/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090213.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 13, 2009, Vol. 13, No. 43 Headlines 140 ASSOCIATES: Court Dismisses Chapter 11 Bankruptcy Case 515 SEABREEZE: Case Summary & Five Largest Unsecured Creditors ABITIBIBOWATER INC: Starts Exchange Offer for $1.8BB Securities AGAPE WORLD: Creditors File Ch. 7 Petition, Trustee Sought ALERIS INT'L: Files for Bankruptcy; Secures $1.075BB DIP Loan ALERIS INT'L: Case Summary & 30 Largest Unsecured Creditors ALLBRITTON COMMUNICATIONS: Moody's Confirms 'B3' Corporate Rating ALTERNATIVE ASSET: Receives Delisting Notice from NYSE Alternext AMERICAN AXLE: Barrow Hanley & Dimensional Fund Disclose Stake AMERICAN HOME: Wins Confirmation of Ch. 11 Liquidating Plan AMERICAN INT'L: To Sell Japanese Headquarters; Faces Probe in UK AMERLINK LTD: Case Summary & 20 Largest Unsecured Creditors APPCO: Files for Chapter 11 Bankruptcy Protection ARLINGTON RIDGE: May Obtain $30,000 to Fund Completion of Home AUTOBACS STRAUSS: Section 341(a) Meeting Slated for March 3 AXION INTERNATIONAL: Gets $560,000 Contract from Major US Railway BANK OF AMERICA: Merrill Moved Up Bonus Date, Says Andrew Cuomo BASIN WATER: Receives Notice of Compliance From Nasdaq BEAZER HOMES: Posts $80 Million Net Loss in Quarter Ended Dec. 31 BEAZER HOMES: Deutsche Bank & Tontine Entities Disclose Stake BELDEN INC: Moody's Cuts Senior Subordinated Notes Rating to Ba2 BUFFALO THUNDER: S&P Cuts Ratings to 'CCC'; May Not Be Able to Pay CABLEVISION SYSTEMS: Dolan Discloses Ownership of 396,561 Shares CABLEVISION SYSTEMS: Expects $375-$450 Million Impairment Charges CARAUSTAR INDUSTRIES: Difficult Env't Cues S&P's Junk Rating CDS MANUFACTURING: Case Summary & 14 Largest Unsecured Creditors CELL THERAPEUTICS: Issues 6,634 Shares of Series F Preferred Stock CHARTER COMMUNICATIONS: Eyes $1.7BB 4th Qrtr. Pro Forma Revenues CHARTER COMMUNICATIONS: Will File for Bankruptcy by April 1 CHARTER COMM: Likely to File, Says Moody's; Rating Down to 'Caa3' CHESAPEAKE ENERGY: Fitch Assigns 'BB' Rating on Sr Notes Offering CHOCTAW RESORT: Moody's Confirms Corporate Family Rating at 'B1' CHRYSLER LLC: Says Auto Sales May Remain 10MM Annually in 4 Years CHRYSLER LLC: Unit to Borrow C$1Bil. from Canada; Plan Due Feb. 20 CHRYSLER LLC: Goes to Foreign Rivals for Labor Costs Data CITIGROUP INC: NY Lawmakers Defend $400-Mil. Deal With Mets CLEARWATER NATURAL: Files Schedules of Assets and Liabilities CONGOLEUM CORP: Dimensional Fund Discloses 3.37% Equity Stake CONSTAR INTERNATIONAL: Can Hire Greenhill as Financial Advisor CROSS LAKE: Canadian Court Extends CCAA Protection to April 15 DELTA MUTUAL: Peralta Appointed as President, CEO and Chairman EDUCATION MEDIA: S&P Downgrades Corporate Credit Rating to 'CCC' ELIZABETH ARDEN: Decline in Sales Won't Affect S&P's 'BB-' Rating FIRST METALS: Globex Discloses Debtor's Talks with Stakeholders FLINTKOTE COMPANY: Wants Plan Filing Period Extended to April 30 FOOTHILL RESOURCES: Files for Chapter 11 in Delaware FORD MOTOR: Investors May Want Firm to Seek Gov't Bailout FOREST OIL: Moody's Assigns 'B1' on $350 Mil. Unsecured Notes FOREST OIL: S&P Assigns 'BB-' Rating on $350 Mil. Senior Notes FUSION TELECOM: NYSE Alternext Issues Notice of Delisting FREESCALE SEMICONDUCTOR: Fitch Downgrades Issuer Rating to 'C' GENERAL GROWTH: Continues to Seek Debt Payment Deadline Extension GENERAL MOTORS: Bondholders May Recover 50 Cents on the Dollar GLEASON/MADDEN PARTNERSHIP: Involuntary Chapter 11 Case Summary GOODY'S LLC: Panel Taps Cooley Godward as Lead Bankruptcy Counsel GOODY'S LLC: U.S. Trustee Holds Section 341(a) Meeting on March 4 GOODY'S LLC: Wants to Hire Skadden Arps as Special Counsel GOODY'S LLC: Wants Schedules, Statements Filing Moved to March 14 GOODY'S LLC: Wants DJM Asset as Special Real Estate Consultant GREATER OHIO ETHANOL: Has Another Buyer For Lima Ethanol Plant HARTMARX CORP: Creditors Panel Can Hire Neal Gerber as Counsel HARTMARX CORPORATION: Taps Skadden Arps as Bankruptcy Counsel HCA INC: Fitch Assigns 'B+' Rating on $300 Mil. Proposed Notes HCA INC: Moody's Assigns 'B2' Rating on Proposed $100 Mil. Notes HCA INC: S&P Assigns 'BB-' Rating on Proposed $300 Mil. Notes HOUGHTON MIFFLIN: S&P Junks Rating on 1st-Lien Credit Facilities JOBSON MEDICAL: Deteriorating EBITDA Cues Moody's Junk Rating LEHMAN BROTHERS: Examiner Gets to Issue Subpoenas, Demand Docs. LEHMAN BROTHERS: Seeks to Inject $272M to Woodlands to Keep Stake LEHMAN BROTHERS: Replaced as Lead Lender in Maui Land's Loan LENOX GROUP: Disclosure Hearing Suspended Due to Funding Delays LIGHTPOINT CLO: Moody's Reviews Ratings on Notes for Likely Cuts MGM MIRAGE: Fitch Downgrades Issuer Default Rating to 'B' MGT CAPITAL: Failure to Hold Shareholders Meeting Cues NYSE Notice MIDWAY GAMES: Files for Chapter 11 Bankruptcy Protection MIDWAY GAMES: Case Summary & 30 Largest Unsecured Creditors MILLENNIUM TRANSIT: Seeks Court OK on 4th DIP Loan From J. Ludvik MONEYGRAM INT'L: Board Names Pam Patsley As Executive Chairman MONEYGRAM INT'L: Board Names Anthony Ryan as President and CEO NOVA BIOSOURCE: Receives Delisting Notice From NYSE PETTERS CO: Panel Taps Brattle Group as Valuation Consultants PETTERS COMPANY: Panel May Retain Huron as Financial Advisor PHH CORP: Loses Investment Grade Status; S&P's Down to 'BB+/B' PLIANT CORPORATION: Wants to Access $75 Million BoNY DIP Facility PLIANT CORP: Taps Epiq Bankruptcy as Claims and Noticing Agent PLIANT CORP: Files Prepackaged Plan and Disclosure Statement POLYMER GROUP: S&P Downgrades Corporate Credit Rating to 'B' POLYONE CORPORATION: S&P Downgrades Corp. Credit Rating to 'B-' POMARE LTD: Gets Final Ok to Borrow $5 Million from North Tustin PULTE HOMES: Board Appoints Michael J. Schweninger as VP QUALITY DISTRIBUTION: S&P Gives Neg. Outlook; Affirms 'B-' Rating RATHGIBSON INC: Liquidity Concerns Prompt Moody's Junk Ratings ROBERT ZVEIBIL: Case Summary & 10 Largest Unsecured Creditors SEMGROUP LP: Asphalt Biz Sale Could Violate Lender's Forbearance SHANDONG ZHOUYUAN: Completes CNY1-Mil. Financing with Investors SIRIUS XM: Seeks Liberty Media's Help to Fend Off Charles Ergen SUPERIOR OFFSHORE: Implements Joint Liquidation Plan SYNAGRO TECHNOLOGIES: Tight Liquidity Prompts S&P to Junk Rating TICKETMASTER ENTERTAINMENT: S&P Puts BB+ Rating on Negative Watch TOWN & COUNTRY: Voluntary Chapter 11 Case Summary UTAH 7000: Promontory Utah Project Headed for Confirmation XERIUM TECHNOLOGIES: S&P Gives Neg. Outlook; Affirms 'B-' Rating WORLDSPACE INC: Extends DIP Credit Maturity Date to Feb. 27 YOUNG BROADCASTING: Foregoes $4.5 Million Interest Payment * January Retail & Food Sales "Unexpectedly" Expand 1.1% * Not All Involuntary Petitioners Liable for Costs * BOOK REVIEW: Merger Takeover Conspiracy, A Business Story ********* 140 ASSOCIATES: Court Dismisses Chapter 11 Bankruptcy Case ---------------------------------------------------------- Brian Bandell at South Florida Business Journal reports that the Hon. Paul G. Hyman of the U.S. Bankruptcy for the Southern District of Florida has dismissed 140 Associates, Ltd.'s Chapter 11 bankruptcy case. According to South Florida Business, Judge Hyman entered the ruling at the request of Seacoast National Bank, which holds a $4 million foreclosure judgment against Boca Raton developer Gregory K. Talbott and 140 Associates. South Florida Business says that 140 Associates filed for Chapter 11 reorganization in November. South Florida Business states that a foreclosure sale on 140 Associates' 7,581-square-foot building at 140 N. Federal Highway in Boca Raton was set for December 1. According to the report, the property houses the headquarters of Talbott Realty and a branch of Colonial Bank. The report states that Seacoast National argued that the bankruptcy filing was made in bad faith because the only major asset is the property, and most of the claims are the secured mortgage. About 140 Associates Boca Raton, Florida-based 140 Associates, Ltd., owns a 7,581- square-foot building at 140 North Federal Highway. The property houses Talbott Realty and a branch of Colonial Bank. The company filed for Chapter 11 protection on Nov. 26, 2008 (Bank. S. D. Fla. Case No. 08-28142). Joey Michael Grant, Esq., at Padula & Grant, PLLC, represents the company in its restructuring effort. The company listed assets of $1,000,001 to $10,000,000 and debts of $1,000,001 to $10,000,000. 515 SEABREEZE: Case Summary & Five Largest Unsecured Creditors -------------------------------------------------------------- Debtor: 515 Seabreeze, LLC 5300 NW 12th Ave #1 Fort Lauderdale, FL 33309 Bankruptcy Case No.: 09-12322 Chapter 11 Petition Date: February 10, 2009 Court: Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: Andrew J. Nierenberg, Esq. ajn1000@aol.com 1500 San Remo Avenue #125 Coral Gables, FL 33146 Tel: (305) 785-8015 Total Assets: $15,085,000 Total Debts: $3,867,029 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gordon Company $60,000 c/o Joseph Ganguzza Assocs. 1 SE 3 Avenue #2150 Miami, FL 33131 Coker & Feiner $5,307 1404 S. Andrews Avenue Ft. Lauderdale, FL 33316 Waste Management $800 3831 NW 21 Avenue Pompano Beach, Fl 33073 Reliable Fire Alarm $800 City of Ft. Lauderdale $392 The petition was signed by Leonard J. Mercer, Jr., manager. ABITIBIBOWATER INC: Starts Exchange Offer for $1.8BB Securities --------------------------------------------------------------- AbitibiBowater Inc. disclosed February 9 the commencement of private offers to exchange certain outstanding series of unsecured notes issued by its Bowater Incorporated subsidiary, in a private placement, for new notes. The eligible series of Existing Notes consist of: * 9.00% Debentures due 2009; * Floating Rate Senior Notes due 2010; * 7.95% Notes due 2011 issued by Bowater Canada Finance Corporation, a wholly-owned subsidiary of Bowater; * 9.50% Debentures due 2012; * 6.50% Notes due 2013; and * 9.375% Debentures due 2021. The Exchange Notes will be issued by Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater, and will consist of: * 10.00% Second Lien Notes due January 31, 2012; and * 10.50% Third Lien Notes due March 31, 2012. The Exchange Offers are being made only to qualified institutional buyers inside the United States and to certain non-U.S. investors located outside the United States. The Company is also soliciting consents to amend the indentures governing the Existing Notes to eliminate the covenants in such indentures relating to liens, secured debt and sale and leaseback transactions. The Exchange Offers and Consent Solicitation will expire at 11:59 p.m., New York City time, on March 9, 2009, unless extended. Tendered Existing Notes may be validly withdrawn at any time prior to the Expiration Date but not thereafter. Concurrently with the Exchange Offers and the Consent Solicitation, Bowater Finance is offering to Eligible Holders of Existing Notes, in a "Concurrent Notes Offering," new 15.50% First Lien Notes due November 15, 2011. Holders of Existing Notes that tender some or all of their Existing Notes in the Exchange Offers will have the right, but not the obligation, to subscribe for a portion of the First Lien Notes being offered. Holders that subscribe for First Lien Notes in the Concurrent Notes Offering will receive consideration consisting of an additional principal amount of Exchange Notes for their Existing Notes tendered and accepted in the Exchange Offers and a subscription fee payable in an additional principal amount of First Lien Notes. The maximum aggregate subscription amount for First Lien Notes that will be accepted in the Concurrent Notes Offering (i.e., cash proceeds to the issuer) is $211.2 million. Separately, Bowater Finance has entered into a note purchase agreement with a private institutional investor pursuant to which the investor has agreed to purchase, on a private placement basis, $80 million principal amount of First Lien Notes for a purchase price of $80 million. Such offer is a separate private placement of First Lien Notes to the institutional investor in addition to the Concurrent Notes Offering, and will be made contemporaneous with and contingent upon the Exchange Offers and the Concurrent Notes Offering. Net cash proceeds from both the Concurrent Notes Offering and the additional private placement will be used to repay amounts outstanding under Bowater's bank credit facilities. For each $1,000 principal amount of Existing Notes validly tendered (and not validly withdrawn) and accepted for exchange and for which the holder elects to subscribe for First Lien Notes in the Concurrent Notes Offering, such holder will receive the principal amount and form of Exchange Notes: SUBSCRIBING TENDERS EXISTING NOTES PRINCIPAL AMOUNT FORM OF TENDERED OF EXCHANGE NOTES EXCHANGE NOTES(1) -------------- ----------------- ----------------- 2009 NOTES $800 SECOND LIEN NOTES 2010 NOTES $700 THIRD LIEN NOTES 2011 NOTES $650 THIRD LIEN NOTES 2012 NOTES $600 THIRD LIEN NOTES 2013 NOTES $575 THIRD LIEN NOTES 2021 NOTES $550 THIRD LIEN NOTES The form of exchange notes does not include First Lien Notes subscribed for in Concurrent Notes Offering. For each $1,000 principal amount of Existing Notes validly tendered and accepted for exchange and for which the holder does not elect to subscribe for First Lien Notes in the Concurrent Notes Offering, that holder will receive the principal amount and form of Exchange Notes: NON-SUBSCRIBING TENDERS EXISTING NOTES PRINCIPAL AMOUNT FORM OF TENDERED OF EXCHANGE NOTES EXCHANGE NOTES(1) -------------- ----------------- ----------------- 2009 NOTES $750 THIRD LIEN NOTES 2010 NOTES $650 THIRD LIEN NOTES 2011 NOTES $600 THIRD LIEN NOTES 2012 NOTES $550 THIRD LIEN NOTES 2013 NOTES $525 THIRD LIEN NOTES 2021 NOTES $500 THIRD LIEN NOTES The Exchange Offers are conditioned upon, among other things, there being validly tendered and not validly withdrawn on or prior to the Expiration Date, greater than 97% in aggregate principal amount of 2009 Notes and 2010 Notes, and greater than 50% in aggregate principal amount of 2011, 2012, 2013 and 2021 Notes. However, this condition may be waived by Bowater Finance under certain circumstances. In addition, Bowater Finance has the right to terminate or withdraw any of the Exchange Offers at any time and for any reason, including if any of the conditions is not satisfied. The New Notes will be senior secured obligations of Bowater Finance, and will be guaranteed by AbitibiBowater, Bowater, Bowater Newsprint South LLC, a wholly owned subsidiary of AbitibiBowater, and by certain other subsidiaries of Bowater and Newsprint South. The New Notes have not been and will not be registered under the Securities Act of 1933 or any state securities laws, may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, and will therefore be subject to substantial restrictions on transfer. Bowater Finance will enter into a registration rights agreement pursuant to which it will agree to file an exchange offer registration statement with the Securities and Exchange Commission with respect to the New Notes. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange. As reported in the Troubled Company Reporter on Nov. 13, 2008, AbitibiBowater Inc. reported a net loss of US$302 million on sales of US$1.7 billion for the third quarter 2008. These results compare with a net loss of US$142 million on sales of US$815 million for the third quarter of 2007, which consisted only of Bowater Incorporated. The company's 2008 third quarter results reflect the full quarter results for Abitibi-Consolidated Inc. and Bowater Incorporated as a combined company after their combination on Oct. 29, 2007. As reported by the TCR on January 29, 2009, Moody's Investors Service downgraded the corporate family rating of AbitibiBowater Inc.'s subsidiaries Abitibi-Consolidated Inc. and Bowater Incorporated to Caa3 from Caa1. The rating action, according to Moody's, was prompted by AbitibiBowater's weakened liquidity position and the deteriorating economic and industry conditions. "The Caa3 corporate family ratings of Abitibi and Bowater reflect a heightened probability of default in the near term given the anticipated challenges of refinancing or paying down their significant short term debt obligations through asset sales, either of which may prove to be difficult in the current market environment." The ratings of both Abitibi and Bowater also reflect the accelerating decline in demand for newsprint and other paper grades manufactured by both companies as consumers continue to migrate to online news and other forms of electronic media. The TCR reported on February 12, 2009, that Standard & Poor's Ratings lowered its long-term corporate credit rating on newsprint producers AbitibiBowater Inc. and subsidiaries Bowater Inc. and Bowater Canadian Forest Products Inc. two notches to 'CC' from 'CCC'. S&P also lowered the long-term corporate credit rating on Abitibi-Consolidated Inc. one notch to 'CCC-' from 'CCC'. AGAPE WORLD: Creditors File Ch. 7 Petition, Trustee Sought ---------------------------------------------------------- Investors claiming of being defrauded in an alleged Ponzi Scheme by Nicholas Cosmo have filed a petition to send Mr. Cosmo's firm Agape World Inc., to Chapter 7 liquidation. The investors have requested for a trustee that would take over Agape World's estates. Bloomberg's Bill Rochelle relates that according to the petitioners, Mr. Cosmo told investors he would use their money to make bridge loans for real estate and construction projects. He promised returns up to 80 percent in as little as 90 days, the creditors alleged in their motion for a trustee. According to Bloomberg, if the bankruptcy court grants the motion, a trustee will be appointed even before the company is officially declared bankrupt. The bankruptcy judge, the report says, already signed an order prohibiting any transfers of company property. As reported by the Feb. 12 issue of the Troubled Company Reporter, Newsday.com said that five investors claiming of being defrauded in an alleged $380 million scam by Mr. Cosmo have asked the Hon. Dorothy Eisenberg of the U.S. Bankruptcy Court for the Eastern District of New York to force his company, Agape World Inc., into bankruptcy court protection. Newsday.com relates that Mr. Cosmo was arrested in January for allegedly masterminding the Ponzi scheme and is being held in jail. According to Newsday.com, the investors are seeking to recover whatever money may be left in Agape World. Court documents say that about $746,000 remains from the money collected by Mr. Cosmo and other associates in Agape World. Hauppauge-based Agape World Inc. -- http://www.agapeworldinc.net/ -- is a private bridge lender since 1999. ALERIS INT'L: Files for Bankruptcy; Secures $1.075BB DIP Loan ------------------------------------------------------------- Aleris International, Inc., and its wholly-owned U.S. subsidiaries have filed petitions for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code as a result of financial constraints related to deteriorating demand, earnings, and liquidity caused by the steep decline in global economic conditions. The filing was made today in the U.S. Bankruptcy Court in Delaware. The Company's European, Asian, South American, Mexican and Canadian operations were not included in the filing. To fund its global operations during the restructuring, Aleris has secured $1.075 billion of debtor-in-possession financing. Subject to court approval, the DIP credit facilities include a new $500 million term loan and a $575 million revolving credit facility that replaces the Company's previous revolving credit facility. These will be used for the Company's normal operating and working capital requirements, including employee wages and benefits, supplier payments, and other operating expenses during the reorganization process. The Company believes that the DIP credit facility provides sufficient funds for its reorganization effort under Chapter 11. "We have moved aggressively to reduce our costs and eliminate capacity to offset the negative effects of the global economic slowdown. However, given the unpredictability of the speed and severity of the downturn over the last few months, these actions were not sufficient to counter the combination of challenges Aleris faces, including a sharp deterioration in demand for our products by the automotive, housing, and general industrial products sectors and an unprecedented decline in aluminum prices which limited our borrowing ability," said Steven J. Demetriou, Aleris Chairman and CEO. "After careful deliberation with our advisors, the Company's Board of Directors concluded that seeking the protection of Chapter 11 for our U.S. operations is the only option to preserve and maximize value for all of our economic stakeholders. This should allow us the time to work through the current dislocations and the opportunity to pursue a financial and operational restructuring that creates a more competitive foundation for the long term. "While we regret the need to take this difficult step, we believe a financial recalibration is necessary for us to resume a path of growth and continue to build a global aluminum enterprise that will endure. "Aleris is conducting business as usual across the Company," continued Mr. Demetriou. "Our customers can continue to have confidence that they will receive their orders on time and as specified. Our suppliers can expect timely payment in full for all goods and services provided from today forward. Furthermore, we have petitioned the Court for customary first day orders, which will ensure that our employees will be paid in full and on the normal schedule and that our operations will function normally and without any disruption." Aleris reported total assets of approximately $4.9 billion and total liabilities of approximately $4.2 billion, on a consolidated basis, as of September 30, 2008. About Aleris International Aleris International, Inc. is a global leader in aluminum rolled products and extrusions, aluminum recycling and specification alloy production. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. ALERIS INT'L: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Aleris International, Inc. aka IMCO Recycling Inc. 25825 Science Park Drive, Suite 400 Beachwood, OH 44122 Bankruptcy Case No.: 09-10478 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Alchem Aluminum Shelbyville Inc. 09-10479 Alumitech of West Virginia, Inc. 09-10480 Alchem Aluminum, Inc. 09-10481 Alumitech, Inc. 09-10482 Alchem Aluminum Europe, Inc. 09-10483 AWT Properties, Inc. 09-10484 CA Lewisport, LLC 09-10485 Aleris Aluminum U.S. Sales, Inc. 09-10486 CI Holdings, LLC 09-10487 IMCO Investment Company 09-10488 Commonwealth Aluminum Concast, Inc. 09-10489 Aleris Blanking and Rim Products, Inc. 09-10490 Commonwealth Aluminum Lewisport, LLC 09-10491 IMCO Management Partnership, L.P. 09-10492 Aleris Light Gauge Products, Inc. 09-10493 Commonwealth Aluminum Metals, LLC 09-10494 IMCO Recycling of California, Inc. 09-10495 Commonwealth Aluminum Sales Corporation 09-10496 Aleris Nevada Management, Inc. 09-10497 IMCO Recycling of Idaho, Inc. 09-10498 Alumitech of Cleveland, Inc. 09-10499 Aleris Ohio Management, Inc. 09-10500 Commonwealth Aluminum Tube Enterprises, LLC 09-10501 Aleris, Inc. 09-10502 IMCO Recycling of Illinois Inc. 09-10504 Commonwealth Aluminum, LLC 09-10505 Alumitech of Wabash, Inc. 09-10506 Alsco Holdings, Inc. 09-10507 Commonwealth Industries, Inc. 09-10508 IMCO Recycling of Indiana Inc. 09-10509 ETS Schaefer Corporation 09-10510 Alsco Metals Corporation 09-10511 IMCO Recycling of Michigan L.L.C. 09-10512 IMCO Indiana Partnership L.P. 09-10513 IMCO Recycling of Ohio Inc. 09-10514 Wabash Alloys, L.L.C. 09-10515 IMCO Recycling of Utah Inc. 09-10516 IMCO International, Inc. 09-10517 Silver Fox Holding Company 09-10518 IMCO Recycling Services Company 09-10519 Rock Creek Aluminum, Inc. 09-10520 IMSAMET, Inc. 09-10521 Related Information: The Debtors produce and sell aluminum rolled and extruded products. The Debtors operate primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. In addition, the Debtors operate 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Chapter 11 Petition Date: February 12, 2009 Court: District of Delaware (Delaware) Judge: Brendan Linehan Shannon Debtors' Counsel: Stephen Karotkin, Esq. Debra A. Dandeneau, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Tel: (212) 310-8000 Fax: (212) 310-8007 http://www.weil.com --- and --- Richards Layton & Finger P.A. Local Counsel: L. Katherine Good, Esq. good@rlf.com Paul Noble Heath, Esq. heath@rlf.com Richards, Layton & Finger, P.A. 920 North King Street Wilmington, DE 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 Financial Advisor: Moelis & Company LLC Restructuring Advisor: Alvarez & Marsal LLC Claims Agent: Kurtzman Carson Consultants LLC The Debtors' financial condition as of Dec. 31, 2008: Total Assets: $4,168,700,000 Total Debts: $3,978,699,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ La SalleBank National 9% Senior Notes $600,000,000 Assocciation, as due December 15, Exchange-Agent 2014 Indenture Trustee Attn: Prank A. Pierson 13S S. LaSalle Street Suite 1560 Chicago, IL 60603 La SalleBank National 10% Senior Sub. $400,000,000 Assocciation, as Notes due Exchange-Agent December 15, 2014 Indenture Trustee Attn: Prank A. Pierson 13S S. LaSalle Street Suite 1560 Chicago, IL 60603 La SalleBank National 9% Senior Notes $105,400,000 Assocciation, as due December 15, Exchange-Agent 2014 Indenture Trustee Attn: Prank A. Pierson 13S S. LaSalle Street Suite 1560 Chicago, IL 60603 Rusal America Corporation Trade Vendor $7,849,616 Attn: Bruce Markowitz, President 550 Mamaroneck Avenue Suite 301 Harrison, NY 10528 Glencore Ltd. Trade Vendor $7,028,470 301 Tresser Blvd, Suite 1400 Stamford, CT 06901 JPMorgan Chase. Bank 7.65% Revenue $5,740,000 as Trustee Services Bonds due May 1, Attn: Institutional Trust 2016- Series 1996 600 Travis Street, Suite 1100 Houston, TX 77002 JPMorgan Chase. Bank 7.45% Revenue $4,600,000 as Trustee Services Bonds due May 1, Attn: Institutional Trust 2022- Series 1998 600 Travis Street, Suite 1100 Houston, TX 77002 JPMorgan Chase. Bank 6.00% Revenue $4,100,000 as Trustee Services Bonds due May 1, Attn: Institutional Trust 2023- Series 1998 600 Travis Street, Suite 1100 Houston, TX 77002 McKinsey & Company Trade Vendor $2,555,000 Attn: Ian Davis, Managing Director 21 K. Clark Street, Suite 2900 Chicago,IL60603 United Scrap Metal Inc. Trade Vendor $2,213,593 Attn: Marsha Serlin, President 1545 S. Cicero Avenue Metal Buyers & Recyclers Cicero, IL 60804 Schnitzer Northeast Trade Vendor $2,070,678 c/o Schnitzer Steel Industries Attn: Rich Josephson, Legal Department 3200 NW Yean Avenue Portland, OR 97210 Huron Valley Steel Trade Vendor $1,894,374 Corporation Attn: Leonard Fritz, President 1670 Fritz Drive Trenton, MI48183 Magnetics Division Commercial Metals Company Trade Vendor $1,580,954 Attn: Murray R. McClean 6565 N. Macarthur Blvd. Suite 800 Irving, TX 75039 Ferropem-Silicon Division Trade Vendor $1,455,262 Attn: Tim Chimera, Manager 60 Public Square, Suite 350 Medina, OH 44256 The David Joseph' Company Trade Vendor $1,246,825 Attn: James H. Goetz, Chief Financial Officer 120 East Pete Rose Way Suite 350 Cincinnati, OH 45202 Honda Trading America Trade Vendor $1,231,776 Corporation Attn: Motchide Sudo, President 700 Clover Road Lincoln, AL 35096 H & H Sheet Metal Trade Vendor $1,186,264 Fabricators Inc. 355 Payton Street Russellville. KY 42276 Noble America Corporation Trade Vendor $1,067,053 Attn: James Emanuele, President PO Box 8500-221 Lockbox 2211 401 Market Street Philadelphia, PA 19178 Sims Metal Management Inc. Trade Vendor $1,038,316 Attn: Rob Larry, Chief Financial Officer 2169 Payshere Circle Chicago, IL 60674 Midwest Iron & Metal Trade Vendor $975,899 Company Inc. Attn: Joel Frydman; Chief Executive Officer PO Box 546 Dayton, OH 45401 PPG Industries Inc. Trade Vendor $920,538 Attn: Charles E. Bunch 6125 Industrial Parkway PO Box 2757 Whitehouse, OH 43571 Omnisource Corporation Trade Vendor $863,265 Attn: Gary E. Rohrs, Chief Financial Officer Toledo - Ferrous Division 2453 Hill Avenue Toledo, OH 43607 Dantherm Filtration Inc. Trade Vendor $853,343 Attn: Carsten Christensen, Chief Financial Officer PO Box 29 102 Transit Avenue Thomasville, NC 27361 Metal Conversions Ltd. Trade Vendor $&40,486 Attn: Rob Carey, President 849 Crawford Avenue N Mansfield, OH 44905 Smelter Service Corporation Trade Vendor $824,522 Attn: Bill Toler, President 401 Frederica Street Suite 104B Owensboro, KY 42301 WorldWide Integrated Supply Trade Vendor $808,856 Chain Solutions Attn: Tim Annett, President 3611 109th Street Urbandale, IA 50322 Schnitzer Southeast LLC Trade Vendor $797,327 c/o Schnitzer Steel Industries Attn: Rich Josephson, Legal Department 3200 NW Yeon Avenue Portland, OR 91210 Northeast Metal Traders Inc. Trade Vendor $773,175 Attn: Ronald W. Greller 7345 Milnor Street Philadelphia, PA 19136 Ford Motor Company Ltd. Trade Vendor $683,014 Attn: Lewis W. K. Booth, Chief Financial Officer 1 American Road Dearborn, MI 48126 Metal Exchange Corporation Trade Vendor $679,599 Attention: Morris S. Lefton, President PO Box 7446M SI Louis, MO 63195 The petition was signed by Sean M. Stack, president. ALLBRITTON COMMUNICATIONS: Moody's Confirms 'B3' Corporate Rating ----------------------------------------------------------------- Moody's Investors Service confirmed the B3 corporate family rating of Allbritton Communications Company following the company's February 5 execution of an amendment to its bank credit facility (with an effective date of December 31, 2008). The amendment mitigates concern about covenant compliance for the December 2008 quarter. It also materially restricts the potential for distributions to the parent company over the intermediate term and will result in the application of free cash flow to debt reduction, in Moody's opinion. This action concludes the review for possible downgrade commenced on January 30, 2009. The confirmation of the B3 corporate family rating assumes no material change to the capital structure over the intermediate term. Moody's changed the outlook to negative, based on Moody's expectation that Allbritton could face challenges complying with the revised financial covenants throughout 2009. A summary of the actions follows. Allbritton Communications Company -- Corporate Family Rating, Confirmed at B3 -- Probability of Default Rating, Confirmed at B3 -- Senior Subordinated Bonds, Confirmed at Caa1, LGD4, 58% -- Outlook, Changed To Negative From Rating Under Review Allbritton's B3 corporate family rating reflects some tolerance for modest increases in financial leverage over current levels, albeit not sustained, due to continued pressure on its revenue. This pressure primarily results from cyclical advertising spending. Furthermore, while Moody's expect distributions to the parent company to moderate over the intermediate term, the historic pattern of distributions weakened credit metrics and pressured the company's ability to comply with the financial covenants in its credit facility. Moody's expect covenant compliance to remain challenging (notwithstanding the February 2009 amendment) and estimate covenants will likely preclude full borrowing under the revolving credit facility. The rating also incorporates the risks of the company's revenue concentration in the Washington, DC market, its lack of network diversity, and long term secular pressures as the proliferation of new media fragments audiences and these non-traditional media compete for advertising dollars. Allbritton's strong market position in local broadcast television that leads to solid EBITDA margins and the capacity to generate positive free cash flow, as well as its ownership of NewsChannel 8, which lends some revenue stability, support the rating. Moody's believes Allbritton can maintain EBITDA margins close to 30% (as per Moody's standard adjustments) due to the combination of recently executed cost cuts and the achievement of profitability for Politico, also a positive for the rating. The last rating action was on January 30, 2009, when Moody's lowered Allbritton's corporate family rating to B3 from B1 and placed ratings on review for possible downgrade. Allbritton Communications Company, headquartered in Arlington, Virginia, owns and operates television stations affiliated with ABC in seven geographic markets. The company also owns NewsChannel 8, a 24 hour basic cable channel primarily focused on local news for DC area, and Politico, a specialized newspaper and Internet site that serves Congress, congressional staffers, and others interested in the political electoral process. Joe L. Allbritton indirectly controls the company, and its annual revenue is approximately $225 million. ALTERNATIVE ASSET: Receives Delisting Notice from NYSE Alternext ---------------------------------------------------------------- Alternative Asset Management Acquisition Corp. on February 10, 2009, received a deficiency letter from the NYSE Alternext US LLC indicating that it was not in compliance with Section 704 of the NYSE Alternext US Company Guide because the Company did not hold an annual meeting of its stockholders during the year ended December 31, 2008. The Company has been afforded the opportunity to submit a plan to the Exchange by March 10, 2009 advising the Exchange of actions taken, or to be taken, to bring the Company into compliance with Section 704 of the Company Guide by August 11, 2009. The Company intends to submit a plan to the Exchange by March 10, 2009 explaining that, pursuant to the Company's charter, it must consummate a business combination by August 1, 2009, or the Company will dissolve and liquidate. As a result, the Company will either hold an annual meeting of stockholders prior to August 1, 2009 or liquidate, in which case its securities would be delisted from the Exchange. If the plan is accepted, the Company will be able to continue its listing, during which time the Company will be subject to continued periodic review by the Exchange's staff. If the plan is not accepted, the Exchange could initiate delisting procedures against the Company. Based in New York, Alternative Asset Management Acquisition Corp. (NYSE Alternext US, Units: "AMV.U", Common Stock: "AMV," Warrants: "AMV.WS") is a blank check company which was formed in 2007 for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination one or more businesses or assets. AMERICAN AXLE: Barrow Hanley & Dimensional Fund Disclose Stake -------------------------------------------------------------- Barrow, Hanley, Mewhinney & Strauss, Inc., disclosed in a regulatory filing dated February 11, 2009, that it may be deemed to beneficially own 54,305,000 shares of American Axle & Manufacturing Holdings Inc.'s common stock or 8.85% of the total stock outstanding. Barrow, Hanley has: * sole power to vote or to direct the vote: 2,152,990 shares * shared power to vote or to direct the vote: 52,152,010 shares * sole power to dispose or to direct the disposition of: 54,305,000 shares In a separate regulatory filing dated February 9, 2009, Dimensional Fund Advisors LP disclosed that it may be deemed to beneficially own 3,683,594 shares of American Axle's common stock or 6.78% of the total stock outstanding. Dimensional Fund, an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/ -- is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom. * * * The Troubled Company Reporter reported on Jan. 29, 2009, that American Bankruptcy Institute reported that Bankruptcy Research firm KDP Investment Advisors said American Axle Manufacturing Holdings Inc. is at high risk of filing for bankruptcy in the next 12 months as declining auto production further pressures the supplier's earnings. The TCR, on Jan. 14, 2009, also reported that Standard & Poor's Ratings Services has lowered its corporate credit rating on Detroit-based American Axle Manufacturing & Holdings Inc. to 'CCC+' from 'B' and removed all the ratings from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. The outlook is negative. At the same time, S&P also lowered its issue-level ratings on the company's debt. AMERICAN HOME: Wins Confirmation of Ch. 11 Liquidating Plan ----------------------------------------------------------- Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware confirmed the third amended chapter 11 plan of liquidation of American Home Mortgage Investment Corp. and its affiliates on February 11, 2009, Bill Rochelle of Bloomberg News reports. The Bankruptcy Court confirmed the Plan after a three-day confirmation hearing despite strong objections by a committee of borrowers. The Committee argued that borrowers -- who were victims of the Debtors' predatory lending practices -- never would have a chance to file a claim were the plan confirmed. The confirmation hearings were supposed to start January 28, but the Debtors postponed it to February 9 to provide time to (i) review the Official Committee of Borrowers' expert report, and (ii) depose the Borrowers' Committee expert. According to Mr. Rochelle, the Plan has different treatments for creditors of the company and its affiliates. He notes that while secured creditors would be paid in full or according to their settlement agreements, unsecured creditors of AHM Holdings are expected to recover around 5 percent. Unsecured creditors of most other affiliates would see 1 percent or less. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for Chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. American Home filed a de-consolidated plan of liquidation on Aug. 15, 2008. (American Home Bankruptcy News; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN INT'L: To Sell Japanese Headquarters; Faces Probe in UK ---------------------------------------------------------------- American International Group Inc. has asked Merrill Lynch to help sell its 15-story headquarters in Japan, Alison Tudor at The Wall Street Journal reports, citing people familiar with the matter. WSJ relates that AIG's Japanese headquarters is overlooking the Imperial Palace and sits on some of the most expensive real estate in the world. According to the report, sources said that the building could be sold for more than $1 billion. The building is near General MacArthur's headquarters, the report says. Citing people familiar with the matter, WSJ states that the sale process will start shortly. The building, according to the report, is one of the assets AIG is selling to help repay a loan of as much as $60 billion it received from the U.S. government in September 2008. The report says that AIG had $38.6 billion outstanding as of February 4. According to WSJ, AIG has found it difficult to sell some businesses, partly because it has been hard to value complex financial instruments, but selling a building might be easier. The financial crisis hasn't hit Japan's property market as hard as other commercial centers, WSJ relates, citing analysts. The report states that the increase in the value of the yen against the U.S. dollar means that any sale in Japan would be worth more when the price is calculated in dollars. WSJ quoted AIG Global Real Estate Investment Corp. President Kevin Fitzpatrick as saying, "There has been a lot of buyer interest from Japan, Asia and other parts of the world." U.K. Gov't Investigates AIG Ragnhild Kjetland at WSJ reports that the U.K's Serious Fraud Office said on Thursday that it has launched a preliminary inquiry into certain subsidiaries of AIG Financial Products Corp. Citing the SFO, WSJ states that inquiry involves the U.K.-based Financial Services Authority, and doesn't concern AIG's foreign or domestic insurance businesses. The SFO, says WSJ, is cooperating with the U.S. authorities that are already conducting separate investigations. SFO Director Richard Alderman said in a statement, "It is right for us to look into the U.K. operations of AIG Financial Products Corp., to determine if there has been criminal conduct. We will use our full range of powers to seek information and to speak to those with an inside knowledge of the company's operations." AIG said that it will cooperate fully with the SFO, which today announced the launch of an inquiry into the UK business operations of certain subsidiaries of AIGFP. As previously disclosed, AIG began the process of unwinding certain of AIGFP's and its subsidiaries' businesses and portfolios, including those in the U.K., late last year. There are approximately 370 employees in AIGFP worldwide who are working on the winding down of the business. About American International Group Based in New York, American International Group, Inc. (AIG) is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76 on Sept. 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw- Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On Sept. 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At Sept. 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since Sept. 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to Sept. 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. AMERLINK LTD: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: AmerLink, Ltd. P.O. Box 669 Battleboro, NC 27809 Bankruptcy Case No.: 09-01055 Type of Business: The Debtor is a homebuilder. Chapter 11 Petition Date: February 11, 2009 Court: Eastern District of North Carolina (Wilson) Judge: Randy D. Doub Debtor's Counsel: Stephani Wilson Humrickhouse, Esq. shumrickhouse@nichollscrampton.com Nicholls & Crampton, P.A. P.O. Box 18237 Raleigh, NC 27619 Tel: (919) 781-1311 Fax: (919) 782-0465 The Debtor's financial condition as of December 31, 2008: Total Assets: $11,406,401 Total Debts: $20,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Horizon Trust & ESOP Payments $7,105,521 Investment Management 515 Franklin Square Michigan City, IN 46360 Agnieszka and Alex Contract $2,500,000 Storozynski 5 Fairview Ave. West Orange, NJ 07052 Gregory Reynolds Contract $2,500,000 36 Andrus Hollow Road Arkville, NY 12406 Carroll County Virginia Contract $1,600,000 605-1 Pine Street Hillsville VA 24343 Joseph Kintz Judgment $835,000 Braidwood IL 60408 Michael Germinario Contract $500,000 PO Box 671 Windham, NY 12496 First South Bank Guaranty of $270,471 Harlingen Stables Stock Building Supply Contract $212,236 Biltbest Windows Vendor $206,334 Bray Log & Lumber Co. Vendor $164,715 Epperson Lumber Vendor $157,690 John Newton Contract $126,719 Nelco Nelco Vendor $116,659 William Overman Accounting $104,851 Pierce LLP MW Manufacturing Vendor $102,781 Lisa Suggs Deposit $92,906 BlueLinx Corp Vendor $69,570 Turman Lumber Company Vendor $62,043 DirecTv Inc. Contract $60,970 Robert Thompson Deposit $55,406 The petition was signed by John M. Barth, president. APPCO: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------- Jeff Keeling at Kingsport Times-News Online reports that Appco has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of Tennessee. Court documents say that Appco estimates that funds will be available for distribution to unsecured creditors. According to Kingsport Times, Appco owes its five largest creditors more than $1 million each. Crescent Oil Co., Kingsport Times states, is Appco's second largest creditor, which holds a $1.65 million claim. Kingsport Times says that Appco's owes a total of $8.2 million to its top seven creditors, six of them supplied fuel. Appco owes grocery and tobacco supplier LP Shanks of Crossville about $1.4 million, Kingsport Times relates. Kingsport Times reports that Mark Dessauer, Esq., at Hunter, Smith and Davis assists Appco in its restructuring efforts. According to Kingsport Times, the Tennessee Lottery pulled its machines and tickets from the Appco stores in December, and since then Appcos have stopped offering gas and money orders. Kingsport Times says that Appco CEO Marty Anderson said on January 2 that "last-minute legal details" had pushed a refinancing back to January 5 or 6. Blountville-based Appco owns a chain of convenience stores. Titan Global Holdings purchased Appco in September 2007. Appco operates 55 stores in Northeast Tennessee, Southwest Virginia, and Southeast Kentucky. ARLINGTON RIDGE: May Obtain $30,000 to Fund Completion of Home -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida granted Arlington Ridge LLC, and its debtor-affiliates, permission to obtain postpetition financing in the amount of approximately $30,000 from Wachovia Bank to fund the cost of finishing a home located at a "Lot 164" property. The $30,000 will come from the funds that remain unused of the initial $900,000 Wachovia DIP Loan that was granted on Dec. 30, 2008. As reported in the Troubled Company Reporter on Jan. 27, 2009, the Debtors filed with the Court on Jan. 14, 2009, an amended Joint Chapter 11 Plan of Reorganization and a disclosure statement explaining the Amended Plan. The Plan contemplates the wind-down of the Debtors' business operations and for the transition of those business operations and the transfer of most of the Debtors' real estate and any related permits and entitlements, to Wachovia, the principal secured creditors of the Debtors. The Plan, as amended, provides for the payment in full of the general unsecured claims of all non-insider creditors. It leaves unimpaired the claims of the Arlington Ridge Community Development District (CDD), a public entity created pursuant to the Florida Statutes, and the claims of the Lake County Tax Collector for ad valorem real property taxes. To permit the Plan to be confirmed, the Prepetition Claims of Insiders and Affiliates will be cancelled, and the Insider DIP Lender will waive its right to any distribution under the Plan. About Arlington Ridge Saint Petersburg, Florida-based Arlington Ridge LLC and its affiliates operate a retirement community. The companies filed for Chapter 11 protection on Oct. 8, 2008 (Bankr. M. D. Fla. Case No. 08-15678). Amy Denton Harris, Esq., Harley E. Riedel, Esq., and Susan H. Sharp, Esq., at Stichter, Riedel, Blain & Prosser, represent the Debtors as counsel. AUTOBACS STRAUSS: Section 341(a) Meeting Slated for March 3 ----------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of creditors of Autobacs Strauss Inc. on March 3, 2009, at 11:00 a.m., eastern time, at J. Caleb Boggs Federal Building, 844 North King Street, 5th Floor, Room 5209, Wilmington, Delaware. 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 Autobacs Strauss Headquartered in South River, New Jersey, Autobacs Strauss Inc. -- http://www.straussauto.com/-- sells after-market automotive parts and accessories, and operate automotive service centers located in New York, New Jersey, Philadelphia, Bethlehem and Pennsylvania. The Debtor operate 86 retail store locations and has about 1,450 employees. The Debtor filed for Chapter 11 protection on Feb. 4, 2009, (Bankr. D. Del. Case No.: 09-10358) Edward J. Kosmowski, Esq. at Young Conaway Stargatt & Taylor, LLP represents the Debtor in its restructuring efforts. As of Jan. 3, 2009, the Debtor's assets total $75,000,000 and debts aggregate $72,000,000. AXION INTERNATIONAL: Gets $560,000 Contract from Major US Railway ----------------------------------------------------------------- Axion International Holdings, Inc. received an order for crossties from a major US railroad company valued at approximately $560,000. Upon completion of this contract, the customer has the potential to place further and larger orders. All contracted products for American commercial customers will be manufactured solely in the United States. "This order represents more than simply an important business opportunity for Axion," said James Kerstein, Chief Executive Officer. "Over and above the significant initial revenue generated and the potential for future, larger orders, the stature of this client provides major validation for our green structural products as well as providing leverage opportunities for expanded business throughout the entire rail and transportation infrastructure sectors." Mr. Kerstein further stated, "As evidenced by this latest order and by the bridges we are constructing for the US Army, our superior products offer higher quality structural solutions to specific projects than the traditional building technologies currently available, and do so in a manner that is both economically competitive and eco-friendly." The US Army has awarded Axion a multi-bridge contract representing a value of approximately $800,000. Utilizing Axion's patented blend of recycled composite materials, the 50-foot plus structures will handle loads of 70 tons, with each replacing a wood bridge with only a 6-ton rating. According to a study conducted by The US Army Corps of Engineers, a similar bridge built using Axion's formulations more than 10 years ago at Fort Leonard Wood has required virtually no maintenance and retains its as-new appearance. Axion Raises $1,375,000 Moreover, on January 20, Axion International entered into a Securities Purchase Agreement with Insight Partners, LLC. Pursuant to the Purchase Agreement, the Company agreed to issue to the Purchaser 1,562,500 shares of Common Stock of the Company for an aggregate purchase price of $1,375,000. About Axion International Basking Ridge, New Jersey, Axion International Holdings, Inc. (OTC Bulletin Board: AXIH -- News) is a leading structural solution provider of cost-effective alternative infrastructure and building products. The Company's "green" proprietary technologies allow for the development and manufacture of innovative structural products made from 100% recycled consumer and industrial plastics. Axion's up-cycled products are an economic and sustainable alternative to traditional building materials such as wood, steel or concrete. Developed in collaboration with scientists at Rutgers University, Axion's patented technologies allow for products that are extremely strong, durable, flexible in design, and low maintenance. BANK OF AMERICA: Merrill Moved Up Bonus Date, Says Andrew Cuomo --------------------------------------------------------------- Chad Bray at The Wall Street Journal reports that New York Attorney General Andrew Cuomo said on Wednesday that Merrill Lynch & Co. "secretly" moved up the date it awarded bonuses for 2008. According to WSJ, Mr. Cuomo said that he has been seeking information about what 2008 bonuses Merrill Lynch planned to award to executives since October 2008. WSJ states that Mr. Cuomo said in a letter to House Financial Service Committee Chairperson Barney Frank that Merrill Lynch awarded $3.6 billion in bonuses to more than 39,000 employees on the eve of its merger with Bank of America Corp. Mr. Cuomo, according to the report, said that he found out that 696 individuals at Merrill Lynch received more than $1 million apiece in bonuses, with 14 of those individuals receiving a combined $249 million, despite billions of dollars in losses. Mr. Cuomo said that Merrill Lynch gave a total of more than $121 million to four top executives, the report says. Citing Mr. Cuomo, WSJ relates that Merrill Lynch's board told him on November 5 that any bonuses to be paid would be "based upon a combination of performance and retention needs," but didn't provide details of the bonus pool, as they hadn't been determined. "Rather, in a surprising fit of corporate irresponsibility, it appears that, instead of disclosing their bonus plans in a transparent way as requested by my office, Merrill Lynch secretly moved up the planned date to allocate bonuses and then richly rewarded their failed executives. Merrill Lynch has never before awarded bonuses at such an early date and this timetable allowed Merrill to dole out huge bonuses ahead of their awful fourth quarter earnings announcement and before the planned takeover of Merrill by Bank of America," the report quoted Mr. Cuomo as saying. Merrill Lynch's decision to award bonuses "prematurely" and Bank of America's "complicity", raises question on "whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding," and whether the boards of the two banks were derelict in their duties and violated their fiduciary obligations, WSJ reports, citing Mr. Cuomo. About Bank of America Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk- management products and services. The bank provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and award-winning online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 40 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. BASIN WATER: Receives Notice of Compliance From Nasdaq ------------------------------------------------------ Basin Water, Inc. received notice from The Nasdaq Stock Market that the Company is in compliance with all requirements for continued listing on The Nasdaq Global Market. The Company had received notices of potential delisting due to the Company's failure to file its quarterly reports on Form 10-Q for the quarters ending June 30 and September 30, 2008. On February 10, 2009 the Company filed its quarterly reports on Form 10-Q for the quarters ended June 30 and September 30, 2008. In addition, on February 10, 2009, the Company filed its restated financial statements on Form 10-K/A for the fiscal years 2006 and 2007, and on Form 10-Q/A for the quarter ended March 31, 2008. The Company is now current with respect to its required Securities and Exchange Commission filings. Accordingly, Nasdaq has determined to continue the listing of the Company's securities on The Nasdaq Stock Market. Rancho Cucamonga, California-based Basin Water, Inc., -- http://www.basinwater.com/-- designs, builds and implements systems for the treatment of contaminated groundwater, industrial process water and air streams from municipal and industrial sources. It provides reliable sources of drinking water for many communities, and the ability to comply with environmental standards and recover valuable resources from process and wastewater streams. Basin Water has developed proprietary, scalable ion-exchange, biological and other treatment systems that effectively process contaminated water and air in an efficient, flexible and cost effective manner. BEAZER HOMES: Posts $80 Million Net Loss in Quarter Ended Dec. 31 ----------------------------------------------------------------- Beazer Homes USA, Inc. (NYSE: BZH), disclosed on February 9, 2009, its financial results for the quarter ended December 31, 2008. The Company previously provided preliminary first fiscal quarter home closings and new home orders and its cash and cash equivalents as of December 31, 2008. Summary results of the quarter are: Quarter Ended December 31, 2008 * Reported net loss from continuing operations of $(80.1) million, or $(2.08) per share, including non-cash pre-tax charges of $30.1 million, consisting of inventory impairments and abandonment of land option contracts of $12.7 million, goodwill impairments of $16.1 million and impairments in joint ventures of $1.3 million. For the first quarter of the prior fiscal year, the Company reported a net loss from continuing operations of $(137.7) million, or $(3.57) per share. * Total revenue: $232.4 million, compared to $500.7 million in the first quarter of the prior year. * Home closings: 938 homes, a decrease of 53.2% from 2,006 homes in the first quarter of the prior year. * New orders: 545 homes, a decrease of 56.5% from 1,252 in the first quarter of the prior year. As of December 31, 2008 * Cash and cash equivalents: $436.9 million, compared to $584.3 million at September 30, 2008 and $236.5 million at December 31, 2007. * Backlog: 965 homes with a sales value of $227.2 million compared to 2,231 homes with a sales value of $605.2 million as of December 31, 2007. * Subsequent to December 31, 2008, the Company received cash tax refunds of approximately $168 million. "The housing industry continues to face the most difficult business conditions in many decades," said Ian J. McCarthy, President and Chief Executive Officer. "During our first fiscal quarter, this challenging environment was greatly exacerbated by continued significant weakening in the overall economy, characterized by rising unemployment, low levels of consumer confidence and ongoing disruptions in the financial and credit markets, all of which negatively impacted buyer demand for new homes. Against this backdrop, we continue to adapt to the reality of lower home closing volumes by further reducing our cost structure. Combined with our disciplined focus on generating and maintaining liquidity, we believe these actions will help us weather this unprecedented housing environment." Quarter Ended December 31, 2008 Homebuilding revenues declined 53.1% for the quarter ended December 31, 2008, due to a 53.2% decline in home closings. The average selling price of homes closed during the quarter was generally flat compared to the same period of the prior year. This was due to changes in both product and geographic mix year- over-year as housing prices fell during the past year and continued to exhibit weakness during the quarter. Home closings declined in all segments, with the most significant declines in the East, Southeast and Other Homebuilding segments. Net new home orders totaled 545 for the quarter, a decrease of 56.5% from 1,252 net orders in the first quarter of the prior fiscal year. Net orders declined 49.4% in markets where the Company maintains a presence and 93.9% in markets the Company had previously announced it was exiting. The cancellation rate for the first quarter was 45.6%, compared to 46.6% for the same period in the prior year. Overall, margins continued to be negatively impacted by weak market conditions. However, gross margin for the first fiscal quarter was 5.9%, compared to a gross loss of 20.8% for the comparable period of the prior year, as a result of lower non-cash pre-tax inventory impairments and option contract abandonment charges of $12.7 million in the first quarter, compared to $168.5 million in the first quarter of the prior year. In light of the significant turmoil in the general economy and the financial markets in particular and a general hesitancy by consumers to make home purchase decisions during the first quarter, the Company did not pursue a strategy of offering additional sales incentives or sales price reductions in order to generate additional sales on the belief that such a strategy would not significantly improve the level of new home orders for the first fiscal quarter. The Company may resume offering additional sales incentives or sales price reductions in response to various factors including competitive market conditions. It is possible that future changes in sales prices and absorptions could lead to additional impairments and that the level of reduced inventory impairments for the first quarter may not be indicative of future levels of impairments. The Company continued to reduce its overhead cost structure. As of December 31, 2008, total headcount was reduced by 32% compared to December 31, 2007 and by over 70% compared to the peak level in fiscal 2006. Subsequent to the end of the first quarter, headcount was further reduced by approximately 300 employees. The Company also incurred a pretax charge of $1.3 million to recognize impairments in joint ventures, and recorded a pre-tax $16.1 million goodwill impairment charge related to the Company's goodwill in its reporting units in Houston, Maryland and Nashville. As of December 31, 2008, the Company had no remaining goodwill recorded on the balance sheet. The Company controlled 36,642 lots at December 31, 2008 (75% owned and 25% controlled under options), reflecting reductions of approximately 8% and 37% from levels as of September 30, 2008, and December 31, 2007, respectively. As of December 31, 2008, unsold finished homes totaled 503, a decline of approximately 26% from the level a year ago. The Company continued to substantially reduce its land and land development spending, which totaled $59.1 million in the first fiscal quarter, compared to $108.4 million for the same period in the prior year. The land and land development expenditure for the first quarter of this fiscal year included approximately $20 million related to the renegotiation of several land banking arrangements resulting in land purchases at a discount to previously contracted prices. Together with approximately $10 million in purchases in the fourth quarter of fiscal 2008, and $20 million of purchases to be concluded during the second quarter of this fiscal year, the Company will have satisfied its obligations under these arrangements. With respect to the Company's cash position, at December 31, 2008, the Company had cash and cash equivalents of $436.9 million, compared to $584.3 million at September 30, 2008 and $236.5 million at December 31, 2007. The Company had no cash borrowings under its secured revolving credit facility as of December 31, 2008, and has no current plans that would require cash borrowings. As of December 31, 2008, the Company had restricted approximately $19 million in cash to sufficiently collateralize outstanding letters of credit under the Company's secured revolving credit facility. Subsequent to December 31, 2008, the Company received cash tax refunds of approximately $168 million. A full-text copy of the Company's quarterly report is available for free at: http://tinyurl.com/cua23r About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." As of December 31, 2008, Beazer's consolidated balance sheets showed $2.4 billion in total assets, $2.1 billion in total liabilities, and $298.1 million in total stockholders' equity. * * * As disclosed in the Troubled Company Reporter on June 12, 2008, Fitch Ratings downgraded Beazer Homes USA Inc.'s Issuer Default Rating to 'B' from 'B+'; Secured revolving credit facility to 'BB- /RR1' from 'BB/RR1'; Senior notes to 'B-/RR5' from 'B/RR5'; Convertible senior notes to 'B-/RR5' from 'B/RR5'; and Junior subordinated debt to 'CCC/RR6' from 'CCC+/RR6'. On February 6, 2009, the TCR reported that Moody's Investors Service placed all of the ratings of Beazer Homes USA, Inc., Hovnanian Enterprises, Inc., M/I Homes, Inc., and Standard Pacific Corp. on review for downgrade. The review was prompted by Moody's expectation that cash flow generation for these companies will weaken in 2009 and deteriorate further in 2010, that the macro environment will continue to be unsupportive, and that access to credit -- both for the industry and for its customers -- will tighten. The review will focus on each company's ability to generate cash flow, manage liquidity, and comply with bank covenants beyond 2009. Beazer Homes USA, Inc. -- B2 corporate family rating -- B2 probability of default rating -- B3 senior unsecured notes rating -- Hovnanian Enterprises, Inc. -- B3 corporate family rating -- B3 probability of default rating -- Ba3 second lien senior secured notes rating -- B3 third lien senior secured notes rating -- Caa1 senior unsecured notes rating -- Caa2 senior subordinated notes rating -- Caa3 preferred stock rating BEAZER HOMES: Deutsche Bank & Tontine Entities Disclose Stake ------------------------------------------------------------- Deutsche Bank AG, Deutsche Bank AG, London Branch and Deutsche Bank Securities Inc. disclosed in a regulatory filing dated February 9, 2009, that they may be deemed to own shares of Beazer Homes USA, Inc.'s common stock. No. of Shares Percentage ------------- ---------- Deutsche Bank 2,645,300 6.73% Deutsche Bank AG, London Branch 2,617,300 6.66% Deutsche Bank Securities Inc. 28,000 0.07% In accordance with Securities Exchange Act Release No. 39538, the securities are beneficially owned by the Corporate and Investment Banking business group and the Corporate Investments business group of Deutsche Bank AG and its subsidiaries and affiliates. Furthermore, CIB disclaims beneficial ownership of the securities beneficially owned by (i) any client accounts with respect to which CIB or its employees have voting or investment discretion, or both, and (ii) certain investment entities, of which CIB is the general partner, managing general partner, or other manager, to the extent interests in those entities are held by persons other than CIB. In a separate regulatory filing dated February 6, 2009, (i) Tontine Overseas Associates, L.L.C., (ii) Tontine Partners, L.P., (iii) Tontine Management, L.L.C., (iv) Tontine Capital Partners, L.P., (v) Tontine Capital Management, L.L.C., and (vi) Jeffrey L. Gendell disclosed that they may be deemed to beneficially own shares of Beazer Homes' Class A Common Stock: No. of Shares Percentage ------------- ---------- Tontine Overseas Associates, L.L.C. 408,200 1.04% Tontine Partners, L.P. 0 0.00% Tontine Management, L.L.C. 0 0.00% Tontine Capital Partners, L.P. 0 0.00% Tontine Capital Management, L.L.C. 0 0.00% Jeffrey L. Gendell 408,200 1.04% Tontine Overseas Associates, L.L.C., serves as investment manager to Tontine Overseas Fund Ltd., Tontine Capital Overseas Master Fund, L.P., and certain separately managed accounts, with respect to the shares of Common Stock directly owned by Tontine Overseas Fund, Tontine Capital Overseas, and the separately managed accounts. Tontine Management, the general partner of Tontine Partners, has the power to direct the affairs of Tontine Partners, including decisions respecting the disposition of the proceeds from the sale of the shares of the Company. Tontine Capital Management, the general partner of Tontine Capital Partners has the power to direct the affairs of Tontine Capital Partners, including decisions respecting the disposition of the proceeds from the sale of the shares of the Company. Mr. Gendell is the managing member of Tontine Management, Tontine Capital Management and Tontine Overseas Associates, and in that capacity directs their operations. Each of the clients of Tontine Overseas Associates has the power to direct the receipt of dividends from or the proceeds of sale of those shares. About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." As of December 31, 2008, Beazer's consolidated balance sheets showed $2.4 billion in total assets, $2.1 billion in total liabilities, and $298.1 million in total stockholders' equity. * * * As disclosed in the Troubled Company Reporter on June 12, 2008, Fitch Ratings downgraded Beazer Homes USA Inc.'s Issuer Default Rating to 'B' from 'B+'; Secured revolving credit facility to 'BB- /RR1' from 'BB/RR1'; Senior notes to 'B-/RR5' from 'B/RR5'; Convertible senior notes to 'B-/RR5' from 'B/RR5'; and Junior subordinated debt to 'CCC/RR6' from 'CCC+/RR6'. On February 6, 2009, the TCR reported that Moody's Investors Service placed all of the ratings of Beazer Homes USA, Inc., Hovnanian Enterprises, Inc., M/I Homes, Inc., and Standard Pacific Corp. on review for downgrade. The review was prompted by Moody's expectation that cash flow generation for these companies will weaken in 2009 and deteriorate further in 2010, that the macro environment will continue to be unsupportive, and that access to credit -- both for the industry and for its customers -- will tighten. The review will focus on each company's ability to generate cash flow, manage liquidity, and comply with bank covenants beyond 2009. Beazer Homes USA, Inc. -- B2 corporate family rating -- B2 probability of default rating -- B3 senior unsecured notes rating -- Hovnanian Enterprises, Inc. -- B3 corporate family rating -- B3 probability of default rating -- Ba3 second lien senior secured notes rating -- B3 third lien senior secured notes rating -- Caa1 senior unsecured notes rating -- Caa2 senior subordinated notes rating -- Caa3 preferred stock rating BELDEN INC: Moody's Cuts Senior Subordinated Notes Rating to Ba2 ---------------------------------------------------------------- Moody's Investors Service affirmed the Baa2 rating on Belden's secured debt facility and downgraded the rating on the senior subordinated notes to Ba2 from Ba1. The corporate family rating remains unchanged at Ba1. The revisions were driven by the shift in Belden's capital structure which, after the repayment of the convertible subordinated debt, will likely include higher borrowings under the secured revolver and anticipated increases in unfunded pension liabilities. The individual debt instrument ratings were determined using Moody's Loss Given Default Methodology. This rating has been changed: -- $350 million senior subordinated notes due 2017 to Ba2, LGD5 71% from Ba1 LGD4 62% These ratings remain unchanged: -- Corporate family rating Ba1 -- Probability of default Ba1 -- $350 million senior secured revolving credit facility due 2011 - Baa2, LGD2 19% (from 17%) -- Outlook Negative 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. BUFFALO THUNDER: S&P Cuts Ratings to 'CCC'; May Not Be Able to Pay ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its ratings on the Santa Fe, New Mexico-based Buffalo Thunder Development Authority to 'CCC', from 'B-'. At the same time, S&P removed the rating from CreditWatch, where S&P placed it on Dec. 30, 2008. The outlook is negative. "The ratings downgrade reflects our concern that the Authority will not be able to meet its fixed obligations in the near term and that it will need some form of external funding in the next several months," said Standard & Poor's credit analyst Ariel Silverberg. This stems from S&P's expectation that weak economic conditions will persist over the next few quarters, resulting in an inability for the Buffalo Thunder Resort and Casino to drive sufficient customer traffic, and a continuation of weak operating performance. "In addition, due to weak initial operating results through Dec. 31, 2008 (the Resort opened Aug. 12, 2008), the Authority has been unable to generate sufficient cash flow to build cushion on the balance sheet, to accommodate expected continued weak performance over the next few quarters," she continued. The rating on the Authority reflects its near-term liquidity position, its high pro forma debt leverage, and limited geographic diversity. The negative outlook reflects S&P's concerns regarding the Authority's near-term liquidity position, and its ability to fund its near-term obligations. S&P expects that the Resort will continue to face challenges in generating sufficient cash flow over the next few months to fund its fixed charges. * * * Bill Rochelle of Bloomberg News notes that this is the second downgrade by S&P in two months. He also notes that the new S&P rating is one level more charitable than the ding issued in December by Moody's Investors Service. CABLEVISION SYSTEMS: Dolan Discloses Ownership of 396,561 Shares ---------------------------------------------------------------- Charles F. Dolan, chairman of Cablevision Systems Corp NY, disclosed in a regulatory filing dated February 11, 2009, that he may be deemed to beneficially own 396,561 shares of Cablevision NY Group Class A Common Stock. Headquartered in Bethpage, New York, Cablevision Systems Corp. (NYSE: CVC) -- is a cable operator in the United States that operates cable programming networks, entertainment businesses and telecommunications companies. Through its wholly owned subsidiary, Rainbow Media Holdings LLC, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies. Through Cablevision Lightpath Inc., its wholly owned subsidiary, the company provides telephone services and Internet access to the business market. At September 30, 2008, the company's consolidated balance sheet showed $9.7 billion in total assets and $14.6 billion in total liabilities, resulting in a $4.9 billion total stockholders' deficit. * * * As disclosed in the Troubled Company Reporter on June 6, 2008, Standard & Poor's Ratings Services affirmed all its ratings, including its 'BB' corporate credit rating, on based Cablevision Systems Corp., a major cable operator in the New York City metropolitan area, and its subsidiaries. The outlook is negative. On June 2, 2008, the TCR reported that Moody's Investors Service assigned a B1 rating to the proposed new $500 million of senior unsecured debt to be issued by Cablevision Systems Corporation's subsidiary CSC Holdings, Inc. Existing ratings for the company and CSC were also affirmed. The rating outlook remains stable. CABLEVISION SYSTEMS: Expects $375-$450 Million Impairment Charges ----------------------------------------------------------------- Management of Cablevision Systems Corporation and CSC Holdings, Inc. has concluded that charges for impairment of certain assets of the Companies' newspaper publishing group would be required under generally accepted accounting principles in connection with the preparation of their financial statements for their Annual Report on Form 10-K for the year ended December 31, 2008. Based on currently available information, the Companies expect to incur between approximately $375 million and $450 million of pre-tax impairment charges under generally accepted accounting principles related to impairments of excess costs over fair value of net assets acquired and other indefinite and definite lived intangible assets. "These impairment charges reflect the continuing deterioration of values in the newspaper industry and the greater than anticipated economic downturn and its current and anticipated impact on the newspaper publishing group's advertising business. The impairment charges are not expected to result in any material future cash expenditures," Michael P. Huseby, executive vice president and chief financial officer, disclosed in a regulatory filing dated February 9, 2009. According to Mr. Huseby, the final conclusion as to the amount of these charges will be made in connection with the completion of the financial statements to be included in the Companies' Annual Report on Form 10-K for the year ended December 31, 2008. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp. (NYSE: CVC) -- is a cable operator in the United States that operates cable programming networks, entertainment businesses and telecommunications companies. Through its wholly owned subsidiary, Rainbow Media Holdings LLC, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies. Through Cablevision Lightpath Inc., its wholly owned subsidiary, the company provides telephone services and Internet access to the business market. At September 30, 2008, the company's consolidated balance sheet showed $9.7 billion in total assets and $14.6 billion in total liabilities, resulting in a $4.9 billion total stockholders' deficit. * * * As disclosed in the Troubled Company Reporter on June 6, 2008, Standard & Poor's Ratings Services affirmed all its ratings, including its 'BB' corporate credit rating, on based Cablevision Systems Corp., a major cable operator in the New York City metropolitan area, and its subsidiaries. The outlook is negative. On June 2, 2008, the TCR reported that Moody's Investors Service assigned a B1 rating to the proposed new $500 million of senior unsecured debt to be issued by Cablevision Systems Corporation's subsidiary CSC Holdings, Inc. Existing ratings for the company and CSC were also affirmed. The rating outlook remains stable. CARAUSTAR INDUSTRIES: Difficult Env't Cues S&P's Junk Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its ratings on Austell, Georgia-based Caraustar Industries Inc. The corporate credit rating was lowered to 'CCC' from 'B-'. At the same time, S&P lowered the issue-level ratings on Caraustar's senior unsecured debt to 'CCC-' from 'B-' and revised the recovery rating to '5' from '4', indicating S&P's expectation that lenders can expect modest (10%-30%) recovery in the event of a payment default, following S&P's review of the recovery prospects for the companies' debtholders. S&P removed all ratings from CreditWatch, where they were placed with negative implications on Nov. 18, 2008. The outlook is negative. "The downgrade reflects our heightened concerns regarding the company's ability to address the maturity of its $190 million senior notes due June 1, 2009 given the combination of the ongoing difficult credit environment and challenging operating conditions," said Standard & Poor's credit analyst Andy Sookram. Under the amended asset-based revolving credit agreement, Caraustar is required to provide evidence of repayment, redemption, or defeasance of the notes by March 1, 2009. In addition, the notes must be repaid, redeemed, or defeased at least 60 days before maturity. The ratings on Caraustar reflect its near-term refinancing risk, high debt burden, weak earnings, and cyclical and mature end- markets. Operating conditions have been difficult over the past few quarters, and S&P does not expect this to change in the near term. During the nine months ended Sept. 30, 2008 compared with the same period in 2007, revenues declined 4% to $648 million because of asset sales and lower volume and selling prices primarily in the recovered fiber segment. However, operating margins increased to 6.6% from 5.8% over the same timeframe as higher selling prices for paperboard and tube and core were partly offset by increased raw material costs, including energy and fiber. Standard & Poor's expects the difficult operating environment to continue in the near term given the weak U.S. economy and S&P's expectations for a decline in demand for the company's products and selling prices. As a result, S&P expects credit measures to deteriorate from current levels, with EBITDA coverage of interest at around 1.5x and adjusted total debt to EBITDA in the 7.5x-8x area. Without meaningful and sustained growth in cash flow generation (which S&P does not currently expect, given the economic downturn's effect on demand for the company's products), liquidity will become further constrained, and Caraustar will likely find it difficult to meet its near-term maturity. The negative outlook reflects S&P's concerns about Caraustar's ability to address the maturity of its outstanding notes on June 1, 2009, of which Caraustar is required to provide evidence of its plan by March 1, 2009, given the difficult credit market environment. In addition, the outlook incorporates S&P's expectations for a very challenging operating environment in the near term, given the weak U.S. economy that will likely lead to a decline in selling prices and demand for its products. As a result, in the absence of an improved credit market, Caraustar may need to restructure its debt obligations. CDS MANUFACTURING: Case Summary & 14 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: CDS Manufacturing, Inc. 441 South Virginia Street Quincy, FL 32351 Bankruptcy Case No.: 09-40089 Type of Business: Established in 1999, CDS Manufacturing produces precast and prestressed concrete products. The Debtor has two casting yards in the Tallahassee, Florida area: (i) The Quincy Casting yard is housed in a 30,000-square-foot facility on 9 acres, and (ii) The Midway Casting Yard is located on 38 acres and is conveniently onsite with Superior Redi-Mix. See: http://www.cdsmanufacturing.net/ Chapter 11 Petition Date: February 11, 2009 Court: Northern District of Florida (Tallahassee) Debtor's Counsel: Thomas B. Woodward, Esq. woodylaw@embarqmail.com Thomas B. Woodward, Atty. P.O. Box 10058 Tallahassee, FL 32302 Tel: (850) 222-4818 Fax: (850) 561-3456 Estimated Assets: Less than $50,000 Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital City Bank-Gretna $2,5148,83 PO Box 900 Tallahassee, FL 32302 BLX Capital, LLC $2,362,655 645 Madison Ave., 19th Floor New York, NY 10022 United States Small Business $1,059,736 Admin. 2120 Riverfront Dr., Ste. 100 Little Rock, AR 72202-1747 Riverside Bank Business Debt $901,582 PO Box 4000 Fort Pierce, FL 34954 Superior Redi-Mix Business Debt $811,026 PO Box 60 Midway, FL 32343 Leaf Financial Corp. $320,617 Southway Industrial Services Business Debt $260,451 Taycor Financial Services $211,999 Florida First Capital $181,609 Commercial Credit Group, Inc. $176,434 Caterpillar Financial $161,615 Services Dale W. Summerford Business Debt $150,498 Regions Bank $149,228 Rose Lutz Business Debt $147,758 The petition was signed by Clayton Sembler, president. CELL THERAPEUTICS: Issues 6,634 Shares of Series F Preferred Stock ------------------------------------------------------------------ Cell Therapeutics, Inc., entered into a letter agreement dated January 29, 2009, with Midsummer Investment, Ltd., SCO Capital Partners, LLC, Context Opportunistic Master Fund, LP, Context Capital Management, LLC, ALTMA Fund SICAV PLC in Respect of the Grafton Sub Fund, Rockmore Investment Master Fund Ltd., TRUK Opportunity Fund, LLC, TRUK International Fund, LP, McMahan Securities Co. L.P., Tewksbury Investment Fund Ltd., Whitebox Hedged High Yield Partners, LP and Whitebox Combined Partners, LP. The last to sign of the Participating Holders signed on February 3, 2009, thereby establishing satisfaction of a percentage participation closing condition. Pursuant to the Letter Agreement, on February 4, 2009, the Company issued to the Participating Holders a total of 6,634 shares of newly issued Series F Preferred Stock of the Company (with a Stated Value of $6,634,000) in exchange for a total of 6,634 shares of outstanding Series A 3% Convertible Preferred Stock, Series B 3% Convertible Preferred Stock and Series C 3% Convertible Preferred Stock of the Company surrendered by the respective Participating Holders: -- 200 shares of Series A 3% Convertible Preferred Stock, -- 2,150 shares of Series B 3% Convertible Preferred Stock, and -- 4,284 shares of Series C 3% Convertible Preferred Stock. Each of the holders of the Company's outstanding Series A 3% Convertible Preferred Stock, Series B 3% Convertible Preferred Stock, Series C 3% Convertible Preferred Stock and Series D 7% Convertible Preferred Stock were given the opportunity to enter into the Letter Agreement; there were a total of 8,052 shares outstanding in the four series before the transaction. The Series F Preferred Stock has no fixed dividend rate, has an initial liquidation preference of $1,000 per share, and if and when it becomes convertible, will be convertible into Common Stock at the option of the holder at a conversion price of $0.14 per share. Accordingly, the 6,634 shares of Series F Preferred Stock would be convertible into a total of 47,385,714 shares of Common Stock. The Series F Preferred Stock becomes convertible on the later of April 1, 2009 or the day the Company's authorized number of shares of Common Stock is increased. Each share of Series F Preferred Stock votes together with all other shares of Common Stock and Preferred Stock as if part of a single class and is entitled to 7,142.9 votes per share of Series F Preferred Stock in any such vote. The holders of Series F Preferred Stock do not have optional redemption rights, either event-based or time-based. The Company has the optional right to redeem the Series F Preferred Stock for its stated value -- $1,000 per share -- after December 31, 2009 or after the day the Company's Common Stock has held a $0.28 market price for 10 consecutive trading days, whichever comes earlier. Under the Letter Agreement, the Participating Holders gave releases and consents and agreed to vote their Series F Preferred Stock in favor of the Company's proposals to increase the authorized number of shares of Common Stock and to effect a reverse stock split. In addition, in a separate transaction, the Company entered into a letter agreement dated February 4, 2009 with RHP Master Fund Ltd., calling for the Company to issue 4,000,000 shares of newly-issued Common Stock in exchange for RHP's 250 shares of Series A 3% Convertible Preferred Stock of the Company. This RHP exchange transaction was consummated on February 4, 2009. On February 3, 2009, the Company filed, with the Secretary of State of the State of Washington, Articles of Amendment to Amended and Restated Articles of Cell Therapeutics, Inc.-Designation of Preferences, Rights and Limitations of Series F Preferred Stock. These Articles of Amendment designated and created the Company's Series F Preferred Stock. As of February 6, 2009, the Company had 321,839,943 shares of such Common Stock issued and outstanding. About Cell Therapeutics Headquartered in Seattle, Cell Therapeutics Inc. -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Going Concern Doubt Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Cell Therapeutics Inc.'s ability to continue as a going concern after auditing company's financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has substantial monetary liabilities in excess of monetary assets as of Dec. 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. The Troubled Company Reporter reported on Nov. 26, 2008, Cell Therapeutics, Inc.'s balance sheet as of Sept. 30, 2008, showed total assets of $93,746,000 and total liabilities of $218,723,000, resulting in total shareholders' deficit of $133,380,000. For the three months ended September 30, 2008, the company posted a net loss of $45,589,000 on total revenues of $2,600,000, compared with a net loss of $48,471,000 on total revenues of $20,000 for the same period a year earlier. James A. Bianco, M.D., the company's chief executive officer, relates that Cell Therapeutics has incurred losses since inception and it expects to generate losses from operations for at least the next year primarily due to research and development costs for Zevalin, OPAXIO (paclitaxel poliglumex), pixantrone and brostallicin. "Our available cash and cash equivalents, securities available- for-sale and interest receivable are approximately $11.7 million as of Sept. 30, 2008. In addition, in October 2008 we issued $24.7 million of 9.66% convertible senior notes, or 9.66% notes, for net proceeds, before fees and expenses, of $7.5 million after taking into account $7.2 million placed in escrow to fund make- whole payments and interest payments on the notes, our repurchase of $18.2 million of our 15% notes as well as $8.2 million in cash released from escrow related to the repurchased notes. Even with this additional financing, we will not have sufficient cash to fund our planned operations through the end of the fourth quarter, which raises substantial doubt about our ability to continue as a going concern," Dr. Bianco says. "Accordingly, we have implemented cost saving initiatives to reduce operating expenses and we continue to seek additional areas for cost reductions. However, we will also need to raise additional funds and are currently exploring alternative sources of equity or debt financing." CHARTER COMMUNICATIONS: Eyes $1.7BB 4th Qrtr. Pro Forma Revenues ---------------------------------------------------------------- Charter Communications, Inc., along with its subsidiaries, released preliminary results for the fourth quarter of 2008, which reflect solid revenue growth and the 9th consecutive quarter of double digit adjusted EBITDA1 growth on a pro forma2 as reported basis. Charter Communications currently expects pro forma revenues for the fourth quarter of 2008 of $1.653 billion, which represents an increase of approximately 7.0% compared to the same period in 2007 on a pro forma basis. Charter Communications expects actual revenues of $1.656 billion, an increase of approximately 6.6% for the period. Charter Communications currently expects pro forma adjusted EBITDA for the fourth quarter of 2008 to be approximately $619 million, an increase of approximately 10.1% compared to the same period in 2007 on a pro forma basis. Actual adjusted EBITDA is expected to be $620 million, an increase of approximately 9.7% compared to 2007. Charter Communications currently expects pro forma annual revenues for 2008 of $6.467 billion, which represents an increase of 8.5% compared to pro forma 2007 and actual annual revenues to be approximately $6.479 billion, an increase of 7.9% compared to 2007. Charter Communications currently expects pro forma annual adjusted EBITDA for 2008 of $2.315 billion, which represents an increase of 10.3% compared to 2007, and actual annual adjusted EBITDA of $2.319 billion, an increase of 9.9% compared to 2007. "We are pleased with our operational results during the fourth quarter, particularly in this challenging economic environment," said Charter Communications President and CEO Neil Smit. "We remain committed to delivering value to our customers through our bundle of quality video, high-speed Internet, and telephone services. We are continuously expanding our high-definition offering, we've recently launched 60Mbps high-speed Internet service, and later this month we'll upgrade Charter Communications High-Speed Internet Max from 16 Mbps speed to 20 Mbps. Our operational results continue to reflect the underlying potential of our business, and our talented employees remain focused on offering enhanced products and service for our customers." Charter Communications added 45,300 revenue generating units (RGUs) during the fourth quarter of 2008 and 650,900 RGUs during the full year. Approximately 53% of Charter's customers subscribe to a bundle, up from 47% in the fourth quarter of 2007. Charter's pro forma average monthly revenue per basic video customer for the fourth quarter of 2008 was $108.27, an increase of 10.2% compared to fourth quarter 2007, primarily as a result of higher bundled penetration and an increase in advanced services. Fourth quarter expected RGU additions (on a pro forma basis for 2008 and 2007) consisted of the following: -- Fourth quarter 2008 net losses of basic video customers were approximately 75,100 compared to a net loss of approximately 65,800 in the fourth quarter of 2007; -- Fourth quarter 2008 net gains of digital video customers were approximately 22,300 compared to a net gain of approximately 59,500 in the fourth quarter of 2007; -- Fourth quarter 2008 net gains of high-speed Internet customers were approximately 22,900 compared to a net gain of approximately 50,500 in the fourth quarter of 2007; and -- Fourth quarter 2008 net gains of telephone customers were Approximately 75,200, compared to a net gain of approximately 155,300 in the fourth quarter of 2007. Telephone homes passed were approximately 10.4 million as of December 31, 2008. Capital expenditures for the fourth quarter of 2008 are currently expected to be approximately $264 million, which would be lower than capital expenditures of $354 million during the same quarter in the prior year. Capital expenditures for the full year 2008 are expected to be approximately $1.202 billion, compared to $1.244 billion in 2007. Approximately 77% of Charter's 2008 capital expenditures were success-based. In the fourth quarter the Company expects to record approximately $1.5 billion of impairment for the year ended December 31, 2008. The Company intends to finalize its franchise impairment analysis, as required by SFAS No. 142, "Goodwill and Other Intangible Assets," prior to the release of its 2008 financial results. 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, Inc. 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 Inc. to 'CC' from 'B-'. S&P said that the rating outlook is negative. CHARTER COMMUNICATIONS: Will File for Bankruptcy by April 1 ----------------------------------------------------------- Kerry E. Grace at The Wall Street Journal reports that Charter Communications Inc. said it will file for Chapter 11 bankruptcy protection by April 1, as part of an agreement with some of its debt holders to cut its debt by $8 billion. Charter Communications and its subsidiaries said that they have reached an agreement-in-principle with an ad hoc committee of certain of the Company's debt holders on the terms of a financial restructuring to reduce the Company's debt by approximately $8 billion. In the context of its agreement, Charter Communications also announced that two of its subsidiaries, CCH I Holdings, LLC, and Charter Communications Holdings, LLC (Charter Holdings), will make within the allotted grace period, interest payments totaling approximately $74 million in the aggregate on certain of their outstanding senior notes that were due January 15, 2009. "We are pleased to have reached an agreement with such a significant portion of our bondholders on a long-term solution to improve our capital structure," said Neil Smit, Charter Communications President and Chief Executive Officer. "We are committed to continuing to provide our 5.5 million customers with quality cable, Internet and phone service, and through this agreement, we will be even better positioned to deliver the products and services our customers demand now and in the future. Moreover, the interest and support provided by our stakeholders with their new capital investment underscores their confidence in Charter and our business." Charter Communications' operations are strong and the Company remains focused on continuing to provide its customers with quality service and support today and going forward. Preliminary fourth quarter 2008 results reflect pro forma1 revenue growth of approximately 7% and pro-forma adjusted EBITDA2 growth of more than 10%, on a year-over-year basis. As of February 11, Charter Communications had approximately $800 million in cash and cash equivalents available to it. Charter Communications believes its liquidity, combined with its cash from operating activities, will be sufficient to meet its projected cash needs, including the payment of normal operating costs and expenses, as it proceeds with its financial restructuring. The funding required by the financial restructuring contemplated by the agreement-in-principle is expected to be satisfied by cash on hand, an exchange of debt of CCH II, LLC, and CCH I, LLC, for new notes issued by CCH II, the issuance of additional debt, and the proceeds of an equity offering for which the Company has received a back-stop commitment from certain of its noteholders. The agreement further contemplates that: (i) the notes and bank debt of Charter Communications Operating, LLC and CCO Holdings, LLC will remain Outstanding; (ii) holders of notes issued by CCH II will receive new notes issued by CCH II or cash on account of their claims; (iii) holders of notes issued by CCH I will receive the new notes issued by CCH II and shares of common stock in Charter Communications; (iv) holders of notes issued by CIH will receive warrants to purchase shares of common stock in Charter Communications; (v) holders of notes of Charter Holdings will receive warrants to purchase shares of common stock of Charter Communications; (vi) holders of convertible notes issued by Charter Communications will receive cash and preferred stock issued by the Company; and (vii) holders of common stock will not receive any amounts on account of their common stock, which will be cancelled. In addition, as part of the financial restructuring, it is expected that consideration will be paid by CCH I noteholders to other entities participating in the financial restructuring. As part of the agreement, Paul Allen will continue as an investor, and will retain the largest voting interest in the Company. The agreement-in-principle is subject to numerous closing conditions and there is no assurance that the treatment of creditors outlined above will not change significantly. Under the terms of the agreement, the Company intends to implement its financial restructuring through a Chapter 11 filing to be initiated on or before April 1, 2009. The purpose of Charter's financial restructuring is to strengthen its balance sheet in order to fully support the Company's operations and service its debt. As such, the agreement-in-principle contemplates paying trade creditors in full. 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, Inc. 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 Inc. to 'CC' from 'B-'. S&P said that the rating outlook is negative. CHARTER COMM: Likely to File, Says Moody's; Rating Down to 'Caa3' ----------------------------------------------------------------- Moody's Investors Service has concluded its review of Charter Communications, Inc. and its subsidiaries, which began December 12, 2008. Charter's Corporate Family Rating was lowered to Caa3 from Caa1, its Probability of Default Rating was confirmed at Ca, and its Speculative Grade Liquidity Rating was lowered to SGL-4 from SGL-3. Ratings for the debt of parent company CCI and all intermediate holding companies through CCH I, LLC (including Charter Communications Holdings, LLC, CCH I Holdings, LLC, and CCH I, LLC) have been lowered, while those for the debt of the intermediate holding company CCH II, LLC, through Charter Communications Operating, LLC (including CCO Holdings, LLC) have been confirmed at existing levels. The rating outlook is stable as all ratings now reflect Moody's estimate of ultimate recovery levels for creditors upon emergence from an anticipated near-term bankruptcy filing and subsequent restructuring, with the exception of the PDR which would revert to a "D" rating in the event of such a filing or some other form of wholesale default on the company's obligations. These summarizes Moody's rating actions and current ratings: Charter Communications, Inc. * Corporate Family Rating -- Downgraded to Caa3 from Caa1 * Probability of Default Rating -- Confirmed at Ca * Senior unsecured notes -- Downgraded to C from Ca (LGD 5, 87%) * Speculative Grade Liquidity Rating -- Downgraded to SGL-4 from SGL-3 Charter Communications Holdings, LLC * Senior unsecured notes -- Downgraded to C from Ca (to LGD 5, 84% from LGD 5, 85%) CCH I Holdings, LLC * Senior unsecured notes -- Downgrade to C from Caa3 (LGD 5, 77%) CCH I, LLC * Senior secured notes -- Downgraded to Ca from Caa3 (LGD 4, 60%) CCH II, LLC * Senior unsecured notes -- Confirmed at Caa2 (to LGD 2, 14% from LGD 3, 42%) CCO Holdings, LLC * Senior unsecured notes -- Confirmed at Caa1 (to LGD 2, 10% from LGD 3, 34%) * Senior secured (1st lien - stock only) Term Loan -- Confirmed B3 (to LGD 1, 6% from LGD 2, 29%) Charter Communications Operating, LLC * Senior secured (2nd lien - all assets) notes -- Confirmed at B3 (to LGD 1, 6% from LGD2, 23%) * Senior secured (1st lien - all assets) Revolver & Term Loan -- Confirmed at B1 (to LGD 1, 3% from LGD 1, 6%) * Rating Outlook -- revised to Stable from Ratings Under Review for Possible Downgrade The rating actions reflect the increased likelihood of imminent default as the grace periods for the missed interest payments totaling approximately $74 million on several of CCHIH's and CCH's senior unsecured debt are set to expire on February 15, 2009. Even if the interest payments are made prior to expiration of the grace period, Moody's anticipates Charter will likely have to file a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code, at which time the company's PDR will be downgraded to D. All other ratings would be expected to be affirmed in such an event, however, as they have been adjusted as needed to reflect ultimate recovery levels in anticipation of this eventuality. The downgrade of Charter's speculative grade liquidity rating to SGL-4 principally reflects the high likelihood of payment default and the subsequent acceleration of the company's debt maturities, satisfaction of which is not feasible. Charter's Caa3 CFR incorporates a mean recovery expectation of 65% (enterprise value-to-liabilities) for the firm, mainly attributable to the company's fundamentally strong business model and improving operating profile, notwithstanding a persistently over-leveraged balance sheet which at times has significantly constrained operating performance. Moody's fundamental valuation of the company's assets supports this above-average recovery forecast relative to historical levels for large corporates. Moody's assessment estimates Charter's assets to be worth (or be financeable at) approximately six times forward EBITDA, or roughly $2,500-to-$3,000 per basic subscriber. This implies that roughly $7.5 billion of the company's debt claims are theoretically impaired, although as likely near-term equity holders some value is likely to accrete for junior-ranking creditors in future periods. While a strict application of absolute priority of claim guidelines under the U.S. Bankruptcy Court system might suggest full recovery for creditors of CCO, CCOH and CCH II, and full impairment for creditors of CCH I, CCHIH, CCH and CCI based on the relative structural provisions underlying each of their respective claims, Moody's LGD methodology incorporates the reality of some ongoing uncertainty with respect to priority of payment due to ongoing negotiations between multiple creditor classes (particularly in the event of a pre-packaged bankruptcy filing) and the ultimate authority of the bankruptcy court judges themselves. Individual security ratings have subsequently been set to assumed ultimate recovery levels inclusive of this ongoing uncertainty. Ratings confirmed are particularly noteworthy in the context of Moody's historical rating practices for companies in and/or on the verge of default, particularly the B1 ratings maintained for the first lien revolving credit facility and term loan of CCO. This comparatively high rating for debt that is perceived to be in imminent risk of default is supported by its senior-most ranking in the consolidated capitalization of the company, with a significant amount of structurally and effectively subordinated debt beneath it to satisfy the material amount of anticipated loss absorption to be realized by creditors of the firm. Of note, Moody's expects that the recent revolver draw-down which left the company with more than $900 million of cash balances as reported in January will effectively preclude the need for a separate Debtor-In-Possession loan, the financing of which may have been difficult to come by given ongoing tightness in the credit markets. Moody's believes that company's restructuring will provide for a more manageable capital structure and mitigate the company's highly cash absorptive financial profile, which historically has been significantly constrained by heavy debt service costs related to its excessively leveraged and unsustainable capital structure. Moreover, rising debt service costs following heavy but necessary capital investment activity and ensuing liquidity-enhancing debt exchanges (albeit at higher interest rates) over the past few years have at times outpaced operational improvements. The last rating action for Charter was on December 12, 2008, when Moody's downgraded the company's PDR to Ca from Caa2 and placed all ratings under review for possible downgrade. Headquartered in St. Louis, Missouri, Charter Communications is a domestic multiple system cable operator serving approximately 5.1 million basic video subscribers. CHESAPEAKE ENERGY: Fitch Assigns 'BB' Rating on Sr Notes Offering ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Chesapeake Energy Corporation's proposed senior note offering. Fitch maintains these ratings for Chesapeake: -- Issuer Default Rating at 'BB'; -- Senior unsecured debt at 'BB'; -- Senior secured revolving credit facility and hedge facilities at 'BBB-'; -- Convertible preferred stock at 'B+'. The Rating Outlook remains Negative. The proposed note offering by Chesapeake is expected to generate proceeds to be used for repaying credit facility borrowings, and as a result, near-term liquidity should be enhanced as a result of the offering. Fitch notes that the company's next borrowing base redetermination period is expected in April 2009. Declining commodity prices combined with the continued uncertainty encompassing the banking industry is expected to put pressure on banks to reduce borrowing levels in credit facilities. As Fitch has previously noted, Chesapeake has currently pledged approximately 60% of assets toward both the credit facility and the secured hedge facility. Chesapeake maintains the flexibility to increase the percentage of assets pledged to the security in these facilities in order to maintain the current borrowing base as commodity prices remain at lower levels. While this would support the company's ability to maintain liquidity at current levels, it could also reduce senior unsecured lenders position in the capital structure. Beyond short-term liquidity concerns, Fitch continues to have concerns about other longer-term issues associated with Chesapeake. Changing financial and operational strategies combined with a continued reliance on external sources of capital continue to place pressure on the ratings. Additional sources of concern include significantly lower commodity prices, the company's aggressive growth strategy, high leverage as measured by debt/proven developed producing, the significant use of off- balance-sheet financings, the potential for weaker production levels stemming from reduced capital expenditures, and Chesapeake's strategy to monetize producing properties and reinvest proceeds into leaseholds which require significant capital expenditures before production materializes. Additionally, as Chesapeake has focused growth efforts on the newly discovered Haynesville shale, Fitch believes the company faces higher levels of operational risk, as this strategy carries with it increased risk of weaker than expected drilling results. Continued positive operational announcements over time will mitigate this risk. Fitch anticipates meeting with company management to review full- year 2008 results as well as financial and operational plans for 2009 and beyond, and anticipate resolving the company's Rating Outlook at that time. Chesapeake's ratings continue to be supported by the size and low risk profile of its oil and gas reserves which now approximate 12.1 trillion cubic feet equivalent. In addition, Chesapeake continues to post very robust reserve replacement results. Both organic reserve replacement and production growth remain strong and support the company's ability to support higher leverage levels. Chesapeake's one-year reserve replacement rate at year- end 2008 is estimated to be 239%. Both the strong reserve replacement metrics and the onshore location of Chesapeake's reserves highlight the low-risk nature of the company's reserves. Chesapeake is an Oklahoma City-based company focused on the exploration, production and development of natural gas. The company's proved reserves remain predominantly natural gas and are based 100% in the U.S. Chesapeake's operations are concentrated primarily in the Mid-Continent, South Texas, the Permian Basin and the Appalachia Basin. The company's reserve growth in recent years reflects the company's aggressive acquisition strategy and consistent success through the drill-bit. CHOCTAW RESORT: Moody's Confirms Corporate Family Rating at 'B1' ---------------------------------------------------------------- Moody's Investors Service confirmed Choctaw Resort Development Enterprise's corporate family rating, probability of default rating and debt ratings at B1. The outlook remains negative. The rating confirmation reflects the recent resolution of covenant violations and Moody's expectation that management's significant cost cutting initiatives will enhance Choctaw Resort's EBITDA, despite continued economic and competitive pressures. This concludes the review for possible downgrade initiated on October 7, 2008. Choctaw has just completed a waiver and amendment under its credit agreement, which has resolved the covenant violations as of September 30, 2008 and December 31, 2008. The amendment also provides more leeway under the total leverage covenant for the two following quarters. Additionally, Moody's recognizes the magnitude of the cost cutting measures taken by management to improve EBITDA. One of the two casinos, the Golden Moon, has been closed during mid-week, addressing the problem of overcapacity during the week. Additionally, Choctaw Enterprise's financial leverage is expected to remain moderate for the B1 rating category, well below 4 times, helped by continued debt reduction. However, the rating outlook remains negative, considering the execution risk associated with management's drastic cost reduction and the continued challenges related to the weak economy and competition. Higher marketing and advertising spending in the second half of 2008, has not delivered the expected benefits on the top line and, in Moody's view, the revenue trend is expected to remain depressed over the next few quarters. Additionally, should management fail to increase EBITDA in the near term due to the unsuccessful execution of the cost-cutting program or a larger than anticipated decline in revenues, the breach of the total leverage covenant could occur in the quarter ended September 30, 2009, when a step down comes into effect. These ratings have been confirmed: -- Corporate Family Rating at B1 -- Probability of Default Rating at B1 -- Senior Unsecured Notes due 2019 at B1 (LGD4, 56%) -- Senior Secured Term Loan due 2011 at B1 (LGD point estimate revised to LGD3, 43% from LGD3, 42%) The last rating action was on October 7, 2008, when Moody's downgraded Choctaw Resort's corporate family rating to B1 from Ba3, and kept the rating under review for possible further downgrade. Choctaw Resort is a component unit of the Mississippi Band of Choctaw Indians, which was created by the Tribe in October 1999 to run its gaming operations. It owns and operates in central Mississippi the Silver Star Hotel and Casino and the Golden Moon Hotel and Casino, which commenced operations in 1994 and 2002, respectively. CHRYSLER LLC: Says Auto Sales May Remain 10MM Annually in 4 Years ----------------------------------------------------------------- Mike Ramsey at Bloomberg News reports that Chrysler LLC President Jim Press said that the Company is assuming that U.S. auto sales may remain at about 10 million annually for four years. According to Bloomberg, Mr. Press said at Economic Club of Chicago, "It would be a mistake to assume that this '10 million market' is an aberration. Instead, we need to accept and come to grips with it. We feel good about our plan and we're confident we can meet our needs and the requirements will be met." At that rate, U.S. annual sales industrywide would drop from an average of more than 16 million cars and light trucks during this decade, Bloomberg relates. Citing Mr. Press, Bloomberg states that Chrysler can be viable at the 10 million annual sales rate. Bloomberg says that automakers sold about 13.2 million vehicles in 2008, the fewest since 1992. According to the report, sales dropped in 2008 as gasoline prices rose to a record in July 2008 and as the credit crunch dried up loans for potential buyers. Chrysler won't ask the government for an extension to submit its viability plan, Bloomberg reports, citing Mr. Press. According to the report, Mr. Press said that once Chrysler completes the actions under its viability plan, would have cut fixed costs by more than $3.8 billion since the company was purchased by Cerberus Capital Management LP in August 2007. Nissan Motor Co. may cancel a supply agreement with Chrysler with small cars, Japan's Kyodo news service relates, citing people close to the transaction. Mr. Press has denied any knowledge of change in plans by Nissan, Bloomberg says. Nissan's North American unit spokesperson Fred Standish said that a project for the Japanese automaker to supply compact vehicles to Chrysler for sale in Latin America starting later this year "continues to progress," and that teams from the firms working on two other projects for providing each other with vehicles "have been asked to ensure that financial objectives for both companies can be met" before those efforts move forward, Bloomberg states. Citing Mr. Press, Bloomberg reports that several groups interested in Viper car business have approached Chrysler. Although Chrysler said in August 2008 that it might sell the business, Mr. Press said that a sale is not imminent, Bloomberg relates. 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: Unit to Borrow C$1Bil. from Canada; Plan Due Feb. 20 ------------------------------------------------------------------ John McCrank at Reuters reports that Chrysler Canada President and CEO Reid Bigland said that the company would submit its restructuring plans to Ottawa on February 20 to be able to qualify for around C$1 billion in loans. Citing Mr. Bigland, Reuters relates that Chrysler Canada would be in a position within the next couple weeks to draw on emergency loans from the governments of Canada and the province of Ontario. Chrysler LLC already received the bailout funds from the U.S. government. Reuters quoted Mr. Bigland as saying, "Receiving the $4 billion from the U.S. has taken some of the urgency away from drawing down on that (Canadian) money. We are getting very close to finalizing an arrangement with Canada, and I'm optimistic over the next couple of weeks, we will be in a position to draw down on those funds." Sales in Canada would be slightly better February, although it will still be a very difficult month, Reuters states, citing Mr. Bigland. According to the report, auto sales in Canada have dropped 25% in January. Mr. Bigland expects industry-wide sales in Canada to be decline 10% this year, the report says. Reuters relates that the federal government said it would provide up to C$12 billion to loosen financing for vehicle and business loans and leases. 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: Goes to Foreign Rivals for Labor Costs Data --------------------------------------------------------- Chrysler has approached foreign competitors, seeking details on their labor costs and other financial information, Josh Mitchell and John D. Stoll at Dow Jones Newswires report, citing an official with one of the competitors. According to Dow Jones, Chrysler and General Motors Corp. are in talks with union leaders on making concessions as required by the firms' federal loan package. The report says that under an agreement with the Treasury Department, GM and Chrysler must bring their labor costs in line with foreign competitors like Toyota Motor Corp., Honda Motor Co. Ltd., and Nissan Motor Co. Ltd. The report states that union leaders said that they need more guidance on their foreign competitors' labor costs. Citing the official from one of the competitors, Dow Jones relates that a third party working on behalf of GM and Chrysler has approached foreign auto makers, asking for details on how much they spend on labor costs. Dow Jones relates that GM and Chrysler have much higher labor costs per-vehicle-built in America, compared with non-U.S. auto makers building at non-unionized plants. Last year, GM and Chrysler spent about $3,400 in average labor costs on every car built in U.S. factories, compared to an estimated $2,200 per car spent by Toyota Motor Corp., says Dow Jones. The report states that GM and Chrysler pay out an average of $55 per hour in wages and benefits to hourly workers. The Japanese manufacturers, according to the report, pay out about $46, according to Barclays Capital. GM, Chrysler, and Ford Motor Co. have been complaining about certain UAW-protected work rules and job-security provisions that add cost and complexity to manufacturing operations, Dow Jones reports. The report says that the UAW would be asked to ease those rules during negotiations with the automakers. Chrysler and GM expect to lessen labor costs extensively by 2010, through a contract signed with the UAW in 2007, according to Dow Jones. The contract, says Dow Jones, allows the two firms to buy out older employees and replace them with workers -- who would get lower pay and less-expensive benefits packages -- and relieve the companies of billions in annual health-care costs through a newly formed trust fund managed by the UAW. Dow Jones, citing a person familiar with the matter, relates that Chrysler plans to cut costs to $2,700 per vehicle by 2010. Debt-For-Equity Swap Talks Citing sources, Jeff Bennett at Dow Jones reports that Chrysler has started talks with lenders about a debt-for-equity swap. The sources said that Chrysler aims to begin the swap by February 17. According to Dow Jones, Chrysler is seeking a further $3 billion in U.S. government loans and must win concessions from creditors, employee groups and other stockholders to prove its long-term viability. Dow Jones relates that people familiar with the matter said that Chrysler has $9 billion in outstanding debt. Dow Jones states that some creditors said that they would consider a debt-for-equity swap tantamount to a default, given Chrysler's week liquidity position. "We are making progress with our partners and appreciate their commitment to our company and our industry's long-term viability. We continue to make progress with our union partners, and this week will work closely with both the union and debt holders to meet the remaining requirements by February 17," Dow Jones quoted Chrysler spokesperson Shawn Morgan as saying. 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. CITIGROUP INC: NY Lawmakers Defend $400-Mil. Deal With Mets ----------------------------------------------------------- The Associated Press reports that six New York House members have come to the defense of Citigroup Inc.'s $400 million stadium- naming deal with New York Mets. According to The AP, Citigroup has a 20-year naming-rights deal for Citi Field, the Mets' new stadium scheduled to open in April. The report says that Reps. Dennis Kucinich and Ted Poe asked Treasury Secretary Timothy Geithner in January to cancel the deal because of $45 billion the bank received in government aid. The House members said in a letter to Mr. Geithner that they "strongly disagree" with that call, according to the report. Democrats Eliot Engel, Joseph Crowley, Yvette Clarke, Gregory Meeks, Anthony Weiner, and Steve Israel have signed the letter, the report says. "It is deceitful and unreasonable to single out Citigroup for an agreement signed several years ago, without referencing the many other companies who have stadium naming rights deals and also received federal assistance," The AP quoted the House members as saying. Several other stadium naming deals with banks have received government money, including the Bank of America Stadium in Charlotte, The AP relates, citing the House members. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan. CLEARWATER NATURAL: Files Schedules of Assets and Liabilities ------------------------------------------------------------- Clearwater Natural Resources LP and its debtor-affiliates filed with the United States Bankruptcy Court for the Eastern District of Kentucky its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property 0 B. Personal Property $448,537 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $45,989,071 E. Creditors Holding Unsecured Priority Claims 0 F. Creditors Holding Unsecured Nonpriority Claims 17,596,847 ----------- ------------ TOTAL $448,537 $63,585,919 About Clearwater Natural Headquartered in Kansas City, Missouri, Clearwater Natural Resources LP engages in coal mining in the Central Appalachian region. In August 2005, the company acquired 100% interest in Miller Bros. that became a wholly-owned operating subsidiary of the company. The company also acquired in October 2006 all interest in Knott Floyd Land Company, a medium scale coal mining company and its operations were subsequently consolidated into Miller. Through Miller, the company produces and sells coal from eleven mining operations in Eastern Kentucky and provide contracts mining services for two third-party owned mines located within the Appalachian region. The company and two of its affiliates, Clearwater Natural Resources LLC and Miller Bros. Coal LLC, filed for January 7, 2009 (Bankr. E.D. Kent. Lead Case No. 09-70011). Mary L. Fullington, Esq., at Wyatt, Tarrant & Combs LLP, and Vinson & Elkins LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Administar Services Group LLC as their restructuring efforts. Rirchard Clippard, the United States Trustee for Region 8, appointed three creditors to serve on an official committee of unsecured creditors. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. CONGOLEUM CORP: Dimensional Fund Discloses 3.37% Equity Stake ------------------------------------------------------------- Dimensional Fund Advisors LP disclosed in regulatory filing dated February 9, 2009, that it may be deemed to beneficially own 123,600 shares of Congoleum Corp.-CL A's common stock or 3.37% of the total shares outstanding. Dimensional Fund, an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03- 51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. Congoleum, together with its bondholders, filed a revised plan of reorganization on Nov. 20, 2008. The Bankruptcy Court has not yet confirmed the plan. CONSTAR INTERNATIONAL: Can Hire Greenhill as Financial Advisor -------------------------------------------------------------- Constar International Inc. and its debtor affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Greenhill & Co., LLC, as financial advisor and investment banker. Greenhill is expected to provide certain financial advisory and investment banking services to the Debtors in connection with the Chapter 11 cases, including: -- reviewing and analyzing the business, operations, properties, financial condition and prospects of the Debtors; -- evaluating the Debtors' debt capacity; -- assisting in the determination of an appropriate capital structure for the Debtors; -- determining a range of values for the Debtors on a going concern basis and on a liquidation basis; -- advising and attending meetings of the Debtors' board of directors and its committees, and if the Debtors determine to undertake a restructuring or sale, advising and assisting the Debtors in structuring and effecting the financial aspects of the transaction; -- providing financial advice and assistance to the debtors in developing and seeking approval of a restructuring plan, and in connection therewith, providing financial advice and assistance to the Debtors in structuring any new securities, other considerations or other inducements to be offered or issued under the plan; -- assisting the Debtors and participating in negotiations with entities or groups affected by the plan; -- assisting the Debtors in preparing, documentation required in connection with the plan; -- participating in hearings before the Bankruptcy Court with respect to the matters upon which Greenhill has provide advice, including coordinating with Debtors' counsel with respect of testimony in connection therewith; and -- providing other advisory services as are customarily provided in connection with the analysis and negotiation of any of the foregoing. Bradley A. Robins, managing director of Greenhill, told the Court that Greenhill will be paid: a) A monthly financial advisory fee of $125,000, which will be made due and paid by the Debtors beginning as of the date of the engagement letter, and thereafter on each monthly anniversary thereof during the term of this engagement. b) If during the term or within the 12 months after the termination of the Greenhill engagement, a restructuring is consummated, Greenhill will entitled to receive a transaction fee, payable at closing thereof, equal to 1.75% of the principal amount of the debt that is restructured; provided that the fees will not exceed $4,000,000. c) If during the fee period, a sale is consummated, Greenhill will be entitled to receive a transaction fee, which will be equal to 1.75% of the aggregate consideration, provided that the fee does not exceed $4,000,000. d) No restructuring transaction fee and no sale transaction fee will be payable for any restructuring or sale occurring after the first to be consummated of any restructuring or sale. Greenhill was not owed any amount in respect of services rendered pre-bankruptcy. Mr. Robins assured the Court that Greenhill is a "disinterested person' as that term is defined in Section 101(14) of the bankruptcy Code. About Constar International Headquartered in Philadelphia, Pennsylvania, Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The company provides full-service packaging services. The company and five of its affiliates filed for Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Wilmer Cutler Pickering Hale and Dorr LLP represents the Debtors as their bankruptcy counsel. The Debtors' local counsel is Bayard, P.A. Pricewaterhouse Coopers is the Debtors' auditors and accountants; Epiq Systems Inc. serves as Claims and Balloting Agent. CROSS LAKE: Canadian Court Extends CCAA Protection to April 15 -------------------------------------------------------------- Cross Lake Minerals Ltd. reports that on February 6, 2009, the British Columbia Supreme Court issued an order providing the Company with an additional period of protection under the Companies' Creditors Arrangement Act. The initial order, which was first granted under the CCAA in favor of the Company on October 14, 2008, has been further extended to April 15, 2009, during which time creditors and other third parties will continue to be stayed from terminating agreements with Cross Lake or otherwise taking steps against Cross Lake. The extension was granted in order to give Cross Lake sufficient time to complete a proposed restructuring plan and plan of arrangement with its creditors as disclosed in a previous press release dated February 4, 2009. In addition, the Order authorizes the $3 million increase in the debtor-in-possession loan facility from Procon Mining and Tunnelling Ltd. to finance working capital requirements up to a total of $5.5 million and amends the maximum amount of the DIP Lender's Charge to $5.5 million to reflect the $3 million increase to the DIP Facility. The Order also authorizes the Company to settle certain outstanding overtime claims with the Director of Employment Standards in the approximate amount of $114,000. Vancouver, British Columbia -- http://www.crosslakeminerals.com/ -- is a Vancouver-based Gold Mining and Development Company focused on continued growth through exploration and acquisitions. Cross Lake is very pleased to be the first new gold producer in British Columbia in many years. To increase shareholder value, the Company will continue to search for gold projects throughout North America that complement the QR Mine and its expertise in gold development. DELTA MUTUAL: Peralta Appointed as President, CEO and Chairman -------------------------------------------------------------- Delta Mutual, Inc. appointed Dr. Daniel R. Peralta as President and Chief Executive Officer and Chairman of its Board of Directors, effective January 20, 2009. Dr. Peralta is a 50% owner of Egani, Inc., a privately held Arizona corporation that he founded in 1998. Egani owns 130,000,000 shares of the common stock of Delta Mutual, Inc., or approximately 59% of the outstanding common stock. These shares were acquired on March 4, 2008 pursuant to a Membership Interest Purchase Agreement between the Company and Egani. Pursuant to the Agreement, the Company acquired from Egani 100% of the issued and outstanding shares of stock held by Egani in Altony S.A., an Uruguayan Sociedad Anonima, which owns 100% of the issued and outstanding membership interests in the South American Hedge Fund LLC, a Delaware limited liability company. Dr. Peralta, 54, is currently the President and a director of Egani, a management and financial consulting firm. He also serves as President and a director of Egani Argentina, an affiliated company. Since July 2008, Dr. Peralta has served as an advisor to the South American Hedge Fund in its oil and gas activities in Argentina. He has also served in various advisory capacities to the Argentine government and as a board member of the Central Bank of Argentina and Vaisala oy Finland-Argentina. He is the author of several publications on finance and economic development in South America. Dr. Peralta earned a doctorate in business administration from Belgrano University in Buenos Aires and an undergraduate degree in aeronautical engineering from the National Technical University of Argentina. Dr. Peralta brings an understanding of both the energy and financial markets to our Board of Directors, and his appointment was welcomed by the Board as a proven and seasoned executive whose guidance the Board looks forward to receiving in the future. The Company has said it has not determined its compensation arrangements with Dr. Peralta at this time. The Company does not compensate directors in their capacity as such nor does it compensate directors for attendance at meetings. The Company does reimburse directors for reasonable expenses incurred in the performance of their duties. During the period from March 6 through November 20, 2008, the Company issued unsecured notes to Egani and related parties: -- a 6% promissory in the principal amount of $21,000 issued March 6, 2008 with a maturity date of April 16, 2009; -- a 6% promissory note in the principal amount of $9,550 issued April 28, 2008 with a maturity date of April 16 2009; -- a 6% promissory note in the principal amount of $13,350 issued September 18, 2008 with a maturity date of April 16, 2009; -- a 6% promissory note issued to Santiago Peralta (the son of Dr. Peralta) in the principal amount of $10,000 issued October 3, 2008 payable upon written demand by the lender; and -- a 6% promissory note issued to Santiago Peralta in the principal amount of $14,000 issued November 20, 2008 payable upon written demand by the lender. All of the principal amount and accrued interest of each loan is due and payable on the respective maturity dates or upon written demand by the lender. The Company has not made any payments of principal or accrued interest. In a Form 5 filing with the Securities and Exchange Commission, Dr. Peralta disclosed that he may be deemed to directly own 2,691,000 company shares. Dr. Peralta may be deemed to indirectly own 65,000,000 shares through Egani, and 1,577,150 shares owned through his son. About Delta Mutual Delta Mutual, Inc. invests in oil and gas properties in South America. It intends to focus its investments in the energy sector, including development of energy producing investments and alternative energy production in Latin America and North America. EDUCATION MEDIA: S&P Downgrades Corporate Credit Rating to 'CCC' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Dublin, Ireland-based Education Media & Publishing Group Ltd. and its Houghton Mifflin Harcourt Publishers Inc. subsidiary. S&P lowered the corporate credit rating to 'CCC' from 'B-'. The rating outlook is negative. EMPG (formerly HM Rivergroup PLC), a leading educational publisher, had consolidated debt and preferred stock of about $7.6 billion as of Sept. 30, 2008. In addition, S&P revised the recovery rating on Houghton Mifflin's first-lien credit facilities to '3', indicating S&P's expectation of average (50% to 70%) recovery for lenders in the event of a payment default, from '2'. The issue-level rating on this debt was lowered to 'CCC' (at the same level as the 'CCC' corporate credit rating) from 'B'. "The ratings downgrade reflects our concern about diminished near- term prospects for textbook educational spending; the likelihood, in our view, of continued weak operating performance; and the repercussions for liquidity amid tightening financial covenants," said Standard & Poor's credit analyst Hal Diamond. Sales declined 5.8% and EBITDA fell 2.2% in the seasonally important three months ended Sept. 30, 2008, reflecting strained state and local budgets. S&P anticipates that the industrywide decline in education spending is likely to continue in 2009 due to the recession, resulting in states postponing textbook purchases. The rating also considers S&P's view of the company's heightened financial risk resulting from EMPG's December 2007 $4 billion acquisition of the former Harcourt education and trade businesses from Reed Elsevier PLC, which S&P does not believe is meaningfully offset by the company's good business position in the educational publishing industry. The May 2008 $768 million sale of its Houghton Mifflin college publishing business modestly lessened the company's operating diversity and increased its reliance on the cyclical K-12 educational publishing business. EMPG has significantly higher leverage than its peers, which could put it at a competitive disadvantage. Standard & Poor's expects that continued weak operating performance and negative discretionary cash flow would necessitate an amendment to financial covenants. Furthermore, S&P believes that the cost that the company's banks would apply in fees and an increase in the interest margin associated with an amendment would further compress its interest coverage and liquidity. Given continued negative discretionary cash flow, and without a material improvement in profitability in 2009, S&P believes that the company's current liquidity would be depleted by 2010. ELIZABETH ARDEN: Decline in Sales Won't Affect S&P's 'BB-' Rating ----------------------------------------------------------------- In the original version of the bulletin published earlier, the headline contained an incorrect reference to fiscal quarter results. A corrected version follows. Standard & Poor's Ratings Services said that the ratings and outlook on Elizabeth Arden Inc. (BB-/Stable/--) are currently unaffected by the results for the fiscal quarter ended Dec. 30, 2008, following S&P's review of the company. During the quarter, the company's sales declined 12.4% (sales declined 8.7%, excluding the effect of foreign currency), as compared with the previous year's second quarter. A significant portion of the shortfall was due to weaker sales at the department store channel and the negative currency effect on the company's international business, which accounted for about one-third of total revenues. Although S&P believes the slowdown in consumer spending and deteriorating global economic conditions will continue, Elizabeth Arden should benefit from the significant portion of sales from the mass channel versus the department store channel, the latter of which has experienced more negative effects due to current economic conditions. S&P expects the company to continue to work down inventory levels and generate sufficient operating cash flow to help fund capital spending and planned growth initiatives. Liquidity remains good. As of Dec. 31, 2008, Elizabeth Arden had $127 million of availability on its borrowing-based revolving credit facility that matures in December 2012. While the company's peak borrowing season has passed, adjusted leverage for the last 12 months period ended December 2008 is higher than expected, at 4.7x due to the contraction in its EBITDA base as a result of the lower sales volume. Nevertheless, adjusted for the incremental business from newly acquired Liz Claiborne fragrances, S&P estimates pro forma leverage is just above 4x, within S&P's previous expectations. However, if Elizabeth Arden's operating performance continues to weaken, and company leverage is not reduced to and sustained in the 4x area, S&P could revise the outlook to negative over the near term. FIRST METALS: Globex Discloses Debtor's Talks with Stakeholders --------------------------------------------------------------- Globex Mining Enterprises Inc. in Rouyn-Noranda, Quebec, Canada, told shareholders that First Metals Inc. has reported a new NI 43-101 compliant mineral resource at the Magusi Project near Rouyn-Noranda, Quebec. Globex Mining said First Metals also has started discussions to facilitate a restructuring plan under a Notice to Make a Proposal under the Bankruptcy and Insolvency Act. Globex said its royalty interest is registered against title and Globex believes that in the worst case, should First Metal go bankrupt, that Globex's royalty will be payable by whoever acquires the property. As reported by the Troubled Company Reporter on February 10, 2009, First Metals obtained a court order for an extension, until March 23, 2009, to file a proposal with the Official Receiver. The extension was sought by the Company in light of ongoing discussions with its principal creditors, aimed at formulating a viable proposal. As reported by the TCR, First Metals filed with the Official Receiver on January 8, 2009, a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act. The filing was made in order to facilitate First Metal's ability to implement a restructuring plan. First Metals failed to make an interest payment due December 31, 2008 on its outstanding senior secured Notes. Any actions against First Metals are stayed, pending the outcome of the Proposal process, as a result of the filing. First Metals was originally required to file its Proposal within 30 days unless an extension is granted by the court. Based in Toronto, Ontario, First Metals Inc. -- http://www.firstmetalsinc.com-- produces Copper from its Fabie Mine, near Rouyn-Noranda and has the advanced Magusi Copper, Zinc, Gold and Silver deposit , located approximately 1.2 km from the Fabie Mine The Company has approximately 42.8 million shares issued and outstanding. FLINTKOTE COMPANY: Wants Plan Filing Period Extended to April 30 ---------------------------------------------------------------- Flintkote Company and Flinktote Mines Limited ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive period to file a Chapter 11 plan through and including April 30, 2009, and their exclusive period to solicit acceptances of that plan through and including June 30. The official committee of asbestos personal injury claimants and the legal representative of future asbestos claimants support the extension request. This is the Debtors' 14th request for an extension of their plan filing deadlines. The Debtors tell the Court that terminating exclusivity at this stage in the Debtors' cases will not result in a "better" plan or speedier confirmation, but will only result in increased delay, extensive litigation and escalating administrative costs. The Debtors relate that cause exists to extend the exclusive periods given the complexities of the Chapter 11 cases and the current and anticipated schedule for confirming the consensual plan. There are over 157,000 asbestos-related personal injury claims against the Debtors pending in various jurisdictions and an untold number of future asbestos-related personal injury claims, with current and future liability for Asbestos personal claims estimated to exceed $3 billion. The Debtors also submit that the extension sought is well within the limits of extensions of exclusivity that have been granted in other asbestos-related cases pending in the District. On Sept. 2, 2008, the Court approved the disclosure statement explaining the Debtors' amended joint plan of reorganization. Pursuant to an order dated Sept. 24, 2008, governing discovery with respect to confirmation of the plan, the Court established certain deadlines for the filing of objections and responses related to the confirmation of the Debtors' plan as well as certain procedures and deadlines related to discovery requests. The Court has scheduled the confirmation hearing for the Debtors' plan for Sept. 14 to 17, 2009. The Plan proposes establishing a Section 524(g) trust to address Asbestos Personal Injury Claims against Flintkote Company. The Plan also provides that the same trust will serve as a liquidating trust for Flintkote Mines, to which Flintkote Mines will contribute its assets under the Plan and from which Asbestos Claims against Flintkote Mines will be satisfied in accordance with the terms of the Plan as confirmed. FOOTHILL RESOURCES: Files for Chapter 11 in Delaware ---------------------------------------------------- On February 11, 2009, Foothills Resources, Inc. and its wholly owned subsidiaries, Foothills California, Inc., Foothills Oklahoma, Inc., and Foothills Texas, Inc., filed voluntary petitions for reorganization relief under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. Foothills said in a statement that it will continue to manage its properties and operate its businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Company also announced that, pending Bankruptcy Court approval, it has received a commitment from its pre-petition term lender for up to $2.5 million in revolving credit debtor-in- possession financing to fund continuing operations. The facility matures 90 days from the date of the Company's initial borrowings thereunder or if earlier, upon confirmation of a plan of reorganization. Access to the facility will be conditioned upon the Company's adherence to an operating budget agreed to with the proposed lender. The Chapter 11 filing in Delaware occurred two days after a forbearance agreement expired with the lenders, Bloomberg's Bill Rochelle reported. Foothills said that the filing of the bankruptcy petitions constituted an event of default under the Credit Agreement, dated as of December 13, 2007, by and among the Company and its Subsidiaries as borrowers, certain lenders and Wells Fargo Foothill, LLC, as administrative agent, as amended. As a result of such event of default, all obligations under the Credit Agreement became immediately due and payable. The Company believes that any efforts to enforce the payment obligations under the Credit Agreement are stayed as a result of the filing of the Chapter 11 case in the Bankruptcy Court. A regulatory filing by the Company listed assets of $89.5 million and debt of $78.8 million on Sept. 30, 2008. The Company had a $2.1 million net loss for the quarter ended Sept. 30. About Foothill Resources Foothills Resources, Inc., is an oil and gas exploration company engaged in the acquisition, exploration and development of oil and natural gas properties. The Company's operations are primarily through its wholly owned subsidiaries, Foothills California, Inc., Foothills Texas, Inc. and Foothills Oklahoma, Inc. Foothills Resources has entered into an agreement with Moyes & Co., Inc. to identify potential acquisition, development, exploitation and exploration opportunities. As of December 31, 2007, two gross (1.5 net) development wells in California (the Vicenus 1-3 re-entry and deepened well, and the GB 5 development well) had been drilled with indications of productivity, but were awaiting testing. As of December 31, 2007, the Company temporarily suspended further testing on the two wells, and is in the process of designing stimulation programs to fracture the formations beyond the damaged zones in the wells. FORD MOTOR: Investors May Want Firm to Seek Gov't Bailout --------------------------------------------------------- Shannon D. Harrington at Bloomberg News reports that investors may want to Ford Motor Co. to seek financial assistance from the U.S. government. According to Bloomberg, credit-default swaps traders are demanding as much to protect against a Ford Motor default as they are for General Motors Corp. Citing market data provider CMA DataVision, Bloomberg states that the cost to protect Ford Motor debt for five years has risen eight percentage points in the past two weeks to 83% upfront, the same as GM contracts. According to the report, this means that to protect $10 million of Ford Motor bonds for five years, it would cost about $8.3 million upfront in addition to $500,000 annually. This is a sign that investors are convinced that Ford Motor will need government aid, Bloomberg says. Bloomberg relates that the contracts have risen each day since January 28, before Ford Motor posted its worst ever annual loss and used its entire $10.1 billion credit line after consuming $5.5 billion in cash in the fourth quarter. Investors, Bloomberg states, are worried that Ford Motor is spending too much cash and is too debt laden to survive without government assistance or without cutting debt by getting bondholders to give up some claims in exchange for other securities. Bloomberg quoted Deutsche Bank analyst Rod Lache as saying, "The reality is there's not a lot of room for error. Our cash burn expectations bring them closer to minimal cash levels by the end of this year. And the company has a lot of debt and, many analysts including us, think it's too much to be viable." Ford Motor spokesperson Bill Collins said in a statement, "We believe we can work with all our stakeholders to ensure that Ford restructures along with the rest of the industry and remains competitive. It would be premature to speculate on the possible outcomes." According to Bloomberg, Ford Motor CEO Alan Mulally told analysts and investors during a conference call in January 2009 that the firm wouldn't have to seek government aid because the U.S. auto market meets the company's projections. Bloomberg relates that Ford Motor expects the sale of 11.5 million to 12.5 million cars and light trucks this year. "Based on current planning assumptions," Ford Motor has enough liquidity without a government loan, Bloomberg says, citing Mr. Collins. Bloomberg quoted Mr. Lache as saying, "They have sufficient liquidity to last a few more quarters." Bloomberg reports that Ford Motor said its available cash decreased $21 billion in 2008 to $13.4 billion. Of $25.8 billion in automotive debt, less than $3 billion is due in the next three years, and a $10.1 billion revolving loan matures at end of 2011, Bloomberg says, citing Ford Motor. Bloomberg relates that Ford Motor, including its finance unit, has a total of $38 billion in debt coming due by 2011. Ford Motor has said it would seek debt-for-equity exchanges to reduce its debt load, but "the question is how successful those would be," Bloomberg states, citing Mr. Lache. According to the report, Mr. Lache said, "You really have to make a convincing argument that the alternative is a lot worse for the creditor. Right now, while they have sufficient liquidity to last a few more quarters, it's tougher to make that argument. And it's tougher to give the creditor something in exchange like collateral when you have a lot of collateral that's already encumbered by the secured debt." About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring in order to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently- approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FOREST OIL: Moody's Assigns 'B1' on $350 Mil. Unsecured Notes ------------------------------------------------------------- Moody's Investors Service assigned a B1 (LGD 5; 73%) rating to Forest Oil's pending $350 million 5-year senior unsecured notes and affirmed its existing Ba3 Corporate Family, Ba3 probability of default, and B1 (LGD 5; 73%) senior unsecured note ratings. The note ratings are assigned under Moody's Loss Given Default notching methodology. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-2. Net proceeds along with working capital will repay a like amount of outstandings under FST's first secured borrowing base revolver. The rating outlook is moved to stable from positive. This reflects the low likelihood that FST could reduce leverage sufficiently under current down-cycle conditions to warrant an upgrade. While FST intends to contain capital spending to within cash flow, cash flow will have also funded a material first half 2009 rise in working capital. FST has been paying for substantial previously ordered drilling pipe at a time when accounts payable are sharply contracting as it lays off third party drilling rigs. FST's rig count will decline from 45 active rigs to 20. Liquidity is adequate for the next four quarters. It appears that FST will be able to maintain $300 million to $400 million of undrawn borrowing availability under its approximately $1.7 billion pro-forma borrowing base. The borrowing base will be reduced from $1.8 billion due to the note offering in a ratio of 0.3 times the amount of the offering. When and if asset market conditions improve, FST intends to divest another $450 million to $750 million in non-strategic assets to reduce debt. However, the reduced SGL rating reflects a potentially tight bank revolver leverage covenant in first quarter 2010. If natural gas prices do not recover sufficiently as the year progresses to boost second half 2008 EBITDA above levels currently expected for first half 2009, trailing twelve month EBITDA would appear insufficient to keep Debt/EBITDA below the 3.5x bank covenant. The ratings are supported by seasoned leadership with a history in onshore exploitation, supportive hedges on approximately 50% of 2009 production, diversified reserves and large diversified drilling inventory, the 2008 reduction in unit cash costs, sufficient margin coverage of cash costs and reserve replacement costs to withstand weak prices for a reasonable period of time without adding to leverage, and an adequate capital and liquidity structure to ride out the down-cycle. Reserve replacement visibility is reasonably good. In the development category, FST has a base of two large, one medium, and two comparatively small core areas for low risk drilling and exploitation. In early stage plays, in formations of already proven sector productivity, FST has considerable growth off the current base, FST has reported a strong horizontal well test in the Haynesville Shale and significant prospective acreage in its Barnett Shale and Greater Vermejo/Haley programs. The ratings are restrained by significant leverage for the ratings and little chance leverage could be materially reduced from operating cash flow alone, FST's medium reserve and production scale for the ratings (although the onshore strategy has moved to a lower operating risk profile), a reduced 2009 production trend due to reduced capital spending, a high 37% of reserves in the proven undeveloped category with attendant heavy capital requirements and drilling, and a need to see FST mount sustained drilling success with its properties acquired during 2008. Over the last several years, FST has made major portfolio transformations involving proportionately major acquisitions and divestitures as the firm moved away from its historic roots in short-lived Gulf of Mexico reserves towards longer-lived onshore properties. During 2008, FST acquired mid-continent reserves for cash and stock for a total of $873 million, followed by the divestiture of Rocky Mountain properties for $200 million cash. However, FST's move into the capital extensive resource plays, that are price sensitive and where economical success or failure can take years to materialize, could result in carrying leverage that prevents FST from being upgraded in the foreseeable future. The company will be funding heavy development capital spending for several years. FST has announced a major reduction in capital spending for 2009 until natural gas prices recover. Moody's believes that FST's 2008 reserve replacement costs were acceptable given sector cost conditions during the year and the fact that the resulting year-end reserve additions had to qualify under sharply lower oil and gas prices. That positive point is tempered, however, by the fact that this was achieved partially through an material increase in the proportion of higher risk and largely unfunded proven undeveloped reserves. FST's leverage on reserves has increased by approximately 10% since mid-2008 and Moody's believes that leverage will need to decline in order to solidify the ratings. The company's plan to reduce debt after its 2008 acquisitions by selling assets was cut short by the sharp contraction in the asset market as 2008 progressed. Moody's last rating action for FST was May 19, 2008, at which time Moody's assigned ratings to its new note senior note offering, affirmed existing ratings, and moved the rating outlook to positive from stable. Forest Oil is an independent oil and gas exploration and production company headquartered in Denver, Colorado. FOREST OIL: S&P Assigns 'BB-' Rating on $350 Mil. Senior Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB-' issue rating and '4' recovery rating to Forest Oil Corp.'s proposed $350 million senior unsecured notes due 2014. In addition, Standard & Poor's raised it rating on Forest's senior unsecured debt issues to 'BB-' (same as the corporate credit rating) from 'B+' and revised its recovery rating to '4' from '5' on all these issues. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on Forest. The outlook is stable. S&P expects proceeds of the new issuance to pay down revolver debt outstanding. As of Sept. 30, 2008, Denver, Colorado-based Forest had $2.7 billion in balance sheet debt. "The 'BB-' corporate credit rating on Forest, an oil and gas exploration and production company, reflects the company's aggressive financial leverage and S&P's expectation that near-term hydrocarbon prices will remain weak," said Standard & Poor's credit analyst David Lundberg. Partially offsetting these weaknesses are the company's improved operating results, its good onshore geographic diversity, and the relatively low-risk nature of its drilling program. "The revised recovery rating on Forest's senior unsecured debt reflects S&P's expectations for average -- 30% to 50% -- recovery in the event of a payment default," added Mr. Lundberg. Forest's 25% growth in total proved reserves in 2008 increases the potential collateral value available to creditors. This higher value more than offsets the increase in senior unsecured indebtedness. With 2.7 trillion cubic feet equivalent of proved reserves (63% proved developed and 75% natural gas) as of year-end 2008, and 518 million cubic feet equivalent of average daily production in 2008, Forest is one of the larger speculative-grade oil and gas exploration and production companies that Standard & Poor's rates. Forest's producing properties are well diversified across onshore Canada and the U.S. The outlook is stable. S&P could consider a positive rating action if the company continues to post strong operating results and Forest reduces debt. Specifically, S&P would expect debt to mcfe of total proved reserves to fall to less than $1 and for debt to EBITDAX, under S&P's short-term pricing assumptions, to be less than 2.75x. S&P would consider a negative rating action if near- term debt to EBITDAX increases to more than 3.25x. FUSION TELECOM: NYSE Alternext Issues Notice of Delisting --------------------------------------------------------- Fusion Telecommunications International, Inc. received notice from the NYSE Alternext US LLC on February 6, 2009, indicating the Exchange's intent to strike the Company's common stock and common stock purchase warrants from listing on the Exchange. The Exchange notice reflects the view of the staff of the Exchange that the Company's proposed plan of compliance, submitted on November 17, 2008, did not satisfactorily demonstrate the Company's ability to regain compliance with deficiencies under these sections of the Exchange Company Guide: -- Section 1003(a)(ii) in that Fusion has stockholders' equity of less than $4,000,000 and losses from continuing operations and/or net losses in three out of its four most recent fiscal years; -- Section 1003(a)(iii) in that Fusion has stockholders' equity of less than $6,000,000 and losses from continuing operations and/or net losses in its five most recent fiscal years; and, -- Section 1003(a)(iv) in that Fusion has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether Fusion will be able to continue operations and/or meet its obligations as they mature. The Exchange notice also cites deficiencies under these sections of the Exchange Company Guide as additional bases for its determination: -- Section 1003(a)(i) in that Fusion has stockholders' equity below $2 million and net losses in two of its three most recent fiscal years, and, -- Section 1003(f)(v) in that the Company did not adequately address the low selling price of its securities within a reasonable time following being advised by the staff of the Exchange that it deemed it appropriate for the Company to effect a reverse stock split. The Company intends to appeal the Exchange's decision on or before Friday, February 13, 2009. The Company's Securities will continue to be listed on the Exchange pending a decision of the Listing Qualifications Panel that will hear the Company's appeal. If the Company's Securities are delisted from the Exchange, the Company believes its Securities are eligible to continue trading on the Over-the-Counter Bulletin Board. Based in New York, Fusion Telecommunications International, Inc. (Amex: "FSN"; "FSN.WS") -- http://www.fusiontel.com-- delivers a full range of advanced IP-based services to corporations, consumers and carriers worldwide. Fusion's Efonica-branded consumer VoIP products and services focus primarily on serving customers in Asia, the Middle East, Africa, Latin America and the Caribbean. FREESCALE SEMICONDUCTOR: Fitch Downgrades Issuer Rating to 'C' -------------------------------------------------------------- Fitch Ratings downgrades Freescale Semiconductor Inc.'s Issuer Default Rating and debt ratings: -- IDR to 'C' from 'CCC'; -- Senior secured bank revolving credit facility (RCF) to 'CC/RR3' from 'B-/RR3'; and -- Senior secured term loan to 'CC/RR3' from 'B-/RR3'. Fitch also affirms Freescale's senior unsecured notes and senior subordinated notes at 'C/RR6'. Fitch's actions affect approximately $10 billion of total debt, including the assumption of a fully drawn $690 million RCF. The downgrade reflects Fitch's belief that Freescale's Feb. 10, 2009 offer to certain existing bondholders to potentially exchange existing senior unsecured and subordinated notes for new senior secured term loans at markedly higher interest rate but significantly below par constitutes a distressed debt exchange. Under Fitch's criteria, a DDE results from an exchange offer with a material reduction in terms (bondholders receive meaningfully less than par) and is de facto necessary, given the expected outcome of various alternatives, even if not explicitly coercive. Freescale's exchange offer also supports Fitch's contention (as noted in Fitch's Jan. 30, 2009 downgrade of Freescale's IDR to 'CCC') that Freescale will ultimately likely need to meaningfully restructure its balance sheet regardless of prevailing economic conditions to meet fixed charges and debt service requirements over the intermediate term. Positively, the exchange offer, if consummated as proposed, will significantly decrease Freescale's total debt and interest expense, reducing anticipated free cash flow usage and strengthening credit protection measures over the next few years. Procedurally, if the exchange is executed as proposed, Fitch would lower the IDR on Freescale to 'RD', reflecting the DDE. Subsequently, Fitch expects to upgrade the IDR on Freescale to at least 'CCC', with the expectation that the notching of the senior secured debt could be tightened, depending upon the amount of incremental senior secured debt related to the DDE. The Recovery Ratings, including those on the proposed new incremental term loans, reflect Fitch's expectation that the new incremental term loans will be pari passu to the existing senior secured debt and, therefore, be in a superior position in the event of a reorganization. The 'RR/6' ratings on the senior unsecured and subordinated debt reflects these tranches weak recovery prospects in bankruptcy. On Feb. 10, 2009, Freescale offered existing bondholders to exchange approximately $2.8 billion of eligible senior unsecured and subordinated notes for up to an aggregate of $1 billion of new incremental senior secured term loans. The company's existing lenders first have the option to provide the additional $1 billion of new incremental term loans under the senior secured credit facility, which, if exercised, would reduce the exchange offer to bondholders by the amounts existing lenders choose to fund. The incremental term loans will pay interest at 12.5% per annum, mature on Dec. 15, 2014, and be guaranteed by the same guarantors under the senior secured credit facility. Fitch believes Freescale's liquidity, while sufficient in the near term, will meaningfully weaken beyond 2009. Pro forma for the $184 million January 2009 draw down on its RCF, liquidity as of Dec. 31, 2008 consisted of approximately $1.6 billion of cash and equivalents and approximately $35 million of remaining availability under the senior secured RCF due 2012. Fitch expects the company will be a cash user throughout 2009, due to lower profitability and the potential for incremental cash restructuring charges. Consistent with Fitch's current macroeconomic outlook, Fitch believes that there are limited prospects for a meaningful demand rebound in 2010. Moreover, Fitch expects demand weakness will be broad based but particularly acute within Freescale's automotive business, given the company's significant exposure to the 'Big 3' U.S. automakers, which have slashed production levels in the face of ongoing market share erosion and financial distress. Freescale has no debt amortization until December 2012 (aside from approximately $35 million per year under the term loan facility), and the company has no financial covenants. At Dec. 31, 2008, and pro forma for the draw down on the RCF, total debt was approximately $10 billion and consisted primarily of: -- $640 million outstanding under the company's $690 million revolving credit facility due December 2012 (as well as approximately $15 million outstanding under letters of credit); -- Approximately $3.4 billion of a senior secured term loan expiring Dec. 1, 2013; -- $500 million of floating rate senior notes due 2014; -- $1.5 billion of 9.125% PIK senior notes due 2014; -- Approximately $2.3 billion of 8.875% senior notes due 2014; and -- Approximately $1.5 billion of 10.125% senior subordinated notes due 2016. GENERAL GROWTH: Continues to Seek Debt Payment Deadline Extension ----------------------------------------------------------------- Kris Hudson at The Wall Street Journal reports that General Growth Properties Inc. continued talks with lenders to seek payment deadline extension on several expiring loans. General Growth said in a filing with the U.S. Securities and Exchange Commission that it might have to file for Chapter 11 bankruptcy protection if it fails to secure deadline extensions on debts coming due. WSJ relates that General Growth has $27 billion in debt as a result of acquisition sprees. The report says that the company faces loans coming due on a weekly basis, but it doesn't have enough cash or borrowing capacity to pay them. WSJ states that General Growth had at least four major loans either coming due or past due on Thursday, the largest of which is a package of two loans totaling $900 million. General Growth, according to the report, has pledged two luxury malls on the Las Vegas Strip as collateral for those debts. The loan package came due in December, but lenders entered a "forbearance" pact with General Growth, pledging not to call the loans due while the company tries to sort out its financial issues, says the report. The report states that the agreement expired on Thursday. According to WSJ, General Growth also continued negotiations with lenders in a $95 million loan on the Oakwood Center mall in New Orleans. WSJ relates that the loan expired on Monday, but General Growth secured three consecutive 24-hour extensions to continue negotiating a longer-term pact. WSJ says that a $225 million loan arranged by Goldman Sachs Group Inc. remained past due on Thursday. WSJ states that Goldman Sachs arranged the financing in September 2008 to give General Growth cash to cover mortgages coming due shortly after the company hired it as one of its three financial advisers. Citing people familiar with the matter, WSJ reports that the loan expired on February 2, and Goldman Sachs has refused to grant an extension unless General Growth makes concessions, including a higher fee. WSJ relates that if lenders decide to foreclose on properties pledged as collateral in the Las Vegas loans, the Goldman Sachs loan or the Oakwood Center loan, it would cause cross defaults of General Growth's $2.6 billion credit facility, and would likely force General Growth to seek bankruptcy protection. WSJ reports that a $58 million securitized mortgage on the Chico Mall in Chico, California expired on Wednesday, but the mortgage is small enough that any foreclosure action by LNR wouldn't trigger cross defaults of other General Growth debts. According to WSJ, LNR Capital Corp., a unit of Cerberus Capital, is the loan's servicer. 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: Bondholders May Recover 50 Cents on the Dollar -------------------------------------------------------------- Caroline Salas and Jeff Green at Bloomberg News report that JPMorgan Chase & Co. said that General Motors Corp. bondholders should recover 50 cents on the dollar, based on the concessions being made by unions. JPMorgan Chase Eric Selle said that a 50-cent "takeout may seem high versus current trading levels, we believe bondholders will not exchange until they approach parity with" treatment of non- pension retiree expenses, Bloomberg relates. According to Bloomberg, GM is in talks with bondholders and United Auto Workers officials, as part of the terms of the U.S. government bailout. GM, says Bloomberg, is seeking to reduce its debt, excluding the government loans, to $33.5 billion from $62 billion. According to the report, the government requires GM to convince bondholders to accept terms that cut $27.5 billion in unsecured debt to $9.2 billion, in a separate equity exchange. The report says that the exchange offers won't affect about $14.1 billion in debt. GM must also get an agreement from the union to cut cash contributions to a union-run retiree health care fund to $10.2 billion from $20.4 billion in exchange for equity, the report states. Bloomberg quoted Mr. Selle as saying, "We tend to side with bondholders in these negotiations, as the shared sacrifice argument falls flat. We believe GM's debt is much too high relative to its earnings; however, roughly half of GM's debt was incurred to fund its pension plan in 2003. In addition, its $3 billion interest carry doesn't provide as much of a competitive disadvantage as its union wages, benefits and work rules." Citing JPMorgan Chase, Bloomberg reports that bondholders could get half their money back if the government funded 10 cents in cash and guaranteed 40 cents in new exchange notes. 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. GLEASON/MADDEN PARTNERSHIP: Involuntary Chapter 11 Case Summary --------------------------------------------------------------- Alleged Debtor: Gleason/Madden Partnership 2401 South Michigan Avenue Chicago, IL 60616 Case Number: 09-04341 Involuntary Petition Date: February 11, 2009 Court: Northern District of Illinois (Chicago) Petitioner's Counsel: Stahl Cowen Crowley LLC 55 W. Monroe Street, Suite 1200 Chicago, IL 60603 Tel: (312) 641-0060 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Patrick W. Gleason partnership $183,834 791 Panfield Drive distributions Carol Stream, IL 60188 Diane E. Gleason partnership $183,834 301 N. Ocean Blvd. distribution Pompano Beach, FL 33062 Margaret Ramirez partnership $183,834 1049 Baybrook Drive distributions Carol Stream, IL 60188 GOODY'S LLC: Panel Taps Cooley Godward as Lead Bankruptcy Counsel ----------------------------------------------------------------- The official committee of unsecured creditors in Goody's LLC and its affiliated debtors' Chapter 11 cases asks the U.S. Bankruptcy Court for the District of Delaware to employ Cooley Godward Kronish LLP as its lead counsel. CGK will: a) attend meetings of the committee; b) review financial information furnished by the Debtors to the committee; c) negotiate a budget and the use of cash collateral; d) review and investigate the liens of purported secured parties; e) confer with the Debtors' management and counsel; f) coordinate efforts to sell or reorganize assets of the Debtors in a manner that maximizes the value for unsecured creditors; g) review the Debtors' schedules and statements of financial affairs; h) advise the committee as to the ramifications regarding all of the Debtors' activities and motions before the Court; i) file appropriate pleadings on behalf of the committee; j) review and analyze the Debtors' financial advisor's work product and reports to the committee; k) provide the committee with legal advice in relation to the cases; l) prepare various applications and memoranda of law submitted to the Court for consideration and handle all other matters relating to the representation of the committee that may arise; m) assist the committee in negotiations with the Debtors and other parties in interest on a strategy for these cases; and n) perform other legal services for the committee as may be necessary or proper in these proceedings. CGK will represent the committee in coordination with Benesch, the committee's proposed local counsel. CGK and Benesch have discussed a division of responsibilities in connection with their representation and avoid duplication of services in their representations. Cathy Hershcope, a member of the firm, tells the Court that CGK's fees for its services are based on its standard hourly rates. The rates were not included in the court documents. Ms. Hershcope adds that CGK did not receive a retainer with respect to the representation. Ms. Hershcope assures the Court that CGK is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. CGK can be reached at: The Grace Building 1114 Avenue of the Americas New York, NY 10036-7798 Tel: (212) 479-6000 Fax: (212) 479-6275 About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC -- http://www.shopgoodys.com-- Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09-10124). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. The Debtor proposed Bass Berry & Sims PLC and Skadden Arps Slate Meagher & Flom LLP as their special counsel; FTI Consulting Inc. as financial advisor; and Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as liquidation agent. The company is owned by Goody's Holdings Inc., a non-debtor entity. As of May 31, 2008, the company operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. When the Debtors filed for protection from their creditors for the second time, they listed assets and debts between $100 million to $500 million each. GOODY'S LLC: U.S. Trustee Holds Section 341(a) Meeting on March 4 ---------------------------------------------------------------- Roberta A. DeAngelis, the U.S. Trustee for Region 3, will convene a meeting of creditors of Goody's LLC and its affiliated debtors on March 4, 2009, at 10:00 a.m. at J. Caleb Boggs Federal Building, 844 North King Street, 5th Floor, Room 5209, Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Wilmington, Delaware, Goody's LLC -- http://www.shopgoodys.com-- Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09-10124). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. The Debtor proposed Bass Berry & Sims PLC and Skadden Arps Slate Meagher & Flom LLP as their special counsel; FTI Consulting Inc. as financial advisor; and Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as liquidation agent. The company is owned by Goody's Holdings Inc., a non-debtor entity. As of May 31, 2008, the company operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. When the Debtors filed for protection from their creditors for the second time, they listed assets and debts between $100 million to $500 million each. GOODY'S LLC: Wants to Hire Skadden Arps as Special Counsel ---------------------------------------------------------- Goody's LLC and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware Skadden, Arps, Slate, Meagher & Flom LLP as special counsel. Skadden Arps has represented Goody's Family Clothing in the first bankruptcy cases, handling every aspect of it including the disclosure solicitation and confirmation of the plan of reorganization, which plan made effective on Oct. 20, 2008, and certain of the Debtors emerged from the first bankruptcy. Skadden Arps will: a) assist the Debtors general bankruptcy counsel, Young Conaway Stargatt & Taylor, LLP in connection with the Debtors' going out of business sales; b) represent the Debtors with respect to claims for rent for the period from June 9, 2008, to June 30, 2008, in the first bankruptcy, including the prosecution of pending appeals, the review, reconciliation and resolution of stub rent claims, the filing and prosecuting of objections to stub rent claims, and the payment of stub rent claims from the stub rent reserve established under the confirmation order; c) represent the Debtors in connection wit claims asserted under Section 503(b)(9) of the Bankruptcy Code in the first bankruptcy case, including prosecuting pending objections to 503(b)(9) claims, and transitioning 503(b)(9) claims reconciliation to counsel to the plan administrator; d) represent the Debtors in connection with administrative claims asserted in the first bankruptcy, including motions to compel payment of administrative claims, pending cure objections, and transitioning administrative claims reconciliation to counsel to the plan administrator; e) provide the general bankruptcy counsel with information and assistance for general bankruptcy counsel's use in negotiations among the plan administrator, prentice and creditors regarding inter-estate settlement; f) appear before the Bankruptcy Court, any district or appellate courts, and the U.S. Trustee with respect to these matters; and g) perform the full range of services normally associated with these matters as the Debtors' special counsel. Skadden Arps will work with the general bankruptcy counsel to avoid performance of any duplicative services. Gregg M. Galardi, a member of Skadden, Arps, Slate, Meagher & Flom LLP, tells the Court that Skadden Arps' professionals' hourly rates are: Partners $730 - $1,050 Counsel $695 - $835 Associates $360 - $680 Legal Assistants $175 - $295 Mr. Galardi adds that Skadden Arps received $308,524 from the Debtors for services rendered after Oct. 21, 2008, and an additional amount of $150,000 to be held as in-account cash for the advance payment of additional post-confirmation professional fees and expenses incurred and charged by Skadden Arps in its representation of the Debtors. Since engagement, Skadden Arps has received an aggregate amount of $1,117,7155 for professional services, including fees and expenses. Mr. Galardi assures the Court that Skadden Arps is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Skadden Arps can be reached at: One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 Tel: (302) 651-3000 Fax: (302) 651-3001 About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC -- http://www.shopgoodys.com-- Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09-10124). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. The Debtor proposed Bass Berry & Sims PLC and Skadden Arps Slate Meagher & Flom LLP as their special counsel; FTI Consulting Inc. as financial advisor; and Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as liquidation agent. The company is owned by Goody's Holdings Inc., a non-debtor entity. As of May 31, 2008, the company operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. When the Debtors filed for protection from their creditors for the second time, they listed assets and debts between $100 million to $500 million each. GOODY'S LLC: Wants Schedules, Statements Filing Moved to March 14 ----------------------------------------------------------------- Goody's LLC and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend until March 14, 2009, the time within which they must file their schedules of assets and liabilities and statements of financial affairs. The Debtors relate that they need additional time to file schedules and statements to ensure their accuracy and avoid confusion on the part of creditors and other parties-in-interest. Headquartered in Wilmington, Delaware, Goody's LLC -- http://www.shopgoodys.com-- Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09-10124). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. The Debtor proposed Bass Berry & Sims PLC and Skadden Arps Slate Meagher & Flom LLP as their special counsel; FTI Consulting Inc. as financial advisor; and Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as liquidation agent. The company is owned by Goody's Holdings Inc., a non-debtor entity. As of May 31, 2008, the company operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. When the Debtors filed for protection from their creditors for the second time, they listed assets and debts between $100 million to $500 million each. GOODY'S LLC: Wants DJM Asset as Special Real Estate Consultant -------------------------------------------------------------- Goody's LLC and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to employ DJM Asset Management LLC as special real estate consultant. DJM will advise and assist the Debtors in connection with a variety of matters relating to the disposition of leases. DJM will also: a) meet with the Company to ascertain the company's goals, objectives and financial parameters; b) negotiate the termination, assignment or other disposition of the leases, including assisting the Debtors at an auction of the leases, if needed; c) negotiate waivers or reduction of prepetition cure amounts and claims with respect to leases; and d) assist the Company in the documentation of proposed transactions. Andre B. Graiser, co-president of DJM, tells the Court that DJM will be paid: A. Lease Disposition: For each closing of a transaction in which any lease is assigned or otherwise transferred to a third party, the consultant will earn a fee in the amount equal to 3.75% of the gross proceeds of the disposition. The consultant will not be entitled to a fee in connection with the disposition of any leases pursuant to a purchase of substantially all the Debtors' remaining assets where the Debtors have received a binding letter of intent for the transaction on or before Feb. 9, 2009. B. Reduction in Bankruptcy Claims: (i) For a lease assumed and assigned by the Debtor, if the amount required to be paid to the landlord to cure defaults existing at the time of assumption is reduced below the cure amount that the Debtors acknowledges is owing, the consultant will receive a fee for the waiver or reduction of the cure amount in the amount equal to 3.75% of the total amount so reduced or waived; (ii)For any lease rejected by the Debtors, if the landlord agrees to reduce or waive the claim it could assert under Bankruptcy Code, or otherwise, the consultant will receive a fee in an amount equal to 3.75% of the savings of the dividend that otherwise would have been payable to the landlord in the Debtors' bankruptcy cases. Pursuant to the consulting agreement, DJM will be compensated for additional consulting services that are not otherwise provided for in the agreement at the rate of $350 per hour. Mr. Graiser adds that the agreement provides that the Debtors will pay all pre-approved out-of-pocket expenses of DJM, not to exceed $15,000 in the aggregate. Mr. Graiser further states Upon the receipt of the $28,000 in proceeds payable to the Debtors from the disposition of the leases and from proceeds, the Debtors will pay DJM $100 per lease property in consideration for its indirect administrative costs. A full-text copy of the consulting agreement is available for free at: http://bankrupt.com/misc/djmservicegreement.pdf Mr. Graiser assures the Court that DJM is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC -- http://www.shopgoodys.com-- Goody's Family Clothing Inc. -- http://www.shopgoodys.com/-- operates chains of clothing stores. The company and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09-10124). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor LLP, represents the Debtors in their restructuring efforts. The Debtor proposed Bass Berry & Sims PLC and Skadden Arps Slate Meagher & Flom LLP as their special counsel; FTI Consulting Inc. as financial advisor; and Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC as liquidation agent. The company is owned by Goody's Holdings Inc., a non-debtor entity. As of May 31, 2008, the company operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. The company and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Debtors selected Logan and Company Inc. as their claims agent. The company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. When the Debtors filed for protection from their creditors for the second time, they listed assets and debts between $100 million to $500 million each. GREATER OHIO ETHANOL: Has Another Buyer For Lima Ethanol Plant -------------------------------------------------------------- Greater Ohio Ethanol asks the U.S. Bankruptcy Court for the Northern District of Ohio for approval to sell its ethanol plant to Paladin Ethanol Acquisition LLC. Greater Ohio has a 54-million-gallon-a-year ethanol plant in Lima, Ohio, which cost $117 million to build. According to Bloomberg's Bill Rochelle, Paladin has offered to buy the plant for $5.75 million cash and a note for $15 million. The note can be deemed paid in full if the buyer pays $2.5 million within two years. Mr. Rochelle notes that this is Greater Ohio's third try to sell its assets. The Bankruptcy Court previously set a December 15, 2008 deadline for submitting bids for the Debtor's assets. The Debtor, however, wasn't able to identify acceptable bids. In a second round of bidding in January 2009, NextGen Energy LLC signed up to buy the facility for $5 million cash and a note for $15.05 million. NextGen, however, failed to make the required deposit and the sale was canceled. The company responded to the second failed sale by filing a motion either to convert the case to liquidation in Chapter 7 or approve a sale. Before a hearing on the sale or conversion motion, Paladin conveyed its bid for the plant. The official committee of unsecured creditors objects to the sale on grounds that it only benefits secured creditors. The committee has also pointed out that the buyer is affiliated with one of the owners of company. Ethanol Producer Magazine said in January that the attorneys for Greater Ohio Ethanol estimated the plant's sale price to be $18 million, less than the $90 million owed to major investors. About Greater Ohio Headquartered in Lima, Ohio, GOE Lima LLC -- http://www.go- ethanol.com/ -- operates an ethanol production facility. The company filed for protection on Oct. 14, 2008 (Bankr. N.D. Ohio Case No. 08-35508). Taft Stettinius & Hollister LLP is the Debtor's proposed bankruptcy counsel. When the Debtor filed for protection from its creditors, its listed assets and debts between $100 million to $500 million each. HARTMARX CORP: Creditors Panel Can Hire Neal Gerber as Counsel -------------------------------------------------------------- The official committee of unsecured creditors in Hartmarx Corporation and its debtor-affiliates' Chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Neal, Gerber & Eisenberg, LLP, as counsel. NGE is expected to: a) assist, advise and represent the Committee in its consultations with Debtors regarding the administration of these cases; b) assist, advise and represent the committee in analyzing the Debtors' assets and liabilities, participate in and review any proposed assets sales, any asset dispositions, financing arrangements and cash collateral stipulations or proceedings; c) assist, advise and represent the Committee in any manner relevant to reviewing and determining the debtors' rights and obligations under leases and other executory contracts; d) assist, advise and represent the Committee in investigating the acts, conduct, assets, liabilities and financial condition of the Debtors, the Debtors' operations and the desirability of the continuance of any portion of those operations, and any other matters relevant to this case or to the formulation of a plan; e) assist, advise and represent the Committee in its participation in the negotiation, formulation and drafting of a plan of liquidation or reorganization; f) advise the Committee on the issues concerning the appointment of a trustee or examiner; g) assist, advise and represent the Committee in understanding its powers and its duties under the Bankruptcy Code and the Bankruptcy Rules and in performing other services as are in interest of those represented by the committee; h) assist, advise and represent the Committee in the evaluation of the claims and on any litigation matters, including avoidance actions; and i) providing other services to the committee as may be necessary in the Chapter 11 cases. NGE intended to work closely with other professionals employed by the committee to ensure that there is no duplication of services performed or charged to the Debtors' estates. NGE's current hourly rates for paralegal and lawyers range from $140 to $795, depending on the background and experience of a particular lawyer or paralegal. The hourly rates of NGE's professionals employed in Hartmarx's cases are: Mark A. Berkoff $625 Thomas C. Wolford $525 William Choslovsky $495 Deborah M. Gutfield $450 Marc I. Fenton $450 Nicholas M. Miller $395 Jason Frye $290 Nina Taylor Brody $240 Mark A. Berkoff, a partner at NGE, told the Court that NGE has not received any payments regarding its professional services or expenses related to its representation to the committee. Mr. Berkoff assures the Court that NGE is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Hartmarx Based in Chicago, Illinois, Hartmarx Corporation (HTMXQ) -- http://www.hartmarx.com-- produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace, Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In addition, the company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle & Scott, Golden Bear, Jag and Dr. Martens. The company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs. The company and its affiliated debtors filed for bankruptcy protection on January 23, 2009 (Bankr. N.D. Ill. Lead Case No. 09-02046). George N. Panagakis, Esq., Felicia Gerber Perlman, Esq., and Eric J. Howe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed $483,108,000 in total assets and $261,220,000 in total debts as of August 31, 2008. HARTMARX CORPORATION: Taps Skadden Arps as Bankruptcy Counsel ------------------------------------------------------------- Hartmarx Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Skadden, Arps, Slate, Meagher & Flom LLP as counsel. Skadden, Arps is expected to: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and property; b) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult on the conduct of these Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11 of the Bankruptcy Code; c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors' estates, the defense of any actions commenced against those estates, negotiations concerning litigation in the Debtors may be involved, and objections to claims filed against the estates; d) prepared, on behalf of the Debtor, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; e) prepare and negotiate on the Debtors' behalf plan of reorganization, disclosure statement and all related agreements and documents and take any necessary action on behalf of the Debtor to obtain confirmation of the plan; f) advise the Debtors in connection with any sale of assets; g) perform other necessary legal services and providing other necessary legal advice to the Debtors in connection with these Chapter 11 Cases; and h) appear before the Court, any appellate courts, and the United States Trustee and protect the interests of the Debtors' estates before the courts and the United States Trustee. The Debtors related that on Jan. 13, 2009, Skadden received a retainer of $350,000, and on Jan. 22, 2009, Skadden received a supplement to the retainer in the amount of $175,000, to be applied against anticipated professional services and expenses charged by Skadden. Prior to Hartmarx's Chapter 11 filing, Skadden drew the full amounts of the Retainer to pay for estimated fees and expenses incurred prior to and up to the petition date but that were unable to be billed specifically because these amounts had not yet been processed through Skadden's billing system. All of these fees, charges and disbursements are attributable to legal services performed. Skadden Arps' professional hourly are: Partners $730 to $1,050 Counsel $695 to $835 Associates $360 to $680 Legal Assistants and Support Staff $175 to $295 To the best of the Debtors knowledge, Skadden Arps is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Skadden Arps can be reached at: One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 Tel: (302) 651-3000 Fax: (302) 651-3001 About Hartmarx Corporation Based in Chicago, Illinois, Hartmarx Corporation (HTMXQ) -- http://www.hartmarx.com-- produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace, Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In addition, the company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle & Scott, Golden Bear, Jag and Dr. Martens. The company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs. The company and its affiliated debtors filed for bankruptcy protection on January 23, 2009 (Bankr. N.D. Ill. Lead Case No. 09-02046). George N. Panagakis, Esq., Felicia Gerber Perlman, Esq., and Eric J. Howe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed $483,108,000 in total assets and $261,220,000 in total debts as of August 31, 2008. HCA INC: Fitch Assigns 'B+' Rating on $300 Mil. Proposed Notes -------------------------------------------------------------- Fitch Ratings has assigned a rating of 'B+/RR3' to HCA Inc.'s proposed offering of $300 million in senior secured second lien notes due 2017. Fitch currently rates HCA: -- Issuer Default Rating (IDR) 'B'; -- Secured Bank Credit Facility 'BB/RR1'; -- Senior Unsecured Notes 'CCC+/RR6'; -- Second Lien Notes 'B+/RR3'. The Rating Outlook is Stable. Total rated debt at Dec. 31, 2008, was approximately $27 billion. The new notes will rank pari passu with the existing second lien notes. Fitch expects the proceeds of the proposed debt offering to be used to reduce outstanding indebtedness. One of Fitch's key concerns regarding the credit is the large amount of debt maturing between 2010 and 2013, including approximately $12 billion in secured term loan borrowings that mature in 2012 and 2013. Fitch believes the company will not be able to satisfy all of these maturities with cash on hand and free cash flow. In addition, market conditions may not be amenable to refinancing large quantities of bank debt. Fitch notes that the proposed notes should begin to address these concerns, although additional activity is expected in the future to address these maturities. HCA's ratings reflect the company's significant leverage and challenging industry environment, partially offset by improvements in its operations and debt levels. HCA has reduced outstanding debt by more than $1.4 billion since its leveraged buy-out in 2006 while leverage (total debt/EBITDA) has declined to approximately 5.8 times from 6.6x at Dec. 31, 2006. HCA also generated approximately $197 million of free cash flow during 2008 after experiencing negative free cash flow in 2006 and 2007. Operations have also improved as the company reported its fifth consecutive quarter of positive same-facility adjusted admissions growth during the fourth quarter. Volumes should continue to benefit in 2009 as several planned capacity additions are completed. However, Fitch notes that HCA's credit profile is constrained by high debt and leverage levels as well as an increasingly challenging industry environment. With approximately $27 billion in debt outstanding and 5.8x leverage at Dec. 31, 2008, HCA's debt and leverage are high for the rating category. In addition, HCA is facing a difficult operating environment with increases in unemployment and uninsured patients expected to continue while Medicaid funding declines. Fitch expects these pressures to result in increased bad debt expense, decreased volumes, and pressures on Medicaid reimbursement for the for- profit hospital industry in 2009. This could pressure the company's ability to generate cash flow in order to service debt and fund operations. HCA INC: Moody's Assigns 'B2' Rating on Proposed $100 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to HCA Inc.'s proposed offering of $300 million of second lien secured notes. Moody's understands that the new notes will rank pari passu with the company's existing second lien notes. Moody's also affirmed the existing ratings of HCA, including the B2 Corporate Family Rating. The outlook for the ratings is stable. Moody's understands that the proceeds of the notes will be used to repay other indebtedness. "The affirmation of HCA's ratings reflects Moody's belief that while the issuance of the new notes will likely increase interest cost, it is not expected to result in incremental leverage," said Dean Diaz, Vice President -- Senior Credit Officer at Moody's. Moody's also understands that the company will seek to amend the terms of its asset-based revolving credit facility and term loan and revolving credit facilities to allow for future issuance of additional first lien debt as long as that debt is used to repay existing first lien debt. HCA's B2 Corporate Family Rating continues to reflect the significant leverage of the company resulting from the November 2006 leveraged buyout. The considerable interest cost associated with the debt results in modest interest coverage metrics and limited free cash flow. The rating also reflects the expectation that HCA's margin performance will continue to be pressured by the unfavorable trends in bad debt expense and weak volumes that have been plaguing the industry as a whole. However, HCA's scale and market strength should aid in weathering these developments. Additionally, the company is expected to maintain good liquidity over the next year. Moody's rating actions are summarized below. Ratings assigned: -- $300 million Second Lien Notes due 2017, B2 (LGD4, 57%) Ratings affirmed/LGD Assessments revised: -- $2,000 million ABL Revolver due 2012, to Ba2 (LGD2, 12%) from Ba2 (LGD2, 13%) -- $2,000 million Revolving Credit Facility due 2012, Ba3 (LGD3, 32%) -- $2,750 million Term Loan A due 2012, Ba3 (LGD3, 32%) -- $8,800 million Term Loan B due 2013, Ba3 (LGD3, 32%) -- $1,250 million Euro Term Loan due 2013, Ba3 (LGD2, 23%) -- $1,000 million Second Lien Notes due 2014, B2 (LGD4, 57%) -- $3,200 million Second Lien Notes due 2016, B2 (LGD4, 57%) -- $1,500 million Second Lien PIK Notes due 2016, B2 (LGD4, 57%) -- Senior unsecured notes (various), Caa1 (LGD6, 90%) -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 -- Speculative Grade Liquidity Rating, SGL-2 Moody's last rating action was on November 20, 2006, when HCA's unsecured notes were downgraded to Caa1 from Ba2 following the closing of the leveraged buyout of the company. Headquartered in Nashville, Tennessee, HCA is the nation's largest acute care hospital company with 166 hospitals and 107 freestanding surgery centers (including eight hospitals and eight freestanding surgery centers that are accounted for using the equity method) as of September 30, 2008. For the year ended December 31, 2008, the company recognized revenue in excess of $28 billion. HCA INC: S&P Assigns 'BB-' Rating on Proposed $300 Mil. Notes ------------------------------------------------------------- Standard & Poor's Rating Services said that it revised its outlook on Nashville, Tennessee-based HCA Inc. to stable from negative, and affirmed its existing ratings on the company. At the same time, it assigned its 'BB-' rating to the company's proposed $300 million senior secured second lien notes offering, with a recovery rating of '2', indicating the expectation of substantial recovery (70%-90%) in the event of default. The proceeds of the notes offering are expected to be used to retire existing debt. "The outlook revision reflects our reduced expectation of a rating downgrade within the next 12 months," said Standard & Poor's credit analyst Alain Pelanne. "A key factor is our view of relatively steady cash flow prospects through 2009, accompanied by ample liquidity provided by substantial revolver capacity and the lack of onerous debt covenants," he continued. The speculative-grade rating on HCA Inc. continues to reflect S&P's concern that the largest U.S. owner and operator of acute health care facilities is particularly sensitive to reduced capacity utilization and pricing, by virtue of the significant debt leverage assumed in its November 2006 leveraged buyout. While HCA has a large portfolio of 166 hospitals and 105 ambulatory surgery centers, S&P believes a concentration in several of its markets, highlight its strength, as well as its vulnerability. HCA enjoys relatively strong negotiating positions with private insurance companies in these markets, but also is susceptible to regional variations in demand, particularly in Florida and Texas. S&P believes managed care price increases, which exceeded 6% in 2008, should average about the same amount in 2009. At the same time, however, a spike in relative economic weakness within HCA's regions would magnify the slackening demand for elective procedures S&P expects to occur in the U.S. this year. Similarly, regional concentrations could amplify the effects of a national uptrend in the level of uncompensated care. In the 2008 fourth quarter alone, HCA's charity care and uninsured discounts increased by $204 million. Furthermore, bad debt expense in fiscal 2008 increased $279 million, contributing to a decline in operating margins to 16.1%, compared with 17.1% year over year. Lastly, given its general dependence on third-party reimbursement, S&P expects that persistent efforts of large insurers and government programs will remain an ongoing uncertainty as they seek to limit the seemingly inexorable growth in the cost of providing care to their beneficiaries. HOUGHTON MIFFLIN: S&P Junks Rating on 1st-Lien Credit Facilities ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Dublin, Ireland-based Education Media & Publishing Group Ltd. and its Houghton Mifflin Harcourt Publishers Inc. subsidiary. S&P lowered the corporate credit rating to 'CCC' from 'B-'. The rating outlook is negative. EMPG (formerly HM Rivergroup PLC), a leading educational publisher, had consolidated debt and preferred stock of about $7.6 billion as of Sept. 30, 2008. In addition, S&P revised the recovery rating on Houghton Mifflin's first-lien credit facilities to '3', indicating S&P's expectation of average (50% to 70%) recovery for lenders in the event of a payment default, from '2'. The issue-level rating on this debt was lowered to 'CCC' (at the same level as the 'CCC' corporate credit rating) from 'B'. "The ratings downgrade reflects our concern about diminished near- term prospects for textbook educational spending; the likelihood, in our view, of continued weak operating performance; and the repercussions for liquidity amid tightening financial covenants," said Standard & Poor's credit analyst Hal Diamond. Sales declined 5.8% and EBITDA fell 2.2% in the seasonally important three months ended Sept. 30, 2008, reflecting strained state and local budgets. S&P anticipates that the industrywide decline in education spending is likely to continue in 2009 due to the recession, resulting in states postponing textbook purchases. The rating also considers S&P's view of the company's heightened financial risk resulting from EMPG's December 2007 $4 billion acquisition of the former Harcourt education and trade businesses from Reed Elsevier PLC, which S&P does not believe is meaningfully offset by the company's good business position in the educational publishing industry. The May 2008 $768 million sale of its Houghton Mifflin college publishing business modestly lessened the company's operating diversity and increased its reliance on the cyclical K-12 educational publishing business. EMPG has significantly higher leverage than its peers, which could put it at a competitive disadvantage. Standard & Poor's expects that continued weak operating performance and negative discretionary cash flow would necessitate an amendment to financial covenants. Furthermore, S&P believes that the cost that the company's banks would apply in fees and an increase in the interest margin associated with an amendment would further compress its interest coverage and liquidity. Given continued negative discretionary cash flow, and without a material improvement in profitability in 2009, S&P believes that the company's current liquidity would be depleted by 2010. JOBSON MEDICAL: Deteriorating EBITDA Cues Moody's Junk Rating ------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Jobson Medical Information LLC by one notch, while concurrently placing the ratings on review for possible further downgrade. The Corporate Family Rating was lowered to Caa1 from B3, the Probability of Default Rating was lowered to Caa2 from Caa1, and the rating on the first lien senior secured credit facility was lowered to Caa1 from B3. The downgrade reflects recent deterioration in Jobson's key credit metrics and liquidity profile and Moody's expectation that operating results will continue to be challenged throughout 2009. End market demand for healthcare-related advertising and marketing services had remained fairly resilient to macroeconomic pressures through the third quarter of 2008, but experienced considerable weakness in the fourth quarter. As a result, Jobson reported a decline in revenue and EBITDA of approximately 21% and 40%, respectively, in the quarter ended December 31, 2008. Solid results in the education segment only partly offset profit declines in the optical, alert marketing, and medical abstract data businesses. Consolidated results were considerably below expectations and Moody's does not anticipate a material improvement in EBITDA or key credit metrics in the near term. Furthermore, as of February 4, 2009, Jobson no longer has access to its $15 million revolver. The deterioration in EBITDA, combined with scheduled step-downs in the leverage covenant, led to a financial covenant default on the senior secured credit facility for the quarter ending December 31, 2008. Currently, Jobson's cash balance approximates $5 million, which Moody's anticipates will be needed in the first quarter of 2009 to fund working capital needs. The review for possible downgrade will primarily focus on the terms of an amendment, if obtained, Jobson's expected run rate operations, and the company's ability to maintain sufficient financial flexibility and liquidity over the near to intermediate term in light of current macroeconomic and end market challenges. Moody's downgraded these ratings and placed them on review for possible further downgrade: -- $15 million senior secured first lien revolving credit facility, to Caa1 (LGD3, 33%) from B3 (LGD3, 35%) -- $107 million senior secured first lien term loan B facility, to Caa1 (LGD3, 33%) from B3 (LGD3, 35%) -- $25 million senior secured delayed draw term loan facility, to Caa1 (LGD3, 33%) from B3 (LGD3, 35%) -- Corporate Family Rating, to Caa1 from B3 -- Probability of Default Rating, to Caa2 from Caa1 The previous rating action occurred on May 2, 2006 when Moody's assigned a first-time Corporate Family Rating of B3. Jobson'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 Jobson's core industry and Jobson's ratings are believed to be comparable to those of other issuers of similar credit risk. Jobson Medical Information LLC, headquartered in New York City, provides marketing services, information databases, trade publications, medical education programs, events, websites and other digital and traditional media services to the healthcare market. The company reported pro forma revenues (adjusted for a divestiture completed in January 2009) of approximately $93 million for the year ended December 31, 2008. LEHMAN BROTHERS: Examiner Gets to Issue Subpoenas, Demand Docs. --------------------------------------------------------------- The examiner for Lehman Brothers Holdings Inc. was given power by the bankruptcy judge to compel witnesses to produce documents and submit to examinations under oath, Bloomberg's Bill Rochelle reports. Anton Valukas, the Court-appointed Chapter 11 examiner, seeks permission from Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to issue subpoenas to former and incumbent officers of Lehman Brothers Holdings, Inc., and its debtor affiliates and other officials involved in the Debtors' transactions. The move is part of the Examiner's investigation into what caused the collapse of the Debtors. The officials would be investigated about the inter-company transfers among LBHI and its subsidiaries a month before the bankruptcy filing; and the transfer of the capital stock of Lehman Brothers Inc.'s subsidiaries to Lehman ALI Inc. on or about September 19, 2008. The officials would also be investigated if any of LBHI's affiliates has a colorable claim against any entity for "potentially voidable transfers" or incurrence of debt. Attorney for Mr. Valukas, Robert Byman, Esq., at Jenner & Block LLP, in New York, says that while some of the officials may be willing to serve as witnesses, the issuance of the subpoenas is necessary to complete the investigation. "Absent the issuance of a subpoena, the examiner will be unable to compel witnesses to produce documents and testify regarding the various matters included in the scope of the investigation," Mr. Byman says. In connection with the issuance of subpoenas, the Examiner also Asked for permission to implement these procedures: (1) except as otherwise agreed by the Examiner, witnesses will be directed to produce, on a rolling basis, all documents responsive to the Examiner's subpoena except those withheld under a claim of privilege within 10 days after service of the subpoena, or to file all objections and responses to the subpoena with the Court within 10 days after its issuance, with a hearing promptly scheduled; (2) if a witness withholds a document based on a claim of privilege, the witness must provide the Examiner with a privilege log containing the information required under Rule 7026 of the Federal Rules of Bankruptcy Procedure within 10 days after issuance of the subpoena; (3) the witness is directed to submit to oral examination upon notice and not later than 15 days from the issuance of the deposition subpoena; and (4) in accordance with Rules 2004 and 9016, the Clerk of the Court will issue subpoenas, signed but otherwise in blank, as requested by the Examiner. Mr. Valukas, according to Bloomberg, also convinced the judge not to force him to share all of the fruits of his investigation with lawyers for Lehman. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers led in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Seeks to Inject $272M to Woodlands to Keep Stake ----------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek approval from the U.S. Bankruptcy Court for the Southern District of New York to inject capital of $272 million Woodlands Commercial Bank to avoid a fire sale of its assets by regulators. Woodlands Commercial, a chartered industrial bank based in Utah, is owned by Lehman Brothers Bancorp Inc., a subsidiary of Lehman Brothers Holdings. It has about $2 billion in assets, primarily in the form of cash and easily saleable securities. As of September 30, 2008, the Bank's financial statements reflected the value of LBHI's equity interest in the Bank at $1 billion. Since September 30, 2008, there has been no significant change in the composition of the Bank's assets or its liabilities. However, due primarily to certain actions by Lehman Brothers Inc. surrounding the Bank's purchase of certain municipal securities on September 12, 2008 through LBI and LBI's failure to deliver the securities, the Bank's December 31, 2008 financial report reflects a material decrease in the Bank's capital level to the point that the Bank's regulators now contend the Bank is insufficiently capitalized as calculated under applicable banking regulations. Notwithstanding the impact of the full reserve for the Bank's municipal bonds and effect of fair value accounting, as of Dec. 31, 2008, the value of LBHI's equity interest was still $430 million. Woodlands Commercial's assets, according to LBHI, are reportedly at risk of being seized and liquidated by the Federal Deposit Insurance Corporation due to its failure to meet sufficient capital level required by FDIC and the Department of Financial Institutions, in Utah. Based on its quarterly financial reports ending December 31, 2008, Woodlands Commercial's risk-based capital is about $405 million, which produced a total risk-based capital ratio at a 5.4% level, leaving the bank below the 8% ratio considered adequate under the regulations of the FDIC and DFI. FDIC has reportedly issued a cease and desist order requiring Woodlands Commercial to raise its capital by no later than February 20, 2009, and submit a capital plan on how it would maintain a sufficient capital by no later than February 19, 2009. Alfredo Perez, Esq., at Weil Gotshal & Manges LLP, in New York, says that LBHI and the management of Woodlands Commercial, in consultation with the Official Committee of Unsecured Creditors, are already working on the capital plan. "Central to this plan is an initial capital infusion by [Lehman Brothers Holdings] of up to approximately $200 million into the bank so that the bank presently reaches the adequacy," he says. Mr. Perez says that Lehman Brothers Holdings will also make subsequent capital infusions of up to $72 million to assure that Woodlands Commercial's adequate capital level will be maintained. "By investing the capital, [Lehman Brothers Holdings] secures sufficient time to permit either a sale of [Woodlands Commercial] or a voluntary planned resolution of the bank's affairs in an orderly and organized fashion," Mr. Perez says, adding that an immediate liquidation of Woodlands Commercial is likely to leave large deficiency claims asserted by the bank's creditors against Lehman Brothers Holdings' estate. Under the capital plan, Lehman Brothers Holdings and Woodlands Commercial also consider the possible termination of the Utah bank's existing participation in unfunded loan commitments of other Lehman units to improve its overall capital position. They also consider pursuing the recovery of municipal securities worth about $534 million that Woodlands Commercial purchased through its affiliated broker dealer, Lehman Brothers Inc. The securities, which had been incorrectly deposited in an account allegedly subject to a pledge agreement between LBI and JPMorgan Chase, had reportedly been seized and sold by JPMorgan without Woodlands Commercial's consent. LBI's failure to deliver the securities reportedly caused the decline in Woodlands Commercial's capital level as reflected in its December 2008 financial report. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers led in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Replaced as Lead Lender in Maui Land's Loan ------------------------------------------------------------ Maui Land & Pineapple Company, Inc. (MLP), said it has concluded a financing agreement to complete construction of its joint venture project, The Ritz-Carlton Club and Residences at Kapalua Bay. After filing for bankruptcy in September 2008, the joint venture's lead lender, Lehman Brothers Holdings, Inc. (Lehman), discontinued its funding of the project. On January 28, 2009, the United States Bankruptcy Court approved terms of a new loan agreement sufficient to fully fund completion of the development. Under the new agreement, Central Pacific Bank replaces Lehman as the administrative agent under the loan. Lehman has agreed to provide $35 million of the $120 million in completion financing, with other co-lenders, including Deutsche Hypothekenbank and Landesbank Baden-Wurttemberg and Marriott International, Inc., providing the balance. "We are very pleased with this outcome and are grateful to Marriott International, Inc.'s Ritz-Carlton Development Co., the contractor Nordic/PCL and the co-lenders who continued to fund the project while completion financing issues were resolved," said Robert Webber, President and CEO of MLP. "Because of their commitment and the efforts of our Senior Vice President/ Development, Ryan Churchill, we never lost a day of construction and were able to sustain the jobs of hundreds of construction workers from our community." "We continue to be encouraged by construction progress, and the project is on schedule to open in June," continued Mr. Webber. "We believe Kapalua Bay will offer purchasers the most stunning ocean-front luxury experience in the state of Hawai'i. Moreover, because many other luxury projects in the state have recently been abandoned, we believe the project is well-positioned for the eventual economic recovery." The Ritz-Carlton Club and Residences at Kapalua Bay offer 84 private ownership residences and 62 residences sold in deeded, one-twelfth fractional ownership interests, along with an abundance of amenities on a 24-acre oceanfront site, complemented by dramatic mountain and ocean views overlooking one of Maui's most spectacular beaches. Maui Land & Pineapple Company, Inc. is a Hawaii corporation and successor to a business organized in 1909. Its principal operating subsidiaries are Maui Pineapple Company, Ltd., a producer and marketer of Maui-grown pineapple, and Kapalua Land Company, Ltd., operator of Kapalua Resort, a master-planned resort community in West Maui. On the Net: http://www.mauiland.com/and http://www.kapalua.com/ About Lehman Brothers Holdings Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers led in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on Sept. 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LENOX GROUP: Disclosure Hearing Suspended Due to Funding Delays --------------------------------------------------------------- Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York adjourned indefinitely the hearing on the disclosure statement to Lenox Group, Inc.'s Chapter 11 plan because the lenders who plan to buy the company have not secured financing, Bloomberg's Bill Rochelle reported. The Chapter 11 plan is built around the sale of the company to prepetition term loan lenders, who have offered to credit bid their claims to partly pay for the assets. Judge Gropper, according to Bloomberg News, previously said that the disclosure statement to the Plan can't be approved because the Plan depends on a purchase that might not be funded and the Disclosure Statement doesn't include enough information about how unsecured creditors would be repaid. The Bankruptcy Code provides that a disclosure statement to the plan must provide adequate information necessary for creditors to make an informed judgment of the plan. Creditors may also seek denial of a disclosure statement accompanied by a reorganization plan that is "not confirmable". "We don't know if the term-loan lenders are going to bid because we don't know if they have financing," Judge Gropper said. He said that to approve a plan now, and have creditors vote on it, would be a needless expense if the purchase plans fall through, according to the Bloomberg report. Before Lenox's bankruptcy filing, the term-loan lenders negotiated an agreement to purchase the business by bidding their secured claims. According to Bloomberg's Bill Rochelle, prepetition term- loan lenders, owed $98.75 million, are expected to bid for the business. The term lenders will submit a credit bid, or will offer to buy assets in exchange for a portion of their claims. Lenox Group Inc., has already obtained approval from the Bankruptcy Court to conduct an auction for its assets or business on Feb. 11, 2008. Bids are due Feb. 6, five days before the auction. Lenox will present the results of the auction at a hearing on Feb. 20. Prior to the petition date, Lenox and the prepetition lenders, on November 23, reached agreement on a term sheet, which presents the material terms of the sale. The parties also entered into a plan support agreement, which provides, among other things, (i) the sale of the Debtors would be effectuated through the terms of a pre-negotiated chapter 11 plan, (ii) the Debtors would use their reasonable best efforts to adhere to the negotiated timeline for the Sale, and (iii) subject to certain conditions, the Term Loan Lenders would not object to and would support the DIP Credit Facility and consummation of the Sale. The salient terms of the Plan Term Sheet are: * The Term Loan Lenders will create a new entity ("New Lenox") to which all of the claims under the Term Loan Agreement owned by the Term Loan Lenders party to the Plan Support Agreement will be transferred. The Term Loan Lenders will credit bid an amount up to the aggregate amount of their claim arising under the Term Loan Agreement for the Purchased Assets of the Debtors. Upon closing of the Sale, New Lenox will own 100% of the equity in New Lenox; * Certain of the Revolving Loan Lenders will extend a $85 million postpetition revolving credit financing facility to the Debtors, and the Revolving Lenders' claims under the Revolving Loan Agreement will be rolled-up into the DIP Credit Facility; * Holders of general unsecured claims will receive their a pro rata share of an amount to be agreed upon by the Term Loan Lenders; and * Holders of Lenox Group common stock will receive no recovery. About Lenox Group Headquartered in Bristol, Pennsylvania, Lenox Group Inc. -- http://www.department56.com/,http://www.lenox.com/,and http://www.dansk.com/-- including its two main operating subsidiaries, D 56, Inc. and Lenox, Incorporated, is a leading designer, marketer, distributor, wholesaler, manufacturer and retailer of quality tableware, collectibles, and other giftware products under the Lenox, Dansk, Gorham, and Department 56 brand names. These products are sold through department stores, large specialty retailers, general merchandise chains, national chains and clubs, small independent specialty retailers, and other wholesale accounts. The company and six of its affiliates filed for Chapter 11 protetcion on November 23, 2008 (Bankr. S.D. N.Y. Lead Case No. 08-14679). Harvey R. Miller, Esq., and Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors their restructuring efforts. The Debtors proposed Berenson & Company as financial advisor, Carl Marks Advisory Group LLC as consultants, and The Garden City Group as claims and noticing agent. Debtors have $264,000,000 in total assets and $238,000,000 in total debts as of October 25, 2008. LIGHTPOINT CLO: Moody's Reviews Ratings on Notes for Likely Cuts ---------------------------------------------------------------- Moody's Investors Service announced that it has placed under review for possible downgrade these notes issued by LightPoint CLO 2004-1, Ltd.: -- Class A-1-A Senior Secured Notes, Aaa Placed Under Review for Possible Downgrade; previously on February 19, 2004 Assigned Aaa. Additionally, Moody's has downgraded and placed under review for possible downgrade these classes of notes: -- Class A-1-B Senior Secured Notes, Downgraded to Aa2 and Placed Under Review for Possible Downgrade; previously on February 19, 2004 Assigned Aaa; -- Class B Senior Secured Notes, Downgraded to A2 and Placed Under Review for Possible Downgrade; previously on February 19, 2004 Assigned Aa1; -- Class X Deferrable Amortizing Senior Secured Notes, Downgraded to Ba1 and Placed Under Review for Possible Downgrade; previously on February 19, 2004 Assigned A2; -- Class C Deferrable Secured Notes, Downgraded to Ba2 and Placed Under Review for Possible Downgrade; previously on February 19, 2004 Assigned A3; -- Class D Secured Notes, Downgraded to B2 and Placed Under Review for Possible Downgrade; previously on November 24, 2008 Downgraded to Baa3. Finally, Moody's has downgraded these notes: -- Class E Subordinated Secured Notes, Downgraded to Ca; previously on November 24, 2008 Downgraded to B1. LightPoint CLO 2004-1, Ltd. is a collateralized loan obligation backed primarily by a portfolio of senior secured loans. As reported by the trustee, on December 10, 2008 the transaction experienced an "Event of Default" caused by a failure of the overcollateralization ratio with respect to the Class A-1A Notes to be at least equal to 103%, as required under the indenture dated February 19, 2004. This Event of Default is continuing. Moody's notes that the transaction provides that the computation of overcollateralization ratios include a haircut to par value of any collateral obligation with a market value below 85% of its principal balance. (This haircut will continue until such obligation trades at a market value of at least 95% of its principal balance for 60 consecutive days.) The trustee reports that the haircut is being applied to a significant proportion of the underlying collateral. As reported by the trustee, the deal is failing all of its overcollateralization tests; as a result all interest proceeds and principal proceeds on the last payment date were used to pay principal on the Class A-1A notes after paying interest due to the Class A-1A, Class A-1B, and Class B Notes. The Class X, Class C, Class D, and Class E Notes are currently deferring interest. The rating actions taken reflect the occurrence of the Event of Default, the application of Moody's revised assumptions with respect to default probability, the treatment of ratings on "Review for Possible Downgrade" or with a "Negative Outlook," the calculation of the Diversity Score, as well as the consideration of credit deterioration in the underlying portfolio. The revised assumptions that have been applied to all corporate credits in the underlying portfolio are described in the press release dated February 4, 2009. Credit deterioration of the collateral pool is observed in, among others, an increase in the dollar amount of defaulted securities with diminished expected recoveries. As provided in the indenture, during the occurrence and continuance of an Event of Default, certain holders of notes may be entitled to direct the trustee to take particular actions with respect to the collateral and the notes. The severity of losses may depend on the timing and choice of remedy to be pursued following the default event. Because of this uncertainty, the ratings of the Class A-1-A, A-1-B, B, X, C and D notes are placed under review for possible downgrade. MGM MIRAGE: Fitch Downgrades Issuer Default Rating to 'B' --------------------------------------------------------- Fitch Ratings has downgraded MGM MIRAGE's Issuer Default Rating and outstanding debt ratings: -- IDR to 'B' from 'BB-'; -- Senior secured notes to 'BB-/RR2' from 'BB'; -- Senior unsecured credit facility to 'B+/RR3' from 'BB-'; -- Senior unsecured notes to 'B+/RR3' from 'BB-'; -- Senior subordinated notes to 'CCC/RR6' from 'B'. The Rating Outlook remains Negative. The downgrade affects MGM's $7 billion credit facility, $6.5 billion of outstanding senior unsecured debt, $848 million of outstanding senior subordinated debt, and $750 million senior secured notes. The 2-notch downgrade of the IDR reflects Fitch's more pessimistic 2009-2010 operating outlook since Fitch previously downgraded MGM's IDR on Oct. 22, 2008. The downgrade also reflects MGM's continued inability to as yet complete CityCenter financing at the joint venture level, resulting in a greater burden on MGM's balance sheet, as it contributes cash to the project. The 'B' IDR is supported by MGM's reasonable flexibility with respect to raising capital or reducing spending in order to meet CityCenter funding needs and reduce risk related to debt maturities beyond 2009. As indicated in reports dated Dec. 16, 2008 and Jan. 30, 2009, Fitch's gaming outlook for 2009-2010 has become more negative, particularly with respect to destination markets, such as the Las Vegas Strip, where MGM is heavily exposed. As the recession deepened in the last few months, Fitch has also become more concerned regarding the impact of additional supply on the Las Vegas Strip over the next 12-18 months. In addition to the demand pressure from weakening U.S. consumer spending, reduced airline capacity and international demand have contributed to declines in Las Vegas visitation levels during this recession well beyond any economic downturn since at least 1970. At the same time, declines in industrywide hotel RevPAR levels accelerated significantly in fourth quarter 2008 (Q4'08) and the deterioration has continued in Q1'09 with recent industrywide RevPAR declines approaching 20%. Although RevPAR data for Las Vegas is reported on a lag, Fitch believes the city and the LV Strip are seeing similar RevPAR pressure. As a result of the poor operating trends that are not expected to abate for at least the next couple of quarters, Fitch believes companies with heavy Las Vegas Strip exposure will exhibit significant negative operating leverage in upcoming quarters, as they compete to fill hotel rooms and generate traffic. The negative operating leverage will have a significant impact on MGM's credit profile in 2009, in Fitch's view. MGM has taken significant steps to bolster its liquidity position over the last couple of months, which supported its credit rating. The company issued a $750 million secured note in November, announced the sale of Treasure Island for $775 million in December, and announced in January it was scaling back on portions of the CityCenter development. These efforts reduced Fitch's previous concerns regarding the company's ability to meet 2009 debt maturities of nearly $1.3 billion. However, credit market conditions have to date prevented MGM from completing its planned $3 billion CityCenter financing, which is resulting in a greater impact to MGM's balance sheet than previous ratings contemplated. Fitch believes MGM will have difficulty continuing to fund the CityCenter project as currently planned and meet 2010 debt maturities of $1.1 billion, unless additional external funding is secured, as Fitch maintains a circumspect view regarding the level of residential sales proceeds to be realized. In addition, Fitch believes MGM will have difficulty managing under its credit facility 7.5 times debt leverage covenant in 2009, and the covenant tightens in 2010. Fitch currently estimates that MGM's debt-to-EBITDA leverage (on a Fitch-adjusted basis) will be well above 7.5x in 2009, although there are differences in the calculations that could provide MGM with some flexibility with respect to actual covenant compliance. MGM's 'B' IDR continues to be supported by its solid asset portfolio that includes both operating properties and excess real estate; a dominant competitive position on the Las Vegas Strip; and MGM's limited wholly owned capital spending outlook, which is contributing to free cash flow generation on a wholly owned basis despite the operating pressure. The 'B' IDR also incorporates MGM's reasonable flexibility with respect to raising capital or reducing spending in order to meet CityCenter funding needs and/or 2010 debt maturities. If MGM is unable to complete the CityCenter financing at the JV level and the unsecured high yield market remains unaccommodating, Fitch believes MGM could consider: scaling back further on the CityCenter project, an equity issuance, additional asset sales, and additional secured debt issuance. Although the New York-New York secured note issuance used up most or all of the 5% net tangible asset carveout allowed in the credit facility, MGM's bonds contain a 15% carveout, which could provide additional secured debt capacity if bank lenders provide an amendment. The Negative Outlook is based on: -- the potential for further deterioration in operating and macro economic trends; -- the impact of supply growth on the Las Vegas Strip over the next 12-18 months, including CityCenter's opening; -- the looming refinancing risk with respect to 2011 commitments even if concerns are mitigated regarding CityCenter funding and 2010 maturities. In 2011, MGM has another $532 million of bond maturities and the expiration of its $7 billion credit facility. In accordance with Fitch's Recovery Rating methodology, Fitch has established RRs because of the IDR downgrade to 'B'. While concepts of Fitch's RR methodology are considered for all companies, explicit recovery ratings are assigned only to those companies with an IDR of 'B+' or below. At the lower IDR levels, Fitch believes there is greater probability of default so the impact of potential recovery prospects on issue-specific ratings becomes more meaningful and is more explicitly reflected in the ratings dispersion relative to the IDR. As a result, Fitch has taken these rating actions: -- Fitch downgraded the New York-New York secured notes from 'BB' to 'BB-/RR2', reflecting a 2-notch positive differential from MGM's 'B' IDR, as Fitch estimates recovery in the 71%-90% range based on the current capital structure. -- Fitch downgraded MGM's unsecured debt from 'BB-' to 'B+/RR3, reflecting a 1-notch positive differential from MGM's 'B' IDR, as Fitch estimates recovery in the 51%-70% range, based on the current capital structure and assuming the revolver is fully drawn. -- Fitch downgraded MGM's subordinated debt from 'B' to 'CCC', reflecting a 2-notch negative differential from MGM's 'B' IDR, as Fitch estimates little to no recovery in the 0%-10% range. MGT CAPITAL: Failure to Hold Shareholders Meeting Cues NYSE Notice ------------------------------------------------------------------ Tim Paterson-Brown, Chairman and CEO of MGT Capital Investments, Inc., stated, "The Company has been considering various strategic alternatives which would require shareholder approval, and we therefore delayed holding our 2008 annual general meeting. On February 10, 2009, we received notice from the staff of the NYSE Alternext US LLC that the Company does not meet one of the Exchange's continued listing standards because it failed to hold an annual meeting of its shareholders in 2008 as required in Section 704 of the Exchange's Company Guide. "The Company is aware of its obligations under the Company Guide, and plans to hold an annual general meeting before June 30, 2009. The Company has been afforded the opportunity to submit a plan of compliance to the Exchange by March 10, 2009 to demonstrate the ability to regain compliance with this requirement by August 10, 2009. The Company fully intends to do this. If the Company does not submit such a plan or if the plan is not accepted by the Exchange, the Company will be subject to delisting procedures as set forth in Section 1010 and part 12 of the Company Guide." Medicsight PLC (AIM: MDST) is a subsidiary of the Company, and an industry leader in the development of Computer-Aided Detection (CAD) and image analysis software which assists radiologists in the early detection of disease, comments on the recently published CMS (Center for Medicare and Medicaid Services) report that concluded that evidence is inadequate to show that CT colonography is an appropriate colorectal screening test, and, as such, the procedure is not reimbursable. The CMS has requested public comments on this proposed determination pursuant to Section 1862(1) of the Social Security Act. After considering the public comments, it will make a final determination and issue a final decision memorandum. Medicsight is in discussions with its strategic partners and clinical advisors to assess the implication this may have on the Company. Reimbursement is, however, available for diagnostic procedures. The area wherein the CMS proposed decision may impact is in colorectal screening only. David Sumner, Chief Executive of Medicsight, said: "We look forward to the feedback from public comment and hope the decision returns as a positive for Medicsight." About MGT Capital Investments Based in New York, MGT Capital Investments, Inc. (NYSE Alternext US: MGT) -- http://www.mgtci.com/-- is a technology holding company that focuses on investments in the global healthcare information technology market. The Company has two subsidiaries, Medicsight PLC and Medicexchange PLC. Medicsight PLC (AIM: MDST) is a UK-headquartered, research driven, leading developer of computer-aided detection (CAD) and image analysis software for the medical imaging market. The CAD software automatically highlights suspicious areas on computerized tomography (CT) scans of the colon and lung, helping radiologists to identify, measure and analyze potential disease and early indicators of disease. Medicsight's CAD software has been validated using one of the world's largest and most population diverse databases of verified patient CT scan data. Medicsight's ColonCAD(TM) and LungCAD(TM) software products are seamlessly integrated with the advanced 3D visualization workstations of several industry-leading imaging equipment partners. Medicexchange PLC provides medical imaging professionals with a global web portal containing an online sales, jobs and information channel for diagnostic, treatment and surgery planning solutions. This combined with a variety of relevant clinical papers, training materials and content gives these professionals access to information and products that they otherwise would have difficulty accessing. MIDWAY GAMES: Files for Chapter 11 Bankruptcy Protection -------------------------------------------------------- Midway Games Inc. and its U.S. subsidiaries have filed voluntary petitions in the U.S. Bankruptcy Court for the District of Delaware for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filing does not include the company's non- U.S. operations, which will continue business as normal. "This was a difficult but necessary decision," said Midway Chairman, President and CEO Matt Booty. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure." "Midway enters this process with strong underlying fundamentals, as evidenced by solid fourth quarter sales that exceeded expectations in spite of a challenging retail and general economic environment," Mr. Booty added. "Overall, Mortal Kombat vs. DC Universe sales are approaching two million units shipped, TNA iMPACT! has shipped approximately one million units, and our Game Party franchise has sold close to three million units in total." Citing Hudson Square Research analyst Daniel Ernst, Reuters states that Midway's bankruptcy filing wasn't surprising, due to the gloomy outlook from much larger rivals like Electronic Arts and Take-Two, and Midway's thin roster of hit games. According to Reuters, Mr. Ernst suggested that Thomas may eventually try to take Midway private. "This private individual is basically taking it private, and relieving them of all of their obligations, and take the Midway brand and see if they can make something out of it at a later date," the report quoted Mr. Ernst as saying. Court documents say that Midway listed $167.5 million in assets and $281 million in liabilities In its filing with the Bankruptcy Court, the company cited that the November 28, 2008, change in ownership triggered accelerated repurchase obligations relating to two classes of Midway debt, which Midway anticipated it would be unable to satisfy. Reuters relates that in November, a group controlled by Sumner Redstone sold an 87% stake it held in the firm to Acquisition Holdings Subsidiary I LLC. Midway, according to Reuters, was then obligated to repurchase $150 million in notes by February 12. Midway expects that Chapter 11 protection will enable the company to conduct its business operations as usual. To that end, Midway is seeking approval from the court for a variety of First Day Motions enabling the company to continue managing its operations in the ordinary course. These motions are typical of the restructuring process, and approval is regularly granted. About Midway Chicago, Illinois-based Midway Games Inc. -- http://www.midway.com -- is famous for its "Mortal Kombat" franchise. It develops and publishes interactive entertainment software for major videogame systems and personal computers. It has offices throughout the world. As of September 30, 2008, the company's balance sheet showed total assets of $167,523,000 and total stockholders' deficit of $113,510,000. MIDWAY GAMES: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Midway Games Inc. 2704 West Roscoe Street Chicago, IL 60618 Bankruptcy Case No.: 09-10465 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Midway Amusement Games, LLC 09-10466 Midway Home Entertainment Inc. 09-10467 Midway Interactive Inc. 09-10468 Surreal Software Inc. 09-10469 Midway Studios - Austin Inc. 09-10470 Midway Studios - Los Angeles Inc. 09-10471 Midway Games West Inc. 09-10472 Midway Home Studios Inc. 09-10473 Midway Sales Company, LLC 09-10474 Type of Business: The Debtors develop video games and sell them primarily in North America, Europe, Asia and Australia. See: http://www.midway.com/ Chapter 11 Petition Date: February 12, 2009 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtor's Counsel: David W. Carickhoff, Jr., Esq. carickhoff@blankrome.com Michael David Debaecke, Esq. debaecke@blankrome.com Victoria A. Guilfoyle, Esq. guilfoyle@blankrome.com Blank Rome LLP Chase Manhattan Centre 1201 Market Street, Suite 800 Wilmington, DE 19801 Tel: (302) 425-6400 Fax: (302) 425-6464 Investment Banker: Lazard Special Counsel: Dewey & LeBoeuf LLP Claims Agent: Epiq Bankruptcy Solutions LLC The Debtors' financial condition as of Sept. 30, 2008: Total Assets: $167,523,000 Total Debts: $281,033,000 The Debtors' Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank, N.A. Convertible $75,000,000 as Unsecured Indenture Senior Notes Trustee for 6.0% Notes Wells Fargo Bank, N.A. Convertible $75,000,000 as Unsecured Indenture Senior Notes Trustee for 7.125% Notes Acquisition Holdings Loan $40,000,000 Subsidiary LLC c/o Mark Thomas Unsecured Kramer, Levin Naftalis, etc. 1177 Avenue of the Americas New York, NY 10036 National Amusements, Inc. Subordinated $20,147,863 200 Elm Street Loan P.O. Box 9126 Dedham, MA 02027-9126 NBA Properties, Inc. License Royalty/ $17,294,849 Attn: Greg Lassen Settlement PO Box 35240 645 5th Street Agreement Newark, NJ 07193-5240 Tel: (212) 407-8000 Tangible Media, Inc. Marketing $8,675,954 Attn: Mitch Boden 10 East 40th Street 9th Floor 11th Floor New York, NY 10016 Tel: (212) 576-4051 Warner Bros. Interactive License $6,654,203 Entertainment Inc. Attn: Albert Fernandez PO Box 100717 818977-7838 Royalty Pasadena, CA 91189 Artifical Mind & Movement External $2,000,000 Attn: Jean Martin-Masse Developer 416 DeMaisonneuve Quest Suite 600 Montreal, Quebec Canada H3A IL2 Tel: (514) 448-2213 Epic Games, Inc. Licenses $1,975,000 Attn: Anne Dube Royalties 620 Crossroads Boulevard Cary, NC 27518 Tel: (919) 854-0070 Walmart Customer $1,576,035 Attn: Darin Dickson Credits 702 SW 8th Street P.O. Box 116 Bentonville, AR 72716 Tel: (479) 273-6289 Far Sight Technologies Inc. External $1,279,151 Attn: Jay Obernolte Developer PO Box 2895 Big Bear Lake, CA 92315-2895 Best Buy Company Customer $1,114,036 Attn: Jill Hamburger Credits PO Box 9331 7601 Penn Avenue Minneapolis, MN 55440-9312 Telk: (612) 292-7860 Target Northern Operations Customer $934,156 Attn: Troy Peterson Credits PO Box 59251 Minneapolis, MN 55459-0251 Tel: (612) 696-3697 Technicolor Video Services Warehouse $637,769 Attn: Rich Cusolito Shipping Department No. 7658 805 445-4292 Los Angeles, CA 90088-7658 Toys R Us Customer $615,276 Attn: G. Berthel Credits 8181 Mira Mesa Boulevard San Diego, CA 82121 Tel: (973) 617-3500 Ditan/Synergex Canada Inc. Customer $578,316 Attn: Jean-Paul Rehr Credits 6175 Kenway Drive Mississauga, Ontario Canada L5T 2L3 Canada L5T IN6 Tel: (905) 362-8066 CBS Outemet, Inc. Marketing $314,600 Vendor David Zucker Severance $300,000 Multi Packaging Solutions Packaging $287,038 A.A.F.E.S. Headquarters Customer $276,314 Credits KMart Holding Corporation Customer $218,497 Credits Tigon Studios License $200,000 Royalty Hollywood Entertainment Customer $190,982 Credits TNA Entertainment LLC License $160,000 Royalty Professional Films, Inc. License $150,000 Royalty Synergex - Latin America Customer $149,027 Credits Pioneer/JB Marketing Customer $133,353 Credits Eclipse Advertising Marketing $132,687 Advertising Gamestop Dan Dematteo Customer $127,250 Credits Sears Roebuck and Co. Customer $125,495 Credits The petition was signed by Ryan G. O'Desky, treasurer and chief financial officer. MILLENNIUM TRANSIT: Seeks Court OK on 4th DIP Loan From J. Ludvik ----------------------------------------------------------------- Millennium Transit Services, LLC, asks the U.S. Bankruptcy Court for the District of New Mexico for authority to incur postpetition financing from James A. Ludvik in the form of a line credit with a line limit of $117,384. The Fourth DIP Loan would be on the same terms as the previous debtor-in-possession loans made by Mr. Ludvik in the amount of $354,832, $395,023, and $186,728, approved on Oct. 16, Nov. 25, and Jan. 27, 2009, respectively. Mr. Ludvik is an insider of the Debtor. As with the three earlier loans, the Fourth DIP Loan would be secured by a second lien on all estate property. The Fourth DIP loan would cover the Debtor's expenses for February 2009, in accordance with the Fourth DIP Budget. More specifically, the Debtor needs the loan to fund operating deficits while it seeks new contracts and attempts to reorganize, and/or seeks a buyer for its assets. The basic terms of the proposed financing are: Amount: Up to $117,384; Interest Rate: 10%; Repayment Schedule: On plan confirmation or case conversion; Collateral Second lien on all assets of the Debtor, except for avoidance actions Pioneer Bank holds the first lien on the DIP Collateral, securing a loan with a current principal balance of approximately $3,500,000. Roswel, New Mexico-based Millennium Transit Services LLC is a bus manufacturer. The company filed for Chapter 11 relief on Aug. 29, 2008 (Bankr. D. N.M. Case No. 08-12848). Judge Mark B. McFeeley presides over the case. David T. Thuma, Esq., at Jacobvitz, Thuma & Walker, represents the Debtor as counsel. George M. Moore, Esq., at Moore, Berkson & Gandarilla, P.C., represents the Official Committee of Unsecured Creditors as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $10 million and $50 million and the same range in debts. MONEYGRAM INT'L: Board Names Pam Patsley As Executive Chairman -------------------------------------------------------------- The Board of Directors of MoneyGram International, Inc., appointed Pamela H. Patsley as Executive Chairman of the Corporation and elected her Chairman of the Board. Ms. Patsley, 51, has worked with private equity firms to evaluate payment services business opportunities from January 2008 to January 2009. Prior to that, Ms. Patsley was the senior executive vice president of First Data Corp., a provider of electronic commerce and payment solutions, from March 2000 to October 2007 and president of First Data International, an electronic payments processor, from May 2002 to October 2007. Prior to joining First Data, Ms. Patsley was the president and chief executive officer of Paymentech, Inc., a payment processor, from 1991 to 2000. Ms. Patsley is also a director of Molson Coors Brewing Company, a beer brewing company, Texas Instruments Inc., a semiconductor manufacturer, and Dr. Pepper Snapple Group Inc., a beverage manufacturer. There are no arrangements or understandings between Ms. Patsley and the Corporation or any other persons pursuant to which Ms. Patsley was selected as a director. Ms. Patsley does not have a family relationship with any director or executive officer of the Corporation. Ms. Patsley is not expected to become a member of any committee of the Board of Directors. In connection with Ms. Patsley's appointment, she entered into an employment agreement with the Corporation which is effective January 21, 2009 and continues, subject to the agreement's termination provisions, for a period of four years. Under the terms of the agreement, Ms. Patsley is required to devote 50% of her time to the Corporation, receive an initial annual base salary of $500,000, subject to review annually, and is eligible to receive the benefits and incentive compensation described in the parties' agreement. If Ms. Patsley's employment is terminated for a reason other than cause, death or disability, or if she terminates for good reason she is entitled to receive a severance allowance in an amount equal to one times her then-current base salary plus a pro rata portion of her then-current target bonus. In addition, the Corporation will continue certain benefits and accelerate the vesting of a portion of stock option awards. Under the agreement, Ms. Patsley is subject to a one-year post- employment non-competition provision. In addition, in connection Ms. Patsley's appointment, Ms. Patsley received non-qualified stock options to purchase 4,700,000 shares of common stock of the Corporation, with an exercise price of $1.50, which grant was made under the MoneyGram International, Inc. 2005 Omnibus Incentive Plan pursuant to the Non-Qualified Stock Option Agreement dated January 21, 2009. Options for 50% of the shares are considered "Time Vested" and options for 50% of the shares are considered "Performance Vested." Except with respect to 500,000 option shares (allocated pro-rata between Time Vested and Performance Vested), the options will not vest and are subject to forfeiture if the stockholders of the Corporation do not approve an amendment to the Omnibus Plan to remove the limitation on the number of options shares that may be granted to an executive officer in any year. Affiliates of Thomas H. Lee Partners, L.P. have provided an executed Proxy appointing Teresa H. Johnson, the Corporation's Executive Vice President, General Counsel and Secretary, as attorney and proxy to vote "FOR" the amendment to the Omnibus Plan at the next annual or special meeting of stockholders of the Corporation. The Time Vested options will vest in equal installments over four years on the anniversary of the grant date. The Performance Vested options will vest as follows: Options for 50% of the shares will vest when the value of the common stock of the Corporation has reached $3.00 per share for a period of 20 consecutive trading days during the 5-year period following the grant date; and options for 50% of the shares will vest when the value of the common stock of the Corporation has reached $4.50 per share for a period of 20 consecutive trading days during the 5-year period following the grant date. If the shares of common stock of the Corporation are not publicly traded, then vesting for the options that are Performance Vested will be vested in the manner set forth in the stock option agreement. Headquartered in Minneapolis, Minnesota, MoneyGram International Inc. (NYSE: MGI) -- http://www.moneygram.com/-- is a worldwide payment services company. The company's major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. MoneyGram is a New York Stock Exchange listed company with approximately 157,000 global money transfer agent locations in 180 countries and territories. MoneyGram International, Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $7,261,049, total liabilities of $8,104,313, resulting in a stockholders' deficit of $843,264. MoneyGram reported third quarter 2008 financial results. For three months ended Sept. 30, 2008, the company reported net loss of $38,552,000 compared to net loss of $34,292,000 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company incurred net loss of $384,246,000 compared to net loss of $96,490,000 for the same period in the previous year. MONEYGRAM INT'L: Board Names Anthony Ryan as President and CEO -------------------------------------------------------------- The Board of Directors of MoneyGram International, Inc., named Anthony P. Ryan the President and Chief Executive Officer of the Corporation, a position he will also hold at the Corporation's principal operating subsidiaries, and elected him a member of the Board of Directors. Mr. Ryan, 46, previously served as Executive Vice President and Chief Operating Officer from November 2007 to January 2009, Executive Vice President/ President, MoneyGram Global Payment Products and Services from August 2006 to November 2007, Executive Vice President/Division President Global Funds Transfer from November 2005 to August 2006 and Vice President of MoneyGram and General Manager of Global Funds Transfer from June 2004 to November 2005, a position he had held at Travelers Express Company, Inc. (predecessor of MoneyGram Payment Systems, Inc.) since 2001. Mr. Ryan previously served as Chief Financial Officer of Travelers Express Company, Inc. from 1997 to 2001 and as Controller from 1996 to 1997. Prior to joining the Corporation, Mr. Ryan spent 10 years at First Data Corporation, serving most recently as Director of Finance. There are no arrangements or understandings between Mr. Ryan and the Corporation or any other persons pursuant to which Mr. Ryan was selected as an officer. Mr. Ryan does not have a family relationship with any director or executive officer of the Corporation. Mr. Ryan is not expected to become a member of any committee of the Board of Directors. Following the election of Ms. Patsley and Mr. Ryan, the Board is comprised of nine members. The Corporation did not enter into or amend any material plan, contract or arrangement to which Mr. Ryan is a party or in which he participates in connection with his appointment, nor did he receive any grant or award, or modification of any previous grant or award, under any plan to which Mr. Ryan participates. Headquartered in Minneapolis, Minnesota, MoneyGram International Inc. (NYSE: MGI) -- http://www.moneygram.com/-- is a worldwide payment services company. The company's major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. MoneyGram is a New York Stock Exchange listed company with approximately 157,000 global money transfer agent locations in 180 countries and territories. MoneyGram International, Inc.'s balance sheet at Sept. 30, 2008, showed total assets of $7,261,049, total liabilities of $8,104,313, resulting in a stockholders' deficit of $843,264. MoneyGram reported third quarter 2008 financial results. For three months ended Sept. 30, 2008, the company reported net loss of $38,552,000 compared to net loss of $34,292,000 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company incurred net loss of $384,246,000 compared to net loss of $96,490,000 for the same period in the previous year. NOVA BIOSOURCE: Receives Delisting Notice From NYSE --------------------------------------------------- Nova Biosource Fuels, Inc. on February 10, 2009, received a notice from NYSE Alternext US LLC, formerly known as the American Stock Exchange, indicating that the Company was not in compliance with Section 704 of the NYSE Alternext US LLC Company Guide, formerly the American Stock Exchange Company Guide, in that it did not hold an annual meeting of its stockholders during 2008. To maintain its Exchange listing, the Company must submit a plan of compliance by March 10, 2009 advising the Exchange of action it has taken, or will take, that would bring it into compliance with Section 704 of the Company Guide by August 11, 2009. The Corporate Compliance Department of the Exchange will evaluate the plan and make a determination as to whether the Company has made a reasonable demonstration in the plan of an ability to regain compliance with the continued listing standards by August 11, 2009, in which case the plan will be accepted. If the plan is accepted, the Company may be able to continue its listing during the plan period up to August 11, 2009, during which time it will be subject to periodic review to determine whether it is making progress consistent with the plan. If the Company does not submit a plan, if the Company submits a plan that is not accepted or if the plan is accepted but the Company is not in compliance with the continued listing standards at the conclusion of the plan period or does not make progress consistent with the plan during the plan period, the Company may become subject to delisting proceedings in accordance with Section 1010 and Part 12 of the Company Guide. During 2008 and early 2009, the Company has been focused on commissioning its flagship biodiesel refinery in Seneca, Illinois and obtaining the working capital necessary to operate the refinery at full capacity while reducing its general and administrative expenses. The Company intends to submit a plan to the Exchange and hold an annual meeting of stockholders in the late April to May time frame to regain compliance with the Exchange's listing standards. About Nova Biosource Fuels Based in Houston, Texas, Nova Biosource Fuels, Inc. (NBF) -- http://www.novabiosource.com/-- refines and markets ASTM D6751 quality biodiesel and related co-products through the deployment of its proprietary, patented process technology, which enables the use of a broader range of lower cost feedstocks. Nova is focused on building and operating a number of Nova-owned biodiesel refineries, with a goal of attaining production capacity of between 190 to 210 million gallons of biodiesel fuel on an annual basis. Nova's business strategy includes building additional biodiesel refineries with production capacities ranging from 20 to 100 million gallons each per year. PETTERS CO: Panel Taps Brattle Group as Valuation Consultants ------------------------------------------------------------- The official committee of unsecured creditors of Petters Company, et al., asks the U.S. Bankruptcy Court for the District of Minnesota for authority to employ The Brattle Group, Inc. as valuation consultant for certain intellectual property assets belonging to Polaroid Corporation. As the Committee's valuation consultant for Polaroid's intellectual property assets, Brattle will provide advice and guidance on critical valuation issues in connection with a proposed sale of substantially all of Polaroid's assets. Polaroid is a subsidiary of the Debtors, and the sale of its assets will directly impact the rights of creditors in the Chapter 11 cases. As compensation for their services, Brattle's professionals currently bill at these hourly rates: Associates, Senior Associates and Senior Consultants $290-$500 Research Associates & Consultants $255-$360 Research Analysts $200-$310 Administrative $80-$95 Michael Dansky, a Principal at Brattle, assures the Court that the firm does not have an interest materially adverse to the interests of the Debtors' estates, or an interest adverse to any class of creditors or equity security holders, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. About Petters Group Worldwide Based in Minnetonka, Minn., Petters Group Worldwide LLC is named for founder and chairman Tom Petters. The group is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Petters formed the company in 1988. Petters Company, Inc. is the financing and capital-raising unit of Petters Group Worldwide, LLC. Petters Company, Inc. Petters Group Worldwide, LLC, and nine other debtor-affiliates filed separate petitions for Chapter 11 relief on Oct. 11, 2008 (Bankr. D. Minn. Lead Case No. 08-45257). James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P., represents the Debtors as counsel. Connie Lahn, Esq., and David E. Runck, Esq., at Fafinski, Mark & Johnson, P.A. represent the Unsecured Creditors Committee as counsel. In its petition, Petters Company, Inc. listed debts of between $500 million and $1 billion, while its parent, Petters Group Worldwide, LLC listed debts of not more than $50,000. As reported in the Troubled Company Reporter on Oct. 7, 2008, Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Minnesota on Oct. 6, 2008 (Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Inc., Sun Country's parent company. PETTERS COMPANY: Panel May Retain Huron as Financial Advisor ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Minnesota has granted the Official Commitee of Unsecured Creditors of Petters Company, Inc., et al., permission to retain the consulting firm of Huron Consulting Group, Inc. as its financial advisor in connection with the Debtors' Chapter 11 cases, effective Dec. 3, 2008. As the Committee's financial advisor, Huron will mainly provide advice and guidance on the complex financial issues presented by the Debtors' Chapter 11 cases, including advising the Committee regarding the Debtors' business plans, and advising the Committee with respect to available capital restructuring, sale and financing alternatives. As compensation for their services, Huron's professionals' currently bill at these hourly rates: Managing Director $650 Director $450 Manager $400 Associate $320 Analyst $235 Huron has informed the Committee that it does not hold or assert a prepetition claim against the Debtors, although it does hold a prepetition claim in the amount of $218,088 against Polaroid Corporation, a subsidiary of the Debtors. Michael Kennely, a Regional Managing Dirctor for the Central Region for Huron, assured the Court that the firm does not represent any interest adverse to the Debtors' estate or its creditors in connection with these Chapter 11 cases, and that Huron is a "disinterested person" as defined in Sec. 101(14) of the Bankruptcy Code. About Petters Group Worldwide Based in Minnetonka, Minn., Petters Group Worldwide LLC is named for founder and chairman Tom Petters. The group is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Petters formed the company in 1988. Petters Company, Inc. is the financing and capital-raising unit of Petters Group Worldwide, LLC. Petters Company, Inc. Petters Group Worldwide, LLC, and nine other debtor-affiliates filed separate petitions for Chapter 11 relief on Oct. 11, 2008 (Bankr. D. Minn. Lead Case No. 08-45257). James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P., represents the Debtors as counsel. Connie Lahn, Esq., and David E. Runck, Esq., at Fafinski, Mark & Johnson, P.A. represent the Unsecured Creditors Committee as counsel. In its petition, Petters Company, Inc. listed debts of between $500 million and $1 billion, while its parent, Petters Group Worldwide, LLC listed debts of not more than $50,000. As reported in the Troubled Company Reporter on Oct. 7, 2008, Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Minnesota on Oct. 6, 2008 (Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Inc., Sun Country's parent company. PHH CORP: Loses Investment Grade Status; S&P's Down to 'BB+/B' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on PHH Corp., including its counterparty credit rating to 'BB+/B' from 'BBB-/A-3'. The outlook is negative. "The downgrade reflects earnings weakness in PHH's mortgage and fleet-management businesses, which most recently has been driven by the turmoil in the mortgage and credit markets," said Standard & Poor's credit analyst Rian M. Pressman, CFA. PHH's mortgage business has underperformed for a number of years; however, the relatively stable earnings generated by the fleet-management business had offset this. Although the fleet-management business remains profitable, lost business momentum and increased funding costs have reduced the magnitude of this offset, contributing to what S&P expects to be a wider consolidated net loss for full-year 2008. (Consolidated net earnings were marginally negative for 2007 and 2006.) The difficult operating environment for prime mortgage originators during the past few years has challenged the profitability of PHH's mortgage business--an outsource provider of mortgage production and servicing to third parties. A variety of factors have contributed to this earnings weakness: thin margins on prime mortgage loans, declining origination volumes industry-wide, fair value adjustments to mortgage servicing rights, hedge losses, write-downs on mortgages held for sale, and nonrecurring charge- offs associated with goodwill and severance. The adverse credit market environment has also pressured PHH's fleet-management business, resulting in weaker-than-expected earnings. In S&P's opinion, the prolonged uncertainty related to PHH's aborted agreement to sell itself to General Electric Capital Corp. (AAA/Negative/A-1+) caused a deceleration of business momentum, resulting in the loss of some existing and prospective clients. (Management has stated that client signings normalized during 2008.) More recently, turmoil in the credit markets has increased the funding costs associated with this business, which is linked to bank-sponsored asset-backed commercial paper multiseller conduits. Management has been working to pass these higher interest costs to its clients; however, because pricing is negotiated at lease inception and remains in place until the term ends, the effect may take up to three years to cycle fully into earnings. The credit facilities used to fund the fleet-management business expire on Feb. 26, and management is seeking to extend or add incremental capacity for new vehicle purchases. (The existing facilities will amortize if not renewed, with proceeds from client lease payments providing the funds to retire outstanding debt.) Maintenance of the current rating depends partially on PHH's ability to continue financing vehicle purchases for clients, because S&P views this as an essential baseline service that allows PHH to offer a host of higher-margin ancillary services. Management has been working to establish a bank, either through a de novo or acquisition strategy. Successful execution of this initiative may improve S&P's opinion of PHH's funding profile. Formation of a depository would allow PHH to retain the mortgage- related escrow deposits that it currently allocates to other financial institutions, thus potentially providing a relatively stable cost-effective source of funding. S&P is also monitoring how existing and prospective government programs to boost the credit and housing markets may directly or indirectly help PHH. For example, the fleet-leasing industry has been lobbying for inclusion in the Term Asset-Backed Securities Loan Facility. Even if these efforts are not successful, programs such as the TALF could benefit PHH indirectly by bringing liquidity back to the asset-backed securities market. PHH's mortgage origination and servicing capabilities might also benefit from various government initiatives that aim to revive the mortgage market and stem home foreclosures. The negative outlook reflects the continued unsettled conditions in the mortgage and credit markets and the negative effect this is having on PHH's profitability. S&P could lower the rating if overall profitability is not restored by year-end 2009 or PHH is not able to maintain adequate funding capacity for the fleet- management business. A more favorable outlook could result from more stable conditions in the mortgage and credit markets, and if PHH successfully restores profitability and diversifies its sources of funding. PLIANT CORPORATION: Wants to Access $75 Million BoNY DIP Facility ----------------------------------------------------------------- Pliant Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to access up to $75 million in postpetition financing under a debtor- in-possession agreement dated Feb. 10, 2009, with a syndicate of financial institutions led by The Bank of New York Mellon, as administrative agent; and DDJ Capital Management LLC, WCP LP, WCIP LP, WCOP Ltd., and Wayzata Opportunities Fund, as lenders. The Debtors and BoNY are parties to an indenture dated June 14, 2007, wherein the Debtors issued $24 million in 18 senior subordinated notes ("First Lien Notes") guaranteed by Pliant Corporation International, Pliant Film Products of Mexico Inc., Pliant Packaging of Canada, Uniplast Inc. and Uniplast US. Inc. As of their bankruptcy filing, the Debtors owe $26.3 million to the bank. The obligations under the subordinated notes indenture are unsecured. The ad hoc committee of certain holders of 11-1/8% senior secured notes due 2009 ("Second Lien Notes") objects the Debtors' request to obtain DIP financing, arguing that the proposed DIP facility -- which is offered by a subset of First Lien Lenders -- violates an intercreditor agreement dated Feb. 17, 2004, between the First Lien and Second Lien Lenders. The financing, according to the committee, is only in the best interest of one group of creditors, the Debtors' first lien noteholders. Furthermore, the committee said the Debtors and noteholders have held back information from other parties-in-interest, including the lock-up agreement with certain of the noteholders and any restructuring milestones, among other things. Accordingly, the noteholders committee asks the Court to direct the Debtors provide a complete adequate protection package to the second lien committee and other holders of second lien notes. Proceeds of the loans will be used to fund working capital and other general corporate needs and pay the Chapter 11 and CCAA expenses including professional fees. In addition, the Debtors provided a budget, wherein they plan to use any funds advanced during the interim period under the commitment to pay (i) payroll expenses; (ii) post-petition trade amounts; (iii) DIP financing costs and interest; (iv) various prepetition claims that are subject of other motions filed concurrently, as authorized by this Court; and (v) working capital and other general corporate purposes. Salient terms of the debtor-in-possession agreement are: Borrowers: Pliant Corporation Guarantors: Pliant Packaging of Canada LLC and Uniplast Industries Co. DIP Agent: The Bank ofNew York Mellon DIP Lenders: DDJ Capital Management LLC, WCP L.P., WCIP L.P., WCOP Ltd., and Wayzata Opportunities Fund II L.P. DIP Facility: A non-amortizing multiple draw superpriority secured term loan facility in an aggregate principal amount not to exceed $75,000,000. No portion of the commitment will be available prior to the closing date and the Court's entry of the interim order. The loans under the DIP facility may be incurred during the availability period as follows: i) an initial drawing upon the entry of the Interim Order in an aggregate principal amount of $25,000,000; and ii) upon entry of the final order (a) up to three additional drawings upon five business days prior written notice, each in a principal amount not less than $5,000,000 and, in the aggregate for such three drawings, a principal amount not to exceed $25,000,000, and iii) subject to the satisfaction of the foreign debt draw conditions, a drawing upon not less than five business days prior written notice, in a principal amount not to exceed $25,000,000. Closing Date. February 17,2009. Maturity: All obligations under the DIP facility will be due and payable on the earliest of i) the nine-month anniversary of the closing date; ii) the effective date of a plan, iii) if the final order has not been entered, the date that is 45 days after the Debtors' bankruptcy filing, and iv) the acceleration of the Loans and the termination of the commitments upon the occurrence of an event of default. Interest: The applicable margin plus the higher of (x) the rate that the administrative agent announces from time to time as its prime lending rate and (y) 1/2 of 1% in excess of the overnight federal funds rate, payable monthly in arrears; provided, however, that in no event shall the Base Rate at any time be less than 5.00%; or The applicable margin plus the current LIBOR rate as quoted by the administrative agent, adjusted for reserve requirements, if any, and subject to customary change of circumstance provisions, for interest periods of one, two, three or six months, payable at the end of the relevant interest period, but in any event at least quarterly; provided, however, that in no event shall the LIBOR Rate at any time be less than 4.00%. Applicable Margin means a rate per annum equal to (x) 11.00%, in the case of Base Rate Loans, and (y) 12.00%, in the case of LIBOR Rate Loans. Interest will be calculated on the basis of the actual number of days elapsed in a 360 day year. Default Interest. Loans will bear interest at an additional 2.00% per annum. The DIP facility is subject to a $3,000,000 carve-out to pay any unpaid fees and expenses incurred by professionals retained by the Debtors or any statutory committee. To secure their DIP obligations, the lenders will be granted superpriority administrative expense claims status over any and all administrative expenses against the Debtors. The DIP agreement contains customary and appropriate events of default. About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany and Mexico. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. * * * As reported by the Troubled Company Reporter on Oct 20, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on Pliant to 'CCC' from 'B-'. At the same time, Standard & Poor's lowered the issue rating on the company's first-lien senior secured notes to 'CCC-' from 'B-' and the second-lien secured notes to 'CC' from 'CCC'. "The downgrade reflects heightened concerns regarding Pliant's ability to refinance pending debt maturities during the next few months," said Standard & Poor's credit analyst Ket Gondhan, "particularly given the company's highly leveraged financial profile and challenging credit market conditions." PLIANT CORP: Taps Epiq Bankruptcy as Claims and Noticing Agent -------------------------------------------------------------- Pliant Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to employ Epiq Bankruptcy Solutions LLC as their claims, noticing and balloting agent. The firm will undertake these procedures in accordance to an agreement dated Feb. 7, 2009, including, but not limited to; a) notify all potential creditors of the filing of the chapter 11 petitions and of the setting of the first meeting of creditors pursuant to section 341(a) of the Bankruptcy Code; b) file affidavits of service for all mailings, including a copy of each notice, a list of persons to whom such notice was mailed, and the date mailed; c) mail the Debtors' disclosure statement, plan, ballots and any other related solicitation materials to holders of impaired claims and equity interests; d) receive and tally ballots and responding to inquiries respecting voting procedures and the solicitation of votes on the plan; and e) provide any other distribution services as are necessary or required. Furthermore, the firm will also undertake these procedures: a) maintain an official copy of the Debtors; schedules, listing creditors and amounts owed; b) furnish a notice of the last date for the filing of proofs of claim and a form for filing a proof of claim to creditors and parties-in-interest; c) docket all claims filed and maintain the official claims register on behalf of the clerk and provide to the clerk an exact duplicate thereof; d) specify in the claims register for each claim docket (i) the claim number assigned, (ii) the date received, (iii) the name and address of the claimant, (iv) the filed amount of the claim, if liquidated, and (v) the allowed amount of the claim; and e) recording all transfers of claims and providing notices of the transfer as required pursuant to Bankruptcy Rule 3001(e). The firm's professionals and their compensation rates are: Designation Hourly Rate ----------- ----------- Senior Consultant $295 Senior Case Manager $225-$275 Case Manager (Level 2) $185-$220 IT Programming Consultant $140-$190 Case Manager (Level 1) $125-$175 Clerk $40-$60 Daniel C. McElhinney, executive director of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany and Mexico. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. * * * As reported by the Troubled Company Reporter on Oct 20, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on Pliant to 'CCC' from 'B-'. At the same time, Standard & Poor's lowered the issue rating on the company's first-lien senior secured notes to 'CCC-' from 'B-' and the second-lien secured notes to 'CC' from 'CCC'. "The downgrade reflects heightened concerns regarding Pliant's ability to refinance pending debt maturities during the next few months," said Standard & Poor's credit analyst Ket Gondhan, "particularly given the company's highly leveraged financial profile and challenging credit market conditions." PLIANT CORP: Files Prepackaged Plan and Disclosure Statement ------------------------------------------------------------ Pliant Corporation and its debtor-affiliates delivered on Feb. 11, 2009, to the Hon. Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware a prepackaged joint Chapter 11 plan of reorganization and a disclosure statement explaining the plan. Overview of the Plan The Plan is based primarily upon a prepetition compromise and lockup agreement with the Debtors' first lien noteholders. On Feb. 11, 2009, the Debtors entered into a restructuring and lockup agreement with the holders of more than 66-2/3% of their first lien notes under which holders agreed to support the proposed financial restructuring, subject to the terms and conditions contained in the lockup agreement, described in the plan. At its core, the plan provides that: i) the Debtors' first lien notes will be exchanged for 100% of the new common stock to be issued under the plan, subject to dilution by the new warrants and a management equity incentive plan contemplated by the plan; ii) to the extent classes containing the claims of Second Lien noteholders, senior subordinated noteholders, and general unsecured claims vote to accept the Plan, holders of claims in such classes will receive a pro rata distribution of new warrants to be issued pursuant to the plan; iii) the Debtors' prepetition credit facility claims will be paid in full in cash; and iv) claims and interests of Pliant's existing equity holders will be extinguished. The plan classified interests against and liens in the Debtors in 11 classes. The classification of treatment of claims and interests are: Treatment of Claims Type Estimated Estimated Class of Claim Treatment Amount Recovery ----- -------- --------- --------- --------- N/A Administrative Unimpaired unstated unstated N/A DIP Facility Unimpaired unstated unstated N/A Priority Tax Unimpaired unstated unstated 1 Priority Non-Tax Unimpaired unstated unstated 2 Other Secured Unimpaired unstated unstated 3 Prepetition Unimpaired unstated unstated Credit Facility 4 First Lien Notes Impaired unstated unstated 5 Unsecured Impaired unstated unstated 6 Senior Impaired unstated unstated Subordinated Notes 7 Intercompany Impaired unstated unstated 8 Section 51O(b) Impaired unstated unstated 9 Pliant Preferred Impaired unstated unstated Stock Interests 10 Pliant Impaired unstated unstated Outstanding Common Stock Interests 11 Subsidiary Unimpaired unstated unstated Interests Holders of Class 4, 5, 6, and 7 claims are entitled to vote to accept or reject the plan. Holders of Class 1 priority non-tax claims and Class 2 other secured claims will be reinstated. Each holder of Class 3 prepetition credit facility claims will be paid in full in cash on the plan's effective date from the proceeds of the exit facility -- including all unpaid interest accrued at the non-default contract rate and any unpaid professional fees and expenses. Holders of Class 4 first lien notes claims will receive in full and complete settlement, release and discharge of such Claim including any administrative expense Claim asserted by the holders under the terms of final DIP Order; pro rata share of 100% of the new common stock issued and outstanding on the plan's effective date. Holder of Class 5 senior subordinated notes claims and Class 6 unsecured claims will not receive or retain any property under the Plan on account of their unsecured claim. Holders 7, 8, 9, and 10 claims will not receive any property or interest on account of such portion under the plan. Holders of Class 11 subsidiary interests will retain their subsidiary interests. About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany and Mexico. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. * * * As reported by the Troubled Company Reporter on Oct 20, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on Pliant to 'CCC' from 'B-'. At the same time, Standard & Poor's lowered the issue rating on the company's first-lien senior secured notes to 'CCC-' from 'B-' and the second-lien secured notes to 'CC' from 'CCC'. "The downgrade reflects heightened concerns regarding Pliant's ability to refinance pending debt maturities during the next few months," said Standard & Poor's credit analyst Ket Gondhan, "particularly given the company's highly leveraged financial profile and challenging credit market conditions." POLYMER GROUP: S&P Downgrades Corporate Credit Rating to 'B' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Polymer Group Inc., including the corporate credit rating to 'B' from 'B+'. The outlook is negative. The downgrade reflects the heightened concerns related to Polymer Group's ability to maintain compliance with its financial covenants in a challenging operating environment. The leverage covenant requirement steps down to 3.5x from 4.0x at the end of the first quarter 2009 and remains at this level through 2009 until it steps down subsequently at the end of the first quarter 2010. The downgrade reflects S&P's expectation that weak global economic conditions this year could hinder the company's volume growth targets, further pressuring its ability to improve its financial profile. Although covenant compliance is a key concern this year, S&P takes some comfort from the company's reasonable credit metrics relative to ratings expectations, and its flexibility to use cash on hand for debt reduction, and its implementation of several short-term cost-cutting initiatives which S&P expects will support operating performance. POLYONE CORPORATION: S&P Downgrades Corp. Credit Rating to 'B-' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on PolyOne Corp., including its corporate credit rating to 'B-' from 'B'. At the same time the ratings were placed on CreditWatch with negative implications. As of Sept. 30, 2008, the company had about $730 million in adjusted debt outstanding. S&P adjusts debt to include capitalized operating leases, an accounts receivable securitization program, and tax-adjusted pension benefits. "The downgrade reflects S&P's expectation for constrained liquidity in 2009 as a result of weaker operating results," said Standard & Poor's credit analyst Paul Kurias. "In particular, S&P is concerned that financial covenant compliance in 2009 will be a challenge." S&P will resolve the CreditWatch in the next few months after reviewing the impact of weaker markets in 2009 on the company's earnings, liquidity and covenant compliance, and the company's attempts at bolstering its operating performance and liquidity. S&P could lower ratings if operating performance deteriorates more than expected or particularly if availability under the receivable facility is only marginally more than the $40 million threshold and cushions under the fixed-charge covenant ratio have eroded further. PolyOne, formed through the merger of Geon Co. with M.A. Hanna Co., has revenues of about $2.6 billion. The company operates through six business groups. The largest of these is the Performance Products And Solutions group, which includes PolyOne's vinyl business, which produces thermoplastic compounds to meet requirements of molded and extruded plastic producers, such as makers of window frames and pipes and fittings. PolyOne also produces specialty resins and engineered materials in its international color and engineered materials business. The distribution business includes the sale of compounds not produced by the company. In addition, as part of its resins and intermediates business, PolyOne holds a 50% interest in the SunBelt chlor-alkali joint venture with Olin Corp. (BB+/Stable/--). POMARE LTD: Gets Final Ok to Borrow $5 Million from North Tustin ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii granted Pomare Ltd. permission to obtain postpetition financing of up to $5,000,000 on a secured and superpriority basis from North Tustin Parners, Inc., as set forth in the DIP Credit Agreement. The Debtor is authorized to draw up to $300,000 in funds from the DIP Loan to pay for the costs incurred in complying with the requirements of the Letter of Intent between the Debtor and the Trustees of the Estate of Bernice Pauahi Bishop, dated Sept. 30, 2008, related to the completion of the escalators referred in said LOI. The Debtor is futher authorized to draw up to $1,500,000 on said DIP Loan to cover the cost of construction of the retail space referred to in said LOI, without further order of the Court, or the consent of the Official Committee of Unsecured Creditors, provided that the Debtor will only draw said funds pursuant to the terms of a construction contract for said improvements approved by the Committee or pursuant to a further order of the Court. The Debtor told the Court that it has been unable to obtain post- petition unsecured credit allowable as an administrative expense under Sec. 364(a) of the Bankrutpcy vcoe, or secured credit on terms and conditions more favorable to its estate than those offered by Lender. Subject to the "Carve Out" and to any prior valid, perfected and non-avoidable liens encumbering the Nimitz Property as of the date of the entry of this Order, all advances made by the Lender to the Debtors shall: a. be granted super-priority administrative expense status with priority over all administrative expenses of and unsecured claims against the Debtor. b. be secured by a first priority, fully perfected security interest in and lien, on all pre-petition and postpetition personal property of the Debtor's estate, whether existing or acquired after the entry of this Order, that is not subject to a prior valid, perfected and non-avoidable liens, c) be secured by a first priority security interest in the Debtor's leasehold interest in the "Nimitz property". A summary of the terms of the final DIP financing is presented below: Lender: North Tustin Partners, Inc. Amount: Advances up to $5,000,000 Term: 24 months Purpose: working capital and other budgeted expenses Collateral and Priority: 1) First Mortgage on Debtor's leasehold interest in the Nimittz Property; 2) Security interest in all other unencumbered personal property assets of the Debtor pursuant to Sec. 364(c)(2) of the Bankruptcy Code; and 3. Super-priority over all administrative laims pursuant to Sec. 364(c)(2) of the Bankruptcy Code. Iterest Rate: Fixed at 7%. Borrowing Base: Equal to the sum of (i) $2,500,000; (ii) 80% of Eligible Receivables, plus (iii) 70% of Eligible Inventory. Loan Fee: $10,000 Monthly Servicing Fee: $1,000 Carve-Out: For the unpaid professional fees and expenses incurred by the Debtor, and the Committee of Unsecured Creditors, if any, as and when allowed on a final basis pursuant to Sec. 330 of the Bankruptcy Code, in an aggregate not to exceed $250,000, (ii) fees payable to the United States Trustee and (iii) unpaid fees and expenses of a Chapter 7 trustee appointed following conversion of the Chapter 11 Case to cases under Chapter 7 of the Bankruptcy Code. Indemnification: Debtor shall indemnify and hold Lender harmless from any and all liability arising from the extension of the DIP Loan, or the relationship created between Borrower and Lender, including all awards, judgments, orders, costs, expenses and attorneys' fees reasonably incurred by Lender, provided that the Debtor shall not be liable to Lender for any protion of such liability resulting from Lender's gross negligence or willful misconduct. A full-text copy of the Court's Final DIP Order is available for free at http://bankrupt.com/misc/PomareLtd_FinalDIPOrder.pdf Based in Honolulu, Hawaii, Pomare Ltd. dba. Hilo Hattie, makes and sells men's clothing. The company filed for Chapter 11 relief on Oct. 2, 2008 (Bankr. D. Hawaii Case No. 08-01448). Chuck C. Choi, Esq., and James A. Wagner, Esq., at Wagner Choi & Verbrugge, represent the Debtor as counsel. Alexis M. McGinness, Esq., and Ted N. Pettit, Esq., at Case Lombardi & Pettit, represent The Official Committee of Unsecured Creditors as counsel. PULTE HOMES: Board Appoints Michael J. Schweninger as VP -------------------------------------------------------- On February 10, 2009, the Board of Directors of Pulte Homes, Inc., appointed Michael J. Schweninger as Vice President and Controller, and the principal accounting officer, of the Company effective March 2, 2009. Mr. Schweninger, age 40, joined the Company in November 2005 as Director of Corporate Audit and most recently served as Director - Finance & Accounting Process Improvement. Before joining the Company, Mr. Schweninger served as Director of Audit and Special Projects for TriMas Corporation from January 2004 to November 2005, and as Director, Transaction Advisory Services Group, at PricewaterhouseCoopers LLP from May 2002 to January 2004. Mr. Schweninger will receive an annual base salary of $250,000. He will also participate in the Annual Program and the Long Term Program under the Company's 2008 Senior Management Incentive Plan. Under the AIP, Mr. Schweninger will have a 2009 target award of 60% of his base salary, the payout for which can be higher or lower depending on the Company's performance in relation to performance goals set by the Compensation Committee of the Board of Directors. The AIP award is subject to pro-ration based on the portion of the 2009 annual incentive period actually worked. Under the LTI, Mr. Schweninger will have a target award for the 2009- 2011 performance cycle of 60% of his base salary, the payout for which can be higher or lower depending on individual performance and the Company's financial performance in relation to performance goals set by the Compensation Committee of the Board of Directors. Mr. Schweninger's LTI Award is subject to pro-ration based on the portion of the LTI performance period actually worked. The payment of any award earned by a participant for the 2009 fiscal year under the LTI is conditioned upon the continued employment of the participant by the Company until December 31, 2011 (subject to earlier vesting in specific circumstances), at which time the award will vest and become payable. Mr. Schweninger may also receive equity grants from time to time at the discretion of the Compensation Committee and will participate in employee benefit plans generally available to all employees on the same terms as similarly situated employees. 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-'. QUALITY DISTRIBUTION: S&P Gives Neg. Outlook; Affirms 'B-' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Quality Distribution Inc. to negative from stable. At the same time, S&P affirmed its ratings on the company, including the 'B-' long-term corporate credit rating. "The outlook revision reflects weaker-than-expected financial performance and stretched credit metrics despite the company's cost-cutting efforts and modest debt reduction during the fourth quarter of 2008, as well as concerns regarding refinancing risk associated with its senior subordinated notes due November 2010," said Standard & Poor's credit analyst Anita Ogbara. The ratings on Tampa, Florida-based Quality Distribution Inc. reflect its market position as the largest bulk tank truck carrier in North America, which is more than offset by its low-margins, participation in a highly fragmented industry, and deteriorating financial profile. Through a network of more than 160 terminals, Quality Distribution LLC, a wholly owned subsidiary, transports a broad range of chemical products. The company also provides customers and affiliates with supplemental services such as tank washing. Although the company benefits from a strong market share in an industry with high barriers to entry, its customers often have transportation alternatives (e.g., rail, barge), depending on the nature of the shipment. The company complements its own fleet operations through the use of affiliates, independent firms contracted by Quality Distribution to operate their terminals exclusively for Quality Distribution; and owner operators, independent contractors who supply one or more drivers, tractors, and tanks for Quality Distribution and affiliate use. This business model shifts fixed costs to variable costs for Quality Distribution, compared with a network that is wholly owned and uses company drivers. This model also allows the company to expand with minimal capital investment for fixed assets. Despite Quality Distribution's meaningful market position, demand for the company's chemical transportation services has deteriorated over the past few quarters. In the third quarter, volumes were down by about 10%. At the same time, higher insurance expenses and rising compensation costs have had a material impact on the company's profitability; operating margins have declined to approximately 8% versus 10% previously. In addition, the company has experienced weaker-than-expected operating profitability due to its conversion of affiliates to company-owned terminals, and expenses related to the acquisition of Boasso America Corp., which was completed in December 2007. Cost reduction measures, including headcount reduction, yielded about $20 million of savings in 2008 and another $10 million are expected in 2009. This should help the company improve margins, given the difficult operating environment. As of Sept. 30, 2008, key credit measures were stretched for the rating; with total debt to EBITDA at 10x and EBITDA to interest coverage at about 1.3x. Key credit measures have begun to show slight improvement as a result of the company's personnel reductions, other profitability initiatives, and debt pay down during the fourth quarter of 2008. S&P expects Quality's financial results and credit metrics to improve in 2009 in response to various operating initiatives and further debt reduction. However, S&P may lower the ratings if liquidity becomes constrained resulting in combined cash and ABL availability below $25 million, or if there are increased refinancing risks associated with the senior subordinated notes due November 2010. Given these concerns, S&P considers an outlook revision to stable unlikely in the near to intermediate term. RATHGIBSON INC: Liquidity Concerns Prompt Moody's Junk Ratings -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of RathGibson (including the corporate family rating to Caa2 from B3). The speculative grade liquidity rating was also lowered to SGL-4 from SGL-3. The outlook is revised to negative from stable. The downgrade reflects Moody's concerns about RathGibson's liquidity position and the sustainability of its capital structure. The company's cash flow is primarily tied to capital spending in end markets that have been adversely impacted by deteriorating macroeconomic conditions. RathGibson is entering into what may be a protracted economic downturn with weaker than expected performance and a highly leveraged capital structure. Moody's believes that these characteristics, combined with RathGibson's small size, provide less flexibility to navigate challenging macroeconomic and end market conditions. As a result, in Moody's opinion, there is a meaningful degree of uncertainty surrounding RathGibson's ability to operate over the near term without requiring external financing or changes to the capital structure. The downgrade to SGL-4 from SGL-3 signals the heightened liquidity risk. Moody's anticipates that EBITDA is unlikely to cover fixed charges and RathGibson could be heavily reliant on its $90 million revolving credit facility to support operations over the next twelve months. The company had approximately $63 million outstanding under the revolver and approximately $26.2 million of availability at 09/30/08. Moody's believes that the combination of evergreen borrowings from acquisitions and a declining borrowing base could pressure RathGibson's liquidity profile over the near-term. While the company should be able to source cash from working capital in a declining revenue environment, it remains uncertain as to whether RathGibson will be able to reduce borrowings commensurate with the expected contraction of the facility's borrowing base. Moreover, Moody's anticipates that the company will likely need to rely on its revolver to fund cash interest payments given Moody's expectation for cash consumption. The negative outlook considers that, given Moody's expectation that end markets will remain very weak, RathGibson's credit profile is likely to remain under pressure over the near-term. The ratings could experience further downward pressure should the company's liquidity deteriorate beyond Moody's expectations, or in the event of a change in the capital structure. Ratings affected by the actions include: -- Corporate Family Rating lowered to Caa2 from B3 -- Probability of Default Rating lowered to Caa2 from B3 -- Senior unsecured note rating lowered to Caa2 from B3; LGD point estimate remains at LGD 3; 45% -- Outlook changed to negative from stable -- SGL Rating lowered to SGL-4 from SGL-3 The prior rating action was on May 12, 2008, when the corporate family rating of RathGibson was downgraded to B3 from B2. RathGibson'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 RathGibson's core industry and RathGibson's ratings are believed to be comparable to those of other issuers of similar credit risk. RathGibson is a manufacturer of highly engineered premium stainless steel and alloy welded and seamless tubular products. The company is headquartered in Lincolnshire, Illinois and has operations in Janesville, Wisconsin; North Branch, New Jersey; Clarksville, Arkansas; and Marrero, Lousiana. During the twelve- month period ending September 30, 2008, RathGibson had approximately $344 million of revenues. ROBERT ZVEIBIL: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Robert Zveibil Sally Dorothy Zveibil 12641 N. Stonebrook Cir. Davie, FL 33330 Bankruptcy Case No.: 09-12350 Chapter 11 Petition Date: February 11, 2009 Court: Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Zach B. Shelomith, Esq. zshelomith@lslawfirm.net 2699 Stirling Rd # C401 Ft Lauderdale, FL 33312 Tel: (954) 920-5355 Fax: (954) 920-5371 Estimated Assets: $1 million to $10 millin Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Washington Mutual Bank Investment Real $9,973,854 7757 Bayberry Rd Property; Jacksonville, FL 32256 Conventional Real Estate Mortgage; secured: $2,813,500; creditline secured $ 370,207; senior lien: $1,062,418 Countrywide Conventional Real $1,433,467 450 American St Estate Mortgage Simi Valley, CA 93065 Homecome Fin Mortgage $347,587 2711 N Haskell Dallas, TX 75204 Countrywide Home Loans Investment Real $323,414 Wachovia Conventional Real $284,732 Estate Mortgage Steve Tibstra Personal Loan $164,000 Eric Brand personal loan $71,500 BankUnited secured: $235,000 $67,939 senior lien: $323,414 AMEX CreditCard $38,284 Bank of America CreditCard $37,945 SEMGROUP LP: Asphalt Biz Sale Could Violate Lender's Forbearance ---------------------------------------------------------------- SemGroup Energy Partners, L.P., said in a regulatory filing that SemGroup, L.P., without revenues from its asphalt assets, may be unable to meet covenants under its forbearance agreement with lenders. SemGroup Energy made the disclosure in connection with SemGroup, L.P.'s February 6 motion in the Bankruptcy Court for the District of Delaware requesting approval of the sale of its asphalt-related assets. SemGroup L.P. intends to solicit bids and hold an auction on February 23, 2008 for the sale of such assets. If the auction is successful, a hearing to approve the sale will be conducted on February 26, 2008. If the auction is not successful, SemGroup L.P. intends to immediately reject the Terminalling Agreement and begin liquidating its remaining asphalt inventory and wind down its asphalt business. If the contract is rejected, there is significant uncertainty as to the Partnership's revenues related to its asphalt assets and there is substantial risk that the Partnership's asphalt assets may be idle during 2009 and subsequent years. SemGroup Energy said that SemGroup LP won't be able to meet covenants, including the minimum liquidity and minimum receipt requirements, under its forbearance agreement with its senior secured lenders pursuant to which such lenders have agreed to forbear from exercising their rights and remedies arising from SemGroup Energy's events of default under its credit agreement. "Even if the auction is successful, [SemGroup L.P.] may have to negotiate a new terminalling and storage contract with the buyer of the Private Company's asphalt assets and such agreement may not be on as favorable terms as the Terminalling Agreement." SemGroup L.P.'s Motion SemGroup, L.P.'s debtor affiliate SemMaterials, L.P. is seeking approval from the U.S. Bankruptcy Court for the District of Delaware to (i) a Feb. 23 auction and sale of all or substantially all of the 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. 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 aforementioned 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. Costs 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) SHANDONG ZHOUYUAN: Completes CNY1-Mil. Financing with Investors --------------------------------------------------------------- Shandong Zhouyuan Seed and Nursery Co., Ltd. completed financing by two individual investors, Zhou Jian and Luo Jing though two private placements and received proceeds in the aggregate amount of CNY1,000,000. As reported by the Troubled Company Reporter on January 26, 2009, Shandong Zhouyuan entered into Stock Transfer Agreements with Zhou Jian, the company's director, and Luo Jing, an individual residing in the People's Republic of China in connection with the sale in a private placement an aggregate of 7,000,000 shares of the company's common stock, par value $0.001 per share. Pursuant to the Agreements, Luo Jing agreed to purchase 1,000,000 shares of Common Stock at a per share purchase price of CNY0.10 or approximately $0.015 per share, for an aggregate purchase price of CNY100,000 or approximately $14,700, and Zhou Jian agreed to purchase 6,000,000 shares of Common Stock at a per share Purchase Price of CNY0.06 or approximately $0.009 for an aggregate purchase price of CNY400,000 or approximately $58,800 and company is obligated to issue the Shares within 30 business days from the date of the Agreement. Also pursuant to the Agreements, in the event of a reverse stock split, the company will issue additional shares to the Investors to make up for the reduction in the number of Shares held by the Investors as a result of the reverse stock split, and issue the additional shares within 15 days of the reverse stock split. English translations of the Stock Transfer Agreements originally executed in Chinese are available for free at: http://ResearchArchives.com/t/s?387c http://ResearchArchives.com/t/s?387d Shandong Zhouyuan said in January that it has established two new branch offices in Henan Province, China. One of the branch offices was established on January 10, 2009 in Tang Ying County of Henan Province and the other was established on January 14, 2009 in Xu Chang City of Henan Province. Currently the Company has five branch offices in China overseeing 247 county level distributors. About Shandong Zhouyuan Shandong Zhouyuan Seed and Nursery Co. Ltd. (OTC BB: SZSN) -- http://www.chinaseedcorp.com/-- was originally incorporated in the State of North Carolina. The company, through its consolidated subsidiary, Shandong Zhouyuan Seed and Nursery Co. Ltd., a company formed under the laws of the People's Republic of China, is engaged in the business of developing, distributing and selling agricultural seeds in China. The company's executive offices are located at Laizhou, Shandong Province, People's Republic of China. At Sept. 30, 2008, the company's balance sheet showed total assets of $3,733,036, total liabilities of $3,356,798 and stockholders' equity $376,238. For the three months ended Sept. 30, 2008, the company posted net loss of $202,431 compared with net loss of $167,810 for the same period in the previous year. For the nine months ended Sept. 30, 2008, the company posted net loss of $159,479 compared with net loss of $610,269 for the same period in the previous year. As of Sept. 30, 2008, total current assets were $579,627, total current liabilities were $2,940,103 and the company had working capital deficit of $2,360,476. Cash at Sept. 30, 2008 was $189,258. As of Sept. 30, 2008, the company had only $189,258 in liquid assets, and only $32,171 in accounts receivable. At the same time the company is in default on bank loans and interest payments totaling $1,521,623. Negotiations are ongoing with respect to a restructuring of the debt. At the same time, the company cannot sustain operations for any significant period of time unless it obtains additional capital. The company's efforts to attract capital are hindered, however, by its default to the Bank. The survival of its business, therefore, depends on its ability to develop a comprehensive debt relief and financing package. Unfortunately, because its operations have produced only a trickle of cash during the past two years, the company can only achieve financing if it convinces the investor that an investment in the company can be leveraged into a significant increase in revenues and cash flows. Going Concern Doubt Kempisty & company CPAs PC in New York expressed substantial doubt about Shandong Zhouyuan Seed & Nursery Co. Ltd.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm said that the company had net losses of $813,341 and $322,586 for the years ended Dec. 31, 2007, and 2006, respectively, and an accumulated deficit of $2,636,401 at Dec. 31, 2007. The auditing firm added that the company was in default on its bank loans as of Dec. 31, 2007, totaling $1,764,834, as of Dec. 31, 2007. Management said the recoverability of a major portion of the company's recorded asset is dependent upon its continued operations, which in turn is dependent upon the its ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue as a going concern. The company is actively pursuing additional funding and a potential merger or acquisition candidate and strategic partners, which would enhance stockholders' investment. SIRIUS XM: Seeks Liberty Media's Help to Fend Off Charles Ergen --------------------------------------------------------------- Sirius XM Radio Inc. is seeking investment from Liberty Media Corp. to ward off satellite entrepreneur Charles Ergen's unsolicited takeover offer, Matthew Karnitschnig at The Wall Street Journal report, citing people familiar with the matter. WSJ relates that a source said that negotiations between Sirius XM and Liberty Media are advanced, but a deal remains far from certain. According to WSJ, it wasn't clear how much Liberty Media would be willing to invest in Sirius XM and if it would end up with control. According to WSJ, Sirius XM is nearly out of cash and might be forced into bankruptcy proceedings or a deal with Mr. Ergen if it fails to secure funds to repay its obligations by Tuesday. The report states that Sirius XM had been trying to convert the $175 million debt tranche that matures on Tuesday into more senior debt and equity with the previous holder of the notes, a hedge fund, but before it could secure a deal, Mr. Ergen acquired the bonds last week. Mr. Ergen, WSJ states, quietly started acquiring Sirius XM debt -- $175 million in bonds that mature on February 17 -- last year, and is now using that debt as leverage to try to force the firm into a deal. The report says that Sirius XM carries a total debt load of about $3.25 billion. WSJ states that Mr. Ergen has offered to inject $500 million into Sirius XM and restructure the about $375 million in short-term debt he holds in return for control of the firm, but Sirius XM rejected the offer. Sirius XM representatives, in response to Mr. Ergen's move, said that the firm was preparing to file for bankruptcy and had hired bankruptcy and restructuring advisers, WSJ relates. Citing people familiar with the matter, WSJ says that company officials privately told investors that Sirius XM has entered a "zone of insolvency" and that a bankruptcy filing would be preferable to cutting a deal with Mr. Ergen. According to WSJ, some investors are worried that Sirius XM might pursue a deal inferior to Mr. Ergen's offer just to escape his clutches. Mr. Ergen and Sirius XM CEO Mel Karmazin have a long- running feud that started when Mr. Karmazin ran Viacom Inc., WSJ relates. About Sirius XM Headquartered in New York, Sirius XM Radio Inc. -- http://www.sirius.com/-- formerly Sirius Satellite Radio Inc., is a satellite radio provider. The company offers over 130 channels to its subscribers, 69 channels of 100% commercial-free music and 65 channels of sports, news, talk, entertainment, traffic, weather, and data content. Its primary source of revenue is subscription fees, with most of its customers subscribing to SIRIUS on either an annual, semi-annual, quarterly or monthly basis. The company derives revenue from activation fees, the sale of advertising on its non-music channels, and the direct sale of SIRIUS radios and accessories. Various brands of SIRIUS radios are Best Buy, Circuit City, Costco, Crutchfield, Sam's Club, Target and Wal-Mart. * * * As reported by the Troubled Company Reporter on Jan. 20, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Sirius XM Radio Inc. to 'CCC' from 'CCC+'. S&P also lowered the issue-level ratings on the debt of Sirius XM Radio Inc. and of Sirius' unrestricted subsidiaries, XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc., which remain on CreditWatch, though the implications are revised to negative from developing. S&P could affirm or lower the issue-level ratings pending S&P's review of additional information and follow-up discussions with management. The outlook is negative. New York City-based Sirius XM had total debt outstanding of $3.37 billion as of Sept. 30, 2008. SUPERIOR OFFSHORE: Implements Joint Liquidation Plan ---------------------------------------------------- The First Amended Joint Chapter 11 Plan of Liquidation submitted by Superior Offshore International, Inc. and the Official Committee of Unsecured Creditors became effective on February 11, 2009. All equity interests in Superior Offshore International, Inc. are cancelled as of the Effective Date under the terms of the Plan. The Plan also provides that the Effective Date will serve as the record date for purposes of distributions, if any, to former equity interest holders under the Plan, unless otherwise ordered by the Bankruptcy Court. Judge Wesley Steen of the U.S. Bankruptcy Court for the Southern District of Texas confirmed on January 28, 2009, the First Amended Joint Plan of Liquidation. At the same time, Bankruptcy Law360 said, the Court denied a request by Louis E. Schaefer, Jr., and Schaefer Holdings LP, the Debtor's founder and equity holder, to convert the Debtor's Chapter 11 restructuring case to a Chapter 7 liquidation proceeding. As reported by the Troubled Company Reporter, Superior Offshore and the Committee filed the Amended Plan and an accompanying disclosure statement on December 16, 2008. The Disclosure Statement was approved on January 9. The TCR says the Plan divides the claims and interests into 9 classes: Class 1 Administrative Claims Class 2 Priority Tax Claims Class 3 Priority Non-Tax Claims Class 4 Secured Claims Class 5 General Unsecured Claims Class 6 Subordinated Claims Class 7 Subordinated Securities Claims Class 8 Interests Class 9 Subordinated Interests All Allowed Class 1, Class 2 and Claims shall receive payment in full, in Cash. In the sole discretion of the Plan Agent, the holder of an allowed Class 4 Claim shall receive either (i) the proceeds of the Collateral securing such Claimant's Allowed Secured Claim after satisfaction in full of all superior liens up to the Allowed Amount of the Claimant's Class 4 Claim; or (ii) the Collateral securing such Claimant's Allowed Secured Claim in full and final satisfaction of such claim. Holders of Allowed General Unsecured Claims under Class 5 will receive a Pro Rata share of Distributions from Available Cash and any Plan Agent Recovery up to the Allowed Amount of such Class 5 Claim. The Plan Agent shall make additional future distributions to holders of Allowed Class 5 Claims from Available Cash and the Plan Agent Recovery as the Plan Agent determines appropriate. Each holder of an Allowed Class 6 Subordinated Claim will receive a Pro Rata share of Available Cash and Plan Agent Recovery up to the Allowed Amount of such Claim after payment in full of all Allowed Class 5 Claims. Each holder of an Allowed Class 7 Subordinated Securities Claim shall look first to the proceeds of the Debtor's available insurance policies for satisfaction of its Claim to the extent that such Claim is covered by insurance. Any remaining unpaid Allowed Class 7 Subordinated Securities Claim shall receive a Pro- Rata share with all Allowed Class 8 Interests of all remaining Available Cash and Plan Agent Recovery after payment in full of all Class 1, 2, 3, 4, 5, and 6 Claims. All Equity Interests under Class 8 shall be canceled as of the Effective Date. Holders of Allowed Equity Interests shall receive a Pro-Rata share with all Allowed Class 7 Claims remaining after application of any available insurance proceeds of all remaining Available Cash and Plan Agent Recovery after payment in full, with interest, of all Class 1, 2, 3, 4, 5, and 6 Claims. All Subordinated Interests under Class 9 shall be canceled as of the Effective Date and shall receive no Distributions. On the Effective Date, all remaining property of the Debtor and of the Estate will vest in the Liquidating Debtor, free and clear of liens, claims and encumbrances, except as otherwise provided in the Plan. From and after the Effective Date of the Plan, the Liquidating Debtor is authorized to (i) take such action as is necessary to complete an orderly wind-down of its operations, including completing all audits by the IRS; (ii) file claim objections; (iii) make distributions; (iv) prosecute causes of action owned by the Estate, including all claims and causes of action arising under the Bankruptcy Code; (v) pursue, liquidate and administer Estate property; (vi) file tax returns; and (vii) take such other action as provided for under the Plan. Pursuant to the Confirmation Order, these individuals will constitute the initial members of the Post-Confirmation Committee: -- Claire Davis -- Michael Parker -- Bruce Lucas -- Terry Braud -- L. Don Miller A full-text copy of the Debtors' and the Official Committee of Unsecured Creditors First Amended Joint Plan of Liquidation is available for free at: http://bankrupt.com/misc/SuperiorOffshore_1stAmendedJointPlan.pdf In his Conversion Motion, Mr. Schaefer said there is no reasonable likelihood that a plan will be confirmed. He said that Amended Plan is defective, and will not yield and equal or higher payout to claimants that would a case under Chapter 7. According to Mr. Schaefer, the amended plan violated the fair and equitable requirements of Section 1129 of the United States Bankruptcy Code. He said, among other things, that the amended plan improperly provide for the treatment of Class 7 and 8 claims because the procedure for the claims in not to be determined until postconfirmation. Mr. Schaefer said the Chapter 7 will maximize the value to creditors and will eliminate unnecessary administrative expenses incurred by various committees and professionals in the Debtor's case. Headquartered in Houston Texas, Superior Offshore International Inc. (Nasdaq: DEEP) -- http://www.superioroffshore.com/-- provides subsea construction and commercial diving services to the offshore oil and gas industry. The company's construction services include installation, upgrading and decommissioning of pipelines and production infrastructure. The company operates a fleet of seven service vessels and provides remotely operated vehicles and saturation diving systems for deepwater and harsh environment operations. Superior Offshore International, Inc., filed for bankruptcy protection on April 24, 2008 (Bankr. S.D. Tex. Case No. 08-32590). The Debtors listed total assets of $67,587,927 and total liabilities of $54,359,884 in its schedules. David Ronald Jones, Esq., and Joshua Walton Wolfshohl, Esq., at Porter & Hedges LLP, represent the Debtor as counsel. The U.S. Trustee for Region 7 appointed five creditors to serve on an Official Committee of Unsecured Creditors. Douglas S. Draper, Esq., at Heller Draper Hayden Patrick & Horn LLC, and Michael D. Rubenstein, Esq., at Liskow Lewis, represent the Committee as counsel. SYNAGRO TECHNOLOGIES: Tight Liquidity Prompts S&P to Junk Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Houston-based Synagro Technologies Inc. to 'CCC+' from 'B-'. The outlook is negative. At the same time, Standard & Poor's lowered the ratings on the company's $390 million senior secured first-lien facilities to 'CCC+' from 'B+' (same as the corporate credit rating) and revised the recovery rating to '3' from '1', indicating the expectation for meaningful (50%-70%) recovery in a payment default scenario. S&P also lowered the ratings on the company's $150 million second- lien term loan to 'CCC-' from 'CCC+' (two notches below the corporate credit rating) and revised the recovery rating to '6' from '5', indicating the expectation for negligible (0%-10%) recovery in a payment default scenario. The downgrade reflects Synagro's tightened liquidity position as covenant step downs and weaker operating results are likely to constrain the company's ability to borrow on its revolving credit facility without violating financial covenants in its credit agreement. Furthermore, a challenging economic environment has impacted municipalities, which account for more than 85% of the company's revenues. S&P is concerned that this environment could lead to further weakness in volumes and pricing and will leave little room for operational disappointments. TICKETMASTER ENTERTAINMENT: S&P Puts BB+ Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Rating Services said it placed its ratings, including the 'BB+' corporate credit rating, on Ticketmaster Entertainment Inc. on CreditWatch with negative implications. At the same time, Standard & Poor's placed its ratings on Live Nation Inc., including the 'B' corporate credit rating, on CreditWatch with positive implications. These CreditWatch placements are based on the two companies' definitive merger agreement. The merger would combine the dominant concert promoter, ticketing company, and artist management agency. The combined entity will be called Live Nation Entertainment Inc. The transaction is being structured as a tax-free, all-stock merger in which Live Nation and Ticketmaster shareholders will each own about 50% of the combined company. The transaction is subject to approval by both companies' shareholders, consent of Ticketmaster bank lenders and the satisfaction of customary closing conditions, and regulatory review and approvals. Ticketmaster and Live Nation expect the transaction to be completed in the second half of 2009. "The rating action is based on the expected changing financial risks from the merger," said Standard & Poor's credit analyst Andy Liu. Compared to the pre-merger financials of the companies, debt leverage will increase for Ticketmaster, but will decrease for Live Nation. Pro forma for the all-stock merger, lease-adjusted total debt to EBITDA of the combined entity would exceed 4x, pro forma as of Sept. 30, 2008. This would represent an increase in lease-adjusted total debt to EBITDA for Ticketmaster from 2.9x, but a decrease for Live Nation from 5.5x. "Furthermore," said Mr. Liu, "Live Nation has significant historical discretionary cash flow deficits and it is unclear that the combined entity would be able to generate meaningfully positive discretionary cash flow, especially with consumer discretionary spending and corporate sponsorship under pressure from the recession." TOWN & COUNTRY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Town & Country - Sterling Heights, Inc. dba Century 21 Town & Country 800 W. University Rochester, MI 48307 Bankruptcy Case No.: 09-43650 Type of Business: The Debtor operates a real estate company. See: Century 21 Town & Country Chapter 11 Petition Date: February 11, 2009 Court: Eastern District of Michigan (Detroit) Judge: Marci B. McIvor Debtor's Counsel: Erika D. Hart, Esq. ehart@tauntlaw.com 700 E. Maple Road, 2nd Floor Birmingham, MI 48009-6359 Tel: (248) 644-7800 Estimated Assets: $1 million to $10 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by John R. Kersten, president. UTAH 7000: Promontory Utah Project Headed for Confirmation ---------------------------------------------------------- Utah 7000 LLC will seek confirmation of its Chapter 11 plan of reorganization before the U.S. Bankruptcy Court for the District of Utah on March 12 and 13. The Plan is premised upon a settlement with first-lien lenders who are owed $313 million, Bloomberg's Bill Rochelle relates. The terms of the Plan are: -- The first- lien lenders would (i) obtain ownership of Utah 7000's Promontory project, and (ii) receive $90 million in new second-lien notes. -- The effectivity of the Plan is contingent upon raising $85 million in a new secured term loan. If a new loan can't be arranged, the project will be sold. -- Assuming financing is arranged, the plan will provide $1.5 million for unsecured creditors who may be paid in full. -- Second lien lenders will receive warrants, and reimbursement of $1.5 million for legal fees. -- The existing owners will contribute $7.275 million in return for releases of claims by the company and first- and second- lien lenders. -- Agreements with lot purchasers will be honored, and obligations under club membership agreements will be performed. The official unsecured creditors' committee supports the plan. Mr. Rochelle notes that there will be an auction on April 17 testing whether anyone would offer more for the project than the lenders who are in effect buying the property under the plan. About Utah 7000 Based in Park City, Utah, Utah 7000 LLC fka Pivotal Promontory LLC operates and develops resort community near Park City and Deer Valley ski resorts. Utah 7000 owns a 7,224-acre master-planned development near Park City, Utah, known as Promontory, On March 28, certain holders of junior and second priority liens filed for involuntary Chapter 11 petitions against the Company (Bankr. D. Utah Lead Case No.08-21869). Kenneth L. Cannon, II, Esq., at Durham Jones & Pinegar, represents the petitioners. On April 3, 2008, the Debtors gave their consent to the entry of an order for Chapter 11 bankruptcy relief. Danny C. Kelly, Esq., at Stoel Rives LLP and Eve H. Karasik, Esq., at Stutman Treister & Glatt Professional Co., represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 19 appointed an Official Committee of Unsecured Creditors in the cases. J. Thomas Beckett, Esq., at Parsons Behle & Latimer, represents the Committee. According to Bloomberg, Judge Judith A. Boulden estimated the value of Utah 7000's property at $560.1 million. The Debtor owes about $431.5 million to several secured creditors. XERIUM TECHNOLOGIES: S&P Gives Neg. Outlook; Affirms 'B-' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Xerium Technologies Inc. to negative from stable. At the same time, S&P affirmed its 'B-' long-term corporate credit rating. "The outlook revision reflects the increased likelihood that Xerium's leverage covenant could come under pressure in 2009 due to further deterioration in the papermaking industry," said Standard & Poor's credit analyst Sarah Wyeth. The industry continues to decline due to the weak economic conditions. Consequently, demand has dropped off, which could affect the company's revenues and margins over the next several quarters. The ratings on Youngsville, North Carolina-based Xerium reflect the company's highly leveraged balance sheet, its modest size as a supplier to niche markets, and its dependence on the papermaking industry, all of which limit the company's organic growth potential. The company's good operating margins, its geographic diversity, and the strong competitive position of its niche product mitigate company weaknesses. Xerium, with revenues of about $650 million, operates in two business segments: clothing, in the form of synthetic textile belts that transport paper through papermaking machines, and roll covers, which provide covering surface for large steel cylinders between which paper travels in those machines. Clothing represented roughly 65% of revenue and roll covers the remainder. The company operates in roughly 15 countries. Xerium derives about 37% of its revenues from Europe, 34% from North America, 18% from Asia-Pacific, and 11% from South America and other regions. The papermaking industry's gradual secular decline has been accelerated by the current recessionary environment and lower advertising revenues. This in turn affects suppliers like Xerium as papermakers cut inventory and capital expenditures. Xerium's operating margin (before depreciation and amortization) was 23% as of Sept. 30, 2008, a level of profitability that Xerium has more or less maintained since 2005. Margins have declined from about 30% in the early part of the decade as a result of paper mill closures, industry consolidation, and limited pricing power. S&P expects margins to decline somewhat in 2009 due to pricing pressure in the current difficult operating environment. The company has a highly leveraged financial risk profile. As of Sept. 30, 2008, total debt to EBITDA (adjusted for the capitalization of operating leases and postretirement obligations) was about 5x, with cash flow protection (measured by funds flow from operations to total adjusted debt) less than 10%. Capital expenditures have grown in the last year because of the company's investment in foreign manufacturing. However, the company has delayed some expansion plans to focus on cash management and debt reduction. At the current rating, S&P expects lease-adjusted total debt to EBITDA in the 5x-6x range and funds from operations to total debt of about 10%. S&P does not factor large acquisitions into the rating. If Xerium's operating environment deteriorates further, resulting in increased likelihood of EBITDA declining more than 10% and covenant headroom declining to single digits in 2009, S&P could lower the rating. The current economic environment and covenant step-downs limit a positive rating action. WORLDSPACE INC: Extends DIP Credit Maturity Date to Feb. 27 ----------------------------------------------------------- WorldSpace, Inc., and certain of its subsidiaries entered into a second amendment to its Senior Secured Super Priority Priming Debtor in Possession Credit Agreement with Citadel Energy Holdings LLC, Highbridge International LLC, OZ Master Fund, Ltd., and Silver Oak Capital LLC, as lenders. Donald J. Frickel, executive vice president, general and secretary, disclosed in a regulatory filing dated February 9, 2009, that the Borrowers obtained the necessary authorizations on February 6 to further amend the terms of the DIP Credit Agreement to, among other things, extend the maturity date of the DIP Credit Agreement and a related deadline for the completion of their sales process to February 27, 2009. A full-text copy of Amendment No. 2 is available for free at: http://tinyurl.com/bcebzz The Borrowers and the Lenders executed Amendment No. 1 to the DIP Credit Agreement on January 6, 2009, which extended the final maturity date of the DIP Credit Agreement and a related deadline for the completion of their sales process to January 29, 2009. The Borrowers and Lenders executed a Bridge Amendment to Debtor in Possession Credit Agreement on January 29, 2009, which amended the terms of the DIP Credit Agreement and extended a related deadline for the completion of their sales process to February 6, 2009. About WorldSpace WorldSpace, Inc. (WSI) -- http://www.1worldspace.com/-- and its debtor- and non-debtor affiliates provide satellite-based radio and data broadcasting services to paying subscribers in ten countries throughout Europe, India, the Middle East, and Africa. The Debtors and their affiliates operate two geostationary satellites, AfriStar and Asia Star, which are in orbit over Africa and Asia. The Debtor and two of its affiliates filed for Chapter 11 bankruptcy protection on Oct. 17, 2008 (Bankr. D. Del., Case No. 08-12412 - 08-12414). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors as counsel. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot Greenleaf represent the Committee as counsel. When the Debtors filed for bankruptcy, they listed total assets of $307,382,000 and total debts of $2,122,904,000. YOUNG BROADCASTING: Foregoes $4.5 Million Interest Payment ---------------------------------------------------------- On February 9, 2009, Young Broadcasting Inc. (Pink Sheets: YBTVA.PK) said that, as part of a strategy to preserve liquidity, it determined to forego making the $4.513 million interest payment due February 6, 2009, on the company's Senior Secured Credit Facility due 2012. Under the terms of the facility, a 10-day grace period will apply to the missed interest payment. As previously disclosed, Young Broadcasting continues to pursue discussions with its debtholders to restructure its balance sheet, improve liquidity, and strengthen its business operations to enhance its value for its employees, viewers, advertisers and local communities. The company does not anticipate that these discussions will impact the operations of its stations or its ability to pay its trade creditors in the ordinary course. Young Broadcasting -- http://www.youngbroadcasting.com/-- owns 10 television stations and the national television representation firm, Adam Young Inc. Five stations are affiliated with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV - Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN, and WBAY-TV - Green Bay, WI), three are affiliated with the CBS Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA and KELO- TV - Sioux Falls, SD), one is affiliated with the NBC Television Network (KWQC-TV - Davenport, IA) and one is affiliated with MyNetwork (KRON-TV - San Francisco, CA). In addition, KELO-TV- Sioux Falls, SD is also the MyNetwork affiliate in that market through the use of its digital channel capacity. * * * As reported by the Troubled Company Reporter on January 19, 2009, Young Broadcasting did not make the $6.125 million interest payment due Jan. 15 on the company's 8.75% Senior Subordinated Notes due 2014 to preserve liquidity. Under the indenture relating to the Notes, a 30-day grace period will apply to the missed interest payment. Young Broadcasting has retained UBS Investment Bank and Sonnenschein Nath & Rosenthal LLP to provide advisory services in connection with its restructuring efforts. The TCR reported on February 12, 2009, that Standard & Poor's Ratings Services lowered its issue-level rating on New York City- based Young Broadcasting Inc.'s senior secured credit facilities to 'D' from 'CC'. The recovery rating on this debt remains unchanged at '2', indicating S&P's expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default. * January Retail & Food Sales "Unexpectedly" Expand 1.1% -------------------------------------------------------- The U.S. Census Bureau said February 12 that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $344.6 billion, an increase of 1.0 percent (+-0.5%) from the previous month, but 9.7 percent (+-0.7%) below January 2008. Total sales for the November 2008 through January 2009 period were down 9.5 percent (+-0.5%) from the same period a year ago. The November to December 2008 percent change was revised from -2.7 percent (+-0.5%) to -3.0 percent (+-0.2%). Retail trade sales were up 1.1 percent (+-0.7%) from December 2008, but were 11.0 percent (+-0.7%) below last year. Gasoline stations sales were down 35.5 percent (+-1.5%) from January 2008 and motor vehicle and parts dealers sales were down 22.2 percent (+-2.3%) from last year. "Sales at U.S. retailers unexpectedly halted a six-month slide in January, an advance that may not be sustained after the number of Americans collecting jobless benefits reached the highest on record," Bloomberg said in its report. * Not All Involuntary Petitioners Liable for Costs -------------------------------------------------- Bill Rochelle of Bloomberg News said that the 9th U.S. Circuit Court of Appeals ruled that if an involuntary bankruptcy petition is dismissed, the target of the bankruptcy is presumed entitled to collect costs and attorneys' fees from the creditors who filed the unsuccessful involuntary petition. According to the report, the Circuit Court held that the bankruptcy judge has discretion to impose costs against some of the involuntary petitioners and not others. The Court said the bankruptcy judge is entitled to "consider factors such as relative culpability among the petitioners." The Feb. 10 opinion by the 9th Circuit, Bloomberg relates, ruled that the bankruptcy judge erred in interpreting the law to mean that costs must be imposed against all petitioners. The case is Sofris v. Maple-Whitworth Inc. (In re Maple- Whitworth Inc.), 07-56537, 9th U.S. Circuit Court of Appeals. * BOOK REVIEW: Merger Takeover Conspiracy, A Business Story ----------------------------------------------------------- Author: David J. Thomsen Publisher: Beard Books Softcover: 379 pages List Price: $34.95 Review by Henry Berry Although fiction, Merger Takeover Conspiracy has the feel of actual events. The realism is quickly established with introductory material that includes a map of the United States showing the routes of western railroads and a financial statement with notes that looks like an authentic corporate report. Above all, however, Merger Takeover Conspiracy is a compelling narrative with aspects of a murder mystery within a modernday business story of greed, ruthlessness, and duplicity. The book begins with Richard Smith, manager of corporate security of Arrow Corporation, destroying company documents in a "materials shredder" with diamond-tipped mechanical gears that can pulverize typewriters, file cabinets, and tape spools; thus ridding Arrow of office equipment that could be linked to incriminating documents. While musing on how his task of destroying office equipment secures his place in the corporation by binding him to certain ambitious, underhanded top corporate personnel with their shared involvement in criminal acts, Smith is knocked unconscious and stuffed into the shredder himself. From such suspenseful beginnings, the story continues to follow the maze of feigns and dirty tricks, the betrayals and ignorance, the concerns and ruthlessness, the coolly-done crimes and desperate measures of many individuals connected in varying degrees to Arrow Corporation's ambitious goal of acquiring the three largest railroads in the Western United States and merging them into one colossal system under Arrow's aegis. Business executives, housewives, the corporate jet pilot, an outside attorney, an investment banker, and an executive assistant are among the cast of characters helping to shed light on the many facets of the plot. Thomsen writes about events, situations, and primary and peripheral characters in the business world as convincingly and dramatically as John Grisham does about those in the legal world. Though Merger Takeover Conspiracy has some sensationalistic touches, the novel is not generic, popular entertainment. Thomsen's novel can be read on many levels: as a gripping crime story about brutal crimes; as a narrative of the unfolding of a master plan for a complex, high-stakes merger; as a portrayal of corporate society; and as a cautionary tale about the personal tragedies caused by systematic illegal activity in large businesses. Although Merger Takeover Conspiracy was first published in 1985, it reflects major stories in today's news media. The crimes of top executives of Tyco, Worldcom, Adelphia, and others cannot but come into the reader's mind. Thomsen goes well beyond the content and personalities of any news stories, however, to shed a critical light on how such events could occur in the business world. In the convention of good mystery writing, Thomsen keeps the reader guessing until the end. In the end, the guilty are exposed, but, in the larger perspective, there is no single culprit. Instead, the entire corporate culture is indicted. Some of the characters can hardly be blamed since they were simply acting according to the principles and the goals of the environment they were in. David J. Thomsen has a background in management, entrepreneurship, executive positions, and consulting. Much of his work has involved research, and he is the author of hundreds of articles. ********* 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 ***