/raid1/www/Hosts/bankrupt/TCR_Public/081226.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, December 26, 2008, Vol. 12, No. 306
Headlines
A21 INC: Court Sets January 12, 2009, as Bid Deadline
A21 INC: Files Interim Financials for September 2008 Quarter
ACCENTIA BIOPHARMACEUTICALS: Biovest Unit Gets OK to Borrow $3MM
ACUSPHERE INC: Board Reset Execs' Salaries & Adopts Bonus Plan
ADELPHIA COMMUNICATIONS: Makes $60 Million Payment to Claimholders
AMERICAN AXLE: Fitch Downgrades Issuer Default Rating to 'B-'
APEX SILVER MINES: Agrees to File for Chapter 11 & Sell Mine
ARLINGTON RIDGE: Files Joint Plan and Disclosure Statement
ARVINMERITOR: Fitch Downgrades Issuer Default Rating to 'B-'
ASBURY AUTOMOTIVE: Moody's Reviews 'B1' CFR for Possible Downgrade
ATLANTIS PLASTICS: Court Converts Cases to Chapter 7 Liquidation
AVIS BUDGET: S&P Junks Corporate Credit Rating From 'B+'
AZTEC OIL: Aug. 31 Balance Sheet Upside Down by $1.5 Million
BAKER STREET: S&P Downgrades Ratings on Class D and E to Low-B
BEARD COMPANY: Retains RJ Falkner to Develop Investor Relations
BERNARD L. MADOFF: Authorities Probe Frank DiPascali on Fraud
BERNARD L. MADOFF: Victims May Have to Return Withdrawn Investment
BIG WEST: Chapter 11 Filing Prompts Moody's 'D' Rating
BKF CAPITAL: John A. Brunjes Resigns as Director
BUFFETS HOLDINGS: Court OKs Third Amendment to DIP Facility
BUFFETS HOLDINGS: Court Sends Plan to Creditors for Voting
CFM US: Jan. 31 Extension of Time to File Chapter 11 Plan
CHEMTURA CORP: S&P Surpasses Moody's on Downgrade
CHEMTURA CORP: Moody's Cuts Corporate Family Rating to 'B2'
CHRYSLER LLC: S&P Cuts Corp. Credit Ratings to 'CC'; Outlook Neg.
CHRYSLER LLC: S&P Won't Raise Credit Rating Above CCC on Loans
CLAIRE'S STORES: Moody's Downgrades Corp. Family Rating to 'Caa3'
CMR MORTGAGE: Posts $22.9 Million Net Loss in Qtr. Ended June 30
COAST CFO: Moody's Cuts Rating on $67.5MM Class D Notes to 'Ba1'
CONCORD CAMERA: Shareholders Okay Dissolution & Liquidation Plan
CORD BLOOD: Amends Securities Purchase Agreement with Tangiers
COTT CORPORATION: Weak Performance Cues Moody's Junk Ratings
DAIMLER CHRYSLER: Poor Fin'l Condition Cues Fitch's Junk Rating
DECODE GENETICS: Terrance McGuire Resigns from Board of Directors
DELTA AIR: Reaches Deal With Mechanics on Seniority Integration
DELTA AIR: Reaches Tentative Deal on NWA-MAC $245MM Bond
DELTA AIR: Will Cut Capacity By 8% in 2009 Due to Recession
DNC MULTIMEDIA: Files for Chapter 11 Protection in Florida
DOLLAR THRIFTY: S&P Junks Long-Term Corporate Credit Rating
DOWLING COLLEGE: Moody's Keeps 'B1' 1996 and 2002 Bonds Rating
DPI OF ROCHESTER: Secuprint Acquires All Assets for $940,000
E*TRADE FINANCIAL: S&P Puts 'B' Rating on CreditWatch Developing
EASTON-BELL: S&P Ratings Cut Matches Moody's March Downgrade
EAU TECHNOLOGIES: Completes Purchase of 100,000 Shares of Stock
EAUTOCLAIMS INC: Auditor Expresses Going Concern Doubt
FIRST FRANKLIN: Moody's Downgrades Ratings on 12 Class Certs.
FIRST FRANKLIN: S&P's Ratings on 7 Classes of Certs. Tumble to 'D'
FLYING J: Chapter 11 Filing Prompts Moody's 'D' Rating on Unit
FORD MOTOR: Moody's Downgrades Senior Unsecured Rating to 'Caa1'
FORD MOTOR: Moody's Downgrades CFR to 'Caa3'; Outlook Negative
GENERAL MOTORS: Court Cuts Legal Fees in Investors Settlement
GENERAL MOTORS: S&P Won't Raise Credit Rating Above CCC on Loans
GENERAL MOTORS: S&P Downgrades Issue-Level Rating to 'C'
GEOEYE INC: S&P Upgrades Corporate Credit Rating to 'B'
GMAC LLC: Application for Bank Holding Company Status Accepted
GMACCM HOME: Moody's Downgrades Ratings on Four Class Certificates
GRAPHIC PACKAGING: Bank Loan Sells at Substantial Discount
GRANITE XPERTS: Files Schedules of Assets and Liabilities
GREAT LAKES: Moody's Changes Rating Outlook to Positive
GREENER CLEANERS: File for Chapter 11 Bankruptcy Protection
GUAM POWER: S&P Raises Long-Term Rating to 'BBB-' From 'BB+'
HARBREW IMPORTS: Sept. 30 Balance Sheet Upside Down by $6.3 Mil.
HAWAIIAN TELCOM: S&P Withdraws 'D' Corporate Credit Rating
HERTZ CORP: S&P Places 'BB-' Corp. Rating on CreditWatch Negative
HOME EQUITY: Moody's Downgrades Ratings on 23 Class Certificates
HOUGHTON MIFFLIN: Market Spending Decline Cues Moody's Junk Rating
IDENTICA HOLDINGS: Sept. 30 Balance Sheet Upside Down by $1.4 Mil.
IKON OFFICE: Ricoh Acquisition Cues Moody's to Upgrade Ratings
INDYMAC BANCORP: Treasury Probes OTS for Irregularities
INFOGROUP INC: S&P's 'BB' Rating Unmoved by Company Privatization
INSIGHT MIDWEST: Bank Loan Sells at Substantial Discount
INTERMUNE INC: Has Liquidity to Fund Biz Through End of 2009
INTERMUNE INC: OrbiMed Advisors Discloses 6.5% Equity Stake
IONICA PLC: Scheme Supervisors to Pay Dividends on January 13
IRVINE SENSORS: Issues Shares to Six Investors for $138,000
IRVINE SENSORS: Sells Patents to Aprolase for $9,500,000
IRWIN WHOLE: Fitch Downgrades Ratings on Five Class Certificates
JACK-IN-THE-BOX: Moody's Affirms Ba3 CFR; Outlook Negative
KAUPTHING BANK: Luxembourg Gov't Inks Initial Sale Deal for Unit
KB TOYS: Court Approves Going-Out-Of-Business Sale for 461 Stores
KEY PLASTICS: Gets Interim Access to $7-Mil. Wayzata DIP Facility
KUAKINI HEALTH: Moody's Affirm 'Ba1' Revenue Bond Rating
LANDAMERICA FINANCIAL: Court OKs Amended Stock Purchase Terms
LAS VEGAS SANDS: Bank Loan Sells at Substantial Discount
LEVITT AND SONS: Disclosure Statement Gets Preliminary Court Nod
LEVITT AND SONS: Hilco Completes Levitt Sale for $14.2 Million
LODGENET INTERACTIVE: To Close Atlanta Call Center, Cut Workforce
LOUISIANA-PACIFIC CORP: S&P Keeps BB Credit Rating on WatchNeg.
MAN GLENWOOD: Moody's Cuts Rating on $43.75MM Class D Notes to Ba3
MATTRESS DISCOUNTERS: Asks Court to Dismiss Chapter 11 Cases
MDRNA INC: Posts $16 Million Net Loss in Quarter Ended Sept. 30
METALDYNE CORP: Moody's Raises Corporate Credit Rating to 'CCC-'
MONEYGRAM INTERNATIONAL: Elects 2 New Directors Designated by THL
MORGAN STANLEY: Fitch Affirms Low-B Ratings on Five Classes
MOTORSPORT AFTERMARKET: S&P Places 'B-' Rating on Negative Watch
NAVISTAR INT'L: To Restate 9-Month Financials; Affirms Guidance
NEW CREATIVE: Files for Chapter 11 Bankruptcy Protection
NON-INVASIVE MONITORING: Posts $498,000 Net Loss in Last Quarter
NORTHERN BAY: Court Orders Dismissal of Chapter 11 Case
ORBIMAGE INC: S&P Upgrades Corporate Credit Rating to 'B'
PALM INC: S&P's 'CCC+' Rating Unmoved by Additional Investment
PEGASUS SOLUTIONS: Moody's Junks Corporate Family Rating from B3
PENSKE AUTOMOTIVE: Moody's Changes Outlook Rating to Negative
PFF BANCORP: U.S. Trustee Forms Three-Member Creditors Committee
POLAROID CORP: Licensee to Dissolve Biz; Liquidation Plan Okayed
POWER SPORTS: Posts $837,727 Net Loss in Quarter Ended Sept. 30
PRECISION DRILLING: Moody's Cuts CFR to 'Ba2'; Outlook Negative
PRODUCTION RESOURCE: S&P Downgrades Corp. Credit Rating to 'B-'
QMG HOLDINGS: S&P Puts 'B' Corp. Credit Rating on WatchNeg.
RAHWAY HOSPITAL: Moody's Affirms 'Ba2' $17 Million Bonds Rating
RESIDENTIAL CAPITAL: Fed Recognizes GMAC as Bank Holding Company
RIVIERA HOLDINGS: Rivacq, 7.15% Equity Owner, Takes Passive Role
RYDER MEMORIAL: S&P Downgrades Long-Term Bond Rating to 'BB+'
SBARRO INC: Posts $1.2 Million Net Loss in Sept. 2008 Quarter
SENTINEL MANAGEMENT: Court Confirms Chapter 11 Liquidation Plan
SONIC AUTOMOTIVE: Moody's Reviews 'Ba3' CFR for Possible Cuts
SS&C TECHNOLOGIES: Earns $4.8MM in Quarter Ended September 30
STARWOOD HOTELS: S&P Downgrades Corporate Credit Rating to 'BB+'
STRUCTURED ASSET: Moody's Downgrades Ratings on 17 Class Certs.
SUMMIT ACCOMMODATORS: Files for Chapter 11 Bankruptcy in Oregon
SUMMIT ACCOMMODATORS: Case Summary & 20 Largest Unsec. Creditors
TENNECO INC: Fitch Downgrades Issuer Default Rating to 'B+'
THACHER PROFFITT: To Wind Down After 160 Years of Service
TROPICANA ENTERTAINMENT: J.H. Cohn Tapped for Atlantic Sale
VALLEJO CITY: Unions & Calpers Thwart Bid to Reject Contracts
VERASUN ENERGY: Seeks Financing for Janesville Plant
VERASUN ENERGY: Seeks to Make Interest Payments to Noteholders
VERASUN ENERGY: Seeks Approval of Shell Trading Customer Pact
VERSACOLD INTERNATIONAL: Moody's Junks Corporate Credit Rating
VISTEON CORP: Fitch Downgrades Issuer Default Rating to 'CC'
WEST HAWK: Files for Chapter 11 Bankruptcy to Restructure Debts
WOODSIDE GROUP: 2 Units' Voluntary Chapter 11 Case Summary
WOODSIDE GROUP: Management Breached Duties, Examiner Finds
WOODSIDE GROUP: Court Fixes January 31 as Claims Bar Date
WP EVENFLO: Moody's Reviews Low-B Ratings for Possible Cuts
YRC WORLDWIDE: Is In Talks with Banks to Modify Loan Terms
YRC WORLDWIDE: Raises $150,400,000 in NATMI Sale-Leaseback Deal
YRC WORLDWIDE: To Cut Non-Union Wages by 10% in 2009 First Half
YRC WORLDWIDE: Provides 4th Quarter 2008 Financial Updates
* Moody's Downgrades Ratings on 323 Notes by Certain CDO Deals
* S&P Junks Ratings on 14 Classes from 10 RMBS Transactions
* Irving Picard Joins Baker & Hostetler in New York
* Henry Paulson Asks Congress to Release Rest of TARP Funds
* States in Trouble Due to Economic Downturn, Study Shows
* ABI Poll Shows Automaker Ch. 11 Filing Better for Taxpayers
* BOOK REVIEW: The First Junk Bond: A Story of Corp. Boom & Bust
*********
A21 INC: Court Sets January 12, 2009, as Bid Deadline
-----------------------------------------------------
The United States Bankruptcy Court for the Middle District of
Florida has set the deadline for bids and the date of the auction
of the U.S. assets of SuperStock, Inc., the stock of SuperStock's
U.K. subsidiary, and the assets of ArtSelect, Inc.
The Court has set Monday, January 12, 2009, as the last date to
submit initial bids consistent with the instructions for bidders
previously issued by the court.
The Court has also set Friday, January 16, 2009, at 9:00 AM
Eastern Time, as the date of the auction.
The auction of assets will be held at the United States
Courthouse Building, 300 North Hogan Street, Courtroom 4-A,
Jacksonville, Florida.
Both the bidding and the auction are being conducted pursuant to
separate motions filed by a21, Inc. to sell the U.S. assets of
SuperStock, Inc. to Masterfile Corporation, and to sell the assets
of ArtSelect, Inc. to Metaverse Corporation.
The sales are free of liens and encumbrances pursuant to Section
363 of the Bankruptcy Code, but are subject to higher and better
bids at the auction.
In addition to the auction of assets on Jan. 16, 2009, the Court
will also have a hearing to approve the companies' disclosure
statement and combined plan of liquidation.
About a21 Inc.
Headquartered in Jacksonville, Florida, a21, Inc. (ATWOE.OB) --
http://www.a21group.com-- makes images, art framing, and wall
decors. The company and two of its affiliates filed for Chapter
11 protection on December 4, 2008 (Bankr. M.D. Fla Lead Case No.
08-07610). Gardner F. Davis, Esq., at Foley & Lardner LLP,
represents the Debtors. As of Sept. 20, 2008, the company has
$24,231,430 in total assets and $30,286,282 in total debts.
A21 INC: Files Interim Financials for September 2008 Quarter
------------------------------------------------------------
a21, Inc., provided the Securities and Exchange Commission with
information that would otherwise be filed in its Form 10-Q for the
quarterly period ended September 30, 2008, to disclose information
about the company's financial state of affairs in a timely
fashion. The company said the information does not include any
adjustments to its intangible asset values.
The company has not been able to file a Form 10-Q for the
quarterly period ended September 30, 2008, as required by
applicable SEC rules.
On November 14, 2008, the company filed a Form NT 10-Q stating
that a Form 10-Q could not be filed within the prescribed time
period because there were indications of impairment to certain
intangible assets held by the company, and the company was not
able to perform the valuation analysis required to appropriately
adjust those asset values, if deemed necessary, as of the date of
the filing of the Form NT 10-Q.
A full-text copy of a21, Inc.'s interim financial statements for
the period ended September 30, 2008, is available at no charge at:
http://ResearchArchives.com/t/s?36b5
a21 Inc.'s unaudited and unreviewed condensed consolidated balance
sheets as of September 30, 2008, shows $26.8 million in total
assets, $30.3 million in total liabilities, resulting in $3.9
million in capital deficit. a21 Inc. will post a net loss
attributed to common stockholders of $964,000 on $4.5 million in
total revenues.
About a21 Inc.
Headquartered in Jacksonville, Florida, a21, Inc. (ATWOE.OB) --
http://www.a21group.com-- makes images, art framing, and wall
decors. The company and two of its affiliates filed for Chapter
11 protection on December 4, 2008 (Bankr. M.D. Fla Lead Case No.
08-07610). Gardner F. Davis, Esq., at Foley & Lardner LLP,
represents the Debtors. As of Sept. 20, 2008, the company has
$24,231,430 in total assets and $30,286,282 in total debts.
ACCENTIA BIOPHARMACEUTICALS: Biovest Unit Gets OK to Borrow $3MM
----------------------------------------------------------------
Effective as of December 22, 2008, Biovest International, Inc.,
subsidiary of Accentia Biopharmaceuticals, Inc., completed the
closing of a debtor-in-possession financing transaction with Corps
Real, LLC, pursuant to which the DIP Lender provided to Biovest a
secured line of credit of up to $3,000,000 in accordance with an
Interim Order entered by the U.S. Bankruptcy Court for the Middle
District of Florida, Tampa Division. The DIP Lender has committed
to advance up to $1 million to Biovest, with additional advances
beyond the initial $1 million being subject to the DIP Lender's
discretion and further Court order.
The DIP Financing was memorialized by a Secured Promissory Note
and Security Agreement. The DIP Transaction is comprised of a
revolving credit facility having these terms:
(a) Principal Amount -- Up to $3,000,000.
(b) Priority and Security -- The Facility is a secured super-
priority loan to a Debtor-in-Possession. Prior to
closing, an Order, satisfactory to the Lender, will be
entered in Biovest's Chapter 11 Proceeding establishing
the Facility as a loan secured by all assets of Biovest
that is senior to all prior and existing liens of Biovest.
(c) Advances under the Facility -- Fixed advances under the
Facility will be:
(i) $500,000 to be paid upon the entry of the Initial
Court Order;
(ii) $250,000 to be advanced on December 31, 2008,
unless Biovest, with the consent of its senior
secured lender, requests that a portion of advance
scheduled for December 31, 2008 be delayed to a
later date;
(iii) $250,000 on January 31, 2009, unless Biovest, with
the consent of its senior secured lender, requests
that a portion of the advance scheduled for
January 31, 2009 be delayed to a later date.
For all amounts in excess of the initial $1,000,000, the
Lender and Biovest will within 30 days of the entry of the
Initial Order agree on a list of "milestone" events to be
achieved by Biovest through use of these Advances, and
Biovest will be required to make a written request
detailing the amount and use; and the Lender will in its
reasonable discretion approve or reject the written
request based upon whether Biovest demonstrates reasonable
progress in achieving the agreed milestones.
(d) Term -- All loans outstanding under the Facility will
become due and payable on the earlier of:
(i) December 31, 2010;
(ii) dismissal of the Chapter 11 Proceeding;
(iii) conversion of the Chapter 11 Proceeding to a
Chapter 7 Proceeding; or
(iv) confirmation of Biovest's Plan of Reorganization.
(e) Interest -- Loans will bear interest at 16% per annum
computed on a daily basis based on the amounts
outstanding. Interest will be paid:
(i) 10% interest will be paid monthly and
(ii) 6% interest will accrue and be paid at maturity.
(f) Points -- At the Closing, Biovest will pay in cash 4% of
the initial $1,000,000 of the Facility (i.e., $40,000).
At the time that Biovest borrows in excess of $1,000,000,
Biovest will pay in cash 4% of the second $1,000,000 of
the Facility (i.e., $40,000). At the time that Biovest
borrows in excess of $2,000,000, Biovest will pay in cash
4% of the third $1,000,000 of the Facility
(i.e., $40,000).
(g) Expenses -- Biovest is responsible for payment of $25,000
in costs at the Closing.
(h) Prepayment -- Loans may be prepaid at any time in an
amount of $50,000 or multiples of $50,000 in excess
thereof, provided, however, that Biovest's senior secured
lender provides its consent to each prepayment via
written notification to Biovest and the Lender.
Full-text copies of the Secured Promissory Note between Corps
Real, LLC and Biovest International, Inc. dated December 22, 2008,
and the Security Agreement between Corps Real, LLC and Biovest
International, Inc. dated December 22, 2008, are available at no
charge at:
http://ResearchArchives.com/t/s?36b3
Headquartered in Tampa, Florida, Accentia BioPharmaceuticals Inc.
(Nasdaq: ABPI) -- http://www.accentia.net/-- is a vertically
integrated biopharmaceutical company focused on the development
and commercialization of drug candidates that are in late-stage
clinical development and typically are based on active
pharmaceutical ingredients that have been previously approved by
the FDA for other indications. The company's lead product
candidate is SinuNase(TM), a novel application and formulation of
a known therapeutic to treat chronic rhinosinusitis.
Additionally, the company has acquired the majority ownership
interest in Biovest International Inc. and a royalty interest in
Biovest's lead drug candidate, BiovaxID(TM) and any other biologic
products developed by Biovest. The company also has a specialty
pharmaceutical business, which markets products focused on
respiratory disease and an analytical consulting business that
serves customers in the biopharmaceutical industry.
Accentia Biopharmaceuticals and nine affiliates filed for
Chapter 11 protection on November 10, 2008 (Bankr. M. D. Florida,
Lead Case No. 08-17795). The Debtors have tapped Charles A.
Postler, Esq., at Stichter, Riedel, Blain & Prosser, in Tampa,
Florida, as their bankruptcy counsel. In their bankruptcy
petition, the Debtors listed assets of $134,919,728 and debts of
$77,627,355 as of June 30, 2008.
ACUSPHERE INC: Board Reset Execs' Salaries & Adopts Bonus Plan
--------------------------------------------------------------
The Board of Directors of Acusphere, Inc., decided on December 12,
2008, that no amounts that would have been payable under the
company's fiscal year 2008 Management Incentive Plan will be paid
to any members of the company's management committee. However,
given the importance of retaining the Executives to manage the
regulatory and financial uncertainties faced by the company, the
Board has approved additional measures to strengthen the retention
of the company's Executives.
The Board approved, effective December 16, 2008, a change in the
base salaries of the Executives, such that their base salaries
would return to the amount in effect immediately prior to the
reduction taken pursuant to the company's Senior Management
Compensation Plan. The base salaries in effect as of December 16,
2008, are:
Base Salary
effective
Current December 16,
Name Position Salary 2008
---- -------- ------- ------------
Sherri C. Oberg President and $371,128 $463,910
CEO
Lawrence A. Gyenes SVP & CFO $292,500 $325,000
Richard Walovitch SVP, Clinical $252,000 $280,000
Research
Michael Slater SVP, Regulatory $232,000 $290,000
Affairs and
Operations
In addition, the Board determined that, prior to December 31,
2008, the company would pay Ms. Oberg and Mr. Slater each a lump
sum equal to half of the base salary reduction taken in connection
with the Compensation Plan. As a result, Ms. Oberg and Mr. Slater
will receive a lump sum payment of approximately $17,397 and
$10,320, respectively.
On December 12, 2008, the Board also adopted an Executive
Retention Bonus Plan, which provides that each Executive will
receive a retention bonus equal to one-third of their base salary
in effect as of December 12, 2008, before taking into account the
reduction provided for in the Compensation Plan. The company will
pay the Retention Bonus in lieu of cash payments otherwise
potentially payable under the Compensation Plan, if (a) such
Executive remains employed by the company through the date that is
15 days after the Prescription Drug User Fee Act date for
Imagify(TM) (Perflubutane Polymer Microspheres for Injectable
Suspension), currently expected to be February 28, 2009, or (b)
the Executive is terminated by the company as a result of the
termination of their position prior to the Payment Date:
Retention
Name Position Bonus
---- -------- ---------
Sherri C. Oberg President and $154,637
CEO
Lawrence A. Gyenes SVP & CFO $108,333
Richard Walovitch SVP, Clinical $93,333
Research
Michael Slater SVP, Regulatory $96,667
Affairs and
Operations
If the company terminates the Executive for Cause, or for any
other reason other than a termination of the Executive's position,
or if the Executive resigns his or her employment with the company
prior to the Payment Date, he or she will not be entitled to any
Retention Bonus. In addition, to the extent the Executive
receives severance payments under the Executive Employment
Agreement between the Executive and the company as a result of
termination of employment prior to the Payment Date, the Executive
will not be eligible for payment under the Retention Bonus Plan in
connection with such termination of employment.
A full-text copy of the Executive Retention Bonus Plan is
available at no charge at:
http://ResearchArchives.com/t/s?36b4
On December 10, 2008, the Cardiovascular and Renal Drugs Advisory
Committee of the U.S. Food and Drug Administration advised that
the diagnostic benefit of contrast enhancement using Acusphere's
ImagifyTM (Perflubutane Polymer Microspheres) for Injectable
Suspension is not sufficient to justify the risks associated with
the product. The vote was 16 against, one in favor and one
abstention. The Committee also discussed concerns that they would
like addressed to support approval of the product for the
detection of coronary artery disease.
The Advisory Committee's recommendations, while not binding, will
be considered by the FDA in its review of the New Drug Application
of Imagify. The expected FDA target action date for Imagify under
the Prescription Drug User Fee Act is February 28, 2009.
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) -- http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
company are focused on developing proprietary drugs that can
offer significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
Going Concern Doubt
Deloitte & Touche LLP in Boston raised substantial doubt about
the ability of Acusphere Inc. to continue as a going concern after
it audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor pointed to the company's recurring
losses from operations, negative cash flows from operations, and
the projected funding needed to sustain its operations.
Acusphere, Inc.'s balance sheet at Sept. 30, 2008, showed total
assets of $22.8 million and total liabilities of $33.1 million,
resulting in a stockholders' deficit of $10.3 million.
The NASDAQ halted trading in the company's common stock on
December 10, 2008.
ADELPHIA COMMUNICATIONS: Makes $60 Million Payment to Claimholders
------------------------------------------------------------------
Adelphia Communications Corporation distributed $60 million in
cash and 514,193 shares of TWC Class A Common Stock to holders of
Allowed Claims against the parent Adelphia Communications pursuant
to the Debtors' First Modified Fifth Amended Joint Chapter 11 Plan
of Reorganization dated Jan. 3, 2007, as confirmed.
The 514,193 shares of TWC Class A Common Stock to be distributed
have a fair market value as of December 19, 2008 (based on the
closing price on that date) of $10 million.
A chart summarizing the distribution of cash and shares of TWC
Class A Common Stock to be made to classes of ACC Claims is
available in the Important Documents section of the company's
website at http://www.adelphiarestructuring.com
The chart does not reflect additional distributions that may be
made over time as a result of the release of escrows, reserves and
holdbacks. The amount and timing of the distributions as a result
of the release of escrows, reserves and holdbacks are subject to
the terms and conditions of the Plan and numerous other conditions
and uncertainties, many of which are outside the control of the
Debtors
Creditor inquiries regarding distributions under the Plan should
be directed to creditor.inquiries@adelphia.com.
About Adelphia Communications
Based in Coudersport, Pennsylvania, Adelphia Communications
Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- was the
fifth largest cable television company in the United States. It
served customers in 31 states and offered analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. Adelphia sold substantially all of
its assets to Time Warner NY Cable LLC and Comcast Corporation on
July 31, 2006.
The company and its more than 200 affiliates filed for Chapter 11
protection in the Southern District of New York on June 25, 2002.
Those cases are jointly administered under case number 02-41729.
Willkie Farr & Gallagher represented the Debtors in their
restructuring efforts. PricewaterhouseCoopers served as the
Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman,
LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represented the
Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of
the Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision LLC. The RME Debtors filed for chapter 11
protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622
through 06-10642). Their cases were jointly administered under
Adelphia Communications and its debtor-affiliates' chapter 11
cases.
The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended
Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That
plan became effective on Feb. 13, 2007.
AMERICAN AXLE: Fitch Downgrades Issuer Default Rating to 'B-'
-------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Ratings of
Tenneco, ArvinMeritor and American Axle:
-- American Axle to 'B-' from 'B';
-- ArvinMeritor to 'B-' from 'B';
-- Tenneco to 'B+' from 'BB-'.
All three companies are expected to remain on Rating Watch
Negative until the availability of longer-term federal assistance
for General Motors is clarified. In the event of a bankruptcy of
General Motors, further rating actions are likely as detailed in
Fitch's press release dated Dec. 11, 2008. The rating actions
incorporate a rapidly deteriorating production forecast for key
European markets, as well as further global production cutbacks.
The federal assistance plan for General Motors and Chrysler is a
positive for the entire supply chain, solidifying production and
the continued extension of trade credit into the first quarter of
2009. Although the plan forestalls the threat of immediate
bankruptcy, Fitch views it as a temporary measure that does not
materially improve the companies' potential for long-term
viability. Fitch expects that last week's agreement will be
significantly restructured and clarified in 2009 under a new
administration and a new Congress. The short timeframe of the
current agreement, the complexity of several components and the
non-binding nature of the agreement provide significant room for
definition or alteration.
Fitch's current ratings assume that any modifications to the
current agreement will, at a minimum, ensure General Motors'
continued operation through 2009. Although auto suppliers were
included in the agreement as a stakeholder targeted for further
concessions, Fitch does not believe that suppliers will be singled
out for concessions beyond the loss of production volumes.
Under any scenario, suppliers will suffer from very deep North
American production cuts to be taken by all U.S. manufacturers in
the first half of 2009, a severe downturn expected in European
passenger car and commercial truck production in the fourth
quarter of 2008 and full-year 2009, the impact of the credit
crisis on the availability of customer financing, and the
deterioration in global economic conditions.
Fitch expects that U.S. industry sales will fall 11% in 2009, from
weak 2008 levels. Reported revenues for Tenneco and ArvinMeritor
will also be affected by the strengthening of the dollar, in a
reversal of year-to-date trends. Potential positives include
commodity price deflation which should provide some margin
benefit, and the effect of lower gas prices and potentially higher
infrastructure spending on the critical pickup truck segment.
Federal programs to boost the availability of retail financing
will be a key in moderating volume declines in 2009.
-- ArvinMeritor: The downgrade of ArvinMeritor is based on the
severe weakening of commercial truck demand in Europe that
is expected to occur in 2009, expectations of continued
weakness in already-weak commercial vehicle U.S. demand from
depressed 2008 levels, and financial stress among
ArvinMeritor's customers in this segment. ArvinMeritor
receives approximately 2/3 of its revenue from its
commercial vehicle systems group.
In addition, ArvinMeritor's light vehicle systems segment is
expected to experience operating losses in 2009 due to
severe production cutbacks in the U.S. and a steep decline
in global production. ArvinMeritor has been unable to
divest its light-vehicle systems operations, which are
expected to produce operating losses and a deteriorating
competitive position through 2009 given the low margins in
the business and the sharp drop in near-term global
production. Fitch does not believe that current industry
prospects will allow a sale of these operations to be
completed without material costs to the company, indicating
that with or without the sale, the light-vehicle systems
group will exacerbate balance sheet and liquidity
deterioration in 2009.
ArvinMeritor has shown progress in its restructuring
efforts, but the decline in global demand and revenues will
outstrip restructuring benefits in 2009. Capital
expenditures remain at low levels versus the industry,
providing little room for further reductions.
Fitch expects that operating losses and restructuring costs
will produce negative cash flows in 2009. ArvinMeritor
recently renegotiated its bank agreement, transitioning to a
senior secured leverage test, which provides some room to
absorb expected deterioration in its 2009 operating
performance. However, this covenant tightens from a current
level of 2.5 times (x) to 2.0x at the end of June 30, 2009,
and could be at some risk given the steep decline expected
in European commercial truck volumes in 2009 and the
continued deterioration in the company's light vehicle
segment.
ArvinMeritor currently has substantial availability under
its revolving credit facility, and Fitch forecasts that
additional drawings will be required in 2009, as other
access to capital is limited. ArvinMeritor is also reliant
on short-term receivables securitization facilities, the
majority of which have recently been extended into late
2009, but the deteriorating quality of receivables or the
unwillingness of banks to offer these facilities could cause
the company to migrate borrowings to its revolving credit
facilities, thereby utilizing a substantial portion of
available liquidity.
At Sept. 30, 2008, ArvinMeritor had $521 million outstanding
under receivable securitization facilities. Maturities in
the company's fiscal 2009 (ending Sept. 30) total
$254 million.
Long-term debt maturities in 2009 and 2010 are minimal.
-- Tenneco: Revenues and operating cash flows are expected to
decline steeply in the fourth quarter of 2008 and into 2009
due to continuing production cuts on Tenneco's key U.S.
platforms and a material decline in European production
through 2009. Third-quarter results showed the severe
effects on profitability resulting from the cutbacks in U.S.
production, and the next several quarters are expected to
show a similar pattern in Europe. Europe accounted for
approximately 48% of YTD revenues, but 68% of YTD operating
earnings. In addition, Tenneco has suffered from a roughly
45% peak-to-trough decline in U.S. pickup truck sales, with
U.S. pickup trucks representing approximately 20% of 2007
revenues.
Despite flexibility in its cost structure and intermediate-
term growth opportunities, the deep downturn in 2009 will
result in negative cash flows and a modestly deteriorating
balance sheet. Tenneco has requested a covenant waiver on
its bank agreement for the fourth quarter of 2008, and will
require further relief given the tightening covenants in
2009.
Fitch expects that Tenneco's adequate asset coverage,
diversified product and customer mix, and the company's
growth opportunities will allow the company to maintain the
size of its existing facility, and that adequate liquidity
will be retained through the trough of the cycle. Net debt
in 2009 is expected to rise modestly due to operating losses
and restructuring costs. Maturities in 2009 are
approximately $21 million. Recovery Ratings on Tenneco show
full recovery for the company's senior secured revolving
credit and term loan lenders, with minimal recoveries
remaining for unsecured and subordinated lenders.
Capital expenditures and a modest level of recent
acquisition activity are likely to be curtailed, but a
healthy level of new business will require continued
investment. Tenneco is relatively unique in the industry by
demonstrating continuous improvement in leverage statistics
into 2008, but the deep cyclical downturn in volumes will
outpace the company's ability to ratchet down its costs
structure. The company's position in emission technologies
and diversified customer base position it well for an
eventual turn in the cycle.
-- American Axle: American Axle's short-term results remain
dependent on the U.S. operations of GM (approximately 78% of
2008 YTD revenues) and Chrysler (12%). Although federal
assistance is expected to keep General Motors in operation
through 2009, the situation is much less certain for
Chrysler.
Federal assistance will, however, provide Chrysler with some
time to determine its future and those of its assets -- and
the Dodge Ram franchise and assets are among the most viable
of these assets.
American Axle recently renegotiated its bank agreement on a
secured basis, providing more room under its financial
covenants. Given the very steep cuts in GM and Chrysler's
first-quarter production, plus a tightening of American
Axle's senior secured leverage covenants in the second half
of 2009, it is uncertain whether American Axle will be able
to remain compliant. Fitch expects that pickup truck sales
are approaching replacement demand levels, indicating that
risks of a further step-down in volumes may be limited.
However, continued weakness in the U.S. housing market and
the impact of the credit crisis on the availability of
retail financing will continue to inhibit a rebound. The
impact of new infrastructure spending programs could also
accelerate a recovery in the latter part of 2009. American
Axle has a healthy book of global new business that will
become more material in the second half of 2009, but volume
expectations have been moderated.
The company has made dramatic improvements to its fixed cost
structure, which will also position the company well as
volumes recover from trough levels, but liquidity will be
very constrained and American Axle may require the
forbearance of the banks to realize these benefits.
Recovery Ratings are based on a potential covenant
violation, but assume continued operation by GM. In the
event of a GM bankruptcy, uncertainty over the continued
operation of GM would likely result in substantially reduced
recovery values.
Fitch has downgraded these ratings:
American Axle & Manufacturing Holdings, Inc
-- Long-term IDR to 'B-' from 'B'.
American Axle & Manufacturing, Inc.
-- Long-term IDR to 'B-' from 'B';
-- Senior Unsecured to 'CCC/RR6' from 'CCC+/RR6';
-- Senior Secured to 'B+/RR2' from 'BB-/RR2'.
ArvinMeritor
-- IDR to 'B-' from 'B';
-- Senior unsecured to 'B-/RR4' from 'B/RR4';
-- Bank credit facility to 'BB-/RR1' from 'BB/RR1'.
Tenneco, Inc.
-- IDR to 'B+' from 'BB-';
-- Senior unsecured notes to 'B-/RR6' from 'BB-';
-- Subordinated notes to 'CCC+/RR6' from 'B'.
In addition Fitch affirms the following:
Tenneco, Inc.
-- Senior secured bank credit facility affirmed at 'BB+',
assigned a recovery rating of 'RR1'
-- Senior secured notes affirmed at 'BB', assigned a recovery
rating of 'RR2'.
Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from
this site, at all times. Fitch's code of conduct,
confidentiality, conflicts of interest, affiliate firewall,
compliance and other relevant policies and procedures are also
available from the 'Code of Conduct' section of this site.
APEX SILVER MINES: Agrees to File for Chapter 11 & Sell Mine
------------------------------------------------------------
Bloomberg's Bill Rochelle notes that Apex Silver Mines Ltd. agreed
to file for Chapter 11 bankruptcy to carry out a letter of intent
where Sumitomo Corp. will pay $22.5 million for Apex's interest in
the San Cristobal mine in Bolivia.
Letter of Intent for Sale of San Cristobal to Sumitomo
Apex entered into a non-binding letter of intent with Sumitomo
related to the sale on November 14, 2008. Pursuant to the deal,
the $22.5 million cash purchase price is payable at the closing of
the sale. Apex would continue to manage the mine following the
sale. Apex and Sumitomo are continuing to negotiate definitive
documentation related to this transaction. Upon completion of the
sale, the holders of the Apex $290.0 million in convertible notes
would be entitled, under the existing terms of the notes, to
redeem the notes for cash. The non-binding letter of intent is
subject to significant conditions, including the restructuring of
the Apex convertible notes in a voluntary reorganization under
chapter 11 of the U.S. Bankruptcy Code.
Termination of Derivative Positions
Apex, Sumitomo and Minera San Cristobal, S.A. have entered into
agreements with BNP Paribas and Barlcays PLC for the termination
of the derivative positions established as a requirement of the
San Cristobal project financing arrangements. Apex paid
approximately $59.0 million, or 65% of the final net settlement
amounts with respect to the derivative positions, and repaid
Sumitomo $7.5 million in respect of 65% of funding previously
provided by Sumitomo to MSC to settle certain derivative
positions. Apex made these payments from the $91.0 million
previously deposited by Apex as cash collateral for the benefit of
the counterparties to the derivative positions. Apex received the
remaining cash collateral, totaling $24.5 million.
Project Finance Loans Acquired by Sumitomo
Sumitomo has acquired 90% of the San Cristobal project finance
loans from the lenders at par plus accrued interest, together with
the right to exercise remedies of the lenders against MSC, Apex
and other Apex subsidiaries. Apex anticipates that Sumitomo, as
the current holder of the San Cristobal project finance loans and
the rights to exercise remedies against MSC, will have the right
to accelerate the indebtedness outstanding upon a default by MSC
or Apex and its affiliates including the circumstances described
in Apex's quarterly report on Form 10-Q, for the quarter ending
September 30, 2008. As noted in that filing, Apex does not have,
and does not expect to have, sufficient cash to fully settle its
share of the obligations if they were to become immediately due
and payable and has reclassified such obligations as short-term in
its consolidated balance sheets.
Amendment to Sumitomo Loan Agreement
Under the terms of the Amendment to the Loan Agreement dated
August 11, 2008, with SC Minerals Aktiebolag, a subsidiary of
Sumitomo, SC Minerals has agreed to increase by $25.0 million the
amount available for borrowing by MSC. SC Minerals is the 35%
shareholder of MSC. The additional $25 million is to be used
solely to fund MSC's operating expenses. The $25.0 million is in
addition to the $125.0 previously borrowed pursuant to the
original Loan Agreement and subsequent Amendments to the Loan
Agreement. The additional loan amount may be borrowed by MSC at
any time on or before December 31, 2008. Apex expects that MSC
will borrow the full Additional Loan Amount on December 22, 2008.
If the full amount available under the amended Loan Agreement is
fully drawn (including the Additional Loan Amount), no payments
are made by MSC prior to maturity, and SC Minerals were to convert
all amounts payable into MSC shares as of the maturity date,
Apex's indirect ownership interest in MSC would be reduced to
approximately 40.5% (approximately 48.2% on conversion of
principal only).
About Apex Silver Mine
Apex Silver Mines Ltd. explores and develops silver and other
mineral properties in Central and South America. The Company is
based in George Town, Cayman Islands.
ARLINGTON RIDGE: Files Joint Plan and Disclosure Statement
----------------------------------------------------------
Arlington Ridge LLC and its debtor-affiliates filed with the U.S.
Bankruptcy Court for the Middle District of Florida on Dec. 12,
2008, a Joint Chapter 11 Plan of Reorganization and Disclosure
Statement.
The Court has conditionally approved the Disclosure Statement.
Objections to the Disclosure Statement are due no later than
Jan. 26, 2009. The Court has set a Plan Confirmation Hearing for
Feb. 2, 2009.
The Plan contemplates the continued development and operation of
Arlington Ridge project and the payment of all non-insider
creditors in full either in cash or over time. Pursuant to the
Plan, on the Effective Date, the Reorganized Debtors will be
revested with all of their assets free and clear of any and all
Liens, Debts, obligations, Claims, Cure Claims, Liabilities,
Interests, and all other interests of every kind and nature.
The Plan will be funded by a combination of: (a) sales of existing
model Units and "white-box" inventory Units, (b) completion of
Units currently under construction and the sale of these Units
(generally pursuant to existing contracts), (c) sales of lots and
new Units to be constructed by the Debtors pursuant to contracts
secured since the eve of the Chapter 11 filings, (d) exit
financing in the form of new working capital and construction
loans, (e) revolver of a portion of the Builder's Line of Credit
(BLOC) for a period not to exceed five years, and (f) if
available, any positive operating funds from the operation of the
Amenities other than those amenities owned by the Arlington Ridge
Community Development District (CDD).
Exit Financing Facility
The Debtors are engaged in preliminary discussions with M. Steven
Sembler and Robert B. Young, who have expressed tentative interest
in providing a $2.3 million exit financing facility that would be
comprised of two components:
1. a working capital loan that would (a) fund the distributions
to CDD, as well as any shortfall from the CDD's operations
for the year following the Effective Date, (b) fund
distributions to Holders of Class 7 Unsecured Claims, and
(c) fund operating expenses for the first year following the
Effective Date; and
2. a construction loan that would provide funds to construct
new Units.
Treatment of Claims and Interests
A) Unclassified Claims
All Allowed Administrative Expense Claim and U.S. Trustee Fees
will be paid in full. Each Holder of an Allowed Priority Tax
Claim will receive on account of such Allowed Priority Tax Claim
regular installment payments in cash in accordance with Section
1129(a)(9)(C) of the Bankruptcy Code.
B) Classified Claims
The Plan divides the Claims and Interests into 10 Classes.
Class 1 comprises all Allowed Priority Claims. Each Holder of an
Allowed Priority Claim shall be paid 100%, in Cash. Class 1 is
Unimpaired.
Class 2 comprises all Secured Claims of the Arlington Ridge
Community Development District, a public entity created pursuant
to the Florida Statutes. The Debtors shall pay the Allowed Amount
of the CDD's Secured Claims including operating and maintenance
assessments pursuant to the CDD Bonds. Class 2 is Unimpaired.
Class 3 comprises all Secured Claims of the Lake County Tax
Collector in connection with 2008 ad valorem real property taxes
on the portion of the Development owned by Arlington Ridge. The
Debtors shall pay the Allowed Amount of the Lake County Tax
Collector's Secured Claims together with interest as agreed by
the Debtors and the Lake County Tax Collector or as determined by
the Court at the Confirmation Hearing in five equal annual
installments commencing 12 months after the Effective Date.
Class 3 is Impaired.
Class 4A comprises the Wachovia DIP Loan Claims pursuant to the
Wachovia DIP Loan Order. The Wachovia DIP Loan Claims will be
paid in full pursuant to the terms of the Wachovia DIP Loan Order.
Class 4A is Unimpaired.
Class 4B comprises all Secured Claims of Wachovia in connection
with the Acsuisition and Development Loan. Wachovia's A&D Loan
will be paid in full within five years of the Effective Date.
Wachovia will receive quarterly interest-only payments on the A&D
Loan as well as a Release Price upon the sale of a Unit and will
receive a minimum of $800,000 on the A&D Loan in 2009 and a
minimum of $1 million on the A&D Loan in each of 2010, 2011, 2012,
and 2013. Class 4B is Impaired.
Class 4C comprises all Secured Claims of Wachovia in connection
with the Builder's Line of Credit. Wachovia's BLOC will be paid
in full within five years of the Effective Date and Wachovia will
receive quarterly interest-only payments on the BLOC as well as
all remaining proceeds from the sale of a Unit in accordance with
the Wachovia DIP Loan Order. Class 4C is Impaired.
Class 5 comprises the Insider DIP Loan Claims of M. Steven Sembler
and Robert B. Young pursuant to the Insider DIP Financing Order.
Commencing on the Effective Date, the Insider DIP Financing shall
be converted to a ten (10) year note and shall be amortized over
fifteen (15) years with interest at the rate established for 5
year Treasury Bills as of the Effective Date plus 265 basis
points. The Insider DIP Loan Claims shall be subordinated to the
Exit Financing Facility and the Class 4 Claims of Wachovia. Class
5 is Impaired.
Class 6 comprises all other Secured Claims not otherwise
classified under the Plan. Each Holder of an Allowed Secured
Claim in Class 6 shall receive either the collateral securing such
Allowed Claim or the value of such collateral within sixty (60)
days following the later of the Effective Date or the date that
such collateral is valued pursuant to a Final Order. Class 6 is
Unimpaired.
Class 7 comprises all Unsecured Claims. Within thirty (30) days
of the Effective Date, each Holder of Allowed Class 7 Unsecured
Claim shall be paid the principal amount of such claim in full
from the Exit Financing Facility. Class 7 is Unimpaired.
Class 8 comprises all Intercompany Claims. On the Effective Date,
all Intercompany Claims shall be deemed cancelled, annulled, and
extinguished without any further action by any party and shall be
of no further force and effect. The Holders of Class 8
Intercompany Claims shall not receive any distribution or receive
or retain any Property or Interest under the Plan on account of
such Class 8 Intercompany Claims. Class 8 is Impaired.
Class 9 comprises all Equity Interests in YS Holdings and Blair
Communities. All Class 9 Equity Interests shall remain in effect;
however, each Holder of an Allowed Equity Interest shall receive
no distribution on account of its Allowed Equity Interest until
all other Allowed Claims have been paid in full. Class 9 is
Unimpaired.
Class 10 comprises all Membership Interests in Arlington Ridge and
Blair Homecrafters. All Class 10 Membership interests shall
remain in effect; however, each Holder of an Allowed Membership
Interest shall receive no distribution on account of its
Allowed Membership Interest until all other Allowed Claims have
been paid in full. Class 10 is Unimpaired.
Who May Vote to Accept or Reject Plan
Class 3, Class 4B, Class 4C, Class 5, and Class 8 are Impaired
under the Plan. Thus, They may vote to accept or reject the Plan.
If one or more of the Impaired Classes of Claims or Interests does
not accept the Plan, the Plan may nevertheless be confirmed and be
binding upon the non-accepting Impaired Class under the "cram-
down" provisions of the Bankruptcy Code, if the Plan does not
"discriminate unfairly" and is "fair and equitable" to the non-
accepting Impaired Classes under the Plan.
A full-text copy of the Debtors' Chapter 11 Plan of Reorganization
is available for free at:
http://bankrupt.com/misc/ArlingtonRidge_DS.pdf
About Arlington Ridge
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.
ARVINMERITOR: Fitch Downgrades Issuer Default Rating to 'B-'
------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Ratings of
Tenneco, ArvinMeritor and American Axle:
-- American Axle to 'B-' from 'B';
-- ArvinMeritor to 'B-' from 'B';
-- Tenneco to 'B+' from 'BB-'.
All three companies are expected to remain on Rating Watch
Negative until the availability of longer-term federal assistance
for General Motors is clarified. In the event of a bankruptcy of
General Motors, further rating actions are likely as detailed in
Fitch's press release dated Dec. 11, 2008. The rating actions
incorporate a rapidly deteriorating production forecast for key
European markets, as well as further global production cutbacks.
The federal assistance plan for General Motors and Chrysler is a
positive for the entire supply chain, solidifying production and
the continued extension of trade credit into the first quarter of
2009. Although the plan forestalls the threat of immediate
bankruptcy, Fitch views it as a temporary measure that does not
materially improve the companies' potential for long-term
viability. Fitch expects that last week's agreement will be
significantly restructured and clarified in 2009 under a new
administration and a new Congress. The short timeframe of the
current agreement, the complexity of several components and the
non-binding nature of the agreement provide significant room for
definition or alteration.
Fitch's current ratings assume that any modifications to the
current agreement will, at a minimum, ensure General Motors'
continued operation through 2009. Although auto suppliers were
included in the agreement as a stakeholder targeted for further
concessions, Fitch does not believe that suppliers will be singled
out for concessions beyond the loss of production volumes.
Under any scenario, suppliers will suffer from very deep North
American production cuts to be taken by all U.S. manufacturers in
the first half of 2009, a severe downturn expected in European
passenger car and commercial truck production in the fourth
quarter of 2008 and full-year 2009, the impact of the credit
crisis on the availability of customer financing, and the
deterioration in global economic conditions.
Fitch expects that U.S. industry sales will fall 11% in 2009, from
weak 2008 levels. Reported revenues for Tenneco and ArvinMeritor
will also be affected by the strengthening of the dollar, in a
reversal of year-to-date trends. Potential positives include
commodity price deflation which should provide some margin
benefit, and the effect of lower gas prices and potentially higher
infrastructure spending on the critical pickup truck segment.
Federal programs to boost the availability of retail financing
will be a key in moderating volume declines in 2009.
-- ArvinMeritor: The downgrade of ArvinMeritor is based on the
severe weakening of commercial truck demand in Europe that is
expected to occur in 2009, expectations of continued weakness
in already-weak commercial vehicle U.S. demand from depressed
2008 levels, and financial stress among ArvinMeritor's
customers in this segment. ArvinMeritor receives approximately
2/3 of its revenue from its commercial vehicle systems group.
In addition, ArvinMeritor's light vehicle systems segment is
expected to experience operating losses in 2009 due to severe
production cutbacks in the U.S. and a steep decline in global
production. ArvinMeritor has been unable to divest its light-
vehicle systems operations, which are expected to produce
operating losses and a deteriorating competitive position
through 2009 given the low margins in the business and the
sharp drop in near-term global production. Fitch does not
believe that current industry prospects will allow a sale of
these operations to be completed without material costs to the
company, indicating that with or without the sale, the light-
vehicle systems group will exacerbate balance sheet and
liquidity deterioration in 2009.
ArvinMeritor has shown progress in its restructuring efforts,
but the decline in global demand and revenues will outstrip
restructuring benefits in 2009. Capital expenditures remain
at low levels versus the industry, providing little room for
further reductions.
Fitch expects that operating losses and restructuring costs
will produce negative cash flows in 2009. ArvinMeritor
recently renegotiated its bank agreement, transitioning to a
senior secured leverage test, which provides some room to
absorb expected deterioration in its 2009 operating
performance. However, this covenant tightens from a current
level of 2.5 times (x) to 2.0x at the end of June 30, 2009,
and could be at some risk given the steep decline expected in
European commercial truck volumes in 2009 and the continued
deterioration in the company's light vehicle segment.
ArvinMeritor currently has substantial availability under its
revolving credit facility, and Fitch forecasts that additional
drawings will be required in 2009, as other access to capital
is limited. ArvinMeritor is also reliant on short-term
receivables securitization facilities, the majority of which
have recently been extended into late 2009, but the
deteriorating quality of receivables or the unwillingness of
banks to offer these facilities could cause the company to
migrate borrowings to its revolving credit facilities, thereby
utilizing a substantial portion of available liquidity.
At Sept. 30, 2008, ArvinMeritor had $521 million outstanding
under receivable securitization facilities. Maturities in the
company's fiscal 2009 (ending Sept. 30) total $254 million.
Long-term debt maturities in 2009 and 2010 are minimal.
-- Tenneco: Revenues and operating cash flows are expected to
decline steeply in the fourth quarter of 2008 and into 2009
due to continuing production cuts on Tenneco's key U.S.
platforms and a material decline in European production
through 2009. Third-quarter results showed the severe effects
on profitability resulting from the cutbacks in U.S.
production, and the next several quarters are expected to show
a similar pattern in Europe. Europe accounted for
approximately 48% of YTD revenues, but 68% of YTD operating
earnings. In addition, Tenneco has suffered from a roughly
45% peak-to-trough decline in U.S. pickup truck sales, with
U.S. pickup trucks representing approximately 20% of 2007
revenues.
Despite flexibility in its cost structure and intermediate-
term growth opportunities, the deep downturn in 2009 will
result in negative cash flows and a modestly deteriorating
balance sheet. Tenneco has requested a covenant waiver on its
bank agreement for the fourth quarter of 2008, and will
require further relief given the tightening covenants in 2009.
Fitch expects that Tenneco's adequate asset coverage,
diversified product and customer mix, and the company's growth
opportunities will allow the company to maintain the size of
its existing facility, and that adequate liquidity will be
retained through the trough of the cycle. Net debt in 2009 is
expected to rise modestly due to operating losses and
restructuring costs. Maturities in 2009 are approximately $21
million. Recovery Ratings on Tenneco show full recovery for
the company's senior secured revolving credit and term loan
lenders, with minimal recoveries remaining for unsecured and
subordinated lenders.
Capital expenditures and a modest level of recent acquisition
activity are likely to be curtailed, but a healthy level of
new business will require continued investment. Tenneco is
relatively unique in the industry by demonstrating continuous
improvement in leverage statistics into 2008, but the deep
cyclical downturn in volumes will outpace the company's
ability to ratchet down its costs structure. The company's
position in emission technologies and diversified customer
base position it well for an eventual turn in the cycle.
-- American Axle: American Axle's short-term results remain
dependent on the U.S. operations of GM (approximately 78% of
2008 YTD revenues) and Chrysler (12%). Although federal
assistance is expected to keep General Motors in operation
through 2009, the situation is much less certain for Chrysler.
Federal assistance will, however, provide Chrysler with some
time to determine its future and those of its assets -- and
the Dodge Ram franchise and assets are among the most viable
of these assets.
American Axle recently renegotiated its bank agreement on a
secured basis, providing more room under its financial
covenants. Given the very steep cuts in GM and Chrysler's
first-quarter production, plus a tightening of American Axle's
senior secured leverage covenants in the second half of 2009,
it is uncertain whether American Axle will be able to remain
compliant. Fitch expects that pickup truck sales are
approaching replacement demand levels, indicating that risks
of a further step-down in volumes may be limited. However,
continued weakness in the U.S. housing market and the impact
of the credit crisis on the availability of retail financing
will continue to inhibit a rebound. The impact of new
infrastructure spending programs could also accelerate a
recovery in the latter part of 2009. American Axle has a
healthy book of global new business that will become more
material in the second half of 2009, but volume expectations
have been moderated.
The company has made dramatic improvements to its fixed cost
structure, which will also position the company well as
volumes recover from trough levels, but liquidity will be very
constrained and American Axle may require the forbearance of
the banks to realize these benefits. Recovery Ratings are
based on a potential covenant violation, but assume continued
operation by GM. In the event of a GM bankruptcy, uncertainty
over the continued operation of GM would likely result in
substantially reduced recovery values.
Fitch has downgraded the following ratings:
American Axle & Manufacturing Holdings, Inc
-- Long-term IDR to 'B-' from 'B'.
American Axle & Manufacturing, Inc.
-- Long-term IDR to 'B-' from 'B';
-- Senior Unsecured to 'CCC/RR6' from 'CCC+/RR6';
-- Senior Secured to 'B+/RR2' from 'BB-/RR2'.
ArvinMeritor
-- IDR to 'B-' from 'B';
-- Senior unsecured to 'B-/RR4' from 'B/RR4';
-- Bank credit facility to 'BB-/RR1' from 'BB/RR1'.
Tenneco, Inc.
-- IDR to 'B+' from 'BB-';
-- Senior unsecured notes to 'B-/RR6' from 'BB-';
-- Subordinated notes to 'CCC+/RR6' from 'B'.
In addition Fitch affirms the following:
Tenneco, Inc.
-- Senior secured bank credit facility affirmed at 'BB+',
assigned a recovery rating of 'RR1'
-- Senior secured notes affirmed at 'BB', assigned a recovery
rating of 'RR2'.
Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from
this site, at all times. Fitch's code of conduct,
confidentiality, conflicts of interest, affiliate firewall,
compliance and other relevant policies and procedures are also
available from the 'Code of Conduct' section of this site.
ASBURY AUTOMOTIVE: Moody's Reviews 'B1' CFR for Possible Downgrade
------------------------------------------------------------------
Moody's Investors Service placed the B1 corporate family and
probability of default ratings of Asbury Automotive, Inc. on
review for possible downgrade.
Ratings placed on review for possible downgrade include:
-- Corporate family rating at B1;
-- Probability of default rating at B1, and
-- Senior subordinated notes at B3.
The review for possible downgrade results from continuing
deterioration in Asbury's operating performance during the third
quarter of 2008, and soft prospects for at least the next twelve
months. "If Asbury continues to follow its 2008 operating
performance trend, the company's credit profile and credit metrics
will weaken below levels appropriate for its current ratings"
stated Moody's Senior Analyst Charlie O'Shea. "Coupling this
with a very uncertain operating environment for 2009, magnified
by potential for disruption due to the present state of the
Detroit-3, has increased Asbury's risk profile."
The most recent rating action for Asbury was the September 15,
2008 affirmation of the B1 corporate family rating and change in
outlook to stable from positive.
Asbury Automotive, Inc., based in Atlanta, Georgia, is a leading
retailer of new and used automobiles with LTM ended September 30,
2008 revenues of $5.4 billion.
ATLANTIS PLASTICS: Court Converts Cases to Chapter 7 Liquidation
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
converted the chapter 11 cases of Atlantis Plastics, Inc., and its
debtor-affiliates to cases under Chapter 7 of the Bankruptcy Code
effective as of Dec. 15, 2008.
All Chapter 11 professionals, other than Trustee's counsel, were
ordered by the Court to file a final application for approval of
Chapter 11 fees within 60 days of the date of the order.
As reported in the Troubled Company Reporter on Nov. 10, 2008, at
the Oct. 3, 2008 hearing on the Debtors' motion for the
approval of the sale of its Plastic Films and Molded Products
business, the Court indicated that it would conduct a hearing on
its own motion to consider the appointment of a Chapter 11 trustee
or conversion of the Debtors' cases to cases under Chapter 7 of
the Bankruptcy Code. At the hearing, the Court set Nov. 20, 2008
as the hearing date.
On Nov. 24, 2008, the Court authorized the appoinment of a
Chapter 11 trustee and continued the sua sponte motion to convert
the Chapter 11 cases to cases under Chapter 7 until Dec. 15, 2008.
On Dec. 3, 2008, the Court approved the appointment of Marcus A.
Watson as Chapter 11 Trustee.
About Atlantis Plastics
Atlanta, Georgia-based Atlantis Plastics, Inc. (OTC:ATPL.PK)
manufactures specialty polyethylene films and molded and extruded
plastic components used in a variety of industrial and consumer
applications.
The company and nine of its debtor-affiliates filed separate
petitions for Chapter 11 relief on Aug. 10, 2008 (Bankr.
N.D. Ga. Lead Case Nos. 08-75473). David B. Kurzweil, Esq., at
Greenberg Traurig, LLP, represents the Debtors as counsel. When
the Debtors filed their schedules with the Court, they listed
total assets of $143,427,638 and total debts of $258,455,803.
AVIS BUDGET: S&P Junks Corporate Credit Rating From 'B+'
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Avis
Budget Group Inc., including lowering the corporate credit rating
to 'CCC+' from 'B+'. All ratings remain on CreditWatch, but the
implications have been revised to developing from negative.
Ratings were initially placed on CreditWatch with negative
implications on Jan. 25, 2008, and subsequently lowered on July 2,
2008, and Oct. 24, 2008, and maintained on CreditWatch negative.
"The downgrade is based on the company's exposure to the
distressed U.S. auto manufacturers; refinancing risk due to the
company's $2.45 billion of asset-backed conduit facilities that
mature through February 2009; and an expected need for covenant
relief on its $2.375 billion corporate credit facility; a
continuing weak earnings outlook for the U.S. car rental industry,
due to pressure on pricing and demand, which began earlier in
2008; and to deteriorating automobile residual values," said
Standard & Poor's credit analyst Betsy Snyder. "If the company is
successful in refinancing of its ABS facilities and obtaining
covenant relief, ratings could be raised modestly; if the company
is unsuccessful, ratings would likely be lowered," the analyst
continued.
On Oct. 27, 2008, the company extended the maturity date of its
principal ABS facility for 60 days to Dec. 26, with a decline in
the amount available to $1.45 billion from $1.5 billion and an
approximate 300-basis-point increase in pricing compared with the
existing facility. In addition, the amount available under its
seasonal ABS conduit facility, which matures in February 2009, was
reduced to $1 billion from $1.1 billion and the pricing increased
to the same level as on the $1.45 billion facility. The company
has also indicated it intends to seek waivers or covenant
amendments to its corporate credit facility: at Sept. 30, 2008,
the required consolidated leverage ratio was 5.25 to 1 and
declines to 4.75 to 1 and the consolidated interest coverage ratio
was 2.25 to 1 and increases to 2.5 to 1, both at Dec. 31, 2008.
While the company was in compliance with both covenants at
Sept. 30, 2008, S&P expects the decline in demand and higher fleet
financing costs may cause it to violate existing covenants.
Parsippany, New Jersey-based Avis Budget, the parent of the Avis
and Budget car rental brands, is one of three large participants
(along with Hertz Corp., and Enterprise Rent-A-Car Co., parent of
the Enterprise, Alamo, and National brands) in the U.S. on-airport
car rental segment.
S&P will assess the success of the company's refinancings, its
expected financial performance in the face of reduced travel in a
weaker economy and higher depreciation and interest expense, and
the effect from the distressed auto manufacturers to resolve the
CreditWatch.
AZTEC OIL: Aug. 31 Balance Sheet Upside Down by $1.5 Million
------------------------------------------------------------
Aztec Oil & Gas, Inc., incurred a net loss of $1,109,298 for the
year ended August 31, 2008, has an accumulated deficit of
$6,076,707 and a working capital deficit of $1,228,197 as of
August 31, 2008. "These conditions raise substantial doubt as to
Aztec?s ability to continue as a going concern," Franklin C.
Fisher, Jr., chief executive officer, and Larry A. Hornbrook,
chief financial officer, disclosed in a regulatory filing with the
Securities and Exchange Commission.
As of August 31, 2008, the company's balance sheet showed total
assets of $2,602,847, total liabilities of $1,733,488, minority
interest of $2,375,973, and total stockholders' deficit of
$1,506,614.
"CSI Energy, LP, a company controlled by our Chief Executive
Officer, has committed to funding any operating deficits for the
current year," Mr. Fisher and Mr. Hornbrook related.
According to Mr. Fisher and Mr. Hornbrook, the company is in the
process of establishing a sufficient ongoing source of revenues to
cover its operating costs. "The ability of the company to
continue as a going concern is dependent on the company ability to
fulfill its business plan. Aztec is currently in phase three of
its business plan, which calls for originating, developing and
managing balanced, low risk, highly focused developmental drilling
projects with investors in areas with low drilling costs and high
success rates where the process can be repeated in a relatively
consistent manner. This stage further balances Aztec?s approach
to profitable energy asset development through low-risk, highly
focused, predominantly 'development' drilling projects in which
Aztec seeks participation from multiple individual and entity
investors. Aztec focuses on drilling in basins, such as in North
Central Texas and the Appalachian region of the United States.
The latter is near the high energy usage 'northeastern corridor'
of the United States. We participate in such regions with our
teaming agreement operators and a select number of local, highly
experienced operators who have access to leases located in
geological trends that have demonstrated substantial historical
production, plus potential remaining reserves which have the
potential to be explored in a low-risk, systematic fashion. Such
local operators have been, and will in the future be selected by
Aztec on the basis of their demonstrated track records."
"In order to execute our business plan, we have entered into
consulting agreements with several of our officers and directors
to provide services to the company. The company plans to retain
consultants with respect to current and proposed properties and
operations. The company, from time to time, may retain
independent engineering and geological consultants and the
services of lease brokers and geophysicists in connection with its
operations," they added.
A full-text copy of the company's annual report is available for
free at http://researcharchives.com/t/s?36a3
About Aztec Oil
Houston, Texas-based Aztec Oil & Gas, Inc., initially known as
Aztec Communications Group, Inc., was organized in Utah on
Jan. 24, 1986, and did not have any activity from 1990 until 2004.
In mid-2003, there was a change in control and new management
elected to pursue oil and gas exploration and development. In
November 2003, Aztec Communications Group, Inc., reincorporated in
Nevada. On Aug. 13, 2004 the company changed its name to Aztec
Oil & Gas, Inc. and affected a 3-for-1 forward stock split.
Aztec exited the development stage at the beginning of the year
ended August 31, 2008, as a result of significant production of
oil and gas from its properties.
BAKER STREET: S&P Downgrades Ratings on Class D and E to Low-B
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class D and E notes issued by Baker Street CLO II Ltd., a
collateralized loan obligation transaction backed by corporate
loans managed by Seix Advisors, and removed them from CreditWatch,
where they were placed with negative implications on Dec. 5, 2008.
S&P lowered the ratings on the notes primarily because of negative
migration in the credit quality of the underlying collateral since
the ratings were issued in September 2006.
Based on the Nov. 3, 2008, monthly trustee report, 9.07%
($35.48 million) of the total securities in the underlying
collateral pool have ratings of 'CCC+' and below, up from 2.79%
($10.80 million) as of September 2006. Furthermore, based on the
most recent trustee report, the ratings on 8.00% of the collateral
are currently on CreditWatch with negative implications.
Ratings Lowered and Removed from Creditwatch Negative
Baker Street CLO II Ltd.
Rating
------
Class To From
----- -- ----
D BB+ BBB/Watch Neg
E B+ BB/Watch Neg
Transaction Information
-----------------------
Issuer: Baker Street CLO II Ltd.
Co-issuer: Baker Street CLO II Corp.
Collateral manager: Seix Advisors
Underwriter: SunTrust Capital Markets Inc.
Trustee: JPMorgan Chase Bank N.A.
Transaction type: Cash flow CLO
BEARD COMPANY: Retains RJ Falkner to Develop Investor Relations
--------------------------------------------------------------
The Beard Company retained RJ Falkner & Company to develop and
implement a comprehensive investor relations program for the
company.
"We selected RJ Falkner & Company as our investor relations firm
because of its expertise in shareholder communications and the
relationships that its research analysts have developed within the
investment community during the past 39 years," stated Herb Mee,
Jr., president of Beard.
"We are excited to be selected to provide a full range of investor
relations services to The Beard Company," commented R. Jerry
Falkner, CFA, president of Falkner. "Beard is pursuing a unique
strategy to enhance shareholder value through the development of a
variety of businesses involving the production and management of
natural resources, including magnetite, ilmenite, carbon dioxide,
coal, and oil and gas. We are particularly intrigued with the
company's 23.2% investment in Geohedral LLC, which has staked
claims covering 49,000 acres in southern Alaska that Geohedral
estimates contain probable above-ground reserves of 891 million
metric tons of magnetite (iron ore) and 696 million metric tons of
ilmenite (iron titanium oxide ore), along with meaningful
quantities of precious metals. If Geohedral's minerals
exploration and development program proves successful, the
positive impact upon Beard shareholders should be highly
significant."
The agreement between Beard and Falkner covers one year and
provides for assistance in investor relations, press release
development, the preparation of independent analyses and research
reports, and other related services of benefit to The Beard
Company. Any forecasts, projections and conclusions contained in
research reports published by RJ Falkner & Company will be
independently prepared by Falkner, unless otherwise stated, and
will not be endorsed by the management of Beard.
RJ Falkner & Company, Inc. -- http://www.rjfalkner.com/-- is an
investment research and financial communications firm that seeks
out undervalued small-cap companies with the potential to
outperform the overall stock market on an intermediate- and long-
term basis. Its research analysts work with the managements of
the companies to broaden their exposure within the investment
community and expand the level of interest among investment
professionals and high-net-worth individual investors.
About The Beard Company
Based in Oklahoma City, The Beard Company (OTC BB: BRCO)
http://www.beardco.com/-- through its subsidiaries, is
principally engaged in coal reclamation in the United States.
It operates in four segments: Coal Reclamation, Carbon Dioxide,
e-Commerce, and Oil and Gas.
The Beard Company reported net earnings of $1,642,000 for the nine
months ended Sept. 30, 2008, compared with a net loss of
$1,630,000 in the comparable 2007 period. Revenues increased 6%
to $1,127,000 in the first nine months of 2008, versus $1,063,000
in the year-earlier period.
For the quarter ended Sept. 30, 2008, the company reported a net
loss of $610,000 versus a net loss of $446,000 in the third
quarter of 2007. Revenues decreased 10% to $376,000 in the recent
quarter, versus $415,000 in the prior-year period.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $1,950,000 and total liabilities of $6,534,000, resulting in a
stockholders' deficit of $4,584,000.
Going Concern Doubt
Cole & Reed, P.C., in Oklahoma City, expressed substantial doubt
about The Beard Company's ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006. Cole & Reed pointed to
the company's recurring losses and negative cash flows from
operations.
BERNARD L. MADOFF: Authorities Probe Frank DiPascali on Fraud
-------------------------------------------------------------
Amir Efrati, Aaron Lucchetti, and Tom Lauricella at The Wall
Street Journal report that authorities trying to determine who
helped Bernard Madoff carry out an alleged Ponzi scheme have
started a probe on Frank DiPascali.
Citing a person familiar with the matter, WSJ relates that Mr.
DiPascali dealt with client accounts and worked at Bernard L.
Madoff Investment Securities LLC's firm for more than 30 years.
Investigators are examining the role of Mr. DiPascali, says the
report.
WSJ quoted a Bernard L. Madoff Investment investor as saying, "If
you wanted anything, a new account, money in, money out, you
called Frank. Nothing moved in that office without him,
operationally."
WSJ relates that after Mr. Madoff was arrested, the Securities and
Exchange Commission investigators went to Bernard L. Madoff
Investment's headquarters in Manhattan to question Mr. DiPascali,
who denied any knowledge on who was responsible for clearing and
settling trades in the investment-advisory side of the company.
The report says that Mr. DiPascali hasn't been charged with any
wrongdoing.
According to WSJ, a person familiar with the situation said that
investigators issued a subpoena to David Friehling, the accountant
who audited the Bernard L. Madoff Investment's financial
statements, and are seeking documents related to the company going
back to Jan. 1, 2000. WSJ relates that Mr. Friehling was given
until Dec. 29, 2008, to fulfill the request. Mr. Friehling, says
the report, took over the accounting firm from Jerry Horowitz, who
did work for Mr. Madoff for decades.
Fairfield Greenwich Involved in Ponzi Scheme
Jenny Strasburg, Peter Lattman, Cassell Bryan-Low, and Thomas
Catan at WSJ relate that investment fund Fairfield Greenwich
Group, which has ties to Bernard L. Madoff Investment, is emerging
as a central player in helping Mr. Madoff raise billions of
dollars worldwide and extend the reach of the alleged Ponzi
scheme.
The SEC reported that it determined in 2006 that Fairfield
Greenwich hadn't properly disclosed that Mr. Madoff supervised
its investment decisions, but the agency found no evidence of
fraud. Fairfield Greenwich has in marketing documents talked of
its close relationship with Mr. Madoff and in the process raised
$1.7 billion from investors in the U.S. and Europe, broadening the
scope of Mr. Madoff's alleged fraud, WSJ states.
According to WSJ, a Fairfield Greenwich spokesperson said that the
fund trusted Mr. Madoff after a 19-year relationship and conducted
due diligence of his activities.
Tremont Group Clients Lose $3.3 Billion
WSJ relates that Tremont Group said that its clients lost about
$3.3 billion, more than half of the assets overseen by the
company, due to Mr. Madoff's alleged $50 billion fraud.
As reported by the Troubled Company Reporter on Dec. 18, 2008,
Tremont Group had US$3.3 billion, or more than half its total
assets, invested with Bernard L. Madoff Investment. Tremont's Rye
Investment Management unit had US$3.1 billion, virtually all the
money the group managed, allocated to Bernard L. Madoff
Investment. Tremont also had another US$200 million, or about 7%
of its total assets, invested through its fund of funds group,
Tremont Capital Management.
Citing Herrick Feinstein LLP's hedge-fund practice chief Irwin
Latner, WSJ states that if investors would raise allegations
concerning due diligence, Tremont's structure as a corporation
managed independently from MassMutual's other businesses could
help protect the parent entities from legal liabilities, said
Irwin Latner, head of the hedge-fund practice at Herrick,
Feinstein LLP. MassMutual said that its exposure to Madoff-
related losses is "very limited," WSJ reports.
Investigators to Send Claim Forms to Fraud Victims
According to The Associated Press, investigators will send a
claims form to the thousands of victims of the Mr. Madoff's
alleged fraud, to allow the victims to list how much they lost and
give help officials figure out how much money was stolen.
The AP states that the claims form will be sent out after a U.S.
Bankruptcy Court judge approves it.
Forensic investigators have come up a preliminary list of the
victims that will receive the forms, The AP says, citing
Securities Investor Protection Corp. President Steve Harbeck.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC is a leading
international market maker. The firm has been providing quality
executions for broker-dealers, banks, and financial institutions
since its inception in 1960. During this time, Madoff has
compiled an uninterrupted record of growth, which has enabled us
to continually build our financial resources. With more than $700
million in firm capital, Madoff currently ranks among the top 1%
of US Securities firms.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission has charged Bernard L.
Madoff and his investment firm, Bernard L. Madoff Investment
Securities LLC, with securities fraud for a multi-billion dollar
Ponzi scheme that he perpetrated on advisory clients of his firm.
The estimated the losses from Madoff's fraud were at least
$50 billion.
As reported by the TCR on Dec. 16, 2008, the Securities Investor
Protection Corporation, which maintains a special reserve fund
authorized by Congress to help investors at failed brokerage
firms, announced on Mon., Dec. 15, that it is liquidating Bernard
L. Madoff Investment Securities LLC of New York, N.Y., under the
Securities Investor Protection Act.
BERNARD L. MADOFF: Victims May Have to Return Withdrawn Investment
------------------------------------------------------------------
Bernard L. Madoff Investment customers who withdrew funds as long
as six years ago may be sued on behalf of other victims to return
profits and even principal, Carlyn Kolker, Tiffany Kary, and
Saijel Kishan at Bloomberg report, citing securities and
bankruptcy lawyers.
According to Bloomberg, clients of Bernard L. Madoff Investment
had about $36 billion. Citing an FBI complaint, the report says
that before Mr. Madoff was arrested, he told employees that his
"Ponzi scheme" may have cost as much as $50 billion. People
familiar with the government's inquiry of Mr. Madoff said that the
fraud may have stretched back to at least the 1970s, Bloomberg
states.
Court documents say that Irving Picard, the trustee appointed to
liquidate Bernard L. Madoff Investment, said that "there has not
been any showing or determination that there are sufficient funds"
to satisfy victim claims.
Bankruptcy Law360 reported on December 16, 2008, that several
legal experts said daunting challenges are sure to lie ahead for
the court-appointed liquidation trustee charged with untangling
Mr. Madoff's books and the attorneys who will represent the slew
of irate investors.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC is a leading
international market maker. The firm has been providing quality
executions for broker-dealers, banks, and financial institutions
since its inception in 1960. During this time, Madoff has
compiled an uninterrupted record of growth, which has enabled us
to continually build our financial resources. With more than $700
million in firm capital, Madoff currently ranks among the top 1%
of US Securities firms.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission has charged Bernard L.
Madoff and his investment firm, Bernard L. Madoff Investment
Securities LLC, with securities fraud for a multi-billion dollar
Ponzi scheme that he perpetrated on advisory clients of his firm.
The estimated the losses from Madoff's fraud were at least
$50 billion.
As reported by the TCR on Dec. 16, 2008, the Securities Investor
Protection Corporation, which maintains a special reserve fund
authorized by Congress to help investors at failed brokerage
firms, announced on Mon., Dec. 15, that it is liquidating Bernard
L. Madoff Investment Securities LLC of New York, N.Y., under the
Securities Investor Protection Act.
BIG WEST: Chapter 11 Filing Prompts Moody's 'D' Rating
------------------------------------------------------
Moody's Investors Service downgraded Big West Oil, LLC's Corporate
Family Rating to Caa3 from B1, its Probability of Default Rating
to D from B1, and the rating on its delayed draw $400 million 7
year senior first secured Term Loan B to Caa3 from B1. Moody's
does not rate BWO's $200 million first secured borrowing base
revolver. As is Moody's standard practice, the ratings will be
withdrawn in the near future.
The downgrades follow BWO's filing under Chapter 11 after
defaulting on its unrated $200 million revolver. Though Big West
had ample undrawn capacity under its revolver borrowing base,
amidst current credit market disruption it was unable to negotiate
a waiver or amendment of its covenant governing the maximum
permitted inter-company receivable.
BWO's parent, Flying J Inc., announced that it and certain of its
subsidiaries, including BWO and Longhorn Pipeline, have filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code. The filing results from liquidity short-falls at
Flying J and Flying J's subsidiary Longhorn Pipeline after falling
oil prices reduced availability on credit facilities tied to the
value of finished petroleum products.
The TLB is first secured principally by BWO's Salt Lake City, Utah
and Bakersfield, California refineries. TLB has been partially
funding a $680 million project to double Bakersfield's high value
gasoline and diesel output by upgrading its existing production
component of very low value gas oil.
Big West Oil., LLC is headquartered in Ogden, Utah.
BKF CAPITAL: John A. Brunjes Resigns as Director
--------------------------------------------
BKF Capital Group Inc. disclosed in a regulatory filing with the
Securities and Exchange Commission that John A. Brunjes resigned
his position as a director of the company.
New York City-based BKF Capital Group Inc. (OTHER OTC: BKFG.PK)
does not have significant operations. Previously, the company was
engaged in the provision of investment advisory and asset
management services in the United States.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $15.9 million, total liabilities of $4.3 million and
stockholders' equity of about $11.6 million.
For three months ended Sept. 30, 2008, the company posted net loss
of $926,000 compared with net loss of $602,000 for the same period
in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $1.2 million compared with net loss of $5.2 million for the
same period in the previous year.
Going Concern Doubt
Holtz Rubenstein Reminick LLP, in New York, expressed substantial
doubt about BKF Capital Group 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 stated that the company experienced a total loss
of assets under management and as a result the company has had a
significant decline in revenues in 2007 and no longer has an
operating business.
The company continues to evaluate strategic alternatives: either
commence a new business or liquidate. Historically, the company
has funded its cash and liquidity needs through cash generated
from operations; however, in light of the above, the company
expects that cash generated from current operations will not be
sufficient to fund operations and that the company will use its
existing working capital to fund operations.
BUFFETS HOLDINGS: Court OKs Third Amendment to DIP Facility
-----------------------------------------------------------
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delaware approved the third amendment to Buffets Holdings,
Inc., and its affiliates' Debtor-in-Possession Credit Agreement
with their lenders.
On December 9, 2008, the Debtors announced that they had executed
the amendment, which secures financing through April 30, 2009,
with a possible extension to May 31, 2009, and keeps the company
on track to exit Chapter 11 protection during the first calendar
quarter of 2009.
The amendment also waives breaches under the DIP agreement and
makes necessary adjustments to ongoing covenants. The Debtors
intend to make a partial prepayment of the DIP facility now that
the Court has approved the amendment.
Prior to the Court's approval of the amendment, U.S. Bank
National Association said it would not issue any PF Letters of
Credit after December 23, 2008, because doing so might provide
defenses by the PF Lenders with respect to their obligations
related to the PF Letters of Credit.
Amanda M. Winfree, Esq., at Ashby & Geddes, P.A., in Wilmington,
Delaware, pointed out that the parties extended the "Calendar
Maturity" by less than six months under the proposed Third
Amended DIP Credit Agreement. Therefore, the Administrative
Agent cannot give the requisite notice to U.S. Bank, and U.S.
Bank will not be obligated to issue any PF Letters of Credit
after December 23.
About Buffets Holdings
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc., which operates 626 restaurants in 39 states, comprised of
615 steak-buffet restaurants and eleven Tahoe Joe's Famous
Steakhouse restaurants, and franchises sixteen steak-buffet
restaurants in six states. The restaurants are principally
operated under the Old Country Buffet, HomeTown Buffet, Ryan's and
Fire Mountain brands. Buffets, Inc. employs approximately 37,000
team members and serves approximately 200 million customers
annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., M. Blake Cleary, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as claims and balloting
agent. The U.S Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Otterbourg Steindler Houston & Rosen PC and
Pachulski Stang Ziehl Young &Jones as counsels. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008, the
Court granted on February 22, 2008, final approval of the Debtors'
debtor-in-possession credit facility, consisting of $85 million of
new funding and $200 million carried over from the company's
prepetition credit facility.
(Buffets Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
BUFFETS HOLDINGS: Court Sends Plan to Creditors for Voting
----------------------------------------------------------
The United States Bankruptcy Court for the District of
Delaware approved the disclosure statement explaining the first
Amended Joint Plan of Reorganization of Buffets Holdings, Inc.,
and its debtor-affiliates at a hearing held December 16, 2008.
Judge Mary F. Walrath ruled that Buffets Holdings' Disclosure
Statement contains adequate information regarding the Plan within
the meaning of Section 1125(a) of the Bankruptcy Code that would
enable creditors to make an informed decision on whether to
accept or reject the Plan.
All objections that have not been withdrawn, sustained or settled
are overruled.
The Debtors' Plan will come before the Court for confirmation at
a hearing on February 3, 2009, at 2:00 p.m., prevailing Eastern
Time. Parties have until January 27, 2009, at 4:00 p.m.
prevailing Eastern Time to file objections to the Plan.
The Court set:
(a) December 16, 2008, as the record date;
(b) December 24, 2008, as the date for mailing all
solicitation packages to creditors and holders of claims
entitled to vote on the Plan;
(d) January 16, 2009, as deadline for creditors to have their
claims temporarily allowed for purposes of voting to
accept or reject the Plan; and
(c) January 27, 2009, 4:00 p.m., prevailing Eastern Time, as
the voting deadline;
(e) January 27, 2009, 4:00 p.m., prevailing Eastern Time, as
the deadline for filing objections to confirmation of the
Plan.
"Court approval of the Disclosure Statement and authorization to
begin the solicitation of creditor approval of our Plan of
Reorganization represents an important step toward emerging from
bankruptcy. We remain on schedule to emerge from Chapter 11
during the first calendar quarter of 2009," said Mike Andrews,
Chief Executive Officer of Buffets Holdings.
Buffets expects to emerge from its reorganization with a stronger
balance sheet, significantly less debt and greater resources to
operate effectively and invest in its business. Over the past
several months, Buffets Holdings has focused its efforts on right-
sizing the organization, including streamlining its portfolio of
restaurants and reducing operating expenses across the business.
"Thanks to the hard work and dedication of our Team Members,
Buffets Holdings will be stronger and more financially secure
when we emerge from bankruptcy," Mr. Andrews added. "We will
have substantially less debt and the right level of resources to
operate effectively and make investments that ensure we can
continue to deliver the highest quality food, service, and value
to our guests."
About Buffets Holdings
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc., which operates 626 restaurants in 39 states, comprised of
615 steak-buffet restaurants and eleven Tahoe Joe's Famous
Steakhouse restaurants, and franchises sixteen steak-buffet
restaurants in six states. The restaurants are principally
operated under the Old Country Buffet, HomeTown Buffet, Ryan's and
Fire Mountain brands. Buffets, Inc. employs approximately 37,000
team members and serves approximately 200 million customers
annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., M. Blake Cleary, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
represent the Debtors in their restructuring efforts. The Debtors
selected Epiq Bankruptcy Solutions LLC as claims and balloting
agent. The U.S Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Otterbourg Steindler Houston & Rosen PC and
Pachulski Stang Ziehl Young &Jones as counsels. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008, the
Court granted on February 22, 2008, final approval of the Debtors'
debtor-in-possession credit facility, consisting of $85 million of
new funding and $200 million carried over from the company's
prepetition credit facility.
(Buffets Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CFM US: Jan. 31 Extension of Time to File Chapter 11 Plan
---------------------------------------------------------
CFM U.S. Corp. and its affiliates ask the U.S. Bankruptcy Court
for the District of Delaware to extend (i) through and including
Jan. 31, 2009 their exclusive period to file a Chapter 11 plan,
and (ii) through and including April 19, 2009, their exclusive
period to solicit acceptances of that Plan.
The Court will convene a hearing on Jan. 21, 2009, at 3:30 p.m. to
consider the request. Objections are due Jan. 14, 2009.
This is the fourth request for an extension. The Court previously
extended the deadline to Dec. 20, and the exclusive solicitation
period to Feb. 18.
The Debtors say the extension is warranted because they have made
substantial progress in their Chapter 11 cases. On Sept. 12,
2008, the official committee of unsecured creditors of CFM
commenced an adversary proceeding, seeking to challenge the liens
and claims of OTPPB. The parties agreed to mediate issues raised
in the complaint and raised an agreement in principle regarding a
framework of a liquidating plan. The Debtors are "now positioned
to prepare and seek approval of a Disclosure Statement and
Liquidating Plan of Reorganization," says William P. Bowden, Esq.,
at Ashby & Geddes, P.A.
In furtherance of implementing their agreement, the OTPPB has
agreed to extend use of cash collateral through and including
Jan. 31, 2009.
Headquartered in Huntington, Indiana, CFM U.S. Corp. --
http://www.majesticproducts.com/-- manufactures two product
categories: Hearth and Heating Products and Barbecue and Outdoor
Products. The company and its affiliate, CFM Majestic U.S.
Holdings, Inc., filed for chapter 11 protection on April 9,
2008 (Bankr. D. Del. Lead Case No. 08-10668). William Pierce
Bowden, Esq., at Ashby & Geddes, represents the Debtors. The
Debtors selected Administar Services Group LLC as their claims
agent. The U.S. Trustee for Region 3 appointed seven creditors to
serve on an Official Committee of Unsecured Creditors. Patrick J.
Reilley, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represents the Committee in these cases. As reported in the
Troubled Company Reporter on June 18, 2008, the Debtors' summary
of schedules showed total assets of $91,316,300 and total debts of
$32,7367,890.
The Debtors' Canadian affiliates filed protection under Companies'
Creditors Arrangement Act with the Ontario Court of Justice on
April 9, 2008.
CHEMTURA CORP: S&P Surpasses Moody's on Downgrade
-------------------------------------------------
Standard & Poor's lowered the corporate rating two levels of
Chemtura Corp. to B, or one step below the downgrade given out
last month by Moody's Investors Service, Bloomberg's Bill Rochelle
notes.
As reported by the Troubled Company Reporter on Nov. 13, Moody's
Investors Service lowered Chemtura Corporation's Corporate
Family Rating to B1 from Ba2 and also lowered the company's
outstanding debt ratings to B1. Moody's ratings action concludes
the review of the ratings that was initiated in December 2007
following management's announcement that it was considering a wide
range of strategic alternatives to enhance shareholder value. The
rating action reflects that Chemtura's operational performance has
not resulted in credit metric improvement in line with Moody's
prior expectations. Moody's gave a stable outlook, saying it
believes the company has a program that "will allow for the
successful refinancing of the notes."
As reported by the Dec. 19 issue of the TCR, Standard & Poor's
Ratings Services said that it lowered its corporate credit and
senior unsecured debt ratings on Chemtura to 'B' from 'BB-' and
placed the ratings on CreditWatch with negative implications. The
recovery rating on the company's senior unsecured notes is
unchanged at '4', indicating expectations of average (30%-50%)
recovery in the event of a payment default.
The downgrade reflects the increasingly challenging operating
environment and declining volumes in the fourth quarter of 2008
primarily related to Chemtura's polymer additives and performance
specialties business segments, which serve electronic, polyolefin,
building and construction and general industrial applications.
"The operating weakness is fairly widespread across the industry,
but the downgrade and CreditWatch listing reflects S&P's concern
over the possibility of a near-term violation of Chemtura's total
leverage covenant under its credit agreement and the upcoming debt
maturity of the $370 million of 7% notes in July 2009," said
Standard & Poor's credit analyst Liley Mehta. "We are
particularly concerned that the company could be challenged to
meet its financial covenants given market conditions."
The company had very limited room under the leverage covenant.
Compliance could be a challenge in 2009 as well if earnings
decline and debt remains consistent with the level at the end of
the 2008 third quarter.
"In resolving the CreditWatch listing, S&P will reassess the
prospects for operating performance in 2009 and monitor the
progress in attaining a waiver or amendment to the senior credit
facility," Ms. Mehta said. "We also plan to monitor the company's
progress regarding a potential business divestiture, the proceeds
of which would be used to redeem the $370 million notes. S&P
could lower the rating further within the next few months if the
company is unable to preserve sufficient liquidity under its
revolving credit facility or if it is unable to demonstrate an
adequate plan to address the upcoming refinancing."
CHEMTURA CORP: Moody's Cuts Corporate Family Rating to 'B2'
-----------------------------------------------------------
Moody's Investors Service lowered Chemtura Corporation's Corporate
Family Rating to B2 from B1 and lowered the company's outstanding
debt ratings to B2. Moody's also placed the ratings of Chemtura
under review for possible downgrade. These actions are taken
following Chemtura's announcement that in light of the change in
economic conditions, the company is implementing a new
restructuring program to reduce fixed costs.
Chemtura has seen order volumes decline as its customers
experience, or anticipate, reductions in demand from the
industries they serve. These order reductions primarily relate to
Chemtura's Polymer Additives and Performance Specialties business
segments in electronic, polyolefin, building and construction, and
general industrial applications. The prospect of a decline in
operating cash flow combined with the potential of a material
restructuring charge calls into question the covenant room at year
end 2008 under Chemtura's existing $740 million bank facility
which was viewed as a potential source for refunding a
$370 million debt maturity due in 2009.
Moody's believes the upcoming debt maturity of $370 million in
July 2009 is a significant concern in a time of challenging
capital market conditions. Chemtura management is aware of this
liquidity challenge as evidenced by an earlier announced, (in
November 2008), five point plan to improve liquidity. This prior
plan included the expectation of improving cash flow via 1)
inventory reductions that may net cash over several quarters; 2)
reducing capital spending to $140 million in 2008 (depreciation is
about $220 million in 2008); 3) possible divestitures although a
material divestiture may require bank approval; 4) possible
further rationalization of capacity to reduce costs and
discretionary spending; and 5) the suspension of the dividend,
which will conserve cash of some $48 million per year. Moody's
view the dividend suspension as a prudent and difficult move that
indicates the board's heightened concern over the need to assure
liquidity in this difficult environment.
In the event refinancing of the debt in the capital markets is
unattractive management may also use the proceeds of yet to be
completed asset sale(s) to meet this obligation. Even if these
asset sale(s) are successful, with proceeds used to pay off debt
coming due, the remaining business profile may be deemed to be too
weak to support a CFR higher than B2. However if these two
options are not available the company would need to rely on other
sources of liquidity including cash balances ($107 million at the
end of September 2008) and an existing committed $740 million
revolver that matures in March of 2010. Chemtura was compliant
with its covenants in the debt agreement at the end of the third
quarter however Moody's believe that the current headroom under
the revolver covenant is tighter than expected for a B1 rated
entity, particularly with the leverage covenant that is at 2.7
times versus the 3.0 times required. At the end of the third
quarter incremental EBITDA headroom under the leverage test is
less than $45 million which would mean that a 10% decline in LTM
EBITDA would put undue pressure on this metric absent further debt
reduction.
Ratings lowered and placed under review:
* Corporate Family Rating -- B2 from B1
* Senior notes, $500 million due 2016 -- B2 from B1 -- LGD4
(54%)
* Senior Unsecured Notes, $150 million due 2026 -- B2 from B1 --
LGD4 (54%)
* Senior Unsecured Notes, $370 million due 2009 -- B2 from B1 --
LGD4 (54%)
Moody's last rating action was to lower Chemtura's CFR to B1 from
Ba2 and also lower the company's outstanding debt ratings to B1 on
November 11, 2008 as Chemtura's operational performance had not
resulted in credit metric improvement in line with Moody's prior
expectations.
Headquartered in Middlebury, Connecticut, Chemtura manufactures a
variety of polymer and rubber additives, castable urethane pre-
polymers, ethylene propylene diene monomer, crop protection
chemicals, brominated flame-retardants, recreational water
treatment chemicals, and brominated/fluorinated specialty
chemicals. In For the LTM period ending September 30, 2008, the
company had revenues of $3.7 billion.
CHRYSLER LLC: S&P Cuts Corp. Credit Ratings to 'CC'; Outlook Neg.
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Chrysler LLC to 'CC' from 'CCC+'. S&P
also lowered the issue-level ratings on the company's senior
secured debt. The outlook is negative.
The downgrades follow Chrysler's announcement Friday that, as part
of its receipt of $4 billion in emergency loans from the U.S.
government, it will seek to obtain concessions from its secured
lenders. Although the company did not provide specific details,
S&P interpret this to mean that Chrysler will offer to exchange
some or all of its secured debt for equity or new debt at a steep
discount to face value. Given Chrysler's weak liquidity, S&P
considers such an offer to be a distressed exchange and, as such,
tantamount to a default.
If Chrysler were to complete an exchange offer, S&P would lower
the corporate credit rating to 'SD' and lower the exchanged issue
ratings to 'D'. S&P would then, shortly thereafter, assign a new
corporate credit rating to Chrysler based on S&P's assessment of
the company's new capital structure and liquidity profile, while
taking into account its business prospects and other relevant
rating considerations.
"Our preliminary expectation is that, even with substantial
government support that enables Chrysler to avoid a bankruptcy
filing, the corporate credit rating would likely not rise out of
the 'CCC' category immediately following the consummation of a
debt exchange because of the various challenges the company faces,
which S&P believes will keep bankruptcy risk high," said Standard
& Poor's credit analyst Robert Schulz.
The outlook is negative. S&P intends to lower the corporate
credit rating to 'SD' and the affected issue ratings to 'D' upon
completion of any future distressed exchange offer. S&P would
then, shortly thereafter, assign a new corporate credit rating to
Chrysler based on, among other things, S&P's assessment of the
company's new capital structure and liquidity profile. S&P's
preliminary expectation is that, even with substantial government
support, Chrysler's corporate credit rating would not rise above
the 'CCC' category following the completion of a debt exchange.
CHRYSLER LLC: S&P Won't Raise Credit Rating Above CCC on Loans
--------------------------------------------------------------
Standard & Poor's Ratings Services said that despite the nearly
$21 billion in emergency loans announced by the U.S. and Canadian
governments to help General Motors Corp. and Chrysler LLC avert
near-term bankruptcies, S&P is not likely to raise the credit
ratings on these companies above the 'CCC' category in the near
future. S&P lowered the corporate credit rating on Chrysler to
'CC' from 'CCC+', reflecting S&P's view of the likelihood of a
distressed exchange offer for the company's secured debt. S&P
also revised its post-default recovery expectations on GM's
unsecured debt because of the collateral to be pledged and the
relative priority of the new government loans, leading S&P to
lower the issue-level ratings on this debt.
The U.S. government announced Friday it would provide a total of
$9.4 billion in loans to GM in two payments, on Dec. 29, 2008, and
Jan. 16, 2009; another $4 billion could become available on
Feb. 17, 2009. The U.S. government will lend $4 billion to
Chrysler on Dec. 29, 2008. On Saturday, the Canadian and Ontario
governments announced they would together provide about
$3.3 billion to the Canadian units of GM and Chrysler in stages
over the next two months. Sweden and Germany have also pledged to
aid their local units of the Michigan-based automakers.
S&P views the actions as necessary to give GM and Chrysler
sufficient liquidity to run their automotive operations for a few
more months, as opposed to facing severe liquidity shortfalls and
heightened risks of bankruptcies by early January 2009. In
addition, S&P see these loans as underscoring the willingness of
the U.S. and other governments to prevent an abrupt and disorderly
collapse of the automotive industry, which would heighten
pressures on an already weak economy.
However, S&P does not believe governments are willing to provide
open-ended support to these companies. President Bush, in
announcing the U.S. loan package, said the assistance will provide
a "brief window" for restructuring outside of bankruptcy court,
and if they are unable to do so, the loans "will provide time for
companies to make the legal and financial preparations necessary
for an orderly Chapter 11 process."
In addition, S&P believes the bankruptcy risk remains high for GM
and Chrysler, as well as for Ford Motor Co., for the rest of next
year because of a range of fundamental challenges that will not be
alleviated by the government funding and, in S&P's view, will keep
cash outflows high or potentially erode liquidity. In S&P's view,
these challenges include:
-- Very weak auto sales in the U.S. and falling demand in Europe
and other global markets. S&P expects U.S. light-vehicle
sales to decline to 11.1 million units in 2009, from an
expected 13.1 million in 2008. Monthly sales in the U.S.
could remain even lower on a seasonally adjusted annual basis
in December and early 2009 after averaging about 10.4 million
units per month in October and November;
-- The need to promptly carry out--as part of the deal to
receive federal loans--a series of complex restructuring
actions, including negotiating lower wages and benefits and
revised work rules with unions, cutting more plant capacity,
rationalizing dealer networks, and potentially extracting
savings from suppliers;
-- Potential for further market share losses caused by continued
or increased customer concerns about these companies' long-
term financial viability;
-- Constrained credit markets, which have sharply reduced the
ability of GMACLLC and DaimlerChrysler Financial Services
Americas LLC to finance new purchases of GM or Chrysler cars.
S&P is also increasingly concerned about their ability to
provide adequate inventory financing for dealers. The federal
loans announced on Friday do not directly bolster the
struggling finance affiliates;
-- Potential supplier failures caused by sharply lower
automobile volumes and extended holiday shutdowns of assembly
plants. Even if the worst-case scenario of an abrupt
bankruptcy by GM or Chrysler is avoided, weaker suppliers
still face major liquidity challenges for the foreseeable
future; and
-- In GM's case, the unresolved exposure to bankrupt major
supplier Delphi Corp. Delphi has been unable to emerge from
bankruptcy protection and recently obtained a forbearance
agreement from debtor-in-possession lenders to keep funding
in place until June 30, 2009. However, if Delphi is unable
to extend this agreement or find alternative funding, S&P
believes it may be forced to cease operations, which would
put enormous pressure on GM's ability to maintain its North
American operations.
The incoming Obama Administration may provide more extensive loans
to GM and Chrysler, provided that the companies present a plan for
financial viability to the government by Feb. 17, 2009, as
stipulated in the preliminary loan documents. However, S&P can
envision scenarios under which such funding could be provided as
part of a prearranged bankruptcy filing. Under terms of the
current loans, GM must reduce its unsecured indebtedness by at
least two-thirds through an exchange offer for equity or new debt.
Chrysler does not have unsecured debt but said Friday it intends
to work with its secured lenders to obtain concessions. Although
it did not provide specific details, S&P interpret this to mean
that Chrysler will offer to exchange some or all of its secured
debt for equity or new debt at a steep discount to face value.
S&P likely would consider such an offer to be a distressed
exchange and, as such, tantamount to a default.
Ford is not currently seeking loans from the government because it
has an undrawn $10.7 billion revolving credit facility, although
it has asked the U.S. government for a $9 billion credit line to
help ensure that its liquidity remains sufficient through 2009 if
industry conditions remain very weak. If Ford were to receive
such a large credit line, depending on its terms S&P could revise
its recovery ratings and potentially lower S&P's issue-level debt
ratings to reflect worsened recovery prospects. However, S&P
notes that its recovery ratings on Ford's unsecured debt are
currently at the lowest level of '6', indicating S&P's expectation
of very low (0 to 10%) recovery in the event of a default.
S&P's recovery ratings on U.S. automaker debt are based on
simulated default scenarios that each include, among other things,
the assumption of a bankruptcy filing, multi-year reorganization,
and eventual emergence from bankruptcy. S&P's expected recovery
prospects for secured and unsecured debtholders vary by automaker,
largely reflecting the company-specific mix of secured and
unsecured debt in the capital structure rather than vastly
different fundamentals for each company.
Regarding the rated auto supplier universe, S&P placed the ratings
on 15 companies on CreditWatch on Nov. 14, 2008, because of their
significant exposure to the Michigan-based automakers. S&P
expects to complete S&P's review of these companies in January
2009. Although the immediate risk of a GM or Chrysler bankruptcy
now seems reduced, the risk remains high in 2009 in S&P's view,
and production levels will likely be low enough -- even without an
automaker bankruptcy -- to inflict further severe distress on the
supply base. Accordingly, S&P believes few auto supplier ratings
will be affirmed at current levels, and many ratings may be
lowered by more than one notch.
CLAIRE'S STORES: Moody's Downgrades Corp. Family Rating to 'Caa3'
-----------------------------------------------------------------
Moody's Investors Service downgraded Claire's Stores, Inc., long
term ratings, including its probability of default rating to Caa3
from Caa1. The speculative grade liquidity rating of SGL-4 is
affirmed. The rating outlook remains negative.
This rating action reflects Claire's third quarter free cash flow
deficit coming in well below Moody's expectations. The downgrade
also reflects Moody's expectation for continued poor performance
given the current weak economic environment. Claire's current
level of negative free cash flow and the expectation for continued
poor perfomance, places further pressure on Claire's already weak
liquidity and increases the likelihood of a distressed debt
exchange or capital structure restructuring.
Claire's Caa3 corporate family rating is primarily driven by the
company's on going free cash flow deficits and its very weak
credit metrics as a result of its heavy debt load. The rating
also reflects Moody's opinion that Claire's has an unsustainable
capital structure at the company's current performance levels.
Given its heavy cash interest burden and unsustainable leverage,
the Caa3 also reflects the high likelihood that Claire's could
choose to pursue a distressed debt exchange or capital structure
restructuring. The rating also considers the company's
concentration in specialty retail, the current challenging
economic environment, and the likelihood of the company continuing
to generate free cash flow deficits. Positive rating
consideration is given to the fact that there are no near-term
scheduled debt maturities, and the fact that Claire's revolving
credit facility has no financial covenants.
The negative outlook reflects the risk Claire's faces that it will
be unable to support its capital structure without stabilizing its
free cash flow deficit and improving its operating performance
over the medium term.
The SGL-4 reflects Claire's weak liquidity primarily driven by its
continued free cash flow deficits despite its current high cash
position. During the quarter ended November 1, 2008, Claire's
drew $194 million under its $200 million revolver. As a result,
Claire's will likely be able to finance its level of free cash
flow deficits with on balance sheet cash over the next twelve
months. However, a further weakening in operating results and/or
working capital changes during the next twelve months could
rapidly absorb this excess cash cushion. In addition, Claire's is
continuing to generate cash flow deficits despite the fact that it
is able to defer paying a portion of its interest expense in cash.
The company currently has no external liquidity as its
$200 million revolving credit facility is fully drawn.
These ratings are downgraded:
-- Corporate family rating to Caa3 from Caa1;
-- Probability of default rating to Caa3 from Caa1;
-- $200 million senior secured revolving credit facility to Caa2
(LGD3, 32%) from B2 (LGD3, 32%);
-- $1,450 million senior secured term loan to Caa2 (LGD3, 32%)
from B2 (LGD3, 32%);
-- Senior unsecured notes to Ca (LGD4, 67%) from Caa2 (LGD4,
67%);
-- Senior subordinated notes to Ca (LGD6, 93%) from Caa3 (LGD6,
93%).
These rating is affirmed:
-- Speculative grade liquidity rating at SGL-4.
The last rating action on Claire's was on September 25, 2008 when
the its corporate family rating was confirmed at Caa1 and the
outlook was changed to negative.
Claire's Stores, Inc., headquartered in Pembroke Pines, Florida,
is the leading specialty retailer of value-price jewelry and
fashion accessories for pre-teens, teenagers, and young adults.
It operates 3,053 stores in North America and Europe. Revenues
for the fiscal year ended LTM period ending November 1, 2008 were
about $1.5 billion.
CMR MORTGAGE: Posts $22.9 Million Net Loss in Qtr. Ended June 30
----------------------------------------------------------------
CMR Mortgage Fund II, LLC's net loss for the quarter ended
June 30, 2008 was $22.9 million, a decrease of $23.7 million from
the $800,000 net income for the quarter ended June 30, 2007,
according to a recent regulatory filing by the company with the
Securities and Exchange Commission. The decrease in net income
resulted from a $20.4 million increase in the loan loss provision,
a $1.4 million decrease in total interest income, a $600,000
increase in professional services expenses, a $1.3 million
increase in other operating expenses, primarily related to the
$900,000 allowance on the receivable from its Manager --
California Mortgage and Realty, Inc. -- and expenses associated
with senior lien payments to entities not affiliated with the
Manager and a $200,000 increase in loan servicing fees between the
quarter ended June 30, 2007, and the quarter ended June 30, 2008,
partially offset by a $100,000 decrease in interest expense.
David Choo, president, and James Gala, chief executive officer and
chief financial officer, said the increases in the provision for
loan losses were due to the decline in real estate property values
which secure the loan portfolio.
"Due to unprecedented dislocations in the real estate and capital
markets since 2007, the Fund has incurred a significant reduction
in loan payoffs from borrowers and an increase in delinquencies,
non-performing loans and REO, resulting in a substantial reduction
of cash flows. In addition, a number of the Fund's loans and
loans senior to the Fund's loans are in default. The Fund's
illiquid position may prevent the Fund from protecting its
position with respect to properties/collateral securing these
defaulted loans.
"At June 30, 2008, the Fund had also pledged $48,000,000 of its
loan portfolio as security for a note with an original principal
balance of $25,000,000 payable to CMR Income Fund, LLC, a related
party. At June 30, 2008, the Fund was in technical default under
this loan, resulting in a technical default under Income Fund's
note payable to Wells Fargo Foothill, the lender on a loan to
Income Fund, also in the original principal amount of $25,000,000.
The carrying amount of the Fund's note payable to Income Fund
includes principal of $20,199,951 and accrued unpaid interest of
$150,816. While in default, the Fund continued to make monthly
interest payments of approximately $165,000. The Manager
subsequently negotiated amendments to the promissory notes between
Income Fund and Wells Fargo Foothill and between Income Fund and
the Fund that were made effective as of July 1, 2008, under which
Wells Fargo Foothill and Income Fund, respectively, waived the
existing defaults and extended the maturity date until
December 31, 2008.
"In March 2008, the Fund began making debt service payments on the
senior debt related to the collateral that secures the Fund's
$3,043,447 participation in a $42,900,000 subordinated loan made
by a fund managed by the Manager following the borrower's default
on the senior and subordinate loans. Due to liquidity issues in
the various funds managed by the Manager, it has become necessary
from time to time for one participant to pay more than its pro
rata share of the senior debt service. Through September 30,
2008, the Fund has made payments totaling $274,607 compared to its
pro rata share of $86,490 relating to this obligation. Under an
agreement among the various participating funds, these advances
will have a priority repayment position relative to loan principal
and accrued interest. The Fund may also need to assume debt
service on a portion of the $5,000,000 of other third party
subordinated debt in order to prevent foreclosure.
"On April 9, 2008, the Manager, on behalf of the Fund and three
other funds it managed, foreclosed on 20 of 22 properties which
comprised approximately $16,095,000, or 85% of the $18,857,100
total collateral securitizing three junior loans to the funds.
The total amount of junior debt secured by these properties,
including principal, advances, and accrued interest was
approximately $21,858,000, including approximately $11,113,000
owed to the Fund. The senior liens, which are held by outside
third parties, total approximately $7,368,569 and bear interest at
an effective average interest rate of approximately 8.0%. In
order to fully maintain its junior lien security interests, the
funds will be obligated to keep the senior liens current until
these properties are sold. The pro rata share of this debt
service will increase monthly interest expense of the Fund by
approximately $30,000.
"While the Fund does continue to accrue and collect interest on a
portion of its loan portfolio, it does not have sufficient funds
to satisfy its obligations or repay all the outstanding principal
balances of the senior debt as they become due, which would allow
the senior debt holders to foreclose on the underlying collateral
and effectively eliminate the Fund's equity therein. Additional
sources of cash from the sale of REO, loan principal repayments or
loan sales are required to continue operations beyond December 31,
2008. These events have raised substantial doubt about the Fund's
ability to continue as a going concern," Mr. Cho and Mr. Gala
said.
As of June 30, 2008, the company's balance sheet showed total
assets of $103,701,109 and total liabilities of $38,246,086,
resulting in total members' capital of $65,455,023.
A full-text copy of the company's Quarterly Report is available
for free at http://researcharchives.com/t/s?36a8
About CMR Mortgage Fund II
CMR Mortgage Fund II, LLC, is a California limited liability
company formed on Sept. 5, 2003, for the purpose of making or
investing in business loans secured by deeds of trust or mortgages
on real properties located primarily in California. The real
properties predominantly consist of land held by businesses or
individuals, or commercial buildings. The land can be income-
producing or may be held for commercial or residential
development. Currently, most of the land securing the Fund's
loans are held for development or is in some stage of application
for development entitlements or building permits. Its loans are
arranged and serviced by a managing company, California Mortgage
and Realty,Inc., a Delaware corporation, which is licensed as a
California real estate broker and a California finance lender.
COAST CFO: Moody's Cuts Rating on $67.5MM Class D Notes to 'Ba1'
----------------------------------------------------------------
Moody's Investors Service announced that it has downgraded these
debt securities issued by Coast CFO 2005-1 Ltd.:
US$67,500,000 Class D Secured Floating Rate Notes due 2012
-- Current Rating: Ba1, on review for downgrade
-- Prior Rating: Baa3, on review for downgrade
Originally rated on March 31, 2005, Coast CFO 2005-1 Ltd. is a
collateralized fund obligation that is backed by equity interests
in a diversified fund of hedge funds. The fund is managed by
Coast Asset Management LP.
The last rating action on the affected securities was on November
20, 2008 when several debt tranches were downgraded and all debt
tranches were maintained on review for further possible downgrade.
The rating action reflects continued deterioration of the net
asset values of the underlying hedge funds within the structure.
The ratings reflect concern over the vehicle's ability to
liquidate portfolio assets within the covenanted timeframe.
Moody's considered the increased likelihood of suspension or
gating of redemptions in the underlying funds within the portfolio
as a negative factor during its review.
CONCORD CAMERA: Shareholders Okay Dissolution & Liquidation Plan
----------------------------------------------------------------
Concord Camera Corp.'s shareholders approved a plan of dissolution
and liquidation of the company at the annual meeting on
December 18, 2008.
The Plan of Liquidation contemplates an orderly wind down of the
Concord Camera's business and operations, the monetization of the
company's non-cash assets, the satisfaction or settlement of its
remaining liabilities and obligations and one or more
distributions to its shareholders.
Pending the shareholders' vote on the Plan of Liquidation, Concord
Camera ceased manufacturing, except as necessary to complete the
manufacture of materials and products remaining in inventory, and
terminated certain of its employees. Following the shareholder
approval of the Plan of Liquidation, the Company will terminate
its remaining employees throughout the wind down period. In
addition, Concord Camera intends to file a certificate of
dissolution, sell and monetize its non-cash assets, satisfy or
settle its remaining liabilities and obligations, including
contingent liabilities and claims, and make one or more
distributions to its shareholders of cash available for
distribution. Concord Camera also expects to delist its shares
from NASDAQ.
The execution of the Plan of Liquidation will be completed as soon
as practicable. However, the company is currently unable to
predict the time required to complete the Plan of Liquidation or
the precise timing or amount of any distributions pursuant to the
Plan of Liquidation. The amount and timing of any distributions
will be determined by the Board and will depend upon the company's
ability to monetize its non-cash assets, including, but not
limited to, auction rate securities that the company has been
unable to sell due to the recent disruptions in the credit markets
and for which the company has reduced the carrying value by
approximately $5.1 million to approximately $17.1 million as of
Sept. 27, 2008, and the company's property in the PRC where the
real estate market has recently experienced significant declines
due to the worldwide financial crisis, and to estimate, settle or
otherwise resolve its remaining liabilities and obligations, some
of which are significant, including litigations and other
contingent liabilities and claims that have not been resolved and
quantified.
About Concord Camera Corp.
Headquartered in Hollywood, Florida, Concord Camera Corp.
(NASDAQ:LENS) -- http://www.concord-camera.com/-- through its
subsidiaries, provides easy-to-use 35mm single-use and traditional
film cameras. Concord markets and sells its cameras on a private-
label basis and under the POLAROID and POLAROID FUNSHOOTER brands
through in-house sales and marketing personnel and independent
sales representatives. The POLAROID trademark is owned by
Polaroid Corporation and is used by Concord under license from
Polaroid.
About Polaroid Corporation
Polaroid Corporation -- http://www.polaroid.com-- makes and
sells films, cameras, and other imaging products. The company and
20 of its affiliates first filed for bankruptcy protection on
October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864).
Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors
in their previous restructuring efforts. At that time, the
company blamed steep decline in its revenue and the resulting
impact on its liquidity.
On June 28, 2002, the U.S. Bankruptcy Court for the District of
Dealware approved the purchase of substantially all of Polaroid's
business by One Equity Partners. The bid provides for cash
consideration of $255 million plus a 35% interest in the new
company for unsecured creditors.
Polaroid Corp., together with 11 affiliates, filed its second
voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D.
Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles
the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum
P.L.L.P, is the Debtors' counsel.
According to the company, the financial structuring process and
the second bankruptcy filing are the result of events at Petters
Group Worldwide, which has owned Polaroid since 2005. The founder
of Petters Group and certain associates are currently under
investigation for alleged acts of fraud that have compromised the
financial condition of Polaroid and other entities owned by
Petters Group. The company and its leadership team are not
subjects of the ongoing investigation involving Petters Group.
CORD BLOOD: Amends Securities Purchase Agreement with Tangiers
--------------------------------------------------------------
Cord Blood America, Inc., entered into Amendment No. 1 of the
Securities Purchase Agreement with Tangiers Investors, LP. The
Amendment amends the Securities Purchase Agreement, that was
originally executed by the company and the Investor on June 27,
2008, by removing the Floor Price under the Securities Purchase
Agreement which was set at $0.01.
Prior to the Amendment, if the company's stock price fell below
$0.01 it could not sell its stock to Tangiers to receive cash
advances under the Securities Purchase Agreement. By removing
this limitation the company may sell shares of its common stock to
Tangiers if the stock price falls below $0.01. Pursuant to the
Securities Purchase Agreement, the company may, at its discretion,
periodically issue and sell to Tangiers shares of its common stock
for a total purchase price of $4,000,000. The amount of each
advance is subject to a maximum advance amount of $250,000, and
the company may not submit any advance within five trading days of
a prior advance. Subject to various conditions specified therein,
Tangiers is required to purchase any and all shares that the
company seeks to sell to it under the Securities Purchase
Agreement.
A full-text copy of the Amendment No. 1 to Securities Purchase
Agreement is available for free at:
http://ResearchArchives.com/t/s?3697
On Oct. 28, 2008, Cord Blood issued a 7% Convertible Debenture in
the principal amount of $160,000 to Tangiers Investors. The
Debenture was issued to the Holder to reimburse it for reduction
in equivalent share amount for the commitment fee in the
Securities Purchase Agreement of June 27, 2008, and consulting
services. The interest rate of the Debenture is 7% per annum and
principal and interest on the Debenture must be paid on March 28,
2010. The Debenture is convertible into shares of the company's
common stock at amount of shares of Common Stock equal to the
lesser of (i) $.01, or (ii) 90% of the average of the of the bid
price daily volume weighted average price of the company's Common
Stock during the 5 consecutive Trading Days prior to Holder's
election to convert.
The Debentures contain certain covenants by the company, including
that:
-- the company will cause its transfer agent to issue shares to
the Holder upon conversion of the Debenture within three
business days of the company's receipt of a conversion
notice;
-- while the Debenture is outstanding, the company will pay,
extend or discharge at or before maturity all of its
respective material obligations and liabilities; and
-- While the Debenture will be outstanding, the company will
keep proper books of record and account in which full, true
and correct entries will be made of all material dealings
and transactions in relation to its business and activities
and will permit representatives of the Holder at the
Holder's expense to visit and inspect any of its respective
properties, to examine and make abstracts from any of its
respective books and records, not reasonably deemed
confidential by the company, and to discuss its respective
affairs, finances and accounts with its respective officers
and independent public accountants, all at reasonable times
and as often as may reasonably be desired.
Events of Default under the Debentures include but are not limited
to these:
-- if any of the representations, warranties or covenants made
by the company in the Debenture are false or misleading n
any material respect as of the closing date for the issuance
of the Debenture.
-- if the company will default in the payment of principal of
or interest due on the Debenture;
-- if the company or a significant subsidiary files for
bankruptcy; and
-- if any monetary judgment is entered against the company in
excess of $100,000.
If an Event of Default occurs and is continuing, then and in every
such case the Holder may, in Holder's sole and absolute
discretion, by a notice in writing to the company, declare that
any or all amounts owing or otherwise outstanding under this
Debenture are immediately due and payable and upon any such
declaration the Debenture or such portion thereof, as applicable,
shall become immediately due and payable in cash at a price of
150% of the principal amount of the Debenture together with all
accrued and unpaid interest thereon to the date of payment;
provided, however, in the case of any Event of Default, all
amounts owing or otherwise outstanding under the Debenture
automatically shall become immediately due and payable without the
necessity of any notice or declaration.
The holders of the Debentures will not have the right to convert
the Debentures, to the extent that after giving effect to the
conversion, the holder would beneficially own in excess of 4.99%
of the shares of the company's Common Stock immediately after
giving effect to the conversion. The Holder, upon 61 days written
notice to the company, may (i) increase the Beneficial Ownership
Limitation provided that it does not exceed 9.99% of the company's
common stock or (ii) remove the Beneficial Ownership Limitation
under the Debenture.
A full-text copy of the terms of the 7% Convertible Debenture is
available for free at:
http://ResearchArchives.com/t/s?3698
About Tanger Properties Limited Partnership
Headquartered in Greensboro, North Carolina, Tanger Properties LP
-- http://www.tangeroutlet.com/-- along with its subsidiaries,
focuses on developing, acquiring, owning, operating and managing
factory outlet shopping centers in the United States. As of
Dec. 31, 2007, it owned 29 outlet centers, with a total gross
leasable area of approximately 8.4 million square feet. The
factory outlet centers were 98% occupied and contained over 1,800
stores, representing approximately 370 store brands. Tanger
Properties Limited Partnership is controlled by Tanger Factory
Outlet Centers, Inc. and subsidiaries, a fully integrated, self-
administered and self-managed real estate investment trust.
About Cord Blood
Headquartered in West Hollywood, California, Cord Blood America
Inc. (OTC BB: CBAI) -- http://www.cordblood-america.com/-- is an
umbilical cord blood stem cell preservation company with a
particular focus on the acquisition of customers in need of family
based products and services. The company also provides
television, radio and internet advertising services to businesses
that sell family based products and services.
The company operates two core businesses:
-- Cord Partners Inc., CorCell Co. Inc., CorCell Ltd. ("Cord")
operates the umbilical cord blood stem cell preservation
operations, and
-- Career Channel Inc. dba. Rainmakers International ("Rain")
operates the television and radio advertising operations.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $5,492,547 and total liabilities of $12,815,847, resulting in a
stockholders' deficit of $7,323,300.
For three months ended Sept. 30, 2008, the company posted net loss
of $1,610,642 compared to net loss of $1,107,974 for the same
period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $5,359,194 compared with net loss of $4,187,878 for the same
period in the previous year.
At Sept. 30, 2008, the company has $56,599 in cash. The company
currently collect cash receipts from operations through both of
its subsidiaries: Cord and Rain. Cord's cash flows from
operations are not currently sufficient to fund operations in
combination with its corporate expenses. Because of this
shortfall, the company has to obtain additional capital through
other sources.
Going Concern Doubt
Rose, Snyder & Jacobs, in Encino, California, expressed
substantial doubt about Cord Blood America 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 reported that the company has sustained
recurring operating losses, continues to consume cash in operating
activities, and has insufficient working capital and an
accumulated deficit at Dec. 31, 2007.
Cord Blood America Inc.'s consolidated balance sheet at June 30,
2008, showed $5,859,694 in total assets and $12,054,864 in total
liabilities, resulting in a $6,195,170 stockholders' deficit.
At June 30, 2008, the company's consolidated financial statements
also showed strained liquidity with $204,924 in total current
assets available to pay $12,054,864 in total current liabilities.
The company reported a net loss of $2,499,142 for the second
quarter ended June 30, 2008, compared with a net loss of
$1,758,472 in the same period last year.
COTT CORPORATION: Weak Performance Cues Moody's Junk Ratings
------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Cott
Corporation (CFR to Caa1 from B3 and senior subordinate to Caa2
from Caa1). The outlook is now stable. The company's speculative
grade liquidity rating was lowered to SGL-4. This completes the
review initiated on September 19, 2008.
The downgrade reflects very weak performance in 2008 with interest
coverage running at 0.3 times through the third quarter of 2008,
negative free cash flow on an LTM basis and leverage of over 5
times. Operating profit on an LTM basis through September 27th was
$7.5 million down from over $100 million three years earlier.
Cott revised its full year outlook in August, when it said that
declining volumes, heavy promotional activity from the national
brands, high commodity prices and certain problems in the
international concentrate unit would all contribute to poor 3rd
quarter and full year performance. Moody's currently expect
interest coverage to remain below 1 times for the next several
quarters and EBITA margin to be near or below 4% for 2008 having
fallen from nearly 17% in 2004 (all per Moody's FM).
The SGL-4 recognizes that internally generated cash flow is
expected to be weaker than previously projected and the
availability under the new $250 million facility is likely to be
less than originally expected. If availability under the asset
backed facility drops below $30 million the company would trigger
a fixed charge coverage covenant, compliance with which could be
somewhat tight. The company expects to have approximately
$50 million of availability at year end which would leave nearly
$20 million in excess cushion over the covenant trigger, (not
including cash on the balance sheet) but this is less than Moody's
expected when Moody's assigned the SGL rating in March when
Moody's expected $80 million of availability over the next 12
month period (or $50 million in excess cushion).
Furthermore, usage of cash is likely to build ahead of the summer
selling season. Cott does not face any major debt or facility
maturities over the next 12 months, but the availability under the
asset based facility could also diminish if the size of the
business continues to shrink. Sales have declined from
$1.77 billion in 2007 to approximately $1.66 billion expected for
this year.
The stable outlook reflects Moody's view that at Caa1 the rating
reflects significant deterioration in credit metrics, but it also
anticipates some stabilization in 2009 as CAPEX is reduced and
since commodity costs have dropped. It also reflects the
possibility that private label products may continue to gain some
momentum in certain channels as the consumer-led economic downturn
worsens and consumer seek value. While the national brands'
promotional activity probably had the greatest impact, Cott's loss
of shelf space at Wal-Mart this year was a setback, and the
success of private label versus the national brands has,
historically and in past recessions, not been as strong in this
segment as in certain other consumer products areas. Further
erosion of excess liquidity or continued negative free cash flow
could lead to further downgrade. Positive ratings pressure would
require interest coverage to rise sustainably above one times, and
cash flows to remain positive for at least a year.
These ratings were lowered:
Cott Corporation:
-- Corporate Family rating to Caa1 from B3
-- Probability of Default Rating to Caa1 from B3
Cott Beverages, Inc.:
-- $275 million 8% senior sub notes due 2011 to Caa2, LGD 5; 74%
from Caa1, LGD 5; 71%
-- Speculative grade liquidity rating to SGL-4 from SGL-3
The last rating action was taken on September 19th, 2008 when the
CFR rating was lowered to B3 from B2 and left on review for
further possible downgrade.
Headquartered in Toronto, Ontario, Cott Corporation is one of the
world's largest retailer-brand soft drink suppliers with a leading
position in take-home carbonate soft drink markets in the US,
Canada, and the UK. Sales for the LTM period ended were
$1.7 billion.
DAIMLER CHRYSLER: Poor Fin'l Condition Cues Fitch's Junk Rating
---------------------------------------------------------------
Fitch Ratings has downgraded and placed on Rating Watch Negative
the Issuer Default Rating of Daimler Chrysler Financial Services
America LLC to 'CC' from 'B-'. A 'CC' rating indicates that
default of some kind appears probable. Approximately $8 billion
of debt is affected by this action.
The action reflects the deteriorating financial condition of DCFS'
parent company Chrysler LLC. Chrysler's downgrade was driven by
the terms of federal government support, whereby the company has
until March 31, 2009 to produce a plan for long-term
profitability, including concessions from unions, creditors,
suppliers and dealers. Terms also include a reduction in
Chrysler's current debt load, which Fitch believes could take the
form of a distressed debt exchange. Chrysler's IDR of 'C'
indicates that default is imminent.
Where appropriate, Fitch has recognized a one-notch differential
between the IDR of a captive finance company and that of an
original equipment manufacturer in the past. However, Fitch
believes that a one-notch differential would not be supported if
Chrysler declares bankruptcy or its viability becomes suspect.
Fitch would also downgrade and equalize the ratings of DCFS with
those of Chrysler should the debt of DCFS be restructured or
become subordinate to obligations purchased by the U.S. Treasury.
Negative rating actions would also result if the existing escrow
backstop that supports any obligation Chrysler may owe to DCFS is
amended.
Similarly, DCFS' Recovery Ratings could be revised to reflect the
impact of debt restructuring or diminished collateral valuations
from the bankruptcy of one or more U.S automakers. The Recovery
Ratings on the first-lien term loan and second-lien revolver are
'RR1' and 'RR3', respectively, and are based on the respective
collateral coverage for these instruments. 'RR1' implies recovery
between 90%-100%, while 'RR3' implies recovery between 51%-70%.
Fitch has downgraded and placed on Rating Watch Negative these:
Daimler Chrysler Financial Services Americas LLC
-- Long-term IDR to 'CC' from 'B-'
-- Secured first lien to 'CCC+/RR1' from 'BB-/RR1'
-- Secured second lien to 'CCC-/RR3' from 'B/RR3'
-- Short-term IDR to 'C' from 'B.'
DECODE GENETICS: Terrance McGuire Resigns from Board of Directors
-----------------------------------------------------------------
deCODE genetics, Inc., disclosed in a regulatory filing with the
Securities and Exchange Commission that Terrance G. McGuire
resigned as a director of the company. deCODE is not aware of any
disagreement between it and Mr. McGuire relating to deCODE's
operations, policies or practices.
deCODE genetics Inc. (Nasdaq: DCGN) -- http://www.decode.com/--
operates as a biopharmaceutical company that applies discoveries
in human genetics to develop drugs and diagnostics for common
diseases. The company serves pharmaceutical companies,
biotechnology firms, pharmacogenomics companies, government
institutions, universities, and other research institutions
primarily in the United States, Europe, and internationally. The
company was founded in 1996 and is headquartered in Reykjavik,
Iceland.
deCODE genetics Inc.'s balance sheet at Sept. 30, 2008, showed
total assets of $100.2 million and total liabilities of
$304.0 million, resulting in a shareholders' deficit of roughly
$203.8 million.
Net loss for the quarter ending Sept. 30, 2008, was $17.9 million,
compared to $24.2 million for the third quarter 2007. Net loss
for the first nine months of 2008 was $62.9 million, compared to
$63.1 million for the first nine months of last year. In addition
to operating loss, net loss figures for the periods presented
include interest expense and, in the 2008 periods, unrealized loss
resulting from the revaluation of the company's auction rate
securities investments. The nine-month figure for 2007 also
includes a one-time payment deCODE received related to the
settlement of an intellectual property suit.
At Sept. 30, 2008, the company had liquid funds available for
operating activities of $11.8 million, as compared to
$23.7 million at June 30, 2008, and $64.2 million at Dec. 31,
2007. The net utilization of liquid funds in the three and nine-
month periods ended Sept. 30, 2008, was $12.0 million and
$52.4 million. At Sept. 30, 2008, the company had $35.5 million in
cash, cash equivalents and investments, comprised of the
$11.8 million in cash and cash equivalents, well as $5.5 million
in restricted investments in U.S. Treasury Bills and $18.2 million
in illiquid, non-current investments in auction rate securities.
The company is undertaking a review of its long-term business
strategy with the goal of sharpening the focus of its business,
selling assets, securing partnerships, and utilizing the resources
generated to support product development and marketing efforts in
its core business. The company has utilized a 30-day grace period
for the scheduled October 15 interest payment on its 3.5% Senior
Convertible Notes due 2011 and is reviewing methods for making
this payment. Given its current liquid assets, and without paying
the interest on its Notes from its present funds, the company must
obtain further financial resources through either the
implementation of strategic alternatives, corporate partnerships,
or the sale of or loans secured by its auction rate securities in
order to continue operations beyond the end of this year. The
company is focused on reducing expenses and speeding the
evaluation of its strategic options in order to obtain the
resources to do so.
DELTA AIR: Reaches Deal With Mechanics on Seniority Integration
---------------------------------------------------------------
The Atlanta Journal-Constitution reported that as of December 20,
2008, these groups of workers from Delta Air Lines, Inc., and
Northwest Airlines Corporation have reached a tentative
agreement on an integrated seniority list:
(1) mechanics and related employees, including approximately
5,000 non-union employees from Delta, and 1,000 workers
from Northwest, as represented by the Aircraft Mechanics
Fraternal Association; and
(2) about a dozen of Delta's non-union meteorologists and
Northwest's 20 meteorologists represented by the Northwest
Airlines Meteorologists Association.
Both agreements, which is subject to ratification by the rank and
file mechanics and meteorologists, "call for a date-of-hire
seniority," said The Detroit News.
Specifically for the mechanics, the deal is subject to approval
of Delta and AMFA in January 2009, said the report.
Delta is "making excellent progress in quickly resolving the
issues that are most important to our employees, notably
seniority integration," airline spokesman Kent Landers told AJC.
In a separate report on December 11, 2008, AJC noted that Delta
has reached "a tentative combined labor contract and seniority
list" with dispatchers from Delta and Northwest.
The Professional Airline Flight Control Association represents
Delta's 188 flight dispatchers, and the Transport Workers Union
represents 174 dispatchers at Northwest. It is yet to be
determined which union will ultimately represent the dispatchers
of the combined Company, the report said.
In letters addressed to their members, the Unions said that the
new Agreement "will provide our members with both job and
financial security." The dispatchers' combined seniority list
"represents a fair integration for both sides while removing the
uncertainty of a binding list as a result of an arbitrated
decision," said AJC.
The Dispatchers' tentative agreement will be presented to the
membership for ratification, the newspaper noted.
Panel Rules on Delta and Pilots' Seniority Integration
On December 8, 2008, the arbitration panel decided to integrate
the pre-merger seniority lists for pilots from Delta Air Lines,
Inc. and Northwest Airlines Corporation on the foundation of a
"ratioed status and category" methodology.
Delta pilots argued that their seniority list should based on
their status and aircraft category. Meanwhile, Northwest insisted
that the fair and equitable method of meshing the lists would be
based on pilots' date of hire.
Pilots are concerned over the meshed seniority lists, which will
ultimately affect their pay and career paths.
The Associated Press noted that methodologically, the decision of
the arbitration panel -- composed of labor attorney Fredric
Horowitz, attorney Dana Eischen and veteran arbitrator Richard
Bloch -- favored Delta's contention. The panel ruled that
combining the airlines' pilots seniority lists based on date of
hire would result in "a dramatic overloading of Northwest pilots
in premium flying categories."
The panel's integration method is hinged upon a "rational
treatment for the minor attrition differences that exist between
the two pilot groups," the AP reported, citing a memo addressed
to pilots from Delta Master Executive Council Chairman, Captain
Lee Moak.
The AP further noted that pursuant to the panel's ruling, a
"fence" will be imposed for five years from the implementation
date of the single operating certificate under which Delta and
Northwest pilots will fly under Delta's name. Delta expects to
obtain the Certificate from the Federal Aviation Administration
by the end of 2009.
The restriction means that during that period, no pre-merger
Delta pilot may be awarded or displaced to a Boeing 787 or Boeing
747 vacancy. Similarly, no pre-merger Northwest pilot may be
awarded or displaced to a vacancy on a Boeing 777 aircraft or
category, the AP explained.
The panel's decision, which affects roughly 12,000 pilots, is
binding and effective immediately.
In a statement posted on the official Web site of the Air Line
Pilots Association, Mr. Moak called the seniority integration
"[a] historic labor first and stands in stark contrast to
traditional airline merger timelines where labor issues can take
years to resolve, often at the expense of both labor and the
merged corporation."
Delta Swaps Aircraft with Northwest
for More Efficient Operations
Delta will begin swapping aircraft with those of Northwest on its
routes, in an effort to have more efficient combined network
operations, according to The Wall Street Journal.
Delta Senior Vice President for Network Planning Bob Cortelyou
outlined 14 changes that the carrier plans to adopt with respect
to utilizing more efficient aircraft, WSJ reported, citing an
internal memo to Delta employees.
The plan will enable Delta to "deploy our largest aircraft to
match customer demand between our hubs and highest density
routes, while smaller aircraft will right-size markets where we
currently have more lift than required," the memo stated.
Among other things, Delta will begin using an Airbus A330 from
Northwest's fleet, instead of the smaller Boeing 767-300 that
Delta currently flies.
Combining Delta and Northwest fleets efficiently is a high
priority of the combined Company, which passenger traffic ranks
as the world's largest, WSJ noted.
Delta to Utilize Small Shuttle Aircraft
In a separate report by Aviationweek.com, Delta said that in
January 2009, it will begin shifting from Delta-operated MD-88
aircraft to Shuttle America's Embraer E-175 aircraft for Delta's
New York LaGuardia - Washington shuttle flights.
Delta will "split the service 50/50 between" MD-88 and E-175 on
January 5. However, the route will be operated entirely with E-
175s by March 28, according to the report.
Delta spokeswoman Betsy Talton told USA Today that the
adjustments will better match the carrier's capacity with demand.
About Delta Air Lines
With its acquisition of Northwest Airlines, Atlanta, Georgia-based
Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or
http://www.nwa.com/-- is now the world's largest airline. From
its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St.
Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its
Northwest subsidiary and Delta Connection carriers offer service
to more than 376 destinations worldwide in 66 countries and serves
more than 170 million passengers each year. Delta's marketing
alliances allow customers to earn and redeem either SkyMiles or
WorldPerks on more than 16,000 daily flights offered by SkyTeam
and other partners.
The merger closed on October 29, 2008.
Prior to the merger, Delta was the world's second-largest airline
in terms of passengers carried and Northwest was the world's
fourth largest airline.
Northwest and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R.
Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at
Cadwalader, Wickersham & Taft LLP in Washington, represented the
Northwest Debtors in their restructuring efforts. The Official
Committee of Unsecured Creditors retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel. When the Northwest Debtors filed for bankruptcy, they
listed $14.4 billion in total assets and $17.9 billion in total
debts. On May 21, 2007, the Court confirmed the Northwest
Debtors' amended plan. That amended plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
Delta and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall
S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta
Debtors in their restructuring efforts. Timothy R. Coleman at The
Blackstone Group L.P. provided the Delta Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provided the Official
Committee of Unsecured Creditors with legal advice. John McKenna,
Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman
at Mesirow Financial Consulting, LLC, served as the Committee's
financial advisors. On April 25, 2007, the Court confirmed the
Delta Debtors' plan. That plan became effective on April 30,
2007. The Court entered a final decree closing 17 cases on
Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: Reaches Tentative Deal on NWA-MAC $245MM Bond
--------------------------------------------------------
Delta Air Lines and the Metropolitan Airports Commission reached a
tentative agreement, which, among other things, provides that the
airline will retain 10,000 of Northwest Airlines Corporation
employees based in Minnesota. Delta pledged to pay off in 2022,
the $245 million that Northwest owes on bond debt under a 1992
agreement with MAC.
Delta was also keen on renegotiating the terms of the Northwest-
MAC Agreement with respect to the requirements of a headquarters,
hub and employment levels.
Under the renegotiated deal, Delta agreed to pay off the airport-
backed bonds by 2016 instead of 2022. The promise of 10,000 jobs
lasts until the bonds are paid off, reported The Associated
Press.
Instead of penalizing Delta when it closes the Northwest
headquarters in Minnesota, MAC Chairman Jack Lanners said airport
officials chose to preserve a Twin Cities hub and thousands of
jobs after the Delta-Northwest merger is fully consummated,
according to the Star Tribune.
Specifically, Delta General Counsel Ben Hirst agreed to transfer
regional airline executives from Atlanta, Georgia to the Twin
Cities, along with Northwest subsidiary Compass Airlines, which
will move its headquarters to the Twin Cities, the report noted.
The new Agreement also requires Delta to offer at least 400 daily
flights from the Twin Cities, said the Star Tribune.
MAC commissioners will consider a final accord in January 2009,
according to reports.
About Delta Air Lines
With its acquisition of Northwest Airlines, Atlanta, Georgia-based
Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or
http://www.nwa.com/-- is now the world's largest airline. From
its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St.
Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its
Northwest subsidiary and Delta Connection carriers offer service
to more than 376 destinations worldwide in 66 countries and serves
more than 170 million passengers each year. Delta's marketing
alliances allow customers to earn and redeem either SkyMiles or
WorldPerks on more than 16,000 daily flights offered by SkyTeam
and other partners.
The merger closed on October 29, 2008.
Prior to the merger, Delta was the world's second-largest airline
in terms of passengers carried and Northwest was the world's
fourth largest airline.
Northwest and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R.
Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at
Cadwalader, Wickersham & Taft LLP in Washington, represented the
Northwest Debtors in their restructuring efforts. The Official
Committee of Unsecured Creditors retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel. When the Northwest Debtors filed for bankruptcy, they
listed $14.4 billion in total assets and $17.9 billion in total
debts. On May 21, 2007, the Court confirmed the Northwest
Debtors' amended plan. That amended plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
Delta and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall
S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta
Debtors in their restructuring efforts. Timothy R. Coleman at The
Blackstone Group L.P. provided the Delta Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provided the Official
Committee of Unsecured Creditors with legal advice. John McKenna,
Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman
at Mesirow Financial Consulting, LLC, served as the Committee's
financial advisors. On April 25, 2007, the Court confirmed the
Delta Debtors' plan. That plan became effective on April 30,
2007. The Court entered a final decree closing 17 cases on
Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DELTA AIR: Will Cut Capacity By 8% in 2009 Due to Recession
-----------------------------------------------------------
As widely reported, Delta Air Lines, Inc., will offer voluntary
severance payouts to a majority of the 75,000 employees at Delta
and Northwest Airlines Corporation's mainline operations, in
light of its plans to cut systemwide capacity in 2009 by 6% to
8%.
Without detailing the number of employees they target to
eliminate, Delta Chief Executive Richard Anderson and President
Ed Bastian said that Delta "will reduce the number of people
needed to operate the airline," according to AP, citing the
Executives' memo to employees December 12, 2008.
Messrs. Anderson and Bastian said that Delta's goal is to achieve
necessary reductions through attrition, limited hiring and the
introduction of the voluntary severance programs, reported The
Associated Press.
According to Bloomberg News, Mr. Anderson did not confirm in a
recorded message the number of jobs that Delta needs to shed, but
emphasized that "we hope to get as many volunteers as we need."
Delta Spokeswoman Betsy Talton told AP that majority of mainline
employees are eligible to apply for the severance payouts.
According to AP, Delta will specifically offer in 2009:
-- a severance program for employees with 10 or more completed
years of service or whose completed years of age and
service add up to at least 55; and
-- an early-out program to be offered to those employees who
do not qualify for the first program but who are
frontline/contract ground and flight attendant employees
with five or more years of service and merit/salaried
employees hired before 2009.
Delta Expects Revenue Decline in 2009
Delta expects the airline industry to decline by 8% to 12% in
2009, according to the Company's regulatory filing with the
Securities and Exchange Commission, in light of an Investor Day
meeting held on December 9, 2008.
Mr. Bastian said the unprecedented level of decline "is related
to what we're seeing going in across other economic sectors,"
reports the Atlanta Journal-Constitution.
As an effect of stock market declines in its pension plans, Delta
also expects its pension costs to soar, the newspaper noted.
Mr. Bastian added that Delta expects that its integration costs
on the merger with Northwest will be $500 million in cash -- down
from a previous estimate of $600 million.
However, Delta assured investors that the airline is "well-
positioned to deal with the economic uncertainty," with its
integration efforts with Northwest being prioritized.
Delta's board has set the airline's annual meeting of stockholders
for April 24, 2009 in New York City. The meeting will be held at
8:30 a.m. EDT in the Auditorium at AXA Equitable Center, 787
Seventh Ave., New York. The record date for determining
stockholders entitled to notice of, and to vote at, the annual
meeting will be the close of business on Feb. 27, 2009.
About Delta Air Lines
With its acquisition of Northwest Airlines, Atlanta, Georgia-based
Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or
http://www.nwa.com/-- is now the world's largest airline. From
its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St.
Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its
Northwest subsidiary and Delta Connection carriers offer service
to more than 376 destinations worldwide in 66 countries and serves
more than 170 million passengers each year. Delta's marketing
alliances allow customers to earn and redeem either SkyMiles or
WorldPerks on more than 16,000 daily flights offered by SkyTeam
and other partners.
The merger closed on October 29, 2008.
Prior to the merger, Delta was the world's second-largest airline
in terms of passengers carried and Northwest was the world's
fourth largest airline.
Northwest and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R.
Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at
Cadwalader, Wickersham & Taft LLP in Washington, represented the
Northwest Debtors in their restructuring efforts. The Official
Committee of Unsecured Creditors retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy
counsel. When the Northwest Debtors filed for bankruptcy, they
listed $14.4 billion in total assets and $17.9 billion in total
debts. On May 21, 2007, the Court confirmed the Northwest
Debtors' amended plan. That amended plan took effect May 31,
2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
Delta and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall
S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta
Debtors in their restructuring efforts. Timothy R. Coleman at The
Blackstone Group L.P. provided the Delta Debtors with financial
advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at
Akin Gump Strauss Hauer & Feld LLP, provided the Official
Committee of Unsecured Creditors with legal advice. John McKenna,
Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman
at Mesirow Financial Consulting, LLC, served as the Committee's
financial advisors. On April 25, 2007, the Court confirmed the
Delta Debtors' plan. That plan became effective on April 30,
2007. The Court entered a final decree closing 17 cases on
Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
DNC MULTIMEDIA: Files for Chapter 11 Protection in Florida
----------------------------------------------------------
DNC Multimedia, fka Planetlink Communications, filed with for
Chapter 11 protection with the U.S. Bankruptcy Court for the
Southern District of Florida (Case No. 08-29582).
On May 7, 2008, Trafalgar Capital Specialized Investment Fund,
FIS, sent a notice of acceleration of all principal, interest and
redemption premiums due Trafalgar pursuant to a Secured
Convertible Debenture issued by the company on November 30, 2007,
in the principal amount of $500,000. No further action was taken
in the notice of acceleration.
On April 16, 2008, the company, as a result of being unable to
timely file its annual report on Form 10-KSB, was no longer quoted
on the Over-the-Counter Bulletin Board of the National Association
of Securities Dealers, Inc. but was reported on the 'pink sheets'
under the symbol "DCNM.PK."
Effective May 12, 2008, the company closed on a financing
transaction with a group of private investors for an investment in
the principal amount of $300,000. The financing consisted of two
components: (a) a secured convertible debenture in the principal
aggregate amount of $175,000 and (b) a secured convertible
debenture, in the principal aggregate amount of $125,000 to be
funded on the earlier of: (i) 150 days from May 12, 2008 or (ii)
the company's receipt of a second purchase order. All of the
funds provided in the financing were held in escrow to be released
at Trafalgar's discretion.
The Debentures are secured by all of the assets and property of
the company in accordance with a Security Agreement between the
company and the Investors.
On May 2, 2008, Robert Lau resigned his position as Chief
Financial Officer to the company. M. Dewey Bain was appointed to
replace him. Mr. Bain was elected to the company's Board of
Directors in August 2002 and has served in a several officer
positions since then, including chief executive officer, chief
financial officer, treasurer, secretary and president.
Based in Suwanee, Georgia, DNC Multimedia, fka Planetlink
Communications, is in the consumer electronics industry, focused
primarily on portable devices.
The company's consolidated balance sheets as of December 31, 2007,
show $1.15 million in total assets and $1.16 million in total
liabilities, resulting in $13,371 in shareholders' deficit. The
company incurred a net loss of $2.5 million and $2.4 million for
the years ended December 31, 2007 and 2006, respectively. As of
December 31, 2007, the company had a working capital deficit of
$639,943 as compared to a working capital deficit of $477,043 as
of December 31, 2006. In addition, as of December 31, 2007, the
company had not yet developed a substantial revenue stream to meet
ongoing cash flow needs. These conditions, the company said,
raise substantial doubt as to its ability to continue as a going
concern.
The Debtor is represented by Bradley Shraiberg, Esq., at Kluger,
Peretz, Kaplan & Berlin.
DOLLAR THRIFTY: S&P Junks Long-Term Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Dollar
Thrifty Automotive Group Inc., including lowering the long-term
corporate credit rating to 'CCC+' from 'B-'. All ratings remain
on CreditWatch with negative implications, where they were
initially placed on Feb. 12, 2008.
"The downgrade is based on the company's exposure to distressed
U.S. auto manufacturers, particularly Chrysler LLC; the need for
longer-term covenant relief on its corporate credit facility; and
a continuing weak earnings outlook, due to pressure on demand,
pricing, and vehicle residual values, which began earlier in
2008," said Standard & Poor's credit analyst Betsy Snyder. "If
the company is unsuccessful in extending covenant relief past the
current Feb. 28, 2009 period, ratings will likely be lowered," the
analyst continued.
Dollar Thrifty has obtained covenant relief on its corporate
credit facility through Feb. 28, 2009, with its corporate leverage
ratio calculation based on the trailing four quarters ended
June 30, 2008. While the company is currently in compliance with
this ratio, it also has two asset-backed facilities that total
$1 billion that mature in May 2009. In addition, S&P expects
reduced demand and higher costs to cause it to violate the
covenant unless it is amended and for a longer period of time.
The distressed U.S. auto manufacturing industry is also having a
material negative effect on the car rental industry. Dollar
Thrifty has significant exposure to Chrysler LLC. It has the
largest percentage of Chrysler vehicles in its fleet of the four
largest U.S. car rental companies. Prices in the used car market,
in which the auto renters dispose of their vehicles, have been
depressed in 2008. This is caused by concerns about the long-term
viability of the U.S. auto manufacturers as well as an oversupply
of used cars in the marketplace due to limited access to credit
and the effect of the recession on consumer spending.
This has resulted in losses on the sale of vehicles, and higher
depreciation expense for the car renters (depreciation expense is
increased to make up for the shortfall at the time of the sale
relative to the expected residual). S&P expects these trends to
continue over the next several months and even worsen if any of
the auto manufacturers were to restructure or liquidate.
Tulsa, Oklahoma-based Dollar Thrifty, the parent of the Dollar and
Thrifty car rental brands, currently has about 11% of the U.S. on-
airport car rental market, significantly smaller than the
approximate 30% share of each of its major competitors Hertz
Corp., Avis Budget Group Inc. (parent of the Avis and Budget
brands), and Enterprise Rent-A-Car Co. (parent of the Enterprise,
Alamo, and National brands). Dollar Thrifty derives most of its
revenues from leisure travelers, whose travel plans are likely to
be reduced to a greater extent from economic weakness.
S&P will assess the success of the company's longer-term covenant
relief, and the effect of the distressed auto manufacturers,
particularly Chrysler, to resolve the CreditWatch.
DOWLING COLLEGE: Moody's Keeps 'B1' 1996 and 2002 Bonds Rating
--------------------------------------------------------------
Moody's is maintaining the B1 rating of Dowling College on
watchlist for possible downgrade. The watchlist applies to the B1
rating on Dowling's Series 1996 and 2002 bonds and applies to a
combined $15.7 million of rated debt. The Series 2002 bonds were
issued through the Town of Brookhaven Industrial Development
Agency, and the Series 1996 bonds were issued through the Suffolk
County Industrial Development Agency.
The ratings remain on watchlist for possible downgrade pending
Moody's review of spring 2009 semester enrollment levels and net
tuition revenue generated, confirmation of extension of the
College's $3 million operating line of credit which is up for
renewal in January, and further updates on the College's FY 2009
operating performance. The College's ability to maintain at least
balanced operations and generate cash flow to adequately cover
debt service responsibilities is a critical credit factor in light
of slim balance sheet cushion. Moody's expect that Moody's next
review of the College's rating will take place within 90 days.
Legal security
The Series 1996 and 2002 bonds are general obligations of the
College and feature debt service reserve funds. The Series 2002
bonds are further secured by a first leasehold mortgage and
security interest in the financed facility, a residence hall on
the Shirley (Brookhaven) campus.
The College's $38.5 million of Series 2006 bonds (not rated by
Moody's) are a general obligation of the College and also have a
debt service reserve fund. They are secured by a first mortgage
lien and security interest in the College's Oakdale and Shirley
campuses and property, excluding the residential facility financed
with the Series 2002 bonds. The Series 2006 bonds have a
subordinate mortgage lien and security interest in the Series 2002
facility.
Per the Series 2006 Sublease between the College and the issuing
authority, under certain circumstances (defined as Triggering
Events in the Sublease), the College's Gross Revenues, excluding
2002 Facility Revenues pledged to the Series 2002 Trustee to
secure the principal amount of the Series 2002 Bonds, would be
directed to the Series 2006 trustee. Debt service on the Series
2006 bonds would first be paid from Gross Revenues, before other
operating costs of the College. In Moody's opinion, the Series
1996 and 2002 bonds have a weaker legal security than the Series
2006 bonds.
Debt-related rate derivatives: None
Key indicators (FY 2008 audited financial data and fall 2008
enrollment data)
-- Total Full-Time Equivalent Enrollment: 4,376 FTE students
-- Total cash and investments (including $4.5 million of debt
service reserve funds): $12.7 million
-- Direct Debt: $66.7 million
-- Total cash and investments-to-direct debt: 0.19 times
-- Estimated total cash and investments (assuming 20% investment
loss during FY 2009)-to-direct debt: 0.15 times
-- Unrestricted cash and investments as of 12/1/08 (unaudited):
$3.4 million (including $1 million drawn under line of
credit)
-- FY 2008 Operating Margin: -1.7%
-- Operating Cash Flow Margin: 7.6%
-- Annual Debt Service Coverage: 1.1 times
-- Reliance on Student Charges: 91.7%
RATED DEBT:
-- Series 1996 and 2002: B1 on watchlist for possible downgrade
DPI OF ROCHESTER: Secuprint Acquires All Assets for $940,000
------------------------------------------------------------
Secuprint Inc., a wholly owned subsidiary of Document
Security Systems, Inc., acquired substantially all of the
assets of DPI of Rochester LLC -- including working capital
of $865,000 -- for about $940,000 in cash plus the right
to assume up to $2.6 million in certain secured equipment leases
and loans.
Secuprint plans to operate DPI's business after the acquisition
under the name DPI Secuprint.
Robert Fagenson, Chairman of the Board of DSS, commented, "The
acquisition of DPI is a transformational event for DSS. It not
only accomplishes the fifth of our five 2008 strategic goals ?- a
synergistic acquisition in the commercial printing industry -- it
also advances our goal of becoming a leading provider of security
solutions."
With DPI's cutting-edge digital print equipment and much-needed
capacity we are well positioned to meet the growing global demand
for our security print products. We are delighted to welcome
DPI's talented workforce to the DSS family," Mr. Fagenson said.
Patrick White, CEO of DSS, added, "The acquisition of DPI's assets
continues DSS's transformation from an IP licensing company to a
customer-driven, full-service manufacturer and strengthens our
position in the rapidly expanding anti-counterfeiting and
authentication market."
"By purchasing the assets of DPI, we gain a very capable team, a
state-of-the-art commercial print facility and a notable list of
clients, all which will enable us to continue growing our security
print production capabilities. Our collective team will carry on
DPI's reputation for high-quality printing and excellent service
to our combined customer group," Mr. White noted.
Mr. White continued, "We expect to derive significant operational
synergies from the transaction as we consolidate print operations
into DPI's facility and integrate the sales forces to pursue
cross-sell opportunities. We also expect to realize margin
improvement by bringing in-house certain DSS print products that
we had previously been outsourcing."
As a result, we expect this transaction to be accretive in the
second half of 2009. In addition to acquiring the physical assets
of DPI and its highly skilled printing staff, we are excited that
both of DPI's principals have signed five-year employment
agreements, with mutually agreeable automatic extensions, with
Secuprint, enabling a smooth transition for DPI's customers," Mr.
White added.
Management will provide more detail on its integration plans with
DPI in early 2009 when it outlines its strategic goals and outlook
for the year. DSS and Secuprint entered into a new credit
facility with Baum Capital Investments Inc. in the principal
amount of up to $1.0 million to pay for most of the cash portion
of the purchase price of the DPI acquisition. The credit facility
has a one-year term and is secured by all of the assets of
Secuprint.
About DPI of Rochester
Rochester, New York-based DPI of Rochester, LLC, operates a
printing company. The company filed for Chapter 11 protection on
Nov. 6, 2008 (Bankr. W. D. N.Y. Case No. 08-22894). David D.
MacKnight, Esq., at Lacy, Katzen., et al., represents the company
in its restructuring effort. The company listed assets of
$3,430,434 and debts of $4,653,237.
E*TRADE FINANCIAL: S&P Puts 'B' Rating on CreditWatch Developing
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its 'B' long-term
counterparty credit rating on E*TRADE Financial Corp. and its
'BB-' long-term counterparty credit rating on E*TRADE Bank, which
had been on CreditWatch Negative since Nov. 13, 2007, were placed
on CreditWatch with developing implications pending the outcome of
the company's application to the U.S. Treasury's Troubled Asset
Relief Program and a review of the overall health of the
franchise.
"Although some performance metrics showed modest improvement in
third-quarter 2008, overall operating performance remained weak in
a difficult environment," said Standard & Poor's credit analyst
Gregory Gaskel.
E*Trade reported a loss of $50.5 million, driven by increased
loan-loss provisions of $518 million and a $154 million pretax
loss from sale of Fannie Mae and Freddie Mac preferred shares.
TARP approval will provide support to the bank's balance sheet in
light of the problematic real estate-related loan portfolio.
S&P expects the company to continue to reduce risk and strengthen
its balance sheet in the face of continuing loan performance
issues and difficult market conditions for its retail investor
franchise. The resolution of the CreditWatch will depend on the
outcome of the company's TARP application and a review of the
overall health of the franchise. Approval under TARP would not
likely affect the rating, although failure to be approved could
result in at least a one-notch downgrade.
EASTON-BELL: S&P Ratings Cut Matches Moody's March Downgrade
------------------------------------------------------------
Easton-Bell Sports Inc., received a downgrade on Dec. 17 from
Standard & Poor's to match the demotion handed out in March by
Moody's Investors Service, Bloomberg's Bill Rochelle notes.
As reported by the Dec. 19 issue of the Troubled Company Reporter,
Standard & Poor's Ratings Services lowered the corporate credit
rating on Easton-Bell Sports Inc. to 'B-' from 'B'. S&P also
lowered the company's senior secured bank loan rating to 'B' from
'B+', while the recovery rating remains '2', indicating the
expectation of substantial (70%-90%) recovery in the event of
payment default. In addition, S&P lowered the senior subordinated
debt rating to 'CCC' from 'CCC+', while the recovery rating
remains '6', indicating the expectation for negligible (0%-
10%) recovery in the event of a payment default. The outlook is
developing. As of Sept. 20, 2008, the Van Nuys, California-based
company had about $497 million of debt.
The ratings downgrade is based on the company's weak liquidity
position and continued high leverage. The ratings reflect Easton-
Bell's weak liquidity, high debt leverage, participation in the
highly competitive sporting goods industry, and an aggressive
financial policy. Easton-Bell benefits from its leading market
positions in football, cycling, baseball, and hockey equipment.
However, S&P believes the company will be challenged to maintain
operating stability as the weak U.S. economy should continue to
affect consumer spending patterns that could further affect
91 retailer inventory levels and their willingness to accept price
increases.
Easton-Bell's liquidity position is very weak and leverage remains
high. While the company has demonstrated stable operating
performance and generated free cash flow the first nine months of
fiscal 2008, liquidity is expected to remain weak through fiscal
2009 due to covenant step-downs beginning in fourth-quarter fiscal
2008 and the weak economy. S&P expects the company will remain in
compliance with its financial covenants in fourth quarter of
fiscal 2008, but with a very limited cushion. The company could
also use its equity cure provision under its bank facility to
remain in compliance with its covenants over the near term.
S&P would consider a lower rating if the company cannot remain in
compliance with its bank facility or the weak economy further
affects its liquidity," said Standard & Poor's credit analyst
Patrick Jeffrey. For example, S&P estimate a less than 5% decline
in EBITDA from current levels and only minimal debt reduction of
about $10 million to $20 million would result in a covenant
violation at the end of the first quarter of fiscal 2009.
"We would consider a higher rating if the company can restore an
adequate covenant cushion, despite near-term step-downs, and
maintain adequate liquidity and operating stability," he
continued.
EAU TECHNOLOGIES: Completes Purchase of 100,000 Shares of Stock
---------------------------------------------------------------
EAU Technologies, Inc., has completed the purchase 100,000 shares
of Common Stock of the company at a price of $1.00 per share.
On Oct. 30, 2008, Theodore Jacoby, a director of EAU Technologies,
Inc., agreed in principle with the company to purchase 100,000
shares of Common Stock.
In connection with the sale, JL Montgomery Consulting, LLC, agreed
to waive the potential application of the antidilution provision
in its warrants under the consulting agreement between JLM and the
Company.
Further, Water Science LLC agreed to waive the potential
application of the antidilution provisions of its warrant
agreement and of its convertible note. Absent the waivers, the
exercise price of the warrants and the conversion price of the
convertible note may have been subject to downward adjustment
based on the $1.00 price offered to Mr. Jacoby. Water Science is
controlled by Peter Ullrich, a director of the company and JLM is
controlled by J. Leo Montgomery, also a director of the company.
JLM also agreed to waive any antidilution provision in its
warrants under his consulting agreement that would have been
triggered by the recent financing transaction with Water Science.
Absent this waiver, the exercise price of the warrants may have
been subject to downward adjustment based on the terms offered to
Water Science.
About EAU Technologies
Based in Kennesaw, Georgia, EAU Technologies Inc., fka as Electric
Aquagenics Unlimited Inc. (OTC BB: EAUI) -- http://www.eau-x.com/
-- is a supplier of Electrolyzed Water Technology and other
complementary technologies with applications in diverse
industries.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $4,537,253 and total liabilities of $11,691,026, resulting in a
stockholders' deficit of $7,153,773.
For three months ended Sept. 30, 2008, the company posted net loss
of $775,761 compared to net loss of $1,199,252 for the same period
in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $3,485,766 compared to net loss of $10,539,203 for the same
period in the previous year.
Going Concern Doubt
HJ & Associates, LLC, in Salt Lake City, expressed substantial
doubt about EAU Technologies Inc., fka Electric Aquagenics
Unlimited Inc.'s ability to continue as a going concern after
auditing the company's financial statements for the years ended
Dec. 31, 2007, and 2006. The auditing firm pointed to the
company's working capital and stockholders' deficits.
EAUTOCLAIMS INC: Auditor Expresses Going Concern Doubt
------------------------------------------------------
McGladrey & Pullen, LLP, in New York, audited the accompanying
balance sheet of eAutoclaims Inc. as of July 31, 2008, and the
related statements of operations, stockholders' equity
(deficiency) and cash flows for the year then ended.
In a letter to the Board of Directors and shareholders of
eAutoclaims dated December 18, 2008, the auditing firm noted that
the company has suffered recurring losses from operations and has
a stockholders' deficiency and working capital deficiency at
July 31, 2008. "These conditions raise substantial doubt about
the company's ability to continue as a going concern."
Jeffrey Dickson, president and chief executive officer, and Larry
Colton, chief financial officer, relate that cash flows generated
from operations, cash received from the issuance of notes and cash
received as a result of the issuance of equity securities were
sufficient to meet the company's working capital requirements for
the year ended July 31, 2008. "The company has suffered recurring
losses from operations including $1,708,124 for the year ended
July 31, 2008, and has a stockholders' deficiency of $596,189 and
a working capital deficiency of $2,334,942 at July 31, 2008. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern."
According to Mr. Dickson and Mr. Colton, the company's plan and
ability to continue as a going concern is primarily dependent upon
the ability to grow revenue through existing and new lines of
business and attract additional capital through debt or equity
financing.
As of July 31, 2008, the company's balance sheet showed total
assets of $2,697,260 and total liabilities of $3,293,449.
A full-text copy of the company's annual report is available for
free at http://researcharchives.com/t/s?36ab
About eAutoclaims
eAutoclaims, Inc., is a Nevada corporation which provides Internet
based vehicle collision claims services for insurance companies,
Managing General Agents, third party claims administrators and
self-insured automobile fleet management companies. The company
accepts assignment of claims from customers, and provides vehicle
repairs through a network of repair shops. The company also
handles estimate, audit and claims administration services for
claims for which the company does not perform the repair. The
company uses the Internet to streamline and lower the overall
costs of automobile repairs and the claims adjustment expenses of
its clients.
FIRST FRANKLIN: Moody's Downgrades Ratings on 12 Class Certs.
-------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 13
tranches issued in four First Franklin Mortgage Loan Trust
transactions. Underlying securities' collateral consists
primarily of closed-end second lien residential mortgage loans.
The ratings on the securities were monitored by evaluating factors
Moody's determined to be essential in the analysis of securities
backed by such loans. The salient factors include: i) Moody's
review of the nature, sufficiency, and quality of historical loan
performance information, ii) analysis of the collateral
composition and pool credit performance including prepayment, loan
delinquency and loss data, iii) consideration of the transaction's
capital structure and related allocations of collateral cash flows
and losses, and iv) a comparison of current credit enhancement
levels to updated Moody's pool loss projections based on present
collateral credit performance.
When analyzing ratings for CES and HELOC transactions, Moody's
projects cumulative losses for each deal based on a collateral
analysis of the deal's Constant Prepayment Rate and Constant
Default Rate.
CPR - CPR is based on the average of the last six months 1-month
CPR.
CDR - There are two approaches for determining pool CDR. The
first approach calculates CDR based on pool loan losses from the
previous twelve months, i.e. recent losses. A second approach is
based on pipeline losses -- losses derived from days-aged
delinquencies and Moody's assumptions for default based on days
delinquent, in foreclosure, or liquidation, and the severity of
loss given default. Moody's assumes 100% severity for second
liens, including both CES and HELOCs. After the CDR is calculated
using the two methods, the effective CDR for loss projection
purposes is determined by using a weighted average of the CDRs as
determined by the recent loss and pipeline loss approaches -- with
weightings determined on a transaction by transaction basis.
Moody's assumes that the CDR will not decline for the next three
years and will decline subsequently for the life of the deal under
a schedule, typically reducing by 50% in year 4 and remaining
constant thereafter.
Based on calculated CPR and CDR, Moody's calculates projected
deal-specific cumulative losses and the weighted average life of
the deal. The credit enhancement calculation can also include
credit for excess spread, i.e. the aggregate, positive difference
in the weighted average loan coupon and the all-inclusive
securities' interest and deal fees, including servicing. Excess
spread benefit is calculated by multiplying the stressed
annualized excess spread by the weighted average life of the deal.
Aggregate credit enhancement which combines subordination benefit
(including over-collateralization and/or reserve accounts) and
excess spread benefit is compared with projected cumulative losses
for the deal to derive coverage multiples and associated ratings
by deal tranche. Moody's will analyze tranche coverage multiples
after consideration of timing of tranche repayment and allocation
of losses (if any).
Issuer: First Franklin Mortgage Loan Trust 2002-FFA
-- Cl. M-1, Downgraded to Ba1; previously on 8/23/2007
Downgraded to A2
-- Cl. M-2, Downgraded to Caa3; previously on 8/23/2007
Downgraded to Baa2
-- Cl. M-3, Downgraded to C; previously on 8/23/2007 Downgraded
to B1
Issuer: First Franklin Mortgage Loan Trust 2003-FFC
-- Cl. M-1, Downgraded to A2; previously on 10/10/2006 Upgraded
to Aaa
-- Cl. M-2, Downgraded to Baa3; previously on 7/16/2003 Assigned
A2
-- Cl. M-3, Downgraded to B2; previously on 4/20/2007 Downgraded
to Ba1
Issuer: First Franklin Mortgage Loan Trust 2004-FFB
-- Cl. M-4, Downgraded to B3; previously on 8/31/2004 Assigned
A2
-- Cl. M-5, Downgraded to Ca; previously on 8/31/2004 Assigned
Baa1
-- Cl. B, Downgraded to Ca; previously on 8/31/2004 Assigned
Baa2
Issuer: First Franklin Mortgage Loan Trust 2004-FFC
-- Cl. B-1, Downgraded to Baa3; previously on 2/25/2005 Assigned
Baa1
-- Cl. B-2, Downgraded to Ba2; previously on 2/25/2005 Assigned
Baa1
-- Cl. B-3, Downgraded to B3; previously on 2/25/2005 Assigned
Baa2
-- Cl. B-4, Downgraded to Caa2; previously on 2/25/2005 Assigned
Ba2
FIRST FRANKLIN: S&P's Ratings on 7 Classes of Certs. Tumble to 'D'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 31
classes of asset-backed certificates issued by six First Franklin
Mortgage Loan Trust transactions. S&P affirmed its ratings on the
remaining 10 classes from these series.
The downgrades reflect the continued poor collateral performance
that has allowed credit enhancement to decline to a point at which
S&P believes is insufficient to maintain the ratings at their
previous levels. The poor performance is reflected in the
complete erosion of overcollateralization to all six transactions.
As of the November 2008 remittance report, cumulative realized
losses were as follows (series: percent of original balance,
amount):
-- 2003-FFH1: 5.05%, $29,400,742;
-- 2003-FFH2: 4.38%, $45,999,841;
-- 2004-FFH1: 4.85%, $38,491,243;
-- 2004-FFH2: 5.19%, $62,333,453;
-- 2004-FFH3: 5.34%, $80,129,739; and
-- 2004-FFH4: 6.42%, $46,242,612
In addition, all six series with lowered ratings have sizable loan
amounts that are severely delinquent (90-plus days, foreclosures,
and real estate owned), which strongly suggest that the
unfavorable performance trends are likely to continue and further
compromise available credit support. As of the November 2008
remittance period, the severe delinquencies are (series: percent
of current balance, amount):
-- 2003-FFH1: 21.31%; $8,165,499;
-- 2003-FFH2: 34.73%; $24,180,439;
-- 2004-FFH1: 21.70%; $10,829,897;
-- 2004-FFH2: 31.06%; $39,440,526;
-- 2004-FFH3: 29.88%; $61,417,117; and
-- 2004-FFH4: 22.27%; $27,355,078
The underlying collateral consists of fixed- and adjustable-rate,
fully amortizing and balloon payment mortgage loans secured by
first liens by one- to four-family residential properties. The
weighted average loan-to-value ratio of the mortgage loans are
generally greater than 90%. These mortgages were originated or
purchased by First Franklin Financial Corp. in accordance with
guidelines that target borrowers with less-than-perfect credit
histories. The guidelines are intended to assess both the
borrower's ability to repay the loan and the adequacy of the value
of the property securing the mortgage.
Ratings Lowered
First Franklin Mortgage Loan Trust 2003-FFH1
Series 2003-FFH1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 32027NED9 B BB
M-2 32027NEE7 CC CCC
M-3 32027NEF4 D CCC
First Franklin Mortgage Loan Trust 2003-FFH2
Series 2003-FFH2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 32027NEU1 CC CCC
M-3 32027NEV9 D CC
First Franklin Mortgage Loan Trust 2004-FFH1
Series 2004-FFH1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-1 32027NGQ8 A AA-
M-2 32027NGR6 CCC B
M-3 32027NGS4 CCC B-
M-4 32027NGT2 CC CCC
M-5 32027NGU9 D CCC
M-6 32027NGV7 D CC
First Franklin Mortgage Loan Trust 2004-FFH2
Series 2004-FFH2
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 32027NHZ7 BB AA
M-3 32027NJA0 B BBB
M-4 32027NJB8 CCC B+
M-5 32027NJC6 CCC B
M-6 32027NJD4 CC B-
M-7 32027NJE2 CC CCC
M-8 32027NJF9 D CC
First Franklin Mortgage Loan Trust 2004-FFH3
Series 2004-FFH3
Rating
------
Class CUSIP To From
----- ----- -- ----
M-2 32027NLS8 B A
M-3 32027NLT6 B- BB+
M-4 32027NLU3 CCC B+
M-5 32027NLV1 CC B
M-6 32027NLW9 CC B-
M-7 32027NLX7 CC CCC
M-8 32027NLY5 D CCC
M-9 32027NLZ2 D CC
First Franklin Mortgage Loan Trust 2004-FFH4
Series 2004-FFH4
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 32027NPG0 BBB A
M-6 32027NPH8 BB BBB+
M-7 32027NPJ4 B BBB-
M-8 32027NPK1 B- BB
M-9 32027NPL9 CCC B
Ratings Affirmed
First Franklin Mortgage Loan Trust 2003-FFH2
Series 2003-FFH2
Class CUSIP Rating
----- ----- ------
M-1A 32027NES6 B
M-1B 32027NET4 B
First Franklin Mortgage Loan Trust 2004-FFH2
Series 2004-FFH2
Class CUSIP Rating
----- ----- ------
M-1 32027NHY0 AA+
First Franklin Mortgage Loan Trust 2004-FFH3
Series 2004-FFH3
Class CUSIP Rating
----- ----- ------
I-A2 32027NMD0 AAA
II-A4 32027NLQ2 AAA
M-1 32027NLR0 AA+
First Franklin Mortgage Loan Trust 2004-FFH4
Series 2004-FFH4
Class CUSIP Rating
----- ----- ------
M-1 32027NPC9 AA+
M-2 32027NPD7 AA
M-3 32027NPE5 AA-
M-4 32027NPF2 A+
FLYING J: Chapter 11 Filing Prompts Moody's 'D' Rating on Unit
--------------------------------------------------------------
Moody's Investors Service downgraded Big West Oil, LLC's Corporate
Family Rating to Caa3 from B1, its Probability of Default Rating
to D from B1, and the rating on its delayed draw $400 million 7
year senior first secured Term Loan B to Caa3 from B1. Moody's
does not rate BWO's $200 million first secured borrowing base
revolver. As is Moody's standard practice, the ratings will be
withdrawn in the near future.
The downgrades follow BWO's filing under Chapter 11 after
defaulting on its unrated $200 million revolver. Though Big West
had ample undrawn capacity under its revolver borrowing base,
amidst current credit market disruption it was unable to negotiate
a waiver or amendment of its covenant governing the maximum
permitted inter-company receivable.
BWO's parent, Flying J Inc., announced that it and certain of its
subsidiaries, including BWO and Longhorn Pipeline, have filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code. The filing results from liquidity short-falls at
Flying J and Flying J's subsidiary Longhorn Pipeline after falling
oil prices reduced availability on credit facilities tied to the
value of finished petroleum products.
The TLB is first secured principally by BWO's Salt Lake City, Utah
and Bakersfield, California refineries. TLB has been partially
funding a $680 million project to double Bakersfield's high value
gasoline and diesel output by upgrading its existing production
component of very low value gas oil.
Big West Oil., LLC is headquartered in Ogden, Utah.
FORD MOTOR: Moody's Downgrades Senior Unsecured Rating to 'Caa1'
----------------------------------------------------------------
Moody's Investors Service downgraded the senior unsecured rating
of Ford Motor Credit LLC to Caa1 from B3 after the Corporate
Family Rating of its ultimate parent, Ford Motor Company, was
downgraded to Caa3 from Caa1. The outlook for the ratings of both
firms is negative.
One consideration in the downgrade of Ford Credit's ratings is the
increased potential that Ford could restructure its liabilities
through a distressed debt exchange and the ramifications of such
an action for Ford Credit. A distressed offering could be seen by
Ford as a necessary condition to negotiating labor contract
concessions equal to those obtained by GM and Chrysler in
connection with their receiving support from the U.S. government.
Moody's believes that there is a low probability that such a
distressed offering by Ford would also involve Ford Credit's
creditors. However, until there is greater clarity regarding the
operating prospects of the Detroit automakers, the auto finance
affiliates, including Ford Credit, could continue to face
heightened credit market uncertainty, thereby constraining their
financial and operating flexibility.
The Ford Credit downgrade also reflects the potential that
extended credit market dislocations, coupled with the global
economic downturn, could have the effect of permanently weakening
the longer-term operating fundamentals of the auto finance
captives of the Detroit automakers. Should capital market access
and funding costs not return to historic norms, Ford Credit's
future business activities would likely narrow in scope, its
earnings and margins would erode, and its ability to absorb
cyclical credit losses would weaken.
Ford Credit continues to address current market conditions by
undertaking actions to preserve liquidity and capital levels. In
Moody's view, Ford Credit has sufficient cash resources to support
near-term operating and debt repayment requirements, when
considering the firm's cash balances, operating cash flow, and
cash generated by expected further declines in earning asset
levels. Moody's expects Ford Credit's leverage profile to remain
adequately positioned.
Moody's links the ratings of Ford Credit with those of Ford due to
the business and ownership connections that tie the two firms'
performance and prospects. However, Moody's believes that the
risk of lower potential recovery that would accompany a Ford
distressed debt exchange is not likely to pertain to creditors of
Ford Credit. Therefore, the recovery differential between the two
sets of creditors is supportive of the wider ratings notching
between Ford and Ford Credit that results from the rating actions.
Ford Credit's negative ratings outlook, mirroring the negative
outlook at Ford, is based upon continuing operating uncertainties
in the auto sector, as well as declining asset quality trends and
adverse funding conditions facing Ford Credit.
The last rating action was on November 7, 2008 when the ratings of
Ford Motor Credit LLC were downgraded to B3 from B2 with a
negative outlook.
Ratings affected by the actions include:
Issuer: Ford Motor Credit LLC:
-- Senior unsecured: to Caa1 from B3, Subordinate shelf: to
(P)Caa3 from (P)Caa2
Issuer: FCE Bank Plc:
-- Senior unsecured: to Caa1 from B3
Issuer: Ford Credit Australia Ltd.:
-- Backed senior unsecured: to Caa1 from B3
Issuer: Ford Credit Canada Limited:
-- Backed senior unsecured: to Caa1 from B3
Issuer: Ford Motor Credit Co. of New Zealand Ltd.:
-- Backed senior unsecured: to Caa1 from B3
Issuer: Ford Credit Capital Trusts I, II, and III:
-- Backed preferred shelf: to (P)Caa3 from (P)Caa2
Ford Motor Credit LLC is the Dearborn, Michigan-based captive
finance arm of Ford Motor Company. The company reported third
quarter 2008 total assets of $155 billion.
FORD MOTOR: Moody's Downgrades CFR to 'Caa3'; Outlook Negative
--------------------------------------------------------------
Moody's Investors Service lowered the Corporate Family Rating and
Probability of Default Rating of Ford Motor Company to Caa3 from
Caa1 and lowered the company's Speculative Grade Liquidity rating
to SGL-4 from SGL-3. The outlook is negative. The downgrade
reflects the increased risk that Ford will have to undertake some
form of balance sheet restructuring in order to achieve the same
UAW concessions that General Motors and Chrysler are likely to
achieve as a result of the recently-approved government bailout
loans. Such a balance sheet restructuring would likely entail a
loss for bond holders and would be viewed by Moody's as a
distressed exchange and consequently treated as a default for
analytic purposes.
Bruce Clark, Senior Vice President with Moody's said, "In return
for its loans to GM and Chrysler, Washington is going to demand
that all stake holders step up and make sacrifices. This will
mean wage and benefit concessions from the UAW, and haircuts to
debt for creditors." Clark went on to explain, "Even if Ford ends
up not needing government loans because of its stronger liquidity
position, the company must have UAW parity with GM and Chrysler.
But, the UAW is unlikely to make concessions to Ford unless Ford's
creditors also bear some pain in the form of a debt
restructuring."
The terms of the recently-approved $17.4 billion in short-term
government financing for GM and Chrysler include important
operational and financial targets. Substantial progress in
achieving these targets will be important to: the government's
decision to extend these loans beyond March 31, 2009; the
provision of any additional funds that might be needed; and, the
restoration of the companies' operational competitiveness. These
targets include substantial wage and benefit concessions by the
UAW and a reduction in debt by as much as two-thirds through a
debt for equity exchange. Moody's expects that considerable
progress will be made in both of these targeted areas.
Ford has maintained that it is not facing a near-term liquidity
shortfall, and it is not seeking short-term financial assistance
from the government. Rather, it has requested the provision of up
to $9 billion in bridge financing that would be available should
market and demand conditions during 2009 be worse than the company
anticipates. Nevertheless, if GM and Chrysler achieve UAW
concessions in conjunction with a forced reduction in debt,
Moody's believes it will be critical for Ford to obtain similar
labor concessions in order to remain competitive. However, Ford
is unlikely to receive those concessions in the absence of some
form of debt reduction that would entail a loss to bond holders.
Moody's expects that the framework of the government loans
extended to GM and Chrysler will create considerable labor and
cost of capital motivations for Ford to undertake a debt
restructuring even if the company does not have to draw on bailout
funds from the government. Moreover, it is possible that the
provision of the committed borrowing facility that Ford is
requesting from the government could have labor concession and
debt reduction provisions similar to those contained in the loans
granted to GM and Chrysler.
Ford's liquidity position at September 30, 2008 consisted of
$18.9 billion in cash and $10.7 billion in undrawn committed
credit facilities. The company believes that this liquidity
profile, combined with the cash saving initiatives it is
undertaking, should enable it to fund itself through 2009.
However, the weak outlook for the US economy, depressed consumer
confidence, and falling automotive demand in the US and Europe
could severely strain the company's liquidity position during
2009. Ford's current operating plan anticipates that US light
vehicle sales will approximate 12.2 million units during 2009.
This planning assumption is significantly higher than the 10.3
million seasonally adjusted annual rate of US automotive shipments
for November. As a result of these mounting operating pressures
Ford's Speculative Grade Liquidity rating was lowered to SGL-4,
indicating weak liquidity during the coming 12 to 15 months. These
same operating pressures result in the negative rating outlook.
The last rating action on Ford was an affirmation of the company's
Caa1 Corporate Family Rating on December 3, 2008.
Ford Motor Company, headquartered in Dearborn, Michigan, is a
leading global automotive manufacturer.
GENERAL MOTORS: Court Cuts Legal Fees in Investors Settlement
-------------------------------------------------------------
The Associated Press reports that U.S. District Judge Gerald
Rosen in Detroit has reduced legal fees in General Motors Corp.'s
$303 million settlement with investors.
The AP states that the lawyers represented people who invested in
GM stock or bonds over a six-year period. The AP relates that two
lead lawyers and five law firms, who represented the people who
invested in GM stock or bonds over a six-year period, asked for a
19% share in the settlement -- almost $60 million -- which Judge
Rosen found excessive. According to The AP, the judge instead
allowed the lawyers to get 15%, or $45 million, which Judge Rosen
said would add up to a rate of $1,825 per hour.
The complainants, according to The AP, claimed that they suffered
due to GM's accounting mistakes and misleading statements about
the health of the firm. Their lawyers said that the case was very
risky due to GM's financial condition and that there was no
guarantee of victory, The AP relates.
SUV Plant in Dayton Closes
The AP reports that GM's sport-utility vehicle plant in the Dayton
suburb of Moraine has closed, after operating for 27 years. The
AP states that Tuesday was the final day of production at the
plant.
According to The AP, GM said in June that it planned to close the
plant as high gasoline prices drove consumers away from SUVs. The
AP says that about 1,080 hourly people worked at the plant. About
572 workers will be working at GM's Moraine engine plant, which
the company co-owns with Isuzu.
Restructuring Will Wipe Out Stockholders,
Credit Suisse Analyst Says
Greg Bensinger and Angela Greiling Keane at Bloomberg New report
that Credit Suisse Group AG analyst Christopher Ceraso said that
the restructuring needed to win government bailout could wipe out
GM's stockholders.
Bloomberg quoted Mr. Ceraso as saying, "Over the next two months,
as bondholders, union representatives and company management meet
to hammer out concessions, we think it will become increasingly
clear that the enormous sacrifice of value on the part of the
union and bondholders will require the complete or near-complete
elimination of the existing GM equity."
The U.S. government will also claim as much as 20% of GM's equity
value in exchange for the loans, Bloomberg states, citing Mr.
Ceraso.
Bloomberg relates that Mr. Ceraso cut his rating on GM shares to
"underperform" from "neutral". Bloomberg states that on Dec. 22,
Mr. Ceraso cut in half the one-year target price on GM to $1.
Citing Mr. Ceraso, Bloomberg says that GM may still end up in
bankruptcy if debtholders and labor groups fail to reach an
agreement.
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: S&P Won't Raise Credit Rating Above CCC on Loans
----------------------------------------------------------------
Standard & Poor's Ratings Services said that despite the nearly
$21 billion in emergency loans announced by the U.S. and Canadian
governments to help General Motors Corp. and Chrysler LLC avert
near-term bankruptcies, S&P is not likely to raise the credit
ratings on these companies above the 'CCC' category in the near
future. S&P lowered the corporate credit rating on Chrysler to
'CC' from 'CCC+', reflecting S&P's view of the likelihood of a
distressed exchange offer for the company's secured debt. S&P
also revised its post-default recovery expectations on GM's
unsecured debt because of the collateral to be pledged and the
relative priority of the new government loans, leading S&P to
lower the issue-level ratings on this debt.
The U.S. government announced Friday it would provide a total of
$9.4 billion in loans to GM in two payments, on Dec. 29, 2008, and
Jan. 16, 2009; another $4 billion could become available on
Feb. 17, 2009. The U.S. government will lend $4 billion to
Chrysler on Dec. 29, 2008. On Saturday, the Canadian and Ontario
governments announced they would together provide about
$3.3 billion to the Canadian units of GM and Chrysler in stages
over the next two months. Sweden and Germany have also pledged to
aid their local units of the Michigan-based automakers.
S&P views the actions as necessary to give GM and Chrysler
sufficient liquidity to run their automotive operations for a few
more months, as opposed to facing severe liquidity shortfalls and
heightened risks of bankruptcies by early January 2009. In
addition, S&P see these loans as underscoring the willingness of
the U.S. and other governments to prevent an abrupt and disorderly
collapse of the automotive industry, which would heighten
pressures on an already weak economy.
However, S&P does not believe governments are willing to provide
open-ended support to these companies. President Bush, in
announcing the U.S. loan package, said the assistance will provide
a "brief window" for restructuring outside of bankruptcy court,
and if they are unable to do so, the loans "will provide time for
companies to make the legal and financial preparations necessary
for an orderly Chapter 11 process."
In addition, S&P believes the bankruptcy risk remains high for GM
and Chrysler, as well as for Ford Motor Co., for the rest of next
year because of a range of fundamental challenges that will not be
alleviated by the government funding and, in S&P's view, will keep
cash outflows high or potentially erode liquidity. In S&P's view,
these challenges include:
-- Very weak auto sales in the U.S. and falling demand in Europe
and other global markets. S&P expects U.S. light-vehicle
sales to decline to 11.1 million units in 2009, from an
expected 13.1 million in 2008. Monthly sales in the U.S.
could remain even lower on a seasonally adjusted annual basis
in December and early 2009 after averaging about 10.4 million
units per month in October and November;
-- The need to promptly carry out--as part of the deal to
receive federal loans--a series of complex restructuring
actions, including negotiating lower wages and benefits and
revised work rules with unions, cutting more plant capacity,
rationalizing dealer networks, and potentially extracting
savings from suppliers;
-- Potential for further market share losses caused by continued
or increased customer concerns about these companies' long-
term financial viability;
-- Constrained credit markets, which have sharply reduced the
ability of GMACLLC and DaimlerChrysler Financial Services
Americas LLC to finance new purchases of GM or Chrysler cars.
S&P is also increasingly concerned about their ability to
provide adequate inventory financing for dealers. The federal
loans announced on Friday do not directly bolster the
struggling finance affiliates;
-- Potential supplier failures caused by sharply lower
automobile volumes and extended holiday shutdowns of assembly
plants. Even if the worst-case scenario of an abrupt
bankruptcy by GM or Chrysler is avoided, weaker suppliers
still face major liquidity challenges for the foreseeable
future; and
-- In GM's case, the unresolved exposure to bankrupt major
supplier Delphi Corp. Delphi has been unable to emerge from
bankruptcy protection and recently obtained a forbearance
agreement from debtor-in-possession lenders to keep funding
in place until June 30, 2009. However, if Delphi is unable
to extend this agreement or find alternative funding, S&P
believes it may be forced to cease operations, which would
put enormous pressure on GM's ability to maintain its North
American operations.
The incoming Obama Administration may provide more extensive loans
to GM and Chrysler, provided that the companies present a plan for
financial viability to the government by Feb. 17, 2009, as
stipulated in the preliminary loan documents. However, S&P can
envision scenarios under which such funding could be provided as
part of a prearranged bankruptcy filing. Under terms of the
current loans, GM must reduce its unsecured indebtedness by at
least two-thirds through an exchange offer for equity or new debt.
Chrysler does not have unsecured debt but said Friday it intends
to work with its secured lenders to obtain concessions. Although
it did not provide specific details, S&P interpret this to mean
that Chrysler will offer to exchange some or all of its secured
debt for equity or new debt at a steep discount to face value.
S&P likely would consider such an offer to be a distressed
exchange and, as such, tantamount to a default.
Ford is not currently seeking loans from the government because it
has an undrawn $10.7 billion revolving credit facility, although
it has asked the U.S. government for a $9 billion credit line to
help ensure that its liquidity remains sufficient through 2009 if
industry conditions remain very weak. If Ford were to receive
such a large credit line, depending on its terms S&P could revise
its recovery ratings and potentially lower S&P's issue-level debt
ratings to reflect worsened recovery prospects. However, S&P
notes that its recovery ratings on Ford's unsecured debt are
currently at the lowest level of '6', indicating S&P's expectation
of very low (0 to 10%) recovery in the event of a default.
S&P's recovery ratings on U.S. automaker debt are based on
simulated default scenarios that each include, among other things,
the assumption of a bankruptcy filing, multi-year reorganization,
and eventual emergence from bankruptcy. S&P's expected recovery
prospects for secured and unsecured debtholders vary by automaker,
largely reflecting the company-specific mix of secured and
unsecured debt in the capital structure rather than vastly
different fundamentals for each company.
Regarding the rated auto supplier universe, S&P placed the ratings
on 15 companies on CreditWatch on Nov. 14, 2008, because of their
significant exposure to the Michigan-based automakers. S&P
expects to complete S&P's review of these companies in January
2009. Although the immediate risk of a GM or Chrysler bankruptcy
now seems reduced, the risk remains high in 2009 in S&P's view,
and production levels will likely be low enough -- even without an
automaker bankruptcy -- to inflict further severe distress on the
supply base. Accordingly, S&P believes few auto supplier ratings
will be affirmed at current levels, and many ratings may be
lowered by more than one notch.
GENERAL MOTORS: S&P Downgrades Issue-Level Rating to 'C'
--------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its issue-
level ratings on the unsecured debt of General Motors Co. and
General Motors of Canada Ltd. to 'C' from 'CC'. At the same time,
S&P revised its recovery rating on GM's debt to '6' from '4',
indicating that lenders can expect to receive negligible (0 to
10%) recovery in the event of a payment default.
The rating actions reflect GM's planned receipt of up to
$13.4 billion of U.S. government loans, plus another approximately
$2.5 billion from the Canadian and Ontario governments. In
addition, Germany and Sweden have signaled that they may make
loans to GM units in those countries, which would further diminish
the value to unsecured creditors of the equity in foreign
subsidiaries.
"We expect these U.S. and Canadian government loans to be backed
by a security package that includes currently unencumbered assets,
which would lead to a significant decrease in value for unsecured
debtholders in the event of a bankruptcy or payment default," said
Standard & Poor's credit analyst Robert Schulz.
The likelihood of GM's initiating a distressed exchange offer on
its unsecured debt is already reflected in the company's corporate
credit rating of CC/Negative/--, which has not changed. In
addition, issue-level ratings on GM's $4.48 billion senior secured
revolving credit facility and $1.5 billion term loan remain at
'CCC,' two notches above the corporate credit rating. The
recovery rating on the secured debt remains at '1,' indicating
expectations of very high (90% to 100%) recovery in the event of a
payment default.
GEOEYE INC: S&P Upgrades Corporate Credit Rating to 'B'
-------------------------------------------------------
On Dec. 22, 2008, Standard & Poor's Ratings Services upgraded
Dulles, Virginia-based GeoEye Inc. and its wholly owned subsidiary
ORBIMAGE Inc. S&P raised the corporate credit rating on the
company to 'B' from 'B-'. The outlook is stable. Outstanding
debt, as of Sept 30, 2008, totaled $250 million.
In addition, S&P raised the issue-level rating on GeoEye's
floating-rate senior secured notes due 2012 to 'BB-' (two notches
above the corporate credit rating on the company) from 'B-'. S&P
also revised the recovery rating on this issue to '1' from '4'.
The '1' recovery rating indicates expectations for full (90%-100%)
recovery in the event of default. A change in S&P's default
scenario precipitated the higher issue-level rating. S&P still
assume that a default would most likely occur with the loss of the
GeoEye-1, the company's advanced high-resolution imaging
satellite. However, S&P now assumes that would happen before
Sept. 6, 2009, the one-year anniversary of the satellite's launch
and the expiration date on the company's existing launch plus one-
year insurance policies. S&P will re-evaluate its default
scenario each year based on the amount of on-orbit insurance on
the satellite at that time.
At the same time, S&P removed the ratings from CreditWatch, where
they were placed with positive implications on Sept. 22, 2008,
following the successful launch of GeoEye-1.
The upgrade reflects the company's improved business risk profile
due to the successful launch of GeoEye-1 on Sept. 6, 2008, and the
Dec. 10, 2008, signing of a service level agreement modification
to the existing NextView contract with the National Geospatial
Intelligence Agency. The 12-month NextView SLA extension, which
is valued at $12.5 million per month, enhances 2009 revenue
visibility. In addition, S&P expects GeoEye to leverage
the NGA-related activity by selling imagery and value-added
services to other customers, including foreign governments, other
U.S. government agencies, and commercial clients. Therefore, S&P
believes the combination of the SLA and successful launch should
result in healthy revenue and cash flow growth over the
intermediate term.
"The ratings on GeoEye continue to reflect a high degree of
business risk because of revenue concentration from a U.S.
government contract and disproportionate reliance on the GeoEye-1
satellite," said Standard & Poor's credit analyst Naveen Sarma.
"The rating also incorporates the potential for significant
financing requirements for the design, development, and launch of
the GeoEye-2 satellite."
The rating recognizes that government contracts are not guaranteed
until Congress appropriates the funds and that, although unlikely,
government agencies may terminate or suspend their contracts at
any time, with or without cause. These risks are somewhat
tempered by the company's dominant position as one of only two
providers of commercial satellite imagery services, and by rising
demand for such services, which is reflected by the company's
$100 million funded backlog as of Sept. 30, 2008.
GMAC LLC: Application for Bank Holding Company Status Accepted
--------------------------------------------------------------
GMAC Financial Services said on December 24, 2008, that its
application to become a bank holding company under the Bank
Holding Company Act of 1956, as amended, has been approved by the
Board of Governors of the Federal Reserve System. In addition,
GMAC Bank has received approval from the Utah Department of
Financial Institutions to convert to a state bank.
As a bank holding company, GMAC will have expanded opportunities
for funding and access to capital, which will provide increased
flexibility and stability.
Extraordinary Circumstances
According to CNNMoney, the Fed said in an order released Wednesday
evening, "In light of the unusual and exigent circumstances
affecting the financial markets . . . the board has determined
that emergency conditions exist that justify expeditious action."
GMAC and its home mortgage-making subsidiary Residential Capital
LLC by the end of the day on Dec. 17 still hadn't reached the
magic 75% participation needed to complete the proposed exchange
offer and qualify for becoming a bank holding company, Bloomberg's
Bill Rochelle notes.
The company has said that as of the end of the day on Dec. 17,
2008, based on preliminary results:
-- approximately $16.9 billion in aggregate principal
amount (or 58%) of the outstanding GMAC old notes had
been tendered in the GMAC offers and
-- approximately $3.5 billion in aggregate principal amount
(or 38%) of the outstanding ResCap old notes had been
tendered in the ResCap offers.
Mr. Rochelle notes that GMAC extended the deadline for early
tenders a fifth time. First announced in November, the investors
were given the option of cashing out or taking new securities. The
offers for GMAC and ResCap are different for each company and for
each of the existing debt securities currently outstanding. GMAC
is 51% owned by Cerberus Capital Management LP and the remaining
stake by General Motors Corp.
GMAC said in a Dec. 19 filing with the Securities and Exchange
Commission following completion of the offers and receipt of all
requisite approvals, GMAC would transfer ResCap old notes acquired
by GMAC in the ResCap debt-for-debt exchange offers in an amount
equal to at least 25% of ResCap's outstanding debt to ResCap in
exchange for all or a majority of the non-voting common equity of
IB Finance Holding Company LLC held by ResCap. IB Finance is the
parent entity for GMAC Bank. Immediately following the IB Finance
Transaction, ResCap would cancel the ResCap old notes acquired
from GMAC. The completion of the IB Finance Transaction, if
undertaken, would be subject to various conditions.
Key Turning Point
"[The] announcement marks a key turning point in GMAC's history,"
said GMAC Chief Executive Officer Alvaro G. de Molina. "As a bank
holding company, GMAC will be competitively positioned for the
long-term to provide financing to auto and mortgage consumers and
businesses such as automotive dealers. GMAC has been a leader in
these sectors and it is critically important to our company and
the broader economy to resume responsible lending to consumers and
businesses."
GMAC's previously announced separate private debt exchange offers
and cash tender offers were subject to the approval of the bank
holding company application. The offers are ongoing and will
expire today, Dec. 26, 2008 at 11:59 p.m. EST.
GM to Reduce Stake
As part of the deal, GM will reduce its ownership interest in GMAC
to less than 10% of the voting and total equity interest of GMAC.
GM's remaining equity interest in GMAC will be transferred to a
trust that has a trustee acceptable to the Board and the
Department of the Treasury, who will be entirely independent of GM
and have sole discretion to vote and dispose of the GMAC equity
interests. The trustee must dispose of the equity interests held
in the trust within three years of the trust's creation.
GMAC has committed to amend its existing agreements with GM to
remove any restrictions on GMAC's ability to engage in
transactions with unrelated third parties and to ensure that GMAC
has complete discretion to set the terms of its financing
arrangements.
To ensure that Cerberus's holdings in GMAC are consistent with the
Board's precedent on noncontrolling investments in banks and bank
holding companies, each Cerberus fund that holds interests in GMAC
will distribute its equity interests in the company to its
respective investors. As a result of this distribution, the
aggregate direct and indirect investments controlled by Cerberus
and its related parties would not exceed 14.9% of the voting
shares or 33% of the total equity of GMAC LLC. The investors that
receive shares in the distribution from the Cerberus funds are
each sophisticated investors and are independent of Cerberus and
independent of each other. No investor would, after the
distribution, own, hold, or control 5% or more of the voting
shares or 7.5% of the total equity of GMAC LLC.
As a result of the distribution, the aggregate direct and indirect
investments controlled by Cerberus and its related parties would
not exceed 14.9% of the voting shares or 33% of the total equity
of GMAC LLC.
Cerberus has made a number of commitments previously found by the
Board to be helpful in limiting the ability of an investor to
exercise a
controlling interest over a banking organization. In addition,
Cerberus employees and consultants would cease providing services
to, or otherwise functioning as dual employees of, GMAC, and
neither Cerberus nor any affiliated entity will have any advisory
relationships with GMAC or any investor regarding the vote or sale
of shares or the management or policies of GMAC or GMAC Bank.
A full-text copy of the Federal Reserve's order is available at no
charge at:
http://bankrupt.com/misc/GMACFedOrder2081224.pdf
Pursuant to the Fed's order, GMAC Bank has total consolidated
assets of approximately $33 billion and controls deposits of
approximately $17 billion. GMAC Bank engages primarily in lending
and other financing activities and taking deposits of the type
that are permissible for an industrial loan company.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit
of GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, GMAC's balance sheet showed total assets of
$211.3 billion, total liabilities of $202.0 billion and members'
equity of about $9.3 billion.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
GMACCM HOME: Moody's Downgrades Ratings on Four Class Certificates
------------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of nine
tranches issued in four GMACM Home Equity Loan Trust transactions.
Underlying securities' collateral consists primarily of closed-end
second lien residential mortgage loans and second lien home equity
lines of credit.
The ratings on the securities were monitored by evaluating factors
Moody's determined to be essential in the analysis of securities
backed by such loans. The salient factors include: i) Moody's
review of the nature, sufficiency, and quality of historical loan
performance information, ii) analysis of the collateral
composition and pool credit performance including prepayment, loan
delinquency and loss data, iii) consideration of the transaction's
capital structure and related allocations of collateral cash flows
and losses, and iv) a comparison of current credit enhancement
levels to updated Moody's pool loss projections based on present
collateral credit performance.
Some of the securities are guaranteed by the respective financial
guarantors. The underlying ratings for these securities generally
reflect the intrinsic credit quality of the securities in the
absence of the guarantee. The current ratings on the below-noted
securities are consistent with Moody's practice of rating such
insured securities at the higher of the guarantor's insurance
financial strength rating and the underlying or intrinsic rating.
When analyzing underlying ratings for CES and HELOC transactions,
Moody's projects cumulative losses for each deal based on a
collateral analysis of the deal's Constant Prepayment Rate and
Constant Default Rate.
CPR - CPR is based on the average of the last six months 1-month
CPR.
CDR - There are two approaches for determining pool CDR. The
first approach calculates CDR based on pool loan losses from the
previous twelve months, i.e. recent losses. A second approach is
based on pipeline losses -- losses derived from days-aged
delinquencies and Moody's assumptions for default based on days
delinquent, in foreclosure, or liquidation, and the severity of
loss given default. Moody's assumes 100% severity for second
liens, including both CES and HELOCs. After the CDR is calculated
using the two methods, the effective CDR for loss projection
purposes is determined by using a weighted average of the CDRs as
determined by the recent loss and pipeline loss approaches -- with
weightings determined on a transaction by transaction basis.
Moody's assumes that the CDR will not decline for the next three
years and will decline subsequently for the life of the deal under
a schedule, typically reducing by 50% in year 4 and remaining
constant thereafter.
Based on calculated CPR and CDR, Moody's calculates projected
deal-specific cumulative losses and the weighted average life of
the deal. The credit enhancement calculation can also include
credit for excess spread, i.e. the aggregate, positive difference
in the weighted average loan coupon and the all-inclusive
securities' interest and deal fees, including servicing. Excess
spread benefit is calculated by multiplying the stressed
annualized excess spread by the weighted average life of the deal.
Aggregate credit enhancement which combines subordination benefit
(including over-collateralization and/or reserve accounts) and
excess spread benefit is compared with projected cumulative losses
for the deal to derive coverage multiples and associated ratings
by deal tranche. Moody's will analyze tranche coverage multiples
after consideration of timing of tranche repayment and allocation
of losses (if any).
Issuer: GMACM Home Equity Loan Trust 2000-HE2
-- Cl. A-1, Downgraded to Baa1; previously on 11/16/2008 Placed
on Review for Direction Uncertain from A2
-- Financial Guarantor: MBIA Insurance Corporation (Currently
Baa1)
-- Cl. A-2, Downgraded to Baa1; previously on 11/16/2008 Placed
on Review for Direction Uncertain from A2
-- Financial Guarantor: MBIA Insurance Corporation (Currently
Baa1)
-- Cl. Variable Funding Notes, Downgraded to Baa1; previously on
11/16/2008 Placed on Review for Direction Uncertain from A2
-- Financial Guarantor: MBIA Insurance Corporation (Currently
Baa1)
Issuer: GMACM Home Equity Loan Trust 2004-HE2
-- Cl. M-1, Downgraded to Baa1; previously on 12/21/2006
Upgraded to Aaa
-- Cl. M-2, Downgraded to B2; previously on 4/30/2004 Assigned
Aa2
Issuer: GMACM Home Equity Loan Trust 2004-HE5
-- Cl. A-5, Downgraded to Ba1; previously on 8/6/2008 Upgraded
to A2
-- Financial Guarantor: Financial Guaranty Insurance Company
(Currently Caa1)
-- Underlying rating Downgraded to Ba1 from A2
-- Cl. A-6, Downgraded to Ba1; previously on 8/6/2008 Upgraded
to A2
-- Financial Guarantor: Financial Guaranty Insurance Company
(Currently Caa1)
-- Underlying rating Downgraded to Ba1 from A2
Issuer: GMACM Home Loan Trust 2001-HLTV2
-- Cl. A-I, Downgraded to Baa1; previously on 11/17/2008 Placed
on Review for Direction Uncertain from Aa3
-- Financial Guarantor: Ambac Assurance Corporation (Currently
Baa1)
-- Cl. A-II, Downgraded to Baa1; previously on 11/17/2008 Placed
on Review for Direction Uncertain from Aa3
-- Financial Guarantor: Ambac Assurance Corporation (Currently
Baa1)
GRAPHIC PACKAGING: Bank Loan Sells at Substantial Discount
----------------------------------------------------------
Participations in a syndicated loan under which Graphic Packaging
International is a borrower traded in the secondary market at
66.44 cents-on-the-dollar during the week ended December 19, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents a drop of 3.81
percentage points from the previous week, the Journal relates.
Graphic Packaging pays 225 basis points over LIBOR to borrow under
the facility. The bank loan carries Moody's Ba3 rating and
Standard & Poor's BB- rating.
Headquartered in Marietta, Georgia, Graphic Packaging
Corporation (NYSE:GPK) -- http://www.graphicpackaging.com/-- is
a provides paperboard packaging solutions for a variety of
products to multinational and other consumer products companies.
The company provides its customers paperboard, cartons and
packaging machines, either as an integrated solution or
separately. Its packaging products are made from a variety of
grades of paperboard. GPC manufactures its packaging products
from coated unbleached kraft paperboard and coated recycled
paperboard that it produces at its mills, and a portion from
paperboard purchased from external sources. The company
operates in four geographic areas: the United States, Central
and South America (Brazil), Europe and Asia-Pacific. GPC
conducts its business in two segments, paperboard packaging and
containerboard/other.
As reported by the Troubled Company Reporter-Latin America on
March 14, 2008, Graphic Packaging Holding Company completed its
combination of Graphic Packaging Corporation and Altivity
Packaging LLC. The combination of Graphic Packaging and Altivity
created a company with pro-forma 2007 revenues of over US$4.4
billion and pro-forma 2007 adjusted EBITDA of approximately US$553
million.
Headquartered in Carol Stream, Illinois, Altivity Packaging --
http://www.altivity.com-- produces various products such as
folding cartons, bag and plastic packaging, and decorative
laminations. Altivity Packaging also provides gift boxes for
department stores and other retail venues, as well contract
packaging services and inks and coatings. The company, which
operates about 60 manufacturing plants across the US, serves the
food, medical, and electronic industries, among others. In 2006
Altivity Packaging was established after TPG Capital's purchase
of Smurfit-Stone Container's consumer packaging unit.
* * *
As reported by the Troubled Company Reporter on March 24, 2008,
Moody's Investors Service affirmed Graphic Packaging International
Inc.'s B1 corporate family rating, B3 subordinated notes, and
SGL-3 speculative grade liquidity rating (indicating adequate
liquidity) following the announcement of the completed combination
of its operations with Altivity Packaging, LLC. Moody's also
assigned a Ba3 rating to the company's new $1.2 billion term loan
C due 2014.
The existing ratings have been downgraded on both the secured bank
facilities, to Ba3 from Ba2, and the senior unsecured notes, to B3
from B2, due to the revised capital structure. The additional
amounts of senior secured debt move the ratings of this debt
toward the B1 corporate family rating while the senior unsecured
notes are lowered by one notch. The outlook remains negative.
Proceeds from the transaction will be used to pay off Altivity's
existing debt, thus Altivity's ratings have been withdrawn.
GRANITE XPERTS: Files Schedules of Assets and Liabilities
---------------------------------------------------------
Granite Xperts, Inc., filed with the U.S. Bankruptcy Court for the
Northern District of Illinois, its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $1,200,000
B. Personal Property $746,194
C. Property Claimed as
Exempt
D. Creditors Holding $1,646,058
Secured Claims
E. Creditors Holding $273,044
Unsecured Priority
Claims
F. Creditors Holding $1,421,209
Unsecured Non-priority
Claims
----------- -----------
TOTAL $1,946,194 $3,340,312
Elk Grove Village, Illinois-based Granite Xperts, Inc. --
http://baykov.com/-- fabricates and installs solid surface
countertops to residential and commercial customers in Illinois,
Michigan, Wisconsin and Indiana.
The company filed for Chapter 11 protection on Oct. 7, 2008
(Bankr. N. D. Ill. Case No. 08-26883). James A. Chatz, Esq.,
Michael L. Gesas, Esq., Michelle G. Novick, Esq., and Miriam R.
Stein, Esq. at Arnstein & Lehr LLP, represent the Debtor as
counsel.
GREAT LAKES: Moody's Changes Rating Outlook to Positive
-------------------------------------------------------
Moody's Investors Service has changed the rating outlook of Great
Lakes Dredge & Dock Corporation to positive from stable and
affirmed the company's existing ratings including the B3 corporate
family and probability of default ratings.
The change in outlook reflects the company's strong credit metrics
for its current rating category, healthy backlog and progress that
GLDD has made toward repositioning some of its assets to the
Middle East where greater demand for dredging work exists. The
asset repositioning and some domestic contract awards have helped
backlog increase to $472 million at September 2008 from $361
million at December 2007. The higher backlog, coupled with an
expectation of lower capital spending, and lower net working
capital increases in 2009 suggest the potential for free cash flow
generation and improving credit metrics which may support a higher
rating level.
GLDD's B3 corporate family rating balances several factors
including: 1) a leading position in the U.S. dredge market, which
has been relatively soft for several years; 2) moderate to high
leverage; 3) lack of free cash flow generation; 4) adequate
liquidity profile.
In addition, these ratings have been affirmed:
-- $175MM 7.75% Gtd Sr Sub Notes due 2013 - Caa1, LGD 5, 72%
Moody's last rating action on GLDD occurred May 2, 2007 when the
ratings were affirmed.
Great Lakes Dredge & Dock Corporation, founded in 1890 and
headquartered in Oak Brook, Illinois is the largest provider of
dredging services in the United States. Revenues for the last
twelve month revenues ended September 30, 2008 were $581 million.
GREENER CLEANERS: File for Chapter 11 Bankruptcy Protection
-----------------------------------------------------------
Michael DeMasi at The Business Review reports that Greener
Cleaners Ltd. has filed for Chapter 11 bankruptcy protection in
the U.S. Bankruptcy Court for the Northern District of New York.
A Greener Cleaners official said that a severe decline in revenue
over the past few months led to the company's bankruptcy filing,
The Business Review relates. "Business has been slowing down
gradually for the last couple years. However over the last three
to four months it has been a really, really dramatic downturn. I
think customers are being hit very, very hard by the economy. The
average dry cleaner has never seen a downturn like this, at least
not since the days of polyester in the '70s," the report quoted
Greener Cleaners CEO B. Robert Joel as saying.
Sales this year will be less than the $3 million in sales reported
last year, with a decline expected to be a double-digit
percentage, The Business Review says, citing Mr. Joel.
According to The Business Review, Mr. Joel said that the company
will continue operations during the court-supervised debt
restructuring, but about three or four of the chain's 14 locations
will be closed. Landlords in those locations haven't been willing
to renegotiate the rent, the report says, citing Mr. Joel. A
Scotia store already closed because the property was sold and the
lease wasn't renewed, according to the report.
Mr. Joel said that Greener Cleaners will lay off some of its 32
workers, The Business Review states. The report says that three
employees have already been laid off.
The Business Review relates that Greener Cleaners listed $647,276
in assets and $1.15 million in liabilities, with KeyBank -- which
holds a $300,000 claim -- as its largest secured creditor and
David M. Siegal -- who is owed $522,753 -- as its largest
unsecured creditor. According to the report, Mr. Siegal is one of
Greener Cleaners owners.
Greener Cleaners wants to continue investing in the business
during the restructuring, including installing another dry
cleaning machine and boosting the processing time so clothes are
returned to the satellite stores faster, The Business Review
reports. "We expect to come out of this a better dry cleaner,
offering better and faster service to our customers," the report
quoted Mr. Joel as saying.
Schenectady, New York-based Greener Cleaners Ltd., formerly known
as KEM Cleaners, is the largest dry cleaning chain in Albany.
GUAM POWER: S&P Raises Long-Term Rating to 'BBB-' From 'BB+'
------------------------------------------------------------
Standard & Poor's Ratings Services raised its standard long-term
rating and underlying rating on Guam Power Authority's existing
revenue bonds to 'BBB-' from 'BB+'. The outlook is stable.
The upgrade reflects, in S&P's opinion, the authority's sustained
trend of improved operational and financial performance, including
more efficient use and greater availability of its baseload
assets; continued support from the Guam Public Utilities
Commission; and continued improvement in the territory's economy.
Fiscal 2007 audited results demonstrate, in S&P's opinion, the
sustained period of good financial performance. This includes
about 1.50x annual debt service coverage, and 1.21x fixed charge
coverage when factoring in the authority's capital lease
obligations to its independent power producers. Guam Power
Authority still has obligations, including capacity payments,
associated with its capital leases. However, for several
consecutive years authority-owned baseload units have provided
nearly 98% of all energy requirements. The on-balance-sheet cash
and equivalents of $25 million was equivalent to a modest 36 days'
cash on hand. Moderating the liquidity position is the fact that
the authority has a good history of support from Guam Public
Utilities Commission, which approved the authority's request to
recover its fuel costs-including stored inventories and hedge
losses, as well as a $10 million line of credit that typically is
used for fuel purchases and repaid within the fiscal year.
The upgrade affects about $368 million in existing revenue bonds.
HARBREW IMPORTS: Sept. 30 Balance Sheet Upside Down by $6.3 Mil.
----------------------------------------------------------------
Harbrew Imports Ltd. Corp.'s September 30, 2008, balance sheet
showed total assets of $1,706,412 and total liabilities of
$8,017,674, resulting in stockholders' deficit of $6,311,262.
In addition, as of September 30, 2008, the company had negative
working capital of $4,150,407. "Further, from inception to
September 30, 2008, we incurred losses of $7,585,049. These
factors create substantial doubt as to our ability to continue as
a going concern. We expect to improve our financial condition as
recently launched products mature and brand awareness increases,
thereby increasing the profitability of our operations.
Additionally, we intend to obtain new financing which will
primarily be used to market and promote Danny DeVito?s Premium
Limoncello and other new products. However, we cannot assure you
that we will be successful in accomplishing these objectives,"
Richard J. DeCicco, president, and William S. Blacker, chief
financial officer, disclosed in a regulatory filing with the
Securities and Exchange Commission.
For the three months ended September 30, 2008, the company posted
a net loss of $921,070 on revenues of $252,322.
"On August 21, 2008, the company executed an agreement with
Capstone Capital Group I, LLC, and Capstone Business Credit,
LLC, whereby the company was to pay $1,500,000 in full and
complete satisfaction of all debts due by the company to both CCG
and CBC -- approximately $2,976,904 at August 21, 2008. The
agreement called for an initial down payment in the amount of
$150,000 -- which was paid -- with the balance of $1,350,000 due
on October 21, 2008. On November 7, 2008, the company executed an
amendment to the settlement agreement whereby the amount of the
note was increased to $2,664,406 and is due on or before
August 21, 2009. The note will bear interest at the rate of 16%.
The company will receive 50% of all collections on sales made
after November 7, 2008, less the applicable interest due within
that month."
A full-text copy of the company's Quarterly Report is available
for free at: http://researcharchives.com/t/s?36a5
About Harbrew Imports
Harbrew Imports Ltd. Corp. was incorporated in Florida on
January 4, 2007 under the name Stassi Harbrew Imports Corp.
pursuant to the Bankruptcy Court Approved Reorganization Plan for
the Stassi Interaxx, Inc., Reorganization approved on December 29,
2006. On May 17, 2007, Harbrew Florida acquired Harbrew Imports,
Ltd., a New York corporation incorporated on September 8, 1999.
Pursuant to the Amended and Restated Reorganization & Merger
Agreement dated April 10, 2007, 288 creditors and shareholders of
Stassi were issued 1,383,256 shares of Harbrew Florida?s common
stock and the two shareholders of Harbrew New York were issued
12,457,944 shares of Harbrew Florida?s common stock.
Prior to the merger on May 17, 2007, Harbrew Florida had no
assets, liabilities, or business operations.
The Company sells various liquor products in North America under
exclusive distribution agreements.
HAWAIIAN TELCOM: S&P Withdraws 'D' Corporate Credit Rating
----------------------------------------------------------
At the company's request, Standard & Poor's Ratings Services
withdrew its 'D' corporate credit rating, and all issue-level and
recovery ratings on Hawaiian Telcom Communications Inc.
Ratings List
Withdrawn
Hawaiian Telcom Communications Inc.
To From
-- ----
Corporate Credit Rating NR D/--/--
Secured NR D
Senior Unsecured NR D
Subordinated NR D
HERTZ CORP: S&P Places 'BB-' Corp. Rating on CreditWatch Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Hertz
Corp., including the 'BB-' corporate credit rating, on CreditWatch
with negative implications.
"The CreditWatch placement is based on the company's exposure to
the distressed U.S. auto manufacturers, and reduced demand in both
its global car rental and equipment rental operations," said
Standard & Poor's credit analyst Betsy Snyder. "These factors,
either alone or in combination, could cause a weakening in Hertz's
credit profile, depending on their severity," the analyst
continued.
The U.S. auto manufacturing industry's problems are also having a
significant negative effect on the car rental industry. Prices in
the used car market, in which the auto renters dispose of their
vehicles, have been depressed in 2008. This is caused by concerns
about the long-term viability of the U.S. auto manufacturers as
well as an oversupply of used cars in the marketplace due to
limited access to credit and the effect of the recession on
consumer spending. This has resulted in losses on the sale of
vehicles, and higher depreciation expense for the car renters
(depreciation expense is increased to make up for the shortfall at
the time of the sale relative to the expected residual). S&P
expects these trends to continue over the next several months and
could even worsen if any of the auto manufacturers were to
restructure or liquidate.
Like the rest of the travel industry, Hertz has faced a decline in
travel due to the weakening economy, resulting in lower
transaction volume and pricing. S&P expects these trends to
continue well into 2009. In addition, its equipment rental
business, which serves industrial and construction sectors, has
also been hard hit over the last several months. As a result, S&P
expects the company's credit ratios to weaken because of ongoing
pressure on revenues, higher depreciation expense, and higher
financing costs.
Hertz has benefited from the timing of its refinancing and debt
maturities. In September 2008, it entered into a new $825 million
asset-backed two-year conduit facility, although pricing was 150
basis points higher than what it had been paying. However, the
company has $940 million of ABS maturities by December 2009, and
refinancing could be difficult if the current capital markets
environment persists.
Park Ridge, New Jersey-based Hertz, is the largest global on-
airport car rental company. HERC, its equipment rental company,
is also one of the major industry participants.
S&P will assess Hertz's expected financial performance from a
reduced level of demand for its car and equipment rentals, higher
depreciation and interest expense in its car rental operations,
and the effect from the distressed U.S. auto manufacturers to
resolve the CreditWatch.
HOME EQUITY: Moody's Downgrades Ratings on 23 Class Certificates
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 23
tranches issued in six Home Equity Mortgage Trust transactions.
Underlying securities' collateral consists primarily of closed-end
second lien residential mortgage loans.
The ratings on the securities were monitored by evaluating factors
Moody's determined to be essential in the analysis of securities
backed by such loans. The salient factors include: i) Moody's
review of the nature, sufficiency, and quality of historical loan
performance information, ii) analysis of the collateral
composition and pool credit performance including prepayment, loan
delinquency and loss data, iii) consideration of the transaction's
capital structure and related allocations of collateral cash flows
and losses, and iv) a comparison of current credit enhancement
levels to updated Moody's pool loss projections based on present
collateral credit performance.
When analyzing ratings for CES and HELOC transactions, Moody's
projects cumulative losses for each deal based on a collateral
analysis of the deal's Constant Prepayment Rate and Constant
Default Rate.
CPR - CPR is based on the average of the last six months 1-month
CPR.
CDR - There are two approaches for determining pool CDR. The
first approach calculates CDR based on pool loan losses from the
previous twelve months, i.e. recent losses. A second approach is
based on pipeline losses -- losses derived from days-aged
delinquencies and Moody's assumptions for default based on days
delinquent, in foreclosure, or liquidation, and the severity of
loss given default. Moody's assumes 100% severity for second
liens, including both CES and HELOCs. After the CDR is calculated
using the two methods, the effective CDR for loss projection
purposes is determined by using a weighted average of the CDRs as
determined by the recent loss and pipeline loss approaches -- with
weightings determined on a transaction by transaction basis.
Moody's assumes that the CDR will not decline for the next three
years and will decline subsequently for the life of the deal under
a schedule, typically reducing by 50% in year 4 and remaining
constant thereafter.
Based on calculated CPR and CDR, Moody's calculates projected
deal-specific cumulative losses and the weighted average life of
the deal. The credit enhancement calculation can also include
credit for excess spread, i.e. the aggregate, positive difference
in the weighted average loan coupon and the all-inclusive
securities' interest and deal fees, including servicing. Excess
spread benefit is calculated by multiplying the stressed
annualized excess spread by the weighted average life of the deal.
Aggregate credit enhancement which combines subordination benefit
(including over-collateralization and/or reserve accounts) and
excess spread benefit is compared with projected cumulative losses
for the deal to derive coverage multiples and associated ratings
by deal tranche. Moody's will analyze tranche coverage multiples
after consideration of timing of tranche repayment and allocation
of losses (if any).
Issuer: Home Equity Mortgage Trust 2003-6
-- Cl. M-2, Downgraded to Aa3; previously on 12/21/2006 upgraded
to Aaa
-- Cl. B-1, Downgraded to Baa1; previously on 12/21/2006
upgraded to A2
-- Cl. B-2, Downgraded to Baa1; previously on 12/21/2006
upgraded to A2
Issuer: Home Equity Mortgage Trust 2003-7
-- Cl. B, Downgraded to Caa2; previously on 12/21/2006 upgraded
to Aa3
Issuer: Home Equity Mortgage Trust 2004-1
-- Cl. B, Downgraded to Caa2; previously on 12/21/2006 upgraded
to A2
Issuer: Home Equity Mortgage Trust 2004-2
-- Cl. M-2, Downgraded to Aa2; previously on 12/21/2006 upgraded
to Aaa
-- Cl. B-1, Downgraded to Baa1; previously on 12/21/2006
upgraded to A1
-- Cl. B-2, Downgraded to B3; previously on 12/21/2006 upgraded
to A2
-- Cl. B-3A, Downgraded to Caa2; previously on 12/21/2006
upgraded to A3
-- Cl. B-3F, Downgraded to Caa2; previously on 12/21/2006
upgraded to A3
Issuer: Home Equity Mortgage Trust 2004-4
-- Cl. M-3, Downgraded to Baa1; previously on 10/18/2004
Assigned Aa3
-- Cl. M-4, Downgraded to Baa2; previously on 10/18/2004
Assigned A1
-- Cl. M-5, Downgraded to Ba3; previously on 10/18/2004 Assigned
A2
-- Cl. M-6, Downgraded to B3; previously on 10/18/2004 Assigned
A3
-- Cl. B-1, Downgraded to Caa1; previously on 10/18/2004
Assigned Baa1
-- Cl. B-2, Downgraded to Caa2; previously on 10/18/2004
Assigned Baa2
-- Cl. B-3, Downgraded to Ca; previously on 10/18/2004 Assigned
Baa3
Issuer: Home Equity Mortgage-Backed Pass-Through Certificates,
Series 2004-3
-- Cl. M-3, Downgraded to Aa2; previously on 12/21/2006 upgraded
to Aaa
-- Cl. M-4, Downgraded to Baa3; previously on 12/21/2006
upgraded to A1
-- Cl. M-5, Downgraded to B3; previously on 12/21/2006 upgraded
to A2
-- Cl. B-1, Downgraded to Caa2; previously on 12/21/2006
upgraded to Baa1
-- Cl. B-2A, Downgraded to Ca; previously on 12/21/2006 upgraded
to Baa1
-- Cl. B-2F, Downgraded to Ca; previously on 12/21/2006 upgraded
to Baa1
HOUGHTON MIFFLIN: Market Spending Decline Cues Moody's Junk Rating
------------------------------------------------------------------
Moody's Investors Service has downgraded Houghton Mifflin Harcourt
Publishing Company's (formerly named Riverdeep Interactive
Learning USA, Inc.) Corporate Family rating and PDR to Caa1 from
B3, based upon Moody's concern that the recent downturn of market
spending on K-12 instructional material will become more extensive
than previously anticipated, placing strain upon the company's
liquidity profile and heightening the probability of covenant
default. Details of the rating actions are:
Ratings lowered and placed under review for possible downgrade:
* Corporate Family rating -- to Caa1 from B3
* Probability of Default rating -- to Caa1 from B3
* Senior secured first lien revolving credit facility due 2013 -
to B2, LGD2, 28% from B1, LGD3, 32%
* Senior secured first lien term loan B due 2014 - to B2, LGD2,
28% from B1, LGD3, 32%
Rating affirmed and placed under review for possible downgrade:
* $1,767 million senior secured second lien term loan due 2014 -
Caa2, LGD5, 76%
All ratings are placed under review for possible further
downgrade.
The downgrade of the CFR to Caa1 largely reflects Moody's concern
that year-to-date shortfalls in HMH's business plan will continue
over the near term, compressing the company's liquidity profile
and preventing the attainment of consolidated debt-to-EBITDA
leverage (through HMH Holdings Limited) close to the 9.0 times
target previously set by Moody's.
The downgrade of the PDR to Caa1 incorporates Moody's view that
HMH could face near-term liquidity pressure (exacerbated by the
questionable continuing availability of Lehman Brothers'
$150 million revolving loan commitment) and a likely default under
its senior secured loan covenants, absent an amendment. Moody's
considers that covenant pressure is likely to persist should the
severity of recent cut-backs in state and local spending on
educational materials continue unabated.
The review for possible downgrade will assess HMH's financial
performance for fiscal 2008; the likelihood of an improvement of
market conditions, the ability of HMH to achieve further market
share gains, and the probability that recently-announced cost
cutting measures will deliver over $150 million in savings
incremental to previously stated targets. In addition, the review
will contemplate the probability that HMH will succeed in
receiving covenant relief (if requested) from its lenders on
acceptable terms and conditions, the company's ability to raise
additional cash if needed (through asset sales or further equity
infusions), and the likelihood that it will consider a distressed
debt exchange or recapitalization in order to more fully address
its highly leveraged balance sheet.
The Caa1 Corporate Family rating incorporates HMH's high leverage
(which Moody's calculates exceeded 10.5 times debt-to-EBITDA
through HMH Holdings Limited at the end of September 2008), the
weak condition of the basal and supplemental K-12 market (sales
declined by 18% in September 2008, according to the Association of
American Publishers) and the strong competition which HMH faces
from large, diversified, educational publishing rivals (including
Pearson and McGraw Hill). The ratings are supported by the long-
established reputation of HMH's imprints, its leading market
position (estimated by management at close to 50% of new US
textbook adoptions), its diversified customer and geographic base,
management's proven success in delivering synergy-related cost
savings, the barriers which the capital-intensive basal publishing
sector presents to new entrants, and the importance associated
with providing school students with high quality instructional
materials.
The last rating action occurred on November 13, 2007, when Moody's
confirmed HMH's B3 CFR and revised the rating outlook to negative.
HMH's ratings were assigned by evaluating factors Moody's believe
are relevant to the credit profile of the issuer, such as i) the
business risk and competitive position of the company versus
others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected financial and
operating performance of the company over the near-to-intermediate
term, and iv) management's track record and tolerance for risk.
These attributes were compared against other issuers both within
and outside of HMH's core industry and HMH's ratings are believed
to be comparable to those of other issuers of similar credit risk.
Headquartered in Boston, Massachusetts, Houghton Mifflin Harcourt
Publishing Company is one of the largest U.S. educational
publishers with revenues of approximately $2.1 billion for the LTM
period ended September 30, 2008.
IDENTICA HOLDINGS: Sept. 30 Balance Sheet Upside Down by $1.4 Mil.
------------------------------------------------------------------
Identica Holdings Corporation's September 30, 2008, balance sheet
showed total assets of $1,030,630, and total liabilities of
$2,433,020, resulting in stockholders' deficit of $1,402,390.
"We incurred a net loss of $1,818,890 for the nine-month period
ended September 30, 2008, as compared to $1,470,652 for the nine-
month period ended September 30, 2007. The increase in net loss
was due to increased general selling and administrative activities
directly related to our United States operations as provided in
our Plan of Operations," Edward Foster, chief executive officer,
and Michael Finn, chief financial officer, disclosed in a
regulatory filing with the Securities and Exchange Commission.
"The company has experienced recurring losses from operations
since inception that raise substantial doubt as to its ability
to continue as a going concern. For the years ended December,
2007 and 2006, the company experienced net losses of $2,662,288
and $2,085,601, respectively. As of September 30, 2008 and
December 31, 2007, the company had an accumulated deficit of
$7,467,967 and $5,649,077 respectively. Management?s plans to
address the lack of adequate funds to continue operations include
continuing its efforts to increase sales of its products and
secure additional debt and equity financing.
"The company began to execute its business strategy on
November 18, 2005. These activities included the acquisition of
Identica Canada Corp. which acquired certain assets of America
Biometrics and Security Inc. on April 25, 2005. The company has
also commenced installations with strategic market resellers in
the United States.
"Since March 2007, we have raised additional capital from our
issuance of our Series A Convertible Preferred Stock of net cash
$3,927,000 after repayment of $1,073,000 in debt obligations.
Historically, the major source of cash for the company has been
the sale of its equity to investors. During the next 12 months,
we hope to be able to generate additional revenue from increased
sales of our identification solutions as well as our two new
divisions, Mobile Identification Management and RFID (Radio
Frequency Identification)," Mr. Foster and Mr. Finn related.
A full-text copy of the company's Quarterly Report is available
for free at http://researcharchives.com/t/s?36a4
About Identica Holdings
Identica Holdings Corporation was incorporated in the State of
Nevada on November 18, 2005. On November 18, 2005, the company
purchased the assets and liabilities of Identica Corp, a company
registered in Ontario, Canada, including all the outstanding
shares of Identica Corp. USA, Inc. On March 10, 2006, Identica
Corp changed its name to Identica Canada Corp. The company is a
US-based, international manufacturer and distributor of cost-
effective, next-generation biometric identification solutions for
identifying individuals.
IKON OFFICE: Ricoh Acquisition Cues Moody's to Upgrade Ratings
--------------------------------------------------------------
Moody's Investors Service raised the ratings of IKON Office
Solutions to A3 from Ba2 following the completion of its
acquisition by Ricoh Co. Ltd (A1 senior unsecured rating with a
negative outlook) for approximately $1.6 billion. The rating
outlook on IKON is negative, reflective of Ricoh's outlook. This
completes a review initiated August 27, 2008.
On October 31, 2008, Ricoh announced that it completed its
$1.6 billion acquisition of IKON Office Solutions, Inc. IKON is
now a wholly owned subsidiary of Ricoh Co. Ltd.
While Ricoh does not guarantee IKON's debt, Moody's believes that
IKON's strategic importance to Ricoh's distribution capabilities
(primarily in North America and Europe) provides a strong
likelihood of support by Ricoh.
IKON no longer has a reporting requirement under the SEC's 1934
Act as a result of having a de minimus number of holders. As
such, there is no longer any requirement to provide financial
statements to the holders of the outstanding 2025 and 2027 Notes.
Moody's will withdraw shortly all IKON ratings as a result of the
absence of a legal guarantee from its parent, combined with
insufficient information to monitor IKON's credit profile through
financial statement filings.
Ratings raised include:
-- Senior unsecured $260 million notes due 2025 to A3 from Ba3,
LGD 4, 62%;
-- Senior unsecured $95 million notes due 2027 to A3 from Ba3,
LGD 4, 62%.
Ratings withdrawn include (not applicable to investment grade
ratings):
-- Corporate Family Rating at Ba2;
-- Probability of Default Rating at Ba2;
-- Speculative Grade Liquidity (SGL-1)
Moody's last rating action with respect to IKON was on August 28,
2008 when its ratings were placed on review for possible upgrade.
Ricoh is one of the world's leading manufacturers of office
automation equipment. With over 300 subsidiaries and affiliates
globally, Ricoh posted sales of Yen 2,219 billion during the
fiscal year ended March 2008.
IKON Office Solutions, headquartered in Malvern Pennsylvania, is
the largest independent distributor of copier, printer and
multifunction printer technologies, as well as a provider of
integrated document management solutions and systems. IKON
generated about $4.17 billion in revenue for the twelve months
ended June 2008.
INDYMAC BANCORP: Treasury Probes OTS for Irregularities
-------------------------------------------------------
Jessica Holzer at The Wall Street Journal reports that the
Treasury Department's inspector general has started investigating
the Office of Thrift Supervision for allowing a backdated capital
infusion into IndyMac Bancorp a few months before the company
collapsed in July.
According to WSJ, the capital infusion let IndyMac to be
classified as "well capitalized," instead of "adequately
capitalized," in the first quarter, which allowed IndyMac TO avoid
having to take certain steps with the Federal Deposit Insurance
Corp.
The office of Sen. Charles Grassley said that West Region Director
Darrel Dochow was removed from OTS, WSJ relates. WSJ states that
Treasury Inspector General Eric M. Thorson said in a letter to
Sen. Grassley that the investigation would examine why Mr. Dochow
let IndyMac record $18 million in capital as received from its
holding company before March 31, 2008, though the capital
injection occurred after that date.
Sen. Grassley's office, according to WSJ, said in a letter to Mr.
Thorson that OTS Director John M. Reich said that the $18 million
capital injection occurred on May 9, 2008, while in his letter to
Sen. Grassley, Mr. Thorson cited conflicting evidence about
whether the contribution occurred in April or May. The report
quoted Mr. Thorson as saying, "The circumstances and accounting of
this transaction as described by OTS are unclear, and the
documentation provided by OTS was ambiguous and incomplete."
IndyMac's risk-based capital ratio, without the backdated capital
contribution, would have dropped below the 10% threshold for "well
capitalized" banks to 9.98% as of March 31, 2008, partly due to
changes proposed by its auditor, Ernst & Young, WSJ reports,
citing Mr. Thorson.
WSJ relates that the shift from well-capitalized to "adequately
capitalized" would have required IndyMac to get special permission
from the FDIC to offer brokered deposits. According to the
report, the FDIC expected IndyMac's failure to cost its deposit
insurance fund about $8.9 billion.
Mr. Reich wrote to Sen. Grassley, saying that the backdated
capital contribution "is a relatively small factor in the events
leading to the failure of IndyMac," but his office "must take
certain actions to ensure that OTS remains a well managed
regulatory agency," WSJ states.
About IndyMac Bancorp
Based in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) --
http://www.indymacbank.com/-- is the holding company for IndyMac
Bank, FSB, a hybrid thrift/mortgage bank that originated mortgages
in all 50 states of the United States. Through its hybrid thrift-
mortgage bank business model, IndyMac designed, manufactured, and
distributing cost-efficient financing for the acquisition,
development, and improvement of single-family homes. IndyMac also
provided financing secured by single-family homes to facilitate
consumers' personal financial goals and strategically invests in
single-family mortgage-related assets.
Indymac Bancorp filed for Chapter 7 bankruptcy protection on
July 31, 2008 (Bankr. C.D. Calif., Case No. 08-21752).
Representing the Debtor are Dean G. Rallis, Jr., Esq., and
John C. Weitnauer, Esq. Bloomberg noted that Indymac had $32.01
billion in assets as of July 11, 2008. In court documents,
IndyMac disclosed estimated assets of $50 million
to $100 million and estimated debts of $100 million to
$500 million.
All of Indymac's business is conducted, and assets are held,
within IndyMac Bank, F.S.B. On July 11, 2008, the Office of
Thrift Supervision closed IndyMac Bank and appointed FDIC as the
bank's receiver. Thacher Proffitt & Wood LLP was engaged as
counsel to the FDIC.
INFOGROUP INC: S&P's 'BB' Rating Unmoved by Company Privatization
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that its rating and
outlook for Omaha, Nebraska-based infoGROUP Inc. (BB/Negative/--)
are not affected by the former CEO and Chairman Vinod Gupta's
announcement that he is considering a proposal to take the company
private. Mr. Gupta owns approximately 40% of infoGROUP's
outstanding shares and said that he is considering developing a
bid for the company.
While S&P is concerned that a transaction would in large part be
debt-financed, and could significantly increase infoGROUP's
leverage, at this time, S&P believes that the condition of the
current financial markets limits the potential for such a
transaction over the intermediate term. S&P will monitor any
progress toward the completion of a transaction and, if announced,
assess its impact, if any, on the current rating and outlook.
INSIGHT MIDWEST: Bank Loan Sells at Substantial Discount
--------------------------------------------------------
Participations in a syndicated loan under which Insight Midwest
Holdings, LLC, is a borrower traded in the secondary market at
72.67 a dollar during the week ended December 19, 2008, according
to data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents a drop of 3.05 percentage points
from the previous week, the Journal relates. The syndicated loan
matures on June 12, 2014, and Insight Midwest pays 200 basis
points over LIBOR to borrow under the facility. The bank loan
carries Moody's B1 rating and Standard & Poor's B+ rating.
Insight Midwest Holdings is a unit of Insight Communications
Company, Inc., a domestic cable television multiple system
operator serving approximately 674,000 basic video subscribers,
mainly in Kentucky and in parts of Indiana and Ohio. Insight
Communications maintains its headquarters in New York.
* * *
As reported by the Troubled Company Reporter on May 1, 2008,
Moody's Investors Service assigned a B1 corporate family rating
for Insight Midwest Holdings and withdrew the former B1 CFR for
Insight Communications Company. The rating action reflects
completion of the division of the former partnership between
Insight and certain affiliates of Comcast Corporation in which
both companies had previously held a 50% interest in Insight
Midwest, LP, the intermediate holding company for the rated issuer
Insight Midwest.
INTERMUNE INC: Has Liquidity to Fund Biz Through End of 2009
------------------------------------------------------------
Intermune, Inc., said in a regulatory filing with the Securities
and Exchange Commission that, at September 30, 2008, it had
available cash, cash equivalents and available-for-sale securities
of $185.6 million compared to $235.3 million at December 31, 2007.
The decrease was primarily driven by the use of cash for
operations.
The company believes that it will continue to require substantial
additional funding to complete the research and development
activities currently contemplated and to commercialize product
candidates. The company believes that its existing cash, cash
equivalents and available-for-sale securities, together with
anticipated cash flows from sales of Actimmune(R), will be
sufficient to fund operating expenses, settlement with the
government, debt obligations and capital requirements under its
current business plan through at least the end of 2009.
Brisbane, Calif.-based InterMune Inc. (Nasdaq: ITMN) --
http://www.intermune.com/-- is a biotechnology company, engages
in the research, development, and commercialization of therapies
in pulmonology and hepatology.
Intermune, Inc. disclosed in a Securities and Exchange Commission
filing that as of September 30, 3008, its balance sheet showed
$205.7 million in total assets, total current liabilities of $42.2
million, Deferred rent of $1.5 million, Deferred collaboration
revenue of $60.5 million, and Liability under government
settlement of $23.4 million; resulting in a $92.0 million
stockholders' deficit. InterMune reported a net loss for the
third quarter of 2008 of $12.5 million, compared with a net loss
of $23.1 million, in the third quarter of 2007.
INTERMUNE INC: OrbiMed Advisors Discloses 6.5% Equity Stake
-----------------------------------------------------------
OrbiMed Advisors LLC and OrbiMed Capital LLC disclose holding
2,570,744 shares or 6.54% of the outstanding common stock of
Intermune, Inc., as of December 19, 2008. OrbiMed Advisors LLC
holds a 3.72% stake while OrbiMed Capital LLC holds 1.87%.
OrbiMed Advisors and OrbiMed Capital hold shares on behalf of:
* Caduceus Capital Master Fund Limited (189,344 shares),
* Caduceus Capital II, L.P. (182,800 shares),
* UBS Eucalyptus Fund, LLC (122,400 shares),
* PW Eucalyptus Fund, Ltd. (13,400 shares),
* Summer Street Life Sciences Hedge Fund Investors LLC
(71,500 shares),
* Knightsbridge Post Venture IV L.P. (9,300 shares),
* Knightsbridge Netherlands II, L.P. (3,400 shares),
* Knightsbridge Netherlands III - LP (6,200 shares),
* Knightsbridge Venture Capital VI, L.P. (12,100 shares),
* Eaton Vance Worldwide Health Sciences (1,098,000 shares),
* Eaton Vance Emerald Worldwide Health Sciences (16,200
shares),
* Eaton Vance Variable Trust (15,700 shares),
* Finsbury Worldwide Pharmaceutical Trust plc (360,500 shares),
* Biotech Growth Trust plc (99,100 shares), and
* Stichting Pensioenfonds ABP (370,800 shares).
Brisbane, Calif.-based InterMune Inc. (Nasdaq: ITMN) --
http://www.intermune.com/-- is a biotechnology company, engages
in the research, development, and commercialization of therapies
in pulmonology and hepatology.
Intermune, Inc. disclosed in a Securities and Exchange Commission
filing that as of September 30, 3008, its balance sheet showed
$205.7 million in total assets, total current liabilities of $42.2
million, Deferred rent of $1.5 million, Deferred collaboration
revenue of $60.5 million, and Liability under government
settlement of $23.4 million; resulting in a $92.0 million
stockholders' deficit. InterMune reported a net loss for the
third quarter of 2008 of $12.5 million, compared with a net loss
of $23.1 million, in the third quarter of 2007.
IONICA PLC: Scheme Supervisors to Pay Dividends on January 13
-------------------------------------------------------------
A. J. Kett, the Joint Scheme Supervisor in Ionica Plc Scheme of
Arrangement, disclosed on Dec. 22, 2008, that in accordance with
Clause 6.1.3 of the Scheme of Arrangement, the Scheme supervisors
intend to pay a third and final dividend of 0.06465 pence in
pound sterling on Admitted Scheme Claims on Jan. 13, 2009.
Dividends on Admitted Scheme Claims in respect of the holders of
the 13-1/2% Senior Notes due 2006 and the 15% Senior Discount
Notes due 2007 will be paid to the Indenture Trustees, the Bank of
New York Mellon and HSBC Bank, respectively, on Jan. 13, 2009.
For further information, please contact:
Holly Arnold
Tel: +44 (0) 1202 41 4370
About Ionica Plc
Ionica Plc's parent company, Ionica Group Plc, provides
telecommunication services in the U.K. Ionica Plc entered into
administration on Oct. 29, 1998. The Debtor previously filed a
complaint against its parent group, Ionica Group PLC. At that
time, the company's unsecured creditors were owed at least
GBP220 million. The company filed for Chapter 11 protection on
Dec. 11, 1998, with the U.S. Bankruptcy Court for the Southern
District of New York, since most of its creditors are located in
the U.S.
IRVINE SENSORS: Issues Shares to Six Investors for $138,000
-----------------------------------------------------------
Irvine Sensors Corporation entered into a Subscription Agreement
on December 10, 2008, with six accredited individual investors,
pursuant to which the company expanded its private placement
launched on November 10, 2008, in a closing of the issuance of
secured promissory notes in the original aggregate principal
amount of $138,000. The company did not disclose the identity of
the invesotrs.
As consideration for making the advances under the Notes, the
company agreed to issue to the Investors an aggregate of 86,250
shares of the company's Common Stock. The Shares have not been
registered under the Securities Act of 1933 and may not be offered
or sold absent registration or an applicable exemption from
registration. The number of Shares being issued equals 25% of the
principal amount of the Notes divided by $0.40, which was the last
closing bid price of the company's Common Stock as determined in
accordance with Nasdaq rules immediately preceding the company
entering into the binding Subscription Agreement to issue the
Notes.
The Notes bear interest at 12.0% per annum and will mature and
become payable 18 months following their issuance. All amounts
payable under the Notes are accelerated upon the occurrence of
certain bankruptcy-related events. The Notes are secured by a
security agreement in substantially all of the company's assets
and such security interest is senior to certain obligations of the
company to Longview Fund, LP and Alpha Capital Anstalt pursuant to
an intercreditor agreement and collateral agent agreement.
In accordance with the terms of the notes, the company would be
required to issue an additional number of shares of the company's
Common Stock with a value equal to 12.5% of the principal amount
of each Note in the event that such Note has not been paid in full
on or before the six month anniversary of the issuance date of the
Note, based on the greater of (x) the fair market value of the
company's Common Stock as of the Six Month Date or (y) the fair
market value of the company's Common Stock as of the date of
issuance of the Note; and an additional number of shares of the
company's Common Stock with a value equal to 12.5% of the
principal amount of each Note in the event that such Note has not
been paid in full on or before the 12-month anniversary of the
issuance date of the Note, based on the greater of (x) the fair
market value of the company's Common Stock as of the Twelve Month
Date or (y) the fair market value of the company's Common Stock as
of the date of issuance of the Note. The company may at its
option expand this Private Placement.
In consideration for services rendered as the lead placement agent
in the Private Placement, the company issued to J.P. Turner &
company, LLC, a five-year warrant to purchase 44,850 shares of the
company's Common Stock at an exercise price of $0.40 per share,
which represents 13% of the gross proceeds divided by the Market
Value. JP Turner also will receive, in consideration for services
rendered as lead placement agent, (i) cash commissions aggregating
$11,040, which represents 8% of the gross proceeds, (ii) a
management fee of $2,760, which represents 2% of the gross
proceeds and (iii) an expense allowance fee of $4,140, which
represents 3% of the gross proceeds.
The company has not granted registration rights with respect to
the Shares or the JP Warrant. The proceeds from the Private
Placement will be used to finance the working capital needs of the
company. The company had 5,641,875 shares of Common Stock
outstanding immediately prior to the Private Placement.
In November, the company said it entered into a Subscription
Agreement with eight accredited individual investors, pursuant to
which it closed a private placement of secured promissory notes in
the original aggregate principal amount of $502,000. As
consideration for making the advances under the Notes, the company
agreed to issue to the Investors an aggregate of 267,021 shares of
the company's Common Stock. The number of Shares being issued
equals 25% of the principal amount of the Notes divided by $0.47,
which was at the last closing bid price of the company's Common
Stock as determined in accordance with Nasdaq rules immediately
preceding the Company entering into the binding Subscription
Agreement to issue the Notes.
About Irvine Sensors
Based in Costa Mesa, Calif., Irvine Sensors Corporation
(Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision
systems company engaged in the development and sale of
miniaturized infrared and electro-optical cameras, image
processors and stacked chip assemblies, the manufacture and sale
of optical systems and equipment for military applications through
its Optex subsidiary and research and development related to high
density electronics, miniaturized sensors, optical interconnection
technology, high speed network security, image processing and low-
power analog and mixed-signal integrated circuits for diverse
systems applications.
Going Concern Doubt
The company generated net losses in fiscal 2005, fiscal 2006,
fiscal 2007 and the 39 weeks ended June 29, 2008. At June 29,
2008, the company's accumulated deficit was $156,444,700.
The company said it engaged an investment banking firm in June
2008 to assist it in raising additional capital. Failure to
successfully raise capital would have a material and adverse
effect on the company's financial condition, which may result in
defaults under its loan and preferred stock instruments. The
company said these conditions create substantial doubt about its
ability to continue as a going concern.
Balance Sheet
At June 29, 2008, the company's consolidated balance sheet showed
$31,519,400 in total assets, $28,794,000 in total liabilities, and
$2,725,400 in total stockholders' equity.
The company's consolidated balance sheet at June 29, 2008, also
showed strained liquidity with $12,104,000 in total current assets
available to pay $12,667,800 in total current liabilities. The
decline in working capital was substantially due to the
reclassification of the $2.0 million debt owed by Optex Systems
Inc., a wholly owned subsidiary, to TWL Group, LP, an entity owned
by Timothy Looney, that is due upon the earlier of Feb. 27, 2009,
or sixty days after all debt to the company's senior lenders is
refinanced or retired in full.
IRVINE SENSORS: Sells Patents to Aprolase for $9,500,000
--------------------------------------------------------
Irvine Sensors Corporation entered into a Patent Purchase
Agreement on December 11, 2008, with Aprolase Development Co.,
LLC, pursuant to which the company agreed to sell, assign,
transfer, and convey to the Purchaser for $9,500,000 all its
right, title, and interest in and to a substantial number of its
provisional patent applications, patent applications, patents, and
related foreign patents and applications, certain specific
abandoned provisional patent applications, patent applications,
patents and other governmental grants or issuances, and the causes
of action to sue for infringement of any enforcement rights. The
Patents relate to the company's systems, sensors and electronics
packaging technologies, although the exact list of Patents to be
sold has not yet been finalized.
Under the Agreement, the company also has agreed to sell, assign,
transfer, and convey to the Purchaser all right, title and
interest -- free and clear of any restrictions, liens, claims, and
encumbrances -- in and to all:
(a) inventions, invention disclosures, and discoveries
described in any of the Patents or Abandoned Assets that (i) are
included in any claim in the Patents or Abandoned Assets, (ii) are
subject matter capable of being reduced to a patent claim in a
reissue or reexamination proceedings brought on any of the Patents
or Abandoned Assets, or (iii) could have been included as a claim
in any of the Patents or Abandoned Assets;
(b) rights to apply in any or all countries of the world for
patents, certificates of invention, utility models, industrial
design protections, design patent protections, or other
governmental grants or issuances of any type related to any of the
Patents and the inventions, invention disclosures, and discoveries
therein;
(c) causes of action and other enforcement rights under, or on
account of, any of the Patents or the rights, including, without
limitation, all causes of action and other enforcement rights for
(i) damages, (ii) injunctive relief, and (iii) any other remedies
of any kind for past, current and future infringement; and
(d) rights to collect royalties or other payments under or on
account of any of the Patents.
The Agreement contains covenants:
(a) requiring the company to cooperate with doing such things
necessary to consummating the transactions contemplated by the
Agreement and fully perfecting and conveying to the Purchaser the
benefit of such transactions;
(b) requiring the company to continue to prosecute, maintain,
and defend the Patents at its sole expense until the Closing;
(c) requiring the company to do, and to cause the inventors to
do, such things necessary for filing patent applications,
enforcement or other actions and proceedings with respect to the
claims under the Patents, provided that the Purchaser compensates
the company for agreed upon reasonable, documented disbursements
and time incurred after Closing in connection with such assistance
in connection with any enforcement or other infringement action
regarding the Patents, under a standard billable hour rate of the
company;
(d) requiring the company to pay any maintenance fees,
annuities, and the like due or payable on the Patents until the
Closing; and
(e) that the Purchaser will not be liable for any obligations
under a pre-existing Royalty Agreement between the company and
Floyd Eide dated as of February 4, 2003.
The Agreement also provides that the Purchaser's total liability
under the Agreement will not exceed $9,500,000 and that, except
for the company's breach of its representations and warranties
related to authority, title and contest, existing licenses and
obligations, restrictions on rights to sue, and validity and
enforceability, or the company's intentional misrepresentation,
the company's total liability under the Agreement will not exceed
$9,500,000. The Agreement further provides that there will be no
consequential damages except in the event of the company's
intentional misrepresentation.
The company and the Purchaser have agreed to use reasonable
efforts to carry out the closing of the transactions contemplated
by the Agreement within 30 calendar days following the later of
December 11, 2008, or the date on which the last of the Closing
deliverables was received by the Purchaser. The Closing is
subject to certain conditions such as:
(a) the company's compliance with all of its obligations under
the Agreement prior to Closing;
(b) the Purchaser is satisfied with the company's
representations and warranties contained in the Agreement;
(c) none of the assets that are included in the Patents will
have expired, lapsed, been abandoned, or deemed withdrawn;
(d) the company will have delivered to the Purchaser, among
other deliverables, an Assignment of Patent Rights and an executed
assignment to effectuate the transactions; and
(e) certain existing licenses will have been terminated, or
amended such that each of them is non-exclusive, non-sublicensable
and nontransferable.
In the event all conditions to Closing are not met within 90 days
following December 11, 2008, either the Purchaser or the company
will have the right to terminate the Agreement by written notice
to the other party.
At the Closing, it is anticipated that the Purchaser will grant to
the company, under the Patents, and for the lives thereof, a
royalty-free, non-exclusive, non-sublicensable, and generally non-
transferable right and license to practice the methods and to
make, have made, use, distribute, lease, sell, offer for sale,
import, export, develop and otherwise dispose of and exploit any
of the company products covered by the Patents, according to terms
to be mutually agreed upon between the company and the Purchaser.
To consummate the transactions, the company will need the consent
of its senior lenders, Longview Fund, L.P. and Alpha Capital
Anstalt, as well as the consent of the holders of its secured
promissory notes. There can be no assurance that the company will
be able to obtain such consents, that the conditions to Closing
will be satisfied or that the company will be able to consummate
the transactions contemplated by the Agreement.
About Irvine Sensors
Based in Costa Mesa, Calif., Irvine Sensors Corporation
(Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision
systems company engaged in the development and sale of
miniaturized infrared and electro-optical cameras, image
processors and stacked chip assemblies, the manufacture and sale
of optical systems and equipment for military applications through
its Optex subsidiary and research and development related to high
density electronics, miniaturized sensors, optical interconnection
technology, high speed network security, image processing and low-
power analog and mixed-signal integrated circuits for diverse
systems applications.
Going Concern Doubt
The company generated net losses in fiscal 2005, fiscal 2006,
fiscal 2007 and the 39 weeks ended June 29, 2008. At June 29,
2008, the company's accumulated deficit was $156,444,700.
The company said it engaged an investment banking firm in June
2008 to assist it in raising additional capital. Failure to
successfully raise capital would have a material and adverse
effect on the company's financial condition, which may result in
defaults under its loan and preferred stock instruments. The
company said these conditions create substantial doubt about its
ability to continue as a going concern.
Balance Sheet
At June 29, 2008, the company's consolidated balance sheet showed
$31,519,400 in total assets, $28,794,000 in total liabilities, and
$2,725,400 in total stockholders' equity.
The company's consolidated balance sheet at June 29, 2008, also
showed strained liquidity with $12,104,000 in total current assets
available to pay $12,667,800 in total current liabilities. The
decline in working capital was substantially due to the
reclassification of the $2.0 million debt owed by Optex Systems
Inc., a wholly owned subsidiary, to TWL Group, LP, an entity owned
by Timothy Looney, that is due upon the earlier of Feb. 27, 2009,
or sixty days after all debt to the company's senior lenders is
refinanced or retired in full.
IRWIN WHOLE: Fitch Downgrades Ratings on Five Class Certificates
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of seven
tranches issued in three Irwin Whole Loan Home Equity Trust
transactions. Underlying securities' collateral consists
primarily of closed-end second lien residential mortgage loans and
second lien home equity lines of credit.
The ratings on the securities were monitored by evaluating factors
Moody's determined to be essential in the analysis of securities
backed by such loans. The salient factors include: i) Moody's
review of the nature, sufficiency, and quality of historical loan
performance information, ii) analysis of the collateral
composition and pool credit performance including prepayment, loan
delinquency and loss data, iii) consideration of the transaction's
capital structure and related allocations of collateral cash flows
and losses, and iv) a comparison of current credit enhancement
levels to updated Moody's pool loss projections based on present
collateral credit performance.
Some of the securities are guaranteed by the respective financial
guarantors. The underlying ratings of these securities generally
reflect the intrinsic credit quality of the securities in the
absence of the guarantee. The current ratings on the below--noted
securities are consistent with Moody's practice of rating such
insured securities at the higher of the guarantor's insurance
financial strength rating and the underlying or intrinsic rating.
When analyzing underlying ratings for CES and HELOC transactions,
Moody's projects cumulative losses for each deal based on a
collateral analysis of the deal's Constant Prepayment Rate and
Constant Default Rate.
CPR - CPR is based on the average of the last six months 1-month
CPR.
CDR - There are two approaches for determining pool CDR. The
first approach calculates CDR based on pool loan losses from the
previous twelve months, i.e. recent losses. A second approach is
based on pipeline losses -- losses derived from days-aged
delinquencies and Moody's assumptions for default based on days
delinquent, in foreclosure, or liquidation, and the severity of
loss given default. Moody's assumes 100% severity for second
liens, including both CES and HELOCs. After the CDR is calculated
using the two methods, the effective CDR for loss projection
purposes is determined by using a weighted average of the CDRs as
determined by the recent loss and pipeline loss approaches -- with
weightings determined on a transaction by transaction basis.
Moody's assumes that the CDR will not decline for the next three
years and will decline subsequently for the life of the deal under
a schedule, typically reducing by 50% in year 4 and remaining
constant thereafter.
Based on calculated CPR and CDR, Moody's calculates projected
deal-specific cumulative losses and the weighted average life of
the deal. The credit enhancement calculation can also include
credit for excess spread, i.e. the aggregate, positive difference
in the weighted average loan coupon and the all-inclusive
securities' interest and deal fees, including servicing. Excess
spread benefit is calculated by multiplying the stressed
annualized excess spread by the weighted average life of the deal.
Aggregate credit enhancement which combines subordination benefit
(including over-collateralization and/or reserve accounts) and
excess spread benefit is compared with projected cumulative losses
for the deal to derive coverage multiples and associated ratings
by deal tranche. Moody's will analyze tranche coverage multiples
after consideration of timing of tranche repayment and allocation
of losses (if any).
Issuer: Irwin Whole Loan Home Equity Trust 2002-A
-- Cl. IIM-1, Downgraded to A3; previously on 8/29/2002 Assigned
Aa2
-- Cl. IIM-2, Downgraded to Ba1; previously on 8/29/2002
Assigned A2
-- Cl. IIB-1, Downgraded to Caa3; previously on 8/29/2002
Assigned Baa2
-- Cl. IA-1, Downgraded to Baa1; previously on 11/16/2008 Placed
on Review for Direction Uncertain from A2
-- Financial Guarantor: MBIA Insurance Corporation (Currently
Baa1)
Issuer: Irwin Whole Loan Home Equity Trust 2003-B
-- Cl. B, Downgraded to B3: previously on 8/7/2003 Assigned Baa3
Issuer: Irwin Whole Loan Home Equity Trust 2003-D
-- Cl. B-1, Downgraded to Ba2; previously on 12/1/2003 Assigned
Baa2
-- Cl. B-2, Downgraded to B1; previously on 12/1/2003 Assigned
Baa3
JACK-IN-THE-BOX: Moody's Affirms Ba3 CFR; Outlook Negative
----------------------------------------------------------
Moody's Investors Service revised Jack-in-the-Box, Inc.'s rating
outlook to negative from stable. The company's Ba3 corporate
family rating, B1 probability of default rating, and Ba3 senior
secured ratings were affirmed.
The change in outlook to negative reflects Jack-in-the-Box's
exposure to unfavorable discretionary consumer spending trends and
high operating costs that will continue to pressure its operating
performance as well as the restaurant sector overall. This could
make it difficult for the company to maintain debt protection
measures consistent with its current rating. Debt protection
measures are already considered relatively weak for the current
rating. Debt/EBITDA is currently at 4.8 times and close to the
5.0 times that Moody's previously cited as a level that could
trigger a negative rating action.
The ratings affirmation is based on Moody's expectation that Jack-
in-the-Box's free cash flow should improve -- despite margin
pressure -- due in part to the expected reduction in capital
expenditures as its re-imaging program and re-franchising efforts
are completed. Moody's also believes the company will prudently
manage its share repurchases during this period of economic
weakness, leaving excess free cash flow that could be used for
debt reduction. In order for Jack-in-the Box to maintain its
current rating, debt/EBITDA will need to start trending lower
towards 4.0 times.
Moody's last rating action for Jack-in-the-Box occurred on
December 5, 2006. At that time, the company's ratings were
lowered in response to weak credit metrics and an increasingly
aggressive financial policy.
Jack in the Box Inc., operates or franchises more than 2,000
quick-service hamburger restaurants in eighteen states,
predominantly in California and Texas. The company also operates
or franchises more than 400 fast-casual Qdoba Mexican Grill
restaurants in 41 states. Revenue for the fiscal year-ending
September 28, 2008, was approximately $2.5 billion.
KAUPTHING BANK: Luxembourg Gov't Inks Initial Sale Deal for Unit
----------------------------------------------------------------
Michele Sinner and Dale Hudson at Reuters report that Luxembourg's
budget minister Luc Frieden has signed a declaration of intent for
the sale of Kaupthing Luxembourg SA, a unit of Iceland's Kaupthing
Bank hf, to a group of investors from Arab countries.
In a statement on Saturday, the Luxembourg government, as cited by
Reuters, said the agreement needs acceptance from the Belgian
state and creditor banks. It added that together with Belgium and
the creditor banks, it would provide credit to Kaupthing
Luxembourg, enabling the unit to keep functioning and reimburse
depositors, Reuters relates.
Reuters recounts a decision on the takeover of Kaupthing
Luxembourg had been postponed earlier this month, with the Belgian
government citing technical reasons.
Belgian accounts, Reuters notes, are held by the Luxembourg unit
of Kaupthing and their money was frozen in November by
Luxembourg's financial regulator after the Icelandic parent
company was taken over by the Icelandic state.
Reuters discloses that according to Belgian Prime Minister Yves
Leterme there was a serious candidate to buy Kaupthing Luxembourg,
and that three or four other parties were also eyeing a takeover
of Kaupthing's Belgian customers.
Potential buyers for the Belgin customers included online lender
Keytrade Bank, German bank Landesbank Nord and the Libyan
Investment Autority fund, Reuters discloses citing Luxembourg
daily Tageblatt.
Suspension of Payment Status
On October 9, 2008, the Board of Directors of Kaupthing Bank
Luxembourg SA applied for suspension of payments status with the
Luxembourg District Court sitting in commercial matters.
The bank was granted this status with monitoring of the bank's
management by the administrators. The Court appointed
PriceWaterhouseCoopers Luxembourg -- represented by Mrs Emmanuelle
Caruel-Henniaux -- and Mr Franz Fayot, Attorney at law, to act as
the bank's administrators.
Monitoring of the Bank's Operations
Among other things, the bank has been unable to reimburse its
customers' cash deposits since it was granted suspension of
payment status on October 9, 2008. Also, the bank is not
authorized to make any other payments unless the administrators
give their prior consent. As a result, the administrators signed
off on a limited number of transactions in the interest of the
bank's creditors and customers.
Some of those transactions were the subject of judgments by the
Luxembourg District Court sitting in commercial matters. These
judgments are dated October 29, 2008, and relate to the suspension
of payment status of the Bank and that of another Luxembourg-based
Icelandic bank.
The administrators apply the solutions proposed by the judgments
as they manage the suspension of payment. These solutions
include:
* The income made up of securities (such as interest and
dividends) owned by the bank's customers and the related
cash are not included in the bank's assets.
* Those transfer orders and share buy orders which have not
yet been closed as of the receivership date must be
canceled. The related amounts must be credited to the
relevant customers' accounts.
* If certain requirements are met, securities, which are not
subject to a pledge, guarantee or lien, may be
transferred.
Takeover Efforts
The administrators would like to come to a solution which will
enable the bank to remain in business. This would have the
advantage of putting an end to the suspension of payment status.
To achieve this, the administrators, together with the bank's
management, have facilitated contacts and discussions with
potential buyers about the terms of a potential takeover with
them.
Using a Data Room made available to them by the bank, potential
buyers can have access to the information they need to confirm
their interest and communicate their offers.
Talks with potential buyers are still ongoing. Making sure the
bank and /or its Belgian and Swiss branches can be taken over is a
key priority for the administrators and for the bank's management.
About Kaupthing Bank Luxembourg
Kaupthing Bank Luxembourg SA is a unit of Iceland-based Kaupthing
Bank hf.
About Kaupthing Bank
Headquarted in Reykjavik, Iceland, Kaupthing Bank --
http://www.kaupthing.com-- is engaged in the provision of
financial services, such as private banking, asset management,
pension services, brokerage services, investment banking, as well
as corporate and retail banking. The Bank's offer is targeted at
companies, institutional investors and individuals. The Bank is
operational in thirteen countries, including Luxembourg,
Switzerland, the Nordic countries, the United Kingdom and the
United States. The main subsidiaries include Kaupthing Singer &
Friedlander and FIH Erhvervsbank.
* * *
As reported in the Troubled Company Reporter, on Nov. 30, 2008,
Olafur Gardasson, assistant for Kaupthing Bank hf., in a
proceeding under Act No. 21/1991, pending before the Reykjavik
District Court, and foreign representative of the Debtor, filed a
petition under chapter 15 of title 11 of the United States Code in
the United States Bankruptcy Court for the Southern District of
New York commencing the Debtor's chapter 15 case ancillary to the
Icelandic Proceeding and seeking recognition for the Icelandic
Proceeding as a "foreign main proceeding" under the
Bankruptcy Code and relief in aid of the Icelandic Proceeding.
Citing a court filing by Olafur Gardarsson, Reuters disclosed
Kaupthing has about US$14.8 billion of principal assets, including
US$222 million located in the United States, and
US$26 billion of principal indebtedness.
KB TOYS: Court Approves Going-Out-Of-Business Sale for 461 Stores
-----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved going-out-of-business sale for all of KB Toys Inc.'s 461
stores.
The company has lowered prices on its entire stock. Savings start
at 40% off regular prices. All KB Toys, KB Toy Outlet, KB Toy
Works, and KB Toys Holiday Stores nationwide are participating in
the liquidation sale event.
"While we are deeply saddened by the impending closing of our
stores, we would like to thank our loyal customers by offering
last-minute holiday savings on everything in the store," said Andy
Bailen, CEO of KB Toys, Inc. "Customers can choose from hot
holiday toys, traditional favorites, video games, closeouts, and
Super Value Toys."
Despite the success that KB Toys had over the last year in
improving the retail, wholesale and operational areas of its
business, the downturn in consumer spending compounded by a
tightening of credit sources have necessitated the closing of all
its stores.
"We want to thank all of our employees for their tremendous
dedication and support of the company. I can't say enough how
proud I am of them for working so hard this year," added Mr.
Bailen.
Other than stores in America, it will also close down stores in
Guam and Puerto Rico by early February 2009, the company said.
Gordon Brothers Group and Great American Group are assisting the
company in running the Going-Out-of-Business sale.
About KB Toys
Headquartered in Pittsfield, Massachusetts, KB Toys, Inc. --
http://www.kbtoys.com-- operates a chain of retail toy stores.
On Jan. 14, 2008, the Debtor and 69 of its affiliates filed for
protection under Chapter 11 of the Bankruptcy Code, which were
administratively consolidated under Case No. 04-10120. Two of the
200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of
Massachusetts Inc. In connection with the emergence of KB Toys
from bankruptcy in August 2005, and the subsequent organizational
restructuring, the assets and operations of may of these prior
debtors were transferred among then existing debtor entities and
consolidated with KB Toys Group. Furthermore, most of the
entities involved were either dissolved or were merged into
surviving entities, and several of them changed their names. As
a result, nine Debtors and four inactive special purpose units
which are not debtors.
The company and eight of its affiliates filed for Chapter 11 on
December 11, 2008 (Bankr. D. Del. Lead Case No. 08-13269). Joel
A. Waite, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway,
Stargatt & Taylor LLP, represent the Debtors in their
restructuring efforts. The Debtors proposed Wilmer Cutler
Pickering Hale and Dorr LLP as their co-counsel, FTI Consulting
Inc. as financial and restructuring advisor, and Epiq Bankruptcy
Solutions LLC as claims and noticing agent. When the Debtors
filed for protection from their creditors, they listed assets and
debts between $100 million to $500 million each.
KEY PLASTICS: Gets Interim Access to $7-Mil. Wayzata DIP Facility
-----------------------------------------------------------------
The Hon. Mary F. Walrath of the United States Bankruptcy
Court for the District of Delaware authorized Key Plastics LLC
and Key Plastics Finance Corp. to access, on an interim basis,
up to $7 million in postpetition financing under the secured
superpriority debtor-in-possession financing agreement dated
Dec. 15, 2008, with a group of financial institutions led
by Wayzata Investment Partners LLC, as administrative and
collateral agent.
Judge Walrath also authorized the Debtors to use cash collateral
securing repayment of secured loan to the lender.
Wayzata Investment agreed to provide as much as $20 million in
financing on a final basis.
Under the agreement, the loan will incur interest at 15% and
the default rate is interest rate plus 2% per annum. The DIP
agreement will mature on the earlier to occur of
-- Feb. 28, 2009, unless extended by the lenders; or
-- the effective date of any confirmed plan of reorganization.
The DIP facility is subject to a $500,000 carve-out to pay fees
and expenses incurred by professionals.
To secure their DIP obligations, the lenders will be granted
superpriority claim against the Debtors with priority over any and
all administrative expenses.
The DIP agreement contains customary and appropriate events of
default.
A full-text copy of the Secured Superpriority Debtor-in-Possession
Financing Agreement dated Dec. 15, 2008, is available for free
at http://ResearchArchives.com/t/s?36ad
A full-text copy of the Collateral Agreement is available for free
at http://ResearchArchives.com/t/s?36ae
A full-text copy of the Guaranty Agreement is available for free
at http://ResearchArchives.com/t/s?36af
About Key Plastics
Headquartered in Northville, Michigan, Key Plastics LLC aka Key
Plastics Technology LLC -- http://www.keyplastics.com-- supply
plastic components to the automotive industry. The Debtors have
24 manufacturing facilities located in the United States, Canada,
Mexico, Germany, Portugal, Spain, the Czech Republic, France,
Slovakia, Italy and China. According to Bloomberg News, the
company filed for bankruptcy in March 23, 2000, in Detroit and
emerged a year later under the ownership of private-equity firm
Carlyle, Bloomberg said. The company and Key Plastics Finance
Corp. filed for Chapter 11 protection on December 15, 2008 (Bankr.
D. Del. Case Nos. 08-13326 and 08-13324). Mark D. Collins, Esq.,
Richards Layton & Finger PA, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed assets and debts between $100 million
to $500 million each.
KUAKINI HEALTH: Moody's Affirm 'Ba1' Revenue Bond Rating
--------------------------------------------------------
Moody's Investors Service has affirmed Kuakini Health System's Ba1
revenue bond rating, affecting $29 million of debt (the 2002
Series A bonds issued through the State of Hawaii Department of
Budget and Finance). The outlook has been revised to stable from
negative reflecting the improvement of operating performance, an
increase in volumes, and the stabilization of the organization's
balance sheet.
Legal security: The bonds are secured by a pledge of gross
revenues of the obligated group members which include: Kuakini
Health System, the parent corporation; Kuakini Medical Center, a
212-licensed bed acute care hospital (represents 86% of system
revenues); Kuakini Geriatric Care, Inc., a 190-bed nursing
facility and 34-bed residential care home (represents 13% of
system revenues); and Kuakini Support Services Inc., a corporation
which manages the system's real estate properties and will begin
overseeing all research activities at Kuakini. Although the
Kuakini Foundation, a fundraising organization that exists for the
sole benefit of the system, is not part of the obligated group, it
guarantees the debt service on the 2002 Series A bonds.
Interest rate derivatives: None
Strengths
* Second year of overall improved operations with significant
operating improvements in 2nd half of fiscal year 2008; broke
even from operations in FY 2008 improving from a loss of
$7 million in FY 2007 (-5.4% margin); operating cashflow
improved to $9.2 million (2.1%) from $2.7 million (6.8%);
revenues grew at a rate of 5%, but expense growth was 0%
* Improved debt measures driven by improved profitability; debt to
cashflow improved to 3.7 times in FY 2008, from unfavorable 10
times in FY 2007; maximum annual debt service coverage improved
to 2.8 times from 1.4 times
* Renovated and expanded emergency department, increasing ED
visits and driving overall admissions growth
* Second year of admissions growth; admissions increased in FY
2007 for the first time in three years growing by 3.6% (despite
a decrease in total discharges market-wide); in FY 2008
admissions grew by 5%
* Significant improvement of pension funding, increasing funded
ratio to 90% at fiscal year end (FYE) 2008 from 54% at FYE 2005;
recent decision to freeze the defined benefit pension plan may
reduce future funding although still subject to market
conditions and equity returns
* Reconstitution of the Board of Directors; new board leadership
together with management has installed greater discipline on
financial performance and expectations
* Defined niche within the competitive Honolulu market; long
cultural history of providing care to the Japanese and elderly
populations of Hawaii; slight growth of market share in 2008
Challenges
* Difficult payer mix with very high and increasing Medicare
exposure of 70% of gross revenues
* Smallest of the major healthcare systems in Oahu, with 9.4%
marketshare, few unique services, and within close proximity of
major competitors
* Strong presence of organized labor, and the dominance of a
single commercial payer, restricts flexibility with respect to
both revenues and expenses
* Significant pension contributions and longer period of modest
operating cashflow has weakened balance sheet, decreasing cash
on hand to 78 days at FYE 2008 from 118 days at FYE 2006; cash
to debt declined to 73% from 109% over the same period; recent
investment losses have further eroded liquidity, reducing cash
on hand to 70 days as of October 31, 2008; all debt is fixed
rate
* Accumulated deferred maintenance; average age of plant is high
at 16 years
Recent Results and Developments
Kuakini's long cultural history of providing care to the Japanese
and elderly populations in Hawaii has been a market
differentiating strength for the organization. However, with the
emphasis of servicing the elderly, Kuakini has had to operate with
a challenging payer mix, with 70% of its gross revenues derived
from Medicare and the bulk of its commercial business derived from
HMSA, the dominant payer in the market. Kuakini is the smallest
of the major healthcare providers in Oahu with approximately 9.4%
marketshare. Competitors include Hawaii Pacific Health (rated
Baa1), Queens Health System (rated A1), and Kaiser Permanente.
Given its smaller size and more limited resource base, Kuakini is
unable to match its competitors' rate of capital investment, and
in general has less bargaining power, placing it at a competitive
disadvantage.
Nevertheless, Kuakini has continued to undertake certain strategic
investments, and although its overall age of plant is high (16
years), Kuakini recently opened a new emergency department which
has helped drive improved volumes. In 2008, visits to the ED
increased by 5%, time on divert decreased to 2% from 11%, and
inpatient admissions improved 5%. Kuakini's marketshare increased
slightly, from 9.2% in 2007 to 9.4% in 2008, and revenues grew by
5%, which is Kuakini's largest increase to revenues in four years.
Profitability improved significantly in FY 2008, much of which is
attributable to improved performance in the second half of the
year. Operations achieved break-even in 2008 for the first time in
six years, reversing a $7 million loss (-5.4% margin) in 2007.
Operating cashflow improved to $9.3 million (6.8% margin) from
$2.7 million (2.1% margin), which is a record high for the
organization. Kuakini achieved this improvement by both growing
revenues, and limiting expense growth. In addition to favorable
volume growth, revenues were benefited by a favorable contract
adjustment with HMSA, and improvements to the organization's
charge master. With respect to expenses, management was able to
reduce expense growth to zero. Both bad debt expense, and interest
expense, actually declined for the year. Also, labor expense
benefited from the hospital's increased use of hospitalists, an
increase in the practice of flex staffing, and certain changes to
the pay structure. Moody's view favorably management's ability to
affect significant improvement to operations.
A historic strength of Kuakini has been its balance sheet, however
due to a combination of poor operating performance, and increased
pension funding, Kuakini's cash balances have been significantly
reduced over the last several years. As of fiscal year end 2008,
unrestricted cash and investments were equal to 78 days of
expenditures, which was down from 130 days as recently as FYE
2005. Due primarily to investment losses, this measure decreased
further through the first four months of FY 2009, with cash on
hand measuring 70 days as of October 31, 2008. Moody's notes that
Kuakini has a favorably conservative investment allocation
strategy, with approximately 2/3rd of their assets invested in
cash and money market funds, and 1/3rd invested in mutual funds.
The outstanding bonds are fixed rate obligations.
Kuakini has identified several future projects including a
research building (estimated to cost between five and six million)
and certain clinical enhancements (expected to cost approximately
four million). Kuakini plans to fund raise for the great majority
of the research building. Moody's believe it will be important for
Kuakini to continue to closely monitor its spending in relation to
its generation of free cashflow, and to preserve, and rebuild, its
current cash balances.
Outlook
The revision of the outlook to stable from negative reflects
Moody's recognition of the improvement of operating performance,
an increase in volumes, and the stabilization of the
organization's balance sheet
What could change the rating - UP
Significant and sustainable operating improvement producing
positive operating margins; liquidity growth and improved debt
measures
What could change the rating - DOWN
Renewed weakening of utilization levels; deterioration of
operating performance; a significant decline in liquidity;
material increase in debt
Key indicators
-- Based on financial statements for Kuakini Health System and
Subsidiaries
-- First number reflects audit year ended June 30, 2007
-- Second number reflects audit year ended June 30, 2008
-- Investment returns smoothed at 6% unless otherwise noted
* Inpatient admissions: 5,605; 5,862
* Total operating revenues: $130.1 million; $136.5 million
* Moody's-adjusted net revenue available for debt service:
$5.9 million; $12.0 million
* Total debt outstanding: $38.2 million; $37.7 million
* Maximum annual debt service (MADS): $4.2 million; $4.2 million
* MADS Coverage based on reported investment income: 1.6 times;
3.2 times
* Moody's-adjusted MADS Coverage: 1.4 times; 2.8 times
* Debt-to-cash flow: 10.2 times; 3.7 times
* Days cash on hand: 88 days; 78 days
* Cash-to-debt: 82%; 73%
* Operating margin: -5.4%; 0.0%
* Operating cash flow margin: 2.1%; 6.8%
The last rating action taken on Kuakini was on April 3, 2008, at
which time Moody's downgraded Kuakini's revenue bond rating to Ba1
from Baa3. The negative outlook was affirmed.
LANDAMERICA FINANCIAL: Court OKs Amended Stock Purchase Terms
-------------------------------------------------------------
Fidelity National Financial, Inc., reported that the U.S.
Bankruptcy Court for the Eastern District of Virginia has approved
amended terms related to the acquisition of LandAmerica Financial
Group, Inc.'s two principal title insurance underwriters,
Commonwealth Land Title Insurance Company and Lawyers Title
Insurance Corporation.
The amended terms will reduce the total purchase price for
Commonwealth and Lawyers to approximately $235 million. Chicago
Title Insurance Company and Fidelity National Title Insurance
Company will pay a total of approximately $135 million in cash to
LFG. Additionally, FNF will pay LFG a total consideration of
approximately $100 million consisting of a $50 million
subordinated note due in 2013, with interest at the 5-year
treasury rate at closing plus 1%, and approximately $50 million in
FNF common stock.
Additionally, the Nebraska rehabilitation court has issued an
order to release Commonwealth and Lawyers from rehabilitation
subject to the closing of the FNF acquisition of the two
underwriters. FNF expects closing of the transaction to take
place later this afternoon, Dec. 22, 2008, subject to the
satisfaction of all remaining closing conditions.
About LandAmerica Financial
LandAmerica Financial Group, Inc. is a leading provider of real
estate transaction services with offices nationwide and a vast
network of active agents. LandAmerica serves its agent,
residential, commercial and lender customers throughout the
United States, Mexico, Canada, the Caribbean, Latin America,
Europe and Asia.
LandAmerica Financial Group and its affiliate LandAmerica 1031
Exchange Services, Inc. filed for Chapter 11 protection Nov. 26,
2008 (Bankr. E. D. Virginia, Lead Case No. 08-35994).
Dion W. Hayes, Esq., and John H. Maddock III, Esq., at
McGuireWoods LLP, are the Debtors' bankruptcy counsel.
In its bankruptcy petition, LFG listed total assets of
$3,325,100,000, and total debts of $2,839,800,000 as of Sept. 30,
2008.
LAS VEGAS SANDS: Bank Loan Sells at Substantial Discount
--------------------------------------------------------
Participations in a syndicated loan under which Las Vegas Sands is
a borrower traded in the secondary market at 38.41 cents-on-the-
dollar during the week ended December 19, 2008, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents a drop of 4.59 percentage points from
the previous week, the Journal relates. The syndicated loan
matures on May 1, 2014 and Las Vegas Sands pays 175 basis points
over LIBOR to borrow under the facility. The bank loan carries
Moody's B2 rating and Standard & Poor's B+ rating.
About Las Vegas Sands
Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) --
http://www.lasvegassands.com/-- owns and operates The Venetian
Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo
and convention center. The company also owns and operates the
Sands Macao, the first Las Vegas-style casino in Macao, China.
As of Sept. 30, 2008, the company has $14.7 billion in total
assets, and $12.4 billion in total liabilities. Unrestricted cash
balances as of September 30, stood at $1.28 billion while
restricted cash balances were $239.1 million. Of the restricted
cash balances, $199.6 million is restricted for Macao-related
construction and $32.3 million is restricted for construction of
Marina Bay Sands in Singapore. As of Sept. 30, total debt
outstanding, including the current portion, was $10.35 billion.
LEVITT AND SONS: Disclosure Statement Gets Preliminary Court Nod
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida
approved Levitt and Sons LLC's Second Amended Disclosure
Statement on December 17, 2008, on a preliminary basis, subject
to a review and approval of a further revised Disclosure
Statement to reflect terms of a resolution reached by the plan
proponents and Wachovia Bank, N.A., with respect to Wachovia's
objection to certain solicitation procedures.
The continued Disclosure Statement hearing commenced last
December 10, 2008. Wachovia Bank withdrew its objection to the
Disclosure Statement on the record at the hearing, as noted by
the Court.
The objections filed by the United States Trustee and Bank of
America, N.A, to the extent not resolved are overruled for
reasons stated on the record.
As per the Court's directive, the Plan Proponents delivered to
the Court a further revised Second Amended Joint Plan of
Liquidation and Disclosure Statement dated December 18, 2008.
Among other things, the revised Second Amended Disclosure
Statement provides that:
(a) The Plan Proponents estimate the total amount of claims
against (1) the LAS Consolidated Debtors to range from
roughly $108,438,261 to $335,801,567, and (2) the
Tennessee Consolidated Debtors to range from roughly
$5,165,229 to $6,201,702, exclusive of the claim of the
LAS Consolidated Debtors against the Tennessee
Consolidated Debtors.
(b) The Plan Proponents anticipate these holders to receive,
in the aggregate, distributions on account of their
Allowed Claims in the range of approximately:
Holder Distribution Range
------ ------------------
Allowed Unsecured Claims in 2.75% to 13.74%
Class LAS-9A
Allowed Deposit Holder Claims in 2.75% to 23.18%
Class LAS-9B against the LAS
Consolidated Debtors
Allowed Unsecured Claims in 38.37% to 55.17%
Class Tenn-6A against the Tennessee
Consolidated Debtors
(c) Wachovia Bank asserts that its General Unsecured Claim is
approximately $58,000,000, as indicated in its amended
proof of claim. The Plan Proponents do not and will not
object to or contest this amount.
(d) Pursuant to the Liquidation Analysis, the Plan Proponents
estimate that the total Allowed General Unsecured Claims
will range from $106,919,107 to $334,110,922, subject in
all events to the outcome of pending objections and
objections to be filed to those claims.
Copies of the black-lined versions of the Second Amended
Disclosure Statement, as amended, and Second Amended Joint
Liquidating Chapter 11 Plan, as amended, dated December 18, 2009,
are available at no charge at:
http://bankrupt.com/misc/LAS_Blacklined2ndDS_amendedDec18.pdf
http://bankrupt.com/misc/LAS_Blacklined2ndPlan_amendedDec18.pdf
After the December 10 Disclosure Statement hearing and consistent
with statements made on the record, the Debtors, the Official
Committee of Unsecured Creditors, and Wachovia Bank entered into
a certain Plan Support Agreement. The Plan Support Agreement is
listed as Exhibit 10. Copies of the Disclosure Statement
exhibits can be accessed for free at:
http://bankrupt.com/misc/LAS_DSexhibits_Dec18.pdf
The Plan Proponents also filed a proposed order granting the
revised Second Amended Disclosure Statement, providing that:
* December 23, 2008, be deemed as the Voting Record Date;
* February 9, 2009, Pacific Time, be deemed as the Voting
Deadline;
* February 19, 2009, Eastern Standard Time, be deemed as the
confirmation hearing date, which hearing will continue, if
necessary, on February 20, and which may be continued from
time to time without further notice; and
* February 4, 2009, be deemed as the Plan objection
deadline.
The Court will conduct a hearing on December 23, 2008, to
consider the further revisions made to the Second Amended
Disclosure Statement.
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. 37; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
LEVITT AND SONS: Hilco Completes Levitt Sale for $14.2 Million
--------------------------------------------------------------
Hilco Real Estate, LLC, has completed the sale of a portion of the
Levitt & Sons residential real estate portfolio comprised of 12
community developments in Tennessee and one in Florida. The sale
represents all assets held by one of Levitt & Sons' creditors in
the bankruptcy case.
In total, Hilco Real Estate sold eight quick delivery homes,
135 partially-built homes and 106 fully-improved home sites. The
bulk of these assets are located in the greater Memphis area.
The Memphis portfolio was purchased, in bulk, by a local investor
who is involved in home building and related construction
businesses. The property in Clermont, Florida, was purchased by
a diversified real estate investment company based in Delray
Beach.
Commenting on the sale, Neil Aaronson, Chief Executive Officer of
Hilco Real Estate said, "There is a tremendous opportunity in the
residential market right now." He added, "Selling partially-built
residential subdivisions has unique challenges. Our experience
with the Levitt & Sons portfolio, and other large residential
bankruptcy cases, has given Hilco an opportunity to identify a
diverse pool of investors who are looking to purchase distressed
residential assets. We will continue to pursue assignments that
will allow us to parlay this skill set into future success
stories."
About Hilco Real Estate, LLC
Hilco Real Estate helps businesses improve leverage and cash flow
by repositioning and restructuring their real estate commitments.
The company's focus is to optimize value in the shortest period
of time. Core competencies include strategic advisory and
consulting services, owned portfolio disposition, lease portfolio
sales/assignments, lease termination, lease renegotiation,
leasing/subleasing, sale of non-core owned assets, sale/leaseback
transactions, and fee and appraisals for leased and owned assets.
The company, which is headquartered in Northbrook, Ill, is a
division of The Hilco Organization. For more information please
visit http://www.hilcorealestate.com/
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. 37; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
LODGENET INTERACTIVE: To Close Atlanta Call Center, Cut Workforce
-----------------------------------------------------------------
LodgeNet Interactive Corporation said in a regulatory filing with
the Securities and Exchange Commission that, as part of its on-
going efforts to enhance profitability, it would be transitioning
calls from hotel guests requiring assistance to connect to the
Internet to a call center operated by a third party specializing
in providing support to Internet customers. As part of this
transition, the company will be closing its Atlanta, Georgia call
center facility during the first quarter of 2009.
The closing of the Atlanta call center location will result in a
decrease of the company's employees by roughly 110 full time
positions, representing roughly 9% of its total workforce. The
reductions are in addition to the reduction in force announced by
the company on November 24, 2008, and will be completed by the end
of the first quarter of 2009. The company's existing call center
in Sioux Falls, South Dakota, which currently handles calls from
hotels related to the company's video systems, will handle calls
from hotel customers, as well as calls that require detailed
technical knowledge or are escalated from the third party call
center. All customer service operations will continue to be based
in the United States.
As a result of the closing of the Atlanta customer service
location, the company expects to incur a charge of roughly
$550,000 in the fourth quarter of 2008 for employee related
expenses and $350,000 in the first quarter of 2009 for other exit-
related costs arising from contractual and other obligations. The
charges are not expected to affect the company's compliance with
its financial covenants during the fourth quarter of 2008 or for
the first quarter of 2009 because related cash expenditures during
the period will be offset by cash savings on salaries and related
expenses. It is anticipated that the foregoing action will reduce
the company's expenses during the second through fourth quarters
of 2009 by a total of roughly $2 million.
In November, LodgeNet implemented an expense reduction program,
which included (a) a reduction in force, (b) the indefinite
deferral of compensation adjustments for all officers and
employees, (c) the suspension of the 401(k) corporate matching
contribution, and (d) the suspension of the company's 2009 bonus
program. The reduction in force would result in a decrease of the
company's employees by roughly 180 full time positions,
representing roughly 13% of its total workforce. The reduction in
force would be completed by December 31, 2008.
Based in Sioux Falls, South Dakota, LodgeNet Interactive
Corporation provides interactive media and connectivity solutions
to the hospitality industry in the United States, Canada, and
Mexico. The company also provides interactive television
solutions in select international markets, primarily through local
or regional licensees. As of September 30, 2008, the company
provided interactive television and other services to roughly
10,000 hotel properties serving more than 1.9 million hotel rooms.
Within that customer base, the company also provides television
programming, broadband Internet, and advertising media solutions
in approximately 1.1 million, 225,000 and 840,000 hotel rooms
respectively. In addition, the company sells and operates
interactive television systems which provide on-demand patient
education, information and entertainment to healthcare facilities
throughout the United States. As of September 30, 2008, the
company's system was installed in 23 healthcare facilities.
The company's consolidated balance sheets are upside-down as of
September 30, 2008: The company had $637.4 million in total
assets; $717.4 million in total liabilities, resulting in $79.9
million in stockholders' deficiency. The company reported a net
loss for the third quarter of 2008 of $6.2 million, compared with
a net loss of $11.4 million, in the third quarter of 2007.
LOUISIANA-PACIFIC CORP: S&P Keeps BB Credit Rating on WatchNeg.
---------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
Louisiana-Pacific Corp., including its 'BB' corporate credit
rating, remain on CreditWatch with negative implications, where
they were initially placed on July 29, 2008.
The initial CreditWatch listing reflected the combination of
prospects for greater-than-expected deterioration in LP's
available cash balances and the need to refinance its
C$125 million term loan maturity. Subsequently, S&P lowered LP's
rating to its current level on Nov. 6, 2008, because of the
ongoing difficult market conditions and the uncertainty
surrounding the company's ability to refinance its C$125 million
term loan given the challenging capital markets.
The continued CreditWatch listing reflects S&P's assessment that
the company utilized some of its cash and short-term investments,
which totaled $330 million as of Sept. 30, 2008, to refinance its
C$125 million maturity.
"While the successful repayment of this obligation alleviated
near-term refinancing risk, it results in the company's liquidity
position being somewhat constrained to a level that S&P would
consider to be weak for the current rating, given S&P's
expectation that the challenging operating environment will
continue in the near term," said Standard & Poor's credit analyst
Pamela Rice. However, S&P expects management will take steps in
the near term to access the capital markets in an effort to
enhance its liquidity to weather the ongoing downturn.
S&P will continue to monitor the company's near-term plans to
enhance its liquidity position through additional financing. In
the event the company is unsuccessful at shoring up its liquidity,
by at least the amount of the recent debt maturity, by the end of
the first quarter of 2009, S&P would likely lower the rating by
one notch to 'BB-'.
MAN GLENWOOD: Moody's Cuts Rating on $43.75MM Class D Notes to Ba3
------------------------------------------------------------------
Moody's Investors Service has downgraded these debt securities
issued by Man Glenwood Alternative Strategies II Ltd.:
US$43,750,000 Class D Secured Floating Rate Notes due 2010
-- Current Rating: Ba3, on review for downgrade
-- Prior Rating: Ba2, on review for downgrade
Originally rated on August 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.
The last rating action on the affected securities was on November
19, 2008 when several debt tranches were downgraded and all debt
tranches were maintained on review for further possible downgrade.
The rating action reflects continued deterioration of the net
asset values of the underlying hedge funds within the structure.
The ratings reflect concern over the vehicle's ability to
liquidate portfolio assets within the covenanted timeframe.
Moody's considered the increased likelihood of suspension or
gating of redemptions in the underlying funds within the portfolio
as a negative factor during its review.
MATTRESS DISCOUNTERS: Asks Court to Dismiss Chapter 11 Cases
------------------------------------------------------------
Mattress Discounters Corp. and Mattress Discounters Corp. East ask
the U.S. Bankruptcy Court for the District of Maryland to dismiss
their Chapter 11 cases.
The Debtors tell the Court that after the Court approved sale of
their Mid-Atlantic business operations to RoomStore, Inc., which
encompassed substantially all of their assets, the Debtors are now
in the process of winding down their business affairs. The
Debtors' few remaining assets are all encumbered by a lien in
favor of the Debtors' secured lender which is owed an amount far
in excess of the value of the remaining assets.
The Debtors add that there is no likelihood of rehabilitation as
there is no money for distribution to unsecured creditors or to
pay a Chapter 7 trustee.
About Mattress Discounters Corp.
Based in Upper Marlboro, Maryland, Mattress Discounters Corp. is a
specialty mattress retailer. The company and Mattress Discounters
Corporation East filed separate petitions for Chapter 11 relief on
Sept. 10, 2008 (Bankr. D. Md. Case Nos. 08-21642 and 08-21644).
C. Kevin Kobbe, Esq., and Shaan S. Chima, Esq., at DLA Piper LLP
(US) represent the Debtor as counsel.
As of the Petition Date, the Debtors operated approximately 140
retail stores located in seven staes, with a concentration in the
Mid-Atlantic region (aproximately 90 stores in Delaware, the
District of Columbia, Maryland and Virginia) and the New England
region (approximately 50 stores in Massachusetts, new Hampshire
and Rhode Island).
When Mattress Discounters Corp. filed for protection from its
creditors, it listed assets of between $10 million and
$50 million, and debts of between $10 million and $50 million.
This is the second bankruptcy filing for Mattress Discounters
Corp. The Debtor first filed for Chapter 11 protection on
Oct. 23, 2002 (Bankr. D. Md. Case No. 02-22330). The Debtor
emerged from its first bankruptcy filing on March 14, 2003.
MDRNA INC: Posts $16 Million Net Loss in Quarter Ended Sept. 30
---------------------------------------------------------------
MDRNA, Inc., posted a $16,070,000 net loss in the three months
ended September 30, 2008, on revenues of $405,000. As of
September 30, 2008, the company's balance sheet showed total
assets of $21,261,000, total liabilities of $15,938,000, and total
stockholders' equity of $5,323,000.
J. Michael French, chief executive officer, and Bruce R. York,
chief financial officer, relate: "As of September 30, 2008, we had
an accumulated deficit of approximately $241.8 million and expect
to incur additional losses in the future as we continue our
research and development activities. We also have negative cash
flows, and customers representing a majority of our 2007 revenue
have terminated their contractual agreements with us. We have
funded our losses primarily through the sale of common stock and
warrants in the public markets and private placements, revenue
provided by our collaboration partners and, to a lesser extent,
equipment financing facilities. The further development of our
RNAi programs will require significant capital. At September 30,
2008, we had working capital (current assets less current
liabilities) of $1.5 million and approximately $10.9 million in
cash and cash equivalents, including $2.2 million in restricted
cash. While we continue to implement cost containment efforts,
our operating expenses, primarily R&D, will consume a material
amount of our cash resources."
"We believe that our current resources are sufficient to fund our
planned operations into the first quarter of 2009. We based our
estimate on our ability to perform planned R&D activities, the
receipt of planned funding and proceeds from assets held for sale.
Our recent decline in market valuation and volatility in our stock
price, as well as global market conditions, could make it
difficult for us to raise capital on favorable terms, or at all.
Any financing we obtain may further dilute or otherwise impair the
ownership interest of our current stockholders. If we fail to
generate positive cash flows or fail to obtain additional capital
when required, we could modify, delay or abandon some or all of
our programs. These factors, among others, raise substantial
doubt about our ability to continue as a going concern."
Mr. French and Mr. York add that on September 19, 2008, the
company received a letter from the Listing Qualifications
Department of the NASDAQ Stock Market notifying MDRNA that it was
not in compliance with the minimum $1.00 per share minimum bid
price requirement for continued inclusion on the NASDAQ Global
Market set forth in NASDAQ Marketplace Rule 4450(a)(5), as a
result of the bid price of its common stock having closed below
$1.00 for the last 30 consecutive business days prior to the date
of the letter. On October 16, 2008, NASDAQ suspended enforcement
of the minimum bid price requirement through January 16, 2009.
The company's date to regain compliance with the continued listing
requirement of NASDAQ Marketplace Rule 4450(a)(5) has been
extended to June 22, 2009.
A full-text copy of the company's quarterly report is available
for free at http://researcharchives.com/t/s?36b2
About MDRNA
MDRNA, Inc., is a biotechnology company focused on the development
and commercialization of pharmaceuticals based on RNA
interference.
METALDYNE CORP: Moody's Raises Corporate Credit Rating to 'CCC-'
----------------------------------------------------------------
Standard & Poor's Ratings Services said it has raised its
corporate credit rating on auto supplier Metaldyne Corp. to 'CCC-'
from 'SD'. The outlook is developing, which indicates that S&P
could raise or lower Metaldyne's corporate credit rating.
At the same time, S&P took a number of other actions with regard
to S&P's issue-level ratings:
-- S&P withdrew its ratings on the debt issues that were the
subject of the recently completed tender offer;
-- S&P raised the rating on Metaldyne Co.'s asset-based bank
facility to 'CCC+' from 'CCC', while leaving the recovery
rating unchanged at '1', indicating the expectation of very
high (90% to 100%) recovery in the event of a payment
default; and
-- S&P revised the recovery rating on Metaldyne Co.'s senior
secured term loan to '4' from '2', indicating the expectation
of average (30% to 50%) recovery in the event of a payment
default.
Metaldyne is one of the largest independent manufacturers of
engineered metal components for the global automotive market and
has revenues of nearly $2 billion.
The upgrade to the corporate credit rating reflects reduced debt
and increased liquidity resulting from the recently completed
tender offer. Parent company AsahiTec Corp. of Japan provided
$50 million of capital, following a $10 million capital injection
in mid-October. Metaldyne customers provided a total of
$60 million of secured financing in conjunction with the tender
offer. Also in conjunction with the tender offer, Metaldyne
reached an agreement with its asset-backed loan and term loan
lenders to ease covenants and provide additional collateral.
Metaldyne's debt was cut by more than $300 million, and the
company will save about $40 million in annual interest expense.
"Metaldyne's prospective credit quality could benefit from the
reduced debt burden and cash interest savings," said Standard &
Poor's credit analyst Robert Schulz. "Still, lower industrywide
production volumes in 2009 and the still-high bankruptcy risk for
major customer Chrysler LLC -- even with the recent announcement
of interim federal loans -- could keep Metaldyne's cash outflows
high and place pressure on the credit profile and ratings," he
continued.
Liquidity has improved following the exchange offer. Although the
company had had negative free operating cash flow in recent
quarters, cash use should decline from the substantial reduction
in annual interest expense. Still, S&P expects sharply lower
production by key customers to make it difficult for the
company to generate free cash flow in the near term. The company
can use about $45 million of the cash recently received from
AsahiTec and its customers to bolster liquidity. Covenants have
been loosened, and the company now has more headroom.
The outlook is developing. S&P could raise the rating raised if
the company can retain the financial benefits of debt reduction --
lower interest expense and greater liquidity -- despite the lower
customer production levels S&P expects in 2009. Alternatively,
S&P could lower the rating if Metaldyne is unable to maintain
near-term liquidity amid challenging industry conditions in 2009,
which will include extensive restructuring actions by key
customers Chrysler and General Motors Corp. and a very weak
consumer economy.
MONEYGRAM INTERNATIONAL: Elects 2 New Directors Designated by THL
----------------------------------------------------------------
The board of directors of MoneyGram International, Inc., in
accordance with the Amended and Restated Purchase Agreement, dated
as of March 17, 2008, with the affiliates of Thomas H. Lee
Partners, L.P. and affiliates of Goldman, Sachs & Co., elected two
new directors designated by THL: Thomas M. Hagerty for a term to
expire at the 2010 annual meeting of stockholders; and Ganesh B.
Rao for a term to expire at the 2009 annual meeting of
stockholders.
Messrs. Hagerty and Rao have not been named to serve on any board
committees, and no determination has been made regarding the board
committee or committees on which either of them may serve. In
accordance with the company's bylaws, the board fixed the number
of directors at eight. Accordingly, with the election of
Messrs. Hagerty and Rao, the board is comprised of seven members
with one vacancy remaining. Messrs. Hagerty and Rao are
principals of THL.
Since the closing of the Transaction, the company has reimbursed
certain legal expenses and the costs of preparing regulatory
filings on behalf of THL in the approximate amount of $546,600.
Effective Nov. 19, 2008, the company and THL determined that
MoneyGram Payment Systems, Inc., a subsidiary of the company, had
received its final approval from each of the required state
regulators of the company's money transmitter, official check and
similar businesses regarding the change in stock ownership
resulting from the Transaction. Pursuant to the Purchase
Agreement, upon the determination, the Voting Date occurred on
Nov. 19, 2008. As a result of the occurrence of the Voting Date
and dividends that have accrued on the Series B Stock, THL has
approximately 80% of the voting power of the company's stock.
NYSE Disclosures
As a result of not attaining the Voting Date until late in 2008,
the New York Stock Exchange granted the company an extension to
May 15, 2009, in which to hold an Annual Meeting of Stockholders.
The company makes certain required disclosures under Section 303A
of the NYSE Listed Company Manual as:
-- Meetings of Non-Management Directors. The board schedules
regular executive sessions of the non-management directors.
During 2007 and through April 25, 2008, Jess T. Hay served
as the presiding director, presiding at executive sessions
of the non-management directors. After the closing of the
Transaction and the resulting decrease in the size of the
board of directors, the board determined there was no longer
a need for the position of presiding director. The director
who presides over executive sessions of the non-management
directors is determined by the board at each meeting during
which an executive session is held.
-- Communications with the board of directors. Stockholders or
other interested parties may communicate with the company's
non-management directors as a group, committees of the board
or individual directors in writing and sent to the attention
of the Corporate Secretary at this address:
MoneyGram International, Inc.
1550 Utica Avenue South, Suite 100
Minneapolis, MN 55416
Upon receipt, the Corporate Secretary will forward all the
correspondence, as appropriate. Complaints and concerns
regarding the company may also be reported anonymously and
confidentially via the company's Always Honest Hotline at
800-443-4113. The text of the company's Policy on
Communications with the board of directors is contained in
its Corporate Governance Guidelines, which are posted in the
Investor Relations section.
-- Audit Committee. The board of directors has adopted a
written charter for the Audit Committee that is available in
the Investor Relations section. A copy of the Audit
Committee charter is also available in print to any
stockholder who submits a request to MoneyGram
International, Inc., 1550 Utica Avenue South, Suite 100,
Minneapolis, Minnesota, Attention: Corporate Secretary.
In a separate filing, the company disclosed that on Dec. 16, 2008,
the NYSE provided official notification of non-compliance with
continued listing standards requiring that stocks trade at a
minimum average closing price of $1.00 per share over a
consecutive 30-day trading period. As of Dec. 12, 2008,
MoneyGram's 30-day trading price averaged 99 cents per share.
The company's common stock remains listed on the NYSE under the
symbol MGI, but the NYSE will assign a ".BC" indicator to the
symbol to denote that the Company is below the quantitative
continued listing standards. As required by the NYSE in order to
maintain the listing, the Company will notify the exchange by
Dec. 31, 2008, of its intent to cure this price deficiency and has
until June 16, 2009, to comply with the listing standard.
About MoneyGram International
Headquartered in Minneapolis, Minnesota, MoneyGram International
Inc. (NYSE: MGI) -- http://www.moneygram.com/-- is a global
payment services company. The company's major products and
services include global money transfers, money orders and
payment processing solutions for financial institutions and
retail customers. MoneyGram is a New York Stock Exchange listed
company with approximately 157,000 global money transfer agent
locations in 180 countries and territories.
As reported in the Troubled Company Reporter on Nov. 11, 2008 ,
MoneyGram International, Inc.'s balance sheet at Sept. 30, 2008,
showed total assets of $7,261,049, total liabilities of
$8,104,313, resulting in a stockholders' deficit of $843,264.
MORGAN STANLEY: Fitch Affirms Low-B Ratings on Five Classes
-----------------------------------------------------------
Fitch Ratings has assigned a Distressed Recovery rating to Morgan
Stanley Capital I Trust's commercial mortgage pass-through
certificates, series 2004-HQ4:
-- $3.4 class P 'B-/DR1'.
Fitch also affirms and assigns Rating Outlooks to these classes:
-- $3.6 Class A-2 at 'AAA'; Outlook Stable;
-- $50 Class A-3 at 'AAA'; Outlook Stable;
-- $72 Class A-4 at 'AAA'; Outlook Stable;
-- $123 Class A-5 at 'AAA'; Outlook Stable;
-- $120 Class A-6 at 'AAA'; Outlook Stable;
-- $776.2 Class A-7 at 'AAA'; Outlook Stable;
-- Interest Only class X-1 at 'AAA'; Outlook Stable;
-- Interest Only class X-2 at 'AAA'; Outlook Stable;
-- $15.4 Class B at 'AA+'; Outlook Stable;
-- $18.8 Class C at 'AA'; Outlook Stable;
-- $13.7 Class D at 'AA-'; Outlook Stable;
-- $24 Class E at 'A'; Outlook Stable;
-- $10.3 Class F at 'A-'; Outlook Stable;
-- $12 Class G at 'BBB+'; Outlook Stable;
-- $12 Class H at 'BBB' Outlook Stable;
-- $15.4 Class J 'BBB-'; Outlook Negative;
-- $5.1 Class K 'BB+'; Outlook Negative;
-- $5.1 class L 'BB'; Outlook Negative;
-- $5.1 class M 'BB-'; Outlook Negative;
-- $1.7 class N 'B+'; Outlook Negative;
-- $3.4 class O 'B'; Outlook Negative.
Fitch does not rate the $15.4 million class Q. Class A-1 has paid
in full.
The assignment of a DR rating is due to expected losses from one
loan (1.5%) currently in special servicing. The Negative Outlooks
are based on an assumption of defaults and losses on the Fitch
loans of concern (7.3%). The Rating Outlooks reflect the likely
direction of additional rating changes over the next one to two
years.
Fitch has identified 9 loans of concern (7.3%) including the
eighth and tenth largest loans in the transaction, and the
specially serviced loans. There are two specially serviced loans;
the largest of which (1.5%) is secured by two office buildings
located in Roseville, California. The loan was sent to specially
servicing due to monetary default. The borrower has indicated a
high vacancy as several tenants related to the home-building
industry have departed. Losses, based on Fitch's preliminary
expectations of value, are expected upon resolution. The second
specially serviced loan (0.2%) is a retail center in Avondale, AZ
and has corrected and is currently pending return to the master
servicer.
As of the November 2008 distribution date, the pool's aggregate
certificate balance has decreased 4.7% to $1.305 billion from
$1.37 billion at issuance. In addition, five loans (4.7%) have
defeased.
The transaction has minimal near-term maturity risk as only 2.3%
mature in 2009, 0% in 2010 and 0.4% in 2011. Of the non-defeased
loans outstanding, 72% of the pool matures in 2014.
Four loans maintain investment grade shadow ratings: Bank of
America Plaza (14.3%), Wells REF Portfolio (8.6%), Eastview Mall
(7.5%), and the Mall at Millenia (4.4%). Each loan has seen
stable to improved performance since issuance. Occupancy as of
June 2008 for the four loans were 92%, 100%, 98% and 99%
respectively.
MOTORSPORT AFTERMARKET: S&P Places 'B-' Rating on Negative Watch
----------------------------------------------------------------
Standard & Poor' Ratings Services placed its 'B-' corporate credit
rating and 'B' secured debt issue-level rating for Motorsport
Aftermarket Group Inc. on CreditWatch with negative implications.
Irvine, California-based MAG had total debt of $272 million as of
Sept. 30, 2008.
"The CreditWatch listing reflects the recession's effect on the
company's operating performance, its rising debt leverage, and
S&P's concern that ongoing pressures will narrow its margin of
covenant compliance," said Standard & Poor's credit analyst Hal
Diamond.
Sales at the company fell 2% year over year, while EBITDA remained
flat in the nine months ended Sept. 30, 2008, as a result of
declining U.S. retail motorcycle sales. MAG has a substantial
dependence on sales of aftermarket parts and accessories for
Harley-Davidson motorcycles. Harley-Davidson experienced a 15.5%
decline in U.S. retail sales in the third quarter of 2008. MAG is
implementing cost reductions, but Standard & Poor's is concerned
that weak motorcycle demand could continue to hurt operating
performance.
Debt to EBITDA, adjusted for operating leases and including a
$1 million management fee, rose to a steep 7.7x for the 12 months
ended Sept. 30, 2008, from 5.9x at the time of the company's 2006
leveraged buyout. On Dec. 1, 2008, MAG completed the acquisition
of DragonFire Racing, an aftermarket parts supplier for all-
terrain vehicles. The transaction has a modest beneficial impact
on debt leverage, but declining demand could affect the
profitability of this new business.
Discretionary cash flow has been modest over the past year. Cash
balances declined to $11.1 million at Oct. 31, 2008 from
$13.6 million a year earlier, due to higher inventories. Standard
& Poor's anticipates that year-end cash balances will be minimal
at year-end due to offseason working capital requirements and the
DragonFire Racing acquisition.
EBITDA coverage of interest expense was modest, at 1.4x over the
12 months ended Sept. 30, 2008. MAG has a $60 million unutilized
revolving credit facility due 2012, but availability is restricted
by covenant levels. Debt leverage, as calculated by the credit
agreement, was 6.32x pro forma for the acquisition, versus the
total leverage covenant of 7.00x. The company faces a covenant
step-down to 6.50x at June 30, 2009, and a further decline to
6.00x at June 30, 2010. Continued weak operating performance and
minimal discretionary cash flow would necessitate an amendment.
MAG has exercised its 4% in-kind partial cash deferral option
since 2007 on the $116.7 million 11.25% senior subordinated notes
due 2016. Standard & Poor's expects that the company will
continue to pay interest in additional notes. Debt maturities are
nominal over the next several years because the term loan
amortizes at 1%, or $1.6 million per year, until it matures in
2013.
In resolving the CreditWatch listing, Standard & Poor's will
assess the company's business strategies and operating outlook,
and its ability to reestablish an appropriate margin of compliance
with its leverage covenant. S&P could lower the rating if it
becomes apparent that the company will violate the covenant over
the next year, or if the penalties that its banks would apply (in
fees and an increase in the interest margin associated with an
amendment) further compress its interest coverage and liquidity.
NAVISTAR INT'L: To Restate 9-Month Financials; Affirms Guidance
---------------------------------------------------------------
Navistar International Corporation (NYSE:NAV) said it will restate
its financial results for the nine months ended July 31, 2008. As
a result, the company expects to increase reported net income by
$50 million to $70 million ($0.68 to $0.95 per diluted share) for
the nine months ended July 31, 2008.
On December 23, 2008, the management of the company, with the
concurrence of the company's Audit Committee, concluded that the
company's previously issued unaudited financial statements for the
three and nine months ended July 31, 2008, should no longer be
relied upon because of errors that when restated will modestly
increase the company's net income for the three and nine months
ended July 31, 2008.
The errors occurred in the company's Truck segment and include
accounting for inventory, accounts payable and costs of products
sold. Specifically as of and for the three months ended July 31,
2008, (a) costs of products sold were overstated and income before
taxes, net income and earnings per share were understated, (b)
inventories were understated and (c) accounts payable were
understated. The company's review process is continuing and may
extend to the first and second quarters of 2008; consequently the
matters identified at this stage, and any assessment of the
nature, scope or amount of restatement, are preliminary and
subject to change.
Navistar continues to affirm its guidance for fiscal 2008 of
projected net income in the range of $467 million to $548 million
and diluted earnings per share of $6.35 to $7.45, excluding
charges for impairment of long-lived assets and related charges
associated with certain assets in its Engine segment(1).
Navistar's Truck segment performed for the year as anticipated;
however, the profitability occurred earlier in the current fiscal
year than previously expected.
"Management is addressing this matter promptly and with due care.
Management and the Audit Committee have discussed these matters
with our Independent Registered Public Accounting Firm, KPMG LLP.
At this time management anticipates completing its review of these
matters and filing one or more Forms 10Q/A as soon as reasonably
practicable," Terry M. Endsley, Navistar's Executive Vice
President and Chief Financial Officer, says.
The restatement is not expected to delay the company's year-end
filing for fiscal 2008 scheduled for December 30.
About Navistar International Corporation
Based in Warrenville, Illinois, Navistar International Corporation
(NYSE: NAV) produces International(R) brand commercial and
military vehicles, MaxxForce(TM) brand diesel engines, IC brand
school and commercial buses, and Workhorse(R) brand chassis for
motor homes and step vans, and is a private label designer and
manufacturer of diesel engines for the pickup truck, van and SUV
markets. Navistar is also a provider of truck and diesel engine
parts. Another affiliate offers financing services.
As of July 31, 2008, Navistar $11.5 billion in total assets, $11.7
billion in total liabilities and $228 million in shareholders'
deficit. Navistar reported $272 million net income for the three
months ended July 31, 2008, on sales and revenues of $3.8 billion.
NEW CREATIVE: Files for Chapter 11 Bankruptcy Protection
--------------------------------------------------------
Gifts & Decorative Accessories reports that New Creative
Enterprises has filed for Chapter 11 bankruptcy protection due to
the banking/credit crisis and significant sales decline.
New Creative said in a statement, "The company has multi-million
dollar lease obligations originating from a warehouse lease buy-
back that was negotiated in 2001. Satisfying those obligations,
which the private equity owners had secured through a credit
facility, became unaffordable in the current environment."
New Creative President and CEO Benno Duenkelsbuehler said that the
company wants to restructure or find a financial partner, Gifts &
Decorative Accessories states.
Gifts & Decorative Accessories relates that New Creative reduced
its workforce, but assured that the cuts won't affect its customer
fulfillment operations. New Creative wants to participate at the
Winter markets and focus on fulfilling all customer orders going
into 2009, the report says, citing Mr. Duenkelsbuehler.
Gifts & Decorative Accessories quoted Mr. Duenkelsbuehler as
saying, "With a team of A+ players, and a terrific group of sales
agencies who delivered an 18 percent sales increase over last year
in bookings volume so far this month, we are confident we will
overcome this last hurdle. Our decision to seek bankruptcy
protection was difficult, but it is ultimately the best decision
for our creditors, factory partners, employees, sales agencies,
and our customers."
New Creative Enterprises -- http://www.ncegifts.com/-- is an
outdoor living decor and gift vendor.
NON-INVASIVE MONITORING: Posts $498,000 Net Loss in Last Quarter
----------------------------------------------------------------
Non-Invasive Monitoring Systems Inc. reported financial results
for three and nine months ended Sept. 30, 2008.
For three months ended Sept. 30, 2008, the company posted net loss
of $498,000 compared to net loss of $330,000 for the same period
in the previous year. The company stated that the increased loss
was due to the increase in operating expenses.
The company's operations have been financed through private sales
of its equity securities and, in August 2008, through the proceeds
of loans. At Oct. 31, 2008, the company has cash of $67,000 and
working capital of $63,000. These funds will not be sufficient
for its operating needs, and the company will need to obtain
additional debt or equity financing to continue its business
activities during fiscal 2009. No assurance can be given that the
additional financing will be available on acceptable terms or at
all. The company's ability to sell additional shares of its stock
or borrow cash under existing or new credit facilities could be
materially adversely affected by the recent economic turmoil in
the World's equity and credit markets. Current economic
conditions have been, and continue to be, volatile and the
volatility has reached unprecedented levels in recent months.
Continued instability in these market conditions may limit its
ability to access the capital necessary to fund and grow its
business and to replace, in a timely manner, maturing liabilities.
Net cash used in operating activities increased to $309,000 for
the three months ended Oct. 31, 2008 from $278,000 for the three
months ended Oct. 31, 2007. This increase of $31,000 was due to
the increased loss and an increase in inventory, offset in part by
increased customer deposits and increases in accounts payable and
accrued liabilities.
Net cash used by investing activities decreased to $50,000 for the
three months ended Oct. 31, 2008, from $175,000 for the three
months ended Oct. 31, 2007. Cash flows in both periods were
related to payments for tooling development under the agreement
with Sing Lin.
At Sept. 30, 2008, total assets of $ 1,530,000 total liabilities
of $999,000 and shareholders' equity of $531,000.
A full-text copy of the company's 10-Q filing is available for
free at http://ResearchArchives.com/t/s?36a2
About Non-Invasive Monitoring
Based in Miami, Florida, Non-Invasive Monitoring Systems Inc.
(OTC BB: NIMU) -- http://www.nims-inc.com/-- is engaged in the
development of innovative medical products utilizing new and
unique technologies to address a wide variety of medical
conditions. The company specializes in products that use a
natural approach to assist subjects without the use of drugs or
any invasive procedures.
The company's flagship product is the Acceleration Therapeutics
AT-101.
Going Concern Doubt
As reported in the Troubled Company Reporter on Nov. 7, 2008,
Eisner LLP, in New York, expressed substantial doubt about Non-
Invasive Monitoring Systems Inc.'s ability to continue as a going
concern after auditing the company's financial statements for the
year ended July 31, 2008, and 2007. The auditing firm pointed to
the company's recurring net losses, cash outflows from operating
activities and accumulated deficit and substantial purchase
commitments.
The company reported net loss of $1,848,000 for fiscal year ended
July 31, 2008, compared to net loss of $1,372,000 for the same
period in the previous year.
NORTHERN BAY: Court Orders Dismissal of Chapter 11 Case
-------------------------------------------------------
Based upon the stipulation of AnchorBank, fsb, and Northern Bay,
LLC, the U.S. Bankruptcy Court for the Western District of
Wisconsin approved on Dec. 10, 2008, the dismissal of Northern
Bay's Chapter 11 case.
On Dec. 1, 2008, AnchorBank and the Debtor stipulated and agreed
that the Court may enter an order dismissing the Debtor's
Chapter 11 case.
As reported in the Troubled Company Reporter on Nov. 20, 2008,
AnchorBank asked the Court for an order abandoning the property in
which it holds a security interest, or alternatively, to dismiss
the case pursuant to Sec. 1112(2) of the Bankruptcy Code.
AnchorBank is the holder of an undisputed claim in excess of
$24,000,000 at the time of the Debtor's bankruptcy filing.
Collateral held by Anchorbank includes all real estate owned by
the Debtor, including most of the 18-hole golf course and both
completed and partially constructed condominium units, as well as
all personal property and an assignment of leases and rents.
Headquartered in Arkdale, Wisconsin, Northern Bay, LLC --
http://www.northernbayresort.com/-- owns and operates a golf
course and lakewide condominiums. The company filed for Chapter
11 bankruptcy protection on June 30, 2008 (W.D. Wis. Case No.
08-13400). Denis P. Bartell, Esq., at Dewitt Ross & Stevens, and
Jeffrey A. Chadwick, Esq., at Katten Muchin Rosenman LLP,
represent the Debtor as counsel. When the company filed for
protection from its creditors, it listed assets of between
$50 million and $100 million and debts of between $10 million and
$50 million.
ORBIMAGE INC: S&P Upgrades Corporate Credit Rating to 'B'
---------------------------------------------------------
On Dec. 22, 2008, Standard & Poor's Ratings Services upgraded
Dulles, Virginia-based GeoEye Inc. and its wholly owned subsidiary
ORBIMAGE Inc. S&P raised the corporate credit rating on the
company to 'B' from 'B-'. The outlook is stable. Outstanding
debt, as of Sept 30, 2008, totaled $250 million.
In addition, S&P raised the issue-level rating on GeoEye's
floating-rate senior secured notes due 2012 to 'BB-' (two notches
above the corporate credit rating on the company) from 'B-'. S&P
also revised the recovery rating on this issue to '1' from '4'.
The '1' recovery rating indicates expectations for full (90%-100%)
recovery in the event of default. A change in S&P's default
scenario precipitated the higher issue-level rating. S&P still
assume that a default would most likely occur with the loss of the
GeoEye-1, the company's advanced high-resolution imaging
satellite. However, S&P now assumes that would happen before
Sept. 6, 2009, the one-year anniversary of the satellite's launch
and the expiration date on the company's existing launch plus one-
year insurance policies. S&P will re-evaluate its default
scenario each year based on the amount of on-orbit insurance on
the satellite at that time.
At the same time, S&P removed the ratings from CreditWatch, where
they were placed with positive implications on Sept. 22, 2008,
following the successful launch of GeoEye-1.
The upgrade reflects the company's improved business risk profile
due to the successful launch of GeoEye-1 on Sept. 6, 2008, and the
Dec. 10, 2008, signing of a service level agreement modification
to the existing NextView contract with the National Geospatial
Intelligence Agency. The 12-month NextView SLA extension, which
is valued at $12.5 million per month, enhances 2009 revenue
visibility. In addition, S&P expects GeoEye to leverage
the NGA-related activity by selling imagery and value-added
services to other customers, including foreign governments, other
U.S. government agencies, and commercial clients. Therefore, S&P
believes the combination of the SLA and successful launch should
result in healthy revenue and cash flow growth over the
intermediate term.
"The ratings on GeoEye continue to reflect a high degree of
business risk because of revenue concentration from a U.S.
government contract and disproportionate reliance on the GeoEye-1
satellite," said Standard & Poor's credit analyst Naveen Sarma.
"The rating also incorporates the potential for significant
financing requirements for the design, development, and launch of
the GeoEye-2 satellite."
The rating recognizes that government contracts are not guaranteed
until Congress appropriates the funds and that, although unlikely,
government agencies may terminate or suspend their contracts at
any time, with or without cause. These risks are somewhat
tempered by the company's dominant position as one of only two
providers of commercial satellite imagery services, and by rising
demand for such services, which is reflected by the company's
$100 million funded backlog as of Sept. 30, 2008.
PALM INC: S&P's 'CCC+' Rating Unmoved by Additional Investment
--------------------------------------------------------------
Palm Inc. announced that Elevation Partners, already a major
investor in the company, has agreed to invest an additional
$100 million in the company's convertible preferred stock. The
transaction is expected to close by Jan. 31, 2009, subject to
customary closing conditions. Standard & Poor's Ratings Services
said that, upon closing of the equity infusion, it expects to
change its outlook on Palm to stable from negative, but the 'CCC+'
corporate credit rating and other ratings will not change.
The transaction will bring Sunnyvale, California-based Palm's pro
forma cash balance to $324 million at Nov. 30, 2008, and give it
additional time to refresh its stale hardware and software
platforms, and relaunch itself in the highly competitive
smartphone industry.
Palm's market position has dwindled. Sales have fallen to less
than half their peak levels, and will remain depressed for at
least the near term. The company faces significant marketplace
challenges as it introduces its next generation of phones into a
depressed 2009 market, even if its product plans fully meet
expectations.
PEGASUS SOLUTIONS: Moody's Junks Corporate Family Rating from B3
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Pegasus
Solutions 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 B3, the
senior secured credit facility rating was lowered to B1 from Ba3,
and the senior unsecured notes rating was lowered to Caa2 from
Caa1. Reduced demand for travel, pricing pressure on contract
renewals, and implementation issues related to system migrations
of current products have compressed Pegasus' margins and resulted
in negative free cash flow in each of the last four quarters.
Consequently, Pegasus' liquidity profile has weakened and key
credit metrics are considerably below previous expectations.
Deteriorating leverage and interest coverage metrics, combined
with scheduled adjustments to financial covenants contained in the
credit facility, led the company to announce it is seeking an
amendment to its covenants. Should an amendment be obtained,
pricing on the credit facility would likely increase and further
pressure cash flow.
The Caa1 CFR reflects Pegasus' weak liquidity profile, high
financial leverage, a poor track record of meeting Moody's
expectations, and the vulnerability of the business to a
protracted decline in hotel occupancy levels and room rates. The
review for possible downgrade will focus on the terms of an
amendment, if obtained, Pegasus' expected run rate operations and
cash generation, and the company's ability to maintain sufficient
financial flexibility and liquidity over the near to intermediate
term.
These ratings were downgraded and concurrently placed on review
for possible downgrade:
-- $10 million senior secured revolver due 2012, to B1 (LGD2,
18%) from Ba3 (LGD2, 17%)
-- $56 million senior secured term loan B due 2013, to B1 (LGD2,
18%) from Ba3 (LGD2, 17%)
-- $30 million senior secured delayed draw term loan due 2013,
to B1 (LGD2, 18%) from Ba3 (LGD2, 17%)
-- $105 million senior unsecured notes due 2015, to Caa2 (LGD5,
74%) from Caa1 (LGD5, 74%)
-- Corporate Family Rating, to Caa1 from B3
-- Probability of Default Rating, to Caa1 from B3
The previous rating action occurred on March 26, 2007 when Moody's
downgraded Pegasus' CFR to B3 from B1.
Pegasus Solutions, Inc. is a provider of technology and services
to hotel and travel distributors. Its services include central
reservation systems; distribution services that link hotel CRS's
to travel agent systems and travel websites; third-party hotel
marketing services; and commission processing services for hotels,
travel agents and travel websites. The company is headquartered
in Dallas, Texas and reported revenues of $164 million in the
twelve months ended September 30, 2008.
PENSKE AUTOMOTIVE: Moody's Changes Outlook Rating to Negative
-------------------------------------------------------------
Moody's Investors Service revised Penske Automotive Group, Inc.'s
rating outlook to negative from stable. All other ratings were
affirmed.
The rating outlook revision to negative reflects accelerating
negative trends in automotive retail sales which are expected to
persist well into 2009 in the US and the UK. Of the rated auto
retailer universe, PAG has the smallest proportion of sales by the
Detroit 3 (GM, Ford, and Chrysler) manufacturers, at less than 6%.
As such, potential impact from the challenges facing these
companies is limited relative to peers. PAG's product mix does
include a high proportion of luxury brands, and Moody's are
concerned that revenues could be adversely impacted as higher
income and aspirational consumers show greater restraint in their
spending in the current recessionary environment. The negative
outlook also takes into consideration that these macro economic
challenges are coming at time when the company's leverage
increased following the debt financed acquisition of a 9% interest
in Penske Truck Leasing Co., L.P. for $219 million during 2008,
and the company continues to pursue aggressive financial policies
as indicated by its $50 million share repurchase undertaken in the
third quarter of 2008.
The affirmation of PAG's ratings reflects Moody's view that the
company continues to benefit from its strong market position as
the second largest US based automotive retailer, with broad
diversification by brand with high international diversification.
The company's earnings benefit from a high level of recurring
revenue from its service and parts business. Moody's also expect
Penske to carefully manage costs and inventory levels in this
environment in a manner which will maintain debt protection
measures at levels acceptable to the rating. The rating
affirmation also reflects expectations the company's overall
liquidity profile will remain good, with access to a diverse range
of funding and limited reliance on the captive finance affiliates
of the Detroit 3 US manufacturers.
These ratings were affirmed and LGD assessments amended:
-- Corporate Family Rating at B1
-- Probability of Default rating at B1
-- $375 million Senior Subordinated Notes due 2016 at B3 (LGD 5,
89% from LGD 5, 88%)
-- $375 million Convertible Senior Subordinated Notes due 2026
at B3 (LGD 5, 89% from LGD 5, 88%)
Moody's last rating action on Penske Automotive Group was on
November 29, 2006 when Moody's assigned a B3 (LGD 5, 88%) rating
to the company's senior subordinated notes.
Headquartered in Bloomfield Hills, Michigan, Penske is the second
largest automotive retailer headquartered in the US. As of
September 30, 2008 the company owned and operated 160 franchises
in the United States and 147 franchises outside the United States,
primarily in the United Kingdom.
PFF BANCORP: U.S. Trustee Forms Three-Member Creditors Committee
----------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3,
appointed three creditors to serve on an Official Committee of
Unsecured Creditors of PFF Bancorp Inc. and its debtor-affiliates.
The creditors committee members are:
1) Developers Surety & Indemnity
Attn: Daniel J. Berge
17780 Fitch, Irvine, CA 92614
Tel: (949) 263-3378
Fax: (949) 553-8143
2) FBOP Corporation
Attn: Edward C. Fitzpatrick
11 West Madison Street
Oak Park, IL 60302
Tel: (708) 445-3213
Fax: (708) 445-3284
3) Wilmington Trust Company
Attn: Suzanne J. MacDonald
Rodney Square North, 1100 North Market Street
Wilmington, DE 19801
Tel: (302) 636-6530
Fax: (302) 651-4149
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Rancho Cucamonga, California, PFF Bancorp, Inc.
-- https://www.pffbank.com -- operates a community bank provides
an array of financial services. The company and four of its
affiliates filed for Chapter 11 protection on December 5, 2008
(Bankr. D. Del. Lead Case No. 08-13127). Paul Noble Heath, Esq.,
Richards, Layton & Finger PA, represents the Debtors. Kurtzman
Carson Consultants LLC was retained as the Debtors' claims,
noticing and balloting agent. When the Debtors filed for
protection from their creditors, they listed $7,779,964 in total
assets and $131,730,000 in total debts.
POLAROID CORP: Licensee to Dissolve Biz; Liquidation Plan Okayed
----------------------------------------------------------------
Concord Camera Corp.'s shareholders approved a plan of dissolution
and liquidation of the company at the annual meeting on
December 18, 2008.
The Plan of Liquidation contemplates an orderly wind down of the
Concord Camera's business and operations, the monetization of the
company's non-cash assets, the satisfaction or settlement of its
remaining liabilities and obligations and one or more
distributions to its shareholders.
Pending the shareholders' vote on the Plan of Liquidation, Concord
Camera ceased manufacturing, except as necessary to complete the
manufacture of materials and products remaining in inventory, and
terminated certain of its employees. Following the shareholder
approval of the Plan of Liquidation, the Company will terminate
its remaining employees throughout the wind down period. In
addition, Concord Camera intends to file a certificate of
dissolution, sell and monetize its non-cash assets, satisfy or
settle its remaining liabilities and obligations, including
contingent liabilities and claims, and make one or more
distributions to its shareholders of cash available for
distribution. Concord Camera also expects to delist its shares
from NASDAQ.
The execution of the Plan of Liquidation will be completed as soon
as practicable. However, the company is currently unable to
predict the time required to complete the Plan of Liquidation or
the precise timing or amount of any distributions pursuant to the
Plan of Liquidation. The amount and timing of any distributions
will be determined by the Board and will depend upon the company's
ability to monetize its non-cash assets, including, but not
limited to, auction rate securities that the company has been
unable to sell due to the recent disruptions in the credit markets
and for which the company has reduced the carrying value by
approximately $5.1 million to approximately $17.1 million as of
Sept. 27, 2008, and the company's property in the PRC where the
real estate market has recently experienced significant declines
due to the worldwide financial crisis, and to estimate, settle or
otherwise resolve its remaining liabilities and obligations, some
of which are significant, including litigations and other
contingent liabilities and claims that have not been resolved and
quantified.
About Concord Camera Corp.
Headquartered in Hollywood, Florida, Concord Camera Corp.
(NASDAQ:LENS) -- http://www.concord-camera.com/-- through its
subsidiaries, provides easy-to-use 35mm single-use and traditional
film cameras. Concord markets and sells its cameras on a private-
label basis and under the POLAROID and POLAROID FUNSHOOTER brands
through in-house sales and marketing personnel and independent
sales representatives. The POLAROID trademark is owned by
Polaroid Corporation and is used by Concord under license from
Polaroid.
About Polaroid Corporation
Polaroid Corporation -- http://www.polaroid.com-- makes and
sells films, cameras, and other imaging products. The company and
20 of its affiliates first filed for bankruptcy protection on
October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864).
Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors
in their previous restructuring efforts. At that time, the
company blamed steep decline in its revenue and the resulting
impact on its liquidity.
On June 28, 2002, the U.S. Bankruptcy Court for the District of
Dealware approved the purchase of substantially all of Polaroid's
business by One Equity Partners. The bid provides for cash
consideration of $255 million plus a 35% interest in the new
company for unsecured creditors.
Polaroid Corp., together with 11 affiliates, filed its second
voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D.
Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles
the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum
P.L.L.P, is the Debtors' counsel.
According to the company, the financial structuring process and
the second bankruptcy filing are the result of events at Petters
Group Worldwide, which has owned Polaroid since 2005. The founder
of Petters Group and certain associates are currently under
investigation for alleged acts of fraud that have compromised the
financial condition of Polaroid and other entities owned by
Petters Group. The company and its leadership team are not
subjects of the ongoing investigation involving Petters Group.
POWER SPORTS: Posts $837,727 Net Loss in Quarter Ended Sept. 30
---------------------------------------------------------------
Shawn Landgraf, chief executive officer of Power Sports Factory,
Inc. formerly Purchase Point Media Corp., disclosed in a
regulatory filing with the Securities and Exchange Commission that
during the three months ended September 30, 2008, the company
incurred a net loss of $837,727, as compared with a net loss of
$812,637 for the comparable period in 2007. The company said the
increased loss is primarily attributable to an increase in cost of
sales from approximately $330,867 in 2007 to $658,601 in 2008, and
an increase in interest expense from $11,641 for the three months
ended September 30, 2007, to $39,436 for the three months ended
September 30, 2008, coupled with a decrease in gross margin from
26% in 2007 to 2% in 2008, primarily due to increases in demurrage
costs due to delayed financings.
"During the nine months ended September 30, 2008, we incurred a
net loss of $2,602,164, as compared with a net loss of $1,224,298
for the comparable period in 2007, the increased loss being
primarily attributable to an increase in selling, general and
administrative expenses from approximately $1,736,377 in 2007 to
$2,921,995 in 2008, and a decrease in net sales from $2,140,543
for the nine months ended September 30, 2007, to $2,081,750 for
the nine months ended September 30, 2008, coupled with an increase
in interest expense from $56,289 in 2007 to $108,996 in 2008.
"The decrease in sales for the nine month period ended
September 30, 2008, was primarily due to inventory financing
delays in the introduction of our new line of scooters under our
recently negotiated rights to the Andretti brand and the resulting
lack of adequate inventory to meet the requirements of our
dealers. For our increased inventory requirements and marketing
efforts, as well as product development, we will require
substantial additional financing," Mr. Landgraf said.
Liquidity and Financial Resources
On September 5, 2007, Purchase Point Media Corp., entered into a
share exchange agreement with the shareholders of Power Sports
Factory, Inc. In connection with the share exchange, the company
acquired the assets and assumed the liabilities of Power Sports
Factory. Pursuant to a Definitive Information Statement filed
with the SEC, and stockholder approval at a stockholders meeting
on May 28, 2008, effective June 9, 2008, Purchase Point effected a
1:20 reverse split of its outstanding common stock in connection
with the Share Exchange Agreement, and changed its name from
Purchase Point Media Corp. to Power Sports Factory, Inc.
"Since the acquisition of Power Sports Factory, we have operated
at a loss. We rely significantly on the private placement of debt
and equity to pay operating expenses," Mr. Landgraf related.
As of September 30, 2008, the Company had $981 of cash on hand.
The Company has has working capital and stockholders' deficiencies
of $3,330,499 and $3,337,901, respectively, at September 30, 2008.
"These conditions raise substantial doubt about the Company's
ability to continue as a going concern," Mr. Landgraf said.
"During the nine months ended September 30, 2008, we received
proceeds of $250,000 from the issuance of convertible debt and net
proceeds $246,566 from the issuance of promissory notes for debt.
We will require substantial additional financing to maintain
operations at Power Sports Factory, and to expand our operations
to continue the launch of our new Andretti brand."
"The company presently does not have sufficient liquid assets to
finance its anticipated funding needs and obligations. The
company's continued existence is dependent upon its ability to
obtain needed working capital through additional equity or debt
financing and achieve a level of revenue and production adequate
to support its cost structure. Management is actively seeking
additional capital to ensure the continuation of its current
operations, complete its proposed activities and fund its current
debt obligations. However, there is no assurance that additional
capital will be obtained. These uncertainties raise substantial
doubt about the ability of the Company to continue as a going
concern."
About Power Sports
Power Sports Factory, Inc., formerly Purchase Point Media Corp.,
was incorporated under the laws of the State of Minnesota. The
company is in the business of marketing, selling, importing and
distributing motorcycles and scooters. The company principally
imports products from China. To date, the company has marketed
significantly under the Yamati and Andretti brands.
PRECISION DRILLING: Moody's Cuts CFR to 'Ba2'; Outlook Negative
---------------------------------------------------------------
Moody's Investors Service lowered both the Corporate Family Rating
(CFR) and Probability of Default Rating of Precision Drilling
Corporation, a subsidiary of Precision Drilling Trust
(collectively Precision) to Ba2 from (P)Ba1. The senior secured
debt rating is unchanged at (P)Ba1 (LGD-3, 37%). The senior
unsecured debt rating was withdrawn. The SGL-2 speculative grade
liquidity rating, indicating good liquidity, is unchanged. The
rating outlook is negative.
The lowering of the CFR to Ba2 reflects the increases in debt and
interest expense associated with the ongoing negotiation of the
rated secured credit facilities and the unrated US$400 million
senior unsecured bridge loan, coupled with the depreciation of the
Canadian dollar. Since assigning the ratings on October 23, 2008,
the estimated initial revolver draw, net of cash, has increased to
about US$60 million from the anticipated closing cash amount of
approximately C$100 million. Factoring in the decline in the
Canadian dollar, total debt has increased by approximately
C$400 million. Additionally, annual interest expense has
increased considerably as a result of the higher interest rates
needed to syndicate the debt. This action also considers the
recent sharp reductions in North American E&P company capex
budgets, which are a reaction to both lower oil and gas prices and
a contraction of credit markets. Lower capital spending will
result in decreased demand for drilling services of companies like
Precision leading to reduced cash flow. The negative outlook
reflects that Precision will remain exposed to potentially higher
interest rates, fees and discount on all of the secured debt as
the syndication of the revolver and Term Loan A continues.
Precision's Ba2 CFR reflects its pro-forma size and scale,
reasonable pro-forma leverage and history of conservative fiscal
management, good operating margins, and the geographic diversity
of its pro-forma drilling rig fleet throughout North America. The
rating is tempered by the inherent volatility of contract
drilling, concentration in North American land drilling,
integration risks related to the acquisition of Grey Wolf, unit
holder distributions as a Canadian income trust, and internal
growth and acquisition strategies. The rating considers
Precision's and Grey Wolf's leading market positions in North
America, longstanding customer relationships and quality rig
fleet. Precision's completion business also adds an element of
greater stability to the business mix.
The ratings of Grey Wolf will remain under review for possible
upgrade pending the closing of its acquisition by Precision. The
rating on Grey Wolf's 3.75% senior unsecured convertible debt will
remain at B1 for the portion of the convertible debt that remains
outstanding after the acquisition closes. Grey Wolf's Ba3 CFR will
be withdrawn when the Precision acquisition closes.
Precision is expected to acquire Grey Wolf on a fully diluted
basis for aggregate consideration of approximately US$1.12 billion
in cash and approximately 42 million Precision trust units, funded
in part by the proposed issuance by Precision of a US$400 million
senior secured term loan A, $400 million senior secured term loan
B and by drawings under a US$400 million bridge facility. The
final composition of debt will not be determined until after the
closing of the acquisition when the amount of Grey Wolf
convertible debt holders exercising their change of control puts
are known.
Downgrades:
Issuer: Precision Drilling Corporation
-- Probability of Default Rating, Downgraded to Ba2 from (P)Ba1
Upgrades:
Issuer: Precision Drilling Corporation
-- Senior Secured Bank Credit Facility, Upgraded to LGD3, 37%
from LGD3, 38%
Assignments:
Issuer: Precision Drilling Corporation
-- Corporate Family Rating, Assigned Ba2
-- Senior Secured Bank Credit Facility, Assigned Ba2
Outlook Actions:
Issuer: Precision Drilling Corporation
-- Outlook, Changed To Negative From Stable
Withdrawals:
Issuer: Precision Drilling Corporation
-- Senior Unsecured Regular Bond/Debenture, Withdrawn,
previously rated (P)Ba2, LGD5, 88%
Moody's last rating action on Precision was to assign a (P)Ba1 CFR
and (P)Ba1 senior secured ratings on October 22, 2008. A (P)Ba2
senior unsecured rating was also assigned at that time. Moody's
last rating action on Grey Wolf was to place its ratings under
review for possible upgrade on August 25, 2008 following its
announcement that it had agreed to be acquired by Precision. The
Grey Wolf ratings under review are the Ba3 CFR, the Ba3 PDR, and
the B1 (LGD 4, 61%) rating on the senior unsecured convertible
notes.
Precision Drilling Corporation is a subsidiary of Precision
Drilling Trust, a Calgary, Alberta-based income trust engaged in
the provision of energy services to the oil and gas industry in
North America. Grey Wolf, Inc. is a Houston, Texas-based company
engaged in the provision of oil and gas drilling services in the
U.S.
PRODUCTION RESOURCE: S&P Downgrades Corp. Credit Rating to 'B-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Production Resource Group LLC and
removed them from CreditWatch, where they were placed with
negative implications on Nov. 26, 2008. The corporate credit
rating was lowered to 'B-' from 'B', and the rating outlook is
stable.
"The downgrade is based on the company's continued weak operating
performance, reduced headroom under financial covenants, and
widening discretionary cash flow deficits," said Standard & Poor's
credit analyst Tulip Lim. "PRG's financial covenants will tighten
over the near-to-intermediate term and, if EBITDA continues to
decline, the company's margin of compliance with covenants could
evaporate."
The 'B-' rating reflects PRG's high debt leverage, fragmented and
competitive end markets, high capital expenditure requirements for
growth, and narrowing margin of compliance with financial
covenants. The company's dominant market share in theatrical
productions and good customer-retention record minimally temper
these factors.
New Windsor, New York-based PRG is a provider of lighting, audio,
video, and scenic equipment and related services for live events
and theatrical productions, with locations around the world. The
company has a very high market share of Broadway theatrical
productions because of its large inventory of lighting, audio, and
scenic equipment, as well as its good track record. Many Broadway
shows have been using PRG's services for several years. Because
the costs of switching lighting and audio service providers often
include dismantling a set, customers usually do not change service
providers during a production run, which can last five to 10
years. Despite these positive factors, the company is exposed to
the unpredictable nature of the concert tour business, economic
cyclicality, closure of musicals and plays, and pricing pressure.
QMG HOLDINGS: S&P Puts 'B' Corp. Credit Rating on WatchNeg.
-----------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' corporate credit
rating on QMG Holdings Inc., as well as its issue-level ratings on
operating subsidiary Questex Media Group Inc., on CreditWatch with
negative implications.
"The CreditWatch placement reflects S&P's concern over Questex's
weakened liquidity amid S&P's expectation of cyclically depressed
operating performance for the business-to-business trade show and
publishing sector," said Standard & Poor's credit analyst Tulip
Lim. "The recession has reduced ad pages for many publishers and
negatively affected trade shows that service industries tied to
consumer-related end markets."
Liquidity is limited. The company had $4.1 million in cash at
Sept. 30, 2008. Borrowings under the revolving credit facility
have steadily climbed. As of Sept. 30, 2009, the company had
$23.9 million outstanding under its $30 million revolver, versus
$14.9 million in the second quarter. Discretionary cash flow for
the 12 months ended Sept. 30, 2008, was negative, partially
because of unfavorable working capital movements. S&P is
concerned that the company may face covenant pressures when the
leverage covenant steps down in the first quarter of 2009, and
then again in the third quarter of 2009 if EBITDA declines under
pressure from the recession.
In resolving the CreditWatch listing, Standard & Poor's will
assess the company's near-term earnings, liquidity, and cash flow
prospects.
RAHWAY HOSPITAL: Moody's Affirms 'Ba2' $17 Million Bonds Rating
---------------------------------------------------------------
Moody's Investors Service has affirmed the Ba2 rating on Rahway
Hospital's outstanding Series 1998 bonds ($17.0 million). The
positive outlook reflects the recent trend of improved operating
performance and patient volumes and expectations that the current
level of operating performance will be maintained in the near
term.
Legal security: Series 1998 bonds are secured by a gross revenue
pledge of Rahway Hospital. The Series 2003 bonds ($11 million)
are backed by a Letter of Credit from Wachovia and rated
Aa2/VMIG1. The Letter of Credit is due to expire in August 2009.
Interest rate derivatives: Floating-to-floating rate swap with
Wachovia Bank based on $11 million notional amount; expires 2010;
management reports that there are no collateral requirements.
Strengths
* Legal Affiliation with A2 rated Robert Wood Johnson University
Hospital (New Brunswick) which has aided Rahway with its
financial and strategic planning efforts
* Banner year of improvement in operating performance in fiscal
year 2007 (6.3% operating margin and 10.9% operating cash flow
margin) although performance through ten months of FY 2008
(3.7% operating margin and 8.4% operating cash flow margin)
has moderated
* Improved liquidity position through eight months of FY 2007
with $24.4 million in unrestricted cash and investments (81.0
days cash on hand) compared to $20.4 million (70.0 days cash
on hand) at fiscal year end 2006
Challenges
* High reliance on Medicare, 59% of revenues, one of the highest
in Moody's portfolio
* Location in fragmented market of Union and Middlesex counties
with other sizable community hospitals providing more array of
services than Rahway; stagnant and aging population
demographics in Rahway's primary service area
* High age of plant (19.8 years) due to low level of capital
spending the last several years ($4.0 million by FYE 2008) due
in part to liquidity pressures related to required pension
contributions of approximately $12 million during the last
three fiscal years
Recent Developments and Results
Rahway Hospital reported a banner year of improved operating
performance in fiscal year 2007 with an operating income of
$8.2 million (6.3% operating margin) and operating cash flow of
$14.0 million (10.9% operating cash flow margin) compared to an
operating income of $3.4 million (3.0% operating margin) and
$9.1 million operating cash flow (8.0% operating cash flow margin)
in FY 2006. The improved operating performance was attributed to
continued increases in both inpatient and outpatient volumes and
improved payor mix with increases in patients with commercial
insurance. The continued improvement in operating performance
drove improvements in debt coverage measures to above average
levels with 1.99 times debt to cash flow and 4.43 times maximum
annual debt service coverage. Performance through ten months of
FY 2008 has softened from FY 2007 levels but remained strong with
$4.1 million in operating income (3.7% operating margin) and $9.3
million in operating cash flow (8.4% operating cash flow margin)
compared to $6.8 million in operating income (6.4% operating
margin) and $11.6 million in operating cash flow (11.0% operating
cash flow margin) in the prior comparable period.
According to management, the softened performance was attributed
to a deterioration in payor mix with an increase in self pay
patients and a decrease in commercially-insured patients with
commercial insurance. By year end, management projects to have
another good year of performance with an operating income of
$6.0 million (5.0% operating margin) and $11.8 million in
operating cash flow (9.9% operating cash flow margin). The
improved year end projections are driven by an expected payment of
$1.3 million in prior year settlements from Medicare DSH; a refund
on employee benefit expenses, and a $300 thousand decline in
depreciation expenses.
The favorable volume trends in recent years are attributed to an
increase in patient volumes from Rahway's primary service area
with the closure of Union Hospital and growth from its new fitness
center. Management was able to recruit some additional physicians
after the recent closing of Muhlenberg hospital, but have not yet
seen patient volumes come from that service area. Approximately
100 physicians have been recruited in the last three fiscal years
and have helped bring additional volume to Rahway. The new
fitness center in the Westfield/Scotch Plains area which opened in
early 2007 is continuing to drive growth in physical therapy
services which has more commercially insured patients. Outpatient
surgery volumes, however, have continued to decline for several
years and through ten months of FY 2008 due to competition from
entrepreneurial physicians. In an effort to offset the decline in
surgeries, management has recruited a new surgery group and opened
a new joint replacement center with one of its orthopedic
surgeons.
Rahway's unrestricted cash position at FYE 2007 has also improved
to $29.0 million (90.6 days cash on hand) from $20.4 million (69.9
days cash on hand) at FYE 2006. The improved liquidity position
was attributed to improvements in A/R and improved operations. As
of October 31, 2008, liquidity has continued to improve to
$30.6 million (90.6 days cash on hand). In addition to improved
operations and revenue cycle, Rahway has benefited from the fact
that its unrestricted cash is primarily invested in cash and cash
equivalents which includes Treasuries, has not suffered investment
losses. Improved operations coupled with a conservative
investment allocation has allowed liquidity to grow and remain
above its days cash covenant of 65 days as stated in its LOC
agreement with Wachovia.
Despite the closure of Union Hospital, Rahway Hospital's service
area remains crowded with many other community hospitals in Union
and Middlesex counties. The immediate service area continues to
age as evidenced by the above average Medicare exposure (59% of
revenue). Rahway Hospital does not have any material service
niche to distinguish itself in this market but its legal
affiliation with A2 rated Robert Wood Johnson University Hospital
continues to be a credit strength as RWJUH has aided Rahway with
managed care negotiations, information technology needs and
strategic planning. While not legally obligated on Rahway's debt,
Moody's does not believe that RWJUH would allow Rahway to default
on a debt service payment.
Outlook
Moody's positive outlook reflects the trend of improved operating
performance the last three fiscal years and expectation of
maintaining improved performance.
What could change the rating--UP
Maintenance of improved operating performance; continued gains in
liquidity
What could change the rating--DOWN
Decline in liquidity; decline in financial performance
Key indicators
Assumptions & Adjustments:
* Based on financial statements for Robert Wood Johnson
University Hospital at Rahway And Affiliates
* First number reflects audit year ended December, 31, 2007
* Second number reflects annualized ten-month unaudited
financials ended October 31, 2008
* Investment returns normalized at 6% unless otherwise noted
* Inpatient admissions: 8,170; 8,415
* Total operating revenues: $129.0 million; $132.8 million
* Moody's-adjusted net revenue available for debt service:
$16.0 million; $12.9 million
* Total debt outstanding: $27.9 million; $25.8 million
* Maximum annual debt service (MADS): $3.6 million; $3.6 million
* Moody's-adjusted MADS Coverage with normalized investment
income: 4.43 times; 3.6 times
* Debt-to-cash flow: 1.99 times; 2.25 times
* Days cash on hand: 90.6 days; 90.6 days
* Cash-to-debt: 103.9%; 118.2%
* Operating margin: 6.3%; 3.7%
* Operating cash flow margin: 10.9%; 8.4%
Outstanding bonds (as of December 31, 2007)
* Series 1998: $17 million outstanding; Ba2
* Series 2003: $11 million outstanding; backed by LOC from
Wachovia; Aa2/VMIG1
The last rating action was on October 31, 2007 when the bond
rating of Rahway Hospital was affirmed at Ba2 and the outlook was
revised to stable from negative.
RESIDENTIAL CAPITAL: Fed Recognizes GMAC as Bank Holding Company
----------------------------------------------------------------
GMAC Financial Services said on December 24, 2008, that its
application to become a bank holding company under the Bank
Holding Company Act of 1956, as amended, has been approved by the
Board of Governors of the Federal Reserve System. In addition,
GMAC Bank has received approval from the Utah Department of
Financial Institutions to convert to a state bank.
As a bank holding company, GMAC will have expanded opportunities
for funding and access to capital, which will provide increased
flexibility and stability.
Extraordinary Circumstances
According to CNNMoney, the Fed said in an order released Wednesday
evening, "In light of the unusual and exigent circumstances
affecting the financial markets . . . the board has determined
that emergency conditions exist that justify expeditious action."
GMAC and its home mortgage-making subsidiary Residential Capital
LLC by the end of the day on Dec. 17 still hadn't reached the
magic 75% participation needed to complete the proposed exchange
offer and qualify for becoming a bank holding company, Bloomberg's
Bill Rochelle notes.
The company has said that as of the end of the day on Dec. 17,
2008, based on preliminary results:
-- approximately $16.9 billion in aggregate principal
amount (or 58%) of the outstanding GMAC old notes had
been tendered in the GMAC offers and
-- approximately $3.5 billion in aggregate principal amount
(or 38%) of the outstanding ResCap old notes had been
tendered in the ResCap offers.
Mr. Rochelle notes that GMAC extended the deadline for early
tenders a fifth time. First announced in November, the investors
were given the option of cashing out or taking new securities. The
offers for GMAC and ResCap are different for each company and for
each of the existing debt securities currently outstanding. GMAC
is 51% owned by Cerberus Capital Management LP and the remaining
stake by General Motors Corp.
GMAC said in a Dec. 19 filing with the Securities and Exchange
Commission following completion of the offers and receipt of all
requisite approvals, GMAC would transfer ResCap old notes acquired
by GMAC in the ResCap debt-for-debt exchange offers in an amount
equal to at least 25% of ResCap's outstanding debt to ResCap in
exchange for all or a majority of the non-voting common equity of
IB Finance Holding Company LLC held by ResCap. IB Finance is the
parent entity for GMAC Bank. Immediately following the IB Finance
Transaction, ResCap would cancel the ResCap old notes acquired
from GMAC. The completion of the IB Finance Transaction, if
undertaken, would be subject to various conditions.
Key Turning Point
"[The] announcement marks a key turning point in GMAC's history,"
said GMAC Chief Executive Officer Alvaro G. de Molina. "As a bank
holding company, GMAC will be competitively positioned for the
long-term to provide financing to auto and mortgage consumers and
businesses such as automotive dealers. GMAC has been a leader in
these sectors and it is critically important to our company and
the broader economy to resume responsible lending to consumers and
businesses."
GMAC's previously announced separate private debt exchange offers
and cash tender offers were subject to the approval of the bank
holding company application. The offers are ongoing and will
expire today, Dec. 26, 2008 at 11:59 p.m. EST.
GM to Reduce Stake
As part of the deal, GM will reduce its ownership interest in GMAC
to less than 10% of the voting and total equity interest of GMAC.
GM's remaining equity interest in GMAC will be transferred to a
trust that has a trustee acceptable to the Board and the
Department of the Treasury, who will be entirely independent of GM
and have sole discretion to vote and dispose of the GMAC equity
interests. The trustee must dispose of the equity interests held
in the trust within three years of the trust's creation.
GMAC has committed to amend its existing agreements with GM to
remove any restrictions on GMAC's ability to engage in
transactions with unrelated third parties and to ensure that GMAC
has complete discretion to set the terms of its financing
arrangements.
To ensure that Cerberus's holdings in GMAC are consistent with the
Board's precedent on noncontrolling investments in banks and bank
holding companies, each Cerberus fund that holds interests in GMAC
will distribute its equity interests in the company to its
respective investors. As a result of this distribution, the
aggregate direct and indirect investments controlled by Cerberus
and its related parties would not exceed 14.9% of the voting
shares or 33% of the total equity of GMAC LLC. The investors that
receive shares in the distribution from the Cerberus funds are
each sophisticated investors and are independent of Cerberus and
independent of each other. No investor would, after the
distribution, own, hold, or control 5% or more of the voting
shares or 7.5% of the total equity of GMAC LLC.
As a result of the distribution, the aggregate direct and indirect
investments controlled by Cerberus and its related parties would
not exceed 14.9% of the voting shares or 33% of the total equity
of GMAC LLC.
Cerberus has made a number of commitments previously found by the
Board to be helpful in limiting the ability of an investor to
exercise a
controlling interest over a banking organization. In addition,
Cerberus employees and consultants would cease providing services
to, or otherwise functioning as dual employees of, GMAC, and
neither Cerberus nor any affiliated entity will have any advisory
relationships with GMAC or any investor regarding the vote or sale
of shares or the management or policies of GMAC or GMAC Bank.
A full-text copy of the Federal Reserve's order is available at no
charge at:
http://bankrupt.com/misc/GMACFedOrder2081224.pdf
Pursuant to the Fed's order, GMAC Bank has total consolidated
assets of approximately $33 billion and controls deposits of
approximately $17 billion. GMAC Bank engages primarily in lending
and other financing activities and taking deposits of the type
that are permissible for an industrial loan company.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit
of GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, GMAC's balance sheet showed total assets of
$211.3 billion, total liabilities of $202.0 billion and members'
equity of about $9.3 billion.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
RIVIERA HOLDINGS: Rivacq, 7.15% Equity Owner, Takes Passive Role
----------------------------------------------------------------
Rivacq LLC disclosed in a regulatory filing with the Securities
and Exchange Commission that on December 8, 2008, it entered into
a termination agreement with Flag Luxury Riv, LLC, and RH1, LLC
entered into the Termination Agreement. The parties agreed to (i)
terminate the Amended and Restated Joint Bidding Agreement dated
as of April 5, 2006 among FLR, RH1, High Desert Gaming, LLC, and
Rivacq, as amended by letter agreement dated April 16, 2007; and
(ii) dissolve Riv Acquisition Holdings Inc. and Riv Acquisition
Inc.
As of December 10, 2008, Rivacq may be deemed the direct
beneficial owner of 893,770 shares of Common Stock of Riviera
Holdings Corp., representing roughly 7.15% of the outstanding
shares of Common Stock.
As a result of the Termination Agreement, Rivacq and these
entities now intend to be passive investors in Riviera Holdings:
* SOF U.S. Hotel Co-Invest Holdings, L.L.C.;
* SOF VII US Hotel Holdings, L.L.C.;
* I-1/I-2 U.S. Holdings, L.L.C. -- Hotel Fund;
* Starwood Global Opportunity Fund VII-A, L.P.;
* Starwood Global Opportunity Fund VII-B, L.P.;
* Starwood U.S. Opportunity Fund VII-D, L.P.;
* Starwood U.S. Opportunity Fund VII-D-2, L.P.;
* Starwood Capital Hospitality Fund I-1, L.P.;
* Starwood Capital Hospitality Fund I-2, L.P.;
* SOF-VII Management, L.L.C.;
* SCG Hotel Management, L.L.C.;
* Starwood Capital Group Global, LLC; and
* Barry S. Sternlicht
Rivacq, et al., said they no longer hold their shares of Common
Stock with the purpose or effect of changing or influencing
control of Riviera Holdings or in connection with or as a
participant in any transaction having that purpose or effect.
SOF Co-Invest, as the sole member of Rivacq, may be deemed to have
beneficial ownership of 893,770 shares of Common Stock, which
represent approximately 7.15% of the outstanding shares of Common
Stock as of November 4, 2008. Each of SOF VII and Hotel Fund, as
the sole members of SOF Co-Invest with 25% and 75% equity
interests in SOF Co-Invest, respectively, may also be deemed to
have beneficial ownership of the shares. Each of the Opportunity
Funds, as the sole members of SOF VII, may also be deemed to have
beneficial ownership of the shares. Each of the Hospitality
Funds, as the sole members of Hotel Fund, may also be deemed to
have beneficial ownership.
SOF VII Management, as the general partner of each of the
Opportunity Funds, may also be deemed to have beneficial ownership
of the shares. Hotel Management, as the general partner of each
of the Hospitality Funds, and SCGG, as the managing member of SOF
VII Management and Hotel Management, may also be deemed to have
beneficial ownership of the shares.
Mr. Sternlicht, as the Chairman and CEO of SCGG and CEO of SOF VII
and Hotel Fund, may also be deemed to have beneficial ownership.
Mr. Sternlicht also directly holds 123,200 shares of Common Stock,
which represent roughly 1.0% of the outstanding shares as of
November 4, 2008, and which, together with the 893,770 shares of
Common Stock that he may be deemed to own beneficially in his
capacity as Chairman and CEO of SCGG and as an executive officer
of certain affiliates, constitute roughly 8.14% of the outstanding
shares of Common Stock as of November 4, 2008.
Based in Las Vegas, Nevada, Riviera Holdings Corporation --
http://www.rivierahotel.com-- owns and operates the Riviera Hotel
and Casino on the Las Vegas Strip and the Riviera Black Hawk
Casino in Black Hawk, Colorado. Riviera Holding's stock is listed
on the American Stock Exchange under the symbol "RIV".
The company's consolidated balance sheets are upside-down as of
September 30, 2008: The company had $218.2 million in total
assets; $264.5 million in total liabilities, resulting in $46.2
million in shareholders' deficiency. The company reported net
loss for the 2008 third quarter of $3.5 million, an increase of
$14.8 million, compared to a net loss of $18.3 million, for the
same period in the prior year.
On November 19, 2008, Riviera Holdings entered into a separate
agreement with each of Plainfield Special Situations Master Fund
Limited and Desert Rock Enterprises LLC relating, among other
things, to the acquisition of the company's common stock by each
Investor from time to time. The company has no plans at the
present time to issue and sell any shares of its common stock to
either Investor. The principal terms of each such agreement are
substantially identical.
Among other things, the agreements provide for: the waiver of the
company's voting limitation set forth in its Articles of
Incorporation; an agreement by both Plainfield and Desert Rock not
to acquire over 15% of Riviera's common stock, unless approved by
the company's Board of Directors; a standstill agreement which
ends on either the day following the company's 2010 annual
stockholders' meeting, September 1, 2010, or the ending of any
period during which another investor is subject to a similar
standstill, whichever comes first; and that Plainfield and Desert
Rock obtain any approvals that may be required from the Nevada and
Colorado gaming authorities in connection with any acquisition.
RYDER MEMORIAL: S&P Downgrades Long-Term Bond Rating to 'BB+'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term rating to
'BB+' from 'BBB-' on Puerto Rico Industrial, Medical, and Higher
Education and Environmental Pollution Control Facilities Finance
Authority's $11.3 million series 1996 bonds, issued for Ryder
Memorial Hospital.
The downgrade reflects an unexpected operating loss for the
10 months of 2008 ended Oct. 31, and management's plans to
increase capital spending during the next 12 to 24 months, which
could result in additional debt of up to $3 million, placing
further pressure on income statement metrics that are light for
the rating and divergent from recent soundness.
Factors supporting the rating are Ryder's dominant market
position, highlighted by 67% market share within the primary
service area; recently sound operating income, generating solid
debt service coverage of 3.2x in 2007; and increasing, though
still weak, liquidity, highlighted by days' cash on hand of 66
days' cash on hand on Oct. 31, 2008.
"The stable outlook reflects S&P's expectation that Ryder's solid
business position and management's plans to increase capacity and
clinical services will allow for volume and revenue growth
sufficient to offset the recent expense base growth, and restore
profitability and coverage to more solid levels," said Standard &
Poor's credit analyst Charlene Butterfield.
A positive outlook or higher rating over time would be predicated
on the maintenance of significant improvement in both income
statement and balance sheet metrics to a level commensurate with
an investment-grade rating. Conversely, a negative outlook or
lower rating would be based on continued decreases in operating
results or balance sheet erosion during the next one to two years.
A pledge of gross receipts of Ryder, a 155-staffed-bed hospital in
Humacao, P.R. secures the bonds.
Management is contemplating two capital projects, one to expand
and renovate the emergency department, and the other to renovate
the operating suite, one of which will likely begin sometime in
2009 upon receipt of financing. Ryder is a 155-staffed bed
hospital in Humacao and is the only vertically integrated provider
in its primary service area. Ryder's market share remains stable
at 67%, making it the dominant provider in its service area.
SBARRO INC: Posts $1.2 Million Net Loss in Sept. 2008 Quarter
-------------------------------------------------------------
Sbarro Inc. swung to a $1.2 million net loss for the quarter ended
September 28, 2008, from a net income of $500,000 for the quarter
ended September 30, 2007. Net loss for the nine months ended
September 28, 2008, was $8.9 million as compared to a net loss of
$35.1 million for the combined nine months ended September 30,
2007.
Sbarro said revenues were $91.9 million for the quarter ended
September 28, 2008, as compared to revenues of $91.0 million for
the quarter ended September 30, 2007. The increase in revenues
was generated by new company-owned stores and royalties on new
franchised stores opened in 2007 and 2008, and royalties generated
from the 15.5% increase in comparable-unit sales growth in the
company's International Franchise restaurants, partially offset by
1% decrease in company-owned comparable-unit sales and lost
royalties due to a 2% decrease in its Domestic Franchise
comparable-unit sales.
As of September 28, 2008, Sbarro's consolidated balance sheets
show $628.6 million in total assets, and these debt obligations:
Total current liabilities $47.4 million
Deferred rent $4.4 million
Deferred tax liability $107.2 million
Due to former shareholders and
other liabilities $13.9 million
Long-term debt $328.8 million
The balance sheets show $126.5 million in shareholders' equity.
On January 31, 2007, MidOcean SBR Acquisition Corp., an indirect
subsidiary of MidOcean SBR Holdings, LLC, an affiliate of MidOcean
Partners III, L.P., and certain of its affiliates merged with and
into Sbarro in exchange for consideration of $450 million in cash,
subject to certain adjustments. As a result of the Merger, Sbarro
is now an indirect wholly owned subsidiary of MidOcean SBR
Holdings.
In connection with the merger, Sbarro issued $150.0 million of
senior unsecured notes at 10.375% due 2015. The interest is
payable on February 1 and August 1 of each year.
In connection with the merger, Sbarro also entered into a $183.0
million senior secured term loan facility and a $25.0 million
senior secured revolving facility. The revolving facility also
provides for the issuance of letters of credit not to exceed $10.0
million at any one time outstanding and swing line loans not to
exceed $5.0 million at any one time outstanding. In addition, the
Senior Credit Facilities provide for an uncommitted incremental
facility of up to $50.0 million. In connection with the Merger,
Sbarro borrowed the entire $183.0 million available under the term
loan facility. The term loan facility will mature in 2014 and the
revolving credit facility is scheduled to terminate and come due
in 2013.
There were $4.0 million letters of credit outstanding as of
September 28, 2008. The letters of credit have been issued instead
of cash security deposits under Sbarro's operating leases or to
guarantee construction costs of the company's locations, and for
run-out claims under the company's medical plan. On October 17,
2008, Sbarro borrowed $8 million under the senior secured
revolving facility. The remaining borrowing availability is $13
million.
According to Sbarro, its Long-Term Debt matures as follows:
Year ending 2008 $0.4 million
2009 1.8 million
2010 1.8 million
2011 1.8 million
2012 1.8 million
2013 and thereafter $323.1 million
The company said it was in compliance with the covenants under its
bank credit agreement for the quarter ended September 28, 2008.
Based in Melville, New York, Sbarro Inc. -- http://www.sbarro.com/
-- operates Italian quick-service restaurants. Sbarro has 1,075
restaurants in 43 countries. Sbarro restaurants feature a menu of
popular Italian food, including pizza, a selection of pasta dishes
and other hot and cold Italian entrees, salads, sandwiches, drinks
and desserts.
* * *
As reported by the Troubled Company Reporter on December 8, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Melville, New York-based Sbarro Inc. to 'CCC' from
'CCC+'. The outlook is negative. Concurrently, S&P lowered the
ratings on the company's $25 million revolving facility and $183
million first-lien term loan to 'CCC' from 'B-'. S&P also revised
the recovery ratings on these facilities to '4' from '2'. The '4'
recovery rating indicates expectations of average (30%-50%)
recovery of principal in the event of default. In addition, S&P
lowered the ratings on the $150 million senior notes to 'CC' from
'CCC-' and kept the recovery rating of '6' on this debt issue
unchanged. The '6' recovery rating indicates expectations of
negligible (0%-10%) recovery of principal in the event of default.
"The downgrade reflects," said S&P's credit analyst Mariola
Borysiak, "our expectation that Sbarro will breach its leverage
covenant under the senior secured credit facilities when it
becomes more restrictive at the end of the fourth quarter ending
Dec. 31, 2008."
SENTINEL MANAGEMENT: Court Confirms Chapter 11 Liquidation Plan
---------------------------------------------------------------
Hon. John H. Squires of the United States Bankruptcy Court for
the Northern District of Illinois confirmed a fourth amended
Chapter 11 plan of liquidation filed by the Official Committee
of Unsecured Creditors of Sentinel Management Group Inc. and the
Chapter 11 trustee for the Debtor, Frederick J. Grede, on Dec. 11,
2008.
According to Bloomberg News, the Committee and Chapter 11
Trustee's plan became effective and the company emerged from
Chapter 11 protection.
Plan Summary
The Plan provides for the liquidation of the Debtor's assets and
the distribution of such assets to Creditors.
On the effective date, the Liquidation Trustee shall establish and
maintain a reserve for the payment of the Disputed BONY Reserve in
the amount of $370,000,000 in Cash which shall be held in a
segregated investment account. The Cash shall be invested 100% in
the Dreyfus Treasury Cash Management fund, unless such other
investment is agreed to in writing by BONY.
Classification and Treatment of Claims
A) Unclassified Claims
Holders of Allowed Administrative Claims shall be paid the full
amount of their Allowed Claim in Cash under the Plan. Holders
of Allowed Priority Tax Claims shall be paid in full, without
postpetition interest or penalty, in Cash.
B) Class 1 -- Other Priority Claims
Each Holder of an Allowed Other Priority Claim shall be paid in
full in Cash.
C) Class 2 -- Secured Claims
Each Holder of an Allowed Secured Claim shall be (i) paid in
full the amount of its Allowed Secured Claim, or (ii) receive
the Collateral securing its Allowed Secured Claim or the
proceeds of such Collateral in full satisfaction of such
Allowed Secured Claim.
With respect to the Disputed BONY Secured Claim, if and to the
extent that the Holder is determined, by a final, appealable
trial court judgment, to hold an Allowed Secured Claim not
subject to subordination, then such Claim shall receive
distribution in the same manner as those of Other Secured
Claims above, provided that such distributions plus accrued
interest shall remain subject to disgorgement and to the extent
that such BONY Trial Court Judgment is subsequently reversed or
modified on appeal or subsequent remand. If and to the extent
that the Disputed BONY Secured Claim is ultimately determined
to be an Allowed Secured Claim, not subject to subordination,
then simple interest on the Allowed amount of the Disputed BONY
Secured Claim shall accrue (a) at the daily effective federal
funds rate (as published by the Board of Governors of the
Federal Reserve System) plus seventy-five (75) basis points for
the period from the Petition Date through the Effective Date
and (b) at the daily effective federal funds rate plus 150
basis points for the period after the Effective Date and until
such time as the Disputed BONY Secured Claim is paid in full.
D) Class 3 -- Customer Claims
E) Class 4 -- General Unsecured Claims
Class 3 consists of all Claims arising from Customer deposits
with Sentinel. Class 4 consists of all unsecured Claims
against Sentinel that do not constitute Administrative Claims,
Priority Tax Claims, Other Priority Claims, or Subordinated
Claims.
Holders of Allowed Class 3 Customer Claims and Allowed Class 4
General Unsecured Claims shall be entitled to a Pro Rata
distribution of Cash and Cash proceeds of all Property,
including Customer Property, not allocated for payment of
Allowed Claims in other Classes, provided that no further
distributions shall be made to any Citadel-Beneficiary
Customer, unless and until, all Holders of Allowed Class 3
Customer Claims that are NonCitadel-Beneficiary Customers shall
have received a Percentage Recovery on account of such Claims
equivalent to the Percentage Recovery of such Citadel-
Beneficiary Customer taking into account all of such Citadel-
Beneficiary Customer's Class 3 Customer Claims.
F) Class 5 -- Subordinated Claims
Holders of Class 5 Subordinated Claims shall receive no
distributions.
G) Class 6 -- Equity Interests
Holders of Class 6 Equity interests shall receive no
distributions.
Classes 1 and 2 are deemed to have accepted the Plan and are not
entitled to vote.
Classes 3, 4, 5, and 6 are impaired under the Plan. Classes 3 and
4 are entitled to vote on the Plan; Classes 5 and 6 are deemed to
have rejected the Plan and, thus, not entitled to vote.
Unexpired Leases and Executory Contracts
Any and all prepetition leases or executory contracts not
previously rejected by the Chapter 11 Trustee, unless specifically
assumed pursuant to orders of the Court or the subject of a
pending motion to assume or assume and assign on the Confirmation
Date, shall be deemed rejected by the Chapter 11 Trustee on the
Confirmation Date.
Plan Implementation
On the Effective Date, a Liquidation Trustee shall be appointed
and shall serve as the sole officer and sole director of the post-
Effective Date Debtor until its dissolution. The Liquidating
Trustee shall be responsible for receiving, liquidating,
administering, and distributing prior to the Transfer Date, the
Remaining Assets and the Non-Estate Claims and after the Transfer
Date, the Trust Assets, in accordance with the Plan and Trust
Agreement.
A Liquidation Trust Committee, which shall consist of three
representatives of the Creditors Committee, shall be formed and
constituted on the Effective Date. The members of the Liquidation
Trust Committee shall consult with the Liquidation Trustee
regarding all material aspects of the Estate's continued
operations and all material activities of the Liquidation Trustee,
exercising their business judgment but subject to the provisions
of the Plan.
A full-text copy of the Disclosure Statement containing a summary
and analysis of the Plan is available for free at:
http://ResearchArchives.com/t/s?2bf2
A full-text copy of the Fourth Amended Chapter 11 Plan of
Liquidation dated Dec. 11, 2008, is available for free at:
http://ResearchArchives.com/t/s?36ac
About Sentinel Management
Based in Northbrook, Illinois, Sentinel Management Group Inc. --
http://www.sentinelmgi.com/-- is a full service firm offering a
variety of security solutions. The company filed a voluntary
chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No.
07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and
Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black
Rosenbloom & Moritz, Ltd. represent the Debtor as counsel. Quinn,
Emanuel Urquhart Oliver & Hedges, LLP, represents the Official
Committee of Unsecured Creditors as counsel. DLA Piper US LLP is
the Committee's co-counsel. When the Debtor sought bankruptcy
protection, it listed assets and debts of more than $100 million.
On Aug. 28, 2007, the Court approved Frederick Grede as the
Debtor's Chapter 11 Trustee. Marc I. Fenton, Esq., at DLA Piper
US LLP, and Vincent E. Lazar, Esq, at Jenner & Block LLP,
represent the Chapter 11 Trustee as counsel.
SONIC AUTOMOTIVE: Moody's Reviews 'Ba3' CFR for Possible Cuts
-------------------------------------------------------------
Moody's Investors Service placed the Ba3 corporate family and
probability of default ratings of Sonic Automotive, Inc. on review
for possible downgrade.
Ratings placed on review for possible downgrade include:
-- Corporate family rating at Ba3;
-- Probability of default rating at Ba3;
-- Senior guaranteed subordinated notes at B1, and
-- Senior convertible subordinated notes at B2.
The review for downgrade reflects Moody's concerns that Sonic's
credit metrics, which have become weak for the Ba3 rating, will
likely continue to deteriorate for the balance of 2008 and into
2009. "EBIT/gross profit could continue to deteriorate over the
next six-to-twelve months, and leverage could spike to close to 7
times," stated Moody's Senior Analyst Charlie O'Shea. "While
Sonic is benefiting from its favorable domestic/foreign mix, no
OEM has proven to be immune to the significant fall-off in
consumer demand, with all dealers exhibiting varying levels of
operating softness. Moody's review will focus on fourth quarter
performance, and potential for improvement in 2009."
The most recent rating action for Sonic Automotive was the
September 26, 2006 issuance of Loss Given Default ratings for the
various rated credit facilities.
Sonic Automotive, Inc., headquartered in Charlotte, North
Carolina, is the third largest auto retailer in the U.S.,
operating 169 franchises in 15 states in the South and Southwest
U.S., which generated $8 billion in revenues for the LTM ended
September 30, 2008.
SS&C TECHNOLOGIES: Earns $4.8MM in Quarter Ended September 30
-------------------------------------------------------------
SS&C Technologies, Inc., reported results for the quarter and nine
months ended Sept. 30, 2008.
For three months ended Sept. 30, 2008, the company reported net
income of $4.8 million compared to net income of $2.2 million for
the same period in the previous year.
Revenue on a GAAP basis for the third quarter of 2008 was
$71.0 million. This represents a 11.8% increase in revenues over
the same period in 2007. Revenue for the first nine months of
2008 was $211.7 million, a 17.8% increase from the same period in
2007. Net income, on a GAAP basis, for the third quarter of 2008,
was $4.8 million.
For nine months ended Sept. 30, 2008, the company reported net
income of $12.3 million compared with net income of $989.0 million
for the same period in the previous year.
Balance Sheet and Cash Flow
SS&C ended the quarter with $30.3 million cash and $414.6 million
in debt for a net debt balance of $384.3 million. The company
generated net cash from operating activities of $43.1 million for
the nine months ended Sept. 30, 2008, which is after paying
$10.7 million in income taxes compared to an income tax refund of
$1.6 million in 2007. Excluding the effects of income tax, its
nine month operating cash increased by 39.5%.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $1.1 billion, total liabilities of $551.9 million and
stockholders' equity of $613.6 million.
The company stated that it is in compliance with all covenants at
Sept. 30, 2008.
About SS&C Technologies Holdings
SS&C Technologies Holdings -- http://www.ssctech.com/-- helps
its clients buy low and sell high. The company (which operates
through its SS&C Technologies subsidiary) designs software for
managing financial portfolios, loans, real estate equity, back-
office processing, and securities trading, and it provides
consulting and outsourcing services. SS&C's software handles
investment portfolio management, asset and liability management
for actuaries, property and casualty insurance company risk
management, and trade ordering and modeling. Customers include
asset managers, insurance companies, banks, corporate
treasuries, hedge funds, home offices, and government agencies.
* * *
SS&C Technologies Inc. continues to carry Moody's Investor
Services' 'Caa1' senior subordinate rating which was placed in
October 2005.
STARWOOD HOTELS: S&P Downgrades Corporate Credit Rating to 'BB+'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Starwood Hotels & Resort Worldwide Inc. to 'BB+' from
'BBB-'. This rating, along with the issue-level ratings on
Starwood's debt issues, was removed from CreditWatch, where it was
placed with negative implications Oct. 23, 2008. The rating
outlook is negative.
The issue-level rating on Starwood's senior unsecured debt was
also lowered to 'BB+' (at the same level as the 'BB+' corporate
credit rating) from 'BBB-'. A recovery rating of '3' was assigned
to this debt, indicating S&P's expectation of meaningful (50% to
70%) recovery for lenders in the event of a payment default.
"The downgrade to 'BB+' reflects S&P's expectation that Starwood
is likely to sustain leverage, as measured by total lease-adjusted
debt to EBITDA, well above S&P's mid- to high-3x threshold for the
previous 'BBB-' rating over the intermediate term," said Standard
& Poor's credit analyst Emile Courtney. "We expect that EBITDA is
likely to decline between 15% and 20% in 2009, and that the
company will likely sustain leverage in the mid- to high-4x area
over the next two years."
Given the current state of credit markets and declining commercial
real estate values, S&P has not factored in asset sales in 2009.
Thus, a significant level of debt repayment from asset sale
proceeds (presumably at a meaningfully higher multiple than
Starwood's current leverage) could potentially lead S&P to
consider a stable rating outlook. At this time, however, S&P
believes it is probable that the company will not achieve a level
of asset sales sufficient to enable it to sustain credit measures
at an investment-grade level given S&P's current view of
Starwood's business profile.
The rating action also incorporates S&P's expectation that
timeshare term securitization markets are unlikely to be available
at acceptable financing terms over the near-to-intermediate term.
Longer term, however, S&P believes these markets could again begin
to provide a financing alternative to Starwood.
With leisure and business travel demand worsening and prospects
for a long U.S. recession, S&P now expect U.S. RevPAR (revenue per
available room) in 2009 to decline in the mid- to high-single-
digit percentage area. S&P remains concerned that economic
challenges in Europe and other international markets will lead to
lower worldwide RevPAR performance for Starwood than S&P
previously anticipated. S&P estimate that the company generates
more than 75% of its EBITDA (including timeshare, but not
including EBITDA from unconsolidated joint ventures) from North
American and European geographies that face continued prospects of
significant economic slowing.
STRUCTURED ASSET: Moody's Downgrades Ratings on 17 Class Certs.
-----------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 17
tranches issued in three Structured Asset Securities Corp Trust
transactions. Underlying securities' collateral consists
primarily of closed-end second lien residential mortgage loans.
The ratings on the securities were monitored by evaluating factors
Moody's determined to be essential in the analysis of securities
backed by such loans. The salient factors include: i) Moody's
review of the nature, sufficiency, and quality of historical loan
performance information, ii) analysis of the collateral
composition and pool credit performance including prepayment, loan
delinquency and loss data, iii) consideration of the transaction's
capital structure and related allocations of collateral cash flows
and losses, and iv) a comparison of current credit enhancement
levels to updated Moody's pool loss projections based on present
collateral credit performance.
When analyzing ratings for CES and HELOC transactions, Moody's
projects cumulative losses for each deal based on a collateral
analysis of the deal's Constant Prepayment Rate and Constant
Default Rate.
CPR - CPR is based on the average of the last six months 1-month
CPR.
CDR - There are two approaches for determining pool CDR. The
first approach calculates CDR based on pool loan losses from the
previous twelve months, i.e. recent losses. A second approach is
based on pipeline losses -- losses derived from days-aged
delinquencies and Moody's assumptions for default based on days
delinquent, in foreclosure, or liquidation, and the severity of
loss given default. Moody's assumes 100% severity for second
liens, including both CES and HELOCs. After the CDR is calculated
using the two methods, the effective CDR for loss projection
purposes is determined by using a weighted average of the CDRs as
determined by the recent loss and pipeline loss approaches -- with
weightings determined on a transaction by transaction basis.
Moody's assumes that the CDR will not decline for the next three
years and will decline subsequently for the life of the deal under
a schedule, typically reducing by 50% in year 4 and remaining
constant thereafter.
Based on calculated CPR and CDR, Moody's calculates projected
deal-specific cumulative losses and the weighted average life of
the deal. The credit enhancement calculation can also include
credit for excess spread, i.e. the aggregate, positive difference
in the weighted average loan coupon and the all-inclusive
securities' interest and deal fees, including servicing. Excess
spread benefit is calculated by multiplying the stressed
annualized excess spread by the weighted average life of the deal.
Aggregate credit enhancement which combines subordination benefit
(including over-collateralization and/or reserve accounts) and
excess spread benefit is compared with projected cumulative losses
for the deal to derive coverage multiples and associated ratings
by deal tranche. Moody's will analyze tranche coverage multiples
after consideration of timing of tranche repayment and allocation
of losses (if any).
Issuer: Structured Asset Securities Corp 2003-S2
-- Cl. M1-A, Downgraded to Aa2; previously on 9/21/2006 Upgraded
to Aaa
-- Cl. M1-F, Downgraded to Aa2; previously on 9/21/2006 Upgraded
to Aaa
-- Cl. M2-A, Downgraded to A3; previously on 9/21/2006 Upgraded
to Aa3
-- Cl. M2-F, Downgraded to A3; previously on 9/21/2006 Upgraded
to Aa3
Issuer: Structured Asset Securities Corp Trust 2004-S3
-- Cl. M1, Downgraded to Baa2; previously on 3/16/2007 Upgraded
to Aaa
-- Cl. M2, Downgraded to Ba1; previously on 3/16/2007 Upgraded
to Aaa
-- Cl. M3, Downgraded to B3; previously on 3/16/2007 Upgraded to
Aa2
-- Cl. M4, Downgraded to Caa3; previously on 3/16/2007 Upgraded
to Aa3
-- Cl. M5, Downgraded to C; previously on 3/16/2007 Upgraded to
A2
-- Cl. M6, Downgraded to C; previously on 3/16/2007 Upgraded to
A3
-- Cl. M7, Downgraded to C; previously on 3/16/2007 Upgraded to
Baa2
Issuer: Structured Asset Securities Corp Trust 2004-S4
-- Cl. M4, Downgraded to Baa1; previously on 2/16/2005 Assigned
A3
-- Cl. M5, Downgraded to Ba3; previously on 2/16/2005 Assigned
Baa1
-- Cl. M6, Downgraded to Caa3; previously on 2/16/2005 Assigned
Baa2
-- Cl. M7, Downgraded to C; previously on 11/8/2007 Placed Under
Review for Possible Downgrade from Baa3
-- Cl. B1, Downgraded to C; previously on 11/8/2007 Downgraded
to Caa3
-- Cl. B2, Downgraded to C; previously on 11/8/2007 Downgraded
to Ca
SUMMIT ACCOMMODATORS: Files for Chapter 11 Bankruptcy in Oregon
---------------------------------------------------------------
Summit Accommodators Inc. filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Court in the United
States Bankruptcy Court for the District of Oregon and replaced
its current management to provide transparency, independent
decision-making and control.
The company said on Dec. 15, 2008, that it was experiencing
significant financial issues, had ceased funding open exchanges,
and had curtailed its daily operations until those issues could be
addressed.
According to the company, it has about $27,831,363 in open
exchanges for customers of Summit 1031 Exchange. However,
the total cash in the company's exchange funds related accounts
is $13,600,212, which is a cash shortfall of approximately
$14,231,151. Although it has other assets that it hopes will
be sufficient to pay all Summit Customers, those assets are
unfortunately illiquid at this time and not immediately available
to fund open exchanges, the company said.
The company retained Tyrell B. Vance LLC as its chief
restructuring officer for all purposes in the Chapter 11 case. The
firm was authorized to investigate all transactions and to manage
the company and all of its assets for the exclusive benefit of the
company and its creditors including all Summit Customers, until
all debts are paid in full or all assets have been appropriately
liquidated and paid to creditors, subject to the direction of the
Court.
The firm will take possession of and preserve all exchange fund
accounts maintained by the company for Summit Customers. The firm
will further assume control of the company and all of its assets,
books and records, and will have the power as CRO to propose a
plan for the company to pay creditors, to bring claims against
third parties, and to do all other acts as may be necessary in the
interests of the company and its creditors or as ordered by the
Court.
In addition, the firm retained Obsidian Finance Group LLC as its
financial consultants to provide advice with respect to all tax
issues affecting Summit Customers and a plan to mitigate damages
to the maximum extent possible of currently unfunded exchanges.
Obsidian Finance will review substantial real estate investments
and recommend the best method to realize the value of such
investments to satisfy claims.
The company further said that this situation resulted from loans
of exchange funds made by it over a period of time ending in
approximately the year 2006 to Inland Capital Corporation, which
in turn loaned funds to various entities and individuals that were
involved in real estate investments located primarily in central
Oregon. Inland Capital is owned by the same persons who own the
company. The members of the entities and the individuals to whom
Inland made loans are in most cases one or more of the owners of
the company.
The company related that the recent crisis and downturn in the
real estate market caused the entities and individuals who owe
Inland Capital to be unable to repay loans in a timely manner,
which in turn caused Inland Capital to be unable to repay Summit
Accommodators. Inland Capital owes $13,706,557 to Summit
Accommodators.
The company said the existing real estate investments will be
made available to repay the loan balance and satisfy claims, in
addition to any and all other available assets and resources of
the company. However, it will unfortunately take time to
determine, realize and reduce the value of such assets to cash to
pay Summit Customers and creditors, the company said.
Susan S. Ford, Esq., and Thomas W. Stilley, Esq., at Sussman Shank
LLP in Portland, Oregon, represents the company.
Headquartered in Portland, Oregon, Summit Accommodators Inc.
operates a tax-deferral company.
SUMMIT ACCOMMODATORS: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Summit Accommodators, Inc.
dba Summit 1031 Exchange
1567 S.W. Chandler Ave., Suite 101
Bend, OR 97702-3257
Bankruptcy Case No.: 08-37031
Chapter 11 Petition Date: December 19, 2008
Court: District of Oregon
Judge: Judge Randall L. Dunn
Debtor's Counsel: Susan S. Ford, Esq.
susanf@sussmanshank.com
Sussman Shank LLP
1000 S.W. Broadway, Suite 1400
Portland, OR 97205
Tel: (503) 227-1111
Fax: (503) 248-0130
Estimated Assets: $10,000,000 to $50,000,000
Estimated Debts: $10,000,000 to $50,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Alessandro Family Trust exchange $2,999,961
P.O. Box 675510
Rancho Santa Fe, CA 92067
Nim, Danny & Annie exchange $2,544,506
1561 Orangewood Drive
San Jose, CA 92121
Lewis Interests, Ltd. exchange $2,461,558
600 Highway 290 East
Elgin, TX 78621
Cooper's Hill Apt. exchange $1,903,780
Association
Nodding Onion, LLC exchange $1,136,615
Banks, Brian & Kyla exchange $1,079,050
Tennant, John & exchange $1,035,256
Tennant, Joseph
Bull Creek Apartments, Ltd. exchange $986,508
SR Center, L.P. exchange $810,248
Brent Corporation exchange $792,904
Miller, Ron & Nye exchange $756,598
Roberson, Rick exchange $637,300
Points West Holdings, Inc. exchange $632,927
Hansen, Martin & Dena exchange $611,291
Arnegards, LLC exchange $600,907
Home Valley Bank exchange $547,936
Pelton, Monroe & Sharon exchange $517,558
Manuel, Bert exchange $512,231
Creer, Ryan & Ruth exchange $500,945
Tenneson Engineering exchange $492,455
The petition was signed by Mark A. Neuman, president of the
company.
TENNECO INC: Fitch Downgrades Issuer Default Rating to 'B+'
-----------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Ratings of
Tenneco, ArvinMeritor and American Axle as:
-- American Axle to 'B-' from 'B';
-- ArvinMeritor to 'B-' from 'B';
-- Tenneco to 'B+' from 'BB-'.
All three companies are expected to remain on Rating Watch
Negative until the availability of longer-term federal assistance
for General Motors is clarified. In the event of a bankruptcy of
General Motors, further rating actions are likely as detailed in
Fitch's press release dated Dec. 11, 2008. The rating actions
incorporate a rapidly deteriorating production forecast for key
European markets, as well as further global production cutbacks.
The federal assistance plan for General Motors and Chrysler is a
positive for the entire supply chain, solidifying production and
the continued extension of trade credit into the first quarter of
2009. Although the plan forestalls the threat of immediate
bankruptcy, Fitch views it as a temporary measure that does not
materially improve the companies' potential for long-term
viability. Fitch expects that last week's agreement will be
significantly restructured and clarified in 2009 under a new
administration and a new Congress. The short timeframe of the
current agreement, the complexity of several components and the
non-binding nature of the agreement provide significant room for
definition or alteration.
Fitch's current ratings assume that any modifications to the
current agreement will, at a minimum, ensure General Motors'
continued operation through 2009. Although auto suppliers were
included in the agreement as a stakeholder targeted for further
concessions, Fitch does not believe that suppliers will be singled
out for concessions beyond the loss of production volumes.
Under any scenario, suppliers will suffer from very deep North
American production cuts to be taken by all U.S. manufacturers in
the first half of 2009, a severe downturn expected in European
passenger car and commercial truck production in the fourth
quarter of 2008 and full-year 2009, the impact of the credit
crisis on the availability of customer financing, and the
deterioration in global economic conditions.
Fitch expects that U.S. industry sales will fall 11% in 2009, from
weak 2008 levels. Reported revenues for Tenneco and ArvinMeritor
will also be affected by the strengthening of the dollar, in a
reversal of year-to-date trends. Potential positives include
commodity price deflation which should provide some margin
benefit, and the effect of lower gas prices and potentially higher
infrastructure spending on the critical pickup truck segment.
Federal programs to boost the availability of retail financing
will be a key in moderating volume declines in 2009.
-- ArvinMeritor: The downgrade of ArvinMeritor is based on the
severe weakening of commercial truck demand in Europe that is
expected to occur in 2009, expectations of continued weakness
in already-weak commercial vehicle U.S. demand from depressed
2008 levels, and financial stress among ArvinMeritor's
customers in this segment. ArvinMeritor receives approximately
2/3 of its revenue from its commercial vehicle systems group.
In addition, ArvinMeritor's light vehicle systems segment is
expected to experience operating losses in 2009 due to severe
production cutbacks in the U.S. and a steep decline in global
production. ArvinMeritor has been unable to divest its light-
vehicle systems operations, which are expected to produce
operating losses and a deteriorating competitive position
through 2009 given the low margins in the business and the
sharp drop in near-term global production. Fitch does not
believe that current industry prospects will allow a sale of
these operations to be completed without material costs to the
company, indicating that with or without the sale, the light-
vehicle systems group will exacerbate balance sheet and
liquidity deterioration in 2009.
ArvinMeritor has shown progress in its restructuring efforts,
but the decline in global demand and revenues will outstrip
restructuring benefits in 2009. Capital expenditures remain
at low levels versus the industry, providing little room for
further reductions.
Fitch expects that operating losses and restructuring costs
will produce negative cash flows in 2009. ArvinMeritor
recently renegotiated its bank agreement, transitioning to a
senior secured leverage test, which provides some room to
absorb expected deterioration in its 2009 operating
performance. However, this covenant tightens from a current
level of 2.5 times (x) to 2.0x at the end of June 30, 2009,
and could be at some risk given the steep decline expected in
European commercial truck volumes in 2009 and the continued
deterioration in the company's light vehicle segment.
ArvinMeritor currently has substantial availability under its
revolving credit facility, and Fitch forecasts that additional
drawings will be required in 2009, as other access to capital
is limited. ArvinMeritor is also reliant on short-term
receivables securitization facilities, the majority of which
have recently been extended into late 2009, but the
deteriorating quality of receivables or the unwillingness of
banks to offer these facilities could cause the company to
migrate borrowings to its revolving credit facilities, thereby
utilizing a substantial portion of available liquidity.
At Sept. 30, 2008, ArvinMeritor had $521 million outstanding
under receivable securitization facilities. Maturities in the
company's fiscal 2009 (ending Sept. 30) total $254 million.
Long-term debt maturities in 2009 and 2010 are minimal.
-- Tenneco: Revenues and operating cash flows are expected to
decline steeply in the fourth quarter of 2008 and into 2009
due to continuing production cuts on Tenneco's key U.S.
platforms and a material decline in European production
through 2009. Third-quarter results showed the severe effects
on profitability resulting from the cutbacks in U.S.
production, and the next several quarters are expected to show
a similar pattern in Europe. Europe accounted for
approximately 48% of YTD revenues, but 68% of YTD operating
earnings. In addition, Tenneco has suffered from a roughly
45% peak-to-trough decline in U.S. pickup truck sales, with
U.S. pickup trucks representing approximately 20% of 2007
revenues.
Despite flexibility in its cost structure and intermediate-
term growth opportunities, the deep downturn in 2009 will
result in negative cash flows and a modestly deteriorating
balance sheet. Tenneco has requested a covenant waiver on its
bank agreement for the fourth quarter of 2008, and will
require further relief given the tightening covenants in 2009.
Fitch expects that Tenneco's adequate asset coverage,
diversified product and customer mix, and the company's growth
opportunities will allow the company to maintain the size of
its existing facility, and that adequate liquidity will be
retained through the trough of the cycle. Net debt in 2009 is
expected to rise modestly due to operating losses and
restructuring costs. Maturities in 2009 are approximately $21
million. Recovery Ratings on Tenneco show full recovery for
the company's senior secured revolving credit and term loan
lenders, with minimal recoveries remaining for unsecured and
subordinated lenders.
Capital expenditures and a modest level of recent acquisition
activity are likely to be curtailed, but a healthy level of
new business will require continued investment. Tenneco is
relatively unique in the industry by demonstrating continuous
improvement in leverage statistics into 2008, but the deep
cyclical downturn in volumes will outpace the company's
ability to ratchet down its costs structure. The company's
position in emission technologies and diversified customer
base position it well for an eventual turn in the cycle.
-- American Axle: American Axle's short-term results remain
dependent on the U.S. operations of GM (approximately 78% of
2008 YTD revenues) and Chrysler (12%). Although federal
assistance is expected to keep General Motors in operation
through 2009, the situation is much less certain for Chrysler.
Federal assistance will, however, provide Chrysler with some
time to determine its future and those of its assets -- and
the Dodge Ram franchise and assets are among the most viable
of these assets.
American Axle recently renegotiated its bank agreement on a
secured basis, providing more room under its financial
covenants. Given the very steep cuts in GM and Chrysler's
first-quarter production, plus a tightening of American Axle's
senior secured leverage covenants in the second half of 2009,
it is uncertain whether American Axle will be able to remain
compliant. Fitch expects that pickup truck sales are
approaching replacement demand levels, indicating that risks
of a further step-down in volumes may be limited. However,
continued weakness in the U.S. housing market and the impact
of the credit crisis on the availability of retail financing
will continue to inhibit a rebound. The impact of new
infrastructure spending programs could also accelerate a
recovery in the latter part of 2009. American Axle has a
healthy book of global new business that will become more
material in the second half of 2009, but volume expectations
have been moderated.
The company has made dramatic improvements to its fixed cost
structure, which will also position the company well as
volumes recover from trough levels, but liquidity will be very
constrained and American Axle may require the forbearance of
the banks to realize these benefits. Recovery Ratings are
based on a potential covenant violation, but assume continued
operation by GM. In the event of a GM bankruptcy, uncertainty
over the continued operation of GM would likely result in
substantially reduced recovery values.
Fitch has downgraded these ratings:
American Axle & Manufacturing Holdings, Inc
-- Long-term IDR to 'B-' from 'B'.
American Axle & Manufacturing, Inc.
-- Long-term IDR to 'B-' from 'B';
-- Senior Unsecured to 'CCC/RR6' from 'CCC+/RR6';
-- Senior Secured to 'B+/RR2' from 'BB-/RR2'.
ArvinMeritor
-- IDR to 'B-' from 'B';
-- Senior unsecured to 'B-/RR4' from 'B/RR4';
-- Bank credit facility to 'BB-/RR1' from 'BB/RR1'.
Tenneco, Inc.
-- IDR to 'B+' from 'BB-';
-- Senior unsecured notes to 'B-/RR6' from 'BB-';
-- Subordinated notes to 'CCC+/RR6' from 'B'.
In addition Fitch affirms the following:
Tenneco, Inc.
-- Senior secured bank credit facility affirmed at 'BB+',
assigned a recovery rating of 'RR1'
-- Senior secured notes affirmed at 'BB', assigned a recovery
rating of 'RR2'.
Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from
this site, at all times. Fitch's code of conduct,
confidentiality, conflicts of interest, affiliate firewall,
compliance and other relevant policies and procedures are also
available from the 'Code of Conduct' section of this site.
THACHER PROFFITT: To Wind Down After 160 Years of Service
---------------------------------------------------------
Thacher Proffitt & Wood LLP said a group of roughly 100 of its
attorneys will move effective January 1, 2009, to Sonnenschein
Nath & Rosenthal LLP, with offices in New York, Washington, D.C.,
and 13 other locations in the United States and abroad.
The group departing includes 40 partners from Thacher Proffitt's
Structured Finance, Real Estate, Corporate and Financial
Institutions, and Litigation and Dispute Resolution practice
groups, including the leadership and most prominent members of
those groups.
The announcement follows a six-month long effort by Thacher
Proffitt's Planning Committee to negotiate a full merger with
another law firm. Although many avenues for a merger were
explored, in the current economic environment it became apparent
to the Committee that a merger could not be executed. As a
result, and in light of severe reductions in revenue, it became
clear that Thacher Proffitt would not have the financial resources
to continue business operations in its current form into the new
year.
Sonnenschein expressed great interest in admitting this talented
group of attorneys from Thacher Proffitt, enabling many in these
four practice groups to continue to practice law together, albeit
in a new firm, Thacher Proffitt said in a news statement.
It is anticipated that Thacher Proffitt will discontinue the
practice of law and will begin an orderly dissolution after
December 31, 2008. The partners who are departing for
Sonnenschein will make every effort to make sure that client
service is not interrupted. Thacher Proffitt will continue to
operate for the purpose of winding down its business, including
the collection of all amounts owed by clients.
About Thacher Proffitt
Founded in 1848, Thacher Proffitt -- http://www.tpw.com/--
advises clients domestically and internationally on a range of
matters involving: banking, bankruptcy, compensation and benefits,
corporate and securities, derivatives and structured products,
distressed assets, environmental and green issues, insurance and
reinsurance, international, investment management, litigation and
dispute resolution (including subprime), real estate, secured
commercial lending, structured finance, tax, technology and
intellectual property, and trusts and estates.
TROPICANA ENTERTAINMENT: J.H. Cohn Tapped for Atlantic Sale
-----------------------------------------------------------
The New Jersey Casino Control Commission has extended the deadline
for the sale of Tropicana Casino and Resort of Atlantic City to
January 21, 2009.
The NJ Commission approved on December 10, 2008, the request of
Retired Justice Gary Stein, as state-appointed conservator for
Tropicana Atlantic City, to employ J.H. Cohn as financial
restructuring advisers to assist with the sale of the casino,
CourierPostOnline.com reported.
The New Jersey Supreme Court previously upheld the NJ
Commission's determination that the management of Tropicana
Atlantic lacks the ability to run the casino, which thus lead to
the Tropicana Atlantic license being revoked. The NJ Supreme
Court's decision paved the way for the conservator's efforts to
sell the Casino.
Justice Stein intends to conduct an auction under Section 363 of
the Bankruptcy Code for the sale of the Tropicana Atlantic City.
The sale could be consummated by January 31, 2009, according to
CPO.
In his report to the NJ Commission, Justice Stein said that he
and his firm have been in discussions with interim management at
Tropicana about "how to retain the employees and pay them after
the bankruptcy filing," CPO reported.
Cordish Company has offered $700,000,000 for the Tropicana
Atlantic City. The auction would give other bidders an
opportunity to bid above Cordish Co.'s offer. Otherwise, Cordish
Co. would get the casino, CPO noted.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including January 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VALLEJO CITY: Unions & Calpers Thwart Bid to Reject Contracts
-------------------------------------------------------------
In separate filings with the U.S. Bankruptcy Court for the Eastern
District of California, the California Labor Federation AFL-CIO;
California Public Employees' Retirement System; International
Association of Firefighters, Local 1186; Vallejo Police Officers'
Association; the International Brotherhood of Electrical Workers,
Local 2376; and Official Unsecured Creditors Committee of City of
Vallejo Retirees objected to the city's request to reject its
collective bargaining agreements with unions.
The California Labor Federation complains that rejection or even
severe modification of the memoranda of agreement between the
City of Vallejo and the Unions would completely upset the
California state system of balancing the political interests of
the City and its workers and infringe directly on California's
system to regulate public sector labor relations.
CalPERS, with whom the City will contract for retirement and
health benefits under the CBAs, asserts that to the extent the
proposed rejection seeks to implicitly reject CalPERs' contracts,
the rejection request should be denied. CalPERS points out that
a proposed rejection of its contracts requires a separately
noticed motion and hearing. CalPERS also asks the Court for
judicial notice of its objection.
The Unions complain that rejection of their CBAs is premature and
inappropriate because the CBAs are not currently burdensome as
the City is not honoring them and that rejection will be more
burdensome as it will lead to mandatory re-negotiation and
arbitration of every contract term while the original contract
terms are re-imposed. The City cannot demonstrate that rejection
is favored by a balance of the equities as it has yet to
demonstrate a substantial detriment to other creditors, Laura C.
Roche, Esq., Farella Braun + Martell LLP, in San Francisco,
California, argues for the Unions.
In support of their objection, the Unions submitted a declaration
by Kenneth Akins, principal at a Sacramento, California
consulting firm University Research & Associates, which the
Unions engaged to review and analyze the declarations of Andrew
Belknap of Management Partners, Inc., and verify salary and
benefits data. According to Mr. Akins, the data contained in
certain reports from the City disclosed total cost of longevity
is $321,181 annually for the Vallejo Police Officer's Association
bargaining unit, which is 2.58% of top step base salary, in
contrast with the theoretical maximum of "up to 10%" as reflected
in those reports.
The Retirees Committee maintains that state laws on collective
bargaining and benefits continue to apply despite the City's
bankruptcy filing, and that the City cannot seek to reject the
CBAs and impose terms and conditions of employment without
following state law after rejection.
The Unions object to the declarations filed by (ii) Susan Mayer,
the Debtor's assistant finance director, (ii) Craig Whittom, the
Debtor's City Manager, and (iii) Mr. Belknap.
The Unions complain that Ms. Mayer's declaration is speculative
and unfounded, pointing out that she has no factual support for
her assertions that by the end of fiscal year June 30, 2008, the
City's General Fund will be completely depleted, that the General
Fund will operate at a $17 million deficit in the fiscal year
2008-2009 and that it will end with a negative cash balance in
each month of the fiscal year.
The Unions also refute Mr. Whittom's declaration, which disclosed
that the current CBAs are effective through June 30, 2010 and
absent modification, the City would be obligated to provide the
compensation and staffing called for in the CBAs through the end
of the 2009-2010 fiscal year.
The Unions, referring to Mr. Belknap's statement that using
professional judgment, he "considered all cities that lie within
a 30-mile radius of Vallejo, which have population between 58,000
and 500,000, and where 10 or more of Vallejo's employees reside,"
argue that the statement is impermissibly vague and speculative.
The Unions, accordingly, ask the Court to strike out those
portions and certain other sections in the declarations.
Copies of the Mayer, Whittom and Belknap Declarations are
available for free at:
* http://bankrupt.com/misc/MayerDeclaration.pdf
* http://bankrupt.com/misc/WhittomDeclaration.pdf
* http://bankrupt.com/misc/BelknapDeclaration.pdf
The Retirees Committee maintain that state laws on collective
bargaining and benefits continue to apply despite the City's
bankruptcy filing, and that the City cannot seek to reject the
CBAs and impose terms and conditions of employment without
following state law after rejection. The Court, pursuant to a
stipulation between the Retirees Committee and the Debtor,
extended the Committee's objection deadline.
About the City of Vallejo
Vallejo -- http://www.ci.vallejo.ca.us/GovSite-- is a city in
Solano County. As of the 2000 census, the city had a total
population of 116,760. It is located in the San Francisco Bay
Area on the northern shore of San Pablo Bay.
The City is a charter city organized and exercising governmental
functions under its charter and the laws and constitution of the
state. Its governing body is its City Council.
The City filed for protection under Chapter 9 of the U.S.
Bankruptcy Code on May 23, 2008 (Bankr. E.D. Calif. Case No.
08-26813). Marc A. Levinson, Esq., and Norman C. Hile, Esq., at
Orrick, Herrington & Sutcliffe LLP in Sacramento, California,
represent the City.
According to Vallejo's comprehensive annual report for the year
ended June 30, 2007, the city has $983 million in assets and
$358 million in debts. (Vallejo Bankruptcy News; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
VERASUN ENERGY: Seeks Financing for Janesville Plant
---------------------------------------------------
At the behest of VeraSun Energy Corp. and its affiliates, the U.S.
Bankruptcy Court for the District of Delaware gave Debtor VeraSun
Janesville, LLC, permission to obtain $500,000 on an interim basis
under a revolving credit facility from AgStar Financial Services
PCA for their ethanol production facility in Janesville,
Minnesota.
Since obtaining the Court's approval to use their lenders' cash
collateral and obtain financing to fund their Chapter 11 cases,
the Debtors have been engaged in talks with AgStar regarding a
financing that that would allow them to maintain necessary
property insurance and preserve going concern value of the
collateral at their Janesville facility.
The Janesville Facility, Mark S. Chehi, Esq., at Skadden Arps
Slate Meagher & Flom LLP, in Wilmington, Delaware, says, is still
partially complete but the Debtors believe that the Janesville
Financing is sufficient to preserve the collateral value through
January 15, 2008. Prior to that date, consistent with other
AgStar financings, the Debtors hope and intend to be back before
the Court seeking approval for financing on a more permanent
basis.
The DIP Facility, which will mature on January 15, 2009, will be
used in accordance with a Court-approved nine-week budget,
available for free at:
http://bankrupt.com/misc/JanesvilleFinancingBudget.pdf
Mr. Chehi tells the Court that the Debtors were unable to obtain
adequate postpetition financing in the form of unsecured credit
or unsecured debt with an administrative priority. He notes that
the circumstances of the Chapter 11 cases instead require the
Debtors to obtain financing under Sections 346(c) and (d) of the
Bankruptcy Code.
The Debtors will grant AgStar a first priority perfected security
interest in all of the real and personal property of Janesville
Facility, provided that the liens and security interests will not
extend to causes of action under Chapter 5 or their proceeds.
The Facility is guaranteed by Debtor US BioEnergy Corporation.
The DIP Loans will bear interest at the LIBOR Rate plus 700 basis
points. The Borrower will pay AgStar a fee equal to 1% of the
aggregate Postpetition Lien Commitment. The Borrower will also
reimburse AgStar for all its reasonable costs and expenses.
Mr. Chehi contends that the proposed Janesville Financing is
required to preserve and maintain the Debtors' going concern
value of the Janesville Facility and is, therefore, in the best
interests of the Debtors. In addition, he says that the
Janesville Financing is necessary to provide working capital for
the Debtors to continue to operate the Janesville Facility in a
"hot-idle" state.
In exchange for the Debtors' use of the Janesville Prepetition
Collateral, including Cash Collateral, and its priming of the
Janesville Prepetition Lenders' liens, the Debtors propose to
provide the Janesville Prepetition Lenders with adequate
protection.
Mr. Chehi relates that the adequate protection proposed by the
Debtors includes replacement liens and claims and the resultant
increase in value of Janesville Prepetition Lenders' interests in
the Janesville Prepetition Collateral on account of preserving
the going concern of the collateral's value. He submits that the
proposed adequate protection package is more than sufficient to
adequately protect the Janesville Prepetition Lenders against the
risk of any diminution in value of their interest in the
Janesville Prepetition Collateral during the Chapter 11 Cases.
The specific terms of the Janesville Financing are set forth in a
draft term sheet, available for free at:
http://bankrupt.com/misc/VeraSunJanesvilleTermSheet.pdf
A final hearing on the Debtors' request will be held by the Court
on January 8, 2009. Objections are due December 30, 2008.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- is a producer
and marketer of ethanol and distillers grains. Founded in 2001,
the company has a fleet of 16 production facilities in eight
states, with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VERASUN ENERGY: Seeks to Make Interest Payments to Noteholders
--------------------------------------------------------------
VeraSun Energy Corp. and its affiliated debtors seek permission
from the U.S. Bankruptcy Court for the District of Delaware to
make adequate protection payments, in the form of interest
payments, to certain holders of their notes.
Pursuant to an indenture, dated December 21, 2005, among VeraSun
Energy Corporation and Wells Fargo Bank, N.A., as Indenture
Trustee, VeraSun issued $210 million in aggregate principal
amount 9-7/8% Senior Secured Notes due 2012. Under the
Indenture, interest payments on the principal amount of the 2012
Senior Secured Notes must be paid semi-annually on June 15 and
December 15 to each holder of record as of the immediately
preceding June 1 and December 1.
On December 3, 2008, the Court gave final approval for VeraSun
and certain of its subsidiaries, certain of the Noteholders, and
Wilmington Trust Company as Administrative Agent, to enter into a
Priming Superpriority DIP Agreement, which provides for a
$196.6 million debtor-in-possession financing facility. The VSE
DIP Financing Order approved a combination of new financing and
$102.9 million of "rollup" financing, which was used to repurchase
certain 2012 Senior Secured Notes from the Secured DIP
Noteholders.
On December 11, 2008, in accordance with the VSE DIP Credit
Agreement, the Secured DIP Noteholders received an interest
payment on the 2012 Senior Secured Notes in the aggregate amount
of approximately $4.9 million. The Debtors have delayed making
the December 15, 2008, cash interest payment pending resolution
of certain issues related to adequate protection and interest
payments.
By making the interest payments to certain Noteholders, the
Debtors avoid the situation wherein certain Noteholders will
receive an adequate protection cash interest payment that is
duplicative of the interest payment that certain Noteholders have
already received in their capacity as Secured DIP Noteholders.
The Debtors ask permission to make, and Wells Fargo and the
Depository Trust Company to process, adequate protection cash
interest payments only on account of that portion of the 2012
Senior Secured Notes that was not "rolled" in connection with the
VSE DIP Financing.
The Debtors, according to Davis Lee Wright, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, do not
intend to make, and the Secured DIP Noteholders do not expect to
receive, an adequate protection cash interest payment that is
duplicative of the DIP Interest Payment.
The request is necessary to remedy an unforeseen issue with
respect to the implementation of the "roll-up" portion of the
debtor-in-possession financing at the VeraSun silo, Mr. Wright
tells the Court. Specifically, the Debtors seek to ensure that
adequate protection cash interest payments are made only in
connection with the "non-rolled up" portion of the 2012 Senior
Secured Notes.
The Court will convene a hearing on January 8, 2009, to consider
the Debtors' request. Objections are due December 30, 2008.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- is a producer
and marketer of ethanol and distillers grains. Founded in 2001,
the company has a fleet of 16 production facilities in eight
states, with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VERASUN ENERGY: Seeks Approval of Shell Trading Customer Pact
-------------------------------------------------------------
VeraSun Energy Corp. and its affiliated debtors seek approval from
the U.S. Bankruptcy Court for the District of Delaware of their
Memorandum of Understanding dated Nov. 26, 2008, with Shell
Trading (US) Company. The Debtors also seek to extend the terms
and assume a related customer contract.
Davis Lee Wright, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Wilmington, Delaware, tells the Court that STUSCO is the
Debtors' largest ethanol customer and a key customer for the
continuation and preservation of the Debtors' business. STUSCO
purchases ethanol from Debtor VeraSun Marketing, LLC, under
various confirmations pursuant to the General Terms and
Conditions for the Sale and Purchase of Refined Products.
The Debtors, Mr. Wright says, have recently completed
negotiations with STUSCO regarding the assumption of and
modifications to the Prepetition Customer Contract. These
changes include, but are not limited to:
-- an increase of volumes of ethanol purchased and additional
delivery locations to STUSCO for the 2009 period as
reflected in 2009 confirmations between the parties;
-- STUSCO's agreement to a provision, which permits the
Debtors to terminate the Prepetition Customer Contract
under certain conditions, without penalty; and
-- STUSCO's agreement not to exercise its termination,
liquidation and related rights as a forward contract
merchant with respect to the Prepetition Customer Contract,
while providing flexibility to the Debtors in assuming the
Prepetition Customer Contract and curing prior defaults.
These changes are important to Debtors' ongoing business
operations, Mr. Wright contends. Maintaining a positive
relationship with STUSCO is absolutely critical to the Debtors'
long-term success, both for the duration of the bankruptcy cases
and maintaining the value of the business as a going concern.
While the Debtors have numerous important relationships with
customers, suppliers and other stakeholders, the relationship
with STUSCO is uniquely critical to ensuring the Debtors' ability
to regain financial strength, he states.
The Debtors entered into the MOU to memorialize their agreement
with STUSCO as to the assumption and modification of the
Prepetition Customer Contract and as to the resolution of the
$10,090,610 in outstanding invoices not paid to the Debtors by
STUSCO on account of credit memos issued by the Debtors totaling
$9,168,945 for October 2008 deliveries under the Prepetition
Customer Contract. The Credit Memo Amount consists of
prepetition amounts owed by the Debtors to STUSCO for the
difference between the provisional estimated price STUSCO paid
and the true price of the ethanol.
STUSCO, Mr. Wright relates, has taken the position that in the
absence of the agreement reflected in the MOU, it could recoup
and setoff the Credit Memo Amount against the Withholding and
otherwise exercise its rights as a forward contract merchant
under the Bankruptcy Code. The Debtors reserve the right to
contest STUSCO's arguments.
As part of the agreement reflected in the MOU, STUSCO agreed to
wire $5 million to the Debtors, shortly after the MOU was
executed, to reduce the Withholding to $5,090,610 on the terms
and conditions set forth in the MOU. In addition, as part of the
MOU, the Debtors agreed to request that the Court enter an order,
pursuant to Section 365(a) of the Bankruptcy Code, authorizing
the Debtors to assume the Prepetition Customer Contract. To the
extent that the Assumption Order is not entered by January 10,
2009, the Debtors are obligated to return the $5 million to
STUSCO, Mr. Wright says.
STUSCO also agreed that should the Court enter the Assumption
Order, STUSCO would thereafter pay $921,665 to the Debtors by
wire transfer, which payment will reduce the Withholding amount
to $4,168,945.
As a result of the Assumption Order, the Debtors will need to
cure all defaults under the Assumed Customer Contract and
consequently will owe STUSCO a cure payment under Section 365 in
the amount of $9,168,945 based on the Credit Memo Amount.
Under the MOU the parties agree that upon approval of the
Assumption Order, STUSCO may retain the $4,168,945 of the Credit
Memo Amount as a partial Cure Payment thereby reducing the
Withholding amount to zero.
The parties further agree that the Debtors will pay the remaining
$5 million of the Cure Payment over a three month period by
selling ethanol to STUSCO at reduced prices. Specifically, the
Debtors will sell ethanol to STUSCO with an additional price
reduction of 8.3 cents per gallon as compared to the price
established in accordance with the specific terms of the
Prepetition Customer Contract until the time the Cure Payment is
paid in full. However, if the Cure Payment has not been paid in
full within three months, the Debtors will pay any remaining
amount to STUSCO by wire transfer in immediately available funds.
The reduction in price for ethanol is to begin effective on
January 1, 2009.
The MOU also provides that the Debtors may terminate the Assumed
Customer Contract, without penalty or damages, upon 10 days'
written notice in the event of a sale or liquidation of its
business or if it otherwise substantially ceases operations. If
the Debtors terminate the Assumed Customer Contract, the Debtors
must pay the remaining outstanding Cure Payment to STUSCO and any
other amounts due STUSCO under the Assumed Customer Contract on
the effective date of termination.
Finally, the MOU provides that the Debtors may assign the Assumed
Customer Contract provided that (i) the Debtors will be required
to pay by wire transfer the value of the remaining outstanding
Cure Payment or Credit Memo Amount to STUSCO and any and all
other amounts due STUSCO under the Assumed Customer Contract on
the effective date of assignment, and (ii) STUSCO receives
adequate assurances of future performance of the Assumed Customer
Contract by the assignee.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- is a producer
and marketer of ethanol and distillers grains. Founded in 2001,
the company has a fleet of 16 production facilities in eight
states, with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
VERSACOLD INTERNATIONAL: Moody's Junks Corporate Credit Rating
--------------------------------------------------------------
Moody's Investors Service has downgraded Versacold International
Corporation's (formerly Eimskip Holdings Inc.) corporate family
rating and probability of default rating to Caa1 from B3 to
recognize incremental near term liquidity pressures that have
developed at Versacold. In conjunction with the rating action,
Versacold's first lien senior secured rating was lowered to B2
from B1 and its second lien senior secured rating was lowered to
Caa2 from Caa1. All ratings were placed under review for further
possible downgrade.
Downgrades:
Issuer: Versacold International Corporation
-- Corporate Family Rating, Downgraded to Caa1 from B3
-- Probability of Default Rating, Downgraded to Caa1 from B3
-- First Lien Senior Secured Bank Credit Facility, Downgraded to
B2 (LGD2, 24%) from B1 (LGD 2, 25%)
-- Second Lien Senior Secured Bank Credit Facility, Downgraded
to Caa2 (LGD4, 68%) from Caa1 (LGD4, 68%)
Outlook Actions:
Issuer: Versacold International Corporation
-- Outlook, Changed To Rating Under Review From Negative
The rating action highlights Moody's view that incremental
pressures have developed on Versacold's liquidity position since
the company's outlook was changed to negative in September 2008.
Specifically, time has advanced on the February 28, 2009 maturity
date of a $28 million secured term loan at Versacold's subsidiary,
Versacold Logistics Canada Inc. (formerly Eimskip Atlas Canada
Inc.), and credit markets remain challenging. Moreover, Moody's
perceives there to be limited headroom under one of VLCI's bank
maintenance covenants. Moody's notes that VLCI is an unrestricted
subsidiary within Versacold's banking group and VLCI's debt is
non-recourse to Versacold. However should VLCI be unable to
obtain relief under its own liquidity pressures, Versacold's
lenders would have the option to call a default under cross
default language of the agreements.
Further downward rating movement has been contained at this time
by Moody's view that Versacold's operations are performing in line
with previous expectations. Moreover, the company's leading
market position within the public refrigeration warehouse business
and its integral nature with a diverse group of customers is
likely to enable its cash flow streams to remain slightly positive
through the economic cycle. This should modestly improve access
under its heavily used revolver and enable the company to meet
step-downs under financial covenants. The ratings will
nonetheless be reviewed for possible downgrade, given the
potential that external events may stress Versacold's liquidity
position within a relatively short time period. The review will
focus on the ability for Versacold and VLCI to satisfactorily
address their aggregate liquidity needs.
The rating continues to consider that Versacold's ultimate parent,
Hf. Eimskipafelag Islands is actively seeking to divest the
company to ease its own leverage and liquidity constraints. HFEI
recently announced that it expects to complete the sale of its
North American assets in early 2009, although the difficult credit
markets and economic environment makes this timing uncertain, in
Moody's opinion. The review will also consider the implications
that HFEI's challenging financial position or the sale of its
North American operations may have on Versacold's debt
obligations.
Moody's last rating action on Versacold was to change the rating
outlook to negative from positive on September 29, 2008 in
recognition of the liquidity pressures at VLCI and potential event
risks arising from HFEI's disclosure that it would seek to divest
the company.
Versacold International Corporation is headquartered in Canada and
is a leading supplier of temperature controlled warehousing and
logistic services to food producers, processors, as well as
wholesale and retail distributors. Annual revenues are
approximately C$1.2 billion.
VISTEON CORP: Fitch Downgrades Issuer Default Rating to 'CC'
------------------------------------------------------------
Fitch Ratings has downgraded Visteon's Issuer Default Rating to
'CC' from 'CCC', indicating that a default is probable. The
rating remains on Rating Watch Negative.
The downgrade reflects the steepening downturn in global auto
production over the near term, Fitch's expectation of continued
heavy negative cash flows at Visteon through 2009, declining
liquidity and lack of access to capital. The lack of financial
covenants in Visteon's bank agreement has forestalled default, but
liquidity could reach minimum required operating levels in 2009.
Visteon's next significant maturity is in 2010, which is likely to
require a distressed debt exchange if the company is not forced to
restructure its liabilities prior to that time.
Although Visteon has reduced its exposure to Ford's domestic
operations, the company will face steep cuts in global production
in the fourth quarter of 2008 and further double-digit production
cuts well into 2009. Revenue declines at Visteon are expected to
far outpace the company's ability to reduce costs or add
replacement revenues, resulting in continuing heavy cash drains.
Visteon obtained 42% of its 2008 YTD revenues from Europe and 29%
from Asia, where steep production cuts will be reflected in
results through 2009. Reported revenues will also be affected by
weaker currency translation, reversing the trend of the first nine
months. Visteon's consolidated and non-consolidated joint-
ventures have benefited reported earnings (although repatriated
cash has been limited), but these operations are expected to show
material declines in operating results as a result of reduced
production volumes in 2009.
Visteon had cash of $1.1 billion at Sept. 30, 2008, although
availability is more limited due to cash held overseas
(approximately 54%), which will also be impacted on a reported
basis by the stronger dollar. With continued operating losses,
additional restructuring costs that will be borne increasingly by
Visteon, and higher employment benefit payments in the fourth
quarter 2008, the company may reach minimum operating requirements
in the next twelve months. Liquidity has been strongly supported
over the last two years by asset sales and a restructuring trust
set up by Ford, but these sources are likely to be materially
reduced going forward. As with all auto suppliers, Visteon is
subject to large intra-period cash swings and is reliant on the
ability and willingness of trade creditors to continue extending
credit. Global uncommitted facilities and receivable
securitization facilities may also become increasingly restrictive
given the credit position of the industry and receivable obligors.
In addition, the challenges of the auto industry and the lack of
DIP financing may prompt an accelerated restructuring of the
company's liabilities.
Recovery ratings reflect the very limited value of Visteon's
domestic assets under a liquidations scenario. Full recovery is
not expected on the revolving credit facility or the term loans,
although the revolving credit agreement is in a moderately better
position due a first lien on more liquid assets. Recoveries are
expected to benefit from the company's consolidated and
unconsolidated joint-ventures, but not sufficiently to cover the
$1.5 billion in term loans. Recoveries may also be limited by a
15% limitation on liens contained in unsecured bond indentures.
Unsecured recoveries are expected to be minimal.
Fitch has downgraded Visteon's IDR and debt ratings:
-- IDR to 'CC' from 'CCC';
-- Senior secured revolving credit facility to 'CCC/RR2' from
'B/RR1';
-- Senior secured term loan to 'CC/RR4' from 'B/RR1'
-- Unsecured notes to 'C/RR6' from 'CC/RR6'.
WEST HAWK: Files for Chapter 11 Bankruptcy to Restructure Debts
---------------------------------------------------------------
West Hawk Energy (USA) LLC, an indirect partially owned subsidiary
of West Hawk Development Corp., sought Chapter 11 protection in
the U.S. Bankruptcy Court for the District of Colorado in order to
implement the restructuring of its indebtedness and permanently
improve its capital structure.
West Hawk Energy said it intends to seek Court approval of the
reorganization plan as soon as possible. It expects business to
continue as usual during the reorganization process and expects to
emerge from Chapter 11 in the summer.
West Hawk Energy assured that the filing does not affect the
its Canadian assets, specifically the British Columbia Groundhog
Coal Project and the reapplication process for the Northwest
Territory Coal Project licenses.
West Hawk Energy has also filed a Demand for Arbitration with the
American Arbitration Association against EnCana Oil and Gas (USA)
Inc. raising claims under the parties Drilling and Development
Agreement dated May 1, 2006. The company has alleged that EnCana
breached the DD&A by making WHE's performance thereunder more
difficult.
On the same date, West Hawk Energy filed an action against EnCana
in the District Court for the City and County of Denver, Colorado
raising various tort and other contract claims against EnCana.
These claims center around allegations that EnCana interfered with
West Hawk Energy relationship with a third party to exploit the
oil and gas interests held by the plaintiffs' in the Piceance
Basin, Colorado.
About West Hawk
West Hawk Energy (USA) LLC -- http://www.westhawkdevelopment.com/
-- provides energy products from a variety of sources. Assets
under development include the figure four natural gas property
located in the Piceance Basin, Colorado, being developed under a
drilling and development agreement; and the Groundhog coal
property located in northwest British Columbia.
WOODSIDE GROUP: 2 Units' Voluntary Chapter 11 Case Summary
----------------------------------------------------------
Debtor-affiliates filing voluntary chapter 11 petitions on
December 19, 2008:
Entity Case No.
------ --------
Woodside Ceramista Village, LLC 08-28168
Woodside Ceramista City, LLC 08-28171
Debtor-affiliates filing voluntary chapter 11 petitions on
March 31, 2008:
Entity Case No.
------ --------
Woodside AMR 91, Inc. 08-13394
Woodside Portofino, Inc. 08-13396
On August 20, 2008, an Ad Hoc Group of Noteholders commenced the
filing of involuntary petitions against 185 affiliates. On
August 20, 2008, JPMorgan Chase Bank, N.A., on behalf of bank
lenders, commenced the filing of certain Joinders in the
Involuntary Petition. On September 16, 2008, the Debtors filed
the Consolidated Answer to Involuntary Petitions and Consent to
Order for Relief; and the U.S. Bankruptcy Court for the Central
District of California entered the Order for Relief Under
Chapter 11. The 185 Debtors' cases are:
Entity Case No.
------ --------
BCD 99, LLC 08-20690
Foxboro 50's, LLC 08-20754
Foxboro Coventry, LLC 08-20755
Foxboro Estates, LLC 08-20756
Foxboro Villages, LLC 08-20757
Ivywood Interior Design, LLC 08-20758
Menifee Woodside, LLC 08-20714
MHA 02, LLC 08-20728
Monterey Woodside, LLC 08-20729
MWG 00, LLC 08-20730
MWL 01, LLC 08-20734
Oquirrh Highlands Condominiums, LLC 08-20759
Pleasant Hill Investments, LC 08-20686
Pleasant Valley Investments, LLC 08-20760
Portola Development Arizona, LLC 08-20763
Portola Development Company, LLC 08-20762
Portola Development Utah, LLC 08-20764
Saratoga Land Development, LLC 08-20765
Sonora HOA Management, LLC 08-20766
Sterling 69, LLC 08-20767
TBB 03, LLC 08-20711
WDS GP, Inc. 08-20768
WDS Holdings, Inc. 08-20688
WGP Group, LLC 08-20770
Woodside 04N, LP 08-20692
Woodside 04S, LP 08-20694
Woodside 05N, LP 08-20699
Woodside 05S, LP 08-20701
Woodside 06N, LP 08-20704
Woodside 07N, LP 08-20706
Woodside 20/25, LLC 08-20772
Woodside Aberdeen, LLC 08-20774
Woodside Allerton, LLC 08-20775
Woodside Amberly, LLC 08-20776
Woodside Amelia Lakes, LLC 08-20777
Woodside AMR 91, LLC 08-20744
Woodside Autumn Ridge, LLC 08-20735
Woodside Avalon Park, LLC 08-20778
Woodside Avalon, LLC 08-20779
Woodside Ballantrae, LLC 08-20780
Woodside Bella Fresca, Inc. 08-20782
Woodside Berkeley, LLC 08-20783
Woodside Bilby Ranch, Inc. 08-21072
Woodside Blue Water Bay, LLC 08-20784
Woodside Bridges at Boulder Creek, LLC 08-20785
Woodside Brookstone, LLC 08-20786
Woodside Buffalo Ridge, LLC 08-20788
Woodside Cambria, LLC 08-20789
Woodside Canyon Creek, LLC 08-20790
Woodside Casa Palermo, LLC 08-20791
Woodside Castleton, LLC 08-20792
Woodside Cedar Creek, LLC 08-20793
Woodside Clarendon Hills, LLC 08-20737
Woodside Clearwater, LLC 08-20794
Woodside Colonial Charles SFD, LLC 08-20795
Woodside Colonial Charles Villas, LLC 08-20796
Woodside Communities - WDC, LLC 08-20797
Woodside Communities of North Florida, LLC 08-20798
Woodside Cortez Heights, LLC 08-20799
Woodside Daytona Land, LLC 08-20800
Woodside Eagle Marsh North, LLC 08-20801
Woodside Eagle Marsh South, LLC 08-20802
Woodside Encore at Sunset Ranch, LLC 08-20803
Woodside Exeter South, LLC 08-20804
Woodside Farmington Hollow Cottages, LLC 08-20805
Woodside Farmington Hollow Estates, LLC 08-20806
Woodside Farmington Meadows, LLC 08-20807
Woodside Fieldstone Ranch, LLC 08-20808
Woodside Fieldstone, LLC 08-20809
Woodside Finisterre, LLC 08-20810
Woodside Foothills Sunrise, LLC 08-20811
Woodside Foothills West, LLC 08-20812
Woodside Garden Gate, LLC 08-20813
Woodside Glenmere, Inc. 08-20736
Woodside Grande Premier, LLC 08-20814
Woodside Greyhawk, LLC 08-20815
Woodside Group, LLC 08-20682
Woodside Grouse Pointe, LLC 08-20816
Woodside Hearthstone, LLC 08-20817
Woodside Heritage Lake 129, Inc. 08-20818
Woodside Heritage Lake 150, Inc. 08-20820
Woodside Heritage Lake 7200, Inc. 08-20821
Woodside Highland Ridge, LLC 08-20825
Woodside Homes Corporation, 08-20827
Woodside Homes of Arizona, Inc. 08-20830
Woodside Homes of California, Inc. 08-20832
Woodside Homes of Central California, Inc. 08-20834
Woodside Homes of Florida, LLC 08-20837
Woodside Homes of Fresno, Inc. 08-20840
Woodside Homes of Minnesota, Inc. 08-20842
Woodside Homes of Nevada, Inc. 08-20843
Woodside Homes of Northern California, Inc. 08-20844
Woodside Homes of Reno, LLC 08-20845
Woodside Homes of South Texas, LLC 08-20846
Woodside Homes of Southeast Florida, LLC 08-20847
Woodside Homes of Southern California, LLC 08-20742
Woodside Homes Sales Corp., 08-20850
Woodside Hunters Creek, LLC 08-20852
Woodside Jackrabbit Estates, LLC 08-20855
Woodside Karston Cove, LLC 08-20861
Woodside Kinder Ranch, LLC 08-20864
Woodside Knoll Creek, LLC 08-20866
Woodside Land Holdings, LLC 08-20868
Woodside Las Colinas, LLC 08-20869
Woodside Legacy Oaks, LLC 08-20871
Woodside Legacy, LLC 08-20738
Woodside Madison Colony, LLC 08-20872
Woodside Magma Ranch, LLC 08-20874
Woodside Majestic Oaks, LLC 08-20875
Woodside Meadows of Big Lake, LLC 08-20877
Woodside Menifee 105, Inc. 08-20879
Woodside Montecatini, Inc. 08-21073
Woodside Montrose, Inc. 08-20881
Woodside Murabella, LLC 08-20882
Woodside North MPLS, LLC 08-20883
Woodside Northridge, LLC 08-20885
Woodside Palmilla, LLC 08-20886
Woodside Palomar, LLC 08-20893
Woodside Park Paseo, LLC 08-20895
Woodside Parkview, LLC 08-20899
Woodside Paseo 5000, LLC 08-20746
Woodside Paseo 6000, LLC 08-20748
Woodside Paseo 7200, LLC 08-20750
Woodside Pebble Creek, LLC 08-20901
Woodside Preserve at Boulder Creek, LLC 08-20905
Woodside Provence, LLC 08-20906
Woodside Quail Crossing, LLC 08-20909
Woodside Rio Vista, LLC 08-20912
Woodside Riverwalk Preserve, LLC 08-20915
Woodside Rocking Horse, LLC 08-20916
Woodside Rockwell, LLC 08-20923
Woodside Rocky Pen, LLC 08-20927
Woodside Rogers Ranch, LLC 08-20937
Woodside Rosewood, LLC 08-20939
Woodside Royal Meadows, LLC 08-20940
Woodside S.O., LLC 08-20941
Woodside Scotland Heights, LLC 08-20942
Woodside Sienna, LLC 08-20943
Woodside Solano, LLC 08-20944
Woodside Somerset, LLC 08-20945
Woodside South Brook, LLC 08-20946
Woodside Southern Hills, LLC 08-20947
Woodside Southridge, LLC 08-20948
Woodside Springs at Boulder Creek, LLC 08-20949
Woodside Stonehaven, LLC 08-20950
Woodside Stoneybrook, LLC 08-20951
Woodside Summerwood, LLC 08-20952
Woodside Summit at Foothills Reserve, LLC 08-20953
Woodside Summit at Riverwalk, LLC 08-20954
Woodside Sunrise at Riverwalk, LLC 08-20955
Woodside Sunset Farms, LLC 08-20956
Woodside Talaverde, LLC 08-20958
Woodside Tampa Palms, LLC 08-20959
Woodside Tempe Village, LLC 08-20960
Woodside Texas Holdings, LLC 08-20962
Woodside Texas Land Holdings, LLC 08-20963
Woodside Thurnbeck, LLC 08-20964
Woodside Tierra Verde 301, LLC 08-20965
Woodside Timberlake, LLC 08-20969
Woodside Trails North at Horsemans Park, LLC 08-20972
Woodside Triana, LLC 08-20975
Woodside Trillium, LLC 08-20979
Woodside Trinity Oaks 55, LLC 08-20985
Woodside Trinity Oaks 65, LLC 08-20981
Woodside Tuscan Oaks, LLC 08-20995
Woodside Two Creeks 50, LLC 08-21002
Woodside Two Creeks 65, LLC 08-21007
Woodside Two Creeks Villas, LLC 08-21008
Woodside Valencia, LLC 08-21012
Woodside Via Valencia, LLC 08-21013
Woodside Via Ventura, LLC 08-21016
Woodside Vicinato, LLC 08-21017
Woodside Villa Palazzo, LLC 08-21018
Woodside Villa Palermo, LLC 08-21022
Woodside Vista Montana, LLC 08-20751
Woodside Walden, LLC 08-21024
Woodside Watson 308, LLC 08-21030
Woodside Weston Ranch, LLC 08-20753
Woodside Wildwood, LLC 08-21035
Woodside Willowbrook, LLC 08-21036
Woodside Wolf Creek 121, Inc. 08-21068
Woodside Wolf Creek 126, Inc. 08-21069
Woodside Wolf Creek 133, Inc. 08-21070
Woodside Wolf Creek 138, Inc. 08-21071
Woodside Wolf Creek 77, Inc. 08-21074
The 187 Debtors' cases are jointly administered under In re
Woodside Group, LLC, Case No. 08-20682.
Address: Woodside Group, LLC
39 East Eagleridge Drive, Suite 102
North Salt Lake, UT 84054
Bankruptcy Court: United States Bankruptcy Court
Central District of California (Riverside)
Bankruptcy Judge: Peter Carroll
Debtors' Bankruptcy
Counsel: Jeremy V. Richards, Esq.
Linda F. Cantor, Esq.
Maxim B. Litvak, Esq.
Pachulski Stang Ziehl & Jones LLP
10100 Santa Monica Blvd., 11th Fl.
Los Angeles, CA 90067
Tel: (310) 277-6910
Fax: (310) 201-0760
http://www.pszjlaw.com
Debtors' Claims
Agent: Kurtzman Carson Consultants LLC
P.O. Box 1070
Riverside, CA 92502-1070
Tel: (951) 774-1000
Counsel to the Ad
Hoc Group of
Noteholders: Susy Li, Esq.
Michael A. Sherman, Esq.
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Tel: 213-680-6400
Fax: 213-680-6499
-- and --
Michael J. Reilly, Esq.
Jonathan B. Alter, Esq.
Mark W. Deveno, Esq.
Bingham McCutchen LLP
One State Street
Hartford, CT 06103-3178
Tel: (860) 240-2700
Fax: (860) 240-2800
Counsel for JPMorgan
Chase Bank, N.A. as
Administrative Agent
to Participant
Lenders
-- and --
Proposed counsel to
Official Committee
of Unsecured
Creditors: David L. Gaffney, Esq.
Snell & Wilmer LLP
One Arizona Center
400 E. Van Buren
Phoenix, AZ 85004-2202
Tel: (602) 382-6254
Fax: (602) 382-6070
-- and --
Michael B. Reynolds, Esq.
Eric S. Pezold, Esq.
Snell & Wilmer LLP
600 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Tel: (714) 427-7000
Fax: (714) 427-7799
During 2007, the Woodside Entities generated revenues exceeding
one billion dollars on a consolidated basis. As of December 31,
2007, the Woodside Entities had consolidated assets and
liabilities of approximately $1.5 billion and $1.1 billion. As of
September 16, 2008, the Debtors have approximately $70 million in
cash. The Woodside Entities employ approximately 494 employees.
The Debtors' consolidated list of 20 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
JP Morgan Chase Bank NA bank debt $47,589,186
201 North Central Avenue
14th Floor
Phoenix, AZ 55004
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
Bank of America bank debt $47,589,186
Real Estate Managed Assets
201 E. Washington Street
Phoenix, AZ 85004
Counsel for the Bank Group
Alan H. Martin, Esq.
Sheppard Mullin Richter &
Hampton LLC
650 Town Center Driver
4th Floor
Costa Mesa, CA 92626-1993
Tel: (714) 513-5100
Fax: (714) 513-5130
Alliance Capital Management noteholder debt $40,000,000
Corp.
1345 Avenue of the Americas
39th Floor
New York, NY 10105
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
Metropolitan Life Insurance noteholder debt $40,000,000
Company Investments
10 Park Avenue
PO Box 1902
Morristown, NJ -7962
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
John Hancock Life Insurance noteholder debt $39,250,000
Co.
Attn: Isaac Epps
197 Claredon Street C-2
Boston, MA 02117
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
The Guardian Life Insurance noteholder debt $38,000,000
Company of America
7 Hanover Square
New York, NY 10004,2616
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
Wachovia Bank NA bank debt $35,691,889
Wachovia Capital Markets LLC
Attn: Kathy Harkness
301 South College Street
NC0537
Charlotte, NC 28288
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
ING Investment Management LLC noteholder debt $30,000,000
5780 Powers Ferry Rd. NW
#300
Atlanta, GA 30327-4349
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
Guaranty Bank Corporate bank debt $28,553,511
Lending Headquarters
8333 Douglas Avenue
Dallas, TX 75225
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
Washington Mutual Bank bank debt $28,553,511
Corporate Headquarters
1301 Second Avenue
Seattle, WA 98101
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
US Bank NA bank debt $23,794,593
US Bancorp Center
800 Nicollet Mall
Minneapolis, MN 55402
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
Hare & Co. noteholder debt $20,571,429
c/o The Bank of NY
PO Box 11203
New York, NY 102286
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
Keybank NA bank debt $19,035,674
Corporate Headquarters
127 Public Square
Cleveland, OH 44144
Counsel for the Bank Group
Marc S. Cohen, Esq.
Kaye Scholer LLP
1999 Avenue of the Stars
Ste. 1700
Los Angeles, CA 90067
Tel: (310) 788-1000
Fax: (310) 788-1200
New York Life Insurance Co. noteholder debt $18,500,000
c/o New York Life
Investment Mgmt.
51 Madison Avenue
New York, NY 10010
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
Bank of the West bank debt $16,656,215
Real Estate Managed Asset
Department
3000 Oak Road, Suite 400
Walnut Creek, CA 94597
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
Regions Bank bank debt $16,656,215
Special Assets Department
Mail Stop BH10701B
Attn: Carl M. Ferris
1901 6th Avenue North
Brimingham, AL 35203
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
Metropolitan Life Insurance noteholder debt $12,000,000
Company of Ct.
10 Park Avenue
PO Box 1902
Morristown, NJ 07962
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
Union Bank of California NA bank debt $11,897,296
Special Assets Department
Attn: Joel Steiner
445 South Figueroa Steet
4th Floor
Los Angeles, CA 90071
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
Wells Fargo Bank NA bank debt $11,897,296
Attn: Loan Adjustment Group
MAC U1228-062
299 South Main Street
6th floor
Salt Lake City, UT 84111
Counsel for the Bank Group
Snell & Wellmer LLP
David Sprenthall, Esq. &
Donald Gaffney, Esq.
One Arizona Center
400 East Van Buren
10th Floor
Phoenix, AZ 85004-2202
Tel: (602) 382-6000
Fax: (602) 382-6070
CUNA Mutual Life Insurance noteholder debt $11,250,000
Society
Attn: Managing Director
Investments
5910 Mineral Point Road
Madison, WI 53705
Counsel for the Noteholder
Group
Bingham McCutchen LLP
Michael J. Reilley Esq. &
Mark W. Deveno, Esq.
399 Park Avenue
New York, NY 10022-4689
Tel: (212) 705-7000
Fax: (212) 752-5378
The petition was signed by Loenard K. Arave.
WOODSIDE GROUP: Management Breached Duties, Examiner Finds
----------------------------------------------------------
Paul S. Aronzon, the duly appointed examiner in the bankruptcy
cases of Woodside Group, LLC, and its affiliated debtors, informed
the U.S. Bankruptcy Court for the Central District of California
that the Debtors and their creditors have a cognizable basis for
asserting legal claims against the company's management and
shareholders.
In his report, Mr. Aronzon said the Debtors hold these claims:
1. Breach of fiduciary duty
Mr. Aronzon said management owed fiduciary duties of loyalty, care
and good faith to both the company and -- at some point in time --
its creditors. He said a colorable basis exists for asserting
that management placed the interests of shareholders above the
interests of both the company and its creditors by (a) failing to
consider those interests in decision-making concerning the
conversion of Woodside Group, Inc. from a subchapter S corporation
to a limited liability company on July 25, 2008 -- which triggered
a write down of the company's remaining assets by approximately
$500 million; (b) effecting the conversion without the consent of
the creditors; (c) potentially usurping the corporate opportunity
for the company to utilize in the future the loss in basis
trigered by the conversion; and (d) distributing dividends to
shareholders without analyzing whether the distributions were
permissible or appropriate.
2. Gross negligence
Mr. Aronzon said management employed an informal, "back of the
envelope" process for determining whether to issue dividends and
how much the dividends should be. Management's process for
deciding upon and pursuing the conversion was intentionally done
without disclosure to the creditors, closed to alternative courses
of action, and driven by a focus on obtaining and protecting
significant tax refunds for shareholders.
3. Unjust enrichment
Mr. Aronzon said the conversion triggered losses that will be
allocated to shareholders, and unless unwound, will lead to the
receipt by the shareholders of significant tax refunds. To the
extent that Woodside is shown to have been in default under its
credit agreement or other debt documents at the time the dividends
were distributed, payment of the dividends was improper and the
money should have been retained by the company, he said.
4. Conversion
"The distribution of dividends by Woodside may have been improper
based on a determination of the time at which the Company became
insolvent," according to Mr. Aronzon. "The shareholders may be in
possession of assets (including the actual tax refunds when
received) that have been converted and which are lawfully the
property of the Debtors and/or the Creditors."
5. Intentional fraudulent transfers
According to the report, Woodside did not receive reasonably
equivalent value in exchange for providing shareholders, including
primarily insiders, with dividends in 2006 and 2007.
6. Constructive fraudulent transfers
To the extent that it can be determined that management's
authorization of the dividends occured at times when Woodside was
insolvent, was substantially undercapitalized or was unable to pay
its debts as they came due, or the transfers left Woodside in such
a state, Mr. Aronzon held that the Debtors or an appointed trustee
has a cognizable basis for seeking, under Section 548 of the
Bankruptcy Code or state fraudulent conveyance statutes, to avoid
the dividend payments as constructive fraudulent transfers.
7. Unlawful dividends under Nevada state law
Mr. Aronzon said although Nevada state law permits otherwise
barred payments where the board of directors based those payments
on financial statements, a fair valuation of the company, or any
other reasonable method under the circumstances, management's
process for deciding upon the dividends does not appear to have
been reasonable or adequate, because management failed to engage
in any meaningful analysis of the company's debt obligations or
solvency prior to issuing the dividends.
8. Alter ego liability
To the extent the creditors are unable to satisfy their claims
against the Debtors, Mr. Aronzon said creditors and other
interested parties have a cognizable basis for seeking to pierce
the corporate veil and compel management -- in particular, Ezra
Nilson, who along with certain family trusts owns more than 90% of
Woodside's outstanding shares -- to satisfy their claims. Mr.
Aronzon explained that in light of Mr. Nilson's overwhelming
ownership interest in Woodside, management's disregard for
corporate formalities, the potential that distributions were made
while the company was insolvent and allegations by the creditors -
- albeit not yet investigated by the Examiner -- that the
company's assets were commingled with those of the shareholders,
there exist an indicia of an "alter ego" relationship between
members of management and the company.
Notwithstanding his findings, Mr. Aronzon cautioned that it is
impossible to say whether unwinding the conversion would
ultimately prove to be the best result for the company and the
creditors. He pointed out that numerous unknown factors may
influence the ultimate outcome, including:
-- whether an eventual plan of reorganization involves
creditors taking an equity stake in the company;
-- the corporate form that a reorganized company would take;
-- the fair market valuie of each of the company's assets at
the time of reorganization;
-- whether any of the company's assets are sold at a price
higher than their fair market value at the time of
reorganization; and
-- whether the company can benefit from any exemptions in the
tax laws that would otherwise limit its ability to utilize
tax losses.
Mr. Aronzon suggested that the Court consider whether as a
practical alternative to unwinding the conversion, the Court
should order that the shareholders seek the tax refunds but place
all funds received in a designated escrow account, pending the
outcome of the bankruptcy cases and any related action seeking
damages against the management or shareholders.
Mr. Aronzon is a partner in the firm of Milbank, Tweed, Hadley &
McCloy LLP, and co-head of its Financial Restructuring Group.
About Woodside Group
Based in North Salt Lake, Utah, Woodside Group, LLC, and its
affiliate entities operate one of the nation's largest privately
held homebuilding companies. Woodside Group is the parent company
of multiple subsidiaries and through approximately 185 of those
subsidiaries, is primarily engaged in homebuilding operations in
California, Nevada, Arizona, Utah, Minnesota, Florida, Maryland
and Texas. The operations of the Woodside Group are financed
through Woodside Group's affiliate Pleasant Hill Investments, LC.
Woodside Group also has subsidiaries -- Unrestricted Subsidiaries
-- that are engaged in business activities outside its standard
homebuilding operations. These Subsidiaries purchase land from
third parties, hold real estate, obtain zoning and other
entitlements on longer-term projects, reinsure the Homebuilding
Subsidiaries, invest in joint venture projects with other
homebuilders, perform renovation work on governmental facilities
and sell land to the Homebuilding Subsidiaries at market prices.
Woodside AMR 91, Inc., and Woodside Portofino, Inc., filed
voluntary chapter 11 petitions on March 31, 2008. On August 20,
2008, an Ad Hoc Group of Noteholders commenced the filing of
involuntary petitions against 185 affiliates. On August 20, 2008,
JPMorgan Chase Bank, N.A., on behalf of bank lenders, commenced
the filing of certain Joinders in the Involuntary Petition. On
September 16, 2008, the Debtors filed the Consolidated Answer to
Involuntary Petitions and Consent to Order for Relief; and the
U.S. Bankruptcy Court for the Central District of California
entered the Order for Relief Under Chapter 11. On December 19,
2008, Woodside Ceramista Village, LLC, and Woodside Ceramista
City, LLC, filed for chapter 11.
The Unrestricted Subsidiaries are Liberty Holdings Group, LLC,
Alameda Investments, LLC, JSO Land, LLC, Eagleridge Office Park,
LLC, Wheatland Heritage Oaks, LLC, Hillsborough, LLC, WDS MTG,
LLC, Atherton Construction, LLC, Victory Holdings, LLC, Danville
Land Investments, LLC, Bellvue Holdings, LLC, Walnut Creek
Development, LLC, WSD SE1, LLC, WMI Holdings, LLC and Reliant
Structural Warranty Insurance Company, Inc. The Unrestricted
Subsidiaries are not debtors in bankruptcy proceedings.
The 187 Debtors' cases are jointly administered under In re
Woodside Group, LLC (Bankr. C.D. Ca. Case No. 08-20682). The Hon.
Peter Carroll presides over the cases. Jeremy V. Richards, Esq.,
Linda F. Cantor, Esq., and Maxim B. Litvak, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Los Angeles, California, are the
Debtors' bankruptcy counsel. Kurtzman Carson Consultants LLC is
the Debtors' claims agent.
Susy Li, Esq., and Michael A. Sherman, Esq., at Bingham McCutchen
LLP in Los Angeles, and Michael J. Reilly, Esq., Jonathan B.
Alter, Esq., and Mark W. Deveno, Esq., at Bingham McCutchen in
Hartford, Connecticut, serve as counsel to the Ad Hoc Group of
Noteholders. David L. Gaffney, Esq., at Snell & Wilmer LLP, in
Phoenix, Arizona, and Michael B. Reynolds, Esq., and Eric S.
Pezold, Esq., at Snell & Wilmer in Costa Mesa, California, act as
counsel for JPMorgan Chase Bank, N.A. as Administrative Agent to
Participant Lenders, and as proposed counsel to the Official
Committee of Unsecured Creditors appointed in the cases.
During 2007, the Woodside Entities generated revenues exceeding
one billion dollars on a consolidated basis. As of December 31,
2007, the Woodside Entities had consolidated assets and
liabilities of approximately $1.5 billion and $1.1 billion. As of
September 16, 2008, the Debtors have approximately $70 million in
cash. The Woodside Entities employ approximately 494 employees.
WOODSIDE GROUP: Court Fixes January 31 as Claims Bar Date
---------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
established:
-- January 31, 2009, as the deadline for parties-in-interest
to file proofs of claim in the bankruptcy cases of Woodside
Group, LLC, and its debtor-affiliates;
-- March 14, 2009, as the deadline for governmental entities
to file proofs of claim against the Debtors.
The Bar Date Order was issued at the behest of the Official
Committee of Unsecured Creditors appointed in the Debtors' cases.
Holders of claims against any of the Debtors arising from the
rejection by a Debtor of an executory contract or unexpired lease
must file and serve a proof of claim in the Chapter 11 case of
that Debtor for the claim before 30 days after the date of entry
of the order authorizing rejection, unless the order authorizing
rejection of the executory contract or unexpired lease or another
Court order provides for an earlier date. Holders of claims
arising from the avoidance of a transfer under chapter 5 of the
Bankruptcy Code, must file and serve a proof of claim in the
Chapter 11 case of that Debtor for the claim before 30 days after
the entry of judgment avoiding the transfer.
The Committee is authorized to include Woodside Eagle Ranch 210,
Inc., a Delaware corporation, and Woodside Waterford Estates,
Inc., a California corporation, in the Bar Date Notice provided
that the Debtors file the bankruptcy petitions for those entities
prior to the time that the Bar Date Notice.
About Woodside Group
Based in North Salt Lake, Utah, Woodside Group, LLC, and its
affiliate entities operate one of the nation's largest privately
held homebuilding companies. Woodside Group is the parent company
of multiple subsidiaries and through approximately 185 of those
subsidiaries, is primarily engaged in homebuilding operations in
California, Nevada, Arizona, Utah, Minnesota, Florida, Maryland
and Texas. The operations of the Woodside Group are financed
through Woodside Group's affiliate Pleasant Hill Investments, LC.
Woodside Group also has subsidiaries -- Unrestricted Subsidiaries
-- that are engaged in business activities outside its standard
homebuilding operations. These Subsidiaries purchase land from
third parties, hold real estate, obtain zoning and other
entitlements on longer-term projects, reinsure the Homebuilding
Subsidiaries, invest in joint venture projects with other
homebuilders, perform renovation work on governmental facilities
and sell land to the Homebuilding Subsidiaries at market prices.
Woodside AMR 91, Inc., and Woodside Portofino, Inc., filed
voluntary chapter 11 petitions on March 31, 2008. On August 20,
2008, an Ad Hoc Group of Noteholders commenced the filing of
involuntary petitions against 185 affiliates. On August 20, 2008,
JPMorgan Chase Bank, N.A., on behalf of bank lenders, commenced
the filing of certain Joinders in the Involuntary Petition. On
September 16, 2008, the Debtors filed the Consolidated Answer to
Involuntary Petitions and Consent to Order for Relief; and the
U.S. Bankruptcy Court for the Central District of California
entered the Order for Relief Under Chapter 11. On December 19,
2008, Woodside Ceramista Village, LLC, and Woodside Ceramista
City, LLC, filed for chapter 11.
The Unrestricted Subsidiaries are Liberty Holdings Group, LLC,
Alameda Investments, LLC, JSO Land, LLC, Eagleridge Office Park,
LLC, Wheatland Heritage Oaks, LLC, Hillsborough, LLC, WDS MTG,
LLC, Atherton Construction, LLC, Victory Holdings, LLC, Danville
Land Investments, LLC, Bellvue Holdings, LLC, Walnut Creek
Development, LLC, WSD SE1, LLC, WMI Holdings, LLC and Reliant
Structural Warranty Insurance Company, Inc. The Unrestricted
Subsidiaries are not debtors in bankruptcy proceedings.
The 187 Debtors' cases are jointly administered under In re
Woodside Group, LLC (Bankr. C.D. Ca. Case No. 08-20682). The Hon.
Peter Carroll presides over the cases. Jeremy V. Richards, Esq.,
Linda F. Cantor, Esq., and Maxim B. Litvak, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Los Angeles, California, are the
Debtors' bankruptcy counsel. Kurtzman Carson Consultants LLC is
the Debtors' claims agent.
Susy Li, Esq., and Michael A. Sherman, Esq., at Bingham McCutchen
LLP in Los Angeles, and Michael J. Reilly, Esq., Jonathan B.
Alter, Esq., and Mark W. Deveno, Esq., at Bingham McCutchen in
Hartford, Connecticut, serve as counsel to the Ad Hoc Group of
Noteholders. David L. Gaffney, Esq., at Snell & Wilmer LLP, in
Phoenix, Arizona, and Michael B. Reynolds, Esq., and Eric S.
Pezold, Esq., at Snell & Wilmer in Costa Mesa, California, act as
counsel for JPMorgan Chase Bank, N.A. as Administrative Agent to
Participant Lenders, and as proposed counsel to the Official
Committee of Unsecured Creditors appointed in the cases.
During 2007, the Woodside Entities generated revenues exceeding
one billion dollars on a consolidated basis. As of December 31,
2007, the Woodside Entities had consolidated assets and
liabilities of approximately $1.5 billion and $1.1 billion. As of
September 16, 2008, the Debtors have approximately $70 million in
cash. The Woodside Entities employ approximately 494 employees.
WP EVENFLO: Moody's Reviews Low-B Ratings for Possible Cuts
-----------------------------------------------------------
Added text to first paragraph, 2nd sentence: made before
January 23, 2007. Revised release follows.
Moody's Investors Service placed WP Evenflo Holdings, Inc. on
review for possible downgrade given concerns regarding the
deterioration in the economic environment and its impact on an
already challenging liquidity situation at the company. A modest
expense associated with the recently announced recall of the
company's Majestic High Chairs made before January 23, 2007 is
likely to only exacerbate a difficult circumstance. Evenflo has
very limited flexibility under its financial maintenance
covenants. The review will focus on the company's ability to meet
its covenants or receive relief through bank amendments or an
equity cure.
These ratings are under review:
-- B3 Corporate family rating
-- B3 Probability of default rating
-- B1 $40 million senior secured revolving credit facility
(LGD3, 33%)
-- B1 $120 million first lien term loan (LGD3, 33%)
-- Caa1 $45 million second lien term loan (LGD5, 77%)
-- LGD assessments are not under review.
The current B3 rating incorporates Evenflo's highly leveraged
profile, weak interest coverage, and limited liquidity. Material
qualitative risks include substantial customer concentration, the
mature nature of the juvenile/infant product category, competition
from well capitalized companies, and its modest operating margins.
Moreover, Evenflo has not achieved projections provided to Moody's
at the time of the leveraged buy out and the subsequent Ameda
acquisition, in part due to one time events including a product
recall in the first quarter of 2008. With respect to recalls,
additional concerns include the potentially high cost, general
product liability risk, and the potential media influence on brand
equity. However, the rating also considers Evenflo's leading
position as a seller of infant and juvenile products with number
one and two positions in many product categories, a comprehensive
product portfolio that addresses a variety of infant/juvenile
needs, strong brand recognition, long-standing relationships with
key retail customers, and organic growth opportunities with
existing customers and internationally, notably in Mexico. Given
the relatively stable demand for infant/juvenile products and the
company's brand equity, adequate asset coverage also supports the
rating.
Moody's last rating action was on September 30, 2008 when the
corporate family and probability of default ratings were
downgraded to B3 from B2.
Headquartered in Miamisburg, Ohio, WP Evenflo is a leading
provider of infant and juvenile products including car seats
(convertible, booster, and infant), on-the-go products (strollers,
travel systems, and portable playards), feeding products (breast
pumps, feeding systems, bottles, high chairs, and pacifiers), and
playtime products (carriers, stationary activity centers, and
safety gates). Revenues were $365 million for the twelve months
ended September 30, 2008.
YRC WORLDWIDE: Is In Talks with Banks to Modify Loan Terms
----------------------------------------------------------
YRC Worldwide Inc. said it is in discussions with its banking
group to modify the terms of:
* the Credit Agreement dated as of August 17, 2007, as
amended, among the company; certain of the company's
subsidiaries; the lenders party thereto; Bank of America,
N.A. and SunTrust Bank, as Syndication Agents; U.S. Bank
National Association, Wachovia Bank, N.A. and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch, as Documentation
Agents; JP Morgan Chase Bank, National Association, Toronto
Branch, as Canadian Agent; J.P. Morgan Europe Limited, as UK
Agent; and JPMorgan Chase Bank, National Association, as
Administrative Agent; and
* the Third Amended and Restated Receivables Purchase
Agreement, dated as of April 18, 2008, as amended, among
Yellow Roadway Receivables Funding Corporation, as Seller;
Falcon Asset Securitization company LLC, Three Pillars
Funding LLC and Amsterdam Funding Corporation, as Conduits;
the financial institutions party thereto, as Committed
Purchasers; YRC Assurance Co. Ltd., as an uncommitted
purchaser; Wachovia Bank, National Association, as Wachovia
Agent and LC Issuer, SunTrust Robinson Humphrey, Inc. as
Three Pillars Agent; The Royal Bank of Scotland plc
(successor to ABN AMRO Bank N.V.), as Amsterdam Agent; and
JPMorgan Chase Bank, N.A., as Falcon Agent and
Administrative Agent.
The company is seeking modifications to its Credit Facilities,
which (among other things) would allow the company to remain in
compliance with a modified maximum ratio of debt to earnings
before interest, taxes, depreciation and amortization and would
provide the company with the liquidity that it requires for its
on-going operations.
The company had a tender offer open to purchase for $150 million
in cash certain of these series of notes:
-- 5.0% Contingent Convertible Senior Notes due 2023;
-- 5.0% Net Share Settled Contingent Convertible Senior Notes
due 2023;
-- 3.375% Contingent Convertible Senior Notes due 2023;
-- 3.375% Net Share Settled Contingent Convertible Senior
Notes due 2023;
-- 8-1/2% Guaranteed Notes due April 15, 2010.
On December 9, 2008, YRC Worldwide amended certain terms of its
cash tender offer. Based on the amended offer prices and assuming
sufficient participation, the company expects to purchase at least
$310 million principal amount of notes resulting in a total debt
reduction of at least $160 million. To the extent the principal
amount of the purchased notes is greater than the amount paid, the
difference will be recognized as a gain on extinguishment of debt
and included in the company's earnings before interest, taxes,
depreciation, and amortization under the debt-to-EBITDA leverage
ratio in the company's credit agreement.
On Wednesday, the company said it terminated the tender offer
pursuant to its terms, which provided (among other things) that
the company could terminate the offer if, on or prior to its
expiration date, the employees of subsidiaries of the company who
are subject to the National Master Freight Agreement, effective
April 1, 2008 through March 31, 2013, between the International
Brotherhood of Teamsters and Trucking Management Inc., a multi-
employer representative for certain subsidiaries of the company,
did not ratify an amendment to that agreement regarding a wage
reduction. As of the expiration date, 12:00 midnight, New York
City time, on December 23, 2008, ratification had not occurred. As
a result, the company will not accept for purchase, or pay for,
notes tendered pursuant to the tender offer.
The company currently expects its union employees to ratify the
wage reduction amendment around year end 2008 and has targeted
late January 2009 for a conclusion of its discussions with its
banks on an amendment to its Credit Facilities.
"Given the economic uncertainty, we believe it is more productive
to pursue a revised arrangement with our banks as an alternative
to completing the tender offer," stated Bill Zollars, Chairman,
President and CEO of YRC Worldwide. "We continue to have good
relationships with our banking group and are confident that we can
work out a mutual agreement that provides flexibility in our
leverage ratio while improving our liquidity position."
The company believes that it must implement these actions to
remain in compliance with its covenants under its Credit
Facilities:
-- further reductions in costs, including (without
limitation) the wage reduction for union employees as well
as other cost reductions that the company is undertaking;
-- successful conclusion of an amendment to its Credit
Facilities; and
-- completion of the integration of the Yellow Transportation
and Roadway networks
The company currently has over $250 million of cash and expects to
generate additional cash from sale and leaseback transactions and
proceeds from sales of excess facilities, while significantly
reducing its 2009 equipment purchases due to the integration of
the Yellow Transportation and Roadway networks.
The company believes that it has these actions available to it to
address its liquidity needs in 2009:
-- continuing to reduce costs in light of the economic
activity and volumes that the company is experiencing;
-- successful conclusion of an amendment to its Credit
Facilities;
-- reducing debt and increasing the company's liquidity by
strategically pursuing sale and leaseback arrangements for
certain of the company's real estate holdings;
-- continuing to sell assets, especially (but without
limitation) those excess assets made available by the
integration of the Yellow Transportation and Roadway
networks;
-- opportunistically repurchasing additional portions of the
company's outstanding notes using YRC Worldwide common
stock;
-- increasing the company's liquidity by terminating its
captive insurance company;
-- entering into other capital markets transactions as they
may become available to the company.
If the company does not execute one or more of these actions,
including ratification and implementation of the labor agreement
modification with the Teamsters and an amendment to its Credit
Facilities, some of which are not entirely within the company's
control, the risk exists that the company would not have
sufficient liquidity in 2009 to meet its operating needs.
Additionally, the company's liquidity needs could increase due to
factors outside of its control. In particular, the company may be
required to use its liquidity to provide letters of credit, surety
bonds and other collateral in excess of current levels to
insurers, vendors, lenders or other third parties in light of
recent rating agency downgrades with respect to the company's debt
instruments.
Based in Overland Park, Kansas, YRC Worldwide Inc. --
http://www.yrcw.com/-- a Fortune 500 company and one of the
largest transportation service providers in the world, is the
holding company for a portfolio of brands including Yellow
Transportation, Roadway, Reimer Express, YRC Logistics, New Penn,
USF Holland, USF Reddaway, and USF Glen Moore. The enterprise
provides global transportation services, transportation management
solutions and logistics management. The portfolio of brands
represents a comprehensive array of services for the shipment of
industrial, commercial and retail goods domestically and
internationally. YRC Worldwide employs approximately 58,000
people.
* * *
As reported by the Troubled Company Reporter on December 8, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
ratings on YRC Worldwide Inc. and subsidiary Roadway LLC to 'CC'
from 'B'. At the same time, S&P lowered the corporate credit
ratings on subsidiaries Yellow Freight System Inc. and Yellow
Corp. to 'C' from 'CCC+' and lowered the ratings on selected
subsidiaries' senior unsecured debt issues to 'C' from 'CCC+'. All
ratings have been placed on CreditWatch with negative
implications.
The TCR related the next day that S&P withdrew its corporate
credit ratings on selected YRC Worldwide Inc. (CC/Watch Neg/--)
subsidiaries, including Roadway LLC, Yellow Corp., and
YellowFreight System Inc. The corporate credit ratings were
originally assigned prior to the series of mergers that created
YRC Worldwide. "We view YRC as one economic entity, therefore the
subsidiary corporate credit ratings no longer have analytical
significance," said Standard & Poor's credit analyst Anita Ogbara.
This does not affect S&P's senior unsecured or issue-level ratings
under these subsidiaries, which remain.
YRC WORLDWIDE: Raises $150,400,000 in NATMI Sale-Leaseback Deal
---------------------------------------------------------------
YRC Worldwide Inc. entered into a Real Estate Sales Contract on
December 19, 2008, with NATMI Truck Terminals, LLC, to sell and
simultaneously lease back a pool of the company's facilities
located throughout the United States.
The aggregate purchase price for the subject facilities is roughly
$150.4 million. Initial annual lease payments will be roughly
$21.1 million in the aggregate, subject to annual increases based
on changes in the Consumer Price Index.
The company expects to close the sale-leaseback transaction by the
end of January 2009 and no later than the middle of February 2009,
subject to the satisfaction of normal and customary due diligence
and related conditions, including NATMI's right to terminate the
Contract in its sole discretion during the inspection period. In
addition, the company has the right to terminate the Contract on
or before January 16, 2009, if the company is unable to obtain
releases of existing mortgages on the facilities and the company
pays to NATMI a $750,000 breakup fee.
The initial lease term for each facility will be 10 years, with
renewal options to extend the term of each lease by up to an
additional 30 years. During the lease term for each facility, as
it may be extended, the company will have a right of first offer
in the event NATMI proposes to sell the facility.
The company has previously entered into other sale-leaseback
transactions with NATMI in the ordinary course of business.
Based in Overland Park, Kansas, YRC Worldwide Inc. --
http://www.yrcw.com/-- a Fortune 500 company and one of the
largest transportation service providers in the world, is the
holding company for a portfolio of brands including Yellow
Transportation, Roadway, Reimer Express, YRC Logistics, New Penn,
USF Holland, USF Reddaway, and USF Glen Moore. The enterprise
provides global transportation services, transportation management
solutions and logistics management. The portfolio of brands
represents a comprehensive array of services for the shipment of
industrial, commercial and retail goods domestically and
internationally. YRC Worldwide employs roughly 58,000
people.
* * *
As reported by the Troubled company Reporter on December 8, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
ratings on YRC Worldwide Inc. and subsidiary Roadway LLC to 'CC'
from 'B'. At the same time, S&P lowered the corporate credit
ratings on subsidiaries Yellow Freight System Inc. and Yellow
Corp. to 'C' from 'CCC+' and lowered the ratings on selected
subsidiaries' senior unsecured debt issues to 'C' from 'CCC+'. All
ratings have been placed on CreditWatch with negative
implications.
The TCR related the next day that S&P withdrew its corporate
credit ratings on selected YRC Worldwide Inc. (CC/Watch Neg/--)
subsidiaries, including Roadway LLC, Yellow Corp., and
YellowFreight System Inc. The corporate credit ratings were
originally assigned prior to the series of mergers that created
YRC Worldwide. "We view YRC as one economic entity, therefore the
subsidiary corporate credit ratings no longer have analytical
significance," said Standard & Poor's credit analyst Anita Ogbara.
This does not affect S&P's senior unsecured or issue-level ratings
under these subsidiaries, which remain.
YRC WORLDWIDE: To Cut Non-Union Wages by 10% in 2009 First Half
---------------------------------------------------------------
YRC Worldwide Inc. has said its employees (including senior
executives and management) who are not represented by the
International Brotherhood of Teamsters or other unions that it
will reduce their gross wages or salary by 10% during the first
half of 2009 and by 5% during the second half of 2009. The
company also has said it will eliminate participating non-union
employees' 401(k) match for the first half of 2009 and increase
the match to 100% of the first 3% of employee contributions to the
401(k) for the second half of 2009.
The company is taking the actions -- in addition to previous
actions that included freezing of the company's non-union defined
benefit pension plans, elimination of the Roadway retiree medical
plan, suspension of non-elective retirement plan contributions and
increases in employee health care contributions -- to comply with
the terms of the proposed modification to the National Master
Freight Agreement, effective April 1, 2008 through March 31, 2013,
between each of YRC Inc., USF Holland Inc. and New Penn Motor
Express Inc. and certain classes of their respective employees
(including drivers, dockworkers and others) represented by the
Teamsters.
Under the proposed modification, non-union employees would be
required to experience the same or greater percent reduction in
total compensation as the affected union employees. These
reductions would be subject to the effectiveness of the proposed
modification to the NMFA.
In addition, the company stated that it expects to create an
equity or profit sharing plan for non-union employees to give them
the economic equivalent of 7% of the company's common stock,
consistent with the company's plans to provide a similar benefit
to employees represented by the Teamsters. Further details of the
plan are being determined as are the details of the plan for union
employees pursuant to the proposed NMFA modification.
The company expects cost savings of approximately $75 million to
$85 million in 2009 relating to the non-union wage reduction and
changes to the 401(k) match for participating non-union employees
(and excluding any impact for the equity or profit sharing plan
for non-union employees described above), assuming the NMFA
modification is ratified and becomes effective and these plans
likewise become effective.
On December 5, 2008, YRC Worldwide's Board of Directors voted (i)
to reduce by 10% all fees for regular Board and committee meetings
attended in 2009 and Board retainer fees for 2009, including the
annual retainer and retainers for service as chairperson of Board
committees, and (ii) to waive any fees for special meetings
attended in 2009.
Details of NMFA Changes
On December 3, 2008, YRC Worldwide unveiled the details of a
proposed modification to the National Master Freight Agreement,
effective April 1, 2008 through March 31, 2013. The proposal
includes these terms:
-- The effective date of the modification would be the first
day of the first payroll period following the ratification
of the modification, which the company expects to occur
prior to January 1, 2009.
-- The effectiveness of the modification is subject to the
ratification by secret ballot of a majority of the affected
union employees voting. New Penn employees would vote on
the modification separately from YRC Inc. and USF Holland
Inc.
-- The modification would implement a 10% reduction in all
wages paid under the NMFA, inclusive of scheduled
increases, starting on the effective date through the
remaining life of the NMFA.
-- The modification would suspend any cost of living
increases, starting on the effective date through the
remaining life of the NMFA.
-- YRC Subsidiary contributions to health, welfare and pension
plans for affected union employees would not change.
-- Non-union employees would experience the same or greater
percent reduction in total compensation as the affected
union employees. This would include the modifications made
earlier this year to the non-union pension, retirement and
other benefit programs.
-- The modification would create a proposed employee stock
ownership plan or trust whereby affected union employees
would participate in the equity of the company through a
vehicle that economically functions as a warrant or similar
instrument to purchase 15% of YRC Worldwide's common stock.
The exercise price for the equity instrument would be the
closing stock price of YRC Worldwide's common stock on the
date the modification to the NMFA becomes effective, and
the purchase would not be effected until on or after
January 1, 2010. The ability to purchase the equity would
expire March 31, 2018. Further details regarding this plan
or trust are being finalized between the Teamsters and the
YRC Subsidiaries.
-- If (1) a Change of Control occurs without Teamster approval
of the acquiror, (2) the company files a Chapter 7 or 11
bankruptcy petition or is placed in involuntary bankruptcy
proceeding or (3) the company terminates the modification
with Teamster approval, the modification would terminate,
wages and cost of living increases would revert to their
original levels on a prospective basis and the equity
vehicle for affected union employees would terminate.
For this purpose, a "Change of Control" occurs if a third
person, including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended,
purchases or otherwise acquires shares of YRC Worldwide
after the effective date of the modification that, together
with stock held by such person or group, constitutes more
than 50% of the total voting power of the stock of YRC
Worldwide where the current directors of YRC Worldwide
(or directors that they nominate or their nominees
nominate) no longer continue to hold more than 50% of the
voting power of the board of directors).
The company expects cost savings of approximately $220 million to
$250 million per year for the remaining term of the NMFA if the
modification is ratified. The actual amount would be determined
by actual levels of employment. A number of other Teamster
bargaining units and bargaining units represented by other unions
are not subject to the NMFA. The company's estimates of cost
savings also assumes that a significant number of these additional
bargaining units ratify similar proposals.
About YRC Worldwide
Based in Overland Park, Kansas, YRC Worldwide Inc. --
http://www.yrcw.com/-- a Fortune 500 company and one of the
largest transportation service providers in the world, is the
holding company for a portfolio of brands including Yellow
Transportation, Roadway, Reimer Express, YRC Logistics, New Penn,
USF Holland, USF Reddaway, and USF Glen Moore. The enterprise
provides global transportation services, transportation management
solutions and logistics management. The portfolio of brands
represents a comprehensive array of services for the shipment of
industrial, commercial and retail goods domestically and
internationally. YRC Worldwide employs roughly 58,000
people.
* * *
As reported by the Troubled company Reporter on December 8, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
ratings on YRC Worldwide Inc. and subsidiary Roadway LLC to 'CC'
from 'B'. At the same time, S&P lowered the corporate credit
ratings on subsidiaries Yellow Freight System Inc. and Yellow
Corp. to 'C' from 'CCC+' and lowered the ratings on selected
subsidiaries' senior unsecured debt issues to 'C' from 'CCC+'. All
ratings have been placed on CreditWatch with negative
implications.
The TCR related the next day that S&P withdrew its corporate
credit ratings on selected YRC Worldwide Inc. (CC/Watch Neg/--)
subsidiaries, including Roadway LLC, Yellow Corp., and
YellowFreight System Inc. The corporate credit ratings were
originally assigned prior to the series of mergers that created
YRC Worldwide. "We view YRC as one economic entity, therefore the
subsidiary corporate credit ratings no longer have analytical
significance," said Standard & Poor's credit analyst Anita Ogbara.
This does not affect S&P's senior unsecured or issue-level ratings
under these subsidiaries, which remain.
YRC WORLDWIDE: Provides 4th Quarter 2008 Financial Updates
----------------------------------------------------------
YRC Worldwide, Inc., disclosed on Wednesday key volume statistics
for the fourth quarter-to-date as of November 30, 2008, compared
to the same period in 2007:
-- YRC National Transportation total tonnage per day down
11.8%;
-- YRC Regional Transportation total tonnage per day down
about 11% when adjusting for the network changes in the
first quarter 2008.
-- Total tonnage per day is down 20.9% without adjusting for
the network changes.
YRC Inc., a subsidiary of the company, is integrating its
operations and local sales teams of its two largest brands, Yellow
Transportation and Roadway. The company expects to have around 80
facilities either consolidated or in process of consolidation by
the end of 2008 and expects the integration to be mostly complete
by early spring 2009 with around 450 consolidated operations.
Early this month, YRC Worldwide acknowledged that the current
slowdown in the U.S. economy and the resulting adverse impact to
both the company's freight volume and yield (or price) for its
services has caused reductions in the company's earnings and its
liquidity position. The company believes that its forecasted
operating performance and planned capital structure actions to be
sufficient to allow it to remain in compliance with its covenants
in its credit and asset backed securitization facilities and, in
particular, its Total Leverage Ratio covenant (as contained and
defined in the credit facility). However, this belief in
remaining in compliance is a forward-looking statement.
The company's forecasts include significant judgment and
significant market risk that may or may not be realized. The
factors that could impact these forecasts include (without
limitation), inflation, inclement weather, price and availability
of fuel, sudden changes in the cost of fuel or the index upon
which the company bases its fuel surcharge, competitor pricing
activity, expense volatility, including (without limitation)
expense volatility due to changes in rail service or pricing for
rail service, ability to capture cost reductions, including
(without limitation) those cost reduction opportunities arising
from the combination of the sales, operations and networks of
Yellow Transportation and Roadway, changes in equity and debt
markets, a downturn in general or regional economic activity,
effects of a terrorist attack, labor relations, including (without
limitation), the impact of work rules, work stoppages, strikes or
other disruptions, any obligations to multi-employer health,
welfare and pension plans, wage requirements and employee
satisfaction, and the risk factors that are from time to time
included in the company's reports filed with the Securities and
Exchange Commission, including the company's Annual Report on Form
10-K for the year ended December 31, 2007.
The company believes that it must implement these actions to
remain in compliance with its covenants:
-- further reduce costs, including (without limitation) the
wage reduction for union employees as well as other cost
reductions that the company is undertaking;
-- successfully conclude the cash tender for the company's
contingent convertible notes and USF senior notes that the
company commenced on November 25, 2008;
-- complete the integration of YRC Inc.'s Yellow
Transportation and Roadway networks.
While taking these actions, the company must also balance its cash
liquidity needs to operate its business with the economic activity
levels that the company is experiencing. In addition to these
actions, the company believes that it has these actions available
to it to address its liquidity needs in 2009:
-- continuing to reduce costs in light of the economic
activity and volumes that the company is experiencing;
-- reducing debt and increasing the company's liquidity by
strategically pursuing sale and leaseback arrangements for
certain of the company's real estate holdings;
-- continuing to sell assets, especially (but without
limitation) those excess assets made available by the
integration of the Yellow Transportation and Roadway
networks;
-- opportunistically repurchasing additional portions of the
company's outstanding notes using YRC Worldwide common
stock;
-- increasing the company's liquidity by terminating its
captive insurance company; and
-- entering into other capital markets transactions as they
may become available to the company.
If the company does not execute one or more of these actions,
including ratification and implementation of the labor agreement
modification with the Teamsters, some of which are not entirely
within the company's control, the risk exists that the company
would not have sufficient liquidity in 2009 to meet its operating
needs. Additionally, the company's liquidity needs could increase
due to factors outside of its control. In particular, the company
may be required to use its liquidity to provide letters of credit,
surety bonds and other collateral in excess of current levels to
insurers, venders, lenders or other third parties in light of
recent rating agency downgrades with respect to the company's debt
instruments.
* Moody's Downgrades Ratings on 323 Notes by Certain CDO Deals
--------------------------------------------------------------
Moody's Investors Service announced that it has downgraded its
ratings of 323 Notes issued by certain collateralized debt
obligation transactions backed by structured finance securities,
320 of which were originated in 2004, and 3 of which were
originated in 2006.
Moody's explained that the rating actions taken are the result of
the application of revised and updated key modelling parameter
assumptions that Moody's uses to rate and monitor ratings of SF
CDOs. The revisions affect the three key parameters in Moody's
model for rating SF CDOs: asset correlation, default probability
and recovery rate. Moody's announced the changes to these
assumptions in a press release published on December 11, 2008.
Moody's noted that most of the lowered ratings remain on review
for possible downgrade due to the continuing weakness in the
performance of and outlook for structured finance securities that
back SF CDOs.
Moody's initially analyzed and continues to monitor these
transactions using primarily the methodology and its supplements
for ABS CDOs:
-- Moody's Approach to Rating Multisector CDOs (9/15/2000)
-- Moody's Approach To Rating Synthetic Resecuritizations
(10/29/2003)
-- Moody's Revisits its Assumptions Regarding Structured Finance
Default (and Asset) Correlations for CDOs (6/27/2005)
-- Moody's Modeling Approach to Rating Structured Finance Cash
Flow CDO Transactions (9/26/2005)
Moody's anticipates that in the coming days it will announce
additional rating actions applicable to SF CDOs of earlier
vintages as the revised assumptions are applied to those
transactions.
The rating actions are:
Abacus 2004-1, Ltd.
-- Class A Notes, Downgraded to Baa3 Under Review for Possible
Downgrade; previously on 6/9/2008 A3 Placed Under Review for
Possible Downgrade
-- Class B Notes, Downgraded to B3 Under Review for Possible
Downgrade; previously on 6/9/2008 Ba3 Placed Under Review for
Possible Downgrade
-- Class C Notes, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 6/9/2008 Caa1 Placed Under Review
for Possible Downgrade
ACA ABS 2004-1, LIMITED
-- US$13,000,000 Combination Securities Due 2039, Downgraded to
Baa2 Placed Under Review for Possible Downgrade; previously
on 5/28/2004 Assigned A2
-- US$18,375,000 Class C-1 Mezzanine Secured Floating Rate
Notes Due 2039, Downgraded to Ba1 Placed Under Review for
Possible Downgrade; previously on 12/19/2006 Upgraded to Baa1
-- US$3,000,000 Class C-2 Mezzanine Secured Fixed Rate Notes Due
2039, Downgraded to Ba1 Placed Under Review for Possible
Downgrade; previously on 12/19/2006 Upgraded to Baa1
-- US$315,000,000 Class A-1 Senior Secured Floating Rate Notes
Due 2039, Downgraded to Aa2 Placed Under Review for Possible
Downgrade; previously on 5/28/2004 Assigned Aaa
-- US$47,250,000 Class B Senior Secured Floating Rate Notes Due
2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 5/28/2004 Assigned Aa2
-- US$49,500,000 Class A-2 Senior Secured Floating Rate Notes
Due 2039, Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 5/28/2004 Assigned Aaa
Alexander Park CDO I, Ltd.
-- Class A-1 Floating Rate Term Notes, Due 2039, Downgraded to
Ba3 Under Review for Possible Downgrade; previously on
11/20/2008 Baa3 Placed Under Review for Possible Downgrade
-- Class A-2 Floating Rate Term Notes, Due 2039, Downgraded to
Caa3 Under Review for Possible Downgrade; previously on
11/20/2008 Caa2 Placed Under Review for Possible Downgrade
Belle Haven ABS CDO, Ltd.
-- Class A1SB-1, Downgraded to Baa1 Under Review for Possible
Downgrade; previously on 6/2/2008 A1 Placed Under Review for
Possible Downgrade
-- Class A1SB-2, Downgraded to Baa1 Under Review for Possible
Downgrade; previously on 6/2/2008 A1 Placed Under Review for
Possible Downgrade
-- US$344,000,000 Class A1ST Senior Secured Floating Rate Notes
Due 2044-1, Downgraded to Baa1 Under Review for Possible
Downgrade; previously on 6/2/2008 A1 Placed Under Review for
Possible Downgrade
-- US$35,000,000 Class A2 Senior Secured Floating Rate Notes Due
2044, Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 6/2/2008 B3 Placed Under Review for Possible
Downgrade
-- US$48,000,000 Class A1J Senior Secured Floating Rate Notes
Due 2044, Downgraded to Caa1 Under Review for Possible
Downgrade; previously on 6/2/2008 B1 Placed Under Review for
Possible Downgrade
Bluegrass ABS CDO II Ltd.
-- Cl. A-1, Downgraded to Ba1 Under Review for Possible
Downgrade; previously on 9/19/2008 Baa1 Placed Under Review
for Possible Downgrade
Bluegrass ABS CDO III, Ltd.
-- US$27,000,000 Class B Third Priority Senior Secured Floating
Rate Notes Due 2039, Downgraded to Caa3 Under Review for
Possible Downgrade; previously on 6/2/2008 B3 Placed Under
Review for Possible Downgrade
-- US$280,000,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Ba1 Under Review
for Possible Downgrade; previously on 6/2/2008 Baa1 Placed
Under Review for Possible Downgrade
-- US$49,000,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Caa1 Under Review
for Possible Downgrade; previously on 6/2/2008 B1 Placed
Under Review for Possible Downgrade
Cascade Funding CDO I, Inc.
-- Class A-1 First Priority Senior Secured Floating Rate Delayed
Draw Notes due March 2042, Downgraded to Baa3 Placed Under
Review for Possible Downgrade; previously on 7/30/2004
Assigned Aaa
-- Class A-2 Second Priority Senior Secured Floating Rate Notes
due March 2042, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 6/9/2008 Ba3 Placed Under Review for
Possible Downgrade
-- Class B Third Priority Secured Floating Rate Notes due March
2042, Downgraded to C ; previously on 6/9/2008 B3 Placed
Under Review for Possible Downgrade
C-BASS CBO IX Limited
-- US$10,000,000 Class B Third Priority Senior Secured Floating
Rate Notes Due April 2039, Downgraded to Aa3 Placed Under
Review for Possible Downgrade; previously on 5/16/2006
Upgraded to Aaa
-- US$12,000,000 Class C Fourth Priority Secured Floating Rate
Deferrable Interest Notes Due April 2039, Downgraded to A1
Placed Under Review for Possible Downgrade; previously on
5/16/2006 Upgraded to Aa1
-- US$14,000,000 Class D Fifth Priority Secured Floating Rate
Deferrable Interest Notes Due April 2039, Downgraded to A3
Under Review for Possible Downgrade; previously on 11/10/2008
Aa3 Placed Under Review for Possible Downgrade
-- US$20,000,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due April 2039, Downgraded to Aa2 Placed
Under Review for Possible Downgrade; previously on 3/31/2004
Assigned Aaa
-- US$220,500,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due April 2039, Downgraded to Aa1 Placed
Under Review for Possible Downgrade; previously on 3/31/2004
Assigned Aaa
Cheyne High Grade ABS CDO, Ltd.
-- U.S. $23,000,000 Class A-2 Floating Rate Notes Due 2039,
Downgraded to Caa1 Under Review for Possible Downgrade;
previously on 6/27/2008 B1 Placed Under Review for Possible
Downgrade
-- U.S. 115,000,000 Class A-1 MTN-e, Downgraded to A2 Placed
Under Review for Possible Downgrade; previously on 7/2/2008
Assigned Aa2
-- US$0 Class A-1 LT Long Term Floating Rate Notes Due 2039,
Downgraded to A3 Under Review for Possible Downgrade;
previously on 6/27/2008 Aa3 Placed Under Review for Possible
Downgrade
Cimarron CDO Ltd./Cimarron CDO Corp.
-- Class A-2 Second Priority Senior Secured Floating Rate Notes
Due 2040, Downgraded to Baa2 Under Review for Possible
Downgrade; previously on 7/2/2008 A2 Placed Under Review for
Possible Downgrade
-- Class A-3 Third Priority Senior Secured Floating Rate Notes
Due 2040, Downgraded to Ba1 Under Review for Possible
Downgrade; previously on 7/2/2008 Baa1 Placed Under Review
for Possible Downgrade Class B Senior Secured Deferrable
Fixed Rate Notes Due 2040, Downgraded to Caa3 Under Review
for Possible Downgrade; previously on 7/2/2008 B3 Placed
Under Review for Possible Downgrade Class C Junior Secured
Deferrable Fixed Rate Notes Due 2040, Downgraded to Caa3
Under Review for Possible Downgrade; previously on 7/2/2008
Caa2 Placed Under Review for Possible Downgrade
CORDS 2004-4
-- Class IV Floating Rate Units, Downgraded to Ba2 Placed Under
Review for Possible Downgrade; previously on 6/4/2008
Downgraded to Baa2
Crystal Cove CDO, Ltd.
-- US$350,000,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to B1 Under Review
for Possible Downgrade; previously on 6/9/2008 Ba1 Placed
Under Review for Possible Downgrade
-- US$70,000,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Caa3 Under
Review for Possible Downgrade; previously on 6/9/2008 Caa2
Placed Under Review for Possible Downgrade
Davis Square Funding II, Ltd.
-- Class A-1 Long Term Floating Rate Notes, Downgraded to Baa1
Under Review for Possible Downgrade; previously on 5/12/2008
A1 Placed Under Review for Possible Downgrade
-- U.S. $548,000,000 Class A-1 MT-e Medium Term Floating Rate
Notes Due 2039, Downgraded to A2 Placed Under Review for
Possible Downgrade; previously on 5/9/2008 Assigned Aa2
-- US$120,000,000 Class A-1 MT-b Medium Term Floating Rate Notes
Due 2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 6/2/2004 Assigned Aa2
-- US$15,000,000 Class C Floating Rate Notes Due 2039,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 7/17/2008 Ba2 Placed Under Review for Possible
Downgrade
-- US$25,000,000 Combination Notes Due 2039, Downgraded to Baa2
Placed Under Review for Possible Downgrade; previously on
6/2/2004 Assigned A2
-- US$250,000,000 Class A-1 MT-d Medium Term Floating Rate Notes
Due 2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 6/2/2004 Assigned Aa2
-- US$57,000,000 Class A-2 Floating Rate Notes Due 2039,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 5/12/2008 Ba2 Placed Under Review for Possible
Downgrade
-- US$75,000,000 Class A-1 MT-a Medium Term Floating Rate Notes
Due 2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 6/2/2004 Assigned Aa2
-- US$75,000,000 Class A-1 MT-c Medium Term Floating Rate Notes
Due 2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 6/2/2004 Assigned Aa2
Davis Square Funding III Ltd./Davis Square Funding III Corp.
-- Class A-1LT-a Floating Rate Notes, Downgraded to A2 Under
Review for Possible Downgrade; previously on 5/23/2008 Aa2
Placed Under Review for Possible Downgrade
-- Class A-1LT-b Floating Rate Notes, Downgraded to A2 Under
Review for Possible Downgrade; previously on 5/23/2008 Aa2
Placed Under Review for Possible Downgrade
-- Class A-2 Floating Rate Notes, Downgraded to Ba1 Under Review
for Possible Downgrade; previously on 5/23/2008 Baa1 Placed
Under Review for Possible Downgrade
-- Class B Floating Rate Notes, Downgraded to Ba2 Under Review
for Possible Downgrade; previously on 5/23/2008 Baa2 Placed
Under Review for Possible Downgrade
-- Class C Participating Notes, Downgraded to Caa3 Under Review
for Possible Downgrade; previously on 5/23/2008 Caa1 Placed
Under Review for Possible Downgrade
-- Class D Participating Notes, Downgraded to Caa3 Under Review
for Possible Downgrade; previously on 5/23/2008 Caa2 Placed
Under Review for Possible Downgrade
Duke Funding VI Ltd./Duke Funding VI, Corp.
-- Class A1J Senior Secured Floating Rate Notes Due 2039,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 4/24/2008 Baa2 Placed Under Review for Possible
Downgrade
-- Class A1S Senior Secured Floating Rate Notes Due 2039,
Downgraded to Ba2 Under Review for Possible Downgrade;
previously on 4/24/2008 A2 Placed Under Review for Possible
Downgrade
-- Class A2 Senior Secured FLoating Rate Notes Due 2039,
Downgraded to Caa2 Under Review for Possible Downgrade;
previously on 4/24/2008 Ba2 Placed Under Review for Possible
Downgrade
-- Composite 1 Securities due 2039, Downgraded to B2 Placed
Under Review for Possible Downgrade; previously on 3/31/2004
Assigned Baa2
Duke Funding VII, Ltd
-- U.S. $129,900,000 Class I-A2 Senior Secured Floating Rate
Notes Due 2034, Downgraded to Ba1 Under Review for Possible
Downgrade; previously on 4/24/2008 A1 Placed Under Review for
Possible Downgrade
-- U.S. $10,000,000 Class X Combination Notes Due 2039,
Downgraded to Caa2 Under Review for Possible Downgrade;
previously on 4/24/2008 Ba2 Placed Under Review for Possible
Downgrade
-- U.S. $100,000 Class I-A2v Senior Secured Floating Rate Notes
Due 2034, Downgraded to Ba1 Under Review for Possible
Downgrade; previously on 4/24/2008 A1 Placed Under Review for
Possible Downgrade
-- U.S. $3,500,000 Class III-B Senior Secured Fixed Rate Notes
Due 2039, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 4/24/2008 B2 Placed Under Review for
Possible Downgrade
-- U.S. $382,000,000 Class I-A1 Senior Secured Floating Rate
Notes Due 2034, Downgraded to Ba1 Under Review for Possible
Downgrade; previously on 4/24/2008 A1 Placed Under Review for
Possible Downgrade
-- U.S. $4,000,000 Class Y Combination Notes Due 2039,
Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 4/24/2008 B1 Placed Under Review for Possible
Downgrade
-- U.S. $61,000,000 Class III-A Senior Secured Floating Rate
Notes Due 2039, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 4/24/2008 B2 Placed Under Review for
Possible Downgrade
-- U.S. $7,000,000 Class Z Combination Notes Due 2039,
Downgraded to Ca ; previously on 4/24/2008 Caa2 Placed Under
Review for Possible Downgrade
-- U.S. 98,500,000 Class II Senior Secured Floating Rate Notes
Due 2039, Downgraded to Caa1 Under Review for Possible
Downgrade; previously on 4/24/2008 Ba1 Placed Under Review
for Possible Downgrade
Dunhill ABS CDO, Ltd.
-- US$20,000,000 Class A-1VB First Priority Senior Secured
Voting Floating Rate Notes Due 2041, Downgraded to A1 Under
Review for Possible Downgrade; previously on 5/9/2008 Aa1
Placed Under Review for Possible Downgrade
-- US$250,000 Class A-1VA First Priority Senior Secured Voting
Floating Rate Notes Due 2041-1, Downgraded to A1 Under Review
for Possible Downgrade; previously on 5/9/2008 Aa1 Placed
Under Review for Possible Downgrade
-- US$327,250,000 Class A-1NV First Priority Senior Secured Non-
Voting Floating Rate Delayed Draw Notes Due 2041, Downgraded
to A1 Under Review for Possible Downgrade; previously on
5/9/2008 Aa1 Placed Under Review for Possible Downgrade
-- US$55,000,000 Class B Third Priority Secured Floating Rate
Notes Due 2041, Downgraded to B2 Under Review for Possible
Downgrade; previously on 5/9/2008 Ba2 Placed Under Review for
Possible Downgrade
-- US$57,500,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2041, Downgraded to Baa1 Under Review
for Possible Downgrade; previously on 5/9/2008 A1 Placed
Under Review for Possible Downgrade
E*Trade ABS CDO III, Ltd.
-- US$5,000,000 Series II Composite Securities Due 2040,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 5/18/2008 Ba2 Placed Under Review for Possible
Downgrade
-- US$13,250,000 Class C Fourth Priority Mezzanine Secured
Floating Rate Notes Due 2040, Downgraded to B1 Under Review
for Possible Downgrade; previously on 5/18/2008 Ba1 Placed
Under Review for Possible Downgrade
-- US$201,000,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due 2025, Downgraded to Aa1 Placed Under
Review for Possible Downgrade; previously on 1/11/2005
Assigned Aaa
-- US$37,750,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2040, Downgraded to A1 Under Review
for Possible Downgrade; previously on 5/18/2008 Aa1 Placed
Under Review for Possible Downgrade
-- US$37,900,000 Class B Third Priority Senior Secured Floating
Rate Notes Due, Downgraded to Baa1 Under Review for Possible
Downgrade; previously on 5/18/2008 A1 Placed Under Review for
Possible Downgrade
FAB US 2006-1 PLC
-- US$215,800,000 Class A1 Floating Rate Notes Due 2047,
Downgraded to Ba3 Under Review for Possible Downgrade;
previously on 5/19/2008 Baa3 Placed Under Review for Possible
Downgrade
-- US$59,000,000 Class A2 Floating Rate Notes Due 2047,
Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 5/19/2008 Caa2 Placed Under Review for Possible
Downgrade
-- US$8,650,000 Class S Floating Rate Notes Due 2015, Downgraded
to B2 Under Review for Possible Downgrade; previously on
5/19/2008 Ba2 Placed Under Review for Possible Downgrade
Fortress ABS Opportunities, Ltd
-- Class A Original Notes, Downgraded to A1 Placed Under Review
for Possible Downgrade; previously on 11/3/2006 Assigned Aa1
-- Class B Original Notes, Downgraded to Ba2 Placed Under Review
for Possible Downgrade; previously on 11/3/2006 Assigned Baa2
-- US$206,000,000 Class A-1a Senior Secured Floating Rate Term
Notes Due 2038, Downgraded to A1 Placed Under Review for
Possible Downgrade; previously on 11/3/2006 Assigned Aa1
-- US$250,000,000 Class A-2 Senior Secured Floating Rate
Revolving Notes Due 2038, Downgraded to A1 Placed Under
Review for Possible Downgrade; previously on 11/3/2006
Assigned Aa1
-- US$53,000,000 Class Ba Senior Secured Deferrable Floating
Rate Term Notes Due 2038, Downgraded to Ba2 Placed Under
Review for Possible Downgrade; previously on 11/3/2006
Assigned Baa2
Gemstone CDO Ltd.
-- Class A-1 Floating Rate Notes Due December 2034, Downgraded
to Aa3 Placed Under Review for Possible Downgrade; previously
on 12/23/2004 Assigned Aaa
-- Class A-2 Floating Rate Notes Due December 2034, Downgraded
to Aa3 Placed Under Review for Possible Downgrade; previously
on 12/23/2004 Assigned Aaa
-- Class A-3 Floating Rate Notes Due December 2034, Downgraded
to Aa3 Placed Under Review for Possible Downgrade; previously
on 12/23/2004 Assigned Aaa
-- Class B Floating Rate Notes Due December 2034, Downgraded to
A2 Under Review for Possible Downgrade; previously on
12/23/2007 Aa2 Placed Under Review for Possible Downgrade
-- Class C Floating Rate Deferrable Interest Notes Due December
2034, Downgraded to Baa2 Under Review for Possible Downgrade;
previously on 12/23/2007 A2 Placed Under Review for Possible
Downgrade
-- Class D-1 Floating Rate Deferrable Interest Notes Due
December 2034, Downgraded to Caa1 Under Review for Possible
Downgrade; previously on 11/19/2008 B1 Placed Under Review
for Possible Downgrade
-- Class D-2 Fixed Rate Deferrable Interest Notes Due December
2034, Downgraded to Caa1 Under Review for Possible Downgrade;
previously on 11/19/2008 B1 Placed Under Review for Possible
Downgrade
Glacier Funding CDO I Limited
-- US$190,000,000 Class A-1 First Priority Senior Floating Rate
Notes Due 2039, Downgraded to Aa1 Placed Under Review for
Possible Downgrade; previously on 3/31/2004 Assigned Aaa
-- US$43,500,000 Class B Third Priority Senior Floating Rate
Notes Due 2039, Downgraded to Ba2 Under Review for Possible
Downgrade; previously on 11/14/2008 Baa2 Placed Under Review
for Possible Downgrade
-- US$44,000,000 Class A-2 Second Priority Senior Floating Rate
Notes Due 2039, Downgraded to A2 Under Review for Possible
Downgrade; previously on 11/14/2008 Aa2 Placed Under Review
for Possible Downgrade
Glacier Funding CDO II, Ltd.
-- Class A-1NV Notes, Downgraded to B1 Under Review for Possible
Downgrade; previously on 4/30/2008 Ba1 Placed Under Review
for Possible Downgrade
-- Class A-1V Notes, Downgraded to B1 Under Review for Possible
Downgrade; previously on 4/30/2008 Ba1 Placed Under Review
for Possible Downgrade
-- Class A-2 Notes, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 4/30/2008 B3 Placed Under Review for
Possible Downgrade
-- Heather Finance Limited Series 2004-13 CoRDS1 Equity,
Downgraded to Baa3 Placed Under Review for Possible
Downgrade; previously on 10/7/2004 Assigned A3
High Grade Structured Credit CDO 2004-1 LTD.
-- Class C Floating Rate Notes, Downgraded to A1 Under Review
for Possible Downgrade; previously on 6/9/2008 Aa1 Placed
Under Review for Possible Downgrade
-- Class D Floating Rate Notes, Downgraded to Baa2 Under Review
for Possible Downgrade; previously on 6/9/2008 A2 Placed
Under Review for Possible Downgrade
-- Class E Floating Rate Notes, Downgraded to Ba3 Under Review
for Possible Downgrade; previously on 6/9/2008 Baa3 Placed
Under Review for Possible Downgrade
-- Class F Floating Rate Notes, Downgraded to B2 Under Review
for Possible Downgrade; previously on 6/9/2008 Ba2 Placed
Under Review for Possible Downgrade
Hillcrest CDO I Ltd
-- Class 2 Composite Notes, Downgraded to Caa2 Under Review for
Possible Downgrade; previously on 10/22/2008 B2 Placed Under
Review for Possible Downgrade
-- Class 3 Composite Notes, Downgraded to Baa2 Under Review for
Possible Downgrade; previously on 10/22/2008 A2 Placed Under
Review for Possible Downgrade
-- Class A-1a Floating Rate Senior Secured Notes Due 2039,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 10/22/2008 Ba2 Placed Under Review for Possible
Downgrade
-- Class A-1b Fixed Rate Senior Secured Notes Due 2039,
Downgraded to B3 Under Review for Possible Downgrade;
previously on 10/22/2008 Ba3 Placed Under Review for Possible
Downgrade
House of Europe Funding II PLC
-- Class A House of Europe Funding II Floating Rate Notes due
2044, Downgraded to Ba1 Under Review for Possible Downgrade;
previously on 11/21/2008 Baa1 Placed Under Review for
Possible Downgrade
-- Class B House of Europe Funding II Floating Raste Notes due
2044, Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 11/21/2008 Caa1 Placed Under Review for
Possible Downgrade
House of Europe III PLC
-- EUR 57,500,000 Class C House of Europe Funding III Floating
Rate Notes due 2090, Downgraded to Ca ; previously on
6/9/2008 Downgraded to B2
-- EUR 60,000,000 Class B House of Europe Funding III Floating
Rate Notes due 2090, Downgraded to B1 Placed Under Review for
Possible Downgrade; previously on 6/9/2008 Downgraded to Aa1
-- EUR 7,500,000 Class D House of Europe Funding III Floating
Rate Notes due 2090, Downgraded to C ; previously on
6/9/2008 Downgraded to Ca
-- EUR 870,000,000 Class A House of Europe Funding III Floating
Rate Notes due 2090, Downgraded to A3 Placed Under
Review for Possible Downgrade; previously on 11/1/2004
Assigned Aaa
Independence V CDO, LTD
-- Class A-1 Senior Floating RateNotes Due 2039, Downgraded to
Ba3 Under Review for Possible Downgrade; previously on
2/28/2008 A3 Placed Under Review for Possible Downgrade
Inman Square Funding I, Ltd
-- U.S. $11,648,903 Class D Combination Notes Due 2039,
Downgraded to B3 Under Review for Possible Downgrade;
previously on 6/2/2008 Ba3 Placed Under Review for Possible
Downgrade
-- U.S. $15,000,000 Class IV Mezzanine Secured Floating Rate
Notes Due 2039, Downgraded to B1 Under Review for Possible
Downgrade; previously on 6/2/2008 Ba1 Placed Under Review for
Possible Downgrade
-- U.S. $165,000,000 Class I Senior Secured Floating Rate Notes
Due 2034, Aaa Placed Under Review for Possible Downgrade;
previously on 11/1/2004 Assigned Aaa
-- U.S. $18,000,000 Class III Mezzanine Secured Fixed Rate Notes
Due 2039, Downgraded to Baa3 Placed Under Review for
Possible Downgrade; previously on 11/1/2004 Assigned A3
-- U.S. $22,000,000 Class A Combination Notes Due 2039,
Downgraded to Baa2 Placed Under Review for Possible
Downgrade; previously on 11/1/2004 Assigned A2
-- U.S. $30,000,000 Class II Senior Secured Floating Rate Notes
Due 2039, Downgraded to A2 Placed Under Review for
Possible Downgrade; previously on 11/1/2004 Assigned Aa2
-- U.S. $30,078,370 Class B Combination Notes Due 2039,
Downgraded to B3 Under Review for Possible Downgrade;
previously on 6/2/2008 Ba3 Placed Under Review for Possible
Downgrade
-- U.S. $4,000,000 Class IV Mezzanine Secured Fixed Rate Notes
Due 2039, Downgraded to B1 Under Review for Possible
Downgrade; previously on 6/2/2008 Ba1 Placed Under Review for
Possible Downgrade
-- U.S. $5,824,451 Class C Combination Notes Due 2039,
Downgraded to B3 Under Review for Possible Downgrade;
previously on 6/2/2008 Ba3 Placed Under Review for Possible
Downgrade
-- U.S. $6,500,000 Class E Combination Notes Due 2039,
Downgraded to Caa2 Under Review for Possible Downgrade;
previously on 6/2/2008 B2 Placed Under Review for Possible
Downgrade
-- U.S. $7,000,000 Class II Senior Secured Fixed Rate Notes Due
2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 11/1/2004 Assigned Aa2
Ischus CDO I Ltd.
-- Class A-1 First Priority Senior Secured Floating Rate Notes
Due 2040-1, Downgraded to Aa2 Placed Under Review for
Possible Downgrade; previously on 1/10/2005 Assigned Aaa
-- Class A-2 Second Priority Senior Secured Floating Rate Notes
Due 2040, Downgraded to Aa3 Under Review for Possible
Downgrade; previously on 11/25/2008 Aaa Placed Under Review
for Possible Downgrade
-- Class B Third Priority Senior Secured Floating Rate Notes Due
2040, Downgraded to Baa2 Under Review for Possible
Downgrade; previously on 11/25/2008 A2 Placed Under Review
for Possible Downgrade
-- Class C-1 Mezzanine Secured Floating Rate Notes Due 2040,
Downgraded to B3 Under Review for Possible Downgrade;
previously on 11/25/2008 Ba3 Placed Under Review for Possible
Downgrade
-- Class C-2 Mezzanine Secured Fixed Rate Notes Due 2040,
Downgraded to B3 Under Review for Possible Downgrade;
previously on 11/25/2008 Ba3 Placed Under Review for Possible
Downgrade
Jupiter High-Grade CDO Ltd
-- Class A-1A Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 2/4/2005 Assigned Aaa
-- Class A-1B Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 2/4/2005 Assigned Aaa
-- Class A-2 Notes, Downgraded to Baa1 Under Review for Possible
Downgrade; previously on 11/14/2008 A1 Placed Under Review
for Possible Downgrade
-- Class B Notes, Downgraded to Ba1 Under Review for Possible
Downgrade; previously on 11/14/2008 Baa1 Placed Under Review
for Possible Downgrade
Kirkwood CDO 2004-1 Ltd.
-- Class A Floating Rate Notes Due December 30, 2044, Downgraded
to Aa3 Under Review for Possible Downgrade; previously on
6/18/2008 Aaa Placed Under Review for Possible Downgrade
-- Class B Floating Rate Deferrable Notes Due December 30, 2044,
Downgraded to Aa3 Under Review for Possible Downgrade;
previously on 6/18/2008 Aaa Placed Under Review for Possible
Downgrade
-- Class C Floating Rate Deferrable Notes Due December 30, 2044,
Downgraded to A1 Placed Under Review for Possible Downgrade;
previously on 1/5/2005 Assigned Aa1
-- Class D Floating Rate Deferrable Notes Due December 30, 2044,
Downgraded to Baa2 Placed Under Review for Possible
Downgrade; previously on 1/5/2005 Assigned A2
-- Class X Notes Due December 30, 2009, Downgraded to Aa3 Under
Review for Possible Downgrade; previously on 6/18/2008 Aaa
Placed Under Review for Possible Downgrade
KLIO Funding, Ltd/KLIO Funding Corp.
-- Cl. A-1, Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 4/30/2004 Assigned Aaa
-- Cl. A-2, Downgraded to Baa1 Under Review for Possible
Downgrade; previously on 6/9/2008 A1 Placed Under Review for
Possible Downgrade
-- Cl. B, Downgraded to B3 Under Review for Possible Downgrade;
previously on 6/9/2008 Ba3 Placed Under Review for Possible
Downgrade
-- Funding Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 6/24/2008 Assigned Aaa
Klio II Funding, Ltd.
-- Refunding Notes Cl. F, Downgraded to Baa1 Under Review for
Possible Downgrade; previously on 11/10/2008 A1 Placed Under
Review for Possible Downgrade
-- US$292,500,000 Class A-1 Floating Rate Notes Due 2039,
Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 11/10/2008 Caa2 Placed Under Review for
Possible Downgrade
Knollwood CDO Ltd.
-- Class A-1 First Priority Senior Secured Floating Rate Notes
due January 8, 2039, Downgraded to Ba3 Under Review for
Possible Downgrade; previously on 5/30/2008 Baa3 Placed Under
Review for Possible Downgrade
-- Class A-2 Second Priority Senior Secured Floating Rate Notes
due January 8, 2039, Downgraded to Caa3 Under Review for
Possible Downgrade; previously on 5/30/2008 B3 Placed Under
Review for Possible Downgrade
-- Class B Third Priority Senior Secured Floating Rate Notes due
January 8, 2039, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 5/30/2008 Caa1 Placed Under Review
for Possible Downgrade
Laguna ABS CDO, Ltd.
-- Class A1J Senior Secured Floating Rate Notes, Downgraded to
A2 Under Review for Possible Downgrade; previously on
11/10/2008 Aa2 Placed Under Review for Possible Downgrade
-- Class A1SB-1 Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 11/5/2004 AssignedAaa
-- Class A1SB-2 Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 11/5/2004 AssignedAaa
-- Class A1ST Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 11/5/2004 AssignedAaa
-- Class A2 Senior Secured Floating Rate Notes, Downgraded to
Baa3 Under Review for Possible Downgrade; previously on
11/10/2008 A3 Placed Under Review for Possible Downgrade
Lakeside CDO II, Ltd
-- Class A-1 First Priority Senior Secured Floating Rate Delayed
Draw Notes Due 2040, Downgraded to Aa3 Placed Under Review
for Possible Downgrade; previously on 4/28/2004 Assigned Aaa
-- Class A-2 Second Priority Senior Secured Floating Rate Notes
Due 2040, Downgraded to A1 Under Review for Possible
Downgrade; previously on 5/30/2008 Aa1 Placed Under Review
for Possible Downgrade
-- Class B Third Priority Secured Floating Rate Notes Due 2040,
Downgraded to B1 Under Review for Possible Downgrade;
previously on 5/30/2008 Ba1 Placed Under Review for Possible
Downgrade
-- Class C Mezzanine Secured Floating Rate Notes Due 2040,
Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 5/30/2008 Caa2 Placed Under Review for Possible
Downgrade
Margate Funding I, LTD.
-- US$100,000,000 Class A1J Senior Secured Floating Rate Notes,
Downgraded to Ba3 Under Review for Possible Downgrade;
previously on 11/25/2008 Baa3 Placed Under Review for
Possible Downgrade
-- US$805,000,000 Class A1S Senior Secured Floating Rate Notes,
Downgraded to A1 Under Review for Possible Downgrade;
previously on 11/25/2008 Aa1 Placed Under Review for Possible
Downgrade
MCKINLEY FUNDING, LTD.
-- ABCP Notes/Funding Notes, Downgraded to A1 Under Review for
Possible Downgrade; previously on 7/10/2008 Aa1 Placed Under
Review for Possible Downgrade
-- Class A-3 Notes, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 6/9/2008 B3 Placed Under Review for
Possible Downgrade
-- Class A-1 Notes, Downgraded to Ba2 Under Review for Possible
Downgrade; previously on 6/9/2008 Baa2 Placed Under Review
for Possible Downgrade
-- Class A-2 Notes, Downgraded to B3 Under Review for Possible
Downgrade; previously on 6/9/2008 Ba3 Placed Under Review for
Possible Downgrade
Mercury CDO 2004-1, Ltd.
-- US$100,000 Class A-1VA First Priority Senior Secured Voting
Floating Rate Notes, Downgraded to Aa2 Placed Under Review
for Possible Downgrade; previously on 12/2/2004 Assigned Aaa
-- US$17,000,000 Class C Fourth Priority Mezzanine Secured
Floating Rate Notes, Downgraded to B2 Placed Under Review for
Possible Downgrade; previously on 12/23/2007 Downgraded to
Ba2
-- US$25,000,000 Class A-2A Second Priority Senior Secured
Floating Rate Notes, Downgraded to Aa3 Placed Under Review
for Possible Downgrade; previously on 12/2/2004 Assigned Aaa
-- US$299,900,000 Class A-1NV First Priority Senior Secured Non-
Voting Floating Rate Notes, Downgraded to Aa2 Placed Under
Review for Possible Downgrade; previously on 12/2/2004
Assigned Aaa
-- US$31,050,000 Class A-2B Second Priority Senior Secured
Floating Rate Notes, Downgraded to Aa3 Placed Under Review
for Possible Downgrade; previously on 12/2/2004 Assigned Aaa
-- US$330,000,000 Class A-1VB First Priority Senior Secured
Voting Floating Rate Notes, Downgraded to Aa2 Placed Under
Review for Possible Downgrade; previously on 12/2/2004
Assigned Aaa
-- US$38,880,000 Class B Third Priority Senior Secured Floating
Rate Notes, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 12/2/2004 Assigned Aa2
Millerton ABS CDO, Ltd.
-- US$210,000,000 Class A-1 Senior Secured Floating Rate Notes
Due 2039, Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 11/25/2004 Assigned Aaa
-- US$24,750,000 Class B Senior Secured Floating Rate Notes Due
2039, Downgraded to B3 Under Review for Possible Downgrade;
previously on 11/21/2008 Ba3 Placed Under Review for Possible
Downgrade
-- US$36,000,000 Class A-2 Senior Secured Floating Rate Notes
Due 2039, Downgraded to Baa2 Under Review for Possible
Downgrade; previously on 11/21/2008 A2 Placed Under Review
for Possible Downgrade
Millstone Funding, Ltd./Millstone Funding Corp.
-- Cl. A-1, Downgraded to Caa2 Under Review for Possible
Downgrade; previously on 4/22/2008 Baa2 Placed Under Review
for Possible Downgrade
-- Cl. A-2, Downgraded to Ca ; previously on 4/22/2008 Ba3
Placed Under Review for Possible Downgrade
-- Cl. B, Downgraded to C ; previously on 4/22/2008 Caa3 Placed
Under Review for Possible Downgrade
MKP CBO III Ltd
-- Class A-2 Second Priority Senior Secured Floating Rate Notes,
Due 2039, Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 4/28/2004 Assigned Aaa
-- Class B Third Priority Senior Secured Floating Rate Notes,
Due 2039, Downgraded to A2 Placed Under Review for Possible
Downgrade; previously on 4/28/2004 Assigned Aa2
-- Class C Mezzanine Secured Floating Rate Notes, Due 2039,
Downgraded to B1 Under Review for Possible Downgrade;
previously on 11/19/2008 Ba1 Placed Under Review for Possible
Downgrade
Newcastle CDO IV, Limited
-- Class II-FL Deferrable Floating Rate Notes, Downgraded to A2
Placed Under Review for Possible Downgrade; previously on
3/31/2004 Assigned Aa2
-- Class II-FX Deferrable Fixed Rate Notes, Downgraded to A2
Placed Under Review for Possible Downgrade; previously on
3/31/2004 Assigned Aa2
-- Class III-FL Deferrable Floating Rate Notes, Downgraded to
Baa2 Placed Under Review for Possible Downgrade; previously
on 3/31/2004 Assigned A2
-- Class III-FX Deferrable Fixed Rate Notes, Downgraded to Baa2
Placed Under Review for Possible Downgrade; previously on
3/31/2004 Assigned A2
-- Class I-MM Floating Rate Notes, Downgraded to Aa3 Placed
Under Review for Possible Downgrade; previously on 3/31/2004
Assigned Aaa
-- Class IV-FL Deferrable Floating Rate Notes, Downgraded to Ba2
Placed Under Review for Possible Downgrade; previously on
3/31/2004 Assigned Baa2
-- Class IV-FX Deferrable Fixed Rate Notes, Downgraded to Ba2
Placed Under Review for Possible Downgrade; previously on
3/31/2004 Assigned Baa2
-- Class V Deferrable Fixed Rate Notes, Downgraded to B2 Placed
Under Review for Possible Downgrade; previously on 3/31/2004
Assigned Ba2
Newcastle CDO V, Limited
-- Class I Floating Rate Notes, Downgraded to Aa3 Placed Under
Review for Possible Downgrade; previously on 10/4/2004
Assigned Aaa
-- Class II Deferrable Floating Rate Notes, Downgraded to A2
Placed Under Review for Possible Downgrade; previously on
10/4/2004 Assigned Aa2
-- Class III Deferrable Floating Rate Notes, Downgraded to Baa2
Placed Under Review for Possible Downgrade; previously on
10/4/2004 Assigned A2
-- Class IV-FL Deferrable Floating Rate Notes, Downgraded to Ba2
Placed Under Review for Possible Downgrade; previously on
10/4/2004 Assigned Baa2
-- Class IV-FX Deferrable Fixed Rate Notes, Downgraded to Ba2
Placed Under Review for Possible Downgrade; previously on
10/4/2004 Assigned Baa2
-- Class V Deferrable Fixed Rate Notes, Downgraded to B2 Placed
Under Review for Possible Downgrade; previously on 10/4/2004
Assigned Ba2
North Street Referenced Linked Notes, 2004-6 Limited
-- Class A Floating Rate Notes, Downgraded to B1 Under Review
for Possible Downgrade; previously on 10/30/2008 Ba1 Placed
Under Review for Possible Downgrade
-- Class B Floating Rate Notes, Downgraded to Caa3 Under Review
for Possible Downgrade; previously on 10/30/2008 Caa2 Placed
Under Review for Possible Downgrade
N-Star Real Estate CDO II Ltd.
-- Class A-1 Floating Rate Senior Notes due 2039, Downgraded to
Aa3 Placed Under Review for Possible Downgrade; previously on
8/11/2004 Assigned Aaa
-- Class B-1 Floating Rate Senior Subordinate Notes due 2039,
Downgraded to Baa2 Placed Under Review for Possible
Downgrade; previously on 4/27/2007 A2 Placed Under Review for
Possible Upgrade
-- Class B-2 Floating Rate Senior Subordinate Notes due 2039,
Downgraded to Baa3 Placed Under Review for Possible
Downgrade; previously on 4/27/2007 A3 Placed Under Review for
Possible Upgrade
-- Class C-1 Floating Rate Subordinate Notes due 2039,
Downgraded to Ba3 Placed Under Review for Possible Downgrade;
previously on 4/27/2007 Baa3 Placed Under Review for Possible
Upgrade
Palisades CDO Ltd.
-- US$15,000,000 TYPE III COMPOSITE NOTES DUE JULY 2039,
Downgraded to Ba2 Under Review for Possible Downgrade;
previously on 4/9/2008 Baa2 Placed Under Review for Possible
Downgrade
-- US$15,200,000 Class C-1 FLOATING RATE NOTES DUE JULY 2039,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 4/29/2008 Ba2 Placed Under Review for Possible
Downgrade
-- US$15,700,000 Class C-2 7.88% NOTES DUE [July]JULY 2039,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 4/29/2008 Ba2 Placed Under Review for Possible
Downgrade
-- US$366,000,000 Class A-1A FLOATING RATE NOTES DUE JULY 2039,
Downgraded to Aa3 Placed Under Review for Possible Downgrade;
previously on 8/11/2004 Assigned Aaa
-- US$4,800,000 TYPE IV COMPOSITE NOTES DUE JULY 2039,
Downgraded to Ba3 Under Review for Possible Downgrade;
previously on 4/9/2008 Baa3 Placed Under Review for Possible
Downgrade
-- US$6,000,000 Class A-1B 4.69% NOTES DUE JULY 2039, Downgraded
to Aa3 Placed Under Review for Possible Downgrade; previously
on 8/11/2004 Assigned Aaa
-- US$6,000,000 Class B-2 5.65% NOTES DUE JULY 2039, Downgraded
to Baa1 Under Review for Possible Downgrade; previously on
4/29/2008 A1 Placed Under Review for Possible Downgrade
-- US$78,000,000 Class B-1 FLOATING RATE NOTES DUE JULY 2039,
Downgraded to Baa1 Under Review for Possible Downgrade;
previously on 4/29/2008 A1 Placed Under Review for Possible
Downgrade
-- US$88,500,000 Class A-2 FLOATING RATE NOTES DUE JULY 2039,
Downgraded to A1 Under Review for Possible Downgrade;
previously on 4/29/2008 Aa1 Placed Under Review for Possible
Downgrade
Paragon CDO, Limited
-- U.S $75,000,000 Class A Floating Rate Notes Due 2044,
Downgraded to A1 Under Review for Possible Downgrade;
previously on 5/30/2008 Aa1 Placed Under Review for Possible
Downgrade
-- US$10,000,000 Class C Floating Rate Deferrable Notes Due
2044, Downgraded to B1 Under Review for Possible Downgrade;
previously on 5/30/2008 Ba1 Placed Under Review for Possible
Downgrade
-- US$25,000,000 Class B Floating Rate Notes Due 2044,
Downgraded to Ba1 Under Review for Possible Downgrade;
previously on 5/30/2008 Baa1 Placed Under Review for Possible
Downgrade
Pillars CDO I Transaction
-- Class A Tranche, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 11/25/2008 Caa1 Placed Under Review
for Possible Downgrade
Pinnacle Point Funding Ltd.
-- Class A-1 Notes, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 4/29/2008 Caa1 Placed Under Review
for Possible Downgrade
-- Class A-2 Notes, Downgraded to Ca ; previously on 4/29/2008
Caa2 Placed Under Review for Possible Downgrade
Porter Square CDO II, Ltd.
-- Class A-2 Senior Secured Floating Rate Notes, Downgraded to
A1 Under Review for Possible Downgrade; previously on
11/25/2008 Aa1 Placed Under Review for Possible Downgrade
-- Class B Senior Secured Floating Rate Notes, Downgraded to
Baa2 Under Review for Possible Downgrade; previously on
11/25/2008 A2 Placed Under Review for Possible Downgrade
-- Class C Mezzanine Secured Deferrable Floating Rate Notes,
Downgraded to Caa3 Placed Under Review for Possible
Downgrade; previously on 4/1/2008 Downgraded to Caa1
REPACS Trust Series Bayshore I
-- Class A Debt Unit, Downgraded to Baa3 Placed Under Review for
Possible Downgrade; previously on 7/3/2008 Downgraded to A3
-- Class B Debt Unit, Downgraded to Baa3 Placed Under Review for
Possible Downgrade; previously on 7/3/2008 Downgraded to A3
REPACS TRUST SERIES: Bayshore II
-- Debt Unit, Downgraded to Baa2 Placed Under Review for
Possible Downgrade; previously on 7/1/2008 Downgraded to A2
Reservoir Funding Ltd.
-- US$374,900,000 Class A-1-NV First Priority Senior Non-Voting
Floating Rate Notes Due 2040, Downgraded to Baa2 Under Review
for Possible Downgrade; previously on 11/20/2008 A2 Placed
Under Review for Possible Downgrade
-- US$75,000,000 Class A-2 Second Priority Senior Floating Rate
Notes Due 2040, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 11/20/2008 B3 Placed Under Review
for Possible Downgrade
-- US$100,000 Class A-1-V First Priority Senior Floating Rate
Notes Due 2040, Downgraded to Baa2 Under Review for Possible
Downgrade; previously on 11/20/2008 A2 Placed Under Review
for Possible Downgrade
Sandstone CDO Ltd.
-- US$30,000,000 Composite Notes, Downgraded to Aa2 Placed Under
Review for Possible Downgrade; previously on 7/8/2004
Assigned Aa1
-- US$18,700,000 Class D Fourth Priority Secured Floating Rate
Deferrable Interest Notes Due 2039, Downgraded to Ba1 Placed
Under Review for Possible Downgrade; previously on 2/16/2007
Upgraded to Baa1
-- US$41,200,000 Class B Second Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Aa2 Placed Under
Review for Possible Downgrade; previously on 2/16/2007
Upgraded to Aa1
-- US$9,400,000 Class C Third Priority Secured Floating Rate
Deferrable Interest Notes Due 2039, Downgraded to Baa1 Placed
Under Review for Possible Downgrade; previously on 2/16/2007
Upgraded to A1
Saturn Ventures 2004 - Fund America Investors III, Limited
-- $10,000,000 Class B Floating Rate Senior Subordinate Notes,
Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 6/2/2008 B3 Placed Under Review for Possible
Downgrade
-- $22,000,000 Class A-3 Floating Rate Senior Notes, Downgraded
to Ba2 Under Review for Possible Downgrade; previously on
6/2/2008 Baa2 Placed Under Review for Possible Downgrade
-- $280,000,000 Class A-1 Floating Rate Senior Notes, Downgraded
to Aa3 Placed Under Review for Possible Downgrade; previously
on 5/17/2004 Assigned Aaa
-- $60,000,000 Class A-2 Floating Rate Senior Notes, Downgraded
to A3 Under Review for Possible Downgrade; previously on
6/2/2008 Aa3 Placed Under Review for Possible Downgrade
Saturn Ventures II, Limited
-- $20,000,000 Class B Floating Rate Subordinate Notes,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 5/9/2008 Ba2 Placed Under Review for Possible
Downgrade
-- $25,000,000 Class A-3 Floating Rate Senior Notes, Downgraded
to Ba3 Under Review for Possible Downgrade; previously
on 5/9/2008 Baa3 Placed Under Review for Possible Downgrade
-- $289,000,000 Class A-1 Short Term Notes, Downgraded to A1
Placed Under Review for Possible Downgrade; previously on
7/2/2008 Assigned Aa1
-- $50,000,000 Class A-2 Floating Rate Senior Notes, Downgraded
to Baa3 Under Review for Possible Downgrade; previously
on 5/9/2008 A3 Placed Under Review for Possible Downgrade
Sherwood Funding CDO, Ltd
-- US$3,500,000 B-2 Senior Secured Fixed Rate Notes Due 2039-4,
Downgraded to Caa1 Under Review for Possible
Downgrade; previously on 5/18/2008 B1 Placed Under Review for
Possible Downgrade
-- US$357,500,000 A-1 Senior Secured Floating Rate Notes Due
2039-1, Downgraded to A1 Under Review for Possible
Downgrade; previously on 5/18/2008 Aa1 Placed Under Review
for Possible Downgrade
-- US$40,500,000 B-1 Senior Secured Floating Rate Notes Due
2039-3, Downgraded to Caa1 Under Review for Possible
Downgrade; previously on 5/18/2008 B1 Placed Under Review for
Possible Downgrade
-- US$82,500,000 A-2 Senior Secured Floating Rate Notes Due
2039-2, Downgraded to Ba3 Under Review for Possible
Downgrade; previously on 5/18/2008 Baa3 Placed Under Review
for Possible Downgrade
-- U.S. 8,000,000 Class 1 Combination Notes Due 2039, Downgraded
to Caa1 Under Review for Possible Downgrade;
previously on 5/18/2008 B1 Placed Under Review for Possible
Downgrade
Sierra Madre Funding, Ltd./ Sierra Madre Funding Corp. - Floating
Rate Notes
-- Cl. A-2, Downgraded to A2 Under Review for Possible
Downgrade; previously on 7/30/2008 Aa2 Placed Under Review
for Possible Downgrade
-- Cl. A-lLT-a, Downgraded to Aa3 Under Review for Possible
Downgrade; previously on 7/30/2008 Aaa Placed Under Review
for Possible Downgrade
-- Cl. A-lLT-b, Downgraded to Aa3 Under Review for Possible
Downgrade; previously on 7/30/2008 Aaa Placed Under Review
for Possible Downgrade
-- Cl. B, Downgraded to A3 Under Review for Possible Downgrade;
previously on 7/30/2008 Aa3 Placed Under Review for
Possible Downgrade
-- Cl. C, Downgraded to Ba3 Under Review for Possible Downgrade;
previously on 7/30/2008 Baa3 Placed Under Review for
Possible Downgrade
-- Cl. D, Downgraded to Caa1 Under Review for Possible
Downgrade; previously on 7/30/2008 B1 Placed Under Review for
Possible Downgrade
-- Cl. E, Downgraded to B2 Under Review for Possible Downgrade;
previously on 7/30/2008 Ba2 Placed Under Review for
Possible Downgrade
SOUTH COAST FUNDING V LTD
-- US$10,000,000 Class A-1 Combination Securities due 2039,
Downgraded to Caa3 Under Review for Possible Downgrade;
previously on 11/20/2008 B3 Placed Under Review for Possible
Downgrade
-- US$10,000,000 Class A-3 Combination Securities due 2039,
Downgraded to B1 Under Review for Possible Downgrade;
previously on 11/20/2008 Ba1 Placed Under Review for Possible
Downgrade
-- US$115,500,000 Class B Third Priority Senior Secured Floating
Rate Notes Due 2039, Downgraded to Baa2 Under Review
for Possible Downgrade; previously on 11/20/2008 A2 Placed
Under Review for Possible Downgrade
-- US$4,000,000 Class A-2 Combination Securities due 2039,
Downgraded to Caa2 Under Review for Possible Downgrade;
previously on 11/20/2008 B2 Placed Under Review for Possible
Downgrade
-- US$47,050,000 Class C-1 Mezzanine Secured Floating Rate Notes
Due 2039, Downgraded to Caa3 Under Review for
Possible Downgrade; previously on 11/20/2008 Caa2 Placed
Under Review for Possible Downgrade
-- US$5,200,000 Class C-2 Mezzanine Secured Fixed Rate Notes Due
2039, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 11/20/2008 Caa2 Placed Under Review
for Possible Downgrade
-- US$53,000,000 Class A-3 Second Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Aa3 Placed
Under Review for Possible Downgrade; previously on 7/20/2004
Assigned Aaa
-- US$748,000,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Aa2 Placed Under
Review for Possible Downgrade; previously on 7/20/2004
Assigned Aaa
-- US$92,750,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2039, Downgraded to Aa3 Placed
Under Review for Possible Downgrade; previously on 7/20/2004
Assigned Aaa
STEERS CREDIT-LINKED TRUST, MAST TRANCHE, Series 2004-1
-- Senior Tranche terminated on 9/20/2009, Downgraded to Aa3
Placed Under Review for Possible Downgrade; previously on
9/14/2004 Assigned Aaa
STEERS Series 2004-1
-- STEERS Credit-Linked Trust, ML Tranche Series 2004
US$19,000,000 Certificates, Downgraded to Ba3 Placed Under
Review for Possible Downgrade; previously on 6/23/2004
Assigned Baa3
Stockbridge CDO Ltd.
-- Class A-1 Floating Rate Senior Notes Due November 18, 2039,
Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 11/25/2004 Assigned Aaa
-- Class A-2 Floating Rate Senior Notes Due November 18, 2039,
Downgraded to Ba3 Under Review for Possible Downgrade;
previously on 6/9/2008 Baa3 Placed Under Review for Possible
Downgrade
-- Class A-3 Floating Rate Senior Notes Due November 18, 2039,
Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 6/9/2008 B3 Placed Under Review for
Possible Downgrade
Straits Global ABS CDO I, Ltd.
-- US$41,000,000 Class B-1 Senior Secured Floating Rate Notes
Due 2040, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 7/17/2008 Caa1 Placed Under Review
for Possible Downgrade
-- US$7,000,000 Class B-2 Senior Secured Fixed Rate Notes Due
2040, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 7/17/2008 Caa1 Placed Under Review
for Possible Downgrade
-- US$248,000,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due 2040, Downgraded to A3 Under Review
for Possible Downgrade; previously on 7/17/2008 Aaa Placed
Under Review for Possible Downgrade
-- US$72,000,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2040, Downgraded to Ba3 Under
Review for Possible Downgrade; previously on 7/17/2008 A3
Placed Under Review for Possible Downgrade
Strata Trust, Series 2004-4
-- US$20,000,000 Floating Rate Credit-Linked Notes, Downgraded
to Baa3 Placed Under Review for Possible Downgrade;
previously on 9/9/2008 Downgraded to A3
Streeterville ABS CDO, Ltd.
-- US$10,000,000 Class C-2 Mezzanine Secured Fixed Rate Notes
Due 2040, Downgraded to B1 Under Review for Possible
Downgrade; previously on 5/23/2008 Ba1 Placed Under Review
for Possible Downgrade
-- US$30,000,000 Class B-1 Third Priority Secured Floating Rate
Notes Due 2040, Downgraded to A3 Under Review for
Possible Downgrade; previously on 5/23/2008 Aa3 Placed Under
Review for Possible Downgrade
-- US$37,000,000 Class B-2 Third Priority Secured Fixed Rate
Notes Due 2040, Downgraded to A3 Under Review for
Possible Downgrade; previously on 5/23/2008 Aa3 Placed Under
Review for Possible Downgrade
-- US$50,000,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2040, Downgraded to A1 Under Review
for Possible Downgrade; previously on 5/23/2008 Aa1 Placed
Under Review for Possible Downgrade
-- US$6,000,000 Class C-1 Mezzanine Secured Floating Rate Notes
Due 2040, Downgraded to B1 Under Review for Possible
Downgrade; previously on 5/23/2008 Ba1 Placed Under Review
for Possible Downgrade
-- US$850,000,000 Class A-1 First Priority Senior Secured
Floating Rate Delayed Draw Notes Due 2040, Downgraded to Aa3
Placed Under Review for Possible Downgrade; previously on
10/8/2004 Assigned Aaa
Summer Street 2004-1, Ltd.
-- Class A-1 Flt. Rt. Senior Secured Notes, Downgraded to Aa3
Placed Under Review for Possible Downgrade; previously on
12/13/2004 Assigned Aaa
-- Class A-2 Flt. Rt. Senior Secured Notes, Downgraded to A2
Under Review for Possible Downgrade; previously on 5/23/2008
Aa2 Placed Under Review for Possible Downgrade
-- Class A-3 Flt. Rt. Senior Secured Notes, Downgraded to Ba2
Under Review for Possible Downgrade; previously on
5/23/2008 Baa2 Placed Under Review for Possible Downgrade
-- Class B Flt. Rt. Subordinate Secured Deferrable Notes,
Downgraded to Caa1 Under Review for Possible Downgrade;
previously on 5/23/2008 B1 Placed Under Review for Possible
Downgrade
TABS 2004-1, Ltd.
-- Class A-1 Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 1/7/2005 Assigned Aaa
-- Class A-2 Notes, Downgraded to Ba2 Under Review for Possible
Downgrade; previously on 5/30/2008 Baa2 Placed Under
Review for Possible Downgrade
-- Class B Notes, Downgraded to Caa3 Under Review for Possible
Downgrade; previously on 5/30/2008 B3 Placed Under
Review for Possible Downgrade
Trainer Wortham First Republic CBO IV, Limited
-- $12,000,000 Class C Secured Floating Rate Notes due 2038,
Downgraded to Ba1 Placed Under Review for Possible
Downgrade; previously on 1/26/2004 Assigned Baa1
-- $220,000,000 Class A Senior Secured Floating Rate Notes due
2034, Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 1/26/2004 Assigned Aaa
32,000,000 Class B Senior Secured Notes due 2038, Downgraded
to A1 Placed Under Review for Possible Downgrade;
previously on 1/26/2004 Assigned Aa1
TRAINER WORTHAM FIRST REPUBLIC CBO V LTD.
-- US$10,000,000 Class C Mezzanine Secured Floating Rate Notes
Due 2040, Downgraded to Baa2 Placed Under Review for
Possible Downgrade; previously on 12/1/2004 Assigned A2
-- US$11,000,000 Class D Mezzanine Secured Floating Rate Notes
Due 2040-1, Downgraded to B1 Under Review for
Possible Downgrade; previously on 5/30/2008 Ba1 Placed Under
Review for Possible Downgrade
-- US$255,000,000 Class A-1 First Priority Senior Secured
Floating Rate Notes Due 2040, Downgraded to Aa2 Placed Under
Review for Possible Downgrade; previously on 12/1/2004
Assigned Aaa
-- US$28,000,000 Class B Third Priority Senior Secured Floating
Rate Notes Due 2040, Downgraded to A2 Placed Under
Review for Possible Downgrade; previously on 12/1/2004
Assigned Aa2
-- US$34,000,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes Due 2040-1, Downgraded to Aa3 Placed
Under Review for Possible Downgrade; previously on 12/1/2004
Assigned Aaa
Tricadia CDO 2003-1, Ltd.
-- Class A-1LA Floating Rate Notes Due February 2016, Downgraded
to Aa3 Placed Under Review for Possible Downgrade;
previously on 1/21/2004 Assigned Aaa
-- Class A-1LB Floating Rate Notes Due February 2016, Downgraded
to Aa3 Placed Under Review for Possible Downgrade;
previously on 1/21/2004 Assigned Aaa
-- Class A-2L Floating Rate Notes Due February 2016, Downgraded
to Aa3 Placed Under Review for Possible Downgrade;
previously on 1/21/2004 Assigned Aaa
-- Class A-3L Floating Rate Notes Due February 2016, Downgraded
to A2 Placed Under Review for Possible Downgrade;
previously on 1/21/2004 Assigned Aa2
-- Class A-4L Floating Rate Notes Due February 2016, Downgraded
to Baa2 Placed Under Review for Possible Downgrade;
previously on 1/21/2004 Assigned A2
-- Class B-1L Floating Rate Notes Due February 2016, Downgraded
to Ba1 Placed Under Review for Possible Downgrade;
previously on 1/21/2004 Assigned Baa1
Tricadia CDO 2004-2, Ltd.
-- Class A Senior Secured Floating Rate Notes Due 2019,
Downgraded to Aa3 Placed Under Review for Possible Downgrade;
previously on 11/25/2004 Assigned Aaa
-- Class B Second Priority Deferrable Floating Rate Notes Due
2019, Downgraded to Baa2 Placed Under Review for Possible
Downgrade; previously on 11/25/2004 Assigned A2
-- Class C Third Priority Deferrable Floating Rate Notes Due
2019, Downgraded to Ba1 Placed Under Review for Possible
Downgrade; previously on 11/25/2004 Assigned Baa1
Vermeer Funding, Ltd
-- Class A-1 Senior Secured Floating Rate Notes due 2039,
Downgraded to Aa2 Placed Under Review for Possible Downgrade;
previously on 4/22/2004 Assigned Aaa
-- Class A-2 Senior Secured Floating Rate Notes due 2039,
Downgraded to Aa3 Placed Under Review for Possible Downgrade;
previously on 4/22/2004 Assigned Aaa
-- Class B Senior Secured Floating Rate Notes due 2039,
Downgraded to A2 Placed Under Review for Possible Downgrade;
previously on 4/22/2004 Assigned Aa2
-- Class C Mezzanine Secured Floating Rate Notes due 2039,
Downgraded to B1 Under Review for Possible Downgrade;
previously on 5/9/2008 Ba1 Placed Under Review for Possible
Downgrade
-- Combination Securities due June 3, 2039, Downgraded to Caa1
Under Review for Possible Downgrade; previously on
5/9/2008 B1 Placed Under Review for Possible Downgrade
Vertical CDO 2004-1 Ltd.
-- Class A Floating Rate Notes, Downgraded to Baa2 Under Review
for Possible Downgrade; previously on 6/2/2008 A2
Placed Under Review for Possible Downgrade
-- Class B Floating Rate Notes, Downgraded to B2 Under Review
for Possible Downgrade; previously on 6/2/2008 Ba2 Placed
Under Review for Possible Downgrade
-- Class C Floating Rate Notes, Downgraded to Caa3 Under Review
for Possible Downgrade; previously on 6/2/2008 B3
Placed Under Review for Possible Downgrade
-- Combination Security I, Downgraded to Caa3 Under Review for
Possible Downgrade; previously on 6/2/2008 Caa1 Placed
Under Review for Possible Downgrade
-- Preference Shares, Downgraded to Caa3 Under Review for
Possible Downgrade; previously on 6/2/2008 Caa1 Placed Under
Review for Possible Downgrade
Whately CDO I, Ltd.
-- US$15,000,000 Combination B Notes Due June 2044, Downgraded
to Caa2 Under Review for Possible Downgrade;
previously on 4/2/2008 B2 Placed Under Review for Possible
Downgrade
-- US$261,000,000 Class A-1A Floating Rate Notes Due June 2044
Downgraded to Aa3 Placed Under Review for Possible Downgrade;
previously on 6/18/2004 Assigned Aaa
-- US$27,000,000 Class A-2 Floating Rate Notes Due June 2044,
Downgraded to B2 Under Review for Possible Downgrade;
previously on 4/23/2008 Ba2 Placed Under Review for Possible
Downgrade
-- US$6,000,000 Class A-1BF Fixed Rate Notes Due June 2044,
Downgraded to Baa3 Under Review for Possible
Downgrade; previously on 4/23/2008 A3 Placed Under Review for
Possible Downgrade
-- US$63,000,000 Class A-1BV Floating Rate Notes Due June 2044
Downgraded to Baa3 Under Review for Possible Downgrade;
previously on 4/23/2008 A3 Placed Under Review for Possible
Downgrade
Whitehawk CDO Funding, LTD.
-- Class A-2 Floating Rate Notes, Downgraded to A1 Under Review
for Possible Downgrade; previously on 7/10/2008 Aa1
Placed Under Review for Possible Downgrade
-- Class B Floating Rate Notes, Downgraded to Baa3 Under Review
for Possible Downgrade; previously on 7/10/2008 A3
Placed Under Review for Possible Downgrade
-- Class C Floating Rate Deferrable Interest Notes, Downgraded
to Caa3 Under Review for Possible Downgrade; previously
on 7/10/2008 Caa2 Placed Under Review for Possible Downgrade
-- Up to US$870,000,000 Class A-1 MM Money Market Floating Rate
Notes, Downgraded to Aa3 Placed Under Review for
Possible Downgrade; previously on 6/25/2008 Assigned Aaa
-- Up to US$870,000,000 Class A-1 MT Medium Term Floating Rate
Notes, Downgraded to A2 Placed Under Review for
Possible Downgrade; previously on 6/25/2008 Assigned Aa2
Witherspoon CDO Funding, Ltd.
-- U.S. 602,001,000 Class A-1 LT-b Floating Rate Notes Due 2039-
1, Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 1/11/2005 Assigned Aaa
-- US$23,000,000 Class C Floating Rate Deferrable Interest Notes
Due 2039-1, Downgraded to B1 Under Review for
Possible Downgrade; previously on 5/23/2008 Ba1 Placed Under
Review for Possible Downgrade
-- US$258,000,000 Class A-1 LT-a Floating Rate Notes Due 2039,
Downgraded to Aa3 Placed Under Review for Possible
Downgrade; previously on 1/11/2005 Assigned Aaa
-- US$40,000,000 Class B Floating Rate Notes Due 2039-1,
Downgraded to A3 Under Review for Possible Downgrade;
previously on 5/23/2008 Aa3 Placed Under Review for Possible
Downgrade
-- US$5,000,000 Combination Securities Due 2039, Downgraded to
Caa3 Under Review for Possible Downgrade; previously
on 5/23/2008 B3 Placed Under Review for Possible Downgrade
-- US$50,000,000 Class A-2 Floating Rate Notes Due 2039-1,
Downgraded to A1 Under Review for Possible Downgrade;
previously on 5/23/2008 Aa1 Placed Under Review for Possible
Downgrade
-- US$9,000,000 Class D Floating Rate Deferrable Interest Notes
Due 2039-1, Downgraded to Caa3 Under Review for
Possible Downgrade; previously on 5/23/2008 Caa2 Placed Under
Review for Possible Downgrade
Zenith Funding, Ltd.
-- A-1, Downgraded to Caa1 Under Review for Possible Downgrade;
previously on 6/17/2008 B1 Placed Under Review for
Possible Downgrade
* S&P Junks Ratings on 14 Classes from 10 RMBS Transactions
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 22
classes of mortgage pass-through certificates from 10 U.S.
residential mortgage-backed securities transactions backed by
prime jumbo mortgage collateral issued in 2003 and 2004. At the
same time, S&P affirmed its ratings on 906 classes from 25
transactions, including those with lowered ratings.
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. The seasoning of these deals ranged from 48
months to 65 months as of the October 2008 distribution period.
Cumulative losses for the downgraded transactions ranged from
0.00% to 0.23% of the original pool balances. Total delinquencies
from these same transactions ranged from 0.84% to 20.44% of the
current pool balances, while severe delinquencies (90-plus days,
foreclosures, and real estate owned) ranged from 0.35% to 12.27%
of the current pool balances.
The affirmations reflect actual and projected credit enhancement
percentages that are sufficient to support the current ratings. A
senior-subordinate structure provides credit support for
transactions with lowered and affirmed ratings. The collateral
backing the certificates originally consisted of 15- to 30-year,
prime jumbo fixed- and adjustable-rate mortgage loans secured by
one- to four-family residential properties.
Rating Actions
Cendant Mortgage Capital LLC
Series 2003-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 15132EDV7 CCC B
MASTR Adjustable Rate Mortgages Trust 2003-4
Series 2003-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 576433EW2 BB BBB
B-4 576433EX0 CCC BB
B-5 576433EY8 CC B
MASTR Adjustable Rate Mortgages Trust 2003-5
Series 2003-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 576433FW1 CCC B
MASTR Adjustable Rate Mortgages Trust 2003-6
Series 2003-6
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 576433GZ3 B BB
B-5 576433HA7 CCC B
MASTR Adjustable Rate Mortgages Trust 2004-3
Series 2004-3
Rating
------
Class CUSIP To From
----- ----- -- ----
B-5 576433LU8 CCC B
MASTR Adjustable Rate Mortgages Trust 2004-4
Series 2004-4
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 576433MP8 BB BBB
B-4 576433MQ6 CCC BB
B-5 576433MR4 CC B
MASTR Adjustable Rate Mortgages Trust 2004-5
Series 2004-5
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 576433NL6 B BB
B-5 576433NM4 CCC B
MASTR Adjustable Rate Mortgages Trust 2004-6
Series 2004-6
Rating
------
Class CUSIP To From
----- ----- -- ----
B-4 576433PL4 B BB
B-5 576433PM2 CCC B
MASTR Adjustable Rate Mortgages Trust 2004-10
Series 2004-10
Rating
------
Class CUSIP To From
----- ----- -- ----
B-2 576433TC0 BB A
B-3 576433TD8 B BBB
B-4 576433SR8 CCC BB
B-5 576433SS6 CC B
MASTR Asset Securitization Trust 2003-12
Series 2003-12
Rating
------
Class CUSIP To From
----- ----- -- ----
B-3 55265K4K2 BB BBB
B-4 55265K4L0 CCC BB
B-5 55265K4M8 CC B
Ratings Affirmed
ABN AMRO Mortgage Corp.
Series 2002-9
Class CUSIP Rating
----- ----- ------
A-3 00077B3T8 AAA
A-4 00077B3U5 AAA
A-25 00077B4R1 AAA
A-30 00077B4W0 AAA
A-P 00077B5A7 AAA
A-X 00077B5B5 AAA
M 00077B5C3 AAA
B-1 00077B5D1 AA+
B-2 00077B5E9 AA
ABN AMRO Mortgage Corp.
Series 2002-10
Class CUSIP Rating
----- ----- ------
IA-3 00077B5M1 AAA
IA-4 00077B5N9 AAA
IA-6 00077B5Q2 AAA
IA-8 00077B5S8 AAA
IA-25 00077B7B3 AAA
IA-26 00077B7C1 AAA
IA-X 00077B5W9 AAA
IIA-1 00077B5X7 AAA
IIA-3 00077B5Z2 AAA
IIA-X 00077B6A6 AAA
A-P 00077B6B4 AAA
M 00077B6C2 AAA
B-1 00077B6D0 AA+
B-2 00077B6E8 A-
ABN AMRO Mortgage Corp.
Series 2003-1
Class CUSIP Rating
----- ----- ------
A-1 00077B7D9 AAA
A-2 00077B7E7 AAA
A-3 00077B7F4 AAA
A-4 00077B7G2 AAA
A-P 00077B7H0 AAA
A-X 00077B7J6 AAA
M 00077B7K3 AAA
B-1 00077B7L1 AA
B-2 00077B7M9 BBB+
ABN AMRO Mortgage Corp.
Series 2003-2
Class CUSIP Rating
----- ----- ------
IA-1 000780BF2 AAA
IA-2 000780BG0 AAA
IA-3 000780BH8 AAA
IA-4 000780BJ4 AAA
IIA-1 000780BK1 AAA
IIA-2 000780BL9 AAA
A-P 000780BM7 AAA
A-X 000780BN5 AAA
M 000780BP0 AA+
B-1 000780BQ8 AA
B-2 000780BR6 A-
B-3 000780BT2 BBB+
B-4 000780BU9 BB-
ABN AMRO Mortgage Corp.
Series 2003-5
Class CUSIP Rating
----- ----- ------
A-2 000780DH6 AAA
A-3 000780DJ2 AAA
A-4 000780DK9 AAA
A-11 000780DS2 AAA
A-29 000780EL6 AAA
A-31 000780EN2 AAA
A-X 000780EP7 AAA
A-P 000780EQ5 AAA
IIA-1 000780ER3 AAA
IIA-2 000780ES1 AAA
IIA-3 000780ET9 AAA
IIA-4 000780EU6 AAA
IIA-5 000780EV4 AAA
IIA-X 000780EW2 AAA
IIA-P 000780EX0 AAA
M 000780EY8 AA+
B-1 000780EZ5 A+
B-2 000780FA9 BBB
B-3 000780FC5 BB
B-4 000780FE1 B
ABN AMRO Mortgage Corp.
Series 2003-7
Class CUSIP Rating
----- ----- ------
A-1 000780KM7 AAA
A-2 000780KN5 AAA
A-3 000780KP0 AAA
A-4 000780KQ8 AAA
A-5 000780KR6 AAA
A-6 000780KS4 AAA
A-P 000780KT2 AAA
A-X 000780KU9 AAA
M 000780KV7 AA
B-1 000780KW5 A
B-2 000780KX3 BBB
B-3 000780KZ8 BB
B-4 000780LA2 B
ABN AMRO Mortgage Corp.
Series 2003-8
Class CUSIP Rating
----- ----- ------
A-1 000780HU3 AAA
A-2 000780HV1 AAA
A-3 000780HW9 AAA
A-4 000780HX7 AAA
A-8 000780JB3 AAA
A-12 000780JF4 AAA
A-13 000780JG2 AAA
A-18 000780JM9 AAA
A-19 000780JN7 AAA
A-20 000780JP2 AAA
A-21 000780JQ0 AAA
A-22 000780JR8 AAA
A-23 000780JS6 AAA
A-24 000780JT4 AAA
A-25 000780JU1 AAA
A-26 000780JV9 AAA
A-29 000780JY3 AAA
A-30 000780JZ0 AAA
A-P 000780KF2 AAA
A-X 000780KG0 AAA
M 000780KH8 AA
B-1 000780KJ4 A-
B-2 000780KK1 BBB-
ABN AMRO Mortgage Corp.
Series 2003-9
Class CUSIP Rating
----- ----- ------
A-1 000780LC8 AAA
A-2 000780LD6 AAA
A-3 000780LE4 AAA
A-4 000780LF1 AAA
A-5 000780LG9 AAA
A-6 000780LH7 AAA
A-P 000780LJ3 AAA
A-X 000780LK0 AAA
M 000780LL8 AA
B-1 000780LM6 A
B-2 000780LN4 BBB
B-3 000780LQ7 BB
B-4 000780LS3 B
ABN AMRO Mortgage Corp.
Series 2003-11
Class CUSIP Rating
----- ----- ------
A-1 000780ML7 AAA
A-2 000780MM5 AAA
A-3 000780MN3 AAA
A-4 000780MP8 AAA
A-5 000780MQ6 AAA
A-7 000780MS2 AAA
A-8 000780MT0 AAA
A-9 000780MU7 AAA
A-11 000780MW3 AAA
A-12 000780MX1 AAA
A-13 000780MY9 AAA
A-14 000780MZ6 AAA
A-P 000780NA0 AAA
M 000780NC6 AA
B-1 000780ND4 A+
B-2 000780NE2 BBB+
B-3 000780NG7 BB
B-4 000780NH5 B
Cendant Mortgage Capital LLC
Series 2002-8
Class CUSIP Rating
----- ----- ------
A-1 15132EBH0 AAA
A-3 15132EBK3 AAA
A-4 15132EBL1 AAA
A-5 15132EBM9 AAA
A-6 15132EBN7 AAA
A-7 15132EBP2 AAA
A-8 15132EBQ0 AAA
A-9 15132EBR8 AAA
P 15132EBU1 AAA
X 15132EBV9 AAA
Cendant Mortgage Capital LLC
Series 2003-4
Class CUSIP Rating
----- ----- ------
I-A-1 15132ECZ9 AAA
I-A-2 15132EDA3 AAA
I-A-3 15132EDB1 AAA
I-A-4 15132EDC9 AAA
I-A-5 15132EDD7 AAA
II-A-1 15132EDE5 AAA
II-A-2 15132EDF2 AAA
II-A-3 15132EDG0 AAA
II-A-4 15132EDH8 AAA
I-P 15132EDJ4 AAA
I-X 15132EDK1 AAA
II-P 15132EDL9 AAA
II-X 15132EDM7 AAA
B-1 15132EDR6 AA
B-2 15132EDS4 A
B-3 15132EDT2 BBB
B-4 15132EDU9 BB
Cendant Mortgage Capital LLC
Series 2003-6
Class CUSIP Rating
----- ----- ------
A-2 15132EDY1 AAA
A-3 15132EDZ8 AAA
A-4 15132EEA2 AAA
A-5 15132EEB0 AAA
A-6 15132EEC8 AAA
A-7 15132EED6 AAA
P 15132EEE4 AAA
X 15132EEF1 AAA
B-3 15132EEJ3 BBB
MASTR Adjustable Rate Mortgages Trust 2003-1
Series 2003-1
Class CUSIP Rating
----- ----- ------
2-A-1 576433DA1 AAA
2-A-2 576433DC7 AAA
2-A-3 576433DD5 AAA
2-A-IO 576433CK0 AAA
3-A-1 576433CL8 AAA
3-A-IO 576433CM6 AAA
B-1 576433CQ7 AA+
B-2 576433CR5 AA
B-3 576433CS3 A-
MASTR Adjustable Rate Mortgages Trust 2003-2
Series 2003-2
Class CUSIP Rating
----- ----- ------
1-A-1 576433DE3 AAA
2-A-1 576433DF0 AAA
3-A-1 576433DG8 AAA
3-A-X 576433DH6 AAA
4-A-1 576433DJ2 AAA
4-A-2 576433DK9 AAA
4-A-X 576433DL7 AAA
5-A-1 576433DM5 AAA
5-A-2 576433DX1 AAA
6-A-1 576433DN3 AAA
6-A-X 576433DP8 AAA
B-1 576433DR4 AA
B-2 576433DS2 A+
B-3 576433DT0 BBB
MASTR Adjustable Rate Mortgages Trust 2003-4
Series 2003-4
Class CUSIP Rating
----- ----- ------
1-A-1 576433EQ5 AAA
2-A-1 576433ER3 AAA
3-A-1 576433ES1 AAA
B-1 576433EU6 AA
B-2 576433EV4 A
MASTR Adjustable Rate Mortgages Trust 2003-5
Series 2003-5
Class CUSIP Rating
----- ----- ------
1-A-1 576433FA9 AAA
1-A-2 576433FB7 AAA
1-A-X 576433FC5 AAA
2-A-1 576433FD3 AAA
2-A-X 576433FE1 AAA
3-A-1 576433FF8 AAA
4-A-1 576433FG6 AAA
4-A-2 576433FH4 AAA
4-A-3 576433FJ0 AAA
4-A-X 576433FK7 AAA
5-A-1 576433FL5 AAA
6-A-1 576433FM3 AAA
B-1 576433FP6 AA+
B-2 576433FQ4 A+
B-3 576433FR2 BBB+
B-4 576433FV3 BB+
MASTR Adjustable Rate Mortgages Trust 2003-6
Series 2003-6
Class CUSIP Rating
----- ----- ------
1-A-2 576433GA8 AAA
1-A-2X 576433GB6 AAA
2-A-1 576433GC4 AAA
2-A-2 576433GD2 AAA
2-A-X 576433GE0 AAA
3-A-1 576433GF7 AAA
3-A-X 576433HC3 AAA
4-A-1 576433GG5 AAA
4-A-2 576433GH3 AAA
4-A-X 576433GJ9 AAA
5-A-1 576433GK6 AAA
5-A-X 576433GL4 AAA
6-A-1 576433GM2 AAA
7-A-1 576433GN0 AAA
7-A-1X 576433HD1 AAA
7-A-2 576433GP5 AAA
7-A-2X 576433HE9 AAA
7-A-3 576433GQ3 AAA
8-A-1 576433GS9 AAA
8-A-X 576433GT7 AAA
B-1 576433GW0 AA+
B-2 576433GX8 A+
B-3 576433GY6 BBB
MASTR Adjustable Rate Mortgages Trust 2004-3
Series 2004-3
Class CUSIP Rating
----- ----- ------
1-A-1 576433KM7 AAA
1-A-X 576433KN5 AAA
2-A-1 576433KP0 AAA
2-A-X 576433KQ8 AAA
3-A-1 576433KR6 AAA
3-A-2 576433KS4 AAA
3-A-3 576433KT2 AAA
3-A-4 576433KU9 AAA
3-A-X 576433KV7 AAA
4-A-1 576433KW5 AAA
4-A-2 576433KX3 AAA
4-A-X 576433KY1 AAA
5-A-1 576433KZ8 AAA
5-A-2 576433LA2 AAA
5-A-X 576433LB0 AAA
6-A-1 576433LC8 AAA
6-A-X 576433LD6 AAA
7-A-1 576433LE4 AAA
7-A-X 576433LF1 AAA
8-A-1 576433LG9 AAA
8-A-2 576433LH7 AAA
8-A-3 576433LJ3 AAA
8-A-4 576433LK0 AAA
8-A-X 576433LL8 AAA
B-1 576433LP9 AA+
B-1-X 576433LQ7 AA+
B-2 576433LR5 A+
B-3 576433LS3 BBB+
B-4 576433LT1 BB
MASTR Adjustable Rate Mortgages Trust 2004-4
Series 2004-4
Class CUSIP Rating
----- ----- ------
1-A-1 576433LW4 AAA
1-A-X 576433LX2 AAA
2-A-1 576433LY0 AAA
2-A-2 576433LZ7 AAA
2-A-3 576433MA1 AAA
2-A-X 576433MB9 AAA
3-A-1 576433MC7 AAA
3-A-X 576433MD5 AAA
4-A-1 576433ME3 AAA
4-A-2 576433MF0 AAA
4-A-X 576433MG8 AAA
5-A-1 576433MH6 AAA
5-A-X 576433MJ2 AAA
B-1 576433MM5 AA
B-2 576433MN3 A
MASTR Adjustable Rate Mortgages Trust 2004-5
Series 2004-5
Class CUSIP Rating
----- ----- ------
1-A-1 576433MT0 AAA
2-A-1 576433MU7 AAA
2-A-X 576433MV5 AAA
3-A-1 576433MW3 AAA
4-A-1 576433MX1 AAA
5-A-1 576433MY9 AAA
6-A-1 576433MZ6 AAA
6-A-X 576433NA0 AAA
7-A-1 576433NB8 AAA
9-A-2 576433NP7 AAA
9-A-X 576433NE2 AAA
B-1 576433NH5 AA+
B-2 576433NJ1 AA-
B-3 576433NK8 A-
MASTR Adjustable Rate Mortgages Trust 2004-6
Series 2004-6
Class CUSIP Rating
----- ----- ------
1-A-1 576433NQ5 AAA
2-A-1 576433NR3 AAA
3-A-1 576433NS1 AAA
4-A-4 576433NW2 AAA
4-A-5 576433NX0 AAA
4-A-6 576433NY8 AAA
4-A-7 576433NZ5 AAA
4-A-8 576433PA8 AAA
4-A-9 576433PB6 AAA
5-A-1 576433PD2 AAA
6-A-1 576433PE0 AAA
B-1 576433PH3 AA
B-2 576433PJ9 A
B-3 576433pk6 BBB+
MASTR Adjustable Rate Mortgages Trust 2004-10
Series 2004-10
Class CUSIP Rating
----- ----- ------
1-A-1 576433SU1 AAA
2-A-1 576433SV9 AAA
2-A-2 576433SW7 AAA
3-A-1 576433SX5 AAA
3-A-2 576433SY3 AAA
B-1 576433TB2 AA
MASTR Adjustable Rate Mortgages Trust 2004-13
Series 2004-13
Class CUSIP Rating
----- ----- ------
1-A-1 576433UD6 AAA
1-A-2 576433WD4 AAA
2-A-1 576433UE4 AAA
2-A-2 576433WE2 AAA
2-A-3 576433WF9 AAA
3-A-1 576433UF1 AAA
3-A-1A 576433WG7 AAA
3-A-1B 576433WH5 AAA
3-A-1C 576433WJ1 AAA
3-A-4 576433UJ3 AAA
3-A-5 576433UK0 AAA
3-A-6 576433UL8 AAA
3-A-7 576433UM6 AAA
3-A-7A 576433WL6 AAA
3-A-7B 576433WM4 AAA
3-A-8 576433WN2 AAA
3-A-X 576433WP7 AAA
4-A-1 576433WQ5 AAA
B-1 576433UQ7 AA
B-2 576433UR5 A-
B-3 576433US3 BBB
B-4 576433UT1 BB
B-5 576433UU8 B
MASTR Asset Securitization Trust 2002-8
Series 2002-8
Class CUSIP Rating
----- ----- ------
1-A-1 55265KNJ4 AAA
1-A-2 55265KNK1 AAA
1-A-3 55265KNL9 AAA
1-A-4 55265KNM7 AAA
1-A-5 55265KNN5 AAA
1-A-11 55265KNU9 AAA
1-PO 55265KNV7 AAA
1-A-X 55265KNW5 AAA
2-A-5 55265KPB9 AAA
2-A-6 55265KPC7 AAA
2-PO 55265KPD5 AAA
2-A-X 55265KPE3 AAA
B-1 55265KPG8 AAA
B-2 55265KPH6 AAA
B-3 55265KPJ2 AA+
MASTR Asset Securitization Trust 2003-2
Series 2003-2
Class CUSIP Rating
----- ----- ------
1-A-1 55265KRL5 AAA
2-A-1 55265KRN1 AAA
2-A-2 55265KRP6 AAA
2-A-3 55265KRQ4 AAA
2-A-6 55265KRT8 AAA
2-A-7 55265KRU5 AAA
2-A-8 55265KRV3 AAA
2-A-9 55265KRW1 AAA
2-A-10 55265KRX9 AAA
15-A-X 55265KSB6 AAA
PO 55265KST7 AAA
15-B-1 55265KSU4 AAA
15-B-2 55265KSV2 AA-
15-B-3 55265KSW0 BBB+
15-B-4 55265KTA7 BB+
15-B-5 55265KTB5 B
3-A-2 55265KSD2 AAA
3-A-5 55265KSG5 AAA
3-A-11 55265KSN0 AAA
3-A-12 55265KSP5 AAA
3-A-13 55265KSQ3 AAA
3-A-14 55265KSR1 AAA
30-A-X 55265KSS9 AAA
30-B-1 55265KSX8 AAA
30-B-2 55265KSY6 AA+
30-B-3 55265KSZ3 AA
30-B-4 55265KTD1 A
30-B-5 55265KTE9 BB
MASTR Asset Securitization Trust 2003-3
Series 2003-3
Class CUSIP Rating
----- ----- ------
1-A-1 55265KTG4 AAA
2-A-1 55265KTH2 AAA
2-A-2 55265KTJ8 AAA
2-A-3 55265KTK5 AAA
2-A-4 55265KTL3 AAA
3-A-2 55265KTN9 AAA
3-A-4 55265KTQ2 AAA
3-A-5 55265KTR0 AAA
3-A-3 55265KTP4 AAA
3-A-6 55265KTS8 AAA
3-A-7 55265KTT6 AAA
3-A-8 55265KTU3 AAA
3-A-17 55265KUD9 AAA
3-A-18 55265KUE7 AAA
4-A-1 55265KUG2 AAA
5-A-1 55265KUH0 AAA
PO-1 55265KUK3 AAA
PO-2 55265KUJ6 AAA
A-X-1 55265KUM9 AAA
A-X-2 55265KUV9 AAA
A-X-3 55265KUL1 AAA
A-X-4 55265KUW7 AAA
B-1 55265KUP2 AAA
B-2 55265KUQ0 AA+
B-3 55265KUR8 A+
B-4 55265KUS6 BBB+
B-5 55265KUT4 BB
MASTR Asset Securitization Trust 2003-4
Series 2003-4
Class CUSIP Rating
----- ----- ------
1-A-1 55265KUX5 AAA
2-A-1 55265KUY3 AAA
2-A-2 55265KUZ0 AAA
2-A-3 55265KVA4 AAA
2-A-4 55265KVB2 AAA
2-A-5 55265KVC0 AAA
2-A-6 55265KVD8 AAA
2-A-7 55265KXD6 AAA
3-A-1 55265KVE6 AAA
3-A-2 55265KVF3 AAA
4-A-1 55265KVG1 AAA
4-A-2 55265KVH9 AAA
4-A-3 55265KVJ5 AAA
5-A-1 55265KVK2 AAA
6-A-1 55265KVL0 AAA
6-A-2 55265KVM8 AAA
6-A-3 55265KVN6 AAA
6-A-5 55265KVQ9 AAA
6-A-6 55265KVR7 AAA
6-A-7 55265KVS5 AAA
6-A-8 55265KVT3 AAA
6-A-9 55265KVU0 AAA
6-A-10 55265KVV8 AAA
6-A-11 55265KVW6 AAA
6-A-16 55265KWB1 AAA
6-A-17 55265KWC9 AAA
7-A-1 55265KWD7 AAA
7-A-2 55265KWE5 AAA
8-A-1 55265KWF2 AAA
8-A-2 55265KWG0 AAA
8-A-3 55265KWH8 AAA
8-A-4 55265KWJ4 AAA
C-A-1 55265KWK1 AAA
C-A-2 55265KWL9 AAA
PO 55265KWM7 AAA
15-A-X 55265KWN5 AAA
30-A-X 55265KWP0 AAA
B-1 55265KWR6 AA+
B-2 55265KWS4 AA
B-3 55265KWT2 A
6-B-1 55265KWU9 AA+
6-B-2 55265KWV7 AA
6-B-3 55265KWW5 A-
B-4 55265KWX3 BBB
B-5 55265KWY1 B+
6-B-4 55265KXA2 BBB-
6-B-5 55265KXB0 B
MASTR Asset Securitization Trust 2003-5
Series 2003-5
Class CUSIP Rating
----- ----- ------
1-A-1 55265KXH7 AAA
2-A-1 55265KXJ3 AAA
2-A-2 55265KXK0 AAA
2-A-3 55265KXL8 AAA
2-A-4 55265KXM6 AAA
2-A-5 55265KXN4 AAA
3-A-1 55265KXP9 AAA
4-A-1 55265KXQ7 AAA
4-A-2 55265KXR5 AAA
4-A-3 55265KXS3 AAA
4-A-4 55265KXT1 AAA
4-A-5 55265KXU8 AAA
5-A-1 55265KXV6 AAA
15-PO 55265KXW4 AAA
30-PO 55265KXX2 AAA
15-AX 55265KXY0 AAA
30-AX 55265KXZ7 AAA
B-1 55265KYB9 AA+
B-2 55265KYC7 A+
B-3 55265KYD5 BBB+
B-4 55265KXE4 BB
B-5 55265KXF1 B
MASTR Asset Securitization Trust 2003-6
Series 2003-6
Class CUSIP Rating
----- ----- ------
1-A-1 55265KYE3 AAA
2-A-1 55265KYF0 AAA
3-A-1 55265KYG8 AAA
3-A-2 55265KYH6 AAA
3-A-3 55265KYJ2 AAA
3-A-5 55265KYL7 AAA
4-A-1 55265KYM5 AAA
5-A-1 55265KYN3 AAA
6-A-1 55265KYP8 AAA
6-A-2 55265KYQ6 AAA
6-A-3 55265KYR4 AAA
6-A-4 55265KYS2 AAA
6-A-5 55265KYT0 AAA
6-A-6 55265KYU7 AAA
6-A-7 55265KYV5 AAA
6-A-8 55265KYW3 AAA
6-A-9 55265KYX1 AAA
7-A-1 55265KYY9 AAA
8-A-1 55265KYZ6 AAA
9-A-1 55265KZA0 AAA
9-A-2 55265KZB8 AAA
9-A-3 55265KZC6 AAA
9-A-4 55265KZD4 AAA
9-A-5 55265KZE2 AAA
9-A-6 55265KZF9 AAA
9-A-7 55265KZG7 AAA
PO 55265KZH5 AAA
PP-A-X 55265KZJ1 AAA
15-A-X 55265KZK8 AAA
30-A-X 55265KZL6 AAA
15-B-1 55265KZN2 AA+
15-B-2 55265KZP7 A+
15-B-3 55265KZQ5 BBB
30-B-1 55265KZR3 AA
30-B-2 55265KZS1 A
30-B-3 55265KZT9 BBB
15-B-4 55265KZU6 BB
15-B-5 55265KZV4 B
30-B-4 55265KZX0 BB
30-B-5 55265KZY8 B
MASTR Asset Securitization Trust 2003-7
Series 2003-7
Class CUSIP Rating
----- ----- ------
I-A-1 55265KA25 AAA
1-A-2 55265KA33 AAA
1-A-3 55265KA41 AAA
2-A-1 55265KA58 AAA
2-A-2 55265KA66 AAA
2-A-3 55265KA74 AAA
2-A-4 55265KA82 AAA
2-A-5 55265KA90 AAA
2-A-6 55265KB24 AAA
2-A-7 55265KB32 AAA
3-A-1 55265KB40 AAA
3-A-2 55265KB57 AAA
4-A-1 55265KB65 AAA
4-A-2 55265KB73 AAA
4-A-3 55265KB81 AAA
4-A-4 55265KB99 AAA
4-A-6 55265KC31 AAA
4-A-7 55265KC49 AAA
4-A-8 55265KC56 AAA
4-A-12 55265KC98 AAA
4-A-18 55265KD71 AAA
4-A-19 55265KD89 AAA
4-A-21 55265KE21 AAA
4-A-22 55265KE39 AAA
4-A-24 55265KE54 AAA
4-A-32 55265KF53 AAA
4-A-33 55265KF61 AAA
4-A-34 55265KF79 AAA
4-A-35 55265KF87 AAA
4-A-36 55265KF95 AAA
4-A-37 55265KG29 AAA
4-A-38 55265KG37 AAA
4-A-41 55265KG60 AAA
4-A-42 55265KG78 AAA
4-A-44 55265KG94 AAA
4-A-45 55265KH28 AAA
4-A-46 55265KH36 AAA
5-A-1 55265KH44 AAA
15-PO 55265KH51 AAA
30-PO 55265KH69 AAA
PP-A-X 55265KH77 AAA
15-A-X 55265KH85 AAA
30-A-X 55265KH93 AAA
B-1 55265KJ34 AA
B-2 55265KJ42 A
B-3 55265KJ59 BBB
B-4 55265KJ67 BB
B-5 55265KJ75 B
MASTR Asset Securitization Trust 2003-9
Series 2003-9
Class CUSIP Rating
----- ----- ------
1-A-1 55265KP37 AAA
2-A-1 55265KP45 AAA
2-A-2 55265KP52 AAA
2-A-3 55265KP60 AAA
2-A-4 55265KP78 AAA
2-A-5 55265KP86 AAA
2-A-6 55265KP94 AAA
2-A-7 55265KQ28 AAA
2-A-8 55265KQ36 AAA
2-A-9 55265KQ44 AAA
2-A-10 55265KQ51 AAA
2-A-11 55265KQ69 AAA
2-A-12 55265KQ77 AAA
3-A-1 55265KQ85 AAA
4-A-1 55265KQ93 AAA
4-A-2 55265KR27 AAA
5-A-1 55265KR35 AAA
5-A-2 55265KR43 AAA
5-A-3 55265KR50 AAA
15-PO 55265KR68 AAA
30-PO 55265KR76 AAA
15-A-X 55265KR84 AAA
30-A-X 55265KR92 AAA
B-1 55265KS34 AA
B-2 55265KS42 A
B-3 55265KS59 BBB
B-4 55265KS67 BB
B-5 55265KS75 B
MASTR Asset Securitization Trust 2003-10
Series 2003-10
Class CUSIP Rating
----- ----- ------
1-A-1 55265KS91 AAA
1-A-2 55265KT25 AAA
2-A-1 55265KT33 AAA
3-A-1 55265KT41 AAA
3-A-2 55265KT58 AAA
3-A-3 55265KT66 AAA
3-A-4 55265KT74 AAA
3-A-5 55265KT82 AAA
3-A-6 55265KT90 AAA
3-A-7 55265KU23 AAA
4-A-1 55265KU31 AAA
5-A-1 55265KU49 AAA
6-A-1 55265KU56 AAA
15-PO 55265KU64 AAA
30-PO 55265KU72 AAA
15-A-X 55265KU80 AAA
30-A-X 55265KU98 AAA
B-1 55265KV30 AA
B-2 55265KV48 A
B-3 55265KV55 BBB
B-4 55265KV63 BB
B-5 55265KV71 B
MASTR Asset Securitization Trust 2003-11
Series 2003-11
Class CUSIP Rating
----- ----- ------
1-A-1 55265KW47 AAA
2-A-1 55265KW54 AAA
2-A-2 55265KW62 AAA
2-A-3 55265KW70 AAA
2-A-4 55265KW88 AAA
2-A-5 55265KW96 AAA
2-A-6 55265KX20 AAA
2-A-7 55265KX38 AAA
2-A-8 55265KX46 AAA
2-A-9 55265KX53 AAA
2-A-10 55265KX61 AAA
2-A-11 55265KX79 AAA
2-A-12 55265KX87 AAA
3-A-1 55265KX95 AAA
3-A-2 55265KY29 AAA
3-A-3 55265KY37 AAA
4-A-1 55265KY45 AAA
5-A-1 55265KY52 AAA
5-A-2 55265K3H0 AAA
6-A-2 55265KY78 AAA
6-A-3 55265KY86 AAA
6-A-4 55265KY94 AAA
6-A-6 55265KZ36 AAA
6-A-7 55265KZ44 AAA
6-A-8 55265KZ51 AAA
6-A-9 55265KZ69 AAA
6-A-10 55265KZ77 AAA
6-A-11 55265KZ85 AAA
6-A-12 55265KZ93 AAA
6-A-13 55265K2A6 AAA
6-A-14 55265K2B4 AAA
6-A-15 55265K2C2 AAA
6-A-16 55265K2D0 AAA
6-A-17 55265K2E8 AAA
7-A-1 55265K2F5 AAA
7-A-2 55265K2G3 AAA
7-A-3 55265K2H1 AAA
7-A-4 55265K2J7 AAA
7-A-5 55265K2K4 AAA
7-A-6 55265K2L2 AAA
7-A-7 55265K2M0 AAA
8-A-1 55265K2N8 AAA
9-A-1 55265K2P3 AAA
9-A-2 55265K2Q1 AAA
9-A-3 55265K2R9 AAA
9-A-4 55265K2S7 AAA
9-A-5 55265K2T5 AAA
9-A-6 55265K2U2 AAA
9-A-7 55265K2V0 AAA
9-A-8 55265K2W8 AAA
10-A-1 55265K2X6 AAA
30-PO 55265K2Z1 AAA
15-A-X 55265K3A5 AAA
30-A-X 55265K3B3 AAA
B-1 55265K3E7 AA
B-2 55265K3F4 A
B-3 55265K3G2 BBB
B-4 55265KV97 BB
B-5 55265KW21 B
15-P0 55265K2Y4 AAA
MASTR Asset Securitization Trust 2003-12
Series 2003-12
Class CUSIP Rating
----- ----- ------
1-A-1 55265K3J6 AAA
1-A-2 55265K3K3 AAA
2-A-1 55265K3L1 AAA
3-A-1 55265K3M9 AAA
3-A-2 55265K3N7 AAA
3-A-3 55265K3P2 AAA
3-A-4 55265K3Q0 AAA
3-A-5 55265K3R8 AAA
3-A-6 55265K3S6 AAA
3-A-7 55265K3T4 AAA
3-A-8 55265K3U1 AAA
3-A-9 55265K3V9 AAA
3-A-10 55265K4P1 AAA
4-A-1 55265K3W7 AAA
5-A-1 55265K3X5 AAA
5-A-2 55265K3Y3 AAA
6-A-1 55265K3Z0 AAA
6-A-2 55265K4A4 AAA
15-PO 55265K4B2 AAA
30-PO 55265K4C0 AAA
15-A-X 55265K4D8 AAA
30-A-X 55265K4E6 AAA
B-1 55265K4H9 AA
B-2 55265K4J5 A
MASTR Asset Securitization Trust 2004-1
Series 2004-1
Class CUSIP Rating
----- ----- ------
1-A-1 55265K5B1 AAA
1-A-6 55265K5G0 AAA
1-A-7 55265K5H8 AAA
1-A-8 55265K5J4 AAA
1-A-9 55265K5K1 AAA
1-A-10 55265K5L9 AAA
1-A-11 55265K5M7 AAA
1-A-12 55265K5N5 AAA
2-A-1 55265K5P0 AAA
3-A-1 55265K5Q8 AAA
3-A-2 55265K5R6 AAA
3-A-3 55265K5S4 AAA
3-A-4 55265K5T2 AAA
3-A-5 55265K5U9 AAA
3-A-6 55265K5V7 AAA
3-A-7 55265K5W5 AAA
3-A-8 55265K5X3 AAA
4-A-1 55265K5Y1 AAA
4-A-2 55265K5Z8 AAA
5-A-4 55265K6E4 AAA
5-A-8 55265K6J3 AAA
5-A-13 55265K6P9 AAA
5-A-14 55265K6Q7 AAA
5-A-15 55265K6R5 AAA
5-A-16 55265K6S3 AAA
5-A-17 55265K6T1 AAA
5-A-18 55265K6U8 AAA
5-A-19 55265K6V6 AAA
5-A-20 55265K7J2 AAA
15-PO 55265K6W4 AAA
30-PO 55265K6X2 AAA
15-A-X 55265K6Y0 AAA
30-A-X 55265K6Z7 AAA
B-1 55265K7C7 AA
B-2 55265K7D5 A
B-3 55265K7E3 BBB
B-4 55265K7F0 BB
B-5 55265K7G8 B
MASTR Asset Securitization Trust 2004-3
Series 2004-3
Class CUSIP Rating
----- ----- ------
1-A-1 55265K7K9 AAA
1-A-2 55265K7L7 AAA
1-A-3 55265K7M5 AAA
2-A-1 55265K7N3 AAA
3-A-1 55265K7P8 AAA
3-A-2 55265K7Q6 AAA
4-A-2 55265K7S2 AAA
4-A-3 55265K7T0 AAA
4-A-4 55265K7U7 AAA
4-A-5 55265K7V5 AAA
4-A-6 55265K7W3 AAA
4-A-7 55265K7X1 AAA
4-A-8 55265K7Y9 AAA
4-A-9 55265K7Z6 AAA
4-A-10 55265K8A0 AAA
4-A-11 55265K8B8 AAA
4-A-12 55265K8C6 AAA
4-A-13 55265K8D4 AAA
4-A-14 55265K8E2 AAA
4-A-15 55265K8F9 AAA
5-A-1 55265K8P7 AAA
PO 55265K8G7 AAA
5-A-X 57643MAA2 AAA
15-A-X 55265K8J1 AAA
30-A-X 55265K8K8 AAA
B-1 55265K8L6 AA
B-2 55265K8M4 A
B-3 55265K8N2 BBB
B-4 55265K8Q5 BB
B-5 55265K8R3 B
MASTR Asset Securitization Trust 2004-4
Series 2004-4
Class CUSIP Rating
----- ----- ------
1-A-1 57643MAD6 AAA
1-A-2 57643MAE4 AAA
1-A-3 57643MAF1 AAA
1-A-4 57643MBD5 AAA
1-A-5 57643MBE3 AAA
1-A-6 57643MAG9 AAA
1-A-7 57643MAH7 AAA
1-A-8 57643MAJ3 AAA
2-A-1 57643MAK0 AAA
2-A-2 57643MAL8 AAA
2-A-3 57643MAM6 AAA
2-A-4 57643MAN4 AAA
2-A-5 57643MAP9 AAA
2-A-6 57643MAQ7 AAA
2-A-7 57643MBF0 AAA
2-A-8 57643MBG8 AAA
3-A-1 57643MAR5 AAA
PO 57643MAS3 AAA
15-A-X 57643MAT1 AAA
30-A-X 57643MAU8 AAA
B-4 57643MBA1 BB
B-5 57643MBB9 B
MASTR Asset Securitization Trust 2004-5
Series 2004-5
Class CUSIP Rating
----- ----- ------
1-A-1 57643MBH6 AAA
1-A-2 57643MBJ2 AAA
1-A-3 57643MBK9 AAA
1-A-4 57643MBL7 AAA
1-A-5 57643MBM5 AAA
1-A-6 57643MBN3 AAA
2-A-1 57643MBP8 AAA
15-PO 57643MBQ6 AAA
30-PO 57643MBR4 AAA
15-A-X 57643MBS2 AAA
30-A-X 57643MBT0 AAA
B-3 57643MBY9 BBB-
B-4 57643MBZ6 BB
B-5 57643MCA0 B
MASTR Asset Securitization Trust 2004-6
Series 2004-6
Class CUSIP Rating
----- ----- ------
1-A-1 57643MCM4 AAA
1-A-2 57643MDU5 AAA
2-A-1 57643MCN2 AAA
2-A-2 57643MCP7 AAA
2-A-3 57643MCQ5 AAA
2-A-4 57643MCR3 AAA
2-A-5 57643MCS1 AAA
2-A-6 57643MCT9 AAA
2-A-7 57643MCU6 AAA
2-A-8 57643MCV4 AAA
2-A-9 57643MCW2 AAA
2-A-10 57643MCX0 AAA
2-A-11 57643MCY8 AAA
2-A-12 57643MCZ5 AAA
2-A-13 57643MDA9 AAA
2-A-14 57643MDB7 AAA
2-A-15 57643MDC5 AAA
3-A-1 57643MDD3 AAA
4-A-1 57643MDE1 AAA
5-A-1 57643MDF8 AAA
5-A-2 57643MDT8 AAA
6-A-1 57643MDG6 AAA
7-A-1 57643MDH4 AAA
15-PO 57643MDJ0 AAA
30-PO 57643MDK7 AAA
15-A-X 57643MDL5 AAA
30-A-X 57643MDM3 AAA
1-B-1 57643MDV3 AA
B-1 57643MDQ4 AA
1-B-2 57643MDW1 A
B-2 57643MDR2 A
1-B-3 57643MDX9 BBB
B-3 57643MDS0 BBB
1-B-4 57643MDY7 BB
B-4 57643MEB6 BB
B-5 57643MEC4 B
1-B-5 57643MDZ4 B
MASTR Asset Securitization Trust 2004-8
Series 2004-8
Class CUSIP Rating
----- ----- ------
1-A-1 57643MEE0 AAA
2-A-1 57643MEF7 AAA
3-A-1 57643MEG5 AAA
PO 57643MEH3 AAA
A-X 57643MEJ9 AAA
B-1 57643MEM2 AA
B-2 57643MEN0 A
B-3 57643MEP5 BBB
B-4 57643MEY6 BB
B-5 57643MEZ3 B
4-A-2 57643MER1 AAA
4-A-3 57643MFB5 AAA
4-B-1 57643MES9 AA
4-B-2 57643MET7 A
4-B-3 57643MEU4 BBB
4-B-4 57643MEV2 BB
4-B-5 57643MEW0 B
MASTR Asset Securitization Trust 2004-10
Series 2004-10
Class CUSIP Rating
----- ----- ------
1-A-1 57643MGV0 AAA
2-A-1 57643MGW8 AAA
2-A-2 57643MGX6 AAA
2-A-3 57643MGY4 AAA
3-A-1 57643MGZ1 AAA
4-A-1 57643MHA5 AAA
4-A-2 57643MHB3 AAA
4-A-3 57643MHC1 AAA
4-A-4 57643MHD9 AAA
5-A-1 57643MHE7 AAA
5-A-2 57643MHF4 AAA
5-A-3 57643MHG2 AAA
5-A-4 57643MHH0 AAA
5-A-5 57643MHJ6 AAA
5-A-6 57643MHK3 AAA
6-A-1 57643MHL1 AAA
15-PO 57643MHM9 AAA
30-PO 57643MHN7 AAA
15-A-X 57643MHP2 AAA
30-A-X 57643MHQ0 AAA
B-1 57643MHT4 AA
B-2 57643MHU1 A
B-3 57643MHV9 BBB
B-4 57643MHW7 BB
B-5 57643MHX5 B
MASTR Asset Securitization Trust 2004-11
Series 2004-11
Class CUSIP Rating
----- ----- ------
1-A-1 57643MHZ0 AAA
2-A-1 57643MJA3 AAA
3-A-1 57643MJB1 AAA
4-A-1 57643MJC9 AAA
4-A-2 57643MJD7 AAA
4-A-3 57643MJE5 AAA
4-A-4 57643MJF2 AAA
4-A-5 57643MJG0 AAA
5-A-1 57643MJH8 AAA
5-A-2 57643MJJ4 AAA
5-A-3 57643MJK1 AAA
5-A-4 57643MJL9 AAA
5-A-5 57643MJM7 AAA
15-PO 57643MJP0 AAA
30-PO 57643MJQ8 AAA
15-A-X 57643MJR6 AAA
30-A-X 57643MJS4 AAA
B-5 57643MJZ8 B
MASTR Asset Securitization Trust 2004-P2
Series 2004-P2
Class CUSIP Rating
----- ----- ------
A-1 55265K4Q9 AAA
A-I-IO 55265K4R7 AAA
A-2 55265K4S5 AAA
B-1 55265K4V8 AA
B-2 55265K4W6 A
B-3 55265K4X4 BBB
B-4 55265K4Y2 BB
B-5 55265K4Z9 B
* Irving Picard Joins Baker & Hostetler in New York
---------------------------------------------------
Irving H. Picard has joined Baker & Hostetler LLP in its New York
City office. Mr. Picard, a noted expert in bankruptcy and
restructuring, currently serves as the Court-appointed trustee
under the Securities Investor Protection Act in the liquidation of
Bernard L. Madoff Investment Securities LLC.
"Irving's depth of knowledge in complicated restructurings and
experience as a trustee in major securities cases is widely
recognized," said George Stamboulidis, Head of the firm's White
Collar and Corporate Investigations Practice. "We are extremely
pleased he will be joining our team and look forward to drawing on
his expertise," said Mr. Stamboulidis, who will become Managing
Partner of the firm's New York office effective Jan. 1, 2009.
"This was also an opportunity for Irving to work again with his
long-time law partner and friend David Sheehan, as well as his
former partners Oren Warshavsky and Rick Lehrer, all of whom
joined us earlier this year. It's a great fit," Mr. Stamboulidis.
Steven Kestner, Executive Partner of Baker Hostetler, noted that
Picard is an ideal complement to the firm's strong practice in
monitorships, trusteeships and related areas of law. "In recent
years Baker Hostetler has been appointed as Independent Monitor of
Merrill Lynch and Mellon Bank as well as Independent Examiner of
the Bank of New York," Mr. Kestner said. "I am delighted that
Irving is joining this strong and highly respected team."
The firm's White Collar Defense and Corporate Investigations
Practice is among the nation's most experienced and effective.
Its white collar and securities attorneys come to Baker Hostetler
from distinguished careers in government as Assistant United
States Attorneys, Assistant District Attorneys and SEC enforcement
attorneys. In addition, the firm has a strong national
Bankruptcy, Creditors' Rights and Restructuring Practice which
will be a valuable resource for Mr. Picard in his role as trustee.
About Baker Hostetler
Baker Hostetler LLP -- http://www.bakerlaw.com-- is a law
firms with 600 attorneys coast to coast. The firm has offices
in Cincinnati, Cleveland, Columbus, Costa Mesa, Denver, Houston,
Los Angeles, New York, Orlando and Washington, D.C. Its four
primary practice groups are Business, Employment, Litigation and
Tax.
* Henry Paulson Asks Congress to Release Rest of TARP Funds
-----------------------------------------------------------
Deborah Solomon and Damian Paletta at The Wall Street Journal
report that Treasury Secretary Henry Paulson has urged the
Congress to release the rest of the funds from the Troubled Assets
Relief Program.
WSJ relates that the government's bailout of the auto industry has
drained what remained in the first half of $700 billion TARP fund.
Mr. Paulson, says WSJ, asked the lawmakers last week to release
the second $350 billion "to support financial market stability."
According to the report, Mr. Paulson said that he would discuss
tapping the money "in the near future" with congressional leaders
and members of President-elect Barack Obama's transition team.
WSJ states that while the first $350 billion has been allocated,
not all of the money has been spent and Treasury could tap the
unused funds. Citing senior Democrats on Capitol Hill, WSJ
reports that President George W. Bush would request for the
release of the second half of the TARP funds in early January,
after Congress reconvenes, but before Barack Obama takes office.
According to WSJ, House Financial Services Committee Chairperson
Barney Frank had said that Mr. Paulson's ability to get that next
$350 billion in TARP funds has "been destroyed" unless he agreed
on a foreclosure plan that carried Mr. Obama's blessing. Mr.
Frank, WSJ relates, said last week that he wanted Mr. Bush to
request the remaining funds quickly. "What I hope is we will have
an agreement in early January about how the second 350 will be
spent. Not to the penny, but in general. So that we will avoid
the kind of fighting we had last time," the report quoted Mr.
Frank as saying.
Mr. Obama's officials said that they would join the talks if Mr.
Paulson decided to request the second half of the funds, WSJ
states.
* States in Trouble Due to Economic Downturn, Study Shows
---------------------------------------------------------
According to the Center on Budget and Policy Priorities, the weak
economy is generating great fiscal distress among states. The
center said that combined budget gaps for the remainder of the
current fiscal year and the next two years are estimated to total
more than $350 billion.
Because states cannot run deficits, they must close their
shortfalls by cutting spending or raising taxes, the center said.
"That causes two further problems. First, their spending cuts and
tax increases take money out of the economy, making the downturn
even worse. Second, as states have to cut back, they cannot
respond to the rising need for health care and other services that
occurs when workers lose jobs or are otherwise hit by the economic
downturn," the center said.
According to the center, 44 states faced or are facing budget
shortfalls:
* In 41 states and Washington, D.C., 2009 budgets have
fallen out of balance since their enactment, producing
mid-year deficits that total more than $42 billion (or 9%
of budgets). These mid-year shortfalls are in addition to
$48 billion in budget gaps that 29 states closed when
enacting their fiscal 2009 budgets, which began on July 1
in most states. Total fiscal 2009 budget gaps equal 14% of
these states\u2019 general fund (operating) budgets.
* Thirty-eight states already project shortfalls totaling
more than $80 billion for fiscal 2010 (which in most
states begins July 1, 2009). As the full extent of 2010
budget gaps become known, shortfalls are likely to equal
$145 billion (based on expected economic deterioration and
the relationship of state revenues to the economy).
* Fiscal distress is highly likely to continue into state
fiscal year 2011, with deficits exceeding those projected
for 2010.
* These estimates assume the absence of an effective economic
recovery package and/or fiscal relief. Federal action could
significantly reduce the size of these shortfalls.
The state revenue situation is rapidly worsening:
* To keep pace with the cost of services, state revenues must
grow. But overall revenues last year were essentially flat
and are weakening dramatically this year.
* Sales taxes are the hardest hit so far, reflecting a fall
in both personal consumption and business purchases. But
income taxes and other taxes are also falling. Recent stock
market declines and continued job losses will depress
revenues further.
States face other problems from the weakening economy:
* Employers are reducing jobs and cutting back on employer-
provided health coverage. As a result, more families are
turning to programs like Medicaid, which provides health
coverage to low- and moderate-income families and is
jointly funded by Washington and the states.
* State spending levels were relatively low even before this
crisis. Aggregate state spending fell sharply relative to
the economy during the 2001 recession, and it remained
below the 2001 level as a share of the economy when states
adopted their 2008 budgets. The funding cuts that states
will likely make in the coming months will reduce overall
spending further below 2001 levels.
* States have already substantially used budget reserves to
address funding gaps, but these reserves are limited.
States ended fiscal 2006 and 2007 with $69 billion in
reserves each year, equal to about 11% of their budgets.
Those are the largest reserves states have ever
accumulated. But now states have used a significant
portion of those reserves, and the remaining amount
will not be enough to solve state budget problems.
The center said 30 states have cut a range of services, including
those aimed at some of their most vulnerable residents. Also, some
states have raised taxes.
* At least 19 states have enacted or implemented cuts that
will affect low-income families\u2019 eligibility for health
insurance or reduce their access to health care; at least
18 states are cutting medical, rehabilitative, home care,
or other services needed by low-income people who are
elderly or have disabilities; at least 20 states are
cutting K-12 and early education; and at least 21 states
have implemented cuts to public colleges and universities.
Also, at least 26 states have proposed or implemented
cuts to their state workforce.
* Also, several states already have enacted tax increases,
closed loopholes, restricted tax credits, increased tobacco
taxes, raised tuitions, or implemented other revenue-
raising measures. For example, Maryland, Michigan, and
New York each raised revenues by more than $1 billion for
fiscal 2009, while also cutting spending.
The Center on Budget and Policy Priorities -- http://www.cbpp.org
-- is a nonprofit, nonpartisan research organization and policy
institute that conducts research and analysis on a range of
government policies and programs. It is supported primarily by
foundation grants.
* ABI Poll Shows Automaker Ch. 11 Filing Better for Taxpayers
-------------------------------------------------------------
A majority of respondents (86 percent) in a recent American
Bankruptcy Institute Quick Poll agreed that a chapter 11 filing is
better for the taxpayers and companies than a government bailout
of the auto industry. Sixty-five percent of respondents "strongly
agreed" and 21 percent "somewhat agreed."
Ten percent of respondents did not think that a chapter 11 filing
would be more beneficial to taxpayers and companies than a
government bailout of the auto industry. Six percent "disagreed
strongly" and 4 percent "somewhat disagreed" that a chapter 11
bankruptcy filing is better for taxpayers and companies than a
government bailout of the auto industry. Two percent of
respondents did not know or had no opinion on the issue.
The Quick Poll was based on the recent discussions on Capitol Hill
to explore ways to provide relief to the struggling U.S.
automakers. U.S. automakers such as General Motors have stated
that they would run out of funding by the end of the December if
they did not receive government aid. Despite swift passage in the
House of Representatives, legislation providing a financial
bailout for U.S. automakers failed in the Senate on Dec. 12. Many
lawmakers were critical of the automaker bailout package, saying
that bankruptcy provided the best method for the automakers to
reorganize their businesses. The Bush Administration announced on
December 19, 2008, that U.S. automakers will receive $13.4 billion
in loans through the Troubled Asset Relief Program in exchange for
substantially restructuring their businesses.
ABI members and members of the public were welcome to submit their
response to the statement: "A chapter 11 bankruptcy is better for
the taxpayers and the companies than a government bailout of the
auto industry."
ABI is the largest multi-disciplinary, nonpartisan organization
dedicated to research and education on matters related to
insolvency. ABI was founded in 1982 to provide Congress and the
public with unbiased analysis of bankruptcy issues. The ABI
membership includes nearly 11,700 attorneys, accountants, bankers,
judges, professors, lenders, turnaround specialists and other
bankruptcy professionals, providing a forum for the exchange of
ideas and information. On the Net: http://www.abiworld.org/
* 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 ***