/raid1/www/Hosts/bankrupt/TCR_Public/081028.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, October 28, 2008, Vol. 12, No. 257
Headlines
ACCELLENT INC: Moody's Holds 'Caa1' Rtng; Changes Outlook to Neg.
ACUSPHERE INC: Secures $20-Million Financing from Cephalon Inc.
AETERNA ZENTARIS: Shares Below $1 Apiece But Stays in Nasdaq
AFFIRMATIVE INSURANCE: Moody's Affirms IFS Rating at 'Ba1'
ALADDIN SYNTHETIC: Moody's Slashes Five Notes Ratings to 'Ca'
ALADDIN SYNTHETIC: Moody's Slashes 'Aa2' Notes Rating to 'Caa1'
ALADDIN SYNTHETIC: Moody's Trims $250MM Series A-3 Notes to 'Ba1'
ALADDIN SYNTHETIC: Moody's Lowers Two Notes Ratings to Ca from Ba2
ALLIANCE IMAGING: S&P Lifts Corp. Credit Rating to 'BB-' from 'B+'
AMERICAN INT'L: Paula Reynolds as Chief Restructuring Officer
AMERICAN PACIFIC: Section 341(a) Meeting Scheduled for Nov. 20
AMES DEPARTMENT: Court Extends Solicitation Period to April 23
AVIGMAR INC: Voluntary Chapter 11 Case Summary
AVIS BUDGET: Weak Earnings Cues S&P to Chips Credit Rating to 'B+'
BAPTIST HEALTH: S&P Lifts $135MM Bonds Rating to 'A1' from 'Ba2'
BEAR STEARNS: S&P Holds Ratings on 23 Classes of Certificates
BERRY PETROLEUM: S&P Changes Outlook to Neg. on Liquidity Concerns
BIG3D, INC.: Case Summary & 20 Largest Unsecured Creditors
BILL HEARD: May Owe Synovus Financial $53 Million
BON-TON STORES: Moody's Reviews Ratings on Lower Forecasts
BOSCH MOTORS: Case Summary & 20 Largest Unsecured Creditors
BOSCOV'S INC: Extends Sale of Assets; Hearing Set for November 5
BUFFETS HOLDINGS: Gets OK for $85M Loan Rates Hike, Drops Fees
BUFFETS HOLDINGS: Court Extends Plan Filing Period Until Dec. 1
C-BASS MORTGAGE: Moody's Cuts Ratings on 214 Tranches from 23 RMBS
CBRE REALTY: Non-Compliant with NYSE's $25-Mil. Market Cap.
CHAPARRAL ENERGY: Postponed Merger Vote Cues S&P to Revise Watch
CHRYSLER LLC: Will Lay Off 5,000 Employees; GM Talks Continue
CHRYSLER LLC: Bankruptcy Speculations Among Analysts Persist
CLEVELAND BIOLABS: Receives Notice of Non-Compliance from Nasdaq
CMP SUSQUEHANNA: Moody's Cuts CF and PD Ratings to Caa2 from B2
COMFORT CO: D.E. Shaw Laminar Portfolios Opposes $35MM Financing
COMFORT CO: Section 341(a) Meeting Scheduled for November 7
COMIJA INC: Section 341(a) Meeting Scheduled for November 5
COMMERCIAL VEHICLE: S&P Trims Credit Rating to 'B'; Outlook Neg.
CREDIT & REPACKAGED: Moody's Cuts Two Notes Rtngs to Ba3 from Ba1
DAVE & BUSTER: S&P Affirms Corporate Credit Rating at 'B'
DEVELOPERS DIVERSIFIED: S&P Trims Preferred Stock Rating to 'BB'
DIEDRICH COFFEE: Market Value Below $5MM, But Nasdaq Suspends Rule
DIGITALFX INT'L: Sends AMEX Compliance Plan, Relies on Products
DILLARD'S INC: Weak Performance Cues Moody's Ratings Review
DIXIE SALES: Voluntary Chapter 11 Case Summary
DRUID TOWN: Section 341(a) Meeting Scheduled for November 13
ELECTRICAL COMPONENTS: S&P Holds 'CCC+' Rating on Credit Amendment
EQUAN REALTY: Taps Michael Schwartz as General Bankruptcy Counsel
FANNIE MAE: Investors Losing Confidence in Fannie and Freddie
FEDDERS CORP: Firms Seek Nearly $5MM in Service Fees
FEDERAL-MOGUL: Earns $61.7MM for Nine Months ended September 30
FGIC CORPORATION: Moody's Reviews 'B1' Rating for Likely Cut
FREESCALE SEMICONDUCTOR: Draws $460,000,000 from Credit Revolver
FREDDIE MAC: Investors Losing Confidence in Firm
FREMONT GENERAL: Taps Epstein Becker as Special Litigation Counsel
FREMONT HOME: S&P Lowers Ratings on 13 Classes of Certificates
GENERAL MOTORS: To Lay Off More Workers, Cut Employee Benefits
GENERAL MOTORS: Bankruptcy Speculations Among Analysts Continue
GMAC LLC: Forgives ResCap's $196.8MM Debt; Credit Pact Amended
GRANITE XPERTS: Section 341(a) Meeting Scheduled for Nov. 13
GREYLOCK SYNTHETIC: Moody's Cuts $1.5MM Notes Rating to 'Ba2'
GREYLOCK SYNTHETIC: Moody's Reviews "Ba2' Ratings for Likely Cut
GS CDS: Moody's Cuts 6.5% of $100MM Credit Derivative Rating to Ca
GS CDS: Moody's Junks 13.5% of $100MM Credit Derivative Rating
HARBOUR WALK: Files Disc. Statement on Plan to Liquidate Assets
HARRAH'S ENTERTAINMENT: Implements Cost Cutting Measures
HASCO: Moody's Trims Ratings on 140 Tranches from 17 Subprime RMBS
HESKA CORP: Trades Below $1 for 30 Days, But Nasdaq Rule Suspended
HIGHLAND CREDIT: Market Value Slide Cues Moody's to Cut Ratings
HILLCREST CDO: Moody's Lowers Notes Ratings on Poor Credit Quality
HRP MYRTLE: Gets Final OK to Access $2-Mil. Cerberus DIP Facility
HRP MYRTLE: Paul Hastings Approved as Bankruptcy Counsel
I-MANY INC: Has Until Nov. 20 to Meet Nasdaq's Market Cap Rule
INDIANAPOLIS DOWNS: S&P Junks Corp. Credit Rtng; Outlook Negative
INSTANT WEB: S&P Puts Ratings Under Neg. Watch on NC Plant Closing
JHT HOLDINGS: Emerges from Bankruptcy; Names Testman as CEO
JOSHUA SALVADOR: Case Summary & 15 Largest Unsecured Creditors
KINNEY HILL: Moody's Slashes $19.25MM Notes Rating to Ba2 from A2
KIRK PIGFORD: Bankr. Adm. Sets 341(a) Meeting for November 10
LARRY GLETZER: Section 341(a) Meeting Scheduled for November 12
LAWRENCE TOTTER: Section 341(a) Meeting Scheduled for Dec. 16
LBREP/L-SUNCAL: Wants Cases Converted to Chapter 7 Proceedings
LEE'S TRUCKING: Court Okays Deininger & Wingfield as Tax Attorney
LORRIE MORGAN: Files for Chapter 7 Bankruptcy in Tennessee
MARIOTTI'S CLEANING: Voluntary Chapter 11 Case Summary
MERCURY CDO: Moody's Downgrades Two Notes Ratings to 'Ca'
METROMEDIA STEAKHOUSE: Gets OK to Borrow $1-Mil. From Parent
ML-CFC COMMERCIAL: S&P Affirms Ratings on 25 Classes of Certs.
MLMI TRUST: Moody's Lowers Ratings on 288 Tranches from 27 RMBS
MODTECH HOLDINGS: Earnings Affected by Delays, Cancellations
MORGAN STANLEY: Moody's Chips Ratings to 'Ba1' on Two Notes
MORGAN STANLEY: Moody's Cuts $6MM Fixed Rate Notes Rating to 'B1'
MORGAN STANLEY: Moody's Junks Four Ratings on Poor Credit Quality
MORGAN STANLEY: Moody's Slashes $30MM Notes Rating to Ba1 from Aaa
MORGAN STANLEY: Moody's Trims Class IA Notes Rating to B2 from Ba1
MORGAN STANLEY: S&P Holds Ratings on 21 Classes of Certificates
NANCY JEAN SERWIN: Case Summary & 12 Largest Unsecured Creditors
NEW YORK TIMES: S&P Cuts Corp. Credit Rating to 'BB-' from 'BBB-'
NORTHLAKE FOODS: May Employ Tatum LLC as Financial Advisors
ORBIT PETROLEUM: Myers Named President; Parent Co. Not in Ch. 11
PACIFIC LIFESTYLE: Section 341(a) Meeting Scheduled for December 2
PAUL REINHART: Lenders Object to Debtor's Use of Cash Collateral
PAUL REINHART: U.S. Trustee Sets 341(a) Meeting for Oct. 28
PEABODY ENERGY: S&P's Rtngs Unmoved by Doubling Repurchase Program
PETTERS GROUP: Larry Reynolds Admits to Fraud With Founder
PILGRIM'S PRIDE: Debt Covenant Waiver Extended to November 26
PITTSBURG PRODCUE: Voluntary Chapter 11 Case Summary
PLASTECH ENGINEERED: Court Approves Amended Disclosure Statement
POWER MEDICAL: Nasdaq Issues Notice of Listing Non-Compliance
PRECISION DRILLING: Moody's Assigns '(P)Ba1' CF and PD Ratings
PRINTERS ROW: Receives $5-Million Loan for Hotel Blake Payment
PROSPECT FUNDING: Moody's Cuts Notes Ratings on Market Value Slide
PROVIDENCE SERVICE: Impaired Logistic Deal Cues Moody's Review
PUTNAM PRIME: Moody's Confirms 'B' Rating; Withdraws Afterwards
QUEBECOR WORLD: Appoints Regis Rehel as Canadian Unit President
QUEBECOR WORLD: Files Annual Financial Results for Fiscal 2007
RED SHIELD: Ct. Okays Sale of Mill to Patriarch Partners for $19MM
RED SHIELD: Maine Court Approves $19 Million Mill Asset Sale
RESIDENTIAL CAPITAL: GMAC Forgives $196.8MM Debt; Loan Amended
RH DONNELLEY: S&P Holds 'B+' Rating; Changes Outlook to Negative
ROME FINANCE: Section 341(a) Meeting Scheduled for November 17
SABR TRUST: Moody's Cuts Ratings on 232 Tranches from 32 RMBS
SANDISK CORP: S&P Removes Ratings from CreditWatch; Outlook Stable
SANKATY HIGH: Moody's Cuts Notes Ratings on Poor Market Value
SANKATY HIGH: Moody's Trims Ratings on Seven Notes to 'Ca'
SCIENTIFIC LEARNING: Has Until Nov. 21 to Comply with Nasdaq Rule
SCRIPPS SIMPLON: Section 341(a) Meeting Scheduled for Nov. 18
SEMGROUP LP: Pays Hiland $12.1 Million for Assumed Contract
SEQUOIA MORTGAGE: S&P Lowers Ratings on Eight Certificate Classes
SHARPER IMAGE: Changes Payment Threshold in Incentive Plan
SHERBURNE COMMONS: Case Summary & 18 Largest Unsecured Creditors
SHERBURNE COMMONS: Loan Default Cues Chapter 11 Filing
SKYPORT GLOBAL: Case Summary & 20 Largest Unsecured Creditors
SOLUTIA INC: Projects $106MM EBITDA for 3rdQ; 10-Q on Oct. 29
SOUNDVIEW: Moody's Lowers Ratings on 256 Tranches from 26 RMBS
SPIRIT FINANCE: S&P Holds 'B+' Rating on $850MM Credit Facility
SPANSION INC: S&P Cuts Corp. Credit to 'B-' with Negative Outlook
STAR-LEDGER: 40% of Newsroom Staff Will Exit Company
SOUTHEAST WAFFLES: Wants to Stop Lawsuits, Defends CEO
SUN MEADOWS: Section 341(a) Meeting Scheduled for October 29
SUNCAL COMPANIES: California Projects 'Under Water' by $300 Mil.
SWISS CHEETAH: Moody's Cuts $10MM Default Swap Rating to 'Caa1'
SWISS CHEETAH: Moody's Lowers $10MM Default Swap Rating to 'Caa1'
SWISS CHEETAH: Moody's Trims $10MM Default Swap Rating to 'Caa1'
SYNCORA GUARANTEE: Moody's Junks and Reviews IFS Ratings
TEGRANT CORP: Moody's Lowers All Ratings on Material Shortfall
THREE STROKES: Section 341(a) Meeting Scheduled for November 13
TICKETMASTER: S&P's 'BB+' Ratings Unaffected buy Investment Deal
TIERS 2006-9: Moody's Trims S. 2006-9 Certs. Rating to B2 from Ba1
TIERS 2006-10: Moody's Junks Series 2006-10 Certificates Rating
TIERS ALASKA: Moody's Lowers Certificate Rating to 'B3' from 'Ba2'
TOUGHER INDUSTRIES: Trustee Files $3.6-Million Suit vs. PSEG
TRS: Moody's Chips $25MM Mezzanine Tranche Rating to Ba1 from Aaa
TRS: Moody's Downgrades $50MM Mezzanine Tranche Rating to 'Ba1'
URBAN SPACES: Case Summary & 18 Largest Unsecured Creditors
VALMONT INDUSTRIES: Moody's Keeps 'Ba1' CF and PD Ratings
VALUE CITY: Case Summary & 50 Largest Unsecured Creditors
VALUE CITY: Seeks Ch. 11 Protection; GOB Sales to Continue
VINEYARD CHRISTIAN: Taps Pachulski Stang as Bankruptcy Counsel
VONAGE HOLDINGS: Waives Financing Condition of Tender Offer
WACHOVIA BANK: S&P Puts Certs. Ratings Under Negative CreditWatch
WASHINGTON MUTUAL: Board Approves Changes in Management Layout
WCI COMMUNITIES: Court OKs $3.5MM Sale of 22 Condominium Units
WCI COMMUNITIES: Court Extends Plan Filing Period until June 2
WEST MAIN: Voluntary Chapter 11 Case Summary
WIDGET POST: Voluntary Chapter 11 Case Summary
WILTON PRODUCTS: S&P Holds 'B3' CF & PD Ratings; Outlook Negative
WOOD FAMILY: City OKs Jack Rose's Pullout From Ballpark Project
YRC WORLDWIDE: S&P Puts 'BB' Corp. Credit Rating Under Neg. Watch
* S&P Cuts Ratings on 90 Tranches from 21 Cash Flow & Hybrid CDOs
* S&P Downgrades Ratings on 51 Classes from 35 U.S. RMBS
* Large Companies with Insolvent Balance Sheets
*********
ACCELLENT INC: Moody's Holds 'Caa1' Rtng; Changes Outlook to Neg.
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Moody's Investors Service changed Accellent Inc.'s rating outlook
to positive from negative and affirmed existing debt ratings
including the company's Corporate Family Rating at Caa1. At the
same time, Moody's is changing Accellent's Speculative Grade
Liquidity Rating to an SGL-3 from SGL-4.
Moody's most recent rating action on Accellent was on December 10,
2007 when the company's CFR and PDR were downgraded to Caa1 and
the outlook was changed to negative because of significant
concerns related to the possibility of a covenant default.
The positive outlook reflects improved prospects for covenant
compliance. Headroom under covenants amended in 2007 has been
better than expected during the first half of 2008, largely
attributed to stabilization of the orthopedic and cardiac product
markets and better profitability. The upgrade to SGL-3
incorporates Moody's expectation that Accellent's liquidity should
be adequate over the next twelve months, aided by stronger
operating cash flow.
Diana Lee, a Senior Credit Officer at Moody's said, "Accellent has
benefited from more stable trends in its end user markets as well
as operational improvements instituted by its relatively new
management team."
Moody's believes the company is still in a transitional phase
under its new management team, and consideration for a ratings
upgrade would be contingent on ongoing top line and cash flow
improvements, especially in light of future step-down provisions.
Furthermore, Accellent's acquisition strategy would also be
considered prior to upward rating movement.
Ratings affirmed:
Accellent Inc.
-- Corporate Family Rating at Caa1
-- Secured Revolver at B2, LGD 2, 29%
-- Secured Term Loan at B2, LGD2, 29%
-- Senior Subordinated Notes at Caa3, LGD5, 83%
-- Probability of Default Rating at Caa1
Rating upgraded:
Accellent Inc.
-- Speculative Grade Liquidity Rating to SGL-3 from SGL-4
Accellent Inc., headquartered in Wilmington, Massachusetts, is an
outsource manufacturer of medical products, primarily serving the
cardiology, endoscopy, and orthopedic markets.
ACUSPHERE INC: Secures $20-Million Financing from Cephalon Inc.
---------------------------------------------------------------
Acusphere, Inc., signed a definitive agreement with Cephalon, Inc.
to provide $20 million in upfront financing by purchasing a
$15 million senior secured convertible note and by paying a
$5 million upfront fee for an exclusive worldwide license to AI-
525, a preclinical-stage injectable formulation of celecoxib using
Acusphere's proprietary Hydrophobic Drug Delivery System (HDDS(TM)
technology. The transaction is expected to close in approximately
10 days.
The $15-million senior secured convertible note has a three-year
term and an interest rate of 8%, payable annually, at the option
of Acusphere, in cash or shares of common stock. At Cephalon's
option, the note is also convertible any time prior to the first
anniversary of the closing date into one of these:
1) a license for Imagify(TM) (Perflubutane Polymer
Microspheres) for Injectable Suspension, a cardiovascular
drug for the detection of coronary artery disease, in all
territories other than those previously licensed by
Acusphere to Nycomed;
2) a number of shares of Acusphere common stock equal to the
outstanding principal and accrued and unpaid interest on
the note at the time of conversion, divided by 90% of the
average closing price of Acusphere's common stock for the
ten day period prior to the signing date, provided that
Cephalon will receive upon conversion shares of common
stock constituting no less than 51% of the fully diluted
number of shares of common stock outstanding after giving
effect to the conversion; or
3) a $15 million credit against a future milestone payment
for approval by the U.S. Food & Drug Administration of the
initial indication for AI-525.
Sherri C. Oberg, President and CEO of Acusphere, said, "Our
transaction with Cephalon accomplishes three important objectives
for Acusphere. First, we secure necessary financing to advance
Imagify through the FDA review process. Second, it provides us
the potential to partner Imagify with Cephalon, whose success has
been built on a strategy of marketing high growth, innovative
products, building marketing and distribution channels and
investing in unique compounds that may change the course of
disease. We are pleased that Cephalon considers Imagify as a
potential new product that fits this profile. Finally, it
represents a significant strategic step for Acusphere as we
build on our technology platform and become a multi-product
company with Cephalon as a seasoned partner in the pain space
pushing forward the development of AI-525 and providing an
important choice in post-operative pain relief. We look forward
to closing this transaction shortly."
Under the AI-525 injectable celecoxib license, in addition to the
$5 million upfront fee, Cephalon will pay Acusphere an additional
$15 million upon FDA approval of the initial indication and a
royalty on global net sales.
AI-525 is an injectable formulation of the hydrophobic drug,
celecoxib, the active ingredient in Pfizer Inc.'s CELEBREX(R),
which had revenues of more than $2.3 billion in 2007. CELEBREX(R)
is a non-steroidal anti-inflammatory drug offering both anti-
inflammation and pain relief for osteoarthritis and rheumatoid
arthritis as well as acute pain, but it is currently available
only in oral form. Acusphere believes that a significant unmet
need exists for an injectable, non-opioid analgesic in a
postoperative setting that not only provides acute pain relief and
imparts anti-inflammatory effect, but also has an improved side
effect and safety profile versus the currently utilized Toradol(R)
or opioids. Given the large market for postoperative pain relief,
Acusphere believes AI-525 is well-positioned to fill this unmet
need, especially in partnership with an experienced drug developer
and marketer like Cephalon.
The Imagify license would include a $40 million payment to
Acusphere upon FDA approval of Imagify and a royalty on net sales.
Acusphere submitted the New Drug Application (NDA) for Imagify in
April 2008, and FDA accepted the filing in June 2008. An FDA
Advisory Committee meeting has been scheduled for Dec. 10, 2008,
to review Imagify. Under the Prescription Drug User Fee Act,
the anticipated action date for Imagify is Feb. 28, 2009.
Acusphere believes that Imagify, if approved, represents a cost-
effective, convenient and radiation-free alternative to nuclear
stress testing, the current standard for imaging coronary artery
disease, the leading cause of death in the U.S.
Prior to the closing of the transaction with Cephalon, and
pursuant to the stockholder approval received at Acusphere's
annual meeting of stockholders on June 5, 2008, the company
expects to file an amendment to its certificate of incorporation
with the Secretary of State of the State of Delaware increasing
the authorized number of shares of its common stock from
98.5 million to 250 million shares. The filing of the amendment
was approved by the finance committee of the company's board of
directors on Oct. 22, 2008.
In addition, Acusphere disclosed that NASDAQ has granted its
request for an exception to NASDAQ 's shareholder approval
requirements, in accordance with NASDAQ Marketplace Rule 4350(i),
which will enable Acusphere to issue the note to Cephalon without
stockholder approval. Absent this exception, NASDAQ rules would
have required the approval of Acusphere's stockholders prior to
issuance of the Note. To obtain this exception, Acusphere was
required to demonstrate to NASDAQ that the delay associated with
the effort to secure stockholder approval would have seriously
jeopardized its financial viability. As also required by NASDAQ,
on Oct. 15, 2008, the audit committee of Acusphere's board of
directors expressly approved its reliance on this exception,
based upon its determination that the current cash position of
Acusphere would not permit the Company to continue to operate
for the time required for the solicitation of stockholder
approval of the issuance of the note to Cephalon. As of
Sept. 30, 2008, the company's cash position was approximately
$4.1 million.
About Acusphere, Inc.
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) -- http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
company are focused on developing proprietary drugs that can
offer significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
Going Concern Doubt
Deloitte & Touche LLP in Boston raised substantial doubt about
the ability of Acusphere Inc. to continue as a going concern after
it audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor pointed to the company's recurring
losses from operations, negative cash flows from operations, and
the projected funding needed to sustain its operations.
As of June 30, 2008, the Company had cash and equivalents of
$12.0 million, current liabilities of $21.1 million and
stockholders' deficit of $0.8 million. During the six months
ended June 30, 2008, the Company incurred a net loss available to
common stockholders of $25.6 million. During the six months ended
June 30, 2008, operating activities used approximately
$10.4 million of cash. Given the Company's results from
operations, current forecasts, and financial position as of
June 30, 2008, the Company will require significant additional
funds in order to fund operations through and beyond the fourth
quarter of 2008.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying
financial statements have been prepared on the basis of a going
concern assumption and do not reflect any adjustments that might
result from the outcome of this uncertainty.
AETERNA ZENTARIS: Shares Below $1 Apiece But Stays in Nasdaq
------------------------------------------------------------
AEterna Zentaris Inc. received a letter from the Nasdaq Stock
Market, notifying AEterna Zentaris that during the 30 consecutive
business days prior to Oct. 16, 2008, the bid price of the
company's common shares had closed below the US$1.00 minimum bid
per share required for continued inclusion on the Nasdaq Global
Market under Marketplace Rule 4450(a)(5). However, the letter
states that given the current extraordinary market conditions,
Nasdaq has determined to suspend enforcement of the bid price and
market value of publicly held shares requirements through Friday,
Jan. 16, 2009. In that regard, the letter states that on Oct. 16,
2008, Nasdaq filed an immediately effective rule change with the
Securities and Exchange Commission to implement the suspension.
According to Nasdaq, these rules will be reinstated on Monday,
Jan. 19, 2009 and the first relevant trade date will be Tuesday,
Jan. 20, 2009.
Therefore, after the reinstatement of these rules, and in
accordance with Marketplace Rule 4450(e)(2), AEterna Zentaris will
be provided 180 calendar days from Tuesday, Jan. 20, 2009, or
until July 20, 2009, to regain compliance with the $1.00 minimum
bid per share under Marketplace Rule 4450(a)(5). If, at any time
before July 20, 2009, including during the suspension period, the
bid price of the company's common shares closes at $1.00 per share
or more for a minimum of 10 consecutive business days, Nasdaq will
provide written notification that AEterna Zentaris has achieved
compliance with Marketplace Rule 4450(a)(5).
If the company is unsuccessful in meeting the minimum bid
requirement by July 20, 2009, Nasdaq will provide notice to
AEterna Zentaris that its common shares will be delisted from the
Nasdaq Global Market. If the company receives a delisting
notification, it may appeal to the Listing Qualifications Panel or
apply to transfer its common shares to the Nasdaq Capital Market
if AEterna Zentaris satisfies all criteria for initial listing on
the Nasdaq Capital Market in accordance with Marketplace Rule
4310(c), other than compliance with the minimum closing bid price
requirement. If the application to the Nasdaq Capital Market is
approved, then the company will have an additional 180-day
compliance period in order to regain compliance with the minimum
bid price requirement while listed on the Nasdaq Capital Market.
The Nasdaq letter has no immediate effect on the listing of the
company's common shares. On October 16, 2008, the closing price
of the company's common shares was US$0.60 per share.
About AEterna Zentaris Inc.
Headquartered in Quebec, Canada, AEterna Zentaris Inc. (TSE:AEZ) -
- http://www.aeternazentaris.com/-- is a biopharmaceutical
company focused on endocrine therapy and oncology, with expertise
in drug discovery, development and commercialization.
AFFIRMATIVE INSURANCE: Moody's Affirms IFS Rating at 'Ba1'
----------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 insurance financial
strength ratings of Affirmative Insurance Company and Insurance
Property and Casualty Insurance Company. In the same action,
Moody's placed Affirmative Insurance Holdings, Inc.'s B1 senior
secured and long-term issuer ratings on review for possible
downgrade. The outlook on the IFS ratings is negative.
The review for possible downgrade of the B1 senior debt rating and
B1 issuer rating will include an evaluation of the cash flows
available to holding company to support its obligations, the
company's prospective profitability including the impact of
broader economic conditions on the company's business profile, and
the company's ongoing financial flexibility given tight loan
covenants. Moody's notes that the insurance operations are in a
negative unassigned surplus position and are not able to dividend
funds to the parent without regulatory approval.
Moody's affirmation of Affirmative's Ba1 insurance financial
strength ratings reflects the company's moderate market share of
the non-standard personal auto market and conservative investment
portfolio. The company has also made meaningful investments to
improve its technology systems. These strengths are offset by the
company's limited operating history, weak profitability, adequate
risk adjusted capital position, and operational and execution
associated with its acquisition of USAgencies. The negative
outlook on IFS ratings reflects the ongoing turmoil in
macroeconomic environment and its potential impact on the
company's customer base and profitability as well as the company's
reduced capital adequacy metrics.
The last rating action occurred on December 11, 2006 when Moody's
assigned its initial debt and insurance financial strength ratings
to Affirmative.
These ratings were affirmed with a negative outlook:
* Affirmative Insurance Company -- insurance financial strength
at Ba1;
* Insura Property & Casualty Insurance Company -- insurance
financial strength at Ba1.
These ratings were placed on review for possible downgrade:
* Affirmative Insurance Holdings, Inc. -- senior secured bank
credit facility at B1; long-term issuer rating at B1.
Affirmative, based in Addison, Texas, is a producer and provide of
non-standard personal automobile insurance to consumers in highly
targeted geographic markets. The company offers products in 13
states, including Texas, Illinois, California, and Florida. For
the first six months of 2008, Affirmative reported total revenues
of $238 million and net income of $7 million. As of June 30,
2008, shareholders' equity was $222 million.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to repay punctually senior
policyholder claims and obligations.
ALADDIN SYNTHETIC: Moody's Slashes Five Notes Ratings to 'Ca'
-------------------------------------------------------------
Moody's Investors Service has downgraded its ratings on the notes
issued by Aladdin Synthetic CDO 2006-1:
Class Description: $75,000,000 Class A Floating Rate Notes due
2013
-- Prior Rating: Aaa
-- Prior Rating Date: 3/31/2006
-- Current Rating: Ba3
Class Description: $7,000,000 Class B Floating Rate Notes due 2013
-- Prior Rating: A1
-- Prior Rating Date: 9/28/2006
-- Current Rating: Ca
Class Description: $15,000,000 Class C Floating Rate Notes due
2013 (2006-1)
-- Prior Rating: A1
-- Prior Rating Date: 3/31/2006
-- Current Rating: Ca
Class Description: $13,000,000 Class D-1 Floating Rate Notes due
2013 (2006-1)
-- Prior Rating: Baa1
-- Prior Rating Date: 3/31/2006
-- Current Rating: Ca
Class Description: EUR 8,000,000 Class D-2 Floating Rate Notes due
2013 (2006-1)
-- Prior Rating: Baa1
-- Prior Rating Date: 3/31/2006
-- Current Rating: Ca
Class Description: $11,000,000 Class E Floating Rate Notes due
2013 (2006-1)
-- Prior Rating: Baa2
-- Prior Rating Date: 9/28/2006
-- Current Rating: Ca
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, Fannie Mae and Freddie Mac, which
were placed into the conservatorship of the U.S. government on
September 8, 2008 and three Icelandic banks, specifically
Kaupthing Bank hf, Landsbanki Islands hf, and Glitnir Banki hf.
ALADDIN SYNTHETIC: Moody's Slashes 'Aa2' Notes Rating to 'Caa1'
---------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Aladdin Synthetic CDO 2006-2:
Class Description: $25,000,000 Class B Floating Rate Notes due
2016 (2006-2)
-- Prior Rating: Aa2
-- Prior Rating Date: 9/28/2006
-- Current Rating: Caa1
Class Description: $8,000,000 Class 7D Floating Rate Notes due
2013 (2006-2)
-- Prior Rating: Baa1
-- Prior Rating Date: 9/28/2006
-- Current Rating: Ca
Class Description: $10,000,000 Class 10D Floating Rate Notes due
2016 (2006-2)
-- Prior Rating: Baa2
-- Prior Rating Date: 9/28/2006
-- Current Rating: Ca
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on September
25, 2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, Fannie Mae and Freddie Mac, which were placed into
the conservatorship of the U.S. government on September 8, 2008
and three Icelandic banks, specifically Kaupthing Bank hf,
Landsbanki Islands hf, and Glitnir Banki hf.
ALADDIN SYNTHETIC: Moody's Trims $250MM Series A-3 Notes to 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade its rating of the notes issued by Aladdin
Synthetic CDO II SPC:
Class Description: $250,000,000 Series A-3 Floating Rate Notes Due
2014
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: 10/3/2008
-- Current Rating: Ba1, on review for possible downgrade
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, Fannie Mae, which was placed into the
conservatorship of the U.S. government on September 8, 2008 and
three Icelandic banks, specifically Kaupthing Bank hf, Landsbanki
Islands hf, and Glitnir Banki hf.
The rating action also reflects the rating action taken by Moody's
on September 18, 2008, the Insurance Financial Strength rating of
Ambac Assurance Corporation, which acts as GIC guarantor in the
transaction, was placed on review for possible downgrade.
ALADDIN SYNTHETIC: Moody's Lowers Two Notes Ratings to Ca from Ba2
------------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the notes
issued by Aladdin Synthetic CDO II SPC:
Class Description: $35,000,000 Series C-2 Notes due 2013
-- Prior Rating: Ba2
-- Prior Rating Date: 10/2/2008
-- Current Rating: Ca
Class Description: $5,000,000 Series C-3 Notes due 2013
-- Prior Rating: Ba2
-- Prior Rating Date: 10/2/2008
-- Current Rating: Ca
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, Freddie Mac, which was placed into
the conservatorship of the U.S. government on September 8, 2008
and three Icelandic banks, specifically Kaupthing Bank hf,
Landsbanki Islands hf, and Glitnir Banki hf.
ALLIANCE IMAGING: S&P Lifts Corp. Credit Rating to 'BB-' from 'B+'
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Alliance Imaging Inc. to 'BB-' from 'B+'. The outlook
is stable.
"This action reflects the company's ability to manage growth and
maintain financial stability despite competitive pressures and
reimbursement challenges," said Standard & Poor's credit analyst
Cheryl Richer. In the past several years, Alliance successfully
adapted its business model to expand from solely mobile operations
into fixed sites, embraced PET/CT technology, and established a
platform in radiation oncology that will provide further revenue
diversity.
The rating on Anaheim, California-based diagnostic imaging
provider Alliance Imaging Inc. reflects the fragmented and
competitive operating environment, somewhat low barriers to entry,
reimbursement risk, and the relatively high fixed-cost nature of
its business. These weaknesses are only partly offset by the
company's meaningful U.S. footprint, favorable longer-term demand
trends for the diagnostic imaging services, and management's
ability to adapt its business model in response to the changing
operating environment.
Industry wide, MRI scan volume growth has declined because of
third-party payors intensifying their utilization management
efforts and increasing patient co-payments. Despite competition
from medical practices and hospitals that buy their own diagnostic
machines, Alliance's increasing market share and development of
fixed sites has provided growth. Although operations in
Certificate-of-Need states provide some insulation from
competitive threats, roughly one-third of the company's three-year
contracts renew annually, exposing it to renewal risk and pricing
pressures.
Because 80% of its revenues are derived from wholesale billings,
Alliance had limited exposure to Medicare reimbursement cuts
related to the Deficit Reduction Act of 2005; the company
experienced a DRA-related reduction of roughly $14 million in 2007
EBITDA which was largely offset by operating efficiencies.
Despite expected stability through 2009, reimbursement risk
remains an ongoing concern. The high demand for PET/CT services
has offset reimbursement cuts for this modality.
The rating outlook is stable. The company enjoys attractive
operating margins, manageable debt levels, and adequate liquidity
resources, and it lacks significant near-term debt maturities.
Revenue erosion because of further changes in reimbursement or
intense competition could put downward pressure on the rating.
S&P assumes that growth will come from acquisitions made at
attractive multiples and that organic growth will continue at a
modest pace. Although S&P expects a decline in operating margins
reflecting operating lease expense associated with acquisitions
and start up costs of radiation therapy facilities, S&P expects
that overall, Alliance will continue to operate efficiently.
Upside potential is limited by difficult industry conditions,
reimbursement risk, and debt leverage that would not likely
support higher ratings; S&P expects debt to EBITDA to be between
3.5x and 4.0x. Oaktree Capital Management LLC and MTS Health
Investors LLC own 49% of the company's common stock. The ratings
assume that these sponsors will not take the company private in
April 2010 when an ownership standstill agreement expires.
AMERICAN INT'L: Paula Reynolds as Chief Restructuring Officer
-------------------------------------------------------------
American International Group, Inc., has named Paula Rosput
Reynolds -- the former Chairperson, President and Chief Executive
Officer of Safeco Corporation -- as Vice Chairperson and Chief
Restructuring Officer.
Ms. Reynolds will oversee AIG's divestiture of assets and will
serve as chief liaison with the Federal Reserve Bank of New York.
She reports to AIG Chairperson and Chief Executive Officer Edward
M. Liddy.
Ms. Reynolds was named Safeco President and CEO in January 2006
and Chairperson in May 2008. Prior to that, she was Chairperson,
President and CEO of AGL Resources, an Atlanta-based energy
holding company. Before joining AGL Resources, Ms. Reynolds spent
20 years in the energy business in various executive positions.
She has served on a number of public boards, including Andarko
Petroleum and Delta Airlines. She graduated with highest honors
in economics from Wellesley College.
Richard H. Booth, previously AIG Senior Vice President and Chief
Administrative Officer, has been named Vice Chairperson,
Transition Planning and Chief Administrative Officer. Mr. Booth
will be responsible for restructuring AIG's corporate center,
overseeing the separation of companies being sold by AIG and
executing AIG's operational transition to its new organizational
structure. Mr. Booth will continue with his current
responsibilities including AIG's global operations and systems,
corporate administration, corporate research and development, and
a variety of special projects. He will also continue to serve as
HSB Group, Inc., chairperson until it is sold. Mr. Booth also
reports to Mr. Liddy.
Mr. Booth was named AIG Senior Vice President and Chief
Administrative Officer in June 2008 in addition to his
responsibilities as Chairperson of HSB. Mr. Booth served as
President and CEO of HSB from 2000 through 2007. Prior to joining
HSB, he spent 30 years in various insurance industry positions,
including President, Chief Operating Officer and Director of The
Travelers Corporation, and Executive Vice President and a Director
of the Phoenix Companies. Mr. Booth is a CPA, Chartered Life
Underwriter and Chartered Financial Consultant. He received his
bachelor's and master's degrees from the University of Hartford's
Barney School of Business.
Mr. Liddy said that Ms. Reynolds and Mr. Booth are both well
prepared to play key roles in turning around AIG. "Both of these
executives will serve us well as we restore AIG as a competitive
enterprise that contributes to the economy and returns value to
taxpayers and shareholders," Mr. Liddy stated.
"Paula brings to AIG deep experience, not only as an insurance
industry leader, but also as someone who has successfully
realigned organizations to meet new challenges," Mr. Liddy said.
"She has earned a reputation for working collaboratively with
government and regulatory officials to achieve mutual goals," he
added.
Mr. Liddy also recognized Mr. Booth's successful career in the
insurance industry -- notably with HSB, the Travelers Corp. and
the Phoenix Companies -- and his particular strengths in managing
complex organizations. "In his brief tenure as AIG's Chief
Administrative Officer, Dick has made tremendous progress in
improving efficiency and reducing costs," Mr. Liddy said.
Shara Tibken at The Wall Street Journal relates that AIG has been
changing its executives since it accepted a $85 billion credit
facility from the federal government in September.
About American International
Based in New York City, American International Group Inc. --
http://www.aig.com/-- (NYSE: AIG) is an international insurance
and financial services organization, with operations in more than
130 countries and jurisdictions. The company is engaged through
subsidiaries in General Insurance, Life Insurance & Retirement
Services, Financial Services and Asset Management.
The company's British headquarters are located on Fenchurch Street
in London, continental Europe operations are based in La Defense,
Paris, and its Asian HQ is in Hong Kong. AIG owns Ocean Finance,
a United Kingdom based company providing home owner loans,
mortgages and remortgages. AIG operates in the UK with the brands
AIG UK, AIG Life and AIG Direct. It has about 3,000 employees,
and sponsors the Manchester United football club. In response to
redemption demands, AIG Life (UK) suspended redemptions of its AIG
Premier Bond money market fund on Sept. 19, 2008, in order to
provide an orderly withdrawal of assets.
The Federal Reserve Bank of New York has extended to AIG a
revolving credit facility up to $85 billion. AIG's borrowings
under the revolving credit facility will bear interest, for each
day, at a rate per annum equal to three-month Libor plus 8.50%.
The revolving credit facility will have a 24-month term and will
be secured by a pledge of assets of AIG and various subsidiaries.
The revolving credit facility will contain affirmative and
negative covenants, including a covenant to pay down the facility
with the proceeds of asset sales.
The summary of terms also provides for a 79.9% equity interest in
AIG. The corporate approvals and formalities necessary to create
this equity interest will depend upon its form.
In a statement, the company said "AIG is a solid company with over
$1 trillion in assets and substantial equity, but it has been
recently experiencing serious liquidity issues."
Standard & Poor's Ratings Services revised the CreditWatch
status of most of its ratings on the AIG group of companies --
including its 'A-' long-term counterparty credit ratings on
American International Group Inc. and the 'A+' counterparty credit
and financial strength ratings on most of AIG's insurance
operating subsidiaries -- to CreditWatch developing from
CreditWatch negative.
S&P raised its ratings on preferred stock of International Lease
Finance Corp. (ILFC; A-/Watch Dev/A-1) to 'BBB' from 'B', and
revised the CreditWatch implications to developing from negative.
All other ILFC ratings remain on CreditWatch with developing
implications.
Fitch Ratings revised its Rating Watch on American International
Group, Inc. to Evolving from Negative. Fitch viewed this
transaction as a favorable development that alleviates significant
near-term liquidity concerns.
* * *
In a U.S. Securities and Exchange Commission filing dated
Aug. 6, 2008, AIG reported a net loss for the second quarter of
2008 of $5.36 billion compared to 2007 second quarter net income
of $4.28 billion. Second quarter 2008 adjusted net loss was $1.32
billion, compared to adjusted net income of
$4.63 billion for the second quarter of 2007. The continuation of
the weak U.S. housing market and disruption in the credit markets,
as well as global equity market volatility, had a substantial
adverse effect on AIG's results in the second quarter.
Net loss for the first six months of 2008 was $13.16 billion,
compared to net income of $8.41 billion in the first six months
of 2007. Adjusted net loss for the first six months of 2008 was
$4.88 billion, compared to adjusted net income of
$9.02 billion in the first six months of 2007.
AMERICAN PACIFIC: Section 341(a) Meeting Scheduled for Nov. 20
--------------------------------------------------------------
The U.S. Trustee for Region 21 will convene a meeting of American
Pacific International, Ltd.'s creditors on Nov. 20, 2008, at 11:00
a.m., at Courtroom 220, West Garden Street, Suite 700, Pensacola.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The deadline for the filing of proofs of claim by creditors
against American Pacific is set for Feb. 20, 2009.
Crestview, Florida-based American Pacific International, Ltd., dba
Shoal River Country Club and Adara Golf Club, operates a golf
course and shop. The company filed for Chapter 11 protection on
Oct. 10, 2008 (Bankr. N. D. Fla. Case No. 08-31566). Louis L.
Long, Jr., Esq., at Chesser & Barr, P.A., represents the Debtor in
its restructuring efforts. In its bankruptcy petition, the
company listed assets of $12,435,231 and debts of $6,025,130.
AMES DEPARTMENT: Court Extends Solicitation Period to April 23
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended Ames Department Store Inc. and its debtor-affiliates'
exclusive period to solicit acceptances for their Chapter 11 Plan
dated Dec. 6, 2004, to April 23, 2009.
On Dec. 6, 2004, the Debtors filed their Chapter 11 plan of
liquidation, and disclosure statement. The Debtors, however, have
not yet begun soliciting votes on the Plan pending a determination
as to the solvency of their estates, and available recovery for
creditors. The Debtors added that they wanted to be sure that
they can pay administrative claims in full before beginning the
soliciting acceptances of the Plan.
The Debtors told the Court that since the decision to wind down
their business was made in August of 2002, the Debtors have:
i) sold all their inventory;
ii) fully satisfied their obligations under their postpetition
financing faciites;
iii) rejected or assumed and assigned the majority of their
unexpires leases of nonresidential real property;
iv) have been settling and reconciling creditors' claims;
v) commenced and are continuing to prosecute and collect
substantial sums from actions to avoid certain prepetition
transfers;
vi) sold, or are in the process of selling their remaining real
estate holdings;
vii) made interim distributions to holders of administrative
claims; and
viii) developed, drafted, and filed the Plan and related
Disclosure Statement.
In addition, the Debtors told the Court that they have commenced
certain initiatives to maximize funds available for distribution
to creditors.
No other party currently has a plan to propose, and no one will be
precluded from asking the Court's permission to propose a plan if
the solicitation period is ented.
Disclosure Statement
As set forth in the Disclosure Statement, the Plan provides for:
i) the distribution on the Effective Date to the holders of
Allowed Administrative Expense Claims, Allowed Priority Tax
Claims, and Allowed Priority Non-Tax Claims Cash in an
amount equal to the Allowed amount of such Claims;
ii) the distribution on the Effective Date to the holders of
Allowed Secured Claims, at the option of the Debtors, of
either:
-- Cash in an amount equal to one hundred percent (100%) of
the unpaid amount of such Allowed Secured Claim,
-- the proceeds of the sale or disposition of the Collateral
securing such Allowed Secured Claim to the extent of the
value of the holder's secured interest in the Allowed
Secured Claim, net of the costs of disposition of such
Collateral,
-- the Collateral securing such Allowed Secured Claim,
-- such treatment that leaves unaltered the legal,
equitable, and contractual rights to which the holder of
such Allowed Secured Claim is entitled, or
-- such other distribution as necessary to satisfy the
requirements of the Bankruptcy Code; and
iii) the distribution on the Effective Date to the holders of
Allowed General Unsecured Claims, subject to Section 6.3(a)
of the Plan permitting the establishment of a Liquidating
Trust, their Pro Rata Share of Available Cash, but not to
exceed the full amount of such holders' Allowed General
Unsecured Claim.
About Ames Department Stores
Originally founded in Southbridge, Massachusetts, Ames Department
Stores was at its height, the nation's fourth largest discount
retailer operating 700 stores in 20 states, which includes the
District of Columbia.
Ames Department Stores Inc. and four of its debtor-affiliates
filed separate petitions for Chapter 11 protection on Aug. 20,
2001 (Bankr. S.D.N.Y. Case Nos. 01-42217 through 01-42221). This
was the Debtors' second bankruptcy filing. The law firms of
Togut, Segal & Segal LLP; Weil, Gotshal & Manges LLP; Storch Amini
& Munves PC; Cadwalader, Wickersham & Taft LLP; and Dewey &
LeBoeuf, LLP, represent the Debtors in their restructuring
efforts.
When the company filed for protection from their creditors, they
listed $1,901,573,000 in assets and $1,558,410,000 in liabilities.
On Aug. 14, 2002, Ames announced plans to go out of business,
liquidate and close all their stores.
AVIGMAR INC: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Avigamar, Inc.
1302 Washington St.
Laredo, TX 78042
Bankruptcy Case No.: 08-50304
Chapter 11 Petition Date: October 24, 2008
Court: Southern District of Texas (Laredo)
Judge: Wesley W. Steen
Debtor's Counsel: Jesse Blanco, Jr., Esq.
jesseblanco@sbcglobal.net
Jesse Blanco Jr., Attorney at Law
P.O. Box 680875
San Antonio, TX 78268
Tel: (210) 509-6925
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.
AVIS BUDGET: Weak Earnings Cues S&P to Chips Credit Rating to 'B+'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Avis
Budget Group Inc., including lowering the corporate credit rating
to 'B+' from 'BB'. All ratings remain on CreditWatch, where they
were placed with negative implications on Jan. 25, 2008. Rating
were subsequently lowered and maintained on CreditWatch on July 2,
2008.
"The downgrade is based on a continuing weak earnings outlook for
the U.S. car rental industry, due to pressure on pricing and
demand, which began earlier in 2008," said Standard & Poor's
credit analyst Betsy Snyder. "The company also faces refinancing
challenges related to an $1.5 billion asset-backed conduit
facility that matures in late October, which will result in
significantly higher pricing levels if and when it is renewed."
Thus far, other car rental companies have successfully refinanced
similar facilities, which are asset-based financings whose ratings
are not directly linked to the issuer's corporate credit rating,
but at significantly higher pricing.
Like the rest of the travel industry, Avis Budget faces a decline
in travel due to the weakening economy, but it also must deal with
refinancing its $1.5 billion conduit and another $1.1 billion
asset-backed facility that matures in February 2009. While the
company has yet to incur increased depreciation costs related to
lower-than-expected proceeds from vehicle sales in a weak used car
market, the company's future earnings could be hurt by the
expected prolonged weak used car market. The company has a market
capitalization of around $158 million, well below book equity of
$1.5 billion at June 30, 2008, which will likely result in a large
noncash goodwill impairment charge in its third quarter.
Parsippany, New Jersey-based Avis Budget, the parent of the Avis
and Budget car rental brands, is one of three large participants
(along with Hertz Corp., and Enterprise Rent-A-Car Co., parent of
the Enterprise, Alamo, and National brands) in the U.S. on-airport
car rental segment.
To resolve the CreditWatch, Standard & Poor's will assess the
success of the company's refinancings. In addition, S&P will take
into consideration Avis Budget's expected financial performance
given a reduction in domestic airline capacity and enplanements, a
weaker economy, and potential lower proceeds from vehicle sales.
BAPTIST HEALTH: S&P Lifts $135MM Bonds Rating to 'A1' from 'Ba2'
----------------------------------------------------------------
Moody's Investors Service has upgraded to A1 from Ba2 the rating
assigned to Baptist Health System of East Tennessee Obligated
Group's $135 million of outstanding Series 2002 bonds issued by
the Health, Educational and Housing Facilities Board of the County
of Knox, Tennessee. The outlook is negative.
The rating upgrade is attributable solely to amendments to the
legal documents, through which Catholic Healthcare Partners
assumes the obligations of BHSET. The Series 2002 BHSET bonds now
stand on parity with CHP's other debt under the master indenture.
CHP's debt is currently rated A1 with a negative outlook. Future
rating affirmations or changes to these bonds will be made in
connection with Moody's review of CHP, and detailed in CHP
reports.
Rated Debt (debt outstanding as of September 30, 2008)
-- Series 2002 ($135.0 million outstanding), rated A1
BEAR STEARNS: S&P Holds Ratings on 23 Classes of Certificates
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 23
commercial mortgage pass-through certificates from Bear Stearns
Commercial Mortgage Securities Trust 2007-TOP26.
The affirmations reflect credit enhancement levels that provide
adequate support through various stress scenarios.
As of the Oct. 14, 2008, remittance report, the trust collateral
consisted of 235 loans with an aggregate principal balance of
$2.089 billion, compared with 237 loans totaling $2.106 billion at
issuance. The master servicer, Wells Fargo Bank N.A., reported
financial information for 100% of the loans in the pool. Seventy-
four percent of the servicer-reported information was partial-year
2008 data, and the remainder was year-end 2007 information. Based
on this information, Standard & Poor's calculated a weighted
average debt service coverage of 1.72x, the same as at issuance.
To arrive at the current weighted average DSC, S&P factored in the
amortization for loans accounting for 20% of the trust balance
that originally had partial interest-only periods. All of the
loans in the trust are current and no loans are with the special
servicer. The trust has not incurred any losses to date.
The top 10 loans have an aggregate principal balance of
$708.3 million (34%). Financial information for the six months
ended June 30, 2008, was available for eight of the top 10 loans.
Based on this information, Standard & Poor's calculated a weighted
average DSC of 2.04x, up from 1.99x at issuance. Although the
sixth-largest loan in the pool, the Viad Corporate Center loan
($65.0 million, 3%), is not on Wells Fargo's October 2008
watchlist, it reported a DSC of 1.01x for the six months ended
June 30, 2008. This loan is secured by a 24-story, 476,400-sq.-
ft., class A office building in Phoenix, Arizona. The second-
largest tenant at the property plans to downsize its space, which
will reduce occupancy to 84% from 93% when the tenant's lease
expires in February 2009. This drop in occupancy would cause the
DSC to fall below 1.0x.
Wells Fargo has since placed this loan on its watchlist. S&P will
continue to monitor the leasing activity at this property.
Standard & Poor's reviewed the property inspection reports
provided by Wells Fargo for the assets underlying seven of the top
10 loans, which characterized the properties as "good" or
"excellent." Wells Fargo indicated that the inspection reports
were not available for the remaining properties.
At issuance, the credit characteristics for 17 loans were
consistent with investment-grade rated obligations and 15 of these
loans continue to have such credit characteristics. The third-
largest loan, Fulbright Tower, and the Stony Point East/West loan
no longer have credit characteristics consistent with investment-
grade rated obligations. Details are:
-- The third-largest loan, Fulbright Tower ($89.0 million,
4%), is secured by a 51-story, 1.2 million-sq.-ft. class A
office tower in Houston, Texas. During S&P's review of
the loan, it discovered an error in S&P's initial
calculation of the property's total operating expenses.
This caused S&P to overstate the property's value at
issuance, which S&P used to calculate required credit
enhancement for the rated certificates. Based on S&P's
current analysis, 12% of the loan proceeds do not have
credit characteristics consistent with those of
investment-grade obligations. However, Standard & Poor's,
in its current analysis of the transaction, determined
that the current credit enhancement is sufficient to
support the outstanding ratings despite the amount of loan
proceeds that are no longer consistent with those of
investment-grade rated obligations.
S&P derived its adjusted valuation using the borrower's operating
statements for the trailing-12-months ending June 30, 2008, and a
rent roll dated June 30, 2008. After adjusting for the
aforementioned miscalculation, S&P's value for the Fulbright Tower
is 2% higher than at issuance. Wells Fargo reported a DSC of
2.86x and 86% occupancy as of June 2008. The office property
securing this loan was identified to be in the path of Hurricane
Ike. The property incurred minimal damage and has business
interruption, flood, and windstorm insurance.
-- The Stony Point East/West loan consists of two cross-
collateralized and cross-defaulted loans totaling
$27.1 million (1%). This loan is secured by two suburban
office properties totaling 282,200 sq. ft. in Santa Rosa,
California. Reported DSC and occupancy for the six months
ended June 30, 2008, were 0.80x and 76%, respectively,
compared with 1.98x and 94% at issuance. Based on S&P's
review of the borrower's operating statements for the
trailing-12-months ended June 30, 2008, S&P's valuation
has declined by 35% since issuance.
Nineteen loans in the pool, totaling $204.4 million (10%), have
reported low DSC. The loans are secured by a variety of hotel,
retail, office, multifamily, industrial, self-storage, and mixed-
use properties. These loans have an average balance of
$10.8 million and have experienced a weighted average decline in
DSC of 52% since issuance. According to S&P's analysis, 13 of the
19 loans are secured by properties that have low per square-foot-
debt exposure and/or have experienced improved occupancy. S&P
expects the DSC for these loans to improve in the future. S&P has
credit concerns with the remaining six loans ($15.1 million,
0.7%). Most of the properties securing these six loans have
experienced a decline in net cash flow due to low occupancies
and/or increased operating expenses.
Wells Fargo reported a watchlist of 18 loans totaling
$181.1 million (9%). The largest loan on the watchlist is the
Regions/Gillette Medical Office loan ($27.6 million, 1%), which is
secured by a 124,300-sq.-ft. medical office building in St. Paul,
Minnesota. This loan appears on the watchlist because it reported
a DSC of 0.87x for the 12 months ended Dec. 31, 2007. The
property was 100% leased as of July 2008, and the reported DSC had
improved to 1.25x for the six months ended June 30, 2008. Wells
Fargo has since removed this loan from its watchlist. The
remaining loans are on the watchlist due to declines in DSC since
issuance and/or low occupancy.
Standard & Poor's identified 12 loans totaling $188.4 million,
including the Fulbright loan, which are secured by properties that
are in areas affected by Hurricane Ike. Wells Fargo indicated
that the properties securing 11 of the 12 loans incurred minimal
or no damage. One property ($2.1 million) sustained significant
damage, for which the tenant is responsible to make repairs.
Standard & Poor's was able to confirm that nine of the 12 loans
have windstorm insurance, two loans have flood insurance, and 10
loans have business interruption insurance. Insurance coverage
information was not available for one of the 12 loans.
Standard & Poor's stressed the loans on the watchlist and other
loans with credit issues as part of its analysis. The resultant
credit enhancement levels adequately support the affirmed ratings.
Ratings Affirmed
Bear Stearns Commercial Mortgage Securities Trust 2007-TOP26
Commercial mortgage pass-through certificates
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 27.22%
A-2 AAA 27.22%
A-3 AAA 27.22%
A-AB AAA 27.22%
A-4 AAA 27.22%
A-1A AAA 27.22%
A-M AAA 17.14%
A-J AAA 9.45%
B AA 7.44%
C AA- 6.55%
D A 5.17%
E A- 4.41%
F BBB+ 3.53%
G BBB 2.65%
H BBB- 1.76%
J BB+ 1.64%
K BB 1.51%
L BB- 1.26%
M B+ 1.13%
N B 0.88%
O B- 0.76%
X-1 AAA N/A
X-2 AAA N/A
N/A -- Not applicable.
BERRY PETROLEUM: S&P Changes Outlook to Neg. on Liquidity Concerns
------------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
exploration and production company Berry Petroleum Co. to negative
from stable. At the same time S&P affirmed Berry's 'BB' corporate
credit rating and the 'B+' issue-level rating on the company's
$200 million 8.25% senior subordinated notes due 2016.
As of Sept. 30, 2008, Berry had about $1.16 billion in debt,
adjusted for operating leases.
"The outlook revision reflects our concerns about the company's
liquidity levels," said Standard & Poor's credit analyst Aniki
Saha-Yannopoulos. "The company has approximately $150 million
available under its recently amended $1.08 billion borrowing based
credit facility."
S&P deems current liquidity levels to be inadequate for the
current rating and for a company with a business model based on
significant reinvestment of capital. To revise the outlook to
stable, the company must increase its liquidity levels; however, a
degree of uncertainty exists about the company's ability to
successfully do this given the turmoil in the credit markets and
the impact on capital-raising initiatives.
The rating on Berry reflects the company's weakened liquidity
profile, heavy oil concentration, high lifting costs for capital-
intensive oil fields, lower operating margins compared with peers,
and volatile commodity prices. The relatively low-risk nature of
the company's reserve base, competitive finding and development
costs, good reserve replacement, and a moderate capital structure
temper these weaknesses.
BIG3D, INC.: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Big3D, Inc.
1419 M St.
Fresno, CA 93721
Bankruptcy Case No.: 08-16768
Chapter 11 Petition Date: October 23, 2008
Court: Eastern District of California (Fresno)
Judge: W. Richard Lee
Debtor's Counsel: Hilton A. Ryder, Esq.
McCormick Barstow LLP
5 River Park Place East
PO Box 28912
Fresno, CA 93729-8912
Tel: (559) 433-1300
Total Assets: $2,985,500
Total Debts: $7,866,251
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/caeb08-16768.pdf
BILL HEARD: May Owe Synovus Financial $53 Million
-------------------------------------------------
Bill Heard Enterprises, Inc., might have owed around $53 million
to Synovus Financial Corp. and its affiliates, including Columbus
Bank and Trust Co., when it filed for bankruptcy protection in
September 2008, according to Tony Adams for Ledger-Enquirer.
During an Oct. 23, 2008 conference call, Synovus Chairman and CEO
Richard Anthony said its commercial and industrial loan portfolio
had added a nonperforming auto dealer, which real estate was taken
as collateral. When asked if the dealer was Bill Heard,
Mr. Anthony refused to drop a name.
Mark Holladay, chief risk officer at Synovus, said the exposure
was around $53 million, but declined to name the client. He,
however, said that the dealer "had locations in the Southwest and
the Southeast."
"And really what happened there is their locations in Las Vegas
and Scottsdale, Arizona, and Orlando, Florida, were the issues
that created their problems," Mr. Holladay added to Ledger-
Enquirer. We've charged off about $3.2 million on that credit.
We have assets located (in Columbus) and in Atlanta and other
personal assets."
Bill Heard did not include Synovus in the list of largest
unsecured creditors attached to its bankruptcy petition. The list
wrote that ADP Dealer Services was the largest unsecured creditor
with a $242,620 trade claim.
About Bill Heard
Headquartered in Huntsville, Alabama, Bill Heard Enterprises Inc.
-- http://www.billheardhuntsville.com/-- is one of the largest
dealers of Chevrolet in the United States. The company and 17 of
its affiliates filed for Chapter 11 protection on Sept. 28, 2008
(Bankr. N.D. Ala. Lead Case No. 08-83028). Derek F. Meek, Esq.,
at Burr & Forman, LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed assets and debts of between
$500 million and $1 billion each.
BON-TON STORES: Moody's Reviews Ratings on Lower Forecasts
----------------------------------------------------------
Moody's Investors Service placed the ratings of Bon-Ton Stores,
Inc. under review for possible downgrade. This includes Bon-Ton's
B2 corporate family rating. LGD assessments and point estimates
are also subject to change.
This review is prompted by continuing pressures on the company's
operating performance, and follows its recent announcement that
guided projected earnings for fiscal year 2008 to the lower end of
the ($1.17) to ($1.67) per share range announced in August, 2008.
Given this new guidance, Moody's is concerned that the company's
performance will prevent it from maintaining credit metrics
appropriate for its current rating.
The review will focus on the outlook for the company's near term
earnings and cash flow, as well as the company's ability to
maintain acceptable credit metrics and financial flexibility in
light of the current, very soft economic environment. This is
particularly important in the near term given that the holiday
season accounts for the vast majority of the company's annual
earnings and cash flow.
Ratings placed under review for possible downgrade:
-- Corporate family rating at B2
-- Probability of default rating at B2
-- $510 million senior unsecured notes at Caa1
The last rating action on this company was a downgrade of Bon-
Ton's corporate family rating to B2 from B1 and a downgrade of the
senior unsecured notes to Caa1 from B3 on February 11, 2008.
The Bon-Ton Stores, Inc. is a regional department store chain,
headquartered in York, Pennsylvania. The company operates 281
stores in 23 Northeastern, Midwestern, and upper Great Plains
states under Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott,
Elder-Beerman, Herberger's and Younkers nameplates and, under the
Parisian nameplate, stores in the Detroit, Michigan area.
Revenues for the last twelve months ended August 4, 2008 were
approximately $3.4 billion.
BOSCH MOTORS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Bosch Motors, Inc.
1205 E. Winnemucca Blvd.
Winnemucca, NV 89445
Bankruptcy Case No.: 08-52022
Chapter 11 Petition Date: October 23, 2008
Court: District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Stephen R. Harris, Esq.
steve@renolaw.biz
Belding, Harris & Petroni, Ltd.
417 W Plumb Lane
Reno, NV 89509
Tel: (775) 786-7600
Fax: (775) 786-7764
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/nvb08-052022.pdf
BOSCOV'S INC: Extends Sale of Assets; Hearing Set for November 5
----------------------------------------------------------------
Boscov's Department Store LLC extended the court-supervised sale
process related to the sale of the company's assets. A hearing
on the sale is now scheduled for November 5 before Judge Kevin
Gross of the U.S. Bankruptcy Court for the District of Delaware .
Despite the current financial environment, the sale process
continues to move forward. It is business-as-usual in Boscov's
stores, with the company continuing to receive new merchandise
daily in preparation for the holiday season.
The company has disclosed that Boscov's entered into an Asset
Purchase Agreement with Versa Capital Management, Inc., a
Philadelphia-based private equity investment firm, pursuant to
which the Boscov's business would continue to operate as a going
concern post-closing. In early October, Versa was designated by
the Court as the 'Stalking Horse' bidder in the auction process
for the company's assets.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $538 million and liabilities of
$479 million in its bankruptcy filing.
(Boscov's Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
BUFFETS HOLDINGS: Gets OK for $85M Loan Rates Hike, Drops Fees
--------------------------------------------------------------
Judge Mary Walrath of the United States Bankruptcy Court for the
District of Delaware approved on Oct. 14, 2008, Buffets Holding
Inc. and its debtor-affiliates' entry into the Second DIP
Amendment and Forbearance Agreement.
In a separate ruling, Judge Walrath denied the Debtors' motion to
file under seal the fee letter upon which an "arrangement fee" is
specified in connection with the amendments to their $285,000,000
DIP loan, which consisted of a $200,000,000 debt rolled over from
a prepetition credit facility, and $85,000,000 of new funding.
The DIP Forbearance Agreement provides that the Administrative
Agent and the Lenders will forbear from exercising their default-
related rights and remedies with respect to the potential breach
of the minimum consolidated EBITDA covenant through Oct. 15, 2008,
and to amend the EBITDA covenant thresholds for the remaining term
of the agreement.
The DIP Forbearance Agreement provides for the amended DIP
Credit Agreement to increase the interest rate margin applicable
to the LIBOR-based $85,000,000 new money facility 1.0% to 8.25%.
The 4.0% per annum LIBOR floor and the 5.0% per annum LIBOR
ceiling contained in the DIP Credit Agreement remain applicable
under the terms of the DIP Forbearance Agreement. The interest
rate on the prepetition debt rollover amounts remains unchanged
under the DIP Forbearance Agreement.
Upon approval of the DIP Forbearance Agreement, the Lenders issued
a Limited Waiver to the DIP Credit Agreement, which waives the
event of default under Section 7(d) of the DIP Credit Agreement as
a result of Buffets, Inc.'s failure to meet the Minimum
Consolidated EBITDA covenant set forth in Section 6.13 of the DIP
Credit Agreement with respect to the three-month fiscal accounting
period ended Aug. 27, 2008, according to a filing with the U.S.
Securities and Exchange Commission dated Oct. 17, 2008.
Prior to the Court's entry of its order, the Official Committee of
Unsecured Creditors sought and obtained the Court's approval to
file under seal the Committee's statement on the Debtors' request.
Laura Davis Jones, Esq., at Pachulski Stang Zeihl & Jones LLP, in
Wilmington, Delaware, said the Committee's request to seal is
premised on Section 107(b) of the Bankruptcy Code which provides
bankruptcy courts with the power to issue orders that will protect
entities from harm with respect to a trade secret or confidential
research, development, or commercial information.
According to Ms. Jones, the Fee Letter constitutes "commercial
information" and was provided to the Committee on a confidential
basis. Moreover, the Letter includes other commercial information
of the Debtors that was provided to the Committee on a
confidential basis, she adds.
In that respect, the Committee said, it should also file its
statement under seal with the Court to prevent disclosure of the
confidential information contained.
U.S. Trustee Intervenes
The United States Trustee, in an effort to protect public interest
in matters requiring full disclosure, also asked the Court to deny
the Debtors' motion to file under seal the Fee Letter related to
the Second Amended DIP Credit Agreement, saying that the
Bankruptcy Code and Rules place narrow limits upon sealing
documents.
Acting United States Trustee for Region 3, Roberta A. DeAngelis,
told Judge Walrath that U.S. courts recognize a general right to
inspect and copy public records and documents, including judicial
records and documents.
This preference for public access, Ms. DeAngelis said, is rooted
in the public's first amendment right to know about the
administration of justice. "It helps safeguard the integrity,
quality, and respect in our judicial system," Ms. DeAngelis
emphasized.
Even if the Debtors could successfully demonstrate that there may
be one or more terms of the Fee Letter that may be protected under
Section 107(b), the relief granted should be narrowly tailored,
Ms. DeAngelis stressed.
Consequently, the Debtors withdrew their request to pay fees in
connection with the Second Amended DIP Credit Agreement.
About Buffets Holdings
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc., which operates 626 restaurants in 39 states, comprised of
615 steak-buffet restaurants and eleven Tahoe Joe's Famous
Steakhouse restaurants, and franchises sixteen steak-buffet
restaurants in six states. The restaurants are principally
operated under the Old Country Buffet, HomeTown Buffet, Ryan's and
Fire Mountain brands. Buffets, Inc. employs approximately 37,000
team members and serves approximately 200 million customers
annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., M. Blake Cleary, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as claims and balloting
agent. The U.S Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Otterbourg Steindler Houston & Rosen PC and
Pachulski Stang Ziehl Young &Jones as counsels. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of
$85 million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
BUFFETS HOLDINGS: Court Extends Plan Filing Period Until Dec. 1
--------------------------------------------------------------
Buffets Holdings Inc. and its debtor-affiliates obtained approval
from the United States Bankruptcy Court for the District of
Delaware to further extend:
* the period within which they have the exclusive right to
file a Chapter 11 Plan of Reorganization, through and
including Dec. 1, 2008; and
* the period within which they have the right to solicit
acceptances of that plan, through and including Jan. 30,
2009.
The Court previously extended their Exclusive Plan Filing Period
from June 11, 2008, through and including September 30.
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc., which operates 626 restaurants in 39 states, comprised of
615 steak-buffet restaurants and eleven Tahoe Joe's Famous
Steakhouse restaurants, and franchises sixteen steak-buffet
restaurants in six states. The restaurants are principally
operated under the Old Country Buffet, HomeTown Buffet, Ryan's and
Fire Mountain brands. Buffets, Inc. employs approximately 37,000
team members and serves approximately 200 million customers
annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., M. Blake Cleary, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as claims and balloting
agent. The U.S Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Otterbourg Steindler Houston & Rosen PC and
Pachulski Stang Ziehl Young &Jones as counsels. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of $85
million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
C-BASS MORTGAGE: Moody's Cuts Ratings on 214 Tranches from 23 RMBS
------------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 214
tranches from 23 subprime RMBS transactions issued by C-Bass. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, subprime residential mortgage
loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2004-CB8
-- Cl. B-1, Downgraded to Baa2 from Baa1
-- Cl. B-4, Downgraded to Ca from Caa2
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2005-CB1
-- Cl. B-3, Downgraded to Ba2 from Baa3
-- Cl. B-4, Downgraded to Caa2 from Ba1
-- Cl. B-5, Downgraded to C from Ba2
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2005-CB2
-- Cl. B-4, Downgraded to Ba3 from Ba1
-- Cl. B-5, Downgraded to Caa2 from Ba2
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2005-CB3
-- Cl. B-1, Downgraded to Baa2 from Baa1
-- Cl. B-2, Downgraded to Ba1 from Baa2
-- Cl. B-3, Downgraded to Ba3 from Baa3
-- Cl. B-4, Downgraded to Caa2 from Ba1
-- Cl. B-5, Downgraded to C from Ba2
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2005-CB5
-- Cl. B-3, Downgraded to Caa2 from B2
-- Cl. B-4, Downgraded to C from Caa1
-- Cl. B-5, Downgraded to C from Caa3
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2005-CB6
-- Cl. M-3, Downgraded to A2 from Aa3
-- Cl. M-4, Downgraded to Baa2 from A1
-- Cl. M-5, Downgraded to Ba3 from A2
-- Cl. M-6, Downgraded to Caa2 from Baa2
-- Cl. B-1, Downgraded to C from B1
-- Cl. B-2, Downgraded to C from B3
-- Cl. B-3, Downgraded to C from Caa1
-- Cl. B-4, Downgraded to C from Caa3
-- Cl. B-5, Downgraded to C from Ca
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2005-CB7
-- Cl. B-1, Downgraded to Baa2 from Baa1
-- Cl. B-2, Downgraded to Ba1 from Baa2
-- Cl. B-3, Downgraded to Caa2 from Baa3
-- Cl. B-4, Downgraded to C from B1
-- Cl. B-5, Downgraded to C from Caa1
Issuer: Citigroup Mortgage Loan Trust, Series 2005-CB8
-- Cl. M-3, Downgraded to A1 from Aa3
-- Cl. M-4, Downgraded to Baa1 from A1
-- Cl. M-5, Downgraded to Baa2 from A2
-- Cl. M-6, Downgraded to Ba3 from A3
-- Cl. B-1, Downgraded to Caa2 from Baa1
-- Cl. B-2, Downgraded to C from Baa2
-- Cl. B-3, Downgraded to C from Ba3
-- Cl. B-4, Downgraded to C from B2
-- Cl. B-5, Downgraded to C from Caa1
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB2
-- Cl. M-1, Downgraded to A1 from Aa1
-- Cl. M-2, Downgraded to Baa2 from Aa2
-- Cl. M-3, Downgraded to Ba2 from Aa3
-- Cl. M-4, Downgraded to Caa2 from A1
-- Cl. M-5, Downgraded to Ca from Baa2
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
Issuer: Citigroup Mortgage Loan Trust 2006-CB3
-- Cl. AV-3, Downgraded to A3 from Aaa
-- Cl. AV-4, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Ba2 from Aa1
-- Cl. M-2, Downgraded to Caa2 from A2
-- Cl. M-3, Downgraded to C from Ba1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB4
-- Cl. AV-3, Downgraded to Aa2 from Aaa
-- Cl. AV-4, Downgraded to A1 from Aaa
-- Cl. M-1, Downgraded to Baa2 from Aa1
-- Cl. M-2, Downgraded to B2 from A3
-- Cl. M-3, Downgraded to Caa2 from Ba1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB5
-- Cl. A-3, Downgraded to Aa2 from Aaa
-- Cl. A-4, Downgraded to A1 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa1
-- Cl. M-2, Downgraded to Ba2 from A1
-- Cl. M-3, Downgraded to Caa2 from Baa3
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB6
-- Cl. A-I, Downgraded to Aa1 from Aaa
-- Cl. A-II-3, Downgraded to Aa2 from Aaa
-- Cl. A-II-4, Downgraded to A1 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa1
-- Cl. M-2, Downgraded to Ba3 from Aa2
-- Cl. M-3, Downgraded to B3 from Aa3
-- Cl. M-4, Downgraded to Ca from Baa1
-- Cl. M-5, Downgraded to C from Ba2
-- Cl. M-6, Downgraded to C from B1
-- Cl. M-7, Downgraded to C from B2
-- Cl. M-8, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB7
-- Cl. A-1, Downgraded to Aa1 from Aaa
-- Cl. A-4, Downgraded to Aa1 from Aaa
-- Cl. A-5, Downgraded to A2 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa1
-- Cl. M-2, Downgraded to Ba3 from Baa2
-- Cl. M-3, Downgraded to B3 from Ba3
-- Cl. M-4, Downgraded to Caa2 from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
-- Cl. B-4, Downgraded to C from Ca
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB8
-- Cl. A-1, Downgraded to A1 from Aaa
-- Cl. A-2B, Downgraded to A1 from Aaa
-- Cl. A-2C, Downgraded to Baa1 from Aaa
-- Cl. A-2D, Downgraded to Baa2 from Aaa
-- Cl. M-1, Downgraded to Ba2 from Aa1
-- Cl. M-2, Downgraded to Caa2 from A3
-- Cl. M-3, Downgraded to C from Ba1
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2006-CB9
-- Cl. A-2, Downgraded to A2 from Aaa
-- Cl. A-3, Downgraded to Ba2 from Aa1
-- Cl. A-4, Downgraded to Ba3 from Aa3
-- Cl. M-1, Downgraded to Caa2 from Ba1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
-- Cl. B-2, Downgraded to C from Ca
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB1
-- Cl. AF-2, Downgraded to Ba3 from Aaa
-- Cl. AF-3, Downgraded to B1 from Aaa
-- Cl. AF-4, Downgraded to B2 from Aaa
-- Cl. AF-5, Downgraded to B3 from Aaa
-- Cl. AF-6, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to Ca from A2
-- Cl. M-2, Downgraded to C from Ba2
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB2
-- Cl. A1, Downgraded to Baa1 from Aaa
-- Cl. A2-C, Downgraded to A3 from Aaa
-- Cl. A2-D, Downgraded to Baa1 from Aaa
-- Cl. A2-E, Downgraded to A3 from Aaa
-- Cl. M-1, Downgraded to Ba3 from Aa1
-- Cl. M-2, Downgraded to Caa2 from Baa1
-- Cl. M-3, Downgraded to Ca from Baa2
-- Cl. M-4, Downgraded to C from Ba3
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa1
-- Cl. B-3, Downgraded to C from Caa2
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB3
-- Cl. A-2, Downgraded to Baa2 from Aaa
-- Cl. A-3, Downgraded to Ba3 from Aaa
-- Cl. A-4, Downgraded to B1 from Aaa
-- Cl. A-5, Downgraded to Ba3 from Aaa
-- Cl. M-1, Downgraded to Caa2 from A3
-- Cl. M-2, Downgraded to C from Ba2
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa1
-- Cl. B-3, Downgraded to C from Caa2
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB4
-- Cl. A-1A, Downgraded to Aa3 from Aaa
-- Cl. A-1B, Downgraded to Ba1 from Aaa
-- Cl. A-1C, Downgraded to B1 from Aaa
-- Cl. A-2B, Downgraded to Aa1 from Aaa
-- Cl. A-2C, Downgraded to Baa1 from Aaa
-- Cl. A-2D, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Caa2 from A2
-- Cl. M-2, Downgraded to C from Ba1
-- Cl. M-3, Downgraded to C from Ba3
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa1
-- Cl. B-3, Downgraded to C from Caa2
-- Cl. B-4, Downgraded to C from Caa3
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB5
-- Cl. A-1, Downgraded to Aa1 from Aaa
-- Cl. A-2, Downgraded to B1 from Aaa
-- Cl. A-3, Downgraded to B2 from Aa2
-- Cl. M-1, Downgraded to Caa2 from A3
-- Cl. M-2, Downgraded to C from Ba2
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB6
-- Cl. A-1, Downgraded to Aa1 from Aaa
-- Cl. A-2, Downgraded to B1 from Aaa
-- Cl. A-3, Downgraded to B2 from Aaa
-- Cl. A-4, Downgraded to B3 from Aaa
-- Cl. M-1, Downgraded to Caa2 from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from Caa2
Issuer: Citigroup Mortgage Loan Trust, Series 2005-CB4
-- Cl. B-4, Downgraded to B1 from Ba1
-- Cl. B-5, Downgraded to Caa2 from Ba2
CBRE REALTY: Non-Compliant with NYSE's $25-Mil. Market Cap.
-----------------------------------------------------------------
CBRE Realty Finance, Inc. was notified by the NYSE Regulation that
the company is not in compliance with the New York Stock Exchange,
Inc. listing standard requiring a listed common stock to maintain
a minimum average closing price of $1.00 per share for 30
consecutive trading days. The NYSE requires notification from the
company within 10 business days of its intent to cure the
noncompliance or it will be subject to suspension and delisting
procedures.
Under the NYSE's rules, the company has six months from the date
of the NYSER notice to cure this deficiency before the NYSE
initiates suspension and delisting procedures. During this
period, the company's common stock will remain listed on the
NYSE, provided that the company continues to satisfy the minimum
market capitalization standard, which requires the company to
maintain a 30 trading-day average market capitalization of at
least $25 million.
The company noted that the NYSE notification will not affect the
company's business operations and does not change its SEC
reporting requirements. The company's common stock remains listed
on the NYSE under the symbol "CBF," but will be assigned a ".BC"
indicator by the NYSE to signify that the company is not currently
in compliance with the NYSE's continued listing standards.
The company will continue to monitor its compliance with the
$25 million market capitalization standard but may not be able to
maintain this market capitalization level. Any failure to comply
with this standard would result in immediate delisting from the
NYSE without any cure period. Noncompliance with this standard
will occur within the next two weeks unless the company's average
30-day stock price is at least $0.82 per share.
If delisted, the company expects its common stock will be traded
through normal brokerage channels on the OTC Bulletin Board.
About CBRE Realty Finance
CBRE Realty Finance Inc. -- http://www.cbrerealtyfinance.com/--
was established in May 2005 and is a commercial real estate
specialty finance company primarily focused on originating,
acquiring, investing in, financing and managing a diversified
portfolio of commercial real estate-related loans and securities.
CBRE Realty Finance has elected to qualify to be taxed as a real
estate investment trust, or REIT, for federal income tax purposes.
CBRE Realty Finance is externally managed and advised by CBRE
Realty Finance Management, LLC, an indirect subsidiary of CB
Richard Ellis Group, Inc. and a direct subsidiary of CBRE Melody &
Company.
CHAPARRAL ENERGY: Postponed Merger Vote Cues S&P to Revise Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the CreditWatch
implications on exploration and production company Chaparral
Energy Inc. to developing from positive. S&P placed the 'B'
corporate credit and other ratings on CreditWatch on July 15,
2008, following the proposed merger with Edge Petroleum Corp.
The CreditWatch revision follows the announcement that Edge
Petroleum's Board of Directors have postponed the shareholder vote
on the merger, scheduled for Oct. 23, until Dec. 4, 2008, while
Chaparral continues to seek the financing necessary to complete
the merger.
"The rating action reflects our concerns about Chaparral's
liquidity if the merger is not successfully completed," said
Standard & Poor's credit analyst Paul Harvey.
The transaction is contingent on a successful refinancing of
Chaparral's existing $600 million borrowing-based revolver to
$1 billion and a $150 million preferred equity infusion from
private equity firm Magnetar Financial LLC. Because of limited
access to capital markets, S&P believes the company will have
difficulty increasing its facility to $1 billion and achieving
minimum pro forma availability of $325 million, which Magnetar
Financial requires as a condition for its $150 million equity
injection.
In addition, to complete the merger the NYSE must approve the
listing of new shares of Chaparral common stock, which requires a
minimum price of $4 per share among other conditions. However,
based on Edge's Oct. 23 closing stock price of 86 cents, the
combined company may have trouble meeting the $4 threshold,
particularly in light of the current market malaise and slumping
crude oil prices. If the merger is not completed, and the company
is unable to maintain adequate liquidity, S&P could lower the
ratings on Chaparral.
A positive rating action is still possible if Chaparral
successfully closes the merger with Edge, which will improve its
liquidity profile and financial measures. Near-term pro forma
debt to EBITDA could improve to around 3.5x, or about 4x if
preferred equity is treated as debt, from 5.5x at June 30, 2008.
Liquidity will benefit from debt repayment via the proceeds of the
series B preferred stock as well as from the expanded borrowing
base.
Chaparral hopes to have the merger financing in place by the
Dec. 4 meeting. S&P will resolve the CreditWatch listing if and
when information regarding progress of the financing and merger
become available. Positive rating actions would require Chaparral
to successfully close the merger with Edge without significantly
altering its projected debt leverage or expected liquidity.
However, if the merger fails to be completed and Chaparral is
unable to maintain adequate liquidity, S&P could lower the
ratings.
CHRYSLER LLC: Will Lay Off 5,000 Employees; GM Talks Continue
-------------------------------------------------------------
John D. Stoll and Neal E. Boudette at The Wall Street Journal
report that Chrysler LLC said that about 25% of its salaried
employees, or 5,000 white-collar workers, will be laid off by
year-end. According to WSJ, Chrysler said that more restructuring
efforts will come "in the near future."
WSJ relates that the layoffs and restructuring moves could help
pave the way for Chrysler's merger with General Motors Corp.
According to the report, any deal would create significant overlap
between GM and Chrysler. Chrysler seems to be clearing the
payroll of workers who might not be needed in the company's next
chapter, the report states, citing Conway MacKenzie & Dunleavy's
senior managing partner Van Conway. A merger between Chrysler and
GM would lead to a loss of 40,000 or more jobs at the two
companies, the report says, citing economists.
A Chrysler spokesperson, according to WSJ, denied that the merger
had something to do with the job cuts, and said that the layoffs
were due to the deep decline in U.S. auto sales.
Chrysler's CEO Robert Nardelli told employees that white-collar
workers who are losing jobs through the latest reduction will
leave the payroll Dec. 31, 2008, according to WSJ. Some of the
5,000 workers will be offered early-retirement or buyout packages,
while others will be terminated involuntarily, WSJ reports.
About Chrysler LLC
Headquartered 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 on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that 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. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CHRYSLER LLC: Bankruptcy Speculations Among Analysts Persist
------------------------------------------------------------
Jeffrey McCracken and John D. Stoll at The Wall Street Journal
report that General Motors Corp. and Chrysler LLC might run out of
cash within a year, without a merger and assistance from the
federal government.
WSJ relates that GM and Chrysler have dismissed speculations on
bankruptcy, but analysts and investors have begun to question
whether one of the firms might have to file for Chapter 11
protection. GM and Chrysler, says WSJ, are locked out of the
credit markets and are burning cash rapidly.
According to WSJ, auto makers and Michigan political delegations
have proposed at least three plans in recent weeks to unlock
federal cash for the new company that GM and Chrysler would
create. The report says that the proposals include seeking an
equity investment from the government and unlocking funds from its
Troubled Asset Relief Program.
Citing people involved in the GM-Chrysler talks, WSJ states that
GM and Chrysler estimate that a combined entity would need $10
billion in new equity for layoffs, plant shutdowns, integration of
GM and Chrysler, and to provide liquidity. The report quoted
Deutsche Bank auto analyst Rod Lache as saying, "Without external
intervention, from consolidation or government assistance, we
expect GM to reach its minimum cash position in under 12 months."
Mr. Lache, according to the report, believed that Chrysler is also
running low on funds and that it could run out of cash by August
2009 or December 2009.
WSJ quoted GM spokesperson Steve Harris as saying, "We continue to
hold the position that bankruptcy is not an option." Chrysler
spokesperson Lori McTavish also denied the company's possible
bankruptcy, the report says.
According to WSJ, a person involved with the GM-Chrysler talks
said that the two companies "are basically waiting on the
government. The three choices are bankruptcy, a big intervention
from the government or some big deal like this that has massive
cost-cutting possibilities. That's it. And even the big deal may
require government help."
WSJ states that the GM-Chrysler merger may be the best way to
bring federal money into the mix and some people have proposed at
least three possibilities for a federal role in the merger:
-- to unlock some of the $25 billion from an energy bill
passed in 2007 that would help compensate manufacturers
for costs associated with new fuel-efficiency standards
for the U.S. auto industry;
-- for the government to take an outright stake in the
entity, which people involved in the talks say could be
in the form of preferred shares; and
-- using the Troubled Asset Relief Program to buy up
troubled auto loans from the companies' financing arms,
GMAC and Chrysler Financial.
According to WSJ, Michigan lawmakers have urged the Federal
Reserve and Treasury to get involved in the GM-Chrysler talks. A
congressional delegation led by Michigan Rep. John Dingell sent a
letter last week to Federal Reserve Chairman Ben Bernanke and
Treasury Secretary Henry Paulson, urging them to find money for
Chrysler and GM, states the report. Michigan Gov. Jennifer
Granholm also started setting up a task force of cabinet officials
who will formulate a contingency plan in the event of a merger, or
if one of the companies seeks bankruptcy court protection. The
task force is talking to auto-industry analysts and economic
planners in Southeast Michigan to come up with a plan to deal with
what could be massive job loss, the report says, citing a
spokesperson for Gov. Granholm.
Gov't Working on $5 Bilion Loan for GM
The U.S. Department of Energy may grant General Motors Corp. about
$5 billion of the $25 billion in low-interest loans approved by
Congress and is being administered by the energy department,
Deborah Solomon and Stephen Power at The Wall Street Journal
report, citing a person familiar with the matter.
According to WSJ, the $25 billion in low-interest loans are aimed
at helping Detroit retool plants to meet new fuel-efficiency
standards.
WSJ relates that the $5 billion loan could help accelerate talks
on GM's merger with Chrysler LLC. The report says that Cerberus
Capital Management LP -- GM and Chrysler's majority owner -- have
been discussing a deal wherein GM would own Chrysler. According
to the report, the companies have struggled to secure financing.
Citing sources, the report says that the company that will be
formed would need $10 billion in new equity to cover the cost of
laying off workers, closing plants, and integrating the two
companies.
The $5 billion loan, according to WSJ, could help steady GM's
finances and make it easier for the company and Cerberus to
persuade investors to support a merger deal. Jeffrey McCracken
and John D. Stoll at WSJ relates that lenders are reluctant to
invest.
WSJ says that any transaction would involve Chrysler and Cerberus
and GM's GMAC LLC, which loans money for car purchases and other
purposes.
WSJ quoted White House spokesperson Dana Perino as saying, "It's a
possibility that they [GM, Chrysler, and Ford Motor Co.] could
qualify" for Treasury funds under the $700 billion rescue fund,
either through a direct investment or participation in the
administration's asset-purchase plan.
A spokesperson for the Energy Department said that the agency is
"developing the rules for the loan program," WSJ states.
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of
US$191.6 billion, and total stockholders' deficit of
US$56.9 billion. For the quarter ended June 30, 2008, the company
reported a net loss of US$15.4 billion over net sales and revenue
of US$38.1 billion, compared to a net income of US$891.0 million
over net sales and revenue of US$46.6 billion for the same period
last year.
About Chrysler LLC
Headquartered 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 on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that 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. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CLEVELAND BIOLABS: Receives Notice of Non-Compliance from Nasdaq
----------------------------------------------------------------
Cleveland BioLabs, Inc. received a letter from The NASDAQ Stock
Market notifying the company that it had ceased to remain in
compliance with Marketplace Rule 4450(b)(1) which requires that
the company maintain either (a) a market value of listed
securities in excess of $50 million or (b) total assets and total
revenues of at least $50 million in the last fiscal year or two of
the past three fiscal years.
The company will be provided 30 calendar days to regain
compliance, or alternatively may apply for transfer of its listing
to The NASDAQ Capital Market.
This notification has no effect on the listing of the company's
common stock during the 30-day period or during evaluation of any
potential application to transfer listing and it will continue to
trade on The NASDAQ Global Market under the symbol CBLI.
Headquartered in Cleveland, Ohio, Cleveland BioLabs, Inc.
(NASDAQ:CBLI) -- http://www.cbiolabs.com/-- is a drug discovery
and development company leveraging its proprietary discoveries
around programmed cell death to develop treatments for cancer and
protection of normal tissues from exposure to radiation and other
stresses. The company has strategic partnerships with the
Cleveland Clinic, Roswell Park Cancer Institute, ChemBridge
Corporation and the Armed Forces Radiobiology Research Institute.
CMP SUSQUEHANNA: Moody's Cuts CF and PD Ratings to Caa2 from B2
---------------------------------------------------------------
Moody's Investors Service downgraded CMP Susquehanna Corp.'s
Corporate Family Rating to Caa2 from B2, its probability of
default rating to Caa2 from B2 and its speculative grade liquidity
rating to SGL-4 from SGL-2. In addition, Moody's downgraded the
company's senior secured credit facility ratings to Caa1 from B1
and its senior subordinated notes to Ca from Caa1. The rating
outlook is negative. This concludes the review for possible
downgrade initiated on October 15, 2008.
The rating downgrades reflect Moody's concerns over CMP's
increasing financial risk as a result of weakening credit metrics
in a slow economy. Moody's expects radio broadcasting revenues,
which are highly reliant on cyclical advertising, to come under
increasing pressure due to the slowdown in consumer spending, its
impact on corporate profits, and the resulting cutbacks in
advertising and marketing budgets by several industries. Moody's
believes that the resultant revenue and cash flow deterioration
will aggravate CMP's already high debt-to-EBITDA leverage and
weaken other credit metrics.
CMP's SGL-4 liquidity rating reflects the company's weak liquidity
position given our expectations for thin cushion under the
company's bank credit facility financial maintenance covenants.
S&P expects the company to generate sufficient cash flow to meet
operational needs, however, positive free cash flow remains
susceptible to greater than expected revenue declines.
Additionally, Moody's believes that CMP will be challenged to
remain compliant with its debt-to-EBITDA leverage covenant when it
steps down at the end of March 2009, and further thereafter.
The negative outlook reflects our concerns regarding CMP's ability
to remain in compliance with tightening financial covenants and
also reflects Moody's belief that absent exercise of the equity
cure provision in the credit agreement, any potential remedy of
covenant problems could involve a significant step-up in pricing,
thereby further pressuring the company's credit metrics.
Moody's has taken these rating actions:
Issuer: CMP Susquehanna Corp.
-- Corporate Family Rating: Downgraded to Caa2 from B2
-- Probability of Default Rating: Downgraded to Caa2 from B2
-- $100 million revolving credit facility due 2012: Downgraded
to Caa1(LGD 3, 39%) from B1 (LGD 3, 37%)
-- $700 million term loan facility due 2013: Downgraded to Caa1
(LGD 3, 39%) from B1 (LGD 3, 37%)
-- $250 million senior subordinated notes due 2014: Downgraded
to Ca (LGD 6, 91%) from Caa1 (LGD 5, 89%)
-- Speculative Grade Liquidity Rating: Downgraded to SGL-4 from
SGL-2
-- Outlook: Revised to Negative from RUR
CMP's Caa2 CFR reflects the company's high debt-to-EBITDA leverage
of 9.8x at 06/30/2008, substantial revenue concentration in two
markets, weak liquidity position and the maturity and inherent
cyclicality of the radio industry.
CMP's ratings are supported by the company's relatively strong
margins, large market presence and high proportion of local
advertising revenue. In addition, despite not being a wholly
owned subsidiary of Cumulus Media Inc., CMP benefits from Cumulus'
experienced management team and clustering of CMP's stations with
those of Cumulus.
CMP Susquehanna Corp., headquartered in Atlanta, Georgia, is a
wholly-owned subsidiary of Cumulus Media Partners LLC, the private
partnership formed by Cumulus Media, Inc. and a consortium of
private equity sponsors. CMP Susquehanna Corp. owns and operates
32 radio stations in nine markets in the U.S. The company's
revenue for the LTM period ended 06/30/2008 was $219 million.
COMFORT CO: D.E. Shaw Laminar Portfolios Opposes $35MM Financing
----------------------------------------------------------------
Bill Rochelle of Bloomberg News reports that D.E. Shaw Laminar
Portfolios, LLC, one of the first-lien lenders to Comfort Co. and
its debtor-affiliates, filed its objection with the U.S.
Bankruptcy Court for the District of Delaware against the Debtors'
$35 million in secured financing, saying it forces the Debtors
into selling the business to a subgroup of the lenders "at a
depressed value and without any market test".
The Court will hold a hearing on Oct. 29, 2008, for final approval
of the financing.
D.E. Shaw says the financing prevents the Debtors from selling the
business to another buyer even if a sale would pay the lenders in
full, forcing them into a "complete abandonment of their fiduciary
duties to all creditors", according to the report.
About Comfort Co.
Comfort West Long Branch, New Jersey-based Co., Inc. --
http://www.sleepinnovations.com/-- makes and sells foam bedding,
sleep products and accessories.
The company and its affiliates filed for Chapter 11 protection on
Oct. 3, 2008 (Bankr. D. Delaware Case No. 08-12305). Michael R.
Lastowski, Esq., at Duane Morris LLP assists the company in its
restructuring effort. The company listed assets of $100 million
to $500 million and debts of $100 million to $500 million.
COMFORT CO: Section 341(a) Meeting Scheduled for November 7
-------------------------------------------------------------
The United States Trustee has scheduled a Section 341(a) meeting
of creditors of Sleep Innovations, Inc., Comfort Co., Inc.,
Advanced Innovations Central, LLC, Advanced Innovations East, LLC,
Advanced Innovations West, LLC, Advanced Urethane Technologies,
Inc., AUT Brenham, Inc., AUT Dallas, Inc., AUT Lebanon, Inc., AUT
Newburyport, Inc., and AUT West Chicago, Inc., for Friday, Nov. 7,
2008 at 11:00 A.M. (ET), at:
J. Caleb Boggs Federal Building
844 North King Street
2nd Floor Room 2112
Wilmington
Delaware
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Comfort Co.
Comfort West Long Branch, New Jersey-based Co., Inc. --
http://www.sleepinnovations.com/-- makes and sells foam bedding,
sleep products and accessories.
The company and its affiliates filed for Chapter 11 protection on
Oct. 3, 2008 (Bankr. D. Delaware Case No. 08-12305). Michael R.
Lastowski, Esq., at Duane Morris LLP assists the company in its
restructuring effort. The company listed assets of $100 million
to $500 million and debts of $100 million to $500 million.
COMIJA INC: Section 341(a) Meeting Scheduled for November 5
-----------------------------------------------------------
The U.S. Trustee for Region 4 will convene a meeting of Comija,
Inc.'s creditors on Nov. 5, 2008, at 10:00 a.m., at 341 Meeting
Room No. 2650 at 101 West Lombard Street, Baltimore.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The deadline for the filing of proofs of claim is Feb. 3, 2009.
Baltimore, Maryland-based Comija, Inc., filed for Chapter 11
protection on Oct. 2, 2008 (Bankr. D. Md. Case No. 08-22791).
James L. Wiggins, Esq., at James L. Wiggins Law Office represents
the company in its restructuring effort. The company listed
assets of $1,346,475 and debts of $391,500.
COMMERCIAL VEHICLE: S&P Trims Credit Rating to 'B'; Outlook Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Commercial Vehicle Group Inc.
to 'B' from 'B+'. The outlook is negative. The rating actions
reflect CVG's weak prospects for the remainder of 2008 and 2009,
given the deteriorating North American economy that has, in turn,
increased the severity and duration of the North American
commercial truck industry downturn.
"We no longer expect CVG's already-weak credit measures to recover
sufficiently in the year ahead to maintain the previous rating,"
said Standard & Poor's credit analyst Nancy Messer. "In addition,
the company faces tight covenants at Dec. 31, 2008. This
tightness and uncertainty in the credit markets make it likely
that CVG will experience higher borrowing costs if it is able to
relax covenants, as it has several times recently. In this credit
market, there are no assurances that waivers can be obtained," she
continued. However, S&P believes CVG is relatively well-
positioned to do so.
Despite CVG's variable cost structure and seasoned management
team, cost-reduction initiatives have not kept pace with the rapid
rise in material and freight costs, combined with significantly
lower volume sales and price concessions to customers.
New Albany, Ohio-based CVG designs, engineers, and produces
structural components of truck cabs, including frame sleeper boxes
and cab-related interior products, for a concentrated group of
large and price-sensitive commercial-truck original equipment
manufacturers. CVG generates about 41% of its revenues from the
sale of components to the North American Class 8 truck market,
which has experienced a steeper decline in demand than expected.
Significantly, CVG's earnings have been hurt by adverse product
mix because an increased percentage of North American sales have
been for export to Mexico, where trucks carry less content per
vehicle for CVG. Sales to the construction equipment market
contribute nearly 20% of the company's revenues and some
diversity to the earnings stream.
CVG's market risk is concentrated in North America, where it
generates the vast majority of its revenues. CVG had $160 million
of total balance sheet debt as of Sept. 30, 2008, excluding S&P's
adjustments for operating leases and unfunded postretirement
benefit obligations.
S&P expects commercial truck build rates to improve slightly in
2009 before the next emissions change in 2010, but the recession
will prevent production levels from reaching anything close to the
record volumes of 2006, before the last emissions change. In
addition, CVG has experienced weakness this year in the European
construction equipment market, which had been positive. The
company's exposure to volatile commodity costs and the highly
cyclical and competitive nature of its end markets are key risks.
Another risk factor is CVG's potential to fund acquisitions with
debt and cash flow.
The outlook on CVG is negative, reflecting S&P's concern about the
company's tight covenants and pressures on cash flow potential in
the year ahead from weak heavy-truck production in the context of
a deteriorating U.S. economy. Still, S&P expects the company's
financial risk profile to eventually become consistent with the
'B' rating.
S&P could lower the ratings further if CVG cannot maintain access
to its revolving credit facility because of an inability to obtain
covenant waivers, if needed, or if free cash flow turns
substantially negative for consecutive quarters. S&P could also
lower the ratings if the commercial vehicle production upturn is
delayed beyond mid-2009, perhaps because of persistent North
American economic weakness, or if economic weakness in other
markets curbs the company's ability to expand EBITDA. To revise
the outlook to stable, S&P would require improved profitability
that leads to sustained cash flow to promote reduced leverage.
This would likely result from a significant rebound in the
U.S. heavy-truck market, with support from improved economic
conditions. This seems unlikely to occur before late 2009, at the
earliest.
CREDIT & REPACKAGED: Moody's Cuts Two Notes Rtngs to Ba3 from Ba1
-----------------------------------------------------------------
Moody's Investors Service has downgraded its ratings on the notes
issued by Credit and Repackaged Securities Limited 2006:
Class Description: $3,000,000 Tranche Notes Due September 15, 2014
(2006-5)
-- Prior Rating: Ba1
-- Prior Rating Date: September 19, 2008
-- Current Rating: Ba3
Class Description: $2,000,000 Tranche Notes Due September 15, 2014
(2007-6)
-- Prior Rating: Ba1
-- Prior Rating Date: September 19, 2008
-- Current Rating: Ba3
Class Description: $15,000,000 Tranche Notes Due September 15,
2014 (2006-7)
-- Prior Rating: B3
-- Prior Rating Date: September 19, 2008
-- Current Rating: Caa2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, as well as
Fannie Mae and Freddie Mac, which were placed into the
conservatorship of the U.S. government on September 8, 2008.
DAVE & BUSTER: S&P Affirms Corporate Credit Rating at 'B'
---------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings, including
the 'B' corporate credit rating, on Dallas-based Dave & Buster's
Inc. At the same time, S&P removed the ratings from CreditWatch
with positive implications, where they were placed on July 15,
2008. The outlook is stable.
"This action is based on our expectation that the company is not
likely to complete an IPO in the near term," said Standard &
Poor's credit analyst Charles Pinson-Rose, "given current capital
market conditions and the very difficult operating environment
facing casual-dining restaurants." Earlier this year, Dave &
Buster's parent company filed an S-1 and subsequently an S-1/A for
an IPO, and proceeds would likely have paid down borrowings on the
company's senior secured term loan and monetized part of the
private-equity sponsor's investment. "Since we no longer expect
that the company can complete an IPO in the near term, our ratings
on the company assume that Dave & Buster's will operate with its
current capital structure this year and next," added Mr. Pinson-
Rose.
DEVELOPERS DIVERSIFIED: S&P Trims Preferred Stock Rating to 'BB'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Developers Diversified Realty
Corp. to 'BBB-' from 'BBB'. At the same time, S&P lowered its
rating on the company's preferred stock to 'BB' from 'BB+'. In
addition, S&P revised the outlook to negative from stable.
"The downgrades and outlook revision reflect DDR's above-average
leverage, low debt service coverage, and its high credit line
usage, which limits the company's financial flexibility given the
weak and uncertain macroeconomic environment," said Standard &
Poor's credit analyst Elizabeth Campbell. "We expect debt
coverage measures to remain under pressure, as a weakening retail
environment may erode DDR's currently sound core operating
fundamentals, and above-average debt maturities over the next few
years are likely to be more costly to refinance."
Absent a meaningful equity raise, the company will remain highly
reliant upon asset sales and monetizations to raise capital. S&P
believes achieving meaningful sales may be challenging, as the
current financial environment has driven real estate transaction
volume and valuations lower and pushed financing costs higher.
The lower ratings, however, remain supported by S&P's expectations
for a comparatively modest impact from retailer woes on DDR's core
cash flow, as the company's relatively young community shopping
center portfolio is entering this downturn well leased. The
longer average lease terms of the big-box retailers that anchor
most of its centers and a still favorable mark-to-market rent
profile provide additional support. Although DDR's strategy
historically has included sizable acquisitions, development, and
expansion into select emerging international markets, management
has pared its appetite for riskier investments.
Beachwood, Ohio-based DDR is a large community shopping center
owner, manager, developer, and acquirer, with roughly $9 billion
real estate at cost on balance sheet as of June 30, 2008. DDR's
portfolio includes approximately 730 retail operating and
development properties in 45 U.S. states, Puerto Rico, Brazil,
Russia, and Canada, totaling more than 157 million square feet.
DIEDRICH COFFEE: Market Value Below $5MM, But Nasdaq Suspends Rule
-----------------------------------------------------------------
Diedrich Coffee, Inc. received a Nasdaq Staff Deficiency Letter
indicating that for the last thirty consecutive trading days, the
company's common stock has not maintained a minimum market value
of publicly held shares of $5 million, and as a result, the
company does not comply with the MVPHS requirement for continued
listing on the NASDAQ Global Market as set forth in NASDAQ
Marketplace Rule 4450(a)(2). In light of extraordinary market
conditions, NASDAQ has suspended enforcement of the bid price and
MVPHS requirements through Jan. 16, 2009. These rules will be
reinstated on Monday, Jan. 19, 2009.
Upon reinstatement, and in accordance with NASDAQ Marketplace
Rule 4450(e)(1), the company will have until April 20, 2009, to
comply with Rule 4450(a)(2), which is demonstrated by the
company's MVPHS equaling or exceeding $5 million for a minimum of
10 consecutive trading days.
On Oct. 15, 2008, the company received a staff deficiency letter
on Oct. 10, 2008 with respect to the company's non-compliance with
the minimum stockholders' equity requirement of $10 million as set
forth in NASDAQ Marketplace Rule 4450(a)(3). The company is in
the process of preparing a response to NASDAQ's request for a plan
to achieve and sustain compliance with NASDAQ Global Market
listing requirements.
Headquartered in Irvine, California, Diedrich Coffee Inc. --
http://www.diedrich.comor http://www.gloriajeans.com/--
specializes in sourcing, roasting and selling quality coffees.
The company's three brands are Diedrich Coffee, Gloria Jean's
Coffees and Coffee People. Diedrich Coffee sells its coffees
through wholesale accounts including office coffee service
distributors, restaurants and specialty retailers, and via the
company's web stores. As of June 25, 2008, the company also has
123 retail outlets, the majority of which are franchised, located
in 28 states.
DIGITALFX INT'L: Sends AMEX Compliance Plan, Relies on Products
---------------------------------------------------------------
DigitalFX International, Inc. submitted a plan, as required, to
The American Stock Exchange advising AMEX of action the company
will take to regain compliance with the AMEX's continued listing
standards.
The Plan sets forth quarterly milestones and a road map of how the
company intends to regain compliance with the continued listing
rules, but most importantly, how the company's new management will
steer the company towards financial stability for our business,
our employees, our loyal distributor base and our shareholders.
The Plan addresses the introduction of new product initiatives,
discusses management changes and outlines the expected financing
plan of the company, the first phase of which was launched on
Oct. 15, 2008.
The Plan remains subject to review and acceptance by the AMEX.
If accepted, the plan will continue to be subject to periodic
review to determine whether the company is making progress
consistent with the plan. If the plan is not accepted, or if the
company does not make progress consistent with the plan, the AMEX
may initiate delisting procedures as appropriate.
About DigitalFX International, Inc.
Headquartered in Las Vegas, Nevada, DigitalFX International Inc.
(AMEX:DXN) -- http://www.DigitalFX.com/-- markets web-based
products such as streaming live and on-demand video, video email
and digital storage. The company also markets proprietary
communication and collaboration services, and social networking
software applications, including its flagship product, called the
Studio.
Limited Waiver
As reported in the Troubled Company Reporter on Oct. 24, 2008,
DigitalFX International entered into several agreements that
resulted in a reshuffle of senior management and in a forbearance,
limited in time, from any action by its note holders, as a first
step in a plan to strengthen its affiliate relations, and regain
financial stability and the confidence of its shareholders.
DILLARD'S INC: Weak Performance Cues Moody's Ratings Review
-----------------------------------------------------------
Moody's Investors Service placed the ratings of Dillard's, Inc.
under review for possible downgrade. LGD assessments and point
estimates are also subject to change.
The review for possible downgrade reflects Moody's concern that
the company's continuing weak operating performance will prevent
the company from maintaining a financial profile and debt
protection measures appropriate for its current rating. Recent
poor performance has led to EBITA to interest coverage ratio of
0.7 times for the last twelve months ended August 4, 2008.
Moody's is also concerned with the company's ability to increase
its level of performance from its core retail operations to a
level appropriate for the B1 rating category, instead of relying
on profits from its credit card related operations.
Moody's review will concentrate on the company's ability to
maintain acceptable credit metrics, financial flexibility, and
liquidity as it adjust to the worsening economy. This is
particularly important given what we expect to be a tough holiday
season which is critical given its earnings and cash flow
dependence on the fourth quarter.
These ratings were placed on review for possible downgrade:
Dillard's Inc.
-- Corporate family rating at B1
-- Probability of default rating at B1
-- $952 million senior unsecured notes at B2
-- $200 million subordinated notes at B3
Dillard's Capital Trust I
-- $200 million preferred stock at B3
Dillard's, Inc. is a regional department store chain,
headquartered in Little Rock, Arkansas. It operates approximately
318 department stores and nine clearance centers in 29 U.S. states
located primarily in the southeast, southwest, and mid-west.
Revenues for the twelve months ended August 4, 2008 were
approximately $7.1 billion.
DIXIE SALES: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Dixie Sales Company USA, Inc.
dba BYOTB
dba Eagle's Nest Bookstore
(Florida Coastal School of Law Bookstore)
dba Fazzinini's Coffee & Tea
5570-603 Florida Mining Blvd. S.
Jacksonville, FL 32257
Bankruptcy Case No.: 08-06595
Chapter 11 Petition Date: October 24, 2008
Court: Middle District of Florida (Jacksonville)
Debtor's Counsel: Brett A. Mearkle, Esq.
court@planlaw.com
Mickler & Mickler
5452 Arlington Expressway
Jacksonville, FL 32211
Tel: (904) 725-0822
Fax: (904) 725-0855
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.
DRUID TOWN: Section 341(a) Meeting Scheduled for November 13
------------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of Druid Town
Home Development, LP's creditors on Nov. 13, 2008, at 11:00 a.m.,
at Room 976 in Dallas.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The deadline for the filing of proofs of claim is Feb. 11, 2009.
Dallas, Texas-based Druid Town Home Development, LP, filed for
Chapter 11 protection on Oct. 7, 2008 (Bankr. N. D. Texas Case No.
08-35161). John E. Leslie, Esq., at the Law Offices of John E.
Leslie represents the company in its restructuring effort. The
company listed assets of $1 million to $10 million and debts of
$1 million to $10 million.
ELECTRICAL COMPONENTS: S&P Holds 'CCC+' Rating on Credit Amendment
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Electrical Components International Inc., including the 'CCC+'
long-term corporate credit rating, and removed them from
CreditWatch where they were placed with negative implications on
May 2, 2008. The outlook is negative.
"The affirmation reflects the recent amendment to ECI's credit
agreement, which gives the company covenant relief," said Standard
& Poor's credit analyst Sarah Wyeth. "Still, the rating remains
in the 'CCC' category and the outlook is negative, indicating our
belief that because of the current market conditions, the
amendment does not provide significant relief and that the company
will be challenged to achieve the 2009 covenant levels."
St. Louis, Missouri-based ECI manufactures wire harnesses for
household appliances. The recessionary conditions of the North
American housing market and the current financial turmoil more
than offset ECI's recent cost-cutting efforts including the
closure of a manufacturing plant. In the fourth quarter, the
company should be able to generate a modest amount of cash to
reduce debt. However, this will most likely not provide enough
cushion to absorb the covenant step downs in 2009. Total debt to
EBITDA was 6.5x at June 30, 2008.
The company's liquidity is constrained. Although it has
sufficient cash on its balance sheet to meet short-term financial
obligations and has access to its $35 million revolver, S&P is
concerned that liquidity will deteriorate significantly as its
leverage covenant steps down.
S&P could lower the ratings if the likelihood of a covenant
violation increases. A positive rating action is limited by the
company's tight covenants and deteriorating end markets.
EQUAN REALTY: Taps Michael Schwartz as General Bankruptcy Counsel
-----------------------------------------------------------------
Equan Realty Corp. asks the U.S. Bankruptcy Court for the Southern
District of New York for authority to employ Michael H. Schwartz,
P.C., under a general retainer, as its counsel.
As the Debtor's counsel, Michael H. Schwartz will provide legal
advice with respect to its powers and duties as debtor-in-
possession, prepare, on behalf of the Debtor, necessary
applications, answers, orders, reports and other legal papers and
perform all other insolvency related legal services as may be
requested by the Debtor.
Michael H. Schwartz, P.C. did not provide a fee schedule for its
professional services.
Michael H. Schwartz, Esq., a principal at Michael H. Schwartz,
P.C., assures the Court that his firm has no present connection
with the creditors of the Debtor or any other party in interest or
their respective attorneys. To the best of the Debtor's
knowledge, Michael H. Schwartz, P.C. represents no interests
adverse to it or its estate.
Based in New York, Equan Realty Corp. is a Single Asset Real
Estate developer. The company filed for Chapter 11 relief on
Oct. 14, 2008 (Bankr. S.D. N.Y. Case No. 08-14017). It listed
total assets of $10,755,997 and total debts of $5,884,523.
FANNIE MAE: Investors Losing Confidence in Fannie and Freddie
-------------------------------------------------------------
Dow Jones Newswires reports that investors are losing confidence
in Fannie Mae and Freddie Mac. Investors, according to The Wall
Street Journal, are worried over the extent of the U.S.
government's guarantee of Fannie and Freddie's debt securities.
WSJ relates that the Federal Housing Finance Agency's director
James Lockhart, told senators on Thursday that the
"conservatorship and the access to credit from the U.S. Treasury
provide an explicit guarantee to existing and future debt holders
of Fannie Mae and Freddie Mac." The report states that a Federal
Housing spokesperson later said that debtholders have an
"effective guarantee," making investors, who had earlier jumped
into the market, sell the debt again.
WSJ says that investors are fear that Freddie and Fannie's debt
might not carry the full backing of the U.S. government.
Dow Jones relates that the government seized the firms to try to
silence concerns that the companies' eroding capital cushion put
their $1.65 trillion of outstanding debt at risk. The report says
that the government pledged about $200 billion in a line of credit
for Fannie and Freddie, adding to investors' anxieties. According
to the report, the measures the government has taken since then to
shore up the broader financial system have caused investors to
question whether agency debt is the best place for funds earmarked
for safe-haven status. The report states that an attempt by James
Lockhart, director of the agency that regulates Fannie and
Freddie, to reassure investors added to the confusion.
According to Dow Jones, the investors' goodwill and the
restoration of their confidence is important to the operations of
Fannie and Freddie, and the fulfilment of their mission to
stabilize the housing market.
Fannie and Freddie, says Dow Jones, raise money in the debt market
by selling bonds at a premium to Treasury yields and using use
these funds to ensure and buy mortgage bonds. Once the cost of
funding becomes too high, the companies' ability to do business is
undercut, states Dow Jones. Dow Jones relates that the risk
premiums investors charge have risen to record weak levels, after
the government said it would back new debt from U.S. banks. The
report states that the government has been hesitant to extend such
a guarantee to Fannie and Freddie debt.
According to Dow Jones, investors are confused about Fannie and
Freddie's business model. The companies, says Dow Jones, are
being operated by the government, which has pledged to buy up
toxic securities like subprime mortgages as part of its multi-
pronged rescue effort. The report states that investors fear that
Fannie and Freddie will be charged with purchasing some of this
debt to support the housing market.
The Federal Housing Finance Agency, Fannie and Freddie's
regulator, said it hasn't instructed the companies to purchase
risky mortgages, Dow Jones reports.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
FEDDERS CORP: Firms Seek Nearly $5MM in Service Fees
----------------------------------------------------
BankruptcyLaw360 reports that the attorneys representing Fedders
Corp. debtor-affiliate Fedders North America, Inc., and its
unsecured creditors requested combined fees of nearly $5 million.
The Bankruptcy Court set an Oct. 20, 2008 deadline to file final
fee applications, after the Debtors' amended joint Chapter 11 plan
of liquidation dated Aug. 21, 2008, became effective Sept. 5,
2008.
As reported in the Troubled Company Reporter on Aug. 22, 2008,
the Plan and related settlement among the Term Lenders, the
Official Committee of Unsecured Creditors and the Debtors provide
for the liquidation and distribution of the Debtors' assets.
About Fedders Corporation
Based in Liberty Corner, New Jersey, Fedders Corporation --
http://www.fedders.com/-- manufactures and markets air treatment
products, including air conditioners, air cleaners, dehumidifiers,
and humidifiers. The company has production facilities in the
United States in Illinois, North Carolina, New Mexico, and Texas
and international production facilities in the Philippines, China
and India. The company and several affiliates filed for Chapter
11 protection on Aug. 22, 2007, (Bankr. D. Del. Lead Case No. 07-
11182). Norman L. Pernick, Esq., and J. Kate Stickles, Esq., at
the Wilmington, Delaware office of Cole, Schotz, Meisel, Forman &
Leonard P.A.; and Irving E. Walker, Esq., at Cole Schotz's
Baltimore, Maryland, office represent the Debtors in their
restructuring efforts. The Debtors have selected Logan & Company
Inc. as claims and noticing agent. The Official Committee of
Unsecured Creditors is represented by Brown Rudnick Berlack
Israels LLP. When the Debtors filed for protection from
creditors, they listed total assets of US$186,300,000 and total
debts of US$322,000,000.
FEDERAL-MOGUL: Earns $61.7MM for Nine Months ended September 30
---------------------------------------------------------------
Federal-Mogul Corporation reported solid year-over-year results
with third quarter sales of $1,692 million, gross margin of
$279 million, pre-tax earnings of $22 million and net income of
$4 million. Cash flow in the third quarter 2008 improved to
$25 million versus a negative cash flow of $(114) million in the
same period of 2007. These sales and operating results are
comparable to year-ago levels, notwithstanding that third quarter
2008 performance was attained in a far more challenging market
environment than in the third quarter of the prior year.
The third quarter of 2008 was marked by a faltering global
automotive market where new vehicle sales and production rates
fell as a result of a major automotive market downturn.
Financial Summary
(in millions)
Three Months Nine Months
Ended September 30
-------------------------------
2008 2007 2008 2007
---- ---- ---- ----
Net sales $1,692 $1,686 $5,546 $5,165
Gross margin 279 279 941 910
Adjusted gross margin 279 279 1,009 910
Selling, general and
administrative expenses 192 208 613 627
Pre-tax income 22 7 133 68
Net income 4 14 62 22
Adjusted net income 4 14 125 22
Operational EBITDA 178 166 640 578
Cash flow 25 (114) 141 (35)
"The third quarter was increasingly difficult for the automotive
industry. Our strong operating fundamentals served to limit the
negative impact of the market downturn. As a result of our
diversification, Federal-Mogul realized continued strong sales.
The company's decisive response to the declining worldwide
automotive market, including sharp cuts in discretionary spending,
coupled with a global restructuring program designed to eliminate
excess operating capacity, reduce requirements for operations
support and streamline SG&A, enabled Federal-Mogul to realize
another profitable quarter and positioned the company for this
challenging market," said Jose Maria Alapont, Federal-Mogul
President and CEO.
Federal-Mogul sales for the three-month period ending Sept. 30,
2008, increased $6 million to $1,692 million, compared to
$1,686 million during the same period a year ago. Favorable
foreign currency exchange lifted sales by $65 million in Europe
and offset volume declines occurring largely in North America,
while Asia-Pacific and other markets continued to perform.
Federal-Mogul, in Q3 2008, recorded a gross margin of
$279 million or 16.5% of sales, compared to the same results,
$279 million or 16.5% of sales in Q3 2007. The company's
Operational EBITDA(1) was $178 million or 10.5% of sales,
compared to $166 million or 9.8% of sales during the same
period in 2007, representing an increase of $12 million or seven
percent. The company recorded pre-tax income of $22 million
compared to $7 million in the third quarter of 2007. Federal-
Mogul reported net income of $4 million or earnings per share of
$0.04, down from $14 million in the third quarter 2007, due to
non-recurrence of tax benefits of $24 million in Q3 2007.
Selling, General and Administrative (SG&A) expenses were reduced
to 11.3% of sales during the quarter, compared to 12.3% of sales
in the same period of 2007. The company realized a reduction in
SG&A expense of $22 million, partially offset by foreign currency
exchange impact of $6 million, resulting in a net improvement of
$16 million.
Federal-Mogul announced, on Sept. 17, 2008, a global restructuring
plan designed to improve operating performance and respond to the
challenging conditions in the global automotive industry. The
plan, when combined with other workforce adjustments, is expected
to reduce the company's global workforce by approximately 4,000
positions or eight%. The planned actions include several
initiatives designed to streamline business processes, consolidate
or close selected locations, and reduce general and administrative
staffing.
The company, during Q3, recorded $11 million in restructuring
expenses for workforce severance costs. Federal-Mogul continues
to implement restructuring actions under the plan, and expects to
finalize them and announce closure of a number of facilities
during 2009.
"During these challenging times, consistent execution of the
company's proven strategy for sustainable global profitable
growth helped to offset the market downturn and strengthen
overall performance," explained Mr. Alapont. "Federal-Mogul has
an established track record for restructuring to sustain
operating performance and, furthermore, we possess a solid
capital structure, considerable liquidity and a favorable bank
financing package. This should enable us to retain our leading
market position and prepare the company for future growth
opportunities through organic growth or market consolidation,"
he added.
"We will continue to focus on our strong fundamentals, including
world-class engineering and manufacturing with a cost-competitive
global footprint; leading technology and innovation in vehicle and
industrial products for fuel economy, alternative energies,
emissions reduction and safety systems; with long-term customer
relationships built on excellence in products and services, supply
chain and operating performance," Mr. Alapont continued.
Federal-Mogul, during the quarter, continued to benefit from
leading technology and innovation, as demonstrated by winning
major business awards relating to fuel efficiency, emissions and
vehicle safety at leading European automakers. One example is
the company's highly-regarded Monosteel(R) pistons featuring
superior strength and performance due to a unique closed gallery
architecture essential for the next generation of emissions-
compliant heavy-duty diesel engines.
The design addresses increasing thermal, mechanical, abrasion and
corrosion challenges placed on diesel engines. In addition,
Federal-Mogul's innovative aluminum pistons can be manufactured
using a proprietary re-melting process that improves durability in
highly-charged light-duty engines where downsizing has been
employed to improve fuel efficiency and reduce CO2 emissions.
Federal-Mogul reported sales of $5,546 million for the nine-
month period ending September 30, 2008, an increase of
$381 million or 7% versus $5,165 million for the same period in
2007.
Gross margin increased to $941 million in the first nine months of
2008 versus $910 million in 2007. Operational EBITDA increased
11%, or $62 million, to $640 million in the first nine months of
2008, as compared to $578 million in the same period the prior
year.
The company recorded pre-tax income of $133 million in the first
nine months of 2008 versus $68 million for the same period in
2007.
Net income was $62 million during the first three quarters of
2008 from $22 million during the first three quarters of 2007.
The company recorded positive cash flow of $141 million in
the first nine months of 2008, which compares to negative cash
flow of $(35) million in the same period of 2007.
"Federal-Mogul remains a strong company with profitable financial
performance, a solid balance sheet, considerable liquidity,
favorable financing and a diverse portfolio of leading products
and customers. Our sustainable global profitable growth strategy
continues to guide the company as we prepare for challenging
market conditions during the remainder of 2008 and in 2009," said
Mr. Alapont.
Interest Rate Risk
Federal-Mogul disclosed in its Form 10-Q for the quarter ended
September 30, 2008, that it was party to a series of five year
interest rate swap agreements with a total notional value of
$1,150 million to hedge the variability of interest payments
associated with its variable-rate term loans under the Exit
Facilities. Through these swap agreements, the Company has fixed
its base interest and premium rate at a combined average interest
rate of approximately 5.4% on the hedged notional value of $1,150
million. Since the interest rate swaps hedge the variability of
interest payments on variable rate debt with the same terms, they
qualify for cash flow hedge accounting treatment.
As of Sept. 30, 2008, unrealized net gains of $11.2 million were
recorded in accumulated other comprehensive loss as a result of
these hedges. Hedge ineffectiveness, determined using the
hypothetical derivative method, was not material for the three or
nine months ended September 30, 2008.
The Exit Facilities were initially negotiated by the Predecessor
Company and certain of the Plan Proponents, reaching agreement on
the majority of significant terms of the Exit Facilities in early
2007. Between the time the terms were agreed in early 2007 and
the Effective Date, interest rates charged on similar debt
instruments for companies with similar debt ratings and
capitalization levels rose to higher levels. As such, when
applying the provisions of fresh-start reporting, the Company
estimated a fair value adjustment of $163 million for the
available borrowings under the Exit Facilities. This estimated
fair value adjustment has been recorded within fresh-start
reporting, and will be amortized as interest expense over the
terms of each of the underlying components of the Exit Facilities.
During the three and nine months ended Sept. 30, 2008, the company
recognized $5.6 million and $16.7 million, respectively, in
interest expense associated with the amortization of this fair
value adjustment.
Federal-Mogul Lost 81% of
Stock Value this Year
Federal-Mogul's third quarter profit fell 74% as a result of the
dwindling sale of automobiles around the world. The profit was
lower than the 36-cent estimate by one analyst surveyed by
Bloomberg News.
Federal-Mogul, Bloomberg said on October 22, fell $1.31, or 21%,
to $5.04 at 4:00 p.m. New York time in Nasdaq Stock Market
composite trading. The stock, Bloomberg added, has lost 21% of
its value this year. At the start of the year, Federal-Mogul's
shares traded at almost $30 per share, according to data gathered
by the Detroit Free Press.
U.S. auto sales fell 13% through September, according to a
Bloomberg report citing Autodata Corp. Car sales in Europe, the
same report said, have been on their longest slump since 2005,
European Automobile Manufacturers' Association said on
Oct. 15, Bloomberg related.
The Detroit Free Press said that most autoparts suppliers had
predicted a "rocky" third quarter, as production cuts that
automakers announced during the first half of the year fully set
in.
A full-text-copy of Federal-Mogul Corp.'s Third Quarter 2008
Results filed on Form 10-Q is available at no charge at:
http://ResearchArchives.com/t/s?3434
Reorganized Federal-Mogul Corporation
Balance Sheet
(In millions)
Assets
Successor Company
------------------
Sep. 30 Dec. 31
2008 2007
------- -------
Current Assets:
Cash and equivalents $781.5 $425.4
Accounts receivable 1,185.7 1,095.9
Inventories 1,034.0 1,074.3
Prepaid expenses and other current assets 318.3 526.4
-------- --------
Total current assets 3,319.5 3,122.0
Property, plant and equipment 2,014.9 2,061.8
Goodwill & indefinite-lived
intangible assets 1,500.5 1,852.0
Definite-lived intangible assets, net 582.7 310.0
Other non-current assets 496.3 520.5
-------- --------
Total Assets $7,913.9 $7,866.3
======== ========
Liabilities and Shareholders' Equity
Short-term debt &
current portion of long-term debt $135.8 $117.8
Accounts payable 641.5 726.6
Accrued liabilities 465.0 496.0
Current portion of postemployment
benefit liability 60.8 61.2
Other current liabilities 152.1 167.3
-------- --------
Total current liabilities 1,455.2 1,568.9
Long-term debt 2,771.9 2,517.6
Post-employment benefits 920.0 936.9
Long-term portion of deferred income taxes 339.4 331.4
Other accrued liabilities 262.6 300.3
Minority interest in consolidated affiliates 51.3 87.5
Shareholders' equity:
Common stock 1.0 1.0
Additional paid-in capital 2,122.7 2,122.7
Retained earnings 61.7 -
Accumulated other comprehensive loss (55.2) -
Treasury stock, at cost (16.7) -
-------- --------
Total Shareholders' Equity 2,113.5 2,123.7
-------- --------
Total Liabilities and Shareholders' Equity $7,913.9 $7,866.3
======== ========
Federal-Mogul Corporation
Statement of Operations
(In millions)
Successor Predecessor
Company Company
------ -----------
Nine Months Ended
September 30
------------------
2008 2007
------- -------
Net sales $5,546.4 $5,165.4
Cost of products sold (4,605.5) (4,255.7)
-------- --------
Gross margin 940.9 909.7
Selling, general & administrative expenses (612.8) (627.3)
Interest expense, net (137.2) (151.8)
Amortization expense (56.7) (14.0)
Chapter 11 & U.K. Administration expenses (15.3) (56.5)
Equity earnings of unconsolidated affiliates 20.7 27.6
Restructuring expense, net (14.0) (39.4)
Other income, net 7.8 19.7
-------- --------
Income before Income Taxes 133.4 68.0
Income Tax (Expense) Benefit, net (71.7) (45.8)
-------- --------
Net Income $61.7 $22.2
======== ========
Federal-Mogul Corporation
Statement of Operations
(In millions)
Successor Predecessor
Company Company
------ -----------
Three Months Ended
September 30
------------------
2008 2007
------- -------
Net sales $1,692.0 $1,685.5
Cost of products sold (1,413.1) (1,406.0)
-------- --------
Gross margin 278.9 279.5
Selling, general & administrative expenses (191.7) (207.7)
Interest expense, net (46.6) (49.9)
Amortization expense (21.4) (4.7)
Chapter 11 & U.K. Administration expenses (2.3) (15.3)
Equity earnings of unconsolidated affiliates 4.2 9.6
Restructuring expense, net (11.3) (9.8)
Other income, net 12.1 5.6
-------- --------
Income before Income Taxes 21.9 7.3
Income Tax (Expense) Benefit, net (18.3) 6.4
-------- --------
Net Income $3.6 $13.7
======== ========
Federal-Mogul Corporation
Statement of Cash Flows
(In millions)
Successor Predecessor
Company Company
--------- -----------
Nine Months Ended
September 30
------------------
2008 2007
------- -------
Cash Provided From (Used By)
Operating Activities:
Net income $61.7 $22.2
Adjustments to reconcile
net income to net cash:
Depreciation and amortization 265.8 261.4
Cash received from 524(g) Trust 225.0 -
Change in postemployment benefits 8.5 (80.8)
Change in deferred taxes 1.7 (20.5)
Changes in operating assets & liabilities:
Accounts receivable (107.9) (127.6)
Inventories 21.9 (14.3)
Accounts payable (75.9) 56.4
Other assets & liabilities (25.5) 41.2
-------- --------
Net Cash Provided From Operating Activities 375.3 138.0
Cash Provided From (Used By)
Investing Activities:
Expenditures for property,
plant & equipment (240.2) (220.4)
Net proceeds from sale of
property, plant & equipment 10.9 26.1
Net proceeds from sale of businesses - 14.0
Proceeds from sale of investment - 13.8
Payments to acquire minority interests - (6.8)
Payments to acquire business (4.7) -
-------- --------
Net Cash Used By Investing Activities (234.0) (173.3)
Cash Provided From (Used By)
Financing Activities:
Proceeds from borrowings on exit facility 2,082.0 -
Repayment of Tranche A/Revolver/PIK Notes (1,790.8) -
Proceeds from borrowings on DIP facility - 658.8
Principal payments on DIP facility - (247.0)
Repayment of prepetition Tranche C debt - (330.0)
Increase (decrease) in short-term debt (0.2) 9.0
Decrease in long-term debt (31.4) (5.0)
Purchase of treasury stock (16.7) -
Decrease in factoring arrangements (15.5) (55.4)
Debt refinance fees (0.6) (0.1)
-------- --------
Net Cash Provided From Financing Activities 226.8 30.3
Effect of foreign currency
exchange fluctuation rates on cash (12.0) (11.9)
Increase in Cash and Equivalents 356.1 6.9
Cash and equivalents at beginning of period 425.4 359.3
-------- --------
Cash and equivalents at end of period $781.5 $366.2
======== ========
About Federal-Mogul Corporation
Federal-Mogul Corporation -- http://www.federal-mogul.com/--
(OTCBB: FDMLQ) is a global supplier, serving the world's foremost
original equipment manufacturers of automotive, light commercial,
heavy-duty, agricultural, marine, rail, off-road and industrial
vehicles, as well as the worldwide aftermarket. Founded in
Detroit in 1899, the company is headquartered in Southfield,
Michigan, and employs 45,000 people in 35 countries. Aside from
the U.S., Federal-Mogul also has operations in other locations
which includes, among others, Mexico, Malaysia, Australia, China,
India, Japan, Korea, and Thailand.
The Company filed for chapter 11 protection on Oct. 1, 2001
(Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F.
Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown &
Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl &
Jones, P.C., represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $10.15 billion in assets and $8.86 billion in liabilities.
Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at
Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein
Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer,
Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the
Official Committee of Unsecured Creditors.
On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan.
They submitted a Disclosure Statement explaining that plan on
April 21, 2003. They submitted several amendments and on June 6,
2004, the Bankruptcy Court approved the Third Amended Disclosure
Statement for their Third Amended Plan. On July 28, 2004, the
District Court approved the Disclosure Statement. The estimation
hearing began on June 14, 2005. The Debtors submitted a Fourth
Amended Plan and Disclosure Statement on Nov. 21, 2006, and the
Bankruptcy Court approved that Disclosure Statement on Feb. 6,
2007. The Fourth Amended Plan was confirmed by the Bankruptcy
Court on Nov. 8, 2007, and affirmed by the District Court on
November 14. Federal-Mogul emerged from chapter 11 on Dec. 27,
2007.
(Federal-Mogul Bankruptcy News, Issue No. 174; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
FGIC CORPORATION: Moody's Reviews 'B1' Rating for Likely Cut
------------------------------------------------------------
Moody's Investors Service has placed the B1 insurance financial
strength ratings of the main operating subsidiaries of FGIC
Corporation, including Financial Guaranty Insurance Company and
FGIC UK Limited under review for possible downgrade. In the same
rating action, Moody's has also placed the Caa2 senior debt
ratings of the holding company, FGIC Corporation and the B3
contingent capital securities ratings of Grand Central Capital
Trusts I-VI on review for possible downgrade. Prior to the rating
action, the rating outlook for FGIC was negative.
The rating action primarily reflects Moody's expectation of
further stress on the company's risk-adjusted capital position in
light of continued deterioration in housing fundamentals and the
related implications on the company's mortgage-related exposures.
Higher expected mortgage default rates and severity was reflected
in upward revisions to Moody's lifetime loss estimates for certain
recent vintage residential mortgage-backed securities announced in
September.
Moody's ratings on securities that are guaranteed or "wrapped" by
a financial guarantor are generally maintained at a level equal to
the higher of a) the rating of the guarantor, or b) the published
underlying rating. In accordance with current rating agency
policy, following Moody's June 20, 2008 rating action on FGIC
which lowered its rating to below the investment grade level,
Moody's withdrew ratings on FGIC wrapped securities for which
there was no published underlying rating. Should the guarantor's
rating subsequently move back into the investment grade range or
should the agency subsequently publish the associated underlying
rating, Moody's would reinstate previously withdrawn ratings on
those wrapped instruments. For further information please see
Moody's special comment entitled: Assignment of Wrapped Ratings
When Financial Guarantor Falls Below Investment Grade (May, 2008).
Moody's said that its review of FGIC's insurance financial
strength rating will update its assessment of the guarantor's
mortgage-related exposures and other insured transactions.
Moody's stated that because FGIC is meaningfully exposed to the
risk of US subprime mortgages and other residential mortgage
products, its updated mortgage loss assumptions are expected to
have a significant impact on estimates of the firm's capital
adequacy.
As part of a restructuring plan, FGIC has ceded most of its US
public finance exposures by completing a reinsurance agreement
with MBIA. FGIC also reached a settlement with the counterparty
for a large and poorly performing ABS CDO. According to Arlene
Isaacs-Lowe, senior vice president, "these events have had a
positive impact on estimates of FGIC's capital adequacy but are
likely to be more than offset by the impact of increased loss
assumptions for FGIC's mortgage related risks."
During the review, Moody's will evaluate the impact of revised
mortgage loss assumptions on capitalization in the context of any
additional restructuring plans. Moody's will also consider the
recent termination of FGIC's net worth maintenance agreement with
FGIC UK on transactions that have been insured by FGIC UK.
List of Rating Actions
These ratings have been placed under review for possible
downgrade:
* Financial Guaranty Insurance Company -- B1 insurance financial
strength;
* FGIC UK Limited -- B1 insurance financial strength;
* Grand Central Capital Trusts I-VI -- B3 contingent capital
securities; and
* FGIC Corporation -- Caa2 senior unsecured debt.
Overview of FGIC Corporation
FGIC Corporation is a holding company whose primary operating
subsidiaries, Financial Guaranty Insurance Corporation and FGIC UK
Limited, provide credit enhancement and protection products to the
public finance and structured finance markets throughout the
United States and internationally. FGIC Corporation is privately
owned by an investor group consisting of The PMI Group, GE and
private equity firms Blackstone, Cypress and CIVC.
FREESCALE SEMICONDUCTOR: Draws $460,000,000 from Credit Revolver
----------------------------------------------------------------
Freescale Semiconductor received approximately $460 million by
making a draw under its $750 million revolving credit facility
under its Credit Agreement, which expires in 2012.
"We made this proactive financial decision to further enhance
our liquidity and cash position," Alan Campbell, senior vice
president and chief financial officer, said. "This improves
the company's financial flexibility as we continue to execute our
business plans."
The company had cash and cash equivalents totaling approximately
$1.3 billion at the third quarter ended Sept. 26, 2008. The
company's revolving credit facility includes a $60 million
commitment from Lehman Commercial Paper, Inc., which filed
for bankruptcy on Oct. 5, 2008. The company's borrowing request
was not honored by Lehman Commercial Paper.
Headquartered in Austin, Texas, Freescale Semiconductor Inc.
(NYSE: FSL) -- http://www.freescale.com/ -- designs and
manufactures embedded semiconductors for the automotive, consumer,
industrial, networking and wireless markets. The company has
design, research and development, manufacturing or sales
operations in more than 30 countries.
* * *
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch placed Freescale's (i) issuer default rating at 'B+'; (ii)
senior secured bank revolving credit facility at 'BB+/RR1'; (iii)
senior secured term loan at 'BB+/RR1'; (iv) senior unsecured notes
at 'B/RR5'; and (v) senior subordinated notes at 'CCC+/RR6'.
FREDDIE MAC: Investors Losing Confidence in Firm
------------------------------------------------
Dow Jones Newswires reports that investors are losing confidence
in Fannie Mae and Freddie Mac. Investors, according to The Wall
Street Journal, are worried over the extent of the U.S.
government's guarantee of Fannie and Freddie's debt securities.
WSJ relates that the Federal Housing Finance Agency's director
James Lockhart, told senators on Thursday that the
"conservatorship and the access to credit from the U.S. Treasury
provide an explicit guarantee to existing and future debt holders
of Fannie Mae and Freddie Mac." The report states that a Federal
Housing spokesperson later said that debtholders have an
"effective guarantee," making investors, who had earlier jumped
into the market, sell the debt again.
WSJ says that investors are fear that Freddie and Fannie's debt
might not carry the full backing of the U.S. government.
Dow Jones relates that the government seized the firms to try to
silence concerns that the companies' eroding capital cushion put
their $1.65 trillion of outstanding debt at risk. The report says
that the government pledged about $200 billion in a line of credit
for Fannie and Freddie, adding to investors' anxieties. According
to the report, the measures the government has taken since then to
shore up the broader financial system have caused investors to
question whether agency debt is the best place for funds earmarked
for safe-haven status. The report states that an attempt by James
Lockhart, director of the agency that regulates Fannie and
Freddie, to reassure investors added to the confusion.
According to Dow Jones, the investors' goodwill and the
restoration of their confidence is important to the operations of
Fannie and Freddie, and the fulfilment of their mission to
stabilize the housing market.
Fannie and Freddie, says Dow Jones, raise money in the debt market
by selling bonds at a premium to Treasury yields and using use
these funds to ensure and buy mortgage bonds. Once the cost of
funding becomes too high, the companies' ability to do business is
undercut, states Dow Jones. Dow Jones relates that the risk
premiums investors charge have risen to record weak levels, after
the government said it would back new debt from U.S. banks. The
report states that the government has been hesitant to extend such
a guarantee to Fannie and Freddie debt.
According to Dow Jones, investors are confused about Fannie and
Freddie's business model. The companies, says Dow Jones, are
being operated by the government, which has pledged to buy up
toxic securities like subprime mortgages as part of its multi-
pronged rescue effort. The report states that investors fear that
Fannie and Freddie will be charged with purchasing some of this
debt to support the housing market.
The Federal Housing Finance Agency, Fannie and Freddie's
regulator, said it hasn't instructed the companies to purchase
risky mortgages, Dow Jones reports.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
FREMONT GENERAL: Taps Epstein Becker as Special Litigation Counsel
------------------------------------------------------------------
Fremont General Inc. seeks permission from the U.S. Bankruptcy
Court for the Central District of California to employ Epstein
Becker & Green, P.C., as its special litigation counsel.
The Debtor requires the firm to render these types of services:
a) investigation, analysis and case assessment;
b) responsive pleadings and meetings of counsel;
c) document review and document production;
d) written discovery;
e) deposition discovery;
f) discovery motions;
g) class and dispositive motion practice;
h) expert interviews and reports;
i) expert discovery;
j) court hearings; and
k) trial and trial preparation.
George T. Caplan, a member at EBG, discloses that he bills $855
per hour. He further discloses that current rates of the
professionals expected to be most active:
Professional Hourly Rate
------------ -----------
Kristopher S. Davis $560
Paul M. Gelb $530
Rhea G. Mariano $300
Eric A. Cook $275
Mr. Caplan relates that the general range of current rates is:
Attorneys $275 - $855
Paralegals $140
Law Clerks $125
Mr. Caplan declares that his firm does not hold any interest
adverse to the Debtor or its estate, and is not a "disinterested
person" as the term is described in the Bankruptcy Code.
Based in Santa Monica, California, Fremont General Corp. (OTC:
FMNTQ) -- http://www.fremontgeneral.com/-- was a financial
services holding company with $8.8 billion in total assets at
Sept. 30, 2007. Fremont General ceased being a financial services
holding company on July 25, 2008, when its wholly owned bank
subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont
Investment & Loan) completed the sale of its assets, including all
of its 22 branches, and 100% of its $5.2 billion of deposits to
CapitalSource Bank.
Fremont General filed for Chapter 11 protection on June 18, 2008,
(Bankr. C.D. Calif. Case No. 08-13421), after selling subsidiary
Fremont Investment & Loan to CapitalSource Inc. Robert W. Jones,
Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, serve as
counsel to the Debtor. Theodore Stolman, Esq., and Scott H. Yun,
at Stutman Treister & Glatt, are the co-counsel to the Debtor.
The Debtor selected Kurtzman Carson Consultants LLC as its claims
agent.
Lee R. Bogdanoff, Esq., Jonathan S. Shenson, Esq., and Jonathan D.
Petrus, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represent
the Official Committee of Unsecured Creditors as counsel.
In its schedules, Fremont General reported $362,227,537 in total
assets and $326,529,372 in total debts. When the Debtor filed for
protection from its creditors, it listed total assets of
$643,197,000 and total debts of $320,630,000.
FREMONT HOME: S&P Lowers Ratings on 13 Classes of Certificates
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 13
classes of mortgage-backed certificates from Fremont Home Loan
Trust 2006-B. Concurrently, S&P affirmed its 'AAA' rating on
class 2-A-2.
The downgrades reflect S&P's opinion that projected credit support
for the affected classes is insufficient to maintain the previous
ratings, given its current projected loss of 30.1% for structure
group one. As of the September 2008 distribution date, structure
group one had realized cumulative losses amounting to 6.25% of the
original pool balance. During the previous three remittance
periods, monthly losses exceeded excess interest by approximately
2.5x; as a result, overcollateralization has been completely
eroded.
In addition, collateral losses have reduced the balance of class
M-11 to zero while also reducing the balance of class M-10 by
$3,869,000. Total delinquencies for structure group one are
52.40% of the current pool balance, while serious delinquencies
represent 41.34%. The remaining pool factor for structure group
one is approximately 65.24%.
Credit support for this structure group is provided by a
combination of excess spread, O/C, and subordination. The
underlying collateral consists of conventional, fully amortizing,
adjustable- and fixed-rate mortgage loans secured by first and
second liens on one- to four-family residential properties.
Ratings Lowered
Fremont Home Loan Trust 2006-B
Rating
------
Class To From
----- -- ----
1-A BB AAA
2-A-3 A AAA
2-A-4 BB AAA
M-1 CCC AA+
M-2 CCC AA
M-3 CCC AA-
M-4 CC BBB+
M-5 CC BB
M-6 CC B
M-7 CC B
M-8 CC CCC
M-9 CC CCC
M-10 D CCC
Rating Affirmed
Fremont Home Loan Trust 2006-B
Class Rating
----- ------
2-A-2 AAA
GENERAL MOTORS: To Lay Off More Workers, Cut Employee Benefits
--------------------------------------------------------------
Sharon Terlep and John Stoll at The Wall Street Journal report
that General Motors Corp. said in a letter to its executives that
the company will be forced to lay off salaried workers later this
year and early next year.
According to WSJ, GM said that the layoffs will occur even after
more workers than expected took buyouts. The report says that GM
hoped to cut its workforce by 15%, or 5,000 workers, under a
buyout and retirement incentive program that is being offered
until Oct. 24.
GM's CEO Rick Wagoner and Chief Operating Officer Fritz Henderson
said in the letter that the company will also cut salaried worker
benefits, WSJ relates. GM will eliminate matching payments into
401(k) plans, and more changes will be disclosed soon, the report
says, citing Messrs. Wagoner and Henderson.
WSJ quoted GM as saying, "The global credit crisis has had a
dramatic impact upon the industry at large, and new vehicle
markets in North America and Western Europe have contracted
severely. The global economic outlook remains very concerning.
As a result, actions are being taken throughout GM's global
operations to address our increasing need to conserve cash."
WSJ reports that the layoffs and worker benefit cuts are part of a
$15 billion liquidity boosting-plan GM disclosed in July, which
includes $10 billion in cost-cutting. More actions are being
taken throughout the company's global operations to conserve cash,
and more salaried benefit changes will be disclosed, the report
says, citing GM.
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of
US$191.6 billion, and total stockholders' deficit of
US$56.9 billion. For the quarter ended June 30, 2008, the company
reported a net loss of US$15.4 billion over net sales and revenue
of US$38.1 billion, compared to a net income of US$891.0 million
over net sales and revenue of US$46.6 billion for the same period
last year.
GENERAL MOTORS: Bankruptcy Speculations Among Analysts Continue
---------------------------------------------------------------
Jeffrey McCracken and John D. Stoll at The Wall Street Journal
report that General Motors Corp. and Chrysler LLC might run out of
cash within a year, without a merger and assistance from the
federal government.
WSJ relates that GM and Chrysler have dismissed speculations on
bankruptcy, but analysts and investors have begun to question
whether one of the firms might have to file for Chapter 11
protection. GM and Chrysler, says WSJ, are locked out of the
credit markets and are burning cash rapidly.
According to WSJ, auto makers and Michigan political delegations
have proposed at least three plans in recent weeks to unlock
federal cash for the new company that GM and Chrysler would
create. The report says that the proposals include seeking an
equity investment from the government and unlocking funds from its
Troubled Asset Relief Program.
Citing people involved in the GM-Chrysler talks, WSJ states that
GM and Chrysler estimate that a combined entity would need $10
billion in new equity for layoffs, plant shutdowns, integration of
GM and Chrysler, and to provide liquidity. The report quoted
Deutsche Bank auto analyst Rod Lache as saying, "Without external
intervention, from consolidation or government assistance, we
expect GM to reach its minimum cash position in under 12 months."
Mr. Lache, according to the report, believed that Chrysler is also
running low on funds and that it could run out of cash by August
2009 or December 2009.
WSJ quoted GM spokesperson Steve Harris as saying, "We continue to
hold the position that bankruptcy is not an option." Chrysler
spokesperson Lori McTavish also denied the company's possible
bankruptcy, the report says.
According to WSJ, a person involved with the GM-Chrysler talks
said that the two companies "are basically waiting on the
government. The three choices are bankruptcy, a big intervention
from the government or some big deal like this that has massive
cost-cutting possibilities. That's it. And even the big deal may
require government help."
WSJ states that the GM-Chrysler merger may be the best way to
bring federal money into the mix and some people have proposed at
least three possibilities for a federal role in the merger:
-- to unlock some of the $25 billion from an energy bill
passed in 2007 that would help compensate manufacturers
for costs associated with new fuel-efficiency standards
for the U.S. auto industry;
-- for the government to take an outright stake in the
entity, which people involved in the talks say could be
in the form of preferred shares; and
-- using the Troubled Asset Relief Program to buy up
troubled auto loans from the companies' financing arms,
GMAC and Chrysler Financial.
According to WSJ, Michigan lawmakers have urged the Federal
Reserve and Treasury to get involved in the GM-Chrysler talks. A
congressional delegation led by Michigan Rep. John Dingell sent a
letter last week to Federal Reserve Chairman Ben Bernanke and
Treasury Secretary Henry Paulson, urging them to find money for
Chrysler and GM, states the report. Michigan Gov. Jennifer
Granholm also started setting up a task force of cabinet officials
who will formulate a contingency plan in the event of a merger, or
if one of the companies seeks bankruptcy court protection. The
task force is talking to auto-industry analysts and economic
planners in Southeast Michigan to come up with a plan to deal with
what could be massive job loss, the report says, citing a
spokesperson for Gov. Granholm.
Gov't Working on $5 Bilion Loan for GM
The U.S. Department of Energy may grant General Motors Corp. about
$5 billion of the $25 billion in low-interest loans approved by
Congress and is being administered by the energy department,
Deborah Solomon and Stephen Power at The Wall Street Journal
report, citing a person familiar with the matter.
According to WSJ, the $25 billion in low-interest loans are aimed
at helping Detroit retool plants to meet new fuel-efficiency
standards.
WSJ relates that the $5 billion loan could help accelerate talks
on GM's merger with Chrysler LLC. The report says that Cerberus
Capital Management LP -- GM and Chrysler's majority owner -- have
been discussing a deal wherein GM would own Chrysler. According
to the report, the companies have struggled to secure financing.
Citing sources, the report says that the company that will be
formed would need $10 billion in new equity to cover the cost of
laying off workers, closing plants, and integrating the two
companies.
The $5 billion loan, according to WSJ, could help steady GM's
finances and make it easier for the company and Cerberus to
persuade investors to support a merger deal. Jeffrey McCracken
and John D. Stoll at WSJ relates that lenders are reluctant to
invest.
WSJ says that any transaction would involve Chrysler and Cerberus
and GM's GMAC LLC, which loans money for car purchases and other
purposes.
WSJ quoted White House spokesperson Dana Perino as saying, "It's a
possibility that they [GM, Chrysler, and Ford Motor Co.] could
qualify" for Treasury funds under the $700 billion rescue fund,
either through a direct investment or participation in the
administration's asset-purchase plan.
A spokesperson for the Energy Department said that the agency is
"developing the rules for the loan program," WSJ states.
About Chrysler LLC
Headquartered 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 on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that 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. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
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.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of
US$191.6 billion, and total stockholders' deficit of
US$56.9 billion. For the quarter ended June 30, 2008, the company
reported a net loss of US$15.4 billion over net sales and revenue
of US$38.1 billion, compared to a net income of US$891.0 million
over net sales and revenue of US$46.6 billion for the same period
last year.
GMAC LLC: Forgives ResCap's $196.8MM Debt; Credit Pact Amended
--------------------------------------------------------------
Dow Jones Newswires reports that Residential Capital LLC said on
Thursday that GMAC LLC, its parent company, forgave
$196.8 million of its debt and amended a credit agreement with two
ResCap units.
On April 18, 2008, Residential Funding Company, LLC, and GMAC
Mortgage, LLC, both subsidiaries of ResCap, entered into a Loan
and Security Agreement with ResCap's parent, GMAC, as lender, to
provide RFC and GMAC Mortgage with a revolving credit facility.
The facility is secured by RFC's and GMAC Mortgage's servicing
rights and related contractual rights under certain pooling and
servicing agreements and loan servicing agreements with respect to
pools of mortgage loans and home equity lines of credit. Under
the terms of the Loan and Security Agreement, RFC and GMAC
Mortgage were permitted to request loans from the lender until
Oct. 17, 2008, at which point the loans would mature, unless
refinanced or repaid earlier. On June 1, RFC, GMAC Mortgage, and
GMAC entered into an amendment to increase GMAC's maximum lending
commitment under the Loan and Security Agreement from $750 million
to $1.2 billion.
Effective Sept. 30, 2008, GMAC forgave $101.5 million of the
indebtedness outstanding under the Loan and Security Agreement as
a contribution of capital to ResCap. In addition, effective Sept.
30, 2008, GMAC also forgave $95.3 million of outstanding principal
and accrued unpaid interest on ResCap's 8.5% Senior Notes Due May
15, 2010, previously acquired through its open market repurchase
program and held by GMAC.
On Oct. 17, 2008, the parties amended the Loan and Security
Agreement to, among other things:
-- Reduce the advance rate from 85% to 76.6%;
-- Extend the maturity of the facility to May 1, 2009,
unless ResCap earlier obtains replacement financing
from a third-party lender;
-- Reduce the amount of GMAC's lending commitment by
$84 million as of Oct. 17, 2008, with a subsequent
commitment reduction of $84 million effective as of
Oct. 22, 2008, and further commitment reductions equal
to any amounts of the outstanding indebtedness forgiven
by GMAC as a contribution of capital to ResCap and its
subsidiaries;
-- Add a covenant by the borrowers to use their best
efforts to provide GMAC, by Nov. 30, 2008, with
$250 million in additional collateral for the
indebtedness outstanding under the facility, with a
zero advance rate applicable to such collateral;
-- At GMAC's request, require the borrowers to resign as
servicers under the underlying servicing agreements,
during the existence of an event of default under the
Loan and Security Agreement; and
-- Add an option permitting GMAC to require on two business
days' notice, or on one business day's notice following
an event of default, that servicing collections be
placed in a segregated account.
The reductions in GMAC's lending commitment reflect GMAC's
agreement to defer repayment of $168 million, required to cure a
borrowing base deficiency. The borrowers repaid $84 million on
Oct. 17 and the remaining $84 million on Oct. 22, 2008,
contemporaneously with the reductions, to cure the borrowing base
deficiency.
RFC and GMAC Mortgage give other representations, covenants, and
indemnities that are customary in similar facilities. ResCap has
entered into a Guarantee pursuant to which it guarantees the
payment by RFC and GMAC Mortgage of their obligations under the
Loan and Security Agreement.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC -
- http://www.rescapholdings.com/-- is the home mortgage unit of
GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
* * *
As reported in the Troubled Company Reporter on Sept. 15, 2008,
Moody's Investors Service downgraded the ratings of Residential
Capital LLC (ResCap)'s senior secured bonds to Ca from Caa2 and
junior secured bonds to Ca from Caa3. The ratings of ResCap's
unsecured senior debt and unsecured subordinate debt were
confirmed at Ca and C, respectively. The outlook is negative.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General
Motors Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
GRANITE XPERTS: Section 341(a) Meeting Scheduled for Nov. 13
------------------------------------------------------------
The U.S. Trustee for Region 16 will convene a meeting of Lawrence
Jacob Totter, Jr.'s creditors on Nov. 13, 2008, at 1:30 p.m., at
219 South Dearborn, Room 804, Chicago, Illinois 60604.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The last day to file the dischargeability is on Jan. 12, 2009.
Elk Grove Village, Illinois-based Granite Xperts, Inc. --
http://baykov.com/-- fabricates and installs solid surface
countertops to residential and commercial customers in Illinois,
Michigan, Wisconsin and Indiana.
The company filed for Chapter 11 protection on Oct. 7, 2008
(Bankr. N. D. Ill. Case No. 08-26883). The company listed assets
of $1 million to $100 million, and debts of $1 million to
$100 million.
GREYLOCK SYNTHETIC: Moody's Cuts $1.5MM Notes Rating to 'Ba2'
-------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade its rating on the notes issued by Greylock
Synthetic CDO 2006:
Class Description: Series 2 $50,000,000 Sub-Class A4-$L Notes Due
2017
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa1, on review for possible downgrade
In addition Moody's also has downgraded its rating on these notes:
Class Description: Series 2 $1,500,000 Sub-Class B2B-$L Notes Due
2017
-- Prior Rating: Baa3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Ba2
According to Moody's, the rating actions are the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, and Fannie
Mae and Freddie Mac, which were placed into the conservatorship of
the U.S. government on September 8, 2008.
GREYLOCK SYNTHETIC: Moody's Reviews "Ba2' Ratings for Likely Cut
----------------------------------------------------------------
Moody's Investors Service has placed on review for possible
downgrade its ratings on the notes issued by Greylock Synthetic
CDO 2006:
Class Description: Series 1 $30,000,000 Sub-Class A1-$LMS Notes
Due 2014
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: A3, on review for possible downgrade
Class Description: Series 2 $51,000,000 Sub-Class A3-$LMS Notes
Due 2017
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: A3, on review for possible downgrade
Class Description: Series 2 $5,000,000 Sub-Class A3-$FMS Notes Due
2017
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: A3, on review for possible downgrade
Class Description: Series 2 $20,000,000 Sub-Class A3A-$FMS Notes
Due 2017
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: A3, on review for possible downgrade
Moody's also announced that it has downgraded and left on review
for possible downgrade its rating on the following notes:
Class Description: Series 1 $105,000,000 Sub-Class A3-$LMS Notes
Due 2014
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa1, on review for possible downgrade
Class Description: Series 2 $20,000,000 Sub-Class A4-$L Notes Due
2017
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa1, on review for possible downgrade
Class Description: Series 2 $20,000,000 Sub-Class A4-$F Notes Due
2017
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa1, on review for possible downgrade
In addition Moody's has downgraded its rating on these notes:
Class Description: Series 1 $87,000,000 Sub-Class A4-$L Notes Due
2014
-- Prior Rating: A3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa2
Class Description: Series 1 $30,000,000 Sub-Class A6-$L Notes Due
2014
-- Prior Rating: Baa1
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa3
Class Description: Series 1 $2,000,000 Sub-Class B2-$F Notes Due
2014
-- Prior Rating: Baa3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Ba2
Class Description: Series 1 $1,250,000 Sub-Class B2A-$F Notes Due
2014
-- Prior Rating: Baa3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Ba2
Class Description: Series 1 $800,000 Sub-Class B2B-$L Notes Due
2014
-- Prior Rating: Baa3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Ba2
Class Description: Series 6 $100,000,000 Sub-Class A1A-$LMS Notes
Due 2014
-- Prior Rating: Aaa
-- Prior Rating Date: December 21, 2006
-- Current Rating: Aa1
Class Description: Series 3 EUR15,000,000 Sub-Class A1-ELMS Notes
Due 2014
-- Prior Rating: Aaa
-- Prior Rating Date: December 21, 2006
-- Current Rating: Aa1
Class Description: Series 4 Yen2,000,000,000 Sub-Class A3-YFMS
Notes Due 2014
-- Prior Rating: Aa2
-- Prior Rating Date: December 21, 2006
-- Current Rating: A2
Class Description: Series 4 Yen2,000,000,000 Sub-Class A4-YF Notes
Due 2014
-- Prior Rating: Aa3
-- Prior Rating Date: December 21, 2006
-- Current Rating: Baa1
Class Description: Series 2 $13,000,000 Sub-Class A6-$L Notes Due
2017
-- Prior Rating: Baa1
-- Prior Rating Date: August 13, 2008
-- Current Rating: Baa3
Class Description: Series 2 $16,000,000 Sub-Class B2-$L Notes Due
2017
-- Prior Rating: Baa3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Ba2
Class Description: Series 2 $2,000,000 Sub-Class B2A-$L Notes Due
2017
-- Prior Rating: Baa3
-- Prior Rating Date: August 13, 2008
-- Current Rating: Ba2
Class Description: Series 5 $20,000,000 Sub-Class A1-$LMS Notes
Due 2017
-- Prior Rating: Aaa
-- Prior Rating Date: December 21, 2006
-- Current Rating: Aa1
Class Description: $10,000,000 Credit Derivatives Transaction
between Bear Stearns Credit Products Inc. and Citibank, N.A.
-- Prior Rating: Aa2
-- Prior Rating Date: December 21, 2006
-- Current Rating: A1
According to Moody's, the rating actions are the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on Sept. 15, 2008, and Fannie Mae
and Freddie Mac, which were placed into the conservatorship of the
U.S. government on Sept. 8, 2008.
GS CDS: Moody's Cuts 6.5% of $100MM Credit Derivative Rating to Ca
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating of the swap GS
CDS -- GM Salaried Employees Pension Trust (Ref No: SDB504978938):
Class Description: 6.5% of $100,000,000 Credit Derivative
Transaction due December 20, 2013
-- Prior Rating: Ba2
-- Prior Rating Date: 10/2/2008
-- Current Rating: Ca
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on September
25, 2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, Freddie Mac, which was placed into the
conservatorship of the U.S. government on September 8, 2008 and
three Icelandic banks, specifically Kaupthing Bank hf, Landsbanki
Islands hf, and Glitnir Banki hf.
GS CDS: Moody's Junks 13.5% of $100MM Credit Derivative Rating
--------------------------------------------------------------
Moody's Investors Service has downgraded its rating of the swap GS
CDS -- GM Hourly-Rt Employee Pension Trust (Ref No:SDB504676501):
Swap Description: 13.5% of $100,000,000 Credit Derivative
Transaction due December 20, 2013
-- Prior Rating: Ba2
-- Prior Rating Date: 10/2/2008
-- Current Rating: Ca
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, Freddie Mac, which was placed into
the conservatorship of the U.S. government on September 8, 2008
and three Icelandic banks, specifically Kaupthing Bank hf,
Landsbanki Islands hf, and Glitnir Banki hf.
HARBOUR WALK: Files Disc. Statement on Plan to Liquidate Assets
---------------------------------------------------------------
Harbour Walk Preserve LLC delivered on Oct. 17, 2008, to the
Hon. Erik P. Kimball of the United States Bankruptcy Court for the
Southern District of Florida a disclosure statement explaining a
Chapter 11 plan of liquidation dated Aug. 21, 2008.
The Chapter 11 Plan is premised on the sale of the Debtors'
assets. The proceeds from the sale and any litigation claims will
be distributed in this manner:
-- all net proceeds collected by the Debtor from the
liquidation of its assets will be deposited into a
distribution account;
-- the distribution will be made on the plan's effective date;
and
-- "final receipt" will mean any net proceeds obtained by the
Debtor from the liquidation of its last remaining asset.
Centre-Line Real Estate Services LLC, as commercial real estate
broker, will market the Debtor's property until May 23, 2008, if
it is unable to enter a non-contingent contract by that date, the
Debtor will conduct an auction.
According to the Deal.com, the City of Stuart, Florida, expressed
its willingness to purchase the Debtor's assets on Oct. 17, 2008.
The plan classifies interests against and liens in the Debtor in
four classes. The classification of interests and claims are:
Treatment of Interests and Claims
Type Estimated Estimated
Class of Claims Treatment Amount Recovery
----- --------- --------- --------- ---------
unclassified administrative $100,000 100%
claims
1 secured claims unimpaired unknown 100%
2 unsecured $92,514 100%
priority claims unimpaired
3 general $14,200 100%
unsecured claims unimpaired
4 equity security unimpaired unknown 100%
holders
Under the plan, Class 1 secured claims will be paid in full at
closing on the sale of the Debtor's property. Holders asserted as
much as $15,587,758 in claims against the Debtor.
Class 2 and 3 unsecured priority claims will be paid 100% of their
respective claims in cash on the plan's effective date.
All holders of Class 4 equity interest will receive the remaining
sale proceeds from the sale of the Debtor's property.
A full-text copy of the Debtor's disclosure statement is available
for free at http://ResearchArchives.com/t/s?3433
About Harbour Walk
Palm Beach Gardens, Florida-based Harbour Walk Preserve LLC filed
for Chappter 11 protection on May 23, 2008 (Bankr. S.D. Fla. Case
No. 08-16789). Bradley S. Shraiberg, Esq., John E. Page, Esq.,
and Eyal Berger, Esq., at Kluger Peretz Kaplan & Berlin P.L.,
represent the Debtor in its restructuring efforts. The Debtor
listed total assets of $16,507,066 and debts of $14,099,226,
according to the Troubled Company Reporter on June 26, 2008.
HARRAH'S ENTERTAINMENT: Implements Cost Cutting Measures
--------------------------------------------------------
Tamara Audi, Peter Lattman, and Jeff McCracken at The Wall Street
Journal report that Harrah's Entertainment has cut the hours at
some of its casino VIP lounges, and has also made changes on its
menus, replacing plates of sandwiches with bruschetta and hummus.
WSJ relates that an industry downturn and debt obligations are
forcing Harrah's to reconsider its expenses to attract clients.
The report says that Harrah's has under $23.9 billion in debt,
most of it strapped on to fund the buyout. Private-equity firms
TPG and Apollo Management LP reached a deal to acquire Harrah's
for $17.3 billion in 2006.
Harrah's bonds, WSJ states, trade at depressed prices, and the
cost of insuring against the company's defaulting on its debt,
through credit default swaps, is among the most expensive on the
market. WSJ relates that Harrah's posted a $97.6 million second-
quarter loss in August 2008, compared with a net income of $237.5
million in August 2007.
Harrah's has sufficient cash to survive in the near term, but may
be find it hard to survive an extended consumer crisis, WSJ says,
citing industry watchers.
WSJ reports that TPG and Apollo each invested $1.3 billion in
Harrah's. The two firms, according to the report, already wrote
down their Harrah's stakes by about 20% months after the buyout
was completed in January 2008. TPG, Apollo, and co-investors,
including Blackstone Group -- which invested about $275 million --
are going to have to mark their holdings down by much more, the
report says, citing people familiar with the deal. The report
states that co-investor GoldenTree Asset Management has already
written down its Harrah's investment by 75%.
WSJ quoted Moody's Investors Service's senior credit officer Peggy
Holloway as saying, "The leverage is so off-the-charts, and we
don't know where the bottom is."
According to WSJ, executives involved in the deal said that the
terms of Harrah's debt package gives them the financial
flexibility to survive the crisis, including "covenant-lite"
loans. These loans, says WSJ, allow a firm's financial
performance to worsen before creditors can intervene. Operating
Harrah's as a private company allows them to be more ruthless
about cost cuts, the report states, citing Harrah's owners.
WSJ states that in a move to cut costs, Harrah's is laying off
hundreds of workers, deferring development projects for its growth
plans -- including a casino in Mississippi -- and cutting client
services. Harrah's is putting off refurbishment of casinos, says
the report.
Harrah's is trying to negotiate more financial flexibility with
its lenders and bondholders, WSJ reports, citing two people
familiar with the situation. Harrah's has considered using some
of a $2 billion revolving credit facility to repurchase some of
its debt and this would help significantly decrease Harrah's $2
billion estimated yearly interest expense, but would harm its
ability to refurbish locations, according to WSJ.
WSJ relates that Harrrah's has also shopped some assets for sale.
Citing Harrah's CEO Gary Loveman, WSJ states that the company "can
hold out indefinitely" against economic turmoil by reducing costs,
centralizing purchasing, and slowing down the rate of investment
in technology.
Harrah's, WSJ reports, said that it has $1.2 billion in cash and
must set aside $500 million to fund gambling operations and pay
outs.
About Harrah's Entertainment
Harrah's Entertainment, Inc. -- http://www.harrahs.com-- provides
branded casino entertainment with about 85,000 workers. Since its
beginning in Reno, Nevada, more than 70 years ago, Harrah's has
grown through development of new properties, expansions and
acquisitions, and now owns or manages casinos on four continents.
The company's properties operate primarily under the Harrah's,
Caesars and Horseshoe brand names; Harrah's also owns the London
Clubs International family of casinos and the World Series of
Poker. It has casinos in Arizona, California, Illinois, Indiana,
Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, North
Carolina and Pennsylvania. It also has casinos in Uruguay and in
Ontario, Canada.
On Jan. 28, 2008, Harrah's Entertainment was acquired by
affiliates of private-equity firms TPG Capital and Apollo Global
Management.
* * *
The Troubled Company Reporter related on July 7, 2008, that
Standard & Poor's Ratings Services revised its rating outlook on
Las Vegas-based Harrah's Entertainment Inc. and its wholly owned
subsidiary, Harrah's Operating Co. Inc., to negative from stable.
At the same time, S&P affirmed the 'B+' corporate credit rating
oneach entity.
As reported in the Troubled Company Reporter on July 21, 2008,
Moody's Investors Service downgraded Harrah's Entertainment Inc.'s
Corporate Family Rating to B3 from B2 and affirmed its Speculative
Grade Liquidity Rating at SGL-3. Moody's also downgraded various
classes of debt issued by Harrah's Operating Company, Inc.,
including its senior secured guaranteed bank revolving and term
loan credit facilities each to Ba3 from Ba2, senior unsecured
parent and operating company guaranteed notes to Caa1 from B3,
senior unsecured parent only guaranteed notes to Caa2 from Caa1,
and senior subordinated notes to Caa2 from Caa1. HOC is a wholly-
owned direct subsidiary of HET. Moody's said that the rating
outlook is stable.
HASCO: Moody's Trims Ratings on 140 Tranches from 17 Subprime RMBS
------------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 140
tranches from 17 subprime RMBS transactions issued by HASCO. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, subprime residential mortgage
loans.
These actions follow and are as a result of Moody's September 18,
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: HASCO 2006-WMC1
-- Cl. A-1, Downgraded to Baa2 from Aaa
-- Cl. A-2, Downgraded to Caa1 from A1
-- Cl. A-3, Downgraded to Caa2 from Baa3
-- Cl. A-4, Downgraded to Caa3 from Ba3
-- Cl. A-5, Downgraded to Caa2 from Baa3
-- Cl. M-1, Downgraded to C from B3
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Caa3
-- Cl. M-5, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2005-I1
-- Cl. II-A-4, Downgraded to Aa2 from Aaa
Issuer: HSI Asset Securitization Corporation Trust 2005-NC1
-- Cl. M-8, Downgraded to Caa3 from B3
Issuer: HSI Asset Securitization Corporation Trust 2005-NC2
-- Cl. M-7, Downgraded to Caa2 from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. M-10, Downgraded to C from Caa3
-- Cl. M-11, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2005-OPT1
-- Cl. M-1, Downgraded to Aa2 from Aa1
-- Cl. M-2, Downgraded to Baa3 from Baa1
-- Cl. M-3, Downgraded to Ba3 from Baa3
-- Cl. M-4, Downgraded to Caa2 from Ba3
-- Cl. M-5, Downgraded to Ca from B2
-- Cl. M-6, Downgraded to C from Caa3
Issuer: HSI Asset Securitization Corporation Trust 2006-HE1
-- Cl. I-A, Downgraded to Caa1 from Baa2
-- Cl. II-A-1, Downgraded to A2 from Aaa
-- Cl. II-A-2, Downgraded to B3 from Aa2
-- Cl. II-A-3, Downgraded to Caa1 from Ba1
-- Cl. II-A-4, Downgraded to Caa2 from Ba2
-- Cl. II-A-5, Downgraded to Caa1 from Baa3
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from B3
-- Cl. M-3, Downgraded to C from Caa1
-- Cl. M-4, Downgraded to C from Caa2
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Caa3
Issuer: HSI Asset Securitization Corporation Trust 2006-HE2
-- Cl. I-A, Downgraded to Ba3 from Baa1
-- Cl. II-A-2, Downgraded to Ba3 from A2
-- Cl. II-A-3, Downgraded to Caa1 from Ba2
-- Cl. II-A-4, Downgraded to Caa2 from Ba3
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from B3
-- Cl. M-3, Downgraded to C from Caa1
-- Cl. M-4, Downgraded to C from Caa2
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2006-NC1
-- Cl. M-1, Downgraded to Aa3 from Aa1
-- Cl. M-4, Downgraded to Caa2 from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2006-OPT1
-- Cl. M-5, Downgraded to A3 from A2
-- Cl. M-6, Downgraded to Baa3 from Baa1
-- Cl. M-7, Downgraded to B2 from Ba3
-- Cl. M-8, Downgraded to Ca from B2
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. M-10, Downgraded to C from Caa2
-- Cl. M-11, Downgraded to C from Caa3
Issuer: HSI Asset Securitization Corporation Trust 2006-OPT2
-- Cl. M-5, Downgraded to Baa1 from A2
-- Cl. M-6, Downgraded to Ba1 from A3
-- Cl. M-7, Downgraded to Caa1 from Baa3
-- Cl. M-8, Downgraded to C from B2
-- Cl. M-9, Downgraded to C from B3
-- Cl. M-10, Downgraded to C from Caa1
-- Cl. M-11, Downgraded to C from Caa3
Issuer: HSI Asset Securitization Corporation Trust 2006-OPT3
-- Cl. M-2, Downgraded to A1 from Aa2
-- Cl. M-3, Downgraded to Baa1 from Aa3
-- Cl. M-4, Downgraded to Ba1 from A1
-- Cl. M-5, Downgraded to Caa2 from Baa2
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
-- Cl. M-10, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2006-OPT4
-- Cl. M-1, Downgraded to Baa2 from Aa2
-- Cl. M-2, Downgraded to B1 from Aa3
-- Cl. M-3, Downgraded to Caa2 from A1
-- Cl. M-4, Downgraded to C from Baa3
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2007-HE1
-- Cl. I-A, Downgraded to Baa3 from A2
-- Cl. II-A-2, Downgraded to A2 from Aa2
-- Cl. II-A-3, Downgraded to Ba2 from A1
-- Cl. II-A-4, Downgraded to Ba3 from A3
-- Cl. M-1, Downgraded to Caa2 from Ba2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2007-HE2
-- Cl. I-A, Downgraded to Baa3 from A1
-- Cl. II-A-1, Downgraded to A2 from A1
-- Cl. II-A-2, Downgraded to B1 from A3
-- Cl. II-A-3, Downgraded to B2 from Baa1
-- Cl. II-A-4, Downgraded to B3 from Baa2
-- Cl. M-1, Downgraded to Ca from B1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
-- Cl. M-9, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2007-NC1
-- Cl. A-1, Downgraded to A2 from Aa1
-- Cl. A-2, Downgraded to B2 from A3
-- Cl. A-3, Downgraded to B3 from Baa1
-- Cl. A-4, Downgraded to Caa1 from Baa2
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Ca
Issuer: HSI Asset Securitization Corporation Trust 2007-OPT1
-- Cl. I-A, Downgraded to A1 from Aaa
-- Cl. II-A-2, Downgraded to A1 from Aaa
-- Cl. II-A-3, Downgraded to A3 from Aaa
-- Cl. II-A-4, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Ba1 from Baa1
-- Cl. M-2, Downgraded to B2 from B1
-- Cl. M-3, Downgraded to Caa2 from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
Issuer: HSI Asset Securitization Corporation Trust 2007-WF1
-- Cl. I-A, Downgraded to Ba3 from Aaa
-- Cl. II-A-2, Downgraded to Baa2 from Aaa
-- Cl. II-A-3, Downgraded to B1 from Aaa
-- Cl. II-A-4, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to Caa3 from Ba3
-- Cl. M-2, Downgraded to C from B1
HESKA CORP: Trades Below $1 for 30 Days, But Nasdaq Rule Suspended
------------------------------------------------------------------
Heska Corporation received a letter from the staff of The Nasdaq
Stock Market confirming that Heska's common stock has closed below
the minimum $1.00 per share requirement for the last 30
consecutive trading days, a requirement for continued inclusion
under Marketplace Rule 4310(c)(4), or the Bid Price Rule.
However, given extraordinary market conditions marked by
unprecedented turmoil in U.S. and world financial markets,
Nasdaq has recently suspended enforcement of the Bid Price Rule
for all Nasdaq-listed companies through Jan. 16, 2009. After
reinstatement of the Bid Price Rule on Jan. 19, 2009, and in
accordance with Marketplace Rule 4310(c)(8)(D), Heska will be
provided 180 calendar days, or until July 20, 2009, to regain
compliance with the Bid Price Rule. If, at anytime before
July 20, 2009, the bid price of Heska's common stock closes at
$1.00 per share or more for a minimum of 10 consecutive business
days, Heska's common stock would regain compliance with the Bid
Price Rule.
If compliance with the Bid Price Rule cannot be demonstrated by
July 20, 2009, the Nasdaq staff will determine whether Heska meets
The Nasdaq Capital Market initial listing criteria set forth in
Marketplace Rule 4310(c), except for the bid price requirement.
If Heska meets the initial listing criteria, the staff of the
Nasdaq will notify Heska that it has been granted an additional
180 calendar day compliance period. If Heska is not eligible for
an additional compliance period, the Nasdaq staff will provide
written notification to Heska that its securities will be
delisted. Heska may then appeal the Nasdaq staff's determination
to a Nasdaq Listing Qualifications Panel. Heska believes it meets
the criteria required for the additional 180 calendar day
compliance period.
About Heska
Based in Loveland, Colorado, Heska Corporation (NASDAQ:HSKA) --
http://www.heska.com/-- sells advanced veterinary diagnostic and
other specialty veterinary products. Heska's offerings to its
customers include diagnostic instruments and supplies well as
single use, point-of-care tests, pharmaceuticals and vaccines.
The company's core focus is on the canine and feline markets
where it strives to provide high value products and unparalleled
customer support to veterinarians.
HIGHLAND CREDIT: Market Value Slide Cues Moody's to Cut Ratings
---------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of certain
classes of notes issued by Highland Credit Opportunities CDO Ltd.,
and left them on review for possible further downgrade:
Class Description: $225,000,000 Class A-1 First Priority Floating
Rate Revolving Notes Due 2013
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/3/2008
-- Current Rating: A2, on review for possible downgrade
Class Description: $613,000,000 Class A-2 First Priority Floating
Rate Term Notes Due 2013
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/3/2008
-- Current Rating: A2, on review for possible downgrade
Class Description: $44,000,000 Class B Second Priority Floating
Rate Term Notes Due 2013
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 10/3/2008
-- Current Rating: Ba1, on review for possible downgrade
Class Description: $44,000,000 Class C Third Priority Floating
Rate Term Notes Due 2013
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: 10/3/2008
-- Current Rating: B3, on review for possible downgrade
The rating actions reflect deterioration in the market value of
the underlying collateral pool as well as the increased volatility
and decreased liquidity in the bank loan market.
Highland Credit Opportunities CDO Ltd. is a market value
collateralized loan obligation transaction backed primarily by
bank loans.
HILLCREST CDO: Moody's Lowers Notes Ratings on Poor Credit Quality
------------------------------------------------------------------
Moody's Investors Service has downgraded ratings of ten classes of
notes issued by Hillcrest CDO I, Ltd., and left on review for
possible further downgrade the ratings of five of these classes.
The notes affected by the rating action are:
Class Description: $314,500,000 Class A-1a Floating Rate Senior
Secured Notes Due 2039
-- Prior Rating: Aa3, on review for possible downgrade
-- Current Rating: Ba2, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
Class Description: $4,250,000 Class A-1b Fixed Rate Senior Secured
Notes Due 2039
-- Prior Rating: A1, on review for possible downgrade
-- Current Rating: Ba3, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
Class Description: $21,250,000 Class A-2 Floating Rate Senior
Secured Notes Due 2039
-- Prior Rating: Baa3, on review for possible downgrade
-- Current Rating: Caa3, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
Class Description: $33,350,000 Class B-1 Floating Rate Senior
Secured Notes Due 2039
-- Prior Rating: Ba3, on review for possible downgrade
-- Current Rating: Ca
-- Prior Rating Date: 5/23/2008
Class Description: $1,500,000 Class B-2 Fixed Rate Senior Secured
Notes Due 2039
-- Prior Rating: Ba3, on review for possible downgrade
-- Current Rating: Ca
-- Prior Rating Date: 5/23/2008
Class Description: $9,500,000 Class C Floating Rate Senior
Subordinate Secured Deferrable Notes Due 2039
-- Prior Rating: Caa3, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Date: 5/23/2008
Class Description: $19,400,000 Class D Floating Rate Senior
Subordinate Secured Deferrable Notes Due 2039
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Date: 5/23/2008
Class Description: $4,000,000 Class 1 Composite Notes Due 2039
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Date: 5/23/2008
Class Description: $9,000,000 Class 2 Composite Notes Due 2039
-- Prior Rating: Ba2, on review for possible downgrade
-- Current Rating: B2, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
Class Description: $5,000,000 Class 3 Composite Notes Due 2039
-- Prior Rating: Aaa
-- Current Rating: A2, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
The rating downgrade actions reflect deterioration in the credit
quality of the underlying portfolio, as well as the occurrence, as
reported by the Issuer on October 2, 2008, of an event of default
that occurs when the Class A/B Principal Coverage Ratio fails to
meet the required level, as described in Schedule 4, Section
XVI(4) of the Trust Deed dated November 10, 2004.
Hillcrest CDO I, Ltd. is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities.
During the occurrence and continuance of an Event of Default,
holders of certain Notes may be entitled to direct the Trustee to
take particular actions with respect to the Collateral Debt
Securities and the Notes.
The rating downgrades taken reflects the increased expected loss
associated with each tranche. Losses are attributed to diminished
credit quality on the underlying portfolio. The severity of
losses of certain tranches may be different, however, depending on
the timing and choice of remedy to be pursued following the event
of default. Because of this uncertainty, the ratings assigned to
the Class A1a, Class A1b, Class A2, Class 2 and Class 3 Notes
remain on review for possible further action.
HRP MYRTLE: Gets Final OK to Access $2-Mil. Cerberus DIP Facility
-----------------------------------------------------------------
The Hon. Kevin Carey of the United States Bankruptcy Court for the
District of Delaware authorized HRP Myrtle Beach Holdings LLC and
its debtor-affiliates to obtain, on a final basis, up to $2
million in debtor-in-possession financing from a group of secured
bondholders led by Cerberus Partners LLP, as collateral and
administrative agent.
The Court also authorized the Debtor to use cash collateral
securing repayment of the secured loan to the lenders in
accordance to the six-week DIP budget. The proceeds of the cash
collateral will be used to fund:
-- accrued prepetition payroll and other related obligations at
least $274,000; and
-- interest at non-default rate under the a revolving credit
agreement.
The DIP facility is subject to carve-outs to pay amounts payable
to the clerk of the bankruptcy and unpaid fees and expenses
incurred by professionals of the Debtors and any committee. There
is a $100,000 carve-out to pay amount of any allowed compensation
for services incurred by any committee and the Debtors'
professionals.
Others secured bondholders are Black Diamond CLA 2005-1 Ltd.,
Black Diamond CLA 2005-2 Ltd., Black Diamond CLA 2006-1 (Cayman)
Ltd., BlackRock Debt Strategies Fund Inc., Boston Income
Portfolio, Eaton Vance Floating Rate Income Trust, Eaton Vance
Limited Duration Income Fund, Eaton Vance Senior Floating Rate
Trust, Eaton Vance Senior Income Trust, High Income Opportunities
Portfolio, Orphesus Holdings LLC, and TransAmerica Partners High
Yield Bond Portfolio.
According to the Troubled Company Reporter on Oct. 2, 2008, the
Court allowed the Debtors to access $1 million in financing and
cash collateral on the interim.
The loan will bear interest at a rate per annum equal to the LIBOR
Rate plus 15 percentage points. Furthermore, the lender's
facility will mature on the earliest of:
a) Oct. 31, 2008;
b) the closing date of a sale or liquidation of all
substantially all of the Debtors' assets of the loan; and
c) the termination by the postpetition agent of the term loan
commitments upon the occurrence and during the continuance of
an event of default.
The proceeds of the loans will be used to (i) repay amounts
outstanding under the credit agreement, (ii) pay fees and expenses
related to the loan, and (iii) fund working capital in the
ordinary course of business.
The Debtors will pay a host of fees including a loan servicing of
$10,000 per month to the lender on the closing date and on the
first business day of each month thereafter.
The DIP facility is subject to $100,000 carve-out to pay fees and
expenses incurred by professionals retained by the Debtors and any
committee, among other things.
The DIP agreement contains customary and appropriate events of
default.
To secure their DIP obligations, the lenders will be entitled to a
superpriority administrative expense claims status over all other
administrative claims of and unsecured claims against the Debtors.
Indebtedness
As of their bankruptcy filing, the Debtors owe Deutsche Bank Trust
Company Americas as much as:
i) $15 million, plus accrued and unpaid interest and fees, costs
and expenses -- including fees and expenses of the counsel,
consultants and advisor -- under a revolving credit agreement
dated March 30, 2006; and
ii) $155 million, plus accrued and unpaid interest and fees,
costs and expenses, arising under the floating rate senior
secured notes due 2012.
The interest on the senior notes accrues at a variable rate
of the six-month LIBOR rate plus 4.75% and is reset semi-
annually. As of June 30, 2008, the interest rate on the
senior notes was 7.38%
The revolving credit and senior note obligations constitute the
legal, valid and binding obligations of the Debtors, enforceable
in accordance withe terms of the financing documents.
A full-text copy of the Debtors' six-week DIP budget is available
for free at http://ResearchArchives.com/t/s?3437
A full-text copy of the Debtor-in-Possession Credit Agreement
between the Debtors and Cerberus is available for free at:
Part One: http://ResearchArchives.com/t/s?3438
Part Two: http://ResearchArchives.com/t/s?3439
Headquartered in Myrtle Beach, South Carolina, HRP Myrtle Beach
Holdings, LLC -- owns and operates Hard Rock Park, a rock-n-roll
theme park in Myrtle Beach, South Carolina, under a long-term
license agreement with Hard Rock Cafe International (USA), Inc.
The company and six of its affiliates filed for Chapter 11
protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No. 08-
12193). Paul, Hastings, Janofsky & Walker LLP represents the
Debtors for their restructuring efforts. The Debtors selected
Richards, Layton & Finger as their co-counsel. The Debtors also
selected RAS Group Inc. as their financial advisor. Steven
Goodwin will serve as the Debtors' chief executive officer. The
U.S. Trustee for Region 3 has appointed creditors to serve on
an Official Committee of Unsecured Creditors. The Committee
selected Dorsey & Whitney LLP as its counsel. When the Debtors
filed for protection from their creditors, they listed assets and
debts between $100 million to $500 million each.
HRP MYRTLE: Paul Hastings Approved as Bankruptcy Counsel
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
HRP Myrtle Beach Holdings LLC and its debtor-affiliates to employ
Paul, Hastings, Janofsky & Walker LLP as their bankruptcy counsel.
In conjunction with the approval, the Court also approved RAS
Mangement Advisors LLC the Debtors' crisis management services and
Richards, Layton & Finger PA as the Debtors' bankruptcy co-
counsel.
According to the Troubled Company Reporter on Oct. 10, 2008, Paul
Hastings will:
a) advise the Debtors of their rights, powers and duties as
debtors and debtors in possession while operating and
managing their respective businesses and properties under
Chapter 11 of the Bankruptcy Code;
b) prepare on behalf of the debtors all necessary and
appropriate applications, motions, proposed orders, other
pleadings, notices, schedules and other documents, and
reviewing all financial and other reports to be filed in
the bankruptcy cases;
c) advise the Debtors concerning, and preparing responses to,
applications, motions, other pleadings, notices and other
papers that may be filed by other parties in the bankruptcy
cases;
d) advise the Debtors with respect to, and assisting in the
negotiation and documentation of, financing agreements and
related transactions;
e) review the nature and validity of any lien asserted against
the Debtors' property and advise the Debtors concerning the
enforceability of such liens;
f) advise the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit of
their estates;
g) advise and assist the Debtors in connection with any
potential property dispositions;
h) advise the Debtors concerning executory contract and
unexpired lease assumptions, assignments and rejections as
well as lease restructurings and recharacterizations;
i) advise the Debtors in connection with the formulation,
negotiation and promulgation of a plan or plans of
reorganization, and related transactional documents;
j) assist the Debtors in reviewing, estimating and resolving
claims asserted against the Debtors' estates;
k) commence and conduct litigation necessary and appropriate to
assert rights held by the Debtors, protect assets of the
Debtors' Chapter 11 estates or otherwise further the goal of
completing the Debtors' successful reorganization; and
l) provide non-bankruptcy services for the Debtors to the
extent requested by the Debtors.
Paul E. Harner, Esq., a partner at Paul Hastings in Chicago,
Illinois, bills at $820 per hour. The firm's other professionals
who are expected to be primarily involved in the case and their
rates are:
Professional Position Hourly Rate
------------ -------- -----------
Michael K. Chernick, Esq. Partner, New York $825
Jeffrey J. Pellegrino, Esq. Partner, New York $830
Kimberly D. Newmarch, Esq. Associate, Chicago $605
Mary Miras, Esq. Associate, New York $590
Christian M. Auty, Esq. Associate, Chicago $495
Hilla Uribe-Jimenez, Esq. Associate, Chicago $405
Ruth P. Rosen Paralegal, Chicago $305
The firm will also be reimbursed for its actual and necessary out-
of-pocket expenses.
Mr. Harner attests that his firm does not have any adverse
interest to the Debtors' estates and is a "disinterested person"
as the term is defined in Section 101(14) of the Bankruptcy
Code.
About HRP Myrtle
Headquartered in Myrtle Beach, South Carolina, HRP Myrtle Beach
Holdings, LLC -- owns and operates Hard Rock Park, a rock-n-roll
theme park in Myrtle Beach, South Carolina, under a long-term
license agreement with Hard Rock Cafe International (USA), Inc.
The company and six of its affiliates filed for Chapter 11
protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No. 08-
12193). Paul, Hastings, Janofsky & Walker LLP represents the
Debtors for their restructuring efforts. The Debtors selected
Richards, Layton & Finger as their co-counsel. The Debtors also
selected RAS Group Inc. as their financial advisor. Steven
Goodwin will serve as the Debtors' chief executive officer. The
U.S. Trustee for Region 3 has appointed creditors to serve on
an Official Committee of Unsecured Creditors. The Committee
selected Dorsey & Whitney LLP as its counsel. When the Debtors
filed for protection from their creditors, they listed assets and
debts between $100 million to $500 million each.
I-MANY INC: Has Until Nov. 20 to Meet Nasdaq's Market Cap Rule
--------------------------------------------------------------
I-many, Inc. received a notice from the Listing Qualifications
Department of The NASDAQ Stock Market LLC indicating that the
market value of I-many's listed securities has been below the
minimum $35 million requirement, as set forth in NASDAQ
Marketplace Rule 4310(c)(3)(B) (the "Rule"), for 10 consecutive
business days.
In accordance with Marketplace Rule 4310(c)(8)(C), I-many has
been provided a period of 30 calendar days, or until Nov. 20,
2008, to regain compliance with the Rule. If, at any time before
Nov. 20, 2008, the market value of I-many's listed securities is
$35 million or more for a minimum of ten consecutive business
days, the Staff of NASDAQ may determine that I-many has regained
compliance with the Rule. If compliance with the Rule cannot be
demonstrated by Nov. 20, 2008, the Staff of NASDAQ will notify
I-many that its common stock would be subject to delisting unless
I-many were to request a hearing before a NASDAQ Listing
Qualifications Panel. In the event I-many requests a hearing,
I-many's common stock will remain listed on The NASDAQ Capital
Market at least until the Panel renders a decision after the
hearing.
Headquartered in Edison, New Jersey, I-many Inc. (NASDAQ:IMNY) --
http://www.imany.com/-- provides contract management software and
services for the enterprise. With hundreds of customers across 21
industries worldwide, I-many is enabling businesses to manage the
entire contract life cycle, from pre-contract processes and
contract management to active compliance and contract
optimization. The result is an end-to-end solution that provides
greater levels of insight into contract performance, allowing
companies to improve profitability and achieve a measurable return
on investment.
INDIANAPOLIS DOWNS: S&P Junks Corp. Credit Rtng; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issuer and issue-
level ratings on Indianapolis Downs LLC; the corporate credit
rating was lowered to 'CCC' from 'B'. The rating outlook is
negative.
"While the company's Indiana Live! Casino is scheduled to open its
permanent facility in the first quarter of 2009, which is likely
to deliver an improved gaming experience, the ratings downgrade
and negative outlook reflect our concerns that the weak economy,
which is leading to gaming revenue declines across the country,
will affect Indiana Live!'s ability to ramp up to a level where it
can fully service its fixed charges," said Standard & Poor's
credit analyst Ariel Silverberg.
The company must meet a quarterly minimum EBITDA threshold under
its bank agreement beginning in December 2008, and stepping up
each consecutive quarter through September 2009. S&P believes
that the company could have difficultly achieving the minimum
EBITDA threshold beginning in the second quarter of 2009.
Indianapolis Downs marginally has sufficient funding to complete
its permanent facility; however, this includes fully using the
completion guarantee provided by the Oliver family trusts. It
also assumes that the company continues to generate monthly EBITDA
at the current level, and that there are no project delays or
additional cost increases. The company is also seeking a $25
million revolving credit facility that, once committed and
available, will provide a better cushion relative to funding
requirements. If this revolver is not put in place, the company
will likely need to seek additional funding in the first half of
2009 to meet its debt service obligations, barring a significant
step-up in operating performance.
Indianapolis Downs has remaining funds in an interest reserve
account to cover interest on its senior secured notes for November
2008, and half of the $20.6 million interest payment for May 2009.
S&P expects run rate annual cash interest requirements to be
approximately $50 million, suggesting that the company will need
to generate about $5 million in monthly cash flow. Given the
current operating environment, S&P is concerned that this may
prove challenging.
According to data from the Indiana Gaming Commission, win per unit
per day at Indiana Live! averaged $243 from opening through
September 2008. This figure is meaningfully below initial run
rate expectations and also compares unfavorably to Hoosier Park--
Indiana Live!'s closest competitor, which averaged $275 win per
unit per day. The permanent facility is expected to provide some
incremental improvement to revenue.
The rating on Indianapolis Downs reflects near-term liquidity
concerns, its high pro forma debt leverage, a heavy interest
burden, and reliance on a single property for cash flow
generation. Indianapolis Downs owns and operates the Indiana
Live! Casino. The casino opened its initial phase to the public
on June 9, 2008, and currently offers 1,898 slot machines, as well
as various food and beverage amenities. The company expects the
facility to be fully complete, with an incremental 102 slot
machines, additional parking, and food and beverage amenities, by
the first quarter of 2009.
Given its private company status, Indianapolis Downs does not
publicly disclose its financial statements. The company is highly
leveraged, and S&P does not expect pro forma credit measures to
improve materially in the near term given its expectation for
operating performance in conjunction with the company's liquidity
issues.
INSTANT WEB: S&P Puts Ratings Under Neg. Watch on NC Plant Closing
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
Chanhassen, Minnesota-based Instant Web Inc., including the 'B'
corporate credit rating, on CreditWatch with negative
implications.
The CreditWatch listing follows the announcement by the company
that it will be closing its Elm City, North Carolina plant due to
the greater-than-expected decline in mail volume experienced in
2008.
"Another factor is our view that EBITDA generation could
subsequently be impaired to a greater extent than previously
anticipated," said Standard & Poor's credit analyst Ariel
Silverberg, "resulting in credit measures that are no longer in
line with the current rating."
In resolving S&P's CreditWatch listing, it will consider to what
extent volumes will decline over the next several quarters and
assess management's plans for managing in an environment of
reduced demand. In addition, S&P's assessment of Instant Web's
liquidity position will be an important ratings consideration.
JHT HOLDINGS: Emerges from Bankruptcy; Names Testman as CEO
-----------------------------------------------------------
JHT Holdings, Inc. emerged from Chapter 11 and named Michael
Testman as its new CEO to fully implement its Plan of
Reorganization.
The announcement follows the approval of the company's plan by
the Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the
District of Delaware earlier this month. According to the
Troubled Company Reporter on Oct. 13, 2008, the plan contains
certain agreements and compromises between the company, the
prepetition lenders, and the Official Committee of Unsecured
Creditors that contemplates, among other things:
-- the payment in full, in cash, of all allowed prepetition
advances claims, DIP facility claims, administrative and
priority claims;
-- the exchange of the prepetition lenders' secured claims
for:
i) the exit second-lien loan in the principal amount of
$60,000,000; and
ii) 70% of the new stock of reorganized company; and
-- the payment of a distribution to the holders of allowed
Class 5 general unsecured claims in the aggregate amount of
$1,350,000, less certain fees and expense, pursuant to a
settlement agreement.
"JHT Holdings is pleased to announce its emergence from Chapter
11, only four months after filing," said JHT Holdings CFO
Christopher Reehl. "The rapid emergence from Chapter 11 is due to
the foresight of the company, the fundamental strength of its
business model and the great confidence the lenders have in the
company."
In June, JHT Holdings reached agreement with its lenders to
restructure its balance sheet through a voluntary, pre-negotiated
Chapter 11 reorganization. At the time, the company predicted
that it would emerge from the Chapter 11 process within six
months. The Chapter 11 process was a strategic financial decision
on the part of JHT Holdings to strengthen its balance sheet so it
was better positioned to weather the current weak truck
manufacturing market and manage the cycles inherent to the
transportation industry.
"JHT is looking forward to fully implementing its Plan of
Reorganization and successfully completing its restructuring,"
said Mr. Reehl. "Company leadership is now focused on beginning
the next chapter for JHT Holdings, including several new
developments that will make JHT Holdings a stronger and more
efficient company, better positioned to serve its customers and
capitalize on new opportunities within the industry."
"We are pleased to announce that Michael Testman has been named as
the company's new CEO," said Mr. Reehl. "He is exactly the right
person to complete JHT Holdings' reorganization and lead the
company to future growth and prosperity."
Mr. Testman is currently President of ATC Leasing, a JHT Holdings'
subsidiary company. The appointment will be effective November 1,
2008. Mr. Testman has more than 20 years of experience in the
truck transportation industry, having also served as CFO and
Controller for other companies in the industry. In addition to
having a strong financial understanding of the industry, Mr.
Testman brings a fundamental understanding of all levels of truck
transportation, including internal and external support, labor
involvement, logistics coordination and customer service to JHT
Holdings.
"I am excited about the opportunity to help lead this fine
company," said Mr. Testman. "JHT Holdings has a very bright
future ahead of it, thanks to an exceptional management team, a
fundamentally strong business model and an effective
reorganization plan. All of these strengths were evident in the
way the management team led the company through the financial
reorganization. JHT Holdings promised it would exit from Chapter
11 within six months; instead it did it in four months. The
Company assured customers it would maintain the highest levels of
customer service throughout the reorganization and it has."
Mr. Testman will replace interim CEO James Welch, who joined JHT
Holdings in September 2007 as interim CEO to guide it through a
challenging financial situation resulting from the weak truck
manufacturing market. His efforts as CEO culminated with JHT's
successful emergence from Chapter 11. Mr. Welch will become the
president and chief executive officer of Dynamex Inc., a provider
of delivery and logistics services, effective November 1, 2008.
"We are grateful to James for his exceptional leadership during
this important transition for JHT Holdings," said Testman. "He
led us through a successful financial reorganization, and we are
excited that he will continue to be a part of the future at JHT by
serving on the board of directors."
"I am proud to have been a part of the outstanding leadership team
at JHT Holdings," said Welch. "I have been impressed with their
professionalism, hard work and commitment to excellence. I know
the company is in good hands as it begins this new chapter of
success."
About JHT Holdings
Headquartered in Kenosha, Wisconsin, JHT Holdings Inc. --
http://www.jhtholdings.com/-- and its affiliates provide over-
the-road transportation of various types of motor vehicles,
including commercial trucks and cars.
The Debtors have non-debtor foreign affiliates in Canada and
Mexico. Another Mexican affiliate, Mexicana Logistics, S.A. de
C.V. is owned 50% by JHT Holdings and 50% by Gustavo Vildosola, a
Mexican national with no connection to the Debtors.
JHT Acquisition Corp. owns all of the outstanding stock of JHT
Holdings. JHT Acquisition is a holding company owned by a group
of investors, MTGLQ Investors, L.P., D.B. Zwirn Special
Opportunities Fund, L.P., ZM Private Equity Fund I, Spectrum
Investment Partners, L.P. and Stonehouse Investment Company LLC.
The company and 16 of its affiliates filed for chapter 11
protection on June 24, 2008 (Bankr. D. Del. Lead Case No.
08-11267). David B. Stratton, Esq., and Evelyn J. Meltzer, Esq.,
at Pepper Hamilton, LLP, represent the Debtors in their
restructuring efforts. The U.S. Trustee has appointed members to
the Official Committee of Unsecured Creditors to serve in this
case. Pachulski Stang Ziehl & Jones LLP represents the Creditors'
Committee. When the Debtors filed for protection from their
creditors, they listed assets and debts of between $100 million
and $500 million.
JOSHUA SALVADOR: Case Summary & 15 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Joshua Salvador
1830 N. 79th St.
Elmwood Park, IL 60707
Bankruptcy Case No.: 08-28867
Chapter 11 Petition Date: October 25, 2008
Court: Northern District of Illinois (Chicago)
Judge: Jacqueline P. Cox
Debtor's Counsel: Debra J. Vorhies Levine, Esq.
debravlevine@yahoo.com
Law Offices of Debra V. Levine
53 W Jackson Boulevard, Suite 909
Chicago, IL 60604
Tel: (312) 259-5970
Fax: (773) 244-0094
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/ilnb08-28867.pdf
KINNEY HILL: Moody's Slashes $19.25MM Notes Rating to Ba2 from A2
-----------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the
classes of notes issued by Kinney Hill Credit Opportunities Fund,
Ltd., and left them on review for possible further downgrade:
Class Description: $385,000,000 Class A-1 Senior Secured Variable
Funding Notes Due 2015
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/17/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $16,500,000 Class B-1 Secured Floating Rate
Notes Due 2015
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 10/17/2008
-- Current Rating: A2, on review for possible downgrade
Class Description: $19,250,000 Class C-1 Secured Floating Rate
Notes Due 2015
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Ba2, on review for possible downgrade
Class Description: $19,250,000 Class D-1 Secured Floating Rate
Notes Due 2015
-- Prior Rating: Baa2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: B3, on review for possible downgrade
The rating actions reflect deterioration in the market value of
the underlying collateral pool as well as the increased volatility
and decreased liquidity in the bank loan market.
Kinney Hill Credit Opportunities Fund, Ltd. is a market value
collateralized loan obligation transaction backed primarily by
bank loans.
KIRK PIGFORD: Bankr. Adm. Sets 341(a) Meeting for November 10
-------------------------------------------------------------
The United States Bankruptcy Administrator for the Eastern
District of North Carolina will convene a meeting of creditors of
Kirk Pigford Construction Inc. at 10:00 a.m., on Nov. 10, 2008, at
the USBA Creditors Meeting Room, 1760 B Parkwood Blvd., in Wilson,
North Carolina. Proof of claim for all creditors, except a
governmental unit, must be received by the bankruptcy clerk's
office by Feb. 8, 2009.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Based in Wrightsville Beach, N.C., Kirk Pigford Construction Inc.
-- http://www.kirkpigfordconstruction.com/-- is a homebuilder.
The company filed for Chapter 11 relief on Oct. 14, 2008 (Bankr.
E.D. N.C. Case No. 08-07139). Trawick H. Stubbs, Jr., Esq., at
Stubbs & Perdue, P.A. represents the Debtor as counsel. When the
Debtor filed for protection from its creditors, it listed assets
of $10 million to $50 million, and debts of $10 million to
$50
million.
LARRY GLETZER: Section 341(a) Meeting Scheduled for November 12
---------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of Larry
Bruce Gletzer's creditors on Nov. 12, 2008, at 9:30 a.m., at Room
130 in San Jose.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The deadline for the filing of proofs of claim is Feb. 10, 2009.
San Jose, California-based Larry Bruce Gletzer filed for Chapter
11 protection on Oct. 7, 2008 (Bankr. N. D. Calif. Case No. 08-
55708). Charles B. Greene, Esq., at the Law Offices of Charles B.
Greene represents the company in its restructuring effort. The
company has assets of $1,500,000 and debtors of $1,313,067.
LAWRENCE TOTTER: Section 341(a) Meeting Scheduled for Dec. 16
-------------------------------------------------------------
The U.S. Trustee for Region 16 will convene a meeting of Lawrence
Jacob Totter, Jr.'s creditors on Dec. 16, 2008, at 9:00 a.m., at
Room 105, 21051 Warner Center Lane, Woodland Hills, California
91367.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The deadline for the filing of proofs of claim is March 16, 2009.
Valencia, California-based Lawrence Jacob Totter, Jr., filed for
Chapter 11 protection on Oct. 7, 2008 (Bankr. C. D. Calif. Case
No. 08-17770). Louis J. Esbin, Esq., who has an office in
Valencia, represents the company in its restructuring effort. The
company listed assets of $1 million to $10 million and debts of $1
million to $10 million.
LBREP/L-SUNCAL: Wants Cases Converted to Chapter 7 Proceedings
--------------------------------------------------------------
The Deal's Jamie Mason reports that four Lehman Commercial Paper
Inc. affiliates asked the Hon. Erithe Smith of the United States
Bankruptcy Court for the Central District of California to convert
their Chapter 11 reorganization cases to a voluntary Chapter 7
liquidation proceedings.
A hearing is set for Oct. 28, 2008, to consider the Debtors'
request, the report says.
Mr. Mason, citing papers filed with the Court, relates that the
Debtors have no equity in the collateral, no encumbered assets and
no financing for a Chapter 11 proceeding. Lehman Commercial said
it wants to foreclose the Debtors' property citing that the
involuntary petitions were filed in bad faith by Gramercy
Warehouse Funding LLC in New York in September 2008, he notes.
The Lehman Commercial units include: (i) LBREP/L-SunCal Master I
LLC, (ii) LBREP/L-SunCal McAllister Ranch LLC, (ii) LBREP/L-SunCal
McSweeny Farms LLC, and (iv) LBREP/L-SunCal Summerwind Ranch LLC,
the report says.
About LBREP/L-SUNCAL
Gramercy Warehouse Funding LLC and several creditors filed
involuntary petitions each against LBREP/L-SunCal Master I
LLC, LBREP/L-SunCal McAllister Ranch LLC, LBREP/L-SunCal McSweeny
Farms LLC, and LBREP/L-SunCal Summerwind Ranch LLC on Sept. 11,
2008 (Bankr. C.D. Calif Case No. 08-15588, 08-15637, 08-15639, and
08-15640). Daniel H. Reiss, Esq., at Levene, Neale, Bender,
Rankin & Brill represents the petitioners.
LEE'S TRUCKING: Court Okays Deininger & Wingfield as Tax Attorney
-----------------------------------------------------------------
The U.S. Bankruptcy court for the Western District of Arkansas
approved Lee's Trucking Inc.'s request to employ Deininger &
Wingfield, P.A. as its tax attorney.
The firm is expected to:
a) give the Debtor legal advice with respect to its
responsibilities as a Debtor-in-Possession, regarding the
tax aspects, in a Chapter 11 bankruptcy proceeding;
b) answer lawsuits that may be pending and to take other
necessary action to avoid the attachments of liens, tax
levies or repossessions of the Debtor's Property;
c) represent the Debtor, in connection with any and all
adversary proceedings which may be instituted in this
court by tax creditors or other tax parties in interest;
d) prepare on behalf of the Debtor, all necessary applications,
answers, orders, reports, other pleadings and legal
documents required under the Bankruptcy Code and by this
court regarding the tax aspects of the Debtor's Chapter 11
Bankruptcy Proceeding;
e) perform all other legal services for the Debtor as deemed
necessary, regarding the tax aspects of this Chapter 11
Bankruptcy proceeding.
Due to the complexity of this case and the extensive legal
services that will be required, the Debtor desires to employ
Deininger & Wingfield, pursuant to whereby Deininger & Wingfield,
P.A., received a prepetition retainer of $5,000. Deininger &
Wingfield will charge for their services rendered on an hourly
basis at their usual and customary hourly rates of $400 plus their
expenses. It is understood that expenses will include the usual
and customary hourly rates of $75 charged by Deininger &
Wingfield, P.A., for paralegal time spent in the case. The fees
and expenses incurred will initially be deducted from the
retainer.
Deininger & Wingfield, P.A., do not represent any interest adverse
to Debtor or the Debtor's estate.
Headquartered in El Dorado, Arkansas, Lee's Trucking, Inc. --
http://www.leestrucking.com/-- transports bulk chemicals, non-
hazardous materials, hazardous materials, and hazardous waste.
The Company filed for chapter 11 protection on May 13, 2005
(Bankr. W.D. Ark. Case No. 05-73565). Robert L. Depper, Jr.,
Esq., at Depper Law Firm represents the Debtor in its
restructuring efforts. As of Sept. 30, 2008, the Debtor's monthly
operating report listed total assets of $1,874,504 and total
liabilities of $3,153,263.
LORRIE MORGAN: Files for Chapter 7 Bankruptcy in Tennessee
----------------------------------------------------------
The Associated Press reports that business related debts has
driven Lorrie Morgan to file for Chapter 7 bankruptcy before a
Nashville, Tennessee federal court on Oct. 22, 2008.
According to various reports, citing a court filing, Ms. Morgan
has liabilities between $1 million to $10 million and estimated
assets of $500,000 to $1 million.
AP states that Ms. Morgan sees bankruptcy as an unfortunate
yet necessary part of the restructuring of her business.
Ms. Morgan creditors included the Internal Revenue Service,
banks, lawyers and others, Reports add.
AP relates that in 1992, the singer said she repaid her creditors
in full and withdrew a bankruptcy petition after filing for
Chapter 11 bankruptcy, listing more than $846,000 in debts.
Lorrie Morgan is a country singer with hits that included "What
Part of No" and "I Didn't Know My Own Strength."
MARIOTTI'S CLEANING: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Mariotti's Cleaning Centers, Inc.
dba Mariotti's Laundry & Cleaners
314 Ponce de Leon Blvd., S.
St. Augustine, FL 32084
Bankruptcy Case No.: 08-06574
Chapter 11 Petition Date: October 24, 2008
Court: Middle District of Florida (Jacksonville)
Judge: Paul M. Glenn
Debtor's Counsel: Robert Altman, Esq., AFD
robertaltman@bellsouth.net
Robert Altman, P.A.
5256 Silver Lake Drive
Palatka, FL 32177-8524
Tel: (386) 325-4691
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.
MERCURY CDO: Moody's Downgrades Two Notes Ratings to 'Ca'
---------------------------------------------------------
Moody's Investors Service has downgraded ratings of three classes
of notes issued by Mercury CDO II, Ltd., and left on review for
possible further downgrade the rating of one of these classes. The
notes affected by the rating action are:
Class Description: $855,000,000 Class A-1 Senior Secured Floating
Rate Notes Due 2045
-- Prior Rating: Aa1, on review for possible downgrade
-- Prior Rating Date: May 29, 2008
-- Current Rating: Ba1, on review for possible downgrade
Class Description: $62,000,000 Class A-2 Senior Secured Floating
Rate Notes Due 2045
-- Prior Rating: B1, on review for possible downgrade
-- Prior Rating Date: May 29, 2008
-- Current Rating: Ca
Class Description: $55,000,000 Class B Senior Secured Floating
Rate Notes Due 2045
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: May 29, 2008
-- Current Rating: Ca
The rating downgrade actions reflect deterioration in the credit
quality of the underlying portfolio, as well as an event of
default on September 25, 2008, as reported by the Trustee, that
occurs when the ratio calculated by dividing (a) the Net
Outstanding Portfolio Collateral Balance by (b) the Aggregate
Outstanding Amount of the Class A Notes, fails to equal or exceed
100%, as described in Section 5.01(i) of the Indenture dated
December 1, 2005.
Mercury CDO II, Ltd is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities.
As provided in Article V of the Indenture during the occurrence
and continuance of an Event of Default, certain parties to the
transaction may be entitled to direct the Trustee to take
particular actions with respect to the Collateral Debt Securities
and the Notes.
The rating downgrades taken reflect the increased expected loss
associated with each tranche. Losses are attributed to diminished
credit quality on the underlying portfolio. The severity of
losses of certain tranches may be different, however, depending on
the timing and choice of remedy to be pursued following the event
of default. Because of this uncertainty, the rating assigned to
the Class A-1 Notes remains on review for possible further action.
METROMEDIA STEAKHOUSE: Gets OK to Borrow $1-Mil. From Parent
------------------------------------------------------------
The Hon. Mary F. Walrath of the United States Bankruptcy Court for
the District of Delaware authorized Metromedia Steakhouses Company
LP and its debtor-affiliates to obtain, on an interim basis, up to
$1 million in postpetition financing from Metromedia Company,
which indirectly owns all of the Debtors' partnership interest.
A hearing is set for Nov. 14, 2008, at 9:00 a.m., to consider the
motion. Objections, if any, are due Nov. 7, 2008.
Judge Walrath also authorized the Debtors to use cash collateral
securing repayment of the secured loan to the lender in accordance
to the six-week DIP budget.
Metromedia Co. committed to provide up to $2.4 million in
financing to the Debtors.
The proceeds of the cash collateral and the DIP facility will be
used to provide the Debtors with immediate access to cash to pay
present operating expenses including wages and salaries, and
utility and vendor costs. The absence of cash would result in
irreparable harm to their business, deplete going concern value
and quash the opportunity for a sale, and jeopardize their ability
to maximize the value of their estates, the Debtor pointed out.
The DIP facility will incur interest at 10% per annum.
The DIP facility is subject to $500,000 carve-out for payment of
all fees and expenses incurred by the Debtors' professionals, and
$50,000 carve-out for professionals of any committee.
The Debtors agreed to pay 2% of the amount of the committed
amount.
The DIP facility contains customary and appropriate events of
default.
To secure their DIP obligations, the lender will be granted liens
and superpriority administrative expense claims in all of the
Debtors' assets.
A full-text copy of the Debtors' Six-Week DIP Budget is available
for free at http://ResearchArchives.com/t/s?343e
About Metromedia Steakhouse
Headquartered in Plano, Texas, Metromedia Steakhouses Company,
L.P. owns and operates family-focused restaurants operating under
the Ponderosa Steakhouse and Bonanza Steakhouse brands directly
and through its affiliates. The company and three of its
affiliates filed for Chapter 11 protection on Oct. 22, 2008
(Bankr. D. Del. Lead Case No. 08-12490). The Debtors are
affiliates of S&A Restaurant Corp. dba Bennigan's Grill & Tavern
who sough protection from its creditors on July 29, 2008, under
Chapter 7 in the United States Bankruptcy Court for the Eastern
District of Texas.
Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl Young & Jones LLP, represent the Debtors. The
Debtors selected AlixPartners LLP as their claims agent. When the
Debtors filed for protection from their creditors, they listed
assets between $1 million and $10 million, and debts between
$100 million and $500 million.
ML-CFC COMMERCIAL: S&P Affirms Ratings on 25 Classes of Certs.
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 25
classes of commercial mortgage pass-through certificates from ML-
CFC Commercial Mortgage Trust 2007-8.
The affirmations reflect credit enhancement levels that provide
adequate support through various stress scenarios.
As of the Oct. 15, 2008, remittance report, the collateral pool
consisted of 218 loans with an aggregate trust balance of
$2.428 billion, compared with the same number of loans totaling
$2.435 billion at issuance. The master servicers, Wells Fargo
Bank N.A. and KeyCorp Real Estate Real Estate Capital Markets
Inc., reported financial information for 87% of the pool. All of
the reported data was either year-end 2007 or interim-2008
information. Based on this data, Standard & Poor's calculated a
weighted average debt service coverage 1.36x, the same as at
issuance. No loans in the pool are delinquent or with the special
servicer. The trust has experienced no losses to date.
The top 10 loans have an aggregate outstanding balance of
$1.031 billion (42%) and a weighted average DSC of 1.37x, compared
with 1.41x at issuance. The top 10 DSC calculations exclude the
fifth-largest loan due to a lack of financial reporting. Standard
& Poor's reviewed property inspections provided by the master
servicer for all of the assets underlying the top 10 exposures,
and all were characterized as "good."
The Peninsula Beverly Hills Hotel loan ($79.3 million, 3%) had
credit characteristics consistent with those of investment-grade
obligations at issuance. Standard & Poor's adjusted value for
this loan is comparable to its value at issuance.
Of the 26 loans ($227 million, 9%) in the pool that have reported
low DSCs, the Gray Apartment Portfolio is the only loan which is a
credit concern. The Gray Apartment Portfolio is also on the
watchlist. The 26 loans with reported low DSCs are secured by a
variety of property types with an average balance of $8.7 million
and have experienced a weighted average decline in DSC of 39%
since issuance. The 25 loans that are not credit concerns at this
time have significant debt service reserves or are in various
stages of lease-up or renovation; therefore, S&P expects the net
cash flow available for debt service to improve in the future.
Wells Fargo and KeyCorp reported a watchlist of 19 loans
($233.1 million, 10%). Three of the 10 largest loans appear on
the watchlist:
-- The sixth-largest loan in the trust is Towers at
University Town Center ($56 million, 2%). The loan is
secured by a 244-unit (910-bed) student-housing complex in
Hyattsville, Maryland Built in 2006, the 16-story complex
provides housing for students attending University of
Maryland and several other colleges in the surrounding
area. The loan appears on the watchlist because of a
reported DSC of 1.03x as of year-end 2007. As of
June 30, 2008, the property was 95% occupied.
-- The Gray Apartment Portfolio ($31.5 million, 1%) is the
ninth-largest exposure in the trust. The exposure
consists of two loans: Park at Lakeside Apartment
($23.5 million), and Evergreen Pointe Apartments
($8.0 million). The cross-collateralized and cross-
defaulted loans are secured by multifamily properties in
Houston, Texas, built between 1972 and 1974 with 789 total
units. As of Dec. 31, 2007, the reported DSCs were 0.84x
and 1.10x, respectively, or 0.91x on a combined basis.
The decline in property performance was primarily
attributed to a decline in occupancy at the Park at
Lakeside, which is due in part to Hurricane Katrina
evacuees leaving the property. The reported occupancy was
74% as of year-end 2007, down from 90% at issuance.
-- Haverly Park Apartments ($30 million, 1%) is the 10th-
largest loan in the trust and is secured by a 636-unit
apartment complex built in 1984 in Dallas, Texas. The
property was 89% occupied as of year-end 2007, down from
98% at issuance. The loan was placed on the watchlist due
to the decline in occupancy. However, as of June 30,
2008, the property was 95% occupied with a reported DSC of
1.03x.
The remaining loans are on the watchlist primarily because of low
occupancy or a decline in DSC since issuance.
Standard & Poor's identified 12 properties ($82 million, 3%) in
areas affected by Hurricane Ike. Of these, six properties (2%)
sustained no damage, and four properties (0.7%) sustained some
minor damage. The servicers could not confirm whether the
remaining two properties (0.3%) sustained any damage. Standard &
Poor's will continue to evaluate information on these loans as it
becomes available.
Standard & Poor's stressed the loans on the watchlist and other
loans with credit issues as part of its analysis. The resultant
credit enhancement levels support the affirmed ratings.
Ratings Affirmed
ML-CFC Commercial Mortgage Trust 2007-8
Commercial mortgage pass-through certificates
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 30.09%
A-2 AAA 30.09%
A-SB AAA 30.09%
A-3 AAA 30.09%
A-1A AAA 30.09%
AM AAA 20.06%
AM-A AAA 20.06%
AJ AAA 11.41%
AJ-A AAA 11.41%
B AA+ 10.91%
C AA 9.28%
D AA- 8.15%
E A+ 7.77%
F A 7.02%
G A- 6.14%
H BBB+ 4.76%
J BBB 3.76%
K BBB- 3.13%
L BB+ 2.51%
M BB 2.13%
N BB- 2.01%
P B+ 1.88%
Q B 1.63%
S B- 1.50%
X AAA N/A
N/A -- Not aplicable.
MLMI TRUST: Moody's Lowers Ratings on 288 Tranches from 27 RMBS
---------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 288
tranches from 27 subprime RMBS transactions issued by MLMI. The
collateral backing these transactions consists primarily of first-
lien, fixed and adjustable-rate, subprime residential mortgage
loans.
These actions follow and are as a result of Moody's September 18,
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Moody's Investors Service also has published the underlying
ratings on the following insured notes as identified below. The
ratings of these insured notes were previously derived from public
ratings on non-sequential pari passu or more junior uninsured
tranches of the same deals.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The ratings on securities
that are guaranteed or "wrapped" by a financial guarantor is the
higher of a) the rating of the guarantor or b) the published
underlying rating. The -- Current Ratings on the below notes
are consistent with Moody's practice of rating insured securities
at the higher of the guarantor's insurance financial strength
rating and any underlying rating that is public.
Complete rating actions are:
Issuer: Merrill Lynch Mortgage Investors Trust 2005-AR1
-- Cl. B-1, Downgraded to Ba1 from Baa2
-- Cl. B-2, Downgraded to B3 from Ba2
-- Cl. B-3, Downgraded to C from B3
-- Cl. B-4, Downgraded to C from Caa2
Issuer: Merrill Lynch Mortgage Investors Trust 2006-AHL1
-- Cl. A-1, Downgraded to Baa1 from Aaa
-- Cl. A-2C, Downgraded to Baa1 from Aaa
-- Cl. A-2D, Downgraded to Baa2 from Aaa
-- Cl. M-1, Downgraded to B2 from Aa3
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-AR1
-- Cl. A-1, Downgraded to Ba3 from Aaa
-- Cl. A-2C, Downgraded to B2 from Aa1
-- Cl. A-2D, Downgraded to B3 from Aa2
-- Cl. M-1, Downgraded to Ca from Baa2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-FF1
-- Cl. A-2C, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to A1 from Aa1
-- Cl. M-2, Downgraded to Baa1 from Aa2
-- Cl. M-3, Downgraded to Baa3 from Baa1
-- Cl. M-4, Downgraded to Ba2 from Ba1
-- Cl. M-5, Downgraded to B2 from B1
-- Cl. M-6, Downgraded to Caa2 from B1
-- Cl. B-1, Downgraded to C from B2
-- Cl. B-2, Downgraded to C from B3
-- Cl. B-3, Downgraded to C from B3
Issuer: Merrill Lynch Mortgage Investors Trust 2006-FM1
-- Cl. A-1, Downgraded to Baa1 from Aaa
-- Cl. A-2C, Downgraded to Baa3 from Aaa
-- Cl. A-2D, Downgraded to Ba1 from Aaa
-- Cl. M-1, Downgraded to Caa3 from A2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
Issuer: Merrill Lynch Mortgage Investors Trust 2006-MLN1
-- Cl. A-1, Downgraded to Baa1 from Aaa
-- Cl. A-2B, Downgraded to Aa2 from Aaa
-- Cl. A-2C, Downgraded to Ba1 from Aaa
-- Cl. A-2D, Downgraded to Ba2 from Aaa
-- Cl. M-1, Downgraded to Caa2 from Baa1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-OPT1
-- Cl. A-1, Downgraded to A1 from Aaa
-- Cl. A-2B, Downgraded to Aa2 from Aaa
-- Cl. A-2C, Downgraded to A3 from Aaa
-- Cl. A-2D, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to B1 from Baa1
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-RM1
-- Cl. A-1, Downgraded to A3 from Aaa
-- Cl. A-2B, Downgraded to B3 from Aaa
-- Cl. A-2C, Downgraded to Caa2 from Aaa
-- Cl. A-2D, Downgraded to Caa1 from Aaa
-- Cl. M-1, Downgraded to C from Aa1
-- Cl. M-2, Downgraded to C from Baa1
-- Cl. M-3, Downgraded to C from Ba2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-RM2
-- Cl. A-1A, Downgraded to B2 from Aaa
-- Cl. A-1B, Downgraded to Caa3 from A2
-- Cl. A-2B, Downgraded to Caa1 from Aaa
-- Cl. A-2C, Downgraded to Caa2 from Aa3
-- Cl. A-2D, Downgraded to Caa3 from A2
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B3
-- Cl. M-3, Downgraded to C from Caa1
-- Cl. M-4, Downgraded to C from Caa2
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-RM3
-- Cl. A-1A, Downgraded to B2 from Aaa
-- Cl. A-1B, Downgraded to Caa3 from A2
-- Cl. A-2B, Downgraded to A1 from Aaa
-- Cl. A-2C, Downgraded to Caa1 from Aa3
-- Cl. A-2D, Downgraded to Caa2 from A2
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-RM4
-- Cl. A-1, Downgraded to Caa1 from Baa3
-- Cl. A-2A, Downgraded to Aa2 from Aaa
-- Cl. A-2B, Downgraded to Caa1 from Aa3
-- Cl. A-2C, Downgraded to Caa2 from Baa3
-- Cl. A-2D, Downgraded to Caa3 from Ba2
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Caa3
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-RM5
-- Cl. A-1, Downgraded to Caa1 from Ba1
-- Cl. A-2A, Downgraded to B3 from Aaa
-- Cl. A-2B, Downgraded to Caa3 from A3
-- Cl. A-2C, Downgraded to Caa3 from Ba1
-- Cl. A-2D, Downgraded to Caa3 from B2
-- Cl. M-1, Downgraded to C from Caa1
-- Cl. M-2, Downgraded to C from Caa2
-- Cl. M-3, Downgraded to C from Caa3
-- Cl. M-4, Downgraded to C from Ca
-- Cl. M-5, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-WMC1
-- Cl. A-1B, Downgraded to Aa3 from Aaa
Financial Guarantor: CIFG Assurance North America, Inc. (Ba2,
outlook uncertain)
-- Underlying Rating: Aa3
-- Cl. A-2D, Downgraded to A2 from Aaa
-- Cl. M-1, Downgraded to Baa2 from Aa1
-- Cl. M-2, Downgraded to B2 from Aa2
-- Cl. M-3, Downgraded to Ca from Aa3
-- Cl. M-4, Downgraded to C from A2
-- Cl. M-5, Downgraded to C from Ba1
-- Cl. M-6, Downgraded to C from B2
-- Cl. B-1A, Downgraded to C from Caa1
-- Cl. B-1B, Downgraded to C from Caa1
-- Cl. B-2A, Downgraded to C from Caa3
-- Cl. B-2B, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-WMC2
-- Cl. A-1, Downgraded to Ba3 from Aaa
-- Cl. A-2C, Downgraded to B3 from Aaa
-- Cl. A-2D, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to C from Aa1
-- Cl. M-2, Downgraded to C from Ba1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. B-1A, Downgraded to C from Ca
-- Cl. B-1B, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2007-MLN1
-- Cl. A-1, Downgraded to Ba1 from Aaa
-- Cl. A-2A, Downgraded to A2 from Aaa
-- Cl. A-2B, Downgraded to B2 from Aaa
-- Cl. A-2C, Downgraded to B3 from Aaa
-- Cl. A-2D, Downgraded to Caa1 from Aaa
-- Cl. M-1, Downgraded to C from A3
-- Cl. M-2, Downgraded to C from Ba1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2005-HE1
-- Cl. M-1, Downgraded to A1 from Aa2
-- Cl. M-2, Downgraded to Baa2 from Baa1
-- Cl. M-3, Downgraded to Baa3 from Baa2
-- Cl. B-1, Downgraded to Ba1 from Baa3
-- Cl. B-2, Downgraded to Ba2 from Ba1
-- Cl. B-3, Downgraded to B2 from Ba2
-- Cl. B-4, Downgraded to B3 from B2
-- Cl. B-5, Downgraded to C from Caa3
Issuer: Merrill Lynch Mortgage Investors Trust Series 2006-HE1
-- Cl. M-1, Downgraded to Aa2 from Aa1
-- Cl. M-2, Downgraded to A3 from Aa2
-- Cl. M-3, Downgraded to Baa2 from Aa3
-- Cl. M-4, Downgraded to Ba3 from A1
-- Cl. M-5, Downgraded to Caa2 from A2
-- Cl. M-6, Downgraded to C from A3
-- Cl. B-1A, Downgraded to C from Ba1
-- Cl. B-1B, Downgraded to C from Ba1
-- Cl. B-2A, Downgraded to C from B2
-- Cl. B-2B, Downgraded to C from B2
-- Cl. B-3A, Downgraded to C from Caa1
-- Cl. B-3B, Downgraded to C from Caa1
Issuer: Merrill Lynch Mortgage Investors Trust Series 2006-HE2
-- Cl. A-3, Downgraded to A2 from Aaa
-- Cl. A-4, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Ba2 from Aa1
-- Cl. M-2, Downgraded to Caa2 from Aa2
-- Cl. M-3, Downgraded to C from Aa3
-- Cl. M-4, Downgraded to C from A2
-- Cl. M-5, Downgraded to C from Ba2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2006-HE3
-- Cl. A-2, Downgraded to Aa2 from Aaa
-- Cl. A-3, Downgraded to Caa1 from Aaa
-- Cl. A-4, Downgraded to Caa2 from Aaa
-- Cl. M-1, Downgraded to C from A3
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
Issuer: Merrill Lynch Mortgage Investors Trust Series 2006-HE4
-- Cl. A-1, Downgraded to A2 from Aaa
-- Cl. A-2B, Downgraded to Aa3 from Aaa
-- Cl. A-2C, Downgraded to B3 from Aaa
-- Cl. A-2D, Downgraded to Caa1 from Aaa
-- Cl. M-1, Downgraded to C from A3
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2006-HE5
-- Cl. A-1, Downgraded to A2 from Aaa
-- Cl. A-2C, Downgraded to Baa3 from Aaa
-- Cl. A-2D, Downgraded to Ba1 from Aaa
-- Cl. M-1, Downgraded to B3 from Baa1
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2006-HE6
-- Cl. A-1, Downgraded to Ba1 from Aaa
-- Cl. A-2A, Downgraded to Aa2 from Aaa
-- Cl. A-2B, Downgraded to B3 from Aaa
-- Cl. A-2C, Downgraded to Caa1 from Aaa
-- Cl. M-1, Downgraded to C from Baa2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
-- Cl. B-3, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2007-HE2
-- Cl. A-1, Downgraded to Ba1 from A3
-- Cl. A-2B, Downgraded to B2 from Baa1
-- Cl. A-2C, Downgraded to B3 from Baa2
-- Cl. A-2D, Downgraded to Caa1 from Baa2
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2007-HE3
-- Cl. A-1, Downgraded to Baa2 from Aa1
-- Cl. A-2, Downgraded to Ba3 from A1
-- Cl. A-3, Downgraded to Caa1 from A3
-- Cl. A-4, Downgraded to Caa2 from A3
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust, Series 2007-HE1
-- Cl. A-1, Downgraded to B3 from A3
-- Cl. A-2A, Downgraded to Aa3 from Aa2
-- Cl. A-2B, Downgraded to B3 from A3
-- Cl. A-2C, Downgraded to Caa1 from Baa2
-- Cl. A-2D, Downgraded to Caa2 from Baa2
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors, Inc. 2005-NC1
-- Cl. B-3, Downgraded to Ba3 from Baa3
-- Cl. B-4, Downgraded to B3 from Ba1
-- Cl. B-5, Downgraded to Ca from B2
Issuer: Merrill Lynch Mortgage Investors, Inc. 2005-WMC2
-- Cl. B-1, Downgraded to Ba1 from Baa3
-- Cl. B-2, Downgraded to Caa2 from Ba1
-- Cl. B-3, Downgraded to C from B3
-- Cl. B-4, Downgraded to C from Caa2
MODTECH HOLDINGS: Earnings Affected by Delays, Cancellations
------------------------------------------------------------
Lou Hirsh at The Press-Enterprise reports that Modtech Holdings'
President and CEO Dennis Shogren said project delays and
cancellations by schools and other government entities affected
the company's financial performance. Modtech Holdings posted in
August 2008 a $4.95 million second quarter loss, compared to a
$42.9 million loss in the second quarter of last year. Modtech
Holdings reported that its sales during the second quarter 2008
period dropped 44% to $13.4 million, from the same period last
year.
Perris, California-based Modtech Holdings, Inc. --
http://www.modtech.com/-- makes and sells modular and relocatable
classrooms, commercial and light industrial modular buildings.
The company filed for Chapter 11 protection on
Oct. 20, 2008 (Bankr. C. D. Calif. Case No. 08-24324). Marc J.
Winthrop, Esq., at Winthrop Couchot Professional Corporation,
represents the company in its restructuring effort.
As of June 30, 2008, Modtech Holdings had $40,925,000 in assets
and $34,974,000 in debts.
MORGAN STANLEY: Moody's Chips Ratings to 'Ba1' on Two Notes
-----------------------------------------------------------
Moody's Investors Service has downgraded its ratings on the notes
issued by Morgan Stanley Managed ACES SPC, Series 2006-9:
Class Description: $30,000,000 Junior Super Senior Secured
Floating Rate Notes due 2013
-- Prior Rating: Aaa
-- Prior Rating Date: December 22, 2006
-- Current Rating: Ba1
Class Description: EUR 25,000,000 Junior Super Senior B Secured
Floating Rate Notes due 2013
-- Prior Rating: Aaa
-- Prior Rating Date: December 22, 2006
-- Current Rating: Ba1
Class Description: $1,000,000 Subordinated Junior Super Senior
Secured Floating Rate Notes due 2013
-- Prior Rating: Aa3
-- Prior Rating Date: July 23, 2008
-- Current Rating: B3
Class Description: $42,000,000 Class IIIA Secured Floating Rate
Notes due 2013
-- Prior Rating: Baa2
-- Prior Rating Date: July 23, 2008
-- Current Rating: Ca
According to Moody's, the rating actions are the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, and three Icelandic banks,
specifically Kaupthing Bank hf, Landsbanki Islands hf, and Glitnir
Banki hf.
MORGAN STANLEY: Moody's Cuts $6MM Fixed Rate Notes Rating to 'B1'
-----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Morgan Stanley ACES SPC, Series 2005-8:
Class Description: $6,000,000 Secured Fixed Rate Notes due 2015-2
-- Prior Rating: Ba1
-- Prior Rating Date: July 11, 2008
-- Current Rating: B1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on Sept. 15, 2008, and Fannie Mae,
which was placed into the conservatorship of the U.S. government
on Sept. 8, 2008.
MORGAN STANLEY: Moody's Junks Four Ratings on Poor Credit Quality
-----------------------------------------------------------------
Moody's Investors Service has downgraded its ratings on the notes
issued by Morgan Stanley Managed ACES SPC Series 2006-6:
Class Description: $30,000,000 Junior Super Senior Secured
Floating Rate Notes due 2013
-- Prior Rating: Aaa
-- Prior Rating Date: November 30, 2006
-- Current Rating: Ba1
Class Description: $110,000,000 Class IIIA Secured Floating Rate
Notes due 2013
-- Prior Rating: Baa2
-- Prior Rating Date: July 23, 2008
-- Current Rating: Ca
Class Description: EUR 13,000,000 Class IIIB Secured Fixed Rate
Notes due 2013
-- Prior Rating: Baa2
-- Prior Rating Date: July 23, 2008
-- Current Rating: Ca
Class Description: EUR 3,000,000 Class IIIC Secured Floating Rate
Notes due 2013
-- Prior Rating: Baa2
-- Prior Rating Date: July 23, 2008
-- Current Rating: Ca
Class Description: $5,000,000 Class IIID Secured Fixed Rate Notes
due 2013
-- Prior Rating: Baa2
-- Prior Rating Date: July 23, 2008
-- Current Rating: Ca
According to Moody's, the rating actions are the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on September
25, 2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, and three Icelandic banks, specifically Kaupthing
Bank hf, Landsbanki Islands hf, and Glitnir Banki hf.
MORGAN STANLEY: Moody's Slashes $30MM Notes Rating to Ba1 from Aaa
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Morgan Stanley Managed ACES SPC Series 2006-11:
Class Description: $30,000,000 Junior Super Senior Secured
Floating Rate Notes due 2013
-- Prior Rating: Aaa
-- Prior Rating Date: March 28, 2007
-- Current Rating: Ba1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on Sept. 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on Sept. 25,
2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, and three Icelandic banks, specifically Kaupthing
Bank hf, Landsbanki Islands hf, and Glitnir Banki hf.
MORGAN STANLEY: Moody's Trims Class IA Notes Rating to B2 from Ba1
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Morgan Stanley ACES SPC, Series 2005-21:
Class Description: Class IA Notes due September 20, 2010
-- Prior Rating: Ba1
-- Prior Rating Date: July 11, 2008
-- Current Rating: B2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on Sept. 15, 2008.
MORGAN STANLEY: S&P Holds Ratings on 21 Classes of Certificates
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 21
classes of commercial mortgage pass-through certificates from
Morgan Stanley Capital I Trust 2007-IQ13.
The affirmations reflect credit enhancement levels that provide
adequate support through various stress scenarios.
As of the Oct. 15, 2008, remittance report, the collateral pool
consisted of 174 loans with an aggregate trust balance of
$1.629 billion, compared with the same number of loans totaling
$1.639 billion at issuance. The master servicers, Wells Fargo
Bank N.A. and NCB FSB, reported full- and partial-year 2007
financial information for 93% of the pool. Based on this data and
excluding the 38 residential cooperative loans ($129.3 million,
8%), Standard & Poor's calculated a weighted average debt service
coverage of 1.21x, down from 1.33x at issuance. There is one 30-
days delinquent loan ($603,145), and no loans are with the special
servicer. The trust has not experienced any losses to date.
The top 10 exposures have an aggregate outstanding balance of
$760.2 million (47%) and a weighted average DSC of 1.12x, down
from 1.22x at issuance. Three of the top 10 exposures are on the
servicer's watchlist. Standard & Poor's reviewed property
inspections provided by the master servicer for all of the assets
underlying the top 10 exposures. All were characterized as "good"
except for four of the eight properties
securing the second-largest exposure, which were characterized as
"fair."
S&P is concerned at this time with three ($14.3 million, 1%) of
the 17 loans ($496.4 million, 31%) in the pool that have reported
low DSC. The three loans are secured by retail and office
properties with an average balance of $4.8 million and have
experienced a weighted average decline in DSC of 56% since
issuance. The 17 loans in the pool with reported low DSC are
secured by a variety of property types with an average balance of
$26.1 million and have experienced a weighted average decline in
DSC of 23% since issuance. The 14 loans that are not credit
concerns at this time have significant reserves for tenant
improvement, leasing commissions, capital expenditures, or debt
service or are in various stages of lease-up or renovation.
Wells Fargo and NCB reported a watchlist of 16 loans
($445.9 million, 27%). Three of the top 10 exposures appear on
the watchlist, but none are current credit concerns.
-- The largest loan in the trust (75-101 Federal Street;
$210 million, 13%) is secured by an 811,687-sq.-ft. office
property in Boston. The loan appears on the watchlist
because of a reported DSC of 0.91x and occupancy of 88% as
of year-end 2007. As of June 30, 2008, the DSC was 0.82x
and occupancy was 76%. The DSC and occupancy fell
primarily due to the loss of the largest tenant upon its
lease expiration. New tenants have signed leases for a
portion of the vacant space, and a letter of credit for
$7.3 million is available to pay the leasing costs.
-- The RREEF Portfolio is the second-largest loan in the
trust ($147 million, 9%) and is secured by eight
multifamily properties with a total of 2,580 units. The
properties are located in Virginia and Maryland. The loan
appears on the watchlist because of a reported DSC of
0.92x as of year-end 2007. As of June 30, 2008, the DSC
had improved to 1.06x.
-- Northridge I, the ninth-largest loan in the trust
($27.4 million, 2%), is secured by a 123,208-sq.-ft.
office property in Herndon, Virginia. The reported DSC
was 0.80x and occupancy was 94% as of year-end 2007. As
of June 30, 2008, both the DSC and occupancy had improved,
to 0.89x and 100%, respectively. At this time, Standard &
Poor's expects the DSC to continue to improve as lease
rates from new tenants are fully realized. The remaining
loans are on the watchlist primarily because of low
occupancy or a decline in DSC since issuance.
Standard & Poor's stressed the loans with credit issues as part of
its analysis. The resultant credit enhancement levels support
affirmed ratings.
Ratings Affirmed
Morgan Stanley Capital I Trust 2007-IQ13
Commercial mortgage pass-through certificates
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 30.20%
A-1A AAA 30.20%
A-2 AAA 30.20%
A-3 AAA 30.20%
A-4 AAA 30.20%
A-M AAA 20.13%
A-J AAA 10.95%
B AA 8.93%
C AA- 7.93%
D A 6.92%
E A- 6.04%
F BBB+ 4.91%
G BBB 4.03%
H BBB- 2.89%
J BB+ 2.39%
K BB 2.26%
L BB- 2.01%
N B 1.51%
O B- 1.13%
X AAA N/A
X-Y AAA N/A
N/A -- Not applicable.
NANCY JEAN SERWIN: Case Summary & 12 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Nancy Jean Serwin
2556 North Terrace Ave.
Milwaukee, WI 53211
Bankruptcy Case No.: 08-28743
Chapter 11 Petition Date: October 24, 2008
Court: Northern District of Illinois (Chicago)
Judge: Bruce W. Black
Debtor's Counsel: Scott R. Clar, Esq.
sclar@craneheyman.com
Crane Heyman Simon Welch & Clar
135 South LaSalle St.
Chicago, IL 60603
Tel: (312) 641-6777
Fax: (312) 641-7114
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/ilnb08-28743.pdf
NEW YORK TIMES: S&P Cuts Corp. Credit Rating to 'BB-' from 'BBB-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on The New York Times Co. to 'BB-' from 'BBB-'. The rating
was removed from CreditWatch, where it was placed July 23, 2008.
The rating outlook is negative.
At the same time, S&P lowered its issue-level rating on the
company's unsecured debt issues to 'BB-' from 'BBB-'. The issue-
level rating was also removed from CreditWatch. In addition, S&P
assigned a recovery rating of '4' to this debt, indicating the
expectation for average recovery in the event of a payment
default.
"The ratings downgrade reflects our expectation that a likely U.S.
economic recession over the intermediate term would continue to
meaningfully exacerbate secular rates of ad revenue decline over
at least the next year," said Standard & Poor's credit analyst
Emile Courtney.
This would prolong the time (possibly until 2010) when ad revenues
could potentially begin to moderate to more manageable rates of
decline--a precondition for executing revenue strategies and cost-
cutting actions that can potentially stabilize EBITDA generation.
It is S&P's estimates that the company's total revenue will
decline in the mid-teens percentage area in 2008 year over year,
and that EBITDA will decline by more than 30% in 2008 and by about
an additional 30% well into 2009.
The three-notch downgrade of the corporate credit rating reflects
still-worsening operating trends in 2008 and S&P's revised
expectation for the EBITDA decline in 2009 to be aligned with
performance in 2008. Previously, S&P expected the EBITDA decline
in 2009 would moderate considerably. The current 'BB-' rating is
now at a level that factors in a continuation of the substantial
advertising slowdown and declining profitability in 2009. These
expectations are notwithstanding: Significant cost-cutting efforts
by the company in 2008 and 2009 totaling more than $230 million.
That the company's online business is more diversified than its
peers' and has a relatively good growth profile. Online revenue
increased 10% and represented 12% of total revenue in the seven
months ended August 2008. The current rate of online revenue
growth is tracking below S&P's previous expectations for 2008, as
online display advertising revenue growth is being challenged by
the economy. Online profitability growth will not fully offset
print declines over the next two years. That the company's
circulation revenue base is larger than, and has a growth profile
that compares favorably to, that of most of the company's peers,
due to premium brands that command high home delivery and
newsstand prices. Circulation revenue increased 1.7% and
represented 31% of total revenue in the seven months ended August
2008.
Total revenue declined by 6.5% year over year and EBITDA declined
by 38% in the nine months ended September 2008, and leverage as
measured by total lease- and pension-adjusted debt to EBITDA was
3.8x at September 2008. Continued significant expected declines
in EBITDA for the remainder of the year are likely to result in
modest free cash flow in 2008 after capital expenditures. The
result is that the company will be a net borrower to complete
dividend payments in excess of $100 million this year. However,
more than $70 million in nonrecurring capital investment spending
related to the company's new headquarters building and plant
consolidation in 2008, and the company's expectation that it will
meaningfully cut its dividend over the near term, are expected to
enable The New York Times to generate a minimal amount of
discretionary cash flow in 2009, even with significant expected
declines in EBITDA.
Leverage, as measured by total lease- and pension-adjusted debt to
EBITDA is expected to increase to 4x by the end of 2008. Over the
near-to-intermediate term, the 'BB-' rating incorporates the
assumption that the company will successfully explore
opportunities to reduce debt levels, including possibly completing
a mortgage on its headquarters building to reduce outstanding
borrowings under its revolvers, and a possible sale of assets.
Pro forma for these actions, S&P anticipates that leverage will
increase to the high-4x area in 2009. However, if an asset sale
transaction does not move forward due to market conditions, S&P
believes leverage would be in the mid-5x area by the end of 2009.
NORTHLAKE FOODS: May Employ Tatum LLC as Financial Advisors
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
after giving due consideration to the objections of the United
States Trustee, has approved Northlake Foods Inc.'s application to
employ Tatum, LLC, to provide financial, management and consultant
services, nunc pro tunc to Sept. 15, 2008, in accordance with the
terms of the Special Project Work Agreement, dated Aug. 28, 2008.
William Maloney, a partner at Tatum, will have primary
responsibility in the project.
The Court's order approving the Application will be subject to
reconsideration for 30 days after the appointment of a committee
of unsecured creditors so that said committee may object to the
retention of Tatum.
As the Debtor's consultants and financial advisors, Tatum is
expected to:
a) assist the Debtor in the process of strategic and operational
analysis of the business;
b) assist the Debtor is assessing secured creditor position and
negotiating with creditors; meeting the custodial and
reporting requirement of the lenders (including cash
forecasting, budgeting, financial analysis, and records
examination);
c) negotiate on behalf of the Debtor with existing leases and
other commitments;
d) assist the Debtor in managing and complying with the
requirements imposed by the Bankruptcy Code and the
Bankruptcy Court;
e) provide counsel to the CEO in developing a plan of
reorganization; and
f) perform such other tasks as may be agreed to by Tatum and
the Debtor's counsel.
As compensation for their services, Tatum's professionals bill:
Managing Partner $395 per hour
William Maloney $345 per hour
Partners $300 per hour
Principals $225 per hour
William Maloney, a partner at Tatum, LLC, assured the Court that
the firm does not represent or hold any interest adverse to the
Debtor or its estate, and that the firm is a "disinterested
person" as that term is defined under Sec. 101(14) of the
Bankruptcy Code.
Tampa, Florida-based Northlake Foods, Inc., operates a restaurant
chain. The company filed for Chapter 11 relief on Sept. 15, 2008
(Bankr. M. D. Fla. Case No. 08-14131). Roberta A. Colton, Esq.,
at Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Millis, P.A.,
represents the Debtor as counsel. When the company filed for
protection from its creditors, it listed assets of $10 million to
$50 million, and debts of $10 million to $50 million.
ORBIT PETROLEUM: Myers Named President; Parent Co. Not in Ch. 11
----------------------------------------------------------------
Orbit Petroleum, Inc. disclosed that effective Oct. 20, 2008, the
board of directors has named Mike Myers as president of Orbit
Petroleum, Inc. and president of the company's subsidiary, Orbit
Petroleum, Inc., Oklahoma, which is currently under a petition
for reorganization under Chapter 11 of the United States
Bankruptcy Code in Federal Court in New Mexico.
Additionally, the company has amended its originally filing
petition to clarify that only the subsidiary is petitioning for
reorganization and not the parent public company. Mr. Myers will
immediately be directly responsible for all action related to both
Orbit Petroleum, Inc. (Nevada), the parent holding company and
Orbit Petroleum, Inc. (Oklahoma) the subsidiary. This change
in management follows an equity investment by a group led by
Mr. Myers to acquire approximately 40% of the parent company.
The board of directors feels that this is a positive development
for both the holding company and its subsidiary. Mr. Myers has a
deal of oil and gas experience and has worked with other
companies going through reorganization.
Jim Frazier will be resigning as president and chairman of the
company with the addition of Mr. Myers. Mr. Frazier will remain
active with the company for a short period of time to aid in the
transition.
About Orbit Petroleum, Inc.
Headquartered in Oklahoma City, Oklahoma, Orbit Petroleum, Inc.
(OBPT.PK) -- http://www.orbitpetro.com-- fdba Tipton
Enterprises, Inc., Tipton Oil and Gas Acquistions, Gilbert lease
Services, T.O.G.A. Well Services and Black Rock Transportation is
the owner of oil and gas properties in New Mexico and Texas.
The company filed for Chapter 11 protection on Feb. 13, 2008,
(Bankr. N.M. Case No.: 08-10408) Daniel J. Behles, Esq.,
represents the Debtor in its restructuring efforts. When it filed
for protection from its creditors, it listed estimated assets of
less than $50,000 and debts between $1 million to $10 million.
PACIFIC LIFESTYLE: Section 341(a) Meeting Scheduled for December 2
------------------------------------------------------------------
The U.S. Trustee for Region 18 will convene a meeting of Pacific
Lifestyle Homes, Inc.'s creditors on Dec. 2, 2008, at 11:00 a.m.,
at Vancouver Federal Building.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Based in Vancouver, Washington, Pacific Lifestyle Homes, Inc. is a
hombuilder throughout Southwest Washington and Northern Oregon.
The company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr.
W.D. Wash. 08-45328). Steven M. Hedberg, Esq., at Perkins Coie
LLP represents the Debtor as counsel. When the Debtor filed for
protection from its creditors, it listed assets of $50 million to
$100 million, and debts of $50 million to $100 million.
PAUL REINHART: Lenders Object to Debtor's Use of Cash Collateral
----------------------------------------------------------------
Paul Reinhart Inc. asks the U.S. Bankruptcy Court for the Northern
District of Texas for authority to:
-- use its lenders' cash collateral or, alternatively,
-- enter into a Funding Agreement with PRAI Texas, Inc., a
wholly-owned subsidiary of Paul Reinhart AG (PRAG), whereby
the Debtor will obtain funding for case administration
expenses for a 90-day period in exchange for the release of
the Debtor's claims against Paul Reinhart AG.
The Debtor is wholly-owned by Paul Reinhart America Inc., which
itself is a wholly-owned subsidiary of PRAG, a Swiss company,
which is one of the world's oldest and largest cotton merchants.
The Debtor tells the Court that absent the ability to use Cash
Collateral, it will be unable to administer assets of the estate
and pay for the necessary costs associated therewith, including
payment of employees and other overhead expenses and
administrative costs of the bankruptcy case.
Funding Agreement with PRAI Texas Inc.
PRAI Texas agrees to advance up to $4 million to the Debtor during
the 90-day period starting on the Court's approval of the request.
PRAI Texas will advance an additional $4 million to the Debtor in
connection with the confirmation, and upon the effective date, of
a Chapter 11 plan of liquidation in the bankruptcy case, provided
such plan contains restrictions on the distribution of such Plan
funding (among other things, earmarking such funds for
distribution on account of allowed non-subordinated unsecured
claims, other than the deficiency claims of the Lenders) and
specifically, a finding that PRAG has committed no act to create
liability to the Debtor.
Use of Cash Collateral
The Debtor will use Cash Collateral held by Wells Fargo HSBC Trade
Bank, N.A. for itself and as agent of the Lenders, to pay, in
accordance with a Budget:
i) expenses incurred in the orderly liquidation and conversion
to cash of assets of the Debtor's estate which serve as
collateral for amounts owing to the Lenders and in relation
to which the Agent holds validly-existing security interests
and liens (the "Collateral"), including, without limitation,
the payment of third-party warehouse, freight and related
charges incurred in connection with the sale and delivery of
the Debtor's cotton inventory (collectively, "Collateral
Disposition Expenses");
ii) expenses incurred in the orderly liquidation and
conversion to cash of assets of the Debtor's estate in which
the Agent does not hold validly-existing security interests
or liens, or in relation to which the Agent's security
interests or liens are avoided (the "Unencumbered Assets");
and
iii) expenses of case administration, including, without
limitation, overhead incurred during the course of the
bankruptcy case (including, without limitation, labor and
benefits, rent, utilities and other ordinary course
operating expenses), fees and expenses incurred by
professionals employed by the Debtor and by any committee
or committees appointed by the U.S. Trustee in the
bankruptcy case, and all statutory fees assessed by or
payable to the U.S. Trustee or the Court (collectively,
"Case Administration Expenses").
Adequate Protection
As adequate protection for the use of Cash Collateral, the Lenders
shall be granted:
-- replacement Liens on all Unencumbered Assets, with the
exception of Chapter 5 Assets, to the extent of the
diminution in value of the Collateral resulting solely from
the Debtor's use of Cash Collateral to (A) liquidate or
otherwise convert to cash Unencumberd Assets, or (B) pay for
Case Administration Expenses which are incurred in connection
with any matter unrelated to administration of the Collateral
(collectively, the "Non-Surcharge Expenses"); and
-- priority administrative claim, subject to a Carve Out (for
statutory fees payable to the U.S. Trustee or the Court and
professional fees and expenses of the Debtor or committee or
committees), to the extent that after taking into account the
Replacement Liens, there continues to be a diminution in
value of the Collateral solely from the Debtor's use of Cash
Collateral for Non-Surcharge Expenses.
During the 90-day forecast period and until a Termination Event,
the Debtor shall be required at the end of each week to apply all
Cash collateral in excess of $15 million to the outstanding
indebtedness owing by the Debtor to the Lenders.
Excluded from the proposed protections is wholesale
replacement/administrative claim protection for the use of Cash
Collateral for any purpose, whatsoever, which has also been
requested by the Lenders. The Debtor believes that such relief is
inappropriate given that the sole beneficiary of Cash Collateral
used to pay for Collateral Disposition Expenses and Case
Administration Expenses necessarily incurred in relation thereto
will be the Agent/Lenders themselves.
Total Assets/Indebtedness
As of the petition Date, the Debtor tell the Court that it had
assets with a carrying value of approximately $157.6 million,
including cash and cash equivalents of about $15.5 million. Other
than its cash and cash equivalents, the Debtor's primary assets
fall into the following categories, having the following estimated
book values as of the Petition Date: (i) cotton inventory
(approximately $55.5 million); and (ii) accounts and notes
receivable, net of allowance for doubtful accounts (approximately
$55.8 million).
As of the Petition Date, the Debtor tells the Court that it is
obligated to the lenders in the approximate principal amount of
$147,378,732. The Lenders hold first priority liens upon and
security interests in substantially all of the Debtor's personal
property to secure repayment of the Debtor's indebtendess.
Lenders' Objections to Use of Cash Collateral
The Prepetition Lenders tell the Court that the adequate
protections proposed in the Debtor's motion is wholly inadequate
to compensate the Prepetition Lenders for the diminution of their
interests in the Prepetition Collateral. Specifically, the
Lenders say the Debtors propose to give them limited replacement
liens and limited priority administrative claims -- an outrageous
attempt to have surcharge of their interests, in contravention of
the requirements of the Bankruptcy Code.
As regarding the Funding Agreement, the Lenders tell the Court
PRAI Texas offers to advance up to $4 million to pay, for a 90-day
period, only Case Administration Expenses, which expressly exclude
expenses incurred in the liquidation of the Prepetition Collateral
(consisting of substantially all of the Debtor's current assets).
The Debtor and PRAI Texas have included this limitation despite
the fact that Debtor's counsel previously advised the Court at the
hearing on first day motions that the case will take the form of a
"liquidating chapter 11." The Lenders tell the Court that such
limitation would prevent the Debtor from meeting its primary
objective in the case, i.e., liquidation of assets absent the
consent of the Agent and the Prepetition Lenders for use of Cash
Collateral.
Furthermore, the Lenders tell the Court that the Funding Agreement
provides PRAG the ability to terminate the Funding Agreement at
any time it wishes. This gives PRAG control and domination in
these matters, with the ability to walk away with a release of the
Debtor's claims against PRAG even before providing any funding
whatsoever.
The Lenders further tell the Court that the proposed $4 million
"plan funding" contained in the Funding Agreement constitutes a
wrongful attempt to determine the terms of a plan of
reorganization sub rosa in contravention of Fifth Circuit
precedent. The Funding Agreement, they note, provides that PRAI
Texas will contribute $4 million in connection with the Court's
confirmation of a plan of reorganization so long as, the funding
is only used solely and exclusively to pay unsecured creditors
other than the Prepetition Lenders.
Headquartered in Richardson, Texas, Paul Reinhart, Inc.
-- http://www.reinhart.com/--is the North American subsidiary of
Switzerland-based Paul Reinhart AG that purchases cotton from
growers and distributes to textile manufacturers worldwide.
Deborah M. Perry, Esq., and E. Lee Morris, Esq., at Munsch Hardt
Kopf & Harr, P.C., represent the Debtor in its restructuring
efforts. The Debtor listed assets of between $100 million and
$500 million and estimated debts of between $100 million and
$500 million in its
filing.
PAUL REINHART: U.S. Trustee Sets 341(a) Meeting for Oct. 28
-----------------------------------------------------------
The United States Trustee for Region 6 will convene a meeting of
creditors of Paul Reinhart Inc. at 2:00 p.m., on Oct. 28, 2008, at
the Office of the U.S. Trustee, 1100 Commerce Street, Room 976, in
Dallas, Texas.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases. All
creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Based in Richardson, Texas, Paul Reinhart Inc. is a cotton
merchant serving organic and traditional growers and textile
mills. The company filed for Chapter 11 relief on Oct. 15, 2008
(Bankr. N.D. Tex. 08-35283). Deborah M. Perry, Esq., and E. Lee
Morris, Esq., at Munsch Hardt Kopf & Harr, P.C., represented the
Debtor as counsel. When the Debtor filed for protection from its
creditors, it listed assets of between $100 million and
$500 million, and the same range of debt.
PEABODY ENERGY: S&P's Rtngs Unmoved by Doubling Repurchase Program
------------------------------------------------------------------
Standard & Poor's Ratings Services said that the ratings and
outlook on Peabody Energy Corp. (BB+/Stable/--) would be
unaffected at this time by the announcement that Peabody will
double the size of its share repurchase program to $1 billion.
S&P expects the company to fund future share repurchases in a
prudent and balanced manner. However, if the company implements a
more aggressive financial policy through sizable debt-financed
share repurchases, and if credit protection measures weaken to
levels lower than S&P previously expected for the current rating,
it could revise the outlook to negative.
MODTECH HOLDINGS: Earnings Affected by Delays, Cancellations
------------------------------------------------------------
Lou Hirsh at The Press-Enterprise reports that Modtech
Holdings' President and CEO Dennis Shogren said project delays
and cancellations by schools and other government entities
affected the company's financial performance. Modtech Holdings
posted in August 2008 a $4.95 million second quarter loss,
compared to a $42.9 million loss in the second quarter of last
year. Modtech Holdings reported that its sales during the
second quarter 2008 period dropped 44% to $13.4 million, from
the same period last year.
Perris, California-based Modtech Holdings, Inc. --
http://www.modtech.com/-- makes and sells modular and
relocatable classrooms, commercial and light industrial modular
buildings. The company filed for Chapter 11 protection on
Oct. 20, 2008 (Bankr. C. D. Calif. Case No. 08-24324). Marc J.
Winthrop, Esq., at Winthrop Couchot Professional Corporation,
represents the company in its restructuring effort.
As of June 30, 2008, Modtech Holdings had $40,925,000 in assets
and $34,974,000 in debts.
PETTERS GROUP: Larry Reynolds Admits to Fraud With Founder
----------------------------------------------------------
The Associated Press reports that Larry Reynolds has admitted
to laundering money at Petters Group Worldwide LLC's founder,
Tom Petters.
According to The AP, Mr. Reynolds pleaded guilty in an
investment fraud scheme that authorities claim was masterminded
by Mr. Petters, who allegedly ran a Ponzi scheme for more than
a decade. The AP says Mr. Reynolds told a federal court that
he laundered money by setting up a bank account at his Los
Angeles firm, Nation Wide International Resources. Citing Mr.
Reynolds, the report says that the account was used to fool
investors into thinking that the money moving through it was
being used to purchase high-end electronics that would later be
sold for a profit. Mr. Reynolds said that $12 billion was
moved through the account to Mr. Petters, minus a commission
for Mr. Reynolds, the report states.
The AP reports that Mr. Petters resigned as Petters Group's
chairperson and CEO of Petters Group before his arrest.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is
named for founder and chairman Tom Petters. The group is a
collection of some 20 companies, most of which make and market
consumer products. It also works with existing brands through
licensing agreements to further extend those brands into new
product lines and markets. Holdings include Fingerhut
(consumer products via its catalog and Web site), SoniqCast
(maker of portable, WiFi MP3 devices), leading instant film and
camera company Polaroid (purchased for $426 million in 2005),
Sun Country Airlines (acquired in 2006), and Enable Holdings
(online marketplace and auction for consumers and
manufacturers' overstock inventory). Petters formed the
company in 1988.
Petters Company, Inc. is the financing and capital-raising unit
of Petters Group Worldwide, LLC. Petters Company, Inc. and
Petters Group Worldwide, LLC, filed separate petitions for
Chapter 11 relief on Oct. 11, 2008 (Bankr. D. Minn. Case No.
08-45257 and 08-45258, respectively). James A. Lodoen, Esq.,
at Lindquist & Vennum P.L.L.P., represents the Debtors as
counsel. In its petition, Petters Company, Inc. listed debts
of between $500 million and $1 billion, while its parent,
Petters Group Worldwide, LLC listed debts of not more than
$50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline
Holdings, Inc., filed for Chapter 11 bankruptcy protection with
the U.S. Bankruptcy Court for the District of Minnesota on
Oct. 6, 2008 (Lead Case No. 08-45136). Petters Aviation, LLC
is a wholly owned unit of Thomas Petters Inc. and owner of MN
Airline Holdings, Inc., Sun Country's parent company.
PILGRIM'S PRIDE: Debt Covenant Waiver Extended to November 26
-------------------------------------------------------------
As reported in the Troubled Company Reporter on Oct. 2, 2008,
Pilgrim's Pride Corporation obtained temporary waivers of its non-
compliance with the fixed charge coverage ratio covenants under
its principal credit facilities as of the fiscal year ending
Sept. 27, 2008. These waivers are scheduled to expire in
accordance with their terms on Oct. 28, 2008.
On Oct. 26, 2008, the Company entered into temporary waivers of
the Company's non-compliance with its fixed charge coverage ratio
covenants and potential non-compliance with its leverage ratio
covenants under its principal credit facilities as of fiscal year
end, which waivers will be effective from Oct. 28, 2008 through
Nov. 26, 2008.
Specifically, on Oct. 26, 2008, the Company entered into:
-- a Limited Duration Waiver of Potential Defaults and Events
of Default under Credit Agreement with CoBank, ACB, as
administrative agent, and the other syndication parties
signatory, waiving certain potential defaults and events of
default relating to non-compliance with the fixed charge
coverage ratio and leverage ratio covenants under the 2006
Amended and Restated Credit Agreement dated as of
Sept. 21, 2006, as amended;
-- a Limited Duration Waiver Agreement with To-Ricos, Ltd., To-
Ricos Distribution, Ltd., Bank of Montreal, as
administrative agent, and certain other bank parties,
waiving certain potential defaults and events of default
relating to non-compliance with the fixed charge coverage
ratio and leverage ratio covenants under the Fourth Amended
and Restated Secured Credit Agreement dated as of
Feb. 8, 2007, as amended; and
-- a Limited Duration Waiver Agreement with Pilgrim's Pride
Funding Corporation, BMO Capital Markets Corp., as
administrator, and Fairway Finance Company, LLC, waiving
certain events of termination and termination events
relating to non-compliance with the fixed charge coverage
ratio and leverage ratio covenants under the Amended and
Restated Receivables Purchase Agreement dated as of
Sept. 26, 2008, as amended.
CoBank Waiver
Pursuant to the CoBank Waiver, the CoBank Lending Group has
granted the Company a waiver for the Waiver Period of potential
defaults and events of default of the Company's covenants to
maintain a certain minimum fixed charge coverage ratio and
leverage ratio under the CoBank Agreement. The CoBank Waiver
further provides that, during the Waiver Period, (i) unless
otherwise approved by the CoBank Lending Group, the Company will
maintain aggregate undrawn commitments under the CoBank Agreement
and the BMO Agreement of at least $35 million; (ii) so long as
aggregate undrawn commitments under the CoBank Agreement and the
BMO Agreement are $75 million or less, the Company will obtain and
pay loans under the CoBank Agreement and the BMO Agreement only on
a pro rata basis; and (iii) the Company will be unable to convert
any portion of the outstanding Revolving Loan into a term loan or
add additional collateral to the available amount under the CoBank
Agreement for borrowing availability purposes.
In addition, the CoBank Waiver requires the Company to engage a
chief restructuring officer within ten business days after the
Company receives a list of candidates for such position from
CoBank. The Company is not obligated to engage any of the
candidates on such list but must engage a person or firm that is
reasonably acceptable to the CoBank Lending Group. In connection
with entering into the CoBank Waiver, the Company has agreed to
pay a waiver fee equal to 0.10% of the total obligations
outstanding under the CoBank Agreement.
BMO Waiver
Pursuant to the BMO Waiver, the BMO Lending Group has granted the
Company a waiver for the Waiver Period of defaults and events of
default relating to the Company's covenants to maintain a certain
minimum fixed charge coverage ratio and leverage ratio under the
BMO Agreement. The BMO Waiver further provides that, during the
Waiver Period, so long as aggregate undrawn commitments under the
CoBank Agreement and the BMO Agreement are $75 million or less,
the Company will be entitled to obtain loans under the BMO
Agreement, and the Company will obtain and pay loans under the BMO
Agreement and the CoBank Agreement only on a pro rata basis. In
addition, the BMO Waiver requires the Company to engage a chief
restructuring officer within ten business days after the Company
receives a list of candidates for such position from Bank of
Montreal.
he Company is not obligated to engage any of the candidates on
such list but must engage a person or firm that is reasonably
acceptable to the BMO Lending Group. In connection with entering
into the BMO Waiver, the Company has agreed to pay a waiver fee
equal to 0.10% of the aggregate commitment under the BMO
Agreement.
RPA Waiver
Pursuant to the RPA Waiver, BMO Capital Markets and Fairway have
granted the Company a waiver for the Waiver Period of any non-
compliance with its covenants to maintain a minimum fixed charge
coverage ratio and leverage ratio under the Amended and Restated
Receivables Purchase Agreement. In connection with entering into
the RPA Waiver, the Company has agreed to pay a waiver fee equal
to 0.10% of the purchase limit under the Amended and Restated
Receivables Purchase Agreement plus other specified fees and
expenses.
The effectiveness of the waivers contained in the Waivers is
conditioned upon, among other things, the Company's continued
compliance with the Company's obligations under the Credit
Documents and forbearance from paying any interest on the
Company's 8-3/8% Senior Subordinated Notes due 2017 or its 7-5/8%
Senior Notes due May 1, 2015. Upon expiration or any termination
of the Waiver Period, unless extended or the Credit Documents are
amended, the waivers contained in the Waivers will no longer be
effective and an event of default or event of termination will
exist under the Credit Documents permitting the CoBank Lending
Group, the BMO Lending Group and BMO Capital Markets to exercise
their remedies and preclude the Company from drawing funds or
selling additional receivables under the Credit Documents.
The company and its advisors have been working diligently on a
comprehensive business plan that addresses the financial and
operational challenges currently facing Pilgrim's Pride and the
chicken industry. The extension announced today provides Pilgrim's
Pride with flexibility while it continues to evaluate its
opportunities to refinance and recapitalize its business. The
company is working toward a solution to improve its long-term
liquidity and position itself to capitalize on its strategic
advantages.
The Company stated: "We have made significant progress in
developing an appropriate and effective strategic response to the
issues facing Pilgrim's Pride and we look forward to executing
against that plan. Lenders have been constructive and supportive
throughout this challenging period and we believe that like us,
they are encouraged by recent industry egg set data and the
continued decline in grain and other feed ingredient prices, which
if sustained should bode well for our Company and the industry as
a whole. In fact, the annualized benefit of the current feed
ingredient prices relative to those that existed at the time of
the Company's third fiscal quarter conference call held on July
29, 2008; is approximately $1.1 billion. We look forward to
working with all of our stakeholders throughout this process."
Pilgrim's Pride also announced that the company intends to
exercise its 30-day grace period in making the $25.7 million
interest payment due November 3, 2008, on its 7-5/8% Senior Notes
and 8-3/8% Senior Subordinated Notes.
Pilgrim's Pride has retained Lazard as its investment banker
to provide strategic advice regarding refinancing and
recapitalization opportunities and Bain Corporate Renewal Group to
work with management on a range of strategic issues and
operational improvements.
At June 28, 2008, Pilgrim's Pride's notes payable and long-term
debt, less current maturities stands at $1,518,979,000.
At June 28, 2008, $213.4 million was available for borrowing under
Pilgrim's Pride's secured revolving credit facility expiring in
2013, $375.0 million was available for borrowing under the
revolving portion of the Company's secured revolving/term credit
facility expiring in 2016 and no funds were available for
borrowing under the Company's secured revolving credit facility
expiring in 2011.
The Company is required, by certain provisions of its debt
agreements, to maintain certain levels of working capital and net
worth, to limit dividends to a maximum of $26.0 million per year,
and to maintain various fixed charge, leverage, current and debt-
to-equity ratios. The Company's debt agreements are also generally
cross-defaulted with one another, and the Company's leases are
generally cross-defaulted with the credit agreements. At June 28,
2008, the Company has fully complied with these covenants. In
April 2008, the Company and its lenders amended certain covenants
in its credit facilities and receivables purchase facility
effective through the end of fiscal 2009 to levels the Company
believes it can comply with in the near-term despite the current
economic issues facing the chicken industry.
About Pilgrim's Pride
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(NYSE: PPC) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. Pilgrim's Pride employs about 40,000
people and has major operations in Texas, Alabama, Arkansas,
Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania,
Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with
other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
* * *
As reported in the Troubled Company Reporter on Sept. 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Pilgrim's Pride Corp., including its corporate credit rating to
'CCC+' from 'BB-'. In addition, S&P revised the CreditWatch
implications to developing from negative.
Moody's Investors Service lowered the ratings of Pilgrim's Pride
Corporation, including (i) corporate family rating to B2 from
B1; (ii) probability of default rating to B2 from B1; (iii)
$400 million 7.625% senior notes due 2015 to Caa1 from B3 and
(iv) $250 million senior subordinated notes due in 2017 and
$5.1 million (original $100 million) senior subordinated notes
due 2013 to Caa1 from B3.
PITTSBURG PRODCUE: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Pittsburgh Produce, LLC
dba DBA Radicchios International Marketplace
160 Gallery Drive
McMurray, PA 15317
Bankruptcy Case No.: 08-27127
Type of Business: The Debtor sells fruits and vegetables.
Chapter 11 Petition Date: October 24, 2008
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Robert O. Lampl, Esq.
rol@lampllaw.com
960 Penn Avenue, Suite 1200
Pittsburgh, PA 15222
Tel: (412) 392-0330
Fax: (412) 392-0335
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors.
PLASTECH ENGINEERED: Court Approves Amended Disclosure Statement
----------------------------------------------------------------
The Hon. Phillip Shefferly of the United States Bankruptcy Court
for the Eastern District of Michigan has approved the second
amended disclosure statement explaining the terms of the Chapter
11 Joint Plan of Liquidation, as twice amended, of Plastech
Engineered Products Inc. and its units, and the Official Committee
of Unsecured Creditors, as co-proponent. The Court held that the
Disclosure Statement contains adequate information necessary in
accordance to Section 1125 of the Bankruptcy Code.
The Court's order paves way for Plastech to begin soliciting
votes from general unsecured creditors, who will be able to
recover seven cents on the dollar under the terms of the Plan,
and from other impaired creditors.
The Court approved the dates proposed by the Debtors pertaining
to the solicitation of votes on their 2nd Amended Joint Plan of
Liquidation. To that extent, Judge Shefferly fixed June 30, 2008
as the solicitation record date for non-governmental creditors,
and July 30, 2008, as solicitation record date for non-
governmental units.
Accordingly, the Debtors' mailing agent, Donlin Recano and
Company will mail all solicitation packages to creditors and
holders of interest by October 29, 2008.
Ballots voting on the Plan must be received by Donlin Recano on
or before November 21, 2008.
Pursuant to the 2nd Amended Plan, the estimated aggregate amount
of allowed Class 6 Non-Tax Priority Claims is at $10,000,000,
compared to prior estimates of between $0 and $25,000,000. Class
6 Claimholders are expected to have full claim recovery.
Holders of Class 7 general unsecured claims -- which are expected
to aggregate less than $200,000,000 -- will obtain a 7% recovery
on their claims. The previous amendment indicated that
$300,000,000 of Class 7 Claims will be allowed under the Plan.
The Debtors and the Committee believe that the Plan affords
creditors the potential for a better realization on the Debtors'
assets than a Chapter 7 liquidation.
Before the Court approved the Disclosure Statement, Goldman Sachs
Credit Partners, L.P., agent for the prepetition lenders owed by
the Debtors in the original principal amount of $265,000,000
under the First Lien Term Loan Credit and Guaranty Agreement,
complained that the document failed to indicate, among others,
that the Debtors have no interest in TrimQuest, LLC. The Debtors
accordingly addressed this concern when they filed the first
amendment. H.S. Die, one of the Debtors' tooling vendors, in a
separate filing, also objected, asking for clarification how
certain claims will be treated under the Plan.
Distributions under the 2nd Amended Plan will be obtained from:
(a) the Debtors' cash on hand,
(b) the proceeds of the sales and sale-related settlements,
(c) cash received in liquidation of the unencumbered assets of
the Debtors, which include expected avoidance actions
recoveries and offsets estimated between $5,000,000 and
$30,000,000, and
(d) the available additional proceeds from the DIP Collateral.
In no event, however, will the DIP Lenders -- consisting of the
Debtors' former major customers Johnson Controls, Inc., Chrysler
LLC, Ford Motor Company and General Motors Corp. who committed to
loan the Debtors up to $99,500,000 for their postpetition
operations -- be obligated to fund, or otherwise raise cash
available to fund, any amounts in excess of the amounts required
by the Final DIP Order or Funding Agreement, or on terms
different from the those specified in the Final DIP Order and
Funding Agreement, or as the DIP Lenders may otherwise agree in
writing.
James P. Carroll, the Debtors' chief liquidating officer, related
that if the requisite acceptances of the Plan are not confirmed,
the Debtors or any other party-in-interest could attempt to
formulate and propose a different plan or plans of liquidation.
If no Plan is confirmed, he said the Debtors' Chapter 11 cases
may be converted under Chapter 7 of the Bankruptcy Code, pursuant
to which a trustee would be elected or appointed to complete the
liquidation of the Debtors' asset; or the Debtors and other
parties-in-interest may seek dismissal of the Chapter 11 cases
pursuant to Section 1112 of the Bankruptcy Code.
Mr. Carroll said that dismissal of the Debtors' Chapter 11 cases
would terminate the automatic stay and might allow certain
creditors to foreclose on their liens on substantially all of the
Debtors' remaining assets. He added that dismissal of the cases
would reduce the value of the Debtors' remaining assets, would
lower the return to creditors and would likely eliminate any
return to holders of claims.
The Court will consider approval of the Debtors' 2nd Amended Plan
on December 3, 2008. Objections to the Plan confirmation must be
filed with the Court and served on notice parties so as to be
received on or before November 24, 2008 at 12:00 pm. (Eastern
Time).
Liquidation Analysis Under Plan
The Debtors filed with the Court an analysis relating how various
classes of claims will be treated in the event their assets are
liquidated pursuant to Chapter 7 of the Bankruptcy Code.
Pursuant to the Liquidation Analysis, holders of DIP Facility
claims will get as low as 49% to as high as 83% of their claims
in a Chapter 7 liquidation. The DIP Lenders, however, will have
full recovery under a Chapter 11 liquidation.
First Lien Term Lenders will recover as low as 5% to as high as
8% of their Claims under Chapter 7 compared to a 70% recovery
under the Chapter 11 Plan.
Recovery by holders of general unsecured claims is pegged at a
low of 7% up to a high of 17% under a Chapter 7 Plan, compared to
a 7% if the Debtors' assets will be liquidated as proposed under
Chapter 11. The Debtors note that even if the Holders of General
unsecured claims would still receive recovery, they would fare
worse under chapter 7 because their residual interest in the
proceeds of unencumbered assets and avoidance actions would
likely be consumed entirely by payments made on account of
administrative claims, priority tax claims and non-tax priority
claims.
To that extent, the Debtors maintain that liquidation of their
assets under the proposed Chapter 11 Plan affords their creditors
the potential for a better recovery on claims than a liquidation
under Chapter 7.
The Debtors note that although the Plan's proposed liquidation
and a chapter 7 liquidation would have the same goal of
liquidating the remainder of the Debtors' estates and
distributing all of the proceeds to creditors, the Plan
Proponents -- the Debtors and the Creditors Committee -- believe
that the Plan provides a more efficient vehicle to reach that
goal. Liquidating the Debtors' estates pursuant to chapter 7
would require the appointment of a chapter 7 trustee. The
appointment of the chapter 7 trustee, as well as any
professionals retained by the chapter 7 trustee, would increase
the operating costs associated with the liquidation of the
Debtors' estates.
A copy of the Liquidation Analysis is available for free
at http://ResearchArchives.com/t/s?343a
A copy of 2nd Amended Disclosure Statement and the related is
available for free at http://ResearchArchives.com/t/s?343b
A copy of 2nd Amended Chapter 11 Plan is available for free
at http://ResearchArchives.com/t/s?343c
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is a full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
Joel D. Applebaum, Esq., at Clark Hill PLC, represents the
Official Committee of Unsecured Creditors.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 38; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
POWER MEDICAL: Nasdaq Issues Notice of Listing Non-Compliance
-------------------------------------------------------------
Power Medical Interventions(r), Inc. received from the Nasdaq
Stock Market a Staff Deficiency Letter notifying the company that
it is not in compliance with the listing standards of the Nasdaq
Global Market.
Separately, the company disclosed that on Oct. 22, 2008, it
received from the United States Food and Drug Administration a
Warning Letter in which FDA stated that the company failed to
comply in certain respects with the agency's quality system and
medical device reporting regulations.
On Oct. 22, 2008, the company received from the Nasdaq Stock
Market a Staff Deficiency Letter notifying the company that it was
not in compliance with the listing requirements of the Nasdaq
Global Market because the company's market value of listed
securities had been below the minimum $50,000,000 requirement for
continued listing set forth in Marketplace Rule 4450(b)(1)(A) for
ten consecutive trading days. Under applicable Nasdaq rules, if
the company is not able to establish compliance with the minimum
market value of listed securities requirement by Nov. 21, 2008,
the company will receive a notice that its common stock will be
delisted from the Nasdaq Global Market.
If the a delisting notification is issued, the company will be
entitled to appeal the Staff's determination to a Nasdaq Listing
Qualifications Panel. A timely appeal would stay delisting
pending the appeal. However, there can be no assurance that the
company will be able to reestablish or maintain compliance with
the applicable Nasdaq listing criteria or that any such appeal,
if taken, would be successful.
FDA Warning Letter
The company disclosed that during April and May 2008, the FDA
conducted an inspection of the company's Langhorne, Pennsylvania
facility, and in May 2008 issued a Notice of Inspectional
Observations, or Form 483, that noted ten inspectional
observations related to, among other matters, management
controls, complaint handling, and medical device reporting.
PMI submitted written responses to the Form 483 on May 23,
May 30, June 18, and Sept. 25, 2008. In the company's 483
responses, PMI described the actions that it had taken or
intended to take to address each of the inspectional observations
and to otherwise ensure that similar nonconformities do not
recur.
On Oct. 22, 2008, the company received from the FDA a Warning
Letter stating that FDA has determined that the company is not
in compliance with certain FDA regulations. The specific
observations identified in the Warning Letter were similar to
those identified on the May 2008 Form 483. In the Warning
Letter, FDA also acknowledged the company's responses to the
May 2008 Form 483 observations and stated that it would verify
compliance at a future inspection. The Warning Letter did not
identify any deficiencies pertaining to the company's
483 responses or corrective actions being implemented by the
company.
The Warning Letter indicated that failure to promptly correct
the noted violations could result in further regulatory action
being taken by the FDA without notice, and that such actions could
include, without limitation, seizure, injunction and/or civil
money penalties.
Michael P. Whitman, the company's Chief Executive Officer, stated,
"Power Medical Interventions takes these issues very seriously and
is working diligently with our internal employees and a number of
consultants to address these issues."
PMI intends to submit a formal response to the FDA within the
15 day time period provided in the FDA Warning Letter.
About Power Medical Interventions, Inc.
Based in Langhorne, Pennsylvania, Power Medical Interventions(r),
Inc. (NASDAQ:PMII) -- http://www.pmi2.com/-- is a provider of
computer-assisted, power-actuated surgical stapling products.
PMI's Intelligent Surgical Instruments(tm) enable less invasive
surgical techniques to benefit surgeons, patients, hospitals and
healthcare networks. PMI manufactures recyclable technology to
reduce medical waste and help keep the planet clean. The company
was founded in 1999, has additional offices in Germany, France,
and Japan.
PRECISION DRILLING: Moody's Assigns '(P)Ba1' CF and PD Ratings
--------------------------------------------------------------
Moody's Investors Service assigned ratings to Precision Drilling
Corporation, a wholly-owned subsidiary of Precision Drilling Trust
as: (P)Ba1 corporate family rating, (P)Ba1 probability of default
rating, (P)Ba1 (LGD-3, 38%) senior secured debt rating, (P)Ba2
(LGD-5, 88%) senior unsecured debt rating, and SGL-2 speculative
grade liquidity rating, indicating good liquidity. The outlook
for the long-term ratings is stable. The ratings are prospective
pending finalization of the capital structure related to
Precision's pending acquisition of Grey Wolf, Inc. (Grey Wolf).
The CFR reflects Precision's pro-forma size and scale, low pro-
forma leverage and history of conservative fiscal management, good
operating margins, and the geographic diversity of its pro-forma
drilling rig fleet throughout North America. The rating is
tempered by the inherent volatility of contract drilling,
concentration in North American land drilling, integration risks
related to the acquisition of Grey Wolf, high unit holder
distributions as a Canadian income trust, and internal growth and
acquisition strategies.
The rating outlook is stable because Moody's expects Precision to
maintain consistent financial metrics over the next several years.
The ratings of Grey Wolf will remain under review for possible
upgrade pending the closing of its acquisition by Precision. Grey
Wolf's Ba3 corporate family rating and probability of default
rating will be withdrawn when the Precision acquisition closes.
The rating on Grey Wolf's 3.75% senior unsecured convertible debt
will likely be raised to Ba2 from B1 if any portion of this
convertible debt remains outstanding after the acquisition closes.
Precision is expected to acquire Grey Wolf for aggregate
consideration of $1.12 billion in cash and 42 million Precision
trust units, funded in part by the proposed issuance by Precision
of a $400 million senior secured term loan A, $400 million senior
secured term loan B and $400 million of senior unsecured notes.
The final composition of debt will not be finalized until the
closing of the acquisition when the amount of Grey Wolf
shareholders electing cash and Grey Wolf convertible debt holders
electing conversion are known. Although Precision has announced
plans to issue $400 million of senior unsecured notes, in Moody's
opinion there is a possibility that the final amount of total
senior unsecured debt may be of a lesser amount. Under Moody's
Loss Given Default methodology for rating individual debt
instruments, the amount of senior unsecured debt in the debt
liability "waterfall" creates a loss absorption cushion for the
senior secured rating. Should the final amount of senior
unsecured debt be less than approximately $360 million, then the
senior secured debt would likely be finalized at Ba1, consistent
with the prospective rating assigned.
If however, the final amount of senior unsecured debt is more than
approximately $360 million, thereby creating an increased loss
absorption cushion for the senior secured debt, then the senior
secured debt rating would likely be finalized at Baa3. In either
case, Precision's senior unsecured debt would be expected to be
finalized at Ba2. Should any portion of Grey Wolf's senior
unsecured convertible debt remain outstanding, it is likely to be
finalized at Ba2 as well, despite the fact that it will be
supported by unsecured guarantees of certain Grey Wolf's
subsidiaries, while the Precision senior unsecured debt will be
supported by the unsecured guarantees of substantially all of the
material U.S. and Canadian subsidiaries of Precision, including
Grey Wolf and its material U.S. subsidiaries.
There is not enough of a difference in the expected loss of these
two tranches of senior unsecured debt to warrant a difference in
their ratings. Precision currently has no debt rated by Moody's.
Moody's' last rating action on Grey Wolf was to place its ratings
under review for possible upgrade following its announcement that
it had agreed to be acquired by Precision. The Grey Wolf ratings
under review are the Ba3 CFR, the Ba3 PDR, and the B1 (LGD 4, 61%)
rating on the senior unsecured convertible notes. Debt ratings
assigned are:
Assignments:
Issuer: Precision Drilling Corporation
-- Probability of Default Rating, Assigned (P)Ba1
-- Speculative Grade Liquidity Rating, Assigned SGL-2
-- Corporate Family Rating, Assigned (P)Ba1
-- Senior Secured Bank Credit Facility, Assigned 38 - LGD3 to
(P)Ba1
-- Senior Unsecured Regular Bond/Debenture, Assigned 88 - LGD5
to (P)Ba2
Outlook Actions:
Issuer: Precision Drilling Corporation
-- Outlook, Changed To Stable From Rating Withdrawn
Precision Drilling Corporation is a subsidiary of Precision
Drilling Trust, a Calgary, Alberta-based income trust engaged in
the provision of energy services to the oil and gas industry in
North America. Grey Wolf, Inc. is a Houston, Texas-based company
engaged in the provision of oil and gas drilling services in the
U.S.
PRINTERS ROW: Receives $5-Million Loan for Hotel Blake Payment
--------------------------------------------------------------
Printers Row LLC has received $5 million in financing to pay for
its acquisition of the Hotel Blake from MHJV LLC following
approval from the U.S. Bankruptcy Court for the Northern District
of Illinois, Inyoung Hwang writes for the Medill Reports Chicago.
The company will use the amount to pay $4.5 million of its
$18 million installment purchase deal.
Printers Row also gain approval to draw $500,000 from its
$2 million revolving loan provided by Accelerated Assets LLC to
finance the operations at the Hotel Blake, Richard Bendix, at
Dykema Gossett PLLC, told Medill Reports.
The company plans to ask approval to borrow the remaining
$1.5 million at a latter date, Medill Reports says.
After the $4.5 million payment, MHJV would make a number of
concessions to Printers Row, including lowering interest rates,
eliminating some penalty fees for defaulted payments and extending
the deadline for a future payment.
Headquartered in Chicago, Illinois, Printers Row LLC owns and
operates Hotel Blake. The company filed for Chapter 11 protection
on July 3, 2008 (Bankr. N.D. Ill. Case No. 08-17301). Richard M.
Bendix, Jr., Esq., at Schwartz Cooper Chartered, represent the
Debtors as counsel. When the Debtor filed for protection against
it creditors, it listed assets and debts of between $50 million to
$100 million.
PROSPECT FUNDING: Moody's Cuts Notes Ratings on Market Value Slide
------------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the
classes of loans and notes issued by and credit facility entered
into by Prospect Funding I, LLC., and left thirteen of the ratings
on review for possible further downgrade. The rating actions
taken are:
Class Description: Up to $35,000,000 Senior Revolving Credit
Agreement
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $45,000,000 Second Senior Loans
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: B3, on review for possible downgrade
Class Description: Up to $40,000,000 Second Senior Credit
Agreement
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: B3, on review for possible downgrade
Class Description: $205,000,000 Class A-2 First Senior Secured
Floating Rate Notes Due 2013
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $200,000,000 Class A-3 First Senior Secured
Variable Funding Notes Due 2013
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $30,000,000 Class A-4 First Senior Secured
Variable Funding Swingline Notes Due 2013
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $240,000,000 Class A-5 First Senior Secured
Multi-Currency Variable Funding Notes Due 2014
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $310,000,000 Class A-6 First Senior Secured
Fixed Rate Notes Due 2012
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $140,000,000 Class A-7 First Senior Secured
Floating Rate Notes Due 2014
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $75,000,000 Class A-8 First Senior Secured
Floating Rate Notes Due 2012
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Aa3, on review for possible downgrade
Class Description: $50,000,000 Class B-2 Second Senior Secured
Floating Rate Notes Due 2012
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: B3, on review for possible downgrade
Class Description: $23,000,000 Class C-1 Mezzanine Secured Fixed
Rate Notes Due 2012
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Caa1, on review for possible downgrade
Class Description: $32,000,000 Class C-2 Mezzanine Secured
Floating Rate Notes Due 2012
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Caa1, on review for possible downgrade
Class Description: $17,500,000 Class D-1 Junior Secured Fixed Rate
Notes Due 2012
-- Prior Rating: Baa2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Ca
Class Description: $37,500,000 Class D-2 Junior Secured Floating
Rate Notes Due 2012
-- Prior Rating: Baa2, on review for possible downgrade
-- Prior Rating Date: 10/10/2008
-- Current Rating: Ca
Prospect Funding I, LLC. is a market value collateralized loan
obligation transaction backed primarily by bank loans.
According to Moody's, the rating action is the result of the
deterioration in the market value of the underlying collateral
pool, along with the increased volatility and decreased liquidity
in the bank loan market.
PROVIDENCE SERVICE: Impaired Logistic Deal Cues Moody's Review
--------------------------------------------------------------
Moody's Investors Service has placed the B2 corporate family, B2
probability of default and the B1 senior secured ratings of
Providence Service Corporation on review for possible downgrade.
The review was prompted by PRSC's announcement that a sizeable
portion of the goodwill created by its LogistiCare acquisition has
been impaired in the third quarter and that it would withdraw its
2008 guidance due to external pressures.
Moody's review will focus on PRSC's ability to preserve its
existing book of business, maintain its modest operating margins,
effect rate increases and restore its ability to forecast earnings
despite the increasing number of budget deficits forecasted in
some of the key states in which it operates. In addition, Moody's
will re-assess the SGL-2 liquidity rating for PRSC, focusing on
the company's ability to generate solid cash flows and maintain
covenant compliance as its payor State's implement plans to offset
declining tax revenues across the United States.
Moody's previous rating action on PRSC was its affirmation of
existing debt ratings on December 10, 2007.
Providence Service Corporation, through its owned and managed
entities, provides home and community based social services and
non-emergency transportation services management to government
sponsored clients under programs such as welfare, juvenile
justice, Medicaid and corrections. The Tucson, Arizona based
company generated revenues of $509 million for the twelve months
ending June 30, 2008.
PUTNAM PRIME: Moody's Confirms 'B' Rating; Withdraws Afterwards
---------------------------------------------------------------
Moody's confirmed the B rating of the Putnam Prime Money Market
and subsequently withdrew the rating on the Fund.
The rating confirmation, which concluded a review for downgrade
initiated on September 18, 2008, is based on the successful
liquidation of the Putnam Prime Money Market Fund. Shareholders
of the Fund received shares of the Aaa-rated Federated Prime
Obligations Fund, managed by Federated Investors, on a $1-per-
share for $1-per-share basis in a transaction that was concluded
on September 24, 2008.
On September 18, 2008, Moody's downgraded the Putnam Prime Money
Market to B from Aaa following Putnam's decision to book
redemptions in the Fund but not pay out proceeds to satisfy
redemption requests. Moody's considered the discontinuation of
cash redemptions a material deviation from the fund's stated
objective to protect principal and provide liquidity.
Moody's withdrew the rating due to the fund's liquidation.
QUEBECOR WORLD: Appoints Regis Rehel as Canadian Unit President
---------------------------------------------------------------
Quebecor World Inc. appointed Regis Rehel as president of its
Canadian Division. Mr. Rehel is an important member of the
Quebecor World's leadership team and will focus on ensuring
Quebecor World's Canadian customers continue to be provided with
complete full-service solutions to meet all of their marketing,
advertising and publishing needs.
Mr. Rehel has extensive experience in sales and operations in both
Canada and the United States. He joined Quebecor World in April
of this year as vice-president of Corporate Optimization. During
this time he has gained knowledge of the company and its customer
base. Mr. Rehel has made contributions to enhancing efficiency
and customer service by improving many of Quebecor World's systems
and processes. From 2000 to 2008, Mr. Rehel held a series of
management positions overseeing operations and sales at Cascades
Inc., an international paper company. Prior to that, he worked as
a consultant specializing in process optimization, executive
coaching and employee empowerment. Mr. Rehel holds a MBA from the
University of Leicester in England.
In addition to Mr. Rehel's appointment, Quebecor World disclosed
that Karl Broderick is rejoining the company as senior vice
president of Sales, Canada and Tim Boissinot is assuming the
position of executive vice president operations Quebecor World
Canada. Mr. Broderick is a senior sales executive with more
than 15 years experience providing customers with value-added
print solutions across Canada. He worked at Canampac/Boehmer
Box and prior to that worked as a senior sales executive at
Quebecor World from 1999-to-2006. Mr. Boissinot has been with
the company for 17 years, as EVP, Canada. Prior to this, he
held a variety of Regional & General Management positions in
various locations in Canada.
"I believe this customer-focused team led by Regis has the right
mix of experience, inside and outside our industry, to provide our
customers with a complete set of value-added solutions to allow
them to achieve their marketing and advertising objectives while
also maximizing our operational efficiencies to strengthen our
position as a leading player in our industry in the Americas,"
Jacques Mallette, president and CEO Quebecor World Inc.,
commented. "I would also like to thank Tony Galasso for his
service to Quebecor World during the last several years. [Mr.
Galasso] has made important contributions to the company as a
sales executive and most recently as president of our Canadian
operations and I wish him well in his future endeavors."
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW)
(NYSE:IQW) -- http://www.quebecorworldinc.com/-- provides market
solutions, including marketing and advertising activities, well as
print solutions to retailers, branded goods companies, catalogers
and to publishers of magazines, books and other printed media. It
has 127 printing and related facilities located in North America,
Europe, Latin America and Asia. In the United States, it has 82
facilities in 30 states, and is engaged in the printing of books,
magazines, directories, retail inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Ernst & Young, Inc., the monitor of Quebecor World Inc., and its
affiliates' reorganization proceedings under the Canadian
Companies' Creditors Arrangement Act, filed a petition under
Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court
for the Southern District of New York on September 30, 2008, on
behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The chapter 15
case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at
Allen & Overy LLP, in New York, serves as counsel to the chapter
15 petitioner.
QWI and certain of its subsidiaries commenced the CCAA proceedings
before the Quebec Superior Court (Commercial Division) on
January 20, 2008. The following day, 53 of QWI's U.S.
subsidiaries, including Quebecor World (USA), Inc., filed
petitions under Chapter 11 of the U.S. Bankruptcy Code.
The Honorable Justice Robert Mongeon oversees the CCAA case.
Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the
Company in the CCAA case. Ernst & Young Inc. was appointed as
Monitor.
Quebecor World (USA) Inc., its U.S. subsidiary, along with other
U.S. affiliates, filed for chapter 11 bankruptcy before the U.S.
Bankruptcy Court for the Southern District of New York (Lead Case
No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter
LLP, represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com/-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
QWI is the only entity involved in the CCAA proceedings that is
not a Debtor in the Chapter 11 Cases.
As of June 30, 2008, Quebecor World's unaudited consolidated
balance sheet showed total assets of $3,412,100,000 total
liabilities of $4,326,500,000 preferred shares of $62,000,000
and total shareholders' deficit of $976,400,000.
The Hon. Robert Mongeon of the Quebec Superior Court has extended
until Dec. 14, 2008, the stay under the Canadian Companies'
Creditors Arrangement Act.
(Quebecor World Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
QUEBECOR WORLD: Files Annual Financial Results for Fiscal 2007
--------------------------------------------------------------
Quebecor World, Inc., and its debtor affiliates filed with the
U.S. Securities and Exchange Commission in a Form 6-K their
annual information form for the year ended Dec. 31, 2007.
Highlights for the Last Three Financial Years
Jacques Mallette, president and chief executive officer, related
that on Nov. 22, 2007, QWI entered into a factoring program for
accounts receivable in France. Under this program, the Debtors
entered into agreements to sell up to EUR47,000,000 of selected
receivables with limited recourse. As of Dec. 31, 2007, the
Debtors sold accounts receivable of EUR 27,700,000, under the
Factoring Program. As of Dec. 31, 2007, the accounts receivable
pledged totaled US$40,700,000. The Factoring Program was sold in
connection with the sale of QWI's European operations.
On Jan. 20, 2008, the Debtors filed for Court protection under
the Companies' Creditors Arrangement Act and on Jan. 21, 2008.
On the same date, the U.S. Debtors filed a petition under Chapter
11 in the United States Bankruptcy Court for the Southern
District of New York.
In connection with the CCAA Proceedings, on Jan. 21, the Debtors
concluded a senior secured super priority DIP credit agreement
with Credit Suisse and Morgan Stanley Senior Funding, Inc., as
joint lead arrangers and initial lenders, and a syndicate of
lenders named later. The DIP Credit Agreement provides for a
US$1,000,000,000 credit facility made available to Quebecor World
and Quebecor World (USA) Inc. The credit facility will expire in
July 2009 unless the Debtors complete a plan of reorganization
under Chapter 11 or a plan of compromise or arrangement under the
CCAA prior to July 2009. The DIP Credit Agreement contains
certain restrictions, including the obligation to respect certain
covenants and financial ratios, as well as certain events of
default, all of which are customary for a DIP credit agreement.
The DIP Credit Agreement is fully secured by liens on
substantially all of the QWI Entities' North American assets and
on certain of their assets located in Latin America.
The Debtors' prepetition revolving credit agreement has been
amended four times since Jan. 25, and the last one on Aug. 5,
which were concluded in order to facilitate the syndication of
the credit facility and to provide them with additional
flexibility regarding reporting requirements and certain other
covenants contained in the DIP Credit Agreement.
On Jan. 28, the Debtors also announced that Quebecor World PLC, a
subsidiary based in Corby, United Kingdom, had been placed into
administration. According to Mr. Mallette, the facility had
experienced economic difficulties mainly due to the overcapacity
of the UK printing industry, challenging market conditions and
reduced demand for printing in the United Kingdom. The decision
was not related to the Debtors' filing for credit protection in
the United States and Canada.
On March 1, 3,975,663 of QWI's 6.90% Series 5 Cumulative
Redeemable First Preferred Shares were converted into 51,410,291
Subordinate Voting Shares in accordance with the rights,
privileges, restrictions and conditions attaching to the Series 5
Preferred. On June 1, 517,184 of QWI's Series 5 Preferred Shares
were converted into 6,799,353 Subordinate Voting Shares in
accordance with the rights, privileges, restrictions and
conditions attaching to the Series 5 Preferred Shares.
Effective Sept. 1, 2008, 744,124 of QWI's issued and outstanding
Series 5 Preferred Shares were converted into 9,943,356
Subordinate Voting Shares. Subsequently, QWI received notices in
respect of 66,601 of the remaining issued and outstanding
Series 5 Preferred Shares requesting conversion into its
Subordinate Voting Shares as of Dec. 1, 2008.
On or after Nov. 27, 2008, Mr. Mallette said QWI will announce
the final conversion rate applicable to the conversion of the
66,601 Series 5 Preferred Shares into Subordinate Voting Shares
scheduled to occur as of Dec. 1, 2008.
In June 2008, the Debtors merged their U.S. Retail Insert,
Catalog, Sunday Magazine, and Direct Mail divisions into their
Marketing Solutions Group; and their U.S. Magazine, Book and
Directory divisions into their Publishing Services Group and the
U.S. Pre-Media and Logistics divisions into the Pre-Media and
Logistics Group. Also, in June 2008, the Debtors announced the
completion of the sale of their European operations to a
subsidiary of Hombergh/De Pundert Group.
In September 2008, in the context of the CCAA Proceedings, the
CCAA Applicants were authorized by the Canadian Court overseeing
their reorganization proceedings to enter into a share purchase
agreement providing for the sale to Bandhu Industrial Resources
Private Limited of their interest in TEJ Quebecor Printing
Limited, which operates a printing facility located in Gurgaon,
India for an estimated total net consideration of approximately
US$150,000.
Risk Factors
QWI, in the Form 6-K, outlined certain risks investors must
consider certain before making any investment decision with
respect to the Company's securities:
(a) The Debtors are currently subject to creditor protection
and restructuring proceedings in both Canada and the
United States. It is unlikely that the existing Multiple
Voting Shares, Subordinate Voting Shares, and Preferred
Shares will have any material value in a restructuring
plan of arrangement, and there is also a risk the shares
could be cancelled. If the Debtors fail to implement a
plan of arrangement and obtain sufficient exit financing
within the time granted by the Canadian and U.S. Courts,
substantially all of their debt obligations will become
due and payable immediately, or subject to immediate
acceleration, which would in all likelihood lead to the
liquidation of the Debtors' assets.
(b) A significant portion of the Debtors' revenues is derived
from long-term contracts with important customers, which
may not be renewed on similar terms and conditions or may
not be renewed at all. The failure to renew contracts
could significantly adversely affect the operating
results, financial condition and cash flows of the
Debtors.
(c) The Debtors are adversely affected by strikes and other
labor protests. As of June 30, 2008, the Debtors:
* had 45 separate collective bargaining agreements in
North America. Nine collective agreements covering
About 300 employees are currently in negotiation. Of
these, two collective agreements covering about 130
employees expired in 2007 and five collective
agreements covering 60 employees expired in 2006.
Two collective agreements covering 100 employees will
expire in 2008 and are already in negotiation;
* employed about 20,000 people in North America, of
which 5,900, or 29% are unionized, while 68 of their
plants and related facilities in North America were
non-unionized;
* employed 3,000 people in Latin America, the majority
of which are either governed by agreements that apply
industry-wide or by a collective agreement.
The Debtors related that there has not been any material
disruption in operations resulting from labor disputes.
However, the Debtors said they are not certain that they
will be able to maintain a productive and efficient labor
environment. They added that they cannot predict the
outcome of any future negotiations relating to the renewal
of the collective bargaining agreements, nor can they
assure with certainty that work stoppages, strikes or
other forms of labor protests pending the outcome of any
future negotiations will not occur.
(d) The Debtors' printing and other facilities are subject to
environmental laws and regulations, which may subject them
to material liability.
(e) The Debtors are controlled by Quebecor Inc., which holds
75.23% of the voting interests in QWI. As a result,
Quebecor Inc. is able to exercise significant influence
over the Debtors' business and affairs and has the power
to determine many matters requiring shareholder approval
and the approval of significant corporate transactions.
The interests of Quebecor Inc. may conflict with the
interests of other holders of the Debtors' equity and debt
securities. However, the Canadian Court has exempted the
Debtors from holding annual meeting of shareholders until
they emerge from their CCAA Proceedings in Canada and
their Chapter 11 proceedings in the United States.
Consequently, even though Quebecor Inc. currently holds
75.23% of QWI's outstanding voting interests, it is
unlikely that Quebecor Inc. will be able to exercise its
votes during their parallel insolvency proceedings in
order to change the composition of the Board of Directors
or cause fundamental changes in the affairs and
organizational documents of QWI.
(f) The Debtors said they have identified material weaknesses
in their internal control over financial reporting and
concluded that the controls were not effective as of
December 31, 2007, and that their disclosure controls and
procedures were not effective as of the same date.
The Debtors relate that if they fail to maintain effective
internal control over financial reporting, they may not
be able to accurately report on their financial results.
Mr. Mallette said the Debtors can provide no assurance
that they will at all times in the future be able to
report that their internal control is effective.
(g) There is a risk that the Toronto Stock Exchange may seek
to de-list the Debtors' currently listed Subordinate
Voting Shares, Series 3 Preferred Shares and Series 5
Preferred Shares. The Debtors, according to Mr. Mallette,
are required to satisfy continued listing requirements
pursuant to the TSX rules in order for the Subordinate
Voting Shares, Series 3 Preferred Shares and Series 5
Preferred Shares to remain eligible for the Listing.
Mr. Mallette said QWI has not taken any steps to have its
securities traded on the OTC Bulletin Board and that there is no
relationship, whether contractual or otherwise, between an issuer
whose securities are traded on the OTC Bulletin Board and that
the OTC Bulletin Board exercises no regulatory oversight over
QWI.
In an event of delisting, the Debtors cannot assure that trading
in their currently listed securities will continue. Any de-
listing of the Subordinate Voting Shares, Series 3 Preferred
Shares and/or Series 5 Preferred Shares may adversely affect a
holder's ability to dispose of, or to obtain quotations as to the
market value of, the securities.
The Debtors further disclosed that as of September 30, 2008,
there were 46,987,120 Multiple Voting Shares and 153,737,924
Subordinate Voting Shares issued and outstanding.
QWI's Debts
Mr. Mallette added that QWI and its subsidiaries, as of Dec. 31,
2007, had a total indebtedness of US$2,809.9 million. As of
June 30, 2008, QWI had an aggregate of US$3,407.6 million of debt
outstanding and no senior secured debt.
In terms of prepetition secured debt, Mr. Mallette said QWI has
granted liens on certain of its North American assets as partial
security for its indebtedness under a syndicated credit facility
made available by a bank syndicate led by the Royal Bank of
Canada and an equipment financing provided by Societe Generale
(Canada). The liens, Mr. Mallette related, secured the
indebtedness up to a maximum aggregate amount of US$170 million
and have not been primed by its DIP Lenders.
As of Dec. 31, 2007, QWI and its subsidiaries also had US62.5
million of capital leases and US$462.5 million of accounts
receivable under their securitization and factoring programs.
Executive Compensation
QWI's non-management directors are paid as follows:
Board Chair Retainer $300,000
Board Retainer 100,000
Lead Director 10,000
Committee Chair Retainer
Audit Committee 10,000
Other Committees 8,000
Meeting Attendance Fees 2,500
Up until February 2008, directors were required to receive at
least 50% of their annual retainer in the form of deferred share
units under a Directors' Deferred Share Unit Plan, with the
option of being able to elect to receive up to 100% of their
annual retainer in the form of DSUs. The value of DSUs
corresponded to the value of the Subordinate Voting Shares as
listed on the NYSE. However, in light of the Insolvency
Proceedings, the delisting of the Subordinate Voting Shares from
the NYSE and the significant drop in the market price of the
Subordinate Voting Shares, QWI terminated the DDSU Plan in
February 2008. Consequently, all remuneration is now paid
entirely in cash.
QWI's officers are paid according to:
All
Securities
Name & Position Year Salary Bonus Option Other Pay
--------------- ---- ------ --------- --------- ---------
Jacques Mallette 2007 $517,404 $449,716 - -
President 2006 450,000 208,140 127,000 138,718
Exec. Officer 2005 112,500 56,250 97,000 -
Wes P. Lucas 2007 1,175,912 - - -
Former Pres. 2006 738,654 750,000 950,000 659,880
CEO 2005 - - - -
Yvan Lesniak 2007 432,840 - - -
Former Pres. 2006 416,717 69,460 - 112,136
Man. Director 2005 382,127 - 600,000 -
Guy Trahan 2007 433,000 305,201 - -
President 2006 425,000 - 75,000 -
Latin America 2005 425,000 382,500 60,000 -
David Blair 2007 325,000 130,705 - -
Senior VP, 2006 293,500 88,050 - 100,000
Operations, 2005 293,500 - 38,000 -
Technologies,
and Continuous
Improvement
The Debtors' 2007 Annual Information Form is available for free
at http://ResearchArchives.com/t/s?3423
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE:
IQW) -- http://www.quebecorworldinc.com/-- provides market
solutions, including marketing and advertising activities, well
as print solutions to retailers, branded goods companies,
catalogers and to publishers of magazines, books and other
printed media. It has 127 printing and related facilities
located in North America, Europe, Latin America and Asia. In
the United States, it has 82 facilities in 30 states, and is
engaged in the printing of books, magazines, directories, retail
inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Ernst & Young, Inc., the monitor of Quebecor World Inc., and its
affiliates' reorganization proceedings under the Canadian
Companies' Creditors Arrangement Act, filed a petition under
Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court
for the Southern District of New York on September 30, 2008, on
behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The chapter 15
case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at
Allen & Overy LLP, in New York, serves as counsel to the chapter
15 petitioner.
QWI and certain of its subsidiaries commenced the CCAA proceedings
before the Quebec Superior Court (Commercial Division) on
January 20, 2008. The following day, 53 of QWI's U.S.
subsidiaries, including Quebecor World (USA), Inc., filed
petitions under Chapter 11 of the U.S. Bankruptcy Code.
The Honorable Justice Robert Mongeon oversees the CCAA case.
Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the
Company in the CCAA case. Ernst & Young Inc. was appointed as
Monitor.
Quebecor World (USA) Inc., its U.S. subsidiary, along with other
U.S. affiliates, filed for chapter 11 bankruptcy before the U.S.
Bankruptcy Court for the Southern District of New York (Lead Case
No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter
LLP, represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com/-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
QWI is the only entity involved in the CCAA proceedings that is
not a Debtor in the Chapter 11 Cases.
As of June 30, 2008, Quebecor World's unaudited consolidated
balance sheet showed total assets of $3,412,100,000 total
liabilities of $4,326,500,000 preferred shares of $62,000,000
and total shareholders' deficit of $976,400,000.
The Hon. Robert Mongeon of the Quebec Superior Court has extended
until Dec. 14, 2008, the stay under the Canadian Companies'
Creditors Arrangement Act.
(Quebecor World Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
RED SHIELD: Ct. Okays Sale of Mill to Patriarch Partners for $19MM
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maine has approved
the sale of Red Shield Environmental, LLC's pulp and paper mill in
Old Town, Maine to New York investment group Patriarch Partners,
for close to $19 million, various reports say.
Patriarch Partners plans to reopen the Red Shield Environmental
mill as soon as possible. The sale is expected to close Monday,
Maine Gov. John Baldacci said.
"This is good news for workers and good news for the community,"
Gov. Baldacci said. "I have spoken with Patriarch CEO Lynn
Tilton, and I am impressed with her vision for the facility and
her commitment to get people back to work."
"The Old Town facility has great potential both as a producer of
alternative energy and as a pulp mill," Gov. Baldacci said.
A $30 million grant from the U.S. Department of Energy will
transfer to the new owners when the sale closes, various reports
say.
About Red Shield
Headquartered in Old Town, Maine, Red Shield Environmental, LLC --
http://www.redshieldenv.com/-- provides renewable energy for on-
site consumption. The company and its affiliate, RSE Pulp &
Chemical, LLC, filed for chapter 11 protection on June 27, 2008
(Bankr. D. Maine Case Nos. 08-10633 and 08-10634), blaming
increases in material and fuel costs. Robert J. Keach, Esq., at
Bernstein, Shur, Sawyer & Nelson, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection
against their creditors, they listed assets of between $50 million
and $100 million, and debts of between $1 million and $10 million.
RED SHIELD: Maine Court Approves $19 Million Mill Asset Sale
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maine has approved
the $19 million sale of Red Shield Environmental, LLC's pulp-and-
paper mill in Old Town to Patriarch Partners, The Associated Press
reports.
Patriarch plans to reopen the mill, which stopped productions in
June amid rising fuel and materials costs for fuel and materials,
AP says.
Maine Governor John Baldacci said the sale is expected to be
completed today, Oct. 27, 2008. He added that the mill has great
potential as a pulp mill and a producer of alternative energy.
About Red Shield
Headquartered in Old Town, Maine, Red Shield Environmental, LLC --
http://www.redshieldenv.com/-- provides renewable energy for on-
site consumption. The company and its affiliate, RSE Pulp &
Chemical, LLC, filed for chapter 11 protection on June 27, 2008
(Bankr. D. Maine Case Nos. 08-10633 and 08-10634), blaming
increases in material and fuel costs.. Robert J. Keach, Esq., at
Bernstein, Shur, Sawyer & Nelson, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection
against their creditors, they listed assets of between $50 million
and $100 million, and debts of between $1 million and $10 million.
RESIDENTIAL CAPITAL: GMAC Forgives $196.8MM Debt; Loan Amended
--------------------------------------------------------------
Dow Jones Newswires reports that Residential Capital LLC said on
Thursday that GMAC LLC, its parent company, forgave
$196.8 million of its debt and amended a credit agreement with two
ResCap units.
On April 18, 2008, Residential Funding Company, LLC, and GMAC
Mortgage, LLC, both subsidiaries of ResCap, entered into a Loan
and Security Agreement with ResCap's parent, GMAC, as lender, to
provide RFC and GMAC Mortgage with a revolving credit facility.
The facility is secured by RFC's and GMAC Mortgage's servicing
rights and related contractual rights under certain pooling and
servicing agreements and loan servicing agreements with respect to
pools of mortgage loans and home equity lines of credit. Under
the terms of the Loan and Security Agreement, RFC and GMAC
Mortgage were permitted to request loans from the lender until
Oct. 17, 2008, at which point the loans would mature, unless
refinanced or repaid earlier. On June 1, RFC, GMAC Mortgage, and
GMAC entered into an amendment to increase GMAC's maximum lending
commitment under the Loan and Security Agreement from $750 million
to $1.2 billion.
Effective Sept. 30, 2008, GMAC forgave $101.5 million of the
indebtedness outstanding under the Loan and Security Agreement as
a contribution of capital to ResCap. In addition, effective Sept.
30, 2008, GMAC also forgave $95.3 million of outstanding principal
and accrued unpaid interest on ResCap's 8.5% Senior Notes Due May
15, 2010, previously acquired through its open market repurchase
program and held by GMAC.
On Oct. 17, 2008, the parties amended the Loan and Security
Agreement to, among other things:
-- Reduce the advance rate from 85% to 76.6%;
-- Extend the maturity of the facility to May 1, 2009,
unless ResCap earlier obtains replacement financing
from a third-party lender;
-- Reduce the amount of GMAC's lending commitment by
$84 million as of Oct. 17, 2008, with a subsequent
commitment reduction of $84 million effective as of
Oct. 22, 2008, and further commitment reductions equal
to any amounts of the outstanding indebtedness forgiven
by GMAC as a contribution of capital to ResCap and its
subsidiaries;
-- Add a covenant by the borrowers to use their best
efforts to provide GMAC, by Nov. 30, 2008, with
$250 million in additional collateral for the
indebtedness outstanding under the facility, with a
zero advance rate applicable to such collateral;
-- At GMAC's request, require the borrowers to resign as
servicers under the underlying servicing agreements,
during the existence of an event of default under the
Loan and Security Agreement; and
-- Add an option permitting GMAC to require on two business
days' notice, or on one business day's notice following
an event of default, that servicing collections be
placed in a segregated account.
The reductions in GMAC's lending commitment reflect GMAC's
agreement to defer repayment of $168 million, required to cure a
borrowing base deficiency. The borrowers repaid $84 million on
Oct. 17 and the remaining $84 million on Oct. 22, 2008,
contemporaneously with the reductions, to cure the borrowing base
deficiency.
RFC and GMAC Mortgage give other representations, covenants, and
indemnities that are customary in similar facilities. ResCap has
entered into a Guarantee pursuant to which it guarantees the
payment by RFC and GMAC Mortgage of their obligations under the
Loan and Security Agreement.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General
Motors Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC -
- http://www.rescapholdings.com/-- is the home mortgage unit of
GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
* * *
As reported in the Troubled Company Reporter on Sept. 15, 2008,
Moody's Investors Service downgraded the ratings of Residential
Capital LLC (ResCap)'s senior secured bonds to Ca from Caa2 and
junior secured bonds to Ca from Caa3. The ratings of ResCap's
unsecured senior debt and unsecured subordinate debt were
confirmed at Ca and C, respectively. The outlook is negative.
RH DONNELLEY: S&P Holds 'B+' Rating; Changes Outlook to Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its ratings outlook on
Cary, North Carolina-based R.H. Donnelley Corp. to negative from
stable, and affirmed the company's 'B+' corporate credit rating.
"The negative outlook revision reflects an expected decreasing
level of EBITDA interest coverage and an increasing level of total
debt to EBITDA over the intermediate term," said Standard & Poor's
credit analyst Emile Courtney. These trends reflect a weakening
economy that will hurt 2009 operating performance more than S&P
previously expected.
ROME FINANCE: Section 341(a) Meeting Scheduled for November 17
--------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of Pacific
Lifestyle Homes, Inc.'s creditors on Nov. 17, 2008, at 11:00 a.m.,
at Vancouver Federal Building.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The deadline for the filing of proofs of claim is set for
Feb. 15, 2009.
Concord, California-based Rome Finance Co., Inc. --
https://www.romefinance.com/ -- offers financial services. The
company filed for Chapter 11 protection on Oct. 15, 2008 (Bankr.
N. D. Calif. Case No. 08-45902). William C. Lewis, Esq., at Law
Offices of William C. Lewis represents the company in its
restructuring effort. The company listed assets of
$50 million to $100 million and debts of $50 million to
$100 million.
SABR TRUST: Moody's Cuts Ratings on 232 Tranches from 32 RMBS
-------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 232
tranches from 32 subprime RMBS transactions issued by SABR.
Additionally, two ratings were confirmed after previously being on
review for possible downgrade, and 23 tranches were placed on
review for possible downgrade. The collateral backing these
transactions consists primarily of first-lien, fixed and
adjustable-rate, subprime residential mortgage loans.
These actions follow and are as a result of Moody's September 18,
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-EC1
-- Cl. M-2, Downgraded to A2 from Aa2
-- Cl. M-3, Downgraded to Ba2 from A2
-- Cl. M-4, Downgraded to B3 from Baa2
-- Cl. B-1, Downgraded to Ca from Ba1
-- Cl. B-2, Downgraded to C from B1
-- Cl. B-3, Downgraded to C from Caa2
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-FR1
-- Cl. M-1, Downgraded to Aa3 from Aa2
-- Cl. M-2, Downgraded to Ba1 from Baa2
-- Cl. M-3, Downgraded to B1 from Ba1
-- Cl. B-1, Downgraded to Caa2 from B1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
-- Cl. B-4, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-FR2
-- Cl. M-1, Downgraded to A1 from Aa2
-- Cl. M-2, Downgraded to Baa3 from A2
-- Cl. M-3, Downgraded to Ba2 from A3
-- Cl. B-1, Downgraded to B2 from Baa1
-- Cl. B-2, Downgraded to Caa2 from Ba1
-- Cl. B-3, Downgraded to Ca from B1
-- Cl. B-4, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-FR3
-- Cl. B-3, Downgraded to Ca from Caa3
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-FR4
-- Cl. M-2, Downgraded to A3 from A2
-- Cl. M-3, Downgraded to Baa3 from A3
-- Cl. B-1, Downgraded to B2 from Baa1
-- Cl. B-2, Downgraded to Ca from Ba1
-- Cl. B-3, Downgraded to C from B3
-- Cl. B-4, Downgraded to C from Caa2
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-FR5
-- Cl. M-3, Confirmed at B3
-- Cl. B-1, Downgraded to Ca from Caa1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
-- Cl. B-4, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-HE1
-- Cl. M-1, Downgraded to Baa1 from Aa2
-- Cl. M-2, Downgraded to Caa2 from Baa3
-- Cl. M-3, Downgraded to C from B1
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
-- Cl. B-4, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-OP1
-- Cl. M-4, Downgraded to Baa1 from A3
-- Cl. B-1, Downgraded to Baa2 from Baa1
-- Cl. B-2, Downgraded to Ba2 from Baa2
-- Cl. B-3, Downgraded to B1 from Baa3
-- Cl. B-4, Downgraded to Ca from Ba1
Issuer: Securitized Asset Backed Receivables LLC Trust 2005-OP2
-- Cl. M-5, Downgraded to Baa1 from A2
-- Cl. M-6, Downgraded to Baa2 from Baa1
-- Cl. B-1, Downgraded to Ba3 from Baa3
-- Cl. B-2, Downgraded to Caa2 from B1
-- Cl. B-3, Downgraded to C from B3
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-CB1
-- Cl. M-2, Downgraded to A3 from Aa2
-- Cl. M-3, Downgraded to Baa3 from Aa3
-- Cl. M-4, Downgraded to B1 from A1
-- Cl. M-5, Downgraded to Caa2 from A2
-- Cl. M-6, Downgraded to C from Baa3
-- Cl. B-1, Downgraded to C from B2
-- Cl. B-2, Downgraded to C from B3
-- Cl. B-3, Downgraded to C from Caa1
-- Cl. B-4, Downgraded to C from Caa3
-- Cl. B-5, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-FR1
-- Cl. M-1, Downgraded to Baa2 from Aa2
-- Cl. M-2, Downgraded to Caa2 from Ba1
-- Cl. M-3, Downgraded to C from B2
-- Cl. B-1, Downgraded to C from B3
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-FR2
-- Cl. A-3, Downgraded to Ba2 from Aaa
-- Cl. M-1, Downgraded to Ca from Ba2
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
-- Cl. B-3, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-FR3
-- Cl. A-3, Downgraded to B2 from Aa2
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-FR4
-- Cl. A-1, Downgraded to B3 from Ba3
-- Cl. A-2A, Confirmed at Aa3
-- Cl. A-2B, Downgraded to Caa1 from A1
-- Cl. A-2C, Downgraded to Caa2 from B1
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from B3
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Caa3
-- Cl. M-5, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-HE1
-- Cl. A-1, Placed on Review for Possible Downgrade, currently
Aa2
-- Cl. A-2A, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2B, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2C, Placed on Review for Possible Downgrade, currently
Aa2
-- Cl. A-2D, Placed on Review for Possible Downgrade, currently
A1
-- Cl. M-1, Downgraded to Ca from B2
-- Cl. M-2, Downgraded to C from Caa2
-- Cl. M-3, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-HE2
-- Cl. A-1, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2A, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2B, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2C, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2D, Placed on Review for Possible Downgrade, currently
Aa2
-- Cl. M-1, Downgraded to Caa2 from Ba2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-NC1
-- Cl. A-3, Downgraded to A2 from Aa3
-- Cl. M-1, Downgraded to Caa2 from Ba3
-- Cl. M-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-NC2
-- Cl. A-3, Downgraded to Baa2 from Aaa
-- Cl. M-1, Downgraded to Caa3 from Baa3
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-NC3
-- Cl. A-1, Placed on Review for Possible Downgrade, currently
Aa2
-- Cl. A-2A, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2B, Placed on Review for Possible Downgrade, currently
Aa2
-- Cl. A-2C, Placed on Review for Possible Downgrade, currently
A1
-- Cl. M-1, Downgraded to Ca from Ba3
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-OP1
-- Cl. B-2, Downgraded to Ba1 from Baa2
-- Cl. B-3, Downgraded to Caa2 from Ba2
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-WM1
-- Cl. A-1A, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-1B, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2B, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. A-2C, Placed on Review for Possible Downgrade, currently
Aaa
-- Cl. M-1, Downgraded to Caa3 from Baa1
-- Cl. M-2, Downgraded to C from Caa2
-- Cl. M-3, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-WM2
-- Cl. A-1, Placed on Review for Possible Downgrade, currently
Baa2
-- Cl. A-2A, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. A-2B, Placed on Review for Possible Downgrade, currently
Aa3
-- Cl. A-2C, Placed on Review for Possible Downgrade, currently
Baa3
-- Cl. A-2D, Placed on Review for Possible Downgrade, currently
Ba2
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from B3
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Caa3
-- Cl. M-5, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-WM3
-- Cl. A-1, Downgraded to B1 from Aa3
-- Cl. A-2, Downgraded to Caa2 from Baa3
-- Cl. A-3, Downgraded to Caa3 from Ba2
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Ca
-- Cl. M-5, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2006-WM4
-- Cl. A-1, Downgraded to B3 from A3
-- Cl. A-2B, Downgraded to B3 from Baa1
-- Cl. A-2C, Downgraded to Caa2 from Baa2
-- Cl. A-2D, Downgraded to Caa3 from Baa3
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa2
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-BR1
-- Cl. A-1, Downgraded to A1 from Aaa
-- Cl. A-2A, Downgraded to Aa1 from Aaa
-- Cl. A-2B, Downgraded to B2 from Aa1
-- Cl. A-2C, Downgraded to B3 from Aa3
-- Cl. M-1, Downgraded to Ca from Baa3
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-BR2
-- Cl. A-1, Downgraded to B2 from Aa2
-- Cl. A-2, Downgraded to Caa1 from A3
-- Cl. M-1, Downgraded to C from Ba3
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-BR3
-- Cl. A-1, Downgraded to Ba2 from Aa2
-- Cl. A-2B, Downgraded to Caa1 from Baa1
-- Cl. A-2C, Downgraded to Caa2 from Baa3
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from Ba3
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
-- Cl. B-3, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-BR4
-- Cl. A-1, Downgraded to B1 from Aa1
-- Cl. A-2A, Downgraded to Aa3 from Aa1
-- Cl. A-2B, Downgraded to B3 from Aa3
-- Cl. A-2C, Downgraded to Caa1 from A3
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from Ba3
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-BR5
-- Cl. A-1, Downgraded to Ba1 from Aaa
-- Cl. A-2A, Downgraded to Aa2 from Aaa
-- Cl. A-2B, Downgraded to B1 from Aaa
-- Cl. A-2C, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to Caa2 from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from Caa2
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-HE1
-- Cl. A-1, Downgraded to B2 from A2
-- Cl. A-2B, Downgraded to Ba3 from Baa1
-- Cl. A-2C, Downgraded to Caa1 from Baa2
-- Cl. A-2D, Downgraded to Caa2 from Baa3
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Caa3
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-NC1
-- Cl. A-1, Downgraded to A3 from Aaa
-- Cl. A-2B, Downgraded to B1 from Aaa
-- Cl. A-2C, Downgraded to B2 from Aa2
-- Cl. M-1, Downgraded to Ca from Baa3
-- Cl. M-2, Downgraded to C from Ba3
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Securitized Asset Backed Receivables LLC Trust 2007-NC2
-- Cl. A-1, Downgraded to A3 from Aaa
-- Cl. A-2B, Downgraded to B1 from Aaa
-- Cl. A-2C, Downgraded to B2 from Aa1
-- Cl. M-1, Downgraded to Caa2 from Aa1
-- Cl. M-2, Downgraded to C from Ba1
-- Cl. M-3, Downgraded to C from Ba3
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
SANDISK CORP: S&P Removes Ratings from CreditWatch; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services removed its ratings on
Milpitas, California-based SanDisk Corp. from CreditWatch,
and lowered its corporate credit and senior unsecured ratings to
'B' from 'B+'. The outlook is stable.
"The action follows a series of announcements, including its
restructured joint venture with Toshiba, third-quarter results and
near-term outlook, and the withdrawal of Samsung Electronics Co.
Ltd.'s offer to acquire the company," said Standard & Poor's
credit analyst Lucy Patricola. "The rating actions reflect
SanDisk's credit profile as an independent company and our
expectation of continued sharp operating losses in the next two to
three quarters. We remain concerned that the potential positive
impact of the restructured joint ventures may not be sufficient to
reverse SanDisk's operating trends and negative cash flows, given
persistent industry over-capacity and weakening macro-economic
conditions."
SanDisk and Toshiba have agreed to sell 30% of their joint venture
interests in Fabs 3 and 4 to Toshiba, effectively reducing
SanDisk's ownership to 35% from 50%. The transaction is valued at
about $1 billion and includes an approximate $500 million cash
payment, reduces capital spending requirements and lowers
SanDisk's wafer supply. The transaction is a positive development
and could partially alleviate SanDisk's negative cash flow trends
through 2009. Still, SanDisk faces considerable near-term
pressure on earnings and cash flow. Marketplace conditions remain
challenging, with price erosion of 60% annually. SanDisk has
accumulated excess inventories despite taking inventory reserves
and related charges of $109 million for the September quarter and
now has more than 90 days of supply.
S&P expects EBITDA will remain negative for the next few quarters
and, despite reduced capital spending, cash flow will likely be
negative as well. Liquidity remains a key pillar of credit
support at $2.6 billion as of Sept. 30, 2008.
The ratings on SanDisk Corp. reflect significant business risk
stemming from a narrow business profile, price volatility in the
NAND flash memory industry, and the substantial investment
required to maintain technology and cost leadership. Substantial
liquidity, stable royalty income streams, and the risk and cost-
sharing benefits of the company's manufacturing joint ventures
with Toshiba Corp. partly offset company business risks.
SanDisk is a leading manufacturer of various formats of flash
memory cards for use in consumer electronics products, including
digital cameras, mobile phones, and game systems. In addition,
the company produces devices such as universal serial bus drives
and MP3 music players. For analytical purposes, Standard & Poor's
consolidates obligations of the company's joint ventures with
Toshiba. Including its portion of guaranteed leases that reside
at the flash joint ventures, lease-adjusted debt was $2.3 billion
as of June 30, 2008. SanDisk's equity investments in and notes
receivable from the joint ventures are treated as capital
spending.
The outlook on SanDisk is stable. The company's adequate
liquidity provides a cushion for operating losses and negative
cash flow expected for the next two to three quarters. S&P could
revise the outlook to negative if the company cannot equalize
product demand with inventory supplies by mid-2009, and continues
to operate at a loss with negative discretionary cash flows. An
outlook revision to positive would be predicated on sustained
profitable operations and fully adjusted leverage measures in the
4x area.
SANKATY HIGH: Moody's Cuts Notes Ratings on Poor Market Value
-------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the
classes of notes issued by and loans entered into by Sankaty High
Yield Partners III, L.P., and left six of the ratings on review
for possible further downgrade. The rating actions taken are:
Class Description: $95,000,000 Class A-1A First Senior Secured
Variable Funding Notes Due 2011
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $105,000,000 Class A-1B First Senior Secured
Variable Funding Multi-Currency Notes Due 2011
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $35,000,000 Class A-1C First Senior Secured
Variable Funding Swingline Notes Due 2011
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $220,000,000 Class A-1 First Senior Secured
Floating Rate Notes Due 2011
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $14,000,000 Class A-2 Second Senior Secured
Floating Rate Notes Due 2011
-- Prior Rating: A3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: B3, on review for possible downgrade
Class Description: $22,500,000 Second Senior Loans Due 2011
-- Prior Rating: A3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: B3, on review for possible downgrade
Class Description: $29,500,000 Class B Third Senior Secured Fixed
Rate Notes Due 2011
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Class Description: $11,000,000 Class B Third Senior Secured
Floating Rate Notes Due 2011
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Class Description: $7,500,000 Class C Senior Subordinated Secured
Fixed Rate Notes Due 2011
-- Prior Rating: Caa1, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Class Description: $43,000,000 Class C Senior Subordinated Secured
Floating Rate Notes Due 2011
-- Prior Rating: Caa1, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Class Description: $3,500,000 Class D Subordinated Secured Fixed
Rate Notes Due 2011
-- Prior Rating: Caa2, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Class Description: $17,500,000 Class D Subordinated Secured
Floating Rate Notes Due 2011
-- Prior Rating: Caa2, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Class Description: $12,500,000 Class E Junior Subordinated Secured
Floating Rate Notes Due 2011
-- Prior Rating: Caa3, on review for possible downgrade
-- Prior Rating Date: 10/21/2008
-- Current Rating: Ca
Sankaty High Yield Partners III, L.P. is a market value
collateralized loan obligation transaction backed primarily by
bank loans.
Moody's explained that the rating actions reflect deterioration in
the market value of the underlying collateral pool as well as the
increased volatility and decreased liquidity in the bank loan
market. Moreover, there exists the risk that the transaction may
experience an Event of Default under the VFN Indenture, Indenture
and under the Second Senior Credit Agreement due to a failure to
maintain the required level of over-collateralization, as
described in Section 7.1.2 of the VFN Indenture, Section 5.1(c) of
the Indenture, and Section 7.1.2 of the Second Senior Credit
Agreement.
The occurrence and continuation of an Event of Default under the
VFN Indenture, Indenture and Second Senior Credit Agreement may
result in the principal of the Notes and the Loans, together with
other outstanding obligations accrued thereon, to become
immediately due and payable, and all Commitments under the VFN
Indenture to be automatically terminated.
The rating downgrades reflect increased expected loss associated
with each tranche and with the senior facility. The severity of
loss may vary depending on the occurrence of the acceleration and
the consequences thereof. For this reason, the ratings assigned
to the Class A-1 Notes, the Class A-2 Notes and the Second Senior
Loans remain on review for possible further rating action.
SANKATY HIGH: Moody's Trims Ratings on Seven Notes to 'Ca'
----------------------------------------------------------
Moody's Investors Service has downgraded its ratings of the
following classes of notes issued by and senior facility entered
into by Sankaty High Yield Partners II, L.P., and left five of the
ratings on review for possible further downgrade. The rating
actions taken are:
Class Description: up to $250,000,000 Senior Facility
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Baa1, on review for possible downgrade
Class Description: $22,000,000 Class A-1 Fixed Rate Notes
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Baa1, on review for possible downgrade
Class Description: $325,000,000 Class A-1 Floating Rate Notes
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Baa1, on review for possible downgrade
Class Description: $45,000,000 Class A-2 Fixed Rate Notes
-- Prior Rating: A3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: B1, on review for possible downgrade
Class Description: $30,000,000 Class A-2 Floating Rate Notes
-- Prior Rating: A3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: B1, on review for possible downgrade
Class Description: $26,000,000 Class B Fixed Rate Notes
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Class Description: $31,000,000 Class B Floating Rate Notes
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Class Description: $43,000,000 Class C Fixed Rate Notes
-- Prior Rating: Caa1, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Class Description: $34,000,000 Class C Floating Rate Notes
-- Prior Rating: Caa1, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Class Description: $16,500,000 Class D Fixed Rate Notes
-- Prior Rating: Caa2, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Class Description: $21,000,000 Class D Floating Rate Notes
-- Prior Rating: Caa2, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Class Description: $22,500,000 Class E Floating Rate Notes
-- Prior Rating: Caa3, on review for possible downgrade
-- Prior Rating Date: 10/20/2008
-- Current Rating: Ca
Sankaty High Yield Partners II, L.P. is a market value
collateralized loan obligation transaction backed primarily by
bank loans.
Moody's explained that the rating actions reflect deterioration in
the market value of the underlying collateral pool as well as the
increased volatility and decreased liquidity in the bank loan
market. Moreover, there exists the risk that the transaction may
experience an Event of Default under the Indenture and under the
Credit Agreement due to a failure to maintain the required level
of over-collateralization, as described in Section 5.1(c) of the
Indenture and Section 7.12 of the Credit Agreement.
The occurrence and continuation of an Event of Default under the
Indenture may result in the principal of the Notes, together with
the premium and interest accrued thereon, to become immediately
due and payable. Similarly, the occurrence and continuation of an
Event of Default under the Credit Agreement may result in the
outstanding principal amount of the Loans and all other
Obligations to become automatically due and payable, and all
Commitments to be automatically terminated.
The rating downgrades reflect increased expected loss associated
with each tranche and with the senior facility. The severity of
loss may vary depending on the occurrence of the acceleration and
the consequences thereof. For this reason, the ratings assigned to
the Class A-1 Notes, the Class A-2 Notes and the Senior Facility
remain on review for possible further rating action.
SCIENTIFIC LEARNING: Has Until Nov. 21 to Comply with Nasdaq Rule
-----------------------------------------------------------------
Scientific Learning Corporation received notice from The NASDAQ
Stock Market indicating that the company is no longer in
compliance with Marketplace Rule 4450(b)(1)(A), which requires
that the market value of the company's common stock be at least
$50,000,000 in order to continue listing on the NASDAQ Global
Market. Under the NASDAQ rules, market value is calculated on
the basis of the closing bid price. As provided in the NASDAQ
rules, the company has 30 calendar days, or until Nov. 21, 2008,
to regain compliance. During this period, the company will
continue to be listed on the NASDAQ Global Market. In order to
regain compliance in this period, the market value of the
company's common stock must be $50,000,000 or more for a minimum
of 10 consecutive business days.
As an alternative to the NASDAQ Global Market, the company may
apply to transfer its securities to the NASDAQ Capital Market.
The company believes that it presently meets the requirements for
the NASDAQ Capital Market, although there can be no assurance that
it will continue to do so. If the company does not regain
compliance by Nov. 21, 2008, and has not applied to transfer to
the NASDAQ Capital Market, the NASDAQ staff will issue a
notification of delisting. The company then has the right to
appeal that decision to a NASDAQ Listing Qualifications Panel.
If the company appeal, its Common Stock will remain listed on the
NASDAQ Global Market during the appeal process, which the company
expects will take at least one month.
"While we are disappointed with this potential change in our
listing status, we continue to be very positive about the
potential of our differentiated, brain-based learning solutions
and the significant progress we are making in executing our
strategic and operational plans," Robert C. Bowen, chairman and
CEO stated. "Our management team and employees remain focused on
building a strong company that continues to increase market
acceptance of our products worldwide while we gain leverage on our
cost structure and build value for our shareholders."
About Scientific Learning Corporation
Based in Oakland, California, Scientific Learning Corporation
(NASDAQ:SCIL) -- http://www.scilearn.com/-- creates educational
software that accelerates learning by improving the processing
efficiency of the brain. Based on more than 30 years of
neuroscience and cognitive research, the Fast ForWord(R) family of
products provides struggling readers with computer-delivered
exercises that build the cognitive skills required to read and
learn effectively.
SCRIPPS SIMPLON: Section 341(a) Meeting Scheduled for Nov. 18
-------------------------------------------------------------
The U.S. Trustee for Region 15 will convene a meeting of Scripps
Simplon Ballpark, LLC's creditors on Nov. 18, 2008, at 3:00 p.m.,
at Suite 630, Emerald Plaza Building.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
La Jolla, California-based Scripps Simplon Ballpark, LLC, filed
for Chapter 11 protection on Oct. 10, 2008 (Bankr. S. D. Calif.
Case No. 08-10068). Bruce A. Wilson, Esq., who has an office at
2031 Fort Stockton Drive, San Diego, California, represents the
company in its restructuring effort. The company listed assets of
$10 million to $50 million and debts of $10 million to
$50 million.
SEMGROUP LP: Pays Hiland $12.1 Million for Assumed Contract
-----------------------------------------------------------
Hiland Holdings GP, LP(Nasdaq: HPGP) and Hiland Partners, LP has
provided an update of the status of the Partnership's credit
exposure to certain affiliates of SemGroup, L.P. that purchase
natural gas liquids and condensate from the Partnership, primarily
at its Bakken and Badlands plants and gathering systems.
On July 22, 2008, SemGroup, L.P. and certain subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the
U.S. Bankruptcy Code. On Aug. 7, 2008, the Partnership announced
the establishment of an allowance for doubtful accounts and bad
debt expense of$8.1 million related to product sales to SemGroup
during June 2008. The Partnership also announced additional
potential exposure estimates of approximately $5.0 million with
SemGroup for uninvoiced product sales from July 1 through July 18,
2008.
On October 20, 2008, the United States Bankruptcy Court for the
District of Delaware entered an order approving the assumption of
a Natural Gas Liquids Marketing Agreement between the Partnership
and SemStream,L.P., an affiliate of SemGroup, L.P., relating to
the sale of natural gas liquids and condensate at the
Partnership's Bakken and Badlands plants and gathering systems. As
a result of the assumption, and in accordance with the order, on
Oct. 21, 2008, SemStream paid $12.1 million to the Partnership,
representing amounts owed to the Partnership from SemStream for
June and July 2008 product sales under the Agreement. The
assumption of the Agreement restores the Partnership and
SemStream, L.P. to their pre-bankruptcy contractual relationship.
The Partnership's third quarter results of operations will reflect
a reversal of $7.9 million of the $8.1 million allowance for
doubtful accounts and bad debt expense previously recorded on the
Partnership's income statement in the second quarter of 2008.
After receipt of the October 21 payment, the Partnership's total
pre-petition credit exposure to SemGroup, related to condensate
sales to SemCrude, LLC, and outside of the Agreement, is
approximately $0.3 million.
About the Hiland Companies
Hiland Partners, LP is a publicly traded midstream energy
partnershipengaged in purchasing, gathering, compressing,
dehydrating, treating,processing and marketing natural gas, and
fractionating, or separating, andmarketing of natural gas liquids,
or NGLs. The Partnership also provides aircompression and water
injection services for use in oil and gas secondaryrecovery
operations. The Partnership's operations are primarily located in
theMid-Continent and Rocky Mountain regions of the United States.
HilandPartners, LP's midstream assets consist of fourteen natural
gas gatheringsystems with approximately 2,079 miles of gathering
pipelines, five naturalgas processing plants, seven natural gas
treating facilities and three NGLfractionation facilities. The
Partnership's compression assets consist of twoair compression
facilities and a water injection plant.
About SemGroup
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.,
is the appointed monitor of SemCanada Crude Company and its
affiliates' reorganization proceedings before the Canadian
Companies' Creditors Arrangement Act. The CCAA stay expires on
Nov. 21, 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.
SEQUOIA MORTGAGE: S&P Lowers Ratings on Eight Certificate Classes
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on eight
classes of mortgage pass-through certificates from Sequoia
Mortgage Trust 2007-2, a residential mortgage-backed securities
transaction backed by U.S. prime jumbo mortgage loan collateral.
In addition, S&P affirmed its ratings on nine classes of
certificates from this series.
The downgrades reflect S&P's opinion that projected credit support
for the affected classes is insufficient to maintain the previous
ratings, given S&P's current projected losses. This RMBS
transaction contains three separate pools of prime jumbo fully
amortizing mortgage loans secured by first liens on one- to four-
family residential properties, divided into two structure groups.
Details are:
-- One pool of adjustable-rate mortgage loans, which have no
payment of principal for a period of three years,
corresponds to structure group one, with senior and
subordinate class names beginning with the number 1; and
-- A second pool of hybrid mortgage loans bearing interest at
a fixed rate for an initial five-year period and at an
adjustable rate thereafter, combined with a third pool of
hybrid mortgage loans bearing interest at a fixed rate for
an initial 10-year period and at an adjustable rate
thereafter, corresponds to structure group two, with
senior and subordinate class names beginning with the
number 2.
S&P assumed that 50% of the dollar amount of 60-day delinquent
loans and 100% of the dollar amount of 90-day delinquent loans
would be in foreclosure within five months. S&P then added this
amount to the dollar amount of loans currently in foreclosure and
used this total, with the current dollar amount of loans that are
classified as real estate owned, to project the lifetime loss
amount for this transaction. This methodology provided a forecast
that is more consistent with the current delinquency performance
trend.
As of the Oct. 20, 2008, distribution date, total delinquencies
and severe delinquencies, as a percentage of the current structure
group balances, and the cumulative realized losses, as a
percentage of the original structure group balances, were as:
Structure Total Severe Cumulative
group delinquencies (%) delinquencies (%) realized losses(%)
--------- ----------------- ----------------- ------------------
1 2.55 1.13 0.00
2 6.36 3.69 0.09
S&P's new lifetime projected losses, as a percentage of the
original structure group balances, for this U.S. RMBS transaction
are:
Structure group Projected loss (%)
--------------- ------------------
1 0.80
2 2.66
The remaining projected lifetime losses and the current credit
support for the non-super-senior classes, as a percentage of the
current structure group balances, as well as the multiple of
current credit support to the remaining projected lifetime losses
for both structure groups, are:
Structure RPL CCS Multiple
group (%) (%) CCS/RPL(x)
--------- ---- ---- ----------
1 1.10 2.748 2.49
2 3.02 4.580 1.52
Since the non-super-senior classes for structure group 1 had a
multiple very close to 2.5x, S&P downgraded these classes to 'A'.
S&P downgraded the senior classes for structure group 2 to 'BB'
because their multiples were between 1.5x and 2.0x. Similarly,
S&P affirmed the 'AAA' rating on the super-senior class from
structure group 1 because its multiple of current credit support
to remaining projected losses was 6.457x, well above S&P's 3.5x
multiple for 'AAA' ratings.
The rating affirmations reflect actual and projected credit
enhancement percentages that S&P believes are sufficient to
support the current ratings.
Subordination provides credit support for this transaction. The
underlying collateral for this deal consists primarily of three
pools of prime jumbo, fully amortizing mortgage loans secured by
first liens on one-to-four family residential properties.
Ratings Lowered
Sequoia Mortgage Trust 2007-2
Mortgage pass-through certificates
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A1 81744LAA2 A AA
1-A3 81744LBA1 A AA
1-XB 81744LAD6 BBB AAA
1-B2 81744LAF1 BB BBB-
2A-A1 81744LAL8 BB BBB
2B-A1 81744LAN4 BB BBB
2-B1 81744LAR5 CCC B
2-B3 81744LAT1 CC CCC
Ratings Affirmed
Sequoia Mortgage Trust 2007-2
Mortgage pass-through certificates
Class CUSIP Rating
----- ----- ------
1-A2 81744LAZ7 AAA
1-XA 81744LAC8 AAA
1-B1 81744LAE4 BBB
1-B3 81744LAG9 CCC
1-B4 81744LAH7 CC
1-B5 81744LAJ3 CC
2-B2 81744LAS3 CCC
2-B4 81744LAU8 CC
2-B5 81744LAV6 CC
SHARPER IMAGE: Changes Payment Threshold in Incentive Plan
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
changes to the incentive plan for employees of Sharper Image Corp.
The Debtor sought to amend the program to change the payment
threshold to participating employees making it effective upon the
earlier occurrence of:
(i) confirmation of a Chapter 11 plan of liquidation;
(ii) conversion of the cases to Chapter 7; or
(iii) termination of employment and the satisfaction of
Incentive Goals.
Roberta A. DeAngelis, acting United States Trustee for Region 3,
avers, objected to the proposed amendment, citing that the
Incentive Plan, filed as hedge against the possibility that
Sharper Image's case would be converted to Chapter 7 before the
employees earned or received their incentive awards, presents the
issue of whether the Debtor would be permitted to convert the
awards into retention payments.
"There is no dispute that this case may be administratively
insolvent," argued Ms. DeAngelis. "Given the present possibility
of administrative insolvency, it would be unfair to the Debtor's
other administrative claimants to be asked to wait in line for
payment while certain administrative claims receive preferred
treatment."
Ms. DeAngelis contended if the services of the Incentive Plan
participants are no longer necessary, then the Debtor's estate
does not need to be giving the participants administrative
superpriority by satisfying their claims ahead of other,
similarly-situated claimants.
The Debtor has admitted that there is a risk its bankruptcy case
will go into a Chapter 7 liquidation because the conversion of
assets to cash "has been disappointing by a large margin,"
Bloomberg News said. The Debtor's key employees agreed to remain
with the company to assist in the liquidation of the estate's
remaining assets.
* * *
After resolution of the U.S. Trustee's objection, Judge Kevin
Gross authorized the Debtor to amend its approved Incentive Plan.
Pursuant to the amendment, the Debtor is authorized to pay Kevin
Palmer, Katherine Wright, Christy Reichert, Jesusa Arcilla, and
Rafael Rey each of their incentive payments upon the attainment of
their Incentive Goals or after the termination of their
employment.
Each of the employees will receive:
Professional Incentive Pay Expected Payment Date
------------ ------------- ---------------------
Kevin Palmer $100,000 No earlier than confirmation
of plan of liquidation
Katherine Wright $69,462 No later than Sept. 31, 2008
Christy Reichert $43,865 No later than Oct. 31, 2008
Jesusa Arcilla $16,057 No later than Oct. 31, 2008
Rafael Ray $25,000 No earlier than the filing
of the Debtor's final tax
returns
About Sharper Image Corp.
Headquartered in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Judge Kevin Gross presides
over the case. Harvey R. Miller, Esq., Lori R. Fife, Esq., and
Christopher J. Marcus, Esq., at Weil, Gotshal & Manges, LLP,
serve as the Debtor's lead counsel. Steven K. Kortanek, Esq.,
and John H. Strock, Esq., at Womble, Carlyle, Sandridge & Rice,
P.L.L.C., serve as the Debtor's local Delaware counsel.
An Official Committee of Unsecured Creditors has been appointed in
the case. Cooley Godward Kronish LLP is the Committee's lead
bankruptcy counsel. Whiteford Taylor Preston LLC is the
Committee's Delaware counsel.
When the Debtor filed for bankruptcy, it listed total assets of
$251,500,000 and total debts of $199,000,000. As of June 30,
2008, the Debtor listed $52,962,174 in total assets and
$39,302,455 in total debts.
The Court extended the exclusive period during which the Debtor
may file a Plan through and including Sept. 16, 2008. Sharper
Image sought and obtained the Court's approval to change its name
to "TSIC, Inc." in relation to an an Asset Purchase Agreement by
the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands,
LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital,
LLC.
(Sharper Image Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SHERBURNE COMMONS: Case Summary & 18 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Sherburne Commons, Inc.
40 Sherburne Commons
Nantucket, MA 02554
Bankruptcy Case No.: 08-18026
Type of Business: The Debtor is a non-profit organization
comprised of island volunteers.
See: http://www.sherburnecommons.com/
Chapter 11 Petition Date: October 23, 2008
Court: District of Massachusetts (Boston)
Judge: William C. Hillman
Debtor's Counsel: Steven T. Hoort, Esq.
Steven.Hoort@ropesgray.com
Ropes & Gray LLP
One International Place
Boston, MA 02110-2624
Tel: (617) 951-7000
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sovereign Bank bank loan $28,653,276
75 State Street
Boston, MA 02109
Faye & Philip Hubbard agreement $840,000
6 Sherburne Commons
Nantucket, MA 02554
Annd Bradt agreement $759,000
6 Sherburne Commons
Nantucket, MA 02554
Peter Guario & Paul Willer agreement $710,188
Joan Manley & Mary Jane agreement $549,400
Lillian Henning agreement $549,239
Eugene Stone agreement $462,681
Gwendolyn Ray agreement $418,500
June Albaugh agreement $414,387
Elizabeth Murray agreement $407,264
Joan Craig agreement $407,264
Pamela Jelleme agreement $396,387
Dorothy Rauch agreement $371,250
Arthur & Martha Butler agreement $356,040
Dorethea Riley agreement $355,500
Edward & Trudy Benhan agreement $355,500
Jean Egan agreement $325,597
EGA, PC trade claim $325,000
SHERBURNE COMMONS: Loan Default Cues Chapter 11 Filing
------------------------------------------------------
Margaret Carroll-Bergman at The Nantucket (Massachusetts)
Independent reports that Sherburne Commons has filed for Chapter
11 protection.
The Nantucket Independent relates that eight residents in the
assisted living facility and one resident in the dementia unit
have to find housing within 90 days. The report says that
Sherburne Commons will be seeking housing in other senior
communities and assisted living facilities and island resources to
help the residents.
According to The Nantucket Indpendent, Sherburne Commons said that
the company has $850,000 in the bank, and monthly fees which range
from $2,500 to $4,000 a month per residence to cover operational
costs. The report says that Melissa Philbrick, Esq. -- an
attorney for Sherburne Commons -- said that the company will be
cutting services and staff until it can regroup and work out a
solution with Sovereign Bank, Sherburne Commons' primary lender.
The Nantucket Indpendent states that Sovereign Bank issued a
demand notice to Sherburne Commons on Oct. 9, 2008, to force the
acceleration of payment on the company's $29 million loan.
According to the report, Sherburne Commons hasn't missed a payment
on its debt with Sovereign Bank. The report states that Sherburn
Commons board of trustees said in a letter to residents on Oct.
23, 2008, "The bank has taken this action not because we have
missed payments, but rather because we are in 'technical default'
-- meaning we are not in compliance with all of the legal
requirements of the loan. As but one example, our vacancy rate is
higher than the loan provisions allow."
The Nantucket Independent reports that many of the 28 residents
who paid the entrance fee -- ranging from $700,000 to
$1 million -- for a cottage and $270,000 to $450,000 for an
apartment, sold their Nantucket home to raise the fee. The report
says that the residents bought into Sherburne Commons, believing
that if they moved or died, they or their family would be able to
get back 90% of the entrance fee. Those residents may not get
back the fee they paid as Sherburne Commons now has $850,000 in
the bank, according to the report.
Residents who paid an entrance fee are listed as creditors, along
with Sovereign Bank and the architect, The Nantucket Independent
states.
About Sherburne Commons
Nantucket, Massachusetts-based Sherburne Commons, Inc. --
http://www.sherburnecommons.com/-- is a not-for-profit
organization comprised of island volunteers. It is an independent
and assisted living facility for seniors. Sherburne Commons'
occupancy rate is less than 50% -- seven of the 20 cottages, 15 of
the 18 independent living apartments, seven of the 14 assisted
living apartments, and one of eight dementia units are occupied.
The first residents moved into Sherburne Commons early in 2007.
SKYPORT GLOBAL: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: SkyPort Global Communications, Inc.
fka SkyPort International, Inc.
dba SkyPort Interational PC
dba SkyComm International, Inc.
11140 Aerospace Avenue
Houston, TX 77034
Bankruptcy Case No.: 08-36737
Type of Business: The Debtor offers satellite and terrestrial
communications services.
See: http://www.skyportglobal.com/
Chapter 11 Petition Date: October 24, 2008
Court: Southern District of Texas (Houston)
Judge: Jeff Bohm
Debtor's Counsel: Edward L. Rothberg, Esq.
erothberg@wkpz.com
Weycer Kaplan Pulaski & Zuber
11 Greenway Plz, Ste 1400
Houston, TX 77046
Tel: (713) 961-9045
Fax: (713) 961-5341
Total Assets: $8,736,791
Total Debts: unstated
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/txsb08-36737.pdf
SOLUTIA INC: Projects $106MM EBITDA for 3rdQ; 10-Q on Oct. 29
-------------------------------------------------------------
Solutia Inc. disclosed that for its continuing operations --
including Saflex(R), Technical Specialties, and CPFilms(R) -- the
company expects to report third quarter net sales of
$587,000,000, a 29% increase over the prior year period and
adjusted EBITDA is anticipated to be $111,000,000, a 46% increase
over the prior year period. These strong results were driven by
a combination of volume, price and manufacturing improvements.
"We believe our three specialties businesses, which comprise
the going-forward Solutia portfolio, represent some of the most
valuable franchises in the specialty chemicals sector," said
Jeffry N. Quinn, chairman, president, and CEO of Solutia Inc.
"Third quarter results for these businesses were exceptional.
Although we are mindful of slowing global economic conditions,
we anticipate these businesses will meet earnings guidance for
the year." Solutia's full-year 2008 adjusted EBITDA guidance for
continuing operations is $385,000,000 to $395,000,000, with the
mid-point of the range on par with the guidance provided during
the company's second quarter earnings call.
"During the third quarter, Solutia reduced its net debt by
$390,000,000, to $1,366,000,000," said James M. Sullivan, senior
vice president and chief financial officer. "Our capital
structure is well positioned with credit facilities committed
through 2013."
Of the company's $1,191,000,000 term loan debt, $900,000,000
is protected by a LIBOR cap of 425 basis points until April 2010.
At the end of the third quarter, Solutia had liquidity of
$227,000,000. The company anticipates strong cash generation in
the fourth quarter that will further increase liquidity and
reduce net debt to approximately $1,300,000,000 by year-end.
Effective with the third quarter, Solutia will report results
from its three specialties segments as continuing operations and
report results from its Nylon segment as discontinued operations.
Solutia is exploring strategic alternatives for its Nylon
business, and a disposition of these assets is currently
anticipated by the end of the first quarter 2009.
The discontinued Nylon segment expects to report third quarter
net sales of $506,000,000 and an adjusted EBITDA loss of
($5,000,000). These results were negatively impacted by
Hurricane Ike as well as deteriorating markets in nylon
intermediates and nylon carpet fibers. The Nylon chemical plant
in Alvin, Texas, which had been shut down in advance of Hurricane
Ike, resumed normal operations in early October. The estimated
cost of property damage incurred at the site is approximately
$10,000,000, which is being excluded from the company's adjusted
EBITDA. Lost profits and other business interruption cost
impacts of $8,000,000 million from the hurricane are included in
adjusted EBITDA.
Solutia will issue financial results for the third quarter
of 2008 on Wednesday, Oct. 29, 2008, after the market closes.
The company will then hold a conference call at 9 a.m. Central
Time (10 a.m. Eastern Time) on Thursday, Oct. 30, 2008, during
which Solutia executives will elaborate upon the company's third
quarter 2008 financial results.
Use of Non-U.S. GAAP Financial Information
and Reconciliation to Comparable GAAP Number
For the purpose of this press release, the company has used
certain financial measures such as EBITDA (defined as earning
before interest expense, income taxes, depreciation and
amortization and reorganization items, net) and Adjusted EBITDA
(to include EBITDA and exclude gains and losses, cost overhang
associated with the potential Nylon disposition, and non-cash
stock compensation expense) that are not determined in accordance
with generally accepted accounting principles in the United
States (GAAP). The company believes that these non-GAAP
financial measures are useful to investors because they
facilitate period-to-period comparisons of Solutia's performance
and enable investors to assess the company's performance in the
way that management and lenders do. Our debt covenants and
certain management reporting and incentive plans are measured
against certain of these non-GAAP financial measures.
Reconciliations of these measures to GAAP measures are included
immediately below.
Reconciliation of Net Loss to Adjusted EBITDA
Successor Predecessor
-------------------- --------------------
Three Months Ended Three Months Ended
(dollars in millions) Sept. 30, 2008 Sept. 30, 2007
-----------------------------------------
Net Loss ($7) ($111)
Plus:
Income Tax Expense 18 11
Interest Expense 43 34
Depreciation and
Amortization 37 31
Reorganization Items,
pre-tax - 152
Net (Gains) and Charges
affecting
comparability, pre-tax
(a) (b) 12 (18)
Non-cash Stock
Compensation Expense 3 -
-------------------- --------------------
Adjusted EBITDA $106 $99
==================== ====================
(a) For 3 months ended September 2008, (Gains) and Charges
affecting comparability, pre-tax are as follows:
$1,000,000 of net charges related to the announced
closure of the Ruabon Facility.
$4,000,000 charge for restructuring costs related
principally to severance and retraining costs.
($3,000,000) gain resulting from surplus land sales.
$10,000,000 charge resulting from property damage
incurred due to Hurricane Ike.
(b) For 3 months ended September 2007, (Gains) and Charges
affecting comparability, pre-tax are as follows:
($22,000,000) gain resulting from a customer contract
termination.
$4,000,000 charge for restructuring charge resulting
from the termination of a third-party agreement at
one of Solutia's facilities.
($3,000,000) gain due to land sales.
$1,000,000 charge resulting from the step-up in basis
of Flexsys' inventory in accordance with purchase
accounting.
$2,000,000 charge for restructuring costs related
principally to severance and retraining costs.
* * *
The Associated Press reported that Solutia's stock price rose
$1.12, to close at $9.43 on October 20, 2008, after Solutia said
it expects its third quarter revenue to increase 14%.
According to Google Finance, these are Solutia's closing prices
for the period October 17 through 23, 2008:
Date Closing Price
---- -------------
10/17/08 $8.31
10/20/08 9.43
10/21/08 9.56
10/22/08 8.31
10/23/08 8.05
About Solutia Inc.
Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE:
SOA-WI) -- http://www.solutia.com/-- and its subsidiaries,
manufactures and sells chemical-based materials, which are used in
consumer and industrial applications worldwide.
The company and 15 debtor-affiliates filed for chapter 11
protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03-
17949). When the Debtors filed for protection from their
creditors, they listed $2,854,000,000 in assets and $3,223,000,000
in debts.
Solutia is represented by Richard M. Cieri, Esq., Jonathan S.
Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP,
in New York, as lead bankruptcy counsel, and David A. Warfield,
Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St.
Louis Missouri, as special counsel. Trumbull Group LLC is the
Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira
S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss
Hauer & Feld LLP represent the Official Committee of Unsecured
Creditors, and Derron S. Slonecker at Houlihan Lokey Howard &
Zukin Capital provides the Creditors' Committee with financial
advice. The Official Committee of Retirees of Solutia, Inc., et
al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke,
Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne,
LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E.
Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter
Young & Rediker, LLC, in Birmingham, Alabama.
On Feb. 14, 2006, the Debtors filed their Reorganization Plan &
Disclosure Statement. On May 15, 2007, they filed an Amended
Reorganization Plan and on July 9, 2007, filed a 2nd Amended
Reorganization Plan. The Bankruptcy Court approved the Debtors'
amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007,
the Debtor re-filed a Consensual Plan & Disclosure Statement and
on Nov. 29, 2007, the Court confirmed the Debtors' Consensual
Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008.
Solutia's $2.05 billion exit financing facility was funded by
Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P.,
and Deutsche Bank Securities Inc. The exit financing is being
used to pay certain creditors, and for ongoing operations.
(Solutia Bankruptcy News, Issue No. 133; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
* * *
Standard & Poor's Ratings Services said its ratings on Solutia
Inc. (B+/Stable/--) will not change as a result of the company's
recent announcement of a public offering of common shares.
SOUNDVIEW: Moody's Lowers Ratings on 256 Tranches from 26 RMBS
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 256
tranches from 26 subprime RMBS transactions issued by Soundview.
The collateral backing these transactions consists primarily of
first-lien, fixed and adjustable-rate, subprime residential
mortgage loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: Soundview Home Loan Trust 2005-1
-- Cl. M-5, Downgraded to Baa1 from A3
-- Cl. M-6, Downgraded to Ba3 from Baa1
-- Cl. M-7, Downgraded to B3 from Baa2
SPIRIT FINANCE: S&P Holds 'B+' Rating on $850MM Credit Facility
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Spirit
Finance Corp. to negative from stable. At the same time, S&P
affirmed the 'BB-' corporate credit rating on Spirit and 'B+'
issue-level rating on Spirit's $850 million secured credit
facility. The recovery rating on the facility is unchanged at
'5', which indicates S&P's expectation of modest recovery in the
event of a payment default.
"The outlook revision reflects our concern that Spirit's financial
profile, which is already characterized by slim coverage measures,
higher leverage, and limited liquidity, could come under
pressure," said Standard & Poor's credit analyst George Skoufis.
"We expect retail fundamentals to weaken further and the currently
volatile capital markets to remain challenging, particularly the
credit markets, resulting in potentially more costly future debt-
financing and refinancing options."
The affirmed ratings acknowledge Spirit's tenant concentrations in
a cyclical retail sector. Spirit's seasoned management team and
the historical stability of the company's net-leased retail real
estate assets partially offset these credit weaknesses.
Scottsdale, Arizona-based Spirit is a privately held $4.2 billion
REIT that focuses on the ownership of triple net-leased retail
properties. As of June 30, 2008, the company owned or financed
1,289 properties in 46 states.
SPANSION INC: S&P Cuts Corp. Credit to 'B-' with Negative Outlook
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Spansion Inc. to 'B-' from 'B' and lowered its issue-
level ratings on the company. The outlook is negative.
"The action reflects substantial negative free cash flows and
declining liquidity," said Standard & Poor's credit analyst Bruce
Hyman.
"The ratings on Sunnyvale, California-based Spansion Inc. reflect
weak profitability and operating cash flows as a supplier in the
competitive NOR flash semiconductor industry, high leverage, and
significant debt amortization requirements," added Mr. Hyman.
"These are only partially offset by the company's good market
position and solid technology base, and its leading edge
manufacturing capabilities."
Spansion is a major supplier of NOR flash semiconductors used in
mobile phones, consumer and automotive electronics, networking and
telecommunications equipment, and computer peripherals. Spansion
holds nearly a 40% market share, well ahead of principal
competitor Numonyx B.V. and third-place supplier Samsung
Electronics Co. Ltd.
Conditions across the entire memory industry have been
challenging, reflecting oversupply and weak economic conditions.
In the September quarter, NOR flash prices declined more rapidly
than historical trends--down about 10% from the June to September
quarter, and worse for commodity products. Spansion's revenues in
the September 2008 quarter were $631 million, up 3% year-on-year
as the company gained share in a declining market. While December
quarter revenues are likely to be close to September levels, that
level will still be $50 million-$100 million below expectations
set earlier this year. Production volumes at Spansion's recently
commissioned advanced factory have been well below expectations,
largely reflecting substantial excess cell phone inventory in
Japan, which will likely take several quarters to resolve.
Spansion's EBITDA margin declined to about 13% in the September
quarter, versus about 16% in June, and the high teens two years
ago, pro forma for a decision to terminate its weakest products.
December quarter EBITDA margins could remain flat with September,
reflecting recently announced cost reductions. Spansion is
seeking research and development partners to reduce its
development expenses, 17% of sales, and intends to contribute a
major assembly plant to a joint venture, which should bolster cash
balances and help to cut expense levels. While helpful, the
timing and extent of the benefit from those actions remains
uncertain.
In light of likely ongoing weak economic conditions, revenues and
operating profitability could continue to be pressured in coming
quarters. Margin growth will likely require completion of
recently announced cost reduction plans, as well as substantial
increased demand.
Debt totaled $1.6 billion as of Sept. 28, 2008, or 5x EBITDA.
Spansion faces substantial marketplace pressures as it implements
its cost reduction plans. While the longer-term effects of those
plans should be favorable, near to intermediate term challenges
are considerable. If cash flows do not stabilize, or if total
liquidity were to decline below $150 million, ratings could be
lowered further; such a situation would likely become evident by
mid-to-late 2009. However, to the extent that Spansion's actions
lead to stabilized cash flows, and liquidity can be sustained at
more than $400 million, the outlook could be revised to stable.
STAR-LEDGER: 40% of Newsroom Staff Will Exit Company
----------------------------------------------------
Shira Ovide at The Wall Street Journal reports that The Star-
Ledger of Newark, New Jersey, said that about 40% of its 1,400
newsroom staff accepted its buyout offer.
As reported in the Troubled Company Reporter on Oct. 9, 2008,
George Arwady, the publisher of The Star-Ledger, said that the
paper will be sold or closed on Jan. 5, 2009, unless 200 buyouts
and several union concessions are met. The Star-Ledger almost
completed cost-cutting measures that will hold off its sale or
closure, including cutting costs, reducing staff, and eliminating
sections as the Web and downturn have eroded print readership and
advertising. The Star-Ledger had said that it would need about
200 workers to accept buyouts and the drivers and mailers unions
to renegotiate contracts.
WSJ relates that the Star-Ledger's editor, Jim Willse, told the
staff on Friday that about 151 buyout offers were accepted in a
newsroom of about 330 people, while the newspaper turned down
about buyout requests from 17 employees.
According to WSJ, buyouts for other departments will be disclosed
in the coming week.
About The Star-Ledger
The Star-Ledger is a newspaper in Newark, New Jersey. It is a
sister paper to the Jersey Journal of Jersey City, The Times of
Trenton, and the Staten Island Advance, all of which are owned by
Advance Publications.
-- Cl. M-8, Downgraded to Ca from Ba1
-- Cl. M-9, Downgraded to C from Ba3
-- Cl. B-1, Downgraded to C from Caa1
Issuer: Soundview Home Loan Trust 2005-2
-- Cl. M-2, Downgraded to Aa3 from Aa2
-- Cl. M-3, Downgraded to A2 from Aa3
-- Cl. M-4, Downgraded to Baa1 from A1
-- Cl. M-5, Downgraded to Baa3 from A2
-- Cl. M-6, Downgraded to Ba1 from A3
-- Cl. M-7, Downgraded to Ba3 from Baa1
-- Cl. M-8, Downgraded to Caa2 from Baa2
-- Cl. M-9, Downgraded to Ca from Baa3
-- Cl. B-1, Downgraded to Ca from Ba1
-- Cl. B-2, Downgraded to C from Ba2
Issuer: Soundview Home Loan Trust 2005-3
-- Cl. M-6, Downgraded to Ba2 from Baa2
-- Cl. M-7, Downgraded to Caa2 from Ba2
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
Issuer: Soundview Home Loan Trust 2005-4
-- Cl. M-4, Downgraded to A3 from A1
-- Cl. M-5, Downgraded to Baa3 from Baa1
-- Cl. M-6, Downgraded to B3 from Ba1
-- Cl. M-7, Downgraded to Ca from B2
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. M-10, Downgraded to C from Caa2
-- Cl. M-11, Downgraded to C from Caa3
Issuer: Soundview Home Loan Trust 2005-CTX1
-- Cl. M-6, Downgraded to Baa1 from A3
-- Cl. M-7, Downgraded to Ba2 from Baa1
-- Cl. M-8, Downgraded to Caa2 from Baa2
-- Cl. M-9, Downgraded to C from Baa3
-- Cl. M-10, Downgraded to C from Ba3
-- Cl. B-1, Downgraded to C from Caa1
Issuer: Soundview Home Loan Trust 2005-DO1
-- Cl. M-4, Downgraded to A2 from A1
-- Cl. M-5, Downgraded to Baa1 from A2
-- Cl. M-6, Downgraded to Ba1 from A3
-- Cl. M-7, Downgraded to Ba3 from Baa1
-- Cl. M-8, Downgraded to B2 from Baa2
-- Cl. M-9, Downgraded to Caa1 from Baa3
-- Cl. M-10, Downgraded to Caa2 from Ba3
Issuer: Soundview Home Loan Trust 2006-1
-- Cl. M-1, Downgraded to A1 from Aa2
-- Cl. M-2, Downgraded to A2 from Aa3
-- Cl. M-3, Downgraded to Baa2 from A1
-- Cl. M-4, Downgraded to B1 from A2
-- Cl. M-5, Downgraded to Caa2 from A3
-- Cl. M-6, Downgraded to C from Baa3
-- Cl. M-7, Downgraded to C from B2
Issuer: Soundview Home Loan Trust 2006-2
-- Cl. M-1, Downgraded to A1 from Aa1
-- Cl. M-2, Downgraded to Baa1 from Aa2
-- Cl. M-3, Downgraded to Baa3 from Aa3
-- Cl. M-4, Downgraded to B1 from A1
-- Cl. M-5, Downgraded to Caa2 from A2
-- Cl. M-6, Downgraded to C from Baa3
-- Cl. M-7, Downgraded to C from B2
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. M-10, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
Issuer: Soundview Home Loan Trust 2006-3
-- Cl. A-3, Downgraded to Ba2 from Aaa
-- Cl. A-4, Downgraded to Ba3 from Aa1
-- Cl. M-1, Downgraded to Caa2 from Baa2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-EQ1
-- Cl. A-4, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to A2 from Aa1
-- Cl. M-2, Downgraded to Baa2 from A1
-- Cl. M-3, Downgraded to Ba2 from Baa3
-- Cl. M-4, Downgraded to B3 from B1
-- Cl. M-5, Downgraded to Ca from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
-- Cl. M-10, Downgraded to C from Caa3
Issuer: Soundview Home Loan Trust 2006-EQ2
-- Cl. A-2, Downgraded to Aa2 from Aaa
-- Cl. A-3, Downgraded to Ba1 from Aaa
-- Cl. A-4, Downgraded to Ba2 from Aaa
-- Cl. M-1, Downgraded to Caa1 from A3
-- Cl. M-2, Downgraded to Ca from B1
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
-- Cl. M-10, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-NLC1
-- Cl. A-2, Downgraded to Ba3 from Aa1
-- Cl. A-3, Downgraded to Caa1 from Aa3
-- Cl. A-4, Downgraded to Caa2 from A3
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-OPT1
-- Cl. M-1, Downgraded to A3 from Aa2
-- Cl. M-2, Downgraded to Ba1 from Aa3
-- Cl. M-3, Downgraded to B2 from A1
-- Cl. M-4, Downgraded to Caa3 from Baa1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
-- Cl. M-10, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-OPT2
-- Cl. A-4, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to Baa2 from Aa3
-- Cl. M-2, Downgraded to Ba3 from Baa1
-- Cl. M-3, Downgraded to Caa2 from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-OPT3
-- Cl. M-1, Downgraded to Baa2 from Aa3
-- Cl. M-2, Downgraded to Ba1 from Baa1
-- Cl. M-3, Downgraded to B3 from Ba3
-- Cl. M-4, Downgraded to Ca from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
-- Cl. M-10, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-OPT4
-- Cl. II-A-3, Downgraded to A1 from Aaa
-- Cl. II-A-4, Downgraded to A3 from Aaa
-- Cl. M-1, Downgraded to Caa2 from Aa2
-- Cl. M-2, Downgraded to C from Baa1
-- Cl. M-3, Downgraded to C from Ba2
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-OPT5
-- Cl. II-A-3, Downgraded to Aa3 from Aaa
-- Cl. II-A-4, Downgraded to A2 from Aaa
-- Cl. M-1, Downgraded to Baa3 from Aa1
-- Cl. M-2, Downgraded to B1 from Baa1
-- Cl. M-3, Downgraded to Caa2 from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Ca
-- Cl. M-10, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2006-WF2
-- Cl. M-1, Downgraded to A1 from Aa1
-- Cl. M-2, Downgraded to Baa1 from Aa2
-- Cl. M-3, Downgraded to Ba2 from Baa2
-- Cl. M-4, Downgraded to Caa3 from B1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Caa3
Issuer: Soundview Home Loan Trust 2007-1
-- Cl. I-A-1, Downgraded to A1 from Aaa
-- Cl. II-A-2, Downgraded to Baa2 from Aaa
-- Cl. II-A-3, Downgraded to Baa3 from Aaa
-- Cl. II-A-4, Downgraded to Ba1 from Aa1
-- Cl. M-1, Downgraded to B1 from A3
-- Cl. M-2, Downgraded to Caa2 from Ba2
-- Cl. M-3, Downgraded to C from B1
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8A, Downgraded to C from Caa1
-- Cl. M-8B, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
Issuer: Soundview Home Loan Trust 2007-NS1, Asset-Backed
Certificates, Series 2007-NS1
-- Cl. A-2, Downgraded to Aa1 from Aaa
-- Cl. A-3, Downgraded to Aa3 from Aaa
-- Cl. A-4, Downgraded to A2 from Aaa
-- Cl. M-1, Downgraded to Baa2 from Aa3
-- Cl. M-2, Downgraded to Ba3 from Baa2
-- Cl. M-3, Downgraded to B2 from Ba2
-- Cl. M-4, Downgraded to Caa2 from B1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. M-10, Downgraded to C from Caa3
Issuer: Soundview Home Loan Trust 2007-OPT1
-- Cl. I-A-1, Downgraded to A3 from Aaa
-- Cl. II-A-2, Downgraded to Baa2 from Aaa
-- Cl. II-A-3, Downgraded to Baa3 from Aaa
-- Cl. II-A-4, Downgraded to Ba1 from Aaa
-- Cl. M-1, Downgraded to B2 from A1
-- Cl. M-2, Downgraded to Caa3 from Ba1
-- Cl. M-3, Downgraded to C from Ba3
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B2
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa2
Issuer: Soundview Home Loan Trust 2007-OPT2
-- Cl. I-A-1, Downgraded to Baa1 from Aaa
-- Cl. II-A-2, Downgraded to A2 from Aaa
-- Cl. II-A-3, Downgraded to Baa2 from Aaa
-- Cl. II-A-4, Downgraded to Baa3 from Aaa
-- Cl. M-1, Downgraded to Ba3 from Ba1
-- Cl. M-2, Downgraded to Caa1 from B1
-- Cl. M-3, Downgraded to Caa2 from B2
-- Cl. M-4, Downgraded to C from Caa2
Issuer: Soundview Home Loan Trust 2007-OPT3
-- Cl. I-A-1, Downgraded to Baa3 from Aaa
-- Cl. II-A-2, Downgraded to A3 from Aaa
-- Cl. II-A-3, Downgraded to Baa1 from Aaa
-- Cl. II-A-4, Downgraded to Baa2 from Aaa
-- Cl. M-1, Downgraded to B1 from Ba3
-- Cl. M-2, Downgraded to Caa2 from B2
-- Cl. M-3, Downgraded to Ca from Caa2
Issuer: Soundview Home Loan Trust 2007-OPT4
-- Cl. I-A-1, Downgraded to Aa3 from Aaa
-- Cl. II-A-2, Downgraded to Aa3 from Aaa
-- Cl. II-A-3, Downgraded to A2 from Aaa
-- Cl. X-1, Downgraded to Aa3 from Aaa
-- Cl. M-1, Downgraded to Baa1 from Aa1
-- Cl. M-2, Downgraded to Baa2 from Aa2
-- Cl. M-3, Downgraded to Ba3 from A2
-- Cl. M-4, Downgraded to B2 from Baa1
-- Cl. M-5, Downgraded to Caa2 from Baa3
-- Cl. M-6, Downgraded to Caa3 from B1
-- Cl. M-7, Downgraded to C from B1
-- Cl. M-8, Downgraded to C from B2
-- Cl. M-9, Downgraded to C from Ca
Issuer: Soundview Home Loan Trust 2007-OPT5
-- Cl. II-A-2, Downgraded to Aa1 from Aaa
-- Cl. II-A-3, Downgraded to Aa3 from Aaa
-- Cl. X-3, Downgraded to A1 from Aaa
-- Cl. M-1, Downgraded to A1 from Aa1
-- Cl. M-1B, Downgraded to A1 from Aa1
-- Cl. M-2, Downgraded to A3 from Aa2
-- Cl. M-2B, Downgraded to A3 from Aa2
-- Cl. M-3, Downgraded to Baa3 from A1
-- Cl. M-4, Downgraded to Ba1 from Baa1
-- Cl. M-5, Downgraded to Ba3 from Baa2
-- Cl. M-6, Downgraded to B2 from Ba2
-- Cl. M-7, Downgraded to Caa1 from B1
-- Cl. M-8, Downgraded to Caa2 from B2
Issuer: Soundview Home Loan Trust 2007-WMC1
-- Cl. I-A-1, Downgraded to Caa1 from Ba1
-- Cl. II-A-1, Downgraded to Caa3 from Ba2
-- Cl. III-A-1, Downgraded to B3 from A2
-- Cl. III-A-2, Downgraded to Caa1 from A3
-- Cl. III-A-3, Downgraded to Caa2 from Ba1
-- Cl. III-A-4, Downgraded to Caa3 from Ba2
-- Cl. M-1, Downgraded to C from B3
-- Cl. M-2, Downgraded to C from Caa2
-- Cl. M-3, Downgraded to C from Caa3
-- Cl. M-4, Downgraded to C from Ca
-- Cl. M-5, Downgraded to C from Ca
SOUTHEAST WAFFLES: Wants to Stop Lawsuits, Defends CEO
------------------------------------------------------
E. Thomas Wood at Nashvillepost.com reports that SouthEast Waffles
LLC is asking the U.S. Bankruptcy Court for the Middle District of
Tennessee to keep some of the company's current and former middle
managers from launching a new lawsuit against it with claims of
unpaid overtime and improper salary deductions.
The Tennessean relates that executives at SouthEast Waffles want
the Court to oust SouthEast Waffles' CEO and chairperson Jim
Shaub.
Nashvillepost.com relates that Barbara Holmes, Esq., and Glenn
Rose, Esq., at Harwell Howard Hyne Gabbert & Manner filed an
appeal, on behalf of SouthEast Waffles, asking the Bankruptcy
Court to declare void a lawsuit by former division manager, John
William Fortner against Mr. Shaub in the federal court of the
Northern District of Alabama. Nashville.com states that
Mr. Fortner had earlier filed a complaint against SouthEast
Waffles but later withdrew it when the company filed for
bankruptcy protection.
According to Nashvillepost.com, Mr. Fortner's lawsuit against
Mr. Shaub seeks class-action status incorporating all district,
division, regional, and area managers who run the firm's
franchised Waffle House restaurants across Tennessee, Kentucky,
Alabama, and Mississippi. The report says the Mr. Fortner claims
that SouthEast Waffles wrongly classified its managers as exempt
from laws requiring time-and-a-half payment for overtime, and
asserts that the firm has a routine policy of improperly docking
managers' wages for amounts "representing cash losses and/or
inventory losses at the restaurants." Under federal labor
regulations, an employer can lose its right to exempt a class of
workers from overtime rules "if it has an 'actual practice' of
making improper deductions from salary."
Mr. Fortner, says Nashvillepost.com, seeks up to three years of
back wages and other damages.
Nashvillepost.com states that SouthEast Waffles argues that Mr.
Fortner's lawsuit violated the automatic stay against legal action
that the firm enjoys while under bankruptcy protection. According
to the report, SouthEast Waffles said that though the lawsuit was
filed against Mr. Shaub, the company will have to defend him, and
would be obliged to pay any judgment awarded, under the terms of
the company's operating agreement.
The Tennessean reports that Mr. Shaub said he wasn't aware of an
alleged check-kiting scheme that creditors say operated through
his franchised restaurants. Court documents say that officials at
SunTrust Bank said in early August that they discovered a massive
check-kiting scheme -- customer's passing worthless checks between
banks -- perpetrated over several months. SunTrust officials,
according to court documents, said that the bank lost $3.7
million.
According to The Tennessean, Mr. Shaub said that he delegated
responsibility for company finances to Chief Financial Officer
Becky Sullivan, who left SouthEast Waffles as allegations of
missing funds first surfaced.
Court documents say that Mr. Shaub gets his $20,000 monthly
salary, plus health-care benefits, until December. The Tennessean
states that the Court has set a hearing for Tuesday on whether Mr.
Shaub be allowed to stay at SouthEast Waffles.
About SouthEast Waffles
Headquartered in Nashville, Tennessee, SouthEast Waffles, LLC dba
Waffle House -- http://www.southeastwaffles.com-- operates
restaurants. The company filed for Chapter 11 protection on Aug.
25, 2008 (Bankr. M.D. Tenn. Case No. 08-07552). Barbara Dale
Holmes, Esq., David Phillip Canas, Esq., Glenn Benton Rose, Esq.,
and Tracy M. Lujan, Esq., at Harwell Howard Hyne Gabbert & Manner
represent the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed assets
and debt of between $10 million and $50 million each.
SUN MEADOWS: Section 341(a) Meeting Scheduled for October 29
------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of Sun
Meadows 136, LLC's creditors on Oct. 29, 2008, at 10:00 a.m., at
the U.S. Trustee Office, 501 I Street, Suite 7-500, Sacramento,
California 95814.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Sacramento, California-based Sun Meadows 136, LLC, filed for
Chapter 11 protection on Oct. 6, 2008 (Bankr. E. D. Calif. Case
No. 08-34404). Stephen R. Harris, Esq., represents the company in
its restructuring effort. The company listed assets of
$1 million to $10 million and debts of $1 million to $10 million.
SUNCAL COMPANIES: California Projects 'Under Water' by $300 Mil.
----------------------------------------------------------------
SunCal Companies' California developments are over $300 million
under water on projects with $441 million in debts, John
Gittelsohn at the Orange County Business Journal reports, citing
Andrew Troop, attorney for Lehman Commercial Paper Inc.
"There is no cash here with which to operate," Mr. Troop was
quoted by the Orange County Business Journal as saying.
About SunCal Companies
SunCal Companies -- http://www.suncal.com/-- has more than
250,000 residential lots and 10 million square feet of commercial
space in various stages of development throughout California,
Arizona, Nevada and New Mexico. Some of SunCal's communities
include Amerige Heights in Fullerton, Lincoln Crossing near
Sacramento and Terra Lago and Fairway Canyon near Palm Springs.
SunCal Companies recently added an active-adult, commercial,
homebuilding, multifamily and urban divisions; and expanded to
Florida, Texas and Washington, D.C.
As reported by the Troubled Company Reporter on Sept. 19, 2008,
creditors have filed bankruptcy petition against a partnership of
SunCal Cos. and one of its biggest financiers, Lehman Brothers
Holdings Inc. of New York, in the U.S. Bankruptcy Court for the
Central District of California. Creditors also filed bankruptcy
petitions against three of the SunCal-Lehman Brothers
partnership's larger planned developments in Bakersfield and
Riverside County, which are slated for auction.
SWISS CHEETAH: Moody's Cuts $10MM Default Swap Rating to 'Caa1'
---------------------------------------------------------------
Moody's Investors Service has downgraded its rating on Swiss
Cheetah 2006-3:
Class Description: $10,000,000 Swiss Cheetah LLC, Series 2006-3
Credit Default Swap
-- Prior Rating: B3
-- Prior Rating Date: 9/19/2008
-- Current Rating: Caa1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Fannie Mae
and Freddie Mac, which were placed into the conservatorship of the
U.S. government on September 8, 2008 and one of the Icelandic
banks, specifically Kaupthing Bank hf.
SWISS CHEETAH: Moody's Lowers $10MM Default Swap Rating to 'Caa1'
-----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on Swiss
Cheetah 2006-2:
Class Description: $10,000,000 Swiss Cheetah LLC, Series 2006-2
Credit Default Swap
-- Prior Rating: B3
-- Prior Rating Date: 9/19/2008
-- Current Rating: Caa1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Fannie Mae
and Freddie Mac, which were placed into the conservatorship of the
U.S. government on September 8, 2008 and one of the Icelandic
banks, specifically Kaupthing Bank hf.
SWISS CHEETAH: Moody's Trims $10MM Default Swap Rating to 'Caa1'
----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on Swiss
Cheetah 2006-1:
Class Description: $10,000,000 Swiss Cheetah LLC, Series 2006-1
Credit Default Swap
-- Prior Rating: B3
-- Prior Rating Date: 9/19/2008
-- Current Rating: Caa1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Fannie Mae
and Freddie Mac, which were placed into the conservatorship of the
U.S. government on September 8, 2008 and one of the Icelandic
banks, specifically Kaupthing Bank hf.
SYNCORA GUARANTEE: Moody's Junks and Reviews IFS Ratings
--------------------------------------------------------
Moody's Investors Service has downgraded to Caa1, from B2, the
insurance financial strength ratings of Syncora Guarantee Inc.
("SG" -- formerly XL Capital Assurance Inc.), and Syncora
Guarantee (U.K.) Ltd., with the ratings placed on review with
direction uncertain. In the same rating action, Moody's
downgraded the provisional senior unsecured shelf rating of
Syncora Holdings Ltd. to (P)Ca from (P)Caa3 and the rating of Twin
Reefs Pass-Through Trust to Ca from Caa2, with the ratings of both
issuers placed on review with direction uncertain.
Moody's has also downgraded to Caa1, from B2, the insurance
financial strength rating of Syncora Guarantee Re Ltd. ("SG Re" --
formerly XL Financial Assurance Ltd), and will withdraw the rating
as a result of its recent merger into SG. Prior to this rating
action, the ratings of SG and SG Re were on review for possible
upgrade, the ratings of Syncora had a negative outlook and the
rating of Twin Reefs was on review with direction uncertain.
According to Moody's, the rating action reflects both Moody's
expectation of higher mortgage-related losses arising from
Syncora's insured portfolio, as well as the possibility that
ongoing settlement negotiations with CDS counterparties regarding
ABS CDO exposures could result in a comprehensive agreement for
the termination of troubled exposures. If Syncora is able to
reach a favorable settlement, remaining SG policyholders would
likely benefit from an improved credit profile at the company.
However, Moody's believes that the terms of any such settlement
would likely be consistent with a distressed exchange for settling
CDS counterparties. For this reason, Moody's has downgraded SG's
insurance financial strength rating, with the ratings on review
with direction uncertain, to reflect the wide range of potential
outcomes resulting from Syncora's restructuring initiatives.
Moody's ratings on securities that are guaranteed or "wrapped" by
a financial guarantor are generally maintained at a level equal to
the higher of a) the rating of the guarantor, or b) the published
underlying rating. In accordance with -- Current Rating agency
policy, following Moody's June 20, 2008 rating action on SG which
lowered its rating to below the investment grade level, Moody's
withdrew ratings on SG-wrapped securities for which there was no
published underlying rating.
Should the guarantor's rating subsequently move back into the
investment grade range or should the agency subsequently publish
the associated underlying rating, Moody's would reinstate
previously withdrawn ratings on those wrapped instruments. For
further information please see Moody's special comment entitled:
Assignment of Wrapped Ratings When Financial Guarantor Falls Below
Investment Grade (May, 2008).
Regarding Syncora's insured portfolio, Moody's expects further
stress on the company's risk-adjusted capital position in light of
continued deterioration in housing fundamentals and the related
implications on the company's mortgage-related exposures. Higher
expected mortgage default rates and severity were reflected in
upward revisions to Moody's lifetime loss estimates for certain
recent vintage residential mortgage-backed securities announced in
September.
Moody's said that its review of SG's insurance financial strength
rating will update its assessment of the guarantor's mortgage-
related exposures and other insured transactions. Moody's stated
that because SG is meaningfully exposed to the risk of US subprime
mortgages and other residential mortgage products, its updated
mortgage loss assumptions are expected to have a significant
impact on estimates of the firm's capital adequacy, which had
recently shown signs of improvement following the $1.8 billion
settlement with former parent, XL Capital Ltd, and the commutation
of certain credit default swaps on ABS CDO exposures with Merrill
Lynch.
According to Moody's, the ratings review will also focus on the
result of ongoing negotiations with CDS counterparties regarding
the commutation of remaining ABS CDO exposures at the company.
Moody's notes that Syncora has earmarked $820 million from its
settlement with XL Capital Ltd for the purpose of commuting,
terminating, amending or restructuring existing agreements with
certain CDS bank counterparties. To the extent Syncora is able to
commute these exposures at a reasonable price, SG's insurance
financial strength rating would likely be upgraded, but any upward
rating revision would likely result in a non-investment grade
rating given the continued uncertainty with respect to Syncora's
remaining mortgage-related exposures and, in Moody's opinion,
impaired franchise.
Conversely, Syncora's inability to adequately mitigate the
potential for further losses on these contracts through negotiated
settlements within a reasonable timeframe could result in a
confirmation of the rating or a further downgrade, depending on
Moody's view of capital adequacy at the firm at the conclusion of
our ratings review.
The downgrades of the ratings on Twin Reefs and Syncora's
provisional senior unsecured shelf registration were prompted by
the likelihood that future dividend payments on Twin Reefs will be
omitted, as well as the absence of unrestricted dividend capacity
at SG. Moody's anticipates that any improvement in SG's capital
adequacy profile achieved through the commutation or termination
of troubled mortgage-related exposures will have only a moderate
impact on the credit profile of the holding company over the near
to medium term.
List of Rating Actions
These ratings have been downgraded and placed on review with
direction uncertain:
* Syncora Guarantee Inc. -- insurance financial strength to Caa1
from B2;
* Syncora Guarantee (U.K.) Ltd. -- insurance financial strength
to Caa1 from B2;
* Syncora Holdings Ltd. -- provisional rating on senior debt to
(P)Ca from (P)Caa3;
* Twin Reefs Pass-Through Trust -- contingent capital securities
to Ca from Caa2.
These ratings have been placed on review with direction uncertain:
* Syncora Holdings Ltd. -- provisional rating on subordinated
debt at (P)Ca and preference shares at Ca.
This rating has been downgraded and will be withdrawn:
* Syncora Guarantee Re Ltd -- insurance financial strength to
Caa1 from B2.
Syncora Holdings Ltd. (formerly Security Capital Assurance Ltd) is
a Bermuda-domiciled holding company whose primary operating
subsidiary, Syncora Gurantee Inc. (formerly XL Capital Assurance
Inc.) provides credit enhancement and protection products to the
public finance and structured finance markets throughout the
United States and internationally.
TEGRANT CORP: Moody's Lowers All Ratings on Material Shortfall
--------------------------------------------------------------
Moody's Investors Service downgraded all of Tegrant Corporation's
credit ratings and changed the outlook to negative. The Corporate
Family Rating and Probability of Default Ratings were lowered to
Caa2 from B3, the first lien senior secured credit facility rating
was lowered to Caa1 from B2 and the second lien senior secured
term loan rating was lowered to Caa3 from Caa2.
The downgrades were driven by a material shortfall in year-to-date
revenue and operating results as compared to previous
expectations, resulting in very high leverage and poor interest
coverage metrics. Moody's expects weak demand for certain of
Tegrant's products to continue over the intermediate term,
particularly within its consumer and building products end
markets.
In addition, Tegrant's liquidity profile is of concern. While the
company reportedly had $15 million of cash on hand at the end of
September 2008, free cash flow is expected to remain negative over
the next twelve months and the revolver is fully drawn. Tegrant's
financial sponsor, Metalmark Capital, made an equity contribution
to cure the company's covenant violation in the second quarter.
It is highly likely, in Moody's opinion, that a cure or amendment
will also be needed for the quarter ended September 30, 2008, when
the leverage covenant stepped down to 6.5 times from 6.75 times.
Should management pursue and obtain a covenant amendment, pricing
on the credit facilities would likely increase significantly and
further pressure cash flow.
Moody's downgraded these ratings:
-- $50 million senior secured first lien revolver due 2013, to
Caa1/ LGD3 (37%) from B2 / LGD3 (37%)
-- $213 million senior secured first lien term loan due 2013, to
Caa1 / LGD3 (37%) from B2 / LGD3 (37%)
-- $75 million senior secured second lien term loan due 2015, to
Caa3 / LGD5 (85%) from Caa2/ LGD5 (85%)
-- Corporate Family Rating, to Caa2 from B3
-- Probability of Default Rating, to Caa2 from B3
The negative outlook reflects general macroeconomic pressures and
cyclical trends within Tegrant's end markets. The outlook also
incorporates Moody's concerns over whether Tegrant can meet its
liquidity requirements over the medium term under its current
capital structure.
The previous rating action occurred on August 23, 2007 when
Moody's assigned initial ratings at the time of the leveraged
buyout.
Tegrant Corporation, headquartered in DeKalb, Illinois is a North
American manufacturer of packaging solutions with a focus in the
consumer, healthcare, automotive, industrial, medical devices and
building products industries. For the twelve months ended
June 30, 2008, the company generated revenues of approximately
$425 million.
THREE STROKES: Section 341(a) Meeting Scheduled for November 13
---------------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of Three
Strokes Limited Partnership's creditors on Nov. 13, 2008, at 2:00
p.m., at Room 976 in Dallas.
This is the first meeting of creditors required under Section
341(a) of the U.S. Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Dallas, Texas-based Three Strokes Limited Partnership filed for
Chapter 11 protection on Oct. 7, 2008 (Bankr. N. D. Texas Case No.
08-35189). Rakhee V. Patel, Esq., at Pronske & Patel, P.C.,
represents the company in its restructuring effort. The company
listed assets of $1 million to $10 million and debts of $1 million
to $10 million.
TICKETMASTER: S&P's 'BB+' Ratings Unaffected buy Investment Deal
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings and
outlook on Ticketmaster are not affected by Ticketmaster's
(BB+/Stable/--) agreement to increase its existing investment
in artist management company, Front Line Management Inc. (not
rated) to a majority interest and install Front Line's CEO, Irving
Azoff, as chief executive of Ticketmaster. The combined entity
will be renamed Ticketmaster Entertainment Inc. Ticketmaster's
current management, led by Chief Executive Sean Moriarty, is to
report to Azoff. To obtain a majority interest in Front Line,
Ticketmaster will purchase a 30% stake in Front Line for about
$123 million in cash from Warner Music Group Corp. Ticketmaster
already owns a minority stake in Front Line.
The investment is a dramatic move, based on the change in
Ticketmaster's management team. The goal is to strengthen
Ticketmaster's connection to performing artists, especially in
light of competitor Live Nation Inc.'s aggressive moves to secure
ticketing rights at entertainment venues. Live Nation has been
trying to persuade venues to switch ticketing service providers
based in part on its potential influence on performing artists.
Ticketmaster had some excess cash on hand and substantial
availability under its $200 million revolving credit facility.
S&P's rating on Ticketmaster had assumed that the company will
continue to pursue tuck-in acquisitions. S&P has further assumed
that the change in management will not result in a significant
shift in financial strategy. If the company pursues further
investments in artist management or tangential businesses that
meaningfully alter the business profile, S&P may review the
outlook or rating.
TIERS 2006-9: Moody's Trims S. 2006-9 Certs. Rating to B2 from Ba1
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Tiers 2006-9 (Alaska):
Class Description: Tiers Alaska Floating Rate Credit Linked Trust
Certificates, Series 2006-9
-- Prior Rating: Ba1
-- Prior Rating Date: 8/13/2008
-- Current Rating: B2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on Sept. 15, 2008, and Washington
Mutual Inc., which was seized by federal regulators on Sept. 25,
2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase.
TIERS 2006-10: Moody's Junks Series 2006-10 Certificates Rating
---------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Tiers 2006-10:
Class Description: Tiers Floating Rate Credit Linked Trust
Certificates Series 2006-10
-- Prior Rating: B3
-- Prior Rating Date: 10/8/2008
-- Current Rating: Caa2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Fannie
Mae and Freddie Mac, which were placed into the conservatorship of
the U.S. government on Sept. 8, 2008, and one Icelandic bank,
specifically Kaupthing Bank hf.
TIERS ALASKA: Moody's Lowers Certificate Rating to 'B3' from 'Ba2'
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by TIERS Alaska Floating Rate Credit Linked Trust, Series
2007-2:
Class Description: TIERS(R) Alaska Floating Rate Credit Linked
Trust Certificates, Series 2007-2
-- Prior Rating: Ba2
-- Prior Rating Date: 8/13/2008
-- Current Rating: B3
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on Sept. 15, 2008, and Freddie Mac,
which was placed into the conservatorship of the U.S. government
on Sept. 8, 2008.
TOUGHER INDUSTRIES: Trustee Files $3.6-Million Suit vs. PSEG
------------------------------------------------------------
Lee Woodard, bankruptcy trustee for Tougher Industries, Inc. has
filed a suit against PSEG Energy Technologies for misrepresenting
the company's value during 2003 stake sale, Cathy Woodruff writes
for the Times Union.
PSEG sold its stake in Tougher in 2003 to Jacob George Acquisition
Inc. for $3.6 million; Mr. Woodard seeks to recover the amount
declaring that the company was worth far less, even then, Times
Union reports.
Mr. Woodard claims PSEG concealed Tougher's problems and
liabilities when it was sold to Jacob George -- which partners
include Steven Shaw, Richard Abramo, Robert Brown and John
Tomassetti, Times Union says.
Mr. Woodard claims PSEG's officers failed to provide the buyers
buyers with audited financial information. It also claims that
PSEG failed to disclose that general contractors had restricted
Tougher's right to bid on HVAC subcontracts and that Albany
general contractor BBL Construction Services LLC, in particular,
had informed Tougher officials that they were not welcome to serve
as subcontractor on its jobs, Times Union reports. The lawsuit
also alleges that PSEG inflated the actual profit margin for
Tougher's ongoing projects at the time.
Mr. Shaw pleaded guilty in June 2008 to bank fraud, tax evasion
and embezzlement in connection with a $6.1 million loan he secured
for Tougher from Berkshire Bank in 2006.
A spokesman for PSEG said it is reviewing the complaint.
Tougher Industries, Inc. is based in Albany, NY. It is a
mechanical contractor.
Tougher Industries filed for Chapter 11 protection on Nov. 3,
2006. The Debtor was already purchased and given extra financing
from its new owners, Massachusetts firm J. Norbert Properties LLC,
but the bankruptcy case is ongoing, according to the report. The
Debtor did not disclose the value of its assets when it filed for
bankruptcy. It listed estimated debt of $1 million to $100
million.
TRS: Moody's Chips $25MM Mezzanine Tranche Rating to Ba1 from Aaa
-----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on TRS $25M
(Ref. MS ACES SPC Series 2006-6):
Class Description: $25,000,000 Mezzanine Tranche
-- Prior Rating: Aaa
-- Prior Rating Date: March 28, 2007
-- Current Rating: Ba1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on September
25, 2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, and three Icelandic banks, specifically Kaupthing
Bank hf, Landsbanki Islands hf, and Glitnir Banki hf.
TRS: Moody's Downgrades $50MM Mezzanine Tranche Rating to 'Ba1'
---------------------------------------------------------------
Moody's Investors Service has downgraded its rating on TRS $50M
(Ref. MS ACES SPC Series 2006-6):
Class Description: $50,000,000 Mezzanine Tranche
-- Prior Rating: Aaa
-- Prior Rating Date: March 28, 2007
-- Current Rating: Ba1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on September
25, 2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, and three Icelandic banks, specifically Kaupthing
Bank hf, Landsbanki Islands hf, and Glitnir Banki hf.
URBAN SPACES: Case Summary & 18 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Urban Spaces of the River, LLC
P.O. Box 775
Asheville, NC 28802
Bankruptcy Case No.: 08-10852
Chapter 11 Petition Date: October 24, 2008
Court: Western District of North Carolina (Asheville)
Judge: George R. Hodges
Debtor's Counsel: D. Rodney Kight, Jr., Esq.
info@kightlaw.com
Kight Law Office
9 SW Pack Square, Suite 200
Asheville, NC 28801
Tel: (828) 255-9881
Fax: (828) 255-9886
Total Assets: $2,900,330
Total Debts: $3,292,839
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ncwb08-10852.pdf
VALMONT INDUSTRIES: Moody's Keeps 'Ba1' CF and PD Ratings
---------------------------------------------------------
Moody's upgraded the Speculative Grade Liquidity Rating of Valmont
Industries, Inc. to SGL-1 from SGL-2. Concurrently, Moody's
withdrew the ratings on Valmont's existing senior unsecured
revolver and term loan because of repayment.
The upgrade in the liquidity rating to SGL-1 was driven by
continued growth in free cash flow above expectations and improved
revolver availability subsequent to Valmont entering into a new
credit facility. Moody's anticipates that the company will be
able to comfortably meet its working capital, capital expenditure
and dividend requirements through internal sources over the next
twelve months. Free cash flow is expected to exceed $50 million
and is supplemented by the $68 million in cash Valmont reported at
September 30, 2008, though about two-thirds of cash is held
outside the US.
Revolver availability has improved as a result of the company's
October 16, 2008 refinance of its $150 million revolver and
$18 million term loan ($75 million face value) maturing in May
2009 with a $280 million senior unsecured revolver maturing in
October 2013 (unrated by Moody's). While current availability of
about $157 million may be temporarily reduced for seasonal working
capital purposes or small acquisitions, Moody's do not expect
availability to fall below $80 million during the next year.
Additionally, Valmont is expected to be well in compliance with
the leverage and interest coverage covenants contained in the new
facility throughout the near term.
The SGL-1 liquidity rating is sensitive to material changes in
cash flow generation and revolver usage, including any changes
made by management in its fiscal policy and acquisition strategy.
Moody's upgraded this rating:
-- Speculative Grade Liquidity Rating, to SGL-1 from SGL-2
Moody's withdrew the below ratings:
-- $150 million senior unsecured revolver due 2009, Baa3
(LGD3, 35%)
-- $75 million face value senior unsecured term loan due 2009,
Baa3 (LGD3, 35%)
Other ratings are:
-- $150 million senior subordinated notes due 2014, Ba2 / LGD5
(to 85% from 81%)
-- Corporate Family Rating, Ba1
-- Probability of Default Rating, Ba1
The previous rating action occurred on March 31, 2008 when Moody's
upgraded Valmont's Corporate Family and Probability of Default
Ratings to Ba1 from Ba2 and raised the senior subordinated notes
rating to Ba2 from Ba3.
Valmont Industries, Inc. is a global producer of metal and
concrete pole and tower structures, mechanized irrigation systems
and coatings. Customers and end-users include state and federal
governments, contractors, utility and telecommunications
companies, manufacturers of commercial lighting fixtures and large
farms. Headquartered in Omaha, Nebraska, the company is publicly
held and reported revenues of $1.8 billion for the twelve months
ended September 30, 2008.
VALUE CITY: Case Summary & 50 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Value City Department Stores LLC
3241 Westerville Road
Columbus, OH 43224
Bankruptcy Case No.: 08-14196
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Value City Holdings, Inc. 08-14197
Value City Department Stores Services, Inc. 08-14198
Value City of Michigan, Inc. 08-14199
Gramex Retail Stores, Inc. 08-14200
GB Retailers, Inc. 08-14201
J.S. Overland Delivery, Inc. 08-14202
Retail Ventures Jewelry, Inc. 08-14203
VCHI Acquisition Co. 08-14204
Type of Business: The Debtors operate a chain of department stores
in the United States.
See: http://www.valuecity.com/
Chapter 11 Petition Date: October 26, 2008
Court: Southern District of New York (Manhattan)
Debtor's Counsel: John Longmire, Esq.
maosbny@willkie.com
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019-6099
Tel: (212) 728-8574
Fax: (212) 728-8111
Claims Agent: Epiq Bankruptcy Solutions LLC
Total Assets: $$138,986,604
Total Debts: $159,825,793
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
DSW Inc. Expense AP $4,492,883
810 DSW Drive
Columbus, OH 43224
NEJ Wholesale Clothing Receivable $1,394,428
170 Pinesbridge Road
Beacon Falls, CT 06403
Schottenstein Stores Corp. Expense AP $947,885
1800 Moler Road
Columbus, OH 43207
Lolly Togs Ltd./French Toast Merchandise AP $906,885
321 Herrod Boulevard
Dayton, NJ 08810
Thor Macomb Mall Rent $887,724
139 Fifth Avenue
York, NY 10036
Tel: (586) 293-7800
Fax: (586) 293-2713
Tiger Capital Group, LLC Expense AP $648,900
84th State Street, 4th Floor
Boston, MA 02109
Vanetti Inc.
12178 4th Street Merchandise AP $491,319
Rancho Cucamonga, CA 91730
Graphic Communications Expense AP $487,784
16-B Journey
Aliso Viejo, CA 92656
San-Malone Enterprises Inc. Merchandise AP $470,205
19865 East Harrison Avenue
City Of Industry, CA 91789
Federal Jeans Inc. Merchandise AP $452,928
2042 Pitkin Avenue
Brooklyn, NY 11207
Diao Group International LLC Merchandise AP $451,544
1 Cape May Street
Harrison, NJ 07029
Northway Group Rent $432,693
8000 McKnight Road, Suite 1501
Pittsburgh, PA 15239
Tel: (412) 364-1171
Fax: (412) 364-0153 T
Saginaw Shopping Center Rent $403,507
120 North Point Boulevard
ext. 903m, Suite 301
Lancaster, OH 17601
Tel: (717) 569-6439
Fax: (717) 560-9909
Columbus Closeouts Ltd. Merchandise AP $386,342
7955 Walnut Street
New Albany, OH 43054
Universal Mall
Universal Mall Rent $383,761
28582 Dequindre Road
Tel: (856) 751-3161
Kanful Hong Kong Limited
2406-7 Suites
Man Yee Building Merchandise AP $376,320
68 Des Voeux Road Central
Hong Kong
Valley Fair/Irvington Rent $362,747
1800 Moler Road
Columbus, OH 43207
Tel: (614) 449-4206
Fax: (614) 445-7373
Bloomer Candy Company Merchandise AP $352,663
P.O. Box 3450
Zanesville, OH 43702
National Janitoral Solutions Expense AP $352,424
14000 Commerce Parkway
Suite C
Mt Laurel, NJ 08054
Barkat Inc. Merchandise AP $348,289
1201 Jersey Avenue
North Brunswick, NJ 08902
Achs Management Group Rent $343,434
18525 Warrensville Heights
LLC
1412 Broadway, 3rd Floor
New York, NY 10018
Jaylyn Sales Merchandise AP $336,836
19 West 34th Street, Room 606
New York, NY 10001
Kamin Realty Corporation Rent $335,882
Attn: Dan Kamin
490 South Highland Avenue
Pittsburgh, PA 15206
Tel: (412) 661-5233
(585) 359-3000
Golf Glen Mart Rent $312,122
270 Commerce Drive
Rochester, NY 14623
Fax: (585) 359-4690
Easy Street Merchandise AP $292,233
364 Route 108
Somersworth, NH 03878
Livonia Mall Rent $285,119
Attn: Karl Zarbo
29514 Seven Mile Road
Livonia, MI 48152
Tel: (248) 476-1160
Hart Schaffner Marx Merchandise AP $269,975
101 North Wacker Drive
Chicago, IL 60606
C.P. International Corp. Merchandise AP $262,244
165 North Dean Street
Wolverine World Wide, Inc. Merchandise AP $256,200
9341 Courtland Drive HC104
Rockford, MI 49351
Crystal Capital Fund Expense AP $250,000
Management LP
2 International Place Expense AP $249,243
Kentex Corp. Merchandise AP $245,157
Branch Properties TC, LLC Rent $241,201
Sterling Inc. Merchandise AP $237,193
Young's Inc. Merchandise AP $232,016
American Greetings Merchandise AP $225,472
Corporation
DLM Off-Price Specialist Merchandise AP $222,733
Azure Apparel, Inc. Merchandise AP $221,800
Good Supplier Corp. Merchandise AP $221,742
American Mall Inc. Rent $221,511
South Flint Plaza LLC Expense AP $220,937
F.S.I. - Fort Lauderdale Inc. Merchandise AP $213,635
Chicago Tribune Expense AP $213,153
Lion of Judah LLC Rent $210,555
Trade Winds Importing LLC Merchandise AP $204,660
Endurance Merchandise AP $204,389
Skechers USA Inc. Merchandise AP $201,807
Biddeford Blankets/Microlife Merchandise AP $194,327
Paco Sports Ltd. Merchandise AP $191,295
Ten West Apparel Merchandise AP $186,536
VALUE CITY: Seeks Ch. 11 Protection; GOB Sales to Continue
----------------------------------------------------------
Value City Department Stores LLC together with eight of its
affiliates filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York citing declining sales
and profitability over the last several years.
According to Stephen Darr, chief financial officer and chief
accounting officer of Value City, the company intends to assume a
prepetition agreement with Tiger Capital Group, LLC for store-
closing, liquidation and/or other promotional type sales at the
Debtors' remaining stores.
Value City operates a full-line retailer carrying men's, women's
and children's apparel, accessories, jewelry, shoes, home
fashions, electronics and seasonal items. It currently operates
out of 66 open stores in Delaware, Georgia, Illinois, Indiana,
Kentucky, Maryland, Michigan, Missouri, New Jersey, Ohio,
Pennsylvania, Tennessee, Virginia and West Virginia, two
distribution centers, and five warehouses. Eighteen additional
stores and warehouses are currently "dark" and the related leases
have been marketed to potential assignees prepetition. The
Debtors currently have 4,500 employees.
Mr. Darr relates that the Debtors operate in an increasingly
competitive discount retail market that includes stores such as TJ
Maxx, Burlington Coat Factory, Big Lots, Kmart, and Marshall's.
The Debtors have striven to separate their businesses from their
competition by offering name brand products, including Black and
Decker, Sunbeam, Caphalon, Sanyo, RCA, Rubbermaid, Cuisinart,
Kitchen Aid, Nike, New Balance, Rockport, Liz Claiborne, Calvin
Klein, Joseph Abboud, Vidal Sassoon, Hanes and many others. For
the seven months ending August 31, 2008, the Debtors recorded net
sales of approximately $288,542,992, and incurred net losses of
$70,041,247.
In late 2007, Retail Ventures, Inc., which owns Value City, as
well as the Filenes Basement and DSW Shoes retail chains,
announced that it was pursuing strategic alternatives for the
reorganization of Value City. As part of this reorganization
effort, VCDS and certain of its affiliates entered into an
agreement with Burlington Coat Factory Warehouse Corporation and
Schottenstein Stores Corporation, the indirect owner of RVI, to
assign or sublease up to 24 locations, with the affected stores to
close their operations on or before the end of March 2008.
On January 23, 2008, VCHI Acquisition Co., a newly formed entity
owned by VCDS Acquisition Holdings, LLC, Emerald Capital
Management LLC and Crystal Value, LLC, acquired an indirect 81%
interest in VCDS from RVI. RVI continues to indirectly own 19% of
VCDS.
Pursuant to a Credit and Security Agreement dated as of Jan. 23,
2008, with lenders led by National City Business Credit, Inc., as
administrative agent and collateral agent and Wells Fargo Retail
Finance, LLC, as co-agent, the Debtors entered into credit
facility comprising (a) revolving credit of up to $75 million; and
(b) letters of credit not to exceed $20 million. The Debtors say
that National City is the lone party holding a secured claim
against them with a $26 million outstanding under the revolver,
and approximately $10.5 million in L/Cs.
During the summer of 2008, in an effort to continue their
operational restructuring, the Debtors sought to obtain additional
financing under the Credit Agreement and to increase their
borrowing limit to $90 million. The Debtors also sold a number of
leases, which resulted to proceeds of $20 million.
"Unfortunately, these financing transactions coincided with a
variety of external economic factors which have led to a
significant decline in the Debtors' profitability and liquidity,"
Mr. Darr said. According to him, among those external factors are
declines in the housing market and the tightening of the credit
markets, which have led to a decline in consumer discretionary
spending and tightening of credit terms by the Debtors' suppliers
and factors.
In order to maximize recoveries by creditors, the Debtors believe
they must seek to continue to close stores and conduct GOB Sales.
The Debtors believe that closing the remaining stores and
conducting GOB Sales and lease dispositions are the most effective
ways to maximize value for their estates and creditors.
Promptly after filing for bankruptcy, the Debtors, as debtors-in-
possession, filed "first day motions" seeking to pay employees,
customers, and taxing authorities. They also sought the Court's
permission to hire Willkie Farr & Gallagher LLP as bankruptcy
counsel and Epiq Bankruptcy Solutions, LLC as claims agent.
The Debtors are also seeking authority to enter into a debtor in
possession financing facility, with National City. The DIP Credit
Agreement provides for extensions of credit up to a total
committed amount of $40,000,000. The Debtors say they need
sufficient liquidity -- to be provided by the DIP Loan and access
to National City's cash collateral -- in order to conduct the GOB
sales in an orderly manner and to fund their Chapter 11 cases.
National City is represented by:
Reimer & Braunstein LLP
Three Center Plaza
Boston, MA 02108
Phone: (617) 880-3550
Attn: David S. Berman
Attn: Donald Rothman
VINEYARD CHRISTIAN: Taps Pachulski Stang as Bankruptcy Counsel
--------------------------------------------------------------
Vineyard Christian Fellowship of Malibu asks the U.S. Bankruptcy
Court for the Central District of California for authority to
employ Pachulski Stang Ziehl & Jones LLP as its general bankruptcy
counsel, effective as of Sept. 12, 2008.
As the Debtor's counsel, Pachulski Stang is expected to:
a) assist, advise, and represent the Debtor regarding the
administration of this case;
b) assist, advise and represent the Debtor in analyzing its
assets and liabilities, investigating the extent and validity
of liens and any proposed asset sales, any asset
dispositions, financing arrangements and cash collateral
stipulations or proceedings;
c) assist, advise and represent the Debtor in any matter
relevant to its rights and obligations under leases and other
executory contracts;
d) assist, advise and represent the Debtor in investigating the
acts, conduct, assets, liabilities and financial condition of
the Debtor, the Debtor's operations and the desirability of
the continuance of any portion of those operations, and any
other matters relevant to this case or to the formulation of
a plan;
e) assist, advise and represent the Debtor in the negotiation,
formulation and drafting of a plan of liquidation or
reorganization;
f) assist, advise and represent the Debtor in understanding its
powers and its duties under the Bankruptcy Code and the
Bankruptcy Rules;
g) assist, advise and represent the Debtor in the evaluation of
claims and on any litigation matters, including avoidance
actions; and
h) provide such other services to the Debtor as may be necessary
in this case.
Pachulski Stang informed the Court that the firm previously
represented the Debtor in certain litigation commonly known as
Mary Devine Scott v. Vineyard Christian Fellowship, Los Angeles
Superior Court Case Number BC392797. Mary Divine Scott is one of
the Debtor's 20 largest unsecured creditors.
The firm told the Court that it also represented Ralph Eugene
Shiveley, an officer and director of the Debtor, in connection
with Mr. Shiveley's interest as a shareholder, officer and
director of Malibu Performing Arts Inc. The Debtor claimed that
Malibu Performing Arts was in default under the prepetition
management agreement with Malibu Performing Arts for the
management of the Debtor's improved property.
The firm also represented Mr. Shiveley in connection with his
interest as a shareholder, officer and director of Sha InterMedia,
in connection with a default under the lease on a portion of its
improved real property to Sha Intermedia.
The firm never represented Malibu Performing Arts or Sha
InterMedia. The firm also told the Court that it has advised
Mr. Shiveley that it will no longer continue its representation of
him and Mr. Shiveley has consented to the termination of the
relationship.
Except as disclosed, the firm assures the Court that neither the
firm nor any of its attorneys have any connection with any party
in interest, their attorneys or accountants, and that the firm
does not represent any interest adverse to the Debtor or its
estate, and that the firm is a "disinterested person' as defined
under Sec. 101(14) of the Bankruptcy Code.
On Sept. 11, 2008, the firm received $140,000 from Juergen
Schoellkopf, treasurer of the Debtor, and $160,000 from Euro
Machine Inc., which is 100% owned by Mr. Schoellkopf, as retainers
on behalf of the Debtor. Of this total amount, $236,835.81 was
set aside as a post-petition retainer. From the remainder,
$43,164.19 was applied to the Debtor's most recent pre-petition
bill.
Subject to the Court's approval, the firm will charge its normal
hourly rates, which were not disclosed.
Malibu, California-based Vineyard Christian Fellowship of Malibu
filed for Chapter 11 protection on Sept. 12, 2008 (Bankr. C. D.
Calif. Case No. 08-16951). The Debtor listed assets of
between $10 million and $50 million, and debts of between
$10 million to $50 million.
VONAGE HOLDINGS: Waives Financing Condition of Tender Offer
-----------------------------------------------------------
Vonage Holdings Corp. waived the financing condition of its tender
offer, thus taking one more step toward completing the refinancing
of its outstanding 5.0% Senior Unsecured Convertible Notes due
2010.
On Oct. 20, 2008, Vonage has signed definitive agreements for a
new financing. Vonage expects to use the proceeds from this
financing to purchase the Notes upon the expiration of the tender
offer, which will occur at noon, New York City time, on
Nov. 3, 2008, unless further extended or earlier terminated. The
receipt of financing was a condition to the tender offer, and
Vonage is now amending the tender offer to waive that condition.
Miller Buckfire & Co., LLC is acting as Dealer Manager and D.F.
King & Co., Inc. is acting as the Information Agent in connection
with the offer. American Stock Transfer & Trust Company, LLC is
the Depositary for the offer.
For any questions concerning the offer or for copies of the
documents related to the offer contact D.F. King & Co., Inc. by
calling 212-269-5550 (for banks and brokers) or 1-888-628-9011
(all others toll free).
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.
Vonage Holdings's balance sheet at June 30, 2008, showed
$466.1 million in total assets and $551.9 million in total
liabilities, resulting in an $85.8 million stockholders' deficit.
WACHOVIA BANK: S&P Puts Certs. Ratings Under Negative CreditWatch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the class
FSN-1 and FSN-2 raked commercial mortgage pass-through
certificates from Wachovia Bank Commercial Mortgage Trust's series
2007-WHALE8 on CreditWatch with negative implications.
The negative CreditWatch placements follow S&P's preliminary
valuation of the seventh-largest loan in the pool, the Four
Seasons Nevis loan, which has a trust balance of $51.0 million
(3%) and a whole-loan balance of $126.7 million. The FSN-1 and
FSN-2 raked certificates, totaling $7.4 million, derive 100% of
their cash flow from the loan.
S&P conducted its preliminary analysis based on the borrower's
operating statements for the trailing 12 months ended Aug. 31,
2008, which indicated a 16% valuation decline since issuance. In
addition, the loan matured on Oct. 9, 2008, and has not met its
extension hurdles, including a minimum debt service coverage of
1.50x. The master servicer, Wachovia Bank N.A., reported a DSC of
1.00x for the year ended Dec. 31, 2007. This loan is in the
process of being transferred to the special servicer.
S&P will resolve the CreditWatch placements following its full
analysis of the Four Seasons Nevis loan and property cash flow.
When resolving S&P's CreditWatch placements, S&P will also seek
information on the condition of the property and its insurance
coverage, as the 196-room hotel property was affected by Hurricane
Omar on Oct. 16, 2008.
Ratings Placed on Creditwatch Negative
Wachovia Bank Commercial Mortgage Trust
Commercial mortgage pass-through certificates series 2007-WHALE8
Rating
------
Class To From
----- -- ----
FSN-1 BB+/Watch Neg BB+
FSN-2 BB/Watch Neg BB
WASHINGTON MUTUAL: Board Approves Changes in Management Layout
---------------------------------------------------------------
In a regulatory filing with the Securities and Exchange Commission
dated Oct. 17, 2008, Washington Mutual, Inc. Executive Vice
President and Secretary Stewart M. Landefeld disclosed that on
October 11, the company's board of directors approved the removal
of all of the company's officers with the exception of (1) Alan
Fishman as chief executive officer, and (2) Stewart Landefeld as
executive vice president.
The officers who were removed include Melissa J. Ballenger,
executive vice president and controller, and Thomas W. Casey,
executive vice president and chief financial officer.
Stephen J. Rotella, who served as the company's president and
chief operating officer, had previously tendered his resignation
on Oct. 3, 2008.
In light of the Officers' departure from WaMu, the board
appointed, on Oct. 11, 2008, William Kosturos as president,
vice president, general auditor, controller, chief financial
officer, treasurer, assistant secretary and chief restructuring
officer, pursuant to an engagement letter with consulting firm
Alvarez & Marsal North America, LLC.
Mr. Kosturos will serve as the company's designated principal
financial officer and principal accounting officer for reporting
purposes to the SEC.
The Engagement Letter essentially provides that Mr. Kosturos will
continue to be employed by A&M. While rendering services for
WaMu's benefit, Mr. Kosturos will continue to work with A&M
personnel in connection with other unrelated matters.
Mr. Kosturos will not receive any compensation directly from the
company and will not participate in any of the company's employee
benefit plans. The company will instead compensate A&M for
Mr. Kosturos' services.
In line with his designation, Mr. Kosturos filed with the SEC a
Form 3 Initial Statement of Beneficial Ownership of Securities in
WaMu on Oct. 20, 2008.
Rotella Sells Washington Home for $6.25-Mil.
Mr. Rotella is selling his 7,430 sq. ft. house located in the
State of Washington for $6,250,000, UPI.com reports.
The Rotellas purchased the house for $3,780,000 in June 2005,
according to the Seattle Times, citing local state records.
About Washington Mutual
headquartered in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
WCI COMMUNITIES: Court OKs $3.5MM Sale of 22 Condominium Units
--------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
has authorized WCI Communities Inc. and its debtor-affiliates to
sell 22 completed condominium units owned by Bay-Colony Gateway,
Inc., to Southern Caledonian Properties Ltd. for $3,520,000, free
and clear of all liens, claims, encumbrances, and other interests.
The Condos are located within the Pelican Preserve neighborhood in
Fort Myers, Florida.
The Debtors are also authorized to pay any commission owed to
broker, Orsini Properties, Ltd.
According to the Naples Daily News, the deal is good for both the
Debtors and Southern Caledonian. The Debtors are getting a
higher price for the condo units than would be expected in
today's market, the newspaper notes. Southern Caledonian is also
getting a good deal as the U.S. dollar is so weak against other
currencies in Europe where the Condos are being marketed, the
news source adds.
Headquartered in Bonita Springs, Florida, WCI Communities, Inc. --
http://www.wcicommunities.com/-- is a fully integrated
homebuilding and real estate services company. It has operations
in Florida, New York, New Jersey, Connecticut, Massachusetts,
Virginia and Maryland. The company directly employs roughly 1,800
people, as well as roughly 1,800 sales representatives as
independent contract employees.
The company and 126 of its affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No. 08-11643
through 08-11770). Thomas E. Lauria, Esq., Frank L. Eaton, Esq.,
Linda M. Leali, Esq., at White & Case LLP, in Miami, Florida.
Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at Bayard,
P.A, are the Debtors' local bankruptcy counsel. Lazard Freres &
Co. represents the Debtors as financial advisors. The Debtors
selected Epiq Bankruptcy Solutions LLC as their claims & notice
agent. The U.S. Trustee for Region 3 appointed five creditors to
serve on an Official Committee of Unsecured Creditors. Daniel H.
Golden, Esq., Lisa Beckerman, Esq., and Philip C. Dublin, Esq.,
at Akin Gump Strauss Hauer & Feld LLP, and Laura Davis Jones,
Esq., Michael R. Seidl, Esq., and Timothy P. Cairns, Esq., at
Pachulski Stang Ziehl & Jones LLP, represent the Committee in
these cases. When the Debtors filed for protection from their
creditors, they listed total assets of $2,178,179,000 and total
debts of $1,915,034,000.
(WCI Communities Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
WCI COMMUNITIES: Court Extends Plan Filing Period until June 2
---------------------------------------------------------------
Judge Kevin J. Carey of the United States Bankruptcy Court for the
District of Delaware has extended the time period within which WCI
Communities Inc. and its debtor-affiliates may remove civil
actions pending as of the Petition Date, through and including the
later of:
(i) June 2, 2009; or
(ii) 30 days after entry of an order terminating the automatic
stay with respect to any particular action sought to be
removed.
The Removal Period Extension Order is without prejudice to any
position the Debtors may take regarding whether Section 362 of the
Bankruptcy Code applies to stay any civil proceedings and the
Debtors' right to seek further extensions of the time to remove
any and all proceedings.
Headquartered in Bonita Springs, Florida, WCI Communities, Inc. --
http://www.wcicommunities.com/-- is a fully integrated
homebuilding and real estate services company. It has operations
in Florida, New York, New Jersey, Connecticut, Massachusetts,
Virginia and Maryland. The company directly employs roughly 1,800
people, as well as roughly 1,800 sales representatives as
independent contract employees.
The company and 126 of its affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Lead Case No. 08-11643
through 08-11770). Thomas E. Lauria, Esq., Frank L. Eaton, Esq.,
Linda M. Leali, Esq., at White & Case LLP, in Miami, Florida.
Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at Bayard,
P.A, are the Debtors' local bankruptcy counsel. Lazard Freres &
Co. represents the Debtors as financial advisors. The Debtors
selected Epiq Bankruptcy Solutions LLC as their claims & notice
agent. The U.S. Trustee for Region 3 appointed five creditors to
serve on an Official Committee of Unsecured Creditors. Daniel H.
Golden, Esq., Lisa Beckerman, Esq., and Philip C. Dublin, Esq.,
at Akin Gump Strauss Hauer & Feld LLP, and Laura Davis Jones,
Esq., Michael R. Seidl, Esq., and Timothy P. Cairns, Esq., at
Pachulski Stang Ziehl & Jones LLP, represent the Committee in
these cases. When the Debtors filed for protection from their
creditors, they listed total assets of $2,178,179,000 and total
debts of $1,915,034,000.
(WCI Communities Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
WEST MAIN: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: The West Main Street Realty Trust
29 Bridge Street
Salem, MA 01970
Bankruptcy Case No.: 08-18035
Chapter 11 Petition Date: October 24, 2008
Court: District of Massachusetts (Boston)
Judge: Joan N. Feeney
Debtor's Counsel: John F. Davis, Esq.
johnfdavisesq@comcast.net
Brown, Brown & Davis LLC
P.O. Box 37
Beverly, MA 01915
Tel: (978) 232-9640
Fax: (978) 232-9644
Estimated Assets: $500,000 to $1 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors.
WIDGET POST: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Widget Post Production Company, LLC
1041 N. Formosa Avenue
West Hollywood, CA 90046
Bankruptcy Case No.: 08-27895
Chapter 11 Petition Date: October 24, 2008
Court: Central District Of California (Los Angeles)
Judge: Victoria S. Kaufman
Debtor's Counsel: Lewis R. Landau, Esq.
lew@landaunet.com
Lewis R Landau Attorney at Law
23564 Calabasas Rd., Suite 104
Calabasas, CA 91302
Tel: (888) 822-4340
Fax: (888) 822-4340
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.
WILTON PRODUCTS: S&P Holds 'B3' CF & PD Ratings; Outlook Negative
-----------------------------------------------------------------
Moody's Investors Service changed Wilton Products, Inc. rating
outlook to negative and affirmed its B3 corporate family rating
and probability of default ratings. In addition, Moody's affirmed
the Ba3 (LGD3, 23%) 1st lien and Caa1 (LGD4, 68%) second lien
ratings. The change in outlook mostly reflects the negative
impact of one of the company's operating segments on the company's
overall financial performance. Moreover, the company will not
achieve projections established at the time of the LBO and, as a
consequence, faces financial covenant step downs in 2009 that, in
Moody's view, will be difficult to meet.
Notably, most of Wilton's segments appear able to maintain
momentum despite the weakening economy and particular
deterioration among key customers. In addition, Moody's believes
the B3 corporate family rating continues to capture the risk
inherent in the company's highly leveraged capital structure which
includes significant junior capital with limited rights
($195 million of mezzanine and $224 million of preferred equity).
In addition, financial support, most likely in the form of an
equity cure, is anticipated from the company's equity sponsor,
GTCR, if necessary.
These rating actions have been taken and follow the ratings
assignments taken on October 24, 2007:
Affirmed:
-- Corporate Family Rating at B3
-- Probability of Default Rating at B3
-- $436 million 1st lien senior secured credit facility due
2014, at Ba3 (LGD3, 23%)
-- $65 million senior secured revolving credit facility due
2013, at Ba3 (LGD3, 23%)
-- $255 million 2nd lien senior secured term loan due 2015, at
Caa1 (LGD4, 68%)
The rating outlook is negative.
Headquartered in Woodridge, Illinois, Wilton Products Inc. is a
leading provider of food and paper crafting products, and
specialty housewares. Reported revenue was approximately
$600 million for the twelve months ended June 30, 2008.
WOOD FAMILY: City OKs Jack Rose's Pullout From Ballpark Project
---------------------------------------------------------------
Craig Harris and Elias C. Arnold at The Arizona Republic report
that the Goodyear City Council approved an agreement that would
take developer Jack Rose's companies off a private development
around a ballpark.
Three entities controlled by Wood Family Enterprises Limited
Partnership filed for Chapter 11 protection in August 2008 to void
contracts with Mr. Rose, The Arizona Republic relates. According
to the report, Wood Family and Mr. Rose are disputing who would
receive $15 million in reimbursements and sales-tax rebates from
Goodyear city.
The Arizona Republic states that under the settlement, Mr. Rose
would get a $225,000 development fee, but Woods Family would get
$15 million in reimbursements and rebates. The report says that
Woods Family will also maintain its ties with Goodyear. The Woods
Family, according to the report, owe M&I Bank about $28.8 million
for improvements on the land.
The Arizona Republic quoted Mr. Rose as saying, "We wanted to let
the Woods go on with the project, and the city to go on with the
project, and there's no way to do that" while fighting over the
$15 million.
According to The Arizona Repbulic, the Woodside owner's attorney -
- Jim Cross, Esq. -- said that the deal would become final once
the Bankruptcy Court approves it.
Rose Sued for Defaulting on Loans
Rose is facing an almost $36 million lawsuit for allegedly
defaulting on real-estate loans to M&I Bank and Meridian Bank, The
Arizona Republic relates.
The Arizona Republic relates that M&I Bank is seeking almost $20.5
million, while Meridian Bank is seeking almost
$15.4 million.
The Arizona Republic quoted Mr. Rose as saying, "These were one-
to three-year loans, and as these loans have come up for renewal,
it has been difficult for people in the real-estate community to
refinance.... I had long-term relationships and promises of loan
extensions that were not kept." The loans were for 14 projects in
Avondale, Buckeye, and Goodyear, the report says, citing Mr. Rose.
According to the report, Mr. Rose said, "We will try to negotiate
with the banks and bring in new capital and resolve the
situation."
According to The Arizona Republic, Mr. Rose said that he has been
caught in the credit shortage, but assured that his personal
financial challenges won't affect a baseball complex, which will
open in February. Goodyear's assistant city attorney, Sarah
Chilton, said that the city has no liability on the banks'
lawsuits against Mr. Rose and that the city has a fee-for-service
contract with Goodyear Baseball LLC, one of Mr. Rose's entities
working on the ballpark.
About Wood Family
Spring, Texas-based Wood Family Enterprises, Inc., filed for
Chapter 11 protection on Dec. 29, 2006 (Bankr. N. D. Texas Case
No. 06-35755). Weldon L. Moore, III, Esq., assists the company in
its restructuring effort. The company listed assets of
$1 million to $100 million and debts of $1 million to
$100 million.
YRC WORLDWIDE: S&P Puts 'BB' Corp. Credit Rating Under Neg. Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on YRC
Worldwide Inc., including the 'BB' long-term corporate credit
rating, on CreditWatch with negative implications. The
CreditWatch placement reflects YRC's deteriorating operating
performance, constrained liquidity position, and concerns over the
near-to-intermediate-term outlook of the less-than-truckload
sector. Overland Park, Kansas-based YRC is the largest LTL
trucking company in North America, generating about $9.4 billion
in annual revenues.
"Given the weak domestic economy, conditions are unlikely to
improve materially over the near term," said Standard & Poor's
credit analyst Anita Ogbara. YRC has experienced meaningful
deterioration in earnings and cash flow as a result of the soft
freight environment and challenging conditions in the trucking
sector. The company posted weaker-than-expected third-quarter
earnings results and did not experience a seasonal peak in demand
during the quarter as previously anticipated. As a result, S&P
expects YRC's operating performance and financial profile to
remain weaker than previously expected. YRC has outlined several
operating initiatives to address the problems in its regional and
national businesses, namely integrating the Yellow and Roadway
operations.
YRC competes with the other large LTL companies -- Arkansas Best
Corp. ($1.9 billion in revenue) and Con-Way Inc. ($4.8 billion in
revenue) -- and with numerous smaller long-haul and regional LTL
companies. Although it is the largest player in a fragmented
industry, it is subject to significant pricing and competitive
pressures that are likely to intensify over the near term. Demand
for freight transportation began to weaken in the fourth quarter
of 2006 and is at risk of slipping further given current sluggish
economic conditions. This has manifested itself mainly in reduced
volumes, with pricing beginning to deteriorate. Given the current
state of the U.S. economy, S&P expects these conditions to persist
into the first half of 2009.
YRC's liquidity is constrained. As of Sept. 30, 2008, the company
had $102 million of cash on hand, with limited access to its
amended $1.1 billion senior credit facility that consists of a
$950 million revolving credit facility and a $150 million senior
unsecured term loan. Over the past month, YRC has drawn
approximately $575 million in available revolver capacity.
Proceeds from the revolver will be used to repay upcoming
maturities, opportunistically retire other debt, and to fund
working capital needs.
As of Sept. 30, 2008, YRC was in compliance with its leverage
covenant at 3.18x versus the 3.75x requirement. The leverage
covenant tightens to 3.5x as of Dec. 31, 2008. The company
expects full-year 2008 capital expenditures in the range of
$50 million to $75 million and year-to-date free cash flow of
$137 million.
S&P will meet with management to discuss YRC's liquidity position,
operating prospects, and financial outlook to resolve the
CreditWatch.
* S&P Cuts Ratings on 90 Tranches from 21 Cash Flow & Hybrid CDOs
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 90
tranches from 21 U.S. cash flow and hybrid collateralized debt
obligation transactions. S&P removed 45 of the lowered ratings
from CreditWatch with negative implications. At the same time,
S&P placed two ratings from Tallships Funding Ltd. on CreditWatch
with negative implications. In addition, S&P withdrew its ratings
on seven tranches from two transactions. The ratings on 43 of the
downgraded tranches are on CreditWatch with negative implications,
indicating a significant likelihood of further downgrades. The
CreditWatch placements primarily affect transactions for which a
significant portion of the collateral assets currently have
ratings on CreditWatch with negative implications or have
significant exposure to assets rated in the 'CCC' category.
The 90 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of $8.525 billion. Twelve of the 21 affected
transactions are mezzanine structured finance CDOs of asset-backed
securities, which are collateralized in large part by mezzanine
tranches of residential mortgage-backed securities and other SF
securities. Five of the 21 affected transactions are high-grade
SF CDOs of ABS that were collateralized at origination primarily
by 'AAA' through 'A' rated tranches of RMBS and other SF
securities. The other four transactions are CDOs of CDOs that
were collateralized at origination primarily by notes from other
CDOs, as well as by tranches from RMBS and other SF transactions.
The CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on U.S. subprime
RMBS.
In addition, Standard & Poor's reviewed the ratings assigned to
Acacia CDO 5 Ltd., and based on the current credit support
available to the tranches, has left the ratings at their current
levels.
To date, S&P has lowered its ratings on 3,981 tranches from 887
U.S. cash flow, hybrid, and synthetic CDO transactions as a result
of stress in the U.S. residential mortgage market and credit
deterioration of U.S. RMBS. In addition, 1,182 ratings from 445
transactions are currently on CreditWatch with negative
implications for the same reasons. In all, S&P has downgraded
$475.528 billion of CDO issuance. Additionally, S&P's ratings on
$13.158 billion of securities have not been lowered but are
currently on CreditWatch with negative implications, indicating a
high likelihood of future downgrades.
Rating Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
Adirondack 2005-1, Ltd. A-1LT-a AA/Watch Neg AAA
Adirondack 2005-1, Ltd. A-1LT-b AA/Watch Neg AAA
Adirondack 2005-1, Ltd. A-1LT-b-1 NR AAA
Adirondack 2005-1, Ltd. A-1LT-b-2 NR AAA
Adirondack 2005-1, Ltd. A-1LT-b-3 NR AAA
Adirondack 2005-1, Ltd. A-1LT-b-4 NR AAA
Adirondack 2005-1, Ltd. A-1LT-b-5 NR AAA
Adirondack 2005-1, Ltd. A-2 A+/Watch Neg AAA
Adirondack 2005-1, Ltd. B BBB-/Watch Neg AA/Watch Neg
Adirondack 2005-1, Ltd. C CCC+/Watch Neg A/Watch Neg
Adirondack 2005-1, Ltd. D CC BBB/Watch Neg
Adirondack 2005-1, Ltd. E CC BB+/Watch Neg
Alexander Park CDO I A-2 BBB- A-/Watch Neg
Alexander Park CDO I B CC B-/Watch Neg
Alexander Park CDO I C CC CCC-/Watch Neg
Commodore CDO IV Ltd A-1(b) AA-/Watch Neg AAA/Watch Neg
Commodore CDO IV Ltd A-2 CCC/Watch Neg A-/Watch Neg
Commodore CDO IV Ltd B CC B-/Watch Neg
Commodore CDO IV Ltd C CC CCC-/Watch Neg
Dalton CDO Ltd A-1a1 A-/Watch Neg AAA/Watch Neg
Dalton CDO Ltd A-1a2 B-/Watch Neg BBB/Watch Neg
Dalton CDO Ltd A-1b1 CCC-/Watch Neg B-/Watch Neg
Dalton CDO Ltd A-1b2 CC B-/Watch Neg
Dalton CDO Ltd A-2 CC CCC-/Watch Neg
Davis Square Funding V A-1-a A/Watch Neg AAA/Watch Neg
Davis Square Funding V A-1-b A/Watch Neg AAA/Watch Neg
Davis Square Funding V A-2 BBB/Watch Neg AA/Watch Neg
Davis Square Funding V B CCC-/Watch Neg BBB-/Watch Neg
Davis Square Funding V C CC CCC-/Watch Neg
Duke Funding V, Ltd. I-W BBB-/Watch Neg AAA
Duke Funding V, Ltd. 1-A2 BBB-/Watch Neg A-/Watch Neg
Duke Funding V, Ltd. I-A1 BBB-/Watch Neg A-/Watch Neg
Duke Funding V, Ltd. I-B BBB-/Watch Neg A-/Watch Neg
Duke Funding V, Ltd. II B/Watch Neg BBB/Watch Neg
Duke Funding V, Ltd. III CC CCC-/Watch Neg
Fort Dearborn CDO I Ltd X BBB-/Watch Neg AAA/Watch Neg
Fort Dearborn CDO I Ltd A-1LA Inv BBB-/Watch Neg AAA/Watch Neg
Fort Dearborn CDO I Ltd A-1LB CC BBB-/Watch Neg
Fort Dearborn CDO I Ltd A-2L CC B/Watch Neg
Fort Dearborn CDO I Ltd A-3L CC CCC+/Watch Neg
G Street Finance Ltd A-1LT-a AA AAA
G Street Finance Ltd A-1LT-b AA AAA
G Street Finance Ltd A-2 A/Watch Neg AAA
G Street Finance Ltd B BBB/Watch Neg AA
G Street Finance Ltd C B+/Watch Neg A
G Street Finance Ltd D CCC-/Watch Neg BBB/Watch Neg
G Street Finance Ltd E CC BB+/Watch Neg
IXIS ABS CDO 1 Ltd. X CCC/Watch Neg AA/Watch Neg
IXIS ABS CDO 1 Ltd. A-1LB CC BB+/Watch Neg
IXIS ABS CDO 1 Ltd. A-2L CC B-/Watch Neg
IXIS ABS CDO 1 Ltd. A-3L CC CCC-/Watch Neg
Klio II Funding, Ltd. A-2 B/Watch Neg BB/Watch Neg
Klio II Funding, Ltd. B CCC-/Watch Neg B+/Watch Neg
Klio II Funding, Ltd. C CC CCC-/Watch Neg
Lexington Capital A-1ANV B/Watch Neg AA/Watch Neg
Funding Ltd.
Lexington Capital A-1AV B/Watch Neg AA/Watch Neg
Funding Ltd.
Lexington Capital A-1B B/Watch Neg AA/Watch Neg
Funding Ltd.
Lexington Capital A-2 CC BBB-/Watch Neg
Funding Ltd.
Lexington Capital B CC B+/Watch Neg
Funding Ltd.
Lexington Capital C CC CCC+/Watch Neg
Funding Ltd.
Longstreet CDO I, Ltd. A-1 CC CCC-/Watch Neg
Mulberry Street CDO A-1B CCC+/Watch Neg A-/Watch Neg
Mulberry Street CDO A-2 CC BB-/Watch Neg
Mulberry Street CDO II A-1A AA AAA/Watch Neg
Mulberry Street CDO II A-1U CCC-/Watch Neg BBB-/Watch Neg
Mulberry Street CDO II A-2 CC CCC-/Watch Neg
Palisades CDO Ltd. A-2 AA/Watch Neg AAA/Watch Neg
Palisades CDO Ltd. B-1 BB-/Watch Neg BBB/Watch Neg
Palisades CDO Ltd. B-2 BB-/Watch Neg BBB/Watch Neg
Palisades CDO Ltd. C-1 CC B/Watch Neg
Palisades CDO Ltd. C-2 CC B/Watch Neg
Palisades CDO Ltd. Type II CC BB+/Watch Neg
Pascal CDO, Ltd. A CCC-/Watch Neg A+/Watch Neg
Pascal CDO, Ltd. B CC B-/Watch Neg
Pascal CDO, Ltd. C CC CCC/Watch Neg
Pioneer Valley CP Notes NR/NR AAA/A-1+/WatchNeg
Structured Credit CDO I
Pioneer Valley A-1A AA+/Watch Neg AAA/Watch Neg
Structured Credit CDO I
Pioneer Valley A-1B NR AAA/Watch Neg
Structured Credit CDO I
Pioneer Valley A-2 A+/Watch Neg AA/Watch Neg
Structured Credit CDO I
Pioneer Valley B B/Watch Neg BBB/Watch Neg
Structured Credit CDO I
Pioneer Valley C CC CCC+/Watch Neg
Structured Credit CDO I
Stockbridge CDO Ltd A-2 CCC-/Watch Neg A/Watch Neg
Stockbridge CDO Ltd A-3 CC B+/Watch Neg
Stockbridge CDO Ltd B CC CCC-/Watch Neg
Straits Global ABS CDO I A Combo CC B+/Watch Neg
Straits Global ABS CDO I A-2 A+/Watch Neg AA/Watch Neg
Straits Global ABS CDO I B Combo CC B+/Watch Neg
Straits Global ABS CDO I B-1 CC BB-/Watch Neg
Straits Global ABS CDO I B-2 CC BB-/Watch Neg
Tallships Funding Ltd Revolver CCC/Watch Neg CCC
Tallships Funding Ltd UnfundedSS CCCsrs/Watch Neg CCCsrs
TIAA Structured Finance A-2 A+/Watch Neg AAA/Watch Neg
CDO II Ltd.
TIAA Structured Finance B CC BBB/Watch Neg
CDO II Ltd.
Zais Investment Grade A-2 AA+ AAA/Watch Neg
Limited X
Zais Investment Grade A-3 A+ AA/Watch Neg
Limited X
Zais Investment Grade A-4 BBB A-/Watch Neg
Limited X
Zais Investment Grade B B BBB-/Watch Neg
Limited X
Zais Investment Grade C CC CCC+/Watch Neg
Limited X
Zais Investment Grade D CC CCC-/Watch Neg
Limited X
Other Ratings Reviewed
Transaction Class Rating
----------- ----- ------
Acacia CDO 5 Ltd. A AAA
Acacia CDO 5 Ltd. B AA
Acacia CDO 5 Ltd. C A
Acacia CDO 5 Ltd. D A-
Acacia CDO 5 Ltd. E BBB
Alexander Park CDO I A-1 AAA
Alexander Park CDO I D-1 CC
Alexander Park CDO I D-2 CC
Commodore CDO IV Ltd A-1(a)-F AAA/Watch Neg
Commodore CDO IV Ltd A-1(a)-U AAA/Watch Neg
Commodore CDO IV Ltd Comp Nts CC
Commodore CDO IV Ltd D CC
Dalton CDO Ltd B CC
Dalton CDO Ltd C CC
Dalton CDO Ltd D CC
Davis Square Funding V D CC
Davis Square Funding V E CC
Davis Square Funding V S AAA
Duke Funding V, Ltd. IV-A CC
Duke Funding V, Ltd. IV-B CC
Fort Dearborn CDO I Ltd B-1L CC
IXIS ABS CDO 1 LTD. B-1L CC
IXIS ABS CDO 1 LTD. B-2L CC
Klio II Funding, Ltd. ABCP AA+/A-1+/Watch Neg
Klio II Funding, Ltd. A-1 BBB/Watch Neg
Klio II Funding, Ltd. Pref Shrs CC
Lexington Capital D CC
Funding Ltd
Lexington Capital E CC
Funding Ltd
Longstreet CDO I, Ltd. A-2 CC
Longstreet CDO I, Ltd. B CC
Longstreet CDO I, Ltd. C CC
Longstreet CDO I, Ltd. D CC
Longstreet CDO I, Ltd. E CC
Longstreet CDO I, Ltd. F CC
Longstreet CDO I, Ltd. G CC
Mulberry Street CDO A-1A AA
Mulberry Street CDO B CC
Mulberry Street CDO C CC
Mulberry Street CDO II A-1B AA
Mulberry Street CDO II A-1W AA
Mulberry Street CDO II B-F CC
Mulberry Street CDO II B-V CC
Mulberry Street CDO II C CC
Palisades CDO Ltd. A-1A AAA
Palisades CDO Ltd. A-1B AAA
Pascal CDO, Ltd. Combo Nts AAA
Pioneer Valley X AAA
Structured Credit CDO I
Pioneer Valley D CC
Structured Credit CDO I
Stockbridge CDO Ltd A-1 AAA
Straits Global ABS CDO I A-1 AAA
Straits Global ABS CDO I C-1 CC
Straits Global ABS CDO I C-2 CC
Tallships Funding Ltd A-1 CC
Tallships Funding Ltd A-2 CC
Tallships Funding Ltd B CC
Tallships Funding Ltd C CC
Tallships Funding Ltd D CC
TIAA Structured Finance A-1 AAA
CDO II, Limited
TIAA Structured Finance C-1 CC
CDO II, Limited
TIAA Structured Finance C-2 CC
CDO II, Limited
Zais Investment Grade S AAA
Limited X
Zais Investment Grade A-1a AAA
Limited X
Zais Investment Grade A-1b AAA
Limited X
* S&P Downgrades Ratings on 51 Classes from 35 U.S. RMBS
--------------------------------------------------------
Standard & Poor's Ratings Services corrected its ratings on 51
classes from 35 U.S. residential mortgage-backed securities
transactions after setting the ratings in error to NR (not rated).
S&P recently set the ratings on these classes to NR under the
assumption that the certificate class balances had been reduced to
zero as a result of principal payments from the collateral pool.
Upon further review, S&P has determined that the class balances
were reduced to zero due to principal write-downs. Accordingly,
S&P has reinstated its ratings on the affected classes and lowered
them to 'D' to reflect the defaults caused by the write-downs.
S&P then withdrew its ratings on these classes.
The transactions were originally backed by conventional, fully
amortizing, adjustable- and fixed-rate mortgage loans secured by
first or second liens on one- to four-family residential
properties.
Ratings Revised
Bear Stearns Asset Backed Securities I Trust 2006-HE7
Series 2006-HE7
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
II-M-11 07388HBL2 D NR CCC NR
Bear Stearns Mortgage Funding Trust 2006-SL2
Series 2006-SL2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 07400YAJ5 D NR CCC NR
B-3 07400YAK2 D NR CCC NR
B-4 07400YAL0 D NR CCC NR
Bear Stearns Mortgage Funding Trust 2006-SL3
Series 2006-SL3
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-4 07400VAL6 D NR CCC NR
Bear Stearns Mortgage Funding Trust 2006-SL4
Series 2006-SL4
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-4 07401GAL8 D NR CCC NR
Bear Stearns Second Lien Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
I-M-2 07401WAC3 D NR CCC NR
I-M-3 07401WAD1 D NR CCC NR
I-M-4 07401WAE9 D NR CCC NR
II-M-2 07401WAR0 D NR CC NR
Citigroup Mortgage Loan Trust Inc.
Series 2005-HE4
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
M-13 17307GR34 D NR CC NR
CWABS Asset-Backed Certificates Trust 2006-SPS2
Series 2006-SPS2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
M-8 12667BAJ3 D NR CCC NR
First Franklin Mortgage Loan Trust 2003-FF3
Series 2003-FF3
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
M4 32027NDN8 D NR CCC NR
B 32027NDP3 D NR CCC NR
First Franklin Mortgage Loan Trust, Series 2007-FFA
Series 2007-FFA
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-4 32027AAL3 D NR CCC NR
B-5 32027AAM1 D NR CCC NR
GSR Mortgage Loan Trust 2005-AR2
Series 2005-AR2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
2B5 36242DK85 D NR CCC NR
GSR Trust 2005-HEL1
Series 2005-HEL1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
M-6 362341P37 D NR CCC NR
B-1 362341P45 D NR CCC NR
HarborView Mortgage Loan Trust 2007-A
Series 2007-A
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-3 41164TAH5 D NR CCC NR
Home Equity Mortgage Trust 2006-5
Series 2006-5
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-1 43709PAQ1 D NR CCC NR
IXIS Real Estate Capital Trust 2005-HE1
Series 2005-HE1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-4 45071KBA1 D NR CC NR
Merrill Lynch Mortgage Investors Trust
Series 2005-HE2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-3 59020UT47 D NR CC NR
Merrill Lynch Mortgage Investors Trust Series 2006-WMC2
Series 2006-WMC2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-3A 59020U6Y6 D NR CCC NR
B-3B 59020U6Z3 D NR CC NR
Merrill Lynch Mortgage Investors Trust, Series 2006-RM1
Series 2006-RM1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-3 59020U5Q4 D NR CCC NR
Merrill Lynch Mortgage Investors Trust, Series 2006-RM2
Series 2006-RM2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 590216AP2 D NR CC NR
B-3 590216AQ0 D NR CC NR
B-4 590216AR8 D NR CC NR
Merrill Lynch Mortgage Investors Trust, Series 2006-RM4
Series 2006-RM4
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-3 59023QAP6 D NR CC NR
B-4 59023QAQ4 D NR CC NR
Merrill Lynch Mortgage Investors Trust, Series 2006-RM5
Series 2006-RM5
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-1 59023FAL9 D NR CC NR
B-2 59023FAM7 D NR CC NR
B-3 59023FAN5 D NR CC NR
Morgan Stanley Mortgage Loan Trust 2007-4SL
Series 2007-4SL
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-3 61751PAJ6 D NR CCC NR
Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series 2006-AR1
Series 2006-AR1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-5 65535VTF5 D NR CC NR
Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series 2006-S1
Series 2006-S1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-5 65535VUF3 D NR CCC NR
Nomura Asset Acceptance Corporation, Alternative Loan Trust, Series 2006-S5
Series 2006-S5
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
M-10 65538AAM3 D NR CCC NR
Ownit Mortgage Loan Trust Series 2005-3
Series 2005-3
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 69121PAL7 D NR CC NR
Ownit Mortgage Loan Trust, Series 2005-5
Series 2005-5
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 69121PCB7 D NR CC NR
RAMP Series 2004-SL3 Trust
Series 2004-SL3
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 76112BDM9 D NR CCC NR
SACO I Trust 2006-2
Series 2006-2
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
II-B-4 785778PW5 D NR CCC NR
SACO I Trust 2006-3
Series 2006-3
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-4 785778QW4 D NR CCC NR
SACO I Trust 2006-5
Series 2006-5
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
II-B-2 785811AW0 D NR CCC NR
SACO I Trust 2006-6
Series 2006-6
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 785779AJ8 D NR CCC NR
SACO I Trust 2006-7
Series 2006-7
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-2 78577PAJ2 D NR CCC NR
B-3 78577PAK9 D NR CCC NR
SunTrust Acquisition Closed-End Seconds Trust, Series 2007-1
Series 2007-1
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
M-4 86801CAE3 D NR CCC NR
Terwin Mortgage Trust 2006-10SL
Series 2006-10SL
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-5 88156VAK4 D NR CCC NR
B-6 88156VAS7 D NR CCC NR
Terwin Mortgage Trust 2006-12SL
Series 2006-12SL
Rating
------
Class CUSIP To From Rating prior to NR Final
----- ----- -- ---- ------------------ -----
B-5 88157DAM9 D NR CCC NR
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Share-
Total holders Total
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------- ------ ------
APP PHARMACEUTIC APPX 1,105 (42) 260
ARBITRON INC ARB 162 (9) 43
BARE ESCENTUALS BARE 263 (49) 113
BLOUNT INTL BLT 482 (33) 148
CABLEVISION SYS CVC 9,483 (5,001) (633)
CHENIERE ENERGY CQP 1,855 (289) 185
CHOICE HOTELS CHH 349 (115) (16)
CLOROX CO CLX 4,708 (370) (412)
COREL CORP CRE 252 (9) (11)
CV THERAPEUTICS CVTX 351 (207) 267
CYBERONICS CYBX 144 (7) 119
DELTEK INC PROJ 181 (72) 39
DISH NETWORK-A DISH 7,681 (2,092) (466)
DOMINO'S PIZZA DPZ 441 (1,437) 84
DUN & BRADSTREET DNB 1,658 (512) (192)
DYAX CORP DYAX 85 (14) 21
EXTENDICARE REAL EXE-U 1,541 (19) 125
GARTNER INC IT 1,121 (42) (266)
GENCORP INC GY 1,014 (22) 66
GENERAL MOTORS GM 136,046 (55,594) (18,825)
GENERAL MOTORS C GMB 136,046 (55,594) (18,825)
GLG PARTNERS-UTS GLG/U 581 (350) 80
HEALTHSOUTH CORP HLS 1,965 (872) (161)
HUMAN GENOME SCI HGSI 847 (120) (36)
IMS HEALTH INC RX 2,360 (10) 324
INCYTE CORP INCY 205 (237) 152
INTERMUNE INC ITMN 210 (81) 143
IPCS INC IPCS 553 (38) 60
LIFE SCIENCES RE LSR 202 (14) 10
LINEAR TECH CORP LLTC 1,665 (378) 1,109
MEDIACOM COMM-A MCCC 3,659 (283) (295)
MOODY'S CORP MCO 1,664 (822) (248)
NATIONAL CINEMED NCMI 540 (475) 58
NAVISTAR INTL NAV 11,557 (228) 1,501
NPS PHARM INC NPSP 188 (197) 95
OCH-ZIFF CAPIT-A OZM 2,129 (208) N.A.
OSIRIS THERAPEUT OSIR 32 (15) (23)
OVERSTOCK.COM OSTK 145 (4) 33
PROTECTION ONE PONE 654 (52) 4
RASER TECHNOLOGI RZ 73 (11) (12)
REGAL ENTERTAI-A RGC 2,688 (214) (124)
REVLON INC-A REV 884 (1,063) 110
ROTHMANS INC ROC 536 (209) 100
SALLY BEAUTY HOL SBH 1,496 (695) 413
SONIC CORP SONC 836 (64) (13)
ST JOHN KNITS IN SJKI 213 (52) 80
SUN COMMUNITIES SUI 1,221 (11) N.A.
SYNTA PHARMACEUT SNTA 87 (10) 60
TAUBMAN CENTERS TCO 3,182 (20) N.A.
THERAVANCE THRX 255 (125) 208
UAL CORP UAUA 21,336 (570) (2,522)
UST INC UST 1,402 (326) 237
WARNER MUSIC GRO WMG 4,519 (99) (750)
WEIGHT WATCHERS WTW 1,107 (893) (210)
WESTERN UNION WU 5,504 (90) 714
WR GRACE & CO GRA 3,754 (179) 970
XM SATELLITE -A XMSR 1,724 (1,144) (683)
*********
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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa,
Luke Walter Ceballos, Ludivino Q. Climaco, Jr., Loyda I. Nartatez,
Tara Marie A. Martin, Joseph Medel C. Martirez, Ma. Cristina I.
Canson, Carlo B. Fernandez, 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.
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