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/raid1/www/Hosts/bankrupt/TCR_Public/090211.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, February 11, 2009, Vol. 13, No. 41 Headlines 3900 LLC: BofA Loses Bid to Deem Firm as Single Asset Real Entity ACCENTIA BIOPHARMA: PPD Records $7MM Asset Impairment Charges ADVANCED MICRO: Fails to Get Enough Shareholder Votes for Spinoff AIRBORNE HEALTH: Moody's Cuts Corp Rating to Ca on Loan Violations AMERICAN GENERAL: S&P Downgrades Counterparty Rating to 'BB+/B' AMERICAN MEDIA: Eight Members Resign From Board of Directors AMERICAN MEDIA: Closes $570MM Debt-Exchange & Signs New Indentures AMERICAN TONERSERV: Board Elects Chuck Mache as President & CEO APPALACHIAN OIL: Case Summary & 20 Largest Unsecured Creditors ARCLIN CANADA: Q4 Covenant Violation Cues S&P's Junk Rating ASPEN JETRIDE: Files for Chapter 7 Liquidation in Arkansas ASARCO LLC: Creditors Panel Tap Exponent Inc as Consultants ASARCO LLC: Settles City of Denver Claim for $640,000 ASHTON WOODS: Posts $18.6 Million Net Loss for Qtr. Ended Nov. 30 AXS-ONE INC: Allan Weingarten Resigns From Board BELDEN INC: Moody's Changes Outlook on 'Ba1' Rating to Negative BLACK GAMING: Forbearance Agreement Extended Until Feb. 12 BRAY & GILLESPIE: Disclosure Statement Hearing Set for March 23 BRUNO'S SUPERMARKETS: Can Hire Burr as Bankruptcy Counsel BRUNO'S SUPERMARKETS: Can Hire KCC as Notice and Claims Agent BRUNO'S SUPERMARKETS: Court Approves Najjar as Conflicts Counsel BRUNO'S SUPERMARKETS: Court OKs NatCity/SSG as Investment Banker BUILDING MATERIALS: David Harrison Changes Status to Consultant CABLEVISION SYS: S&P Sees Aggressive Fin'l Policy, Stays at 'BB' CARITAS HEALTH CARE: Files Chapter 11 to Close Queens Hospitals CALIFORNIA STATE: Will Sell $200 Mil. in Bonds to Bay Area Agency CDX GAS: Files Schedules of Assets and Liabilities in Texas CFM US: Won't Pursue Chapter 11 Plan; Seeks Case Conversion CHARTER COMM: In Talks With Bondholders; Mum on Bankruptcy Rumors CHECKER MOTORS: Seeks to Modify Labor Pact & Cut Retiree Benefits CHECKER MOTORS: Taps Carson Fischer as Bankruptcy Counsel CHECKER MOTORS: Taps McCarthy Smith as Labor Counsel CHEMTURA CORP: Discusses Actions to Improve Liquidity CHESAPEAKE CORP: Sec. 341 Meeting Slated for February 20 CHESAPEAKE CORP: Gets Go-Signal to Hire Hunton & Williams CHESAPEAKE CORP: May Hire Hammonds LLP as European Counsel CHESAPEAKE CORP: Debtors Files Schedules of Assets & Liabilities CHRYSLER LLC: Faces $110M Suit by Faurencia for Research Costs CHRYSLER LLC: Asks Dealers to Order More to Hit Viability Plan CLEAR CHANNEL: Taps $1.6BB of Credit Facility, Stirs Up Doubt CNA FINANCIAL: Moody's Affirms Subordinated Debt Rating at 'Ba1' COBBLESTONE ESTATES: Case Summary & 4 Largest Unsecured Creditors COMDISCO HOLDING: Reports Fiscal 1st Quarter 2009 Results COREL CORP: Nov. 30 Balance Sheet Upside Down by $8.3 Million COUNTRY COACH: Creditors File Involuntary Chapter 11 Petition CSC HOLDINGS: Moody's Assigns 'B1' Rating on $500 Mil. Notes CSC HOLDINGS: S&P Assigns 'BB' Rating on $500 Mil. Senior Notes DBSI INC: Unit's Voluntary Chapter 11 Case Summary DE KALB COUNTY: S&P Slashes 2005 Bonds to CCC on Funding Woes DECODE GENETICS: Moves Listing of Stock to Nasdaq Capital Market ENVIRONMENTAL TECTONICS: Has $12MM Stockholder Deficit at Nov. 28 ENVIRONMENTAL TECTONICS: Emerald Advisers Reports 6.55% Stake EPIX PHARMACEUTICALS: Robert Perez Resigns From Board FORTUNOFF HOLDINGS: Court Extends Schedules Filing Until March 6 FORTUNOFF HOLDINGS: Can Hire Sidley Austin as Bankruptcy Counsel FORTUNOFF HOLDINGS: Can Use $10MM of Wells Fargo's 90-Day DIP Loan FREESCALE SEMICONDUCTOR: Invites Noteholders to Join New Loans FREESCALE SEMICONDUCTOR: Posts $7.9 Billion Net Loss in 2008 GAINEY CORP: Court Sets March 23 Deadline to File Proofs of Claim GAINEY CORP: Asks Court to Extend Plan Filing Period to March 31 GAINEY CORP: Asks Retroactive Approval of Sale of 10 Tractors GENERAL GROWTH: A Chapter 11 Filing Won't Affect Malls GENERAL MOTORS: Will Lay Off 14% of Work Force This Year GLOBAL AIRCRAFT: Three Creditors Have Over $7.8 Million in Claims GLOBAL BEVERAGE: Sells Beverage Network to Master Distributors GOLDEN EAGLE: Enters Into 4 Common Stock Subscription Agreements HARRY & DAVID: Reports Second Quarter Fiscal 2009 Results HARRY & DAVID: Eroding Operating Trends Cue S&P's Junk Ratings HAYES LEMMERZ: Tight Liquidity Cues S&P's Rating Cut to 'CCC+' IDEARC INC: Moody's Says Bankruptcy A Solution, Rating Cut to Caa2 IL LUGANO: May Sell Condo Unit at Reduced Price of $580,000 INCYTE CORP: Matthew Emmens Resigns From Board INTERNATIONAL SILICON: Voluntary Chapter 11 Case Summary JACOBS ENTERTAINMENT: S&P Affirms Corporate Credit Rating to 'B-' KEYSTONE AUTOMOTIVE: Weak Credit Metrics Cue Moody's Junk Ratings LEHMAN BROTHERS FINANCE: Voluntary Chapter 15 Case Summary LEHMAN BROTHERS: Two Units' Chapter 11 Case Summary LINEAR TECHNOLOGY: Issues Revised Fiscal Q2 2009 Results LATHAM MANUFACTURING: Moody's Withdraws 'Caa1' Ratings LYONDELLBASSEL: Acceleration of 2015 Notes Could Cue Bankruptcy LYONDELL CHEMICAL: Gets TRO on Noteholders Action vs. Parent MCCLATCHY CO: Gets NYSE Non-Compliance Note As Stock Under $1 MCCLATCHY CO: Posts $21.7 Million Net Loss in 4th Quarter MAGNA ENTERTAINMENT: Unit Applies for VLT License in Anne Arundel MCKESSON CORPORATION: Moody's Assigns Low-B Shelf Ratings MEDICAL SOLUTIONS: Gets Termination Notice on Reorganization Pact MODINE MANUFACTURING: Delays Filing of 3rd Qtr Fiscal 2009 Report MODINE MANUFACTURING: Obtains Waiver on Covenant Default MUZAK HOLDINGS: Files for Chapter 11 Bankruptcy Protection MUZAK HOLDINGS: Case Summary & 30 Largest Unsecured Creditors NEW CENTER: S&P Downgrades Ratings on Asset-Backed Notes to 'B' NORTEL NETWORKS: Obtains Extension of CCAA Stay Period NORTEL NETWORKS: Gets Continued Access to EDC Support Facility OPEN ENERGY: Nov. 28 Balance Sheet Shows Strained Liquidity OPEN ENERGY: Changes Business Name to "Applied Solar" PALM INC: Board Appoints Rajiv Dutta as Director PRB ENERGY: Emerged From Bankruptcy on February 2 PULTE HOMES: Posts $1.5 Billion Net Loss for Year Ended Dec. 31 PWJ HOLDINGS: Voluntary Chapter 11 Case Summary RH DONNELLEY: Moody's Slashes to Caa1, Says Bankruptcy A Solution RVI GUARANTY: Fitch Downgrades Insurer Strength Rating to 'BB' S&K FAMOUS BRANDS: Files for Chapter 11 Bankruptcy Protection SBARRO INC: Provides Preliminary 4th Qrtr. & Fiscal 2008 Results SEMGROUP LP: Wants Feb. 23 Auction or Wind Down for Asphalt Biz SIMMONS COMPANY: Gets Forbearance Until March 31 for $200M Notes SMITTY'S BUILDING: Wants March 30 as General Claims Bar Date SMITTY'S BUILDING: Section 341(a) Meeting Set for February 25 SMITTY'S BUILDING: US Trustee Forms Seven-Member Creditors Panel SMITTY'S BUILDING: Gets Final Approval to Access BoA DIP Facility SOUTHEAST BANKING: Court Okays Payment of Break-Up Fee to Modena SOUTHEAST BANKING: Court Sets March 9 Plan Confirmation Hearing SOUTHWEST CHARTER: GE Wants Ch. 7 Conversion or Collateral Release SPECTRUM BRANDS: Court Confirms Admin. Status of 20-Day Goods SPECTRUM BRANDS: Starts Review on Leases; Rejects 5 Contracts SPECTRUM BRANDS: Court Defers 341 Meeting & Panel Appointment SPECTRUM BRANDS: Court Moves Schedules Filing Deadline to May 19 SPECTRUM BRANDS: Posts $112.7MM Net Loss for Qrtr. Ended December SYNOVICS PHARMACEUTICALS: Posts $4MM Net Loss in FY Ended Oct. 31 SYNTAX-BRILLIAN: Plan Solicitation Period Extended to April 20 TCW OAK: Moody's Junks Ratings on Three Classes of Notes TROPICANA ENTERTAINMENT: Panel Drops Bid to Hire Fox Rothschild TROPICANA ENTERTAINMENT: Panel Taps Sills Cummis as NJ Counsel UNIGENE LABORATORIES: Eiref Joins to Compensation & Audit Panels US ENERGY: Wants More Time To Complete Sale of Biogas Assets VELOCITY EXPRESS: Gets Nasdaq Delisting Notice; to Seek Hearing VERASUN ENERGY: Creditors Panel Wants Garden City as Info. Agent VERASUN ENERGY: Seeks Permission to Pay $4MM in Insurance Premiums VERASUN ENERGY: U.S. Trustee to Continue 341 Meeting on March 5 VONAGE HOLDINGS: Market Value $100-Mil.; Receives NYSE Notice WASHINGTON MUTUAL: Gets Permission to Sell FTV Stake for $3.2MM WASHINGTON MUTUAL: Pens Deal Continuing Towers Perrin's Services WASHINGTON MUTUAL: Gave $151MM to Bank Unit 1 Yr. Before Collapse WASHINGTON MUTUAL: Gets Okay to Pay November Bankruptcy Fees WAVE SYSTEMS: Regains Compliance with NASDAQ Market Cap Rule YELLOW BLUFF: Mum About January Chapter 11 Filing YELLOWSTONE CLUB: Former Owner Tim Blixseth May Try to Buy Firm * David Shaev Joins NACBA in Efforts to Modify Bankruptcy Law * Treasury Says Changes in Bank Bailout Minor * Upcoming Meetings, Conferences and Seminars ********* 3900 LLC: BofA Loses Bid to Deem Firm as Single Asset Real Entity ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada has denied the motion of Bank of America, N.A., as trustee for the registered holders of Morgan Stanley Capital I Inc. Commercial Pass-Through Certificates, Series MSCI 2004-HQ3, to designate 3900, LLC, as a single asset real entity (SARE) as defined by Sec. 101(51B) and requiring the Debtor to comply with the provisions of Sec. 362(d)(3) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Jan. 12, 2009, Bank of America asserted that the Debtor is a SARE because it consists of a single property or project, the rental payments collected from the real property comprise the Debtor's sole source of income; and the Debtor conducts no business other than the operation of the real property. As a SARE, the Debtor is required, within 90 days of its bankruptcy filing, to either file a confirmable plan of reorganization or to commence monthly debt service payments. Absent compliance with these requirements, Bank of America is entitled to relief from the automatic stay. Based in Las Vegas, 3900, LLC also known as Michael's Plaza, owns and operates a shopping center in Tempe, Arizona. Revenue consists of rental income and common area maintenance charges paid by tenants in the shopping center. The company filed for Chapter 11 relief on Oct. 17, 2008 (Bankr. D. Nev. 08-22163). Matthew L. Johnson, Esq., at Matthew L. Johnson & Associates, P.C., represents the Debtor as counsel. In its schedules, 3900, LLC listed total assets of $18,142,411, and total debts of $10,086,336. ACCENTIA BIOPHARMA: PPD Records $7MM Asset Impairment Charges -------------------------------------------------------------- PPD, Inc., has recorded $7.0 million in asset impairment charges resulting from Accentia Biopharmaceuticals, Inc.'s bankruptcy filing in November 2008. On Monday, PPD reported net revenue of $368.2 million for the fourth quarter of 2008, compared to net revenue of $375.0 million for the fourth quarter of 2007. PPD also reported that net revenue for the full year ended December 31, 2008, was $1.57 billion, an increase of 11.0% compared to net revenue of $1.41 billion for the full year 2007. Full year 2008 income from operations was $281.8 million, an increase of 22.5% compared to income from operations of $230.0 million for the same period in 2007. PPD Inc. -- http://www.ppdi.com/-- is a global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. PPD's clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. 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). Charles A. Postler, Esq., and Elena P. Ketchum, Esq., at Stichter, Riedel, Blain & Prosser, in Tampa, Florida, represent the Debtors as counsel. The Official Committee of Unsecured Creditors selected Paul J. Battista, Esq., at Genovese Joblove & Battista, P.A. as its counsel. Based in Tampa, Florida, Biovest International Inc. (OTC BB: BVTI) -- http://www.biovest.com/-- is a pioneer in the development of advanced individualized immunotherapies for life-threatening cancers of the blood system. Biovest is a majority-owned subsidiary of Accentia Biopharmaceuticals Inc., with its remaining shares publicly traded. Biovest International Inc.'s consolidated balance sheet at June 30, 2008, showed $5.9 million in total assets, $36.8 million in total liabilities, and $4.6 million in non-controlling interests in variable interest entities, resulting in a $35.5 million total stockholders' deficit. ADVANCED MICRO DEVICES: Fails to Win Enough Votes for Spinoff ------------------------------------------------------------- Jerry A. Dicolo at The Wall Street Journal relates that Advanced Micro Devices has failed to gain enough shareholder votes on Tuesday to approve the spinoff of its manufacturing operations. AMD's Special Meeting of Stockholders at the Hilton Austin Airport, 9515 Hotel Drive in Austin, Texas, has been adjourned until 10:00 a.m., Central Standard Time, on February 18, 2009, at the Hilton Austin Airport, 9515 Hotel Drive in Austin, Texas. At that meeting, a stockholder vote to approve the issuance of AMD shares and warrants pursuant to the Master Transaction Agreement will take place. The meeting is being adjourned to provide AMD with additional time to solicit proxies from its stockholders to establish the requisite quorum for the conduct of business at the Special Meeting of Stockholders. A majority of AMD's shares that were outstanding at the close of business on January 15, 2009, need to be present at the meeting, either in person or by proxy, to establish a quorum. As of February 10, approximately 42% of those shares have been voted, with approximately 97% of votes cast in favor of issuing the additional shares and warrants. According to WSJ, a shareholder vote is the last major condition required before AMD can close a deal to spin off its chip production division into a new venture, known as The Foundry Company, which it will jointly own with Advanced Technology Investment Co., an investment entity associated with the government of Abu Dhabi. WSJ quoted AMD spokesperson Drew Prairie as saying, "We had set an aggressive schedule for the shareholder meeting. In restrospect, it was maybe too aggressive, and we need a litte more time for stockholders to participate in the vote." WSJ states that stockwatchers expect that the spinoff deal will be approved when the stockholders' meeting reconvenes. WSJ quoted Caris & Co. analyst Betsy Van Hees as saying, "It's just a delay, and a delay that could consequently push out the closing date of the venture." According to the report, Ms. Van Hees admitted, "We were largely expecting this to be just a formality, so this does certainly give us increasing cause for concern." About Advanced Micro Headquartered in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative processing solutions in the computing, graphics and consumer electronics markets. As of December 27, 2008, the company's balance sheet showed total assets of $7,675,000,000, total current debts of $2,226,000,000, deferred income taxes of $91,000,000, long-term debt and capital lease obligations of $4,702,000,000, other long-term liabilities of $569,000,000, minority interest in consolidated subsidiaries of $169,000,000, and total stockholders' deficit of $82,000,000. * * * As reported in the Troubled Company Reporter on Aug. 12, 2008, Fitch Ratings affirmed these ratings on Advanced Micro Devices Inc.: Issuer Default Rating at 'B-'; Senior unsecured debt at 'CCC/RR6' and Rating Outlook at Negative. AIRBORNE HEALTH: Moody's Cuts Corp. Rating to Ca on Loan Default ---------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Airborne Health, Inc., including the corporate family rating to Ca from Caa1, probability of default rating to D from Caa2, and bank loan rating to Ca from Caa1. The downgrades follow covenant violations at the end of the company's second quarter and Airborne's failure to pay a principal installment of $3.0 million on January 31, 2009, which constitutes an event of default under the credit agreement. The outlook for the ratings is negative. Despite a greater degree of visibility on the regulatory front following the resolution of legal issues, including follow-on claims by state attorney generals, Moody's believes that the company is not appropriately capitalized to enable the company's new management team to focus on challenging operational issues. The downgrade also takes into account the company's very small revenue base, very high leverage, undiversified product offering, the potential effects of an economic slowdown on consumer spending, very high seasonality in the category, and dependence on larger retail customers for the distribution of its products amidst intense competition from a variety of branded and private label products. Following a weak winter season to date and payments to settle legal issues which followed the settlement of a class action lawsuit, Airborne's liquidity is extremely poor: The company has no access to its revolver and, under the agreement, the lenders have the right to accelerate outstanding loans. Moody's took these rating actions: -- Downgraded the Corporate Family Rating to Ca from Caa1; -- Downgraded the Probability of Default Rating to D from Caa2; -- Downgraded the $20 million first lien secured revolving credit facility due 2012 to Ca (LGD 4, 64%) from Caa1 (LGD 3, 35%); -- Downgraded the $135 million first lien secured term loan due 2012 to Ca (LGD 4, 64%) from Caa1 (LGD 3, 35%); The outlook for the ratings is negative. Subscribers can refer to Moody's Credit Opinion for Airborne Health, Inc., on moodys.com for additional information. The previous rating action for Airborne was on May 1, 2008, when Moody's downgraded the company's corporate family rating to Caa1 from B3, under review for a further downgrade, because of ongoing concerns regarding the company's liquidity profile and delays in seeking and obtaining covenant amendments from the company's senior secured lenders. Airborne Health, Inc, headquartered in Bonita Springs, Florida, markets the "Airborne" effervescent health formula that is designed to support the immune system. The company's products are distributed nationwide through about 70,000 supermarkets, drugstores, discounters, club stores, and other retail locations. Airborne generated net revenue of $85 million for the twelve months ended October 31, 2008. AMERICAN GENERAL: S&P Downgrades Counterparty Rating to 'BB+/B' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its counterparty credit rating on American General Finance Corp. to 'BB+/B' from 'BBB/A-3' and removed it from CreditWatch Negative, where it was placed Oct. 8, 2008. The outlook is negative. "The company's credit profile is under pressure because of 1ess secure access to funding, deteriorating asset quality, diminished operating flexibility reflecting the difficulties of its parent, and a weak market environment for consumer-related businesses. However, the current rating takes into account some funding support from the company's parent in the near term, and the prospect that this would give the company time to secure additional funding sources," said Standard & Poor's credit analyst Adom Rosengarten. AGFC's liquidity profile remains uncertain because external funding markets are closed to the company. AGFC must rely on portfolio cash flows, asset liquidations, and support from its parent company to meet debt payments and other cash needs in the near to medium term, but S&P believes the extent to which each of these sources can be used is limited. The company has significantly reduced its origination volume to preserve cash, and the rating takes into account limited support from AGFC's parent company, American International Group Inc., in the near-to-medium term. In the past months AIG has shown itself willing and able to provide support. S&P believes this should give AGFC sufficient time to determine a longer-term funding strategy. At the same time, AGFC's earnings performance has been weak as a declining economy has increased pressure on the company's consumer lending base. Pretax losses of $683 million for the first nine months of 2008 reflect increasing credit-loss provisions and intangible write-downs. S&P expects fourth-quarter asset-quality metrics to continue to deteriorate beyond normal seasonal levels as the residential real estate market remains difficult. Nevertheless, S&P recognize that noncash charges have been responsible for most earnings losses to date, and although delinquencies and charge-offs have deteriorated, AGFC remains among the stronger players in the subprime lending industry. The 2.19% charge-off ratio for third-quarter 2008 (compared to 1.16% for the same quarter in 2007) remains below that of competitors. The rating on AGFC's trust-preferred securities will remain at 'B' and is removed from CreditWatch Positive. This rating reflects an expanded notching between this instrument and the counterparty credit rating due to the company's weakening financial flexibility. At the same time, S&P is less concerned about the U.S. government's forced suspension of equity-linked dividend payments. S&P had lowered its ratings on AGFC's trust-preferred stock and certain other units of ultimate parent AIG because of the U.S. Federal Reserve's Sept. 16, 2008, statement that the U.S. government would have the right to veto AIG's common and preferred dividends under the $85 billion credit line the Federal Reserve Bank of New York extended to AIG. S&P now believes, however, that it is unlikely that AGFC's trust-preferred dividends would in fact be vetoed. The negative outlook reflects S&P's concern that weakening economic conditions will continue to pressure AGFC's subprime consumer base, possibly leading to materially higher credit losses and further quarterly net losses in 2009. Credit quality deterioration beyond expected levels could lead to a downgrade. The negative outlook also takes into account S&P's uncertainty regarding AGFC's medium-to-long-term funding availability and the limited nature of current liquidity sources. AGFC has substantial debt issuances coming due in the second half of 2009, and although S&P believes that its current sources of liquidity should be substantial enough to manage through these payments, S&P is concerned about the draining effect these cash outflows will have on the company's limited liquidity resources. Although S&P believes these sources will be sufficient to cover cash needs in the short-term, a longer-term solution has not been established and the negative outlook reflects the risk that frozen funding markets could outlast the company's current sources of liquidity. S&P will continue to monitor AGFC's liquidity availability, and if more deterioration occurs as cash outflows build, S&P could lower the rating further. On the other hand, if AGFC can determine a viable longer-term funding strategy and asset quality metrics remain in a reasonable range for the rating, S&P could change the outlook to stable. AMERICAN MEDIA: Eight Members Resign From Board of Directors ------------------------------------------------------------ Effective as of January 30, 2009, Jeffrey Sagansky, Michael Garin, Anthony J. DiNovi, Soren L. Oberg, Richard J. Bressler, Daniel G. Ross, Saul D. Goodman, and Kathleen G. Reiland resigned as members of American Media Operations Inc.'s board of directors. Before their resignations, Mr. DiNovi and Mr. Ross were members of the Company's Executive Committee and Compensation Committee and Mr. Bressler, Mr. Garin and Mr. Ross were members of the Company's Audit Committee. Appointment of Replacement Directors Bradley G. Pattelli, Philip L. Maslowe, Marc Nuccitelli and Charles C. Koones were appointed directors effective the same day Mr. DiNovi, et al., were scheduled to leave their post. Bradley G. Pattelli, age 42, has held various positions at Angelo, Gordon & Company since 1998, and is a Managing Director and co- head of the firm's leveraged loan business and portfolio manager for several CLOs and a credit opportunities fund. While at Angelo, Gordon & Company, Mr. Pattelli has analyzed high yield investment opportunities ranging from par loans to distressed debt. Prior to joining Angelo, Gordon & Company, Mr. Pattelli served as a Portfolio Manager/Analyst at diSilvestri Asset Management. He also serves on the board of directors for Thermadyne Holdings Corporation, a publicly traded supplier of cutting and welding products. Mr. Pattelli is a Chartered Financial Analyst and has a B.S. degree from Notre Dame and an M.B.A. degree from Columbia University School of Business. Philip L. Maslowe, age 61, has served on the board of directors and as the chairman of the audit committee for Delek US Holdings, Inc., a diversified energy business, since May 2006, and has served on the board of directors and audit committee, as well as chairman of the human resources committee, of NorthWestern Corporation, a publicly traded provider of electricity and natural gas, since December 2004. From March 2006 to February 2007, Mr. Maslowe served on the board of managers of Gate Gourmet Group Holding, LLC, a private company providing catering services to airlines. From 2002 to 2004, Mr. Maslowe served as a member of the board of directors and audit committee, as well as chairman of the corporate governance committee, of Mariner Health Care, Inc., a publicly-traded provider of post-acute health care services, and as chairman of the board of directors, chairman of the audit committee, and chairman or member of the compensation committee of AMF Bowling Worldwide, Inc., a company that operates bowling centers and holds an interest in a business that manufactures and sells bowling equipment. From 1997 to 2002, Mr. Maslowe served as executive vice president and chief financial officer of The Wackenhut Corporation, a provider of diversified outsourcing services for security, staffing and privatized prisons. Mr. Maslowe holds a B.B.A. from Loyola University of Chicago and received a Master of Management degree from Northwestern University and is a certified public accountant. Marc Nuccitelli, age 42, has served as managing director and portfolio manager for Credit Opportunities for Brencourt Advisors, an investment firm since December 2003. From 2002 to 2003, Mr. Nuccitelli served as senior vice president and head trader of Avenue Capital, where he managed and traded a distressed portfolio and co-managed a high-yield portfolio. From 2000 to 2002, Mr. Nuccitelli served as a principal of the Global Special Situations Group of Banc of America Securities, Inc. Mr. Nuccitelli holds a B.S. in Finance from Syracuse University. Charles C. Koones, age 46, has held various positions at RBI Entertainment Group and Variety magazine, most recently serving as President of RBI Entertainment Group since 2002. Mr. Koones serves as a board member for ContentNext Media, Inc., Museum of Television and Radio (Los Angeles), Museum of Moving Image (New York), Inner City Arts (Los Angeles), Environmental Media Association, and the President's Council of the University of Richmond. Mr. Koones holds a B.A. from the University of Richmond. About American Media Headquartered in Boca Raton, Florida, American Media, Inc., through operating subsidiary American Media Operations Inc., is a publisher of celebrity journalism and health and fitness magazines in the U.S., including Star, Shape, Men's Fitness, Fit Pregnancy, Natural Health, and The National Enquirer. In addition to print properties, AMI owns Distribution Services, Inc., the country's number one in-store magazine merchandising company. As of September 30, 2008, the company's balance sheet showed total assets of $892,142,000 and total liabilities of $1,290,423,000, resulting in total shareholders' deficit of $398,281,000. As reported by the Troubled Company Reported on November 11, 2008, Standard & Poor's Ratings Services lowered its ratings on American Media Operations Inc.: -- S&P lowered the corporate credit rating to 'SD' (selective default) from 'CCC+'. -- S&P lowered the rating on American Media's 10.25% senior subordinated notes due 2009 to 'D' from 'CCC-', while leaving the recovery rating on this debt unchanged at '6', indicating S&P's expectation of negligible (0% to 10%) recovery for lenders. -- S&P lowered the rating on the company's 8.875% senior subordinated notes due 2011 to 'CC' from 'CCC-' and placed it on CreditWatch with negative implications. The recovery rating on these notes also remains unchanged at '6.' -- Lastly, S&P lowered the rating on American Media's senior secured debt to 'CC' from 'B' and placed it on CreditWatch with developing implications. S&P revised the recovery rating on this debt to '2', indicating S&P's expectation of substantial (70% to 90%) recovery in the event of a payment default, from '1.' AMERICAN MEDIA: Closes $570MM Debt-Exchange & Signs New Indentures ------------------------------------------------------------------ Dean D. Durbin, executive vice president and chief financial officer of American Media Operations, Inc., disclosed in a regulatory filing dated February 5, 2009, that: -- On January 30, 2009, AMOI successfully completed its cash tender offers and receipt of requisite consents in the related consent solicitations in respect of its outstanding senior subordinated notes, consisting of: (1) $414,544,000 aggregate principal amount of 10-1/4% Series B Senior Subordinated Notes due 2009; and (2) $155,454,000 aggregate principal amount of 8-7/8% Senior Subordinated Notes due 2011. About $400,518,688 of the 2009 Notes and $147,952,321 of the 2011 Notes were validly tendered and accepted for payment and consents were delivered with respect to the Existing Notes. -- On January 29, the Company executed these supplemental indentures in connection with its successful Consent Solicitations: (i) the Ninth Supplemental Indenture among the Company, the Guarantors named therein and HSBC Bank USA, National Association, as trustee, with respect to the 2009 Notes; and (ii) the Seventh Supplemental Indenture among the Company, the Guarantors named therein and HSBC Bank USA, National Association, as trustee, with respect to the 2011 Notes. The Supplemental Indentures eliminated substantially all of the restrictive covenants, certain events of default and other related provisions in the Indentures governing the Existing Notes. -- In addition, on January 30, 2009, American Media, Inc., sold 5,694,480 shares of its common stock for an aggregate offering price of $126,153,8028, pursuant to the Purchase Agreement dated January 29, 2009, among AMI, the company, the other parties named therein and J.P. Morgan Securities Inc. The proceeds received for the Common Stock were used to pay for a portion of the Company's Tender Offers. -- On December 31, 2008, the Company amended and restated its Credit Agreement, dated as of January 30, 2006, among the Company, AMI, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Deutsche Bank Securities Inc., as Syndication Agent. On January 30, 2009, concurrently with the consummation of the Tender Offers, the Amended and Restated Credit Agreement became effective. -- On January 30, the Company entered into: (i) an Indenture among the Company, the Guarantors named therein and Wilmington Trust FSB, as trustee, under which the Company issued $21,245,380 of 9% Senior PIK Notes due 2013; and (ii) an Indenture among the Company, the Guarantors named therein and Wilmington Trust FSB, as trustee, under which the Company issued $300,000,000 of 14% Senior Subordinated Notes due 2013. The proceeds received for the Notes were used to pay for a portion of the Company's Tender Offers. The Indentures contain restrictive covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to incur additional indebtedness or issue certain preferred shares, pay dividends and make certain distributions, investments and other restricted payments, create certain liens, sell assets, enter into transactions with affiliates, merge, consolidate, sell or otherwise dispose of all or substantially all of its assets and limit the ability of certain subsidiaries to make payments to the Company. The Indentures also contain customary events of default which would permit the holders of the Notes to declare those Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Notes or other material indebtedness, the failure to satisfy covenants and specified events of bankruptcy and insolvency. -- On January 30, 2009, the Company issued 1,000 shares of its common stock to AMI. There were no underwriting discounts or commissions for the issuance. The issuance of the Company's common stock was made in reliance upon an exemption from registration provided by Section 4(2) of the Securities Act. As a result of the restructuring of the Company's capital structure and the issuance of Common Stock by AMI to the bondholders who participated in the Tender Offers and Consent Solicitations, the Tendering Bondholders acquired 95% of AMI's Common Stock on January 30, 2009. AMI's equityholders prior to the financial restructuring retained 5% of AMI's Common Stock. On January 30, the Existing Equityholders, certain employees of AMI, certain Tendering Bondholders -- collectively representing approximately 78% of the outstanding principal amount of Existing Notes -- the Existing Equityholders' representative and AMI entered into a Stockholders Agreement. Concurrently, each of the Company and AMI filed its amended and restated Certificate of Incorporation, pursuant to which the boards of directors of the Company and AMI, as of January 30, 2009, were initially composed of five members. The Stockholders Agreement provides that, upon agreement of Angelo, Gordon & Co., L.P., Avenue Capital Management II, L.P., Capital Research and Management Company, Capital Guardian Trust Company and Capital International, Inc., Credit Suisse Securities (USA) LLC and Regiment Capital Management, LLC, who beneficially own or control approximately 79.7% of the outstanding shares of AMI's Common Stock, those boards of directors will be expanded to seven directors and the two newly created vacancies will be filled by the designees of those Committee Holders. Thereafter, the Stockholders Agreement provides that each board of directors of the Company and AMI will be composed of seven members. The Stockholders Agreement provides that six of those directors of each board will initially be designated by Committee Holders and the other director will be the chief executive officer of the Company and AMI. Under the terms of the Stockholders Agreement, the Committee Holders will have these designation rights: (A) so long as a Committee Holder holds shares representing 10% or more of the outstanding Common Stock of AMI, it will have the right to designate one director, and (B) for so long as Committee Holders collectively hold shares representing more than 50% of the outstanding Common Stock of AMI, the remaining directors will be designated by the approval of Committee Holders: (i) representing a majority in number of the Committee Holders, and (ii) representing more than 50% of Common Stock held by the Committee Holders. The parties to the Stockholders Agreement will be obligated to vote for the directors designated. About American Media Headquartered in Boca Raton, Florida, American Media, Inc., through operating subsidiary American Media Operations Inc., is a publisher of celebrity journalism and health and fitness magazines in the U.S., including Star, Shape, Men's Fitness, Fit Pregnancy, Natural Health, and The National Enquirer. In addition to print properties, AMI owns Distribution Services, Inc., the country's number one in-store magazine merchandising company. As of September 30, 2008, the company's balance sheet showed total assets of $892,142,000 and total liabilities of $1,290,423,000, resulting in total shareholders' deficit of $398,281,000. As reported by the Troubled Company Reported on November 11, 2008, Standard & Poor's Ratings Services lowered its ratings on American Media Operations Inc.: -- S&P lowered the corporate credit rating to 'SD' (selective default) from 'CCC+'. -- S&P lowered the rating on American Media's 10.25% senior subordinated notes due 2009 to 'D' from 'CCC-', while leaving the recovery rating on this debt unchanged at '6', indicating S&P's expectation of negligible (0% to 10%) recovery for lenders. -- S&P lowered the rating on the company's 8.875% senior subordinated notes due 2011 to 'CC' from 'CCC-' and placed it on CreditWatch with negative implications. The recovery rating on these notes also remains unchanged at '6.' -- Lastly, S&P lowered the rating on American Media's senior secured debt to 'CC' from 'B' and placed it on CreditWatch with developing implications. S&P revised the recovery rating on this debt to '2', indicating S&P's expectation of substantial (70% to 90%) recovery in the event of a payment default, from '1.' AMERICAN TONERSERV: Board Elects Chuck Mache as President & CEO --------------------------------------------------------------- On February 2, 2009, the Board of Directors of American TonerServ Corp. elected Chuck Mache to serve as president and chief executive officer of the Company. Mr. Mache replaces Daniel J. Brinker in the position of president. Mr. Brinker will now serve as the Company's chairman of the board. Chuck Mache was elected as a director of the Company on November 29, 2007, and on January 8, 2008 was elected Chairman of the Board. Mr. Mache has spent a quarter-century selling, managing, building, and leading sales organizations, with a specialty in highly competitive industries. In 2005, he founded Chuck Mache Communications, Inc., which provides executive coaching and consulting services to businesses. From 2002 to 2004, Mr. Mache was with Benchmark Lending Group, Inc., a direct mortgage lender, first as Senior Vice President and then as President. From 1995 to 2001, Mr. Mache served as a Vice President of Sales and Marketing on a part time basis for the Company and for MTC Telemanagement, an international long distance telephone carrier. From 1984 to 1994 he served as Executive Vice President of Sales for American Home Shield, a residential home warranty provider. During that period, American Home Shield's revenues grew from $6M to $100M. Mr. Mache is also the author of the book "The Four Kinds of Sales People: How and Why They Excel - And How You Can Too" published by John Wiley & Sons in 2007. He is 51 years old. For the first three months of his employment as President and CEO, Mr. Mache will be paid a salary of $10,000 per month. At the end of that period, it is anticipated that a complete compensation arrangement will be offered to Mr. Mache. The compensation package for Mr. Brinker will not immediately be changed, but may be changed in the future. About American TonerServ Based in Santa Rosa, California, American TonerServ Corp. (OTC BB: ASVP) -- http://www.americantonerserv.com/-- is a consolidator in the highly fragmented printer supplies and services industry. ATS acquires, integrates and manages independent businesses that deliver printer supplies, services and equipment to small and mid-sized businesses. Going Concern Doubt As of September 30, 2008, the Company had a net working capital deficit of $3,189,912. The Company has inadequate financial resources to sustain its business activities. The Company could generate positive cash flows from operations with substantial reductions in personnel. However, this would prohibit the Company from executing its current acquisition strategy. The Company is currently spending approximating $100,000 more cash per month than is generated from operations. During the quarter ended March 31, 2008, the Company received $1,420,000 in proceeds from a common stock offering. During the quarter ended June 30, 2008, the Company received $1,500,000 in proceeds from a convertible note offering, which included shareholder advances of $100,000 being converted into the note offering. During the quarter ended September 30, 2008, the Company received $350,000 in proceeds from a note offering. These proceeds were used for working capital and to satisfy short term note obligations. The Company estimates that it will need to raise an additional $3,800,000 during the next 12 months to meet its minimum capital requirements. There is substantial doubt that the Company will be able to continue as a going concern, absent raising additional financing. At. Sept. 30, 2008, the company's balance sheet showed total assets of $8,292,077, total liabilities of $6,989,010 and stockholders' equity of $1,303,067. For the three months ended Sept. 30, 2008, the company posted net loss of $956,081 compared to net loss of $1,234,037 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted net loss of $3,408,006 compared to net loss of $3,080,011 for the same period in the previous year. APPALACHIAN OIL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Appalachian Oil Company 1992 Highway 75 P.O. Box 1500 Blountville, TN 37617-1500 Bankruptcy Case No.: 09-50259 Type of Business: The Debtor sells petroleum products. See: http://www.goappco.com/ Chapter 11 Petition Date: February 9, 2009 Court: Eastern District of Tennessee (Greeneville) Debtor's Counsel: Mark S. Dessauer, Esq. dessauer@hsdlaw.com Hunter, Smith & Davis LLP 1212 North Eastman Road P.O. Box 3740 Kingsport, TN 37664 Tel: (423) 378-8840 Fax: (423) 378-8801 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Amoco/BP Fuel $2,412,161 P.O. Box 460849 Houston, Texas 77056 Crescent Oil Company Inc. Fuel $1,648,286 P.O. Box 6667 116 W. Myrtle Independence, KS 67301 Citgo Petroleum Corp. Fuel $1,349,439 P.O. Box 3758 Tulsa, OK 74136 Marathon Ashland Petroleum Fuel $1,207,344 LLC 539 S. Main St. Findlay, Ohio LP Shanks Grocery $1,427,450 P.O. Box 1068 Tobacco Supplier Crossville, TN 38557 Valero Marketing & Supply Co. Fuel $967,272 P.O. Box 500 San Antonio, Texas 78292-0500 Conoco-Phillips Fuel $620,132 Box 75201 Charlotte, NC 28275 Y A Landholdings, LLC Rent $412,500 American Management Corp. Insurance $288,988 Regal Petroleum Terminal Fuel $203,665 Western Union Money Orders $169,143 Management Properties Rent $150,545 Brown Food Service, Inc. Grocery Supplier $150,079 Pepsi-Cola Company Grocery Supplier $136,317 Ryder Transportation Services Transportation $110,692 Pet Dairy Grocery Supplier $96,407 Coca-Cola Bottling Co. Grocery Supplier $77,300 Frito-Lay #2 Grocery Supplier $74,384 Royal Cup Coffee Inc. Grocery Supplier $70,077 B & B Distributors Grocery Supplier $57,078 The petition was signed by Bryan M. Chance, president. ARCLIN CANADA: Q4 Covenant Violation Cues S&P's Junk Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said it lowered the long-term corporate credit rating on formaldehyde-based adhesive resins and overlays products manufacturer Arclin Canada Ltd. two notches to 'CCC' from 'B-'. At the same time, S&P lowered the issue-level rating on Arclin's first-lien senior secured debt to 'CCC+' from 'B' (one notch above the corporate credit rating on the company). The recovery rating is unchanged at '2', indicating the expectation for a substantial (70%-90%) recovery in the event of a payment default. S&P also lowered the rating on the second-lien senior secured debt to 'CC' from 'CCC' (two notches below the corporate credit rating on the company). The recovery rating is unchanged at '6', indicating the expectation for negligible (0%-10%) recovery in the event of a payment default. The ratings on the company remain on CreditWatch with negative implications, where they were placed Jan. 27, 2009. The CreditWatch placement reflects Standard & Poor's uncertainty about Arclin's ability to receive waivers for current covenant violations and amendments to its covenants. "The two-notch downgrade reflects a covenant violation in fourth- quarter 2008, lack of access to Arclin's credit facility, expectations of weak cash flow generation in 2009, and a highly leveraged capital structure that S&P don't expect to improve in the near term," said Standard & Poor's credit analyst Jatinder Mall. "Furthermore, the company is seeking amendments to covenants for 2009 and 2010 and, given current credit markets, it is still uncertain what the outcome for these might be," Mr. Mall added. Arclin manufactures formaldehyde-based adhesive resins and overlays products used in home construction, remodeling, and industrial applications. It has operations in Canada, the U.S., and Mexico. The company generates about half of its revenues from panelboard resins and about 20% from the overlays segment. S&P's key concern in the short term is the company's ability to receive waivers and amendments from debt holders. Arclin will require 51% consent from both first-lien and second-lien debt holders. This could complicate the amendment process as second- lien debt holders could hold out for additional compensation in exchange for agreeing to proposed amendments. While S&P believes an equity injection by Ontario Teachers Pension Plan would help with liquidity, to date OTPP has not indicated any intention of further support. Standard & Poor's will likely resolve the CreditWatch when Arclin confirms that it has been able to receive waivers for current covenant violations and amend covenants for 2009 and 2010. ASPEN JETRIDE: Files for Chapter 7 Liquidation in Arkansas ---------------------------------------------------------- Aspen Times reports that Aspen Jetride filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Arkansas on Friday. According to Aspen Times, Aspen Jetride listed $3.8 million in assets and $46 million in liabilities. Court documents say that Aspen Jetride owes Iberia Bank of Louisiana about $8.55 million and almost $7.5 million to Chicago billionaire John Calamos Sr., who had been brought in as a partner in the firm. Aspen Times states that Aspen Jetride owes: -- $5,991 to the Aspen Daily News, -- $14,097 to Aspen Magazine, -- $6,500 to Aspen Peak, -- $73,184 to Stanley and Judith Hoffberger, and -- $1,601 to Total Merchant Services. Aspen Times relates that before the Chapter 7 filing, Aspen Jetride relinquished its flight operation certificate in November 2008. Aspen Jetride took over operations for charter service Aspen Executive Air (AEXJet) in 2008, says Aspen Times. According to the report, AEXJet filed for Chapter 11 bankruptcy protection in September 2007. Aspen Jetride -- http://www.aspenjetride.com/-- is a northwest Arkansas-based charter flight service company with a fleet of 26 jets around the country. ASARCO LLC: Creditors Panel Tap Exponent Inc as Consultants ----------------------------------------------------------- The Official Committee of Unsecured Creditors in ASARCO LLC's bankruptcy cases seeks permission from Judge Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas to retain Exponent, Inc., nunc pro tunc to January 12, 2009, as its environmental consultant. Exponent Inc. will advise the Creditors Committee on ASARCO LLC's potential liability for certain unsettled environmental claims and will assist the Committee to determine the reasonableness of any proposed settlement reached by ASARCO and claimant.As the Creditors Committee's environmental consultant, Exponent Inc. will: (a) estimate remediation costs, restoration costs, natural resources damages costs, and asset retirement obligations at certain sites for which ASARCO has alleged liability, including certain: * custodial trust sites; * miscellaneous state and federal sites; and * residual sites. (b) assist the Creditors Committee in negotiations with various parties; (c) render expert testimony as required by the Creditors Committee; (d) assist the Creditors Committee in conducting discovery, preparing expert testimony or reports, and evaluating reports and testimony by other experts and consultants; and (e) render other advisory services as may be requested by the Creditors Committee. Exponent Inc. will be paid for its services on an hourly basis, in accordance with the firm's normal billing practices: Position Hourly Charge -------- ------------- Principal/Officer $260 - $600 Senior Manager $225 - $425 Manager $175 - $350 Senior Engineer/Scientist/Associate $140 - $250 Engineer/Scientist/Associate $100 - $205 Associate Technical/Research Specialist $80 - $195 Technical Assistant $60 - $125 Administrative/Non-technical Assistant $60 - $130 Dr. Mark W. Johns will be principally responsible for the consulting services to be provided by Exponent Inc. for the Committee's benefit. Dr. Johns is a principal scientist and his hourly rate is $300. Other members of Exponent Inc. that will assist Dr. Johns may include, among others, (i) Scott Shock, a managing engineer with an hourly rate of $195, and (ii) Mark Bryant, a managing engineer with an hourly rate of $205. In addition, Exponent Inc. will submit for reimbursement, all of its reasonable out-of-pocket expenses incurred in connection with its retention. Dr. Johns assures the Court that Exponent Inc. does not have or represent any interest materially adverse to the Debtors' or their bankruptcy estates, creditors, or interest holders; and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Settles City of Denver Claim for $640,000 ----------------------------------------------------- After engaging in arm's-length and often contentious bargaining, ASARCO LLC and the City and County of Denver, Colorado, reached an agreement resolving all of the City's remaining claims against ASARCO with respect to ASARCO's Globe Plant Site and the Vasquez Boulevard/Interstate 70 Site. Specifically, the Denver Settlement Agreement provides that: (a) The City will be allowed a $640,000 general unsecured claim in settlement and full satisfaction of all of its claims and causes of action against ASARCO; (b) The City covenants not to sue or assert claims or causes of action against the Debtors; (c) The parties will exchange mutual releases; and (d) The parties release each other from all obligations and liabilities owed to each other with respect to the Sites, except for the City's tax claims. ASARCO believes that the Denver Settlement Agreement is reasonable, fair, and equitable. The Denver Settlement Agreement also saves attorneys' fees and expenses that would otherwise be expended in prosecuting the estimation of the City's claims, Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, asserts. ASHTON WOODS: Posts $18.6 Million Net Loss for Qtr. Ended Nov. 30 ----------------------------------------------------------------- Ashton Woods USA L.L.C delivered to the Securities and Exchange Commission unaudited financial statements as of November 30, 2008, and May 31, 2008, and for the three and six month periods ended November 30, 2008 and 2007, in order to provide the holders of its outstanding debt securities with updated financial and other information regarding the Company. The Company posted a net loss of $18,678,000 on revenues of $67,810,000 for the three months ended November 30, 2008, compared with a net loss of $15,102,000 for the same period a year earlier. Jerry Patava, interim chief financial officer, recounted that on August 21, 2008, the Company received a notice of default from the lenders of its senior credit facility as a result of the Company's non-compliance, as of May 31, 2008, with certain of the financial covenants under its senior credit facility. "As a result of this default, we are prohibited from paying interest on or purchasing our $125 million aggregate principal amount of 9.5% Senior Subordinated Notes due 2015 during the existence of the default, which led to our default of the interest payment provisions of the Subordinated Notes subsequent to August 31, 2008. Further, our tangible net worth was below the level required by the indenture covering the Subordinated Notes for two consecutive quarters -- the quarter ended August 31, 2008, and the quarter ended May 31, 2008. As a result, we were required to offer to repurchase 10% of the outstanding Subordinated Notes, which was prohibited by the senior credit facility. We have entered into an amendment to our senior credit facility to address the defaults, which will become effective upon consummation of an exchange offer and consent solicitation related to our Subordinated Notes. The amendment to our senior credit facility is also intended to provide us with additional flexibility during the continuing economic downturn to continue to fund our obligations." On January 13, 2009, the Company commenced an offer to exchange its Subordinated Notes for up to $65 million of new 11.0% senior subordinated notes due 2015 and up to 20% of the membership interests in Ashton Woods. The offer is conditioned on, among other things, acceptance by holders of at least 95% of the outstanding principal amount of Subordinated Notes, subject to waiver under certain circumstances. As part of the exchange offer, the Company is also soliciting consents from holders of the Subordinated Notes to amend certain terms of the Subordinated Notes, by removing a number of covenants and events of default and waiving any existing covenant defaults and any defaults created by the exchange offer. Holders of approximately 71% of the Subordinated Notes have agreed to exchange their Subordinated Notes in the exchange offer. Debt restructuring fees of $2.3 million in the condensed consolidated statement of operations for the three and six months ended November 30, 2008, represent certain fees incurred in connection with the exchange offer and consent solicitation for the Subordinated Notes. Other fees incurred in connection with the Restructuring, including the amendment to its senior credit facility and the offer to exchange its Subordinated Notes, total approximately $2.5 million and are included in other assets on the condensed consolidated balance sheet at November 30, 2008. On January 14, 2009, the Company and Parkmount Land Development Inc., an entity affiliated with one or more of the Equity Sponsors entered into a term loan agreement pursuant to which Parkmount will provide a secured bridge loan to the Company in the aggregate principal amount of up to $5.0 million. Amounts under the Bridge Loan may be advanced to the Company from time to time upon request. The Bridge Loan will bear interest until paid at an annual rate equal to the LIBOR rate plus six percent, as determined two days prior to the date of the term loan agreement. The company will repay all amounts outstanding under the Bridge Loan upon the earlier to occur of (i) March 1, 2009, (ii) the date of the commencement of any case by or against the company or any guarantor of the Bridge Loan under Chapter 7 or Chapter 11 of the Bankruptcy Code, or (iii) the closing of the transactions contemplated by the Restructuring, including the consummation of the exchange offer for the Subordinated Notes. In connection with the Term Loan Agreement, certain of the Company's subsidiaries agreed to guarantee, jointly and severally, its obligations under the Bridge Loan. In addition, the Company and the guarantors agreed to pledge certain assets to Parkmount as further security for the Bridge Loan. As of January 28, 2009, $1.0 million had been borrowed under the Bridge Loan. A full-text copy of the Company's financial statements is available for free at: http://researcharchives.com/t/s?395b About Ashton Woods USA Headquartered in Atlanta, Georgia, Ashton Woods USA L.L.C. is a homebuilder with operations in Atlanta, Dallas, Houston, Orlando, Phoenix, Denver and Tampa. * * * The Troubled Company Reporter reported on October 7, 2008, that Standard & Poor's Ratings Services lowered its corporate credit ratings on Ashton Woods USA LLC and its subsidiary, Ashton Woods Finance Co., to 'D' from 'CCC' and downgraded Ashton Woods' $125 million 9.5% senior subordinated notes due 2015 to 'D' from 'CC' after the company failed to make its Oct. 1, 2008, interest payment on this obligation. The recovery rating on the senior subordinated notes remains a '6'. The ratings were on CreditWatch negative before being lowered, where they were placed on Aug. 6, 2008. AXS-ONE INC: Allan Weingarten Resigns From Board ------------------------------------------------ On February 4, 2009, Allan Weingarten, a director of AXS-One Inc. resigned from the Company's Board of Directors. Headquartered in Rutherford, N.J., AXS-One (OTC BB: AXSO) -- http://www.axsone.com/-- provides Records Compliance Management software solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. AXS-One has offices worldwide including in the United States, Australia, Singapore, United Kingdom and South Africa. Going Concern Doubt As reported in the Troubled Company Reporter on April 25, 2008, Amper, Politziner, & Mattia, P.C., in Edison, N.J., expressed substantial doubt about AXS-One Inc.'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. The auditing firm pointed to the company's losses from operations and working capital deficiency. The company generated losses from operations of $1,752,000 for the three months ended March 31, 2008. Additionally, the company was not in compliance with its quarterly license revenue covenant as of March 31, 2008. The bank waived such violation and changed the covenants for future periods from a minimum license revenue covenant and minimum three month rolling net loss covenant to (a) a minimum three month rolling EBITDA covenant, (b) minimum cash and accounts receivable availability covenant and (c) a minimum equity infusion covenant of $500,000. AXS-One Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $4.8 million, total liabilities of $18.2 million and shareholders' deficit of $13.4 million. BELDEN INC: Moody's Changes Outlook on 'Ba1' Rating to Negative --------------------------------------------------------------- Moody's Investors Service revised the outlook on Belden's Ba1 corporate family rating to negative from stable. The change was driven by the rapid decline in performance in the last two quarters and potential for performance to continue to deteriorate to a greater extent than accommodated by the Ba1 rating. Declines were across all major product categories and particularly impacted by a dramatic drop in European sales. Belden recently announced that sales for the December quarter had declined 26.3% on an organic basis from the prior year period following a 10.7% drop in the September quarter. Adjusted operating income also declined in the December quarter to $18.9 million from $63.6 million in the prior year quarter. While the Ba1 rating incorporated the cyclical nature of the company, the current downturn may be more severe than contemplated in the current rating. The liquidity profile remains supported by healthy cash balances but a continued deterioration in performance will pressure financial covenants on the company's loan facility. The company had approximately $227 million in cash as December 31, 2008. The company generated approximately $22.6 million of free cash flow (defined as cash from operations less capital expenditures and dividends) during the quarter with a strong contribution from working capital. Working capital will likely continue to be a source of cash as revenues and inventory decline and should contribute to continued free cash flow generation, as it did in the 2001-2003 downturn. The Ba1 rating continues to reflect the company's leading positions within data networking and industrial cabling markets, strong credit metrics, and end customer sector and geographic diversification. Prior to the decline, Belden's credit metrics were reflective of a strong Ba1 or higher rating. The severity of the current cycle may impact the credit metrics sufficiently to downgrade the rating. The ratings could face additional downward pressure if leverage approaches 3.5x particularly if the financial covenants have not been adjusted to accommodate the decline in performance. Moody's most recent action was on February 13, 2008, when Moody's upgraded Belden's ratings. Belden Inc. is a leading designer and manufacturer of connectivity and signal transmission products for the global network communication and specialty electronic marketplaces with trailing twelve month revenues of approximately $2.0 billion. The company is headquartered in St. Louis, Missouri. BLACK GAMING: Forbearance Agreement Extended Until Feb. 12 ---------------------------------------------------------- On February 2, 2009, Black Gaming, LLC, and its direct and indirect wholly owned subsidiaries, Virgin River Casino Corporation, RBG, LLC, B & B B, Inc., Casablanca Resorts, LLC, Oasis Interval Ownership, LLC, Oasis Interval Management, LLC, Oasis Recreational Properties, Inc., and R. Black, Inc., and Wells Fargo Foothill, Inc., entered into a Second Amendment to Forbearance, Consent and Third Amendment to Credit Agreement. The Second Amendment amends the Forbearance, Consent and Third Amendment to Credit Agreement, as amended, between the Company and Wells Fargo Foothill dated November 3, 2008. Pursuant to the Second Amendment, the Forbearance Termination Date was extended from February 2, 2009 to February 12, 2009. Section 3 of the Forbearance Agreement was also amended to allow the Company to transfer slot machines and video poker machines from the Suspended Location, as defined in the Forbearance Agreement, to one of the Company's other operating casino locations. No other provisions of the Forbearance Agreement were amended, and except as modified by the Second Amendment, the terms of the Forbearance Agreement remain in full force and effect in accordance with their respective terms. A full-text copy of the Second Amendment is available for free at: http://researcharchives.com/t/s?3962 About Black Gaming, LLC Headquartered in Las Vegas, Nevada, Black Gaming, LLC -- http://www.blackgaming.com/-- through its subsidiaries, engages in the ownership and operation of casino hotels. Its casino properties include CasaBlanca Hotel & Casino, Oasis Hotel & Casino, and Virgin River Hotel & Casino, which are located in Mesquite, Nevada. The company also owns the Virgin River Convention Center in Mesquite, Nevada, which is used as a special events facility and for overflow hotel traffic from its other properties. Black Gaming's properties also offer amenities, including championship golf courses, spas, a bowling center, a movie theater, both gourmet and casual restaurants, and banquet and conference facilities. Founded in 1988, the company has 2,300 employees. * * * As reported by the Troubled Company Reporter on Jan. 20, 2009, Moody's Investors Service downgraded Black Gaming LLC's corporate family and probability of default ratings to Ca from Caa3 following the announcement that it did not make the January 15, 2009 scheduled interest payment on its 9% senior secured notes due 2012. Moody's also lowered the ratings for the 9% senior secured notes to Caa3 from Caa2 and the 12.75% senior subordinated notes to C from Ca. The SGL-4 speculative grade liquidity rating was affirmed. The outlook remains negative. At Sept. 30, 2008, the company's balance sheet showed total assets of $166.3 million and total liabilities of $221.4 million, resulting in a members' deficit of $55.1 million. For three months ended Sept. 30, 2008, the company posted net loss of $10.1 million compared with net loss of $7.9 million for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted a net loss of $34.4 million compared with a net loss of $12.1 million for the same period in the previous year. BRAY & GILLESPIE: Disclosure Statement Hearing Set for March 23 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida will hold a hearing on March 23, 2009, to consider approval of the disclosure statement filed by Bray & Gillespie Management, LLC, and 78 of its affiliated or related debtors on Jan. 9, 2009, in support of their Joint Plan of Reorganization. As envisaged, on the Plan's effective date, all of the prepetition equity in the Debtors will be cancelled and a new equity distributed. A B&G Liquidating Trust will be established which will own 100% of all the Reorganized Debtors. The Plan contemplates the continuation of the operations of 24 hotels located in Volusia County and the seven other related or affiliated entities which own producing property. The Reorganized Debtors will consist of six entities: (i) the Holding Co.; (ii) the Management Co.; (iii) Arbor Co.; (iv) Land Co.; (v) Hotel Co.; and (vi) LNR Co. Arbor Co. will consist of the Six-Pack hotels; Hotel Co. will consist of the 16 other hotels currently operated by various Debtors; Land Co., will consist of 38 other parcels of real property of which seven currently produce some rental income but are not hotels; and LNR Co. will consist of two hotels. Management Co. will provide reservation and management services to Arbor Co., Land Co., Hotel Co., and LNR Co. Holding co. will own all of the common equity ownership interest in the other five Reorganized Debtors. All claims by any Debtor against any other Debtor will be waived. The Reorganized Debtors will continue to maintain a centralized corporate administrative office which will manage and operate the hotels and the entities which own income producing property. In addition, Wachovia Bank will continue to make available the existing credit line up to an aggregate amount of $3 million ("Exit Financing"). The Debtors believe cash flow from the continued operation of the hotels and the Exit Financing will be sufficient to meet all required Plan payments. Broad Third-Party Releases to Messrs. Bray and Gillespie In consideration of the substantial contributions made and to be made under the Plan by B&G Management partners Charles A. Bray and Joseph G. Gillespie, the Plan contemplates the provision to Messrs. Bray and Gillespie of broad third-party releases and injunctions of pursuit against Messrs. Bray and Gillespie of claims arising out of and deriving from the business operations and financial affairs of the Debtors. The third party releases and injunctions will be omnibus in nature, excepting therefrom only liabilities of Messrs. Bray and Gillespie, or either of them owing to holders of claims against the Debtors but arising from non-debtor transactions of a purely personal of family nature. 102 Classes of Claims and Interests The Plan contains 102 classes of claims and interests. There are 22 classes of secured claims, one class of unsecured claims, one class of unsecured priority claims, and 78 classes of interests. Overall, the Plan provides that Holders of Allowed Administrative Claims will be paid in full on the Plan's Effective Date. Holders of Allowed Priority Claims will be paid by the respective Reorganized Debtor over time, with interest, over a period of six years. As to the Allowed Secured Claim of Wachovia Bank in respect of the Debtor-in-Possession Loan, it will be paid according to the terms set forth in the Court's order allowing the DIP Loan. The Holders of the Allowed Secured Class 2, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20 Claims will be paid either monthly interest or monthly interest and receive a new PIK Note. Holders of Allowed General Unsecured Claims in Class 24 will receive as a group a Pro Rata share (based on their percentage of the Allowed Class 24 Claims) of 100% of the interests in the B&G Liquidating Trust. On the Plan's Effective Date, Holders of Allowed General Unsecured Class 24 Claims will receive, in full satisfaction of their Allowed Unsecured Claims an interest in the B&G Liquidating Trust. The B&G Liquidating Trust will be vested with the following as of the Plan's Effective Date: (i) condo units owned by 600 North Investments LLC; (ii) certain real property owned by the Debtors; (iii) a lien on the proceeds of the 2004 Hurricane Litigation; (iv) Causes of Action; and (v) the common equity of Holding Co. Because of the large number of potential deficiency claims which will ultimately become Class 24 Claims, the Debtors believe that the ultimate true amount of Allowed Unsecured Claims will exceed $100,000,000. Classes 25 through 102 of Interests will be cancelled upon the Plan's Effective Date. All Classes are impaired under the Plan. Cramdown Provisions The Debtors intend to invoke the "cramdown" provisions under Section 1129(b)(1) of the Bankruptcy Code which permits a court to confirm a plan even if all Impaired Classes do not vote in favor of the Plan, provided that the Plan has been accepted by at least one Impaired Class of Claims. Section 1129(b)(10) states that a plan may still be confirmed by the Court at the request of the proponent of the plan, "if the plan does not discriminate unfairly, and is fair and equitable with respect to each Class of Claims that is impaired under, and has not accepted, the plan." A full-text copy of the Disclosure statement is available at: http://bankrupt.com/misc/Bray&GillespieDSpart1.pdf http://bankrupt.com/misc/Bray&GillespieDSpart2.pdf http://bankrupt.com/misc/Bray&GillespieDSpart1.pdf Based in Daytona Beach, Florida Bray & Gillespie Management, LLC - - http://www.brayandgillespie.com-- and its debtor-affiliates are engaged in the business of renovating and redeveloping resort properties along Florida's Atlantic coastline. The Company owns over six miles of ocean property from Daytona Beach to Ormond Beach. B&G Management operates a total of 24 hotels located in Volusia County which are either affiliates or related companies. B&G Management is owned by partners Charles A. Bray and Joe Gillespie. Bray & Gillespie Management, LLC and 78 of its debtor-affiliates filed separate petitions for Chapter 11 relief on Sept. 12, 2008 (Bankr. M.D. Fla. Lead Case No. 08-05473). Jimmy D. Parrish, Esq., Marianne L. Dorris, Esq., R. Scott Shuker, Esq. at Latham Shuker Eden & Beaudine LLP, represent the Debtors as counsel. Peter N. Hill, Esq., at Wolff Hill McFarlin & Herron PA, represent the Official Creditors Committee as counsel. In its petition, Bray & Gillespie Management, LLC disclosed assets of $1 million to $10 million and debts of $1 million to $10 million. BRUNO'S SUPERMARKETS: Can Hire Burr as Bankruptcy Counsel --------------------------------------------------------- Bruno's Supermarkets LLC obtained authority from the U.S. Bankruptcy Court for the Northern District of Alabama to employ Burr & Forman LLP as lead counsel. Burr & Forman is expected to counsel and represent the Debtor in connection with general bankruptcy administration well as general corporate, finance, litigation, employee benefits, labor, tax, customer issues, vendor issues, insurance and assist Debtor on matters relating to local bankruptcy custom and practice. In the event that there is a conflict of interest with a particular matter, the Debtor has employed Najjar & Deneburg, P.C., to handle the matter. Robert B. Rubin, a partner at Burr & Forman, told the Court of Burr & Forman's professionals' standard hourly rates: Partners $310 - $490 Associates $210 - $305 Legal Assistants $85 - $175 The Debtor was also permitted to make monthly payments to Burr & Forman in its representation of Debtor without further order of the Court. Mr. Rubin also related that the Debtor has paid Burr & Forman the aggregate sum of approximately $500,000 on account of professional services rendered and disbursements made for the Debtor. An additional amount may be held by Burr & Forman as a general retainer for post-petition date services and expenses incurred in connection with the Chapter 11 case. Mr. Rubin assured the Court that Burr & Forman is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Burr & Forman LLP 171 17th Street, NW Suite 1100 Atlanta, GA 30363 Tel: (404) 815-3000 (877) FOR-BURR Fax: (404) 817-3244 About Bruno's Supermarkets Bruno's Supermarkets, LLC, owns the Bruno's and FOOD WORLD grocery store chains, which includes 23 Bruno's locations and 43 FOOD WORLD in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed its voluntary Chapter 11 petition on Feb. 5, 2009 (Bankr. N.D. Alabama, Case No. 09-00634). Bruno's has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process. It has retained Kurtzman Carson Consultants LLC as claims and noticing agent. BRUNO'S SUPERMARKETS: Can Hire KCC as Notice and Claims Agent ------------------------------------------------------------- Bruno's Supermarkets LLC obtained authority from the United States Bankruptcy Court for the Northern District of Alabama to employ Kurtzman Carson Consultants LLC as notice and claims agent. KCC is expected to: a) prepare and serve required notices in the Chapter 11 case; b) within five days after the service of a particular notice, file with the Clerk's Office a certificate or affidavit of service; c) maintain copies of any proofs of claim and proofs of interest filed in this case; d) maintain official claims registers in this case by docketing all proofs of claim and proofs of interest in a claims database that includes information for each claim or interest asserted; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make the list available upon request to the Clerk's Office or any parties-in-interest; h) Provide access to the public for examination of copies of any proofs of claim or proofs of interest filed in this case without charge during the regular business hours; i) record all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of the transfers as requested by Rule 3001(e), if directed to do so by the Court pursuant to Rule 2002; j) comply with applicable federal state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; k) provide temporary employees to process claims as necessary; l) promptly comply with further conditions and requirements as the Clerk's Office or the court may at any time prescribe; and m) provide other claims processing, noticing, balloting and related administrative services as may be requested from time to time by the Debtor. James M. Le, chief operating officer of KCC, tells the Court that KCC will be paid a $10,000 evergreen retainer for services to be performed and expenses to be incurred. KCC's hourly rates are: Clerical $45 - $65 Project Specialist $80 - $140 Technology/ Programming Consultant $145 - $195 Consultant $165 - $245 Senior Consultant $255 - $275 Senior Managing Consultant $295 - $325 Weekend, holidays and overtime Waived Mr. Le assures the Court that KCC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Bruno's Supermarkets Bruno's Supermarkets, LLC, owns the Bruno's and FOOD WORLD grocery store chains, which includes 23 Bruno's locations and 43 FOOD WORLD in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed its voluntary Chapter 11 petition on Feb. 5, 2009 (Bankr. N.D. Alabama, Case No. 09-00634). Bruno's has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process. It has retained Kurtzman Carson Consultants LLC as claims and noticing agent. BRUNO'S SUPERMARKETS: Court Approves Najjar as Conflicts Counsel ---------------------------------------------------------------- Bruno's Supermarkets LLC obtained authority from the United States Bankruptcy Court for the Northern District of Alabama to employ Najjar Denaburg, P.C., as conflicts counsel. Najjar is expected handle matters in this chapter 11 case where the Debtor's lead counsel Burr & Forman LLP may have a conflict. Charles L. Denaburg, a partner at Najjar, tells the Court that the firm's professional hourly rates are: Partners $250 - $375 Of Counsel Attorney $250 Legal Assistants $85 On Feb. 4, 2009, the Debtor paid Najjar a $75,000 retainer. Najjar has been paid $5,112.50 for services rendered prepetition. The balance of Najjar's prepetition retainer is $69,887. Mr. Denaburg assured the Court that Najjar is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Bruno's Supermarkets Bruno's Supermarkets, LLC, owns the Bruno's and FOOD WORLD grocery store chains, which includes 23 Bruno's locations and 43 FOOD WORLD in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed its voluntary Chapter 11 petition on Feb. 5, 2009 (Bankr. N.D. Alabama, Case No. 09-00634). Bruno's has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process. It has retained Kurtzman Carson Consultants LLC as claims and noticing agent. BRUNO'S SUPERMARKETS: Court OKs NatCity/SSG as Investment Banker ---------------------------------------------------------------- Bruno's Supermarkets LLC obtained authority from the United States Bankruptcy Court for the Northern District of Alabama to employ the Special Situations Group of NatCity Investments Inc. as investment banker. NatCity/SSG is expected to: a. assess strategic alternatives for the Debtor's operations; and b. assess and perform services relating to the structure of proposals and alternatives relating to the debtor's reorganization, recapitalization, rehabilitation and consolidation, by means of one or more corporate restructuring transactions. J. Scott Victor, senior managing director and co-head of NatCity/SSG told the Court that the Debtor paid a $75,000 initial fee. For services provided, the Debtor will compensate NatCity/SSG with: -- a monthly fee of $75,000, payable on the fifteenth of each month thereafter for the term of NatCity's engagement. -- Upon the first closing of a financing, a fee, payable in cash at hand as a condition of closing the financing, equal to or greater of (i) $200,000 or (ii) 1% of the total amount of any senior debt package acquired from financing sources other that Regions Bank, any affiliate of the Debtor, or Lone Star funs V (U.S.), LP. -- Upon the consummation of transaction, a fee equal to $1,000,000, together with the monthly fee and the financing fee, payable in cash, at, and as a condition of, closing the transaction. The total of all monthly fees received by NatCity/SSG will be credited against the transaction fee owed to NatCity/SSG. The initial fee will also be credited against the transaction fee. Mr. Victor assured the Court that NatCity is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Bruno's Supermarkets Bruno's Supermarkets, LLC, owns the Bruno's and FOOD WORLD grocery store chains, which includes 23 Bruno's locations and 43 FOOD WORLD in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed its voluntary Chapter 11 petition on Feb. 5, 2009 (Bankr. N.D. Alabama, Case No. 09-00634). Bruno's has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process. It has retained Kurtzman Carson Consultants LLC as claims and noticing agent. BUILDING MATERIALS: David Harrison Changes Status to Consultant --------------------------------------------------------------- John F. Rebele, senior vice president, chief financial officer and chief administrative officer of Building Materials Corporation of America, disclosed in a regulatory filing dated February 5, 2009, that on January 30, 2009, David A. Harrison converted his full- time employment as the Senior Vice President, Chief Marketing Officer of Building Materials Corporation of America and its subsidiaries to become a consultant to the Company. In connection with the change in employment status, Mr. Harrison ceased being a member of the board of directors of the Company and its subsidiaries on that date. To effect this change in status, on January 30, 2009, the Company and Mr. Harrison entered into a Separation Agreement and General Release as well as a related consulting services agreement. For the first 12 months of the Consulting Agreement, Mr. Harrison will receive a monthly fee of $28,000.00. Thereafter, he will receive a monthly fee of $10,000. Mr. Harrison is prohibited from working with or providing services to a competitor of the Company during the term of the Consulting Agreement and for a period thereafter. About Building Materials Based in Wayne, New Jersey, Building Materials Corporation of America is a manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. The company also manufactures specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. The Company is a wholly owned subsidiary of BMCA Holdings Corporation, which is a wholly owned subsidiary of G-I Holdings Inc. The Company's products are marketed in three groups: residential roofing, commercial roofing and specialty building products and accessories. On March 26, 2007, the Company completed the acquisition of ElkCorp, a manufacturer of roofing products and building materials. * * * As reported in the Troubled Company Reporter on May 27, 2008, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Building Materials Corp. of America. At the same time, S&P revised the recovery rating on the Company's $975 million first-lien term loan due 2014 to '3', indicating that lenders can expect meaningful (50% to 70%) recovery in the event of a payment default, from '2'. As a result, S&P lowered the issue-level rating on the term loan to 'B+' from 'BB-', in accordance with its issue rating framework. S&P also assigned a '3' recovery rating on BMCA's outstanding $250 million 7.75% senior notes due 2014. Standard & Poor's removed all the ratings from CreditWatch, where they had been placed with negative implications on Jan. 10, 2008. The outlook is negative. As reported in the TCR on April 10, 2008, Moody's Investors Service lowered the ratings of Building Materials Corp. of America including the corporate family rating to B3 from B2, first lien term loan rating to B3 from B2, senior notes rating to B3 from B2, and junior term loan rating to Caa2 from Caa1. The probability of default rating was lowered to Caa1 from B2. The ratings outlook remains negative. As of September 28, 2008, the Company's balance sheet showed total assets of $2,715,306,000 and total liabilities of $2,766,795,000, resulting in total stockholders' deficit of $51,489,000. CABLEVISION SYS: S&P Sees Aggressive Fin'l Policy, Stays at 'BB' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB' issue-level and '3' recovery ratings to CSC Holdings Inc.'s proposed $500 million senior notes due 2019. The '3' recovery rating indicates the expectation for meaningful (50%-70%) recovery of principal in the event of payment default. At the same time, S&P placed the 'BB+' rating on $650 million of senior secured debt of majority-owned Newsday LLC on CreditWatch with negative implications. The 'BB' corporate credit rating on parent Cablevision Systems Corp. remains unchanged. Bethpage, New York-based Cablevision is a major cable operator in the New York metropolitan area. The notes will be sold under Rule 144A and the company will be required to file a future exchange offer registration under certain conditions. Proceeds of the new notes, in combination with net proceeds of $732 million from notes sold last month will be used to repay or repurchase $500 million of notes due April 2009 and a portion of the aggregate $1.4 billion of notes due in July and August. Total reported debt was about $12 billion at Sept. 30, 2008. The ratings on Cablevision reflect S&P's expectation that the company may well choose to pursue its historic, aggressive financial policy, a factor that overshadows its investment-grade business risk profile. Cablevision's satisfactory business position stems largely from the attractive demographics of its well-clustered, well-managed 3.1 million metropolitan New York cable TV customers. CARITAS HEALTH CARE: Files Chapter 11 to Close Queens Hospitals --------------------------------------------------------------- Caritas Health Care Inc., and eight affiliates sought bankruptcy protection under Chapter 11 of the Bankruptcy Code on Feb. 6 to implement a plan to close its two-hospital system. A Feb. 3 report by Crain's New York Business said that Caritas pressured the state of New York for funding and warned of immediate closure and bankruptcy filing absent the requested aid, which included $6 million for last Friday's payroll. However, according to the report, while the state acknowledged that the two hospitals of Caritas are essential to the community, the hospitals in Queens, New York, are not financially viable. According to Bloomberg News, Caritas' chief restructuring officer said closing the hospitals with bankruptcy court assistance was necessary because the New York State Department of Health and the New York State Dormitory Authority "indicated that they no longer have the ability to continue to subsidize Caritas's operating losses." In its bankruptcy petition, the Company listed assets of $87.2 million against debt totaling $188.3 million. Debt includes a $13.9 million secured claim owing to HFG Healthco-5 LLC; $9.1 million owed to St. Vincent Catholic Medical Center secured by a second-lien on the assets; and $55 million to the State Dormitory Authority. Caritas Health Care Inc. is the owner of Mary Immaculate Hospital and St. John's Queens Hospital. Caritas, created by Wyckoff Heights Medical Center, purchased the two hospitals in a bankruptcy sale in early 2007 from St. Vincent Catholic Medical Centers of New York. St. John's has 227 generate acute-care beds while Mary Immaculate has 189. Caritas and eight affiliates filed for Chapter 11 on Feb. 6, 2009 (Bankr. E.D. N.Y., Lead Case No. 09-40901). Adam T. Berkowitz, Esq., at Proskauer Rose LLP, has been tapped as counsel. JL Consulting LLC is the Debtors' restructuring advisors. Caritas in its bankruptcy petition estimated assets of $50 million to $100 million, and debts of $100 million to $500 million. CALIFORNIA STATE: Will Sell $200 Mil. in Bonds to Bay Area Agency ----------------------------------------------------------------- Stu Woo at The Wall Street Journal reports that California will sell $200 million in general obligation bonds to the Bay Area Toll Authority to fund public-works projects around the San Francisco Bay area. Tom Dresslar, a spokesperson for state Treasurer Bill Lockyer, said that the Bay Area Toll Authority would purchase the bonds through a private placement, WSJ relates. WSJ quoted Mr. Dresslar as saying, "We're not aware that this kind of transaction has ever been conducted in the state," but this unusual move was required, because "we have no budget. We are unable to access the bond market and so we are scratching and clawing to find ways to pump dollars into infrastructure projects, to keep folks working." According to WSJ, the state's treasurer, controller, and finance department director will consider the proposal on February 18. They are expected to approve the sale, the report says, citing a person familiar with the matter. WSJ states that budget problems have impacted a California economy already slammed by the housing-market crash and recession. State leaders, according to the report, have: -- frozen funding for $3 billion in public-works projects; -- delayed more than $3 billion in tax refunds, welfare checks and other payments; and -- started furloughing more than 200,000 government workers for two days a month. WSJ relates that Gov. Arnold Schwarzenegger said that he would send layoff notices to 20,000 workers if no budget deal is reached with state lawmakers by Friday. He will lay off about 10,000 workers to save $150 million over 17 months, the report states. CDX GAS: Files Schedules of Assets and Liabilities with Court ------------------------------------------------------------- CDX Gas LLC and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Southern District of Texas its schedules of assets and liabilities disclosing: Assets Liabilities ------ ----------- A. Real Property $215,693,626 B. Personal Property $780,614,980 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $550,886,155 E. Creditors Holding Unsecured Priority Claims $280,654 F. Creditors Holding Unsecured Nonpriority Claims $280,112,716 ----------- ------------ TOTAL $996,308,606 $831,259,526 About CDX Gas Based in Houston, Texas, CDX Gas LLC -- http://www.cdxgas.com/-- is an independent gas company that explores, develops, and produces onshore North American unconventional natural gas resources located in coal, shale, and tight gas sandstone formations. The Company and 19 of its affiliates filed for Chapter 11 protection on Dec. 12, 2008 (Bankr. S.D. Tex. Lead Case No. 08-37922). Harry Allen Perrin, Esq., John E. Mitchell, Esq., and Michaela Christine Crocker, Esq., at Vinson Elkins LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million and $1 billion in their filing. CFM US: Won't Pursue Chapter 11 Plan; Seeks Case Conversion ----------------------------------------------------------- CFM U.S. Corp. gave up hope of confirming a liquidating Chapter 11 plan and instead filed a motion to convert the case to a liquidation in Chapter 7 where a trustee will be appointed automatically, Bloomberg's Bill Rochelle reports. CFM announced in December that a settlement was reached in a lawsuit brought by the creditors' committee against Ontario Teachers Pension Plan Board, the head of a group that took the company private in April 2005. The settlement, according to Mr. Rochelle's report, is to provide the foundation for a liquidating Chapter 11 plan that was scheduled to be filed by the end of January. The settlement and plan would have also provide for wrapping up proceedings begun simultaneously in Canada for protection from creditors in the Ontario Court of Justice under the Companies' Creditors Arrangement Act. CFM, however, said that the plan was blown apart by a $42 million tax claim and a $9.1 million claim by a union pertaining to a pension plan, Mr. Rochelle said. He added that an effort at mediation last week failed. The U.S. Bankruptcy Court for the District of Delaware will hear the conversion request on Feb. 18. CFM has consummated the sale of substantially all of its assets. According to Bloomberg, CFM was authorized in July to sell most of the assets for $42.5 million after selling other assets in May to two buyers for $4.6 million. It was permitted in August to sell real estate in Huntington, Indiana, for $2 million. 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. CHARTER COMM: In Talks With Bondholders; Mum on Bankruptcy Rumors ----------------------------------------------------------------- Ryan Bentley at Petoskey News-Review reports that Charter Communications spokesperson Anita Lamont said that the company doesn't comment on speculations about its alleged preparation for a bankruptcy filing. As reported by the Troubled Company Reporter on Jan. 19, 2009, the failure of Charter Communications' two subsidiaries to make scheduled interest payments of $73.7 million on some of its debt by the deadline raises the potential for a bankruptcy filing. Charter Communications said that two of its subsidiaries, CCH I Holdings, LLC and Charter Communications Holdings, LLC, didn't make scheduled payments of interest due on January 15, 2009, on certain of their outstanding senior notes. People familiar with the matter said that Charter Communications was preparing for a bankruptcy filing after missing the interest payment, Reuters states. Bloomberg News says that Charter Communications has hired Greg Doody, an attorney who had helped lead natural gas-fueled power producer Calpine Inc. out of bankruptcy and who helped HealthSouth Corp. stave off bankruptcy after a 2003 accounting scandal. Citing a source, Reuters reports that the possible bankruptcy filing's timing was unclear, and that there was a possibility to arrange a prepackaged bankruptcy with bondholders. Petoskey News quoted Ms. Lamont as saying, "We're talking to our bondholders." Citing Ms. Lamont, Petoskey News relates that Charter Communications has $900 million cash on hand to sustain them. Ms. Lamont, according to the report, said that she and doesn't foresee Charter Communications' financial position altering services. About Charter Communications Headquartered in St. Louis, Missouri, Charter Communications Inc. (Nasdaq: CHTR) -- http://www.charter.com/-- is a broadband communications company and the third-largest publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. As reported by the Troubled Company Reporter on Nov. 11, 2008, Charter Communications' balance sheet at Sept. 30, 2008, showed total assets of $15.1 billion, total liabilities of $23.9 billion, resulting in a shareholders' deficit of $8.8 billion. As reported by the Troubled Company Reporter on Dec. 22, 2008, Fitch Ratings placed Charter Communications, Inc.'s 'CCC' Issuer Default Rating and the IDRs and individual issue ratings of Charter's subsidiaries on Rating Watch Negative. Approximately $21.1 billion of debt outstanding as of Sept. 30, 2008 is effected by Fitch's action. As reported by the TCR on Dec. 16, 2008, Moody's Investors Service lowered the Probability-of-Default Rating for Charter Communications to Ca from Caa2 and placed all ratings (other than the SGL3 Speculative Grade Liquidity Rating) for the company and its subsidiaries under review for possible downgrade. As reported by the Troubled Company Reporter on Dec. 16, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Charter Communications to 'CC' from 'B-'. S&P said that the rating outlook is negative. CHECKER MOTORS: Seeks to Modify Labor Pact & Cut Retiree Benefits ----------------------------------------------------------------- Checker Motors Corporation seeks permission from the Hon. James D. Gregg of the U.S. Bankruptcy Court for the Western District of Michigan to reject, pursuant to Sections 1113 and 1114 of the Bankruptcy Code, their collective bargaining agreement with union employees and eliminate certain retiree benefits. The Debtor is a party to a collective bargaining agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, and its Local 2-682. The Debtor currently has 169 employees, 125 of whom are unionized. Moreover, 176 individuals receive retiree benefits of $802,000 in total annually. The bargaining agreement has a termination date of June 14, 2011, and calls for increases in wage rates and employer pension contributions in June 2009 and June 2010. Among others, the Debtor proposes to eliminate piece rate wage payments, and that all employees will be paid at a straight hourly rate as set forth in a new pay schedule. Daily overtime will be eliminated. Overtime will be paid only for hours worked beyond 40 in a workweek. The Debtor also wants free hand to send a junior employee home at any time, provided the remaining employees have the ability to perform the available work. The Debtor will also suspend the profit sharing plan. The Debtor proposes to cap insurance cost at the level of $500 per employee, on average. The Debtor expects to realize up to $5,400,000 in annual cost savings if its proposal is implemented. With respect to retiree benefits, the Debtor proposes to take out healthcare coverage to retirees as well as certain other insurance benefits to union retirees. The Debtor expects annual savings of $802,000 if the proposal is implemented. The Debtor tells the Court that it is not able to compete in the automotive supplier marketplace as a consequence of its uncompetitive labor rates and other employee and retirement benefits and obligations. In addition, the Debtor has had to contend with continuing decline in market share of the Debtor's OEM customers. According to the Debtor, the request "is the last and most important component of the Debtor's restructuring initiative," and without the relief requested, it will not survive. The Debtor notes that it is burning roughly $550,000 of cash per month. At this rate, the Debtor expects to run out of cash in July 2009. If the request is not granted, the Debtor said it will have no choice but to cease operations and liquidate its assets. The Debtor notes that it spent about a year in discussions with the union regarding the concessions sought. While the union's representatives seemed to agree that the company was facing certain death without labor concessions, the union generally reacted with an attitude of indifference to the request to negotiate reasonable modifications to the labor agreement, the Debtor tells the Court. The parties also met post-bankruptcy, including on January 30 wherein the union presented its first full proposal. The Debtor, however, found the proposal insufficient. About Checker Motors Headquartered in Kalamazoo, Michigan, Checker Motors Corporation was established by Morris Markin in 1922 through a merger of Commonwealth Motors and Markin Automobile Body. The Debtor, once the manufacturer of the famed Checker automobile (the iconic American taxi cab), is a Kalamazoo, Michigan-based automotive parts supplier that makes metal stampings and welded assemblies for various car and truck lines. The Company filed for Chapter 11 protection on January 16, 2009 (Bankr. W.D. Mich. Case No. 09-00358). Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., represents the Debtor in its restructuring efforts. The Debtor proposed Plante & Moran as financial advisor; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and McCarthy Smith Law Group as special counsel. An official committee of unsecured creditors has been appointed in the case. As of December 31, 2008, the Debtor had $22.3 million in assets and $20.1 million in debts. CHECKER MOTORS: Taps Carson Fischer as Bankruptcy Counsel --------------------------------------------------------- Checker Motors Corporation seeks permission from the U.S. Bankruptcy Court for the Western District of Michigan to employ Carson Fischer, P.L.C. as its bankruptcy counsel to file and prosecute their chapter 11 cases and all related matters. Checker Motors needs the firm to provide advice with regard to the Debtor's duties and responsibilities; assist in preparing financial statements, balance sheets and business plans; pursue claims against third parties; and assist in negotiations with creditors and in preparing a plan of reorganization and obtaining confirmation of that plan. The firm will be paid pursuant to these hourly rates: Partners $350 - $550 Associates $175 - $345 Law clerks $110 Legal assistants $125 The Debtor will also reimburse the firm for necessary expenses. Joseph M. Fischer, Esq., a partner at the firm, attests that Carson Fischer does not hold or represent any interest adverse to the Debtor's estates and is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. About Checker Motors Headquartered in Kalamazoo, Michigan, Checker Motors Corporation was established by Morris Markin in 1922 through a merger of Commonwealth Motors and Markin Automobile Body. The Debtor, once the manufacturer of the famed Checker automobile (the iconic American taxi cab), is a Kalamazoo, Michigan-based automotive parts supplier that makes metal stampings and welded assemblies for various car and truck lines. The Company filed for Chapter 11 protection on January 16, 2009 (Bankr. W.D. Mich. Case No. 09-00358). Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., represents the Debtor in its restructuring efforts. The Debtor proposed Plante & Moran as financial advisor; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and McCarthy Smith Law Group as special counsel. An official committee of unsecured creditors has been appointed in the case. As of December 31, 2008, the Debtor had $22.3 million in assets and $20.1 million in debts. CHECKER MOTORS: Taps McCarthy Smith as Labor Counsel ---------------------------------------------------- Checker Motors Corporation seeks to hire McCarthy Smith Law Group as special counsel with regard to labor and employment law matters in the bankruptcy case. Among other things, the Debtor will look to the firm for advice on matters involving union-related issues; and the Debtor's duties and responsibilities with respect to existing collective bargaining agreements and the negotiation and revision of the agreements. The firm will also represent the Debtor with regard to any actions brought by or against the Debtor involving labor and employment law related matters. The firm will be paid at these hourly rates: Partners $250 Associates $170 Legal assistants $95 Kevin M. McCarthy, Esq., a partner at the firm, attests that his firm does not hold or represent any interest adverse to the Debtor's estates and is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. About Checker Motors Headquartered in Kalamazoo, Michigan, Checker Motors Corporation was established by Morris Markin in 1922 through a merger of Commonwealth Motors and Markin Automobile Body. The Debtor, once the manufacturer of the famed Checker automobile (the iconic American taxi cab), is a Kalamazoo, Michigan-based automotive parts supplier that makes metal stampings and welded assemblies for various car and truck lines. The Company filed for Chapter 11 protection on January 16, 2009 (Bankr. W.D. Mich. Case No. 09-00358). Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., represents the Debtor in its restructuring efforts. The Debtor proposed Plante & Moran as financial advisor; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and McCarthy Smith Law Group as special counsel. An official committee of unsecured creditors has been appointed in the case. As of December 31, 2008, the Debtor had $22.3 million in assets and $20.1 million in debts. CHEMTURA CORP: Discusses Actions to Improve Liquidity ----------------------------------------------------- Chemtura Corp. disclosed recent strides to improve liquidity as well as its strategy to weather the current economic climate as a viable, strong competitor in the specialty chemicals marketplace. Craig A. Rogerson, Chairman, President and CEO, commented: "In November and December Chemtura, like many companies, experienced a sharp drop in demand from customers as orders were delayed or reduced as the recession took hold. With Chemtura's overall financial performance and outlook impacted by the deteriorating macroeconomic climate the Company, as previously announced, sought relief from our lending banks and subsequently entered into a 90-day amendment and waiver agreement with lenders under its senior credit facility on December 30, 2008." Certain of the Company's senior lenders further agreed to assist the Company in establishing a new U.S. accounts receivable facility to replace much of the liquidity that had previously been available under the Company's existing accounts receivable facility. On January 23, 2009, Chemtura closed on its new $150 million U.S. accounts receivable facility with a three-year term and terminated its former U.S. facility. Mr. Rogerson continued: "In the meantime, we resolved to take firm measures to manage our liquidity going forward. We are reducing indirect costs by $50 million as a result of eliminating layers, broadening job scope, and utilizing the capabilities delivered by consolidating our enterprise systems around SAP 6.0. We are reducing our inventories by a substantial amount and have suspended our dividend. We are continuing where possible to make variable the fixed costs at our manufacturing facilities by curtailing production lines and furloughing employees as required to balance the reduced demand from our customers. We also retain a close focus on aggressively managing working capital to supplement our liquidity. We made good progress in the fourth quarter and plan to make further progress in 2009." Mr. Rogerson said that one of the Company's key objectives in the first half of 2009 is to secure the liquidity to meet the maturity of Chemtura's 2009 Notes when they come due on July 15, 2009. "Our primary and preferred path to obtain this liquidity is the sale of asset(s)," he said. "We continue to pursue multiple asset divestment alternatives with multiple players and are in the midst of diligence activities with potential buyers. As we evaluate all of our alternatives (including asset dispositions), we will act in the best interests of all our stakeholders. While there are no assurances of success until a transaction is completed, the process to sell an asset continues to make solid progress." Rogerson continued: "We have a solid portfolio of businesses today, and this will remain the case after an asset sale. Some are high-margin industry leaders. Others have good growth potential, while a few have significant challenges which we intend to resolve." Mr. Rogerson noted that all of the businesses were affected to some extent by the economic downturn, which intensified as the fourth quarter of 2008 progressed. However, the Company's Polymer Additives business took the brunt of the reduction in demand from customers, with sales for the fourth quarter, 2008 down 35 percent compared to the fourth quarter, 2007. Demand from electronic, building and construction, and polyolefin applications saw the most significant impact. For the Company as a whole, fourth quarter sales were impacted to a slightly lesser extent, down 23 percent compared to a year ago. However, full year 2008 sales were down 5 percent. This reflected first, the fact that the dramatic drop in demand did not occur until late in the year and, second, the divestiture of the Oleochemicals business, both of which were offset in part by higher selling prices due to raw material price increases and growth from some business segments. Chemtura expects to release its 2008 fourth quarter and full year financial results on the evening of Wednesday, February 25, 2009, followed by a conference call at 9:00 am EST the following day. Those results will quantify an impairment of goodwill and restructuring charges being taken in the fourth quarter 2008. Mr. Rogerson said he has had success in meeting challenges similar to those facing Chemtura, having been through difficult financial conditions before while serving as an executive, including as Chief Executive Officer of Hercules Inc. "We are managing Chemtura's businesses with the expectation that we will be here for the long run and that we will come out of this a more efficient and effective partner to our suppliers and customers, and a consistent, value-creating investment for our owners," he said. "We appreciate the commitment and support of our customers, suppliers and employees in this transitional period." Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. * * * As reported by the Troubled Company Reporter on January 21, 2009, Bloomberg News had said Chemtura Corp., and industry peers Ineos Group Holdings, Georgia Gulf Corp. are crashing on a mountain of takeover debt and may follow Lyondell Chemical Co. into bankruptcy, based on the trading in their bonds. As to Ineos, Georgia Gulf and Chemtura, Bloomberg said the combination of $11.7 billion in debt, frozen credit markets and the global recession are forcing the companies to negotiate with creditors to loosen terms of their loans. A glut in supplies that drove prices of polypropylene down by half since October will make it even harder for plastics makers to meet debt payments, just as manufacturers in the Middle East add millions of tons of new supplies. Chemtura had disclosed $3.88 billion in assets and about $2.46 billion in debts as of Sept. 30, 2008. As of September 30, 2008, total debt was 2.7 times adjusted earnings before interest, taxes, depreciation and amortization. In February 2008, the company repurchased $30 million of its then outstanding $400 million 7% Notes Due 2009. The Notes mature in July 2009. The TCR said February 9 that Moody's Investors Service lowered Chemtura's Corporate Family Rating to B3 from B2, its PDR to Caa1 from B2 and lowered the company's outstanding debt ratings to B3. The ratings of Chemtura remain under review for possible downgrade. Despite the recent signing of $150 million three year U.S. accounts receivable facility, Moody's remain concerned over Chemtura's tight liquidity as evidenced by the maturity of the waiver on the revolving credit facility on March 30, 2009 and upcoming $370 million debt maturity due in early July 2009. CHESAPEAKE CORP: Sec. 341 Meeting Slated for February 20 -------------------------------------------------------- The United States Trustee for the Eastern District of Virginia will convene a meeting of the creditors of Chesapeake Corporation and its debtor-affiliates on February 20, 2009, at 10:00 a.m. The meeting will be held at 701 East Broad Street, Suite 4300, in Richmond, Virginia. This is the first meeting of creditors required under Section 41(a) of the Bankruptcy Code in the Debtors' bankruptcy cases. All creditors are invited, but not required, to attend. The Section 3419(a) Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Chesapeake has tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHESAPEAKE CORP: Gets Go-Signal to Hire Hunton & Williams --------------------------------------------------------- Judge Frank J. Santoro of the U.S. Bankruptcy Court for the Eastern District of Virginia permitted Chesapeake Corporation and its debtor-affiliates to employ Hunton & Williams, LLP, as their bankruptcy counsel, to file and prosecute these chapter 11 cases and all related matters. Since 1973, Hunton & Williams has represented the Debtors in various aspects of their businesses, including but not limited to corporate, intellectual property, environmental, mergers and acquisitions, and employment matters. Furthermore, since August 1 2008, Hunton & Williams has advised the Debtors in regards to restructuring their obligations and preparing the Debtors to file their petitions for bankruptcy relief. Hunton & Williams will render general legal services to the Debtors as needed throughout the course of these chapter 11 cases, including but not limited to bankruptcy, banking, corporate, labor and employment, litigation and tax advice. The initial hourly rates for the attorneys at Hunton & Williams who are expected to have primary responsibility for these cases are: Attorneys Hourly Rate --------- ----------- Benjamin C. Ackerly $680 Peter S. Partee $680 Gary E. Thompson $680 Kimberly M. Magee $520 Michael C. McCann $500 J. R. Smith $500 Jason W. Harbour $445 Hilary A. Peet $255 Hannah S. Garrett $255 Other attorneys in the Firm who may have responsibility for particular issues arising in these cases bill at hourly rates ranging from $230 per hour to $880 per hour. Paralegal rates range from $110 to $320 per hour and case clerk rates range from $75 to $125 per hour. The Debtors will also reimburse the Firm for all actual out-of- pocket expenses. Benjamin C. Ackerly, Esq., a partner with Hunton & Williams, disclosed the Debtors provided the firm with a $750,000 advance payment in September 2008. Mr. Ackerly said that since January 1, 2008, Hunton & Williams has billed the Debtors $3,952,686 in the aggregate. As of the Petition Date, the Advanced Retainer had a balance of $750,000, according to Mr. Ackerly, and the Debtors do not owe Hunton & Williams any amounts for legal services rendered, or reimbursement of expenses incurred before the Petition Date. Mr. Ackerly has ascertained that while Hunton & Williams represents certain of the Debtors' creditors and other parties-in- interest in ongoing matters unrelated to the Debtors and the chapter 11 cases, none of the representations are adverse to the interests of the Debtors' estates or any class of creditors or equity security holders. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Chesapeake has tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHESAPEAKE CORP: May Hire Hammonds LLP as European Counsel ---------------------------------------------------------- Chesapeake Corporation sought and obtained permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Hammonds LLP as special counsel in connection with certain aspects of the proposed sale of substantially all of the Debtors' assets including competition, pensions and European finance aspects. Hammonds is a multi-jurisdictional law firm with offices in England, Belgium, France and Germany. The firm has acted as European advisor to certain of the Debtors and their non-debtor subsidiaries since January 2008 in connection with Chesapeake's refinancing endeavors and discussions with existing lenders. The firm will be paid for its services at these hourly rates: Billing Category Hourly Rate ---------------- ----------- Partners GBP315 - GBP450 Senior associates GBP250 - GBP360 Associates GBP190 - GBP290 Paraprofessionals GBP125 - GBP165 Hammonds professionals that will primarily render services to the Debtors are Jon Bew, Wendy Hunter, Kirsty Bartlett, Tom Pick, Guillaume Taillandier, Renata Victory, John Heaton and Ryan Hawley. Prior to the petition date, the Debtors paid an aggregate of GBP200,000 to Hammonds as a classic retainer. As of the petition date, the Debtors did not owe the firm any amount for legal services rendered prepetition. Jon Bew, Esq., a partner at the firm, attests that his firm does not have any connection with or any interest adverse to the Debtors, their creditors, or any other party-in-interest, or their attorneys and accountants with respect to any matters on which the firm is to be engaged. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Chesapeake has tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHESAPEAKE CORP: Files Schedules of Assets & Liabilities -------------------------------------------------------- Chesapeake Corporation and 18 affiliates filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, their schedules of assets and liabilities, disclosing: A. Chesapeake Corporation Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property B. Personal Property $584,450,825 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $245,984,567 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority Claims $362,764,411 ------------ ------------ TOTAL $584,450,825 $608,748,978 B. Chesapeake Printing and Packaging Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property $3,600,000 B. Personal Property $6,864,120 F. Creditors Holding Unsecured Non-priority Claims $26,589,035 ------------ ------------ TOTAL $10,464,120 $26,589,035 C. Chesapeake Pharmaceutical Packaging Company, Inc. Name of Schedule Assets Liabilities ---------------- ------------ ------------ B. Personal Property $34,786,668 F. Creditors Holding Unsecured Non-priority Claims $32,274,498 ------------ ------------ TOTAL $34,786,668 $32,274,498 D. Chesapeake International Holding Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 E. WTM I Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property B. Personal Property $57,429,222 E. Creditors Holding Unsecured Priority Claims $6,904,143 F. Creditors Holding Unsecured Non-priority Claims $67 ------------ ------------ TOTAL $57,429,222 $6,904,211 F. Sheffield, Inc. Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 G. Chesapeake Assets Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 H. Chesapeake Recycling Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property $0 F. Creditors Holding Unsecured Non-priority Claims $7,844 ------------ ------------ TOTAL $0 $7,844 I. Chesapeake Display and Packaging Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ B. Personal Property $3,251,807 D. Creditors Holding Secured Claims $0 ------------ ------------ TOTAL $3,251,807 $0 J. The Chesapeake Corporation of Virginia Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property $0 F. Creditors Holding Unsecured Non-priority Claims $1,012 ------------ ------------ TOTAL $0 $1,012 K. Chesapeake Corporation (Wisconsin) Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 M. Chesapeake Corporation (D.C.) Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 N. Chesapeake Corporation (Illinois) Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 O. Chesapeake Corporation (Louisiana) Name of Schedule Assets Liabilities ---------------- ------------ ------------ TOTAL $0 $0 P. Chesapeake Forest Products Company, LLC Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property $0 F. Creditors Holding Unsecured Non-priority Claims $6,697,982 ------------ ------------ TOTAL $0 $6,697,982 Q. Cary St. Company Name of Schedule Assets Liabilities ---------------- ------------ ------------ B. Personal Property $290,979 D. Creditors Holding Secured Claims $0 ------------ ------------ TOTAL $290,979 $0 R. Delmarva Properties, Inc. Name of Schedule Assets Liabilities ---------------- ------------ ------------ B. Personal Property $24,219,684 F. Creditors Holding Unsecured Non-priority Claims $2,916,655 ------------ ------------ TOTAL $24,219,684 $2,916,655 S. Stonehouse Inc. Name of Schedule Assets Liabilities ---------------- ------------ ------------ B. Personal Property $14,323,427 D. Creditors Holding Secured Claims $0 ------------ ------------ TOTAL $14,323,427 $0 About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Chesapeake has tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHRYSLER LLC: Faces $110-M Suit by Faurencia for Research Costs --------------------------------------------------------------- Jewel Gopwani, Free Press Business Writer, reports that Faurencia, a French auto supplier, has sued Chrysler LLC to obtain payment of $110 million for engineering and research costs. The report notes that engineering costs refer to the expenses associated with interior parts made for Chrysler PT Cruiser and Sebring, Dodge Avenger nad Nitro and Jeep Liberty. Research costs were originally baked into the price of each component, the report adds. Faurencia, according to the report, alleged that it was never reimbursed of the expenses. The report says that Chrysler did not raise the price of each component when production fell below the projection. Ms. Gopwani, citing Faurencia, says that Chrysler's volume reductions have cause correspondingly dramatic shortfalls in Chrysler's payment of the amounts owed. Faurencia, the report continues, also accuses Chrysler of handling over its research to a Chinese company. According to Michael Palese, Chrysler spokesperson, it would be inappropriate to comment on the matter as Chrysler has not been served with a lawsuit and has not had the opportunity to study the allegation. Ms. Gopwani says that the dispute reflects the effects of falling volumes on suppliers, who are not only losing sales, but are also losing out on up-front development expenses. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CHRYSLER LLC: Asks Dealers to Order More to Hit Viability Plan -------------------------------------------------------------- Chrysler LLC has continued urging its 3,300 dealers to order more vehicles, Alex P. Kellogg at The Wall Street Journal reports, citing people familiar with the matter. According to WSJ, Chrysler has been asking Dodge and Jeep franchises for the past few weeks to take on additional inventory to help the company, as auto sales drop in the in the U.S. WSJ relates that the sources said that Chrysler trying to reach its February sales goal of 75,000 vehicles and generate revenue for the company. As of Tuesday afternoon Chrysler was still 10,000 vehicles short, WSJ states, citing a person familiar with the matter. Chrysler, according to WSJ, must show that dealers' orders are strong, as part of a plan it has to submit by February 17, which is included in the terms of the bailout loans it secured from the government. A dealer said that Chrysler continued to make calls on Tuesday, including to those who had met their original allotment goal, WSJ reports. Chrysler could reach its goal if each one took another three or four cars, WSJ says, citing a dealer. WSJ, citing people familiar with the matter, relates that about 70% of the dealers have accepted their "allocation," or the orders that were recommended by Chrysler. WSJ states that orders were supposed to be in by Friday and then Monday, but Chrysler has extended the deadline. According to WSJ, people familiar with the matter said that top Chrysler executives have called dealers who had not yet agreed to take more inventory to ask that they help out. WSJ relates that Chrysler is offering some new incentives, including $1,000 cash bonus for the sale of vehicles like the Dodge Ram or Caravan. Citing J.D. Power & Associates, WSJ states that the Chrysler vehicles that were sold between January 1 and February 2 had stayed in dealers' hands at an average of 132 days before they were bought by clients, the longest "days-to-turn" for any manufacturing except Mitsubishi Motors Corp. and Suzuki. The report says that the industry average was 94 days. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CLEAR CHANNEL: Taps $1.6BB of Credit Facility, Stirs Up Doubt ------------------------------------------------------------- Radio Business Report states that Clear Channel Communications, Inc., has borrowed the remaining $1.6 billion available under its $2.0 billion revolving credit facility to improve its liquidity position in light of continuing uncertainty in credit market and economic conditions. According to Radio Business, Clear Channel took the $1.6 billion just after Moody's Investors Service said it had placed $23 billion of debt at Clear Channel under review for a possible downgrade. FMQB relates that the review was due to concerns that "radio revenues in 2009 will turn out to be lower than expected and the company's cash flow could decline to levels that would weaken credit metrics and cause a breach of financial covenants." Sarah McBride at The Wall Street Journal reports that Clear Channel's debt traded at sharply lower levels after it said that it was tapping an additional $1.6 billion in credit. Clear Channel's term loan due in 2016 was trading at 45 cents on the dollar on Tuesday, down from 50 cents last week, WSJ states. WSJ says that a Clear Channel bond due in 2013 was trading at 13 cents on the dollar, down from 15 cents at the start of February and 80 cents in 2008. WSJ relates that drawing down the remaining $1.6 billion in its credit facility injects more cash into Clear Channel's balance sheet. According to the report, investors grew more skeptical about Clear Channel's ability to repay loans, and analysts are wondering whether Clear Channel may have decided to access those funds now for fear it won't be able to do so later. Clear Channel might not be able to use that credit if it breaches certain financial covenants-conditions that it must meet to satisfy lenders, the report says, citing analysts. WSJ states that Clear Channel didn't specify what it would use the funds for. Clear Channel Communications is the operating subsidiary of San Antonio, Texas-based CC Media Holdings Inc. As reported by the Troubled Company Reporter on Jan. 7, 2009, participations in a syndicated loan under which Clear Channel Communications is a borrower traded in the secondary market at 49.80 cents-on-the-dollar during the week ended January 2, 2009. This represents a drop of 1.87 percentage points from the previous week. Clear Channel Communications pays interest at 365 points above LIBOR. The bank loan matures on December 30, 2015. The bank loan carries Moody's B1 rating and Standard & Poor's B rating. As reported by the Troubled Company Reporter on Jan. 19, 2009, Clear Channel planned to lay off about 1,500 workers, or 7% of its staff in the U.S. Clear Channel has 20,000 workers in the U.S. The layoffs will mostly affect employees in ad sales. Clear Channel will implement other cuts to save almost $400 million. CNA FINANCIAL: Moody's Affirms Subordinated Debt Rating at 'Ba1' ---------------------------------------------------------------- Moody's Investors Service has affirmed the Baa3 senior debt rating of CNA Financial Corp., Inc., and the A3 insurance financial strength ratings on Continental Casualty Company and members of its property/casualty insurance intercompany pool. However, the outlook for the ratings has been changed to negative from stable because of continued investment losses resulting in weakness in earnings, and reduced capitalization. The company recently released full year results, which included a net after-tax loss of $299 million and a decline in equity year over year of 32% to $6.9 billion as of December 31, 2008. The decline in CNA's shareholders' equity reflects full year net after-tax operating income (excluding realized investment gains (losses)) of $533 million, together with after-tax realized capital losses of $841 million during 2008 and an all other comprehensive after-tax loss -- consisting primarily of unrealized investment losses -- of $3.9 billion at year-end. "Although CNA's investment portfolio includes a well-diversified mix of municipal, corporate, structured, and alternative instruments, Moody's believe that further losses of meaningful amount are likely to continue in 2009," commented Moody's senior credit officer Alan Murray. "However, the ultimate economic loss potential in these positions is likely to be significantly less than current market values suggest." Although the company does have a sizeable portfolio of longer-dated fixed maturities, which tend to have more volatile valuations, Moody's noted that these support longer-duration long-term care and pension liabilities, which are not exposed to meaningful disintermediation liquidity risk. "Future economic losses in CNA's investment portfolio will constrain profitability and capital growth near-term, resulting in higher leverage and a weakened financial flexibility position," Mr. Murray noted, "the holding company's liquidity position remains sound, with approximately $540 million of cash and high- quality liquid securities and no significant near-term debt maturities." However, a continuation of more significant than expected investment impairments (e.g. more than $750 million pre- tax in 2009) absent further equity-like capital support from majority-owner Loews and/or other shareholders, could prompt the rating agency to downgrade CNA's ratings. In affirming the ratings, Moody's cited CNA's leadership position in many major commercial and specialty property/casualty insurance lines in the U.S., its adequate capitalization, a generally improved profitability and operational leverage profile in recent years, and the historically supportive parentage of Loews. These strengths remain tempered by a history in past market down-cycles of weak and volatile operating results, exposures to asbestos and environmental liabilities as well as to natural and manmade catastrophes, and potential volatility arising from claim reserve variability and reinsurance counterparty credit risks. Moody's noted that a combination of these factors could lead to a return to a stable outlook: realized investment losses moderating to less than $500 million pre-tax in 2009, a continuation of current trends or improvement in core operating earnings, a significant decline in CNA's unrealized investment loss position, and financial leverage below 25%. Factors that could lead to a downgrade include these: a further decline in shareholders' equity of $1 billion or more or realized investment losses in excess of $750 million pre-tax in 2009; sustained adjusted financial leverage in excess of 30%; a multi- notch downgrade of Loews Corporation; annual catastrophe losses exceeding 15% of shareholders' equity; earnings coverage of interest on debt and preferred dividends below 2x; annual adverse reserve development in excess of 5% of total reserves. The rating agency added that the spread between the A3 insurance financial strength rating of Continental Casualty Company and members of its intercompany reinsurance pool, and CNA Financial Corporation's Baa3 senior debt rating is 3 notches, which is standard notching for US-based insurance groups. These ratings have been affirmed with a negative outlook: -- CNA Financial Corporation: senior unsecured debt at Baa3; provisional rating for senior debt at (P)Baa3; provisional rating for subordinated debt at (P)Ba1; preferred stock at Ba2; provisional rating for preferred stock at (P)Ba2; -- The Continental Corporation - senior debt at Baa3; -- CNA Financial Capital I, II and III: provisional rating for subordinated debt at (P)Ba1. -- Insurance financial strength ratings at A3 for members of CNA's Continental Casualty Company intercompany reinsurance pool: -- American Casualty Company of Reading, Pennsylvania -- Columbia Casualty Company; -- Continental Casualty Company; -- Continental Insurance Company of New Jersey; -- Continental Insurance Company; -- National Fire Insurance Company of Hartford; -- Transportation Insurance Company; -- Valley Forge Insurance Company. CNA Financial Corporation is engaged through its subsidiaries in commercial and specialty property and casualty insurance. For the full year 2008, CNA Financial Corporation reported net earned premiums for property/casualty insurance operations of $7.2 billion and a net loss of $299 million. As of December 31, 2008, shareholders' equity was $6.9 billion. Moody's most recent rating action on CNA Financial Corp. was on October 27, 2008 when the rating firm affirmed its long-term ratings on CNA Financial Corporation and it's subsidiaries with a stable outlook, following the announcement of the company's results for the third quarter of 2008, the cancellation of its common shareholder dividends, and a $1.25 billion injection of preferred shares by its 90% parent, Loews Corporation. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations. COBBLESTONE ESTATES: Case Summary & 4 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Cobblestone Estates, Inc. 1 Carman Court Huntington Station, NY 11746 Bankruptcy Case No.: 09-70743 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: February 9, 2009 Court: Eastern District of New York (Central Islip) Judge: Robert E. Grossman Debtor's Counsel: Craig D. Robins, Esq. CraigRobinsLaw@aol.com Law Office of Craig D. Robins 180 Froehlich Farm Blvd. Woodbury, NY 11797 Tel: (516) 496-0800 Fax: (516) 682-4775 Total Assets: $15,050,100 Total Debts: $15,203,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ NYC Dept. of Finance Real Estate Taxes $150,000.00 P.O. Box 32 value: Church Street Station $15,000,000; New York NY 10008-0032 net unsecured: $150,000 AKRF, Inc. Consulting $25,000 440 Park Ave South New York NY 10016 Edgeboro International Inc. Vendor and $20,000 P.O. Box 520 building supplies Milltown NJ 08850 Allied Environmental Group Trucking Fees $8,000 The petition was signed by Ranjan Betheja, president. COMDISCO HOLDING: Reports Fiscal 1st Quarter 2009 Results --------------------------------------------------------- Comdisco Holding Company, Inc. reported financial results for its fiscal first quarter ended December 31, 2008. Comdisco Holding emerged from Chapter 11 bankruptcy proceedings on August 12, 2002 and, under its Plan of Reorganization, its business purpose is limited to the orderly sale or run-off of all its remaining assets. For the quarter ended December 31, 2008, Comdisco Holding reported a net loss of approximately $72,000. For the quarter ended December 31, 2008, total revenue decreased by 94% to $381,000. The decrease is primarily the result of lower gains on the sale of equity securities in the current quarter. Gains were roughly $92,000 for the current quarter compared to gains of roughly $5.7 million for the quarter ended December 31, 2007. Net cash provided by operating activities was $4,771,000 for the quarter ended December 31, 2008 compared to net cash provided by operating activities of $3,629,000 for the quarter ended December 31, 2007. The net cash provided by operating activities in the quarter ended December 31, 2008 included cash receipts of approximately $5.3 million from income tax refunds for Comdisco Holding Company, Inc.'s Canadian subsidiary. However, such receipts are anticipated to be used to satisfy Canadian taxes payable. Total assets are $73,552,000 as of December 31, 2008 which included $61,947,000 of unrestricted cash, compared with total assets of $75,464,000 as of September 30, 2008 which included $57,554,000 of unrestricted cash. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations and no further distributions will be made. Comdisco filed on August 12, 2004, a Certificate of Dissolution with the Secretary of State of the State of Delaware to formally extinguish Comdisco Holding Company, Inc.'s corporate existence with the State of Delaware except for the purpose of completing the wind-down contemplated by the Plan. COREL CORP: Nov. 30 Balance Sheet Upside Down by $8.3 Million ------------------------------------------------------------- Corel Corporation (NASDAQ:CREL; TSX:CRE) reported on February 6, 2009, financial results for its fourth quarter and year ended November 30, 2008. Revenues in the fourth quarter of fiscal 2008 were $69.4 million, a decrease of 4 percent over revenues of $72.4 million in the fourth quarter fiscal 2007. GAAP net income in the fourth quarter of fiscal 2008 was $1.2 million, or $0.05 per basic and diluted share, compared to GAAP net income of $3.3 million, or $0.13 per basic and diluted share, in the fourth quarter of fiscal 2007. Non-GAAP adjusted net income for the fourth quarter fiscal 2008 was $11.4 million, or $0.43 per diluted share, compared to non- GAAP adjusted net income for the fourth quarter of fiscal 2007 of $13.4 million, or $0.51 per diluted share. Non-GAAP adjusted EBITDA in the fourth quarter of 2008 was $16.9 million, a decrease of 15 percent over $19.9 million in the fourth quarter of 2007. Revenues for the year ended November 30, 2008 were $268.2 million, an increase of 7 percent over revenues of $250.5 million for the year ended November 30, 2007. GAAP net income for the year ended November 30, 2008 was $3.7 million, or $0.14 per basic and diluted share, compared to a GAAP net loss of $13.1 million, or $0.52 per diluted share, for the year ended November 30, 2007. Non-GAAP adjusted net income for the year ended November 30, 2008, was $37.8 million, or $1.44 per diluted share, compared to non- GAAP adjusted net income for the year ended November 30, 2007, of $34.0 million, or $1.32 per diluted share. Non-GAAP adjusted EBITDA for the year ended November 30, 2008 was $60.9 million, an increase of 6 percent over $57.3 million for the year ended November 30, 2007. "Thanks to the efforts of our global team, Corel delivered a solid 2008," said Kris Hagerman, Interim CEO of Corel. "Despite facing a tough economic climate as we closed out the fourth quarter, revenues for the full year were up across all geographies and business units, demonstrating the benefits of Corel's broad product portfolio and diversified channel strategy. Looking ahead to 2009, we have an exciting slate of new product introductions that we believe will further enhance our market position, even in a challenging economy." Given the uncertainty of the current global economic environment, the Company has elected not to provide guidance for Q1 or the full year at this time. As of November 30, 2008, the company's balance sheet showed total assets of $259,396,000 and total liabilities of $267,759,000, resulting in total shareholders' deficit of $8,363,000. About Corel Corp. Corel Corp. (NASDAQ:CREL) (TSX:CRE) -- http://www.corel.com/-- is one of the world's top software companies with more than 100 million active users in over 75 countries. The company provides high quality, affordable and easy-to-use Graphics and Productivity and Digital Media software. The company's products are sold through a scalable distribution platform comprised of Original Equipment Manufacturers (OEMs), the company's global e- Stores, and the company's international network of resellers and retail vendors. The company's award-winning product portfolio includes some of the world's most widely recognized and popular software brands, including CorelDRAW(R) Graphics Suite, Corel(R) Paint Shop Pro(R) Photo, Corel(R) Painter(TM), VideoStudio(R), WinDVD(R), Corel(R) WordPerfect(R) Office and WinZip(R). The company's global headquarters are in Ottawa, Canada, with major offices in the United States, United Kingdom, Germany, China, Taiwan and Japan. The Troubled Company Reporter reported on Nov. 6, 2008, that Standard & Poor's Ratings Services affirmed its 'B' long-term corporate credit and senior secured debt ratings, on Ottawa-based packaged software provider Corel Corp. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed March 31, 2008. The outlook is stable. At Aug. 31, Corel had US$159 million of debt outstanding. COUNTRY COACH: Creditors File Involuntary Chapter 11 Petition ------------------------------------------------------------- Court documents say that Riley Investment Management LLC, B. Riley & Company LLC, and Fluid Connector Products Inc. have filed an involuntary Chapter 11 bankruptcy petition against Country Coach LLC in the U.S. Bankruptcy Court for the District of Oregon. Reuters relates that Riley Investment, B. Riley, and Fluid Connector claimed that Country Coach owes them $1 million. According to Reuters, Wells Fargo Bank filed a lawsuit against Country Coach in January, when the Company defaulted on a $25 million credit facility. Court documents say that Wells Fargo said that Country Coach owes it about $8 million as of December 2008. A division of Volvo Group Canada, Prevost, also sued Country Coach for allegedly failing to pay for two bus shells, according to court documents. In September, Country Coach completed a restructuring plan aimed at stemming a sharp decline in sales volume to due market pressures. In its eight-month restructuring, Country Coach cut its size by 50%, reduce staffing and inventory. Country Coach LLC's key investors, led by Bryant Riley, also reaffirmed their commitment towards the company. "Adding to the millions of dollars this group has invested in Country Coach since February 2007, the investing partners have committed an additional $6 million in new cash to ensure the company can maintain an aggressive position relative to product quality, lean manufacturing initiatives and new R & D projects like the exciting new Veranda line of coaches," a September 2008 release said. Country Coach was sent to Chapter 11 less than two months after its owner, National R.V. Holdings Inc., reorganized in court, Bloomberg's Bill Rochelle said. National R.V., had its reorganization plan approved by a judge in December. The Perris, California based company sought Chapter 11 protection in November 2007, listing assets of $54.4 million against debt of $30.1 million. Country Coach, LLC -- http://www.countrycoach.com/-- is a Highline motorcoach builder. Country Coach was founded in 1973 and has a 508,000 square feet manufacturing facility in Junction City, Oregon. CSC HOLDINGS: Moody's Assigns 'B1' Rating on $500 Mil. Notes ------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to the proposed $500 million senior unsecured note issuance by CSC Holdings, Inc., a wholly-owned subsidiary of Cablevision Systems Corporation. Net proceeds from the issuance, along with $750 million of proceeds from the company's January 2009 offering, will be used to refinance debt. The short-term liquidity rating for Cablevision has been raised to SGL-2 ("good") from SGL-3 ("adequate"), reflecting the company's improved liquidity profile proforma for the assumed successful completion of the new bond offering. All other ratings for Cablevision, CSC and subsidiary Newsday LLC were affirmed. The outlook for all ratings remains stable. Moody's has taken these rating actions: Issuer: Cablevision Systems Corporation Corporate Family Rating -- Affirmed at Ba3 * Probability of Default Rating -- Affirmed at Ba3 * Senior Unsecured Notes -- Affirmed at B2 (LGD6 -- 93%) * Speculative Grade Liquidity Rating -- Upgraded to SGL-2 from SGL-3 * Rating Outlook -- Stable Issuer: CSC Holdings, Inc. (CSC) * Senior Secured Bank Credit Facilities -- Affirmed at Ba1 (LGD2 -- 18%) * Senior Unsecured Notes / Debentures -- Affirmed at B1 (LGD4 -- 69%) * Rating Outlook -- Stable Issuer: Newsday LLC (Newsday) * Senior Secured Fixed Rate Term Loan (gtd. by CSC on a senior unsecured basis) -- Affirmed at B1 (LGD4 -- 69%) The speculative grade liquidity rating revision to SGL-2 reflects Cablevision's improved internal liquidity when considering the $1.25 billion of proceeds from its 2009 bond issuances, cash on hand of $315 million (as of 9/30/08) and Moody's expectation that the company will generate about $350 million of free cash flow in 2009. The rating change also subsequently reflects expectations of reduced reliance on the CSC revolving credit facility to fund Cablevision and CSC debt maturities and requisite amortization payments totaling $1.7 billion in 2009, given the pending debt offering which augments the January 2009 issuance. Cablevision's ratings continue to broadly reflect the company's high financial risk and growing business risk, both of which are exacerbated by the historically shareholder-oriented predisposition and investment strategies of the controlling Dolan family. These risks are mitigated, however, by the industry- leading operating performance of the core cable business and prospects for further growth in what are perceived to be very high value assets, inclusive of the content and other media properties owned by the company. "Difficult market conditions notwithstanding, long-term ratings for Cablevision have fully incorporated the expectation that the company would in fact be able to access new capital to satisfy upcoming maturities," noted Moody's Senior Vice President Russell Solomon. Newsday's ratings continue to principally reflect the support afforded by the guaranty provided by CSC on a senior unsecured basis, which augments an otherwise comparatively weak underlying fundamental credit profile and some credit enhancement via interest payments received on Cablevision mirror notes. Moody's last rating action on Cablevision was on January 8, 2009, when Moody's assigned a B1 rating to its new bond issuance and affirmed the company's Ba3 corporate family rating. Headquartered in Bethpage, New York, Cablevision Systems Corporation is predominantly a domestic cable TV multiple system operator serving more than 3 million subscribers in and around the New York metropolitan area. Among other entertainment- and media- related business ventures, the company also owns and distributes programming to cable television and direct broadcast satellite providers throughout the United States through its Rainbow National Services subsidiary. * * * The 'BB' rating simultaneously issued by S&P on the unsecured notes is two notches higher than the 'B1' rating issued by Moody's. CSC HOLDINGS: S&P Assigns 'BB' Rating on $500 Mil. Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB' issue-level and '3' recovery ratings to CSC Holdings Inc.'s proposed $500 million senior notes due 2019. The '3' recovery rating indicates the expectation for meaningful (50%-70%) recovery of principal in the event of payment default. At the same time, S&P placed the 'BB+' rating on $650 million of senior secured debt of majority-owned Newsday LLC on CreditWatch with negative implications. The 'BB' corporate credit rating on parent Cablevision Systems Corp. remains unchanged. Bethpage, New York-based Cablevision is a major cable operator in the New York metropolitan area. The notes will be sold under Rule 144A and the company will be required to file a future exchange offer registration under certain conditions. Proceeds of the new notes, in combination with net proceeds of $732 million from notes sold last month will be used to repay or repurchase $500 million of notes due April 2009 and a portion of the aggregate $1.4 billion of notes due in July and August. Total reported debt was about $12 billion at Sept. 30, 2008. The ratings on Cablevision reflect S&P's expectation that the company may well choose to pursue its historic, aggressive financial policy, a factor that overshadows its investment-grade business risk profile. Cablevision's satisfactory business position stems largely from the attractive demographics of its well-clustered, well-managed 3.1 million metropolitan New York cable TV customers. * * * S&P's 'BB' rating on the unsecured notes is two notches higher than the 'B1' rating simultaneously issued by Moody's. DBSI INC: Unit's Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: DBSI Inc. 1550 S. Tech Lane Meridian, ID 83642 Bankruptcy Case No.: 08-12687 Debtor-affiliates that filed separate Chapter 11 petitions on Feb. 9, 2009: Entity Case No. ------ -------- DBSI Surprise Farms LLC 09-10409 Debtor-affiliates that filed separate Chapter 11 petitions on Jan. 26, 2008: Entity Case No. ------ -------- FOR 1031 Brookhollow One LLC 09-10262 DBSI Brookhollow One LLC 09-10263 DBSI Lone Peak Parkway LLC 09-10264 Debtor-affiliates that filed separate Chapter 11 petitions on Jan. 9, 2008: Entity Case No. ------ -------- FOR 1031 Broadway Plaza LLC 09-10080 Florissant Market Place Acquisition LLC 09-10081 Debtor-affiliates that filed separate Chapter 11 petitions on Jan. 7, 2008: Entity Case No. ------ -------- Belton Town Center Acquisition LLC 09-10034 DBSI Broadway Plaza LeaseCo LLC 09-10035 DBSI Collins Offices LLC 09-10036 DBSI Development Services LLC 09-10037 DBSI-Renaissance Flowood LLC 09-10038 DBSI Land Development LLC 09-10039 DBSI Lexington LLC 09-10040 DBSI Meridian 184 LLC 09-10041 DBSI One Hernando Center North LLC 09-10042 DBSI Republic LeaseCo LLC 09-10043 South Cavanaugh LLC 09-10044 DBSI 121/Alma Land L.P. 09-10045 DBSI 121/Alma LLC 09-10046 Debtor-affiliates that filed separate Chapter 11 petitions on Nov. 10, 2008: Entity Case No. ------ -------- DBSI South 75 Center LeaseCo LLC 08-12688 DBSI 14001 Weston Parkway LeaseCo LLC 08-12689 DBSI CP Ironwood LeaseCo LLC 08-12690 DBSI Lake Ellenor LeaseCo LLC 08-12691 DBSI 12 South Place LeaseCo LLC 08-12692 DBSI 13000 Weston Parkway LeaseCo LLC 08-12693 DBSI 2001A Funding Corporation 08-12694 DBSI 2001B Funding Corporation 08-12695 DBSI 2001C Funding Corporation 08-12696 DBSI 2005 Secured Notes Corporation 08-12697 DBSI 2006 Secured Notes Corporation 08-12698 DBSI 2008 Notes Corporation 08-12699 DBSI 2nd Street Quad LeaseCo LLC 08-12700 DBSI 700 Locust LeaseCo LLC 08-12701 DBSI Abbotts Bridge LeaseCo LLC 08-12702 DBSI Allison Pointe LeaseCo LLC 08-12703 DBSI Amarillo Apartments LeaseCo LLC 08-12704 DBSI Anna Plaza LeaseCo LLC 08-12705 DBSI Arlington Town Square LeaseCo LLC 08-12706 DBSI Arrowhead LeaseCo LLC 08-12707 DBSI Avenues North Center LeaseCo LLC 08-12708 DBSI Bandera Trails LeaseCo LLC 08-12709 DBSI Battlefield Station LeaseCo LLC 08-12710 DBSI Belton Town Center LeaseCo LLC 08-12711 DBSI Breckinridge LeaseCo LLC 08-12712 DBSI Brendan Way LeaseCo LLC 08-12713 DBSI Brookfield Pelham LeaseCo LLC 08-12714 DBSI Cambridge Place LeaseCo LLC 08-12715 DBSI Carolina Commons LeaseCo LLC 08-12716 DBSI Cedar East and Cypress LeaseCo LLC 08-12717 DBSI Clear Creek Square LeaseCo LLC 08-12718 DBSI Corporate Woods LeaseCo LLC 08-12719 DBSI CP Clearwater LeaseCo LLC 08-12720 DBSI Cranberry LeaseCo LLC 08-12721 DBSI Cross Pointe LeaseCo LLC 08-12722 DBSI Crosstown Woods LeaseCo LLC 08-12723 DBSI Daniel Burnham LeaseCo LLC 08-12724 DBSI Decatur LeaseCo LLC 08-12725 DBSI Eagle Landing LeaseCo LLC 08-12726 DBSI Embassy Tower LeaseCo LLC 08-12727 DBSI Executive Dr LeaseCo LLC 08-12728 DBSI Executive Park LeaseCo LLC 08-12729 DBSI Fairlane Green LeaseCo LLC 08-12730 DBSI Fairway LeaseCo LLC 08-12731 DBSI Florissant Market Place LeaseCo LLC 08-12732 DBSI Gadd Crossing LeaseCo LLC 08-12733 DBSI Ghent Road LeaseCo LLC 08-12734 DBSI Grant Street Portfolio LeaseCo LLC 08-12735 DBSI Green Street Commons Leaseco LLC 08-12736 DBSI Guaranteed Capital Corporation 08-12737 DBSI Hampton LeaseCo LLC 08-12738 DBSI Hickory Plaza LeaseCo LLC 08-12739 DBSI Highlands & Southcreek LeaseCo LLC 08-12740 DBSI Houston Levee Galleria Leaseco LLC 08-12741 DBSI Kemper Pointe LeaseCo LLC 08-12742 DBSI Kenwood Center LeaseCo LLC 08-12743 DBSI Keystone Commerce LeaseCo LLC 08-12744 DBSI Lake Natoma LeaseCo LLC 08-12745 DBSI Lamar LeaseCo LLC 08-12746 DBSI Landmark Towers Leaseco LLC 08-12747 DBSI Lifestyle Center LeaseCo LLC 08-12748 DBSI Lincoln Park 10 LeaseCo LLC 08-12749 DBSI Mansell Forest LeaseCo LLC 08-12750 DBSI Mansell Place LeaseCo LLC 08-12751 DBSI Master Leaseco, Inc. 08-12752 DBSI Meadow Chase Apartments LeaseCo LLC 08-12753 DBSI Megan Crossing LeaseCo LLC 08-12754 DBSI Metropolitan Square LeaseCo LLC 08-12755 DBSI Missouri LeaseCo LLC 08-12756 DBSI Network LeaseCo LLC 08-12757 DBSI North Logan Retail Center LeaeCo LLC 08-12758 DBSI North Park LeaseCo LLC 08-12759 DBSI North Stafford LeaseCo LLC 08-12760 DBSI Northlite Commons II LeaseCo LLC 08-12761 DBSI Northpark Ridgeland LeaseCo LLC 08-12762 DBSI Northridge LeaseCo LLC 08-12763 DBSI Oakwood Plaza LeaseCo LLC 08-12764 DBSI Old National Town Center LeaseCo LLC 08-12765 DBSI One Executive Center LeaseCo LLC 08-12766 DBSI One Hanover LeaseCo LLC 08-12767 DBSI Park Creek-Gainesville LeaseCo LLC 08-12768 DBSI Parkway III LeaseCo LLC 08-12769 DBSI Peachtree Corners Pavilion LeaseCo LLC 08-12770 DBSI Phoenix Peak LeaseCo LLC 08-12771 DBSI Pinehurst Square East LeaseCo LLC 08-12772 DBSI Pinehurst Square West LeaseCo LLC 08-12773 DBSI Plano Tech Center LeaseCo LLC 08-12774 DBSI Portofino Tech Center LeaseCo LLC 08-12775 DBSI Properties Inc. 08-12776 DBSI Real Estate Funding Corporation 08-12777 DBSI Realty Inc. 08-12778 DBSI Road 68 Retail Center LeaseCo LLC 08-12779 DBSI Sam Houston Tech Center LeaseCo LLC 08-12780 DBSI Sapphire Pointe LeaseCo LLC 08-12781 DBSI Securities Corporation 08-12782 DBSI Sherwood Plaza LeaseCo LLC 08-12783 DBSI Shoppes at Misty Meadows LeaseCo LLC 08-12784 DBSI Shoppes at Trammel LeaseCo LLC 08-12785 DBSI Signature Place LeaseCo LLC 08-12786 DBSI Silver Lakes Leaseco LLC 08-12787 DBSI Southport Pavilion LeaseCo LLC 08-12788 DBSI Spalding Triangle LeaseCo LLC 08-12789 DBSI Spring Valley Road LeaseCo LLC 08-12790 DBSI Springville Corner Leasco LLC 08-12791 DBSI ST Tower LeaseCo LLC 08-12792 DBSI St. Andrews Place LeaseCo LLC 08-12793 DBSI Stone Glen Village LeaseCo LLC 08-12794 DBSI Stony Brook South LeaseCo LLC 08-12795 DBSI Streetside at Towne Lake LeaseCo LLC 08-12796 DBSI Topsham Fair Mall LeaseCo LLC 08-12797 DBSI Torrey Chase LeaseCo LLC 08-12798 DBSI Treasure Valley Business Center LeaseCo LLC 08-12799 DBSI Trinity Ridge Business Center LeaseCo LLC 08-12800 DBSI University Park LeaseCo LLC 08-12801 DBSI Vantage Drive LeaseCo LLC 08-12802 DBSI Watkins LeaseCo LLC 08-12803 DBSI West Oaks Square LeaseCo LLC 08-12804 DBSI Wilson Estates LeaseCo LLC 08-12805 DBSI Winchester Office LeaseCo LLC 08-12806 DBSI Windcom Court LeaseCo LLC 08-12807 DBSI Wisdom Pointe LeaseCo LLC 08-12808 DBSI Woodlands Medical Office LeaseCo LLC 08-12809 DBSI Woodside Center LeaseCo LLC 08-12810 DCJ Inc. 08-12811 DBSI Draper LeaseCo LLC 08-12812 FOR 1031 LLC 08-12813 Spectrus Real Estate Inc. 08-12814 DBSI Academy Park Loop LeaseCo LLC 08-12815 DBSI Copperfield Timbercreek LeaseCo LLC 08-12816 DBSI Corporate Center II LeaseCo LLC 08-12817 DBSI Executive Plaza LeaseCo LLC 08-12818 DBSI Northgate LeaseCo LLC 08-12819 DBSI Two Notch Rd. LeaseCo LLC 08-12820 DBSI Asset Management LLC 08-12821 DBSI 2006 Land Opportunity Fund LLC 08-12822 DBSI Shoppes at Trammel LLC 08-12823 DBSI 2007 Land Improvement & Development Fund LLC 08-12824 DBSI 2008 Land Option Fund LLC 08-12825 DBSI Alma/121 Office Commons LLC 08-12826 DBSI Cottonwood Plaza Development LLC 08-12827 DBSI Draper Technology 21 LLC 08-12828 DBSI Escala LLC 08-12829 DBSI Short-Term Development Fund LLC 08-12830 DBSI Telecom Office LLC 08-12831 DBSI Discovery Real Estate Services LLC 08-12834 Related Information: The Debtors operate a real estate company. See: http://www.dbsi.com Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsel: James L. Patton, Esq. bankfilings@ycst.com Joseph M. Barry, Esq. bankfilings@ycst.com Michael R. Nestor, Esq. bankfilings@ycst.com Young, Conaway, Stargatt & Taylor LLP The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: (302) 571-6684 (302) 571-6600 (302) 571-1253 http://www.ycst.com Notice Claims and Balloting Agent Claims: Kurztman Carson Consultants LLC Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ellen Kwiatkowski- investment $26,743,328 Schwinge 402 Kilarney Pass Mundeleim, IL 60060 Michael Kanoff investment $18,696,689 3500 Flamingo Drive Miami Beach, Fl 33140 Harold Rubin investment $17,854,893 100 North Street Teterboro, NJ 07608 Bill Ramsey investment $15,500,000 PO Box 690 Salinas, CA 93902 Frederick Nicholas investment $14,250,863 3844 Culver Center Street Suite B Culver City, CA 90232 Peter Evans investment $7,317,633 17046 Marina Bay Drive Huntington Beach, CA 92649 Jeffrey Johnston investment $7,200,000 1751 Wst. Citracado Pkwy. Clubhouse Escondido, CA 92029 Yim Chow investment $7,200,000 702 Los Pinos Avenue Milpitas, CA 95035 Phyllis Chu investment $6,191,068 3020 Gough Street San Francisco, CA 94123 Elizabeth Noonan investment $5,395,000 316 Chapin Lane Burlingame, CA 94010 John Roeder investment $5,375,848 PO Box 23490 San Jose, CA 95153 Jim Nicholas investment $5,325,000 385 Hilcrest Road Englewood, NJ 07632 Robert Markstein investment $5,220,000 696 San Ramon Valley Boulevard, #347 Danville, CA 94526 Robert Angelo investment $4,542,500 33316 S.E. 34th Street Washougal, WA 98671 Henry Vara investment $4,509,982 16960 Bohlman Road Saratoga, CA 95070 Alan Destefani investment $4,500,000 PO Box 20968 Bakersfield, CA 93390 Kevin Pascoe investment $4,476,000 9400 Etchart Road Bakersfield, CA 93314 Martha Walker investment $4,324,349 863 S. Bates Street Birmingham, AL 48009 Tina Bernard investment $4,277,596 19336 Collier Street Tarzana, CA 91356 Paul Wendland investment $4,208,999 1034 N. Datepalm Drive Gilbert, AZ 85234 William Marvel investment $3,579,289 492 Escondido Circle Grand Junction, CO 81503 James Fritts investment $3,424,900 309 W. Washington Street Charlestown, WV 25414 Joan Kresse investment $3,410,909 5100 Figueroa Mountain Road Los Olivios, CA 93441 John Baklayan investment $3,400,000 16105 Whitecap Land Huntington Beach, CA 92649 Robert Rifkin investment $3,360,000 697 Red Arrow Trail Palm Desert, CA 92211 Gerard Keller investment $3,200,783 12-161 Saint Andrews Drive Ranco Mirage, CA 92270 Kristi Wells investment $3,120,000 2860 Old Quarry Road West Point, IA 92656 Michael Cooper investment $3,000,000 6465 S. 3000 E, Suite Salt Lake City, UT 84121 Gladys Esponda investment $3,000,000 PO Box 609 Buffalo, NY 82834 Arthur Hossenlopp investment $3,000,000 228 18th Street Ft. Madison, IA 52627 Richard Newman investment $3,000,000 13679 Orchard Gate Road Poway, CA 92064 Bernard Posner investment $3,000,000 6222 Primrose Avenue Los Angeles, CA 90068 Kent Schroeder investment $3,000,000 5697 McIntyre Street Golden, CO 80403 Bernard Ineichen investment $2,900,000 650 South Avenue, B122 Yuma, Arizona 85346 Alan Sacks investment $2,900,000 5 Horizon Road, #1407 Fort Lee, NJ 07024 Joseph Stokley investment $2,843,461 PO Box 1231 Bethel Island, CA 94511 JoAnn Picket investment $2,800,000 3769 E. 125th Drive Thornton, CO 80241 Bill Hall investment $2,740,593 PO Box 16172 Lubbock, TX 79490 Max Buchmann investment $2,716,186 14464 Rand Rail Drive El Cajon, CA 92021 Brian Schuck investment $2,701,027 700 Maldonado Pensacola Beach, Fl 32561 James Jensen investment $2,616,648 2125 Cypress Point Discovery Bay, CA 94505 Robert Etzel investment $2,600,000 2623 Avenue H. Ft. Madison, IA 52627 Theodore Mintz investment $2,554,458 751 Georgia Trail Lincolnton, NC 28092 Joyce Jongsma investment $2,540,000 2012 E. Burrville Crete, IL 60417 Kent Wright investment $2,488,694 2115 Marwood Circle Salt Lake City, UT 84124 James Veugler investment $2,442,397 c/o Georgia Veugler Material Recovery Corp. 820 E. Terra Cotta Ave. Unit 116 Crystal Lake, IL 60014 Virgil Gentzler investment $2,427,301 2707 Bressi Ranch Way Carlsbad, CA 92009 Karen Hughes investment $2,417,886 1050 The Old Drive Pebble Drive, CA 93953 Robert Goldberg investment $2,407,915 PO Box 8807 Boise, ID 83707 DE KALB COUNTY: S&P Slashes 2005 Bonds to CCC on Funding Woes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on De Kalb County Housing Authority, Georgia's multifamily housing revenue bonds, series 2005, issued for the Creekside Vista Apartments Project, to 'CCC' from 'AAA' and placed the rating on CreditWatch with negative implications. "The downgrade reflects Standard & Poor's belief that the project will not have sufficient funds to meet its March 1, 2009, debt service payment," said Standard & Poor's credit analyst Renee Berson. As per the trustee, U.S. Bank, subsequent to the conversion from construction to permanent financing funds were released to the borrower. S&P expects that these funds will be paid back to the trust estate; however, as of Feb. 5, 2009, these funds have not been paid back. When sufficient funds are deposited, Standard & Poor's will take the appropriate rating action. The mortgage loan continues to be enhanced by a Fannie Mae credit facility. The facility provides for interest and principal advances for delinquent mortgage payments, certain mandatory redemptions, acceleration, and funds deemed to be preferential payments or subject to automatic stay under the U. S. Bankruptcy Code following a bankruptcy filing by or against the borrower or mortgage loan servicer. The facility expires five days following bond maturity, or earlier pursuant to its terms. The bonds are scheduled to mature on Sept. 1, 2038, although they are subject to mandatory tender on Sept. 1, 2026 (the initial remarketing date), at which time Standard & Poor's rating will be withdrawn. DECODE GENETICS: Moves Listing of Stock to Nasdaq Capital Market ---------------------------------------------------------------- deCODE genetics (Nasdaq:DCGN) disclosed that on February 2, 2009, it received a letter from the Nasdaq Listing Qualifications Panel stating that the Panel will transfer the listing of deCODE's common stock from the Nasdaq Global Market to the Nasdaq Capital Market, effective at the open of the trading session on Wednesday, February 4, 2009. The Nasdaq Capital Market, which is one of the three market tier designations for Nasdaq-listed stock, is a continuous trading market that operates in substantially the same manner as the Nasdaq Global Market. It includes the securities of approximately 550 companies. deCODE's trading symbol will remain DCGN and trading of its common stock will be unaffected by the transfer. The Panel's determination follows deCODE's hearing before the Panel on December 18, 2008, regarding its non-compliance with Nasdaq Marketplace Rule 4450(b)(1)(A), which relates to the minimum market value of listed shares. The Company's continued listing on the Nasdaq Capital Market is contingent upon successful completion by April 29, 2009, of a review process and the evidencing of compliance with all the requirements for continued listing on the Nasdaq Capital Market. 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. ENVIRONMENTAL TECTONICS: Has $12MM Stockholder Deficit at Nov. 28 ----------------------------------------------------------------- Environmental Tectonics Corp. reported $30.4 million in total assets and $$33.8 million in total liabilities -- as well as $44,000 in minority interest, $9.3 million in cumulative convertible participating preferred stock, Series B and C -- resulting in $12.6 million in stockholders' deficiency as of November 28, 2008. The Company's balance sheet also showed strained liquidity. The Company had $13.1 million in total current assets, including $548,000 in cash and cash equivalents, to satisfy $15.1 million in total current liabilities. The Company reported a $113,000 net loss on $8.7 million in net sales for the 13 weeks ended November 28, 2008, lower compared to the $2.0 million in net loss during the same period in 2007. The Company had $3.1 million in net loss for the past three quarters ended November 28, 2008, also lower compared to $10.7 million in net loss for the same period in 2007. AMEX Delisting As reported by the Troubled Company Reporter, Environmental Tectonics was advised on September 16, 2008, by the American Stock Exchange that it had accepted the Company's compliance plan and agreed to continue the listing of the Company's common stock through at least March 16, 2009, subject to the Company attaining certain milestones. The Plan had been submitted on July 31, 2008 in response to a letter received from AMEX on July 2, stating that the Company was not in compliance with Section 1003 of the AMEX Company Guide. Specifically, the Company is not in compliance with Section 1003(a)(i) of the AMEX Company Guide with stockholders' equity of less than $2,000,000 and losses from continuing operations and net losses in two out of its three most recent fiscal years, Section 1003(a)(ii) of the AMEX Company Guide with stockholders' equity of less than $4,000,000 and losses from continuing operations and net losses in three out of its four most recent fiscal years, and Section 1003(a)(iii) of the AMEX Company Guide with stockholders' equity of less than $6,000,000 and net losses in its five most recent fiscal years. This non-compliance by the Company with Section 1003 of the AMEX Company Guide makes the Company's common stock subject to being delisted from AMEX. The Company has been granted an extension until March 16, 2009, to regain compliance with the continued listing standards and must meet certain milestones during that timeframe which relate to specific plan objectives, some of which involve modifications to the Company's Subordinated Note and Preferred Stock. These instruments are held by H.F. Lenfest, a significant shareholder and a member of the Company's Board of Directors. The Company is currently in discussions with Mr. Lenfest concerning these matters. The Company cannot predict the outcome of these discussions at this time. The Company will be subject to periodic review by AMEX Exchange Staff during the extension period. Failure to make progress consistent with the Plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company's common stock being delisted from AMEX. As a consequence of falling below the continued listing standards set forth in the AMEX Company Guide, the Company has been included in a list of issuers that are not in compliance with AMEX's continued listing standards. Additionally, an indicator has been added to the Company's trading symbol noting the Company's non- compliance with the continued listing standards of the AMEX Company Guide. The indicator will remain in place until such time as the Company regains compliance with the applicable listing standards. Lenfest Acquisition Proposal On February 20, 2008, ETC received a proposal from an affiliate of Mr. Lenfest to purchase all of the publicly traded shares of the common stock of the Company not owned by Mr. Lenfest at the time the acquisition is consummated. On September 11, ETC was informed by Mr. Lenfest that he was withdrawing his proposal to purchase all of the publicly traded shares of the common stock of the Company that he did not currently own. Mr. Lenfest beneficially owns 48.7% of the Company's common stock, on a fully diluted basis -- assuming the conversion of outstanding convertible notes and convertible preferred stock. Liquidity Matters The Company expects to need additional sources of capital to continue growing and operating its business. The Company is currently in discussions with PNC Bank, National Association, and Mr. Lenfest for potential additional funding. The Company cannot be certain that it will be successful in obtaining additional sources of capital. On May 20, 2008, Mr. Lenfest agreed to fund all requests by ETC for funds to support its operations through June 30, 2009, on terms and conditions to be mutually agreed upon by Mr. Lenfest and ETC, provided that ETC may not request more than $10 million in the aggregate. ETC's objective in its refinancing efforts is to increase its current financing with additional financing from PNC or Mr. Lenfest commitments. It is expected that these arrangements may include a restructuring of the Company's current capital structure including an exchange of Mr. Lenfest's debt for preferred stock and a modification of the terms of the outstanding preferred stock The Company believes that existing cash balances at November 28, 2008, cash generated from operating activities, cash from potential new contract awards, and potential additional funding from PNC or Mr. Lenfest with will be adequate to meet its future obligations through at least November 30, 2009. At November 28, 2008, the Company's availability under its Credit Agreement with PNC was approximately $971,000. The Company's backlog at November 28, 2008 and February 29, 2008, for work to be performed and revenue to be recognized under written agreements after such dates, was $28,040,000 and $38,281,000, respectively. In addition, training, maintenance and upgrade contracts backlog at November 28, 2008, and February 29, 2008, for work to be performed and revenue to be recognized after such dates under written agreements was $2,339,000 and $1,028,000, respectively. These contracts total $30,379,000 and include contracts with domestic customers ($3,748,000 or 12.3%), U.S. Government agencies ($3,003,000 or 9.9%) and international customers ($23,627,000 or 77.8%). Of the November 28, 2008 sales backlog, the Company has contracts totaling approximately $14,036,000 for pilot training systems including $12,729,000 for two customers in the Middle East. About Environmental Tectonics Southampton, Pennsylvania-based Environmental Tectonics Corporation (AMEX: ETC) -- http://www.etcusa.com/-- designs, develops, installs and maintains aircrew training systems (aeromedical, tactical combat and general), disaster management training systems and services, entertainment products, sterilizers (steam and gas), environmental testing products, hyperbaric chambers and related products for domestic and international customers. ENVIRONMENTAL TECTONICS: Emerald Advisers Reports 6.55% Stake ------------------------------------------------------------- Emerald Advisers, Inc., disclosed in a regulatory filing with the Securities and Exchange Comission that it may be deemed to beneficially owned 590,405 shares of common stock of Environmental Tectonics Corp. Kenneth G. Mertz II, President of Emerald Advisers, said his firm holds 6.55% of the 9,035,355 shares of common stock outstanding as of November 28, 2008. Various officers of the Company also disclosed their ownership of ETC shares. ETC President Williams F. Mitchell disclosed his acquisition of company shares in several transactions in January and February. As a result, Mr. Mitchell raised his stake to 1,034,124 ETC shares. Mr. Mitchell may also be deemed to indirectly own 45,200 shares, which is held by his spouse. Harold Fitzgerald Lenfest, a director of the Companym disclosed owning 2,375,037 shares as of January 20. Howard W. Kelley, another director, disclosed having 12,756 shares as of January 20. Environmental Tectonics Corp. reported $30.4 million in total assets and $$33.8 million in total liabilities -- as well as $44,000 in minority interest, $9.3 million in cumulative convertible participating preferred stock, Series B and C -- resulting in $12.6 million in stockholders' deficiency as of November 28, 2008. About Environmental Tectonics Southampton, Pennsylvania-based Environmental Tectonics Corporation (AMEX: ETC) -- http://www.etcusa.com/-- designs, develops, installs and maintains aircrew training systems (aeromedical, tactical combat and general), disaster management training systems and services, entertainment products, sterilizers (steam and gas), environmental testing products, hyperbaric chambers and related products for domestic and international customers. * * * Environmental Tectonics reported $30.4 million in total assets and $$33.8 million in total liabilities -- as well as $44,000 in minority interest, $9.3 million in cumulative convertible participating preferred stock, Series B and C -- resulting in $12.6 million in stockholders' deficiency as of November 28, 2008. The Company is not in compliance with the American Stock Exchange's Company Guide, making the Company's common stock subject to being delisted from AMEX. However, AMEX has granted the Company until March 16, 2009, to regain compliance with the Exchange's continued listing standards and must meet certain milestones during that timeframe which relate to specific plan objectives, some of which involve modifications to the Company's Subordinated Note and Preferred Stock. The Company has said it expects to need additional sources of capital to continue growing and operating its business. The Company is currently in discussions with PNC Bank, National Association, and Mr. Lenfest for potential additional funding. The Company cannot be certain that it will be successful in obtaining additional sources of capital. ETC's objective in its refinancing efforts is to increase its current financing with additional financing from PNC or Mr. Lenfest commitments. It is expected that these arrangements may include a restructuring of the Company's current capital structure including an exchange of Mr. Lenfest's debt for preferred stock and a modification of the terms of the outstanding preferred stock The Company believes that existing cash balances at November 28, 2008, cash generated from operating activities, cash from potential new contract awards, and potential additional funding from PNC or Mr. Lenfest with will be adequate to meet its future obligations through at least November 30, 2009. At November 28, 2008, the Company's availability under its Credit Agreement with PNC was approximately $971,000. EPIX PHARMACEUTICALS: Robert Perez Resigns From Board ----------------------------------------------------- On February 2, 2009, Robert J. Perez tendered his resignation from the Board of Directors of EPIX Pharmaceuticals, Inc., effective as of February 28, 2009. Mr. Perez' resignation did not result from any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Headquartered in Lexington, Mass., EPIX Pharmaceuticals Inc. (NasdaqGM: EPIX) -- http://www.epixmed.com/-- is a biopharmaceutical company focused on discovering and developing novel therapeutics through the use of its proprietary and highly efficient in silico drug discovery platform. The company has a pipeline of internally-discovered drug candidates currently in clinical development to treat diseases of the central nervous system and lung conditions. EPIX also has collaborations with leading organizations, including GlaxoSmithKline, Amgen, Cystic Fibrosis Foundation Therapeutics, and Bayer Schering Pharma AG, Germany. As of September 30, 2008, the company's balance sheet showed total assets of $52,811,411 and total liabilities of $137,635,229, resulting in total stockholders' deficit of $84,823,818. FORTUNOFF HOLDINGS: Court Extends Schedules Filing Until March 6 ---------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York extended until March 6, 2009, the time within which Fortunoff Holdings LLC and Fortunoff Card Company LLC must file their schedules of assets and liabilities, schedules of executory contracts and unexpired leases, and statements of financial affairs. The Debtors, citing "the complexity and diversity" of their operations, said they will be unable to complete the Schedules within the Feb. 20, 2009 deadline. The Debtors submit that the vast amount of information that they must assemble and compile, the multiple places where the information is located, and the number of employee and professional hours required to complete the Schedules have caused the delay in the filing. About Fortunoff Holdings New York-based Fortunoff Holdings LLC -- http://www.fortunoff.com/ -- started out as a family-owned business founded by Max and Clara Fortunoff in 1922, until it merged with M. Fortunoff of Westbury, L.L.C. and Source Financing Corporation in 2004. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff Holdings and its affiliate, Fortunoff Card Company LLC, filed for Chapter 11 protection on February 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10497). Lee Stein Attanasio, Esq., at Sidley Austin LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Zolfo Cooper LLC as their special financial advisor and The Garden City Group Inc. as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. This is the second bankruptcy filing by Fortunoff. In 2008, Fortunoff Fine Jewelry and Silverware LLC filed for Chapter 11. An entity owned by NRDC Equity Partners bought Fortunoff during its first Chapter 11 case. FORTUNOFF HOLDINGS: Can Hire Sidley Austin as Bankruptcy Counsel ---------------------------------------------------------------- Fortunoff Holdings LLC and Fortunoff Card Company LLC obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Sidley Austin LLP as general reorganization and bankruptcy counsel. Sidley is expected to: a) provide legal advice with respect to the Debtors' powers and duties as debtors in possession; b) take all necessary action on behalf of the Debtors to protect and preserve the Debtors' estates, including prosecuting actions on behalf of the Debtors, negotiating any and all litigation in which the Debtors are involved and objecting to claims filed against the Debtors' estates; c) prepare on behalf of the Debtors all necessary motions, answers, orders, reports and other legal papers in connection with the administration of the Debtors' estates; d) attend meeting and negotiate with representatives of creditors and other parties in interest, attend court hearings, and advise the Debtors on the conduct of their Chapter 11 cases; e) perform any and all other legal services for the Debtors in connection with these Chapter 11 cases and with implementation of the Debtors' plan of reorganization; f) advise and assist the Debtors regarding all aspects of the plan confirmation process, including, but not limited to, negotiating and drafting of a plan of reorganization and accompanying disclosure statement, securing the approval of a disclosure statement, soliciting votes in support of a plan confirmation, and securing confirmation of a plan; g) provide legal advice and representation with respect to various obligations of the Debtors and their managers and officers; h) provide legal advice and perform legal services with respect to matters involving the negotiation of the terms and issuance of corporate securities, matters relating to corporate governance and the interpretation, application or amendment of the Debtors' organizational documents, including their limited liability company agreements, material contracts, and matters involving the fiduciary duties of the Debtors and their officers and managers; i) provide legal advice and services with respect to litigation, tax and other general non-bankruptcy legal issues for the Debtors to the extent requested by the debtors; and j) render other services as may be in the best interest of the Debtors in connection with any of the foregoing and all other necessary or appropriate legal services in connection with these Chapter 11 cases. Lee S. Attanasio, a partner at Sidley Audtin LLP, told the Court of Sidley's domestic billing rates: Partners $575 - $1,000 Counsel/ Senior Counsel $370 - $855 Associates $220 - $625 Paraprofessionals $70 - $365 Mr. Attanasio added that on Jan. 28, 2009, Sidley received a $200,000 retainer in connection with preparing for the filing of these Chapter 11 cases and for its proposed postpetition representation of the Debtors. On each of Feb. 2 and 4, 2009, the retainer was further increased by $200,000. Mr. Attanasio assured the Court that Sidley is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Sidley can be reached at: 787 Seventh Avenue New York, New York 10019 Tel: (212) 839-5300 Fax: (212) 839-5599 About Fortunoff Holdings New York-based Fortunoff Holdings LLC -- http://www.fortunoff.com/ -- started out as a family-owned business founded by Max and Clara Fortunoff in 1922, until it merged with M. Fortunoff of Westbury, L.L.C. and Source Financing Corporation in 2004. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff Holdings and its affiliate, Fortunoff Card Company LLC, filed for Chapter 11 protection on February 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10497). Lee Stein Attanasio, Esq., at Sidley Austin LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Zolfo Cooper LLC as their special financial advisor and The Garden City Group Inc. as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. This is the second bankruptcy filing by Fortunoff. In 2008, Fortunoff Fine Jewelry and Silverware LLC filed for Chapter 11. An entity owned by NRDC Equity Partners bought Fortunoff during its first Chapter 11 case. FORTUNOFF HOLDINGS: Can Use $10MM of Wells Fargo's 90-Day DIP Loan ------------------------------------------------------------------ The Hon. Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York authorized Fortunoff Holdings LLC and Fortunoff Card Company LLC to access, on an interim basis, up to $10 million in postpetition financing under the debtor-in- possession agreement dated Feb. 5, 2009, with Wells Fargo Retail Finance LLC, as administrative and collateral agent, and UBS Securities LLC as syndication agent. The Debtors funded their pre-bankruptcy operations through a credit agreement dated March 7, 2008, with Wells Fargo, which loan is secured by all of the Debtors' assets. Fortunoff Card guarantied all the obligations under the agreement. The Debtors owe about $68.1 million in revolving credit loans and $3.6 million in issued and outstanding letters of credit to Wells Fargo as of their bankruptcy filing. The DIP loan provides a roll-up of the $70 million prepetition loan and an additional $10 million debtor- in-possession funding to Fortunoff. The DIP Credit Agreement provides for a 90-day term of the DIP Loan. In addition, the DIP Lenders have required the Debtors to: -- submit a bidding protocol for the "sale of substantially all of [the Debtors'] business assets in connection with a going out of business or similar liquidation sale and the permanent closing all or a portion of [the Debtors'] stores" -- select a stalking horse bidder by Feb. 10. -- complete the sale by Feb. 11. -- obtain the Court's approval of the sale by Feb. 13. -- close the sale by Feb. 15. -- obtain an extension of their deadline to assume or reject leases to not less than 210 days from their bankruptcy filing. The extensions of credit under the DIP Facility are contingent on the achievement of those milestones. Other salient terms of the DIP facility are: Borrowers: Fortunoff Holdings LLC and Fortunoff Card LLC. Lenders and Agent: Wells Fargo Retail Finance LLC, as administrative agent, collateral agent, swing line lender and letter of credit issuer; Wells Fargo and UBS Securities LLC, as joint lead arrangers and joint bookrunners; and UBS Securities LLC, as syndication agent. Commitment: $80,000,000 Interest Rate: Prime + 4% Fees: Unused Line Fee of 0.50%, $1,400,000 closing fee, which includes conditional waiver of the early termination fee due under the prepetition credit agreement. Collateral: Substantially all of the Debtors' property and the proceeds. Termination: All prepetition obligations and obligations under the DIP Facility obligations are due and payable upon the earliest of: i) May 6, 2009; ii) Feb. 23, 2009, if a final order is not entered by such date; iii) event of default; or iv) effective date of a plan. Proceeds of the DIP facility will be used (i) to refinance prepetition secured debt on a rolling basis by applying proceeds of collateral to the debt in accordance with the terms of the prepetition loan documents and payment in full upon entry of a final order, and (ii) to pay expenses of the operation of their business for the purposes of consummating a sale of their assets, in accordance with the proposed budget. The DIP facility is subject to carve-out to pay fees and expenses incurred by professionals retained by the Debtors. To secure their DIP obligations, the lender will be granted superpriority administrative claim status over all administrative expense claims and unsecured claims against the Debtors. The DIP agreement contains customary and appropriate events of default. The Debtor will present on Feb. 24, 2009, at 10:00 a.m., the motion before the Court for final approval. A full-text copy of the Debtors' debtor-in-possession agreement is available for free at: http://ResearchArchives.com/t/s?3958 A full-text copy of the Debtors' debtor-in-possession agreement budget is available for free at: http://ResearchArchives.com/t/s?3959 About Fortunoff Holdings New York-based Fortunoff Holdings LLC -- http://www.fortunoff.com/ -- started out as a family-owned business founded by Max and Clara Fortunoff in 1922, until it merged with M. Fortunoff of Westbury, L.L.C. and Source Financing Corporation in 2004. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff Holdings and its affiliate, Fortunoff Card Company LLC, filed for Chapter 11 protection on February 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10497). Lee Stein Attanasio, Esq., at Sidley Austin LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Zolfo Cooper LLC as their special financial advisor and The Garden City Group Inc. as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. This is the second bankruptcy filing by Fortunoff. In 2008, Fortunoff Fine Jewelry and Silverware LLC filed for Chapter 11. An entity owned by NRDC Equity Partners bought Fortunoff during its first Chapter 11 case. FREESCALE SEMICONDUCTOR: Invites Noteholders to Join Debt-Exchange ------------------------------------------------------------------ Freescale Semiconductor disclosed Feb. 10, 2009, that it is extending invitations to eligible holders of each of its Senior Floating Rate Notes due 2014, 9.125%/9.875% Senior PIK-Election Notes due 2014, 8.875% Senior Fixed Rate Notes due 2014 and 10.125% Senior Subordinated Notes due 2016 to participate as a lender in its new incremental term loans under its senior secured credit facility in an aggregate principal amount, together with incremental term loans payable as compensation, of up to $1,000,000,000. The incremental term loans mature on December 15, 2014 and will be guaranteed by the same guarantors under its senior secured credit facility. The purpose of the note invitations is to improve the Company's financial flexibility by reducing its overall indebtedness and related interest expense. The Company is also seeking commitments in the incremental term loans from existing lenders under its senior secured credit facility. These commitments would reduce the aggregate amount of incremental term loans available to eligible holders of existing notes; accordingly, in the event the existing lenders deliver commitments equal to $1,000,000,000, no incremental term loans would be available to eligible holders in the note invitations. Commitments in the cash invitations to existing lenders must be made by 5:00 p.m., New York City time, on February 19, 2009, and must be funded with immediately available funds in U.S. dollars by 11:00 a.m., New York City time, on March 17, 2009, or earlier in the event the note invitations are terminated. Each note invitation will terminate at midnight, New York City time, on March 10, 2009, unless extended by the Company with respect to any or all of the note invitations. Eligible holders who make their commitments by 5:00 p.m., New York City time, on February 24, 2009, unless extended by the Company, will receive the early note commitment consideration for each $1,000 principal amount of existing notes delivered and accepted by the Company, which will be more than the consideration received for existing notes delivered and accepted by the Company after the early commitment date. Commitments may be rescinded prior to 5:00 p.m., New York City time, on February 24, 2009, and may not be rescinded thereafter. In addition, eligible holders of existing notes -- other than the Senior Toggle Notes -- validly delivered and not validly rescinded will be entitled to receive at closing, cash with respect to accrued and unpaid interest on such existing notes. The ratio of incremental term loans to Senior Toggle Notes takes into account accrued pay-in-kind interest on the Senior Toggle Notes. The Company will not accept commitments that would result in the principal amount of the incremental term loans being greater than $1,000,000,000. In addition, the Company has limited the amount of commitments funded by Senior Toggle Notes to $250,000,000 and the amount of commitments funded by Senior Subordinated Notes to $746,268,000. The Company will accept commitments in accordance with an acceptance priority level, with Level 1 having the highest priority. If the incremental term loans are not fully committed at the termination date, the Company reserves the right, but is not obligated, to increase or waive in its sole discretion the limitation with respect to the Senior Toggle Notes. In such event, to the extent required by law, the Company may extend the termination date of the note invitation with respect to the Senior Toggle Notes without reinstating rescission rights of eligible holders. The note invitations are being extended only to beneficial owners of existing notes who certify to the Company that they are (1) a commercial bank, an insurance company, a finance company, a financial institution or any fund that invests in loans in the ordinary course of business and has total assets in excess of $5,000,000, and (2) a "qualified institutional buyer". These beneficial owners are referred to as "eligible holders." The Company's obligation to accept any commitments, and the existing notes delivered pursuant to such commitments, is set forth solely in the Confidential Information Memorandum relating to the note invitations and the related commitment letter. Documents relating to the note invitations will only be distributed to beneficial owners of existing notes who confirm their eligibility. Beneficial owners who desire a copy of the eligibility letter should contact Global Bondholder Service Corporation, the information agent for the note invitations, at (866) 937-2200 (U.S. Toll-free) or (212) 925-1630 (collect), or visit: http://www.gbsc-usa.com/Freescale/Invitation.htm. About Freescale Semiconductor Austin, Texas-based Freescale Semiconductor -- Http://www.freescale.com/ -- designs and manufactures embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. The privately held company has design, research and development, manufacturing or sales operations around the world. * * * The Troubled Company Reporter reported on Jan. 20, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Austin, Texas-based Freescale Semiconductor Inc. to 'B-' from 'B+' and removed the rating from CreditWatch, where it was placed on Oct. 3, 2008, with negative implications. At the same time, S&P lowered its senior secured rating to 'B-' from 'BB' and changed S&P's recovery rating on these issues to '3' from '1', indicating expectations for meaningful (50%-70%) recovery in the event of payment default. S&P lowered its senior unsecured and subordinated ratings to 'CCC' from 'B-'. The recovery rating remains '6' on these issues, indicating negligible (0-10%) recovery in the event of a payment default. The outlook is negative. The TCR reported on Jan. 29, 2009, that Moody's Investors Service downgraded the corporate family (to Caa1) and long-term debt ratings (senior secured to B1; senior notes to Caa2; and senior subordinated notes to Caa3) of Freescale Semiconductor, Inc. Simultaneously, Moody's downgraded the speculative grade liquidity rating to SGL-3 from SGL-1. The outlook remains negative. The TCR reported on Feb. 3, 2009, that Fitch Ratings downgraded the ratings for Freescale Semiconductor Inc.: -- Issuer Default Rating to 'CCC' from 'B'; -- Senior secured bank revolving credit facility to 'B-/RR3' from 'BB/RR1'; -- Senior secured term loan to 'B-/RR3' from 'BB/RR1'; -- Senior unsecured notes to 'C/RR6' from 'CCC+/RR6'; and -- Senior subordinated notes to 'C/RR6' from 'CCC/RR6'. The Rating Outlook remains Negative. Fitch's actions affect approximately $10.1 billion of total debt, including the assumption of a fully drawn $690 million RCF. Freescale Semiconductor, Inc., for the year ended Dec. 31, 2008, incurred a net loss of $7.9 billion. As of Dec. 31, the company had $6.6 billion in total assets and $11.3 billion in total liabilities, resulting in a $4.6 billion stockholders' deficit. FREESCALE SEMICONDUCTOR: Posts $7.9 Billion Net Loss in 2008 ------------------------------------------------------------ Freescale Semiconductor, Inc., generated $5.2 billion in revenue for the year ended December 31, 2008. During the second half of 2008, the company experienced pressure on its revenues associated with the macroeconomic weakness, particularly in the automotive industry. "We expect weaker demand in the automotive industry and in other of our end markets to persist, which will affect our revenue and profitability into 2009. As a result, we announced plans to sharpen our strategic focus on growth markets and key market leadership positions as well as intentions to explore strategic options for our cellular handset business, including completing a sale, joint venture agreement or other transformation in the coming months," Richard Beyer, chairman of the board and chief executive officer, disclosed in the company's annual report filed on February 6, 2009, with the Securities and Exchange Commission. The company incurred a net loss of $7.9 billion during 2008, primarily related to impairment charges of $5.4 billion and $1.6 billion associated with its goodwill and intangible assets, respectively. "These significant impairments were triggered by an updated supply arrangement with Motorola terminating future minimum purchase commitments, the significant decline in the market capitalization of the public companies in our peer group as of December 31, 2008, our intent to pursue strategic alternatives for our cellular handset product group and the impact from weakening market conditions in our remaining businesses," Mr. Beyer said. As of Dec. 31, 2008, the company had $6.6 billion in total assets and $11.3 billion in total liabilities, resulting in a $4.6 billion stockholders' deficit. A full-text copy of the company's annual report is available for free at: http://researcharchives.com/t/s?3949 About Freescale Semiconductor Austin, Texas-based Freescale Semiconductor -- Http://www.freescale.com/ -- designs and manufactures embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. The privately held company has design, research and development, manufacturing or sales operations around the world. * * * The Troubled Company Reporter reported on Jan. 20, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Austin, Texas-based Freescale Semiconductor Inc. to 'B-' from 'B+' and removed the rating from CreditWatch, where it was placed on Oct. 3, 2008, with negative implications. At the same time, S&P lowered its senior secured rating to 'B-' from 'BB' and changed S&P's recovery rating on these issues to '3' from '1', indicating expectations for meaningful (50%-70%) recovery in the event of payment default. S&P lowered its senior unsecured and subordinated ratings to 'CCC' from 'B-'. The recovery rating remains '6' on these issues, indicating negligible (0-10%) recovery in the event of a payment default. The outlook is negative. The TCR reported on Jan. 29, 2009, that Moody's Investors Service downgraded the corporate family (to Caa1) and long-term debt ratings (senior secured to B1; senior notes to Caa2; and senior subordinated notes to Caa3) of Freescale Semiconductor, Inc. Simultaneously, Moody's downgraded the speculative grade liquidity rating to SGL-3 from SGL-1. The outlook remains negative. The TCR reported on Feb. 3, 2009, that Fitch Ratings downgraded the ratings for Freescale Semiconductor Inc.: -- Issuer Default Rating to 'CCC' from 'B'; -- Senior secured bank revolving credit facility to 'B-/RR3' from 'BB/RR1'; -- Senior secured term loan to 'B-/RR3' from 'BB/RR1'; -- Senior unsecured notes to 'C/RR6' from 'CCC+/RR6'; and -- Senior subordinated notes to 'C/RR6' from 'CCC/RR6'. The Rating Outlook remains Negative. Fitch's actions affect approximately $10.1 billion of total debt, including the assumption of a fully drawn $690 million RCF. GAINEY CORP: Court Sets March 23 Deadline to File Proofs of Claim ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Michigan has set March 23, 2009, as the last day for the filing of proofs of claim in Gainey Corp., and its debtor-affiliates' bankruptcy cases. The Court set April 14, 2009, as the deadline for all governmental units to file claims against the Debtors. The Court also established March 23, 2009, as the last date for filing claims for payment against the Debtors pursuant to Sec. 503(b)(9) of the Bankruptcy Code. Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., and John T. Schuring, Esq., and Trent B. Collier, at Dickinson Wright PLLC; and Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP represent the Debtors as counsel. Alixpartners, LLC is the Debtors' restructuring and financial consultant. Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Louis P. Rochkind, Esq., Paul R. Hage, Esq., and Richard E. Kruger, Esq., at Jaffe, Raitt, Heuer & Weiss, PC, represent the Official Committee of Unsecured Creditors as counsel. Virchow Krause and Company, LLP is the Debtor's financial advisor. In its schedules, Gainey Corp. listed total assets of $32,634,336 and total debts of $226,766,249. GAINEY CORP: Asks Court to Extend Plan Filing Period to March 31 ---------------------------------------------------------------- Gainey Corp. and its debtor-affiliates ask the U.S. Bankruptcy for the Western District of Michigan to extend their exclusive period to file a plan through and including March 31, 2009, and their exclusive period to solicit acceptances of said plan through and including May 31, 2009. The Debtors' exclusive periods to file a plan and solicit acceptances of said plan expire on Feb. 11, 2009, and April 12, 2009, respectively. The Debtors tell the Court that theirs is a large and complex case, involving an entity with approximately $400,000,000 in annual sales, multiple business locations and thousand of employees. The Debtors add that the early proceedings in the case were complicated by the strenuous objections to the initial use of cash collateral, extensive proceedings relating to issues involving the proposed compensation to the Debtors' officers, negotiations for the extended use of cash collateral, and finally by proceedings relating to the U.S. Trustee's request for the appointment of an examiner. These matters have now been resolved. In view of the above, the Debtors have not had sufficient time and opportunity to formulate a plan of reorganization. Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., and John T. Schuring, Esq., and Trent B. Collier, at Dickinson Wright PLLC; and Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP represent the Debtors as counsel. Alixpartners, LLC is the Debtors' restructuring and financial consultant. Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Louis P. Rochkind, Esq., Paul R. Hage, Esq., and Richard E. Kruger, Esq., at Jaffe, Raitt, Heuer & Weiss, PC, represent the Official Committee of Unsecured Creditors as counsel. Virchow Krause and Company, LLP is the Debtor's financial advisor. In its schedules, Gainey Corp. listed total assets of $32,634,336 and total debts of $226,766,249. GAINEY CORP: Asks Retroactive Approval of Sale of 10 Tractors ------------------------------------------------------------- Gainey Corp., and its debtor-affiliates, ask the U.S. Bankruptcy Court for the Western District of Michigan for retroactive approval of Debtor Lester Coggins Trucking, Inc.'s ("LCT") recent sale of 10 tractors to Roy's Trucks & Equipment Inc. The sale closed on Jan. 7, 2009, at a price of $17,500 per tractor, or a total purchase consideration of $175,000. The Debtors tell the Court that they own in the aggregate approximately 5,000 trucks and trailers, substantially of which is subject to a perfected security interest in favor of Wachovia. The negotiation for the sale of the 10 tractors was conducted during September 2008. The proposed sale, however, did not close in September as planned. On Oct. 14, 2008, the Debtors filed their petitions with the Court under Chapter 11 of the Bankruptcy Code. Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The company and its subsidiaries filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mich. Lead Case No. 08-09092) on Oct. 14, 2008. Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., and John T. Schuring, Esq., and Trent B. Collier, at Dickinson Wright PLLC; and Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP represent the Debtors as counsel. Alixpartners, LLC is the Debtors' restructuring and financial consultant. Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Louis P. Rochkind, Esq., Paul R. Hage, Esq., and Richard E. Kruger, Esq., at Jaffe, Raitt, Heuer & Weiss, PC, represent the Official Committee of Unsecured Creditors as counsel. Virchow Krause and Company, LLP is the Debtor's financial advisor. In its schedules, Gainey Corp. listed total assets of $32,634,336 and total debts of $226,766,249. GENERAL GROWTH: A Chapter 11 Filing Won't Affect Malls ------------------------------------------------------ Cnjonline.com reports that a General Growth Properties Inc. spokesperson said on Monday that the company's possible bankruptcy filing, along with severe financial difficulties, is unlikely to cause noticeable changes at its North Plains Mall for customers. According to the report, spokesperson Jim Graham said that a Chapter 11 bankruptcy wouldn't change daily operation for malls. "Regardless of what happens to GGP at the corporate level, we really don't expect our customers to experience much of a change at their local shopping center, including North Plains Mall.... Under Chapter 11, businesses are usually able to continue operating their facilities, especially in a situation where the problems are more financial rather than having to do with a lack of customers, because we do continue to have good occupancy at many of our shopping centers and plenty of customers coming in," the report quoted Mr. Graham as saying. According to Cnjonline.com, North Plains Mall General Manager Cindy Banister said that the mall is doing well and that she has heard nothing of trouble in its future. "North Plains Mall is at an all-time high right now as far as our tenants and our sales per square foot. We have just a couple of vacancies. We're not going anywhere," the report quoted Ms. Banister as saying. General Growth, Cnjonline.com says, is struggling to refinance billions in debt it took on during an expansion effort that included the $7 billion acquisition of a competitor in 2004, and now the company is trying to sell properties and operating rights to some facilities to bring in enough cash to pay the bills. General Growth said on Friday that it would delay by two weeks the release of its fourth quarter earnings, Cnjonline.com reports. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner with 200-plus shopping malls in 44 states. General Growth is a self-administered and self-managed real estate investment trust. General Growth owns, manages, leases and develops retail rental property, primarily shopping centers. Substantially all of its properties are located in the United States, but the company also has retail rental property operations and property management activities -- through unconsolidated joint ventures -- in Brazil and Turkey. Its Master Planned Communities segment includes the development and sale of residential and commercial land, primarily in large-scale projects in and around Columbia, Maryland; Houston, Texas; and Summerlin, Nevada, as well as the development and sale of its one residential condominium project located in Natick (Boston), Massachusetts. General Growth said in a regulatory filing Sept. 30 that its potential inability to address its 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to its ability to continue as a going concern. General Growth had $29.6 billion in total assets and $27.3 billion in total liabilities as at Sept. 30. * * * As reported by the Troubled Company Reporter on Dec. 11, 2008, Fitch Ratings, has downgraded the Issuer Default Ratings and outstanding debt ratings of General Growth Properties to 'C' from 'B'. GENERAL MOTORS: Will Lay Off 14% of Work Force This Year -------------------------------------------------------- Kerry E. Grace at The Wall Street Journal reports that General Motors Corp. will cut 14% of its salaried work force, or 10,000 employees, this year, as part of a plan that the company presented to the Congress in December 2008 to get financial assistance from the government. According to WSJ, GM will lay off about 3,400 workers in the U.S., or 12% of GM's U.S. salaried work force. Much of the layoffs, says WSJ, will be done by May 1. By that time, GM will cut most of its remaining employees' salary by 3% to 7% through year-end, WSJ states. According to the report, GM executives will get a 10% cut on their pay. WSJ relates that GM has a week to submit an update on the restructuring plan's viability. GM said that if its financial situation doesn't improve, it is considering bankruptcy an option, WSJ states. GM, says WSJ, struggles to cope with a steep decline in vehicle sales world-wide, as consumers cut back spending and try to save money during the recession. According to the report, GM posted an 11% decrease in last year's sales. Citing Research firm R. L. Polk & Co., WSJ reports that light- vehicle sales this year would drop 13% to 56.8 million units worldwide. WSJ relates that the projected decline for the U.S. is 19%, after a 17% drop in 2008. 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 US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$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 US$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. GLOBAL AIRCRAFT: Three Creditors Have Over $7.8 Million in Claims ----------------------------------------------------------------- Azbiz.com reports that Global Aircraft Solutions, Inc., owes three creditors at least $700,000 each. According to Azbiz.com, Wind Rose Aviation has a disputed claim of $5.14 million to Global Aircraft's charter airline in Kiev, Ukrane, Wind Rose Aviation. Global Aircraft, says Azbiz.com, owes $2.04 million to Kabul, Afghanistan-based Pamir Airways, and $705,000 to Miami, Florida-based jet engine maintenance firm New Jet Engine Services. Global Aircraft said that it had reached an agreement, prior to its Chapter 11 bankruptcy filing in January, to sell its assets, which include Victory Park Credit Opportunities Master Fund Ltd., Azbiz.com relates. The report states that Victory Park holds about $8 million of Global Aircraft's debt. Court documents say that Global Aircraft listed $4.6 million in assets. About Global Aircraft Solutions Headquartered in Tucson, Arizona, Global Aircraft Solutions -- http://www.globalaircraftsolutions.com-- provides parts support and maintenance, repair and overhaul (MRO) services for large passenger jet aircraft to scheduled and charter airlines and aviation leasing companies. Hamilton Aerospace and World Jet, both divisions of Global Aircraft Solutions, operate from adjacent facilities comprising about 25 acres located at Tucson International Airport. These facilities include hangars, workshops, warehouses, offices and other buildings. Notable customers include G.A. Telesis, AfriJet, Zero G, Swift Air, Pamir Airways, Wind Rose Aviation, Jetran International, the Mexican Presidential Fleet, SEDENA, Canadian North Airlines, Iraqi Airways, Ryan International Airlines, and Alant Soyuz. Global Aircraft filed for Chapter 11 bankruptcy protection on January 30, 2009 (Bankr. D. Ariz. Case No. 09-01655). Mary B. Martin, Esq., at Lane & Nach, P.C., assists the company in its restructuring effort. The company listed $1,000,001 to $10,000,000 in assets and $1,000,001 to $10,000,000 in debts. GLOBAL BEVERAGE: Sells Beverage Network to Master Distributors -------------------------------------------------------------- On February 1, 2009, Global Beverage Solutions, Inc., entered into an agreement to sell the assets of Beverage Network of Maryland, Inc., a wholly owned subsidiary of the Company to Master Distributors, Inc., in exchange for cancellation of the debt originally incurred to acquire this entity and assumption of certain other debts and obligations including trade debts. The purchase was consummated at a closing on February 2, 2009, effective as of February 1, 2009. Headquartered in Plantation, Fla., GlobaL Beverage Solutions Inc. (OTC BB: GBVS.OB) -- http://www.globalbeveragesolutions.com/-- is a business development company organized pursuant to applicable provisions of the Investment Company Act of 1940. The company primarily focuses on manufacturing, distribution and sales of unique beverages globally. Going Concern Doubt As reported in the Troubled Company Reporter on May 14, 2008, Turner, Stone & Company LLP, in Dallas, expressed substantial doubt about Global Beverage Solutions Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the the year ended Dec. 31, 2007. At September 30, 2008, the Company had a working capital deficit of $7,886,835 as compared to $6,136,235 at December 31, 2007. The increase in working capital deficit of $1,750,600 during 2008 was primarily the result of using working capital to acquire treasury stock in the amount of $700,000, the net loss of $1,252,987 and less the increases to common stock and additional paid-in capital in the amount of $236,198 as a result of stock and options issued. Net cash provided by operating activities was $40,646. As of September 30, 2008, the Company had an accumulated deficit totaling $35,860,896. It also had a net loss of $1,252,987 during the nine months ended September 30, 2008. As of September 30, 2008, the Company's balance sheet showed total assets of $3,125,389 and total liabilities of $8,815,558, resulting in total stockholders' deficit of $5,690,169. GOLDEN EAGLE: Enters Into 4 Common Stock Subscription Agreements ---------------------------------------------------------------- On January 28, 2009, Golden Eagle International, Inc., entered into four separate Common Stock Subscription Agreements. Pursuant to the Subscription Agreements the company issued an aggregate of 298,649,085 shares of its common stock in consideration for the retirement of $189,054.36 of Company debt and $20,000 in cash. The material terms of each Subscription Agreement are: 1) Two Subscription Agreements: one with Dewey L. Williams and the other with the Dewey L. Williams Profit Sharing Plan and Trust, providing for the issuance of 57,781,600 shares of the company's restricted common stock to the Williams Group at a price per share equal to one-half of the market closing price of its common stock on the date of the transaction -- January 28, 2009 -- or $0.0007 per share. Approximately, 29,210,171 of the shares were issued to the Williams Group in exchange for the satisfaction of $20,447.12 debt and 28,571,429 shares were issued in consideration for $20,000 in cash. 2) Subscription Agreement with Jose Edmundo Arauz providing for the issuance of 182,000,000 shares of the company's restricted common stock to Arauz at a price per share equal to one-half of the market closing price of its common stock on the date of the transaction -- January 28, 2009 -- or $0.0007 per share. The shares were issued to Arauz in exchange for satisfaction of $127,400 debt that the company owed to Arauz. 3) Subscription Agreement with Nestor Dimas Perez providing for the issuance of 58,867,486 shares of the company's restricted common stock to Perez at a price per share equal to one-half of the market closing price of our common stock on the date of the transaction -- January 28, 2009 -- or $0.0007 per share. The shares were issued to Perez in exchange for satisfaction of $41,207.24 debt that the company owed to Perez. "We have previously used the loan proceeds for general corporate purposes. We have reduced the debt on our balance sheet for which we have exchanged our restricted common shares and made the corresponding entry to the equity section of our balance sheet. The $20,000 in cash received by the Company for the purchase of shares will be used for general corporate purposes at our sole discretion," Terry C. Turner, president and chief executive officer, disclosed in a regulatory filing dated February 5, 2009. About Golden Eagle Headquartered in Salt Lake City, Golden Eagle International Inc. (OTC BB: MYNG) -- http://www.geii.com/-- is a gold and copper exploration and mining company. The company is engaged in the development of existing gold and copper deposits in the Guarayos Greenstone Belt within Bolivia's Precambrian shield. Exploration is ongoing in this highly prospective area. Going Concern Doubt Chisholm, Bierwolf & Nilson, LLC, in Bountiful, Utah, expressed substantial doubt about Golden Eagle International 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 company had a significant working capital deficit and had substantial losses since its inception. Due to our working capital deficit of $886,059 at September 30, 2008, and $816,944 at December 31, 2007, the company is unable to satisfy its current cash requirements for any substantial period of time through its existing capital. The company, in its Form 10-Q filed on November 19, 2008, said it anticipates total operating expenditures of approximately $2,300,000 pending adequate financing over the next twelve months, in these areas: -- General and administrative expenses of $1,500,000; and -- Exploration and development expenses of $800,000. The company's cash balance of $8,157 as September 30, 2008, is insufficient to meet these planned expenses. As of September 30, 2008, the company's balance sheet showed total assets of $6,273,316, total liabilities of $1,138,337 and total stockholders' equity of $5,134,978. HARRY & DAVID: Reports Second Quarter Fiscal 2009 Results --------------------------------------------------------- Harry & David Holdings, Inc., reported on February 6, 2009, financial results for its fiscal second quarter ended December 27, 2008. All results reflect continuing operations net of the Company's divestiture of its Jackson & Perkins business in April 2007 and include the additions of the Wolferman's and Cushman's Fruit Company businesses acquired in January 2008 and August 2008, respectively. Net sales for the 13-week period ended December 27, 2008 decreased 15.5% to $307.7 million, compared to $364.0 million for the 13- week period ended December 29, 2007. The net sales decrease of $56.3 million in the second quarter of fiscal 2009 from the same period in fiscal 2008 was primarily driven by lower product demand in Harry and David Direct Marketing, lower customer traffic in the Company's stores, and to a lesser extent the later timing of our Fruit-of-the-Month(TM) club shipments. Gross profit margin was 47.6% in the second quarter of fiscal 2009 compared to 54.0% in the same period last year. The margin decrease was driven by increased markdowns and discounts including increases in delivery discounts, increases in inventory write offs and higher material costs and to a lesser extent, the mix impact of slightly lower margins in the Company's acquired brands, this year versus last year. "In the second fiscal quarter, we experienced the most challenging consumer economic and market conditions in many decades," said Bill Williams, President and CEO. "While we are disappointed with our operating performance, we have taken numerous actions to maximize sales and profits through competitive promotional pricing, reducing operating and capital expenditures. Although the extent of the markdowns and discounts was unprecedented, we delivered great value to our customers during this difficult economy." For the second quarter of fiscal 2009, selling, general and administrative expenses were $105.0 million versus $86.7 million last year. SG&A expenses as a percent to sales increased to 34.1% from 23.8% in the second quarter of fiscal 2008 primarily as a result of the sales declines and the write down of certain goodwill, intangibles and other impaired store assets. The $18.3 million SG&A increase was due to a $15.0 million non-cash charge for impairment of goodwill and intangible assets related to acquisitions and store impairments and the addition of Wolferman's and Cushman's Fruit Company advertising costs in the Direct Marketing segment. These increases were partially offset by lower advertising costs in the Harry & David Direct Marketing unit and lower payroll costs. SG&A, when normalized for impairment write downs and acquisition advertising expenses declined 4.4% versus last year to approximately $82.9 million, or 26.9% of sales. As part of the Company's ongoing efforts to reduce operating expenses, on January 15, 2009 the Company announced a 10% reduction to its full-time workforce. Pre-tax income from continuing operations for the second quarter of fiscal 2009 was $48.4 million, compared to pre-tax income of $103.8 million reported in the same period of fiscal 2008. For the quarter ended December 27, 2008, the Company's net income, which includes discontinued operations, was $29.7 million, reflecting an effective tax rate of 38.8%, compared to net income of $66.0 million and an effective tax rate of 36.5%, reported in the same period last year. EBITDA was $59.8 million in the second fiscal quarter of 2009, compared to $115.2 million in the same period of fiscal 2008. The decline in EBITDA was primarily due to the Company's reduced operating performance and non-cash write downs for goodwill, intangibles, store impairment, and inventory write offs which were partially offset by the gain on debt repayment discussed below. In October 2008, the Company repurchased $16.6 million of its fixed rate Senior Notes and $9.8 million of its floating rate notes in open market purchases, for a combined cost of $13.3 million. The debt repurchase resulted in a net gain of $12.6 million, recorded in the second quarter of fiscal 2009. Inventory was $44.7 million at December 27, 2008, versus $46.2 million reported in the same period last year. The 3.2% decrease was due to lower Harry & David finished goods inventory and to a lesser extent higher inventory write offs, offset by additional inventory associated with the Company's acquisition of the Wolferman's(R) and Cushman's(TM) brands. As of December 27, 2008, the Company had $95.2 million in cash and cash equivalents and no outstanding borrowings under its credit facility, compared to $179.8 million of cash as of December 29, 2007, which included approximately $46 million in proceeds from the sale of Jackson & Perkins. The Company was in compliance with its annual bank covenant cash test, which was measured at December 31, 2008. Capital expenditures were $2.7 million for the quarter ended December 27, 2008, versus $5.6 million reported in the same period last year. Net sales for the twenty-six week period ended December 27, 2008, were $360.3 million, a decrease of $59.1 million or 14.1%, from fiscal 2008 to fiscal 2009. EBITDA from continuing operations for the twenty-six week period ended December 27, 2008 was $46.0 million, a decrease of $54.5 million from the prior year. The decrease was primarily due to the Company's operating performance, partially offset by the gain on debt repurchase. Pre-tax income from continuing operations for the twenty-six week period ended December 27, 2008, was $23.8 million, compared to $78.4 million in the twenty-six week period ended December 29, 2007. Net income from continuing operations for the year-to-date period in fiscal 2009 was $14.3 million, compared to net income of $49.9 million reported in the same period in fiscal 2008. The Company's full interim results for the second fiscal quarter ended December 27, 2008, was filed with the Securities and Exchange Commission in a quarterly report on Form 10-Q. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?3960 As of December 27, 2008, the company's balance sheet showed total assets of $389,536,000, total liabilities of $370,595,000 and total stockholders' equity of $18,941,000. On February 6, 2009, Harry & David Holdings also disclosed that Stephen V. O'Connell, EVP, CFO and Chief Administrative Officer will resign his position as CFO, CAO and as a member of the Board of Directors effective with the naming of a successor. About Harry & David Holdings, Inc. Headquartered in Medford, Oregon, Harry & David Holdings, Inc. -- http://www.hndcorp.com/-- is a multi-channel specialty retailer and producer of branded premium gift-quality fruit, gourmet food products and other gifts marketed under the Harry and David and Wolferman's brands. The company's marketing channels include direct marketing, business-to-business, its Harry and David stores, and wholesale distribution through select retailers. The company grows, manufactures, designs or packages products that account for the majority of its sales annually. On Aug. 8, 2008, it acquired Cushman Fruit Company, Inc. The Troubled Company Reporter reported on November 17, 2008, that Moody's Investors Service lowered the corporate family rating and probability of default rating of Harry & David's to B3 from B2. At the same time, Moody's lowered the company's senior unsecured rating to Caa1 (LGD4, 69%) from B3 (LGD4, 68%). The outlook is negative. HARRY & DAVID: Eroding Operating Trends Cue S&P's Junk Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Medford, Oregon-based Harry & David Operations Corp. to 'CC' from 'B-'. Concurrently, S&P lowered the ratings on the Company's $175 million senior fixed-rate notes and $70 million senior floating-rate notes to 'C' from 'CCC+'. The recovery rating on these notes remains at '5', indicting S&P's expectation for modest (10%-30%) recovery of principal in the event of default. The outlook is negative. "The downgrade reflects our belief that negative operating trends will continue to erode Harry & David's already-weak liquidity position," said Standard & Poor's credit analyst Mariola Borysiak, "and that the company may run out of cash before it can borrow from its revolving credit facility." This action is in accordance with S&P's criteria that defines ratings in the 'CC' category. HAYES LEMMERZ: Tight Liquidity Cues S&P's Rating Cut to 'CCC+' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on automotive wheel manufacturer Hayes Lemmerz International Inc. to 'CCC+' from 'B-'. At the same time, S&P lowered its issue-level ratings on the company's debt, reflecting the downgrade of the corporate credit rating as well as revised recovery expectations. All ratings are removed from CreditWatch with negative implications, where they had been placed on Nov. 13, 2008. The downgrades reflect Hayes's tight liquidity, which will remain under pressure from sharp declines in automotive production in Europe and North America. The company recently obtained an amendment from its secured lenders relaxing its financial covenants, which S&P views as a near-term positive. However, the covenant levels were amended for only one year and are scheduled to tighten again at the end of the first quarter of 2010. In the meantime, S&P's view is that continued slack demand may prevent Hayes from substantially improving liquidity during the next few quarters, leaving the company more vulnerable to further industry weakness. S&P's expectation is that U.S. light-vehicle sales will decline to 10.0 million units in 2009, a 24% decline from 2008. S&P believes auto sales in Europe, which represent nearly 60% of Hayes's sales, could decline substantially as well in 2009. The ratings on Northville, Michigan-based Hayes reflect the company's constrained liquidity, high leverage, and recent negative cash flows, as well as the multiple business risks inherent in the automotive supply industry. These risks include intense competition, high fixed costs, volatile raw material prices, and sharply declining vehicle demand in the United States and more recently in Europe and other key global markets. Partly offsetting these risks are the company's solid market position and good geographic and customer diversity as the world's largest wheel manufacturer. In recent years, Hayes has divested operations outside of its core wheel business and sharply reduced its dependence on the Michigan- based automakers' U.S. operations. This process continued in 2008 as the company announced plans to sell a powertrain facility in Mexico and close an aluminum wheel plant in Georgia. The U.S. market now accounts for just 13% of total sales, down from 60% in 2001. However, S&P does not expect the company's geographic diversity to provide substantial benefits in 2009, as it did in previous years, because vehicle production has declined across multiple markets as a result of the weak global economy. One positive has been the recent decline in aluminum and steel prices, although S&P expects this trend to only partly offset the detrimental effect of low production volumes on Hayes's financial results. The weakening of the euro against the dollar, if sustained, will result in lower sales and profitability from Hayes's European operations when translated into dollars, but much of Hayes's debt is euro-denominated as well, which should mitigate much of the currency-related effect on leverage or other credit ratios. S&P's expect Hayes's financial results for the fourth quarter, ending Jan. 31, 2009, to be significantly worse than those reported in the third quarter. The company withdrew its EBITDA guidance for fiscal 2008 after acknowledging that it would not come close to meeting its previous guidance of $225 million to $240 million. S&P's expectation is that Hayes's free operating cash flow will be flat or slightly negative for the full year 2009, reflecting S&P's assumption of a 20% total revenue decline, including a negative foreign exchange effect. However, a less severe decline in production or substantial cost-saving actions could result in positive free operating cash flow. S&P projects that lower sales in 2009 will lead to reduced profitability and push leverage substantially higher -- in S&P's estimation, above 6x if revenues decline 20% and the company is unable to fully realize the productivity gains it has achieved in recent years. The negative outlook reflects S&P's expectation that sharply lower industry production in Europe and other regions will hinder Hayes's ability to substantially improve liquidity in 2009. S&P expects free operating cash flow to be flat to slightly negative in 2009; however, S&P could lower the ratings if cash use is more severe than S&P currently expect, such that total liquidity drops below $80 million at the end of any quarter. In S&P's view, this could occur if revenues decline more than 20% from 2008 levels excluding foreign exchange adjustments, or if gross margins excluding depreciation and amortization fall to 12% or lower from an expected 14% in 2008. S&P could also lower the ratings if the company were to pursue a debt restructuring, which S&P would likely deem to be a distressed exchange. S&P's could revise the outlook to stable or positive or raise the ratings if the company produces free operating cash flow of $50 million or more in 2009 and uses the proceeds to bolster liquidity, although any upgrade would also be dependent on S&P's gaining greater assurance about Hayes's ability to meet its 2010 financial covenants. IDEARC INC: Moody's Says Bankruptcy A Solution, Rating Cut to Caa2 ------------------------------------------------------------------ Moody's Investors Service has downgraded Idearc Inc.'s Corporate Family Rating to Caa2 and its Probability of Default Rating to Caa3, reflecting concerns that the company may determine that a complete debt restructuring represents the best alternative to address its currently challenged capital structure. Details of the rating action are: Ratings downgraded: * Corporate Family rating - to Caa2 from B3 * PDR - to Caa3 from B3 * $250 million revolving credit facility, due 2011 - to B3, LGD2, 19% from B2, LGD3, 34% * $1,515 million term loan A, due 2013 - to B3, LGD2, 19% from B2, LGD3, 34% * $4,679 million term loan B, due 2014 -- B3, LGD2, 19% from B2, LGD3, 34% * $2,850 million senior unsecured notes, due 2016 -- to Ca, LGD5, 71% from Caa2, LGD5, 87% Rating affirmed: * Speculative Grade Liquidity rating - SGL-4 The rating outlook is negative. The downgrade of the PDR to Caa3, in particular, indicates Moody's concern that the company's current review of appropriate capital structure alternatives will conclude that a pre-packaged bankruptcy, a distressed exchange or other restructuring measures represent the optimal solution to re-align its over-leveraged balance sheet. Idearc's previous B3 CFR was based upon Moody's assessment of the company continuing its operations as a going concern, and considered that Idearc possessed sufficient financial flexibility to continue operations for a considerable period of time (assuming lender support for financial covenant relief, if requested). The downgrade of the CFR to Caa2 reflects the shift in Moody's expectation that the company will instead implement a more comprehensive restructuring. Additionally, the downgrade of the CFR reflects Moody's view that Idearc may experience declines in its advertising sales at a far grater pace than Moody's had previously contemplated, reducing its free cash flow and increasing the likelihood that the company will fail to comply with its financial covenants over the near term. The Caa2 CFR reflects Idearc's heavy debt burden (exceeding $9 billion), its high leverage (which Moody's estimates at approximately 7.1 times debt to EBITDA for the LTM period ended September 30, 2008) and the challenges facing the company as it seeks to grow online advertising sales and to expand its presence within non-incumbent markets in response to the secular pressure facing its traditional print-centric incumbent yellow pages publishing business. The rating is supported by Idearc's scale and scope as the second largest U.S. yellow pages directory publisher, the strong market position and competitive barriers conferred by its exclusive 30-year publishing agreement with Verizon Communications as the "official" yellow pages directory within Verizon Communications' incumbent service areas, its still relatively healthy free-cash-flow generation, and its highly diversified customer and market base. Notwithstanding a sizeable cash balance (in excess of $550 million) Idearc's SGL-4 liquidity rating continues to almost entirely underscore Moody's concern that the company will fail to comply with the senior secured leverage test embedded in the company's bank credit agreement, and the inability to cure the same without the support of the bank group (which would not be assumed per Moody's SGL rating methodology), notwithstanding still strong internal sources of cash. The risk of covenant default is accentuated by Moody's expectation that the rate of decline of Idearc's advertising sales will worsen materially beyond the 11% decline which it reported in Q308. The negative outlook underscores Moody's view that Idearc will experience an elevated level of customer cancellations and non- renewals as the current recession takes its toll on advertising spending by the company's largely small and medium sized customers. In addition, the negative outlook reflects the increasing competition and disintermediation facing the mature incumbent yellow pages publishing business. In the event of a restructuring, Moody's consider that the company's current senior secured lenders would receive above average recovery, however holders of Idearc's senior unsecured notes (representing around a third of the company's current capitalization) would likely face only modest recovery prospects. The last rating action occurred on November 6, 2008, when Moody's downgraded Idearc's CFR to B3. Additional research, including the most recent Credit Opinion, can be found on www.moodys.com. Idearc'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 the competitive position of the company versus others in its industry, ii) the capital structure and the 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 of risk. These attributes were compared against other issuers both within and outside of Idearc's core industry and Idearc's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in DFW Airport, Texas, Idearc, Inc. is the second largest US yellow pages publisher. The company reported sales of approximately $3.1 billion for the LTM period ended September 30, 2008. * * * Bloomberg's Bill Rochell notes that Moody's is in agreement with S&P on the corporate rating. The downgrade was the third by Moody's in roughly 10 months. S&P downgraded three times in eight months. IL LUGANO: May Sell Condo Unit at Reduced Price of $580,000 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut approved on February 4, 2009, the request of IL Lugano, LLC to approve the sale of Condominium Unit #1207, Model Type "The Basil", free and clear of all liens, claims and encumbrances, to Donna L. Patterson at the reduced purchase price of $580,000. As reported in the Troubled Company Reporter on January 22, 2009, IL Lugano agreed to waive the "closing charge" of 1.5% of the Purchase Price, and also agreed to pay for the owner's title insurance policy and documentary stamps on the deed. Liens shall attach to the net proceeds of the sale. The original purchase price for the said unit was $670,000. When the purchase agreement was signed on or about November 23, 2004, the condominium-hotel property had not yet been constructed. Following the execution of the purchase agreement, Ms. Patterson posted deposits in the aggregate amount of $134,000. Ms. Patterson subsequently complained that the square footage of the unit was less than that originally stated in the prospectus and attached exhibits. Ms. Patterson also alleged that the unit was not constructed on time nor was it part of a Hilton hotel as allegedly originally promised. The Debtor told the Court that the purchase price represented fair value for the unit. The Debtor added that had it proceeded with litigation against the purchaser, the outcome would have been uncertain, and would have resulted in significant expense to the Company. Based in Fort Lauderdale, Florida, IL Lugano, LLC is is the owner of a 4-star, boutique-style, luxury condominium-hotel property located in Fort Lauderdale, Florida, which opened to the public on January 16, 2008. The Debtor is a wholly owned subsidiary of SageCrest Vegas LLC, which is a wholly owned subsidiary of SageCrest II LLC. On August 17, 2008, SageCrest II, LLC and SageCrest Holdings Limited each filed a voluntary petition for Chapter 11 protection (Bankr. D. Conn. Lead Case No. 08-50754). The hotel portion of the property has 105 rooms and the condominium portion of the property has approximately 23 condominium units. Since the Petition Date, IL Lugano has completed construction of an upscale Todd English restaurant, which opened to the public on November 17, 2008, and is expected to generate substantial additional revenue. The company filed for chapter 11 protection on August 29, 2008 (Bankr. D. Conn. Case No. 08-50811). Douglas J. Buncher, Esq., at Neligan Foley LLP, and James Berman, Esq., at Zeisler and Zeisler, represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $50 million and $100 million and debts of between $1 million and $10 million. IL Lugano filed for bankruptcy to prevent any adverse judgment and subsequent enforcement actions against IL Lugano in a lawsuit filed by EPI NCL, LLLC, in the Circuit Court of the 17th Judicial Circuit of Broward County, Florida, which was set for trial on Sept. 2, 2008, and to allow adequate time for completion of the restaurant and sale of the property. INCYTE CORP: Matthew Emmens Resigns From Board ---------------------------------------------- Effective February 4, 2009, Matthew W. Emmens resigned from the Board of Directors of Incyte Corporation in connection with his appointment as President of Vertex Pharmaceuticals Incorporated. Based in Wilmington, Delaware, Incyte Corporation (Nasdaq: INCY) -- http://www.incyte.com/-- is a drug discovery and development company focused on developing proprietary small molecule drugs to treat serious unmet medical needs. Incyte's pipeline includes multiple compounds in Phase I and Phase II development for oncology, inflammation and diabetes. * * * As of September 30, 2008, the company's balance sheets showed total assets of $264,718,000 and total liabilities of $442,095,000, resulting in total stockholders' deficit of $177,377,000. INTERNATIONAL SILICON: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: International Silicon Solutions, Inc. 11601 Plano Road, Suite 104 Dallas, TX 75243 Tel: (214) 349-8688 Bankruptcy Case No.: 09-30854 Chapter 11 Petition Date: February 9, 2009 Court: Northern District of Texas (Dallas) Debtor's Counsel: Randy Ford Taub, Esq. rfordtaub@msn.com Law Office of R. Ford Taub 1004 Crystal Springs Drive Allen, TX 75013 Tel: (972)678-2950 Fax: (972)678-2953 Estimated Assets: $1 million to $100 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by Gary Conrad Garrett, chief executive officer, president and chairman. JACOBS ENTERTAINMENT: S&P Affirms Corporate Credit Rating to 'B-' ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating, as well as all issue-level ratings, on Jacobs Entertainment Inc., and removed them from CreditWatch, where they were placed with negative implications on Nov. 13, 2008. The rating outlook is negative. In addition, S&P revised its recovery rating on Jacobs' senior unsecured notes to '4', indicating S&P's expectation of average (30% to 50%) recovery for lenders in the event of a payment default, from '3'. The issue-level rating on the notes was affirmed at 'B-' (the same level as the 'B-' corporate credit rating). "The affirmation of the 'B-' corporate credit rating reflects the recent execution of an amendment to Jacobs' senior secured credit facility," explained Standard & Poor's credit analyst Ariel Silverberg. "The previous CreditWatch listing was based on S&P's expectation that the company would violate its net senior secured debt to EBITDA covenant in the first quarter of 2009, as well as the uncertainty as to how lenders would respond to a covenant violation in the current environment. While S&P has now removed the rating from CreditWatch, the negative rating outlook reflects S&P's concern that Jacobs could violate its net total debt to EBITDA and EBITDA coverage of cash interest covenants in the second half of 2009." S&P's projections factor in an expectation that EBITDA will fall in the low-teens percentage area in the first half of 2009 year over year, primarily due to continued weakness in the economy. While S&P expects year-over-year declines to moderate somewhat by the second half of 2009, in part due to the expected benefits from legislation changes in Colorado (which allow for increased betting limits, expanded hours of operations, and for the introduction of craps and roulette), S&P anticipates the full-year 2009 EBITDA drop to be in the low-teens percentage area, resulting in adjusted debt to EBITDA to track towards the high-6x area by the end of 2009. The recent amendment provides relief to the net senior secured debt to EBITDA covenant. Terms of the amendment include a widening of the aforementioned covenant, a change in the definition of consolidated EBITDA to allow for the add-back of certain one-time expenses, and an increase in pricing by 25 basis points on the senior secured facilities. The 'B-' rating reflects the company's high debt levels, active growth strategy, and second-tier casinos. The company's geographic diversity mildly tempers these factors. While Jacobs has not yet publicly released its fiscal year-end (Dec. 31, 2008) financial statements, S&P expects adjusted debt to EBITDA and EBITDA interest coverage were around 6.0x and in the high-1x area, respectively. Given S&P's expectations for operating performance, S&P expects these measures to weaken through 2009. KEYSTONE AUTOMOTIVE: Weak Credit Metrics Cue Moody's Junk Ratings ----------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family and Probability of Default of Keystone Automotive Operations, Inc. to Caa2 from B3. Concurrently, Moody's also lowered the ratings of the company's senior secured term loan to Caa1 from B2, and its guaranteed senior subordinated notes to Caa3 from Caa2. The outlook remains negative. These rating actions reflect further deterioration in Keystone's already weak credit metrics. Moody's anticipates the negative trend will likely persist into 2009. The deterioration is in part attributable to the dramatic volume decline in automobile sales in North America, particularly in the truck and SUV segments. In addition, revenues and EBIT margin for Keystone's aftermarket specialty equipment have also been hurt by the low consumer spending on discretionary items. As of September 27, 2008, Keystone's debt/EBITDA was approximately 8.5x, EBIT/Interest was around 0.6x and free cash flow negative, all are expected to further deteriorate considerably in the next 6-12 months. Although the magnitude of the revenue decline of Keystone has been generally less than the same of the new car sales volume reduction in North America, a large part of its business is directly linked to the new car sales which experienced a precipitous drop in 2008 of approximately 19%. "We now expect the new car sales in North America would remain sluggish in 2009." Stated Moody's analyst John Zhao. Therefore, Keystone's top line could face significant pressure, resulting in a sharp decline in EBIT due to its high operating leverage. While Keystone benefits from its breadth and depth of its product mix as well as its broad customer base, most of these products are specialty discretionary items, demand of which is subject to significant subsidence as the consumer confidence remains at historic low. "Per Moody's estimate, Keystone's operating profit could continue to erode in the medium term, and leverage could rise above 10 times," Added Zhao. "At this level of leverage, the bond holders of the $175 million subordinated notes would likely experience significant losses in a distressed scenario." Moody's however, expects the company would likely maintain adequate liquidity in the near term, underpinned by its covenant- lite asset-based revolving credit facility and minimal near-term maturity. However, Moody's cautions the possibility of erosion of its borrowing base availability in the future if the company fails to manage its working capital effectively in tandem with an anticipated sales decline. The negative outlook reflects Moody's continuing concern that Keystone's operating performance and cash flow could come under further pressure. The company's performance also remains vulnerable to further erosion in the truck and SUV markets and increasing competitive pricing in its markets. A key element in Keystone's ability to contend with these challenges is to adjust its cost structure quickly to sustain its operating profit. Ratings lowered: -- Corporate Family Rating, to Caa2, from B3 -- Probability of Default Rating, to Caa2, from B3 -- Senior secured term loan to Caa1 (LGD3 37%) from B2 (LGD3 39%) -- Guaranteed senior subordinated unsecured notes due 2013, to Caa3 (LGD6 96%) from Caa2 (LGD5 85%) The $125 million secured asset based revolving credit facility is not rated by Moody's. The last rating action for Keystone was on June 6, 2007 when the CFR was downgraded to B3 from B2 with negative outlook. Keystone, headquartered in Exeter, Pennsylvania, competes as a leading distributor in the specialty accessories and equipment segment of the broader automotive aftermarket equipment industry. Keystone's specialty products are used by consumers to improve the performance, functionality, and appearance of their vehicles. Keystone is presently the dominant player in the Northeast, with a strong presence as well in the Midwest, the Southeast, and Canada. With annual revenues of approximate $588 million, Keystone is majority-owned by Bain Capital. LEHMAN BROTHERS FINANCE: Voluntary Chapter 15 Case Summary ---------------------------------------------------------- Chapter 15 Debtor: Lehman Brothers Finance AG aka Lehman Brothers Finance SA Talstrasse 82, 8001 Zurich, Switzerland Chapter 15 Case No.: 09-10583 Debtor-affiliate filing separate Chapter 15 petitions on Oct. 3, 2008: Entity Case No. ------ -------- Lehman Brothers Finance SA 08-13887 Type of Business: The Debtors provide investment banking services to institutional, corporate, government, and individual clients. Lehman Brothers Finance AG operates as a subsidiary of Lehman Brothers Inc. Chapter 15 Petition Date: February 20, 2009 Court: Southern District of New York (Manhattan) Chapter 15 Petitioner's Counsel: Michael A. Rosenthal, Esq. mrosenthal@gibsondunn.com Gibson, Dunn & Crutcher LLP 200 Park Avenue, 47th Floor New York, NY 10166 Tel: (212) 351-4000 Fax: (212) 351-4035 Estimated Assets: More than $1 billion Estimated Debts: More than $1 billion LEHMAN BROTHERS: Two Units' Chapter 11 Case Summary --------------------------------------------------- Debtor: Lehman Brothers Holdings Inc. 745 Seventh Avenue New York, NY 10019 Bankruptcy Case No.: 08-13555 Type of Business: The Debtor is an investment bank. The company serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers is involved in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The company operates in three segments: Capital Markets, Investment Banking, and Investment Management. It has regional headquarters in London and Tokyo, and operates in a network of offices around the world. It has about 28,000 full- time employees. See: http://www.lehman.com/ Debtor-affiliates filing separate Chapter 11 petitions Feb. 11, 2009: Entity Case No. ------ -------- Structured Asset Securities Corporation 09-10558 LB Rose Ranch LLC 09-10560 Debtor-affiliates filing separate Chapter 11 petitions Sep. 15, 2008: Entity Case No. ------ -------- LB 745 LLC 08-13600 PAMI Statler Arms LLC 08-13664 Lehman Brothers Commodity Services Inc. 08-13885 Lehman Brothers Finance SA 08-13887 Lehman Brothers Special Financing Inc. 08-13888 Lehman Brothers Derivative Products Inc. 08-13899 Lehman Commercial Paper Inc. 08-13900 Lehman Brothers Commercial Corporation 08-13901 Lehman Brothers Financial Products Inc. 08-13902 Fundo de Investimento Multimercado Credito Privado 08-13903 Lehman Scottish Finance L.P. 08-13904 CES Aviation LLC 08-13905 CES Aviation V LLC 08-13906 CES Aviation IX LLC 08-13907 East Dover Limited 08-13908 Court: Southern District of New York (Manhattan) Debtor's Counsel: Harvey R. Miller, Esq. harvey.miller@weil.com Richard P. Krasnow, Esq. Lori R. Fife, Esq. Shai Y. Waisman, Esq. Jacqueline Marcus, Esq. Weil, Gotshal & Manges, LLP 767 Fifth Avenue New York, NY 10153 Tel: (212) 310-8000 Fax: (212) 310-8007 http://www.weil.com/ Total Assets Total Debts ------------ ----------- Lehman Brothers $639 billion $613 billion LB 745 More than $1 billion More than $1 billion Lehman Brothers More than $1 billion More than $1 billion Commodity Lehman Brothers More than $1 billion More than $1 billion Finance Lehman Brothers More than $1 billion More than $1 billion Special Lehman Brothers More than $1 billion More than $1 billion Derivative Lehman Commercial More than $1 billion More than $1 billion Paper Lehman Brothers More than $1 billion More than $1 billion Commercial Lehman Brothers More than $1 billion More than $1 billion Financial Fundo de More than $1 billion More than $1 billion Investimento Lehman Scottish More than $1 billion More than $1 billion Finance CES Aviation More than $1 billion More than $1 billion LLC CES Aviation More than $1 billion More than $1 billion V LLC CES Aviation More than $1 billion More than $1 billion IX LLC East Dover More than $1 billion More than $1 billion Limited PAMI Statler $20 million $38 million A. Lehman Brothers' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Citibank, N.A., as indenture bond debt $138,000,000,000 trustee, and The Bank of New York Mellon Corporation (with respect to the Euro Medium Term Notes only, as indenture trustee, under the Lehman Brothers Holdings. Senior Notes. Citibank, N.A. 399 Park Avenue New York, NY 10043 Attn: Wafaa Orfy Tel: (800) 422-2066 Fax: (212) 816-5773 The Bank of New York One Canada Square Canary Wharf, London E14 5AL Attn: Raymond Morison Tel: 44-207-964-8800 The Bank of New York bond debt $15,000,000,000 Mellon Corporation, as indenture trustee under the Lehman Brothers Holdings Inc. subordinated debt. The Bank of New York Mellon Corporation 101 Barclay Street New York, NY 10286 Attn: Chris O'Mahoney Tel: (212) 815-4107 Fax: (212) 815-4000 AOZORA bank loan $463,000,000 1-3-1 Kudan-Minami Chiyoda-ku, Tokyo 102-8660 Tel: 81-3-5212-9631 Fax: 81-3-3265-9810 Mizuho Corporate Bank Ltd. bank loan $289,000,000 Global Syndicated Financi Division 1-3-3, Marunochi, Chiyoda-ku Tokyo, Japan 100-8210 Timothy White Managing Director - Head of Originations Corporate and Investment Bank Department 1251 Avenue of the Americas 32nd floor New York, NY 10020-1104 Tel: (212) 282-3360 Fax: (212) 282-4487 Citibank N.A. Hong Kong bank loan $275,000,000 Branch Financial Institutions Group Asia Pacific 44f Citibank Tower 3 Garden Rd. Central Hong Kong Michael Mauerstein MD - FIG 388 Greenwich Street New York, NY 10013 Tel: (212) 816-3431 BNP Paribas bank loan $250,000,000 787 7th Avenue New York, NY 10019 Tel: (212) 841-2084 Shinesi Bank Ltd. bank loan $231,000,000 1-8, Uchisaiwaicho 2- Chome Chiyoda-ku, Tokyo 100-8501 Tel: 81-3-5511-5377 Fax: 81-3-4560-2834 UFJ bank Limited bank loan $185,000,000 2-7-1, Marunouchi Chiyoda-ku, TKY 100-8388 Stephen Small vice president head of financial institutions Bank of Tokyo-Mitsubishi UFJ Trust Company 1251 Avenue of the Americas New York, New York 10020-1104 Tel: (212) 782-4352 Fax: (212) 782-6445 Sumitomo Mitsubishi bank loan $177,000,000 Bank Corp. 13-6 Nihobashi- Kodenma-Cho, Chuo-ku, Tokyo, 103-0001 Yas Imai Senior Vice President Head of Financial Institution Group Sumitomo Mistui Banking Corporation 277 Park Avenue New York, NY 10172 Tel: (212) 224-4031 Fax: (212) 224-4384 Svenska Handelsbanken letter of credit $140,610,543 153 E. 53rd St., 37th floor New York, NY 10022 Tel: (212) 258,9487 KBC Bank letter of credit $100,000,000 125 W. 55th St. New York, NY 10019 Tel: (212) 258-9487 Mizuho Corporate Bank Ltd. bank loan $93,000,000 1-3-3, Marunouchi Chiyoda-ku, TKY 100-8219 Timothy White Managing Director - Head of Originations Corporate and Investment Bank Department 1251 Avenue of the Americas 32nd floor New York, NY 10020-1104 Tel: (212) 282-3360 Shinkin Central Bank bank loan $93,000,000 8-1, Kyobashi 3-Chome Chuo-ku, Tokyo 104-0031 Shuji Yamada Deputy General Manager Financial Institution Dept. Shinkin Central Bank 3-7, Yaesu 1-chome, Chuo-ku Tokyo 104-0028 Tel: 81-3-5202-7679 Fax: 81-3-3278-7051 The Bank of Nova Scotia bank loan $93,000,000 Singapore Branch 1 Raffles Quay #201-01 One Raffles Quay North Tower Singapore 0485583 George Neofitidis Director Financial Institutions Group One Liberty Plaza New York, NY 10006 Tel: (212) 225-5379 Fax: (212) 225-5254 Chuo Mitsui Trust & Banking bank loan $93,000,000 3-33-1 Shiba, Minato-ku, Tokyo, 105-0014 Tel: 81-3-5232-8953 Fax: 81-3-5232-8981 Lloyds Bank letter of credit $75,381,654 1251 Avenue of the Americas 39th Floor P.O. Box 4873 New York, NY 10163 Tel: (212) 930-8967 Fax: (212) 930-5098 Hua Nan Commercial Bank bank loan $59,000,000 Ltd. 38 Chung-King South Road Section 1 Taipei, Taiwan Bank of China bank loan $50,000,000 New York Branch 410 Madison Avenue New York, NY 10017 Tel: (212) 936-3101 Fax: (212) 758-3824 Nippon Life Insurance Co. bank loan $46,000,000 1-6-6, Marunouchi, Chiyoda-ku, Tokyo 100-8288 Takayuki Murai Deputy General Manager Corporate Finance Dept. #1 Nippon Life Insurance Co. Tel: 81-3-5533-9814 Fax: 81-3-5533-5208 ANZ Banking Group bank loan $44,000,000 Limited 18th Floor Kyobo Building 1 Chongro 1 Ku, Chongro Ka, Seoul, Korea Michael Halevi Director, Financial Institutions ANZ Banking Group 1177 Avenue of Americas New York, NY 10036 Tel: (212) 810-9871 Fax: (212) 801-9715 Standard Chartered Bank bank loan $41,000,000 One Madison Avenue New York, NY 10010-3603 Bill Hughes SVP-FIG Standard Chartered bank One Madison Avenue New York, NY 10010-3603 Tel: (212) 667-0355 Fax: (212) 667-0273 Standard Chartered Bank letter of credit $36,114,000 One Madison Avenue New York, NY 10010-3603 Bill Hughes SVP-FIG Standard Chartered bank One Madison Avenue New York, NY 10010-3603 Tel: (212) 667-0355 Fax: (212) 667-0273 First Commercial Bank bank loan $25,000,000 Co. Ltd. New York Agency 750 3rd Avenue, 34th Floor New York, NY 10017 Jason C. Lee Deputy General Manager First Commercial Bank Co. Ltd. New York Agency 750 3rd Avenue, 34th Floor New York, NY 10017 Tel: (212) 599-6868 Fax: (212) 599-6133 Bank of Taiwan bank loan $25,000,000 New York Agency 100 Wall Street, 11th Floor New York, NY 1005 Eunice S.J. Yeh Senior Vice President & General Manager 100 Wall Street, 11th floor New York, NY 10005 Tel: (212) 968-0580 Fax: (212) 968-8370 DnB NOR Bank ASA bank loan $25,000,000 NO-0021, Olso, Norway Stranden 21, Aker Brygge Tel: 47 22 9487 46 Fax: 47 22 48 29 84 Australia and New Zealand bank loan $25,000,000 Banking Group Limited Melbourne Office Level 6, 100 Queen Street Victoria Melbourne, VIC 3000 Australia Michael Halevi Director, Financial Institutions ANZ Banking Group 1177 Avenue of Americas New York, NY 10036 Tel: (212) 810-9871 Fax: (212) 801-9715 Australia National Bank letter of credit $12,588,235 1177 Avenue of the Americas, 6th Floor New York, NY 10036 Michael Halevi Director, Financial Institutions ANZ Banking Group 1177 Avenue of Americas New York, NY 10036 Tel: (212) 810-9871 Fax: (212) 801-9715 National Australia Bank letter of credit $10,294,163 245 Park Avenue, 28th Fl. New York, NY 10167 Michael Halevi Director, Financial Institutions ANZ Banking Group 1177 Avenue of Americas New York, NY 10036 Tel: (212) 810-9871 Fax: (212) 801-9715 Taipei Fubon Bank, New bank loan $10,000,000 York Agency 100 Wall Street, 14th floor NY NY 10005 Tel: (212) 968-9888 Fax: (212) 968-9800 B. LB 745's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rocky-Forty-Ninth LLC ground lease $0 c/o The Rockefeller Group 1221 Avenue of the Americas New York, NY 10020 C. PAMI Statler's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Steingass trade debt $76,372 754 Progress Drive Medina, OH 44256 Statler Arms Garage LLC litigation $50,000 1111 Euclid Ave. claim Cleveland, OH 44115 Illuminating trade debt $40,182 P.O. Box 3638 Akron, OH 44309 TD Security trade debt $19,795 P.O. Box 81357 Cleveland, OH 44181 Marble Care trade debt $16,270 5184 Richmond Rd Cleveland, OH 44146 IGS trade debt $13,901 P.O. Box 631919 Cincinnati, OH WCCV trade debt $13,598 3479 State Rd. Cuyahoga Falls, OH 44223 Demann trade debt $9,350 16919 Walden Cleveland, OH 44128 Dominion trade debt $5,335 P.O. Box 26225 Richmond, VA 23260 Midwest Realty Advisors, LLC trade debt $5,000 37848 Euclid Avenue Willoughby, OH 44094 RMC trade debt $3,340 P.O. Box 31315 Rochester, NY 14603 Republic Waste trade debt $3,338 P.O. Box 9001826 Louisville, KY 40290 Division Water trade debt $3,124 P.O. Box 94540 Cleveland, OH 44101 NorthEast trade debt $3,088 P.O. Box 9260 Akron, OH 44305 Time Warner trade debt $2,831 P.O. Box 0901 Carol Stream, IL 60132 Best Karpet trade debt $2,689 1477 E 357 street EastLake, OH 44095 AT&T trade debt $2,232 P.O. 8100 Aurora, IL 60507 Account Temps trade debt $2,087 12400 Collections Drive Chicago, IL 60693 Rentokil trade debt $1,742 8001 Sweet Valley Dr Valleyview, OH 44125 LINEAR TECHNOLOGY: Issues Revised Fiscal Q2 2009 Results -------------------------------------------------------- Linear Technology Corporation (NASDAQ-LLTC) disclosed on February 6, 2009, that its previously reported results for the second quarter of fiscal 2009 ended December 28, 2008, have been revised to exclude a non-cash charge of $15.0 million pertaining to accelerating the vesting of stock options for 1.4 million shares representing all of the "out-of-the-money" stock options previously awarded to it's non-officer and non-director employees under its stock option plans. The effect of this change in the Consolidated Statements of Income for the second quarter and the first six-month period of fiscal year 2009 was to increase GAAP operating income by $15.0 million, GAAP net income by $11.0 million and to increase GAAP diluted earnings per share by $0.05. For the reconciliation between the previously announced results on January 13, 2009, and the revised results, for the impact to the Consolidated Condensed Balance Sheets. The revised results are included in the Company's Quarterly Report on Form 10- Q for the quarterly period ended December 28, 2008, filed on February 6, a full-text copy of which is available for free at: http://researcharchives.com/t/s?395f In the Company's press release dated January 13, 2009, the Company announced its quarterly results for the second quarter ended December 28, 2008. While in the process of performing quarterly review procedures in accordance with Statement on Auditing Standard No. 100, the Company's independent registered public accounting firm had not taken exception to the Company's accounting and disclosure of its treatment of the acceleration of stock options prior to the issuance of the Company's press release. In its release the Company stated that "The Company accelerated the vesting of all "out-of-the-money" stock options previously awarded to its non-officer and non-director employees under its stock option plans. The unvested options to purchase approximately 1.4 million shares became exercisable as a result of the vesting acceleration on December 17, 2008. The additional non-cash charge to the income statement as a result of the acceleration totaled $15.0 million. This incremental charge increased Cost of Sales by $2.3 million; Research and Development expense by $7.5 million; and Selling, General and Administrative expense by $5.2 million." Subsequent to the issuance of the press release and prior to the completion of its SAS 100 review of the second fiscal quarter ended December 28, 2008, the Company's independent registered public accounting firm informed the Company that it believed the Company's accounting treatment for the option acceleration did not comply with SFAS No. 123(R), "Share-Based Payment." The Company has been advised by its independent registered public accounting firm that it and other large registered public accounting firms are jointly in the process of seeking the views of the staff of the Securities and Exchange Commission with respect to the application of certain provisions of FAS123(R), specifically to treatment of accelerating the vesting of "out-of- the-money" stock options. The company understands that the meeting between the SEC and the Company's independent registered public accounting firm, as well as the other large registered public accounting firms, is occurring to provide clarity in the application of these certain provisions. The Company has nevertheless decided not to wait for the SEC's decision as the Company has chosen to file its Form 10-Q within the legal deadline of 40 calendar days. Accordingly, the Company has revised its second quarter fiscal 2009 results to eliminate the $15.0 million non-cash charge related to these options. The $15.0 million charge will now be recognized over the next 2.5 years. As a result of this change, the non-cash charge for all stock-based compensation was approximately $14.7 million in the just completed second fiscal quarter and is estimated to approximate $18 million in the current March quarter. As of December 28, 2008, the company's balance sheet showed total assets of $1,493,538,000 and total liabilities of $1,803,149,000, resulting in total stockholders' deficit of $309,611,000. About Linear Technology Headquartered in Milpitas, California, Linear Technology Corporation (NasdaqGS: LLTC) -- http://www.linear.com/-- is a manufacturer of linear integrated circuits. Linear Technology products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, DC-DC converters, battery chargers, data converters, communications interface circuits, RF signal conditioning circuits, uModule(TM) products, and many other analog functions. Applications for Linear Technology' high performance circuits include telecommunications, cellular telephones, networking products such as optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products such as digital cameras and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems. LATHAM MANUFACTURING: Moody's Withdraws 'Caa1' Ratings ------------------------------------------------------ Moody's Investors Service has withdrawn all ratings on Latham Manufacturing Corporation for business reasons. These ratings were withdrawn: -- Corporate Family Rating of Caa1; -- Probability of Default Rating of Caa1; -- Senior secured revolving credit facility of B3 (LGD3/42%); and -- Senior secured term loan of B3 (LGD3/42%). The last rating action was on December 23, 2008 when the ratings of Latham were downgraded to Caa1 from B3. Based in Latham, New York, Latham is one of the largest manufacturers of swimming pool components and pool accessories in North America. LYONDELLBASSEL: Acceleration of 2015 Notes Could Cue Bankruptcy --------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York has entered a temporary restraining order against any creditor of Lyondell Chemical Company or its co-debtor affiliates and subsidiaries from proceeding against LyondellBasell Industries AF S.C.A. pursuant to guaranty agreements entered into by LyondellBasell Industries AF S.C.A. with such creditors. The temporary restraining order also restrains holders of record and beneficial owners of the EUR500 million and $615 million 8-3/8% Senior Notes due 2015 issued by LyondellBasell Industries AF S.C.A. from, among other things, taking any action to accelerate the maturity of such notes. Lyondell Chemical's filing for Chapter 11 automatically stayed lawsuits against the Debtors. However, LyondellBasell Industries and its certain European affiliates have not filed for Chapter 11. Involuntary Insolvency In its request for injunction, Lyondell Chemical told the Court that allowing the noteholders to accelerate all amounts outstanding under the notes, could precipitate an involuntary insolvency proceeding against LBIAF, which in turn will cause a default under its debtor-in-possession financing. Pursuant to an indenture, dated as of August 10, 2005, Nell AF S.A.R.L., the predecessor in interest to LBIAF, issued $615,000,000 and EUR500,000,000 of 8-3/8% senior notes due 2015. The 2015 Notes are guaranteed on a senior subordinated basis by certain of LBIAF's subsidiaries. A preliminary injunction is necessary to stay the indenture trustee for the 2015 Notes and all holders of record and beneficial holders of such notes, and all persons or entities acting in concert with any of them, from taking action against LBIAF or its non-debtor affiliate guarantors with respect to the 2015 Notes, asserts David Peterson, Esq., at Susman Godfrey L.L.P., in Houston, Texas. Mr. Peterson explains that the Debtors' bankruptcy filing triggered an event of default under the 2015 Indenture; upon an event of default, the indenture trustee or the holders of 25% or more of the 2015 Notes have the right to declare all principal and accrued interest to be due and payable and the trustee may exercise or direct the exercise of certain remedies against LBIAF. Under the terms of the 2015 Indenture and pursuant to an intercreditor agreement with the Debtors' senior creditors and the 2015 Noteholders, the 2015 Noteholders are subject to certain limitations on payment, and enforcing their rights against the 2015 Guarantors, although not against LBIAF. Upon notification of a default under the 2015 Notes, the 2015 Noteholders and indenture trustee may only take enforcement action in respect of the guarantees after the passage of a period of time (179 days) or the occurrence of certain events. According to a January 15, 2009 article in Debt Service Wire, certain holders of the 2015 Notes also hold credit default swaps as a hedge on the 2015 Notes and are allegedly attempting to gather holders of 25% in amount of the 2015 Notes and accelerate the 2015 Notes in order to trigger a payout under the 2015 CDS. Mr. Peterson explains that acceleration of the 2015 Notes may force LBIAF to commence a restructuring proceeding. Additionally, it is possible that due to an acceleration of the 2015 Notes, certain holders of the 2015 Notes could attempt to commence an involuntary bankruptcy proceeding against LBIAF in Luxembourg, the Netherlands or elsewhere. He avers that a filing by or against LBIAF would be disastrous to the Debtors' reorganization efforts because, among other reasons, the commencement of an involuntary insolvency proceeding against LBIAF would constitute a default under both the Debtors' postpetition financing facility and the Debtors' forbearance agreements with their prepetition senior secured and bridge lenders. "In short, allowing the 2015 Noteholders to take any act to accelerate the maturity of or otherwise enforce any rights in respect of the 2015 Notes could imperil the Debtors' chances of successfully reorganizing and thus irreparably harm the Debtors at a very early stage in the chapter 11 cases," Mr. Peterson concludes. "Accordingly, as a necessary measure that would serve the best interests of the Debtors' estates and creditors, the Court should enjoin the exercise of contractual or legal remedies against LBIAF or its non-debtor subsidiaries with respect to the 2015 Notes until confirmation of a plan of reorganization in these cases." Holders of 2015 Notes The entities believed by the Debtors to be holders of record or beneficial holders of the 2015 Notes are: Advantus Capital Management Inc.; AEGON Asset Management NV (Netherlands); AEGON USA Investment Management LLC; AllianceBernstein LP; American Money Management Corp.; Amerisure Insurance; Analytic Investors LLC; Banc of America Securities Ltd.; Barclays Fixed Income; Barclays Global Investors; Bawag PSK Invest GmbH; BlackRock Financial Management Inc.; Blue Cross Blue Shield of Michigan; BlueMountain Capital Management; BNY Mellon Private Wealth; BOA Securities Ltd.; California STRS; Clearstream Banking; City National Bank; Cominvest Asset Management GmbH; Cr�dit Suisse Asset Management Americas; CS Securities LLC; CS Securities (Europe) Limited; CS Securities (Switzerland) LLC; DBAG London Global; Delaware Investment Advisers; Deutsche Asset Management (DeAM); Deutsche Bank Securities; Employers Insurance Co. of Nevada Inc.; Eurizon Capital SGR SpA; Euroclear SA; F&C Asset Management plc; Federated Investors Inc.; Fidelity Management & Research Co.; Fifth Third Asset Management; Fort Washington Investment Advisors Inc.; Fortis Investment Management SA (Luxembourg); GE Asset Management; Goldman Sachs Asset Management LP; Greenwich Street Advisors; Henderson Global Investors Limited; HSBC Global Asset Management (UK) Limited; Hugheson Limited; ING Investment Management LLC; Jones Heward Investment Counsel Inc.; JP Morgan Clearing Corp.; The Lafayette Life Insurance Co.; Legg Mason Partners Fund Advisor LLC; Liberty Mutual Insurance Co.; Loomis, Sayles & Co., LP; M&G Investment Management Ltd.; Mediolanum Asset Management Limited; Metzler Investment GmbH; MFC Global Investment Management (US) LLC; The Midland Co.; Morgan Stanley Investment Management Inc.; Mutual of America Capital Management Corp.; Mutual of Omaha Insurance Co.; Nationwide Insurance Co. (Office of Investments); New Jersey Division of Investments; New York Life Investment Management LLC; NOBO & Retail Accounts; Nomura Asset Management Co., Ltd.; Nomura Corporate Research & Asset Management; Northern Trust Investments NA; Ohio PERS; Ohio STRS; Pioneer Investment Management (Ireland) Ltd.; Pioneer Investment Management Inc.; PPM America Inc.; Provident Investment Counsel Inc.; Prudential Investment Management-Fixed Income; Pyramis Global Advisors LLC; Sankaty Advisors LLC; Standish Mellon Asset Management Co., LLC; State Street Global Advisors (SSgA); Stichting Pensioenfonds ABP; Stone Harbor Investment Partners LP; STW Fixed Income Management; Teacher Retirement System of Texas; Teachers Advisors Inc.; UBS AG; USAA Investment Management Co.; Wells Capital Management; Western Asset Management Co. (WAMCO); White Mountains Advisors LLC. Injunction Hearing on Friday in Manhattan A hearing will be held on the motion for preliminary injunctive relief on Friday, February 13, 2009 at 9:45 a.m. before the Honorable Robert E. Gerber, United States Bankruptcy Judge, at the United States Bankruptcy Court for the Southern District of New York, Courtroom 621, One Bowling Green, New York, New York 10004. Any objections to the motion for preliminary injunction must be received no later than 12:00 p.m. on Thursday, February 12, 2009 by the Bankruptcy Court and filed electronically in accordance with General Order M-242. Objections must also be served on i) Susman Godfrey L.L.P., proposed attorneys for the Debtors, 1000 Louisiana Street, Suite 5100, Houston, Texas 77002 (Attn: Vineet Bhatia, Esq. and David Peterson); (ii) Cadwalader, Wickersham & Taft LLP, proposed attorneys for the Debtors, One World Financial Center, New York, New York 10281 (Attn: Deryck A. Palmer, Esq. and Jessica L. Fink, Esq.); (iii) the Office of the United States Trustee for the Southern District of New York, 33 Whitehall Street, New York, New York 10004 (Attn: Paul Schwartzberg, Esq.); (iv) Davis, Polk & Wardwell, attorneys for the agents for the Debtors' postpetition credit facilities, 450 Lexington Avenue, New York, New York 10017 (Attn: Marshall S. Huebner, Esq. and Timothy E. Graulich, Esq.); (v) Simpson Thacher & Bartlett LLP, attorneys for UBS AG, Stamford Branch, as Term DIP Agent, 425 Lexington Avenue, New York, New York, 10017 (Attn: Kathrine A. McLendon and Anne L. Knight); (vi) Brown Rudnick LLP, proposed attorneys for the Official Committee of Unsecured Creditors, Seven Times Square, New York, New York 10036 (Attn: Edward S. Weisfelner, Esq.) and Brown Rudnick LLP, One Financial Center, Boston, Massachusetts 02111 (Attn: Steven D. Pohl, Esq.); and (vii) Mayer Brown LLP, attorneys for the agents for the Debtors' postpetition credit facilities, 1675 Broadway, New York, New York 10019 (Attn: Brian Trust, Esq.). A copy of the temporary restraining order and other relevant documents may be found at: http://chapter11.epiqsystems.com/lyondellbasellindustries About LyondellBassell Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Gets TRO on Noteholders Action vs. Parent ------------------------------------------------------------ The United States Bankruptcy Court for the Southern District of New York has entered a temporary restraining order against any creditor of Lyondell Chemical Company or its co-debtor affiliates and subsidiaries from proceeding against LyondellBasell Industries AF S.C.A. pursuant to guaranty agreements entered into by LyondellBasell Industries AF S.C.A. with such creditors. The temporary restraining order also restrains holders of record and beneficial owners of the EUR500 million and $615 million 8-3/8% Senior Notes due 2015 issued by LyondellBasell Industries AF S.C.A. from, among other things, taking any action to accelerate the maturity of such notes. Lyondell Chemical's filing for Chapter 11 automatically stayed lawsuits against the Debtors. However, LyondellBasell Industries and its certain European affiliates have not filed for Chapter 11. Involuntary Insolvency In its request for injunction, Lyondell Chemical told the Court that allowing the noteholders to accelerate all amounts outstanding under the notes, could precipitate an involuntary insolvency proceeding against LBIAF, which in turn will cause a default under its debtor-in-possession financing. Pursuant to an indenture, dated as of August 10, 2005, Nell AF S.A.R.L., the predecessor in interest to LBIAF, issued $615,000,000 and EUR500,000,000 of 8-3/8% senior notes due 2015. The 2015 Notes are guaranteed on a senior subordinated basis by certain of LBIAF's subsidiaries. A preliminary injunction is necessary to stay the indenture trustee for the 2015 Notes and all holders of record and beneficial holders of such notes, and all persons or entities acting in concert with any of them, from taking action against LBIAF or its non-debtor affiliate guarantors with respect to the 2015 Notes, asserts David Peterson, Esq., at Susman Godfrey L.L.P., in Houston, Texas. Mr. Peterson explains that the Debtors' bankruptcy filing triggered an event of default under the 2015 Indenture; upon an event of default, the indenture trustee or the holders of 25% or more of the 2015 Notes have the right to declare all principal and accrued interest to be due and payable and the trustee may exercise or direct the exercise of certain remedies against LBIAF. Under the terms of the 2015 Indenture and pursuant to an intercreditor agreement with the Debtors' senior creditors and the 2015 Noteholders, the 2015 Noteholders are subject to certain limitations on payment, and enforcing their rights against the 2015 Guarantors, although not against LBIAF. Upon notification of a default under the 2015 Notes, the 2015 Noteholders and indenture trustee may only take enforcement action in respect of the guarantees after the passage of a period of time (179 days) or the occurrence of certain events. According to a January 15, 2009 article in Debt Service Wire, certain holders of the 2015 Notes also hold credit default swaps as a hedge on the 2015 Notes and are allegedly attempting to gather holders of 25% in amount of the 2015 Notes and accelerate the 2015 Notes in order to trigger a payout under the 2015 CDS. Mr. Peterson explains that acceleration of the 2015 Notes may force LBIAF to commence a restructuring proceeding. Additionally, it is possible that due to an acceleration of the 2015 Notes, certain holders of the 2015 Notes could attempt to commence an involuntary bankruptcy proceeding against LBIAF in Luxembourg, the Netherlands or elsewhere. He avers that a filing by or against LBIAF would be disastrous to the Debtors' reorganization efforts because, among other reasons, the commencement of an involuntary insolvency proceeding against LBIAF would constitute a default under both the Debtors' postpetition financing facility and the Debtors' forbearance agreements with their prepetition senior secured and bridge lenders. "In short, allowing the 2015 Noteholders to take any act to accelerate the maturity of or otherwise enforce any rights in respect of the 2015 Notes could imperil the Debtors' chances of successfully reorganizing and thus irreparably harm the Debtors at a very early stage in the chapter 11 cases," Mr. Peterson concludes. "Accordingly, as a necessary measure that would serve the best interests of the Debtors' estates and creditors, the Court should enjoin the exercise of contractual or legal remedies against LBIAF or its non-debtor subsidiaries with respect to the 2015 Notes until confirmation of a plan of reorganization in these cases." Holders of 2015 Notes The entities believed by the Debtors to be holders of record or beneficial holders of the 2015 Notes are: Advantus Capital Management Inc.; AEGON Asset Management NV (Netherlands); AEGON USA Investment Management LLC; AllianceBernstein LP; American Money Management Corp.; Amerisure Insurance; Analytic Investors LLC; Banc of America Securities Ltd.; Barclays Fixed Income; Barclays Global Investors; Bawag PSK Invest GmbH; BlackRock Financial Management Inc.; Blue Cross Blue Shield of Michigan; BlueMountain Capital Management; BNY Mellon Private Wealth; BOA Securities Ltd.; California STRS; Clearstream Banking; City National Bank; Cominvest Asset Management GmbH; Cr�dit Suisse Asset Management Americas; CS Securities LLC; CS Securities (Europe) Limited; CS Securities (Switzerland) LLC; DBAG London Global; Delaware Investment Advisers; Deutsche Asset Management (DeAM); Deutsche Bank Securities; Employers Insurance Co. of Nevada Inc.; Eurizon Capital SGR SpA; Euroclear SA; F&C Asset Management plc; Federated Investors Inc.; Fidelity Management & Research Co.; Fifth Third Asset Management; Fort Washington Investment Advisors Inc.; Fortis Investment Management SA (Luxembourg); GE Asset Management; Goldman Sachs Asset Management LP; Greenwich Street Advisors; Henderson Global Investors Limited; HSBC Global Asset Management (UK) Limited; Hugheson Limited; ING Investment Management LLC; Jones Heward Investment Counsel Inc.; JP Morgan Clearing Corp.; The Lafayette Life Insurance Co.; Legg Mason Partners Fund Advisor LLC; Liberty Mutual Insurance Co.; Loomis, Sayles & Co., LP; M&G Investment Management Ltd.; Mediolanum Asset Management Limited; Metzler Investment GmbH; MFC Global Investment Management (US) LLC; The Midland Co.; Morgan Stanley Investment Management Inc.; Mutual of America Capital Management Corp.; Mutual of Omaha Insurance Co.; Nationwide Insurance Co. (Office of Investments); New Jersey Division of Investments; New York Life Investment Management LLC; NOBO & Retail Accounts; Nomura Asset Management Co., Ltd.; Nomura Corporate Research & Asset Management; Northern Trust Investments NA; Ohio PERS; Ohio STRS; Pioneer Investment Management (Ireland) Ltd.; Pioneer Investment Management Inc.; PPM America Inc.; Provident Investment Counsel Inc.; Prudential Investment Management-Fixed Income; Pyramis Global Advisors LLC; Sankaty Advisors LLC; Standish Mellon Asset Management Co., LLC; State Street Global Advisors (SSgA); Stichting Pensioenfonds ABP; Stone Harbor Investment Partners LP; STW Fixed Income Management; Teacher Retirement System of Texas; Teachers Advisors Inc.; UBS AG; USAA Investment Management Co.; Wells Capital Management; Western Asset Management Co. (WAMCO); White Mountains Advisors LLC. Injunction Hearing on Friday in Manhattan A hearing will be held on the motion for preliminary injunctive relief on Friday, February 13, 2009 at 9:45 a.m. before the Honorable Robert E. Gerber, United States Bankruptcy Judge, at the United States Bankruptcy Court for the Southern District of New York, Courtroom 621, One Bowling Green, New York, New York 10004. Any objections to the motion for preliminary injunction must be received no later than 12:00 p.m. on Thursday, February 12, 2009 by the Bankruptcy Court and filed electronically in accordance with General Order M-242. Objections must also be served on i) Susman Godfrey L.L.P., proposed attorneys for the Debtors, 1000 Louisiana Street, Suite 5100, Houston, Texas 77002 (Attn: Vineet Bhatia, Esq. and David Peterson); (ii) Cadwalader, Wickersham & Taft LLP, proposed attorneys for the Debtors, One World Financial Center, New York, New York 10281 (Attn: Deryck A. Palmer, Esq. and Jessica L. Fink, Esq.); (iii) the Office of the United States Trustee for the Southern District of New York, 33 Whitehall Street, New York, New York 10004 (Attn: Paul Schwartzberg, Esq.); (iv) Davis, Polk & Wardwell, attorneys for the agents for the Debtors' postpetition credit facilities, 450 Lexington Avenue, New York, New York 10017 (Attn: Marshall S. Huebner, Esq. and Timothy E. Graulich, Esq.); (v) Simpson Thacher & Bartlett LLP, attorneys for UBS AG, Stamford Branch, as Term DIP Agent, 425 Lexington Avenue, New York, New York, 10017 (Attn: Kathrine A. McLendon and Anne L. Knight); (vi) Brown Rudnick LLP, proposed attorneys for the Official Committee of Unsecured Creditors, Seven Times Square, New York, New York 10036 (Attn: Edward S. Weisfelner, Esq.) and Brown Rudnick LLP, One Financial Center, Boston, Massachusetts 02111 (Attn: Steven D. Pohl, Esq.); and (vii) Mayer Brown LLP, attorneys for the agents for the Debtors' postpetition credit facilities, 1675 Broadway, New York, New York 10019 (Attn: Brian Trust, Esq.). A copy of the temporary restraining order and other relevant documents may be found at: http://chapter11.epiqsystems.com/lyondellbasellindustries About Lyondell Chemical Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries -- http://www.lyondellbasell.com/-- the world's third largest independent chemical company. Lyondellbasell produces polypropylene and advanced polyolefins products, is a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. LyondellBasell is not part of the bankruptcy filing. LyondellBasell's non-U.S. operating entities are also not included in the Chapter 11 filing. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MCCLATCHY CO: Gets NYSE Non-Compliance Note As Stock Under $1 ------------------------------------------------------------- On February 4, 2009, The McClatchy Company was notified by the New York Stock Exchange that it is not in compliance with the NYSE's continued listing standards. The NYSE's Notice indicated that as of February 2, 2009, the Company's 30 trading-day average closing share price for its Class A Common Stock was $0.98, which was below the NYSE's quantitative listing standard requiring NYSE listed companies to have an average closing price of any listed security not below $1.00 per share for any consecutive 30 trading- day period. Under the applicable rules and regulations of the NYSE, the Company has 10 business days from the receipt of the Notice, or until February 19, 2009, to notify the NYSE of its intent to cure this deficiency. Under applicable rules and regulations of the NYSE regarding the Share Price Deficiency, the Company has six months from the date of the Notice to cure the Share Price Deficiency. If the Company is not compliant by that date, its Class A Common Stock will be subject to suspension and delisting by the NYSE. The Company is currently exploring alternatives for curing the Share Price Deficiency and restoring compliance with the continued listing standards and intends to notify the NYSE within the required 10-business day period that it intends to cure the deficiency. The Company's Class A Common Stock remains listed on the NYSE under the symbol "MNI," but will be assigned a ".BC" indicator by the NYSE so as to signify that the Company is not currently in compliance with the NYSE's continued quantitative listing standards. Although the Company intends to cure this deficiency and return to compliance with the NYSE continued listing requirements, there can be no assurance that it will be able to do so. About The McClatchy Company Headquartered in Sacramento, California, The McClatchy Company (NYSE: MNI) -- http://www.mcclatchy.com/-- is the third largest newspaper company in the United States, with 30 daily newspapers, approximately 50 non-dailies, and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City Star, the Charlotte Observer, and The (Raleigh) News & Observer. McClatchy also owns a portfolio of premium digital assets, including 14.4% of CareerBuilder, an online job site, and 25.6% of Classified Ventures, a newspaper industry partnership that offers the auto website, cars.com, and the rental site, apartments.com. * * * As reported by the Troubled Company Reporter on Sept. 19, 2008, Moody's Investors Service downgraded The McClatchy Company's Corporate Family and Probability of Default ratings to B2 from Ba3, the ratings on the senior unsecured notes to Caa1 from B1, and the rating on the guaranteed bank facility to Ba2 from Ba1. The rating outlook is negative. The downgrade reflects Moody's expectation that ongoing significant declines in advertising revenue will continue to pressure EBITDA -- leading to an increase in leverage and heightened risk of a credit facility covenant violation. Moody's anticipates McClatchy's free cash flow generation and the modest bank leverage will allow the company to obtain an amendment if necessary, but an increase in the interest rate spread and tighter non-financial covenants are likely to result, which would reduce financial flexibility. The TCR reported on Feb. 10, 2009, that Fitch Ratings downgraded the Issuer Default Rating and outstanding debt ratings of The McClatchy Company: -- Issuer Default Rating to 'CCC' from 'B-'; -- Senior secured credit facility to 'CCC/RR4' from 'B+/RR2'; -- Senior secured term loan to 'CCC/RR4' from 'B+/RR2'; -- Senior unsecured notes/debentures to 'C/RR6' from 'CCC/RR6'. There is no Rating Outlook assigned. Approximately $2.1 billion of debt is affected by the action. As of Sept. 28, 2008, the company's balance sheet showed total assets of $3.6 billion, total liabilities of $2.9 billion, and total stockholders' equity of $375.9 million. MCCLATCHY CO: Posts $21.7 Million Net Loss in 4th Quarter --------------------------------------------------------- The McClatchy Company reported on February 5, 2009, a net loss from continuing operations in the fourth quarter of 2008 of $20.4 million, or 25 cents per share, including a pre-tax non-cash impairment charge of $59.6 million related to newspaper mastheads. Adjusted earnings from continuing operations were $21.8 million, or 26 cents per share, in the fourth quarter of 2008 after excluding several unusual items. Total net loss including discontinued operations was $21.7 million, or 26 cents per share in the 2008 fourth quarter. Management conducted its annual impairment testing of goodwill and other long-lived assets as of the end of its fiscal year, December 28, 2008. Upon completion of that testing, the company recorded a pre-tax non-cash impairment charge of $59.6 million to newspaper mastheads. The company did not record an impairment charge related to goodwill in 2008. For the fourth quarter of 2007, the company reported an after-tax loss from continuing operations of $1.43 billion, or $17.42 per share, including the effect of non-cash after-tax impairment charges related to goodwill and newspaper mastheads of $1.47 billion, or $17.86 per share. Adjusted earnings from continuing operations were $36.1 million, or 44 cents per share, in the fourth quarter of 2007 after excluding the non-cash impairment charges. The company's total net loss, including the results of discontinued operations, was $1.43 billion, or $17.46 per share. Revenues in the fourth quarter of 2008 were $470.9 million, down 17.9% from revenues from continuing operations of $573.4 million in the fourth quarter of 2007. Advertising revenues were $388.3 million, down 20.7% from 2007, and circulation revenues were $67.0 million, up 1.4%. Online advertising revenues grew 10.3% in the fourth quarter of 2008 and were 10.9% of total advertising revenues compared to 7.8% of total advertising revenues in the fourth quarter of 2007. Using cash from operations and proceeds from asset sales, the company repaid $30 million of debt in the quarter and $433 million for all of 2008. Debt at the end of the fiscal year was $2.038 billion, down from $2.471 billion at the end of 2007. Restructuring Plan McClatchy noted that the duration and depth of the economic recession have taken a severe toll on its advertising revenues. Given the unprecedented deterioration in revenues and with no visibility of an improving economy, the company is continuing to reduce expenses. McClatchy announced that it is developing a plan to reduce costs by an additional $100 million to $110 million, or approximately seven percent of 2008 cash expenses, over the next 12 months beginning later in the first quarter of 2009. Details of the plan have not yet been finalized and as a result, costs to complete the plan are not yet known. In addition, the company will freeze its pension plans and temporarily suspend the company match to its 401(k) plans, effective March 31, 2009. The company will extend a salary freeze for senior executives in 2009 that was implemented in 2007. The company previously announced that it had implemented a company-wide salary freeze from September 2008 through September 2009. Gary Pruitt, McClatchy's chairman and chief executive officer, also has declined any bonus for 2008 and 2009. In addition, other senior executives will not receive bonuses for 2008. McClatchy will suspend its quarterly dividend after paying the first quarter 2009 dividend, which was declared on January 27, 2009, in order to preserve cash for debt repayment. The first quarter 2009 dividend of $.09 per share is half the per share dividend paid in the 2008 first quarter. Full Year Results Net income from continuing operations for fiscal 2008 was $2.8 million, or three cents per share, and was affected by the impact of the non-cash impairment charges and other unusual items. Adjusted earnings from continuing operations were $55.4 million, or 67 cents per share, in fiscal 2008. Total net income including discontinued operations was $1.4 million, or two cents per share. In addition to the impairment charges previously noted, results in 2008 included the impact of several unusual items including: a gain on the sale of a one-third interest in SP Newsprint Company; a gain on the extinguishment of debt; write-offs of deferred financing costs as a result of amendments to the company's credit agreement; charges related to the implementation of previously announced restructuring plans; the write-down of certain internet investments; and adjustments for certain discrete tax items. The loss from continuing operations for full year 2007 was $2.73 billion, or $33.26 per share, including the effect of the non-cash impairment charges taken in 2007. Adjusted earnings from continuing operations were $110.9 million, or $1.35 per share, in fiscal 2007 after considering the non-cash impairment charges and adjustments for certain discrete tax items. The company's total net loss, including the results of discontinued operations, was $2.74 billion, or $33.37 per share. Revenues from continuing operations in 2008 were $1.9 billion, down 15.9% compared to $2.26 billion in 2007. Advertising revenues in 2008 totaled $1.6 billion, down 17.9% and circulation revenues were $265.6 million, down 3.7%. Online advertising revenues grew 10.6% in 2008 and represented 11.6% of total advertising revenues compared to 8.6% for all of 2007. Management's Comments Commenting on McClatchy's results, Mr. Pruitt said, "2008 was a difficult and disappointing year. We faced troubled economic times and structural changes in our business. "Still, 2008 was a good year for our online business; online audiences and revenues rose sharply. In the fourth quarter, average monthly unique visitors to our websites were up 25.3% and were up 33.5% for all of 2008. Online advertising revenues grew 10.3% in the fourth quarter of 2008 and were up 47.3% excluding employment advertising, a category that has been impacted both online and in print by the nationwide decline in jobs. "But the economy remains mired in recession and our industry is still in a period of transition. The advertising environment continues to be weak and we expect print advertising revenues to continue to be down. While we do not have final advertising revenue results for January, we know that the month was slower than the fourth quarter. We don't have any better sense than other market observers as to how long the current recession will last and we do not yet have visibility of revenue trends. "We must respond with both continued rigor in driving our revenue results as well as permanently reducing our cost structure. At McClatchy we are quickly becoming a hybrid print and online news and information company. "Evidence of our cost reduction efforts can be found in our results. Excluding severance and other benefit charges related to our previously announced restructuring plans, cash expenses were down 14.4% in the fourth quarter and were down 11.5% in all of 2008. "This necessary transition to a more efficient company is especially painful in a horrible economy and we have had to make some very difficult decisions to keep the company safe," Mr. Pruitt said. "Even so, we are determined to treat our employees well and secure their retirement as best we can. So while we have announced that we are freezing our pension plans and will temporarily suspend 401(k) matching contributions as of March 31, we will continue to offer competitive benefits for our employees. We expect to offer a new 401(k) plan later this year that will include both a matching contribution (once reinstated), plus a supplemental contribution that is tied to cash flow performance. I recognize the sacrifices our employees are making to help us get though this difficult time and I appreciate their loyalty to McClatchy. I am confident that the McClatchy team is up to this challenge and we will see brighter days when the economy finally turns." Pat Talamantes, McClatchy's chief financial officer, said, "Our new cost initiatives, combined with our 2008 efforts, are designed to save approximately $300 million annually before severance costs. Approximately $60 million of savings has been realized in 2008, and $44.7 million of severance costs associated with these programs has been expensed in 2008 and largely paid." "Despite the downturn in advertising revenues, we still continue to generate significant cash and are using it to repay debt," Pat Talamantes said. "Our debt at year end is $2.038 billion, down $433 million from the end of 2007. Based on our trailing 12 months of cash flow, our leverage ratio is currently 5.1 times cash flow and our interest coverage ratio is 2.8 times cash flow as defined by our bank agreement -- well within the allowable covenant thresholds. We have $159 million in availability under our bank credit lines, and have no significant debt maturities until June 2011. We believe that we can work through this difficult environment, and we expect to make further progress in paying down debt in 2009." A full-text copy of the company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?395e About The McClatchy Company Headquartered in Sacramento, California, The McClatchy Company (NYSE: MNI) -- http://www.mcclatchy.com/-- is the third largest newspaper company in the United States, with 30 daily newspapers, approximately 50 non-dailies, and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City Star, the Charlotte Observer, and The (Raleigh) News & Observer. McClatchy also owns a portfolio of premium digital assets, including 14.4% of CareerBuilder, an online job site, and 25.6% of Classified Ventures, a newspaper industry partnership that offers the auto website, cars.com, and the rental site, apartments.com. * * * As reported by the Troubled Company Reporter on Sept. 19, 2008, Moody's Investors Service downgraded The McClatchy Company's Corporate Family and Probability of Default ratings to B2 from Ba3, the ratings on the senior unsecured notes to Caa1 from B1, and the rating on the guaranteed bank facility to Ba2 from Ba1. The rating outlook is negative. The downgrade reflects Moody's expectation that ongoing significant declines in advertising revenue will continue to pressure EBITDA -- leading to an increase in leverage and heightened risk of a credit facility covenant violation. Moody's anticipates McClatchy's free cash flow generation and the modest bank leverage will allow the company to obtain an amendment if necessary, but an increase in the interest rate spread and tighter non-financial covenants are likely to result, which would reduce financial flexibility. The TCR reported on Feb. 10, 2009, that Fitch Ratings downgraded the Issuer Default Rating and outstanding debt ratings of The McClatchy Company: -- Issuer Default Rating to 'CCC' from 'B-'; -- Senior secured credit facility to 'CCC/RR4' from 'B+/RR2'; -- Senior secured term loan to 'CCC/RR4' from 'B+/RR2'; -- Senior unsecured notes/debentures to 'C/RR6' from 'CCC/RR6'. There is no Rating Outlook assigned. Approximately $2.1 billion of debt is affected by the action. As of Sept. 28, 2008, the company's balance sheet showed total assets of $3.6 billion, total liabilities of $2.9 billion, and total stockholders' equity of $375.9 million. MAGNA ENTERTAINMENT: Unit Applies for VLT License in Anne Arundel ----------------------------------------------------------------- Magna Entertainment Corp. applied on February 2, 2009, through Laurel Racing Assoc., Inc., one of its wholly owned subsidiaries, to the Maryland VLT Facility Location Commission for a Video Lottery Operation License to operate 4,750 VLTs at Laurel Park in Anne Arundel County, Maryland. While MEC has submitted an application, Laurel Racing did not pay the specified license fee of $28.5 million at this time. MEC hopes to be able to work with its partners, the Commission and Anne Arundel County in the very near future to achieve a successful licensing of Laurel Racing and the construction of the Laurel VLT Facility. Frank Stronach, Chairman and Chief Executive Officer of MEC, stated, "We are excited to pursue a VLT License for Laurel Racing and we believe that locating the video lottery facility at Laurel Park will help preserve Maryland's thoroughbred industry, including Laurel Park, Pimlico and the Preakness Stakes(R)." Magna Entertainment arranged for the funding of the specified license fee of $28.5 million to Laurel Racing, in connection with its February 2, 2009 application by Laurel Racing for a VLT License in Anne Arundel County. The Initial License Fee will be placed in an escrow account held at a Maryland bank. Laurel Racing has asked the Maryland VLT Facility Location Commission to undertake that it will utilize its discretionary authority to refund the Initial License Fee in the event Laurel Racing is granted a VLT License but is unable to obtain all proper zoning and permits necessary for the operation of a video lottery terminal facility at Laurel Racing's Anne Arundel location. Provided the Commission agrees to refund the Initial License Fee, that fee and all interest earned will be paid to the Commission. The Initial License Fee funds were advanced pursuant to the previously announced December 1, 2008 loan agreement among MEC, certain MEC subsidiaries as guarantors, and a subsidiary of MEC's controlling shareholder, MI Developments Inc., as lender. About Magna Entertainment Headquartered in Aurora, Ontario, Magna Entertainment Corp. (Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/ -- acquires, develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. Going Concern Doubt As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. Net loss for the three months ended Sept. 30, 2008, was $48.4 million, an improvement of $1.5 million or 2.9% compared to the same period last year. Net loss for the nine months ended Sept. 30, 2008, was $116.1 million, an increase of $45.3 million or 64.0% compared to the same period last year. At Sept. 30, 2008, the company's balance sheet showed total assets of $1.1 billion, total liabilities of $891.0 million and total shareholders' equity of $272.7 million. MCKESSON CORPORATION: Moody's Assigns Low-B Shelf Ratings --------------------------------------------------------- Moody's Investors Service assigned a Baa3 rating to McKesson Corporation's $500 million senior note offering and ratings to McKesson's new WKSI universal shelf. Ratings on the company's prior shelf, which expired, were withdrawn. At the same time, Moody's affirmed all other existing debt ratings and the stable rating outlook. The last rating action on McKesson was taken on October 5, 2007 when Moody's affirmed the company's ratings and stable outlook in conjunction with the announcement that McKesson was acquiring Oncology Therapeutics Network and its board had authorized a $1 billion share buyback program. McKesson's Baa3 ratings reflect the company's position as one of the nation's leading pharmaceutical distributors as well as solid cash flow generation. Moody's believe this new debt offering -- proceeds from which will be used for general corporate purposes, including the settlement of the private payor portion of AWP- related litigation -- can be absorbed within the current rating category. The stable outlook reflects Moody's expectation that the company will maintain FCF/TD measures of at least 20% even if it moves toward a more leveraged, targeted capital structure. In addition, the stable outlook assumes that McKesson will sustain solid cash flow despite declines in hospital capital spending, which is expected to result in lower software sales within its information technology division. "McKesson's measured approach to buybacks and acquisitions offsets uncertainty associated with a tough economic environment," said Diana Lee, a Senior Credit Officer at Moody's. The affirmation of the ratings and stable outlook also assume that McKesson will maintain a sufficient liquidity profile, especially in light of the potential for additional litigation payouts related to AWP litigation. Ratings assigned: McKesson Corporation -- Baa3 $500 million new senior unsecured notes -- (P)Baa3 senior shelf -- (P)Ba1 subordinated shelf -- (P)Ba1 senior subordinated shelf -- (P)Ba1 junior subordinated shelf -- (P)Ba2 preferred shelf Ratings affirmed: McKesson Corporation -- Senior unsecured notes at Baa3 -- Short-term rating at Prime-3 -- Backed Industrial Revenue Bonds at Baa3 McKesson Canada Corporation -- Short-term rating at Prime-3 Ratings withdrawn: McKesson Corporation -- Existing senior shelf at (P)Baa3 -- Existing subordinated shelf at (P)Ba1 -- Existing senior subordinated shelf at (P)Ba1 -- Existing junior subordinated shelf at (P)Ba1 -- Existing preferred shelf rating at (P)Ba2 McKesson'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 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 McKesson's core industry and McKesson's ratings are believed to be comparable to those of other issuers of similar credit risk. McKesson Corporation, located in San Francisco, California, is a leading pharmaceutical drug distributor. Its information systems business provides software and hardware support to a large portion of the nation's hospitals. The company reported revenues of about $106.6 billion for the twelve months ended December 31, 2008. MEDICAL SOLUTIONS: Gets Termination Notice on Reorganization Pact ----------------------------------------------------------------- Marshall Sterman, chairman of the Board of Directors of Medical Solutions Management Inc., disclosed in a regulatory filing dated February 5, 2009, that the company and Andover Medical, Inc., received a notice of termination of an Asset Purchase Agreement and Plan of Reorganization from Certified Diabetic Services, Inc. On July 25, 2008, Medical Solutions, Andover Medical, and Certified Diabetic Services, Inc., entered into an Asset Purchase Agreement and Plan of Reorganization, pursuant to which Medical Solutions was to acquire substantially all of the assets of Andover and CDIP, including Andover's and CDIP's subsidiaries. On February 3, 2009, the company and Andover received a notice of termination of the Reorganization Agreement from CDIP, "pursuant to Section 6.1(b)(i) thereof for failure to consummate the transaction by December 31, 2009." Mr. Sterman also disclosed that on February 4, 2009, Robert Coffill resigned from the Board of Directors. In connection with the resignation, the company and Mr. Coffill also mutually agreed to terminate Mr. Coffill's employment. Moreover, Mr. Sterman related, on February 2, 2009, the company entered into a Business Consulting Agreement with Parcae Capital pursuant to which the company engaged Parcae to oversee the management and restructuring of Medical Solutions, including overseeing an independent investigation into the facts and circumstances surrounding the current ongoing federal investigation involving MSMT. About Medical Solutions Headquartered in Marlborough, Massachusetts, Medical Solutions Management, Inc., (OTC BB: MSMT.OB) -- markets and sells orthopedic and podiatric durable medical equipments in the United States. It enables orthopedic and podiatric practices to dispense an array of durable medical equipment directly to their patients during office visits through its turnkey programs. The company also provides billing services, inventory management, and insurance verifications, as well as offers related management services. Going Concern Doubt As reported in the Troubled Company Reporter on May 14, 2008, Boston-based Wolf & Company, P.C., expressed substantial doubt about Medical Solutions Management Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2007. The Company's losses have resulted in an accumulated deficit of $158,648,786 as of September 27, 2008. Operating activities consumed $5,067,386 in cash in the nine months ended September 27, 2008. In addition, the Company has negative working capital of $91,859 as of September 27, 2008. Medical Solutions Management Inc.'s consolidated balance sheet at September 27, 2008, showed total assets of $8,103,070, total liabilities of $8,104,703 and Series D Convertible Preferred stock of $8,124,432, resulting in total stockholders' deficiency of $8,126,065. MODINE MANUFACTURING: Delays Filing of 3rd Qtr Fiscal 2009 Report ----------------------------------------------------------------- Modine Manufacturing Company has filed a Form 12b-25 "Notification of Late Filing" with the U.S. Securities and Exchange Commission delaying the filing of its Form 10-Q for the quarter ended December 31, 2008 to on or before February 17, 2009. The Company will release its third quarter fiscal 2009 earnings on Tuesday, February 17, 2009 and conduct a conference call and webcast for investors on that same date at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). According to the Company, the weakening global economy and sales volume declines have created a significant downturn in Modine Manufacturing Company's vehicular markets, particularly within Europe. These factors triggered an impairment review of the Company's long-lived assets within its Original Equipment -- Europe segment during the third quarter ended December 31, 2008. As of February 9, 2009, the Company has yet to complete this impairment analysis in time to timely file the Form 10-Q for the quarterly period ended December 31, 2008 without unreasonable effort or expense. According to the Company, for the three months ended December 31, 2008, it anticipates reporting a loss from continuing operations in a range of $55 million to $58 million, subject to finalization of the long-lived asset impairment analysis for the Company's Original Equipment -- Europe segment. This compares to the reported loss from continuing operations for the three months ended December 31, 2007 of $55 million. The Company says the current year loss is the result of these: -- Sales volumes declined significantly as a result of the weakening global economy. The instability in the global financial markets has created a significant downturn in the Company's vehicular markets, particularly within Europe. Net sales were $365 million for the three months ended December 31, 2008, as compared to net sales of $481 million for the three months ended December 31, 2007; -- The decline in sales volumes, the underabsorption of fixed costs in the Company's manufacturing facilities as the result of declining sales volumes, as well as a shift in product mix toward lower margin business contributed to a decline in gross profit. Gross profit was $42 million for the three months ended December 31, 2008, as compared to gross profit of $70 million for the three months ended December 31, 2007; -- The results for the three months ended December 31, 2008 are anticipated to include impairment charges in a range of $25 million to $28 million, subject to the finalization of the long-lived asset impairment analysis for the Original Equipment -- Europe segment. This is comprised of a $9 million goodwill impairment charge in the Company's Original Equipment -- Europe segment, an estimated $8 million to $11 million long-lived asset impairment charge in the Company's Original Equipment -- Europe segment, and an $8 million long-lived asset impairment charge in the Company's Original Equipment -- North America segment; -- Restructuring and repositioning charges totaling $27 million were recorded during the three months ended December 31, 2008, related to a workforce reduction in the Company's Racine, Wisconsin headquarters and a planned workforce reduction throughout the Company's European facilities, including the European headquarters in Bonlanden, Germany; and -- Tax valuation allowance charges of $7 million were recorded against the net deferred tax assets in the U.S. and South Korea as the Company continues to assess that it is more likely than not that these assets will not be realized in the future. For the nine months ended December 31, 2008, the Company anticipates reporting a loss from continuing operations in a range of $61 million to $64 million. This compares to the reported loss from continuing operations for the nine months ended December 31, 2007 of $34 million. The weakened global economy is expected to continue to adversely affect the Company's results over the remainder of fiscal 2009. Based on this trend and the current quarter impairment and restructuring charges which were not contemplated in the second quarter of fiscal 2009, the Company anticipates that its full year results will fall significantly below its fiscal 2009 loss from continuing operations before income taxes guidance range of $5 million to $25 million which was previously reported in conjunction with the Company's second quarter fiscal 2009 earnings release on October 30, 2008. About Modine Based in Racine, Wisconsin, Modine Manufacturing Company (MOD) - http://www.modine.com/-- specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, heating, ventilation and air conditioning equipment, off-highway and industrial equipment, refrigeration systems, and fuel cells. The company had revenues of $1.9 billion in fiscal year 2008. It employs roughly 7,900 people at 33 facilities worldwide in 15 countries. MODINE MANUFACTURING: Obtains Waiver on Covenant Default -------------------------------------------------------- Modine Manufacturing Company discloses that as a result of the significant downturn in its vehicular markets and resulting loss to be reported for the three months ended December 31, 2008, the Company was not in compliance with the interest expense coverage ratio at December 31, 2008, which constituted a default under the debt agreements. Modine says its debt agreements require it to maintain specified financial ratios. The most restrictive limitations are quarter- end debt to earnings before interest, taxes, depreciation and amortization of not more than a 3.0 to 1.0 ratio (leverage ratio) and earnings before interest and taxes (EBIT) to interest expense of not less than a 1.75 to 1.0 ratio for the third quarter of fiscal 2009 (interest expense coverage ratio), as such terms are used in the debt agreements. As indicated in the Company's quarterly report on Form 10-Q for the quarterly period ended September 30, 2008, recent adverse trends have put additional pressure on the Company's ability to remain in compliance with the interest expense coverage ratio. Modine relates that it has reached an agreement in principle with its primary lenders and holders of notes on a waiver of the default which existed at December 31, 2008, and an amendment of its debt agreements. The Company has received written confirmation from the lenders and note holders, and anticipates closing on the waiver and amendments prior to filing its Form 10-Q for the quarterly period ended December 31, 2008. The waiver and amendments will not become effective until the closing. In the very unlikely event that the Company is unable to close on the waiver and amendments prior to the filing of its Form 10-Q for the quarterly period ended December 31, 2008, the Company would be required to classify its outstanding long-term indebtedness totaling $254 million as a current liability. Presently, the Company is not able to borrow on its existing revolving credit facility and will not be able to do so until closing on the waiver and amendments. However, at December 31, 2008, the Company had cash of $73 million that it believes will be sufficient to fund operations without accessing the revolving credit facility while the Company closes on the waiver and amendment or pursues other financing options, if needed. While the Company is confident that it will be able to close on the waiver and amendment with its primary lenders and holders of notes, and in fact is in the final stages of doing so, if it is unable to do so and also unable to obtain alternative financing arrangements, there would be substantial doubt about the Company's ability to continue as a going concern. About Modine Based in Racine, Wisconsin, Modine Manufacturing Company (MOD) - http://www.modine.com/-- specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, heating, ventilation and air conditioning equipment, off-highway and industrial equipment, refrigeration systems, and fuel cells. The company had revenues of $1.9 billion in fiscal year 2008. It employs roughly 7,900 people at 33 facilities worldwide in 15 countries. MUZAK HOLDINGS: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Muzak Holdings LLC and certain of its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to facilitate a restructuring of the Company's debt obligations. Patrick Fitzgerald at The Wall Street Journal relates that Muzak had $333.6 million in total assets and $468.1 million in total current liabilities for of the quarter ended September 30, 2008. Muzak, according to WSJ, listed about $370 million in bond debt and also owes $105 million to its senior lenders. Muzak said in a filing with the U.S. Securities and Exchange Commission that about $436.6 million of the company's long term debt was scheduled to mature in the first quarter of 2009, starting with the maturity of its $105 million term loan on January 19. Muzak previously reached an agreement with its lenders to access all cash on hand and cash generated from ongoing operations. The Company is confident that it has sufficient means to support the business during the Chapter 11 process. As reported on January 19, 2009, the Company reached an agreement with its secured lenders to extend the maturity date under the Company's $105 million Credit Agreement, dated as of April 15, 2005, for a period of 22 days through and including February 10, 2009. The maturity extension served as a catalyst for constructive negotiations with each of the Company's major creditor constituencies concerning a comprehensive financial restructuring that will maximize value for all interested parties. Muzak and its major creditor constituencies are committed to building upon the momentum gained over the past 22 days in an effort to continue, and ultimately complete, restructuring negotiations, which can be implemented on an expedited basis in Chapter 11. "Muzak is a solid business with an outstanding customer base, but we are burdened with substantial debt obligations established over a decade ago. Muzak has nearly doubled its cash flows while investing in its operations over the last three years, a period in which Muzak has also not had the need to seek additional financing, demonstrating that our business continues to perform well even in today's challenging environment," said Stephen P. Villa, Chief Executive Officer of Muzak. "We believe Chapter 11 will provide us with the opportunity to right size our capital structure and gain financial flexibility, while continuing to operate our business and serve our clients without interruption. Our lenders have shown a tremendous amount of support and have committed to funding this restructuring process. We intend to move through this process as quickly as possible, and we firmly believe that this course of action will better position Muzak for long-term success." The Company has filed a series of motions with the Court to ensure the continuation of normal operations, including paying employee wages and salaries and to provide employee benefits without interruption. The Company also has asked for authority to honor all of its outstanding client programs, including promotional programs. During the Chapter 11 process vendors will be paid by the Company for post-petition purchases of goods and services in the ordinary course of business. In addition, the Company will continue its business arrangements and agreements with Independent Affiliates and the Company has asked for authority to honor any amounts owed to Independent Affiliates. Mr. Villa concluded, "This process will provide us with the ability to address our outstanding debt position and to continue 'business as usual' at Muzak -- providing high quality music and messaging products, innovative technologies and superior client service. Muzak has a strong foundation in place and we are fully committed to making this financial restructuring successful and positioning the Company for sustainable profitability. " Kirkland & Ellis LLP is serving as legal advisor and Moelis & Company is serving as financial advisor to the Company. Additional information about Muzak's restructuring is available at: http://www.muzak.com/restructuring. For access to Court documents and other general information about Chapter 11 cases, visit: http://chapter11.epiqsystems.com/muzak. About Muzak Fort Mill, S.C.-based Muzak Holdings LLC -- http://www.muzak.com- - creates a variety of music programming from a catalog of over 2.6 million songs and produces targeted custom in-store and on- hold messaging. Through its national service and support network, Muzak designs and installs professional sound systems, digital signage, drive-thru systems, commercial television and more. MUZAK HOLDINGS: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Muzak Holdings LLC 3318 Lakemont Blvd. Fort Mill, SC 29708 Bankruptcy Case No.: 09-10422 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Muzak Holdings Finance Corp. 09-10424 Muzak LLC 09-10425 Background Music Broadcasters, Inc. 09-10426 Muzak Capital Corporation 09-10427 MLP Environmental Music, LLC 09-10428 Business Sound, Inc. 09-10429 BI Acquisition, LLC 09-10430 Muzak Finance Corp. 09-10431 Electro-Systems Corporation 09-10432 Audio Environments, Inc. 09-10433 Telephone Audio Productions, Inc. 09-10434 Vortex Sound Communications Company, Inc. 09-10435 Muzak Houston, Inc. 09-10437 Music Incorporated 09-10438 Related Information: The Debtors provide business music programming. As reported by the Troubled Company Reporter on Jan. 14, 2009, Moody's Investors Service downgraded Muzak Holdings, LLC's probability-of-default rating to Ca from Caa3 and the corporate family rating to Ca from Caa2. Moody's also downgraded the ratings of the company's $220 million senior unsecured notes to Ca from Caa1, and the $25 million senior discount notes and $115 million senior subordinated notes to C from Ca. The downgrade of the probability-of-default rating reflects Moody's concern over the company's ability to satisfy $437 million of debt maturing in the March 2009 quarter. In Moody's opinion, a refinancing is highly unlikely given time constraints and the current state of credit markets. These maturities increase the likelihood of a distressed exchange or bankruptcy filing in Moody's opinion. See: http://www.muzak.com/ Chapter 11 Petition Date: February 10, 2009 Court: District of Delaware (Delaware) Judge: Kevin J. Carey Debtors' General Counsel: Kirkland & Ellis LP Local Counsel: Domenic E. Pacitti, Esq. dpacitti@klehr.com Klehr Harrison Harvey Branzburg & Ellers 919 Market Street, Suite 1000 Wilington, DE 19801 Tel: (302) 552-5511 Fax: (302) 426-9193 Investment Banker: Moelis & Company LLC Auditors: PricewaterhouseCooper LLP Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Bank N.A. senior notes $225,255,556 as indenture trustee 10% due 2009 Corporate Trust Services One Federal Street Boston, MA 02110 Attn: Andrew M. Sinasky Vice President Tel: (617) 603-6564 Fax: (617) 603-6699 U.S. Bank N.A. senior subor. $120,520,399 as indenture trustee notes 9.875% Corporate Trust Services due 2009 One Federal Street Boston. MA 02110 Attn: Andrew M. Sinasky Vice President Tel: (617) 603-6564 Fax: (617) 603-6699 U.S. Bank N.A. senior discount $25,514,495 as indenture trustee notes 13% due Corporate Trust Services 2010 One Federal Street Boston, MA 02110 Attn: Andrew M. Sinasky Vice President Tel: (617) 603-6564 Fax: (617) 603-6699 Dukate, Bronwein M. electro system $1,318,673 20404 Front Beaeh Road corp. Panama City, FL 32413 2220 Colorado Avenue Santa Monica. CA 90404 Tel: (310) 865-4086 Fax: (310) 865-1598 EMI Capitol Records trade debt $320,323 AT&T trade debt $257,384 Dish Network trade debt $251,276 American Society of trade debt $213,020 Composers, Authors and Publishers Warner Special Products trade debt $207,378 Sony Music trade debt $168,915 BMG Film & Television Music trade debt $99,095 United Parcel Service trade debt $70,848 Virgin Records trade debt $60,008 Adrian L. Cameron electro system $58,043 corporation Daphne L. Clark electro system $58,043 corporation Harry Fox Agency trade debt $53.517 Rhino Entertainment trade debt $40,386 Daphne L. Murray electro system $38,659 corporation SESAC Inc. trade debt $29,168 Mackenzie Laboratories, Inc. trade debt $28,642 TW Telecom trade debt $25,302 CDW Direct LLC trade debt $24,393 Broadcast Music, Inc. trade debt $21,597 Installers Depot trade debt $19,307 Oce Imagistics International trade debt $19,054 MCM Wireless trade debt $19,000 Bosch Security trade debt $18,828 Sys/Telex Com IWC Electric, LLC trade debt $18,670 Extron Electronics trade debt $18,463 The petition was signed by R. Dodd Haynes, chief financial officer and treasurer. NEW CENTER: S&P Downgrades Ratings on Asset-Backed Notes to 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its 'A-1' and 'A-1+' ratings on the two series of asset-backed commercial paper notes issued by New Center Asset Trust to 'B' and removed them from CreditWatch with negative implications. The actions follow the lowering of the ratings on four series of Renaissance Center Asset Trust pass-through certificates held by NCAT and their removal from CreditWatch with negative implications. On Feb. 6, 2009, S&P lowered its ratings on RCAT's series 2004-5 and 2004-6 certificates to 'BB' from 'AA' and removed them from CreditWatch with negative implications. On the same date S&P also lowered its ratings on RCAT's series 2005-1 and 2005-2 certificates to 'BB-' from 'AA' and removed them from CreditWatch with negative implications. The ratings on these four RCAT series are linked, respectively, to the ratings on class RN1 from SWIFT X's series 2004-A; class RN2 from SWIFT X's series 2004-A; class RN1 from SWIFT XI's series 2005-A; and class RN2 from SWIFT XI's series 2005-A, which S&P lowered and removed from CreditWatch with negative implications on Feb. 5, 2009. S&P's previously placed its ratings on the two series of ABCP notes on CreditWatch with negative implications on Dec. 5, 2008, after S&P downgraded to 'AA' from 'AAA' the four series of pass- through certificates issued by RCAT and placed them on CreditWatch with negative implications. The ratings on the ABCP issued by NCAT primarily reflect liquidity support provided by a syndicate of financial institutions and the credit quality of each of the underlying assets. If Standard & Poor's lowers its ratings on any of the assets underlying NCAT's ABCP, S&P would likely lower the ABCP rating to a level that would be consistent with the revised rating on the underlying assets. GMAC LLC administers NCAT. NORTEL NETWORKS: Obtains Extension of CCAA Stay Period ------------------------------------------------------ Nortel Networks Corporation, Nortel Networks Limited and the other Canadian subsidiaries that filed for creditor protection under the Companies' Creditor Arrangement Act have obtained an order from the Ontario Superior Court of Justice extending, until to May 1, 2009 of the stay of proceedings that was previously granted by the Canadian Court. An initial 30 day stay of proceedings was obtained on January 14, 2009. The purpose of the stay of proceedings is to provide Nortel with an opportunity to develop a comprehensive business and financial restructuring plan for consideration by their creditors and the Canadian Court. Nortel and NNL also obtained an order from the Canadian Court permitting the postponement of their respective annual general meetings of shareholders beyond the statutory deadline of June 30, 2009 to a date that is within six months following the termination of the stay period under the CCAA proceedings. The postponement will allow Nortel's senior management to fully focus on the preparation of Nortel's comprehensive restructuring plan and avoid the significant costs associated with annual shareholders' meetings during this period. Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Gets Continued Access to EDC Support Facility -------------------------------------------------------------- Nortel Networks Corporation has entered into an amendment to its agreement with Export Development Canada, initially announced on January 14, 2009, to permit continued access by NNL to its EDC performance-related support facility up to May 1, 2009 for up to a maximum of US$30 million of support. The extension of the support facility has been approved by the Canadian Court. Nortel and EDC continue to work together to see if a longer term arrangement, acceptable to both parties, can be reached. As reported by the Troubled Company Reporter on January 15, 2009, Nortel was given continued access to the EDC performance-related support facility for an interim period of 30 days for up to a maximum of US$30 million of support based on Nortel's currently estimated requirements over the period. John Doolittle, vice president at Nortel, in an affidavit explaining events leading to Nortel's bankruptcy filing, said that actions by ratings agencies beginning Sept. 2008 have compounded its restricted ability to access capital markets, and jeopardized ongoing relationships with EDC. In September 2008, Standard & Poor's revised its outlook on Nortel from positive to stable, and Moody's revised its outlook on Nortel from stable to negative. In November 2008, Standard and Poor's changed its outlook to negative. In December 2008, Moody's issued a downgrade of Nortel's corporate family rating from B3 to Caa2. EDC, according to Mr. Doolittle, provides a support facility that backstops certain letters of credit and performance bonds and the December 2008 Moody's downgrade gives EDC a right to suspend additional support under the facility. A 30-day waiver was granted by EDC on December 15, 2008. In January 2009, EDC and Nortel entered into a subsequent agreement for 30 days that provides Nortel access to a maximum of up to $30 million of additional support under the facility during this period, to allow EDC and Nortel to work together to see if a longer term arrangement, acceptable to both parties, can be reached. The agreement is subject to the condition that any support granted by EDC post-filing under the EDC Support Facility, as it may be amended from time to time, is secured by a second charge over all the assets of the Canadian Debtors, subject to exceptions. "The potential termination of the EDC Support Facility would be very damaging to the Debtors' businesses," Mr. Doolittle said. In its bankruptcy petition submitted to the U.S. Bankruptcy Court for the District of Delaware, U.S.-based Nortel Networks Inc., named Export Development of Canada as its sixth largest unsecured creditor with trade debt of $186,719,257. The Debtor noted that EDC's claims are "contingent and unliquidated." "The Government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada," The Honourable Tony Clement, Minister of Industry of Canada, said in a statement. "EDC has agreed to provide up to $30 million in short-term financing through its existing bonding facility and is open to discussing with Nortel post-filing financing in conjunction with other financial institutions. It is important to note that Nortel is filing for court-supervised restructuring under the CCAA, not bankruptcy. Nortel has stated that it has every intention of emerging from this restructuring under the CCAA as a viable business. We will monitor its progress closely." Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) OPEN ENERGY: Nov. 28 Balance Sheet Shows Strained Liquidity ----------------------------------------------------------- Open Energy Corporation reported $22.0 million in total assets and $20.5 million in total liabilities as of November 30, 2008. The Company's balance sheet showed strained liquidity. At Nov. 30, the Company had $5.9 million in total current assets, including $1.4 million in cash and cash equivalents to satisfy $12.2 million in total liabilities. The Company incurred a net loss of $19.1 million on $1.6 million in revenues, net, for the three months ended November 30, 2008. The losses are much higher compared to $10.3 million in net loss for the same period in 2007. The Company incurred $23.6 million in net loss for the six months ended November 30, 2008, higher compared to $19.2 million in net loss during the same period in 2007. The Company has incurred losses since its inception totaling approximately $111,085,000 through November 30, 2008. As of November 30, 2008, the Company had cash and cash equivalents of $1,465,000, and negative working capital of $6,360,000. During the six months ended November 30, 2008, the Company funded its operations from the sale of debt and equity securities and at November 30, 2008, had no unused sources of liquidity. On June 3 and June 10, 2008, the Company received aggregate funding of $1,950,000 under a $3,500,000 Loan, bringing the total amount borrowed under this loan to the full $3,500,000. There is no additional borrowing capacity under this loan. On September 12, 2008, the Company entered into a definitive securities purchase agreement with The Quercus Trust. The securities purchase agreement provides for the sale to Quercus of warrants to acquire 235,000,000 shares of the Company's common stock at a purchase price of $0.02 per warrant for total cash proceeds of $4.2 million, the satisfaction of $300,000 of accrued and outstanding interest on the Series B Convertible Notes held by Quercus and a $200,000 restructuring fee for the amendment of certain terms of the $3.5 million secured loan previously extended to the Company by Quercus. The warrants have a three-year term with an initial exercise price of $0.067 per share. On September 12, the Company entered into a forbearance and repayment agreement with the Company's largest supplier, Suntech. The forbearance agreement provided for a payment plan for approximately $3 million of payables due as of the agreement date from the Company with interest at 12% per annum. Pursuant to the agreement, the Company paid $1 million on September 19, 2008, and further agreed to pay $500,000 on or prior to January 15, 2009, and six payments of $297,558 on a monthly basis beginning on March 15, 2009, until the entire amount is paid in full. The Company believes that its current cash will only provide sufficient working capital to fund its operations through March 2009. Its current cash requirements are significant due to existing payment obligations and the need to bring in additional personnel to support sales efforts; research and development expenses; and other operational expenses. The Company expects to continue to incur significant negative cash flow from operations during fiscal 2009. Thus, additional equity or debt financing will need to be raised in the near future to implement the Company's business strategy. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital or it could be forced to cease operations. In order to continue as a going concern, the Company will need to secure additional financing and ultimately to develop and grow its customer base and revenues and achieve a profitable level of operations. Management plans to raise additional capital through sales of debt and equity securities, the proceeds of which will primarily be used to support its working capital requirements. The financial statements included herein do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Based in Solana Beach, California, Open Energy Corporation (OTC BB: OEGY) -- http://www.openenergycorp.com -- a renewable energy company, focuses on the development and commercialization of a portfolio of solar technologies for residential, commercial, and industrial applications. The company designs, manufactures, and distributes building-integrated photovoltaic roofing tiles, roofing membranes, and architectural photovoltaic glass products under the SolarSave(R) trade name. * * * As reported in the Troubled Company Reporter on Sept. 24, 2008, Squar Milner Peterson Miranda & Williamson LLP, in San Diego raised substantial doubt about the ability of Open Energy Corporation to continue as a going concern after it audited the company's financial statements for the year ended May 31, 2008. The auditing firm pointed to the company's recurring losses from operations and working capital deficit. OPEN ENERGY: Changes Business Name to "Applied Solar" ----------------------------------------------------- Open Energy Corporation effective January 16, 2009, changed its name to Applied Solar, Inc. The name change was effected through the merger of the Company's wholly-owned subsidiary, Applied Solar, Inc., a Nevada corporation, with and into the Company pursuant to articles of merger. Neither the merger nor the amendment of the Company's articles of incorporation to change the name required shareholder approval under applicable Nevada law. Following the name change, on January 20, 2009, the Company amended its articles of incorporation to increase the number of shares of common stock the Company is authorized to issue from 1,125,000,000 to 3,000,000,000. The Company effected the increase by filing an amendment to its articles of incorporation with the Nevada Secretary of State. On January 15, 2009, the Company issued warrants to acquire a total of 15,879,450 shares of common stock to the holders of its Series B Convertible Notes, in lieu of the payment of cash interest in the aggregate amount of $317,589. These warrants were issued at a rate of $0.02 per share, with an exercise price of $0.067 per share. These warrants contain a cashless exercise feature that first applies one year after issuance if the resale of the underlying shares is not covered by an effective registration statement. These warrants have a term of three years and benefit from antidilution protection. Based in Solana Beach, California, Open Energy Corporation (OTC BB: OEGY) -- http://www.openenergycorp.com -- a renewable energy company, focuses on the development and commercialization of a portfolio of solar technologies for residential, commercial, and industrial applications. The company designs, manufactures, and distributes building-integrated photovoltaic roofing tiles, roofing membranes, and architectural photovoltaic glass products under the SolarSave(R) trade name. * * * As reported in the Troubled Company Reporter on Sept. 24, 2008, Squar Milner Peterson Miranda & Williamson LLP, in San Diego raised substantial doubt about the ability of Open Energy Corporation to continue as a going concern after it audited the company's financial statements for the year ended May 31, 2008. The auditing firm pointed to the company's recurring losses from operations and working capital deficit. PALM INC: Board Appoints Rajiv Dutta as Director ------------------------------------------------ As previously reported by the Troubled Company Reporter, on January 30, 2009, Donna L. Dubinsky offered to resign from the Board of Directors of Palm, Inc., in connection with the Company's sale to Elevation Partners, L.P., and Elevation Employee Side Fund, LLC of an aggregate of 100,000 detachable units for an aggregate purchase price of $100 million. The Board accepted Ms. Dubinsky's offer of resignation effective as of February 2, 2009. Effective as of February 2, 2009, the Board, including each of the Preferred Directors, appointed Rajiv Dutta to fill the vacancy on the Board created by Ms. Dubinsky's resignation. Mr. Dutta retired as the President of eBay Marketplaces and Executive Vice President of eBay Inc. in October 2008 and as a member of the board of directors of eBay, Inc. in July 2008. Mr. Dutta was designated for nomination by Elevation, pursuant to Elevation's rights under the Amended and Restated Stockholders' Agreement, dated as of January 9, 2009, between the Company and Elevation, and recommended for appointment by the Nominating and Governance Committee of the Board. Mr. Dutta will serve as a Preferred Director. Unless earlier terminated pursuant to the terms of the Certificates of Designation, the Preferred Director will serve until the next special or annual meeting of stockholders called for the purpose of electing Preferred Directors at which such Preferred Director is up for election or at any special meeting of the holders of Series B and Series C Convertible Preferred Stock for the purpose of removing the Preferred Director. In addition, Mr. Dutta, who qualifies as an "audit committee financial expert", was appointed to the Audit Committee of the Board. As a result of Mr. Dutta's appointments to the Board and to the Audit Committee, he has received options to acquire 28,000 shares of the Company's common stock pursuant to the Company's 2001 Stock Option Plan for Non-Employee Directors and 8,000 performance shares pursuant to the Company's 1999 Stock Plan. Each of these awards is subject to vesting over a three-year period in equal annual increments together with the terms of the Company's standard option and performance share agreements for non-employee directors, as applicable. On February 2, 2009, the Board amended the 2001 Plan to provide that options granted under the 2001 Plan would terminate upon the expiration three months from a participant's termination of service on the Board prior to age 65 for any reason other than the participant's death or disability, unless a different period is set forth in the participant's option agreement. Also on February 2, 2009, with the recommendation of the Compensation Committee of the Board and the approval of the Board, the Company entered into an agreement with Donna L. Dubinsky to provide that, upon the termination of Ms. Dubinsky's service on the Board, her vested options will remain exercisable for a period of one year following the date of the termination -- but in no event later than the expiration of the term of the relevant option. About Palm Inc. Headquartered in Sunnyvale, California, Palm Inc. (Nasdaq:PALM) -- http://www.palm.com/-- provides mobile computing solutions worldwide. The company offers Palm Treo smartphones, Palm LifeDrive mobile managers, and Palm handheld computers, as well as software, services, and accessories. * * * The Troubled Company Reporter reported on Aug. 18, 2008, that Moody's Investors Service downgraded Palm Inc.'s corporate family rating and probability of default rating to B3 from B2 with a negative ratings outlook. Simultaneously, Moody's affirmed Palm's speculative-grade liquidity rating of SGL-2. This concludes the review for possible downgrade that was initiated in March 2008 following the company's weaker than expected third quarter fiscal 2008 results. The rating downgrade to B3 reflects Moody's expectation of continued weakness in Palm's operating performance and negative cash flow generation over the near term. Moody's notes that Palm's CFR could have been downgraded further absent the company's high levels of domestically-held cash balance, which could support the company's expected negative free cash flow. The TCR reported on July 28, 2008, that Standard & Poor's Ratings Services lowered its corporate credit rating on Palm Inc. to 'B-' from 'B' and removed all the ratings from CreditWatch, where they had been placed with negative implications on March 21, 2008. The outlook is negative. As of November 30, 2008, the company's balance sheet showed total assets of $660,926,000, total liabilities of $811,503,000, Series B redeemable convertible preferred stock of $260,496,000, resulting in total stockholders' deficit of $411,073,000. PRB ENERGY: Emerged From Bankruptcy on February 2 ------------------------------------------------- On February 2, 2009, the Modified Second Amended Joint Plan of Reorganization filed by PRB Energy, Inc., and PRB Oil & Gas, Inc., became effective. The United States Bankruptcy Court for the District of Colorado entered an order confirming the Plan on January 16, 2009. In connection with PRB's reorganization and exit from bankruptcy, PRB changed its corporate name to Black Raven Energy, Inc. In connection with the consummation of the Plan, Black Raven Energy and PRB Oil entered into a Limited Waiver, Consent, and Modification Agreement, as of the Effective Date, with West Coast Opportunity Fund, LLC. Under the Modification Agreement, Black Raven Energy and PRB Oil agreed to issue an Amended and Restated Senior Secured Debenture, payable to WCOF, in the amount of $18,450,000. The Amended Debenture supersedes and amends the senior secured debentures issued by PRB Oil to WCOF and DKR Soundshore Oasis Holding Fund Ltd. on December 28, 2006. Under the Amended Debenture, $3,750,000 of the outstanding principal balance and any unpaid accrued interest are due and payable on December 31, 2009. The remainder of the outstanding principal balance of the Amended Debenture, along with any unpaid accrued interest, are due and payable on December 31, 2010. The Amended Debenture bears interest at 10% per annum which is payable quarterly. Subject to certain conditions, the Amended Debenture can be prepaid with a prepayment penalty of 110% of the outstanding principal, unpaid accrued interest and late charges. Upon the occurrence of an event of default, the Amended Debenture may be immediately redeemed by WCOF and the interest rate applicable to the principal amounts will be increased to 18% per annum during the period the default exists. Any portion of the Amended Debenture that is redeemed by WCOF will be redeemed at a price equal to 110% of the outstanding principal, unpaid accrued interest and late charges. Pursuant to the Plan and the Modification Agreement, the Amended Debenture includes a $1.5 million exit financing facility to be used by Black Raven Energy and PRB Oil to pay for certain post-petition claims and administrative expenses. The principal amount of the Exit Financing is included in, and the repayment terms of the Exit Financing are governed by, the Amended Debenture. Under the Modification Agreement, WCOF agrees to waive any defaults that may have existed under the Original Debentures or other applicable transaction documents prior to the Effective Date, and to waive any default that may exist under the Original Debentures, Amended Debenture, or other applicable transaction documents due to the implementation of the Plan. WCOF also agrees to release PRB Gathering, Inc., a former subsidiary of PRB, from certain obligations under the Original Debentures. In connection with PRB's reorganization and emergence from bankruptcy, all existing shares of PRB's common stock were cancelled as of the Effective Date. Upon the Effective Date, as all existing compensation and benefit plans of PRB were terminated, including PRB's 2007 Equity Incentive Plan. As of the Effective Date, any and all awards granted under the 2007 Plan were terminated and will no longer be of any force or effect. Black Raven Energy, Inc., initiated the issuance of 15 million shares of newly created common stock of Black Raven Energy, par value $.001, to be issued: (a) 13.5 million shares of Common Stock to WCOF, (b) 1.425 million shares of Common Stock, on a pro rata basis, to holders of Class A-4 Claims, and (c) 75,000 shares of Common Stock, on a pro rate basis, to holders of Class B-5 Claims. Pursuant to the Plan, Black Raven Energy will issue warrants to holders of Class A-4 Claims to acquire, on a pro rata basis, 1.425 million shares of Common Stock at an exercise price of $2.50 per share. Black Raven Energy will also issue warrants to holders of Class B-5 Claims to acquire, on a pro rata basis, 75,000 shares of Common Stock at an exercise price of $2.50 per share. All of these warrants must be exercised no later than December 31, 2013. By acquiring 13,500,000 shares of Common Stock, WCOF owns 90% of the outstanding Common Stock of Black Raven Energy. Pursuant to the Plan, Atticus Lowe, an affiliate of WCOF, will serve as an initial member of the Board of Directors of Black Raven Energy. The Board has not yet determined the committee or committees of the Board, if any, on which Mr. Lowe will serve. On the Effective Date, these persons resigned from the Board of PRB: -- James P. Schadt, -- Paul L. Maddock, Jr., -- Reuben Sandler, and -- Sigmund J. Rosenfeld. Mr. Schadt served as Executive Chairman of the Board. Messrs. Schadt, Maddock, Sandler, and Rosenfeld did not resign from the Board because of any disagreement with PRB's management or on any matter relating to PRB's operations, policies or practices. Pursuant to the Plan, William F. Hayworth and Gus J. Blass III will remain members of the Board of Black Raven Energy. As required by the Plan, William F. Hayworth will remain as the President and Chief Executive Officer of Black Raven Energy. As of the Effective Date, the Board will initially consist of three members. About PRB Energy Headquartered in Denver, PRB Energy, Inc. formerly PRB Gas Transportation, Inc. -- http://www.prbenergy.com/-- operates as independent energy companies engaged in the acquisition, exploitation, development and production of natural gas and oil. In addition, PRB Energy provides gas gathering, processing and compression services for properties it operates and for third- party producers. PRB Energy operates as two business segments through two wholly-owned subsidiaries, PRB Oil and Gas, Inc., a gas and oil exploitation and production company, and PRB Gathering, Inc., a gathering and processing company, formed in August 2006. The company conducts its business activities in Wyoming, Colorado and Nebraska. The Debtor, PRB Oil & Gas, Inc. and PRB Gathering, Inc. filed separate petitions for Chapter 11 relief on March 5, 2008 (Bankr. D. Colo. Lead Case No. 08-12658). Faegre & Benson LLP; Donald D. Allen, Esq., Edward M. Hepenstall, Esq., James T. Markus, Esq., Jennifer M. Salisbury, Esq., and John F. Young, Esq., at Block, Markus & Williams LLC represent the Debtors in their restructuring efforts. Daniel J. Garfield, Esq., and Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, P.C., represent the Official Committee of Unsecured Creditors as counsel. The Debtor listed assets of between $50 million and $100 million and liabilities of between $10 million and $50 million. The Court confirmed PRB Energy, Inc.'s Modified Second Amended Joint Plan of Reorganization on January 16, 2009. The Plan became effective on February 2, 2009. PULTE HOMES: Posts $1.5 Billion Net Loss for Year Ended Dec. 31 --------------------------------------------------------------- Pulte Homes disclosed on February 4, 2009, financial results for its fourth quarter ended December 31, 2008. Highlights include: -- For the Fourth Quarter 2008, Generated 1,763 Net New Orders and Closed 5,474 Homes -- Company Ended Q4 2008 With $1.655 Billion of Cash -- Impairments and Land-Related Charges of $380 Million for the Fourth Quarter 2008 -- Q4 2008 Net Loss of $1.33 Per Share, Inclusive of Impairments and Land-Related Charges -- Company Expects Tax Refunds of Approximately $374 Million For the quarter, the Company reported a net loss of $338.2 million, or $1.33 per share, compared with a $874.7 million net loss for the prior year fourth quarter, or $3.46 per share. The fourth quarter 2008 net loss included $380 million of pre-tax charges related to inventory impairments and other land-related charges. Impairments and land-related charges for the prior year quarter were $509 million. Consolidated revenues for the quarter were $1.7 billion, a decline of 43% from prior year quarter revenues of $2.9 billion. "The homebuilding operating environment took yet another step down during the fourth quarter of 2008," said Richard J. Dugas, Jr., President and CEO of Pulte Homes. "During the quarter, consumers faced unprecedented levels of financial uncertainty that dramatically impacted purchases of all large-ticket items, especially homes. Sinking consumer confidence, excess foreclosure inventory and continued very tight mortgage availability put dramatic downward pressure on the homebuilding market. These factors, combined with an exceptionally weak economy and a surge in unemployment across all industries left many potential home purchasers on the sidelines to wait for a more certain view of the future. "Despite this strong downward market momentum, Pulte achieved its stated cash goal as we generated significant positive cash flow during the quarter. We ended the year with nearly $1.7 billion in cash, no debt outstanding under our revolving credit facility and took further action to restructure our company overhead to better match anticipated reduced volume for 2009. Pulte's strong beginning cash position, anticipated tax refunds, and expected positive operating cash flow in 2009 leave us well positioned to capitalize on opportunities once stability in the housing sector begins to materialize." Fourth Quarter Results Revenues from homebuilding settlements in the fourth quarter decreased 45% to $1.5 billion, compared with $2.8 billion in last year's fourth quarter. The change in revenue for the quarter reflects a 37% decrease in closings to 5,474 homes, and a 13% decrease in average selling price to $278,000. Fourth quarter homebuilding pre-tax loss was $466.3 million, compared with a $459.2 million pre-tax loss for the prior year quarter. Homebuilding SG&A expense totaled $205 million for the quarter, including $15 million of severance-related charges. During the fourth quarter of 2008, the Company recorded $380 million of impairments and land-related charges, including $205 million related to land impairments, $14 million associated with the write-off of land deposits and pre-acquisition costs, $146 million of impairments of land held for sale and $15 million related to the Company's investment in unconsolidated joint ventures. For the prior year quarter, impairments and land- related charges totaled $509 million. In addition, goodwill impairments of $5 million were recorded during the 2008 fourth quarter, compared with $34 million for the prior year quarter. Net new home orders for the fourth quarter were 1,763 homes, a decline of 61% from the prior year fourth quarter. Pulte Homes' ending backlog as of December 31, 2008, was valued at $631 million (2,174 homes), compared with a value of $2.5 billion (7,890 homes) at the end of last year's fourth quarter. At the end of the fourth quarter 2008, the Company's debt-to-capitalization ratio was 52.8%, and on a net debt-to-capitalization basis was 34.8%. The Company's financial services operations reported pre-tax loss of $7.9 million for the fourth quarter 2008, compared with $10.3 million of pre-tax income for the prior year's quarter. This fourth quarter 2008 pre-tax loss was primarily due to a 42% decline in mortgage loans originated during the quarter compared with the prior year quarter combined with an increase in loan loss reserves. The mortgage capture rate for the quarter was 92%, compared with 91% for the same quarter last year. Full Year Results For the year ended December 31, 2008, Pulte Homes' net loss was $1.5 billion, or $5.81 per share, compared with a $2.3 billion, or $8.94 per share, net loss for the prior year. Consolidated revenues for 2008 were $6.3 billion, down 32% from $9.3 billion for the prior year. Revenues from homebuilding settlements for the period were approximately $6 billion, down 33% from the prior year. Lower revenues for the period resulted from a 12% decrease in average selling price to $284,000, combined with a 24% decrease in the number of homes closed to 21,022. Homebuilding pre-tax loss for 2008 was $1.7 billion, compared with a $2.5 billion pre-tax loss for the prior year. Homebuilding SG&A expense decreased $284 million, or 27%, compared with last year. During 2008, the Company recorded $1.5 billion of impairments and land-related charges, including $1.2 billion related to land impairments, $33 million associated with the write-off of land deposits and pre-acquisition costs, $271 million of impairments of land held for sale, and $18 million related to the Company's investment in unconsolidated joint ventures. For 2007, these impairments and land-related charges totaled $2.2 billion. Homebuilding pre-tax loss for the year also includes goodwill impairments of $5 million compared with $370 million in the prior year. Pulte's financial services operations reported pre-tax income of $28 million in 2008 compared with $43 million in the prior year. The 35% decrease in mortgage loans originated during the year was the primary cause for this decrease, partially offset by a positive shift in the mix of mortgage loans toward more profitable agency-backed products. As of December 31, 2008, the company's balance sheet showed total assets of $7,708,458,000, total liabilities of $4,872,760,000 and total shareholders' equity of $2,835,698,000. A full-text copy of the company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?395c Vincent Frees to Retire On February 9, 2009, Vincent J. Frees, Vice President and Controller and the principal accounting officer of Pulte Homes, Inc. said that he will retire from the company, effective March 2, 2009. About Pulte Homes Based in Bloomfield Hills, Michigan, Pulte Homes Inc. (NYSE: PHM) -- http://www.pulte.com/-- is one of America's home building companies with operations in 50 markets and 26 states. During its 58-year history, the company has delivered more than 500,000 new homes. Pulte Mortgage LLC is also a nationwide lender offering Pulte customers a wide variety of loan products and superior service. * * * As reported in the Troubled Company Reporter on Dec. 16, 2008, Fitch Ratings has downgraded Pulte Homes, Inc.'s Issuer Default Rating and outstanding debt ratings: (i) IDR to 'BB+' from 'BBB-'; (ii) senior unsecured to 'BB+' from 'BBB-'; and (iii) unsecured bank credit facility to 'BB+' from 'BBB-'. PWJ HOLDINGS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: PWJ Holdings, LLC 2989 West Maple Loop, Suite 110 Lehi, UT 84043 Bankruptcy Case No.: 09-21044 Chapter 11 Petition Date: February 10, 2009 Court: District of Utah (Salt Lake City) Debtor's Counsel: David E. Hardy, Esq. 5532 Lillehammer Lane, Suite 300 Park City, UT 84098 Tel: (801) 879-2999 Fax: (435) 655-7988 Estimated Assets: $100 million to $500 million Estimated Debts: $10 million to $50 million The Debtor does not have creditors who are insider. The petition was signed by Nathan Welch, manager. RH DONNELLEY: Moody's Slashes to Caa1, Says Bankruptcy A Solution ----------------------------------------------------------------- Moody's Investors Service has downgraded R.H. Donnelley's Corporate Family Rating to Caa1 and its Probability of Default Rating to Caa2, prompted by concerns that the company may determine that a complete debt restructuring represents the best alternative of addressing its currently challenged capital structure. The downgrade of the PDR to Caa2, in particular, reflects Moody's concern that a pre-packaged bankruptcy, distressed exchange and/or other restructuring measures likely represent the optimal solution to re-align the company's over-leveraged balance sheet, and that market conditions may now be ripe for the same. Moody's had previously considered it likely that the company would continue (but likely substantially expand) the scope of its recent debt repurchase activities to effect a reduced debt profile and improved credit metrics. A pre-emptive restructuring now seems to be a more viable alternative given current market conditions, which are expected to facilitate a more expedient solution to alleviate the company's financial strain. Whereas the former B2 CFR was based on Moody's fundamental assessment of the company continuing its operations as a going concern, the downgrade to Caa1 similarly reflects the aforementioned shift in expectations towards a more comprehensive restructuring, rather than merely opportunistic debt repurchases. Moreover, the downgrade also reflects Moody's expectation that Donnelley may experience near-term advertising sales declines at levels far worse than previously contemplated, materially curtailing the company's free cash flow generating ability and exacerbating liquidity pressure posed by its 2010 scheduled debt maturities. The ratings continue to broadly reflect R.H. Donnelley's persistently high leverage, its vulnerability to weakened market conditions facing the directory publishing business, the increasing threat posed by competing directory publishers and web- based directory service providers in virtually all of its markets, the lack of equity support provided to debtholders (following a substantial decline in the market value of the company's equity), and the dependence of the holding companies (R. H. Donnelley Corporation and Dex Media, Inc.) upon the receipt of continued covenant-compliant restricted payments from the three major operating companies in order to service their obligations. Ratings continue to garner support, nonetheless, from R.H. Donnelley's large scale, as well as the strong market positions conferred by its exclusive publishing agreements with Embarq Corporation, Qwest Communications, and AT&T Inc. as the "official" yellow pages directory within a number of its incumbent markets. In addition, ratings reflect the company's diversified customer and geographic market base, and the still relatively healthy free- cash-flow generating ability of its properties. The downgrade of the liquidity rating to SGL-3 incorporates the near-term pressure presented by tightening financial maintenance covenants of R.H. Donnelley Inc. and Dex Media West (notwithstanding covenant relaxation received in connection with the May 2008 amendment). In this respect, Moody's note that Moody's estimate of covenant compliance recognizes contractual, but not elective reductions of debt according to its SGL methodology. In addition, R.H. Donnelley faces a substantial funding gap posed by a sizeable step-up in the level of R.H. Donnelley Inc.'s requisite term loan amortization payments to more than $250 million per quarter starting in Q1 2010, which is further exacerbated by the August 2010 maturity of approximately $385 million of maturing Dex West notes. The continuing negative rating outlook underscores Moody's concern that, over the intermediate term, R.H. Donnelley will likely experience substantially higher levels of customer payment delinquencies and non-renewals as recessionary conditions take a tighter grip on all of its markets, especially those in Florida, Arizona and Nevada. Of note, the standalone financial metrics of Dex Media East, Dex Media West and R.H. Donnelley Inc. are materially stronger than those of the consolidated entity. At the end of September 2008, these companies reported debt-to-EBITDA leverage multiples of 3.2x, 4.3x and 3.9x, respectively, and interest coverage of 4.9x, 3.0x and 3.3x, respectively. While Dex Media East faces no unmanageable debt maturities until 2014, Dex Media West 's $385 million notes mature in August 2010, and as previously noted R.H. Donnelley Inc.'s scheduled term loan payments step up to $209 million per quarter starting at the end of March 2010. Moody's considers that both Dex Media West and R.H. Donnelley Inc. will be challenged to meet these repayment obligations, absent an amendment. In the event of a complete restructuring of the consolidated entities, Moody's will consider assigning CFRs to each of these three companies to reflect their businesses on a standalone basis. Moody's considers that each of the operating companies currently represents an acceptable level of refinancing risk; however, lenders are likely to accommodate such refinancing only in exchange for more stringent terms and at a significantly higher cost. In the event of a restructuring, Moody's consider that holders of R.H. Donnelly Corporation and Dex Media Inc. notes would likely expect to receive little-to-no recovery; however, Moody's expect that creditors of R.H. Donnelly Inc., Dex Media East and Dex Media West will face substantially lower prospects of impairment. Details of the rating actions are: Ratings downgraded: R. H. Donnelley Corporation * Corporate Family rating - to Caa1 from B2 * PDR - to Caa2 from B2 * Speculative Grade Liquidity rating - to SGL-3 from SGL-2 * 6.875% senior notes due 2013 - to Caa3, LGD5, 70% from Caa1, LGD5, 87% * 6.875% Series A-1 senior discount notes due 2013 - to Caa3, LGD5, 70% from Caa1, LGD5, 87% * 6.875% Series A-2 senior discount notes due 2013 - to Caa3, LGD5, 70% from Caa1, LGD5, 87% * 8.875% Series A-3 senior notes due 2016 - to Caa3, LGD5, 70% from Caa1, LGD5, 87% * 8.875% series A-4 senior notes due 2017 - to Caa3, LGD5, 70% from Caa1, LGD5, 87% R.H. Donnelley Inc. * Senior secured revolving credit facility due 2009/2011- to B1, LGD1, 7% from Ba2, LGD2, 15% * Senior secured term loan D due 2011- to B1, LGD1, 7% from Ba2, LGD2, 15% * 11.75% senior unsecured notes due 2015 -- to B3, LGD2, 24% from B1, LGD3, 43% Dex Media East LLC * Senior secured revolving credit facility due 2013 - to B1, LGD1, 7% from Ba2, LGD2, 15% * Senior secured term loan A due 2013 - to B1, LGD1, 7% from Ba2, LGD2, 15% * Senior secured term loan B due 2014 - to B1, LGD1, 7% from Ba2, LGD2, 15% Dex Media West LLC * Senior secured revolving credit facility due 2013 - to B1, LGD1, 7% from Ba2, LGD2, 15% * Senior secured term loan A due 2013 - to B1, LGD1, 7% from Ba2, LGD2, 15% * Senior secured term loan B due 2014 - to B1, LGD1, 7% from Ba2, LGD2, 15% * 9.875% senior subordinated notes due 2013 - to Caa1, LGD3, 33% from B2, LGD4, 54% * 5.875% senior unsecured notes due 2011 -- to B3, LGD2, 24% from B1, LGD3, 43% * 8.5% senior unsecured notes due 2010 -- to B3, LGD2, 24% from B1, LGD3, 43% Dex Media Inc. * 8% senior unsecured global notes due 2013 - to Caa2, LGD3, 44% from B3, LGD4, 66% * 9% senior discount global notes due 2013 - to Caa2, LGD3, 44% from B3, LGD4, 66% The rating outlook remains negative. The last rating action occurred on November 13, 2008, when Moody's downgraded R.H. Donnelley's CFR to B2. R.H. Donnelley'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 the competitive position of the company versus others in its industry, ii) the capital structure and the 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 of risk. These attributes were compared against other issuers both within and outside of R.H. Donnelley's core industry and R.H. Donnelley's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in Cary, North Carolina, R. H. Donnelley is one of the largest U.S. yellow page directory publishing companies. The company reported revenues of approximately $2.7 billion for the LTM period ended September 30, 2008. RVI GUARANTY: Fitch Downgrades Insurer Strength Rating to 'BB' -------------------------------------------------------------- Fitch Ratings has downgraded the Insurer Financial Strength ratings of R.V.I. Guaranty Co., Ltd., and its insurance subsidiaries, R.V.I. America Insurance Co. and R.V.I. National Insurance Co. to 'BB' from 'A-', and removed them from Rating Watch Negative. The Rating Outlook is Evolving. The ratings were placed on Rating Watch Negative on Aug. 11, 2008, to reflect the potential for additional losses within RVI's insured asset portfolio in which the company provides residual value insurance protection. The rating action follows Fitch's review of RVI's portfolio and reflects Fitch's belief that when viewed in the context of the current economic climate, the risk profile of the portfolio is substantially greater than that for an investment grade rating. In particular, Fitch is concerned about the potential for significant performance volatility in RVI's financial guaranty reinsurance business, in which the company assumed a limited number of large concentrations in individual exposures of originally 'AAA' rated corporate collateralized debt obligations. The concentrated and leveraged nature of these exposures is large relative to RVI's capital. The rating action also reflects additional losses within RVI's insured passenger vehicles portfolio as used car values continued to decline in 2008 to record levels. Positively, RVI reached negotiated settlements on a significant portion of these claims in the fourth quarter of 2008. While Fitch views these settlements favorably in reducing future uncertainty, the additional losses that had been developing on these exposures, in light of sharp declines in used car values as recessionary conditions worsened, were much greater than Fitch anticipated at the prior rating level. In addition, the rating action reflects what Fitch views as declines in RVI's franchise value, albeit with a lower risk underwriting profile going forward. The overall weak and deteriorating economic conditions have reduced demand for the purchase/leasing of both new and used assets, which in Fitch's view could result in reduced new business volume for RVI going forward. Also, following the losses suffered in 2008, the company has scaled back passenger vehicle business, historically RVI's largest segment of insurance in force, opting to only provide low- risk FASB levels of coverage going forward. While this will reduce overall underwriting risk and puts less strain on RVI's capitalization, it will also increase client concentration risk and further reduce the diversification of RVI's insured portfolio. The commercial equipment segment will be the only remaining sizable asset class, with a reduced focus on passenger vehicles following extensive losses in 2003/2004 and 2008 and the company exiting the commercial real estate segment late in 2006 due to reduced opportunities in a soft market environment. Fitch views the resulting increased concentration risk in RVI's business model as negative from a ratings perspective. The Evolving Rating Outlook reflects uncertainty with respect to the direction of future changes in RVI's risk profile and business position. To the extent that the company is able to remove the above noted financial guaranty reinsurance risk, the ratings could be upgraded. Fitch would also view favorably an improvement in the quality of RVI's capital, such as through converting its soft capital facility into hard capital. Conversely, if the company suffers additional significant losses, the ratings could be lowered further. Fitch has downgraded and removed from Rating Watch Negative these: R.V.I. Guaranty Co., Ltd. -- IFS to 'BB' from 'A-'. R.V.I. America Insurance Company -- IFS to 'BB' from 'A-'. R.V.I. National Insurance Company -- IFS to 'BB' from 'A-'. The Rating Outlook is Evolving S&K FAMOUS BRANDS: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------- S&K Famous Brands, Inc., has filed a voluntary petition for reorganization relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Easter District of Virginia. The Company intends to continue operations without interruption during the Chapter 11 process, while its management team and advisors focus on executing the comprehensive restructuring plan announced in July 2008. Last year, the company closed 78 stores. The bankruptcy papers don't indicate the remaining stores will be liquidated, notes Bloomberg's Bill Rochelle. To fund its continuing operations during the reorganization process, the Company has negotiated $13.0 million debtor-in- possession (DIP) financing from Wells Fargo Retail Finance. The company will use the DIP credit facility to fund its working capital requirements, including employee wages and benefits, post- petition vendor payments, and other operating expenses during the reorganization process. S&K President and CEO Joseph A. Oliver, III, said, "Our first priority is to reduce debt and recapitalize the Company as quickly as possible. We have already taken our restructuring pain and implemented the actions needed to fix our company, including consolidating our store base, reducing our operating costs and introducing the merchandise that is attracting a new generation of happy S & K shoppers. We will continue to do what it takes to reduce operating costs and improve our operations. Our goal is for this process to be the final step towards building a specialty retail chain that can prosper in the future. We ran positive comparable store sales and strong traffic increases this past holiday season, which gives us confidence about the tough choices we have made. I appreciate all the support from our vendors, landlords, customers and associates." Glen Allen, Virginia-based S & K Famous Brands, Inc. -- http://www.skmenswear.com-- is a menswear retailer operating 136 stores in 23 States; reaching from the East Coast to Kansas and from Maine to Florida. S & K offers a complete line of men's tailored and non-tailored collections at competitive value prices. Over the last year, S & K has expanded its offerings to include a much broader mix of sportswear, jeans and dress-casual shirts and has introduced new designer collections from Kenneth Cole, Michael Kors, Michael Brandon, and others. Additionally, the company's tuxedo rental, corporate apparel and e-commerce divisions continue to grow rapidly. S&K filed for Chapter 11 bankruptcy petition on February 9, 2009 (Bankr. E.D. Va. Case No. 09-30805). The Company works with strategic advisor Alvarez & Marsal LLC, a global performance improvement and turnaround consulting firm, to assist the management team on a restructuring plan that has been underway since July 2008. The Company's restructuring counsel is Lynn L. Tavenner, Esq., and Paula S. Beran, Esq., at Tavenner & Beran, PLC, its corporate counsel is McGuire Woods LLP, and its claims agent is Kurtzman Carson Consultants. Wells Fargo Retail Finance LLC is the company's administrative and collateral agent. The Company listed $41,440,100 in assets and $35,499,00 in debts. SBARRO INC: Provides Preliminary 4th Qrtr. & Fiscal 2008 Results ---------------------------------------------------------------- Sbarro, Inc, disclosed in a regulatory filing dated February 6, 2009, that it expects to report revenues of approximately $98.7 million for the quarter ended December 28, 2008 as compared to $104.7 million for the quarter ended December 30, 2007. "The decrease in revenues was primarily due to a decline in comparable unit sales in our company owned stores partially offset by sales from new store openings," Dan Montgomery, vice president and chief financial officer, said. The Company expects to report a decline of approximately 6.9% in comparable unit sales for company owned stores in the quarter ended December 28, 2008, as compared to the fourth quarter of last year. In the quarter ended December 30, 2007, the year-over-year decline in comparable unit sales was 1.8%. The weaker performance in the fourth quarter of 2008 primarily reflects reduced mall traffic throughout the United States as a result of the current economic environment. According to Mr. Montgomery, "EBITDA, as calculated in accordance with the terms of our bank credit agreement, is expected to be approximately $17.1 million for the quarter ended December 28, 2008 as compared to $23.9 million for the quarter ended December 30, 2007. The decline in EBITDA was primarily due to the decline in comparable unit sales in our company owned stores and increased product costs." "In the fourth quarter of 2008, prices for our key commodities, such as cheese and flour, began to stabilize. As a result, commodity costs in the fourth quarter of 2008 were not as significant a contributor to the lower level of profitability as they had been in the previous three quarters. In the early part of 2009, the price we pay for cheese, flour and related items have dropped significantly as compared to the prices we paid throughout 2008 and in some cases have returned to more historical price levels." During the fourth quarter of 2008, the Company drew down approximately $20 million under its revolving credit facility and, given existing letter of credit commitments, has remaining availability of approximately $1 million. The Company estimates that it had total cash and cash equivalents on hand of approximately $38.3 million as of December 28, 2008. On February 2, 2009, the Company made its scheduled semi-annual interest payment on its Senior Notes due 2015. Selected Preliminary Fiscal 2008 Results of Operations The Company has reported operating results and its financial position for all periods presented as of and prior to January 30, 2007 -- prior to completion of a change in control of the Company pursuant to a merger -- as a predecessor period of the Company and for all periods from and after January 31, 2007, the date of the merger, as successor periods of the Company. The Company's operating results for the fiscal year ended December 30, 2007 are presented as the "combined" results of the predecessor and successor periods of the Company. The presentation of "combined" results is not consistent with the requirements of GAAP; however, the Company's management believes that it is a meaningful way to present the results of operations for the fiscal year ended December 30, 2007. The Company expects to report revenues of approximately $359.2 million for the fiscal year ended December 28, 2008, as compared to $358.8 million for the combined fiscal year ended December 30, 2007. "The increase in revenues was driven primarily by new company owned stores and royalties on new franchised restaurants opened in 2007 and 2008, offset by a decline in company owned comparable unit sales and reduced royalties due to the decline in domestic franchise comparable unit sales," Mr. Montgomery said. For the fiscal year ended December 28, 2008, the Company expects to report a decline of approximately 2.2% in comparable unit sales for company owned stores, as compared to the prior fiscal year. In the combined fiscal year ended December 30, 2007, the year- over-year increase in comparable unit sales was 1.5%. "EBITDA, as calculated in accordance with the terms of our bank credit agreement, is expected to be approximately $43.7 million for the fiscal year ended December 28, 2008 as compared to $58.2 million for the combined fiscal year ended December 30, 2007. The decline in EBITDA was primarily due to the decline in comparable unit sales in our company owned stores as well as our domestic franchise restaurants and increased product costs," Mr. Montgomery added. Discussions with Lenders Regarding Amendment to Credit Facility Based on preliminary financial results for the quarter and year ended December 28, 2008, the Company anticipates that when it delivers its audited financial information for the fiscal year ended December 28, 2008, to its agent bank in April 2009, in accordance with the requirements of its bank credit agreement, it will not be in compliance with certain financial covenants under that agreement, which would constitute a default (with effect from December 28, 2008) under that agreement. In view of this expectation, the Company has started discussions with its agent bank regarding amendments to certain provisions of its bank credit agreement. There can be no assurance that the Company will be able to negotiate any amendment on terms acceptable to the Company or at all. The failure to negotiate an amendment or alternatively to obtain a waiver from its agent bank for any covenant non- compliance could have a material and adverse effect on the Company. A full-text copy of the company's Selected Preliminary Fourth Quarter and Fiscal 2008 Results of Operations and Business Update dated as of February 5, 2009, is available for free at: http://researcharchives.com/t/s?3961 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. Entities controlled by MidOcean Partners III, LP, a private equity firm, and certain of its affiliates acquired the Company, pursuant to an agreement and plan of merger on January 31, 2007. MidOcean SBR Acquisition Corp., a wholly-owned subsidiary of Sbarro Holdings, LLC, merged with and into the Company, with the Company surviving the Merger. Sbarro Holdings, LLC is a wholly-owned subsidiary of MidOcean SBR Holdings, LLC. Sbarro Holdings, LLC owns 100% of the Company's outstanding common stock and Holdings owns 100% of the limited liability company interests of Sbarro Holdings, LLC. MidOcean owns approximately 74% of Holdings and thus acquired control of the Company in the Merger. Certain of the Company's senior managers acquired approximately 5% of the outstanding equity of Holdings in connection with the Merger, with the balance of the equity of Holdings being owned by other investors. * * * As reported by the Troubled Company Reporter on Feb. 3, 2009, Standard & Poor's Ratings Services cut its corporate credit rating on Sbarro to 'CC' from 'CCC'. The outlook is negative. S&P also lowered the ratings on the company's $25 million revolving facility and $183 million first-lien term loan to 'CC' from 'CCC'. The downgrade reflects S&P's belief that negative operating trends will continue to erode Sbarro's liquidity, thereby limiting the company's capability to service its debt, said Standard & Poor's credit analyst Mariola Borysiak. In January, Moody's Investors Service downgraded the probability of default rating as well as the corporate family rating of Sbarro to Caa2 from Caa1. Moody's also lowered the company's speculative grade liquidity rating to SGL-4 from SGL-3. The outlook is negative. Moody's said the ratings downgrade reflects Sbarro's weaker than expected operating performance which continues to pressure margins and cash flows. The downgrade also reflects Moody's view that -- given the company's weak operating performance -- Sbarro may have difficulty meeting financial covenants in its bank credit facility, which tighten over the next several quarters. SEMGROUP LP: Wants Feb. 23 Auction or Wind Down for Asphalt Biz --------------------------------------------------------------- SemGroup, L.P.'s debtor affiliate SemMaterials, L.P. seeks approval from the U.S. Bankruptcy Court for the District of Delaware to approve (i) a Feb. 23 auction and sale of all or substantially all of its assets; or in the alternative, (ii) a winding-down of SemMaterials and the rejection of a terminalling agreement with non-debtor affiliate SemGroup Energy Partners, L.P. SemMaterials is primarily engaged in the business of purchasing, producing, storing, and distributing liquid asphalt cement products, emulsions, and residual fuel throughout the United States, as well as research and development. The SemMaterials Business employs approximately 560 individuals. On January 14, 2008, SemMaterials entered into a purchase and sale agreement with SemGroup Energy Partners, L.P., pursuant to which SemMaterials sold certain domestically owned liquid asphalt cement assets with a net book value of approximately $145 million for a purchase price of approximately $378.8 million. The sale closed on February 20, 2008. In connection with the Asphalt Purchase Agreement, SemMaterials and SGLP also entered into a terminalling and storage agreement. Under the Terminalling Agreement, SGLP provides SemMaterials storage and terminalling services that are subject to minimum monthly volume requirements, regardless of the volume actually used by SemMaterials in a given month. Based on these throughput and storage requirements, SemMaterials is obligated to pay SGLP approximately $5 million per month. Furthermore, the agreements and the sale of assets to the SGLP have created a complex relationship between SGLP and SemMaterials where physical assets are inextricably intertwined and a multitude of employees regularly split duties between both entities. This has created a further challenge for the marketing process. SemMaterials' Business relies in great part on the ability to purchase liquid asphalt product at reduced prices and store it during the winter seasons, when there is limited road construction activity, and later selling the stored product for a higher price during the summer months, as construction activity and demand for the liquid asphalt product increases. SemMaterial's Business is faced with a number of material obstacles: (i) the fact that the Business has been substantially curtailed since the commencement of the bankruptcy case; (ii) substantial working capital requirements to fund seasonal inventory purchases; (iii) high fixed costs, including $5 million in monthly payments under the Terminalling Agreement, which result in total monthly "hold costs" for the Debtors of approximately $15 million; and (iv) a highly seasonal business in which expected cash expenditures exceed expected cash revenue during a number of months of each year. In addition, since the commencement of the chapter 11 cases, SemMaterials has been unable to obtain financing that would allow it purchase inventory for its seasonal build in accordance with normal industry practices. In light of the foregoing, and the financial burden imposed on the Debtors' estates by the Business, Debtors, in consultation with their professionals, do not believe that continuing to own the Business is in the best interests of the Debtors' estates. Cost of Terminalling Agreement Scares Away Buyers Since the commencement of their chapter 11 cases, the Debtors, in consultation with their professionals, have diligently evaluated restructuring and cost-cutting measures designed to maximize the value of SemMaterials, including engaging in good faith discussions with SGLP to amend the terms of the Terminalling Agreement. In addition, the Debtors have had discussions with SGLP about jointly marketing the asphalt assets. In addition, SemMaterials has been selling existing inventory to meet sales commitments and, to date, has generated approximately $275 million from the sale of its working capital. Unable to reach any agreement with SGLP, on August 26, 2008, Blackstone Advisory Services L.P. began contacting potential buyers and began to market the Business. Blackstone directly contacted over 130 parties to promote interest in the SemMaterials sale process. Seventy-five interested parties received a comprehensive confidential information memorandum which outlined the SemMaterials business divisions, the asphalt industry dynamics and detailed financial projections. On October 6, 2008, Blackstone received six first-round, qualified bids for the Business and these parties were provided access to an electronic data room to conduct comprehensive due diligence on the Business. Following management presentations all but one potential buyer withdrew from the marking process for, among other things, the following reasons: (i) the high fixed costs associated with the Terminalling Agreement's lease payment obligations; (ii) the Business's working capital needs and the seasonal nature of its cash flow; and (iii) the impact on the Business from the failure to secure asphalt ahead of the 2009 season. One potential buyer who has negotiated a modified Terminalling Agreement continues to remain in the process. However, given the current financing environment, it remains unclear whether that party will be able to successfully obtain the financing required the complete the purchase. Despite their best efforts, at this time, the Debtors do not have a stalking horse. Further, and given that the carrying costs of the Terminalling Agreement and the operating cash burn are approximately $5 million and $10 million per month respectively, the Debtors have determined, in their business judgment, the need to either sell the Business in the near term to avoid a further cash drain or, if the auction process is unsuccessful, reject the Terminalling Agreement and liquidate the Business. February 23 Auction The Debtors ask the Court to approve these Bid Procedures: -- Deadline to submit bids will be on Feb. 18, 2009. -- Qualified bidders will be identified by Feb. 20, 2009. -- An auction will be conducted at the offices of Weil, Gotshal & Manges LLP, on Feb. 23, if one or more qualifying bids are received. -- Within two days after the adjournment of the auction, the Debtors in consultation with their creditors committee and agent to their lenders will make a determination whether to accept or reject the successful bid at the auction. -- The Debtors will seek the Court's approval of the successful bid at a sale hearing on Feb. 26. If the Auction does not result in a transaction the Debtors believe they should consummate, they will ask the Court to approve the rejection of the Terminalling Agreement and wind down of the Business. The Debtors do not believe that it would be a proper exercise of their business judgment to continue to support the Business given the significant challenges. Bloomberg's Bill Rochelle notes that SemGroup sought approval of the sale or winding down of SemMaterials without gaining authorization from the management committee now controlled by New York supermarket owner John A. Catsimatidis. About SemGroup LP SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SIMMONS COMPANY: Gets Forbearance Until March 31 for $200M Notes ---------------------------------------------------------------- Simmons Bedding Company, a subsidiary of Simmons Company and a leading manufacturer of premium-branded bedding products, disclosed on February 5, 2009, that the ad hoc committee of holders of its $200 million 7.785% senior subordinated notes, which represents 60% of the Notes, has approved a forbearance agreement with the Company through March 31, 2009. The committee is pursuing approval from additional Note holders to make the forbearance agreement effective. "We appreciate the confidence that the ad hoc committee for the Notes has shown by approving the forbearance agreement and we look forward to finalizing the restructuring in a timely manner," said Stephen G. Fendrich, Simmons Bedding's President and Chief Operating Officer. "Simmons continues to make progress working with its various financial stakeholders to design and implement a balance sheet restructuring," continued Mr. Fendrich. "We have the support of our vendors and we continue to provide our customers with the same level of quality and service that they have come to expect from us." Simmons Bedding Company reached an agreement with its senior bank lenders in December 2008 to extend their forbearance period to March 31, 2009. The forbearance period is intended to provide the Company with sufficient time to reduce the leverage on its balance sheet through an organized financial restructuring. The ad hoc committee's legal counsel is Brian Hermann of Paul, Weiss, Rifkind, Wharton & Garrison LLP and The Blackstone Group is the committee's financial advisor. Weil, Gotshal & Manges LLP and Miller Buckfire & Co., LLC are advising Simmons. A full-text copy of the Forbearance Agreement is available for free at: http://researcharchives.com/t/s?395d About Simmons Company Headquartered in Atlanta, Georgia, Simmons Company -- http://www.simmons.com/-- is a mattress manufacturer and marketer of a range of products through its indirect subsidiary Simmons Bedding Company. Products includes Beautyrest(R), Beautyrest Black(TM), ComforPedic by Simmons(TM), Natural Care(TM), BackCare(R), Beautyrest Beginnings(TM) and Deep Sleep(R). Simmons Bedding Company operates 21 conventional bedding manufacturing facilities and two juvenile bedding manufacturing facilities across the United States, Canada and Puerto Rico. Simmons also serves as a key supplier of bedding to hotel groups and resort properties. The Troubled Company Reporter reported on January 23, 2009, that Standard & Poor' Ratings Services said that it lowered its corporate credit rating on Atlanta, Georgia-based Simmons Co. to 'SD' from 'CCC'. S&P also lowered the ratings on wholly-owned subsidiary Simmons Bedding Co.'s 7.875% subordinated notes due 2014 to 'D' from 'CCC'. The recovery rating for these notes remains '3'. In addition, S&P lowered the ratings on Simmons Bedding's senior secured bank facility to 'CC' from 'B-', and the recovery rating remains a '1'. Standard & Poor's also lowered the ratings for both Simmons Co.'s unsecured notes and holding company Simmons Holdco Inc.'s unsecured notes to 'C' from 'CC'. The recovery ratings for these remain a '6'. S&P also removed the ratings from CreditWatch with developing implications, where S&P originally placed them with negative implications on Aug. 12, 2008, following the company's drawdown of its revolving credit facility. S&P subsequently lowered the ratings to the current levels following two separate rating actions on Oct. 22, 2008 and Nov. 14, 2008. On the latter date, S&P revised the CreditWatch listing to developing from negative. As of Sept. 27, 2008, Simmons Co. had close to $1.3 billion in total debt, including debt at Simmons Holdco. SMITTY'S BUILDING: Wants March 30 as General Claims Bar Date ------------------------------------------------------------ Smitty's Building Supply Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Virginia to approve the form of notice of the claims bar date and establish bar dates for creditors to file proofs of claim as: -- establishing a claims bar date for all claims that arose prior to the commencement date against any of the Debtors to require creditors holding a general claim to file a proof of claim no later than March 30, 2009; -- establishing a claims bar date for all holders of general claim that are served with notice that the Debtors amended their schedules of assets and liabilities reducing, deleting or changing the status of a general claim in the schedules of thirty days after service of the amendment notice; -- establishing a bar date for creditors holding claims pursuant to the Debtors' rejection of a contract or lease after entry of an order authorizing rejection to require creditors holding the rejected claims to file proofs of claim by the later of the general claims bar date or thirty days after the effective date of rejection; and -- establishing a claims bar date for governmental units of July 6, 2009. The Debtors relate that to implement the plan and the disclosure statement process, it is imperative that the Debtors have determined the scope of claims in the case. Creditors will not be prejudiced by a general claims bar date of March 30, 2009. Creditors were provided with notice of the bankruptcy and meeting of creditors on Jan. 9, 2009, well as an amended notice on Feb. 4, 2009. The Debtors proposed general claims bar date is well over two months after the original notice of bankruptcy was mailed to creditors and will be over one months after the Debtors are required to file their schedules and statements of financial affairs, giving creditors ample time to review them and determine whether they need to file a proof of claim. About Smitty's Building Headquartered in Alexandria, Virginia, Smitty's Building Supply Inc. supplies building materials in Washington, D.C. The Company and three of its affiliates filed for Chapter 11 protection on Jan. 5, 2009 (Bankr. D. Del. Lead Case No. 09-10040). Kristen E. Burgers, Esq., and Lawrence Allen Katz, Esq., at Venable LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC serves as the Debtors' claims agent. When the company filed for protection from their creditors, they listed assets and debts between $10 million and $50 million in their filing. SMITTY'S BUILDING: Section 341(a) Meeting Set for February 25 ------------------------------------------------------------- The United States Trustee for Region 4 will convene a meeting of creditors of Smitty's Building Supply Inc. and its debtor- affiliates on Feb. 25, 2009, at 3:00 p.m., at 115 South Union Street, Suite 210, Room 206 in Alexandria, Virginia. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Smitty's Building Headquartered in Alexandria, Virginia, Smitty's Building Supply Inc. supplies building materials in Washington, D.C. The Company and three of its affiliates filed for Chapter 11 protection on Jan. 5, 2009 (Bankr. D. Del. Lead Case No. 09-10040). Kristen E. Burgers, Esq., and Lawrence Allen Katz, Esq., at Venable LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC serves as the Debtors' claims agent. When the company filed for protection from their creditors, they listed assets and debts between $10 million and $50 million in their filing. SMITTY'S BUILDING: US Trustee Forms Seven-Member Creditors Panel ---------------------------------------------------------------- The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors of Smitty's Building Supply Inc. and its debtor-affiliates. The members of the Committee are: 1) Lightstyles, LTD Robert L. Slagle, President rslagle@lightstyles.com 1261 Claremont Rd Carlisle, PA 17015 Tel: (717) 241-6442 Fax: (717) 241-6772 2) Snavely Forest Products ssimpson@sfpusa.com 1251 New Windsor Road Westminister, MD 21158 Sharon S. Simpson, Credit Manager Tel: (410) 848-1300 x 200 Fax: (410) 857-6134 fax 3) Jefferson Homebuilders, Inc. joe_daniel@culpeperwood.com fka Culpeper Wood Preservers Joseph R. Daniel, President P.O. Box 1148 Culpeper, VA 22701 Tel: (540) 825-5200 Fax: (540) 825-9162 fax 4) Atlantic Forest Products johnson@atlanticforest.com 240 West Dickinson St. Baltimore, MD 21230 Russell W. Johnson, President Tel: (410) 752-8092 Fax: (410) 539-2494 5) Madison Wood Preservers, Inc. jtdlaw@verizon.net c/o John T. Donelan, Esq. 125 S. Royal Street Alexandria, VA 22314 Tel: (703) 684-7555 Fax: (703) 684-0981 6) Rocco Building Supplies, LLC afcanada@roccobuilding.com A. Fontaine Canada, President P.O. Box 1860 Harrisonburg, VA 22801 Tel: (540) 437-4852 Fax: (540) 434-4593 7) BWI of PA jcortese@bwimillwork.com Jack Cortese, President 210 Industrial Parkway Branchburg, NJ 08876 Tel: (908) 526-7555 Fax: (908) 526-5450 fax 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. About Smitty's Building Headquartered in Alexandria, Virginia, Smitty's Building Supply Inc. supplies building materials in Washington, D.C. The Company and three of its affiliates filed for Chapter 11 protection on Jan. 5, 2009 (Bankr. D. Del. Lead Case No. 09-10040). Kristen E. Burgers, Esq., and Lawrence Allen Katz, Esq., at Venable LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC serves as the Debtors' claims agent. When the company filed for protection from their creditors, they listed assets and debts between $10 million and $50 million in their filing. SMITTY'S BUILDING: Gets Final Approval to Access BoA DIP Facility ----------------------------------------------------------------- Sephen S. Mitchell of the United States Bankruptcy Court for the District of Delaware authorized Smitty's Building Supply Inc. and its debtor-affiliates to obtain, on a final basis, debtor-in- possession financing under the postpetition credit and security agreement with Bank of America, N.A., as lender. Judge Mitchell said all objections to the motion have been withdrawn. The Debtors owe the lender $12,287,544 comprised of a $6,725,000 revolving line of credit, a $4,728,888 real estate term loan, and $833,656 conversion term loan, as of their bankruptcy filing. Proceeds of the facilities will be used to (i) repay in full all prepetition obligations as of the Debtors' bankruptcy filing, and (ii) provide working capital, costs and professionals fees. The salient terms of the DIP facility are: DIP Amount: A senior revolving credit facility including the prepetition Revolving Credit Facility, in the maximum principal amount of $8,500,000, through April 30, 2009; the maximum principal amount of $9,750,000 from May 1, 2009 through June 30, 2009, and the maximum principal amount of $10,500,000 from July 1, 2009, through August 15, 2009, with funds to be made available to the Debtors pursuant to an agreed Borrowing Base and compliance with certain availability requirements. A senior term loan in the amount of $5,562,545 including the pre-petition real estate term loan and conversion term loan. Maturity Date: August 15, 2009. Interest: BBA 1-month LIBOR + 450 basis points Advance Rates: 80% of eligible receivables plus 50% of eligible inventory plus a $3,750,000 minus the carve-out minus reserves as may from time to time be established in good faith. The DIP facility is subject to a $250,000 carve-out for professional fee. To secure their DIP obligations, the lender will be granted superpriority administrative claims status priority over and any administrative expense claims, among other things. A full-text copy of the revolving loan note is available for free at: http://ResearchArchives.com/t/s?379a A full-text copy of the term loan note is available for free at: http://ResearchArchives.com/t/s?379b A full-text copy of the postpetition credit and security agreement is available for free at http://ResearchArchives.com/t/s?379d A full-text copy of the 13-week cash flow budget is available for free at: http://ResearchArchives.com/t/s?379d About Smitty's Building Headquartered in Alexandria, Virginia, Smitty's Building Supply Inc. supplies building materials in Washington, D.C. The Company and three of its affiliates filed for Chapter 11 protection on Jan. 5, 2009 (Bankr. D. Del. Lead Case No. 09-10040). Kristen E. Burgers, Esq., and Lawrence Allen Katz, Esq., at Venable LLP, represent the Debtors in their restructuring efforts. Epiq Bankruptcy Solutions LLC serves as the Debtors' claims agent. When the company filed for protection from their creditors, they listed assets and debts between $10 million and $50 million in their filing. SOUTHEAST BANKING: Court Okays Payment of Break-Up Fee to Modena ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida approved on Feb. 9, 2009, the request of Jeffrey H. Beck, the Chapter 11 Trustee for the estate of Southeast Banking Corp., for the payment of (I) a break-up fee in the amount of $1,500,000 in favor of Modena 2004-1 LLC, the equity investor for the Trustee's Second Amended Chapter 11 Plan of Reorganization, and (II) repayment of a $500,000 reimbursement fee back to Modena 2004-1 LLC, in accordance with and under the conditions set forth in the Master Subscription Agreement. If the Plan is not confirmed and the case is either converted back to Chapter 7 or an alternative liquidating plan is later confirmed, no break-up fee will be payable to Modena. As reported in the Troubled Company Reporter on Jan. 13, 2009, the Plan proposes to rehabilitate SEBC and certain of its non- debtor subsidiaries by recapitalizing SEBC through an investment of $1.639 billion by Modena 2004-1 LLC, an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc., and reorganizing SEBC into SEBC Financial Corporation, with a new holding company, SEBC Holdings, LP. SEBC Holdings will own 60% of the common stock of Reorganized SEBC and a new subsidiary, SEBC Real Estate, LLC, that will acquire and hold SEBC's real estate-owning subsidiaries. The equity investment would be utilized by Reorganized SEBC to purchase equity securities from a newly formed special purpose vehicle to be established on or after the Closing Date. The Court finds that the amount of the break-up fee is reasonable relative to both (a) the contemplated $1.639 billion investment that the investor proposes to make in SEBC if the Plan is confirmed and consummated, and (b) the time and expense incurred by the investor in its due diligence, negotiation and drafting with respect to the Plan. About Southeast Banking Southeast Banking Corp. was the holding company of Southeast Bank, N.A., and its sister institution, Southeast Bank of West Florida, and the direct or indirect parent of a number of subsidiary corporations and affiliates, active and inactive, which at various times conducted substantial business throughout the State of Florida and beyond. The businesses of SEBC and its affiliates consisted of banking, real estate investment and development, insurance, mortgage banking, venture capital, and asset investment. At the time of their failure the Banks had total assets of $10.5 billion and total deposits of $7.6 billion. Most of the assets were with SEBNA, which had 218 of the combined 224 branches and all but $100 million of the assets. Together, the two banks had approximately 6,200 employees, operating exclusively in Florida. On Sept. 20, 1991, Southeast Bank filed a voluntary petition under Chapter 7 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 91-14561). Southeast Bank, N.A., was seized by federal regulators while Southeast Bank of West Florida was seized by state regulators on Sept. 19, 1991. On Sept. 20, 1991, SEBC's board of directors voted to authorize the filing of a voluntary Chapter 7 petition, and then promptly resigned along with all of SEBC's officers. Jeffrey H. Beck was the fourth trustee appointed in the Debtor's liquidation proceeding. This Bankruptcy Case was converted to Chapter 11 on Sept. 17, 2007, almost sixteen years after its initial filing. SOUTHEAST BANKING: Court Sets March 9 Plan Confirmation Hearing --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida approved at a hearing on Feb. 11, 2009, the adequacy of the amended disclosure statement filed by Jeffrey H. Beck, the Chapter 11 Trustee for the estate of Southeast Banking Corp., in support of the Trustee's Third Amended Chapter 11 Plan of Reorganization. The Court has set a confirmation hearing at 9:30 a.m. on March 9, 2009. The deadline for filing objections to confirmation of the Plan is on Feb. 27, 2009. As reported in the Troubled Company Reporter on Jan. 13, 2009, the Plan proposes to rehabilitate SEBC and certain of its non- debtor subsidiaries by recapitalizing SEBC through an investment of $1.639 billion by Modena 2004-1 LLC, an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc., and reorganizing SEBC into SEBC Financial Corporation, with a new holding company, SEBC Holdings, LP. SEBC Holdings will own 60% of the common stock of Reorganized SEBC and a new subsidiary, SEBC Real Estate, LLC, that will acquire and hold SEBC's real estate-owning subsidiaries. The equity investment would be utilized by Reorganized SEBC to purchase equity securities from a newly formed special purpose vehicle to be established on or after the Closing Date. A full-text copy of the Disclosure Statement explaining the Chapter 11 Trustee's Third Amended Plan for Southeast Banking Corp., dated Feb. 9, 2009, is available for free at: http://bankrupt.com/misc/SoutheastBankingDSThirdAmendedPlan.pdf About Southeast Banking Southeast Banking Corp. was the holding company of Southeast Bank, N.A., and its sister institution, Southeast Bank of West Florida, and the direct or indirect parent of a number of subsidiary corporations and affiliates, active and inactive, which at various times conducted substantial business throughout the State of Florida and beyond. The businesses of SEBC and its affiliates consisted of banking, real estate investment and development, insurance, mortgage banking, venture capital, and asset investment. At the time of their failure the Banks had total assets of $10.5 billion and total deposits of $7.6 billion. Most of the assets were with SEBNA, which had 218 of the combined 224 branches and all but $100 million of the assets. Together, the two banks had approximately 6,200 employees, operating exclusively in Florida. On Sept. 20, 1991, Southeast Bank filed a voluntary petition under Chapter 7 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 91-14561). Southeast Bank, N.A., was seized by federal regulators while Southeast Bank of West Florida was seized by state regulators on Sept. 19, 1991. On Sept. 20, 1991, SEBC's board of directors voted to authorize the filing of a voluntary Chapter 7 petition, and then promptly resigned along with all of SEBC's officers. Jeffrey H. Beck was the fourth trustee appointed in the Debtor's liquidation proceeding. This Bankruptcy Case was converted to Chapter 11 on Sept. 17, 2007, almost sixteen years after its initial filing. SOUTHWEST CHARTER: GE Wants Ch. 7 Conversion or Collateral Release ------------------------------------------------------------------ General Electric Capital Corp. asks the U.S. Bankruptcy Court for the District of Arizona to compel Southwest Charter Lines Incorporated to turnover and release possession of General Electric's collateral, or in the alternative, to convert the Debtor's case to one under Chapter 7 of the Bankruptcy Code. General Electric holds a valid and perfected security interest in various motor coaches and trailers of various makes and models. On or about Oct. 23, 2008, the Debtor and General Electric stipulated to the entry of an order in connection with General Electric's motion for relief from stay, which was entered by the Court on Oct. 23, 2008. The stipulated order provided for certain monthly payments. Due to the Debtor defaulting on the payments, the Court entered the order for relief from the automatic stay on Nov. 19, 2008. General Electric tells the Court that the Debtor has refused to relinquish its collateral and that this failure to turn over the collateral is in direct violation of the Court's order. General Electric adds that that "cause" also exists for conversion of the Debtor's case to a Chapter 7 proceeding: 1. The Debtor's pattern of selling collateral without court approval and failing to turn over the sales proceeds to secured creditors; 2. Failure to file a plan and disclosure statement within a reasonable time; 3. Continuing failure to make adequate protection and regular monthly payments to secured creditors 4. Failure to file monthly operating reports since October, 2008. 5. Apparent failure to maintain insurance on estate property, and other creditor's collateral. Headquartered in Gilbert, Arizona, Southwest Charter Lines Inc. -- http://www.swcl.com/-- operates, rents, and leases buses, trucks, trailers, and modular buildings. The company filed for Chapter 11 bankruptcy protection on May 29, 2008 (Bankr. D. Ariz. Case No. 08-06252). Donald W. Powell, Esq. at Carmichael & Powell PC, represents the Debtor as bankruptcy counsel. When the Debtor filed for Chapter 11 restructuring, it listed total assets of $12,907,933 and total debts of $12,352,275. SPECTRUM BRANDS: Court Confirms Admin. Status of 20-Day Goods ------------------------------------------------------------- In the ordinary course of Spectrum Brands Inc. and its affiliates' business, numerous Vendors honor orders received from the Debtors for a variety of Goods, including, without limitation, packaging supplies, flashlights, hairdryers, bottles, pet health and wellness products and aquatics equipment and accessories. As a result, on a regular basis, large quantities of Goods are delivered to the Debtors' facilities. As of the Petition Date, there were a number of Outstanding Orders for Goods yet to be delivered. These Goods, the Debtors assert, are absolutely essential to the sustained operations of their businesses and their efforts to reorganize. The Debtors believe that, as a result of their bankruptcy filings, many of the Vendors will be concerned that they will not be paid for Goods delivered on or after the Petition Date, if that delivery or shipment is based on an Outstanding Order. The Debtors estimate that approximately $44,000,000 in respect of 20-Day Goods is now due or will become due and payable in the near future. In the absence of a confirmation that postpetition delivery or other performance under an Outstanding Order will give rise to an administrative expense claim that must be paid, many Vendors may decline to ship, or may instruct their shippers not to deliver Goods destined for the Debtors, their proposed counsel, D.J. Baker, Esq., at Skadden, Arps, D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, told Judge Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas. Other Vendors, Mr. Baker added, will condition postpetition delivery or other performance on the issuance of substitute purchase orders, which would be extremely disruptive to the Debtors' ongoing business operations. Accordingly, at the Debtors' behest, the Court confirmed that: (a) the Debtors' suppliers and vendors will have administrative expense claims under Sections 503(b) and 507(a)(2) of the Bankruptcy Code for those undisputed obligations arising from prepetition purchase orders outstanding on the Petition Date relating to the shipments of Goods on or after the Petition Date; and (b) Vendors will have administrative expense claims under Section 503(b)(9) for those undisputed obligations related to shipments of Goods within 20 days before the Petition Date. The Debtors are authorized to pay their undisputed obligations arising from goods delivered to and received by the Debtors on or after the Petition Date in the ordinary course of business, consistent with the Debtors' prepetition customary practices. The Debtors are authorized, in their sole discretion, to pay claims arising from the 20-Day Goods after the Petition Date. In exercising their payment discretion, the Debtors may elect to only pay part of a claim for 20-Day Goods, leaving the remainder to be paid pursuant to their plan of reorganization. Any Vendor that accepts payment of a claim arising from the 20- Day Goods will be deemed to have agreed to (a) release any liens it may have on the Debtors' goods or property; and (b) continue to provide Goods to the Debtors on terms and conditions as good or better than those that existed on January 1, 2009, during the pendency of the Chapter 11 cases. If a Vendor accepts payment and thereafter does not continue to provide Goods to the Debtors on the Customary Terms during the pendency of the Chapter 11 cases, then (i) any payment on a claim for 20-Day Goods received by that Vendor will be deemed to be an unauthorized voidable postpetition transfer under Section 549 and recoverable by the Debtors in cash upon written request; and (ii) upon recovery by the Debtors, any claim for 20-Day Goods will be reinstated as if the payment had not been made, less the Debtors' reasonable costs in recovering the amounts. If the Debtors seek to recover a payment for 20-Day Goods from a Vendor because the Vendor does not continue to provide Goods to the Debtors on at least the Customary Terms during the pendency of the Chapter 11 cases, that Vendor may contest that action by making a written request to the Debtors to schedule a hearing before the Court. The Debtors are authorized, in their sole discretion, under Section 546(h), to return Goods purchased from the Vendors by the Debtors prior to the Petition Date, for credit against that Vendors' prepetition claims. The Order preserves the rights of Vendors to seek to establish an allowed administrative expense claim, if and to that extent that: * the Vendor makes a timely, written demand for reclamation of Goods pursuant to Section 546(c)(1) and Section 2-702 of the Uniform Commercial Code; * the Debtors have received and accepted the Vendor's Goods and have not offered to make those Goods available for pick-up; * the Vendor has properly identified the Goods subject to reclamation and proves the validity and amount of its claim to the Debtors' satisfaction; and * the Vendor's claim is otherwise enforceable against the Debtors, subject, in each case, to any Prior Rights and any limitations imposed by any Court order with respect to the Debtors' proposed DIP financing agreement or otherwise. The Debtors have waived the right to take the position that an otherwise valid Reclamation Demand is rendered invalid by: * a Vendor's failure to take any or all possible "self-help" measures with respect to those Goods; * the failure of a Vendor to file an adversary proceeding against the Debtors seeking to enjoin them from using or selling those Goods or any other similar relief; or * the Debtors' continued use or sale of the Goods or proceeds therefrom after the Reclamation Demand was filed, served or delivered. The Debtors, however, have not waived any defense to a Reclamation Demand resulting from the failure of a Vendor to timely comply with any requirement under Section 546(c) or UCC Section 2-702 to the extent that act was not stayed by the automatic stay. All Reclamation Demands received by the Debtors will be preserved for proceedings later in the Chapter 11 cases. In the event that the Debtors' pre-negotiated plan of reorganization is not confirmed, or the terms of that plan are modified to provide for less than payment in full, the Debtors will initiate proceedings within 60 days after that denial or modification to determine whether the claims subject to the Reclamation Demands are entitled to administrative expense status. If the Court determines through the Reclamation Proceedings that the claims subject to the Reclamation Demands are entitled to be paid as administrative expense claims, then any allowed claims will be treated as administrative expense claims under the Plan. The Court prohibits Vendors from seeking any other treatment for their reclamation claims than is permitted under the Order, and all parties are prohibited from commencing adversary proceedings against the Debtors in respect of Reclamation Demands or any claims relating thereto. The Debtors are authorized to continue using the Goods in the ordinary course of their business, notwithstanding the assertion of a Reclamation Demand with respect to those Goods. Pursuant to Section 362, the Court prohibits Vendors and any other third parties from seeking to reclaim Goods that have already been delivered, or from interfering with the delivery of Goods presently in transit to the Debtors, absent further Court order. The Court also directs all applicable banks and other financial institutions to honor all checks drawn on the Debtors' accounts, and to honor all fund transfer requests made, in respect of payments made by the Debtors to the Vendors. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Starts Review on Leases; Rejects 5 Contracts ------------------------------------------------------------- Pursuant to Section 105(a), 365(a) and 554 of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, Spectrum Brands Inc. and its affiliates sought and obtained permission from Judge Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas to reject five leases and abandon to the Landlords any and all property within the premises of the properties subject to the leases. Rejection Lessee Location Date ------ ----------- ---------- IMC/Mosaic Property 4060 East 26th St., 03/31/2009 Vernon, California Reynolds Property 4139 Bandini Blvd., 03/31/2009 Los Angeles, California Winter Haven 2121 3rd St. SW, 01/02/2009 Winter Haven, Florida DART Warehouse 13890 Corporate Woods 01/02/2009 Trail, Bridgeton, Missouri Former UIC HQs 21560 Schuetz Rd., 01/02/2009 St. Louis, Missouri The Debtors also sought and obtained the Court's permission to authorize the Landlords, in their sole discretion and without further notice, to dispose of the Abandoned Property without liability to the Debtors or any third parties claiming an interest in the Abandoned Property. The, as part of their prepetition restructuring initiatives, vacated the Premises and surrendered possession to the Landlords prior to the Petition Date, and as to other of the Leases, intend to vacate the Premises within the next 60 days. The Debtors state that as to the Leases they have already been vacated, they currently derive no benefit from those Leases and have no other productive use for those Premises. With respect to the other Leases, the Debtors have determined that those Premises are no longer necessary for the Debtors' operations and that their closure within the next 60 days makes good business sense. The estimated monthly cost of the Leases is approximately $240,000. Through the rejection of the Leases, the Debtors tell the Court that they will be relieved from paying the rent and other costs, including taxes, insurance, utilities, operating expenses and other future related charges associated with the Leases. The Debtors add that they will also avoid incurring unnecessary administrative charges that provide no tangible benefit to the Debtors' estates thus enabling the Debtors to increase their future cash flow. Furthermore, the Debtors have determined that the abandonment of any Abandoned Property is appropriate because the property is of inconsequential value or the cost of removing and storing such property exceeds its value to the Debtors' estates. In connection with the rejection of certain of the Leases, the Debtors will surrender possession of the Premises to the landlord as of the Petition Date. As to other of the Leases, the Debtors will surrender possession within the next 60 days. The Debtors will continue to perform their respective obligations under the Leases through the Applicable Rejection Date. The Lessors have until March 7, 2009, to file any rejection damages claims. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Court Defers 341 Meeting & Panel Appointment ------------------------------------------------------------- Judge Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas deferred the Sec. 341 meeting, establishment of deadline for filing proofs of claim and appointment of an official creditors committee in the bankruptcy cases of Spectrum Brands, Inc., and its 13 subsidiaries. Judge King said the deferment of the setting of the General Bar Date is without prejudice to any request for the setting of a special bar date for rejection damages claim pursuant to any motion to reject filed by the Debtors. As reported by the Troubled Company Reporter on February 6, 2009, the Debtors asked the Court to either waive or defer the creditors meeting and claims bar date. The Debtors' proposed counsel, D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New York, explained that in this scenario where the Debtors have filed a prepackaged plan of reorganization, many of the administrative procedures that are routine in traditional cases are simply not necessary. Indeed, he says those procedures have the potential to delay confirmation, thereby negatively impacting not only the Debtors' opportunity for a successful reorganization but also the interests of all parties. Mr. Baker asserts that the unimpaired creditors do not need a meeting to gather information that will help them to protect their claims under a reorganization plan. He adds that the noteholders do not need a meeting given the support they gave to the restructuring proposed under the Plan. However, the Debtors state that if the Disclosure Statement is not approved by April 4, 2009, then the Court may schedule a Section 341 meeting on June 3, 2009. In their request, the Debtors also asked for a deferral or waiver of the appointment of an official unsecured creditors' committee given that the pre-negotiated Plan intends to reinstate the claims of general unsecured creditors, with those claims being paid on terms as would otherwise apply had the Debtors' bankruptcy cases not been filed. The Debtors asked that an appointment of an official creditors' committee be deferred until June 3, if the Disclosure Statement is not approved by April 4. If during the deferral period the Debtors withdraw the Plan or amend the Plan in a manner that impairs treatment of general unsecured creditors, the deferral would automatically terminate and the U.S. Trustee can proceed to appoint a creditors' committee. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Court Moves Schedules Filing Deadline to May 19 ---------------------------------------------------------------- Judge Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas extended the deadline for Spectrum Brands, Inc. and 13 subsidiaries to file schedules of assets and liabilities and statements of financial affairs until May 19, 2009. Moreover, the Court held that the filing of the schedules and statements are permanently waived upon confirmation of the Prepackaged Joint Plan of Reorganization within the extension period. The Debtors have said that given the size and complexity of their businesses, they do not believe that they will be in a position to accurately complete their Schedules and Statements within February 18, 2009. The Debtors' business operations require them to maintain voluminous books and records and complex accounting systems. Consequently, collecting the information necessary to complete the Schedules and Statements will require substantial time and effort on the part of the Debtors' employees. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Posts $112.7MM Net Loss for Qrtr. Ended December ----------------------------------------------------------------- Citing a strong top-line growth in its largest and most profitable business segment, Spectrum Brands disclosed consolidated net sales of $564.2 million for the quarter ended December 28, 2008, as compared to $604.7 million for the first quarter of fiscal year 2008 after excluding the Canadian division of the Home and Garden business, which the company sold in November 2007. Sales, excluding $34.8 million of unfavorable foreign exchange losses, were down less than one percent from sales in the same quarter last year. Consolidated adjusted EBITDA, a non-GAAP measurement which the Company believes is a useful indicator of the operating health of the business and its trajectory, benefited from the eighth consecutive quarter of adjusted EBITDA growth in the Global Batteries and Personal Care segment and was $53.7 million for the quarter. This amount included a negative impact of foreign exchange of $12.7 million. In comparison, consolidated adjusted EBITDA for the first quarter of fiscal year 2008 was $57.0 million. The results from both periods exclude the results from the company's growing products portion of the Home and Garden business. The company reported a net loss of $2.19 per share for the quarter. Excluding certain items which management believes are not indicative of the Company's on-going normalized operations, the Company generated an adjusted loss per share of $0.18, a non- GAAP number. These excluded items, net of tax, include: -- Restructuring and related charges of $52.7 million, or $1.03 per share, primarily associated with the company's strategy to exit the growing products portion of its Home and Garden business, its decision to exit Ningbo Baowang, a battery manufacturing facility in China, and company- wide cost reduction and integration initiatives; -- Net tax adjustments of $48.5 million, or $0.94 per share, to exclude the effect of certain adjustments made to the valuation allowance against net deferred taxes and other tax related items; -- A loss of $5.0 million, or $0.10 per share, from the growing products portion of the Home and Garden business, which is consistent with results in prior comparable periods which reflects the seasonality of this business; and -- Other items that net to a benefit of $2.9 million, or $0.06 per share. During the first quarter of fiscal year 2008, the company reported a net loss per fully diluted share of $0.85. Excluding net tax adjustments of $0.50, a loss of $0.10 from the growing products portion of the Home and Garden business, $0.03 for discontinued operations representing the company's sale of the Canadian portion of the Home and Garden business, restructuring and related charges of $0.06, and other items that net to a benefit of $0.10, the first quarter 2008 adjusted loss per fully diluted share was $0.26. Gross profit and gross margin for the quarter were $145.0 million and 25.7 percent, respectively, versus $217.7 million and 36.0 percent for the same period in fiscal year 2008. Within cost of sales the company incurred restructuring related charges of approximately $55.2 million, negatively impacting this quarter's margin by 978 basis points, primarily related to the company's decision to exit the growing products portion of the Home and Garden business. During the first quarter of 2008, cost of sales included $0.1 million of restructuring and related charges. First Quarter Segment Results Despite negative foreign exchange pressure and relatively poor holiday results for the majority of retailers, the Global Batteries and Personal Care segment reported a solid first quarter. Key placement and distribution wins for the holiday season were a major contributor, driving year-over-year improvement in adjusted EBITDA and strong share growth in many of its product categories. Consumers appear to be embracing the Rayovac value proposition, a trend the Company believes should continue. Net sales for the segment for the first quarter were $389.3 million compared with $418.0 million for the same period last fiscal year, a difference of $28.7 million, of which $33.2 million represents the impact of negative foreign exchange. Adjusted EBITDA was $53.2 million for the quarter. Excluding $13.2 million of negative foreign exchange impact, adjusted EBITDA was up 27.1 percent compared to last year. Segment profitability for this segment was $53.3 million for the quarter, up 13.0 percent over last year's level. The profit improvement was primarily due to the cost savings generated from more efficient operation of the company's manufacturing facilities and cost reduction initiatives. North America led the way in global battery sales with 21.8 percent growth in total batteries sales and 28.8 percent growth in alkaline batteries. Rayovac was the only major battery brand during the quarter to grow in both dollar share and dollar sales growth in all three major battery segments as defined by Nielsen: alkaline, heavy duty, and rechargeable. As the company continued its exit of unprofitable SKUs, including the shutdown of its Ningbo facility in China, which produced batteries sold into the European markets. European battery sales for the quarter were $94.8 million, as compared with $109.9 million last year. Foreign exchange losses negatively impacted European sales by $11.3 million. Latin American battery sales for the quarter were $38.0 million, down from $60.0 million last year, as the impact of foreign exchange and a dramatic slowdown in the economies of several countries, including Brazil, depressed sales. With double digit growth in women's hair care including strong sales volumes in both North America and Europe, global sales of Remington branded products were $144.9 million for the quarter, compared with $150.1 million during the same period of last year, down $5.2 million due to the impact of negative foreign exchange totaling $14.2 million. In addition to the company's continued success in hair care, its men's shaving business, led the by the introduction of the new Flex360 line of rotary shavers, delivered double digit POS growth during the holiday season at all major retailers in North America and the UK. Sales in men's shaving in North America were up over 20 percent for the quarter. The Global Pet Supplies Segment reported net sales of $132.4 million down from $142.5 million in the same period of last fiscal year, including $1.6 million of negative foreign exchange impact this quarter. Companion animal sales, which made up 37.5 percent of total segment sales, were up 3.8 percent while aquatics sales declined 12.6 percent due to lower sales of the company's higher priced aquatics equipment, which has been hurt by the economic downturn. Adjusted EBITDA for the Global Pet Supplies segment was $17.6 million for the quarter compared to $22.1 million last year. Segment profitability for Global Pet Supplies for the quarter was $12.0 million compared to $16.8 million last year due to lower sales of higher priced aquatics equipment as well as higher input cost of goods sold not yet offset by increased pricing. Spectrum's Home and Garden segment's net sales were $42.5 million, as compared with $44.2 million for the same period of last year. Sales of the Company's controls products during the quarter were $26.8 million, essentially flat with sales of $26.9 million during the same period last year. As announced in November, the company has substantially closed the growing products portion of its Home and Garden segment as of January 31, 2009. The company has seen no negative impact on its controls business as a result of its exit from growing products. Due to the seasonal nature of the Home and Garden business, the company reported an adjusted EBITDA loss from its Controls products for the quarter of $8.2 million, improved from its loss of $11.2 million in the same period last fiscal year due to downsizing of the organization and other cost reduction initiatives. Segment profitability for the quarter was a loss of $18.4 million for the Home and Garden business as compared with a loss in the prior year of $19.1 million. During the first quarter of fiscal 2008, no depreciation and amortization was recorded because the Home and Garden business was classified as a discontinued operation at that time. Taking into account the increase in depreciation and amortization recorded of $3.4 million, the favorable variance in segment profitability was due to a reduction in marketing and distribution expenses. Corporate expenses were $8.4 million for the quarter as compared with $8.3 million in corporate expenses during the first quarter of last year. Interest expense was $52.5 million compared to $57.2 million in the same period last year. Debt Refinancing On February 3, 2009, the company announced a proposed financial restructuring plan supported by bondholders representing, in the aggregate, a total of approximately 70 percent of the face value of the outstanding bonds, that would, if confirmed and consummated as proposed, significantly reduce the company's outstanding debt, which management believes will put the company in a stronger financial position for the future. To implement the refinancing in the most efficient manner and to take advantage of certain tax benefits, Spectrum Brands and all of its US subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Court. The company's non-US operations, which are legally separate, are not included in the Chapter 11 proceedings. Under the proposed plan, the company's debt would be reduced by approximately $840 million (or approximately one-third) and its annual cash interest obligations would decrease by approximately $95 million for each of the next two years. The company, assuming timely confirmation of the proposed plan, anticipates that it will emerge from this bankruptcy process in four to six months. There can be no assurances, however, that the proposed plan will be confirmed or consummated. The process of negotiating the proposed plan and preparing for a related chapter 11 bankruptcy filing has consumed a significant amount of management's time causing delays in completing the required disclosure and rendering management unable to complete its Form 10-Q for the quarter ended December 28, 2008, in a timely manner. However, it is currently anticipated that the Report will be filed within the five day extension period following the prescribed due date of the Report, or February 11, 2009. Until further notice, the Company expects to discontinue its practice of hosting quarterly earnings calls. SPECTRUM BRANDS, INC. Condensed Consolidated Statements of Operations For the three months ended December 28, 2008 and December 30, 2007 (Unaudited) (In millions, except per share amounts) THREE MONTHS F2009 F2008 (a) INC(DEC) % Net sales $ 564.2 $ 604.7 -6.7% Cost of goods sold 364.0 386.9 Restructuring and related charges 55.2 0.1 Gross profit 145.0 217.7 -33.4% Selling 118.1 136.3 General and administrative 38.0 39.2 Research and development 5.6 5.8 Restructuring and related charges 25.9 4.9 Total operating expenses 187.6 186.2 Operating income (42.6) 31.5 Interest expense 52.5 57.2 Other expense (income), net 3.7 (0.1) Loss from continuing operations before income taxes (98.8) (25.6) Income tax expense 13.9 16.5 Loss from continuing operations (112.7) (42.1) Loss from discontinued operations, net of tax (a) - (1.3) Net loss $ (112.7) $ (43.4) Average shares outstanding (b) 51.4 51.0 Loss from continuing operations $ (2.19) $ (0.82) Loss from discontinued operations - (0.03) Basic loss per share $ (2.19) $ (0.85) Average shares and common stock equivalents outstanding (b) (c) 51.4 51.0 Loss from continuing operations $ (2.19) $ (0.82) Loss from discontinued operations - (0.03) Diluted loss per share $ (2.19) $ (0.85) (a) Reflects the loss from discontinued operations, net of tax, of the Canadian Home & Garden business, discontinued effective October 1, 2006. Included in the loss from discontinued operations for the three months ended December 30, 2007, is a loss on disposal of $1.2 million, net of tax benefit. The company's Canadian Home and Garden business was sold on November 1, 2007. (b) Per share figures calculated prior to rounding. (c) For the three months ended December 28, 2008 and December 30, 2007, the company has not assumed the exercise of common stock equivalents as the impact would be antidilutive. SPECTRUM BRANDS, INC. Supplemental Financial Data For the three months ended December 28, 2008 and December 30, 2007 (Unaudited) ($ in millions) Supplemental Financial Data F2009 F2008 Cash $ 100.7 $ 84.9 Trade receivables, net $ 305.6 $ 359.7 Days Sales Outstanding (a) 48 54 Inventory, net $ 407.6 $ 449.9 Inventory Turnover (b) 4.0 3.6 Total Debt $ 2,604.9 $2,570.1 THREE MONTHS Supplemental Cash Flow Data F2009 F2008 Depreciation and amortization, excluding amortization of debt issuance costs $ 32.4 $ 16.2 Capital expenditures $ 1.9 $ 6.5 THREE MONTHS Supplemental Segment Sales & Profitability F2009 F2008 Net Sales Global Batteries & Personal Care $ 389.3 $ 418.0 Global Pet Supplies 132.4 142.5 Home and Garden 42.5 44.2 Total net sales $ 564.2 $ 604.7 Segment Profit (Loss) Global Batteries & Personal Care $ 53.3 $ 47.1 Global Pet Supplies 12.0 16.8 Home and Garden (18.4) (19.1) Total segment profit 46.9 44.8 Corporate 8.4 8.3 Restructuring and related charges 81.1 5.0 Interest expense 52.5 57.2 Other expense (income), net 3.7 (0.1) Loss from continuing operations before income taxes $ (98.8) $ (25.6) (a) Reflects actual days sales outstanding at end of period. (b) Reflects cost of sales (excluding restructuring and related charges) during the last twelve months divided by inventory as of the end of the period. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SYNOVICS PHARMACEUTICALS: Posts $4MM Net Loss in FY Ended Oct. 31 ----------------------------------------------------------------- Miller Ellin & Company, LLP, in New York, in a letter dated January 29, 2009, to Synovics Pharmaceuticals, Inc., expressed substantial doubt about the company's ability to continue as a going concern after auditing the consolidated balance sheets of Synovics Pharmaceuticals, Inc., and Subsidiaries as of October 31, 2008 and 2007 and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended October 31, 2008, 2007, and 2006. The firm pointed out that the company has negative working capital of $6,540,018 and has experienced significant losses and negative cash flows. The company incurred net losses of $4,005,831, $20,857,884, $8,571,021, $2,911,260 and $1,124,336, for the years ended October 31, 2008, 2007, 2006, 2005 and 2004. As of October 31, 2008, the company's accumulated deficit was $78,649,597. "These facts raise substantial doubt about the Company's ability to continue as a going concern." "Management is currently in the process of evaluating several funding alternatives it believes will address its current financial requirements to enable it to stabilize its financial condition. The company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to maintain adequate financing, and ultimately to attain successful operations," Jyotindra Gange, the company's principal executive officer, disclosed in a regulatory filing dated February 4, 2009. Consolidated revenues for the year ended October 31, 2008, were $25,959,579 compared to $23,466,311 for the same period in 2007, an increase of approximately 10.6% over the prior fiscal year. The increase results from a continued strong growth of the OTC product line as well as increases in sales of the Rx product line. The increase in revenue was negatively impacted by the continued decline in sales of ephedrine and pseudoephedrine products caused in part by the rejection of the company's application to the United States Drug Enforcement Agency for its 2008 procurement quota. In addition, on September 15, 2008, the DEA commenced an administrative proceeding against the company to, among other things, revoke the company's DEA license to manufacture and distribute controlled substances. During fiscal year 2008, sales of products containing ephedrine and guaifenesin accounted for approximately 47% of sales as compared to approximately 63% for the same period in 2007. Cost of revenues for the year ended October 31, 2008 was $16,988,322 compared to $16,837,126 for the year ended October 31, 2007. The company's gross profit percentage increased to 34.6% from 28.2%. This increase primarily relates to a shift in product mix resulting from the increases in sales of Rx products which have a higher profit margin than some of the company's non-controlled substance private label OTC products. Research and development expenses for the year ended October 31, 2008 was $1,177,313 compared to $1,289,833 for the year ended October 31, 2007. The research and development expenses are in line with the company's historical norms. Selling, general, and administrative expenses for the year ended October 31, 2008, was $10,277,409 as compared to $15,603,823 for the year ended October 31, 2007. The reduction in selling, general and administrative expenses is a result of the incurrence of less consulting expense which in fiscal year ended 2008 was $1,760,613 as compared to $6,818,602 for the same period in 2007. In addition, this reduction is the result of reduced spending in an effort to conserve cash. The operating expenses are in line with historical norms. During the year ended October 31, 2008, the company incurred an impairment loss of $660,919 as compared to $4,006,386 for the prior fiscal year. The decrease is attributable to the non- recurrence of a one time impairment loss incurred by the company during fiscal year ended 2007. Interest expense for the year ended October 31, 2008, was $4,166,852 as compared to $6,400,962 for the year ended October 31, 2007. The reason for this reduction in interest expense is as a result of the company's repayment of outstanding indebtedness during the fiscal year that at October 31, 2007, was $18,625,000 and at October 31, 2008, was $6,190,000. In addition, during the year ended October 31, 2008, there was interest forgiveness of $3,325,747 relating to the repayment and settlement of outstanding debt. As of October 31, 2008, the company's balance sheet showed total assets of $22,346,110, total liabilities of $17,344,616, and total stockholders' equity of $5,001,494. A full-text copy of the company's annual report is available for free at: http://researcharchives.com/t/s?395a About Synovics Pharmaceuticals Based in Ft. Lauderdale, Florida, Synovics Pharmaceuticals Inc. (OTC BB: SYVC) -- http://www.bionutrics.com/-- through its subsidiaries, engages in the development, manufacture, and commercialization of generic over-the-counter (OTC) pharmaceutical products and generic prescription drug products. The company's OTC product categories include analgesics, cough, cold, antihistamines, asthma relief, and laxatives. It also offers private label solid dosage Rx products, including Estratest, a product used by post-menopausal women. Synovics Pharmaceuticals packages and distributes its private label, or store brand OTC products to chain drug stores, wholesalers, and distributors in the United States. It has a strategic partnership with Maneesh Pharmaceuticals Pvt. Ltd. The company was founded in 1983. It was formerly known as Bionutrics Inc. SYNTAX-BRILLIAN: Plan Solicitation Period Extended to April 20 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended on Feb. 4, 2009, Syntax-Brillian Corp., and its debtor-affiliates' exclusive period to file a plan to Feb. 3, 2009, and their exclusive period to solicit acceptances of said plan to April 20, 2009. As reported in the Troubled Company Reporter on Jan. 21, 2009, the Debtors filed with the Court a Chapter 11 Liquidating Plan and a disclosure statement containing information necessary for holders or interests to make an informed judgement about the Plan. The Plan contemplates the complete liquidation of the assets of the Debtors, the creation of a liquidation trust and a "lender trust" and distribution of all proceeds resulting therefrom. In general, certain of the Debtors' assets will vest in the Lender Trust for disposition by a lender trustee for the benefit of the Lender beneficiaries thereof. All other assets of the estates will vest in the Liquidation Trust for disposition by the Liquidation Trustee for the benefit of the beneficiaries thereof. Pursuant to the Plan, upon the Plan's effective date, the Debtors' estates and all of the debts of all of the Debtors will be substantively consolidated for purposes of treating claims including for voting, confirmation and distribution purposes. Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc. and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a suplier of film cameras and a line of digital imaging products, including digital cameras. The Debtors filed separate petitions for Chapter 11 relief on July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the Official Committee of Unsecured Creditors. Pepper Hamilton, LLP represents the Committee as counsel. Epiq Bankruptcy Solutions, LLC is the Debtors' balloting, notice, and claims agent. Syntax-Brillian cut a deal to sell its business assets to Olevia International Group LLC. On Sept. 10, 2008, OIG told the Bankruptcy Court that it won't pursue the deal, contending that the Debtors irreparably breached various covenants and representations contained in the Purchase Agreement, causing various Closing Conditions to fail, and rendering it unable to comply with its obligations under the Purchase Agreement. OIG also accused the Debtors of violating their sale contract by losing business from Target Corp., the Debtors' main customer. The following day, the Debtors filed a lawsuit asking the Court to compel Olevia International to complete the purchase. On Oct. 10, the Bankruptcy Court denied OIG's emergency request to excuse it from its obligations. OIG has taken an appeal of that order. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. TCW OAK: Moody's Junks Ratings on Three Classes of Notes -------------------------------------------------------- Moody's Investors Service announced that it has downgraded its ratings of notes issued by TCW Oak Canyon Funding, collateralized debt obligation transactions referencing corporate obligations. Moody's explained that the rating actions taken are the result of (i) the application of revised and updated key modeling parameter assumptions that Moody's uses to rate and monitor ratings of corporate synthetic CDOs and (ii) the deterioration in the credit quality of the transaction's reference portfolio. The revisions affect key parameters in Moody's model for rating corporate synthetic CDOs: default probability, asset correlation, and other credit indicators such as ratings reviews and outlooks. Moody's initially analyzed and continues to monitor this transaction using primarily the methodology for corporate synthetic CDOs as described in Moody's Special Report: -- Moody's Approach to Rating Corporate Collateralized Synthetic Obligations (December 2008) The rating actions are: Class Description: TCW Oak Canyon Funding Tranche B (REF: 124770) -- Current Rating: Caa2 -- Prior Rating Date: October 23, 2008 -- Prior Rating: Baa2 Class Description: TCW Oak Canyon Funding Tranche B1 (REF: 126272) -- Current Rating: Caa2 -- Prior Rating Date: October 23, 2008 -- Prior Rating: Baa3 Class Description: TCW Oak Canyon Funding Tranche D (REF: 126296) -- Current Rating: Ca -- Prior Rating Date: October 23, 2008 -- Prior Rating: Ba2 TROPICANA ENTERTAINMENT: Panel Drops Bid to Hire Fox Rothschild --------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy cases of Tropicana Entertainment and its affiliates withdrew, without prejudice, a request to retain Fox Rothschild LLP as its New Jersey Regulatory and Gaming Counsel. At a January 8, 2009 hearing, the Court found that Fox Rothschild's representation of Tropicana Las Vegas represented an inherently adverse conflict and adjourned the hearing on the Application. Fox Rothschild is unable to withdraw from its representation of Tropicana Las Vegas and the Creditors Committee has determined to withdraw its Application. 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 and its affliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). 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. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENTERTAINMENT: Panel Taps Sills Cummis as NJ Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy cases of Tropicana Entertainment and its affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to retain Sills Cummis & Gross P.C., as its New Jersey regulatory and gaming counsel, nunc pro tunc to February 6, 2009. The need to retain special counsel, particularly with respect to New Jersey gaming laws, is critical because of the pending conservatorship related to Tropicana Atlantic City hotel and casino and all other assets of Adamar of New Jersey, Inc., and the proceedings pending before the New Jersey Casino Control Commission, Committee Chairperson Bradley Takahashi, vice president of Franklin Mutual Advisers, LLC, tells the Court. Mr. Takahashi relates that the disposition of the Atlantic City Assets is a critical outstanding issue in the Debtors' reorganization efforts. He notes that Tropicana Atlantic City trustee and conservator Justice Gary S. Stein has petitioned the NJ Commission on February 2, 2009, for (1) an extension of time in which to sell or otherwise disposed of the Atlantic City Assets, (2) leave to take Adamar into bankruptcy, and (3) leave to conduct a sale of the Atlantic City Assets pursuant to Section 363 of the Bankruptcy Code. Sills Cummis will advise the Creditors Committee with respect to the NJ Commission proceedings bearing on the disposition of the Atlantic City Assets. In the event that the Atlantic City Assets are retained and not sold by Justice Stein, Sills Cummis will advise the Creditors Committee with respect to regulatory issues involving the Atlantic City Assets that may arise during the Debtors' Chapter 11 cases, according to Mr. Takahashi. Sills Cummis will also provide other legal services as the Creditors Committee may consider desirable to execute its statutory duties and further the interests of its constituents in the Debtors' Chapter 11 cases. Sill Cummis will be paid its current hourly rates, as may be adjusted from time to time, and will be reimbursed for reasonable and actual out-of-pocket expenses. The firm's current hourly rates are: Partners, Special counsel $375 - $750 Kenneth F. Oettle, attorney $550 Associates $225 - $475 Paralegals $125 - $295 Kenneth F. Oettle, Esq., senior counsel at Sills Cummis, discloses that the firm previously represented Harbinger Capital Partners Master Fund I, Ltd., and Harbinger Capital Partners Special Situations Fund, L.P., as their New Jersey gaming counsel in connection with the disposition of the Atlantic City Assets. However, Harbinger no longer holds subordinated notes and has consented to the Creditors Committee's retention of Sills Cummis. According to Mr. Oettle, the Sills Cummis (i) has current or former clients that may be potential parties-in-interest and (ii) has represented or currently represents certain entities on unrelated matters. These include: -- Franklin Templeton Investments, affiliate of Franklin Mutual Advisors, LLC, -- Lazard Freres & Co., LLC, -- Bank of America, N.A., -- Citigroup Global Markets, Inc., Deutsche Bank, and -- Credit Suisse First Boston. The firm does not represent any interest that is materially adverse to the interests of the Creditors Committee or the Debtors' estates with respect to the matters on which it will be employed. Sills Cummis is a disinterested person, as the term is defined in Section 101(14) of the Bankruptcy Code. The Creditors Committee has obtained the Court's approval to shorten notice of the Application due to the looming deadlines in connection with the ongoing NJ Commission proceedings. The Application will be considered at the hearing scheduled on February 17, 2009. Objections are due no later than February 13, 2009. The NJ Commission will hear Justice Stein's petition on February 18, 2009. The Creditors Committee is required to submit a response to the petition, together with a motion for leave to intervene or participate, by February 9, 2009, Mr. Takahashi notes. 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 and its affliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). 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. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) UNIGENE LABORATORIES: Eiref Joins to Compensation & Audit Panels ---------------------------------------------------------------- As previously reported by the Troubled Company Reporter, Zvi Eiref was elected to the Board of Directors of Unigene Laboratories, Inc., effective as of January 5, 2009. On February 4, 2009, the Board appointed Mr. Eiref to serve on each of the Board's Compensation Committee and Audit Committee. Based in Fairfield, New Jersey, Unigene Laboratories Inc. (OTC BB: UGNE) -- http://www.unigene.com/-- is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Due to the size of the worldwide osteoporosis market, Unigene is targeting its initial efforts on developing calcitonin and PTH-based therapies. Fortical(R), Unigene's nasal calcitonin product for the treatment of postmenopausal osteoporosis, received FDA approval and was launched in August 2005. Unigene has licensed the U.S. rights for Fortical to Upsher-Smith Laboratories, worldwide rights for its oral PTH technology to GlaxoSmithKline and worldwide rights for its calcitonin manufacturing technology to Novartis. Going Concern Doubt Grant Thornton, in Edison, New Jersey, expressed substantial doubt about Unigene Laboratories 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 recurring losses from operations and accumulated deficit. As of September 30, 2008, the company's balance sheet showed total assets of $31,733,398 and total liabilities of $48,489,743, resulting in total stockholders' deficit of $16,756,345. US ENERGY: Wants More Time To Complete Sale of Biogas Assets ------------------------------------------------------------ U.S. Energy Systems Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to extend their exclusive period to solicit acceptances of their respective Chapter 11 plans. The Debtors want their Feb. 27 solicitation deadline extended to (i) March 31, 2009 for GBGH LLC, and (ii) May 28, 2009 for U.S. Energy Systems and U.S. Energy Overseas Investment LLC. The Debtors say the extension will allow them to complete the sale of substantially all assets of U.S. Energy Biogas Corp. to Silver Point Finance LLC. According to the Troubled Company Reporter on Feb. 4, 2009, the Court approved bidding procedures for the sale of the Debtors' biogas assets, subject to competitive bidding and auction. Silver Point, the designated stalking-horse bidder, agreed to purchase USEB's assets for about $94.5 million, including, among other things: a) the assumption of the entire amount of the outstanding USEB indebtedness, which amount currently is $83.8 million, but is subject to adjustment prior to closing in accordance with the terms of the USEB indebtedness; b) the assumption of the entire outstanding amount under the Net Profit Interest agreement dated May 31, 2007, between the Debtors and Silver Point, which amount will be fixed solely for purposes of calculating the purchase price at $5.8 million; c) the assumption or release of at least $500,000 of the U.S. Energy Overseas Investments LLC indebtedness in accordance with the terms of the USEO indebtedness; Bids for USEB's assets plus a $5 million good faith deposit must be submitted by March 9, 2009, at 12:00 p.m. (prevailing Eastern Time) followed by an auction on March 12, 2009, at 10:00 a.m. (prevailing Eastern Time) at the offices of Hunton & Williams LLP at 200 Park Avenue in New York. Sale hearing to consider approval will take place on March 13, 2009, at 10:00 a.m. (prevailing Eastern Time). Objections to the sale, if any, are due March 10, 2009. Silver Point will be paid $3.0 million break-up fee if the Debtors consummate the sale of USEB's asset to another party under the sale agreement. Jefferies & Company Inc., investment and financial advisory firm, will assist and advice the Debtors for the sale of USEB's assets. A full-text copy of the Debtors' asset purchase agreement is available for free at: http://ResearchArchives.com/t/s?390b About U.S. Energy Systems Based in Avon, Connecticut, U.S. Energy Systems, Inc., (Pink Sheets: USEY) -- http://www.usenergysystems.com/-- owns green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company filed for Chapter 11 protection on Jan. 9, 2008 (Bank. S.D. N.Y. Case No. 08-10054). Subsequently, 34 affiliates filed separate Chapter 11 petitions. Peter S. Partee, Esq., at Hunton & Williams LLP, represents the Debtor in its restructuring efforts. Jefferies & Company, Inc., serves as the company's financial advisor. The Debtor selected Epiq Bankruptcy Solutions LLC as noticing, claims and balloting agent. The Official Committee of Unsecured Creditors has yet to be appointed in these cases by the U.S. Trustee for Region 2. When the Debtors filed for protection from their creditors, they listed total assets of $258,200,000 and total debts of $175,300,000. On Jan. 23, 2009, U.S. Energy Biogas Corp and eight of its subsidiaries filed their respective voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The USEB Debtors' cases are being jointly administered for procedural purposes with the cases of the USEY Debtors. VELOCITY EXPRESS: Gets Nasdaq Delisting Notice; to Seek Hearing --------------------------------------------------------------- Velocity Express Corporation received on February 4, 2009, a letter from the Listing Qualifications Staff of The NASDAQ Stock Market indicating that, based upon the Company's non-compliance with the $2.5 million stockholders' equity requirement for continued listing on The NASDAQ Capital Market, as set forth in NASDAQ Marketplace Rule 4310(c)(3), the Company's securities were subject to delisting from NASDAQ unless the Company requested a hearing before the NASDAQ Listing Qualifications Panel. The Staff Determination followed earlier correspondence from NASDAQ, which was announced by the Company on October 17, 2008. The Company intends to request a hearing before the Panel, which will stay any action with respect to the Staff Determination until the Panel renders a decision subsequent to the hearing. There can be no assurance that following the hearing the Panel will grant the Company's request for continued listing. About Velocity Express Headquartered in Westport, Connecticut, Velocity Express Corporation (NASDAQ:VEXP) -- http://www.velocityexp.com/-- together with its subsidiaries, is engaged in the business of providing time definite ground package delivery services. The company operates in the United States with limited operations in Canada. Its customers comprised of multi-location, blue chip customers with operations in the healthcare, commercial and office products, financial, transportation and logistics, technology and energy sectors. * * * As of December 27, 2008, the company's balance sheet showed total assets of $92,779,000 and total liabilities of $115,383,000, resulting in total shareholders' deficit of $22,604,000. For the three months ended Dec. 27, 2008, the company posted a net loss of $9,073,000. Going Concern Doubt As reported in the Troubled Company Reporter on December 5, 2008, Ted Stone, Velocity's Chief Financial Officer stated in a regulatory filing with the Securities and Exchange Commission, that the company reported significant recurring losses from operations over the past several years including in 2008 a loss of approximately $56.1 million, which includes a goodwill impairment charge of $46.7 million and a $13.9 million non-cash gain on the extinguishment of debt. "The company also used cash in operating activities over the past several years, including $11.3 million in 2008. However, for the three months ended Sept. 27, 2008, the company generated $600,000 in cash from operating activities. As of Sept. 27, 2008, the company has negative working capital of approximately $20.7 million and a deficiency in assets of $13.6 million. Further, the company did not meet the minimum EBITDA levels and minimum driver pay and purchased transportation covenants contained in its credit agreement, as amended, at various times during fiscal 2008 and 2009. These conditions raise substantial doubt about the company's ability to continue as a going concern." VERASUN ENERGY: Creditors Panel Wants Garden City as Info. Agent ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy cases of VerSun Energy Corp. of it affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to retain The Garden City Group, Inc., as information agent nunc pro tunc to January 7, 2009. The Committee says they need the services of Garden City to comply with its obligations under Section 1102(b)(3) of the Bankruptcy Code, which provides that a committee will: (a) provide access to information for creditors who: * hold claims of the kind represented by that committee; and * are not appointed to the committee; (b) solicit and receive comments from the Creditors; and (c) be subject to a court order that compels any additional report or disclosure to be made to the Creditors. The Committee believes that the retention of Garden City to assist the Committee in complying with its Obligations will add to the effective administration of the Debtors' Chapter 11 cases and reduce the overall expense of administering the Chapter 11 cases. As the Committee's information agent, Garden City will: (a) establish and maintain an Internet-accessed website that provides, without limitation: * a link or other form of access to the website maintained by the Debtors' notice, claims, and balloting agent at http://www.kccllc.net/verasun which will include, among other things, the case docket and claims register; * highlights of significant events in the Chapter 11 Cases; * a calendar with upcoming significant events in the Chapter 11 Cases; * a general overview of the chapter 11 process; * press releases (if any) issued by the Committee or the Debtors; * a registration form for creditors to request "real- time" updates regarding the Chapter 11 Cases via electronic mail; * a form to submit creditor questions, comments, and requests for access to information; * responses to creditor questions, comments, and requests for access to information; provided, that the Committee may privately provide such responses in the exercise of its reasonable discretion, including in light of the nature of the information request and the creditor's agreement to appropriate confidentiality and trading constraints; * answers to frequently asked questions; * links to other relevant websites; * the names and contact information for the Debtors' counsel and restructuring advisor(s); and * the names and contact information for the Committee's counsel and financial advisors; (b) distribute the updates regarding the Chapter 11 Cases via electronic mail for creditors that have registered for service on the Committee Website; and (c) establish and maintain a telephone number and electronic mail address for creditors to submit questions and comments. Large Chapter 11 cases in which Garden City has been retained by either the debtor or creditors' committee and, among other things, created websites to provide creditors and other parties- in-interest access to information include WCI Inc., Kimball Hill, Inc., TOUSA, Inc., Propex Inc., and Calpine Corporation As full compensation for the services to be provided by Garden City, the Committee will file an application with the Court to require the Debtors to pay Garden City its fee without the need to file formal fee applications. Garden City's hourly billing rates: Administrative $45-$70 Data Entry Processors $55 Mailroom and Claims Control $55 Project Administrators $70-$85 Quality Assurance Staff $80-$125 Project Supervisors $95-$110 Systems & Technology Staff $100-$200 Graphic Support $125 Project Managers $125-$150 Directors, Sr. Consultants & Asst. VPs $175-$250 Senior Management $250-$295 A schedule of Garden City's rates is available for free at: http://bankrupt.com/misc/VerSGardenCityFees.pdf Jeffrey S. Stein, the vice president of Garden City, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14), and does not represent any interest adverse to the Debtors or their estates. About VeraSun Energy Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -- http://www.verasun.comor http://www.VE85.com/-- produces and markets 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; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). VERASUN ENERGY: Seeks Permission to Pay $4MM in Insurance Premiums ------------------------------------------------------------------ VeraSun Energy Corp. and its affiliates seek authority from Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware to finance the payment of premiums on the vast majority of their Insurance Policies through First Insurance Funding Corp., an insurance premium finance company. The Debtors maintain various insurance policies, including, among others, workers' compensation, automobile claims, and directors' and officers' liability, in connection with the operation of their businesses and management of their properties. Majority of the Debtors' insurance premiums, according to Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware, are financed under a Commercial Premium Finance Agreement and Disclosure Statement dated November 7, 2008. The total premium under the policy subject to the General Financing Agreement with FIFC is $4,698,362. Mr. Chehi says that in accordance with the Agreement with FIFC, the Debtors have made a down payment of $939,672 and financed a total of $3,758,689. The Debtors have also made two monthly installment payments totaling $429,148, leaving a balance of approximately $2,939,314, payable in seven equal monthly installments. Maintenance of insurance coverage under the various Insurance Policies is essential to the continued operation of the Debtors' businesses and is required under the United States Trustee's Operating Instructions and Reporting Requirements for Chapter 11 Cases, the laws of the various states in which the Debtors operate, and the Debtors' various financial agreements, Mr. Chehi points out. If the Debtors do not make any of the payments as they become due, the stay will be automatically lifted to enable FIFC or third parties, including insurance companies providing the coverage under the Insurance Policies, to take all steps necessary and appropriate to cancel the Insurance Policies, collect the collateral and apply it to the indebtedness owed to FIFC by the Debtors. The Debtors also seek authority to finance insurance premiums associated with the facility located in Janesville, Minnesota under a separate Commercial Premium Finance Agreement and Disclosure Statement. The total premiums under the policy subject to the Janesville Financing Agreement with FIFC equal $184,957. Upon entering into the Janesville Financing Agreement, the Debtors propose to make a down payment of $46,239 and the Debtors will finance $138,717. Pursuant to the proposed agreement, the Debtors will be charged an annual percentage rate of 6.57%, resulting in an annual assessment of a $3,724 finance charge. The Janesville Financing Agreement requires eight additional monthly payments to FIFC, each totaling $17,805 with the next installment due on February 11, 2009. The Debtors, Mr. Chehi says, have made one monthly installment payment totaling $17,805, leaving a balance of approximately $121,707, payable in seven equal monthly installments. The Debtors seek authority to pay the remaining installments under the Financing Agreements as they come due in the approximate aggregate amount of $4,004,775. VERASUN ENERGY: U.S. Trustee to Continue 341 Meeting on March 5 --------------------------------------------------------------- The Office of the United States Trustee filed a notice with the U.S. Bankruptcy Court for the District of Delaware informing parties-in-interest in the bankruptcy cases of VeraSun Energy Corp. and its affiliates that the meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code, commenced on December 2, 2008, and continued to February 5, 2009, has been adjourned to March 5, 2009. Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -- http://www.verasun.comor http://www.VE85.com/-- produces and markets 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; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). VONAGE HOLDINGS: Market Value $100-Mil.; Receives NYSE Notice ------------------------------------------------------------- Vonage Holdings Corp. received on February 9, 2009, notification from the New York Stock Exchange that the Company had fallen below the continued listing standard that requires a minimum average global market capitalization of not less than $100 million over a consecutive 30 trading-day period. The Company intends to notify the NYSE that it will submit a plan within 45 days from the receipt of the NYSE notice that demonstrates its ability to regain compliance within 18 months. Upon receipt of the Company's plan, the NYSE has 45 calendar days to review and determine whether the Company has made a reasonable demonstration of its ability to come into conformity with the relevant standards within the 18-month period. The NYSE will either accept the plan, at which time the Company will be subject to ongoing monitoring for compliance with this plan, or the NYSE will not accept the plan and the Company will be subject to suspension and delisting proceedings. During this cure period, the Company's shares will continue to be listed and traded on the NYSE, subject to the Company's compliance with other NYSE continued listing standards. The Company's business operations, credit agreement and Securities and Exchange Commission reporting requirements are unaffected by this notice. About Vonage Holdings Headquartered in Holmdel, New Jersey, Vonage Holdings Corp. (NYSE:VG) -- http://www.vonage.com/-- provides broadband telephone services with more than 2.6 million subscriber lines. Its technology enables anyone to make and receive phone calls with a touch tone telephone almost anywhere a broadband Internet connection is available. Vonage's service is sold on the web and through national retailers including Best Buy, Wal-Mart Stores Inc. and Target and is available to customers in the U.S., Canada and the United Kingdom. * * * BDO Seidman, LLP, in Woodbridge, New Jersey, raised substantial doubt as to Vonage Holdings Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. Vonage's balance sheet at Sept. 30, 2008, showed total assets of $429,636,000, total liabilities of $519,634,000, resulting in a stockholders' deficit of $89,998,000. As of Sept. 30, 2008, the company has a working capital deficit of $248,117 caused by $253,460 of Notes being classified as a current liability since they could have been put to the company by the holders on Dec. 16, 2008. On Oct. 19, 2008, the company entered into definitive agreements for the Financing consisting of (i) a $130,300 First Lien Senior Facility, including an original issuance discount of $7,200, (ii) a $72,000 Second Lien Senior Facility and (iii) the sale of $18,000 of the Company's Convertible Notes. The Financing was consummated on Nov. 3, 2008. WASHINGTON MUTUAL: Gets Permission to Sell FTV Stake for $3.2MM --------------------------------------------------------------- Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware authorizes Washington Mutual Inc. to sell its limited partnership interests with related capital commitments in the FTV Funds for $3,463,900, consisting of: FTV Fund Partnership Purchase Price -------------------- -------------- Financial Technology Ventures (Q), L.P. $599,978 Financial Technology Ventures II (Q), L.P. 2,700,000 FTVentures III, L.P. 163,922 The Sale of the FTV Assets will be free and clear of all liens under Section 363(f) of the Bankruptcy Code, to Industry Ventures Fund V, L.P., a limited partner in certain of the FTV Funds. Industry Ventures is granted the protections afforded by Section 363(m) of the Bankruptcy Code. Prior to the Court's ruling, the Debtors certified that they received no objection, answer or responsive pleading with respect to the Sales. JPMorgan to Close Branches in March Meanwhile, as part of its integration efforts, JPMorgan Chase & Co. will close 36 of 111 branches operated by Washington Mutual, Inc. in Houston, Texas, beginning in March 2009, the Houston Business Journal reported. Across the state of Texas, JPMorgan Chase is closing 88 WaMu branches, and keeping 169. JPMorgan Chase says by mid-2009, the rest of the WaMu branches in Houston will be operating under the Chase brand. Following the consolidation, the combined Chase-WaMu entity will have 220 branches in the Houston region, according to the report. In addition, Chase intends to open five new branches in the Houston area by the end of 2009, the Houston Business Journal added. Similarly, 12 of the 22 WaMu branches in San Antonio are expected to close, and the remaining 10 will be converted to the Chase, the San Antonio Business Journal related in a separate report. JPMorgan Chase spokesman Greg Hassell told the newspaper that "virtually all" employees at the WaMu branches will land a job with JPMorgan Chase. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its debtor-affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WASHINGTON MUTUAL: Pens Deal Continuing Towers Perrin's Services ---------------------------------------------------------------- Prior to the Petition Date, Towers, Perrin, Forster & Crosby served as Washington Mutual Inc.'s Enrolled Actuary under Section 3042 of the Employee Retirement Income Security Act of 1974. Towers Perrin provided the Debtors with various employee benefit plan consultation and administration services as well and services related to pension plan liability measurements. Specifically, Towers Perrin's prepetition services included: -- actuarial estimates, calculations and annual certifications of Department of Labor Form 5500 filings of employee benefit plan liabilities and ERISA funding requirements; -- fulfilling ERISA plan sponsor requirements; and -- financial reporting in connection with the ERISA issues. Since the Petition Date, the Parties have discussed the Debtors' request for the continuation of the Towers Perrin Prepetition Services. In this regard, the Parties entered into a stipulation dated February 4, 2009, which details the continuation of the Services postpetition. Under the Stipulation, the Debtors may pay Towers Perrin for postpetition services. Towers Perrin is not a "professional person" pursuant to the Section 327(a) of the Bankruptcy Code, which provides that a "professional person" is limited to persons which play a central role in the administration of the debtor proceedings. Thus, Towers Perrin need not be employed as the Debtors' professional, nor file fee applications for compensation and reimbursement of expenses. However, in the event Towers Perrin performs any services relating to Employee Benefit Plan termination, wind-up, or transfer and settlement, the firm will seek to be retained as a professional in WaMu's cases. The Stipulation will not be construed or deemed to amend or modify any of the agreements between and among the Parties, or constitute an assumption or a rejection of any of their agreements. The Debtors will provide notice of the Stipulation to the United States Trustee, counsel to the Official Committee of Unsecured Creditors, and all parties that sought service of papers in the Chapter 11 proceedings, in accordance with Rule 2002 of the Federal Rules of Bankruptcy Procedure. A hearing to consider the Stipulation is scheduled on February 27, 2009. Objections, if any, must be filed by February 20. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its debtor-affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WASHINGTON MUTUAL: Gave $151MM to Bank Unit 1 Yr. Before Collapse ----------------------------------------------------------------- In an amended statement of financial affairs filed with the U.S. Bankruptcy Court for the District of Delaware, Washington Mutual, Inc., disclosed payments it made to Washington Mutual Bank from October 2007 to September 2008, totaling $151,934,564: Date Paid Amount Paid to WMB --------- ------------------ 10/11/2007 $857,230 10/18/2007 3,446,107 11/08/2007 1,189 11/15/2007 254,364 12/13/2007 186,438 01/10/2008 6,863,343 01/17/2008 2,190 02/07/2008 2,319,329 03/06/2008 7,948 03/13/2008 773,837 03/31/2008 14,030,414 04/10/2008 4,488,747 04/24/2008 3,759,043 05/08/2008 2,598,863 05/30/2008 1,240,005 06/19/2008 170 06/26/2008 10,520,771 07/24/2008 581,788 08/14/2008 1,431,922 08/21/2008 4,194,820 09/11/2008 112,923 09/25/2008 4,101,278 10/18/2007 175,635 10/25/2007 305,110 10/31/2007 1,434,522 11/08/2007 4,966,409 11/15/2007 725,599 12/13/2007 8,865,013 12/31/2007 6,205 01/10/2008 6,362,822 01/17/2008 914,011 01/31/2008 12,447,072 02/07/2008 3,377,908 02/14/2008 292,691 02/21/2008 671,242 02/29/2008 750,288 03/13/2008 3,256,230 03/20/2008 1,096,451 04/10/2008 3,429,936 05/15/2008 1,956,466 05/22/2008 3,062,583 06/19/2008 1,422,117 06/30/2008 5,284,659 07/10/2008 2,598,631 07/24/2008 2,879,785 08/07/2008 1,805,099 08/14/2008 2,573,609 09/11/2008 614,326 09/18/2008 17,205,753 09/25/2008 1,681,646 WaMu also listed two pension funds to which it has contributed within six years prior to the Petition Date: Pension Fund Taxpayer Identification No. ------------ --------------------------- Retirement Income Plan 09-1653725 for Salaried Employees of Lakeview Savings Bank Washington Mutual, Inc. 91-1653725 Cash Balance Pension Plan WaMu also updated the list of lawsuits and administrative proceedings to which it is or was a party within one year to the Petition Date, a full-text copy of which is available for free at http://bankrupt.com/misc/WaMu_AmendedLawsuitsList.pdf The Debtor's amended list of Litigation contains certain proceedings that were intended to be filed against Washington Mutual Bank, but were inadvertently filed against WaMu. WaMu Chief Financial Officer John Maciel noted that the Debtor's current Statement of Financial Affairs reflects information available to the Debtor and its professionals as of January 16, 2009. WaMu also revised the list of entities in which it was a partner, or owned 5% percent or more of the voting or equity securities within six years immediately preceding the Petition Date. A complete list of those entities is available for free at: http://bankrupt.com/misc/WaMu_AmendedCorporateEntities.pdf WaMu also submitted to the Court on January 27, 2009, a revised schedule of assets and liabilities, which reflect immaterial amendments. Specifically, WaMu updated Schedule F on the list of creditors holding unsecured non-priority claims, with entities asserting unliquidated or unsecured amounts. WaMu's total liabilities with respect to Schedule F remain at $7,831,843,148. A full-text copy of WaMu's Amended Schedule F is available for free at: http://bankrupt.com/misc/WaMu_AmndedUnsecurdNonpriority.pdf As disclosed in its original Schedules, WaMu's assets aggregate $4,485,265,926, while its liabilities total $7,832,281,789. John Maciel, WaMu's chief financial officer, cautioned parties- in-interest that while WaMu has made reasonable effort to ensure the accuracy of its Schedules, the information are largely provided by JPMorgan Chase Bank, National Association, as custodians of most of the Debtor's books and records, as of December 18, 2008. The current Schedules reflect information available to WaMu and its professionals as of January 16, 2009, Mr. Maciel clarified. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its debtor-affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WASHINGTON MUTUAL: Gets Okay to Pay November Bankruptcy Fees ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized Washington Mutual Inc. to pay professional fees and reimburse the firms' out-of-pocket expenses for the period from November 1 to 30, 2008. The Debtors filed separate certificates of no objection to the fee applications of three professionals in their Chapter 11 cases. The Professionals are: Professional Fees Expenses ------------ ---- -------- Davis Wright Tremaine LLP $117,476 $82 Pepper Hamilton LLP 283,647 14,908 Richards, Layton & Finger, P.A. 16,548 4,137 In a separate filing, the Debtors clarified that they will pay FTI Consulting, Inc.: -- $537,698, representing 80% of the firm's professional fees; and -- $11,750, as reimbursement for expenses it incurred in the course of rendering services to the Debtors. A certificate of no objection was previously filed with the Court with respect to FTI's Fee Application. Meanwhile, six professionals seek the Court's allowance of their professional fees and the reimbursement of their expenses for these fee periods: Professional Fees Expenses Fee Period ------------ ---- -------- ---------- Akin Gump Strauss $571,896 $21,753 12/01/08 to Hauer & Feld LLP, as 12/31/08 co-counsel to the Official Committee of Unsecured Creditors FTI Consulting, Inc., 323,746 3,294 12/01/08 to as financial advisor 12/31/08 to the Creditors Committee Pepper Hamilton LLP, as 214,419 15,956 12/01/08 to co-counsel to the 12/31/08 Creditors Committee Shearman & Sterling LLP 293,714 6,879 10/08/08 to as the Debtors' special 12/31/08 tax litigation counsel Miller & Chevalier 45,126 0 10/08/08 to Chartered, as the 12/31/08 Debtors' special counsel Richards, Layton & 19,189 2,554 12/01/08 to & Finger, P.A., as 12/31/08 the Debtors' counsel About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its debtor-affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) WAVE SYSTEMS: Regains Compliance with NASDAQ Market Cap Rule ------------------------------------------------------------ Wave Systems Corp. received notice from the NASDAQ Stock Market confirming that the market value of the company's Class A common stock has been above $35 million for 10 consecutive trading days, in compliance with the rules governing continued listing on the NASDAQ Capital Market. Wave received a delisting notice from the NASDAQ Stock Market in August for Wave's failure to comply with the $50 million market value continued-listing requirement of the NASDAQ Global Market. Wave appealed the matter and requested that its listing be transferred to the NASDAQ Capital Market. In December, NASDAQ granted the request and transferred the company's listing to the NASDAQ Capital Market, requiring Wave to demonstrate compliance with the $35 Million market value rule by February 17, 2009 in order to maintain its listing. Although Wave will continue to be listed on the NASDAQ Capital Market based on compliance with the $35 million market value rule, Wave remains required to gain compliance with the $1.00 minimum closing bid price listing requirement of the NASDAQ Capital Market. Based on the NASDAQ Stock Market's suspension of the enforcement of the bid price rule, Wave has until on or about August 14, 2009 to gain compliance with the bid price rule. If Wave does not gain compliance with the bid price rule by the end of the compliance period, Wave may be subject to delisting or may be entitled to an additional 180-day period if Wave meets the other initial listing requirements of the NASDAQ Capital Market at the end of the compliance period. Wave plans to exercise diligent efforts to maintain the listing of its common stock on the NASDAQ Capital Market, but there is no assurance that it will be successful in doing so. Series K Preferred Stock Converts to Common Stock All of the issued and outstanding shares of the company's 8% Series K convertible preferred stock have been automatically converted into shares of the company's Class A common stock as of February 5, 2009 (at a rate of 10,000 shares of common stock for each of the 456 shares of Series K preferred stock). The average of the closing bid prices of the company's Class A common stock for the fifteen-day trading period ending on February 5, 2009 was $0.706, exceeding the bid price target of $0.70 per share set forth in the Series K charter, and resulting in the automatic conversion of the securities into common stock and the elimination of any future dividend obligation on the Series K securities. About Wave Systems Lee, Massachusetts-based Wave Systems (WAVX) -- http://www.wave.com/-- provides software on critical enterprise PC security challenges such as strong authentication, data protection, network access control and the management of these enterprise functions. Wave is a pioneer in hardware-based PC security and a founding member of the Trusted Computing Group (TCG), a consortium of nearly 140 PC industry leaders that forged open standards for hardware security. Wave's EMBASSY(R) line of client- and server-side software leverages and manages the security functions of the TCG's industry standard hardware security chip, the Trusted Platform Module (TPM). TPMs are included on tens of millions of PCs and are standard equipment on many enterprise-class PCs shipping today. Using TPMs and Wave software, enterprises can substantially and cost-effectively strengthen their current security solutions. YELLOW BLUFF: Mum About January Chapter 11 Filing ------------------------------------------------- Alena Parker at Coastalcourier.com reports that Yellow Bluff Development has remained mum about its Chapter 11 bankruptcy filing on January 6, 2009, in the U.S. Bankruptcy Court for the Southern District of Georgia. James L. Drake Jr., Esq., at James L. Drake, Jr., P.C., assists Yellow Bluff in its restructuring effort, says Coastalcourier.com. According to Coastalcourier.com, about 33 letters were sent out on January 9 to Yellow Bluff's creditors. Coastalcourier.com says that the creditors can attend a February 11 public meeting in the Savannah bankruptcy court. Coastalcourier.com quoted Sam Kay, a clerk of bankruptcy court for the Southern district, as saying, "That's where the creditor has the opportunity to question the offices of the debtor about the bankruptcy. The debtor has four months to get a plan of reorganization together and propose how they'll pay their debtors." Coastalcourier.com relates that Yellow Bluff has $1.2 million in unsecured debts, including $241,959 to the company's second largest creditor, Paul Krebs Construction, which, according to court documents, is seeking an unliquidated, disputed lawsuit over its claim. The lawsuit is contingent and no legal action can currently be taken other than bankruptcy court, Coastalcourier.com says, citing Mr. Kay. Coastalcourier.com states that Ren Keel, one of Yellow Bluff's partners, served as the signing authority on the bankruptcy records. Yellow Bluff Development is a housing development in Savannah, Georgia. YELLOWSTONE CLUB: Former Owner Tim Blixseth May Try to Buy Firm --------------------------------------------------------------- The attorneys for Tim Blixseth, the founder and former owner of Yellowstone Club, said that their client has "strong interest" in bidding for the club, according to court documents. Jonathan Weber at New West Network relates that Mr. Blixseth relinquished control of Yellowstone Club to his ex-wife Edra in a divorce settlement that was finalized in August 2008. New West Network quoted Mr. Blixseth as saying, "Given what we now have discovered about how and why this has happened, I would have never sold Yellowstone Club. My ultimate goal is to insure that the hard working men and woman of Montana who are creditors, and in many cases, friends, are treated fairly, and that the dream I shared with hundreds of families over the years will ultimately be fulfilled." About Yellowstone Club Yellowstone Club -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. It is located near Big Sky, Montana. It was founded in 1999. As reported in the Troubled Company Reporter on Nov. 13, 2008, Yellowstone Club filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Montana. In its bankruptcy petition, it listed debts of more than $360 million. * David Shaev Joins NACBA in Efforts to Modify Bankruptcy Law ------------------------------------------------------------- NYC consumer bankruptcy attorney David B. Shaev will join fellow members of The National Association of Consumer Bankruptcy Attorneys (NACBA) from around the country as they meet in Washington, D.C., on February 9 and 10 for training and discussions with legislators to support the passage of the "Helping Families Save Their Homes in Bankruptcy Act of 2009" along with companion bills that have been introduced in the House of Representatives and Senate. Mr. Shaev, a fervent consumer rights advocate frequently sourced by the media, announced his participation in the Capital Hill meeting Inauguration Day on The PIX 11 Morning News where he is a frequent guest. "We are at a critical juncture in our economy; decisive action needs to be taken now; not doing so leads to disastrous consequences. Proposals that rely on mortgage lenders to voluntarily modify loans have failed to stem the tide of foreclosures. As long as we maintain the status quo, we are going to see additional homes dumped on the market; prices will continue their tailspin, contributing to the growing financial crisis." The proposed law would allow bankruptcy judges to modify mortgages on a homeowner's principal place of residence, as is currently allowed on vacation homes, boats, commercial real estate, vehicles, and farms. Modifications could include reducing the principle, interest rate and lengthen the time for repayment. The restructuring mortgages would help homeowners avoid foreclosure, provide stability to the housing market, save neighborhoods and as a result, boost the economy. According to Mr. Shaev, the next priority he has his sights on is the growing student loan problem. Section 523 of the Bankruptcy Code states that student loans are not dischargeable, with very few exceptions. "This is a systemic problem where students are graduating with hundreds of thousands in debt that they will be unable to pay or discharge under the current bankruptcy laws. We need to raise awareness and educate the public." * Treasury Says Changes in Bank Bailout Minor --------------------------------------------- Maya Jackson Randall, Deborah Solomon, and Damian Paletta at The Wall Street Journal report that a Treasury spokesperson said that the financial rescue plan is "intact" and just undergoing minor revisions. "It's basically intact -- done, but there are minor tweaks happening. We are ready to announce what we believe is a comprehensive forward-looking plan tomorrow [February 10]," WSJ quoted the spokesperson as saying. According to WSJ, Treasury Secretary Timothy Geithner is expected to disclose the Obama administration's new plans for boosting credibility to the $700 billion financial rescue plan that the Bush administration started up in 2008. WSJ states that the bailout plan includes: -- fresh cash injections into banks, -- new programs to help possibly 2.5 million struggling homeowners, -- a significant expansion of a Federal Reserve program designed to jump-start consumer lending, and -- a mechanism to allow banks to get rid of bad assets. Citing people familiar with the matter, WSJ states that Mr. Geithner would announce that the government will collaborate with the private sector to buy banks' troubled assets. As reported by the Troubled Company Reporter on Feb. 9, 2009, Mr. Geithner is considering a partnership with the private sector in buying banks' troubled assets. WSJ relates that while, Brian Sterling, co-head of investment banking for advisory firm Sandler O'Neill & Partners, finds the government-private sector collaboration an "interesting tool" worth exploring, some investors are concerned about joining with the government in such an arrangement if the rules of engagement weren't guaranteed to remain consistent. WSJ states that J.P. Morgan Chase & Co. executives believe that it may be wiser to hold on to troubled assets that have already been written down, in case the bank can recoup losses when markets revive. WSJ reports that these elements would likely be included in the plan: -- inclusion of assets beyond the student-loan, auto- loan and credit-card debt it was set up to absorb in the Fed's Term Asset-Backed Securities Loan Facility; -- a second round of cash injections in financial firms with more strict terms like a requirement to modify troubled mortgages and better track the federal funds; -- the Federal Deposit Insurance Corp. would be able to help dismantle troubled financial firms beyond the depository institutions over which it now has authority. -- the FDIC would guarantee a wider range of debt that banks issue to fund loans; -- an up to $100 billion help for homeowners; and -- changes in public relations, aimed at improving the bailout's poor image. The administration is considering renaming the $700 billion Troubled Asset Relief Program and making it independent of the Treasury. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Feb. 5-7, 2009 AMERICAN BANKRUPTCY INSTITUTE Caribbean Insolvency Symposium Westin Casurina, Grand Cayman Island, Alabama Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 25-27, 2009 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 2, 2009 ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS Chicago Regional Conference Union League Club of Chicago, Chicago, Illinois Contact: 1-541-858-1665; http://www.airacira.org/ Mar. 13, 2009 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Beverly Wilshire, Beverly Hills, California Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 14-16, 2009 AMERICAN BANKRUPTCY INSTITUTE Conrad Duberstein Moot Court Competition St. John's University School of Law, New York City Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 1-4, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 16-19, 2009 COMMERICAL LAW LEAGUE OF AMERICA 2009 Chicago/Spring Meeting Westin Hotel on Michigan Ave., Chicago, Ill. Contact: (312) 781-2000; http://www.clla.org/ Apr. 17-18, 2009 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES NABT Spring Seminar The Peabody, Orlando, Florida Contact: http://www.nabt.com/ Apr. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE Consumer Bankruptcy Conference John Adams Courthouse, Boston, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 27-28, 2009 TURNAROUND MANAGEMENT ASSOCIATION Corporate Governance Meetings Intercontinental Hotel, Chicago, Illinois Contact: www.turnaround.org Apr. 28-30, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Intercontinental Hotel, Chicago, Illinois Contact: www.turnaround.org May 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners Alexander Hamilton Custom House, New York City Contact: 1-703-739-0800; http://www.abiworld.org/ May 4, 2009 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference New York Marriott Marquis, New York City Contact: 1-703-739-0800; http://www.abiworld.org/ May 7-8, 2009 RENASSANCE AMERICAN MANAGEMENT, INC. 6th Annual Conference on Distressted Investing - Europe The Le Meridien Piccadilly Hotel, London, U.K. Contact: 1-903-595-3800 or http://www.renaissanceamerican.com/ May 7-10, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center National Harbor, Maryland Contact: http://www.abiworld.org/ May 12-15, 2009 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Tulane University, New Orleans, La. Contact: http://www.abiworld.org/ May 14-16, 2009 ALI-ABA Chapter 11 Business Reorganizations Langham Hotel, Boston, Massachusetts Contact: http://www.ali-aba.org June 11-14, 2009 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ July 16-19, 2009 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Mt. Washington Inn Bretton Woods, New Hampshire Contact: http://www.abiworld.org/ July 29-Aug. 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Westin Hilton Head Island Resort & Spa, Hilton Head Island, S.C. Contact: http://www.abiworld.org/ Aug. 6-8, 2009 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Conference Hotel Hershey, Hershey, Pa. Contact: http://www.abiworld.org/ Sept. 10-11, 2009 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: Jan. 23, 2009 ********* 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. The Sunday TCR delivers securitization rating news from the week then-ending. 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, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. 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 ***