/raid1/www/Hosts/bankrupt/TCR_Public/081120.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, November 20, 2008, Vol. 12, No. 277
Headlines
2115 COMPTON: Voluntary Chapter 11 Case Summary
89 CREEK: Involuntary Chapter 11 Case Summary
ADELPHIA COMM: Reports Distribution Of $134MM Cash & 1MM TW Shares
ADELPHIA COMM: Reach Deal with FirstEnergy on Contract Issues
AFC ACQUISITIONS: Unit to Hold Going-Out-of-Business Sales
ALLIED WASTE: S&P Holds Positive Watch on Planned Republic Merger
ALOHA AIRLINES: Selling IP Assets for At Least $525,000 at Auction
ALPHA NATURAL: S&P Holds Pos. Watch on B+ Rating on Cliff Merger
ALTERNATIVE LOAN: S&P Corrects 'B' Rating on Class X-BJ to AAA
AMERICAN INTERNATIONAL: Some Bidders Would Need Gov't Backing
AMERICAN INTERNATIONAL: MetLife "Positioned" to Buy U.S. Units
ARCHWAY COOKIES: Court Picks Lance Inc.'s $30MM Bid for Assets
ASARCO LLC: El Paso Residents Want Firm's Liabilities Disclosed
ASARCO LLC: Court Gives Go Signal on Amboy Property Auction
ASARCO LLC: Inks Deal with Tersigni on Over-Billings
ASCENDIA BRANDS: To Grant Severance/Bonuses to Wind-Down Personnel
ATHERTON-NEWPORT: Inks Asset Sale Deal with Guardian Management
AUTHSEC INC: Case Summary & 20 Largest Unsecured Creditors
BEAR STEARNS: Fitch Takes Rating Actions on Various Cert. Classes
BEAUDRY RV: Files for Bankruptcy, Seeks $7-Mil. GE Financing
BEAUDRY RV: Voluntary Chapter 11 Case Summary
BI-LO LLC: S&P Puts 'B-' Rating on Negative CreditWatch
CAMPBELL CONTRACTORS: Case Summary & 19 Largest Unsec. Creditors
CARAUSTAR INDUSTRIES: S&P Puts 'B-' Rating on Negative CreditWatch
CARMIKE CINEMAS: S&P Changes Outlook to Negative & Keeps B- Rating
CCS MEDICAL: Tight Loan Covenants Spur S&P to Junk Ratings
CHEM RX: S&P Junks Corporate Credit Rating & Removes CreditWatch
CHRYSLER LLC: CEO to Accept $1 Salary in Exchange for Gov't Aid
CIRCUIT CITY: Dec. 19 Deadline for 503(b)(9) Claims Set
CIRCUS AND ELDORADO: S&P Holds 'B' Rating; Outlook Negative
CITIGROUP INC: Leon Gross Leaves Firm; Co. to Buy SIV Assets
CLEARWATER FUNDING: Moody's Downgrades 2 Classes of Notes to 'B3'
COMUNITY LENDING: Asks Court to Convert Cases to Chapter 7
COMUNITY LENDING: Taps Day Pitney as Special Counsel
CONGOLEUM CORP: Court OKs Settlement Agreement on Asbestos Claims
CONGOLEUM CORP: SVP of Sales Disposes of All 2,500 Shares
CONGOLEUM CORP: September 30 Balance Sheet Upside-Down by $54MM
CONGOLEUM CORP: Files Amended Plan of Reorganization
CORPORATE BACKED: S&P Puts BB- Rating on Two Classes on Neg. Watch
CW MINING: Court Converts Case to Liquidation under Ch. 7
DBO HOLDINGS: S&P Maintains 'B+' Corporate Credit Rating
DBSI INC: Gets Interim Approval to Use Cash Collateral
DBSI INC: M&I Marshall Asserts $76MM Loan to Firm is Secured
DSLA MORTGAGE: S&P Junks Rating on Class B-5 Certificates
DURACO PRODUCTS: Case Summary & 20 Largest Unsecured Creditors
ENDURANCE BUSINESS: S&P Junks Corporate Credit Rating From 'B-'
EVA-TONE INC: Gets Interim OK to Use Textron Cash Collateral
FMC REAL: Fitch Holds Low-B Ratings & Assigns Stable Outlooks
FORD MOTOR: CEO Won't Accept $1 Salary in Exchange for Gov't Aid
FRENCH LICK: S&P Lifts Corporate Credit Rating to 'CC' From 'SD'
GASTAR EXPLORATION: Moody's Cuts Senior Note Rating to 'Caa3'
GENERAL MOTORS: CEO Wagoner Says Bankruptcy Would Be Catastrophic
GENERAL MOTORS: CEO Won't Accept $1 Salary to Bag Gov't Aid
GERALDINE PYE: Case Summary & 9 Largest Unsecured Creditors
GLOBAL CROSSING: EVP Daniel Wagner Owns 48,625 Shares of Stock
GOODYEAR TIRE: S&P's Ratings Remain on CreditWatch Negative
GS MORTGAGE: S&P Puts Ratings on 11 Classes on Negative Watch
HALO TECHNOLOGY: Panel Taps Cerian Technology as Corporate Advisor
HANESBRANDS INC: Moody's Keeps All Ratings With Stable Outlook
HARRAH'S ENTERTAINMENT: S&P Junks Rating on $2.1BB Note Offering
HEAVEN INVESTMENT: Has Until December 29 to File Chapter 11 Plan
HOLLYWOOD THEATERS: S&P Downgrades Corporate Credit Rating to 'B-'
HOME EQUITY: S&P Downgrades Ratings on Classes MF-1 & MV-1 Certs.
HUNTER DEFENSE: Moody's Retains 'B2' Rating With Stable Outlook
IMMUNICON CORP: Plan of Liquidation Effective Nov. 17
IMPERIAL GAMING: Case Summary and 20 Largest Unsec. Creditors
IMPERIAL GAMING: Files for Chapter 11 Protection in Colorado
INDUSTRIAS VASSALLO: Case Summary and 20 Largest Unsec. Creditors
INDUSTRIAS VASSALLO: Files for Bankruptcy in Puerto Rico
INNERDOORWAY: Bankruptcy Won't Affect Subscribers & Advertisers
INTERNATIONAL FOOD: Auditor Raises Going Concern Doubt
JAMES RIVER: FMR LLC Disposes of 5.26% Stake
JAMES RIVER: Posts $21.7 Net Loss in Quarter ended Sept. 30
JOSEPH LEFRAK: Case Summary & 20 Largest Unsecured Creditors
JP MORGAN: S&P Makes Corrections on Ratings on Eight Classes
KEVIN HEBNER: Case Summary and 20 Largest Unsecured Creditors
KIS GOLF: Voluntary Chapter 11 Case Summary
KOMUNIK CORP: Restructures in Canada, Gets CCAA Protection
L & M BROADCASTING: Case Summary and 20 Largest Unsec. Creditors
LAKEWOOD INVESTORS: Case Summary & 7 Largest Unsecured Creditors
LAZY DAYS: Nonpayment of Interest Cues S&P's Rating Downgrades
LAZY DAYS: Nonpayment of Interest Cues Moody's Rating Downgrades
LEINER HEALTH: Has Until November 30 to File Chapter 11 Plan
LEVEL 3 COMMS: S&P Junks Corporate Credit Rating From 'B-'
LOUIS VAN ROEKEL: Case Summary & 2 Largest Unsecured Creditors
MAIN STREET: Fitch Withdraws 'D' Ratings on 2008A Revenue Bonds
MARION BISHOFF: Case Summary & 20 Largest Unsecured Creditors
MARX BLACKETT: Case Summary and 20 Largest Unsecured Creditors
MECACHROME INTERNATIONAL: Moody's Cuts Corp. Family Rating to 'Ca'
MECACHROME INTERNATIONAL: S&P's Corporate Rating Tumbles to 'D'
MONROE CENTER: Seeks to Block Sale of Membership Interests
MORGAN STANLEY: S&P Puts 'BB-' Rating on CreditWatch Negative
NEFF CORP: 10% Senior Note Offering Prompts S&P's Junk Ratings
NETVERSANT SOLUTIONS: Case Summary & 25 Largest Unsec. Creditors
NETVERSANT SOLUTIONS: Liquidity Crisis Blamed For Bankruptcy
NORD RESOURCES: Commences Offering of 54,889,705 Shares of Stock
NORD RESOURCES: Posts $1.6MM Net Loss in Quarter ended Sept. 30
NORTHERN BAY: AnchorBank Files Motion for Abandonment or Dismissal
ORBITZ WORLDWIDE: Moody's Keeps B2 Rating; Outlook Is Negative
OVERLAND STORAGE: Auditor Raises Going Concern Doubt
PETTERS GROUP: Barclays Sues Ritchie Funds Over Bad Investment
PROCESS DEVELOPMENT: Case Summary & 20 Largest Unsec. Creditors
QUIGLEY CO: Seeks U.S. Trustee's E-mails w/ Asbestos Claimants
RACE POINT: Moody's Cuts Rating on $39.9MM Class D Notes to Ba1
REDROLLER HOLDINGS: Case Summary and 20 Largest Unsec. Creditors
RELLOR GROUP: Case Summary and 20 Largest Unsecured Creditors
SABRE HOLDINGS: Moody's Holds 'B2' Rating; Outlook Negative
SAFLINK CORP: Auditor Raises Going Concern Doubt
SAINTS MEDICAL: Financial Decline Cues Moody's Ba2 Rating
SALEM COMMUNICATIONS: S&P Junks Issue-Level Rating on $100MM Notes
SEMGROUP LP: Court Extends Removal & Lease Decision Periods
SUNGARD DATA: Fitch Revises Rating Outlook to Negative
SYNCORA GUARANTEE: S&P Downgrades Financial Strength Rating to 'B'
SYNTAX-BRILLIAN: Seeks to Sell Tooling Set for $120,000
THORNBURG MORTGAGE: Misses Interest Payment for 8% Senior Notes
TRAVELPORT HOLDINGS: Moody's Holds 'B2' Rating; Outlook Negative
UNITED SITE: Moody's Junks Corporate Family Rating From 'B3'
VERASUN ENERGY: Seeks to Reject Janesville & Welcome Corn Pacts
VERIFONE INC: Moody's Affirms 'B1' Rating With Negative Outlook
VERUTEK TECH: Reports Narrower $1.3MM Net Loss for Last 9-Months
VUBOTICS INC: Case Summary & 15 Largest Unsecured Creditors
WACHOVIA AUTO: S&P Takes Rating Actions on Five Transactions
WATERMARK MARINA: Creditors Meeting Set for Dec. 15
ZEE ZERO: Case Summary & 3 Largest Unsecured Creditors
* Fitch Says Higher Taxes to Further Pressure Cigarette Volumes
* Fitch Says Restaurant Credit Risk Rises as Challenges Persist
* Fitch Says Food Industry Should Focus on Liquidity & Leverage
* S&P Downgrades Ratings on 38 Tranches From 10 Hybrid CDO Deals
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
2115 COMPTON: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: 2115 Compton Avenue Corona LLC
1035 Montecito Dr Ste 102
Corona, CA 92879
Case No.: 08-26176
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Central District Of California (Riverside)
Judge: Meredith A. Jury
Debtor's Counsel: Edward A Weiss
700 S Macduff
Anaheim, CA 92804
714-952-3752
Total Assets: $12,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor does not have creditors who are not insiders.
89 CREEK: Involuntary Chapter 11 Case Summary
---------------------------------------------
Alleged Debtor: 89 CREEK, LLC
3104 E. Camelback, No. 612
Phoenix, AZ 85016
Case Number: 08-16482
Debtor-affiliate subject to separate Chapter 11 petitions:
Entity Case No.
------ --------
Goddyear 93 LLC 08-16482
Involuntary Petition Date: November 17, 2008
Court: District of Arizona (Phoenix)
Judge: Charles G. Case II
Petitioners Claim Amount
----------- ------------
Phoenix Holdings II, LLC unstated
Robert Burns, Manager
3104 E. Camelback, NO. 612
Phoenix, AZ 85016
ADELPHIA COMM: Reports Distribution Of $134MM Cash & 1MM TW Shares
------------------------------------------------------------------
The reorganized Adelphia Communications Corp. and its affiliates
filed with the Court their seventh post- confirmation report dated
October 15, 2008. Under the report, the Reorganized Debtors
disclosed the steps they have taken for the consummation of their
Chapter 11 Plans:
* Distributed $134.2 million of cash and 1,059,015 shares of
Time Warner Comcast Class A Common Stock on September 8,
2008 to holders of ACC Allowed Claims.
* Completed the sixth newly Allowed Claims distribution on
August 6, 2008 distributing $500,000 in cash and 18,178
shares of TWC Class A Common Stock to holders of newly
Allowed Claims.
* Obtained bankruptcy court approval for the 26th Supplemental
Claims Order, filed settlement stipulations including those
of Lucent Technologies Inc. and General Dynamics Government
Systems Corp., and filed 21st through 26th Omnibus Objection
to Claims to resolve the remaining Disputed Claims. As of
October 15, 2008, 125 Disputed Claims pend resolution.
* Funded the grid interest escrow pursuant to the JV Plan for
$64.7 million for Century-TCI and $52.4 million for
Parnassos
* Settled all remaining professional fee holdbacks.
* Recovered $2.5 million in surety bond collateral to be
recovered amounts to $1 million.
The Reorganized Debtors report these cash activity for the period
from June 30, 2008 through September 30, 2008:
Cash Stock Total
------------ ------------ -----------
Balance at 6/30/08 $721,406,997 $114,759,105 836,166,102
Additions 14,974,720 0 14,974,720
Interest Income 4,232,999 0 4,232,999
Plan Disbursements (157,687,112) (40,342,390)(198,030,042)
Operating Costs (11,026,418) 0 (11,026,418)
------------ ------------ -----------
Balance at 9/30/08 $571,901,186 $74,416,175 $646,317,361
============ ============ ===========
The amounts listed under the column "Stock" reflect the New
Deemed Value of the TWC Class A Common Stock for $37.8038 and its
closing price for $24.20 at September 30, 2008. Thus, the fair
market value of the remaining stock on September 30, 2008 was
$47.6 million. The "Additions" include tax refunds of $14.3
million and miscellaneous cash receipts of $700,000. Plan
Disbursements include release of the Comcast and Time Warner
indemnity claim escrow.
"Operating costs" include professional expenses for $5.7 million;
payroll, benefits and bonus payments for $3.8 million; insurance
expense for $900,000; and other overhead expenses of $600,000.
The Report also contains the distributions of cash and shares of
TWC Class A Common Stock made to classes of claims through
September 30, 2008, a full-text copy of which is available for
free at: http://bankrupt.com/misc/ACOM_PostConReport.pdf
Meanwhile in connection with the JV Litigation Indemnification
Fund, Shelley C. Chapman, Esq., at Wilkie Farr & Gallagher LLP, in
New York, reports that as of October 1, 2008, about $1,929,025 has
been distributed from the JV Fund, with a current balance of
$8,789,230. In addition, the Plan Administrator has received
invoices, totaling $5,756,539, which are currently unpaid.
About Adelphia Comms
Based in Coudersport, Pennsylvania, Adelphia Communications
Corporation (OTC: ADELQ) -- http://www.adelphia.com/--
is a cable television company. Adelphia serves customers in 30
states and Puerto Rico, and offers analog and digital video
services, Internet access and other advanced services over its
broadband networks. The company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr &
Gallagher represents the Debtors in their restructuring efforts.
PricewaterhouseCoopers serves as the Debtors' financial advisor.
Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin,
Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of
the Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision LLC. The RME Debtors filed for chapter 11
protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622
through 06-10642). Their cases are jointly administered under
Adelphia Communications and its debtor-affiliates' chapter 11
cases.
The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended
Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That
plan became effective on Feb. 13, 2007.
(Adelphia Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ADELPHIA COMM: Reach Deal with FirstEnergy on Contract Issues
-------------------------------------------------------------
Adelphia Communications Corp. and its affiliates and FirstEnergy
Corp. entered into a court-approved stipulation resolving
FirstEnergy's objection to the assumption and assignment of
certain contracts and FirstEnergy's proofs of claim asserted
against the Debtors.
The Debtors served a notice that designated FirstEnergy's
contracts as one of those to be assumed and assigned pursuant to
the Debtors' sale of substantially all of their assets to Time
Warner NY Cable LLC. FirstEnergy opposed the proposed contract
assumption, asserting that the Debtors have not cured defaults
due under the Contracts. Subsequently, the Court approved the
Time Warner sale as well as the certain contract assumptions,
excluding FirstEnergy's contracts due to the pending objection.
The Court entered another order approving the assumption of the
FirstEnergy Contracts upon the Debtors' reservation of $2,000,000
as adequate assurance of prompt cure of all defaults arising on
or prior to the assignment of the FirstEnergy Contracts.
FirstEnergy also provided utility services to the Debtors and
have filed proofs of claim against the Debtors for amount owing
to the FirstEnergy Contracts and with the Utility Account.
FirstEnergy also filed a motion seeking payment of administrative
expenses. The Debtors have objected to FirstEnergy's Claims
pursuant to their 6th and 20th Omnibus Claims Objections.
Accordingly, the Debtors and FirstEnergy agreed that the Debtors
will provide FirstEnergy with:
(i) an allowed administrative expense claim for $2,400,000;
and
(ii) an allowed Subsidiary Debtor Trade Claim for $1,000,000,
which includes interest.
The Allowed Claims will replace all Claims asserted by
FirstEnergy and FirstEnergy's rights to receive a distribution of
account of the Allowed Claims will be satisfied by a cash payment
of $2,878,620 and 13,793 shares of Class A Common Stock of Time
Warner Cable Inc.
Moreover, the parties agree that the automatic stay will be
lifted solely to permit FirstEnergy to assert and pursue recovery
and collection of prepetition property damage claims, including
all interests under the Plan, against the Debtors' insurers. Any
recovery by FirstEnergy pursuant to the action is limited to
funds available policies issued by Arrowpoint Capital.
The parties further agree that:
(i) all Claims asserted by FirstEnergy will be deemed
disallowed and expunged;
(ii) the cure objection, the administrative expense motion and
claims objections will be deemed withdrawn; and
(iii) the Debtors will be authorized to release any amount
remaining in the Reserve less the Settlement Amount
without further Court order.
About Adelphia Comms
Based in Coudersport, Pennsylvania, Adelphia Communications
Corporation (OTC: ADELQ) -- http://www.adelphia.com/--
is a cable television company. Adelphia serves customers in 30
states and Puerto Rico, and offers analog and digital video
services, Internet access and other advanced services over its
broadband networks. The company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr &
Gallagher represents the Debtors in their restructuring efforts.
PricewaterhouseCoopers serves as the Debtors' financial advisor.
Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin,
Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of
the Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision LLC. The RME Debtors filed for chapter 11
protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622
through 06-10642). Their cases are jointly administered under
Adelphia Communications and its debtor-affiliates' chapter 11
cases.
The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended
Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That
plan became effective on Feb. 13, 2007.
(Adelphia Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
AFC ACQUISITIONS: Unit to Hold Going-Out-of-Business Sales
----------------------------------------------------------
Home Furnishings Business reports that the U.S. Bankruptcy Court
for the Central District of California has approved the going-out-
of-business sales of AFC Acquisitions' American Home Furnishings
furniture stores.
According to Home Furnishings, American Home's going-out-of-
business sales will be conducted by Planned Furniture Promotions,
Enfield, Connecticut, at three locations in Tucson and one each in
Prescott, Mesa, and Sahuarita.
As reported in the Troubled Company Reporter on Nov. 12, 2008,
American Home's furniture stores in Tucson closed in preparation
for a liquidation sale. American Home said that it would
liquidate six Arizona stores and two New Mexico stores, leaving
one store each in Albuquerque, Farmington, and Santa Fe.
Court documents say that AFC Acquisitions wants to consolidate
three locations in Albuquerque into one store and operate it with
locations in Santa Fe and Farmington. According to the documents,
AFC Acquisitions filed for bankruptcy after a key lender, Wells
Fargo Retail Financing, cut off a revolving credit facility.
Clint Engel at Furniture Today relates that an attorney for
Planned Furniture said earlier this month that the liquidator will
pay 75 cents on the dollar for the inventory in the Arizona stores
and $250,000 as an augment fee to bring in additional goods.
Furniture Today states that about $350,000 will be set aside to
fulfill existing client orders for goods not in stock.
Headquartered in Albuquerque, New Mexico, AFC Acquisition Corp. --
http://www.americanhome.com/-- operates the American Home chain
of furniture stores. The company has 674 employees, of whom 611
are full-time workers and the remaining are part-time employees.
AFC Acquisition filed for Chapter 11 protection on Nov. 2, 2008
(Bankr. C. D. Calif. Case No. 08-28517). David S. Kupetz, Esq.,
at Sulmeyer Kupetz, represents the company in its restructuring
effort. The company listed assets of $10 million to $50 million
and debts of $1 million to $10 million.
ALLIED WASTE: S&P Holds Positive Watch on Planned Republic Merger
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on solid
waste services providers Republic Services Inc. (BBB+/Watch Neg/
A-2) and Allied Waste Industries Inc. (BB/Watch Pos/--) remain on
CreditWatch, where the ratings were originally placed on June 16,
2008. The ongoing CreditWatch follows the announcement on
Nov. 14, 2008, that both companies have received approval from
their respective stockholders in favor of the proposed merger
between Republic and Allied.
Standard & Poor's expects that the merger will close before the
end of this year, following receipt of antitrust regulatory
approval from the U.S. Department of Justice.
"If the transaction is completed as proposed, S&P would expect to
lower the corporate credit rating on the combined Republic to
'BBB' from 'BBB+' and the short-term corporate credit rating to
'A-3' from 'A-2'," said Standard & Poor's credit analyst James
Siahaan. The outlook would be negative reflecting the aggressive
financial profile of the combined company, the integration
challenges related to systems and operations, and concerns related
to potential weakening of operating results in light of current
recessionary economic conditions.
S&P would expect that all remaining outstanding debt would become
unsecured at closing. As such, Allied's issue ratings would
become unsecured and would be raised to 'BBB', while Allied's
subordinated debt would be raised to 'BBB-' (one notch below the
corporate credit rating).
Although the Department of Justice is likely to deem a certain
amount of asset divestitures as mandatory for the combination to
be completed, S&P does not expect divestitures to materially
weaken Republic's business diversity or profitability.
S&P expects Republic to adhere to its long-standing investment-
grade financial policies, and to allocate free cash flow
judiciously, prioritizing debt reduction over shareholder rewards,
so as to improve the financial profile of the combined entity.
Although Republic's funds from operations to total adjusted debt
ratio will deteriorate from historical levels following the
transaction, S&P expects this credit measure to improve to the
25%-30% range within two years from the transaction's completion.
If the achievement of this target becomes increasingly unlikely,
on account of persistent weakness in the economic environment,
integration-related issues, or other factors, then S&P may
consider lowering the ratings.
S&P expects to resolve the CreditWatch on both entities upon the
completion of the merger. S&P expects this to occur before the
end of the year, following the receipt of antitrust regulatory
approval from the U.S. Department of Justice.
ALOHA AIRLINES: Selling IP Assets for At Least $525,000 at Auction
------------------------------------------------------------------
Erik Larson of Bloomberg News reports that the Hon. Lloyd King of
the United States Bankruptcy Court for the District of Hawaii has
authorized Aloha Airlines Inc. to sell its intellectual property
for $525,000 to Yucaipa Cos. or to the highest bidder at an
auction.
According to Mr. Larson, the company's IP assets comprised of
trademarks, Internet domains and several designs for painting
aircraft exteriors.
Yucaipa Cos, a majority investor and second-lien creditor, is
designated stalking-horse bidder for the company's assets,
Bloomberg says. Yucaipa will pay $25,000 in cash and will credit
bid $500,000 of its claims.
Bid for the company's asset must be submitted by Nov. 26, 2008,
followed by an auction on Dec. 3, 2008, then a sale hearing the
next day, Bloomberg relates.
About Aloha
Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines
Inc. -- http://www.alohaairlines.com/-- and its affiliates are
carriers that fly passengers and freight to Hawaii's five major
airports, as well as to half a dozen destinations in the western
U.S. They operate a fleet of about 20 aircraft, all Boeing 737s,
including three configured as freighters.
Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D.
Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy
protection in February 2006.
The company and its affiliates filed again for Chapter 11
protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08-
00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven
Singerman, Esq., at Berger Singerman P.A., and David C. Farmer,
Esq., represent the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors was represented by
Sonnenschein Nath & Rosenthal LLP and Bronster Hoshibata, A Law
Corporation. The Debtors' schedules reflected total assets of
$74,600,000 against total liabilities of $197,100,000.
On April 29, 2008, the Court converted the Debtors' cases into
chapter 7 liquidation proceedings. The next day, the U.S. Trustee
appointed Dane S. Field to serve as chapter 7 trustee for the
cases. James Wagner, Esq., at Wagner Choi & Verbrugge, represents
Mr. Field.
ALPHA NATURAL: S&P Holds Pos. Watch on B+ Rating on Cliff Merger
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on Alpha
Natural Resources Inc., including its 'B+' corporate credit
rating, remain on CreditWatch with positive implications, where
they were placed July 16, 2008, following the company's
announcement that it had agreed to be acquired by Cliffs Natural
Resources Inc.
This CreditWatch update follows the recent announcement by Alpha
and Cliffs that their previously agreed-to merger, under which
Cliffs would have acquired all outstanding shares of Alpha, would
be terminated after considering various issues, including the
current macroeconomic environment, uncertainty in the global steel
industry, shareholder dynamics, and risks and costs of potential
litigation. Under the terms of the settlement agreement,
Cliffs will pay Alpha $70 million.
"However, the continued CreditWatch listing for Alpha reflects
strong operating results in the quarter ended Sept. 30, 2008, due
to strong demand for coking coal, which resulted in an increase in
sales realization per ton of $85.70 compared to $58.09 during the
same prior-year period," said Standard & Poor's credit analyst
Maurice Austin. In addition, the company currently has about 94%
of thermal coal and 43% of met coal production committed for 2009,
at average prices of $70 per ton and $194 per ton, respectively.
As a result, S&P expects the company's financial profile to remain
at a level that it's good for the current rating, with adjusted
debt to EBITDA around 1.5x and adjusted funds from operations to
total debt greater than 45%, despite the majority of Alpha's mines
being located in the operationally challenged Central Appalachian
basin.
In resolving the CreditWatch listing, S&P will meet with
management and review its expectations for operational trends and
financial strategies in the near to intermediate term. Outcomes
could include an affirmation of the current rating or an upgrade
of one notch.
ALTERNATIVE LOAN: S&P Corrects 'B' Rating on Class X-BJ to AAA
--------------------------------------------------------------
Standard & Poor's Ratings Services corrected its rating on the
class X-BJ certificate from Alternative Loan Trust 2006-OA10. The
transaction is collateralized by Alternative-A negatively
amortizing residential mortgage loans. S&P reinstated the 'AAA'
rating on class X-BJ after it was inadvertently downgraded to 'B'
on Oct. 14, 2008, as part of a larger review of U.S. Alt-A
transactions.
The X-BJ class is an interest-only class whose notional balance is
equal to the balance of the group 3 senior certificates.
Generally, Standard & Poor's rates interest-only classes
equivalent to the highest rating on the related classes, which in
this case is class 3-A-1 (rated 'AAA'). S&P is reinstating S&P's
initial 'AAA' rating on class X-BJ, which reflects S&P's views of
the projected losses and remaining credit support for this
transaction.
Rating Reviewed
Alternative Loan Trust 2006-OA10
Rating
Class CUSIP Current Oct. 14 Pre-Oct. 14
----- ----- ------- ------- -----------
X-BJ 02146QAG8 AAA B AAA
AMERICAN INTERNATIONAL: Some Bidders Would Need Gov't Backing
-------------------------------------------------------------
Paritosh Bansal at Reuters reports that some buyers interested in
American International Group's assets consider the government as a
potential source of financing.
AIG, according to Reuters, has said it will sell everything except
for its U.S. property and casualty, foreign general insurance, and
an ownership interest in foreign life operations.
Citing investment bankers and lawyers, Reuters relates that
several AIG assets are worth billions of dollars. These experts,
according to the report, said that potential buyers will find it
hard to come up with the money to acquire the assets with the
credit markets still frozen and stock prices swooning. The
government is heavily invested in the future of AIG, so some
advisers see government financing as a possibility, Reuters
states, citing the sources.
Some AIG assets like its U.S. life insurance may be beyond the
reach of any one company without government help if credit market
crisis continues, Reuters reports. According to the report,
Bernstein analysts said in October that the U.S. life unit could
cost $23.4 billion to $33.8 billion depending on the multiple to
book value used.
Reuters quoted King & Spalding mergers partner William Bates as
saying, "In some circumstance if there were no other choice, the
government may say it's a better credit risk to take the buyer's
debt and in effect trade out. But again, their interest in going
into AIG was to keep the system from failing. And I am not sure
seller financing supports that rationale."
According to Reuters, experts said that the government hasn't said
it would fund any asset sales.
"I am quite sure the government would rather not provide
financing," Reuters quoted Lazard Ltd deputy chairperson Gary Parr
as saying.
Former CEO Gets Big Payoffs From AIG
Jay Miller, Lauren Pollock, and Kathy Shwiff at The Wall Street
Journal report that AIG's former CEO, Maurice Greenberg, is
getting big payoffs "on two bets of his investment vehicle" made
in 2005. The report says that C.V. Starr & Co. turned over on
Monday about 4.42 million shares valued at $8.4 million to fulfill
a variable prepaid forward contract with Credit Suisse Group that
generated $240 million for Mr. Greenberg when he entered it.
Mr. Greenberg is C.V. Starr's CEO and chairperson.
WSJ relates that executives have used variable prepaid forward
contracts with investment banks to limit the risk of holding big
blocks of their firm's stock. Citing Gradient Analytics founder
Carr Bettis, the report says that most of these arrangements let
the investor defer capital-gains taxes while retaining voting
rights.
AIG shares were trading at $67 when C.V. Starr entered the deal,
WSJ states. The stock turned over Monday was then worth about
$296.3 million in 2005, says WSJ. According to the report, AIG's
shares closed at $1.91 on Monday, off 97% this year.
Banks got the shares at a discount as incentive for taking the
risk and typically balance that risk with their own hedging
strategies, WSJ reports, citing Ms. Bettis.
About American International Group
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch Ratings,
which triggered additional requirements for liquidity. These and
other events severely limited AIG's access to debt and equity
markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest. Since Sept. 30, AIG has
borrowed additional amounts under the Fed Facility and has
announced plans to sell assets and businesses to repay amounts
owed in connection with the Fed Credit Agreement. In addition,
subsequent to Sept. 30, 2008, certain of AIG's domestic life
insurance subsidiaries entered into an agreement with the NY Fed
pursuant to which the NY Fed has borrowed, in return for cash
collateral, investment grade fixed maturity securities from the
insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
AMERICAN INTERNATIONAL: MetLife "Positioned" to Buy U.S. Units
--------------------------------------------------------------
Citigroup Inc. analyst Colin Devine said that MetLife Inc. is
"positioned" to purchase the U.S. life and retirement units of
American International Group Inc., Bloomberg News reports.
According to Bloomberg, Mr. Devine said in a research note on
Nov. 18 that MetLife can undertake "potentially transformational"
acquisitions, after raising more than $2 billion in capital.
MetLife has $6 billion in excess capital, Bloomberg says, citing
Mr. Devine.
"With our recently completed $2.3 billion common stock offering,
MetLife has further bolstered its strong, excess capital
position," C. Robert Henrikson, chairman, president and chief
executive officer of MetLife, said three weeks ago when the
insurance firm released its third quarter results. On October 8,
2008, the company had issued 86,250,000 shares of its common stock
at a price of $26.50 per share for gross proceeds of $2.3 billion.
As of Sept. 30, 2008, MetLife had $521.3 billion in assets and
$493.5 billion in debts. Its board of directors has declared an
annual common stock dividend of $0.74 per share, which is
unchanged from the dividend that the company paid in 2007.
Metlife's shares closed at $20.72 a share on Tuesday, compared
with $22.23 apiece on Nov. 17, and $28.14 on Nov. 14. According
to The Wall Street Journal, shares of MetLife have dropped nearly
40% since the beginning of November, and options traders appear to
be betting on further declines.
According to MarketWatch, Fox-Pitt Kelton analyst Mark Finkelstein
has reiterated his outperform rating on MetLife and said he
expects the stock to rebound. "We continue to believe MetLife has
the strongest excess capital position of the diversified large cap
names (approximately $6 billion) and is positioned to weather both
equity market and credit challenges," the analyst said.
Mr. Finkelstein has a $50-a-share price target on the stock.
MetLife -- http://www.metlife.com/-- is a leading provider of
insurance and financial services with operations throughout the
United States and the Latin America, Europe and Asia Pacific
regions. Through its domestic and international subsidiaries and
affiliates, MetLife reaches more than 70 million customers around
the world and MetLife is the largest life insurer in the United
States (based on life insurance in-force).
Attorney General Asks AIG on Bonus & Pay Plans
Grant McCool at Reuters reports that New York Attorney General
Andrew Cuomo has asked AIG to inform his office about the
company's plans on executive bonuses and pay raises this year.
Reuters relates that Mr. Cuomo, as part of his drive to force
rescued companies to drop year-end payments, warned AIG on Tuesday
of "significant legal ramifications" over executive bonuses.
According to the report, Mr. Cuomo and California Congressman
Henry Waxman are investigating executive pay, putting pressure on
companies over their policies of paying out millions of dollars in
bonuses to executives each year.
"It seems hard to imagine that AIG could pay significant bonuses
or give raises to its executives after the company has quite
literally been bailed out by the American taxpayer," Reuters
quoted Mr. Cuomo as saying.
According to Hugh Son at Bloomberg, Mr. Cuomo said that AIG should
be "completely transparent" on executive pay.
Bloomberg states that AIG has agreed to stop severance payments to
executives including former CEO Martin Sullivan and canceled most
of its planned conferences.
AIG spokesperson Nicholas Ashooh said that the company hasn't paid
its CEO, Edward Liddy, a salary since he was appointed by the
government in September 2008, Bloomberg reports.
Bloomberg quoted Mr. Ashooh as saying, "Mr. Liddy's compensation
has not yet been determined by the board, and to date he's been
working without compensation." Mr. Ashooh, according to the
report, said that he didn't know when the board would set
Mr. Liddy's pay.
AIG said in a regulatory filing on Tuesday that it would pay
$3 million to several executives under deferred compensation plans
that are being terminated. AIG, according to Bloomberg, said last
week that amounts being paid under the deferred compensation were
previously earned, and had no connection to the federal bailout.
AIG, as reported in the Troubled Company Reporter on Nov. 17,
2008, decided to terminate 14 voluntary deferred compensation
programs involving 5,600 employees and independent agents and
representatives. Approximately $500 million in earned but
deferred pay will be distributed in the first quarter of 2009.
About American International Group
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch
Ratings, which triggered additional requirements for liquidity.
These and other events severely limited AIG's access to debt and
equity markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since Sept. 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to Sept. 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
ARCHWAY COOKIES: Court Picks Lance Inc.'s $30MM Bid for Assets
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
Lance, Inc., manufacturer and marketer of snack foods throughout
the United States and other parts of North America, to be the
"stalking horse" bidder for the primary assets of Archway Cookies
LLC and Mother's Cake and Cookie Co. Lance, Inc. was approved as
the stalking horse bidder in connection with the bankruptcy
court's approval of auction procedures for the sale of the assets.
Lance, Inc. bid $30 million for the combined primary assets of
Archway Cookies LLC and Mother's Cake and Cookie Co., and plans to
use available liquidity under its current credit facilities to
fund the acquisition. Under the court-approved auction
procedures, Lance, Inc.'s bids are subject to the submission of
"higher and better bids." Any competing bids must be submitted by
the last week of November 2008. In the event competing bids are
received, an auction will be held during the first week of
December 2008. The bankruptcy court will conduct a hearing for
final approval of the sale in early December 2008.
Headquartered in Battle Creek, Michigan, 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.
ASARCO LLC: El Paso Residents Want Firm's Liabilities Disclosed
---------------------------------------------------------------
In a notice submitted to the U.S. Bankruptcy Court for the
Southern District of Texas, residents from El Paso, Texas, Daniel
Arellano, Jesus Canaba, Juan Garza, Efren Martinez and Carlos
Rodriguez assert that individuals guiding the settlements on
ASARCO LLC's environmental liabilities have (i) conflicts of
interest, which have not been disclosed to creditors in the
bankruptcy cases, and (ii) facts which demonstrate that
massive liabilities are being concealed from the jurisdiction of
the Court.
Mr. Arellano, chairman of the East Side chapter of the
Association of Community Organizations for Reform Now, on behalf
of several El Paso residents previously urged the Court to deny
ASARCO's request for an air quality permit for the possible re-
opening of the company's smelter in El Paso.
The Residents relate that the Department of Justice Environmental
Section has investigated many allegations, and has sought
enforcement orders regarding ASARCO's century long historic
environmental problems. However, they note, the DOJ has never
considered or attempted to neither mitigate nor address concerns
related to employee exposure to hazardous waste materials.
Each time the DOJ negotiates with ASARCO executives, it fails to
disclose the truth to injured persons, the Residents tells the
Court. They say many affected persons have now submitted to the
Court's jurisdiction.
"It is our clear desire to obtain the truth from conflicted
government officials who have refused to disclose conflicts of
interest," the Residents wrote. "It is our goal to find honest
justice. A justice which has not been corrupted by the special
interest as Asarco's bankers, and its insurance corporations
which sold environmental and excess policies which should have
covered all damage claims before this Court," they continued.
The Residents allege that the DOJ's Alan S. Tenenbaum, Esq., may
have potential undisclosed conflict of interest because he may
have appeared before a jury to represent defendant Shell Oil
against the United States, after the Environmental Protection
Agency ordered Shell Oil to pay certain clean up costs. In 1988,
a jury ruled that Shell Oil was liable for the costs at Rocky
Mountain Arsenal.
ASARCO Vice President for Environmental Affairs Thomas Aldrich
disclosed that certain material that was from Shell Oil's cleanup
activities was shipped from Rocky Mountain Arsenal.
"[Mr. Tenenbaum] may have represented Shell Oil and others,
however ASARCO's continued efforts to hide and not disclose all
information related to the facts on its activities during the
time it handled waste from both RMA and Deseret Chemical Depot
continues to do injury to the harm it has created to the ASARCO
employees and residents of the El Paso area," the Residents said.
Additional potential undisclosed conflicts may exist between
ASARCO and federal officials, like the EPA and the Department of
Interior and the DOJ Environmental Sections, the Residents
contend. They believe that Mr. Tenenbaum may have gained
knowledge, which has not been disclosed, when he represented
Shell Oil against the U.S. Army; and may have been involved in
the settlement negotiations for the disposal of hazardous waste
generated at the RMA site, which material was received by
ASARCO's El Paso plant for final incineration and disposal.
The Residents emphasize that the undisclosed conflicts must be
brought to light and to the information of all creditors.
Provided that the Court issue a "CALL FOR DISCLOSURES" to each
individual and entity that has submitted to the Court's
jurisdiction, the Residents ask the Court to provide:
-- free of charge a complete electronic copy of all documents,
Court records, exhibits, transcripts and testimony hearing
presented before the Court;
-- free of charge copies of all correspondence, received or
transmitted by the DOJ and Mr. Tenenbaum's office related
to ASARCO, and the bankruptcy hearing before the Court;
-- for the release of all information related to prior cases
involving Mr. Tenenbaum and Shell Oil vs. U.S., RMA and
Lloyds of London; and
-- for honest independent medical monitoring and health
assessments with associated expenses of all ASARCO
employees and contractors exposed to ASARCO's illegal
hazardous waste materials.
DOJ Responds
David L. Dain, Esq., senior attorney for the DOJ's Environmental
Enforcement Section, avers that the Residents' Notice erroneously
contends that the United States failed to provide notice to the
Court of a public comment from Taylor Moore with respect to
settlements entered into by the United States and Debtors with
respect to the El Paso Survey Site, in Texas, and the Dona Ana
Metal Site, in New Mexico. He points out that the Court approved
the settlements on December 4, 2007, at Docket No. 6434.
Contrary to the Notice's allegation, Mr. Dain says, the United
States provided the Court with notice of the public comment
regarding the El Paso Site settlements, which was attached to the
DOJ's response to the comment, and docketed at Docket No. 6420.
He notes that United States' response to Mr. Moore's public
comment was that the commenter's request for additional actions
by EPA was not precluded by the settlements, and that the
commenter had not provided any actual evidence of any conflict of
interest.
Mr. Dain also argues that the allegation that Mr. Tenenbaum
appeared before a jury to represent Shell Oil or otherwise
represented Shell Oil in the RMA matter is incorrect. The United
States is not aware of any conflicts of interest of its attorneys
on the Debtors' bankruptcy cases, he maintains.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The Company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 92; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Court Gives Go Signal on Amboy Property Auction
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas has
approved ASARCO LLC's proposed procedures for the sale of
approximately 70 acres of real property located in the City of
Perth Amboy, County of Middlesex, in New Jersey, to RLF Perth
Amboy Properties LLC and TRC Companies, Inc.
The Court has also approved the proposed uniform procedures for
the determination of cure claims.
When appropriate, ASARCO may obtain from the Court a date and
time for the sale hearing, Judge Schmidt held.
ASARCO's decision to assume and assign certain Permits and
Contracts related to the Perth Amboy Sale is subject to the
Court's approval and consummation of the proposed Sale, Judge
Schmidt clarified.
If RLF and TRC are prepared to consummate the Sale and the ASARCO
sells the Property to another party, the Purchase Agreement will
be terminated, and ASARCO's escrow agent, General Land Abstract
Co., Inc., will deliver the Earnest Money, with interest, to RLF.
If ASARCO closes the Sale with another party, it ASARCO will pay
RLF and TRC the sum of 3% of the Purchase Price, plus the
reimbursement of reasonable expenses not exceeding $200,000.
If the effective date of the Debtors' plan of reorganization
occurs prior to the closing of the Sale, the Property and
conveyance documents executed by ASARCO will be placed in escrow
with the trustee of the multi-state environmental custodial trust
to be created pursuant to the Plan, Judge Schmidt ruled. Under
the Purchase Agreement, the closing of Sale must occur no later
than December 31, 2008.
The Court has also approved the parties' stipulation abating the
deadline on filing objections to the proposed Sale.
Objections
Prior to the entry of the Perth Amboy Sales Procedures Order, PA-
PDC Perth Amboy Urban Renewal, LLC, and Perth Amboy Redevelopment
Agency filed separate objections to the sale procedures request.
PA-PDC asked the Court to deny the request, asserting that no
auction is necessary or permissible, as a property in bankruptcy
is already subject a different process for establishment of fair
market value pursuant to applicable non-bankruptcy law. PA-PDC
added that the process proposed is inherently unfair in that it
does not provide bidders with sufficient time or access to
conduct meaningful due diligence.
PA-PDC is a redeveloper of a certain Area 3-1, in which the Perth
Amboy Property is a part, and is charged to acquire the area,
remediate it, and redevelop it with warehouse development that
will generate multiple revenues and jobs for Perth Amboy.
Moreover, the Perth Amboy Redevelopment Agency or PARA argued
that granting the Debtors' request would have material, adverse
impact on its ability to implement its adopted "redevelopment
plan" for the timely remediation and restoration of the Property,
and thus, the public health, safety and welfare of the citizens
of Perth Amboy will be negatively impacted. PARA also joined in
PA-PDC's objection.
Should the Court approve the Debtors' request, PARA pointed out
that it is imperative to the health and welfare of the public to
require the party acquiring the Property to provide assurances
that it has the financial wherewithal to undertake complete and
timely remediation of the Property.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The Company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 92; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Inks Deal with Tersigni on Over-Billings
----------------------------------------------------
ASARCO LLC, Lac d'Amiante du Quebec Ltee, CAPCO Pipe Company,
Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec,
Ltd., and LAQ Canada, Ltd., ask the U.S. Bankruptcy Court for the
Southern District of Texas to approve a certain settlement
agreement they entered into with L. Tersigni Consulting CPA, P.C.,
also known as L. Tersigni Consulting, P.C.
Before November 2007, Tersigni provided accounting and financial
advisory services primarily to creditor committees in various
asbestos-related Chapter 11 proceedings, including the ASARCO
Asbestos Creditors' Committee. However, in May 2007, Tersigni
had allegedly falsified some of the time billed for the work
performed for its clients by increasing the actual time spent
working. To this end, Tersigni engaged Heller Ehrman LLP to
conduct an investigation into its billings. Heller Ehrman issued
a report identifying certain matters, in which time shown on the
fee applications was greater than the time recorded on some of
Tersigni's employee time sheets.
By then, several of the asbestos creditors began or continued
legal proceedings against Tersigni, including claims for
disgorgement of all fees paid to Tersigni. Against this
backdrop, Nancy A. Tersigni, executrix of the Estate of firm
founder Loreto Tersigni, elected sought bankruptcy protection for
the Tersigni firm in the U.S. Bankruptcy Court for the District
of Connecticut in November 2007.
Hugh M. Ray was later appointed by the Office of the U.S.
Trustee, as an examiner, to further investigate, report on and
made recommendations regarding, the claims of the Asbestos
Creditors and potential claims against the Tersigni Estate. On
March 26, 2008, the Examiner filed its first report recommending
that rather than engage in protracted and expensive litigation,
ASARCO, the Tersigni Estate and the Asbestos Creditors should
attempt to negotiate a settlement of the Asbestos Creditors'
claims based on reimbursement for actual damages, not
disgorgement, claimed to have been incurred by the Asbestos
Creditors.
The ASARCO Parties had paid approximately $3,250,000 to Tersigni
over the years for work the firm had done for the Asbestos
Committee. Tersigni had $476,410 in fees that had been billed
and remained unpaid, despite the fact that the fees had been
partially approved by the Bankruptcy Court.
Following negotiations, the ASARCO parties and the Tersigni
parties reached at a settlement agreement, which provides that:
(1) The ASARCO Parties agreed to take an 11.1% refund of the
fees previously paid, and the $476,410 that remain unpaid
as compensation for the alleged fraudulent fee write ups.
With the refund credited against the unpaid fees, it
reduced the amount owed to Tersigni to $63,037, which is
the agreed settlement payment.
(2) By virtue of the refund, the ASARCO Parties will get
$413,373 in credit against an outstanding administrative
Expense;
(3) The Tersigni Bankruptcy Estate will waive its claim for
unpaid fees, if any; and
(4) "Cross releases" will be exchanged among the Tersigni
Parties, Tersigni and the Tersigni Bankruptcy Estate, and
the Asbestos Creditors.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The Company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 92; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASCENDIA BRANDS: To Grant Severance/Bonuses to Wind-Down Personnel
------------------------------------------------------------------
Ascendia Brands Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware for authority
to implement a severance and incentive program for their remaining
employees.
The Debtors have conducted three rounds of auctions in September
and October as part of their plans to sell substantially all of
their assets postpetition. The Debtors have sold majority of
their assets -- "valuable" assets that remain unsold include
certain accounts receivables.
Under the program, the Debtors propose to entitle their 11
remaining personnel to severance packages. The Debtors intend to
pay:
i) each information technology or human resources personnel 90%
of his weekly salary for every week he/she is retained.
ii) each finance, marketing or logistics employee 65% of his
weekly salary for each week that he/she is retained.
The Debtors note that the severance payment to an insider would
not exceed 10 times the mean severance pay for the non-management
covered employees. The Debtors said the program would cost
between $135,000 and $315,000.
The Debtors also relate that they intend to provide incentives in
the event certain collection benchmarks for accounts receivables
are achieved. If the A/R collections exceed $9,100,000, an
incentive pool amounting to at least $25,000 will be created for
the remaining employees.
The Debtors tell the Court that they can no longer provide their
employees health benefits as their police expired on Oct. 31,
2008, and COBRA coverage is not longer available since the
Debtors' Binghamton, New York facility shut down.
A hearing is set for Nov. 25, 2008, at 2:30 p.m., to consider
approval of the proposed incentive and severance packages.
Objections, if any, are due Nov. 18, 2008, at 4:00 p.m.
The Debtors have recently signed a deal with Toys "R" Us, Inc., in
connection with amounts owing by TRU on account of goods delivered
pursuant to purchase orders. After reconciling unpaid amounts
between the parties, TRU has stipulated that it owes $176,280
(which it will pay in full) in current net receivable, and
$134,647 in future net receivable (which it will promptly pay, but
at 10% discount on account of early payment).
About Ascendia Brands
Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. --
http://www.ascendiabrands.com/-- makes and sells branded consumer
products primarily in North America and over 80 countries as well.
The company's customers include Walmart, Walgreens, Kmart, Meijer
Stores, Target, and CVS. The company and six of its affiliates
filed for Chapter 11 protection on Aug. 5, 2008 (Bankr. D. Del.
Lead Case No.08-11787). Kenneth H. Eckstein, Esq., and Robert T.
Schmidt, Esq., at Kramer Levin Naftalis & Frankel LLP, represent
the Debtors in their bankruptcy cases. M. Blake Cleary, Esq.,
Edward J. Kosmoswki, Esq., and Patrick A. Jackson, Esq., at
Young, Conaway, Stargatt & Taylor, LLP, serve as the Debtors'
Delaware counsel. The Debtors selected Epiq Bankruptcy Solutions
LLC as their claims agent. When the Debtors filed for protection
from their creditors, they listed total assets of $194,800,000 and
total debts of $279,000,000.
ATHERTON-NEWPORT: Inks Asset Sale Deal with Guardian Management
---------------------------------------------------------------
Guardian Management LLC signed preliminary agreements to acquire
the real estate portfolio of Atherton-Newport Investments. The
assets to be acquired by Guardian include more than 4,000
apartment units, located in Las Vegas, Miami, Phoenix, and
Seattle. Avalon Holdings, a diversified investment company also
based in the Pacific Northwest, working with Guardian, initiated
and structured the transaction.
Over a period of almost a year, ANI's creditors committee,
interviewed and received qualifications from more than
15 potential buyout and take-over candidates. The creditors
committee, chaired by Steve Trax, principal of MTX Wealth
Management LLC of Bethesda, MD, consisted primarily of ANI's
noteholders who had advanced, in the aggregate, more than
$30.0million to ANI. In the end, Guardian was chosen as the
strongest candidate of the group.
"Guardian was selected because of its experience and expertise in
handling complex troubled assets," Mr. Trax said. "We couldn't
have found a better partner. They were creative in working with
the Committee to develop a structure that meets the needs of the
initial capital investor base."
Robert Opera, attorney for the creditors committee, was
instrumental in evaluating noteholders' options, negotiating
agreements with ANI's secured creditor and with Guardian, and
getting the Agreements executed. Opera is a partner at Winthrop
Couchot Professional Corp., a bankruptcy and reorganization law
firm located in Newport Beach, California.
Guardian Management LLC is in the process of acquiring the
Atherton-Newport assets through implementation of its first
strategic investment fund. That fund, was also utilized in the
acquisition of the Southern California and Arizona offices of
Sperry Van Ness, one of the largest commercial real estate
investment brokerage firms in the nation. Guardian closed the
Sperry Van Ness acquisition in September 2008.
"We are confident in our abilities to restructure and reposition
these assets," Tom Brenneke, president of Guardian Management
LLC, said. "This acquisition is the perfect fit in satisfying
the goals of our first fund and positions us to leverage the
resources of our affiliated team members."
About Atherton-Newport Investments, L.L.C.
Based in Irvine, California, Atherton-Newport Investments, L.L.C.
-- http://www.atherton-newport.com/-- is a real estate investment
and development company. Formed in 2001, it has expertise in the
acquisition, rehabilitation, repositioning and management of
multi-family investments, well as the entitlement and development
of infill residential sites.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on Jan. 16, 2008, (Bankr. C.D. Calif. Lead Case No.:
08-10230) Joseph A. Eisenberg, Esq. at Jeffer, Mangels, Butler &
Marmaro, L.L.P., David W. Meadows, Esq. and Stephen R. Wade, Esq.
represnt the Debtors in their restructuring efforts. As reported
in the Troubled Company Reporter on Feb. 12, 2008, the Debtor's
schedules show assets of 15,876,061 and debts of $43,881,537.
AUTHSEC INC: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Authsec, Inc.
6990 Columbia Gateway Drive, Ste. 120
Columbia, MD 21046
Case No.: 08-25177
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
District of Maryland (Baltimore)
Judge: Duncan W. Keir
Debtor's Counsel: Howard M. Heneson, Esq.
Howard M. Heneson, P.A.
810 Glen Eagles Court, Suite 301
Towson, MD 21286
Tel: (410) 494-8388
Fax: (410) 494-8389
Email: hheneson@bankruptcymd.com
Total Assets: $3,125,000
Total Debts: $3,187,226
A list of the Debtor's 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/mdb08-25177.pdf
BEAR STEARNS: Fitch Takes Rating Actions on Various Cert. Classes
-----------------------------------------------------------------
Fitch Ratings has taken various rating actions on Bear Stearns
Structured Products mortgage certificates. The classes represent
a beneficial ownership interest in separate trust funds.
Bear Stearns Structured Products Trust 2000-1
-- Class 1-X affirmed at 'AAA'; Outlook Stable;
-- Class 1-B affirmed at 'AA'; Outlook Stable;
-- Class 1-C affirmed at 'A'; Outlook Stable;
-- Class 1-D affirmed at 'BBB'; Outlook Stable;
-- Class 2-A affirmed at 'AAA'; Outlook Stable;
-- Class 2-B affirmed at 'AA'; Outlook Stable;
-- Class 2-C affirmed at 'A'; Outlook Stable;
-- Class 2-D affirmed at 'BBB'; Outlook Stable;
-- Class 2-E affirmed at 'BB'; Outlook Stable;
-- Class 2-F affirmed at 'B'; Outlook Stable;
-- Class 3-X affirmed at 'AAA'; Outlook Stable;
-- Class 3-A rated 'AAA', placed on Rating Watch Negative;
-- Class 3-B rated 'AAA', placed on Rating Watch Negative;
-- Class 3-C rated 'AA', placed on Rating Watch Negative;
-- Class 3-D downgraded to 'BBB' from 'A'; Outlook Stable;
-- Class 3-E downgraded to 'BB' from 'BBB'; Outlook Stable;
-- Class 3-F downgraded to 'CCC/DR1' from 'BB';
-- Class 3-G downgraded to 'CC/DR3' from 'B';
-- Class 4-A downgraded to 'CCC/DR1' from 'AAA';
-- Class 5-A affirmed at 'AAA'; Outlook Stable;
-- Class 5-B affirmed at 'AA'; Outlook Stable;
-- Class 5-C affirmed at 'A'; Outlook Stable;
-- Class 5-D affirmed at 'BBB'; Outlook Stable
-- Class 5-E affirmed at 'BB'; Outlook Stable;
-- Class 5-F affirmed at 'B'; Outlook Stable.
The rating actions were taken as part of Fitch's ongoing
surveillance process of existing transactions.
BEAUDRY RV: Files for Bankruptcy, Seeks $7-Mil. GE Financing
------------------------------------------------------------
Beaudry RV Co. along with seven of its affiliates filed a
voluntary petition under Chapter 11 of the Bankruptcy Code before
the U.S. Bankruptcy Court for the District of Arizona after a
group of banks, including Bank of America, Wells Fargo Bank, and
Comerica Bank, tried to bar the company from accessing its cash.
The company said it will liquidate certain real estate assets not
necessary for its business. The proceeds of the sale will be used
to fund operations and repay the banks. According to the company,
the banks provided as much as $13,800,000 for the construction of
leasehold improvements on the company's dealership and service
facility in Chandler, Arizona.
The company, however, has said it will stay in business. Thomas
Sylvester, Beaudry's CEO, stated that daily operations at the
company's two RV centers -- in Tucson and in Chandler -- and at
Beaudry RV Resort will continue, the Arizona Daily Star reported.
"It really shouldn't change anything," Mr. Sylvester said. "It
should be business as usual. We're going into bankruptcy to stay
in business. We expect to come out even stronger than we go in."
In detailing events leading to Beaudry's bankruptcy filing,
Frederick J. Petersen, Esq., at Mesch Clark & Rothschild, P.C.,
said that the banks refused to allow the company to access the
equity in its assets sufficient for its operations to continue,
and demanded all proceeds be paid to it.
Mr. Sylvester, according to Tucson Citizen, said, "We filed
Chapter 11 to stay in business, not go out of business. We came
close to replacement financing. The banking crisis contributed
quite a bit." Mr. Sylvester, the report says that Beaudry RV has
never missed a payment or made late payments to lenders.
In conjunction with the filing, the company is asking the Court
for authority to obtain up to $7 million in debtor-in-possession
financing from GE Commercial Distribution Finance Corporation.
The facility will incur interest at LIBOR plus 2.85%. The company
wants to tap $750,000 from the facility on the interim.
According to the Arizona Daily Star, the Beaudry family has owned
auto dealerships in the Tucson area since 1940. Company President
Bob Beaudry started downsizing the business in 2003 with the sale
of six dealerships to the Scottsdale-based Chapman Automotive
Group. Mr. Sylvester last June informed employees about plans to
sell its Tucson operations to Lazydays RV Center Inc. but the deal
was called off in August.
These Beaudry RV affiliates are included in the bankruptcy filing:
-- Beaudry RV Resort, 3200 E. Irvington Road;
-- Beaudry RV Collision Center, 5970 S. Palo Verde Road; and
-- four real estate holding companies:
a) Palo Verde Ventures LLC,
b) Gila River Ventures LLC,
c) Witt Ventures LLC, and
d) Smart Ventures LLC.
Beaudry RV listed $50 million to $100 million in assets and debts.
About Beaudry RV
Founded in 1940, Beaudry RV Co. -- http://www.beaudryrv.com/-- is
a dealer of new cars in Tucson. Beaudry RV sold most of the new-
car operations to the Chapman Automotive Group in 2005. The
company still has a used-car lot in Tucson -- Berry Good Cars,
5300 S. Palo Verde Road -- and a multibrand new-car dealership in
Benson: Beaudry Chevrolet, Jeep, Chrysler and Dodge.
BEAUDRY RV: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Beaudry RV Co.
P.O. Box 26925
Tuczon, AZ 85726-6925
Bankruptcy Case No.: 08-16533
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Beaudry Chevrolet, Chrysler, Jeep & Dodge 08-16504
Palo Verde Ventures, LLC 08-16526
Gila River Ventures, LLC 08-16527
Smart Ventures, LLC 08-16529
Witt Ventures, LLC 08-16531
Beaudry RV Company 08-16533
Beaudry RV Resort, Inc. 08-16536
Type of Business: The Debtors sell motor coaches, fifth wheels,
travel trailers and toy haulers. The company
operates a 426 space luxury RV park and has
about 172 full-time employees. See
http://www.beaudryrv.com/
Chapter 11 Petition Date: November 17, 2008
Court: District of Arizona (Tucson)
Judge: James M. Marlar
Debtor's Counsel: Frederick J. Petersen, Esq.
ecfbk@mcrazlaw.com
Michael W. McGarth, Esq.
ecfbk@mcrazlaw.com
Scott H. Gan, Esq.
ecfbk@mcrazlaw.com
Mesch, Clark & Rothschild, P.C.
259 N. Meyer Avenue
TUCSON, AZ 85701
Tel: (520) 624-8886
Fax: (520) 798-1037
Estimated Assets: $50 million to $100 million
Estimated Debts: $50 million to $100 million
The Debtor does not have any creditors who are not insiders.
The petitions was signed by the company's chief executive officer,
Thomas P. Sylvester.
BI-LO LLC: S&P Puts 'B-' Rating on Negative CreditWatch
-------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B-' corporate
credit rating on Greenville, South Carolina-based BI-LO LLC on
CreditWatch with negative implications.
"The CreditWatch placement reflects S&P's concern regarding the
company's ability to refinance both its existing $260 million term
loan and its $100 million asset-based revolver when they come due
in March 2009," said Standard & Poor's credit analyst Jackie
Oberoi, "given the current lack of liquidity in the credit markets
for speculative-grade credits."
CAMPBELL CONTRACTORS: Case Summary & 19 Largest Unsec. Creditors
----------------------------------------------------------------
Debtors: Bond Grant Campbell
dba Campbell Contractors, Inc
Shelli Marie Campbell
211 E. Pine Ave., Ste. 101
Meridian, ID 83642
Case No.: 08-02607
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
District of Idaho (Boise)
Judge: Terry L. Myers
Debtors' Counsel: D Blair Clark
1513 Tyrell Lane, Suite 130
Boise, ID 83706
Tel: (208) 475-2050
Fax: (208) 475-2055
Email: dbc@dbclarklaw.com
Total Assets: $3,295,004
Total Debts: $4,140,876
A list of the Debtors' 19 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/idb08-02607.pdf
CARAUSTAR INDUSTRIES: S&P Puts 'B-' Rating on Negative CreditWatch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Caraustar
Industries Inc., including its 'B-' corporate credit rating, on
CreditWatch with negative implications.
"The CreditWatch listing reflects heightened near-term refinancing
risk in conjunction with the maturity of Caraustar's $190 million
senior notes due June 1, 2009," said Standard & Poor's credit
analyst Pamela Rice. While Caraustar continues to work on
alternatives, including asset-based lending and asset sales, to
address the maturity, it has not yet been able to complete a
refinancing plan given very challenging credit markets. The
company recently amended its credit agreement to extend the date
by which it needs to provide evidence of repayment, redemption, or
defeasance of the notes to March 1, 2009. However, the notes must
be repaid, redeemed, or defeased at least 60 days prior to
maturity.
Liquidity should be adequate for near-term needs, as Caraustar had
$41 million of cash at the end of October 2008, $38 million
available under its revolving credit facility following the
amendment, and is not subject to any maintenance financial
covenants. Caraustar reported improved operating results for the
third quarter of 2008, positive free cash flow, and anticipates
benefits from lower recycled fiber and energy costs in the next
quarter. Still, the prospects for demand and the ability to
retain pricing are uncertain considering the weak U.S. economy.
In resolving S&P's CreditWatch, S&P will continue to monitor the
company's progress in raising funds through new financing and
asset sales. S&P will lower the ratings to the 'CCC' category if
Caraustar does not have committed plans in place to repay or
refinance the $190 million of senior notes by early 2009.
CARMIKE CINEMAS: S&P Changes Outlook to Negative & Keeps B- Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Columbus, Ga.-based movie exhibitor Carmike Cinemas Inc. to
negative from stable. At the same time, S&P affirmed S&P's
ratings on the company, including the 'B-' corporate credit
rating.
"The outlook revision reflects the negative impact of poor third-
quarter box office performance on Carmike's EBITDA, credit
measures, and cushion of compliance with its leverage covenant,"
said Standard & Poor's credit analyst Jeanne Mathewson.
As of Sept. 30, 2008, Carmike had a very slim 6% EBITDA cushion
against its leverage covenant (its tightest covenant). S&P
expects leverage could come down over the next quarter, based on
strong October box office results and Carmike's continued efforts
to prepay debt. S&P believes that economic conditions could add
to pressures, making ticket price increases more difficult, among
other things. Also, ongoing exposure to the fluctuating
popularity of Hollywood films and to regions of operation with
narrower film preferences could make it difficult to reduce
leverage and establish a more substantial cushion of compliance
with covenants.
Based on screen count, Carmike is the fourth-largest theater chain
in the U.S., with about 2,276 screens in 250 theaters in 37
states. Carmike's theaters are less modern than those of other
leading chains, and many of its venues lack popular theater
features, such as stadium seating, and don't have a large number
of screens, which would provide a wider selection of films and
show times, although the company has moved aggressively in
installing 3-D screens. These characteristics could make
Carmike's circuit more prone to attendance deterioration if it is
faced with new competition.
The company's theaters are primarily located in small-to-midsize
markets in the Southeast and Midwest. The film preferences in
these areas tend to be narrower and operating performance more
volatile.
Revenue and EBITDA in the third quarter of 2008 declined 7% and
23% year over year, respectively, on a 15% decline in attendance.
Due to 7% fewer theatres being open in 2008, attendance per screen
fell at a slightly slower rate of 11.5% over the same period in
2007. The EBITDA margin declined roughly 290 basis points in the
quarter due to higher film and concession costs as a percentage of
revenue, and higher theatre operating expenses. Ticket prices in
the quarter were 7.6% over prior-year levels. Nevertheless, the
company's average ticket price compares unfavorably to other rated
exhibitors, partially reflecting its regions of operations. For
the 12 months ended Sept. 30, 2008, its EBITDA margin was 14.5%--
relatively low compared with its peers'.
For the 12 months ended Sept. 30, 2008, the company's lease-
adjusted debt to EBITDA was high, at 6.5x, and lease-adjusted
coverage of interest was thin, at 1.4x. The company reduced
capital spending from prior-year levels, which helped to maintain
modestly positive discretionary cash flow for the 12 months ended
Sept. 30, 2008. S&P views the company's recent suspension of its
shareholder dividend and moderated capital spending as a positive,
and expects discretionary cash flow to remain modestly positive in
2009, depending on how well films play in Carmike's markets.
CCS MEDICAL: Tight Loan Covenants Spur S&P to Junk Ratings
----------------------------------------------------------
Standard & Poor's Ratings Services lowered all of its ratings on
Clearwater, Florida-based CCS Medical, including its corporate
credit rating which was lowered to 'CCC' from 'B-'. The outlook
remains negative.
"The downgrade primarily reflects extremely tight loan covenants
as of Sept. 30 and a potential covenant default on Dec. 31, 2008,
if lower-than-expected growth rates in the diabetes market
continues as an outgrowth of the difficult economic environment,"
said Standard & Poor's credit analyst Michael Berrian.
For the third quarter ended Sept. 30, 2008, CCS' consolidated
revenues and EBITDA were 21% and 33% below plan, respectively,
while its debt leverage continues to remain high. As a result,
the cushion under its interest coverage covenant has eroded to the
point where, without a sponsor provided equity infusion, default
is likely for the period ending Dec. 31, 2008. The unfavorable
operating performance was primarily the result of ongoing
competitive pressures resulting from the loss of a major marketing
agreement in the Sanvita glucometer product segment. To a lesser
extent, the variation from plan was caused by declining growth
rates in the diabetes business-to-consumer segment; the difficult
economic environment is causing diabetic customers to ration their
diabetic testing supplies, leading to reduced purchases of those
supplies. Further, CCS is seeing additional margin erosion due to
reimbursement rate decreases in the diabetic and respiratory
businesses, which are likely to continue into 2009 when the
Medicare program implements an across-the-board 9.5% rate cut.
The outlook is negative. Current industry and macro-economic
challenges have resulted in lower-than-expected sales and very
tight financial covenants. Moreover, S&P expects bad debt
expense, which was higher relative to projections in the third
quarter, to remain a challenge for the company in the near-to-
medium term as the weak economy continues to impact the company's
ability to collect on patient accounts receivable. The rating on
the company could be lowered if ongoing economic weakness and
industry pressures, and the absence of a sponsor-provided equity
cure, results in a default under its interest coverage covenant.
An equity infusion could contribute to credit improvement if, once
it manages through difficult market trends in the business-to-
consumer segment, CCS is able to capitalize on an important new
marketing agreement. A key accomplishment toward this would be
the prospect for a sustained cushion of at least one-half turn
under its interest coverage covenant.
CHEM RX: S&P Junks Corporate Credit Rating & Removes CreditWatch
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Long
Beach, N.Y.-based institutional pharmacy services provider Chem Rx
Corp., including its corporate credit rating, which was lowered to
'CCC' from 'B-'. At the same time, Standard & Poor's removed the
company from CreditWatch with negative implications, where it was
placed on Oct. 15, 2008. The outlook is negative.
"The rating action reflects S&P's growing concern with the
company's ability to operate within the tightening financial
covenants of its credit facility, given its growing selling,
general, and administrative expenses versus 2007," said Standard &
Poor's credit analyst Jesse Juliano. "Following the company's
reported Sept. 30, 2008, results, S&P believes that the 'CCC'
corporate credit rating better reflects the likelihood that the
company could violate its financial covenants in the near-term
without an amendment to its credit agreement, capital infusion, or
significant improvement in its operations." Although ongoing
revenue and gross profit improvements could encourage lenders to
provide covenant relief, difficult credit markets and the
company's declining to flat EBITDA (relative to the prior year)
could make it difficult and expensive to obtain an amendment to
its credit agreement.
The ratings on Chem Rx Corp. reflect the company's narrow business
focus, relatively small scale, regional concentration in the state
of New York, the potential for reimbursement and pricing
pressures, and its high debt leverage and tight financial
covenants. These concerns are partially mitigated by the
company's solid position in its markets, its high customer
retention, and by opportunities to continue its consistent revenue
growth trend.
Chem Rx's narrow business focus exposes it to industry-related
risks such as reimbursement reductions; as of Dec. 31, 2007,
federal Medicare Part D prescription drug plans represented about
52% of the company's payors, while payments directly from the
state Medicaid programs and from Medicare Part D, Medicaid, and
facilities (including Medicare Part A) constituted about
28%. While Part D-related pricing and administration have
generally been favorable, S&P remains concerned that PDPs may face
government pressure to reduce costs through future pricing
reductions.
Chem Rx is also relatively small. With about a 2% national market
share, the company is the third-largest player in institutional
pharmacy services, but significantly trails industry giant
Omnicare Inc., which has more than 50% of the market. Size
generally leads to greater location diversity, increased
negotiating leverage with large national insurance providers,
lower drug purchasing costs, and economies of scale.
The outlook is negative. The rating could be downgraded to 'D' if
the company is unable to operate within its financial covenants,
is unable to find an external capital source, and is unable to
obtain an amendment to its credit agreement. Given the Dec. 31,
2008, step down in its debt leverage covenant, flat or declining
EBITDA would lead to a covenant violation in the fourth quarter.
An outlook revision to positive seems unlikely in the near term
without significant covenant relief from an amendment to the
company's credit facility or a substantial capital infusion.
CHRYSLER LLC: CEO to Accept $1 Salary in Exchange for Gov't Aid
---------------------------------------------------------------
Chrysler LLC CEO Robert Nardelli said on Tuesday that he would be
willing to work under a $1 salary per year as a condition for a
federal bailout package, Josh Mitchell at Dow Jones Newswires
reports.
Workforce.com relates that Mr. Nardelli said that he would accept
a $1 yearly salary if it helped Chrysler obtain its $7 billion
share of a proposed $25 billion automaker rescue package.
Dow Jones states that former Chrysler CEO Lee Iacocca accepted in
1979 to have a $1 yearly salary to secure a $1.5 billion loan
guarantee from the government, which bailed out the company in the
1980s.
Dow Jones reports that the CEOs of General Motors Corp. and Ford
Motor Co. said on Wednesday that they would refuse a $1 salary in
exchange for government aid.
According to Dow Jones, a House Financial Services Committee
member told GM CEO Rick Wagoner and Ford Motor CEO Alan Mulally
during a hearing on Wednesday that reducing their annual salaries
to $1 would be "an important symbolic gesture" as they seek for
$25 billion in loans funded by tax dollars
Mr. Wagoner said that his salary has already been decreased
significantly and that he has given up other forms of
compensation, Dow Jones states. Workforce.com relates that
Mr. Wagoner said he had previously cut his salary by 50%.
Dow Jones quoted Mr. Mulally as saying, "I understand your point
about the symbol. But I think, not just for me, but we're trying
to fill a skilled and motivated team." According to
Workforce.com, Mr. Mulally -- who earned $21 million in 2007 --
said that he was concerned that cutting compensation might cause
Ford Motor to lose executives and be unable to attract top talent.
Dow Jones says that when Mr. Mulally was pressed on whether he
would work for $1 per year, he said, "I think I'm OK where I am."
Neal E. Boudette, Josh Mitchell, and Siobhan Hughes at The Wall
Street Journal report that Ford Motor, Chrysler, and GM, tried
told the House Financial Services Committee that the auto industry
could collapse without emergency assistance from the government.
According to WSJ, Chrysler has worked out some contingency plans
in case it has to file for Chapter 11 protection. Mr. Nardelli
said that Chrysler has "looked at all aspects" of a potential
bankruptcy filing and "have gone through advisors to help us think
this through," WSJ relates.
A bankruptcy filing would likely lead GM to "liquidate the company
because you wouldn't have any revenue," and so GM has decided to
put "all effort into avoiding" bankruptcy and hasn't worked out a
detailed contingency plan, WSJ says, citing Mr. Wagoner.
WSJ states that Mr. Mulally said Ford Motor has studied a
bankruptcy option and believes "it is not a viable" option.
Messrs. Wagoner and Nardelli, as they did in a Senate committee
hearing on Tuesday, said that without help, GM and Chrysler could
run out of money soon, WSJ reports.
Democrats, according to WSJ, are proposing to take the requested
$25 billion auto bailout from the $700 billion plan for the
financial markets. The Bush administration is saying that the
companies should get the money quicker from previously approved
loans, WSJ states. President-elect Barack Obama is backing quick
aid to the auto makers, according to the report.
WSJ relates that Rep. Barney Frank, the Massachusetts Democrat who
chairs the committee, crafted a House plan that requires
automakers to submit operating and restructuring plans and
describe how the loan money would be used. The report says that
under that bill, taxpayers would be reimbursed, with interest,
while "golden parachutes" and dividend payments over the life of
the loans would be banned.
The proposed loans being supported by Democrats would be for 10
years, starting at an interest rate of 5%, and would be provided
under the government's $700 billion financial rescue plan, WSJ
states.
Nissan & Renault No Longer Seeking Alliances
Nissan Motor Co. and Renault SA's Carlos Goshn has said he's no
longer seeking alliances, according to Bloomberg TV.
As reported in the Troubled Company Reporter on Oct. 22, 2008,
Chrysler might join a manufacturing and development alliance
between Nissan Motor and Renault, but still preferred a merger
deal with GM. While GM was unable to secure financing for the
deal, Chrysler parent Cerberus Capital was continuing to explore
Chrysler's possible team up with Nissan. Cerberus Capital was
considering selling a minority stake to Nissan and Renault.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CIRCUIT CITY: Dec. 19 Deadline for 503(b)(9) Claims Set
-------------------------------------------------------
Circuit City Stores, Inc., and its debtor-affiliates notify
parties-in-interest that December 19, 2008, has been established
as the deadline for filing a request for allowance of
administrative expense claims under Section 503(b)(9) of the
Bankruptcy Code.
All parties asserting administrative expense claims for the value
of any goods sold in the ordinary course of business, and
received by the Debtors within 20 days before the Petition Date,
must file a request for payment on the claim on or before
December 19.
Any person or entity holding a Section 503(b)(9) claim that fails
to file a claim request by December 19 will be forever barred and
estopped from asserting a Section 503(b)(9) claim against the
Debtors, their bankruptcy estates, or the property of any of
them, absent further Court order.
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. 4; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CIRCUS AND ELDORADO: S&P Holds 'B' Rating; Outlook Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Reno, Nevada-based Circus and Eldorado Joint Venture to negative
from stable. Ratings on CEJV, including the 'B' corporate credit
rating, were affirmed.
"The outlook revision reflects greater-than-expected EBITDA
declines as a result of weak economic conditions and the
substantial pullback in consumer discretionary spending,"
explained Standard & Poor's credit analyst Melissa Long.
For the nine months ended Sept. 30, 2008, net revenues and EBITDA
fell by 14% and 37%, respectively. Operating performance has also
been negatively affected by the lack of a bowling tournament in
Reno in 2008. S&P had previously incorporated an expectation for
low double-digit declines in EBITDA in 2008, with leverage (as
measured by total debt to EBITDA) spiking to around 5.0x.
Leverage at Sept. 30, 2008 was 6.4x. S&P is now incorporating an
assumption that full-year revenue and EBITDA declines will be
around 15% and 35%, respectively, as S&P anticipates that fourth-
quarter performance will look similar to third-quarter
performance.
In 2009, S&P anticipates that the return of a bowling tournament
to the Reno market will somewhat offset any further EBITDA
declines related to the negative impact of the economy on consumer
discretionary spending. S&P's rating, therefore, incorporates an
assumption that leverage will now peak in the high-6x area in
2009, and that coverage will remain in the mid-1x area.
The 'B' rating reflects CEJV's reliance on a single market, small
cash flow base, and high debt levels, as well as the limited
growth prospects for the Reno, Nevada market over the intermediate
term given weak economic conditions and the potential for
increased competition. The rating also factors in the company's
meaningful surplus cash, which S&P believes will support it
through the economic downturn.
CEJV is a joint venture of affiliates of MGM MIRAGE
(BB-/Negative/--) and Eldorado Resorts LLC, and owns and operates
a single property, the Silver Legacy Resort Casino in Reno. The
Reno market continues to experience softness in gaming revenues,
resulting from a long-term gradual decline in the market. Gaming
win, as reported by the Nevada Gaming Control Board, totaled
roughly $859 million in 2000, compared with $754 million in 2007,
representing a compound annual decline of about 1.8%. The current
weakened state and the resulting substantial pullback in consumer
discretionary spending is also contributing to revenue declines
presently. For the year as of September 2008, gaming win in Reno
(as reported by the Nevada Gaming Control Board) declined about
8.4% year over year.
Professional bowling is an important factor for the Reno market.
The city has one of the largest bowling complexes in North
America, and in 2007, 80,000 bowlers came to Reno between February
and June for the U.S. Bowling Congress Open Tournament. Multi-
month tournaments will be held in Reno two out of every three
years through 2018. Given the timing of these tournaments, the
market will continue to experience swings in gaming (as well as
nongaming) revenues, depending on the absence or presence of a
bowling tournament in each reporting period. The absence of a
major bowling tournament in the first half of 2008 contributed to
weak performance at Silver Legacy. S&P anticipates that the
property will receive some benefit from the return of a major
tournament in 2009 and 2010.
CITIGROUP INC: Leon Gross Leaves Firm; Co. to Buy SIV Assets
------------------------------------------------------------
Jeff Kearns at Bloomberg News reports that Citigroup Inc.'s global
head of options strategy Leon Gross has left the company.
Mr. Gross was a New York-based managing director who led
Citigroup's "multi-strategy research," making recommendations to
investors on equity derivatives and other assets, according to
Bloomberg.
Bloomberg relates that Mr. Gross' departure is part of Citigroup's
plan to lay off about 52,000 employees.
As reported in the Troubled Company Reporter on Nov. 18, 2008,
Citigroup Inc. plans to cut more than 50,000 jobs or about 14% of
its workforce. Citigroup plans to reduce its workforce to
300,000. The bank's headcount peaked at 375,000.
David Enrich at The Wall Street Journal relates that Citigroup CEO
Vikram Pandit said at an employees' meeting at Citigroup
headquarters on Monday, "There is still a lot of rebalancing ahead
of us." Mr. Pandit also said in a memo that 2009 could be a
difficult one for clients.
WSJ reports that New York Attorney General Andrew Cuomo pressed
Citigroup executives about yearly bonuses this year, saying in a
statement, "It would send exactly the wrong message for
Citigroup's top brass to collect bonuses while investors,
taxpayers, and now Citigroup's own employees suffer."
Directors will decide on executive bonuses early next year, WSJ
says, citing a Citigroup spokesperson.
Citigroup to Acquire SIV's Remaining Assets
To complete the wind-down of the Citi-advised Structured
Investment Vehicles, Citigroup said on Nov. 19 that, in a nearly
cashless transaction, it has committed to acquire the remaining
assets of the SIVs at their current fair value, estimated to be
approximately $17.4 billion, net of cash, as compared to
$21.5 billion at Sept. 30, 2008. The decline primarily reflects
asset sales and maturities of $3.0 billion and a decline in market
value of $1.1 billion since the end of the third quarter 2008.
Citigroup will record these assets as Available for Sale. As a
result of the transaction, Citigroup's GAAP assets will be reduced
by approximately $6 billion and risk-weighted assets will be
increased by approximately $2 billion.
The SIVs have been selling assets as part of an orderly asset-
reduction plan to fund maturing debt obligations on a timely
basis, and have reduced long-term assets from $87 billion at the
end of July 2007 to $17 billion currently.
As previously disclosed, Citigroup has been providing financial
support to the SIVs. The current fair value of such support is
$6.5 billion and is expected to be repaid upon completion of the
transaction. This transaction will result in the SIVs' having
sufficient funds to repay maturing senior debt obligations.
Citigroup's net incremental funding requirement at closing is
estimated at $300 million.
David Enrich at The Wall Street Journal reports that Citigroup's
stock price plunged 23% on Wednesday, the steepest percentage
decline ever for the company, which during the past three days has
lost a third of its stock-market value.
According to WSJ, Citigroup's decision to buy the last
$17.4 billion in assets held by SIVs flustered investors. SIVs,
says WSJ, were among the first mortgage-related assets to blow up
when the credit crunch hit in 2007, and the purchase will result
in a $1.1 billion write-down. The report states that a Citigroup
official said that he was relieved that Citigroup is finally
ridding itself of SIVs.
The drop in stock price was also fueled by a steeper fourth-
quarter loss projection by Fox-Pitt, Kelton analyst David Trone,
who said, "The specter of Citi's problem asset levels...could
continue to hinder investor confidence...."
Based in New York, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com-- is organized into four major segments
-- Consumer Banking, Global Cards, Institutional Clients Group,
and Global Wealth Management. Citi had $2.0 trillion in total
assets on $1.9 trillion in total liabilities as of September 30,
2008.
CLEARWATER FUNDING: Moody's Downgrades 2 Classes of Notes to 'B3'
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings on these notes
issued by Clearwater Funding CDO 2001-A, Ltd.:
Class Description: $20,000,000 Class A-2 Notes Due 2013
-- Prior Rating: Aa2
-- Prior Rating Action Date: 7/18/2001
-- Current Rating: A1
Class Description: $11,250,000 Class A-3 Notes Due 2013
-- Prior Rating: A3, on review for possible downgrade
-- Prior Rating Action Date: 3/28/2008
-- Current Rating: Baa2
Class Description: $5,000,000 Class B-1 Notes Due 2013
-- Prior Rating: Ba2, on review for possible downgrade
-- Prior Rating Action Date: 3/28/2008
-- Current Rating: B3
Class Description: $8,250,000 Class B-2 Notes Due 2013
-- Prior Rating: Ba2, on review for possible downgrade
-- Prior Rating Action Date: 3/28/2008
-- Current Rating: B3
According to Moody's, rating actions are a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool, which consists primarily of corporate
bonds.
Moody's notes that the underlying portfolio has a sizeable
concentration in finance, buildings and real estate sectors which
have come under stress in the current market environment.
In addition, Moody's also upgraded these notes:
Class Description: $444,000,000 Class A-1 Notes Due 2013
-- Prior Rating: Aa2
-- Prior Rating Action Date: 6/30/2008
-- Current Rating: Aaa
This rating action is based on the actual underlying rating of the
Class A-1 Notes. This underlying rating reflects the intrinsic
credit quality of the Class A-1 Notes in the absence of the
guarantee from MBIA Insurance Corporation, whose insurance
financial strength rating was downgraded from A2 to Baa1 on
November 7, 2008. Pursuant to the press release distributed on
November 10, 2008, for a structured finance security wrapped by a
financial guarantor, the Moody's rating will be the higher of (i)
the guarantor's financial strength rating and (ii) the current
underlying rating.
COMUNITY LENDING: Asks Court to Convert Cases to Chapter 7
----------------------------------------------------------
ComUnity Lending, Inc., and LES Liquidation, Inc., ask the U.S.
Bankruptcy Court for the Northern District of California to
convert their Chapter 11 cases to a case under Chapter 7 of the
Bankruptcy Code.
The Debtors tell the Court that they have successfully completed
the liquidation of substantially all of CLI's loans and real
estate owed properties (REOs), along with other assets. The
Debtors say that the continuing decline of the real estate market
and the current financial crisis have adversely impacted the value
of their assets, and as a result they no longer believe that a
liquidating plan can assure creditors more than they would receive
in a Chapter 7 case.
The Debtors filed a proposed plan of liquidation on July 7, 2008,
and an amended plan was filed on Aug. 22, 2008. The Debtors'
liquidation analysis projected a distribution to general unsecured
creditors of between 10 and 15% with the variance attributable to
the outcome of a certain "Top Hat" litigation, an adversary
proceeding filed by participants to the Debtors' deferred
compensation plan.
Due to the current financial crisis, the Debtors estimate that the
return to unsecured creditors will be significantly less, and that
the remaining assets will require litigation, or are not readily
subject to liquidation.
About ComUnity Lending
Headquartered in San Jose, California, ComUnity Lending Inc.
-- http://www.comunitylending.com/ -- is a mortgage lender, with
mortgage programs of up to $1,500,000. The company and its
affiliate, LES Liquidation Inc., filed for Chapter 11
protection on Jan. 4, 2008 (Bankr. N.D. Calif. Case Nos. 08-50030
and 08-50031). Craig C. Chiang, Esq., at Buchalter Nemer, Doris
A. Kaelin, Esq., Ivan Jen, Esq., Jenny L. Fountain, Esq., John
Walshe Murray, Esq., and Robert A. Franklin, Esq., at the Law
Offices of Murray and Murray, represent the Debtors in their
restructuring efforts. When ComUnity Lending filed for protection
from its creditors, it listed assets and liabilities of
$10 million to $50 million. No Creditors' Committee has been
formed.
COMUNITY LENDING: Taps Day Pitney as Special Counsel
----------------------------------------------------
ComUnity Lending, Inc., asks the U.S. Bankruptcy Court for the
Northern District of California for authority to employ Day
Pitney, LLP, as special counsel in connection with the Top Hat
Litigation, effective as of Sept. 1, 2008.
Prior to the Petition Date, the Debtor established a non-
qualified, unfunded, deferred compensation plan (the Top Hat Plan)
for certain of its employees. Several of the participants of the
Top Hat Plan have filed an adversary proceeding in this case
seeking a determination that the funds in the Top Hat Plan belong
to the former employees who contributed funds to the Top Hat Plan.
Based on the underlying documents, CLI believes that the funds
held by CLI in the Top Hat Plan are assets of the company, subject
to the claims of its general creditors and are property of the
bankruptcy estate.
The Adversary Proceeding is now pending in the District Court
before the Honorable James Ware.
The Debtor tells the Court that Day Pitney has completed its
services for the Debtor, but clearing conflicts has taken longer
than anticipated, thus delaying the filing of this Application.
Amish R. Doshi, an attorney at Day Pitney, assures the Court the
firm does not hold or represent any interest adverse to the Debtor
or its estate, and that the firm is a "disinterested person" as
that term is defined under Sec. 101(14) of the Bankruptcy Code.
The attorneys and paraprofessionals of Day Pitney who will be
primarily assisting in this matter and their corresponding hourly
rate are:
Ronald S. Beacher, Esq. $495
Amish R. Doshi, Esq. $405
About ComUnity Lending
Headquartered in San Jose, California, ComUnity Lending Inc.
-- http://www.comunitylending.com/ -- is a mortgage lender, with
mortgage programs of up to $1,500,000. The company and its
affiliate, LES Liquidation Inc., filed for Chapter 11 protection
on Jan. 4, 2008 (Bankr. N.D. Calif. Case Nos. 08-50030 and 08-
50031). Craig C. Chiang, Esq., at Buchalter Nemer, Doris A.
Kaelin, Esq., Ivan Jen, Esq., Jenny L. Fountain, Esq., John Walshe
Murray, Esq., and Robert A. Franklin, Esq., at the Law Offices of
Murray and Murray, represent the Debtors in their restructuring
efforts. When ComUnity Lending filed for protection from its
creditors, it listed assets and liabilities of $10 million to $50
million. No Creditors' Committee has been formed.
CONGOLEUM CORP: Court OKs Settlement Agreement on Asbestos Claims
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of New Jersey,
approved a litigation settlement agreement among:
-- Congoleum Corporation,
-- the official committee of bondholders appointed in
Congoleum's bankruptcy cases,
-- the official committee of asbestos claimants, and
-- certain holders of pre-petition settlements with respect to
asbestos claims.
The Settlement Agreement provides, among other things, that upon
effectiveness of a plan of reorganization for Congoleum, the
Settling Claimants will waive any and all rights with respect to
any pre-petition settlement of their asbestos claims against
Congoleum, and their claim will be restored to the status quo ante
as it existed as of the time the Settling Claimant initially filed
or submitted its asbestos claim against Congoleum.
The Settlement Agreement also provides that Congoleum is released
from any and all obligations and duties imposed pursuant to any
pre-petition asbestos settlement, the Collateral Trust Agreement,
Security Agreement and any and all other agreements and amendments
thereto with respect to the pre-packaged plan of reorganization
filed by Congoleum on Dec. 31, 2003.
A full text copy of the settlement agreement is available for free
at http://ResearchArchives.com/t/s?34f8
A full-text copy of the order granting joint motion of the Debtors
and the Bondholders Committee is available for free at
http://ResearchArchives.com/t/s?34f9
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 28, 2008, in
Congoleum Corp.'s 2007 annual report filed with the U.S.
Securities and Exchange Commission, the company's management said
there is "substantial doubt about the company's ability to
continue as a going concern unless it obtains relief from its
substantial asbestos liabilities through a successful
reorganization under Chapter 11 of the Bankruptcy Code."
CONGOLEUM CORP: SVP of Sales Disposes of All 2,500 Shares
---------------------------------------------------------
Dennis Jarosz, senior vice president of sales and marketing of
Congoleum Corporation, disclosed on a Form 4 filing with the
Securities and Exchange Commission that he no longer own any
shares of the company's common stock after the sale of 2,500
shares of common stock at $0.005 per share on Nov. 11, 2008.
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 28, 2008, in
Congoleum Corp.'s 2007 annual report filed with the U.S.
Securities and Exchange Commission, the company's management said
there is "substantial doubt about the company's ability to
continue as a going concern unless it obtains relief from its
substantial asbestos liabilities through a successful
reorganization under Chapter 11 of the Bankruptcy Code."
CONGOLEUM CORP: September 30 Balance Sheet Upside-Down by $54MM
---------------------------------------------------------------
Congoleum Corporation's balance sheet at Sept. 30, 2008, showed
total assets of $175.1 million, total liabilities of $229.8
million, resulting in a shareholders' deficit of about $54.7
million.
The company reported its financial results for the third quarter
ended Sept. 30, 2008. The net loss for the quarter, which
includes the charge of $11.5 million for asbestos related
reorganization costs, was $10.1 million, compared with net income
of $1.2 million in the third quarter of 2007.
The net loss for the nine months ended Sept. 30, 2008, which
includes the $11.5 million charge for asbestos related
reorganization costs was $8.2 million versus net income of
$1.7 million in the first nine months of 2007.
Results for the three and nine months ended Sept. 30, 2007,
include $2.9 million and $8.5 million of interest on Congoleum's
8-5/8% Senior Notes. Under the terms of its recent reorganization
plan, Congoleum will not pay interest on the Senior Notes for the
period commencing with the filing of its bankruptcy. In the
fourth quarter of 2007 Congoleum reversed the post-bankruptcy
interest it had previously recorded on the Senior Notes.
Congoleum is no longer recording interest expense on the Senior
Notes, and there was no interest expense on the Senior Notes in
the three and nine month periods ended Sept. 30, 2008.
A full-text copy of the company's 10-Q filing is available for
free at http://ResearchArchives.com/t/s?34fb
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 28, 2008, in
Congoleum Corp.'s 2007 annual report filed with the U.S.
Securities and Exchange Commission, the company's management said
there is "substantial doubt about the company's ability to
continue as a going concern unless it obtains relief from its
substantial asbestos liabilities through a successful
reorganization under Chapter 11 of the Bankruptcy Code."
CONGOLEUM CORP: Files Amended Plan of Reorganization
----------------------------------------------------
Congoleum Corporation and its debtor-affiliates together with the
Official Committee of Asbestos Claimants and the Official
Committee of Bondholders, as co-proponents, delivered to the
United States Bankruptcy Court for the District of New Jersey an
amended Chapter 11 plan of reorganization dated Nov. 14, 2008, and
an amended disclosure statement explaining the plan. The parties
submitted their original plan on Feb. 5.
A hearing is set for Dec. 18, 2008, at 10:00 a.m., to consider the
adequacy of the amended disclosure statement. Objections, if any,
are due Dec. 11, 2008.
The amended plan provides for the issuance of an injunction under
Section 524(g) of the Bankruptcy Code that results in the
channeling of asbestos related liabilities of the Debtors to the
Plan Trust. The amended plan also provides for the issuance of
70% of the shares of newly created Congoleum common stock to the
Trust, and 30% of the shares of newly created Congoleum common
stock to the holders of allowed senior note claims.
The amended plan further provides for, among other things, payment
in full of allowed administrative claims, allowed priority tax
Claims, and allowed priority claims, and the establishment of the
Plan trust to satisfy Plan Trust asbestos claims. Lender secured
claims and other secured Claims are not impaired under the Plan.
A five-member board will be appointed for Reorganized Congoleum.
American Biltrite Inc., which owns majority of the existing shares
of Congoleum, will make the services of Roger Marcus, Richard
Marcus and Howard Feist, III available to Reorganized Congoleum
for two years after the Effective Date in consideration of a base
annual fee of $800,000 and an annual incentive fee. Roger Marcus
will serve as Chief Executive Officer and Director of Reorganized
Congoleum. Howard Feist III shall serve as Chief Financial Officer
of Reorganized Congoleum. Substantially all of Roger Marcus's
time, approximately 25% of Richard Marcus's time, and about 50% of
Howard Feist III's time, in each case, during normal working hours
on an annual basis will be made available by ABI to Reorganized
Congoleum for the two years following the Effective Date.
Overview of the Plan
The salient terms of the reorganization contemplated by the plan
include:
a) the creation of the Plan Trust which is intended to be a
"qualified settlement fund" within the meaning of Section
1.468B - 1(a) of the Treasury Regulations promulgated under
Section 468B of the IRC, that will assume the liabilities of
the Debtors with respect to all Plan Trust Asbestos Claims
and will use Plan Trust Assets and income to pay Plan Trust
Asbestos Claims as provided in the Amended Plan and the Plan
Trust Documents;
b) the funding of the Plan Trust with the Plan Trust Assets;
c) the classification of Claims and Interests and the treatment
of the Claims and Interests under the Plan;
d) the payment of Claims in accordance with the requirements of
the Bankruptcy Code;
e) the establishment and implementation of the trust
distribution procedures as provided in the Plan Trust
Agreement for the resolution of Asbestos Personal Injury
Claims;
f) the issuance of certain injunctions, including but not
limited to, the Discharge Injunction, the Anti-Suit
Injunction and the Asbestos Channeling Injunction;
g) the issuance by Reorganized Congoleum of the New Senior
Notes and the New Common Stock pursuant to the Amended Plan;
h) the procedures for addressing and resolving Disputed Claims;
i) entry into a $30,000,000 Chapter 11 exit facility to be
provided by lenders acceptable to the Bondholders'
Committee, the Debtors and the Asbestos Claimants' Committee;
j) the merger of the Subsidiary Debtors with and into
Congoleum, with Reorganized Congoleum as the sole surviving
entity;
k) the governance and management of Reorganized Congoleum;
l) the Litigation Settlement Agreement;
m) the payment of Allowed General Unsecured Claims; and
n) the retention of jurisdiction by the Bankruptcy Court.
Plan Trust
On the plan's effective date, all Plan Trust Asbestos Claims will
be assumed by and transferred to the Plan Trust. The Plan Trust
will be funded with the Plan Trust Assets which will include
assets and any income, profits and proceeds derived from (i)
common stock; (ii) new senior notes; (iii) the asbestos insurance
rights; (iv) the proceeds of the asbestos insurance settlement
agreements; (v) proceeds of the asbestos in-place insurance
coverage; (vi) proceeds of the asbestos insurance actions; (vii)
proceeds of the asbestos insurance action recoveries; (viii)
the asbestos property damage insurance rights; and (ix) the rights
granted to the Plan Trust pursuant to the insurance assignment
agreement.
Classification of Claims
The plan classifies interests against and liens in the Debtors in
11 classes. The classification of treatment of interests and
claims are:
Treatment of Interests and Claims
Class Type of Claims Treatment
----- -------------- ---------
unclassified administrative unimpaired
unclassified prioritax tax unimpaired
1 priority unimpaired
2 lender secured unimpaired
3 other secured unimpaired
4 senior note impaired
5 workers' unimpaired
compensation
6 ABI impaired
7 asbestos persnal impaired
injury
8 asbestos property impaired
damage
9 general unsecured impaired
10 congoleum interest impaired
11 subsidiary interest unimpaired
Class 7 and 9 are entitled to vote to accept or reject the plan.
Under the plan, Class 1 and 2 will be paid in full.
At the Debtors' option, each holder of Class 3 allowed other
secured claim will receive one these treatments:
i) retain unaltered the legal, equitable and contractual rights
to which the claim entitles the holder and allowed other
secured claim will be reinstated on the effective date;
ii) the Debtors will surrender all collateral securing the
claim to the holder in full satisfaction of their allowed
claim, without representation or warranty by the Debtors;
iii) holder will be otherwise treated in a manner so that the
claim will be rendered unimpaired.
Class 4 senior note claims will be allowed in an aggregate amount
equal to $103,593,750, which will not be subject to any avoidance,
reductions, set off, subordination, counterclaims, defenses,
disallowance and impairment. On the plan's effective date, holder
will receive a pro rata share of each of the securities included
in the senior note distribution.
Each holder of Class 5 allowed workers' compensation claim will be
paid in ordinary course.
On the plan's effective date, all intercompany agreements will be
rejected and all Class 6 ABI claims will be deemed disallowed
and expunged.
All liability for all Class 7 asbestos personal injury claims as
well as liability for all future demands and Class 8 asbestos
property damage claims will be assumed by the Plan Trust and the
Debtors will have no liability thereof.
Holders of Class9 general unsecured claims will expect to recovery
70% of their allowed claim.
Class 10 claims will be canceled while Class 11 will be retained
under the plan.
A full-text copy of Congoleum's amended disclosure statement is
available for free at:
http://ResearchArchives.com/t/s?34f5
A full-text copy of Congoleum's amended Chapter 11 plan of
reorganization is available for free at
http://ResearchArchives.com/t/s?34f7
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No.
03-51524) as a means to resolve claims asserted against it related
to the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 28, 2008, in
Congoleum Corp.'s 2007 annual report filed with the U.S.
Securities and Exchange Commission, the company's management said
there is "substantial doubt about the company's ability to
continue as a going concern unless it obtains relief from its
substantial asbestos liabilities through a successful
reorganization under Chapter 11 of the Bankruptcy Code."
CORPORATE BACKED: S&P Puts BB- Rating on Two Classes on Neg. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-'ratings on the
class A-1 and A-2 certificates from the $46.0 million Corporate
Backed Trust Certificates Goodyear Tire & Rubber Note-Backed
Series 2001-34 Trust on CreditWatch with negative implications.
The CreditWatch placement reflects S&P's Nov. 14, 2008, placement
of the certificates' underlying securities, the 7% notes due
March 15, 2008, issued by The Goodyear Tire & Rubber Co., on
CreditWatch with negative implications.
Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-
Backed Series 2001-34 Trust is a pass-through transaction, and the
ratings on the certificates are based solely on the rating
assigned to the underlying securities, the 7% notes due March 15,
2008, issued by The Goodyear Tire & Rubber Co. ('BB-/Watch Neg').
CW MINING: Court Converts Case to Liquidation under Ch. 7
---------------------------------------------------------
Steven Oberbeck at The Salt Lake Tribune reports that the Hon.
Judge Judith Boulden of the U.S. Bankruptcy Court for the District
of Utah has converted C.W. Mining Inc.'s Chapter 11 case to
Chapter 7.
As reported in the Troubled Company Reporter on Feb. 28, 2008,
C.W. Mining asked the Court to trash the involuntary Chapter 11
petition filed by three of its creditors -- Aquila Inc., House of
Pumps Inc., and Owell Precast LLC. The creditors filed
involuntary chapter 11 petition against C.W. Mining on Jan. 8,
2008 (Bankr. D. Utah Case No. 08-20105). Keith A. Kelly, Esq.,
represents the petitioning creditors. Aquila seeks judgment of
$24,841,988, House of Pumps demands repayment of trade debt worth
$19,256 and Owell Precast demands payment of $3,440 in trade debt.
According to The Salt Lake Tribune, the creditors claimed that
C.W. Mining wasn't paying its debts. Aquila, says The Salt Lake
Tribune, subsequently requested that either a Chapter 11 trustee
be put into place to take over C.W. Mining, or liquidate the
debtor.
The Salt Lake Tribune relates that the Court ordered C.W. Mining's
liquidation after the 10th Circuit Court of Appeals upheld a lower
court ruling that found that the company owed Aquila about
$24 million for coal it failed to supply.
According to The Salt Lake Tribune, Chuck Caisley -- the
spokesperson for Aquila's owner Kansas City Power & Light said,
"Essentially we were seeking an independent third party to gain
control of the company's remaining assets and ensure they were
distributed fairly [to the creditors]."
Court documents say that C.W. Mining's affiliate, Standard
Industries, contended that there were no assets remaining from
C.W. Mining that could provide value to Aquila. "Aquila, who
stands alone as the only [unsecured] creditor seeking bankruptcy
relief, would not receive anything in Chapter 7," the report
quoted F. Mark Hansen -- the attorney for Standard Industries --
as saying. The report states that Mr. Hansen said that the
dismissal of the Chapter 11 case was in the best interest of C.W.
Mining's secured creditors who hold an interest in the company's
remaining property.
Since the involuntary bankruptcy petition was filed, Standard
Industries has paid almost all of C.W. Mining's 120-plus trade
creditors, The Salt Lake Tribune reports, citing Mr. Hansen.
About C.W. Mining
Salt Lake City, Utah-based C.W. Mining Co., dba Co-Op Mining
Company, mines coal near the base of Huntington Canyon in Emery
County.
In 2003, about 75 workers were on strike alleging low pay and
unsafe working condition in the company's mine. The workers also
demanded re-employment of those who were fired because of union
membership. The workers had planned to form the United Mine
Workers. However, C.W. Mining continues to employ non-union
workers.
DBO HOLDINGS: S&P Maintains 'B+' Corporate Credit Rating
--------------------------------------------------------
Standard &Poor's Ratings Services affirmed its ratings, including
its 'B+' corporate credit rating, on DBO Holdings. At the same
time, S&P removed all ratings on DBO Holdings from CreditWatch,
where they were initially placed on Aug. 13, 2008, following the
company's announcement that it agreed to be acquired by OJSC
Novolipetsk Steel (BBB-/Stable/--) for $3.5 billion. The outlook
is stable.
The affirmation and CreditWatch removal reflect S&P's assessment
that despite the high likelihood that weaker steel demand will
hurt the company's operating performance over the next several
quarters, S&P expects its credit measures to remain at a level S&P
would consider to be in line with the rating. Specifically, S&P
expects debt to EBITDA (adjusted for operating leases) to remain
below 4.5x.
The rating on Beachwood, Ohio-based tubular products manufacturer
DBO Holdings reflects the cyclical nature of the company's end
markets, its significant reliance on nonresidential construction
spending, and its moderately aggressive financial profile, as well
as the threat of increased imports due to a stronger dollar. The
rating also reflects the company's good market position and its
highly variable cost structure.
DBO Holdings, with revenues in excess of $2 billion, is one of
North America's largest producers of steel pipe and tubular
products, with the capacity to produce 3 million tons annually.
The company has a strong North American market position in
structural tube (about 51% of the company's product mix), standard
pipe (22%), and electrical conduit products (10%).
DBSI INC: Gets Interim Approval to Use Cash Collateral
------------------------------------------------------
The Hon. Peter J. Walsh of the United States Bankruptcy Court for
the District of Delaware authorized DBSI Inc. and its debtor-
affiliates to use, on an interim basis, cash collateral securing
repayment of secured loan to lenders in accordance with the
budget.
A hearing is set for Dec. 2, 2008, at 2:00 p.m., to consider final
approval of the motion.
The Debtors told the Court that they have an urgent need to use
cash collateral to permit the preservation and orderly disposition
of the tenant-in-common (TIC) properties that compromise the
Property Management Business wherein their lenders have a first
priority perfected security interest. Absent access to those
funds will disable the Debtors to pay expenses associated with the
management of the properties including payroll and general
maintenance costs, according to the Debtors.
As adequate protection, the lenders will be granted a replacement
lien on all postpetition collateral including all cash and cash
equivalents generated by the Debtors relating to the properties.
Access to cash collateral will terminate on the earliest to occur
of (i) Dec. 3, 2008; (ii) dismissal of the cases or conversion of
the cases to Chapter 7; (iii) appointment of a trustee or
examiner, among other things.
A full-text copy of the Debtors' cash collateral budget is
available for free at http://ResearchArchives.com/t/s?34ef
About DBSI Inc.
Headquartered in Meridian, Idaho, DBSI Inc. -- http://www.dbsi.com
-- operates a real estate company. The company and 145 of its
affiliates filed for Chapter 11 protection on Nov. 10, 2008
(Bankr. D. Del. Lead Case No. 08-12687). The Debtors proposed
Young Conaway Stargatt & Taylor LLP as its counsel. Kurztman
CarsonConsultants LLC represents as the Debtors' notice claims and
balloting agent. No Official Committee of Unsecured Creditors has
bee appointed in these cases to date. When the Debtors filed for
protection from their creditors, they listed assets and debts
between $100 million and $500 million each.
DBSI INC: M&I Marshall Asserts $76MM Loan to Firm is Secured
------------------------------------------------------------
M&I Marshall & Ilsley Bank filed a complaint in the United States
Bankruptcy Court for the District of Delaware seeking judgment
against DBSI Inc. and its debtor-affiliates.
The bank demands judgment stating that it is a secured lender and
has a valid right under certain loan agreements. The bank asserts
that it is not required to turn over set-off funds to the Debtors,
among other things.
The bank provided to the Debtors in the aggregate amount of
$76,271,594 in loans comprised of:
i) loans secured by direct mortgages in the subject property
and security interest in the proceeds, rents and payments
streams generated by the property;
ii) mezzanine loans secured by a pledge of the equity of the
Debtor holding the fee interest in the subject property at
the time of the loan; and
iii) an unsecured loan.
None of the loan are cross-collateralized.
M&I tells the Court that it placed an administrative freeze on
certain of the Debtors' account to stem the dissipation of the
funds, which secured the Debtors' indebtedness to the bank. The
lender said it has a valid right of set-off against the funds in
these accounts in according to the terms of a certain loan
agreement.
Approximately $9,525,416 remains in the fund as of the Debtors'
bankruptcy filing, the bank noted.
The Debtors entered into a series of separate loan agreements with
the bank:
-- $9,496,962 Collins loan agreement dated June 28, 2007;
-- $5,118,902 Emerald loan agreement dated Dec. 4, 2007;
-- $3,349,474 Rowesix loan agreement dated Dec. 31, 2007;
-- $5,210,000 Heritage loan agreement dated Feb. 27, 2008;
-- $3,397,528 Regents loan agreements dated Feb. 29, 2008;
-- $5,006,442 Cornerstone loan agreement dated June 13, 2008;
and
-- $1,668,944 Solitude loan agreement dated Sept. 26, 2008.
About DBSI Inc.
Headquartered in Meridian, Idaho, DBSI Inc. -- http://www.dbsi.com
-- operates a real estate company. The company and 145 of its
affiliates filed for Chapter 11 protection on November 10, 2008
(Bankr. D. Del. Lead Case No. 08-12687). James L. Patton, Esq.,
Joseph M. Barry, Esq., Michael R. Nestor, Esq., at Young, Conaway,
Stargatt & Taylor LLP, represent the Debtors in their
restructuring efforts. The Debtor selected Kurztman Carson
Consultants LLC as notice claims and balloting agent. When the
Debtors filed for protection from their creditors, they listed
assets and debts between $100 million and $500 million each.
DSLA MORTGAGE: S&P Junks Rating on Class B-5 Certificates
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the class
B-5 mortgage pass-through certificates from DSLA Mortgage Loan
Trust 2004-AR3 to 'CCC' from 'B'. At the same time, S&P affirmed
S&P's ratings on 11 other classes from this transaction.
The lowered rating reflects projected credit enhancement levels
that are not sufficient to support the certificates at their
previous rating levels as of the October 2008 remittance period.
Based on the dollar amount of loans currently in the delinquency
pipeline for series 2004-R3, losses are projected to further
reduce credit enhancement levels. Class B-5 has $1.4 million in
current credit support, but the transaction currently has $8.193
million in severe delinquencies (90-plus days, foreclosures, and
REOs). Cumulative realized losses are zero. This deal has paid
down to less than 15% of its original pool size.
The affirmations reflect current credit support percentages that
are sufficient to maintain the ratings at their current levels.
A senior-subordinate structure provides credit support for this
transaction. The underlying collateral for all of the affected
classes in this transaction consists primarily of Alt-A mortgage
loans.
Rating Actions
DSLA Mortgage Loan Trust 2004-AR3
Series 2004-R3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 23332UBR4 CCC B
Ratings Affirmed
DSLA Mortgage Loan Trust 2004-AR3
Series 2004-R3
Class CUSIP Rating
----- ----- ------
1-A1A 23332UBD5 AAA
1-A1B 23332UBE3 AAA
2-A1 23332UBF0 AAA
2-A2A 23332UBG8 AAA
2-A2B 23332UBH6 AAA
A-R 23332UBK9 AAA
X 23332UBJ2 AAA
B-1 23332UBL7 AA+
B-2 23332UBM5 A+
B-3 23332UBN3 BBB+
B-4 23332UBP8 BB+
DURACO PRODUCTS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Duraco Products, Inc.
1109 E. Lake Street
Streamwood, IL 60107
Case No.: 08-31353
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Northern District of Illinois (Chicago)
Judge: Eugene R. Wedoff
Debtor's Counsel: Keevan D. Morgan
Morgan & Bley, Ltd.
900 W. Jackson Blvd.
Chicago, IL 60607
Tel: 312 243-0006 Ext. 29
Fax: 312 243-0009
Email: kmorgan@morganandbleylimited.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Debtor's 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ilnb08-31353.pdf
ENDURANCE BUSINESS: S&P Junks Corporate Credit Rating From 'B-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Endurance Business Media Inc., and
removed them from CreditWatch, where they were placed with
negative implications Sept. 18, 2008. The corporate credit rating
was lowered to 'CCC+' from 'B-', and the rating outlook is
negative.
In addition, S&P lowered the issue-level rating on the company's
senior secured first-lien debt to 'CCC+' (at the same level as the
'CCC+' corporate credit rating on the company) from 'B'. The
recovery rating on this debt was revised to '3', indicating S&P's
expectation of meaningful (50% to 70%) recovery in the event of a
payment default, from '2'. S&P also lowered the issue-level
rating on the company's senior secured second-lien debt to 'CCC-'
(two notches lower than the corporate credit rating) from 'CCC',
while the recovery rating on this debt remains at '6', indicating
S&P's expectation of negligible (0% to 10%) recovery in the event
of a payment default.
"The rating actions reflect S&P's uncertainty regarding
Endurance's ability to obtain needed covenant relief in the
current tight credit environment," said Standard & Poor's credit
analyst Michael Altberg. "We also believe that the company could
face difficulty in selling new Homes & Land franchises in 23
states that require Homes & Lands affiliates to file audited
financial statements."
Endurance publishes residential real estate and rental property
advertising publications in the U.S., including Homes & Land,
Rental Guide, Home Guide, and Estate & Homes. These free
publications, which are distributed in supermarkets, restaurants,
and sidewalk kiosks, help to connect potential homebuyers with
real estate brokers and agencies.
Revenue and EBITDA declined 28% and 42%, respectively, in the
third quarter of 2008. The deterioration reflects a decline
across all segments, including a 29% revenue decline at the
company's more profitable franchise operations, which account for
roughly two-thirds of revenue. Endurance experienced significant
page count declines as a result of continued weakness in the U.S.
real estate market. There has also been pressure on real estate
publications from the migration of advertising-supported listings
to the Internet.
Despite the weak real estate market, the company was able to
maintain its EBITDA margin at 29.1% for the 12 months ended
Sept. 30, 2008, which compares favorably with peers. Endurance
has proactively managed its expenses and has closed less
profitable markets. S&P believes it will become increasingly
difficult to maintain revenues and margins as the real estate
market continues to struggle into 2009.
Total debt to EBITDA was 6.5x for the 12 months ended Sept. 30,
2008, up from 5.3x a year earlier. EBITDA coverage of interest was
1.7x for the same period. The company converted about 10.3% of
EBITDA to discretionary cash flow for the period--down
significantly from levels during 2004 to 2006.
EVA-TONE INC: Gets Interim OK to Use Textron Cash Collateral
------------------------------------------------------------
The Hon. Catherine Peek McEwan of the United States Bankruptcy
Court for the Middle District of Florida authorized Eva-tone Inc.
to use, on an interim basis, cash collateral securing repayment of
secured loan to Textron Financial Corporation.
The Debtor wants to use cash collateral to fund operating expenses
during the Chapter 11 case in accordance with budget.
The Debtor and secured lender Textron entered into an agreement
dated Dec. 21, 2007. The transaction provides up to $5 million in
revolving credit facility. The lender holds a first priority,
perfected security inetrest in (i) all of the Debtor's assets and
(ii) all proceeds and products of the lender's collateral.
The Debtor owes $2.5 million plus interest and attorneys' fees to
Textron under the credit facility as of the its bankruptcy filing.
A hearing is set for Dec. 2, 2008, at 10:00 a.m., to consider
final approval of the Debtor's motion. Objections, if any, are
due Nov. 28, 2008.
A full-text copy of the Debtor's cash collateral budget is
available for free at http://ResearchArchives.com/t/s?34f0
Headquartered in Clearwater, Florida, Eva-tone Inc. --
http://www.evatone.com-- offers audio duplication, compact
disc and CD-ROM replication. The company filed for Chapter 11
protection on November 3, 2008 (Bankr. M.D. Fla. Case No.
08-17445). Rod Anderson, Esq., at Holland & Knight LLP,
represents the Debtor. When the Debtor filed for protection from
its creditors, it listed assets and debts between $10 million and
$50 million each.
FMC REAL: Fitch Holds Low-B Ratings & Assigns Stable Outlooks
-------------------------------------------------------------
Fitch Ratings affirms and assigns Rating Outlooks to FMC Real
Estate CDO 2005-1 Ltd. (FMC 2005-1):
-- $131,825,000 class A-1 at 'AAA'; Outlook Stable;
-- $43,941,000 class A-2 at 'AAA'; Outlook Stable;
-- $43,941,000 class B at 'AA'; Outlook Stable;
-- $49,434,000 class C at 'A'; Outlook Stable;
-- $34,055,000 class D at 'BBB+'; Outlook Stable;
-- $13,182,000 class E at 'BBB'; Outlook Stable;
-- $21,970,000 class F at 'BBB-'; Outlook Stable;
-- $35,153,000 class G at 'BB'; Outlook Stable;
-- $12,084,000 class H at 'B'; Outlook Stable.
Fitch has affirmed and assigned Stable Outlooks to all classes due
to the overall stable performance of the portfolio, above average
reinvestment cushion to the modeled Poolwide Expected Loss, and
the transaction passing its stress testing. The Collateralized
Debt Obligation was reviewed as approximately 12% of the portfolio
has turned over since the last review.
Transaction Summary
FMC 2005-1 is a $439,519,500 revolving commercial real estate cash
flow CDO that closed on July 13, 2005. As of the Oct. 21, 2008
trustee report and based on Fitch categorizations, the CDO was
substantially invested: commercial mortgage whole loans/A-notes
(33.9%), commercial mortgage B-notes (30.3%), CRE mezzanine loans
(35.8%), and cash (0.1%). The CDO is also permitted to invest in
credit tenant lease loans, Real Estate Investment Trust debt,
commercial mortgage-backed securities, and CRE CDOs.
The portfolio is selected and monitored by SCFFI GP LLC, an
affiliate of Five Mile Capital. FMC 2005-1 has a five-year
reinvestment period during which, if all reinvestment criteria are
satisfied, principal proceeds may be used to invest in substitute
collateral. The reinvestment period ends August 2010.
Performance Summary
Since last reviewed in October 2007, the PEL has increased to
36.125% from 32.625%. Despite this increase, the transaction's
current reinvestment cushion of 20.375% to its modeled stressed
PEL of 56.500% is still considered above-average.
Since Fitch's last review, four assets (11.5%) have been added to
the pool while one asset (1.7%) paid off. The new assets have a
significantly higher weighted average expected loss than the
weighted average expected loss of the loans that have remained in
the pool. The added assets consist of a B-note (4.5%) secured by
an 18 acre development site located on the Las Vegas strip that is
currently improved with various low-rise mixed-use commercial
buildings; an A-note (3.7%) backed by a condo conversion located
in Tampa, FL; a B-note (2.1%) secured by a regional mall located
in a suburb of Chicago, Illinois; and a mezzanine loan (1.2%)
secured by ownership interests in an office park located in a
suburb of Detroit, Michigan.
In general, the performance of the loans remaining in the pool
since the last review has been stable. Several properties
experienced improved performance as a result of the actualization
of business plans, while others experienced a decline in credit
quality, yielding no significant net change on a poolwide basis.
As of October 2008, there are no delinquent loans reported. It
should be noted, however, that a B-note (4.5%) is currently in
forbearance. This loan, which is secured by a 3.8 acre site
located in Miami Beach, Florida, matured in June 2008. A new
investor has assumed responsibility for the project, has made $50
million in pay downs to the A-note to date, and is expected to
repay the B-note by the end of November 2008.
As of the October 2008 trustee report, the overcollateralization
and interest coverage ratios of all classes remain above their
covenants.
Collateral Analysis
Per the October 2008 trustee report, the CDO is within all its
property type covenants. Retail and office properties represent
the largest concentrations of traditional property types at 28.3%
and 25.7%, respectively. The portfolio also contains non-
traditional property types including land (11.4% according to
Fitch categorizations) and a condominium conversion (3.7%).
Additionally, the transaction remains within all of its geographic
location covenants with the highest concentrations in Arizona at
12% and Florida at 11.3%.
The portfolio's weighted average spread is currently 4.88%, above
the minimum covenant of 4.25%, and the weighted average coupon is
currently 7.28%, above the minimum covenant of 6.5%.
The Fitch Loan Diversity Index is 434 compared to the covenant of
500. The current LDI represents average diversity as compared to
other CRE CDOs.
Asset Manager
Five Mile is an alternative fixed-income investment management
firm founded in February 2003 by individuals whose former
experience includes positions with Salomon Brothers Inc.,
Greenwich Capital Markets, Inc., Kidder, Peabody & Company, Inc.,
and PaineWebber Inc. Five Mile is majority owned and controlled
by its management and minority owned by affiliates of American
International Group, Inc. and W.R. Berkley Corporation. To date,
Five Mile has launched four investment funds: Housatonic Fund,
Silvermine Fund, Structured Income Fund, of which SCFFI is a
general partner and Five Mile Capital Partners II, a successor
fund to the Structured Income Fund. The assets for FMC 2005-1 are
from the Structured Income Fund, which has $662 million in equity
commitments and is now closed to new investors. This fund focuses
on debt and debt-like investments secured by commercial real
estate, consumer receivables, and other asset-backed collateral.
Ongoing Surveillance
Upgrades during the reinvestment period are unlikely given the
pool could still migrate to the PEL covenant. Fitch will consider
assigning Negative Outlooks or placing classes on Rating Watch
Negative should the reinvestment cushion fall to 2% or below.
Additionally, Fitch performs underlying property value decline
stress testing on the CDO's liabilities. To the extent investment
grade rated bonds could be impaired by a 25% property value
decline, classes could also be assigned Negative Outlooks, placed
on Rating Watch Negative or downgraded. The Fitch PEL is a
measure of the hypothetical loss inherent in the pool at the 'AA'
stress environment before taking into account the structural
features of the CDO liabilities. Fitch PEL encompasses all loan,
property, and pool-wide characteristics modeled by Fitch.
Fitch will continue to monitor and review this transaction and
will issue an updated Snapshot report after each committeed
review. The surveillance team will conduct a review whenever
there is approximately 15% change in the collateral composition,
quarterly, or semi-annually.
The ratings of the class A and B notes address the likelihood that
investors will receive full and timely payments of interest, as
per the governing documents, as well as the aggregate outstanding
amount of principal by the stated maturity date. The ratings of
the class C, D, E, F, G, and H notes address the likelihood that
investors will receive ultimate interest and deferred interest
payments, as per the governing documents, as well as the aggregate
outstanding amount of principal by the stated maturity date.
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.
For CREL CDOs, a Negative Outlook may be assigned to any class
that fails Fitch's stress testing. Fitch's stress testing assumes
various property value declines for each rating stress. Based on
these results, any loan whose loan-to-value ratio is greater than
100% is assumed to default with the recovery calculated based on
the property value in that rating stress.
FORD MOTOR: CEO Won't Accept $1 Salary in Exchange for Gov't Aid
----------------------------------------------------------------
Josh Mitchell at Dow Jones Newswires reports that the CEOs of
General Motors Corp. and Ford Motor Co. said on Wednesday that
they would refuse a $1 salary in exchange for government aid.
According to Dow Jones, a House Financial Services Committee
member told GM CEO Rick Wagoner and Ford Motor CEO Alan Mulally
during a hearing on Wednesday that reducing their annual salaries
to $1 would be "an important symbolic gesture" as they seek for
$25 billion in loans funded by tax dollars
Mr. Wagoner said that his salary has already been decreased
significantly and that he has given up other forms of
compensation, Dow Jones states. Workforce.com relates that
Mr. Wagoner said he had previously cut his salary by 50%.
Dow Jones quoted Mr. Mulally as saying, "I understand your point
about the symbol. But I think, not just for me, but we're trying
to fill a skilled and motivated team." According to
Workforce.com, Mr. Mulally -- who earned $21 million in 2007 --
said that he was concerned that cutting compensation might cause
Ford Motor to lose executives and be unable to attract top talent.
Dow Jones says that when Mr. Mulally was pressed on whether he
would work for $1 per year, he said, "I think I'm OK where I am."
Chrysler LLC CEO Robert Nardelli said on Tuesday that he would be
willing to work under a $1 salary as a condition for a federal
bailout package, Dow Jones reports. Workforce.com relates that
Mr. Nardelli said that he would accept a $1 yearly salary if it
helped Chrysler obtain its $7 billion share of a proposed
$25 billion automaker rescue package.
Dow Jones states that former Chrysler CEO Lee Iacocca accepted in
1979 to have a $1 yearly salary to secure a $1.5 billion loan
guarantee from the government, which bailed out the company in the
1980s.
Neal E. Boudette, Josh Mitchell, and Siobhan Hughes at The Wall
Street Journal report that Ford Motor, Chrysler, and GM, tried
told the House Financial Services Committee that the auto industry
could collapse without emergency assistance from the government.
According to WSJ, Chrysler has worked out some contingency plans
in case it has to file for Chapter 11 protection. Mr. Nardelli
said that Chrysler has "looked at all aspects" of a potential
bankruptcy filing and "have gone through advisors to help us think
this through," WSJ relates.
A bankruptcy filing would likely lead GM to "liquidate the company
because you wouldn't have any revenue," and so GM has decided to
put "all effort into avoiding" bankruptcy and hasn't worked out a
detailed contingency plan, WSJ says, citing Mr. Wagoner.
WSJ states that Mr. Mulally said Ford Motor has studied a
bankruptcy option and believes "it is not a viable" option.
Messrs. Wagoner and Nardelli, as they did in a Senate committee
hearing on Tuesday, said that without help, GM and Chrysler could
run out of money soon, WSJ reports.
Democrats, according to WSJ, are proposing to take the requested
$25 billion auto bailout from the $700 billion plan for the
financial markets. The Bush administration is saying that the
companies should get the money quicker from previously approved
loans, WSJ states. President-elect Barack Obama is backing quick
aid to the auto makers, according to the report.
WSJ relates that Rep. Barney Frank, the Massachusetts Democrat who
chairs the committee, crafted a House plan that requires
automakers to submit operating and restructuring plans and
describe how the loan money would be used. The report says that
under that bill, taxpayers would be reimbursed, with interest,
while "golden parachutes" and dividend payments over the life of
the loans would be banned.
The proposed loans being supported by Democrats would be for 10
years, starting at an interest rate of 5%, and would be provided
under the government's $700 billion financial rescue plan, WSJ
states.
Nissan & Renault No Longer Seeking Alliances
Nissan Motor Co. and Renault SA's Carlos Goshn has said he's no
longer seeking alliances, according to Bloomberg TV.
As reported in the Troubled Company Reporter on Oct. 22, 2008,
Chrysler might join a manufacturing and development alliance
between Nissan Motor and Renault, but still preferred a merger
deal with GM. While GM was unable to secure financing for the
deal, Chrysler parent Cerberus Capital was continuing to explore
Chrysler's possible team up with Nissan. Cerberus Capital was
considering selling a minority stake to Nissan and Renault.
About Ford Motor Co.
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Nov. 11,
2008, Moody's Investors Service lowered the debt ratings of
Ford Motor Company, Corporate Family and Probability of
Default Ratings to Caa1 from B3. The company's Speculative
Grade Liquidity rating remains at SGL-3 and the rating outlook
is negative. In a related action Moody's also lowered the
long-term rating of Ford Motor Credit Company to B3 from B2.
The outlook for Ford Credit is negative.
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch Ratings downgraded the Issuer Default Rating of Ford Motor
Company and Ford Motor Credit Company by one notch to 'CCC' from
'B-'.
FRENCH LICK: S&P Lifts Corporate Credit Rating to 'CC' From 'SD'
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on French Lick Resorts & Casino LLC to 'CC' from 'SD'. The
rating outlook is negative. At the same time, Standard & Poor's
raised its issue-level rating on FLRC's senior notes to 'C' from
'D'.
The rating upgrade reflects an assessment of FLRC's operating
performance and capital structure following the successful tender
for $127.9 million of principal amount, or 47%, of FLRC's
$270 million mortgage notes. The notes were purchased at a
discount to par of $780 per $1,000 principal amount, plus a tender
premium of $20, through a contribution by FLRC's parent, the Cook
family. As of Sept 30, 2008, there was $142.1 million in
principal of the notes outstanding.
"The 'C' rating reflects French Lick, Indiana-based FLRC's
inability to meet its fixed obligations through internally
generated funds, and extremely weak credit measures, in part due
to FLRC's relatively remote location, as well as increased
competition following the June 2008 opening of two racinos in
Indianapolis," said Standard & Poor's credit analyst Ariel
Silverberg.
Operating performance in the first nine months of 2008 was
negatively affected by both increased competition and higher
operating costs resulting from the West Baden Hotel, which opened
May 2007. According to data published by the Indiana Gaming
Commission, for the first nine months of 2008, FLRC had, on
average, the lowest win per unit per day ($199) of the riverboats
in the Indiana market. The Indianapolis racinos averaged a win
per unit per day of $257 since June. FLRC's relatively weak win
per unit figures reflect, in part, a lack of sufficient customer
visitation due to the facility's rather remote location,
approximately 100 miles south of Indianapolis, and not directly
accessible by an interstate.
The weak operating performance in the first nine months of 2008
resulted in minimal EBITDA generation and the need for external
funding to support FLRC's fixed charges, which came in the form of
a capital contribution from the parent company. Notwithstanding
the reduction in interest expense following the repurchase of
approximately half of the outstanding notes, S&P expects that
EBITDA generation will not be sufficient to fund FLRC's interest
payments of approximately $15.3 million per year on the remaining
principal amount of its notes, in addition to other fixed charges.
S&P expect the property will remain reliant on contributions from
the company's parent, or other external sources of liquidity, in
2009.
FLRC is a private company and, therefore, does not publicly
disclose its financial information. As of Sept 30, 2008, FLRC's
credit measures were extremely weak.
GASTAR EXPLORATION: Moody's Cuts Senior Note Rating to 'Caa3'
-------------------------------------------------------------
Moody's Investors Service downgraded Gastar Exploration USA, Inc's
senior secured note rating to Caa3 (LGD 3, 43%) from Caa2 (LGD3,
47%). Moody's also downgraded the company's Probability of
Default Rating to Caa3 from Caa2 and its Corporate Family Rating
to Caa3 from Caa2. In addition, Moody's lowered Gastar's
Speculative Grade Liquidity rating to SGL-4 from SGL-3. The
ratings have been placed on review for further possible downgrade.
The downgrade and subsequent review are prompted by Moody's
concern that at the end of the fourth quarter of 2008 the company
may not be able to comply with its current ratio financial
covenant per its bank credit facility. The current market
conditions amplify the uncertainty surrounding the company's
ability to negotiate a waiver of the covenant or obtain alternate
liquidity. Additionally, Gastar's liquidity profile is
constrained by the company's internal funding shortfall over the
next 15 months of potentially $110 million, as estimated by
Moody's. Over the next five quarters, external funding will be
needed to help cover working capital, planned capital expenditures
of $116 million, $33 million of debt maturities during 2009, and
the October 2009 maturity of its $19.4 million credit facility,
which Moody's expects to be fully drawn by the end of 2008.
During the ratings review, Moody's will determine whether Gastar
can successfully obtain a financial covenant waiver from its bank
and/or if it can improve its financial covenant headroom and
liquidity profile by (i) executing a joint-venture agreement for
the development of its Marcellus shale acreage, (ii) closing on an
asset sale, and/or (iii) by replacing and increasing the size of
its credit facilities.
The downgrade of the Speculative Grade Liquidity Rating to SGL-4
from SGL-3 reflects weak liquidity, in part, due to the
aforementioned near-term covenant compliance concerns.
Furthermore, Moody's expects that operating cash flow will be
insufficient to cover working capital, planned capital
expenditures and debt maturities over the next twelve months.
Moody's last rating action on Gastar dates from Nov. 15, 2007, at
which time Moody's assigned the initial rating on Gastar's senior
secured notes
GENERAL MOTORS: CEO Wagoner Says Bankruptcy Would Be Catastrophic
-----------------------------------------------------------------
General Motors Corporation distributed to certain members of the
U.S. government materials related to the testimony by G. Richard
Wagoner, Jr., GM Chairman and Chief Executive Officer, before the
Senate Banking Committee on November 18, 2008, and before the
House Committee on Financial Services on November 19.
General Motors Corp, along with Ford Motor Company and Chrysler
LLC, has requested a $25-billion bailout for automakers in order
to help them avoid collapse or bankruptcy. The Big 3 have
proposed to access emergency funding from the $700-billion package
approved by Congress in October intended to bail out financial
institutions.
A copy of Mr. Wagoner's presentation is available for free at:
http://researcharchives.com/t/s?3501
Mr. Wagoner sad that GM has taken far-reaching actions over the
last several years to restructure and position its business for
viability. Despite dramatic cost reductions, among other things,
the credit crisis is overwhelming operating plans -- weakening
U.S. vehicle market and closing off financial market funding.
"Bankruptcy filing would be catastrophic to the nation; would have
massive and far reaching systematic economic and social costs."
Mr. Wagoner noted that GM directly employs 240,000 people and
supports another 5 million jobs at dealers, parts suppliers and
service providers. He said a Chapter 11 bankruptcy filing by GM,
which comprises 4% of U.S. gross domestic product, would be
catastrophic:
-- Successful Chapter 11 filing would require both preservation
of revenue (especially in a high fixed cost industry like
the auto industry) and successful financing while in
bankruptcy
-- Filing would precipitate massive and rapid desertion by
customers:
* automobiles are the second largest purchase for most
individuals, and purchase decisions are impacted by
consideration of warranty, service parts and residual
value
* customers have other options: a June 2008 survey by CNW
Research indicated that about 80% of customers would not
purchase a vehicle from bankrupt manufacturer
-- In today's credit market, financing while in bankruptcy
would be very difficult -- especially if the company was not
able to protect its revenue base
-- Significant negative effects on U.S. automotive industry,
broader economy and global credit markets.
Mr. Wagoner warned that a full collapse by the Detroit 3 in 2009
would cause more than 1.7 million in lost jobs in 2009, and a 50%
reduction by the Detroit 3 will result to 1.4 million jobs cut.
He gave these figures in a full collapse:
2009 2010 2011
---- ---- ----
Detriot 3 Reduction 100% 100% 100%
Direct Employment (239,341) (239,341) (205,611)
Supplier Employment (973,969) (795,223) (544,598)
Indirect Employment (1,738,034) (1,427,452) (1,021,354)
---------- ---------- ----------
(2,951,344) (2,462,016) (1-771,563)
Mr. Wagoner assured lawmakers that GM would be "a winning auto
company for the long-term". He said GM is building the best cars
in its 100-year history, including a U.S. launch of the Chevrolet
Cruze in 2010, and recent successful launch of the Cadillac CTS,
Chevrolet Malibu and Buick Enclave. He added that GM's landmark
agreement with union United Auto Workers provides new operating
flexibility, competitive U.S. hourly labor costs in 2010 and caps
GM's hourly retiree healthcare liability.
European and Asian automakers, while implementing job cuts and
other cost reductions to address the worldwide economic crisis,
are not facing trouble as deep as the U.S. Big 3's. "We're
expecting to be profitable next year; that's the goal," BMW Chief
Executive Officer Norbert Reithofer said in an interview.
Volkswagen AG, Europe's largest carmaker, according to Bloomberg,
is continuing with plans to complete its Chattanooga, Tennessee,
plant by the second half of 2010, and expects U.S. production in
2009 to equal this year's. Nissan Motor Co., Japan's third-
largest automaker, said profit in the second half of 2008 may go
to "zero" because of lower sales in the U.S. and a stronger yen.
BMW agreed with GM's views that a bankruptcy by GM would have
catastrophic effects, especially on the auto-parts supply sector,
but said that it wouldn't acquire GM's Hummber, Saab or Opel
brands, which acquisition would boost GM's liquidity. "If such a
large company would declare bankruptcy, it would also have
tremendous effects on the supply sector," Mr. Reithofer, BMW's
CEO, said. "I wouldn't like it at all."
"We don't know if GM will go bankrupt, but we certainly don't hope
so," said Mark Barnes, COO of Volkswagen's America unit. "Now
that we are building a U.S. plant, we need suppliers."
Bloomberg TV says GM is suspending production at a plant in
Thailand. Bloomberg also noted that Mr. Wagoner has indicated he
may step down from GM if asked to.
Meanwhile, American Bankruptcy Institute says while the heads of
the Big Three automakers of Detroit pleaded at a Senate Banking
Committee for emergency government aid to stave off potential
collapse, they appeared they had not persuaded enough lawmakers to
move quickly on a bailout. ABIWorld.org also said the
government's handling of the crisis in the airline industry
following the September 11, 2001, terrorist attacks could offer a
blueprint for a potential intervention to prop up the automakers.
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.
GENERAL MOTORS: CEO Won't Accept $1 Salary to Bag Gov't Aid
-----------------------------------------------------------
Josh Mitchell at Dow Jones Newswires reports that the CEOs of
General Motors Corp. and Ford Motor Co. said on Wednesday that
they would refuse a $1 salary in exchange for government aid.
According to Dow Jones, a House Financial Services Committee
member told GM CEO Rick Wagoner and Ford Motor CEO Alan Mulally
during a hearing on Wednesday that reducing their annual salaries
to $1 would be "an important symbolic gesture" as they seek for
$25 billion in loans funded by tax dollars
Mr. Wagoner said that his salary has already been decreased
significantly and that he has given up other forms of
compensation, Dow Jones states. Workforce.com relates that
Mr. Wagoner said he had previously cut his salary by 50%.
Dow Jones quoted Mr. Mulally as saying, "I understand your point
about the symbol. But I think, not just for me, but we're trying
to fill a skilled and motivated team." According to
Workforce.com, Mr. Mulally -- who earned $21 million in 2007 --
said that he was concerned that cutting compensation might cause
Ford Motor to lose executives and be unable to attract top talent.
Dow Jones says that when Mr. Mulally was pressed on whether he
would work for $1 per year, he said, "I think I'm OK where I am."
Chrysler LLC CEO Robert Nardelli said on Tuesday that he would be
willing to work under a $1 salary as a condition for a federal
bailout package, Dow Jones reports. Workforce.com relates that
Mr. Nardelli said that he would accept a $1 yearly salary if it
helped Chrysler obtain its $7 billion share of a proposed
$25 billion automaker rescue package.
Dow Jones states that former Chrysler CEO Lee Iacocca accepted in
1979 to have a $1 yearly salary to secure a $1.5 billion loan
guarantee from the government, which bailed out the company in the
1980s.
Neal E. Boudette, Josh Mitchell, and Siobhan Hughes at The Wall
Street Journal report that Ford Motor, Chrysler, and GM, tried
told the House Financial Services Committee that the auto industry
could collapse without emergency assistance from the government.
According to WSJ, Chrysler has worked out some contingency plans
in case it has to file for Chapter 11 protection. Mr. Nardelli
said that Chrysler has "looked at all aspects" of a potential
bankruptcy filing and "have gone through advisors to help us think
this through," WSJ relates.
A bankruptcy filing would likely lead GM to "liquidate the company
because you wouldn't have any revenue," and so GM has decided to
put "all effort into avoiding" bankruptcy and hasn't worked out a
detailed contingency plan, WSJ says, citing Mr. Wagoner.
WSJ states that Mr. Mulally said Ford Motor has studied a
bankruptcy option and believes "it is not a viable" option.
Messrs. Wagoner and Nardelli, as they did in a Senate committee
hearing on Tuesday, said that without help, GM and Chrysler could
run out of money soon, WSJ reports.
Democrats, according to WSJ, are proposing to take the requested
$25 billion auto bailout from the $700 billion plan for the
financial markets. The Bush administration is saying that the
companies should get the money quicker from previously approved
loans, WSJ states. President-elect Barack Obama is backing quick
aid to the auto makers, according to the report.
WSJ relates that Rep. Barney Frank, the Massachusetts Democrat who
chairs the committee, crafted a House plan that requires
automakers to submit operating and restructuring plans and
describe how the loan money would be used. The report says that
under that bill, taxpayers would be reimbursed, with interest,
while "golden parachutes" and dividend payments over the life of
the loans would be banned.
The proposed loans being supported by Democrats would be for 10
years, starting at an interest rate of 5%, and would be provided
under the government's $700 billion financial rescue plan, WSJ
states.
Nissan & Renault No Longer Seeking Alliances
Nissan Motor Co. and Renault SA's Carlos Goshn has said he's no
longer seeking alliances, according to Bloomberg TV.
As reported in the Troubled Company Reporter on Oct. 22, 2008,
Chrysler might join a manufacturing and development alliance
between Nissan Motor and Renault, but still preferred a merger
deal with GM. While GM was unable to secure financing for the
deal, Chrysler parent Cerberus Capital was continuing to explore
Chrysler's possible team up with Nissan. Cerberus Capital was
considering selling a minority stake to Nissan and Renault.
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.
GERALDINE PYE: Case Summary & 9 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: GERALDINE KAY PYE
1133 WARRIOR DR
FRANKLIN, TN 37064
Case No.: 08-10820
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Middle District of Tennessee (Nashville)
Judge: Keith M. Lundin
Debtor's Counsel: STEVEN L. LEFKOVITZ
LAW OFFICES LEFKOVITZ & LEFKOVITZ
618 CHURCH ST STE 410
NASHVILLE, TN 37219
Tel: 615 256-8300
Fax: 615 250-4926
Email: Stevelefkovitz@aol.com
Total Assets: $2,179,515
Total Debts: $2,213,905
A list of the Debtor's 9 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/tnmb08-10820.pdf
GLOBAL CROSSING: EVP Daniel Wagner Owns 48,625 Shares of Stock
--------------------------------------------------------------
Daniel J. Wagner, Global Crossing Ltd.'s executive vice president
for Ent. Sales and Collab. SVS., disclosed in a Form 4 filing with
the Securities and Exchange Commission that he owns 48,625 shares
of the company's common stock after the sale of 5,000 shares of
common stock at $8.82 per share on Nov. 11, 2008.
Headquartered in Bermuda, Global Crossing Ltd. (NASDAQ:GLBC) --
http://www.globalcrossing.com/-- is a communications solutions
provider, offering a suite of Internet protocol and legacy
telecommunications services worldwide. GCL uses a global IP-based
network that directly connects more than 390 cities in more than
30 countries, and delivers services to more than 690 cities in
more than 60 countries worldwide. It serves a number of
corporations and telecommunications carriers, providing a range of
managed data, and voice products and services.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $2.5 billion, total liabilities of $2.7 billion, resulting in a
shareholders' deficit of about $199 million.
GOODYEAR TIRE: S&P's Ratings Remain on CreditWatch Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services said its ratings on The
Goodyear Tire & Rubber Co. remain on CreditWatch with negative
implications, where they were placed Nov. 13, 2008 (along with
those of a number of other suppliers), as a result of the
company's exposure to General Motors Corp. (CCC+/Negative/--),
Ford Motor Co. (B-/Watch Neg/--), and Chrysler LLC
(CCC+/Negative/--). The Michigan-based automakers are
increasingly beleaguered by a worsening economy, a shift in
consumer preferences away from full-size SUVs and pickup trucks,
and faster-than-expected cash burn as they attempt to adjust
productive capacity with demand.
"Although Goodyear's global exposure to the Michigan-based
original equipment manufacturers was less than 8% in 2007 and
continues to fall, S&P believes the worsening conditions of these
customers pose another level of difficulty and uncertainty in an
already challenging environment worldwide," said Standard & Poor's
credit analyst Lawrence Orlowski. Tire demand has been falling,
not only in North America and Europe but also in Latin America, as
economic conditions deteriorate. Moreover, Goodyear's North
American operations continue to generate weak segment operating
margins, and this is unlikely to change in light of lower demand,
even though the company has been adapting to the economic downturn
by cutting production, enhancing manufacturing efficiencies, and
controlling spending.
Akron, Ohio-based Goodyear has a weak business risk profile, which
reflects tough global tire industry conditions and the company's
high fixed-cost structure. These factors more than offset the
company's business strengths, including its position as one of the
three largest global tire manufacturers, good geographic
diversity, strong distribution, and a well-recognized brand name.
Goodyear has adequate liquidity. The company has substantial cash
balances and borrowing availability under multiple secured,
committed facilities that are sufficient to meet operating and
financing needs during the next year. Goodyear should continue to
improve earnings and cash flow, but it is vulnerable to falling
consumer demand in North America and Europe. As a result of
declines in discretionary income and falling consumer confidence,
individuals are driving less and postponing purchases. Moreover,
management is projecting weak demand for the rest of 2008. S&P
expects that weakness to continue into 2009. On the other hand,
lower raw material costs should boost cash flow, helping to offset
declining unit sales.
S&P expects to resolve the CreditWatch listing within the next 90
days. Given the potential for immense structural and near-term
changes to the industry, S&P would likely resolve the CreditWatch
listing as S&P receive more information on potential U.S.
government assistance to the automakers, or lack thereof. S&P's
reviews will include assessments of any potential effect on the
suppliers' liquidity, including their ability to remain in
compliance with financial covenants, and prospects for the
viability of their businesses more broadly, including future
incremental revenue and profitability declines. S&P may resolve
the reviews for certain less-affected suppliers more quickly than
for others.
GS MORTGAGE: S&P Puts Ratings on 11 Classes on Negative Watch
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on 11
classes of commercial mortgage pass-through certificates from GS
Mortgage Securities Trust 2007-GG10 on CreditWatch with negative
implications.
The CreditWatch negative placements follow Standard & Poor's
preliminary analysis of the loans in the pool with low debt
service coverage, including interest-only loans that will have low
DSC when their amortization periods begin. The Credit Watch
placements also reflect S&P's preliminary analysis of three
specially serviced assets ($124 million, 1.2%) that are with the
special servicer, CWCapital Asset Management LLC. One of the
three specially serviced assets, the Pavilion at Lansdale loan
($32 million, 0.4%), is in the process of being transferred to
CWCapital, and is not yet reflected as specially serviced on the
most recent remittance report dated Nov. 13, 2008. The loan is
60-plus days delinquent.
S&P is in the process of analyzing the loans with low DSC. There
are 45 loans ($2.66 billion, 35%) that have reported DSC of less
than 1.0x. An additional 14 loans ($152.8 million, 2.0%) will
have DSC of less than 0.9x when their initial interest-only
periods end. Eleven ($1.94 billion, 25.7%) of the 45 loans that
reported DSC of less 1.0x have loan exposures that exceed
$100 million. This includes five of the top 10 loans. Sixteen
loans ($1.18 billion, 15.7%) have depleted their debt service
reserve, and three loans have exposures of more than $100 million.
Details of the specially serviced loans are:
-- The Lakeside at White Oak loan has a total exposure of
$44.1 million. The loan is secured by a 561-unit multifamily
property in Newnan, Georgia. The loan was transferred to the
special servicer in July 2008 due to monetary default and is
now in foreclosure. The property inspection by CWCapital
characterized the collateral as "poor." An appraisal
reduction amount of $10.3 million is in effect, based on an
August 2008 appraisal.
-- The Holiday Inn Portfolio loan has a total exposure of
$49.2 million. The loan is secured by 11 limited- and full-
service lodging properties under the Holiday Inn, Crown
Plaza, and Ramada Inn flags. The properties are located in
various states including Michigan, Florida, Iowa,
Pennsylvania, Georgia, Alabama, and South Carolina. The loan
was transferred to the special servicer in April 2008 due to
imminent default. The loan is less than 30 days delinquent.
The borrower is in default under three franchisee agreements,
and nine of the properties have been dropped from their
respective franchisees' reservations systems. CWCapital is
moving forward with foreclosure.
-- The Pavilion at Lansdale loan has a total exposure of
$31.9 million. The loan is secured by a 139,623-sq.-ft.
grocery-anchored retail property in Lansdale, Pennsylvania.
The grocery anchor, Vidalia Market Place, occupies 20% of the
net rentable area and closed in August 2008. The loan is
60-plus days delinquent and is in the process of being
transferred to the special servicer. The property was 92%
occupied as of March 31, 2008. There has been no updated
financial information for this loan since issuance.
Standard & Poor's will resolve the CreditWatch negative placements
after S&P completes its review of the specially serviced assets
and the remaining loans in the pool.
Ratings Placed on CreditWatch Negative
GS Mortgage Securities Trust 2007-GG10
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
F A/Watch Neg A 8.38%
G A-/Watch Neg A- 7.38%
H BBB+/Watch Neg BBB+ 6.00%
J BBB/Watch Neg BBB 4.75%
K BBB-/Watch Neg BBB- 3.75%
L BB+/Watch Neg BB+ 3.255
M BB/Watch Neg BB 3.00%
N BB-/Watch Neg BB- 2.63%
O B+/Watch Neg B+ 2.38%
P B/Watch Neg B 2.13%
Q B-/Watch Neg B- 1.88%
HALO TECHNOLOGY: Panel Taps Cerian Technology as Corporate Advisor
------------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Halo
Technology Holdings, Inc., and its debtor-affiliates' Chapter 11
cases asks the U.S. Bankruptcy Court for the District of
Connecticut for authority to retain Cerian Technology Ventures,
LLC to provide corporate advisory services, nunc pro tunc to Oct.
31, 2008.
Cerian Technology has agreed to perform these services to the
Creditors Committee:
a) evaluate the Debtors' technology, business, intellectual
property assets and management;
b) advise the Committee as to potential strategies for
maximizing the value of the Debtors including sale and
financing options; and
d) potentially serve as an investment banker or chief
restructuring officer.
The Committee tells the Court that the Debtors' cases have been
pending for more than 14 months, and that it is unclear to the
creditors how, and when, the Debtors intend to file a plan of
reorganization detailing their plans for the future. The
Committee adds that management at Halo is plainly working
principally to enrich its own interests.
Subject to the Court's approval, Cerian Technology will be paid:
a) a $50,000 retainer;
b) fees based on Cerian Technology's regular hourly rates for
technology, management and intellectual property analysis
work ranging from $275 for technology managers to $675 for
senior advisors; and
c) reimbursement for actual and reasonable out-of-pocket
expenses.
Brian Sagi, the president and chief executive officer at Cerian
Technology, assures the Court that Cerian Technology neither holds
or represents any interest adverse to the Debtors or their
estates, and that the firm is a "disinterested person" as that
term is defined under Sec. 101()14) of the Bankruptcy Code.
Greenwich, Connecticut-based Halo Technology Holdings Inc. fka
Warp Technology Holdings Inc. -- http://www.haloholdings.com/--
is a holding company whose subsidiaries operate enterprise
software and information technology businesses. The company and
its affiliates filed for chapter 11 protection on Aug. 20, 2007
(Bankr. D. Conn. Lead Case No. 07-50480). David Wallman, Esq., at
The Wallman Law Firm, LLC, and lawyers at Zeisler & Zeisler P.C.,
serve as the Debtors' counsel. James C. Graham, Esq., Kristin B.
Mayhew, Esq., at Pepe & Hazard, and Patrick M. Birney, Esq., at
Thelen LLP, represent the Official Committee of Unsecured
Creditors as counsel. At March 31, 2007, the company reported
total assets of $47,344,373 and total liabilities of $45,494,297.
HANESBRANDS INC: Moody's Keeps All Ratings With Stable Outlook
--------------------------------------------------------------
Moody's Investors Service lowered Hanesbrands Inc.'s Speculative
Grade Liquidity Rating to SGL-2 from SGL-1. All other ratings
were affirmed and the rating outlook remains stable.
The downgrade of the company's Speculative Grade Liquidity rating
primarily reflects Moody's view that the cushion in the financial
covenants contained in the company's secured credit facilities may
reduce over the next few quarters, as financial covenants tighten
according to their contractual terms. Specifically, the company's
1st lien maximum total leverage covenant (debt/EBITDA, as defined)
will have a required step down to 3.0 times by the end of 2009
compared to a required level of 4.0 times as at its most recent
quarter end.
Moody's continues to view Hanesbrands' liquidity as good, as the
company has access to a substantially undrawn $500 million
revolving credit facility (though the amount available may be
limited if covenant cushion is moderate). Moody's also expect the
company to generate positive free cash flow as inventory levels
reduce over the next few quarters.
The affirmation of the company's Ba3 corporate family rating and
stable outlook reflects debt reduction as well as revenue and
operating margin stability since the company was spun off by Sara
Lee Corporation in September, 2006. Hanesbrands' ratings reflect
its still high financial leverage and the company's participation
in a product category considered by Moody's to be highly
commoditized.
These ratings were lowered:
-- Speculate Grade Liquidity Rating to SGL-2 from SGL-1
These ratings were affirmed and LGD assessments amended:
-- Corporate Family Rating at Ba3
-- Probability of Default Rating at Ba3
-- 1st lien credit facilities ($500 million Revolving Credit
Facility and $1.15 billion Term Loans) at Ba2 (LGD 2, 29%)
-- $450 million 2nd lien term loan at B1 (LGD 4, 69% from LGD 5,
71%)
-- $500 million unsecured notes at B2 (LGD 5, 89%)
Hanesbrands Inc., headquartered in Winston-Salem, North Carolina,
is a major manufacturer and marketer of branded innerwear and
outerwear apparel. The company markets products under the
"Hanes", "Champion", "Playtex", "Bali", "Wonderbra" and "L'eggs"
brands. The company reported sales of approximately $4.4 billion
for the LTM period ending Sept. 27, 2008.
HARRAH'S ENTERTAINMENT: S&P Junks Rating on $2.1BB Note Offering
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Las Vegas-based Harrah's Entertainment Inc. and its
wholly owned subsidiary, Harrah's Operating Co. Inc., to 'CC' from
'B'. At the same time, S&P lowered the issue-level rating on the
company's secured loan to 'B+' from 'BB-'. In addition, S&P
lowered the rating on each of the company's senior unsecured and
subordinated debt issues to 'C'. All ratings remain on
CreditWatch with negative implications.
These actions follow the company's announcement that it is
offering to exchange up to $2.1 billion of proposed new senior
secured second-priority notes for a portion (or potentially all in
some cases) of each of the outstanding senior unsecured and
subordinated notes in the capital structure. In some cases, an
exchange for the new notes would represent a substantial discount
to the par amount of the outstanding issue. As a result, S&P
views the exchanges as being tantamount to default given the
distressed financial condition of the company and S&P's concerns
around Harrah's ability to service its current capital structure
over the intermediate term absent this exchange offer. In
addition, the terms of the exchange offer allow holders of notes
maturing in 2010 and 2011 to participate in a modified Dutch
auction process for total cash payment by the company of up to
$325 million." Upon consummation of the transaction, S&P would
lower the notes ratings to 'D' and the corporate credit rating to
'SD'," said Standard & Poor's credit analyst Ben Bubeck. "As soon
as is practical thereafter, S&P will reassess Harrah's capital
structure and assign new ratings based on the amount of notes
successfully tendered."
It is S&P's preliminary expectation that, in the event the
exchange succeeds, the corporate credit rating would be 'B-'
following the consummation of the exchange transactions. Prior to
the exchange announcement, the corporate credit ratings for HET
and HOC were on CreditWatch with negative implications, and S&P
expect they would have been lowered to the 'CCC' category. S&P
recognizes that the post-exchange capital structure would
eliminate, or at least substantially reduce, Harrah's debt
maturities over the next few years, in addition to meaningfully
lowering the company's outstanding debt. However, Harrah's
ability to successfully service its debt obligations over the
intermediate term would still rely on a substantial moderation of
declines recently observed in the gaming sector. The 'B-' rating
does, however, acknowledge that the post-exchange capital
structure, combined with management's efforts to cut costs and
pull back on capital spending, allows the company greater capacity
to weather the current downturn over at least the next several
quarters.
Based on the expected 'B-' corporate credit rating post-exchange,
the issue rating on the company's existing first-lien senior
secured credit facility would remain at 'B+' (two notches above
the expected 'B-' corporate credit rating) following the
completion of the exchange. This rating currently remains on
CreditWatch, however, pending the conclusion of S&P's review
following the completion of the exchange offer.
In addition, S&P assigned S&P's 'B-' rating (at the same level as
the expected 'B-' corporate credit rating) to HOC's proposed up to
$2.1 billion of senior secured second-priority notes. (This
rating is not on CreditWatch with negative implications because it
would be withdrawn in the event the exchange does not move
forward.) S&P also assigned the facility a recovery rating of
'4', indicating the expectation for average (30% to 50%) recovery
in the event of a payment default.
HEAVEN INVESTMENT: Has Until December 29 to File Chapter 11 Plan
----------------------------------------------------------------
The Deal's Carolyn Okomo reports that the Hon. Thomas Holman of
the United States Bankruptcy Court for the Eastern District of
California established Dec. 29, 2008, as deadline for Heaven
Investment Holding Corp. to file a Chapter 11 plan and a
disclosure statement explaining the plan.
According to Ms. Okomo, the company's case could be converted to
Chapter 7 liquidation or dismissed if it failed to comply the
Court's ruling.
Ms. Okom adds the possibility of both a conversion and a dismissal
as a result of the company's failure to (i) comply with a
scheduling order from the Court requiring the company to disclose
its single-asset real estate status; (ii) file a status report by
Oct. 20, 2008; and (iii) attend a preliminary status conference
that had been scheduled on Oct. 28.
Among other things, the company failed to file the status report
by the deadline, the Deal relates.
About Heaven Investment
Headquartered in Sacramento, California, Heaven Investment Holding
Corp. is a real estate corporation. It filed for chapter 11
protection on Aug. 29, 2008 (Bankr. E.D. Calif. Case No.
08-32280). Judge Thomas Holman presides over the case. Yasha
Rahimzadeh, Esq., represents the Debtor. When the Debtor filed
for protection from its creditors, it listed total assets of
$21,120,000 and total liabilities of $30,571,763.
HOLLYWOOD THEATERS: S&P Downgrades Corporate Credit Rating to 'B-'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Portland, Oregon-based Hollywood
Theaters Inc. by one notch and removed them from CreditWatch,
where they were placed with negative implications on June 13,
2008. The corporate credit rating was lowered to 'B-' from 'B',
and the rating outlook is negative.
"The ratings downgrade reflects S&P's uncertainty regarding
Hollywood's ability to maintain compliance with covenants as they
tighten in the fourth quarter and twice in 2009," explained
Standard & Poor's credit analyst Jeanne Mathewson. "We also
believe that the company could face difficulty in refinancing its
debt when its first-lien term loan and revolving credit facility
mature in July 2009."
As of Sept. 30, 2008, the company had a scant 1% EBITDA cushion
against its first-lien leverage covenant (its tightest covenant).
This covenant stepped down an additional quarter turn on Oct. 1,
2008. Hollywood will need to increase EBITDA by roughly 25% in
the fourth quarter in order to maintain compliance, which S&P
views as unlikely if the box office underperforms in December.
The company's leverage covenants tighten two additional times in
2009.
Revenue and EBITDA in the quarter ended Sept. 30, 2008, were down
13% and 17% year over year, respectively. The declines were due
to an industrywide decline in attendance, increased competitive
pressure on five of Hollywood's theatres, and the impact of fewer
theatres in 2008 due to closures. Lease-adjusted leverage was
high, at 6.5x for the 12 months ended Sept. 30, 2008, but higher
still at 8.4x when including the company's debt-like preferred
stock.
HOME EQUITY: S&P Downgrades Ratings on Classes MF-1 & MV-1 Certs.
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class MF-1 and MV-1 pass-through certificates from Home Equity
Mortgage Loan Asset-Backed Trust SPMD 2000-C. At the same time,
S&P affirmed its ratings on the remaining classes of certificates
from the same transaction.
The lowered ratings reflect the availability of credit support for
the affected transaction coupled with S&P's loss expectations
based on the dollar amount of loans currently in the transaction's
delinquency pipeline. Due to the increasingly small pool factor
of this transaction, future 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. As of the Oct. 25, 2008,
distribution date, current credit support versus severe
delinquencies for this transaction is as follows:
Class Credit support (million) Sev. del. (million)
----- ------------------------ -------------------
AF-5 $6.389 $3.095 (loan group 1)
AF-6 $6.389 $3.095 (loan group 1)
MF-1 $1.179 $3.095 (loan group 1)
MF-2 $0.235 $3.095 (loan group 1)
AV $7.916 $4.526 (loan group 2)
MV-1 $1.692 $4.526 (loan group 2)
MV-2 $0.792 $4.526 (loan group 2)
As of the October 2008 remittance, cumulative losses for loan
group 1 were 6.50% and 4.20% for loan group 2 of the transaction's
original pool balance. Total delinquencies were 60.40% for loan
group 1 and 69.30% for loan group 2 of the current pool balance,
while severe delinquencies (90-plus days, foreclosures, and REOs)
were 35.35% for loan group 1 and 46.78% for loan group 2 of the
current pool balance.
The affirmations reflect current and projected credit support
percentages, which are sufficient to maintain the ratings at their
current levels. As of the October 2008 remittance report, credit
support for these classes ranged from 4.53% to 78.17% of the
current pool balance. In comparison, the ratio of current credit
enhancement to original credit enhancement ranged from 1.13x to
9.77x.
A combination of subordination, excess interest, and
overcollateralization provide credit enhancement for this
transaction. The collateral supporting this series originally
consisted of pools of U.S. subprime fixed- and adjustable-rate
mortgage loans secured by first liens on one- to four-family
residential properties.
Ratings Lowered
Home Equity Mortgage Loan Asset-Backed Trust Series SPMD 2000-C
Rating
------
Class CUSIP To From
----- ----- -- ----
MF-1 456606BJ0 CCC BB-
MV-1 456606BN1 B- AA
Ratings Affirmed
Home Equity Mortgage Loan Asset-Backed Trust Series SPMD 2000-C
Class CUSIP Rating
----- ----- ------
AF-5 456606BF8 AAA
AF-6 456606BG6 AAA
AV 456606BM3 AAA
MV-2 456606BP6 CCC
HUNTER DEFENSE: Moody's Retains 'B2' Rating With Stable Outlook
---------------------------------------------------------------
Moody's Investors Service affirmed the B2 corporate family and
probability of default ratings of Hunter Defense Technologies,
Inc. The outlook remains stable.
The B2 family rating reflects the company's recent revenue,
earnings and cash flow performance levels which have met
expectations that were set when the CFR was assigned in July 2007.
The B2 also reflects sole-source status that many of Hunter's
heater and CBRN filter products hold with the U.S. Department of
Defense. In Moody's view, U.S. defense demand should remain
favorable in 2009 which should enable the company to continue
meeting its projected performance level and leverage reduction
goals. Against these positives, the rating also encompasses
Hunter's low tangible asset base, high leverage, and risks from
customer/product concentration.
The stable outlook contemplates moderate earnings growth which
should generate improving credit metrics and sustain cash flow
available for debt reduction. The outlook also reflects Hunter's
good liquidity profile stemming from a $20 million revolving
credit line with low letters of credit utilization, low historical
working capital and seasonal borrowing needs, and good covenant
headroom cushion.
In addition to the aforementioned, these ratings have been
affirmed:
-- $20 million first lien revolver due August 2013 B1, LGD 3,
34%
-- $165 million first lien term loan B due August 2014 B1, LGD
3, 34%
-- $80 million second lien term loan due August 2015 Caa1, LGD
5, to 86% from 85%
Moody's last rating action on Hunter occurred July 23, 2007 when
Hunter was assigned a B2 corporate family rating, and LBO debts
related to the company's acquisition by Metalmark Capital were
also rated.
Hunter Defense Technologies, Inc., headquartered in Solon, Ohio,
is a provider of tactical shelters, chemical, biological,
radiological, nuclear filters and collective protective systems,
and mobile power and temperature control equipment for the U.S.
military and Homeland Security. Last twelve months ended
Sept. 30, 2008 revenue was approximately $218 million.
IMMUNICON CORP: Plan of Liquidation Effective Nov. 17
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware confirmed
on Nov. 7, 2008, Immunicon Corp. and its debtor-affiliates' fourth
amended plan of liquidation under Chapter 11 of the Bankruptcy
Code, dated Oct. 13, 2008. All objections, if any, to the extent
not withdrawn were overruled by the Court.
Classes 2, 3, and 4, which are the only Classes entitled to vote
on the Plan, have each accepted the Plan.
The fourth amended plan of liquidation became effective on
Nov. 17, 2008. Robert F. Troisio has been appointed Liquidating
Trustee of the IMMC Liquidating Estate.
About Immunicon Corporation
Headquartered in Huntington Valley, Pennsylvania, Immunicon
Corporation and its debtor-affiliates -- http://www.immunicon.com/
-- offers products and services for cell analysis and molecular
research. The Debtors filed for Chapter 11 protection on June 11,
2008 (Bankr. D. Del. Lead Case No. 08-11178). Sheldon K. Rennie,
Esq., at Fox Rothschild LLP, represents the Debtors in their
restructuring efforts. When Immunicon Corp. filed for protection
from its creditors, it listed estimated assets of $9,231,264 and
estimated debts of $24,309,838.
IMPERIAL GAMING: Case Summary and 20 Largest Unsec. Creditors
-------------------------------------------------------------
Debtor: Imperial Gaming Corporation
aka Imperial Casino Hotel
Imperial Hotel & Casino
Imperial Casino, Ltd
Imperial Players
P.O. Box 869
Cripple Creek, CO 80813
Bankruptcy Case No.: 08-28279
Chapter 11 Petition Date: November 17, 2008
Court: District of Colorado (Denver)
Judge: A. Bruce Campbell
Debtor's Counsel: Lee M. Kutner, Esq.
lmk@kutnerlaw.com
Ste. 500, 303 E. 17th Ave.
Denver, CO 80203
(303) 832-2400
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 20 largest unsecured creditors is
available for free at http://bankrupt.com/misc/codb08-28279.pdf
The Debtor's petition was signed by Robert A. Brooker, President.
IMPERIAL GAMING: Files for Chapter 11 Protection in Colorado
------------------------------------------------------------
Denver Business Journal reports that Imperial Gaming Corp. has
filed for Chapter 11 protection in the U.S. Bankruptcy Court for
the District of Colorado.
According to Wayne Heilman at The Gazette, Imperial Gaming's
President and General Manager Bob Brooker said that the company
filed for bankruptcy because the firm's gambling revenue has
dropped 21% this year and was no longer sufficient to cover
payments on its $5 million in debt. Mr. Brooker blamed the
revenue decline on:
-- a statewide smoking ban extended to casinos on January
2008,
-- a weak economy,
-- higher gasoline prices, and
-- the opening of a large new casino in town.
The Gazette quoted Mr. Brooker as saying, "Cash flow is slow this
time of year and we have been having trouble covering our debt.
We would have been able to get through one or two of these
problems, but facing all four has been pretty difficult.
Hopefully, things will get better sooner than July (when the
higher limits and new games take effect), but this gives us time
to get to that point when we can add the games, increase the
limits and expand our hours."
Mr. Brooker said that Imperial Game's assets are between
$8 million and $9 million. Court documents indicate that Imperial
Gaming listed debts of $1 million to $10 million. The company
said that it had between 100 and 199 creditors, Denver Business
states. According to The Gazette, Mr. Brooker said that Imperial
Gaming's largest creditors include First Community Bank -- which
holds the mortgage on the hotel and casino -- and slot machine
giant International Game Technology Corp.
The Gazette reports that Imperial Gaming had filed for Bankruptcy
Court protection from its creditors in 2000 to reduce its
$13.2 million debt, which exceeded its assets by more than
$3 million. Imperial Gaming emerged from that Chapter 11
protection in 2001.
The Gazette relates that Imperial Gaming employs 55 people and
will remain open.
About Imperial Casino
The Imperial Casino Hotel operates 178 slot machines in Cripple
Creek. It was built in 1896 as the Collins Hotel, and changed its
name to the Hotel Imperial in 1905.
INDUSTRIAS VASSALLO: Case Summary and 20 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Industrias Vassallo, Inc.
1000 CARR. No. 506
Coto Laurel
Ponce, PR 00780-2935
Bankruptcy Case No.: 08-07752
Chapter 11 Petition Date: November 17, 2008
Court: District of Puerto Rico (Old San Juan)
Judge: Brian K. Tester
Debtor's Counsel: Charles Alfred Cuprill, Esq.
cacuprill@aol.com
Charles A. Curpill, PSC Law Office
Second Floor, 356 Calle Fortaleza
San Juan, PR 00901
Tel (787) 977-0515
Estimated Assets: $1,000,001 to $100,000,000
Estimated Debts: $1,000,001 to $100,000,000
The Debtor did not file a list of its largest unsecured creditors.
INDUSTRIAS VASSALLO: Files for Bankruptcy in Puerto Rico
--------------------------------------------------------
Industrial Vassalo Inc. of Coto Laurel, Puerto Rico, made a
voluntary filing under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Puerto Rico, according to Bloomberg News' Christopher Scinta.
The company did not disclose reasons why it filed for bankruptcy,
Mr. Scinta notes.
Mr. Scinta, citing papers filed with the Court, says the company
owes $11.9 million to its unsecured creditors and $35.9 million in
loans to secured lender Westernbank.
The company's unit Syroco Inc. filed for bankruptcy in New York in
July 2007 after three years of losses, which case was converted to
Chapter 7 liquidation in March 2008, Bloomberg notes.
Industrial Vassallo Inc. makes PVC water pipes.
INNERDOORWAY: Bankruptcy Won't Affect Subscribers & Advertisers
---------------------------------------------------------------
Boulder County Business Report states that InnerDoorway's
President Rob Lutz said that the company doesn't expect its
bankruptcy to affect subscribers or advertisers much.
According to Boulder County Business, Mr. Lutz said that filing
for Chapter 11 protection was "something that we had to consider
after having a couple of tough issues."
Citing Mr. Lutz, Boulder County Business relates that
InnerDoorway's readership and advertising base has increased since
the company changed its name in February 2008. The report says
that a Texas-based venture capitalist company funds much of
InnerDoorway, and that money has diminished substantially.
Mr. Lutz said that he expects InnerDoorway to be profitable next
year and hopes to pay back as many of its debts as possible,
Boulder County Business reports.
No workers will be laid off, Boulder County Business states,
citing Mr. Lutz.
Boulder, Colorado-based InnerDoorway produces consumer and trade
publications with a focus on health and wellness. The company
filed for Chapter 11 protection on Nov. 10, 2008 (Bankr. D. Colo.
Case No. 08-27888). Daniel J. Garfield, Esq., at Brownstein Hyatt
Farber Schreck, LLP, represents the company in its restructuring
effort. The company listed assets of $1,000,001 to $10,000,000
and debts of $1,000,001 to $10,000,000.
INTERNATIONAL FOOD: Auditor Raises Going Concern Doubt
------------------------------------------------------
Gruber & Company, LLC, in Saint Louis, Missouri, in a letter dated
Oct. 10, 2008, to the Board of International Food Products Group,
Inc., disclosed that it audited the financial statements for the
years ended June 30, 2008, and 2007.
"The company has suffered recurring losses from operations, has
difficulties generating sufficient cash flow to meet its
obligations and sustain its operations, and has a working capital
deficit, that raise substantial doubt about its ability to
continue as a going concern," the auditor stated.
As of June 30, 2008, International Food's balance sheet showed
total assets of $1,428,585, total liabilities of $1,923,482, and
total shareholders' deficit of $494,897.
For the year ended June 30, 2008, the company posted a net loss of
$1,329,337 on sales of $1,386,000. A year earlier, the company
posted a net loss of $1,184,659.
Management's plans include an acquisition of a food company, which
it believes will lead to profits, significant revenue and
significant funding. No assurances can be given that the company
will be able to raise the capital required to implement its
business plan. In addition even if the company is able to achieve
distribution of its products, there is no assurance that there
will be sufficient sell-through of those products to warrant
reorders, that reliable sources of products will be retained or
that the company will be able to sustain levels of sales at prices
that generate sufficient gross profit to cover expenses.
A full-text copy of the company's Amended Annual Report is
available for free at: http://researcharchives.com/t/s?34f2
In a separate regulatory filing, the company also disclosed that
it won't be able to file its quarterly report for the period ended
Sept. 30, 2008, on time. "Documentation necessary in order to
prepare a complete filing has not been obtained," Richard Damion,
IFPG chief executive officer, informed the Securities and Exchange
Commission.
About IFPG
International Food Products Group, Inc., is in the food industry
business and during the past year has broadened its scope.
Through strategic planning IFPG has entered into the Wi MAX and
RFID technology arena as well as other emerging technologies. To
better represent the nature of its business, in October of 2008
IFPG changed its name to Advanced Technologies & Products Group,
Inc.
IFPG has already formed three wholly owned subsidiaries to better
segregate its business plan: Golden Choice Foods (GCF), Restaurant
Holdings Group (RHG), and Newport Digital Technologies (NDT). GCF
will concentrate on the sale and marketing of intellectual
property products such as controlling of diabetes for children and
weight control for children. RHG is a one third owner in a new
restaurant franchise operation revolving around Peruvian Food.
NDT will be concentrating on the sales and marketing of high
technology products worldwide, including WiMax, RFID, affordable
notebook computers for children and other emerging technology
products.
Many of IFPG's operations are conducted through the use of
independent contractors. Independent contractors provide selling,
manufacturing, shipping and computer services. Because of this
policy, IFPG currently has three full-time employees.
JAMES RIVER: FMR LLC Disposes of 5.26% Stake
--------------------------------------------
Scott C. Goebel. Esq., in behalf of FMR LLC and its subsidiaries
disclosed in a Form 13G/A filing with the Securities and Exchange
Commission that FMR beneficially own approximately 300 or 0.001%
shares of the company's common stock. FMR disclosed in July that
it owned 1,333,200 shares of the stock, constituting 5.264% of the
stock outstanding.
Meanwhile, Coy K. Lane, Jr., senior vice president and chief
operating officer of James River Coal Co. disclosed on a Form 4
filing with the Securities and Exchange Commission that it owns
82,680 shares of the company's common stock after the sale of
5,280 shares of common stock at $19.22 per share on Nov. 1, 2008.
Michael E. Weber, senior vice president and chief commercial
officer of James River, on the other hand, said that he owns
26,754 shares of the company's common stock after a sale of 1,623
shares of common stock at $19.22 per share at Nov. 11, 2008.
The number of shares of the company's common stock, par value
$.01 per share, outstanding as of Oct. 15, 2008 was 27,401,703.
Headquartered in Richmond, Virginia, James River Coal Company
(NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines,
processes and sells bituminous steam and industrial-grade coal
primarily to electric utility companies and industrial customers.
The company's mining operations are managed through six operating
subsidiaries located throughout eastern Kentucky and in southern
Indiana.
* * *
As reported in the Troubled Company Reporter on Sept. 17, 2008,
Standard and Poor's Ratings Service affirmed its ratings,
including its 'CCC' corporate credit rating, on Richmond,
Virginia-based James River Coal. The outlook remains
developing.
JAMES RIVER: Posts $21.7 Net Loss in Quarter ended Sept. 30
-----------------------------------------------------------
James River Coal Company reported net loss of $21.7 million for
the third quarter of 2008 and a net loss of $62.4 million for the
nine months ended Sept. 30, 2008. This is compared to a net loss
of $9.7 million for the third quarter of 2007 and a net loss of
$35.6 million for the nine months ended Sept. 30, 2007. The
results for the third quarter of 2007 and the nine months ended
Sept. 30, 2007, include a $6.1 million gain on curtailment of the
company's defined benefit pension plan.
As of Sept. 30, 2008, the company had available liquidity of
$60.1 million calculated as:
-- Cash and Cash Equivalents - $45.1 million
-- Availability under the Revolver - $15.0 million
-- Available Liquidity - $60.1 million
The company's available liquidity was reduced by $24.2 million in
early October 2008 as a result of its repayment of the Term
Facility and funding of the Letter of Credit Facility and the
payment of accrued interest and financing fees. The Term Facility
has been paid in full.
The company was not in compliance with the Adjusted EBITDA and
leverage ratio covenants contained in the Revolving Credit
Facility and the Letter of Credit Facility as of Sept. 30, 2008.
The company has entered into a waiver and amendment to the
Revolving Credit Facility with regard to the non-compliance. The
company has also reached an agreement with the required lenders
under the Letter of Credit Facility regarding a waiver and
amendment of the non-compliance. The waivers and amendment relate
to both the quarter ended Sept. 30, 2008 and the quarter ended
Dec. 31, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $504.6 million and total liabilities of $385.9 million and
shareholders' equity of $118.7 million.
A full-text copy of the company's 10-Q filing is available for
free at http://ResearchArchives.com/t/s?34fd
About James River Coal Co.
Headquartered in Richmond, Virginia, James River Coal Company
(NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines,
processes and sells bituminous steam and industrial-grade coal
primarily to electric utility companies and industrial customers.
The company's mining operations are managed through six operating
subsidiaries located throughout eastern Kentucky and in southern
Indiana.
* * *
As reported in the Troubled Company Reporter on Sept. 17, 2008,
Standard and Poor's Ratings Service affirmed its ratings,
including its 'CCC' corporate credit rating, on Richmond,
Virginia-based James River Coal. The outlook remains developing.
JOSEPH LEFRAK: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Joseph S. Lefrak
18 East 48th Street
New York, NY 10017
Case No.: 08-14563
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Southern District of New York (Manhattan)
Debtor's Counsel: David H. Wander, Esq.
Wander & Associates, P.C.
641 Lexington Avenue
New York, NY 10022
Tel: (212) 751-9700
Fax: (212) 751-6820
Email: dwander@wanderlaw.com
Total Assets: $3,771,100
Total Debts: $8,328,541
A list of the Debtor's 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/nysb08-14563.pdf
JP MORGAN: S&P Makes Corrections on Ratings on Eight Classes
------------------------------------------------------------
Standard & Poor's Ratings Services corrected its ratings on eight
classes from JP Morgan Alternative Loan Trust 2006-S1. The
transaction is collateralized by U.S. Alternative-A residential
mortgage loans. S&P reinstated the 'AAA' ratings on senior classes
3-A-2, 3-A-2A, 3-A-3, 3-A-4, 3-A-5, and P, and corrected the
ratings on subordinate classes 3-M-1 and 3-M-2 to 'BBB' and 'B',
respectively.
S&P previously downgraded these classes on Nov. 11, 2008, as part
of a larger review of U.S. Alt-A RMBS transactions.
Excess spread, overcollateralization, and subordination provide
credit support for this deal. The corrected ratings reflect S&P's
belief that the amount of credit support available is sufficient
to support the ratings. At the time of S&P's Nov. 11 rating
action, S&P didn't take into account the full amount of excess
spread and overcollateralization available to support the notes.
Ratings Corrected
JPMorgan Alternative Loan Trust 2006-S1
Ratings
-------
Class CUSIP Current Nov. 11 Pre-Nov. 11
----- ----- ------- ------- -----------
3-A-2 46627MFA0 AAA BB AAA
3-A-2A 46627MFB8 AAA BB AAA
3-A-3 46627MFU6 AAA BB AAA
3-A-4 46627MFV4 AAA BB AAA
3-A-5 46627MFW2 AAA BB AAA
P 46627MFR3 AAA BB AAA
3-M-1 46627MFC6 BBB CCC AA+
3-M-2 46627MFD4 B CCC BBB
KEVIN HEBNER: Case Summary and 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Kevin D. Hebner
Amanda J. Hebner
3809 So. HWS Cleveland Blvd.
Omaha, NE 68130
Bankruptcy Case No.: 08-82938
Chapter 11 Petition Date: November 13, 2008
Court: District of Nebraska (Omaha Office)
Debtor's Counsel: Douglas E. Quinn, Esq.
dquinn@mnmk.com
McGrath, North, Mullin & Kratz, P.C.
Suite 3700 First National Tower
1601 Dodge Street
Omaha, NE 68102-1637
Tel: (402) 341-3070
Fax: (402) 341-0216
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/nedb08-82938.pdf
The Debtor's petition was signed by Kevin D. Hebner and Amanda J.
Hebner.
KIS GOLF: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: KiS Golf, Inc.
441 Donelson Pike, Suite 325
Nashville, TN 37214
615-232-9400
Case No.: 08-10809
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Middle District of Tennessee (Nashville)
Debtor's Counsel: JOSEPH CARSON STONE, Esq.
J CARSON STONE III PC
209 TENTH AVENUE SOUTH, SUITE 334
NASHVILLE, TN 37203
Tel: 615-259-1901
Fax: 615-259-1904
Email: carson@jcstonelaw.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
KOMUNIK CORP: Restructures in Canada, Gets CCAA Protection
----------------------------------------------------------
Komunik Corporation and its active subsidiaries have obtained
creditor protection under the Companies' Creditors Arrangement
Act (Canada) pursuant to an initial order granted on Nov. 18,
2008 by the Superior Court of Quebec. The CCAA filing is a
necessary step in completing its restructuring efforts.
"The Initial Order provides a framework for us to restructure our
business," Sebastien P. Demers, chief executive officer of the
corporation, said. "We are working diligently with our customers,
suppliers and employees to advance that process. We are
optimistic that the CCAA process will allow the business to
prosper in the long term."
"We are also pleased to advise that the corporation has financing
required to see the business operate during the restructuring
period, as approved by the Court" he added.
The corporation and its principal lenders have negotiated the
terms under which the Lenders are providing the corporation with
financing during the CCAA proceedings. The terms of the
arrangement between the Lenders and the corporation have been
approved pursuant to the terms of the Initial Order.
The CCAA protection will stay creditors, suppliers and others from
enforcing any rights against the corporation and its subsidiaries
and will afford the corporation and its subsidiaries the
opportunity to restructure their affairs.
The corporation's board of directors authorized the corporation to
takethis action as the best alternative for the long-term
interests of the corporation, its employees, customers, creditors
and other stakeholders.
The corporation expects to operate its business as usual during
the restructuring process and to provide uninterrupted service to
its customers.
RSM Richter Inc. is the court appointed Monitor for the CCAA
proceedings and will monitor the ongoing operations of the
corporation and its subsidiaries, assist with the development and
filing of a plan of reorganization, compromise and arrangement
with its creditors and other stakeholders, liaise with creditors,
customers and other stakeholders and report to the court.
Stikeman Elliott LLP is acting as legal counsel for the
corporation and its subsidiaries.
About Komunik Corporation
Headquartered in Montreal, Canada, Komunik Corporation (TSE:KOM) -
- http://www.komunik.com/-- is a provider of end-to-end solutions
for Communication Resource Management. Through innovation and a
nation-wide infrastructure, Komunik helps its clients increase the
return on their investment. Komunik develops technology, and
provides expertise and support for document Management, multi-
channel relationship marketing and overall print services.
L & M BROADCASTING: Case Summary and 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: L & M Broadcasting, Inc.
dba WNGTTV UPN 48
WMNT TV
P.O. Box 13782
Columbus, OH 43213
Bankruptcy Case No.: 08-61159
Chapter 11 Petition Date: November 13, 2008
Court: Southern District of Ohio (Columbus)
Judge: Charles M. Caldwell
Debtor's Counsel: Mark Ditullio, Esq.
bankruptcylaw@ameritech.net
169 E Livingston Ave
Columbus, OH 43215
Tel: (614) 461-1516
Fax: (614) 461-1520
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/ohsb08-61159.pdf
The Debtor's petition was signed by LaMaree Miller, President/
Director.
LAKEWOOD INVESTORS: Case Summary & 7 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Lakewood Investors, L.L.C.
P.O. Box 8860
Mobile, AL 36689
Case No.: 08-35806
Petition Date: November 17, 2008
Court: U.S. Bankruptcy Court
Eastern District of Virginia (Richmond)
Judge: Douglas O. Tice Jr.
Debtor's Counsel: William C. Parkinson, Jr.
Wm. C. Parkinson, Jr., P.C.
5310 Markel Road, Suite 200
Richmond, VA 23230
Tel: 804-288-9026
Fax: 804-282-0459
Email: wparkjr@aol.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Debtor's 7 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/vaeb08-35806.pdf
LAZY DAYS: Nonpayment of Interest Cues S&P's Rating Downgrades
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Seffner, Florida-based Lazy Days' R.V. Center
Inc. to 'CC' from 'CCC+', as well as S&P's rating on the company's
unsecured debt to 'C' from 'CCC-'. The outlook is negative.
The downgrade reflects Lazy Days' announcement that it did not
make the interest payment due Nov. 17, 2008, on its $137 million,
11.75% senior unsecured notes. The notes provide for a 30-day
grace period for making the interest payment.
"The company is discussing a financial restructuring with the
noteholders, and a bankruptcy filing also is possible," said
Standard & Poor's credit analyst Nancy Messer. A nonpayment of
interest on the notes after the grace period would trigger the
cross-default provisions under Lazy Days' floor plan credit
facility. The U.S. recession has caused a sharp drop in sales of
recreational vehicles, pressuring Lazy Days' margins, earnings,
and cash flow.
The outlook is negative. S&P would lower the corporate crediting
rating to 'SD' (selective default) and the note rating to 'D' if
the grace period expires without the company's having paid the
interest, or if a distressed exchange occurs. After lowering the
rating to 'SD,' S&P may continue to rate Lazy Days, and the rating
could be raised back to the 'CCC' category or higher depending on
S&P's assessment of the company's new capital structure and
liquidity profile. S&P could also withdraw S&P's ratings. S&P
will lower the ratings to 'D' if the company files for bankruptcy.
LAZY DAYS: Nonpayment of Interest Cues Moody's Rating Downgrades
----------------------------------------------------------------
Moody's Investors Service downgraded Lazy Days' R.V. Center,
Inc.'s ratings, including the Corporate Family Rating and
Probability of Default Ratings to Ca from Caa2. Moody's also
downgraded the rating on the company's 11.75% senior unsecured
notes to C from Caa3. Lazy Days' SGL-4 Speculative Grade
Liquidity rating was affirmed. The ratings remain on review for
possible downgrade.
These ratings were downgraded:
-- Corporate Family Rating to Ca from Caa2;
-- Probability of Default Rating to Ca from Caa2;
-- Senior Unsecured Notes at to C from Caa3 (LGD 5, 83%), the
LGD point estimate remains subject to change.
This rating is affirmed:
-- The SGL-4 Speculative Grade Liquidity Rating
The rating downgrades were prompted by Lazy Days' Nov. 17, 2008
announcement that it had elected not to make the interest payment
due on that day to holders of the 11.75% Senior Unsecured Notes
due 2012. Under the indenture terms governing the notes, Lazy
Days has a thirty day grace period before the failure to pay
interest becomes an event of default, which would then allow the
note holders to demand immediate repayment. The company also
announced that during the grace period, it intends to engage in
discussions with the note holders to improve liquidity or modify
the company's requirements for liquidity. Lazy Days also
announced that it is negotiating terms of a waiver of the cross-
default provisions within its $100 million floor plan credit
facility.
Moody's review will focus on the outcome of the negotiations with
the company's note holders and floor plan credit facility lenders,
and the likelihood of support provided by the company's owner,
Bruckmann, Rosser, Sherrill & Co. II, L.P.
Moody's last downgraded Lazy Days' on July 18, 2008 to reflect the
company's declining operating performance and financial
flexibility.
Headquartered near Tampa, Florida, Lazy Days is the largest single
site recreational vehicle retailer in the world. Its products
include new and pre-owned Class A and Class C motor homes,
conventional trailers and fifth-wheel trailers. Revenues were
about $634 million for the LTM period ended September 30, 2008.
LEINER HEALTH: Has Until November 30 to File Chapter 11 Plan
------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
further extended the exclusive periods of Leiner Health Products
Inc. and its debtor-affiliates to:
a) file a Chapter 11 plan until Nov. 30, 2008; and
b) solicit acceptances of that plan until Dec. 31, 2008.
According to the Troubled Company Reporter on Oct. 8, 2008,
the Debtors reminded the Court that they submitted a joint Chapter
11 plan of liquidation and a disclosure statement explaining the
plan on July 18, 2008. The plan contemplates the liquidation of
their estate, and the distribution of the sale proceeds and any
other remaining assets to their creditors, the Debtors says. They
filed an amended version of the plan on Aug. 22, 2008, the Debtor
notes.
The Court approved the adequacy of their disclosure statement on
Aug. 21, 2008.
The Debtors said they need sufficient time to allow the plan
confirmation process to continue unhindered by competing plans.
About Leiner Health
Based in Carson, California, Leiner Health Products Inc. --
http://www.leiner.com/-- manufactures and supplies store brand
vitamins, minerals and nutritional supplements products, and over-
the-counter pharmaceuticals in the US food, drug and mass merchant
and warehouse club retail market. In addition to its primary
VMS and OTC products, they provide contract manufacturing
services. During the fiscal year ended March 31, 2007, the VMS
business comprised approximately 61% of net sales. On March 20,
2007, they voluntarily suspended the production and distribution
of all OTC products manufactured, packaged or tested at its
facilities in the US.
The company filed for Chapter 11 protection on March 10, 2008
(Bankr. D. Del. Lead Case No.08-10446). Jason M. Madron, Esq.,
and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.,
represent the Debtors. The Debtors selected Garden City Group
Inc. as noticing, claims and balloting agent. The U.S. Trustee
for Region 3 appointed creditors to serve on an Official Committee
of Unsecured Creditors in these cases. The Committee selects Saul
Ewing LLP as its counsel.
As reported in the Troubled Company Reporter on April 10, 2008,
the Debtors' schedules of assets and liabilities showed total
assets of $133,412,547 and total debts of $477,961,526.
LEVEL 3 COMMS: S&P Junks Corporate Credit Rating From 'B-'
----------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit rating on Broomfield, Colorado-based Level 3 Communications
Inc. to 'CC' from 'B-'. S&P also lowered the issue-level ratings
on the company's 6% convertible subordinated notes due 2009, the
6% convertible subordinated notes due 2010, and the 2.875%
convertible senior notes due 2010 to 'C' from 'CCC'. S&P also
placed these ratings on CreditWatch with negative implications
following Level 3's announcement of below par cash tender offers
for the three debt issues cited above. Upon successful completion
of the tender offers, S&P would lower the affected note ratings to
'D'. S&P would also initially lower the corporate credit rating
to 'SD' for selective default, before assigning a new corporate
credit rating of 'B-' to the company.
S&P also placed the ratings on Level 3 and its wholly owned
subsidiary, Level 3 Financing Inc.'s, other debt issues, including
its $1.4 billion term loan, on CreditWatch with negative
implications. "The reason for the CreditWatch placement is that
S&P will need to evaluate the credit impact of alternative efforts
to refinance problematic 2010 maturities if the proposed tender
offer is not consummated," said Standard & Poor's credit analyst
Susan Madison.
LOUIS VAN ROEKEL: Case Summary & 2 Largest Unsecured Creditors
--------------------------------------------------------------
Debtors: Louis Junior Van Roekel
Desirae Faye Van Roekel
633 East Sioux Ave.
Pierre, SD 57501
Case No.: 08-30049
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
District of South Dakota (Central (Pierre)
Debtors' Counsel: Stan H. Anker
Anker Law Group, P.C.
1301 West Omaha Street, Suite 108
Rapid City, SD 57701
Tel: 605-718-7050
Fax: 605-718-0700
Email: sanker@rushmore.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $0 to $50,000
The Debtors identified Chase and Bank of America as their two
largest unsecured creditors with claims for $9,000 and $7,500,
respectively.
MAIN STREET: Fitch Withdraws 'D' Ratings on 2008A Revenue Bonds
---------------------------------------------------------------
Fitch Ratings is withdrawing the 'D' rating of Main Street Natural
Gas, Inc. Gas Project Revenue Bonds 2008A per Fitch's criteria.
Main Street has other prepay bonds outstanding which Fitch
continues to monitor; however Fitch will not provide analytical
coverage on this series.
MARION BISHOFF: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Marion Dorthea Bishoff
8613 Garnet Rock Gate
Laurel, MD 20723
Case No.: 08-25178
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
District of Maryland (Baltimore)
Judge: Duncan W. Keir
Debtor's Counsel: Howard M. Heneson
Howard M. Heneson, P.A.
810 Glen Eagles Court, Suite 301
Towson, MD 21286
Tel: (410) 494-8388
Fax: (410) 494-8389
Email: hheneson@bankruptcymd.com
Total Assets: $1,146,421
Total Debts: $4,350,425
A list of the Debtor's 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/mdb08-25178.pdf
MARX BLACKETT: Case Summary and 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Marx C. Blackett Oil Incorporated
P.O. Box 55
Midvale, UT 84047
Bankruptcy Case No.: 08-27963
Chapter 11 Petition Date: November 13, 2008
Court: District of Utah (Salt Lake City)
Debtor's Counsel: Franklin L. Slaugh, Esq.
880 East 9400 South, Suite 103
Sandy, UT 84094
Tel: (801) 572-4412
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/utdb08-27963.pdf
The Debtor's petition was signed by Terence Jenkins, President.
MECACHROME INTERNATIONAL: Moody's Cuts Corp. Family Rating to 'Ca'
------------------------------------------------------------------
Moody's Investors Service downgraded the corporate family and
probability of default ratings of Mecachrome International Inc. to
Ca from Caa3 and lowered the rating on the company's senior
secured credit facilities to B3 from B2. The company's senior
subordinated rating was affirmed at Ca.
The rating action follows the company's announcement that it would
not make the November 15, 2008 interest payment on its 9% senior
subordinated notes. The indenture governing the notes provides
for a 30-day grace period to cure. Should the interest payment
not be made within this horizon, a cross-default could then be
called under the company's bank credit facilities. Given the
potential for a default to be called in addition to the unlikely
ability for Mecachrome to maintain compliance with its bank
financial covenants, Moody's assumes the company's unused EUR75
million revolver is now unavailable.
The negative outlook recognizes the near term potential for a
default and considers that Mecachrome is evaluating alternatives
to improve its financial position, which the company states could
include a debt restructuring.
Mecachrome's speculative grade liquidity rating remains at SGL-4,
indicating weak liquidity. The company has little cash on its
balance sheet and likely no access to its revolver with which to
fund expected cash consumption. Its accounts receivable
securitization facility is not committed and could be terminated
upon short notice while the company lacks the committed resources
to backstop Q3/08 usage of roughly EUR55 million under this
facility. Absent a cure of the interest payment within the 30-day
grace period, senior secured bank creditors (owed roughly
EUR7 million) and senior subordinate note holders (owed roughly
EUR200 million) would be in a position to accelerate those
obligations.
Downgrades:
-- Probability of Default Rating, Downgraded to Ca from Caa3
-- Corporate Family Rating, Downgraded to Ca from Caa3
-- Senior Secured Bank Credit Facility, Downgraded to B3 (LGD 1,
2%) from B2 (LGD 2, 10%)
Affirmations:
-- Senior Subordinated Regular Bond/Debenture, at Ca (LGD4, 54%
from LGD4, 65%)
-- SGL-4
Moody's previous rating action related to Mecachrome occurred on
November 13, 2008 at which time its corporate family and
probability of default ratings were lowered to Caa3 from Caa1.
Mecachrome International Inc., headquartered in Montreal Canada,
is a leading designer, manufacturer and assembler of precision-
engineered industrial components and systems, including aircraft
engine components and structural components, and motor racing
engines. The company operates in both North America and Europe.
MECACHROME INTERNATIONAL: S&P's Corporate Rating Tumbles to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Montreal-based Mecachrome International Inc. to
'D' from 'CC' after the company missed the semi-annual interest
payment due Nov. 15, on its 9% EUR200 million senior subordinated
notes.
At the same time, S&P lowered the issue-level ratings on the
senior subordinated notes to 'D' from 'CC' and on the senior
secured credit facilities to 'D' from 'CCC-'. The recovery
ratings on these debts are unchanged at '4' and '2', respectively.
In addition, S&P removed the ratings from CreditWatch with
developing implications, where they were placed Nov. 12, 2008.
"The rating action follows Mecachrome's failure to make the
scheduled interest payment," said Standard & Poor's credit analyst
Greg Pau.
With the unavailability of its EUR75 million secured credit
facility reported in Mecachrome's financial statements for third-
quarter 2008, a reported cash balance of EUR8 million, and
continued negative free cash flow from operations (EUR8 million
reported in the third quarter of 2008 alone), S&P believes that
there is a high degree of uncertainty as to the company's ability
to make the interest payment on the senior subordinated notes
before the end of the 30-day grace period.
"Although S&P understands that Mecachrome is current in its
quarterly interest payments on its secured term loan (with
principal of EUR7 million), S&P also understand that the lenders
under this loan have the right to accelerate the payment of the
principal under the cross-default clause if the company remains in
default on the senior subordinated notes at the end of the grace
period," Mr. Pau added. In this event, it is S&P's view that
Mecachrome could also default on the secured credit facility.
MONROE CENTER: Seeks to Block Sale of Membership Interests
----------------------------------------------------------
Monroe Center II Urban Renewal Co. LLC owner Dil Hoda said that he
is asking the U.S. Bankruptcy Court for the District of New Jersey
to block the sale of its membership, court documents say.
Njbiz.com relates that Strategic Performance Fund-II Inc. -- a
mezzanine investor that holds Mr. Hoda and his partner Gerard
Saddel's personal equity in the project as collateral -- planned
to hold the sale on Wednesday, and a hearing in the Court was
expected on Nov. 18.
According to court documents, Mr. Hoda said that the sale would
end the Monroe Center project. Mr. Hoda requested the court to
give Monroe Center more time to secure a No Further Action Letter
relating to environmental contamination on the site, and resolve
other issues relating to the project, before the sale would take
place.
Njbiz.com states that environmental issues have plagued the
project, as site investigations revealed significant contamination
of volatile organic compounds on the property. Mr. Hoda said that
remediation efforts didn't lessen the contamination, but worsened
the problem, according to the report. Monroe Center, says the
report, has spent $4 million in cleanup costs for the site.
Mr. Hoda blamed the environmental problems, the real estate
slowdown, and credit crunch for Monroe Center's failure to raise
sufficient funds to pay Strategic Performance, according to court
documents.
Citing Mr. Hoda, Njbiz.com reports that Monroe Center submitted a
new Remediation Action Work plan to the New Jersey Department of
Environmental Protection, expected to be approved within the next
30 days. Mr. Hoda said that approval from the department would
Monroe Center in a more favorable position to raise funds to make
payments to Strategic Performance, the report states.
About Monroe Center
Hoboken, New Jersey-based Monroe Center II Urban Renewal Company,
LLC, filed for Chapter 11 protection on Nov. 14, 2008 (Bankr. D.
N.J. Case No. 08-32556). Christine M. Gravelle, Esq., at
Markowitz Gravelle, LLP, represents the company in its
restructuring effort. The company listed assets of less than
$50,000 and debts of $10 million to $50 million.
MORGAN STANLEY: S&P Puts 'BB-' Rating on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' rating on the
$3.0 million class A-4 secured fixed-rate notes from Morgan
Stanley ACES SPC's series 2006-8 on CreditWatch with negative
implications.
The rating action reflects the Nov. 13, 2008, placement of the
senior unsecured and other ratings on The Goodyear Tire & Rubber
Co. on CreditWatch negative.
Morgan Stanley ACES SPC's series 2006-8 is a credit-linked note
transaction. The rating on each class of notes is based on the
lowest of (i) the rating on the respective reference obligations
for each class (with respect to class A-4, the senior unsecured
notes issued by The Goodyear Tire & Rubber Co. {'BB-/Watch Neg'});
(ii) the rating on the guarantor of the counterparty to the credit
default swap, the interest rate swap, and the contingent forward
agreement, Morgan Stanley (A+/Negative/A-1); and (iii) the
rating on the underlying securities, the class A certificates
issued by BA Master Credit Card Trust II's series 2001-B due 2013
('AAA').
NEFF CORP: 10% Senior Note Offering Prompts S&P's Junk Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Neff Corp. to 'CC' from 'B'. In addition, S&P
lowered the rating on the Miami-based equipment rental company's
10% senior notes due 2015 to 'C' from 'CCC+' and second-lien term
loan due 2014 to 'C' from 'B-'. At the same time, S&P placed the
ratings on the long-term corporate credit and senior unsecured
notes on CreditWatch with negative implications.
The rating actions follow the company's announcement of an offer
to exchange all of its 10% senior unsecured notes due 2015 to term
loans under its senior secured first-lien credit agreement, up to
45% of the unsecured notes par value. The tender offer is open
until Dec. 15, 2008, and is conditioned on at least one-half of
the aggregate principal amount of the senior note issue being
tendered.
"We consider the offer to be a distressed exchange and, as such,
tantamount to a default," said Standard & Poor's credit analyst
Helena Song. The coercive exchange reflects the difficult
conditions affecting operations, specifically in Neff's rental
equipment end markets, and the severe challenges they will likely
confront in 2009. If the exchange is completed, S&P would lower
the corporate credit rating on Neff to 'SD' and lower the
exchanged issue ratings to 'D'.
It is S&P's preliminary expectation that the corporate credit
rating on Neff would initially be not higher than 'CCC+' following
the consummation of the exchange transactions because cash
interest savings as a result of the exchanges would not
meaningfully increase Neff's ability to service its revised
capital structure over the intermediate term. As soon as it is
practical after the exchange, S&P will reassess Neff's capital
structure and revise ratings based on the amount of notes
successfully tendered.
NETVERSANT SOLUTIONS: Case Summary & 25 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: NetVersant Solutions, Inc.
777 Post Oak Boulevard, Suite 400
Houston, TX 77056
Bankruptcy Case No.: 08-12973
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
NetVersant - Northern California, Inc. 08-12974
NetVersant - Southern California, Inc. 08-12975
NetVersant - California, Inc. 08-12976
NetVersant - Denver, Inc. 08-12977
NetVersant GP, Inc. 08-12978
NetVersant LP, Inc. 08-12979
NetVersant Management Co., L.P. 08-12980
NetVersant National, Inc. 08-12981
NV Resources, Inc. 08-12982
NetVersant, Inc. 08-12983
NetVersant - Oregon, Inc. 08-12984
NetVersant - Atlanta, Inc. 08-12985
NetVersant - Mid-Atlantic, Inc. 08-12986
NetVersant - New England, Inc. 08-12987
NetVersant - Minneapolis/St. Paul, Inc. 08-12988
NetVersant - Albuquerque, Inc. 08-12989
Intelligent Building Systems, Inc. 08-12990
NetVersant - Philadelphia, Inc. 08-12991
NetVersant - Texas, Inc. 08-12992
NetVersant - Cascades, Inc. 08-12993
NetVersant - Washington, Inc. 08-12994
Type of Business: The Debtors provide wireless network
infrastructure services. The Debtors also
provide an array of voice, video and data
communication services
See: http://www.netversant.com/home.htm
Chapter 11 Petition Date: November 19, 2008
Court: District of Delaware (Delaware)
Judge: Peter J. Walsh
Debtors' Counsel: Daniel B. Butz, Esq.
dbutz@mnat.com
Gregory W. Werkheiser, Esq.
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
Wilmington, DE 19899
Tel: (302) 575-7348
Fax: (302) 658-3989
The Debtors' Local Counsel: Porter & Hedges LLP
Financial Advisor: Solutions Management LLC
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
------ --------------- ------------
Anixter Inc. trade $28,282,113
Attn: Lori Crump
PO Box 847428
Dallas, TX 75284-7428
Tel: (972) 353-7448
Fax: (972) 353-7402
Voda One trade $4,019,029
Attn: Robin McNany
Westcon Group North America
Box 512573
Philadelphia, PA 19175-2573
Tel: (402) 334-4237
Fax: (208) 832-5367
CSC - Communications Supply trade $3,587,140
Corp.
3462 Solutions Center Drive
Chicago, IL 60677
Tel: (630) 221-6415
Fax: (630) 221-6416
Comstor trade $2,017,605
Attn: Robin McNany
Westcon Group Norther America
Box 512573
Philadelphia, PA 19175-2573
Tel: (402) 334-4237
Fax: (208) 832-5367
Westcon Group North America trade $1,538,968
Inc.
Attn: Robin McNany
Box 512573
Philadelphia, PA 19175-2573
Tel: (402) 334-4237
Fax: (208) 832-5367
Nortel Networks Inc. trade $714,977
Attn: Christopher Parrick
1500 Concorde Terrace
Sunrise, FL 33323
Tel: (972) 362-8190
Fax: (972) 362-8191
Sprint trade $677,975
Attn: 2001501
PO Box 804414
Kansas City, MO 64180-4414
Tel: (713) 235-7359
Fax: (713) 235-7310
Lenel Systems International trade $299,843
Inc.
ADI trade $293,659
Miller Information Systems trade $286,005
Dell Marketing LP trade $283,724
Northern Video Systems Inc. trade $282,648
Accu-Tech Corporation trade $279,765
IBEW-NECA Sound & union fees $271,999
Communications Trus Fund
Health & Welfare Trust Fund
GE Security trade $267,187
Dixie Electric Company trade $248,256
Advent Systems Inc trade $242,555
Amag Technologies Inc. trade $216,660
Total Network Consulting trade $187,710
Applied Voice & Speech trade $175,534
Technologies
IBEW Loca No. 98 Benefit trade $174,415
Funds
Avaya trade $171,236
Prospect Communications trade $170,085
Joseph J. Culbertson subordinated note $167,844
Frances C Culbertson subordinated note $167,844
Miller Electric Company trade $161,597
Tele-Optics Inc. trade $158,096
Sabio Limited trade $156,100
Telesource Services LLC trade $154,606
Honeywell International Inc. trade $148,485
The petition was signed by senior vice president and chief
financial officer Ronald E. Hale, Jr.
NETVERSANT SOLUTIONS: Liquidity Crisis Blamed For Bankruptcy
------------------------------------------------------------
NetVersant Solutions Inc. together with 21 of its affiliates
filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware citing financial difficulties, breach of the
terms of its secured facility and liquidity crisis.
According to the company, during the fiscal years ended Dec. 31,
2006, and Dec. 31, 2008, and nine months ended Sept. 30, 2008, it
had revenues, net loss and EBITDA:
12/31/06 12/31/07 09/30/08
------------ ------------ ------------
Revenues $242,760,000 $240,084,000 $160,842,000
Net Loss 20,740,000 17,453,000 13,822,000
EBITDA (3,243,000) 6,208,000 1,593,000
The company said its operating performance has affected by the
combination of several large unprofitable projects in its Southern
California and Phoenix operations and poor operating results from
its Baltimore/Washington D.C. and New York locations. The company
related that these negative events and unprofitable operations
consumed working capital totaling $20.4 million, which was finance
primarily through additional borrowings under the company's long-
term debt agreements and extend credit terms from key vendors.
Because of the operating losses, it was out of compliance with
certain financial covenants of the credit agreement related to
operating performance during 2006, 2007, and 2008, the company
notes.
The company added that that the increasing long-term debt and
related interest expenses burdened its ability to fund normal
operations. The company said it paid about $29.8 million in
interests during the periods.
The cumulative effect of the poor operating results and debt
service costs caused its working capital situation to worsen
significantly during fiscal year 2008 and negatively affected
its ability to generate revenue and cash flow to fund their
outstanding obligations, the company lamented. The company
related that it was unable to acquire inventory or engage
subcontractors on an efficient basis during the summer of 2008
which reduced the borrowing base under the credit agreement and
further constraining working capital.
The company further said it billing to customers fell from
$20,494,00 in March 2008 to (i) $18,225,000 in June 2008, and (ii)
$15,910,000 in September 2008, a 22 decrease over the six-month
period.
The term-loan lenders who hold about $82 million in outstanding
prepetition debt have agreed to provide as much as $20 million
debtor-in-possession financing to the company and seek an
expedited sale of substantially all of the company's assets to the
lenders or to another party. The proceeds of the loan will be
used to fund its operations and Chapter 11 cases over the next
five weeks, the company pointed out.
Capital Structure
The company and its subsidiaries entered into a credit agreement
with:
i) Wells Fargo Foothill Inc., Patriarch Partners Agency
Services LLC, and Zohar CDO 2003-1 Limited, and
ii) Zohar II-005-1 Limited, and Zohar III Limited.
The credit agreement provided $22.5 million revolving credit
facility, $12.5 million Term Loan A, and $55.8 million Term Loan
B. There is a subfacility under the revolvers for letters of
credit and $5.7 million for letters of credit outstanding as of
the company's bankruptcy filing. The credit agreement is secured
by substantially all of the company's assets including its trade
names.
The company said about $110 million remain outstanding under the
credit agreement as of Oct 31, 2008.
About NetVersant
Headquartered in Houston, Texas, NetVersant Solutions Inc. --
http://www.netversant.com/home.htm-- provides wireless network
infrastructure services. The Debtors also provide an array of
voice, video and data communication services.
NORD RESOURCES: Commences Offering of 54,889,705 Shares of Stock
---------------------------------------------------------------
Stockholders of Nord Resources Corporation are offering up to an
aggregate of 54,889,705 shares of the company's common stock
comprised of:
-- Up to 30,666,700 shares of common stock issued without the
payment of any additional consideration upon the conversion
of 30,666,700 special warrants of our company that were
offered and sold in an unregistered private placement which
closed on June 5, 2007;
-- Up to 15,333,350 shares of common stock issuable upon the
exercise of common stock purchase warrants which were issued
without the payment of any additional consideration upon the
conversion of the special warrants that were offered and
sold in the unregistered private placement which closed on
June 5, 2007;
-- Up to 1,840,002 shares of common stock issuable upon the
exercise of stock options issued in partial consideration of
services rendered in connection with the unregistered
private placement of special warrants which closed on
June 5, 2007;
-- Up to 843,590 shares of common stock issuable upon the
exercise of outstanding common stock purchase warrants; and
-- Up to 6,206,063 outstanding shares of common stock held by
certain Selling Stockholders.
The company will not receive any of the proceeds from the sale of
shares by the selling stockholders. However, some of the shares
that may be offered for sale by certain selling stockholders are
issuable upon exercise of options and warrants. If all of these
options and warrants are exercised, which cannot be assured, we
will receive total proceeds of $19,001,046. The proceeds, if any,
would be used for general corporate purposes and potentially the
repayment of debt.
There were 69,033,635 shares of common stock outstanding as of
Oct. 6, 2008.
About Nord Resources
Based in Tucson, Arizona, Nord Resources Corporation (Pink Sheets:
NRDS) -- http://www.nordresources.com/-- is an emerging copper
producer, which controls a 100% interest in the Johnson Camp SX-EW
copper project in Arizona. Nord's near term objective is to
resume mining and leaching operations at the Johnson Camp mine,
which has been on care and maintenance status since August 2003.
Nord has decided to proceed with its mine plan bases on an updated
feasibility study that was completed in October 2005, subject to
raising sufficient financing.
Going Concern Doubt
On March 26, 2008, Mayer Hoffman McCann PC, in Denver, Colorado,
expressed substantial doubt about Nord Resources Corporation's
ability to continue as a going concern after auditing the
company's consolidated financial statements as of the years ended
Dec. 31, 2007, and 2006. The auditing firm company reported that
the company incurred a net loss of $2,500,000 and $6,200,000
during the years ended Dec. 31, 2007, and 2006.
The company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flow to meet the company's
obligations on a timely basis, to produce copper at a level where
it can become profitable, to pay off existing debt and provide
sufficient funds for general corporate purposes.
Liquidity and Financial Resources
Nord Resources Corporation's balance sheet at March 31, 2008,
showed total assets of $29,200,00 and total liabilities of
$32,300,000, resulting in a shareholders' deficit of roughly
$3,100,000.
The company's cash flows from operating activities during the
three months ended March 31, 2008, and 2007 were negative $532,132
and negative $114,079.
NORD RESOURCES: Posts $1.6MM Net Loss in Quarter ended Sept. 30
---------------------------------------------------------------
Nord Resources Corporation reported its financial results for the
third quarter and nine months ended Sept. 30, 2008.
For three month ended Sept. 30, 2008, the company incurred net
loss of $1,608,328 compared to net income of $1,040,684 for the
same period in the previous year.
For nine month ended Sept. 30, 2008, the company reported net loss
of $2,173,359 compared to net loss of $475,303 for the same period
in the previous year.
The 2008 loss is attributable to an unusually high level of
operating costs as the result of increased sulfuric acid expenses,
the one-time consulting and remediation expenses incurred, and the
non-cash write-down of the carrying value of copper inventories.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $37,116,627, total liabilities of $33,012,744 and shareholders'
equity of $4,103,883.
A full-text copy of the 10-Q filing is available for free at
http://ResearchArchives.com/t/s?34fc
About Nord Resources
Based in Tucson, Arizona, Nord Resources Corporation (Pink Sheets:
NRDS) -- http://www.nordresources.com/-- is an emerging copper
producer, which controls a 100% interest in the Johnson Camp SX-EW
copper project in Arizona. Nord's near term objective is to
resume mining and leaching operations at the Johnson Camp mine,
which has been on care and maintenance status since August 2003.
Nord has decided to proceed with its mine plan bases on an updated
feasibility study that was completed in October 2005, subject to
raising sufficient financing.
Going Concern Doubt
On March 26, 2008, Mayer Hoffman McCann PC, in Denver, Colorado,
expressed substantial doubt about Nord Resources Corporation's
ability to continue as a going concern after auditing the
company's consolidated financial statements as of the years ended
Dec. 31, 2007, and 2006. The auditing firm company reported that
the company incurred a net loss of $2,500,000 and $6,200,000
during the years ended Dec. 31, 2007, and 2006.
The company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flow to meet the company's
obligations on a timely basis, to produce copper at a level where
it can become profitable, to pay off existing debt and provide
sufficient funds for general corporate purposes.
Liquidity and Financial Resources
Nord Resources Corporation's balance sheet at March 31, 2008,
showed total assets of $29,200,00 and total liabilities of
$32,300,000, resulting in a shareholders' deficit of roughly
$3,100,000.
The company's cash flows from operating activities during the
three months ended March 31, 2008, and 2007 were negative $532,132
and negative $114,079.
NORTHERN BAY: AnchorBank Files Motion for Abandonment or Dismissal
------------------------------------------------------------------
AnchorBank, fsb, asks the U.S. Bankruptcy Court for the Western
District of Wisconsin to:
a) grant it relief from stay pursuant to Sec. 362(d) of the
Bankruptcy Code, and
b) order that the property secured to AnchoBank, fsb be
abandoned pursuant to Sec. 554 of the Bankruptcy Code or,
alternatively, to dismiss the case pursuant to Sec. 1112(2)
of the Bankruptcy Code.
Anchor is the holder of an undisputed claim in excess of
$24,000,000 at the time of the Debtor's bankruptcy filing.
Collateral held by Anchor includes all real estate owned by the
Debtor, including most of the 18-hole golf course and both
completed and partially constructed condominium units, as well as
all personal property and an assignment of leases and rents.
In support of its request, Anchor stated:
a) The real estate is subject to significant past due real
estate taxes. Debtor's schedules show $751,992.97 in real
estate property taxes owed at the time of filing. During the
period from the filing dated through Oct. 31, 2008,
additional $175,400 of 2008 real estate property taxes have
accrued. These taxes are a first and paramount lien against
the Debtor's estate.
b) Owners of condominium units which are being rented out by
the Debtor under a rental program have advised Anchor that
the Debtor has not distributed their share of the rents
collected in August and September.
c) The Debtor has defaulted under the terms of the Cash
Collateral Agreement covering the period from July 1, 2008,
through Aug. 18, 2008, including:
-- failure to deposit and make payments to a DIP account
at Anchor, and to make the payment to Anchor required by
paragraph 4.1.
-- failure to provide Anchor with copies of any listing,
brokerage or similar contracts relating to the
condominiums.
d) The Debtor has failed to file operating reports for August
and September of 2008.
e) The Debtor continues to use cash collateral since the
termination date of the Cash Collateral Order. Anchor has
requested financial information regarding the operation and
use of funds, but has received virtually no financial
information from the Debtor.
f) The Debtor has failed to make the real estate property tax
for the portion of the golf course that sits on leased real
estate (the "Vroble Lease").
g) There are junior mortgages held by David Kennedy against all
or most of the real estate of the Debtor in the approximate
amount of $4,823,000, and there is a construction lien claim
held by LaForce in the amount of $83,038.79.
h) The Debtor has no equity in the Property.
i) Anchor is not adequately protected:
-- The Debtor has failed to pay post-petition obligations to
the third party condominium unit owners.
-- Anchor was advised that the Debtor had insufficient funds
to pay utility expenses.
-- The Debtor has failed to make required payments for the
leases for golf carts and golf course related equipment.
-- Cash flow from operations may be insufficient to fund
winter operation costs and pay accruing real estate
property taxes.
-- The Debtor has not sold a single condominium unit since
the filing of its bankruptcy petition.
j) The Property is not necessary to an effective reorganization,
as there is not a reasonable likelihood that a plan can be
be confirmed.
k) the Property is of inconsequential value or benefit to the
estate as its value is less than the total liens against it.
A final hearing on AnchorBank, fsb's motion has been scheduled for
Dec. 1, 2008.
Headquartered in Arkdale, Wisconsin, Northern Bay, LLC --
http://www.northernbayresort.com/-- owns and operates a golf
course and lakewide condominiums. The company filed for Chapter
11 bankruptcy protection on June 30, 2008 (W.D. Wis. Case No.
08-13400). Denis P. Bartell, Esq., at Dewitt Ross & Stevens, and
Jeffrey A. Chadwick, Esq., at Katten Muchin Rosenman LLP,
represent the Debtor as counsel. When the company filed for
protection from its creditors, it listed assets of between
$50 million and $100 million and debts of between $10 million and
$50 million.
ORBITZ WORLDWIDE: Moody's Keeps B2 Rating; Outlook Is Negative
--------------------------------------------------------------
Moody's Investors Service revised the rating outlook of Orbitz
Worldwide, Inc. to negative from stable while affirming the
corporate family rating at B2. The outlook revision is based on
the deteriorating demand for travel as evidenced by double-digit
declines in bookings during the most recent quarter by Travelport,
a global distribution system supplier, and airline capacity cuts.
While Orbitz increased net revenue and gross bookings by 9% and
4%, respectively, in the third quarter of 2008 fueled by effective
marketing campaigns, the company has experienced a slowdown in all
of their businesses beginning in October, which has prompted its
decision to reduce U.S. headcount by 10%. With global recession
becoming an increasing concern, Moody's expects the current
weakness in the travel sector to persist into 2009 with ongoing
double-digit declines in bookings as consumers scale back on
travel spending.
Moody's believes that a prolonged downturn in the global travel
market could slow the company's ability to generate free cash flow
and delay its ability to de-lever from its current level of about
4.5x (Moody's adjusted debt to EBITDA). The ratings could
experience downward pressure if bookings deteriorate more than 15%
on a year-on-year basis over the next several quarters, travel
demand does not stabilize by 2010, free cash flow becomes negative
on a sustained basis, or covenant compliance tightens in the
upcoming year in light of step-downs. The speculative grade
liquidity rating was downgraded to SGL-3 from SGL-2 to reflect the
potential for reduced cushion under the leverage ratio, which
steps down in 2009.
Orbitz B2 corporate family rating reflects significant competition
from supplier-owned direct and third party travel sites (e.g.
Expedia, Priceline, and Travelocity), the unprofitable but
improving performance of its European ebookers business, the
controlling stake held by Travelport and its affiliates, who
collectively own 58% of the company's outstanding common stock,
and moderate leverage. Balancing these credit challenges are the
company's leading position in the consumer online travel services
market, recognizable global online brand, and solid free cash flow
given the company's low capital expenditure requirements
($50 million of free cash flow in the last twelve months ended
Sept. 30, 2008).
While the corporate family rating has been affirmed, the ratings
on the senior secured term loan and revolving credit facilities
were downgraded based on new disclosures provided in the company's
public filings related to accounts payable balances, consistent
with Moody's Loss-Given-Default rating methodology.
These ratings/assessments were affected by this action:
-- Corporate Family Rating affirmed at B2;
-- Probability-of-default affirmed at B3;
-- $600 million secured term loan facility due 2014 downgraded
to B2 (LGD3, 31%) from B1 (LGD 2, 27%);
-- $85 million secured revolving credit facility due 2013
downgraded to B2 (LGD3, 31%) from B1 (LGD 2, 27%);
Speculative grade liquidity rating downgraded to SGL-3 from SGL-2.
The last rating action was on July 26, 2007 when Moody's affirmed
the B2 corporate family rating and stable outlook.
Orbitz Worldwide, Inc., with approximately $887 million of
revenues for the twelve months ended Sept. 30, 2008, is a leading
global online travel company, which operates a portfolio of
consumer and corporate travel brands, including Orbitz,
CheapTickets, and ebookers.
OVERLAND STORAGE: Auditor Raises Going Concern Doubt
----------------------------------------------------
PricewaterhouseCoopers LLP, in San Diego, California, informed the
Board of Directors and shareholders of Overland Storage, Inc., on
Oct. 13, 2008, that it audited the financial statements of the
company and its wholly owned subsidiaries for the years ended
June 29, 2008 and July 1, 2007.
According to the auditor, the company has incurred losses and
negative cash flows from operations that raise substantial doubt
about the Company's ability to continue as a going concern.
Vernon A. LoForti, Overland Storage president and chief executive
officer stated that: "We have incurred losses for our last three
fiscal years and negative cash flows for our last two fiscal
years. As of June 30, 2008, we had an accumulated deficit of
$50.9 million. During fiscal 2008 we incurred a net loss of
$32.0 million and the balance of cash, cash equivalents and short-
term investments declined to $9.7 million or by $13.1 million
compared to the balance at June 30, 2007. We operate in a highly
competitive market characterized by rapidly changing technology.
We have no other unused sources of liquidity at this time. During
fiscal 2009, we expect to continue to incur losses as we introduce
and market our new products."
"We need immediate and substantial cash to continue our operations
at current levels. We currently have no funding commitments.
Management has projected that cash on hand will be sufficient to
allow us to continue our operations at current levels into
November 2008. We will need additional funding, either through
debt or equity financings, or we will be forced to extend payment
terms with vendors where possible, to liquidate certain assets
where possible, or to suspend or curtail certain of our planned
operations. Any of these actions could harm our business, results
of operations and future prospects. We anticipate we will need to
raise approximately $10.0 million of cash and cash equivalents in
the next twelve months to fund our operations through fiscal 2009
at current levels."
"Our recurring losses from operations, negative cash flows, and
accumulated deficit and need for additional financing raise
substantial doubt about our ability to continue as a going
concern. Our consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. We need to generate additional revenue and improve our
gross profit margins to be profitable in future periods. We may
never return to profitability, or if we do, we may not be able to
sustain profitability on a quarterly or annual basis."
"Possible funding alternatives, for raising working capital, are
bank or asset based financing options equity-based financing,
including convertible debt and factoring arrangements. We are in
discussions with funding sources for each of these options but we
currently have no funding commitments. If we raise additional
funds by selling additional shares of our capital stock, the
ownership interest of our shareholders will be diluted. The
amount of dilution could be increased by the issuance of warrants
or securities with other dilutive characteristics, such as anti-
dilution clauses or price resets."
"As of June 30, 2008, our other assets included $3.1 million of
auction rate securities, which securities have a par value of
$5.0 million. The auctions for these securities have failed since
July 2007, which limits our ability to liquidate these securities
and recover their carrying value in the near term. Our estimate
of the fair value of the auction rate securities is based on the
probability weighted expected future cash flows associated with
the investments. We may nonetheless attempt to liquidate these
securities to meet cash needs. We cannot predict whether we will
be able to liquidate these securities, and we expect that any
liquidation in the near term will bring less than the value of
these securities, as of June 30, 2008, based upon subsequent
indicative bids. For example, indicative bids (i.e., one measure
of the estimated liquidation value) from Deutsche Bank subsequent
to year-end for our ARS have ranged from a high of approximately
$2.8 million at July 16, 2008 to a low of approximately
$1.4 million at Oct. 1, 2008, the most recent bid as of the date
of this report. We do not believe this current estimate of the
liquidation value represents the estimated fair value of the
instruments as of the end our fiscal year. The indicative bids
are not based on active markets or orderly transactions between
market participants. However, it is possible that we may be
required to record additional impairments to these investments in
future periods."
As of June 30, 2008, the company's balance sheet showed total
assets of $62,590,000, total debts of $44,407,000 and total
shareholders' equity of $18,183,000. For the year ended June 30,
2008, the company posted a net loss of $32,025,000, on net
revenues of $127,700,000, compared with a net loss a year earlier
of $44,111,000 on net revenues of $160,443,000.
A full-text copy of the Annual Report is available for free at:
http://researcharchives.com/t/s?34f4
In its latest quarterly report filed on October 31, 2008, with the
Securities and Exchange Commission, the company disclosed that as
of September 30, 2008, its assets totaled $61,182,000 and its
debts reached $50,091,000, narrowing shareholders' equity to
$11,091,000.
About Overland Storage
Overland Storage, Inc., was incorporated on Sept. 8, 1980, under
the laws of the State of California. For more than 27 years, the
company has delivered data protection software designed for backup
and recovery to ensure business continuity. Historically, it has
focused on delivering a portfolio of tape automation software
including loader and library systems designed for small and
medium-sized business computing environments.
PETTERS GROUP: Barclays Sues Ritchie Funds Over Bad Investment
--------------------------------------------------------------
According to Bloomberg News, Barclays Bank Plc sued hedge fund
manager Ritchie Capital Management and its principal, Thane
Ritchie, accusing them of concealing more than $150 million in
investments made in the collapsed Petters Group Worldwide LLC and
affiliates.
As reported by the Troubled Company Reporter, Tom Petters, the
founder and former CEO of Petters Group, has been placed in
federal custody on charges of mail and wire fraud, money
laundering and obstruction of justice. Mr. Petters, accused of
leading a $2 billion fraud, is being held without bail in a
Minnesota jail, according to Bloomberg.
U.S. District Judge Ann Montgomery appointed Minneapolis
attorney Doug Kelley as receiver for Petters Group Worldwide LLC,
Petters Co. Inc. and other companies. The order does not include
Sun Country Airlines, which filed a Chapter 11 bankruptcy petition
on Oct. 5, 2008.
"Thane Ritchie made the decision to invest significant sums" from
two of his firm's hedge funds with Petters, at a time when those
funds "were supposed to be winding down," Barclays, said in a
complaint filed yesterday in Illinois state court in Chicago,
Bloomberg news reported.
Barclays says it's owed at least $380 million.
About Ritchie Capital
Headquartered in Lisle, Illinois, Ritchie Capital Management
Ltd. - http://www.ritchiecapital.com/-- is a private asset
management firm founded in 1997 by former college football
linebacker Thane Ritchie. The company has offices in New York
and Menlo Park, California.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and
08-45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on Oct. 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings,
Inc., Sun Country's parent company.
PROCESS DEVELOPMENT: Case Summary & 20 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: Process Development Corporation
6060 Milo Road
Dayton, OH 45414
Case No.: 08-35859
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Southern District of Ohio (Dayton)
Debtor's Counsel: Anne M Frayne
18 West First Street
Dayton, OH 45402
Tel: (937) 224-0077
Fax: (937) 224-5782
Email: annefrayne@myersandfrayne.com
Total Assets: $372,577
Total Debts: $1,100,957
A list of the Debtor's 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ohsb08-35859.pdf
QUIGLEY CO: Seeks U.S. Trustee's E-mails w/ Asbestos Claimants
--------------------------------------------------------------
Quigley Co. Inc.'s counsel Michael Cook is asking the Hon. Stuart
Bernstein of the United States Bankruptcy Court for the Southern
District of New York for authority to depose the United States
Trustee for Region 2 who oversee the Debtor's bankruptcy
proceeding, Tiffany Kary of Bloomberg News reports.
Mr. Cook said it wants the U.S. Trustee to turn over e-mails
exchanged with a group of asbestos victims who allege Quigley of
trying to avoid paying claims for their illness, Bloomberg says.
Bloomberg relates that Judge Bernstein called Mr. Cook's request
an unusual tactic that might not be legally proper. "[Mr. Cook
is] trying to find out stuff that have no right to find out,"
Bloomberg quoted Judge Bernstein as saying.
A hearing is set for Dec. 9, 2008, to consider approval of the
motion, the report says.
Judge Bernstein, according to the report, is also expected to rule
on a motion by Pfizer Inc. and Quigley to dismiss the tort group's
demand that the companies disclose documents and testify about
their legal defense agreement and past settlements with asbestos
victims.
About Quigley Company
Quigley Company, Inc., a division of Pfizer Inc., sold asbestos-
containing insulation products until the early 1970s. Quigley
filed for protection under chapter 11 on Sept. 3, 2004 (Bankr.
S.D.N.Y. Case No. 04-15739) in order to implement a proposed
global resolution of all pending and future asbestos-related
personal injury liabilities.
Asbestos victims and Pfizer have been negotiating a settlement
deal which calls for Pfizer to pay $430 million to 80% of existing
plaintiffs. It will also place an additional $535 million into an
asbestos settlement trust that will compensate future plaintiffs
as well as the remaining 20% of current plaintiffs with claims
against Pfizer and Quigley. The compensation deal is worth
$965 million all up. Of that $535 million, $405 million is in a
40-year note from Pfizer, while $100 million will come from
insurance policies.
Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte
Roth & Zabel LLP, represent the Debtor in its restructuring
efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered,
represents the Official Committee of Unsecured Creditors. When
the Debtor filed for protection from its creditors, it listed
$155,187,000 in total assets and $141,933,000 in total debts.
RACE POINT: Moody's Cuts Rating on $39.9MM Class D Notes to Ba1
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of these notes
issued by Race Point IV CLO, Ltd:
Class Description: $72,500,000 Class A-1-B Floating Rate Notes Due
2021
-- Prior Rating: Aaa
-- Prior Rating Action Date: Aug. 30, 2007
-- Current Rating: Aa1
Class Description: $22,000,000 Class B Floating Rate Notes Due
2021
-- Prior Rating: Aa2
-- Prior Rating Action Date: Aug. 30, 2007
-- Current Rating: Aa3
Class Description: $33,000,000 Class C Floating Rate Deferrable
Notes Due 2021
-- Prior Rating: A2
-- Prior Rating Action Date: Aug. 30, 2007
-- Current Rating: A3
Class Description: $39,900,000 Class D Floating Rate Deferrable
Notes Due 2021
-- Prior Rating: Baa2, on review for possible downgrade
-- Prior Rating Action Date: Sept. 18, 2008
-- Current Rating: Ba1
According to Moody's, the rating action is a result of the loss of
credit support from the Class D Coupon Swap. Lehman Brothers
Special Financing Inc. acts as counterparty under the Class D
Coupon Swap Agreement (with Lehman Brothers Holdings Inc.
guaranteeing the obligations of LBSFI). In this role, LBSFI
advances payment of interest owed on the Class D notes through
August 2012 to the extent that interest collections on the
collateral are insufficient to service such payments.
The bankruptcy filings of LBSFI and LBHI have disrupted LBSFI's
ability to perform its obligations under the swap. Moody's noted
that no cash collateral has been posted to Race Point IV CLO, Ltd.
by LBSFI. Additionally, the likelihood of entering into a
replacement swap at an acceptable cost in the near-term appears to
be adversely constrained by the current challenging market
conditions. Moody's further noted that the loss of credit support
from the Class D coupon swap increases the likelihood of the Class
D notes accruing interest through August 2012.
The transaction's payment priority requires current interest and
interest on deferred interest of the Class D notes to be paid from
principal collections prior to the payment of the senior notes'
principal after August 2012. As a result, the loss of support
from the Class D coupon swap has also increased the expected
losses on the notes senior to the Class D notes, as reflected in
the rating actions above.
REDROLLER HOLDINGS: Case Summary and 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: RedRoller Holdings, Inc.
fka Aslahan Enterprises Ltd.
1266 East Main Street
Soundview Plaza
Stamford, CT 06902
Bankruptcy Case No.: 08-51101
Chapter 11 Petition Date: November 13, 2008
Court: District of Connecticut (Bridgeport)
Judge: Alan H.W. Shiff
Debtor's Counsel: James Berman, Esq.
jberman@zeislaw.com
Zeisler and Zeisler
558 Clinton Avenue
P.O. Box 3186
Bridgeport, CT 06605
Tel (203) 368-4234
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $500,001 to $1,000,000
The Debtor doesn't have any creditor that's an insider.
The Debtor's petition was signed by William Van Wyek, President.
RELLOR GROUP: Case Summary and 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Rellor Group, L.L.C.
8914 179th St. E
Puyallup, WA 98375
Bankruptcy Case No.: 08-45953
Chapter 11 Petition Date: November 13, 2008
Court: Western District of Washington (Tacoma)
Debtor's Counsel: Benjamin J. Riley, Esq.
bjriley64@hotmail.com
Brian L Budsberg PLLC
1801 West Bay Drive Ste 301
Olympia, WA 98507
Tel: (360) 584-9093
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/wawb08-45953.pdf
The Debtor's petition was signed by Debbie A. Berg.
SABRE HOLDINGS: Moody's Holds 'B2' Rating; Outlook Negative
-----------------------------------------------------------
Moody's Investors Service revised the rating outlook of Sabre
Holdings Corporation to negative from stable while affirming the
corporate family rating at B2. The outlook revision is based on
the reduced demand for travel, the expected negative impact on
free cash flow during 2008, and Moody's expectation of double-
digit declines in global distribution system segments into 2009 as
consumers and corporations scale back travel spending.
The global economic slowdown, resulting weakness in the travel
sector, and airline capacity reductions are expected to negatively
impact Sabre's financial results. While the company has achieved
significant cost savings on an annual run-rate basis since its LBO
in March 2007, Moody's believes that any prolonged downturn in the
global travel market during 2009 could slow the company's ability
to generate free cash flow and delay its ability to de-lever from
its current level of over 6.5x (Moody's adjusted debt to EBITDA,
including the annual run rate effect of cost savings achieved to
date).
The ratings could experience downward pressure if bookings
deteriorate more than 15% on a year-on-year basis over the next
several quarters or if travel demand does not stabilize by 2010.
Sabre's B2 corporate family rating reflects the company's high
financial leverage, low asset returns, modest interest coverage,
concentrated business profile (as measured by its client, product,
and geographic diversity), and the potential for secular declines
in the GDS business as travel bookings continue to shift away from
travel agencies to supplier direct distribution. The rating is
supported by Sabre's leading position as one of the top three
global GDS providers, importance of GDS in the global travel
industry, its efficient and lean cost structure, and the stability
of pricing from long-term contracts with major U.S. airlines.
While there are no significant debt maturities in the intermediate
term, the company's financial flexibility is limited to its $500
million revolver in the absence of new financing.
Ratings affirmed:
-- Corporate Family Rating - B2
-- Probability of Default Rating - B2
-- $3.015 billion Sabre Inc. Senior Secured Term Loan facility
due 2014 - B1, LGD 3 (38%)
-- $500 million Sabre Inc. Senior Secured Revolving Credit
Facility due 2013 - B1, LGD 3 (38%)
-- $400 million Sabre Holdings Senior Unsecured Notes due August
2011 - Caa1, LGD 6 (90%)
-- $400 million Sabre Holdings Senior Unsecured Notes due March
2016 - Caa1, LGD 6 (90%)
The last rating action was on April 6, 2007, when Moody's assigned
a first-time corporate family rating of B2 and a stable rating
outlook in connection with the company's acquisition by Silver
Lake Partners and Texas Pacific Group.
Headquartered in Southlake, Texas, Sabre is a leading global
distribution system and consumer online travel services provider.
SAFLINK CORP: Auditor Raises Going Concern Doubt
------------------------------------------------
PMB Helin Donovan, LLP, in Austin, Texas, informed the Board of
Directors and Stockholders of Saflink Corporation and subsidiaries
on Oct. 31, 2008, that it audited the financial statements for the
year ended Dec. 31, 2007.
The auditor noted that the company has experienced circumstances,
which raise substantial doubt about its ability to continue as a
going concern.
On Aug. 30, 2007, the company entered into an Agreement and Plan
of Merger and Reorganization with IdentiPHI, Inc., and Ireland
Acquisition Corporation, a wholly owned subsidiary of Saflink,
pursuant to which the Company agreed to acquire all of the
outstanding shares of IdentiPHI, Inc., in a stock-for-stock
transaction. The merger was completed on February 8, 2008.
According to management, since inception, Saflink had been unable
to generate net income from operations. Saflink accumulated net
losses of approximately $283.4 million from its inception through
Dec. 31, 2007, and continued to accumulate net losses since
Dec. 31, 2007. Saflink had historically been financed through
issuances of common and preferred stock, convertible debt and
promissory notes. Saflink financed operations during the twelve
months ended Dec. 31, 2007, primarily from proceeds from the
issuance of a subordinated $400,000 promissory note to a related
party, $778,000 in proceeds from the sale of its SAFsolution and
SAFmodule source code to Former IdentiPHI in February 2007, and
cash proceeds of $4.0 million from the sale of the Registered
Traveler business to FLO Corporation, a previously consolidated
entity. As of Dec. 31, 2007, Saflink's principal source of
liquidity consisted of $744,000 of cash and cash equivalents,
while it had working capital deficit of $1.7 million.
On Jan. 24, 2007, Saflink borrowed $400,000 from Richard P.
Kiphart, a former member of the Company's board of directors and
current stockholder, and issued an unsecured promissory note to
Mr. Kiphart bearing interest at the rate of 10% per annum. The
note was due and payable in four equal quarterly installments
beginning Jan. 1, 2008, with accrued interest payable with each
installment of principal. On Nov. 1, 2007, Saflink entered into a
Notes Conversion Agreement with Mr. Kiphart pursuant to which Mr.
Kiphart agreed to convert the outstanding principal and accrued
but unpaid interest under this promissory note and a $1.25 million
convertible promissory note also held by Mr. Kiphart into shares
of Saflink's common stock at a conversion rate of $0.0415 per
share. Because the number of shares of common stock Saflink would
be required to issue to Mr. Kiphart upon conversion of his
promissory notes exceeded the total number of Saflink's authorized
shares of common stock, Saflink had to obtain stockholder approval
of an increase to the number of shares of Saflink's common stock
authorized before Saflink could effect the conversions. On
Feb. 8, 2008, upon receiving shareholder approval of an increase
in its authorized shares from 200,000,000 to 1,500,000,000,
Saflink issued an aggregate of 45,620,667 shares of common stock
to Mr. Kiphart, pursuant to the terms of the Notes Conversion
Agreement.
On Feb. 27, 2007, Saflink sold its rights in its SAFsolution and
SAFmodule software programs to Former IdentiPHI for an initial
payment of $778,000 plus quarterly payments based on a percentage
of Former IdentiPHI's gross margin over the next three years. The
$778,000 in proceeds was deferred and was being recognized as
revenue on a pro rata basis over the three year period that
Saflink agreed to provide certain patent protection rights under
its patent portfolio. As of Dec. 31, 2007, Saflink had deferred
revenue of $562,000 related to this sale and recognized $216,000
as revenue during the year ended Dec. 31, 2007. The quarterly
payments were due over a period of three years and the amount of
the quarterly payments were to be equal to a percentage of Former
IdentiPHI's gross margin on sales that included the software
programs' source code, including:
(i) 20% of gross margin on OEM sales that included
SAFsolution,
(ii) 15% of gross margin on non-OEM sales that included
SAFsolution, and
(iii) 30% of gross margin on sales that included SAFmodule.
As a result of the merger between Saflink and Former IdentiPHI on
Feb. 8, 2008, this agreement was effectively voided.
On Aug. 30, 2007, Saflink entered into a merger agreement with
Former IdentiPHI. Under the merger agreement, Saflink agreed to
loan Former IdentiPHI up to an aggregate amount of $1,000,000, in
one or more installments, pursuant to the terms of a secured
promissory note. The loaned amounts accrued interest at the prime
rate per annum (as published from time to time in the Wall Street
Journal), compounded on an annual basis. Former IdentiPHI would be
required to repay any such principal borrowed amounts, plus all
accrued and unpaid interest, within 45 days following the earlier
of the termination of the merger agreement for any reason, or
Former IdentiPHI's closing of an equity financing of at least
$2,000,000. Former IdentiPHI's obligations under the secured
promissory note were secured by all of Former IdentiPHI's assets.
As of Dec. 31, 2007, Former IdentiPHI had borrowed $400,000 under
this secured promissory note. Upon the successful closing of the
merger between Saflink and Former IdentiPHI on Feb. 8, 2008, the
outstanding principal and interest due under this promissory note
was eliminated through purchase accounting of the merger.
On March 9, 2007, Saflink created FLO Corporation, as a wholly-
owned subsidiary, to focus on Saflink's Registered Traveler
business. On April 16, 2007, Saflink and FLO Corporation entered
into an Asset Purchase and Contribution Agreement pursuant to
which FLO Corporation acquired all of Saflink's assets and certain
liabilities of Saflink's Registered Traveler business in exchange
for a promissory note with a principal amount of $6.3 million.
FLO Corporation made cash payments to Saflink against the
$6.3 million promissory note in the amounts of $200,000, $400,000
and $1.6 million on May 2, 2007, July 3, 2007, and July 6, 2007,
respectively. On Aug. 24, 2007, FLO Corporation paid Saflink the
remaining principal balance of the promissory note through a
combination of $2.2 million in cash and the cancellation of
approximately $1.9 million of outstanding Saflink debentures and a
Saflink promissory note that had been assigned to FLO Corporation
by its investors.
Since its incorporation, FLO Corporation had capitalized itself
through a series of financing transactions. On April 16, 2007,
FLO Corporation issued approximately $3.5 million of convertible
promissory notes in a private placement. The aggregate
consideration for these notes consisted of approximately
$1.8 million in cash, the assignment to FLO Corporation of
approximately $1.6 million of outstanding 8% convertible
debentures issued by Saflink and the assignment to FLO Corporation
of a $140,000 promissory note issued by Saflink to a related
party.
On July 3, 2007, FLO Corporation raised approximately
$4.7 million through the private placement of its Series A
preferred stock. The aggregate consideration for the preferred
stock consisted of approximately $4.5 million in cash, and the
assignment to FLO Corporation of $166,667 of Saflink's outstanding
8% convertible debentures. Concurrent with this financing, FLO
Corporation issued 1,793,118 shares of its common stock to Saflink
in a forward stock split, and following this recapitalization and
financing, Saflink was no longer a majority stockholder of FLO
Corporation. As a result of the reduction in ownership in FLO
Corporation and other factors, Saflink determined that the results
of operation of FLO Corporation should not be presented on a
consolidated basis as the conditions for consolidation have not
been met. In addition, Saflink has not assigned any value to its
investment in FLO Corporation as FLO Corporation had a working
capital deficit as of July 3, 2007 -- the date FLO Corporation
issued shares of its common stock to Saflink.
As of Dec. 31, 2007, the company's balance sheet showed total
assets of $1,473,000, total liabilities of $3,178,000, and total
stockholders' deficit of $1,705,000.
A full-text copy of the Amended Annual Report filed with the
Securities and Exchange Commission on Oct. 31, 2008, is available
for free at: http://researcharchives.com/t/s?34f3
About Saflink
Saflink Corporation offers software solutions that protect
intellectual property, secure information assets, control access
to physical facilities, and eliminate passwords. Saflink's
technologies provide the basis for identity assurance management
solutions that allow administrators to verify the identity of
users and control access to computer networks, facilities and
applications. Saflink's products are designed to eliminate the
problems associated with password management by measuring human
characteristics such as voiceprint, fingerprint, iris pattern, and
facial contours, which are virtually impossible to duplicate.
This type of authentication makes it more convenient for end-users
to access their computer accounts, while improving the security of
these accounts and reducing the overhead costs of maintaining
them.
SAINTS MEDICAL: Financial Decline Cues Moody's Ba2 Rating
---------------------------------------------------------
Moody's Investors Service has downgraded the rating assigned to
Saints Medical Center's (formerly known as Saints Memorial Medical
Center) bonds to Ba2 from Ba1. The bonds are issued by the
Massachusetts Health & Educational Facilities Authority (see debt
list at end of report). The downgrade is attributable to a
decline in financial performance and liquidity in FY 2008. The
outlook is stable.
Legal Security: Lien on gross receipts of Saints Memorial Medical
Center; 1.10 times rate covenant; debt service reserve fund
Interest Derivative Rates: None
Strengths
* Successful recruitment of additional primary care physicians and
specialists to the hospital's network of primary care practices
* Clinical agreement signed with Massachusetts General Hospital to
provide enhanced radiology services at Saints, which will enable
the program to return to full-time interventional service
Challenges
* Saints experienced a challenging year in FY 2008 resulting in an
expected loss from operations of about $1.6 million and a
decline in the hospital's unrestricted cash and investments to
approximately $27.6 million from $42.7 million at FYE 2007
* The hospital is highly leveraged with declining liquidity
measures. Cash-to-debt declined to 49% at FYE 2008 while debt-
to-cash flow rose unfavorably to approximately 15 times.
* Very competitive market with Lowell General Hospital (rated A3).
LGH and Saints offer a similar service array and most
specialists admit to both hospitals.
* Transfer of obstetrical services and Bariatric Surgery program
to LGH; LGH has made efforts to recruit physicians and programs
from Saints over the past several years
* High annual debt service relative to total amount of debt
outstanding resulting from reliance on capital leases and
borrowings with relatively short maturities
Recent Developments and Results
FY 2008 was a challenging year for Saints as the loss of several
physicians in different specialties led to a 5.9% decline in
admissions and a 14.1% decline in surgeries. The decrease in
admissions is primarily due to the move of Saints' four-physician
OB group and the Bariatric Surgery program to LGH. Moody's note,
however, that the surgeons in the Bariatric program still provide
general surgery services at Saints. Additionally, Saints has
added 23 physicians over the past 18 months, which management
believes will address the decline in admissions (see discussion
below). The decrease in surgery is largely due to the
gastrointestinal physicians at LGH establishing a free standing
endoscopy unit, which has negatively impacted GI procedures at
both Saints and LGH.
Overall, the volume decrease resulted in weaker financial
performance with full year operating cash flow likely declining to
approximately $6.2 million (based on annualized 11 month interim
results) from $7.2 million in FY 2007. A significant concern from
a credit perspective is the decline in the hospital's unrestricted
cash and investments to approximately $28 million from
$42.7 million at FYE 2007. The decline was caused by higher
capital spending (discussed below), lower operating cash flow, and
general market declines in the hospital's investment portfolio.
Although liquidity is sufficient on a relative basis at 76 days
cash on hand, $28 million is a small amount of cash on an absolute
basis, and could restrict the hospital's ability to pursue
strategic investments. Lowell is a competitive market and LGH is
slightly larger and offers generally similar services. LGH
captures the leading market share at 30% to Saints' 22% and has
likely grown market share over the past year by successfully
recruiting physicians that previously practiced at Saints. The
ability to continue making strategic investments is a key factor
of Moody's rating analysis. Saints is in the process of seeking a
strategic partner that will provide capital resources to the
hospital.
Saints is pursuing a strategy to capture a larger share of the
out-migration market that currently goes to regional community
hospitals. A segment of the market travels to Boston (about 40
minutes away) to access services not available in the area, or for
clinical reputation reasons, but there is a significant portion of
the market that utilizes regional community hospitals that Saints
is competing for. To build referrals from this market, Saints has
expanded its employed physician base, concentrating on placing
primary care physicians in offices in areas in which it seeks to
grow market share. The employed physician group has grown to 26
from only four in 2005 and includes 15 primary care physicians
(the balance includes nurse practitioners, surgeons, and
medical/oncologists).
This strategy is not without risk, as the aggregate physician
subsidy can become quite large, and must be funded at higher
levels per physician until the practices are more established and
better able to support themselves. Saints also recently signed a
clinical agreement with Massachusetts General Hospital to provide
radiologists for the radiology service and is developing a Women's
Center in Andover. The agreement with Massachusetts General could
allow Saints to expand market share in radiology. The Women's
Center is being staffed by physicians moving into an existing
local practice, which may minimize the time required to establish
profitable operations.
Access to capital continues to be a challenge for Saints. The
hospital is leveraged, with weak MADS coverage and high debt-to-
cash flow of approximately 15 times in FY 2008. Although capital
spending reached $9 million in FY 2008 (capital spending ratio of
1.7 times), inconsistent operating results have limited capital
spending in recent years, and the decline of unrestricted cash
will likely limit future spending and reduce the scope of
available strategic investments.
Outlook
The stable outlook at the lower rating level reflects efforts by
Saints to find a strategic partner to provide capital resources
and investments made by management over the past year to grow
market share.
What could change the rating -- UP
Rebound of utilization volumes and operating cash flow; growth of
unrestricted cash to historical levels allowing the hospital to
pursue additional strategic investment
What could change the rating -- DOWN
Further decline of unrestricted cash and investments; loss of
additional physicians or market share; further decline in
utilization or financial performance
Key Indicators
Assumptions & Adjustments:
-- Based on financial statements for Saints Medical Center
-- First number reflects audit year ended September 30, 2007
-- Second number reflects interim eleven months annualized ended
Aug. 31, 2008
-- Investment returns normalized at 6% unless otherwise noted
* Inpatient admissions: 7,434; 6,995
* Total operating revenues: $134.4 million; $131.8 million
* Moody's-adjusted net revenue available for debt service:
$9.7 million; $7.2 million
* Total debt outstanding: $60.3 million; $57.5 million
* Maximum annual debt service (MADS): $7.4 million; $7.4 million
* MADS Coverage with reported investment income: 1.5 times;
information not available
* Moody's-adjusted MADS Coverage with normalized investment
income: 1.3 times; 1.1 times
* Debt-to-cash flow: 9.9 times; 15.2 times
* Days cash on hand: 119 days; 73 days
* Cash-to-debt: 71%; 49%
* Operating margin: (1.0%); (2.0%)
* Operating cash flow margin: (5.3%); (4.7%)
Rated Debt (debt outstanding as September 30, 2008)
-- Series 1993A; Fixed Rate ($54,100,000 million outstanding)
rated Ba2
SALEM COMMUNICATIONS: S&P Junks Issue-Level Rating on $100MM Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Camarillo, California-based radio broadcasting company
Salem Communications Corp. to 'B' from 'B+'. The rating was
removed from CreditWatch, where it was placed with negative
implications on Sept. 18, 2008. The rating outlook is negative.
In addition, S&P lowered the issue-level rating on Salem
Communications Holding Corp.'s $100 million 7.75% senior
subordinated notes to 'CCC+' (two notches lower than the 'B'
corporate credit rating) from 'B-'. This rating was also removed
from CreditWatch. The recovery rating on this debt remains
unchanged at '6', indicating S&P's expectation of negligible (0%
to 10%) recovery in the event of a payment default.
"The ratings downgrade reflects the company's narrow margin of
covenant compliance, as well as risks linked to its intermediate-
term need for comprehensive refinancing," said Standard & Poor's
credit analyst Michael Altberg.
Leverage (per lenders' computations) as of Sept. 30, 2008 was
6.07x, versus a 6.75x covenant, which steps down to 5.75x on
March 31, 2009, and then to 5.50x at the end of 2009. Although
the company is working to reduce its operating expenses and
complete asset sales, S&P believes it will be challenged to comply
with the first-quarter step-down given currently weak advertising
demand. In addition, the company will need to address roughly
$334 million of 2010 maturities, which pose risks in the current
credit environment and could bring a meaningful increase in
pricing from currently attractive rates. Salem generates
satisfactory discretionary cash flow and has adequate interest
coverage metrics for the rating, providing some flexibility
against potential interest rate increases.
For the third quarter of 2008, revenue and EBITDA (excluding
noncash impairment charges and noncash stock compensation)
declined 4.3% and 16% year over year, respectively, as the company
experienced an 11% decline in advertising revenue and a 2% decline
in revenue from the sale of programming time blocks. Revenue
growth of 17% in the nonbroadcast segment, which contains
publishing and Internet activities, did not offset the decline in
core revenues and block programming fees.
Lease-adjusted debt to EBITDA at Sept. 30, 2008 was high, at 7x.
EBITDA coverage of interest was about 2.3x as of the same date.
Salem converted a healthy 47% of EBITDA to discretionary cash flow
for the 12 months ended Sept. 30, 2008, which S&P expects could
decline in 2009 and 2010 due to continued earnings pressure and
the potential for increased financing costs following a
comprehensive refinancing. The company's senior secured
facilities consist of a $52.5 million revolving credit facility
that maturing March 25, 2009, a $75 million term loan B
($72 million outstanding as of Sept. 30, 2008) maturing March 10,
2010, and a $165 million term loan C ($161.7 million outstanding)
maturing June 30, 2012 (or six months prior to the maturity of any
subordinated debt). Salem's $100 million 7.75% senior
subordinated holding company notes mature on Dec. 15, 2010, and,
as a result, the term loan C will be due on June 15, 2010. For
this reason, S&P expects that the company will need to refinance
its capital structure over the next year to 18 months, which could
pose additional risks if credit market conditions don't improve.
SEMGROUP LP: Court Extends Removal & Lease Decision Periods
-----------------------------------------------------------
Pursuant to Section 105(a) of the Bankruptcy Code and Rule
9006(b) of the Federal Rules of Bankruptcy Procedure, the U.S
Bankruptcy Court for the District of Delaware extended the period
within which Semgroup L.P. and its debtor affiliates may remove
actions pending on or before the Petition Date, to February 17,
2009.
The Court also extended the deadline within which the Debtors'
must decide whether to assume or reject unexpired non-residential
real
property leases, through and including February 17, 2009.
About SemGroup
SemGroup L.P. -- http://www.semgrouplp.com/-- is a
midstream service company providing the energy industry means to
move products from the wellhead to the wholesale marketplace.
SemGroup provides diversified services for end users and consumers
of crude oil, natural gas, natural gas liquids, refined products
and asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-
11525). These represent the Debtors' restructuring efforts: John
H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq.
at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P.
Kessler, Esq. and Sherri L. Toub, Esq. at Weil, Gotshal & Manges
LLP; and Martin A. Sosland, Esq. and Sylvia A. Mayer, Esq. at Weil
Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the
Debtors' claims agent. The Debtors' financial advisors are The
Blackstone Group L.P. and A.P. Services LLC.
Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye
Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter
Anderson & Corroon LLP, represent the Debtors' prepetition
lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.,
is the appointed monitor of SemCanada Crude Company and its
affiliates' reorganization proceedings before the Canadian
Companies' Creditors Arrangement Act. The CCAA stay expires on
Nov. 21, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
(SemGoup Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SUNGARD DATA: Fitch Revises Rating Outlook to Negative
------------------------------------------------------
Fitch Ratings has revised SunGard Data System's Rating Outlook to
Negative from Stable and affirmed these ratings:
-- Issuer Default Rating at 'B+';
-- $250 million 3.75% senior notes due 2009 at 'B+/RR4';
-- $250 million 4.875% senior notes due 2014 at 'B+/RR4';
-- $1.6 billion 9.125% senior unsecured notes due 2013 at
'B/RR5';
-- $500 million 10.625% senior unsecured notes due 2015 at
'B/RR5';
-- $1 billion 10.25% senior subordinated notes due 2015 at 'B-
/RR6'.
Due to lower valuation and recovery, these ratings have been
downgraded:
-- $1 billion senior secured revolving credit facility due 2011
to 'BB/RR2' from 'BB+/RR1';
-- $4.8 billion senior secured term loan due 2014 to 'BB/RR2'
from 'BB+/RR1'.
The rating action reflects Fitch's expectations that:
-- SunGard's Financial Services segment's revenue (54% of total
for the twelve months ended Sept. 30, 2008) and profitability
may erode well into 2009, negatively affecting the company's
credit protection measures. The current turmoil in the
global financial markets is significantly worse than
previously anticipated, and has created a high degree of
uncertainty around near-term financial performance. Revenue
weakness could result from lower or delayed orders, potential
reductions in the customer base, or customers renegotiating
maturing contracts at reduced terms.
-- A longer and more severe economic downturn could have a
larger negative impact on SunGard's profitability at its
Availability Services, Higher Education, and Public Sector
than previously expected, reducing those segments' ability to
moderate the impact of a decline at FS. While SunGard's
diverse businesses, long-term contracts and largely recurring
revenue base generally enable the company to withstand
macroeconomic pressures, Fitch believes that the recent
slowdown in organic revenue growth at HE and PS could
intensify over the next several quarters amid a significantly
weaker economy. Fitch believes that AS will maintain fairly
consistent revenue growth, although margin erosion could
intensify due to increased pricing pressure.
-- Limited revenue growth and profitability erosion could result
in meaningfully slower deleveraging over the medium term.
Fitch estimates that total debt/LTM EBITDA was 6.0 times at
3Q08, versus 5.3x at 2Q08. This was driven by a $1.1 billion
increase in debt in the quarter, which will fund the
estimated $619 million GLTrade acquisition, a $250 million
January 2009 maturity, and the $250 million reduction in the
company's off balance sheet AR securitization facility.
Current ratings incorporate leverage within a 5.0x-5.5x range
over the intermediate term, with the expectation that
acquisition activity could result in leverage above this
range on a short-term basis, with subsequent deleveraging via
EBITDA growth. Repayment of the January 2009 maturity and
consolidation of GLTrade EBITDA will reduce leverage over the
near term.
SunGard's recurring revenue model, driven by long term contracts
and significant switching costs, enable the company to generate
consistent annual free cash flow of approximately $200-$300
million. The company uses this cash for small, tuck-in
acquisitions to augment mature market organic growth rates. A
reduction in sales and/or profitability due to a severe and
prolonged economic downturn would likely drive a commensurate
decline in free cash flow, hindering SunGard's ability to grow via
acquisitions. Additionally, should lower free cash flow result in
a material increase in debt-financed acquisitions, further ratings
pressure could develop.
The ratings could be downgraded if:
-- The FS business experiences a steep decline in sales and/or
profitability, driven by continued reduction of new contracts
and/or customer attrition;
-- Significant further decline in operating margins, driven by
pricing pressure on new or renewed contracts, or lack of
commensurate operating expense reduction in the event of
lower revenue growth;
-- Absence of deleveraging from current levels via EBITDA growth
over the medium term.
The ratings could stabilize if:
-- Improved visibility occurs in the FS segment, with
expectations that it will withstand the ongoing turmoil and
consolidation in the financial markets, without experiencing
sharp top line declines and significant customer attrition;
-- EBITDA growth at AS, HE and PS offsets the impact of a
potential decline in FS on SunGard's overall profitability;
-- Material deleveraging occurs over the near term, via EBITDA
growth or debt reduction.
As of Sept. 30, 2008, Fitch believes SunGard's liquidity position
was sufficient and supported by approximately $1.6 billion of cash
and $603 million available under its $1 billion senior secured
revolving credit facility expiring 2011 (net of $26 million of
letters of credit outstanding and, therefore, unavailable for
borrowings). The company's accounts receivable securitization
program, which had $448 million drawn at Sept. 30, was reduced to
$200 million from $450 million in October 2008; SunGard will repay
the $248 million in borrowings with cash from collections.
Additionally, for the twelve months ended Sept. 30, 2008, the
company generated $363 million of free cash flow, excluding cash
generated by amounts drawn under the AR facility.
As of Sept. 30, 2008, total on-balance-sheet debt was
approximately $8.8 billion and consisted primarily of:
$4.8 billion of senior secured term loans expiring 2014;
$371 million drawn under the senior secured revolving credit
facility expiring 2011; approximately $250 million of 3.75% senior
notes due 2009, which Fitch anticipates the company will repay
with cash on hand; approximately $250 million of 4.875% senior
notes due 2014; $1.6 billion of 9.125% senior unsecured notes due
2013; $500 million of 10.625% senior unsecured notes due 2015 and
$1 billion of 10.25% senior subordinated notes due 2015. Debt
amortization requirements under the term loans are 1% of the
outstanding amount annually.
The Recovery Ratings reflect Fitch's belief that SunGard would be
reorganized rather than liquidated in a bankruptcy scenario, given
Fitch's estimates that the company's ongoing concern value of
$6.3 billion is significantly higher than its projected
liquidation value, due mostly to the significant value associated
with SunGard's intangible assets. In estimating ongoing concern
value, Fitch reduced the valuation multiple to 6x from the
previous 7x, attributing recent valuation contraction among
comparable companies. Fitch discounts SunGard's normalized
operating EBITDA by 30%, corresponding to the EBITDA level that
would breach the company's financial covenants.
After reductions for administrative and cooperative claims, Fitch
arrives at an adjusted reorganization value of approximately
$5.7 billion. Based upon these assumptions, the senior secured
debt, including $1 billion revolving credit, and $4.8 billion of
term loan facilities recover approximately 87%, resulting in 'RR2'
ratings for both tranches of debt. The senior notes' 'RR4'
recovery rating reflects the partial security these notes received
during the leveraged buyout process and Fitch's belief that the
secured bank debt is in a superior position due to its right to
the company's intellectual property. The 'RR5' recovery rating
for the $2.1 billion senior unsecured debt reflects Fitch's
estimate that 11%-30% recovery is reasonable, while the 'RR6'
recovery rating for the $1 billion of subordinated debt reflects
Fitch's belief that negligible recovery would be achievable due to
its deep subordination to other securities in the capital
structure. The analysis is proforma for the redemption of the
January 2009 senior notes.
SYNCORA GUARANTEE: S&P Downgrades Financial Strength Rating to 'B'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its financial strength
rating on Syncora Guarantee Inc. to 'B' from 'BBB-' and revised
the CreditWatch implications to developing from negative.
At the same time, Standard & Poor's suspended its ratings on
public finance and corporate transactions insured by Syncora that
do not have an underlying public rating.
"The downgrade is the result of the company's delay in
implementing its restructuring plan and slow progress in its
negotiations with counterparties of its CDO of ABS exposure," said
Standard & Poor's credit analyst David Veno.
"If management is not successful in its negotiations to develop
strategic alternatives for problematic credits in its insured
portfolio, S&P believes the financial position of the company
would be impaired to a point that could lead to regulatory
intervention, in which case the rating could go lower," said Mr.
Veno. "If management is successful in its negotiations and
presents a reasonably viable strategy for the company, the rating
could go higher."
SYNTAX-BRILLIAN: Seeks to Sell Tooling Set for $120,000
-------------------------------------------------------
Bankruptcy Law360 reports that Syntax-Brillian filed a motion with
the U.S. Bankruptcy Court seeking to approve the sale of LCoS
Plastic Injection Mold Tooling Set as a de minimus asset free and
clear of liens, claims, interests and encumbrances. The report
says the Tooling Set consists of a series of molds used in the
plastic injection process to create plastic frames for television
using the LCoS technology. The Debtors propose to sell the
Tooling Set for $120,000, according to the report. A hearing
is scheduled for December 8, 2008 and objections are due by
December 1, 2008, the report says.
Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:
BRLC) -- http://www.syntaxbrillian.com/-- manufactures and
markets LCD HDTVs, digital cameras, and consumer electronics
products including Olevia(TM) brand high-definition widescreen LCD
televisions and Vivitar brand digital still and video cameras.
Syntax-Brillian is the sole shareholder of California-based
Vivitar Corporation.
The company and two of its affiliates -- Syntax-Brillian SPE,
Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection
on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through
08-11409. Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and
John W. Weiss, Esq., at Greenberg Traurig LLP in New York,
represent the Debtors as counsel. Victoria Counihan, Esq., at
Greenburg Traurig LLP in Wilmington, Delaware, is the Debtors'
Delaware counsel. Five members compose the Official Committee of
Unsecured Creditors. Epiq Bankruptcy Solutions, LLC is the
Debtors' balloting, notice, and claims agent.
Syntax-Brillian cut a deal to sell its business assets to Olevia
International Group LLC. On Sept. 10, 2008, OIG told the
Bankruptcy Court that it won't pursue the deal, contending that
the Debtors irreparably breached various covenants and
representations contained in the Purchase Agreement, causing
various Closing Conditions to fail, and rendering it unable to
comply with its obligations under the Purchase Agreement. OIG
also accused the Debtors of violating their sale contract by
losing business from Target Corp., the Debtors' main customer.
The following day, the Debtors filed a lawsuit asking the Court to
compel Olevia International to complete the purchase. On Oct. 10.
the Bankruptcy Court denied OIG's emergency request to excuse it
from its obligations. OIG has taken an appeal of that order.
When the Debtors filed for protection from their creditors, they
listed total assets of $175,714,000 and total debts of
$259,389,000.
THORNBURG MORTGAGE: Misses Interest Payment for 8% Senior Notes
---------------------------------------------------------------
Thornburg Mortgage, Inc. has not paid the interest payment due on
Nov. 15, 2008, on its 8% Senior Notes, because it currently does
not have available funds to do so. The company is in active
negotiations with the counterparties to the Override Agreement
and expects to pay the $12.2 million interest payment once an
amended and restated agreement has been reached with the
counterparties to the Override Agreement and within the 30-day
grace period under the indenture.
The company's amended Exchange Offer and Consent Solicitation for
all series of its outstanding Preferred Stock was scheduled to
expire at 5 p.m., New York City time, on Nov. 19, 2008. As of
Nov. 18, 2008, the company had received tenders for:
-- 72.2% of the outstanding shares of its Series C Preferred
Stock;
-- 79.2% of the outstanding shares of its Series D Preferred
Stock;
-- 83.2% of the outstanding shares of its Series E Preferred
Stock; and
-- 67.4% of the outstanding shares of its Series F Preferred
Stock.
Holders of the Preferred Stock that have tendered their shares
may withdraw their shares at any time prior to the company's
acceptance of the shares after the expiration of the Exchange
Offer.
The Exchange Offer is being made to holders of Preferred Stock in
reliance upon the exemption from the registration requirements of
the Securities Act of 1933, as amended, afforded by
Section 3(a)(9) thereof. Investor inquiries about the Exchange
Offer must be directed to the company at (866) 222-2093 (toll
free). Requests for copies of the Offering Circular, all
supplements thereto and related documents may be directed to
Georgeson Inc., the information agent for the Exchange Offer, at
866-399-8748 (toll free).
About Thornburg Mortgage Inc.
Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA)
-- http://www.thornburgmortgage.com/-- is a single-family
residential mortgage lender focused principally on prime and
super-prime borrowers seeking jumbo and super-jumbo adjustable-
rate mortgages. It originates, acquires, and retains investments
in adjustable and variable rate mortgage assets. Its ARM assets
comprise of purchased ARM assets and ARM loans, including
traditional ARM assets and hybrid ARM assets.
* * *
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Moody's Investors Service affirmed Ca and C senior debt and
preferred stock ratings, respectively of Thornburg Mortgage, Inc.
Thornburg's Ca debt rating remains under review for possible
downgrade.
As reported in the Troubled Company Reporter on Oct. 3, 2008,
Standard & Poor's Ratings Services said that its rating on
Thornburg Mortgage Inc. will remain at 'SD' until the company's
preferred exchange offer is finalized. S&P will then evaluate the
viability of Thornburg's business model and its future financial
prospects. S&P believes that if the tender offer is unsuccessful,
funding costs will be too high relative to the company's earnings
generation capacity.
TRAVELPORT HOLDINGS: Moody's Holds 'B2' Rating; Outlook Negative
----------------------------------------------------------------
Moody's Investors Service revised the rating outlook of Travelport
Holdings Ltd. and its primary debt issuing subsidiary, Travelport
LLC, to negative from stable while affirming the corporate family
rating at B2.
The outlook revision is based on the weak demand for travel
globally during the current economic slowdown, as evidenced by the
10% decrease in Travelport's Global Distribution Systems segments
year-on-year during the third quarter of 2008. Moody's expects
continued low double-digit booking declines into 2009 as consumers
and corporations scale back on travel spending. While the company
has achieved significant cost savings (e.g. $187 million of annual
run rate savings from the re-engineering of the Travelport
business and an additional $123 million of synergies from the
Worldspan acquisition for actions taken to date, as estimated by
company management) and increased adjusted EBITDA slightly during
the nine months ended Sept. 30, 2008, Moody's believes that a
prolonged downturn in the global travel market could offset the
benefits of these cost reductions and delay its ability to de-
lever from its current level of over 6.5x (Moody's adjusted debt
to EBITDA, including the annual run rate effect of cost savings
achieved to date). The ratings could experience downward pressure
if bookings deteriorate more than 15% on a year-on-year basis over
the next several quarters or if travel demand does not stabilize
by 2010.
The B2 corporate family rating reflects Travelport's high leverage
as a result of the Blackstone led LBO in August 2006 and the debt-
financed acquisition of Worldspan in August 2007, modest total
interest coverage (less than 2 times), and the potential for
secular declines in the GDS business as travel bookings continue
to shift away from travel agencies to supplier direct
distribution. The rating is supported by the continued importance
of GDS in the global travel industry including online bookings,
Travelport's strong position in the U.S. GDS market, and its
enhanced global footprint through the addition of Worldspan's
business and technology platform. The rating further benefits
from the stability of the company's long-term contracts with all
of the major U.S. carriers, despite pricing concessions during the
last renewal, and the lack of any significant debt maturity
through 2012.
While the corporate family rating has been affirmed, the ratings
of the company's revolving credit facility, synthetic letter of
credit facility, and term loan facility were upgraded one notch to
reflect changes in the company's capital structure, consistent
with Moody's Loss-Given-Default rating methodology.
These ratings/assessments were affected by this action:
-- Corporate family rating affirmed at B2;
-- Probability of default rating affirmed at B2;
-- Euro 235 million senior unsecured notes due 2014 - B3 (LGD4,
63% from 68%);
-- $150 million floating rate senior unsecured notes due 2014 -
B3 (LGD4, 63% from 68%);
-- $450 million fixed senior unsecured notes due 2014 - B3
(LGD4, 63% from 68%);
-- $300 million subordinated notes due 2016 - Caa1 (LGD5, 78%
from 83%);
-- Euro 160 million subordinated notes due 2016 - Caa1 (LGD5,
78% from 83%);
-- $1.1 billion holding company PIK loan due 2012 - Caa1 (LGD 6,
90% from 92%);
-- Speculative grade liquidity rating affirmed at SGL-2.
These ratings were upgraded/assessments revised:
-- $300 million revolving credit facility due 2012 upgraded to
Ba2 from Ba3 (LGD 2, 21% from 23%);
-- $150 million synthetic letter of credit facility due 2013
upgraded to Ba2 from Ba3 (LGD 2, 21% from 23%);
-- $2.178 billion term loan facility due 2013 upgraded to Ba2
from Ba3 (LGD 2, 21% from 23%)
The last rating action was on Aug. 22, 2007, when Moody's affirmed
the ratings and stable outlook of Travelport in response to the
closing of its Worldspan LP acquisition.
Headquartered in New York, New York, Travelport, with
approximately $2.6 billion of revenues for the twelve months ended
Sept. 30, 2008, provides travel services, including those through
its global distribution system and GTA, its group travel and
wholesale hotel business.
UNITED SITE: Moody's Junks Corporate Family Rating From 'B3'
------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of United Site Services, Inc. to Caa1 from B3. Moody's also
downgraded the first lien revolving credit facility to B1 from Ba3
and the second lien term loan to Caa1 from B3. The downgrade
reflects the company's weak credit metrics, the potential for
ongoing weak cash flows, and the prospects for a more severe
economic downturn than the prior rating anticipated.
The downgrade also reflects Moody's concern that a protracted
downturn in the residential/commercial construction market may
continue to pressure the company's operating performance.
Notwithstanding the benefit of disaster related activity on the
company's September 2008 results, Moody's remains concerned that
sales in the company's core construction-related business could
remain under pressure. The rating derives support from the
company's adequate liquidity, its favorable operating performance
for the September 2008 quarter, and its ongoing cost reduction
activities. The ratings outlook remains negative.
These ratings were downgraded:
-- Corporate Family Rating to Caa1 from B3;
-- Probability of Default Rating to Caa1 from B3;
-- $100 million senior secured first lien revolving credit
facility due 2012 to B1 (LGD1, 6%) from Ba3 (LGD1, 5%);
-- $265 million senior secured second lien term loan due 2013 to
Caa1 (LGD3, 47%) from B3 (LGD3, 45%).
The negative outlook reflects Moody's concern over the company's
ability to improve its earnings and cash flows given the prospects
for a protracted downturn in its construction end-markets.
The last rating action for USS occurred on Sept. 25, 2007, when
Moody's downgraded the corporate family rating to B3 from B2 and
revised the ratings outlook to negative from stable.
Moody's analyzes this company using the Global Consumer & Business
Service Industry Methodology.
United Site Services, Inc. headquartered in Westborough,
Massachussetts, rents and services a comprehensive line of
portable restrooms, temporary fencing, temporary electric
equipment and storage containers to a broad range of customers
including construction contractors, special events planners,
private individuals, commercial establishments and governmental
agencies. The company is privately held.
VERASUN ENERGY: Seeks to Reject Janesville & Welcome Corn Pacts
---------------------------------------------------------------
Pursuant to Section 365(a) of the Bankruptcy Code and Rule 6006 of
the Federal Rules of Bankruptcy Procedure, VeraSun Energy Corp.
and its debtor affiliates ask the U.S. Bankruptcy Court for the
District of Delaware authority to reject:
(a) contracts for delivery of corn in October, November, and
December 2008 to idle Janesville and Welcome, Minnesota
production facilities; and
(b) sales contracts for Lincoln Oil Company, Inc., Osage,
Inc., and ProTec Fuel Management LLC.
Before the Petition Date, the Debtors constructed two ethanol
plants in Welcome and Janesville and entered into contracts for
the delivery of corn in anticipation of commencing operations at
the plants in the fall of 2008. The plants are substantially
complete, but not yet operational, the Debtors' counsel, Mark S.
Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, in
Wilmington, Delaware, relates.
In connection with the filing for Chapter 11 protection, the
Debtors sought additional financial commitments from lenders that
hold claims secured by liens on the Janesville and Welcome plants
to obtain additional liquidity necessary to begin sustainable
operations at the plants.
With respect to the Janesville plant, AgStar Financial Services
holds claims secured by liens on substantially all the assets of
VeraSun Janesville, LLC, including the Janesville plant. With
respect to the Welcome plant, the Indenture Trustee holds claims
secured by liens on property, plant, and equipment for the
benefit of the holders of the $210 million senior secured notes,
and UBS AG and UBS Loan Finance LLC hold claims secured by liens
on working capital and inventory
Mr. Chehi notes that, as of November 14, 2008, the Debtors do not
have an agreement with the Janesville and Welcome Lenders to
support operations at the Janesville and Welcome Plants. He
tells the Court that it is clear the Plants will be idle at least
through the end of 2008.
Accordingly, because the Janesville and Welcome Plants are idle,
there is no need to purchase corn under the Janesville and
Welcome 2008 Corn Contracts, Mr. Chehi contends.
With regard to the Sales Contracts, the Debtors entered into them
to enhance their sales, Mr. Chehi relates. However, due to the
reduced production volume at their plants due to lack of supply
of raw materials in addition to the loss of anticipated capacity
at the Welcome and Janesville plants, and other market dynamics,
the Debtors no longer have the ability to profitably fulfill the
requirements set in the Sales Contracts.
A schedule of the Rejected Contracts is available for free at:
http://bankrupt.com/misc/VeraSunDeliverSalesContracts.pdf
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. 6; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VERIFONE INC: Moody's Affirms 'B1' Rating With Negative Outlook
---------------------------------------------------------------
Moody's Investors Service confirmed VeriFone, Inc.'s corporate
family rating at B1 with a negative outlook. Simultaneously,
Moody's raised VeriFone's senior secured debt ratings to Ba2 from
B1 and raised the probability of default rating to B1 from B2 due
to a change in the company's capital mix.
The rating confirmation concludes the review for possible
downgrade that was initiated in December 2007 following the
company's announcement that it would restate prior financials
statements for the first three quarters of fiscal 2007 and delay
filing its fiscal year-end 2007 form 10-K financials due to
accounting errors discovered primarily associated with inventory
valuation issues.
VeriFone has subsequently concluded its internal review into the
accounting errors, filed the required financial statements, and is
now in compliance with all covenants related to its senior secured
bank credit facility. As part of the restatement, VeriFone's
previously reported income before taxes and net income for the
nine months ended July 31, 2007, were lowered by an aggregate
amount of $36.7 million and $70.2 million, respectively. The
majority of the adjustments were related to erroneous
manufacturing and distribution overhead allocations recorded as
in-transit inventory.
The confirmation of VeriFone's B1 CFR recognizes the remediation
initiatives that VeriFone has undertaken to address the material
weaknesses in the company's internal controls over financial
reporting and corporate governance challenges identified during
its restatement process. However, to the extent that additional
corporate governance or accounting control issues should occur,
this could adversely affect Moody's assessment of the company's
credit quality.
VeriFone's B1 CFR is constrained by the company's high leverage,
reduced profitability due to weaker revenue and profitability
trends in the company's North America business stemming from
product-mix changes and a weak macro environment, increased
competitive landscape as a result of industry consolidation, and
shareholder litigation overhang from its accounting restatement.
VeriFone's B1 CFR also recognizes the company's leadership
position in the POS electronic payment device market, PCI security
compliance mandates by credit card processors, which are expected
to drive existing device upgrades for U.S. merchants, good
geographic and end-market diversification with relatively strong
growth in emerging markets (albeit at lower margins), and expanded
product mix. The B1 rating also derives support from the
company's good liquidity position. Furthermore, VeriFone is also
well positioned to benefit from the overall secular shift from
traditional paper-based transactions to electronic-based payment
solutions in addition to the need for improved security standards.
VeriFone's negative outlook reflects Moody's expectation that the
company's revenue growth and profit expansion prospects may be
strained over the near-term due to challenging macro economic
conditions, both domestically and internationally, and exposure to
retail and consumer-oriented end-markets, which are expected to be
pressured. Partially offsetting this is VeriFone's good liquidity
position, defensible market position, and robust portfolio of
product offerings ahead of upcoming PCI security compliance
standard deadlines for U.S. merchants.
This rating was confirmed:
-- B1 for Corporate Family Rating
These ratings were changed as per the change in capital structure
and in accordance with Moody's Loss-Given-Default methodology:
(The rating change on the senior secured term loan and revolving
credit facility reflect the changes in VeriFone's capital
structure following the issuance of $316 million of 1.375% senior
convertible notes (unrated by Moody's), which was partially used
to repay $260 million of senior secured term loan.)
-- Probability of Default Rating to B1 from B2
-- $40 million senior secured revolving credit facility due 2012
to Ba2 (LGD2, 19%) from B1 (LGD3, 31%)
-- $232.5 million senior secured term loan due 2013 to Ba2
(LGD2, 19%) from B1 (LGD3, 31%)
The rating outlook is negative.
Headquartered in San Jose, California, VeriFone is a global market
leader in the development and marketing of secure POS electronic
payment solutions. The company offers a variety of POS electronic
payment devices that run proprietary or third-party operating
systems, security and encryption software, which are used to
process a wide variety of payment types including signature and
PIN entry debit cards, credit cards, contactless cards, and
electronic bill payments. VeriFone's payment systems are
available in different wireline and wireless configurations and
are marketed to various financial, retail, hospitality, petroleum,
transportation, government and healthcare vertical markets.
In November 2006, the company acquired Lipman Electronic
Engineering Ltd., an Israeli-based firm with sizeable emerging
markets presence with a global lead in wireless payment devices.
Revenues and EBITDA (Moody's adjusted) for the last twelve months
ended July 31, 2008 were $915 million and $105 million,
respectively.
VERUTEK TECH: Reports Narrower $1.3MM Net Loss for Last 9-Months
----------------------------------------------------------------
VeruTEK Technologies, Inc., for the nine months ended Sept. 30,
2008, reported a net loss of $1,309,879, compared with a net loss
of $4,993,787 in the same period last year.
VeruTEK's Sept. 30, 2008 balance sheet showed total assets of
$5,054,140 and total liabilities of $3,558,548, resulting in total
stockholders' equity of $1,495,592. As of Dec. 31, 2007, the
company disclosed $1,776,847 in assets and $4,985,196 in debts,
resulting to a $3,208,349 deficit. During May 2008 the company
completed a private placement raising approximately $6.2 million
in funds from 41 institutional and accredited investors and 3
directors. The successful completion of the May 2008 private
placement resulted in a positive net working capital balance as of
September 30, 2008 of approximately $500,000.
The company has an accumulated deficit of about $11.4 million at
Sept. 30, 2008. As is typical with early stage growth companies,
the company said its recurring net losses have been largely a
result of business development expenses as well as investments in
infrastructure for growing the company's business and operations.
The possible continuation of net losses and the accumulated
deficit raise substantial doubt about the Company's ability to
continue as a going concern, the company stated.
Management believes that the company will be successful in its
efforts to adequately meet its capital needs and continue to grow
its business. During May 2008, the company completed a private
placement raising approximately $6.2 million (before transaction
related expenses) in funds from 41 institutional and accredited
investors and 3 directors. Expected transaction expenses directly
related to the private placement are estimated to be approximately
$500,000. The successful completion of the May 2008 private
placement resulted in a positive net working capital balance as of
Sept. 30, 2008, of approximately $0.5 million. The positive
working capital balance, which includes approximately $3.7 million
in cash and cash equivalents, will be utilized to support future
operations. The company estimates current funding will sustain
its operations at least through the period ending April 30, 2009.
On March 26, 2008, Carlin, Charron & Rosen, LLP, in Glastonbury,
Connecticut, had informed the Board that the company:
-- has a working capital deficiency of approximately
$2.2 million at Dec. 31, 2007,
-- has sustained net losses of approximately $5.9 million and
$4.2 million for the year ended Dec. 31, 2007, and for
the period from Feb. 1, 2006 (inception) through Dec. 31,
2006, respectively,
-- has an accumulated deficit of approximately $10.1 million
at Dec. 31, 2007, and
-- is not in compliance with certain provisions of its bank
debt agreement, which provides the bank with the right to
demand repayment.
"These factors raise substantial doubt about the Company's ability
to continue as a going concern," the auditor stated in the
company's Annual Report.
About VeruTEK
VeruTEK Technologies, Inc., formed to develop and commercialize
new technologies in the field of environmental remediation. The
company provides technical and consulting services to clients to
resolve complex environmental remediation matters at a wide range
of waste sites, principally by combining surfactant and oxidant
chemistries.
VUBOTICS INC: Case Summary & 15 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Vubotics, Inc.
fdba Halifax International, Inc.
fdba Christopher Partners, Inc.
580 Conway Forest Drives
Atlanta, GA 30327
Case No.: 08-83616
Petition Date: November 18, 2008
Court: U.S. Bankruptcy Court
Northern District of Georgia (Atlanta)
Debtor's Counsel: Louis G. McBryan
Howick, Westfall, McBryan & Kaplan, LLP
Suite 600 - One Tower Creek
3101 Tower Creek Parkway
Atlanta, GA 30339
Tel: (678) 384-7000
Fax: (678) 384-7034
Email: lmcbryan@hwmklaw.com
Total Assets: $19,215
Total Debts: $3,570,375
A list of the Debtor's 15 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/ganb08-83616.pdf
WACHOVIA AUTO: S&P Takes Rating Actions on Five Transactions
------------------------------------------------------------
Standard & Poor's Ratings Services took these rating actions after
reviewing five outstanding Wachovia Auto Loan Owner Trust and WFS
Financial Owner Trust transactions:
-- S&P raised its ratings on nine subordinate classes from
WFS' series 2005-2 and 2005-3 and WALOT's series 2006-1 and
2006-2; and
-- S&P affirmed its ratings on the remaining 17 classes from
WFS' series 2005-2 and 2005-3 and WALOT's series 2006-1,
2006-2, and 2007-1.
Credit performance for series 2005-2 and 2005-3 has been better
than S&P's original expectations. However, credit losses for
series 2006-1, 2006-2, and 2007-1 have been higher than S&P
expected. The deterioration is evident in rising delinquencies
and increased default frequencies. As a result, S&P has revised
S&P's loss assumptions accordingly. With S&P's lowered
lifetime loss expectations for series 2005-2 and 2005-3 and
despite S&P's increased lifetime loss expectations for 2006-1,
2006-2, and 2007-1, S&P is raising and affirming S&P's ratings on
all five transactions.
Table 1
Collateral Performance
Initial Revised
Pool Current 60-plus day lifetime CNL lifetime CNL
Series factor CNL delinq. Expect. Expect.
------ ------ ------- ----------- ------------ ------------
2005-2 15.44% 3.22% 1.61% 4.00-4.50% 3.50-3.70%
2005-3 20.59% 3.49% 1.59% 4.00-4.50% 3.80-4.20%
2006-1 40.54% 3.57% 1.70% 3.75-4.00% 5.30-5.60%
2006-2 41.22% 3.51% 1.68% 3.75-4.00% 5.30-5.70%
2007-1 56.06% 3.29% 1.56% 3.75-4.00% 6.25-6.75%
CNL - cumulative net loss
The upgrades reflect increased credit enhancement in the form of
overcollateralization, a cash reserve account, subordination for
the higher tranches, and excess spread relative to remaining
expected losses. All of the transactions consist of an underlying
pool of prime and nonprime automobile receivables. S&P did not
raise its ratings on series 2007-1 because it is generally S&P's
practice to assess transactions for upgrades once they have 18
months of performance or the pool balance has been reduced to 50%
of the original amount. Series 2007-1 has not achieved those
thresholds yet.
All five deals have maintained or built to a 0.50% reserve account
target as a percent of the initial pool balance by trapping
monthly excess spread. They also have O/C amounts (as a
percentage of the current pool balances) and a floor (as a
percentage of the initial pool balances) that must be built and
maintained. As of the September 2008 performance month, the
reserve accounts and O/C amounts for four of the five series were
at their required levels and were releasing monthly excess spread.
The reserve account for series 2006-2 is at its required level,
and O/C is close to its required level of 1.25% of the current
pool balance.
Table 2
Reserve And O/C Levels
Current Current
Initial Reserve reserve OC OC OC
Target account target floor account
Series (deposit initial) (current) (current) (initial) (current)
------ ----------------- --------- --------- --------- --------
2005-2 0.50% 0.50% 3.24% 5.75% 1.00% 6.48%
2005-3 0.25% 0.50% 2.43% * 1.00% 2.57%
2006-1 0.25% 0.50% 1.23% * 1.00% 3.77%
2006-2 0.25% 0.50% 1.21% 1.25% 0.50% 1.18%
2007-1 0.25% 0.50% 0.89% 1.25% 0.50% (1) 1.25%
* 5.00% O/C target minus the reserve account amount.
(1) Can step down at months 30 and 36 if certain performance
measures are met.
Due to the full sequential pay structure of these deals, senior
and mezzanine tranches also benefit from subordination as another
form of credit enhancement, which continues to build as a percent
of the current pool balance while the collateral pool amortizes.
Table 3
Initial Subordination Levels
Class A Class B Class C Class D
subordination subordination subordination subordination
Series (initial) (initial) (initial) (initial)
------ ------------- ------------- ------------- -------------
2005-2 11.00% 7.25% 3.25% N/A
2005-3 11.00% 7.25% 3.25% N/A
2006-1 11.00% 7.25% 3.26% N/A
2006-2 13.50% 9.75% 5.75% 2.50%
2007-1 14.25% 10.50% 6.50% 2.50%
N/A - not applicable
Current Subordination Levels
Class A Class B Class C Class D
subordination subordination subordination subordination
Series (current) (current) (current) (current)
------ ------------- ------------- ------------- -------------
2005-2 71.26% 46.97% 21.05% N/A
2005-3 53.41% 35.20% 15.78% N/A
2006-1 27.14% 17.88% 8.03% N/A
2006-2 32.75% 23.65% 13.95% 6.06%
2007-1 25.42% 18.73% 11.59% 4.46%
N/A - not applicable
S&P's analysis incorporated cash flow modeling, which took into
account current and historical transaction performance.
Consequently, S&P used voluntary prepayments and losses reported
by the trusts. Various cash flow scenarios and sensitivity
analyses included assumptions on recoveries of 45%-50%, monthly
prepayment speeds ranging between 0.95 and 1.50 ABS (absolute
prepayment speed), and servicing fees of 1.25%. Additionally, S&P
used various loss curves to capture the historical timing of prior
WFS deals with similar collateral characteristics. Moreover, S&P
took into account current net loss trends when creating the
appropriate loss curves. Furthermore, the ability of the
transactions to generate and release excess spread, as well as the
decline in hard enhancement in S&P's stressed scenarios, were also
reflected in the cash flows to determine the total enhancement in
each deal. In S&P's sensitivity analysis, S&P also examined the
potential growth and speed of growth in enhancement for the
various tranches over time at S&P's new revised loss levels.
The upgrades and affirmations reflect the benefits of a sequential
principal payment structure and the growth in credit support as a
percent of the amortizing pool balance. In view of S&P's revised
lifetime loss expectations, the classes were able to withstand
cash flow stress scenarios at their raised or affirmed levels.
Ratings Placed
WFS Financial 2005-2 Owner Trust
Rating
------
Class To From
----- -- ----
D AAA A
WFS Financial 2005-3 Owner Trust
Rating
------
Class To From
----- -- ----
C AAA AA
D AA+ BBB+
Wachovia Auto Loan Owner Trust 2006-1
Rating
------
Class To From
----- -- ----
B AAA AA
C AA A
D BBB+ BBB
Wachovia Auto Loan Owner Trust 2006-2
Rating
------
Class To From
----- -- ----
B AAA AA
C AA A
D BBB+ BBB
Ratings Affirmed
WFS Financial Owner Trust
Series Class Rating
------ ----- ------
2005-2 A-4 AAA
2005-2 B AAA
2005-2 C AAA
2005-3 A-4 AAA
2005-3 B AAA
Wachovia Auto Loan Owner Trust
Series Class Rating
------ ----- ------
2006-1 A-3 AAA
2006-1 A-4 AAA
2006-2 A-3 AAA
2006-2 A-4 AAA
2006-2 E BB
2007-1 A-2 AAA
2007-1 A-3a AAA
2007-1 A-3b AAA
2007-1 B AA
2007-1 C A
2007-1 D BBB
2007-1 E BB
WATERMARK MARINA: Creditors Meeting Set for Dec. 15
---------------------------------------------------
Wayne Faulkner at StarNewsOnline.com reports that a meeting of
Watermark Marina of Wilmington, LLC's creditors is scheduled for
Dec. 15 in Wilson, at 10 a.m.
Trollerbk.com relates that proofs of claim must be filed by
March 16, 2009.
StarNewsOnline.com states that boat owner John Crook said on
Tuesday that Watermark Marina informed him on Monday that he had
access to his boat, which is being stored in the marina's boat
barn. According to the report, Mr. Crook said that he and some
other boat owners hadn't been able to get to their craft since
September 2008, when Tropical Storm Hanna struck the Wilmington
area and Hurricane Ike was plowing toward the U.S. A Watermark
Marina representative blamed the access problem on a damaged
forklift, and that forklift had been repaired, the report says,
citing Mr. Crook.
New Hanover County tax collector holds a $34,156.74 unsecured
claim against Watermark Marina, StarNewsOnline.com says.
Walnut Creek, California-based Watermark Marina of Wilmington
offers 450 dry-stack boat storage spaces and a 480-foot pier.
When it opened on July 21, 2007, it was owned and managed by
Southfork Cos. of El Dorado Hills, California.
The company filed for Chapter 11 protection on Nov. 14, 2008
(Bankr. E. D. N.C. Case No. 08-08103). Trawick H Stubbs, Jr.,
Esq., at Stubbs & Perdue, P.A., represents the company in its
restructuring effort. The company listed assets of $1 million to
$10 million and debts of $10 million to $50 million.
ZEE ZERO: Case Summary & 3 Largest Unsecured Creditors
------------------------------------------------------
Debtor: Zee Zero, L.L.C.
253-255 Tremont Street
Boston, MA 02116
Case No.: 08-18797
Petition Date: November 18, 2008
Court: United States Bankruptcy Court
District of Massachusetts (Boston)
Judge: Henry Boroff
Debtor's Counsel: Herbert Weinberg
Rosenberg & Weinberg,
805 Turnpike St., Suite. 201
North Andover, MA 01845
Tel: (978) 683-2479
Fax: (978) 682-3041
Email: hweinberg@jrhwlaw.com
Total Assets: $6,000,000
Total Debts: $6,015,266
The Debtor's three largest unsecured creditors are:
Creditor Claim Amount
-------- ------------
Haim Zahavi $2,000,000
30 West Street, Unit 14A
New York NY 10004
Joseph Youshaei $25,000
615 Chestnut Hill Avenue
Brookline MA 02445
Bodoff & Associates $25,000
225 Friend Street
Boston MA 02114
* Fitch Says Higher Taxes to Further Pressure Cigarette Volumes
---------------------------------------------------------------
Fitch Ratings expects ratings for U.S. tobacco companies to remain
stable in 2009. This outlook is supported by the companies'
significant liquidity positions and by their ability to continue
to generate sizeable free cash flow as a result of their high
operating margins.
Excise Taxes Expected to Be Up Sharply in 2009
The current Federal authorization of the State Children's Health
Insurance Program, which was funded by a 15 cent increase in the
federal excise tax on cigarettes in 1997, expires in March of
2009. An expansion of the program, which was to be funded by a 61
cent increase in the federal excise tax raising it to $1 per pack
of cigarettes, was passed by congress in 2007 but was vetoed by
President Bush. Given President-elect Obama's healthcare
priorities, it is likely expansion of SCHIP, and consequently an
increase in the federal excise tax, will be authorized early next
year.
Fitch expects state and local governments to increase tobacco
excise taxes to help offset revenue shortfalls. States and
municipalities face revenue shortfalls due to a reduced income tax
base, because of increased unemployment, and reduced property tax
base, as a result of foreclosures and property value declines.
While tax increases are politically unpopular, especially in
recessions, reductions in government services are also politically
unpopular, leading to potential budget imbalance. However,
increases in so-called 'sin taxes', excise taxes on tobacco and
liquor, meet with little political resistance, allowing
governments to somewhat offset revenue shortfalls.
While tobacco products are relatively price inelastic, they are
not perfectly inelastic, meaning excise tax increases will
negatively impact volumes. It is likely tobacco companies will
take pricing in order to offset depressed volume, as a result of
increased excise taxes, which will in turn depress volumes
further. Each tobacco tax increase leads to reduced pricing
flexibility for the industry. While significant trading down to
discount brands was not observed in 2008, Fitch expects greater
trading down in 2009 due to higher tobacco prices in combination
with a consumer-led recession.
Democratic Party Ruing Coalition Makes FDA Regulation
in 2009 Likely
On July 30, 2008, the U.S. House of Representatives passed H.R.
1108/S. 625, the Family Smoking Prevention and Tobacco Control
Act, with an overwhelming majority but the bill has yet to be
brought to a vote in the Senate due to a filibuster by
Republicans. With Democrats enlarging their majority in both
houses of congress, it remains to be seen whether the Senate
Republicans can maintain their filibuster. Although the bill will
need to be re-introduced in the next congress, the bill is
unlikely to change drastically due to compromises made in drafting
the bill to make it acceptable to various constituencies. Adding
further momentum to passage of the bill, Senator Ted Kennedy is
the senate sponsor of the bill, and the senator is likely to lead
Democratic-party legislative initiatives on healthcare. While it
was unlikely President Bush would have signed the bill had it
passed congress, President-elect Obama is a co-sponsor of the
legislation and is likely to sign the bill into law if a version
of the current bill passes congress.
Immediately following passage of FDA regulation, the tobacco
industry will likely operate much as it does today. The
provisions allowing the continued sale of tobacco products to
adults in retail outlets, along with legislation grandfathering
today's tobacco products, will essentially ensure the continued
operation of the industry in its current form in the near term.
The ban on flavored cigarettes may stifle future industry
innovation in tobacco taste preferences, but the exclusion of
menthol as a banned flavor is important to all industry players
and especially to Lorillard, Inc. considering the company's
menthol brand Newport comprises over 90% of its volume. Menthol
cigarettes as a segment have experienced minimal growth to modest
declines over the past few years, in contrast to mid-single-digit
cigarette volume declines for the overall industry.
With the exceptions of banning tobacco products, eliminating
nicotine content in tobacco, and prohibiting the retail sale of
tobacco products, the current draft of the legislation gives the
secretary of the Department of Health and Human Services, as the
Cabinet-level head of the FDA, wide-ranging authority to impose
regulations. Fitch anticipates further advertising and sale
restrictions would lessen the competitive forces between industry
participants, benefiting those tobacco companies with substantial
market shares. Furthermore, the legislation proposes a process
for approval of modified-risk tobacco products, providing another
impetus for industry change. If modified-risk products gain
consumer acceptance, Fitch expects they could drastically change
the competitive landscape of the industry in favor of early
industry innovators.
Supreme and Federal Appeals Court Rulings Could Clear
Litigation Picture in 2009
This fall, the U.S. Supreme Court heard oral arguments in Altria
v. Good. The court's ruling should clarify a split in the
appellate courts as to whether claims under state consumer fraud
laws alleging fraud with regard to 'light' and 'lower tar and
nicotine' labels are pre-empted under the Federal Cigarette
Labeling and Advertising Act of 1965. Given the line of
questioning pursued by the justices during oral arguments, Fitch
expects a ruling in favor of Altria Group, Inc. However, it is
difficult to predict the outcome of legal rulings. A ruling in
favor of Altria will further reduce the potential for adverse
legal judgments against tobacco companies.
On Oct. 14, 2008, a three judge panel for the Federal Court of
Appeals of the D.C. Circuit heard arguments against a 2006 Federal
Court ruling in USA v. Philip Morris USA et al. Both the
Department of Justice and the defendants have significant issues
with the 2006 ruling finding tobacco companies guilty of
racketeering but awarding no monetary damages to fund a multi-
billion dollar smoking cessation program sought by the Justice
Department. The 2006 ruling found the use of 'light' and 'low
tar' descriptors as misleading and barred their continued use.
The ruling was stayed on appeal, and the Supreme Court's ruling in
Altria v. Good could have significant impacts in this case. It is
likely the three judge panel will wait to rule until after the
Altria v. Good judgment.
Moist Tobacco: Following Altria's Acquisition of UST Inc.,
Category Will Be More Competitive
While the total moist smokeless tobacco category is quite a bit
smaller than the cigarette market, accounting for approximately
$3 billion in annual sales in 2007, the moist smokeless tobacco
category growth has been between 5% and 6% annually during the
past few years. Furthermore, the category is expected to continue
to grow mid-single digits for the next several years, contrasting
with U.S. cigarette volumes, which are expected to continue to
decline. Additionally, operating margins are significant. UST
posted a 56% operating margin in smokeless tobacco for the first
nine months of 2008. This makes the market very attractive for
cigarette manufacturers and accounts for Reynolds American Inc.'s
purchase of Conwood in 2006 and Altria's bid to acquire UST.
Despite having over 57% market share, UST has been steadily losing
share in the moist smokeless tobacco category to Conwood, since an
adverse anti-trust ruling. Conwood's value brand Grizzly has been
outgrowing the overall category for several quarters, and the
brand is expected to continue to grow as it benefits from trade
down from premium brands such as UST's Skoal and Copenhagen.
Weakness in spending at convenience and gas outlets in 2008, which
has prompted the trade down from premium smokeless tobacco brands
to value brands, is expected to continue in 2009 as consumers pare
back travel and discretionary spending.
With Altria's acquisition of UST expected to close in early
January 2009, changes in price structure and promotion are
anticipated in the moist smokeless tobacco category. Altria is
likely to implement its marketing strategies in the smokeless
tobacco category in an attempt to shore up share positions and
capture some of the growth value brands have enjoyed. Altria's
acquisition of UST is part of its strategy to diversify within
domestic tobacco to offset declining cigarette volumes.
This is a list of Fitch-rated issuers and their current Issuer
Default Ratings:
-- Altria Group, Inc. ('BBB+'; Outlook Stable);
-- Reynolds American Inc. ('BBB-'; Outlook Stable);
-- UST Inc. ('A'; Rating Watch Negative);
* Fitch Says Restaurant Credit Risk Rises as Challenges Persist
---------------------------------------------------------------
Fitch Ratings expects the negative effects of a declining U.S.
economy, growing pressure on consumer discretionary spending, and
higher than normal food costs to be further magnified in the
restaurant industry during 2009. The strong likelihood of a
global macroeconomic downturn, supplier consolidation and the
inability to enter long-term fixed-price supply contracts will
also add to operating challenges experienced in 2008. Industry
rationalization, due to a continued pull-back in new unit
development and additional bankruptcy filings, particularly among
highly leveraged chains, franchisees and smaller independents,
will continue. The combination of a challenging operating
environment and difficult credit conditions have raised borrowing
costs and are expected to add additional weakness to the credit
profile of the industry.
Fitch views the quick service restaurant segment as better
positioned to withstand the current economic stress and market
turndown because of its value perception, lower priced menu items,
and continued consumer trade-down from full-service dining
establishments. The Issuer Default Rating for Burger King
Corporation was upgraded by Fitch to 'BB' from 'BB-' and the
Outlook was revised to Positive, because the company's credit
measures were strong for the previous rating and operating
performance continues to be good. McDonald's Corporation, which
has an IDR of 'A/F1', and YUM! Brands, Inc., which is rated
'BBB-', currently have Stable Outlooks. These companies have
significant liquidity and do not have material near-term
maturities.
Fitch's outlook for the casual dining segment remains negative.
Credit ratings for casual dining restaurants that have engaged in
large debt-financed acquisitions or share repurchases, such as
Darden Restaurants, Inc. which is rated 'BBB', and Brinker
International, Inc. which is rated 'BBB-' have declined. Further
increases in leverage could result in additional downgrades.
Given the lack of substantial catalysts, a sustainable turnaround
in the casual dining segment is not anticipated in 2009. On
average, the segment is expected to experience low- to mid-single-
digit same-store sales declines and continued margin pressure.
However, some companies will perform worse than others; for
example, Ruby Tuesday, Inc., is experiencing double-digit declines
in SSS. Companies with multiple large-core concepts, such as
Darden which operates Red Lobster, Olive Garden and LongHorn
Steakhouse, are expected to report blended SSS growth that
outperforms their single-concept peers.
Credit Risk Rises
As Industry Cash Flow Comes Under Pressure
Fitch expects credit risk, specifically for the full-service
segment of the restaurant industry, to rise in 2009. Significant
debt reduction is not anticipated to occur, unless required by
lenders, due to continued pressure on cash flow and a desire to
reinvest in the business. The absence of significant maturities
and higher investor risk premiums will also limit debt issuances
in 2009. Managing credit ratings, maintaining strong banking
relationships, and preserving liquidity will be a focus of most
management teams.
Restaurants which amend their credit facilities are paying higher
fees and could, as in the case of Ruby Tuesday's, be required to
provide collateral. Access to capital and financial flexibility
is especially limited for restaurants which engaged in whole-
company securitizations to make large debt-financed acquisitions
or pay special one-time dividends, such as DineEquity, Inc., Sonic
Corporation, and Domino's Pizza Inc. Higher-cost sale-leaseback
financing for those with real estate assets could increase.
Market capitalizations of most major restaurant operators have
declined drastically over the past 12 months. However, because
lack of access to low cost capital and free cash flow pressure,
Fitch does not anticipate heightened share repurchases or
restaurant acquisitions in 2009. The stock price of Ruby Tuesday,
DineEquity, Wendy's/Arby's Group, Inc., Brinker, Domino's and
Sonic were down over 50% for the 12-month period ending Oct. 31,
2008.
Given declining stock prices and cash flow generation, a reduction
in dividends could help improve the liquidity of some restaurant
companies. As of Oct. 31, 2008, the dividend yield of the S&P 500
Index was 3% but the yield of Wendy's/Arby's Group, DineEquity and
Brinker were well above this at approximately 8.8%, 5.5% and 4.7%,
respectively. Ruby Tuesday was forced to eliminate its fiscal
2008 dividend until it is able to meet leverage thresholds for two
consecutive fiscal quarters. The company's dividend yield
approached 5.0% following the end of its June 2008 fiscal year.
Capex Reductions and Refranchising
Help Supplement Cash Flow
The availability of attractive real estate sites and the growing
need to reinvest in the business by providing franchisees
financial assistance to support remodeling programs and new
product offerings has increased the demand for capital. There
could also be an uptick in unit purchases from struggling
franchisees in 2009, given the difficult operating conditions.
Fitch expects the current environment to dictate short-term
changes in the financial strategies of most restaurants.
A number of casual dining companies continue to reduce capital
expenditures, primarily by slowing the development of new company-
operated units, in order to preserve liquidity and in some cases
remain free cash flow positive. Noticeable reductions include
those by Brinker and Ruby Tuesday. Brinker cut capital spending
dramatically in 2008, plans additional cutbacks in 2009, and
stated that it will eliminate virtually all company-owned
restaurant development in the fiscal year ending June 2010. The
company's capital expenditures have fallen from $431 million in
2007 to $270 million in 2008 and to an estimated $135 million-
$145 million in 2009. Ruby Tuesday, whose credit agreement limits
capital spending, expects to spend $25 million in 2009 versus over
$115 million in 2008.
In order to supplement cash flow generation, refranchising efforts
are continuing across the industry. Most restaurants met their
2008 refranchising goals but the pace of refranchising is likely
to slow in 2009. Transaction sizes are smaller and deals are
taking longer to consummate due to increased lender due diligence
and higher capital requirements from buyers. Recent decisions by
GE Capital's franchise financing unit and Bank of America, two of
the largest national lenders to restaurant franchisees, to pull
back on new franchisee lending will certainly reduce activity
within the industry. Refranchising is a longer-term strategy for
YUM and Brinker, but companies such as DineEquity are depending on
these programs as an additional source of cash flow.
Merger and acquisition activity will also remain slow. Brinker's
pending divestiture of Romano Macaroni Grill took longer than
originally projected and as a result of financing difficulties
resulted in the company maintaining a minority stake in the
concept. Triarc's acquisition of Wendy's was an all-stock
transaction instead of the debt-financed acquisition originally
anticipated. The management buyout of Landry's Restaurants Inc. -
operator of Rainforest Cafe, Chart House and Saltgrass Steak House
- remains delayed due to difficult credit conditions and the
company's declining stock price. As previously mentioned, Fitch
does not expect acquisition activity to heat up in the industry
during 2009 despite attractive market valuations.
Bankruptcy Filings Advance Industry Rationalization
Due to the high rate of leverage buyout and recapitalization
activity that occurred over the past several years, bankruptcy
risk is likely to increase in 2009. Highly leveraged restaurants
that are experiencing persistent declines in SSS, generate
negative free cash flow, and require multiple amendments to credit
facilities are most vulnerable. Publicly traded restaurants that
have lost significant equity value could also be at risk.
In 2008, most of these filings were full-service restaurants in
the family dining or bar and grill categories. Concepts which were
involved in bankruptcy filings included Baker's Square, Village
Inn, Old Country Buffet, Ryan's Steakhouse, Bennigan's, Ponderosa,
and Bonanza. Fitch believes a high level of bankruptcy risk
continues in these subsectors, given the general oversupply of
units and the high number of restaurants with weak brand equities.
An increase in the number of bankruptcy-related restaurant
closures combined with less unit growth will advance the reduction
in industry capacity. Buffet's and VICORP, which filed for
Chapter 11 bankruptcy protection in January and April of this
year, are closing restaurants. Metromedia Restaurant Group, which
operates Bennigan's and Steak & Ale restaurants, filed for Chapter
7 bankruptcy protection in July and closed more than 300 company-
operated units. Metromedia Steakhouse Co., L.P., a related
subsidiary, which operates Ponderosa and Bonanza Steakhouses filed
for Chapter 11 bankruptcy protection in October is also likely to
close units.
Fitch expects the high level of rationalization occurring in the
restaurant industry to prove to be especially positive when
consumer spending recovers. Concepts that are leaders within
their categories, such as Olive Garden and Red Lobster, and those
that have a strong consumer followings or brand equities, such as
Chili's and Applebee's, are likely to benefit.
Same Store Sales Weakness
Proliferates Throughout the Industry
Unfortunately, conditions which would normally be positive for the
industry, such as declining gas prices and additional consumer-
related government stimulus packages, are being muted by fears of
rising unemployment and continued downward pressure on both the
housing and the stock markets. Without a meaningful recovery in
consumer sentiment, traffic growth will decline for the entire
restaurant industry in 2009. Modest increases in prices, as
indicated by the USDA forecast of a 4.0%-5.0% increase in food-
away-from-home prices (up from a 3.5%-4.5% increase in 2008), are
likely to be offset by negative mix shift toward value-priced menu
offerings among QSR and increased promotional activity by casual
dining restaurants.
The casual dining segment will enter its third year of negative
SSS performance, but heightened promotional activity and
discounting along with an uptick in restaurant closures should
help minimize the level of consumer trade- down. SSS growth for
the QSR is generally expected to remain positive. The QSR segment
will continue to benefit from the attraction provided by their
everyday value menus and the rollout of premium products such as
Pizza Hut's Tuscani Pasta, Long John Silver's Freshside Grille and
Burger King's Steakhouse Burgers.
The considerable international presence of QSRs such as McDonald's
and YUM, will continue to benefit these companies in 2009, despite
rising global economic pressures. SSS performance could weaken
meaningfully in emerging geographies with low per-capita
disposable incomes; however, Fitch anticipates that revenue growth
will continue to be supported by international unit development.
Margin Pressure Could Accelerate
Due to Discounting and Food Costs
Restaurant margins, particularly within the casual dining segment,
deteriorated significantly in 2008 due to higher food and labor
costs. Fitch expects margin compression to remain an issue in
2009. Although agricultural commodity prices have declined from
peak levels, the USDA is projecting a material increase in chicken
prices due to reduced industry production, while beef costs are
forecast to remain high due to a continued low level of cattle
supply.
Furthermore, Fitch believes structural changes in the meat
industry could transfer more commodity price risk to the
foodservice industry. Supplier consolidation and less favorable
contract terms could limit the future bargaining power of the
industry. The relationships most restaurants have with their
suppliers could change.
Fitch projects that higher food costs combined with an increase in
lower margin limited-time offers, such as Applebee's Neighbor
Deals which include an appetizer and two entrees for $20, and
$4.99 Angus Burger and Fries lunch, will pressure restaurant
margins for casual dining restaurants in 2009. Restaurant margins
for QSR companies and their franchisees could also be negatively
impacted by an uptick in purchases from less profitable value menu
items and a slowdown in sales from higher margin international
operations.
Labor costs, however, are not anticipated to be a major issue in
2009 despite implementation of the third and final phase of the
federal minimum wage increase to $7.25 per hour. Merger activity
along with the increase in restaurant closures has resulted in a
larger pool of available staff and could put downward pressure on
compensation levels. Reductions in restaurant expenses and
corporate overhead during the current downturn have helped make
restaurants generally more efficient, but for some operators, this
will not be enough to offset the impact of higher food cost and
increased sales of lower margin products.
This is a list of Fitch-rated issuers and their current Issuer
Default Ratings:
-- McDonald's Corporation ('A'; Outlook Stable);
-- YUM! Brands Inc., ('BBB-'; Outlook Stable);
-- Burger King Corporation ('BB'; Outlook Positive);
-- Darden Restaurants Inc. ('BBB'; Outlook Negative);
-- Brinker International, Inc. ('BBB-'; Outlook Negative);
* Fitch Says Food Industry Should Focus on Liquidity & Leverage
---------------------------------------------------------------
Fitch Ratings notes that despite declining energy and agricultural
ingredient costs, high financial leverage and weak cash flow
generation continue to wreak havoc on the commodity food industry.
Liquidity and debt reduction should take priority over share
repurchases and acquisitions in 2009, regardless of significant
stock price declines and additional assets coming to market. The
well-anticipated bankruptcy filing by poultry processor Pilgrim's
Pride Corp. and the potential inability of fresh produce
manufacturer Dole Food Co. to refinance significant near-term
maturities illustrate the challenges faced by a low-margin highly
levered food company in a difficult operating environment.
Equity issuances, convertible debt offerings and asset sales
enabled many commodity food companies to pay down debt or support
near-term liquidity in 2008. Tyson Foods, Inc., Pilgrim's,
Smithfield Foods, Inc., Dean Foods Co. and Chiquita Brands
International, Inc. all issued equity, convertible notes or both.
Large divestitures included Smithfield's beef operation and Del
Monte Foods Co.'s StarKist seafood business. Although Del Monte
is not a pure play commodity food company and the divestiture of
its seafood operation further reduces its exposure to low-margin
commodity food products, more than half its revenue comes from
processed fruits and vegetables. Fitch anticipates continued
stock market weakness, a poor credit environment and higher risk
premiums will limit these activities for high-yield commodity food
companies in 2009.
A conservative financial strategy and significant exposure to
higher margin packaged or pet food should continue to benefit
firms such as Hormel Foods Co. and Del Monte, both of which have a
Stable Rating Outlook. The Outlooks for Dole and Tyson, however,
remain Negative. Dole's liquidity will continue to gradually
improve as the company closes a number of smaller asset sales
announced at the end of September. The company's ratings,
however, are likely to be downgraded if management does not
provide additional visibility in the near term around plans for
its significant upcoming maturities. A cash infusion or
additional equity by owner David H. Murdock, who has substantial
wealth, would be viewed positively.
Tyson is currently benefiting from the diversification provided by
its pork and beef business but continued deterioration in the
profitability of its core chicken business is a concern. Ratings
could be downgraded if the company's acquisition strategy becomes
increasingly aggressive, leverage increases more than anticipated
or liquidity becomes an issue. Tyson's nearest material maturity
is in early 2010.
Credit Outlook Remains Negative Despite Declining
Commodity Prices
Although costs have declined, 2009 is projected to be another
difficult year for most of the commodity food industry. Until
core operating margins show meaningful improvement and leverage
declines, credit profiles will remain weak. On latest 12-month
basis, Pilgrim's, Smithfield, Tyson, Dole and Chiquita are all
currently generating negative free cash flow. Fitch expects the
protein processors to benefit the most from declining commodity
prices; however, continued weak chicken prices and hedging losses
could mask much of the benefit in the near term.
The price of corn and soybean meal, two primary ingredients in
animal feed for the protein industry, has declined approximately
40%-50% since peaking at over $7.00 per bushel and $400 per short
ton during the summer of 2008. On Oct. 31, 2008, spot prices were
approximately $3.66 per bushel and $278 per short ton,
respectively. As of Nov. 10, 2008, the USDA expects corn prices
to average $4.00-$4.80 per bushel and soybean meal prices to
average $255 and $315 per short ton during 2008/2009. Corn and
soybean meal futures indicate prices will average near the low end
of this range.
Declining raw milk prices should continue to benefit the operating
earnings and cash flow generation of Dean. After peaking at over
$24/hundredweight in mid-2007, the USDA has forecast the Class 1
All milk price of $16.50-$17.40/cwt in 2009, down from the
$18.45/cwt estimate for 2008. Dean used its approximately $400
million of equity offering proceeds during the first quarter of
2008 to reduce debt and plans to use discretionary cash flow to
continue deleveraging its balance sheet in 2009.
Improved performance in the banana operations of Dole and Chiquita
combined with the dramatic pullback in shipping fuel prices should
benefit cash flow in 2009. Bunker fuel, as measured by the
Rotterdam Netherlands index, has declined 55% from a peak of
$761/metric ton on July 15, 2008 to $343/metric ton at Oct. 31,
2008. However, operating costs for these companies remain
challenged by European Union's Euro176 per metric ton tariff on
bananas sourced from Latin America.
Negotiations regarding a reduction in the tariff collapsed along
with the Doha Round of global trade discussions this past summer
and the European Commission has appealed the WTO's ruling that its
tariff violates trade rules. The timing of a resolution remains
uncertain; however, Fitch continues to expect a change in the
regime and notes that a material immediate reduction in banana
tariffs would be extremely beneficial for the operating earnings
and cash flow of these companies.
Dole's appeal of the Euro 45.6 million (approximately $58 million)
banana price-fixing fine charged by the EC will delay the need to
make any payments. However, due to high leverage and a string of
near-term maturities, liquidity and refinancing risk remains a
major concern. Dole has $350 million of 8 5/8% notes due May 1,
2009, followed by $400 million of 7 1/4% notes due June 15, 2010
and $200 million of 8 7/8% notes due March 15, 2011. Due to
progress made on an additional $145 million in near-term asset
sales, Fitch estimates that Dole's liquidity has improved since
the end of second-quarter 2008. At June 14, the company had $166
million available on its $350 million asset-based revolver
expiring in 2011 and $77 million in cash.
Structural Changes in the Protein Industry Continue
Change is no stranger to the meat and poultry industry, given its
long history of large acquisitions and divestitures. However, due
to the U.S. Department of Justice's anti-trust lawsuit filed in
late October, Brazilian-based JBS S.A.'s acquisition of National
Beef Packing Co., LLC does not appear likely. If successful, the
U.S. could risk becoming less competitive in the global beef
industry. Fitch anticipates that the bankruptcy filing of
Pilgrim's - the largest chicken processor in the world with
approximately $8.6 billion in sales, $1.5 billion in debt, $185
million of EBITDA and leverage of 8.0 times (x) at the latest 12-
month period ending June 28, 2008 - will be the most significant
change faced by the industry in 2009.
Pilgrim's has exhibited a long list of warning signals; including
high leverage, four consecutive quarters of losses, entering of a
30-day interest payment grace period ending Dec. 3, 2008 on its
unsecured notes and retaining investment advisors to examine
refinancing or recapitalization options. In addition, the company
has lost 100% of its equity value. Recent actions by the
company's lenders including granting of a temporary fixed-charge
coverage covenant waiver expiring Nov. 26, 2008 and the forced
hiring of a restructuring chief indicate that they are more
interested in cutting potential losses versus continuing to work
with the company. Fitch believes bondholders could be more apt to
work with the company as it restructures its balance sheet.
Bondholder losses may accelerate if Pilgrim's is forced into
chapter 7 liquidation.
With the elimination of capacity, Fitch believes the bankruptcy of
Pilgrim's will be longer term positive for Tyson and the viable
remaining players in the poultry industry. A considerable
reduction in production will help support higher pricing for the
entire industry. Difficult credit conditions, levered balance
sheets, uncertain operating conditions and a strengthening dollar
is expected to limit the number of potential buyers.
Fitch also continues to believe higher than normal grain costs is
a structural change for the protein industry and that input costs
for commodity food companies are not sustainable at pre-2006
levels. Despite the current global macroeconomic slowdown, longer
term secular demand for agricultural grains remains strong and
should outweigh ancillary factors such as the impact of a
strengthening dollar. Efforts by protein processors to modify
customer contracts by shifting more commodity risk to customers
are evidence of this change.
Near-term Market Prices
for the Protein Industry Raising Concern
Commodity food companies have historically had less pricing power
than their branded packaged food companies. Conventional wisdom,
however, would suggest an improved ability to raise prices given
the rapid escalation of agricultural commodity prices during the
first half of 2008, significant operating losses and announcements
regarding supply cuts.
As of Oct. 17, 2008, the USDA is forecasting live hog prices of
$50-$55/cwt for 2008/2009, up an average of 7% from $49/cwt
estimate for 2007/2008. Broilers prices are projected to range
81-88 cents/lb, an average increase of 7% from the 79 cents/lb
forecast for the previous year. Finally, choice steers are
expected to be $94-$102/lb, up approximately 4% from approximately
$94/lb. Consumer price inflation for these proteins is projected
to be 5%-6%, versus an estimated 3%-4% in 2008. Recent market
pricing trends, however, are signaling less of an increase in
2009. Industry profitability could remain under pressure even
though year-over-year costs for feed grains have declined.
As of Nov. 12, Georgia Dock skinless boneless breast meat prices
were $1.10/lb; levels not seen since January 2006 when reduced
international demand for leg quarters caused a significant
oversupply of U.S. chicken. Leg quarter prices are down over 35%
to 36 cents/lb in the last month due to inventory buildup caused
by lower imports by Russia - the largest importer of U.S. chicken.
A general slowdown in foodservice demand could escalate this
buildup. If chicken prices remain depressed, consumer
substitution into other proteins could further negatively affect
prices. However, reduced egg sets for chicken, the removal of
chicken production capacity by Pilgrim's and production cuts by
hog and turkey producers should support all protein prices in
2009.
This is a list of Fitch-rated issuers and their current Issuer
Default Ratings:
-- Tyson Foods, Inc. ('BB+'; Outlook Negative);
-- Hormel Foods Corp. ('A'; Outlook Stable);
-- Dole Food Co. Inc. ('B-'; Watch Negative);
-- Del Monte Foods Co. ('BB'; Outlook Stable).
* S&P Downgrades Ratings on 38 Tranches From 10 Hybrid CDO Deals
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 38
tranches from 10 U.S. cash flow and hybrid collateralized debt
obligation transactions. S&P removed eight of the lowered ratings
from CreditWatch with negative implications. At the same time,
S&P placed one rating from Coolidge Funding Ltd. on CreditWatch
with negative implications. The ratings on 21 of the downgraded
tranches are on CreditWatch with negative implications, indicating
a significant likelihood of further downgrades.
The CreditWatch placements primarily affect transactions for which
a significant portion of the collateral assets currently have
ratings on CreditWatch with negative implications or have
significant exposure to assets rated in the 'CCC' category.
The 38 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of $3.916 billion. Seven of the 10 affected
transactions are mezzanine structured finance CDOs of asset-backed
securities, which are collateralized in large part by mezzanine
tranches of residential mortgage-backed securities and other SF
securities. The other three affected transactions are high-grade
SF CDOs of ABS that were ollateralized at origination primarily by
'AAA' through 'A' rated tranches of RMBS and other SF securities.
This CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on U.S. subprime
RMBS.
In addition, Standard & Poor's reviewed the ratings assigned to
C-Bass CBO X Ltd., RFC CDO II Ltd., Solstice ABS CBO Ltd., Capstan
CBO Ltd., and MWAM CBO 2001-1 Ltd., and has left the ratings on
these transactions at their current levels based on the current
credit support available to support the tranches.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
has lowered its ratings on 4,029 tranches from 900 U.S. cash flow,
hybrid, and synthetic CDO transactions as a result of stress in
the U.S. residential mortgage market and credit deterioration of
U.S. RMBS. In addition, 1,016 ratings from 438 transactions are
currently on CreditWatch with negative implications for the same
reasons. In all, S&P has downgraded $479.556 billion of CDO
issuance. Additionally, S&P's ratings on $11.180 billion of
securities have not been lowered but are currently on CreditWatch
with negative implications, indicating a high likelihood of future
downgrades. Standard & Poor's will continue to monitor the CDO
transactions it rates and take rating actions, including
CreditWatch placements, when appropriate.
* Rating Actions
Rating
------
Transaction Class To From
----------- ----- -- ----
Acacia CDO 6 Ltd E-1 BB+ BBB
Acacia CDO 6 Ltd E-2 BB+ BBB
Buckingham CDO Ltd. ACP BBB-/WatchNeg A+//Watch Neg
Buckingham CDO Ltd. B B+/Watch Neg BBB+/Watch Neg
Coolidge Funding, Ltd. A-1 AAA/Watch Neg AAA
Coolidge Funding, Ltd. A-2 AA/Watch Neg AAA
Coolidge Funding, Ltd. B A/Watch Neg AA
Coolidge Funding, Ltd. C BBB/Watch Neg A-
Coolidge Funding, Ltd. D B/Watch Neg BBB/Watch Neg
Coolidge Funding, Ltd. E CCC BB-/Watch Neg
High Grade Structured A-1 AA+/Watch Neg AAA/Watch Neg
Credit CDO 2005-1
High Grade Structured A-2 AA-/Watch Neg AA/Watch Neg
Credit CDO 2005-1
High Grade Structured B A-/Watch Neg A+/Watch Neg
Credit CDO 2005-1
High Grade Structured X BBB/Watch Neg A-/Watch Neg
Credit CDO 2005-1
High Grade Structured C BB/Watch Neg BBB-/Watch Neg
Credit CDO 2005-1
Mill Reef SCDO 2005-1 X B+/Watch Neg AAA
Mill Reef SCDO 2005-1 A-1L CC CCC+
Mill Reef SCDO 2005-1 A-2L CC CCC-
Mill Reef SCDO 2005-1 A-3L CC CCC-
Mill Reef SCDO 2005-1 B-1E CC CCC-
Mill Reef SCDO 2005-1 B-1L CC CCC-
Neptune CDO 2004-1 Ltd. A-1LA AA-/Watch Neg AA/Watch Neg
Neptune CDO 2004-1 Ltd. A-1LB BB/Watch Neg BBB-/Watch Neg
Neptune CDO 2004-1 Ltd. A-2L CC CCC-/Watch Neg
Rockville CDO I Ltd. A-1 CCC AA-/Watch Neg
Summer Street 2005-1 A-1 BB+/Watch Neg A/Watch Neg
Summer Street 2005-1 A-2 CCC- BBB-/Watch Neg
Summer Street 2005-1 A-3 CC B/Watch Neg
Summer Street 2005-1 B CC CCC-/Watch Neg
Summit RMBS CDO I Ltd A-1J AA- AA+/Watch Neg
Summit RMBS CDO I Ltd A-2 A- A+/Watch Neg
Summit RMBS CDO I Ltd A-3F BBB-/Watch Neg BBB+/Watch Neg
Summit RMBS CDO I Ltd A-3V BBB-/Watch Neg BBB+/Watch Neg
Summit RMBS CDO I Ltd BF BB/Watch Neg BBB-/Watch Neg
Summit RMBS CDO I Ltd BV BB/Watch Neg BBB-/Watch Neg
Summit RMBS CDO I Ltd Comb I BB-/Watch Neg BB/Watch Neg
Summit RMBS CDO I Ltd Comb II BB/Watch Neg BBB-/Watch Neg
Sunrise CDO I Ltd. A BB+ A-
Sunrise CDO I Ltd. B CC CCC-
* Other Ratings Reviewed
Transaction Class To
----------- ----- --
Acacia CDO 6 Ltd A-1 AAA
Acacia CDO 6 Ltd A-2 AAA
Acacia CDO 6 Ltd B AA
Acacia CDO 6 Ltd C A
Acacia CDO 6 Ltd D A-
Capstan CBO Ltd. A-1 AAA
Capstan CBO Ltd. A-1A AAA
C-Bass CBO X Ltd. A AAA
C-Bass CBO X Ltd. B AA
C-Bass CBO X Ltd. C A
C-Bass CBO X Ltd. D BBB
MWAM CBO 2001-1 Ltd. A AAA
Neptune CDO 2004-1 Ltd. A-3L CC
Neptune CDO 2004-1 Ltd. B-1L CC
RFC CDO II Ltd A-1 AAA
RFC CDO II Ltd A-2 AAA
RFC CDO II Ltd B-1 AA
RFC CDO II Ltd B-2 AA
RFC CDO II Ltd C A-
RFC CDO II Ltd D BBB
RFC CDO II Ltd E BBB-
RFC CDO II Ltd F BB
Rockville CDO I Ltd A-2 CC
Rockville CDO I Ltd A-3 CC
Rockville CDO I Ltd B CC
Rockville CDO I Ltd C CC
Rockville CDO I Ltd D CC
Rockville CDO I Ltd E CC
Solstice ABS CBO Ltd. A A+
Summer Street 2005-1 Ltd C CC
Summit RMBS CDO I Ltd A-1S AAA
Summit RMBS CDO I Ltd Pref Share B+/Watch Neg
Sunrise CDO I Ltd. C CC
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
In Re Abraham Nicola Nunu
Bankr. E.D. Mich. Case No. 08-66556
Chapter 11 Petition Filed October 30, 2008
Filed as Pro Se
In Re Southwell, Angela W.
aka Angela I. Southwell
fdba Dental Art in the Village
dba Dr. Angela Wilbert Southwell
aka Angela W. Southwell, DDS
dba Dr. Angela Southwell, DDS
Bankr. M.D. Tenn. Case No. 08-10256
Chapter 11 Petition Filed October 31, 2008
See http://bankrupt.com/misc/tnmb08-10256.pdf
In Re Angela W. Southwell, DDS, PLLC
Bankr. M.D. Tenn. Case No. 08-10261
Chapter 11 Petition Filed October 31, 2008
In Re Southwell Properties, LLC
Bankr. M.D. Tenn. Case No. 08-10260
Chapter 11 Petition Filed October 31, 2008
In Re Belana, Inc.
Bankr. E.D. Calif. Case No. 08-17095
Chapter 11 Petition Filed November 3, 2008
See http://bankrupt.com/misc/caeb08-17095.pdf
In Re Culinary Investors, LLC
Bankr. E.D. Calif. Case No. 08-17094
Chapter 11 Petition Filed November 3, 2008
See http://bankrupt.com/misc/caeb08-17094.pdf
In Re V.L. Enterprises
Bankr. N.D. Ga. Case No. 08-82378
Chapter 11 Petition Filed November 3, 2008
Filed as Pro Se
In Re Rabuse, Marc
Bankr. S.D. N.Y. Case No. 08-23604
Chapter 11 Petition Filed November 3, 2008
See http://bankrupt.com/misc/nysb08-23604.pdf
In Re Rgold Group L.L.C.
Bankr. E.D. Tex. Case No. 08-42953
Chapter 11 Petition Filed November 3, 2008
See http://bankrupt.com/misc/txeb08-42953.pdf
In Re Garden of Eat'n of Tampa, Inc.
Bankr. M.D. Fl. Case No. 08-17452
Chapter 11 Petition Filed November 4, 2008
See http://bankrupt.com/misc/flmb08-17452.pdf
In Re T & T Beefs, Inc.
dba Beef O'Brady's
Bankr. M.D. Fl. Case No. 08-17545
Chapter 11 Petition Filed November 5, 2008
See http://bankrupt.com/misc/flmb08-17545.pdf
In Re Old Cutler Lady, Inc.
Bankr. S.D. Fl. Case No. 08-26752
Chapter 11 Petition Filed November 4, 2008
See http://bankrupt.com/misc/flsb08-26752.pdf
In Re COSMETICS and MORE, LLC
Bankr. M.D. Tenn. Case No. 08-10360
Chapter 11 Petition Filed November 4, 2008
See http://bankrupt.com/misc/tnmb08-10360.pdf
In Re Bon Mur I
Bankr. N.D. Tex. Case No. 08-35796
Chapter 11 Petition Filed November 4, 2008
Filed as Pro Se
In Re Bon Mur II
Bankr. N.D. Tex. Case No. 08-35795
Chapter 11 Petition Filed November 4, 2008
Filed as Pro Se
In Re Stadtman, Jack Michael
Bankr. N.D. Tex. Case No. 08-35785
Chapter 11 Petition Filed November 4, 2008
Filed as Pro Se
In Re ICP 1500, LLC
Bankr. N.D. Tex. Case No. 08-35791
Chapter 11 Petition Filed November 4, 2008
Filed as Pro Se
In Re ICP 3000, LLC
Bankr. N.D. Tex. Case No. 08-35792
Chapter 11 Petition Filed November 4, 2008
Filed as Pro Se
In Re MRS Homes Corp.
Bankr. E.D. N.Y. Case No. 08-47476
Chapter 11 Petition Filed November 5, 2008
Filed as Pro Se
In Re Auburn Petroleum, LLC
Bankr. N.D. N.Y. Case No. 08-32827
Chapter 11 Petition Filed November 5, 2008
Filed as Pro Se
In Re Davis, Charles Chandler
Bankr. E.D. Tex. Case No. 08-43003
Chapter 11 Petition Filed November 5, 2008
Filed as Pro Se
In Re FABDA, Inc.
aka Abraxas Energy Development
Bankr. E.D. Tex. Case No. 08-42997
Chapter 11 Petition Filed November 5, 2008
Filed as Pro Se
In Re Mays, Stephen Todd
dba Mays Construction & Repair
Bankr. M.D. Tenn. Case No. 08-10441
Chapter 11 Petition Filed November 6, 2008
See http://bankrupt.com/misc/tnmb08-10441.pdf
In Re Crockett Discount Auto World, Inc.
Bankr. E.D. Tex. Case No. 08-90325
Chapter 11 Petition Filed November 6, 2008
See http://bankrupt.com/misc/txeb08-90325.pdf
In Re SGA (U.S.A.) Inc.
Bankr. S.D. N.Y. Case No. 08-14454
Chapter 11 Petition Filed November 10, 2008
See http://bankrupt.com/misc/nysb08-14454.pdf
In Re All American Apparel Company Inc.
Bankr. S.D. N.Y. Case No. 08-14455
Chapter 11 Petition Filed November 10, 2008
See http://bankrupt.com/misc/nysb08-14455.pdf
In Re Performance Logistics, LLC
Bankr. E.D. Pa. Case No. 08-17394
Chapter 11 Petition Filed November 11, 2008
See http://bankrupt.com/misc/paeb08-17394.pdf
In Re Sunshine Bar, Inc.
aka t/a 1A Sunshine
Bankr. E.D. Penn. Case No. 08-17395
Chapter 11 Petition Filed November 11, 2008
See http://bankrupt.com/misc/paeb08-17395.pdf
In Re Mount Hope MBC Management, LLC
aka Mount Hope Missionary Baptist Church Management
& Development, LLC
Mt. Hope Missionary Baptist Church Management
& Development
Mount Hope Property Management
Mount Hope Management
Bankr. N.D. Ill. Case No. 08-30702
Chapter 11 Petition Filed November 11, 2008
See http://bankrupt.com/misc/ilnb08-30702.pdf
In Re Torres, Jorge M.
Torres, Juana M.
Bankr. N.D. Ill. Case No. 08-30740
Chapter 11 Petition Filed November 11, 2008
See http://bankrupt.com/misc/ilnb08-30740.pdf
In Re Hannah, Robert Keith
aka Bobby Hannah
Hannah Heavy Haul
Bankr. D. Nev. Case No. 08-23340
Chapter 11 Petition Filed November 11, 2008
See http://bankrupt.com/misc/nvb08-23340.pdf
In Re Quistorff, James Arthur
Quistorff, Doris Gayle
fka Radford, Doris Gayle
Bankr. W.D. Tenn. Case No. 08-32102
Chapter 11 Petition Filed November 11, 2008
See http://bankrupt.com/misc/tnwb08-32102.pdf
In Re Calvary Mennonite Church of Inglewood
Bankr. C.D. Calif. Case No. 08-29273
Chapter 11 Petition Filed November 12, 2008
Filed as Pro Se
In Re Panado, Corazon P.
Bankr. S.D. Calif. Case No. 08-11454
Chapter 11 Petition Filed November 12, 2008
Filed as Pro Se
In Re Oreste's Bar & Grill - Santa Isabel, Inc.
Bankr. D. P.R. Case No. 08-07654
Chapter 11 Petition Filed November 12, 2008
See http://bankrupt.com/misc/prb08-07654.pdf
In Re Stafford, John L.
de la Vergne, Tanya Ducros
Bankr. M.D. Ala. Case No. 08-11917
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/almb08-11917.pdf
In Re RLM Ventures
Bankr. C.D. Calif. Case No. 08-25885
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/cacb08-25885.pdf
In Re The Paper & Ink Link, Inc.
aka Suzy's Zoo Greeting Cards
Bankr. N.D. Calif. Case No. 08-46617
Chapter 11 Petition Filed November 13, 2008
Filed as Pro Se
In Re Homefinishers, Inc.
dba Chicago Rebath
Bankr. N.D. Ill. Case No. 08-30893
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/ilnb08-30893.pdf
In Re Carter Enterprises, Inc.
Bankr. S.D. Ind. Case No. 08-14244
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/insb08-14244.pdf
In Re EK United Foods, LLC
dba Cafe Grossi
Bankr. D. N.J. Case No. 08-32429
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/njb08-32429.pdf
In Re D.E. Bishop Negotiators
Bankr. E.D. N.Y. Case No. 08-47693
Chapter 11 Petition Filed November 13, 2008
Filed as Pro Se
In Re LRA Associates Inc.
dba Nathan's Famous, Inc.
Bankr. S.D. N.Y. Case No. 08-23656
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/nysb08-23656.pdf
In Re Scott A Hurt Photographer, Inc.
Bankr. S.D. Ohio Case No. 08-61161
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/ohsb08-61161.pdf
In Re Integrated Commercial Enterprises, Ltd.
Bankr. E.D. Pa. Case No. 08-17477
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/paeb08-17477.pdf
In Re Potomac Valley Real Estate, Inc.
Bankr. E.D. Va. Case No. 08-17117
Chapter 11 Petition Filed November 13, 2008
See http://bankrupt.com/misc/vaeb08-17117.pdf
In Re Smiley Real Estate, LLC
Bankr. D. Conn. Case No. 08-33747
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/ctb08-33747.pdf
In Re Special Acquisitions, LLC
Bankr. D. Conn. Case No. 08-33741
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/ctb08-33741.pdf
In Re Westfields Apartments, LLC
Bankr. S.D. Ga. Case No. 08-12573
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/gasb08-12573.pdf
In Re Sara's Family Restaurant, Inc.
Bankr. N.D. Ind. Case No. 08-13974
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/innb08-13974.pdf
In Re O'Bryan Development, Inc.
Bankr. W.D. Ky. Case No. 08-41529
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/kywb08-41529.pdf
In Re Maqsood Hamid Mir
Bankr. D. Md. Case No. 08-24998
Chapter 11 Petition Filed November 14, 2008
Chapter 11 Petition Dismissed November 14, 2008
Filed as Pro Se
In Re Chelmsford Auto Court Realty, LLC
Bankr. D. Mass. Case No. 08-43725
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/mab08-43725.pdf
In Re Steveco Enterprises, Inc.
fka Big Apple Bagel
Bankr. E.D. Mich. Case No. 08-34759
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/mieb08-34759.pdf
In Re Cote, Kristen R.
Bankr. D. N.H. Case No. 08-13387
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/nhb08-13387.pdf
In Re 8312 Pizza LLC
Bankr. E.D. N.Y. Case No. 08-47747
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/nyeb08-47747.pdf
In Re Alessandro, Carmine
Bankr. S.D. N.Y. Case No. 08-14514
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/nysb08-14514.pdf
In Re St. Clair Sportswear, Inc.
dba Classic Impressions
Bankr. W.D. Penn. Case No. 08-27676
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/pawb08-27676.pdf
In Re Helton, Rickey Wayne
dba Helton Farms
Helton & Sons Construction
Bankr. M.D. Tenn. Case No. 10715
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/tnmb08-10715.pdf
In Re Wharton Chiropractic Center
dba Dixie Chiropractic
El Campo Chiropractic
Lake Jackson Chiropractic
Bankr. S.D. Tex. Case No. 08-37327
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/txsb08-37327.pdf
In Re Dominion Consulting Engineers, P.C.
Bankr. E.D. Va. Case No. 08-17141
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/vaeb08-17141.pdf
In Re Grant Holdings LLC
Bankr. W.D. Wash. Case No. 17766
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/wawb08-17766.pdf
In Re La Ferme de Metras, LLC
dba Willapa Hills Farmstead Cheese
Willapa Hills Natural Lamb
Frogmore House
Willapa Hills Sheep Dairy
Bankr. W.D. Wash. Case No. 46007
Chapter 11 Petition Filed November 14, 2008
See http://bankrupt.com/misc/wawb08-46007.pdf
In Re Pennsylvania Buffets, LLC
dba Golden Corral Restaurant
Bankr. S.D. N.Y. Case No. 08-23671
Chapter 11 Petition Filed November 15, 2008
See http://bankrupt.com/misc/nysb08-23671.pdf
In Re Dave J. Enterprises, Inc.
Bankr. E.D. Mich. Case No. 08-68107
Chapter 11 Petition Filed November 16, 2008
See http://bankrupt.com/misc/mieb08-68107.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. 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
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
not guaranteed.
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for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
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*** End of Transmission ***