/raid1/www/Hosts/bankrupt/TCR_Public/081114.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 14, 2008, Vol. 12, No. 272
Headlines
ACADEMIC DISTRIBUTING: Case Summary & 20 Largest Unsec. Creditors
ACCENT WINDOWS: Case Summary & 20 Largest Unsecured Creditors
AMH HOLDINGS: S&P Maintains 'B-' Corporate Credit Rating
ALERIS INTERNATIONAL: Third Quarter Results Cue S&P's Rating Cut
AMERICAN AXLE: DBRS Cuts Rating to B; Trend Remains Negative
AMERICAN INTERNATIONAL: Elects Dennis Dammerman to Board
AIR KAUAI: Recovers Choppers from Bank, Seeks Chapter 11 Dismissal
A&N INVESTMENT: Case Summary & Six Largest Unsecured Creditors
ARCHWAY COOKIES: Court OKs Sale of $100,000 in Misc. Assets
ATRIUM COMPANIES: Moody's Assigns 'Caa3' Rating to New Sr. Notes
BALLYROCK ABS: Full Payment Cues S&P to Withdraw Note Ratings
BARNEYS NEW YORK: S&P Downgrades Corporate Credit Rating to 'B-'
BELLA SONO: Voluntary Chapter 11 Case Summary
BONTEN MEDIA: WTVF-TV Merger Rejection Cues Moody's Junks Ratings
BOWNE & CO: S&P Places 'BB-' Rating on CreditWatch Negative
BROOKE CORP: Section 341(a) Meeting Scheduled for December 8
BROOKE CORP: Insurance Commish Urges Clients to Check Coverage
BROOKE CORP: U.S. Trustee Forms Seven-Member Creditors Committee
BUCKEYE TECHNOLOGIES: S&P Holds BB- Rating; Outlook Positive
CBA COMMERCIAL: Moody's Downgrades Ratings on Four Cert. Classes
CESAR QUINONES: Case Summary & 20 Largest Unsecured Creditors
CHARLES OBAHIAGON: Case Summary & 20 Largest Unsecured Creditors
CHESAPEAKE CORP: Warns of Possible Bankruptcy Filing
CHRYSLER LLC: DBRS Places Rating Under Review
CIENA CAPITAL: U.S.-Lenders Dispute Stalls Cash Collateral Plea
CIRCUIT CITY: Wants Access to Bank of America's Cash Collateral
CIRCUIT CITY: Gets Interim OK to Access $1.1BB DIP Financing
CIRCUIT CITY: The Brick Owner a Potential Buyer for The Source
CIRCUIT CITY: U.S. Trustee Names 11 Creditors to Committee
COLTS 2007-1: Fitch Affirms Ratings on Five Classes of Notes
COMM 2006-FL2: Fitch Downgrades 10 Classes of Certificates
COMMERCIAL MORTGAGE: Fitch Keeps 'B+' Rating on $21.7 Mil. Notes
CONSECO INC: Completes Transfer of Health Insurance to SHCO Trust
CONSTELLATION ENERGY: Lead for Securities Suit Due Nov. 21
CREDIT SUISSE: Fitch Affirms Ratings on All Classes of Notes
DELTA AIR: CEO R. Anderson Has 1.2MM Shares Post-Merger
DELTA AIR: To Repay $245MM of Northwest Bond Debt to MAC
DOWNEY FINANCIAL: Acute Liquidity Prompts Moody's to Junk Ratings
FANNIE MAE: Gov't May Have to Inject More Capital Into Firm
FORD MOTOR: DBRS Junks Rating; Trend Remains Negative
FREDDIE MAC: Gov't May Have to Inject More Capital Into Firm
FREESCALE SEMICONDUCTOR: Fitch Cuts Issuer Default Rating to 'B'
GDR TWO: Case Summary & Three Largest Unsecured Creditors
GDR TWO: Files for Chapter 11 Bankruptcy in Colorado
GENERAL MOTORS: DBRS Junks L-T Ratings; Trend Remains Negative
GENERAL GROWTH: Might Petition for Ch. 11; In-Talks with Lenders
GENERAL GROWTH: Raises Going Concern Doubt Amid Heavy Debt Load
GENERAL MOTORS: Sells 13-Millionth Used Vehicle at Auction
GENWORTH FINANCIAL: Uses $930 Mln. of $1.7 Bln. Credit Facilities
GEORGE HARDING: Voluntary Chapter 11 Case Summary
GERSTEN SAVAGE: Fortifies Practice with Centurion Merger
GENERAL MOTORS: Experts Weigh Govt. Bail-Out or Bankruptcy
GCI INC: Third Quarter Results Cues Moody's to Hold 'B1' Ratings
GUY KIRKPATRICK: Case Summary & Six Largest Unsecured Creditors
GWLS HOLDINGS: Unsec. Creditors Balk at Sale to 1st Lien Lenders
HAAC SPORTSMANS: Case Summary & 11 Largest Unsecured Creditors
HEP DEVELOPMENT: Voluntary Chapter 11 Case Summary
IGLESIA MISIONARA: Voluntary Chapter 11 Case Summary
ION MEDIA: Weak Performance Prompts Moody's 'Caa3' Rating
IMPERIAL BUSINESS: Section 341(a) Meeting Scheduled for Nov. 13
IMPLANT SCIENCES: Court Denies Evans Analytical Claim on Assets
IMPLANT SCIENCES: To File Revised Listing Compliance Plan
INNERDOORWAY: Case Summary & 20 Largest Unsecured Creditors
INTEGRA HOSPITAL: Files for Chapter 11 Bankruptcy in Texas
INTEGRA HOSPITAL: Case Summary & 20 Largest Unsecured Creditors
ISCHUS MEZZANINE: Eroding Credit Quality Cues Moody's Rating Cuts
JEVIC TRANSPORTATION: Has Until Dec. 17 to File Chapter 11 Plan
JL Building #2: Voluntary Chapter 11 Case Summary
JOHN LACKEY: Case Summary & 20 Largest Unsecured Creditors
K3 INVESTMENTS: Voluntary Chapter 11 Case Summary
KAL MA MAL: Case Summary & 10 Largest Unsecured Creditors
KRATON POLYMERS: S&P Upgrades Corporate Rating to 'B-' From CCC+
LAS VEGAS SANDS: Moody's Downgrades Ratings to 'B2' From 'Ba3'
LASALLE COMMERCIAL: Moody's Downgrades Ratings on Seven Classes
LEHMAN BROTHERS: A&M Meets Creditors; Euro Unit Owes LBHI $8BB
LEHMAN BROTHERS: Court to Tackle Examiner Request Jan. 14
LEHMAN BROTHERS: Deutsche Bank Sues for Return of $72.5MM
LEHMAN BROTHERS: Employee Files Class Suit for Mass Layoffs
LEHMAN BROTHERS: Fitch Cuts Rating on $57.5 Mil. Notes to 'BB'
LEHMAN BROTHERS: NY Comptroller Wants Trustee to Replace CEO
MASTR SEASONED: S&P Downgrades Ratings on 14 Classes of Certs.
MECACHROME INTERNATIONAL: S&P Junks Long-Term Corp. Credit Rating
MERRILL LYNCH: Fitch Affirms 'BB' Rating on $48.2 Mil. Notes
MGM MIRAGE: Terry Lanni Leaves Chairperson & CEO Posts
ML-CFC COMMERCIAL: Moody's Downgrades Ratings on Six Classes
MORGAN STANLEY: Fitch Downgrades Ratings on Five Classes of Notes
NATIONAL AMUSEMENTS: Owner Says Assets Still Exceed $1.6BB Debts
NATIONAL WHOLESALE: Case Summary & 20 Largest Unsecured Creditors
NAUTILIUS RMBS IV: Fitch Downgrades Ratings on Three Note Classes
NAUTILIUS RMBS V: Fitch Downgrades Ratings on Five Note Classes
NRG ENERGY: Moody's Reviewing 'Ba3' Rating For Possible Downgrade
NOBLE CAPITAL: Case Summary & 20 Largest Unsecured Creditors
NORANDA ALUMINUM: S&P Puts 'B' Corporate Rating on Negative Watch
NORTEL NETWORKS: DBRS Places "B" Ratings Under Review
NORTEL NETWORKS: RBC Warns of Potential Nortel Bankruptcy in 2011
PAPER INTERNATIONAL: Section 341(a) Meeting Slated for Dec. 6
PROSPECT FUNDING: Moody's Junks Ratings on Five Classes of Notes
RAED HUDAIHED: Case Summary & 18 Largest Unsecured Creditors
RESIDENTIAL CAPITAL: DBRS Junks Rating; Trend Is Negative
RIVIERA HOLDING: Decline in Earnings Cues Moody's Rating Cut to B3
ROGER POLLOCK: Faces Mortgage Defaults & Unpaid Dues & Bills
SANDRA MONTANO: Case Summary & 20 Largest Unsecured Creditors
SANTA FE 124: Case Summary & 10 Largest Unsecured Creditors
SIMMONS BEDDING: Expects Q3 10% Sales Drop; To Take $3.6M Charge
SPECTRUM BRANDS: Fertilizer Exit Won't Affect Fitch's Ratings
SPRINT NEXTEL: Offers Voluntary Buyout Packages to Employees
STATION CASINOS: S&P Junks Corporate Credit Rating From 'B-'
STRUCTURED ASSET: Moody's Downgrades Ratings of 174 Tranches
STRUCTURED ASSET: S&P Downgrades Ratings on Two Classes to 'CC'
SYNERGY HEMATOLOGY: Case Summary & 15 Largest Unsecured Creditors
TALCOTT NOTCH: S&P Withdraws Note Ratings on Complete Paydown
TOURMALINE CDO: Intention to Liquidate Cues S&P's Rating Cuts
TOUSA INC: Court Postpones Nov. 12 Disclosure Statement Hearing
TOUSA INC: Addresses Objections to Disclosure Statement
TOUSA INC: Treatment of Claims under Latest Plan
TOUSA INC: Files 2nd Amended Plan of Reorganization and DS
UNITED GUARANTY: S&P Downgrades Counterparty Credit Rating to 'B'
VERASUN ENERGY: Court to Consider Access to DIP Funding on Dec. 2
VERASUN ENERGY: Jay D. Debertin Resigns as Member of the Board
VERASUN ENERGY: Section 341(a) Meeting Slated for December 2
VINEYARD CHRISTIAN: Obtains Interim Okay to Use Cash Collateral
WACHOVIA BANK: Fitch Puts Low-B Ratings on Classes G & H Certs.
WOODSIDE GROUP: U.S. Trustee Appoints Paul Aronzon as Examiner
YRC WORLDWIDE: Moody's Downgrades Corporate Credit Rating to 'B1'
* Fitch Says Airline & Railroad Liquidity Expected to Stay Strong
* Markets Crisis Spurs Haynes and Boone Bankruptcy Expansion
* Moody's Downgrades Ratings on 180 Tranches Across 44 TRUPs
* Moody's Reports Negative Outlook on Medical Device Sector
* Moody's Says Credit Outlook for Health Insurers Turns Negative
* Moody's Says Global Speculative Default Rate to Reach 10.4%
* S&P Downgrades Ratings on 35 Classes From Eight RMBS Deals
* Michael Baxter Appointed to Judicial Conference Advisory Panel
* BOOK REVIEW: Crafting Solutions for Troubled Businesses
*********
ACADEMIC DISTRIBUTING: Case Summary & 20 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Academic Distributing, Inc.
PO BOX 1360
Dewey, AZ 86327
Bankruptcy Case No.: 08-16198
Chapter 11 Petition Date: November 12, 2008
Type of Business: The Debtor sells computer software and
hardware.
See: http://www.academic-wholesale.com/
Court: District of Arizona (Phoenix)
Debtor's Counsel: Pernell W. McGuire, Esq.
pmcguire@pmcguirelaw.com
Law Office of P Pernell McGuire, PLLC
P.O. Box 1448
Flagstaff, AZ 86002
Tel: (928) 779-1173
Fax: (928) 779-1175
Estimated Assets: $276,232
Estimated Debts: $2,010,026
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/azb08-16198.pdf
ACCENT WINDOWS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Accent Windows, Inc.
12300 Pecos Street
Westminster, CO 80234
Bankruptcy
Case No.: 08-27561
Chapter 11
Petition Date: November 4, 2008
Court: U.S. Bankruptcy Court
District of Colorado (Denver)
Judge: Sidney B. Brooks
Debtor's
Counsel: Aaron A Garber
303 E. 17th Ave.
Ste. 500
Denver, CO 80203
303-832-2400
Email: aag@kutnerlaw.com
Jeffrey S. Brinen
303 E. 17th Ave.
Ste. 500
Denver, CO 80203
303-832-2400
Email: jsb@kutnerlaw.com
Estimated
Assets: Not indicated
Estimated
Debts: $1,000,001 to $10,000,000
Debtor's 20 Largest Unsecured Creditors
Entity Amount
------ ------
Internal Revenue Service $637,016
1999 Broadway, MS 5012 DEN
Denver, CO 80202-3025
Norm Meier $339,893
10624 Royal Porthcawl
Naperville, IL 60564
Idearc Media Corp. #1223 $87,538
P.O. Box 619009
DFW Airport, TX 75261-9009
John J. Appelhanz $77,316
Cardinal CG $75,610
P.H. Tech Corp. $72,488
Comcast Spotlight $72,229
Customgas Solutions $69,552
U.S. Building Supply $58,145
Dex Media East #6252 $57,200
U.S. Bank $45,836
Airgas Intermountain, Inc. $38,948
BKD LLP $38,641
KCNC TV $35,077
Yellow Book - West $30,000
PRC-DESOTO International, Inc. $25,829
Glass, Inc. $25,516
Edgetech I.G., Inc. $24,070
Southwall Technologies $23,514
KOAA-TV $22,997
AMH HOLDINGS: S&P Maintains 'B-' Corporate Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Service affirmed its ratings, including
its 'B-' corporate credit rating, on AMH Holdings Inc. and its
operating subsidiary, Cuyahoga Falls, Ohio-based Associated
Materials Inc. (AMI; B-/Negative/--). S&P removed all ratings
from CreditWatch, where they were placed with negative
implications on July 18, 2008. The outlook is negative.
"The affirmation and CreditWatch removal reflect S&P's assessment
that despite the high likelihood that the ongoing downturn in new
construction and repair and remodeling demand will continue to
hurt AMH's earnings and cash flow in the coming quarters," said
Standard & Poor's credit analyst Thomas Nadramia, "the company
will maintain adequate liquidity to fund its operating needs."
ALERIS INTERNATIONAL: Third Quarter Results Cue S&P's Rating Cut
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Beachwood, Ohio-based Aleris International Inc. to 'B'
from 'B+'. S&P also lowered the issue-level ratings on the
company's debt by one notch. Concurrently, S&P has placed these
ratings on CreditWatch with negative implications.
"The downgrade reflects weaker-than-expected third-quarter
financial results as a result of lower volumes and EBITDA," said
Standard & Poor's credit analyst Maurice Austin, "due to
challenging operating conditions reflecting weak end-market
demand."
AMERICAN AXLE: DBRS Cuts Rating to B; Trend Remains Negative
------------------------------------------------------------
DBRS downgraded the Senior Notes and Senior Convertible Notes
ratings of American Axle & Manufacturing Holdings Inc. (American
Axle or the Company) to B from BB. The downgrade reflects the
Company's much weaker business profile attributable to the sharp
decline in North American vehicle and associated production, which
has become much worse than previously anticipated by DBRS.
Additionally, the potential consolidation of the Detroit 3 would
further contract production volumes, further adding to American
Axle's challenge. The Company's financial profile has also
materially deteriorated given significant losses incurred this
year in addition to further debt being assumed in the third
quarter. The ratings remain on Negative trend given the very weak
industry conditions expected to prevail through 2009, as well as
American Axle's ongoing high exposure to the SUV and light-truck
platforms of General Motors Corp. (GM) and Chrysler LLC
(Chrysler), notwithstanding the Company's announced intentions to
diversify its customer base going forward.
On October 31, 2008, American Axle announced third quarter results
that were significantly below DBRS's expectations. The Company
reported a net loss of $441 million for the quarter, relative to a
profit of $14 million generated in the same period the prior year.
DBRS notes that the recent results incorporate special charges
totalling $398 million, the majority of which are attributable to
asset impairments ($256 million) and attrition programs/benefit
reductions ($85 million) associated with the revised labor
agreement reached with the UAW. The asset impairments incorporate
volume declines of SUV and light-truck product programs; this is a
function of significantly lower vehicle demand in the U.S. owing
to well-documented economic concerns that have recently been
compounded by the lower credit access of consumers. Additionally,
the significant shift away from larger vehicles (such as SUVs and
pick-up trucks) and toward smaller vehicles (i.e., passenger cars
and crossover utility vehicles (CUVs)) has further adversely
impacted the Company.
The severe market conditions have negatively affected American
Axle's financial profile. Debt-to-capital has increased to 111.8%
as of September 30, 2008, from a level of 48.8% as of December 31,
2007 (although DBRS notes that is partly a function of debt drawn
down in the third quarter to bolster the Company's liquidity
position amid the current global financial crisis). Furthermore,
the Company will incur a significant loss for 2008.
DBRS additionally notes that already weak market conditions have
become much more severe in recent months, as economic challenges
in the United States have proliferated globally, with reduced
credit access further impeding demand. This has resulted in a
striking drop in industry sales, with October's seasonally
adjusted annual sales rate amounting to 10.9 million units; the
lowest level since March 1983.
The Company's exposure to the Detroit 3 is of particular concern
as GM and Chrysler together represented the overwhelming majority
(i.e., close to 90%) of American Axle's 2007 revenues. Each of the
Detroit 3 has significantly underperformed vis-a-vis already weak
industry levels, as the product offerings of these companies
(primarily pick-up trucks and SUVs) have fallen into disfavour
given increasing fuel costs (notwithstanding the significant
moderation in fuel prices the past two months). Production volumes
of the affected models have been significantly curtailed. However,
the Detroit 3 continue to burn cash at alarming rates and given
the much reduced access to credit, there are increasing concerns
regarding the viability of notably GM and Chrysler over the near-
to medium-term. Under any emerging scenario, future production
volumes of the Detroit 3 will continue to contract significantly,
further negatively affecting American Axle's business.
However, the Company's short-term liquidity appears to be
satisfactory. Cash and equivalents totalled $454 million as of
September 30, 2008, which is higher than typical cash balances and
is a result of the additional debt drawn down in the third
quarter. Additionally, the debt repayment schedule is favourable,
with no significant repayments due within the next three years.
American Axle has a $600 million revolving credit facility, which
as of September 30, 2008, had $105 million of remaining
availability (after deducting outstanding letters of credit).
American Axle has stated publicly that it is in compliance with
all financial covenants.
While the Company is attempting to diversify its customer base and
stands to benefit from their new UAW agreement, the ratings remain
on Negative trend given the remaining significant dependence on
the large truck and SUV platforms of GM and Chrysler, as well as
the severe market conditions expected to continue over the medium
term. Any further deterioration in the Company's financial profile
or reduction in liquidity (i.e., restricted availability of bank
lines, non-compliance with covenants) would likely trigger a
further downgrade.
AMERICAN INTERNATIONAL: Elects Dennis Dammerman to Board
--------------------------------------------------------
American International Group, Inc.'s Board of Directors has
elected Dennis D. Dammerman as director.
Mr. Dammerman is currently chairperson of the Board of Directors
of Discover Financial Services, lead director of Capmark Financial
Group Inc., and a director of BlackRock, Inc. He retired in 2005
as GE Vice Chairperson of the Board and Executive Officer, and a
member of the Corporate Executive Office.
Mr. Dammerman's retirement followed a 38-year career at GE. He
had served on the GE Board of Directors since 1994, as Chairperson
and Chief Executive Officer of GE Capital Services since 1998, and
as a director of GE Capital Services for 16 years. He joined
General Electric in 1967 in the financial management program in GE
Appliances. He held a succession of financial management and
business leadership positions before being named Chief Financial
Officer of GE in 1984.
In 1994, Mr. Dammerman was named Chairperson and Chief Executive
Officer of Kidder, Peabody Group, Inc., retaining his position as
GE Chief Financial Officer. He returned full time to his position
as Chief Financial Officer of GE in 1995 when Kidder Peabody was
sold to PaineWebber.
AIG Chairperson and CEO Edward J. Liddy said, "Dennis Dammerman is
a distinguished and respected executive who brings to the AIG
Board a singular record of experience in financial management and
financial services. I am delighted that he has agreed to join the
Board of AIG at this crucial time, and I look forward to the
benefit of his wise counsel."
Mr. Dammerman graduated from the University of Dubuque and is
currently a Trustee of Skidmore College and the New York Racing
Association.
News On Another AIG Splurge
Leads to Calls for CEO Resignation
Various media reports have criticized AIG for hosting a conference
at a luxury resort in Phoenix last week, at a time when the
troubled insurer is seeking an additional $40 billion loan from
taxpayers' money. Earlier, AIG spent $440,000 for a weeklong
retreat at the posh St. Regis Resort in California for top-
performing insurance agents, just days after the U.S. government
saved the firm from bankruptcy with an $85 billion bail-out.
"We reviewed this one. This one did not slip by," AIG spokesman
Nick Ashooh said Tuesday, according to The Associated Press.
"Some of the things we've done in the past certainly can be
criticized, but this was a totally legitimate event that wasn't
even for AIG employees."
Rep. Elijah E. Cummings (D-Md.) called yesterday for the
resignation of AIG's top executive after news reports of another
resort hotel event involving AIG employees, Baltimore Sun
reported. ABC News relates that Congressman Cummings wrote to
AIG's CEO Edward Liddy that the decision to hold that event was
"outrageous" given an earlier pledge by Liddy to curtail such
events.
In a Nov. 11 statement, Edward Liddy, AIG Chairperson and CEO
said, "Recent news reports have grossly mischaracterized an
American International Group seminar for 150 independent financial
planners held in Phoenix last week. The financial planners are
not AIG employees. In addition, the cost to AIG for this event
was minimal. More than 90% of the costs were paid either by
sponsors or by the independent financial planners themselves. It
is essential for AIG to conduct seminars of this kind to keep
independent financial planners abreast of investment products and
services including those offered by AIG. The financial planners
are responsible for generating almost $200 million in revenue this
year for AIG as of September 30th. On October 10, I issued a
directive to all AIG employees and subsidiaries to reduce expenses
and conserve cash, including cancelling all nonessential
conferences or meetings, unnecessary travel and excessive
overhead. Since then, we have canceled more than 160 events. We
conducted a top-to-bottom review of all expenses of the Phoenix
meeting in advance and found that it was consistent with my
October 10th directive. This conference was approved because it
provides the kind of communication we must conduct with the people
who sell our products if we are to be successful and repay the
U.S. taxpayer."
New Govt. Bailout for AIG
Serena Ng and Liam Pleven at The Wall Street Journal report that
many banks that previously bought protection from AIG on
securities backed by now-troubled mortgage assets would recover
most of their investments under a plan by AIG and the Federal
Reserve Bank of New York to buy around $70 billion of those
securities via a new company. The report says that the securities
are collateralized debt obligations (CDOs) backed by subprime-
mortgage bonds, commercial-mortgage loans and other assets.
According to the report, the federal government has revamped the
$150 billion bailout for AIG. The report states that banks in the
U.S., Europe, and Canada purchased credit-default swaps on these
securities from AIG, which promised compensation if the securities
defaulted.
According to WSJ, the market values of the CDOs have declined, and
banks were then allowed to pry about $35 billion in collateral
from AIG as a result of those declines and downgrades in AIG's
credit ratings. The report states that the banks that sought and
received collateral from AIG include:
-- Goldman Sachs Group Inc.,
-- Merrill Lynch & Co.,
-- UBS AG, and
-- Deutsche Bank AG.
AIG "Too Big To Fail", Says J. Berry
John M. Berry said in a commentary posted at Bloomberg that the
Federal Reserve and the Treasury Department may have learned from
the Lehman Brothers debacle -- thus they are taking a risk with
taxpayers' money to save the financial system. Mr. Berry recalls
that after government officials allowed Lehman to succumb to
bankruptcy, the world's financial system seized up, and stock
prices fell.
Mr. Berry says that AIG falls into the "too-big-to-fail category,
" and the Fed has no choice but to extend collateral-backed loans
to AIG and other firms in order to protect the financial markets.
"If taxpayers ultimately lose money as a result of these actions,
it's to prevent the far greater losses from an economic meltdown."
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, 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.
AIR KAUAI: Recovers Choppers from Bank, Seeks Chapter 11 Dismissal
------------------------------------------------------------------
Janis L. Magin at Pacific Business News (Honolulu) reports that
Air Kauai Inc. got back its two Eurocopter AS 350 helicopters on
Wednesday from the Bank of Hawaii.
Pacific Business relates that Air Kauai stopped operations last
week after the Bank of Hawaii repossessed its two helicopters.
Air Kauai filed for Chapter 11 protection on Nov. 7, 2008, to try
to get the helicopters back, the report says, citing Jerrold
Guben, the attorney for Air Kauai.
According to Pacific Business, the Bank of Hawaii had filed a
complaint against Air Kauai in the 1st Circuit Court in Honolulu
on Nov. 5, 2008, claiming that Air Kauai took out two loans of
more than $2 million each on June 21, 2007, to buy the
helicopters. Air Kauai owed more than $3.3 million in unpaid
principal, accrued and unpaid interest and late fees as of
Nov. 3, 2008, the report states.
Air Kauai was current on its payments on one of the two loans
before Nov. 1, 2008, and the company had made all but one payment
on the other debt since June 2007, Pacific Business relates,
citing Mr. Guben. Air Kauai's owner, Michael J. Bowen, said that
the exception was one payment in October 2008, which the Bank of
Hawaii rejected after it was received after the grace period,
Pacific Business states. According to the report, Mr. Bowen said
he planned to ask the Bank of Hawaii for a modification of the
loan.
Plans to Seek Dismissal of Chapter 11 Case
Citing Mr. Guben, Pacific Business relates that Air Kauai will ask
the bankruptcy court to dismiss the company's Chapter 11 case, now
that the company has its helicopters back. Mr. Bowen, according
to the report, said that Air Kauai would resume operations.
Pacific Business quoted Bank of Hawaii spokesperson Stafford
Kiguchi as saying, "We were pleased to reach an agreement that
included releasing the collateral and obtaining payment for month
of November."
Air Kauai Inc. -- http://www.airkauai.com/-- is based in Lihue,
Hawaii. It provides flying tours around Kauai, showing the Waimea
Canyon naPali Cosat, and Mt. Waialeale Crater. The company was
founded in 1989.
A&N INVESTMENT: Case Summary & Six Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: A&N Investment Properties, LLC
P.O. Box 10940-0940
Glendale, AZ 85318
Bankruptcy Case No.: 08-16121
Debtor-affiliate filing a separate Chapter 11 petition:
Entity Case No.
------ --------
Middle Mountain 156 LLC 08-16119
Chapter 11 Petition Date: November 12, 2008
Court: District of Arizona (Phoenix)
Judge: Charles G. Case II
Debtor's Counsel: Allan D. Newdelman, Esq.
anewdelman@qwestoffice.net
Allan D. Newdelman PC
80 E. Columbus Avenue
Phoenix, AZ 85012
Tel: (602) 264-4550
Fax: (602) 277-0144
Estimated Assets Estimated Debts
---------------- ---------------
A&N Investment $50 million $10 million to
to $100 million $50 million
Middle Mountain $10 million to $10 million to
$50 million $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
MM Arizona Holdings LLC property; $60,000,000
399 West Washington Street
#420
Tempe, AZ 85281
Nicholas W. Bonnano loan $40,000
PO Box 10940-0940
Glendale, AZ 85318
Pinal County Treasurer taxes $24,891
P.O. Box 729
Florence, AZ 85232
The Estate of Tamera R. loan unknown
Jenkins
163 LLC loan unknown
Allen Dean Jenkins loan unknown
ARCHWAY COOKIES: Court OKs Sale of $100,000 in Misc. Assets
-----------------------------------------------------------
Time-Gazette staff writer Ginger Christ reports that the United
States Bankruptcy Court for the District of Delaware approved
procedures for the sale of Archway Cookies LLC's miscellaneous
assets.
The procedures will govern the sales of, among other things,
office furniture, equipment, computer and personal property worth
at most $100,000, the source says.
According to Time-Gazette, final sale procedures require the
company to submit a notice of proposed sale to the Court and
provide the Official Committee of Unsecured Creditors with a
notice five days before the filing. The notice should contain (i)
the assets' location; (ii) economic terms of the proposed sale;
and (iii) identity of parties involved in the sale and its
relationship with the company, the report says.
"The sale of certain non-essential assets benefit the company's
estate and its creditors," Time-Gazette quoted a person with
knowledge of the matter.
Evan Scurti, diredtor of Stewart and Ashland Area Council for
Economic Development director, said at a November 6 hearing that
the local company facility and brand be sold intact, Time-Gazette
notes.
According to the Troubled Company Reporter on Nov. 10, 2008, the
Committee said the Debtors have yet to select a stalking horse
bidder and there should be no auction before the Debtors filed
their schedules of assets and liabilities, and statements of
financial affairs. The Debtors have until Dec. 5, 2008 to file
their schedules and statements.
An auction is expected to take place on Nov. 24, 2008, followed by
a hearing the next day.
The Committee asserted that senior lenders -- including Wachovia
Capital Finance Corporation (New England) and Catterton V LP --
should not be allowed to credit bid at the auction before it
completes its investigation of the prepetition secured claims
until Dec. 16, 2008.
About Archway Cookies
Battle Creek, Michigan-based Archway Cookies, LLC,--
http://www.archwaycookies.com/-- makes soft-baked cookies. and
crackers. In 1998, Specialty Foods Corp. acquired the Debtors'
for about $100 million.
Parmalat Finanziaria of Italy acquired Mother's Cake and Cookie
Company and Archway Cookies from The Specialty Foods Acquisition
Corporation for $250 million in 2000. Parmalat later sold its
North American Bakery Group, which includes the Archway brands,
Mother's brands and the U.S. and Canadian private label cookie
businesses, to the private equity firm Catterton Partners and
their operating partner Insight Holdings in 2005.
Archway Cookies filed for Chapter 11 protection on Oct. 6, 2008
(Bankr. D. Del. Case No. 08-12323). Its affiliate, Mother's Cake
& Cookie Co. also filed for bankruptcy (Bankr. D. Del. Case No.
08-12326). Michael R. Lastowski, Esq., at Duane Morris, LLP,
represent the Debtors in their restructuring efforts. In their
filing, the Debtors listed estimated assets of between $50 million
and $100 million and estimated debts of between $500 million and
$1 billion.
ATRIUM COMPANIES: Moody's Assigns 'Caa3' Rating to New Sr. Notes
----------------------------------------------------------------
Moody's Investors Service assigned a Caa3 rating to Atrium's new
senior subordinated notes due 2012. Moody's has affirmed the
company's Caa2 CFR, changed its PDR from Caa2/LD to Caa2, and
revised its outlook to stable.
These ratings or assessments for Atrium Companies, Inc. have been
assigned:
-- $186m sr. subordinated notes due 2012 rated Caa3, (LGD5-88%);
-- $42.3 million sr. subordinated notes due 2012 rated Caa3,
(LGD5-73%);
-- $334.5 million gtd. senior secured term loan B, due 2012,
upgraded to B3 (LGD3, 31%) from Caa1 (LGD3, 33%);
-- $45.5 million (previously $50m) senior secured revolving
credit facility, due 2011, upgraded to B3 (LGD3, 31%) from
Caa1 (LGD3-33%).
These ACIH ratings or assessments have been affirmed: (ACIH is an
intermediate holding company that is structurally below Atrium
Corporation, the ultimate parent company, but resides above Atrium
Companies, Inc., the primary operating company):
-- Corporate Family Rating, affirmed at Caa2;
-- $174 million ($4.6m outstanding) senior discount notes due
2012, upgraded to Caa3 (LGD5 88%) previously rated Ca (LGD5,
89%);
-- Probability of Default Rating, upgraded to Caa2, previously
Caa2/LD.
-- Speculative Grade Liquidity Rating, upgraded to SGL-3 from
SGL-4.
The rating affirmation and the outlook revision to stable reflect
the benefit of the cash preservation provided by the PIK feature
of the new notes, and the $50 million capital infusion from the
company's primary investor, Kenner & Co. The debt restructuring
also provides covenant relief under the company's bank credit
facilities. The Caa2 CFR reflects the company's high leverage,
low free cash flow generation, and the ongoing uncertainty
surrounding the homebuilding and building product industries.
The new 11% and the new 15% unsecured senior subordinated notes
are fully and unconditionally guaranteed on a joint and several
basis by ACIH, and all of the issuers other guarantors. Their
respective ratings reflect the anticipated recovery in the event
of default under Moody's Loss Given Default ratings methodology.
The upgrade of the company's Speculative Grade Liquidity Rating to
a SGL-3 from SGL-4 rating reflects covenant relief, cash infusion,
and the lower cash interest burden of the new notes.
Headquartered in Dallas, Texas, Atrium Companies, Inc. is one of
the largest window manufacturers in North America. Revenues for
the trailing twelve months ended June 30, 2008 were $693 million.
BALLYROCK ABS: Full Payment Cues S&P to Withdraw Note Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on the
class A-1a and A-1b notes issued by Ballyrock ABS CDO 2007-1 Ltd.,
a hybrid collateralized debt obligation transaction managed by
Ballyrock Investment Advisors LLC. At the same time, S&P affirmed
its rating on the class C notes. The class S, A-2, and B note
ratings remain on CreditWatch with developing implications.
The rating withdrawal follows the full payment of the class A-1
notes on the Nov. 6, 2008, payment date. The affirmation and
continued CreditWatch developing placements reflect the transfer
of $137 million to a reserve account on the Nov. 6 payment date.
These funds may be used to pay down the remaining notes during the
February 2008 payment period at the manager's direction.
Ratings Withdrawn:
* Ballyrock ABS CDO 2007-1 Ltd.
Rating
------
Class To From Current balance (million)
----- -- ---- -------------------------
A-1a NR A/Watch Dev $0.00
A-1b NR BBB/Watch Dev $0.00
NR - Not rated.
Ratings Affirmed:
* Ballyrock ABS CDO 2007-1 Ltd.
Class Rating Current balance (million)
----- ------ -------------------------
C CCC $27.50
Ratings Remaining on CreditWatch Developing:
* Ballyrock ABS CDO 2007-1 Ltd.
Class Rating Current balance (million)
----- ------ -------------------------
S BB/Watch Dev $4.972
A-2 BB/Watch Dev $23.929
B B/Watch Dev $56.25
Other Outstanding Rating:
Class Rating
----- ------
D CC
Transaction Information
-----------------------
Issuer: Ballyrock ABS CDO 2007-1 Ltd.
Co-issuer: Ballyrock ABS CDO 2007-1 Inc.
Collateral manager: Ballyrock Investment Advisors LLC
Underwriter: Lehman Bros. Inc.
Trustee: Wells Fargo Bank Northwest N.A.
BARNEYS NEW YORK: S&P Downgrades Corporate Credit Rating to 'B-'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on New York City-based Barneys New York Inc. to 'B-' from
'B'. At the same time, S&P lowered the issue-level rating on the
company's senior secured term loan to 'B-' from 'B'. The outlook
is stable.
"The downgrade reflects S&P's expectation for a significant and
rapid performance deterioration," said Standard & Poor's credit
analyst David Kuntz, "thus leading S&P to conclude that the
business is increasingly vulnerable to the weak economy."
Furthermore, S&P expects that market conditions will be
tremendously challenging and lead to poor performance over the
near term.
BELLA SONO: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Bella Sono Investments, LLC
2440 Wall Street, Suite A
Conyers, GA 30013
Bankruptcy
Case No.: 08-82685
Chapter 11
Petition Date: November 4, 2008
Court: U.S. Bankruptcy Court
Northern District of Georgia (Atlanta)
Judge: James Massey
Debtor's
Counsel: Stephen F. Suarino
Suarino & Associates, PC
Suite 140
1770 Indian Trail-Lilburn Rd.
Norcross, GA 30093
(678) 597-1388
Fax : (678) 697-1190
Email: attorney@suarinolaw.com
Estimated
Assets: $1,000,001 to $10,000,000
Estimated
Debts: $0 to $50,000
The Debtors do not have creditors who are not insiders.
BONTEN MEDIA: WTVF-TV Merger Rejection Cues Moody's Junks Ratings
-----------------------------------------------------------------
Moody's Investors Service downgraded the corporate family and
probability of default ratings for Bonten Media Group, Inc. to
Caa1 from B3 and withdrew the rating on its proposed $101 million
senior secured credit term loan. This action follows the
company's announcement that Bonten will not close on the
acquisition of CBS affiliate WTVF-TV in Nashville, Tennessee, from
Landmark Communications.
The prior B3 corporate family rating, affirmed in August 2008,
incorporated the benefits of the proposed transaction, which
included a meaningful equity contribution and would have
significantly increased the company's scale and diversification.
Furthermore, industry conditions have deteriorated, and the
downgrade reflects Moody's heightened concerns that the company
will face substantial revenue and cash flow deterioration in 2009
due to the high probability of further weakening in the U.S.
economy and its impact on advertising revenue. The depth and
severity of the expected decline exceeds the cyclicality built
into the Prior Rating, and Moody's believes Bonten's debt-to-
EBITDA will rise to over 10 times, inconsistent with a B3 rating,
particularly given the lack of scale.
The flexible capital structure, which provides the option to pay
interest in-kind rather than in cash on its senior subordinated
notes, as Moody's well as adequate cushion under the one financial
covenant in Bonten's credit facility, limit near term default
risk, in Moody's opinion, supporting the stable outlook. The
option to accrue interest is beneficial to short term liquidity,
but exercise of this option would negatively impact credit metrics
over the longer term. Bonten's leading position in the majority
of its markets also supports the stable outlook, and any evidence
of deterioration of this position, or revenue declines or EBITDA
margin erosion in excess of expectations, could have negative
rating implications, especially given the company's relatively
modest size.
Moody's also adjusted instrument ratings.
Bonten Media Group, Inc.
-- Corporate Family Rating, Downgraded to Caa1 from B3
-- Probability of Default Rating, Downgraded to Caa1 from B3
-- Senior Subordinated Bonds, Affirmed Caa2, LGD4, 69%
-- Senior Secured First Lien Bank Credit Facility, Affirmed B1,
LGD2, 13%
-- Senior Secured First Lien Term Loan, Withdrawn, previously
rated B1, LGD2, 26%
Outlook, Stable
The Caa1 CFR reflects expectations for Bonten's already high
leverage to increase, its lack of scale, substantial revenue and
cash flow concentration in two key markets, and limited free cash
flow (about breakeven for the trailing twelve months ended
June 30). The rating also incorporates the inherent cyclicality
of advertising spending and long term secular pressures as the
proliferation of new media fragments audiences and these non-
traditional media compete for advertising dollars. Bonten's
leading position in most of its markets, the substantial
contribution of local advertising to total revenues, and diverse
network affiliations all support the ratings.
Formed in November 2006 by Diamond Castle Holdings, LLC, to
acquire and operate local television stations in the United
States, Bonten Media Group operates sixteen full power, low power
and digital television stations in eight markets (including
stations operated via JSA/JOA agreements with Esteem
Broadcasting). It maintains headquarters in New York, New York,
and its annual revenue is approximately $50 million.
BOWNE & CO: S&P Places 'BB-' Rating on CreditWatch Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its 'BB-'
rating for Bowne & Co. Inc. on CreditWatch with negative
implications.
"The rating action follows the company's recently reported
financial results for third-quarter 2008 and reflects S&P's
concern that given the current pace of EBITDA declines, mostly due
to significantly lower transactional financial print revenue, S&P
believes that Bowne could face a deteriorating EBITDA cushion
relative to its required 3x total leverage covenant in its senior
credit facility," said Standard & Poor's credit analyst Michael
Listner.
Although S&P's expectations for operating performance factored in
the highly cyclical nature of revenue and profitability from
capital markets activities, current operating trends necessitate a
reassessment of the company's cost structure and operating
strategies.
"In resolving the CreditWatch listing, S&P will consider expected
cash usage over the intermediate term, compared with available
liquidity sources, management's restructuring actions, progress in
integrating recent acquisitions as well as synergies from these
business lines, and near-to-intermediate term operating
expectations in acquired businesses and non-transactional
segments," he continued.
Standard & Poor's expects to resolve the CreditWatch listing in
the next 30 days.
BROOKE CORP: Section 341(a) Meeting Scheduled for December 8
------------------------------------------------------------
The U.S. Trustee for Region 20 will convene a meeting of creditors
of Brooke Corporation and its debtor-affiliates on Dec. 8, 2008,
at 10:30 a.m., at 161 Robert J. Dole US Courthouse, 500
State Avenue Room 173 in Kansas City, Kansas.
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.
Headquartered in Overland Park, Kansas, Brooke Corporation --
http://www.brookebanker.com-- operates an insurance agency and
finance company. The company owns 81% of Brooke Capital. The
majority of the company's stock was owned by Brooke Holding Inc.,
which, in turn was owned by the Orr Family. A creditor of
the family, First United Bank of Chicago, was foreclosed on the
BHI stock. The company's revenues are generated from sales
commissions on the sales of property and casualty insurance
policies, consulting, lending and brokerage services. The company
and its affiliates filed for Chapter 11 protection on Oct. 28,
2008 (Bankr. D. Ks. Lead Case No. 08-22786). Angela R. Markley,
Esq., The Debtors' in-house counsel, represents the Debtors' in
their restructuring efforts. Husch Blackwell Sanders LLP
represents the Chapter 11 Trustee. When the Debtors filed for
protection from their creditors, they listed total assets of
$512,855,000 and total debts of $447,382,000.
BROOKE CORP: Insurance Commish Urges Clients to Check Coverage
--------------------------------------------------------------
Kelly Johnson at Sacramento Business Journal reports that
Insurance Commissioner Steve Poizner has urged California
residents who bought insurance policies through Brooke Corp.
franchises to verify their coverage.
Mr. Poizner said in a statement that that clients should verify
their coverage through their insurance company or through the
Brooke agent who sold the policy. According to Sacramento
Business, Mr. Poizner said that it is unlikely that an insurance
policy held by a California resident will be affected.
According to Sacramento Business, at least two dozen of Brooke's
offices in Sacramento have closed.
Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) --
http://www.brookebanker.com-- is an insurance agency and finance
company. The company owns 81% of Brooke Capital. The majority of
the company's stock was owned by Brooke Holding Inc., which, in
turn was owned by the Orr Family. A creditor of the family, First
United Bank of Chicago, was foreclosed on the BHI stock. The
company's revenues are generated from sales commissions on the
sales of property and casualty insurance policies, consulting,
lending and brokerage services.
Brooke Corp. and its affiliate, Brooke Capital Corp. filed for
Chapter 11 protection on Oct. 28, 2008 (Bankr. D. Kan. Case No.
08-22786). Angela R Markley, Esq., is the Debtors' in-house
counsel. The Debtors listed assets of $512,855,000 and debts of
$447,382,000.
BROOKE CORP: U.S. Trustee Forms Seven-Member Creditors Committee
----------------------------------------------------------------
Richard A. Wieland, the U.S. Trustee for Region 20, appointed
seven creditors to serve on an Official Committee of Unsecured
Creditors for the Chapter 11 cases of Brooke Corporation and its
debtor-affiliates.
The creditors' committee members are:
1) RKC Financial
Roger Cunningham - Committee Member
201 W. Glade Rd.
Euless, TX 76039
Tel: (817) 868-7979 ext. 310
Fax: (214) 797-1757 - cell
RKCfinancial@aol.com
2) Addison Low Cost/Addison York
Mahesh Bhatia - Committee Member
Represented by: Sam Kornhauser
Law Offices of Samuel Kornhauser
155 Jackson St., Ste. 1807
San Francisco, CA 94111
Tel: (415) 981-6281
Fax: (415) 981-7616
SKornhauser@earthlink.net
3) NCMIC Finance Corp.
Greg Cole - Committee Member
14001 University Aven
Clive, IA 50325-8258
Tel: (515) 313-4561
Fax: (515) 313-4483-FAX
gcole@ncmic.com
Represented by: Merritt Pardini, Esq.
Kattew, Muchin, Rosenman LLP
575 Madison Ave.
New York, NY 10022-2585
Tel: (212) 940-6742
Fax: (212) 894-5742-FAX
merritt.pardini@kattenlaw.com
4) Seraphein Beyn
Scott Lanphear - Committee Member
2319 J. Street
Sacramento, CA 95816
Tel: (916) 441-7911 ext. 207
ScottL@hardhittingads.com
5) J & P Holdings - Hallberg Ins. Agency
Gary Randant Jr. and/or Jim Hallberg - Committee Member
6811 Shawnee Mission Pkwy., Ste. 306
Overland Park, KS 66202
Tel: (913) 403-0399
Fax: (708) 552-4453-FAX
Grandant@JandPHoldings.com
JHallberg@JandPHoldings.com
6) Timothy M. Crawley - Committee Member.
1709 Calavera Pl.
Fullerton, CA 92833
Tel: (626) 332-5700
Ghanem Insurance Services, Inc.
Owner/President
1015 N. Azusa Ave.
Covina, CA 91722
Tel: (626) 332-5700
Fax: (626) 332-7111
tmcgoirish@yahoo.com
7) Travis Alexander Torrence - Committee Member
Fulbright & Jaworski L.L.P.
Fulbright Tower
1301 McKinney, Ste. 5100
Houston, TX 77010
Tel: (713) 651-3558
Fax: (713) 651-5246
ttorrence@fulbright.com
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Overland Park, Kansas, Brooke Corporation --
http://www.brookebanker.com-- operates an insurance agency and
finance company. The company owns 81% of Brooke Capital. The
majority of the company's stock was owned by Brooke Holding Inc.,
which, in turn was owned by the Orr Family. A creditor of
the family, First United Bank of Chicago, was foreclosed on the
BHI stock. The company's revenues are generated from sales
commissions on the sales of property and casualty insurance
policies, consulting, lending and brokerage services. The company
and its affiliates filed for Chapter 11 protection on Oct. 28,
2008 (Bankr. D. Ks. Lead Case No. 08-22786). Angela R. Markley,
Esq., The Debtors' in-house counsel, represents the Debtors' in
their restructuring efforts. Husch Blackwell Sanders LLP
represents the Chapter 11 Trustee. When the Debtors filed for
protection from their creditors, they listed total assets of
$512,855,000 and total debts of $447,382,000.
BUCKEYE TECHNOLOGIES: S&P Holds BB- Rating; Outlook Positive
------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Buckeye
Technologies Inc. to positive from stable. At the same time, S&P
affirmed the 'BB-' corporate credit rating and all other ratings
on the Memphis, Tennessee-based producer of specialty pulps and
absorbent products.
"The outlook revision reflects S&P's assessment that despite the
high likelihood that operating conditions will remain challenging
in the next several quarters due to the weak U.S. economy, Buckeye
will maintain credit measures consistent with a higher rating as
they reduce debt balances with free cash flow," said Standard &
Poor's credit analyst Andy Sookram. "Specifically, S&P expects
debt to EBITDA to remain below 3x and funds from operations to
debt to increase to about 30%."
The rating on Buckeye reflects excess industry capacity, volatile
input costs, and the meaningful, but declining, proportion of
revenues derived from cyclical commodity products. The company's
leading position in value-added product markets, improving cost
structure, and good geographic diversity partially offset these
factors.
Buckeye benefits from good geographic diversity; slightly more
than 50% of its sales are to customers outside North America. In
addition, the company continues to increase its focus on value-
added products, which represent about 80% of its revenues, thus
reducing its reliance on sales of fluff pulp, which has more
volatile prices. Value-added products offer unique performance
characteristics that command premium pricing compared with fluff
pulp.
CBA COMMERCIAL: Moody's Downgrades Ratings on Four Cert. Classes
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of four classes
and affirmed three classes of CBA Commercial Mortgage Pass-Through
Certificates, Series 2006-1:
-- Class A, $96,667,900, affirmed at Aaa
-- Class X-1, Notional, affirmed at Aaa
-- Class M-1, $4,587,000, affirmed at Aa2
-- Class M-2, $4,587,000, downgraded to A3 from A2
-- Class M-3, $5,004,000, downgraded to Ba1 from Baa3
-- Class M-4, $2,919,000, downgraded to B2 from Ba2
-- Class M-5, $1,877,000, downgraded to Caa2 from B2
Moody's downgraded Classes M-2, M-3, M-4, and M-5 due to realized
and anticipated losses from specially serviced loans.
As of the Oct. 27, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 27%
to $121.3 million from $166.8 million at securitization. The
Certificates are collateralized by 219 mortgage loans with an
average loan size of $554,000. The top 10 loans represent 31% of
the pool.
Five loans have been liquidated from the trust, resulting in an
aggregate realized loss of approximately $776,800. Forty-one
loans, representing 17% of the pool, are in special servicing.
Nine of the loans, representing 3% of the pool, are real estate
owned. Moody's is estimating an aggregate $5.5 million loss from
all specially serviced loans. Four loans, representing 1% of the
pool, are on the master servicer's watchlist.
Moody's was provided with limited current financial information
for the pool and accordingly has not estimated an overall loan to
value ratio.
CESAR QUINONES: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: CESAR I VARGAS QUINONES
aka CESAR IVAN VARGAS QUINONES
PO BOX 7000
SAN SEBASTIAN, PR 00685
Bankruptcy
Case No.: 08-07506
Chapter 11
Petition Date: November 4, 2008
Court: U.S. Bankruptcy Court
District of Puerto Rico (Old San Juan)
Judge: ENRIQUE S. LAMOUTTE INCLAN
Debtor's
Counsel: ALBERTO O LOZADA COLON
BUFETE LOZADA COLON
PO BOX 427 PMB 1019
MAYAGUEZ, PR 00681
787 833-6323
Email: alberto3@coqui.net
Estimated
Assets: $1,000,001 to $10,000,000
Estimated
Debts: $1,000,001 to $10,000,000
A list of the Debtors' 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/prb08-07506.pdf
CHARLES OBAHIAGON: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Charles Obahiagon
1718 Cinnamon Teal Way
Upper Marlboro, MD 20774
Bankruptcy
Case No.: 08-24414
Chapter 11
Petition Date: November 4, 2008
Court: U.S. Bankruptcy Court
District of Maryland (Greenbelt)
Judge: Thomas J. Catliota
Debtor's
Counsel: Donald L Bell
The Law Office of Donald L. Bell, LLC
9701 Apollo Drive
Suite 481
Upper Marlboro, MD 20774
(301) 773-8631
Fax : (301) 773-8634
Email: donbellaw@yahoo.com
Total Assets: $1,435,722
Total Debts: $1,655,576
A list of the Debtors' 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/mdb08-24414.pdf
CHESAPEAKE CORP: Warns of Possible Bankruptcy Filing
----------------------------------------------------
Chesapeake Corporation warned in a regulatory filing with the
Securities and Exchange Commission on November 12, 2008, that its
restructuring activities may require it and, possibly, certain of
its U.S. subsidiaries, to seek the protection of U.S. bankruptcy
laws.
On October 1, 2008, Chesapeake obtained amendments to its $250
million senior secured credit facility, which included a waiver,
effective as of September 28, 2008, of compliance with certain
financial condition covenants through October 31, 2008. The
amendment waived any potential event of default for failure to
meet the financial condition covenants.
Chesapeake related that effective November 1, 2008, upon the
expiration of the waiver, it was in default of the financial
condition covenants under the Credit Facility, and that it entered
into a Forbearance Agreement with the Credit Facility lenders.
The lenders agreed that they will not exercise their rights and
remedies in respect of the existing financial condition covenant
defaults under the Credit Facility, including accelerating the
maturity of outstanding borrowings, through December 10, 2008,
subject to the company's compliance with the terms and conditions
of the Forbearance Agreement.
Chesapeake anticipates that as a result of its failure to meet
certain financial condition covenants, the lenders will issue a
payment blockage notice which will prevent the company from making
the scheduled interest payment on its senior subordinated note due
November 15, 2008. Issuance of the notice is permitted by the
subordination provisions governing the company's senior
subordinated notes. Neither the issuance of the notice nor the
existing default under the Credit Facility gives the holders of
the company's senior subordinated notes a right to accelerate
payment of the notes. A failure to pay interest on the notes that
continues for 30 days would, however, constitute an Event of
Default under the terms of the notes and would give the
noteholders the right to accelerate payment.
Holders of more than 70% of the principal amount of the company's
outstanding 10-3/8% Sterling-denominated senior subordinated notes
due in 2011 and its 7% euro-denominated senior subordinated notes
due in 2014 have formed an ad hoc committee and retained a third
party financial advisor in October. Chesapeake said it continues
to be actively engaged in constructive discussions with members of
the ad hoc committee, as well as their advisor, about financial
restructuring alternatives that the company expects would, if
successfully implemented, address its short- and long-term
financing, capital structure and operational needs. Chesapeake
said the alternatives currently under consideration would likely
reduce the value of its existing common stock to nominal or no
value and possibly impair the creditors' investment in certain of
the company's debt obligations. Chesapeake added that discussions
with the bondholders and their financial advisor are progressing
and ongoing, but there can be no guarantee that a final agreement
will be reached.
Chesapeake does not expect its U.K. or other foreign subsidiaries
to be involved in administration or other similar proceedings and,
accordingly, it expects to be able to continue to provide
customers and suppliers with normal level of service and
performance.
On Wednesday, Chesapeake filed with the SEC its Form 10-Q for the
quarterly period ended September 28, 2008. Chesapeake reported an
$8.3 million net loss on $248.2 million net sales. As of
September 28, Chesapeake had $936.6 million in total assets,
including $340.7 million in total current assets; and $937.1
million in total liabilities, including $469.2 million in current
liabilities, resulting in $500,000 in stockholders' deficit.
Chesapeake said last week that the quarterly report would be
delayed. In a Form NT 10-Q filed November 7, the company said it
would be unable to file its report "within the prescribed time
period without unreasonable effort or expense."
Chesapeake has been in the red for the past three years, incurring
net losses of $11.2 million, $36.7 million and $318.3 million, for
the fiscal years ended December 30, 2007, December 31, 2006 and
December 31, 2005. According to the company, factors contributing
to the net losses included, but were not limited to costs
associated with its cost-savings plan and other restructuring
efforts, environmental remediation costs, price competition,
rising raw material costs and lost customer business due to
geographic shifts in production within the consumer products
industry which it serves. Chesapeake said the current challenging
economic climate may also lead to adverse changes in working
capital levels or additional pension expense and funding
requirements, which may also have a direct impact on its results
and financial position. The company acknowledged that these and
other factors may adversely affect its liquidity and its ability
to generate profits in the future.
The members of the lending consortium under Chesapeake's $250
million Second Amended and Restated Credit Agreement dated as of
February 23, 2004, as further amended, are:
* WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender and
Administrative Agent;
* BANK OF AMERICA INC. as a Lender;
* HSBC Bank plc as a Lender;
* KBC Bank N.V., as a Lender;
* CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender;
* Allied Irish Banks p.l.c. as a Lender;
* Citicorp North America, Inc., as a Lender;
Bank of America, N.A. and Citicorp North America, Inc., serve as
as syndication agents; HSBC Bank plc, as documentation agent,
Wachovia Capital Markets, LLC, as a co-lead arranger and the sole
bookrunner, and Banc of America Securities LLC and Citicorp North
America, Inc., as co-lead arrangers.
On March 5, 2008, Chesapeake obtained an agreement from a majority
of the lenders to amend the Credit Facility through the end of
fiscal 2008. The amendment affected financial maintenance
covenants in all four quarters of fiscal 2008, providing an
increase in the total leverage ratios and a decrease in the
interest coverage ratios. In addition, interest rates were
increased and basket limitations were imposed for acquisitions,
dispositions and other indebtedness, among other changes. The
amendment also stipulated that in the event that the Credit
Facility was not fully refinanced prior to March 31, 2008, the
company would provide a security interest in substantially all
tangible assets of its European subsidiaries. During the third
quarter of fiscal 2008 the lenders under the Credit Facility
obtained security interests in certain of the company's assets
located in the U.K., Ireland, France, Germany, Belgium and the
Netherlands.
On July 15, 2008, Chesapeake agreed with its lenders on a further
amendment of certain provisions of the Credit Facility which
increased the permissible total leverage ratio to 7.00:1 for the
second fiscal quarter 2008 and the senior leverage ratio to 3.40:1
for the second fiscal quarter. In addition, interest rates were
increased to 550 basis points over LIBOR. The amendment also
provided for agreement on an amended recovery plan for one of the
company's U.K. subsidiaries and its defined benefit pension plan,
which provides for an inter-creditor agreement among the Credit
Facility lenders, Chesapeake and the Trustee; placed a limit on
the future borrowing of the U.S. borrower under the Credit
Facility; and provided for a new event of default if The Pensions
Regulator in the U.K. issues a Contribution Notice or Financial
Support Direction.
By August 1, 2008, Chesapeake had proposed a comprehensive
refinancing plan to address the upcoming maturity of its Credit
Facility as well as its general liquidity needs. The proposed
refinancing plan was expected to include: (1) new senior secured
credit facilities to be used to fully repay or replace the Credit
Facility and provide incremental liquidity, and (2) an offer to
exchange its outstanding 10-3/8% Sterling-denominated senior
subordinated notes due in 2011 and its 7% euro-denominated senior
subordinated notes due in 2014 for new debt or equity securities.
In the regulatory filing, Chesapeake also warned that there an be
no guarantee that any restructuring or refinancing plan will be
successfully implemented. The company said failure to
successfully implement a restructuring or refinancing plan or
otherwise address compliance issues under the Credit Facility
within the timeframe permitted by the Forbearance Agreement would
have a material adverse effect on its business, results of
operations and financial position and would materially affect its
ability to continue as a going concern. If Chesapeake does not
comply with the terms of the Forbearance Agreement, the lenders
under the Credit Facility could require immediate payment of all
amounts outstanding under the Credit Facility and terminate their
commitments to lend under the Credit Facility. Pursuant to cross-
default provisions in many of the instruments that govern other
outstanding indebtedness, including the company's senior
subordinated notes due in 2011 and 2014, an acceleration of the
maturity of the borrowings under its Credit Facility could require
immediate payment of substantially all of its other outstanding
indebtedness.
Chesapeake also noted that it currently lacks access to
alternative sources of liquidity that would be necessary to repay
the amounts due under the Credit Facility at its maturity, or
sooner, if accelerated in accordance with the terms of the Credit
Facility or through cross-default provisions of certain of its
other indebtedness.
Headquartered in Richmond, Virginia, Chesapeake Corporation
(NYSE: CSK) -- http://www.cskcorp.com/-- is a supplier of
specialty paperboard packaging products in Europe and an
international supplier of plastic packaging products to niche
end-use markets. Chesapeake has 47 locations in France,
Ireland, United Kingdom, North America, China, HongKong, among
others and employs approximately 5,500 people.
CHRYSLER LLC: DBRS Places Rating Under Review
---------------------------------------------
DBRS placed the ratings of Chrysler LLC (Chrysler or the Company),
including Chrysler's Issuer Rating of CCC (high), Under Review
with Negative Implications. The rating action reflects the severe
deterioration in automotive industry conditions as the U.S.
economic challenges have proliferated globally. This has led to a
sharp reduction in access to credit and much lower consumer
confidence. While industry conditions were already weak in the
first half of 2008, these items have triggered a much sharper
decline in sales the past two months. Vehicle sales in September
were a seasonally adjusted annual rate (SAAR) of 12.2 million
units. This was followed by a further calamitous drop to a SAAR of
10.9 million units in October, which represented the lowest
monthly total in 25 years.
Chrysler, along with its Detroit 3 peers, faces the challenge of
maintaining sufficient liquidity balances as it attempts to
turnaround its operations amid these severe market conditions.
DBRS expects the Under Review -- Negative status to be resolved
within the next few weeks; however, a ratings downgrade is likely
to result.
CIENA CAPITAL: U.S.-Lenders Dispute Stalls Cash Collateral Plea
---------------------------------------------------------------
Tiffany Kary of Bloomberg News reports that the Hon. Arthur
Gonzalez of the United States Bankruptcy Court for the Southern
District of New York allowed Ciena Capital LLC to continue to use
cash under an interim order amidst a dispute between the United
States of America and lenders over who gets the proceeds from the
company's loan to small businesses.
According to Bloomberg, lender Allied Capital Corporation might
contest Judge Gonzalez's order protected its collateral if
Debtor's motion is approved without further information whether
the lender has liens on it.
The U.S. Small Business Administration argued that granting the
Debtor's request would illegally give the lender a lien on the
proceeds, Bloomberg says. SBA protested that the assets of the
Debtor's affiliate, The Business Loan Center, do not belong to the
Debtor or its prepetition lenders including Allied Capital, the
report notes. SBA authorized the affiliate to provide small
business loans, the report adds.
SBA asserted that the prepetition lenders have no valid security
interest in any portion of the SBA loans, the report relates.
Bloomberg, citing papers filed with the Court, said the Debtor
granted its prepetition lenders certain assets as security for a
$500 million revolving loan. The deal requires SBA's consent
under government regulations, the report says. The Debtor owes
approximately $325 million under the loan, the report notes.
Headquartered in New York City, Ciena Capital LLC --
http://www.cienacapital.com/-- offers commercial real estate
finance services including loans and long term investment property
financing. The company and 11 affiliates files for Chapter 11
protection on Sept. 30, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-
13783). Peter S. Partee, Esq., and Andrew Kamensky, Esq., at
Hunton & Williams LLP, represent the Debtors as counsel. Mark T.
Power, Esq., and Jeffrey Zawadzki, Esq., at Hahn & Hessen LLP,
represent the Official Committee of Unsecured Creditors as
counsel. When the Debtors filed for protection from their
creditors, they listed both assets and debts between $100 million
and $500 million.
CIRCUIT CITY: Wants Access to Bank of America's Cash Collateral
---------------------------------------------------------------
Before the Petition Date, Circuit City Stores, Inc., and its
debtor-affiliates and its Canadian unit, InterTan Canada Ltd.,
borrowed money under a $1.3 billion revolving facility governed by
the Second Amended and Restated Credit Agreement dated as of Jan.
31, 2008, with Bank of America, N.A., as agent for the lenders.
Obligations under the Prepetition Secured Facility are secured by,
among other things, first priority liens on inventory, accounts,
and credit card receivables, and are guaranteed by the Debtors and
certain other subsidiaries of Circuit City.
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
LLP, in Wilmington, Delaware, relates that for the past two years,
the Debtors have experienced operational losses. "The losses
experienced by the Debtors are attributable to a number of factors
similarly affecting retailers across the marketplace, including
the tightening of and disruption in the credit markets and the
resulting impact on consumer spending."
"As the Debtors have continued to operate and work through these
issues, ongoing losses have been largely funded by increased
borrowings under the Prepetition Secured Facility, leading to
outstanding borrowings of $898 million, including borrowings by
InterTan. These outstanding borrowings, along with reductions in
the borrowing base under the Prepetition Secured Facility,
ultimately reduced the Debtors' available liquidity and
jeopardized continued operations," Mr. Galardi says.
"To address these problems, in May 2008, the Debtors retained an
investment banker to assist them in exploring strategic
alternatives. The Debtors eventually concluded that, while
strategic options will always be explored as part of their
fiduciary responsibility, given current market conditions, it was
prudent to focus internally on improving the Debtors' performance
in order to operate as a standalone business. At the same time,
a number of the Debtors' vendors were eliminating or restricting
trade terms, which resulted in a further strain on the Debtors?
liquidity needs. Moreover, as the result of the weakened
economic environment and its potential impact on the timing of
sales of the company's inventory and costs and expenses
associated with such sales, a recent third-party appraisal
conducted for the Prepetition Lenders resulted in a reduction of
the estimated net orderly liquidation value of the company's
inventory. This reduction led to a lower borrowing base and
reduced availability for the period preceding the Petition Date
compared with what the company had expected previously," Mr.
Galardi adds.
Section 363(c)(2) of the Bankruptcy Code provides that the
Debtors can't touch the cash collateral unless the Prepetition
Lenders consent or the Court authorizes the Debtors to do so.
According to Mr. Galardi, the Prepetition Lenders have consented
to the Debtors' use of Cash Collateral subject to certain terms
and conditions. Thus, the Debtors ask the U.S. Bankruptcy Court
for the Eastern District of Virginia to authorize them to use the
Cash Collateral in accordance with agreed terms.
Mr. Galardi says the Debtors need immediate access to the cash
collateral in order to:
-- permit, among other things, the orderly continuation of the
operation of their businesses and the completion of the
restructuring process;
-- ensure that the Debtors have sufficient working capital and
liquidity to operate their businesses and thus preserve and
maintain the going concern value of the Debtors? estates,
which, in turn, is integral to maximizing recoveries for
the Debtors' stakeholders; and
-- pay operating expenses, including payroll, and pay vendors
to ensure a continued supply of goods essential to the
Debtors' continued viability.
In exchange for the Debtors' use of the Prepetition Collateral,
the Debtors have agreed to provide certain adequate protection to
the Prepetition Lenders, which include, among other things:
(a) payments of interest, fees and expense reimbursements as
and when due under the Prepetition Secured Facility,
(b) adequate protection replacement liens,
(c) a superpriority administrative claim subject only to a
carve-Out and claims of postpetition lenders, and
(d) an indemnity account of $300,000 to secure indemnification
obligations to the Prepetition Lenders.
About Circuit City Stores, Inc.
Headquartered in Richmond, Virginia, Circuit City Stores, Inc.
(NYSE: CC) is a leading specialty retailer of consumer electronics
and related services. At Oct. 31, 2008, its domestic segment
operated 712 superstores and 9 outlet stores in 165 U.S. media
markets. At Sept. 30, its international segment operated through
770 retail stores and dealer outlets in Canada.
Circuit City also operates Web sites at
http://www.circuitcity.com/, http://www.thesource.ca/and
http://www.firedog.com/.
The Debtor and 17 of it debtor-affiliates filed for Chapter 11
protection on November 10, 2008, (Bankr. E.D. Va. Case No.: 08-
35653) The Debtors' general restructuring counsel is consist of
Gregg M. Galardi, Esq., Ian S. Fredericks, Esq., Timothy G. Pohl,
Esq. and Chris L. Dickerson, Esq. at Skadden, Arps, Slate, Meagher
& Flom LLP. The Debtors' local restructuring counsel is consist
of Dion W. Hayes, Esq. and Douglas M. Foley, Esq. at McGuireWoods
LLP. The Debtors' special financing counsel is Kirkland & Ellis
LLP. Their special securities counsel is Wilmer, Cutler,
Pickering, Hale and Dorr, LLP. The Debtors' financial advisor is
FTI Consulting, Inc. The Debtors' financial advisor is Rotschild
Inc. The Debtors' Canadian gen. restructuring counsel is Osler,
Hoskin & Harcourt LLP. Their claims agent is Kurtzman Carson
Consultants LLC. At Aug. 31, 2008, the Debtor's financial
condition showed total assets of $3,400,080,000 and estimated
debts of $2,323,328,000.
(Circuit City Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CIRCUIT CITY: Gets Interim OK to Access $1.1BB DIP Financing
------------------------------------------------------------
Chris L. Dickerson, Esq., at Skadden, Arps, Slate, Meagher & Flom,
LLP, in Chicago, Illinois, tells the U.S. Bankruptcy Court for the
Eastern District of Virginia that before their bankruptcy filing,
Circuit City Stores, Inc. and its debtor-affiliates, with the
assistance of their financial advisors and investment bankers,
searched for equity investors or sources of additional financing.
But they were unable to obtain any unsecured financing. They
couldn't locate an entity willing to provide a loan that afforded
the Debtors sufficient liquidity but was subordinated to the liens
of the Debtors' prepetition lenders. They couldn't obtain an
additional equity investment from any potential strategic partner.
The Debtors explored various alternatives until they determined
that the only viable option is to enter into a debtor-in-
possession loan with their prepetition lenders that rolled
substantially all of their prepetition indebtedness into the DIP
Facility and allowed them to continue to access financing similar
to the Prepetition Secured Facility -- a $1.3 billion revolving
facility governed by the Second Amended and Restated Credit
Agreement dated as of Jan. 31, 2008, with Bank of America,
N.A., as agent.
Though the Debtors and their advisors conducted numerous
discussions and negotiations with other potential postpetition
lenders, none resulted in any proposals for alternative
postpetition financing, Mr. Dickerson says.
According to Mr. Dickerson, the Debtors plan to use a portion of
the proceeds of the DIP Facility to pay in full the Prepetition
Indebtedness, with the exception of certain Canadian liabilities.
The outstanding borrowings, including borrowings by InterTan,
total $898 million.
"In addition, letters of credit issued under the Prepetition
Secured Facility will be deemed to be issued under the DIP
Facility. Rolling the Prepetition Indebtedness into the DIP
Facility in this manner is necessary because the Prepetition
Lenders are unwilling to consent to the priming of their security
interests by new debtor-in-possession financing. Moreover,
entering into a facility with the Prepetition Lenders is
beneficial to the Debtors because the Prepetition Lenders'
familiarity with the Debtors' businesses allowed for the
expeditious completion of credit documents as the Debtors
prepared for Chapter 11," Mr. Dickerson says.
Mr. Dickerson adds that bringing in new lenders and allowing for
the due diligence necessary would have likely been too time-
consuming as the Debtors focused on restructuring their
businesses at this critical time of the year. A DIP Facility
with Bank of America as Agent assured the smoothest transition
into chapter 11 possible. Nonetheless, before determining to
enter into the DIP Credit Agreement, the Debtors conducted
vigorous and lengthy, arm's-length, and good-faith negotiations
with the Agent and the DIP Lenders.
The salient terms of the DIP Facility are:
Debtor Borrowers: Circuit City Stores, Inc., Circuit City Stores
West Coast, Inc., and Circuit City Stores
PR, LLC
Administrative
Agent: Bank of America, N.A.
Lenders: BANK OF AMERICA, N.A., as Administrative Agent,
as Collateral Agent, as Issuing Bank, as
Swingline Lender to the Domestic Borrowers, and
as Domestic Lender
BANK OF AMERICA, N.A., (acting through its
Canada branch), as Canadian Lender, as
Swingline Lender and Issuing Bank to the
Canadian Borrower, and as Canadian
Administrative Agent and Canadian Collateral
Agent
GENERAL ELECTRIC CAPITAL CORPORATION, as
Co-Documentation Agent, as Co-Collateral Agent
and as Domestic Lender
WELLS FARGO RETAIL FINANCE, LLC, as Syndication
Agent, Joint Bookrunner and Domestic Lender
JPMORGAN CHASE BANK, N.A. as co-Documentation
Agent and as Domestic Lender
WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL),
as Domestic Lender
GMAC COMMERCIAL FINANCE LLC, as Domestic Lender
THE CIT GROUP/BUSINESS CREDIT, INC., as
Domestic Lender
NATIONAL CITY BUSINESS CREDIT, INC., as
Domestic Lender
BURDALE FINANCIAL LTD., as Domestic Lender
UBS LOAN FINANCE LLC, as Domestic Lender
UPS CAPITAL CORPORATION, as Domestic Lender
FIFTH THIRD BANK, as Domestic Lender
SUNTRUST BANK, as Domestic Lender
TEXTRON FINANCIAL CORPORATION, as Domestic
Lender
MERRILL LYNCH CAPITAL, a Division of Merrill
Lynch Business Financial Services Inc., as
Domestic Lender
PNC BANK, N.A., as Domestic Lender
WEBSTER BUSINESS CREDIT CORPORATION, as
Domestic Lender
CAPITAL ONE LEVERAGE FINANCE CORP., as
Domestic Lender
Commitment: A senior revolving credit facility of
$1.1 billion (inclusive of a sublimit in the
amount of $350 million for issuance of letters
of credit and a sublimit of $50 million for
borrowings by InterTan), which amount would be
reduced to $900 million on December 29, 2008,
provided that amounts outstanding under the DIP
Facility may not exceed the Borrowing
Availability.
Borrowing
Availability: The Borrowing Base of the Borrowers minus the
Availability Reserves.
Availability
Reserves: Reserves that the DIP Lenders determine are
appropriate; After Jan. 17, 2009, amounts
available to InterTan will be reduced to
$50 million
Use of Proceeds: The proceeds will be used only:
(a) to repay the Prepetition Liabilities,
(b) to finance the acquisition of working
capital assets of the Borrowers, including
the purchase of inventory and equipment in
the ordinary course of business,
(c) to finance capital expenditures of the
Borrowers,
(d) to pay fees, costs and expenses in
connection with the transactions
contemplated,
(e) for other payments permitted to be made by
the DIP Orders, and any other court orders,
and
(f) for general corporate purposes.
Term: The earliest of (i) twelve months from the
Closing Date; (ii) a continuing event of
default as specified under the DIP Credit
Agreement; (iii) the failure of the Debtors to
obtain a Final Borrowing Order on or before the
date which is 45 days after the Effective Date;
or (iv) emergence from chapter 11 and the
effectiveness of a plan of compromise under the
Companies' Creditors Arrangement Act for the
Canadian Entities.
The DIP Credit Agreement also requires the
Debtors to file a plan of reorganization and
disclosure statement providing for payment of
the DIP Facility and the Prepetition
Indebtedness in full on the effective date by
March 1, 2009.
Priority
and Liens: The DIP Facility will be secured by a
first-perfected security position on
substantially all assets of the Borrowers and
the Guarantors. The DIP Facility will not be
secured by proceeds from avoidance actions
under Chapter 5 of the Bankruptcy Code, and
will be subject to a Carve-Out. In addition,
the DIP Facility will be secured by a super-
priority administrative claim under Section
507(b) of the Bankruptcy Code having priority
over all other administrative claims.
Obligations owing by the Canadian Entities will
be entitled to superpriority claim status and
will be secured by a first priority perfected
security interest and hypothec in favor of the
Canadian Agent subject to certain conditions.
Carve-Out: $3,000,000, plus the Reported Fee Accruals for
Professional Fees and Expenses allowed by the
Court
Fees: The Borrowers are required to pay a Facility
Closing Fee, Letter of Credit Fees, and Unused
Facility Fees.
Interest Rate: Prime Rate established by the Agent from time
to time plus Applicable Margins or LIBOR Rates
Default Interest: The rate otherwise in effect plus 2.0%
Events of
Default: Usual and customary events of default, plus:
-- material modification of the DIP Order
without the Lenders' consent;
-- appointment of a Chapter 11 Trustee or
conversion of the case to Chapter 7;
-- untimely entry of a Final DIP Order;
-- lifting of the automatic stay that permits
any creditor exercise any remedy causing a
material adverse effect; etc.
Minimum
Availability
Covenant: Beginning Dec. 20, 2008, the Borrowers are
required to reduce borrowings (or increase the
Borrowing Base) under the DIP Facility so that:
(i) from December 20 through Dec. 27,
2008, the net availability will be at
least $75 million,
(ii) from Dec. 28, 2008, through
Jan. 10, 2009, the net availability
will be at least $50,000,000, and
(iii) from Jan. 11, 2009, through
Jan. 17, 2009, the net availability
will be at least $35,000,000.
Term Loan: The DIP Credit Agreement requires the Debtors,
by no later than Jan. 17, 2009, to obtain a
junior term loan reasonably satisfactory to the
DIP Lenders and in the amount of at least
$75 million.
Budget: The DIP Credit Agreement requires (i) the
Debtor Borrowers' total cash expenditures
(excluding disbursements for the purchase of
Inventory) not to be greater than 110% of the
projected total amount set forth in a 20-week
cash flow budget, and this covenant will be
tested cumulatively from the Petition Date to
Dec. 13, 2008, and weekly thereafter on a
four-week trailing basis; and (ii) the average
amount of Eligible Inventory per retail store
of the Debtor Borrowers will not be less than
$1,300,000, with this covenant to be tested
each week beginning on Jan. 10, 2009.
A full-text copy of the 176-page DIP Agreement is available for
free at http://ResearchArchives.com/t/s?34d7
Absent approval of the financing provided by the DIP Facility,
Mr. Dickerson says, the Debtors will not be able to meet their
direct operating expenses, will suffer irreparable harm, and
their entire reorganization effort will be severely jeopardized.
"The terms and conditions of the DIP Credit Agreement are fair
and reasonable and were negotiated by the parties in good faith
and at arm's length. Accordingly, the DIP Lenders should be
accorded the benefits of Bankruptcy Code section 364(e) in
respect of the DIP Credit Agreement," Mr. Dickerson asserts.
Mr. Dickerson adds that repayment of the debt owed to the
Prepetition Lenders will not prejudice other creditors because
the proposed Interim Order provides that the approval of the DIP
Credit Agreements is without prejudice to the right of any
official committee appointed in the Debtors' cases to contest or
challenge the validity of the liens of any Prepetition Agent or
Prepetition Lender. The Debtors assert that under the consensual
arrangements embodied in the DIP Agreements, the repayment of the
obligations under the Prepetition Credit Agreement is appropriate.
The Debtors ask the Court to approve the DIP Credit Agreement in
accordance with the terms set forth in the Interim Order and the
DIP Credit Agreement.
Interim DIP Financing Approval
On an interim basis, the Court has authorized the Debtors to
borrow up to $1,100,000,000 -- consisting of $1,050,000,000 for
the Debtors and $50,000,000 for InterTan Canada Ltd. -- in
accordance with the terms and conditions of the DIP Credit
Agreement.
The Final Hearing to consider entry of the Final Order and final
approval of the DIP Facility is scheduled for Dec. 5, 2008, at
10:00 a.m. (Eastern) at the United States Bankruptcy Court for the
Eastern District of Virginia, Richmond, Virginia.
Written objections must be filed with the Clerk of the Bankruptcy
Court no later than Nov. 28, 2008, which objections will be served
to:
(a) counsel for Debtor:
(i) Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Linda K. Myers, Esq.
Fax: (312) 861-2200
(ii) Skadden Arps Slate Meagher & Flom, LLP
One Rodney Square
Wilmington, Delaware 19889
Attn.: Gregg Galardi, Esq.
Fax: (888) 329-3792
Attn.: Chris L. Dickerson, Esq.
Fax: (312) 407-8680
(iii) McGuireWoods LLP
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attn.: Dion W. Hayes, Esq.
Fax: (804) 698-2078
Douglas M. Foley, Esq.
Fax: (757) 640-3957
(b) counsel for DIP Agents:
(i) Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn: David S. Berman, Esq.
Fax: (617) 880-3456
(ii) LeClair Ryan
Riverfront Plaza, East Tower
951 East Byrd Street, Eighth Floor
Richmond, Virginia 23219
Attn.: Bruce Matson, Esq.
Fax: (804) 783-7269
(c) counsel to any Committee; and
(d) the U.S. Trustee
A full-text copy of the Interim DIP Financing Order is available
for free at http://ResearchArchives.com/t/s?34d5
About Circuit City Stores, Inc.
Headquartered in Richmond, Virginia, Circuit City Stores, Inc.
(NYSE: CC) is a leading specialty retailer of consumer electronics
and related services. At Oct. 31, 2008, its domestic segment
operated 712 superstores and 9 outlet stores in 165 U.S. media
markets. At Sept. 30, its international segment operated through
770 retail stores and dealer outlets in Canada.
Circuit City also operates Web sites at
http://www.circuitcity.com/, http://www.thesource.ca/and
http://www.firedog.com/.
Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates
filed a voluntary petition for reorganization relief under Chapter
11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case
No.: 08-35653). InterTAN Canada, Ltd., which runs Circuit City's
Canadian operations, also sought protection under the Companies'
Creditors Arrangement Act in Canada.
Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden,
Arps, Slate, Meagher & Flom, LLP, are the Debtors' general
restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley,
Esq., at McGuireWoods LLP, are the Debtors' local counsel. The
Debtors also tapped Kirkland & Ellis LLP as special financing
counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special
securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as
financial advisors. The Debtors' Canadian general restructuring
counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson
Consultants LLC is the Debtors' claims and voting agent. The
Debtors disclosed total assets of $3,400,080,000 and debts of
$2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CIRCUIT CITY: The Brick Owner a Potential Buyer for The Source
--------------------------------------------------------------
Brick Group Income Fund, which owns "The Brick" furniture stores
in Toronto, is a potential buyer of InterTAN Canada Ltd. --
Circuit City Stores Inc.'s Canadian unit, Hollie Shaw of the
Financial Post reports.
Tal Woolley of RBC Capital Markets said that potential buyers
could "cherry pick ideal locations and make a nominal payment for
the equity to assume control of the company out of protection
under the Companies' Creditors Arrangement Act," says Ms. Shaw.
"[While] The Source does not look like a natural fit for The
Brick, [but] core Brick stores do more than 20% of their business
in home electronics and both chains have a significant warranty
business," Mr. Wolley said, according to the report.
Mr. Wolley values InterTan at $40 million to $100 million, the
Financial Post relates.
InterTAN Canada was granted creditor protection by the Ontario
Superior Court of Justice under the Companies' Creditors
Arrangement Act on Nov. 10, 2008.
InterTAN operates or licenses 772 neighborhood electronics stores
and dealer outlets across Canada under the trade name, The Source
by Circuit City. The Court appointed Alvarez & Marsal to serve as
monitor in the case.
About Circuit City Stores, Inc.
Headquartered in Richmond, Virginia, Circuit City Stores, Inc.
(NYSE: CC) is a leading specialty retailer of consumer electronics
and related services. At Oct. 31, 2008, its domestic segment
operated 712 superstores and 9 outlet stores in 165 U.S. media
markets. At Sept. 30, its international segment operated through
770 retail stores and dealer outlets in Canada.
Circuit City also operates Web sites at
http://www.circuitcity.com/, http://www.thesource.ca/and
http://www.firedog.com/.
Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates
filed a voluntary petition for reorganization relief under Chapter
11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case
No.: 08-35653). InterTAN Canada, Ltd., which runs Circuit City's
Canadian operations, also sought protection under the Companies'
Creditors Arrangement Act in Canada.
Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden,
Arps, Slate, Meagher & Flom, LLP, are the Debtors' general
restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley,
Esq., at McGuireWoods LLP, are the Debtors' local counsel. The
Debtors also tapped Kirkland & Ellis LLP as special financing
counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special
securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as
financial advisors. The Debtors' Canadian general restructuring
counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson
Consultants LLC is the Debtors' claims and voting agent. The
Debtors disclosed total assets of $3,400,080,000 and debts of
$2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CIRCUIT CITY: U.S. Trustee Names 11 Creditors to Committee
----------------------------------------------------------
W. Clarkson McDow, Jr., United States Trustee for Region 4,
appoints eight members to the Official Committee of Unsecured
Creditors in Circuit City Stores, Inc.'s Chapter 11 cases:
(1) Hewlett-Packard Company
Attn: Ramona Neal/Chris Patafio
11307 Chinden Boulevard, MS 314
Boise, Idaho 83714
Tel: (208) 396-6484
Fax: (208) 396-3958
Email: ramona.neal@hp.com
Email: Chris.patafio@hp.com
(2) Samsung Electronics America, Inc.
Attn: Joseph McNamara
105 Challenger Road
Ridgefield Park, New Jersey 07660
Tel: (201) 229-4253
Fax: (201) 229-5704
Email: josephm@sea.samsung.com
(3) LG Electronics USA, Inc.
Attn: Brian Wehr
c/o H. Jason Gold
Wiley Rein LLP
7925 Jones Branch Drive
McLean, Virginia 22102
Tel: (703) 905-2829
Fax: (703) 905-2820
Email: jgold@wileyrein.com
(4) Alliance Entertainment
Attn: Douglas J. Bates
27500 Riverview Center Blvd
Bonita Springs, Florida 34134
Tel: (239) 949-7688
Fax: (239) 949-7689
Email: dbates@sourceinterlink.com
(5) Garmin International, Inc.
Attn: Lisa Brauch
1200 East 151st Street
Olathe, Kansas 66062
Tel: (913) 440-1911
Fax: (913) 397-8282
Email: lisa.brauch@garmin.com
(6) Simon Property Group, Inc.
Attn: Ronald M. Tucker
225 W. Washington Street
Indianapolis, Indiana 46204
Tel: (317) 263-2346
Fax: (317) 263-7901
Email: rtucker@simon.com
(7) Weidler Settlement Class
Attn: Christopher Jones and Martin Fletcher
Whiteford Taylor & Preston LLP
3190 Fairview Park Drive, Suite 300
Falls Church, Virginia 22042
Tel: (703) 280-9263
Fax: (703) 280-8942
Email: cajones@wtplaw.com
(8) Developers Diversified Realty Corp.
Attn: Eric C. Cotton
3300 Enterprise Parkway
Beachwood, Ohio 44122
Tel: (216) 755-5660
Fax: (216) 755-1660
Email: ecotton@ddrc.com
(9) Pension Benefit Guarantee Corporation
Attn: Sara Eagle
Office of General Counsel
1200 K St. NW
Washington, District of Columbia 20005
Tel: 202-326-4020 x3881
Email: eagle.sara@pbgc.gov
(10) Toshiba America Consumer Products, LLC
Attn: Judy Oliver and Joe Shedlock
82 Totowa Road
Wayne, New Jersey 07470
Tel: 973-628-8000
Fax: 973-628-1410
Email: judy_olivero@tacp.com
Email: Joe_shedlock@tacp.com
(11) Paramount Home Entertainment
Attn: Andi Marygold
5555 Melrose Avenue
Bluhdorn #213
Hollywood, California 90038
Tel: 323-956-5489
Fax: 323-862-1183
Email: andi_marygold@paramount.com
About Circuit City Stores, Inc.
Headquartered in Richmond, Virginia, Circuit City Stores, Inc.
(NYSE: CC) is a leading specialty retailer of consumer electronics
and related services. At Oct. 31, 2008, its domestic segment
operated 712 superstores and 9 outlet stores in 165 U.S. media
markets. At Sept. 30, its international segment operated through
770 retail stores and dealer outlets in Canada.
Circuit City also operates Web sites at
http://www.circuitcity.com/, http://www.thesource.ca/and
http://www.firedog.com/.
Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates
filed a voluntary petition for reorganization relief under Chapter
11 of the Bankruptcy Code on November 10 (E.D. Virg. Lead Case
No.: 08-35653). InterTAN Canada, Ltd., which runs Circuit City's
Canadian operations, also sought protection under the Companies'
Creditors Arrangement Act in Canada.
Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden,
Arps, Slate, Meagher & Flom, LLP, are the Debtors' general
restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley,
Esq., at McGuireWoods LLP, are the Debtors' local counsel. The
Debtors also tapped Kirkland & Ellis LLP as special financing
counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special
securities counsel; and FTI Consulting, Inc. and Rotschild Inc. as
financial advisors. The Debtors' Canadian general restructuring
counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson
Consultants LLC is the Debtors' claims and voting agent. The
Debtors disclosed total assets of $3,400,080,000 and debts of
$2,323,328,000 as of Aug. 31, 2008. (Circuit City Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
COLTS 2007-1: Fitch Affirms Ratings on Five Classes of Notes
------------------------------------------------------------
Fitch Ratings affirms all five classes of notes issued by CoLTS
2007-1 Ltd./LLC (CoLTS 2007-1) and assigns Rating Outlooks. These
rating actions are effective immediately:
-- $260,000,000 class A floating-rate notes affirmed at 'AAA';
Outlook Stable;
-- $22,250,000 class B floating-rate notes affirmed at 'AA';
Outlook Stable;
-- $40,000,000 class C floating-rate Deferrable Interest notes
affirmed at 'A'; Outlook Stable;
-- $21,215,000 class D floating-rate deferrable interest notes
affirmed at 'BBB'; removed from Rating Watch Negative;
Outlook Negative
-- $22,250,000 class E floating-rate deferrable interest notes
affirmed at 'BB'; removed from Rating Watch Negative; Outlook
Negative.
CoLTS 2007-1 is a cash flow collateralized loan obligation that
closed Feb. 27, 2007 and is managed by Structured Asset Investors,
LLC - Middle Market Capital.
CoLTs 2007-1 is a revolving transaction, comprising 96.8% first
lien and 3.2% of second lien loans as of the trustee report dated
Oct. 3, 2008. The reinvestment period will end in March 2012.
The three largest Fitch industry concentrations in CoLTS 2007-1
are health care (16.6%), computers and electronics (14.6%), and
business services (11.5%). The five largest obligors represent
approximately 10.6% of the total notional amount, and the single
largest obligor accounts for approximately 2.4% of the portfolio.
Included in this review, Fitch discussed the current state of the
portfolio with the asset manager and their portfolio management
strategy going forward.
The affirmations are the result of the credit support still
available to the rated notes through overcollateralization and
excess spread, despite the credit deterioration in the portfolio.
According to the Oct. 3, 2008 report, the Fitch weighted average
rating factor was failing, increasing to 29.23 ('B/B-') from 23.96
('B+/B') at close, relative to a trigger of 28.00 ('B/B-').
Furthermore, defaulted assets account for approximately 4.9% of
the portfolio and assets considered 'CCC+' or lower represent
approximately 8.3% of the portfolio. That said, all the OC tests
are still passing their test levels. Fitch notes that during the
revolving period, if the class E OC ratio falls below 106.9%, up
to 70% of excess interest proceeds that would otherwise be
available to the preference shares are diverted to purchase
additional collateral to build support for the rated notes. Such
diversion of interest proceeds has occurred once, on the March 20,
2008 payment date, when the class E OC ratio was 105.9%, and
approximately $2.4 million in excess interest proceeds were
diverted to purchase additional collateral. The class E OC ratio
is currently passing at 107.91%.
The Negative Rating Outlook assigned to the classes D and E notes
reflects Fitch's view with respect to the pace at which negative
credit migration has occurred within the portfolio. Compared to
other Fitch-rated middle market CLOs, defaults have occurred
relatively early in the transaction. This, combined with the
level of assets rated 'CCC+' or below and increasing recessionary
pressures, leaves the classes D and E notes more vulnerable than
the rest of the rated notes to further credit deterioration in the
intermediate term.
The ratings on the classes A and B notes address the likelihood
that investors will receive full and timely payments of interest
as well as the stated balance of principal by the legal final
maturity date, as per the transaction's governing documents. The
ratings on the classes C, D, and E notes address the likelihood
that investors will receive ultimate and compensating interest
payments as well as the stated balance of principal by the legal
final maturity date, as per the transaction's governing documents.
Fitch reviewed this transaction in accordance with its updated
criteria released on April 30, 2008 for corporate CDOs. At that
time, Fitch noted it would be reviewing its ratings accordingly to
establish consistency for existing and new transactions. As part
of this review, Fitch makes standard adjustments for any names on
Rating Watch Negative or with a Negative Outlook, reducing such
ratings for default analysis purposes by two notches and one
notch, respectively.
Fitch introduced Rating Outlooks for U.S. structured finance in
September 2008 to provide investors with forward-looking analysis
for a structured finance tranche's credit performance. Fitch's
Rating Outlook indicates the likely direction of any rating change
over a one- to two-year period and may be Positive, Negative,
Stable or, occasionally, Evolving. More information is available
in Fitch's Sept. 11, 2008 report 'Introducing Rating Outlooks for
U.S. Structured Finance Bonds'.
COMM 2006-FL2: Fitch Downgrades 10 Classes of Certificates
----------------------------------------------------------
Fitch Ratings downgrades these rake classes of COMM 2006-FL2
commercial mortgage pass-through certificates and adds Rating
Outlooks:
-- $3.3 million class MSH-1 to 'BB+' from 'BBB+'; Outlook
Negative;
-- $2.9 million class MSH-2 to 'BB' from 'BBB'; Outlook
Negative;
-- $4.8 million class MSH-3 to 'BB-' from 'BBB-'; Outlook
Stable;
-- $4 million class MSH-4 to 'BB-' from 'BB+'; Outlook Stable;
-- $1.8 million class ES-1 to 'BBB-' from 'BBB+'; Outlook
Negative;
-- $1.7 million class ES-2 to 'BB+' from 'BBB'; Outlook
Negative;
-- $1.5 million class ES-3 to 'BB' from 'BBB-'; Outlook
Negative;
-- $2.9 million class TC-1 to 'BB-'; Outlook Negative;
-- $2.4 million class TC-2 to 'BB-'; Outlook Negative;
-- $37 million class J to 'BBB'; Outlook Negative.
Additionally, Fitch affirms these classes and adds Rating
Outlooks:
-- $853.7 million class A-2 at 'AAA'; Outlook Stable;
-- $507 million class A-J at 'AAA'; Outlook Stable;
-- $94.9 million class B at 'AA+'; Outlook Stable;
-- $66.7 million class C at 'AA+; Outlook Stable;
-- $73.6 million class D at 'AA'; Outlook Stable;
-- $54.7 million class E at 'AA-'; Outlook Stable;
-- $54.7 million class F at 'A+'; Outlook Stable;
-- $52.2 million class G at 'A+'; Outlook Stable;
-- $32.5 million class H at 'A'; Outlook Stable;
-- Interest Only classes X-1, X-2, X-3-BC, X-3-DB, X-3-SG, X-4,
X-5-BC, X-5-DB, and X-5-SG at 'AAA'; Outlook Stable.
Class A-1 has paid in full.
Fitch also affirms these rake classes and adds Rating Outlooks:
-- $11.9 million class CN-1 at 'BBB'; Outlook Negative;
-- $8.1 million class CN-2 at 'BBB'; Outlook Negative;
-- $8 million class CN-3 at 'BBB-'; Outlook Negative;
-- $73.1 million class KR-1 at 'BBB+'; Outlook Negative;
-- $22.8 million class KR-2 at 'BBB'; Outlook Negative;
-- $64.4 million class KR-3 at 'BBB-'; Outlook Negative;
-- $6.8 million class IP-1 at 'BBB+'; Outlook Stable;
-- $11.2 million class IP-2 at 'BBB'; Outlook Stable;
-- $11 million class IP-3 at 'BBB-'; Outlook Stable;
-- $5 million class HDC-1 at 'BBB+'; Outlook Stable;
-- $6.5 million class FSH-1 at 'BBB+'; Outlook Negative;
-- $8.7 million class FSH-2 at 'BBB'; Outlook Negative;
-- $9.2 million class FSH-3 at 'BBB-'; Outlook Negative;
-- $1.1 million class CA-2 at 'BBB'; Outlook Stable;
-- $1.3 million class CA-3 at 'BBB-'; Outlook Stable;
-- $1.4 million class CA-4 at 'BBB-'; Outlook Stable;
-- $5.6 million class AN-3 at 'BBB-'; Outlook Stable;
-- $4.5 million class AN-4 at 'BBB-'; Outlook Stable;
-- $5.9 million class FG-1 at 'AA'; Outlook Negative;
-- $6.1 million class FG-2 at 'A+'; Outlook Negative;
-- $4.3 million class FG-3 at 'A-'; Outlook Negative;
-- $5.5 million class FG-4 at 'BBB'; Outlook Negative;
-- $7.2 million class FG-5 at 'BBB-'; Outlook Negative;
-- $2.5 million class LS-1 at 'BBB+'; Outlook Stable;
-- $2.7 million class LS-2 at 'BBB'; Outlook Stable;
-- $2.6 million class LS-3 at 'BBB-'; Outlook Stable;
-- $2.3 million class LB-1 at 'BBB+'; Outlook Stable;
-- $1.6 million class LB-2 at 'BBB'; Outlook Stable;
-- $1.6 million class LB-3 at 'BBB-'; Outlook Stable;
-- $1.3 million class AH-1 at 'BBB+'; Outlook Stable;
-- $1.3 million class AH-2 at 'BBB'; Outlook Stable;
-- $1.5 million class AH-3 at 'BBB-'; Outlook Stable;
-- $1.9 million class AH-4 at 'BB+'; Outlook Stable;
-- $1.3 million class CM-1 at 'A-'; Outlook Stable;
-- $2.5 million class CM-2 at 'BBB-'; Outlook Stable.
Rake class SR-1 has paid in full. Fitch does not rate classes
CA-1, AN-1 and AN-2.
The downgrade of classes MSH-1, MSH-2, MSH-3, and MSH-4 is due to
slower than expected recovery from ongoing renovations as well as
renovations at certain properties that are behind schedule. The
loan is secured by three hotels; Sheraton Suites San Diego (San
Diego, California), Sheraton Framington (Framington, MA) and
Westin Embassy Row (Washington). The borrower did not meet budget
targets due to incomplete renovations and the properties not being
fully operational. As a result, banquets, catering and transient
business was turned away.
The downgrade of classes ES-1, ES-2 and ES-3 is due to declining
performance at The Embassy Suites Lake Buena Vista (Orlando,
Florida). The property was renovated in early 2007 but has not
realized significant performance gains as expected. Occupancy
dropped approximately 5% from year-end 2007 to the twelve months
ended July 31, 2008.
The downgrade of classes TC-1 and TC-2 is due to declining
performance at The Avenue at Tower City (Cleveland, Ohio). The
property's anchor tenant is Tower City Cinema. Occupancy has
decreased to 88.6% at June 20, 2008 compared to 95.1% at YE 2007,
in-line sales per square foot have declined from $279 to $266 for
YE 2006 and YE 2007, respectively. Additionally expenses have
increased approximately 30% since issuance and the overall
economic outlook for the Cleveland area is negative.
The Rating Outlooks reflect likely rating changes over the next
one to two years. Negative Outlooks reflect loans that are behind
on their stabilization plans or where economic pressures may make
execution of the original business plans less feasible.
As of the October 2008 distribution date, the total collateral
balance has been reduced by 27.9% to $2.17 billion from $3 billion
at issuance. Credit enhancement, however, has increased only
marginally because of the transaction's modified sequential pay
structure. The structure provides that, for all but one loan, 85%
of any principal proceeds are allocated to the class A and A-J
notes, with the remainder allocated to the remaining collateral
classes B through J.
Since issuance in October 2006, the Strategic Hotel Portfolio loan
has paid in full, along with its accompanying rake class. In
addition, the balance of the Carr National Portfolio, the largest
loan at issuance, was reduced by approximately 69% through
paydown, and the Carr America Portfolio, the fifth largest loan at
issuance, was paid down by approximately 74%. The Four Seasons
Hualalai loan has paid down approximately 13% through the sale of
residences in the resort-home portion of that collateral. The
Albertson's (Newkirk) Portfolio has paid down 10.5% since
issuance.
The four largest loans make up 67% of the transaction, and all
except one loan in the deal (3%) have subordinate debt outside the
transaction. In addition, three loans, including the two Carr
Portfolio loans and the Kerzner International Portfolio, have debt
that is pari passu with the debt obligations in other commercial
mortgage backed securities transactions.
The remaining collateral consists of sixteen loans listed below in
order of size. The collateral includes loans on hotels (60.7%),
office (16.6%), multifamily (12.9%) and retail (9.8%) properties.
The loans are: Kerzner International Portfolio (31.9%);
Independence Plaza (12.2%); Hotel del Coronado (12%); Carr America
National Pool 3 (11%); Four Seasons Hualalai (8.1%); Albertson's
(Newkirk) Portfolio (4.7%); MSREF Hotel Portfolio (3.1%);
Superstition Springs Center (3.1%); Ft. Lauderdale Marina Marriott
(3%); Legacy So Cal Portfolio (2.6%); The Avenue at Tower City
(1.9%); Legacy Bayside (1.6%); Carr America Pool 2 (1.4%); Embassy
Suites Lake Buena Vista (1.3%); Algonquin Hotel (1.4%); and
Charleston Marriott (0.6%).
COMMERCIAL MORTGAGE: Fitch Keeps 'B+' Rating on $21.7 Mil. Notes
----------------------------------------------------------------
Fitch Ratings affirms Commercial Mortgage Acceptance Corp.,
commercial mortgage pass-through certificates, series 1998-C2, and
assigns Rating Outlooks:
-- Interest-only class X at 'AAA'; Outlook Stable;
-- $23.4 million class D at 'AAA'; Outlook Stable;
-- $43.4 million class E at 'AAA'; Outlook Stable;
-- $21.7 million class G at 'AAA'; Outlook Stable;
-- $36.1 million class H at 'AA-'; Outlook Stable;
-- $65.1 million class J at 'BB'; Outlook Stable;
-- $21.7 million class K at 'B+'; Outlook Negative.
The $14.7 million class L remains at 'C/DR5'. Fitch does not rate
the $122.9 million class F certificates. Class M has been reduced
to zero due to realized losses, and classes A-1, A-2, A-3, B, and
C have paid in full. The Rating Outlooks reflect the likely
direction of any rating change over the next one to two years, and
incorporate Fitch's increased default and loss expectations
corresponding to the Fitch loans of concern (20%).
The affirmations are the result of stable performance since
Fitch's last rating action. As of the October 2008 distribution
date, the pool's aggregate balance has been reduced 87.9% to
$348.9 million, from $2.89 billion at issuance. Of the original
512 loans, 109 remain in the pool. Ten loans (13.0%) have
defeased, including two of the top 10 loans (8.3%).
Four loans (9.4%) are currently in special servicing, the two
largest of which (8.1%) are cross-collateralized and cross-
defaulted. The special servicer has filed a repurchase claim
against the loan seller, Merrill Lynch, because it has been unable
to obtain a signed copy of the Cross Guaranty and Contribution
Agreement, which the borrower claims was never signed at closing.
At this time, Fitch does not expect legal fees to adversely impact
the trust; however, losses on the assets are possible.
The largest specially serviced asset (4.2%) is a 245,010 square
foot grocery-anchored retail center located in Anderson, Indiana.
As of year-end 2007, the asset had a reported debt service
coverage ratio of 1.31 times, with 87% occupancy. The loan
transferred Aug. 1, 2008 due to the default of the second largest
specially serviced asset (3.8%), with which it is crossed. The
loan matured and is currently due in full, but the borrower has
asked for a six-month forbearance which would allow the borrower
to continue to operate the center post-maturity. The second
largest specially serviced loan (3.8%), with which the largest
asset is crossed, was transferred May 7, 2008, due to imminent
default. The loan is collateralized by a 245,010 sf grocery-
anchored retail center located in Lafayette, Indiana, as well as
cross-collateralized by the Anderson, Indiana property. As of
Dec. 31, 2007, the center was 76% occupied, and had a servicer-
reported DSCR of 0.66x.
The third largest specially serviced asset (0.7%) is a retail
center located in Greenwood, South Carolina that became real
estate owned in June 2006. The special servicer recently leased a
majority of the space, with completion of the related build-out
expected by Oct. 29, 2008.
The smallest specially serviced loan (0.6%) was transferred
May 20, 2008. The loan is secured by a 150,965 sf grocery-
anchored retail center in Dayton, Ohio. Reported occupancy is
55%, and the year-end 2007 servicer-reported DSCR was 0.35x. The
special servicer is currently soliciting note sale proposals.
Fitch loans of concern total 20.0% of the pool, and include the
four specially serviced assets (9.4%). Excluding the specially
serviced assets, no additional maturities are scheduled for the
remainder of 2008. Four non-defeased loans comprising 5.9% of the
pool mature between 2009 and 2010; these loans carry a weighted
average coupon of 7.11% and a weighted average Fitch stressed
loan-to-value ratio of 47.9%.
CONSECO INC: Completes Transfer of Health Insurance to SHCO Trust
-----------------------------------------------------------------
Conseco, Inc., completed the transfer of Senior Health Insurance
Company of Pennsylvania, fka Conseco Senior Health Insurance
Company, to Senior Health Care Oversight Trust, an independent
trust. In connection with the completion of the transfer, Conseco
contributed $175 million to the capital of Senior Health and the
Trust, as:
-- A 6% Senior Note due 2013 in the principal amount of
$125 million, the principal of which is payable in five
equal annual installments.
-- A contribution of $11 million to the Trust to provide
working capital and to fund future operating expenses of the
Trust.
-- Cash and cash equivalents of $39 million, including a ceding
commission of $35.7 million paid by Conseco Life Insurance
Company, in connection with the assignment by Senior Health
of its non-long term care business to Conseco Life Insurance
Company.
The transaction was subject to approval by the Pennsylvania
Insurance Department, which issued its order approving the
transfer of ownership.
"The completion of this transfer and the formation of the
independent trust is a balanced solution for all of Conseco's
constituents and Senior Health's long-term care policyholders,"
Conseco CEO Jim Prieur said. "The trust will operate Senior
Health for the exclusive benefit of the policyholders, without a
profit motive, and will be governed by a highly qualified board of
trustees under the oversight of the Pennsylvania Insurance
Department. In addition, we expect that Conseco will benefit from
both reduced earnings volatility and better allocation of
management resources on its core businesses going forward."
Conseco expects to record accounting charges of approximately
$1.1 billion related to the transaction, of which $503.7 million
was recognized in the second quarter of 2008, $155.0 million was
recognized in the third quarter of 2008, and approximately
$400 million is expected to be recognized in the fourth quarter of
2008.
Conseco, Inc.'s insurance companies help protect working American
families and seniors from financial adversity: Medicare
supplement, long-term care, cancer, heart/stroke and accident
policies protect people against major unplanned expenses;
annuities and life insurance products help people plan for their
financial futures.
About Conseco Inc.
Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) --
http://www.conseco.com/-- is the holding company for a group of
insurance companies operating throughout the United States that
develop, market and administer supplemental health insurance,
annuity, individual life insurance and other insurance products.
The company became the successor to Conseco Inc. (Old Conseco), in
connection with its bankruptcy reorganization. CNO focuses on
serving the senior and middle-income markets. The company sells
its products through three distribution channels: career agents,
professional independent producers and direct marketing. CNO
operates through its segments, which includes Bankers Life,
Conseco Insurance Group, Colonial Penn, other business in run-off
and corporate operations.
* * *
As reported in the Troubled Company Reporter on Aug. 25, 2008,
Moody's Investors Service downgraded the rating of Conseco, Inc.'s
bank debt to B1 from Ba3 and moved the outlook on Conseco to
negative from stable.
Moody's continues the review with direction uncertain on these
rating:
Conseco Senior Health Insurance Company
-- insurance financial strength rating at Caa1;
CONSTELLATION ENERGY: Lead for Securities Suit Due Nov. 21
----------------------------------------------------------
The deadline for investors to move to be appointed lead plaintiff
in the Constellation Energy Group, Inc., securities class action
is Friday, Nov. 21, 2008. Under federal law, any investor who
purchased Constellation Energy stock between Jan. 30, 2008, and
Sept. 16, 2008, inclusive, and suffered losses may move the Court
to serve as lead plaintiff on behalf of the investor class.
As reported in the Troubled Company Reporter on Nov. 4, 2008,
Scott+Scott LLP filed a class action lawsuit against Constellation
Energy Group, Inc., and certain officers and directors of the
company in the U.S. District Court for the District of Maryland,
for violations of the Securities Exchange Act of 1934.
Scott+Scott filed the lawsuit on behalf of those purchasing the
company's common stock during the period Jan. 30, 2008, to
Sept. 16, 2008.
The Complaint alleges that, during the Class Period, Constellation
Energy issued materially false and misleading statements regarding
the Company's operations and financial performance. Among other
things, Plaintiffs allege that Defendants failed to disclose that
the Company's financial results were inflated by questionable
accounting practices. In addition, the Company concealed the
extent of its credit exposure to failing trading partners,
particularly Lehman Brothers Holding Inc., which would affect the
Company's ability to engage in energy-related trades. As a result
of defendants' false statements and omissions during the Class
Period, Constellation Energy common shares traded at artificially
inflated prices.
In August 2008, share prices of Constellation Energy softened as
analysts began to question certain aspects of the Company's
accounting, particularly the Company's questionable
characterizations of depreciation, cash flow and mark-to-market
adjustments. Shortly thereafter, on Sept. 15, 2008, Lehman
Brothers, a key trading partner of Constellation Energy, filed for
Chapter 11 bankruptcy protection. On that day, investors were
stunned as Constellation's business exposure to the Lehman
bankruptcy was revealed. By the close of the Class Period, the
Company's shares traded at $24.77 per share, a 75% loss from the
Class Period high.
About Constellation Energy
Constellation Energy -- http://www.constellation.com-- a FORTUNE
125 company with 2007 revenues of $21 billion, says it is the
nation's largest competitive supplier of electricity to large
commercial and industrial customers and the nation's largest
wholesale power seller. Constellation Energy also manages fuels
and energy services on behalf of energy intensive industries and
utilities. It owns a diversified fleet of 83 generating units
located throughout the United States, totaling approximately 9,000
megawatts of generating capacity. The company delivers electricity
and natural gas through the Baltimore Gas and Electric Company
(BGE), its regulated utility in Central Maryland.
CREDIT SUISSE: Fitch Affirms Ratings on All Classes of Notes
------------------------------------------------------------
Fitch Ratings has affirmed all classes of notes for Credit Suisse
Commercial Mortgage Trust's commercial mortgage pass-through
certificates, series 2007-C5, and assigned Rating Outlooks:
-- $29.4 million class A-1 at 'AAA'; Outlook Stable;
-- $315.0 million class A-2 at 'AAA'; Outlook Stable;
-- $161.0 million class A-3 at 'AAA'; Outlook Stable;
-- $65.1 million class A-AB at 'AAA'; Outlook Stable;
-- $982.5 million class A-4 at 'AAA'; Outlook Stable;
-- $347.6 million class A-1-A at 'AAA'; Outlook Stable;
-- $198.0 million class A-M at 'AAA'; Outlook Stable;
-- $74.1 million class A-1-AM at 'AAA'; Outlook Stable;
-- $153.5 million class A-J at 'AAA'; Outlook Stable;
-- $57.4 million class A-1-AJ at 'AAA'; Outlook Stable;
-- Interest-only class A-SP at 'AAA'; Outlook Stable;
-- Interest-only class A-X at 'AAA'; Outlook Stable;
-- $23.8 million class B at 'AA+'; Outlook Stable;
-- $20.4 million class C at 'AA'; Outlook Stable;
-- $34.0 million class D at 'AA-'; Outlook Stable;
-- $30.6 million class E at 'A+'; Outlook Stable;
-- $13.6 million class F at 'A'; Outlook Stable;
-- $40.8 million class G at 'A-' Outlook Stable;
-- $20.4 million class H at 'BBB+' Outlook Stable;
-- $30.6 million class J at 'BBB' Outlook Stable;
-- $23.8 million class K at 'BBB-' Outlook Negative;
-- $10.2 million class L at 'BB+' Outlook Negative;
-- $10.2 million class M at 'BB' Outlook Negative;
-- $10.2 million class N at 'BB-' Outlook Negative.
Fitch does not rate the $17.0 million class O, the $3.4 million
class P, the $10.2 million class Q, or the $34.0 million class S.
The rating affirmations reflect minimal paydown since issuance and
stable performance of the pool. As of the October 2008
distribution date, the transaction has paid down by 0.14% to
$2.717 billion from $2.721 billion at issuance. Rating Outlooks
reflect the likely direction of rating changes over the next one
to two years and take into account higher default and loss
expectations on Fitch Loans of Concern.
Fitch has identified 16 Loans of Concern (11.5%), including one
specially serviced (0.1%). The specially serviced asset is an
unanchored retail property located in Calcutta, Ohio. The loan
transferred to the special servicer following a monetary default
and is currently 90+ days delinquent. The special servicer filed
for foreclosure in September 2008. After the filing, the borrower
submitted a forbearance proposal, which has been accepted by the
special servicer. The agreement provides for escalating monthly
payments in an amount sufficient to bring the loan payment current
by February 2009 including reimbursement for collection costs.
There were three loans at issuance still in the process of
stabilizing, Gulf Coast Town Center Phases I & II (7.0%), Allanza
at the Lakes (3.1%) and Commerce Corporate Plaza (3.1%). Fitch
has reviewed the updated occupancy and cash flow information for
these loans and has determined that Gulf Coast Town Center and
Commerce Corporate Plaza were in line with the stabilization
schedule set forth at issuance. Allanza at the Lakes is
considered a Loan of Concern due to below-market occupancy and
potential performance decline in the Las Vegas market.
There is one shadow rated loan within the transaction: 450
Lexington Avenue (7.4%). The property is a 910,473 sf Class A
office building located in New York. Occupancy as of June 2008
was 98.5%, consistent with issuance. Although the reported net
cash flow as of June 2008 has declined from issuance, the decline
is due to a major tenant's lease commencing in August 2008. The
loan maintains its investment grade shadow rating.
DELTA AIR: CEO R. Anderson Has 1.2MM Shares Post-Merger
-------------------------------------------------------
In separate filings dated Oct. 31, 2008, these officers
disclosed with the Securities and Exchange Commission that they
either acquired, disposed of, or beneficially owned stocks of
Delta Air Lines, Inc., subsequent to the company's merger with
Northwest Airlines Corporation:
* Richard Anderson, Delta's chief executive officer, owned
1,219,711 Shares, subsequent to his acquisition of 760,000
Shares. He also acquired the right to buy 1,520,000 Shares
at a conversion price of $7.99, which will expire on
Oct. 28, 2018.
* Edward H. Bastian, Northwest's president and CEO, disposed
of a total of 185,850 Shares, and acquired 649,150 Shares,
making him the direct beneficial owner of 722,062 after the
transactions. Mr. Bastian also acquired the right to buy
940,000 shares of Delta common stock, at $7.99 conversion
price, which will expire on Oct. 28, 2018.
* Michael J. Becker, Northwest's executive vice president and
COO, acquired the right to buy a total of 259,681 Shares, at
conversion prices of $18.15, $17.81 and $16.86. The Stock
Options will expire on June 13, June 27 and July 12, 2017.
* Michael H. Campbell, Delta's EVP for HR and Labor Relations,
disposed of a total of 96,955 Shares, and acquired 268,870
Shares in the aggregate, after which he beneficially owned
391,438 Shares. Mr. Campbell also acquired the option or
right to buy 520,000 Shares at $7.99 conversion price, which
will expire on Oct. 28, 2018.
* Stephen Gorman, Delta's EVP and COO, disposed of a total of
46,813 Shares, and acquired 394,470 Shares; and acquired the
right or option to buy 730,000 Shares at a conversion price
of $7.99, which will expire on Oct. 28, 2018.
* Glen W. Hauenstein, Delta's EVP for Network Planning and
Review Management, disposed of a total of 109,053 Shares.
Following the transactions, he owned 407,840 Shares.
* Richard B. Hirst, SVP and GC at Delta, acquired the right to
buy 102,823 Shares at $14.15 conversion price, which will
expire on Sept. 30, 2017.
* Hank Halter, Delta's senior VP and CFO, disposed of 16,514
Shares, and acquired 203,000 Shares, after which he
beneficially owned 267,533 Shares.
* Doug Steenland, a director at Delta, acquired 596,564
Shares, disposed of 264,270 Shares, and subsequently owned
501,569 Shares. He also acquired the option to buy a total
of 596,516 Shares, which will expire on June 13, June 27 and
July 12, 2017.
Pursuant to the Merger awards consisting of portions of
restricted stock and stock options to Delta officers, Messrs.
Anderson, Bastian, Becker, Campbell and Gorman, the restricted
stock vests, and the stock options become exercisable, over a
three year period, specifically:
-- on each of May 1, 2009, Nov. 1, 2009, and May 1, 2010,
with respect to 20% of the Shares; and
-- Nov. 1, 2011, with respect to the remaining 40% of the
Shares.
The exercise price of the stock option is the closing price of the
common stock on the New York Stock Exchange on Oct. 29, 2008.
In separate SEC filings dated Nov. 4, 2008, these officers
disclosed that they disposed of their Shares:
Shares Shares Owned
Officer Disposed Price Post-Transaction
------- -------- ----- ----------------
Mr. Bastian 100,000 $10.4485 622,062
Mr. Halter 64,533 10.7589 203,000
Mr. Hauenstein 20,000 11.5 387,840
Mr. Campbell 65,719 11.2 325,719
Messrs. Bastian and Halter sold their Shares in open market
transactions through a broker-dealer.
Similarly, four directors acquired beneficial ownership of, and
options to buy, Delta Shares. The Stocks they acquired are
exercisable on Oct. 29, 2008, and expiring on Aug. 27, 2017.
The Directors are:
Shares Acquired Conversion
Director Acquired Stock Options Price
-------- -------- ------------- ----------
Roy J. Bostock, 16,468 9,146 $17.81
John M. Engler, 13,718 9,146 $17.81
Rodney E. Slater 13,718 9,146 $17.81
Mickey P. Foret 34,990 9,146 $17.81
& 13,718
Kenneth F. Khoury, former EVP and general counsel; and Lee A.
Macenczak, former EVP for Sales and Marketing, each disposed of a
total of 66,218 Shares, and acquired 79,340 Shares, after which
they each beneficially owned 133,795 Shares.
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is
the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington, represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel in the Debtors' chapter 11 cases. When the Debtors filed
for bankruptcy, they listed $14.4 billion in total assets and
$17.9 billion in total debts. On Jan. 12, 2007, the Debtors filed
with the Court their chapter 11 plan. On Feb. 15, 2007, the
Debtors filed an amended plan and disclosure statement. The Court
approved the adequacy of the Debtors' amended disclosure statement
on March 26, 2007. On May 21, 2007, the Court confirmed the
Debtors' amended plan. That amended plan took effect May 31,
2007.
(Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall
S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors
in their restructuring efforts. Timothy R. Coleman at The
Blackstone Group L.P. provides the Debtors with financial advice.
Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump
Strauss Hauer & Feld LLP, provide the Official Committee of
Unsecured Creditors with legal advice. John McKenna, Jr., at
Houlihan Lokey Howard & Zukin Capital and James S. Feltman at
Mesirow Financial Consulting, LLC, serve as the Committee's
financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007.
On Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on Feb. 2,
2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure
statement. In April 25, 2007, the Court confirmed the Debtors'
plan. That plan became effective on April 30, 2007. The Court
entered a final decree closing 17 cases on Sept. 26, 2007.
* * *
As reported in the Troubled Company Reporter on July 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Northwest Airlines Corp. and subsidiary Northwest Airlines Inc.
(both rated B/Negative/--), including lowering the long-term
corporate credit ratings on both entities to 'B' from 'B+', and
removed the ratings from CreditWatch, where they had been placed
with negative implications April 15, 2008. The outlook is
negative.
The downgrade reflects expected losses and reduced or negative
operating cash flow caused by high fuel prices. S&P also lowered
our ratings on enhanced equipment trust certificates, in some
cases by more than one notch.
DELTA AIR: To Repay $245MM of Northwest Bond Debt to MAC
--------------------------------------------------------
Delta Air Lines, Inc., reiterated their pledge to repay the
Metropolitan Airports Commission the $245 million that Delta's
subsidiary, Northwest Airlines Corporation, owes on bond debt,
reports the Star Tribune.
Under the current Agreement, the bonds would be paid off in 2022,
and violations of its terms would trigger an acceleration of the
payments by 10 years.
Delta executives, however, suggest renegotiation of the 1992
agreement between Northwest and the MAC, with respect to the
requirements of a headquarters, hub and employment levels.
Northwest's headquarters at Eagan, Minnesota, is expected to
close subsequent to the approval that the airlines obtained from
Federal Aviation Administration on integrated flight operations,
"which could occur in late 2009 or early 2010," says the report.
Absent a new agreement, Delta would violate the current pact when
the headquarters closes and its penalty would be early repayment
of all of the bond debt by 2012, according to the report.
"Our priorities in negotiations with the airline are to retain as
many jobs and as much air service in Minnesota as possible,"
Patrick Hogan, a MAC spokesman, said.
Northwest CEO Ed Bastian affirms that "there is a practical and
immediate consideration about the number of salaried jobs that
Delta will retain in Minnesota," according to the report.
Mr. Bastian pushes for the speedy negotiations. Mr. Hogan noted,
however, that Delta has not submitted a written proposal for
MAC's consideration to "tell us how they intend to make amends."
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall
S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors
in their restructuring efforts. Timothy R. Coleman at The
Blackstone Group L.P. provides the Debtors with financial advice.
Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump
Strauss Hauer & Feld LLP, provide the Official Committee of
Unsecured Creditors with legal advice. John McKenna, Jr., at
Houlihan Lokey Howard & Zukin Capital and James S. Feltman at
Mesirow Financial Consulting, LLC, serve as the Committee's
financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007.
On Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on Feb. 2,
2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure
statement. In April 25, 2007, the Court confirmed the Debtors'
plan. That plan became effective on April 30, 2007. The Court
entered a final decree closing 17 cases on Sept. 26, 2007.
* * *
As reported in the Troubled Company Reporter on July 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Northwest Airlines Corp. and subsidiary Northwest Airlines Inc.
(both rated B/Negative/--), including lowering the long-term
corporate credit ratings on both entities to 'B' from 'B+', and
removed the ratings from CreditWatch, where they had been placed
with negative implications April 15, 2008. The outlook is
negative.
The downgrade reflects expected losses and reduced or negative
operating cash flow caused by high fuel prices. S&P also lowered
our ratings on enhanced equipment trust certificates, in some
cases by more than one notch.
DOWNEY FINANCIAL: Acute Liquidity Prompts Moody's to Junk Ratings
-----------------------------------------------------------------
Moody's Investors Service downgraded the senior unsecured ratings
of Downey Financial Corp. to Ca from B3. Downey Saving and Loan
Association's bank financial strength rating was downgraded to E
from E+, long term deposit rating to B3 from B1 and issuer rating
to Ca from B2. All Downey ratings are under review for downgrade.
Moody's downgrade and review for further downgrade reflects the
acute liquidity constraints at Downey Financial Corp and the minor
cushion Downey Savings and Loan currently maintains over its
regulatory capital requirements as it struggles with severe asset
quality issues.
The company disclosed that Downey Financial Corp.'s liquid assets
at Sept. 30, 2008 are $11 million with no current sources of
additional liquidity. This entity has a $200 million senior note
due July 2014 which has a semi-annual interest cost of
$6.5 million. The next payment on this note is due on Jan. 1,
2009. Normally, Downey Financial Corp's primary source of
liquidity would be dividends from Downey Savings and Loan, but
these payments are not permitted without the consent of the
company's primary regulator, the Office of Thrift Supervision.
Additionally, Downey Financial Corp. may not issue new debt
without the consent of the OTS and Moody's believes it is unlikely
either the debt or equity markets are currently open to Downey.
"Without an equity raise, new debt issuance or dividend from
Downey Saving and Loan, all of which Moody's considers very
unlikely, Downey Financial Corp. will likely default on its senior
note," said Moody's Vice President and Senior Credit Officer Craig
Emrick.
Downey Savings and Loan is currently under a consent order with
the OTS that requires the thrift to maintain capital ratios in
excess of the normal Moody's well capitalized minimums and
complete a capital raise by Dec. 31, 2008. Downey currently has a
cushion of approximately $60 million over these minimums and
Downey disclosed that it will likely violate these thresholds on
Dec. 31, 2008 without a capital raise.
The enforcement action that would be taken by the OTS, if any,
should Downey violate the terms of its consent order are
uncertain. However, due to the depths of Downey's problems,
Moody's believes there is the potential that bank regulators could
place Downey Saving and Loan in receivership and arrange for
another banking institution to assume the thrift's deposits and
possibly purchase certain assets. In the majority of regulatory
assisted transactions that have occurred this year all deposits,
both insured and uninsured, have been assumed by the acquiring
entity. The B3 deposit rating reflects the potential that
uninsured depositors would be assumed in Downey's case as Moody's
well, although the actual outcome is uncertain.
However, it is very unlikely that the obligations of Downey
Financial Corp. would be assumed by an acquiring entity in an
assisted transaction, and the potential loss on the senior notes
would be significant. This is reflected in the assigned Ca
rating.
Moody's review will focus on the expected loss that would occur
should Downey be placed into receivership.
Downgrades:
Issuer: Downey Financial Corp.
-- Issuer Rating, Downgraded to Ca from B3, Placed on Review for
Possible Downgrade
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ca
from B3, Placed on Review for Possible Downgrade
Issuer: Downey Savings & Loan Association
-- Bank Financial Strength Rating, Downgraded to E from E+
-- Issuer Rating, Downgraded to Ca from B2, Placed on Review for
Possible Downgrade
-- OSO Senior Unsecured OSO Rating, Downgraded to Ca from B2,
Placed on Review for Possible Downgrade
-- Senior Unsecured Deposit Rating, Downgraded to B3 from B1,
Placed on Review for Possible Downgrade
Downey Financial Corp. is based in Newport Beach, California and
reported total assets of $12.8 billion at Sept. 30, 2008.
FANNIE MAE: Gov't May Have to Inject More Capital Into Firm
-----------------------------------------------------------
Zachary A. Goldfarb at The Washington Post reports that the U.S.
Treasury Department will likely be required to pump billions of
dollars into Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac could need more than the $200 billion
that the government set aside for capital infusions into the two
firms, Washington Post says, citing some analysts.
Washington Post relates that the Treasury Department, as agreed
between the government and the two companies, must inject money --
$100 billion for each firm -- in any quarter when the firms'
liabilities exceed their assets.
According to Washington Post, Barclays Capital analyst Rajiv Setia
said, "Depending on what happens with housing, you could see
scenarios where the $100 billion comes into the question."
Freddie Mac may need $40 billion by year-end, the report says,
citing Mr. Setia.
Prabha Natarajan at The Wall Street Journal reports that Fannie
Mae and Freddie Mac debts have weakened again, with risk premiums
on debt securities issued by the firm taking "a turn for the
worse" on Thursday morning, due to continued uncertainty of the
firm's future. Investors, according to WSJ, are worried that the
firms may not be able to raise capital through long-term bonds.
According to WSJ, risk premiums on longer notes were weaker by 5
to 14 basis points on Thursday, and Fannie Mae's two-year
benchmark note was 7.5 basis points wider at 128 basis points over
comparative Treasury yields. Data provider TradeWeb reports that
Freddie Mac's 4.125% note due 2013 was weaker by 13.5 basis points
at 131.
WSJ relates that Freddie Mac and Fannie Mae, after a short period
of gradual improvement of risk premiums, or spreads, over
comparable Treasury yields, "reversed course on a bevy of" these
negative news:
-- Fannie Mae's Monday announcement of a $29 billion third
quarter loss,
-- Treasury Secretary Henry Paulson's comments on the need
for either explicit or no government backing of the bonds
issued by these companies, and
-- the change of focus on how the $700 billion bailout would
be spent on Wednesday.
WSJ quoted Mark Noble of MF Global as saying, "Investors are going
back to all these concerns. There is no stability in the market
place." According to WSJ, a spate of selling by overseas
investors on Thursday, especially in the three-year notes, pushed
the shorter notes to wider levels.
Fannie Mae, states WSJ, said in its third-quarter filing that it
has "experienced reduced demand for our debt obligations from some
of our historical sources of that demand, particularly in
international markets," and this has made it difficult "to issue
debt securities with maturities greater than one year."
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.
FORD MOTOR: DBRS Junks Rating; Trend Remains Negative
-----------------------------------------------------
DBRS downgraded the ratings of Ford Motor Company (Ford or the
Company), including Ford's Issuer Rating to CCC (high) from B
(low). Ford's Senior Secured Credit Facilities and Long-Term Debt
are downgraded to B (low) and CCC respectively. Ford Motor Credit
Company LLC and Ford Credit Canada Limited's short- and long-term
debt are also downgraded to B (low) and R-5, respectively. (This
reflects the maintenance of the one notch rating differential
between the parent company and the credit company.) The trends
remain Negative. The ratings action reflects DBRS's concerns
regarding the increasing challenges facing Ford over the near to
medium term as the Company seeks to maintain sufficient liquidity
balances while attempting to turn around its North American
operations amid severe market conditions.
Ford announced third-quarter results that were below DBRS's
expectations. The Company's reported net income for the period was
a moderate loss of $129 million; however, this included a
significant special item incorporating retiree health care
curtailment gains. Excluding the special items, Ford's automotive
operations generated a pre-tax loss of $2.7 billion. More
significantly, Ford used $7.7 billion in cash through the quarter,
with the Company's gross cash balances as of
September 30, 2008 totaling $18.9 billion, down sharply from a
2007 year-end level of $34.6 billion. DBRS notes that the cash
burn in recent months has been exacerbated by the Company's
aggressive production declines in response to falling vehicle
demand; this has had a pronounced negative impact on Ford's level
of accounts payable. DBRS expects the significant use of working
capital to partially reverse itself in early 2009.
The weak results are indicative of several obstacles that have
hindered the Company, along with its Detroit 3 peers. Product
offerings are relatively over-weighted to pick-up trucks and SUVs,
which have fallen out of favor in the U.S. market amid increasing
fuel costs. This has led to a shift in vehicle segmentation toward
smaller vehicles that has accelerated sharply as fuel prices
peaked earlier this year. (Despite the significant moderation in
fuel prices the past two months, this trend has not significantly
reversed.) Additionally, U.S. industry volumes are falling
precipitously as economic concerns in the U.S. proliferated into a
global crisis, triggering a sharp reduction in access to credit
and much lower consumer confidence. Vehicle sales in September
were a seasonally adjusted annual rate (SAAR) of 12.2 million
units. This was followed by a further calamitous drop to a SAAR of
10.9 million units in October, which represented the lowest
monthly total in 25 years. The sales declines and associated rate
of cash burn, together with significantly restricted access to
credit or external sources of capital have increased concerns
regarding the ultimate viability of the Detroit 3, notably General
Motors Corporation (GM) and Chrysler LLC (Chrysler).
Ford's use of cash through the first nine months of 2008 amounts
to a very alarming level of $15.7 billion. However, this includes
significant Voluntary Employee Beneficiary Association-related
(VEBA) payments that will not be repeated going forward, in
addition to the aforementioned significant use of working capital,
which should partially reverse itself early next year.
Accordingly, DBRS believes that Ford's rate of cash burn should
moderate considerably over the near term.
Additionally, DBRS notes that the Company unveiled several
measures to help defend the Company's liquidity position going
forward. These include reduced capital expenditures over the next
two years as well as lower personnel-related costs to be achieved
through further staff reductions and revisions to total
compensation. Furthermore, Ford seeks to recover capital from Ford
Credit as it reduces its balance sheet in line with significantly
lower vehicle volumes. DBRS notes that Ford's liquidity position
continues to be the highest of the Detroit 3; in addition to its
cash balances, Ford's availability of secured credit lines totaled
$10.7 billion for a total liquidity position of $29.6 billion as
of September 30, 2008.
The ratings remain on Negative trend, reflecting the very weak
industry conditions that are expected to prevail over the
remainder of this year and through 2009. Additional factors that
may impact the ratings over the near term include the eventual
outcomes of the dialogue Ford and its automotive peers are having
with various governments as the automotive industry seeks
assistance as it undergoes the current turbulent market conditions
worldwide.
FREDDIE MAC: Gov't May Have to Inject More Capital Into Firm
------------------------------------------------------------
Zachary A. Goldfarb at The Washington Post reports that the U.S.
Treasury Department will likely be required to pump billions of
dollars into Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac could need more than the $200 billion
that the government set aside for capital infusions into the two
firms, Washington Post says, citing some analysts.
Washington Post relates that the Treasury Department, as agreed
between the government and the two companies, must inject money --
$100 billion for each firm -- in any quarter when the firms'
liabilities exceed their assets.
According to Washington Post, Barclays Capital analyst Rajiv Setia
said, "Depending on what happens with housing, you could see
scenarios where the $100 billion comes into the question."
Freddie Mac may need $40 billion by year-end, the report says,
citing Mr. Setia.
Prabha Natarajan at The Wall Street Journal reports that Fannie
Mae and Freddie Mac debts have weakened again, with risk premiums
on debt securities issued by the firm taking "a turn for the
worse" on Thursday morning, due to continued uncertainty of the
firm's future. Investors, according to WSJ, are worried that the
firms may not be able to raise capital through long-term bonds.
According to WSJ, risk premiums on longer notes were weaker by 5
to 14 basis points on Thursday, and Fannie Mae's two-year
benchmark note was 7.5 basis points wider at 128 basis points over
comparative Treasury yields. Data provider TradeWeb reports that
Freddie Mac's 4.125% note due 2013 was weaker by 13.5 basis points
at 131.
WSJ relates that Freddie Mac and Fannie Mae, after a short period
of gradual improvement of risk premiums, or spreads, over
comparable Treasury yields, "reversed course on a bevy of" these
negative news:
-- Fannie Mae's Monday announcement of a $29 billion third
quarter loss,
-- Treasury Secretary Henry Paulson's comments on the need
for either explicit or no government backing of the bonds
issued by these companies, and
-- the change of focus on how the $700 billion bailout would
be spent on Wednesday.
WSJ quoted Mark Noble of MF Global as saying, "Investors are going
back to all these concerns. There is no stability in the market
place." According to WSJ, a spate of selling by overseas
investors on Thursday, especially in the three-year notes, pushed
the shorter notes to wider levels.
Fannie Mae, states WSJ, said in its third-quarter filing that it
has "experienced reduced demand for our debt obligations from some
of our historical sources of that demand, particularly in
international markets," and this has made it difficult "to issue
debt securities with maturities greater than one year."
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.
FREESCALE SEMICONDUCTOR: Fitch Cuts Issuer Default Rating to 'B'
----------------------------------------------------------------
Fitch Ratings lowered these ratings on Freescale Semiconductor
Inc.:
-- Issuer Default Rating (IDR) to 'B' from 'B+';
-- Senior secured bank revolving credit facility (RCF) to
'BB/RR1' from 'BB+/RR1';
-- Senior secured term loan to 'BB/RR1' from 'BB+/RR1';
-- Senior unsecured notes to 'CCC+/RR6' from 'B/RR5';
-- Senior subordinated notes to 'CCC/RR6' from 'CCC+/RR6'.
The Rating Outlook remains Negative. Fitch's actions affect
approximately $10.1 billion of total debt including the assumption
of a fully drawn RCF.
The ratings and Outlook reflect Fitch's expectation that
Freescale's free cash flow will be negative for the fourth quarter
of 2008 and all of 2009, excluding a number of non-recurring cash
items, due to:
-- Significantly weakened consumer spending prospects over at
least the near term, which Fitch believes will be exacerbated
by tight credit markets and drive a sharper than previously
contemplated contraction within the global semiconductor
market. This should negatively impact Freescale across all
business segments, including its historically more stable
Microcontrollers and radio frequency, analog, and
sensors segments;
-- Sharper-than-anticipated production cuts for all of
Freescale's automotive customers, particularly the big three
U.S. automakers, which face ongoing market share erosion and
to which Freescale has significant exposure;
-- A precipitous decline in quarterly cellular segment sales to
below $100 million beginning in the current quarter, the
fourth fiscal quarter of 2008, from more than $350 million in
the year ago fourth quarter, as a result of Motorola's
(historically 90% of Cellular segment sales) cancellation of
its remaining contractual purchase obligations with
Freescale. Nonetheless, Fitch believes Freescale's planned
partial or full divestiture of or exit from the unprofitable
Cellular unit within the coming months will enable the
company to re-focus the significant capital previously
invested in the cellular-related research and development
into markets offering higher profitability and more
meaningful revenue growth opportunities.
The ratings also reflect Fitch's expectations that Freescale's
credit protection measures will weaken over the near term, driven
by a combination of lower profitability anticipated for 2009 and
the company's recent draw down on its RCF. As a result, Fitch
estimates interest coverage (operating EBITDA-to-gross interest
expense) could fall to nearly 1.0 times (x) and leverage (total
debt-to-operating EBITDA) could approach 10x. As a follow up on
to its 2008 restructuring activities, Freescale recently announced
additional restructuring plans for 2009, which are expected to
reduce fixed costs by up to $400 million (on an annual run rate
basis) by the end of next year. Nonetheless, the ratings and
Outlook incorporate Fitch's expectations that cost reductions will
not offset significant revenue declines in 2009, which Fitch
believes will exceed 10% (excluding the Cellular segment).
Despite these challenges, Fitch recognizes that Freescale has
sufficient liquidity to absorb even greater than anticipated cash
usage over the next two years. As of the quarter ended Sept. 30,
2008, Freescale's liquidity was supported by approximately
$1.8 billion of cash and cash equivalents and approximately
$230 million of availability remaining under the company's
$690 million senior secured revolving credit facility due 2012,
pro forma for the $460 million draw under this facility subsequent
to the most recently ended quarter. Freescale drew against its
RCF to bolster its liquidity in the face of meaningful uncertainty
through 2009, particularly regarding the extent of sales declines,
as well as the timing of cash restructuring charges and the
receipt of cash payments from Motorola associated with its
cancelled purchase agreement.
Further negative rating actions could occur if:
-- Freescale's free cash flow burn is greater than expected,
which likely would be profitability driven and suggest the
company's financial flexibility could be meaningfully reduced
within the next 18 months;
-- The company delays the sale of or exit from its cellular
business or fails to replace these lost revenues over the
intermediate term.
Conversely, Fitch may stabilize the ratings if Freescale:
-- Meaningfully reduces debt with cash proceeds from the sale of
the cellular business; or
-- Experiences greater than anticipated operating margin
expansion or revenue growth, neither of which Fitch believes
is likely through 2009 and possibly the first half of 2010;
Fitch expects Freescale's free cash flow for 2008 will be more
than $400 million, although this amount includes one-time payments
in the first quarter of 2008 from equipment sales and Motorola to
reduce purchase commitments. Nonetheless, Fitch believes
Freescale will be challenged to be free cash flow neutral in the
fourth quarter of 2008 and currently believes the company's use of
free cash flow for 2009 will exceed $250 million unless the
company is able to stem meaningful gross margin erosion and
achieve its cost reduction targets, assuming working capital
efficiency ratios remains at near current levels. Additionally,
Freescale's only debt amortization until 2013 is 1% per annum
under the term loan facility, or approximately $35 million per
year, and the company has no financial covenants.
At Sept. 30, 2007, total debt was approximately $10.0 billion and
consisted primarily of:
(i) $460 million outstanding under the company's $690 million
revolving credit facility due December 2012;
(ii) Approximately $3.4 billion of senior secured term loan
expiring Dec. 1, 2013;
(iii) $500 million of floating rate senior notes due 2014;
(iv) $1.5 billion of 9.125% PIK-election senior notes due 2014;
(v) Approximately $2.34 billion of 8.875% senior notes due
2014; and
(vi) Approximately $1.5 billion of 10.125% senior subordinated
notes due 2016.
The Recovery Ratings for Freescale reflect Fitch's recovery
expectations under a distressed scenario, as well as Fitch's
expectation that the enterprise value of Freescale, and hence
recovery rates for its creditors, will be maximized in a
restructuring scenario (as a going concern) rather than a
liquidation scenario. In deriving a distressed enterprise value,
Fitch applies a 35% discount to Fitch's estimate of Freescale's
operating EBITDA for the latest 12 months ended Sept. 30, 2008 of
approximately $1.4 billion. The discount is equivalent to Fitch's
estimate of maintenance capital spending and total interest
expense for Freescale, assuming the company exercises its option
to pay in kind interest expense on the above referenced
$1.5 billion PIK-election senior notes.
Fitch then applies a 5x distressed EBITDA multiple, which
considers that a stress event would likely result in a contraction
to Freescale's current multiple. As is standard with Fitch's
recovery analysis, the revolver is assumed to be fully drawn and
cash balances fully depleted to reflect a stress event. The 'RR1'
for Freescale's secured bank facility and term loan reflects
Fitch's belief that 91%-100% recovery is likely. The 'RR6' for
Freescale's senior and senior subordinated notes reflects Fitch's
belief that 0%-10% recovery is realistic. However, Fitch believes
that, for the senior subordinated notes, expanding the notching
down by one is appropriate due to the structurally superior
position of the senior unsecured note holders.
GDR TWO: Case Summary & Three Largest Unsecured Creditors
---------------------------------------------------------
Debtor: GDR Two, LLC
5030 Centennial Blvd., Suite A
Colorado Springs, CO 80919
Bankruptcy Case No.: 08-27935
Chapter 11 Petition Date: November 11, 2008
Type of Business: The Debtor owns land with buildings at
4980, 5010 and 5030 Centennial Blvd. in
Colorado Springs.
Court: District of Colorado (Denver)
Judge: Michael E. Romero
Debtor's Counsel: Kenneth J. Buechler, Esq.
Ken.Buechler@Sendwass.com
1660 Lincoln St., Ste. 2200
Denver, CO 80264
Tel: (303) 296-1999
Fax: (303) 296-7600
Total Assets: $13,080,723
Total Debts: $5,895,000
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
City Of Colorado Springs $10,000
PO Box 1575, M/C 1543
Colorado Springs, CO 80901-1575
Intergrated Process Systems, Inc. $0
c/o James R. Chadderdon, PC
128 South Tejon, Suite 408
Colorado Springs, CO 80903
Equipment Technologies, Inc. $0
c/o James R. Chadderdon, PC
128 South Tejon, Suite 408
Colorado Springs, CO 80903
GDR TWO: Files for Chapter 11 Bankruptcy in Colorado
----------------------------------------------------
GDR Two LLC filed a voluntary petition for Chapter 11 protection
before the United States Bankruptcy Court for the District of
Colorado, Denver Business Journal reports.
According to the Journal, the company's affiliate, GDR InterTech
LLC, which made printed circuit boards, filed for bankruptcy in
March this year.
Industrial auctioneer The Branford Group, the Journal says, will
conduct an auction to sell the affiliates' equipment at a
December 6 auction in Colorado Springs.
The company said in papers filed with the Court it tapped Sender &
Wasserman P.C. as its counsel.
Headquartered in Colorado, GDR Two LLC is a single-asset real
estate owns a parcel of land at 4980, 5010 and 5030 Centennial
Boulevard.
GENERAL MOTORS: DBRS Junks L-T Ratings; Trend Remains Negative
--------------------------------------------------------------
DBRS has downgraded the long-term ratings of General Motors
Corporation (GM or the Company), including the Issuer Rating to CC
from B (low). GM's Secured Credit Facilities and Long-Term Debt
are downgraded to CCC (low) and CC respectively. All trends remain
Negative. The ratings action reflects DBRS's concerns regarding
the severe challenges facing GM over the near term, as the Company
seeks to maintain sufficient liquidity balances while attempting
to turn around its North American operations amid extremely
difficult market conditions.
GM announced third-quarter results that were well below DBRS's
expectations. Excluding special items, GM's automotive operations
generated a pre-tax loss of $2.8 billion. More significantly, the
automotive operations used $6.9 billion in cash through the
quarter, with special cash charges associated with the
restructurings of GM and of Delphi Corporation further increasing
the operating use of cash to $8.5 billion. Through the first nine
months of 2008, this operating use of cash totaled $16 billion. As
of September 30, 2008, GM's gross cash position (including $300
million of readily-available assets of the Voluntary Employee
Beneficiary Association (VEBA)) amounted to $16.2 billion, down
sharply from a 2007 year-end level of $27.3 billion. DBRS notes
that the Company also fully drawed its secured revolver in the
third quarter to help defend its current liquidity position. While
the cash burn in the third quarter was exacerbated by significant
working capital useage and sales allowances that are expected to
partly reverse in subsequent quarters, DBRS nonetheless notes that
the Company's cash balances are now dangerously close to the
baseline range of $11 billion to $14 billion required to maintain
operations, as disclosed by GM previously this year.
The weak results are indicative of several obstacles that have
hindered the Company, along with its Detroit 3 peers. Product
offerings are relatively over-weighted to pick-up trucks and SUVs,
which have fallen out of favour in the U.S. market amid increasing
fuel costs. This has led to a shift in vehicle segmentation toward
smaller vehicles that has accelerated sharply as fuel prices
peaked earlier this year. (Despite the significant moderation in
fuel prices the past two months, this trend has not significantly
reversed.) Additionally, U.S. industry volumes are falling
precipitously as economic concerns in the United States
proliferated into a global crisis, triggering a sharp reduction in
access to credit and much lower consumer confidence. Vehicle sales
in September were a seasonally adjusted annual rate (SAAR) of 12.2
million units. This was followed by a further calamitous drop to a
SAAR of 10.9 million units in October, which represented the
lowest monthly total in 25 years. GM's total vehicle sales in
October were down 45% year-over-year. GMAC's restricted access to
capital to support GM sales is another grave concern that
contributed to the very low October sales totals; this further
complicates a sales turnaround going forward. The sales declines
and associated rate of cash burn, together with significantly
restricted access to credit or external sources of capital have
increased concerns regarding the ultimate viability of the Detroit
3, notably General Motors Corporation (GM) and Chrysler LLC
(Chrysler).
In response to the extremely challenging environment and GM's
precipitously declining liquidity position, the Company announced
some additional measures to bolster its previous liquidity
initiatives, as announced on July 15, 2008. These primarily
include a further reduction in capital expenditures as well as
structural cost reductions that are expected to increase the total
liquidity measures to approximately $20 billion through the end of
2009. However, even assuming the successful execution of these
measures, the Company conceded that its liquidity position through
the first half of next year is likely to fall below the minimally
required level, absent several developments including a
significant improvement in economic and automotive industry
conditions, improved access to capital markets and other private
sources of funding, obtainment of some government funding, or some
combination of the foregoing.
The ratings remain on Negative trend, reflecting the minimal
liquidity cushion and the very weak industry conditions expected
to prevail through the end of 2009. DBRS will monitor GM's
progress in raising additional liquidity, including the eventual
outcomes of the dialogue GM and its automotive peers are having
with various governments as the automotive industry seeks
assistance as it undergoes the current turbulent market conditions
worldwide.
GENERAL GROWTH: Might Petition for Ch. 11; In-Talks with Lenders
----------------------------------------------------------------
The Courier-Journal reports that General Growth Properties, Inc.
told its investors that it might file for Chapter 11 protection to
keep creditors away as loans come due next month.
General Growth said in a filing with the Securities and Exchange
Commission that it's working with lenders to gain more time to pay
off debt, and is also considering asset sales and other ways to
raise cash. General Growth has $1.13 billion in debt coming due
by the end of the year, with more than $900 million due by Dec. 1,
2008. General Growth said that even if it is successful in
addressing these 2008 maturities, an additional $3.07 billion in
debt is scheduled to mature in 2009. The Courier-Journal says
that if General Growth fails to make those debt payments, other
lenders would be able to demand earlier payment.
General Growth's latest balance sheet provides that it has
$29,662,127,000 in assets and $27,326,990,000 in debts as of Sept.
30, 2008. The company has $139,175,000 in cash and cash
equivalents as of Sept. 30.
In September, 2008, General Growth announced that it was working
with our advisors to develop a comprehensive strategic plan to
generate capital from a variety of sources, including, but not
limited to, both core and non-core asset sales, the sale of joint
venture interests, a corporate level capital infusion, and/or
strategic business combinations. General Growth's shares, says
Courier-Journal, have been dropping since September, when they
traded in the mid-$20 range, and news of the firm's solvency
troubles sent the stock further down by 64% to 49 cents per share
on Nov. 11, 2008.
General Growth spokesperson David Keating said that operations are
ongoing at the firm's three malls in the Louisville metro area,
Courier-Journal relates.
Based in Chicago, Illinois, General Growth Properties, Inc. --
http://www.ggp.com/-- is the second-largest U.S. mall owner with
200-plus shopping malls in 44 states. General Growth is a
self-administered and self-managed real estate investment trust.
General Growth owns, manages, leases and develops retail rental
property, primarily shopping centers. Substantially all of its
properties are located in the United States, but the company also
has retail rental property operations and property management
activities -- through unconsolidated joint ventures -- in Brazil
and Turkey. Its Master Planned Communities segment includes the
development and sale of residential and commercial land, primarily
in large-scale projects in and around Columbia, Maryland; Houston,
Texas; and Summerlin, Nevada, as well as the development and sale
of its one residential condominium project located in Natick
(Boston), Massachusetts.
GENERAL GROWTH: Raises Going Concern Doubt Amid Heavy Debt Load
---------------------------------------------------------------
General Growth Properties, Inc., disclosed in a regulatory filing
that its potential inability to address its 2008 or 2009 debt
maturities in a satisfactory fashion raises substantial doubts as
to its ability to continue as a going concern.
General Growth delivered to the Securities and Exchange Commission
on Monday its financial report for the quarter ended September 30,
2008.
The company posted $15.4 million net loss for the period on $814
million in total revenues. General Growth has $29.6 billion in
total assets and $27.3 billion in total liabilities as at
September 30.
As of September 30, 2008, the company had roughly $1.13 billion in
debt maturing in 2008 and $3.07 billion in debt maturing in 2009.
The company has $900 million of property secured debt and
$58 million of corporate debt that is scheduled to mature by
December 1, 2008. The company is working with its syndicate of
lenders to extend the November 28, 2008 maturity dates for the
property secured debt -- for Fashion Show and The Shoppes at The
Palazzo, two of its premier Las Vegas properties -- and pursuing a
variety of refinancing and extension alternatives with respect to
the corporate debt. In addition, the company has undertaken a
comprehensive examination of all the financial and strategic
alternatives to generate capital from a variety of sources,
including, but not limited to, both core and non-core asset sales,
the sale of joint venture interests, a corporate level capital
infusion, or strategic business combinations. The company says it
is marketing The Grand Canal Shoppes and its premier Las Vegas
properties for sale. The company also has deferred certain
development and redevelopment projects and will continue to
evaluate economic and financing conditions and determine, in light
of such conditions, when to recommence such development and
redevelopment expenditures.
The company has sold certain office assets and suspended its third
quarter dividend. To repay maturing debt and to provide cash for
liquidity, the company obtained a $225 million secured short term
loan in October and November 2008 with a scheduled maturity of
February 1, 2009, which may be extended for an additional 60 days
at the discretion of the lender.
In addition to its debt maturities, the company needs cash to
satisfy its working capital needs, including as a result of
demands to provide additional cash collateral to various surety
companies and utility providers. The company does not anticipate
that either its revolving credit facility or its July 2008 secured
portfolio facility can be a significant source of working capital.
In the third quarter of 2008, the company closed on a $1.75
billion secured term loan -- Secured Portfolio Facility -- with
Eurohypo AG, New York Branch, as Administrative Agent; Wachovia
Capital Markets LLC, Eurohypo and ING Real Estate Finance (USA)
LLC, as Joint Lead Arrangers and Book Managers; the Documentation
Agents; Wachovia Bank, National Association and ING, as Co-
Syndication Agents; and a consortium of lenders. As of September
30, 2008, the company has received advances of $1.51 billion under
the facility. Although additional advances of up to $240.0
million may be made until December 31, 2008, subject to
participation by additional lenders and certain other conditions,
the company currently does not expect such advances to be made.
The proceeds from this facility have been used to repay debt
maturing in 2008 and for general corporate purposes. In October
and November 2008, the company closed on a $225 million secured
short term loan. Proceeds of this facility have been used to
repay debt maturing in 2008 and to provide additional liquidity.
BusinessWeek's Joseph Weber said in October that analysts believe
that General Growth's CEO John Bucksbaum could be forced to sell
the company and its more than 200 malls nationwide to pay debt.
Mr. Weber reported that the company's stock, at nearly $58 a year
ago, plunged to just above $7 on Oct. 2 after news broke that its
long-serving chief financial officer, Bernard Freibaum, had quit
after selling several million shares to meet margin calls.
BusinessWeek said analysts believe Indianapolis-based Simon
Property Group, the leading mall operator with some 383 malls
worldwide, and Sydney, Australia-based Westfield Group, with 118
malls are spread across the U.S., Australia, New Zealand, and
Britain, could buy the company and pay off its debt. Buyers could
also include Vornado Realty Trust, the owner of Toys R Us, and
Brookfield Asset Management, based in Toronto, the report said.
In its regulatory filing, General Growth says given the continued
weakness of the retail and credit markets, there can be no
assurance that the company can obtain extensions or refinance its
existing debt or obtain the additional capital necessary to
satisfy its short term cash needs on satisfactory terms. In the
event that the company is unable to extend or refinance its debt
or obtain additional capital on a timely basis and on acceptable
terms, the company will be required to take further steps to
acquire the funds necessary to satisfy its short term cash needs,
including seeking legal protection from its creditors. The
failure to refinance or extend the $900 million of property
secured debt would trigger an event of default under its
Senior Credit Facility and its Secured Portfolio Facility. The
failure to refinance or extend the $58 million of corporate debt
would also trigger an event of default under its Secured Portfolio
Facility and under certain of the company's TRCLP bonds.
Based in Chicago, Illinois, General Growth Properties, Inc. --
http://www.ggp.com/-- is the second-largest U.S. mall owner with
200-plus shopping malls in 44 states. General Growth is a
self-administered and self-managed real estate investment trust.
General Growth owns, manages, leases and develops retail rental
property, primarily shopping centers. Substantially all of its
properties are located in the United States, but the company also
has retail rental property operations and property management
activities -- through unconsolidated joint ventures -- in Brazil
and Turkey. Its Master Planned Communities segment includes the
development and sale of residential and commercial land, primarily
in large-scale projects in and around Columbia, Maryland; Houston,
Texas; and Summerlin, Nevada, as well as the development and sale
of its one residential condominium project located in Natick
(Boston), Massachusetts.
GENERAL MOTORS: Sells 13-Millionth Used Vehicle at Auction
----------------------------------------------------------
General Motors Corp. sold its 13-millionth remarketed vehicle at
an auction. The vehicle, a 2008 Chevrolet Suburban 2WD half-ton
LS model, was sold on Nov. 13, 2008, at a special sales event at
the Manheim St. Louis Auto Auction to George Weber Chevrolet of
Columbia, Illinois. GM Sponsored Auctions closed sale included
700 GM used vehicles.
GM Rental and Used Vehicle Activities director Mark Mathews said,
"Manheim St. Louis Auto Auction has been a great General Motors
sale over the past 22 years and we're pleased we can share this
honor with our auction partners here. This milestone is the
result of the contributions of all of our auction venues across
the United States over the last 26 years. The Manheim St. Louis
team and all of the 40 GM Sponsored Auctions across the United
States understand that effective vehicle remarketing is about
providing outstanding service and value to our dealers, from
reconditioning and repairs to presenting the vehicles in the sale
lanes."
"The Manheim St. Louis auction has done a tremendous job handling
the GM and GMAC Remarketing accounts over the years. Their
service to GM dealers and preparation and management of the sale
vehicles has been outstanding and it's fitting that we hold this
landmark GM sale here," GM Remarketing's national sales manager
Dan Kennedy as saying.
Since its first GM auction in October 1986, the Manheim St. Louis
auction has sold more than 350,000 GM used vehicles. More than
250 GM dealers participated in today's sale.
Manheim St. Louis holds a closed GM Sponsored Auctions sale every
other Thursday, offering an average of 600 vehicles per sale and
welcoming 250 GM dealers, who buy both in the lane and online,
using Manheim Simulcast. Participating dealers hail from across
the United States.
Mike Goodsell, general manager, Manheim St. Louis, said , "GM's
decision to sell its 13-millionth used vehicle here is a real
tribute to the Manheim St. Louis team's commitment to meeting the
needs of our factory customers and to the pride and dedication of
the auction employees here. We've had an excellent relationship
with General Motors over the past 22 years, working hard to
develop programs and processes to help maximize value for both GM
and its dealers."
About Manheim
Manheim -- www.manheim.com -- is the world's leading provider of
vehicle remarketing services. Through its wholesale operating
locations and array of technology products, Manheim impacts every
stage of a used vehicle's life cycle, helping commercial sellers
and automobile dealers realize the full value of their vehicles.
The company's operating location services include reconditioning,
certification, inspections, dealer financing, transport, title
management and marshaling, among others. Manheim is also the
leader in vehicle remarketing technology, using its online tools
to connect buyers and sellers around the globe to the world's
largest, most comprehensive wholesale marketplace. In 2007,
Manheim handled nearly 10 million used vehicles, facilitating
transactions representing more than $59 billion in value.
Manheim's subsidiary companies provide value-added remarketing
products and services, including paintless dent removal (Dent
Wizard), Auto Body Repair and salvage vehicle remarketing (Total
Resources Auctions). Manheim is a subsidiary of Atlanta-based Cox
Enterprises, Inc., one of the nation's leading media companies and
providers of automotive services.
About GM Remarketing
General Motors has been a major participant in the growth of the
auction industry over the last 26 years. In 1983, GM used 10
auctions with total sales of nearly 20,000 vehicles. Today GM
redistributes used, off-lease and off-rent vehicles through GM
dealers, with the help of 40 GM Sponsored Auctions in the United
States. This provides value not only for GM, but also provides a
source that makes available high-quality used vehicles for GM
dealers.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. to 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the company's rapidly
diminishing liquidity position. Given the current liquidity level
of $16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. and General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. economy.
GENWORTH FINANCIAL: Uses $930 Mln. of $1.7 Bln. Credit Facilities
-----------------------------------------------------------------
Genworth Financial, Inc., has borrowed $930 million of the
$1.7 billion available to the company, under its two revolving
credit facilities that mature in 2012. The company intends to use
the borrowings along with other sources of liquidity for the
repayment of outstanding holding company debt (including the
Company's senior notes maturing in 2009) at maturity and/or the
purchase and retirement of outstanding debt prior to maturity or
for other general corporate purposes.
After the maturity of the 2009 notes, Genworth Financial has no
additional long term debt maturing until 2011 when notes and
preferred stock totaling $694 million are due.
Genworth Financial's Chairperson and CEO Michael D. Fraizer said,
"Accessing the credit facility to position us in retiring our 2009
debt maturities is an important step to navigate today's difficult
capital market conditions. Genworth remains focused on enhancing
capital flexibility through reinsurance and other strategic
actions and positioning the company effectively while we serve our
policyholders and distributors every day."
Of the $930 million borrowed, $465 million was borrowed under the
company's Amended and Restated Five-Year Credit Agreement, dated
as of Aug. 13, 2007, and $465 million was borrowed under the
company's Amended and Restated Five-Year Credit Agreement, dated
as of May 25, 2006. All amounts under the 2007 Credit Agreement
are due on Aug. 13, 2012, and all amounts under the 2006 Credit
Agreement are due on May 25, 2012 (as extended pursuant to the
terms of the 2006 Credit Agreement), unless, in either case, the
commitments are terminated earlier either at the request of the
company or upon the occurrence of an event of default.
The principal amounts borrowed under each Credit Agreement will
initially bear interest at the prime rate, as announced from time
to time by JPMorgan Chase Bank as its prime rate in effect at its
principal office in New York City, which will be due and payable
on the last day of each calendar quarter and on the date the
principal amount under such Credit Agreement is due and payable.
In accordance with the terms of the Credit Agreements, the Company
intends to convert the interest rate on the borrowings to a LIBOR-
based rate shortly.
In its third quarter earnings release the company stated that at
the insurance company operating level the company maintained
approximately $6.2 billion in cash and cash equivalents. The
company also stated that its life insurance risk based capital
levels were estimated to be approximately 360% as of Sept. 30,
2008, following the contribution of $500 million from the holding
company effective as of that date. Reinsurance and capital
efficiency projects providing capital benefits of approximately
$750 million were completed in the third quarter, with an
additional $115 million completed since the end of the quarter.
There is an additional $500 million of reinsurance and other
capital projects targeted for completion by year end. In its
quarterly release the company also announced other strategies
aimed at providing additional capital flexibility.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) -- http://www.genworth.com--
is a public Fortune 500 global financial security company. It was
incorporated in Delaware on October 23, 2003, in preparation for
the corporate formation of certain insurance and related
subsidiaries of the General Electric Company. Genworth operates
through three segments -- Retirement and Protection, International
and U.S. Mortgage Insurance -- and employs roughly 7,000 people
with a presence in more than 25 countries. Its products and
services are offered through financial intermediaries, advisors,
independent distributors and sales specialists. Genworth
Financial, which traces its roots back to 1871, became a public
company in 2004 and is headquartered in Richmond, Virginia.
As reported in the Troubled Company Reporter on Nov. 12, 2008,
Genworth Financial disclosed in a regulatory filing with the
Securities and Exchange Commission that as a result of the rating
downgrade of its holding company, it is no longer eligible to sell
commercial paper to the Federal Reserve's Commercial Paper Funding
Facility, although the outstanding commercial paper that is
currently held by CPFF will continue to be held until maturity.
GEORGE HARDING: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: George Harding
dba Harding & Harding III, INC
510-516 W. Pike Street
Philadelphia, PA 19140
Bankruptcy
Case No.: 08-17291
Chapter 11
Petition Date: November 4, 2008
Court: U.S. Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Judge: Eric L. Frank
Debtor's
Counsel: PATRICK M. MCHUGH
8040 ROOSEVELT BLVD
SUITE 214
PHILADELPHIA, PA 19152
(215)332-0707
Estimated
Assets: $100,000 to $1,000,000
Estimated
Debts: $100,000 to $1,000,000
The Debtor did not file a list of its 20 largest unsecured
creditors.
GERSTEN SAVAGE: Fortifies Practice with Centurion Merger
--------------------------------------------------------
Law firm Gersten Savage LLP has entered into a strategic
partnership with Centurion Intelligence Partners to meet the due
diligence and intelligence requirements of Gersten Savage and its
clients. Under the leadership of Colonel Frank B. Bragg, Jr.,
U.S. Army (Ret.), Centurion has quietly emerged as a leader in
discreet due diligence and risk assessment, the law firm said.
"We are very pleased to disclose this partnership because it
offers our clients a competitive edge," said Gersten Managing
Partner Jay Kaplowitz. "We will especially rely on Centurion's
global intelligence capabilities in South America, the Middle East
and China."
Colonel Frank Bragg, president of Centurion said, "Centurion
provides decision makers with a decision advantage because we
utilize the best of military intelligence practices to provide the
most comprehensive information, even in challenging and often
ambiguous environments. We aren't like the rest. Our people are
trained military intelligence analysts, researchers and
collectors."
"While remaining true to our values of confidentiality, integrity
and professionalism, we have quickly and quietly become a leading
private intelligence firm," said Marc Roman, Chief operating
officer of Centurion. "Our focus is exclusively intelligence,
from risk assessments on foreign and domestic companies,
organizations and individuals, to conducting operations
worldwide."
Since its founding, Centurion Intelligence Partners has become the
premier provider of intelligence to a wide range of clients.
Co-founder, president and CEO Colonel Frank B. Bragg, Jr. is the
driving force behind the company's strategic development as well
as the principal architect of its global capabilities. Col. Bragg
has significant experience in leading and managing large, complex,
and geographically dispersed intelligence and security
organizations, including command and responsibility for the
leadership, training, and management of the multi-faceted military
intelligence, signals intelligence, and security operations of
over 2000 personnel.
About Gersten Savage LLP
Headquartered in New York, New York, Gersten Savage LLP --
http://www.gskny.com/-- founded in 1977, is a full-service firm,
Gersten Savage's practice groups cover corporate, finance, tax,
litigation, bankruptcy, real estate, and intellectual property in
the United States and throughout the world. The firm has about 50
employees. Gersten Savage represents issuers and broker dealers
on matters ranging from private placements, public underwritings,
regulatory compliance, and merger and acquisitions. The firm also
represents principals in the establishment of hedge funds and off-
shore financing entities. In addition, the firm represents start-
up companies, established public and private enterprises, domestic
and offshore investment partnerships, and registered investment
advisors.
Its international and tax planning division is able to
provide a full range of legal services to its clients is enhanced
by intellectual property, bankruptcy and real estate expertise.
The firm's clients span a broad range of industries, including
investment banking, e-commerce, consumer products, insurance,
health-care, manufacturing, importing, mining, oil and gas,
distribution, and retailing.
GENERAL MOTORS: Experts Weigh Govt. Bail-Out or Bankruptcy
----------------------------------------------------------
Micheline Maynard at The New York Times report that some experts
believe that a Chapter 11 filing by General Motors Corp. is
preferable to a government bailout.
According to The Times, those experts say that the bailout may
only delay, at considerable cost, the wrenching but necessary
steps GM needs to take to become a stronger firm.
The Times relates that under bankruptcy, GM's labor contracts
would be at risk of termination and could lead to a potential
confrontation with the unions, but GM said that its pension
obligations are largely funded for its 479,000 retirees and their
spouses.
Shareholders, says The Times, already lost much of the equity that
would disappear in a bankruptcy case. The Times states that
bankruptcy can offer a fresh start with a more competitive cost
structure.
The Times quoted Tuck School of Business at Dartmouth associate
dean Matthew J. Slaughter as saying, "Just let market forces play
out. And if GM or one of the other companies files for
bankruptcy, support the workers and the communities that would
affected by a bankruptcy filing."
William Ackman, who runs Pershing Square Capital, suggested that
GM consider filing for Chapter 11, The Times states. Mr. Ackman
said in an interview with Charlie Rose on PBS, "The way to solve
that problem is not to lend more money to GM." According to The
Times, Mr. Ackman said that GM should submit a "prepackaged"
bankruptcy, laying out steps it will take once under Chapter 11
protection.
The Times reports that GM may be forced to take drastic actions as
a condition of receiving any federal bailout package from the
government, which may include stiff requirements that GM and other
automakers meet financial goals before they can get access to
federal financing and lawmakers may demand a change in management.
Some have also questioned whether it's appropriate to further use
taxpayers' money to bail out private firms. According to
Bloomberg, so far, taxpayers have provided about $1 trillion for
rescues of private companies.
Bankruptcy Won't Solve Problem of Slumping Sales;
Results to Loss of Millions of Jobs
Filing for Chapter 11 may turn into a "roach motel" for General
Motors Corp. with the risk the automaker won't be able to emerge
from the process, according to Gimme Credit analyst Shelly
Lombard, Bloomberg News report. While she said that they are not
promoting a government bail-out, Ms. Lombard wrote that bankruptcy
would be risky for GM as it won't solve the underlying problem
that GM has insufficient cash to get through a "dramatic drop in
sales."
Nicolas Van Praet at Financial Post reports that Fitch Ratings
credit analyst said that reorganizing under a deliberate Chapter
11 bankruptcy filing may be impossible because arranging debtor-
in-posession financing from traditional lenders would be hard.
The report quoted Mr. Oline as saying, "If they were to file, it
really doesn't solve the problems. It actually makes the problems
more difficult to solve because you would probably immediately see
a decline in sales and revenues and make [fixing] the business
model that much more difficult."
According to Financial Post, Market research firm J.D. Power &
Associates analyst Tom Libby said that there isn't a chance that
GM or its Detroit rivals will seek bankruptcy protection and that
"they will do absolutely everything to avoid that. It's a very
open, competitive industry with many, many brands and models.
There would be a rapid decline in share [for the automakers who
file]."
A study by the Center for Automotive Research of Ann Arbor,
Michigan indicates that more than three million North American
employees would be laid off if GM, Ford Motor Co., and Chrysler
LLC, would file for Chapter 11 protection.
Fears of job losses over a bankruptcy filing of GM, along with its
co-automakers Ford Motor Company and Chrysler LLC, have pushed
House Financial Service Committee Chairman Barney Frank (D-MA) and
House Speaker Nancy Pelosi to reject calls to let the largest
collapse. As reported by the Troubled Company Reporter, Mr. Frank
said that that he will introduce a bill that would allocate $25
billion of the U.S. Treasury's $700-billion financial-rescue plan,
originally intended for financial institutions, to auto makers
General Motors Corp., Ford Motor Co. and Chrysler LLC. GM has
said that it would need more funding from the government to
weather the storm.
A bankruptcy filing for GM could also shatter its former unit
Delphi Corp.'s plans to finally exit bankruptcy this year or early
next year. Delphi obtained bankruptcy court approval of its
Chapter 11 exit plan in January this year, but stayed in
bankruptcy after it struggled to obtain exit financing. "If GM
fails, it's likely the Delphi reorganization fails, and Delphi
converts to a case under Chapter 7 -- a liquidation," Nancy
Rapoport, a law professor at the University of Nevada-Las Vegas,
said today in an e-mail, according to Bloomberg News. "For the
creditors of Delphi, this of course isn't optimal, and the usual
issues in Chapter 7, determining the liquidation value of the
company, will apply."
Bailout Lacks Political Support
Josh Mitchell and Michael R. Crittenden at The Wall Street Journal
report that Senate Banking Committee Chairperson Christopher Dodd,
a Democrat, said that General Motors Corp.'s request for financial
bailout from the government lacks political support.
According to WSJ, Sen. Dodd said that no Republicans would support
the Democrats' $25 billion proposal and that he was disinclined to
move a bill without bipartisan support. The report says that Sen.
Dodd told reporters on Capitol Hill, "I'd want to be careful about
bringing up a proposition that might fail. There's some political
considerations that need to be made over the next few days."
WSJ relates that Republicans have questioned bailing out auto
makers, which include GM, Ford Motor, and Chrysler LLC, and
partisan differences threatened to hinder the Democrats' plans.
Republicans, says WSJ, have said that the Congress has already set
aside $25 billion in loans to help auto makers modernize plants to
make fuel-efficient cars. That program "has been tied up in red
tape," according to WSJ. Republicans suggested that the Congress
pass legislation to free up those loans more quickly, WSJ states.
A multibillion-dollar rescue of Detroit auto makers would be
"neither fair to taxpayers nor sound fiscal policy" without
requiring dramatic reforms of the companies, WSJ says, citing
House Minority Leader John Boehner of Ohio. Mr. Boehner asked in
a statement, "What assurances will Democrats give taxpayers about
their chances of getting their bailout money back?" Mr. Boehner
also questioned why Democratic leaders haven't insisted that auto
makers produce a "credible plan to strengthen their financial
health," the report states.
GM spokesperson Greg Martin, according to WSJ, said that the firm
will demonstrate it has made significant cost reductions in recent
years and has a strong plan to recover financially. The report
quoted Mr. Martin as saying, "We're going to have a good
opportunity next week to update Congress on all that we've done to
reshape our business and develop new products."
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. to 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the company's rapidly
diminishing liquidity position. Given the current liquidity level
of $16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. and General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. economy.
GCI INC: Third Quarter Results Cues Moody's to Hold 'B1' Ratings
----------------------------------------------------------------
Moody's Investors Service assigned GCI Inc. an SGL-2 speculative
grade liquidity rating (indicating good liquidity) while
concurrently affirming the company's B1 corporate family rating,
B1 probability of default rating, and the B3 rating applicable to
its senior unsecured notes due in 2014. The rating outlook is
stable. The rating actions follow a review of GCI's recently
released fiscal third quarter results, with results notably
tracking Moody's expectations.
Moody's most recent rating action was on May 8, 2008, when GCI's
CFR was downgraded to B1 from Ba3 and its senior unsecured notes
Moody's re downgraded to B3 from B1. The downgrades at the time
reflected execution risks associated with GCI's ongoing capital
expansion plans, relating primarily to its wireless network build
out. The downgrades also reflected expectations of Moody's weaker
credit metrics resulting from the debt impact of the capital
spending and a margin impact from heightened competition. During
the intervening period, GCI's financial and operational
performance has generally tracked Moody's revised expectations. A
review of GCI's Q3 financial results confirms that there is
sufficient liquidity to continue funding the company's capital
expansion plans. With it being confirmed that existing credit
protection measures can be maintained with adequate liquidity on
hand and without consuming excessive amounts of its bank credit
facility, the existing debt ratings can be affirmed, as can the
stable outlook.
With cash and equivalents on hand at Sept. 30, 2008 of roughly
$37 million and availability of $96 million under its $100 million
revolving credit facility, the company should have adequate cash
resources to finance the cash drain arising from ongoing capital
investment in its wireless network build-out. The bank facility
is committed to 2011, and there are no debt maturities in the
intervening period. Financial covenants are not expected to limit
access over the forward four quarter SGL rating horizon. The
combination of these factors allows Moody's to assess GCI's
liquidity profile as "good" and assign an SGL-2 speculative grade
liquidity rating.
Issuer: GCI, Inc.
Assignments:
-- Speculative Grade Liquidity Rating, SGL-2 assigned
Affirmations:
-- Corporate Family Rating, unchanged at B1
-- Probability of Default Rating, unchanged at B1
-- Senior Unsecured Notes, unchanged at B3 (LGD5, 84%)
Headquartered in Anchorage, Alaska, GCI Inc. is a leading
integrated, facilities-based communications company offering local
and long-distance telephony, cable video, and data or Internet
services to consumer and commercial customers throughout most of
the State of Alaska. GCI Inc. is wholly owned by General
Communication Inc., a publicly traded holding company listed on
the NASDAQ.
GUY KIRKPATRICK: Case Summary & Six Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Guy Zephariah Kirkpatrick, III
P.O. Box 90929
Tucson, AZ 85752
Bankruptcy Case No.: 08-16122
Chapter 11 Petition Date: November 12, 2008
Court: District of Arizona (Tucson)
Debtor's Counsel: Jeffrey A. McKee, Esq.
jmckee@dmflaw.com
Davis McKee & Forshey, P.C.
1650 N. First Avenue
Phoenix, AZ 85003-1124
Tel: (602) 266-7667
Fax: (602) 277-9839
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/azb08-16122.pdf
GWLS HOLDINGS: Unsec. Creditors Balk at Sale to 1st Lien Lenders
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of GWLS Holdings
Inc. and its debtor-affiliates objects proposed bidding procedures
for the sale of substantially all of the Debtors' assets under a
certain purchase agreement with NEWCO LLC, an acquisition vehicle
to be formed by lenders under the Debtors' first lien credit
facility.
The Committee relates that the abbreviated timeline for the
Debtors' sale process would leave insufficient time for them to
provide notice and solicit interest of prospective bidders. The
procedures of the sale process are unworkable and need to be
extended, the Committee asserts.
The Committee disclosed troubling aspects of the procedures
including, among other things:
-- requiring letters of intent to be initially provided by
Nov. 14-21, 2008, which is approximately twenty-five
days after the marketing process was first begun, for a
company of this size and complexity is as unrealistic as it
is unnecessary;
-- the pervasive involvement in the bid and sale process by the
First Lien Lenders, which stand as the pre- and post-
petition lenders as well as the stalking horse, gives pause
to any non-insider third-party seeking to enter the field;
-- little legitimate basis underlying the requirement that
prospective bidders make a $7.5 million all-cash deposit
as purported evidence of their good faith, especially where,
as here, the First Lien Lenders are tendering a credit
bid. The bidding handicap is exacerbated by the additional
requirement that the deposit must be posted by Dec. 15,
2008 and remain open and irrevocable until the earlier of a
date which is twenty-five (25) days after the Sale Hearing
or Jan. 31, 2009. The First Lien Lenders have access to
the Debtors' records, the closing of any approved credit bid
sale should follow the Sale Hearing almost immediately. The
Debtors have failed to demonstrate the reasons for requiring
a bidder to keep a $7.5 million deposit posted for over six
weeks; and
-- the minimum requirements qualifying a prospective bid appear
designed to "chill".
Accordingly, the Committee asks the United States Bankruptcy Court
for the District of Delaware to deny approval of the Debtors'
proposed bidding procedures. A hearing is set for Nov. 14, 2008,
at 11:00 a.m., to consider the Committee's request.
About GWLS Holdings
Headquartered in Dallas, Texas, GWLS Holdings Inc. --
http://www.greatwide.com/-- operate trucking and logistics
company. The company and 50 of its affiliates filed for Chapter
11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No.
08-12430). Robert S. Brady, Esq., at Young, Conaway, Stargatt &
Taylor LLP, as the Debtors' counsel. Willkie Farr Gallagher LLP,
represents as the Debtors' co-counsel. Miller Buckfire & Co.,
LLC, is the Debtors' financial advisor. When the Debtors filed
sought bankruptcy protection from their creditors, they listed
assets and debts between $500 million and $1 billion each.
HAAC SPORTSMANS: Case Summary & 11 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: HAAC Sportsmans Club, LLC
Parkway Center, Suite 130
1800 Parkway Place
Marietta, GA 30067
Bankruptcy
Case No.: 08-82650
Chapter 11
Petition Date: November 4, 2008
Court: U.S. Bankruptcy Court
Northern District of Georgia (Atlanta)
Judge: Paul W. Bonapfel
Debtor's
Counsel: Leon S. Jones
Jones & Walden, LLC
21 Eighth Street, NE
Atlanta, GA 30309
(404) 564-9300
Fax : 404-564-9301
Email: ljones@joneswalden.com
Estimated
Assets: $1,000,001 to $10,000,000
Estimated
Debts: $1,000,001 to $10,000,000
A list of the Debtors' 11 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ganb08-82650.pdf
HEP DEVELOPMENT: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: HEP Development, LLC
7613 South Jordan Landing Boulevard
West Jordan, UT 84084
Bankruptcy Case No.: 08-27666
Chapter 11 Petition Date: Nov. 3, 2008
Court: District of Utah (Salt Lake City)
Judge: William T. Thurman
Debtor's Counsel: Russell S. Walker
rwalker@wklawpc.com
Woodbury & Kesler
Suite 300, 265 East 100 South
Salt Lake City, UT 84111
Tel: (801) 364-1100
Fax: (801) 359-2320
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $500,001 to $1,000,000
The Debtor did not file a list of its largest unsecured creditors.
IGLESIA MISIONARA: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Iglesia Misionara Asamblea De Dios, Inc.
10651 Anderson Rd.
Tampa, FL 33625
Bankruptcy Case No.: 08-17956
Chapter 11 Petition Date: November 12, 2008
Court: Middle District of Florida (Tampa)
Judge: Michael G. Williamson
Debtor's Counsel: Alberto F Gomez, Jr., Esq.
algomez@morsegomez.com
Morse & Gomez, PA
119 S. Dakota Avenue
Tampa, FL 33606
Tel: (813) 301-1000
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.
ION MEDIA: Weak Performance Prompts Moody's 'Caa3' Rating
---------------------------------------------------------
Moody's Investors Service downgraded ION Media Networks Inc.'s
Corporate Family Rating to Caa3 from Caa1 and its Probability of
Default rating to Ca from Caa1. Associated instrument ratings
Moody's were also lowered. The rating outlook is negative.
The downgrade of the CFR to Caa3 is largely driven by the
company's Moody's weak operating performance during the first half
of 2008 and Moody's heightened concerns that the company will face
continued revenue deterioration due to the high probability of a
further weakening in the U.S. economy. ION's infomercial and long
form revenues have been under pressure at the same time that the
company's efforts to increase its television ratings and
advertising revenue have yet to gain traction.
In addition, Moody's believes ION's strategy of increasing its
advertising revenue faces considerable risk in the current weak
advertising climate. Furthermore, ION's cash flow has also
deteriorated due to the company's increasing investment in content
and marketing as it looks to more deeply penetrate the network
spot advertising market in an attempt to reduce its reliance on
long-form paid programming.
The downgrade of the PDR to Ca underscores Moody's view that
continuing high levels of negative free cash flow will likely
exhaust the company's liquid resources over the near term (absent
an infusion of additional cash equity support), resulting in a
potential interest payment default as early as Q3 2009. Moody's
notes that the company faces no meaningful debt maturities until
January 2012 when its $325 million Term Loan and $400 million
First Priority Senior Secured Notes come due.
Moody's last rating action for ION was in October 2007, when the
company's CFR and PDR Moody's re both downgraded to Caa1 from B3.
Moody's has taken these rating actions:
Issuer: ION Media Networks Inc.:
-- Corporate Family Rating: Downgraded to Caa3 from Caa1
-- Probability of Default Rating: Downgraded to Ca from Caa1
-- Floating Rate First Priority Senior Secured Notes due
Jan. 15, 2012: Downgraded to B2 (LGD 1, 7%) from B1
(LGD 2, 16%)
-- Floating Rate Second Priority Senior Secured Notes due
Jan. 15, 2013: Downgraded to Caa3 (LGD 3, 32%) from Caa1
(LGD 4, 53%)
-- Outlook: Revised to Negative from Stable
ION's Caa3 CFR reflects the high level of execution risk and
substantial operating expenses associated with its re-entry into
the ratings-driven general network spot advertising market through
the airing of low-cost non-original programming. Moody's believes
the company's excessively levered and unsustainable capital
structure leaves little, if any, room for slippage in the
execution of this strategy.
Additionally, Moody's expects the costs associated with the
transition from long-form/infomercial revenue to advertising
revenue coupled with the company's high interest costs will likely
cause the company to burn through the majority of its large cash
balance ($80.5 million as of June 30, 2008) in 2008 and, assuming
no additional cash equity infusions, Moody's expects cash balances
to be fully depleted over the interim rating horizon. Moody's
notes that ION benefits from the concentration of convertible debt
and preferred stock that is mandatorily convertible in its capital
structure, as well as the PIK feature for a majority of its debt
and preferred stock obligations.
In addition, the CFR incorporates Moody's view that debt holders
can look to above-average recovery prospects in a downside
scenario, based upon a "stick" valuation of its broadcasting
properties. The shift to such an above-average recovery
expectation for the corporate enterprise given the now closer
proximity to default is evidenced by improving loss-given-default
rates for the rated debt instruments concurrent with rating
action.
ION Media Networks, Inc., headquartered in Moody's West Palm
Beach, Florida, owns a broadcast television station group and the
ION Television network, which reaches approximately 95 million
U.S. television households via its nationwide broadcast
television, cable and satellite distribution systems.
IMPERIAL BUSINESS: Section 341(a) Meeting Scheduled for Nov. 13
---------------------------------------------------------------
The United States Trustee for Region 3 will convene a meeting of
Imperial Business Park, L.P.'s creditors at 10:00 a.m., on
Nov. 13, 2008, at the Liberty Center, 7th Floor, Room 725, 1001
Liberty Avenue, in Pittsburgh, Pennsylvania.
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.
About Imperial Business
Oakdale, Pennsylvania-based Imperial Business Park, L.P. --
http://www.imperialbusinesspark.net/-- owns an industrial and
business park. The company filed for Chapter 11 protection on
Oct. 2, 2008 (Bankr. W. D. Pa. Case No. 08-26580). David K.
Rudov, Esq., at Rudov & Stein, represents the Debtor as counsel.
The company listed assets of $16,064,823 and debts of $18,078,619.
IMPLANT SCIENCES: Court Denies Evans Analytical Claim on Assets
---------------------------------------------------------------
Implant Sciences Corporation disclosed a favorable ruling on a key
motion in its ongoing litigation with Evans Analytical Group, LLC.
The Superior Court of the State of California, Santa Clara County,
has denied a motion by Evans to attach substantial portions of the
Company's assets prior to any final judgment on the merits of
Evans' claims. Evans sued the Company in February 2008, seeking
rescission of the sale of our Accurel Systems subsidiary. No
trial date has yet been scheduled.
Phillip C. Thomas, Implant Sciences' chief executive officer,
said, "We are pleased by the Court's ruling and believe we have
achieved a significant victory in this matter. With the Court's
decision, we remain free to operate our business without the
threat that our cash and other assets may be frozen; we are also
free to continue with the planned divestitures of our Core Systems
subsidiary and certain other assets so we can focus on our
explosives detection business. Moreover, we believe the
litigation with Evans has made it extremely difficult to raise
capital. Now that this immediate threat is behind us, we will
renew our efforts to obtain additional financing."
Mr. Thomas added, "In reaching its decision to deny Evans' motion,
the Court stated that the evidence submitted by Evans did not
demonstrate that Evans is more likely than not to obtain a
judgment against us on its rescission claims. Although the
litigation will continue, we are encouraged by this finding. We
continue to believe that Evans' claims are not justified and we
will continue to defend ourselves vigorously. However, as with
any litigation, no assurance can be given that we will ultimately
be successful in our defense against Evans' claims."
About Implant Sciences
Based in Wakefield, Massachusetts, Implant Sciences Corporation -
- http://www.implantsciences.com/-- develops, manufactures and
sells products through its primary business units: (i) explosives
trace detection systems for homeland security, defense, and other
security related applications and (ii) state of the art services
for the medical and semiconductor industries. The company has
developed proprietary technology used in its commercial portable
and bench-top ETD systems, which ship to a growing number of
locations domestically and around the world.
Going Concern Doubt
On Oct. 14, 2008, UHY LLP, expressed substantial doubt about
Implant Sciences Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the fiscal year ended June 30, 2008 and 2007.
The auditing firm pointed to the company's recurring losses from
operations.
IMPLANT SCIENCES: To File Revised Listing Compliance Plan
---------------------------------------------------------
Implant Sciences Corporation received notice, on Nov. 5, 2008,
from the NYSE Alternext US, LLC, that the company is not in
compliance with certain of the Exchange's continued listing
standards as set forth in Part 10 of the Exchange's Company Guide.
Specifically, after reviewing the company's Annual Report on Form
10-K for the fiscal year ended June 30, 2008, the Exchange has
determined that the company is not in compliance with Section
1003(a)(iv) of the Company Guide because the company "has
sustained losses which are so substantial in relation to its
overall operations or its existing financial resources, or its
financial condition has become so impaired that it appears
questionable, in the opinion of the Exchange, as to whether the
Company will be able to continue operations and/or meet its
obligations as they mature."
On May 12, 2008, the company announced that it had submitted a
plan of compliance to the Exchange in response to an April 9,
2008, notification by the Exchange of noncompliance with Section
1003(a)(ii) of the Company Guide with stockholders equity of less
than $4,000,000 and losses from continuing operations and net
losses in three out of its four most recent fiscal years and
Section 1003(a)(iii) of the Company Guide with stockholders equity
of less than $6,000,000 and losses from continuing operations and
net losses in its five most recent fiscal years.
The company intends to submit a revised Plan to the Exchange on or
before Nov. 19, 2008, which will address the actions the company
has taken and will take that would bring it into compliance with
Section 1003(a)(iv) of the Company Guide by Feb. 5, 2009. The
company's common stock will continue to be listed on the Exchange
pending the Exchange's review of the revised Plan.
Phillip C. Thomas, Implant Sciences' Chief Executive Officer,
said, "Earlier, we [disclosed] the denial of a motion by Evans
Analytical Group, LLC to attach substantial portions of our assets
prior to any final judgment on the merits of Evans' claims in the
litigation over the sale of our Accurel Systems assets. We hope
that this news, together with the restructuring of our obligations
to Laurus Master Fund into April 2009 and other initiatives we
have implemented or are attempting to implement, will demonstrate
to the Exchange that we will be able to regain compliance with all
continued listing requirements on a timely basis."
The company will remain subject to the conditions set forth in the
Exchange's notification of April 9, 2008. Accordingly, if the
Company's revised Plan is not accepted, the company's common stock
may be subject to delisting proceedings. If the revised Plan is
accepted, but the company is not in compliance with all of the
Exchange's continued listing standards by Oct. 9, 2009 or does not
make progress consistent with the revised Plan prior to that date,
the common stock may be subject to delisting proceedings.
About Implant Sciences
Based in Wakefield, Massachusetts, Implant Sciences Corporation -
- http://www.implantsciences.com/-- develops, manufactures and
sells products through its primary business units: (i) explosives
trace detection systems for homeland security, defense, and other
security related applications and (ii) state of the art services
for the medical and semiconductor industries. The company has
developed proprietary technology used in its commercial portable
and bench-top ETD systems, which ship to a growing number of
locations domestically and around the world.
Going Concern Doubt
UHY LLP on Oct. 14, 2008, expressed substantial doubt about
Implant Sciences Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the fiscal year ended June 30, 2008 and 2007.
The auditing firm pointed to the company's recurring losses from
operations.
INNERDOORWAY: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: InnerDoorway dba InnoVision Health Media
dba Alternative Medicine
Advances
Impakt Health
Integrative Medicine
Alternative Therapies
InnerDoorway Health Media
InnoVision Communications
InnoVision
Natural Solutions Magazine
2995 Wilderness Place, Suite 205
Boulder, CO 80301
Bankruptcy Case No.: 08-27888
Chapter 11 Petition Date: November 10, 2008
Court: District of Colorado (Denver)
Judge: Michael E. Romero
Debtor's Counsel: Daniel J. Garfield
dgarfield@bhfs.com
410 17th St., 22nd Fl.
Denver, CO 80202
Tel: 303-223-1100
Michael J. Pankow
mpankow@bhfs.com
410 17th St., 22nd Fl.
Denver, CO 80202
Tel: (303) 223-1100
Fax: 303-223-1111
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Debtor's list of largest unsecured creditors is
available for free at http://bankrupt.com/misc/codb08-27888.pdf
INTEGRA HOSPITAL: Files for Chapter 11 Bankruptcy in Texas
----------------------------------------------------------
Integra Hospital Plan LLC together with three of its affiliates
filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Court for the Eastern District of Texas.
Mark Pfeil, chief financial officer of the company, said that the
Chapter 11 filing came after Bank of Texas provided a notice of
default and acceleration of certain promissory notes on Oct. 15,
2008. The bank notified on Nov. 3, 2008, the company of more
defaults and information provided by the company was insufficient
for it to make a decision regarding additional advances. The bank
began to offset the amounts under the loans that resulted in the
inability of company to pay payroll when it became due, Mr. Pfeil
related.
According to Mr. Pfeil, the bank loaned as much as $4,250,000
under a revolver to the company. The company owes about
$3,992,623 under the revolver at present, and $343,940 on capital
leases for computers. The bank also provided the company's
affiliate, Integra Baton Rouge LLC, a $1,000,000 revolver, which
has been fully drawn under a term loan of $4,000,000, which has a
current balance of $3,800,000, Mr. Pfiel said. The primary
purported security for the loans is the Debtors' account
receivables, he added
Several financial institutions also provided the company loans
including:
a) Contemporary Healthcare Fund 1 provided up to $6,000,000
mezzanine, which has a current balance of $6,000,000. CHF
holds a second lien on the same collateral as the Bank of
Texas; and
b) Texas Capital Bank provided as much as $2,700,000 loan,
which has a current balance of $2,218,553, and is allegedly
secured by equipment and leases.
The company is presently in discussions with potential purchasers
for the sale of substantially all of its assets. The company has
filed the appropriate motion with the Court to initiate the sale
process.
$1.5 Million Ziegler Facility
And Cash Collateral
The company wants to obtain up to $1.6 million in postpetition
financing from Ziegler Healthcare Fund I Limited Partnership to
fund ongoing working capital and general corporate needs as it
restructures. The facility will incur interest at 15% on an
annual basis.
The company also wants to use cash collateral securing repayment
of the secured loans to Bank of Texas, Contemporary Healthcare
and Texas Capital. A hearing is set for Nov. 21, 2008, at 1:30
p.m., to consider the cash collateral motion.
Headquartered in Plan, Texas, Integra Hospital Plano, L.L.C. --
http://www.integrahospitalplano.com/-- operates a physical
rehabilitation center
INTEGRA HOSPITAL: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Integra Hospital Plano, L.L.C.
2301 Marsh Lane
Plano, TX 75093
Bankruptcy Case No.: 08-42998
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Integra Hospital Baton Rouge LLC 08-42999
Integra Hospital Management LLC 08-43001
Integra Hospital Holdings Ltd. 08-43002
Chapter 11 Petition Date: November 15, 2008
Type of Business: The Debtors operate a physical rehabilitation
center.
See: http://www.integrahospitalplano.com/
Court: Eastern District of Texas (Sherman)
Judge: Brenda T. Rhoades
Debtors' Counsel: Carol E. Jendrzey, Esq.
cejendrz@coxsmith.com
Lindsey Graham, Esq.
lgraham@coxsmith.com
Mark E. Andrews, Esq.
mandrews@coxsmith.com
Cox Smith Matthews
112 E. Pecan, Ste. 1800
San Antonio, TX 78205
Tel: (210) 554-5558
Fax: (210) 226-8395
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtors' Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Texas HCP Holding LP $1,020,000
File # 50132
Los Angeles, CA 90074
Siemens Medical Bank NA $203,607
2809 Collection E
Chicago, IL 60693
Jeanette Colson $107,790
2701 W. 15th St., Suite 629
Plano, TX 75075
Universal Hospital Service $94,582
Cardinal Health 301 Inc. $90,632
Texas Capital Bank NA $85,707
Reliant Energy Retail Serv. $84,012
Cardinal Health Inc. $81,112
Maxim Healthcare Services $81,034
Owens & Minor $74,318
Nikki Parham $52,671
Platinum Select LLP $43,701
Millet The Printer Inc. $42,202
Amerisourcebergen Drug Cor. $42,398
Mediserve Information $40,450
Enterprise Staffing Agency $53,121
Hughes & Luce LLP $41,770
Gulf Shore Medical Supply $39,902
SHC Services Inc. $37,997
Globalcomm Inc. $36,279
ISCHUS MEZZANINE: Eroding Credit Quality Cues Moody's Rating Cuts
-----------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
further possible downgrade the rating of one class of notes issued
by Ischus Mezzanine CDO IV, Ltd.:
Class Description: $17,500,000 Class X First Priority Senior
Secured Amortizing Notes Due 2013
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: Oct. 20, 2008
-- Current Rating: Ba1, on review for possible downgrade
The rating downgrade action reflects deterioration in the credit
quality of the underlying portfolio, as well as the occurrence on
Nov. 3, 2008, as reported by the Trustee, of an event of default
that occurs when the ratio calculated by dividing (A) the Net
Outstanding Portfolio Collateral Balance by (B) Aggregate
Outstanding Amount of the Class A-1 Notes plus the Super Swap
Amount falls below 100%, as described in Section 5.01 (i) of the
Indenture dated June 27, 2007.
Ischus Mezzanine CDO IV, 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 downgrade 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 X Notes remain on review for possible further action.
JEVIC TRANSPORTATION: Has Until Dec. 17 to File Chapter 11 Plan
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
Jevic Transportation and its debtor-affiliates' exclusive periods
to:
a) file a chapter 11 plan until Dec. 17, 2008; and
b) solicit acceptances of that plan until Feb. 17, 2009.
As reported in the Troubled Company Reporter on Sept. 23, 2008,
the Debtors told the Court that they and their professionals have
not had sufficient time to negotiate a plan. The Official
Committee of Unsecured Creditors also has not concluded its
investigation as to any potential challenges to the lenders'
liens.
Based in Delanco, New Jersey, Jevic Transportation Inc. --
http://www.jevic.com/-- provides trucking services. The company
has two units: Jevic Holding Corp. and Creek Road Properties.
Neither of the units have assets nor operations. The company and
its affiliates filed for chapter 11 protection on May 20, 2008
(Bankr. D. Del. Case No. 08-11008). Domenic E. Pacitti, Esq., and
Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg &
Ellers, in Wilmington, Delaware, represent the Debtors as counsel.
The U.S. Trustee for Region 3 has appointed five creditors to
serve on an Official Committee of Unsecured Creditors. Robert J.
Feinstein, Esq., Bruce Grohsgal, Esq., and Maria A. Bove, Esq., at
Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware,
represent the Official Committee of Unsecured Creditors.
Before filing for bankruptcy, the Debtors initiated an orderly
wind-down process. As a part of the wind-down process, the
Debtors have ceased substantially all of their business and
terminated approximately 90% of their employees. The Debtors
continue to manage the wind-down process in attempt to deliver all
of the freight that is in their system and to retrieve their
assets.
When the Debtors filed for protection against their creditors,
they listed assets and debts of between $50 million and
$100 million each.
JL Building #2: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: JL Building #2, LLC
7613 South Jordan Landing Boulevard
West Jordan, UT 84084
Bankruptcy Case No.: 08-27670
Chapter 11 Petition Date: November 3, 2008
Court: District of Utah (Salt Lake City)
Judge: William T. Thurman
Debtor's Counsel: Russell S. Walker
rwalker@wklawpc.com
Woodbury & Kesler
265 East 100 South, Suite 300
Salt Lake City, UT 84111
Tel: (801) 364-1100
Fax: (801) 359-2320
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its largest unsecured creditors.
JOHN LACKEY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: John K. Lackey
Delana R. Lackey
707 Bright Pond Road
Summersville, WV 26651
Bankruptcy Case No.: 08-21077
Chapter 11 Petition Date: November 3, 2008
Court: Southern District of West Virginia (Charleston)
Judge: Ronald G. Pearson
Debtor's Counsel: Howard S. Levy
howard@voorheeslevy.com
Voorhees & Levy LLC
11159 Kenwood Road
Cincinnati, OH 45242
Tel: (513) 489-2555
Fax: (513) 489-2556
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Debtor's list of largest unsecured creditors is
available for free at http://bankrupt.com/misc/wvsb08-21077.pdf
K3 INVESTMENTS: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: K3 Investments Group LLC
33 Brookmeadow Dr.
Wimberley, TX 78676
Bankruptcy Case No.: 08-12210
Chapter 11 Petition Date: November 4, 2008
Court: Western District of Texas (Austin)
Judge: Frank R. Monroe
Debtor's Counsel: Rogena Jan Atkinson
rogena@rjabankruptcy.com
The Law Offices of R. J. Atkinson, LLC
1100 NE Loop 410, Suite 510
San Antonio, TX 78209
Tel: (210) 805-9909
Fax: (210) 832-9372
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its largest unsecured creditors.
KAL MA MAL: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Kal Ma Mal Corporation
4050 Enrico Street
San Bernardino, CA 91710
Bankruptcy Case No.: 08-25805
Chapter 11 Petition Date: November 12, 2008
Court: Central District of California (Riverside)
Judge: Meredith A. Jury
Debtor's Counsel: Michael A. Younge, Esq.
8141 E. Kaiser Blvd., Ste. 200
Anaheim Hills, CA 92808
Tel: (714) 685-1170
Total Assets: $1,100,000
Total Debts: $1,244,835
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/califcb08-25805.pdf
KRATON POLYMERS: S&P Upgrades Corporate Rating to 'B-' From CCC+
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Kraton Polymers LLC to 'B-' from 'CCC+'.
At the same time, S&P raised the issue-level rating on Kraton's
first-lien term loan to 'B' from 'B-'. The recovery rating is
unchanged at '2', which indicates S&P's expectation of substantial
(70% to 90%) recovery in the event of a payment default. S&P also
raised the issue-level rating on Kraton's senior subordinated
notes to 'CCC' from 'CCC-'. The recovery rating is unchanged at
'6', which indicates S&P's expectation of negligible (0% to 10%)
recovery in the event of default. In addition, S&P removed all
ratings from CreditWatch where they were placed with negative
implications on April 1, 2008. The outlook is positive.
The upgrade reflects the company's stronger operating performance
over the past year and improved financial flexibility as a result
of reduced concern regarding covenant compliance in the near term.
The upgrade also reflects S&P's expectation that the company's
credit metrics and financial profile should improve from current
levels to avoid future covenant concerns particularly in light of
anticipated steps in 2009. Over the past year, Kraton was able to
increase margins despite a very challenging raw material
environment. As a result cash flow protection and credit measures
have improved alleviating near-term financial covenant and
liquidity issues.
LAS VEGAS SANDS: Moody's Downgrades Ratings to 'B2' From 'Ba3'
--------------------------------------------------------------
Moody's Investors Service lowered the ratings of Las Vegas Sands,
Corp. and its subsidiaries, including Venetian Casino Resort, LLC
and Venetian Macao Limited. The ratings Moody's re also placed on
review for possible further downgrade.
The two-notch downgrade reflects Las Vegas Sands' considerable
leverage, the continuation of significant negative trends in Las
Vegas, and expectation that these trends will continue in the
foreseeable future. The downgrade also considers recent
visitation restrictions in Macao, China that will likely slow Las
Vegas Sands' rate of growth in that market, at least until the
Chinese government decides to relax these travel restrictions.
Positive consideration is given to Las Vegas Sands' recent
announcement that it will delay a considerable amount of planned
development capital spending in Las Vegas, Pennsylvania, and
Macao. This, along with the company's recently announced capital
raising program, is expected to alleviate concerns related to
liquidity and covenant compliance.
The review for possible further downgrade takes into account that
the proposed capital raising program has not closed. Las Vegas
Sands is in the final stages of a $2.1 billion capital raising
program, about half of which is intended to be raised as common
equity, with the other half being raised in the form of preferred
stock with a 10% annual dividend. Failure to successfully raise
adequate new capital, even with the significant reduction in
capital spending plans, would likely result in a covenant default
and could jeopardize the company's ability to continue as a going
concern. If this Moody's re to occur, the ratings could be
lowered several notches.
Moody's review will consider the success and adequacy of Las Vegas
Sands' current capital raising effort, particularly with respect
to the company's liquidity profile, capital spending plans, terms
of the proposed preferred stock, and longer-term impact on
covenant compliance and consolidated credit metrics.
In addition to overall negative business and financial trends,
this rating action reflects Moody's decision to take a
consolidated approach to the rating of Las Vegas Sands, Corp. and
all of its operating subsidiaries. As a result, Venetian Macao
Limited's B1 corporate family rating and B2 probability of default
rating Moody's re withdrawn. The primary reason for the
consolidated rating approach is the increasing amount of financing
done at the parent company level, proceeds of which have and will
be used to fund its domestic and international subsidiaries.
Las Vegas Sands, Corp. ratings lowered and placed on review for
possible downgrade:
-- Corporate family rating to B2 from Ba3
-- Probability of default rating to B2 from Ba3
-- $250 million 6.375% senior notes to B2 from Ba3
Venetian Casino Resort, LLC (and its co-issuer Las Vegas Sands,
LLC) ratings lowered and placed on review for possible downgrade:
-- $1 billion revolver expiring 2012 to B2 from Ba3
-- $3 billion term loan due 2014 to B2 from Ba3
-- $600 million delay draw term loan due 2014 to B2 from Ba3
-- $400 million delay draw term loan due 2013 to B2 from Ba3
Venetian Macao Limited ratings lowered and placed on review for
possible downgrade:
-- $700 million revolver expiring 2011 to B2 from B1
-- $1.8 billion term loan due 2013 to B2 from B1
-- $100 million term loan due 2011 to B2 from B1
-- $700 million delay draw term loan due 2012 to B2 from B1
Las Vegas Sands, Corp. and Venetian Casino Resort, LLC ratings
Moody's re placed on review for possible downgrade on July 17,
2008 in response to the slower than anticipated growth at the
company's Las Vegas subsidiary stemming largely from the material
softness in the Las Vegas gaming market.
Las Vegas Sands, Corp. owns and operates gaming and entertainment
facilities in Las Vegas, Nevada and in Macao, China. The company
is also developing gaming facilities in Pennsylvania and
Singapore. Consolidated net revenues the 12-month period ended
Sept. 30, 2008 Moody's re $4.3 billion.
LASALLE COMMERCIAL: Moody's Downgrades Ratings on Seven Classes
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of seven classes
and affirmed six classes of Lasalle Commercial Mortgage
Securities, Inc., Commercial Mortgage Pass-Through Certificates,
Series 2005-MF1:
-- Class A, $249,057,177, affirmed at Aaa
-- Class X, Notional, affirmed at Aaa
-- Class B, $7,263,000, affirmed at Aa2
-- Class C, $10,168,000, affirmed at A2
-- Class D, $6,779,000, affirmed at Baa1
-- Class E, $2,905,000, affirmed at Baa2
-- Class F, $2,905,000, downgraded to Ba1 from Baa3
-- Class G, $4,842,000, downgraded to Ba3 from Ba1
-- Class H, $1,936,000, downgraded to B1 from Ba2
-- Class J, $1,937,000, downgraded to B3 from B1
-- Class K, $968,000, downgraded to Caa1 from B2
-- Class L, $1,937,000, downgraded to Caa2 from B3
-- Class M, $969,000, downgraded to Ca from Caa2
Moody's downgraded Classes F, G, H, J, K, L and M due to realized
and anticipated losses from specially serviced loans.
As of the Oct. 20, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 23%
to $296.6 million from $387.3 million at securitization. The
Certificates are collateralized by 285 mortgage loans with an
average loan size of $3.6 million. The top 10 loans represent 10%
of the pool.
Six loans have been liquidated from the trust, resulting in an
aggregate realized loss of approximately $944,500. Sixteen loans,
representing 6% of the pool, are in special servicing. Three of
the loans, representing 1% of the pool, are real estate owned.
Moody's is estimating an aggregate $5.4 million loss from all the
specially serviced loans.
One hundred seventeen loans, representing 39% of the pool, are on
the master servicer's watchlist. The watchlist includes loans
which meet certain portfolio review guidelines established as part
of the Commercial Mortgage Securities Association's monthly
reporting package. As part of Moody's ongoing monitoring of a
transaction, Moody's reviews the watchlist to assess which loans
have material issues that could impact performance.
Moody's was provided with full-year 2007 operating results for 89%
of the pool. Moody's weighted average loan to value ratio is 96%
compared to 93% at Moody's prior full review and at
securitization.
Moody's periodically completes full reviews in addition to
monitoring transactions on a monthly basis. Moody's prior full
review is summarized in a press release dated March 17, 2008.
LEHMAN BROTHERS: A&M Meets Creditors; Euro Unit Owes LBHI $8BB
--------------------------------------------------------------
On Nov. 3, 2008, in response to various discovery motions,
representatives from Lehman Brothers Holdings Inc. met with a
number of parties-in-interest.
Alvarez & Marsal North America prepared a presentation, a copy of
which is available at http://researcharchives.com/t/s?34ca
In light of concerns of PricewaterhouseCoopers LLP, the joint
administrators of Lehman's units in the United Kingdom, regarding
the transfer of securities before the Petition Date, A & M
clarified that transactions from Sept. 10 to 14 resulted to
Lehman Brothers International Europe owing Lehman Brothers
Holdings Inc. about $8 billion as of Sept. 15, and Lehman
Brothers Inc. owing approximately $4 billion of payables to LBIE.
A & M explained that:
-- $2.3 Billion of approximately $4 billion related to one
batch error on Sept 10 resolved on Sept 14.
-- Run on bank environment resulted in processing backup with
back office catching up on Sept. 14.
-- In the ordinary course, money would flow on Monday morning
from LBI to LBIE.
-- Bankruptcy of LBHI disrupted chain of events.
While CEO Richard Fuld continues to be the CEO of Lehman, the
organizational structure provided in the presentation provided
that Brian Marsal of A & M presently heads Lehman Brothers
Holdings, Inc. as its CRO.
According to A & M, key challenges facing the Debtors include (i)
loss of personnel, (ii) conflicting priority -- while the
estate's primary priority is to stabilize, creditors' may differ;
and (iii) administrative independence of proceedings in the
United Kingdom and Asia.
According to A & M, it has worked out a protocol with James
Giddens, the trustee appointed for the liquidation of LBI's
business, to use payroll accounts going forward -- new funding
must be deposited to cover all disbursements. The Trustee has
acknowledged LBI's obligation on 450 bounced payroll checks and
is going to court for approval to honor payroll obligations.
Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New
York, told Judge James Peck at the Nov. 8 hearing before the U.S.
Bankruptcy Court for the Southern District of New York that since
the last omnibus hearing on Oct. 16, the CRO was able to fill the
teams that would run the Debtors' estates, with the exception of
the derivatives team. "And that's a more selective expertise and
a little bit harder to find the employees for that."
Mr. Miller added that in light of the judge's admonition about
transparency, the CRO and the Debtors held sequential meetings
with various groups of creditors over the last three weeks. The
Rule 2004 motions or requests for documents and investigations,
including Harbinger's, have been deferred.
Mr. Miller also disclosed that the Debtors have been careful in
releasing information to creditors. "And the problem with
getting all this information out, Your Honor, is some of the
information, we are finding out, people are seeking information
to -- taking advantage in a way in trading in claims for and
against the Lehman Brothers' estate."
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on
Sept. 16 (Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
LEHMAN BROTHERS: Court to Tackle Examiner Request Jan. 14
---------------------------------------------------------
James Giddens, the trustee appointed for the liquidation of
Lehman Brothers Inc.'s business, said he won't support the
appointment of an examiner who would be authorized to investigate
LBI.
Mr. Giddens said he has already started conducting an
investigation into the financial status of LBI as required under
the Securities Investor Protection Act and that an investigation
of the company by an examiner would duplicate or impede him from
discharging his duty.
Mr. Giddens said that the Securities Investor Protection
Corporation charged with the statutory duties of oversight under
SIPA, also disapproves the "imposition of unnecessary costs and
administrative burdens." He further said that the appointment of
an examiner is only allowed in a chapter 11 case and, therefore,
is not applicable to the SIPA proceeding.
BofA, Harbinger Back Examiner's Appointment
In their statements filed with the Court, Bank of America,
Harbinger Capital Partners Special Situations Fund and Harbinger
Capital Partners Master Fund I, expressed support for the
proposed appointment of an examiner.
Bank of America said the appointment of an examiner would
facilitate the collection, analysis and dissemination of
information in a cost-effective and orderly manner since it would
reduce the need for separate investigations by creditors under
Rule 2004 of the Federal Rules of Bankruptcy Procedure. The bank
proposed that the scope of the investigation should be extended
to Lehman Brothers Holdings and all of its subsidiaries.
Meanwhile, Harbinger Capital Partners Special and Harbinger
Capital Partners Master said the appointment would be of great
use in the bankruptcy cases of Lehman Brothers Holdings and its
subsidiaries, considering that the cases are taking place in
multi-national jurisdictions which complicate the disclosure and
sharing of information.
The hearing to consider approval of the proposed appointment of
an examiner has been moved to Nov. 20, at 2:00 p.m.
U.S. Trustee: Court Can Appoint Examiner
Diana Adams, the United States Trustee for Region 2, said that
the Court can direct the appointment of an examiner pursuant to
Section 1104(c)(2) of the Bankruptcy Code if it finds that the $5
million debt threshold has been satisfied.
Section 1104(c)(2) requires the mandatory appointment of an
examiner, provided that the debtor's unsecured debts, other than
debts for goods, services and taxes, or owing to an insider,
exceed $5 million.
"If the Court finds that the $5 million debt threshold is met,
the order directing the appointment of an examiner should contain
appropriate provisions to address issues that can arise related
to the coordination of the examiner's investigation with other
investigations of the Debtors," Ms. Adams said.
Ms. Adams requested that she be consulted by any party in
connection with the preparation of an order directing the
examiner's appointment.
Meanwhile, James Giddens, the trustee appointed for the
liquidation of Lehman Brothers Inc.'s business, said he won't
support the appointment of an examiner who would be authorized to
investigate LBI.
Mr. Giddens said he has already started conducting an
investigation into the financial status of LBI as required under
the Securities Investor Protection Act and that an investigation
of the company by an examiner would duplicate or impede him from
discharging his duty.
Mr. Giddens said that the Securities Investor Protection
Corporation charged with the statutory duties of oversight under
SIPA, also disapproves the "imposition of unnecessary costs and
administrative burdens." He further said that the appointment of
an examiner is only allowed in a chapter 11 case and, therefore,
is not applicable to the SIPA proceeding.
BofA, Harbinger Back Examiner's Appointment
In their statements filed with the Court, Bank of America,
Harbinger Capital Partners Special Situations Fund and Harbinger
Capital Partners Master Fund I, expressed support for the
proposed appointment of an examiner.
Bank of America said the appointment of an examiner would
facilitate the collection, analysis and dissemination of
information in a cost-effective and orderly manner since it would
reduce the need for separate investigations by creditors under
Rule 2004 of the Federal Rules of Bankruptcy Procedure. The bank
proposed that the scope of the investigation should be extended
to Lehman Brothers Holdings and all of its subsidiaries.
Meanwhile, Harbinger Capital Partners Special and Harbinger
Capital Partners Master said the appointment would be of great
use in the bankruptcy cases of Lehman Brothers Holdings and its
subsidiaries, considering that the cases are taking place in
multi-national jurisdictions which complicate the disclosure and
sharing of information.
The hearing to consider approval of the proposed appointment of
an examiner has been moved to Jan. 14, 2009, at 10:00 a.m.
Creditors and other concerned parties have until Jan. 9, 2009 at
4:00 p.m. to file their objections.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on
Sept. 16 (Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
LEHMAN BROTHERS: Deutsche Bank Sues for Return of $72.5MM
---------------------------------------------------------
Deutsche Bank AG filed a lawsuit against Lehman Brothers Holdings
to compel the bankrupt company to return the $72.5 million it
received from the German bank.
In a complaint filed Nov. 11 in the U.S. Bankruptcy Court for the
Southern District of New York, Deutsche Bank said that the money
had been mistakenly transferred to Lehman Brothers Holdings'
account held at Bank of America.
The money was supposed to be transferred to a certain fund as
required under its master agreement with Deutsche Bank. The name
of the fund was not mentioned in the complaint.
Attorney for Deutsche Bank, Joshua Dorchak, Esq., at Bingham
McCutchen, in New York, said that Lehman Brothers Holdings
refused to return the sum on grounds that one of its units is
allegedly owed by the German bank about $290 million.
"[Deutsche Bank] is aware of no contractual or other relationship
with [Lehman Brothers Holdings] that could give rise to a debt in
any amount owing from [Deutsche Bank] to [Lehman Brothers
Holdings]," he said.
Mr. Dorchak said that Deutsche Bank paid $72.5 million to the
fund, which agreed not to file any claims against the bank on
account of the incorrect transfer.
Deutsche Bank asks the Court to correct a simple but substantial
mistake, Mr. Dorchak wrote. Deutsche Bank, according
Mr. Dorchak, meant to transfer the $72.5 million to another party
but sent it instead to Lehman Brothers Holdings Inc., "due to
both a clerical error at DB and a miscommunication between DB and
its counterparty."
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on
Sept. 16 (Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
LEHMAN BROTHERS: Employee Files Class Suit for Mass Layoffs
-----------------------------------------------------------
Miron Berenshteyn filed with the Court an adversary class action
omplaint on behalf of himself, and the other similarly situated
former employees who worked for Lehman Brothers Holding, Inc. and
were terminated on September 9, 2008, as part of mass layoffs or
plant closings ordered by the Debtor. Mr. Berenshteyn said
within 30 days of that date, they were not provided 60 days'
advance written notice of their termination, as required by the
Worker Adjustment and Retraining Notification Act and by the New
Jersey WARN Act.
Mr. Berenshteyn and all similarly situated employees seek to
recover 60 days wages and benefits from the Debtor. New Jersey
employees seek to recover lost wages, benefits and other
remuneration, including severance pay equal to one week of pay
for each full year of employment.
Mr. Berenshteyn's counsel contends that WARN backpay claim is
entitled to first priority administrative expense status pursuant
to Section 503(b)(1)(A) of the Bankruptcy Code, or wage priority
status pursuant to Section 507(a)(4), (5).
Mr. Berenshteyn asks the Court to:
a. certify his action as a class action;
b. designate him as a Class Representative;
c. appoint his attorneys as Class Counsel;
d. grant him and other similarly situated former employees a
first priority administrative expense claim for WARN
backpay equal to the sum of their unpaid wages, salary,
commissions, bonuses, accrued holiday pay, accrued vacation
pay, pension and 401(k) contributions and other ERISA
benefits, for 60 days, that would have been covered and
paid under the then-applicable employee benefit plans had
that coverage continued for that period and severance in
accordance with the New Jersey Warn Act
-- or, alternatively --
determine that the first $10,950 of their WARN Act claims
is entitled to priority status, and the remainder is a
general unsecured claim;
e. grant him an award against the Debtor under the New Jersey
WARN Act of compensatory damages, including lost wages,
benefits and other remuneration and reasonable attorneys'
fees; and
f. grant him an allowed administrative-expense priority claim
against the Debtor for the reasonable attorneys' fees and
the costs and disbursements that he incurs in prosecuting
the action, as authorized by the WARN Act.
Mr. Berenshteyn and the putative class are represented by:
Rene S. Roupinian, Esq.
Jack A. Raisner, Esq.
OUTTEN & GOLDEN LLP
3 Park Avenue, 29th Floor
New York, New York 10016
Telephone: (212) 245-1000
Facsimile: (212) 977-4005
Christopher D. Loizides, Esq.
LOIZIDES, P.A.
1225 King Street, Suite 800
Wilmington, DE 19801
Telephone: (302) 654-0248
Facsimile: (302) 654-0728
According to Mr. Roupinian, the persons in the Class are so
numerous that joinder of all members is impracticable. "Although
the precise number of such persons is unknown, the facts on which
the calculation of that number can be based are presently within
the sole control of the Debtor. There are questions of law and
fact common to the Class Members that predominate over any
questions affecting only individual members. The claims of the
Plaintiff are typical of the claims of the Class. The Plaintiff
will fairly and adequately protect the interests of the Class."
Mr. Roupinian assures the Court that his firm experienced in
complex class action employment litigation.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on
Sept. 16 (Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
LEHMAN BROTHERS: Fitch Cuts Rating on $57.5 Mil. Notes to 'BB'
--------------------------------------------------------------
Fitch Ratings downgrades and assigns Rating Outlooks to these
classes of Lehman Brothers Floating Rate Commercial Mortgage
Trust, series 2007-LLF C5:
-- $51.8 million class H to 'BBB-' from 'BBB'; Outlook Negative;
-- $57.5 million class J to 'BB' from 'BBB-'; Outlook Negative.
In addition, Fitch affirms and assigns Rating Outlooks to these
classes:
-- $1.112 million class A-1 at 'AAA'; Outlook Stable;
-- $472.9 million class A-2 at 'AAA'; Outlook Stable;
-- $80.3 million class A-3 at 'AAA'; Outlook Stable;
-- $52.7 million class B at 'AA'; Outlook Stable;
-- $48.7 million class C at 'AA-'; Outlook Stable;
-- $31.8 million class D at 'A+'; Outlook Stable;
-- $28.8 million class E at 'A'; Outlook Stable;
-- $28.8 million class F at 'A-'; Outlook Stable;
-- $28.8 million class G at 'BBB+'; Outlook Negative;
-- Interest-only class X-1 at 'AAA'; Outlook Stable;
-- Interest-only class X-2 at 'AAA'; Outlook Stable.
Rake classes LCC, MVR, TSS-1, TSS-2, have paid in full. Fitch
does not rate the rake classes CGC, CPE, CQR-1, CQR-2, DMC-1,
DMC-2, FBS-1, FBS-2, FTC-1, FTC-2, HAR-1, HAR-2, HRH, HSS, INO,
JHC, NOP-1, NOP-2, NOP-3, OCS, ONA, OWS-1, OWS-2, PHO, SBG, SFO-1,
SFO-2, SFO-3, SFO-4, SFO-5, UCP, VIS, and WHH.
The downgrades are the result of lowering the shadow ratings on
these three Fitch Loans of Concern. The largest (2.7%) is
collateralized by 11 office buildings and three development sites
in Atlanta, Georgia. At issuance, the vacancy at the property was
90.6% with average leases in place of $18.90. Currently, market
vacancy is 21.6% with market rents of $19.08. As of year-end 2007
(YE07), the servicer reported debt service coverage ratio, was
1.52 times(x) compared to banker underwritten 2.56x at issuance.
The second (1.7%) is collateralized by three office buildings
located in San Jose, California. Historically, occupancy ranged
from 94.5% to 100% during the years 1997 to 2003. At issuance,
occupancy was 80.5% and the most recent rent roll dated March 2,
2008 shows occupancy at 74%. In-place rents are averaging $24 a
square foot, compared to market rents of $29.49 and vacancy of
21.4%. The market remains challenging and tenants are taking more
time to lease open spaces.
The smallest (0.53%) is collateralized by a 240-unit multifamily
property located in Tucson, Arizona. The current sponsor acquired
the property after the previous owner abandoned condo conversion
efforts. The current borrower has been marketing units and
continues to invest in renovations. Occupancy has risen since
issuance from 64.3% to 75.0% as of June 30, 2008. However, due to
current economic conditions and the market outlook, the loan is
not performing as anticipated.
The remaining 32 loans in the transaction have exhibited
relatively stable performance since issuance. As of the October
2008 distribution date, the transaction has paid down by 13.4% to
$2.1 billion from $2.5 billion at issuance. Four loans have paid
in full since issuance and 35 loans remain outstanding. Three
classes have been assigned Negative Rating Outlooks due to
increased probability of future default on the loans of concern
and prolonged stabilization of several properties. The Rating
Outlooks reflect the likely direction of any rating changes over
the next one to two years.
The CalWest Industrial Portfolio (12.2%) is the largest loan in
the transaction. It is secured by 95 warehouse, business park,
and flex/office properties located in California, Oregon,
Washington, Texas, and Arizona. Occupancy across the portfolio
has decreased since issuance, to 81.0% as of March 31, 2008 from
92.2%. The loan had a Fitch stressed DSCR of 1.33x on the trust
balance A-1 note, compared to a 1.40x at issuance. The loan
matures June 8, 2009 and has three one-year extension options.
The SFO Office Portfolio (8.4%) securitizes the second largest
loan. The portfolio consists of five office buildings located in
San Francisco, California. Four of the buildings have exhibited
historically high occupancy and have been well-maintained. The
fifth building (Foundry Square), was under construction at
issuance with a completion date of December 2007. At loan
closing, there was a $34.7 million guaranty to be used in part for
debt service as well as a $43.4 million completion guaranty for
Foundry Square. In addition, Foundry Square was 95% preleased. As
of YE07, the Fitch stressed DSCR was below 1.00x compared to 1.55x
at issuance, however, this is primarily due to Foundry Square's
recent completion. The loan matures May 9, 2009 and has three
one-year extension options.
The third largest loan is secured by the John Hancock Center
(8.1%) located in Chicago, Illinois. The loan has shown an
increase in Fitch stressed DSCR of 1.88x as of YE07, compared to
1.31x at issuance. The improved performance is the result of
renewed leases at higher rents and lease-up of vacant space.
Occupancy was 81.0% at YE07 compared to 79.2% at issuance. The
loan matures Feb. 9, 2009 and has three one-year extension
options.
The transaction remains well diversified in terms of geographic
locations, property types and number of loans. In addition, the
underlying loans generally have experienced institutional sponsors
and property managers.
LEHMAN BROTHERS: NY Comptroller Wants Trustee to Replace CEO
------------------------------------------------------------
Thomas DiNapoli, New York State Comptroller, asks the U.S.
Bankruptcy Court for the Southern District of New York to appoint
a Chapter 11 trustee to oversee Lehman Brothers Holdings Inc.'s
estate.
Mr. DiNapoli said that Lehman Brothers Holdings' board of
directors and chief executive officer must be replaced by a
trustee who is capable of administering the company.
"[Richard Fuld, Jr.] and his hand-selected Board, many members of
which lack experience relevant to the exotic financial
instruments and complex structured assets central to the cases,
should be replaced by a trustee with expertise in bankruptcy and
restructuring matters to supervise administration of Lehman's
estate," he said.
Mr. DiNapoli blamed the directors' alleged lack of financial
experience and expertise for the collapse of the company, saying
this had been manifested by their inactivity during the housing
downturn and the depreciation of subprime mortgage assets in
early-2007.
"Many banks closed their subprime mortgage origination businesses
and drastically tried to reduce subprime exposure. Yet Lehman
continued to originate subprime mortgages, including billions of
dollars worth in the second quarter of 2007 alone, without any
objection from the directors," he said. Mr. DiNapoli likewise
blamed the CEO's "domineering role" in all facets of managing
Lehman Brothers Holdings for its bankruptcy.
By the time the company filed for bankruptcy, Mr. Fuld was both
the Chairman of the Board and the CEO. He also led the company's
two-person executive committee, which was responsible for making
important decisions between meetings of the directors.
"Given the past failures of Mr. Fuld and inaction by the Board,
creditors and equity holders cannot accept the notion that Mr.
Fuld and the Board are the best parties to supervise the
administration of the estate and to investigate the causes of
Lehman's collapse," Mr. DiNapoli further said.
Mr. DiNapoli clarified that the appointment of the trustee would
not replace the company's chief restructuring officer.
"A trustee would not interrupt, side track, or hinder
administration of the estate. To the contrary, it would add
efficiency and ensure greater transparency by providing the CRO
with additional resources, guidance and oversight," he said.
If not approved, Mr. DiNapoli urged the Court that an examiner
with "expanded powers," must be appointed to investigate the
company's former and current management.
A hearing to consider approval of the proposed appointment of a
trustee is scheduled for Dec. 3, at 10:00 a.m. Creditors and
other concerned parties have until Nov. 28, at 4:00 p.m. to file
their objections.
* * *
A Lehman spokesperson said Mr. Fuld would step down as CEO by
year-end and will not receive severance pay. Mr. Fuld, however,
will stay as chairman of the board, Harvey R. Miller, Esq., at
Weil Gotshal & Manges LLP, in New York, said, according to AHN.
Mr. Fuld has been widely criticized for contributing to the
demise of Lehman, which made risky investments in mortgage-
related assets.
According to Bloomberg News, Mr. Fuld in March contacted Warren
Buffet's Berkshire Hathaway for a stake in Lehman. Mr. Buffet
offered to buy preferred shares that would pay a dividend of 9%
and could be converted to common at the then-market price of $40.
Mr. Fuld, however, spurned the offer and a few days later, on
April 1, Lehman sold $4 billion of convertible preferred stock to
public investors with a 7.25% interest rate and a 32% conversion
premium.
After Sept. 10, when Mr. Fuld pre-announced quarterly results of
a $3.9 billion loss, after $5.6 billion of writedowns, Lehman
negotiated a sale of its assets in order to boost available cash
and avoid filing for bankruptcy protection. However, on Sept.
15, Lehman made the largest bankruptcy filing in history after a
private sale could not be consummated and U.S. federal regulators
refused to bail out Lehman.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- is the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers has been a leader in the global
financial markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offers a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy September 15, 2008 (Bankr.
S.D.N.Y. Case No.: 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
The September 15 Chapter 11 filing by Lehman Brothers Holdings,
Inc., does not include any of its subsidiaries.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on
Sept. 16 (Case No. 08-13600). Several other affiliates followed
thereafter.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on September 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on September 16.
The two units of Lehman Brothers Holdings, Inc., which has filed
for bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of JPY4
trillion -- US$38 billion). Lehman Brothers Japan Inc. reported
about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
MASTR SEASONED: S&P Downgrades Ratings on 14 Classes of Certs.
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 14
classes of mortgage pass-through certificates from MASTR Seasoned
Securitization Trust 2004-1. At the same time, S&P affirmed S&P's
ratings on 10 other classes from this transaction.
The lowered ratings reflect S&P's analysis of loss expectations
for the transaction based on the dollar amount of loans in its
delinquency pipeline compared with the amount of remaining credit
support. Because less than 29% of the collateral (as a percentage
of the original pool balance) remains in the pool for this
transaction, the potential losses from delinquent loans could have
a more significant impact on the credit support available for the
remaining classes. Based on the current collateral performance of
this transaction, S&P projects that future credit enhancement
percentages will be insufficient to maintain the ratings at their
previous levels.
This transaction has four loan groups: loan group one has its own
set of subordinate classes (15-B-1 through 15-B-6), and loan
groups two through four share three subordinate classes (C-B-4
through C-B-6). Loan group 2 has its own set of subordinate
classes (30-B-1 through 30-B-3), which are senior to the three
shared subordinate classes. Loan groups 3 and 4 share an
additional set of subordinate classes (HY-B-1 through HY-B-3),
also senior to those shared with loan group 2.
As of the Oct. 25, 2008, distribution, loan groups 1, 3, and 4 had
incurred no cumulative losses, while loan group 2 had $251,581 in
cumulative losses. There were no delinquencies for loan group 3,
while total delinquencies for loan groups 1, 2, and 4 were
$0.57 million, $10.58 million, and $0.89 million, respectively.
Severe delinquencies (90-plus days, foreclosures, and REOs)
totaled $0.57 million for group 1, $3.99 million for group 2, and
$0.89 million for group 4. For S&P's analysis, it compared the
balances of the subordinate classes to the estimated maximum
dollar amount of losses they could incur from the various loan
groups, according to S&P's projections.
The affirmations reflect current and projected credit support
percentages that are sufficient to maintain the ratings at their
current levels.
The collateral for this transaction consists of seasoned, prime
jumbo, fixed-rate and hybrid adjustable-rate mortgage loans.
Credit enhancement is provided strictly by subordination of the
junior classes.
Rating Actions
MASTR Seasoned Securitization Trust 2004-1
Series 2004-1
Rating
------
Class CUSIP To From
----- ----- -- ----
15-B-3 55265WBL6 BBB- BBB
15-B-4 55265WBT9 B BB
15-B-5 55265WBU6 CCC B
30-B-1 55265WBM4 BB- AA
30-B-2 55265WBN2 B- A
30-B-3 55265WBP7 CCC BBB
3-A-1 55265WBC6 BBB AAA
4-A-1 55265WBD4 A AAA
4-A-2 55265WBE2 BBB AAA
HY-B-1 55265WBQ5 B AA
HY-B-2 55265WBR3 CCC A
HY-B-3 55265WBS1 CCC BBB
C-B-4 55265WBW2 CC BB
C-B-5 55265WBX0 CC B
Ratings Affirmed
MASTR Seasoned Securitization Trust 2004-1
Series 2004-1
Class CUSIP Rating
----- ----- ------
1-A-1 55265WAV5 AAA
A-X 55265WBF9 AAA
2-A-1 55265WAW3 AAA
2-A-2 55265WAX1 AAA
2-A-3 55265WAY9 AAA
2-A-4 55265WAZ6 AAA
2-A-6 55265WBB8 AAA
PO 55265WBZ5 AAA
15-B-1 55265WBJ1 AA
15-B-2 55265WBK8 A
MECACHROME INTERNATIONAL: S&P Junks Long-Term Corp. Credit Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Montreal-based Mecachrome International Inc., including the long-
term corporate credit rating to 'CC' from 'B'. At the same time,
S&P revised the CreditWatch implications to developing from
negative. A CreditWatch developing placement means that S&P could
lower, raise, or affirm the ratings.
"The 'CC' rating indicates that in Standard & Poor's opinion
Mecachrome is currently vulnerable to nonpayment of its financial
obligations," said Standard & Poor's credit analyst Greg Pau. The
rating action follows the company's announced management change
and its delay in publishing financial results for the third
quarter of 2008. "The downgrade also reflects our view that, under
the current debt market conditions and with the company's frequent
management changes, there is now a much higher likelihood that
Mecachrome could be denied access to its EUR75 million secured
revolving credit facility," Mr. Pau added.
In the meantime, the company's revenue and cash flow remain
adversely affected by delays in production ramp-up in key aircraft
programs, decreased business volume in the auto sport segment, and
slowing auto markets in Europe.
If the revolving credit facility becomes unavailable, the company
will have to rely on its cash balance and draw down on its
factoring credit line to make its interest payments of about EUR9
million on the subordinated notes on Nov. 15. After making the
interest payments, Mecachrome's available cash resources to
support its working-capital and capital expenditure requirements
will be limited and, as a result, the company's ability to operate
and generate revenue could in S&P's view be handicapped.
The CreditWatch with developing implications reflects the
increased possibility that the company could choose to default on
the imminent subordinated note interest payment to conserve cash,
at which time S&P could lower the rating to 'D'. In the event that
Mecachrome chooses to make the interest payment while having no
access to a revolving credit line of at least EUR20 million,
Standard & Poor's could keep the rating at 'CC' to reflect
Mecachrome's continued liquidity challenge. Alternatively, S&P
could raise the rating to the 'CCC' category if the company
demonstrates its ability to access a similar-sized revolving
credit limit to support its operations. S&P expects to resolve
the CreditWatch within the next three months.
MERRILL LYNCH: Fitch Affirms 'BB' Rating on $48.2 Mil. Notes
------------------------------------------------------------
Fitch affirmed and assigned outlooks to Merrill Lynch Floating
Trust, commercial mortgage pass-through certificates, series
2006-1:
-- $556.9 million class A-1 at 'AAA'; Outlook Stable;
-- $527.7 million class A-2 at 'AAA'; Outlook Stable;
-- Interest-only class X-1A at 'AAA'; Outlook Stable;
-- Interest-only class X-1B at 'AAA'; Outlook Stable;
-- Interest-only class X-3A at 'AAA'; Outlook Stable;
-- Interest-only class X-3B at 'AAA'; Outlook Stable;
-- Interest-only class X-3C at 'AAA'; Outlook Stable;
-- $55.4 million class B at 'AAA'; Outlook Stable;
-- $48.9 million class C at 'AAA'; Outlook Stable;
-- $32.6 million class D at 'AA+'; Outlook Stable;
-- $75.3 million class E at 'AA'; Outlook Stable;
-- $46.7 million class F at 'AA-'; Outlook Stable;
-- $44.3 million class G at 'A+'; Outlook Stable;
-- $40.6 million class H at 'A'; Outlook Stable;
-- $35.9 million class J at 'A-'; Outlook Stable;
-- $36.3 million class K at 'BBB+'; Outlook Stable;
-- $31.1 million class L at 'BBB'; Outlook Stable;
-- $48.2 million class M at 'BB'; Outlook Stable.
Class A-1A and X-2 have paid in full. Fitch does not rate classes
TM, X-1TM, or X-2TM.
The rating affirmations are a result of the stable performance
since Fitch's last rating action as the loans continue to perform
as expected. Since Fitch's last rating action, the Portals III
loan has fully paid off prior to its maturity date of January
2009. Rating Outlooks reflect the likely direction of rating
changes over the next one to two years.
As of the October 2008 distribution date, the transaction has paid
down by 37.6% since issuance. Six of the original 15 loans have
paid in full, and two loans have had partial releases of
collateral. There have been no losses to date, and there are no
delinquent or specially serviced loans. The three largest loans
are the Trizec Portfolio (39.6% of the senior trust component),
Lord & Taylor Portfolio (32%), and The Royal Holiday Portfolio
(4.1%). All loans maintain their investment-grade shadow ratings.
The Lord & Taylor Portfolio loan is secured by 36 Lord & Taylor
retail stores across nine states and a 587,364 square foot
distribution center. The Sponsor, NRDC Equity Partners, is in the
process of re-positioning the stores by rebalancing their
merchandise, implementing a more modern advertising campaign, and
improving public area layout and design. The loan's initial
maturity date was Oct. 11, 2008, and has exercised its first of
three options. The portfolio continues to demonstrate stable
performance, which Fitch will continue to monitor given the
current economic environment and outlook for retail.
The Trizec Portfolio loan's collateral consists of 20 office
properties with a total of 8 million sf located across five
states. Two properties have been released since issuance. The
portfolio's three largest tenants are the Pension Benefit Guaranty
Corp. (4.8%), Kellogg, Brown & Root (3.7%), and Continental
Airlines (2.9%). The loan's initial maturity date was Oct. 11,
2008, and it has exercised the first of three one-year extension
options. Occupancy as of June 30, 2008 was approximately 84% on a
portfolio basis, as compared to 84.6% at issuance.
MGM MIRAGE: Terry Lanni Leaves Chairperson & CEO Posts
------------------------------------------------------
Tamara Audi at The Wall Street Journal reports that MGM Mirage
said that Terry Lanni has notified the company that he will be
resigning as its chairperson and CEO, effective Nov. 30, 2008.
WSJ relates that Mr. Lanni will remain as a member of MGM Mirage's
board.
Mr. Lanni said in a statement, "I have served as Chairman for more
than 13 years and have seen this company grow from owning one
resort in Las Vegas to 17 resorts internationally, with joint
ventures around the world. I believe it is now time to step aside
from full-time engagement and turn over the reins to the new
generation. I am recommending to the Board of Directors that Jim
Murren succeed me as chairman and CEO. Jim is fully equipped to
lead the company through these turbulent times in the global
economy and take it to new levels of growth and success."
About MGM Mirage
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) --
http://www.mgmmirage.com/-- is a hotel and gaming company. It
owns and operates 17 properties located in Nevada, Mississippi
and Michigan, and has investments in three other properties in
Nevada, New Jersey and Illinois.
* * *
As reported in the Troubled Company Reporter on Oct. 9, 2008,
Tamara Audi at The Wall Street Journal reports that MGM Mirage
needs to raise about $1.2 billion to complete the financing of its
CityCenter project in Las Vegas.
As reported in the Troubled Company Reporter on Oct. 7, 2008, MGM
Mirage said that CityCenter, its joint development project with
Dubai World, completed the first phase of its $3.0 billion
financing package by securing a $1.8 billion senior bank credit
facility. The facility matures in April 2013 and is expected to
be increased to a total amount of $3.0 billion as additional
commitments are received. CityCenter has received additional
signed commitment letters totaling in excess of $500 million,
which commitments are expected to be added to the facility once
completed. MGM Mirage and Dubai World continue to work with
additional lenders and will seek the remaining commitment amounts
through a syndication process beginning on Oct. 7, 2008. The
gross project budget consists of $9.3 billion of construction
costs (including capitalized interest), $1.7 billion of land, $0.2
billion of preopening expenses, and $0.1 billion of intangible
assets. CityCenter is scheduled to be completed in December 2009.
According to WSJ, MGM Mirage is working to secure 41.2 billion in
financing to round out the $3 billion needed to complete the
project.
As reported in the Troubled Company Reporter on Oct. 30, 2008, MGM
Mirage said it was suspending its casino projects in Las Vegas and
Atlantic City because of the credit crunch. MGM Mirage's
Chairperson and CEO Terry Lanni said that the company has done
predevelopment work on the MGM Grand Atlantic City, but the
company will suspend development until the economy and capital
markets "are sufficiently improved." Design and preconstruction
work on MGM Mirage's Las Vegas joint venture with Kerzner
International and Istithmar has also been suspended, said Mr.
Lanni.
As reported in the Troubled Company Reporter on Nov. 3, 2008,
Moody's Investors Service downgraded MGM MIRAGE's (MGM) Corporate
Family rating and Probability of Default rating to Ba3 from Ba2.
Moody's also downgraded MGM's senior unsecured bond rating to Ba3
from Ba2 and its senior subordinated bond rating to B2 from B1.
Moody's also assigned a (P)Ba1 provisional rating to the company's
proposed benchmark senior secured guaranteed note. All ratings
remain on review for further possible downgrade. The company's
Speculative Grade Liquidity rating was also downgraded to SGL-4
from SGL-3.
Standard & Poor's Ratings Services, as reported in the Troubled
Company Reporter on Oct. 31, 2008, lowered its corporate credit
and issue-level ratings on Las Vegas-based MGM MIRAGE and its
subsidiaries by one notch. The corporate credit rating was
lowered to 'BB-' from 'BB', and the rating outlook is negative.
ML-CFC COMMERCIAL: Moody's Downgrades Ratings on Six Classes
------------------------------------------------------------
Moody's Investors Service downgraded the ratings of six classes
and affirmed 20 classes of ML-CFC Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates, Series 2007-7:
-- Class A-1, $42,887,981, affirmed at Aaa
-- Class A-2, $110,798,000, affirmed at Aaa
-- Class A-2FL, $30,000,000, affirmed at Aaa
-- Class A-3FL, $204,236,000, affirmed at Aaa
-- Class A-SB, $102,775,000, affirmed at Aaa
-- Class A-4, $787,943,000, affirmed at Aaa
-- Class A-4FL, $55,000,000, affirmed at Aaa
-- Class A-1A, $603,009,889, affirmed at Aaa
-- Class AM, $233,551,000, affirmed at Aaa
-- Class AM-FL, $45,000,000, affirmed at Aaa
-- Class AJ, $174,358,000, affirmed at Aaa
-- Class AJ-FL, $45,000,000, affirmed at Aaa
-- Class X, Notional, affirmed at Aaa
-- Class B, $55,710,000, affirmed at Aa2
-- Class C, $27,855,000, affirmed at Aa3
-- Class D, $45,264,000, affirmed at A2
-- Class E, $27,856,000, affirmed at A3
-- Class F, $34,818,000, affirmed at Baa1
-- Class G, $27,855,000, affirmed at Baa2
-- Class H, $24,373,000, affirmed at Baa3
-- Class J, $10,446,000, downgraded to Ba2 from Ba1
-- Class K, $10,446,000, downgraded to Ba3 from Ba2,
-- Class L, $10,445,000, downgraded to B1 from Ba3,
-- Class M, $6,964,000, downgraded to B2 from B1,
-- Class N, $6,964,000, downgraded to B3 from B2,
-- Class P, $6,964,000, downgraded to Caa1 from B3,
Moody's downgraded Classes J, K, L, M, N, and P due to anticipated
losses from specially serviced loans and increased dispersion.
As of the Oct. 15, 2008 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 0.5%
to $2.77 billion from $2.79 billion at securitization. The
Certificates are collateralized by 326 mortgage loans ranging in
size from less than 1% to 4% of the pool, with the top 10 loans
representing 20% of the pool. The pool includes two loans,
representing 0.7% of the pool, with investment grade underlying
ratings.
The pool has not experienced any losses since securitization.
Fifteen loans, representing 4% of the pool, are currently in
special servicing. The largest specially serviced loan is the
Mervyns Corporate Headquarters Loan ($45.0 million -- 1.6%). This
loan was transferred to special servicing in October 2008 for
imminent default due to Mervyn's Chapter 11 bankruptcy filing.
Mervyn's leases 100% of the premises. The property was originally
built as a department store, and thus has no windows on the first
three floors, and has served as Mervyns corporate headquarters
since 1984. Moody's has not estimated a loss for this loan at
this time, but has estimated an aggregate $5.3 million loss for
the remaining specially serviced loans.
Fifty-four loans, representing 20% of the pool, are on the master
servicer's watchlist. The watchlist includes loans which meet
certain portfolio review guidelines established as part of the
Commercial Mortgage Securities Association's monthly reporting
package. As part of Moody's ongoing monitoring of a transaction,
Moody's reviews the watchlist to assess which loans have material
issues that could impact performance.
Moody's was provided with full-year 2007 and partial-year 2008
operating results for 89% and 40% of the pool, respectively.
Moody's weighted average loan to value ratio for the conduit
component is 113% compared to 111% at securitization. In addition
to the overall decline in pool performance, LTV dispersion has
increased since securitization. Based on Moody's analysis,
approximately 36% of the conduit pool has a LTV in excess of 120%
compared to 30% at securitization.
The loans with investment grade underlying ratings represent 0.7%
of the pool. The One Turnberry Place Loan ($14.2 million -- 0.5%)
is secured by a 107,000 square foot office building located in
Aventura, Florida. Performance has declined due to increased
expenses. Moody's current underlying rating is Aa1 compared to
Aaa at securitization. The Old Glory Loan ($4.9 million -- 0.2%)
is secured by a residential cooperative property located in New
York City. Moody's current underlying rating is Aaa, the same as
at securitization.
The three largest loans represent 9.5% of the pool. The largest
loan is the One Pacific Plaza Loan ($105.0 million -- 3.8%), which
is secured by a 428,000 square foot office building located in
Huntington Beach, California. Occupancy has declined to 81% as of
January 2008 compared to 100% at securitization due to lease
rollovers. The largest tenant at securitization, Triad Financial
Corporation, renewed its lease in February 2008 for a 3-year term,
but reduced its leased area from 15% to 7% of the property. The
loan is on the servicer's watchlist due to the decline in
occupancy. The loan is interest only for its entire 6-year term.
Moody's LTV is 148% compared to 135% at securitization.
The second largest loan is the Commons at Calabasas Loan
($101.5 million -- 3.7%), which is secured by a 171,000 square
foot retail center located in Calabasas, California. The center
has been 100% occupied since 1999. The anchor tenants include
Ralph's Grocery Store, Barnes and Noble and Rite Aid. The
property's performance has been impacted by increased expenses.
The loan is interest only for its entire 10-year term. Moody's
LTV is 128% compared to 126% at securitization.
The third largest loan is the 10 Milk Street Loan ($58.0 million -
2.1%), which is secured by a 230,000 square foot office building
located in downtown Boston, Massachusetts. Occupancy has declined
to 83% as of December 2007 compared to 92% at securitization due
to lease rollovers. The largest tenant at securitization was
Color Kinetics, leasing 25% of the premises. Color Kinetics
vacated at its lease expiration in August 2007. A portion of its
space has been released. The loan is interest only for its entire
10-year term. Moody's LTV is 144% compared to 140% at
securitization.
Moody's periodically completes full reviews in addition to
monitoring transactions on a monthly basis. Moody's prior full
review is summarized in a Presale Report dated May 24, 2007. This
is Moody's full first review since securitization.
MORGAN STANLEY: Fitch Downgrades Ratings on Five Classes of Notes
-----------------------------------------------------------------
Fitch Ratings has downgraded five classes of Morgan Stanley
Capital I Inc., series 2007-XLF:
-- $13.5 million class H from 'BBB+' to 'BBB-' Outlook Negative;
-- $20.6 million class J from 'BBB' to 'BB+' Outlook Stable;
-- $20.6 million class K from 'BBB' to 'BB' Outlook Stable;
-- $21.1 million class L from 'BBB-' to 'BB-' Outlook Negative;
-- $3.3 million class M-JPM to 'BB-' Outlook Negative.
In addition, Fitch has affirmed these classes:
-- $299.7 million class A-1 at 'AAA' Outlook Stable;
-- $229.7 million class A-2 at 'AAA' Outlook Stable;
-- $41.2 million class B at 'AA+' Outlook Stable;
-- $41.2 million class C at 'AA' Outlook Stable;
-- $25.2 million class D at 'AA-' Outlook Stable;
-- $27.4 million class E at 'A+' Outlook Stable;
-- $26.3 million class F at 'A' Outlook Stable;
-- $26.6 million class G at 'A-' Outlook Negative;
-- $5.5 million class M-HRO at 'BBB' Outlook Negative;
-- $3 million class M-STR at 'BBB-' Outlook Negative;
-- $8.4 million class N-HRO at 'BBB-' Outlook Negative;
-- $2.8 million class N-STR at 'BBB-' Outlook Negative.
Classes M-MPK and N-MPK have paid in full.
The downgrades are due to the decline in performance of the loans
secured by the JP Morgan Portfolio (12.8%), the Le Meridien Hotel
(3.3%) and an unfavorable outlook on the Babcock Ranch land loan
(12.4%). Le Meridien, located in Cancun, Mexico has experienced a
decline in Fitch-stressed net cash flow by approximately 54% since
issuance based on servicer-provided June 30, 2008 financial
statements. The decline is due primarily to lower occupancy and
average daily rate over the past year as compared to issuance and
continued pressures on vacation destinations such as Cancun.
The JP Morgan Portfolio loan's Fitch-stressed net cash flow has
declined by approximately 41% since issuance based on servicer-
provided June 30, 2008 financial statements. The decline is due
primarily to a decline in occupancy and the release of several of
the better performing properties. Additionally, economic
pressures may make it difficult to lease the remaining vacant
space.
The Babcock Ranch land loan is secured by 18,070 acres of land,
located in Punta Gorda, Florida, and partially entitled for 18,325
residential units and 6,000,000 sf of commercial space. Due to a
decline in the market for residential property it is unlikely that
the sponsors will be able to execute on their original business
plan in the original time frame.
The remaining loans are stabilizing as expected and have
experienced minimal paydown since the last review. As of the
October 2008 remittance date, the transaction's principal balance
has decreased by 40.3% since issuance and 0.5% since the last
review to $816.1 million from $1.4 billion at issuance. The
Rating Outlooks reflect likely rating changes over the next one to
two years. Negative Outlooks reflect loans that are behind on
their stabilization plans or where economic pressures may make
execution of the original business plans less feasible.
Ten of the original 15 loans remain. Three loans, HRO Hotel
Portfolio (18.7%), J.P. Morgan Office Portfolio (12.8%), and New
Boston Office Portfolio (7.6%), have exercised partial releases
and as a result, those three loans have paid down by 8.7%, 49.8%,
and 11.4% respectively. All of the loans that remain in the
transaction maintain investment grade shadow ratings.
The largest loan is secured by the HRO Hotel Portfolio, which
consists of six full-service hotels (there were seven at issuance,
one has been released) that are all undergoing significant
renovations/improvements. At closing, the sponsor, Morgan Stanley
Real Estate Fund, posted a letter of credit in the amount of
$102.1 million ($43,000/key) for these improvements. As of
October 2008, the letter of credit has a remaining balance of
$33.6 million. The loan is in the process of being extended and
will have an extended maturity date of Oct. 9, 2009. There are
two remaining one-year extension options. The Negative Outlooks
for the rake classes of this loan are assigned based on the
economic pressures facing the hotel sector.
The second-largest loan is secured by the Crowne Plaza Times
Square (18.6%), a full-service hotel located in the Times Square
submarket of New York City. The collateral includes 180,000 sf of
office space, 42,121 sf of ground-level retail space, and a 159-
space underground parking garage. A $40 million letter of credit
was reserved at issuance to fund renovations of the hotel's guest
rooms, lobby, restaurant, and front desk. As of October 2008 the
letter of credit had a remaining balance of approximately
$7.7 million. The renovations began in January 2008 and are
scheduled to be completed in mid-2009. The loan matures on
Dec. 9, 2009 and has two one-year extension options.
NATIONAL AMUSEMENTS: Owner Says Assets Still Exceed $1.6BB Debts
----------------------------------------------------------------
Merissa Marr at The Wall Street Journal reports that National
Amusements Inc.'s owner Sumner Redstone assured in a statement on
Thursday that the value of his assets still exceeds his
$1.6 billion debts and that he won't sell stock in Viacom Inc. and
CBS Corp.
As reported in the Troubled Company Reporter on Nov. 11, 2008, the
Redstone family, which owns National Amusements, is considering
asset sales as part of an urgent restructuring of their $1.6
billion debt. National Amusements Inc. said it was negotiating
with its lenders and has created a special committee to conduct
those talks. National Amusements said that it sold $233 million
worth of stock in Viacom and CBS to raise cash to comply with debt
covenants. Mr. Redstone planned to sell
$400 million, or 20% of his family's of nonvoting stock in Viacom
and CBS. National Amusements said that it had completed the sale
of 17 million of CBS Class B shares and seven million of Viacom
Class B shares, and that it had no plans to sell additional
shares. Mr. Redstone could sell the family's stakes in Midway
Games Inc. and slot machine company WMS Industries Inc. as part of
a restructuring. Mr. Redstone, through National Amusements,
poured $800 million in Midway Games.
WSJ relates that Mr. Redstone's is trying to stop a downward
spiral in Viacom and CBS. According to the report, Viacom and CBS
stock have dropped in the past week, as investors became more
worried that the decline would undermine Mr. Redstone's
negotiations with lenders and force him to sell stock in the two
firms. National Amusements, says the report, has been in talks to
restructure its debt since October.
According to WSJ, Mr. Redstone is expected to sell some assets so
that bankers would agree to a restructuring, and sources said that
advisers are assessing the Redstone family's holdings to assess
their value and ease of sale.
About National Amusements, Inc.
National Amusements, Inc., North America's sixth largest theatre
operator is a closely held corporation, that operates more than
1,425 motion picture screens in the U.S., the U.K., Latin
America, is an equal partner in the online ticketing service,
MovieTickets.com and the parent company of Viacom. Viacom is a
leading global media company, with preeminent positions in
broadcast and cable television, radio, outdoor advertising and
online. With programming that appeals to audiences in every
demographic category across virtually all media, the company is a
leader in the creation, promotion and distribution of
entertainment, news, sports, music and comedy. Viacom's well-
known brands include CBS, MTV, Nickelodeon, VH1, BET, Paramount
Pictures, Viacom Outdoor, Infinity, UPN, Spike TV, TV Land, CMT:
Country Music Television, Comedy Central, Showtime, Blockbuster,
and Simon & Schuster.
NATIONAL WHOLESALE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: NWL Holdings, Inc.
aka National Wholesale Liquidators
111 Hempstead Turnpike
West Hempstead, NY 11552
Bankruptcy Case No.: 08-12847
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
NWL Buying, Inc. 08-12846
NWL of Bay Parkway, Inc. 08-12848
NWL of Nanuet, Inc. 08-12849
NWL of Co-Op City, Inc. 08-12850
NWL of Babylon, Inc. 08-12851
NWL of East Haven, Inc. 08-12852
National Wholesalers Kissena Center 2, Inc. 08-12853
National Wholesale Liquidators of Staten Island, I 08-12854
National Wholesale Liquidators of Patterson, LLC 08-12855
National Wholesale Liquidators of Yonkers, Inc. 08-12856
National Wholesale Liquidators of Cottman, LLC 08-12857
National Wholesale Liquidators of Brooklyn, Inc. 08-12858
National Wholesale Liquidators of Hempstead, Inc. 08-12859
National Wholesale Liquidators of Glenolden, LLC 08-12860
National Wholesale Liquidators of Philadelphia, In 08-12861
National Wholesale Liquidators of Newark, Inc. 08-12862
Nanuet Wholesale Liquidators, Inc. 08-12863
632 Broadway Variety Store, Inc. 08-12864
NWL of Northern Boulevard, Inc. 08-12864
National Wholesale Liquidators of Spring Valley, I 08-12866
NWL of Benning Road, Inc. 08-12867
National Wholesale Liquidators, Inc. 08-12868
NWL of Hunting Park, Inc. 08-12869
NWL of District Heights, Inc. 08-12870
National Wholesale Liquidators of Middletown, Inc. 08-12871
NWL of New Castle, Inc. 08-12872
NWL of R.I. Ave., Inc. 08-12873
NWL of Dorchester, Inc. 08-12874
NWL of Reading, Inc. 08-12875
NWL of Upper Darby, Inc. 08-12876
NWL of Dekalb, Inc. 08-12877
NWL of New Carrollton, Inc. 08-12878
NWL of Cranston, Inc. 08-12879
NWL of Langley Park, Inc. 08-12880
NWL of Bel Air, Inc. 08-12881
NWL of Aramingo, Inc. 08-12882
NWL of Evergreen, Inc. 08-12883
National Wholesale Liquidators of West Hempstead 08-12884
NWL of Reistertown, Inc. 08-12885
NWL of North Bergen, Inc. 08-12886
NWL of Catonsville, Inc. 08-12887
National Wholesale Liquidators of Union, Inc. 08-12888
NWL of Revere, Inc. 08-12899
NWL of Cermak, Inc. 08-12890
National Wholesale Distributors, Inc. 08-12891
NWL of South Orange, Inc. 08-12893
National Wholesale Liquidators of Bethpage, Inc. 08-12893
National Wholesale Liquidators of Bridgeport, Inc. 08-12894
National Wholesale Liquidators of Cherry Hill, Inc 08-12895
National Wholesale Liquidators of Baldwin, Inc. 08-12896
National Wholesalers of Kissena Center, Inc. 08-12897
National Wholesale RX, Inc. 08-12898
National Wholesale Liquidators of Linden, Inc. 08-12899
National Wholesale Liquidators of Farmingdale, Inc 08-12900
NWL Management, Inc. 08-12901
National Wholesale Liquidators of Jersey City, Inc 08-12902
National Wholesale Liquidators of Orange, Inc. 08-12903
NWL of Northland, Inc. 08-12904
NWL of Fall River, Inc. 08-12905
NWL of Oregon Ave., Inc. 08-12906
NWL of Green Acres, Inc. 08-12907
NWL of Edison, Inc. 08-12908
Chapter 11 Petition Date: November 10, 2008
Type of Business: The Debtors is a family-owned discount
retailer. The company was founded in 1984. The
company has 55 stores located in New York, New
Jersey, Pennsylvania, Connecticut, Maryland,
Washington D.C., Delaware, Massachusetts,
Virginia, Rhode Island, Michigan and Illinois.
See:
http://www.nationalwholesaleliquidators.com/
Court: District of Delaware (Delaware)
Judge: Mary F. Walrath
Debtors' Bankruptcy Counsel: Dreier LLP
Debtors' Local Counsel: John H. Knight, Esq.
knight@rlf.com
L. Katherine Good, Esq.
good@rlf.com
Lee E. Kaufman, Esq.
kaufman@rlf.com
Mark D. Collins
collins@RLF.com
Richards Layton & Finger P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Tel: (302) 651-7700
Fax: (302) 651-7701
Special Counsel: Kirkland & Ellis LLP
Financial Advisor: Financo Inc.
Business Advisor: FTI Consulting Inc.
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Haier America Trading trade debt $2,381,714
Attn: Chet Feldman
1356 Broadway
New York, NY 10018
Tel: (212) 594-3330
Fax: (718) 297-6594
White Rose Grocery trade debt $1,183,732
Attn: Ed Stokes
380 Middlesex Avenue
Carteret, NJ 07009
Tel: (732) 541-5555
Fax: (732) 541-3602
American Color Graphics Inc. trade debt $1,118,409
Attn: Tim Hall
PO Box 198344
Atlanta, GA 30384-8344
Tel: (678) 904-4570
Fax: (678) 904-4580
Home Dynamix/Div of trade debt $969,723
Emerem Inc.
Attn: Rami Evar Terms Ch 07/08
1 Carol Place
Tel: (800) 726-9290
Fax: (201) 329-7491
Lehrhoff Company Inc. trade debt $735,234
Attn: Ben Schrager
351 Mill Road
Tel: (888) 547-1553
Fax: (800) 905-5685
Sharp Electronics trade debt $688,647
Attn: Michael Richardson
Sharp Plaza
Mahwah, NJ 07430
Tel: (201) 529-8200
Fax: (201) 529-9108
Achim Importing Co. Inc. trade debt $667,592
Attn: Howie Siegel
58 2nd Avenue
Tel: (800) 542-2446
Fax: (718) 369-2210
Guard Security Hardware trade debt $625,353
Attn: Howard Berger
1 South Middlesex Avenue
Monroe Township, NJ 08831-3726
Tel: (800) 523-1268
Fax: (609) 860-9991
Commonwealth Wholesale Corp. trade debt $527,048
Attn: Irwin x5501
250 Hallandale Beach Blvd.
#409
Tel: (954) 237-5501
Fax: (954) 458-5456
The Washington Post trade debt $455,616
Imation Electronics Mem Corp. trade debt $441,000
UTZ Quality Food Inc. trade debt $438,305
Royal Appliances Mfg. trade debt $424,649
CBA Industries Inc. trade debt $393,303
ES International Ent. Inc. trade debt $384,216
Panties Plus Inc. trade debt $356,165
Interaction Communication Int. trade debt $300,000
Transworld International trade debt $278,880
Trading
JWIN Electronics Corp. trade debt $273,137
M. Rothman Co. trade debt $270,932
NAUTILIUS RMBS IV: Fitch Downgrades Ratings on Three Note Classes
-----------------------------------------------------------------
Fitch Ratings downgrades three and assigns distressed recovery
(DR) ratings to eight classes of notes issued by Nautilus RMBS CDO
IV, Ltd/LLC. These rating actions are effective immediately:
-- $372,633,388 class A-1S notes downgraded to 'C' from 'B', and
assigned DR5;
-- $69,651,955 class A-1J notes downgraded to 'C' from 'CCC',
and assigned DR6;
-- $51,271,578 class A-2 notes downgraded to 'C' from 'CC', and
assigned DR6;
-- $28,054,259 class A-3 notes remain 'C', assigned DR6;
-- $20,073,306 class B-V notes remain 'C', assigned DR6;
-- $5,804,330 class B-F notes remain 'C', assigned DR6;
-- $15,478,212 class C-V notes remain 'C', assigned DR6;
-- $3,869,533 class C-F notes remain 'C', assigned DR6.
Fitch's rating actions reflect the credit deterioration within the
portfolio and underlying exposure to Alternative-A and subprime
residential mortgage-backed securities.
Nautilus IV is a cash flow collateralized debt obligation that
closed on March 15, 2007 and is managed by RCG Helm, LLC.
Presently, 39.5% of the portfolio consists of U.S. Prime RMBS,
54.6% Alt-A RMBS and 5.9% subprime RMBS. Since the last review in
August 2008, approximately 42.4% of the portfolio has been
downgraded, with 29.6% of the portfolio currently on Rating Watch
Negative. Of the portfolio, 64.9% is now rated below investment
grade, with 43.1% rated 'CCC+' or below.
The collateral deterioration has caused each of the
overcollateralization tests to fall below 100% and fail their
respective triggers. As of the trustee report dated Sept. 30,
2008, the senior OC ratio was 89%, the class A-3 OC ratio was
83.1% and the class B OC ratio was 79.1%. Fitch received notice
that the class A-1 OC ratio fell below 100% on Sept. 2, 2008 which
caused an Event of Default to occur. As a remedy to the EOD, the
controlling class, currently the class A-1S notes, has elected to
accelerate the notes and direct the sale and liquidation of the
portfolio. Proceeds from the sale of the collateral will be
applied in accordance with the priority of payments. Fitch
expects the class A-1S, A-1J and A-2 notes to receive interest
distributions, but only the class A-1S notes are expected to
receive principal payments. No interest or principal
distributions are expected to be made to the class A-3, B-V, B-F,
C-V or C-F notes.
The ratings of the class A-1S, A-1J and A-2 notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the stated
balance of principal by the legal final maturity date. The rating
of the class A-3, B-V, B-F, C-V and C-F notes addresses the
likelihood that investors will receive ultimate and compensating
interest payments, as per the governing documents, as well as the
stated balance of principal by the legal final maturity date.
NAUTILIUS RMBS V: Fitch Downgrades Ratings on Five Note Classes
---------------------------------------------------------------
Fitch Ratings downgrades five and assigns distressed recovery
ratings to six classes of notes issued by Nautilus RMBS CDO V,
Ltd/LLC.
These rating actions are effective immediately:
-- $222,564,632 class A-1S notes downgraded to 'C' from 'A',
assigned DR5 and removed from Rating Watch Negative;
-- $40,562,148 class A-1J notes downgraded to 'C' from 'BBB',
assigned DR6 and removed from Rating Watch Negative;
-- $8,903,886 class A-2 notes downgraded to 'C' from 'BB',
assigned DR6 and removed from Rating Watch Negative;
-- $8,903,886 class A-3 notes downgraded to 'C' from 'B',
assigned DR6 and removed from Rating Watch Negative;
-- $6,925,225 class B notes downgraded to 'C' from 'CC',
assigned DR6;
-- $2,473,302 class C notes remain at 'C', assigned DR6;
Fitch's rating actions reflect the credit deterioration within the
portfolio.
Nautilus V is a cash flow collateralized debt obligation that
closed on June 27, 2007 and is managed by RCG Helm, LLC.
Presently, 84.6% of the portfolio consists of U.S. Prime RMBS and
15.4% Alt-A RMBS. Since the last review in September 2008,
approximately 82% of the portfolio has been downgraded, with 64.1%
of the portfolio currently on Rating Watch Negative. Of the
portfolio, 52.5% is now rated below investment grade, with 29.7%
rated 'CCC+' or below.
The collateral deterioration has caused each of the
overcollateralization tests to fall below 100% and fail their
respective triggers. As of the trustee report dated Sept. 30,
2008, the senior OC ratio was 93%, the class A-3 OC ratio was
90.1% and the class B OC ratio was 87.9%. Fitch received notice
that the class A-1OC ratio fell below 100% on Sept. 9, 2008 which
caused an event of default to occur. As a remedy to the EOD, the
controlling class, currently the class A-1S notes, has elected to
accelerate the notes and direct the sale and liquidation of the
portfolio. Proceeds from the sale of the collateral will be
applied in accordance with the priority of payments. Fitch
expects the class A-1S, A-1J and A-2 notes to receive interest
distributions, but only the class A-1S notes are expected to
receive principal payments. No interest or principal
distributions are expected to be made to the class A-3, B or C
notes.
The ratings of the class A-1S notes, class A-1J notes and class
A-2 notes address the likelihood that investors will receive full
and timely payments of interest, as per the transaction's
governing documents, as well as the aggregate outstanding amount
of principal by the stated maturity date. The ratings of the
class A-3 notes, class B and class C notes address the likelihood
that investors will receive ultimate interest payments, as per the
transaction's governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date.
NRG ENERGY: Moody's Reviewing 'Ba3' Rating For Possible Downgrade
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Exelon Corporation
(Exelon: Baa1 senior unsecured) and its subsidiaries Exelon
Generation Company (ExGen: A3 senior unsecured) and PECO Energy
Company (PECO: A3 Issuer Rating) under review for possible
downgrade, and placed the ratings of NRG Energy, Inc. (NRG: Ba3
Corporate Family Rating) under review for possible upgrade
following filing by Exelon with the SEC of Form S-4 commencing an
exchange offer for the stock of NRG. Moody's also affirmed the
Speculative Liquidity Rating of NRG at SGL-1, and the ratings of
Commonwealth Edison Company (ComEd:Baa3 senior unsecured), an
Exelon subsidiary.
"While contingencies remain, S-4 filing by Exelon commencing an
exchange offer of 0.485 Exelon shares for each NRG share increases
the probability of the $6.2 billion acquisition of NRG being
completed, which has the potential to substantially alter the
current credit profile of Exelon, ExGen, and NRG," said A.J.
Sabatelle, Vice President, Senior Credit Officer, Moody's.
"While uncertainties exist concerning the final legal structure,
the terms of any related required financing, and the potential
issues that may surface from Exelon commencing a hostile takeover,
Moody's believes that a multi-notch rating change is possible for
Exelon, ExGen, and NRG," added A.J. Sabatelle.
The rating review will assess the credit implications of the
proposed merger on the prospective credit metrics of Exelon,
ExGen, and NRG, and will factor in the benefits of a larger more
diverse generation company, the ability to achieve potential
synergies from the combination, the probability of subsequent
asset sales that may emerge, as well as the likely increase in
financing costs associated with completing the transaction. The
review will consider the rating implications for each legal entity
once details of the final legal structure emerge, the prospects
for attaining the necessary regulatory and shareholder approvals,
and the possibility that other issues may surface as the
transaction proceeds forward.
Moody's observes that the consolidated credit metrics of Exelon
and ExGen will weaken from historical levels and that the business
risk for the company will increase, including the assumption of
associated environmental risks that currently exist at NRG.
Conversely, the potential combination should have positive
benefits for NRG creditors given Exelon's stronger balance sheet
and the presumed value for a merchant wholesale power operation
from being a part of a more diverse and larger organization.
Through the 12 months ended Sept. 30, 2008, Moody's calculates
that Exelon and ExGen generated about $5.3 billion and $3.3
billion of operating cash flow, respectively, while NRG generated
about $1.5 billion over the same period. Assuming that the merger
is completed and all $8.6 billion of NRG's debt and preferred is
refinanced or assumed at the time of closing, Moody's calculates
that the proforma combined cash flow to adjusted debt could
approximate 25-27% for Exelon on a fully consolidated basis or 35-
37% if NRG Moody's re to be combined with ExGen. Cash flow
coverage of interest expense would likely to approximate 5.0x at
Exelon and around 6.0x at ExGen. These financial ratios, while
still reflective of an investment grade profile, are materially
lower than Exelon and ExGen's historical credits metrics.
In addition to the potential benefits of the combination with
Exelon, the review for possible upgrade at NRG also considers
maintenance of the strong financial performance at this company
and the expectation for continued stable cash flow generation due
to the degree of hedging in place for the next several years. To
that end, through 12 months ending Sept. 30, 2008, Moody's
calculates NRG's cash flow to adjusted debt at more than 17% and
interest coverage in excess of 3.0x resulting in free cash to
adjusted debt at 8.4%.
The rating affirmation of NRG's speculative grade liquidity rating
of SGL-1 reflects Moody's expectation that the company will
maintain a very good liquidity profile over the next 12-month
period as a result of its generation of strong internal cash
flows, maintenance of significant cash balances plus continued
access to substantial credit availability and viable trading
counterparties. Total liquidity at Sept. 30, 2008 exceeded
$3.0 billion, including unrestricted cash on hand of $1.483
billion. Based upon recent guidance provided by company
management, Moody's believes NRG will generate free cash flow
during 2008 of more than $425 million. Moody's understands that
the company remains comfortably in compliance with the covenants
in its bank facilities and acknowledges the liquidity improvement
that has occurred following the sale of certain non-strategic
assets earlier this year.
The review of PECO's ratings largely reflects the relatively close
interrelationship that exists among Exelon, ExGen, and PECO
including participation in an existing money pool arrangement
under which PECO can be either a lender or borrower. According to
the company's latest third quarter SEC filings, the maximum amount
borrowed by PECO during 2008 was $405 million. Year-to-date, PECO
has not lent any monies to the money pool. At Sept. 30, 2008,
PECO had outstanding money pool borrowings of $288 million.
Moody's acknowledges the transition risk that PECO faces as the
company moves to market rates for generation in its service
territory beginning in 2011 and observes that Exelon will need
Pennsylvania Public Utilities Commission approval of its merger
with NRG.
The rating affirmation of ComEd's ratings reflects the standalone
credit quality of this utility which also incorporates the recent
favorable electric rate case decision in September 2008 as well as
the separateness that exists at ComEd relative to the rest of the
Exelon organization including it not being a part of the Exelon
money pool and having separate corporate governance in place.
On Review for Possible Downgrade:
Issuer: Delaware County Industrial Dev. Auth., PA
-- Senior Secured Revenue Bonds, Placed on Review for Possible
Downgrade, currently A2
Issuer: Exelon Capital Trust I
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa2
Issuer: Exelon Capital Trust II
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa2
Issuer: Exelon Capital Trust III
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa2
Issuer: Exelon Corporation
-- Issuer Rating, Placed on Review for Possible Downgrade,
currently Baa1
-- Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)Baa3 to (P)Baa1
-- Senior Unsecured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently Baa1
-- Senior Unsecured Commercial Paper, Placed on Review for
Possible Downgrade, currently P-2
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently Baa1
-- Senior Unsecured Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa1
Issuer: Exelon Generation Company, LLC
-- Issuer Rating, Placed on Review for Possible Downgrade,
currently A3
-- Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)Baa2 to (P)A3
-- Senior Unsecured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently A3
-- Senior Unsecured Commercial Paper, Placed on Review for
Possible Downgrade, currently P-2
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently A3
Issuer: PECO Energy Capital Trust IV
-- Preferred Stock Preferred Stock, Placed on Review for
Possible Downgrade, currently Baa1
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa1
Issuer: PECO Energy Capital Trust V
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa1
Issuer: PECO Energy Capital Trust VI
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa1
Issuer: PECO Energy Company
-- Commercial Paper, Placed on Review for Possible Downgrade,
currently P-1
-- Issuer Rating, Placed on Review for Possible Downgrade,
currently A3
-- Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)Baa2 to (P)A2
-- Preferred Stock Preferred Stock, Placed on Review for
Possible Downgrade, currently Baa2
-- Senior Secured First Mortgage Bonds, Placed on Review for
Possible Downgrade, currently A2
-- Senior Unsecured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently A3
Issuer: Peco Energy Capital Trust III
-- Preferred Stock Preferred Stock, Placed on Review for
Possible Downgrade, currently Baa1
Issuer: Pennsylvania Economic Dev. Fin. Auth.
-- Senior Unsecured Revenue Bonds, Placed on Review for Possible
Downgrade, currently a range of VMIG 2 to A3
On Review for Possible Upgrade:
Issuer: NRG Energy, Inc.
-- Probability of Default Rating, Placed on Review for Possible
Upgrade, currently Ba3
-- Corporate Family Rating, Placed on Review for Possible
Upgrade, currently Ba3
-- Multiple Seniority Shelf, Placed on Review for Possible
Upgrade, currently a range of (P)B2 to (P)Ba1
-- Preferred Stock Preferred Stock, Placed on Review for
Possible Upgrade, currently B2
-- Senior Secured Bank Credit Facility, Placed on Review for
Possible Upgrade, currently Ba1
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Upgrade, currently B1
Outlook Actions:
Issuer: Exelon Capital Trust I
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Exelon Capital Trust II
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Exelon Capital Trust III
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Exelon Corporation
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Exelon Generation Company, LLC
-- Outlook, Changed To Rating Under Review From Stable
Issuer: NRG Energy, Inc.
-- Outlook, Changed To Rating Under Review From Stable
Issuer: PECO Energy Capital Trust IV
-- Outlook, Changed To Rating Under Review From Stable
Issuer: PECO Energy Capital Trust V
-- Outlook, Changed To Rating Under Review From Stable
Issuer: PECO Energy Capital Trust VI
-- Outlook, Changed To Rating Under Review From Stable
Issuer: PECO Energy Company
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Peco Energy Capital Trust III
-- Outlook, Changed To Rating Under Review From Stable
Headquartered in Chicago, Exelon is the holding company for non-
regulated subsidiary, ExGen and for regulated subsidiaries, ComEd
and PECO. At Dec. 31, 2007, Exelon had total assets of
$45.4 billion.
Headquartered in Princeton, NRG owns and operates power generating
facilities, primarily in Texas and the northeast, south central
and Moody's stern regions of the United States. NRG also owns
generating facilities in Australia and Germany.
NOBLE CAPITAL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Noble Capital REO, LLC
8200 N. Mopac Expressway, Suite 320
Austin, TX 78759
Bankruptcy Case No.: 08-12200
Chapter 11 Petition Date: November 3, 2008
Court: Western District of Texas (Austin)
Judge: Frank R. Monroe
Debtor's Counsel: Marvin E. Sprouse, III
msprouse@jw.com
Jackson Walker
100 Congress, Suite 1100
Austin, TX 78701
Tel: (512) 236-2000
Fax: (512) 236-2002
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Debtor's list of largest unsecured creditors is
available for free at http://bankrupt.com/misc/txwb08-12200.pdf
NORANDA ALUMINUM: S&P Puts 'B' Corporate Rating on Negative Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
the 'B' corporate credit rating, on Franklin, Tennessee-based
Noranda Aluminum Holding Corp. and Noranda Aluminum Acquisition
Corp. on CreditWatch with negative implications.
"The CreditWatch placement follows the company's announcement that
it has elected to pay all interest under their $220 million senior
notes due 2014 and $510 million notes due 2015 entirely in-kind
for the interest period beginning on Nov. 15, 2008, and ending on
May 15, 2009," said Standard & Poor's credit analyst Sherwin
Brandford. "Standard and Poor's considers this action to be an
indication of Noranda's expectation of pressured operating results
over the next few quarters due to depressed aluminum prices and
weak end-market demand."
In addition, the company recently borrowed $225 million under its
revolving credit facility because of concerns about instability in
the financial markets and, as a result, leverage was 5.8x on
Sept. 30, 2008, up from 5.1x at the end of the second quarter.
Primary aluminum prices have decreased dramatically over the past
several weeks and are currently about $0.86 per pound, which is
below the company's reported cash cost per pound in the third
quarter of $0.95. S&P expects the company to report slightly
negative EBITDA in the fourth quarter and believes there is
significant risk of that level of earnings continuing into 2009
given the global economic slowdown, which will continue to
pressure prices.
In resolving S&P's CreditWatch, S&P will meet with the company to
discuss its near-term operating and financial strategies in light
of the difficult operating conditions.
NORTEL NETWORKS: DBRS Places "B" Ratings Under Review
-----------------------------------------------------
DBRS placed its B (low) ratings on Nortel Networks Corporation,
Nortel Networks Limited and Nortel Networks Capital Corporation
(collectively, Nortel or the Company) and its Pfd-5 (low)
preferred share ratings on Nortel Networks Limited Under Review
with Negative Implications.
This review follows the Company's Q3 2008 results that were below
DBRS's expectations. The Company indicated that its 2008 results
will likely be around the low end of its previous guidance range
(revenue to decline by around 4% and management operating margin
to improve by around 125 basis points versus 2007). However, it
also indicated that, given the challenging operating environment,
its 2008 results could potentially be even lower. The announcement
is the second time the Company has lowered expectations for 2008.
The first time was in September 2008.
As such, DBRS expects that its review will focus on two factors.
Firstly, Nortel's business risk profile in an operating
environment that continues to weaken as a result of macroeconomic
factors and increasing competitive forces impacting demand in the
telecom equipment sector. DBRS plans to review the appropriateness
of its B (low) Issuer Rating, which previously held a Stable
trend. DBRS will also review the appropriateness of its recovery
ratings.
In this context, DBRS plans to examine Nortel's (a) revised
operating expectations and the impact on its financial performance
given the likelihood of a sustained economic downturn; (b) the
resulting impact of its cumulative cost-cutting actions announced
to date and (c) the impact of the Company's current plan to sell
its Metro Ethernet Networks (MEN) business.
In addition, DBRS will focus on how these and other factors impact
the Company's liquidity position for 2008, 2009 and beyond. The
Company expects cash levels to end 2008 at $2.4 billion, which is
below DBRS's original expectation.
Secondly, DBRS expects its review will result in Nortel's Pfd-5
(low) preferred share ratings moving to D. This move follows the
Company announcement that it plans to suspend its preferred share
dividend payments going forward. This suspension will follow the
Company's previously announced November 12, 2008 dividend payment
on its Series 5 preferred shares (cumulative) and its Series 7
preferred shares (non-cumulative).
NORTEL NETWORKS: RBC Warns of Potential Nortel Bankruptcy in 2011
-----------------------------------------------------------------
Bloomberg News reports that RBC Capital Markets said that Nortel
Networks Corp. may file for bankruptcy by 2011 without government
cash infusion or funding from financial institution.
According to Bloomberg, New York-based RBC Capital analyst Mark
Sue noted that the company is overwhelmed with debt and burning
cash. Mr. Sue trimmed his price target to the stock from $1.50 to
$0, the report says.
Nortel lost 95% of its market value this year as customer
patronize to newer technology from Cisco Systems Inc., Bloomberg
relates. RBC Capital said Nortel could sell Metro Ethernet unit,
the report adds. "Assets sale could not have come at a worse
time. The world move on while Nortel was stuck in restructuring
mode," Bloomberg quoted Mr. Sue as saying.
Mr. Sue said too many asset sale could conflict with the company's
debt covenenats, the report says.
Bloomberg notes, after Nortel's stock reached a split-adjusted
high of $900 in 2000, the company bowed down to Cisco and Juniper
Network Inc.
Bloomberg says Nortel rose 19 cents to 78 cents yesterday in New
York Stock Exchange composite trading. Trace said the company's
10-3/4% note due 2016 dropped 6 cents on the dollar to 27 cents on
the dollar, the report notes.
Himanshu Shah, Shah Capital Management's founder and chief
investment officer, said that Nortel could refinance its debt and
would not go bankrupt, Bloomberg says. "Tightening [Nortel's]
cost is going to pay off. [Nortel needs] to do more," Bloomberg
quoted Mr. Shah as saying.
Nortel said in a statement that it incurred a net loss in the
third quarter of 2008 of $3.41 billion, or $6.85 per common share
on a basic and diluted basis, compared to net income of $27
million, or $0.05 per common share on a basic and diluted basis,
in the third quarter of 2007 and a net loss of $113 million, or
$0.23 per common share on a diluted basis, in the second quarter
of 2008.
Nortel also disclosed revenue in the third quarter of
$2.32 billion, which decreased 14% year over year and down 1% on a
year-to-date basis. The decline compared to the year ago quarter
resulted from a challenging economic environment, competitive
pressures and reduced spending by key carrier customers. Gross
margin in the third quarter of 39.2 percent decreased over the
prior year period primarily due to unfavourable product mix.
Nortel revised its revenue and management operating margin
financial outlook for the full year 2008 to around the low end of
the previously announced ranges primarily due to the further
deteriorating economic conditions and the unfavourable impact of
foreign exchange and now expects revenue to decline by around four
percent compared to 2007 (versus the previous range of a decline
of two to four percent), gross margin to be about 42 percent of
revenue, and management operating margin(a) to improve about 125
basis points compared to 2007 (versus the previous range of an
improvement of 125 to 175 basis points). In light of the economic
conditions noted above, and continuing foreign exchange
volatility, Nortel's actual results may be lower than these
current expectations.
The company is announcing the expected net reduction of
approximately 1,300 positions under the 2009 Restructuring Plan,
with about 25 percent of the net reduction taking place in 2008
and the remainder in 2009. This is expected to result in annual
gross savings of approximately $190 million, with total charges to
earnings and cash outlays of approximately $130 million. About $20
million of the cash outlay is expected in 2008 with substantially
the remainder in 2009, and about $50 million of the charges are
expected to be incurred in 2008 with the remainder in 2009. These
reductions are in addition to the net 1,200 remaining positions to
be eliminated as part of the previously announced restructuring
plans.
About Nortel Networks
Headquartered in Toronto, Ontario, Canada, Nortel Networks
Corporation designs and supplies telecommunications networking
hardware and software to a variety of business and governmental
customers around the globe. 2007 sales were nearly $11 billion
* * *
According to the Troubled Company Reporter on Nov. 12, 2008,
Standard & Poor's Ratings Services said it placed the ratings,
including the 'B-' long-term corporate credit rating, on Canada-
based telecommunications equipment provider Nortel Networks Ltd.
on CreditWatch with negative implications. The ratings on
NNL are based on the consolidation with parent Nortel Networks
Corp. At Sept. 30, Nortel had about $4.5 billion of debt
outstanding.
PAPER INTERNATIONAL: Section 341(a) Meeting Slated for Dec. 6
-------------------------------------------------------------
The U.S. Trustee for Region 2 will convene a meeting of creditors
of Paper International Inc. and its affiliate on Dec. 6, 2008, at
2:00 p.m., at Office of the United States Trustee 80 Broad Street,
4th Floor in New York.
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.
About Paper International
Headquartered in Prewitt, New Mexico, Paper International, Inc.
-- http://www.internationalpaper.com-- manufactures paper and
packaging products with operations in North America, Europe, Latin
America, Russia and North Africa. The Debtors have more than
50,000 employees in in 20 countries. The company and Fiber
Management of Texas, Inc. filed for Chapter 11 protection on Oct.
6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-13917). Larren M.
Nashelsky, Esq., at Morrison & Foerster LLP, represents the
Debtors. The Debtor selected Meade Monger as their chief
restructuring officer. The Debtors also selected AP Services,
LLC, as their restructuring advisor. Kurztman Carson Consultant
LLC will serve as the Debtors' claims agent.
Corporacion Durango, S.A.B. de C.V. of Durango, Mexico, owns
100% of the Debtors' interests as of October 6, 2008. Corporacion
Durango filed a voluntary Chapter 15 petition in the United States
Bankruptcy Court for the District of New York, Case No. 08-13911.
Paper International listed assets between $100 million and
$500 million, and debts between $500 million to $1 billion, while
Fiber Management listed assets between $1 million to $10 million
and debts between $500 million and $1 billion.
PROSPECT FUNDING: Moody's Junks Ratings on Five Classes of Notes
----------------------------------------------------------------
Moody's Investors Service downgraded its ratings of these classes
of notes issued by and loans entered into by Prospect Funding I,
LLC, and left 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: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $205,000,000 Class A-2 First Senior Secured
Floating Rate Notes Due 2013
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $200,000,000 Class A-3 First Senior Secured
Variable Funding Notes Due 2013
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $30,000,000 Class A-4 First Senior Secured
Variable Funding Swingline Notes Due 2013
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, 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: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $310,000,000 Class A-6 First Senior Secured
Fixed Rate Notes Due 2012
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $140,000,000 Class A-7 First Senior Secured
Floating Rate Notes Due 2014
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: $75,000,000 Class A-8 First Senior Secured
Floating Rate Notes Due 2012
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Baa3, on review for possible downgrade
Class Description: Up to $40,000,000 Second Senior Credit
Agreement
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Caa1, on review for possible downgrade
Class Description: $45,000,000 Second Senior Loans
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Caa1, on review for possible downgrade
Class Description: $50,000,000 Class B-2 Second Senior Secured
Floating Rate Notes Due 2012
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Caa1, on review for possible downgrade
Class Description: $23,000,000 Class C-1 Mezzanine Secured Fixed
Rate Notes Due 2012
-- Prior Rating: Caa1, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Caa3, on review for possible downgrade
Class Description: $32,000,000 Class C-2 Mezzanine Secured
Floating Rate Notes Due 2012
-- Prior Rating: Caa1, on review for possible downgrade
-- Prior Rating Date: Oct. 24, 2008
-- Current Rating: Caa3, on review for possible downgrade
Prospect Funding I, LLC. is a market value collateralized loan
obligation transaction backed primarily by bank loans, high yield
securities and mezzanine investments.
Moody's explained that the rating actions reflect deterioration in
the market value of the underlying collateral pool as Moody's ll
as the increased volatility and decreased liquidity in the bank
loan market. Moreover, Moody's has been notified that an Event of
Default occurred on Oct. 28, 2008 due to a failure to maintain the
required level of over-collateralization. The occurrence and
continuation of an Event of Default 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 to be automatically terminated.
The rating downgrades reflect increased expected loss associated
with each tranche. 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 notes and loans remain on
review for possible further rating action.
RAED HUDAIHED: Case Summary & 18 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Raed Hudaihed
464 Bahia Beach Blvd.
Ruskin, FL 33570
Bankruptcy Case No.: 08-17941
Chapter 11 Petition Date: November 12, 2008
Court: Middle District of Florida (Tampa)
Judge: Caryl E. Delano
Debtor's Counsel: Sheila D. Norman, Esq.
sheila@normanandbullington.com
Norman and Bullington, P.A.
1905 West Kennedy Blvd.
Tampa, FL 33606
Tel: (813) 251-6666
Fax: (813) 254-0800
Total Assets: $1,429,170
Total Debts: $1,905,928
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flmb08-17941.pdf
RESIDENTIAL CAPITAL: DBRS Junks Rating; Trend Is Negative
---------------------------------------------------------
DBRS downgraded all long-term ratings of Residential Capital, LLC
(ResCap or the Company), including its Issuer Rating and Long-Term
Debt rating, to C. The rating trend is Negative. The Short-Term
Debt remains unchanged at R-5 with a Negative trend.
This rating action follows ResCap's earnings release, which
indicates a loss of $1.9 billion for the third quarter of 2008.
Key factors driving this quarter's loss were increased loan
provisioning, losses due to foreign exchange volatility and an
increase in reserves for loan repurchases. The slowed U.S. housing
market and reduced market liquidity continue to depress
origination volumes, thereby weakening margins and overall
earnings potential. DBRS views the third-quarter loss as further
evidence of the increasing pressure on ResCap's franchise. Given
the escalating pressure on consumers, declining U.S. housing
markets, reduced market liquidity and the overall deteriorating
operating environment, the prospect for a recovery is weakening.
Moreover, this rating action reflects DBRS's concern that ResCap's
ability to continue as a going concern has been greatly
diminished. The intensifying global credit market disruption has
significantly reduced ResCap's ability to obtain liquidity,
capital and other forms of economic support from sources other
than GMAC, LLC (GMAC), ResCap's ultimate parent. Given the
headwinds pressuring GMAC's core automotive finance segment and
the need for GMAC to protect its franchise, DBRS believes that the
likelihood of further economic support from GMAC has diminished
significantly, and in light of this, DBRS questions ResCap's
ability to remain a going concern. DBRS notes that GMAC has
announced that it has applied to become a bank holding company,
which, if approved, could have a positive impact on ResCap;
however, ResCap's near-term business prospects remain limited.
Accordingly, DBRS has lowered its ratings to reflect the
heightened risk of default.
RIVIERA HOLDING: Decline in Earnings Cues Moody's Rating Cut to B3
------------------------------------------------------------------
Moody's Investors Service downgraded Riviera Holding Corporation's
Corporate family, Probability of default, and senior secured
ratings to B3 from B2. The rating outlook is negative.
The downgrade reflects Riviera's greater than anticipated decline
in earnings, increasing leverage, eroding cash balance, and loss
of access to remaining availability under its $20 million
revolving credit facility. Pursuant to its revolving credit
facility, Riviera is subject to a debt/EBITDA covenant if
outstandings exceed $2.5 million. Riviera cannot meet this
covenant test, and as a result, does not have access to the
remaining $17.5 million; Riviera drew $2.5 million during the
third quarter.
Debt/EBITDA has risen to approximately 7.3 times (including
Moody's standard analytic adjustments) and could increase given
the weak outlook for gaming demand in Las Vegas. Despite this
high leverage, the B3 Corporate family rating anticipates that
Riviera will be able to cover interest payments and capital
expenditures through 2009 with a combination of internally
generated cash flow and unrestricted cash balances.
The negative outlook reflects the possibility that a further
earnings decline could cause Riviera's liquidity cushion to erode,
particularly if the rate of decline accelerates. If this were to
happen during the next six months, a negative rating action would
likely occur.
Ratings downgraded and assessments adjusted:
-- Corporate family rating to B3 from B2
-- Probability of default rating to B3 from B2
-- $225 million term loan to B3 (LGD3, 48%) from B2 (LGD4, 51%)
-- $20 million revolving credit to B3 (LGD3, 48%) from B2
(LGD4, 51%)
Moody's previous rating action for Riviera occurred on July 18,
2008. At that time, the rating outlook was revised to negative
from stable.
Riviera Holdings Corporation owns and operates the Riviera Hotel
and Casino on the Las Vegas Strip and the Riviera Black Hawk
Casino in Black Hawk, Colorado. The company generated net
revenues of approximately $181 million for the LTM period ended
Sept. 30, 2008.
ROGER POLLOCK: Faces Mortgage Defaults & Unpaid Dues & Bills
------------------------------------------------------------
Mortgage defaults, past-due construction bills, and unpaid
homeowner dues of homebuilder Roger Pollock and his affiliated
companies are increasing, public records show.
Ryan Frank at The Oregonian reports that homebuilder Roger Pollock
relates that Mr. Pollock's Pollock Commercial Holdings LLC, has
defaulted on its $5 million construction loan, and his general
contractor has sued the company for $1.3 million in unpaid bills.
The Oregonian relates that Sterling Savings Bank sued Mr.
Pollock's Buena Vista Custom Homes, saying that the company
stopped paying its loans. The report says that Sterling Savings
is seeking to recover $11 million in loans and foreclose on about
50 lots Buena Vista owns in a Happy Valley subdivision. Mr.
Pollock said that Sterling Savings was to blame on his commercial
project problems because it backed out of commitments to provide
more funding, states the report.
According to The Oregonian, Mr. Pollock said that he stopped
paying loans on his rentals because the rents didn't cover his
mortgage, and hopes to renegotiate those loans and resell his
subdivision lots. That plan was stalled when Sterling Savings
stopped the months of negotiations, the report says, citing Mr.
Pollock.
The Oregonian quoted Mr. Pollock as saying, "The only way to start
negotiations with the bank is if you're in default. I don't think
they know what to do. Do you take the home? Do you wait to see
if you get any of the (federal) bailout?"
Sterling Savings Bank, says the Oregonian, filed two lawsuits
against Mr. Pollock and his companies:
-- The first seeks to foreclose on homes and lots, mostly in
Happy Valley's Lincoln Heights subdivision; and
-- The second states that Mr. Pollock or his company had
defaulted on loans for 20 rental properties, all but two
in Happy Valley.
The Oregonian reports that a Clackamas County judge appointed Ted
Durant & Associates Inc. as receiver and directed it to collect
the rents from Pollock's rental homes. Court documents indicate
that Ted Durant accused Mr. Pollock and his company of demanding
that the tenants continue to pay rent, which Mr. Pollock denied.
The Oregonian relates that Mr. Pollock said that hasn't collected
any rent from the properties since the receiver took over.
Carlson Testing Inc. of Tigard filed a "small-claims" case against
Pollock Commercial in August 2008, according to The Oregonian.
The report states that these subcontractors filed filed liens for
unpaid bills:
-- Dallas Glass,
-- Cascade Fire Protection Co.,
-- Sowles Co.,
-- Portland Electrical Construction Inc., and
-- Western Partitions Inc.
Precision Construction Co. of Portland, the general contractor,
filed in September 2008 a $1.3 million lawsuit against Mr. Pollock
for unpaid bills, The Oregonian reports.
The Oregonian states that this month, lender Banner Bank sued Mr.
Pollock, asking the Clackamas County Circuit Court to appoint a
receiver to manage the project and claiming that Mr. Pollock had
defaulted on a $5 million construction loan when he failed to pay
his construction bills. Mr. Pollock didn't make his monthly
$31,600 payment since September, the report says. According to
the report, Mr. Pollock said that Banner Bank agreed to provide
another $2 million loan to finish the building but later changed
its mind.
According to The Oregonian, the homeowners' associations in Mr.
Pollock's projects are also asking payment for unpaid bills. The
Oregonian relates that Northwest Community Management Co., which
manages the homeowners' association, filed six liens against Buena
Vista seeking $4,900 in unpaid dues.
About Roger Pollock
Lake Oswego, Oregon-based developer, Roger Pollock --
http://www.rogerpollock.com/-- is the founder and owner of Buena
Vista Custom Homes.
SANDRA MONTANO: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Sandra S. Montano
aka Sandra Lynne Shere
1245 Vienna Way
Venice, CA 90291-4026
Bankruptcy Case No.: 08-29245
Chapter 11 Petition Date: November 12, 2008
Court: Central District Of California (Los Angeles)
Debtor's Counsel: Claudia L. Phillips, Esq.
celpmgp@aol.com
5699 Kanan Rd #425
Agoura Hills, CA 91301
Tel: (310) 597-3534
Fax: (818) 735-0139
Total Assets: $1,789,680
Total Debts: $792,762
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/califcb08-29245.pdf
SANTA FE 124: Case Summary & 10 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Santa Fe 124, LLC
2220 Village Walk Drive #3203
Henderson, NV 89052
Bankruptcy Case No.: 08-23354
Chapter 11 Petition Date: November 11, 2008
Court: District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Nancy L. Allf, Esq.
nancy_allf@gshllp.com
Gonzalez Saggio & Harlan, LLP
411 E. Bonneville, Ste. 100
Las Vegas, NV 89101
Tel: (702) 366-1866
Fax: (702) 366-1945
Estimated Assets: $10 million $50 million
Estimated Debts: $10 million $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Nevada State Bank property $10,456,000
PO Box 990
Las Vegas, NV 89125
First Management Capital LLC $115,234
190 E. Mesquite Blvd., St. H
Mesquite, NV 89027
Bam Capital LLC investor $120,000
2220 Village Walk Drive
#3203
Henderson, NV 89052
First Trustee Management LLC investor $100,000
SW Capital LLC investor $90,000
First Capital Services LLC investor $83,500
EMP Capital II LLC investor $69,000
PFG Residential LLC investor $6,500
Clark County Assessor unknown
Vegas Design contractor unknown
SIMMONS BEDDING: Expects Q3 10% Sales Drop; To Take $3.6M Charge
----------------------------------------------------------------
Larry Thomas at Furniture Today reports that Simmons Bedding
Company has delayed filing its third-quarter 2008 earnings.
According to Furniture Today, the firm's third quarter results was
scheduled to be released last Tuesday. Furniture Today relates
that for the third quarter, Simmons Bedding projected sales of
$273 million to $278 million -- about 10% to 13% lesser compared
to the same period last year.
The company didn't make a projection for net income, but said it
would include a $3.6 million bad debt charge stemming from the
recent Chapter 11 bankruptcy filing by Mattress Discounters, one
of its largest customers.
Furniture Today relates that Simmons Bedding said in October that
it probably breached one of its loan covenants. According to the
report, Simmons Bedding had said that it doesn't expect to be in
compliance with the maximum coverage ratio for its senior credit
facility -- consists of a $75 million revolving loan and a
$465 million term loan.
Simmons Bedding is currently in discussions with its senior
lenders with respect to a forbearance agreement related to the
senior credit facility in order to have more time to negotiate the
terms of an amendment which will include revised financial
covenants into 2010. As a result, Simmons Bedding will delay its
earnings release for the third quarter and nine months ended Sept.
27, 2008, which was previously scheduled for after the close of
business on Nov. 11, 2008.
About Simmons Company
Atlanta-based Simmons Company -- www.simmons.com -- through its
indirect subsidiary Simmons Bedding Company, is one of the world's
largest mattress manufacturers, manufacturing and marketing a
broad range of products including Beautyrest(R), Beautyrest
Black(R), Beautyrest Studio(TM), ComforPedic by Simmons(TM),
Natural Care(R), Beautyrest Beginnings(TM) and Deep Sleep(R).
Simmons Bedding Company operates 19 conventional bedding
manufacturing facilities and two juvenile bedding manufacturing
facilities across the United States, Canada and Puerto Rico.
Simmons also serves as a key supplier of beds to many of the
world's leading hotel groups and resort properties. Simmons is
committed to developing superior mattresses and promoting a higher
quality sleep for consumers around the world.
SPECTRUM BRANDS: Fertilizer Exit Won't Affect Fitch's Ratings
-------------------------------------------------------------
There is no rating implication to announcement that Spectrum
Brands will exit its fertilizer operations. Fitch Ratings rates
Spectrum Brands, Inc.:
-- Issuer default rating 'CCC';
-- $1 billion term loan B 'B/RR1';
-- $225 million ABL 'B/RR1';
-- EUR350 million term loan 'B/RR1';
-- $700 million 7.4% senior sub note, 'CCC-/RR5';
-- $2.9 million 8.5% senior sub note, 'CCC-/RR5';
-- $347 million 11.25% variable rate toggle senior sub note,
'CCC-/RR5'.
The Rating Outlook is Negative.
While revenue levels will decline, margins and profitability
should improve modestly as this category's profit contribution has
been either highly variable or marginal of late given the strong
increase in input costs and shipping costs. More importantly with
the exit, working capital requirements which peak in the January-
March quarter will decline markedly which is expected to provide
the company with more availability under its ABL than in the prior
year. In the near term, Spectrum should have enough liquidity to
operate its business and service its debt. Spectrum remains
focused on improving its capital structure.
Spectrum is a global branded consumer products company with
operations in seven product categories: consumer batteries; lawn
and garden; pet supplies; electric shaving and grooming; household
insect control; electric personal care products; and portable
lighting.
SPRINT NEXTEL: Offers Voluntary Buyout Packages to Employees
------------------------------------------------------------
Kerry E. Grace at The Wall Street Journal reports that Sprint
Nextel Corp. is offering voluntary buyout packages to some of its
almost 60,000 employees.
The buyouts have been offered to workers in areas like human
resources and corporate communications, that don't have direct
contact with clients, WSJ relates, citing a Sprint Nextel
spokesperson. The report quoted the spokesperson as saying,
"We're always evaluating our options and looking for ways to
reduce our labor costs."
According to WSJ, the spokesperson said that Sprint Nextel hasn't
made any announcements on whether it will make any involuntary job
cuts. The report says that Sprint Nextel said earlier this year
that part of its cost-saving measures is the laying off of about
4,000 workers. Sprint Nextel, states the report, had considered
several strategies to catch up with rivals AT&T and Verizon.
Sprint Nextel lost about 1.3 million subscribers in the third
quarter 2008, according to the report.
Sprint Nextel Corp. -- http://www.sprint.com/-- offers a
comprehensive range of wireless and wireline communications
services bringing the freedom of mobility to consumers, businesses
and government users. Sprint Nextel is widely recognized for
developing, engineering and deploying innovative technologies,
including two robust wireless networks serving about 54 million
customers at the end of the fourth quarter 2007; industry-leading
mobile data services; instant national and international walkie-
talkie capabilities; and a global Tier 1 Internet backbone.
* * *
The Troubled Company Reporter reported on Aug. 13, 2008, that DBRS
assigned the Sprint Nextel Corporation proposed issuance of
$3.0 billion of Cumulative Perpetual Convertible Preferred Shares
a rating of BB. The trend is negative.
STATION CASINOS: S&P Junks Corporate Credit Rating From 'B-'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Las Vegas-based Station Casinos Inc. to 'CCC' from 'B-'.
The issue-level ratings on the company's debt were also lowered by
two notches. At the same time, S&P removed the ratings from
CreditWatch, where S&P placed them with negative implications
Oct. 20, 2008. The rating outlook is negative.
In addition, S&P revised the recovery rating on Station's senior
unsecured debt to '4', indicating average (30% to 50%) recovery in
the event of a payment default, from '3'. The issue-level rating
on this debt was lowered to 'CCC' (at the same level as the 'CCC'
corporate credit rating on the company) from 'B-'.
"The ratings downgrade reflects S&P's assessment that Station's
ability to service its current capital structure over the
intermediate term will be challenged given S&P's expectation for
continued declines in the Las Vegas locals market," explained
Standard & Poor's credit analyst Ben Bubeck.
During the nine months ended Sept. 30, 2008, EBITDA declined
11.2%, and S&P expects that performance over the next few quarters
will track similarly. While S&P still expects some moderation of
declines in the second half of 2009, S&P project that full-year
2009 EBITDA will decline in the mid-single-digit percentage area
from 2008 levels.
Furthermore, the ratings downgrade reflects the likelihood of a
covenant violation in the current quarter. In S&P's previous
downgrade on Sept. 17, 2008, S&P indicated that the then proposed
amendment by the company would not allow Station to avoid a
covenant violation potentially as soon as March 31, 2009. Given
extremely weak credit measures, including consolidated EBITDA
interest coverage of just 1.2x as of Sept. 30, 2008, S&P is
skeptical that any amendment to the credit facility that does not
include a significant equity infusion will allow Station to meet
debt service requirements over the intermediate term. Also, an
amendment to the bank facility would likely include an increase in
pricing, which would further strain EBITDA coverage of interest.
S&P is also focusing on the mid-2010 expiration of the management
contract with the United Auburn Indian Community, which ontributes
a substantial portion of EBITDA, as S&P takes this rating action.
While Station has a pipeline of potential additional Native
American management contracts that could replace this source of
cash flow, the timing and ability to raise funds to complete these
projects is unclear.
S&P believes that with the operating environment likely to be very
difficult for the next few quarters, it is now less certain that
there are sufficient economic incentives in place such that the
owners would step in to cure a covenant default under the equity
cure provision in the credit facility or contribute an amount of
equity sufficient to allow Station to meet debt service
obligations over the intermediate term.
The 'CCC' corporate credit rating reflects Station's weak credit
metrics, limited liquidity, and S&P's expectation for continued
negative trends in net revenues and EBITDA over the next few
quarters. In addition, S&P's expectation for a near-term covenant
violation threatens the company's access to its revolving credit
facility. While Station maintains a leadership position in the
Las Vegas locals market and S&P holds a favorable long-term view
of the prospects for the market, these factors are not sufficient
to offset a capital structure unsuitable to weather the current
economic downturn.
STRUCTURED ASSET: Moody's Downgrades Ratings of 174 Tranches
------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 174
tranches from 21 subprime RMBS transactions issued by SAIL.
Additionally, one rating was confirmed after previously being on
review for possible further downgrade. The collateral backing
these transactions consists primarily of first-lien, fixed and
adjustable-rate, subprime residential mortgage loans.
These actions are a result of Moody's Sept. 18, 2008 announcement
that it had updated its loss projections on first-lien subprime
RMBS.
Complete rating actions are:
Issuer: Structured Asset Investment Loan Trust 2005-1
-- Cl. M1, Confirmed at Aa1
-- Cl. M2, Downgraded to A1 from Aa2
-- Cl. M3, Downgraded to Baa3 from Aa3
-- Cl. M4, Downgraded to B1 from Baa2
-- Cl. M5, Downgraded to Ca from Ba1
-- Cl. M6, Downgraded to C from B1
-- Cl. M7, Downgraded to C from B3
-- Cl. M8, Downgraded to C from Caa1
-- Cl. M9, Downgraded to C from Caa2
Issuer: Structured Asset Investment Loan Trust 2005-10
-- Cl. M1, Downgraded to Baa1 from Aa1
-- Cl. M2, Downgraded to Ba2 from A3
-- Cl. M3, Downgraded to Caa2 from Ba1
-- Cl. M4, Downgraded to C from B2
-- Cl. M5, Downgraded to C from Caa1
-- Cl. M6, Downgraded to C from Caa2
-- Cl. M7, Downgraded to C from Caa3
-- Cl. M8, Downgraded to C from Caa3
-- Cl. M9, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2005-11
-- Cl. A1, Downgraded to A1 from Aaa
-- Cl. A3, Downgraded to Aa2 from Aaa
-- Cl. A7, Downgraded to A2 from Aaa
-- Cl. M1, Downgraded to Caa2 from Baa3
-- Cl. M2, Downgraded to C from B2
-- Cl. M3, Downgraded to C from B3
-- Cl. M4, Downgraded to C from Caa2
-- Cl. M5, Downgraded to C from Caa3
-- Cl. M6, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2005-2
-- Cl. M2, Downgraded to Aa3 from Aa2
-- Cl. M3, Downgraded to Baa1 from Aa3
-- Cl. M4, Downgraded to Ba3 from Baa2
-- Cl. M5, Downgraded to Caa2 from Baa3
-- Cl. M6, Downgraded to C from Ba1
-- Cl. M7, Downgraded to C from B1
-- Cl. M8, Downgraded to C from B3
-- Cl. M9, Downgraded to C from Caa2
-- Cl. B, Downgraded to C from Caa3
Issuer: Structured Asset Investment Loan Trust 2005-3
-- Cl. M3, Downgraded to A2 from Aa3
-- Cl. M5, Downgraded to B2 from Ba1
-- Cl. M6, Downgraded to C from Ba3
-- Cl. M7, Downgraded to C from B3
-- Cl. M8, Downgraded to C from Caa1
-- Cl. M9, Downgraded to C from Caa2
Issuer: Structured Asset Investment Loan Trust 2005-4
-- Cl. M2, Downgraded to A1 from Aa2
-- Cl. M3, Downgraded to Baa1 from Aa3
-- Cl. M4, Downgraded to Ba2 from A1
-- Cl. M5, Downgraded to Caa1 from A2
-- Cl. M6, Downgraded to Caa3 from Baa1
-- Cl. M7, Downgraded to Ca from Baa3
-- Cl. M8, Downgraded to Ca from Ba1
-- Cl. M9, Downgraded to Ca from B3
Issuer: Structured Asset Investment Loan Trust 2005-5
-- Cl. M3, Downgraded to A1 from Aa3
-- Cl. M4, Downgraded to Baa1 from A1
-- Cl. M5, Downgraded to Ba1 from A3
-- Cl. M6, Downgraded to B2 from Baa2
-- Cl. M7, Downgraded to Ca from Ba1
-- Cl. M8, Downgraded to C from Ba3
-- Cl. M9, Downgraded to C from Caa3
-- Cl. B, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2005-6
-- Cl. M2, Downgraded to A2 from Aa2
-- Cl. M3, Downgraded to Baa2 from A2
-- Cl. M4, Downgraded to Ba2 from Baa2
-- Cl. M5, Downgraded to Caa2 from Baa3
-- Cl. M6, Downgraded to C from Ba3
-- Cl. M7, Downgraded to C from B3
-- Cl. M8, Downgraded to C from Caa1
Issuer: Structured Asset Investment Loan Trust 2005-7
-- Cl. M2, Downgraded to A2 from Aa2
-- Cl. M3, Downgraded to Baa2 from A2
-- Cl. M4, Downgraded to Ba3 from Baa3
-- Cl. M5, Downgraded to Caa3 from B2
-- Cl. M6, Downgraded to C from B3
-- Cl. M7, Downgraded to C from Caa1
-- Cl. M8, Downgraded to C from Caa2
-- Cl. M9, Downgraded to C from Caa3
Issuer: Structured Asset Investment Loan Trust 2005-8
-- Cl. M1, Downgraded to A2 from Aa2
-- Cl. M2, Downgraded to Ba1 from Baa2
-- Cl. M3, Downgraded to Caa2 from B2
-- Cl. M4, Downgraded to C from B3
-- Cl. M5, Downgraded to C from Caa2
-- Cl. M6, Downgraded to C from Caa3
-- Cl. M7, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2005-9
-- Cl. M1, Downgraded to A2 from Aa3
-- Cl. M2, Downgraded to Ba1 from Baa2
-- Cl. M3, Downgraded to Caa2 from B2
-- Cl. M4, Downgraded to C from B3
-- Cl. M5, Downgraded to C from Caa1
-- Cl. M6, Downgraded to C from Caa2
-- Cl. M7, Downgraded to C from Caa3
-- Cl. M8, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2005-HE1
-- Cl. M2, Downgraded to A3 from Aa2
-- Cl. M3, Downgraded to Baa3 from A1
-- Cl. M4, Downgraded to B3 from Baa3
-- Cl. M5, Downgraded to Ca from B2
-- Cl. M6, Downgraded to C from B3
-- Cl. M7, Downgraded to C from Caa2
-- Cl. M8, Downgraded to C from Caa3
-- Cl. M9, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2005-HE2
-- Cl. M2, Downgraded to A2 from Aa2
-- Cl. M3, Downgraded to Baa3 from A1
-- Cl. M4, Downgraded to B2 from Baa2
-- Cl. M5, Downgraded to Ca from Ba3
-- Cl. M6, Downgraded to C from B2
-- Cl. M7, Downgraded to C from Caa1
-- Cl. M8, Downgraded to C from Caa2
-- Cl. M9, Downgraded to C from Caa3
Issuer: Structured Asset Investment Loan Trust 2005-HE3
-- Cl. M2, Downgraded to Baa1 from Aa2
-- Cl. M3, Downgraded to B1 from Baa1
-- Cl. M4, Downgraded to Caa2 from Ba1
-- Cl. M5, Downgraded to C from B2
-- Cl. M6, Downgraded to C from B3
-- Cl. M7, Downgraded to C from Caa1
-- Cl. M8, Downgraded to C from Caa2
-- Cl. M9, Downgraded to C from Caa3
-- Cl. M10, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-1
-- Cl. A4, Downgraded to Baa1 from Aaa
-- Cl. M1, Downgraded to Ba3 from Aa1
-- Cl. M2, Downgraded to Ca from Baa1
-- Cl. M3, Downgraded to C from B1
-- Cl. M4, Downgraded to C from B3
-- Cl. M5, Downgraded to C from Caa2
-- Cl. M6, Downgraded to C from Caa3
-- Cl. M7, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-2
-- Cl. A3, Downgraded to A3 from Aaa
-- Cl. A4, Downgraded to B3 from Aaa
-- Cl. M1, Downgraded to C from Ba3
-- Cl. M2, Downgraded to C from B3
-- Cl. M3, Downgraded to C from Caa2
-- Cl. M4, Downgraded to C from Caa3
-- Cl. M5, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-3
-- Cl. A1, Downgraded to Ba2 from Aaa
-- Cl. A2, Downgraded to Baa1 from Aaa
-- Cl. A5, Downgraded to Ba1 from Aaa
-- Cl. A6, Downgraded to B1 from Aaa
-- Cl. M1, Downgraded to C from Baa1
-- Cl. M2, Downgraded to C from B1
-- Cl. M3, Downgraded to C from B2
-- Cl. M4, Downgraded to C from Caa1
-- Cl. M5, Downgraded to C from Caa2
-- Cl. M6, Downgraded to C from Caa3
-- Cl. M7, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-4
-- Cl. A1, Downgraded to B1 from Aaa
-- Cl. A2, Downgraded to Baa1 from Aaa
-- Cl. A4, Downgraded to Ba2 from Aaa
-- Cl. A5, Downgraded to B3 from Aa2
-- Cl. M1, Downgraded to C from B1
-- Cl. M2, Downgraded to C from B3
-- Cl. M3, Downgraded to C from Caa1
-- Cl. M4, Downgraded to C from Caa2
-- Cl. M5, Downgraded to C from Caa3
-- Cl. M6, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-BNC1
-- Cl. A1, Downgraded to Baa2 from Aaa
-- Cl. A4, Downgraded to Baa2 from Aaa
-- Cl. A5, Downgraded to B3 from Aaa
-- Cl. M1, Downgraded to C from Ba3
-- Cl. M2, Downgraded to C from B2
-- Cl. M3, Downgraded to C from Caa1
-- Cl. M4, Downgraded to C from Caa3
-- Cl. M5, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-BNC2
-- Cl. A1, Downgraded to Ba2 from Aa3
-- Cl. A2, Downgraded to Ba2 from Aa3
-- Cl. A5, Downgraded to Ba2 from Aaa
-- Cl. A6, Downgraded to B3 from A3
-- Cl. M1, Downgraded to C from B3
-- Cl. M2, Downgraded to C from Caa2
-- Cl. M3, Downgraded to C from Caa3
-- Cl. M4, Downgraded to C from Ca
Issuer: Structured Asset Investment Loan Trust 2006-BNC3
-- Cl. A1, Downgraded to Ba2 from Aa2
-- Cl. A3, Downgraded to Ba1 from Aaa
-- Cl. A4, Downgraded to B2 from Aa3
-- Cl. M1, Downgraded to C from B1
-- Cl. M2, Downgraded to C from B2
-- Cl. M3, Downgraded to C from B3
-- Cl. M4, Downgraded to C from Caa2
-- Cl. M5, Downgraded to C from Caa3
-- Cl. M6, Downgraded to C from Caa3
-- Cl. M7, Downgraded to C from Ca
STRUCTURED ASSET: S&P Downgrades Ratings on Two Classes to 'CC'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A and B units from the $79.795 million Structured Asset
Trust Unit Repackaging Tribune Co. Debenture Backed Series 2006-1
to 'CC' from 'CCC'.
The downgrades reflect the Nov. 11, 2008, lowering of the rating
on the underlying securities, the $79.795 million 7.25% debentures
due Nov. 15, 2096, issued by Tribune Co., to 'CC' from 'CCC'.
Structured Asset Trust Unit Repackaging Tribune Co. Debenture
Backed Series 2006-1 is a pass-through transaction, and the
ratings on the certificates issued by the trust are based solely
on the rating assigned to the underlying securities, the
$79.795 million 7.25% debentures due Nov. 15, 2096, issued by
Tribune Co.
SYNERGY HEMATOLOGY: Case Summary & 15 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Synergy Hematology - Oncology Medical Associates, Inc.
5901 West Olympic Boulevard, Suite 420
Los Angeles, CA 90036
Bankruptcy Case No.: 08-29315
Chapter 11 Petition Date: November 12, 2008
Type of Business: The Debtor operates medical office.
Court: Central District Of California (Los Angeles)
Judge: Samuel L. Bufford
Debtor's Counsel: Thomas J. Polis, Esq.
tom@polis-law.com
Polis & Associates, APLC
19800 MacArthur Blvd., Ste. 1000
Irvine, CA 92612-2433
Tel: (949) 862-0040
Fax: (949) 862-0041
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/califcb08-29315.pdf
TALCOTT NOTCH: S&P Withdraws Note Ratings on Complete Paydown
-------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on the
class A-3L, A-3B, and A-4 notes issued by Talcott Notch CBO I
Ltd., an arbitrage high-yield collateralized bond obligation
transaction managed by General Re-New England Asset Management
Inc. The rating on class A-4 was previously on CreditWatch
positive.
The rating withdrawals follow the complete paydown of the class
A-3L notes on the April 30, 2008, payment date and the complete
paydowns of the class A-3B and A-4 notes on the Oct. 30, 2008,
payment date.
Ratings Withdrawn
* Talcott Notch CBO I Ltd.
Rating Balance (million)
------ -----------------
Class To From Current Original
----- -- ---- ------- --------
A-3L NR AAA 0.000 93.000
A-3B NR AAA 0.000 15.635
A-4 NR BB-/Watch Pos 0.000 20.000
NR - Not rated.
TOURMALINE CDO: Intention to Liquidate Cues S&P's Rating Cuts
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on two
classes of notes issued by Tourmaline CDO II Ltd. The ratings
remain on CreditWatch with negative implications.
The downgrades follow notification from the trustee of the
transaction that the controlling noteholders intend to liquidate
the collateral and terminate the deal.
The deal experienced an event of default on March 28, 2008, due to
the failure of an overcollateralization-based EOD trigger.
Tourmaline CDO II Ltd. is a hybrid collateralized debt obligation
of asset-backed securities transaction collateralized by mezzanine
residential mortgage-backed securities and other structured
finance assets.
Ratings Lowered and Remaining on CreditWatch Negative
Tourmaline CDO II Ltd.
Rating
------
Class To From
----- -- ----
A B/Watch Neg BBB-/Watch Neg
B CCC-/Watch Neg B/Watch Neg
Other Outstanding Ratings
Tourmaline CDO II Ltd.
Class Rating
----- ------
C CC
D CC
E CC
TOUSA INC: Court Postpones Nov. 12 Disclosure Statement Hearing
---------------------------------------------------------------
Judge John K. Olson of the United States Bankruptcy Court for the
Southern District of Florida postponed the hearing to consider the
adequacy of TOUSA Inc. and its debtor-affiliates' Amended
Disclosure Statement explaining the proposed Joint Plan of
Reorganization to a date yet to be determined.
The Court originally scheduled the Disclosure Statement Hearing
for Nov. 12, 2008.
The Official Committee of Unsecured Creditors and several
insurance companies, including Wilmington Trust Company, Liberty
Mutual Insurance Company and Travelers Casualty and Surety Company
of America, have filed objections to the Amended Disclosure
Statement.
Since then, additional parties have also made known to the Court
their objections to the Disclosure Statement. Among those
parties are the U.S. Trustee, Citicorp North America, Inc., and
several "development districts."
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008.
(TOUSA Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TOUSA INC: Addresses Objections to Disclosure Statement
-------------------------------------------------------
Parties to TOUSA Inc. and its debtor-affiliates' Chapter 11 cases
filed with the United States Bankruptcy Court for the Southern
District of Florida their objections to the Debtors' Amended
Disclosure Statement explaining the Amended Joint Plan of
Reorganization.
Trustee's Objection
Donald F. Walton, the U.S. Trustee for Region 21, asserts that
the Debtors' Amended Disclosure Statement failed to, among others:
-- identify the Litigation Trustee, Litigation Trust
Committee, and Plan Administrator and provide a summary of
each qualification as well the process used to select each
person;
-- state that the U.S. Trustee is not responsible for
oversight of the Plan Administrator or Litigation Trust but
has standing in removal of the Plan Administrator and
Litigation Trustee, modification of the Amended Plan, and
conversion of the cases;
-- clarify the compensation arrangements for the Plan
Administrator, Litigation Trustee and Litigation Trust
Committee that should be subject to court review and
objections;
-- set forth that administrative bar date should be subject to
a separate order or confirmation order as well as separate
orders for the lease rejections and rejection damages bar
date;
-- add information on outstanding fees owed, projected
administrative claims, amounts of funds in each Debtor case
and projected recoveries;
-- provide specifications on (i) intercompany claims, as to
their treatment and whether they are subordinated to
holders of general unsecured claims; and (ii) deficiency
claims, which should not be entitled to treatment different
from general unsecured claims, voting procedures and
whether each debtor is responsible for payment of the
deficiency claims;
-- specify the processes on the Debtors' sales and continued
construction activities;
-- clarify that any reference to Section 1146 of the
Bankruptcy Code should be limited to transfers made under
the Plan and not for ordinary course or other land/asset
sales; and
-- cite any basis in providing for interest and expenses for
the indenture trustee when its claims are general unsecured
claims and not entitled to a treatment different from
general unsecured claims.
The U.S. Trustee also contends that the exculpation, release, and
injunction provisions proposed under the Plan should be taken out
as there is no basis for that protection for the Debtors, the
Debtors' professionals, the Official Committee of Unsecured
Creditors, the current board of the Debtors, and the Debtors'
secured lenders. "The releases are not an integral part of the
plan and are not essential to its implementation," the U.S.
Trustee maintains.
Moreover, the U.S. Trustee points out that the Debtors'
circumstances do not warrant third party releases, especially
taking into account that:
-- There is no allegation of an identity of interest between
the Debtors and third parties, such that a lawsuit against
any of the release parties is, in essence, a lawsuit
against the Debtors or will deplete the Debtors' estates.
-- The release parties will have all been compensated in the
Debtors' cases, and thus the services performed by those
parties do not constitute a contribution of "assets" to the
reorganization.
-- Without the third party releases, the Plan will still
proceed and the litigation will continue. The releases
will have no positive impact on the likelihood of success
of the Debtors' Plan.
-- There is no basis to extend protection to professional for
postpetition actions or omissions beyond any existing
applicable standard of liability.
Moreover, the U.S. Trustee suggests that the ballot process be
modified to allow for ballots to be accepted by the Clerk of the
Court as well as the Noticing Agent. All deadlines and dates
should take into accounts delays caused by the period the ballot
packages are being mailed, the U.S. Trustee adds.
Based on these reasons, the U.S. Trustee objects to the Amended
Disclosure Statement to the extent necessary changes are not made
by the Debtors to correct deficiencies it pointed out.
Citicorp North America, Inc. Objections
Citicorp North America, Inc., as administrative agent to the
Debtors' First Lien Credit Agreements, asserts that as the
Amended Joint Plan of Reorganization can not be confirmed, the
related Amended Disclosure Statement must also be denied.
On Citicorp's behalf, Allan E. Wulbern, Esq., at Smith Hulsey &
Busey, in Jacksonville, Florida, contends that the Disclosure
Statement:
(1) fails to disclose Citicorp's objections to the terms of
the New Notes, specifically that the terms of the New
Notes are unacceptable as they would not result in any
recovery to the First Lien Lenders;
(2) fails to disclose any justification or bases for unequal
treatment between the First and Second Lien Lenders,
whereby the Plan seeks to afford provisionally allowed
claims of Second Lien Lenders the same treatment to
provisionally allowed claims of First Lien Parties;
(3) fails to disclose the Debtors' inability to refinance the
New Notes until the conclusion of the Litigation Trust
causes of action;
(4) fails to disclose the potential impact of the July 2007
Intercreditor Agreement among the First Lien Lenders and
the Second Lien Lenders, by which the extent and nature of
the First Lien Parties' rights under it could have a
significant impact on the viability and confirmability of
the Amended Plan and the Second Lien Lenders' potential
liability under the Intercreditor Agreement; and
(5) does not adequately describe the Prepetition Secured
Lenders defenses to the Litigation Trust causes of action.
Citicorp is concerned that the Debtors did not attempt to
identify an applicable market rate before setting the terms of
the New Notes. "If they had done such an analysis, they would
have recognized what the rest of the financial world knows,
namely that the secured financing market is currently in
unprecedented turmoil and is not likely to stabilize anytime
soon," he says. "As such, there may be no general market rate
which would apply to securities such as the New Notes."
Even a review of the Debtors' financial condition upon emergence
shows that the appropriate interest rate to provide a full
recovery to the First Lien Lenders is considerably higher than
the "LIBOR plus 6.5 percent" proposed by the Debtors in the Plan,
Mr. Wulbern argues. Among others, he notes that the probability
of failure of the Plan is significant simply because New TOUSA is
emerging greatly over-levered and with unidentified management.
Citicorp also asserts that the Plan's proposed disgorgement
procedures with respect to postpetition transfers are untenable
and inequitable. The procedures improperly require the transfer
to the Litigation Trust of any payments or other consideration
received by the First Lien Lenders that are determined to be
avoidable on account of such an action, Mr. Wulbern notes.
Citicorp and the First Lien Lenders inform the Court that they
expect to be involved in the selection of the board of New TOUSA
as they will be future primary stakeholders of the Debtors upon
their emergence from bankruptcy.
Severala Development Districts'
In separate filings, several development districts complain that
they simply cannot tell from a reading of the Disclosure
Statement as to how exactly the Debtors' Amended Joint Plan of
Reorganization is to treat or classify their claims.
The Development Districts are:
* The Hammocks Community Development District
* Live Oak No. 1 Community Development District
* Live Oak No. 2 Community Development District
* Islands at Doral III Community Development District
* Islands at Doral Townhomes Community Development District
* Monterra Community Development District
* Waterford Estates Community Development District
The Development Districts were each created and exist pursuant to
the Florida Statutes. They are units of local government in the
state of Florida.
The Development Districts filed separate proofs of claim in the
Debtors' cases asserting secured claims.
Community Development Districts are utilized by developers of
large communities, like the Debtors, as a financing tool to fund
a significant part of the capital infrastructure costs with tax
exempt bond proceeds. CDDs frequently levy several types of
special assessments against the property located within the CDD,
in particular debt assessments and operations and maintenance
special assessments. CDD special assessments are a lien on the
property co-equal in priority with lien of ad valorem taxes.
Accordingly, the Development Districts seek a modification of the
Disclosure Statement to address their concerns.
The Development Districts assert that the Debtors' obligations
relating to the payment of special assessments are senior in
priority to the claims designated as first lien claims.
Tousa's Response
In a November 12 filing with the United States Bankruptcy Court
for the Southern District of Florida, TOUSA, Inc., and its debtor
subsidiaries sought an adjournment of the Disclosure Statement
hearing for a brief period in order to allow parties-in-interest
to negotiate regarding a potential alternative plan of
reorganization that would involve a third party investment.
Accordingly, Judge John K. Olson has adjourned the Disclosure
Statement hearing to a date yet to be determined.
In the meantime, the Debtors submitted to the Court a
comprehensive reply to address the objections lodged opposing the
Disclosure Statement.
Among the parties that filed their opposition to the Disclosure
Statement hearing are the Official Committee of Unsecured
Creditors, the U.S. Trustee, Citicorp North America, Inc.,
Wilmington Trust Company, several insurance companies and certain
development districts.
Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami,
Florida, relates that the Objections are generally on (i) the
Debtors' proposed voting and solicitation procedures; (ii) the
adequacy of the Disclosure Statement; and (iii) raising
substantive issues concerning confirmation of the Plan.
According to Mr. Singerman, the Debtors have individually
identified each of the points raised in the Objections and have
either made a change to the Disclosure Statement or have included
an explanation as to why no change is needed.
Mr. Singerman maintains that the Disclosure Statement provides
200 pages of detailed description of the Debtors' businesses, the
history of these Chapter 11 cases, the Plan and alternatives to
the Plan -- all of which together amply constitutes "adequate
information" that will give holders of impaired claims the
necessary information to make an informed judgment about the
Plan.
However, with respect to objections that raise confirmation
issues, the Debtors assert that the Court need not address
confirmation issues at this time.
Nevertheless, Mr. Singerman contends that the Debtors' Plan is
neither "patently" nor "facially" unconfirmable.
Mr. Singerman says that provisional allowance does not render the
Plan facially or patently unconfirmable. The Creditors Committee
has asserted that any payment to the Prepetition Lenders would
violate the Bankruptcy Code. Mr. Singerman notes that the Court
has rejected this argument on two occasions, at the first day
hearings and the cash collateral motion hearing.
Mr. Singerman adds that the Committee has failed to provide any
evidence whatsoever to support a finding that the Plan was
proposed in anything other than good faith.
A summary of the Debtors' position as to the various Disclosure
Statement objection is available for free at:
http://ResearchArchives.com/t/s?34e1
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008.
(TOUSA Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TOUSA INC: Treatment of Claims under Latest Plan
------------------------------------------------
Pursuant to the Second Amended Disclosure Statement and Joint Plan
of Reorganization, TOUSA, Inc., and its debtor subsidiaries
amended the aggregate claim amount of these classes of claims
asserted against TOUSA, Inc., and the Subsidiary Debtors:
Claim Claim Amended
Debtor Class Designation Aggregate Amount
------ ----- ----------- ----------------
TOUSA, Inc. TOI-3 Other Secured $7,724,529
Claims
TOI-4 Other Priority 273,001
Claims
TOI-5B General Unsecured 1,359,670,275
Claims
Subsidiary
Debtors 3 Other Secured 45,883,434
Claims
4 Other Priority 1,747,613
Claims
5B General Unsecured 433,602,401
Claims
The Amended Plan also provides for new claim classifications,
namely Class TOI 6 Convenience Claims, TOI 7 Claims Subordinated
under Section 510(b) of the Bankruptcy Code, and Class 8 Equity
Interests.
Pursuant to the Amended Plan, Convenience Claims will be paid 25%
of the Allowed Claim amount and holders of those claims are
entitled to vote under the Amended Plan. Class 7 Claim holders
however are not entitled to distribution under the Amended Plan
and are deemed to have rejected the Amended Plan. Class 8 Equity
Claims are claims previously classified under Class 6.
Moreover, Beacon Hill at Mountain's Edge, LLC, has three new
claims classification:
* Beacon Hill Class 1A - First Lien Revolver Claims
* Beacon Hill Class 1B - First Lien Term Loan Claims
* Beacon Hill Class 2 - Second Lien Claims
Beacon Hill Class 1A Claim holders are impaired and entitled to
vote. Holders of Class 1A Claims will be paid in full of Allowed
Claims or afforded other treatment as deemed applicable. Beacon
Hill Class 1B holders are impaired and entitled to vote to the
Amended Plan. Class 1B Claim Holders will either receive payment
in full of Allowed Claims or afforded other treatment as deemed
applicable. Beacon Hill Class 2 Claim holders are impaired and
are entitled to vote under the Amended Plan. Holders of Beacon
Hill Class 2 Claims will be paid in full according to the Allowed
Claim amount or other treatment.
In line with this modification, Beacon Hill Class 1 will be
deemed as Class 3 Other Secured Claims. In the same way, Beacon
Hill Class 2 will be Class 4 Other Priority Claims and Beacon
Hill Class 3 will be changed to Class 5 General Unsecured Claims.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008.
(TOUSA Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
TOUSA INC: Files 2nd Amended Plan of Reorganization and DS
----------------------------------------------------------
TOUSA, Inc., and its debtor subsidiaries delivered to the the
United States Bankruptcy Court for the Southern District of
Florida a Second Amended Plan of Reorganization and Disclosure
Statement dated Nov. 12, 2008.
Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami,
Florida, relates that among other things, amendments included on
the Nov. 12 Plan and Disclosure Statement pertains to disclosures
on:
(1) TOUSA's entry into a First Lien Revolving Credit Agreement
on March 6, 2006, for credit of up to $800 million. The
First Lien Debt amended on July 31, 2007 to reduce fund
availability to $700 million;
(2) the indemnification obligations with respect to directors
and officers and insurance relevant to certain litigation
and Plan releases;
(3) the review and analysis of intercompany claims;
(4) interests in the Litigation Trust;
(5) the disgorgement, cancellation or dilution of certain
interests in non-cash property for distribution under the
Amended Plan;
(6) a modification of the claim classification;
(7) clarifications on "book value;"
(8) the post-confirmation role of the U.S Trustee;
(9) transferability and evidence of the Litigation Trusts
Interests to be issued under the Amended Plan; and
(10) statements of creditors constituencies concerning the
Plan.
D & O and Insurance
Indemnification Obligations
The Second Amended Plan contains provisions relating to the D&O
Liability Insurance Policies, which aggregate approximately $110
million. The Amended Plan provides that none of the Debtors,
their estates , the Reorganized Debtors or the Litigation Trust
will pursue any claim or action against any of the current or
former representative to the extent those claims exceed the
available insurance proceeds under the D&O Liability Insurance
Policies.
Intercompany Claims
In the context of preparing to respond to discovery requests in
the Creditors Committee Action, the TOUSA and Zolfo Cooper have
engaged in an analysis of intercompany claims and cash flow
transactions among TOUSA and the Subsidiary Debtors.
A list of the TOUSA Intercompany Claims can be accessed for free
at http://ResearchArchives.com/t/s?34e0
Interests in the Litigation Trust
The Plan defines "Litigation Trust Interests" as beneficial
interests in the Litigation Trust that will entitle the holder to
receive, on a pro rata basis, its Litigation Trust Recovery
Proceeds.
The Litigation Trust Interests will be issued in 37 series
corresponding to the 37 Subsidiary Debtors and those series will
have subseries: (i) Senior Note Claims -- subseries A, (ii)
General Unsecured Claims -- subseries B, (iii) Subordinated Note
Claims -- subseries C; and (iv) PIK Note Claims -- subseries D.
The Official Committee of Unsecured Creditors will appoint the
Litigation Trustee. If the Committee fails to give to the
Debtors the name of the Litigation Trustee at least five days
before the filing of the Plan Supplement, the TOUSA will appoint
the Litigation Trustee. In the same way, TOUSA will appoint
members of the Litigation Trust should the Committee fail to
submit names of the members five days before the filing of the
Plan Supplement.
Disgorgement and Dilution of Interests
in Non-Cash Property for Distribution
The First Lien Lenders have indicated that without successful
negotiations, they intend to oppose the disgorgement with respect
to the New Secured Notes and will ask the Bankruptcy to
allow TOUSA to make all interest payments and pay other amounts
owing to the First Lien Lenders in cash as due under the New
Revolver Note and the New First Lien Note. TOUSA reserves the
right to revise the treatment of the First Lien Lenders under the
Amended Plan to make changes as required by the 's
determination or by a consensual resolution to those objections.
The Amended Plan provides that in the event the Litigation
Trustee prevails by Final Order in the Committee Action against
the Bank Lenders, First Lien Revolver Claims, First Lien Term
Loan Claims and Second Lien Claims, the New First Revolver Note,
New First Lien Note, New Second Lien PIK Notes and the New TOUSA
Stock will be subject to disgorgement, cancellation or dilution.
Modification to Claims Classification
The Amended Plan also adds new claim classes -- Class TOI 6
convenience claims; Class TOI 7 claims subordinated under Section
510(b) of the Bankruptcy Code; and Class 8 Equity Claims.
Convenience Claims are any prepetition unsecured claims against
the Debtors that would be a General Unsecured Claim and either
allowed for $2,500 or less, or greater than $2,500 but is subject
to holder's election to reduce the allowed amount to $2,500 for
purpose of rendering the claim a Convenience Claim.
Class TOI 7 consists of all claims arising under Section 510(b),
which provides for the enforcement of a subordination agreement
to the extent that agreement is enforceable under applicable non-
bankruptcy law. Holders of Class TOI 7 Claims will not receive
any distribution and is deemed impaired with no voting rights
under the Amended Plan and is deemed to have rejected the Plan.
Moreover, Beacon Hill at Mountain's Edge, LLC, has these new
claim classifications -- Beacon Hill Class 1A First Lien Revolver
Claims, Beacon Hill Class 1B First Lien Term Loan Claims, and
Beacon Hill Class 2 Second Lien Claims.
Clarification on Book Value
The Amended Plan provides that the New Revolver Notes, First Lien
Notes, Second Lien PIK Notes and the New TOUSA Stock will be
allocated among Subsidiary Debtors so that each Subsidiary Debtor
receives a percentage of the New TOUSA Stock equal to the ratio
of the book value of the TOUSA's assets to the book value of all
of the assets of the Subsidiary Debtors.
The Committee has asserted that to the extent the
determines that book value is an appropriate metric for
allocation of the New Notes and the New TOUSA Stock, TOUSA must
use book values as of December 31, 2008 or other date that will
accurately reflect TOUSA's pre-Effective Date write-downs and
provide more appropriate allocation of value among the Subsidiary
Debtors.
TOUSA believes that the calculated Book Value is in the fact an
accurate proxy for determining relative value among the
Subsidiary Debtors.
A full-text copy of TOUSA's Book Valuation is available for free
at http://ResearchArchives.com/t/s?34df
The Amended Plan also contemplates that the Second Lien Lenders
will be provided 100% of the New TOUSA Stock and the right to
select all of the members of the New TOUSA board.
Post-Confirmation Role of the U.S. Trustee
The Amended Plan clarifies that the United States Trustee will
not be responsible for oversight of the Litigation Trust, the
TOI Plan Administrator, or any applicable Plan Agent after the
Confirmation Date. The U.S. Trustee will, however, maintain
standing to, among other things, seek removal of the Litigation
Trustee, the TOI Plan Administrator, any applicable Plan Agent,
modification of the Plan or conversion.
TOUSA also notes that it incorporated the assertions found in the
objections lodged by Citicorp. North America, Inc., as
administrative agent to Prepetition Secured Lenders, and the
Official Committee of Unsecured Creditors.
A blacklined copy of TOUSA's Second Amended Plan is available for
free at:
http://ResearchArchives.com/t/s?34dd
A blacklined copy of TOUSA's Second Amended Disclosure Statement
is available for free at:
http://ResearchArchives.com/t/s?34de
TOUSA also appended exhibits on its claims summary, financial
projections and term loan sheets, full-text copies of which are
available for free at:
http://ResearchArchives.com/t/s?34dc
http://ResearchArchives.com/t/s?34db
http://ResearchArchives.com/t/s?34da
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
TOUSA's Exclusive Plan Filing Period expires Oct. 25, 2008.
(TOUSA Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
UNITED GUARANTY: S&P Downgrades Counterparty Credit Rating to 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
and financial strength ratings on United Guaranty Residential
Insurance Co. of North Carolina to 'B' from 'BBB+'. At the same
time, Standard & Poor's withdrew its ratings on UGRIC-NC at the
company's request. S&P had placed the ratings on CreditWatch
with negative implications on Sept. 12 based on S&P's concerns
that additional market value losses in mortgage-related assets
could strain the resources of American International Group Inc.,
UGRIC-NC's ultimate parent. Subsequently, S&P revised the
CreditWatch status of the ratings to developing on Sept. 17 and
then back to negative on Oct. 13. The ratings on AIG and United
Guaranty Residential Insurance Co., a subsidiary that provides
default protection for first-lien mortgages, were not affected by
rating actions.
S&P's rating assumes AIG will contribute $450 million in capital
to UGRIC-NC very soon. AIG has received all approvals and
confirmed its commitment to contribute $450 million to UGRIC-NC.
If UGRIC-NC receives a capital contribution that is significantly
less than $450 million, S&P probably would have lowered the
ratings on UGRIC-NC by multiple notches to below 'B', if S&P still
had rated the company.
The ratings on UGRIC-NC were based on the stand-alone rating, with
one full category (three notches) of support for an explicit
support agreement from AIG. "The stand-alone rating reflected
UGRIC-NC's inadequate stand-alone capitalization, poor operating
performance, and the uncertainty related to the ultimate losses
from the insured loan portfolio," said Standard & Poor's credit
analyst James Brender. "These negative factors were offset
partially by UGRIC-NC's conservative investment portfolio."
VERASUN ENERGY: Court to Consider Access to DIP Funding on Dec. 2
-----------------------------------------------------------------
Judge Brendan Linehan Shannon of the United States Bankruptcy
Court for the District of Delaware will convene a hearing on
Dec. 2, 2008, at 10:00 a.m., to consider final approval of the
VeraSun Energy Corporation and its debtor-affiliates' request to
access debtor-in-possession loans from several lenders.
Objections are due Nov. 21.
Objections must be served to:
* counsel to the Debtors
Attn: Mark S. Chehi, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square, P.O. Box 636
Wilmington, Delaware 19899-0636
Attn: Patrick J. Nash, Jr., Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive, Chicago, Illinois 60606
* counsel to any Statutory Committee
* counsel to AgStar Financial Services, PCA
Attn: David B. Stratton, Esq.
Pepper Hamilton
1313 Market Street, P.O. Box 1709
Hercules Plaza, Suite 5100
Wilmington, Delaware 19899-1709
Attn: Phillip Bohl, Esq.
Gray Plant Mooty, 80 South 8th Street
500 IDS Center
Minneapolis, Minnesota 55402
* counsel to the UBS AG Stamford Branch
Attn: Richard W. Riley, Esq.
Duane Morris LLP
Suite 1200, 1100 North Market Street
Wilmington, Delaware 19802-1246
Attn: Brian I. Swett, Esq.
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
* counsel to the Secured Noteholders
Attn: Neil Glassman, Esq.
Bayard PA
222 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attn: George Davis, Esq.
Cadwalader Wickersham & Taft LLP
One World Financial Center
New York, New York 10281;
* counsel to West LB
Attn: JoelWaite, Esq.
Young Conaway Stargatt & Taylor LLP
The Brandywine Building, 100 West Street, 17th Floor
Wilmington, Delaware 19801
Attn: Howard Seife, Esq.
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
* counsel to Dougherty
Attn: Bonnie Glanz Fatell, Esq.
Blank Rome LLP
1201 Market Street, Suite 800
Wilmington, Delaware 19801
Attn: Steven W. Meyer, Esq.
Oppenheimer, Wolff & Donnelly LLP
3300 Plaza VII, 24 South Seventh Street
Minneapolis, Minnesota 55402
* counsel to First Bank & Trust
Attn: C. Kevin Kobbe, Esq.
DLA Piper
6225 Smith Avenue
Baltimore, Maryland, 21209-3600
* Office of the United States Trustee
Attn: Mark Kenney, Esq.
J. Caleb Boggs Federal Bldg.
844 North King Street, Room 2207, Lockbox 35
Wilmington, DE 19801
The $190,000,000 DIP Loans for the VSE Debtors provided by certain
holders of the 9-7/8% Senior Secured Notes due 2012 will mature on
the earliest of (i) Nov. 30, 2009, (ii) Nov. 5, 2009 if the final
order approving the VSE Loans has not been entered on or before
this date, (iii) confirmation by the Court of a plan of
reorganization, or (iv) the acceleration of the VSE Loans or the
termination of the VSE Lenders' commitments in accordance with the
final loan documentation.
The commitment of the VSE Lenders to provide VSE Loans is subject
to a number of conditions, including completion of final loan
documentation satisfactory in form and substance to the VSE
Lenders and the administrative agent for the VSE Lenders, and
final approval by the Court, on or before November 17, 2008.
Failure to meet the condition will constitute an event of default
and will result in the VSE Loans becoming immediately due and
payable. VeraSun Energy Corporation said in a filing with the
Securities and Exchange Commission that there can be no assurance
that it will be able to obtain financing, other than under the
Interim Facility, or retain the financing under the Interim
Facility on the terms proposed in the Bondholder Commitment
Letter or at all.
Subject to a $1,000,000 professional fee carve-out, the VSE Loans
will be secured by a first priority, priming security interest on
the property, plant and equipment of the VSE Obligors and a
junior security interest on the accounts receivable and inventory
of the VSE Obligors -- junior to the security interests of the
lenders under VeraSun's $125,000,000 revolving credit facility
with UBS Securities LLC, UBS AG, Stamford Branch, and UBS Loan
Finance LLC.
The $25,000,000 DIP Loans for certain VSE Debtors to be provided
by AgStar Financial Services, PCA, will mature on November 3,
2009. The Interim Facility will mature on the earlier of the
entry of a final order of the Court approving the final loan
documentation or Dec. 10, 2008.
About VeraSun Energy Corporation
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -
- http://www.verasun.comor http://www.VE85.com/-- is a producer
and marketer of ethanol and distillers grains. Founded in 2001,
the company has a fleet of 16 production facilities in eight
states, with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
Verasun Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VERASUN ENERGY: Jay D. Debertin Resigns as Member of the Board
--------------------------------------------------------------
VeraSun Energy Corporation disclosed with the Securities and
Exchange Commission that Jay D. Debertin resigned effective
Nov. 6, 2008, as a member of board of directors.
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -
- http://www.verasun.comor http://www.VE85.com/-- is a producer
and marketer of ethanol and distillers grains. Founded in 2001,
the company has a fleet of 16 production facilities in eight
states, with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
Verasun Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VERASUN ENERGY: Section 341(a) Meeting Slated for December 2
------------------------------------------------------------
Roberta A. DeAngelis, Acting United States Trustee for Region 3,
will convene a meeting of creditors of VeraSun Energy Corporation
and its 24 affiliates on Dec. 2, 2008, at 4:00 p.m., at Room 2112,
J. Caleb Boggs Federal Building, 2nd Floor, 844 King Street, in
Wilmington, Delaware.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in the Debtor's bankruptcy cases.
Attendance by the Debtor's creditors at the meeting is welcome,
but not required. The Sec. 341(a) meeting offers the creditors a
one-time opportunity to examine the Debtor's representative under
oath about the Debtor's financial affairs and operations that
would be of interest to the general body of creditors.
About VeraSun Energy Corporation
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -
- http://www.verasun.comor http://www.VE85.com/-- is a producer
and marketer of ethanol and distillers grains. Founded in 2001,
the company has a fleet of 16 production facilities in eight
states, with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No.: 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
Verasun Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VINEYARD CHRISTIAN: Obtains Interim Okay to Use Cash Collateral
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
has granted Vineyard Christian Fellowship of Malibu permission, on
an interim basis, pending a final hearing, to use the pre-petition
lenders' Cash Collateral, to fund its post-petition operations, in
accordance with a budget.
The Court ordered that the Debtor shall deposit and hold all Cash
Collateral net of operating and case expenditures in a segregated
Cash Collateral Account, separate from any other debtor-in-
possession account into which all monies not constituting Cash
Collateral will be deposited.
Final Hearing, which was commenced on Nov. 4, 2008, is continued
to Nov. 18, 2008.
The Debtor told the Court that it should not be required to
provide any other form of adequate protection because the Secured
Creditor's overall collateral value will not diminish by its use
of the Cash Collateral. The Debtor contends that its use of Cash
Collateral to maintain and operate the multi-purpose office
building and recording studio facility will allow the Debtor to
generate sufficient net operating income and preserve and improve
the Property's value as a whole.
Pre-Petition Obligations
Pre-Petition Lenders Principal Facility
-------------------- --------- ----------
Marshall Investments $12,570,000 Construction-Term Loan
Corp. (disputed in
part)
Westminster Financial $500,000 Home Equity Line of
Credit
Moel Lenders $1,200,000 Promissory Note
Juergen Schoellkopf $300,000 Promissory Note
The Debtor's pre-petition lenders assert security interests in the
Debtor's real property in Malibu, California, the facility, and
certain related assets. An appraisal report of the Property
estimates the market value of the property and other improvements
at $27.8 million on a stabilized basis and $27.6 million "as-is."
The Debtor told the Court that it has no other immediate funding
available, and absent access to the Cash Collateral, it will have
to shut down the Facility, to the detriment of the Debtor and all
of its creditors, including the Secured Creditors.
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). James Stang, Esq., at Pachulski Stang
Ziehl & Jones LLP represents the Debtor in its restructuring
effort. In its schedules, the Debtor listed total assets of
$34,344,046 and total debts of $18,670,082.
WACHOVIA BANK: Fitch Puts Low-B Ratings on Classes G & H Certs.
---------------------------------------------------------------
Fitch Ratings has downgraded, removed from Rating Watch Negative
and assigned Outlooks to these classes of Wachovia Bank Commercial
Mortgage Trust, series 2005-C20, commercial mortgage pass-through
certificates:
-- $41.2 million class F to 'BBB-' from 'BBB+'; Outlook Stable;
-- $32.1 million class G to 'BB' from 'BBB'; Outlook Stable;
-- $41.2 million class H to 'B-' from 'BBB-'; Outlook Stable.
Fitch has downgraded, removed from Rating Watch Negative and
assigned distressed recovery ratings to these classes:
-- $22.9 million class J to 'CCC/DR1' from 'BB+';
-- $13.7 million class K to 'C/DR6' from 'BB';
-- $13.7 million class L to 'C/DR6' from 'BB-';
-- $9.2 million class M to 'C/DR6' from 'B+';
-- $9.2 million class N to 'C/DR6' from 'B';
-- $9.2 million class O to 'C/DR6' from 'B-'.
In addition, Fitch has affirmed and assigned Outlooks:
-- $287.8 million class A-3SF at 'AAA'; Outlook Stable;
-- $218.5 million class A-4 at 'AAA'; Outlook Stable;
-- $121.1 million class A-5 at 'AAA'; Outlook Stable;
-- $218.8 million class A-6A at 'AAA'; Outlook Stable;
-- $50.0 million class A-6B at 'AAA'; Outlook Stable;
-- $176.1 million class A-PB at 'AAA'; Outlook Stable;
-- $861.8 million class A-7 at 'AAA'; Outlook Stable;
-- $313.2 million class A-1A at 'AAA'; Outlook Stable;
-- $100.0 million class A-MFL at 'AAA'; Outlook Stable;
-- $266.4 million class A-MFX at 'AAA'; Outlook Stable;
-- $274.8 million class A-J at 'AAA'; Outlook Stable;
-- Interest-only class X-P at 'AAA'; Outlook Stable;
-- Interest-only class X-C at 'AAA'; Outlook Stable;
-- $77.9 million class B at 'AA'; Outlook Stable;
-- $27.5 million class C at 'AA-'; Outlook Negative;
-- $68.7 million class D at 'A'; Outlook Negative;
-- $41.2 million class E at 'A-'; Outlook Negative.
The $50.4 million class P is not rated by Fitch. Classes A-1 and
A-2 have paid in full.
The rating downgrades and removal of classes from Rating Watch
Negative reflect the significant expected losses upon disposition
of the largest loan in special servicing, the Macon & Burlington
Mall Pool. The Rating Outlooks reflect the likely direction of
any rating changes over the next one to two years. As of the
October 2008 remittance report, the transaction has paid down 8.7%
to $3.35 billion from $3.66 billion at issuance.
There are two assets in special servicing (4.2%), which includes
the Macon & Burlington Mall Pool loan (4.1%) that is in
foreclosure. The loan is backed by two cross-collateralized
regional malls located in Macon, Georgia and Burlington, North
Carolina. The trust portion of the loan is $137.9 million and
began amortizing on a 30 year schedule in July 2006. There is
approximately $27 million in subordinate debt held outside the
trust. Both mall properties have suffered dramatic declines in
occupancy due to anchor tenants vacating their spaces in addition
to newer competition in their surrounding areas. A receiver has
been appointed to manage the properties.
Five loans, Americas Mart (5.9%), 60 Hudson Street (4.8%),
Westfield San Francisco Centre (1.8%), 101 Avenue of the Americas
(1.7%), and JCS Studios (0.6%) maintain investment grade shadow
ratings due to stable performance since issuance. The shadow
rated loans are scheduled to mature in 2015, excluding 101 Avenue
of the Americas, which is scheduled to mature in 2011.
The largest loan in the pool, Americas Mart, secured by a 4.1
million square foot merchandise mart property in Atlanta, Georgia,
had a fiscal year-end 2008 debt service coverage ratio of 2.50
times. 60 Hudson Street, a 1.1 million sf office property located
in New York City was 76.7% occupied as of June 2008. Westfield
San Francisco Centre, a 498,103 sf regional mall located in San
Francisco, California, was 100% occupied as of June 2008, compared
to 99.2% at issuance. 101 Avenue of the Americas, a 411,097 sf
office property located in New York, was 100% occupied as of June
2008. JCS Studios, a 95,870 sf industrial property located in
Brooklyn, New York was 100% occupied as of June 2008, unchanged
from issuance.
The second largest loan in the pool (5.8%), the NGP Rubicon GSA
Pool, is collateralized by fourteen office and industrial
properties located in various states. Year-end 2007 reported DSCR
was 1.45x.
In 2010, 14.7% of the pool is scheduled to mature. YE 2007
reported DSCR for these loans was 1.79x with a weighted average
coupon of 5.09%.
WOODSIDE GROUP: U.S. Trustee Appoints Paul Aronzon as Examiner
--------------------------------------------------------------
Peter C. Anderson, the United States Trustee for Region 16, asks
the U.S. Bankruptcy Court for the Central District of California
to approved his appointment of Paul Aronzon, as examiner in
Woodside Group, LLC et al.'s Chapter 11 cases.
Mr. Aronzon states that he is not a creditor, equity security
holder, or insider of the Debtors; and that he is not of has not
been an investment banker for any outstanding security of the
Debtors, nor an attorney or advisor for any investment banker for
any outstanding security of the Debtors. Mr. Aronzon further
assures the Court that he does not have an interest materially
adverse to the Debtors' or their estates, and that he is a
"disinterested person" within the meaning of Sec. 101(14) of the
Bankruptcy Code.
Paul Aronzon recently rejoined Milbank, Tweed, Hadley & McCloy
LLP's Los Angeles office as a partner, resuming his role as co-
head of the office's financial restructuring group.
Mr. Aronzon was a partner a Milbank for 17 years before leaving 2
and a half years ago for Imperial Capital, an investment banking
firm where he was head of restructuring advisory services and co-
head of investment banking.
Woodside Group LLC and its debtor-affiliates --
http://www.woodside-homes.com/-- are homebuilders. The Debtor
group, together with several other homebuilders, is continuing to
develop the Inspirada master-planned community in Henderson,
Nevada.
On March 31, 2008, Woodside AMR 107, Inc. and Woodside Portofino,
Inc. filed voluntary petitions for relief under Chapter 11 of the
United States Bankruptcy Code. On August 20, 2008, an Ad Hoc
Group of Noteholders commenced the filing of involuntary petitions
against the remaining 185 debtors. On August 20, 2008, JPMorgan
Chase Bank, N.A., on behalf of the Bank Group, commenced the
filing of certain Joinders in the Involuntary Petition. On
September 16, 2008, the Debtors filed a "Consolidated Answer to
Involuntary Petitions and Consent to Order for Relief" and the
Court entered the "Order for Relief Under Chapter 11."
The 187 Debtors are jointly administered under Case No. 08-20682.
The Bankruptcy Cases are currently pending before the Honorable
Peter Carroll in the United States Bankruptcy Court for the
Central District of California (Riverside).
Harry D. Hochman, Esq., Jeremy V. Richards, Esq., Linda F. Cantor,
Esq., Esq., and Maxim B. Litvak, Esq., at Pachulski Stang
Ziehl & Jones LLP, in Los Angeles, California, represent the
Debtors. Susy Li, Esq., and Michael A. Sherman, Esq., at Bingham
McCutchen LLP, in Los Angeles; and Michael J. Reilly, Esq.,
Jonathan B. Alter, Esq., and Mark W. Deveno, Esq., at Bingham
McCutchen in Hartford, Connecticut, act as counsel to the Ad Hoc
Group of Noteholders. Donald L. Gaffney, Esq., at Snell & Wilmer
LLP, in Phoenix, Arizona; and Michael B. Reynolds, Esq., and Eric
S. Pezold, Esq., at Snell & Wilmer in Costa Mesa, California,
serve as counsel for JPMorgan Chase Bank, N.A., as Administrative
Agent to Participant Lenders.
During 2007, the Woodside Entities generated revenues exceeding
$1 billion on a consolidated basis. As of December 31, 2007, the
Woodside Entities had consolidated assets and liabilities of
approximately $1.5 billion and $1.1 billion, respectively. As of
the September 16, 2008 petition date, the Debtors have
approximately $70 million in cash. The Woodside Entities employ
approximately 494 employees.
YRC WORLDWIDE: Moody's Downgrades Corporate Credit Rating to 'B1'
-----------------------------------------------------------------
Moody's Investors Service lowered the ratings of YRC Worldwide
Inc., Corporate Family Rating to B1 from Ba2. The rating outlook
is negative.
While the U.S. economy is having an adverse impact on YRC's
financial performance, the ratings downgrade is primarily driven
by certain structural Moody's weaknesses of the company, as well
as YRC's need to improve its capital structure. The company has
undertaken certain initiatives to address these issues. However,
overall credit metrics are expected to remain at levels reflective
of B1 issuers.
YRC has experienced difficult operating conditions in its overall
less than truckload business throughout the cyclical downturn,
with operating ratios system-wide falling behind those of key
competitors. As a result, key credit metrics such as Retained
Cash Flow to Debt, EBIT / Interest, and Debt to EBITDA continue to
lag those of many industry peers, and currently map closer to
companies in the B rating category. However, the primary weakness
in YRC's structure lies in its YRC Regional (formally USF)
operations. This segment, based predominantly in the upper
Midwest, has significant exposure to long term erosion in the U.S.
auto industry. As demand levels fall in this freight group, the
company will have to rationalize its operating base to meet the
lower-volume environment (i.e. fewer trucks and terminals).
However, Moody's believes the company will face challenges in
implementing the downsizing program without impairing YRC's
service levels, customer base, and market share.
The other important consideration affecting the downgrade deals
with YRC's need to improve its capital structure. YRC has
maintained a leveraged capital structure that has ensued from the
acquisitions of Roadway (2003) and USF (2005). As a result, the
company faces significant levels of debt maturities over the next
few years. Recently, YRC has addressed the most immediate of
these concerns, having repaid about $325 million of notes due
through May 2009. Still, YRC has substantial amounts of debt that
will mature between 2010 and 2012. In addition to borrowings,
Moody's notes the impact that YRC's multi-employer pension plans
have on the company's capital structure. Moody's capitalizes the
estimated liability implied by the company's costs paid into such
plans, and adjusts debt accordingly. Although these plans do not
present an identifiable re-financing event, as is associated with
conventional debt instruments, YRC's participation in such plans
will continue to be a significant component of the company's cost
structure.
With these challenges facing the company over the near term,
liquidity becomes a key consideration in Moody's analysis.
Although the company has taken an important step to retire
sizeable near term maturities, YRC needed to make heavy use of its
$1 billion credit facility to do so. According to David Berge,
Vice President of Moody's, "with more debt maturing between 2010
and 2012, it is now important for YRC to restore its liquidity to
make sure the company can again meet these obligations."
This will most likely need to be accomplished through free cash
flow generation in 2009. Currently, the company is working on an
ambitious and accelerated operational re-structuring program that
is intended to address structural weaknesses in the company's
operations. The speed and success of this initiative, along with
developments in the U.S. trucking markets in general, will be
important factors in YRC's ability to enhance its free cash flow
over the near term, and bolster its liquidity condition.
The outlook remains negative in recognition of the company's
vulnerability to Moody's weaknesses in the U.S. economy and the
uncertainty surrounding the depth and duration of the current
economic downturn. Further declines in freight volumes or pricing
pressures in 2009 that might ensue from a prolonged recession
would make it difficult for the company to generate cash flows at
levels sufficient to restore liquidity in time to address debt
maturities in 2010-2012.
The ratings could be downgraded if the company's free cash flows
becomes negative in 2009, or if the company does not restore the
availability under its $1 billion credit facility to at least
$500 million, or if room under financial covenants prescribed
under this facility Moody's re to severely limit borrowing.
Rating could also be lowered if the company fails to extend its
$600 million receivables securitization facility at next expiry
(April 2009).
The ratings could be stabilized if free cash flows become strongly
positive in 2009, with operating ratios returning to the mid-90%
range. The company will have to demonstrate the maintenance of a
solid liquidity position throughout this period, with less
reliance on the revolving credit facility to cover note maturities
while maintaining ample cushion to covenants.
Downgrades:
Issuer: USF Corporation
-- Senior Unsecured Regular Bond/Debenture, Downgraded to B2
(LGD4, 58%) from Ba3
Issuer: YRC Worldwide Inc.
-- Probability of Default Rating, Downgraded to B1 from Ba2
-- Corporate Family Rating, Downgraded to B1 from Ba2
-- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to B2
(LGD4, 68%) from Ba3
YRC Worldwide does business through two national less-than-
truckload companies, YRC National Transportation, which comprises
the long-haul operations that comprises the legacy Yellow and
Roadway businesses (about 70% of LTM September 2008 revenue), and
through YRC Regional Transportation , a regional LTL business
essentially comprising YRC's acquired USF companies (about 22% of
revenue). Through its YRC Logistics business unit, the company
also offers logistics and supply chain services. YRC's broad
service offering includes next day and expedited service
throughout most of the country.
* Fitch Says Airline & Railroad Liquidity Expected to Stay Strong
-----------------------------------------------------------------
Fitch Ratings issued a special report which focuses on liquidity
issues in the airlines, railroads and trucking sectors. According
to the report, liquidity for the airline sector is relatively
strong, with $17 billion in available liquidity at Sept. 30, 2008,
versus $11 billion in estimated debt maturities through year-end
2010. Liquidity in the railroad sector is expected to remain
strong, despite ongoing share repurchase programs.
Despite weakening economic conditions, airline liquidity is
expected to remain adequate as long as fuel prices do not spike
again. The significant capacity reductions put into place
beginning in September will help to mitigate the effects that an
economically driven decline in industry demand likely will have on
airline revenues. Despite most airlines' low credit ratings and
very difficult credit market conditions, airlines continue to find
opportunities to utilize the value of their unencumbered asset
bases to serve as collateral for secured borrowings.
Fitch expects liquidity in the railroad sector to remain strong.
Although market conditions in 2009 likely will be more challenging
than the already weakened conditions experienced in 2008, industry
pricing growth should drive ongoing strength in free cash flow
despite an expected decline in volumes.
Among the rated trucking issuers, liquidity positions are mixed,
although near-term debt maturities are relatively light. The
truckers are expected to see very challenging industry conditions
in 2009 that will put significant pressure on free cash flow.
* Markets Crisis Spurs Haynes and Boone Bankruptcy Expansion
------------------------------------------------------------
Haynes and Boone, LLP has bolstered its bankruptcy and business
reorganization practice by adding 10 lawyers to the group over the
last 20 months. "Our group is busy now, and we're expecting a very
active 2009," said Steve Pezanosky, who heads the firm's
Bankruptcy and Business Reorganization Section.
Most of the new lawyers are lateral hires from other firms,
including Peter Ruggero and Ian Bolton, who have joined the firm's
Houston office. In addition, the firm further strengthened its
restructuring practice by transferring associate David Liebenstein
from the firm's Corporate Section in New York and Erik Martin from
the Business Planning and Tax Section in Fort Worth.
With 38 full-time attorneys and several more splitting time in
other practice groups, Haynes and Boone has developed one of the
largest stables of bankruptcy talent in the country. The
attorneys, spread across seven of the firm's ten offices, are
fielding calls from a wide array of clients affected by the
turmoil in international capital markets.
Last month, for example, Haynes and Boone filed a lawsuit on
behalf of Texas billionaire T. Boone Pickens against a unit of
bankrupt Lehman Brothers Holdings Inc. for $59.9 million in
damages stemming from derivatives deals that were aborted after
Lehman filed bankruptcy.
"We've long recognized that our practice structures must be fluid
to make the best of bad economic times," said the firm's managing
partner, Terry Conner. "We're positioned well geographically to
absorb more work throughout our ten offices from New York to
Mexico City."
As part of the geographic positioning, the firm late last year
announced the transfer of senior bankruptcy partner Lenny Parkins
from Houston to New York as part of its long-term expansion
strategy.
The Haynes and Boone, LLP Bankruptcy Practice is ranked No. 1 in
Texas by Chambers USA, and has developed a truly national scope
over the past several years. The way has been paved through a
series of high-profile out-of-court restructurings and Chapter 11
matters throughout the country, including leading the
representation of debtors or various major creditor constituencies
in the cases of Wellman, Inc.; Lehman Brothers Holdings; Adelphia
Communications Corporation; WCI Communities, Inc.; JHT Holdings,
Inc.; SemGroup; American LaFrance, LLC; ATA Airlines; Marcal Paper
Mills, Inc.; ASARCO, LLC; Tekoil & Gas Corporation; Heartland
Enterprises and Bombay Corporation.
Haynes and Boone, LLP is an international corporate law firm with
offices in Texas, New York, Washington, D.C., Mexico City and
Moscow, providing a full spectrum of legal services. With more
than 500 attorneys, Haynes and Boone is ranked among the largest
law firms in the United States by The National Law Journal. The
firm has been recognized as one of the "Best Corporate Law Firms
in America" (Corporate Board Member Magazine, 2001-2008), as one
of The Best 20 Law Firms for Overall Diversity (Vault, 2009), a
Top 25 Law Firm for Hispanic Americans (MultiCultural Law
Magazine, 2008), and a Top 100 Law Firm for Women (Women 3.0,
2008).
* Moody's Downgrades Ratings on 180 Tranches Across 44 TRUPs
------------------------------------------------------------
Moody's has downgraded 180 tranches across 44 Trust Preferred
CDOs. In addition, 88 tranches remain on review for further
possible downgrade.
The downgrades are prompted by the exposure of these TRUP CDOs to
trust preferred securities issued by small to medium sized U.S.
community banks which have or may experience deferral in interest
payments and defaults due to the current credit crisis and Moody's
ak economic conditions. Some TRUP CDO tranches remain on review
for possible downgrade for the possibility that an event of
default could be triggered within the CDO due to the deferral of
payment by many underlying bank trust preferred securities.
These rating actions reflect Moody's assumption that there will be
zero recovery on the 31 bank trust preferred securities that are
currently deferring interest payment and the 10 banks that Moody's
re closed by their regulator in these TRUP CDOs. Moody's believes
that while the actions proposed by the Troubled Assets Relief
Program are a positive development for the U.S. banking sector, it
may not be sufficient to prevent further deferral of interest
payment on their trust preferred securities and defaults for some
of the Moody's aker banks in TRUP CDOs. Therefore, Moody's has
updated the approach to calculating the default probability and
correlation for bank trust preferred securities that back the
securities issued by the bank TRUP CDOs.
Moody's updated the approach to calculating the default
probability by using two financial ratios for every bank in the
collateral portfolio. The first ratio is calculated as: (non-
current loans plus other real estate owned) divided by (tangible
common equity plus allowance for loan losses). The second ratio
is calculated as: (non-current loans plus other real estate owned
plus 20% of current construction and development loans) divided by
(tangible common equity plus allowance for loan losses). If the
First Ratio is above 150% or the Second Ratio is above 175%, for
purposes of these rating actions, Moody's assumed these banks to
be defaulted with a zero recovery. If the First Ratio is above
100% or the Second Ratio is above 130%, Moody's assumed these
banks had an implied default probability Rating Factor of 6500
(implied default probability rating of Caa2). Moody's used the
second quarter 2008 financials when calculating the First Ratio
and Second Ratio. Generally, the First Ratio and Second Ratio
Moody's re used to identify banks more likely to defer payments on
their trust preferred securities or default.
For all other banks in TRUP CDOs without a public rating from
Moody's, when calculating the default probability, Moody's used
the quantitative V3.1 Risk Calc Model for private banks with the
credit cycle adjustment. To account for potential model error and
adverse selection, the most favorable implied default probability
Rating Factor assumed from the Model was 360, which translates
into an implied default probability rating of Baa2. Finally, to
account for the increased likelihood of deferral on the bank TRUPs
in the current environment, the pool-wide default probability was
multiplied by 1.25. Moody's used the second quarter 2008
financials in the Model.
For correlation purposes, Moody's continued to assume five regions
for U.S. banks, but no longer making a distinction between banks
and thrifts. Also, Moody's increased the assumed inter-asset
correlation, which is correlation between bank regions, to 10%.
The assumed intra-asset correlation, which is correlation within
bank regions, remained at 45%. The update to the default
probability assumptions was a much larger driver to these rating
actions than the correlation update.
Moody's continued to assume a 10% recovery for bank trust
preferred securities in its cash flow analysis which represents
the likelihood that some banks that defer interest payments may
ultimately pay cumulative interest without defaulting. Moody's
also continued to use the correlated binomial to analyze TRUP
CDOs. Other than the assumptions noted above, these actions used
the approach outlined in Moody's Approach to Rating U.S. Bank
Trust Preferred Security CDOs, April 14, 2004.
In order to promote transparency, Moody's encourages the
Underwriters and Collateral Managers for all TRUP CDOs to publish
the list of collateral securities in each of their respective
CDOs. TRUP CDOs with exposure to bank, REITS and insurance trust
preferred securities will be reviewed in the coming Moody's eks.
Issuer: ALESCO Preferred Funding I, Ltd.
1) Class Description: $149,000,000 Class A-1 First Priority Senior
Secured Floating Rate Notes Due 2033
- Prior Rating: Aaa
- Prior Rating Date: Oct. 29, 2003
- Current Rating: Aa1, Review for Possible Downgrade
2) Class Description: $66,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due 2033
- Prior Rating: Aaa, Review for Possible Downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa3, Review for Possible Downgrade
3) Class Description: $56,700,000 Class B-1 Mezzanine Secured
Floating Rate Notes Due 2033,
- Prior Rating: A3, Review for Possible Downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
4) Class Description: $45,000,000 Class B-2 Mezzanine Secured
Fixed/Floating Rate Notes Due 2033,
- Prior Rating: A3, Review for Possible Downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
Issuer: ALESCO Preferred Funding II, Ltd.
1) Class Description: $149,000,000 Class A-1 First Priority Senior
Secured Floating Rate Notes Due 2033
- Prior Rating: Aaa
- Prior Rating Date: Dec. 29, 2003
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $66,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa3, on review for possible downgrade
3) Class Description: $56,700,000 Class B-1 Mezzanine Secured
Floating Rate Notes,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: B2
4) Class Description: $45,000,000 Class B-2 Mezzanine Secured
Fixed/Floating Rate Notes,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: B2
Issuer: Alesco Preferred Funding III, Ltd.
1) Class Description: $160,000,000 Class A-1 First Priority Senior
Secured Floating Rate Notes Due 2034
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $70,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due 2034
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa3, on review for possible downgrade
3) Class Description: $40,500,000 Class B-1 Mezzanine Secured
Floating Rate Notes Due 2034
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: B3
4) Class Description: $63,500,000 Class B-2 Mezzanine Secured
Fixed/Floating Rate Notes Due 2034,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: B3
Issuer: ALESCO Preferred Funding IV, Ltd.
1) Class Description: $195,000,000 Class A-1 First Priority Senior
Secured Floating Rate Notes Due 2034
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $63,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due 2034
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A2, on review for possible downgrade
3) Class Description: $7,000,000 Class A-3 Second Priority Senior
Secured Fixed/Floating Rate Notes Due 2034
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A2, on review for possible downgrade
4) Class Description: $62,380,000 Class B-1 Mezzanine Secured
Floating Rate Notes,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa2
5) Class Description: $51,620,000 Class B-2 Mezzanine Secured
Fixed/Floating Rate Notes,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa2
6) Class Description: $3,000,000 Class B-3 Mezzanine Secured
Fixed/Floating Rate Notes,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa2
Issuer: MM Community Funding Ltd.
1) Class Description: Class B Floating Rate Senior Notes Due 2031,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
Issuer: MM Community Funding II Ltd.
1) Class Description: $205.0 million of Class B Floating Rate
Subordinate Notes due 2031,
- Prior Rating: A2
- Prior Rating Date: March 14, 2008
- Current Rating: Baa2, on review for possible downgrade
Issuer: MM Community Funding III Ltd.
1) Class Description: $177.0 million of Class B Floating Rate
Subordinate Notes due 2032,
- Prior Rating: A1
- Prior Rating Date: March 14, 2008
- Current Rating: Baa2, on review for possible downgrade
Issuer: MM Community Funding IX, Ltd.
1) Class Description: $126,000,000 Class A-1 Floating Rate Senior
Notes Due 2033
- Prior Rating: Aaa
- Prior Rating Date: April 28, 2003
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $45,000,000 Class A-2 Floating Rate Senior
Notes due 2033
- Prior Rating: Aaa
- Prior Rating Date: April 28, 2003
- Current Rating: A2, on review for possible downgrade
3) Class Description: $50,000,000 Class B-1 Floating Rate Senior
Subordinate Notes due 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
4) Class Description: $60,000,000 Class B-2 Fixed/Floating Rate
Senior Subordinate Notes due 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
Issuer: MMCAPS Funding I, Ltd.
1) Class Description: $191,500,000 Fixed Rate Senior Notes, due
6/15/31
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $77,000,000 Fixed Rate Mezzanine Notes, due
6/15/31
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B1
Issuer: MMCapS Funding XIX, Ltd.
1) Class Description: $220,000,000 Class A-1 Floating Rate Senior
Notes Due 2038
- Prior Rating: Aaa
- Prior Rating Date: July 24, 2008
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $26,000,000 Class A-2 Floating Rate Senior
Notes Due 2038
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: July 14, 2008
- Current Rating: A1, on review for possible downgrade
3) Class Description: $32,000,000 Class B Floating Rate Senior
Notes Due 2038
- Prior Rating: Aa2, on review for possible downgrade
- Prior Rating Date: July 14, 2008
- Current Rating: Ba1
4) Class Description: $79,000,000 Class C Floating Rate Senior
Subordinate Notes Due 2038,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa2
Issuer: MMCAPS Funding XVIII, Ltd.
1) Class Description: $185,100,000 Class A-1 Floating Rate Notes
Due 2039;
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $21,800,000 Class A-2 Floating Rate Notes
Due 2039
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: A3, on review for possible downgrade
3) Class Description: $20,100,000 Class B Floating Rate Notes Due
2039
- Prior Rating: Aa2, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ba1
4) Class Description: $55,900,000 Class C-1 Floating Rate
Deferrable Interest Notes Due 2039
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
5) Class Description: $12,000,000 Class C-2 Fixed/Floating Rate
Deferrable Interest Notes Due 2039
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
6) Class Description: $4,000,000 Class C-3 Fixed Rate Deferrable
Interest Notes Due 2039
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
Issuer: Preferred Term Securities, Ltd.
1) Class Description: $201,050,000 of Fixed Rated Senior Notes due
September 15, 2030
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $90,000,000 Fixed Rate Mezzanine Notes due
September 15, 2030
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: B1
Issuer: Preferred Term Securities II, Ltd
1) Class Description: $227,750,000 of Floating Rated Senior Notes
Due March 1, 2031
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $93,000,000 Fixed Rate Mezzanine Notes Due
March 1, 2031
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: B3
Issuer: Preferred Term Securities IV, Ltd.
1) Class Description: $341,000,000 Floating Rate Mezzanine Notes
Due December 23, 2031,
- Prior Rating: A3
- Prior Rating Date: March 14, 2008
- Current Rating: Ba3
Issuer: Preferred Term Securities V, Ltd.
1) Class Description: $201,450,000 Floating Rate Mezzanine Notes,
due April 3, 2032,
- Prior Rating: Aa3
- Prior Rating Date: March 14, 2008
- Current Rating: Ba1
Issuer: Preferred Term Securities VI, Ltd.
1) Class Description: $199,950,000 Floating Rate Mezzanine Notes,
due July 3, 2032,
- Prior Rating: A1
- Prior Rating Date: March 14, 2008
- Current Rating: B3
Issuer: Preferred Term Securities VII
1) Class Description: $120,000,000 Floating Rate Class A-2 Senior
Notes due October 3, 2032,
- Prior Rating: Aaa
- Prior Rating Date: Sept. 26, 2002
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $177,900,000 Floating Rate Mezzanine Notes
Due October 3, 2032,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa2
Issuer: Preferred Term Securities VIII, Ltd
1) Class Description: $225,000,000 Floating Rate Class A-1 Senior
Notes Due 2033,
- Prior Rating: Aaa
- Prior Rating Date: Dec. 20, 2002
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $100,800,000 Floating Rate Class A-2 Senior
Notes Due 2033
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $58,700,000 Floating Rate Class B-1
Mezzanine Notes Due January 3, 2033,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: B3
4) Class Description: $30,700,000 Fixed/Floating Rate Class B-2
Mezzanine Notes Due January 3, 2033,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: B3
5) Class Description: $75,000,000 Fixed/Floating Rate Class B-3
Mezzanine Notes Due January 3, 2033,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2006
- Current Rating: B3
Issuer: Preferred Term Securities IX, Ltd.
1) Class Description: $245,000,000 Floating Rate Class A-1 Senior
Notes Due April 3, 2033,
- Prior Rating: Aaa
- Prior Rating Date: March 27, 2003
- Current Rating: Aaa, on review for possible downgrade
2) Class Description: $42,000,000 Floating Rate Class A-2 Senior
Notes Due April 3, 2033
- Prior Rating: Aaa
- Prior Rating Date: March 27, 2008
- Current Rating: Aa1, on review for possible downgrade
3) Class Description: $33,000,000 Fixed/Floating Rate Class A-3
Senior Notes Due April 3, 2033,
- Prior Rating: Aaa
- Prior Rating Date: March 27, 2008
- Current Rating: Aa1, on review for possible downgrade
4) Class Description: $86,000,000 Floating Rate Class B-1
Mezzanine Notes Due April 3, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
5) Class Description: $16,250,000 Fixed/Floating Rate Class B-2
Mezzanine Notes Due April 3, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
6) Class Description: $66,250,000 Fixed/Floating Rate Class B-3
Mezzanine Notes Due April 3, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
Issuer: Preferred Term Securities X, Ltd.
1) Class Description: $287,000,000 Floating Rate Class A-1 Senior
Notes due 2033,
- Prior Rating: Aaa
- Prior Rating Date: June 24, 2003
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $67,000,000 Floating Rate Class A-2 Senior
Notes due 2033;
- Prior Rating: Aaa
- Prior Rating Date: June 24, 2003
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $2,000,000 Fixed/Floating Rate Class A-3
Senior Notes due 2033,
- Prior Rating: Aaa
- Prior Rating Date: June 24, 2003
- Current Rating: Aa2, on review for possible downgrade
4) Class Description: $88,000,000 Floating Rate Class B 1
Mezzanine Notes Due July 3, 2033,
- Prior Rating: A2
- Prior Rating Date: July 22, 2008
- Current Rating: B3
5) Class Description: $19,000,000 Fixed/Floating Rate Class B 2
Mezzanine Notes Due July 3, 2033,
- Prior Rating: A2
- Prior Rating Date: July 22, 2008
- Current Rating: B3
6) Class Description: $70,500,000 Fixed/Floating Rate Class B 3
Mezzanine Notes Due July 3, 2033,
- Prior Rating: A2
- Prior Rating Date: July 22, 2008
- Current Rating: B3
Issuer: Preferred Term Securities XI, Ltd.
1) Class Description: $343,000,000 Floating Rate Class A-1 Senior
Notes due 2033,
- Prior Rating: Aaa
- Prior Rating Date: Sept. 19, 2003
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $70,000,000 Floating Rate Class A-2 Senior
Notes due 2033;
- Prior Rating: Aaa
- Prior Rating Date: Sept. 19, 2003
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $124,500,000 Floating Rate Class B 1
Mezzanine Notes Due September 24, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B2
4) Class Description: $13,000,000 Fixed/Floating Rate Class B 2
Mezzanine Notes Due September 24, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B2
5) Class Description: $65,500,000 Fixed/Floating Rate Class B 3
Mezzanine Notes Due September 24, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B2
Issuer: Preferred Term Securities XII, Ltd.
1) Class Description: $442,400,000 Floating Rate Class A-1 Senior
Notes due 2033,
- Prior Rating: Aaa
- Prior Rating Date: Sept. 19, 2003
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $64,000,000 Floating Rate Class A-2 Senior
Notes due 2033;
- Prior Rating: Aaa
- Prior Rating Date: Sept. 19, 2003
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $10,000,000 Fixed/Floating Rate Class A-3
Senior Notes due 2033,
- Prior Rating: Aaa
- Prior Rating Date: Sept. 19, 2003
- Current Rating: Aa2, on review for possible downgrade
4) Class Description: $17,000,000 Fixed/Floating Rate Class A-4
Senior Notes due 2033;
- Prior Rating: Aaa
- Prior Rating Date: Sept. 19, 2003
- Current Rating: Aa2, on review for possible downgrade
5) Class Description: $204,400,000 Floating Rate Class B-1
Mezzanine Notes Due December 24, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
6) Class Description: $20,500,000 Fixed/Floating Rate Class B-2
Mezzanine Notes Due December 24, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
7) Class Description: $37,700,000 Fixed/Floating Rate Class B-3
Mezzanine Notes Due December 24, 2033,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
Issuer: Preferred Term Securities XIII, LTD.
1) Class Description: $276,250,000 Floating Rate Class A-1 Senior
Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: March 31, 2004
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $27,000,000 Floating Rate Class A-2 Senior
Notes Due 2034;
- Prior Rating: Aaa
- Prior Rating Date: March 31, 2004
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $7,750,000 Fixed/Floating Rate Class A-3
Senior Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: March 31, 2004
- Current Rating: Aa2, on review for possible downgrade
4) Class Description: $21,500,000 Fixed/Floating Rate Class A-4
Senior Notes Due 2034;
- Prior Rating: Aaa
- Prior Rating Date: March 31, 2004
- Current Rating: Aa2, on review for possible downgrade
5) Class Description: $98,350,000 Floating Rate Class B-1
Mezzanine Notes Due March 24, 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
6) Class Description: $21,450,000 Fixed/Floating Rate Class B-2
Mezzanine Notes Due March 24, 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
7) Class Description: $44,000,000 Fixed/Floating Rate Class B-3
Mezzanine Notes Due March 24, 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
Issuer: Preferred Term Securities XIV, Ltd.
1) Class Description: $257,800,000 Floating Rate Class A-1 Senior
Notes due 2034,
- Prior Rating: Aaa
- Prior Rating Date: June 30, 2004
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $62,000,000 Floating Rate Class A-2 Senior
Notes due 2034;
- Prior Rating: Aaa
- Prior Rating Date: June 30, 2004
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $117,000,000 Floating Rate Class B-1
Mezzanine Notes Due June 24, 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
4) Class Description: $10,800,000 Fixed/Floating Rate Class B-2
Mezzanine Notes Due June 24, 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
5) Class Description: $13,000,000 Fixed/Floating Rate Class B-3
Mezzanine Notes Due June 24, 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
Issuer: Regional Diversified Funding 2004-1LTD.
1) Class Description: $144,000,000 Class A-1 Floating Rate Senior
Notes Due 2034,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: A3, on review for possible downgrade
2) Class Description: $62,000,000 Floating Rate Class A-2 Senior
Notes due 2034;
- Prior Rating: Aa2, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Baa2, on review for possible downgrade
3) Class Description: $22,000,000 Class B-1 Floating Rate Senior
Subordinate Notes Due 2034,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa1
4) Class Description: $95,000,000 Class B-2 Fixed/Floating Rate
Senior Subordinate Notes Due 2034,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa1
Issuer: Regional Diversified Funding, Ltd.
1) Class Description: $225,000,000 of Fixed Rate Senior Notes due
March 15, 2030,
- Prior Rating: A1, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B1
Issuer: Soloso CDO 2005-1 Ltd.
1) Class Description: $170.0 million Class A-1L Floating Rate
Notes Due October 2035,
- Prior Rating: Aaa
- Prior Rating Date: Aug. 31, 2005
- Current Rating: A2, on review for possible downgrade
2) Class Description: $126.0 million Class A-1LA Floating Rate
Notes Due October 2035;
- Prior Rating: Aaa
- Prior Rating Date: Aug. 31, 2005
- Current Rating: A1, on review for possible downgrade
3) Class Description: $39.0 million Class A-1LB Floating Rate
Notes Due October 2035,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A3, on review for possible downgrade
4) Class Description: $45.5 million Class A-2L Deferrable Floating
Rate Notes Due October 2035,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: B1
5) Class Description: $40.0 million Class A-3L Floating Rate Notes
Due October 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
6) Class Description: $19.0 million Class A-3A Fixed/Floating Rate
Notes Due October 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
7) Class Description: $19.0 million A-3B Fixed/Floating Rate Notes
Due October 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
8) Class Description: Class $30.5 million Class B-1L Floating Rate
Notes Due October 2035,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ca
Issuer: TPREF Funding I Ltd.
1) Class Description: $201.0 million of Class B Floating Rate
Subordinate Notes due 2032,
- Prior Rating: A2
- Prior Rating Date: July 23, 2002
- Current Rating: Ba3
Issuer: TPREF Funding II Ltd.
1) Class Description: $222.0 million of Class A-1 Floating Rate
Senior Notes due 2032,
- Prior Rating: Aaa
- Prior Rating Date: Oct. 31, 2002
- Current Rating: Aaa, on review for possible downgrade
2) Class Description: $222.0 million of Class A-1 Floating Rate
Senior Notes due 2032,
- Prior Rating: Aaa
- Prior Rating Date: Oct. 31, 2002
- Current Rating: Aa3, on review for possible downgrade
3) Class Description: $196.0 million of Class B Floating Rate
Subordinate Notes due 2032,
- Prior Rating: A1, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ba3
Issuer: TPREF Funding III, Ltd.
1) Class Description: Class A-1 Floating Rate Senior Notes,
- Prior Rating: Aaa
- Prior Rating Date: Feb. 28, 2003
- Current Rating: Aaa, on review for possible downgrade
2) Class Description: Class A-2 Floating Rate Senior Notes,
- Prior Rating: Aaa
- Prior Rating Date: Feb. 28, 2003
- Current Rating: Aa1, on review for possible downgrade
3) Class Description: Class B-1 Floating Rate Senior Subordinated
Notes
- Prior Rating: A2
- Prior Rating Date: Feb. 28, 2003
- Current Rating: B2
4) Class Description: Class B-2 Floating Rate Senior Subordinate
Notes
- Prior Rating: A2
- Prior Rating Date: Feb. 28, 2003
- Current Rating: B2
Issuer: Trapeza CDO I, LLC
1) Class Description: $161.5 million of Class A-1 First Priority
Senior Secured Floating Rate Notes due 2032,
- Prior Rating: Aaa
- Prior Rating Date: Nov. 27, 2002
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: U.S 20.0 million of Class A-2 First Priority
Senior Secured Fixed Rate Notes due 2032,
- Prior Rating: Aaa
- Prior Rating Date: Nov. 27, 2002
- Current Rating: Aa3, on review for possible downgrade
3) Class Description: $54.6.0 million of Class B-1 Second Priority
Senior Secured Floating Rate Notes due 2032,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Baa2, on review for possible downgrade
4) Class Description: $2.0 million of Class B-2 Second Priority
Senior Secured Floating Rate Notes due 2032,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Baa2, on review for possible downgrade
5) Class Description: $16.0 million of Class B-3 Second Priority
Senior Secured Fixed Rate Notes due 2032,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Baa2, on review for possible downgrade
6) Class Description: $29,600,000 Class C-1 Third Priority Secured
Floating Rate Notes Due 2032,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
7) Class Description: $10,000,000 Class C-2 Third Priority Secured
Fixed Rate Notes Due 2032,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
8) Class Description: $16,500,000 Class D Mezzanine Secured
Floating Rate Notes Due 2032,
- Prior Rating: Ba3, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
Issuer: Trapeza CDO II, LLC
1) Class Description: $132,000,000 of Class A1A First Priority
Senior Secured Floating Rate Notes due 2033,
- Prior Rating: Aaa
- Prior Rating Date: March 31, 2003
- Current Rating: Aaa, on review for possible downgrade
2) Class Description: $100,000,000 Class A1B Second Priority
Senior Secured Floating Rate Notes due 2033,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $27,000,000 of Class B Third Priority Senior
Secured Floating Rate Notes due 2033,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: A1, on review for possible downgrade
4) Class Description: US $43.5MM Class C-1 Fourth Priority Secured
Floating Rate Notes due 2033,
- Prior Rating: Baa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa2
5) Class Description: US $54.8MM Class C-2 Fourth Priority Secured
Fixed/Floating Rate Notes due 2033,
- Prior Rating: Baa1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Caa2
6) Class Description: US $18.7MM Class D Mezzanine Secured
Floating Rate Notes due 2033,
- Prior Rating: Ba1, on review for possible downgrade
- Prior Rating Date: Sept. 16, 2008
- Current Rating: Ca
Issuer: Trapeza CDO III, LLC
1) Class Description: $108.5 million of Class A1A First Priority
Senior Secured Floating Rate Notes due 2034,
- Prior Rating: Aaa
- Prior Rating Date: June 24, 2003
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $71.5 million of Class A1B Second Priority
Senior Secured Floating Rate Notes due 2034,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A3, on review for possible downgrade
3) Class Description: $25.0 million of Class B Third Priority
Senior Secured Floating Rate Notes due 2034,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Baa3, on review for possible downgrade
4) Class Description: $31,250,000 Class C-1 Third Priority Secured
Fixed Rate Notes,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ca
5) Class Description: $31,250,000 Class C-2 Third Priority Senior
Secured Fixed/Floating Rate Notes,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ca
6) Class Description: $14,500,000 Class D Mezzanine Secured
Floating Rate Notes,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: C
7) Class Description: $8,000,000 Class E Secured Notes,
- Prior Rating: Ba2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: C
Issuer: Trapeza CDO IV, LLC
1) Class Description: $145,000,000 Class A1A First Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Oct. 29, 2003
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $95,000,000 Class A1B Second Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A3, on review for possible downgrade
3) Class Description: $33,000,000 Class B Third Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Baa3, on review for possible downgrade
4) Class Description: $44,500,000 Class C-1 Fourth Priority
Secured Floating Rate Notes Due 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ca
5) Class Description: $44,500,000 Class C-2 Fourth Priority
Secured Fixed/Floating Rate Notes Due 2034,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ca
6) Class Description: $14,000,000 Class D Mezzanine Secured
Floating Rate Notes Due 2034,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: C
Issuer: Trapeza CDO V, Ltd.
1) Class Description: $120,000,000 Class A1A First Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Dec. 29, 2003
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $50,000,000 Class A1B Second Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A1, on review for possible downgrade
3) Class Description: $33,000,000 Class B Third Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A3, on review for possible downgrade
4) Class Description: $25,000,000 Class C-1 Fourth Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Ca
5) Class Description: $41,000,000 Class C-2 Fourth Priority
Secured Fixed/Floating Rate Notes Due 2034,
- Prior Rating: Baa2, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Ca
6) Class Description: $13,000,000 Class D Mezzanine Secured
Floating Rate Notes Due 2034,
- Prior Rating: Ba3, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: C
Issuer: Trapeza CDO VI, Ltd.
1) Class Description: $155,000,000 Class A-1A First Priority
Senior Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: April 28, 2004
- Current Rating: Aa1, on review for possible downgrade
2) Class Description: $21,000,000 Class A-1B Second Priority
Senior Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa2, on review for possible downgrade
3) Class Description: $59,350,000 Class A-2 Third Priority Senior
Secured Floating Rate Notes Due 2034,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Aa3, on review for possible downgrade
4) Class Description: $39,500,000 Class B-1 Fourth Priority
Secured Floating Rate Notes Due 2034,
- Prior Rating: Baa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: B3
5) Class Description: $56,500,000 Class B-2 Fourth Priority
Secured Fixed/Floating Rate Notes Due 2034,
- Prior Rating: Baa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: B3
Issuer: Trapeza CDO VII, Ltd.
1) Class Description: $194,000,000 Class A-1 First Priority Senior
Secured Floating Rate Notes Due 2035,
- Prior Rating: Aaa
- Prior Rating Date: Nov. 9, 2004
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $32,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due 2035,
- Prior Rating: Aaa
- Prior Rating Date: Nov. 9, 2004
- Current Rating: Baa1, on review for possible downgrade
3) Class Description: Class B-1 Third Priority Secured Floating
Rate Notes,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
4) Class Description: Class B-2 Third Priority Senior Secured
Fixed/Floating Rate Notes,
- Prior Rating: A2, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
Issuer: Tropic CDO II, LTD
1) Class Description: $145,000,000 of Class A-1L Floating Rate
Notes due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Oct. 21, 2003
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $50,000,000 of Class A-2L Floating Rate
Notes due 2034,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: A2, on review for possible downgrade
3) Class Description: $35,000,000 of Class A-3L Floating Rate
Notes due 2034,
- Prior Rating: Aa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Baa3, on review for possible downgrade
4) Class Description: $38,000,000 Class A-4L Floating Rate Notes
Due April 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Caa3
5) Class Description: $30,000,000 Class A-4 Fixed/Floating Rate
Notes Due April 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Caa3
6) Class Description: $15,000,000 Class B-1L Floating Rate Notes
Due April 2034,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Ca
Issuer: TROPIC CDO III LTD
1) Class Description: $158,000,000 of Class A-1L Floating Rate
Notes due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Feb. 27, 2004
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $45,000,000 of Class A-2L Floating Rate
Notes due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Feb. 27, 2004
- Current Rating: A1, on review for possible downgrade
3) Class Description: $31,000,000 of Class A-3L Floating Rate
Notes due 2034,
- Prior Rating: Aa1
- Prior Rating Date: Feb. 27, 2004
- Current Rating: Ba2
4) Class Description: $40,500,000 Class A-4A Fixed/Floating Rate
Notes Due 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
5) Class Description: $20,000,000 Class A-4B Fixed/Floating Rate
Notes Due 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
6) Class Description: $19,500,000 Class A-4L Floating Rate Notes
Due 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
Issuer: TROPIC CDO IV LTD.
1) Class Description: $160,000,000 Class A-1L Floating Rate Notes
Due April 2035,
- Prior Rating: Aaa
- Prior Rating Date: Dec. 1, 2004
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $40,000,000 Class A-2L Floating Rate Notes
Due April 2035,
- Prior Rating: Aaa
- Prior Rating Date: Dec. 1, 2004
- Current Rating: A2, on review for possible downgrade
3) Class Description: $37,500,000 Class A-3L Deferrable Floating
Rate Notes Due April 2035,
- Prior Rating: Aa1
- Prior Rating Date: Dec. 1, 2004
- Current Rating: Baa3, on review for possible downgrade
4) Class Description: $26,000,000 Class A-4L Floating Rate Notes
Due April 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
5) Class Description: $35,000,000 Class A-4 Fixed/Floating Rate
Notes Due April 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
6) Class Description: $20,000,000 Class B-1L Floating Rate Notes
Due April 2035,
- Prior Rating: Baa3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Ca
Issuer: US Capital Funding I LTD
1) Class Description: $100,000,000 Class A-1 Floating Rate Senior
Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Feb. 27, 2004
- Current Rating: Aa2, on review for possible downgrade
2) Class Description: $24,000,000 Class A-2 Floating Rate Senior
Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: Feb. 27, 2004
- Current Rating: A2, on review for possible downgrade
3) Class Description: $45,000,000 Class B-1 Floating Rate Senior
Subordinate Notes Due 2034,
- Prior Rating: Baa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Caa1
4) Class Description: $24,000,000 Class B-2 Fixed/Floating Rate
Senior Subordinate Notes Due 2034,
- Prior Rating: Baa1, on review for possible downgrade
- Prior Rating Date: Aug. 14, 2008
- Current Rating: Caa1
Issuer: US Capital Funding II LTD
1) Class Description: $171,000,000 Class A-1 Floating Rate Senior
Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: June 30, 2004
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $33,500,000 Class A-2 Floating Rate Senior
Notes Due 2034,
- Prior Rating: Aaa
- Prior Rating Date: June 30, 2004
- Current Rating: A2, on review for possible downgrade
3) Class Description: $70,000,000 Class B-1 Floating Rate Senior
Subordinate Notes Due 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
4) Class Description: $40,000,000 Class B-2 Fixed/Floating Rate
Senior Subordinate Notes Due 2034,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: B3
Issuer: US Capital Funding III, Ltd.
1) Class Description: $111,000,000 Class A-1 Floating Rate Senior
Notes Due 2035,
- Prior Rating: Aaa
- Prior Rating Date: Nov. 30, 2004
- Current Rating: Aa3, on review for possible downgrade
2) Class Description: $23,000,000 Class A-2 Floating Rate Senior
Notes Due 2035,
- Prior Rating: Aaa
- Prior Rating Date: Nov. 30, 2004
- Current Rating: A3, on review for possible downgrade
3) Class Description: $39,100,000 Class B-1 Floating Rate Senior
Subordinate Notes Due 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa1
4) Class Description: $48,000,000 Class B-2 Fixed/Floating Rate
Senior Subordinate Notes Due 2035,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa1
Issuer: U.S. CAPITAL Funding IV, LTD.
1) Class Description: $200,000,000 Class A-1 Floating Rate Senior
Notes Due 2039,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: A2, on review for possible downgrade
2) Class Description: $14,000,000 Class A-2 Floating Rate Senior
Notes Due 2039,
- Prior Rating: Aaa, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Baa3, on review for possible downgrade
3) Class Description: $92,250,000 Class B-1 Floating Rate Senior
Subordinate Notes Due 2039,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
4) Class Description: $12,500,000 Class B-2 Fixed/Floating Rate
Senior Subordinate Notes Due 2039,
- Prior Rating: A3, on review for possible downgrade
- Prior Rating Date: July 22, 2008
- Current Rating: Caa3
* Moody's Reports Negative Outlook on Medical Device Sector
-----------------------------------------------------------
Moody's outlook for the US Medical Products and Device sector has
been revised to negative from stable based primarily on concerns
that credit market disruptions and the potential for a protracted
recession could pressure US hospitals, which are key customers for
the medical products and device sector.
"The challenges facing the hospital sector lead us to expect
softening demand for certain medical products," said Diana Lee,
Moody's Vice President and Senior Credit Officer.
The outlook expresses Moody's expectations for the fundamental
credit conditions in the industry over the next 12 to 18 months
and does not speak to the expected balance of rating changes
during this timeframe.
As a result of challenging economic conditions, Moody's expects US
hospitals will see softer volume trends, especially for elective
surgical procedures. In addition, not-for-profit hospitals, which
comprise the majority of the nation's hospitals, will likely
continue to experience limited access to the tax-exempt debt
markets, which could curtail spending on medical equipment over
the near-term.
These factors contribute to a higher likelihood that already
slowing organic growth for certain medical products makers will be
further constrained. For some, slower organic growth coupled with
potential near-term acquisition opportunities could raise event
risk and possibly even liquidity concerns.
While the overall sector outlook is negative, demand for devices
used to treat life-threatening conditions is less likely to be
impacted than demand for products linked to elective healthcare
procedures or to capital spending, according to Moody's.
"This is a diverse sector, and an economic downturn is likely to
affect some companies and products more than others," said Lee.
Geographic diversification is another important factor. Sales
outside the US, which have helped support steady demand for
medical products, are generally more insulated from economic
pressures relative to the US market. This is because of the
prevalence of government-sponsored healthcare programs that
provide access to healthcare services regardless of employment
status. However, the extent to which these government programs
focus more on cost saving measures due to heightened funding
pressures could affect sales over time.
* Moody's Says Credit Outlook for Health Insurers Turns Negative
----------------------------------------------------------------
The fundamental credit outlook for the US healthcare insurance
companies, spanning the next 12-18 months, has shifted to negative
from stable, Moody's Investors Service concludes in its recent
report on the sector. As reasons for its opinion, the rating
agency cites the operational, economic, and political challenges
that will lower margins and hamper growth.
"Over the near-term," says the report's author Vice President
Stephen Zaharuk, "we believe that the credit profile of healthcare
insurers will come under negative pressure as the result of the
current political and economic climates, which in turn have placed
a strain on both management and operational capabilities."
Mr. Zaharuk points out that the mounting cost of health care
continues to test the willingness of employers to provide health
insurance to their employees, especially with a downturn in the
economy. "This scenario results in intense pricing pressure in
order to maintain market share. In addition, new commercial and
Medicare Advantage products have added more operational complexity
and financial risk for the insurers."
"Although more conservatively invested than other sectors," Mr.
Zaharuk says, "the healthcare insurance sector will feel the
impact of credit impairments and lower investment returns should
economic conditions continue to deteriorate." "Additionally," he
states "the vulnerability of an employer-based system for
healthcare coverage is exposed in a recessionary environment."
"Layoffs and coverage elimination by employers have an immediate
negative impact on the sector's revenues and earnings," the
analyst notes.
"Finally," Mr. Zaharuk says, "the current uncertainty surrounding
political solutions with respect to health care at both the state
and federal levels hinders insurers' ability to develop focused
strategic plans." He adds: "More urgently, reimbursement cuts to
insurers for Medicare Advantage programs and pressure on state
budgets for Medicaid spending are threatening the growth and
profitability of these segments."
"However," the analyst adds, "not all companies will face the same
degree of ratings pressure." The analyst explains that the rating
impact on any particular insurer will be determined by a
combination of several external and internal factors: (1) a
company's size and product diversity; (2) its financial profile,
including profitability, capital adequacy, and financial
flexibility; (3) the quality and adaptability of management; (4)
the severity of the current economic downturn; and (5) the degree
and swiftness of healthcare reform.
* Moody's Says Global Speculative Default Rate to Reach 10.4%
-------------------------------------------------------------
Moody's Investors Service's default rate forecasting model now
predicts that the global speculative-grade issuer-weighted
corporate default rate will climb to 4.3% by the end of this year
and rise sharply to 10.4% a year from now.
"Speculative-grade corporate default rates are expected to climb
sharply throughout 2009 as Moody's baseline forecast now
incorporates a deep and protracted US recession. Corporate
default rates in this cycle will likely match or exceed the peak
levels reached in the previous two US recessions of 1990-91 and
2000-01," says Moody's Director of Corporate Default Research
Kenneth Emery.
Moody's global speculative-grade default rate edged higher to 2.8%
in October, from September's revised level of 2.7% and 1.1% a year
ago. Measured on a dollar volume basis, the default rate remained
unchanged at 2.4% from September's revised level. A year ago, the
global dollar-weighted bond default rate stood at 0.7%.
For both U.S. and European speculative-grade issuers, Moody's
forecasting model foresees default rates increasing to 4.9% and
2.2%, respectively, by the end of this year and 11.2% and 9.7% a
year from now.
The U.S. speculative-grade default rate increased from a revised
level of 3.1% in September to 3.3% in October. At this time last
year, the U.S. default rate was 1.1%. Measured on a dollar-
weighted basis, the default rate finished at 2.7%, unchanged from
last month's revised figure. At this time last year, the U.S.
dollar-weighted bond default rate stood at 0.6%.
Across industries over the coming year, Moody's default rate
forecasting model indicates that the Consumer Transportation
sector will be the most troubled in the U.S. and the Durable
Consumer Goods sector will have the highest default rate in
Europe.
Moody's speculative-grade corporate distress index--which measures
the percentage of rated issuers that have debt trading at
distressed levels--rose more than 60% from September's 29.7% to
48.5% in October, marking the highest level since Moody's launched
the index in 1996. A year ago, the index was much lower at 4.6%.
There Moody's were a total of ten rated corporate debt defaulters
in October. Three are from U.S. and Iceland, respectively and one
each from United Kingdom, Mexico, Japan, and Hong Kong.
Year-to-date, a total of 71 Moody's-rated corporate issuers have
defaulted this year, compared with 16 defaults for the same period
last year. Of the 71 defaulters, 59 are from the U.S. and Canada
and eight are from Europe
In the leveraged loan market, a total of four Moody's-rated
issuers defaulted in October. None of these four issuers are
included in Moody's loan default rate as their loans are unrated.
The trailing 12-month U.S. leveraged loan default rate remained
unchanged at 2.9% from September to October. A year ago, the
leveraged loan default rate was much lower at 0.3%.
* S&P Downgrades Ratings on 35 Classes From Eight RMBS Deals
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 35
classes from eight residential mortgage-backed securities
transactions backed by U.S. subprime mortgage loan collateral
issued in 2005 and 2007. At the same time, S&P removed 14 of the
lowered ratings from CreditWatch with negative implications. In
addition, S&P affirmed S&P's ratings on 47 classes from the same
eight RMBS transactions and on 36 classes from three additional
transactions. Lastly, S&P removed seven of the affirmed ratings
from CreditWatch negative.
The downgraded classes represent an original par amount of
approximately $1.52 billion, which is less than 1% of the par
amount of U.S. RMBS backed by first-lien subprime mortgage loans
rated by Standard & Poor's in 2005 and 2007. S&P has taken
previous rating actions on approximately $0.18 billion of the
total amount of affected securities.
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. S&P's default
curve for U.S. subprime RMBS is a key component of S&P's loss
projection analysis of U.S. RMBS transactions.
With the recent continued deterioration in U.S. RMBS performance,
however, S&P is adjusting its loss curve forecasting methodology
to more explicitly incorporate each transaction's current
delinquency (including 60- and 90-day delinquencies), default, and
loss trends. Some transactions are experiencing foreclosures and
delinquencies at rates greater than S&P's initial projections.
S&P believes that adjusting S&P's projected losses, which S&P
derived from its default curve analysis, is appropriate in cases
where the amount of current delinquencies indicates a different
timing or level of loss. In addition, S&P recently revised its
loss severity assumption for transactions issued in 2006 and the
first half of 2007. S&P based the revised assumption on its
belief that continued foreclosures, distressed sales, increased
carrying costs, and a further decline in home sales will continue
to depress prices and push loss severities higher than S&P
previously assumed.
The lowered ratings reflect S&P's assessment of credit support
under three constant prepayment rate scenarios. The first
scenario utilizes the lower of the lifetime or 12-month CPR, while
the second utilizes a 6% CPR, which is very slow by historical
standards. The third scenario uses a prepayment rate that is
equal to two times the lower of the lifetime or 12-month CPR. S&P
incorporated a third CPR scenario into S&P's cash flow analysis to
account for potential increases in prepayments, which may result
from normal increases typically found in the seasoning of pools
combined with a chance that governmental proposals, if adopted,
may lead to increased CPRs. S&P assumed a constant default rate
for each pool.
Because S&P's analysis focused on each individual class with
varying maturities, prepayment scenarios may cause an individual
class or the transaction itself to prepay in full before it incurs
the entire loss projection. Slower prepayment assumptions
lengthen the average life of the mortgage pool, which increases
the likelihood that total projected losses will be realized. The
longer a class remains outstanding, however, the more excess
spread it generates.
To assess the creditworthiness of each class, S&P reviewed the
individual delinquency and loss trends of each transaction for
changes, if any, in risk characteristics, servicing, and the
ability to withstand additional credit deterioration. For
mortgage pools that continue to exhibit rising delinquencies, S&P
increased S&P's cash flow stresses to account for potential
increases in monthly losses. In order to maintain a rating higher
than 'B', a class had to absorb losses in excess of the base-case
assumptions S&P assumed in S&P's analysis. For example, one class
may have to withstand 115% of S&P's base-case loss assumptions in
order to maintain a 'BB' rating, while a different class may have
to withstand 125% of S&P's base-case loss assumptions to maintain
a 'BBB' rating. Each class that has an affirmed 'AAA' rating can
withstand approximately 150% of S&P's base-case loss assumptions
under its analysis, subject to individual caps assumed on specific
transactions. S&P determined the caps by limiting the amount of
remaining defaults to 90% of the current pool balances.
A combination of subordination, excess spread, and
overcollateralization provide credit support for the affected
transactions. The underlying collateral for these deals consists
of fixed- and adjustable-rate U.S. subprime mortgage loans secured
by first and second liens on one- to four-family residential
properties.
To date, S&P has resolved the CreditWatch placements of the
ratings on 2,606 classes from 389 U.S. subprime RMBS transactions
from the 2005, 2006, and 2007 vintages. Currently, S&P's ratings
on 678 classes from 127 U.S. subprime RMBS transactions from the
2005, 2006, and 2007 vintages are on CreditWatch negative.
Standard & Poor's will continue to monitor the RMBS transactions
it rates and take rating actions, including CreditWatch
placements, when appropriate.
Rating and CreditWatch Actions
CWABS Asset-Backed Certificates Trust 2005-5
Series 2005-5
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 126673V41 AA- AA-/Watch Neg
CWABS Asset-Backed Certificates Trust 2005-AB2
Series 2005-AB2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 126673T28 AA AA+
M-3 126673T36 BBB AA/Watch Neg
M-4 126673T44 B AA-/Watch Neg
M-5 126673T51 B- B
M-7 126673T77 CC CCC
B 126673T85 CC CCC
FFMLT Trust 2005-FF2
Series 2005-FF2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 36242DP23 CCC B-
B-4 36242D2W2 CC CCC
B-5 36242D2X0 CC CCC
First Franklin Mortgage Loan Trust 2005-FF10
Series 2005-FF10
Rating
------
Class CUSIP To From
----- ----- -- ----
A1 32027NWK3 BBB AAA/Watch Neg
A3 32027NWM9 AAA AAA/Watch Neg
A4 32027NWN7 A AAA/Watch Neg
A5 32027NWP2 BB AAA/Watch Neg
A6-M 32027NWQ0 B AAA/Watch Neg
M6 32027NWW7 D CC
GSAMP Trust 2005-HE2
Series 2005-HE2
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 36242DB28 CC CCC
B-4 36242DB36 D CC
GSAMP Trust 2005-HE4
Series 2005-HE4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 362341KE8 AA AA/Watch Neg
M-4 362341KF5 A AA-/Watch Neg
Impac Secured Assets Trust 2007-1
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 452559AB3 B+ AAA
A-3 452559AC1 B+ AAA
A-M 452559AD9 B AAA
M-1 452559AE7 CCC AA+
M-2 452559AF4 CCC AA+
M-3 452559AG2 CCC AA
M-4 452559AH0 CCC A+
M-5 452559AJ6 CC A-
M-6 452559AK3 CC BBB/Watch Neg
M-7 452559AL1 CC BBB-/Watch Neg
M-8 452559AM9 CC BB/Watch Neg
B 452559AN7 CC BB-/Watch Neg
JPMorgan Mortgage Acquisition Corp. 2005-FLD1
Series 2005-FLD1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-3 46626LAV2 AA- AA-/Watch Neg
Structured Asset Investment Loan Trust 2005-4
Series 2005-4
Rating
------
Class CUSIP To From
----- ----- -- ----
M4 86358ESN7 AA- AA-/Watch Neg
M8 86358ESS6 CC CCC
M10 86358ESU1 D CC
Terwin Mortgage Trust 2007-4HE
Series 2007-4HE
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 88157QAA6 AA AA/Watch Neg
A-2 88157QAK4 BBB BBB/Watch Neg
A-3 88157QAL2 CCC BB/Watch Neg
G 88157QAG3 AA AAA/Watch Neg
M-1 88157QAB4 CC B/Watch Neg
M-2 88157QAC2 D CCC
Ratings Affirmed
ABFC 2005-WF1 Trust
Series 2005-WF1
Class CUSIP Rating
----- ----- ------
A-1 04542BLU4 AAA
A-2C 04542BLX8 AAA
M-1 04542BLY6 AA+
M-2 04542BLZ3 AA
M-3 04542BMA7 AA-
M-4 04542BMB5 A+
M-5 04542BMC3 A+
M-6 04542BMD1 A
M-7 04542BME9 A-
M-8 04542BMF6 BBB+
M-9 04542BMG4 BBB
M-10 04542BMH2 BBB-
B-1 04542BMJ8 BB
B-2 04542BMK5 B
B-3 04542BML3 CCC
CWABS Asset-Backed Certificates Trust 2005-5
Series 2005-5
Class CUSIP Rating
----- ----- ------
1-A 126673U42 AAA
2-A-2 126673U67 AAA
2-A-3 126673U75 AAA
M-1 126673U83 AA+
M-2 126673U91 AA+
M-3 126673V25 AA+
M-4 126673V33 AA
M-6 126673V58 B
M-7 126673V66 CCC
CWABS Asset-Backed Certificates Trust 2005-AB2
Series 2005-AB2
Class CUSIP Rating
----- ----- ------
1-A-1 126673S52 AAA
2-A-2 126673S78 AAA
2-A-3 126673S86 AAA
M-1 126673S94 AA+
M-6 126673T69 CCC
FFMLT Trust 2005-FF2
Series 2005-FF2
Class CUSIP Rating
----- ----- ------
A-1 36242DM67 AAA
A-2C 36242DM91 AAA
M-1 36242DN25 AA+
M-2 36242DN33 AA
M-3 36242DN41 AA
M-4 36242DN58 AA-
M-5 36242DN66 A+
M-6 36242DN74 BBB
B-1 36242DN82 BB
B-2 36242DN90 B
First Franklin Mortgage Loan Trust 2005-FF10
Series 2005-FF10
Class CUSIP Rating
----- ----- ------
M1 32027NWR8 CCC
M2 32027NWS6 CCC
GSAMP Trust 2005-HE2
Series 2005-HE2
Class CUSIP Rating
----- ----- ------
M-1 36242DA52 A
M-2 36242DA60 BBB
M-3 36242DA78 B
B-1 36242DA86 B-
B-2 36242DA94 CCC
GSAMP Trust 2005-HE4
Series 2005-HE4
Class CUSIP Rating
----- ----- ------
A-1 362341JY6 AAA
A-2B 362341KA6 AAA
A-2C 362341KB4 AAA
M-1 362341KC2 AA+
M-2 362341KD0 AA+
M-5 362341KG3 B
M-6 362341KH1 CCC
B-1 362341KJ7 CCC
B-2 362341KK4 CCC
B-3 362341KL2 CCC
Impac Secured Assets Trust 2007-1
Series 2007-1
Class CUSIP Rating
----- ----- ------
A-1 452559AA5 AAA
JPMorgan Mortgage Acquisition Corp. 2005-FLD1
Series 2005-FLD1
Class CUSIP Rating
----- ----- ------
A-2 46626LAR1 AAA
A-3 46626LAS9 AAA
M-1 46626LAT7 AA+
M-2 46626LAU4 AA
M-4 46626LAW0 BB
M-5 46626LAX8 CCC
M-6 46626LAY6 CCC
M-7 46626LAZ3 CCC
M-8 46626LBA7 CCC
M-9 46626LBB5 CCC
Structured Asset Investment Loan Trust 2005-4
Series 2005-4
Class CUSIP Rating
----- ----- ------
A3 86358ESG2 AAA
A4 86358ESH0 AAA
A5 86358ESJ6 AAA
M1 86358ESK3 AA+
M2 86358ESL1 AA
M3 86358ESM9 AA
M5 86358ESP2 BB
M6 86358ESQ0 CCC
M7 86358ESR8 CCC
* Michael Baxter Appointed to Judicial Conference Advisory Panel
----------------------------------------------------------------
Covington & Burling LLP partner Michael St. Patrick Baxter has
been appointed by Chief Justice John G. Roberts, Jr., to the
Judicial Conference of the United States' Advisory Committee on
Bankruptcy Rules.
The Advisory Committee on Bankruptcy Rules studies the bankruptcy
rules of procedure and practice, considers and drafts proposed
changes, and submits proposed rule changes to the Judicial
Conference's Rules Committee. Committee members are appointed by
the Chief Justice of the United States. Mr. Baxter's term is for
three years.
At Covington, Mr. Baxter's practice includes advising debtors,
creditors, and official committees in bankruptcy cases; advising
on the structuring of transactions involving financially troubled
companies; counseling companies in workouts, corporate
restructurings, and bankruptcy reorganizations; and acting as a
Chapter 11 bankruptcy trustee.
Mr. Baxter is a conferee of the National Bankruptcy Conference, a
fellow of the American College of Bankruptcy, a member of the
American Law Institute, a founding member of the International
Insolvency Institute, chair of the American Bar Association's
Business Bankruptcy Committee, and an adjunct professor at the
George Washington University Law School.
About Covington & Burling
Founded in 1919, Covington & Burling LLP -- http://www.cov.com/
-- provides corporate, litigation, and regulatory expertise to
enable clients to achieve their goals. The firm has 650 lawyers
and offices in Beijing, Brussels, London, New York, San Francisco,
and Washington, DC Covington & Burling LLP, an international law
firm, provides corporate, litigation, and regulatory expertise to
enable clients to achieve their goals. Founded in 1919, the firm
has more than 650 lawyers and offices in Beijing, Brussels,
London, New York, San Diego, San Francisco, Silicon Valley, and
Washington, DC.
* BOOK REVIEW: Crafting Solutions for Troubled Businesses
---------------------------------------------------------
Full Title: Crafting Solutions for Troubled Businesses: A
Disciplined Approach to Diagnosing and
Confronting Management Challenges
Author: Stephen J. Hopkins and S. Douglas Hopkins
Publisher: Beard Books
Hardcover: 316 pages
List Price: US$74.95
Order your personal copy at
http://www.amazon.com/exec/obidos/ASIN/1587982870/internetbankrupt
So the first thing to do when dealing with a troubled business
is to find the guilty and lop someone's head off! Don't be so
quick to react, advise co-authors Stephen J. Hopkins and S.
Douglas Hopkins in their thoughtful, well-researched book,
Crafting Solutions for Troubled Businesses.
The father-son team of Steve and Doug Hopkins are principals of
Kestrel Consulting LLC, a firm they founded in March 2004.
Each has more than 25 years of experience working with troubled
businesses and providing turnaround advisory and interim
management services.
Steve got his first taste of a troubled business when, as chief
financial officer of an 80-year-old chemical company, Bill
Nightingale of Nightingale & Associates assisted him in taking
the company through a Chapter 11 filing. The company
subsequently emerged from bankruptcy with payment in full to all
creditors.
Steve then joined Nightingale, staying for 23 years and serving
initially as a principal and eventually as president from 1994
to 2000. Doug began working at Nightingale in 1978 as a part-
time resource for special projects. After working in this
capacity for 10 years, Steve joined Nightingale full time in the
1980s and became a principal in 1994. Both Steve and Doug have
served in various C-level roles in troubled companies, including
CEO, CFO, COO, and CRO.
To write this book, the Hopkinses drew upon their vast
experience in dealing with troubled companies. They took 100 of
the largest projects they have been involved in and applied a
"disciplined analysis" to diagnose problem situations and
produce successful outcomes.
The projects -- helpfully set apart by shaded boxes --
demonstrate the authors' theories and methods in dealing with
troubled businesses.
The authors also analyze some well-known cases like Enron,
WorldCom, and Sunbeam to help the reader connect the dots in a
very real sense and use the book for actionable advice.
The book is divided into five parts:
1) Conceptual Approach and Key Issues,
2) Managing the Crisis,
3) The Diagnosis Process,
4) Alternatives and Action Plans, and
5) Lessons Learned in 100 Completed Assignments.
Each part has multiple chapters expanding on these themes, and
each chapter concludes with a recap of what was discussed. For
speed readers and the time crunched, these recaps are an
excellent way of extracting from the book the essence of what
the authors are advocating.
So what about lopping off that head? The authors contend that
management's role is much less pivotal than is commonly
believed.
The real issue when working with a troubled business is
determining the viability of the business. To do that, the
underlying causes must be identified at different stages of the
corporate lifecycle.
The authors categorize troubled businesses as Undisciplined
Racehorses, Overburdened Workhorses, and Aging Mules. Only
through a step-by-step diagnosis can the core problems be dealt
with. Pursuing a turnaround may not always be a viable and, in
fact, in only one-third of the 100 cases the authors worked on
did the company achieve a true operational turnaround.
Crafting Solutions to Troubled Businesses should be on the must-
read list of anyone involved in dealing with, consulting for, or
operating a troubled business.
*********
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 Caballos, Sheryl Joy P. Olano, Carlo 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.
*** End of Transmission ***