airplanes to a turnaround that began in 1996.
And if the name sounds more than familiar, it should: in
September 2006, Ford Motor Company named Mr. Mulally as its new
President and CEO, citing his record of success during his long
tenure at Boeing. Through all of those years, Mr. Mulally made
the "working together" principles and practices his gospel. He
has been a vocal advocate of both the principles and this book
by James Lewis even during his highly visible transition to
Ford.
Working Together chronicles the application of Mulally's
leadership principles during his years at Boeing, especially
during the execution of the 777 project. The 12 principles
espoused in "working together" comprise a management philosophy
that enabled Boeing "to dramatically increase production on all
of our airplanes, improve our entire production system, and
develop a number of new airplanes all simultaneously," as Mr.
Mulally notes in the Foreword to the book.
The value and effectiveness of working together is conveyed in a
dramatic way by the author. Mr. Lewis introduces the high
stakes that Boeing faced in developing the 777. At first, the
company bit off more than it could chew. Fired by the
enthusiasms and passions of employees exemplified by Mr.
Mulally, Boeing pursued an ideal that exceeded its capacity to
meet. At one point, Boeing had to "stop global production for
lack of parts." Boeing was losing money, risking its future,
and disappointing its customers, investors, and employees.
But the roots of its problems were basically a lack of proper
preparedness and organization. With Mr. Mulally in charge,
operations were revised according to the model of working
together. Work processes were reinforced, reinvigorated, and
closely monitored. Practices such as focused agendas for
meetings, clear assignments, communication among disparate
employee segments, solicitation of input, and keeping a project
on track, were implemented.
Boeing underwent a transformation from a company in danger of
permanently damaging its reputation and competence, to a company
that reaffirmed its preeminence in the field of airplane design
and production.
As he took over the reins at Ford, Mr. Mulally observed that
many of the challenges he addressed in commercial airline
manufacturing are analogous to the issues he will now face at
the car manufacturing giant. He stated, "I'm looking forward to
working closely with Bill [Ford] in the ongoing turnaround of
this great company. I'm also eager to begin engagement with the
leadership team. I believe strongly in teamwork and I fully
expect that our efforts will be a productive collaboration."
James P. Lewis is President of Lewis Institute, Inc., a training
and consulting company specializing in project management, which
he founded in 1981. He also teaches seminars on the subject in
the United States, England, and Asia.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Raphael M. Palomino, Shimero R. Jainga, Ronald C. Sy, Joel
Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino
Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph
Medel C. Martirez, Ma. Cristina I. Canson, Christopher G.
Patalinghug, and Peter A. Chapman, Editors.
Copyright 2008. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***