/raid1/www/Hosts/bankrupt/TCR_Public/081121.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 21, 2008, Vol. 12, No. 278
Headlines
853 SOUTH: Case Summary & 10 Largest Unsecured Creditors
ACA ABS: Moody's Junks Rating on $20,000,000 Class C Notes
ACTIVANT SOLUTIONS: Orlando Bravo Resigns from Board of Directors
AHERN RENTALS: Declining Rental Rates Cue Moody's 'B3' Ratings
ALERIS INTERNATIONAL: Weak Fin'l Position Cues Moody's Junk Rating
AMBAC FINANCIAL: S&P Downgrades Hybrid Security Rating to 'BB+'
AMERICAN INT'L: CV Star Sells 4.4MM Shares to Credit Suisse
AMERICREDIT CORP: Moody's Lowers Corporate Family Rating to 'B2'
ANGEL ACQUISITION: Sept. 30 Balance Sheet Upside Down by $2.8MM
ARLINGTON RIDGE: Amends List of 20 Largest Unsecured Creditors
ARLINGTON RIDGE: Files Schedules of Assets and Liabilities
ATA AIRLINES: Southwest Offers $7.5MM to Assume LaGuardia Slots
AXLETECH INTERNATIONAL: S&P Puts 'B+' Rating on Positive Watch
BANC OF AMERICA: S&P Downgrades Ratings on Six Classes of Certs.
BEARINGPOINT INC: Seeks to Restructure Debt, Taps AlixPartners
BEARINGPOINT INC: Shareholders' Meeting Slated for December 5
BEARINGPOINT INC: Stock Trades at OTCBB Following NYSE Suspension
BH S&B HOLDINGS: Case Summary & 30 Largest Unsecured Creditors
BH S&B HOLDINGS: Files for Bankruptcy 3 Months After S&B Purchase
BUMBLE BEE: Moody's Withdraws Ratings After Debt Repayment
CENTERLINE CAPITAL: S&P Downgrades Counterparty Rating to 'B+'
CHAPEAU INC: Wants to Sell Co-Generation & Demand Response Assets
CHECK INTO CASH: Shuts Down Operations in 32 of 92 Stores in Ohio
CHESAPEAKE CORP: Sept. 28 Balance Sheet Upside-Down by $500,000
CHRYSLER LLC: Fails to Convince Lawmakers on Bailout Urgency
CHRYSLER LLC: Fitch Puts 'CCC' IDR on Rating Watch Negative
CHRYSLER LLC: Says Bankruptcy Would be Costly & Unworkable
CITIGROUP: Mulls Auction of Assets & Sale of Whole Company
CJC ENTERPRISES: Files for Chapter 11 Protection in Colorado
CLARENDON ALUMINA: Moody's Cuts Issuer Default Ratings to 'B-'
CLOROX CO: EVP Larry Peiros Sold 23,375 shares at $61.94 Apiece
CLOROX CO: September 30 Balance Sheet Upside-Down by $400MM
CMR MORTGAGE: Case Summary & 12 Largest Unsecured Creditors
CONEXANT SYSTEMS: Revenue Shortfalls Cue S&P'S Rating Cut to 'B'
CONTINENTAL PROMOTION: Lets Go of 17 Workers; Files for Bankruptcy
CREDIT AND REPACKAGED: Moody's Cuts Rating on $20 Mil. Notes
CWCAPITAL COBALT: S&P Puts Ratings on Eight Classes on Neg. Watch
DATATEL INC: S&P Changes Outlook to Stable & Keeps 'B' Rating
DEBORAH CARTER: Case Summary & 15 Largest Unsecured Creditors
DELFASCO FORGE: Court Approves Bidding Procedures
EARTH BIOFUELS: Fails to File Report for Quarter ended Sept. 30
EARTH BIOFUELS: Solicits Consents to Amend Cert. of Incorporation
ELEMCO TESTING: Voluntary Chapter 11 Case Summary
ELITE LANDINGS: Asks Court to Approve Inter-Company Transfers
ELITE LANDINGS: May Employ Moss & Barnett as Bankruptcy Counsel
ELITE LANDINGS: May Employ Smith Gambrell as Special Counsel
ELITE LANDINGS: Sec. 341(a) Meeting Scheduled for Dec. 12, 2008
ENDURANCE BUSINESS: Moody's Junks Corporate Family Rating From B2
ESQUIRE CORP: Files for Chapter 7 Liquidation
FANNIE MAE: Will Suspend Foreclosure Sales & Evictions
FINLAY FINE: Moody's Pares Probability of Default Rating to 'Ca'
FIRST DATA: Fitch Maintains Ratings & Changes Outlook to Negative
FORD MOTOR: Fails to Convince Lawmakers on Bailout Urgency
FRANKLIN COUNTY: S&P Downgrades Revenue Debt Rating to 'BB'
FREDDIE MAC: Will Suspend Foreclosure Sales & Evictions
FREESCALE SEMICONDUCTOR: Reports 3rd Quarter S. Deficit of $700MM
FREESCALE SEMICONDUCTOR: SVP Discloses Ownership of 1,000 Shares
GEMSTONE CDO: Moody's Junks Rating on $6,000,000 Class E Notes
GENERAL GROWTH: Taps Sidley Austin to Aid in Talks with Lenders
GENERAL MOTORS: Fails to Convince Lawmakers on Bailout Urgency
GENERAL MOTORS: SolarWorld Mulls EUR1 Bil. Offer for German Unit
GENESIS EDUCATIONAL: Case Summary & 4 Largest Unsecured Creditors
GREENCORE TECHNOLOGY: Auditor Raises Going Concern Doubt
GREEN VALLEY: S&P Downgrades Corporate Credit Rating to 'B-'
GROUP 1 AUTOMOTIVE: Moody's Reviewing Ba3 Rating for Downgrade
GSR MORTGAGE: S&P Downgrades Ratings on Seven Classes of Certs.
GTC BIOTHERAPEUTICS: Sept. 28 Balance Sheet Upside Down by $647K
HCA GENESIS: Court Dismisses Chapter 11 Case
HIGHLAND CREDIT: Moody's Cuts Ratings on Four Classes of Notes
HOST HOTELS: S&P Changes Outlook to Negative & Holds 'BB' Rating
HOUSE OF EUROPE: Moody's Cuts Ratings on Four Classes of Notes
INTCOMEX INC: S&P Changes Outlook to Stable & Affirms 'B-' Rating
INTEGRA TELECOM: S&P Keeps 'B-' Rating; Outlook Negative
JBB 1033: Case Summary & Largest Unsecured Creditor
JOHNSON BROADCASTING: Section 341(a) Meeting Set for Dec. 18, 2008
JOHNSON BROADCASTING: Asks Court to Approve Use of Cash Collateral
JOHNSON BROADCASTING: May Employ Andrews Kurth as Counsel
JOHNSON BROADCASTING: May Employ Taps Kalil & Co. as Media Broker
JP MORGAN: Fitch Puts Various Note Ratings on Negative Watch
JPMORGAN CHASE: To Lay Off 10% of Staff; To Freeze Base Salaries
KINGSRIDGE 200: Case Summary & 13 Largest Unsecured Creditors
LAZY DAYS: Won't Make Interest Payment on $137 Mil. Senior Notes
LCV LLC: Files for Chapter 11 Protection
LEVITT AND SONS: Court to Tackle Disclosure Statement on Dec. 1
LOGAN KNITTING MILLS: Case Summary & 20 Largest Unsec. Creditors
MACMENAMIN'S GRILL: Files for Chapter 11 Protection; Blames State
MAN GLENWOOD: Moody's Cuts Rating on $43.7MM Class D Notes to Ba2
MASHANTUCKET PEQUOT: Moody's Assigns Ba2 Corporate Family Rating
MI DEVELOPMENTS: Moody's Cuts Rating on Senior Debentures to 'Ba1'
MKP CBO III: Moody's Reviews 'Ba1' Note Rating For Possible Cut
MOHEGAN TRIBAL: Negative Gaming Trends Cue Moody's Rating Cuts
MORGAN STANLEY: S&P Downgrades Rating on Notes to 'B-' From AAA
MXENERGY HOLDINGS: Strained Liquidity Cues Moody's Junk Ratings
NEFF CORP: Launches Offering for $230 Million Senior Notes
OCWEN MORTGAGE: Fitch Takes Various Rating Actions on Certs.
PANOLAM INDUSTRIES: S&P Downgrades Corporate Credit Rating to 'B-'
PAPPAS TELECASTING: Will Auction 10 Stations on December 11
PARMALAT SPA: Italian Council Grants Latte Di Roma Appeal
PARMALAT SPA: Creditors Convert Warrants For 30,699 Shares
PEACH HOLDINGS: Moody's Maintains 'B2' Corporate Family Rating
PHENIX CFO: Fitch Downgrades Ratings on Three Tranches
PHYSICIAN MEDICAL: Wants Chapter 11 Case Converted or Dismissed
PLASTECH ENGINEERED: Wants More Time for Plan; Gets Opposition
QUIKSILVER INC: Moody's Downgrades Corporate Family Rating to 'B2'
REAL MEX: S&P Affirms 'CCC' Corp. Credit Rating; Outlook Negative
REGAL ENTERTAINMENT: S&P Puts 'BB-' Rating on Negative CreditWatch
RELIANT ENERGY CHANNELVIEW: Plan Gets Creditors Support
SAKS INCORPORATED: Moody's Reviews Low-B Ratings for Possible Cut
SALTON LAND: Voluntary Chapter 11 Case Summary
SCIENS CFO: Fitch Junks Rating on EUR7,800,000 Class E
SCC COMMUNITIES: Case Summary & 5 Largest Unsecured Creditors
SECURE COMPUTING: Moody's Withdraws Ratings on McAfee Acquisition
SEQUOIA MORTGAGE: S&P Downgrades Ratings on 16 Classes of Certs.
SHARPER IMAGE: Wants Wachovia to Surrender COLI Policies
SHARPER IMAGE: Wants Potter State Court Action Dismissed
SHARPER IMAGE: Court to Tackle Chapter 7 Conversion Dec. 18
STEVE AND BARRY'S: Stone Barn Hires Liquidator for Wind Down
STEVE HOFSAESS: Case Summary & 20 Largest Unsecured Creditors
SUNCREST LLC: Court to Convert Case to Chapter 7
SYNCORA HOLDINGS: Shares Transfer Cues Appointment of 4 Directors
SYNCORA HOLDINGS: Elizabeth Keys Resigns as Chief Financial Off.
SYNCORA HOLDINGS: Management Raises Going Concern Doubt
SZE-YAU DEREK YIU: Case Summary & 14 Largest Unsecured Creditors
THELEN LLP: 19 Attorneys Move to Winston & Strawn
THORNBURG MORTGAGE: Exchange Offer for 8% Preferred Stocks Expires
THORNBURG MORTGAGE: Nonpayment of Interest Spurs S&P's 'D' Rating
TORRENT ENERGY: To Sell Asset to Y.A. Global Investment
VALUE CITY: Gets Final OK to Access $40MM Wells Fargo DIP Loan
VISTA LEVERAGED: S&P Downgrades Rating on Senior Notes
VUBOTICS INC: Files for Chapter 11 Protection in Georgia
WASHINGTON MUTUAL: Investors Want to Form Equity Committee
WASHINGTON MUTUAL: Freddie Mac & JPMorgan Argue Over Bad Mortgages
WASHINGTON MUTUAL: Board Taps Williams as President, Maciel as CFO
WASHINGTON MUTUAL: BNY Mellon Resigns As Trustee to $1.15B Notes
WATERFORD GAMING: Moody's Junks Corporate Family Rating From 'B1'
WICKES HOLDINGS: Gets Initial OK to Sell Assets for $3.7 Million
WP HICKMAN: May Use Cash Collateral on Interim Basis Until Nov. 30
W.R. GRACE: Files 1st Amended Plan & Disclosure Statement
W.R. GRACE: Financial Projections Under Amended Plan
W.R. GRACE: To Sell 66-Acre MD Land to Emerge, Says Report
YOUNG BROADCASTING: KRON-TV Sale Fails; May File for Bankruptcy
YRC WORLDWIDE: S&P Downgrades Corporate Credit Rating to 'B'
ZOO FH: Fitch Junks Ratings on Two Tranches
* Ernst & Young Names Two Leaders in Restructuring Services
* Fitch Downgrades $296.7 Billion in U.S. Corporate Bonds in Q3
* Fitch Sees 2008 Holiday Season as Most Challenging for Retailers
* Fitch Says Sharp Profit Decline in Insurance Industry Continues
* King & Spalding Welcomes Back Former Solicitor General Clement
* Marks Panet Hires John M. Bonora as Director in L&CFAS Group
* Moody's Says Commercial Real Estate Prices Increase in September
* NACVA Acquires National Association Litigation
* S&P Downgrades Ratings on 36 Cert. Classes From 19 RMBS Deals
* S&P Examines Rated North American CMBS Exposure to Circuit City
* S&P Puts Ratings on 25 Classes on CreditWatch Negative
* S&P Reports Rise in Timeshare Securitization Delinquencies
* S&P Says Recession Weighs Down Forest Products 2009 Outlook
* S&P Sees No Silver Lining for Retailers This Holiday Season
* BOOK REVIEW: The First Junk Bond: A Story of Corp Boom & Bust
*********
853 SOUTH: Case Summary & 10 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: 853 South Lucerne LLC
5967 W. 3rd St., Ste. 200
Los Angeles, CA 90036
Bankruptcy Case No.: 08-29794
Type of Business: The Debtor operates a real estate company.
Chapter 11 Petition Date: November 18, 2008
Court: Central District Of California (Los Angeles)
Judge: Samuel L. Bufford
Debtor's Counsel: Simon Aron, Esq.
Wolf, Rifkin, Shapiro & Schulman LLP
11400 W Olympic Blvd 9th Fl
Los Angeles, CA 90064-1565
Tel: (310) 478-4100
Fax: (310) 479-1422
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
SMH Inc. $188,270
5967 West 3rd St., #200
Los Angeles, CA 90036
Fairland Construction Inc. $55,000
23945 Calabasas Road
Calabasas, CA 91302
D&S Homes $49,642
23945 Calabasas Road
Calabasas, CA 91302
James Heimer Architect Inc. $17,275
Group M. Engineers $17,275
Levin & Seligman $15,357
Creative Engineering Group $7,369
Hahn & Associates Inc. $2,419
Ayala's Earthwork Services $2,350
Wood Smith Henning & Berman $2,163
The petition was signed by the manager Brian Dror.
ACA ABS: Moody's Junks Rating on $20,000,000 Class C Notes
----------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the ratings of these two classes of notes
issued by ACA ABS 2005-1, Limited:
Class Description: $54,000,000 Class A-2 Second Priority Floating
Rate Notes, due April 5, 2040
-- Prior Rating: Aa1, on review for possible downgrade
-- Prior Rating Date: May 9, 2008
-- Current Rating: A1, on review for possible downgrade
Class Description: $45,000,000 Class B Third Priority Floating
Rate Notes, due April 5, 2040
-- Prior Rating: A1, on review for possible downgrade
-- Prior Rating Date: May 9, 2008
-- Current Rating: B3, on review for possible downgrade
Additionally, Moody's has downgraded the rating of this class of
notes:
Class Description: $20,000,000 Class C Fourth Priority Deferrable
Floating Rate Notes, due April 5, 2040
-- Prior Rating: Baa3, on review for possible downgrade
-- Prior Rating Date: May 9, 2008
-- Current Rating: C
According to Moody's, the rating changes reflect the deterioration
in the credit quality of the transaction's underlying collateral,
the majority of which consists of subprime RMBS issued in 2004.
Moody's notes that the Class C Notes are deferring interest and
there has been loss of overcollateralization since the prior
rating action.
Moody's announced on Sept. 18, 2008, that it is revising its
expected loss assumptions which are used for the surveillance of
ratings of ABS CDOs holding subprime RMBS, specifically of the
second half 2005 -- first half 2007 vintages. Moody's stated that
for purposes of monitoring its ratings of ABS CDOs with exposure
to second half 2005 -- first half 2007 subprime RMBS, it will rely
on certain projections of the lifetime average cumulative losses
for vintages of RMBS set forth in a recent Moody's Special Report.
Moody's explained that it will utilize the range of loss
projections set forth in the report based on deal performance and
quarterly vintage to modify its prior assumptions of the expected
loss inputs when monitoring ABS CDO ratings.
While this transaction is primarily exposed to 2004 vintage
collateral, the credit quality of the ABS CDO securities in the
pool has deteriorated significantly since the prior rating action.
ACTIVANT SOLUTIONS: Orlando Bravo Resigns from Board of Directors
-----------------------------------------------------------------
Orlando Bravo resigned from the board of directors of Activant
Solutions Inc. Mr. Bravo was a member of the company's
Compensation Committee of the Board. Mr. Bravo was appointed as a
director of the company pursuant to the Stockholders Agreement,
dated May 2, 2006.
Additionally, the company stated that S. Scott Crabill would
continue to serve as a director of the company, as a designee of
entities affiliated with Thoma Cressey Bravo, Inc.
Headquartered in Livermore, California, Activant Solutions Inc. --
http://www.activant.com/-- is a technology provider of vertical
business management solutions serving small and medium-sized
retail and wholesale distribution businesses. The company serves
three primary vertical markets: automotive aftermarket; hardlines
and lumber; and wholesale distribution.
Founded in 1972, Activant provides customers with industry
tailored proprietary software, professional services, content,
supply chain connectivity, and analytics. Activant has operations
in California, Colorado, Connecticut, Illinois, New Jersey,
Pennsylvania, South Carolina, Texas, Utah, Canada, Ireland, and
the United Kingdom.
* * *
Activant Solutions Inc. senior subordinated notes continue to
carry Moody's Investors Service's Caa1 rating which was placed in
April 2006.
AHERN RENTALS: Declining Rental Rates Cue Moody's 'B3' Ratings
--------------------------------------------------------------
Moody's Investors Service changed the corporate family and
probability of default ratings of Ahern Rentals, Inc. to B3 from
B2 and changed the ratings outlook to stable from negative. The
company's speculative grade liquidity rating of SGL-3 has been
affirmed.
The downgrade reflects Ahern's declining rental rates from
intensified price competition, expectation of a weak 2009 U.S.
non-residential construction environment, risk of used equipment
market softening, and a somewhat diminished, though still
adequate, liquidity profile. Reflective of a more aggressive
financial policy, Ahern maintained a relatively high level of
capital spending into the second quarter of 2008 though the non-
residential construction activity outlook was weakening.
Heightened price competition, including in Ahern's core Las Vegas
market, will likely continue pressuring margins and limit the pace
with which the company can reduce leverage from internal cash flow
generation.
The stable outlook reflects Ahern's established position in its
markets and the company's plan to reduce capital spending.
Reduced capital spending should enable free cash flow for
repayment of revolver borrowings, and thereby increase the amount
of Ahern's total available liquidity.
The SGL-3 affirmation reflects an expectation of continued
adequate liquidity based largely on Ahern's plan to reduce capital
spending 50% from the 2008 level. Ahern's asset-based
$350 million revolving credit facility has a minimum fixed charge
coverage, maximum leverage and minimum utilization rate covenant
tests that spring if availability declines below set thresholds;
the company is required to test covenants when availability
declines below $25 million, as was temporarily the case during the
third quarter of 2008. The maximum leverage ratio test steps down
to 4.5 times by March 31, 2009. Although at current levels the
company would possess an approximately 15% headroom cushion, at
the stepped-down test level, if rental rates decline from current
levels, the headroom under this springing covenant test could
become tight.
Ratings changed:
-- Corporate family to B3 from B2
-- Probability of default to B3 from B2
-- $290 million 9.25% second priority global notes due August
2013 to Caa1 LGD 5, 77% from B3 LGD 5, 76%
Ratings affirmed:
-- Speculative grade liquidity - SGL-3
Moody's last rating action on Ahern occurred April 15, 2008 when
the company's outlook was changed to negative from stable.
Ahern Rentals, Inc., headquartered in Las Vegas, Nevada, is a
regional equipment supplier with 48 branches predominately in the
Southwest region of the United States. As of September 2008 Ahern
had in excess of 35,000 pieces of rental equipment having an
original cost of approximately $824 million. The company
specializes in high reach equipment.
ALERIS INTERNATIONAL: Weak Fin'l Position Cues Moody's Junk Rating
------------------------------------------------------------------
Moody's Investors Service downgraded Aleris International Inc's
corporate family rating and its probability of default rating to
Caa1 from B2. At the same time, Moody's downgraded the ratings on
the senior secured term loans at Aleris and Aleris Deutschland
Holding GMBH (due 2013) to Caa1 from B2, the rating on Aleris's 9%
senior unsecured notes due 2014 to Caa2 from B3 and the rating on
its 10% senior subordinated notes due 2016 to Caa3 from Caa1. The
rating outlook is stable.
The downgrade reflects the company's weakened financial position
and considers the difficult operating environment facing the
company in light of extremely weak end-market conditions in its
major markets (automotive and building and construction represent
roughly 45% of revenues). As market conditions have deteriorated,
Aleris's performance reflects a downward trend in earnings and
minimal debt protection coverage ratios (LTM September 2008
EBIT/Interest 0.2x adjusted for non cash charges and Moody's
standard adjustments). This trend was particularly magnified in
the third quarter of 2008 and Moody's does not anticipate any
meaningful improvement in market conditions in 2009. The
downgrade also considers the high level of debt and accompanying
interest requirements under which the company is presently
operating (10.2x Debt /EBITDA LTM Sept. 30, 2008 adjusted for non
cash write downs and Moody's standard adjustments).
The Caa1 corporate family rating incorporates the company's
sensitivity to volume levels, which Moody's expects to decline
further over the next several quarters, particularly as the
slowing trends in Europe become more widespread, and the ongoing
earnings and cash flow generation pressure that will result.
However, the rating considers Aleris's ability over the next
several months to improve operating cash flow as working capital
converts on lower aluminum prices and efforts taken by the company
to improve its cost position, including announcing multiple
facility closures in Tennessee, Ohio, Virginia, and Ontario as
well as headcount reductions. The company indicates its focus on
efficiency and synergies resulted in approximately $30 million in
savings in the third quarter of 2008.
The stable outlook reflects Moody's expectation that the company's
focus on cost control, current liquidity position ($377 million at
Sept. 30, 2008, including $293 million under the asset based
revolver -- before considering the excess availability requirement
for the springing fixed charge coverage ratio), and favorable
working capital conversion over the next two quarters will support
operations during these challenging market times. Moody's notes
that the company has elected to exercise the PIK option in its 9%
notes due 2014, from the December 2008 to June 2009 period, which
will reduce annual cash interest payments in 2009 by about
$27 million. While this is favorable from a liquidity perspective,
it will further increase already high debt levels. The outlook
also reflects Moody's expectation that aluminum prices will not
exhibit the same degree of precipitous fall witnessed over the
last several months and that therefore, Aleris' margin
requirements on its aluminum hedging will moderate, further
improving liquidity. Should the company's liquidity or
availability under its asset based borrowing credit facility
deteriorate substantially, the rating would come under further
downward pressure.
Downgrades:
Issuer: Aleris International Inc.
-- Probability of Default Rating, Downgraded to Caa1 from B2
-- Corporate Family Rating, Downgraded to Caa1 from B2
-- Senior Subordinated Regular Bond/Debenture, Downgraded to
Caa3 from Caa1
-- Senior Secured Term Loan, Downgraded to Caa1, LGD4, 50% from
B2, LGD3, 47%
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2,
LGD5, 73% from B3, LGD4, 66%
Issuer: Aleris Deutschland Holding GMBH
-- Senior Secured Term Loan, Downgraded to Caa1, LGD4, 50% from
B2, LGD3, 47%
Outlook Actions:
Issuer: Aleris International Inc.
-- Outlook, Changed To Stable From Negative
Issuer: Aleris Deutschland Holding GMBH
-- Outlook, Changed To Stable From Negative
Moody's last rating action on Aleris was April 15, 2008, when its
outlook was changed to negative from stable.
Headquartered in Beachwood, Ohio, Aleris is a leading global
producer of aluminum rolled and extruded products and participates
in the aluminum recycling and alloy products markets. LTM
September 2008 the company generated revenues of approximately
$6.3 billion.
AMBAC FINANCIAL: S&P Downgrades Hybrid Security Rating to 'BB+'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its financial strength
rating on Ambac Assurance Corp. to 'A' from 'AA'. At the same
time, Standard & Poor's lowered its ratings on holding company
Ambac Financial Group Inc.'s senior debt and hybrid security to
'BBB' and 'BB+' from 'A' and 'BBB+', respectively. The outlook on
the ratings is negative.
Standard & Poor's also lowered to 'BBB' from 'A' its ratings on
preferred stock issued by Anchorage Finance Sub-Trusts I, II, III,
and IV and Dutch Harbor Finance Sub-Trusts I, II, III, and IV
(committed capital facilities supported by, and for the benefit
of, Ambac).
"The rating action on Ambac reflects S&P's view that the company's
exposures in the U.S. residential mortgage sector and particularly
the related collateralized debt obligation structures have been a
source of significant and comparatively greater-than-competitor
losses and will continue to expose the company to the potential
for further adverse loss development," said Standard & Poor's
credit analyst Dick Smith. "These losses have slightly more than
offset the benefits to the company of lower capital requirements
that result from a declining book of business."
In addition, to support funding needs at affiliate Ambac Capital
Funding Inc., a provider of investment agreements, to meet
increased collateralization and termination requirements, Ambac
has purchased assets from and made loans to the affiliate that
have lowered slightly the credit quality of Ambac's investment
portfolio and increased the gap between the book value and fair
market value of the assets in the portfolio. Nevertheless, in
S&P's opinion, the company still exhibits sound claims-paying
ability at its current rating and adequate liquidity levels.
The rating action on Ambac Financial incorporates the previously
identified loss development, capital adequacy and liquidity
assessments for Ambac, plus added liquidity stress at the holding
company level due to the inability of Ambac to pay dividends in
2009 without specific approval from the Wisconsin Office of
Insurance Commissioner. While the holding company currently holds
cash in excess of its 2009 debt service and cash expense
requirements, resumption of dividends from Ambac in 2010 and
beyond, without gaining specific regulatory approval, will be
dependent on Ambac's return to meaningful profitability.
AMERICAN INT'L: CV Star Sells 4.4MM Shares to Credit Suisse
-----------------------------------------------------------
C. V. Starr & Co., Inc., disclosed in a Form 4 filing with the
Securities and Exchange Commission that on November 15, 2005, it
entered into a variable prepaid forward sale contract for up to
4,423,116 shares of American International Group, Inc. common
stock pursuant to a letter agreement with Credit Suisse First
Boston LLC and Credit Suisse First Boston Capital LLC. CV Starr
cut its holdings to 8.5 million AIG shares after the transaction.
CV Starr filed the Form 4 in connection with the settlement of the
CS Contract.
The CS Contract provided that the number of shares of Common Stock
deliverable to Credit Suisse by CV Starr at settlement would be
based upon the VWAP Price -- as defined in the CS Contract -- for
each of the 10 Scheduled Trading Days prior to and including
November 17, 2008, as:
(a) if the VWAP Price -- as defined in the CS Contract -- per
share of the Common Stock were less than or equal to
$65.85 -- the Forward Floor Price -- a delivery of 1/10
of the Maximum Number of shares of Common Stock, subject
to rounding;
(b) if the Settlement Price were greater than the Forward
Floor Price but less than or equal to $85.61, a delivery
of shares equal to (i) the Forward Floor Price divided by
the Settlement Price times (ii) 1/10 of the Maximum Number
of shares of Common Stock, subject to rounding; and
(c) if the Settlement Price were greater than the Forward Cap
Price, a delivery of shares equal to (i) (A) the Forward
Floor Price plus (B) the Settlement Price minus the
Forward Cap Price, divided by (ii) the Settlement Price,
times (iii) 1/10 of the Maximum Number of shares of Common
Stock, subject to rounding.
The Settlement Price on each of the Valuation Dates ranged from a
high of $2.48 to a low of $1.87, resulting in CV Starr delivering
to Credit Suisse the Maximum Number of shares of Common Stock.
CV Starr may be deemed to be the beneficial owner of, and to have
a pecuniary interest in, the shares of Common Stock held by the
C.V. Starr & Co., Inc. Trust, of which CV Starr is a beneficiary.
CV Starr may be deemed to beneficially own more than 10% of AIG
common stock under Rule 16a-1(a)(1) under the Securities Exchange
Act of 1934, as amended, as a result of it being deemed a member
of a group under Section 13(d)(3) of the Exchange Act.
In a separate Form 4 filing, AIG's newest director, Dennis D.
Dammerman, disclosed he was granted 5,636 units of deferred stock
on November 14, 2008. Mr. Dammerman now holds 36,424 units of
derivative securities as a result.
The grant of deferred stock units was made pursuant to the
American International Group, Inc. Amended and Restated 2007 Stock
Incentive Plan. Subject to the terms of the Plan and award
agreement, shares of AIG Common Stock underlying the deferred
stock units will be deliverable, without any cash consideration
and conditions, on the last trading day of the month in which the
director ceases to be an AIG director. The award includes
dividend equivalent rights payable in the form of deferred stock
units.
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.
AMERICREDIT CORP: Moody's Lowers Corporate Family Rating to 'B2'
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of AmeriCredit
Corp., including its Corporate Family Rating and its senior
unsecured debt rating (to B2 from B1). The ratings remain on
review for possible further downgrade.
The downgrade primarily reflects the effects of potential
franchise impairment and continuing challenges to the company's
wholesale funding model.
ACF has implemented a sharp curtailment of its loan originations.
From a peak of $8.5 billion in fiscal 2007, originations have been
cut to a current annual run-rate of about $1.2 billion. This
contraction mainly reflects a challenging environment for ACF's
wholesale funding model; it also reflects weakening economic
conditions and deteriorating asset quality, the product of
increased frequency of default as well as increased severity of
loss in a softening used car market. Although the cutback in
originations volume is consistent with industry trends, in Moody's
view it nevertheless poses a potential risk of impairment to the
company's franchise value. This risk is magnified by the monoline
nature of the company's operations.
Regarding funding, ACF's wholesale funding model continues to be
adversely affected by the ongoing financial crisis and severely
disrupted credit markets. These conditions have resulted in
sharply reduced market appetite for structured finance
investments, including sub-prime and near-prime auto asset-backed
securities that comprise a majority of ACF's managed funding.
Moreover, the monoline insurers who historically have wrapped most
of ACF's ABS issues have been beset by their own financial
problems and resulting negative ratings actions. As a
consequence, their willingness and ability to insure additional
ACF securitization volume is uncertain and ACF has turned to other
funding structures. In Moody's view this has limited the firm's
financial flexibility, although the company has turned to
alternative funding structures, e.g. senior/subordinated-
structured term ABS issuance such as the company's $500 million
2008-1 transaction in October 2008.
ACF's liquidity and financial flexibility are also being pressured
by additional collateral requirements from warehouse lenders, as
well as by potential challenges in remaining in compliance with
the terms of such facilities in terms of their collateral
performance tests.
Balancing these credit challenges are ACF's significant position
(despite recent cutbacks) in the large, fragmented indirect sub-
prime auto market; significant tangible equity base; efficient
servicing systems and infrastructure and proprietary credit
scoring models for underwriting and pricing; and capable senior
management team.
During its continuing review, Moody's will evaluate ACF's progress
in preserving its financial flexibility, including maintaining
compliance with its credit agreements. If ACF is successful in
this regard, the ratings could be confirmed.
AmeriCredit is a leading independent automobile finance company
based in Fort Worth, Texas. As of Sept. 30, 2008 the company
reported total managed receivables of approximately $14 billion.
ANGEL ACQUISITION: Sept. 30 Balance Sheet Upside Down by $2.8MM
---------------------------------------------------------------
Angel Acquisition Corp., formerly known as Palomar Enterprises,
Inc., disclosed in a recent regulatory filing that as of September
30, 2008, its balance sheet showed $1,360,472 in total assets and
$4,183,311 in total liabilities, resulting in total stockholders'
deficit of $2,822,839.
For the nine months ended September 30, 2008, the company posted a
net loss of $2,028,487, on revenues of $187,984, compared with a
net loss of $3,965,946, on revenues of $419,528, in the same
period last year.
Early this year, after auditing Palomar Enterprises' financial
statements for the years ended December 31, 2007 and 2006, Gruber
& Company, LLC, in Lake Saint Louis, Missouri, said conditions
exist, which raise substantial doubt about the company's ability
to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its
operations.
Management had noted that the company has been unable to generate
sufficient operating revenues and has incurred operating losses.
The company is dependent upon the available cash on hand and
either future sales of securities or upon its current management
and advances or loans from controlling shareholders or corporate
officers to provide sufficient working capital. "There is no
assurance that the company will be able to obtain additional
funding through the sales of additional securities or, that
funding, if available, will be obtained on terms favorable to or
affordable by the company. It is the intent of management and
controlling shareholders to provide sufficient working capital
necessary to support and preserve the integrity of the corporate
entity. However, there is no legal obligation for either
management or controlling shareholders to provide additional
funding."
About Angel Acquisition
Palomar was incorporated on March 10, 1999, in accordance with the
laws of the State of Nevada. On February 5, 2008, Palomar changed
its name to Angel Acquisition Corp. to properly reflect the change
in business direction. The company assists private companies in
the process of going public as well as being a licensed mortgage
broker and developer.
ARLINGTON RIDGE: Amends List of 20 Largest Unsecured Creditors
--------------------------------------------------------------
Arlington Ridge LLC filed with the U.S. Bankruptcy Court for the
Middle District of Florida an amended list of its 20 largest
unsecured creditors.
It listed Dunnellon, Fla.-based Media Graphics Inc. of Central
Florida as its largest unsecured creditor. Media Graphics has a
claim of $21,116 for advertising services.
A complete list Arlington Ridge LLC's 20 largest unsecrued
creditors is available for free at:
http://researcharchives.com/t/s?34fe
Saint Petersburg, Florida-based Arlington Ridge LLC and its
affiliates operate a retirement community. The companies filed
for Chapter 11 protection on Oct. 8, 2008 (Bankr. M. D. Fla. Case
No. 08-15678). Amy Denton Harris, Esq., Harley E. Riedel, Esq.,
and Susan H. Sharp, Esq., at Stichter, Riedel, Blain & Prosser,
represent the Debtors as counsel. In its schedules, the company
listed total assets of $84,045 and total debts of $17,539,779.
ARLINGTON RIDGE: Files Schedules of Assets and Liabilities
----------------------------------------------------------
Arlington Ridge LLC filed with the U.S. Bankruptcy Court for the
Middle District of Florida its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property
B. Personal Property $84,045
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $17,439,975
E. Creditors Holding
Unsecured Priority
Claims $210
F. Creditors Holding
Unsecured Non-priority
Claims $99,594
----------- -----------
TOTAL $84,045 $17,539,779
Saint Petersburg, Florida-based Arlington Ridge LLC and its
affiliates operate a retirement community. The companies filed
for Chapter 11 protection on Oct. 8, 2008 (Bankr. M. D. Fla. Case
No. 08-15678). Amy Denton Harris, Esq., Harley E. Riedel, Esq.,
and Susan H. Sharp, Esq., at Stichter, Riedel, Blain & Prosser,
represent the Debtors as counsel.
ATA AIRLINES: Southwest Offers $7.5MM to Assume LaGuardia Slots
---------------------------------------------------------------
Southwest Airlines confirmed that it has submitted a bid that
would allow the airline to assume ATA Airlines' rights to operate
at New York's LaGuardia Airport through a purchase of ATA
Airlines. The bid was submitted in connection with the publicly
disclosed auction process in the U.S. Bankruptcy Court in
Indianapolis and consistent with the Federal Aviation
Administration's recent rule clarification regarding LaGuardia's
slots.
Southwest is working with ATA Airlines with respect to the terms
and conditions of the bid. The bid does not contemplate operating
ATA, but it is intended to allow Southwest to acquire the LGA
slots.
The $7.5 million bid seeks to obtain the rights to 14 slots at
LaGuardia that are held by ATA Airlines, which filed for
bankruptcy protection on April 2, 2008. Those 14 slots would
permit an operation of up to seven daily round trip flights at
LaGuardia. Southwest would not acquire, as a part of its bid, any
aircraft, facilities, or employees of ATA.
"It is our intent, with the successful conclusion of the
transaction, to make plans to initiate service from LaGuardia,"
said Southwest's chairman,president, and CEO Gary Kelly. "Even in
this volatile environment, we have said we must monitor the
competitive landscape and take advantage of prudent market
opportunities."
The bankruptcy court must approve the bid and a reorganization
plan forATA Airlines before Southwest could gain the rights to
ATA's LaGuardia slots.
Once the acquisition is finalized, Southwest will work with the
Federal Aviation Administration and the Port Authority of New York
to commence service at LaGuardia, including acquisition of the
necessary airport gates and facilities. Details on the
commencement of service or the cities that would be served by
Southwest from LaGuardia have not yet been determined.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News; Bankruptcy Creditors' Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
AXLETECH INTERNATIONAL: S&P Puts 'B+' Rating on Positive Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on AxleTech
International Holdings Inc., including the 'B+' long-term
corporate credit rating, on CreditWatch with positive
implications.
"The CreditWatch placement follows the announcement that Axletech
has agreed to be acquired by General Dynamics Corp. [A/Stable/
A-1], said Standard & Poor's credit analyst Sarah Wyeth.
Troy, Michigan-based AxleTech is an independent supplier of
planetary axles, brakes, and other drivetrain components used in
commercial and military end markets. Falls Church, Virginia-based
General Dynamics is a leading domestic military contractor,
manufacturing nuclear submarines, destroyers, naval auxiliary
ships, armored vehicles, and munitions.
The transaction is expected to close by Dec. 31, 2008, pending
regulatory approval.
If AxleTech's debt is retired as part of the acquisition, S&P will
subsequently withdraw the ratings.
BANC OF AMERICA: S&P Downgrades Ratings on Six Classes of Certs.
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on six
classes of commercial mortgage pass-through certificates from Banc
of America Commercial Mortgage Trust 2006-6. In addition, S&P
affirmed S&P's ratings on 17 classes from this series.
The downgrades reflect credit concerns with four of the 12 loans
in the pool that have low reported debt service coverage. The
downgrades also reflect credit concerns with two assets with the
special servicer, CWCapital Asset Management LLC.
The affirmed ratings reflect credit enhancement levels that
provide adequate support through various stress scenarios.
There are 10 loans in the pool totaling $365.3 million (14.9%)
with low reported DSCs. The loans are secured by a variety of
property types with an average balance of $36.5 million. These
loans have experienced an average decline in DSC of 35% since
issuance. The four loans that are credit concerns are secured by
a variety of property types and have experienced a combination
of declining occupancy and higher operating expenses. The
remaining loans are in various stages of lease-up, and the net
cash flow available for debt service is expected to improve in the
future; these loans are not credit concerns at this time.
The Showtime Cinemas loan ($3.4 million, 0.1%) is one of two loans
with CWC and is secured by a 40,000-sq.-ft. movie theater property
in Newburgh, New York. The loan was transferred to CWC on
Oct. 10, 2008, because the tenant did not pay real estate taxes
due in January 2008, which the master servicer subsequently
advanced. The loan is now current for principal and interest, but
it is still in arrears for the January 2008 real estate taxes and
the monthly real estate tax escrow that was instituted after the
nonpayment occurred. CWC is currently working to resolve the
issue, and Standard & Poor's will continue to monitor the
situation.
The other loan with CWC, the Days Inn-Jacksonville loan
($2.7 million, 0.1%), is secured by a 120-room limited-service
hotel in Jacksonville, Florida. The loan was transferred to CWC
on Nov. 10, 2008, because the borrower indicated that it was
unable to continue keeping the loan current. In addition, the
property's status as a Days Inn franchisee may be in jeopardy. As
of June 2008, the DSC for this loan was reported to be 0.68x. CWC
is currently in the process of gathering the latest information,
and Standard & Poor's will continue to monitor the situation.
As of the Nov. 10, 2008, remittance report, the collateral pool
consisted of 117 loans with an aggregate trust balance of
$2.45 billion, compared with the same number of loans totaling
$2.46 billion at issuance. The master servicer, Bank of America
N.A., reported financial information for 100.0% of the pool.
Ninety-nine percent of the servicer-provided information was full-
year 2007 data. Standard & Poor's calculated a weighted average
DSC of 1.30x for the pool, down from 1.36x at issuance. The trust
has experienced no losses to date.
The top 10 loans have an aggregate outstanding balance of $1.52
billion (61.9%) and a weighted average DSC of 1.22x, down from
1.31x at issuance. Standard & Poor's reviewed property inspections
provided by the master servicer for all of the assets underlying
the top 10 exposures, and all were characterized as "good."
At issuance, there was one loan, Central Park Corporate Center
(1.1%), with credit characteristics consistent with those of
investment-grade rated obligations. The loan's performance has
deteriorated, and its credit characteristics are no longer
consistent with those of investment-grade rated obligations. The
loan has a balance $26.5 million and is secured by four suburban
office buildings totaling 379,793 sq. ft. in Bloomfield, New
Jersey. As of June 30, 2008, reported DSC was 1.73x and occupancy
was 76.0%, compared with 87.0% occupancy at issuance. Standard &
Poor's adjusted value for this loan is down 8.5% from its level at
issuance due to a decline in occupancy and an increase in
operating expenses.
BofA reported a watchlist of 28 loans ($715.8 million, 29.2%).
The Chicago Loop Portfolio loan ($165.0 million, 6.7%) is the
largest loan on the watchlist and the fifth-largest exposure in
the pool. The loan is secured by a 1,631,429-sq.-ft. three-
building office portfolio in Chicago. The loan appears on the
watchlist because of a decline in DSC to 0.82x as of Dec. 31,
2007. However, due to lease-up at the properties, the DSC
improved to 1.17x as of June 30, 2008; at this time, the loan is
not a credit concern.
Standard & Poor's identified two properties ($20.5 million; 0.8%)
in areas affected by Hurricane Ike. The properties sustained
either no damage or minor damage that is already under repair.
The master servicer stated that it found the insurance coverage to
be sufficient and that none of the properties were in the flood
zone.
Standard & Poor's stressed the loans on the watchlist and the
other loans with credit issues as part of its analysis. The
resultant credit enhancement levels support the lowered and
affirmed ratings.
Ratings Lowered
Banc of America Commercial Mortgage Trust 2006-6
Commercial mortgage pass-through certificates series 2006-6
Class To From Credit enhancement
----- -- ---- ------------------
J BB BB+ 2.89%
K BB- BB 2.51%
L B+ BB- 2.13%
M B B+ 2.01%
N B- B 1.63%
O CCC+ B- 1.26%
Ratings Affirmed
Banc of America Commercial Mortgage Trust 2006-6
Commercial mortgage pass-through certificates series 2006-6
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 30.12%
A-2 AAA 30.12%
A-3 AAA 30.12%
A-SB AAA 30.12%
A-4 AAA 30.12%
A-1A AAA 30.12%
A-M AAA 20.08%
A-J AAA 12.18%
B AA 10.17%
C AA- 9.16%
D A 7.91%
E A- 6.65%
F BBB+ 5.52%
G BBB 4.39%
H BBB- 3.14%
XC AAA N/A
XP AAA N/A
N/A - Not applicable.
BEARINGPOINT INC: Seeks to Restructure Debt, Taps AlixPartners
--------------------------------------------------------------
BearingPoint, Inc., disclosed in a regulatory filing with the
Securities and Exchange Commission that in early October 2008 it
retained business and financial advisory firm AlixPartners to
assist in developing its 2009 plan, participate in its upcoming
negotiations to restructure its indebtedness and lead a number of
key cash management initiatives.
The company appointed AlixPartners managing director Kenneth A.
Hiltz as BearingPoint's chief financial officer effective
November 11, 2008. Mr. Hiltz will replace BearingPoint interim
chief financial officer, Eddie Munson, who will continue to serve
on BearingPoint's Board of Directors and resume his duties as a
member of the Audit Committee of the Board of Directors.
"We're pleased to have Ken join the company and will look to him
to help us focus on improved cash management and debt
restructuring," Ed Harbach, BearingPoint's chief executive
officer, said.
Mr. Hiltz stated, "During the last month, I've not only conducted
an in-depth review of BearingPoint's financials, but become
heavily engaged in the company's 2009 budget and planning process.
While it's too early to make a definitive forecast, I feel very
comfortable that we will have enough cash to allow us to work
through the next couple of quarters as we focus, almost
exclusively, on cash and other balance sheet improvements."
The company reported gross revenue of $801.0 million in the third
quarter 2008 compared to $861.9 million in the third quarter of
2007, a decrease of 7.1%. The company said net revenue -- gross
revenue less other direct contract expenses -- was $629.4 million
in the third quarter compared to $658.9 million in the third
quarter of 2007, a decrease of 4.5%. The company reported a net
loss in the third quarter of $30.5 million compared to a loss of
$68.0 million in the third quarter of 2007.
As of September 30, 2008, the company had $1.7 billion in total
assets and $2.2 billion in total liabilities, resulting in $469
million in stockholders' deficit. The company said cash balance,
which includes restricted cash, was $333.0 million on Sept. 30,
2008, compared to $431.2 million on Sept. 30, 2007.
In the third quarter of 2008, BearingPoint won business with Time
Warner, Total US Exploration and Production, the Maryland
Department of Human Resources, the Texas Department of Information
Resources, Bendigo and Adelaide Bank, the U.S. Air Force, the U.S.
Marine Corps, the U.S. Department of State, the U.S. Government
Services Administration and Unifi Mutual Holding Co.
BearingPoint said it retained financial advisors to explore ways
to improve its capital structure and liquidity in light of its
evolving cash position. The alternatives initially included a
merger or sale of the company as a whole, a sale of all or
substantially all of the assets of the company or the sale by the
company of any of its six principal business units. While the
recent and sudden downturns in global financial and credit markets
have created significant challenges in the pursuit of a merger or
sale of the company, they have also presented other opportunities
with interested parties, which the company continues to pursue.
Because the company has not yet reached a strategic agreement
regarding a merger or sale, its Board of Directors has also
directed the company's financial advisors to begin discussions
with debt holders to explore the feasibility of restructuring its
debt or exchanging existing convertible debt for equity. The
company has begun to make contact with debt holders in the past
week. At this time, BearingPoint can provide no information
regarding the outcome of these discussions or on the timing of
when they will be completed.
The company has withdrawn all remaining forward-looking guidance
for fiscal year 2008. Given the recent dramatic changes in global
financial and credit markets and the continuing pressures that
these events have placed on the company's share price, the company
said it is no longer confident that it can assess the near-term
implications that these developments will have.
"While businesses around the world are feeling the effects of a
difficult macroeconomic environment, I remain impressed with the
resilience in our business," said Mr. Harbach. "However, we are
uncomfortable trying to predict how client demand and the
perceptions of entering into long-term engagements with
BearingPoint will affect our financial position for the remainder
of the year. We've factored a number of considerations into our
decision, including: the speed at which our clients are making
decisions based on their own outlook; the uncertainties that we
face while we resolve issues such as our own noncompliance with
New York Stock Exchange continuing listing standards; and our view
that we increasingly believe a strategic transaction or
restructuring of our indebtedness will be necessary for us to
continue to fund our 2009 operations and debt obligations.
"I can only reassure our clients, our investors and our people
that we will continue to explore and pursue all options that are
in the best interests of our various constituencies," continued
Mr. Harbach. "We currently plan to provide a business update later
in the quarter after we have finalized our 2009 budgeting process,
and have moved further in discussions with debt holders and other
possible transaction counterparties," Mr. Harbach concluded.
About BearingPoint Inc.
Headquartered in McLean, Virginia, BearingPoint, Inc. (NYSE:BE) --
http://www.bearingpoint.com-- is a provider of management and
technology consulting services to Global 2000 companies and
government organizations in more than 60 countries worldwide. The
company's core services include management consulting, technology
solutions, application services and managed services. In North
America, BearingPoint delivers consulting services through its
Public Services, Commercial Services and Financial Services
industry groups (North American Industry Groups), which provides
industry-specific knowledge and service offerings. Outside of
North America, BearingPoint operates in Europe, the Middle East
and Africa (EMEA); the Asia Pacific region, and Latin America
(including Mexico).
BEARINGPOINT INC: Shareholders' Meeting Slated for December 5
-------------------------------------------------------------
BearingPoint, Inc., wil convene its annual meeting of stockholders
on December 5, 2008, at 10:00 a.m. EST, at The Sheraton Premier at
Tysons Corner located at 8661 Leesburg Pike, in Vienna, Virginia.
At the Annual Meeting, stockholders will be asked to vote on a
number of matters, including the election of Class II directors,
the ratification of the appointment of Ernst & Young LLP as the
Company's independent registered public accounting firm for 2008,
and the approval of an amendment to the company's Amended and
Restated Certificate of Incorporation that would permit the
company's Board of Directors to effect, at their discretion, a
reverse stock split of the company's common stock.
The company's Class II director nominees are Wolfgang H. Kemna,
Albert L. Lord and J. Terry Strange.
The company has filed a proxy statement with the Securities and
Exchange Commission in relation to the Annual Meeting. A full-
text copy of the proxy statement is available at no charge at:
http://ResearchArchives.com/t/s?350b
About BearingPoint Inc.
Headquartered in McLean, Virginia, BearingPoint, Inc. (NYSE:BE) --
http://www.bearingpoint.com-- is a provider of management and
technology consulting services to Global 2000 companies and
government organizations in more than 60 countries worldwide. The
company's core services include management consulting, technology
solutions, application services and managed services. In North
America, BearingPoint delivers consulting services through its
Public Services, Commercial Services and Financial Services
industry groups (North American Industry Groups), which provides
industry-specific knowledge and service offerings. Outside of
North America, BearingPoint operates in Europe, the Middle East
and Africa (EMEA); the Asia Pacific region, and Latin America
(including Mexico).
BEARINGPOINT INC: Stock Trades at OTCBB Following NYSE Suspension
-----------------------------------------------------------------
BearingPoint, Inc. received on November 13, 2008, a notice from
NYSE Regulation, Inc., that the NYSE has decided to suspend the
company's common stock from trading prior to market opening on
Monday, November 17, 2008. The NYSE based its determination on
the "abnormally low" trading price of the company's common stock,
which closed at $0.07 on November 12, 2008. In addition, the
company had previously fallen below the NYSE's continued listing
standard for minimum average closing price of $1.00 over a
consecutive 30 trading day period and minimum average market
capitalization of $100 million over a consecutive 30 trading day
period.
The company has a right to a review of this determination by a
Committee of the Board of Directors of NYSE. Application to the
Securities and Exchange Commission to delist the company's common
stock is pending the completion of applicable procedures,
including any appeal by the company of the NYSE staff decision.
The company intends to appeal the NYSE's decision. The company's
common stock began trading at the OTC Bulletin Board under the
symbol BRGP.PK, following suspension from trading on the NYSE.
About BearingPoint Inc.
Headquartered in McLean, Virginia, BearingPoint, Inc. (NYSE:BE) --
http://www.bearingpoint.com-- is a provider of management and
technology consulting services to Global 2000 companies and
government organizations in more than 60 countries worldwide. The
company's core services include management consulting, technology
solutions, application services and managed services. In North
America, BearingPoint delivers consulting services through its
Public Services, Commercial Services and Financial Services
industry groups (North American Industry Groups), which provides
industry-specific knowledge and service offerings. Outside of
North America, BearingPoint operates in Europe, the Middle East
and Africa (EMEA); the Asia Pacific region, and Latin America
(including Mexico).
BH S&B HOLDINGS: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: BH S&B Holdings LLC
12 Harbor Park Drive
Port Washington, NY 11050
Bankruptcy Case No.: 08-14604
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
BHY S&B Intermediate Holdco LLC 08-14605
BH S&B Retail LLC 08-14606
BH S&B Lico LLC 08-14607
Heritage Licensing LLC 08-14608
Fashion Plate Licensing LLC 08-14609
Cubicle Licensing LLC 08-14610
BH S&B Distribution LLC 08-14611
Related Information: _____________________________________.
Chapter 11 Petition Date: November 19, 2008
Court: Southern District of New York (Manhattan)
Judge: Martin Glenn
Debtor's Counsel: Joel H. Levitin, Esq.
JLevitin@cahill.com
Richard A. Stieglitz, Jr., Esq.
RStieglitz@cahill.com
Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY 10005
Tel: (212) 701-3770
Fax: (212) 269-5420
Chief Restructuring Officer: RAS Management Advisors LLC
Claims, Notice, and Balloting Agent: Kurtzman Carson Consultants
LLC
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
B R Fries Constructors $541,710
34 West 2nd Street
New York, NY 10001
Tel: (212) 563-3300
Fax: (212) 629-6029
Gildan Active Wearl SRL $418,200
600 De Maisonnueve W., 33rd Floor
Montreal, QC H3A 3J2
Canada
Tel: (866) 755-2023
Fax: (514) 6810
Safari Apparls $410,112
Attn: Kirit Pate
Nilesh Mehra
Plot #17/18
Surat Apparel Park - Sez
Surat-Palsana Park Road
Sachin Surat 394230
Gujarat
Tel: 91-261-2391840
Empire Healthchoice Assurance $405,688
Inc.
1 Liberty Plaza
New York, New York 10006
Tel: (212) 476-1000
Fax: 212-46-1281
Lotus Clothing $301,307
No. 75/75 Pete Channnappa Indl
Estate, Kamakshipalya,
Magadi Main Road
Bangalore 560 079
India
Tel: 91-80-23482583
Fax: 91-80-23487488
Sinomax International $294,199
(Hongkong) Limited (Wanda)
11/F Winful Ind., Bldg.
15-17 Tai Yip St., Vietnam
B26-Binh Tan Dist.
Hochiminh City, 231-84-0
SM Traders $273,193
D-11 South Avenue
S.I.T.E. Karachi 75700
Pakistan
Tel: 92-21-2562310
Fax: 92-21-2562312
92-21-25670130
Xiamen Fitex Garment $164,761
Attn: Maggie Zhang
No. 83 Huli Garden
Tongan Ind. Zone
Xiamen, China
Tel: 0086-0592-3175562
Fax: 0086-1385-0009938
Embee Apparels $162,859
Attn: Manish Makharia
5/1 Madanay Yakanaha LLI
Tumkur Road
Malleswaram, Bangalore
562123
India
Tel: 080-23712486
Fax: 988-0671270
CH Robinson Worldwide Inc. $157,954
PO Box 9121
Minneapolis, MN 55480-9121
Tel: (312) 944-7277
Fax: (312) 944-9395
Shanghai New Union $135,927
1341, Yu Yuan Road
Shanghai, China
Tel: (0086-21-62527-043
Qwest $124,839
1801 California St.
5th Floor
Denver, CO 80202
Tel: (303) 295-4516
Fax: (303) 391-1919
Al Munaf Corporation $119,070
F-442 Metroville
S.I.T.E Karachi
Pakistan
Tel: 92-21-2567801-05
Fax: 92-21-2567809
Jeans Manufacturing Company $114,609
Ltd.
65/1 E Hajipara, D.I.T. Road
Rampura, Dhaka 1219
Tel: 93305-768-311-347
Fax: 0088-02-8319306
Adart Poly Bag $111,356
270 Durry Avenue Unit 1
Hicksville, NY 11801
Tel: (516) 932-1001
Fax: (516) 932-1043
Texport Clothing Industries $109,872
No. 154 A/B, 3rd Cross, 5th Main
Yeshwantpur Industrial
Suburb, Bankaglore 56002
India
Tel: (080) 3924065
Stitchwell Garments $103,452
2011/B, GIDC, Phase IV, Opp AEC Gas
Station, Vatva, Ahmedabad
Gujarat, India 141007
Tel: 91-079-589321058934747
Fax: 91-079-5834989
Eastend Exports $97,807
2783/2 Sunder Nagar
Ludhiana, Punjab
India 141007
Tel: 91-161-2606405
Fax: 91-161-2665147
Jerzees Activewear $97,379
755 Lee St.
Alexander City, AL 35011
Tel: (800) 321-1138
Werner Enterprises Inc. $95,910
39357 Treasury Center
Chicago, IL 60694-9300
14507 Fronteir Rd.
Omaha, NE 68138
Tel: (402) 895-6640
Punit Creation $93,139
Walantaka Serang 42183
Banten Indonesia/Unit No. 10
Bldg. No. 2B, Mittal Undustrial
Estat, Mumbai 400059
Tel: 91-22-8593826
Fax: 91-22-8515143
Visual Impressions Inc. $88,693
6600 W. Calumet Road
Milwaukee, WI 53223
Tel: (414) 354-9190
Fax: (414) 354-9191
Mr. Industries $85,806
Coimbatore TN India
Tel: 866-674-7704
Lightning Management Inc. $81,742
4 Commerce Drive
PO Box 992
Harriman, NY 10926
Tel: (845) 783-1350
Fax: (845) 783-9985
Sky High Fashions $80,555
No. 53, 2nd Floor
Commercial St.
Bangalore 560 001, India
Tel: 91-80-25598564
Fax: 91-80-25581099
Mainoor Textile Industries Pvt. $79,747
Ltd.
Rubytex Sourcing
Park Ave., Suite 102
Jason Trade Center, Shahrah-E-
Faisal
Pakistan/D 97 S.I.T.E, Karachi
75700, Pakistan
Tel: 91-21-256-2350
Pepco Energy Services $78,587
1300 N. 17th Street, Suite
Arlington, VA 22209
UPS $66,702
55 Glenlake Pkwy. N.E.
Atlanta, GA 30328
Tel: (404) 828-6000
Fax: (404) 828-6562
Omni Care $65,928
PO Box 7502
Clearwater, Fl 33758
Tel: (727) 409-9670
Fax: (727) 443-3332
Simco Fashions Ltd. $64,829
55 W. Panthapath, 8th Floor
Dhaka 1205, Bangladesh India
Tel: 880-2-9129473
Fax: 880-2-9133952
BH S&B HOLDINGS: Files for Bankruptcy 3 Months After S&B Purchase
-----------------------------------------------------------------
BH S&B Holdings LLC, which bought the business of bankrupt Steve
and Barry's in August 2008, and seven other affiliates filed for
bankruptcy protection before the U.S. Bankruptcy Court for the
Southern District of New York on Nov. 19, 2008.
Steve & Barry's was a specialty retailer of apparel and
accessories, selling, among other things, university apparel and
lifestyle brands, private-label casual clothing, and exclusive
celebrity endorsed apparel. On July 9, 2008, the companies
comprising Steve & Barry's filed for Chapter 11 bankruptcy
protection before this Court, and on August 25, 2008, sold
substantially all of their assets to the Debtors.
Richard A. Sebastiao of RAS Management Advisors, LLC, relates that
BH S&B, et al., intended to operate certain Steve & Barry's stores
as going concerns and to liquidate inventory at other locations. In
addition, there were certain other "bubble stores" where BH S&B
was provided a period of time to determine whether to liquidate
the inventory in such stores or to continue to run them as on-
going stores. "Since the sale closing, however, for various
reasons, including the general health of the American economy and
the state of the retail market in particular, sales at all stores
have been disappointing, and the Debtors' revenue has suffered,"
Mr. Sebastio explains.
As a result, BH S&B, et al., according to Mr. Sebastio, were not
in compliance with certain covenants under their senior secured
credit facility and had no prospects for continued financing of
their business as a going concern, and thus, in consultation with
their lenders, they decided the appropriate course of action to
maximize value for the benefit of all of their stakeholders was an
orderly liquidation in Chapter 11.
To that end, on or about November 7, 2008, the Debtors
retained RAS Management Advisors, LLC, as their restructuring
advisors. RAS will also provide the services of Timothy D. Boates,
president of RAS, as Chief Restructuring Officer.
In addition, during the Chapter 11 cases, the Debtors will seek to
employ a joint venture led by Great American Group, LLC, to act as
consultants and to assist in the process as the Debtors liquidate
the inventory at all of their remaining stores. The Debtors hope
to complete an orderly liquidation of the Debtors' assets by the
end of this year or early next year.
The Debtors have sought an order directing that their Chapter 11
cases be jointly administered by the Court, in the proposed lead
case of BH S&B Holdings LLC, Case No. 08-14604.
Gift Cards to Be Honored
In the ordinary course of their business, the Debtors sold gift
cards in their stores, on their Web site, and at third-party
locations. The sale of gift cards is very common in the retail
industry, as most of the Debtors' competitors have similar
programs. As of the Petition Date, however, there are
approximately 175,000 gift cards outstanding, with a total value
of approximately $2.2 million in the aggregate, that have not yet
been processed for payment or otherwise submitted for use by the
holders thereof. Some of those gift cards were distributed by
Interactive Communications International, Inc. and National Gift
Card Corporation.
The Debtors intend to honor gift cards. "The Debtors' orderly
liquidation efforts through "going out of business" and simi1ar-
themed sales at their stores are dependent, to a large degree, on
their business relationships with their customers and potential
new customers over the next few months," Mr. Sebastio relates.
Store Closing Sales
The Debtors have determined that proceeding with the management
and disposition of the their merchandise and other assets in the
context of "going out of business," "store closing," or similar-
themed sales in a timely manner is in their best interests and in
the best interests of their stakeholders. Accordingly, a joint
venture of Great American Ventures, LLC, Tiger Capital Group, LLC,
and Hudson Capital Partners, LLC, and the Debtors executed a
consulting agreement.
DIP Financing
The Debtors are parties to a Prepetition revolving credit
agreement, dated October 14, 2008, by and among BH S&B Holdings,
as borrower; the other Debtors, as the guarantors thereto; the
lenders from time to time thereunder; and Ableco Finance LLC, as
collateral agent and as administrative agent. As of the Petition
Date, the Debtors were indebted under the Prepetition Revolving
Credit Agreement in the principal amount of approximately $90
million, plus accrued and unpaid interest thereon and fees, costs,
and expenses and all other amounts payable thereunder. The loans
were secured by liens on, and security interests in all of the
Debtors' personal property assets of any kind or nature.
In addition, the Debtors are parties to that certain Amended and
Restated Subordinated Second Lien Financing Agreement dated as of
October 14, 2008, by and among BH S&B Holdings, as borrower; the
other Debtors as the guarantors thereto; the lenders from time to
time thereunder; and non-Debtor BH S&B Finco LLC, as Collateral
Agent and as Administrative Agent. As of the Petition Date, the
Debtors were indebted to the Prepetition Term Loan Lenders in the
principal amount of approximately $75 million, plus accrued and
unpaid interest thereon and fees, costs, and expenses. The loans
were secured by second-priority liens on, and security interests
in, substantially all of the Debtors' personal property assets,
subject, junior, and subordinate in all respects to the Revolving
Credit Prepetition Liens, pursuant to the terms of an
intercreditor agreement.
All of the Debtors' cash and sources of future cash are subject to
liens and security interests in favor of the same or affiliated
lenders as are the Prepetition Revolving Lenders. In the context
of the Store Closing Sales and an overall wind-down of their
operations, the Debtors are not in the best position to provide
adequate protection to the Prepetition Lenders in connection with
any use of their collateral.
Accordingly, the Debtors have entered into the DIP Credit
Agreement with the Post-Petition Lending Group -- which are the
same or affiliated lender(s) as the Prepetition Revolving Lenders
-- in order to have sufficient funds to be able to conduct the
Store Closing Sales and liquidate their assets in an orderly
fashion, in a manner that best preserves and maintains the value
of their assets pending the liquidation.
The Debtors admit that they did not engage in a lengthy marketing
process in order to obtain post-petition financing, largely
because they concluded that obtaining alternate sources of funding
at this time would not have been possible. Instead, the Debtors
elected to enter into the DIP Credit Agreement with the Post-
Petition Lending Group in part because of the latter's willingness
to support the Debtors in their efforts to maximize value pursuant
to the Store Closing Sales.
BUMBLE BEE: Moody's Withdraws Ratings After Debt Repayment
----------------------------------------------------------
Moody's Investors Service withdrew the ratings of Bumble Bee
Foods, LLC and Clover Leaf Seafoods, L.P. following repayment of
their rated debt upon the acquisition of their parent Connors
Brothers Income Fund by an affiliate of Centre Partners Management
LLC.
Ratings withdrawn:
Bumble Bee Foods, LLC and Clover Leaf Seafoods L.P., as co-
borrowers
-- Corporate family rating at B1
-- Probability of Default Rating at B2
-- $75 million senior secured revolving credit agreement
expiring in May 2011 at B1 (LGD3, 32%)
-- $200 million senior secured term loan due in May 2012 at B1
(LGD3, 32%)
-- Speculative Grade Liquidity Rating at SGL-3
With combined revenues of approximately $982 million for the
twelve months ended Sept. 27, 2008, Bumble Bee Foods, LLC and
Clover Leaf Seafoods, L.P. are manufactures of branded, shelf
stable fish and other assorted protein products. Moody's previous
rating action was the change in outlook from positive to
developing and the affirmation of all ratings on Sept. 30, 2008.
CENTERLINE CAPITAL: S&P Downgrades Counterparty Rating to 'B+'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Centerline Capital Group, including lowering the long-term
counterparty rating to 'B+' from 'BB'. At the same time, S&P
revised S&P's outlook on Centerline to negative.
"The rating action reflects ongoing deterioration in several core
business lines that are unlikely to recover soon," said Standard &
Poor's credit analyst Jeffrey Zaun. S&P expects Centerline's
commercial real estate business to continue to suffer from weak
markets for commercial mortgage-backed securities. Income from
the company's affordable-housing segment will also remain low
because of a pullback by Fannie Mae, Freddie Mac, and financial
institutions that have less need for tax credits because of
declining profitability. These business difficulties have put
pressure on both funding and liquidity as Centerline's management
has tried to negotiate a longer term, secured debt financing
package.
Even after the two-notch downgrade, S&P has lingering concerns
about the company's ability to weather the current financial
environment. S&P's concerns are only partially offset by
management's progress toward deleveraging the firm and by the
stable income from its large servicing portfolio and agency
origination business.
Centerline is in discussions with its creditors to amend its
revolving credit facility and the amortization schedule for its
term loan.
The outlook reflects S&P's expectation that the market for raising
CMBS funds will remain closed at least into 2009 and that the
market for new affordable housing funds will be weak for the
foreseeable future.
S&P could downgrade Centerline if deterioration in the firm's
agency, affordable housing, and servicing businesses further
weakens the company's ability to service its liabilities. A major
part of this analysis will involve determining the degree to which
management can stabilize earnings and negotiate the financing of
its term loan and revolver.
S&P could return the outlook to stable if the company's earnings
power improves with the recovery of its affordable housing and
commercial real estate funds businesses.
CHAPEAU INC: Wants to Sell Co-Generation & Demand Response Assets
-----------------------------------------------------------------
Chapeau, Inc., is negotiating a sale agreement and has filed a
motion for order approving sale of assets free and clear of liens,
claims and encumbrances and authorizing assumption and assignment
of executory contracts in the United States Bankruptcy Court for
the District of Nevada.
In the case of In Re Chapeau, Inc., a Utah corporation dba Blue
Point Energy, Case Number
BK-N-08-52080-GWZ, in which BluePoint Energy seeks to sell all of
its Co-Generation and Demand Response assets, equipment and
related assets at a hearing scheduled on Nov. 24, 2008, at
2:00 p.m. in the United States Bankruptcy Court for the District
of Nevada in Reno, Nevada, located at 300 Booth Street, 5th Floor,
Reno, Nevada 89509.
A secured creditor has proposed a purchase of said assets for a
credit bid in the amount of $5,500,000, subject to certain
conditions, and subject to over bidding, at an auction to be held
on Nov. 24, 2008, at 2:00 p.m. in the aforementioned court. The
Board of Directors of Bluepoint Energy has not yet accepted the
purchase proposal. Interested parties may bid at the hearing for
the purchase of the assets pursuant to a bidding process to be as:
Bidding Process at the Auction: The Auction will be conducted by
the Debtor, subject to Court supervision and further orders, as:
(1) Opening Bid. Buyer's offer as embodied in the Purchase
Agreement ($5,500,000) shall be deemed to be the Opening
Bid;
(2) First Overbid. The first overbid if any, will be the
highest Competing Bid with a cash value that equals the
offer contained in the Purchase Agreement plus $50,000,
and the Competing Bid must include a deposit in the form
of certified funds in the amount of 10% of the Opening
Bid, all subject to Bankruptcy Court approval;
(3) Bid Increments. Each bid after the Competing Bid shall
exceed the previous bid in present cash value by at least
$50,000;
(4) Bidding Rounds. Each Qualified Bidder shall have a
reasonable opportunity after the commencement of the
Auction to make an Overbid. If no Overbids are made, the
Debtor will close the Bidding and award the sale to the
Qualified Bidder whose Bid has the highest present cash
value as determined by the Debtor and approved by the
court. If a Qualified Overbid is made, each Qualified
Bidder will have a reasonable opportunity to make
additional Overbids. Bidding rounds will continue until
there are no further Qualifying Overbids, whereupon the
last and highest Bid determined by the Debtor and approved
by the Bankruptcy Court will be deemed the winning bid with
respect to the Assets.
Interested parties may request additional information and
documentation concerning the assets and the sale by contacting:
Steven P. Brandon, President
Chapeau, Inc. dba BluePoint Energy
20 Industrial Parkway
Carson City, Nevada 89706
Tel: (775) 246-8111
Fax: (775) 246-8116
E-mail: sbrandon@bluepointenergy.com
Godfrey Evans, General Counsel
Chapeau, Inc. d/b/a BluePoint Energy
1190 Suncast Lane, Suite Z
El Dorado Hills, CA 95762
Tel: (916) 939-8700
Fax: (916) 939-8705
E-mail: gevans@bluepointenergy.com
Copies of the Motion and Notice of Hearing, including the copy of
the subject Asset Purchase Agreement, which will be the basis of
Over Bidding, may be obtained by contacting BluePoint Energy's
bankruptcy attorney:
Stephen R. Harris Esq.
Belding, Harris & Petroni, Ltd.
417 West Plumb Lane
Reno, NV 89509
Tel: (775) 786-7600
Fax: (775) 786-7764
E-mail: steve@renolaw.biz
About Chapeau Inc
Headquartered in Sparks, Nevada, Chapeau Inc. (OTC:CPEU) dba
BluePoint Energy Inc. The company's GenView controls technology
is a multi-layered, Internet-based microprocessor control system
designed to integrate energy generating assets with building
management control systems. The system architecture provides
users the ability to not only remotely monitor critical energy
data, it also enables them with full access to modify performance
set-points and other key generating asset operational metrics
remotely as well. Chapeau and Specialized Energy Products Inc.
do business under the name BluePoint Energy Inc.
The Debtor filed for Chapter 11 protection on Oct. 31, 2008,
(Bankr. D. Nev. Case Number: 08-52080) Janet L. Chubb, Esq. at
Jones Vargas represent the Debtor in its restructuring efforts.
The Debtor listed assets between $1 million to $100 million and
liabilities between $1 million to $100 million.
CHECK INTO CASH: Shuts Down Operations in 32 of 92 Stores in Ohio
-----------------------------------------------------------------
Payday lender Check Into Cash is closing 32 of its 92 stores in
Ohio. The closings follow passed legislation that caps interest
rates at 28%, making it impossible for the company to continue
current operations. The 60 stores that remain open are offering
micro loans under the Ohio Small Loan Act.
"We're making an effort to continue serving our customers," said
Check Into Cash President Steve Scoggins. "While the federal
government understands the importance of providing access to
credit as it's doing with the bailout. Ohio legislators insisted
on eliminating credit access for its citizens. In addition, this
is putting thousands out of work during a serious economic
crisis."
Ohioans are likely to experience what Federal Reserve researchers
Donald Morgan and Michael Strain learned about Georgia and North
Carolina after payday lending was eliminated. Their study showed
that customers bounced more checks, filed for Chapter 7 bankruptcy
more often and registered more complaints with the FTC. Consumers
were also forced to use more expensive credit options when payday
loans weren't available.
Approximately 45 employees will lose their jobs early next month
when the store closings go into effect. Some 47,500 square feet
of retail space will now go dark as the 32 locations in cities
and towns across the state are vacated.
Mr. Scoggins declined to say whether additional Ohio locations may
be shuttered in the future. "We're doing the best we can to meet
the needs of our customers and at the same time trying to keep the
lights on," he explained.
Headquartered in Cleveland, Tennessee, Check Into Cash, is a
founding member of the Community Financial Services Association,
an industry trade group of responsible lenders dedicated to
promoting balanced legislation and consumer protection while
preserving credit options. Founded in 1993, Check Into Cash has
1254 centers in 32 states, and is one of the nation's privately
held payday advance company.
CHESAPEAKE CORP: Sept. 28 Balance Sheet Upside-Down by $500,000
---------------------------------------------------------------
Chesapeake Corporation's balance sheet at Sept. 28, 2008, showed
total assets of $936.6 million total liabilities of $937.1 million
and stockholders' deficit of $500,000.
Sales dropped to $248.2 million in third quarter of 2008, compared
with $266.4 million during the same period in 2007. Sales during
the nine-month period total $752.5 million, compared with $789.3
million during the first 9 months of 2007.
For three months ended Sept. 28, 2008, the company reported a net
loss of $8.3 million compared with net income of $4.3 million of
the same period in the previous year. For the nine-month period,
the company incurred net loss of $277.1 million compared to net
loss of $5.5 million for the same period in the previous year.
The company has reported losses during its last three fiscal
years. For the fiscal years ended Dec. 30, 2007, Dec. 31, 2006
and Dec. 31, 2005, it incurred net losses of $11.2 million, $36.7
million and $318.3 million, respectively.
Factors contributing to these net losses included, but were not
limited to goodwill impairment charges, costs associated with its
cost-savings plan and other restructuring efforts, environmental
remediation costs, price competition, rising raw material costs
and lost customer business due to geographic shifts in production
within the consumer products industry which we serve. Certain of
those factors, such as goodwill or other asset impairments, are
non-cash charges and therefore are not expected to impact the
company's liquidity.
The company's senior credit facility, amended in 2004, and which
provides borrowings of up to $250 million, matures in February
2009. The senior credit facility is collateralized by a pledge of
the inventory, receivables, intangible assets and other assets of
Chesapeake Corporation and certain U.S. subsidiaries. The
facility is guaranteed by Chesapeake Corp., each material U.S.
subsidiary and each United Kingdom (U.K.) subsidiary borrower,
although most U.K. subsidiary borrowers only guarantee borrowings
made by U.K. subsidiaries.
The company sought amendments to its senior credit facility due to
its inability to meet certain milestones:
-- a March 5 amendment affected financial maintenance covenants
in all four quarters of fiscal 2008, providing an increase in
the total leverage ratios and a decrease in the interest
coverage ratios. During the third quarter of fiscal 2008 the
lenders under the Credit Facility obtained security interests
in certain of the Company's assets located in the U.K.,
Ireland, France, Germany, Belgium and the Netherlands.
-- On July 15, the permissible total leverage ratio to 7.00:1
for the second fiscal quarter of 2008 and the senior leverage
ratio to 3.40:1 for the second fiscal quarter. In exchange,
interest rates were increased to 550 basis points over LIBOR.
On August 1, 2008, the company announced a proposed comprehensive
refinancing plan to address the upcoming maturity of its credit
facility as well as its general liquidity needs. The proposed
refinancing plan was expected to include: (1) new senior secured
credit facilities to be used to fully repay or replace its
existing $250-million Credit Facility and provide incremental
liquidity, and (2) an offer to exchange its outstanding 10-3/8%
Sterling-denominated senior subordinated notes due in 2011 and its
7% euro-denominated senior subordinated notes due in 2014 for new
debt or equity securities.
On October 1, 2008, the company agreed with its lenders on an
amendment to its Credit Facility which included a waiver,
effective as of September 28, 2008, of compliance with certain
financial condition covenants through October 31, 2008. The
amendment waived any potential event of default for failure to
meet the financial condition covenants. Effective November 1,
2008, upon the expiration of that waiver, the company is in
default of the financial condition covenants under the Credit
Facility. On November 1, 2008, it entered into a Forbearance
Agreement with its Credit Facility lenders. Under the Forbearance
Agreement, the lenders agreed that they will not exercise their
rights and remedies in respect of the existing financial condition
covenant defaults under the Credit Facility, including
accelerating the maturity of outstanding borrowings, through
December 10, 2008, subject to the company's compliance with the
terms and conditions of the Forbearance Agreement.
The company has acknowledged that failure to successfully
implement a restructuring or refinancing plan or otherwise address
access to alternative sources of liquidity raises substantial
doubt about its ability to continue as a going concern.
A full-text copy of the SEC 10-Q filing is available for free at
http://ResearchArchives.com/t/s?3504
About Chesapeake Corporation
Headquartered in Richmond, Virginia, Chesapeake Corporation
(NYSE: CSK) -- http://www.cskcorp.com/-- is a supplier of
specialty paperboard packaging products in Europe and an
international supplier of plastic packaging products to niche end-
use markets. Chesapeake has 47 locations in France, Ireland,
United Kingdom, North America, China, HongKong, among others and
employs approximately 5,500 people.
* * *
As disclosed in the Troubled Company Reporter on Aug. 11, 2008,
Moody's Investors Service downgraded Chesapeake Corporation's
Corporate Family Rating to Caa2 from B2 and its Probability of
Default Rating to Caa2 from B3. Concurrently, Moody's downgraded
the company's senior unsecured revenue bonds to Caa3 from B3 and
senior subordinated notes to Caa3 from Caa1. All credit ratings
remain on review for possible downgrade.
Standard & Poor's Ratings Services lowered its ratings on
Chesapeake Corp. The corporate credit rating was lowered to
'CCC+' from 'B'. The ratings remain on CreditWatch, where they
were placed on July 2, 2008, with negative implications.
CHRYSLER LLC: Fails to Convince Lawmakers on Bailout Urgency
------------------------------------------------------------
Greg Hitt, Jeffrey McCracken, and Matthew Dolan at The Wall Street
Journal report that General Motors Corp., Ford Motor, and Chrysler
LLC failed to convince lawmakers of their urgent need for
financial assistance.
According to WSJ, Congressional Democratic leaders wanted to take
out the $25 billion financial aid for the automakers out of the
government's $700 billion bailout to the financial markets. Many
Republicans and the Bush administration have resisted the
proposal, and instead favored loosening controls over $25 billion
in already approved loans -- meant to help the industry retool --
to aid in the current crisis. The report says that the
Republican-backed proposal could be added on Thursday as an
amendment to a separate measure that would extend jobless
benefits. Some Democrats, including Michigan Senator Carl Levin,
suggested they would be willing to consider it, while more senior
Democrats strongly opposed it.
Senate Majority Leader Harry Reid, says WSJ, backed away from
efforts to force a vote this week on a Democratic-backed bill that
will allow the bailout, saying that he might move a Republican
alternative proposal on Thursday, but it faced strong opposition.
According to Detroit Free Press, former Republican presidential
candidate Mitt Romney said automakers should go bankrupt rather
than obtain a $25-billion government bailout. "A managed
bankruptcy may be the only path to the fundamental restructuring
the industry needs."
Many lawmakers still had grave doubts about whether the auto
makers were too weak to be saved, Patrick Yoest and Josh Mitchell
at WSJ relate, citing Democratic leaders. Many lawmakers were
unconvinced that the executives of GM, Ford Motor, and Chrysler
could turn their companies around, the report says.
According to WSJ, public anger about the prospect of another
taxpayer-funded rescue of corporations appeared to play a major
role in the Democrat's failure to secure government financial
assistance for GM, Ford Motor, and Chrysler. WSJ states that
Senator Reid told reporters, "The sad reality is that no one has
come up with a plan that can pass the House and Senate and get
signed by President Bush. The executives of the auto companies
have not been able to convince the Congress and the American
people that this government bailout will be its last."
Congressional leaders will consider a special session for the
second week of December if GM, Ford Motor, and Chrysler submit
comprehensive business plans showing how they will return their
firms to stability, and the plans must be submitted by Dec. 2, WSJ
reports, citing Senator Reid.
Failure to gain support in Washington could force GM to file for
bankruptcy protection, but the company is resisting suggestions
from advisers that it make preparations for a Chapter 11 filing,
WSJ says, citing people familiar with the matter. The sources
said that GM admitted to the Congress this week that it could soon
run out of cash, WSJ states. Ford Motor and Chrysler also ruled
out filing for bankruptcy, according to the report.
WSJ states that United Auto Workers President Ron Gettelfinger
told the Bush administration and the Congress must come to an
agreement on aid, or one or more of the Detroit Three auto makers
could collapse by the year-end, and "the costs that would come
from this are just too great."
If one of the automakers would file for bankruptcy, some estimates
put U.S. job losses as high as 2.5 million in 2009, according to
WSJ. The report says that GM, Ford Motor, and Chrysler employ
almost a quarter-million workers. More than 730,000 other workers
produce materials and parts that go into cars, and one million
more people work in dealerships nationwide, the report states.
WSJ relates that Senator Reid said that the Bush administration
could act on its own, noting "the authority to provide funds to
the auto industry lies with the Treasury Department," which
administers the market-rescue fund.
Automakers Split Over Condition for $25BB Bailout
Siobhan Hughes at Dow Jones Newswires reports that GM, Ford Motor,
and Chrysler were split over whether to accept a new round of
mandatory increases in fuel-mileage standards in return for a $25
billion in emergency loans from the government.
GM, Ford Motor, and Chrysler are seeking additional, more
immediate loans, Dow Jones states. As reported in the Troubled
Company Reporter on Nov. 20, 2008, the CEOs of GM and Ford said
that they would refuse a $1 salary in exchange for government aid,
while Chrysler's CEO agreed to the wage.
Congress voted in 2007 to boost fuel-efficiency standards to an
average 35 miles per gallon by 2020, Dow Jones says. According
to the report, the Congress already approved $25 billion in loans
to help factories make more fuel-efficient cars.
Loans should be contingent upon a commitment to develop a new
generation of cars that reduce greenhouse-gas emissions and
operate more efficiently, Dow Jones says, citing Democratic
lawmakers. The executives of the companies, according to the
report, suggested that automakers were already struggling to meet
the new fuel-efficiency standards mandated by a 2007 law.
Dow Jones quoted Ford Motor CEO Alan Mulally as saying, "I think
the work we did last year was very, very good work. We completely
stretched the enabling technology to be able to meet the fuel-
efficiency improvement. I don't think we know of any more
technology that we can bring to bear to accelerate that."
GM CEO Richard Wagoner, according to Dow Jones, said, "We're
stretching to meet the requirements as they are."
Dow Jones reports that Chrysler Robert Nardelli said that "given
our situation, we'd be open to any requirements that you felt
appropriate."
According to Dow Jones, the Democratic-controlled Congress has
been asking car makers to make more fuel-efficient vehicles, which
Detroit has resisted.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
CHRYSLER LLC: Fitch Puts 'CCC' IDR on Rating Watch Negative
-----------------------------------------------------------
Fitch Ratings placed the 'CCC' Issuer Default Rating of Chrysler
LLC on Rating Watch Negative, reflecting the company's diminishing
liquidity position and the pressing need for external capital to
weather current market conditions. The impact of a steep cyclical
decline in industry sales, plus the impact of the credit crisis on
the availability of retail financing, will result in further
revenue declines over the near term, offsetting the company's
material improvement in its cost structure.
Operating losses, restructuring costs and working capital outflows
will continue to result in heavy cash drains over the next several
quarters. Fitch expects that federal financial assistance over
the next quarter and the forbearance of trade creditors will be
required in order to avoid a 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. Chrysler is dependent on the financial
capacity and willingness of its suppliers to continue extending
trade credit, as the company does not have sufficient resources to
finance ongoing operations in the event that trade credit is
curtailed. Fitch expects that federal aid to Chrysler is
probable, either directly or through facilitating a merger,
although the amount, timing, structure and term remain uncertain.
Without material federal assistance in the short term, Fitch would
review the rating for a potential downgrade to 'CC', which
indicates that default is probable. The provision of federal
assistance may not preclude a downgrade to 'CC'.
Over the near term, capital constraints will continue to restrict
Chrysler's ability to invest in the technology, product and plant
necessary to remain competitive in the North American market.
Expansion of global alliances or an acquisition by a competitor
will be required to give Chrysler the capital and scale to remain
viable given the competitive market, the cyclical nature of the
business and the rapid technological change forecast for the
industry over the near term. Chrysler's strengths in minivans,
pickups and the Jeep brand provide a viable platform for
sustaining production in these segments if Chrysler is able to
ally itself with a stronger global manufacturer. The rapid
deterioration of the North American market over the past year has
outpaced Chrysler's ability to transition its market and product
strategy, leaving the company in an untenable capital and
competitive position given the projected industry environment over
the next two years.
The rationing of retail financing in the domestic market further
highlights the superior capital advantage held by transplant
manufacturers, which will further impair near-term volume and
price performance of the domestic manufacturers.
Fitch has also downgraded the senior secured first-lien bank loan
to 'CCC+/RR3', based on weaker recoveries in the event of a
bankruptcy. Recoveries are based on a liquidation scenario rather
than a going-concern basis, with minimal recovery on PP&E, limited
recoveries on inventories and receivables, plus residual value for
the minivan and Dodge Ram platforms and the Jeep and Dodge brands.
These ratings have been affected:
-- IDR of 'CCC' placed on Rating Watch Negative;
-- Senior secured first-lien bank loan downgraded to 'CCC+/RR3'
from 'B/RR1', placed on Rating Watch Negative;
-- Senior secured second-lien bank loan of 'CC/RR6', placed on
Rating Watch Negative.
CHRYSLER LLC: Says Bankruptcy Would be Costly & Unworkable
----------------------------------------------------------
Jeff Green at Bloomberg News reports that Chrysler LLC's CEO
Robert Nardelli, along with General Motors Corp. and Ford Motor
Co. CEOs, told the Congress that a bankruptcy filing would be
unworkable.
The CEOs told the Congress that they have studied bankruptcy
before dismissing the idea and instead asked the U.S. government
for financial aid, Bloomberg says.
Bloomberg quoted Mr. Nardelli as saying, "We have looked at all
aspects, whether it's a prepackage, whether it's prenegotiated,"
and the options are "more negative and most costly," than
restructuring as a condition of receiving federal aid.
According to Bloomberg, Mr. Nardelli disclosed Chrysler's internal
assessment of bankruptcy during a testimony to a Senate committee,
and repeated it to the Congress.
Bloomberg relates that Mr. Nardelli admitted that Chrysler is down
to $6.1 billion in cash and burning about $1 billion more per
month. He told senators on Nov. 18 that bankruptcy would take too
much time, the report says. Chrysler would need support from "all
the players, all of the suppliers, all of the vendors, all of the
labor," the report states, citing Mr. Nardelli.
Mr. Nardelli said that Chrysler has billions of dollars in cash
payment obligations every month to pay wages, to pay suppliers,
and to fund health care and pensions, all in the range of $4 to
$5 billion per month.
This crisis has already driven U.S. sales to a 25-year low,
Mr. Nardelli said. In 2008 alone, Chrysler's volume domestically
has dropped from 17 million units to 11 million -- a 38% decline.
That volume drop is more than the total U.S. sales of Ford Motor
and Chrysler combined.
Therefore without immediate bridge financing support, Chrysler's
liquidity could fall below the level necessary to sustain
operations in the ordinary course, according to Mr. Nardelli.
This would put at risk health care coverage for retirees, which is
part of Chrysler's nearly $20 billion total health care
obligation, $2 billion in annual pension payments to the company's
retirees and surviving spouses, approximately $7 billion in
current payables, $35 billion in future annual supplier business,
and 56,600 direct Chrysler employees earning $6 billion in wages.
Mr. Nardelli said that independent research firms have quantified
the fallout of a domestic automaker bankruptcy to the overall
economy, and the impact is devastating: 2.3 to 3 million in lost
jobs, $275 to $400 billion in lost wages, and $100 to $150 billion
in lost government revenue.
Mr. Nardelli said that bankruptcy is not a good option for
Chrysler and for the auto industry or the broader economy, for
these reasons:
-- retail sales would be impacted materially as a result of
declining consumer confidence, and the company will be
forced to heavily discount existing inventory to move its
product;
-- given the company's common supplier base -- at Chrysler,
96 of the company's top 100 suppliers are common to Ford
Motor and GM -- the bankruptcy of any one domestic
automaker would place enormous pressure on the supply
chain and, consequently, that company's competitors;
-- factories would likely be idled for a significant period
of time while the company renegotiates contracts with each
of the company's thousands of individual suppliers;
-- restructuring and reorganization costs and expenses will
be materially higher in connection with a Chapter 11
process: supplier and dealer support and marketing costs
will increase, general economic dislocation will follow,
and significant fees and expenses will be paid to an army
of bankruptcy professionals;
-- the overall amount and cost of financing the restructuring
will be significantly higher in a Chapter 11 process than
the working capital bridge the company is requesting; and
-- the company cannot be confident that it will able to
successfully emerge from bankruptcy.
As reported in the Troubled Company Reporter on Nov. 20, 2008,
Mr. 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 if it helped Chrysler obtain its $7 billion share of a
proposed $25 billion automaker rescue package. Chrysler has also
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."
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.
CITIGROUP: Mulls Auction of Assets & Sale of Whole Company
----------------------------------------------------------
Citigroup Inc. executives has started considering the possibility
of auctioning off assets of the company or even selling the whole
firm outright, David Enrich at The Wall Street Journal reports,
citing people familiar with the matter.
According to WSJ, the sources said that talks within Citigroup are
at a preliminary stage and don't indicate that the company's board
and management are backing down from their insistence that the
firm has ample capital, funding, and strategic direction. WSJ
relates that Citigroup officials have decided they need to
consider a range of scenarios that were unthinkable only weeks
ago, after the stock was down another 26% on Thursday, its worst
one-day percentage decline ever.
Directors, says WSJ, have been talking by phone about what could
be done to reverse the stock's decline. According to the report,
Citigroup CEO Vikram Pandit and other company executives have told
colleagues they are frustrated and befuddled by this week's 50%
stock decline.
Citing people familiar with the situation, WSJ states that
Citigroup's board of directors will hold a formal meeting on
Nov. 21 to discuss the options.
WSJ relates that top executives held meetings on Thursday to hash
out a stabilization strategy. "Citi has a very strong capital
and liquidity position" and is "focused on executing our
strategy," which includes cutting expenses and selling assets, a
Citigroup spokesperson said in a statement on Wednesday.
According to WSJ, Citigroup executives are weighing the
possibility of selling the company or merging with a rival. Some
analysts said that Morgan Stanley and Goldman Sachs Group Inc. are
potential suitors, says the report.
Morgan Stanley wasn't weighing a bid and hadn't spoken to
Citigroup about a deal recently, WSJ states, citing people
familiar with the matter.
Goldman Sachs would potentially look at pieces of Citigroup, WSJ
relates.
Citigroup Asks for Reinstatement of Short Selling Ban
Citigroup officials are asking lawmakers and the Securities and
Exchange Commission to reinstate the expired ban on short selling
of financial stocks, Damian Paletta, David Enrich, and Kara
Scannell at WSJ report, citing sources. Short selling is a way to
bet that shares will drop, says the report.
WSJ relates that the move is part of Citigroup's effort to try to
reverse this week's decline in its stock price. Sources said that
Citigroup is also urging federal officials to reinstate the
"uptick rule," which expired in July 2007, according to the
report. The rule, says the report, required investors to wait
until a company's stock rose before they could sell it short.
Saudi Prince to Acquire More Shares in Firm
Andrew Critchlow at WSJ reports that Saudi investor Prince
Alwaleed bin Talal believes that Citigroup shares are undervalued.
Mr. Talal said in a statement that he "began buying Citi shares as
he strongly believes that they are dramatically undervalued."
Mr. Talal, according to WSJ, said on Thursday that he will
increase his holdings in Citigroup back to 5%, from less than 4%,
and expressed his support for the management.
Citigroup Might Abandon Plans to Buy Chevy Chase
Citigroup has been negotiating in recent weeks a possible
acquisition of Chevy Chase Bank, WSJ relates, citing people
familiar with the matter.
The sources said that with Citigroup's stock declining, the Chevy
Chase deal might fall apart, because Citigroup had hoped to pay
for the acquisition in stock instead of cash, WSJ reports.
CEO at Indian Unit Resigns, Layoffs Expected
Geeta Anand and Ellen Sheng at WSJ report that Sanjay Nayar has
left CitiFinancial India -- Citigroup's Indian and South Asia
operation -- as its CEO to join private equity company Kohlberg
Kravis Roberts & Co.'s Indian unit as CEO early next year.
Mr. Nayar was a member of Citigroup Asia's executive operating
committee and senior leadership committee, says WSJ. According to
WSJ, Citigroup said it has appointed Mark Robinson, a 24-year
company veteran, to take Mr. Nayar's place.
CitiFinancial India also expects to lay off more than 1,000
workers over the next few months, WSJ states. Citing a person
familiar with the matter, WSJ relates that most of the company's
Indian job cuts will come from CitiFinancial India, its lending
arm, where it plans to gradually lay off about 1,000 employees
over the next few months. The source, according to the report,
also said that Citigroup will cut several dozen additional
positions from its investment and corporate banks.
WSJ says that the planned layoffs are still being finalized and
most of the people who will lose their jobs will still be
notified. The layoffs, the report states, are part of Citigroup's
recently disclosed plan to cut 50,000 jobs.
WSJ quoted Godwin Chellam, head of corporate affairs for Citigroup
in South Asia, as saying, "We have mentioned previously that we're
in the midst of restructuring CitiFinancial to provide a more
comprehensive relationship with clients by offering new products
such as wealth management and insurance. As part of the move,
some jobs may be made redundant, but it is too early to speculate
on numbers."
According to WSJ, a person familiar with the matter said that
Citigroup is looking for ways to move laid-off workers into other
jobs at the bank.
Citigroup's India operations has about 7,000 workers in retail
banking -- including consumer and lending services -- and about
3,000 in corporate and investment banking, says WSJ. The firm
recently sold its Indian back-office operations that employed
about 12,000 people, according to the report. The company is also
planning to unload another part of its business in India, and
Citigroup is in talks for the sale of its 2,000-person technology
services outsourcing unit, the report states, citing a source.
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.
CJC ENTERPRISES: Files for Chapter 11 Protection in Colorado
------------------------------------------------------------
CJC Enterprises Inc. filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the District of Colorado on Nov. 18, 2008.
According to Denver Business, CJC Enterprises listed less than
$500,000 in assets and less than $500,000 in liabilities. Denver
Business relates that CJC Enterprises has less than 50 creditors.
CJC Enterprises Inc. is based in Denver. It does business as Sir
Speedy Printing Center.
CLARENDON ALUMINA: Moody's Cuts Issuer Default Ratings to 'B-'
--------------------------------------------------------------
Fitch Ratings has downgraded Clarendon Alumina Production
Limited's foreign and local currency Issuer Default Rating to 'B-'
from 'B'; and revised the Rating Outlook to Negative from Stable.
CAP is 100% owned by the Government of Jamaica and is a partner
with a subsidiary of Alcoa Inc. in a bauxite mining and alumina
refining operation in Jamaica called Jamalco. This rating action
follows yesterdays downgrade of the long-term foreign currency IDR
of Jamaica by Fitch to 'B'; Outlook Negative.
Also in-line with sovereign rating action on Jamaica, Fitch has
downgraded the US$200 million 8.5% unsecured notes due November
2021 of CAP to 'B/RR4' from 'B+/RR4'. The 15-year notes continue
to be supported by an explicit unconditional and irrevocable
guarantee by the GoJ for timely interest and principal on the
notes. The IDRs of CAP are rated one notch lower than Jamaica
reflecting other debt issuance at the company which have implicit
support from the GoJ but not the explicit guarantees which support
the US$200 million unsecured notes.
For the financial year ended March 31, 2008, CAP generated
US$21.1 million of funds from operations (FFO) compared to a
negative US$10.6 million FFO in 2007. CAP ended the financial
year with a negative US$34.7 million operating EBITDA position,
primarily a reflection of high production costs in relation to
caustic soda and fuel inputs and CAP's inability to pass them
through to end customers, largely due to inflexible long-term
supply contracts with its main customer Glencore, ending 2010 and
2012 respectively. As a result of these long-term contracts, CAP
was unable to benefit from the high spot prices seen for alumina
during the last two years, demonstrated by the negative
US$11.2 million operating EBITDA position also seen for financial
year ended March 31, 2007.
At the end of March 2008, CAP had US$326.2 million of debt and
US$16 million of cash and marketable securities translating to a
total debt-to-EBITDA ratio of negative 9.4 times and an FFO
adjusted leverage ratio of 6.9x. The March 2008 total debt figure
represents an increase of more than 87% on US$286 million at
March 31, 2007. With the constraints currently being experienced
in the capital markets, CAP does not have other significant
sources to shore up its liquidity position and its credit rating
is strengthened by explicit and implicit support by the GoJ.
CAP was incorporated in April 1985 in Jamaica. CAP entered into a
joint-venture agreement with a subsidiary of Alcoa Inc., to become
partners in a bauxite mining and alumina refining operation in
Jamaica called Jamalco. Jamalco is an unincorporated joint-
venture association that involves the proportionate sharing of
production costs and the alumina output of the Clarendon Alumina
Refinery. In the financial year 2008, CAR produced 1.15 million
tons of alumina and CAP's 50% share of the output generated
revenues of US$117.2 million from the sale of 606,000 tons of
alumina.
CLOROX CO: EVP Larry Peiros Sold 23,375 shares at $61.94 Apiece
---------------------------------------------------------------
Larry Peiros, the executive vice president - COO North America of
The Clorox Company disclosed in a Form 4 filing with the
Securities and Exchange Commission that on November 5, 2008.
-- he acquired 23,400 shares of common stock at $53.9 per
share;
-- transferred 25 shares to a family trust.
-- disposed of 23,375 shares at $61.94 apiece.
Mr. Peiros directly owned 24,216 shares following the transaction.
He also disclosed that he indirectly owns 34,464 shares held by a
family trust.
The sale of shares was held on Nov. 5, 2008.
As of Sept. 30, 2008, there were 138,712,570 shares outstanding of
the company's common stock par value of $1.
About The Clorox Company
Headquartered in Oakland, California, The Clorox Company (NYSE:
CLX) -- http://www.thecloroxcompany.com/-- manufactures and
markets household cleaning products with fiscal year 2007
revenues of US$4.8 billion. Clorox markets some of consumers'
most trusted and recognized brand names, including its namesake
bleach and cleaning products, Green Works(TM) natural cleaners,
Armor All(R) and STP(R) auto-care products, Fresh Step(R) and
Scoop Away(R) cat litter, Kingsford(R) charcoal, Hidden
Valley(R) and K C Masterpiece(R) dressings and sauces, Brita(R)
water-filtration systems, Glad(R) bags, wraps and containers,
and Burt's Bees(R) natural personal care products.
Clorox has manufacturing facilities in China, Costa Rica,
Dominican Republic, Malaysia, Panama, Peru, United Kingdom,
among others.
CLOROX CO: September 30 Balance Sheet Upside-Down by $400MM
-----------------------------------------------------------
The Clorox Company's balance sheet at Sept. 30, 2008, showed total
assets of $4.5 billion and total liabilities of $4.9 billion,
resulting in a stockholders' deficit of approximately
$400 million.
Clorox reported first-quarter net earnings of $128 million.
Current quarter earnings included about $6 million in pretax
restructuring-related charges and a pretax loss of $3 million
related to the Burt's Bees acquisition.
In the year-ago quarter, Clorox reported net earnings of
$111 million. These year-ago results included about $27 million
in pretax restructuring-related charges. The charges for both
years were associated with the consolidation of the company's
manufacturing network and other actions the company decided to
take in light of its Centennial Strategy.
First-quarter sales grew 12% to $1.38 billion, compared with
$1.24 billion in the year-ago quarter. Excluding the Burt's Bees
acquisition, sales in the current quarter grew 8%.
Net cash provided by operations was $93 million, compared to
$163 million in the year-ago quarter. The decrease was due to
higher working capital. Working capital reflected the impact of
the Burt's Bees acquisition and higher inventory levels resulting
from increased commodity costs and inventory builds to support
both new product launches and the manufacturing network
consolidation. Also contributing to the decline in cash flow were
higher incentive compensation and interest payments versus the
year-ago quarter.
A full-text copy of the company's 10-Q filing is available for
free at http://ResearchArchives.com/t/s?3506
About The Clorox Company
Headquartered in Oakland, California, The Clorox Company (NYSE:
CLX) -- http://www.thecloroxcompany.com/-- manufactures and
markets household cleaning products with fiscal year 2007
revenues of US$4.8 billion. Clorox markets some of consumers'
most trusted and recognized brand names, including its namesake
bleach and cleaning products, Green Works(TM) natural cleaners,
Armor All(R) and STP(R) auto-care products, Fresh Step(R) and
Scoop Away(R) cat litter, Kingsford(R) charcoal, Hidden
Valley(R) and K C Masterpiece(R) dressings and sauces, Brita(R)
water-filtration systems, Glad(R) bags, wraps and containers,
and Burt's Bees(R) natural personal care products.
Clorox has manufacturing facilities in China, Costa Rica,
Dominican Republic, Malaysia, Panama, Peru, United Kingdom,
among others.
CMR MORTGAGE: Case Summary & 12 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: CMR Mortgage Fund, LLC
62 First Street, Fourth Floor
San Francisco, CA 94105
Bankruptcy Case No.: 08-32220
Chapter 11 Petition Date: November 19, 2008
Court: Northern District of California (San Francisco)
Judge: Thomas E. Carlson
Debtor's Counsel: Michael D. Cooper, Esq.
mcooper@wendel.com
Wendel, Rosen, Black and Dean LLP
1111 Broadway 24th Fl.
P.O. Box 2047
Oakland, CA 94604-2047
Tel: (510) 834-6600
Estimated Assets: $10 million to $50 million
Estimated Debts: $1 million to $10 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Saigon Plaza trade debt $2,015,667
c/o Michael A. Ahrens
Sheppard Mullin Richter &
Hamptons LLP
San Francisco, CA 94111
Tel: (415) 434-9100
CMR Mortgage Fund II LLC amounts payable $1,180,559
62 First Street
San Francisco, CA 94105
California Mortgage and Realty amounts payable $688,700
Inc.
62 First Street
San Francisco, CA 94105
Beacon Development Co. trade debt $445,500
Orrick Herrington, et al. legal fees $94,380
Fidelity National Title trade debt $20,395
Perry Smith LLP audit fees $15,000
Sunstate Equipment Co. trade debt $14,613
Lesher Chee Stadlbauer appraiser fees $10,000
Binder & Malter LLP legal fees $5,445
Stein & Lubin LLP legal fees $192
Akerman legal fees $41
The petition was signed by California Mortgage and Realty Inc.'s
chief executive officer and manager James Gala.
CONEXANT SYSTEMS: Revenue Shortfalls Cue S&P'S Rating Cut to 'B'
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its issue level and
recovery ratings on California-based Conexant Systems Inc.'s
(B-/Stable/--) senior secured notes. The issue-level rating on
the notes was lowered to 'B' (one notch higher than the corporate
credit rating) from 'B+' and the recovery rating was revised to
'2', indicating a substantial (70%-90%) recovery in the event of a
default, from '1'.
"The downgrade on the notes is based on significant operating
revenue shortfalls and asset sales that have resulted in
significantly reduced EBITDA levels and operations," said Standard
& Poor's credit analyst Joseph Spence.
"The ratings on Newport Beach, California-based Conexant Systems
Inc. reflect uncertainty regarding the company's ability to halt
substantial revenue declines, very high leverage, and reliance on
asset sales to retire debt." These factors are offset, in part,
by its modest cash balance and fabless strategy, in which the
company does not manufacture its own integrated circuits.
Ratings List
Downgraded
To From
-- ----
Conexant Systems Inc.
Senior Secured (1 issue) B B+
Recovery Rating 2 1
CONTINENTAL PROMOTION: Lets Go of 17 Workers; Files for Bankruptcy
------------------------------------------------------------------
Michael Hinman at Tampa Bay Business Journal (Florida) reports
that after laying off 17 workers, Continental Promotion Group,
Inc., and CPG Marketing Inc. filed for Chapter 11 bankruptcy
protection.
Tampa Bay Business states that Continental Promotion told Florida
Agency for Workforce Innovation last week that it would lay off 17
people by Nov. 19, 2008.
According to Tampa Bay Business, Continental Promotion and CPG
Marketing list an Eisenhower Boulevard office as their address,
and both have Daniel Granger as CEO.
Tampa Bay Business relates that Continental Promotion lists assets
of $1 million to $10 million, and liabilities of $1 million to
$10 million from between 200 and 999 creditors.
CPG Marketing, says Tampa Bay Business, listed assets of
$1 million to $10 million, and liabilities of $10 million to
$50 million, with up to 50 creditors.
About Continental Promotion
Continental Promotion Group, Inc. -- http://www.cpginc.com --
provides a wide range of promotional management services. The
company interacts with over 30 million consumers annually through
manufacturer and retailer driven promotions. In addition to the
company's market-leading Rebate Fulfillment Services, CPG's
products include Prepaid Promotional Card Management, Merchant
Gift Card Fulfillment, Premium/Literature Fulfillment, Sales
Promotion Spiffs, Customer Loyalty/Retention Programs, Online
Reporting, Product Sampling Programs, Sweepstakes and Contest
Administration, and Special Services.
The company has offices in Tampa, Florida, Tempe, Arizona,
Toronto, Canada, and Tipperary, Ireland.
CREDIT AND REPACKAGED: Moody's Cuts Rating on $20 Mil. Notes
------------------------------------------------------------
Moody's Investors Service downgraded its rating on these notes
issued by Credit and Repackaged Securities Limited 2006-1:
Class Description: $20,000,000 Tranche Notes due March 20, 2013
-- Prior Rating: Ba3
-- Prior Rating Date: July 20, 2008
-- Current Rating: B2
Moody's explained that rating actions reflect the deterioration in
the credit quality of the transaction's underlying reference pool,
which consists primarily of corporate securities, as well as the
negative action taken by Moody's on the Insurance Financial
Strength rating of MBIA Insurance Corporation, which acts as the
guarantor of the GIC provider in the transaction. On Nov. 7,
2008, Moody's downgraded its rating of MBIA Insurance Corporation
to Baa1.
CWCAPITAL COBALT: S&P Puts Ratings on Eight Classes on Neg. Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on eight
classes from CWCapital COBALT Vr Ltd. on CreditWatch with negative
implications following various commercial mortgage-backed
securities rating and CreditWatch actions.
The CreditWatch negative placements reflect S&P's preliminary
analysis of COBALT Vr following the CreditWatch negative
placements of the ratings on GS Mortgage Securities Trust 2007-
GG10 (GSMST 2007-GG10) and the lowering of the ratings on Banc of
America Commercial Mortgage Trust 2006-6 (BACM 2006-6)
According to the Oct. 27, 2008, trustee report, COBALT Vr's
current assets included 235 classes ($2.612 billion, 77%) of CMBS
pass-through certificates from 49 distinct transactions issued
between 2003 and 2007. None of the CMBS assets represent a
concentration of 10% or more of total assets; details of the CMBS
assets from GSMST 2007-GG10 and BACM 2006-6 are:
-- Six classes ($241.9 million; 7%) from GSMST 2007-GG10,
including five that S&P placed on CreditWatch negative and
the first-loss class S; and
-- Eight classes ($86.9 million; 3%) from BACM 2006-6, including
six classes that S&P downgraded and the first-loss class P
COBALT Vr's non-CMBS assets include:
-- Six classes ($406.6 million, 12%) from CRIIMI MAE Commercial
Mortgage Trust's series 1998-C1, which is a CMBS re-REMIC
(resecuritized real estate mortgage investment conduit)
transaction;
-- The preferred share classes ($382.5 million, 11%) from nine
commercial real estate collateralized debt obligation (CRE
CDO) transactions; and
-- Class E-2 ($6 million) from Fairfield Street Solar 2004-1
Ltd., which is a CRE CDO transaction.
The aggregate principal balance of the assets totaled
$3.407 billion, down from $3.432 billion at issuance, while the
aggregate principal balance of the liabilities totaled
$3.432 billion, which is unchanged since issuance. The
$24.5 million reduction in the aggregate asset balance was due to
principal losses realized on first-loss CMBS assets, which
currently represent $916.3 million (27%) of the asset pool.
S&P expects to resolve or update the CreditWatch negative
placements on the ratings from Cobalt Vr in conjunction with S&P's
CreditWatch resolutions on GSMST 2007-GG10.
Ratings Placed on CreditWatch Negative
CWCapital COBALT Vr Ltd.
Notes
Rating
------
Class To From
----- -- ----
B AA/Watch Neg AA
C A+/Watch Neg A+
E BBB+/Watch Neg BBB+
F BBB/Watch Neg BBB
G BBB-/Watch Neg BBB-
H BB+/Watch Neg BB+
J B-/Watch Neg B-
K CCC/Watch Neg CCC
DATATEL INC: S&P Changes Outlook to Stable & Keeps 'B' Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Fairfax,
Virginia-based Datatel Inc. to stable from negative. At the same
time, Standard & Poor's affirmed its 'B' corporate credit rating
on Datatel.
"The outlook revision follows an improvement in operating
performance and consistent debt prepayments," said Standard &
Poor's credit analyst Joseph Spence. "The ratings on Datatel
reflect its narrow product focus in a competitive market, highly
seasonal cash flows, and high leverage." These factors are offset
partially by the company's strong business position in the higher
education enterprise resource planning market and a significant
base of recurring revenues, with improving profit margins.
Datatel provides enterprise resource planning software products
tailored to middle-tier higher education institutions. The
company's suite of ERP software modules includes solutions for
student administration, financial aid, finance, human resources,
and fundraising. These products are currently used by more than
737 educational institutions, including middle-level two- and
four-year colleges and specialty schools. Many of its competitors
enjoy greater scale, financial resources, revenue diversity and/or
the ability to compete for larger, more profitable and prestigious
higher education clients. Within its segment, however, Datatel is
the No. 2 provider, after SunGard Higher Education Solutions, a
subsidiary of SunGard Data Systems Inc.
Datatel's Sept. 30, 2008, last-12-months revenues improved 9% to
$130 million, from the prior-year. This improvement is primarily
attributable to modest price increases on maintenance services,
which constitute 61% of total revenues and has renewal rates in
the mid 90% area, as well as modest new customer growth.
The outlook is stable. Datatel's ability to maintain medium to
high single-digit growth driven by its contractual recurring
revenues as well as its improved EBITDA margins in a soft economic
environment provides critical ratings support. S&P could raise
the outlook to positive if the company were able to sustain its
current profitability levels while maintaining leverage in the
mid-to-low 5x during its peak borrowing seasons. S&P could revise
the outlook to negative if debt increased significantly beyond its
seasonal requirements driving leverage peaks back into the high 6x
area.
DEBORAH CARTER: Case Summary & 15 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Deborah Carter
16132 NE 179th
Woodinville, WA 98072
Bankruptcy Case No.: 08-17869
Chapter 11 Petition Date: November 18, 2008
Court: Western District of Washington (Seattle)
Judge: Thomas T. Glover
Debtor's Counsel: Jeffrey B. Wells, Esq.
eajbwellaw@aol.com
Jeffrey B. Wells, Attorney at Law
500 Union St., Suite 927
Seattle, WA 98101
Tel: (206)624-0088
Total Assets: $2,073,500
Total Debts: $1,132,156
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/wawb08-17869.pdf
DELFASCO FORGE: Court Approves Bidding Procedures
-------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
approved the bidding procedures for Delfasco Forge.
Under the procedures, the proposed acquisition of substantially
all of the assets of Delfasco Forge by Modern Forge Texas, Inc.,
is subject to Court approval and any higher and better offers that
might be received during the marketing and sale process.
MFT's Bid price to acquire substantially all of the assets of the
assets of Delfasco Forge is approximately $2,225,000, as more
fully set forth in the asset purchase agreement, available upon
request.
The proposed initial bid requirement is $2,392,500 -- which equals
the current bid of $2,225,000; plus $167,500 which is a break-up
fee of 3% of the bid amount; plus reimbursement of MFT's expenses
as approved by the Court, to a cap of $100,000; plus an overbid
increment of $10,000.
Qualified bids -- which include a cash deposit in the amount of
$500,000 -- must be submitted on or before 12:00 p.m. on Dec. 2,
2008. If one or more qualified bids are received, an auction will
be conducted on Dec. 4, 2008, at 1:00 p.m. in the offices of
counsel to the Debtor, Potter Anderson & Corroon, LLP, in
Wilmington, Delaware. The winning bid will be presented for Court
approval on Dec. 8, 2008 at 2:00 p.m. Closing on the sale of
assets will occur thereafter. Copies of the Bid Procedures Motion
are available upon request.
To obtain more information or to return an executed
Confidentiality Agreement, contact the financial advisor to the
Official Committee of Unsecured Creditors:
Ted Gavin, CTP
tgavin@nhbteam.com
Principal
NachmanHaysBrownstein, Inc.
Office Tel: (302) 655-8997
Cell No: (484) 432-3430
Fax: (302) 655 6063
Hernan Serrano
hserrano@nhbteam.com
Managing Director
NachmanHaysBrownstein, Inc.
Office Tel: (212) 848-0262
Cell No: (516) 236-3209
Fax: (212) 751-3512
For those interested in the transaction, contact Potter Anderson &
Corroon, LLP, the counsel of the debtor at:
Steven M. Yoder, Esq.
syoder@potteranderson.com
Partner
Potter Anderson & Corroon, LLP
Office Tel: (302) 984-6107
Fax: (302) 778-6107
Based in Hurst, Tex., Delfasco Forge -- http://www.delfasco.com--
makes practice bombs for Air Force and Navy pilots. It is also a
metal fabricator and forger. It operated at the Grand Prairie
site from 1981 until 1998.
Based in Newcastle Delaware, Delfasco Inc. filed for bankruptcy
protection on July 28, 2008 (Bankr. D.Del., Case No. 08-11578).
When Delfasco Inc. filed for bankruptcy, it listed estimated
assets of between $1,000,000 and $10,000,000 and estimated debts
of between $1,000,000 and $10,000,000.
EARTH BIOFUELS: Fails to File Report for Quarter ended Sept. 30
---------------------------------------------------------------
Earth Biofuels Inc. received a notification of late filing from
the Securities and Exchange Commission in relation to the
company's failure to file its Form 10-QSB for the period ended
Sept. 30, 2008.
Headquartered in Dallas, Texas, Earth Biofuels Inc. (OTC BB: EBPF)
-- http://www.earthbiofuels.com/-- is engaged in the domestic
production, supply and distribution of alternative based fuels
consisting of biodiesel and previously liquid natural gas and
ethanol. Earth's primary bio-diesel operations are located in
Oklahoma and Texas. Earth sold its subsidiary which produced LNG,
at the end of the second quarter 2008, and restructured its debts
with significant investors.
As reported in the Troubled Company Reporter on Aug. 22, 2008,
Earth Biofuels Inc.'s consolidated balance sheet at June 30, 2008,
showed $14.8 million in total assets, $135.7 million in total
liabilities, and $1.2 million in redeemable preferred stock,
resulting in a $122.1 million stockholders' deficit.
Going Concern Doubt
Montgomery Coscia Greilich LLP, in Plano, Tex., expressed
substantial doubt about Earth Biofuels Inc.'s ability to continue
as a going concern after auditing the company's consolidated
financial statements for the year ended Dec. 31, 2007. The
auditing firm pointed to the company's recurring operating losses
and working capital deficit.
The company has incurred significant losses from operations
through June 30, 2008, and has limited financial resources. The
company also has an accumulated deficit of $279.3 million,
negative current ratios and negative tangible net worth at
June 30, 2008.
In addition, investors holding $52.5 million in senior unsecured
notes filed with the bankruptcy courts a Chapter 7 # Involuntary
Liquidation against the company during the second quarter of 2007.
However, on Nov. 14, 2007, the company negotiated and executed a
settlement agreement with the above note holders. The agreement
required the creditors to dismiss their petition of bankruptcy.
EARTH BIOFUELS: Solicits Consents to Amend Cert. of Incorporation
-----------------------------------------------------------------
Earth Biofuels Inc. is soliciting written consents from its
stockholders as of Oct. 21, 2008, record date for proposal to
amend the company's amended certificate of incorporation to:
-- to increase the number of authorized shares of common stock
par value $0.001 per share of the company from 400,000,000
to 2,500,000,000 shares;
-- to effectuate the change of company's name to evolution
energy, inc.; and
-- to effect a reverse stock split of all of the outstanding
shares of common stock of the company at a ratio of 1 for
20 immediately after the share increase.
As of Oct. 21, 2008, the company's authorized capitalization
consisted of 400,000,000 shares of common stock, of which
385,076,314 shares were issued and outstanding, and 15,000,000
shares of preferred stock, of which 7,000,000 shares were
designated as Series A Preferred Stock, and 2,000,000 shares of
which were designated as Series B Preferred Stock, of which
6,376,991 shares of Series A Preferred Stock were issued and
outstanding and 608,586 shares of Series B Preferred Stock were
issued and outstanding.
A majority of the votes attributable to the company's outstanding
common stock and outstanding shares of Series A Preferred Stock
were cast in favor of the Proposals, which actions are expected to
take place on or about Nov. 25, 2008.
A full-text copy of the company's proposals is available fro free
at http://ResearchArchives.com/t/s?3503
About Eart Biofuels Inc.
Headquartered in Dallas, Texas, Earth Biofuels Inc. (OTC BB: EBPF)
-- http://www.earthbiofuels.com/-- is engaged in the domestic
production, supply and distribution of alternative based fuels
consisting of biodiesel and previously liquid natural gas and
ethanol. Earth's primary bio-diesel operations are located in
Oklahoma and Texas. Earth sold its subsidiary which produced LNG,
at the end of the second quarter 2008, and restructured its debts
with significant investors.
As reported in the Troubled Company Reporter on Aug. 22, 2008,
Earth Biofuels Inc.'s consolidated balance sheet at June 30, 2008,
showed $14.8 million in total assets, $135.7 million in total
liabilities, and $1.2 million in redeemable preferred stock,
resulting in a $122.1 million stockholders' deficit.
Going Concern Doubt
Montgomery Coscia Greilich LLP, in Plano, Tex., expressed
substantial doubt about Earth Biofuels Inc.'s ability to continue
as a going concern after auditing the company's consolidated
financial statements for the year ended Dec. 31, 2007. The
auditing firm pointed to the company's recurring operating losses
and working capital deficit.
The company has incurred significant losses from operations
through June 30, 2008, and has limited financial resources. The
company also has an accumulated deficit of $279.3 million,
negative current ratios and negative tangible net worth at
June 30, 2008.
In addition, investors holding $52.5 million in senior unsecured
notes filed with the bankruptcy courts a Chapter 7 Involuntary
Liquidation against the company during the second quarter of 2007.
However, on Nov. 14, 2007, the company negotiated and executed a
settlement agreement with the above note holders. The agreement
required the creditors to dismiss their petition of bankruptcy.
ELEMCO TESTING: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Elemco Testing Company, Inc.
505-3 Johnson Avenue
Bohemia, NY 11716
Case No.: 08-76561
Debtor-affiliates: Case No.
------------------ --------
Elemco Electrical Construction Co., Inc. 08-76562
Elemco Industries, Inc. 08-76563
Petition Date: November 19, 2008
Court: U.S. Bankruptcy Court
Eastern District of New York (Central Islip)
Judge: Alan S. Trust
Debtors' Counsel: Jonathan S. Pasternak, Esq.
Julie A. Cvek, Esq.
Rattet, Pasternak & Gordon Oliver, LLP
550 Mamaroneck Avenue, Suite 510
Harrison, NY 10528
Tel: (914) 381-7400
Fax: (914) 381-7406
Email: jsp@rattetlaw.com
Email: JCVEK@RATTETLAW.COM
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtors did not file their list of creditors when they filed
their Chapter 11 petitions.
ELITE LANDINGS: Asks Court to Approve Inter-Company Transfers
-------------------------------------------------------------
Elite Landings, LLC, asks the U.S. Bankruptcy Court for the
District of Minnesota for authority to make inter-company
transfers to Petters Aviation, LLC, to provide operating funds to
Petters Aviation through the end of Feb. 28, 2009.
The total budget for the Dec. 1, 2008, through Feb. 28, 2009,
budget is $492,287.
The Debtor is a wholly owned subsidiary of Petters Aviation.
Petters Aviation is a wholly owned subsidiary of Thomas Petters,
Inc., which is in turn owned 100% by Thomas J. Petters,
individually.
Thomas Petters, the founder and former CEO of Petters Group,
remains in federal custody on charges of mail and wire fraud,
money laundering and obstruction of justice.
Prior to the petition date, Elite was in the business of
purchasing Airbus Corporate Jet Aircraft from Airbus S.A.S. and
reselling them. Prior to the filing of the Debtor's bankruptcy
petition, certain pending Purchase Agreements were cancelled by
agreement and, following the Petition Date, the Debtor received a
refund of its down payments amounting to $9,500,000 on six Airbus
aircraft.
About Petters Aviation
Prior to the Petition Date, Petters Aviation held title to a
Boeing 727-100 VIP aircraft bearing FAA registration number N706JP
(the Boeing 727) and a Challenger 601 aircraft bearing FAA
registration number N227PE (the Challenger 601). It subleased
certain hangar facilities at the Minneapolis-St. Paul
International Airport and provided corporate hangaring, an
executive jet center, and limited FBO services from this facility
(the Executive Jet Center). It also managed and oversaw the
daily operations of its wholly owned subsidiaries, including the
Debtor, Petters Aircraft Leasing, LLC and Southwest Aviation,
Inc., Petters Aviation also owns all of the voting stock of MN
Airline Holdings, Inc., which in turn owns 100% of MN Airlines,
LLC, which operates as Sun Country Airlines.
Petters Aviation LLC, and its debtor-affiliates MN Airlines LLC,
and MN Airline Holdings Inc. filed separate petitions for Chapter
11 relief on Oct. 6, 2008 (Bankr. D. Minn. Lead Case No. 08-
45136). Brian F. Leonard, Esq., Matthew R. Burton, Esq., at
Leonard O'Brien et al., represented the Debtors as counsel. When
Petters Aviation LLC filed for protection from its creditors, it
listed assets of $50 million and $100 million, and the same range
of debts.
Proposed Transfers are Ordinary Course
The Debtor tells the Court that until the filing of the
bankruptcies of Petters Aviation and the Debtor, Petters Aviation
regularly received inter-company transfers from its subsidiaries.
For example, Elite does not have its own employees but instead,
Petters Aviation provides Elite with various services.
Accordingly, the Debtor and Petters Aviation believe that the
proposed inter-company transfers are within the ordinary course of
their business, but in an abundance of caution, the Debtor is
seeking court approval of the transaction under Sec. 363(b) of the
Bankruptcy Code.
Proposed Use of Assets is in Best Interests of the Estate
Elite tells the Court that it knows of no creditor with a security
interest in its assets, and that the proposed use of assets is in
the best interests of the estate. If Petters Aviation ceased
operations, there would be no entity to oversee the operations of
the subsidiaries, which would be detrimental to Petters Aviations
creditors.
Based in Minnetonka, Minnesota, Elite Landings, LLC offers
aviation services. The company filed for Chapter 11 relief on
Oct. 9, 2008 (Bankr. D. Minn. Case No. 08-45210). Brian F.
Leonard, Esq., at Leonard, O'Brien, Spencer, Gale & Sayre, Ltd.,
Cass Weil, Esq., James A. Rubenstein, Esq., Lorie A. Klein, Esq.,
at Moss & Barnett, and Ronald E. Barab, Esq., at Smith, Gambrell &
Russell, LLP, represent the Debtor as counsel. The company listed
total assets of between $10 million and $50 million, and the same
range in total debts.
ELITE LANDINGS: May Employ Moss & Barnett as Bankruptcy Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota granted
Elite Landings, LLC, authority to employ Moss & Barnett, as
bankruptcy counsel.
As the Debtor's bankruptcy counsel, Moss & Barnett is expected to
represent and assist the Debtor in carrying out its duties under
the Bankruptcy Code and to perform other legal services necessary
to the Debtor's continuing operations.
As compensation for their services, Moss & Barnett's professionals
bill:
Hourly Rate
-----------
James A. Rubenstein, Esq. $390
Cass S. Weil, Esq. $380
James E. O'Brien, Esq, $475
Lorie A. Klein, Esq. $250
Sue Lacy $180
Andrew Malec $130
The Debtor has reviewed the declaration of Cass S. Weil, Esq., a
shareholder at Moss & Barnett, and believe that the attorneys
selected by the Debtor do not represent any interest adverse to
estate and are disinterested under Sec. 327(a) of the Bankruptcy
Code.
Based in Minnetonka, Minnesota, Elite Landings, LLC offers
aviation services. The company filed for Chapter 11 relief on
Oct. 9, 2008 (Bankr. D. Minn. Case No. 08-45210). Brian F.
Leonard, Esq., at Leonard, O'Brien, Spencer, Gale & Sayre, Ltd.,
and Ronald E. Barab, Esq., at Smith, Gambrell & Russell, LLP,
represent the Debtor as counsel. The company listed total assets
of between $10 million and $50 million, and the same range in
total debts.
ELITE LANDINGS: May Employ Smith Gambrell as Special Counsel
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota granted
Elite Landings, LLC, permission to employ Smith Gambrell &
Russell, LLP, as special counsel.
As the Debtor's special counsel, SGR will advise the Debtor
generally regarding matters of a general corporate nature,
negotiation and documentation of credit facilities, real estate,
divestiture of assets, litigation, intellectual property and
securities law and to participate in, and support the preparation
of, various pleadings and documents which are filed in the case.
As compensation for their services, SGR will the Debtor at their
customary hourly rates in effect on the date the services are
rendered on behalf of the Debtor, as follows:
Howard E. Turner, Esq. $595
Ronald E. Barab, Esq. $550
Brian P. Hall, Esq. $400
Barbara Ellis-Monro,Esq. $375
Jessica Rissmiller, Esq. $225
Nicholas Roecker, Law Clerk $200
Virginia Eden, Paralegal $190
Elissa Hart, Paralegal $190
Lorna J. Virts, Paralegal $190
Ronald E. Barab, Esq., a partner at SGR, assured the Court that
the firm does not represent any interest adverse to the Debtor or
their estate.
MN Airlines, LLC dba. Sun Country Airlines, MN Airline Holdings,
LLC, and Petters Aviations, LLC have likewise sought permission to
employ SGR as special counsel in their respective Chapter 11
cases.
Based in Minnetonka, Minnesota, Elite Landings, LLC offers
aviation services. The company filed for Chapter 11 relief on
Oct. 9, 2008 (Bankr. D. Minn. Case No. 08-45210). Brian F.
Leonard, Esq., at Leonard, O'Brien, Spencer, Gale & Sayre, Ltd.,
Cass Weil, Esq., James A. Rubenstein, Esq., Lorie A. Klein, Esq.,
at Moss & Barnett, and Ronald E. Barab, Esq., at Smith, Gambrell &
Russell, LLP, represent the Debtor as counsel. The company listed
total assets of between $10 million and $50 million, and the same
range in total debts.
ELITE LANDINGS: Sec. 341(a) Meeting Scheduled for Dec. 12, 2008
---------------------------------------------------------------
The United States Trustee for Region 12 will convene a meeting of
Elite Landings, LLC's creditors at 10:30 a.m., on Dec. 12, 2008,
at the U.S. Courthouse, Room 1017, 300 S. 4th Street, in
Minneapolis, Minnesota.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Based in Minnetonka, Minnesota, Elite Landings, LLC offers
aviation services. The company filed for Chapter 11 relief on
Oct. 9, 2008 (Bankr. D. Minn. Case No. 08-45210). Brian F.
Leonard, Esq., at Leonard, O'Brien, Spencer, Gale & Sayre, Ltd.,
Cass Weil, Esq., James A. Rubenstein, Esq., Lorie A. Klein, Esq.,
at Moss & Barnett, and Ronald E. Barab, Esq., at Smith, Gambrell &
Russell, LLP, represent the Debtor as counsel. The company listed
total assets of between $10 million and $50 million, and the same
range in total debts.
ENDURANCE BUSINESS: Moody's Junks Corporate Family Rating From B2
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Endurance
Business Media, Inc. while concurrently placing the ratings on
review for possible further downgrade. The Corporate Family
Rating and Probability of Default Rating were lowered to Caa1 from
B2, the first lien senior secured credit facility rating was
lowered to B3 from B1 and the second lien senior secured term loan
rating was lowered to Caa3 from Caa1.
The Caa1 CFR incorporates the company's weak liquidity profile,
small scale, very high financial leverage and the precipitous
decline in end market demand. Yet despite the severe and
protracted downturn in the US housing market and related
advertising spending, Endurance's cash flow has remained breakeven
to slightly positive through the three quarters ended Sept. 30,
2008 and lends support to the rating.
The ratings downgrade was prompted by a significantly greater
decline in year-to-date September revenue and operating results
than Moody's previously expected. Negative headwinds in the
sector contributed to a material drop in advertising pages in the
company's publications, including its flagship 'Homes&Land' brand.
Despite cost-cutting initiatives, EBITDA has declined
approximately 33% year-to-date as compared to the prior year.
This steep deterioration in EBITDA, combined with a scheduled
step-down in the maximum leverage covenant to 5.75 times at
September 30, 2008, led to a covenant default on both the first
and second lien loans.
On Nov. 11, 2008, management notified the lending group that a
default had occurred. Endurance has thirty days from the
notification date to cure the default and does not currently have
access to its $20 million revolving credit facility. The
company's Sept. 30, 2008 reported cash balance was $3.5 million.
Should management pursue and obtain a covenant amendment, pricing
on the credit facilities would likely increase and further
pressure cash flow generation.
The review for possible downgrade will primarily focus on the
terms of an amendment, if obtained, Endurance's expected run rate
operations, and the company's ability to maintain sufficient
financial flexibility and liquidity over the near to intermediate
term in light of the current challenges in the US real estate
market.
Moody's downgraded these ratings and concurrently placed them on
review for possible downgrade:
-- $20 million first lien revolving credit facility due 2012, to
B3/LGD3(38%) from B1/LGD3(38%)
-- $107 million first lien term loan due 2013, to B3/LGD3(38%)
from B1/LGD3(38%)
-- $40 million second lien term loan due 2014, to Caa3/LGD5(89%)
from Caa1/LGD5 (89%)
-- Corporate Family Rating, to Caa1 from B2
-- Probability of Default Rating, to Caa1 from B2
The previous rating action occurred on April 16, 2008 when Moody's
affirmed the ratings while changing the outlook to negative from
stable.
Endurance Business Media, Inc., headquartered in Tallahassee,
Florida, is a leading publisher of free circulation real estate
guides and a provider of commercial printing services. For the
twelve months ended Sept. 30, 2008, revenues were $78 million.
ESQUIRE CORP: Files for Chapter 7 Liquidation
---------------------------------------------
Esquire Corp. of Lone Tree has filed for Chapter 7 liquidation in
the U.S. Bankruptcy Court for the District of Colorado, court
documents say.
Court documents indicate that Esquire listed about $32,000 in
assets and almost $680,000 in liabilities. According to Denver
Business Journal, Esquire said that it had 50 to 100 creditors.
About Esquire
Esquire Corp. is the owner of The Wareham Group P.C. law firm.
The company's president is attorney Robert Wareham.
FANNIE MAE: Will Suspend Foreclosure Sales & Evictions
------------------------------------------------------
Lauren Pollock at The Wall Street Journal reports that Fannie Mae
and Freddie Mac will suspend foreclosure sales and evictions on
certain properties until January.
According to WSJ, the temporary suspension applies to 10,000
borrowers with Fannie Mae-owned mortgages and 6,000 with Freddie
Mac-owned mortgages in occupied single-family and two- to four-
unit properties with foreclosure sales scheduled between Nov. 26,
2008, and Jan. 9, 2009. The suspension won't apply to vacant
single-family properties, the report says.
WSJ relates that Fannie Mae and Freddie Mac want to give
"servicers" more time to help borrowers avoid foreclosure. The
report quoted Freddie Mac CEO David M. Moffett as saying, "By
working closely with FHFA and our servicers, Freddie Mac is on
track to help three out of every five troubled borrowers with
Freddie Mac-owned loans avoid foreclosure this year."
Fannie Mae and Freddie Mac said last week they would help
streamline the modification of loans for homeowners who are at
least 90 days behind on their mortgage payments, WSJ says. The
program to streamline the modification of loans will begin by Dec.
15, 2008.
The government, according to WSJ, had said that it would use the
two companies to extend aid to struggling homeowners.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
FINLAY FINE: Moody's Pares Probability of Default Rating to 'Ca'
----------------------------------------------------------------
Moody's Investors Service downgraded Finlay Fine Jewelry
Corporation's probability of default rating to Ca from Caa2 and
the senior unsecured notes rating to Ca from Caa3. In addition,
all ratings, including the Caa2 corporate family rating, were
placed on review for further possible downgrade.
The downgrade is prompted by Finlay's recent announcement that it
had entered into an agreement in principle with about 70% of its
note holders to exchange its 8.375% Senior Notes for new Third
Lien Secured PIK Notes. In addition, the note holders have agreed
to purchase $20 million of new Second Lien Secured PIK Notes.
Both new notes are PIK at Finlay's option.
Moody's considers this transaction to be a distressed exchange
given that (A) the existing note holders will be pressured into
exchanging existing notes into the new notes as they otherwise
would become effectively subordinated to a new class of secured
debt represented by the new notes, and (B) the existing note
holders will be foregoing their right to cash interest and it is
highly likely that the company will choose to defer paying cash
interest. Hence, it is Moody's view that existing note holders
are being pressured into accepting securities with certain
characteristics which are less favorable than the existing
securities. Upon closing of the debt exchange the probability of
default rating will be downgraded to D.
These ratings are downgraded and placed on review for possible
downgrade:
-- Probability of default rating to Ca from Caa2;
-- $200 million senior unsecured notes to Ca from Caa3.
This rating is placed on review for possible downgrade:
-- Corporate family rating at Caa2.
The senior unsecured notes LGD assessment of LGD 6, 92% remains
subject to change.
The proposed debt exchange is prohibited by the indenture
governing the 8.375% notes. As such, Finlay has launched a
consent and waiver solicitation to amend the existing indenture.
The consent and solicitation offer expires on Nov. 25, 2008. The
company also announced that a majority of the holders have already
agreed in principle to provide the required consent and waiver.
The review will focus on the timing of the debt exchange as well
as the amount of debt that is ultimately exchanged. In addition,
the review will focus on the impact of deferring cash interest on
the company's liquidity and its performance prospects in the
current holiday season.
Finlay Fine Jewelry, headquartered in New York City, operates 671
leased jewelry departments in major retailers as well as 67 Bailey
Banks and Biddle locations, 35 Carlyle, and 5 Congress Jewelers
specialty jewelry stores. For the year ended Feb. 3, 2008,
revenues from continuing operations were nearly $836 million.
FIRST DATA: Fitch Maintains Ratings & Changes Outlook to Negative
-----------------------------------------------------------------
Fitch Ratings affirmed these ratings for First Data Corp.:
-- Long-term Issuer Default Rating (IDR) at 'B+';
-- $2 billion senior secured revolving credit facility due 2013
at 'BB/RR2';
-- $13 billion senior secured term loan B due 2014 at 'BB/RR2';
-- $3.75 billion 9.875% senior unsecured notes due 2015 at 'B-
/RR6'.
In addition, Fitch has assigned these ratings:
-- $3 billion 10.55% senior unsecured notes with four-year
mandatory PIK interest due 2015 'B-/RR6'.
-- $2.5 billion 11.25% senior subordinated notes due 2016
'CCC+/RR6'.
The Rating Outlook has been revised to Negative from Stable.
The Negative Rating Outlook reflects these considerations:
-- FDC's broad exposure to consumer credit and consumer spending
trends in the US and internationally, particularly Europe,
combined with Fitch's expectations for a significant decline
in consumer spending in 2009 in addition to a continued tight
consumer credit environment, both of which should weigh
heavily on overall debit and credit card transaction volume.
-- These trends are partially mitigated by a continued shift in
mix of payment type to card-based payments which Fitch
expects, as a secular growth trend, will continue to insulate
FDC from general economic weakness.
-- However, given the potential magnitude and duration of the
expected decline in consumer spending, Fitch believes it is
possible FDC could experience flat to declining revenue in
2009 which would push out any expected net reduction in total
debt beyond 2010.
-- Further, Fitch believes FDC is negatively impacted by the
current shift in consumer spending to large discount
retailers where FDC receives a significantly lower profit per
transaction. Additionally, any acceleration of the growth in
debit card transactions, which carry a lower profit than
credit card transactions for FDC, resulting from declining
consumer credit availability, would also negatively impact
results.
A rating downgrade could occur if the magnitude and duration of
expectations for the U.S. and global economies continue to decline
beyond current expectations of a moderate recession lasting into
2009. A further deterioration in economic conditions could result
in a meaningful increase to FDC's leverage as EBITDA would remain
flat or decline with total debt increasing through paid-in-kind
interest and the potential need to draw on the company's revolving
credit facility. Additionally, a greater than one quarter trend
of declining credit and debit card transaction volumes would
likely lead to a ratings downgrade as this would signal a change
in consumer buying patterns well beyond considerations currently
supporting the ratings.
The ratings affirmation reflects these considerations:
-- FDC has achieved modest reductions in leverage since its
leveraged buy-out in September 2007. Fitch estimates leverage
(Total Debt/Total Operating EBITDA) at 8.8 times as of
September 2008 versus 9.4x at the time of the LBO. The
leverage decrease has been driven by modest EBITDA growth
which has offset increased debt totals resulting from PIK
interest on a portion of FDC's debt.
-- FDC has achieved $360 million of annualized savings as of
September 2008, roughly $100 million more than originally
anticipated. The company expects to recognize an additional
$150 million to $200 million of future technology cost
savings. Fitch believes that continued profitability
improvements could be constrained by minimal to declining
revenue growth in 2009.
-- Fitch believes that with modest revenue growth in 2009 and
2010, FDC could generate sufficient free cash flow to reduce
total debt by 2010.
-- Fitch does not expect the recently completed dissolution of
FDC's Chase Paymentech joint venture to have a material
impact on the company's EBITDA and cash flow. However, a
material decline in the business assumed by FDC following the
dissolution of the joint venture could negatively impact
ratings in the future. In 2007, Fitch estimates that Chase
Paymentech's standalone EBITDA was approximately
$650 million. FDC held a 49% equity interest in the joint
venture.
Liquidity as of Sept. 30, 2008, was adequate with $579 million in
cash plus approximately $1.5 billion available under the company's
$1.8 billion secured revolving credit facility which expires
September 2013. The credit facility was originally a $2 billion
committed facility, $230.6 million of which was provided by an
affiliate of Lehman Brothers. The $307 million of drawings was in
large part a result of a cessation of cash dividend payments from
Chase Paymentech during the year as well as $100 million of
corporate cash in the Reserve Primary Fund which was not
accessible. The balance outstanding on the revolving credit
facility was repaid subsequent to the September 2008 quarter end.
Total debt as of Sept. 30, 2008 was approximately $22.8 billion
and consisted primarily of These: i) $307 million outstanding
under a $2 billion secured revolving credit facility expiring
September 2013; ii) $12.8 billion outstanding under a secured term
loan B maturing September 2014; iii) $3.75 billion in 9.875%
senior unsecured notes maturing September 2015; iv) $3 billion in
10.55% notes maturing September 2015 with mandatory PIK interest
through September 2011 and cash interest thereafter; and v)
$2.5 billion of 11.25% senior subordinated notes maturing
September 2016.
In addition, a subsidiary of New Omaha Holdings L.P. (the parent
company of First Data Corp.) has outstanding $1 billion of senior
unsecured PIK notes due 2016. These notes are not obligations of
FDC, and FDC provides no credit support of these notes which, as a
result, are not included in the calculation of total indebtedness
for FDC nor leverage ratios.
Rating strengths include:
-- Stable business model, largely driven by growth in the volume
of electronic payments which as an increasing mix of overall
consumer payment methods, represents a mitigating factor
against the risk of a general economic decline;
-- Significant portion of FDC's Financial Services revenue
stream is under long-term contract, is recurring in nature
and carries high contract renewal rates;
-- Strong revenue diversification in terms of products and
customers with the largest customer representing less than
3.5% of revenue in 2007, excluding reimbursables, as well as
increasing geographic diversification from higher growth
international business;
-- Significant growth opportunities in international markets
which are heavily fragmented competitively and generally
nascent opportunities in terms of the penetration of
electronic payments;
-- FDC has leading market share in its primary businesses with
an inherent advantage in its significant scale and scope of
operations relative to its nearest competitors.
Rating concerns include:
-- Limited financial flexibility to manage adverse changes to
its operating model given leverage (total debt/operating
EBITDA) of 8.8x and interest coverage of 1.3x as of September
2008;
-- Continued execution risk from data center and processing
platform consolidation initiatives which if improperly
managed could significantly impair profitability;
-- On-going consolidation among financial institutions could
lead to customer losses or pressure on profitability in the
card processing business from banks' increased leverage in
price negotiation;
-- The dissolution of Chase Paymentech creates a significant
competitor in JP Morgan Chase which did not previously exist
in the merchant acquisition space and could lead to market
share loss and/or pressure on profitability;
-- FDC continues to evaluate selective acquisitions, a portion
of which could be debt financed.
The Recovery Ratings for FDC reflect Fitch's recovery expectations
under a distressed scenario, as well as Fitch's expectation that
the enterprise value of FDC, and hence recovery rates for its
creditors, will be maximized in a restructuring scenario (as a
going concern) rather than a liquidation scenario. In deriving a
distressed enterprise value, Fitch applies a 15% discount to FDC's
estimated operating EBITDA (adjusted for equity earnings in
affiliates) of approximately $2.6 billion for the latest 12 months
ended Sept. 30, 2008 which is equivalent to Fitch's estimate of
FDC's total interest expense and maintenance capital spending.
Fitch then applies a 6 times distressed EBITDA multiple, which
considers FDC's prior public trading multiple and that a stress
event would likely lead to multiple contraction. As is standard
with Fitch's recovery analysis, the revolver is fully drawn and
cash balances fully depleted to reflect a stress event. The 'RR2'
for FDC's secured bank facility reflects Fitch's belief that 71%-
90% recovery is realistic. The 'RR6' for FDC's senior and
subordinated notes reflect Fitch's belief that 0%-10% recovery is
realistic. The 'CCC+/RR6' rating for the subordinated notes
reflects the minimal recovery prospects and inherent subordination
in a recovery scenario.
FORD MOTOR: Fails to Convince Lawmakers on Bailout Urgency
----------------------------------------------------------
Greg Hitt, Jeffrey McCracken, and Matthew Dolan at The Wall Street
Journal report that General Motors Corp., Ford Motor, and Chrysler
LLC failed to convince lawmakers of their urgent need for
financial assistance.
According to WSJ, Congressional Democratic leaders wanted to take
out the $25 billion financial aid for the automakers out of the
government's $700 billion bailout to the financial markets. Many
Republicans and the Bush administration have resisted the
proposal, and instead favored loosening controls over $25 billion
in already approved loans -- meant to help the industry retool --
to aid in the current crisis. The report says that the
Republican-backed proposal could be added on Thursday as an
amendment to a separate measure that would extend jobless
benefits. Some Democrats, including Michigan Senator Carl Levin,
suggested they would be willing to consider it, while more senior
Democrats strongly opposed it.
Senate Majority Leader Harry Reid, says WSJ, backed away from
efforts to force a vote this week on a Democratic-backed bill that
will allow the bailout, saying that he might move a Republican
alternative proposal on Thursday, but it faced strong opposition.
According to Detroit Free Press, former Republican presidential
candidate Mitt Romney said automakers should go bankrupt rather
than obtain a $25-billion government bailout. "A managed
bankruptcy may be the only path to the fundamental restructuring
the industry needs."
Many lawmakers still had grave doubts about whether the auto
makers were too weak to be saved, Patrick Yoest and Josh Mitchell
at WSJ relate, citing Democratic leaders. Many lawmakers were
unconvinced that the executives of GM, Ford Motor, and Chrysler
could turn their companies around, the report says.
According to WSJ, public anger about the prospect of another
taxpayer-funded rescue of corporations appeared to play a major
role in the Democrat's failure to secure government financial
assistance for GM, Ford Motor, and Chrysler. WSJ states that
Senator Reid told reporters, "The sad reality is that no one has
come up with a plan that can pass the House and Senate and get
signed by President Bush. The executives of the auto companies
have not been able to convince the Congress and the American
people that this government bailout will be its last."
Congressional leaders will consider a special session for the
second week of December if GM, Ford Motor, and Chrysler submit
comprehensive business plans showing how they will return their
firms to stability, and the plans must be submitted by Dec. 2, WSJ
reports, citing Senator Reid.
Failure to gain support in Washington could force GM to file for
bankruptcy protection, but the company is resisting suggestions
from advisers that it make preparations for a Chapter 11 filing,
WSJ says, citing people familiar with the matter. The sources
said that GM admitted to the Congress this week that it could soon
run out of cash, WSJ states. Ford Motor and Chrysler also ruled
out filing for bankruptcy, according to the report.
WSJ states that United Auto Workers President Ron Gettelfinger
told the Bush administration and the Congress must come to an
agreement on aid, or one or more of the Detroit Three auto makers
could collapse by the year-end, and "the costs that would come
from this are just too great."
If one of the automakers would file for bankruptcy, some estimates
put U.S. job losses as high as 2.5 million in 2009, according to
WSJ. The report says that GM, Ford Motor, and Chrysler employ
almost a quarter-million workers. More than 730,000 other workers
produce materials and parts that go into cars, and one million
more people work in dealerships nationwide, the report states.
WSJ relates that Senator Reid said that the Bush administration
could act on its own, noting "the authority to provide funds to
the auto industry lies with the Treasury Department," which
administers the market-rescue fund.
Automakers Split Over Condition for $25BB Bailout
Siobhan Hughes at Dow Jones Newswires reports that GM, Ford Motor,
and Chrysler were split over whether to accept a new round of
mandatory increases in fuel-mileage standards in return for a $25
billion in emergency loans from the government.
GM, Ford Motor, and Chrysler are seeking additional, more
immediate loans, Dow Jones states. As reported in the Troubled
Company Reporter on Nov. 20, 2008, the CEOs of GM and Ford said
that they would refuse a $1 salary in exchange for government aid,
while Chrysler's CEO agreed to the wage.
Congress voted in 2007 to boost fuel-efficiency standards to an
average 35 miles per gallon by 2020, Dow Jones says. According
to the report, the Congress already approved $25 billion in loans
to help factories make more fuel-efficient cars.
Loans should be contingent upon a commitment to develop a new
generation of cars that reduce greenhouse-gas emissions and
operate more efficiently, Dow Jones says, citing Democratic
lawmakers. The executives of the companies, according to the
report, suggested that automakers were already struggling to meet
the new fuel-efficiency standards mandated by a 2007 law.
Dow Jones quoted Ford Motor CEO Alan Mulally as saying, "I think
the work we did last year was very, very good work. We completely
stretched the enabling technology to be able to meet the fuel-
efficiency improvement. I don't think we know of any more
technology that we can bring to bear to accelerate that."
GM CEO Richard Wagoner, according to Dow Jones, said, "We're
stretching to meet the requirements as they are."
Dow Jones reports that Chrysler Robert Nardelli said that "given
our situation, we'd be open to any requirements that you felt
appropriate."
According to Dow Jones, the Democratic-controlled Congress has
been asking car makers to make more fuel-efficient vehicles, which
Detroit has resisted.
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-'.
FRANKLIN COUNTY: S&P Downgrades Revenue Debt Rating to 'BB'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Franklin
County, Ohio's revenue debt one notch to 'BB' from 'BB+', issued
for Friendship Village of Columbus, based on its concern for
Friendship Village's challenged balance sheet for a type A
continuing-care retirement community and the need for capital
investments. The outlook is stable.
"We believe Friendship Village's operations will stabilize over
the next year," said Standard & Poor's credit analyst Brian
Williamson. "Once Friendship Village's management decides on its
campus plan, however, S&P could change the rating again."
Friendship Village's balance sheet, however, remains challenged.
Days' cash on hand was 129 while adjusted leverage was 65% and the
cash-to-debt ratio was 32%. The balance sheet remains a concern
due to Friendship Village's liquidity being low for a type A
facility. Management has also acknowledged there is a need to
invest capital.
For unaudited fiscal year-end June 30, 2008, Friendship Village
posted a negative 2.06% operating margin compared with a negative
0.79% margin for the same period in 2007. The challenge to
operations remains occupancy for the independent-living units.
Management has put plans in place to watch the expense base, and
it continues to look at various ways to get new residents to move
into the community from their existing homes.
As Friendship Village contemplates future capital spending,
management expects its balance sheet to remain challenged for the
near future.
The rating action affects roughly $17.45 million of debt
outstanding.
FREDDIE MAC: Will Suspend Foreclosure Sales & Evictions
-------------------------------------------------------
Lauren Pollock at The Wall Street Journal reports that Fannie Mae
and Freddie Mac will suspend foreclosure sales and evictions on
certain properties until January.
According to WSJ, the temporary suspension applies to 10,000
borrowers with Fannie Mae-owned mortgages and 6,000 with Freddie
Mac-owned mortgages in occupied single-family and two- to four-
unit properties with foreclosure sales scheduled between Nov. 26,
2008, and Jan. 9, 2009. The suspension won't apply to vacant
single-family properties, the report says.
WSJ relates that Fannie Mae and Freddie Mac want to give
"servicers" more time to help borrowers avoid foreclosure. The
report quoted Freddie Mac CEO David M. Moffett as saying, "By
working closely with FHFA and our servicers, Freddie Mac is on
track to help three out of every five troubled borrowers with
Freddie Mac-owned loans avoid foreclosure this year."
Fannie Mae and Freddie Mac said last week they would help
streamline the modification of loans for homeowners who are at
least 90 days behind on their mortgage payments, WSJ says. The
program to streamline the modification of loans will begin by Dec.
15, 2008.
The government, according to WSJ, had said that it would use the
two companies to extend aid to struggling homeowners.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
FREESCALE SEMICONDUCTOR: Reports 3rd Quarter S. Deficit of $700MM
-----------------------------------------------------------------
Freescale Semiconductor Inc.'s balance sheet at Sept. 26, 2008,
showed total assets of $11.0 billion and total liabilities of
$11.7 billion, resulting in a stockholders' deficit of roughly
$700 million.
For three months ended Sept. 26, 2008, the company reported net
loss of $3.4 billion compared to net loss of $261 million for the
same period in the previous year.
For nine months ended Sept. 26, 2008, the company incurred net
loss of $3.9 billion compared with net loss of $1.0 billion for
the same period in the previous year.
A full-text copy of the SEC 10-Q filing is available for free at
http://ResearchArchives.com/t/s?3508
About Freescale Semiconductor
Headquartered in Austin, Texas, Freescale Semiconductor Inc.
(NYSE: FSL) -- http://www.freescale.com/ -- designs and
manufactures embedded semiconductors for the automotive, consumer,
industrial, networking and wireless markets. The company has
design, research and development, manufacturing or sales
operations in more than 30 countries.
* * *
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch Ratings believes Freescale Semiconductor Inc.'s announced
plan to sell or joint venture its cellular business has no
immediate impact on the company's debt ratings or Negative Rating
Outlook, due primarily to the uncertainty surrounding the
structure and timing of any potential transaction. Fitch rates
Freescale as: (i) issuer default rating at 'B+'; (ii) senior
secured bank revolving credit facility at 'BB+/RR1'; (iii) senior
secured term loan at 'BB+/RR1'; (iv) senior unsecured notes at
'B/RR5'; senior subordinated notes at 'CCC+/RR6'.
FREESCALE SEMICONDUCTOR: SVP Discloses Ownership of 1,000 Shares
----------------------------------------------------------------
Mohindra Vivak, senior vice president for Strategy and Business
Transform of Freescale Semiconductor disclosed in a Form 4 filing
with the Securities and Exchange Commission that he owns 1,000
shares of the company's common stock.
As of Oct. 22, 2008, there were 1,000 shares of the company's
common stock, par value $0.01 per share, outstanding.
Headquartered in Austin, Texas, Freescale Semiconductor Inc.
(NYSE: FSL) -- http://www.freescale.com/ -- designs and
manufactures embedded semiconductors for the automotive, consumer,
industrial, networking and wireless markets. The company has
design, research and development, manufacturing or sales
operations in more than 30 countries.
* * *
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch Ratings believes Freescale Semiconductor Inc.'s announced
plan to sell or joint venture its cellular business has no
immediate impact on the company's debt ratings or Negative Rating
Outlook, due primarily to the uncertainty surrounding the
structure and timing of any potential transaction. Fitch rates
Freescale as: (i) issuer default rating at 'B+'; (ii) senior
secured bank revolving credit facility at 'BB+/RR1'; (iii) senior
secured term loan at 'BB+/RR1'; (iv) senior unsecured notes at
'B/RR5'; senior subordinated notes at 'CCC+/RR6'.
GEMSTONE CDO: Moody's Junks Rating on $6,000,000 Class E Notes
--------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the ratings of these two classes of notes
issued by Gemstone CDO Ltd.:
Class Description: $20,000,000 Class D-1 Floating Rate
Deferrable Interest Notes Due December 2034
-- Prior Rating: Baa2, on review for possible downgrade
-- Prior Rating Date: Dec. 23, 2007
-- Current Rating: B1, on review for possible downgrade
Class Description: $10,000,000 Class D-2 Fixed Rate Deferrable
Interest Notes Due December 2034
-- Prior Rating: Baa2, on review for possible downgrade
-- Prior Rating Date: Dec. 23, 2007
-- Current Rating: B1, on review for possible downgrade
Additionally, Moody's has downgraded the rating of this class of
notes:
Class Description: $6,000,000 Class E Floating Rate Deferrable
Interest Notes Due December 2034
-- Prior Rating: Ba2, on review for possible downgrade
-- Prior Rating Date: Dec. 23, 2007
-- Current Rating: C
Moody's notes that the transaction is currently failing the junior
test of overcollateralization and that a majority of the
collateral consists of subprime RMBS.
Moody's announced on Sept. 18, 2008 that it is revising its
expected loss assumptions which are used for the surveillance of
ratings of ABS CDOs holding subprime RMBS, specifically of the
second half 2005 - first half 2007 vintages. Moody's stated that
for purposes of monitoring its ratings of ABS CDOs with exposure
to second half 2005 - first half 2007 subprime RMBS, it will rely
on certain projections of the lifetime average cumulative losses
for vintages of RMBS set forth in a recent Moody's Special Report.
Moody's explained that it will utilise the range of loss
projections set forth in the report based on deal performance and
quarterly vintage to modify its prior assumptions of the expected
loss inputs when monitoring ABS CDO ratings.
Although the transaction is primarily exposed to collateral issued
prior to 2005, there has been deterioration in the credit quality
of the underlying portfolio.
GENERAL GROWTH: Taps Sidley Austin to Aid in Talks with Lenders
---------------------------------------------------------------
Bloomberg News reports that General Growth Properties Inc. has
hired Sidley Austin to assist it in negotiations to refinance
roughly $27.3 billion in debt.
The Wall Street Journal says General Growth has tapped Sidley
Austin as "bankruptcy counsel," but noted that the engagement
doesn't mean a Chapter 11 filing is imminent. "Financially
distressed companies often hire bankruptcy advisers and never take
that step," according to the report.
As reported by the Troubled Company Reporter on Nov. 14, General
Growth acknowledged in a regulatory filing that it's working with
lenders to gain more time to pay off debt, and is also considering
asset sales and other ways to raise cash. General Growth has
$1.13 billion in debt coming due by the end of the year, with more
than $900 million due by Dec. 1, 2008 [Nov. 28]. General Growth
said that even if it is successful in addressing these 2008
maturities, an additional $3.07 billion in debt is scheduled to
mature in 2009.
General Growth had $29,662,127,000 in assets and $27,326,990,000
in debts as of Sept 30, 2008. The company has $139,175,000 in
cash and cash equivalents as of Sept. 30.
"General Growth Properties has hired Sidley Austin in an advisory
role," David Keating, a company spokesman, said today in a
statement, Bloomberg reported. "We are looking at multiple
options to address our current financial situation, among them
being continuing to work with our syndicate of lenders on loan
extensions."
Chicago-based General Growth, which was dropped from the S&P 500
Index, has warned it could seek bankruptcy protection if it is
unable to roll over its debt, MarketWatch notes.
General Growth, WSJ says, is in talks with banks including
Deutsche Bank AG, Goldman Sachs Group and Wachovia Corp. to extend
its payment deadline on the $900 million due Nov. 28. It appears
that General Growth's lenders will extend its Nov. 28 payment
deadline, giving it until early next year to sell those malls and
avoid bankruptcy, WSJ stated, citing two people familiar with the
matter.
WSJ states that Goldman Sachs is handling the company's financial
restructuring and guiding efforts to sell three luxury malls in
Las Vegas. General Growth's other advisers are Morgan Stanley and
Deutsche Bank.
General Growth's financial situation and stock has steadily
deteriorated this year. According to WSJ, General Growth's stock
has sunk from an all-time high of $67 in March 2007 to less than
$1.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc. --
http://www.ggp.com/-- is the second-largest U.S. mall owner with
200-plus shopping malls in 44 states. General Growth is a
self-administered and self-managed real estate investment trust.
General Growth owns, manages, leases and develops retail rental
property, primarily shopping centers. Substantially all of its
properties are located in the United States, but the company also
has retail rental property operations and property management
activities -- through unconsolidated joint ventures -- in Brazil
and Turkey. Its Master Planned Communities segment includes the
development and sale of residential and commercial land, primarily
in large-scale projects in and around Columbia, Maryland; Houston,
Texas; and Summerlin, Nevada, as well as the development and sale
of its one residential condominium project located in Natick
(Boston), Massachusetts.
General Growth said in a regulatory filing Sept. 30 that its
potential inability to address its 2008 or 2009 debt maturities in
a satisfactory fashion raises substantial doubts as to its ability
to continue as a going concern. General Growth had $29.6 billion
in total assets and $27.3 billion in total liabilities as at
September 30.
* * *
As reported by the Troubled Company Reporter on Nov. 18, Moody's
Investors Service has downgraded the ratings on General Growth
Properties, Inc., certain of its subsidiaries and The Rouse
Company LP (to Caa2 from B3 senior secured bank debt; to Caa2 from
B3 senior unsecured debt). The ratings remain on review for
further possible downgrade. The rating action reflects deepening
concerns in the REIT's ability to meet its near term debt
obligations and funding needs.
GENERAL MOTORS: Fails to Convince Lawmakers on Bailout Urgency
--------------------------------------------------------------
Greg Hitt, Jeffrey McCracken, and Matthew Dolan at The Wall Street
Journal report that General Motors Corp., Ford Motor, and Chrysler
LLC failed to convince lawmakers of their urgent need for
financial assistance.
According to WSJ, Congressional Democratic leaders wanted to take
out the $25 billion financial aid for the automakers out of the
government's $700 billion bailout to the financial markets. Many
Republicans and the Bush administration have resisted the
proposal, and instead favored loosening controls over $25 billion
in already approved loans -- meant to help the industry retool --
to aid in the current crisis. The report says that the
Republican-backed proposal could be added on Thursday as an
amendment to a separate measure that would extend jobless
benefits. Some Democrats, including Michigan Senator Carl Levin,
suggested they would be willing to consider it, while more senior
Democrats strongly opposed it.
Senate Majority Leader Harry Reid, says WSJ, backed away from
efforts to force a vote this week on a Democratic-backed bill that
will allow the bailout, saying that he might move a Republican
alternative proposal on Thursday, but it faced strong opposition.
According to Detroit Free Press, former Republican presidential
candidate Mitt Romney said automakers should go bankrupt rather
than obtain a $25-billion government bailout. "A managed
bankruptcy may be the only path to the fundamental restructuring
the industry needs."
Many lawmakers still had grave doubts about whether the auto
makers were too weak to be saved, Patrick Yoest and Josh Mitchell
at WSJ relate, citing Democratic leaders. Many lawmakers were
unconvinced that the executives of GM, Ford Motor, and Chrysler
could turn their companies around, the report says.
According to WSJ, public anger about the prospect of another
taxpayer-funded rescue of corporations appeared to play a major
role in the Democrat's failure to secure government financial
assistance for GM, Ford Motor, and Chrysler. WSJ states that
Senator Reid told reporters, "The sad reality is that no one has
come up with a plan that can pass the House and Senate and get
signed by President Bush. The executives of the auto companies
have not been able to convince the Congress and the American
people that this government bailout will be its last."
Congressional leaders will consider a special session for the
second week of December if GM, Ford Motor, and Chrysler submit
comprehensive business plans showing how they will return their
firms to stability, and the plans must be submitted by Dec. 2, WSJ
reports, citing Senator Reid.
Failure to gain support in Washington could force GM to file for
bankruptcy protection, but the company is resisting suggestions
from advisers that it make preparations for a Chapter 11 filing,
WSJ says, citing people familiar with the matter. The sources
said that GM admitted to the Congress this week that it could soon
run out of cash, WSJ states. Ford Motor and Chrysler also ruled
out filing for bankruptcy, according to the report.
WSJ states that United Auto Workers President Ron Gettelfinger
told the Bush administration and the Congress must come to an
agreement on aid, or one or more of the Detroit Three auto makers
could collapse by the year-end, and "the costs that would come
from this are just too great."
If one of the automakers would file for bankruptcy, some estimates
put U.S. job losses as high as 2.5 million in 2009, according to
WSJ. The report says that GM, Ford Motor, and Chrysler employ
almost a quarter-million workers. More than 730,000 other workers
produce materials and parts that go into cars, and one million
more people work in dealerships nationwide, the report states.
WSJ relates that Senator Reid said that the Bush administration
could act on its own, noting "the authority to provide funds to
the auto industry lies with the Treasury Department," which
administers the market-rescue fund.
Automakers Split Over Condition for $25BB Bailout
Siobhan Hughes at Dow Jones Newswires reports that GM, Ford Motor,
and Chrysler were split over whether to accept a new round of
mandatory increases in fuel-mileage standards in return for a $25
billion in emergency loans from the government.
GM, Ford Motor, and Chrysler are seeking additional, more
immediate loans, Dow Jones states. As reported in the Troubled
Company Reporter on Nov. 20, 2008, the CEOs of GM and Ford said
that they would refuse a $1 salary in exchange for government aid,
while Chrysler's CEO agreed to the wage.
Congress voted in 2007 to boost fuel-efficiency standards to an
average 35 miles per gallon by 2020, Dow Jones says. According
to the report, the Congress already approved $25 billion in loans
to help factories make more fuel-efficient cars.
Loans should be contingent upon a commitment to develop a new
generation of cars that reduce greenhouse-gas emissions and
operate more efficiently, Dow Jones says, citing Democratic
lawmakers. The executives of the companies, according to the
report, suggested that automakers were already struggling to meet
the new fuel-efficiency standards mandated by a 2007 law.
Dow Jones quoted Ford Motor CEO Alan Mulally as saying, "I think
the work we did last year was very, very good work. We completely
stretched the enabling technology to be able to meet the fuel-
efficiency improvement. I don't think we know of any more
technology that we can bring to bear to accelerate that."
GM CEO Richard Wagoner, according to Dow Jones, said, "We're
stretching to meet the requirements as they are."
Dow Jones reports that Chrysler Robert Nardelli said that "given
our situation, we'd be open to any requirements that you felt
appropriate."
According to Dow Jones, the Democratic-controlled Congress has
been asking car makers to make more fuel-efficient vehicles, which
Detroit has resisted.
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: SolarWorld Mulls EUR1 Bil. Offer for German Unit
----------------------------------------------------------------
SolarWorld AG is planning to submit an offer to the US car maker
General Motors Corp. (GM) to take over the four German factories
and the Ruesselsheim development center of Adam Opel GmbH, the
company said in a statement.
SolarWorld said it can make available cash funds amounting to
EUR250 million and bank credit lines worth EUR750 million under
the proviso that the federal government provides a guarantee. A
core prerequisite for the submission of the offer is the complete
separation of Opel from the GM Group and a compensation payment of
EUR40,000 per German job (totaling EUR1 billion).
The SolarWorld Group which has so far been exclusively involved in
solar power technology intends to develop Opel into the first
'green' European automotive group. The group has already been
working for some years on the development and testing of electric
drive vehicles that are propelled by solar energy.
"Sustainability is a comprehensive concept. The challenges of
climate protection and of the market can only be met if we move on
from automotive to solar-motive concepts", said SolarWorld
Chairman and CEO Frank H. Asbeck.
General Motors Comments
Sharon Terlep of Dow Jones Newswires reports that in response to
SolarWorld's announcement, General Motors said the unit is not for
sale.
"This is pure speculation," Karin Kirchner, a GM spokeswoman at
the company's European headquarters in Zurich, said in an e-mail
cited by Dow Jones.
"Opel is not for sale," Ms. Kirchner said, but declined to
specifically discuss SolarWorld's offer.
EUR1 Bil. Lifeline for Opel
As reported in the Troubled Company Reporter-Europe on Nov. 18,
2008, according to newspaper Deutsche Welle, after a Nov. 17
meeting with leaders of Adam Opel, German Chancellor Angela Merkel
said the automaker's request for a EUR1 billion aid from the
German government is "not yet determined." However, Deutsche
Welle said further talks on the issue has been planned and a
decision is expected by Christmas.
According to Bloomberg News, Opel is asking for assistance as its
parent General Motors seeks a U.S. government bailout to avert
bankruptcy. The German unit, Blooomberg News related, wants loan
guarantees in case it's affected by the parent's crisis and "GM's
financial situation were to intensify."
"We haven't yet decided if such a bailout is necessary, it depends
on the developments in the United States, but from the side of the
federal government, we said we'll approach the assessment of a
bailout positively, which is an important signal to the
employees," the Associated Press quoted Chancellor Merkel as
saying.
Chancellor Merkel meanwhile noted that "if such a bailout did take
place, the funding would have to stay in Germany with Opel." Opel
earlier said the government aid would cover developing vehicles
and equipment for its German factories and that it would "under no
circumstances" be used outside Europe, Bloomberg News disclosed.
About SolarWorld AG
Headquartered in Bonn, Germany, SolarWorld AG (FRA:SWV) --
http://www.solarworld.de/-- operates in the photovoltaic sector.
The Company divides its operation into six business segments.
Research and Development includes activities for the technology,
process and product development. The Raw Materials segment offers
production and processing of solar silicon. The Wafers segment
produces crystalline solar wafers. The Solar Cells segment
produces silicon-based solar cells for use in solar power modules.
The Modules segment offers hook-up of solar cells, placement of
connection socket and framing for use in power generation. The
Trading segment is engaged in the international distribution of
SolarWorld modules and complete systems. The Company's
subsidiaries include SolarWorld Innovations GmbH,
Sunicon AG, Deutsche Solar AG, Deutsche Cell GmbH and Solar
Factory GmbH, among others.
About Adam Opel
Adam Opel GmbH -- http://www.opel.com/-- is General Motors
Corp.'s German wholly owned subsidiary. Opel started making cars
in 1899. Opel makes passenger cars (including the Astra, Corsa,
and Vectra) and light commercial vehicles (Combo and Movano). Its
high-performance VXR range includes souped-up versions of Opel
models like the Meriva minivan, the Corsa hatchback, and the Astra
sports compact. Opel is GM's largest subsidiary outside North
America.
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.
GENESIS EDUCATIONAL: Case Summary & 4 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Genesis Educational Bilingual Center Inc
41 Barrio Cantera, Suite 5
Manati, PR 00674
Bankruptcy Case No.: 08-07837
Chapter 11 Petition Date: November 18, 2008
Court: District of Puerto Rico (Old San Juan)
Debtor's Counsel: Jesus Santiago Malavet
smslopsc@prtc.net
Santiago Malavet and Santiago Law Office
470 Sagrado Corazon Street
San Juan, PR 00915
Tel: (787) 727-3058
Fax: (787) 726-5906
Total Assets: $1,589,050
Total Debts: $1,581,196
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/prb08-07837.pdf
GREENCORE TECHNOLOGY: Auditor Raises Going Concern Doubt
--------------------------------------------------------
PS Stephenson & Co. PC, in Wharton, Texas, wrote to the Board of
Directors of GreenCore Technology, Inc., and subsidiaries on
November 3, 2008, that after auditing the financial statements for
the years ended June 30, 2008, 2007 and 2006, it has substantial
doubt about the company's ability to continue as a going concern.
The firm pointed to the company's recurring losses from
operations.
The company has incurred net losses aggregating $12,255,000 during
the three years ended June 30, 2008. In addition, the company has
a working capital deficiency of $7,934,000 and a stockholder's
deficiency of $6,119,000 at June 30, 2008. As of June 30, 2008,
the company's balance sheet showed total assets of $1,969,000 and
total debts of $8,088,000.
Management said: "There can be no assurance that sufficient funds
required during the next year or thereafter will be generated from
operations or that funds will be available from external sources
like debt or equity financings or other potential sources. The
lack of additional capital resulting from the inability to
generate cash flow from operations or to raise capital from
external sources would force the Company to substantially curtail
or cease operations and would, therefore, have a material adverse
effect on its business. Further, there can be no assurance that
any required funds, if available, will be available on attractive
terms or that they will not have a significant dilutive effect on
the company's existing stockholders."
During the years ended June 30, 2008, 2007 and 2006, and in
addition to internally generated funds, the company had obtained
financing through the sale of equity securities, issuance of notes
payable, and advances from related parties.
The Company has developed a plan to address liquidity in these
ways:
* To raise capital through the sale or exercise of equity
securities
* Increase revenue through the sale of DC solar powered air
conditioners and related products.
A full-text copy of the company's annual report is available for
free at http://researcharchives.com/t/s?3502
About GreenCore
GreenCore Technology, Inc., formerly known as AquaCell
Technologies, Inc., was incorporated in Delaware on March 19,
1997. The company's principal business activity is the
manufacture and sale of DC solar power air conditioning systems
utilizing patented technologies. The company markets its product
primarily to distributors in the alternative energy marketplace.
Through June 2006, its Aquacell Media, Inc. subsidiary placed
coolers into various locations and sold targeted advertising on
the bottle band of the permanently attached five-gallon bottle.
During fiscal 2007, the company transitioned away from placing the
coolers in retail locations and selling advertising space on the
water cooler and concentrated on selling the patented self-filling
water coolers.
In May 2007, GreenCore formed a wholly owned subsidiary GreenCore
Air, Inc., for the purpose of acquiring GPM, Inc., the patent
holder and manufacturer of a direct current solar powered air
conditioner. On May 24, 2007, GreenCore acquired 100% of the
outstanding equity interests of GPM, and GPM was effectively
merged into GreenCore Air.
GREEN VALLEY: S&P Downgrades Corporate Credit Rating to 'B-'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Las Vegas-based Green Valley Ranch Gaming LLC to 'B-'
from 'B'. The rating outlook is negative.
At the same time, S&P lowered the issue-level rating on the
company's $550 million senior secured first-lien term loan to 'B'
(one notch higher than the corporate credit rating) from 'BB-'.
The recovery rating on this loan was revised to '2', indicating
the expectation for substantial (70% to 90%) recovery in the event
of a payment default, from '1'.
In addition, S&P lowered the issue-level rating on the company's
$250 million senior secured second-lien term loan to 'CCC' (two
notches lower than the corporate credit rating) from 'CCC+'. The
recovery rating on this loan remains at '6', indicating the
expectation for negligible (0% to 10%) recovery in the event of a
payment default.
"The ratings downgrade reflects S&P's concern that ongoing
softness in the Las Vegas locals market could drive negative free
operating cash flow generation over the next several quarters,"
said Standard & Poor's credit analyst Ben Bubeck.
During the quarter ended Sept. 30, 2008, free operating cash flow
was modestly negative and cash balances declined to $9.7 million,
from $11.5 million at the start of the quarter. S&P previously
indicated that the failure to generate positive free operating
cash flow, given the company's extremely limited liquidity
position, would drive the rating at least one notch lower. The
'B-' rating incorporates S&P's expectation that any additional
cash burn over the next several quarters at this property will be
modest and that the owners would likely step in to provide
liquidity to the extent required to meet debt service obligations.
During the nine months ended Sept. 30, 2008, net revenues and
EBITDA before management fees declined 10.6% and 19.4%,
respectively, from the corresponding prior-year period. S&P
expects that performance over the next few quarters will track
similarly. Although S&P anticipates some moderation of declines
in the second half of 2009, S&P projects that full-year 2009
EBITDAM will decline in the mid-single-digit percentage area from
2008 levels.
The rating on GVR reflects the company's high debt leverage,
limited liquidity, reliance on a single source of cash flow, and
S&P's expectation for continued negative trends in net revenues
and EBITDAM over the next several quarters. The property's high
quality and good location, along with S&P's favorable long-term
view of the prospects for the Las Vegas locals market, only
partially temper these factors. As of Sept. 30, 2008, total debt
to EBITDAM was 8.1x, and EBITDAM interest coverage was 1.5x.
GROUP 1 AUTOMOTIVE: Moody's Reviewing Ba3 Rating for Downgrade
--------------------------------------------------------------
Moody's Investors Service placed the Ba3 corporate family and
probability of default ratings of Group 1 Automotive, Inc. on
review for possible downgrade.
This review action results from Moody's concern that Group 1 may
have difficulty continuing to reduce leverage to levels necessary
for the maintenance of its current Ba3 rating. "While Group 1 has
succeeded in reducing absolute debt levels, reductions in EBITDA
resulting from the difficult macroeconomic environment result in
the very real possibility that the company will not be able to
sufficiently reduce leverage to an acceptable level in the near
term," stated Moody's Senior Analyst Charlie O'Shea.
Ratings placed under review include:
-- Corporate family rating at Ba3;
-- Probability of default rating at Ba3;
-- Sr. Subordinated Notes at B2;
-- Senior Unsecured Shelf at (P)B1;
-- Senior Subordinated Shelf at (P)B2, and
-- Preferred Shelf at (P)B2.
Group 1 Automotive, headquartered in Houston, Texas, is a leading
auto retailer, with 145 franchises, and generated revenues of
$6.15 billion for the LTM ended Sept. 30, 2008.
GSR MORTGAGE: S&P Downgrades Ratings on Seven Classes of Certs.
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on seven
classes of mortgage pass-through certificates from four GSR
Mortgage Loan Trust transactions. At the same time, S&P affirmed
S&P's ratings on 314 other outstanding classes from these and 14
other GSR Mortgage Loan Trust transactions.
The downgrades reflect declining actual credit support and
negative projected credit support, which is insufficient to
support the ratings at their previous levels. Based on the dollar
amount of loans currently in the delinquency pipeline of the
affected deals, losses are projected to further reduce credit
support. In addition, current credit support for the classes S&P
downgraded to 'CC' and 'CCC' may not be sufficient to fully cover
projected losses, due to high delinquencies and projected losses
on the related mortgage collateral. The seasoning of these deals
ranged from 45 months to 67 months as of the October 2008
distribution period.
As of the Oct. 25, 2008, distribution date, cumulative losses for
the downgraded transactions ranged from 0.01% to 0.9% of the
original pool balances. Total delinquencies ranged from 1.49% to
5.60% of the current pool balances, while severe delinquencies
(90-plus days, foreclosures, and real estate owned) ranged from
1.26% to 3.82% of the current pool balances.
The affirmations reflect current and projected credit support
percentages that are sufficient to maintain the ratings at their
current levels.
A senior-subordinate structure provides credit support for the
transactions. The collateral backing the certificates originally
consisted of 15- to 30-year prime fixed- and adjustable-rate
mortgage loans secured by one- to four-family residential
properties.
Rating Actions
GSR Mortgage Loan Trust 2004-5
Series 2004-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B4 36228FX68 BB- BB
B5 36228FX76 CCC B
GSR Mortgage Loan Trust 2004-7
Series 2004-7
Rating
------
Class CUSIP To From
----- ----- -- ----
B5 36228F5T9 CCC B
GSR Mortgage Loan Trust 2004-11
Series 2004-11
Rating
------
Class CUSIP To From
----- ----- -- ----
B3 36242DGC1 BBB- BBB
B4 36242DGE7 CCC BB
B5 36242DGF4 CC B
GSR Mortgage Loan Trust 2004-15F
Series 2004-15F
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 36242DRR6 CCC B
Ratings Affirmed
GSR Mortgage Loan Trust 2003-10
Series 2003-10
Class CUSIP Rating
----- ----- ------
1A1 36228FXX9 AAA
1A4 36228FYA8 AAA
1A5 36228FYB6 AAA
1A6 36228FYC4 AAA
1A7 36228FYD2 AAA
1A8 36228FYE0 AAA
1A9 36228FYF7 AAA
1A11 36228FYH3 AAA
1A12 36228FYJ9 AAA
2A1 36228FYK6 AAA
2A2 36228FYL4 AAA
3A1 36228FYM2 AAA
B1 36228FXQ4 AA
B2 36228FXR2 A
B3 36228FXS0 BBB
B4 36228FXU5 BB
B5 36228FXV3 B
GSR Mortgage Loan Trust 2003-13
Series 2003-13
Class CUSIP Rating
----- ----- ------
1A1 36228FYY6 AAA
1A2 36228FYZ3 AAA
B1 36228FZA7 AA
B2 36228FZB5 A
B3 36228FZC3 BBB
B4 36228FZE9 BB
B5 36228FZF6 B
GSR Mortgage Loan Trust 2003-2F
Series 2003-2F
Class CUSIP Rating
----- ----- ------
IA-1 36228FMM5 AAA
IA-2 36228FMN3 AAA
IA-3 36228FMP8 AAA
IIA-2 36228FMT0 AAA
IIA-3 36228FMU7 AAA
IIA-4 36228FMV5 AAA
IIA-5 36228FMW3 AAA
IIA-6 36228FMX1 AAA
IIA-X 36228FMZ6 AAA
IIA-P 36228FNA0 AAA
IIIA-1 36228FNB8 AAA
A-X 36228FNC6 AAA
GSR Mortgage Loan Trust 2003-3F
Series 2003-3F
Class CUSIP Rating
----- ----- ------
IA-1 36228FNZ5 AAA
IA-2 36228FPA8 AAA
IA-4 36228FPC4 AAA
IA-6 36228FPE0 AAA
IIA-1 36228FPF7 AAA
IIA-2 36228FPG5 AAA
IIIA-1 36228FPK6 AAA
IIIA-2 36228FPL4 AAA
IIIA-3 36228FPM2 AAA
IIIA-6 36228FPQ3 AAA
IVA-1 36228FPR1 AAA
IVA-2 36228FPS9 AAA
IVA-3 36228FPT7 AAA
A-P 36228FPU4 AAA
A-X1 36228FPV2 AAA
A-X2 36228FPW0 AAA
B-1 36228FPX8 AAA
B-2 36228FPY6 AAA
B-3 36228FPZ3 AAA
B-4 36228FQB5 AA+
B-5 36228FQC3 A
GSR Mortgage Loan Trust 2003-4F
Series 2003-4F
Class CUSIP Rating
----- ----- ------
IA-1 36228FQE9 AAA
IA-2 36228FQF6 AAA
vIIA-3 36228FQJ8 AAA
IIA-4 36228FQK5 AAA
IIA-5 36228FQL3 AAA
IIIA-3 36228FQT6 AAA
IIIA-4 36228FQU3 AAA
IVA-1 36228FQY5 AAA
IVA-2 36228FQZ2 AAA
VA-1 36228FRD0 AAA
A-P1 36228FRE8 AAA
A-P2 36228FRF5 AAA
A-X1 36228FRG3 AAA
A-X2 36228FRH1 AAA
B-1 36228FRJ7 AAA
B-2 36228FRK4 AAA
B-3 36228FRL2 AA+
B-4 36228FRM0 AA-
B-5 36228FRN8 BBB+
GSR Mortgage Loan Trust 2003-7F
Series 2003-7F
Class CUSIP Rating
----- ----- ------
IA-1 36228FTT3 AAA
IA-2 36228FTU0 AAA
IA-3 36228FTV8 AAA
IA-4 36228FTW6 AAA
IA-5 36228FTX4 AAA
IIA-1 36228FTY2 AAA
IIA-2 36228FTZ9 AAA
IIA-3 36228FUA2 AAA
IIA-4 36228FUB0 AAA
IIA-5 36228FUC8 AAA
IIIA-1 36228FUD6 AAA
IIIA-2 36228FUE4 AAA
IIIA-3 36228FUF1 AAA
IVA-1 36228FUJ3 AAA
IVA-2 36228FUK0 AAA
VA-1 36228FUN4 AAA
VA-2 36228FUP9 AAA
VA-3 36228FUQ7 AAA
VA-5 36228FUS3 AAA
VIA-1 36228FUT1 AAA
A-P 36228FUU8 AAA
A-1X 36228FUV6 AAA
A-X3 36228FUW4 AAA
A-X4 36228FUX2 AAA
A-X5 36228FUY0 AAA
A-X6 36228FUZ7 AAA
B1 36228FVA1 AAA
B2 36228FVB9 AA+
B3 36228FVC7 A+
B4 36228FVE3 BBB+
B5 36228FVF0 BB-
GSR Mortgage Loan Trust 2003-9
Series 2003-9
Class CUSIP Rating
----- ----- ------
A-1 36228FWR3 AAA
A-2 36228FWS1 AAA
A3 36228FWT9 AAA
X1 36228FWX0 AAA
X2 36228FWY8 AAA
X3 36228FWZ5 AAA
B1 36228FWU6 AA+
B2 36228FWV4 A+
B3 36228FWW2 BBB+
B4 36228FXA9 BB+
B5 36228FXB7 B
GSR Mortgage Loan Trust 2004-2F
Series 2004-2F
Class CUSIP Rating
----- ----- ------
IA1 36229RKM0 AAA
IA-2 36229RKN8 AAA
IA-3 36229RKP3 AAA
IA-4 36229RKQ1 AAA
IA-5 36229RKR9 AAA
IA-6 36229RKS7 AAA
IA-7 36229RKT5 AAA
IIA-1 36229RKU2 AAA
IIA-2 36229RKV0 AAA
IIIA-1 36229RLA5 AAA
IIIA-2 36229RLB3 AAA
IIIA-3 36229RLC1 AAA
IIIA-4 36229RLD9 AAA
IIIA-6 36229RLF4 AAA
IVA-1 36229RLG2 AAA
IVA-2 36229RLH0 AAA
VA-1 36229RLJ6 AAA
VIA-1 36229RLK3 AAA
VIIA-1 36229RLL1 AAA
VIIA-2 36229RLM9 AAA
A-P 36229RLV9 AAA
A-X 36229RLW7 AAA
VIIIA-1 36229RLN7 AAA
IXA-1 36229RLP2 AAA
XA-1 36229RLQ0 AAA
XIA-1 36229RLR8 AAA
XIIA-1 36229RLS6 AAA
XIIIA-1 36229RLT4 AAA
XIVA-1 36229RLU1 AAA
I-B1 36229RLX5 AA+
I-B2 36229RLY3 A+
I-B3 36229RLZ0 BBB+
I-B4 36229RMD8 BB
I-B5 36229RME6 B
II-B1 36229RMA4 AA
II-B2 36229RMB2 A
II-B3 36229RMC0 BBB
II-B4 36229RMG1 BB
GSR Mortgage Loan Trust 2004-3F
Series 2004-3F
Class CUSIP Rating
----- ----- ------
IA-1 36228FG34 AAA
IIA-1 36228FG42 AAA
IIA-2 36228FG59 AAA
IIA-3 36228FG67 AAA
IIA-4 36228FG75 AAA
IIA-5 36228FG83 AAA
IIA-6 36228FG91 AAA
IIA-7 36228FH25 AAA
IIA-8 36228FH33 AAA
IIA-10 36228FH58 AAA
IIA-11 36228FH66 AAA
IIA-12 36228FH74 AAA
IIIA-1 36228FH82 AAA
IIIA-2 36228FH90 AAA
IIIA-7 36228FJ64 AAA
IIIA-8 36228FJ72 AAA
A-P 36228FJ80 AAA
A-X 36228FJ98 AAA
B1 36228FK21 AA
B2 36228FK39 A
B3 36228FK47 BBB
B4 36228FK54 BB
B5 36228FK62 B
GSR Mortgage Loan Trust 2004-5
Series 2004-5
Class CUSIP Rating
----- ----- ------
1A1 36228FV94 AAA
1A2 36228FW28 AAA
1A3 36228FW36 AAA
1AX 36228FW44 AAA
2A1 36228FW51 AAA
2AX 36228FW69 AAA
3A1 36228FW77 AAA
3A2 36228FW85 AAA
3A3 36228FW93 AAA
B1 36228FX27 AA
B2 36228FX35 A
B3 36228FX43 BBB
GSR Mortgage Loan Trust 2004-6F
Series 2004-6F
Class CUSIP Rating
----- ----- ------
IA-1 36228F2D7 AAA
IA-2 36228F2E5 AAA
IA-3 36228F2F2 AAA
IIA-1 36228F2G0 AAA
IIA-2 36228F2H8 AAA
IIA-3 36228F2J4 AAA
IIA-4 36228F2K1 AAA
IIA-5 36228F2L9 AAA
IIA-6 36228F2M7 AAA
IIA-7 36228F3B0 AAA
IIA-8 36228F3C8 AAA
IIIA-1 36228F2N5 AAA
IIIA-2 36228F2P0 AAA
IIIA-3 36228F2Q8 AAA
IIIA-4 36228F2R6 AAA
IVA-1 36228F2U9 AAA
VA-1 36228F2V7 AAA
A-P 36228F2W5 AAA
A-X 36228F2X3 AAA
B1 36228F2Y1 AA
B2 36228F2Z8 A
B3 36228F3A2 BBB
B4 36228F3V6 BB
B5 36228F3W4 B
GSR Mortgage Loan Trust 2004-7
Series 2004-7
Class CUSIP Rating
----- ----- ------
1A1 36228F4P8 AAA
1A2 36228F5Q5 AAA
1A3 36228F5R3 AAA
2A1 36228F4Q6 AAA
3A1 36228F4R4 AAA
4A1 36228F4S2 AAA
B1 36228F4T0 AA
B2 36228F4U7 A
B3 36228F4V5 BBB
B4 36228F5S1 BB
GSR Mortgage Loan Trust 2004-8F
Series 2004-8F
Class CUSIP Rating
----- ----- ------
IA-1 36242DCD3 AAA
IA-2 36242DCE1 AAA
IIA-1 36242DCF8 AAA
II-A2 36242DCG6 AAA
IIA-3 36242DCH4 AAA
IIIA-1 36242DCJ0 AAA
IIIA-2 36242DCK7 AAA
IIIA-3 36242DCL5 AAA
A-X 36242DCM3 AAA
B1 36242DCN1 AA
B2 36242DCP6 A
B3 36242DCQ4 BBB
B4 36242DCR2 BB
B5 36242DCS0 B
GSR Mortgage Loan Trust 2004-9
Series 2004-9
Class CUSIP Rating
----- ----- ------
3A1 36242DBK8 AAA
GSR Mortgage Loan Trust 2004-10F
Series 2004-10F
Class CUSIP Rating
----- ----- ------
1A-1 36242DEH2 AAA
1A-2 36242DEJ8 AAA
1A-3 36242DEK5 AAA
1A-4 36242DEL3 AAA
1A-5 36242DEM1 AAA
1A-6 36242DEN9 AAA
1A-7 36242DEP4 AAA
2A-1 36242DEQ2 AAA
2A-2 36242DER0 AAA
2A-3 36242DES8 AAA
2A-4 36242DET6 AAA
2A-5 36242DEU3 AAA
3A-1 36242DEV1 AAA
4A-1 36242DEW9 AAA
5A-1 36242DEX7 AAA
6A-1 36242DEY5 AAA
7A-1 36242DEZ2 AAA
8A-1 36242DFA6 AAA
8A-2 36242DFB4 AAA
8A-3 36242DFC2 AAA
9A-1 36242DFD0 AAA
A-X 36242DFE8 AAA
A-P 36242DFF5 AAA
B1 36242DFG3 AA
B2 36242DFH1 A
B3 36242DFJ7 BBB
B4 36242DFK4 BB
B5 36242DFL2 B
GSR Mortgage Loan Trust 2004-11
Series 2004-11
Class CUSIP Rating
----- ----- ------
1A1 36242DFP3 AAA
1A2 36242DFQ1 AAA
2A1 36242DFS7 AAA
2A2 36242DFT5 AAA
2A3 36242DFU2 AAA
2AX1 36242DFV0 AAA
2AX2 36242DFW8 AAA
3A1 36242DFX6 AAA
4A1 36242DFY4 AAA
5A1 36242DFZ1 AAA
B1 36242DGA5 AA
B2 36242DGB3 A
GSR Mortgage Loan Trust 2004-13F
Series 2004-13F
Class CUSIP Rating
----- ----- ------
1A-1 36242DLQ4 AAA
2A-1 36242DLR2 AAA
2A-2 36242DLS0 AAA
3A-1 36242DLU5 AAA
3A-2 36242DLV3 AAA
3A-3 36242DLW1 AAA
4A-1 36242DLX9 AAA
4A-2 36242DLY7 AAA
A-X 36242DLZ4 AAA
A-P 36242DMA8 AAA
B-1 36242DMB6 AA
B-2 36242DMC4 BBB
B-3 36242DMD2 B
B-4 36242DME0 CCC
GSR Mortgage Loan Trust 2004-15F
Series 2004-15F
Class CUSIP Rating
----- ----- ------
1A-1 36242DQT3 AAA
1A-2 36242DQU0 AAA
1A-3 36242DQV8 AAA
1A-4 36242DQW6 AAA
2A-1 36242DQX4 AAA
2A-2 36242DQY2 AAA
2A-3 36242DQZ9 AAA
3A-1 36242DRC9 AAA
3A-2 36242DRD7 AAA
4A-1 36242DRE5 AAA
5A-1 36242DRF2 AAA
6A-1 36242DRG0 AAA
7A-1 36242DRH8 AAA
7A-2 36242DRJ4 AAA
A-X 36242DRK1 AAA
A-P 36242DRL9 AAA
B-1 36242DRM7 AA
B-2 36242DRN5 A
B-3 36242DRP0 BBB
B-4 36242DRQ8 BB
GTC BIOTHERAPEUTICS: Sept. 28 Balance Sheet Upside Down by $647K
----------------------------------------------------------------
GTC Biotherapeutics, Inc.'s September 28, 2008, balance sheet
showed total assets of $33,007,000 and total liabilities of
$33,654,000, resulting in total shareholders' deficit of $647,000.
For the three months ended September 28, 2008, the company posted
a net loss of $6,060,000 on revenues of $2,929,000, compared with
a net loss of $8,388,000 on revenues of $2,576,000 in the same
period in 2007.
In its quarterly report filed with the Securities and Exchange
Commission, GTC Biotherapeutics disclosed that it has incurred
losses from operations and negative operating cash flow since
inception and have an accumulated deficit of $297.9 million at
September 28, 2008. "Our recurring losses from operations and
limited funds raise substantial doubt about our ability to
continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded assets or the amount of
reclassification of liabilities, or any adjustments that might be
necessary should we be unable to continue as a going concern. Our
primary sources of additional capital raised have been equity
financings and debt financings. Management expects that future
sources of funding may include new or expanded partnering
arrangements and sales of equity or debt securities. Our failure
to raise capital as and when needed would have a negative impact
on our financial condition and our ability to pursue our business
strategies. We may be required to delay, reduce the scope of or
eliminate our research and development programs, reduce our
planned commercialization efforts, or obtain funds through
arrangements with collaborators or others that may require us to
relinquish rights to certain product candidates that we might
otherwise seek to develop or commercialize independently.
Additionally, any future equity funding may dilute ownership of
our current equity investors. Based on our cash balance as of
September 28, 2008, projected cash receipts from existing
programs, we believe we have the ability to continue our
operations into the second quarter of 2009, including normal
recurring debt service payments. We are currently in discussions
for potential new partnering transactions with a plan to bring
further financial resources into GTC in the near term through
upfront payments. In addition, we may sell additional equity or
debt securities. However, there can be no assurance that we will
be able to enter into anticipated partnering arrangements, or
raise additional capital, on terms that are acceptable to us, or
at all."
A full-text copy of the company's Quarterly Report is available
for free at: http://researcharchives.com/t/s?3500
LFB Note & Warrant Purchase Agreement
On October 31, 2008, GTC entered into a Note and Warrant Purchase
Agreement with LFB Biotechnologies S.A.S.U., under which GTC
agreed to issue to LFB a $15.0 million secured convertible note
and a warrant to purchase 23,193,548 shares of GTC common stock
for payment to GTC of $15.0 million. GTC expects to receive net
proceeds of approximately $10.0 million, after payment of fees and
expenses related to the transaction and after depositing $4.0
million of the proceeds into a restricted cash account for the
benefit of General Electric Capital Corporation to satisfy a
condition to receiving GE Capital's consent to the transaction.
GTC expects to use the net proceeds for general corporate
purposes.
The principal amount of the Convertible Note will be convertible
into 48,387,096 shares of GTC common stock, and the Warrant will
be exerciseable for 23,193,548 shares of GTC common stock. Upon
exercise of the Warrant in full and conversion of the Convertible
Note in full, LFB would own 91,844,048 shares, or 52.6%, of GTC
common stock. The Purchase Agreement also provides LFB with
certain rights and benefits, including a right of first refusal
and a right of first negotiation with respect to GTC's future
sales of common stock, the right of first negotiation with respect
to certain of GTC's products and technologies and the right to
designate board representatives upon conversion of the Convertible
Note. The Purchase Agreement also requires that GTC grant to LFB
rights and licenses to certain technology, products and patents to
guaranty GTC's obligations under the Convertible Note.
Completion of the transaction is subject to satisfaction of
certain conditions, including: the receipt of certain approvals
from GTC stockholders; the execution of an intercreditor agreement
between LFB and GE Capital, the lender under GTC's existing senior
secured credit facility; the accuracy of the representations and
warranties of the parties; and the satisfaction of other customary
closing conditions. GTC expects the transaction to close within
three days after receipt of all required approvals from its
stockholders.
A full-text copy of the Note and Warrant Purchase Agreement is
available for free at: http://researcharchives.com/t/s?34ff
Nasdaq Deficiency Notice
In a separate regulatory filing, John B. Green, senior vice
president, treasurer and chief financial officer, related that on
November 6, 2008, the company received a deficiency letter from
the staff of The Nasdaq Stock Market notifying it that it no
longer satisfies the $2.5 million minimum stockholders' equity
requirement for continued listing of its common stock on the
Nasdaq Capital Market.
"In reviewing our eligibility for continued listing, the Nasdaq
staff has requested that we provide a plan to achieve and sustain
compliance with the continued listing requirements, including the
time frame for completion of the plan. We currently intend to
timely file a plan with Nasdaq. If, after conclusion of its
review, the Nasdaq staff does not accept our compliance plan, it
will provide us with written notice that our common stock will be
delisted. At that time, we would have the opportunity to appeal
the staff's decision to a Nasdaq Listing Qualifications Panel.
During any appeal, our common stock would continued to be listed
on Nasdaq pending a hearing and decision by the Listing
Qualifications Panel," Mr. Green said.
About GTC Biotherapeutics, Inc.
Headquartered in Framingham, Massachusetts, GTC Biotherapeutics,
Inc. (NASDAQ: GTCB) -- http://www.gtc-bio.com-- develops,
supplies, and commercializes therapeutic proteins produced through
transgenic animal technology. The company is also developing a
portfolio of recombinant human plasma proteins with known
therapeutic properties. The company also has a monoclonal
antibody portfolio focused on follow-on biologics, including a
CD20 monoclonal antibody. The intellectual property of the
company includes a patent in the United States through 2021 for
the production of any therapeutic protein in the milk of any
transgenic mammal. It's transgenic production platform is
particularly well suited to enabling cost effective development of
proteins that are difficult to express in traditional recombinant
production systems as well as proteins that are required in large
volumes.
HCA GENESIS: Court Dismisses Chapter 11 Case
--------------------------------------------
Robert Brauchle at Watertown Daily Times reports that Judge
Cecelia G. Morris dismissed on Tuesday a 2005 Chapter 11 ruling
that protected Mercy of Northern New York from creditors.
Watertown Daily relates that Judge Morris' decision takes effect
in seven days and could force Mercy to close its doors within two
years.
According to Watertown Daily, the court had ruled that Mercy be
allowed to reorganize under Chapter 11. Mercy agreed to make
regular payments to creditors until its debts were paid off, but
those obligations haven't been met, the report says.
Judge Morris asked in September 2008 that stakeholders submit
position statements concerning Mercy's performance as it relates
to the bankruptcy ruling, and many of them asked that the court
dismiss the Chapter 11 case, Watertown Daily reports.
Watertown Daily relates that General Electric Capital Corp., who
owns the mortgage on the Stone Street building, asked that the
ruling be dismissed so it can recover money it is owed. The
report states that General Electric asked that a new receiver be
appointed to supervise patient care while the building is being
foreclosed on.
Anthony Salerno purchased Mercy out of bankruptcy for almost $6.7
million in August 2001 and acted as a receiver at the time of the
purchase, Watertown Daily relates. Mr. Salerno passed away
Tuesday morning, Newswatch50.com relates.
Kathy Tucker, a union representative for local 1199 SEIU workers
at Mercy, said that creditors will be able to sue for 20% of what
they're owed, which is the amount approved by the U.S. Bankruptcy
Court, Newswatch50.com relates.
According to Newswatch50.com, Watertown Mayor Jeff Graham worries
that the 200 nursing home beds allocated to Mercy could end up
going elsewhere. Mr. Graham said that demolition could cost
millions of dollars if the city gets stuck with the Mercy building
for unpaid taxes, the report states.
Headquartered in Watertown, New York, HCA Genesis, Inc. dba Mercy
of Northern New York operates Health Care complexes. The company
and parent MGNH, Inc. filed separate petitions for chapter 11
protection on Sept. 5, 2003 (Bankr. S.D. N.Y. Lead Case No.
03-37132). When the company filed for protection from its
creditors, it listed $11,547,733 in assets and $14,837,290 in
debts.
HIGHLAND CREDIT: Moody's Cuts Ratings on Four Classes of Notes
--------------------------------------------------------------
Moody's Investors Service downgraded its ratings of these classes
of notes issued by Highland Credit Opportunities CDO Ltd. and left
them on review for possible further downgrade:
Class Description: U.S.$225,000,000 Class A-1 First Priority
Floating Rate Revolving Notes Due 2013
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: Oct. 22, 2008
-- Current Rating: B3, on review for possible downgrade
Class Description: U.S.$613,000,000 Class A-2 First Priority
Floating Rate Term Notes Due 2013
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: Oct. 22, 2008
-- Current Rating: B3, on review for possible downgrade
Class Description: U.S.$44,000,000 Class B Second Priority
Floating Rate Term Notes Due 2013
-- Prior Rating: Ba1, on review for possible downgrade
-- Prior Rating Date: Oct. 22, 2008
-- Current Rating: Caa3, on review for possible downgrade
Class Description: U.S.$44,000,000 Class C Third Priority Floating
Rate Term Notes Due 2013
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: Oct. 22, 2008
-- Current Rating: Ca
Highland Credit Opportunities CDO Ltd. is a market value
collateralized loan obligation transaction backed primarily by
bank loans.
The rating actions reflect deterioration in the market value of
the underlying collateral pool as well as the increased volatility
and decreased liquidity in the bank loan market. Moreover,
Moody's understands that an Event of Default has recently occurred
due to a failure to maintain the required level of over-
collateralization. The occurrence and continuation of an Event of
Default may result in the principal of the Notes, together with
other outstanding obligations accrued thereon, to become
immediately due and payable.
The rating action taken reflects Moody's view of the increased
expected loss associated with the rated Notes. The severity of
loss may vary and depend on the timing and choice of remedies to
be pursued following the default event. For this reason, the
rating assigned to each Notes remains on review for possible
further rating action.
HOST HOTELS: S&P Changes Outlook to Negative & Holds 'BB' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Host
Hotels & Resorts Inc. and Host Hotels & Resorts L.P. to negative
from stable and affirmed the 'BB' corporate credit rating and all
other ratings. The negative outlook reflects S&P's worsening
expectation for revenue per available room in the U.S. next year
and that Host's credit measures are likely to deteriorate more
than S&P expected because of a higher year-over-year pace of
EBITDA decline.
"With business and leisure travel demand worsening and prospects
for a long and moderate U.S. recession, S&P now expect RevPAR in
the U.S. in 2009 to decline to the mid- to high-single-digits,"
said Standard & Poor's credit analyst Emile Courtney, "compared to
S&P's previous expectation of a decline of 5% or slightly more."
Notably, given the current underperformance industry-wide in
Host's predominantly upscale and luxury price segments, RevPAR for
Host's portfolio of companies could decline at a high-single-
digits pace in 2009.
Host's EBITDA in 2009 could decline by 15% to 20%, compared to
S&P's previous expectation of about 10%. Host currently has some
flexibility in credit measures--lease-adjusted debt to EBITDA of
4.5x (compared to S&P's threshold level of 5x for the 'BB'
rating), EBITDA coverage of interest and preferred dividends of
3.6x (above 2.5x), and debt to total capital of 55% (less than
60%), all as of the 12 months ended September 2008. However, S&P
is increasingly concerned that a decline in EBITDA of 15% to 20%
in 2009 would result in measures that would be weak for the
current rating. At the end of 2009, S&P estimate that credit
measures could be at or worse than the threshold levels: lease-
adjusted debt to EBITDA could be in the mid-5x area, EBITDA
coverage of interest and preferred dividends could be in the mid-
2x area, and debt to total capital could be about 60%.
In addition, Host on Nov. 18, 2008, revised its guidance for
comparable hotel RevPAR to a year-over-year decline of 9% to 11%
for the December 2008 quarter and a decline of 3% for the full-
year 2008, reflecting significantly slowing travel demand and a
worsening economy. Host gave no updated guidance for 2009.
The rating reflects Host's aggressive financial risk profile and,
as a real estate investment trust, its reliance on external
sources of capital for growth. These factors are tempered by the
company's high-quality and geographically diversified hotel
portfolio of 117 owned hotels and more than 60,000 rooms (at
September 2008), high barriers to entry for new competitors
because of its hotels' locations (primarily in urban and resort
markets or close to airports), its strong brand relationships, and
its experienced management team.
Host's credit measures can move within a wide range over time,
given the cyclical nature of lodging and the company's operating
leverage, and S&P expect the current rating to hold,
notwithstanding intermediate-term weakness in credit measures.
The negative outlook reflects the possibility of worse operating
performance than S&P currently expects. The negative outlook
reflects S&P's concern that a decline in EBITDA of 15% to 20% in
2009 would result in credit measures at or worse than S&P's
threshold levels for the 'BB' rating: lease adjusted debt to
EBITDA could be in the mid-5x area (compared to S&P's threshold
level of 5x), EBITDA coverage of interest and preferred
dividends could be in the mid-2x area (more than 2.5x), and debt
to total capital could be in the 60% area (less than 60%).
Driving S&P's concern for Host's credit measures is worsening
business and leisure travel demand and prospects for a long and
moderate U.S. recession. As a result, S&P now believes RevPAR in
the U.S. in 2009 could decline in the mid- to high-single-digits
range, and that Host's portfolio of hotels concentrated in
predominantly upscale and luxury segments could experience a 2009
RevPAR decline in the high-single-digits area. Also, S&P
currently expects that Host would borrow modestly to fund regular
and special dividends, although S&P believes share repurchases and
opportunistic acquisitions would be minimal over the intermediate
term.
S&P could lower the ratings if operating conditions worsen more
than S&P's expected 15% to 20% decline in EBITDA, or if Host
borrows significant amounts to fund dividends, acquisitions, or
share repurchases. The outlook could be revised back to stable if
it becomes clear during the next several quarters that S&P's 2009
EBITDA assumption proves too aggressive and there is a path
toward sustainable recovery in the U.S. lodging industry.
HOUSE OF EUROPE: Moody's Cuts Ratings on Four Classes of Notes
--------------------------------------------------------------
Moody's Investors Service downgraded the ratings on these four
classes of notes issued by House of Europe Funding IV PLC, and
left two of these ratings on review for possible downgrade. The
notes affected by rating actions are:
Class Description: EUR 62,500,000 Class B House of Europe Funding
IV PLC Floating Rate Notes due 2090
-- Prior Rating: Aa3, on review for possible downgrade
-- Current Rating: Ba2, on review for possible downgrade
-- Prior Rating Action Date: May 8, 2008
Class Description: EUR 5,000,000 Class C House of Europe Funding
IV PLC Floating Rate Notes due 2090
-- Prior Rating: A3, on review for possible downgrade
-- Current Rating: Caa2, on review for possible downgrade
-- Prior Rating Action Date: May 8, 2008
Class Description: EUR 49,000,000 Class D House of Europe Funding
IV PLC Floating Rate Notes due 2090
-- Prior Rating: B2, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: May 8, 2008
Class Description: EUR 8,500,000 Class E House of Europe Funding
IV PLC Floating Rate Notes due 2090
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Action Date: May 8, 2008
Additionally, Moody's has placed the rating of these note on
review for possible downgrade:
Class Description: Euro 130,000,000 Class A2 House of Europe
Funding IV Floating Rate Notes, due 2090
-- Prior Rating: Aaa
-- Current Rating: Aaa, on review for possible downgrade
-- Prior Rating Action Date: September 29, 2005
According to Moody's, the rating actions are a result of continued
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities. Moody's notes that collateral par continues
to deteriorate with an increase in the number of defaulted assets
since the prior Moody's rating action. Moreover, the transaction
has significant exposure to subprime and Alt-A securities.
INTCOMEX INC: S&P Changes Outlook to Stable & Affirms 'B-' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Miami,
Florida-based Intcomex Inc. to stable from positive, following
recent weakness in operating performance. Standard & Poor's also
affirmed its 'B' corporate credit rating and its 'B-' senior
secured debt rating.
"The ratings reflect the company's position as a second-tier
distributor of IT products to the Latin American and Caribbean
markets, modest historical earnings and cash flow from operations,
earnings exposure to more volatile end-market economic conditions,
and a leveraged balance sheet," said Standard & Poor's credit
analyst Martha Toll-Reed.
Following strong, double-digit revenue growth rates through the
first half of 2008, revenue growth slowed to about 2% in September
2008, reflecting highly competitive pricing conditions and
weakness in sales of some PC components. Operating margins--2.2%
in the September 2008 quarter as compared with about 4% in the
prior year period--were adversely affected by pricing compression
and higher operating expenses. In addition, profitability in the
near-to-intermediate term will remain exposed to high volatility
in foreign currency exchange markets. Although S&P expects the
company to sustain its record of profitable operation, global
economic weakness and highly competitive industry conditions are
likely to pressure revenue growth and profitability in the near
term.
Founded in 1988, Intcomex's revenues for the 12 months ended Sept.
30, 2008, were about $1.1 billion. Although fragmented and highly
competitive, the Latin American PC market has good unit growth
potential due to low PC penetration rates, declining PC prices,
and rapid growth of Internet users. Intcomex has consistently
grown its market presence and revenue base through internal
expansion. In June 2005, the company acquired Centel, S.A. de
C.V., a former subsidiary. However, additional acquisitions are
not expected to be a strategic priority and are not factored into
the current rating and outlook.
The stable outlook reflects Intcomex's profitable operating
history, diverse customer base and continued growth in the Latin
America PC market. However, the company's relatively modest
EBITDA levels are vulnerable to unexpected volatility in operating
conditions, including foreign exchange rates. The potential for
rating improvement is currently constrained by highly competitive
market conditions, increased volatility of operating performance,
and a leveraged balance sheet. If total debt to EBITDA exceeds
7x, due to further declines in annual EBITDA and/or the incurrence
of additional debt to fund operations, the outlook could be
revised to negative.
INTEGRA TELECOM: S&P Keeps 'B-' Rating; Outlook Negative
--------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Portland, Oregon-based competitive local exchange carrier Integra
Telecom Inc. to negative from positive. At the same time, S&P
affirmed the company's existing ratings, including its 'B-'
corporate credit rating, its 'B-' first-lien bank facility rating
(with a '4' recovery rating), and its 'CCC' second-lien term loan
and payment-in-kind floating-rate unsecured note ratings (both
with a '6' recovery rating). At Sept. 30, 2008, the company had
$1.2 billion of totaled funded debt outstanding.
"The outlook revision reflects the fact that Integra has very
limited headway under its minimum fixed-charge financial covenant
for the third quarter of 2008," explained Standard & Poor's credit
analyst Catherine Cosentino. The covenant is currently 1.05x and
actually tightens even further in the first quarter of 2009 to
1.1x. "It will be challenging for the company to remain in
compliance with these covenant requirements," added Ms. Cosentino,
"especially if its business is hurt by weakness in the economy and
related slow-down in demand for telecom services by Integra's
targeted business customers."
JBB 1033: Case Summary & Largest Unsecured Creditor
---------------------------------------------------
Debtor: JBB 1033 Park Road LLC
3859 Lewiston Place
Fairfax, VA 22030
Bankruptcy Case No.: 08-00763
Chapter 11 Petition Date: November 19, 2008
Court: District of Columbia (Washington, D.C.)
Debtor's Counsel: Jeffrey M. Sherman, Esq.
jsherman@semmes.com
Semmes, Bowen & Semmes
1001 Connecticut Ave., Suite 1100
Washington, DC 20036
Tel: (202) 822-8250
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
The Debtor's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Metropolitan Fire Protection $9,317
7179 Old Alexandria Ferry Road
Clinton, MD 2073
JOHNSON BROADCASTING: Section 341(a) Meeting Set for Dec. 18, 2008
------------------------------------------------------------------
The United States Trustee for Region 7 will convene a meeting of
Johnson Broadcasting, Inc. and Johnson Broadcasting of Dallas,
Inc.'s creditors at 2:00 p.m.., on Dec. 18, 2008, at Suite 3401,
515 Rusk Ave., in Houston, Texas.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson
Broadcasting of Dallas Inc. own and operate television stations in
Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of
Dallas Inc. filed separate petitions for Chapter 11 relief on
Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585,
respectively). John James Sparacino, Esq., and Timothy Alvin
Davidson, II, Esq., at Andrews and Kurth, represent the Debtors
as counsel. When Johnson Broadcasting Inc. filed for protection
from its creditors, it listed assets and debts of between
$10 million to $50 million each.
JOHNSON BROADCASTING: Asks Court to Approve Use of Cash Collateral
-----------------------------------------------------------------
Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc.
ask the U.S. Bankruptcy Court for the Southern District of Texas
for authority to use their lenders' cash collateral on an interim
and final basis, pursuant to a budget for each of the Debtors, to
pay for operating expenses, including payment of payroll.
Johnson Broadcasting is indebted to Merrill Lynch Finance Corp.
for approximately $3.9 million which is secured by, essentially,
all of its assets. Douglas R. Johnson, who owns 100% of Johnson
Broadcasting and 85% of the equity of Johnson Broadcasting of
Dallas, is also an obligor on the debt owed to Merrill Lynch
Finance Corp.
Johnson Broadcasting of Dallas is obligated to certain relatives
of Douglas R. Johnson in the approximate aggregate amount of
$5.8 million which is secured by, essentially, all of the assets
of the Debtor. Upon information and belief, the loans are
unperfected and the purported security interests are subject to
avoidance.
The Debtors tell the Court that the approval of their request for
use of Cash Collateral will minimize disruption of their business
as going concerns, and will increase their successful
reorganization or sale. In addition, included in both budgets is
a line item for a payment related to certain equipment related to
the Digital TV conversion. The Debtors believe that this
equipment will enable them to receive a Special Temporary
Authority from the FCC that will enable them to continue to
broadcast for at least 6 months past the February 2009 DTV
transition deadline.
As adequate protection to Merrill Lynch Finance Corp., Johnson
Broadcasting agree to make periodic cash payments to compensate
for any diminution for the use of Cash Collateral. Johnson
Broadcasting does not believe that it needs to provide adequate to
the relatives of Douglas R. Johnson, as the equity cushion
provides adequate protection.
Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson
Broadcasting of Dallas Inc. own and operate television stations in
Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of
Dallas Inc. filed separate petitions for Chapter 11 relief on
Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585,
respectively). John James Sparacino, Esq., and Timothy Alvin
Davidson, II, Esq., at Andrews and Kurth, represents the Debtors
as counsel. When Johnson Broadcasting Inc. filed for protection
from its creditors, it listed assets and debts of between
$10 million to $50 million each.
JOHNSON BROADCASTING: May Employ Andrews Kurth as Counsel
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
granted authority to Johnson Broadcasting Inc. and Johnson
Broadcasting of Dallas Inc. to employ Andrews Kurth LLP as
bankruptcy counsel, nunc pro tunc to the petition date.
As the Debtors' bankruptcy counsel, Andrews Kurth is expected to:
a) advise the Debtors with respect to their powers and duties as
debtor-in-possession in the continued operation of their
businesses and management of their properties;
b) take all necessary actions to protect and preserve the
Debtors' estates, including the prosecution of actions on the
Debtors' behalf, the defense of any actions commenced against
the Debtors, the negotiation of disputes in which the Debtors
are involved, and the preparation of projections to claims
filed against the Debtors' estates;
c) prepare on behalf of the Debtors, as debtors-in-possession,
all necessary motions, applications, answers, orders,
reports, and papers in connection with the orderly
administration of the estates;
d) perform all necessary legal services in the formulation,
negotiation and confirmation of a plan of reorganization (or
any amendments or modifications to a plan of reorganization)
and disclosure statement complying with the requirements of
Chapter 11 of the Bankruptcy Code, which will be submitted to
parties in interest after approval by the Court; and
e) perform any and all other legal services for the Debtors that
the Debtors determine are necessary and appropriate after
advice and consultation.
As compensation for their services, Andrews Kurth's professionals
bill:
Attorneys $250 to $910 per hour
Paralegals $125 to $275 per hour
The attorneys who will be primarily responsible for the engagement
are John J. Sparacino, Esq., whose current hourly rate is $675 and
Tad Davidson whose current hourly rate is $450.
The Debtors have been advised that Andrew Kurth has agreed to
waive any pre-petition date unpaid fees and expenses. Therefore,
to the best of the Debtors' knowledge and belief, Andrew Kurth
does not hold any interest adverse to the Debtors or their estates
in the matters upon which the firm is to be engaged.
Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson
Broadcasting of Dallas Inc. own and operate television stations in
Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of
Dallas Inc. filed separate petitions for Chapter 11 relief on
Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585,
respectively). When Johnson Broadcasting Inc. filed for
protection from its creditors, it listed assets and debts of
between $10 million to $50 million each.
JOHNSON BROADCASTING: May Employ Taps Kalil & Co. as Media Broker
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas has
granted Johnson Broadcasting Inc. and Johnson Broadcasting Inc. of
Dallas Inc. ermission to employ Kalil & Co., Inc., as their media
broker.
The Debtors told the Court that it anticipates filing a plan of
reorganization which may provide for the sale of their assets.
As the Debtors' media broker, Kalil is expected to:
a) aggressively market a secure a transaction by properly
packaging the stations:
b) list the stations for sale with industry publications;
d) negotiate with prospective purchasers or other agents for the
sale of the stations; and
e) assist in all facets of the sale and closing of the sale on
the station.
In exchange for their services, Kalil will receive a fee of 2% of
the purchase price, to be paid in cash.
Frank J. Higney, vice president at Kalil, assured the Court that
the firm does not hold or represent any interest adverse to the
Debtors or their estate, and is a "disinterested person" as that
term is defined under Sec. 101(14) of the Bankruptcy Code.
Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson
Broadcasting of Dallas Inc. own and operate television stations in
Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of
Dallas Inc. filed separate petitions for Chapter 11 relief on
Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585,
respectively). John James Sparacino, Esq., and Timothy Alvin
Davidson, II, Esq., at Andrews and Kurth, represents the Debtors
as counsel. When Johnson Broadcasting Inc. filed for protection
from its creditors, it listed assets and debts of between
$10 million to $50 million each.
JP MORGAN: Fitch Puts Various Note Ratings on Negative Watch
------------------------------------------------------------
Fitch Ratings places these classes of J.P. Morgan Chase, series
2008-C2 on Rating Watch Negative:
-- $16.0 million class H at 'BBB+';
-- $14.6 million class J at 'BBB';
-- $14.6 million class K at 'BBB-';
-- $8.7 million class L at 'BB+;
-- $4.4 million class M at 'BB';
-- $5.8 million class N at 'BB-';
-- $4.4 million class P at 'B+';
-- $2.9 million class Q at 'B'; and
-- $4.4 million class T at 'B-'.
In addition, Fitch affirms and assigns Outlooks to these classes:
-- $22.2 million class A-1 at 'AAA'; Outlook Stable;
-- $68.1 million class A-2 at 'AAA'; Outlook Stable;
-- $105.5 million class A-3 at 'AAA'; Outlook Stable;
-- $54.5 million class A-SB at 'AAA; Outlook Stable;
-- $354.6 million class A-4 at 'AAA'; Outlook Stable;
-- $145 million class A-4FL at 'AAA'; Outlook Stable;
-- $64.9 million class A-1A at 'AAA'; Outlook Stable;
-- $116.6 million class A-M at 'AAA'; Outlook Stable;
-- $61.2 million class A-J at 'AAA'; Outlook Stable;
-- Interest-only class X at 'AAA'; Outlook Stable;
-- $14.6 million class B at 'AA+'; Outlook Stable;
-- $14.6 million class C at 'AA'; Outlook Stable;
-- $10.2 million class D at 'AA-'; Outlook Negative;
-- $10.2 million class E at 'A+; Outlook Negative;
-- $13.1 million class F at 'A'; Outlook Negative; and
-- $11.7 million class G at 'A-'; Outlook Negative.
The Rating Watch Negative placements are due to the recent
transfer of two loans representing approximately 20% of the
transaction to special servicing for imminent default. Fitch
expects to resolve the Rating Watch status of these classes as
more information on the potential workouts of the loans becomes
available.
The Negative Rating Outlooks reflect the uncertainty surrounding
the outcome of the workouts as various strategies continue to be
discussed. The Outlooks may be revised or changed when the Rating
Watch status is resolved.
The largest loan (10.8%) in the transaction is The Promenade Shops
at Dos Lagos. The loan is secured by a 345,847 square foot
lifestyle/entertainment retail center built in 2006-2007, which
was the first of two phases of development. The sponsor has
expressed financial hardship due to the serious downturn in the
economy and slower than anticipated growth of the surrounding
neighborhood residential real estate market. Fitch's cash flow
analysis at issuance considered contractual rent obligations,
which represented approximately 91.4% of the net rentable area at
an average in-place rate of $23.50 per square foot. Cash flow has
declined from issuance and is no longer sufficient to meet the
monthly debt service obligation.
The third largest loan (8.9%) in the transaction is a portfolio of
two full service Westin Hotels, totaling 899 rooms. The hotels
are located in Tucson, AZ, and Hilton Head, South Carolina. The
borrowers indicated that they will have difficultly paying debt
service going forward as a result of declining market performance.
There is approximately $31.5 million of mezzanine debt that is
subordinate to the trust amount. The loan is pari passu in that
only the $104 million A-2 note is collateral to this transaction;
the $105 million A-1 note was securitized in the JPMCC 2007-C1
transaction which is not rated by Fitch.
The special servicers for the loans are currently reviewing
workout options with the borrowers. Fitch will continue to
monitor the workout of these loans and their potential effect on
the transaction.
JPMORGAN CHASE: To Lay Off 10% of Staff; To Freeze Base Salaries
----------------------------------------------------------------
JPMorgan Chase & Co. will lay off about 10%, or 3,000, of its
investment banking staff, Elizabeth Hester at Bloomberg reports,
citing a person familiar with the bank.
According to Bloomberg, the source said that the layoff at
JPMorgan Chase will be global and will affect various groups
within the investment bank. Citing a source, Alistair Barr at
MarketWatch relates that the job cuts will be across all levels,
assets classes, and geographies.
Some workers at the bank have been notified, Bloomberg says.
Citing a source, Bloomberg relates that JPMorgan Chase will also
freeze base salaries in 2009 for most employees who earn more than
$60,000 to $70,000.
New York-based JPMorgan Chase & Co. --
http://www.jpmorganchase.com-- is a financial holding company.
JPMorgan Chase's principal bank subsidiaries are JPMorgan Chase
Bank, National Association, a national banking association with
branches in 17 states, and Chase Bank USA, National Association, a
national bank that is the Company's credit card issuing bank.
JPMorgan Chase's principal non-banking subsidiary is J.P. Morgan
Securities Inc., its United States investment banking firm. The
bank and non-bank subsidiaries of JPMorgan Chase operate
nationally, as well as through overseas branches and subsidiaries,
representative offices and subsidiary foreign banks.
KINGSRIDGE 200: Case Summary & 13 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Kingsridge 200 L.L.C.
4435 Waterview Drive, Suite 104
Glen Allen, VA 23060
Bankruptcy Case No.: 08-35836
Chapter 11 Petition Date: November 18, 2008
Court: Eastern District of Virginia (Richmond)
Judge: Douglas O. Tice, Jr.
Debtor's Counsel: Roy M. Terry, Jr., Esq.
rterry@durrettebradshaw.com
DurretteBradshaw, PLC
600 E. Main St., 20th Floor
Richmond, VA 23219
Tel: (804) 775-6948
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $1,000,000 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/vaeb08-35836.pdf
LAZY DAYS: Won't Make Interest Payment on $137 Mil. Senior Notes
----------------------------------------------------------------
Lazy Days' R.V. Center Inc. disclosed in a regulatory filing with
the Securities and Exchange Commission that it will not pay the
interest payment due Nov. 17, 2008, on $137 million in 11.75%
senior notes that mature May 15, 2012.
The moved is an attempt to preserve cash in light of the severe
and protracted downturn in the market for recreational vehicles
that has been exacerbated by a significant reduction in the
extension of credit to consumers for the purchase of recreational
vehicles, among other things.
The company issued on May 14, 2004, $152 million of unsecured,
senior notes through a private placement exempt from the
registration requirements of the 1933 Securities Act. On Dec. 6,
2004, the company completed the exchange of $137 million of its
Senior Notes while the remaining notes totaling $15 million were
not eligible for exchange.
The company said it has a 30-day grace period before the failure
to pay interest becomes an event of default. During this period,
the company intends to engage in talks with holders of its Senior
Notes to improve its liquidity or modify its requirements for
liquidity.
According to the company, the outstanding balance of Senior Notes
at Sept. 30, 2008, was $138,744,046 net of unearned discount of
$809,954. Interest expense on the Senior Notes for the three and
nine-month periods ended Sept. 30, 2008 was $4,099,899 and
$12,298,196 compared to $4,171,367 and $12,514,102 for the three
and nine-month periods ended Sept. 30, 2007, the company added.
The Senior Notes, the company said, rank pari passu with its
existing and future senior debt. The Senior Notes are effectively
subordinated to the floor plan credit facility, including its
revolving credit facility, to the extent of the assets
collateralizing the debt, the company related.
The company said it has the option to redeem the Senior Notes at
any time at a defined premium plus accrued and unpaid interest to
the date of redemption.
The company further said it will offer to repurchase Senior Notes
from all holders, on a pro rata basis, to the extent of 50% of the
its free cash flow for any six-month period ending on either
June 30 or Dec. 31 of any fiscal year. If its free cash flow for
any six-month period is less than $1.0 million, the company may
elect not to make a free cash flow offer for such period and add
such free cash flow to the amount of free cash flow for the next
succeeding six-month period. The company's free cash flow offer
for the six-month period ended June 30, 2008, was recorded as a
current maturity of long-term debt. In Oct. 2008, the free cash
flow offer was completed for $1,849,209, consisting of $1,717,000
in bond redemption, a $51,510 redemption premium and $80,699 in
accrued interest.
The company said it had outstanding letters of credit amounting to
$495,000 at Sept. 30, 2008. Interest on outstanding advances is
payable monthly and is based on the prime rate. Borrowings are
collateralized by substantially all of the company's assets.
The company has assets of $318,091,662 and liabilities of
$251,938,030 as of Sept. 30, 2008, compared with assets of
$340,583,539 and liabilities of $269,372,003 as of Dec. 31, 2007.
Current assets total $104,894,990, of which $4,349,023 is in cash
as of Sept. 30, 2008.
About Lazy Days'
Lazy Days' R.V. Center, Inc., -- http://www.lazydays.com/-- a
wholly owned subsidiary of LD Holdings, Inc., makes coach and
beaver motorhomes, carriage fifth wheels and coachmen Rvs.
According to the Troubled Company Reporter on Nov. 20, 2008,
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 (i) Corporate Family Rating to Ca
from Caa2; (ii) Probability of Default Rating to Ca from Caa2; and
(iii) Senior Unsecured Notes at to C from Caa3 (LGD 5, 83%), the
LGD point estimate remains subject to change.
LCV LLC: Files for Chapter 11 Protection
----------------------------------------
Denver Business Journal reports that LCV LLC filed for Chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the
District of Colorado on Nov. 18, 2008.
Court documents say that LCV listed assets of $10 million to $50
million and debts of $10 million to $50 million. According to
Denver Business, LCV said that it had less than 50 creditors.
LCV LLC is a construction company in Greenwood Village, Colorado.
LEVITT AND SONS: Court to Tackle Disclosure Statement on Dec. 1
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida has
set a hearing for December 1, 2008, to consider the adequacy of
the disclosure statement to the First Amended Joint Liquidating
Chapter 11 Plan dated October 31, 2008, proposed by Levitt and
Sons LLC and its debtor affiliates, together with the
Official Committee of Unsecured Creditors.
Parties-in-interest who oppose the Disclosure Statement are given
until November 24 to file their written objections. If the Court
approves the Disclosure Statement, the Debtors may begin
soliciting acceptances, then seek confirmation of, their Plan.
Judge Ray has extended the Debtors' exclusive period for
soliciting acceptances to their proposed Chapter 11 plan, as
amended, through and including January 31, 2009.
As reported by the Troubled Company reporter, the Debtors
delivered to the Court their First Amended Joint Liquidating
Chapter 11 Plan and Disclosure Statement dated October 31, 2008.
Levitt and Sons Executive Vice President John A. Dischner relates
that the Amended Plan provides that the net proceeds of the sale
or other disposition of assets of Levitt and Sons, the settlement
and compromise of certain Causes of Action, including the
Woodbridge Settlement and certain contingent recoveries through
Causes of Action, will be collected and distributed to creditors:
(a) First, to the Holders of Secured Claims, if any, who hold
valid, duly-perfected and non-avoidable security interests
in and Liens on assets and proceeds, provided that
Distributions to those Holders will come only from those
assets or proceeds;
(b) Second, to the Holders of Allowed Administrative Expense
Claims, Allowed Professional Claims, Allowed Priority Tax
Claims, and Allowed Priority Claims in accordance with the
scheme of priorities set forth in the Bankruptcy Code; and
(c) Third, to the Holders of Allowed General Unsecured Claims
and the Holders of Allowed Deposit Holder Claims on a pro
rata basis.
About Levitt and Sons
Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors have filed a Chapter 11 joint plan of liquidation.
(Levitt and Sons Bankruptcy News, Issue No. 33; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
LOGAN KNITTING MILLS: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: LOGAN KNITTING MILLS, INC.
dba SUCCESS FULFILLMENT SERVICES
dba LOGAN MILITARY SUPPLY
dba LOGAN INTERNATIONAL CONTRACT EMBROIDERY
fdba WRESTLERS EXPRESS2181 FOSTER AVE.
2181 FOSTER AVE.
Wheeling, IL 60060
Case No.: 08-31632
Petition Date: November 19, 2008
Court: U.S. Bankruptcy Court
Northern District of Illinois (Chicago)
Debtor's Counsel: Forrest L Ingram, Esq.
Forrest L. Ingram, P.C.
79 W Monroe Street, Suite 900
Chicago, IL 60603
Tel: 312 759-2838
Fax: 312 759-0298
Email: fingram@fingramlaw.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/ilnb08-31632.pdf
MACMENAMIN'S GRILL: Files for Chapter 11 Protection; Blames State
-----------------------------------------------------------------
Allan Drury at The Journal News (New York) reports that
MacMenamin's Grill has filed for Chapter 11 bankruptcy protection.
According to The Journal, Brian MacMenamin, the owner of
MacMenamin's Grill, blamed his company's bankruptcy on the state
of New York's delay in granting him permission to expand his
cooking school. The Journal relates that Mr. MacMenamin said that
he already applied to the state Bureau of Proprietary School
Supervision, but the agency has ignored his request.
MacMenamin's Grill is contesting more than $90,000 in bills from
utility company Consolidated Edison Inc., The Journal states,
citing Mr. MacMenamin.
MacMenamin's Grill -- http://www.macmenaminsgrill.com/-- is a
five-star restaurant known for its fish and steak platters. It is
located in New Rochelle, New York.
MAN GLENWOOD: Moody's Cuts Rating on $43.7MM Class D Notes to Ba2
-----------------------------------------------------------------
Moody's Investors Service downgraded these debt securities issued
by Man Glenwood Alternative Strategies II Ltd.:
$250,000,000 Class A Secured Floating Rate Notes due 2010
-- Current Rating: Aa2, on review for downgrade
-- Prior Rating: Aaa, on review for downgrade
$40,000,000 Class B Secured Floating Rate Notes due 2010
-- Current Rating: A3, on review for downgrade
-- Prior Rating: Aa2, on review for downgrade
$15,000,000 Class C Secured Floating Rate Notes due 2010
-- Current Rating: Baa1, on review for downgrade
-- Prior Rating: A1, on review for downgrade
$43,750,000 Class D Secured Floating Rate Notes due 2010
-- Current Rating: Ba2, on review for downgrade
-- Prior Rating: Baa2, on review for downgrade
Originally rated on Aug. 13, 2003, Man Glenwood Alternative
Strategies II Ltd. is a collateralized fund obligation that is
backed by equity interests in a diversified fund of hedge funds.
The fund is managed by Man Glenwood GmbH.
All of the Notes were put on review for possible downgrade by
Moody's on Oct. 28, 2008. This rating action reflects severe
deterioration in the transaction's overcollateralization level due
to severe market conditions.
MASHANTUCKET PEQUOT: Moody's Assigns Ba2 Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service downgraded ratings for the Mashantucket
(Western) Pequot Tribal Nation, including its Special Revenue
Obligation bonds to Ba1 (LGD2, 27%) from Baa3. Moody's also
assigned a Ba2 corporate family rating and Ba2 probability of
default rating to this issuer as it has transitioned to non-
investment grade status. The rating outlook is negative.
These ratings were assigned:
-- Corporate family rating at Ba2
-- Probability of default rating at Ba2
These ratings were lowered and LGD point estimates assigned:
-- Special Revenue Obligations to Ba1 (LGD2, 27%) from Baa3
Subordinated Special Revenue Obligations to Ba3 (LGD5, 71%)
from Ba1
-- 2007 Series A Notes to B1 (LGD5, 89%) from Ba2
The downgrade to non-investment grade status is based on Moody's
expectation that, the continuation of negative gaming trends in
Connecticut and the broader Northeast US gaming market will
prohibit the company from reducing its debt/EBITDA ratio over the
next several years to a level consistent with its former
investment grade status -- below 4 times. Debt/EBITDA for the 12-
month period ended June 30, 2008 approximated 6.5 times. This
high leverage was largely the result of a steep decline in recent
earnings along with a significant amount of debt-financed
development capital expenditures related to the new MGM Grand at
Foxwoods.
The downgrade incorporates the expected earnings contribution from
the recent opening of the $700 million MGM Grand at Foxwoods,
announced cost reductions, and the company's decision to
significantly reduce development related capital expenditures.
The negative rating outlook considers that despite cost cutting
initiatives, minimal development CAPEX in the foreseeable future,
and further earnings contributions from the MGM Grand at Foxwoods,
the continuation of negative gaming trends in Connecticut could
make it difficult for Foxwoods to significantly reduce its
leverage during the next two years. Continued and significant
declines in reported monthly gaming revenues could lead to a
further downgrade.
This rating action concludes the review process that was initiated
on Aug. 21, 2008 when Foxwoods' ratings were placed on review for
possible downgrade in response to the company's continued
vulnerability to the weak US economy and increased competition in
the Northeast US.
Foxwoods Resort Casino is owned by the Mashantucket Pequot Tribal
Nation. The Mashantucket Pequot Gaming Enterprise, a wholly-
owned, unincorporated division of the Tribe, conducts Foxwoods'
gaming and resort operations.
MI DEVELOPMENTS: Moody's Cuts Rating on Senior Debentures to 'Ba1'
------------------------------------------------------------------
Moody's Investors Service downgraded the senior debentures of MI
Developments Inc. to Ba1, from Baa3. Moody's rating action
reflects the persistent financial issues with Magna Entertainment
Corp., a company in which MID has a 54% equity stake and controls
96% of the votes, and increasing pressures in the automotive
sector. The rating outlook is stable. The stable outlook reflects
MID's stable cash flows from long-term triple-net leases,
substantially all of them to MID's former parent, Magna
International, Inc., from which MID was spun off in 2003, and
strong credit metrics.
Moody's stated that the reasons for the downgrade included: MID
not completing a reorganization of MEC; the continued extension of
material additional credit from MID to MEC; the failure of MEC to
resolve "going concern" matters; material further deterioration in
MEC's credit quality; recent CEO and director turnover, which has
increased Moody's concerns about corporate governance matters; and
heightened concern regarding the operating performance of MID's
primary tenant, Magna, and the automotive sector as a whole.
MI Developments Inc. is a real estate operating company that owns,
develops and manages industrial and commercial real estate
properties located in North America and Europe. The MEC holding
is a credit weakness, since MEC's cash flows are more volatile and
seasonal than those of MID. Although the cash flows of MID and
MEC are segregated, and the continued extension of credit to MEC
to stem the operating losses in MEC is a credit negative for MID,
MID does not guarantee any of MEC's debt.
The current rating reflects MID's strong franchise in owning and
operating 105 triple-net industrial assets located in nine
countries. MID has 27.3 million square feet of leaseable area in
the core real estate business, which is concentrated in terms of
property type, with approximately 97% (based on square footage)
manufacturing plants and warehouses, and 3% office buildings.
These properties are comprised predominantly of industrial plants
strategically located and used by Magna primarily to provide
automotive parts and modules to the world's manufacturers of cars
and light trucks for their assembly plants throughout North
America and Europe. The portfolio also includes several office
buildings, including the head offices of Magna. On a book value
basis at September 30, 2008, the properties are distributed in:
Canada (33%), Austria (30%), USA (18%), Germany (10%), Mexico (6%)
and other countries (3%). As Magna undergoes a rationalization
process, it has apprised MID that it will be vacating some of its
properties. Since these are net lease properties with long-term
leases, Magna will be responsible for lease payments unless they
negotiate a lease buyout arrangement with MID. To MID's credit,
it is aggressively pursuing new tenants and has successfully
signed two new tenants.
MID's overall liquidity and funding is satisfactory. MID has no
balance outstanding on its $50 million revolver at 3Q08; however,
MEC has 0% available on its $40 million line of credit at 3Q08,
which is factored into the analysis due to the consolidation of
MID's and MEC's financial positions resulting from MID's majority
interest in MEC - this provides a combined availability of 56%.
MEC's liquidity significantly depends on further sales of unique
assets -- a negative, particularly in the current economy. MID's
consolidated debt maturity schedule is choppy, with the maximum
debt maturity comprising 33% of debt coming due in 2010; prior to
that the maturities are in the 1% to 10% of total debt range.
There are immaterial amounts of encumbered properties in MID (the
property company) with only $6 million of mortgages; however,
encumbrances exist in MEC, where the majority of assets are
pledged (in most cases, to MID). MID's cash flows and earnings
have been stable in the core real estate portfolio, but volatile
for the MEC holdings - thus the consolidated EBITDA/Revenues ratio
is 24.8%, which is low. Fixed charge coverage is excellent at
4.9x, but this figure has varied during the past five years as MID
has worked through its relationship with MEC.
Moody's noted that MEC carries significant leverage, and the
overlapping ownership of MID, MEC and Magna creates potential
conflicts of interest. MID has extended credit to subsidiaries of
MEC via two project financings totaling $196.5 million: a
$162.3 million project financing for the redevelopment of
Gulfstream Park racetrack and casino in Florida (due February
2016), and a $34.2 million project financing for the redevelopment
of Remington Park racetrack and casino in Oklahoma (due December
2016). Although MID has some unhedged FX exposure, its revenues
are diversified, with approximately 32% Canadian dollar, 24% US
dollar and 43% Euro (1% other currencies). MID's net debt/EBITDA
is strong at 1.8x and secured debt is low at 4% of gross assets.
An upgrade would be difficult in the medium term. Positive rating
movement would be predicated on MID successfully spinning off MEC,
leading to more robust and consistent financial results, and less
concentration risk with Magna, which would approach closer to 65%
of MID's tenant base. The rating could come under pressure should
MID experience a substantive weakening in credit metrics with
fixed charge coverage consistently trending below 3x, a
significant deterioration in the automotive industry that would
force Magna to close a substantial number of its properties leased
to MID, as well as further CEO and director turnover that
increases Moody's concerns about corporate governance matters.
These ratings were downgraded with a stable outlook:
-- MI Developments Inc.; Unsecured debt at Ba1, from Baa3;
unsecured debt shelf at (P)Ba1, from (P)Baa3.
MI Developments Inc., a real estate operating company
headquartered in Aurora, Ontario, Canada, is engaged in the
ownership, development, management, leasing and acquisition of
industrial and commercial real estate properties located in North
America and Europe. Virtually all of its income-producing
properties are under lease to Magna International Inc. or its
subsidiaries. MID also acquires land that it intends to develop
for mixed-use and residential projects and holds a controlling
interest in Magna Entertainment Corp., an owner and operator of
horse racetracks and supplier, via simulcasting, of live racing
content to the inter-track, off-track and account wagering
markets. At Sept. 30, 2008, MI Developments had US$2.8 billion in
assets on a consolidated basis and US$1.7 billion in equity.
MKP CBO III: Moody's Reviews 'Ba1' Note Rating For Possible Cut
---------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade these note issued by MKP CBO III Ltd.:
The $17,000,000 Class C Mezzanine Secured Floating Rate Notes Due
2039
-- Prior Rating: Baa2
-- Prior Rating Date: April 28, 2004
-- Current Rating: Ba1, on review for possible downgrade
According to Moody's this rating change is the result of
deterioration in the credit quality of the underlying pool of
collateral. Moody's notes that collateral par has deteriorated
since the last rating action was taken due to an increase in the
amount of defaulted assets.
MOHEGAN TRIBAL: Negative Gaming Trends Cue Moody's Rating Cuts
--------------------------------------------------------------
Moody's Investors Service lowered Mohegan Tribal Gaming
Authority's corporate family rating and probability of default
rating to B1 from Ba2. The company's senior subordinated notes
were lowered to B3 from Ba3, while the company's senior notes were
lowered to Ba3 from Ba1. A stable rating outlook was assigned.
The two-notch downgrade of MTGA's corporate family rating
anticipates that the continuation of negative gaming trends in
Connecticut along with the significant dividends paid to the
Mohegan Tribe will prohibit MTGA from reducing its debt/EBITDA in
the near-term to a level consistent with a Ba2 corporate family
rating -- about 4 times. Debt/EBITDA for the 12-month period
ended June 30, 2008 was about 5.8 times, and will likely go higher
due to weak operating performance and several quarters of higher-
than average capital expenditures. Moody's does not expect
debt/EBITDA to get much below 6.0 times by the end of fiscal 2010.
The B1 corporate family rating incorporates MTGA's plans to
significantly reduce capital expenditures once the current project
expenditures come to an end in mid 2009, and expected earnings
contributions from the recent opening expansions.
MTGA's stable outlook anticipates that the company will be able to
successfully resolve several issues related to compliance with its
bank loan covenants. The company will need to obtain an amendment
to allow it to repay its $330 million 6.375% senior subordinated
notes that mature in July 2009. Without the amendment, MTGA will
likely bump up against its total leverage covenant in its upcoming
second fiscal quarter. The stable outlook also considers Moody's
expectation that MTGA will be able to maintain credit metrics
consistent with its current rating even though current weak demand
and consumer spending trends are expected to continue.
These ratings were lowered and LGD point estimates adjusted:
-- Corporate family rating to B1 from Ba2
-- Probability of default rating to B1 from Ba2
-- $971.4 million senior subordinated notes to B3 (LGD5, 80%)
from Ba3 (LGD5, 82%)
-- $250 million senior notes due 2013 to Ba3 (LGD3, 30%) from
Ba1 (LGD3, 33%)
This rating action concludes the review process that was initiated
on Aug. 21, 2008 when MTGA's ratings were placed on review for
possible downgrade in response to the company's continued
vulnerability to the weak US economy and increased competition in
the Northeast US.
The Mohegan Tribal Gaming Authority owns and operates a gaming and
entertainment complex located near Uncasville, Connecticut, known
as Mohegan Sun. It also owns and operates a gaming and
entertainment facility offering slot machines and harness racing
in Plains Township, Pennsylvania, known as Mohegan Sun at Pocono
Downs. MTGA's reported net revenues of $1.6 billion for the
latest 12-month period ended June 30, 2008.
MORGAN STANLEY: S&P Downgrades Rating on Notes to 'B-' From AAA
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the notes
issued by Morgan Stanley Capital Services Inc.'s DekaBank Deutsche
Girozentrale Series NG5HV credit default swap transaction and
placed it on CreditWatch with negative implications (see list).
The transaction is a total return swap that is directly linked to
the rating on the class IC floating-rate notes from Morgan Stanley
Managed Aces SPC's series 2006-6. Standard & Poor's lowered the
rating on the class IC notes to 'B-' on Nov. 13, 2008, and kept it
on CreditWatch with negative implications.
Rating Lowered and Placed on CreditWatch Negative
Credit Default Swap
Morgan Stanley Capital Services Inc. - DekaBank Deutsche
Girozentrale, Series NG5HV
Rating
------
Class To From
----- -- ----
Notes B-srp/Watch Neg AAAsrp
MXENERGY HOLDINGS: Strained Liquidity Cues Moody's Junk Ratings
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of MXenergy
Holdings Inc. The ratings downgraded include the company's
Corporate Family Rating and Probability of Default Rating to Caa3
from B3 and the rating on its floating rate senior notes due 2011
to Ca (LGD 5, 78%) from Caa1 (LGD 5, 77%). The ratings remain on
review for further possible downgrade.
The ratings downgrade reflects MXenergy's constrained liquidity
profile and heightened risk of defaulting under its revolving
credit facility over the near term. MXenergy's borrowing base
availability has declined due to reduced natural gas prices,
resulting in tightened liquidity needs as the company enters the
winter heating season. The company relies on its credit facility
for letters of credit that are essential to its operations.
MXenergy recently obtained a waiver and amended its credit
agreement enabling the company to issue approximately $25 million
of additional letters of credit without a deduction from its
borrowing base availability, with step downs over the next several
months. As a condition to the waiver, Denham Commodity Partners
and Charterhouse Group Inc., the company's two largest
shareholders, provided $10 million in bridge financing. However,
Moody's is concerned that current market conditions create a high
degree of uncertainty regarding the company's ability to obtain
alternate liquidity sources and additional waivers under its
credit agreement.
As part of the bank credit facility amendment, MXenergy must meet
a Liquidity Event, as specifically defined under its credit
facility, by certain milestones, which Moody's believes are needed
in order to avoid a default under the facility. A Liquidity Event
would entail either: (1) a $75 million equity contribution into
the company or (2) the refinancing of its credit facility. With
respect to the Liquidity Event, the company has until Dec. 15,
2008 to retain an investment bank, Dec. 31, 2008 to deliver a
proposed plan, Feb. 15, 2009 to deliver an executed, non-binding
letter of intent, March 31, 2009 to deliver an executed contract,
and May 31, 2009 to fully execute on either one of the above
transactions. The revolving credit facility and the company's
hedge facility mature on July 31 and July 1, 2009, respectively.
The ratings remain under review for possible further downgrade
pending the outcome of the company's efforts to meet the Liquidity
Event and improve its liquidity profile. The last rating action
for MXenergy dates from May 20, 2008, when Moody's placed the
company's ratings on review for possible downgrade and lowered its
Speculative Grade Liquidity (SGL) rating to SGL-4 from SGL-3. The
SGL rating remains unchanged at SGL-4.
MXenergy Holdings Inc. is headquartered in Stamford, Connecticut.
NEFF CORP: Launches Offering for $230 Million Senior Notes
----------------------------------------------------------
Neff Corp. said that it is offering each of the holders of its
10% senior notes due 2015 an opportunity to become a lender of
term loans under its senior secured first lien credit agreement
in consideration for properly tendered and accepted outstanding
Senior Notes and consents for amendments to the indenture relating
to the Senior Notes.
As of Nov. 14, 2008, there was $230 million aggregate principal
amount of Senior Notes outstanding.
The offer to purchase the Senior Notes will expire at 11:59 p.m.,
New York City time, on Dec. 15, 2008, unless extended or earlier
terminated by the company. Holders who intend to receive the
Total Consideration for the Senior Notes must validly tender and
not validly withdraw their Senior Notes at or prior to 11:59 p.m.,
New York City time, on Dec. 2, 2008, unless extended or earlier
terminated. Holders of Senior Notes that validly tender their
Senior Notes after the Early Consent Date and at or prior to the
Expiration Date, if accepted for payment by us, will receive the
Purchase Consideration, but will not receive the Early Consent
Amount.
Holders tendering their Senior Notes will be required to consent
to proposed amendments to the Indenture, which would eliminate the
restrictive covenants and certain events of default contained in
the Indenture. Holders may not tender their Senior Notes without
also delivering consents and may not deliver consents without also
tendering their Senior Notes.
In each case, holders that validly tender and do not validly
withdraw their Senior Notes, if accepted for payment by Neff, will
receive accrued and unpaid interest on their Senior Notes from the
most recent interest payment date to, but excluding, the
Settlement Date. The "Settlement Date" is the date the holder
will become a Term Lender under the Credit Agreement. The
Settlement Date is expected to be the first business day following
the day on which the Expiration Date occurs or promptly
thereafter.
Tenders may be withdrawn at or prior to 11:59 p.m., New York City
time, on Dec. 2, 2008, unless extended. Holders may withdraw
tendered Senior Notes at any time at or prior to the Withdrawal
Deadline but holders may not withdraw their tendered Senior Notes
on or after the Withdrawal Deadline.
The offer to purchase and consent solicitation relating to the
Senior Notes are made upon the terms and conditions set forth in
the Offer to Purchase and Consent Solicitation Statement dated
Nov. 17, 2008, and Letter of Transmittal and Consent. The offer
to purchase and consent solicitation are subject to the
satisfaction of certain conditions, including obtaining the
requisite consent of the lenders under the Credit Agreement to the
amendment of the Credit Agreement to provide for the Term Loans
and a minimum tender condition of at least one half of the
aggregate principal amount of Senior Notes outstanding being
properly tendered.
The Term Loans will be in an aggregate principal amount equal to
the total aggregate consideration paid in the offer to purchase
and consent solicitation, bear interest at a floating rate equal
to 3-month LIBOR plus a margin initially of 3.50% per annum
payable quarterly in arrears and will be due in May 2013. The
Term Loans will be guaranteed by our direct parent company, Neff
Holdings Corp., and our direct and indirect wholly-owned domestic
subsidiaries and will be secured by a lien on the collateral that
secures the revolving credit loan and certain treasury management
or interest protection and other hedging arrangements under the
Credit Agreement and will be entitled to proceeds of such
collateral only after the Revolving Obligations have been paid
in full. Upon effectiveness of the amendment to the Credit
Agreement, the interest rate for lenders under the Revolving
Loan will be increased by 200 bps.
By tendering its Senior Notes and by executing the Letter of
Transmittal and Consent dated Nov. 17, 2008, the tendering holder
is agreeing to become a Term Lender under the Credit Agreement.
Accordingly, the actual beneficial holder of an interest in the
Senior Notes must complete and execute the Letter of Transmittal
and Consent in order to validly tender the related Senior Notes.
The form of an amended credit agreement providing for the Term
Loans will be available for review by the holders of the Senior
Notes prior to the Early Consent Date. Holders should contact the
Information Agent to obtain access to the form of this agreement
and the procedures for its execution.
The offer to purchase and consent solicitation is only being
made to holders of Senior Notes who are institutional accredited
investors and each holder will be required to make a
representation to such effect in the Letter of Transmittal and
Consent.
The company has retained Miller Buckfire & Co., LLC to act as the
Dealer Manager for the offer to purchase and consent solicitation,
and holders can contact Adam Fitzner at (212) 895-1865 or Ofir
Nitzan at (212) 895-1871. The company has also retained D.F. King
& Co., Inc., to act as Information Agent and Exchange Agent in
connection with the offer to purchase and the consent
solicitation, and holders can contact them at (800) 628-8536 or at
(212) 269-5550 for banks and brokers only.
A full-text copy of the Summary of the Amended Credit Agreement is
available for free at http://ResearchArchives.com/t/s?3507
About Neff
Neff Corp. -- http://www.neffcorp.com.-- operates an equipment
rental company in the United States. Through its 65 branches
that located primarily in the Sunbelt states, the company rents
an array of construction and industrial equipment including
earthmoving equipments. The company is controlled by affiliates
of Lightyear Capital LLC.
* * *
According to the Troubled Company Reporter on Nov 20, 2008,
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.
OCWEN MORTGAGE: Fitch Takes Various Rating Actions on Certs.
------------------------------------------------------------
Fitch Ratings has taken various rating actions on Ocwen mortgage
pass-through certificates:
Ocwen Residential MBS Corporation, series 1998-R1
-- Class A-WAC rated 'AAA', placed on Rating Watch Negative;
-- Class B-1 rated 'AA+', placed on Rating Watch Negative;
-- Class B-2 rated 'A', placed on Rating Watch Negative;
-- Class B-3 rated 'BB', placed on Rating Watch Negative.
Ocwen Residential MBS Corporation, series 1998-R2
-- Class AP rated 'AAA', placed on Rating Watch Negative;
-- Class P-F rated 'AAA', placed on Rating Watch Negative;
-- Class X-F rated 'AAA', placed on Rating Watch Negative.
Ocwen Residential MBS Corporation, series 1999-R1
-- Class AP-A rated 'AAA', placed on Rating Watch Negative;
-- Class AP-F rated 'AAA', placed on Rating Watch Negative;
-- Class B1-A rated 'AAA', placed on Rating Watch Negative;
-- Class B1-F rated 'AAA', placed on Rating Watch Negative;
-- Class B2-A rated 'AA+', placed on Rating Watch Negative;
-- Class B2-F rated 'AA', placed on Rating Watch Negative;
-- Class B3-A rated 'BBB', placed on Rating Watch Negative;
-- Class B3-F rated 'BBB', placed on Rating Watch Negative;
-- Class B4-A rated 'B', placed on Rating Watch Negative;
-- Class B4-F affirmed at 'CCC/DR2';
-- Class B5-A remains at 'CC/DR2';
-- Class B5-F remains at 'C/DR6'.
Ocwen Residential MBS Corporation, series 1999-R2
-- Class AP rated 'AAA', placed on Rating Watch Negative;
-- Class B1 rated 'AA', placed on Rating Watch Negative;
-- Class B2 rated 'BBB', placed on Rating Watch Negative;
-- Class B3 affirmed at 'CCC/DR2';
-- Class B4 remains at 'C/DR2'.
The rating actions were taken as part of Fitch's ongoing
surveillance process of existing transactions.
PANOLAM INDUSTRIES: S&P Downgrades Corporate Credit Rating to 'B-'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Panolam
Industries International Inc. S&P lowered the corporate credit
rating to 'B-' from 'B'. The ratings remain on CreditWatch, where
they were placed with negative implications on Sept. 10, 2008.
"The downgrade and continuing CreditWatch listing reflect S&P's
increasing concerns about Panolam's ability to meet its financial
covenants given challenging markets," said Standard & Poor's
credit analyst Pamela Rice. "The lowered ratings also reflect
S&P's growing concern about the impact that the ongoing housing
downturn, weakening commercial construction activity, credit
market turmoil, and competitive pressures may have on the
company's operating performance over the next several quarters."
Operating margins have declined by about 150 basis points for the
nine months ended Sept. 30, 2008, and S&P expect earnings to
remain pressured through 2009. In addition, the company's debt to
EBITDA covenant steps down to 4.5x for the first quarter of 2009
and interest coverage steps up to 2.25x at that time. The actual
leverage covenant ratio on Sept. 30, 2008, was 4.89x. If
Panolam's financial results continue to deteriorate, the company
has stated that it will not be in compliance with its financial
covenants at the end of 2008. If any violation is not waived or
cured, about $323 million in debt obligations could be accelerated
and would hurt liquidity. While the ratings incorporate S&P's
expectations that Panolam will seek to address any potential
covenant issues, the nearly frozen credit markets might make this
difficult. As of Sept. 30, 2008, Panolam had about $28 million in
cash. The company subsequently borrowed the remaining
$20.9 million that was available on its $30 million revolving
credit facility. As a result, S&P believes the company should be
able to meet operating, capital, and debt-service obligations in
the near term.
In resolving the CreditWatch listing, S&P will continue to discuss
with management its plans to address any potential near-term
liquidity constraints caused by tight covenants and the difficult
operating and credit market conditions that are likely to continue
over the next few quarters.
PAPPAS TELECASTING: Will Auction 10 Stations on December 11
-----------------------------------------------------------
The Wall Street Journal reports that Pappas Telecasting Inc. will
auction off 10 stations on Dec. 11, 2008.
Michael Malone at Broadcasting & Cable relates that as Pappas
continues to pay down a heavy debt load, stations in these
locations will go on the block include those in:
-- El Paso,
-- Omaha, and
-- Sioux City.
Broadcasting & Cable states that 13 of Pappas Telecasting's
stations have been operating under Chapter 11 protection since May
2008. When those stations moved into Chapter 11, three of Pappas
Telecasting's lenders pushed for involuntary Chapter 7 petitions
for the company's chairperson Harry Pappas and his wife, the
report says. Pappas Telecasting and its lenders agreed in August
2008 to the appointment of a Chapter 11 trustee to oversee the
company's operations, financial affairs, and sale process, after
talks broke down between Pappas Telecasting and its lenders,
according to the report.
Pappas Telecasting owns about 27 stations. Broadcasting & Cable
relates that the company sold six stations a few months ago,
mostly low power ones, in Nevada and California to Entravision for
$4 million.
About Pappas Telecasting
Fresno, California-based Pappas Telecasting Inc., aka KMPH, aka
KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and
its affiliates are broadcasting companies. Founded in 1971, their
stations reach over 15% of all U.S. households and over 32% of
Hispanic households.
Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008
(Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the
Debtors in their restructuring efforts. Administar Services Group
LLC is the Debtors' notice and claims agent. The Debtors listed
$100 million to $500 million in assets and debts when they filed
for bankruptcy.
Harry J. Pappas, the CEO and chairman of Pappas Telecasting and
its debtor-affiliates, was the subject of a petition for Chapter 7
liquidation filed by creditors before the U.S. Bankruptcy Court
for the District of Delaware. Mr. Pappas' wife Stella was also
subject of the involuntary petition. The petitioning creditors
are Fortress Credit Opportunites I LP, Fortress Credit
Opportunites II LP, Ableco Finance LLC and Silver Oak Capital.
John H. Knight, Esq., at Richards Layton & Finger, represents the
Fortress Creditors. Adam G. Landis, Esq., at Landis Rath & Cobb
LLP, in Wilmington, represents Ableco and Silver Oak.
According to Bloomberg, the Debtors listed assets with a book
value of $460 million and debt of $537 million, including inter-
corporate debt.
PARMALAT SPA: Italian Council Grants Latte Di Roma Appeal
---------------------------------------------------------
Parmalat SpA said Nov. 13 that the Italian Council of State
(Consiglio di Stato) granted its appeal and has annulled the
decision n. 7119/2007 of the TAR Lazio with which the Regional
Administrative Tribunal has ruled that the sale of the subsidiary
Centrale del Latte di Roma SpA to Cirio and thereafter to
Eurolat/Parmalat would have been allegedly void.
Therefore, the Centrale del Latte di Roma SpA remains
definitively in the Parmalat Group.
Headquartered in Milan, Italy, Parmalat S.p.A.
-- http://www.parmalat.net/-- sells nameplate milk products
that can be stored at room temperature for months. It also has
about 40 brand product lines, which include yogurt, cheese,
butter, cakes and cookies, breads, pizza, snack foods and
vegetable sauces, soups and juices.
The company's U.S. operations filed for chapter 11 protection on
Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary
Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal &
Manges LLP, represent the Debtors. When the U.S. Debtors filed
for bankruptcy protection, they reported more than
US$200 million in assets and debts. The U.S. Debtors emerged from
bankruptcy on April 13, 2005.
Parmalat S.p.A. and its Italian affiliates filed separate
petitions for Extraordinary Administration before the Italian
Ministry of Productive Activities and the Civil and Criminal
District Court of the City of Parma, Italy on Dec. 24, 2003.
Dr. Enrico Bondi was appointed Extraordinary Commissioner in
each of the cases. The Parma Court has declared the units
insolvent.
On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No.
04-14268, in the United States Bankruptcy Court for the Southern
District of New York.
Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat
Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and
Food Holdings are Cayman Island special-purpose vehicles
established by Parmalat S.p.A. The Finance Companies are under
separate winding up petitions before the Grand Court of the Cayman
Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman)
Ltd. serve as Joint Provisional Liquidators in the cases. On
Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No.
04-10362, in the United States Bankruptcy Court for the Southern
District of New York. In May 2006, the Cayman Island Court
appointed Messrs. MacRae and Cleaver as Joint Official
Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham
& Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon,
Herlands Randolph, represent the Finance Companies in the Sec. 304
case.
The Honorable Robert D. Drain presides over the Parmalat Debtors'
U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat
permanent injunction.
(Parmalat Bankruptcy News, Issue No. 108; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PARMALAT SPA: Creditors Convert Warrants For 30,699 Shares
----------------------------------------------------------
In October, Parmalat S.p.A. said that, following the allocation of
shares to creditors of the Parmalat Group, the subscribed and
fully paid up share capital has now been increased by 366,533
euros to 1,668,227,162 euros from 1,667,860,629 euros. The share
capital increase is due to the assignation of 335,834 and to the
exercise of 30,699 warrants.
[The latest status of the share allotment is]:
* Number 27,971,590 shares representing approximately 1.7%
of the share capital are still in a deposit account c/o
Parmalat S.p.A., of which:
-- 13,025,345 or 0.8% of the share capital, registered in
the name of individually identified commercial
creditors, are still deposited in the intermediary
account of Parmalat S.p.A. centrally managed by Monte
Titoli (compared with 13,032,721 shares as at
October 15, 2008);
-- 14,946,245 or 0.9% of the share capital registered in
the name of the Foundation, called Fondazione Creditori
Parmalat, of which:
(i) 120,000 shares representing the initial share
capital of Parmalat S.p.A. (unchanged);
(ii) 14,826,245 or 0.9% of the share capital that
pertain to currently undisclosed creditors
(compared with 14,984,608 shares as at
October 15, 2008).
About Parmalat
Headquartered in Milan, Italy, Parmalat S.p.A.
-- http://www.parmalat.net/-- sells nameplate milk products
that can be stored at room temperature for months. It also has
about 40 brand product lines, which include yogurt, cheese,
butter, cakes and cookies, breads, pizza, snack foods and
vegetable sauces, soups and juices.
The company's U.S. operations filed for chapter 11 protection on
Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary
Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal &
Manges LLP, represent the Debtors. When the U.S. Debtors filed
for bankruptcy protection, they reported more than
US$200 million in assets and debts. The U.S. Debtors emerged from
bankruptcy on April 13, 2005.
Parmalat S.p.A. and its Italian affiliates filed separate
petitions for Extraordinary Administration before the Italian
Ministry of Productive Activities and the Civil and Criminal
District Court of the City of Parma, Italy on Dec. 24, 2003.
Dr. Enrico Bondi was appointed Extraordinary Commissioner in
each of the cases. The Parma Court has declared the units
insolvent.
On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No.
04-14268, in the United States Bankruptcy Court for the Southern
District of New York.
Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat
Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and
Food Holdings are Cayman Island special-purpose vehicles
established by Parmalat S.p.A. The Finance Companies are under
separate winding up petitions before the Grand Court of the Cayman
Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman)
Ltd. serve as Joint Provisional Liquidators in the cases. On
Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No.
04-10362, in the United States Bankruptcy Court for the Southern
District of New York. In May 2006, the Cayman Island Court
appointed Messrs. MacRae and Cleaver as Joint Official
Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham
& Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon,
Herlands Randolph, represent the Finance Companies in the Sec. 304
case.
The Honorable Robert D. Drain presides over the Parmalat Debtors'
U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat
permanent injunction.
(Parmalat Bankruptcy News, Issue No. 108; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
PEACH HOLDINGS: Moody's Maintains 'B2' Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Peach Holdings,
Inc. (Corporate Family Rating and Senior Secured Bank Credit
Facility B2), but changed the rating outlook to negative from
stable.
The negative outlook reflects emerging risks in the company's
funding profile in the current challenging market conditions. The
company's funding depends on a secured warehouse facility and the
term securitization markets. The current volatile market
conditions have created uncertainty regarding Peach's ability to
maintain funding capacity at sufficient levels to sustain its
business volumes and revenues, which could have negative
implications for the company's profitability, capital generation
and debt coverage. Furthermore, Peach's flexibility to adjust its
pricing to reflect increased funding costs may be limited due to
the required court approval process associated with its
acquisition of structured settlement receivables. Moody's also
noted that in recent years Peach's revenue mix has shifted toward
life settlement, a business that involves a higher degree of model
risk than its structured settlement business.
Moody's B2 ratings for Peach reflect the company's strong market
share in a number of "personal factoring" segments, mainly
structured settlements and life settlements that have historically
produced strong operating performance and substantial free cash
flows. The ratings are also supported by the company's
experienced management team that has played a role in shaping the
regulatory environment in its business sector and has invested
significantly in the company's equity. On the other hand, the
ratings also reflect a number of risks to the company, including
its reliance upon securitization funding and its significant
financial leverage.
Moody's continues to monitor Peach's plans for and progress in
strengthening its funding profile. To return to a stable outlook,
Peach would need to demonstrate the ability to manage its funding
profile through the current challenging environment, including
renewing its credit facilities and returning to the term
securitization market. Moody's would also need to observe
progress by the company in reducing its leverage through solid
cash flow generation and effective debt management.
Peach Holdings, Inc. is located in Boynton Beach, Florida, and
reported assets of approximately $1.15 billion at Sept. 30, 2008
PHENIX CFO: Fitch Downgrades Ratings on Three Tranches
------------------------------------------------------
Fitch Ratings has downgraded three tranches from Phenix CFO Ltd.
-- EUR 60,000,000 class S rated 'AA', remains on Rating Watch
Negative;
-- EUR 24,000,000 class M1 ' downgraded to 'A' from 'AA',
remains on Rating Watch Negative;
-- EUR 15,000,000 class M2 downgraded to 'BBB' from 'A', remains
on Rating Watch Negative;
-- EUR 21,000,000 class M3 downgraded to 'BB' from 'BBB',
remains on Rating Watch Negative.
These rating actions reflect the fund's performance as of the end
of September based upon updated Fitch cash flow analysis along
with expectations of further stress in the coming months for the
hedge fund sector. All classes remain on Rating Watch Negative
given the current performance volatility expected throughout the
remainder of the year. To the extent net asset values decline by
more than expected or the transaction breaches its Overleverage
Test, the ratings could be further downgraded. Fitch is still
reassessing its approach for analyzing HF CFOs given the recent
market environment and in consideration of higher observed market
volatility, reduced liquidity, and limited transparency in
underlying hedge funds.
PHYSICIAN MEDICAL: Wants Chapter 11 Case Converted or Dismissed
---------------------------------------------------------------
Physicians Medical Center LLC asks the Hon. Tamara O Mitchell of
the United States Bankruptcy Court for the Northern District of
Alabama to dismiss its Chapter 11 reorganization case or, in the
alternative, convert the case to Chapter 7 liquidation proceeding.
A hearing is set for Nov. 21, 2008, to consider the Debtor's
motion.
The Debtor tells the Court that it is unable to fund its wind-down
expenses including statutory fees and costs associated with
confirming a Chapter 11 plan of liquidation without use of cash
collateral and postpetition advances from CMMC Development
Company. The Debtor said it owes about $3.5 million to CMMC
Development under a credit and security agreement dated April 5,
2007.
According to the Motion, the Court authorized the Debtor to obtain
postpetition financing and access to cash collateral securing
repayment of secured loan to the lender on an interim basis. The
Debtor said it was able to:
i) implement an accelerated shutdown plan for its hospital,
ii) discharge the last of its patients,
iii) cease hospital operations, and
iv) notify necessary regulators agencies.
In addition, the Debtor related that all accrued wages and
salaries of its workers were paid in full.
The Debtor said that it prepared a revised budget in advance of
the final hearing on the postpetition motion. The budget included
projected revenues from the collection of receivables and storing
patients records, satisfying obligations to Blue Cross/Blue Shield
of Alabama for employee health insurance benefits, paying
quarterly fess to the bankruptcy administrator and obtaining
confirmation of a Chapter 11 plan of liquidation. The lender
declined to fund its long-term wind-down efforts upon review of
the revised budget and cash flow forecast, the Debtor says.
Chris Hawkins, Esq., at Bradley Arant Rose & White LLP, says the
Debtor failed to reach an agreement with the lender regarding
long-term postpetition financing. "Although the Debtor is paying
postpetition expenses in the normal court under the interim
budget, it expects loss or diminution of the estate due to lack of
financing," Mr. Hawkins relates. "[The Debtor] has no reasonable
likelihood of rehabilitation," he continues.
About Physicians Medical
Based in Birmingham, Alabama, Physicians Medical Center, LLC,
formerly Carraway Methodist Medical Center, owns and operates a
617-bed acute care hospital which also serves as a training site
for residents in the University of Alabama School of Medicine's
anesthesiology program. The company filed for Chapter 11 relief
on Oct. 20, 2008 (Bankr. N.D. Ala. Case No. 08-0520). Christopher
L. Hawkins, Esq., and M. Leesa Booth, Esq., at Bradley Arant Rose
& White represent the Debtor in its restructuring efforts. The
Bankruptcy Administrator appointed creditors to serve on an
Official Committee of Unsecured Creditors in this case. The
Committee selected Maynard, Cooper & Gale P.C. as its counsel.
Debtor listed assets of between $10 million and $50 million, and
debts of between $10 million and $50 million.
PLASTECH ENGINEERED: Wants More Time for Plan; Gets Opposition
--------------------------------------------------------------
Plastech Engineered Products and its debtor units ask the U.S.
Bankruptcy Court for the Eastern District of Michigan (Detroit) to
extend the time within which they may solicit acceptances of their
Chapter 11 Plan until January 27, 2009.
On August 11, 2008, prior to the expiration of the period within
which they had exclusive rights to file a Chapter 11 plan,
Plastech filed a Chapter 11 Liquidation Plan and Disclosure
Statement. Plastech amended those documents on October 16, 2008.
The Amended Plan, among other things, (i) provides for the
estimated allowed amounts of claims in the Chapter 11 cases,
although the expected recovery of unsecured creditors owed about
$300,000,000 remains unspecified, (ii) adjusts the solicitation
schedule, under which the Plan will be presented to the Court for
confirmation in early December.
The Original Plan contemplated an Oct. 22 confirmation hearing,
about four months after the auto-parts supplier sold its units to
various parties, including its top-customer Johnson Controls,
Inc., and its secured lenders.
The Amended Plan, which the Debtors propose together with the
Official Committee of Unsecured Creditors:
(a) provides for a confirmation objection deadline on
November 25, 2008 at 4:00 p.m. (Eastern Time), and a
Plan confirmation hearing on Dec. 3, 2008 at 9:30 a.m.
(Eastern Time).
(b) named Carroll Services LLC, as Liquidating Trustee, with
James Patrick Carroll as managing member, appointed
pursuant to the Plan, to act as trustee of and administer
the Liquidating Trust.
According to Sarah, E. Pierce, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, in Wilmington, Delaware, relates that an
extension of the period within which the Debtors have the lone
rights to solicit acceptances of their Chapter 11 plan is
necessary. She explains that an extension is required to afford
the Debtors sufficient time to complete solicitation of votes on
the Plan and proceed to confirm and consummate the Plan.
Currently, the Debtors 'Solicitation Period expires on November
28, 2008.
According to Ms. Pierce, in the more than three months since the
Debtors obtained an extension of their exclusive periods, they
have committed extensive efforts to:
* negotiating the terms of and the filing of their Plan and
Disclosure Statement, including the subsequent amendments;
* seeking Court approval of the adequacy of the Disclosure
Statement;
* commencing solicitation of votes on the Plan; and
* filing numerous claim objections and handling various
motions, requests and inquiries from creditors who seek
varied types of relief.
Chief among these efforts, she says, has been the negotiation and
formulation of the Plan. Ms. Pierce adds that the formulation of
the Disclosure Statement with respect to the Plan likewise
required the Debtors' extensive efforts since it involved the
evaluation and analysis of the many claims and the development of
a liquidation analysis. Additionally, Debtors have also devoted
extensive efforts in reviewing and analyzing the administrative,
priority and unsecured claims filed, as well as analyzing
hundreds of their executory contracts and personal property
leases.
Given their substantial progress since the Petition Date, the
Debtors believe that they should be allowed additional time to
complete solicitation of votes on their Plan, and subsequently
the confirmation and consummation of that Plan.
The Debtors ask the Court to shorten the notice period on their
request to allow a hearing on November 24, 2008.
Section 503(b)(9) Claimants Oppose Plan
Various parties filing claims under Section 503(b)(9) of the
Bankruptcy Code, namely (i) Exco Automotive Solutions, L.P., doing
business as Polytech, (ii) Creative Liquid, (iii) Load One, LLC
and (iv) International Products Warehouse, LLC, filed individual
objections to the Plan and to the Disclosure Statement explaining
that Plan.
In particular, Exco opposes a provision of the Plan where the
Debtors require holders of administrative claims to file
objections to the confirmation of the Plan and that absent any
filed objections, the administrative claimants will be deemed to
consent to receive less favorable treatment under the Plan and
will be deemed to accept a partial pro rata payment of their
allowed administrative claims in the event insufficient funds for
allowed administrative claims exists.
Michael J. Leavitt, Esq., at Sullivan & Leavitt, P.C., in
Northville, Michigan, says Exco does not consent to receiving a
less favorable treatment under Section 1129(a)(9) of the
Bankruptcy Code. Exco also does not consent to accepting partial
pro rata payment of allowed administrative claims should funds
become insufficient, asserting that Exco's claims under Section
503(b) (9) of the Bankruptcy Code must be pad in full.
Creative Liquid, Load One and International Products Warehouse,
LLC share Exco' assertion and ask the Court for full payment of
their 503(b)(9) Claims.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is a full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent. Joel D. Applebaum, Esq., at
Clark Hill PLC, represents the Official Committee of Unsecured
Creditors.
The Debtors filed their Plan of Liquidation on August 11, 2008.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
QUIKSILVER INC: Moody's Downgrades Corporate Family Rating to 'B2'
------------------------------------------------------------------
Moody's Investors Service lowered its Corporate Family Rating and
Probability of Default Ratings on Quiksilver, Inc. to B2 from Ba3.
Moody's also lowered the company's Speculative Grade Liquidity
Rating from SGL-3 to SGL-4 and ratings on Quiksilver's
$400 million Unsecured Notes due 2015 to B3 from B1. All ratings,
other than the Speculative Grade Liquidity Rating, remain under
review for a further possible downgrade. LGD Assessments are
subject to change.
The downgrade of the Corporate Family Rating reflects the
company's weakened liquidity position following the sale of its
Rossignol ski business, as well as the smaller-than-expected
leverage accomplished from that subsidiary's sale. The sale of
Rossignol, which had been incurring operating losses, was viewed
as a positive development. However, Quiksilver funded the
seasonal build in Rossignol's inventory through the date of sale,
and the net cash sale proceeds (which were reduced in the revised
final purchase price) were insufficient to retire the associated
working capital debt. The company continues to have a significant
level of short term debt in its capital structure, the maturity of
which it needs to extend or otherwise maintain access to in the
next year. The company could be challenged to maintain adequate
access to liquidity given current stress in the global capital
markets.
The downgrade of Quiksilver's Speculative Grade Liquidity to SGL-4
reflects its continued reliance on short term funding arrangements
(a material amount of which are uncommitted in Europe) and the
negative impact on overall liquidity resulting from recent
amendments to the company's US Asset Based Revolver. Amongst
other things, these amendments effectively limit the ability of
Quiksilver and its domestic subsidiaries to loan money or
otherwise transfer cash to the Company's foreign subsidiaries.
This results in Quiksilver needing to finance its European
operations materially through uncommitted European bank lines,
insufficient committed facilities in Europe to refinance these if
required, and an inability to use its US bank revolver to help
finance the European operations. In addition, as part of the
recent Amendment, the Company's domestic subsidiaries granted a
security interest in some of the previously unencumbered
trademarks and copyrights of the Company, limiting the company's
alternative sources of liquidity in the US.
The review for further possible downgrade reflects Moody's
concerns that an inability to maintain access to adequate
liquidity on an ongoing basis could negatively impact the
company's business operations over the course of 2009. In that
regard the company has stated it continues to evaluate potential
financing alternatives and that it has expanded its review to
include private equity investment capital and other strategic
alternatives. If the company is unable to conclude a transaction
in the near term, or experiences difficulty maintaining access to
adequate liquidity, ratings could be lowered further.
Following the sale of Rossignol and treating it as a discontinued
operation, Moody's expect pro forma leverage would be below 5.0
times and EBITDA/interest to exceed 3.5 times. Moody's believe
the company benefits from a portfolio of strong brands, and recent
performance has been good despite challenging economic conditions.
These ratings were lowered, and kept on review for a further
possible downgrade. LGD Assessments are subject to change:
-- Probability of Default Rating to B2 from Ba3
-- Corporate Family Rating to B2 from Ba3
-- $400 million unsecured notes due 2015 to B3 (LGD 4, 67%) from
B1 (LGD 4, 63%)
This rating was lowered, and is not under review for a further
possible downgrade:
-- Speculative Grade Liquidity Rating to SGL-4 from SGL-3.
Quiksilver, Inc. is a diversified designer and distributor of
branded apparel, footwear, accessories, and related products
including Quiksilver, Roxy, and DC. The company reported fiscal-
year 2007 total revenue from continuing operations of
approximately $2.05 billion.
REAL MEX: S&P Affirms 'CCC' Corp. Credit Rating; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'CCC' corporate
credit rating on the Cypress, California-based Real Mex
Restaurants Inc. At the same time, S&P revised the recovery
rating on the company's $105 million senior secured notes to '3'
from '1'. In line with this change, S&P lowered the issue-level
rating to 'CCC' from 'B-'. The '3' recovery rating indicates
S&P's expectation of meaningful (50%-70%) recovery of principle in
the event of default. The outlook is negative.
The ratings on Real Mex are unsolicited and may be based solely on
publicly available information and may or may not involve the
participation of the issuer's management. Standard & Poor's has
used information from sources believed to be reliable but does not
guarantee the accuracy, adequacy, of completeness of any
information used.
The affirmation of the corporate credit rating follows the
company's announcement that lenders at Real Mex's parent company,
RM Restaurant Holdings Corp., agreed to exchange outstanding
borrowings for 94.5% of Holdings' common stock. At the same time,
Real Mex was able to extend the maturity of its senior secured
revolving credit facility until January 2010 (it was to expire in
January 2009) and relax financial covenants of that facility and
its unsecured term loan, while agreeing to increased interest
costs.
"While these actions improve the company's very near-term
liquidity," said Standard & Poor's credit analyst Charles Pinson-
Rose, "we still feel that there is considerable default risk in
2009, given the company's increased interest costs and very likely
declines in operating performance."
REGAL ENTERTAINMENT: S&P Puts 'BB-' Rating on Negative CreditWatch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Regal
Entertainment Group, including the 'BB-' corporate credit rating,
on CreditWatch with negative implications. S&P analyzes parent
holding company Regal Entertainment Group and its subsidiary,
Regal Cinemas Corp., on a consolidated basis.
"The CreditWatch placement is based on S&P's concern regarding
Regal's higher debt leverage and its narrowing margin of covenant
compliance for the 'BB-' rating," explained Standard & Poor's
credit analyst Jeanne Mathewson.
Pro forma for the April 30, 2008 acquisition of Consolidated
Theatres LLC, lease-adjusted debt to EBITDA (including dividends
from National CineMedia Inc.) rose to nearly 6.0x--above S&P's
5.75x threshold for the 'BB-' rating. Moreover, the EBITDA
cushion of covenant compliance narrowed to 15% as of Sept. 25,
2008, and will continue to narrow, as the leverage covenant steps
down a quarter turn in each of the next two years if Regal is
unable to meaningfully reduce net debt leverage. While Standard &
Poor's believes that leverage could subside somewhat at the end of
the year due to an extra week in the 2008 reporting period, S&P
expects any decline to reverse through 2009 as the benefit of the
extra week rolls off.
Regal's revenue for the 2008 third quarter was up 1% year over
year, while EBITDA declined 13% due to a 3.6% decline in
attendance, a 10% increase in rent expense, and a 7% increase in
other operating expenses. These declines were partially mitigated
by a 4% increase in average ticket price per patron, a 3% increase
in concession revenue per patron, and a 19% increase in other
revenues. The decline in attendance was mainly because of a weak
economy and a tough comparison with last year's record third
quarter, in which the company posted a 15% increase from the prior
year.
In resolving the CreditWatch listing, S&P will reassess Regal's
business outlook and review management's plan for addressing its
leverage and covenant compliance. S&P could lower the rating if
leverage remains elevated and management's plans do not
sufficiently alleviate covenant pressure, especially in light of
the company's high dividend rate and S&P's concerns about
intermediate-term financial and economic challenges.
RELIANT ENERGY CHANNELVIEW: Plan Gets Creditors Support
-------------------------------------------------------
Bankruptcy Law360 reports that all the creditors eligible to vote
on Reliant Energy Channelview LP's reorganization plan have voted
to accept the plan. Bankruptcy Law360 says Reliant Channelview is
now closer to leaving Chapter 11.
The Troubled Company Reporter, citing a Bankruptcy Law360 report,
said on October 20, 2008, that the United States Bankruptcy Court
for the District of Delaware approved the Chapter 11 disclosure
statement of Reliant Channelview and its
debtor-affiliates and has set a hearing to confirm the plan on
Nov. 21, 2008.
According to Troubled Company Reporter, the plan contemplates the
liquidation of the Debtors' estate and the distribution of the
sale proceeds and any other remaining assets to holders of allowed
claims and equity interests. The plan further contemplates the
appointment of a plan administrator who will serve as the chief
executive officer of the Debtors.
On April 8, 2008, GIM Channelview Cogeneration, LLC, emerged as
the winning bidder during an auction. Consequently, the Debtors
and GIM entered into an GIM asset purchase agreement, wherein GIM
did not provide for the assumption and assignment of the Second
Amended Restated Cash Flow Participation Agreement (CFPA) between
the Debtors and Equistar Chemicals LP. The purchase price under
the GIM APA was $500 million. The proceeds of the proposed GIM
APA were sufficient to pay all creditor claims in full and provide
a recovery to interest holders.
The next day, the Court ruled that the Debtors had satisfied the
standards for approval of the sale under Section 363 of the United
States Bankruptcy Code, and that the CFPA was not severable from
the other Equistar agreements to be assumes and assigned under the
GIM APA. Thus, the Court's ruling regarding the CFPA jeopardized
the Debtors' ability to consummate the sale to GIM.
As the GIM APA did not contemplate the assumption and assignment
of the CFPA, the Debtors and Equistar attempted to reach an
agreement resolving their disputes with respect to the CFPA. On
April 23, 2008, the Debtors asked the Court to appoint a Chapter
11 trustee but the Court decided to defer its decision on the
Trustee plea and directed the parties to mediate their dispute.
On May 6, 2008, the Court entered an order defering motion of the
Debtors for entry of an order appointing a Chapter 11 trustee.
The parties participated in the court-ordered mediation and
successfully resolved their disputes regarding the sale and the
CFPA.
On June 9, 2008, the Debtors asked the Court to approve the GIM
sale and a stipulation in connection with the sale. The salient
terms of the stipulation are:
-- Upon closing of the sale, the CFPA will be deemed assume by
the Debtors, but not assigned to GIM. The acquired assets
will be conveyed to GIM free and clear of any liens, claims
under the CFPA;
-- The project agreements and the letter agreements will be
assume and assigned under the sale order.
-- At closing, Equistar will receive certain payments and will be
deemed to have terminated its interest under and waived all
rights under the CFPA.
-- After closing, all available cash will be paid to Equistar
and REI in the following ratios:
a) available cash up to and including $71.7 million will be
paid 80% to Equistar and 20$ to REI or its designees;
b) available cash in excess of $71.7 million will be paid 60%
to Equistar and 405 to REI or its designees;
c) Any additional funds will be paid 12.5% to Equistar and
87.5% to REI.
-- All obligations under the secured credit facility will be paid
in full at closing. Any obligations arising under the secured
credit facility post-closing will be paid in full under the
confirmed plan.
On June 9, 2008, the Court approved sale to GIM. The closing of
the sale took place on July 1, 2008.
The plan classifies interests against and claims in the Debtors in
five classes. The classification of interests and claims are:
Treatment of Interests and Claims
Type Estimated
Class of Claims Treatment Recovery
----- --------- --------- ---------
unclassified administrative 100%
claims
unclassified priority 100%
claims
unclassified other priority 100%
claims
1 secured lender unimpaired 100%
claims
2 other secured unimpaired 100%
claims
3 general unsecured unimpaired 100%
claims
4 intercompany impaired 0%
claims
5 equity interests impaired unknown
Class 5 holders of interests against the Debtors are entitled to
vote for the plan.
Holders of Class 1 secured lender claims will receive cash from
the sale proceeds to the prepetition agents in an amount necessary
to satisfy the allowed secured claims in full.
Each holders of Class 2 other secured claims will be paid in full
and final satisfaction of the allowed other secured claims
otherwise holders agrees to a different treatment, either:
-- the collateral secured the allowed secured claims; or
-- cash in an amount equal to the value of the collateral.
Holders of Class 3 general unsecured claims will receive the full
unpaid amount of the claims plus interest -- except, in accordance
wit the terms of the stipulation, allowed intercompany claims will
be paid without interests -- with respect to the claims from the
Debtors' bankruptcy filing to the plan's effective date, accruing
at the Federal Judgment Rate as of the Debtors' bankruptcy filing.
Class 4 intercompany claims will be canceled and holders will not
receive any distribution under the plan.
Holders of Class 5 equity interest, after the plan's effective
date, will receive all cash and rights, title and interest in any
other assets remaining in the Debtors' estates. All cash
distributed to holders of equity interest will be subject to and
in accordance with the terms of the stipulation including any
payments required to be made to Equistar.
A full-text copy of the Debtors' Disclosure Statement is available
for free at:
http://ResearchArchives.com/t/s?31ef
A full-text copy of the Debtors' Joint Chapter 11 Plan of
Liquidation is available for free at:
http://ResearchArchives.com/t/s?31f0
About Reliant Energy Channelview
Based in Houston, Reliant Energy Channelview L.P. owns a power
plant located near Houston, and is an indirect wholly owned
subsidiary of Reliant Energy Inc. -- http://www.reliant.com/--
The company and its three affiliates, Reliant Energy Channelview
(Texas) LLC, Reliant Energy Channelview (Delaware) LLC, and
Reliant Energy Services Channelview LLC filed for chapter 11
protection on Aug. 20, 2007 (Bankr. D. Del. Lead Case No.
07-11160). Jason M. Madron, Esq., Lee E. Kaufman, Esq., Mark D.
Collins, Esq., Paul Noble Heath, Esq., Richards, Robert J. Stearn
Jr., Esq., at Layton & Finger P.A., and Timothy P. Cairns,
Pachulski Stang Ziehl & Jones represent the Debtors. The U.S.
Trustee for Region 3 appointed an Official Committee of Unsecured
Creditors in these cases. David B. Stratton, Esq., and Evelyn J.
Meltzer, Esq., at Pepper Hamiltion LLP, represent the Committee.
When the Debtors filed for protection from their creditors,
they listed total assets of $362,000,000 and total debts of
$342,000,000.
SAKS INCORPORATED: Moody's Reviews Low-B Ratings for Possible Cut
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Saks Incorporated
under review for possible downgrade, including the B1 corporate
family rating. LGD assessments and point estimates are also
subject to change.
The review is prompted by the company's announcement of lower than
expected earnings results for the third quarter ended Nov. 1,
2008. The company reported soft margins, high inventory levels,
and negative comparable store sales. Also, credit metrics have
deteriorated over the past two quarters with LTM debt to EBITDA
currently at 5.2 times and EBITA to interest expense at 1.1 times.
Given the weak economic environment, intense competition, and
aggressive acceleration of markdowns, the credit metrics could
further deteriorate to levels inappropriate for the current
rating.
The review will focus on the company's ability to maintain
acceptable credit metrics and good liquidity. The review will
also focus on the company's near term earnings and cash flow, the
performance of the New York City flagship store which accounts for
approximately 20% of revenues, and its ability to reduce high
inventory levels given the extremely challenging operating
environment.
Ratings placed under review for possible downgrade:
-- Corporate family rating at B1
-- Probability of default rating at B1
-- 7% Global notes due Dec. 1, 2013 at B2
-- 7.5% Bonds due Dec. 1, 2010 at B2
-- 2% Convertible notes due March 14, 2024 at B2
-- 7.375% Bonds due Feb. 15, 2019 at B2
-- 9.875% Notes due Oct. 1, 2011 at B2
The last rating action on this company was an upgrade of Saks'
corporate family rating to B1 from B2 and an upgrade of the
various senior unsecured notes to B2 from B3 on May 22, 2008.
Saks Incorporated, headquartered in New York, operates 53 Saks
Fifth Avenue luxury department stores, 51 Off Fifth off-price
stores, and saks.com. Total revenues for the last twelve months
ended November 1, 2008 were approximately $3.2 billion.
SALTON LAND: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Salton Land Development, LLC
73-755 County Club Drive
Palm Desert, CA 92260
Bankruptcy Case No.: 08-26258
Chapter 11 Petition Date: November 19, 2008
Court: Central District Of California (Riverside)
Judge: Thomas B. Donovan
Debtor's Counsel: Daniel J. McCarthy, Esq.
dmccarthy@hillfarrer.com
Hill Farrer & Burrill LLP
300 S. Grand Ave., 37th Floor
Los Angeles, CA 90071
Tel: (213) 621-0802
Estimated Assets: $100 million to $500 million
Estimated Debts: $10 million to $50 million
The Debtor does not have any creditors who are not insiders.
The petition was signed by Michael G. Lamelza.
SCIENS CFO: Fitch Junks Rating on EUR7,800,000 Class E
------------------------------------------------------
Fitch Ratings has downgraded four tranches from Sciens CFO I Ltd.
-- EUR121,200,000 class A affirmed at 'AA', remains on Rating
Watch Negative;
-- EUR21,000,000 class B downgraded to 'BBB' from 'AA', remains
on Rating Watch Negative;
-- EUR13,900,000 class C downgraded to 'BB' from 'A', remains on
Rating Watch Negative;
-- EUR18,600,000 class D downgraded to 'B' from 'BBB+', remains
on Rating Watch Negative;
-- EUR7,800,000 class E downgraded to 'CCC' from 'BB+', removed
from Rating Watch Negative.
These rating actions reflect the fund's performance as of the end
of September based upon updated Fitch cash flow analysis along
with expectations of further stress in the coming months for the
hedge fund sector. Classes A through D remain on Rating Watch
Negative as Fitch is still reassessing its approach for analyzing
Hedge Fund Collateralized Fund Obligations given the recent market
environment and in consideration of higher observed market
volatility, reduced liquidity, and limited transparency in
underlying hedge funds.
SCC COMMUNITIES: Case Summary & 5 Largest Unsecured Creditors
-------------------------------------------------------------
Debtors: SCC Communities LLC, Debtor
2392 Morse Ave
Irvine, CA 92614
Case No.: 08-17573
Debtor-affiliates: Case No.
------------------ --------
North Orange Del Rio Land, LLC 08-17574
Tesoro SF, LLC 08-17575
SunCal Oak Knoll, LLC 08-17588
Petition Date: November 19, 2008
Court: U.S. Bankruptcy Court
Central District of California (Santa Ana)
Judge: Erithe A. Smith
Debtors' Counsel: Paul J Couchot, Esq.
Winthrop Couchot PC
660 Newport Ctr Dri Ste 400
Newport Beach, CA 92660
Tel: 949-720-4100
Fax: 949-720-4111
Email: pcouchot@winthropcouchot.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $0 to $50,000
A list of the Debtor's 5 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/cacb08-17573.pdf
SECURE COMPUTING: Moody's Withdraws Ratings on McAfee Acquisition
-----------------------------------------------------------------
Moody's has withdrawn all ratings for Secure Computing Corporation
for business reasons. Secure Computing has repaid and terminated
all rated debt and has been acquired by McAfee Inc.
These ratings were withdrawn:
-- Corporate Family Rating: B2
-- Probability of Default Rating: B3
-- Senior Secured Revolving Credit Facility due 2012: B2/LGD-
3(31%)
-- Senior Secured Term Loan due 2013: B2/LGD-3/(31%)
SGL-2
Secure Computing is a provider of enterprise security products.
The company is headquartered in San Jose, California.
SEQUOIA MORTGAGE: S&P Downgrades Ratings on 16 Classes of Certs.
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 16
classes of mortgage pass-through certificates from nine Sequoia
Mortgage Trust transactions. At the same time, S&P affirmed S&P's
ratings on 189 other outstanding classes from these and 12 other
Sequoia Mortgage Trust transactions.
The lowered ratings reflect S&P's loss expectations based on the
dollar amount of loans currently in the transactions' delinquency
pipelines, coupled with remaining credit support. Because the
pool factors for these transactions with lowered ratings are
becoming increasingly small, the potential losses from delinquent
loans could have a more significant impact on the credit support
available for the remaining classes. Based on the current
collateral performance of these transactions, S&P projects that
future credit enhancement percentages may be insufficient to
maintain the ratings at their previous levels. The seasoning of
these deals ranged from 45 months to 83 months as of the October
2008 distribution period.
As of the Oct. 25, 2008, distribution date, cumulative losses for
the downgraded transactions ranged from 0.01% to 0.14% of the
transactions' original pool balances. Total delinquencies ranged
from 5.22% to 7.45% of the current pool balances, while severe
delinquencies (90-plus days, foreclosures, and real estate owned)
ranged from 2.86% to 5.08% of the current pool balances.
The affirmations reflect current and projected credit support
percentages that are sufficient to maintain the ratings at their
current levels.
The collateral backing these certificates consists of 25- and 30-
year prime jumbo adjustable-rate mortgage loans, which only
require interest payments for the first five or 10 years, and are
secured primarily by single-family detached residential
properties.
Rating Actions
Sequoia Mortgage Trust 5
Series 5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 81743WAF8 BB BB+
B-5 81743WAG6 CCC B
Sequoia Mortgage Trust 2003-5
Series 2003-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 81743PCU8 B BB
B-5 81743PCV6 CCC B
Sequoia Mortgage Trust 2004-1
Series 2004-1
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 81744FAJ6 BBB- BBB+
B-4 81744FAK3 B BB
B-5 81744FAL1 CCC B
Sequoia Mortgage Trust 2004-4
Series 2004-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 81744FBN6 B BB+
B-5 81744FBP1 CCC B
Sequoia Mortgage Trust 2004-8
Series 2004-8
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 81744FDS3 BB BB+
B-5 81744FDT1 CCC BB-
Sequoia Mortgage Trust 2004-9
Series 2004-9
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 81744FEE3 B BB-
Sequoia Mortgage Trust 2004-10
Series 2004-10
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 81744FFG7 B B+
Sequoia Mortgage Trust 2004-11
Series 2004-11
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 81744FFV4 B BB-
Sequoia Mortgage Trust 2004-12
Series 2004-12
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 81744FGJ0 B BB
B-5 81744FGK7 CCC B
Ratings Affirmed
Sequoia Mortgage Trust 5
Series 5
Class CUSIP Rating
----- ----- ------
A 81743WAA9 AAA
X 81743WAJ0 AAA
B-1 81743WAC5 AA+
B-2 81743WAD3 A+
B-3 81743WAE1 BBB+
Sequoia Mortgage Trust 6
Series 6
Class CUSIP Rating
----- ----- ------
A 81743XAA7 AAA
X AAA
B-1 81743XAB5 AAA
B-2 81743XAD1 A+
B-3 81743XAE9 BBB+
B-4 BB
B-5 B
Sequoia Mortgage Trust 10
Series 10
Class CUSIP Rating
----- ----- ------
1A 81743VAA1 AAA
2A-1 81743VAB9 AAA
2A-2 81743VAN3 AAA
X-1A 81743VAC7 AAA
X-1B 81743VAD5 AAA
X-2 81743VAP8 AAA
X-B 81743VAE3 AAA
B-1 81743VAG8 AA+
B-2 81743VAH6 A+
B-3 81743VAJ2 BBB
B-4 81743VAK9 BB
B-5 81743VAL7 B
Sequoia Mortgage Trust 11
Series 11
Class CUSIP Rating
----- ----- ------
A 81744AAA6 AAA
X-1A 81744AAC2 AAA
X-1B 81744AAD0 AAA
X-B 81744AAE8 AAA
B-1 81744AAB4 AA
B-2 81744AAG3 A
B-3 81744AAH1 BBB
B-4 BB
B-5 B
Sequoia Mortgage Trust 2003-1
Series 2003-1
Class CUSIP Rating
----- ----- ------
1A 81743PAA4 AAA
2A 81743PAB2 AAA
X-1A 81743PAC0 AAA
X-1B 81743PAD8 AAA
X-2 81743PAE6 AAA
X-B 81743PAF3 AAA
B-1 81743PAH9 AA+
B-2 81743PAJ5 A+
B-3 81743PAK2 BBB
B-4 81743PAL0 BB
B-5 81743PAM8 B
Sequoia Mortgage Trust 2003-2
Series 2003-2
Class CUSIP Rating
----- ----- ------
A-1 81743PAP1 AAA
A-2 81743PAQ9 AAA
M-1 81743PAR7 AA
Sequoia Mortgage Trust 2003-3
Series 2003-3
Class CUSIP Rating
----- ----- ------
A-1 81743PAT3 AAA
A-2 81743PAU0 AAA
X-1A 81743PAV8 AAA
X-1B 81743PAW6 AAA
X-2 81743PAX4 AAA
X-B 81743PAY2 AAA
B-1 81743PBB1 AA+
B-2 81743PBC9 A+
B-3 81743PBD7 BBB+
B-4 81743PBE5 BB
B-5 81743PBF2 B
Sequoia Mortgage Trust 2003-4
Series 2003-4
Class CUSIP Rating
----- ----- ------
1-A-1 81743PBH8 AAA
1-A-2 81743PBJ4 AAA
1-X-1A 81743PBM7 AAA
1-X-1B 81743PBN5 AAA
1-X-2 81743PBP0 AAA
1-X-B 81743PBQ8 AAA
1-B-1 81743PBK1 AA+
1-B-2 81743PBR6 AA-
1-B-3 81743PBS4 A-
1-B-4 81743PBT2 BB
1-B-5 81743PBU9 B
2-A-1 81743PBW5 AAA
2-X-1 81743PCA2 AAA
2-X-M 81743PCB0 AAA
2-X-B 81743PCC8 AAA
2-M-1 81743PBX3 AA+
2-B-1 81743PBY1 AA
2-B-2 81743PCD6 A+
2-B-3 81743PCE4 BBB+
2-B-4 81743PCF1 BB
2-B-5 81743PCG9 B
Sequoia Mortgage Trust 2003-5
Series 2003-5
Class CUSIP Rating
----- ----- ------
A-1 81743PCJ3 AAA
X-1A 81743PCL8 AAA
X-1B 81743PCM6 AAA
A-2 81743PCK0 AAA
X-2 81743PCN4 AAA
X-B 81743PCP9 AAA
B-1 81743PCR5 AA+
B-2 81743PCS3 A+
B-3 81743PCT1 BBB
Sequoia Mortgage Trust 2003-8
Series 2003-8
Class CUSIP Rating
----- ----- ------
A-1 81743PDX1 AAA
A-2 81743PDY9 AAA
X-2 81743PEA0 AAA
X-B 81743PEB8 AAA
B-1 81743PED4 AA+
B-2 81743PEE2 A+
B-3 81743PEF9 BBB+
B-4 81743PEG7 BB
B-5 81743PEH5 B
Sequoia Mortgage Trust 2004-1
Series 2004-1
Class CUSIP Rating
----- ----- ------
A 81744FAA5 AAA
X-2 81744FAC1 AAA
X-B 81744FAD9 AAA
B-1 81744FAG2 AA+
B-2 81744FAH0 A+
Sequoia Mortgage Trust 2004-3
Series 2004-3
Class CUSIP Rating
----- ----- ------
A-1 81744FAZ0 AAA
M-1 81744FBA4 AA
Sequoia Mortgage Trust 2004-4
Series 2004-4
Class CUSIP Rating
----- ----- ------
A 81744FBF3 AAA
X-1 81744FBG1 AAA
X-2 81744FBH9 AAA
X-B 81744FBJ5 AAA
B-1 81744FBK2 AAA
B-2 81744FBL0 AA-
B-3 81744FBM8 A-
Sequoia Mortgage Trust 2004-5
Series 2004-5
Class CUSIP Rating
----- ----- ------
A-1 81744FBS5 AAA
A-2 81744FBT3 AAA
A-3 81744FCF2 AAA
X-2 81744FBV8 AAA
X-B 81744FBX4 AAA
B-1 81744FBZ9 AAA
B-2 81744FCA3 AA-
B-3 81744FCB1 BBB+
B-4 81744FCC9 BB
B-5 81744FCD7 B
Sequoia Mortgage Trust 2004-6
Series 2004-6
Class CUSIP Rating
----- ----- ------
A-1 81744FCG0 AAA
A-2 81744FCH8 AAA
A-3-A 81744FCJ4 AAA
A-3-B 81744FCU9 AAA
X-A 81744FCK1 AAA
X-B 81744FCL9 AAA
B-1 81744FCN5 AAA
B-2 81744FCP0 AA-
B-3 81744FCQ8 BBB+
B-4 81744FCR6 BB+
B-5 81744FCS4 B
Sequoia Mortgage Trust 2004-7
Series 2004-7
Class CUSIP Rating
----- ----- ------
A-1 81744FCV7 AAA
A-2 81744FCW5 AAA
A-3-A 81744FCX3 AAA
A-3-B 81744FDH7 AAA
X-A 81744FCY1 AAA
X-B 81744FCZ8 AAA
B-1 81744FDB0 AAA
B-2 81744FDC8 AA-
B-3 81744FDD6 BBB+
B-4 81744FDE4 BB+
B-5 81744FDF1 B
Sequoia Mortgage Trust 2004-8
Series 2004-8
Class CUSIP Rating
----- ----- ------
A-1 81744FDJ3 AAA
A-2 81744FDK0 AAA
X-A 81744FDL8 AAA
X-B 81744FDM6 AAA
B-1 81744FDP9 AA+
B-2 81744FDQ7 A+
B-3 81744FDR5 BBB+
Sequoia Mortgage Trust 2004-9
Series 2004-9
Class CUSIP Rating
----- ----- ------
A-1 81744FDV6 AAA
A-2 81744FDW4 AAA
X-A 81744FDX2 AAA
X-B 81744FDY0 AAA
B-1 81744FEA1 AA+
B-2 81744FEB9 A+
B-3 81744FEC7 BBB+
B-4 81744FED5 BB+
Sequoia Mortgage Trust 2004-10
Series 2004-10
Class CUSIP Rating
----- ----- ------
A-1A 81744FET0 AAA
A-1B 81744FEU7 AAA
A-2 81744FEV5 AAA
A-3A 81744FEW3 AAA
A-3B 81744FEX1 AAA
A-4 81744FEY9 AAA
X-A 81744FEZ6 AAA
X-B 81744FFA0 AAA
B-1 81744FFC6 AA+
B-2 81744FFD4 A+
B-3 81744FFE2 BBB+
B-4 81744FFF9 BB
Sequoia Mortgage Trust 2004-11
Series 2004-11
Class CUSIP Rating
----- ----- ------
A-1 81744FFJ1 AAA
A-2 81744FFK8 AAA
A-3 81744FFL6 AAA
X-A1 81744FFM4 AAA
X-A2 81744FFN2 AAA
X-B 81744FFP7 AAA
B-1 81744FFR3 AA+
B-2 81744FFS1 A+
B-3 81744FFT9 BBB
B-4 81744FFU6 BB+
Sequoia Mortgage Trust 2004-12
Series 2004-12
Class CUSIP Rating
----- ----- ------
A-1 81744FFY8 AAA
A-2 81744FFZ5 AAA
A-3 81744FGA9 AAA
X-A1 81744FGB7 AAA
X-A2 81744FGC5 AAA
X-B 81744FGD3 AAA
B-1 81744FGF8 AA+
B-2 81744FGG6 A+
B-3 81744FGH4 BBB+
SHARPER IMAGE: Wants Wachovia to Surrender COLI Policies
--------------------------------------------------------
Sharper Image Corp., known now known as TSIC, Inc., asks the U.S.
Bankruptcy Court for the District of Delaware to direct Wachovia
Bank, N.A., as trustee under a prepetition Guarantor Trust
Agreement, to surrender approximately $130,000 to the estate,
which amount represents the cash surrender value, plus interest,
of the Debtor's terminate corporate owned life insurance policies.
John H. Strock, Esq., at Womble Carlyle Sandridge & Rice, PLLC,
in Wilmington, Delaware, relates that, as of the Petition Date,
the Debtor owned two blocks of COLI Policies -- one block holds
approximately 42 policies and the other block holds approximately
25 policies. Wachovia Bank holds the COLI Policies in trust for
the benefit of participating TSIC, Inc., executives and their
beneficiaries until the participants received the benefits
promised to them under various non-qualified agreements.
Pursuant to the terms of the Trust Agreement, Wachovia became
barred from making any payments to the Debtor and its
beneficiaries as a result of the Debtor's Chapter 11 filing, as
the filing constituted event of "insolvency" for the purposes of
the Trust Agreement, Mr. Strock relates. Consequently, as of the
Petition Date, Wachovia has held the assets of the Trust for the
benefit of the Debtor's general creditors, he tells the Court.
Before the Petition Date, the Debtor took loans out against the
COLI Policies, with the last loan taken in November 2007. The
amounts obtained from the loans were used to reimburse the Debtor
for the fact that it paid executives out of corporate cash rather
than out of assets in the Trust. According to Mr. Strock, if the
Debtor surrendered its COLI Policies, it would receive about
$130,000 in cash from the insurance carrier, John Hancock Life
Insurance Company.
At the end of August 2008, the Debtor learned that certain of its
COLI Policies were scheduled to lapse if new premium dollars were
not paid. Mr. Strock states that failure to surrender the COLI
Policies prior to non-payment would result in the estate losing
all cash surrender value of those policies that were set to
lapse. In light of the estates' wind-down efforts, the Debtor
determined that payment of additional premiums to maintain the
COLI Policies would not result in any additional value to the
estate, and that surrender of the COLI Policies would ensure that
the cash value of the COLI Policies would be preserved for the
benefit of its estate and creditors.
Consequently, on August 27, 2008, the Debtor directed Wachovia to
surrender the COLI Policies to John Hancock Life Insurance
Company. Upon receipt of the cash surrender value for the COLI
Policies, Wachovia immediately invested the COLI Proceeds in an
interest bearing Evergreen Money Market Fund. Wachovia has
agreed to return the COLI Proceeds to the estate for distribution
to its creditors subject to approval of the Court.
The Debtor contends COLI proceeds are no longer necessary nor in
the better interests of the estate and its creditors because;
-- the COLI Proceeds will be placed into the Debtor's interest
bearing checking account, resulting in no loss of accrued
interest as a result of their withdrawal from the Account;
and
-- the return of the COLI Proceeds furthers the Debtor's
objective to collect all its outstanding assets as soon as
practicable so that it can shortly make a good faith
proposal to its unpaid Chapter 11 claimants to satisfy
their allowed claims upon conclusion of its claims
reconciliation process.
The Debtor requests, and Wachovia has agreed on, the turn over
the COLI Proceeds in discharge of Wachovia's remaining custodial
obligation. Moreover, within ten business days of entry of the
Proposed Order, Wachovia will file an accounting as to its
management of the COLI Proceeds with the Court.
About Sharper Image Corp.
Headquartered in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Judge Kevin Gross presides
over the case. Harvey R. Miller, Esq., Lori R. Fife, Esq., and
Christopher J. Marcus, Esq., at Weil, Gotshal & Manges, LLP,
serve as the Debtor's lead counsel. Steven K. Kortanek, Esq.,
and John H. Strock, Esq., at Womble, Carlyle, Sandridge & Rice,
P.L.L.C., serve as the Debtor's local Delaware counsel.
An Official Committee of Unsecured Creditors has been appointed in
the case. Cooley Godward Kronish LLP is the Committee's lead
bankruptcy counsel. Whiteford Taylor Preston LLC is the
Committee's Delaware counsel.
When the Debtor filed for bankruptcy, it listed total assets of
$251,500,000 and total debts of $199,000,000. As of June 30,
2008, the Debtor listed $52,962,174 in total assets and
$39,302,455 in total debts.
The Court extended the exclusive period during which the Debtor
may file a Plan through and including Sept. 16, 2008. Sharper
Image sought and obtained the Court's approval to change its name
to "TSIC, Inc." in relation to an an Asset Purchase Agreement by
the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands,
LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital,
LLC.
(Sharper Image Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
SHARPER IMAGE: Wants Potter State Court Action Dismissed
--------------------------------------------------------
Before its bankruptcy filing, Sharper Image Corporation, known now
known as TSIC, Inc., John Potter and Phillip Rittenhouse, on
behalf of themselves and similarly situated individuals, initiated
an action against Sharper Image in the Superior Court of
California, County of San Francisco. Pursuant to the Potter
Action, Messrs. Potter
and Rittenhouse alleged that TSIC engaged in false and misleading
business practices in violation of California state law, in
connection with TSIC's sale of Ionic Breeze air purifiers.
The Plaintiffs moved for class certification under California's
Code of Civil Procedure, which TSIC Debtor opposed. TSIC also
filed a motion in the State Court disqualifying the designated
class representatives, on the grounds (i) of conflict of interest
and (ii) that the class representatives were not capable of
protecting the interests of the class. In December 2005, the
California State Court certified the Potter class on a national
basis and denied TSIC's motion to disqualify. In January 2006,
TSIC appealed the California State Court's ruling denying the
Motion to Disqualify in the Court of Appeal, State of California,
First Appellate District Division Four. The Appeal remains
pending in the California Appellate Court.
which the State Court subsequently denied. After the Court
certified the Potter Class, TSIC moved to dismiss the Appeal but
was denied of its request.
On August 18, 2008, the Plaintiffs filed with the U.S. Bankruptcy
Court for the District of Delaware a motion for certification of
their class for the purposes of asserting and seeking allowance
of their class claim. No party objected to the certification
motion. On September 9, the Bankruptcy Court certified the
Potter Class and approved the class representative and class
counsel.
After the Bankruptcy Court certified the Potter Class, TSIC moved
to dismiss the State Court Action. On October 1, 2008, the
California Appellate Court denied TSIC's request for dismissal.
The denial was without prejudice to renew the motion to dismiss
the Appeal, so long as the motion to dismiss was "supported by an
appropriate order from the federal bankruptcy court."
By this motion, the Debtor asks the Bankruptcy Court to dismiss
the Appeal pursuant to Section 105(a) of the Bankruptcy Code.
According to Steven K. Kortanek, Esq., at Womble Carlyle
Sandridge & Rice, PLLC, in Wilmington, Delaware, the Debtor has
concluded that the burden of continuing the Appeal would
substantially outweigh potential benefit to the estate. The
Debtor contend its estate has only a short lifespan remaining and
limited resources with which to discharge its remaining
obligations.
* * *
Mr. Kortanek submitted to the Court a certification of no
objection regarding the Debtor's Motion dismissing the Potter
Class Appeal.
Accordingly, Judge Gross dismissed the Debtor's appeal on the
Court's Order certifying the Potter Class.
About Sharper Image Corp.
Headquartered in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Judge Kevin Gross presides
over the case. Harvey R. Miller, Esq., Lori R. Fife, Esq., and
Christopher J. Marcus, Esq., at Weil, Gotshal & Manges, LLP,
serve as the Debtor's lead counsel. Steven K. Kortanek, Esq.,
and John H. Strock, Esq., at Womble, Carlyle, Sandridge & Rice,
P.L.L.C., serve as the Debtor's local Delaware counsel.
An Official Committee of Unsecured Creditors has been appointed in
the case. Cooley Godward Kronish LLP is the Committee's lead
bankruptcy counsel. Whiteford Taylor Preston LLC is the
Committee's Delaware counsel.
When the Debtor filed for bankruptcy, it listed total assets of
$251,500,000 and total debts of $199,000,000. As of June 30,
2008, the Debtor listed $52,962,174 in total assets and
$39,302,455 in total debts.
The Court extended the exclusive period during which the Debtor
may file a Plan through and including Sept. 16, 2008. Sharper
Image sought and obtained the Court's approval to change its name
to "TSIC, Inc." in relation to an an Asset Purchase Agreement by
the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands,
LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital,
LLC.
(Sharper Image Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
SHARPER IMAGE: Court to Tackle Chapter 7 Conversion Dec. 18
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware will
consider Frederic Prohov's request to convert
Sharper Image Corp.'s Chapter 11 case to a case under Chapter 7 of
the Bankruptcy of the Bankruptcy Code on Dec. 18. The Court
previously scheduled a Nov. 19 hearing on the matter.
Sharper Image has asked the Court to deny the request for lack of
cause.
"[Mr.] Prohov has not established he is a creditor of TSIC, other
than the claim that his father purportedly purchased a Sharper
Image gift card in the amount of $50 and gave it to him," the
Debtor argues.
John H. Strock, Esq., at Womble Carlyle Sandridge & Rice, PLLC,
in Wilmington, Delaware, tells the Court that the Debtor and its
professionals have worked diligently, expeditiously, and
efficiently to convert its remaining assets and interests to
cash, including, without limitation, its interests in real
property and unexpired nonresidential leases. As a result of its
efforts, the Debtor has realized approximately $56,200,000 in
recoveries and is presently pursuing additional recoveries.
The Debtor's management, employees, and its professionals have
worked overtime to minimize the impact of the disappointing
recoveries and to maximize the value of remaining assets for the
benefit of the estate, Mr. Strock says. If conversion is
granted, it will negatively affect the ongoing efforts to realize
value for the estate and its economic stakeholders, the Debtor
argues.
"Mr. Prohov has initiated the conversion motion to obtain
leverage for the granting of his motion to certify a putative
class of TSIC gift card claimants, the objective being to
eliminate potential review and objections to claims that may be
asserted by the gift card claimants," Mr. Strock asserts.
The Debtor informs the Court that, together with its
professionals, it has worked diligently to collect and dispose of
the estate's remaining assets, as well as resolve any outstanding
liabilities, including, among other things:
(a) termination of its unexpired nonresidential lease interest
in its Rockefeller Center and Marlton Center leases,
resulting in recovery of $1,360,000 in cash;
(b) conclusion of the second wave of store closing liquidation
sales;
(c) management of an auction for the assumption and assignment
of the Debtor's remaining unexpired nonresidential lease
property interest and, after resolving contested
assignments with respective lessors, recovery of over
$2,500,000 in cash for the estate;
(d) negotiations with the joint venture of Hilco/Gordon
Brothers to reconcile merchandise value sold in the second
wave store liquidation sales, resulting in receipt of
$700,000 in cash;
(e) settlement with Wells Fargo Retail Finance LLC in an
amount of $150,000 to terminate the prepetition indemnity
account, which had been maintained in favor of Wells on
account of the prepetition credit facility;
(f) termination of the Debtor's interest in certain corporate
owned life insurance policies, estimated recovery of
$100,000 in cash;
(g) analysis and pursuit of potentially valuable claims;
(h) collection of amounts outstanding in closed store bank
accounts, valued at over $2,000,000 in cash;
(i) management of the cash flows and maintenance of the estate
within the projected wind-down budget; and
(j) closure of the corporate headquarters and preservation of
corporate records.
In a separate filing, the Official Committee of Unsecured
Creditors disputes Mr. Prohov's contention that the Committee is
"working to deprive priority creditors of their rights."
The Committee argues that Mr. Prohov's statements regarding the
settlements of its objection to the Debtor's sale of assets to
Hilco/Gordon Brothers are wrong, unsupported by the records, and
do not constitute evidence supporting his burden of proof with
respect to the Conversion Motion.
Mr. Prohov's characterization of the settlement and obligations
was squarely addressed and refuted in the Court's Memorandum
Opinion on August 18, 2008, pursuant to which the Court approved
the settlement and held, among other things, that (i) the
Committee owes its responsibility and duty to the class it
represents, the general unsecured creditors of the Debtor; and
(ii) the money to be paid to the Committee on behalf of general,
unsecured creditors, is non-estate property, the Committee points
out.
Pursuant to the Memorandum Opinion, the Joint Venture's funds are
not proceeds from a secured creditor's lien, do not belong to the
estate, and will not become part of the estate even if the Court
does not approve the settlement, the Committee contends. In
addition, the Committee avers that Mr. Prohov's unfounded
characterization of its role in the proceeding is a thinly veiled
attempt to rewrite the record of the Debtor's case and gain
leverage for his gift card class-certification and conversion
motion.
About Sharper Image Corp.
Headquartered in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Judge Kevin Gross presides
over the case. Harvey R. Miller, Esq., Lori R. Fife, Esq., and
Christopher J. Marcus, Esq., at Weil, Gotshal & Manges, LLP,
serve as the Debtor's lead counsel. Steven K. Kortanek, Esq.,
and John H. Strock, Esq., at Womble, Carlyle, Sandridge & Rice,
P.L.L.C., serve as the Debtor's local Delaware counsel.
An Official Committee of Unsecured Creditors has been appointed in
the case. Cooley Godward Kronish LLP is the Committee's lead
bankruptcy counsel. Whiteford Taylor Preston LLC is the
Committee's Delaware counsel.
When the Debtor filed for bankruptcy, it listed total assets of
$251,500,000 and total debts of $199,000,000. As of June 30,
2008, the Debtor listed $52,962,174 in total assets and
$39,302,455 in total debts.
The Court extended the exclusive period during which the Debtor
may file a Plan through and including Sept. 16, 2008. Sharper
Image sought and obtained the Court's approval to change its name
to "TSIC, Inc." in relation to an an Asset Purchase Agreement by
the Debtor with Gordon Brothers Retail Partners, LLC, GB Brands,
LLC, Hilco Merchant Resources, LLC, and Hilco Consumer Capital,
LLC.
(Sharper Image Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000) 215/945-7000)
STEVE AND BARRY'S: Stone Barn Hires Liquidator for Wind Down
------------------------------------------------------------
The Wall Street Journal reports that Stone Barn Manhattan LLC, et
al., fka Steve & Barry's Manhattan LLC, will be going out of
business. Bay Harbour Management -- an affiliate of Steve &
Barry's owner BH S&B Holdings, LLC -- has now hired a liquidation
firm to handle the chain's going-out-of-business sale, WSJ says.
Clear Thinking Group LLC, a national advisory firm, announced Oct.
30 that it has been retained by Stone Barn Manhattan LLC, et al.,
to assist in their wind down process. Under the terms of the
engagement Managing Director Dorene Robotti and the Clear Thinking
Group team will manage the Debtors' wind-down efforts, helping
guide the Debtors to a successful plan of liquidation.
Steve & Barry's will also lay off its 5,000 workers, John Boyle at
Citizen-Times.com reports.
Citizen-Times.com relates that Rick Davis, store director of the
Biltmore Square Mall location, said that he's heard "nothing"
about a closure. The report quoted him as saying, "All we know is
what we've read in the reports on the Internet." Steve & Barry's
has an anchor store in Biltmore Square Mall.
About Steve and Barry's
Headquartered in Port Washington, New York, Steve and Barry's LLC
-- http://www.steveandbarrys.com/-- is a national casual apparel
retailer that offers high quality merchandise at low prices for
men, women and children. Founded in 1985, the company operates
276 anchor and junior anchor shopping center and mall-based
locations throughout the U.S. The discount clothing chain's
brands include the BITTEN(TM) collection, the first-ever apparel
line created by actress and global fashion icon Sarah Jessica
Parker, and the STARBURY(TM) collection of athletic and lifestyle
apparel and sneakers created with NBA (R) star Stephon Marbury.
Steve & Barry's LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq.,
at Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.
Diana G. Adams, United States Trustee for Region 2, has appointed
seven members to the Official Committee of Unsecured Creditors in
the Debtors' Chapter 11 cases.
On Aug. 22, 2008, the Debtors obtained permission from the Court
to sell substantially all of their assets for $168 million to a
joint venture by Bay Harbour Management and York Capital, BHY S&B
Holdings, LLC. Under the terms of the purchase agreement,
majority of the Debtors' 276 stores will remain open.
Pursuant to the Purchase Agreement, the Court authorized 51
Debtors to change their corporate names. Lead Debtor Steve &
Barry's Manhattan LLC (Case No. 08-12579) has been changed to
Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC
(Case No. 08-12615) is now known as Steel Bolt LLC.
When the Debtors filed for bankruptcy, they listed $693,492,000 in
total assets and $638,086,000 in total debts.
(Steve and Barry's Bankruptcy News; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
STEVE HOFSAESS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: STEVE HERBERT HOFSAESS
3808 FAIRWAY CIRCLE
LAS VEGAS, NV 89108
Case No.: 08-23761
Petition Date: November 19, 2008
Court: U.S. Bankruptcy Court
District of Nevada (Las Vegas)
Debtor's Counsel: CHRISTOPHER G. GELLNER, Esq.
302 E. CARSON AVE. #808
LAS VEGAS, NV 89101
Tel: (702) 386-9393
Email: cggellner@lvcoxmail.com
Total Assets: $2,160,800
Total Debts: $4,123,132
A list of the Debtor's 20 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/nvb08-23761.pdf
SUNCREST LLC: Court to Convert Case to Chapter 7
------------------------------------------------
The Hon. William T. Thurman of the United States Bankruptcy Court
for the District of Utah will issue an order approving motion to
convert Chapter 11 reorganization case to Chapter 7 liquidation
proceeding filed by SunCrest LLC fdba Dae/Westbrook LLC on
Oct. 27, 2008.
Judge Thurman's order will be entered after payment of
administrative fee is completed.
According to the Debtor, it has ceased operation because it has
sold substantially all its assets to Zion First National Bank.
The sale closed on June 30, 2008, the Debtor said. Since the
sale, the Debtor worked out to wind up its affairs including
negotiating several settlements with Zions, WB Land Investments,
the Official Committee of Unsecured Creditors, Micron and CDC
Constructors, wherein about $596,539 was secured for the benefit
of the Debtor's estate, the Debtor related.
In addition, the Debtor was able to secure (i) $70,000 from Micron
under a settlement agreement approved by the Court on Sept. 8,
2008; (ii) $50,000 in refunds owed to the estate from earnest
money deposits for various lots that were never purchased, (iii)
$15,000 in settlement of a preference claim against Ray, Quinney &
Nebeker, PC; (iv) approximately $80,000 from the Master Marketing
Account; and (v) collection of impact fee payments totaling
approximately $300,000 from CDC Constructors.
William L. Wallander, Esq., at Vinson & Elkins LLP, relates that
the conversion is appropriate because it will protect the estate
from any diminution in value. The company will capture any
remaining value of its assets through liquidation, Mr. Wallander
notes.
About SunCrest
Headquartered in Draper, Utah, SunCrest LLC fdba Dae/Westbrook LLC
-- http://www.suncrest.com-- develops mountaintop community in
Draper. The company filed for Chapter 11 protection on April 11,
2008 (Bankr. D. Utah Case No.08-22302). Joel T. Marker, Esq., at
McKay Burton & Thurman, represents the Debtor in its restructuring
efforts. The U.S. Trustee for Region 19 appointed seven creditors
to serve on an Official Committee of Unsecured Creditors. David
E. Leta, Esq., and Engels Tejeda, Esq., at Snell & Wilmer in Salt
Lake City, Utah, represent the Committee in this case. The Debtor
listed $46,442,365 in total assets and $96,587,367 in total debts.
SYNCORA HOLDINGS: Shares Transfer Cues Appointment of 4 Directors
-----------------------------------------------------------------
Syncora Holdings Ltd. appointed Mssrs. Duncan P. Hennes, Edward
J. Muhl, Thomas S. Norsworthy, and Robert J. White to its board
of directors in connection with the transfer on Nov. 18, 2008,
of 30,069,049 Syncora shares, owned by XL Capital Ltd, to
a Trust pursuant to the Master Commutation Release and
Restructuring Agreement, dated July 28, 2008.
The shares were held in the Trust for the benefit of Syncora
Guarantee Inc. until the time as an agreement between Syncora
Guarantee and a consortium of Syncora Guarantee's credit default
swap and financial guarantee counterparties is reached and
thereafter the shares will be held for the benefit of the
Financial Counterparties, or as otherwise provided in the Deed
of Trust.
"The new appointees bring a wealth of restructuring, insurance
regulatory and reinsurance expertise to our Board of Directors.
Their collective expertise and insights will be extremely valuable
as we continue our negotiations with the financial counterparties
and execute the next phase of our restructuring," Susan Comparato,
acting chief executive officer and General Counsel of Syncora,
said.
The director appointments were agreed upon by Syncora and the bank
consortium and all four are independent Directors. Mssrs. Hennes
and Muhl are Class I directors and members of the Finance and Risk
Oversight Committee.
Mr. Norsworthy is a Class II director and member of the
compensation committee. Mr. White is a Class III director and a
member of the audit committee. With these appointments, Syncora's
board of directors will have nine members.
Mr. Hennes has nearly 30 years of financial services management
experience. He is a co-founder and partner of Atrevida Partners,
an alternative asset manager. Prior to founding Atrevida
Partners, Mr. Hennes was a co-founder and partner of Promontory
Financial Group. He is the former chief executive officer of
Soros Fund Management. Earlier in his career, Mr. Hennes spent
12 years at Bankers Trust Company. While at Bankers Trust, he
was chairman of the board of Oversight Partners I, the consortium
that took control of Long Term Capital Management. Mr. Hennes
has a B.S., summa cum laude, and M.B.A. with Distinction from the
Wharton School at the University of Pennsylvania.
Mr. Muhl is the owner and chief executive of an insurance,
reinsurance and legislative consulting firm. He has over
40 years of experience in the insurance industry in both the
private and public sector. He has served in a regulatory
capacity in two states, as Commissioner of Insurance for the
State of Maryland and as Superintendent of Insurance for the
State of New York, and has also held the position of President of
the National Association of Insurance Commissioners. Mr. Muhl
is a former partner and National Leader of PricewaterhouseCoopers
Insurance Regulatory and Compliance Practice and has experience
as a board member of insurance companies, currently serving on the
board of directors of Farm Family Insurance Company, Columbian
Financial Group, UNUM Insurance Group and Arrowpoint Capital
Insurance Group.
Mr. Norsworthy was the chief executive officer of Trenwick
America Reinsurance Corporation and The Insurance Corporation of
New York, a property-casualty reinsurer and insurer currently in
run-off. Mr. Norsworthy has more than 30 years of accounting,
actuarial, finance and treasury experience. He was the co-founder
of Kenning Financial Advisors, a consulting and advisory group
focused on the insurance industry. Prior to Kenning, Norsworthy
was the Chief Financial Officer at Swiss Re Capital Partners,
the Swiss Re division responsible for the company's strategic
equity investments and private equity relationships. He has also
served as chief financial officer of The Resolution Group Inc.,
a property-casualty insurance group, and its principal subsidiary,
International Insurance Company. Earlier in his career,
Norsworthy worked for PricewaterhouseCoopers.
Mr. White is a reorganization and restructuring attorney with
over 35 years of experience. He has completed his appointment
as Receiver in Charge of the Cosmopolitan Resort and Casino in Las
Vegas, Nevada. Mr. White had a 35-year career at O'Melveny &
Meyers where he was the founder of the firm's Restructuring and
Reorganization practice. He has represented creditors in such
major restructurings and bankruptcies as WorldCom, Covanta, and
Pacific Crossing, as well as banks in Adelphia's Chapter 11 exit
financing and debtors in At Home Inc., Phar-Mor and MegaFoods
in their bankruptcies. Mr. White has been involved with numerous
other out-of-court restructurings and bankruptcies representing
debtors, creditors, equity holders and purchasers of assets. He
currently sits on the board of directors of ImageDocUSA and the
American Cancer Society. He holds a B.S. in Accounting
from the University of Illinois and J.D., summa cum laude, from
the University of Michigan.
About Syncora Holdings Ltd.
Based in Hamilton, Bermuda, Syncora Holdings Ltd. (NYSE: SCA) --
http://www.syncora.com/-- fka Security Capital Assurance Ltd.
is a monoline financial guarantee insurance provider, and Syncora
Guarantee Re Ltd. (formerly XL Financial Assurance Ltd.), a
monoline provider of reinsurance to financial guarantee insurers
that provides credit enhancement for the obligations of debt
issuers worldwide.
Going Concern Doubt
In the opinion of the company, the principal factors which affect
the company's ability to continue as a going concern are: (i) its
ability to successfully reach agreements with Financial
Counterparties and other parties to commute, terminate or
restructure the company's CDS contracts and policies on terms
satisfactory to the company, well as to address the company's
public finance business to the satisfaction of the New York
Superintendent of Insurance, (ii) the risk of adverse loss
development on its remaining in-force business not so commuted,
terminated or restructured (particularly in regard to its exposure
to residential mortgages) that would cause it not to be in
compliance with its $65 million minimum policyholders' surplus
requirement under New York state law, and (iii) the risk of
intervention by the NYID as a result of the financial condition of
Syncora Guarantee.
As a result of uncertainties associated with these factors
affecting the company's ability to continue as a going concern,
management has concluded that there is substantial doubt about the
ability of the company to continue as a going concern.
* * *
As reported in the Troubled Company Reporter on Aug. 8, 2008,
Moody's Investors Service placed the B2 insurance financial
strength ratings of Syncora Guarantee Inc. (formerly XL Capital
Assurance Inc.), Syncora Guarantee (U.K.) Ltd. and Syncora
Guarantee Re Ltd. (formerly XL Financial Assurance Ltd) on review
for possible upgrade.
SYNCORA HOLDINGS: Elizabeth Keys Resigns as Chief Financial Off.
----------------------------------------------------------------
Syncora Holdings Ltd. disclosed that Elizabeth A. Keys has left
her position as chief financial officer to pursue another
employment opportunity within the financial services industry.
The company's board of directors has elected not to name a
replacement CFO at this time.
Additionally, the company disclosed that Mary R. Hennessy, a
board member since the firm's initial public offering in 2006,
has resigned from the board of directors of Syncora effective
Nov. 15, 2008. Ms. Hennessy advised the company that her
resignation was due to a combination of factors including
increased demands of the Syncora board coupled with her other work
commitments. After Ms. Hennessy's departure there are five
members on the company's board.
"On behalf of the board of directors, we'd like to thank
[Ms. Keys] and [Ms. Hennessy] for their service and dedication
to the company," Susan Comparato, acting chief executive officer
and general counsel of Syncora Holdings Ltd., commented. "We
greatly appreciate their hard work, particularly over the past
few months during our critical restructuring initiatives. The
entire board also joins me in wishing [Ms. Keys] and
[Ms. Hennessy] every success in their future endeavors."
About Syncora Holdings Ltd.
Based in Hamilton, Bermuda, Syncora Holdings Ltd. (NYSE: SCA) --
http://www.syncora.com/-- fka Security Capital Assurance Ltd.
is a monoline financial guarantee insurance provider, and Syncora
Guarantee Re Ltd. (formerly XL Financial Assurance Ltd.), a
monoline provider of reinsurance to financial guarantee insurers
that provides credit enhancement for the obligations of debt
issuers worldwide.
Going Concern Doubt
In the opinion of the company, the principal factors which affect
the company's ability to continue as a going concern are: (i) its
ability to successfully reach agreements with Financial
Counterparties and other parties to commute, terminate or
restructure the company's CDS contracts and policies on terms
satisfactory to the company, well as to address the company's
public finance business to the satisfaction of the New York
Superintendent of Insurance, (ii) the risk of adverse loss
development on its remaining in-force business not so commuted,
terminated or restructured (particularly in regard to its exposure
to residential mortgages) that would cause it not to be in
compliance with its $65 million minimum policyholders' surplus
requirement under New York state law, and (iii) the risk of
intervention by the NYID as a result of the financial condition of
Syncora Guarantee.
As a result of uncertainties associated with these factors
affecting the company's ability to continue as a going concern,
management has concluded that there is substantial doubt about the
ability of the company to continue as a going concern.
* * *
As reported in the Troubled Company Reporter on Aug. 8, 2008,
Moody's Investors Service placed the B2 insurance financial
strength ratings of Syncora Guarantee Inc. (formerly XL Capital
Assurance Inc.), Syncora Guarantee (U.K.) Ltd. and Syncora
Guarantee Re Ltd. (formerly XL Financial Assurance Ltd) on review
for possible upgrade.
SYNCORA HOLDINGS: Management Raises Going Concern Doubt
-------------------------------------------------------
Syncora Holdings Ltd. disclosed results for the three- and nine-
month periods ended Sept. 30, 2008. The net loss available to
common shareholders in the third quarter of 2008 was
$1.3 billion as compared to a net loss of $89.9 million reported
in the third quarter of 2007. The net loss for the quarter was
due to a net loss of $1.0 billion due to the net change in fair
value of derivatives, as compared to a net loss of $131.5 million
recorded in the comparable period in 2007.
The company also reported a $213.0 million in net loss and loss
adjustment expenses compared to $5.4 million in the third quarter
of 2007 due to adverse development relating to certain insured
obligations supported by residential mortgage-backed securities.
The net loss for the first nine months of 2008 was $1.9 billion
as compared to a net loss of $26.7 million for the first nine
months of 2007. The increase in net loss for the nine-month
period ended Sept. 30, 2008, was attributable to a net loss of
$1.2 billion due to the net change in fair value of derivatives
compared to a net loss of $145.8 million for the comparable
period in 2007. Net losses and loss adjustment expenses for the
first nine months of 2008 were $710.2 million compared with
$5.8 million during the comparable period in 2007 due to adverse
development in certain insured obligations supported by RMBS.
As of Sept. 30, 2008, the company reported total shareholders'
equity of $63.5 million and common shareholders' deficit of
$183.1 million as compared to total shareholders' equity of
$427.1 million and common shareholders' equity of $180.5 million
at Dec. 31, 2007.
Negotiations with Financial Counterparties
During the third quarter 2008, J.P. Morgan Securities Inc. was
engaged to assist Syncora Guarantee Inc. in identifying and
analyzing strategic alternatives with respect to its portfolio of
credit default swap and financial guarantee contracts. J.P.
Morgan is working directly with Syncora and its legal advisors
during negotiations with Syncora Guarantee's CDS and financial
guarantee bank counterparties.
The original negotiation period and forbearance agreements
provided for by the Master Commutation, Release and Restructuring
Agreement expired on Oct. 15, 2008; however, Syncora Guarantee
and its Financial Counterparties, except Lehman Brothers Inc.,
agreed to extend the period for negotiations to Oct. 31, 2008.
Subsequent to that expiration, the company has engaged in
discussions with the Financial Counterparties to further extend
the negotiations and accompanying forbearance agreements, though
there has been no further extension and there can be no assurance
additional extensions will be obtained. The negotiations with the
Financial Counterparties remain ongoing, but there can be no
assurance the negotiations will ultimately result in an agreement.
Ability of the company to Continue as a Going Concern
In the opinion of the company, the principal factors which affect
the company's ability to continue as a going concern are: (i) its
ability to successfully reach agreements with Financial
Counterparties and other parties to commute, terminate or
restructure the company's CDS contracts and policies on terms
satisfactory to the company, well as to address the company's
public finance business to the satisfaction of the New York
Superintendent of Insurance, (ii) the risk of adverse loss
development on its remaining in-force business not so commuted,
terminated or restructured (particularly in regard to its exposure
to residential mortgages) that would cause it not to be in
compliance with its $65 million minimum policyholders' surplus
requirement under New York state law, and (iii) the risk of
intervention by the NYID as a result of the financial condition of
Syncora Guarantee.
As a result of uncertainties associated with these factors
affecting the company's ability to continue as a going concern,
management has concluded that there is substantial doubt about the
ability of the company to continue as a going concern.
Notification by New York Stock Exchange of
Listing Standards Non- Compliance
Syncora was notified on Nov. 11, 2008 by the New York Stock
Exchange Regulation, Inc. that it is not in compliance with the
New York Stock Exchange's continued listing standards, because
over a consecutive 30-day trading period its average total market
capitalization was less than $75 million and the company's most
recently reported shareholders' equity was below $75 million.
On Nov. 13, 2008, the company was notified it was not in
compliance with the NYSE's price criteria requiring listed shares
to have an average closing price over $1.0 for the prior
30 trading day period. Under applicable NYSE procedures, the
company has 30 business days from the receipt of the notice to
submit a plan to the NYSE to demonstrate its ability to achieve
compliance with the continued listing standards within six months
regarding the price criteria and 18 months regarding market
capitalization and shareholders' equity standards. The company
expects to notify the NYSE that it intends to cure the market
capitalization and average closing price deficiencies and maintain
its listing. However, there can be no assurance that the company
will be successful in its attempt to cure the deficiencies and
maintain its listing.
Operating Loss
For the third quarter of 2008, the company reported an operating
loss of $1.5 billion compared to operating income of
$46.0 million for the third quarter of 2007. For the first nine
months of 2008, the company reported an operating loss of
$2.8 billion compared to operating income of $136.5 million for
the first nine months of 2007.
Liquidity
As of Sept. 30, 2008, Syncora, the parent company, had cash and
cash equivalents of $28.8 million, which includes a $30.8 million
distribution from Syncora Guarantee Re on Aug. 5, 2008. On a
consolidated basis, the company had unrestricted cash and cash
equivalents totaling $752.2 million. Additional restricted cash
and cash equivalents totaled $977.9 million which includes
$825.0 million held for the commutation negotiations with the
Syncora Guarantee's financial counterparties and $128.3 million
supporting the company's remaining reinsurance business.
Balance Sheet
The company's net unpaid losses and loss adjustment expense
reserves were $805.6 million at the end of the third quarter of
2008, versus $135.6 million at year-end 2007. The increase was
due to the case loss reserve additions and loss reserve accretion
which occurred during the third quarter of 2008 in connection with
the company's insured HELOC, CES and Alt-A portfolios.
As of Sept. 30, 2008, total assets were $4.1 billion, up from
$3.7 billion in total assets as of June 30, 2008 and $3.6 billion
in total assets as of Dec. 31, 2007. The company had common
shareholders' deficit of $183.1 million as of Sept. 30, 2008,
compared to a deficit of $428.7 million as of June 30, 2008, and
common shareholders' equity of $180.5 million at the end of 2007.
The company's total shareholders' equity as of Sept. 30, 2008, was
$63.5 million as compared to a deficit of $182.1 million at
June 30, 2008, and total shareholders' equity of $427.1 million as
of Dec. 31, 2007.
Book value per common share as of Sept. 30, 2008, was based on the
company's issued and outstanding shares of 34,433,680, which
excludes restricted stock shares well as the 30,069,049 shares
held in escrow for the benefit of Syncora Guarantee deemed to be
treasury stock for accounting purposes only. This compares to
64,169,788 shares outstanding as of Dece. 31, 2007.
About Syncora Holdings Ltd.
Based in Hamilton, Bermuda, Syncora Holdings Ltd. (NYSE: SCA) --
http://www.syncora.com/-- fka Security Capital Assurance Ltd.
is a monoline financial guarantee insurance provider, and Syncora
Guarantee Re Ltd. (formerly XL Financial Assurance Ltd.), a
monoline provider of reinsurance to financial guarantee insurers
that provides credit enhancement for the obligations of debt
issuers worldwide.
* * *
As reported in the Troubled Company Reporter on Aug. 8, 2008,
Moody's Investors Service placed the B2 insurance financial
strength ratings of Syncora Guarantee Inc. (formerly XL Capital
Assurance Inc.), Syncora Guarantee (U.K.) Ltd. and Syncora
Guarantee Re Ltd. (formerly XL Financial Assurance Ltd) on review
for possible upgrade.
SZE-YAU DEREK YIU: Case Summary & 14 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Sze-Yau Derek Yiu
fdba Ky-Tek
fdba Matrix Investments
dba Global Financing
P.O. Box 4313
Santa Clara, CA 95056
Case No.: 08-56664
Petition Date: November 19, 2008
Court: U.S. Bankruptcy Court
Northern District of California (San Jose)
Judge: Marilyn Morgan
Debtor's Counsel: David A. Boone, Esq.
Law Offices of David A. Boone
1611 The Alameda
San Jose, CA 95126
Tel: (408) 291-6000
Email: ecfdavidboone@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 14 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/canb08-56664.pdf
The Debtor's prior bankruptcy cases were filed in the
Northern District of California:
Case Number Date Filed
----------- ----------
04-57118 11/18/04
04-54323 07/12/04
03-53008 05/09/03
02-57083 12/13/02
THELEN LLP: 19 Attorneys Move to Winston & Strawn
-------------------------------------------------
In a year marked by exceptional growth, Winston & Strawn LLP said
it has added 19 attorneys to its West Coast and New York offices
whose practices focus on complex litigation, private equity,
international transactions, real estate, energy and intellectual
property law. Partners Paul R. Griffin, Jonathan R. Howden,
Richard A. Lapping, Kit Choy Loke, Dirk R. Mueller, Robert L.
Nelson Jr. and Robert B. Pringle join the firm's San Francisco
office; Jarrett L. Fugh will reside in the Los Angeles office, and
Jonathan S. Bristol joins in New York. In San Francisco, Dean
Morehous joins the firm as of counsel, along with nine associates.
All were previously with Thelen LLP.
"We are extremely pleased to continue a remarkable year of
strategic growth for the firm and welcome these attorneys to our
offices," said Tom Fitzgerald, managing partner of Winston &
Strawn. "The depth of their experience will complement our
existing core transactional and litigation practices and reinforce
the firm's reputation for handling high stakes deals and bet-the-
company lawsuits."
Messrs. Pringle, Griffin and Howden bring a well-established
antitrust and commercial litigation practice. Ms. Loke and
Messrs. Fugh and Mueller have deep experience representing
companies in the hospitality, private investment and energy
industries for transactional needs. Messrs. Nelson and Bristol
handle private equity, project finance and real estate matters
globally. Mr. Lapping brings his restructuring and bankruptcy
practice to the firm's strong restructuring and insolvency
practice. Mr. Morehous is known for his trial skills in
intellectual property, insurance coverage and general litigation.
Since the beginning of 2008, and including this new group of
attorneys, Winston & Strawn has opened two offices in Charlotte,
N.C., and Hong Kong, while adding 40 partners, four of counsel and
28 associates. The firm climbed five spots in the recently
released 2008 National Law Journal 250 Survey of law firms, based
on size, and is now ranked 26th on the list.
Winston & Strawn has begun the process of formalizing its presence
in mainland China and Hong Kong where it will be formally
affiliated with a local partnership.
Winston & Strawn Lateral Attorney Biographies
-- San Francisco Office
Office spokesperson: Charles Birenbaum, (415) 591-1403
"This is an exciting time of growth for our office. These
additions further expand and enrich our energy, real estate,
finance, intellectual property and litigation practices. We look
forward to working with such gifted attorneys, and our clients
will surely benefit from their expertise," said Charles Birenbaum,
managing partner of Winston & Strawn's San Francisco office.
Paul Griffin has extensive experience in antitrust litigation,
including cartel and price fixing cases, grand jury
investigations, merger analyses and challenges, monopolization,
price discrimination and unfair competition. He is considered one
of California's leading experts on gift cards and has led the
defense of numerous class action lawsuits alleging violations of
California's stringent gift card law. Mr. Griffin is formerly vice
chair of Thelen's antitrust practice group. He earned his juris
doctor from the University of Michigan Law School.
Jonathan Howden is a commercial litigator who concentrates his
practice in white collar, corporate compliance and antitrust
matters. Before entering private practice, he served for nearly 20
years as assistant United States attorney for the Northern
District of California. Mr. Howden was part of the team that
successfully prosecuted former Ukrainian Prime Minister Pavel
Lazarenko for money laundering, wire fraud and transportation of
stolen property. He earned his juris doctor from the University of
California, Hastings College of Law.
Richard Lapping focuses on business reorganization and bankruptcy,
as well as commercial litigation. He advises businesses on debt
restructuring, trust formation, acquisitions and
divestitures.Lapping also works with corporations, limited
liability companies and partnerships on creditors' rights,
governance and control issues. He has experience with
securitization and energy transactions and sits on the University
of California Hastings 1066 Foundation Board of Trustees. He
received his juris doctor from the University of California,
Hastings College of Law.
Kit Choy Loke counsels clients on the acquisition, management and
divestiture of real estate, regulatory compliance by foreign
investors, entity formation and governance, and hotel development
and management transactions. Conversant in Bahasa Melayu,
Cantonese and Mandarin Chinese, she also represents U.S. investors
in business opportunities in East Asia. Ms. Loke received her
juris doctor and LL.M. from University of California, Berkeley
School of Law, and an LL.B. from the National University of
Singapore.
Dean Morehous has more than 23 years of experience in litigation
matters. He has expertise in intellectual property, insurance
coverage and commercial litigation. Mr. Morehous also has
substantial experience in failed system, software and technology
defect claims. He earned his juris doctor from the University of
California, Davis.
Dirk Mueller focuses on real estate and energy transactions,
project development and project finance. He represents clients in
connection with acquisitions, dispositions, project development,
joint ventures, construction, mezzanine and shared appreciation
loans and project finance transactions. With more than 15 years of
experience, Mr. Mueller has extensive experience with financing
and development of wind, solar, geothermal and natural gas-fired
energy projects. Mr. Mueller received his juris doctor from the
University of California, Berkeley School of Law.
Robert Nelson concentrates his practice on energy/infrastructure,
cross-border transactions (especially involving Asia), and private
equity. He has done more development and financing work for solar
energy projects than any other practicing lawyer in the world
today, and has been named as one of the leading energy and project
finance lawyers in the world by Euromoney and other prestigious
publications. As former co-chair of Thelen's Asian practice group,
Mr. Nelson worked extensively throughout the region, with emphasis
on China and India. He received his juris doctor from Columbia
University.
Robert Pringle focuses his practice in antitrust, unfair
competition, securities and complex commercial litigation.
Formerly firmwide chair or Thelen's antitrust and competition
practice, he has been active in criminal grand jury matters,
contested mergers and a variety of civil litigation. Mr. Pringle
as acted as counsel for numerous Fortune 200 and global 500
companies. Recently he served as lead counsel in a worldwide
cartel criminal investigation and subsequent class action. He
received his juris doctor from Duke University School of Law.
Associates: Eva Chan, Marcus Colabianchi, Seagrumn Gilbert, Laura
Guillen, Jinjian Huang, Sean Meenan, Takako Morita, Justin Pauls
and Jonathan Swartz
-- Los Angeles Office
Office spokesperson: Laura Petroff, (213) 615-1736
"We look forward to Jarrett joining the Los Angeles office. During
this economic climate, his vast knowledge of the technology and
financial intricacies involved in the hospitality and real estate
industries will augment our real estate and restructuring and
insolvency practices," said Laura Petroff, managing partner of
Winston & Strawn's Los Angeles office.
Jarrett Fugh advises clients in the hospitality and resort
industries with regard to real estate and technology. He focuses
on real estate finance and capital markets lending, including
restructuring of syndicated, mezzanine and securitized loans and
construction financing for major commercial, residential and
hospitality properties. Mr. Fugh also handles mergers and
acquisitions, joint ventures, strategic alliances and venture
capital financings. He received his juris doctor, with honors,
from the George Washington University Law School.
-- New York Office
Office Spokesperson: Jonathan Goldstein, (212) 294-6714
"Jonathan is a welcome addition to the New York office. His
experience in the real estate and corporate finance sectors will
afford greater opportunities to service and support our clients in
these areas," said Jonathan Goldstein, managing partner of Winston
& Strawn's New York office.
Jonathan Bristol focuses on real estate and private equity
transactions, including debt and equity financings, international
investment funds, real estate loans, hotel and hospitality
industry projects, and the purchase and sale of real estate
holdings. Mr. Bristol holds a juris doctor from the University of
Virginia School of Law.
As reported by the Troubled Company Reporter on November 19, 2008,
various law firms have continued to snag certain of Thelen's
practice groups and professionals:
-- Morgan Lewis & Bockius and Reed Smith took Thelen's high-
profile energy teams;
-- Howrey LLP nabbed Thelen's construction group; and
-- Robinson & Cole LLP got 20 attorneys.
Nixon Peabody, Baker Hostetler and Pillsbury Winthrop Shaw Pittman
LLP also got Thelen professionals.
San Francisco Business Times says Nixon Peabody took in between 60
and 90 lawyers from Thelen early in November. The group will
expand Nixon Peabody's practices in business, intellectual
property, litigation and real estate, the report says.
In July 2008, Thelen was reportedly seeking another merger partner
to boost its headcount and stem the tide of partner defections.
After merger discussions with Nixon Peabody failed, the firm began
looking to shed practice groups and offices as the threat of
dissolution loomed.
On Oct. 28, 2008, Thelen's partnership council recommended that
the firm be dissolved. Thelen's line of credit was cut off due to
many partners departing the firm. The firm hopes to shut down by
Dec. 1, 2008.
In a separate report, Bankruptcy Law360 relates that an attorney
for Thelen said Thursday that Skadden Arps Slate Meagher & Flom
LLP may drop a suit it is bringing against Thelen Reid over
indemnification payments -- and pursue its claim within the
underlying case, which involves the allegedly botched delivery of
certain securities to shareholders of a bankrupt funeral operator.
The indemnification suit was filed Oct. 29, 2008, before the
Supreme Court of the State of New York in Manhattan, Bankruptcy
Law360 says.
Thelen LLP, formerly known as Thelen Reid Brown Raysman & Steiner
-- http://thelen.com/-- is a bicoastal American law firm in
process of dissolution. It was formed as a product between two
mergers between California and New York-based law firms, mostly
recently in 2006. Its headcount peaked at roughly 600 attorneys
in 2006, and had 500 early in 2008, with offices in eight cities
in the United States, England and China.
THORNBURG MORTGAGE: Exchange Offer for 8% Preferred Stocks Expires
-----------------------------------------------------------------
Thornburg Mortgage, Inc. disclosed that the Exchange Offer and
Consent Solicitation for all of the company's outstanding shares
of 8.00% Series C Cumulative Redeemable Preferred Stock, Series D
Adjusting Rate Cumulative Redeemable Preferred Stock, 7.50%
Series E Cumulative Convertible Redeemable Preferred Stock and
10% Series F Cumulative Convertible Redeemable Preferred Stock
has expired and that the company has accepted valid tenders of at
least 66-2/3% of each series of the Preferred Stock.
As of the expiration of the Exchange Offer and Consent
Solicitation at 5:00 p.m., New York City time, on Nov. 19, 2008,
holders of Preferred Stock had tendered:
(i) 89.4% (5,834,744 shares) of the Series C Preferred Stock;
(ii) 91.2% (3,646,556 shares) of the Series D Preferred Stock;
(iii) 92.1% (2,913,110 shares) of the Series E Preferred Stock;
and
(iv) 97.9% (29,692,293 shares) of the Series F Preferred Stock.
Shareholders who participated in the Exchange Offer and Consent
Solicitation will receive 3 shares of the company's common stock
for each share of Preferred Stock validly tendered and accepted,
and the company will issue a total of 126,260,109 shares of its
common stock in exchange for the shares of Preferred Stock
accepted in the Exchange Offer and Consent Solicitation. In
addition, the company will amend its Charter to modify the terms
of each series of Preferred Stock as described in the Offering
Circular. Following settlement of the Exchange Offer and Consent
Solicitation, approximately 690,256 shares of Series C Preferred
Stock will remain outstanding, approximately 353,444 shares of
Series D Preferred Stock will remain outstanding, approximately
249,390 shares of Series E Preferred Stock will remain outstanding
and approximately 634,422 shares of Series F Preferred Stock will
remain outstanding.
Thornburg Mortgage made this Exchange Offer and Consent
Solicitation as part of the financing transaction the company
entered into with various investors on March 31, 2008. By
successfully completing the Exchange Offer and Consent
Solicitation and upon issuance of additional warrants to the
participants of the Principal Participation Agreement, the annual
interest rate on the company's Senior Subordinated Secured Notes
due 2015 will be lowered from 18% to 12%, resulting in savings of
approximately $75.9 million per year in interest payments.
Additionally, upon issuance of the additional warrants, the PPA
will expire according to its terms, thereby allowing the company
to retain the monthly principal payments on the mortgage backed
securities collateralizing its reverse repurchase agreement
borrowings once the Override Agreement terminates in March 2009,
after deducting payments due under those reverse repurchase
agreements.
Subsequent to the completion of the Exchange Offer and Consent
Solicitation, the Preferred Stock will no longer meet the
continued listing criteria under the NYSE Listing Company Manual
and is expected to be delisted promptly. The company does not
intend to list the Preferred Stock on any other national
securities exchange.
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.
THORNBURG MORTGAGE: Nonpayment of Interest Spurs S&P's 'D' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
rating on Thornburg Mortgage Inc. to 'D' from 'SD'. In addition,
the issue rating on Thornburg's senior notes has been changed to
'D' from 'CC'.
This rating change follows Thornburg's announcement that it has
not paid, and does not have the funds to pay, its $12.2 million
Nov. 15, 2008, interest payment on its senior notes. This missed
payment constitutes a default by Standard & Poor's criteria, and
therefore the ratings are moved to 'D'. Thornburg has stated its
intention to pay the interest payment within the 30-day grace
period under the indenture after further negotiations with the
counterparties of its override agreement, but these negotiations
have been ongoing for an extended period.
"Given the long-standing nature of the negotiations through this
point, S&P feel that it will be difficult for Thornburg to
finalize negotiations and make its payment within the 30-day grace
period," said Standard & Poor's credit analyst Adom Rosengarten.
If the payment is made, S&P could raise the ratings.
TORRENT ENERGY: To Sell Asset to Y.A. Global Investment
-------------------------------------------------------
Bill Rochelle of Bloomberg News reports that Torrent Energy
Corp.'s assets will be sold to Y.A. Global Investment LLP in
exchange for its secured claim, and the Debtor's Chapter will be
dismissed in 10 days.
According to Mr. Rochelle, a judge in the future will decide how
much to pay the professionals who will not be compensated in full.
Mr. Rochelle relates the Debtor planned to confirm a Chapter 11
plan until Y.A. Global stopped funding its case. Y.A Global
provided at least $4.5 million to the Debtor before it ceased
funding, he says.
About Torrent Energy
Headquartered in Portland, Oregon, Torrent Energy Corporation
-- http://www.torrentenergy.com/-- is an exploration stage
company engaged in the exploration for coalbed methane in the Coos
Bay region of Oregon and in the Chehalis Basin region of
Washington State. The company and two of its affiliates filed for
Chapter 11 protection on June 2, 2008 (Bankr. D. Ore. Case Nos.
08-32638 through 08-32640). Jeanette L. Thomas, Esq., at
Perkins Coie LLP, represents the Debtors in their restructuring
efforts. The company has $35.3 million in total assets and
$24.8 million in total liabilities as June 30, 2008.
VALUE CITY: Gets Final OK to Access $40MM Wells Fargo DIP Loan
--------------------------------------------------------------
Value City Holdings Inc. sought and obtained approval on a final
basis to borrow up to $40 million in debtor-in-possession
financing from lenders National City Business Credit Inc. and
Wells Fargo Retail Finance LLC, Bankruptcy Law360 reports. Value
City obtained interim approval to access the DIP facility two days
after filing for bankruptcy, the report says.
Judge James M. Peck signed off on the DIP order, the report says.
Headquartered in Columbus, Ohio, Value City Holdings Inc. --
http://www.valuecity.com/-- operates a chain of department stores
in the United States. The company and eight of its affiliates
filed for Chapter 11 protection on Oct. 26, 2008 (Bankr. S.D. N.Y.
Lead Case No. 08-14197). John Longmire, Esq., and Lauren C.
Cohen, Esq., at Willkie Farr & Gallagher LLP, represents the
Debtors' in their restructuring efforts. The company selected
Epiq Bankruptcy Solutions LLC as its claims, noticing and
balloting agent. The United States Trustee for Region 2 has
named a nine-member official committee of unsecured creditors.
When the Debtors filed for protection from their creditors,
they listed assets and debts between $100 million and
$500 million each.
VISTA LEVERAGED: S&P Downgrades Rating on Senior Notes
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the
senior notes issued by Vista Leveraged Income Fund, a
collateralized loan obligation transaction managed by MJX Asset
Management LLC, and placed it on CreditWatch with negative
implications.
The lowered rating and CreditWatch placement primarily reflect the
volatility in market conditions that have stressed the market
prices of the collateral backing the rated notes. The downward
pressure on market prices has resulted in the failure of the
transaction's asset coverage ratio, which is the portfolio's
market value based coverage ratio. Based on the Nov. 3, 2008,
trustee report, the asset coverage ratio was at 95.16% compared
with the required ratio of 110%. The transaction triggered an
event of default on Nov. 6 because of continued failure of the
asset coverage ratio for over 30 days. Standard & Poor's noted
that, according to the indenture, if an EOD has occurred and is
continuing, the majority of the controlling class can direct the
sale and liquidation of the collateral.
Rating Lowered and Placed on CreditWatch Negative
Vista Leveraged Income Fund
Rating
------
Class To From Balance (million)
----- -- ---- -----------------
Senior Notes BB+/Watch Neg AAA $175.099
Transaction Information
-----------------------
Issuer: Vista Leveraged Income Fund
Co-issuer: Vista Leveraged Income Fund Inc.
Underwriter: Credit Suisse
Collateral manager: MJX Asset Management LLC
Trustee: Bank of New York Mellon Trust Co.
VUBOTICS INC: Files for Chapter 11 Protection in Georgia
--------------------------------------------------------
J. Scott Trubey at Atlanta Business Chronicle reports that
VuBotics Inc. filed for Chapter 11 bankruptcy protection in the
U.S. Bankruptcy Court for the Northern District of Georgia on
Wednesday.
Atlanta Business relates that VuBotics has operated for three
years. Court documents indicate that VuBotics listed $19, 215 in
assets and $3.5 million in debts.
Atlanta Business reported last year that VuBotics officials said
that their products help wireless device users read text like e-
mails and documents up to five times faster than they would
normally. According to Atlanta Business, VuBotics said it was
trying to strike license agreements with newspapers, Blackberry
makers Research in Motion Ltd., and other makers of smartphones.
Previous Atlanta Business say that VuBotics raised about
$2.3 million in a stock sale in August 2006 and some $2 million
more in angel capital last year. According to court documents,
VuBotics has issued 56 million shares to 500 shareholders.
VuBotics' Board of Directors appointed Jules Stine as a new
director and Chief Operating Officer of the company, effective
Oct. 3, 2008. Mr. Stine serves as a director of the company until
his successor has been duly elected or appointed. Mr. Stine has
served as a reorganization consultant since 1991. In this role he
provides corporate restructuring and reorganization advisory
services, including assisting clients with developing and
implementing strategy, raising capital, analyzing internal control
and financial management and executing mergers and acquisitions.
Mr. Stine has served as an outside consultant and advisor to Brax
Ltd., since 2000, and to the minority partners of Clear Channel
Airports of Georgia since 2002. His clients have included
companies in such diverse industries as real estate, advertising,
van conversion, textile and apparel manufacturing and retail. Mr.
Stine received a B.S. in Chemistry from the University of Georgia.
Atlanta Business reports that VuBotics listed several law firms as
its largest unsecured creditors, including:
-- Baker Donelson LLP, which holds a $285,995 claim,
-- Duane Morris LLP, which has a $501,943 claim,
-- Greenberg Traurig LLP, which has a $716,667 claim, and
-- McKenna Long & Aldridge LLP, which is owed $209,050.
About VuBotics
Atlanta-based VuBotics Inc. is a software company, which markets
products to improve reading speed and comprehension on digital
handheld devices. It is the developer of VuIT Textcasting and
VuIT Mine data mining software. The company, through its
subsidiaries, operates as an intellectual asset development and
marketing company.
WASHINGTON MUTUAL: Investors Want to Form Equity Committee
----------------------------------------------------------
A group of Washington Mutual, Inc., investors has initiated the
process of establishing an equity committee in WaMu's Chapter 11
cases.
A forum Web site has also been organized by the WaMu Investors to
"release investigative articles regarding the unprecedented
seizure of Washington Mutual Bank."
On behalf of the WaMu Investors, media spokesman Michael
Rozenfield released a statement posted on
http://www.wamucoup.com/:
HOUSTON, Texas -- November 15, 2008 -- WamuCoup.com and
WamuRape.org have initiated the process for the formation
of an equity committee through the US Court Trustee's office
regarding the Washington Mutual bankruptcy. An equity
committee can be appointed by the court to preserve
shareholder's rights. It is up to the trustee's office
whether they recommend the formation of this committee. The
timeframe involved is several weeks. Below is a copy of the
documentation that our organization has provided regarding the
worth of Washington Mutual, Inc.
Here is a detailed explanation why the group of
shareholders I am working with believe there is enough value
left in the company for an equity committee to be formed.
Before I begin my financial analysis, I would like to state a
few facts about this voluntary Chapter 11 reorganization
bankruptcy.
First, it is highly unusual as the FDIC seizure of WAMU
Bank is what caused this whole event to occur. Even the FDIC
admits that the bank was solvent and well-capitalized up to
the date of seizure. The second item I would like to mention
is that there is legal precedent for successful legal recourse
against the FDIC, specifically the lawsuit filed by First City
Bancorpation of Texas in 1992, which contended the FDIC
seizure to be hasty and unwarranted. In 1993 the court ruled
in the banks favor, and returned the assets to the bank.
Additionally, there are many indicators, widely discussed in
the media, that indicate the seizure may not have been
justified, and also indicate there may have been actions on
the part of JPMorgan to actually cause the failure of the
bank. We are hopeful the legal representative of WMI will
pursue this. Finally, we feel our shares should not be
canceled due to the reorganization of the holding company
whose financial worth exceeds its current debt obligations.
For the sake of this analysis we must separate the
holding company from the bank. However, it was worth noting
that JPM paid 1.9 Billion dollars for the bank to the FDIC.
Although it is not clear to me who that money belongs to, I
believe it should belong to WMI. The bank was at least 90% of
the holding company's business, but what is left of the
holding company is what concerns the stockholders presently.
The first place to look is the SEC form WMI filed in its
Chapter 11 bankruptcy. It claimed 32 Billion dollars in
assets and 8 Billion dollars in liabilities. This is
extremely unusual as most companies do not declare bankruptcy
with four times as many declared assets as liabilities. That
would make the company very well funded and make it have
significant equity value. Now it is clear from the court
filings where the 8 Billion dollars in liabilities come from,
but what are these 32 billion dollars in assets?
We know, by reading the court filings, there is 4.4
billion dollars in cash that is owned by WMI held at JPM bank
and Bank of America. The source of this money can be found in
the WMI June 10Q filing. WMI injected 6 billion dollars into
the bank in 2008 after raising 10 billion dollars with the 3
billion dollar series R preferred stock offering and 7 billion
dollars TPG investment into WMI. Most of this money was spent
on supporting the bank. However, out of all of the money that
was raised, 2.2 billion was left from the TPG deal and 1.9
billion from the series R offering.
Supporting the bank was a money losing venture for the
company as the bank was posting large net losses due to
mortgage defaults. This is where the NOLs (net operating
losses) come into play and why they belong to WMI. The money
that caused the net operating losses was spent in support of
the bank to the detriment of the holding company so there is
no reason why the 'tax write down' should belong to anyone
other than the holding company. We are confident the court
will rule in favor of WMI on this issue. There are
approximately 20 Billion dollars of Net Operating losses which
will allow for writing down 20 Billion dollars of future
profit for the company. If you assume a 35% tax rate (the
generalized business rate tax), that is 7 billion dollars in
value. Just those two items combined is greater than the 8
Billion dollars that is owed to the bond and unsecured debt
holders.
However, there is even more value left in the WAMU
holding company. I have included a list at the bottom of this
letter that shows the subsidiaries of WMI. This list is quite
extensive. Many of these subsidiaries have hundreds of
millions of dollars (potentially billions of dollars when
considered in total) in value associated with them. Some of
them may be now owned by the bank, but the majority of them
are still owned by the holding company. These are documented
in SEC filings and I have included a list at the bottom of
this letter.
Once WMI creates its list of assets, it will become clear
how much all of these subsidiary companies are worth. Let me
also note there has been a recent claim by WMI that they have
an insurance company worth nearly $400 Million and this is
just the tip of the iceberg. Additionally, there is also real
estate that the holding company owns but I was unable to find
a list of which buildings it holds title to (including the
WAMU Center).
Finally, there are two more potential sources of value.
In the June 10Q, it was noted that WMI held 4 billion dollars
worth of Providian Financial preferred shares. WAMU Bank
bought out Providian in 2006 and Providian remains a
subsidiary of WMI. Although WAMU bank was seized, those
shares still belong to the holding company as Providian is a
subsidiary of WAMU Bank.
Additionally, there is potential of a reversal of the
seizure and the return of the bank, which would be optimal for
WMI and its shareholders. There is language in HR 1424 that
Wells Fargo cited to purchase Wachovia bank instead of
Wachovia being sold to Citi. I have included it below the
letter for reference. We feel these statutes could also be
used on behalf of WMI, to recoup what the FDIC seized, in
whole or in part.
Even WMI is not fully aware of what the value of WMI is
at present, due to the fact that JPMorgan has their books, and
they currently do not have sufficient staff to evaluate all
these issues, per their most recent court filing. I hope you
now see the value in the company that we do, and see why we
would like to protect our interests in what is left of the
company, WMI.
I would be happy to provide any documentation or
information you need regarding this information or anything
else. Please contact me if you have any questions or need any
further information.
(c) UNENFORCEABILITY OF CERTAIN AGREEMENTS. Section
13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c))
is amended by adding at the end the following new paragraph:
(11) UNENFORCEABILITY OF CERTAIN AGREEMENTS. -- No provision
contained in any existing or future standstill,
confidentiality, or other agreement that, directly or
indirectly:
(A) affects, restricts, or limits the ability of any
person to offer to acquire or acquire,
(B) prohibits any person from offering to acquire or
acquiring, or
(C) prohibits any person from using any previously
disclosed information in connection with any such
offer to acquire or acquisition of, all or part of
any insured depository institution, including any
liabilities, assets, or interest therein, in
connection with any transaction in which the
Corporation exercises its authority under section 11
or, shall be enforceable against or impose any
liability on such person, as such enforcement or
liability shall be contrary to public policy'.
Washington Mutual, Inc.'s direct and indirect subsidiaries
are:
* 110 East 42nd Operating Company, Inc.
* 620-622 Pellhamdale Avenue Owners Corporation
* Accord Realty Management Corporation
* ACD2
* ACD3
* ACD4
* Ahmanson Developments, Inc.
* Ahmanson GGC LLC
* Ahmanson Insurance, Inc.
* Ahmanson Land Company
* Ahmanson Marketing, Inc.
* Ahmanson Obligation Company
* Ahmanson Residential 2
* Ahmanson Residential Development
* Bryant Financial Corporation
* California Reconveyance Company
* CCB Capital Trust IV
* CCB Capital Trust IX
* CCB Capital Trust V
* CCB Capital Trust VI
* CCB Capital Trust VII
* CCB Capital Trust VIII
* Clayton Blackbear, Inc.
* Commercial Loan Partners L.P.
* CRP Properties, Inc.
* Dime Capital Partners, Inc.
* Dime Commercial Corp.
* Dime CRE, Inc.
* Dime Mortgage of New Jersey, Inc.
* ECP Properties, Inc.
* The E-F Battery Accord Corporation
* F.C. LTD.
* FA California Aircraft Holding Corporation
* FA Out-of-State Holdings, Inc.
* Flower Street Corporation
* Great Western FS Corporation
* Great Western Service Corporation Two
* H.F. Ahmanson & Company
* H.S. Loan Corporation
* Harmony Agency, Inc.
* HCP Properties Holdings, Inc.
* HCP Properties, Inc.
* HFC Capital Trust I
* HHP Investment, LLC
* HMP Properties, Inc.
* Home Crest Insurance Services, Inc.
* HS Loan Partners LLC
* Irvine Corporate Center, Inc.
* Ladue Service Corporation
* Long Beach Securities Corp.
* Marion Insurance Company, Inc.
* Marion Street, Inc.
* Mid Country Inc.
* Murphy Favre Housing Managers, Inc.
* Murphy Favre Properties, Inc.
* NAMCO Securities Corp.
* Nickel Purchasing Company, Inc.
* Norstar Mortgage Corp.
* North Properties, Inc.
* Pacific Centre Associates LLC
* Pacoima Investment Fund LLC
* PCA Asset Holdings LLC
* Pike Street Holdings, Inc.
* Plainview Inn, Inc.
* Providian Bancorp Services
* Providian Leasing Corporation
* Providian Mauritius Investments LTD
* Providian Services Corporation
* Providian Services LLC
* Providian Technology Services Private Limited
* Reverse Exchange Corporation
* Rivergrade Investment Corp.
* Riverpoint Associates
* Robena Feedstock LLC
* Robena LLC
* Savings of America, Inc.
* Seafair Securities Holdings Corp.
* Second and Union LLC
* Seneca Funding (UK) Limited
* Seneca Funding LLC
* Seneca Funding Management LLC
* Seneca Funding Trust
* Seneca Holdings, Inc.
* Seneca Newco LLC
* Seneca Street, Inc.
* Sivage Financial Services LLC
* Snohomish Asset Holdings LLC
* SoundBay Leasing LLC
* Stockton Plaza, Incorporated
* Strand Capital LLC
* Sutter Bay Associates LLC
* Sutter Bay Corporation
* Thackeray Funding Corp.
* Thackeray Funding Partners
* Thackeray Holdings Corp.
* University Street, Inc.
* WaMu 1031 Exchange
* WaMu Asset Acceptance Corp.
* WaMu Capital Corp.
* WaMu Insurance Services, Inc.
* WaMu Investments, Inc.
* Washington Mutual Asset Securities Corp.
* Washington Mutual Bank
* Washington Mutual Bank fsb
* Washington Mutual Brokerage Holdings, Inc.
* Washington Mutual Capital Trust 2001
* Washington Mutual Community Development, Inc.
* Washington Mutual Finance Group LLC
* Washington Mutual Life Insurance Company of California, a
Stock Insurer
* Washington Mutual Mortgage Securities Corp.
* Washington Mutual Preferred Funding LLC
* Washington Mutual Trade Service Limited
* Washington Mutual-Seattle Art Museum Project Owners
Association
* Western Service Co.
* WM Aircraft Holdings LLC
* WM Asset Holdings Corp.
* WM Citation Holdings, LLC
* WM Enterprises & Holdings, Inc.
* WM Funds Disbursements, Inc.
* WM Marion Holdings LLC
* WM Mortgage Reinsurance Company, Inc.
* WM Specialty Mortgage LLC
* WM Winslow Funding LLC
* WMB St. Helens LLC
* WMBFA Insurance Agency, Inc.
* WMFS Insurance Services, Inc.
* WMGW Delaware Holdings LLC
* WMHFA Delaware Holdings LLC
* WMI Investment Corp.
* WMI Rainier LLC
* WMICC Delaware Holdings LLC
* WMRP Delaware Holdings LLC
* Yellowstone Venture, Inc.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: Freddie Mac & JPMorgan Argue Over Bad Mortgages
------------------------------------------------------------------
Freddie Mac and JPMorgan Chase & Co. are in a dispute over bad
mortgages sold by Washington Mutual Inc., that may strip JPMorgan
of millions of dollars in fees, according to Bloomberg News.
JPMorgan, which took over WaMu's banking assets after the
Company's collapse, told Freddie it "won't buy back mortgages
sold by WaMu that failed to match promises made about their
quality," the report said, citing a regulatory filing filed by
Freddie Mac.
In response, Freddie said it won't permit JPMorgan to keep WaMu's
mortgage servicing contracts "unless it assumes the Washington
Mutual repurchase obligations," Bloomberg related.
Along with other bond investors, Freddie seeks to shift more of
the losses incurred due to U.S. foreclosures to lenders that
originally made the loans or to parties that assured
creditworthiness, according to the report.
The dispute can possibly be brought to court, "depending on the
legal language used by regulators in the rushed deal to rescue
WaMu," IDDmagazine.com, quoting anonymous sources, as saying.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: Board Taps Williams as President, Maciel as CFO
------------------------------------------------------------------
The Board of Directors of Washington Mutual, Inc., appointed
Robert J. Williams, Jr., as president of the Company, on
October 13, 2008, WaMu disclosed in a regulatory filing with the
Securities and Exchange Commission.
Mr. Williams, age 49, served as senior vice president and
corporate treasurer of Washington Mutual Bank from February 2005
until his appointment as president of the Company. Prior to his
employment with WMB, Mr. Williams served in various positions
with SunTrust Bank, including as senior vice president for
Corporate Treasury from 2000 until February 2005.
Mr. Williams and the Company entered into an employment offer
letter dated November 13, 2008. Pursuant to the Offer Letter,
Mr. Williams will be compensated according to these terms:
* He will receive a monthly salary of $175,000 per month
from November 13, 2008, through March 12, 2009. During
that time, Mr. Williams will serve as a full-time officer
and employee of the Company.
* From March 13 until November 13, 2009, Mr. Williams
will serve in a part-time capacity as President, while at
liberty to take full-time employment elsewhere, at a
monthly salary of $75,000 per month.
* From November 14, 2009 through March 14, 2010, Mr.
Williams will serve as president, or in other appropriate
office as may be designated by the Board, in a part-time
capacity at a monthly salary of $50,000 per month, during
which time either Mr. Williams or the Company may
terminate his employment, effective January 14, 2010, or
thereafter, with or without cause, on 30 days' notice.
Unless terminated for Cause, as defined in the Offer Letter, Mr.
Williams' employment will be (i) from November 13, 2008 to
January 14, 2010, and (ii) from month-to-month thereafter through
February 2010, unless terminated prior to that date.
J. Maciel as CFO
The Board also appointed, on November 13, 2008, John A. Maciel as
the Company's chief financial officer, general auditor and
controller. Mr. Maciel continues to hold the positions of
executive vice president, additional restructuring officer,
assistant secretary and assistant treasurer.
Mr. Maciel will serve as the Company's designated principal
financial officer and principal accounting officer for Securities
and Exchange Commission reporting purposes.
Since 2005, Mr. Maciel, age 41, has been a senior director at
Alvarez & Marsal North America, LLC, a management consulting firm
specializing in advisory and business consulting services for
companies in transition. Prior to his employment with A&M, Mr.
Maciel consulted for a variety of companies, where he managed and
supervised projects regarding major reorganization, financial
planning and reporting, and Sarbanes Oxley compliance.
Immediately prior to his employment with A&M, Mr. Maciel was
working as an independent contractor for Hexcel Corporation,
supervising the Sarbanes Oxley implementation, among other
things.
Mr. Maciel is serving in his positions with the Company in
accordance with an engagement letter entered into between the
Company and A&M on October 11, 2008, under which Mr. Maciel will
continue to be employed by A&M and will not (i) receive any
compensation directly from the Company or (ii) participate in any
of the Company's employee benefit plans. Instead, WaMu will
compensate A&M for Mr. Maciel's services at a rate of $540 per
hour.
In connection with the appointment of Mr. Williams as Company
president and Mr. Maciel as CFO, the Board removed William
Kosturos from those positions. Mr. Kosturos continues to serve
as chief restructuring officer, executive vice president and
secretary of the Company.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: BNY Mellon Resigns As Trustee to $1.15B Notes
----------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission dated November 19, 2008, Washington Mutual, Inc.
disclosed that it entered into an Instrument of Resignation,
Appointment and Acceptance effective as of October 14, 2008, with
Wells Fargo Bank, N.A., and The Bank of New York Mellon Trust
Company, N.A. with respect to the Indenture, dated as of
April 30, 2001, by and between the WaMu and Mellon.
Pursuant to the Indenture, WaMu issued $1,150,000,000 aggregate
principal amount of its 5.375% Junior Subordinated Debt
Securities due July 1, 2041.
The Instrument of Resignation provides that, as of the Effective
Date:
(1) Mellon, as the Resigning Trustee confirms, assigns,
transfers, delivers and conveys to Wells Fargo all
rights, powers, trusts privileges, duties and obligations
that the Resigning Trustee holds under the Indenture and
all property and moneys held by the Resigning Trustee
under the Indenture;
(2) the Company accepts the resignation of Mellon as Trustee,
Paying Agent and Security Registrar under the Indenture
and appoints Wells Fargo to replace Mellon under the
Indenture; and
(3) Wells Fargo agrees to perform the rights, powers and
duties of the Trustee as set forth in the Indenture.
Notwithstanding the resignation of Mellon as Trustee, Paying
Agent and Security Registrar under the Indenture, the WaMu will
remain obligated under the Indenture to compensate, reimburse and
indemnify Mellon in connection with its capacities.
Under the Instrument of Resignation, the resignation of Mellon as
Paying Agent and the subsequent appointment of Wells Fargo under
the Indenture will be effective October 24.
A full-text copy of the Instrument of Resignation is available
for free at http://ResearchArchives.com/t/s?3509
The Resignation Agreement
The Company also entered into an Agreement of Resignation,
Appointment and Acceptance effective as of October 15, 2008, by
and among the Company, Law Debenture Trust Company of New York,
as successor Trustee LDT, and Mellon Trust Company, N.A. as the
resigning trustee, with respect to the Indenture II, dated as of
April 4, 2000, between the Company and Mellon Trust.
Pursuant to the Indenture II, the Company issued $500,000,000
aggregate principal amount of its 8.25% Subordinated Notes,
$750,000,000 aggregate principal amount of its 4.625%
Subordinated Notes and $500,000,000 aggregate principal amount of
its 7.25% Subordinated Notes.
The Agreement of Resignation provides that, effective as of the
Effective Date:
(1) Mellon Trust assigns, transfers, delivers and confirms
to Law Debenture Trust all its right, title and interest
under the Indenture II;
(2) The Company accepts the resignation of Mellon Trust as
Trustee, Security Registrar and Paying Agent under the
Indenture II and vests Law Debenture Trust with, all
rights, powers, duties and obligations of Mellon Trust;
and
(3) Law Debenture Trust accepts its appointment as successor
Trustee under the Indenture II.
WaMu acknowledges its obligation to indemnify Mellon Trust for,
and to hold harmless against, any loss, liability and expense
incurred on the part of Mellon, and arising out of or in
connection with the acceptance or administration of the Trust
under the Indenture II.
A full-text copy of the Agreement of Resignation is available for
free at http://ResearchArchives.com/t/s?350a
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Inc. Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WATERFORD GAMING: Moody's Junks Corporate Family Rating From 'B1'
-----------------------------------------------------------------
Moody's Investors Service lowered the corporate family rating and
senior unsecured notes rating of Waterford Gaming LLC's and its
wholly-owned subsidiary and co-issuer, Waterford Gaming Finance
Corp. to Caa1 from B1. It also downgraded the probability of
default rating to B3 from Ba3. The rating outlook is stable.
The rating action is concurrent with the rating downgrade of
Mohegan Tribal Gaming Authority's, which was based on the
expectation of continuing negative gaming trends in Connecticut
and MTGA's high leverage over the rating horizon.
Waterford's only material source of cash flows to service its debt
obligations consists of the cash distributions made by Trading
Cove Associates, a 50%-owned general partnership, which earns a 5%
relinquishment fee based on certain gross revenues of MTGA's
Mohegan Sun casino. Beyond the Mohegan Sun casino's revenue
generation, Moody's further considers MTGA's overall credit
profile in the assessment of Waterford's ratings. MTGA has the
ability to block all or part of the relinquishment payments to TCA
in the event of a payment or non-payment default on MTGA's senior
secured or senior unsecured debt.
Moody's also cautions that (1) in the event of MTGA's bankruptcy,
liquidation, or reorganization, the amounts otherwise payable to
TCA could be distributed to the holders of MTGA's senior secured
and unsecured debt until they are repaid in full, as defined in
the relinquishment agreement, and (2) TCA might be precluded from
judicially enforcing its rights and remedies given MTGA's
sovereign immunity.
Positive rating consideration that partly offsets the
aforementioned risk factors is given to Waterford's reasonable
interest coverage and leverage metrics. Waterford's leverage is
expected to remain moderate in the intermediate term due to an
excess cash flow sweep and the limitations with regards to
additional debt and restricted payments in the notes indenture.
However, the final repayment of Waterford's senior notes at
maturity remains dependent on the adequacy of relinquishment fees
received by TCA over time and the concurrent cash distributions to
Waterford.
The stable outlook reflects Moody's view that MTGA's credit
profile will remain commensurate with its current ratings and that
the continuing collection of the relinquishment fees will allow
gradual debt reduction at Waterford.
S&P's last rating action was made on Aug. 22, 2008, when Moody's
placed Waterford's ratings on review for possible downgrade.
Ratings downgraded:
-- Corporate family rating to Caa1 from B1
-- Probability of default rating to B3 from Ba3
-- Senior unsecured notes rating to Caa1 from B1
(LGD 4/65% assessment unchanged)
Waterford is a special purpose company formed solely for the
purpose of holding its 50% partnership interest, as a general
partner, in TCA, a Connecticut general partnership and the manager
(until Jan. 1, 2000) and developer of the Mohegan Sun casino
located in Uncasville, Connecticut. The Mohegan Sun casino is
owned and operated by the Mohegan Tribal Gaming Authority.
WICKES HOLDINGS: Gets Initial OK to Sell Assets for $3.7 Million
----------------------------------------------------------------
The Deal's Jamie Mason reported that the Hon. Kevin Carey of the
United States Bankruptcy Court for the District of Delaware
conditionally approved the sale of Wickes Furniture Co.'s
corporate headquarters to Village of Wheeling for $3.775 million.
Judge Carey will issue his final ruling after a 25-day inspection
period asked by Village of Wheeling, Mr. Mason says.
According to the Deal, Village of Wheeling won at the auction
after it outbid a $3.575 million offer made by the designated
stalking-horse bidder Morningside Equities Group Inc. Secured
creditor Wells Fargo Retail Finance, who provided up to
$30 million in postpetition financing to fund the Debtor's case,
decided not to make any offer, the report says.
Morningside Equities will be paid $50,000 in break-up fee and
$10,000 in expenses reimbursement, Mr. Mason citing papers filed
with the Court.
The sale is expected to close by Dec. 20, 2008, the Deal notes.
Mr. Mason notes that the company no longer needs the facility
because it cease all its operations and no remaining corporate
staff.
A full-text copy of Wickes and Village's Asset Purchase Agreement
is available for free at http://ResearchArchives.com/t/s?3505
Based in Wheeling, Illinois, Wickes Furniture Company, Inc. --
http://www.wickesfurniture.com/-- is a furniture retailer in the
U.S. with 43 retail stores serving greater Chicago, Los Angeles,
Las Vegas, and Portland. Founded in 1971, Wickes offers room
packages featuring complete living rooms, dining rooms, bedrooms
as well as bedding, home entertainment, accessories and accent
furniture. Wickes employs more than 1,700 employees and offers
products from leading furniture and bedding manufacturers.
The company and two of its debtor-affiliates filed for Chapter 11
protection on Feb. 3, 2008 (Bankr. D. Del. Lead Case No.
08-10213). Nancy Peterman, Esq., at Greenberg Traurig LLP, in
Florida and Sandra G. Selzer, Esq., at Greenberg Traurig LLP, in
Delaware represent the Debtors in their restructuring efforts.
The Debtors selected Epiq Bankruptcy Solutions LLC as claims,
noticing and balloting agent. The U.S. Trustee for Region 3
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors. Margaret M. Manning, Esq., at Whiteford
Taylor & Preston in Wilmington, Delaware, represents the Committee
in these cases. Wickes Furniture Company's schedules show total
assets of $95,503,244 and total liabilities of $153,787,895.
Wickes Holding's schedules show total assets of $15,108,493 and
total liabilities of $79,535,472.
WP HICKMAN: May Use Cash Collateral on Interim Basis Until Nov. 30
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Pennsylvania
authorized W.P. Hickman Systems, Inc. and its debtor-affiliates
authority to use FirstMerit Bank, N.A.'s Cash Collateral on an
interim basis from Nov. 1, 2008, through Nov. 30, 2008, to pay
only their employees' wages and salaries and related taxes and
benefits and ordinary course postpetition inventory claims,
pursuant to a budget. During the interim period, the Debtors'
utilization of Cash Collateral shall not exceed $1,898,345.
As adequate protection, FirstMerit is granted a post-petition
security interest in, and a lien upon the collateral as of the
Petition Date, but such post-petition security interest shall only
be to the same extent, and have the same priority, as its security
interest as of the Petition Date.
FirstMerit is also granted a superpriority administrative claim,
with the exception that said superpriority administrative claim
will be subordinate to wages and benefits due employees of the
Debtors and the related taxes, the fees of professionals as
approved by the Court and the fees due the U.S. Trustee.
The Court also ordered the Debtors to maintain insurance on their
assets during the Interim Period in amounts not less than what
they had prior to the Petition Date.
A hearing to consider further use of Cash Collateral shall be held
on Nov. 25, 2008.
Pre-Petition Debt and Collateral
As of the Petition Date, the Debtors owes FirstMerit approximately
$3.0 million under its Revolving Credit Facility with the bank.
The obligations to FirstMerit under the Revolver are
collateralized by the following assets of the Debtors:
-- approximately $7.2 million in receivables
-- approximately $969,000 in inventory, and
-- Commercial real property valued at approximately $400,000.
The Revolver is further secured by various guaranties from certain
individuals and commercial real estate owned by a prior insider of
the Debtors that the Debtors believe has a value of $2.2 million.
Solon, Ohio-based W.P. Hickman Systems, Inc. --
http://www.wphickman.com/-- offers commercial roofing products.
The Debtors engage in providing services to the federal government
through its GSA certification and are involved in major buying
groups including Sodexho-USA, Horizon Resource Group and U.S
Community Services. The company and its affiliates filed for
Chapter 11 protection on Oct. 2, 2008 (Bankr. W. D. Pa. Case No.
08-26591). Paul J. Cordaro, Esq., and Aurelius P. Robleto, Esq.,
at Campbell & Levine LLC represent the Debtors in their
restructuring efforts. James E. Van Horn, Esq., at McGuireWoods
LLP represent the Official Committee of Unsecured Creditors as
counsel. W.P. Hickman listed assets of $10 million to $50 million
and debts of $10 million to $50 million.
W.R. GRACE: Files 1st Amended Plan & Disclosure Statement
---------------------------------------------------------
W.R. Grace & Co., its subsidiaries, the Official Committee of
Asbestos Personal Injury Claimants, the Asbestos PI Future
Claimants' Representative, and the Official Committee of Equity
Security Holders, delivered to the U.S. Bankruptcy Court for the
District of Delaware on November 10, 2008, a first amended Joint
Plan of Reorganization and a Disclosure Statement explaining the
amended Plan.
The First Amended Plan and Disclosure Statement, among others,
incorporate the objections raised by several parties to the
Disclosure Statement, and a settlement of all Claims and Demands
against the Debtors.
Treatment of Class 9 Claims
Under the First Amended Plan, each holder of Allowed Class 9
General Unsecured Claims will be paid the Allowed Amount of its
Allowed General Unsecured Claim plus postpetition interest on
that Claim either:
(i) in Cash in full on the later of the Effective Date, or the
date the General Unsecured Claim becomes an Allowed
General Unsecured Claim; or
(ii) on other less favorable terms as have been agreed on by
the Holder of an Allowed General Unsecured Claim and the
Debtors or the Reorganized Debtors.
Subject to Section 3.1.9(d) of the Plan, postpetition interest on
Allowed General Unsecured Claims will be calculated either:
* for General Unsecured Claims arising from the Prepetition
Credit Facilities, postpetition interest will be calculated
from the Petition Date through December 31, 2005 at the rate
of 6.09% and thereafter at floating prime, in each case
compounded quarterly through the Effective Date or the date
the General Unsecured Claim becomes an Allowed Claim;
* for General Unsecured Claims arising from Environmental
Claims that include a liquidated amount for postpetition or
future clean-up liability, postpetition interest will be
calculated at the rate of 4.19% from the date of any order
allowing the Environmental Claim in the liquidated amount,
compounded annually through the Effective Date or the date
the General Unsecured Claim becomes an Allowed Claim;
* for General Unsecured Claims arising from an existing
contract that specifies payment of interest at a non-default
rate of interest, postpetition interest will be calculated
at the non-default rate of interest provided in the contract
from the Petition Date, compounded annually through the
Effective Date or the date the General Unsecured Claim
becomes an Allowed Claim; or
* for all other General Unsecured Claims, postpetition
interest will be calculated the rate of 4.19% from the
Petition Date, compounded annually through the Effective
Date or the date the General Unsecured Claim becomes an
Allowed Claim.
The postpetition interest may also be calculated on other less
favorable terms as those that may be agreed on by the Holder of
an Allowed General Unsecured Claim and the Debtors or the
Reorganized Debtors, including an agreement whereby no
postpetition interest is paid on the Claim or postpetition
interest begins to accrue on the Claim on a date other than the
Petition Date.
The First Amended Plan provides for Holders of Class 9 Claims,
other than Holders of Claims based on the Debtors' Prepetition
Credit Facilities, may request a determination of whether they
are entitled to postpetition interest at a rate or calculation
other than the treatment provided for in the Plan.
The Debtors estimate that Allowed Class 9 Claims will total
$1,155,800,000, which includes:
-- $500,000,000 of principal under the Debtors' Prepetition
Loan Facilities;
-- $305,100,000 of accrued interest;
-- $154,400,000 of Environmental Claims
-- $27,600,000 under drawn letters of credit and other debt;
-- $40,900,000 of accounts payable;
-- $127,900,000 of principal plus $10,600,000 of accrued
interest;
-- $67,200,000 of tax reserves; and
-- $58,500,000 of other accrued liabilities plus $2,200,000 of
interest.
The Debtors assert that Class 9 is unimpaired and that the
Holders of the General Unsecured Claims in Class 9 are deemed to
have voted to accept the Plan. However, the Debtors have agreed
to solicit and tabulate the votes of the Holders of General
Unsecured Claims in Class 9. Whether those votes will be given
effect is subject to it being determined that Class 9 is an
impaired Class.
The Official Committee of Unsecured Creditors contends that Class
9 is impaired because the Debtors' Plan impairs the rights of the
Class 9 Creditors, as it does not leave the creditors' rights
entirely unaltered.
The Creditors' Committee argues that the Debtors' Prepetition
Credit Facilities that govern the rights of certain holders of
Class 9 Claims call for a payment equal to the Prime Rate plus 2%
in the event of default, compounded quarterly. The current Plan
calls for Class 9 creditors to receive postpetition rates
selected by the Plan Proponents that the Committee alleges have
no foundation in the Pre-petition Credit Facilities.
The Debtors and the Creditors' Committee agreed on the record at
the Court hearing held on October 27, 2008, that the Committee's
arguments with respect to the impairment of Class 9 are preserved
and will be raised as an objection to confirmation of the Plan.
The Debtors contend that Class 9 is not impaired, because all
Class 9 Creditors will be paid the full Allowed Amount of their
Claims plus postpetition interest. The Debtors assert that any
alteration of the rights of Class 9 Creditors is a function of
the Bankruptcy Code rather than the Plan itself and thus does not
constitute impairment.
Indirect PI Trust Claims
Pursuant to the First Amended Plan, certain Claims defined as
Indirect PI Trust Claims are included in the definition of
Asbestos PI Claims and consequently receive the same treatment as
Asbestos PI Claims, including being discharged with respect to
the Debtors, channeled to the Asbestos PI Trust and subject to
the Asbestos PI Channeling Injunction, effective as of the
Effective Date.
Indirect PI Trust Claims include:
(1) claims for reimbursement, indemnification, subrogation or
contribution on account of damages a Claimant has paid or
may pay to plaintiffs in cases against the Claimant on
account of claims that would constitute Asbestos PI Claims
against the Debtors; and
(2) asserted against the Debtors by Claimants seeking
reimbursement, indemnification, subrogation, or
contribution from the Debtors with respect to any surety
bond, letter of credit or other financial assurance issued
by any Entity on account of or with respect to an Asbestos
PI Claim.
Claims in the first category include claims asserted against the
Debtors by Claimants like Maryland Casualty Company, the state of
Montana, Royal Insurance Company, Continental Casualty Company,
and other similarly situated parties as well as any claims that
may be asserted against the Debtors or the Reorganized Debtors by
Burlington Northern Santa Fe Railroad and Scotts Company for
reimbursement, indemnification, subrogation or contribution on
account of damages the Claimants have paid or may pay to the
plaintiffs like the Libby Claimants for death, bodily injury,
sickness, disease, or other personal injuries to the extent
caused or allegedly caused by exposure to asbestos or asbestos-
containing products for which the Debtors have liability.
Claims in the second category include Claims asserted against the
Debtors by (a) Tempo Master Fund L.P. and Morgan Stanley Senior
Funding, as successor to the Bank of America, N.A., relating to
letters of credit which have been drawn to reimburse National
Union Fire Insurance Company and its affiliates for payments made
on an Asbestos PI Settlement; and (b) the contingent claims of
Fireman's Fund and Wachovia Bank, NA related to the Edwards
judgment currently stayed on appeal.
Pursuant to the Trust Distribution Procedures, Indirect PI Trust
Claims will be treated as presumptively valid and paid by the
Asbestos PI Trust, subject to the applicable Payment Percentage,
if the following conditions are met:
(a) the claim has not been disallowed; and
(b) the holder of the Claim establishes that (i) the Indirect
Claimant has paid in full the liability and obligation of
the Asbestos PI Trust to the individual claimant to whom
the Asbestos PI Trust would otherwise have had a liability
or obligation under the TDP; (ii) the Direct Claimant and
the Indirect Claimant have forever and fully released the
Asbestos PI Trust from all liability to the Direct
Claimant; and (iii) the claim is not otherwise barred by a
statute of limitation or repose or by other applicable
law.
A few creditors have objected to the Voting Procedures based on
the designation of the value of Indirect Asbestos PI Claims at
$1.00. The Debtors believe that this aspect of the Voting
Procedures is consistent with what the Bankruptcy Court has
approved previously in other asbestos-related Chapter 11 cases.
In addition, the nominal valuation ascribed to Indirect Asbestos
PI Claims for voting purposes is appropriate and is consistent
with the typical treatment of such claims under the Bankruptcy
Code in non-asbestos cases. Lastly, the Debtors are aware of no
other reliable method of valuing these claims. To the extent
that a Class 6 Indirect PI Trust Claimant disagrees with the
$1.00 valuation of its claim for voting purposes only, that
Claimant may file a Rule 3018 motion in accordance with the
Voting Procedures.
Indirect PD Trust Claims
The First Amended Plan, any Claims asserted against the Debtors
for reimbursement, indemnification, subrogation or contribution
on account of damages the Claimants have paid or may pay to the
plaintiffs for an Asbestos PD Claim or any Claim with respect to
any surety bond, letter of credit or other financial assurance
issued by any Entity on account of, or with respect to, an
Asbestos PD Claim are Indirect PD Trust Claims.
These Claims include the contingent claim of St. Paul Companies
related to an appeal bond posted for the Solow Asbestos PD Claim
currently stayed on appeal.
Pursuant to the Plan, Allowed Asbestos PD Claims, including
Allowed Indirect PD Trust Claims, will be paid in full, in Cash,
by the Asbestos PD Trust pursuant to the terms of the Asbestos PD
Trust Agreement. The Plan also provides that, in connection with
confirmation, the Court will enter a case management order
setting forth procedures for determining the allowance or
disallowance of Unresolved Asbestos PD Claims.
Plan Funding
Funding of the Asbestos PI Trust will come from several sources,
including:
(1) $250 million in Cash plus certain interest from the
Debtors;
(2) a Warrant to acquire 10 million shares of Parent Common
Stock at an exercise price of $17.00 per share;
(3) deferred payments of $110 million per year for five years
beginning in 2019, and $100 million per year for ten years
beginning in 2024, as further set forth in the Deferred
Payment Agreement, backed by a guaranty;
(4) insurance rights and proceeds;
(5) the payment from Cryovac, Inc., comprised of a combination
of Cash in the amount of $512.5 million plus interest and
18 million shares of common stock of Sealed Air
Corporation, each of which is subject to adjustment under
the terms of the Sealed Air Settlement Agreement, reduced
by Cryovac's direct transfer to the Asbestos PD Trust as
part of the Asbestos PD Initial Payment, which will be
transferred by Cryovac directly to the Asbestos PI Trust;
(6) the payment Fresenius Medical Care Holdings, Inc.,
composed of Cash in the amount of $115 million, reduced by
the amount of Fresenius' direct transfer to the Asbestos
PD Trust as part of the Asbestos PD Initial Payment, which
will be transferred by Fresenius directly to the Asbestos
PI Trust;
(7) an amount in Cash equal to the Asbestos PD Initial Payment
from the Parent;
(8) the Trust Causes of Action; and
(9) following the transfer or vesting of the foregoing to or
in the Asbestos PI Trust, any proceeds thereof and
earnings and income thereon.
The initial payment percentage will be set promptly after the
Effective Date by the Trustees, after consultation with the Trust
Advisory Committee and the FCR. The IPP will be between 25% and
35%. The PI Committee and the FCR believe it is prudent to set
the precise IPP at that time to more accurately reflect the value
of certain assets being contributed to the Asbestos PI Trust,
including the Warrant, the Sealed Air stock and the Asbestos
Insurance Rights. The Warrant and the Sealed Air common stock
are especially subject to market fluctuations, which have
recently been extraordinary and may continue to fluctuate at any
time. Further, the value of the Asbestos Insurance Rights are
also impossible to predict with any certainty at this point as
the various insurers have notified the Plan Proponents that they
may contest their applicable insurance contracts, the Debtors
tell the Court.
A blacklined version of the First Amended Plan is available for
free at http://bankrupt.com/misc/blacklined_1stAmendedPlan.pdf
A blacklined version of the Disclosure Statement explaining the
First Amended Plan is available for free at:
http://bankrupt.com/misc/blacklined_1stAmendedDS.pdf
Disclosure Statement Hearing
Continued to November 24
Judge Fitzgerald will continue the hearing on the Disclosure
Statement issues raised by the Official Committee of Asbestos
Property Damage Claimants on November 24, 2008.
All other Disclosure Statement issues are deemed heard on
November 14.
W.R. GRACE: Financial Projections Under Amended Plan
----------------------------------------------------
W. R. Grace & Co., filed with the U.S. Bankruptcy Court for the
District of Delaware revised financial information under the Joint
Plan of Reorganization it filed with the Official Committee of
Asbestos Personal Injury Claimants, the Asbestos PI Future
Claimants' Representative, and the Official Committee of Equity
Security Holders.
The Revised Financial Information contains:
(i) Grace's condensed consolidated balance sheet as of
June 30, 2008, reflecting accounting effects of the Plan,
as if it was effective on June 30, 2008;
(ii) Grace's consolidated statements of operations for the
year ended December 31, 2007, and for the six months ended
June 30, 2008, reflecting the accounting effects of the
Plan as if it were in effect at the beginning of those
periods mentioned;
(iii) Grace's projected condensed consolidated balance sheets as
of December 31, 2008 and 2009, as if the Plan was
effective at December 31, 2008, together with historical
information as of December 31, 2006, 2006 and 2007;
(iv) Grace's projected condensed consolidated statements of
cash flows for the years ending December 31, 2008 and
2009, as if the Plan were effective on December 31, 2008,
together with historical information as of December 31,
2005, 2006 and 2007; and
(v) Grace's projected condensed consolidated statements of
cash flows for the years ended as if the Plan were
effected on December 31, 2008, together with historical
information for the years ended December 31, 2005, 2006
and 2007.
According to the Revised Financial Projections, Grace is changing
its accounting method to FIFO for all inventories effective in
the third quarter of 2008. Grace summarized the effects of the
change in accounting method for inventories, pre-tax income from
core operations, and net income for the historical periods
including in the Financial Information:
2005 2006 2007
----------------- ----------------- -----------------
Reported Restated Reported Restated Reported Restated
-------- -------- -------- -------- -------- --------
Inventories $278.3 $341.1 $284.6 $324.5 $303.5 $362.9
Pre-tax income 201.5 214.9 240.2 225.3 284.6 297.1
Net income 67.3 76.0 18.3 8.6 80.3 88.8
The change in inventory valuation between the LIFO and FIFO
methods relates primarily to price increases of raw materials,
commodity metals, and energy used in Grace Davison products and
production processes. The change in accounting method has no
effect on cash during the projection period due to Grace's net
operating losses in the United States.
A full-text copy of the Revised Projected Financial Information
is available for free at:
http://bankrupt.com/misc/grace_revisedexhibit12.pdf
W.R. GRACE: To Sell 66-Acre MD Land to Emerge, Says Report
----------------------------------------------------------
The Baltimore Business Journal reported that W.R. Grace & Co.
intends to sell off 66 acres of its property in Howard County,
Maryland, as part of its plan to emerge successfully from
Chapter 11.
The report, citing real estate brokers' estimate, says Grace
could raise between $15,000,000 to $37,000,000 for the property
depending on how developers size up the market and their ability
to find tenants the area. Though the property could draw
interest given the scarcity of available land in Columbia,
experts question as to how many bids will be submitted
considering the present market conditions, the article
speculates.
The article further states that Grace needs $1,500,000 to
successfully emerge though the company's officials disclose that
the sale is not related to the company's efforts to emerge. The
Business Journal quoted William M. Corcoran, Grace's spokesman,
as saying that "[t]he decision was part of a larger evaluation of
Grace's space needs . . . Grace executives saw no reason to hold
on to the land."
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The Company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee
of Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
(W.R. Grace Bankruptcy News, Issue No. 172; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
YOUNG BROADCASTING: KRON-TV Sale Fails; May File for Bankruptcy
---------------------------------------------------------------
San Francisco Business Times reports that Young Broadcasting has
failed to sell its KRON-TV station in San Francisco, and said that
it may have to file for Chapter 11 bankruptcy protection.
Young Broadcasting said in a statement, "There are no current
active discussions with possible buyers of KRON-TV."
Young Broadcasting's total debt as of Sept. 30, 2008, was
$824.7 million, consisting of $339.0 million under the term loan
portion of the Senior Credit Facility, $484.3 million of Senior
Subordinated Notes and $1.4 million of bond premiums. In
addition, at Sept. 30, 2008, the company had an additional
$20.0 million of undrawn amount under the Senior Credit Facility.
Young Broadcasting is exploring several ways to improve liquidity
and cash flow. Despite actions that the company has taken to
generate cost savings and minimize negative cash flow, there is no
assurance that the company will be able to restructure its debt
and generate sufficient cash flow from operations or that future
business and financing alternatives will be available in an amount
sufficient to enable the company to fund its liquidity needs for
the next twelve months. To address these issues, the company and
its advisors have been and expect to continue to actively engage
in discussions with various parties about financing alternatives,
including restructuring a significant portion of the company's
outstanding debt and obtaining incremental capital as necessary.
The company is also taking action to improve cash flow by
implementing additional cost savings measures. There can be no
assurance that the company will be successful in restructuring its
debt and improving cash flow or completing these financing
alternatives on terms acceptable to the company or at all.
If Young Broadcasting is unsuccessful in improving cash flow and
completing these financing alternatives, the company may fail to
comply with the covenant in its Senior Credit Facility requiring
maintenance of $10 million of cash and short term investments and
in the future may be unable to meet certain of its obligations as
they come due. An event of default under any of the company's
debt instruments could result in the acceleration of the company's
payment obligations under that debt, which could have a material
adverse effect on the company's business, consolidated financial
results and operations, and could require the company to seek
protection under Chapter 11 of the U.S. Bankruptcy Code.
Access to the undrawn amounts under the Senior Credit Facility is
subject to certain conditions, including the company remaining in
compliance with the above-discussed covenants. There can be no
assurance that the company will be able to draw on its revolver as
needed.
Young Broadcasting said that it may fail to maintain its listing
on The Nasdaq Capital Market. On Sept. 8, 2008, the company
received approval from the NASDAQ Hearings Panel to transfer the
listing of the company's common stock from The NASDAQ Global
Market to The NASDAQ Capital Market, effective Sept. 10, 2008. As
previously reported, the NASDAQ staff notified the company on Feb.
15, 2008, that it wasn't in compliance with the NASDAQ Marketplace
Rule 4450(a)(5) which requires a $1.00 per share minimum bid
price.
On March 3, 2008, the NASDAQ staff notified us that the company's
common stock was not in compliance with the NASDAQ Marketplace
Rule 4450(b)(3) which requires the company's publicly held shares
to have a market value of at least $15 million. The Listing
Qualification Staff of The NASDAQ Stock Market notified the
company on June 3, 2008, that it did not regain compliance with
NASDAQ Marketplace Rule 4450(b)(3). Additionally, the Listing
Qualification Staff of The NASDAQ Stock Market notified the
company on Aug. 14, 2008, that it was still not compliant with the
$1.00 per share minimum bid price requirement set forth in NASDAQ
Marketplace Rule 4450(a)(5). On July 31, 2008, Young Broadcasting
requested that the NASDAQ panel transfer the company's securities
to the NASDAQ Capital Market and allow the company to remain
listed under an exception through Nov. 28, 2008.
After considering the company's record and history which was
presented to the NASDAQ staff, the NASDAQ panel approved the
transfer of the company's common stock to the NASDAQ Capital
Market and granted a short extension of time to permit us to
become compliant with all continued listing standards of the
NASDAQ Capital Market by or before Nov. 28, 2008. On Oct. 23,
2008, the NASDAQ staff notified Young Broadcasting that the
extension of time to permit us to become compliant with the NASDAQ
Marketplace Rules 4450(a)(5) and 4450(b)(3) was extended to
March 2, 2009, and that the extension of time to permit the
company to become compliant with all other standards of the NASDAQ
Capital Market remained Nov. 28, 2008.
About Young Broadcasting
Headquartered in New York City, Young Broadcasting Inc. --
http://www.youngbroadcasting.com/-- owns ten television stations
and the national television representation firm, Adam Young Inc.
Five stations are affiliated with the ABC Television Network,
three are affiliated with the CBS Television Network, one is
affiliated with the NBC Television Network, and one is affiliated
with MyNetwork. In addition, KELO-TV-Sioux Falls, SD is also the
MyNetwork affiliate in that market through the use of its digital
channel capacity.
* * *
As reported in the Troubled Company Reporter on Sept. 9, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating and issue-level ratings on New York City-based Young
Broadcasting Inc. The corporate credit rating was lowered to
'CCC' from 'CCC+'. The rating outlook is negative. The company
had about $826 million of outstanding debt as of June 30, 2008.
YRC WORLDWIDE: S&P Downgrades Corporate Credit Rating to 'B'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on YRC
Worldwide Inc. and its subsidiaries, including lowering the
corporate credit rating to 'B' from 'BB'. At the same time, the
ratings have been removed from CreditWatch, where they were placed
with negative implications on Oct. 24, 2008. The outlook is
negative.
"The rating actions reflect heightened concerns over the company's
covenant cushion, liquidity position, and operating prospects over
the next year, given the slowing U.S. economy, operational
challenges, and mounting competitive pressures in the trucking
sector," said Standard & Poor's credit analyst Anita Ogbara.
YRC's liquidity position is constrained. As of Dec. 31, 2008, the
maximum total debt to EBITDA covenant will tighten to 3.5x and
will remain at this level through August 2012. Moreover, over the
next several quarters, S&P expects earnings to deteriorate
further, putting pressure on covenant compliance particularly
during the second and third quarters of 2009. S&P expects the
company to remain in compliance with its covenants over the next
few quarters; however, YRC will likely have very limited room
under bank covenants for a further material decline in EBITDA.
Ratings on YRC Worldwide reflect the company's participation in
the competitive, capital-intensive, and cyclical trucking
industry, high labor costs associated with its unionized work
force, and earnings pressure due to weak demand. These negative
credit characteristics are marginally offset by its leading market
position in the long-haul, less-than-truckload trucking industry,
which has high barriers to entry.
Overland Park, Kan.-based YRC competes with the other large LTL
companies-Arkansas Best Corp. ($1.9 billion in revenue) and Con-
Way Inc. ($4.8 billion in revenue)-and with numerous smaller long-
haul and regional LTL companies. Although it is the largest
player in a fragmented industry, it is subject to significant
pricing and competitive pressures that are likely to intensify
over the near term. Demand for freight transportation began to
weaken in the fourth quarter of 2006 and is at risk of slipping
further, given current deteriorating economic conditions. This
has manifested itself mainly in reduced volumes, with pricing now
also beginning to deteriorate. Given the current state of the U.S.
economy, S&P expects these conditions to persist well into 2009.
YRC has pursued selective acquisitions in the past that have
helped the company gain market share and increase its product
offering. However, these acquisitions have stretched the
company's financial profile, and YRC has not yet rationalized
these acquired LTL operations. To improve profitability, YRC
plans to streamline operations, reduce overhead, and manage costs
more effectively. More specifically, YRC has outlined several
operating initiatives to address the problems in its regional and
national businesses, and will integrate its long-haul LTL Yellow
and Roadway operations.
S&P expects YRC to continue integrating Yellow and Roadway
operations and reduce overhead costs to improve financial results
during early 2009. S&P could lower the ratings if its liquidity
position deteriorates further due to covenant concerns and access
to capital becomes further constrained. An outlook revision to
stable is unlikely at this time.
ZOO FH: Fitch Junks Ratings on Two Tranches
-------------------------------------------
Fitch Ratings has downgraded five tranches from Zoo HF 3 plc,:
-- EUR94,500,000 class A downgraded to 'A' from 'AA', placed on
Rating Watch Evolving;
-- EUR8,000,000 class B downgraded to 'BBB' from 'AA', placed on
Rating Watch Evolving;
-- EUR6,500,000 class C downgraded to 'BB' from 'A', placed on
Rating Watch Evolving;
-- EUR12,500,000 class D downgraded to 'CCC' from 'BBB', removed
from Rating Watch Negative;
-- EUR5,500,000 class E downgraded to 'CCC' from 'BB', removed
from Rating Watch Negative.
These rating actions reflect the fund's performance as of the end
of October based upon updated Fitch cash flow analysis along with
expectations of further stress in the coming months for the hedge
fund sector. Fitch is still reassessing its approach for
analyzing Hedge Fund Collateralized Fund Obligations, given the
recent market environment and in consideration of higher observed
market volatility, reduced liquidity, and limited transparency in
underlying hedge funds.
Classes A through C are placed on Rating Watch Evolving due to a
breach of a transaction trigger that would result in a full
redemption of the underlying funds along with a proposed
restructuring to prevent the redemption. The proposed
restructuring could have positive rating implications for classes
A, B, and C. However, if the proposed restructuring cannot be
implemented, the notes could be further downgraded due to a full
redemption in a distressed environment.
* Ernst & Young Names Two Leaders in Restructuring Services
-----------------------------------------------------------
Ernst & Young LLP Transaction Advisory Services appointed David
R. Williams as the US Leader for Restructuring Services and John
O'Neill as the US Leader of Bankruptcy and Restructuring Tax.
Mr. Williams will enhance and expand TAS' global Restructuring
Services business line by leading US Restructuring Services.
Mr. O'Neill will focus on tax aspects of bankruptcy and workouts
in his new leadership position.
"We are seeing increased demand for financial and organizational
restructuring solutions -- both in the US and abroad," said
Steven Krouskos, Americas Accounts and Growth Leader for Ernst &
Young TAS. "With a network of 8,700 transaction professionals
worldwide and a leadership position in advising the corporate and
private equity markets, TAS is positioned to help clients adapt
and build strength in today's challenging global economy."
"We are extremely pleased to have David join Ernst & Young's TAS
as the US Leader for Restructuring," Mr. Krouskos said. "His
nearly 30 years of industry experience and his deep knowledge in
corporate restructuring will provide an important contribution to
TAS' Restructuring business line's growth and complement the
firm's broad range of services."
"With the economic downturn and tightening of the credit markets,
we expect to see a strong need for liquidity management services
in the US well into 2009 and beyond," Mr. Williams said. "Our
services address a broad range of complex operational and
financial issues that many businesses are facing in this
environment."
Mr. Williams has held senior worldwide leadership positions in
restructuring services and financial services at
PricewaterhouseCoopers and other companies. He has assisted
debtors, creditors and stakeholders, as well as private equity
investors, in addressing a wide array of restructuring and
strategy issues, including buy and sell-side representation,
plans of reorganization, profit enhancement, expense resolution,
litigation, receiverships, fraud investigations and various types
of transaction support services.
"[Mr.] O'Neill brings industry knowledge and experience to the
US Restructuring business line," Mr. Krouskos continued. "He
will be instrumental in advising clients on how to be better
prepared for tax planning around bankruptcy, divestitures,
liquidation and restructuring."
Mr. O'Neill has held several leadership positions over the course
of his long career, including recently as Ernst & Young LLP's
Americas Director of Private Equity. He has advised many large
and medium-sized private equity firms throughout his 26-year
career and has also served as Bankruptcy Tax practice leader at
Arthur Andersen. He is experienced in the areas of mergers,
acquisitions, divestitures, leveraged buyouts, bankruptcy, debt
workout, cross-border transactions, with a focus on the retail and
distribution, consumer products, and manufacturing industries.
Transaction Advisory Services
The Transaction Advisory Services team works with some of the
world's largest organizations, fastest growing companies and
private equity firms on some of the biggest and most complex
cross-border deals in the global market. The team helps
achieve the growth, performance improvement and returns that
stakeholders expect.
Ernst & Young has an extensive worldwide reach, with 8,700
transaction professionals worldwide, and the experience of
thousands of transactions across all markets and industry sectors.
About Ernst & Young
Ernst & Young -- http://www.ey.com/-- offers service in
assurance, tax, transaction and advisory services. Worldwide, its
135,000 people are united by its shared values and a commitment to
quality. Ernst & Young offers integrated, objective advisory
services that are designed to help evaluate opportunities, make
transactions more efficient and achieve strategic goals.
* Fitch Downgrades $296.7 Billion in U.S. Corporate Bonds in Q3
---------------------------------------------------------------
The credit crisis and softening economy pushed up the par value of
U.S. corporate bonds affected by downgrades to $296.7 billion in
the third quarter, a level topping the worst quarters of the 2001
and 2002 downturn. Overall, downgrades affected 7.8% of U.S. bond
market volume while upgrades affected 1.7%. At the investment
grade level, the effects of negative and positive rating changes
were 8.5% and 1.7%, respectively, of high grade volume while
downgrades and upgrades affected 4.4% and 1.7%, respectively, of
speculative grade volume.
The bulk of third-quarter downgrades occurred in the financial
sector, which accounted for $258.5 billion, or 87%, of the total
downgrades. Industrial downgrades, at $38.2 billion, were split
$12.6 billion investment grade and $25.6 billion speculative
grade. Anxiety surrounding the collapse or emergency rescue of
major U.S. financial institutions caused new issuance to drop 71%
in the quarter. New bond sales totaled just $80.8 billion,
compared with $275.5 billion in the second quarter. While
speculative grade issuance fell to lows recorded in previous
quarters, investment grade issuance experienced a first and deep
contraction with issuance falling to $71.5 billion from $242.1
billion in the second quarter.
'U.S. corporate bond issuance remained weak in October at just
$21.8 billion for the month, a run rate below even the third
quarter's soft $80.8 billion in new issuance' said Eric Rosenthal,
Director of Fitch Credit Market Research.
Median coupons on newly issued bonds moved higher in the third
quarter but experienced even sharper increases in October, albeit
on light issuance volumes.
"Unprecedented stress in the financial sector and fear of a
prolonged economic recession have pushed up corporate borrowing
costs to extraordinary levels," said Mariarosa Verde, Managing
Director of Fitch Credit Market Research. "Unless market
conditions improve, $502.7 billion in bonds coming due in 2009
will be subject to substantially higher refinancing rates."
Fitch finds that $473.4 billion in investment grade bonds are due
to mature in 2009 and $29.4 billion in speculative grade bonds.
The investment grade maturities are concentrated in the financial
sector, at $387.7 billion.
* Fitch Sees 2008 Holiday Season as Most Challenging for Retailers
------------------------------------------------------------------
Fitch Ratings expects that the 2008 holiday season will be
extremely challenging for retailers and could be the weakest
season over the past two decades. Real retail sales turned
negative in the back to school period for the first time since
2001 and are expected to remain negative for the balance of 2008.
This is particularly significant for the department stores as well
as specialty apparel and electronic retailers as the fourth
quarter represents about 30% of sales and up to 50% or more of
operating earnings for these companies. Promotional activity will
be substantial and broad based to drive customer traffic and clear
excess inventory.
For 2009, Fitch expects that these trends will continue as
consumers curtail discretionary spending and look to maximize
value. Comparable store sales growth for operators selling
clothing, home related goods, and other discretionary categories
is expected to continue to be negative while those companies that
have built a strong value perception and have strong private and
exclusive brand offerings will outperform their peers. While the
weak sales will be geographically broad based, sales pressure will
be more acute in those markets most impacted by housing and job
related weakness. Similar to the 2008 holiday season, promotional
activity is likely to be prevalent as retailers look to stimulate
demand and clear overstocks.
This view is based on Fitch's outlook for consumer spending which
is expected to further decline through the fourth quarter of 2008
and into next year. The growth in personal consumption
expenditures is projected to be -1.6% in 2009 and the rate of
growth is expected to remain below trend into 2010. Consumer's
wealth, incomes and capacity to borrow are being constrained by
rising unemployment and job uncertainty, higher cost and reduced
availability of household credit and falling real estate and
equity prices. These negative pressures will far outweigh any
benefits consumers get from a decline in energy and commodity
prices.
As a result, Fitch has recently taken a number of negative rating
actions and expects negative rating pressure for its U.S. retail
coverage in 2009. This is reflected by the number of Negative
Rating Outlooks across the portfolio with 10 companies or 36% of
the portfolio having Negative Rating Outlooks compared to 15% in
the year ago period. Negative rating activity is more likely for
retailers selling discretionary products such as department stores
and specialty retail, where the Negative Outlooks are
concentrated.
Key Retail Trends in 2009
Fitch expects retailers will continue to focus on several ongoing
initiatives in 2009 which includes maintaining or increasing
market share by emphasizing their value proposition, managing
profitability in the face of declining sales, and preserving
liquidity and maximizing capital efficiency. In addition, Fitch
expects further retail consolidation as retailers that do not
manage these initiatives effectively are forced to reduce their
retail footprints or exit the market.
Emphasizing Value to Gain Share
Value oriented offerings will be the focal point as retailers try
to capture more share of the consumer's shrinking wallet.
Promotion and pricing will be prevalent across the spectrum of
retailers in 2009. Key beneficiaries of this shift in consumer
behavior will be the discount formats, particularly those selling
food such as Wal-Mart and Costco. In addition, companies that
have built a strong value perception and have strong private and
exclusive brand offerings should also outperform relative to their
peers.
Preserving Operating Margins - Inventory and Operating
Cost Management
Further cost cutting measures will be another significant area of
emphasis for retailers as they look to offset margin compression
from heightened promotional activity, mix shifts to lower margin
products and lower leverage of fixed costs. Inventory management,
supply chain efficiencies, labor productivity and other operating
costs are expected to continue to come under increasing scrutiny.
Some companies in the more challenged department store and
specialty retail segments such as Macy's, Kohl's, and Gap have
done a good job of managing gross margins despite the weak sales
levels. In general, comparable inventory levels are down, but
weak holiday sales will necessitate higher levels of promotional
activity. In addition, even those retailers that have
appropriately managed inventory levels are likely to be impacted
as competitors with excess inventories or those liquidating use
promotions to clear store shelves. In 2009, Fitch expects
inventory planning will be challenging and a key focus for
companies. Companies with shorter lead times, such as Best Buy
and Kohl's, will be better positioned to react quickly than those,
such as the luxury retailers, with lead times as long as six to
nine months.
Companies have been cutting operating expenses and certain
companies, such as RadioShack and Limited Brands, have been able
to cut costs as an offset to gross profit weakness. However,
given the significance of the expected revenue declines in 2009
operating margin deterioration is likely to accelerate and profit
declines may be substantial.
Liquidity Focus and Capital Efficiency
Another key area is preserving liquidity and maximizing capital
efficiency. As external availability of credit is challenged,
internal and committed external sources of liquidity are critical
to meet upcoming commitments. For retailers in Fitch's coverage,
long-term debt maturities are relatively moderate with around
$40 billion maturing over the next three years out of a total of
almost $150 billion outstanding. In 2009, non-investment grade
retailers have less than $2 billion maturing, and investment grade
retailers, while more significant, also have a relatively modest
$11 billion.
Companies are working to maximize free cash flow and maintain cash
balances by reducing working capital needs, lowering capital
expenditures, and halting share repurchases. Working capital,
which typically peaks in the October/November time period for most
discretionary retailers, has been reduced as companies have
lowered inventory levels in anticipation of soft sales. Capital
expenditures in 2009 are expected to be well below 2008 levels as
companies preserve free cash flow and work to improve capital
efficiency and have had more time to adjust their development
plans. Therefore, Fitch expects companies to reduce the number of
new store openings, remodel activity and information technology
expenditures in 2009. Several companies that have already
announced reduced capital expenditures include Wal-Mart, J.C.
Penney, Macy's, Target, Lowe's, and Staples. In addition, minimal
share repurchase activity is expected in 2009.
Fitch expects some companies, particularly those that are
investment grade, to access the long-term debt markets or utilize
committed bank facilities to refinance existing debt during 2009.
For example, Staples is expected to refinance commercial paper it
issued to complete its acquisition of Corporate Express. Longer
term, companies will need to access external credit markets to
refinance maturing debt and renew bank facilities. However, as
bank facilities are renewed, it is likely that availability will
be reduced, particularly for weaker operators, and that the cost
of these funds will increase substantially.
Retail Consolidation Accelerates
An acceleration of retail consolidation is another trend expected
in 2009 as strong operators gain share and weaker operators get
rationalized out of the market. Fitch have already seen
significant store closing activity during 2008 following several
bankruptcies with announced closures of 155 of Circuit City's 721
stores as well as liquidation announcements by Linen's 'N Things
which had 589 stores and Mervyn's which had 175 stores. Fitch
expects further announcements of store closings after the holiday
season as retailers close underperforming stores or as further
bankruptcies are announced.
Sector Specific Outlooks
Discounters
The strong value messages of the discounters will continue to draw
consumers from all income levels. Food and consumables will
continue to drive store traffic and those operators, such as Wal-
Mart and Costco, with broad grocery offerings will outperform.
Fitch expects operating profit margins to remain relatively steady
as a result of the discounters' efficient supply chain management
and low cost operating structures. While store base expansion
will continue, it will be at a slower rate to reflect the weaker
operating environment. Given the strong financial flexibility of
the discounters, rating movement is expected to be generally
limited and driven by broad capital structure decisions such as
the level of debt-financed share repurchases.
Supermarkets
Supermarkets will continue to benefit from their broad non-
discretionary product offerings and convenient store locations.
Having a strong price message will be fundamental as consumers
look to maximize value. Identical store sales will continue to be
pressured by trade down to discount formats and value priced
products including private label. Price investments will also
weigh on gross margins but the stronger operators are expected to
offset these investments with operating cost reductions. For
example, Kroger's strong value image has resulted in it continuing
to report industry leading mid-single digit non-fuel identical
store sales, and Safeway and Kroger have both been able to offset
price investments with operating cost efficiencies. Store base
investments will continue to be central to long-term operating
strategies, and this along with capital structure management will
be key rating drivers over time. Opportunistic mergers and
acquisitions may emerge in 2009 although transactions are expected
to be small and market based.
Drug Stores
Drug retailers are also expected to benefit from their mainly non-
discretionary merchandise offering despite the challenging
environment. Given the significant pace of merger and acquisition
activity over the past few years, both CVS Caremark and Rite Aid
will continue to focus on integrating acquired units and
leveraging their increased scale and breadth of services. There
is a lack of large scale acquisition opportunities in the drug
retail sector and therefore share gains will increasingly depend
on generating above average organic growth, store closings or
share losses by weaker independents and regional chains, and
smaller market fill-in acquisitions and prescription file buys.
Fitch expects drug retailers to further develop their multi-
channel distribution strategies in areas such as pharmacy benefit
management and specialty pharmacy where merger and acquisition
activity could continue. In addition, enhanced service offerings
such as additional in-store clinics will help these retailers win
share from other healthcare venues. CVS Caremark is already well-
positioned with leading market shares in all prescription
distribution channels (retail and in-store clinics, mail, and
specialty), and Fitch expects CVS Caremark to continue to drive
share gains and leverage its integrated platform, generating
incremental revenue longer term. However, industry participants
could experience slowing top line growth if prescription volumes
decline. In addition, profit margins could be pressured by
weakness in front-end categories and potential changes in pharmacy
reimbursement rates although an offset will be the growth in
higher margin generics.
Department Stores
Fitch expects department store same store sales trends to be
considerably weak through 2009 and credit metrics to weaken from
current levels. Promotional activity will continue to be
prevalent as retailers seek to align inventory to anticipated
sales and drive traffic in their stores. This coupled with the
deleveraging of fixed costs will pressure operating profit
margins. Key to ratings will be a company's ongoing ability to
prudently anticipate and manage inventory, expenses, and capital
spending in the face of top line deceleration. For example,
Kohl's has been able to drive positive gross margin this year on
negative sales trends through its success with higher margin
private and exclusive brands and conservative inventory
management. Fitch expects well-run and well-capitalized operators
to increasingly consolidate share as weaker operators with thin
operating margins and liquidity issues exit the market. There
have already been a number of announced bankruptcies, such as
Boscov's and Mervyn's, and the pace could accelerate in a
prolonged downturn.
Luxury retailers have seen a significant deceleration in top line
growth that goes beyond weakness in aspirational consumer spending
and higher inventory levels from longer lead times. As such,
these retailers could face significant gross margin pressure in
the upcoming quarters until inventory is better aligned with sales
growth. Fitch expects overall capital spending in the sector to
decline meaningfully in 2009 as companies pull back or delay store
openings, remodels and information technology investments, as well
as close underperforming stores, with a few announced by Dillard's
and Sears. Share repurchase activity should be minimal next year
as investment grade retailers have essentially halted share
buybacks to preserve cash flow.
Specialty
Consumer electronics demand is expected as much of the new product
adoption has already taken place and incremental price declines
will not be adequate to stimulate demand. In addition,
competition will remain intense as a result of the discounters'
expanded electronics offerings and the expected negative effect of
liquidation sales from struggling operators such as Circuit City
and Tweeter. Given the weak sales trends, Best Buy's and Radio
Shack's abilities to adjust inventory levels and operating costs
as well as preserve liquidity will be key rating drivers.
Home improvement retailers are anticipated to remain pressured by
weak sales as consumers continue to cut back on spending in this
category. Nonetheless, these retailers will focus on improving
customer service levels and product offerings to capture market
share. Share consolidation for Home Depot and Lowe's, which
account for less than 20% of the market, is possible despite these
companies slowing their store growth to focus on strengthening
existing operations. Share repurchase activity has been halted as
companies preserve cash in a weak operating environment.
Nevertheless, continued weakness in the housing market would
further pressure operating results and credit metrics.
Specialty apparel retailers, particularly those with poor fashion
content, will continue to experience negative sales growth on weak
demand. A focus on operating efficiencies and conservative
inventory levels to limit promotional activity, which has allowed
these companies to maintain operating profit margins to date, may
not be sustainable, and margin erosion is possible. Fitch expects
sales for toy retailers to show relative strength as parents
continue to purchase toys for their children although the
transaction size is expected to decline. Fitch expects office
products retailers to be pressured as small business spending
tightens in line with a slowing economy, but retailers that
provide an easy shopping experience and strong execution are
expected to outperform their peers.
This is a list of Fitch-rated issuers and their current Issuer
Default Ratings in the U.S. retail sector:
Discounters
-- Costco Wholesale Corporation ('AA-'; Outlook Stable);
-- Target Corporation ('A'; Outlook Stable);
-- Wal-Mart Stores, Inc. ('AA'; Outlook Stable).
Supermarkets and Drug Stores
-- CVS Caremark Corp. ('BBB+'; Outlook Stable);
-- The Kroger Co. ('BBB'; Outlook Stable);
-- Rite Aid Corp. ('B-'; Outlook Stable);
-- Safeway Inc. ('BBB'; Outlook Stable);
-- Supervalu Inc. ('BB-'; Outlook Positive).
Department Stores
-- The Bon-Ton Stores, Inc. ('B'; Outlook Negative);
-- Dillard's, Inc. ('B'; Outlook Negative);
-- J.C. Penney Company, Inc. ('BBB'; Outlook Negative);
-- Kohl's Corporation ('BBB+'; Outlook Stable);
-- Macy's, Inc. ('BBB-'; Outlook Stable);
-- Neiman Marcus, Inc. ('B'; Outlook Stable);
-- Nordstrom, Inc. ('A-'; Outlook Negative);
-- Saks Incorporated ('B+'; Outlook Stable);
-- Sears Holdings Corporation ('B+'; Outlook Stable).
Specialty Retail
-- AutoZone, Inc. ('BBB'; Outlook Stable);
-- Best Buy Co. Inc. ('BBB+'; Outlook Negative);
-- Blockbuster Inc. ('CCC'; Outlook Stable);
-- Burlington Coat Factory Warehouse Corp. ('B-'; Outlook
Negative);
-- The Gap, Inc. ('BB+'; Outlook Stable);
-- The Home Depot, Inc. ('BBB+'; Outlook Negative);
-- Limited Brands, Inc. ('BB+'; Outlook Negative);
-- Lowe's Companies, Inc. ('A+'; Outlook Negative);
-- RadioShack Corporation ('BB'; Outlook Negative);
-- Staples, Inc. ('BBB'; Outlook Stable);
-- Toys 'R' Us, Inc. ('B-'; Outlook Stable).
* Fitch Says Sharp Profit Decline in Insurance Industry Continues
-----------------------------------------------------------------
The U.S. property/casualty insurance industry experienced a sharp
decline in performance in the first nine months of 2008.
Profitability fell due to poor investment results, above average
catastrophe losses, and deteriorating accident-year underwriting
income, which were partially offset by favorable prior years' loss
reserve development.
Economic and financial market turmoil has adversely affected all
financial services industry segments in 2008. Outside of a few
notable companies, property/casualty insurers were modestly
affected by problems in subprime mortgage and mortgage derivative
markets, but recent events that promoted sharper declines in
equity markets and a flight to the safety of treasury securities
from high-rated corporate and tax-exempt bonds has had a more
severe effect on insurers' invested assets and capital position.
In a new report, Fitch Ratings discusses aggregated GAAP earnings
release and 10-Q filing data from a group of 52 publicly traded
property/casualty insurers in the debt rating universe as well as
several other insurance organizations of interest, to evaluate
year to date 2008 performance.
During the first nine months of 2008, GAAP shareholders' equity
declined for 46 of the 52 companies in the Fitch universe, largely
due to realized and unrealized investment losses. In aggregate,
the group reported a $55.7 billion (13%) decline in GAAP equity
during the period (8.9% decline excluding American International
Group, Inc. results).
The group's net income, excluding AIG, dropped 77% in this period
relative to the first nine months of 2007. Earnings are not
expected to rebound significantly in the remainder of 2008, as
further investment losses are likely. Fitch continues to expect
most insurers in its publicly traded universe to post a calendar-
year underwriting profit in 2008.
* King & Spalding Welcomes Back Former Solicitor General Clement
----------------------------------------------------------------
King & Spalding said former United States Solicitor General Paul
Clement will rejoin the firm's Washington, D.C., office to
establish an expanded national appellate practice and a strategic
counseling practice.
Mr. Clement, 42, is returning to the firm after a seven-year
absence during which he served as the 43rd Solicitor General of
the United States, the nation's top lawyer before the Supreme
Court. The Senate confirmed Mr. Clement as the 43rd Solicitor
General in 2005 at the age of 38, making him the youngest
Solicitor General confirmed by the Senate since William Howard
Taft in 1890. Before his confirmation as Solicitor General, Mr.
Clement served as Acting Solicitor General for nearly a year and
as Principal Deputy Solicitor General for over three years. In
total, Mr. Clement served over seven years in the Office of the
Solicitor General, the longest period of continuous service in the
Office by a Solicitor General since the 19th Century. He has
argued 49 cases before the Supreme Court, including McConnell v.
FEC, Tennessee v. Lane, Rumsfeld v. Padilla, United States v.
Booker and MGM v. Grokster. He also argued a number of the
government's most important cases in the lower federal courts.
According to Bankruptcy Law360, the speculation over which law
firm would be able to entice Mr. Clement to join its ranks has
ended.
"We are very pleased to welcome our former colleague and friend
Paul Mr. Clement back to King & Spalding," said J. Sedwick (Wick)
Sollers, managing partner of King & Spalding's Washington office.
"Paul is widely considered to be one of the most talented and
accomplished lawyers of his generation and our clients and growing
appellate practice will benefit greatly from Paul's vast knowledge
and experience before the U.S. Supreme Court, and before appeals
courts nationwide."
Mr. Clement added: "I am delighted to be returning to King &
Spalding. I know firsthand that King & Spalding is a tremendous
firm and a wonderful place to practice law. I look forward to
taking the firm's appellate practice to new heights."
Mr. Clement clerked for Judge Laurence H. Silberman of the U.S.
Court of Appeals for the D.C. Circuit (1992-1993), and for Justice
Antonin Scalia of the U.S. Supreme Court (1993-1994). He then went
on to serve as an associate in the Washington, D.C., office of
Kirkland & Ellis, and as chief counsel of the U.S. Senate
Subcommittee on the Constitution, Federalism and Property Rights.
He then was a partner at King & Spalding, where he headed the
firm's appellate practice until he joined the Office of the
Solicitor General. Since leaving the Justice Department in June,
Mr. Clement has been a visiting professor at the Georgetown
University Law Center and a senior fellow at Georgetown's Supreme
Court Institute.
A native of Cedarburg, Wisconsin, Mr. Clement received his
bachelor's degree summa cum laude from the Georgetown University
School of Foreign Service. He graduated magna cum laude from
Harvard Law School, where he was the Supreme Court editor of the
Harvard Law Review. He also received a Masters in Philosophy in
Economic and Politics of Development with distinction from
Cambridge University.
The association between King & Spalding and Solicitors General
goes back nearly a century. Founding partner Alexander King served
as the nation's 16th Solicitor General from 1918 to 1920.
About King & Spalding
King & Spalding is an international law firm with more than 880
lawyers in Abu Dhabi, Atlanta, Austin, Charlotte, Dubai,
Frankfurt, Houston, London, New York, Riyadh (affiliated office),
San Francisco, Silicon Valley and Washington, D.C. The firm
represents half of the Fortune 100 and in Corporate Counsel
surveys consistently has been among the top firms representing
Fortune 250 companies. For additional information about the firm,
visit http://www.kslaw.com/
* Marks Panet Hires John M. Bonora as Director in L&CFAS Group
--------------------------------------------------------------
John M. Bonora, CPA/ABV, CFE, has joined Marks Paneth & Shron LLP
as director in the Litigation and Corporate Financial Advisory
Services Group where he will focus on commercial litigation and
economic damages, valuation and bankruptcy services. He will be
based in the MP&S Manhattan office.
Mr. Bonora comes to MP&S from a large New York accounting and
business advisory firm. There, he was a director in the firm's
Litigation Consulting, Valuation and Bankruptcy Services Group,
responsible for client development and managing litigation
consulting, forensic accounting, valuation, bankruptcy, and
restructuring services engagements.
"We are excited to welcome [Mr.] Bonora to the firm," said
Arthur E. Cannata, CPA and Mark Levenfus, CPA, managing partners
of Marks Paneth & Shron. "The addition of John to the Litigation
and Corporate Financial Advisory Services Group reflects our
commitment to broadening the firm's capability to service the
legal community.
"In addition, [Mr. Bonora's] expertise and know-how will
strengthen our ability to meet the challenges faced by our clients
in the current economic environment," added Mr. Cannata and
Mr. Levenfus.
Mr. Bonora has over 30 years of experience working in both
professional services firms and in industry. Throughout his
career, he has directed numerous engagements and prepared expert
reports related to alleged fiscal improprieties, the valuation
of shareholder interests and the calculation of economic damages.
Mr. Bonora has also worked on numerous bankruptcy-related issues
such as the determination of solvency, the formulation of plans of
reorganization, and the recoverability of alleged fraudulent
transfers and preferential payments. He has advised litigation
counsel, the courts, Chapter 11 Debtors, and Chapter 11 and
Chapter 7 Trustees, and has served as a troubled business workout
specialist, including directing the turnaround and successful
reorganization of an equipment distributor.
Mr. Bonora has provided both grand jury and trial testimony at
the state Supreme Court level, and has testified in Federal
Bankruptcy Court.
Mr. Bonora is Accredited in Business Valuation by the American
Institute of Certified Public Accountants, and is a Certified
Fraud Examiner. He is a member of the New York State Society of
Certified Public Accountants, the American Bankruptcy Institute,
the Association of Insolvency and Restructuring Advisors, and the
Turnaround Management Association. He is also an Associate Member
of the American Bar Association; Business Law and Litigation
Sections.
Mr. Bonora holds a Master's in Business Administration from the
Harvard Business School and a Bachelor of Science in Electrical
Engineering from Tufts University. He resides in Stamford,
Connecticut.
About Marks Paneth & Shron
Marks Paneth & Shron LLP -- http://www.markspaneth.com/-- is an
accounting firm with nearly 500 people, approximately 70 of whom
are partners and principals. The firm provides businesses with
a full range of auditing, accounting and tax services, well as
litigation and corporate financial advisory services to domestic
and international clients. The firm also specializes in providing
tax advisory and consulting for high net worth individuals and
their families, well as a wide range of services for
international, real estate, media, entertainment, nonprofit,
professional and financial services and energy clients. Its
headquarters are in Manhattan. Additional offices are in
Westchester, Long Island and the Cayman Islands.
* Moody's Says Commercial Real Estate Prices Increase in September
------------------------------------------------------------------
Commercial real estate prices as measured by Moody's/REAL
Commercial Property Price Indices increased in September, rising
2.5% over the previous month. This represents a decrease in
prices of 7.9% from September 2007 and is 9.4% below the peak in
prices in October 2007. The index remains 3.2% higher than it was
two years ago.
"An increase in prices at this time may seem counterintuitive,"
says Moody's Managing Director Nick Levidy. "However, Moody's
believe this result can be explained by continued loss avoidance
on the part of sellers and by the fact that many September
closings occurred pursuant to contracts entered into in the
summer, before the market turmoil of September and October."
Part of the price increase may also be attributed to some relative
strength in the apartment sector, Moody's says. Without this
sector, the aggregate monthly return for the remaining property
types was less than 1%.
"We believe that commercial property prices will soon start to
decline again. As pressure continues to build in the sector,
owners will begin selling into a deteriorating market at lower
prices," says Moody's Levidy.
Looking at the third quarter, Moody's reports that the top ten
markets showed modest gains in all property sectors. Office
prices in the top ten cities in particular fared relatively well,
with a 2.2% price increase from the previous quarter, although
nationally office prices were down 1%.
The western office sector underperformed the nation, with a
decrease in prices of 5.5% in the third quarter.
During the third quarter, the three other property types-
apartments, industrial and retail-showed modest price increases on
a national level, although prices for all four property types are
down significantly from their peaks.
The CPPI
Moody's/REAL Commercial Property Prices Indices are based on the
repeat sales of the same properties across the US at different
points in time. Analyzing price changes measured in this way
provides maximum transparency and methodological rigor. This
approach also circumvents the distortions that can occur with
other commercial property value measurements such as appraisals or
average prices, says Moody's.
* NACVA Acquires National Association Litigation
------------------------------------------------
The National Association of Certified Valuation Analysts has
acquired the National Litigation Consultants' Review.
"NACVA includes many of the most prominent business valuation
practitioners at work in the nation today," said Parnell Black,
who noted that Association members frequently appear in court to
defend or critique the value of privately held businesses when
estates are settled, companies acquired, and marital disputes
resolved.
"The National Litigation Consultants' Review offers the most
informed opinion, current news analysis, and insightful commentary
available for testifying experts on financial issues including
business valuation," explains Black. "That makes it a natural fit
for NACVA and provides strong value to our members."
Black adds that the NLCR's focus will be broadened with enhanced
focus on the financial forensics disciplines NACVA Certified
Forensic Financial Analyst accreditation holders concern
themselves with. CFFA holders will receive the newsletter free.
The NLCR will evolve as an identifier for all CFFA holders. It
will also serve as a regular forum where experts will offer
opinion, exchange analysis, and engage in increased dialogue on
financial forensics and CFFA-related issues.
Senior Editor, Jim Atkins, MBA, CPA/ABV, CFE, CVA (ret.) who
will be succeeded by Dermot O'Neil, CPA, ABV, CVA, CFFA and
longstanding member of the NLCR Editorial Board said that over the
years, NACVA members have enjoyed a strong relationship with the
NLCR. According to Atkins, the "cream of the crop" in business
valuation have spent time on the NLCR Editorial Board, including
Jeff Salins, CPA, CVA; Darrell Dorrell, CPA/ABV, MBA, CVA, ASA,
CMA, DABFA; Nancy Fannon, ASA, CPA, ABV, MCBA; Gary Trugman,
CPA/ABV, MCBA, ASA, MVS; Lari Masten, MSA, CPA/ABV, CVA; Paul
French, CPA/ABV, CVA, CFE, BVAL, CFFA, CDFA, CPIM, CFD, FCPA,
CM&AA, CMEA, CrFA; Ed Cordes, CPA/ABV, CVA; Tim York, CPA, CVA;
Parnell Black himself (MBA, CPA, CVA), and others.
The NLCR includes feature articles offering practical analysis
of contemporary issues; frank discussions and insights into how
financial issues must be presented and defended in the courtroom;
and war stories, horror stories, and hilarious stories from expert
witnesses, attorneys, and judges who have been there. It also
offers practical "how to" information on using technical tools and
the Web resources; independent, objective reviews of new
litigation and business valuation publications and software; and
analysis of efficiency tools, management ideas, and marketing tips
specifically directed to the litigation support and financial
issues practitioner.
About NACVA
Based in Salt Lake City, Utah, The National Association of
Certified Valuation Analysts delivers training from the nation's
leading experts in consulting fields such as business valuation,
financial litigation forensics, forensic accounting, business
fraud, mergers and acquisitions, business and intellectual
property damages, fair value, healthcare consulting, and exit
strategies. NACVA's two business valuation credentials, the
Certified Valuation Analyst (CVA) and Accredited Valuation Analyst
(AVA), are the only business valuation designations accredited by
the National Commission for Certifying Agencies (NCCA). Through
its affiliated organizations, the Financial Forensics Institute
(FFI) and the Association of Certified Merger and Acquisition
Professionals (ACMAP), NACVA also sponsors the Certified Forensic
Financial Analyst (CFFA) and the Certified Merger and Acquisition
Professional (CMAP) designations. Along with its training and
certification programs, NACVA offers a range of support services,
reference materials, software, and customized databases to enhance
the professional capabilities and capacities of its members.
On the Web: http://www.nacva.com/>www.nacva.com
About National Litigation
NLCR is the oldest professional newsletter in existence for the
testifying expert. The inaugural issue for National Litigation
Consultants' Review name was in 2001; but the publication is the
unofficial successor to the CPA Litigation Service Counselor,
which has been published since 1993. Published 12 times per
year, it is available for $195 annually. All NACVA members will
receive 10% off the subscription price, and all NACVA Certified
Forensic Financial Analysts (CFFA) credential holders will receive
the newsletter free.
* S&P Downgrades Ratings on 36 Cert. Classes From 19 RMBS Deals
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 36
classes of mortgage pass-through certificates from 19 U.S.
residential mortgage-backed securities transactions due to the
recent rating actions on Syncora Guarantee Inc. S&P removed 29 of
the lowered ratings from CreditWatch with negative implications.
Concurrently, S&P placed 13 additional ratings on CreditWatch
negative and affirmed two others and removed them from CreditWatch
negative. Finally, S&P affirmed its ratings on eight classes from
an additional four transactions. In total, S&P analyzed 59
Syncora-insured classes from 33 U.S. RMBS transactions as part of
this review.
On Nov. 18, 2008, Standard & Poor's lowered its financial strength
rating on Syncora Guarantee Inc. to 'B' from 'BBB-' and revised
the CreditWatch implications on the rating to developing from
negative.
The Syncora downgrade negatively affected 49 of the 59 insured
classes. S&P downgraded 31 classes to 'B'; these ratings remain
linked to the monoline insurer rating because the deals do not
have sufficient credit support to sustain higher ratings on their
own. S&P lowered the ratings on the remaining five downgraded
classes to 'BB'; these ratings are now delinked from the monoline
insurer rating because the inherent credit support for the deals
sustains ratings higher than 'B'. Of the 13 classes placed on
CreditWatch with negative implications, 10 are rated 'AAA', while
the remaining three are rated 'BBB'. S&P expects to resolve the
CreditWatch placements affecting these transactions after S&P
completes its reviews of the underlying credit enhancement for
these classes.
S&P affirmed its ratings on eight of the 59 Syncora-insured
classes at their current levels. In addition, S&P affirmed two
'AAA' rated classes and removed them from CreditWatch negative due
to a recent review of the underlying credit enhancement for the
classes, which S&P found sufficient to support the 'AAA' ratings.
Standard & Poor's will continue to monitor its ratings on all U.S.
RMBS classes insured by Syncora and take appropriate rating
actions as necessary.
Rating and CreditWatch Action
Alternative Loan Trust 2005-52CB
Series 2005-52CB
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-3 12668ABG9 AAA/Watch Neg AAA
Ameriquest Mortgage Securities Inc.
Series 2004-R6
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 03072SSH9 AAA/Watch Neg AAA
A-4 03072SSL0 AAA/Watch Neg AAA
Bear Stearns Second Lien Trust 2007-SV1
Series 2007-SV1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 07401UAB9 BB BBB-/Watch Neg
A-3 07401UAU7 BB BBB-/Watch Neg
C-BASS 2007-SL1 Trust
Series 2007-SL1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 1248MKAB1 B BBB-/Watch Neg
A-1 1248MKAA3 B BBB-/Watch Neg
CWABS Asset-Backed Certificates Trust 2004-15
Series 2004-15
Rating
------
Class CUSIP To From
----- ----- -- ----
1-AV-1 126673UG5 AAA/Watch Neg AAA
CWABS Asset-Backed Certificates Trust 2004-9
Series 2004-9
Rating
------
Class CUSIP To From
----- ----- -- ----
1-AV-1 126673GK2 AAA/Watch Neg AAA
CWABS Revolving Home Equity Loan Trust Series 2004-Q
Series 2004-Q
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A 126673MX7 BBB/Watch Neg BBB
2-A 126673MY5 BBB/Watch Neg BBB
CWABS Revolving Home Equity Loan Trust Series 2004-R
Series 2004-R
Rating
------
Class CUSIP To From
----- ----- -- ----
2-A 126673QB1 B BBB-/Watch Neg
1-A 126673QA3 BBB/Watch Neg BBB
CWHEQ Home Equity Loan Trust Series 2006-S7
Series 2006-S7
Rating
------
Class CUSIP To From
----- ----- -- ----
A-4 12668VAD1 B BBB-/Watch Neg
A-6 12668VAF6 B BBB-/Watch Neg
A-5 12668VAE9 B BBB-/Watch Neg
A-3 12668VAC3 B BBB-/Watch Neg
A-1 12668VAA7 B BBB-/Watch Neg
A-2 12668VAB5 B BBB-/Watch Neg
CWHEQ Revolving Home Equity Loan Trust Series 2005-K
Series 2005-K
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A 126685AT3 B BBB-/Watch Neg
2-A-1 126685AU0 B BBB-/Watch Neg
2-A-3 126685AW6 B BBB-/Watch Neg
2-A-4 126685AX4 B BBB-/Watch Neg
CWHEQ Revolving Home Equity Loan Trust Series 2006-D
Series 2006-D
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A 126685DS2 B BBB-/Watch Neg
2-A 126685DT0 B BBB-/Watch Neg
DSLA Mortgage Loan Trust 2006-AR1
Series 2006-AR1
Rating
------
Class CUSIP To From
----- ----- -- ----
2A-1C 23332UGP3 BB BBB-
1A-1B 23332UGL2 BB BBB-
FFMLT 2007-FFB-SS
Series 2007-FFB-SS
Rating
------
Class CUSIP To From
----- ----- -- ----
A 30248EAA6 B BBB-/Watch Neg
GreenPoint Mortgage Funding Trust 2006-HE1
Series 2006-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
Ax 39539BAA1 B BBB-/Watch Neg
GreenPoint Mortgage Funding Trust 2007-HE1
Series 2007-HE1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 39539JAA4 B BBB-/Watch Neg
A-2 39539JAB2 B BBB-/Watch Neg
HarborView Mortgage Loan Trust 2005-11
Series 2005-11
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A-1B 41161PUJ0 AAA/Watch Neg AAA
2-A-1C 41161PUM3 AAA/Watch Neg AAA
HarborView Mortgage Loan Trust 2006-4
Series 2006-4
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A1B 41161PL35 B BBB-/Watch Neg
2-A1C 41161PL68 B BBB-/Watch Neg
3-A1C 41161PP72 BB BBB-/Watch Neg
Harborview Mortgage Loan Trust 2006-5
Series 2006-5
Rating
------
Class CUSIP To From
----- ----- -- ----
1-A1B 41161MAB6 B BBB-/Watch Neg
HarborView Mortgage Loan Trust 2006-BU1
Series 2006-BU1
Rating
------
Class CUSIP To From
----- ----- -- ----
1A-1B 41161PG64 AAA AAA/Watch Neg
2A-1C 41161PG98 AAA AAA/Watch Neg
IndyMac Home Equity Mortgage Loan Asset-Backed Trust
Series 2006-H3
Rating
------
Class CUSIP To From
----- ----- -- ----
A 45664UAA3 B BBB-/Watch Neg
IndyMac INDX Mortgage Loan Trust 2006-AR6
Series 2006-AR6
Rating
------
Class CUSIP To From
----- ----- -- ----
2-A-1C 456612AE0 B BBB-
1-A-1B 456612AB6 B BBB-
Lehman XS Trust 2007-8H
Series 2007-8H
Rating
------
Class CUSIP To From
----- ----- -- ----
A5 52524TAE4 B BBB-
Nomura Asset Acceptance Corp. Alternative Loan Trust
Series 2007-S2
Rating
------
Class CUSIP To From
----- ----- -- ----
A 65538BAA7 B BBB-/Watch Neg
Park Place Securities, Inc.
Series 2004-WHQ1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 70069FBL0 AAA/Watch Neg AAA
Park Place Securities, Inc.
Series 2004-MCW1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-1 70069FCB1 AAA/Watch Neg AAA
RALI Series 2006-QO4 Trust
Series 2006-QO4
Rating
------
Class CUSIP To From
----- ----- -- ----
I-A-2 75114GAB5 B BBB-
II-A-3 75114GAE9 B BBB-
SACO I Trust 2006-1
Series 2006-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A 785778QA2 B BBB-/Watch Neg
SunTrust Acquisition Closed-End Seconds Trust
Series 2007-1
Rating
------
Class CUSIP To From
----- ----- -- ----
A 86801CAA1 B BBB-/Watch Neg
WaMu Mortgage Pass-Through Certificates Series 2004-RS1 Trust
Series 2004-RS1
Rating
------
Class CUSIP To From
----- ----- -- ----
A-3 92922FMN5 AAA/Watch Neg AAA
Ratings Affirmed
2004-CB6 Trust
Series 2004-CB6
Class CUSIP Rating
----- ----- ------
AF-3 59020UJA4 AAA
CWABS Asset-Backed Certificates Trust 2005-BC5
Series 2005-BC5
Class CUSIP Rating
----- ----- ------
2-A-2 126670NA2 AAA
Option One Mortgage Loan Trust 2007-HL1
Series 2007-HL1
Class CUSIP Rating
----- ----- ------
II-A-1 68402SAB5 A
II-A-2 68402SAC3 A
II-A-3 68402SAD1 A
I-A-1 68402SAA7 A
II-A-4 68402SAE9 A
Securitized Asset Backed Receivables LLC Trust 2005-HE1
Series 2005-HE1
Class CUSIP Rating
----- ----- ------
A-1B 81375WGN0 AAA
* S&P Examines Rated North American CMBS Exposure to Circuit City
-----------------------------------------------------------------
In light of Circuit City's recent bankruptcy filing, Standard &
Poor's Ratings Services has reviewed its portfolio of rated
commercial mortgage-backed securities to identify loans that may
be affected by forthcoming store closures, which the retailer
announced one week before filing for bankruptcy.
According to a new report, Standard & Poor's has identified 202
U.S. CMBS loans that are secured by properties that have Circuit
City as a tenant. In total, Standard & Poor's determined that the
loans serve as collateral in 143 transactions.
Circuit City's bankruptcy follows several other high-profile
retail bankruptcies, such as Linens N' Things and Mervyn's, and
S&P continue to monitor the effects on retail loan performance in
S&P's portfolio.
"Given the exposure that S&P's rated CMBS transactions have to
many of these and other national retailers, S&P continue to place
scrutiny on this sector, as tenant bankruptcies can have an impact
on outstanding transaction ratings," said credit analyst Jim
Manzi.
The 202 identified CMBS loans have an outstanding principal
balance of $4.5 billion and serve as collateral in 143 Standard &
Poor's rated CMBS transactions. S&P determined that Circuit
City's total exposure to S&P's rated CMBS portfolio is $1.0
billion and averaged less than 0.5% of each transaction.
"At this time however, S&P does not expect widespread rating
actions on rated U.S. CMBS as a direct result of Circuit City's
bankruptcy filing," said credit analyst Harris Trifon. "However,
S&P will continue to assess the impact of Circuit City's evolving
situation on the CMBS transactions S&P rates as information on
individual properties becomes available and initiate rating
actions as they are warranted."
* S&P Puts Ratings on 25 Classes on CreditWatch Negative
--------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on 25
classes from 13 U.S. cash flow collateralized debt obligation of
asset-backed securities transactions on CreditWatch with negative
implications. The affected classes represent an aggregate
original issuance amount of approximately $1.97 billion.
The CreditWatch placements reflect continued deterioration in the
credit quality of the residential mortgage-backed securities
backing these CDO transactions as well as the decline in the
credit quality of the CDO transactions that are held by affected
transactions. Twelve of the 13 CDO transactions are mezzanine
structured finance CDOs, generally defined as CDOs of ABS
collateralized at origination primarily by 'A' and 'BBB' rated
tranches of RMBS and other structured finance securities, while
the remaining transaction is a high-grade CDOs of ABS, generally
defined as CDOs of ABS typically collateralized at origination
primarily by 'AAA' through 'A' rated tranches of RMBS and other
structured finance securities.
Standard & Poor's expects to resolve the CreditWatch placements on
the affected transactions within the next few weeks.
Ratings Placed on CreditWatch Negative
Rating
------
Transaction Class To From
----------- ----- -- ----
Acacia CDO 8 Ltd A-1 AAA/Watch Neg AAA
Acacia CDO 8 Ltd A-2 AAA/Watch Neg AAA
Acacia CDO 8 Ltd B AA/Watch Neg AA
Acacia CDO 8 Ltd C A/Watch Neg A
Arroyo CDO I Ltd. B AA/Watch Neg AA
Arroyo CDO I Ltd. C-1 BBB-/Watch Neg BBB-
Arroyo CDO I Ltd. C-2 BBB-/Watch Neg BBB-
Ayresome CDO I, Ltd. A-1b AAA/Watch Neg AAA
C-Bass CBO XI, Ltd. D BBB+/Watch Neg BBB+
C-BASS CBO XIII Ltd C A/Watch Neg A
C-BASS CBO XIII Ltd D BBB/Watch Neg BBB
Eastman Hill Funding I, Limited A-1-FL AAA/Watch Neg AAA
Eastman Hill Funding I, Limited A-1-FX AAA/Watch Neg AAA
Eastman Hill Funding I, Limited A-2 AAA/Watch Neg AAA
Fort Point CDO I Ltd. A-1 AAA/Watch Neg AAA
Ischus CDO I Ltd A-2 AAA/Watch Neg AAA
Mercury CDO 2004-1 Ltd B AA/Watch Neg AA
Mercury CDO 2004-1 Ltd C BBB/Watch Neg BBB
Pacific Bay CDO. Ltd. B AA/Watch Neg AA
Pacific Bay CDO. Ltd. C A-/Watch Neg A-
Pacific Shores CDO Ltd. C BBB+/Watch Neg BBB+
Pacific Shores CDO Ltd. Pfd Sh Cl1 BB-/Watch Neg BB-
Pacific Shores CDO Ltd. Pfd Sh Cl2 BB-/Watch Neg BB-
Pasadena CDO Ltd C BBB/Watch Neg BBB
Sandstone CDO Ltd. D A/Watch Neg A
* S&P Reports Rise in Timeshare Securitization Delinquencies
------------------------------------------------------------
The overall performance of U.S. timeshare securitizations began
losing ground during third-quarter 2008, as a number of key
performance variables showed some weakening after leveling off in
the previous quarter, according to a recent report published by
Standard & Poor's Ratings Services.
"Total delinquencies rose to 4.2% in September 2008 (a new high),
averaging 3.9% during third-quarter 2008," said Standard & Poor's
credit analyst Frank Trick. "In looking at the individual trusts,
delinquencies rose for nearly 80% of the trusts during third-
quarter 2008. This compares with flat and decreasing delinquency
levels in the first and second quarters, respectively."
At the same time, monthly defaults increased. "Third-quarter 2008
default rates rose 20 basis points year-over-year and were also up
compared with the previous quarter, peaking at 70 bps during
September," Mr. Trick said.
Excess spread remained relatively robust at 7.0%, but continued to
lag the historical average of 8.1%. The 7.0% spread level was
down 60 bps from the second quarter, but marks a 10-bps increase
from the same quarter in 2007.
Meanwhile, monthly prepayments continued to fall, averaging 80 bps
during third-quarter 2008. This compares with 100 bps during the
same quarter in 2007.
The aggregate outstanding issuance amount for outstanding term
transactions as of September 2008 was approximately $2.85 billion,
backed by nearly $3.69 billion in timeshare loan receivables.
During third-quarter 2008, Standard & Poor's didn't take any
performance based rating or CreditWatch actions on transactions
backed by timeshare loan receivables.
* S&P Says Recession Weighs Down Forest Products 2009 Outlook
-------------------------------------------------------------
The faltering U.S. economy hangs heavy on the outlook for the U.S.
forest products sector in 2009.
Certain of S&P's concerns for forest products companies in 2008--
the ability of producers to raise prices and the housing downturn
--persist, but a new year brings new concerns for the industry.
"Our greatest concern has shifted to how paper and packaging
demand will fare in the recession," said Standard & Poor's credit
analyst Pamela Rice. "The nearly frozen credit markets are also
clouding prospects for the sector's financial performance next
year and could strain overall liquidity."
Standard & Poor's has incorporated these baseline expectations
into S&P's ratings, and as a result, 40% of U.S forest products
companies currently have negative outlooks. Considering the
preponderance of negative trends, further downgrades or negative
outlooks are possible.
* S&P Sees No Silver Lining for Retailers This Holiday Season
-------------------------------------------------------------
With less of almost everything that U.S. retailers want-from heavy
store traffic to higher revenues to easy credit terms for
themselves and their customers-the ratings and outlooks on the 150
retailers that Standard & Poor's Ratings Service covers appear
likely, overall, to remain bleak throughout 2008 and well into
next year, according to a new report.
"Throughout this economic slump," said Standard & Poor's credit
analyst Gerald A. Hirschberg, "the most successful retailers will
likely be those who can maintain liquidity at adequate levels,
control costs, and still draw in shoppers by differentiating their
merchandise, the look of their store, and their service from their
rivals."
* BOOK REVIEW: The First Junk Bond: A Story of Corp Boom & Bust
----------------------------------------------------------------
Author: Harlan D. Platt
Publisher: Beard Books
Paperback: 256 pages
List Price: US$34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587981203/internetbankrupt
This is a book that business people will find particularly
enlightening. It details how Texas International, Inc.'s
bankruptcy filing affected various stakeholders, the bankruptcy
negotiation process, and the alternative post-bankruptcy
structures that were considered.
This engrossing book follows the extraordinary journey of the
company through its corporate growth and decline, debt exchange
offers, and corporate rebirth.
It is a case study of a company that exemplified the 1980s,
complete with fascinating people, financial innovations, and
successive rounds of high stakes poker, as the misfortunes of
the company unfold.
Detailed is the involvement of Drexel Lambert banking house and
its guiding spirit Michael Milken, who secured fresh capital for
the company through the issuance of a high-yield bond with an
above-market rate of interest to counterbalance its elevated
credit risk.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa,
Luke Caballos, Sheryl Joy P. Olano, Carlo Fernandez, Christopher
G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2008. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***