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/raid1/www/Hosts/bankrupt/TCR_Public/090219.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 19, 2009, Vol. 13, No. 49 Headlines ABITIBIBOWATER INC: Enters Into Support & Backstop Agreements ACTIVANT SOLUTIONS: Posts $24.8MM Net Loss in Qtr. Ended Dec. 31 AIRTRAN HOLDINGS: Appoints Michael Jackson to Board of Directors ALERIS INT'L: Credit Swaps Index Trades to Be Settled AMERICA CAPITAL: Court Confirms First Amended Plan of Liquidation AMERICAN AXLE: John A. Casesa Resigns from Board of Directors AMERICAN INTERNATIONAL: Court Dismisses Shareholders' Class Suit AMERICAN PACIFIC: S&P Gives Negative Outlook; Affirms 'B+' Rating ARMADA SINGAPORE: Creditor Opposes Chapter 15 Petition ASHTON WOODS: S&P Withdraws 'D' Corporate Credit Rating ATP OIL & GAS: Bank Loan Continues to Sell at Substantial Discount AVANTAIR INC: Reports $600,000 Loss in Quarter ended December 31 AVITAR INC: "Going Concern Doubt" Accountant Resigns BARBECUES & MORE: To Close Last Store Due to Poor Retail Climate BARBEQUES GALORE: Former Franchisee to Close Final Store Location BASSETT FURNITURE: Gets Waiver From Lender on Covenant Violation BEARINGPOINT INC: Files for Chapter 11 with Pre-Packaged Plan BEARINGPOINT INC: Case Summary & 30 Largest Unsecured Creditors BERNARD L. MADOFF: Meeting of Creditors to Be Held Tomorrow BERNARD L. MADOFF: Client List Includes Defense Counsel BERNARD L. MADOFF: Firms May Liable for Overlooking "Red Flags" BUILDING MATERIALS: Bank Loan Sells at Substantial Discount BULK PETROLEUM: Case Summary & 20 Largest Unsecured Creditors CELSIA TECHNOLOGIES: Completes Sale of $1.71-Million Debentures CHARTER COMMUNICATIONS: Inks Terms of Ch. 11 Plan with Noteholders CHARTER COMMUNICATIONS: Lenders Fail to Fund Affiliate's Borrowing CHARTER COMMUNICATIONS: Expects Q4 EBITDA to Hike 9.7% to $619MM CHESAPEAKE ENERGY: Posts $866 Million Loss in 4th Quarter CHRYSLER LLC: Has 70% Chance of Filing Bankruptcy, Says Moody's CIMARRON CDO: Moody's Junks Ratings on Four Classes of Notes CLEARWATER NATURAL: Gets Green Light to Hire Parkman Whaling CLEARWATER NATURAL: Taps Stites & Harbison as Special Counsel CLEARWATER NATURAL: Panel Taps Blank Rome as Bankruptcy Counsel CLEARWATER NATURAL: Panel Hires John Morgan as Conflicts Counsel CONCORD CAMERA: Enters Into Sale Pacts With Bao on Joint Stock CONTEC INNOVATIONS: Files for Bankruptcy; KPMG Named as Trustee CONTECH LLC: Sec. 341 Meeting of Creditors Slated for March 9 CONTECH LLC: Seeks to Hire Carson Fischer as Local Counsel CONTECH LLC: Seeks to Employ Huron as Financial Consultants CONTECH LLC: Gets Permission to Engage KCC as Claims Agent CROWN MEDIA: Dec. 31 Balance Sheet Upside Down by $67.7 Million DANA CORP: Bank Loan Continues Slide in Secondary Market Trading DANKA BUSINESS: Reports Increased Distribution to ADS Holders DAYTON SUPERIOR: Extends Exchange Offer for 13% Notes Until March DELPHI CORP: GM Buyback of Sites to Partly Fund Exit Financing DELPHI CORP: Remains Committed to Emerging From Chapter 11 DELTEK INC: Dec. 31 Balance Sheet Upside Down by $53.8 Million DIAMOND RANCH: Dec. 31 Balance Sheet Upside Down by $3.3 Million DREIER LLP: Discloses $59.3MM in Assets and $42.3MM in Liabilities DRYSHIPS INC: Moving in Right Direction, Says Lender ECLIPSE AVIATION: Astronics Records $7.5MM Charge on Bankruptcy FOAMEX INTL: Files for Bankruptcy After Missed Interest Payment FOOTHILLS RESOURCES: Can Access $1.6-Mil. Loan on Interim Basis FORD MOTOR: Bank Loan Slides in Secondary Market Trading FORWARD FOODS: Files for Chapter 11 Due to PCA Peanut Recalls FORWARD FOODS: Seeks Benesch Friedlander as Attorneys FORWARD FOODS: Seeks Garden City Group as Claims Agent FORWARD FOODS: Wants to Access $4-Million DIP Loan from Emigrant GALE FORCE: Commences Insolvency Proceedings in Canada GENCORP INC: Posts $5.7 Million Net Loss in Quarter Ended Nov. 30 GENERAL MOTORS: Says Chapter 11 May Result to Liquidation GENERAL MOTORS: Bondholders Fear Restructuring Plan Insufficient GENERAL MOTORS: Viability Plan Includes Buyback of Delphi Plants GENERAL MOTORS: Chapter 11 Filing Probable by 70%, Says Moody's GENERAL MOTORS: Bank Loan Slides in Secondary Market Trading GOLDEN NUGGET: S&P Affirms Corporate Credit Rating at 'B-' HAIGHTS CROSS: Board Approves Annual Incentive Bonus Plan HARRAH'S ENTERTAINMENT: Borrowing Requests Cue S&P's Junk Rating HARRAH'S OPERATING CO: S&P Junks Corp. Credit Rating HPG INTERNATIONAL: Bid Procedures Okayed; Auction Sale on March 6 INCENTRA SOLUTIONS: U.S. Trustee Forms 5-Member Creditors Panel INDEPENDENCE TAX: Dec. 31 Balance Sheet Upside Down by $18.7MM INSMED INC: Initially Completes MerckDeal, Receives $2.5 Million INTEGRA BANK: Moody's Cuts Financial Strength Rating to 'D+' JEFFERSON COUNTY: Seeks More Time to Negotiate With Creditors JESUITS OF OREGON: Files for Chapter 11 Bankruptcy Protection LANDAMERICA FINANCIAL: Seeks to Sell FNF Stock When Price Is Right LANDRY'S RESTAURANTS: S&P Affirms Corporate Credit Rating at 'B' LEAR CORP: Bank Loan Continues to Sell at Substantial Discount LEHMAN BROTHERS: Gets Court Nod to Inject $272M in Woodlands LEHMAN BROTHERS: KPMG HK to Hold Press Briefing February 24 LEHMAN BROTHERS: Former LBI Director Sues Barclays for Severance LIBERTY MEDIA: Fitch Retains BB Negative Watch After Sirius Loan LIBERTY MEDIA: S&P Retains Negative CreditWatch on 'BB+' Rating LYONDELLBASELL: Misses Coupon Payments, Fitch Withdraws Ratings FOAMEX INT'L: Case Summary & 25 Largest Unsecured Creditors MAGNA ENTERTAINMENT: Faces March 20 Maturity of $48.5-Mil. Loan MERGE HEALTHCARE: Posts $23.7MM Loss, Sales Slightly Drop in 2008 NAILITE INTERNATIONAL: Obtains Court OK to Borrow $1 Million NORMAN SALTER: Case Summary & 20 Largest Unsecured Creditors NORTEL NETWORKS: To Submit New Business Plan Within Next Few Weeks NOVA BIOSOURCE: Receives Delisting Notice From NYSE Alternext NOVA M RADIO: Will File for Bankruptcy Liquidation OCEANAUT INC.: To Seek Shareholder OK to Liquidate and Dissolve ORLEANS HOMEBUILDERS: Amends Second Amended Credit Agreement ORLEANS HOMEBUILDERS: Posts $15.6MM Net Loss in Qtr. Ended Dec. PARMALAT SPA: Accepts EUR24.2MM Settlement from Banco Popolare PARMALAT SPA: Deloitte Wins Ruling on Dismissal of Fraud Suit PATRIOT HOMES: Taps Marcus & Millichap as Real Estate Advisor PATRIOT HOMES: Wants to Sell Personal Property at Closed Facility PAUL REINHART: Creditors Committee Seeks to Sue Banks PDI PRODUCTION: Says Canadian Subsidiary Is Insolvent PEANUT CORP: Peanut Recalls Force Forward Foods to Seek Bankruptcy PLAQUEMINES PARISH: Moody's Lifts Rating on $5.5MM Debt From Ba1 PLEASANT CARE: Workers to Get Back Health Benefits & Vacation Pay POLAROID CORP: Files Schedules of Assets and Liabilities POWER EFFICIENCY: Updates Stockholders Regarding Status & Strategy PROPEX INC: Court Approves $65-Mil. Wayzata Loan on Final Basis PROPEX INC: To Sell All Assets to Wayzata Unit for $61 Million PUREDEPTH INC: Runs Restructuring Plan, to Affect N.Z. Operations RACE POINT: Moody's Junks Ratings on Three Classes of Notes RENEW ENERGY: U.S. Trustee Forms Five-Member Creditors Committee REVLON INC: Dec. 31 Balance Sheet Upside Down by $1.1 Billion RICHARD BOKAVICH: Voluntary Chapter 11 Case Summary SEMGROUP ENERGY: Nasdaq to Delist Common Stock Effective Feb. 20 SEMGROUP LP: Energy Partners Gets Nasdaq Delisting Notice SENSATA TECHNOLOGIES: S&P Junks Corp. Credit Rating; Outlook Neg. SIRIUS XM: S&P Puts 'CCC' Corp. Rating on Positive CreditWatch SMITHFIELD FOODS: Will Shut Down 6 Plants, Lay Off 1,800 Workers SMURFIT-STONE: Auction to Settle Derivative Trades on Feb. 19 SPANSION INC: Grace Period Elapses; New CEO Tasked to Merge/Sell SPANSION INC: Japan Affiliate Files Protection from Creditors SPANSION INC: Fitch Downgrades Issuer Default Rating to 'D' SPANSION INC: Moody's Cuts Default Rating to 'D' on Non-Payments SPECIAL DEVICES: Reports $52MM in Assets and $109MM in Debts ST BERNARD PARISH: Moody's Lifts Rating on $18.4MM Debt From Ba2 STANFORD INT'L BANK: SEC Charges Firm of $8 Billion Fraud STATION CASINOS: Misses Feb. 15 Payment, Moody's Keeps Ca Rating STATION CASINOS: Missed Interest Payment Cues S&P's 'D' Rating TEXAS PETROCHEM: Moody's Puts "+" Outlook on Ba3 on Boost in Cash TRUMP ENTERTAINMENT: Moody's Withdraws Ratings on Bankr. Filing TEXAS WESLEYAN: Moody's Affirms 'Ba2' Rating on 1997A Bonds U.S. SHIPPING: Fails to Pay $6.5 Million Interest Due Feb. 15 WALDEN RESERVE: May Conduct Auction of Cumberland County Property WORLDSPACE INC: Court Extends DIP Maturity Date to February 27 WORLDSPACE INC: Wants Plan Filing Period Extended to April 30 YOUNG BROADCASTING: Has Until March 20 to File Schedules YOUNG BROADCASTING: Moody's Affirms Ca Corp. Rating on Bankruptcy YOUNG BROADCASTING: Chapter 11 Filing Cues S&P's Rating Cut to D YRC WORLDWIDE: Completes Sale and Financing Leaseback Transaction YRC WORLDWIDE: Finalizes Loan Terms Amendment YRC WORLDWIDE: S&P Changes Outlook on 'CCC' Rating to Positive * Canada Incurs Record $14BB Auto Trade Deficit in 2008 * Moody's Says Stimulus Helps Big Banks, Unclear for Small Lenders * Private Equity-Owned Firms Better Managed than Others, WEF Says * GE Allocates $2 Billion for Bankruptcy Loans in 2009 * Wilbur L. Ross Interested in Banking, Troubled Industries * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 ********* ABITIBIBOWATER INC: Enters Into Support & Backstop Agreements ------------------------------------------------------------- The Troubled Company Reporter previously reported that on February 9, 2009, Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater Inc., commenced: (i) private exchange offers with respect to six series of outstanding debt securities issued by either Bowater Incorporated, a wholly owned subsidiary of the Company, or Bowater Canada Finance Corporation, a wholly owned subsidiary of Bowater, (ii) a consent solicitation to effect certain amendments to the indentures governing the Bowater Notes, and (iii) a concurrent private offering of new 15.5% First Lien Notes due November 15, 2011 to holders of Bowater Notes who tender notes in the exchange offers. In connection with the Exchange Offers, on February 8, the Company and Bowater entered into: (i) exchange and support agreements, and (ii) backstop commitment agreements with holders of approximately $578 million in aggregate principal amount of the Bowater Notes, which represents approximately 32.0% of the outstanding Bowater Notes. The Initial Backstop Group holds Bowater Notes representing 51.2% of the Bowater Notes that are required to achieve the minimum tender condition in the Exchange Offers. Pursuant to the Support Agreements, the Initial Backstop Group has agreed, among other things, to tender such amount of Bowater Notes in the Exchange Offers. Pursuant to the Backstop Agreements, in the event BowFin does not receive subscriptions equal to $211.2 million in the Concurrent Notes Offering, the Initial Backstop Group will subscribe for additional First Lien Notes, up to approximately $144.6 million in additional subscriptions. Prior to the expiration of the Exchange Offers, BowFin intends to enter into Support Agreements and Backstop Agreements with other holders of Bowater Notes for up to an additional approximately $66.6 million in backstop commitments. In exchange for their backstop commitments, Backstoppers will receive: (i) a cash fee equal to 5% of such Backstopper's commitment amount, which amount is payable whether or not the Exchange Offers are successfully completed; (ii) a fee equal to 2.5% of such Backstopper's commitment amount which shall be paid in First Lien Notes upon the closing of the Exchange Offers; and (iii) the right to exchange a portion of any 10.5% Third Lien Notes due March 31, 2012, they receive in the Exchange Offers for 10.0% Second Lien Notes due January 31, 2012. In addition, in the event the Backstoppers are called upon to fulfill some portion of their backstop commitment, they will be entitled to receive: (i) an additional $50 principal amount of First Lien Notes per $1,000 principal amount of such Backstopper's subscriptions for First Lien Notes accepted in the Concurrent Notes Offering, and (ii) their pro rata share -- allocated based on each Backstopper's commitment amounts -- of a pool of Second Lien Notes, with the aggregate amount of such pool based on tenders in the Exchange Offers that do not elect to participate in the Concurrent Notes Offering. Pursuant to the terms of the Backstop Agreements, BowFin may not, except in limited circumstances, waive the minimum tender condition with respect to the Exchange Offers without the consent of members of the Initial Backstop Group holding a majority of the aggregate principal amount of Bowater Notes held by the Initial Backstop Group. The obligations of the Backstoppers to purchase First Lien Notes pursuant to the Backstop Agreements are subject to a number of conditions, including, among other things: (i) delivery of certain agreements relating to the new notes to be issued in the Exchange Offers and Concurrent Notes Offering, (ii) delivery of certificates of officers with respect to certain representations made to the Backstoppers, (iii) delivery of the proposed amendments to Bowater's U.S. and Canadian Bank Credit Facilities, and (iv) the absence of certain of events occurring prior to closing of the Exchange Offers. In addition, the Backstop Agreements may be terminated as a result of, among other things, the failure of the Company and Bowater to enter into additional Backstop Agreements with respect to an additional $66.5 million in Commitment Amounts, the termination of the Additional Financing Transaction, or a material adverse effect on the business, assets, financial conditions, liabilities or results of operations of Bowater, Bowater Newsprint South LLC and their U.S. majority owned subsidiaries. In any event the Support Agreements and Backstop Agreements will terminate on March 31, 2009. Note Purchase Agreement In addition to the Exchange Offers, on February 8, the Company, Bowater and BowFin entered into a note purchase agreement with Fairfax Financial Holdings Limited whereby Fairfax has agreed to purchase, on a private placement basis, $80 million principal amount of First Lien Notes for a purchase price of $80 million. The Additional Financing Transaction is a separate private placement of First Lien Notes to Fairfax in addition to the Concurrent Notes Offering, and is being made contemporaneously with and contingent upon the Exchange Offers and the Concurrent Notes Offering. Pursuant to the Note Purchase Agreement, Fairfax will also receive: (i) a cash fee equal to 2.5% of the aggregate subscription amount under the Note Purchase Agreement, (ii) a 5% subscription fee payable in additional principal amount of First Lien Notes -- which subscription fee is also being paid to the participants in the Concurrent Notes Offering, (iii) a 2.5% fee payable in principal amount of Second Lien Notes based on a portion, if any, of the Bowater Notes Fairfax tenders in the Exchange Offers, and (iv) similar to the Backstoppers, the right to exchange a portion of any Third Lien Notes they would be entitled to receive in the Exchange Offers for Second Lien Notes. Pursuant to the terms of the Note Purchase Agreement, BowFin may not, except in limited circumstances, waive the minimum tender condition with respect to the Exchange Offers without the consent of Fairfax. The Note Purchase Agreement includes customary representations and warranties of the parties thereto. Fairfax's obligations under the Note Purchase Agreement are subject to satisfaction of conditions substantially similar to those in the Backstop Agreements and may be terminated in circumstances substantially similar to those pursuant to which the Backstop Agreements may be terminated. Consummation of each of the Exchange Offers and the Concurrent Notes Offering is conditioned upon the consummation of the Additional Financing Transaction and, likewise, consummation of the Additional Financing Transaction is contingent on the consummation of both of those transactions. 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'. ACTIVANT SOLUTIONS: Posts $24.8MM Net Loss in Qtr. Ended Dec. 31 ---------------------------------------------------------------- Activant Solutions Inc. posted a $24.8 million net loss for the three months ended December 31, 2008, on revenues of $96.2 million. Total revenues for the three months ended December 31, 2008, decreased by $12.6 million, or 11.6%, compared to the three months ended December 31, 2007. The decrease in revenues over the comparable period a year ago is primarily a result of an overall decrease in systems sales as well as a decrease in services revenues in Automotive, partially offset by an increase in services revenues in Wholesale Distribution. Total operating expenses increased by $22.4 million, or 49.9%, for the three months ended December 31, 2008, compared to the three months ended December 31, 2007. The increase was driven primarily by the impairment of goodwill as well as increases in amortization and restructuring costs offset by reductions in labor related expenses, bad debt, and outside services. Interest expense for the three months ended December 31, 2008, was $13.0 million compared with $13.7 million for the three months ended December 31, 2007. The decrease in interest expense was primarily a result of the reduction in the Company's outstanding debt as a result of principal payments made in the past six months totaling approximately $18.5 million as well as a lower interest rates in the three months ended December 31, 2008, compared to the same period in 2007. Other income (expense), net primarily consists of interest income, foreign currency gains or losses and gains or losses on marketable securities. Other income (expense), net for the three months ended December 31, 2008, was a loss of $0.3 million compared to income of $0.6 million for the three months ended December 31, 2007. Activant recognized income tax expense of $0.2 million, or 1.0% of pre-tax loss, for the three months ended December 31, 2008, compared to an income tax expense of $0.5 million, or 46.3% of pre-tax income, in the comparable period in 2007. The decrease in income tax expense is due to lower pre-tax income -- after giving effect to the non-deductible goodwill impairment charge -- during the three months ended December 31, 2008. The Company's effective tax rate for the three months ended December 31, 2008, differed from the statutory rate primarily due to the non-deductible goodwill impairment charge and to state taxes, net of U.S. income tax benefit. As of December 31, 2008, the Company's balance sheet showed total assets of $1 billion, total liabilities of $772.8 million and total stockholders' equity of close to $229.2 million. A full-text copy of the Company's quarterly report is available for free at: http://researcharchives.com/t/s?399b Headquartered in Livermore, California, Activant Solutions Inc. -- http://www.activant.com/-- is a technology provider of vertical business management solutions serving small and medium-sized retail and wholesale distribution businesses. The company serves three primary vertical markets: automotive aftermarket; hardlines and lumber; and wholesale distribution. Founded in 1972, Activant provides customers with industry tailored proprietary software, professional services, content, supply chain connectivity, and analytics. Activant has operations in California, Colorado, Connecticut, Illinois, New Jersey, Pennsylvania, South Carolina, Texas, Utah, Canada, Ireland, and the United Kingdom. * * * Activant Solutions Inc. senior subordinated notes continue to carry Moody's Investors Service's Caa1 rating which was placed in April 2006. AIRTRAN HOLDINGS: Appoints Michael Jackson to Board of Directors ---------------------------------------------------------------- AirTran Holdings, Inc., disclosed that Michael P. Jackson has been elected to the Company's board of directors. His term commences immediately. Mr. Jackson will fill the vacancy created when William J. Usery, Jr. retired from the board effective as of the 2008 Annual Meeting. In connection with Mr. Jackson's election as a director, he received a cash payment of $6,750 representing the pro rata portion of cash payments ordinarily made to directors in accordance with the board's usual policies, and was granted 2,900 shares of restricted stock vesting in thirds on May 20, 2009, 2010 and 2011, representing the pro rata portion of restricted stock grants ordinarily made in accordance with the Company's annual stock grant policy for all directors. "[Mr. Jackson's] extensive background in the aviation industry will serve our board and shareholders well," said Bob Fornaro, chairman, president and chief executive officer for AirTran Airways. "We welcome him to AirTran and have confidence that he will be an asset in helping us uphold our commitment to provide outstanding service and shareholder value." Mr. Jackson is president and founder of Firebreak Partners, LLC, which finances and deploys high-value security technologies to protect critical infrastructure. Prior to his current position, Jackson was the Deputy Secretary of the U.S. Department of Homeland Security, a role in which he served as the chief operating officer responsible for day-to-day operations of a department with an employee base of 210,000 and a budget of $48.5 billion. In addition, Mr. Jackson served as Deputy Secretary of the U.S. Department of Transportation from May 2001 to August 2003 where he particularly focused on DOT's response to the 9/11 terrorist attacks. Prior to joining DOT in 2001, he worked as chief operating officer at Lockheed Martin IMS's Transportation Systems and Services. During his distinguished career, Mr. Jackson has held positions for three U.S. Presidents and has coordinated substantial policy, delivered frequent Congressional testimony and interfaced with U.S. and foreign government officials. He has served on the board of directors for Amtrak. A native of Houston, Texas, Mr. Jackson has a B.A. from University of Houston and a Ph.D. with distinction from the Government Department at Georgetown University. He resides in northern Virginia with his wife, Caron, and their daughter. About AirTran Holdings Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 56 U.S. destinations. * * * The Troubled Company Reporter said on Aug. 29, 2008, that Standard & Poor's Ratings Services has lowered its ratings on AirTran Holdings Inc., including the corporate credit rating, which it lowered to 'CCC+' from 'B-'. At the same time, S&P removed the ratings from CreditWatch, where they had been placed with negative implications on May 22, 2008. The outlook is stable. ALERIS INT'L: Credit Swaps Index Trades to Be Settled ----------------------------------------------------- Markit said February 17 that in response to Aleris International, Inc.'s bankruptcy filing, Markit LCDX index dealers have voted to run a Credit Event Auction to facilitate settlement of loan-only credit default swap (LCDS) trades referencing the company, which is a constituent of series 8, 9, and 10 of the Markit LCDX index. The auction terms, including the auction date, will be determined by Markit LCDX dealers according to LCDS Auction Rules published on the International Swaps and Derivatives Association (ISDA) website. Markit and Creditex are the official administrators of Credit Event Auctions. The auction date and an auction timeline will be posted on http://www.creditfixings.com/ The Credit Event Auction process was launched in 2005 by Markit and Creditex in collaboration with ISDA and major credit derivative dealers. Since then, Markit and Creditex have conducted 39 Credit Event Auctions and the process has become an integral part of CDS market infrastructure. Markit is a financial information services company with more than 1,100 employees in Europe, North America and Asia-Pacific. Over 1,500 financial institutions use its independent services to manage risk, improve operational efficiency and meet regulatory requirement. About Aleris International Aleris International, Inc. produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. 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 operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. AMERICA CAPITAL: Court Confirms First Amended Plan of Liquidation ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida confirmed on Feb. 5, 2009, America Capital Corporation's First Amended Plan of Liquidation under Chapter 11 of the Bankruptcy Code dated Nov. 18, 2008. The plan was confirmed pursuant to the "cramdown" provisions under Sec. 1199(a)(10) and (b) of the Bankruptcy Code. Holders of Allowed Unsecured Claims under Class 4, which is impaired, voted to accept the plan, which was determined without including any acceptance of the plan by any insider. The Court also approved the appointment of Jeffrey H. Beck as the Liquidation Agent on the Plan's effective date. On the Plan's Effective Date, any and all property of the estate, including pursuant to Section 541 of the Bankruptcy Code and the Litigation Claims, including all recoveries, proceeds and products therefrom, shall be transferred to and vested in the Liquidating Debtor's Estate. As reported in the Troubled Company Reporter on Dec. 18, 2009, the Court approved the adequacy of America Capital Corp.'s disclosure statement which was filed in support of its First Amended Plan of Liquidation. As reported in the Troubled Company Reporter on Dec. 2, 2008, the Plan will be funded entirely by the TFC distribution and recoveries, if any, in respect to certain litigation claims against third parties. A full-text copy of America Capital Corp.'s First Amended Plan of Liquidation is available for free at: http://researcharchives.com/t/s?357e A full-text copy of the First Amended Disclosure Statement for America Capital Corp.'s First Amended Plan of Liquidation is available for free at: http://researcharchives.com/t/s?357f About America Capital Corp. Based in Miami, Florida, America Capital Corp. holds a 65.19% interest in TransCapital Financial Corporation. TransCapital Financial is a holding and management company that conducted substantially all of its operations through its wholly owned subsidiary, Transohio Savings Bank, FSB. Transohio Savings' key activities as a savings and loans institution were banking and lending and its primary lending activity was the originating and purchasing of loans secured by mortgages on residential properties. Transohio Savings also endeavored to generate residential loan originations through branch personnel and real estate brokers. Mobile home and home improvement loans were generated through dealers and contractors and additionally, Transohio Savings made construction loans generated by contractors that usually extended to not more than one year in length. America Capital filed for Chapter 11 relief on June 19, 2006 (Bankr. S.D. Fla. Case No. 06-12645). Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, Jeffrey I. Snyder, Esq., Mindy A. Mora, Esq., and Nicole Testa Mehdipour, Esq., at Bilzin Sumberg, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $52,005,000 and total debts of $207,170,268. TransCapital Financial Corporation also filed for Chapter 11 relief on June 19, 2006 (Bankr. S.D. Fla. Case No, 06-12644). Its Chapter 11 Plan was confirmed on Sept. 23, 2008. AMERICAN AXLE: John A. Casesa Resigns from Board of Directors ------------------------------------------------------------- American Axle & Manufacturing Holdings, Inc., disclosed in a regulatory filing that John A. Casesa resigned from the board of directors effective immediately. 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 INTERNATIONAL: Court Dismisses Shareholders' Class Suit ---------------------------------------------------------------- On November 4, 2008, a purported class action captioned Wilma Walker v. American International Group, Inc., CA No. 4142-CC was filed in the Court of Chancery of the State of Delaware. Plaintiffs in the Action alleged violations of Delaware General Corporation Law Section 242(b)(2) and breaches of fiduciary duty in connection with the Series C Preferred Stock to be issued by American International Group, Inc., to a trust created for the benefit of the United States Treasury, pursuant to a credit agreement with the Federal Reserve Bank of New York entered into on September 22, 2008. On February 5, 2009, the Court approved a Stipulation and Order of Dismissal entered into by the parties in connection with the Action. The Stipulation and Order of Dismissal requires that notice of such should be given to shareholders of AIG. A full-text copy of the Stipulation and Order of Dismissal is available for free at: http://researcharchives.com/t/s?39a5 Based in New York, American International Group, Inc. (AIG) is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76 on Sept. 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw- Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On Sept. 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At Sept. 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since Sept. 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to Sept. 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. AMERICAN PACIFIC: S&P Gives Negative Outlook; Affirms 'B+' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on American Pacific Corp. to negative from stable. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating on American Pacific and affirmed its 'B+' rating on the company's existing senior unsecured notes due 2015. "The outlook revision reflects our expectation of weaker 2009 operating results caused by declines in revenue and margins related to its fine chemicals segment," said Standard & Poor's credit analyst Henry Fukuchi. "We expect the volume loss from its anti-viral product within this segment will be partially mitigated by top line growth from existing and new products. The outlook revision also reflects the concern of a weaker financial profile if American Pacific continues to execute its acquisition strategy in the midst of an expected weak fiscal year." The rating on Las Vegas-based American Pacific Corp. reflects the company's business position as a niche provider of ammonium perchlorate and active pharmaceutical ingredients. The rating also reflects a narrow customer and product base, demand that is somewhat dependent on governmental appropriations in the AP business and on the continued success of a few key drugs in the active pharmaceutical ingredients business, and a leveraged financial profile. The outlook is negative. The ratings could be lowered if operating profitability deteriorates further because of weaker volumes and results in an funds from operations to total adjusted debt ratio below 20%. The ratings could also be lowered if management engages in an aggressive repurchase of stock, or an acquisition that would materially stretch the financial profile or diminish liquidity. The current ratings could be supported if AMPAC maintains a funds from operations to total adjusted debt ratio at approx. the 20% level through a business cycle. ARMADA SINGAPORE: Creditor Opposes Chapter 15 Petition ------------------------------------------------------ Armada (Singapore) Pte, received an objection to its Chapter 15 petition from Transfield ER Capt Ltd. According to Bloomberg's Bill Rochelle, Transfield, which has claims of $209 million, questioned whether Armada's corporate nerve center is located in Singapore. If it isn't, the bankruptcy proceedings in Singapore wouldn't be the "foreign main proceeding," and the broadest form of Chapter 15 relief wouldn't be allowed, Transfield said, according to the report. Transfield, according to Mr. Rochelle, also contends there are procedural defects in how Armada is moving ahead with the Chapter 15 papers. The Troubled Company Reporter, citing Bloomberg News, reported on January 19 that Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York granted interim approval to Armada's petition for protection from creditors under Chapter 15. Approval of the Chapter 15 petition would allow Armada to reorganize in Singapore and protects it from U.S. lawsuits. Armada announced January 6 that it has been granted leave to convene a creditors' meeting to vote on a proposed Scheme of Arrangement pursuant to Section 210 of the Companies Act of the Republic of Singapore that will protect its assets and maximize funds available to creditors as it restructures its business operations. About Armada Singapore Armada (Singapore) Pte. Ltd. -- http://www.armadagroup.com/-- is a privately owned holding company incorporated and based in Singapore. It is one of the world's leading dry bulk shipping companies. It provides ocean transportation services to a variety of major raw material and commodity shippers and consumers located throughout the globe. Armada filed for bankruptcy protection under Chapter 15 of the U.S. Bankruptcy Code on January 7, 2009, to seek recognition of its bankruptcy proceedings in Singapore and imposition of the automatic stay to protect its assets while it restructures (Bankr. S.D. N.Y. Case No. 09-10105). The petitioner's counsel is Barbra R. Parlin, Esq., at Holland & Knight, LLP, in New York. In its bankruptcy petition, Armada estimated assets and debts of US$100 million to US$500 million. ASHTON WOODS: S&P Withdraws 'D' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'D' corporate credit ratings assigned to Ashton Woods USA LLC and its subsidiary, Ashton Woods Finance Co. S&P also withdrew its 'D' issue-level rating and S&P's '6' recovery rating on the company's senior subordinated notes due 2015. S&P is withdrawing its ratings following the Feb. 13, 2009, completion of a transaction that resulted in the exchange of substantially all of the company's previously public $125 million 9.5% senior subordinated notes due 2015 for new unrated privately placed subordinated notes (up to $65 million at 11% due 2015) and equity in the company (roughly 20%). The new notes will not bear interest during the first three years. On the third anniversary of the issue date, interest will be paid in cash if fixed-charge coverage exceeds 1.75x. If FCC does not exceed 1.75x, interest may be paid, at the company's option, by the issuance of additional new notes. Atlanta, Georgia-based Ashton Woods is a comparatively small, privately held homebuilder that is structured as a limited liability company. The company is owned by Toronto, Ontario-based Great Gulf Group of Cos., which is also a private entity. Ashton Woods currently operates active communities in Atlanta, Georgia, Dallas and Houston, Texas, Orlando and Tampa, Florida, and Phoenix, Arizona. Ashton Woods builds single-family homes, townhouses, and condominiums, primarily for first-time, first-time move-up, and second-time move-up buyers. Ratings Withdrawn Ashton Woods USA LLC Rating ------ To From -- ---- Corporate credit NR D/--/-- Senior subordinated NR D (Recov. rtg: 6) Ashton Woods Finance Co. To From -- ---- Corporate credit NR D/--/-- ATP OIL & GAS: Bank Loan Continues to Sell at Substantial Discount ------------------------------------------------------------------ Participations in a syndicated loan under which ATP Oil & Gas Corp. is a borrower traded in the secondary market at 52.50 cents- on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 3.07 percentage points from the previous week, the Journal relates. ATP Oil & Gas pays interest at 475 points above LIBOR. The bank loan matures on December 30, 2013. The bank loan is unrated. As reported by the Troubled Company Reporter on January 7, 2009, the bank loan traded in the secondary market at 56.25 cents-on- the-dollar during the week ended January 2, 2009, representing a drop of 2.08 percentage points from the previous week. ATP Oil & Gas Corp. is an international offshore oil and gas development and production company with operations in the Gulf of Mexico and the North Sea. The company trades publicly as "ATPG" on the NASDAQ Global Select Market. On the Net: http://www.atpog.com/ AVANTAIR INC: Reports $600,000 Loss in Quarter ended December 31 ---------------------------------------------------------------- Avantair, Inc. reported financial results for its fiscal second quarter ended Dec. 31, 2008. Second Quarter Fiscal 2009 and Recent Highlights: -- Total record revenues of $35.4 million, up 23.7% year-over- year; -- Loss from operations of $0.6 million, down 86.9% year-over- year; -- EBITDA (profitable results from operations before depreciation and amortization) of $690,360, up 118.1% year- over-year; -- Charter card sales up 96% quarter-over-quarter, to 53 from 27; -- Reported delivery of 50th Piaggio Avanti; -- Disclosed new hybrid flight program - 'Axis Club' - designed to bridge the gap between the financial commitment of a fractional share and charter cards. "We are pleased to report an excellent second quarter with record high revenues of $35.4 million, a significant decrease in our loss from operations and our first quarter of positive EBITDA of $690,360," stated Steven Santo, chief executive officer of Avantair. "These results demonstrate the leverage in our business model, and were driven by the consistent growth in our sales pipeline, recent fleet utilization improvements and a disciplined focus on reducing costs. Furthermore, the current market environment serves to highlight our position as the lowest-cost and most fuel-efficient provider in the Light Jet market, attracting an increasing number of customers from competing fractional programs, as they continue to seek a more affordable alternative." "Charter card sales also reached a record high, increasing 96% quarter-over-quarter, which is a testament to our continued ability to attract those customers focused on affordability, comfort and safety,' Mr. Santo continued. "As a result, the majority of cards sold were to customers choosing Avantair over more expensive, competing fractional programs. Historically, we have been able to convert approximately 20% of our cardholders to fractional shareowners. We are very excited about our recently launched Axis Club program, which affords customers the opportunity to enjoy the benefits of private ownership while reducing the initial outlay of funds required when purchasing a fractional share. We believe its hybrid and low-cost approach to private travel will enable us to build our sales pipeline and capture a greater percentage of the more than 3,000 light jet fractional owners in the market." About Avantair Inc. Based in Clearwater, Florida, Avantair Inc. (OTC BB: AAIR.OB) -- http://www.avantair.com/-- is the exclusive North American provider of fractional aircraft shares in the Piaggio Avanti P.180 aircraft. Avantair is the fifth largest company in the North American fractional aircraft industry and the only publicly-traded standalone fractional operator. The Company currently manages a fleet of 33 planes with another 52 Piaggio Avanti IIs on order. It also recently announced an order of 20 Embraer Phenom 100s. Avantair, with operations in 5 states and approximately 270 employees, offers private travel solutions for individuals and companies at a fraction of the cost of whole aircraft ownership. At Sept. 30, 2008, the Company's balance sheet showed total assets of $187,529,411 and total liabilities of $222,897,177, resulting in a stockholders' deficit of $35,367,766. For three months ended Sept. 30, 2008, the Company posted a net loss of $3,335,733 compared with a net loss of $4,792,698 for the same period in the previous year. At Sept. 30, 2008, and June 30, 2008, Avantair had a working capital deficit of approximately $29 million and $30.2 million and an accumulated deficit of about $80 million and $77 million. As of Sept. 30, 2008, cash and cash equivalents amounted to approximately $8.2 million. AVITAR INC: "Going Concern Doubt" Accountant Resigns ---------------------------------------------------- Cory Gelmon, chief executive officer and director of Avitar Inc., disclosed in a regulatory filing dated February 11, 2009, that BDO Seidman, LLP, the independent accountant who was engaged as the principal accountant to audit its financial statements, resigned effective October 14, 2008. BDO Seidman's audit report included in the Company's consolidated financial statements for the years ended September 30, 2007, and 2006, was modified to include an explanatory paragraph regarding recurring losses and working capital and stockholder deficits that raised substantial doubt as to the Company's ability to continue as a going concern. The audit report contains no other adverse opinion, disclaimer of opinion or modification as to uncertainty, audit scope or accounting principles. During the fiscal years ended September 30, 2007 and 2006, and any subsequent interim period preceding the resignation of BDO Seidman, there were no disagreements with BDO Seidman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which disagreements, if not resolved to the satisfaction of BDO Seidman, would have caused it to make reference to the subject matter of the disagreement in connection with its report. About Avitar Inc. Avitar Inc. (OTC BB: AVRN.OB)-- http://www.avitarinc.com/-- develops, manufactures and markets proprietary products in the oral fluid diagnostic market, disease and clinical testing market, and customized polyurethane applications used in the wound dressing industry. * * * BDO Seidman LLP, in Boston, expressed substantial doubt about Avitar Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm reported that the company has suffered recurring losses from operations and has working capital and stockholder deficits as of Sept. 30, 2007. As reported in the Troubled Company Reporter on Feb. 22, 2008, Avitar Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $1,452,056 in total assets, $9,335,504 in total liabilities, and $3,215,490 in convertible preferred stock and redeemable convertible preferred stock, resulting in an $11,098,938 total stockholders' deficit. BARBECUES & MORE: To Close Last Store Due to Poor Retail Climate ---------------------------------------------------------------- Barbecues & More will close its last Orange County store in Costa Mesa. The Company made the announcement on Feb. 6 and said the 8,000-square-foot Costa Mesa store -- which opened about 22 years ago -- is set to close within the next two weeks. "We are closing our final store due to the tough retail climate where consumers are extremely concerned about the economy and are holding onto their money," said Brett Maister, CEO of the Maister Group of Companies dba Barbecues & More. The merchandise at this store is currently marked off 40% and more. Barbecues & More was previously a franchised business of Barbeques Galore, which filed for bankruptcy protection in August 2008. In September, Barbeques Galore said in a statement that it sold substantially all of its assets to a newly formed entity owned by Grand Hall Enterprise Co., Ltd., the largest barbeque grills manufacturer in Taiwan. The purchase price was $15 million. Through the sale, Barbecues & More was separated from Barbeques Galore. About Barbecues & More Headquartered in Santa Ana, Calif. in a 15,000 foot warehouse and established in 1987 Barbecues & More, formerly Barbeques Galore Orange County, pioneered the Gourmet Backyard Chef and carried name brands such as Viking(R), Weber(R), Twin Eagles(R), Lynx(R), Fire Magic(R), Infinity Outdoor(R), U-line(R), Danby(R), American Gas Logs, Charbroil(R), Beef-Eater(R) from Australia and Blue Rhino(R) to name a few. For more information, call Brett Maister at 1-800-551-3835 or e-mail bmaister@ocbbq.com. BARBEQUES GALORE: Former Franchisee to Close Final Store Location ----------------------------------------------------------------- Barbecues & More will close its last Orange County store in Costa Mesa. The Company made the announcement on Feb. 6 and said the 8,000-square-foot Costa Mesa store -- which opened about 22 years ago -- is set to close within the next two weeks. "We are closing our final store due to the tough retail climate where consumers are extremely concerned about the economy and are holding onto their money," said Brett Maister, CEO of the Maister Group of Companies dba Barbecues & More. The merchandise at this store is currently marked off 40% and more. Barbecues & More was previously a franchised business of Barbeques Galore, which filed for bankruptcy protection in August 2008. In September, Barbeques Galore said in a statement that it sold substantially all of its assets to a newly formed entity owned by Grand Hall Enterprise Co., Ltd., the largest barbeque grills manufacturer in Taiwan. The purchase price was $15 million. Through the sale, Barbecues & More was separated from Barbeques Galore. About Barbecues & More Headquartered in Santa Ana, Calif. in a 15,000 foot warehouse and established in 1987 Barbecues & More, formerly Barbeques Galore Orange County, pioneered the Gourmet Backyard Chef and carried name brands such as Viking(R), Weber(R), Twin Eagles(R), Lynx(R), Fire Magic(R), Infinity Outdoor(R), U-line(R), Danby(R), American Gas Logs, Charbroil(R), Beef-Eater(R) from Australia and Blue Rhino(R) to name a few. For more information, call Brett Maister at 1-800-551-3835 or e-mail bmaister@ocbbq.com. BASSETT FURNITURE: Gets Waiver From Lender on Covenant Violation ---------------------------------------------------------------- Bassett Furniture Industries Inc. said it has received a waiver of a covenant violation from its bank lender and a reduction of the net worth covenant requirements for fiscal 2009 and 2010. According to the Company, due to the charges recorded in the fourth quarter of 2008, its net worth decreased below the levels specified in the revolving credit facility. The Company said the other relevant terms in the facility including the interest rate were not significantly amended. The Company currently has $19.0 million outstanding on its revolving credit facility with $10.5 million of availability. The Company amended its facility in August 2008 by extending the maturity date an additional two years and amending certain covenants. The credit facility, as amended, provides for borrowings of up to $45.0 million at a variable interest rate of LIBOR plus 1.75% (3.66% on November 29, 2008). The facility is secured by a pledge of certain of the Company's marketable securities and substantially all of the Company's receivables and inventories. To the extent the value of the marketable securities falls below $16.0 million, the Borrowing Base is decreased by 125% of the difference between $16.0 million and the actual value of those securities. This facility contains, among other provisions, certain defined financial requirements including a maximum ratio of debt to equity and a minimum level of net worth. Bassett Furniture recently disclosed results of operations for its fiscal year and quarter ended November 29, 2008. Sales for the fourth quarter of 2008 were $61.7 million, down 18.9% from the $76.0 million for the fourth quarter of 2007. This shortfall is primarily due to continued soft furniture retail conditions fueled by the significant economic turmoil during the fourth quarter of 2008 that affected the financial markets, consumer confidence and spending on big-ticket items such as furniture. Gross margins in the fourth quarter of 2008 were 40.0% as compared to 38.8% for 2007. This increase is due to improved margins in both the wholesale and retail segments. Selling, general and administrative expenses decreased $0.6 million for the fourth quarter of 2008 as compared to the fourth quarter of 2007 primarily due to decreased spending in the Company's wholesale and retail segments offset by a $4.1 million increase in bad debt expense. Bad debt expense increased due to store closings (both planned and completed) and the prolonged weak retail environment that is affecting certain licensees within the Company's retail network. The Company recorded a significant non-cash charge of $23.4 million to write-off substantially all of the deferred tax assets previously recorded. The Company reported a net loss of $37.8 million for the quarter ended November 29, 2008, as compared to a net loss of $4.0 million, for the quarter ended November 24, 2007. Robert H. Spilman, Jr., president and chief executive officer, said, "The Company incurred non cash charges totaling $30.3 million comprised of write-offs of deferred income tax assets, a goodwill write-off, and the impairment of its marketable securities portfolio. Furthermore, the Company recorded $6.6 million of bad debt reserves during the quarter. These charges were partially offset by $2.1 million of proceeds from the CDSOA. "We are in an extremely volatile and difficult environment and are focusing its efforts squarely on the generation and preservation of cash. At year end, the Company had reduced inventories by 13%, a $6.7 million reduction. Company wide headcount had dropped 7% despite the acquisition of four licensed stores during the course of the year. The Company is continuing to assess its overall cost structure and inventory levels and are presently implementing plans to reduce both. Accordingly, the Company has recently suspended its employee 401k match and its quarterly dividend to shareholders. "We continue to work with our Bassett Home Furnishings licensed store network to help the Company's dealers weather this unprecedented storm. The Company is focused on helping its dealers streamline their cash flow and to implement more aggressive product promotions in an attempt to stimulate consumer interest. Six underperforming licensee stores were closed and two were acquired during the quarter. In addition to these efforts, the Company is planning to close another 8-10 licensed stores in 2009 and could acquire additional licensee stores. At year end, the network was comprised of 84 licensed and 31 corporate stores. The Company used $19.0 million of cash in operating activities during the year ended November 29, 2008 primarily to fund retail operating losses, slower collections on accounts receivable and a decrease in accounts payable. This use of cash was due to both the continued difficult environment at retail as well as payments to fund the inventory build at the end of 2007 and the beginning of 2008 for the January 2008 new product rollout. Although the Company plans additional product introductions in 2009, they will not be as extensive as the rollout in early 2008. The Company expects overall inventory levels to decrease during 2009, generating additional positive cash flow. The Company also funded $18.7 million in dividends, including an $8.7 million special dividend in August, and repurchased $4.3 million of common stock under a previously announced share repurchase plan. These cash requirements were primarily funded through $29.6 million of net investment sales, $6.1 million in dividends from an affiliate and $9.0 million in additional borrowings on the revolving credit facility. Subsequent to year end, the Company announced that the Board of Directors did not declare a regular quarterly dividend to be paid in the second quarter of 2009, conserving approximately $1.1 million of cash. This follows the announcement in October of 2008 where the Board decided to suspend making any decision with respect to the $0.50 per share second special dividend that it previously said it intended to make during 2008. Also subsequent to year end, the Company received $10.6 million or 80% of its net asset value of the investment in Styx Partners, L.P. The Company expects to receive the remaining portion by the end of 2009. About Bassett Furniture Bassett Furniture Industries, Inc. (BSET) manufactures and markets high quality, mid-priced home furnishings. With approximately 115 Bassett stores, Bassett has leveraged its strong brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. BEARINGPOINT INC: Files for Chapter 11 with Pre-Packaged Plan ------------------------------------------------------------- BearingPoint, Inc. said it has achieved a financial restructuring agreement with its senior secured lenders that will significantly reduce its debt and improve its capital structure. To facilitate this process, the Company filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York. The Company's operations based outside the United States are not included in the filing and will not be affected. The Company plans to continue its operations in the normal course through the financial restructuring process. In addition, the Company plans to continue providing uninterrupted service to its clients around the world. The filing was made with a "pre-arranged" restructuring plan with the support of the Company's senior secured lenders. As a result, the Company expects that it will complete its restructuring process on an accelerated basis. The decision to file was made after an exhaustive review of alternative options. In addition to significantly reducing its debt burden, the process resolves the Company's near-term cash payment obligations relating to the right of the holders of certain of the Company's debentures to require the Company to repurchase these debentures, as early as April 2009, as well as the prospect that the Company would have to repay all of its outstanding debt in the event that its common stock were delisted from the New York Stock Exchange. "Our day-to-day operations will continue uninterrupted and we want to assure our employees and customers that we remain committed to serving our clients and to providing world-class consulting solutions," said Ed Harbach, CEO of BearingPoint. "This restructuring is an important step to secure a better and stronger future for BearingPoint and we expect to emerge from this process in an expeditious manner," Harbach continued. "We've made significant progress in the last year to improve our underlying business fundamentals. We've delivered increases in gross profit and operating income and substantially lowered our overhead expenses. This restructuring process will significantly improve our financial profile and further enhance our ability to compete in the marketplace," Harbach continued. As stated in the filing, BearingPoint and its senior secured lenders have reached an agreement in principle to support the proposed pre-arranged plan of reorganization (the "Pre-Arranged Plan"), which has been filed with the Court. The Pre-Arranged Plan, among other things, provides that (i) the $500 million senior secured credit facility, dated as of May 18, 2007 and as amended on June 1, 2007, will be replaced with a new secured, senior credit facility as follows: term loan in the amount of $272 million plus accrued interest and a synthetic letter of credit facility in the amount of up to $130 million; plus the issuance of new preferred stock; (ii) the unsecured debt will be exchanged for different classes of common stock; and (iii) all existing equity in the Company will be cancelled for no consideration. The implementation of the Pre-Arranged Plan is dependent upon a number of factors, including final documentation, the approval of a disclosure statement and confirmation and consummation of the Pre-Arranged Plan in accordance with the provisions of the Bankruptcy Code. While the Company believes that its current plan provides the best available alternative for its creditors, clients and employees, the Company will continue to consider additional enhancements or alternatives to its current plan that would lead to an improved recovery. The Company has filed a variety of first day motions with the Court that, with Court approval, will allow it to continue to conduct business without interruption. These motions are primarily designed to minimize any impact on the Company's clients and employees. During the reorganization process, suppliers and subcontractors should expect to be paid for post-petition purchases of goods and services in the ordinary course of business. The Company's principal bankruptcy attorneys are Weil, Gotshal & Manges LLP. AlixPartners, LLP and Greenhill & Co. are the Company's financial advisors. In its third quarter report to the Securities and Exchange Commission, BearingPoint disclosed $1,762,689,000 in assets and $2,231,839,000 in liabilities as of Sept. 30, 2008. About BearingPoint, Inc. BearingPoint, Inc. -- http://www.BearingPoint.com-- is one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. Based in McLean, Va., the firm has approximately 15,000 employees focusing on the Public Services, Commercial Services and Financial Services industries. BearingPoint professionals have built a reputation for knowing what it takes to help clients achieve their goals, and working closely with them to get the job done. The Company's service offerings are designed to help clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next-generation" technology. BEARINGPOINT INC: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: BearingPoint, Inc. fka KPMG Consulting, Inc. 1676 International Drive McLean, VA 22102 Bankruptcy Case No.: 09-10691 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- BE New York Holdings, Inc. 09-10690 BearingPoint, LLC 09-10692 BearingPoint Americas, Inc. 09-10693 BearingPoint BG, LLC 09-10694 BearingPoint Enterprise Holdings, LLC 09-10695 BearingPoint Global, Inc. 09-10696 BearingPoint Global Operations, Inc. 09-10697 BearingPoint International I, Inc. 09-10698 BearingPoint Israel, LLC 09-10699 BearingPoint Puerto Rico, LLC 09-10700 BearingPoint Russia, LLC 09-10701 BearingPoint South Pacific, LLC 09-10702 BearingPoint Southeast Asia LLC 09-10703 BearingPoint Technology Procurement Services, LLC 09-10704 BearingPoint USA, Inc. 09-10705 i2 Mid Atlantic LLC 09-10706 i2 Northwest LLC 09-10707 Metrius, Inc. 09-10708 OAD Acquisition Corp. 09-10709 OAD Group, Inc. 09-10710 Peloton Holdings, L.L.C. 09-10711 Softline Aquisition Corp. 09-10712 Softline Consulting & Integrators, Inc. 09-10713 A & B Parker, Inc. 09-10714 Type of Business: The Debtor provides management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. The company's core services include management consulting, technology solutions, application services and managed services. In North America, BearingPoint delivers consulting services through its Public Services, Commercial Services and Financial Services industry groups (North American Industry Groups), which provides industry-specific knowledge and service offerings. Outside of North America, BearingPoint operates in Europe, the Middle East and Africa (EMEA); the Asia Pacific region, and Latin America (including Mexico). Troubled Company Reporter said Nov. 21, 2008, BearingPoint, Inc. received on November 13, 2008, a notice from NYSE Regulation, Inc., that the NYSE has decided to suspend the company's common stock from trading prior to market opening on Monday, November 17, 2008. The NYSE based its determination on the "abnormally low" trading price of the company's common stock, which closed at $0.07 on November 12, 2008. In addition, the company had previously fallen below the NYSE's continued listing standard for minimum average closing price of $1.00 over a consecutive 30 trading day period and minimum average market capitalization of $100 million over a consecutive 30 trading day period See: http://www.bearingpoint.com Chapter 11 Petition Date: February 18, 2009 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Alfredo R. Perez, Esq. alfredo.perez@weil.com Weil Gotshal & Manges LLP 700 Louisiana, Suite 1600 Houston, TX 77002 Tel: (713) 546-5040 Fax: (713) 224-9511 Financial Advisor: Greenhill & Co., LLC Restructuring Advisor: AP Services LLC Special Corporate Counsel: Davis Polk & Wardell The Debtors' financial condition as of September 30, 2008: Total Assets: $1,762,689,000 Total Debts: $2,231,839,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York $251,415,258 Indenture Trustee under the Series A Notes 101 Barclay Street, 8W New York, NY 10286 The Bank of New York $203,398,611 (Indenture Trustee under the Series B Notes) 101 Barclay Street, 8W New York, NY 10286 The Bank of New York $201,393,317 (Indenture Trustee under the Series C Notes) 101 Barclay Street, 8W New York, NY 10286 Friedman, Fleischer & $37,886,126 Lowe Capital Partners II, L.P. (Purchaser under the FFL Notes) One Maritime Plaza Suite 1000 San Francisco, CA 94111 Attn: Spencer C. Fleischer Tel: (415) 402-2100 AT&T Corp. $13,810,852 One AT&T Way Benminster, NJ 07921 PGA Tour Inc. $3,543,938 112 PGA Tour Boulevard Ponte Verdra Beach, FL 32092 UBS AG, Stamford Branch $3,500,000 677 Washington Boulevard Stamford, CT 06901 Attn: Christopher Gomes 203-719-4176 KPMG LLP - USA $1,873,698 Three Chestnut Ridge Road Montvale, NJ 07645 KPMG LLP - USA $1,391,185 Three Chestnut Ridge Road Montvale, NJ 07645 Attn: Alicia Widelski 201-307-7256 Sun Microsystems Inc. $1,964,000 Bank of America Lockbox Service 12120 Collection Center Dr. Chicago, IL 60693 Judy Ethell $1,740,000 823 Fairfield Lake Drive Chesterfield, MO 63017 FFL Parallel Fund II, L.P. $1,418,122 One Maritime Plaza, Suite 1000 San Francisco, CA 94111 Attn: Spencer C. Fleischer 415-402-2100 Deltek Systems $1,025,960 P.O. Box 79581 Baltimore, MD 21279 Attn: Sherri Perfater 515-783-4156 GW Consulting Inc. $970,289 5870 Trinity Parkway, Unit 300 Centreville, VA 20120 Attn: Isabel Vasquez 703-592-1413 The West River Group GS $937,341 P.O. Box 376 25610 Chance Farm Court Royal Oak, MD 21662 Attn: Taylor Rose 202-320-1785 Equant Inc. $867,338 P.O. Box 7247-7134 Philadelphia, PA 19170 Attn: Erwann Revolt +353-1-402-5959 Hewlett Packard $789,825 P.O. Box 101149 Atlanta, GA 30392 Attn: Mary Ellen Strei 718-788-0101 Morgan Business Consulting $778,915 LLC 21377 Scara Place Ashburn, VA 20148 Attn: Cathy Goin 866-455-2424 x3 FFL Executive Partners II $726,881 L.P. One Maritime Plaza, Suite 1000 San Francisco, CA 94111 Attn: Spencer C. Fleischer 415-402-2100 Cisco Systems Capital $675,679 Corporation 170 West Tasman Drive San Jose, CA 95134 Siemens IT Solutions and $644,517 Services Inc. Dept CH 14235 Palatine, IL 60055 Attn: Denna Austin 513-336-1246 Raya USA LLC $639,810 1660 International Drive Suite 400 McLean, VA 22102 Federal Management $588,652 Systems Inc. 462 K Street NW Washington, DC 20001 Attn: Joy Creavalle 202-842-3003 x407 Oracle USA Inc. $548,270 Dept CH 10699 Palatine, IL 60055 Attn: Sriram Ravichandran 888-803-7414 IBM Credit LLC $527,039 North Castle Drive Armonk, NY 10504 TEKsystems Inc. $520,892 P.O. Box 198568 Atlanta, GA 30384 Attn: Kim Lacy 410-540-7234 GPI Plaza, LP $412,980 World Learning Inc. $378,481 Square One Armoring $320,020 Services Company Parsons Commercial $308,815 Technology Group Inc. The petition was signed by John DeGroote, executive vice president and chief legal officer. BERNARD L. MADOFF: Meeting of Creditors to Be Held Tomorrow ----------------------------------------------------------- The meeting of creditors of Bernard L. Madoff Investment Securities LLC will be held on Friday, February 20, 2009, at 10:00 a.m. at the Auditorium of the United States Bankruptcy Court, Southern District of New York, One Bowling Green, New York (the entrance to the Auditorium is on the State Street side of the building and is also marked as the handicapped entrance to the Smithsonian Institute American Indian Museum). Meeting attendees are encouraged to arrive early as the Auditorium and overflow rooms have a limited seating capacity of 460 and attendees are required to pass through a security checkpoint before being admitted to the building. The Trustee anticipates that the agenda for the meeting will include: * Report on the commencement of the liquidation proceeding and the role of the Trustee. * Status Report on the Trustee's activities to date. * Status report about litigation and Trustee's investigation. * Next steps including the processing, review and satisfaction of customer claims. * Questions from the audience and from online submissions to the Trustee's Web site: http://www.madofftrustee.com/CreditorsMeetings.aspx Due to the fact that this case involves a criminal matter, Irving Picard, the Trustee, does not expect that any member of pre- liquidation management of BLMIS will be present for examination. Various individuals, foundations, banks, hedge funds and firms have disclosed losses tied to investments with Bernard L. Madoff, who has been jailed on allegations of running a $50-billion Ponzi scheme. At least 10 parties, led by Fairfield Greenwich Corp. which has lost $7.5 billion, have each disclosed more than a billion dollars in losses due to investments with Madoff. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were at least $50 billion Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. BERNARD L. MADOFF: Client List Includes Defense Counsel ------------------------------------------------------- Bernard Madoff's defense attorney, Ira "Ike" Sorkin, may have a conflict of interest defending his client in a $50 billion fraud case because the lawyer's parents invested with Madoff until 2007, Erik Larson of Bloomberg News reported. The investment was an individual retirement account opened by Sorkin's father and inherited by his mother in 2001, Mr. Sorkin said, according to the report. When his mother died in 2007, the IRA was cashed out. The investment came to light after Mr. Sorkin's name appeared in a 162-page list of Madoff clients prepared by AlixPartners, LLP, the claims agent hired by the trustee of Bernard L. Madoff Investment Securities LLC. A copy of the list of creditors is available for free at http://bankrupt.com/misc/Madoff_Clients_ExhA.pdf Various individuals, foundations, banks, hedge funds and firms have disclosed losses tied to investments with Bernard L. Madoff, who has been jailed on allegations of running a $50-billion Ponzi scheme. At least 10 parties, led by Fairfield Greenwich Corp. which has lost $7.5 billion, have each disclosed more than a billion dollars in losses due to investments with Madoff. Aside from filing claims in Madoff's cases, other parties have pursued actions against fund managers for investing their money in Madoff. New York University said in a Dec. 23 complaint that it had at least $24 million in losses after J. Ezra Merkin and his funds invested its money with BLMIS without consent. According to Bloomberg, New York State Supreme Court Justice Richard Lowe in Manhattan has issued an order restraining Mr. Merkin, along with his Gabriel Capital LP fund and Ariel Fund Ltd., from withdrawing, liquidating or dissolving assets. Mr. Merkin, former chairman of GMAC LLC, "invested billions of client funds with Madoff," Bloomberg said. He said that his Ariel Fund plunged 41.2 percent during the fourth quarter, with most of the loss coming from investments tied to Madoff and private-equity securities. The Pension Fund for Hospital and Health Care Employees for the Philadelphia sued closely held hedge-fund firm Austin Capital Management Ltd. over losses tied to Madoff. Securities regulators are currently probing New York-based Cohmad Securities Corp., which was co-owned by Madoff. Secretary of the Commonwealth William Galvin said that Mr. Madoff's wife, Ruth, withdrew from Cohmad $5.5 million on Nov. 25 and $10 million on December 10, the eve of Mr. Madoff's arrest. The regulator is seeking to revoke Cohmad's state securities registration, based on allegations that Cohmad and BLMIS "so intertwined that they could be viewed as a common enterprise." Meanwhile, according to a Washington Post report, a 65-year old man, William Foxton, killed himself losing his savings in hedge funds that invested with Madoff. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were at least $50 billion Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. BERNARD L. MADOFF: Firms May Liable for Overlooking "Red Flags" --------------------------------------------------------------- Ianthe Jeanne Dugan and David Crawford at The Wall Street Journal report that legal and accounting experts say that the numerous accounting firms that failed to spot the alleged fraud at Bernard L. Madoff Investment Securities LLC could be legally vulnerable. WSJ says that the accounting firms include: -- Friehling & Horowitz, -- McGladrey & Pullen LLP, -- Tremont Group Holdings, -- KPMG LLP, -- PricewaterhouseCoopers, and -- Sosnik Bell & Co. Citing the experts, WSJ relates that the accounting firms that inspected Bernard L. Madoff Investment's books or the books of the "feeder funds" that helped steer money to the Company should have uncovered "red flags". According to WSJ, Lynn E. Turner, former chief accountant for the Securities and Exchange Commission, said that he finds it hard to believe that auditors of the feeder funds checked out Mr. Madoff's auditor "as a way of bullet-proofing their confidence," because "if they didn't, then investors will have to hold the auditor accountable." The report states that some companies involved in Madoff-related audits said that they had no obligation to check out Mr. Madoff's auditor, as their primary role is to ensure that the numbers their clients supply add up. Friehling & Horowitz, a suburban New York firm with one active accountant, audited Bernard L. Madoff Investment's books, says the report. WSJ reports that some critics blamed the SEC. WSJ relates that when Enron Corp. collapsed, the Public Company Accounting Oversight Board was set up under the Sarbanes-Oxley Act of 2002 to help detect fraud, and auditors of brokerage firms were supposed to be registered. According to the report, the SEC suspended the rule for private financial partnerships. Friehling & Horowitz, the report states, wasn't registered with the Public Company Accounting Oversight Board, nor was it "peer reviewed," a system in which auditors check out one another for quality control. Citing the American Institute of Certified Public Accountants, WSJ relates that David Friehling, Friehling & Horowitz's sole accountant, was enrolled in a peer-review program at AICPA, but wasn't required to participate because he told the trade group that he didn't handle audits. According to WSJ, Bernard L. Madoff Investment feeder fund Maxam Absolute Return Fund LP said in a lawsuit filed in Connecticut Superior Court against its auditor, McGladrey & Pullen LLP, that the firm was "in the best position to understand that an operation of Madoff's size required a much larger audit team." Court documents say that an investor claimed that KPMG allegedly overlooked a "highly suspicious claim" as it audited a Madoff feeder fund's books. The fund was managed by Tremont Group Holdings, WSJ relates. WSJ reports that investors in a fund marketed by Banco Santander SA also filed a lawsuit against PricewaterhouseCoopers Ireland. PricewaterhouseCoopers's Canadian affiliate, according to the report, has denied claims that it was negligent in its audit of Madoff feeder fund Fairfield Greenwich Group. WSJ states that hundreds of individuals who invested with Mr. Madoff hired Sosnik Bell & Co. to handle their monthly statements. Some used Sosnik' services at the suggestion of Bernard L. Madoff Investment and an affiliate, Cohmad Securities, WSJ relates. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were at least $50 billion Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. BUILDING MATERIALS: Bank Loan Sells at Substantial Discount ----------------------------------------------------------- Participations in a syndicated loan under which Building Materials Holding Corp. is a borrower traded in the secondary market at 32.00 cents-on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 4.00 percentage points from the previous week, the Journal relates. Building Materials pays interest at 225 points above LIBOR. The bank loan matures on November 10, 2013. The bank loan carries Moody's Caa1 rating. Based in Wayne, New Jersey, Building Materials Corporation of America is a manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. The company also manufactures specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. The Company is a wholly owned subsidiary of BMCA Holdings Corporation, which is a wholly owned subsidiary of G-I Holdings Inc. The Company's products are marketed in three groups: residential roofing, commercial roofing and specialty building products and accessories. On March 26, 2007, the Company completed the acquisition of ElkCorp, a manufacturer of roofing products and building materials. * * * As of September 28, 2008, the Company's balance sheet showed total assets of $2,715,306,000 and total liabilities of $2,766,795,000, resulting in total stockholders' deficit of $51,489,000. BULK PETROLEUM: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Bulk Petroleum Corporation, Debtor 9653 N. Granville Rd. Mequon, WI 53097 Tel: (262) 242-4800 Bankruptcy Case No.: 09-21782 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Bulk Petroleum Indiana Properties, LLC 09-21785 Bulk Petroleum Kentucky Properties, LLC 09-21786 Charanjeet Illinois Stations No. 6, Inc. 09-21788 Charanjeet's Wisconsin Properties One, LLC 09-21790 Darshan's Wisconsin Stations Eight, LLC 09-21791 Gurpal Wisconsin Stations, LLC 09-21792 Interstate Petroleum Products, Inc. 09-21793 Rakhra Wisconsin E-Z Go Stations Three, Inc. 09-21794 Sartaj"s Illinois Nine, LLC 09-21795 Darshan's Michigan Stations One, Inc. 09-21799 Dhaliwal's Michigan Bulk Stations Two, Inc. 09-21802 Rakhra Michigan E-Z Go Stations Three, Inc. 09-21804 Darshan's Illinois Properties, Inc. 09-21807 Dhaliwal Illinois Properties Five, Inc. 09-21808 Jaspal's Illinois Seven, LLC 09-21810 Sukhi's Illinois Eight, LLC 09-21812 Darshan's Indiana Stations One, Inc. 09-21815 Dhaliwal's Indiana Bulk Stations Two, Inc. 09-21816 Rakhra Indiana E-Z Go Stations Three, Inc. 09-21817 Darshan's Kansas Stations One, Inc. 09-21818 Darshan's Missouri Stations One, Inc. 09-21819 Darshan's Iowa Stations One, Inc. 09-21820 Dhaliwal Iowa Stations Two, Inc. 09-21821 Rakhra Iowa E-Z Go Stations Three, Inc. 09-21822 Darshan's Iowa Properties Four, LLC 09-21823 Dhaliwal Iowa Properties Five, LLC 09-21824 Darshan's Wisconsin Properties Four, Inc. 09-21825 Type of Business: The Debtors operate gasoline service stations. Chapter 11 Petition Date: February 18, 2009 Court: Eastern District of Wisconsin (Milwaukee) Judge: Susan V. Kelley Debtor's Counsel: Jerome R. Kerkman, Esq. jkerkman@kerkmandunn.com Kerkman & Dunn 757 N. Broadway, Suite 300 Milwaukee, WI 53202-3612 Tel: (414) 277-8200 Fax: (414) 277-0100 Special Conflicts Counsel: Michael P. Dunn, Esq. michaeldunnlaw@aol.com Nistler Law Office 757 North Broadway, Suite 600 Milwaukee, WI 53202 Tel: (414) 277-8515 Estimated Assets: $50 million to $100 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CITGO $4,958,302 P.O. Box 75065 Charlotte, NC 28275-5065 Marathon Ashland LLC $3,464,789 539 S. Main St. Findlay, OH 45840-3295 Valero $231,404 6611 Clayton Rd. St. Louis, MO 63117-1642 TKC Properties, LLC $157,288 Plews Shadley Racher & Braun $143,727 Fox O'Neill & Shannon Trust Act $112,288 M&M Service Inc. $86,531 Energy & Environment Cabinet $79,800 American Environmental $77,406 Miller Johnson PLC $45,118 Suby, Von Haden & Associates $44,240 Anderson Tackman & Co. PLC $42,740 Frost Brown Todd LLC $38,289 Cananwill, Inc. $23,8729 Patzik, Frank & Samotny Ltd $22,490 Quad Corporation $20,622 Trileaf $13,980 Louisville Air Pollution $11,811 Future Environmental Inc. $11,546 CT Corporation System $9,532 The petition was signed by Darshan S. Dhaliwal, president. CELSIA TECHNOLOGIES: Completes Sale of $1.71-Million Debentures --------------------------------------------------------------- On February 12, 2009, Celsia Technologies, Inc. (OTCBB: CLST (formerly CSAT)), disclosed that it sold in a private placement to accredited investors warrants and debentures, due December 31, 2010, having an aggregate principal balance of $1,710,526 for $1,300,000 -- before deducting expenses and fees related to the private placement. The debentures are secured by the assets of the Company and are convertible into shares of the Company's common stock at a price of $0.10 per share subject to adjustment as provided in the debentures. As part of the private placement, the company also issued the investors warrants to purchase up to 17,105,257 shares of the Company's common stock at a price of $0.10 per share subject to adjustment in certain circumstances detailed in the warrants. The securities sold by the Company in the private placement were not registered under the Securities Act of 1933, as amended, and were sold in reliance upon exemptions from the registration requirements of the Securities Act pursuant to Regulation D promulgated under the Securities Act. Therefore, those securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933 and any applicable state securities laws. Richard Rosenblum Appointed as Director Effective February 10, 2009, the Board of Directors of the Company increased its number of directors by two, for a total of nine, and appointed Richard Rosenblum to the Company's board of directors. Mr. Rosenblum has been a principal of Harborview Advisors, LLC since its inception. Mr. Rosenblum has been an active and productive force in the small and mid cap markets for over 16 years, advising, strategizing and raising over $400 million for both private and public companies during that time span. He previously was a Managing Director of Investment Banking for vFinance, Inc., a middle market investment banking and brokerage organization. Mr. Rosenblum has continued to provide advice, expertise and access to critical growth capital for emerging growth companies. Mr. Rosenblum sits on the Board of Directors of several companies, both public and private, and is active in fundraising for charitable causes. Mr. Rosenblum, born 1959, graduated from the State University of New York at Buffalo in 1981, Summa Cum Laude, with a degree in Finance and Accounting Mr. Rosenblum is not related to and has no relationship to any other Board member or executive officer and is not party to any transaction with the Company except that he serves as principal of Harborview Master Fund LP., which has invested a total of $783,194 in the Company. A full-text copy of the Company's disclosure is available for free at: http://researcharchives.com/t/s?39b1 About Celsia Technologies Headquartered in Miami, Florida, Celsia Technologies Inc. (OTC BB: CSAT) -- http://www.celsiatechnologies.com/-- is a full solution provider and licensor of thermal management products and technology for the PC, consumer electronics, lighting and display industries. The company develops and commercializes next-generation cooling solutions built on patented micro thermofluidic technology. Celsia Technologies' intellectual property portfolio includes patents registered in Korea, the U.S., Japan and Taiwan, with patents pending in the EU, Russia, India and China. The Company and its subsidiaries have recently commenced limited revenue producing operations and have sustained accumulated losses of approximately $45.3 and $40.3 million as of September 30, 2008 and December 31, 2007, respectively. The Company and its Subsidiaries have funded operations through equity and debt financing since inception. All these factors raise substantial doubt over the Company's ability to continue as a going concern. As of September 30, 2008, the Company's balance sheet showed total assets of $3,314,931 and total liabilities of $8,411,957, resulting in total stockholders' deficit of $5,097,026. CHARTER COMMUNICATIONS: Inks Terms of Ch. 11 Plan with Noteholders ------------------------------------------------------------------ Charter Communications, Inc., reached an agreement in principle with holders of certain of its subsidiaries' senior notes holding approximately $4.1 billion in aggregate principal amount of notes issued by Charter's subsidiaries, CCH I, LLC and CCH II, LLC. Pursuant to separate restructuring agreements, dated Feb. 11, 2009, entered into with each Noteholder, on or prior to April 1, 2009, Charter and its subsidiaries expect to file voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code to implement a restructuring aimed at improving its capital structure. Restructuring Agreements and Commitment Letters The restructuring contemplated by the Restructuring Agreements is expected to be funded with cash from operations, an exchange of debt of CCH II for other debt at CCH II, the issuance of additional debt, and the proceeds of an equity offering for which Charter has received a back-stop commitment from certain Noteholders. In addition to the Restructuring Agreements, the Noteholders have entered into commitment letters with Charter, pursuant to which they have agreed to exchange and purchase, as applicable, certain securities of Charter. A full-text copy of the Restructuring Agreement is available for free at: http://ResearchArchives.com/t/s?3996 A full-text copy of the Commitment Letter is available for free at: http://ResearchArchives.com/t/s?3997 Under the Notes Exchange, an offer to existing holders of senior notes of CCH II and CCH II Capital Corp. will be made to exchange their CCH II Notes for new 13.5% Senior Notes of CCH II and CCH II Capital Corp. CCH II Notes exchanged for New CCH II Notes in the Notes Exchange will be converted into New CCH II Notes with a principal amount equal to the outstanding principal amount of the CCH II Notes plus accrued but unpaid interest to the bankruptcy petition date plus post-petition interest, but excluding any call premiums or prepayment penalties. CCH II Notes that are not exchanged in the Notes Exchange will be converted into cash in an amount equal to the Exchange Amount. The aggregate principal amount of New CCH II Notes to be issued pursuant to the plan of reorganization outlined in the Restructuring Agreement is expected to be approximately $1.48 billion plus accrued but unpaid interest to the bankruptcy petition date plus post-petition interest, but excluding any call premiums or prepayment penalties, plus an additional $85 million. Under the Restructuring Agreements, certain holders of CCH II Notes have committed to exchange, pursuant to the Notes Exchange, an aggregate of approximately $1.21 billion in aggregate principal amount of CCH II Notes, plus accrued but unpaid interest to the bankruptcy petition date plus post-petition interest, but excluding any call premiums or any prepayment penalties. In the event that the aggregate principal amount of New CCH II Notes to be issued pursuant to the Notes Exchange would exceed the Target Amount, each Noteholder participating in the Notes Exchange will receive a pro rata portion of the Target Amount of New CCH II Notes, based upon the ratio of (i) the aggregate principal amount of CCH II Notes it has tendered into the Notes Exchange to (ii) the total aggregate principal amount of CCH II Notes tendered into the Notes Exchange. Participants in the Notes Exchange will receive a commitment fee equal to 1.5% of the principal amount plus interest on the CCH II Notes exchanged by the participant in the Notes Exchange. Under the New Debt Commitment, certain holders of CCH II Notes have committed to purchase an additional amount of New CCH II Notes in an aggregate principal amount of $267 million, subject to adjustment. Participants in the New Debt Commitment will receive a commitment fee equal to the greater of (i) 3.0% of their respective portion of the New Debt Commitment and (ii) 0.83% of its respective portion of the New Debt Commitment for each month beginning April 1, 2009, during which its New Debt Commitment remains outstanding. Under the Rights Offering, Charter will offer to existing holders of senior notes of CCH I that are accredited investors or qualified institutional buyers, the right to purchase shares of the new Class A Common Stock of Charter, to be issued upon Charter's emergence from bankruptcy, in exchange for a cash payment related to the equity value of Charter upon emergence. Upon emergence from bankruptcy, Charter's new Class A Common Stock is not expected to be listed on any public or over-the-counter exchange or quotation system and will be subject to transfer restrictions. It is expected, however, that Charter will thereafter apply for listing of its new Class A Common Stock on the NASDAQ Stock Market as provided in the Term Sheet. The Rights Offering is expected to generate proceeds of up to approximately $1.62 billion and will be used to fund the cash portion of the Notes Exchange, repayment of certain amounts relating to the satisfaction of certain swap agreement claims against Charter Communications Operating, LLC and for general corporate purposes. Under the Commitment Letters, subject to equity ownership limitations, certain Noteholders have agreed to subscribe for their respective pro rata portions of the Rights Offering, and certain of the Backstop Parties have, in addition, agreed to subscribe for a pro rata portion of any Rights that are not purchased by other holders of CCH I Notes in the Rights Offering. Noteholders who have committed to participate in the Excess Backstop will be offered the option to purchase a pro rata portion of additional shares of Charter's new Class A Common Stock, at the same price at which shares of the new Class A Common Stock will be offered in the Rights Offering, in an amount equal to $400 million less the aggregate dollar amount of shares purchased pursuant to the Excess Backstop, subject to certain equity ownership limitations. The Backstop Parties will receive a commitment fee equal to 3% of its respective equity backstop. The Restructuring Agreements further contemplate that upon consummation of the Plan (i) the notes and bank debt of Charter's subsidiaries, Charter Operating and CCO Holdings, LLC will remain outstanding, (ii) holders of notes issued by CCH II will receive New CCH II Notes or cash pursuant to the Notes Exchange, (iii) holders of notes issued by CCH I will receive shares of Charter's new Class A Common Stock, (iv) holders of notes issued by CCH I Holdings, LLC will receive warrants to purchase shares of common stock in Charter, (v) holders of notes of Charter Communications Holdings, LLC will receive warrants to purchase shares of Charter's new Class A Common Stock, (vi) holders of convertible notes issued by Charter will receive cash and preferred stock issued by Charter, (vii) holders of common stock will not receive any amounts on account of their common stock, which will be cancelled, and (viii) trade creditors will be paid in full. In addition, as part of the proposed restructuring, it is expected that consideration will be paid by holders of CCH I Notes to other entities participating in the financial restructuring. A full-text copy of the Term Sheet For Proposed Joint Chapter 11 Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?3998 Pursuant to a separate restructuring agreement among Charter, Paul G. Allen and an entity controlled by Mr. Allen, in settlement of their rights, claims and remedies against Charter and its subsidiaries, and in addition to any amounts received by virtue of their holding any claims of the type set forth above, upon consummation of the Plan Mr. Allen or his affiliates will be issued a number of shares of the new Class B Common Stock of Charter the that the aggregate voting power of the shares of new Class B Common Stock shall be equal to 35% of the total voting power of all new common stock of Charter. Also, as part of the settlement, upon consummation of the Plan Mr. Allen or the affiliates will receive or retain certain additional consideration. Each share of new Class B Common Stock will be convertible, at the option of the holder, into one share of new Class A Common Stock, and will be subject to significant restrictions on transfer. Holders of new Class A Common Stock and holders of new Class B Common Stock will receive certain customary registration rights with respect to their shares. The Restructuring Agreements also contemplate that these emergence from bankruptcy each holder of 10% or more of the voting power of Charter will have the right to nominate one member of the Board for each 10% of voting power, and that at least Charter's current chief executive officer and chief operating officer will continue in their same positions. The Restructuring Agreements require Noteholders to cast their votes in favor of the Plan and generally support the Plan and contain certain customary restrictions on the transfer of claims by the Noteholders. In addition, the Restructuring Agreements contain an agreement by the parties that Charter shall not be required to comply with any terms if the compliance would trigger a default under one or more of certain debt instruments to remain outstanding. The Restructuring Agreements and Commitment Letters are subject to certain termination events, including, among others: -- the commitments set forth in the respective Noteholder's Commitment Letter will have expired or been terminated; -- Charter's board of directors shall have been advised in writing by its outside counsel that continued pursuit of the Plan is inconsistent with its fiduciary duties because, and the board of directors determines in good faith that, (A) a proposal or offer from a third party is reasonably likely to be more favorable to the Company than is proposed under the Term Sheet, taking into account, among other factors, the identity of the third party, the likelihood that any the proposal or offer will be negotiated to finality within a reasonable time, and the potential loss to the company if the proposal or offer were not accepted and consummated, or (B) the Plan is no longer confirmable or feasible; -- the Plan or any subsequent plan filed by Charter with the bankruptcy court (or a plan supported or endorsed by Charter) is not reasonably consistent in all material respects with the terms of the Restructuring Agreements; -- Charter shall not have filed for Chapter 11 relief with the bankruptcy court on or before April 1, 2009; -- a disclosure statement order reasonably acceptable to Charter and the holders of a majority of the CCH I Notes held by the ad-hoc committee of certain Noteholders has not been entered by the bankruptcy court on or before the 50th day following the bankruptcy petition date; -- a confirmation order reasonably acceptable to Charter and the Requisite Holders is not entered by the bankruptcy court on or before the 130th day after the bankruptcy petition date; -- any of the Chapter 11 cases of Charter is converted to cases under chapter 7 of the Bankruptcy Code if as a result of the conversion the Plan is not confirmable; -- any Chapter 11 cases of Charter is dismissed if as a result of the dismissal the Plan is not confirmable; -- the order confirming the Plan is reversed on appeal or vacated; -- any Restructuring Agreement or the Allen Agreement has terminated or breached in any material respect; and -- Charter must not have reached agreement with senior management on a compensation program reasonably acceptable to Charter and the Requisite Holders by March 12, 2009. As a result, there is no assurance that the treatment of creditors outlined above will not change significantly. The Allen Agreement contains substantially similar provisions as do the Restructuring Agreements. On Feb. 13, 2009, Charter paid the full amount of these overdue interest payments to the Paying Agent for the Overdue Payment Notes, which constitutes payment under the Indentures. As required under the Indentures, Charter has set a special record date for payment of the interest payments of Feb. 28, 2009. On Jan. 15, 2009, two of Charter's subsidiaries, CCH I Holdings, LLC and Charter Communications Holdings, LLC, did not make scheduled payments of interest due on Jan. 15, 2009, on certain of their outstanding senior notes. Each of the respective governing indentures for the Overdue Payment Notes permits a 30-day grace period for the interest payments through Feb. 15, 2009. Escrow Agreement As part of the agreement in principle, Charter and certain of its subsidiaries entered into an Escrow Agreement, dated as of Feb. 11, 2009, with members of the ad-hoc committee of holders of the Overdue Payment Notes and Wells Fargo Bank, National Association, as Escrow Agent. Under the Escrow Agreement, the Ad-Hoc Holders have agreed to deposit into an escrow account the amounts they receive in respect of the Scheduled Payments and Wells Fargo will hold the amounts until (i) Charter and a majority of the Ad-Hoc Holders agree to the release thereof, (ii) the restructuring transactions contemplated in the Restructuring Agreements are consummated on or prior to Dec. 15, 2009, or are not consummated by the date due to a material breach of the Restructuring Agreements of Charter or its subsidiaries, followed by notice thereof to Wells Fargo by a majority of the Ad-Hoc Holders and Charter, at which time Wells Fargo will release the amounts to the Ad-Hoc Holders, or (iii) the transactions contemplated by the Restructuring Agreements are not consummated by Dec. 15, 2009, for any other reason, followed by notice thereof to Wells Fargo by a majority of the Ad-Hoc Holders and Charter, at which time it will release the amounts to Charter or its subsidiaries. The amounts to be deposited in escrow are approximately $47 million. A full-text copy of the RESTRUCTURING AGREEMENT is available for free at: http://ResearchArchives.com/t/s?3999 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, the as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. As reported by the Troubled Company Reporter on Nov. 11, 2008, Charter Communications' balance sheet at Sept. 30, 2008, showed total assets of $15.1 billion, total liabilities of $23.9 billion, resulting in a shareholders' deficit of $8.8 billion. As reported by the Troubled Company Reporter on Dec. 22, 2008, Fitch Ratings placed Charter Communications, Inc.'s 'CCC' Issuer Default Rating and the IDRs and individual issue ratings of Charter's subsidiaries on Rating Watch Negative. Approximately $21.1 billion of debt outstanding as of Sept. 30, 2008 is effected by Fitch's action. As reported by the TCR on Dec. 16, 2008, Moody's Investors Service lowered the Probability-of-Default Rating for Charter Communications to Ca from Caa2 and placed all ratings (other than the SGL3 Speculative Grade Liquidity Rating) for the company and its subsidiaries under review for possible downgrade. As reported by the Troubled Company Reporter on Dec. 16, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Charter Communications to 'CC' from 'B-'. S&P said that the rating outlook is negative. CHARTER COMMUNICATIONS: Lenders Fail to Fund Affiliate's Borrowing ------------------------------------------------------------------ Charter Communications Inc. disclosed in a regulatory filing that lenders have failed to fund Charter Operating, LLC's borrowing request. On Feb. 3, 2008, Charter Operating, an indirect subsidiary of Charter, made a request to the administrative agent under its Amended and Restated Credit Agreement, dated as of March 18, 1999, as amended and restated as of March 6, 2007, to borrow additional revolving loans under the Credit Agreement. The borrowing request complied with the provisions of the Credit Agreement including section 2.2 thereof. On Feb. 5, 2009, Charter Communications Inc. received a notice from the administrative agent asserting that one or more Events of Default have occurred and are continuing under the Credit Agreement, including, pursuant to section 8(g)(v) thereof. Charter Communications disagrees with the administrative agent's assertions and sent a letter to the administrative agent on Feb. 9, 2009, among other things, stating that no Event of Default under the Credit Agreement has occurred or is continuing and requesting the administrative agent rescind its notice of default and fund Charter Operating's borrowing request. The admin. agent sent a letter to Charter on Feb. 11, 2009, stating that it continues to believe that one or more events of default have occurred and are continuing. As a result, with the exception of one lender who funded approximately $354,237, the lenders have failed to fund Charter Operating's borrowing request. 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, the as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. As reported by the Troubled Company Reporter on Nov. 11, 2008, Charter Communications' balance sheet at Sept. 30, 2008, showed total assets of $15.1 billion, total liabilities of $23.9 billion, resulting in a shareholders' deficit of $8.8 billion. As reported by the Troubled Company Reporter on Dec. 22, 2008, Fitch Ratings placed Charter Communications, Inc.'s 'CCC' Issuer Default Rating and the IDRs and individual issue ratings of Charter's subsidiaries on Rating Watch Negative. Approximately $21.1 billion of debt outstanding as of Sept. 30, 2008 is effected by Fitch's action. As reported by the TCR on Dec. 16, 2008, Moody's Investors Service lowered the Probability-of-Default Rating for Charter Communications to Ca from Caa2 and placed all ratings (other than the SGL3 Speculative Grade Liquidity Rating) for the company and its subsidiaries under review for possible downgrade. As reported by the Troubled Company Reporter on Dec. 16, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Charter Communications to 'CC' from 'B-'. S&P said that the rating outlook is negative. CHARTER COMMUNICATIONS: Expects Q4 EBITDA to Hike 9.7% to $619MM ---------------------------------------------------------------- Charter Communications, Inc., disclosed preliminary results for the fourth quarter of 2008. Charter expects pro forma revenues for the fourth quarter of 2008 of $1.65 billion, which represents an increase of approximately 7.0% compared to the same period in 2007 on a pro forma basis. Charter expects actual revenues of $1.65 billion, an increase of approximately 6.6% for the period. Charter currently expects pro forma adjusted EBITDA for the fourth quarter of 2008 to be approximately $619.00 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 $620.00 million, an increase of approximately 9.7% compared to 2007. Charter expects pro forma annual revenues for 2008 of $6.46 billion, which represents an increase of 8.5% compared to pro forma 2007, and actual annual revenues to be approximately $6.47 billion, an increase of 7.9% compared to 2007. Charter expects pro forma annual adjusted EBITDA for 2008 of $2.31 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 Neil Smit, president and chief executive officer. "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 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 added 45,300 revenue generating units 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, 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 these: -- 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 Dec. 31, 2008. Capital expenditures for the fourth quarter of 2008 are 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 Dec. 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, the as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. As reported by the Troubled Company Reporter on Nov. 11, 2008, Charter Communications' balance sheet at Sept. 30, 2008, showed total assets of $15.1 billion, total liabilities of $23.9 billion, resulting in a shareholders' deficit of $8.8 billion. As reported by the Troubled Company Reporter on Dec. 22, 2008, Fitch Ratings placed Charter Communications, Inc.'s 'CCC' Issuer Default Rating and the IDRs and individual issue ratings of Charter's subsidiaries on Rating Watch Negative. Approximately $21.1 billion of debt outstanding as of Sept. 30, 2008 is effected by Fitch's action. As reported by the TCR on Dec. 16, 2008, Moody's Investors Service lowered the Probability-of-Default Rating for Charter Communications to Ca from Caa2 and placed all ratings (other than the SGL3 Speculative Grade Liquidity Rating) for the company and its subsidiaries under review for possible downgrade. As reported by the Troubled Company Reporter on Dec. 16, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Charter Communications to 'CC' from 'B-'. S&P said that the rating outlook is negative. CHESAPEAKE ENERGY: Posts $866 Million Loss in 4th Quarter --------------------------------------------------------- Chesapeake Energy Corporation has released its financial and operating results for the 2008 full year and fourth quarter. For the 2008 full year, Chesapeake reported net income to common shareholders of $623 million ($1.14 per fully diluted common share), operating cash flow of $5.178 billion (defined as cash flow from operating activities before changes in assets and liabilities) and EBITDA of $3.647 billion (defined as net income (loss) before income taxes, interest expense, and depreciation, depletion and amortization expense) on revenue of $11.629 billion and production of 843 billion cubic feet of natural gas equivalent (bcfe). For the 2008 fourth quarter, Chesapeake reported a net loss to common shareholders of $866 million (a loss of $1.51 per fully diluted common share), operating cash flow of $1.015 billion and EBITDA of negative $783 million on revenue of $2.981 billion and production of 213 bcfe. The Company's 2008 full year and fourth quarter results include various items that are typically not included in published estimates of the company's financial results by certain securities analysts. Excluding the items detailed below, Chesapeake generated adjusted net income to common shareholders for the 2008 full year of $1.954 billion ($3.55 per fully diluted common share) and adjusted EBITDA of $5.633 billion, increases of 25% and 12%, respectively, over the 2007 full year. For the 2008 fourth quarter Chesapeake generated adjusted net income to common shareholders of $427 million ($0.73 per fully diluted common share) and adjusted EBITDA of $1.242 billion. The excluded items and their effects on 2008 full year and fourth quarter reported results are detailed as follows: -- an unrealized noncash after-tax mark-to-market gain of $434 million for the 2008 full year and $380 million for the 2008 fourth quarter resulting from the company's natural gas, oil and interest rate hedging programs; -- a noncash after-tax impairment charge of $1.73 billion for the 2008 full year and for the 2008 fourth quarter related to the carrying value of natural gas and oil properties and certain midstream assets; -- a noncash after-tax impairment charge of $110 million for the 2008 full year and for the 2008 fourth quarter related to certain investments; -- an after-tax net gain of $144 million for the 2008 full year on exchanges of certain of the company's contingent convertible senior notes for shares of common stock and the early redemption of the company's $300 million 7.75% Senior Notes due 2015 and an after-tax gain of $163 million in the 2008 fourth quarter on exchanges of Contingent convertible senior notes; -- an after-tax consent fee of $6 million for the 2008 full year paid to amend certain debt covenants contained in five of the company's senior note indentures; and -- a reduction of net income available to common shareholders of $67 million for the full year 2008 resulting from exchanges of the company's preferred stock for common stock that reduced future preferred stock dividend payment requirements. The excluded items do not affect the calculation of operating cash flow. Daily production for the 2008 fourth quarter averaged 2.32 bcfe, flat compared to the 2.32 bcfe produced per day in the 2008 third quarter and an increase of 97 million cubic feet of natural gas equivalent (mmcfe), or 4%, over the 2.22 bcfe produced per day in the 2007 fourth quarter. Adjusted for the company's year-end 2007, 2008 second quarter and 2008 third quarter volumetric production payment sales of 55, 47 and 47 mmcfe per day, respectively, as well as the company's sale of Woodford Shale and Fayetteville Shale properties producing 47 and 45 mmcfe per day, respectively, Chesapeake's sequential and year-over-year production growth rates were 2% and 14%, respectively. In addition, voluntary production curtailments due to low wellhead natural gas prices totaled approximately 65 mmcfe per day during the 2008 fourth quarter. Chesapeake's average daily production for the 2008 fourth quarter consisted of 2.13 billion cubic feet of natural gas (bcf) and 30,956 barrels of oil and natural gas liquids (bbls). The company's 2008 fourth quarter production of 213 bcfe was comprised of 196 bcf (92% on a natural gas equivalent basis) and 2.8 million barrels of oil and natural gas liquids (mmbbls) (8% on a natural gas equivalent basis). Chesapeake's 2008 full year production of 843 bcfe was comprised of 775 bcf (92% on a natural gas equivalent basis) and 11.2 mmbbls (8% on a natural gas equivalent basis). Chesapeake's average daily production for the full year 2008 of 2.30 bcfe consisted of 2.12 bcf and 30,656 bbls. The company's growth rate for its full year 2008 natural gas production was 18% and its growth rate for full year 2008 oil production was 14%. The 2008 full year was Chesapeake's 19th consecutive year of sequential production growth. Average Realized Prices, Hedging Results and Hedging Positions Detailed Average prices realized during the 2008 fourth quarter (including realized gains or losses from natural gas and oil derivatives, but excluding unrealized gains or losses on such derivatives) were $7.13 per thousand cubic feet (mcf) and $54.80 per bbl, for a realized natural gas equivalent price of $7.29 per thousand cubic feet of natural gas equivalent (mcfe). Realized gains from natural gas and oil hedging activities during the 2008 fourth quarter generated a $2.25 gain per mcf and a $1.61 gain per bbl for a 2008 fourth quarter realized hedging gain of $445 million, or $2.09 per mcfe. Excluding hedging activity, Chesapeake's average realized pricing basis differentials to NYMEX during the 2008 fourth quarter were a negative $2.07 per mcf and a negative $5.55 per bbl. By comparison, average prices realized during the 2007 fourth quarter (including realized gains or losses from natural gas and oil derivatives but excluding unrealized gains or losses on such derivatives) were $8.11 per mcf and $72.58 per bbl, for a realized natural gas equivalent price of $8.43 per mcfe. Realized gains from natural gas and oil hedging activities during the 2007 fourth quarter generated a $1.73 gain per mcf and a $13.66 loss per bbl for a 2007 fourth quarter realized hedging gain of $287 million, or $1.40 per mcfe. Excluding hedging activity, Chesapeake's average realized pricing basis differentials to NYMEX during the 2007 fourth quarter were a negative $0.59 per mcf and a negative $4.44 per bbl. For the 2008 full year, average prices realized (including realized gains or losses from natural gas and oil derivatives, but excluding unrealized gains or losses on such derivatives) were $8.09 per mcf and $70.48 per bbl, for a realized natural gas equivalent price of $8.38 per mcfe. Realized gains and losses from natural gas and oil hedging activities during the 2008 full year generated a $0.34 gain per mcf and a $24.56 loss per bbl for a 2008 full year realized hedging loss of $9 million, or $.01 per mcfe. Excluding hedging activity, Chesapeake's average realized pricing basis differentials to NYMEX during the 2008 full year were a negative $1.30 per mcf and a negative $4.61 per bbl. By comparison, average prices realized during the 2007 full year (including realized gains or losses from natural gas and oil derivatives but excluding unrealized gains or losses on such derivatives) were $8.14 per mcf and $67.50 per bbl, for a realized natural gas equivalent price of $8.40 per mcfe. Realized gains from natural gas and oil hedging activities during the 2007 full year generated a $1.85 gain per mcf and a $1.14 loss per bbl for a 2007 full year realized hedging gain of $1.2 billion, or $1.68 per mcfe. Excluding hedging activity, Chesapeake's average realized pricing basis differentials to NYMEX during the 2007 full year were a negative $0.57 per mcf and a negative $3.67 per bbl. During 2006, 2007 and 2008, Chesapeake's natural gas and oil hedging activities generated a total realized gain of $2.4 billion, or $1.15 per mcfe. Estimated Proved Reserves Chesapeake began 2008 with estimated proved reserves of 10.879 trillion cubic feet of natural gas equivalent (tcfe) and ended the year with 12.051 tcfe, an increase of 1.172 tcfe, or 11%. During 2008, Chesapeake replaced 843 bcfe of production with an estimated 2.015 tcfe of new proved reserves for a reserve replacement rate of 239%. Reserve replacement through the drillbit was 2.545 tcfe, or 302% of production. This includes 1.248 tcfe of positive performance revisions and 298 bcfe of negative revisions resulting from natural gas and oil price decreases between December 31, 2007, and December 31, 2008. Acquisitions of proved reserves completed during 2008 were 172 bcfe at a cost of $355 million, or $2.06 per mcfe, while sales of proved reserves during 2008 totaled 702 bcfe for proceeds of $2.433 billion, or $3.47 per mcfe. Sales of undeveloped leasehold during 2008 generated cash proceeds of $5.3 billion versus a cost basis of the leasehold sold of approximately $1.1 billion. Under full cost accounting rules, the difference of $4.2 billion was not reported as income but rather was credited to the full cost pool and will consequently lower the company's future DD&A rate. Chesapeake's total drilling and net acquisition costs for 2008 were $1.61 per mcfe. This calculation excludes costs of $2.387 billion for the acquisition of unproved properties and leasehold (net of sales), $440 million for capitalized interest on unproved properties, $314 million for seismic, and $23 million relating to tax basis step-up and asset retirement obligations, and also excludes negative revisions of proved reserves from lower natural gas and oil prices. Excluding these items and acquisition and divestiture activity, Chesapeake's exploration and development costs through the drillbit during 2008 were $2.04 per mcfe (net of $271 million in drilling carries associated with the Haynesville and Fayetteville joint ventures). Chesapeake Eyes Attractive Returns for 2009 & 2010 During 2009 and 2010, Chesapeake anticipates generating attractive returns and delivering drillbit exploration and development costs up to 30% - 40% lower than 2008 costs from a combination of lower service costs and the benefit of using approximately $2.2 billion of its more than $4 billion of joint venture drilling carries in three of its Big 4 shale plays. Accordingly, Chesapeake is targeting drilling exploration and development costs of approximately $1.25 and $1.50 per mcfe in 2009 and 2010, respectively, and believes its maintenance capital expenditure requirement in 2009 and 2010 will only be approximately 15% and 20%, respectively, of projected operating cash flow. Chesapeake anticipates directing approximately 75% of its gross drilling capital expenditures during 2009 and 2010 to its Big-4 shale plays. Balance Sheet Flexibility Maintained & Liquidity Increased During 2008, Chesapeake strengthened its balance sheet though the issuance of common stock for $2.6 billion of cash, the exchange of $455 million of preferred stock for common stock, the exchange of $765 million of contingent convertible senior notes for common stock, the sale of proved and unproved properties in multiple innovative transactions and the addition of $623 million of net income to common for the 2008 full year. As a result, the company's net debt to book capitalization ratio decreased from 47% at December 31, 2007 to 43% at December 31, 2008. Chesapeake ended 2008 with cash and cash equivalents on hand of approximately $1.75 billion. In the past month, Chesapeake has issued $1.425 billion in new senior notes and used the proceeds from the note offerings and cash on hand to reduce borrowings under its $3.5 billion revolving credit facility. Additionally, the company is working to generate at least $1.0 billion of excess cash in each of 2009 and 2010 through various asset monetization initiatives. Over the next two years, Chesapeake plans to reduce its financial leverage through asset monetizations and through the growth of its proved reserve base. As a result of absolute and relative deleveraging, the company anticipates it will have investment grade credit metrics by at least year end 2010, including a key rating agency metric of long-term debt to proved reserves of less than $0.75 per mcfe. About Chesapeake Energy Corporation Based in Oklahoma City, Oklahoma, Chesapeake Energy Corporation (NYSE: CHK) -- http://www.chkenergy.com/-- produces natural gas in the U.S. The company's operations are focused on exploratory and developmental drilling and corporate and property acquisitions in the Mid-Continent, Fort Worth Barnett Shale, Fayetteville Shale, Permian Basin, Delaware Basin, South Texas, Texas Gulf Coast, Ark-La-Tex and Appalachian Basin regions of the United States. * * * As reported by the Troubled Company Reporter on Jan. 30, 2009, Moody's Investors Service assigned a Ba3 (LGD 4; 69%) rating to Chesapeake Energy's pending $1 billion offering of senior unsecured notes due 2015. The TCR reported on Jan. 30, 2009, that Fitch Ratings assigned 'BB' issuer default and senior unsecured debt ratings. Fitch also placed a 'B+' convertible preferred stock rating on the company. Fitch said that the rating outlook remains negative. According to the TCR on Jan. 30, 2009, Standard & Poor's Ratings Services assigned its 'BB' issue rating and '4' recovery rating to oil and gas exploration and production company Chesapeake Energy Corp.'s proposed $500 million senior unsecured notes due 2016. Proceeds will repay outstanding bank debt. CHRYSLER LLC: Has 70% Chance of Filing Bankruptcy, Says Moody's --------------------------------------------------------------- Moody's Investors Service said February 18 that the risk of a bankruptcy filing by General Motors (GM) and Chrysler Automotive LLC (Chrysler) remains high. The rating agency's comments came in response to the submission by both companies of their respective restructuring plans to the U.S. Treasury, in compliance with the February 17 deadline stipulated in the emergency loan package established on December 19, 2008. As a result of the precipitous decline in global automotive demand, particularly in North America and Europe, GM and Chrysler have significantly increased their estimates for the amount of government loans they will need since the submission of their December 2, 2008 restructuring plan and loan request to the US Treasury. GM's request for government loans, based on its base case assumptions, has risen to $22.5 billion from $18 billion, and Chrysler's request has increased to $9 billion from $7 billion. To date, government funding to GM has been $13.4 billion with an additional $6 billion having been made available to GMAC LLC. Funding extended to Chrysler has been $4 billion, with $1.5 billion having been extended to Chrysler Financial. Bruce Clark, Senior Vice President with Moody's said, "Despite the extension of considerable emergency funding to GM and Chrysler and their finance arms, we continue to see a high risk of a Chapter 11 filing by one or more of the US auto makers with the government providing DIP financing to promote an orderly bankruptcy process. We continue to see the probability of such a filing as being in the area of 70% - the same level we identified in our December 2008 comment on the US auto industry." This risk, as well as the high likelihood of some form of a distressed exchange for debt holders, is reflected in Moody's Ca Corporate Family Ratings for GM and Chrysler. These ratings are unchanged. Given the significantly increased need for government support, Moody's expects that the US Treasury is likely to be more insistent that each company's constituents, particularly creditors and the UAW, make substantive concessions as part of their restructuring programs. Key provisions that had been contained in the Treasury's conditions for extending loans beyond March 31st, include: 1) the conversion of 2/3 of unsecured public debt to equity; 2) an agreement with the UAW that 50% of future VEBA contributions be made in the form of equity; and 3) the narrowing of the UAW wage and productivity gap with that existing at US transplant facilities. Although negotiations in these areas are continuing, final agreement has not been achieved. Moreover, Moody's remains concerned that there is a degree of resistance on the part of creditors and the UAW to make the level of concessions that might be acceptable to the Treasury and to the governmental panel that will assess the companies' viability and evaluate the merits of providing the additional funds that have been requested. Bruce Clark said, "The government has already put a lot of money into these companies, and the ripple effects of a filing would be extremely damaging to the economy. As a result, there may be a degree of skepticism among creditors and other constituents that the government will actually allow any of the Detroit-3 to file for bankruptcy." However, Clark concluded that, "Because of the potential reluctance of constituents to make adequate concessions and the considerable complexity of the reorganization, the government may in fact have to stand aside and allow one or more companies to make a Chapter 11 filing as a measure that could accelerate the restructuring that is necessary." The last rating action on GM and Chrysler was a downgrade of their Corporate Family Ratings to Ca on December 3, 2008. CIMARRON CDO: Moody's Junks Ratings on Four Classes of Notes ------------------------------------------------------------ Moody's Investors Service announced that it has downgraded four classes of Notes and withdrawn its short-term rating of one class of notes issued by Cimarron CDO Ltd./ Cimarron CDO Corp., which consists of significant exposure to a combination of subprime and Alt-A RMBS, CLO, and Structured Finance CDO securities. Moody's explained that the rating actions listed below reflect certain updates and projections on these asset classes as described below. According to a press release, on average, Moody's is now projecting cumulative losses of about 20% for 2006 securitizations and about 24% for 2007 securitizations. As a result of the revised loss projections, in most cases, subordinate Alt-A RMBS securities are likely to be completely written down. Moody's is likely to downgrade the ratings of these securities to Ca or C. In addition, according to the press release, credit protection from structural features should provide most senior Alt-A RMBS bond holders with fairly high recovery rates, although approximately 80-85% of all senior securities are likely to experience recoveries consistent with ratings lower than B3. Moody's revised loss projections for Option ARMs RMBS securities issued in the US since 2004 which were described in a press release published on February 5, 2009. According to the press release, on average, Moody's is now projecting cumulative losses of 27% for 2006 and 30% for 2007 vintage Option ARM securitizations. Given the revised loss projections Moody's expects that ratings on most subordinate securities in this review will be downgraded to Ca or C. Senior certificates in several Option ARM transactions have sequential loss allocation after the mezzanines have been written down. As a result, the senior most bonds are likely to be downgraded below Baa3 while senior support securities are likely to be downgraded to Ca or C. Moodys announced revisions and updates to certain key assumptions, including Default Probability and Diversity Score, that it uses to rate and monitor collateralized loan obligations in a Press Release published on February 4, 2009. According to the press release, Moody's expects that the revised assumptions will have a significant impact on mezzanine and junior CLO tranches, resulting in a downgrade of their ratings by three to six notches on average. Moody's also announced a ratings review of all U.S. commercial mortgage backed securities conduit and fusion transactions rated during the period from 2006 through 2008, and all large loan and single borrower transactions regardless of vintage in a Press Release on February 5, 2009. Based on this press release, low investment grade and speculative grade rated bonds are likely to be downgraded by five to six notches on average. Moody's announced on September 18, 2008 that it is revising its expected loss assumptions which are used for the surveillance of ratings of ABS CDOs holding subprime RMBS, specifically of the second half 2005 -- first half 2007 vintages. Moody's stated that for purposes of monitoring its ratings of ABS CDOs with exposure to subprime RMBS, it will rely on certain projections of the lifetime average cumulative losses for vintages of RMBS set forth in a recent Moody's Special Report. Moody's explained that it will utilize the range of loss projections primarily set forth in the report to modify its prior assumptions of the expected loss inputs when monitoring ABS. In addition, Moody's explained that the rating actions taken incorporate the application of revised and updated key modeling parameter assumptions that Moody's uses to rate and monitor ratings of SF CDOs. The revisions affect the three key parameters in Moody's model for rating SF CDOs: asset correlation, default probability and recovery rate. Moody's announced the changes to these assumptions in a press release published on December 11, 2008. Moody's initially analyzed and continues to monitor these transactions using primarily the methodology and its supplements for ABS CDOs as described in Moody's Special Reports below: -- Moody's Approach to Rating Multisector CDOs (9/15/2000) -- Moody's Approach To Rating Synthetic Resecuritizations (10/29/2003) -- Moody's Revisits its Assumptions Regarding Structured Finance Default (and Asset) Correlations for CDOs (6/27/2005) -- Moody's Modeling Approach to Rating Structured Finance Cash Flow CDO Transactions (9/26/2005) The rating actions are: -- U.S. $0 CP Notes, Rating Withdrawn; previously on 12/23/2004 Assigned P-1. -- U.S. $25,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2040, Downgraded to C; previously on 12/22/2008 Downgraded to Baa2 and remains Under Review for Possible Downgrade. -- U.S. $35,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2040, Downgraded to C; previously on 12/22/2008 Downgraded to Ba1 and remains Under Review for Possible Downgrade. -- U.S. $20,000,000 Class B Senior Secured Deferrable Fixed Rate Notes Due 2040, Downgraded to C; previously on 12/22/2008 Downgraded to Caa3 and remains Under Review for Possible Downgrade. -- U.S. $34,370,106 Class C Junior Secured Deferrable Fixed Rate Notes Due 2040, Downgraded to C; previously on 12/22/2008 Downgraded to Caa3 and remains Under Review for Possible Downgrade. On the Closing Date, Moody's assigned a P-1 rating to the U.S. $0 CP Notes as if it had been issued by the Issuer. The Moody's assigned ratings to the CP Notes have been withdrawn due to the current zero balance. Moody's additionally considered the likelihood that JP Morgan & Co. will exercise its right to waive the obligation of advancing monies per the 364-Day Liquidity Facility Agreement due to the imminent breach of $90,000,000 of pool losses. CLEARWATER NATURAL: Gets Green Light to Hire Parkman Whaling ------------------------------------------------------------ Clearwater Natural Resources, LP, Miller Bros. Coal, LLC, and Clearwater Natural Resources, LLC received permission from the Hon. William S. Howard of the U.S. Bankruptcy Court for the Eastern District of Kentucky to employ Parkman Whaling LLC as their investment bankers and financial advisors. The Debtors need a qualified and experienced investment banker and financial advisor to assist it in pursuing a transaction, whether an M&A Transaction, Financing Transaction or Restructuring Transaction. The Debtors note that Parkman Whaling is generally familiar with their business, and has a recognized expertise in the energy industry as a whole. The Debtors believe that Parkman Whaling has the requisite qualifications and experience to serve as their investment banker and financial advisor. Pursuant to the parties' agreement, the Debtors propose to pay Parkman Whaling on a monthly basis at a rate of $75,000 per month plus expenses, paid monthly in advance. The Debtors will also pay Parkman Whaling a $500,000 fee in connection with the consummation of a Transaction. Parkman Whaling's contact information: Parkman Whaling LLC Attn: Thomas B. Hensley, Jr. 600 Travis, Suite 600 Houston, TX 77002-2733 Tel: (713) 333-8400 Fax: (713) 333-8420 Parkman Whaling's Thomas B. Hensley, Jr., affirms that the firm neither holds nor represents "an interest adverse to the estate" within the meaning of Section 327(a) of the Bankruptcy Code, and that Parkman Whaling is a disinterested person" within the meaning of Section 101(14). 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. Richard Clippard, the United States Trustee for Region 8, appointed three creditors of Debtor Miller Bros. Coal LLC 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. CLEARWATER NATURAL: Taps Stites & Harbison as Special Counsel ------------------------------------------------------------- Clearwater Natural Resources, LP, Miller Bros. Coal, LLC, and Clearwater Natural Resources, LLC seek permission from the Hon. William S. Howard of the U.S. Bankruptcy Court for the Eastern District of Kentucky to employ Stites & Harbison, PLLC, as their special counsel with regard to matters related to regulatory enforcement, environmental permitting, mineral lease and law issues, and possible litigation associated therewith. Stites & Harbison has provided legal services to Miller Bros. in the Commonwealth of Kentucky during the last year, during which time it has handled Miller Bros.'s legal needs with respect to specific matters related to regulatory enforcement, environmental permitting, and mineral law issues, and has developed significant familiarity and experience with these matters. For the services, the Debtors propose to pay the firm according to its hourly rates: Professional Hourly Rate ------------ ----------- Members $250 - $500 Associates $180 - $290 Paralegals $100 - $150 The attorneys and paralegals expected to render services to the Debtors are: Professional Position Hourly Rate ------------ -------- ----------- Thomas E. Meng Member $360 Stephen G. Allen Member $330 Jennifer E. Drust Associate $180 Stites & Harbison's contact information: Stites & Harbison, PLLC 250 W. Main Street, Suite 2300 Lexington, KY 40507 Tel: (859) 226-2300 Fax: (859) 253-9144 Thomas E. Meng, Esq., a member at the firm, attests that Stites & Harbison represents no interest adverse to the Debtors or their estates in the matters for which it is proposed to be retained and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Meng discloses that Stites & Harbison represents two of Miller Bros.' creditors, Indemnity National Insurance Company and Quanta Indemnity Company, but representation of the two creditors is not an interest adverse to the Debtors under Section 327(c) and (e) of the Bankruptcy Code, and the firm has obtained conflict of interest waivers from all relevant parties. Mr. Meng also notes that Stites & Harbison has received no payments from the Debtors on account of services rendered or to be rendered in contemplation of or in connection with the cases. He also relates that Stites & Harbison has informed the Debtors that the costs and expenses it incurred on behalf of Miller Bros. after January 7, 2009, have been minimal, and are estimated to be no more than $2,400. Additionally, Stites & Harbison is owed roughly $12,876 for services performed prior to the Petition Date, which will be paid in the ordinary course, as permitted by Sections 327(c) and (e). 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. Richard Clippard, the United States Trustee for Region 8, appointed three creditors of Debtor Miller Bros. Coal LLC 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. CLEARWATER NATURAL: Panel Taps Blank Rome as Bankruptcy Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy case of Clearwater Natural Resources, LP's subsidiary, Miller Bros. Coal, LLC, sought and obtained permission from the Hon. William S. Howard of the U.S. Bankruptcy Court for the Eastern District of Kentucky to retain Blank Rome LLP as its bankruptcy counsel in the Debtors' cases. The primary members of the Blank Rome engagement team for the Committee and their hourly rates are: Professional Hourly Rate ------------ ----------- John Lucian $425 Regina Stango Kelbon $580 Kevin Baum $440 Gregory Vizza $245 Other Blank Rome professionals that may be required to render service for the Committee will be paid at these rates: Professional Hourly Rate ------------ ----------- Partners and counsel $380 - $625 Associates $245 - $380 Paralegals $105 - $265 The firm will also be reimbursed for work-related expenses. John Lucian, Esq., a partner at Blank Rome, attests that his firm does not represent any entity that has an adverse interest in connection with the Chapter 11 cases. 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. Richard Clippard, the United States Trustee for Region 8, appointed three creditors of Debtor Miller Bros. Coal LLC 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. CLEARWATER NATURAL: Panel Hires John Morgan as Conflicts Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy case of Clearwater Natural Resources, LP's subsidiary, Miller Bros. Coal, LLC, sought and obtained permission from the Hon. William S. Howard of the U.S. Bankruptcy Court for the Eastern District of Kentucky to retain John O. Morgan, Jr., as its local and conflicts counsel. The Committee needs the services of a local attorney to assist the panel in the recovery of estate assets. Mr. Morgan attests that he has no connections with the Debtors, any of the creditors, or their professionals, and other parties- in-interest; and that he is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. The firm charges $275 per hour for attorneys and $110 per hour for paralegals. 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. Richard Clippard, the United States Trustee for Region 8, appointed three creditors of Debtor Miller Bros. Coal LLC 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. CONCORD CAMERA: Enters Into Sale Pacts With Bao on Joint Stock -------------------------------------------------------------- On February 6, 2009, Concord Camera HK Limited, a subsidiary of Concord Camera Corp., entered into various agreements with Bao On Joint Stock Company providing for the sale of Concord Camera HK's registered land and buildings in The People's Republic of China and certain temporary buildings and equipment and facilities located thereon. The purchase price for the Real Estate and Facilities is RMB34,500,000, which is approximately US$5,047,180 at the exchange rate in effect on February 12, 2009. The terms of the Agreement provide that Bao is responsible for all taxes attributable to the sale of the registered land and buildings and Concord Camera HK is responsible for all taxes attributable to the sale of the temporary buildings, equipment and facilities. On February 6, 2009, Bao paid RMB2,500,000, which is approximately US$365,738 at the exchange rate in effect on February 12, 2009, into an account designated by Concord Camera HK as a deposit. Pursuant to the Agreement, Bao is required to pay the RMB34,500,000 purchase price into an account designated by Concord Camera HK on or before February 20, 2009. Upon payment of the RMB34,5000,000 purchase price by Bao, the RMB2,500,000 deposit will be credited back to Bao for purposes of paying the taxes attributable to the sale of the registered land and buildings. Bao's obligation to pay the RMB34,500,000 purchase price on or before February 20, 2009, and to proceed with the transaction is not subject to any financing conditions. If Bao fails to deposit the RMB34,500,000 amount on or before February 20, 2009, the RMB2,500,000 deposit will be forfeited to Concord Camera HK. The sale of the Real Estate and Facilities will be completed and the RMB34,500,000 purchase price will be released to Concord Camera HK upon the local government authorities completing the transfer of the real estate certificates to Bao. The RMB34,500,000 purchase price includes a leaseback of the Real Estate and Facilities pursuant to which Concord Camera HK will lease a portion of the Real Estate and Facilities for up to six months, at no additional cost to Concord Camera HK, to complete the wind down and liquidation process in the PRC. About Concord Camera Headquartered in Hollywood, Florida, Concord Camera Corp. (NASDAQ:LENS) -- http://www.concord-camera.com/-- through its subsidiaries, provides easy-to-use 35mm single-use and traditional film cameras. Concord markets and sells its cameras on a private- label basis and under the POLAROID and POLAROID FUNSHOOTER brands through in-house sales and marketing personnel and independent sales representatives. The POLAROID trademark is owned by Polaroid Corporation and is used by Concord under license from Polaroid. The Troubled Company Reporter reported on November 3, 2008, that the Plan of Liquidation contemplates an orderly wind down of the company's business and operations, the monetization of the company's non-cash assets, the satisfaction or settlement of its remaining liabilities and obligations and one or more distributions to its shareholders. In connection with the board's approval of the Plan of Liquidation, the company also said that it has ceased manufacturing and terminated certain of its employees and, if the company's shareholders approve the Plan of Liquidation, will terminate its remaining employees throughout the wind down period. The TCR added that if the company's shareholders approve the Plan of Liquidation, the company intends to file a certificate of dissolution, sell and monetize its non-cash assets, satisfy or settle its remaining liabilities and obligations, including contingent liabilities and claims, and make one or more distributions to its shareholders of cash available for distribution. In connection with the shareholder approval of the Plan of Liquidation, the company expects to delist its shares from NASDAQ. The TCR reported on Feb. 6, 2009, that on January 30, 2009, Concord Camera Corp. notified the NASDAQ Stock Market of its intent to delist its common stock from the NASDAQ Global Market. The Company currently anticipates that, on or about February 9, 2009, it will file with the Securities and Exchange Commission and NASDAQ a Form 25 relating to the delisting of its common stock. The Company expects that trading in the Company's common stock will be suspended on the date the Form 25 is filed, with the official delisting of its common stock becoming effective ten days thereafter. CONTEC INNOVATIONS: Files for Bankruptcy; KPMG Named as Trustee --------------------------------------------------------------- Contec Innovations Inc. said on February 11 that it has made a voluntary assignment in bankruptcy. Contec blamed the present financial environment and its inability to secure additional funding or other reasonable strategic alternatives. KPMG Inc. has been appointed the Trustee in bankruptcy. In addition, Ma Yu has resigned as a director and Sean Alger has resigned as Chief Financial Officer. Don Lay, the remaining director and officer is working with KPMG Inc. to maximize value to the creditors and shareholders. The Company wishes to thank its shareholders, customers, suppliers, employees and other stakeholders for their support over the years. Questions may be directed to the Trustee as: KPMG Inc. 777 Dunsmuir Street P.O. Box 10426, Pacific Centre Vancouver, BC V7Y 1K3 Attention: Rob Richards Telephone: 604-646-6360 Fax: 604-691-3036 Email: robrichards@kpmg.ca About Contec Innovations Contec Innovations Inc. (TSXV: BUZ) -- http://www.contec.caor http://www.buzmob.com/-- operates the BUZmob(tm) mobile publishing service. BUZmob(tm) delivers digital content to mobile users on any device, on any network, anywhere in the world. BUZmob(tm) is powered by Contec's Hornet(tm), a mobile data infrastructure solution that accelerates the creation and rollout of mobile data services. Headquartered in Vancouver, Canada, Contec has a sales and support office in Beijing, China. CONTECH LLC: Sec. 341 Meeting of Creditors Slated for March 9 ------------------------------------------------------------- A meeting of creditors pursuant to Section 341 of the Bankruptcy Code has been scheduled in the bankruptcy cases of Contech U.S., LLC and its debtor-affiliates for March 9, 2009, at 2:00 p.m. ET. The meeting will be held at: United States Bankruptcy Court 211 West Fort Street 3rd Floor, Room 315D Detroit, MI 48226 Rule 9001(5) of the Federal Rules of Bankruptcy Procedure requires that a representative of the Debtor appear at the Meeting of Creditors for the purpose of being examined under oath by a representative of the Office of the United States Trustee and by any interested parties that attend the meeting. Creditors are welcome, but not required, to attend the meeting. The Meeting of Creditors may be continued or adjourned by notice at the meeting, without further written notice to creditors. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Debtors also manufacture safety steel forged automotive components and tube fabrications through its Steel Products Group primarily for commercial truck OEM's. The The Debtors have approximately 1,000 employees. The company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., serve as the Debtors' local counsel. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for Chapter 11 protection from their creditors, they listed assets and debts between $100 million to $500 million each. CONTECH LLC: Seeks to Hire Carson Fischer as Local Counsel ---------------------------------------------------------- Contech U.S., LLC, and its debtor-affiliates seek to employ Carson Fischer, P.L.C., as their local bankruptcy counsel, to assist their lead counsel in prosecuting their Chapter 11 cases and all related matters. Contech U.S. notes that Carson Fisher possesses nationally recognized expertise in automotive insolvency matters, having been actively involved in numerous Chapter 11 cases involving Tier I and II automotive parts suppliers. Carson Fischer's hourly rates are: Professional Hourly Rate ------------ ----------- Partners $350 - $550 Associates $175 - $345 Law clerks $110 Legal assistants $125 Robert A. Weisberg, Esq., a partner at the firm, ascertains that his firm does not hold or represent an interest adverse to the estates, and is disinterested as defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Debtors also manufacture safety steel forged automotive components and tube fabrications through its Steel Products Group primarily for commercial truck OEM's. The The Debtors have approximately 1,000 employees. The company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., serve as the Debtors' local counsel. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for Chapter 11 protection from their creditors, they listed assets and debts between $100 million to $500 million each. CONTECH LLC: Seeks to Employ Huron as Financial Consultants ----------------------------------------------------------- Contech U.S., LLC, and its debtor-affiliates require the services of financial consultants. In this regard, the Debtors seek permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Huron Consulting Group. The Debtors will look to Huron to: 1. assist the management team in the development of strategic alternatives analysis focused on all viable opportunities available to the Company and provide a recommended course of action; and facilitate discussions and educate the Company's creditors regarding the viable alternatives; 2. provide certain services related to the potential sale of the Debtors' Steel Products Group and Contech Operating UK, Ltd., including running a competitive sale process between potential purchasers to optimize the price and terms of the deal; 3. assist in the management of the Company's daily liquidity, and in the preparation of cash flow and liquidity projections, updated financial forecasts, and in the preparation of feasibility analysis in connection with the Company's restructuring efforts; and 4. assist and provide other support to the bankruptcy counsel in the preparation of a Chapter 11 plan of reorganization and disclosure statement. Huron's hourly rates are: Professional Hourly Rate ------------ ----------- Managing director $715 - $650 Director $590 - $525 Manager $450 - $400 Associate $375 - $300 Analyst $275 - $225 The Debtors propose to reimburse the firm for work-related expenses. John C. DiDonato, a managing director at Huron, ascertains that his firm does not have an interest materially adverse to the Debtors, their estates or any class of creditors or equity security holders, and that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Debtors also manufacture safety steel forged automotive components and tube fabrications through its Steel Products Group primarily for commercial truck OEM's. The The Debtors have approximately 1,000 employees. The company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., serve as the Debtors' local counsel. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for Chapter 11 protection from their creditors, they listed assets and debts between $100 million to $500 million each. CONTECH LLC: Gets Permission to Engage KCC as Claims Agent ---------------------------------------------------------- The Hon. Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan authorized Contech U.S., LLC, and its debtor-affiliates to employ Kurtzman Carson Consultants LLC as their claims, noticing and balloting agent. According to the Debtors, the thousands of creditors and other parties-in-interest involved in their Chapter 11 cases may impose heavy administrative and other burdens on the Court and the Office of the Clerk of Court. The Debtors engaged KCC to relieve the Court and the Clerk's office of these burdens. The Debtors and KCC entered into an agreement for services, dated as of January 24, 2009. The Debtors have provided KCC with a $25,000 security retainer. James Le, Chief Operating Officer of KCC, affirms that the firm does not hold or represent an interest adverse to the Debtors' estates, and that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Debtors also manufacture safety steel forged automotive components and tube fabrications through its Steel Products Group primarily for commercial truck OEM's. The The Debtors have approximately 1,000 employees. The Company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., serve as the Debtors' local counsel. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for Chapter 11 protection from their creditors, they listed assets and debts between $100 million to $500 million each. CROWN MEDIA: Dec. 31 Balance Sheet Upside Down by $67.7 Million --------------------------------------------------------------- Crown Media Inc.'s December 31, 2008, balance sheet showed total assets of $38,690,000 and total liabilities of $88,940,000, resulting in total stockholders' deficit of $67,766,000. Total revenues for the three months ended December 31, 2008 decreased to approximately $10.8 million compared with approximately $12.5 million for the same period in 2007. Operating expenses, before depreciation and amortization, for the three months ended December 31, 2008, dropped 6.8% to $7.9 million compared with $8.4 million for the fourth quarter in 2007. Corporate and administrative expenses for the fourth quarter of 2008 were approximately $0.5 million compared to $1.2 million for the three months ended December 31, 2007. Depreciation of property and equipment totaled approximately $0.3 million for each of the three months ended December 31, 2008 and 2007. Amortization expense in connection with definite-lived intangible assets acquired in the acquisition of the Jonesboro Group was approximately $0.17 million for each of the three months ended December 31, 2008 and 2007. Interest expense incurred in connection with the Company's Credit Facilities was approximately $2.9 million and $3.1 million for the three months ended December 31, 2008 and 2007, respectively. Amortization of costs incurred in connection with the Company's Credit Facilities were approximately $0.4 million for the three months ended December 31, 2008, compared to $0.3 million for the three months ended December 31, 2007. Income tax expense was approximately $0.05 million and $2.6 million for the three and six months ended December 31, 2008 and 2007, respectively. Loss from discontinued operations was $0 and $16.8 million for the three months ended December 31, 2008 and 2007, respectively. The Company's net loss available to common shareholders is approximately $1.6 million and $25.0 million for the three months ended December 31, 2008 and 2007, respectively. As of December 31, 2008, the Company had negative working capital of approximately $68 million and it failed to meet certain financial loan covenants contained in its loan agreements. On January 3, 2009, subsequent to the quarter ended December 31, 2008, the Company failed to make a $1.1 million interest payment, which constitutes an additional violation of its loan covenants. As a result of not being in compliance with its loan facility covenants as of December 31, 2008, the Company classified all of its loan facility debt as a current liability to reflect the option its lenders have to call its debt at any time. The Company is currently negotiating with its lenders to restructure its credit facilities, waive these violations or reset the due dates of this debt. The Company has $2.6 million of tax liabilities which began to come due on September 15, 2008. In order to meet these tax obligations the Company has been negotiating with the appropriate authorities to arrange payment plans to spread these payments over an extended period of time. If the Company is not successful in some or all of these situations, it may not have sufficient liquidity to operate: 1) generate positive operating cash flow to meet its current operating obligations as they become due; 2) restructure its credit facilities to alleviate the possibility of its banks calling its debt at any time; and 3) in the case of its tax obligations, successfully renegotiating its payment plans with the taxing authorities. "These factors raise substantial doubt as to our ability to continue as a going concern," Mark G. Meikle, executive vice president and chief financial officer, said. A full-text copy of the Company's quarterly report is available for free at: http://researcharchives.com/t/s?39b0 About Triple Crown Headquartered in Lawrenceville, Georgia, Triple Crown Media Inc. (Nasdaq: TCMI) -- http://triplecrownmedia.com/-- owns and operates six daily newspapers and one weekly newspaper in Georgia. DANA CORP: Bank Loan Continues Slide in Secondary Market Trading ---------------------------------------------------------------- Participations in a syndicated loan under which Dana Corp. is a borrower traded in the secondary market at 38.25 cents-on-the- dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 2.75 percentage points from the previous week, the Journal relates. Dana pays interest at 375 points above LIBOR. The bank loan matures on January 31, 2015. The bank loan carries B3 Moody's rating and B+ S&P rating. Participations in a syndicated loan under which fellow parts maker Lear Corp. is a borrower traded in the secondary market at 46.05 cents-on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 2.06 percentage points from the previous week, the Journal relates. Lear pays interest at 250 points above LIBOR. The bank loan matures on March 29, 2012. The bank loan is unrated. As reported by the Troubled Company Reporter on February 4, 2009, the loan traded in the secondary market at 42.50 cents-on-the- dollar for the week ended January 30, 2009, representing a drop of 3.38 percentage points from the previous week. About Dana Holding Corporation Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believe the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near- term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANKA BUSINESS: Reports Increased Distribution to ADS Holders ------------------------------------------------------------- On February 11, 2009, Danka Business Systems PLC (OTC BB: DANKY.OB) reported that, following discussions between the Company's convertible participating shareholders and certain holders of Danka's American Depositary Shares, the Participating Shareholders have agreed to an increase in the amount payable out of the proceeds of the proposed Members' Voluntary Liquidation to all persons who hold Danka ADSs as at the time at which the MVL commences to a cash payment equal to $0.12 per ADS or $0.03 per ordinary share. The Company also disclosed that, pursuant to a voting agreement entered into among certain holders of Danka ADSs, including DCML LLC and Ironwood Investment Management, LLC, and the Company on February 11, 2009, each of the Committed Holders has agreed to vote their entire respective holdings of Danka ADSs in favor of the MVL and related resolutions to be proposed at the Extraordinary General Meeting of the Company to be held on February 19, 2009. The Committed Holders collectively hold the right to vote approximately 25,558,409 ADSs, which represent 102,233,636 ordinary shares, representing approximately 27% of the voting rights exercisable at the EGM. Cypress Merchant Banking Partners II L.P. and certain of its affiliates, which collectively hold Participating Shares representing approximately 29.9% of the voting rights exercisable at the EGM, have affirmed their agreement to vote in favor of the MVL and related proposals. The obligations of the Participating Shareholders under a deed of undertaking entered into with the Company to, among other things, instruct the liquidators appointed in the MVL to make the increased payment to all persons who hold Danka ordinary shares and ADSs are conditional on the resolution to approve the MVL being duly approved by the requisite majority at the EGM-i.e., by the affirmative vote of 75% or more of the votes cast-and such obligations of the Participating Shareholders will terminate on the earlier of (i) February 28, 2009, and (ii) the resolution to approve the MVL to be proposed at the EGM failing to be approved by the requisite majority at the EGM. If Danka shareholders do not approve the MVL, there is no guarantee that any future alternative chosen by the Company's Board of Directors to distribute the Company's net cash will result in any return to ADS holders. In addition, there can be no guarantee that, should the proposed MVL not be approved at the EGM, the holders of the Participating Shares will not take action(s) that may be available to them under applicable law, for example seeking an involuntary winding up of the Company, to recover amounts to which they are entitled pursuant to the Company's Articles of Association and which must be paid to them before ADS holders are entitled to receive any return on a winding up of the Company. Accordingly, in an involuntary liquidation, it is unlikely that ADS holders would receive any distribution. The Company has been advised by the Cypress Shareholders that they intend to file an application in the near future seeking the involuntary winding up of the Company under the provisions of the UK Insolvency Act. The Cypress Shareholders have also informed the Company that, in the event that the MVL is rejected once again, they will seek the support of the Company's management and Board of Directors for the involuntary liquidation application. The Company's Board of Directors -- with the two directors appointed by the Cypress Shareholders abstaining -- continues to recommend that Danka shareholders vote in favor of the resolutions to be proposed at the EGM. Further information regarding the resolutions to be proposed at the EGM is set forth in the Notice of Extraordinary General Meeting and proxy statement filed with the SEC on January 20, 2009, and mailed to holders of ADSs on or about that date. ADS holders are encouraged to read the proxy statement, including its annexes, in its entirety. The Company urges ADS holders to act promptly so that their votes can be represented at the EGM. ADS holders must submit their voting instructions in time for such instructions to be received by The Bank of New York Mellon, as depositary, no later than 5:00 p.m. (New York time) on February 17, 2009. A voting instruction form to be used by holders of Danka ADSs in connection with the resolutions to be proposed at the EGM accompanied the proxy statement previously mailed to ADS holders. If any ADS holder would like to change any voting instructions that have already been returned, please contact the Company's proxy solicitor, Innisfree M&A Incorporated, as quickly as possible. Holders may contact Innisfree toll-free at (888) 750- 5834, with any questions about the MVL and the EGM, including the procedures for voting Danka ADSs. About Danka Business Systems Headquartered in St. Petersburg, Florida, Danka Business Systems PLC (LON: DNK) -- http://www.danka.com/-- offers document solutions including office imaging equipment: digital and color copiers, digital and color multifunction peripherals printers, facsimile machines, and software in the United States. It also provides a range of contract services, including professional and consulting services, maintenance, supplies, leasing arrangements, technical support and training, collectively referred to as Danka Document Services. The company's revenue is generated from two primary sources: new retail equipment, supplies and related sales, and service contracts. Danka sells Canon products, as well as Kodak, Toshiba and Hewlett-Packard. On Aug. 31, 2006, the company sold its subsidiary, Danka Australasia PTY Limited to Onesource Group Limited. In January 2007, the company disposed of its European businesses to Ricoh Europe B.V. Going Concern Doubt As reported in the Troubled Company Reporter on July 24, 2008, Ernst & Young LLP in Tampa, Fla., raised substantial doubt about Danka Business Systems PLC's ability to continue as a going concern after auditing the company's financial statements for the year ended March 31, 2008. The auditing firm stated that the company has incurred recurring operating losses, has a working capital deficit and has not complied with certain covenants of loan agreements with a bank. In addition, on June 27, 2008, the company sold its remaining operations to Konica Minolta Business Solutions U.S.A., Inc. As of December 31, 2008, the Company's balance sheet showed total assets of $74,371,000, total liabilities of $10,045,000 and 6.5% senior convertible participating shares of $388,191,000, resulting in total shareholders' deficit of $323,865,000. DAYTON SUPERIOR: Extends Exchange Offer for 13% Notes Until March ----------------------------------------------------------------- Dayton Superior Corporation extended the exchange expiration date for its private exchange offer with respect to its 13% Senior Subordinated Notes due 2009 and concurrent consent solicitation. The exchange expiration date has been extended until 11:59 p.m. EST, on March 13, 2009. The exchange expiration date had been scheduled for 11:59 p.m. EST, on Feb. 13, 2009. The withdrawal expiration date expired at 11:59 p.m. EST, Dec. 1, 2008, and has not been extended. The early consent deadline expired at 5:00 p.m. EDT, on July 25, 2008, and has not been extended. As of the close of business on Feb. 11, 2009, approximately $9.6 million in aggregate principal amount of the 13% Senior Subordinated Notes due 2009 have been tendered and not withdrawn. The exchange offer is being made only to qualified institutional buyers and institutional accredited investors inside the United States and to certain non-U.S. investors located outside the United States. Headquartered in Dayton, Ohio, Dayton Superior Corporation (NASDAQ:DSUP) -- http://www.daytonsuperior.com/-- is a North American provider of specialized products consumed in non- residential, concrete construction, and a concrete forming and shoring rental company serving the domestic, non-residential construction market. The company's products are used in non- residential construction projects, including infrastructure projects, such as highways, bridges, airports, power plants and water management projects; institutional projects, such as schools, stadiums, hospitals and government buildings, and commercial projects, such as retail stores, offices and recreational, distribution and manufacturing facilities. Dayton Superior offers more than 20,000 catalogued products. * * * As reported by the Troubled Company Reporter on January 28, 2009, Standard & Poor's Rating Services said it lowered its ratings on Dayton Superior Corp. S&P lowered the corporate credit rating to 'CCC' from 'CCC+' and removed all ratings from CreditWatch, where they were placed with negative implications on Aug. 14, 2008. The outlook is negative. DELPHI CORP: GM Buyback of Sites to Partly Fund Exit Financing -------------------------------------------------------------- Thomas Hartley at Business First of Buffalo reports that Delphi Corp. said that a sale of some properties to General Motors Corp. is being discussed. GM's restructuring plan contemplates the purchase of certain sites from Delphi that represent an important source of supply for the GM and potential incremental liquidity support. A portion of Delphi's exit funding needs would be satisfied through the proceeds from the sale of sites to GM. Delphi is also seeking to address its underfunded pension plans and to secure exit financing to successfully emerge from bankruptcy. Based on current agreements with Delphi, GM is required to absorb the remaining hourly pension plan only under certain conditions, which are not currently expected to be met. GM has no obligation to absorb Delphi's salaried pension plan. As such, the federal loan support outlined in the restructuring plan does not contemplate the transfer of either the hourly or salaried pension plans to GM. Delphi is unlikely to be able to support these underfunded pension plans going forward and may need to terminate these plans, which would impact the Pension Benefit Guaranty Corporation. PBGC is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations Given current capital market environments, it is uncertain whether Delphi will be able to raise the balance of the funding necessary to exit bankruptcy. If Delphi is unsuccessful in addressing its underfunded pension plans and raising exit financing, it would represent a significant risk to GM's revised Plan. GM would have to consider alternative strategies, including utilizing other sources of supply, although it would require some time to accomplish. GM Proposes Credit Insurance Program for Suppliers GM has proposed in its restructuring plan that the government create by March a credit insurance program, or a government sponsored factoring program, for original equipment manufacturer (OEM) receivables. Large production cuts, especially in the first quarter of 2009, have severely affected cash flow and liquidity for the automotive supply chain. Suppliers are trying to reduce costs and breakeven points and conserve cash, but there is a limit to what can be done in the short term. Many of the suppliers' lenders are reluctant to include domestic OEM receivables in their borrowing base calculations because of concerns about OEM viability, impairing supplier liquidity when it is most needed. Some suppliers face the possibility of a going-concern qualification from their auditors based in part on their receivable exposures. Going concern qualifications can trigger loan and bond defaults and make raising new capital nearly impossible, placing the survival of the affected supplier in jeopardy. Under the credit program GM is proposing, the government would guarantee OEM receivables up to a certain limit. The OEMs would select participating credit insurance providers, or supply chain financing providers, based on a competitive process, and suppliers would enroll in the program as they deem necessary, and pay insurance and processing fees. GM estimates that $4.5 billion would be needed for the program through 2011 for direct material and logistics suppliers, with eligible GM receivables limited to those associated with the supplier's U.S.- based manufacturing operations. GM believes the program needs to be in place by March 2009 as there will be significant working capital requirements to support the planned increase in the GM production schedule, following very low production levels in January and February. The proposed program, according to GM, guarantees eventual payment of the affected receivables, allowing suppliers access to financing. The program would significantly improve the availability of private capital to the supply base without direct government outlay, most likely avoiding a wave of supplier bankruptcies and disruptions in the shared automotive supply chain. As GM demonstrates its viability, as suppliers restructure and consolidate in an orderly fashion, and as GM migrates its supply base to suppliers with the highest long-term viability, the need for the program would be reduced and eventually eliminated, without expense to the Government. GM has been moving new and current programs to healthier suppliers and will accelerate this process significantly in 2009-2011. GM projects a 30 percent reduction in the number of suppliers to General Motors' North American operations. GM expects the North American supply base to continue to deliver annual material performance over the viability plan period. GM's strategy is to continue improving supply base health by partnering with suppliers who are cost-effective and have invested in innovative products and technologies. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Remains Committed to Emerging From Chapter 11 ---------------------------------------------------------- Delphi Corp. (PINKSHEETS: DPHIQ) says it has been engaged in lengthy discussions with GM regarding certain matters related to our emergence from Chapter 11. "Delphi remains focused on emerging from Chapter 11 as soon as practicable, maximizing return for our stakeholders and preserving the accumulated pension benefits of our employees," according to a Delphi statement in response to GM's viability plan submitted to the Treasury on February 17. "We are currently engaged in discussions with GM regarding, among other issues, the possible sale of certain Delphi U.S. manufacturing facilities to GM. Should these transactions materialize, we will notify all affected employees and engage in discussions with our customers to ensure the orderly and uninterrupted supply of product to their operations. Additionally, we will work with impacted suppliers on related matters." Meanwhile, according to Bloomberg, Delphi, as part of its plans to cut costs, said it is cutting 775 jobs, or 20 percent of the work force, at its steering components operation in Saginaw, Michigan. The business is under contract to be sold to Platinum Equity LLC, but the sale remains pending. Delphi Corp., in May 2008, sued Appaloosa and other parties in light of their refusal to comply with their prior agreement to provide US$2,550,000,000 in equity exit financing to Delphi. Appaloosa's termination of their Equity Purchase and Commitment Agreement stalled the consummation of Delphi's Plan of Reorganization, which was confirmed by the Court January 25, 2008, and kept Delphi in Chapter 11. Delphi, on October 3, filed modifications to their Plan of Reorganization, which would allow Delphi to exit Chapter 11 regardless of the outcome of their lawsuit for specific performance by the Plan Investors. The Modified Plan does not require equity exit financing from the Plan Investors, and only contemplates a US$3.75 billion of funded emergence capital through a combination of term bank debt and rights to purchase equity in Reorganized Delphi. The Modified Plan also requires more funding by General Motors Corp. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTEK INC: Dec. 31 Balance Sheet Upside Down by $53.8 Million -------------------------------------------------------------- On February 12, 2009, Deltek, Inc. (Nasdaq: PROJ), the leading provider of enterprise applications software for project-focused businesses, reported financial results for its fourth quarter and full year ended December 31, 2008. Fourth Quarter 2008 Results Total revenue for the fourth quarter of 2008 was $71.7 million, compared with $77.0 million in the prior year period. License revenue for Q4 was $19.8 million, compared to $27.1 million in the fourth quarter of 2007. Consulting services revenue for Q4 was $21.9 million, compared to $22.3 million in the prior year period. Maintenance and support revenue in the fourth quarter of 2008 was $30.0 million, compared to $27.4 million in Q4 2007. Non-GAAP net income for the fourth quarter of 2008 was $8.5 million, or $0.20 per diluted share, compared to $9.2 million, or $0.21 per diluted share, in the fourth quarter of 2007. GAAP net income for the fourth quarter of 2008 was $6.1 million, or $0.14 per diluted share, compared to $7.1 million, or $0.16 per diluted share, in the fourth quarter of 2007. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company's 2005 recapitalization, amortization of acquired intangible assets, restructuring charges and New Mountain Capital fees. "In the face of increasing economic uncertainty, we are pleased with our ability to achieve our Q4 revenue objectives, exceed our profit goals and generate strong cash flow. Our results reflect the continuing strength of our government contracting business, combined with our focus on expanding service margins and maintaining strong expense controls," said Kevin Parker, Deltek president and CEO. "Despite the tough economic climate, in 2008 we achieved record total revenue, increased profitability, reported record operating cash flow, added 450 new customers to our installed base and achieved near double-digit license growth in our core government contracting business." Full-Year 2008 Results Total revenue for 2008 was $289.4 million, compared with $278.2 million in 2007. License revenue for 2008 was $77.4 million, compared to $87.1 million in 2007. Consulting services revenue for 2008 was $91.6 million, compared to $83.4 million in 2007. Maintenance and support revenue in 2008 was $115.7 million, compared to $102.9 million in 2007. Non-GAAP net income for 2008 was $32.4 million, or $0.73 per diluted share, compared to $29.5 million, or $0.71 per diluted share, in 2007. Full-year 2008 GAAP net income was $23.5 million, or $0.53 per diluted share, compared to $22.5 million, or $0.54 per diluted share, in 2007. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company's 2005 recapitalization, amortization of acquired intangible assets, restructuring charges and New Mountain Capital fees. Recent Highlights * Q4 cash flow from operations increased more than 35% to $9.5 million, compared to $7.0 million in the prior-year period, resulting in a cash balance of $35.8 million at December 31, 2008. For 2008, cash flow from operations increased over 120% to $42.6 million, a new Company record. * During Q4, Deltek added 130 new customers, a 9% increase over Q4 2007. For the year, Deltek added 450 new customers, a 7% increase over 2007. * Deltek launched GovStart, a turn-key software solution that enables government contractors to quickly and easily implement a comprehensive business development solution. GovStart is an all-inclusive offering that includes Deltek's industry-leading GovWin product, hosting, quick-start implementation and ongoing maintenance and support. * Deltek held its inaugural customer conference for the EMEA region. This exclusive event was created as a forum for Deltek's growing EMEA customer base to collaborate with each other and learn best practices for managing their project- focused businesses. Attendees joined Deltek executives at the conference to discuss the future product directions for Deltek's industry-leading Vision and Enterprise Project Management solutions. * Deltek received CustomerSat's Achievement in Customer Excellence (ACE)(TM) Award for "Customer Support Satisfaction." This ACE award recognizes Deltek's industry- leading success and effectiveness in building customer loyalty and delivering a premier customer support experience. This is the second year in a row that Deltek has received this award for outstanding customer service. As of December 31, 2008, the Company's balance sheet showed total assets of $193,272,000 and total liabilities of $247,082,000, resulting in total stockholders' deficit of $53,810,000. A full-text copy of the Company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?39b5 About Deltek, Inc. Headquartered in Herndon, Virginia, Deltek, Inc. (Nasdaq: PROJ) -- http://www.deltek.com/--provides enterprise applications software and related services designed specifically for project- focused organizations. Project-focused organizations generate revenue from defined, discrete, customer-specific engagements or activities. DIAMOND RANCH: Dec. 31 Balance Sheet Upside Down by $3.3 Million ---------------------------------------------------------------- Diamond Ranch Foods, Ltd.'s December 31, 2008, balance sheet showed total assets of $1,144,993 and total liabilities of $4,536,162, resulting in total stockholders' deficit of $3,391,169. The Company posted a net loss of $180,457 for the three months ended December 31, 2008. President Louis Vucci, Jr., disclosed in a regulatory filing that the Company's revenues from operations for the three months ended December 31, 2008 were $1,631,714 compared to $2,840,463 for 2007, a decrease of $1,208,749 or 42.6%. The reason for the decrease was mostly a decision to concentrate on higher gross profit items as well as the overall downturn in the economy. "Our cost of sales for the three months ended December 31, 2008 was $1,227,917, generating a gross profit of $403,797, or 24.7%. Cost of Sales for the same period in 2007 was $2,109,289, resulting in a gross profit of $731,174 or 25.7%." "Our operating expenses for the three months ended December 31, 2008 totaled $532,594 compared to $612,645 in 2007. The decrease was attributable to reduction in our payroll, factoring fees, rental and sales commissions." For the nine months ended December 31, 2008, the Company's cash used by operating activities totaled $83,353 and cash provided by financing activities was $80,453. A full-text copy of the Company's quarterly report is available for free at: http://researcharchives.com/t/s?39b2 About Diamond Ranch Diamond Ranch Foods, Ltd., -- www.diamondranchfoods.com/ -- processes and distributes meats and fresh cut portion controlled poultry, and is located in the historic Gansevoort meatpacking district in lower Manhattan, NY. Operations include packing, processing, labeling and distribution of products. The company also provides portion controlled meats, custom meat cutting, and private labeling. The company's diversified customer base includes in-home food service businesses, retailers, hotels, restaurants, and institutions, deli and catering operators and industry suppliers. The Troubled Company Reporter reported on June 13, 2008, that Gruber & Company, LLC, raised substantial doubt on the ability of Diamond Ranch Foods, Ltd., to continue as a going concern after it audited the company's financial statements for the year ended March 31, 2008. The auditor pointed to the company's recurring losses from operations. DREIER LLP: Discloses $59.3MM in Assets and $42.3MM in Liabilities ------------------------------------------------------------------ Dreier LLP submitted before the U.S. Bankruptcy Court for the Southern District of New York its formal lists of assets and debt showing property on the books for $59.3 million against liabilities of $42.3 million, Bloomberg's Bill Rochelle said. Diamond McCarthy partner Sheila M. Gowan has taken over Dreier's estates after she was appointed Chapter 11 trustee to oversee the Chapter 11 bankruptcy case of Dreier. Tiffany Kary of Bloomberg said that the Debtor listed secured claims of $29.8 million, unsecured priority claims of $2.1 million and unsecured non-priority claims of $10.4 million. The report adds that the listed assets include -- of unknown value, art seized from Dreier LLP's New York and Connecticut offices by the U.S. government. -- $12,000 deposit for season tickets with the New York Mets; -- $3.9 million in office furniture; and -- $15.5 million of funds in an account with Wachovia Bank NA pledged to secure a letter in favor of Hines 499 Park LLC, a landlord for Dreier's New York headquarters. -- $1,125 worth of stock certificates in Axiom Management that have been seized by the federal government, and $8,400 in shares of Avalon Capital Holdings. -- of "unknown" value, 9,294 shares in Nortel Networks Corp., which has filed for bankruptcy, -- a $1.1 million investment Dreier LLP made in CP3 LP, a California limited partnership. New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- was founded by Marc S. Dreier in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier has been charged by the U.S. government for conspiracy, securities fraud and wire fraud before the U.S. District Court for the Southern District of New York (Manhattan) (Case No. 09-cr-00085- JSR). Dreier LLP filed for Chapter 11 on Dec. 16, 2008 (Bankr. S. D. N.Y., Case No. 08-15051). Judge Robert E. Gerber handles the case. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, has been retained as counsel. The Debtor listed assets between $100 million to $500 million, and debts between $10 million to $50 million in its filing. Wachovia Bank National Association, Sheila M. Gowan as trustee for Chapter 11 estate of Dreier LLP, and Steven J. Reisman as postconfirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that sent Mr. Dreier to bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D. N.Y., Case No. 09-10371). DRYSHIPS INC: Moving in Right Direction, Says Lender ---------------------------------------------------- DryShips Inc. is "moving in the right direction" after renegotiating loan terms with Nordea Bank Finland Plc, the lender said, according to Bloomberg News. "With present developments I think they are doing fine," Ulf Andersson, head of shipping and offshore at the bank's London branch, said by phone on February 17, according to Bloomberg. Further renegotiations are unlikely if ship-rental prices stay at present levels, he said. DryShips (NASDAQ:DRYS) said in a February 9 Form 6-K filing with the U.S. Securities and Exchange Commission that it has reached preliminary agreement with Nordea Bank Finland Plc to obtain a covenant waiver in connection with the $800.0 million Primelead facility, which was used to partially finance the acquisition of Ocean Rig ASA. The outstanding loan amount under the facility is $650.0 million. In accordance with the main terms of the waiver: (i) the Company will pay a restructuring fee of 0.15% on the outstanding loan amount under the facility plus an amount equal to 1.00% per annum on the loan outstanding for the period from January 9, 2009 until the Effective Date of the waiver agreement; (ii) $75.0 million of principal repayment due February 2009 will be postponed until May 2009; (iii) the margin on the facility will increase by 1.00% to 3.125% per annum; and (iv) regular principal payments will resume as of August 2009. In addition, among other things, lender consent will be required for the acquisition of DrillShip Hulls 1837 and 1838, for new cash capital expenditures or commitments and for new acquisitions for cash until the loan has been repaid to below $375.0 million. The waiver agreement Effective Date will not exceed August 12, 2009, at which time the Company expects to be in compliance with the restructured loan covenants. The agreement is preliminary and is subject to formal approvals by the Company and the syndicate banks (Nordea Bank Finland Plc, DnB NOR Bank ASA and HSH Nordbank AG). DryShips disclosed the covenant violations on January 28. "Our loan agreements require that we maintain loan to value ratios ranging from 120% to 200% of the total amount outstanding under the relevant agreement. The current low drybulk charter rates and drybulk vessel values have affected our ability to comply with these covenants. In addition, if the value of our vessels deteriorates significantly, we may have to record an impairment adjustment to our financial statements, which would adversely affect our financial results and further hinder our ability to raise capital. We have received notices from certain of our lenders that we are not in compliance with our loan to value covenants and we are currently in discussions with these and other lenders for waivers and amendments of certain financial and other covenants contained in our loan agreements." About DryShips Inc. DryShips Inc. -- http://www.dryships.com-- based in Greece, is an owner and operator of drybulk carriers that operate worldwide. As of the day of this release, DryShips owns a fleet of 43 drybulk carriers comprising 7 Capesize, 29 Panamax, 2 Supramax and 5 newbuilding drybulk vessels with a combined deadweight tonnage of over 3.4 million tons, 2 ultra deep water semisubmersible drilling rigs and 2 ultra deep water newbuilding drillships. DryShips Inc.'s common stock is listed on the NASDAQ Global Market where trades under the symbol "DRYS." ECLIPSE AVIATION: Astronics Records $7.5MM Charge on Bankruptcy --------------------------------------------------------------- Astronics Corp. reported sales of $44.4 million in the fourth quarter of 2008, up 22.4% compared with $36.3 million in the fourth quarter of 2007. The Company reported a fourth quarter 2008 loss of $0.2 million compared with net income of $2.1 million in the 2007 fourth quarter. During the quarter, the Company recorded a pre-tax charge of $7.5 million, or $0.46 per diluted share after tax, to write-down assets associated with its customer Eclipse Aviation Corporation, which declared bankruptcy in November 2008. Sales for 2008 increased 9.8% to $173.7 million compared with 2007 sales of $158.2 million. For 2008, net income was $10.0 million, or $0.94 per diluted share, 35.3% below net income of $15.4 million, or $1.44 per diluted share, in 2007. Based in East Aurora, New York, Astronics provides innovative, high performance lighting, power management systems for the global aerospace industry; automated diagnostic test systems, training and simulation devices for the defense industry; and safety and survival equipment for airlines. On January 22, 2009, the Troubled Company Reporter, citing New Mexico Business Weekly, said the Hon. Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware approved the sale of Eclipse Aviation Corp.'s assets to ETIRC Aviation affiliate EclipseJet Aviation International Inc. for a combination of cash, equity, and debt. As reported by the TCR on Jan. 16, 2009, Eclipse Aviation's auction was cancelled, after the company failed to attract any qualified bids by the Jan. 13 deadline. The lack of bids let Eclipse Aviation's largest shareholder, ETIRC Aviation, proceed with plans to buy the bankrupt company. According to New Mexico Business, EclipseJet Aviation will pay $28 million in cash for Eclipse Aviation, plus $160 million in newly issued notes, and an offer of 15% equity in the new firm to senior secured note holders. About Eclipse Aviation Albuquerque, New Mexico-based Eclipse Aviation Corporation -- http://www.eclipseaviation.com/-- makes six-passenger planes powered by two Pratt & Whitney turbofan engines. The company and Eclipse IRB Sunport, LLC filed separate petitions for Chapter 11 relief on Nov. 25, 2008 (Bankr. D. Delaware Lead Case No. 08-13031). Daniel Guyder, Esq., John Kibler, Esq., and David C. Frauman, Esq., at Allen & Overy LLP, represent the Debtors as counsel. Joseph M. Barry, Esq., and Donald J. Bowman, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors as Delaware counsel. Eclipse Aviation Corporation listed assets of between $100 million and $500 million and debts of more than $1 billion. FOAMEX INTL: Files for Bankruptcy After Missed Interest Payment --------------------------------------------------------------- Foamex International Inc. and certain of its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The Company plans to use this process to restructure its debt, resulting in a capital structure more suited to the conditions of today's market environment, while positioning the Company for the future. The Company's normal day-to-day operations will continue without interruption. "The chapter 11 process will allow Foamex to gain immediate liquidity and continue operating without interruption, while giving us the opportunity we need to restructure our balance sheet, strengthen our business performance and create long-term value," said Jack Johnson, President and Chief Executive Officer. "Like many companies around the world, Foamex has been hit hard by the economic downturn in the markets we serve. Although we have reduced debt by approximately $240 million to $380 million over the past two years, we cannot support the existing heavy debt load in the current operating environment." Mr. Johnson added, "Despite this challenging business environment, Foamex is continuing to invest in technology, product and market development. We expect to emerge from this process as quickly as possible with a more appropriate capital structure that will allow us to be a healthier, more competitive company. We deeply appreciate the dedication and efforts of our employees, who have worked exceedingly hard during this challenging period for the Company. We look forward to the support of our vendors and business partners as we move through the reorganization process." $7.3-Mil. Interest Payment Default Foamex missed $7.3 million in interest payments due at the end of the Jan. 21 grace periods on the Company's $325 million first-lien term loan and the $47 million second-lien term loan. As reported by the Troubled Company Reporter on February 16, 2009, Foamex entered into a Forbearance Agreement, dated January 22, 2009, with Bank of America, N.A., Wells Fargo Foothill, LLC, Wachovia Bank, National Association, GE Business Financial Services Inc., and General Electric Capital Corporation with respect to the Company's Revolving Credit Agreement, dated as of February 12, 2007, as amended. Under the Forbearance Agreement, the Lenders agreed to forbear from exercising their right to refuse to make Loans under the Credit Agreement arising as a result of the Representation Breaches and Specified Events of Default until January 30, 2009. In addition, Foamex L.P. agreed to maintain the aggregate Availability under the Credit Agreement to not less than $8,500,000. The Forbearance Agreement was subsequently amended by the parties by a letter agreement to extend the forbearance period until February 4, 2009. On February 9, the parties further amended the Forbearance Agreement (effective as of February 4) to provide that (i) the forbearance period be extended to February 18, (ii) the maximum commitments for the Lenders under the Credit Agreement be reduced from $175 million to $100 million, and (iii) the aggregate Availability could not be less than $9,000,000. On Monday, the TCR said the Company was continuing discussions with lenders under its First Lien Term Credit Agreement regarding the terms of a forbearance agreement. $95-Mil. Loan from Matlin & BofA In conjunction with its filing, the Company is seeking Bankruptcy Court approval of up to $95 million in debtor-in-possession financing provided by MatlinPatterson Global Opportunities Partners III L.P. and Bank of America, which represents a significant incremental cash availability at the outset of the proceedings. The proposed DIP financing, combined with cash flow from operations, will enable the Company to continue to satisfy customary obligations associated with ongoing operations of its business, including payment of employee wages and benefits in the ordinary course, and payment of post-petition obligations to vendors. Foamex will use chapter 11 to implement its balance sheet restructuring initiatives, which are designed to restore the Company's business to long-term financial health, while continuing to operate in the normal course of business. Foamex anticipates that its day-to-day operations will continue as usual without interruption during the chapter 11 process, which is expected to last approximately six months. In addition to seeking Bankruptcy Court approval of DIP financing, Foamex has filed a variety of customary first day motions seeking authority to pay certain pre-petition amounts owed to its employees, customers and others, which will help enable it to continue to conduct business as usual while it completes its balance sheet restructuring. Except for Foamex Canada, today's filings do not affect the Company's international business which includes operations in Mexico and the Company's joint venture in China. Foamex has retained Houlihan Lokey as its financial advisor and Akin Gump and Cozen O'Connor as its legal counsel. More information about Foamex's reorganization case is available on the Company's Web site at http://www.foamex.com/restructuring About Foamex International Foamex International Inc. (FMXL) -- http://www.foamex.com/-- headquartered in Media, PA, produces polyurethane foam-based solutions and specialty comfort products. The Company services the bedding, furniture, carpet cushion and automotive markets and also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The company and eight affiliates first filed for chapter 11 protection on September 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). On February 2, 2007, the U.S. Bankruptcy Court for the District of Delaware confirmed the Debtors' Second Amended Joint Plan of Reorganization. The Plan became effective and the company emerged from chapter 11 bankruptcy on February 12, 2007. * * * Standard & Poor's Ratings Services has lowered its corporate credit rating on Foamex L.P. to 'D' from 'CCC+'. At the same time, S&P lowered the issue-level rating on the company's $425 million first-lien term loans to 'D' from 'CCC+', with a recovery rating of '4', indicating S&P's expectation for average (30% to 50%) recovery in the event of a payment default. S&P also lowered the issue-level rating on the company's $175 million second-lien term loans to 'D' from 'CCC-', and the recovery rating is '6', indicating S&P's expectation for negligible (0% to 10%) recovery in the event of a default. Moody's Investors Service downgraded Foamex L.P.'s Probability of Default Rating to D from Caa2 and its Corporate Family Rating to Ca from Caa2. Moody's also downgraded the company's first lien term loan to Ca from Caa2 and its second lien term loan to C from Caa3. The outlook is negative. FOOTHILLS RESOURCES: Can Access $1.6-Mil. Loan on Interim Basis --------------------------------------------------------------- Foothills Resources Inc. received permission from the U.S. Bankruptcy Court for the District of Delaware to access $1.6 million of the $2.5 million in debtor-possession-loans from Regiment Capital Special Situations Fund III LP, Bloomberg's Bill Rochelle said. The DIP Loan, according to the report, is secured by a lien on assets subordinate to the existing lenders'. The Company has said that the DIP 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. About Foothills 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. 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 (Bankr. D. Del., Case No. 09-10453). Judge Christopher S. Sontchi handles the Chapter 11 case. The Debtor has tapped Akim Gump Strauss Hauer & Feld LLP as bankruptcy counsel and Cole, Schotz, Meisel, Forman & Leonard, as local counsel. The Garden City Group Inc. is the Company's claims agent. In its bankruptcy petition, Foothills estimated assets and debts of $50 million to $100 million. FORD MOTOR: Bank Loan Slides in Secondary Market Trading -------------------------------------------------------- Participations in a syndicated loan under which Ford Motor Co. is a borrower traded in the secondary market at 34.09 cents-on-the- dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.87 percentage points from the previous week, the Journal relates. Ford pays interest at 300 points above LIBOR. The bank loan matures on December 15, 2013. The bank loan carries Moody's B2 rating and S&P's CCC+ rating. Meanwhile, participations in a syndicated loan under which rival General Motors Corp. is a borrower traded in the secondary market at 35.20 cents-on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 7.22 percentage points from the previous week, the Journal relates. General Motors pays interest at 275 points above LIBOR. The bank loan matures on November 27, 2013. The bank loan carries Moody's B3 rating and S&P's CCC rating. 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. FORWARD FOODS: Files for Chapter 11 Due to PCA Peanut Recalls ------------------------------------------------------------- Forward Foods LLC filed a Chapter 11 petition February 17 in Delaware after recalling 75% percent of its products on account of using peanuts from Peanut Corp. of America Peanut Corp. of America had filed for Chapter 7 liquidation, after closing its plants due to salmonella poisoning on its products. PCA made announcements starting early January that it was voluntarily recalling all peanuts and peanut products processed in its Blakely, Georgia facility since January 1, 2007 because they have the potential to be contaminated with Salmonella. The peanut butter recalled was sold by PCA in bulk packaging to distributors for institutional and food service industry use. It is also sold under the brand name Parnell's Pride to those same industries. Additionally, it was sold by the King Nut Company under the label King Nut. PCA, according to Bloomberg, is facing a criminal investigation over eight deaths and hundreds of sickened consumers resulting from a salmonella outbreak. Forward Foods announced January 30 a voluntary recall of DETOUR(R) branded bars that contain roasted peanuts purchased from Peanut Corporation of America (PCA). According to Forward Foods, PCA is the focus of an investigation by the U.S. Food and Drug Administration (FDA) concerning a recent Salmonella outbreak thought to be caused by tainted peanut products. Salmonella is an organism which can cause serious and sometimes fatal infections in young children, frail or elderly people and others with weakened immune systems. Healthy persons infected with Salmonella often experience fever, diarrhea (which may be bloody), nausea, vomiting and abdominal pain. In rare circumstances, infection with Salmonella can result in the organism getting into the bloodstream and producing more severe illnesses such as arterial infections (i.e., infected aneurysms), endocarditis and arthritis. Forward Foods said in its Jan. 30 statement that it Detour products have not been linked to any incidents of Salmonella, and "we are not aware of any illnesses that have been linked to our products." According to Bloomberg's Bill Rochelle, Forward and its owner Emigrant Capital Corp. have been involved in a lawsuit with the previous owner Bluegrass Bars LLC. Forward will ask the Bankruptcy Court for approval of a settlement where Bluegrass will pay $975,000 to Forward while turning $6.5 million in secured and unsecured acquisition notes over to Emigrant. Minden, Nevada-based Forward Foods LLC is a manufacturer of protein bars. Forward is primarily owned by private-equity investor Emigrant Capital Corp. which purchased the protein bar business in 2006 from Bluegrass Bars LLC. Forward's petition listed assets of $21.3 million against debt totaling $25.4 million, including $18.6 million in secured claims. FORWARD FOODS: Seeks Benesch Friedlander as Attorneys ----------------------------------------------------- Forward Foods LLC asks the United States Bankruptcy Court for the District of Delaware for permission to employ Benesch Friedlander Coplan & Aronoff LLP as its attorneys. The firm will: a) advise the Debtor of its rights, powers, and duties as a debtor-in-possession continuing to operate and manage its business and property; b) attend meetings and negotiating with representatives of creditors and other parties in interest; c) prepare on behalf of the Debtor all necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules, and other documents, and reviewing all financial and other reports to be filed with the Court in this chapter 11 case; d) advise the Debtor concerning, and preparing responses to, applications, motions, pleadings, notices, and other papers that may be filed and served in this chapter 11 case; e) advise the Debtor concerning, and assist in the negotiation and documentation of, the refinancing or sale of its assets, debt and lease restructuring, executory contract and unexpired lease assumptions, assignments or rejections, and related transactions, as the case may be; f) review the nature and validity of liens asserted against the Debtor's property and advising the Debtor concerning the enforceability of such liens; g) advise the Debtor concerning the actions that they might take to collect and recover property for the benefit of their estates; h) counsel the Debtor in connection with the formulation, negotiation, and confirmation of a plan or plans of reorganization and related documents; and i) perform such other legal services for and on behalf of the Debtor as may be necessary or appropriate in the administration of its chapter 11 case and business, including advising and assisting the Debtor with respect to debt restructuring, corporate governance issues related to such restructuring, stock or asset dispositions and general business and litigation matters. The firm's professionals and their rates are: Professional Designation Hourly Rate ------------ ----------- ----------- William I. Kohn, Esq. Partners $695 Bradford J. Sandler, Esq. Partners $535 Jennifer R. Hoover, Esq. Associates $330 Kari Coniglio, Esq. Associates $230 Sandi Van Dyk Paralegals $215 Lisa Behra Paralegals $175 Bradford, J. Sandler, Esq., a partner at the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Minden, Nevada, Forward Foods LLC makes and sells energy bars. The company filed for Chapter 11 on February 17, 2009 (Bankr. D. Del. Case No. 09-10545). The Debtor has tapped Benesch Friedlander Coplan & Aronoff LLP as its attorneys. The Debtor proposed The Garden City Group Inc. as its claims, notice and balloting agent. When the Debtor filed for protection from their creditors, it listed $21,279,873 in total assets and $25,364,230 in total debts. FORWARD FOODS: Seeks Garden City Group as Claims Agent ------------------------------------------------------ Forward Foods LLC asks the United States Bankruptcy Court for the District of Delaware for permission to tap The Garden City Group Inc. as claims, notice and balloting agent. The firm will: a) notify all potential creditors of the filing of the Debtor's bankruptcy petition and of the setting of the first meeting of creditors, pursuant Section 341, under the proper provisions of the Bankruptcy Code and the Bankruptcy Rules; b) maintain an official copy of the Debtor's schedules of assets and liabilities and statement of financial affairs listing the Debtor's known creditors and the amounts owed thereto; c) notify all potential creditors of the existence and amount of their respective claims, as evidenced by the Debtor's books and records and as set forth in their Schedules; d) furnish a notice of the last day for the filing of proofs of claim and a form for the filing of a proof of claim, after such notice and form are approved by this Court; e) file with the Clerk an affidavit or certificate of service which includes a copy of the notice, a list of persons to whom it was mailed, and the date the notice was mailed, within seven days of service; f) docket all claims received, maintain the official claims register for the Debtor on behalf of the Clerk, and provide the Clerk with a certified duplicate unofficial Claims Register on a monthly basis, unless otherwise directed; g) specify, in the claims register, the following information for each claim docketed: -- the claim number assigned; -- the date received; -- the name and address of the claimant and agent, if applicable, who filed the claim -- the filed amount of the claim, if liquidated; and -- the classification(s) of the claim according to the proof of claim; h) record all transfers of claims and provide any notices of such transfers required by Bankruptcy Rule 3001; i) make changes in the Claims Register pursuant to Court Order; j) upon completion of the docketing process for all claims received to date by the Clerk's office, turn over to the Clerk copies of the Claims Register for the Clerk's review; k) maintain the Claims Register for public examination without charge during regular business hours; l) maintain the official mailing list for the Debtor, which shall be available upon request by a party-in-interest or the Clerk, of all entities that have filed a proof of claim; m) assist with, among other things, solicitation, calculation, and tabulation of votes and distribution, as required in furtherance of confirmation of the Plan; n) provide and maintain a website where parties can view claims filed, status of claims, and pleadings or other documents filed with the Court by the Debtor; o) Thirty days prior to the close of this case, an order dismissing Garden City would be submitted terminating its services upon completion of its duties and responsibilities and upon the closing of this case; and p) at the close of the case, box and transport all original documents in proper format, as provided by the Clerk's office, to the Federal Records Center. Jeffrey Stein, senior vice president of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. The firm will be paid for its services in accordance with the bankruptcy administration agreement. A full-text copy of the agreement is available for free at: http://ResearchArchives.com/t/s?39a8 Headquartered in Minden, Nevada, Forward Foods LLC makes and sells energy bars. The company filed for Chapter 11 on February 17, 2009 (Bankr. D. Del. Case No. 09-10545). The Debtor has tapped Benesch Friedlander Coplan & Aronoff LLP as its attorneys. The Debtor proposed The Garden City Group Inc. as its claims, notice and balloting agent. When the Debtor filed for protection from their creditors, it listed $21,279,873 in total assets and $25,364,230 in total debts. FORWARD FOODS: Wants to Access $4-Million DIP Loan from Emigrant ---------------------------------------------------------------- Forward Foods LLC asks the United States Bankruptcy Court for the District of Delaware for authority to obtain $4 million in postpetition financing under a certain credit agreement with Emigrant Capital Corp. The Debtor tells the Court that it has the need to obtain financing in order to maintain its operations and preserve its going concern value while it attempts to seek more financing necessary to restructure its secured debt and enable it to emerge from bankruptcy. According to the Debtor, it sought financing from CIT Comerica and Next Protein Inc. but they refused to extend funding or participate in any postpetition financing deals. The Debtor provided a budget that provides for the payment of all present administrative expenses in its chapter 11 case. The $4 million DIP facility, which is priced at 15% per annum, will mature on Dec. 31, 2009. The Debtor will grant the lender junior lien on prepetition collateral, senior position on postpetition collateral, and superpriority administrative expense claim status to secure its DIP obligation. The credit agreement contains appropriate events of default. A full-text copy of the credit agreement is available for free at: http://ResearchArchives.com/t/s?39aa A full-text copy of the summary of DIP terms is available for free at: http://ResearchArchives.com/t/s?39ab A full-text copy of the debtor-in-possession budget is available for free at: http://ResearchArchives.com/t/s?39ac About Forward Foods Headquartered in Minden, Nevada, Forward Foods LLC makes and sells energy bars. The company filed for Chapter 11 on February 17, 2009 (Bankr. D. Del. Case No. 09-10545). The Debtor has tapped Benesch Friedlander Coplan & Aronoff LLP as its attorneys. The Debtor proposed The Garden City Group Inc. as its claims, notice and balloting agent. When the Debtor filed for protection from their creditors, it listed $21,279,873 in total assets and $25,364,230 in total debts. GALE FORCE: Commences Insolvency Proceedings in Canada ------------------------------------------------------ Gale Force Petroleum Inc. filed a Proposal to Creditors under the Bankruptcy and Insolvency Act (Canada), effective February 3, 2009. The Board of Directors of Gale Force performed an in-depth review of the Corporation's business activities, and concluded that to continue as a going concern, a restructuring of the Corporation's debts and concurrent refinancing is necessary. Michael McLellan, President and CEO, said, "When your board of directors initially adopted the restructuring plan in September 2007, there was a belief that management could obtain sufficient new funding and create enough value to overcome an unhealthy balance sheet, ultimately growing to create value for shareholders. "We began the restructuring plan with liabilities that exceeded $6 million, assets worth less than $1 million and minimal revenues. We needed to raise sufficient equity to build new assets while simultaneously paying down or reducing our debts. We have faithfully executed this strategy, raising equity financing totalling $4.9 million, reducing the total debts of the Corporation to $3.7 million and investing shareholder's money in new higher-quality natural gas properties in Alberta and Kentucky. "In the last several months, oil and natural gas prices have diminished, credit has become unavailable and general economic conditions have deteriorated such that the Corporation can no longer rely on raising financing in equity markets that would be needed to complete the restructuring. "It is apparent that unless there is a major reduction and restructuring of the Corporation's debts, the Corporation will not be able to meet its short-term obligations, nor will it be possible for the Corporation to continue as a going concern. "The Corporation is convinced that it possesses valuable assets. Notably, it believes that its Kentucky Shale Gas Property has the potential to provide extended growth in both revenues and net asset value, if financing could be made available to continue the development of the property and if natural gas prices recover. "The Corporation's recent workover and completion program proved that there is consistent gas potential across the Kentucky Property and confirmed that there is low-risk, low-cost drilling for the Devonian Shale target, with the potential for excellent economic returns to investment. The recent Farmout Agreement concluded by the Corporation on January 13, 2009, will ensure the continued development of the Kentucky Property in the near term. "However, in the event of a bankruptcy, even if there is an orderly sale of the Corporation's assets, in current market conditions there would be no value remaining for the Corporation's shareholders or for its unsecured creditors. "As a result, the Corporation has determined that the best option to realize a possible future for the Corporation, its shareholders and its creditors, is to file a Proposal to Creditors under the Bankruptcy and insolvency Act (Canada)." According to Mr. McLellan, the Proposal will address all classes of creditors and observe standard practice, regulatory and financial requirements. For the Proposal to be "Approved", it must receive approval in each class of creditor by at least 66.67% in dollars and 50.00% plus one in the number of eligible creditors who vote. It also must be accepted by the Court. The Proposal offers payment of all debts owing to the Corporation's unsecured creditors and potential claimants totalling approximately $2.5 million by the issuance of common shares of the Corporation: Category I unsecured creditors will be offered full payment of their claims at $0.05 per share, or, 20 common shares of the Corporation per each dollar of debt. Category II unsecured creditors will be offered full payment of their claims at $0.067 per share, or, 15 common shares of the Corporation per each dollar of debt. If the Proposal is Approved, the Corporation will issue roughly 47,000,000 common shares to settle all claims. There are currently 19,468,284 common shares of the Corporation issued and outstanding. The Corporation has also reached an agreement with its lender and sole secured creditor, Primatlantis Capital, which is subject to the Approval of the Proposal. According to the terms of this agreement, $133,000 in interest and fees owing to Primatlantis will be paid as a Category I unsecured creditor under the Proposal. Additionally, there will be several amendments to the loan agreement, including: -- the Maturity Date will be extended until December 31, 2010; -- the loan will not earn any interest nor will there be any fees owing on the loan until after December 31, 2009; after December 31, 2009 the loan will earn interest at 12% per annum; after December 31, 2009, the loan will be convertible in full or in part into securities of the Corporation, at the election of the lender, upon terms and conditions similar to those offered to purchasers of securities of the Corporation participating in any private placement of the Corporation following the Proposal; and -- the loan is repayable in full or in part at the election of the Corporation at any time without penalty. Because there will be no scheduled interest payments or capital repayments on the loan until after December 31, 2009, the lender will not put the Corporation into default until at least after December 31, 2009, which will provide the Corporation with time to attempt to obtain funding to reimburse the loan or pursue other growth strategies. The Proposal to Creditors was designed by the Corporation to be fair and equitable to all creditors and stakeholders, with the goal of providing the best chance at realizing value for the creditors, claimants and shareholders under the circumstances. For the filing of the Proposal, the Corporation has contracted Raymond Chabot Inc. to act as Trustee. The shares issued as payment of debts under the Proposal as well as the amended convertible loan agreement are subject to prior applicable regulatory approval. The Board of Directors of the Corporation is composed of five members, being Jocelyn Boucher (Chairman), Ron Bourgeois, Mazen Haddad, Antoinette Lizzi and Michael McLellan. As part of the restructuring, the directors had decided against drawing any salary or board fees since July 1, 2008, and will not draw any fees until at least after the restructuring of the Corporation is complete and new financing is obtained. Also, all current directors and officers of the Corporation have forfeited their options to purchase shares of the Corporation. If the Proposal is Approved, the Corporation will require a minimum amount of equity financing for the restructuring to be successful and for the Corporation to continue as a going concern. The Corporation is therefore examining financing opportunities. Further details will be announced when available. About Gale Force Gale Force Petroleum Inc. (TSX Venture: GFP) -- http://www.GaleForcePetroleum.com/-- is a public corporation focused on acquiring and exploiting unconventional and conventional gas resources in mature basins, building shareholder value through growth. It owns producing natural gas properties in Alberta, Canada and in Kentucky, USA. GENCORP INC: Posts $5.7 Million Net Loss in Quarter Ended Nov. 30 ----------------------------------------------------------------- On February 12, 2009, GenCorp Inc. (NYSE: GY) reported results for the fourth quarter and fiscal year ended November 30, 2008. Sales for the fourth quarter of 2008 totaled $198.5 million compared to $203.8 million for the fourth quarter of 2007. Sales for 2008 were $742.3 million compared to $745.4 in 2007. Net loss for the fourth quarter of 2008 was $5.7 million, or $0.10 loss per share, compared to net income of $12.4 million, or $0.21 diluted earnings per share for the fourth quarter of 2007. The decrease in operating results was primarily due to a charge of $14.6 million related to the freeze of the defined benefit pension plan. Net income for 2008 was $1.5 million, or $0.03 income per share compared to net income of $69.0 million, or $1.14 diluted earnings per share for 2007. The decrease in operating results was primarily the result of: (i) $31.2 million gain in discontinued operations from a negotiated early retirement of a seller note and an earn-out payment associated with the divestiture of the Fine Chemicals business in 2007; (ii) $18.1 million income tax benefit related to income tax settlements and the carryback of net operating losses to prior years in 2007; (iii) $16.8 million of charges in 2008 as a result of the second amended and restated shareholder agreement with Steel Partners II L.P. with respect to the election of Directors at the 2008 Annual Meeting and other related matters; (iv) a charge of $14.6 million in 2008 related to the freeze of the defined benefit pension plan, partially offset by a $13.6 million decrease in retirement benefit plan expense in 2008. On November 25, 2008, the Company decided to amend the defined benefit pension and benefits restoration plans to freeze future accruals under such plans. Effective February 1, 2009, the Company discontinued future benefit accruals for current salaried employees. No employees lost their previously earned pension benefit. As a result of the amendment and freeze, the Company incurred a curtailment charge of $14.6 million in the fourth quarter of 2008 primarily due to the immediate recognition of unrecognized prior service costs. "The year 2008 was one of significant transition, change and challenge for the Company. However, we remained focused on delivering solid operational performance," said Scott Neish, GenCorp's interim chief executive officer. "Sales in 2008 were $742 million, bolstered by progress on the replacement of our highly profitable 50-year Titan business and a $10 million real estate transaction. "Additionally, we reached a major milestone in our real estate strategy. After more than four years of dedicated effort and without any public opposition, the Sacramento County Board of Supervisors approved the Final Environmental Impact Report and County General Plan amendments for the 1,400 acre master-planned community called Glenborough at Easton and Easton Place," concluded Mr. Neish. Operations Review * Aerospace and Defense Segment Sales for the fourth quarter of 2008 decreased to $196.9 million compared to $202.2 million for the fourth quarter of 2007, reflecting lower overall volume in defense programs partially offset by higher space propulsion volume. Aerojet reports its fiscal year sales and income under a 52/53 week accounting convention. Fiscal 2008 is a 53 week year compared to a 52 week year in fiscal 2007. Sales for 2008 decreased to $725.5 million compared to $739.1 million for 2007, reflecting the close-out activities of the Titan program in 2007, partially offset by the additional week of net sales of approximately $19 million in 2008. Segment performance for the fourth quarter of 2008 declined to $3.8 million compared to income of $19.8 million in the fourth quarter of 2007 primarily due to the charge related to the freeze of the defined benefit pension plan in the fourth quarter of 2008. Segment performance was income of $40.8 million in 2008 compared to income of $61.3 million in 2007. The decrease in segment performance is primarily the result of: (i) the favorable performance on the close-out of the Titan program in 2007; (ii) the charge in 2008 related to the freeze of the defined benefit pension plan; and (iii) higher environmental remediation provision adjustments in 2008, partially offset by decreased retirement benefit plan expense in 2008. As of November 30, 2008, funded contract backlog, which includes only those contracts for which money has been directly authorized by the U.S. Congress, or for which a firm purchase order has been received from a commercial customer, was $675 million compared to $566 million as of November 30, 2007. As of November 30, 2008, and 2007, total contract backlog was $1,035 million and $912 million, respectively. * Real Estate Segment Sales for both the fourth quarter of 2008 and 2007 were $1.6 million and related to rental property operations. Segment performance was $0.9 million and $0.7 million for the fourth quarters of 2008 and 2007, respectively. Sales for 2008 were $16.8 million compared to $6.3 million for 2007. Segment performance was $10.3 million and $3.5 million for 2008 and 2007, respectively. The increases in sales and segment performance are primarily due to the sale of 400 acres of the Rio Del Oro property to Elliott Homes Inc. for $10 million in cash during the second quarter of 2008. Additional Information Retirement benefit plan expense, which is mostly non-cash, for the fourth quarter of 2008 was $2.3 million compared to $5.4 million in the fourth quarter of 2007. Retirement benefit plan expense decreased to $8.0 million in 2008 from $21.6 million in 2007. These decreases are primarily related to an increase in the discount rate used to determine benefit obligations and a reduction in the impact of amortizing prior years' actuarial losses. Corporate and other expenses for the fourth quarter of 2008 were $3.1 million compared to $3.9 million for the fourth quarter of 2007. The decrease was primarily related to the fourth quarter of 2008 reversal of previously recognized stock-based compensation due to the lower fair value of the stock appreciation rights. Corporate and other expenses decreased to $16.2 million in 2008 from $19.7 million in 2007 primarily related to the 2008 reversal of previously recognized stock-based compensation due to the lower fair value of the stock appreciation rights, partially offset by higher charges for estimated future environmental remediation obligations. Total debt decreased to $440.6 million at November 30, 2008 from $446.3 million at November 30, 2007. Cash balances at November 30, 2008 increased to $92.7 million compared to $92.3 million at November 30, 2007. Total debt less cash decreased to $347.9 million at November 30, 2008 from $354.0 million at November 30, 2007. As of November 30, 2008, the Company had $73.9 million in outstanding letters of credit issued under the $125.0 million letter of credit subfacility, and the Company's $80.0 million revolving credit facility was unused. As of November 30, 2008, the Company's defined benefit pension plan assets and projected benefit obligations were $1.3 billion and $1.4 billion, respectively. The Pension Protection Act, enacted in August 2006, will require underfunded pension plans to improve their funding ratios within prescribed intervals based on the level of their underfunding. The Company may be required to make significant cash contributions in the future, a portion of which the Company may not be able to charge immediately through its government contracts. As of November 30, 2008, the Company's balance sheet showed total assets of $1,005,700,000 and total liabilities of $1,033,200,000, resulting in total stockholders' deficit of $35,100,000. A full-text copy of the Company's Annual Report is available for free at: http://researcharchives.com/t/s?39a6 About GenCorp Headquartered in Rancho Cordova, Calif., GenCorp Inc. (NYSE: GY) -- http://www.GenCorp.com/-- is a leading technology-based manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the entitlement, sale and leasing of the company's excess real estate assets. As reported in the Troubled Company Reporter on Jan. 20, 2009, Moody's Investors Service downgraded the Corporate Family Rating of GenCorp, Inc. to B3 from B2 and the Probability of Default Rating to Caa1 from B2. In a related action, the company's senior secured bank credit facilities were downgraded to Ba3, convertible subordinated notes downgraded to Caa2, and senior subordinated notes affirmed at B1. The rating outlook remains negative. GENERAL MOTORS: Says Chapter 11 May Result to Liquidation --------------------------------------------------------- General Motors Corp. said in its restructuring plan that, given the complexity and scope of its global business operations, there is a substantial risk that emergence from a Chapter 11 bankruptcy of the company would be impossible and liquidation pursuant to Chapter 7 of the Bankruptcy Code would result. Given GM's financial position and the state of the credit markets, any DIP financing would need to be provided by the U.S. government. Otherwise, GM wouldn't be able to operate in Chapter 11 and would very likely be compelled to liquidate. The financing requirements of GM significantly exceed those in an out of court process, irrespective of the bankruptcy route chosen. Many of the liabilities that could be impaired in a traditional bankruptcy process could have the effect of shifting those liabilities to the government. To assess the relative merits of an out of court process, GM has compared the projected results of its viability plan against projected outcomes in three different bankruptcy scenarios: -- Pre-solicited or Pre-packaged Chapter 11 Under this scenario, and as contemplated in GM's planned Bond/VEBA exchange offer, tendering bondholders would be required to vote affirmatively to accept a Chapter 11 Plan of Reorganization. If possible (because the Plan of Reorganization received the requisite votes) and necessary (because the out of court process failed), the exchange plan would be implemented in bankruptcy, binding 100% of the bondholders to accept consideration equivalent to that contemplated in the out of court exchange. However, this scenario requires an agreement in advance regarding the treatment of VEBA liabilities acceptable to bondholders, as well as a commitment for government financing. No other creditor would be impaired. Existing shareholders would be almost entirely diluted. This scenario is assumed to require approximately 60-65 days to achieve confirmation of the plan and exit from Chapter 11. It will cause a quite severe near-term negative revenue impact during the bankruptcy proceeding, and a less severe but still serious long-term negative revenue impact after exiting from Chapter 11. -- Pre-negotiated Cram-Down Plan Under this option, which is more aggressive than a consensual pre-packaged Chapter 11 approach discussed in Scenario 1, the Company would seek a larger conversion of debt to equity. This strategy could take many forms, including: (A) complete conversion of the bonds to equity; (B) reduction in obligations from impairing additional classes of claims (including potentially litigation liabilities, dealer claims and contract rejection damages); and (C) greater to perhaps complete equitization of the VEBA obligations. This scenario is assumed to require a minimum of 90 days for its least aggressive variant, up to as long as six months or more for more aggressive variants, such as converting a portion of other liabilities to equity. If the Company were to pursue a larger or complete conversion of the VEBA to equity, the assumption is that this would be a vigorously contested, endangering resolution with the UAW and potentially forcing the Company into an extended traditional Chapter 11 case or free-fall bankruptcy as described in Scenario 3. The cram down process results in an incremental $4 billion debt reduction, or complete conversion of all U.S. unsecured debt to equity, but also involves Significantly higher levels of DIP financing required which, in turn, produces a significantly negative NPV. There would be significantly less negative impact than in a traditional Chapter 11, which has broader implications for the industry as a whole. However, this scenario includes elements likely to elicit opposition, which increases the timing risks and the risk that Scenario 2 might evolve into the substantially less favorable Scenario 3. -- Traditional Chapter 11 Case Under this scenario, the objective would be to accomplish a more comprehensive restructuring of the liability portion of the balance sheet, along with substantial asset dispositions, using all of the tools traditionally available to debtors to restructure through a court supervised process. This process could be expected to require 18-24 months, with an estimated 24 months used for analytical purposes in this appendix. Financially, while the traditional bankruptcy process allows for greater liability reduction potential, incremental funding requirements surge close to a $100 billion or more, reflecting catastrophic revenue reduction impact as well as wholesale (i.e., dealer) financing requirements and supplier support. The revenue impact during this type of bankruptcy would be very severe, with a substantially delayed recovery time and significant potential for permanent, significant damage. There is considerable doubt whether the Company would survive this process. Total Financing Requirement ($ in billions) Out of Pre- Cram Traditional Court Bkrptcy Solicited Down Chapter 11 Process Process Process Process Process ------- ------ ------- ------- ---------- Liability Reduction Potential 47 47 47 >100 Liabilities Reduced 28 33 37 41-78 NPV - Equity Value (Midpoint) 9 6 0-(16) (25)-(28) Government Support* U.S. Financing Requirement 23 25 29-37 42-53 Wholesale Support 0 2 7 14 Supplier Support 4 8 9-10 13-17 Delphi 0 1 1 2 Total U.S. Government 27 36 46-55 71-86 Non-U.S. Financing Requirement 6 9 11-15 15-17 Total Financing Requirement 33 45 57-70 86-103 * Government support defined as peak borrowing requirements from 2009-2011 GM said that consumer confidence is essential to its future success. GM believes that a bankruptcy filing would substantially, if not completely, erode consumers' confidence in its ability to deliver on those requirements. GM's bankruptcy would also threaten GMAC's ability to fund itself in the capital markets, impairing GMAC's capacity to provide wholesale and retail financing essential to support the viability of GM. A GM bankruptcy may constitute an Event of Default in one or more of GMAC's independent credit facilities. GMAC might also experience indirect effects of a GM bankruptcy which triggered provisions in existing facilities or resulting in the inability to renew existing facilities. Without additional support for GMAC, GM believes that GMAC would cease wholesale dealer financing for all but the most creditworthy retailers. This would necessarily shift substantially the entire burden of wholesale financing to the Company, in turn increasing the size of any DIP funding facility. In an out-of-court process, and in the two accelerated bankruptcy strategies, claims of trade creditors are not impaired and no further provision has been made for incremental DIP capacity. In a traditional bankruptcy, with the significant expected volume declines increasing the likelihood of supplier economic distress, the Company believes that incremental DIP, and potentially permanent additional funding, would be required. 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. GM's common stock was considered the stock market's bellwether for many years, hence the saying "What's good for GM is good for America." 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 $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of 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. GENERAL MOTORS: Bondholders Fear Restructuring Plan Insufficient ---------------------------------------------------------------- A group of General Motors Corp. bondholders says that the firm's latest restructuring plan fails to address all the challenges facing the company and doesn't cut costs enough in light of the deteriorating economy, Sharon Terlep and Neil King Jr. at The Wall Street Journal report, citing a person familiar with the matter. According to WSJ, the group is in talks to reduce GM's $27 billion in unsecured debt through a debt-for-equity swap, as required by the terms of the bailout loans the government granted to GM. The report says that if the negotiation with the bondholders collapse and GM fails to get the debt exchange started by March 31, the earlier funding from the government would be at risk under the loan terms. GM, states the report, has received $13.4 billion in federal loans. WSJ relates that the restructuring plan GM presented to the government on Tuesday involves the layoff of about 47,000 workers around the world, shutting down five additional plants in North America, and eliminating four of the auto maker's eight brands. The report quoted a source as saying, "The question is, did they go far enough, or are they just layering debt onto debt? They need the company to drive hard so it is competitive soon, not in 2012." WSJ states that President Barack Obama's auto task force will be meeting on Friday to evaluate the recovery plans that GM and Chrysler LLC submitted. 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 $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of 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. GENERAL MOTORS: Viability Plan Includes Buyback of Delphi Plants ---------------------------------------------------------------- General Motors Corp.'s restructuring plan contemplates the purchase of certain sites from Delphi Corp. that represent an important source of supply for the GM and potential incremental liquidity support. A portion of Delphi's exit funding needs would be satisfied through the proceeds from the sale of sites to GM. Thomas Hartley at Business First of Buffalo reports that Delphi said that a sale of some properties to GM is being discussed. Delphi is also seeking to address its underfunded pension plans and to secure exit financing to successfully emerge from bankruptcy. Based on current agreements with Delphi, GM is required to absorb the remaining hourly pension plan only under certain conditions, which are not currently expected to be met. GM has no obligation to absorb Delphi's salaried pension plan. As such, the federal loan support outlined in the restructuring plan does not contemplate the transfer of either the hourly or salaried pension plans to GM. Delphi is unlikely to be able to support these underfunded pension plans going forward and may need to terminate these plans, which would impact the Pension Benefit Guaranty Corporation. PBGC is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations Given current capital market environments, it is uncertain whether Delphi will be able to raise the balance of the funding necessary to exit bankruptcy. If Delphi is unsuccessful in addressing its underfunded pension plans and raising exit financing, it would represent a significant risk to GM's revised Plan. GM would have to consider alternative strategies, including utilizing other sources of supply, although it would require some time to accomplish. GM Proposes Credit Insurance Program for Suppliers GM has proposed in its restructuring plan that the government create by March a credit insurance program, or a government sponsored factoring program, for original equipment manufacturer (OEM) receivables. Large production cuts, especially in the first quarter of 2009, have severely affected cash flow and liquidity for the automotive supply chain. Suppliers are trying to reduce costs and breakeven points and conserve cash, but there is a limit to what can be done in the short term. Many of the suppliers' lenders are reluctant to include domestic OEM receivables in their borrowing base calculations because of concerns about OEM viability, impairing supplier liquidity when it is most needed. Some suppliers face the possibility of a going-concern qualification from their auditors based in part on their receivable exposures. Going concern qualifications can trigger loan and bond defaults and make raising new capital nearly impossible, placing the survival of the affected supplier in jeopardy. Under the credit program GM is proposing, the government would guarantee OEM receivables up to a certain limit. The OEMs would select participating credit insurance providers, or supply chain financing providers, based on a competitive process, and suppliers would enroll in the program as they deem necessary, and pay insurance and processing fees. GM estimates that $4.5 billion would be needed for the program through 2011 for direct material and logistics suppliers, with eligible GM receivables limited to those associated with the supplier's U.S.- based manufacturing operations. GM believes the program needs to be in place by March 2009 as there will be significant working capital requirements to support the planned increase in the GM production schedule, following very low production levels in January and February. The proposed program, according to GM, guarantees eventual payment of the affected receivables, allowing suppliers access to financing. The program would significantly improve the availability of private capital to the supply base without direct government outlay, most likely avoiding a wave of supplier bankruptcies and disruptions in the shared automotive supply chain. As GM demonstrates its viability, as suppliers restructure and consolidate in an orderly fashion, and as GM migrates its supply base to suppliers with the highest long-term viability, the need for the program would be reduced and eventually eliminated, without expense to the Government. GM has been moving new and current programs to healthier suppliers and will accelerate this process significantly in 2009-2011. GM projects a 30 percent reduction in the number of suppliers to General Motors' North American operations. GM expects the North American supply base to continue to deliver annual material performance over the viability plan period. GM's strategy is to continue improving supply base health by partnering with suppliers who are cost-effective and have invested in innovative products and technologies. 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 $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of 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. GENERAL MOTORS: Chapter 11 Filing Probable by 70%, Says Moody's ---------------------------------------------------------------- Moody's Investors Service said February 18 that the risk of a bankruptcy filing by General Motors (GM) and Chrysler Automotive LLC (Chrysler) remains high. The rating agency's comments came in response to the submission by both companies of their respective restructuring plans to the US Treasury, in compliance with the February 17 deadline stipulated in the emergency loan package established on December 19, 2008. As a result of the precipitous decline in global automotive demand, particularly in North America and Europe, GM and Chrysler have significantly increased their estimates for the amount of government loans they will need since the submission of their December 2, 2008 restructuring plan and loan request to the US Treasury. GM's request for government loans, based on its base case assumptions, has risen to $22.5 billion from $18 billion, and Chrysler's request has increased to $9 billion from $7 billion. To date, government funding to GM has been $13.4 billion with an additional $6 billion having been made available to GMAC LLC. Funding extended to Chrysler has been $4 billion, with $1.5 billion having been extended to Chrysler Financial. Bruce Clark, Senior Vice President with Moody's said, "Despite the extension of considerable emergency funding to GM and Chrysler and their finance arms, we continue to see a high risk of a Chapter 11 filing by one or more of the US auto makers with the government providing DIP financing to promote an orderly bankruptcy process. We continue to see the probability of such a filing as being in the area of 70% - the same level we identified in our December 2008 comment on the US auto industry." This risk, as well as the high likelihood of some form of a distressed exchange for debt holders, is reflected in Moody's Ca Corporate Family Ratings for GM and Chrysler. These ratings are unchanged. Given the significantly increased need for government support, Moody's expects that the US Treasury is likely to be more insistent that each company's constituents, particularly creditors and the UAW, make substantive concessions as part of their restructuring programs. Key provisions that had been contained in the Treasury's conditions for extending loans beyond March 31st, include: 1) the conversion of 2/3 of unsecured public debt to equity; 2) an agreement with the UAW that 50% of future VEBA contributions be made in the form of equity; and 3) the narrowing of the UAW wage and productivity gap with that existing at US transplant facilities. Although negotiations in these areas are continuing, final agreement has not been achieved. Moreover, Moody's remains concerned that there is a degree of resistance on the part of creditors and the UAW to make the level of concessions that might be acceptable to the Treasury and to the governmental panel that will assess the companies' viability and evaluate the merits of providing the additional funds that have been requested. Bruce Clark said, "The government has already put a lot of money into these companies, and the ripple effects of a filing would be extremely damaging to the economy. As a result, there may be a degree of skepticism among creditors and other constituents that the government will actually allow any of the Detroit-3 to file for bankruptcy." However, Clark concluded that, "Because of the potential reluctance of constituents to make adequate concessions and the considerable complexity of the reorganization, the government may in fact have to stand aside and allow one or more companies to make a Chapter 11 filing as a measure that could accelerate the restructuring that is necessary." The last rating action on GM and Chrysler was a downgrade of their Corporate Family Ratings to Ca on December 3, 2008. GENERAL MOTORS: Bank Loan Slides in Secondary Market Trading ------------------------------------------------------------ Participations in a syndicated loan under which General Motors Corp. is a borrower traded in the secondary market at 35.20 cents- on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 7.22 percentage points from the previous week, the Journal relates. General Motors pays interest at 275 points above LIBOR. The bank loan matures on November 27, 2013. The bank loan carries Moody's B3 rating and S&P's CCC rating. Meanwhile, participations in a syndicated loan under which rival Ford Motor Co. is a borrower traded in the secondary market at 34.09 cents-on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.87 percentage points from the previous week, the Journal relates. Ford pays interest at 300 points above LIBOR. The bank loan matures on December 15, 2013. The bank loan carries Moody's B2 rating and S&P's CCC+ rating. 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 $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. GOLDEN NUGGET: S&P Affirms Corporate Credit Rating at 'B-' ---------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed the ratings, including the 'B-' corporate credit rating, on Las Vegas-based Golden Nugget Inc. S&P also removed the ratings from CreditWatch with negative implications, where they were placed on Jan. 28, 2008. The outlook is negative. The action stemmed from the removal of the ratings on parent Landry's Restaurants Inc. from CreditWatch following the funding of Landry's new senior secured credit facility and its new senior notes to refinance its 9.5% senior unsecured notes. "The outlook is negative, reflecting our concerns about the potential for a covenant violation in 2010," said Standard & Poor's credit analyst Melissa Long. HAIGHTS CROSS: Board Approves Annual Incentive Bonus Plan --------------------------------------------------------- On February 6, 2009, the board of directors of Haights Cross Communications, Inc., approved the Company's annual incentive bonus plan for managers and employees of the Company and its direct and indirect subsidiaries known as the "Annual Management & Employee Bonus Plan." A full-text copy of the Company's Annual Management & Employee Bonus Plan is available for free at: http://researcharchives.com/t/s?39ae Founded in 1997 and based in White Plains, New York, Haights Cross Communications -- http://www.haightscross.com/-- is an educational and library publisher of books, audio products, software and online services, serving these markets: K-12 supplemental education, public library and school publishing and audio books. Haights Cross companies include: Triumph Learning (New York, NY), Buckle Down Publishing (Iowa City, IA), Options Publishing (Iowa City, IA), and Recorded Books (Prince Frederick, MD). * * * The Troubled Company Reporter reported on Aug. 29, 2008, that Standard & Poor's Ratings Services affirmed its 'CCC' corporate credit rating on Haights Cross Communications Inc. (HCC) and removed the ratings from CreditWatch, where they were placed with negative implications on June 16, 2008, based on Standard & Poor's concern about the company's ability to repay its $124.5 million senior secured term loan on Aug. 15, 2008. The outlook is stable. The TCR also reported on Aug. 29, 2008, that Moody's Investors Service affirmed Haights Cross Communications, Inc.'s Caa3 Corporate Family rating while upgrading its Probability of Default rating to Caa3 from Ca, following the company's announcement that it has successfully refinanced its prior senior secured term loan. As of September 30, 2008, the company's balance sheet showed total assets of $283,825,000 and total liabilities of $425,112,000, resulting in total stockholders' deficit of $141,287,000. HARRAH'S ENTERTAINMENT: Borrowing Requests Cue S&P's Junk Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas, Nevada-based Harrah's Entertainment Inc. and its wholly owned subsidiary, Harrah's Operating Co. Inc., to 'CCC' from 'B-'. The rating outlook is negative. In addition, the issue-level rating on HOC's 10% second-lien senior secured notes (due 2015 and 2018) was lowered to 'CCC-' (one notch lower than the 'CCC' corporate credit rating) from 'B'. The recovery rating on the notes was revised to '5', indicating the expectation for modest (10%-30%) recovery in the event of a payment default, from '2'. S&P lowered the issue-level ratings on the company's other debt issues by two notches in conjunction with the lowering of the corporate credit rating. The recovery ratings on these issues remain unchanged. The rating downgrade reflects S&P's concern that the recent announcement by the company that it has submitted borrowing requests for the remaining amount available under its $2 billion revolving credit facility signals that management's outlook for 2009 and the company's ability to service its current capital structure over the next several quarters have deteriorated in recent weeks. Previously, following Harrah's below-par debt tender offer (which S&P viewed as being tantamount to default), combined with management's efforts to cut costs and pull back on capital spending, S&P had said that S&P believed the company had greater capacity to weather the current downturn over at least the next several quarters. In that analysis, S&P assumed an EBITDA decline in the mid- to high-single digit percentage range in 2009. S&P's 'CCC' rating now incorporates the expectation that EBITDA will decline in the low- to mid-teens percentage area in 2009, which would likely result in a near-term covenant violation. The 'CCC' corporate credit rating reflects Harrah's weak credit metrics, limited liquidity, and S&P's expectation for continued negative trends in net revenues and EBITDA over at least the next few quarters. In addition, the rating reflects S&P's expectation for a near-term covenant violation. Harrah's is the world's largest gaming company in terms of properties, revenue, and EBITDA. The company owns and/or operates properties in most major domestic gaming markets under brand names including Caesars, Harrah's, and Horseshoe. During the nine months ended Sept. 30, 2008, the company generated more than $7.8 billion of net revenue and $1.9 billion of property-level EBITDA - - down 4% and 12%, respectively, year over year. These declines were more pronounced in the quarter ended Sept. 30, 2008, however, as net revenue and EBITDA declined 7% and 20%, respectively, year over year. S&P believes that this heightened level of deterioration has continued into the first quarter of 2009. Pro forma for the recent debt exchange, debt leverage, including $6.5 billion of CMBS debt and $2 billion of payment-in-kind preferred equity (which S&P considers to be debt-like), was approximately 10.5x as of Sept. 30, 2008, and S&P estimates EBITDA coverage of interest to have been about 1.5x. "Given the weakened condition of the gaming sector and S&P's expectation that EBITDA will decline in the low- to mid-teens percentage area in 2009, S&P believes the company is unlikely to be able to service its existing capital structure and remain in compliance with its bank covenant throughout 2009," said Standard & Poor's credit analyst Ben Bubeck. HARRAH'S OPERATING CO: S&P Junks Corp. Credit Rating ---------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas, Nevada-based Harrah's Entertainment Inc. and its wholly owned subsidiary, Harrah's Operating Co. Inc., to 'CCC' from 'B-'. The rating outlook is negative. In addition, the issue-level rating on HOC's 10% second-lien senior secured notes (due 2015 and 2018) was lowered to 'CCC-' (one notch lower than the 'CCC' corporate credit rating) from 'B'. The recovery rating on the notes was revised to '5', indicating the expectation for modest (10%-30%) recovery in the event of a payment default, from '2'. S&P lowered the issue-level ratings on the company's other debt issues by two notches in conjunction with the lowering of the corporate credit rating. The recovery ratings on these issues remain unchanged. The rating downgrade reflects S&P's concern that the recent announcement by the company that it has submitted borrowing requests for the remaining amount available under its $2 billion revolving credit facility signals that management's outlook for 2009 and the company's ability to service its current capital structure over the next several quarters have deteriorated in recent weeks. Previously, following Harrah's below-par debt tender offer (which S&P viewed as being tantamount to default), combined with management's efforts to cut costs and pull back on capital spending, S&P had said that S&P believed the company had greater capacity to weather the current downturn over at least the next several quarters. In that analysis, S&P assumed an EBITDA decline in the mid- to high-single digit percentage range in 2009. S&P's 'CCC' rating now incorporates the expectation that EBITDA will decline in the low- to mid-teens percentage area in 2009, which would likely result in a near-term covenant violation. The 'CCC' corporate credit rating reflects Harrah's weak credit metrics, limited liquidity, and S&P's expectation for continued negative trends in net revenues and EBITDA over at least the next few quarters. In addition, the rating reflects S&P's expectation for a near-term covenant violation. Harrah's is the world's largest gaming company in terms of properties, revenue, and EBITDA. The company owns and/or operates properties in most major domestic gaming markets under brand names including Caesars, Harrah's, and Horseshoe. During the nine months ended Sept. 30, 2008, the company generated more than $7.8 billion of net revenue and $1.9 billion of property-level EBITDA - - down 4% and 12%, respectively, year over year. These declines were more pronounced in the quarter ended Sept. 30, 2008, however, as net revenue and EBITDA declined 7% and 20%, respectively, year over year. S&P believes that this heightened level of deterioration has continued into the first quarter of 2009. Pro forma for the recent debt exchange, debt leverage, including $6.5 billion of CMBS debt and $2 billion of payment-in-kind preferred equity (which S&P considers to be debt-like), was approximately 10.5x as of Sept. 30, 2008, and S&P estimates EBITDA coverage of interest to have been about 1.5x. "Given the weakened condition of the gaming sector and S&P's expectation that EBITDA will decline in the low- to mid-teens percentage area in 2009, S&P believes the company is unlikely to be able to service its existing capital structure and remain in compliance with its bank covenant throughout 2009," said Standard & Poor's credit analyst Ben Bubeck. HPG INTERNATIONAL: Bid Procedures Okayed; Auction Sale on March 6 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved on Feb. 9, 2009, (i) the Bid Procedures for the auction sale of substantially all of HPG International, Inc., and VIG Holdings, Ltd.'s assets free and clear of all liens and encumbrances, and (ii) procedures for the assignment of executory contracts and unexpired leases related to the sale. There is no "stalking horse" bidder for the assets. The assets to be sold include all of the assets related to the business operations of HPG International, Inc., comprised of, among other things: i) the real property located at 755 Oakhill Road, Mountaintop, Pennsylvania; ii) machinery and equipment located on the property; and iii) inventory, permits, intellectual property utilized in the manufacturing process. As provided in the Bid Procedures, if Qualified Bids are timely received, the Debtors shall conduct an auction at the offices of Buchanan Ingersoll & Rooney PC, The Brandywine Building, 1000 West Street, Suite 1410, in Wilmington, Delaware 19801 on March 6, 2009, at 10:00 a.m. prevailing Eastern time. Any party that wishes to take part in this process and submit a bid for the assets of any portion thereof must submit their competing bid prior to March 3, 2009, at 4:00 p.m. eastern time to: Wyatt, Matas & Associates, LLC Attn: Chip Measells 1776 I Street, NW, Suite 900 Washington DC 20006 Tel: (202) 661,4690 Fax: (202) 661-4611 email: www.wyattmatas.com At the auction, qualified bidders will be permitted to increase their bids. The bidding at the auction shall start at the Initial Bid and shall continue in increments of at least $25,000. A sale hearing to approve the sale to the purchaser which submits the highest and best offer at the auction is scheduled on March 10, 2009, at 11:30 a.m. prevailing Eastern time. Objections to the sale of the assets must be in writing and served upon the Debtors and Notice Parties so as to be received on or before 4:00 p.m. prevailing eastern time, on March 3, 2009. Failure of any person to timely file its objection shall be a bar to the assertion, at the sale hearing or thereafter, of any objection to the sale or the Debtors' assumption and assignment of contracts under any asset purchase agreement with the successful bidder, including the transfer of the assets free and clear of encumbrances. A full-text copy of the Court's Bid Procedures Order is available at: http://bankrupt.com/misc/HPGInternationalBidProceduresOrder.pdf About HPG International Headquartered in Mountaintop, Pennsylvania, HPG International Inc. -- http://www.hpg-intl.com-- designs and make plastics PV sold primarily to the fabricating industries throughout the United States, Canada and Mexico for commercial use in roofs, pool, liners, wallcoverings, label applications and shower panels. The company and its affiliate, VIG Holdings Ltd., filed for Chapter 11 protection on Jan. 23, 2009 (Bankr. D. Del. Lead Case No. 09- 10231). Jeffrey M. Carbino, Esq., Buchanan Ingersoll & Rooney PC, represents the Debtors in their restructuring efforts. The Debtors proposed Kurtzman Carson Consultants LLC as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $10 million and $50 million each. INCENTRA SOLUTIONS: U.S. Trustee Forms 5-Member Creditors Panel --------------------------------------------------------------- Roberta A. DeAngelis, United States Trustee for Region 3, appointed five creditors to serve on an Official Committee of Unsecured Creditors of Incentra Solutions Inc. and its affiliated debtors. The members of the Committee are: 1) Symantec Corporation Attn: Christina Rios Alataris 20330 Stevens Creek Blvd., Cupertino, CA 95014 Tel: (408) 421-2911 Fax: (408) 517-8121 2) Riverbed Technology Inc. Attn: Marty Connall 199 Fremont Street San Francisco, CA 94105 Tel: (415) 247-8800 Fax: (415) 247-8801 3) Promark Technology, Inc. Attn: Dale Foster 10900 Pump House Road, Suite B Annapolis Junction, MD 20701 Tel: (240) 280-8030 Fax: (301) 725-7869 4) Paul Chopra 3731 La Salle St. Phoenix, AZ 85040 Tel: (602) 437-2888 Fax: (602) 437-3888 5) Westcon Group North America, Inc. Attn: Charles Thropp 520 White Plains Road Tarrytown, MY 10591 Tel: (914) 829-7000 Fax: (914) 829-7161 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Incentra Solutions Headquartered in Boulder, Colorado, Incentra Solutions Inc. -- http://www.incentra.com-- provide information technology services. The company and seven of its affiliates filed for Chapter 11 protection on February 4, 2009 (Bankr. D. Del. Lead Case No. 09-10370). Bruce Grohsgal, Esq., at Pachulski, Stang, Ziehl Young & Jones, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, the listed $92,494,615 in total assets and $80,301,104 in total debts. INDEPENDENCE TAX: Dec. 31 Balance Sheet Upside Down by $18.7MM -------------------------------------------------------------- Independence Tax Credit Plus L.P.'s results of operations for the three and nine months ended December 31, 2008 and 2007 consisted primarily of the results of the Partnership's investment in Local Partnerships. Rental income increased approximately 2% and 1% for the three and nine months ended December 31, 2008, as compared to the corresponding periods in 2007, primarily due to increases in rental rates and occupancy at several Local Partnerships partially offset by an increase in vacancies at one Local Partnership. Total expenses, excluding repairs and maintenance and loss on impairment of fixed assets, remained fairly consistent with an increase of approximately 1% and 2% for the three and nine months ended December 31, 2008, as compared to the corresponding periods in 2007. Repairs and maintenance expenses decreased approximately $154,000 and $302,000 for the three and nine months ended December 31, 2008 as compared to the corresponding periods in 2007, primarily due to basement renovations and window and door replacements in the prior year at one Local Partnership and rehabilitation costs resulting from a fire in the prior year as well as a decrease in maintenance contracts and security contract at a second Local Partnership, partially offset by an increase in carpet replacement, carpentry and repair contracts and materials at a third Local Partnership, an increase in basement renovations, installation of kitchen hardware and appliances and window and door replacements at a fourth Local Partnership and an increase in carpet replacement, decorating and maintenance contracts and snow removal contracts at a fifth Local Partnership. The Company reported a net income of $161,061 for the quarter ended December 31, 2008. As of December 31, 2008, the Company's balance sheet showed total assets of $75,211,754, total liabilities of $87,652,869, and minority interests of $6,298,555, resulting in total partners' deficit of $18,739,670. A full-text copy of the Company's quarterly report is available for free at: http://researcharchives.com/t/s?39af About Independence Tax Credit Plus L.P. Based in New York, Independence Tax Credit Plus L.P., a Delaware limited partnership, was organized on Nov. 7, 1990, but had no activity until May 31, 1991, and commenced its public offering on July 1, 1991. The general partner of the Partnership is Related Independence Associates L.P., a Delaware limited partnership. The general partner of Related Independence Associates L.P. is Related Independence Associates Inc., a Delaware corporation. The ultimate parent of Related Independence Associates Inc. is Centerline Holding Company. The Partnership's business is to invest as a limited partner in other partnerships (Local Partnerships) that own leveraged apartment complexes that are eligible for the low-income housing tax credit enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit. Qualified Beneficial Assignment Certificates holders are entitled to tax credits over the period of the Partnership's entitlement to claim tax credits with respect to each Apartment Complex. The Partnership is currently in the process of disposing of its investments. INSMED INC: Initially Completes MerckDeal, Receives $2.5 Million ---------------------------------------------------------------- Insmed Incorporated entered into an Asset Purchase Agreement for the sale of its Follow-On Biologics platform to a subsidiary of Merck & Co., Inc., for a purchase price of $130 million in cash. Subject to the terms and conditions of the Agreement, (i) at the first closing, which occurred on Feb. 12, 2009, Insmed sold to the Merck subsidiary its INS-19 and INS-20 products and all related intellectual property for an initial payment of $2.5 million and, subject to the satisfaction of certain conditions, three additional monthly payments of $2.5 million each and (ii) Insmed agreed to sell, and the Merck subsidiary agreed to purchase, at a second closing, the balance of Insmed's Follow-On Biologics platform and the equipment and assets in Insmed's Boulder Colorado facility, for an additional payment of $130 million less any amounts paid to Insmed in connection with the first closing. The second closing is expected to occur on March 31, 2009, assuming all conditions to the second closing have been satisfied prior to such date. The transaction does not require approval by the Insmed shareholders under Virginia law because, among other things, Insmed is retaining its IPLEX business, including its Virginia facility and all assets related thereto, which will be a significant continuing business activity. After fees, taxes and other costs related to the transaction, the Company expects net proceeds of approximately $123 million. A full-text copy of the Asset Purchase Agreement is available for free at: http://ResearchArchives.com/t/s?399c On Feb. 6, 2009, Insmed Incorporated entered into an agreement with 2545 Central LLC, the landlord of Insmed's leased facilities located at 5797 Central Avenue, Boulder Co. and 2590 Central Avenue, Boulder Colorado to amend the original leases for both premises. The amendments modify the original leases for both premises to provide Insmed with additional options to renew and extend each lease for four separate additional terms through to December 31, 2035. A full-text copy of the FIRST AMENDMENT TO LEASE is available for free at: http://ResearchArchives.com/t/s?399d A full-text copy of the SECOND AMENDMENT TO LEASE is available for free at: http://ResearchArchives.com/t/s?399e About Insmed Headquartered in Richmond, Virginia, Insmed Incorporated, (NasdaqCM: INSM) -- http://www.insmed.com -- is a biopharmaceutical company that develops and commercializes drugs to treat metabolic diseases, endocrine disorders, and oncology. Its lead product candidate IPLEX, a recombinant protein product candidate, is in Phase II clinical trials for the treatment of myotonic muscular dystrophy, the common form of adult-onset muscular dystrophy. The company has license and collaborative agreements with Fujisawa Pharmaceutical Co., Ltd., to use IGF-I therapy for the treatment of extreme or severe insulin resistant diabetes; and a license to Pharmacia AB's portfolio of regulatory filings pertaining to rhIGF. Insmed was founded in 1999. Going Concern Doubt Richmond, Virginia-based Ernst & Young LLP raised substantial doubt about the ability of Insmed Incorporated to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the company's recurring operating losses and negative cash flows from operations. The company said that its ability to continue as a going concern is dependent upon its ability to take advantage of raising capital through securities offerings, debt financing, and partnerships and use these sources of capital to fund operations. Management is focusing on raising capital through any one or more of these options. INTEGRA BANK: Moody's Cuts Financial Strength Rating to 'D+' ------------------------------------------------------------ Moody's Investors Service downgraded Integra Bank's financial strength rating to D+ from C, and its deposit ratings to Ba1/Not- Prime from A3/Prime-2. Following the rating action, the long-term ratings remain under review for possible downgrade. The holding company, Integra Bank Corporation, is unrated. The downgrade reflects Moody's view that Integra's concentration in commercial real estate will lead to significant credit costs in the near-term that will substantially weaken its capital position. Although Moody's had previously incorporated Integra's CRE concentration into its ratings, the recent sharp decline in real estate prices and anticipated deterioration in CRE loan performance, especially residential construction and development loans, has led Moody's to considerably increase its loss expectations. As of December 31, 2008, Integra's true CRE exposure (excluding owner-occupied loans) represented approximately 5 times tangible common equity and over 40% of total loans. Further, Integra's construction and land development portfolio, which has accounted for most of the asset quality deterioration to date, accounts for over 60% of the CRE portfolio. This represents one of the most significant CRE concentrations among Moody's-rated U.S. banks. The ratings review will focus on Integra's options for strengthening its capital base, which is a necessary step in order to absorb Moody's view of expected losses. Moody's notes that Integra has applied for participation in the U.S. Treasury's Capital Purchase Program. If Integra is approved to participate in the program, Moody's expects the ratings to remain at their current levels following the action. If Integra is unsuccessful in obtaining a capital injection from the U.S. Treasury, Moody's will consider the bank's other options for raising capital. Moody's last rating action on Integra was on February 28, 2008, when it affirmed the bank's ratings. Integra Bank Corporation is headquartered in Evansville, Indiana and reported assets of $3.4 billion at December 31, 2008. Downgrades: Issuer: Integra Bank National Association -- Bank Financial Strength Rating, Downgraded to D+ from C -- Issuer Rating, Downgraded to Ba2 from A3 -- OSO Rating, Downgraded to NP from P-2 -- Deposit Rating, Downgraded to NP from P-2 -- OSO Senior Unsecured OSO Rating, Downgraded to Ba2 from A3 -- Senior Unsecured Deposit Rating, Downgraded to Ba1 from A3 Outlook Actions: Issuer: Integra Bank National Association -- Outlook, Changed To Rating Under Review From Stable JEFFERSON COUNTY: Seeks More Time to Negotiate With Creditors ------------------------------------------------------------- Alabama's Jefferson County has asked a federal court to give it more time to negotiate with creditors to avoid what could be the largest municipal bankruptcy in U.S. history, Reuters reported February 18. As reported by the Troubled Company Reporter on September 18, 2008, Syncora Guarantee Inc., a wholly owned subsidiary of Syncora Holdings Ltd., Financial Guaranty Insurance Company, and The Bank of New York Mellon, as Trustee for $3.2 billion of Jefferson County Sewer Revenue Warrants, acting at the direction of the Bond Insurers, filed a suit against Jefferson County Alabama and the County's Commissioners. The Bond Insurers insure approximately $2.8 billion in Jefferson County Sewer Revenue Warrants. The suit, which was filed in the United States District Court for the Northern District of Alabama, includes a request to the Court to appoint an independent and qualified receiver to: manage the Jefferson County Sewer System; consider and implement any appropriate rate modifications and other sources of revenue; ensure compliance with applicable laws; assist in achieving an appropriate financial resolution; and pursue any bona fide claims. Jefferson County's lawyers, according to Reuters, asked U.S. District Judge David Proctor for a "continuance" to delay a decision on whether to appoint a receiver to manage the operation of the county's sewers, according to court documents. Bloomberg News, citing two court appointed special masters, said February 11 that sewer customers may face a 25% percent rate increase as officials seek to renegotiate $3.2 billion debt to avert bankruptcy. According to Bloomberg, Jefferson County faces insolvency after interest on more than $3 billion of adjustable- rate debt for the county's sewer system surged to as high as 10 percent when bond insurers' credit ratings plunged following unrelated losses involving subprime mortgages. Jefferson County has received forbearance agreements from lenders, including JPMorgan Chase, to give officials time to develop a plan. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. The Birmingham firm of Bradley Arant Rose & White, represents Jefferson County. Porter, White & Co. in Birmingham is the county's financial adviser. A bankruptcy by Jefferson County stands to be the largest municipal bankruptcy in U.S. history. It could beat the record of $1.7 billion, set by Orange County, California in 1994. * * * As reported by the TCR on Dec. 19, 2008, Standard & Poor's Ratings Services has kept the ratings on Jefferson County, Alabama's series 1997A, 2001A, 2003 B-1-A through series 2003 B-1-E, and series 2003 C-1 through 2003 C-10 sewer system revenue bonds ('C' underlying rating) on CreditWatch negative due to recent draws against the system's cash and surety reserves beginning in September 2008. "Although the system has made two net system revenue payments to the trustee in recent months for debt service, it has depleted its cash reserves and a portion of its surety reserves since September 2008," said Standard & Poor's credit analyst Sussan Corson. The trustee estimates the system currently has $176 million remaining in total combined surety reserves with Financial Guaranty Insurance Co., Syncora Guarantee Inc., and Financial Security Assurance Inc., which can be applied on a prorata basis to any parity debt. JESUITS OF OREGON: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------- The Associated Press reports that the Jesuits of the Oregon Province -- officially the Society of Jesus -- has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Oregon. According to The AP, lawsuits alleging sex abuse by priests led to the Jesuits' bankruptcy filing. The Rev. Patrick J. Lee, the current provincial, said in a statement, "Our decision to file Chapter 11 was not an easy one, but with approximately 200 additional claims pending or threatened, it is the only way we believe that all claimants can be offered a fair financial settlement within the limited resources of the Province." The AP relates that many of the lawsuits involve Alaska Natives who say they were sexually abused as children while living in remote villages. The AP states that the Jesuits listed less than $5 million in assets and almost $62 million in liabilities. Ken Roosa, an attorney representing more than 60 Alaska Natives, said on Tuesday night that the order is vastly underestimating its assets, as the Jesuits have assets of "more than a billion dollars," The AP reports. The Jesuits said that it has worked "diligently" to resolve claims of misconduct and that it has settled more than 200 claims, paying more than $25 million to victims since 2001, The AP relates. The amount, according to The AP, excludes payments made by insurers. The Jesuits of the Oregon Province religious order has 10 provinces in the U.S. The Oregon Province covers Oregon, Washington, Alaska, Idaho, and Montana. The order is based in Portland. LANDAMERICA FINANCIAL: Seeks to Sell FNF Stock When Price Is Right ------------------------------------------------------------------ LandAmerica Financial Group, Inc., seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to sell its common shares of Fidelity National Financial, Inc. On December 21, 2008, the Debtor entered into an amended and restated Stock Purchase Agreement with FNF, Fidelity National Title Insurance Company and Chicago Title Insurance Company pursuant to which LFG sold, among other things, its capital stock in Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation. The transaction closed on December 22, 2008. Pursuant to the terms of the Revised SPA, among other consideration, FNF issued to LFG 3,176,620 shares of its common stock. John H. Maddock III, Esq., at McGuirewoods LLP, in Richmond, Virginia, relates that in early January 2009, the Debtor discussed the option of selling the Stock (at the time the Stock was trading at prices in excess of $16 per share) with the official committee of unsecured creditors of LFG. At that time, the members of the LFG Creditors' Committee, who serve as representatives of the beneficiaries of the Stock proceeds, notified the Debtor, in writing, that the committee did not want the Debtor to sell the Stock at that time. While the decision to sell the Stock must rest on the Debtor's business judgment, the LFG Creditors' Committee's view as to the timing and method of such disposition is a significant consideration that informs that judgment. In this regard, the Debtor informed the LFG Creditors' Committee at that time that it would refrain from selling the Stock and, assuming the absence of new developments, defer in large part to the judgment of the committee as to when and how the Stock should be sold. Since that time, the Debtor understands that the LFG Creditors' Committee has developed a protocol and formed a subcommittee to analyze the disposition of the Stock. On February 5, 2009, FNF filed a Registration Statement Under the Securities Act of 1933 with the United States Securities and Exchange Commission, registering the Stock for resale by the Debtor. Pursuant to the Form S-3, the Debtor may offer and resell from time to time any or all of the Stock. The Debtor intends to sell the Stock in open market transactions, by private placement, or any other means permissible under applicable law, subject to the prior written consent of the LFG Creditors' Committee. Mr. Maddock explains that FNF is a holding company that is a provider, through its subsidiaries, of title insurance, specialty insurance, claims management services, and information services throughout the United States. Since the Stock was acquired by LFG, the value of FNF's stock has been increasing. On December 22, 2008, the value of the Stock was [$14.82] per share. As of February 12, 2009, the Stock was trading at $18.24 per share. Given the daily fluctuation in prices and the volatility of the market, the Debtor seeks to ensure that it has the ability to act quickly to liquidate all or a portion of the Stock when it and the LFG Creditors' Committee agree it is advisable to do so.1 Upon consummation of a sale of the Stock, the Debtor will file a notice with the Court informing the Court and parties in interest of the net sale price obtained. About LandAmerica Financial LandAmerica Financial Group, Inc. is a leading provider of real estate transaction services with offices nationwide and a vast network of active agents. LandAmerica serves its agent, residential, commercial and lender customers throughout the United States, Mexico, Canada, the Caribbean, Latin America, Europe and Asia. LandAmerica Financial Group and its affiliate LandAmerica 1031 Exchange Services, Inc. filed for Chapter 11 protection Nov. 26, 2008 (Bankr. E.D. Va. Lead Case No. 08-35994). Dion W. Hayes, Esq., and John H. Maddock III, Esq., at McGuireWoods LLP, are the Debtors' bankruptcy counsel. In its bankruptcy petition, LFG listed total assets of $3,325,100,000, and total debts of $2,839,800,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes LandAmerica Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by LandAmerica Financial and its affiliate LandAmerica 1031 Exchange Services, Inc. (http://bankrupt.com/newsstand/or 215/945-7000) LANDRY'S RESTAURANTS: S&P Affirms Corporate Credit Rating at 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its ratings, including the 'B' corporate credit rating, on Houston-based Landry's Restaurants Inc. and removed them from CreditWatch, where they were placed on Jan. 28, 2008, with negative implications. The outlook is stable. This action follows the company's funding of its new senior secured credit facility and its new senior notes to refinance its 9.5% senior unsecured notes. At the same time, S&P assigned a '1' recovery to Landry's $215 million senior secured facility, consisting of a $165 million term loan and a $50 million revolving credit facility. The '1' recovery rating indicates S&P's expectation of very high (90%-100%) recovery of principle in the event of default and also dictates an issue-level rating of 'BB-', two notches above the issuer's corporate credit rating. S&P also assigned a '3' recovery rating to Landry's $295.5 million senior secured notes (with an original issue discount of $260 million). The '3' recovery rating indicates S&P's expectation of meaningful (50%- 70%) recovery of principle in the event of default and also dictates an issue-level rating of 'B', the same as the corporate credit rating. At the same time, S&P affirmed the ratings, including the 'B-' corporate credit rating, on Las Vegas based-Golden Nugget Inc., an unrestricted subsidiary of Landry's, and removed the ratings from CreditWatch with negative implications, where they were placed on Jan. 28, 2008. The Golden Nugget has a negative outlook. "The outlook is stable," said Standard & Poor's credit analyst Charles Pinson-Rose, "and incorporates that credit metrics should be mostly maintained at current levels in the near term and that cash flows from operations should supply adequate liquidity." LEAR CORP: Bank Loan Continues to Sell at Substantial Discount -------------------------------------------------------------- Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 46.05 cents-on-the- dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 2.06 percentage points from the previous week, the Journal relates. Lear pays interest at 250 points above LIBOR. The bank loan matures on March 29, 2012. The bank loan is unrated. Participations in a syndicated loan under which fellow parts maker Dana Corp. is a borrower traded in the secondary market at 38.25 cents-on-the-dollar during the week ended February 13, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 2.75 percentage points from the previous week, the Journal relates. Dana pays interest at 375 points above LIBOR. The bank loan matures on January 31, 2015. The bank loan carries B3 Moody's rating and B+ S&P rating. Based in Southfield, Michigan, Lear Corp. is a global automotive supplier, conducting business in two product operating segments: seating and electrical and electronic. The seating segment includes seat systems and the components. The electrical and electronic segment includes electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, as well as audio sound systems and in-vehicle television and video entertainment systems. The assembly process with respect to the electrical and electronic segment is performed in low-cost labor sites in Mexico, Honduras, the Philippines, Eastern Europe and Northern Africa. Lear has divested substantially all of the assets of its interior segment, which included instrument panels and cockpit systems, headliners and overhead systems, door panels, flooring and acoustic systems and other interior products. * * * As reported by the Troubled Company Reporter on Jan. 9, 2009, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear Corporation, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. According to the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Southfield, Michigan-based Lear Corp. to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LEHMAN BROTHERS: Gets Court Nod to Inject $272M in Woodlands ------------------------------------------------------------ Lehman Brothers Holdings Inc. won authority from the U.S. Bankruptcy Court for the Southern District of New York to infuse additional $272 million of capital into Woodlands Commercial Bank, Bloomberg's Bill Rochelle said. "I'm satisfied there are sound business reasons that support this action," U.S. Bankruptcy Court Judge James M. Peck said at the hearing, according to Bloomberg. Judge Peck, the report adds, also approved a request by Lehman to contribute as much as $185 million to its Lehman Brothers Bank FSB thrift unit. 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: KPMG HK to Hold Press Briefing February 24 ----------------------------------------------------------- Edward Middleton, Head of Restructuring at KPMG, said the firm has held meetings with creditors and shareholders of eight Lehman Hong Kong subsidiaries: 1. Lehman Brothers Securities Asia Limited (In Liquidation) 2. Lehman Brothers Futures Asia Limited (In Liquidation) 3. Lehman Brothers Asia Limited (In Liquidation) 4. Lehman Brothers Asia Holdings Limited (In Liquidation) 5. Lehman Brothers Asia Capital Company (In Liquidation) 6. LBQ Hong Kong Funding Limited (In Liquidation) 7. Lehman Brothers Nominees (H.K.) Limited (In Liquidation) 8. Lehman Brothers Commercial Corporation Asia Limited (In Liquidation) KPMG says it will hold a press briefing in Hong Kong at 12:00 noon, Tuesday 24 February, to update on Lehman's creditors meetings. The briefing will follow a shareholders meeting with Lehman Brothers Asia Capital Company (LBACC) (In Liquidation), at 11:00 am. According to Financial Times, creditors have been told that Lehman Brothers' Hong Kong operations made inter-company transfers totalling $6.7bn to the bank's Japanese arm -- a far larger amount than previously revealed. The bank's Hong Kong entities, FT adds, also held several hundred million dollars in accounts at Lehman Brothers Bankhaus, a deposit taking institution based in Frankfurt. Meanwhile, Bloomberg News, citing the Economic Daily News (Taipei), said last week that Taiwan is planning to freeze Lehman's assets of about NT$20 billion ($588 million) on the island to compensate investors who lost money from Lehman-linked products. Taiwan's investors, according to the Taipei newspaper, citing a regulator, hold about NT$78 billion of Lehman-linked securities. KPMG is a global network of professional firms providing Audit, Tax and Advisory services. KPMG China has 12 offices (including KPMG Advisory (China) Limited) in Beijing, Shenyang, Qingdao, Shanghai, Nanjing, Chengdu, Hangzhou, Guangzhou, Fuzhou, Shenzhen, Hong Kong and Macau, with more than 8,500 professionals. 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: Former LBI Director Sues Barclays for Severance ---------------------------------------------------------------- Maximilian Coreth, a former Lehman Brothers Inc. managing director, who was fired after being transferred to Barclays Capital Inc. when it bought Lehman's brokerage business, sued Barclays seeking $19.6 million in severance pay, Bloomberg News said. Christopher Scinta of Bloomberg reported, citing the complaint, that Mr. Coreth's employment agreement with Lehman stated that if he was terminated without cause before February 2009 he would receive $19.6 million in severance. Coreth began working for Barclays Capital, a unit of Londonbased Barclays Plc, Sept. 16 after it bought Lehman's North American brokerage. He was fired without cause Oct. 14, according to the suit. 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) LIBERTY MEDIA: Fitch Retains BB Negative Watch After Sirius Loan ---------------------------------------------------------------- Fitch Ratings stated that Liberty Media LLC's 'BB' Issuer Default Rating and debt ratings remain on Rating Watch Negative. The ratings were placed on Watch Negative on Sept. 3, 2008, when Liberty's board of directors authorized management to proceed with development of a plan to split-off the assets of Liberty Entertainment, most notably its approximately 50% stake in DirecTV. Liberty announced that it intends to lend a net $500 million to Sirius XM Radio Inc. subject to certain conditions. The announced investment in Sirius will essentially substitute a portion of Liberty's liquid investment portfolio (cash, marketable securities, and/or equity collars) with secured debt of the challenged satellite radio operator. Excluding Entertainment assets, Fitch estimates Liberty's liquidity prior to the Sirius transaction to comprise approximately $2.5 billion of cash (including the Reserve Fund) and nearly $4 billion in net marketable securities and equity collars. While the Sirius transaction is negative from a liquidity standpoint, it is partially mitigated by Liberty's position in Sirius' capital structure, which should ultimately result in approximately 50% of $1 billion of total debt secured by all assets of Sirius. While the final documents have not been filed yet, Fitch expects Liberty's loan to carry a limitation on additional secured debt. Assuming existing bank lines are extended (a condition precedent for Liberty to lend a portion of the loan), Sirius management should be able to re-concentrate their focus from liquidity issues to operational issues. Fitch would expect this to include renegotiation of programming terms that have resulted in significant cash burn to date. Sirius had $360 million of cash at Sept. 30, 2008 but has been burning over $300 million per year. While the majority of the Liberty loans will be used to redeem maturing debt, Fitch anticipates that some cash will remain for working capital purposes. Liberty's ratings continue to be supported by operating cash flows (predominantly through QVC) that cover total cash interest at approximately 3 times, with further bondholder protection through asset coverage (excluding operating businesses) of net debt and deferred tax liabilities of over 0.5x. Liberty has some significant maturities over the next five years, most notably $5.2 billion in QVC bank debt due 2011. Fitch expects operating cash flows to be able to reduce bank drawings to below $4.5 billion by maturity. Additional maturities include $800 million of bonds due 2013 and $1.3 billion of Time Warner Exchangeable debt puttable in 2013. Given the existing capital markets and QVC's operational issues, Liberty's portfolio of cash and marketable securities could become ever more important over the intermediate term to handle these maturities and offset loan reductions, tight credit markets, and higher interest expense. Fitch expects to resolve the Negative Rating Watch when the Liberty Entertainment spin is finalized (or if it is abandoned). Management currently expects to finalize the spin in the first half of 2009. LIBERTY MEDIA: S&P Retains Negative CreditWatch on 'BB+' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Liberty Media Corp., including the 'BB+' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Dec. 15. 2008. This CreditWatch listing was based on the company's plan to distribute a majority of its Liberty Entertainment tracking stock assets to existing Liberty Entertainment tracking stockholders through the split-off of a newly formed subsidiary, Liberty Entertainment Inc. LMEI will comprise Liberty's entire 52% interest in the DIRECTV Group Inc., its 50% interest in GSN LLC, 100% of FUN Technologies, and 100% of Liberty Sports Holdings Inc. LMEI will also be the obligor on about $2 billion of derivative borrowings. Upon completion of the split-off (expected in the second quarter of 2009), S&P expects to lower its corporate credit rating on Liberty Media to 'BB-' with a negative outlook. This CreditWatch update follows the announcement that Liberty Media and SIRIUS XM Radio Inc. have entered into an agreement under which Liberty Media will invest a total of $500 million, after fees, in the form of loans to SIRIUS XM and receive a preferred equity interest convertible into a 40% stake in SIRIUS XM. The investment will be funded in two phases. The first phase includes a $280 million senior secured loan. SIRIUS XM will use the proceeds to repay $171.6 million of its maturing 2.5% convertible notes due Feb. 17, 2009, and the balance for general corporate purposes. The loan will bear interest a rate of 15%, maturing in December 2012, and be secured by the assets securing SIRIUS XM's existing term credit facility. The second phase will provide an additional $150 million loan to XM Satellite Radio, SIRIUS XM's wholly owned subsidiary. In addition, Liberty Media agreed to offer to purchase up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities. Upon completion of the second phase of the Liberty investment, SIRIUS XM will issue Liberty an aggregate of 12.5 million shares of preferred stock convertible into 40% of the common stock of SIRIUS XM. Liberty's obligation to consummate the second phase of its investment is subject to various closing conditions. "Liberty Media's investment in SIRIUS XM currently does not affect our prospective rating outcome following the split-off of LMEI," said Standard & Poor's credit analyst Andy Liu. "We still expect to lower our rating on Liberty Media to 'BB-' with a negative outlook. However, given that SIRIUS faces maturities above and beyond Liberty Media's investment, as well as significant operating challenges, a further financial commitment by Liberty Media could affect our rating on the company." Upon completion of the split-off, S&P will review the final terms before resolving the CreditWatch listing. If the split-off is completed according to the current plan, S&P will implement the outlined rating action. If there are substantial changes to the split-off, S&P will review the new structure in determining the new rating outcome. LYONDELLBASELL: Misses Coupon Payments, Fitch Withdraws Ratings --------------------------------------------------------------- Fitch Ratings has withdrawn Netherlands-based petrochemicals company LyondellBasell Industries AF SCA's Long- and Short-term Issuer Default Ratings of 'C' on Rating Watch Negative. Its US subsidiaries Lyondell Chemicals Company, Lyondell Basell Finance Co, Equistar Chemicals L.P and Millennium America Inc. have been affirmed at Long-term IDR 'D' and withdrawn. Fitch has also affirmed and withdrawn all the debt ratings on LBI, Lyondell Basell Finance Co, Millennium America Inc., Equistar Chemicals L.P. and Lyondell Chemicals Company. Fitch will no longer provide public ratings or analytical coverage of LBI. The withdrawal of the ratings follows LBI's announcement that its US subsidiaries and one of its holding companies in Europe had filed for a reorganization of its operations and balance sheet under the protection of Chapter 11 in the U.S. Bankruptcy Code for the Southern District of New York. Further, on 15 February 2009, LBI missed coupon payments on its US$615 million and EUR500 million European bonds due in 2015, according to company unconfirmed reports. FOAMEX INT'L: Case Summary & 25 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Foamex International Inc. Rose Tree Corporate Center II 1400 N. Providence Road, Suite 2000 Media, PA 19063-2076 Bankruptcy Case No.: 09-10560 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- FMXI, LLC 09-10561 Foamex L.P. 09-10562 Foamex Latin America, Inc. 09-10563 Foamex Mexico, Inc. 09-10565 Foamex Carpet Cushion LLC 09-10566 Foamex Asia, Inc. 09-10567 Foamex Canada Inc. 09-10568 Related Information: Foamex produces cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures polymers for the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates first filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). On Feb. 2, 2007, it won confirmation of its plan of reorganization, and 10 days later, emerged from bankruptcy See: http://www.foamex.com Chapter 11 Petition Date: February 18, 2009 Court: District of Delaware (Delaware) Judge: Kevin J. Carey Debtors' Counsel: Ira S. Dizengoff, Esq. Phillip M. Abelson, Esq. Brian D. Geldert, Esq. Akin Gump Srauss Hauer & Feld LLP One Bryant Park New York, NY 10036 Tel: (212)872-1000 Faxl: ((212) 872-1002 http://www.ycst.com Co-counsel: Mark E. Felger, Esq. Jeffrey R. Waxman, Esq. Cozen O'Connor 1201 N. Market Street, Ste 1400 Wilmington, DE 19801 Tel: (302) 295-2087 Faxl: ((302) 295-2013 Investment Banker: Houlihan Lokey Accountant: McGladrey & Pullen LLP Claims Agent: Epiq Bankruptcy Solutions LLC The Debtors' financial condition as of September 28, 2008: Total Assets: $363,821,000 Total Debts: $379,710,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dow Chemical Trade debt $18,129,397 2030 Dow Center Midland, MI 48674 Attn: Pat Dawson Tel: (989) 636-8758 Fax: (989) 636-2705 Milliken & Company Trade debt $2,905,843 920 Milliken Road Spartanburg, SC 29303 Attn: Denis Golden Tel: (212) 819-4586 Fax: (212) 819-4279 Bayer Corporation Trade debt $1,358,866 100 Bayer Road Pittsburgh, PA 15205 Attn: G.F. Jerry MacCleary Tel: (989) 636-4947 Fax: (412) 777-2404 Textileather Trade debt $902,994 Dept 77116 P.O. Box 77000 Detroit, MI48277-0116 Attn: Doug Holder Tel: (248) 761-3311 Fax: (519) 740-2977 Canadian General Tower Trade debt $850,382 52 Middleton Street Cambridge, ON NIR 5T6 Attn: Doug Holder Tel: (248) 761-3311 Fax: (519) 740-2977 Shell Chemical Co. Trade debt $684,000 P.O. Box 2463 Houston, TX 77252-2463 Calgary, Alberta T2P 213 Attn: Martin Mohr Tel: (403) 691-4031 Fax: (403) 691-4970 Centimark Corporation Trade debt $511,407 298 Hansen Access Road King of Prussia, PA 19406 Attn: Michael Mangiaruga Tel: (800) 759-9880 ext. 3507 Fax: (610) 382-3170 Chemtura Corporation Trade debt $507,832 199 Benson Road Middlebury, CT 06749 Attn: Martin Swing Tel: (704) 577-2344 Fax: (704) 894-0162 Bayer Inc. Trade debt $467,770 EDS Corporation Contract $401,552 Momentive Performance Trade debt $332,426 Materials Suminoe Textile Trade debt $306,501 Dow Chemical Canada Trade debt $304,335 Furniture Transportation Trade debt $292,344 Riviera Finance Trade debt $272,409 Empire Wrecking Co of Trade debt $264,162 Reading PA Cytec Industries Inc. Trade debt $249,892 Huntsman Polyurethanes Contract $242,139 US Connections Trade debt $224,001 Lanxess Corporation Trade debt $222,252 Tri-Con Industries Inc. Trade debt $214,643 Edge-Sweets Trade debt $207,702 Clean Air Specialists Inc. Trade debt $203,730 Evonik Goldschmidt Trade debt $179,218 Corporation Conwed Plastics Trade debt $174,570 The petition was signed by John G. Johnson, Jr., president and chief executive officer. MAGNA ENTERTAINMENT: Faces March 20 Maturity of $48.5-Mil. Loan --------------------------------------------------------------- Magna Entertainment Corp. said MI Developments Inc., the Company's controlling shareholder, will not be proceeding with its reorganization proposal. MEC is in discussions with MID concerning alternatives to the reorganization proposal. MEC cautions shareholders and others considering trading in securities of MEC that there can be no assurance that any alternative transaction will be completed. As reported by the Troubled Company Reporter on January 5, 2009, Magna entered into a transaction agreement with MID and entities affiliated with MEC's chairman and chief executive officer, Frank Stronach, to implement a proposed reorganization of MID that includes the spin-off of MEC to MID's existing shareholders. The Transaction Agreement contemplates, among other things, a multi- step series of proposed transactions designed to recapitalize and reposition MEC to enable it to pursue its strategy of horse racing, gaming and entertainment on a standalone basis. If the transactions contemplated by the Transaction Agreement are implemented, MEC will ultimately be controlled directly by the Stronach Group, MID will no longer have any ownership interest in MEC and MID will be prohibited from investing any additional funds into, or entering into any new transactions with, MEC without the approval of the minority MID Class A shareholders. Loan Maturity Date Accelerated In accordance with the terms of certain of MEC's loan agreements, the maturity date of the first tranche of the new loan that a subsidiary of MID made available to MEC on December 1, 2008, in connection with the reorganization proposal, the maturity date of the bridge loan from MID Lender and the deadline for repayment of US$100 million under the Gulfstream project financing facility from MID Lender will each be accelerated to March 20, 2009. The maturity date of the second tranche of the New Loan has already been accelerated to May 13, 2009. As of February 18, 2009, there is roughly US$48.5 million outstanding under the first tranche of the New Loan, roughly US$0.7 million outstanding under the second tranche of the New Loan and roughly US$126.2 million outstanding under the bridge loan. In accordance with its terms, the maturity date of MEC's US$40 million credit facility with a Canadian chartered bank will also accelerate to March 5, 2009. If MEC is unable to repay its obligations when due or satisfy required covenants in its loan agreements, substantially all of its other current and long-term debt will also become due on demand as a result of cross-default provisions within loan agreements, unless MEC is able to obtain waivers, modifications or extensions. In the event MEC is unsuccessful in its efforts to raise additional funds, through an alternative transaction with MID, assets sales, by taking on additional debt or by some other means, MEC will not be able to meet such obligations. About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. (MECA) is North America's largest owner and operator of horse racetracks, based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. At Sept. 30, 2008, the company's balance sheet showed total assets of $1.1 billion, total liabilities of $891.0 million and shareholders' equity of $272.7 million. Going Concern Doubt As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. MERGE HEALTHCARE: Posts $23.7MM Loss, Sales Slightly Drop in 2008 ----------------------------------------------------------------- Merge Healthcare Incorporated disclosed financial results for the fourth quarter and year ended Dec. 31, 2008. Fourth quarter net sales totaled $15.1 million, compared to $15.6 million in the fourth quarter of 2007 and $14.6 million in the third quarter ended Sept. 30, 2008. Operating income for the fourth quarter was $3.7 million, compared to an operating loss of $8.5 million in the fourth quarter of 2007 and operating income of $1.3 million in the third quarter of 2008. Net income for the fourth quarter of 2008 was $1.9 million, compared to a net loss of $9.5 million in the fourth quarter of 2007 and a net income of $400,000 in the third quarter of 2008. Net income for the fourth quarter of 2008 includes a non-cash charge of $1.4 million due to the impairment of certain equity investments. During the fourth quarter of 2008, the cash balance increased by $3.4 million to $17.8 million at Dec. 31, 2008. In addition, deferred revenue increased by $1.0 million to $16.8 million at Dec. 31, 2008. "These results show continued positive progress on our turnaround efforts at Merge," according to Justin Dearborn, CEO of Merge Healthcare. "They also indicate our ability to function profitably in a very challenging market." For the year ended Dec. 31, 2008, net sales totaled $56.7 million, compared to $59.6 million for the year ended Dec. 31, 2007. The operating loss for 2008 was $21.7 million compared to an operating loss of $171.2 million for 2007. Total operating loss for 2008 reflects an operating loss of $26.7 million during the first half of the year and operating income of $5.0 million during the second half of the year. Contributing to the operating loss for 2007 was a goodwill impairment charge of $122.4 million. Net loss for 2008 totaled $23.7 million compared to a loss of $171.6 million for 2007. About Merge Healthcare Incorporated Based in Milwaukee, Wisconsin, Merge Healthcare Incorporated (Nasdaq: MRGE; TSX: MRG) -- http://www.mergehealthcare.com/-- is a developer of medical imaging and clinical software applications and developmental tools. The company develops medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. As reported by the Troubled Company Reporter on November 5, 2008, Merge Healthcare Incorporated's balance sheet at Sept. 30, 2008, showed total assets of $53,533,000, total liabilities of $46,674,000 and shareholders' deficit of $6,859,000. Possible Bankruptcy As reported in the Troubled Company Reporter on May 16, 2008, if adequate funds are not available or are not available on acceptable terms, the company will likely not be able to fund its new teleradiology business, take advantage of unanticipated opportunities, develop or enhance services or products, respond to competitive pressures, or continue as a going concern beyond June 30, 2008, and may have to seek bankruptcy protection. Going Concern Doubt KPMG LLP in Chicago expressed substantial doubt about Merge Healthcare Incorporated's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and negative cash flows. The company says it has generated losses from operations over the past nine consecutive quarters and the company currently has no credit facility. As a result, the company is currently completely dependent on available cash and operating cash flow to meet its capital needs. NAILITE INTERNATIONAL: Obtains Court OK to Borrow $1 Million ------------------------------------------------------------ Nailite International Inc. was authorized by the U.S. Bankruptcy Court for the District of Delaware to access, on the interim, $1 million from the $3 million DIP facility provided by Premier Exteriors LLC, Bloomberg's Bill Rochelle said. Nailite filed for bankruptcy due to lack of liquidity resulting in its failure to pay the principal and interest owed to National City Bank under the credit agreement dated April 2003. Premier purchased all of the rights of National City Bank under the credit agreement including the obligations of the Company The final hearing on the DIP financing will be held March 12. About Nailite International Headquartered in Miami, Florida, Nailite International Inc. -- http://www.nailiteinternational.com-- produces injection polypropylene based cedar and masonry replica siding. The Debtor supplies residential construction and remodeling markets through various building materials and siding distributors. Nailite International filed for Chapter 11 on Feb. 13, 2009 (Bankr. D. Del., Case No. 09-10526). Gabriel R. MacConaill, Esq., and Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, have been tapped as counsel. AlixPartners LLP is also on-board as restructuring adviser. In its bankruptcy petition, the Company estimated assets and debts of $50 million to $100 million. NORMAN SALTER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Norman J. Salter Kerri A Salter aka Kerri D Anderson 5111 Caroli Lane La Canada, CA 91011 Bankruptcy Case No.: 09-11653 Debtor-affiliates filing separate Chapter 11 petitions on Jan. 13, 2009: Entity Case No. ------ -------- Valleyheart LP 09-10353 Chapter 11 Petition Date: February 17, 2009 Court: Central District Of California (San Fernando Valley) Judge: Kathleen Thompson Debtors' Counsel: Craig M. Rankin, Esq. cmr@lnbrb.com Levene Neale Bender 10250 Constellation Blvd., Ste. 1700 Los Angeles, CA 90067 Tel: (310) 229-1234 Fax: (310) 229-1244 Estimated Assets: $1 million to $10 million Estimated Debts: $100 million to $500 million The Debtors' Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cathay Bank Guaranties for $68,298,494 Attn: Eddie Chang loans made to 4th 250 S. Atlantic Blvd, 2d Floor street Loft Monterey Park, CA 91754 Partners, LP [Est. 626) 284-9686 Value of Real Property Securing Loan $55,000,000), Dupont Lofts,LP [Est. Value of Real Property Securing Loan 526,000,0001, Acama Villas LP [Est. Value of Real Property Securing Loan 53,000,0001, Aqua Vista Villas LP [Est. Value of Real Property Securing Loan $6,500,000] Countrywide Financial Guaranty on loan $34,390,193 Attn: David Kegaries made to Brockman 4500 Park Granada Building Lofts, LLC Calabasas, CA 91302 [Est. Value of Real Tel: (213) 621-3617 Property Securing Loan $20,000,000] Preferred Bank Guaranty on loans $23,638,8470 601 S. Figueroa St., 29th made to Boxwood Floor Los Angeles, CA 90017 Lofts, Inc. [Est. Los Angeles, CA 90017 Value of Real Tel: (213) 891-1188 Property Securing Loan $7,000,0001, 13340 Washington Development, LLC [Est. Value of Real Property Securing Loan $4,500,000], and Eagle Rock Blvd. Partners LP [Est. Value of Real Property Securing Loan $4,000,000] Wells Fargo Bank Guaranty on loan $22,850,000 Attn: John Ferguson made to 4000 420 Montgomery Street 2030 Metropolitan/NACL San Francisco, CA 94104 Properties LLC Tel: (949) 251-4310 [Est. Value of Real Property Securing Loan $25,000,000], and Von Karman II, LLC [Est. Value of Real Property Securing Loan $14,000,000] Bank of America Guaranty on loan $18,359,975 Attn: David Kegaries Floor made to West 101 N. Tyron 333 Hills Townhouse Charlotte, NC 28255 Partners [Est. Tel: (213) 621-3617 Value of Real Property Securing Loan $12,000,0001 Macquarie Bank Guaranty on loan $15,000,000 Attn: Jaybin Henderson made to Platinum Santa Monica Blvd., Suite 250 Triangle Boulevard Venice, CA 90291 Condominiums [Est. Value of Real Property Securing Loan $18,000,000] Arbor Realty Mortgage Guaranty on loan $11,522,3150 Attn: Mark Fogel made to 2010 E. Securities Arbor Realty Ocean Boulevard Mtg Secs 2005-1 Ltd. LLC [Est. Value of 333 Earle Ovlngton Blvd. Real Property Suite 900 Securing Loan Uniondale, NY 11553 $5,500,000] Tel: (516) 832-6589 America First Credit Union Guaranty on loan $8,950,391 Attn: Dave Christensen made to Utopia 1344 W. 4675 Development Riverdale, UT 84405 Corporation [Est. Tel: (801) 827-8605 Value of Real Property Securing Loan $4,000,000] Grayl CPB, LLC Guaranty on loan $8,007,000 Attn: William Hamlin made to 550 West CSt., Suite Valleyheart, LP San Diego, CA 92101 [Est. Value of Real Tel: (619) 544-9100 Property Securing Loan $5,000,000] Wachovia Bank Guaranty on loan $7,103,000 Attn: Kenneth D. Fox at made to Beachfront Sheppard, Mullin et al. Villas [Est. Value LLP of Real Property Costa Mesa, CA 92626 LP Securing Loan $13,500,000] First Community Bank Guaranty on loan $7,085,303 Attn: Mark Paterson made to West 438 First St. First Community Millennium Homes Bank of Utah, Inc. and Santa Rosa, CA 95401 Liberty Valley Tel: (801) 424-7981 Village LP [Est. Value of Real Property Securing Loan $2,500,000] Chinatrust Bank USA Guaranty on loan $6,171,563 Attn: Frank Chen made to NO Torrance 22939 Hawthorne Blvd. Seniors [Est. Value Torrance, CA 90505 of Real Property Tel: (626) 913-8815 LLC Securing Loan $5,000,000] San Luis Trust Bank Guaranty on loan $5,631,770 Attn: Paul White made to 600 Morro 1001 Marsh Street Bay LP [Est. Value San Luis Obispo, CA 93401 of Real Property Tel: (805) 541-9200 Securing Loan $4,200,000] Robert Nolan Guaranty on loan $5,366,667 211 Culver Blvd., St. T made to 4th Street Playa Del Rey, CA 90293 Loft Partners LP Tel: (310) 821-0921 [Est. Value of Real Property Securing Loan $5,000,000] and West Mellennium Homes, Inc. and of an investment in Dupont Lofts LP Six Point Co. $4,000,000 loan to $4,000,0000 Nate Walker Oilip Ram and 20525 Chatsboro Or. Norman Salter Woodland Hills, CA 91364 secured by a 2nd Trust Deed on property owned by Beachfront Villas LP [Est. Value of Real Property Securing Loan $13,500,000] First Republic Bank Guaranty on $3,742,155 Attn: Lisa Lemons loan made to Villa 111 Pine St. Managing Dr. O'Este, LP [Est. Private Banking Value of Real San Francisco, CA 94111 Property Securing Loan $5,200,000] Abraham Iny Lawsuit $2,350,000 Attn: Lawrence C. Ecoff 1729 280 S. Beverly Dr. Encino, CA 91436 Tel: (310) 887-1850 Neil Miller Lawsuit $2,350,000 Attn: Lawrence C. Ecoff Ecoff, Law & Salomons, LLP Los Angeles, CA 90064 Beverly Hills, CA 90212 Tel: (310) 887-1850 Zebrack Group Loan $1,535,307 Attn: Dale Alberstone 2029 S. Sepulveda Blvd. 2nd Floor 1801 Los Angeles, CA 90025 Tel: (310) 277-7300 Pacific Commerce Bank Bank loan $1,000,000 Attn: Cliff Nielsen 420 East 3rd St, Ste 100 Los Angeles, CA 90013 Tel: (213) 417-0155 MR Development Co., LLC Guaranty for loan $1,000,0000 Attn: Nate Walker made to Dupont 19456 Ventura Blvd. Lofts, LP [Est. Tarzana, CA 91356 Value of Real Tel: (818) 344-7171 Property Securing Loan $26,000,000] NORTEL NETWORKS: To Submit New Business Plan Within Next Few Weeks ------------------------------------------------------------------ Reuters, citing a senior company official, reported that Nortel Networks Corp aims to present its new business plan on how it will scale down its business operations within the next few weeks. U.S.-based unit Nortel Networks Inc. has obtained approval from the U.S. Bankruptcy Court for the District of Delaware to file until April 14, 2009 their reports of financial information about the companies in which they hold a controlling or substantial interest. The Debtors estimate that there are more than 30 companies where they hold substantial or controlling interest, most of which the Debtors do not have sole discretion to report information about their business. With respect to its Canadian cases, NNC and four affiliates won an extension from the Ontario Superior Court of Justice of the stay order against creditors until May 1. NNC has said the extension was necessary to provide stability to the Company's business while it prepares a restructuring plan, with the assistance of Ernst & Young Inc. and their advisers. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. NOVA BIOSOURCE: Receives Delisting Notice From NYSE Alternext ------------------------------------------------------------- Nova Biosource Fuels, Inc. (NBF) said on February 10, 2009, the Company 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. In order 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 Nova Biosource Fuels, Inc. -- 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. NOVA M RADIO: Will File for Bankruptcy Liquidation -------------------------------------------------- Sarah McBride at The Wall Street Journal reports that Nova M Radio Inc. co-founder Anita Drobny said that the company will file for bankruptcy liquidation. WSJ relates that Ms. Drobny and her husband Sheldon founded Nova M in 2006 and have been funding the business partly with their own money. The company has 34 affiliates. WSJ states that as advertising revenue dropped, so did the Drobnys' personal portfolio, making it impossible for them to keep supporting Nova M, which lost $100,000 a month. According to WSJ, Ms. Drobny said that the financial stresses eventually affected her husband's health, leading to the breakdown that landed him in the hospital. According to WSJ, Nova M's highest-profile host, Randi Rhodes, vanished from the airwaves earlier in February. WSJ relates that Nova M hired Ms. Rhodes in 2008 after she fell out with Air America. Citing a person familiar with the matter, WSJ says that Nova M was supposed to have promised to cover certain legal costs for Ms. Rhodes. According to the report, Ms. Rhodes resigned from Nova M after discovering that her employment contract didn't offer such indemnification. Ms. Rhodes posted on her Web site that she left Nova M due to the company's failure to correct an unspecified problem and says she is seeking a new home for her show, while WSJ reports that Ms. Rhodes' lawyer, Robert Gaulin, blamed "technical problems." WSJ relates that Mike Malloy, Nova M's other host, will transfer to On Second Thought Radio Network LLC. Nova M Radio is in the business of building a Progressive Talk radio network with the original founders of Air America Radio. Nova M Radio nationally syndicates The Randi Rhodes Show and The Mike Malloy Show and operates radio station 1190 KNUV in Phoenix, Arizona. Nova M Radio's affiliate markets include Los Angeles, Chicago, San Francisco, Dallas, Washington DC, Seattle, Miami, Phoenix, Minneapolis, Denver, Portland, plus both Sirius and XM Satellite Radio. Nova M Radio operates a tri-platform business model based on national radio syndication, local radio station management and new media services. OCEANAUT INC.: To Seek Shareholder OK to Liquidate and Dissolve --------------------------------------------------------------- Oceanaut, Inc., said February 18 that its board of directors has determined that the Company will not consummate a business combination by the March 6, 2009 deadline provided for in its charter, and that it is advisable that the Company be dissolved. As a result, Oceanaut intends to convene a special meeting of its shareholders on March 16, 2009 to vote on a plan of liquidation and dissolution of the Company. The record date for the special meeting is February 27, 2009. The Company intends to begin promptly the process of dissolution and liquidating its trust account in accordance with its charter and applicable Marshall Islands law. Assuming shareholder approval of the Company's plan of liquidation, the Company expects to liquidate its trust account and make an estimated payment of approximately $ 8.27 per share of common stock. No payments will be made in respect of the Company's outstanding warrants or to any of the Company's initial shareholders with respect to any shares owned by them prior to the Company's initial public offering in March 2007, except with respect to 625,000 shares of common stock included in the 1,125,000 insider units purchased by Excel Maritime Carriers Ltd., the Company's corporate sponsor, in a private placement that closed immediately prior to the consummation of the Company's initial public offering. The Company intends to prepare and file with the Securities and Exchange Commission for mailing to its shareholders, as soon as practicable, a definitive proxy statement seeking approval to effect the orderly liquidation and dissolution of the Company. About Oceanaut Inc. Oceanaut, Inc. (AMEX: OKN; OKN.U; OKN.WS) is a blank check company formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, vessels or one or more operating businesses in the shipping industry. ORLEANS HOMEBUILDERS: Amends Second Amended Credit Agreement ------------------------------------------------------------ On February 11, 2009, Orleans Homebuilders, Inc. (AMEX: OHB) reported that it and its lenders have entered into the First Amendment to its Second Amended and Restated Credit Loan Agreement and First Amendment to Security Agreement, effective immediately. Among other things, the Amendment immediately improves the borrowing base availability calculation by decreasing certain borrowing base category limitations. Jeffrey P. Orleans, Chairman of the Board and Chief Executive Officer stated, "With the help of our lending group, we have secured this important bank amendment, which will provide us with added liquidity and flexibility to manage in these difficult times. It is a challenging environment, but we have made good progress on our stated objectives, and we have a strong and experienced team that is managing through it." As part of the Amendment, the Company reduced the amount of the credit facility by approximately 8%, from $440 million to $405 million, subject to availability determinations and other limitations. The Amendment provides for additional borrowing base liquidity by amending certain category limitations for spec inventory and model homes, as well as for land under development, within the calculation of borrowing base availability. These changes immediately enhance the borrowing base liquidity of the Company. Certain financial covenants were modified, including reductions in minimum consolidated tangible net worth, cash flow from operations, minimum liquidity, and maximum cash covenants. The interest rate was increased by 25 basis points to LIBOR plus 5.25%. The Amendment also includes certain other terms, modifications and definitional adjustments, which are set forth in the final documentation. The amendment includes these changes: * The amount of the credit facility was reduced by approximately 8%, from $440 million to $405 million. The amount of the revolving credit facility will be further reduced to $375 million beginning July 16, 2009 and through maturity. The letter of credit sublimit was reduced from $60 million to $30 million. The amount available under the credit facility remains subject to borrowing base availability requirements. * The existing category limitations applicable to the determination of the net borrowing base availability were adjusted so that the maximum borrowing base availability attributable to work-in-progress inventory not subject to a qualifying agreement of sale -- i.e., spec inventory and model home inventory -- was increased from 45% to 58% of total work-in-process inventory including backlog units; this change applies to all borrowing base certificates delivered before July 31, 2009. In addition, maximum borrowing base availability attributable to land under development was increased from 55% to 65% of total borrowing base availability for all borrowing base certificates delivered before July 31, 2009, but generally subject to a maximum of $235 million. Garry P. Herdler, Executive Vice President and Chief Financial Officer, stated, "The amendment significantly improves the Company's liquidity through the reduction of borrowing base category limitations, and it provides for immediate increased flexibility. We believe that this amendment is positive for both the Company and the lending group, and we appreciate the continued support of our lenders." A full-text copy of the First Amendment is available for free at: http://researcharchives.com/t/s?39a9 The Troubled Company Reporter reported on February 2, 2009, Orleans Homebuilders, Inc., received a limited waiver from its lenders under the Company's Second Amended and Restated Revolving Credit Line Agreement. The effect of this waiver is to provide a period during which certain covenants in the Credit Facility are waived through and including February 6, 2009, which includes a waiver of a breach of a covenant related to the Company's outstanding borrowings exceeding its then available borrowing base. About Orleans Homebuilders, Inc. Orleans Homebuilders, Inc. -- http://www.orleanshomes.com-- develops, builds and markets high-quality single-family homes, townhouses and condominiums. It has operations in Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North Carolina; Richmond and Tidewater, Virginia; Chicago, Illinois; and Orlando, Florida. The Company's Charlotte, North Carolina operations also include adjacent counties in South Carolina. ORLEANS HOMEBUILDERS: Posts $15.6MM Net Loss in Qtr. Ended Dec. --------------------------------------------------------------- On February 11, 2009, Orleans Homebuilders, Inc. (AMEX: OHB), reported results for the second quarter ending December 31, 2008. Orleans Homebuilders is a residential homebuilder with operations in Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North Carolina; Richmond and Tidewater, Virginia; Chicago, Illinois; and Orlando, Florida. The Company's Charlotte, North Carolina operations also include adjacent counties in South Carolina. Financial Highlights for the Three Months Ended December 31, 2008: * Fiscal year 2009 second quarter residential property revenue decreased 39% to $87.8 million (199 homes) compared to $144.5 million (323 homes) for the prior year period. The average selling price for homes delivered in the fiscal 2009 second quarter was $441,000 compared to $447,000 in the prior year period. * Fiscal year 2009 second quarter net new orders decreased 64% to $41.2 million (113 homes) compared to $114.7 million (284 homes) for the prior year period. * The backlog at December 31, 2008 decreased 48% to $156.8 million (335 homes) compared to $301.3 million (610 homes) at December 31, 2007. The average selling price for homes in backlog at December 31, 2008 was $468,000 compared to $494,000 as of December 31, 2007. * The Company experienced a cancellation rate of approximately 31% for the three months ended December 31, 2008, which is an increase from 26% for the three months ended December 31, 2007. This increase was primarily driven by lower gross orders. * The Company owned or controlled approximately 6,387 building lots at December 31, 2008, which includes approximately 1,353 building lots controlled through contracts and options. At December 31, 2007, the Company owned or controlled approximately 8,500 building lots, of which approximately 2,550 were controlled through contracts and options. This represents a 25% decrease of lots owned or controlled since December 31, 2007. As of December 31, 2008, approximately 52% of the Company's owned lots are in its northern region; approximately 36% in its southern region, approximately 7% are in its midwestern region and approximately 5% in its Florida region. * Fiscal year 2009 second quarter GAAP loss from continuing operations was $15.6 million ($0.84 per diluted share) as compared to a GAAP loss from continuing operations of $38.6 million ($2.09 per diluted share) for the prior year period. On a non-GAAP adjusted basis, the fiscal year 2009 second quarter loss from continuing operations was $3.5 million ($0.19 per diluted share) compared to fiscal year 2008 second quarter loss from continuing operations of $2.0 million ($0.11 per diluted share). * Fiscal year 2009 second quarter non-GAAP adjusted EBITDA decreased to $573,000 compared to $3.1 million for the prior year period. * During the second quarter of fiscal year 2009, the Company's deferred tax asset reserve increased by $6.0 million. Financial Highlights for the Six Months Ended December 31, 2008: * Fiscal year 2009 year-to-date second quarter residential property revenue decreased 33% to $176.4 million (399 homes) compared to $263.8 million (586 homes) for the prior year period. The average selling price for homes delivered in the fiscal year 2009 year-to-date second quarter was $442,000 compared to $450,000 in the prior year period. * Fiscal year 2009 year-to-date second quarter net new orders decreased 62% to $94.9 million (248 homes) compared to $247.3 million (587 homes) for the prior year period. * The Company experienced a cancellation rate of approximately 34% for the six months ended December 31, 2008, which is an increase from 24% for the six months ended December 31, 2007. This increase was primarily driven by lower gross orders. * Fiscal year 2009 year-to-date second quarter GAAP loss from continuing operations was $37.6 million ($2.03 per diluted share) as compared to a GAAP loss from continuing operations of $40.4 million ($2.18 per diluted share) for the prior year period. On a non-GAAP adjusted basis, the fiscal year 2009 year-to-date second quarter loss from continuing operations was $8.0 million ($0.43 per diluted share) compared to fiscal year 2008 year-to-date second quarter loss from continuing operations of $3.1 million ($0.17 per diluted share). * Fiscal year 2009 year-to-date second quarter non-GAAP adjusted EBITDA decreased to $43,000 compared to $7.3 million for the prior year period. * During the first half of fiscal year 2009, the Company recorded an impairment charge to goodwill in the amount of $4.2 million. This goodwill impairment charge is related to the Parker and Lancaster acquisition, and was recorded in the Company's Southern operating segment. * During the first six months of fiscal year 2009, the Company's deferred tax asset reserve increased by $14.4 million. Jeffrey P. Orleans, Chairman and Chief Executive Officer stated: "The downturn in the housing industry has continued, due to continued external factors, including rising unemployment and diminished consumer confidence. Ultimately, the housing market will get better, although the timing of such improvement is uncertain. The anticipated federal stimulus provides some hope that this rebound will occur sooner than previously expected. We are also hopeful that the anticipated federal stimulus bill will provide a meaningful tax credit for all homebuyers. We believe there is pent-up demand in some markets that when combined with reduced mortgage rates may stimulate buyers who have been waiting on the sidelines. With this in mind, we remain focused on our stated objectives, and we are confident in our long-term opportunities." Inventory Impairments, Impairment on Land to be Sold and Write-Off of Abandoned Projects and Pre-Acquisition Costs: The overall economic downturn deepened during the second quarter of fiscal year 2009 significantly impacting the homebuilding market. Amidst rising unemployment, high foreclosures, increased supply of existing home inventory, tight credit and falling home resale values homebuyers' confidence continued to deteriorate. This has resulted in increased sales incentives and decreased homebuyer demand causing the company to record pre-tax charges in the three and six months ended December 31, 2008 and 2007. Outlook The challenges faced by the housing industry have increased during the last quarter. Difficulties which were previously confined to certain segments of the economy (including homebuilding) have expanded to a greater portion of the United States and global economy. Economic reports show that the United States economy is suffering from rising unemployment, lower consumer spending, falling wages, tight credit and continuing difficulties in the real estate industry. Housing starts have fallen to record lows, unemployment has increased and consumer confidence is at or near record lows. During the quarter, it was announced that the United States economy had been in a recession since December 2007. As a result, we believe that overall economic conditions and conditions in the housing and mortgage markets will remain difficult and these conditions may continue to have a negative impact on new orders, new order pricing and consumer confidence related to housing in the near term, thereby further reducing revenues, gross margins and net income. The Company is continuing to respond to these unfavorable market conditions by attempting to maintain absorption levels through the use of sales incentives, reevaluating its individual land holdings, reducing its land expenditures, limiting its supply of unsold homes under construction and emphasizing cost reductions to adjust for lower levels of production. Further decreases in demand for the Company's homes may require it to further increase the use of sales incentives and to take other steps to reduce expenditures and expenses. Garry P. Herdler, Executive Vice President and Chief Financial Officer stated: "Given the lower net orders, weak economic conditions and capital markets volatility we observed during the second fiscal quarter, the Company has continued to focus on maintaining liquidity and generating cash flow. We have limited the supply of unsold homes under construction during the quarter, reduced our budgeted land expenditures in the coming quarters, and we continue to focus on cost reductions." As of December 31, 2008, the Company's balance sheet showed total assets of $625,009,000, total liabilities of $579,250,000 and total stockholders' equity of $45,759,000. A full-text copy of the Company's quarterly report is available for free at: http://researcharchives.com/t/s?39ad About Orleans Homebuilders, Inc. Orleans Homebuilders, Inc. -- http://www.orleanshomes.com-- develops, builds and markets high-quality single-family homes, townhouses and condominiums. It has operations in Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North Carolina; Richmond and Tidewater, Virginia; Chicago, Illinois; and Orlando, Florida. The Company's Charlotte, North Carolina operations also include adjacent counties in South Carolina. On February 11, 2009, Orleans Homebuilders, Inc. (AMEX: OHB) reported that it and its lenders have entered into the First Amendment to its Second Amended and Restated Credit Loan Agreement and First Amendment to Security Agreement, effective immediately. Among other things, the Amendment immediately improves the borrowing base availability calculation by decreasing certain borrowing base category limitations. The Troubled Company Reporter reported on February 2, 2009, Orleans Homebuilders, Inc., received a limited waiver from its lenders under the Company's Second Amended and Restated Revolving Credit Line Agreement. The effect of this waiver is to provide a period during which certain covenants in the Credit Facility are waived through and including February 6, 2009, which includes a waiver of a breach of a covenant related to the Company's outstanding borrowings exceeding its then available borrowing base. PARMALAT SPA: Accepts EUR24.2MM Settlement from Banco Popolare -------------------------------------------------------------- Parmalat S.p.A., the Extraordinary Administration Commissioner of the Companies of the Parmalat Group and Banco Popolare soc. Coop. a r.l., said February 18 that it reached a definitive agreement settling all transactions and claims against the banks belonging to the former Banco Popolare di Verona e Novara Group related to the period prior to the date when the Parmalat Group was declared insolvent (December 2003). Pursuant to the agreement, the banks of the Group, Banca Popolare di Verona SGSP and Credito Bergamasco, agreed to pay to Parmalat S.p.A., in its capacity as Assumptor of the composition with creditors approved by the Court of Parma, a total of EUR24.2 million, using funds set aside in previous years, with no negative impact on the income statement. In consideration of the above-mentioned payments, Parmalat S.p.A., in its capacity as Assumptor of the composition with creditors, and the Commissioner of the Parmalat Group companies under Extraordinary Administration not included in the composition with creditors agreed to desist from all actions to void that they may have filed and agreed to abstain from any further actions to void and/or actions for damages and/or actions of any other type against the Banco Popolare Group, and the above-mentioned banks agreed to waive all of their verified claims as well as the right to file proof of claims. Parmalat and the Extraordinary Administration Commissioner on the one hand and Banco Popolare's top management on the other, advised by the legal firms Studio Maffei Alberti of Bologna and Studio Tarzia of Milan respectively, expressed their satisfaction with the agreement, which sets the condition for the resumption of a collaborative business relationship between the two Groups. According to Bloomberg News, Parmalat Chief Executive Officer Enrico Bondi has recovered more than EUR2 billion from dozens of Italian and international banks after seeking damages or attempting to "claw back" financing through claims the lenders helped Parmalat's former managers hide the true state of the company's finances. Mr. Bondi, according to the report, has said banks should have spotted the irregularities that allowed Parmalat to hide billions of euros of losses from the public before its collapse in December 2003. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04- 10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. (Parmalat Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PARMALAT SPA: Deloitte Wins Ruling on Dismissal of Fraud Suit ------------------------------------------------------------- Bloomberg News reports that Deloitte Touche Tohmatsu and Grant Thornton LLP won a ruling upholding the dismissal of fraud suits brought by U.S. units of Parmalat Finanziaria SpA, in connection with the dairy company's collapse in 2003. David Glovin of Bloomberg reported that the U.S. Court of Appeals in New York on February 17 upheld the 2007 dismissal of two lawsuits against the accounting firms brought by the administrator for bankrupt Parmalat USA and the litigation trustee for its Farmland Dairies unit. They claimed the auditors hid the parent company's dire financial situation, the report said. "The district court properly dismissed plaintiffs' claims against each defendant," the Appeals Court said. The suits were separate from a class action against the auditors on behalf of U.S. Parmalat investors. In January, Judge Lewis Kaplan of the U.S. District Court in Manhattan entered a decision allowing a lawsuit by Parmalat shareholders against Deloitte Touche Tohmatsu -- the parent company of accounting firm Deloitte & Touche LLP -- and its affiliates. Buyers of Parmalat shares between January 1999 and December 2003, the month that the dairy company was declared insolvent in Italy, filed the lawsuit against Deloitte Touche in 2004. Parmalat and its subsidiaries collapsed after the discovery of a fraud involving the understatement of the Company's debt by almost $10 billion and overstatement of net assets by $16.4 billion. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04- 10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. (Parmalat Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PATRIOT HOMES: Taps Marcus & Millichap as Real Estate Advisor ------------------------------------------------------------- Patriot Homes, Inc., et al., seek the U.S. Bankruptcy Court for the Northern District of Indiana's authority to employ Marcus & Millichap Estate Investment Services as their real estate advisor and broker. Marcus & Millichap will provide real estate advisory and brokerage services with respect to three industrial properties which the Debtors desire to sell. These properties are located at 104400 County Road 2, Middlebury, Indiana, 57352 & 57490 Country Road 3, Elkhart, Indiana, and 1871 Bexar Avenue East, in Hamilton, Alabama. As per agreement, Marcus & Millichap shall receive a "Transaction Fee" for any sale, computed at 6% of Gross Value. If one or more of the properties is represented by an outside broker, Marcus & Millichap shall share 50% of the Transaction Fee with said outside broker. Marcus & Millichap shall also be entitled to reimbursement of reasonable expenses not to exceed a maximum aggregate reimbursement of $10,000. R. Andrew Glinski, an associate director at Marcus & Millichap, attests that the firm does not have any interest adverse to the Debtors or their estates, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Middlebury, Indiana, Patriot Homes, Inc. -- http://www.patriothomes.com/-- makes modular houses. The Debtor and 7 of its debtor-affiliates filed separate motions for Chapter 11 relief on Sept. 28, 2008 (Bankr. N.D. Ind. Lead Case No. 08-33347). Bell Boyd & Lloyd, LLP, is the Debtors' bankruptcy counsel. Rebecca Hoyt Fisher, Esq., at Laderer & Fischer, represents the Official Committee of Unsecured Creditors as counsel. In its schedules, Patriot Homes disclosed total assets of $1,715,900 and total debts of $17,918,377. PATRIOT HOMES: Wants to Sell Personal Property at Closed Facility ----------------------------------------------------------------- Patriot Homes, Inc., et al., ask the U.S. Bankruptcy Court for authority sell certain personal property located at their Indiana facility located at 10440 Country Road 2, Indiana, at a public auction, free and clear of all liens and encumbrances. The Debtors tell the Court that business operations are no longer being conducted at said facility. Simultaneous with this filing, the Debtors have applied for authority to employ Hahn Auctioneers, Inc. as auctioneer. Wells Fargo Business Credit which possesses a security interest in the personal property, has consented to the sale. Headquartered in Middlebury, Indiana, Patriot Homes, Inc. -- http://www.patriothomes.com/-- makes modular houses. The Debtor and 7 of its debtor-affiliates filed separate motions for Chapter 11 relief on Sept. 28, 2008 (Bankr. N.D. Ind. Lead Case No. 08-33347). Bell Boyd & Lloyd, LLP, is the Debtors' bankruptcy counsel. Rebecca Hoyt Fisher, Esq., at Laderer & Fischer, reresents the Official Committee of Unsecured Creditors as counsel. In its schedules, Patriot Homes disclosed total assets of $1,715,900 and total debts of $17,918,377. PAUL REINHART: Creditors Committee Seeks to Sue Banks ----------------------------------------------------- The official committee of unsecured creditors of Paul Reinhart Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas to grant it authority to sue, on behalf the Company, prepetition bank lenders. According to Bloomberg's Bill Rochelle, the Creditors committee is asserting that the Debtor has refused to sue the bank lenders who are also asserting claims against the Company. The Creditors Committee contends that the Debtor has valid claims against the lenders. The Comittee, according to the report, says that after Reinhart lost money in cotton hedging and violated the bank loan agreement, the banks developed a "scheme" enabling the bank group, through Reinhart, "to unlawfully speculate in the commodities market," while refusing to allow the company to pay for cotton purchased from farmers. Mr. Rochele relates that the Committee wants the banks' claims to be equitably subordinated to the claims of unsecured creditors for $180 million. The Committee, the report adds, also accuses the banks of breach of contract and breaching fiduciary duty. Wells Fargo Bank is agent for the lenders. About Paul Reinhart Based in Richardson, Texas, Paul Reinhart Inc. is a cotton merchant serving organic and traditional growers and textile mills. The company, which filed for Chapter 11 bankruptcy on Oct. 15, 2008 (Bankr. N.D. Tex. Case No. 08-35283), blamed futures losses and its inability to attain adequate financing for the bankruptcy filing. Deborah M. Perry, Esq., and E. Lee Morris, Esq., at Munsch Hardt Kopf & Harr, P.C.; and Joseph M. Coleman, Esq., at Kane, Russell, Coleman & Logan, represent the Debtor as counsel. The U.S. Trustee for Region 6 appointed creditors to serve on an Official Committee of Unsecured Creditors in this case. Michael R. Rochelle, Esq., and Sean Joseph McCaffity, Esq., at Rochelle McCullough L.L.P., represent the Committee as counsel. In its schedules, the Debtor listed total assets of $143,943,710 and total debts of $247,421,595. PDI PRODUCTION: Says Canadian Subsidiary Is Insolvent ----------------------------------------------------- Enegi Oil Plc said in a statement that its Canadian unit PDI Production Inc.'s liabilities have exceed its assets. According to Enegi Oil, PDI Production has entered into discussions with its creditors to reschedule payment of its debts. Citing Enegi Oil, Reuters reports that PDI Production's financial position had been "materially adversely" affected by the temporary closure of Newfoundland well PAP#1-ST#3, where a flow test showed sub-economic results in January 2009. PDI Production, according to Reuters, said it was examining various options for improving the flow rate and recovery from the well. The report says that the well was expected to generate revenue for the group. Reuters states that Enegi Oil said that it was working closely with PDI Production to ensure that the group's assets continue to be developed and that the value of those assets is maximized for the benefit of shareholders. "To this end, the company is continuing the review of its operational and financial options that it announced previously. Further announcements will be made when the Company has greater clarity on the outcome of this review and any update on the financial position of PDIP," Crain's Manchester quoted Enegi Oil as saying. St. John's, Newfoundland-based PDI Production Inc. -- http://www.pdip.ca/-- is a wholly owned subsidiary of Enegi Oil Plc. The Company is committed to the identification, development and operation of value-creating hydrocarbon opportunities in Atlantic Canada. The company was founded in May 2006. it has operations on the Port au Port Peninsula. PEANUT CORP: Peanut Recalls Force Forward Foods to Seek Bankruptcy ------------------------------------------------------------------ Forward Foods LLC filed a Chapter 11 petition February 17 in Delaware after recalling 75% percent of its products on account of using peanuts from Peanut Corp. of America Peanut Corp. of America had earlier filed for Chapter 7 liquidation, after closing its plants due to salmonella poisoning on its products. PCA made announcements starting early January that it was voluntarily recalling all peanuts and peanut products processed in its Blakely, Georgia facility since January 1, 2007 because they have the potential to be contaminated with Salmonella. The peanut butter recalled was sold by PCA in bulk packaging to distributors for institutional and food service industry use. It is also sold under the brand name Parnell's Pride to those same industries. Additionally, it was sold by the King Nut Company under the label King Nut. PCA, according to Bloomberg, is facing a criminal investigation over eight deaths and hundreds of sickened consumers resulting from a salmonella outbreak. Forward Foods announced January 30 a voluntary recall of DETOUR(R) branded bars that contain roasted peanuts purchased from Peanut Corporation of America (PCA). According to Forward Foods, PCA is the focus of an investigation by the U.S. Food and Drug Administration (FDA) concerning a recent Salmonella outbreak thought to be caused by tainted peanut products. Salmonella is an organism which can cause serious and sometimes fatal infections in young children, frail or elderly people and others with weakened immune systems. Healthy persons infected with Salmonella often experience fever, diarrhea (which may be bloody), nausea, vomiting and abdominal pain. In rare circumstances, infection with Salmonella can result in the organism getting into the bloodstream and producing more severe illnesses such as arterial infections (i.e., infected aneurysms), endocarditis and arthritis. Forward Foods said in its Jan. 30 statement that it Detour products have not been linked to any incidents of Salmonella, and "we are not aware of any illnesses that have been linked to our products." According to Bloomberg's Bill Rochelle, Forward and its owner Emigrant Capital Corp. have been involved in a lawsuit with the previous owner Bluegrass Bars LLC. Forward will ask the Bankruptcy Court for approval of a settlement where Bluegrass will pay $975,000 to Forward while turning $6.5 million in secured and unsecured acquisition notes over to Emigrant. Minden, Nevada-based Forward Foods LLC is a manufacturer of protein bars. Forward is primarily owned by private-equity investor Emigrant Capital Corp. which purchased the protein bar business in 2006 from Bluegrass Bars LLC. Forward's petition listed assets of $21.3 million against debt totaling $25.4 million, including $18.6 million in secured claims. About Peanut Corp. Lynchburg, Virginia-based Peanut Corporation of America -- http://www.peanutcorp.com/-- was a peanut processing company and maker of peanut butter for bulk distribution to institutions, food service industries, and private label food companies. Peanut Corp. filed a petition on Feb. 13 for liquidation in Chapter 7 in U.S. Bankruptcy Court before the U.S. Bankruptcy Court for the Western District of Virginia (Case No. 09-60452). Peanut Corp. listed both assets and liabilities in the range of $1 million to $10 million. PLAQUEMINES PARISH: Moody's Lifts Rating on $5.5MM Debt From Ba1 ---------------------------------------------------------------- Moody's Investors Service has upgraded to Baa1 from Ba1 and assigned a stable outlook, to the rating on Plaquemines Parish School Board's $5.5 million in outstanding sales tax debt. The bonds are secured by a 1% sales and use tax levied within the borders of the Parish. The significant upgrade is based upon the notable recovery in key financial and economic indicators following Hurricane Katrina, which support Moody's belief that the positive trends have substantively strengthened the credit quality of the Board. A result of these changes is strong sales tax revenues that provide ample debt service coverage. Further considerations in the assignment of the Baa1 rating are the Board's vulnerability to such an unprecedented natural disaster and ongoing concentration of the economic base in the volatile oil and gas industry. Although the largest taxpayers were fundamental in the Board's recovery following the hurricane, Moody's recognizes that the concentration in refineries poses a risk in light of the weakening National economy. Positive Sales Tax Collections The School Board is located in southeastern Louisiana and sustained severe flooding as a result of Hurricane Katrina, which devastated the southern part of the Parish. Refinement of energy natural resources is a dominant sector in the local area economy and comprises 44.9% of the top ten taxpayers in the tax base. Considering that the largest sales tax dealers are largely related to the oil and gas industry, the refineries have been vital to the area's economic recovery. In the months following the hurricane, the impact on sales tax revenues was unclear. Since fiscal 2005, sales tax revenues have increased beyond pre-storm levels. In fiscal 2005, total pledged revenues decreased slightly by 3.7% from $6.3 million to $6.1 million. In fiscal 2007, sales tax revenues increased 31.5% to $8.0 million due to strong rebuilding efforts throughout the Parish. Sales tax collections were also $8 million in fiscal 2007 and consistent with budget for fiscal 2008. Year-to-date revenues in fiscal 2009 are approximately 1% below the prior year-to-date however officials indicate that December revenues will mitigate this slight decline. Moody's recognizes that the recovery in sales tax revenues was more rapid than previously projected and is a key consideration in the rating change. Debt Service Coverage Solid The bonds are secured by a 1% sales tax approved by voters at an election held on January 18, 1992. The debt service requirements are $1.2 million annually through fiscal 2012 and then decrease to $262,000 beginning in fiscal 2013. When considering fiscal 2007 revenues of $8.1 million, debt service coverage exceeds 6.0 times annually through 2012 and then exceeds 31.0 times beginning in fiscal 2013. Payout is rapid with all sales tax debt retired by 2018. Under a conservative stress test, the lowest amount collected in the last ten years, of $4.3 million would continue to provide a strong 3.55 times coverage. Additionally, reported financial resources for FY 2007 indicate that the Board has $1.2 million in sales tax debt service reserves thereby providing additionally financial security for the bonds. Tax Base Achieves Substantial Growth In 2008 And 2009 Fiscal Years In November of 2005, the School Board had an enrollment of approximately 2,550 students which approximates one-half of the pre-Katrina enrollment. Enrollment is now at 3,600 which is 70% of the pre-storm level. Early estimates were that the full valuation could decrease as much as 25%; however, actual results were more favorable with only a slight 2.7% decrease in fiscal 2006 and a 2.5% decrease in fiscal 2007. These declines were followed by strong growth rates of 12.1% in fiscal 2008 and 26.9% in fiscal 2009 as rebuilding efforts were underway. Preliminary estimates are not available for the 2010 fiscal year but officials believe ongoing renovations and new construction will drive another strong growth rate for the tax base. The Board receives 33% of its General Fund revenues from property taxes; therefore, recovery in the tax base is key to the funding of daily operations. Additionally, Moody's notes that there was originally some concern that the property tax collection rate could decline; however, total collections have approximated 100% annually, which is consistent with the historical trend. The top ten taxpayers comprise a substantial 44.9% of the total tax base and this concentration risk is a fundamental consideration in the rating assignment. The largest taxpayer, Conoco Phillips Petroleum (Moody's senior, unsecured rated A1), comprises 15% of the total base. The area is heavily dependent on the oil and gas industry and any negative changes in demand or pricing could significantly impact the local economy and is reflected in the Baa1 rating. Financial Operations Remain Healthy In fiscal 2007, 28% of General Fund revenues were derived from State sources while 24% were from sales taxes and 22% were from property taxes. Unique to fiscal years 2006 and 2007, 24% of revenues were derived from Federal funding following the hurricane. A large $21 million surplus, in fiscal 2006, and another $5 million surplus, in 2007, occurred due to Federal funding related to the hurricane. This increased the total fund balance from $8.5 million in fiscal 2005 to $35 million in 2006 and $40 million in fiscal 2007. Moody's recognizes that verifying structural balance in daily operations is difficult given the flow of Federal funding through the General Fund over the past several reporting periods. Moody's believes that the unreserved, undesignated portion of the total fund balance is a good indicator of the available funds for contingencies aside from hurricane recovery. In fiscal 2004, the undesignated reserve was $3.1 million but decreased to a narrow $707,000, in fiscal 2005, equal to 1.6% of General Fund revenues. This reserve subsequently increased to $19 million in fiscal 2006 and then slightly decreased to $18 million in fiscal 2007. Projections for fiscal 2008 indicate the undesignated fund balance could decrease to $16 million. Officials state that they have a goal of maintaining at least $8 million in the fund balance for contingencies. The School Board drew down its authorized $11 million Community Disaster Loan. There has been some indication, from the Federal government, that the CDL funding could be forgiven so that issuers will not have to repay this loan; however, if the Board does need to repay it, payments can be made over ten years which officials stated would be manageable for them to fund out of operating revenues. The rating upgrade takes into consideration Moody's belief that the School Board has remained financially sound as it continues to manage through the Katrina impact. Outlook The stable outlook reflects Moody's belief that key economic and financial indicators have demonstrated solid and steady recovery since Hurricane Katrina. Key Statistics (prior to Katrina): * 2009 Estimated population: 21,540 * 2000 population: 26,757 * MADS Coverage: 6.68 times * 2009 Full Valuation: $4.9 billion * Full value per capita: $230,589 * Per capita income: $15,937 (67.1%) * Payout (10 years): 100% * 2007 General Fund balance: $40.4 million (67.1% of General Fund revenues) * 2007 Undesignated General Fund balance: $18.1 million (30.2% of General Fund revenues) The last rating action for the Plaquemines Parish School Board was on March 1, 2006 when the Board's rating was upgraded to a Ba1 with a positive outlook from Ba2. PLEASANT CARE: Workers to Get Back Health Benefits & Vacation Pay ----------------------------------------------------------------- The U.S.Bankruptcy Court for the Central District of California has finalized a class action settlement restoring health care benefits and vacation pay to hundreds of workers, Morris Polich & Purdy LLP said. Morris Polich represented a class of several hundred former employees of the now defunct Pleasant Care nursing home chain, after their health insurance coverage was retroactively terminated and earned vacation pay withheld. In February 2007, the Pleasant Care companies filed for Chapter 11 bankruptcy. During the reorganization, the Pleasant Care facilities remained open, and their employees continued to work under the belief that they were still covered by Pleasant Care's self-funded health insurance plan. After a couple of months, however, Pleasant Care stopped funding the plan, and the employees were billed directly for medical services they thought were covered. Some had bills of more than $10,000, and the bankruptcy court set a bar date for all administrative claims that was due to expire before many of the workers received their bills. Morris Polich & Purdy took the case 11 days before the bar date. Considering that the defendants were already in bankruptcy, "it was a big risk," says David Vendler, a partner with the firm. However, Mr. Vendler states, "the workers badly needed help, or a real injustice was going to be done." Because the case was in bankruptcy court, Morris Polich & Purdy partnered with Richard Baum, a bankruptcy attorney in Los Angeles. "The first thing to do was to extend the bar date and get a notice to the class that they could understand," Baum stated. Bankruptcy Judge Ellen Carroll agreed that the bar date had to be moved back, and, in what Baum says may be a first, the new notice of administrative claim bar date was rewritten in plain English, then translated into Tagalog, as many of the affected workers were from the Philippines. The bankruptcy court initially declined to allow the claimants to be treated as a class. After this ruling, Mr. Vendler and Baum decided that filing a separate action in the District Court was their best alternative. After several rounds of procedural wrangling over venue, which plaintiffs eventually won, the defendants agreed to settle the claims on a class basis, and this settlement was finally approved by the bankruptcy court. Under the terms of the settlement, the employees will receive approximately 65% of their claims, a greater percentage than all of the other administrative claimants. Mr. Vendler is particularly proud of the result. "Very few firms in Los Angeles would take a class action case on contingency against a set of defendants already in bankruptcy court," Mr. Vendler states, "but this was a case where we simply could not stand idly by and watch people face potential bankruptcy, just because they committed the crime of going to work every day." Ultimately, the defendants did the right thing in settling the case. About Pleasant Care Based in La Canada, California, Pleasant Care Corporation -- http://www.pleasantcare.com/-- provide nursing home care. The Company and four of its affiliates filed for chapter 11 protection on March 22, 2007 (Bankr. C.D. Calif. Lead Case No. 07-12312). Ron Bender, Esq., Monica Y. Kim, Esq., and Jacqueline L. Rodriguez, Esq., at Levene, Neale, Bender, Rankin & Brill LLP, represent the Debtors. Samuel R. Maizel, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and liabilities between $1 million and $100 million. POLAROID CORP: Files Schedules of Assets and Liabilities -------------------------------------------------------- Polaroid Corporation filed with the U.S. Bankruptcy Court for the District of Minnesota its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ------------ A. Real Property B. Personal Property $28,520,484 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $72,842,082 E. Creditors Holding Unsecured Priority Claims $4,867,049 F. Creditors Holding Unsecured Non-priority Claims $224,109,221 ----------- ------------ TOTAL $28,520,484 $301,818,353 About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. POWER EFFICIENCY: Updates Stockholders Regarding Status & Strategy ------------------------------------------------------------------ Power Efficiency Corporation posted certain information on its Web site and intends to disseminate this information, as and when requested, to Company stockholders as well as members of the investment community regarding the Company's current status and business strategy for its 2009 fiscal year. A full-text copy of the presentation is available for free at: http://researcharchives.com/t/s?39b3 Additionally, the Company mailed a letter to its stockholders setting forth the Company's current status and business strategy for its 2009 fiscal year. A full-text copy of the stockholder letter is available for free at: http://researcharchives.com/t/s?39b4 According to Chairman and CEO Steven Strasser, the Obama administration has indicated its intentions to enact energy and environmental legislation, including considerable funds targeting energy efficiency. "Many of the electric utilities have joined the chorus by advocating that efficiency is one of the best means to ensure adequate energy supplies while reducing harmful emissions. According to the Department of Energy, electric motors are the largest single category of electricity end use in the U.S., so efforts to improve energy efficiency should put an emphasis on motor efficiency." "For Power Efficiency, this is all very positive news because we believe our products, based on our proprietary E-Save Technology(R) platform, are an excellent way for organizations to save energy and reduce CO2 emissions." About Power Efficiency Corp. Based in Las Vegas, Power Efficiency Corporation (OTC BB: PEFF) -- http://www.powerefficiency.com/-- is a green energy company focused on efficiency technologies for electric motors. The company has developed a patented and patent-pending technology platform, called E-Save Technology(TM), which has been demonstrated in independent testing to improve the efficiency of electric motors by 15-35% in appropriate application Going Concern Doubt As reported in the Troubled Company Reporter on April 4, 2008, Livingston, N.J.-based Sobel & Co., LLC, expressed substantial doubt about Power Efficiency Corporation's ability to continue as a going concern after the firm audited the company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and deficiency of cash from operations. The Company suffered recurring losses from operations, a recurring deficiency of cash from operations, including a cash deficiency of approximately $2,425,000 from operations for the nine months ended September 30, 2008. While the Company appears to have adequate liquidity at September 30, 2008, there can be no assurances that such liquidity will remain sufficient. PROPEX INC: Court Approves $65-Mil. Wayzata Loan on Final Basis --------------------------------------------------------------- Judge John C. Cook of the U.S. Bankruptcy Court for the Eastern District of Tennessee authorized Propex, Inc., and its debtor affiliates, on a final basis, to borrow from Wayzata Investment Partners LLC, acting as sole administrative agent, and Wayzata Opportunities Fund II, L.P., and certain other lenders, up to $65,000,000 in postpetition financing. The Court opined that the Debtors have an immediate need to obtain a replacement financing facility to pay its existing DIP Facility obligations; continue the orderly operation of their business; maintain business relationship with vendors, suppliers and customers; make payroll; make capital expenditures and satisfy other working capital and operational needs. The total amount outstanding under the Debtors' 2008 Existing Facility with PNB Paribas and certain other lenders, as of January 23, 2009, was $32,774,377, plus $420,000 in cash used to cash collateralized letters of credit issued by the Existing Agent, and any reasonable professional fees of the Existing Agent for its counsel and advisors. In accordance with the Interim DIP Order, the Debtors paid their obligations under the 2008 Facility in full on January 30, 2009. By virtue of the payments, the 2008 Facility is thus terminated and is of no further force or effect. All of the DIP Obligations under the Wayzata Facility constitute allowed clams against the Debtors, with priority over any and all administrative expenses, diminution claims and all other claims, the Court ruled. The Carve-Out refers to (i) an amount of up to $4,200,000, in the aggregate, that may be sued solely to pay Court-approved fees and expenses of the retained professionals of the Debtors, the Official Committee of Unsecured Creditors, and the Debtors' Chief Restructuring Officer upon the occurrence of an event of default or the "termination date;" (ii) all quarterly fees required to be paid to the U.S. Trustee; and (iii) any Court-approved fees payable to the Clerk of the Bankruptcy Court. The Wayzata Facility will mature and the DIP Obligations will be due and payable in immediately available funds, without notice or demand, on the earlier of: (a) April 23, 2009; (b) the effective date of the plan of reorganization; (c) upon any sale of substantially all of the Debtors' assets pursuant to Section 363 of the Bankruptcy Code; or (d) at the sole discretion of the DIP Lenders, upon the occurrence and continuation of an Event of Default under the DIP Documents. Prior to the entry of the Court's final order, the Official Committee of Unsecured Creditors reiterated that in order to circumvent the negative tax consequences of Section 956 of the Internal Revenue Code, U.S. Companies rarely pledge two-thirds or more the capital stock of their foreign companies. The Committee pointed out that despite the adverse tax consequences, the Wayzata Facility requires the Debtors to pledge 100% of their foreign stock, even though that pledge may cause the Debtors to incur millions of dollars of additional tax liability. The Committee noted that a Section 506(c) waiver is specifically inappropriate where the DIP Lender is seeking to acquire the Debtors' assets by forcing a quick sale. Thus, because the DIP Lender is utilizing the Chapter 11 process solely to maintain and preserve its own collateral for its own benefit, it would be highly inequitable to make the Debtors' estates bear the administrative expenses of liquidating the DIP Lenders' collateral, where there may not be any way to pay that administrative costs absent a Section 506(c) surcharge, the Committee contended. The Committee further asserted that the Chief Restructuring Officer Success Fee should not be included in the Carve-Out because: (a) the inclusion increases the risk that the administrative claims will not be paid in full at the end of the Debtors' Chapter 11 cases; (b) the fees of the CRO are not subject to any holdback or final approval of the Court; (c) the CRO Success Fee was not included in the 2008 DIP Facility and thus, including it in 2009 DIP Facility with Wayzata is simply a wrongful grab by the Debtors to enrich their own professionals to detriment of other creditors. In reply to the Committee's objection, the Debtors noted that the waiver of Section 506(c) rights, as provided in the Wayzata Facility, are provisions customarily contained in DIP financing packages and have been approved by several courts, including courts within the Sixth Circuit. The Committee's objections were overruled by the Court at a February 9, 2009 hearing. A full-text copy of the Wayzata Final DIP Order can be accessed for free http://bankrupt.com/misc/Propex_FinalDIP.pdf Final Cash Collateral Order In line with the Debtors' Replacement DIP Facility with Wayzata Investment Partners LLC, Judge Cook granted the Debtors permission, on a final basis, to use the cash collateral of their Prepetition Lenders pursuant to a budget. The Prepetition Lenders are entitled to adequate protection of their interests in the Prepetition Collateral in an amount equal to the aggregate diminution in value of the Prepetition Collateral. To secure the Adequate Protection Obligations, the Prepetition Lenders are granted valid, perfected replacement security interest in and lien on all of the Collateral, subject and subordinate only to the Permitted Prepetition Liens, the liens of the DIP Lenders, and the Carve Out. The Debtors' right to use cash collateral will automatically terminate on the date that is the earlier of 10 days after an event of default under the Debtors' Replacement DIP Facility with Wayzata Investment Partners and certain other lenders, or on the maturity date of the DIP Facility. About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors have selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. The Debtors have filed their Disclosure Statement and Plan of Reorganization on October 29, 2008. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PROPEX INC: To Sell All Assets to Wayzata Unit for $61 Million -------------------------------------------------------------- Propex Inc. and its debtor affiliates seek permission from the U.S. Bankruptcy Court for the Eastern District of Tennessee to sell substantially all of their assets to Xerxes Operating Company, LLC and Xerxes Foreign Holdings Corp. for $61,560,000, free and clear of all liens, claims and encumbrances, and subject to higher and better bids. Xerxes Operating and Xerxes Foreign Holdings are entities majority-owned by Wayzata Opportunities Fund II LP, an affiliate of the DIP Agent, Wayzata Investment Partners LLC. The salient terms of the parties' Asset Purchase Agreement dated February 17, 2009 are: (1) The Assets to be sold by the Debtors to Xerxes include all of their cash, accounts receivable, inventory, real property, facility leases, tangible real property, equipment leases, intellectual property, rights under contracts and benefit plans, books and records, permits and licenses, tax refunds and rebates. (2) Xerxes will also acquire all equity securities of every foreign subsidiary of the Debtors, and all obligations of every foreign subsidiary to the Debtors. (3) The aggregate purchase price for the Assets to be sold is $61,560,000, subject to certain adjustments. The estimated net asset value refers to the Debtors' good faith estimate of the Net Asset Value as of the Closing Date. If the Estimated Net Asset Value is less than the Baseline Net Asset Value, the Purchase Price will be reduced by an amount equal to the amount by which the Estimated Net Asset Value is less than the Baseline Net Asset Value. If the Estimated Net Asset Value is greater than the Baseline Net Asset Value, the Purchase Price will be increased by an amount equal to the amount by which the Estimated Net Asset Value is greater than the Baseline Net Asset Value. (4) The sale of the Assets will be on an "as is, where is" basis and without representations or warranties of any kind. (5) The Debtors' assets that are excluded in the proposed sale are: -- the Carve Out Cash Amount, which refers to the $4,200,000 to be drawn by the Debtors from the DIP Facility; -- Avoidance claims or causes of action arising under the Bankruptcy Code or applicable state law; -- certain real property, facility leases, equipment leases, contracts; and -- equity securities of the Debtors (6) Xerxes will assume certain of the Debtors' contracts and all obligations under those contracts, including any cure amount on those contracts. Xerxes will also assume: -- all unpaid postpetition trade payable incurred in the ordinary course of business; -- all obligations due to the Debtors' employees, including wages, bonuses, commissions, unused vacation and sick leaves; -- all warranty claims of the Debtors' customers; and -- unpaid real property taxes of up to $2,500,000. (7) The proposed sale is subject to higher and better bids. (8) The Debtors will pay Xerxes a $1,846,800 break-up fee if they consummate a sale with a party or entity other than Xerxes. A full-text copy of the Xerxes Asset Purchase Agreement is available for free at http://bankrupt.com/misc/Propex_APA.pdf Bidding Procedures In order to obtain the highest, best financial or otherwise superior offer for their assets, the Debtors propose to subject the sale of their assets to uniform bidding procedures. The Debtors propose that any interested party must deliver to their counsel an executed confidentiality agreement. To be eligible to participate in the auction: (1) Each Bid must be accompanied by a $5,000,000 deposit; (2) A competing bid must exceed the purchase price by the sum of the break-up fee amounting to $1,846,800 plus 1,500,000, the initial minimum overbid increment. (3) A Bid must be irrevocable until two business days after the assets have been sold pursuant to the closing of the proposed sale approved by the Court. (4) A Bid must be an all cash bid, on the terms that are substantially the same or better than the terms of the Xerxes Agreement. Only a Bid that contemplates a purchase of all of the Debtors' Assets will constitute a Qualified Bid. (5) A Bid must include executed transaction documents pursuant to which the Qualified Bidder proposes to effectuate the contemplated transaction. (6) A Bid may not be conditioned on obtaining financing or any internal approval, or on the outcome or review of due diligence, but may be subject to the accuracy in all material respects at the closing of specified representations and warranties or the satisfaction in all material respects at the closing of specified conditions, none of which will be more burdensome than those set forth in the Xerxes Agreement. (7) A Bid may not request or entitle the Qualified Bidder, other than Xerxes, any break-up fee, termination fee, expense reimbursement or similar type of payment to any Qualified Bidder. (8) A Bid must provide written evidence reasonably acceptable to the Debtors, including current financial statements and a description of equity and debt financing commitments to be used to close the transaction, that demonstrates that the Potential Bidder has necessary financial ability to close the contemplated transaction and provide adequate assurance of future performance under all contracts to be assumed in the contemplated transaction. If the Debtors, after consultation with the DIP agent, BNP Paribas Securities Corp., and the Official Committee of Unsecured Creditors, determine that a potential bidder that has satisfied the bid requirements does not constitute a qualified bidder, then the Potential Bidder's right to receive access to the due diligences materials or additional non-public information will immediately terminate. Each Potential Bidder and Qualified Bidder should comply with all reasonable requests for additional information and due diligence access by the Debtors or their advisors regarding that Bidder and its contemplated transaction and its financial capacity to contemplate that transaction. The deadline for submitting bids by a Qualified Bidder will be March 18, 2009. The Debtors will notify all Qualified Bidders of the Baseline Bid as of March 20, 2009. If more than one qualified bid is received by the Debtors, an auction will be conducted on March 23, 2009 at 10:00 a.m. Eastern Time, at the offices of King & Spalding LLC, in Atlanta, Georgia. With regards to any Bid made at the Auction subsequent to the Debtors' announcement of the Baseline Bid, a Qualified Bidder must comply with these conditions: * Any overbid after the Baseline Bid will be made in increments of at least $500,000. * An overbid must comply with the conditions for a Qualified Bid, provided that the Bid Deadline and the Initial Minimum Overbid Increment will not apply. * The Debtors will announce at the Auction the material terms of each Overbid. The Debtors will identify the highest and best offers for the Assets upon review. A full-text copy of the Bidding Procedures is available for free at http://bankrupt.com/misc/Propex_BidProcedures.pdf Henry J. Kaim, Esq., at King & Spalding LLP, in Houston, Texas, asserts the competitive bidding process will enable the Debtors to capture value for their assets and executory contracts, all for the benefit of their estates and creditors by taking full advantage of the potential buyer pool. The Court will convene a hearing on March 4, 2009, at 9:00 a.m., to consider the Debtors' request for uniform bidding procedures. Any party who wishes to object has until March 2 to file a formal written objection. The Court has set the final sale hearing for March 24, 2009. Any objections should be filed with the Court no later than March 20. About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors have selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. The Debtors have filed their Disclosure Statement and Plan of Reorganization on October 29, 2008. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PUREDEPTH INC: Runs Restructuring Plan, to Affect N.Z. Operations ----------------------------------------------------------------- On February 8, 2009, PureDepth Inc. implemented a restructuring plan to better align resources with its strategic plans. The restructuring will result in a realignment and reduction affecting personnel in its Auckland, New Zealand offices. The Company did not disclose further details. Headquartered in Redwood City, Calif., PureDepth Inc. (OTC BB: PDEP) -- http://www.puredepth.com/-- and its subsidiaries engage in the development, marketing, licensing, and support of Multi-Layer Display (MLD) technology and related products and services. The company's MLD technology provides a method of displaying multiple windows on which different data or images can be overlapped displaying 3D content. Its technology has applications in location-based entertainment devices; computer monitors; public information display systems; mobile devices; flat panel televisions; and automotive, defense, and other vertical markets. The company also manufactures prototype MLD-enabled display devices. PureDepth has operations in the United States and New Zealand. Going Concern Doubt Stonefield Josephson Inc., in San Francisco, expressed substantial doubt about PureDepth Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Jan. 31, 2008. As of October 31, 2008, the company's balance sheet showed total assets of $12,025,034 and total liabilities of $17,262,631, resulting in total stockholders' deficit of $5,237,597. For the three months ended October 31, 2008, the company reported net losses of $2.3 million which is consistent when compared to the $2.3 million reported in the three months ended October 31, 2007. For the nine months ended October 31, 2008, the company reported net losses of $5.3 million representing a decrease in its net loss of $1.8 million when compared to the $7.1 million reported in the nine months ended October 31, 2007. PureDepth's net losses are primarily derived from total operating expenses and will continue to be so until its licensing revenues become significant. Its operations have not generated net income to date and are not expected to do so in the year ending 2009. RACE POINT: Moody's Junks Ratings on Three Classes of Notes ----------------------------------------------------------- Moody's Investors Service announced that it has downgraded these notes issued by Race Point CLO, Limited: -- U.S. $10,000,000 Class B-1 Senior Secured Floating Rate Notes due 2013; Downgraded to A2; previously on August 4, 2008 Upgraded to Aa2; -- U.S. $12,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2013; Downgraded to A2; previously on August 4, 2008 Upgraded to Aa2; -- U.S. $20,000,000 Class C Senior Secured Floating Rate Notes due 2013; Downgraded to Baa3; previously on August 4, 2008 Upgraded to A2; -- U.S. $15,500,000 Class D-1 Senior Secured Floating Rate Notes due 2013; Downgraded to Caa1; previously on August 4, 2008 Upgraded to Ba2; -- U.S. $2,000,000 Class D-2 Senior Secured Floating Rate Notes due 2013; Downgraded to Caa1; previously on August 4, 2008 Upgraded to Ba2; -- U.S. $3,500,000 Class D-3 Senior Secured Fixed Rate Notes due 2013; Downgraded to Caa1; previously on August 4, 2008 Upgraded to Ba2. According to Moody's, the rating actions taken on the notes are a result of applying Moody's revised assumptions with respect to default probability, the treatment of ratings on "Review for Possible Downgrade" or with a "Negative Outlook," and the calculation of the Diversity Score. The actions also reflect consideration of notable credit deterioration of the underlying portfolio since Moody's last review. 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 a decline in the average credit rating (as measured through the weighted average rating factor), an increase in the dollar amount of defaulted securities, and an increase in the proportion of securities from issuers rated Caa1 and below. Finally, Moody's noted that the portfolio includes a number of investments in securities that mature after the maturity date of the notes. These investments potentially expose the notes to market risk in the event of liquidation at the time of the notes' maturity. RENEW ENERGY: U.S. Trustee Forms Five-Member Creditors Committee ---------------------------------------------------------------- William T. Neary, the United States Trustee for Region 11, appointed five creditors to serve on an Official Committee of Unsecured Creditors of Renew Energy LLC. The members of the Committee are: 1) Danisco USA Inc. 200 Meridian Centre Blvd., Ste. 300 Rochester, NY 14618 Attn: Hans Foerster Tel: (585) 256-5294 Fax: (585) 244-2806 hans.foerster@danisco.com 2) GEA Barr-Rosin Inc. 255 38th Avenue St. Charles, IL 60174 Attn: Colin Crankshaw Tel: (630) 569-3980 x 101 Fax: (630) 584-4406, fax colin.crankshaw@geagroup.com 3) C.R. Meyer & Sons Company 895 West 20th Avenue Oshkosh, WI 54902 Attn: Tom DeLeeuw Tel: (920) 235-3350 Fax: (920) 235-2722 4) U.S. Bank, N.A. 60 Livingston Ave. St. Paul, MN 55107 Attn: Patricia Kapsch Tel: (651) 495-3960 Fax: (651) 495-8100 patricia.kapsch@usbank.com 5) WE Energies 333 W. Everett St. A132C Milwaukee, WI 53203 Attn: Tim Brown Tel: (414) 221-3792 Fax: (414) 221-4093 tim.brown@we-energies.com Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Renew Energy Headquartered in Jefferson, Wisconsin, Renew Energy LLC -- http://www.renewenergyllc.com-- operates an ethanol plant facility. The company filed for Chapter 11 protection on January 30, 2009 (Bankr. W.D. Wis. Case No. 09-10491). Christopher Combest, Esq., at Quarles & Brady LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed asset and debts between $100 million to $500 million each. REVLON INC: Dec. 31 Balance Sheet Upside Down by $1.1 Billion ------------------------------------------------------------- On February 12, 2009, Revlon, Inc. (NYSE: REV), reported results for the three months and year ended December 31, 2008 According to the Company, 2008 results compared with 2007's are: * Net sales of $1,346.8 million compared with $1,367.1 million. Higher net sales of color cosmetics were offset by lower net sales of beauty care and unfavorable foreign currency fluctuations. * Operating income of $155.0 million compared with $118.4 million. * Net income of $57.9 million, or $1.13 per diluted share, compared to a net loss of $16.1 million, or $0.32 per diluted share. Net income in 2008 includes discontinued operations of $44.8 million, or $0.87 per diluted share, of which $45.2 million, or $0.88 per diluted share, relates to the gain on sale of discontinued operations. * Adjusted EBITDA of $248.1 million compared with $221.4 million. * Positive free cash flow of $26.0 million compared with negative free cash flow of $17.1 million. Commenting on the announcement, Revlon President and Chief Executive Officer, David Kennedy, said, "During the year, net sales growth in Revlon brand color cosmetics, which was driven by strong new product introductions and a more focused allocation of advertising and promotional expenditures, along with continued rigorous cost control, resulted in significantly improved financial performance. Specifically, and as we forecasted, the Company improved operating margins, profitability and generated positive free cash flow and net income. In addition, during 2008, we reduced debt by $110 million, improving our capital structure." Mr. Kennedy continued, "While we expect economic conditions and the retail sales environment to remain uncertain around the world, we believe we are better positioned than in many years to maximize our business results in light of these conditions. Specifically, we have strong global brands, a highly capable organization, a sustainable, reduced cost structure, and an improved capital structure. We are encouraged by the continued growth in mass channel color cosmetic consumption in the U.S. and in key markets around the world throughout 2008, despite the uncertain economic conditions. We are also encouraged that, in January 2009, according to ACNielsen, the U.S. mass retail color cosmetics category expanded 3.6% and Revlon brand color cosmetics gained 0.7 percentage points, growing faster than the category, for a dollar share of 13.3%. We are continuing to execute our strategy and manage our business while maintaining flexibility to adapt to changes in business conditions. We are also continuing our intense focus on the key growth drivers of our business, including innovative, high-quality, consumer-preferred products, effective integrated brand communication, appropriate levels of advertising and promotion, and superb execution with our retail partners, along with disciplined spending and rigorous cost control. Over time, we believe that with this focus we will generate profitable net sales growth and sustainable positive free cash flow." 2008 Results Net sales in 2008 were $1,346.8 million, a decrease of $20.3 million, or 1.5%, compared to $1,367.1 million in 2007. Foreign currency fluctuations negatively impacted net sales by $8.3 million. Excluding foreign currency fluctuations, net sales of Revlon brand color cosmetics increased 9% driven by strong new product introductions (higher shipments and favorable product returns, partially offset by higher promotional allowances). Increased net sales of Revlon brand color cosmetics were offset by declines in net sales for Almay (higher shipments, offset by higher product returns and higher promotional allowances), and lower net sales of certain fragrance and beauty care brands. In the United States, net sales in 2008 were $782.6 million, a decrease of $21.6 million, or 2.7%, compared to $804.2 million in 2007. Higher net sales of Revlon brand color cosmetics were offset by lower net sales of Almay, fragrance and beauty care products. In 2008, higher net sales of Revlon ColorSilk and Revlon beauty tools were offset by cycling the 2007 launches of Revlon Colorist hair color, Revlon Flair fragrance and Mitchum Smart Solid anti-perspirant deodorant. In the Company's international operations, net sales in 2008 were $564.2 million, an increase of $1.3 million, or 0.2%, compared to $562.9 million in 2007. Excluding the unfavorable impact of foreign currency fluctuations of $8.3 million, net sales increased by 1.7% as a result of higher net sales of Revlon and Almay color cosmetics, Revlon beauty tools and Mitchum anti-perspirant deodorant, partially offset by lower net sales of fragrance and hair care products. Higher net sales in the Asia Pacific and Latin America regions were partially offset by lower net sales in the Europe region. Consistent with the Company's business plan and the increased level of new product introductions, the Company supported its brands with advertising and promotions throughout the year. In 2008, advertising and promotional spending across all the Company's brands remained largely unchanged. The Company increased spending on its color cosmetics brands, while spending on certain of its beauty care brands was lower as a result of cycling prior year spending on the launches of Revlon Colorist hair color, Revlon Flair fragrance and Mitchum Smart Solid anti- perspirant deodorant. These actions contributed to our performance in the marketplace in 2008 as reflected in the U.S. mass retail dollar share and dollar volume growth related to the Revlon and Almay brands in the segments in which our new product launches and advertising and promotional spending were focused. Operating income in 2008 was $155.0 million, representing an 11.5% operating income margin, compared to $118.4 million, representing an 8.7% operating income margin, in 2007, and Adjusted EBITDA in 2008 was $248.1 million, compared to $221.4 million in 2007. Operating income and Adjusted EBITDA benefitted from lower selling, general and administrative expenses, an improvement in gross profit margin, and lower restructuring charges. Additionally, operating income and Adjusted EBITDA in 2008 benefited from a net gain of $4.7 million and $5.2 million, respectively, related to the sale of a facility in Mexico, and a net gain of $5.9 million related to the sale of a non-core trademark. Net income in 2008 was $57.9 million, or $1.13 per diluted share, compared to a net loss of $16.1 million, or $0.32 per diluted share, in the prior year. Net income in 2008 includes a $45.2 million, or $0.88 per diluted share, gain on the sale of discontinued operations and a loss from discontinued operations of $0.4 million, or $0.01 per diluted share. Income from continuing operations in 2008 was $13.1 million and includes a net gain of $4.3 million related to the sale of a facility in Mexico and a net gain of $5.9 million related to the sale of a non-core trademark, and compares to a loss from continuing operations of $19.0 million in 2007. Adjusted EBITDA and free cash flow are non-GAAP measures that are defined in the footnotes to this release and are reconciled in the case of Adjusted EBITDA to net income/(loss) and in the case of free cash flow to net cash provided by (used in) operating activities, their most directly comparable GAAP measures, respectively, in the accompanying financial tables. Fourth Quarter 2008 Results Net sales in the fourth quarter of 2008 were $334.2 million, a decrease of $39.1 million, or 10.5%, compared to $373.3 million in the fourth quarter of 2007. Foreign currency fluctuations negatively impacted net sales by $23.3 million. Excluding foreign currency fluctuations, increased net sales of Revlon brand color cosmetics (favorable product returns, partially offset by lower shipments and higher promotional allowances), were offset by decreased net sales for Almay (higher shipments, offset by higher product returns and higher promotional allowances), and decreased net sales for beauty care brands. In the United States, net sales in the fourth quarter of 2008 were $199.6 million, a decrease of $16.2 million, or 7.5%, compared to $215.8 million in the fourth quarter of 2007. Increased Revlon brand color cosmetics net sales, were offset by declines in Almay and declines in certain beauty care brands. In the Company's international operations, net sales in the fourth quarter of 2008 were $134.6 million, a decrease of $22.9 million, or 14.5% (entirely due to unfavorable foreign currency fluctuations), compared to $157.5 million in the fourth quarter of 2007. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased by 0.2% as a result of higher net sales for Revlon and Almay color cosmetics, mostly offset by declines in hair care and fragrance products. Higher net sales in the Asia Pacific and Latin America regions were offset by lower net sales in the Europe region. Consistent with the Company's business plan and the increased level of new product introductions, the Company supported its brands with increased levels of advertising and promotional support in the fourth quarter of 2008 compared to same period in 2007. These actions contributed to our performance in the marketplace in the fourth quarter of 2008 as reflected in the U.S. mass retail dollar share and dollar volume growth related to the Revlon and Almay brands in the segments in which our new product launches and advertising and promotional spending were focused. Operating income in the fourth quarter of 2008 was $44.0 million, compared to $79.3 million in the fourth quarter of 2007, and Adjusted EBITDA was $66.7 million, compared to $105.1 million in the year-ago period. The decline in operating income and Adjusted EBITDA was driven by increased advertising and promotional expenditures. Net income in the fourth quarter of 2008 was $11.3 million, or $0.22 per diluted share, compared to net income of $40.8 million, or $0.80 per diluted share, in the same period in 2007. Income from continuing operations in the fourth quarter of 2008 was $11.2 million, compared to $40.0 million in the year-ago period. Company Strategy The Company continues to focus on its strategy: (i) building and leveraging its strong brands; (ii) improving the execution of its strategies and plans, and providing for continued improvement in its organizational capability through enabling and developing its employees; (iii) continuing to strengthen its international business; (iv) improving its operating profit margins and cash flow; and (v) improving its capital structure. As of December 31, 2008, the Company's balance sheet showed total assets of $813,400,000 and total liabilities of $1,926,200,00, resulting in total stockholders' deficit of $1,112,800,000. A full-text copy of the Company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?39a7 About Revlon Inc. Headquartered in New York City, Revlon Inc. (NYSE: REV) -- http://www.revloninc.com/-- is a worldwide cosmetics, hair color, beauty tools, fragrances, skincare, anti- perspirants/deodorants and personal care products company. The company's brands, which are sold worldwide, include Revlon(R), Almay(R), Mitchum(R), Charlie(R), Gatineau(R) and Ultima II(R). RICHARD BOKAVICH: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Richard D. Bokavich Rose M. Bokavich 100 Old Wharf Road Dennis Port, MA 02639 Bankruptcy Case No.: 09-11186 Chapter 11 Petition Date: February 17, 2009 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Christopher J. Panos, Esq. panos@craigmacauley.com Craig and Macauley, P.C. 600 Atlantic Avenue Federal Reserve Plaza Boston, MA 02110 Tel: (617) 367-9500 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of 20 largest unsecured creditors. SEMGROUP ENERGY: Nasdaq to Delist Common Stock Effective Feb. 20 ---------------------------------------------------------------- SemGroup Energy Partners, L.P., received a letter from the Hearings Panel of The Nasdaq Stock Market, Inc. providing the Panel's decision to delist SGLP's common units from NASDAQ, with trading being suspended effective at the open of trading on Friday, February 20, 2009. Following the delisting of the SGLP's common units from NASDAQ, SGLP expects that its common units will be quoted in the "Pink Sheets" beginning on February 20, 2009. SGLP continues to work to file its late periodic reports in the near future. SGLP intends to promptly seek the re-listing of its common units on NASDAQ as soon as practicable thereafter. About SemGroup Energy Partners, L.P. Based in Tulsa, Oklahoma, SemGroup Energy Partners L.P. (SGLP) -- http://www.SGLP.com/-- owns and operates a diversified portfolio of complementary midstream energy assets. SemGroup Energy Partners provides crude oil and liquid asphalt cement terminalling and storage services and crude oil gathering and transportation services. The general partner of SemGroup Energy Partners is a subsidiary of SemGroup, L.P. * * * Events of default exist under SemGroup Energy Partners, L.P.'s Amended and Restated Credit Agreement, dated Feb. 20, 2008, among the Partnership, Wachovia Bank, National Association, as Administrative Agent, L/C Issuer and Swing Line Lender, Bank of America, N.A., as Syndication Agent and the other lenders from time to time party thereto. As reported by the Troubled Company Reporter on January 23, 2009, SemGroup Energy Partners and its lenders entered into the Second Amendment to Forbearance Agreement and Amendment to Credit Agreement, which extends the Forbearance Period until the earlier of: i) March 18, 2009; ii) the occurrence of any default or event of default under the Credit Agreement other than certain defaults and events of default indicated in the Forbearance Agreement, as amended by the First Amendment and the Second Amendment; and iii) the failure of the Partnership to comply with any of the terms of the Forbearance Agreement, as amended by the First Amendment and the Second Amendment. The Credit Agreement was comprised of a $350 million revolving credit facility and a $250 million term loan facility. The Second Amendment permanently reduced the Partnership's revolving credit facility under the Credit Agreement from $300 million to $220 million and also prohibits the Partnership from borrowing additional funds under its revolving credit facility during the Extended Forbearance Period. About SemGroup L.P. 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) SEMGROUP LP: Energy Partners Gets Nasdaq Delisting Notice --------------------------------------------------------- SemGroup Energy Partners, L.P., received a letter from the Hearings Panel of The Nasdaq Stock Market, Inc. providing the Panel's decision to delist SGLP's common units from NASDAQ, with trading being suspended effective at the open of trading on Friday, February 20, 2009. Following the delisting of the SGLP's common units from NASDAQ, SGLP expects that its common units will be quoted in the "Pink Sheets" beginning on February 20, 2009. SGLP continues to work to file its late periodic reports in the near future. SGLP intends to promptly seek the re-listing of its common units on NASDAQ as soon as practicable thereafter. About SemGroup Energy Partners, L.P. Based in Tulsa, Oklahoma, SemGroup Energy Partners L.P. (SGLP) -- http://www.SGLP.com/-- owns and operates a diversified portfolio of complementary midstream energy assets. SemGroup Energy Partners provides crude oil and liquid asphalt cement terminalling and storage services and crude oil gathering and transportation services. The general partner of SemGroup Energy Partners is a subsidiary of SemGroup, L.P. * * * Events of default exist under SemGroup Energy Partners, L.P.'s Amended and Restated Credit Agreement, dated Feb. 20, 2008, among the Partnership, Wachovia Bank, National Association, as Administrative Agent, L/C Issuer and Swing Line Lender, Bank of America, N.A., as Syndication Agent and the other lenders from time to time party thereto. As reported by the Troubled Company Reporter on January 23, 2009, SemGroup Energy Partners and its lenders entered into the Second Amendment to Forbearance Agreement and Amendment to Credit Agreement, which extends the Forbearance Period until the earlier of: i) March 18, 2009; ii) the occurrence of any default or event of default under the Credit Agreement other than certain defaults and events of default indicated in the Forbearance Agreement, as amended by the First Amendment and the Second Amendment; and iii) the failure of the Partnership to comply with any of the terms of the Forbearance Agreement, as amended by the First Amendment and the Second Amendment. The Credit Agreement was comprised of a $350 million revolving credit facility and a $250 million term loan facility. The Second Amendment permanently reduced the Partnership's revolving credit facility under the Credit Agreement from $300 million to $220 million and also prohibits the Partnership from borrowing additional funds under its revolving credit facility during the Extended Forbearance Period. About SemGroup L.P. 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) SENSATA TECHNOLOGIES: S&P Junks Corp. Credit Rating; Outlook Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Sensata Technologies B.V., including the corporate credit rating to 'CCC+' from 'B'. The company had total balance sheet debt of about $2.5 billion at Dec. 31, 2008. The outlook is negative. "The downgrade reflects worse-than-expected operating results and weak prospects in key end markets that have increased the risk of a covenant violation in the near term," said Standard & Poor's credit analyst Dan Picciotto. Sensata recently announced that fourth-quarter revenues declined 28% and reported adjusted EBITDA fell 38%. If the company violates its covenants, it may be difficult for it to obtain relief given its highly leveraged financial profile and the state of credit markets. The ratings on Attleboro, Massachussetts-based Sensata reflect its highly leveraged financial profile and weak business risk profile. Still, the company does benefit from good geographic diversification and solid operating margins. Sensata, formerly a division of Texas Instruments Inc., consists of two business units that manufacture highly engineered electronic sensors and controls. It has generated about $1.4 billion in revenue in 2008 but has experienced rapid declines recently. Sensata's products are sold into mature, cyclical end markets that change primarily at GDP-like rates. The company also has a significant exposure to the challenged global automotive market, which accounts for more than half of sales. However, the company does benefit from strong market positions as it is the sole or primary source for most of its customers. Deteriorating conditions in key end markets have affected the company's operating performance. Notably, the global automotive industry has slowed significantly and overall company revenues appear likely to decline meaningfully in 2009. Sensata's controls segment has been affected by the residential housing downturn. Sensata has maintained its high operating margin (before depreciation and amortization) of more than 20% and has a significant proportion of variable costs which should mitigate the impact of a sales reduction on margin. The company's global manufacturing footprint also helps to contain costs. Sensata has a highly leveraged financial risk profile. At Dec. 31, 2008, Sensata's adjusted total debt to EBITDA was more than 7x although it has managed to remain modestly free cash flow positive. Difficult operating prospects in 2009 are likely to result in further deterioration in credit measures and could pressure covenants. S&P could lower the ratings if the company violates its covenants and appears unlikely to obtain satisfactory relief or if the company fails to meet its financial obligations. S&P could also lower the ratings if the company announces a tender offer that S&P views to be a distressed exchange. On the other hand, S&P could reconsider the outlook if the company appears likely to maintain adequate headroom under its covenants and does not have any other liquidity challenges. SIRIUS XM: S&P Puts 'CCC' Corp. Rating on Positive CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC' corporate credit rating for Sirius XM Radio Inc. and XM Satellite Radio Holdings Inc. (which S&P analyzes on a consolidated basis), as well as all issue-level ratings for the company, on CreditWatch with positive implications. The action is based on the recent announcement that Liberty Media Corp. (BB+/Watch Neg/--) will make a $530 million investment in Sirius and its subsidiaries in the form of a loan and an equity interest. Liberty has initially agreed to provide a $280 million 15% senior secured loan due December 2012 ($250 million which will be funded today), to repay Sirius' $171.6 million 2.5% convertible notes due Feb. 17, 2009, and to provide funds for general corporate purposes. Liberty has agreed to provide an additional loan of $150 million to XM Satellite Radio and to purchase up to $100 million of the loans under XM Satellite Radio's existing credit facilities from the lenders. Sirius still faces significant debt maturities in 2009, with $350 million of XM bank debt maturing May 2009 and $227.5 million of XM 10% convertible senior notes due December 2009. In addition, Standard & Poor's believes the company may encounter significant obstacles in meeting its 2009 financial targets of $300 million of EBITDA and modestly positive free cash flow, considering the sharp decline in U.S. auto sales and the weak retail consumer electronics market, which S&P believes are likely to slow subscriber growth. "For the Sirius rating to be raised, the company will need to demonstrate progress toward achieving sustainable profitability and positive discretionary cash flow, and address its sizable remaining 2009 maturities," said Standard & Poor's credit analyst Hal Diamond. "We currently believe that the likely extent of a potential upgrade of the corporate credit rating would be limited to one notch, to 'CCC+'. An upgrade from the 'CCC' category would entail progress addressing maturities and operating cash requirements beyond 2009." SMITHFIELD FOODS: Will Shut Down 6 Plants, Lay Off 1,800 Workers ---------------------------------------------------------------- Smithfield Foods, Inc., disclosed a plan to consolidate and streamline the corporate structure and manufacturing operations of its pork group to improve operating efficiencies and increase utilization. The Company expects the restructuring plan will result in annual cost savings after applicable restructuring expenses of approximately $55 million in fiscal 2010 and $125 million by fiscal 2011. Smithfield Foods said that the pork group's new business model will enhance the strength of its independent operating company approach, while rationalizing manufacturing operations and taking advantage of synergies in key overhead areas such as sales, marketing, purchasing and information technology. "This plan will create true synergies between our independent operating companies and produce more opportunities to improve the bottom line in the future," said C. Larry Pope, Smithfield Foods President and CEO. "Combined with the several plant closures we have made over the last three years, this restructuring should improve operating rates dramatically, allowing us to shed low- margin business," he said. In connection with the plan, the Company anticipates recording a pre-tax charge, principally related to non-cash asset write-downs, of approximately $85 million in its third fiscal quarter ended February 1. In addition, Smithfield Foods expects to record one- time pre-tax charges of approximately $30 million as the plan is implemented over the next three quarters. The Company estimates that $53 million in capital expenditures will be required relative to plant consolidations in the remainder of fiscal 2009 and in fiscal 2010. Total capital expenditures are expected to remain below depreciation in this fiscal year and next. The plan includes the following actions at various operating units: -- Smithfield Foods will reduce the number of independent Operating companies in the pork group to three from seven. Four existing independent operating companies will be combined under the various business units of The Smithfield Packing Company, Inc., John Morrell & Co. and Farmland Foods, Inc. -- John Morrell and Farmland Foods will merge their respective fresh pork sales forces. This consolidation will enable the company to serve customers with two highly competitive sales groups, Smithfield Packing Company in the East and Farmland Foods in the Midwest and West. -- Patrick Cudahy, Inc., a producer of bacon, dry sausages, hams and other specialty packaged meats, will become part of the John Morrell Group. -- Carando Foods, a unit of Farmland Foods producing Italian deli and specialty meats, also will be combined with the John Morrell Group. The addition of Carando and Patrick Cudahy to the John Morrell Group, which includes Armour- Eckrich Meats, LLC and Curly's Foods, Inc., will leverage the efficiencies of the packaged meats companies' manufacturing and marketing platforms. -- Farmland Foods will strengthen its foodservice business with the assimilation of North Side Foods Corp., a large supplier to the quick service restaurant industry. -- Cumberland Gap Provision Co., a unit of the John Morrell Group and producer of hams, sausages and other specialty packaged meats, will integrate with Smithfield Packing Company. -- The international sales organizations that are responsible for exports of several independent operating companies will be consolidated into one group to form Smithfield Foods International Group, providing one face to overseas markets and reducing selling, general and administrative expense. This consolidation already is underway and has yielded positive results. -- Smithfield Foods will close six plants and transfer production to more efficient facilities, increasing their utilization rates. These plants are expected to be closed by December 2009. "We are very excited about this restructuring plan. The plan will better align the company by enhancing operating efficiencies and increasing utilization rates to reduce our overall manufacturing and overhead structures, which will make Smithfield Foods a more competitive company," said Mr. Pope. "Previously, the company's overall focus has been on growth based on opportunistic acquisitions of high-quality companies at distressed prices. Now we want to fully assimilate and integrate these enterprises, driving operating efficiencies and growing our high-margin packaged meats business," Mr. Pope continued. "The restructuring marks a historic step forward for the company, as we turn our attention to the future. We expect to be a stronger, more profitable company." Mr. Pope said that, beginning in the first quarter of fiscal 2010, investors will be able to track packaged meats performance, as the company will begin reporting separate metrics for that component of the business. "After a careful and thorough analysis of our pork businesses, we have concluded that the consolidation of our independent operating companies into three strong, market-driven companies with highly- competitive and powerful regional brands will best serve the needs of our customers, employees and other key stakeholders," said George H. Richter, president and chief operating officer of the company's pork group. "This new business model will allow us to focus on maximizing operating, marketing, financial and logistical synergies that will enable us to better meet the needs of our retail, foodservice and international customers who do business with multiple Smithfield Foods companies," continued Mr. Richter. As a result of the restructuring plan, the company expects to achieve a net reduction of approximately 1,800 jobs in the pork group. Company Amends Credit Facilities Separately, Mr. Pope noted that Smithfield Foods has entered into amendments of its United States and European credit facilities. The company disclosed the two separate credit facility amendments on reports on Form 8-K filed with the U.S. Securities and Exchange Commission on February 6 and February 13. He said that the amendments provide, among other things, for a reduction of the applicable interest coverage ratio for specified periods through the third quarter of fiscal 2010. "These amendments are very positive developments, for they provide the company with sufficient time and financial flexibility to bridge the current hog cycle and uncertain economic environment," said Mr. Pope. "This action should remove any question about the financial strength of Smithfield Foods. We have eliminated a major distraction, allowing our management team to focus full time on the restructuring plan and running the business." With sales of $12 billion, Smithfield Foods is the leading processor and marketer of fresh pork and packaged meats in the United States, as well as the largest producer of hogs. About Smithfield Foods Smithfield Foods, Inc., (NYSE: SFD) -- http://www.smithfieldfoods.com/-- headquartered in Smithfield Virginia, is the world's largest pork producer and processor and the fifth largest U.S. beef processor. The company conducts its business through five segments: Pork, International, Hog Production, Other and Corporate, each of which comprises a number of subsidiaries. The Pork segment produces a variety of fresh pork and packaged meats products in the United States and markets them nationwide and to a number of foreign markets, including China, Japan, Mexico, Brazil, Russia and Canada. The Pork segment operates over 40 processing plants. The International segment includes its international meat processing operations that produce a variety of fresh and packaged meats products. The HP segment consists of hog production operations located in the United States, Poland and Romania, as well as its interests in hog production operations in Mexico. The Other segment comprises its turkey production operations and its interest in Butterball LLC. During the fiscal year ended April 27, 2008 it discontinued its Beef segment operations. Sales for the twelve months ended July 27, 2008, excluding the revenues of the discontinued beef business, were approximately US$11.9 billion. * * * As reported in the Troubled Company Reporter on Dec. 18, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Smithfield Foods Inc. to 'B' from 'BB-'. SMURFIT-STONE: Auction to Settle Derivative Trades on Feb. 19 ------------------------------------------------------------- CreditFixings.com said that the auction to settle the credit derivative trades for Smurfit-Stone Container Enterprises Inc. is to be held on February 19, 2009. Results are due to be published according to this timetable: Initial Bidding Period CDS 09:45 - 10:00 EST LCDS 10:45 - 11:00 EST Results of Initial Bidding Period 11:30 EST Subsequent Bidding Period CDS 12:45 - 13:00 EST LCDS 13:45 - 14:00 EST Final Results 15:00 EST The International Swaps and Derivatives Association, Inc. and Markit North America, Inc., the successor to CDS IndexCo LLC published the LCDS Auction Settlement Terms on February 13. The ISDA published the 2009 Smurfit CDS Protocol on February 11. About Smurfit-Stone Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. According to Bloomberg News, Smurfit-Stone joins other pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corp. Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC, acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Grace Period Elapses; New CEO Tasked to Merge/Sell ---------------------------------------------------------------- Spansion Technology Inc. let the 30-day grace period elapse without making the interest payment it missed in January on the $250 million 11.25% senior notes of 2016. Moody's Investors Service has downgraded Spansion's probability of default rating to 'D' from 'Ca'. The rating action was in response to Spansion's missed interest payment on its $250 million senior unsecured notes following expiration of the 30-day cure period on February 14, 2009. Moody's also views this as a payment default for the $625 million secured floating rate notes since the indenture governing this debt contains cross default provisions. The Company has been faced with resignations from top members of management. On January 30, 2009, Dr. Bertrand Cambou resigned as the President and Chief Executive Officer of Spansion and as a member of the Company's Board. January 29, 2009, James Doran resigned as the Company's Executive Vice President and Chief Operating Officer, effective as of February 13, 2009, to accept a senior level position at another company. On February 2, the Board appointed John Kispert, 45, as the Company's President and Chief Executive Officer. An employment letter with Mr. Kispert provides that Mr. Kispert will be entitled to compensation of $75,000 per month, and will receive a nonrefundable advance of four months salary. In addition, Mr. Kispert is entitled to a bonus of $1.75 million upon the first to occur of either of these transactions: (i) A merger or consolidation of the Company with any other corporation which constitutes a change in ownership of the securities of the Company representing more than 50% of the total voting power represented by the Company's then outstanding securities, other than a merger or consolidation which would result in holders of pre- transaction debts of the Company generally holding at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) The sale, lease or other disposition by the Company of all or substantially all the Company's assets, which occurs on the date that any one person, or more than one person acting as a group, acquires assets from the Company that have a total gross fair market value equal to or more than 85% of the total fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. The Company, in its Jan. 15 letter announcing the non-payment of interest on its notes, said it has been exploring strategic alternatives, including, but not limited to, opportunities to merge with or sell to similar U.S. or foreign businesses. The Company entered into a Severance and Consulting Agreement with Spansion with its former CEO, pursuant to which Dr. Cambou will receive a severance package that includes a lump-sum payment equal to one year of Dr. Cambou's base salary ($751,275) plus the Company's reimbursement of out-of-pocket expenses incurred by Dr. Cambou in connection with the preparation of his 2008 tax returns. Under his Severance and Consulting Agreement, Dr. Cambou will provide transition services to the Company on a consultant basis for a four month period, and will be paid at a monthly rate equal to fifty percent (50%) of his monthly base salary. Pursuant to the agreement, Dr. Cambou has released any and all claims against the Company. About Spansion Spansion (NASDAQ: SPSN) -- http://www.spansion.com-- is a leading Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. The TCR reported on Jan. 19, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Spansion Inc. to 'D' from 'CCC', and the issue-level rating on Spansion LLC's 11.25% senior unsecured notes due 2016 to 'D' from 'CC'. SPANSION INC: Japan Affiliate Files Protection from Creditors ------------------------------------------------------------- Spansion Japan Limited, an indirect subsidiary of Spansion Inc., entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from Spansion Japan's creditors while it continues restructuring efforts. The Spansion Japan Proceeding constitutes an event of default causing automatic acceleration of the outstanding obligations without further action under these debt instruments of Spansion LLC and Spansion Japan: -- The Senior Facility Agreement, dated March 30, 2007, among Spansion Japan, GE Capital Leasing Corporation and the other financial institutions party thereto, which resulted in all obligations under the GE Facility (approximately $285 million as of the Proceeding Date) becoming automatically due and payable. -- The Revolving Credit Facility Agreement, dated as of Dec. 28, 2007, among Spansion Japan, The Bank of Tokyo- Mitsubishi UFJ, Ltd., and the other financial institutions party thereto, which resulted in all obligations under the BTMU Revolver (approximately $98 million as of the Proceeding Date) becoming automatically due and payable. -- The Credit Line Account Application and Agreement for Organizations and Business, dated as of Dec. 29, 2008, between Spansion LLC and UBS Bank USA, which resulted in all obligations under the UBS Credit Line (approximately $75 million as of the Proceeding Date) becoming automatically due and payable. -- The Indenture, dated as of June 12, 2006, among Spansion LLC, the Company and Spansion Technology LLC, as guarantors, and HSBC Bank USA, National Association, as successor Trustee, governing Spansion LLC's issued and outstanding 2.25% Senior Subordinated Exchangeable Debentures due 2016, which resulted in all obligations under the Exchangeable Debentures Indenture (approximately $208 million as of the Proceeding Date) becoming automatically due and payable. In addition, the Spansion Japan Proceeding constitutes an event of default, which may result in acceleration of the outstanding obligations thereunder if the Agent or Trustee, as applicable, takes the prescribed steps under the following debt instrument to cause such acceleration: -- The Credit Agreement, dated as of Sept. 19, 2005, among Spansion LLC, Bank of America, N.A. and the other financial institutions party thereto, as amended, under which there were approximately $10 million of obligations outstanding as of the Proceeding Date. -- The Indenture, dated as of Dec. 21, 2005, among Spansion LLC, the Company and Spansion Technology LLC, as guarantors, and HSBC Bank USA, National Association, as successor Trustee, governing Spansion LLC's issued and outstanding 11.25% Senior Notes due 2016, under which there were approximately $266 million of obligations outstanding as of the Proceeding Date. -- The Indenture, dated as of May 18, 2007, among Spansion LLC, the Company and Spansion Technology LLC, as guarantors, and HSBC Bank USA, National Association, as successor Trustee, governing Spansion LLC's issued and outstanding Senior Secured Floating Rate Notes due 2013, under which there were approximately $632 million of obligations outstanding as of the Proceeding Date. Progress on U.S. Restructuring Efforts Spansion also disclosed that it is in active discussions with an ad hoc committee representing holders of its $625 million Senior Secured Floating Rate Notes due 2013 about restructuring the company's balance sheet as well as potential strategic transactions. "We are making progress in our constructive discussions with an ad hoc committee of secured noteholders, to find a mutually beneficial agreement as we seek to resolve Spansion's capital structures," John Kispert, Spansion's president and CEO said. About Spansion Spansion (NASDAQ: SPSN) -- http://www.spansion.com-- is a leading Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. As reported by the Troubled Company Reporter on Jan. 19, 2009, Fitch Ratings downgraded these ratings for Spansion Inc.: -- Issuer Default Rating to 'C' from 'CCC'; -- $175 million senior secured revolving credit facility (RCF) due 2010 to 'CC/RR3' from 'CCC+/RR3'; -- $625 million senior secured floating rating notes due 2013 to 'CC/RR3' from 'CCC+/RR3'; -- $225 million of 11.25% senior unsecured notes due 2016 to 'C/RR6' from 'CC/RR6'; -- $207 million of 2.25% convertible senior subordinated debentures due 2016 to 'C/RR6' from 'CC/RR6'. According to the TCR on Jan. 19, 2009, Moody's Investors Service downgraded Spansion's corporate family rating and probability of default rating to Ca from Caa2, senior secured floating rate notes to Caa2 from B3 and senior unsecured notes to Ca from Caa3. The TCR reported on Jan. 19, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Spansion Inc. to 'D' from 'CCC', and the issue-level rating on Spansion LLC's 11.25% senior unsecured notes due 2016 to 'D' from 'CC'. SPANSION INC: Fitch Downgrades Issuer Default Rating to 'D' ----------------------------------------------------------- Fitch Ratings has downgraded the Issuer Default Rating for Spansion Inc. (SPSN) to 'D' from 'C' following the Feb. 14, 2009, expiration of a 30 day cure period triggered by the company failing to make its senior unsecured interest payment on Jan. 15, 2009. Fitch also has affirmed these ratings on Spansion: -- $175 million senior secured revolving credit facility (RCF) due 2010 at 'CC/RR3'; -- $625 million senior secured floating rating notes due 2013 at 'CC/RR3'; -- $225 million of 11.25% senior unsecured notes due 2016 at 'C/RR6'; and -- $207 million of 2.25% convertible senior subordinated debentures due 2016 at 'C/RR6'. Approximately $1.3 billion of debt securities are affected by Fitch's actions. Fitch expects to withdraw its ratings on Spansion in 30 days. Fitch believes the missed interest payment as well as Spansion Japan Limited (a wholly owned subsidiary of the company) entering into bankruptcy proceedings, violates certain cross default provisions in Spansion's various bond indentures, potentially resulting in the acceleration of all outstanding debt amounts if notified by the trustee. SPANSION INC: Moody's Cuts Default Rating to 'D' on Non-Payments ---------------------------------------------------------------- Moody's Investors Service has downgraded Spansion's probability of default rating to D from Ca and left ratings for the corporate family and debt instruments unchanged. The rating action was in response to Spansion's missed interest payment on its $250 million 11.25% senior unsecured notes following expiration of the 30-day cure period on February 14, 2009. Moody's also views this as a payment default for the $625 million secured floating rate notes since the indenture governing this debt contains cross default provisions. Following this rating action, Moody's will withdraw all ratings. Ratings downgraded: * Probability of Default Rating to D from Ca Ratings unchanged: * Corporate Family Rating -- Ca * $625 Million Senior Secured Floating Rate Notes -- Caa2 (LGD-2, 25%) * $250 Million 11.25% Senior Unsecured Notes -- Ca (LGD-5, 71%) * Speculative Grade Liquidity Rating -- SGL-4 In accordance with Moody's LGD methodology, the $625 million secured notes are rated Caa2 (two notches higher that the senior unsecured notes) with a corresponding LGD-2 assessment, reflecting some recovery value to noteholders. Despite depressed valuations for technology assets, Moody's expects at least a 75% recovery. Moody's note that the $625 million secured notes have a first priority lien on all inventory and domestic property, plant and equipment (net book value of roughly $1.2 billion as of December 30, 2007) as well as a second lien on domestic accounts receivable (net book value of approximately $217 million as of December 30, 2007). The $250 million senior unsecured notes are rated Ca with a corresponding LGD-5 assessment. The unsecured notes are expected to recover less than 30% of their value reflecting their junior position in Spansion's capital structure as a result of the considerable amount of secured debt in front of them. Moody's last rating action was on January 15, 2009. The principal rating actions involved the downgrade of the company's CFR (to Ca), PDR (to Ca) and instrument ratings (senior secured to Caa2; senior unsecured to Ca). Spansion'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 the 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 Spansion's core industry and Spansion's ratings are believed to be comparable to those of other issuers of similar credit risk. Spansion Inc., headquartered in Sunnyvale, California, and parent of Spansion, LLC, is a provider of flash memory semiconductors, with $2.5 billion of revenue for the last twelve months ended September 28, 2008. SPECIAL DEVICES: Reports $52MM in Assets and $109MM in Debts ------------------------------------------------------------ Special Devices Inc. filed its schedules of assets and liabilities, showing property for $52.2 million against $109 million in liabilities, Bloomberg's Bill Rochelle reported. The Company, the report adds, has $22.5 million in secured borrowing provided by Wayzata Opportunities Fund LLC, one of the pre-bankruptcy lenders. Moorpark, California-based Special Devices Inc. -- http://www.specialdevices.com/-- was founded in the 1950s to manufacture explosives for film special effects, also makes initiators for the defense and mining industries. The company makes a component that causes car air-bags to deploy. Special Devices filed for Chapter 11 protection on December 15, 2008 (Bankr. D. Del. 08-13312) after failing to refinance $73.6 million in debt. The Hon. Mary F. Walrath oversees the case. Jason M. Madron, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., serve as the Debtor's counsel. Gibson, Dunn & Crutcher LLP acts as special corporate counsel, and Kurztman Carson Consultants LLC acts as claims agent. When it filed for bankruptcy, the Debtor estimated both assets and debts to be between $50 million and $100 million. ST BERNARD PARISH: Moody's Lifts Rating on $18.4MM Debt From Ba2 ---------------------------------------------------------------- Moody's Investors Service has upgraded to Baa2 from Ba2 and assigned a stable outlook to the rating on St. Bernard Parish School Board's $18.4 million in outstanding general obligation unlimited tax debt. The bonds are secured by the collection of an ad valorem tax levied without limit as to rate or amount on all taxable property within the boundaries of the District. The significant upgrade is based upon the notable recovery in key financial and economic indicators following Hurricane Katrina and Moody's belief that the positive trends have strengthened the credit quality of the Board. Assignment of the Baa2 rating also continues to reflect the Board's vulnerability to such an unprecedented natural disaster and ongoing concentration in the oil and gas industry. Although the largest taxpayers were fundamental in the Board's recovery following the hurricane, Moody's recognizes that the concentration in refineries remains a notable risk. Tax Base Exhibiting Signs Of Recovery The School Board is located in southeastern Louisiana and sustained severe flooding which devastated a majority of the tax base. Prior to the hurricane, the population of the Parish was 67,000; in the months after the storm, the population was estimated to be 7,000 and current estimates are that the population has remarkably increased to 37,000. Also immediately after the storm, enrollment drastically declined from 8,800 to 460 students; enrollment is now 4,355 or 50% of the pre-storm level. Early estimates were that the full valuation of taxable property could decrease as much as 25%, while the actual initial post-storm decline approximated this level with a 21% decrease for the 2006 fiscal year. This notable decrease was subsequently followed by modest growth rates of 2.8% in fiscal 2007 and 4% in fiscal 2008. In fiscal 2009, however, a substantial amount of rebuilding drove the full valuation to increase 21.4% reaching $1.9 billion which approximates the pre-Katrina valuation. Preliminary estimates are not available for the 2010 fiscal year but officials believe ongoing renovations and new construction will drive another strong growth rate for the tax base. The Board receives 37% of its General Fund revenues from property taxes; therefore, recovery in the tax base is important to daily operations. Additionally, the District conservatively budgeted for a 70% collection rate on residential properties for fiscal 2007; however, total collections have been close to 100% annually which is consistent with the historical trend. Officials noted that the State has a $75,000 homestead exemption so home values that are close to this amount do not provide significant tax revenue however the remodeled and new homes being constructed in the Parish have much higher values providing additional tax revenue. Oil and gas is a dominant factor in the local area as is demonstrated in the top ten taxpayers that comprise a substantial 71% of the property tax base. The largest taxpayer, Chalmette Refinery, is 30% of the tax base and Murphy Oil is 16% of the base. All of the largest taxpayers and employers were open shortly after the hurricane and they are now operating at pre- storm levels. However, with the area heavily dependent on the oil and gas industry any negative changes in demand or pricing could significantly impact the local economy and is a key consideration in assignment of the Baa1 rating. Financial Operations Remain Healthy In fiscal 2008, 36% of General Fund revenues were derived from State sources while 26% were from sales taxes and 18% were from property taxes. Officials have been able to manage a decrease in State funding in fiscal years 2007 and 2008 given less expenditures resulting from a smaller enrollment. As expected, sales tax revenues decreased 33% in fiscal 2005 but then increased 9.3% in 2007 and 2.7% in 2008 to $11.2 million. The total General Fund balance fluctuated in 2006, 2007 and 2008 given the ebb and flow of Federal funding in the General Fund. In fiscal 2006, the total fund balance increased to $35.5 million but then decreased to $22.3 million in fiscal 2007 as certain Federal funding designations were spent. In fiscal 2008, another decrease brought the total fund balance to $19.8 million but remained a strong 45% of General Fund revenues. The undesignated portion of the fund balance was $9.2 million in fiscal 2006, $9.4 million in fiscal 2007 and $6.9 million in fiscal 2008. In fiscal 2008, this amount equals 15.9% of General Fund revenues. Officials have a goal of maintaining 15% of operations in the General Fund balance. After the storm the School Board drew upon a modest $4.5 million of its $17.8 million Community Disaster Loan. There has been some indication, from the Federal government, that the CDL funding could be forgiven so that issuers will not have to repay this loan; however, if the Board does need to repay it, payments can be made over ten years which officials stated would be manageable for them to fund out of operating revenues. The rating upgrade takes into consideration Moody's belief that the School Board has remained financially sound as it continues to manage through the Katrina impact. Debt Burdens Manageable; No Plans For Future Debt The Board's debt burden is 1.2% overall and amortization is rapid with 100% of principal repaid in ten years. With FEMA providing substantial amounts of funding to rebuild school facilities, there are no plans to issue additional debt which should moderate debt levels. The Board's debt is all fixed rate. Outlook The stable outlook reflects Moody's belief that key economic and financial indicators have demonstrated solid and steady recovery since Hurricane Katrina. Key Statistics: * 2009 Estimated population: 37,000 * 2000 population: 67,000 * 2009 Full Valuation: $1.9 billion * Full value per capita: $53,944 * Per capita income: $16,718 (77.4% of US) * Overall debt burden: 1.2% * Payout (10 years): 100% * 2007 General Fund balance: $19.8 million (45.6% of General Fund revenues) * 2007 Undesignated General Fund balance: $6.9 million (15.9% of General Fund revenues) The last rating action for the St. Bernard Parish School Board was on July 18, 2006 when the Board's Ba2 rating was confirmed and a stable outlook was assigned. STANFORD INT'L BANK: SEC Charges Firm of $8 Billion Fraud --------------------------------------------------------- The U.S. Securities and Exchange Commission has charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an US$8 billion Certificate of Deposit program. Mr. Stanford's companies include Antiguan-based Stanford International Bank Limited (SIBL), Houston-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management. The SEC also charged SIBL chief financial officer James Davis as well as Laura Pendergest- Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action. Pursuant to the SEC's request for emergency relief for the benefit of defrauded investors, U.S. District Judge Reed O'Connor entered a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal those assets, the regulator said in a Feb. 17 statement. "As we allege in our complaint, Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors." Rose Romero, Regional Director of the SEC's Fort Worth Regional Office, added, "We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world." SEC Complaint The SEC's complaint, filed in federal court in Dallas, alleges that acting through a network of SGC financial advisers, SIBL has sold approximately US$8 billion of so-called "certificates of deposit" to investors by promising improbable and unsubstantiated high interest rates. These rates were supposedly earned through SIB's unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years. According to the SEC's complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in "liquid" financial instruments (the portfolio); monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators. Recently, as the market absorbed the news of Bernard Madoff's massive Ponzi scheme, SIBL attempted to calm its own investors by falsely claiming the bank has no "direct or indirect" exposure to the Madoff scheme. According to the SEC's complaint, SIBL is operated by a close circle of Mr. Stanford's family and friends. SIBL's investment committee, responsible for the management of the bank's multi- billion dollar portfolio of assets, is comprised of Mr. Stanford; Mr. Stanford's father who resides in Mexia, Texas; another Mexia resident with business experience in cattle ranching and car sales; Ms. Pendergest-Holt, who prior to joining SFG had no financial services or securities industry experience; and Mr. Davis, who was Stanford's college roommate. The SEC's complaint also alleges an additional scheme relating to US$1.2 billion in sales by SGC advisers of a proprietary mutual fund wrap program, called Stanford Allocation Strategy (SAS), by using materially false historical performance data. According to the complaint, the false data helped SGC grow the SAS program from less than US$10 million in 2004 to more than US$1 billion, generating fees for SGC (and ultimately Mr. Stanford) of approximately US$25 million in 2007 and 2008. The fraudulent SAS performance was used to recruit registered investment advisers with significant books of business, who were then heavily incentivized to reallocate their clients' assets to SIB's CD program. The SEC's complaint charges violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act, and registration provisions of the Investment Company Act. In addition to emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest. The Commission acknowledges the assistance and cooperation of the Financial Industry Regulatory Authority (FINRA) in connection with this matter. The SEC's investigation is continuing. FINRA independently developed information through its examination and investigative processes that contributed significantly to the filing of this enforcement action. CD Program SIBL describes the CDs in its disclosure statement as traditional bank deposits, Bloomberg News says. A one-year, US$100,000 CD issued by the bank paid a 4.5 percent annual yield as of Nov. 28, the news agency notes citing a SIBL Web site posting. The bank doesn't lend proceeds and instead invests in a mix of equities, metals, currencies and derivatives, Bloomberg News relates citing SIBL Web site postings and CD disclosures. In 2006, 57.4 percent of SIBL's portfolio was in equities, 21.9 percent in Treasuries and corporate bonds, 13 percent in metals, 7 percent in alternatives, and the rest in cash, mostly dollars, the bank's disclosure statement related to the CD offering said as cited by Bloomberg News. In one of its Web site postings, SIBL said its assets surpassed US$8 billion in June 2008, increasing by US$2 billion since 2007. The bank also said its assets reached US$1 billion in July 2001; US$2 billion in July 2003; US$3 billion in December 2004; US$5 billion in October 2006 and US$8 billion in June 2008 SIBL said in the same posting it focuses on a very select clientele and a very select product line including a CD that typically pays clients a higher interest rate than other banks' CDs. Withdrawals Barred Alison Fitzgerald at Bloomberg News reports that according to people familiar with the matter, SIBL placed a 60-day moratorium on early redemptions of its certificates of deposit. Stanford Group Co. financial advisers have told three clients that they can't redeem CDs sold by the firm prior to their maturity date, the people said as cited by Bloomberg News. According to Bloomberg News, one Austin, Texas-based depositor said he called his advisers Feb. 12 and was told he could not cash out his CDs, while a customer in Houston, who said he has more than US$2 million in Stanford CDs, said a representative told him on Feb. 11 that he'd have to wait until the maturity date to get his money back. The bank in the past let customers pay a three-month interest penalty to get their money back before the contractual maturity of the certificates, according to the news agency's sources. "Bank depositors may withdraw funds in accordance with the terms of their accounts," Bloomberg News quoted SIBL spokesman Brian Bertsch as saying. The Wall Street Journal relates that in a phone interview Monday, Mr. Davis declined to comment when asked if investors are having difficulty obtaining redemptions. "I don't have any comment, but I appreciate your call," WSJ quoted Mr. Davis as saying during the phone interview. Latin America Clients News of the SEC's complaint sent SIBL's Latin American clients to the bank's units in the region. Matthew Walter and Daniel Cancel of Bloomberg News report SIBL's affiliates in Venezuela, Panama and Ecuador were packed with clients trying to close accounts after the firm was accused of fraud in the U.S. According to the report, more than 100 clients went to one of Stanford Group Venezuela Asesores de Inversi�n, C.A.'s offices to transfer their accounts. The Venezuelan affiliate, Bloomberg News notes, has offices in five cities in the country. At the Stanford Group Casa de Valores in Quito, Ecuador, Bloomberg News says clients mingled in the lobby seeking information. "We have no information yet, and things are operating normally so far," the news agency quoted Dayana Hernandez, the manager at the Quito brokerage, as saying. At Stanford's Panama unit, Stanford Bank of Panama S.A., customers who wanted to withdraw money were turned away because the branch was already closed, Bloomberg News discloses. Meanwhile, Bloomberg News says according to the Bogota securities exchange, stock transactions by Stanford Financial Group's Colombian brokerage unit operated normally as of Feb. 17. The exchange is unaware of any problems involving Stanford's Bolsa y Banca unit, an exchange spokesman told Bloomberg News in a phone interview. In Antigua, The Wall Street Journal reports anxious depositors have flown in from overseas to seek their money from SIBL. Lawyers cited by WSJ said at least some depositors were being allowed to withdraw funds under the terms of their certificates of deposit. Some local clients have also responded to the news headlines by pulling funds from the separate Stanford-controlled Bank of Antigua, WSJ adds. Halted Financing Commitments As reported yesterday in the Troubled Company Reporter-Latin America, Bloomberg News said SIBL failed to complete its financing commitments to two transactions involving U.S. companies in which it owns shares. According to the report, the bank was released from its obligation to lend Elandia International Inc. US$28 million. In a Feb. 6 statement, ELandia said it has restructured its capital structure after modifying its credit agreement with SIBL. Under the terms of the modified credit agreement, ELandia said it has terminated SIBL's obligation to lend to ELandia the US$28 million balance of the amount committed and in exchange, and SIBL has surrendered for cancellation 16,148,612 shares of ELandia common stock. In addition, SIBL has converted the total principal amount outstanding under the loan of US$12 million into 1,777,778 shares of eLandia's Series B Convertible Preferred Stock and agreed to exchange US$2.35 million of outstanding principal owed by a subsidiary of eLandia under separate agreement for 344,444 shares of Series B Convertible Preferred Stock. As a result of the modification, eLandia has reduced its common stock outstanding from 40.9 million shares to 24.8 million shares. As part of the modification, SIBL was granted the option to purchase an additional 592,593 shares of the company's Series B Preferred Stock for an aggregate purchase price of US$4 million, exercisable through March 31, 2009. The terms of the Series B Preferred Stock were also amended to reduce the conversion ratio and to eliminate the voting rights of the Series B Preferred Stock. In the event that SIBL does not exercise this option in full, the conversion ratio for all shares of Series B Preferred Stock will be further reduced effective April 1, 2009. Also, SIBL agreed to terminate all of its rights to cause eLandia to register its shares for resale. In addition, SIBL has placed all of its shares of common stock and Series B Preferred Stock in a voting trust under which Pete R. Pizarro, Chairman and CEO of Elandia, serves as Voting Trustee. Last week, Bloomberg News said SIBL failed to provide funding for Health System Solutions Inc. to buy Emageon Inc., a medical- technology company. The bank is the principal shareholder of Tampa, Florida- based Health Systems Solutions, which sells medical software, according to the news agency. In a Feb. 13 statement, Emageon said it has received the US$9 million that had been placed in escrow with The Bank of New York Mellon by Health Systems Solutions Inc. in connection with the parties' merger transaction. The escrowed funds became payable to Emageon when the merger was not consummated before the close of business on February 11, 2009. Emageon also said it has terminated its amended merger agreement with Health Systems due to Health Systems' failure to receive all necessary financing on or before the designated closing date of February 11, 2009. About SIBL Domiciled in Antigua, Stanford International Bank Limited -- http://www.stanfordinternationalbank.com/-- is a member of Stanford Private Wealth Management, a global financial services network with US$51 billion in deposits and assets under management or advisement. Stanford Private Wealth Management serves more than 70,000 clients in 140 countries. STATION CASINOS: Misses Feb. 15 Payment, Moody's Keeps Ca Rating ---------------------------------------------------------------- Moody's Investors Service said Station Casinos, Inc.'s ratings are not affected by the announcement that it failed to make the February 15, 2009 scheduled interest payment on its 7.75% senior notes due 2016. Moody's last rating action for Station occurred on February 4, 2009 when its Corporate Family Rating and Probability of Default Rating were downgraded to Ca from Caa3. Station Casinos, Inc. wholly owns and operates 13 gaming and entertainment facilities located in Las Vegas, Nevada. The company also holds a 50% joint venture interest in five casinos and manages several Native American gaming facilities. Station generates approximately $1.4 billion in annual net revenues. STATION CASINOS: Missed Interest Payment Cues S&P's 'D' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level rating on Las Vegas, Nevada-based Station Casinos Inc.'s 7.75% senior notes to 'D' from 'CC'. The rating action reflects the missed Feb. 15, 2009 interest payment on the notes. A payment default has not occurred relative to the legal provisions of the notes, since there is a 30-day grace period to make the payment. However, S&P considers a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial stress -- unless S&P is confident that the payment will be made in full during the grace period. This rating action follows S&P's Feb. 4, 2009 research report in which S&P lowered its corporate credit rating on Station and S&P's issue-level rating on Station's 6.5% senior subordinated notes to 'D'. The company announced on Feb. 3, 2009, that it did not make the Feb. 1, 2009 interest payment on the 6.5% senior subordinated notes. At that time, Station also announced a solicitation for votes from eligible institutional holders of its senior unsecured and senior subordinated notes for a restructuring plan under Chapter 11 of the U.S. Bankruptcy Code. In addition to the missed payments on the 6.5% senior subordinated notes and the 7.75% senior notes, S&P expects Station to miss the upcoming interest payment on the 6.875% senior subordinated notes (due March 1). If and as this interest payment is not made, the issue-level rating on the notes will also be lowered to 'D'. All other issue-level ratings remain on CreditWatch, where they were placed with negative implications Nov. 26, 2008. Ratings List Station Casinos Inc. Corporate Credit Rating D/--/-- Downgraded Station Casinos Inc. To From -- ---- 7.75% senior notes D CC/Watch Neg TEXAS PETROCHEM: Moody's Puts "+" Outlook on Ba3 on Boost in Cash ----------------------------------------------------------------- Moody's Investors Service views the improvement in liquidity stemming from the amendment to Texas Petrochemicals' (Ba3 CFR/Stable outlook) credit facility to be a positive; however, it recognizes that future volatility in demand for TPC's products and commodity prices could impact liquidity in the future, even as sales volumes improve. Should availability under the revolver decline below $30-$35 million, the Ba3 Corporate Family Rating could come under negative pressure. The last rating action for TPC was an assignment of a probability of default rating and announcement of implementation of the loss- given-default methodology on September 27, 2006. Texas Petrochemicals LP is a processor of crude C4 hydrocarbons (primarily butadiene, butene-1, isobutylene), differentiated isobutylene derivatives and nonene and tetramer. The company operates three Texas-based manufacturing facilities in Houston, Baytown and Port Neches. TRUMP ENTERTAINMENT: Moody's Withdraws Ratings on Bankr. Filing --------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Trump Entertainment Resorts Holdings, LP because the issuer has filed for bankruptcy. These Trump ratings were withdrawn: -- Probability of Default Rating of D -- Corporate Family Rating of Ca -- $1.25 billion senior secured second lien notes due 2015 of Ca (LGD 4, 64%) -- SGL-4 Speculative Grade Liquidity rating Moody's previous rating action related to Trump occurred on February 12, 2009, when Moody's commented that the February 11, 2009 forbearance extension did not affect the company's ratings. Trump Entertainment Resorts Holdings, LP, owns and operates the Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and the Trump Marina Hotel Casino in Atlantic City, New Jersey. The company generates approximately $950 million of annual net revenue. TEXAS WESLEYAN: Moody's Affirms 'Ba2' Rating on 1997A Bonds ----------------------------------------------------------- Moody's Investors Service has affirmed the Ba2 rating on Texas Wesleyan University's Series 1997A bonds issued through the Forth Worth Higher Education Finance Corporation. At this time, Moody's are revising Moody's rating outlook to stable from positive, reflecting weakened liquidity and operating performance as well as expectations of a weak economic environment negatively impacting investment returns and gift revenues. Legal Security: Payments are a general unsecured obligation of the University. Interest Rate Derivatives: None Strengths * Continued strong growth in enrollment (nearly 30% over the past five years) in both undergraduate and graduate programs (3,049 full-time equivalent students in fall 2008), driven in large part by the success of the University's on-line programs as well as growth in the graduate programs. Transfer students comprise nearly 60% of the University's entering undergraduate enrollment through strategic relationships with nearby community colleges. * Although weakened in FY2008, operating cash flow margin as calculated by Moody's remains positive at 4.3% in FY 2008 (reduced from an average of 11.9% in the previous three years), providing adequate debt service coverage of 1.4 times. Management expects stronger operating performance in FY2009 with a target operating surplus of $600,000. Total net tuition revenue continues to grow, with a healthy 12.5% increase to $38.5 million in FY2008; growth of student charges is essential as they represent an increasing 86% of the University's operating revenues in FY2008 as calculated by Moody's compared to 78% in FY2005. * Management remains focused on generating positive operating results and on rebuilding liquidity. The University plans to retain all unrestricted gifts (typically $600,000-800,000 annually) instead of using these funds for operations and has limited endowment spending to a fixed rate of $2.5 million annually. Given current market conditions, however, Moody's expects resource and liquidity growth may take longer than planned. Challenges * Limited liquidity, excluding plant equity, with unrestricted financial resources weakened from -$1.3 million in FY 2007 to - $2.3 million in FY 2008. The University's lack of liquid financial resources and reliance on a line of credit for seasonal cash flow leaves it vulnerable to unexpected shifts in demand or financial performance. * Balance sheet cushion remains thin with expendable financial resources covering direct debt and annual operations by 0.31 times and 0.13 times, respectively (5/31/08). Since the end of the fiscal year, challenging investment markets have negatively impacted financial resources. Assuming a 30% reduction in financial resources from the end of FY 2008, expendable financial resources would cover debt 0.2 times and operations a very weak 0.09 times. * Highly competitive student market, with the University competing with public universities and regional private higher education institutions. The University's net tuition per student of $13,583 is relatively low when compared to peer institutions, especially those with significant graduate enrollment. The competitive environment can potentially limit growth in net tuition revenue, while the current economic environment could also create more need for financial aid, potentially stressing the University's operations and endowment. Recent Developments In March 2008, Texas Wesleyan University purchased an additional $9 million of annuities (following the purchase of $10 million in December 2007) to terminate the University's remaining obligation under a frozen defined benefit pension plan. The annuities were purchased with $2 million in cash, a $1 million loan and $6 million of plan assets. The plan, which has been closed to new participants since 1996, was underfunded by $8.3 million at the end of FY 2008. In FY2009, this liability will be zero. The University's current asset allocation includes approximately 55% in traditional equity, 30% in fixed income, and 12% in hedge funds. The Fund Evaluation Group serves as the University's investment manager. Investment returns have been favorable over the past several years, however, market conditions have impacted recent performance with a negative 6% return in FY2008. Management reports preliminary FY 2009 returns through December at approximately negative 27%. TWU did not have any exposure to the Commonfund Short Term Fund when it was closed last September. Management notes that gift revenues during the past 18 months have been healthy, with gifts and pledges providing full funding for the construction of a fitness center as well as additional $2 million for scholarship funds. Outlook The University's rating outlook is stable, reflecting Moody's expectation that continued net tuition revenue growth and improvement in operating results will contribute to growth of liquid financial resources over time. The outlook also incorporates Moody's expectation of continued enrollment growth and no near-term borrowing plans. What Could Change the Rating - UP Growth in liquidity from enhanced fundraising or retained surpluses, along with stability in enrollment and leverage levels What Could Change the Rating - DOWN Enrollment declines, especially leading to operating deficits; substantial new borrowing; further reductions to already limited liquidity Key Data And Ratios (Fiscal year 2008 financial data; fall 2008 enrollment data) * Figures in parentheses include a pro-forma 30% reduction to financial resources * Total Full-Time Equivalent Enrollment (FTE): 3,049 students * Total Direct Debt: $20.1 million * Total Financial Resources: $36.7 million ($25.7 million) * Expendable Financial Resources to Direct Debt: 0.31 times (0.22 times) * Expendable Financial Resources to Operations: 0.13 times (0.09 times) * Average Actual Debt Service Coverage (three-year average): 2.3 times * Reliance on Student Charges (Tuition and Auxiliary Revenues): 86.3% Rated Debt * Revenue Bonds, Series 1997A: Ba2 The last rating action was on January 16, 2008 when the rating for Texas Wesleyan University was affirmed and the outlook was revised to positive from stable. U.S. SHIPPING: Fails to Pay $6.5 Million Interest Due Feb. 15 ------------------------------------------------------------- U.S. Shipping Partners L.P. disclosed in a regulatory filing that effective as of February 9, 2009, it and its lenders amended: * the Waiver and Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of October 20, 2008, to extend the lenders' waiver of any potential defaults under the financial covenants in the Partnership's senior credit agreement for the quarters ended September 30, 2008 and December 31, 2008 through the earlier of (i) February 20, 2009 and (ii) the date on which the Partnership makes an interest payment in respect of its senior notes; and * the Forbearance Agreement entered into with holders of a majority-in-interest of the outstanding loans under the senior credit agreement on December 30, 2008 to extend the termination date to the earliest to occur of (i) 5:00 p.m. (Eastern time) on February 20, 2009; (ii) the date on which the Partnership makes an interest payment in respect of its senior notes; (iii) the occurrence and continuance of any event of default other than the Partnership's failure to make the December 31, 2008 principal and interest payments under the senior credit facility; and (iv) the failure by the Partnership to comply with any of the provisions of the Forbearance Agreement. Prior to this extension the waiver and the Forbearance Agreement were to expire on February 10, 2009. In accordance with the terms of the Forbearance Agreement, the Partnership is currently engaged in good faith negotiations with the administrative agent and the lenders regarding restructuring and strategic alternatives. There can be no assurance that the Partnership's negotiations with the lenders will be successful, or that the lenders will not declare all outstanding obligations under the senior credit agreement to be immediately due and payable and pursue their rights and remedies under the senior credit agreement upon termination of the Forbearance Agreement on February 20, 2009. In a separate regulatory filing dated February 17, 2009, the Partnership did not make the $6.5 million interest payment due on February 15, 2009 in respect of its 13% senior secured notes due 2014. Under the terms of the Indenture, dated August 7, 2006, governing the Notes, the Partnership has a grace period of 30 days from the payment due date with respect to the interest payment before the nonpayment becomes an event of default under the Indenture. There is no right to accelerate the obligations under the Notes based on the nonpayment unless interest remains unpaid upon expiration of the grace period. In the event that the interest payment is not made prior to the expiration of the 30-day grace period, then the aggregate principal amount of the Notes, plus the unpaid interest payment and any other amounts due and owing on the Notes could be declared immediately due and payable by the Trustee under the Indenture or by holders of 25% or more of the aggregate principal amount of the Notes. The rights of the holders of the Notes with respect to the collateral securing such Notes are substantially limited pursuant to the terms of the lien-ranking agreements set forth in the Indenture and in the intercreditor agreement between, among others, the trustee for the Notes and the collateral agent under the Partnership's amended and restated credit facility. Under those lien-ranking agreements, at any time that obligations under the Senior Credit Agreement that have the benefit of the first priority liens are outstanding, any actions that may be taken in respect of the collateral, including the ability to cause the commencement of enforcement proceedings against the collateral and to control the conduct of such proceedings, and the approval of amendments to and waivers of past default under the collateral documents, will be at the direction of the lenders under the Senior Credit Agreement and holders of any other obligations secured by the first priority liens. As a result, the trustee, on behalf of the holders of the Notes, will not have the ability to commence, control or direct such actions, even if the rights of the holders of the Notes are adversely affected. Failure to make the interest payment on the Notes within the 30-day grace period would also constitute an event of default under the Partnership's Senior Credit Agreement, which would allow the lenders thereunder to declare the Partnership's obligations under the Senior Credit Agreement immediately due and payable and to exercise their rights and remedies under the Senior Credit Agreement. About U.S. Shipping Partners L.P. U.S. Shipping Partners L.P. is a leading provider of long-haul marine transportation services for refined petroleum, petrochemical and commodity chemical products in the U.S. domestic "coastwise" trade. Its existing fleet consists of twelve tank vessels: five integrated tug barge units; one product tanker; three chemical parcel tankers and three ATBs. U.S. Shipping has embarked on a capital construction program to build additional ATBs and, through a joint venture, additional tank vessels that upon completion will result in U.S. Shipping having one of the most modern versatile fleets in service. For additional information about U.S. Shipping Partners L.P., visit: http://www.usslp.com/ The Troubled Company Reporter reported on Feb. 2, 2009, that Standard & Poor's Ratings Services withdrew its 'D' corporate credit and other ratings on U.S. Shipping Partners L.P. S&P lowered all ratings on U.S. Shipping to 'D' on Jan. 6, 2009, after the company's announcement on Jan. 5, 2009, that it was in default under the terms of its senior credit agreement, after failing to make principal and interest payments due on Dec. 31, 2008. WALDEN RESERVE: May Conduct Auction of Cumberland County Property ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas has granted Walden Reserve, LLC, permission to sell its fee simple interest in certain real property located in Cumberland County, Tennessee consisting of approximately 5,835 acres of land, free and clear of all liens, interests and encumbrances. The Court also approved the bidding procedures for the auction sale. As reported in the Troubled Company Reporter on Jan. 5, 2009, the Debtor told the Court that the sale of the real property is the best method for satisfying its lenders and generating the highest value for its assets given the time constraints imposed by its creditors and the Bankruptcy Code. The real property will be offered in individual tracts, combinations or as a whole as allowed by state and county planning and zoning regulations. Acceptance of any auction bid is subject to approval by the Debtor and the Court prior to closing. Pursuant to the Bidding Procedures, the auction sale will be held no later than March 15, 2009. Westchester Auctions, who has been granted the exclusive right to sell the real property, has agreed to advance certain expenses associated with the cost of the sale, including the construction of a road to provide better visibility, and has requested that they retain an 8% buyer's premium and obtain a lien on the proceeds of sale with a higher priority of all creditors. Pursuant to the approved bidding procedures, 10% of the accepted bid will be paid as down payment upon execution of an Agreement to Purchase. The remainder of the purchase price will be payable in cash at closing, which will take place within 30 days following the auction. About Walden Reserve Based in Overland Park, Kansas, Walden Reserve, LLC, formerly doing business as Renegade Mountain Partners LLC, is a real estate developer in the State of Tennessee. The Debtor filed for chapter 11 protection on May 28, 2008 (D. Kan. Case No. 08-21230). Colin N. Gotham, Esq., at Evans & Mullinix, P.A., represents the Debtor in its restructuring efforts. Scott J. Goldstein, Esq., at Spencer, Fane, Britt & Browne, represents the Committee of Unsecured Creditors as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $14,637,288 and total debts of $7,085,320. WORLDSPACE INC: Court Extends DIP Maturity Date to February 27 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted, on an interim basis, the emergency request of WorldSpace, Inc., et al., for the extension of the maturity date of their Debtor-in-Possession Financing with a syndicate of financial institutions including Citadel Energy Holdings LLC, Highbridge International LLC, OZ Master Fund Ltd., and AG Offshore Convertibles Ltd. under a secured superpriority priming debtor-in- possession facility agreement dated Nov. 5, 2008, as amended. The Court also increased the total term loan commitment under the DIP Credit Agreement by $1.3 million to $14.3 million. The maturity date shall now be that date which is the earliest of (a) Feb. 27, 2009, (b) the effective date of the Borrowers' Reorganization Plan that has been confirmed by an order of the Bankruptcy Court; and (c) the date on which the Borrowers have consummated, pursuant to Sec. 363 of the Bankruptcy Code and a final order of the Bankruptcy Court, a sale or sales of all or substantially all of the Borrowers's assets. The Court ordered, however, that the DIP Lenders shall have no obligation to extend the financing under this Second DIP Amendment, unless all of the conditions precedent to the making of such loan under the Second DIP Amendment and the Court's Order have been satisfied in full or waived by the DIP Lenders, each in their sole discretion. A final hearing to consider final approval of the increase in the DIP Financing shall be held on Feb. 25, 2009, at 2:00 p.m (prevailing Eastern time). As reported in the Troubled Company Reporter on Nov. 17, 2008, the Court authorized the Debtors to obtain up to $13.0 million in postpetition financing from the DIP Lenders to enable the Debtors to pay their employees, to continue operations and preserve the value of their estates. A full-text copy of the Court's interim order, dated Feb. 5, 2009, is available at: http://bankrupt.com/misc/WorldSpaceInc_InterimOrder02.05.09.pdf 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. WORLDSPACE INC: Wants Plan Filing Period Extended to April 30 ------------------------------------------------------------- WorldSpace, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive period to file a plan until April 30, 2009, and their exclusive period to solicit acceptances of said plan until June 29, 2009. The extension will allow the Debtors sufficient time to consummate a sale of substantially all of their assets, formulate a plan of reorganization and negotiate the plan with their creditors. The Debtors's exclusive filing period expired last Feb. 14, 2009, while the exclusive solicitation period will expire on April 15, 2009. This is the Debtors' first request for the extension of their exclusive periods. As reported in the Troubled Company Reporter on Feb. 5, 2008, the Debtors asked the Court to approve (i) the sale of all or substantially of the assets of WorldSpace, Inc., and its debtor and non-debtor affiliates related to their satellite radio business to the highest and best bidder at an open auction on Jan. 26, 2009, and (ii) the assumption and assignment of certain executory contracts and unexpired leases in connection with the sale. The auction was later rescheduled to Feb. 23, 2009. There is no stalking horse bidder for the Acquired Assets. The sale of the Acquired Assets must be completed with one or more successful bidders to avoid a default under the DIP Credit Agreement. As reported in the Troubled Company Reporter on Nov. 17, 2008, the Court authorized the Debtors to obtain up to $13 million in postpetition financing from a syndicate of financial institutions including Citadel Energy Holdings LLC, Highbridge International LLC, OZ Master Fund Ltd., and AG Offshore Convertibles Ltd. under a secured superpriority priming debtor-in-possession facility agreement dated Nov. 5, 2008, as amended. The sale hearing, which was supposed to take place on Jan. 29, 2009, is scheduled to take place instead on Feb. 25, 2009, at 2:00 p.m. prevailing Eastern time. 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: Has Until March 20 to File Schedules -------------------------------------------------------- The Hon. Arthur J. Gonzalez of the United States Bankruptcy Court for the Southern District of New York extended until March 20, 2009, the period within which Young Broadcasting Inc. and its debtor-affiliates may file their schedules of assets and liabilities, and statement of financial affairs. About Young Broadcasting Headquartered in New York, Young Broadcasting Inc. -- http://www.youngbroadcasting.com-- own 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 Jan. 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. Jo Christine Reed, Esq., at Sonnenschein Nath & Rosenthal LLP, presents the Debtors in their restructuring efforts. The Debtors proposed UBS Securities LLC as consultant, Ernst & Young LLP as accountant, Epiq Bankruptcy Solutions LLC as claims agent, and David Pauker as chief restructuring officer. When the Debtors filed for protection from their creditors, they listed $575,600,070 in total assets and $980,425,190 in total debts. YOUNG BROADCASTING: Moody's Affirms Ca Corp. Rating on Bankruptcy ----------------------------------------------------------------- Moody's Investors Service has downgraded Young Broadcasting Inc.'s Probability of Default Rating to D from Ca and confirmed its Ca Corporate Family Rating following the announcement that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In addition, Moody's downgraded the company's senior secured credit facility to Ca from Caa1 and confirmed the rating of Young's senior subordinated notes. This rating action concludes the review of Young's ratings initiated on January 16, 2009. Moody's will be withdrawing all of Young's ratings shortly. The downgrade of Young's PDR reflects the Company's bankruptcy filing, which Moody's classifies as a "default" event, consistent with the "D" Probability of Default rating. Young's Ca CFR incorporates Moody's fundamental valuation of Young's assets and expectation of a below average family recovery at approximately 35%. The company filed for bankruptcy protection on February 13, 2009 as the grace period related to payment of interest on the Company's 8.75% Senior Subordinated Notes due 2014 was to expire on February 15, 2009. Moody's has taken these rating actions: Young Broadcasting Inc. * Corporate family rating -- confirmed Ca * Probability-of-default rating -- downgraded to D from Ca * $370 million senior secured credit facility -- downgraded to Ca (LGD 4, 62%) from Caa1 (LGD 2, 17%) * 10% Senior Subordinated Notes due 2011 -- confirmed C (to LGD 6, 95% from LGD 5, 73%) * 8 3/4 % Senior Subordinated Notes due 2014 -- confirmed C (to LGD 6, 95% from LGD 5, 73%) * Outlook stable On January 16, 2009, Moody's downgraded Young's Corporate Family Rating and Probability of Default Rating to Ca from Caa3 and placed all rating under review for further possible downgrade. Young Broadcasting Inc., headquartered in New York owns and operates 10 television stations in 10 markets and a national television sales representative firm, Adam Young Inc. YOUNG BROADCASTING: Chapter 11 Filing Cues S&P's Rating Cut to D ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its issue- level rating on New York, N.Y.-based Young Broadcasting Inc.'s 10% senior subordinated notes due 2011 to 'D' from 'C'. The recovery rating on this debt issue remains unchanged at '6', indicating S&P's expectation of negligible (0%-10%) recovery for debtholders in a payment default. As of Sept. 30, 2008, the company had debt of about $825 million. The rating downgrade reflects the company's announcement that it has filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. "We lowered our corporate credit rating for Young to 'D' on Jan. 20, 2009, after the company missed an interest payment on its 8.75% senior subordinated notes due 2014," said Standard & Poor's credit analyst Deborah Kinzer. "This was followed by a downgrade of Young's senior secured debt to 'D' on Feb. 10, 2009, after the company missed an interest payment on its term loan," she continued. Young owns and operates 10 TV stations, reaching almost 6% of U.S. households. YRC WORLDWIDE: Completes Sale and Financing Leaseback Transaction ----------------------------------------------------------------- YRC Worldwide Inc. disclosed in a regulatory filing that it closed on an additional portion of the sale and financing leaseback transaction pursuant to the NAT Transaction. On Dec. 19, 2008, YRC Worldwide entered into a Real Estate Sales Contract with NATMI Truck Terminals, LLC to sell and simultaneously lease back a pool of the Company's facilities located throughout the United States. The Company expects to close the sale-leaseback transaction by the end of January 2009 and no later than the middle of February 2009, subject to the satisfaction of normal and customary due diligence and related conditions, including NATMI's right to terminate the Contract in its sole discretion during the inspection period. The aggregate purchase price for the subject facilities is approximately $150.4 million. Initial annual lease payments will be approximately $21.1 million in the aggregate, subject to annual increases based on changes in the Consumer Price Index. The initial lease term for each facility will be 10 years, with renewal options to extend the term of each lease by up to an additional 30 years. During the lease term for each facility, as it may be extended, the Company will have a right of first offer in the event NATMI proposes to sell the facility. The Company received approximately $9 million of proceeds at the February 13 closing. The Company has extended the inspection period for the NAT Transaction to mid-March 2009 for the remaining subject facilities. The Company expects to close on the remaining subject facilities in early to mid-March 2009, subject to the satisfaction of normal and customary due diligence and related conditions, including NATMI's right to elect not to acquire any of the remaining subject facilities in its sole discretion during the inspection period. National Master Freight Agreement The union employees represented by the International Brotherhood of Teamsters voted to modify the National Master Freight Agreement, effective April 1, 2008, through March 31, 2013, with YRC Inc., USF Holland Inc. and New Penn Motor Express Inc., to, among other things, reduce wages paid under the NMFA by 10%. In the Prior Form 8-K, the Company stated that it is required to provide a certification to the Teamsters on or before Feb. 15, 2009, that no event or condition exists that constitutes a default under the Company's credit facility, or which upon notice, lapse of time or both would, unless cured or waived, become or lead to the a default. On February 12, 2009, the Company delivered the certification to the Teamsters in accordance with the modified NMFA. In the Prior Form 8-K, the Company also stated that the affected union employees will receive the right to participate in the equity of the Company through a vehicle that economically functions as a warrant or similar instrument to purchase 15% of the Company's common stock. Consistent with this statement, the Company and the Teamsters have agreed to implement a Union Employee Option Plan and a Union Employee Stock Appreciation Right Plan. Pursuant to the Stock Option Plan, on Feb. 12, 2009, the Company granted to its union employees, who are employed by bargaining units who have ratified the wage reduction, options to purchase up to an aggregate of 11,394,758 shares of the Company's common stock at an exercise price equal to $3.74 per share, which was the closing price per share of the Company's common stock on the NASDAQ Stock Market on that date. The options will vest in full on the first anniversary of the grant date, and will be exercisable for 10 years following the date of grant, subject to the terms of the Stock Option Plan. The options were granted subject to shareholder approval and will not be effective until the Stock Option Plan is approved by the shareholders of the Company. The Company expects to submit the Stock Option Plan to a vote by its shareholders at a meeting of the shareholders later this year, most likely its annual meeting of shareholders, which is usually held in May of each year. If the shareholders of the Company do not approve the Stock Option Plan, the options granted under the Stock Option Plan will automatically terminate. Pursuant to the SAR Plan, on Feb. 12, 2009, the Company granted to its Union Employees stock appreciation rights with respect to up to 11,394,758 shares of the Company's common stock at an exercise price equal to $3.74 per share, which was the closing price per share of the Company's common stock on the NASDAQ Stock Market on that date. Each Union Employee received one SAR under the SAR Plan for each option that the Union Employee received under the Stock Option Plan. Each SAR provides the Union Employee the right to receive a cash payment from the Company equal to the closing price of the Company's common stock on the date of exercise less the exercise price of the SAR. The SARs will vest in full on the first anniversary of the grant date, and will be exercisable for 10 years after the date of grant, subject to the terms of the SAR Plan. If the shareholders of the Company approve the Stock Option Plan, the SARs granted under the SAR Plan will automatically terminate. Based on the Feb. 12, 2009, closing price of the Company's common stock of $3.74 per share, the aggregate fair value of the union equity grants is approximately $30 million and would be recognized as a one-time accounting charge on the grant date. Under the SAR Plan, the aggregate fair value of the union equity grants would be re-measured at the end of each quarter using the closing share price of the Company's common stock at that time. If the shareholders of the Company approve the Stock Option Plan, the aggregate fair value of the union equity grants would be fixed using the closing share price of the Company's common stock on the date of shareholder approval. About YRC Worldwide Inc. Headquartered in Overland Park, Kansas, YRC Worldwide Inc. -- http://www.yrcw.com/-- a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. YRC Worldwide employs approximately 58,000 people. * * * As reported in the Troubled Company Reporter on Jan. 9, 2009, Standard & Poor's Ratings Services revised the implications of its CreditWatch review of YRC Worldwide Inc. (CC/Watch Dev/--) to developing from negative. The revision follows news of the Overland Park, Kansas-based trucking company's terminated debt tender offer and negotiations with its bank group to modify terms on its revolving credit and asset backed securitization facilities. On January 13, the TCR said Fitch Ratings downgraded the Issuer Default Ratings and debt ratings of YRC (IDR to 'CCC' from 'B'; Secured credit facilities to 'B/RR1' from 'BB/RR1'; and Senior unsecured to 'C/RR6' from 'CCC+/RR6') and its subsidiary, YRC Regional Transportation, Inc. (IDR to 'CCC' from 'B'; and Senior secured notes to 'C/RR6' from 'CCC+/RR6'.) On February 2, the TCR reported that YRC Worldwide Inc. closed the first part of the sale and financing leaseback transaction from a contract with NATMI Truck Terminals, LLC entered on December 19, 2008. The company received roughly $101 million of proceeds and expects to receive roughly $50 million more in the second closing. In the company's waivers filed with the SEC on January 22, 2009, it stated that it now has the ability to use the proceeds from this transaction for operating purposes, which is the company's current intention. The company will account for the proceeds as a financing transaction, therefore, the assets remain on the books and a lease obligation will be recorded as long-term debt. The company will recognize the lease payments through interest expense with no impact to depreciation expense. As reported by the TCR on January 19, 2009, YRC obtained waivers under its credit facilities until February 17. The company is in discussions with its banking group to modify certain terms of its credit facilities, including changes to its leverage ratio, in addition to early renewal of its asset-backed securitization facility. YRC WORLDWIDE: Finalizes Loan Terms Amendment --------------------------------------------- YRC Worldwide Inc. finalized an amendment with the company's lenders of its credit facilities and renewed its asset-backed securitization facility two months prior to maturity. "We are pleased with the banks' support of our strategic actions and their confidence in our ability to improve our financial position," stated Tim Wicks, executive vice president and CFO of YRC Worldwide. "We feel good about the amendment that we reached and the flexibility it will provide us to help weather this economic recession. We look forward to discussing these flexibilities in our analyst call tomorrow." Credit Agreement Amendment On Feb. 12, 2009, the Company and certain of its subsidiaries entered into Waiver and Amendment No. 2 to the Credit Agreement with the lenders and agents party thereto, which amends the Credit Agreement, dated as of Aug. 17, 2007, among the parties thereto. The Credit Agreement continues to provide the Company with a $950 million senior revolving credit facility, including sublimits available for borrowings under certain foreign currencies and for letters of credit, and a senior term loan in an aggregate outstanding principal amount of approximately $111.5 million. The Credit Agreement Amendment removes the Company's right to request an increase in the commitments under the Credit Agreement. Maturity Date: The Credit Agreement expires, and the revolving credit facility and term loan mature, on Aug. 17, 2012, or the earlier date as the requisite lenders give notice if: -- $50 million or more of the amount required to be satisfied in cash in respect of YRC Regional Transportation, Inc.'s fka USFFreightways Corporation 8-1/2% Guaranteed Notes due April 15, 2010, remains outstanding on or after March 1, 2010, or -- $50 million or more of the amount required to be satisfied in cash in respect of the Company's 5% Contingent Convertible Senior Notes due 2023 remains outstanding on or after June 25, 2010. Fees and Interest Rate: The Credit Agreement Amendment increases the interest rate spread for loans bearing interest by reference to the LIBOR rate from a current spread of 160 basis points for revolving loans and 200 basis points for term loans to 650 basis points for both revolving loans and term loans, and implements a new LIBOR rate floor of 350 basis points. The Credit Agreement Amendment also increases the interest rate spread for loans bearing interest by reference to the alternate base rate from a current spread of 75 basis points to 550 basis points, and implements a new alternate base rate floor equal to the one-month LIBOR rate plus 100 basis points. The Company expects interest expense to increase $38.5 million annually with this amendment. The commitment fee payable to the lenders party to the Credit Agreement increased from a current rate of 40 basis points to 100 basis points. In connection with the Credit Agreement Amendment, the Company paid fees to the consenting lenders equal to approximately $8.0 million. Mandatory Prepayments and Commitment Reductions: The Company and its domestic subsidiaries are required to prepay amounts under the Credit Agreement with some or all of the net cash proceeds that they receive in respect of certain prepayment events. Net cash proceeds in respect of any real estate sales will be applied as: -- The first $150 million in net cash proceeds (plus up to an additional $10 million of the net cash proceeds used to pay any fees under or in connection with the Credit Agreement or the ABS Facility) received from the sale and lease back of approximately 32 facilities pursuant to the terms of that certain Real Estate Sales Contract dated Dec. 19, 2008, by NATMI Truck Terminals, LLC and the Company as in effect on Feb. 12, 2009, are not required to be used to prepay amounts outstanding under the Credit Agreement. Any additional net cash proceeds received from the NAT Transaction are applied in the manner set forth in the next bullet point. -- For any real estate asset sale, the net cash proceeds of which, together with the aggregate amount of net cash proceeds from all the real estate asset sales occurring on or after Jan. 1, 2009, -- is less than or equal to $300 million and occurs on or prior to July 15, 2009, 50% of the proceeds will be used to prepay outstanding revolving loans under the Credit Agreement and the remaining 50% will be deposited into an escrow account; -- is less than or equal to $300 million and occurs after July 15, 2009, 50% of the proceeds will be used to prepay amounts outstanding under the Credit Agreement and the remaining 50% will be retained by the Company; -- is greater than $300 million and less than or equal to $500 million, 75% of the proceeds will be used to prepay amounts outstanding under the Credit Agreement and the remaining 25% will be retained by the Company; and -- is greater than $500 million, all of the proceeds will be used to prepay amounts outstanding under the Credit Agreement. Any amount on deposit in the Escrow Account will be released -- prior to July 16, 2009, if (a) no default has occurred and is continuing and (b) the Company, its domestic subsidiaries (other than Yellow Roadway Receivables Funding Corporation or any other receivables entity) and YRC Assurance, collectively, have less than $100 million of cash and cash equivalents on hand; and -- on July 16, 2009, only to the extent that any amounts remain on deposit in the Escrow Account; provided, that any amounts withdrawn or released from the Escrow Account will cause a reduction of the revolving commitments under the Credit Agreement equal to the withdrawn or release amounts. For any non-real estate sale, the net cash proceeds of which together with the aggregate amount of net cash proceeds received from all non-real estate asset sales occurring in the same fiscal year of the Company, exceed $25 million, 75% of the net cash proceeds will be used to prepay amounts outstanding under the Credit Agreement and the remaining 25% will be retained by the Company. All net cash proceeds received from any additional indebtedness incurred will be used to prepay amounts outstanding under the Credit Agreement. 50% of the net cash proceeds received from the issuance of any common stock or other equity interests will be used to prepay amounts under the Credit Agreement. The Company is required to prepay amounts due under the Credit Agreement within three business days after the earlier of -- the date on which the Company's annual audited financial statements for the immediately preceding year are delivered pursuant to the Credit Agreement and -- the date on which the annual audited financial statements were required to be delivered pursuant to the Credit Agreement, in an amount equal to 50% of the Company's Excess Cash Flow for the immediately preceding year, less any voluntary prepayments of loans under the Credit Agreement, with the first the prepayment required to be made by the Company in 2010 in respect of the Company's Excess Cash Flows, if any, for the fiscal year ending Dec. 31, 2009. Affirmative Covenants: The affirmative covenants contained in the Credit Agreement Amendment are substantially similar to the affirmative covenants contained in the Credit Agreement as it existed prior to the Credit Agreement Amendment. These summarizes some of the changes to the affirmative covenants implemented by the Credit Agreement Amendment. The Credit Agreement Amendment i) provides that proceeds from the Credit Agreement may not be used to refinance, repay, settle, support or otherwise satisfy any outstanding indebtedness (other than industrial revenue bonds in an aggregate amount not to exceed $7 million); ii) requires the Company to fully complete the process of winding up, liquidating or dissolving YRC Assurance in all respects by March 14, 2009, (or the longer period as the administrative agent may agree in its sole discretion). Financial Covenants: For 2009 and 2010, the Credit Agreement Amendment replaces the prior financial covenants with three other financial covenants: Minimum Liquidity, Minimum Consolidated EBITDA and Maximum Capital Expenditures. Minimum Liquidity: The Company must maintain Liquidity equal to or greater than $100 million at all times, and Liquidity will be tested on each business day. Maximum Capital Expenditures: The Company will not, nor will it permit any subsidiary of the Company to, incur or make any capital expenditures in excess of (i) $150 million for the four consecutive fiscal quarters ending December 31, 2009 and (ii) $235 million for the four consecutive fiscal quarters ending Dec. 31, 2010. Modifications to Existing Financial Covenants: The Credit Agreement Amendment modifies the two financial covenants that were contained in the Credit Agreement prior to giving effect to the Credit Agreement Amendment as: -- The Company will not permit the Consolidated Interest Coverage Ratio as of the end of any test period ending on or about March 31, 2011, and as of the end of each other test period ending thereafter to be less than 2.50 to 1.00, which was the level that was set forth in the Credit Agreement prior to giving effect to the Credit Agreement Amendment. -- The Company will not permit the Total Leverage Ratio as of the end of any test period ending on or about March 31, 2011, and as of the end of each other test period ending thereafter to exceed 3.50 to 1.00, which was the level that was set forth in the Credit Agreement prior to giving effect to the Credit Agreement Amendment. Events of Default: The Credit Agreement Amendment modifies the events of default in the Credit Agreement to clarify that an event of default occurs if any amortization event or other similar repayment event under the ABS Facility is triggered by an event of default thereunder and to include an events of default if fees or other amounts in excess of $20 million are paid to satisfy obligations, or to pay creditors who have exercised remedies, in each case, under certain operating leases due to a default, event of default or acceleration thereunder and an event of default if an acceleration of obligations in excess of $20 million under certain operating leases occurs and remains uncured. Waivers: The Credit Agreement Amendment provides that the waivers set forth in Waiver No. 1 are permanently granted. In addition, the Credit Agreement Amendment waives any default or event of default arising as a result of the loan parties' failure to comply with a covenant relating to permitted liens in the Credit Agreement by virtue of the Company or its subsidiaries granting liens to the Company or other of its subsidiaries in several notes representing intercompany loans. Certain of these notes are pledged to the lenders to secure the obligations under the Credit Agreement. ABS Facility Amendment On Feb. 12, 2009, the Company amended its asset-backed securitization facility. The amended ABS Facility will expire on Feb. 11, 2010. The ABS Facility continues to permit financings of up to $500 million based on the characteristics of the Company's accounts receivable and the reserve requirements of the receivables purchasers. The amendment to the ABS Facility includes these terms. -- The ABS Facility Amendment implements increased reserve requirements applicable to the accounts receivable. After applying the new reserve requirements, the total capacity under the ABS Facility decreased by approximately $28.8 million as a result of the new reserve requirements. -- The cost of funding under the ABS Facility increased. The cost of funding under the ABS Facility for conduits is a variable rate based on A1/P1 rated commercial paper. Conduits are not committed to fund; that role is performed by certain banks called committed purchasers. Conduit funding is used long as the conduits agree to fund. The cost of funding for Wachovia Bank, National Association, and other committed purchasers, is one-month LIBOR (but never less than 3.5% per annum, adjusted for certain reserves), plus 6.5% per annum. The Company expects aggregate cost of funding (excluding fees) to increase up to $4.1 million annually as a result of this renewal. -- The definition of "Base Rate" was modified so that the Base Rate at any given time cannot be less than the LIBOR Rate. -- The letters of credit sublimit decreased from $125 million to $105 million. -- The ABS Facility Amendment implements the Minimum Consolidated EBITDA, Maximum Capital Expenditures and Minimum Liquidity financial covenants that are consistent with the Credit Agreement Amendment. YRC Assurance Co. Ltd., the Company's subsidiary and captive insurance company domiciled in Bermuda, was investing in accounts receivable through the ABS Facility to support the capital requirements that Bermuda law requires YRC Assurance to maintain to issue insurance policies to other Company subsidiaries. The Company desired to utilize these receivables to finance its general corporate purposes rather than to finance YRC Assurance's capital requirements. Therefore, YRC Assurance withdrew from the ABS Facility by selling back approximately $159 million of its ownership interests in the accounts receivables to Yellow Roadway Receivables Funding Corporation, a special purpose entity and wholly owned subsidiary of the Company. YRRFC then sold the ownership interests in the accounts receivable purchased from YRC Assurance to the bank parties to the ABS Facility. These bank parties will now finance the Company for general corporate purposes by reinvesting in this pool of accounts receivable. YRC Assurance will no longer be a purchaser or a co-agent party to the ABS Facility and will commute existing intercompany insurance policies due to the reduction in the capital it is required to maintain by regulation for these policies. The Company may incur additional U.S. federal income taxes as a result of this transaction. In connection with the ABS Facility Amendment, the Company paid fees to the consenting bank parties equal to approximately $3.8 million. An additional fee equal to approximately $10.0 million will become due Sept. 30, 2009, if the ABS Facility has not been terminated by the date and the Company does not have a corporate credit rating of B/B2 or better from Standard & Poor's and Moody's Investors Service, Inc., by the date. The Company's corporate credit ratings currently are CCC/Caa3. The ABS Facility utilizes the accounts receivable of these subsidiaries of the Company: YRC Inc., USF Reddaway, Inc. and USF Holland, Inc. YRRFC operates the ABS Facility. Under the terms of the ABS Facility, the Originators may transfer trade receivables to YRRFC, which is designed to isolate the receivables for bankruptcy purposes. A third-party conduit or committed purchaser must purchase from YRRFC an undivided ownership interest in those receivables. The percentage ownership interest in receivables that the conduits or committed purchasers purchase may increase or decrease over time, depending on the characteristics of the receivables, including delinquency rates and debtor concentrations. The ABS Facility Amendment provides that the waivers set forth in the Limited Waiver are permanently granted. In addition, the ABS Facility Amendment waives any event of default which may have arisen as a result of representations or warranties made or deemed made in connection with the ABS Facility or any related document proving to have been incorrect when made or deemed made or conditions to a credit event not being satisfied solely as a result of the existence of a default or an event of default under the ABS Facility arising from the Lien Covenant Default or Additional Representation Default. A full-text copy of the 8K filing is available for free at: http://ResearchArchives.com/t/s?3991 About YRC Worldwide Inc. Headquartered in Overland Park, Kansas, YRC Worldwide Inc. -- http://www.yrcw.com/-- a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. YRC Worldwide employs approximately 58,000 people. * * * As reported in the Troubled Company Reporter on Jan. 9, 2009, Standard & Poor's Ratings Services revised the implications of its CreditWatch review of YRC Worldwide Inc. (CC/Watch Dev/--) to developing from negative. The revision follows news of the Overland Park, Kansas-based trucking company's terminated debt tender offer and negotiations with its bank group to modify terms on its revolving credit and asset backed securitization facilities. On January 13, the TCR said Fitch Ratings downgraded the Issuer Default Ratings and debt ratings of YRC (IDR to 'CCC' from 'B'; Secured credit facilities to 'B/RR1' from 'BB/RR1'; and Senior unsecured to 'C/RR6' from 'CCC+/RR6') and its subsidiary, YRC Regional Transportation, Inc. (IDR to 'CCC' from 'B'; and Senior secured notes to 'C/RR6' from 'CCC+/RR6'.) On February 2, the TCR reported that YRC Worldwide Inc. closed the first part of the sale and financing leaseback transaction from a contract with NATMI Truck Terminals, LLC entered on December 19, 2008. The company received roughly $101 million of proceeds and expects to receive roughly $50 million more in the second closing. In the company's waivers filed with the SEC on January 22, 2009, it stated that it now has the ability to use the proceeds from this transaction for operating purposes, which is the company's current intention. The company will account for the proceeds as a financing transaction, therefore, the assets remain on the books and a lease obligation will be recorded as long-term debt. The company will recognize the lease payments through interest expense with no impact to depreciation expense. As reported by the TCR on January 19, 2009, YRC obtained waivers under its credit facilities until February 17. The company is in discussions with its banking group to modify certain terms of its credit facilities, including changes to its leverage ratio, in addition to early renewal of its asset-backed securitization facility. YRC WORLDWIDE: S&P Changes Outlook on 'CCC' Rating to Positive -------------------------------------------------------------- Standard & Poor's Ratings Services revised the implications of its CreditWatch review on YRC Worldwide Inc. (CCC/Watch Pos/--) to positive from developing. The revision follows news of the Overland Park, Kan.-based trucking company's completed amendment to its credit facilities and renewal of its asset-backed securitization facility. "These developments lessen the near-term risk of a downgrade, and S&P will evaluate their effect on YRC's liquidity and credit quality in resolving the CreditWatch review," said Standard & Poor's credit analyst Anita Ogbara. YRC's senior credit facilities consist of a $950 million senior revolving credit facility and a $150 million term loan. The previous covenants, which specified maximum leverage of 3.5x and minimum interest coverage of 2.5x, have been waived through March 31, 2011. Per the terms of the amendment, YRC's covenants include (but are not limited to) these: -- Minimum cumulative EBITDA of $45 million, $130 million, and $180 million for the quarters ending June 30, Sept. 30, and Dec. 31, 2009, respectively; -- Maximum gross capital expenditures of $150 million in 2009 and $235 million in 2010; and -- Minimum liquidity (defined as cash and cash equivalents, revolver availability less letters of credit exposure, and ABS availability) of $100 million at all times. The maturity date of the senior credit facility remains Aug. 17, 2012, unless $50 million or more remains outstanding on the 8.5% USF Freightways Corporation notes due 2010 as of March 1, 2010; or if $50 million or more is outstanding on the 5% contingent convertible notes due 2023 as of June 25, 2010. The ABS facility will expire on Feb. 11, 2010, and permits financings of up to $500 million based on borrowing base availability. In exchange for these amended terms, YRC will pay amendment fees totaling $12 million and higher interest costs over the duration of the agreement. As of Dec. 31, 2008, YRC had $325 million in cash on its balance sheet. S&P could raise ratings if S&P judges that the revised covenants and renewal of the company's ABS facility have lessened liquidity pressures sufficiently to warrant an upgrade. * Canada Incurs Record $14BB Auto Trade Deficit in 2008 ------------------------------------------------------- Data newly released from Statistics Canada confirms that Canada experienced its worst-ever year in international trade in automotive products in 2008, according to an analysis from the Canadian Auto Workers union. Canada's automotive trade deficit more than doubled last year, to almost $14 billion - an all-time record. The 2007 deficit was $6.6 billion. Canada's exports of finished vehicles declined dramatically (by almost one quarter) as a result of the financial crisis and resulting collapse of U.S. auto sales. Imports of auto parts (which are used in Canadian auto factories) also declined. But imports of finished vehicles from offshore grew again (for the fifth straight year), despite the economic crisis. The aggregate data reveal several worrying trends. For the first time in decades Canada experienced a net auto trade deficit within North America. Canada's traditional auto trade surplus with the U.S. plunged to just $4 billion (barely one-fifth the level of three years ago). That surplus with the U.S. no longer offsets Canada's long-standing auto trade deficit with Mexico (which equaled $4.5 billion last year), leaving a small combined deficit for the NAFTA region as a whole. Canada's auto trade with offshore (non-NAFTA) producers remains very unbalanced as well. Canada's automotive exports to countries outside of NAFTA plunged 30 per cent last year (to just over $1 billion). However, despite slowing auto sales in Canada, auto imports from outside of NAFTA continued their steady growth, reaching a record $15 billion. Those imports have doubled in the past decade. For every dollar of automotive imports that Canada accepts from outside of NAFTA, Canada exports just seven cents back in the other direction. Since Canada no longer can rely on a trade surplus within the North American market to offset this offshore deficit, Canada's overall trade deficit has widened dramatically. "This data confirms that Canada's unbalanced trade with Asia and Europe is a major cause of the industrial carnage we see around us today," said CAW President Ken Lewenza, reacting to the new data. The collapse of Canada's automotive trade position has contributed substantially to the deterioration in Canada's overall merchandise trade balance. Aggregate statistics released last week confirmed that Canada slipped into an overall trade deficit in December for the first time since 1976. "For years we tolerated a growing offshore imbalance, because our strong position in the U.S. market bailed us out," Lewenza said. "But clearly we can't count on the U.S. market to prop up our trade numbers anymore, which makes it all the more essential to address those trade imbalances with the rest of the world." "For years we have relied on exports of petroleum and other resources to subsidize a growing manufacturing trade deficit, but this is no longer possible either," Lewenza added. "Our collapsing performance in autos and other manufactured goods now translates into a bottom-line trade deficit." Lewenza reiterated the CAW's position that the federal government must address the growing auto trade imbalance as part of a broader national auto strategy. The CAW has made its willingness to engage in contract renegotiations with the Detroit Three automakers conditional on the implementation of a national auto strategy. The CAW estimates that the $14 billion automotive trade deficit in 2008 corresponds to the loss of 22,500 direct auto jobs (based on the average job intensity of automotive shipments). "Because of this trade deficit, Canada now has far less than its share of auto jobs, even within North America. Canadians deserve to have a proportional share of good jobs, and implementing a national auto strategy is a pre-requisite for stabilizing and rebuilding the industry," said Lewenza. * Moody's Says Stimulus Helps Big Banks, Unclear for Small Lenders ------------------------------------------------------------------ In response to last week's unveiling of the U.S. Government's Financial Stability Plan (FSP) and signing of the American Recovery and Reinvestment Act (Stimulus Act), Moody's Investors Service has published a detailed analysis of their credit implications. In a Special Comment entitled "Credit Implications of U.S. Financial Stability Plan and Stimulus Act," Moody's presents the following key credit conclusions: - Banks: The FSP is positive for large banks (with $100 billion in assets or more), but the plan's benefits are less clear for creditors of smaller banks. - U.S. Government Balance Sheet: The moderate incremental amount of debt that the FSP is likely to lead to and minimal effect on government net worth means that our evaluation of the U.S. government's creditworthiness is unchanged. - Life Insurers (with the exception of MetLife) are not covered by the FSP as it only applies to federally regulated financial institutions. - Financial Guarantors are unlikely to receive much relief, hence a ratings-neutral impact, but may benefit indirectly from the FSP's easing of credit conditions. - Corporates: An increase in lending by banks is essential to prevent an increasingly negative outlook for U.S. corporates. An alleviation of the current market dislocation would prompt corporates to resume their focus on fundamentals and mitigate default risk. - Securitizations: Reduced unemployment that is likely to result from the Stimulus will have a positive effect on all consumer ABS, RMBS and unguaranteed (private) student loans. The credit quality of covered bonds will improve insofar as the FSP improves the credit strength of banks supporting those programs. - Technology Firms: The Stimulus's impact on rated technology companies is likely to be quite muted and distant, with no rating implications. - Municipal Issuers: The Stimulus is unlikely to create longer- term credit benefits for most municipal issuers who face entrenched credit challenges. However, U.S. states will receive nearly $150 billion, which may prevent some downgrades. - Executive Compensation has been capped for some highly paid employees at firms that have received or will receive TARP assistance. Credit implications are unknown. * Private Equity-Owned Firms Better Managed than Others, WEF Says ----------------------------------------------------------------- The World Economic Forum has found that private equity-owned firms are, on average, better managed than government-, family- or privately owned firms. The World Economic Forum disclosed those findings in its the Globalization of Alternative Investments Working Papers Volume 2: The Global Economic Impact of Private Equity Report 2009, one of the most exhaustive studies of private equity involving thousands of companies going back to the 1980s. According to study, firms acquired by private equity groups enjoy productivity growth two percentage points greater than average; in France, private equity funds act as an engine of growth for small and medium size enterprises. Private equity investment in emerging markets raised increasingly significant funds between 2004 and 2007. The research project included an international team of noted academics led by Josh Lerner, Jacob H. Schiff Professor of Investment Banking at Harvard Business School. * GE Allocates $2 Billion for Bankruptcy Loans in 2009 ------------------------------------------------------ General Electric plans to dole out approximately $2 billion in debtor-in-possession loans this year, higher than the $1.9 billion it awarded companies restructuring under Chapter 11 protection in 2008, according to Bloomberg News. LeveragedFinanceNews says that the number of bankruptcies is expected to climb by a much higher rate than 5%, the increase to the amount GE has set aside for the bankruptcy loans. Robert McMahon, managing director of restructuring finance in the corporate lending unit, said, according to Bloomberg, that GE is now charging 3% and 5% for the DIP loan, compared with roughly 2% over the past years. According to a GE Web site -- http://www.gecfo.com-- debtor-in- possession financing is offered by GE to companies in business bankruptcy for the purpose of bankruptcy financing. In most cases, DIP financing is considered attractive because it is done only under order of the Bankruptcy Court, which is empowered by the Bankruptcy Code. Debtor-in-Possesion financing can also provide corporate bankruptcy financing to engage in a prepackaged business bankruptcy where the asset based lender providing DIP financing supplies the funds to work out a settlement with creditors up front, in order to walk into corporate bankruptcy court with this prepacked settlement. An asset based lender providing Debtor-In-Possession financing following the filing of either a voluntary or involuntary corporate bankruptcy proceeding utilizes the same fundamental asset valuation approach to provide the loan as it would utilize for a company not in business bankruptcy. The availability of DIP financing may depend on the perceived viability of the company during the proceeding and on its ability to successfully complete a Plan of Reorganization (POR). The Plan of Reorganization must specify how the debtor intends to pay the creditors and Debtor-in-Possession financing is a means toward that end. * Wilbur L. Ross Interested in Banking, Troubled Industries ----------------------------------------------------------- Billionaire investor Wilbur Ross, chairman of WL Ross & Co., discussed with Bloomberg's Carol Massar investment opportunities in distressed assets, and the outlook for U.S. automakers and the financial industry. Wilbur L. Ross, known for buying distressed assets, says that he is looking at the banking sector. "Well, we're looking at a variety of things. As you know, we're quite interested in the banking sector, although we haven't done anything of great consequence there yet. We're looking at other sectors. Looking at pulp and paper, looking at casinos, looking at aluminum, all the industries that are going through the big wringer." With respect to the U.S. auto industry, Mr. Ross says that the industry is still viable. "The American companies are still selling half of all the cars in this country. And even at today's levels of something like 10 million vehicles, very depressed level, 5 million cars times $20,000 a car, that's $100 billion business. There ought to be a way for somebody to make a living at a $100 billion business. Mr. Ross said that a bankruptcy filing by the automakers would be "very risky." To recall, Chryser and General Motors ahve said that they might have to file for bankruptcy absent an additional $21.6 million in government loans. * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 --------------------------------------------------------------- In Re Brantley, Joe W. Brantley, Mary Emma Bankr. S.D. Ala. Case No. 09-10624 Chapter 11 Petition filed February 10, 2009 See http://bankrupt.com/misc/alsb09-10624.pdf In Re A Great Restaurant, LLC aka Sage American Bar & Grill Bankr. D. Conn. Case No. 09-30328 Chapter 11 Petition filed February 10, 2009 See http://bankrupt.com/misc/ctb09-30328.pdf In Re RoboDent, Inc. Bankr. S.D. Tex. Case No. 09-30991 Chapter 11 Petition filed February 10, 2009 See http://bankrupt.com/misc/txsb09-30991.pdf In Re Hyperquip, Inc. dba AAA Pressure Washers & Supplies Bankr. D. Ariz. Case No. 09-02363 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/azb09-02363.pdf In Re Olsen, Richard Kevin Arnold, Sharon Eileen Bankr. D. Ariz. Case No. 09-02330 Chapter 11 Petition filed February 11, 2009 Filed as Pro Se In Re DeArmond, Albert Lee Bankr. E.D. Calif. Case No. 09-11104 Chapter 11 Petition filed February 11, 2009 Filed as Pro Se In Re Lohrey, David William Lohrey, Harmony Sederholm Bankr. N.D. Calif. Case No. 09-10339 Chapter 11 Petition filed February 11, 2009 Filed as Pro Se In Re Golden Tennessee Leasing, Inc. Bankr. M.D. Fla. Case No. 09-01526 Chapter 11 Petition filed February 11, 2009 Filed as Pro Se In Re MCI Trust & Foundation Ltd. Bankr. M.D. Fla. Case No. 09-01498 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/flmb09-01498.pdf In Re Eggleston, George Bankr. N.D. Ga. Case No. 09-63619 Chapter 11 Petition filed February 11, 2009 Filed as Pro Se In Re John Robert Vaughn Bankr. C.D. Ill. Case No. 09-70361 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/ilcb09-70361.pdf In Re Affinity Processing Services, Inc. Bankr. N.D. Ill. Case No. 09-04327 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/ilnb09-04327.pdf In Re Brookside Kitchens, Inc. dba Dinner by Design Bankr. N.D. Ill. Case No. 09-70339 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/ilnb09-70339.pdf In Re Fernandez, Jose Fernandez, Maria Bankr. D. Md. Case No. 09-12229 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/mdb09-12229.pdf In Re Zavoral, Gary Sr., F. Zavoral, Patricia A. dba Z-Brite Metal Finishing, Inc. Bankr. W.D. Mich. Case No. 09-01298 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/miwb09-01298p.pdf See http://bankrupt.com/misc/miwb09-01298c.pdf In Re Z-Brite Metal Finishing, Inc. Bankr. W.D. Mich. Case No. 09-01296 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/miwb09-01296p.pdf See http://bankrupt.com/misc/miwb09-01296c.pdf In Re Apple Valley Jewelers Acquisition, LLC Bankr. D. Minn. Case No. 09-30792 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/mnb09-30792.pdf In Re Woodbury Jewelers, LLC Bankr. D. Minn. Case No. 09-30794 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/mnb09-30794.pdf In Re First Hi Ventures, Inc. dba Dominos Bankr. D. N.J. Case No. 09-13297 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/njb09-13297.pdf In Re FD 149 Realty LLC Bankr. S.D. N.Y. Case No. 09-10594 Chapter 11 Petition filed February 11, 2009 Filed as Pro Se In Re Two Sandwich Kings LLC Bankr. E.D. Wis. Case No. 09-21462 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/wieb09-21462.pdf In Re Momcilovic, Bosko B. aka Momcilovic, Robert aka Momcilovic, Bob Bankr. D. Ariz. Case No. 09-02436 Chapter 11 Petition filed February 12, 2009 Filed as Pro Se In Re Duran, Ruben G. Bankr. C.D. Calif. Case No. 09-13135 Chapter 11 Petition filed February 12, 2009 Filed as Pro Se In Re Excel Printing, Inc. Bankr. M.D. Fla. Case No. 09-00894 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/flmb09-00894.pdf In Re J-Mima, Inc. Bankr. S.D. Fla. Case No. 09-12433 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/flsb09-12433p.pdf See http://bankrupt.com/misc/flsb09-12433c.pdf In Re Walker, Catherine B. Bankr. S.D. Fla. Case No. 09-12425 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/flsb09-12425.pdf In Re Support Systems and Services, Inc. Bankr. S.D. Ill. Case No. 09-30294 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/ilsb09-30294.pdf In Re Corporate Computer Resources, Inc. fka Corporate Computer Repair, Inc. Bankr. S.D. Ind. Case No. 09-01363 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/insb09-01363.pdf In Re Family Solutions, Inc. Bankr. S.D. Ind. Case No. 09-01338 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/insb09-01338.pdf In Re Birnhak, Jason T. Bankr. E.D. N.Y. Case No. 09-70810 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/nyeb09-70810.pdf In Re Michelle's Foodland, Inc. dba Michelle's Kitchen Bankr. S.D. N.Y. Case No. 09-10604 Chapter 11 Petition filed February 11, 2009 See http://bankrupt.com/misc/nysb09-10604.pdf In Re WOW TECHNOLOGIES INC. Bankr. D. Nev. Case No. 09-11878 Chapter 11 Petition filed February 12, 2009 See http://bankrupt.com/misc/neb09-11878.pdf In Re Point Zero West Development LLC Bankr. C.D. Calif. Case No. 09-12616 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/cacb09-12616.pdf In Re Meriden Properties, LLC Bankr. D. Conn. Case No. 09-30348 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/ctb09-30348.pdf In Re Ronic Enterprises, Inc. Bankr. D. Conn. Case No. 09-50245 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/ctb09-50245.pdf In Re Phillips Lawn Care, Inc. aka Phillips Landscaping, Inc. Bankr. E.D. Mich. Case No. 09-43893 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/mieb09-43893.pdf In Re Extreme Air Heating & Cooling, LLC Bankr. D. N.J. Case No. 09-13448 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/njb09-13448.pdf In Re Kruger Properties, LLC Bankr. N.D. Okla. Case No. 09-10336 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/oknb09-10336.pdf In Re Piskorski, Slawomir Bankr. D. Ore. Case No. 09-30866 Chapter 11 Petition filed February 13, 2009 Filed as Pro Se In Re Madison Carpet Outlet, Inc. Bankr. E.D. Tenn. Case No. 09-10904 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/tneb09-10904p.pdf See http://bankrupt.com/misc/tneb09-10904c.pdf In Re Aaron Bonding Co. Bankr. M.D. Tenn. Case No. 09-01537 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/tnmb09-01537.pdf In Re Perlicki, Johnny Bankr. S.D. Tex. Case No. 09-31036 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/txsb09-31036.pdf In Re Tadpole Trucking, LLC Bankr. W.D. Tenn. Case No. 09-10638 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/tnwb09-10638.pdf In Re Fred's Restaurant, Inc. Bankr. E.D. Va. Case No. 09-70551 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/vaeb09-70551.pdf In Re Cass Trucking, Inc. Bankr. E.D. Wis. Case No. 09-21589 Chapter 11 Petition filed February 13, 2009 See http://bankrupt.com/misc/wieb09-21589.pdf In Re 2520 North Tampa, LLC dba Tijuana Iguana Bankr. M.D. Fla. Case No. 09-02631 Chapter 11 Petition filed February 16, 2009 See http://bankrupt.com/misc/flmb09-02631.pdf In Re Keyes, Robert Jr., F. Bankr. M.D. Fla. Case No. 09-02647 Chapter 11 Petition filed February 16, 2009 See http://bankrupt.com/misc/flmb09-02647.pdf In Re 18 MRP LLC Bankr. D. N.H. Case No. 09-10428 Chapter 11 Petition filed February 16, 2009 See http://bankrupt.com/misc/nhb09-10428.pdf In Re Sam's Ceramic & Stone, Inc. Bankr. S.D. N.Y. Case No. 09-22200 Chapter 11 Petition filed February 16, 2009 See http://bankrupt.com/misc/nysb09-22200.pdf In Re Unlimited Entertainment Group of San Juan Inc. Bankr. D. P.R. Case No. 09-01035 Chapter 11 Petition filed February 16, 2009 See http://bankrupt.com/misc/prb09-01035.pdf In Re Strathcona Electric, Inc. Bankr. D. Ariz. Case No. 09-02596 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/azb09-02596.pdf In Re Savar, Moses Vasi aka Savarirayan, Moses Vasi Savar, Estrella Nina Bankr. C.D. Calif. Case No. 09-12709 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Jaime Caballero, Inc. dba US Gas Bankr. N.D. Calif. Case No. 09-41143 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/canb09-41143.pdf In Re NexHorizon of CO, Inc. Bankr. D. Colo. Case No. 09-12193 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/cob09-12193.pdf In Re Barlow, Kevin Layne Sr. Bankr. M.D. Ga. Case No. 09-50503 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/gamb09-50503.pdf In Re The Church of the True Living God Bankr. N.D. Ga. Case No. 09-64043 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Stevens, Alfonzo Bankr. N.D. Ga. Case No. 09-63985 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Capones Hideaway Lodge Inc. Bankr. N.D. Ill. Case No. 09-04937 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/ilnb09-04937.pdf In Re On Q BIlliards, Inc Bankr. N.D. Ill. Case No. 09-05007 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re J.A. Brunton, Inc. Bankr. D. Maine Case No. 09-10135 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Ocean Wood Enterprises, LLC Bankr. D. Maine Case No. 09-10136 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Liss, Martin William Bankr. D. N.J. Case No. 09-13731 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Alessandro, Carmine Bankr. S.D. N.Y. Case No. 09-10684 Chapter 11 Petition filed February 17, 2009 Filed as Pro Se In Re Pinetree Mall Associates Partnership Bankr. S.D. N.Y. Case No. 09-10688 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/nysb09-10688.pdf In Re Wallace & Associates, P.C. Bankr. S.D. N.Y. Case No. 09-22209 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/nysb09-22209.pdf In Re Stinson, Giovanni B. aka Bryan Stinson Bankr. W.D. Okla. Case No. 09-10645 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/okwb09-10645.pdf In Re Crew Management Inc. Bankr. D. P.R. Case No. 09-01037 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/prb09-01037.pdf In Re El Pozo Laundry Mats, Ltd. Bankr. S.D. Tex. Case No. 09-31083 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/txsb09-31083.pdf In Re Hankins, Benjamin Robert aka Ben Hankins Bankr. W.D. Wash. Case No. 09-11281 Chapter 11 Petition filed February 17, 2009 See http://bankrupt.com/misc/wawb09-11281.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to: http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. 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 ***