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/raid1/www/Hosts/bankrupt/TCR_Public/090224.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 24, 2009, Vol. 13, No. 54 Headlines 5925 ALMEDA: Can Use Lender's Collateral Until March 2 ACCEPTANCE INSURANCE: Granite Re Files Plan of Reorganization ALLIANCE ONE: Moody's Affirms 'B2' Rating on High Cash Balances ALLIED CAPITAL: Defaults Under Revolver and $1 Billion in Notes ALLIED CAPITAL: S&P Downgrades Counterparty Rating to 'BB+' ALLIS CHALMERS: Moody's Cuts Notes to 'B3' on Weakening Sector AMC ENTERTAINMENT: Posts $81.9MM Loss in 13 Weeks Ended January AMERICAN INT'L: Gov't May Have to Expand Bailout Package to Co. AMKOR TECHNOLOGY: S&P Affirms 'B+' Corporate Credit Rating AOT HOLDINGS: S&P Puts 'B' Corporate Rating on Negative Watch BAKER & TAYLOR: Moody's Cuts Rating to 'B3' on Weak Performance BANKATLANTIC BANCORP: Defers Trust Pref. Stock Interest Payment BANKRUPTCY MANAGEMENT: High Leverage Prompts S&P's Junk Rating BEARINGPOINT INC: Proposes Bonuses for Directors and Managers BEARINGPOINT INC: Seeks to Keep Pacts with All Managing Directors BERNARD L. MADOFF: No Securities Bought for Clients, Says Trustee BILLION COUPONS: SEC Halts Ponzi Scheme Targeting Deaf Investors BLACK GAMING: Moody's Downgrades Default Rating to 'Ca/LD' BRUNO'S SUPERMARKETS: To Close 10 of 66 Stores BURLINGTON COAT: Enters Into Separation Agreement With Mark Nesci CANWEST GLOBAL: Ten Holdings Proposes Capital Equity Offering CC MEDIA: Concern on Loan Covenants Cues S&P's Cuts to 'B-' CENTRAL PLAINS: Moody's Downgrades Rating on 2007A Bonds to 'Ba1' CHAD THERAPEUTICS: Files for Chapter 7; Stops Operations CHRYSLER LLC: Beijing Automotive Denies Asset Purchase Talks CHRYSLER LLC: Protocol for Tipton Claims vs. GETRAG Okayed CHRYSLER LLC: Treasury's Advisers Talks with Banks on DIP Loans CIRCUIT CITY: To Start Auctions for Last Store Leases Feb. 26 CITIGROUP INC: Gov't May Increase Stake in Bank CONSTAR INTERNATIONAL: Amends DIP Credit Agreement CONSTAR INTERNATIONAL: TCM & EagleRock Disclose Equity Stakes DHP HOLDINGS: Files Schedules of Assets and Debts DISTRIBUTED ENERGY: Morgan Stanley Et Al. Disclose Equity Stake EAST CAMERON: Court Extends Plan Exclusive Period to April 3 EAST CAMERON: May Retain Steffes Vingiello as Bankruptcy Counsel EAST CAMERON: Panel Wants Examiner Appointed in Debtor's Case FANNIE MAE: $200 Bil. Deal Expansion Won't Affect S&P's Ratings FLYING J: Wants to Borrow up to $10 Million from Merrill Lynch FLYING J: April 20 Deadline for Filing Sec. 503(b)(9) Claims Set FOAMEX INTERNATIONAL: Can Access $20 Million Loan on Interim Basis FONTAINEBLEAU LAS VEGAS: Cash Concerns Cue S&P's Junk Rating FORD MOTOR: Reaches Tentative Deal on Retiree Benefits With UAW FORTUNOFF HOLDINGS: No Longer Accepting Gift Cards FORWARD FOODS: Can Access $4-Million Loan on Interim Basis FREMONT GENERAL: Harbinger Et Al. Disclose Zero Equity Stake GENERAL DATACOMM: Dec. 31 Balance Sheet Upside Down by $35.8MM GENERAL GROWTH: Amends Loan Agreement for Oakwood Shopping Center GEORGIA GULF: Weak Financial Performance Cues Moody's Junk Rating GETRAG TRANSMISSION: Protocol for Resolving Tipton Claims Okayed GENERAL MOTORS: Treasury's Advisers Mulls Possible DIP Loans GLOBAL CONSUMER: Receives Non-Compliance Notice From NYSE GOODYEAR TIRE: Moody's Affirms Corporate Family Rating at 'Ba3' HAWAIIAN TELCOM: Seeks to Cease Cash Payments to Secured Lenders HUNGARIAN TELEPHONE: Obtains Waiver Under Senior Credit Facilities HICKS ACQUISITION: Receives Non-Compliance Notice From NYSE JB POINDEXTER: Moody's Cuts Rating to B3 on Deepening Recession JER INVESTORS: Receives Non-Compliance Notice From NYSE LANGUAGE LINE: S&P Changes Outlook to Stable; Affirms 'B' Rating LEHIGH COAL: Disagreement Over Results of Operations MAGNA ENTERTAINMENT: Violates Nasdaq Rule as Director Quits MATTRESS HOLDING: Weak Consumer Spending Cues Moody's Junk Rating MCCOY 6: Files for Chapter 11 Bankruptcy Protection MICRON TECHNOLOGY: S&P Downgrades Corporate Credit Rating to 'B' MUZAK HOLDINGS: Proposes Incentive Plan for 6 Executives NRDC ACQUISITION: Receives Non-Compliance Notice From NYSE NEW YORK TIMES: Suspension of Dividends Won't Move Moody's Rating NOVELIS INC: S&P Puts 'BB-' Rating on CreditWatch Negative NORTEL NETWORKS: To Divest Layer 4-7 Data Portfolio NOWAUTO GROUP: Can't File Dec. 31 Form 10-Q on Time OSI RESTAURANT: Moody's Cuts Rating on $550 Mil. Notes to 'C' PACIFIC LIFESTYLE: Plan Filing Period Extended to July 12 PFF BANCORP: Luxor Capital Et Al. Disclose Zero Equity Stake PHILADELPHIA NEWSPAPERS: Files for Ch. 11 to Explore Alternatives PHILADELPHIA NEWSPAPERS: Case Summary & 30 Unsecured Creditors PREFERRED VOICE: Dec. 31 Balance Sheet Upside Down by $1 Million PULSAR PUERTO RICO: Seeks July 7 Extension to File Plan QIMONDA NA: Files for Chapter 11 Bankruptcy Protection QIMONDA NA: To Separate from Richmond Unit; To Sell QR Plant RBS GLOBAL: Moody's Downgrades Corporate Family Ratings to 'B3' READER'S DIGEST: Weak Projected EBITDA Cues Moody's Junk Rating REDENVELOPE INC: Prime Logic & Cummins Disclose Zero Equity Stake RITZ CAMERA: Files for Chapter 11 Bankruptcy in Delaware RITZ CAMERA: Case Summary & 29 Largest Unsecured Creditors ROUGE INDUSTRIES: Ct. Sends Plan for Voting; April 7 Deadline Set SALT VERDE: Moody's Downgrades Rating on 2007 Gas Bonds to 'Ba1' SHEARIN FAMILY: Wins Final OK of RBC Loan for Nautical Club SIRIUS XM: Tax Losses Could Benefit Liberty Media, Says WSJ SMURFIT-STONE: Receives Final Court Approval for $750MM DIP Loan SNOQUALMIE ENTERTAINMENT: Moody's Junks Corporate Family Rating ST LAWRENCE HOMES: Schedules $115.9M in Assets, $107.7M in Debts SPANSION INC: To Slash 35% of Global Work Force STANDARD STEEL: S&P Downgrades Corporate Credit Rating to 'B-' STAR TRIBUNE: Asks Court to Cancel Contract With Union STATION CASINOS: Boyd Offers $950 Million for OpCo Assets STELLA LEVEA: Files for Chapter 11 Bankruptcy Protection TARRAGON CORP: Common Stock Delisted From Nasdaq TIMBERLINE RESOURCES: Receives Non-Compliance Notice From NYSE TRUMP ENTERTAINMENT: Gets Court Nod to Pay Critical Vendors TRW AUTOMOTIVE: S&P Downgrades Corporate Credit Rating to 'B+' TENNESSEE ENERGY: Moody's Cuts Rating on 2006A Bonds to 'Ba1' TEXTRON FINANCIAL: Moody's Downgrades Rating on Class B to 'Ba2' TRAILER BRIDGE: Moody's Affirms Corporate Family Rating at 'B3' VALASSIS COMMUNICATIONS: Receives NYSE Non-compliance Notice VERASUN ENERGY: Plants Set for March 16 Auction WORLDSPACE INC: Highbridge Discloses 9.99% Equity Stake * Stimulus Package Restricts Banks' Hiring of Foreign Workers * More Troubles Ahead for Newspapers; 4 Large Publishers in Ch. 11 * Billion Dollar Filers in February Now Total Five * Firms Expand Bankruptcy Practice As Demand Rises * Three Large Companies Emerged, Issue New Stock in February * Unemployment Benefits Make Another Record * Large Companies With Insolvent Balance Sheets ********* 5925 ALMEDA: Can Use Lender's Collateral Until March 2 ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas in Houston issued an interim order authorizing 5925 Almeda North Tower, L.P., to use the cash collateral securing its obligations to its lender, Corus Bank, N.A. The Debtor and the Lender have agreed to the entry of the Interim Order. The Lender has asserted that it holds claims against the Debtor, as of the bankruptcy filing date, pursuant to the $51,000,000 in prepetition loans owed by the Debtor. The Lender also has asserted that it holds liens and security interests in the Debtor's assets to secure the loan obligation. The Debtor needs to use the cash collateral to pay association assessments as well as sales and leasing expenses relating to postpetition payroll, payroll taxes, overhead and other expenses necessary to maximize the value of the Debtor's estate. Pursuant to the Interim Cash Collateral Order, the Debtor is permitted to use the cash collateral to pay expenses for the period until March 2, 2009, as provided in a budget. The Debtor has provided the Lender a budget for the full months of January and February 2009. As adequate protection, the Debtor grants the Lender automatically perfected first priority replacement and additional liens and security interests in its assets. The Court has authorized the Debtor to sell Residential Condominium Units in the ordinary course of business. The Cash Collateral Order requires the Debtor to segregate the sale proceeds. The Court will convene another hearing on March 2, 2009, at 01:30 p.m. to consider the Debtor's continued use of the cash collateral. 5925 Almeda North Tower, L.P. owns and develops a residential and retail condominium project located at 5925 Almeda, Houston, commonly known as Mosaic North Tower. 5925 Almeda North Tower filed for bankruptcy on January 5, 2009 (Bankr. S.D. Tex. Case No. 09-30158). The Hon. Marvin Isgur presides over the case. Joseph G. Epstein, Esq., and Weiting Hsu, Esq., at Winstead PC, in Dallas, serve as bankruptcy counsel. Paradigm Tax Group, LLC, acts as tax consultants; and RSM McGladrey Inc. acts as Tax Return Preparer. When it filed for bankruptcy, the Debtor reported total assets of $85,000,000 and total debts of $51,950,000. An official committee of unsecured creditors has not been appointed in the case. ACCEPTANCE INSURANCE: Granite Re Files Plan of Reorganization ------------------------------------------------------------- On February 9, 2009, Granite Reinsurance Company, Ltd., filed with the United States Bankruptcy Court for the District of Nebraska a Plan of Reorganization and explanatory disclosure statement for Acceptance Insurance Companies Inc. in AICI's Chapter 11 bankruptcy proceeding. The Plan of Reorganization and Disclosure Statement are subject to the approval of the Bankruptcy Court. If approved by the Bankruptcy Court, the Disclosure Statement would be distributed to holders of certain claims and interests for a vote on Granite Re's proposed Plan of Reorganization. According to Granite Re's Disclosure Statement each class that is impaired under such plan must vote to accept the plan unless "cram down" provisions of the United States Bankruptcy Code are employed. After such vote, the Bankruptcy Court would hold a confirmation hearing to determine whether the requisite vote has been obtained, hear and determine objections and whether to confirm the plan, among other things. AICI believes that Granite Re's proposed plan is untenable, believes that the Creditor's Committee in AICI's bankruptcy proceeding will not approve the proposed plan and intends to object to the proposed plan. About Acceptance Insurance Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies, Inc. -- http://www.aicins.com/-- owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. The company filed for Chapter 11 protection on January 7, 2005 (Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services, Inc. and American Agrisurance, Inc. -- each filed Chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 and 05-80058) on January 7, 2005. John J. Jolley, Esq., at Kutak Rock LLP, represents the Debtor in its restructuring efforts. Lawyers at McGrath North Mullin & Kratz PC, LLO represent the Official Committee of Unsecured Creditors in Acceptance Insurance's case. ALLIANCE ONE: Moody's Affirms 'B2' Rating on High Cash Balances --------------------------------------------------------------- Moody's Investors Service upgraded the liquidity ratings of Alliance One International, Inc. to SGL-3 from SGL-4. Moody's also affirmed AOI's long-term ratings and stable outlook, including the company's B2 corporate family rating. The upgrade of the company's speculative grade liquidity rating to SGL-3 from SGL-4 reflects the completion of an amendment to its senior secured credit facility that provides for modifications to various threshold amounts under its financial covenants while increasing the asset based revolving credit commitment amount by $55 million to $305 million. The facility maturity date was unchanged at September 2010. The rating outlook is stable. The affirmation of the company's long-term ratings reflects Moody's expectation that AOI's operating performance will not deviate significantly from plan including modest leverage reduction and further operating margin improvement. The company's intrinsic liquidity position remains adequate supported by high cash balances and sufficient cash flow from operations to cover the company's basic cash needs. "The improved liquidity profile of AOI at a time when capital markets remain difficult provides important support to the company," says Moody's Vice President and Senior Credit Officer Janice Hofferber. Ratings of AOI upgraded include this: -- Speculative Grade Liquidity rating to SGL-3 from SGL-4 Ratings of AOI affirmed (LGD point estimates revised) include the following: -- Corporate family rating of B2 -- Probability of default rating of B2 -- $305 million senior secured revolving credit facility due 2010 at Ba2 (LGD1, 5%) -- $150 million 8 ½% senior unsecured notes due 2012 at B2 (LGD4, 56%) -- $315 million 11% senior unsecured notes due 2012 at B2 (LGD4, 56%) -- $91.4 million 12 _% senior subordinated notes due 2012 at Caa1 (LGD6, 95%) -- Outlook is stable Alliance One International, Inc. and Intabex Netherlands, B.V. are co-borrowers under the senior secured revolving credit facility. The last rating action regarding AOI was on June 26, 2008 when Moody's downgraded the company's speculative grade liquidity rating to SGL-4 and affirmed the company's long-term B2 corporate family rating with a stable outlook. Headquartered in Morrisville, North Carolina, Alliance One International, Inc. is one of the world's leading tobacco merchants and processors. Its principal products include flue- cured, burley and oriental tobaccos, which are major ingredient in American -- blend cigarettes. Total revenues for the last twelve months ending December 2008 were approximately $2.1 billion. ALLIED CAPITAL: Defaults Under Revolver and $1 Billion in Notes --------------------------------------------------------------- Allied Capital Corp. is in default on a revolving credit and $1.015 billion in notes. Allied Capital said in a February 19 regulatory filing that it remains in discussions with lenders under its revolving credit facility and the holders of its outstanding private notes to seek relief under certain terms of both the revolving credit facility and the private notes due to an expected covenant default. "These discussions are continuing and, in light of the current market environment, the Company has expanded the discussions to encompass a more comprehensive restructuring of these debt agreements to provide operational flexibility." The Company, as a result of those discussions, has not completed the documents contemplated by the December 30, 2008 amendments to the revolving credit facility and the private notes, which were to include a grant of a first lien security interest on substantially all of the Company's assets. Consequently, the administrative agent for the revolving credit facility has notified the Company that an event of default has occurred pursuant to the revolving credit facility. An event of default under the revolving credit facility constitutes an event of default under the private notes. As of February 13, 2009, the Company had $50 million in outstanding borrowings and approximately $120 million in outstanding letters of credit issued under the revolving credit facility, and $1.015 billion in outstanding private notes. Neither the lenders nor the noteholders have accelerated repayment of the Company's obligations; however, the occurrence of an event of default permits the administrative agent for the lenders under the revolving credit facility, or the holders of more than 51% of the commitments under the revolving credit facility, to accelerate repayment of all amounts due, to terminate commitments thereunder, and to require the Company to provide cash collateral equal to the face amount of all outstanding letters of credit. Pursuant to the terms of the private notes, the occurrence of an event of default permits the holders of 51% or more of any issue of outstanding private notes to accelerate repayment of all amounts due thereunder. Acceleration of the amounts outstanding under the revolving credit facility or any issue of the private notes could have a material adverse impact on the Company's liquidity, financial condition or results of operations. The existence of an event of default restricts the Company from borrowing or obtaining letters of credit under its revolving credit facility, and from declaring dividends or other distributions to its shareholders. Pursuant to the terms of the revolving credit facility, during the continuance of an event of default, the applicable spread on any borrowings outstanding and fees on any letters of credit outstanding under the revolving credit facility increase by up to 200 basis points. Pursuant to the private notes, during the continuance of an event of default, the rate of interest borne by the private notes increases by 200 basis points. About Allied Capital Allied Capital (NYSE:ALD) -- http://www.alliedcapital.com-- is a business development company in the U.S. that is regulated under the Investment Company Act of 1940. Allied Capital invests long- term debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has been investing in the U.S. entrepreneurial economy for 50 years. At September 30, 2008, Allied Capital had $4.6 billion in total assets, $2.1 billion in total borrowings, $2.4 billion in total equity and a net asset value per share of $13.51. Allied Capital has a diverse portfolio of investments in 117 companies across a variety of industries. * * * Moody's Investors Service on Jan. 28 lowered Allied's corporate grade by two levels to junk at Ba2. ALLIED CAPITAL: S&P Downgrades Counterparty Rating to 'BB+' ----------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Washington, D.C.-based Allied Capital Corp. including lowering the long-term counterparty credit rating to 'BB+' from 'BBB-'. At the same time, S&P placed the ratings on CreditWatch with negative implications. The rating action is subsequent to an event of default pursuant to the terms of Allied's revolving credit facility. In December 2008, Allied reached an agreement with its lenders to amend the terms on the facility and its private notes. Among other modifications to the firm's debt covenants, the amendment lowered the minimum consolidated shareholders' equity requirement to the greater of 85% of consolidated debt or $1.50 billion, from $2.37 billion. As part of the amendment, Allied agreed to give its lenders a first-priority lien on substantially all of its assets by Jan. 30, 2009. Allied's failure to do this resulted in an event of default. Allied continues to negotiate covenant amendments with its lenders. The CreditWatch reflects the heightened uncertainty as to its ability to successfully negotiate covenant relief. "The firm's need for additional covenant relief and the notification that it is in default based on its breach of covenants have introduced more uncertainty than is consistent with an investment-grade rating," said Standard & Poor's credit analyst Jeffrey Zaun. ALLIS CHALMERS: Moody's Cuts Notes to 'B3' on Weakening Sector -------------------------------------------------------------- Moody's Investors Service downgraded Allis-Chalmers' senior unsecured notes to B3 (LGD4, 61%) from B2 (LGD4, 57%), in accordance with the Loss Given Default methodology, which reflects the increasing amounts of secured debt in the company's capital structure. The Corporate Family Rating and Probability of Default Rating remain unchanged at B2, but the outlook was changed to negative from positive. Additionally, Moody's lowered the Speculative Grade Liquidity rating to SGL-3 from SGL-2. The negative outlook reflects that deepening sector weakness, including continuing reductions in capital spending and oil field activity by the exploration and production sector, may prevent ALY from meeting its cash flow and debt reduction goals, as deterioration in rig and oilfield services demand reduces sector capacity utilization and pricing power. A high proportion of ALY's cash flows are tied to drilling activity which is one of the more volatile segments within the services sector. ALY's ratings are supported by rising diversification of business activity by type and location. Historically reliant on the more volatile North American market for a majority of its cash flows, ALY has continued to grow internationally, with approximately 45% of its 2008 revenues and consolidated EBITDA coming from abroad. The company expects to see significant growth in its international operations in 2009 as it continues to expand its rental services business across the globe, added 16 service rigs and 2 drillings rigs to its rig fleet in South America during 2008, and entered the Brazilian market at the end of 2008 with an additional 6 drilling rigs and one service rig at the end of 2008. However, the oilfield services industry its very competitive and several of ALY's business lines directly compete against larger more deeply capitalized competitors having greater financial flexibility, and that may have been entrenched in their markets under their existing ownership longer than ALY. The negative outlook, as well as the change in ALY's SGL rating to SGL-3, also reflects increased use of external funding and a degree of increased leverage to expand the rig fleet going into the likely deeper phase of sector weakness. Asset based funding will partially finance two newbuilds rigs targeted for use in the growing Haynesville Shale play. Moody's anticipates a decrease in the covenant compliance cushion during 2009. Overall liquidity will tighten from current levels during 2009, though it is expected to adequately cover the company's need for capex, interest and working capital. ALY could return to a stable outlook if it demonstrates durable cash flows during 2009, ample covenant coverage, and sound liquidity. Much weaker than expected operating results, and leverage approaching 4.0x Debt / EBITDA, could result in further negative rating actions. Moody's last rating action on ALY dates from August 11, 2008 at which time Moody's affirmed ALY's ratings and outlook. The principal methodology used in rating ALY was Moody's Global Oilfield Services Industry rating methodology which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating Complete can also be found in the Credit Policy & Methodologies directory. Allis-Chalmers Energy Inc., headquartered in Houston, Texas, is a provider of oilfield services and products for oil and gas companies. AMC ENTERTAINMENT: Posts $81.9MM Loss in 13 Weeks Ended January --------------------------------------------------------------- AMC Entertainment Inc. and its subsidiaries posted a net loss of $81,979,000 in the 13 weeks ended January 1, 2009, on net revenues of $538,935,000. Net loss was $11,177,000 for the thirteen weeks ended December 27, 2007. The increase in net loss was primarily due to impairment charges of $73,547,000. The Company posted a net loss of $67,484,000 for the 39 weeks ended January 1, 2009, on net revenues of $1,721,164,000. On December 29, 2008, the Company sold its operations in Mexico, including 44 theatres and 493 screens. As of January 1, 2009, the Company's balance sheet showed total assets of $3,636,181,000, total liabilities of $2,560,816,000 and total stockholders' equity of $1,075,365,000. AMC Entertainment also filed Supplement No. 3 to its market-making prospectus dated August 12, 2008. The prospectus is a combined prospectus under Rule 429 of the Securities Act of 1933, as amended, that relates to: -- $325,000,000 11% Series B Senior Subordinated Notes due 2016 -- $250,000,000 85/8% Series B Senior Notes due 2012 -- $300,000,000 8% Series B Senior Subordinated Notes due 2014 A full-text copy of Supplement No. 3 is available for free at: http://researcharchives.com/t/s?39c5 Headquartered in Kansas City, Missouri, AMC Entertainment Inc. -- http://www.amctheatres.com/-- is a theatrical exhibition company. As of July 3, 2008, the company owned, operated or had interests in 353 theatres and 5,117 screens, with 89% or 4,569 of its screens in the U.S. and Canada and 11%, or 548 of its screens in Mexico, China (Hong Kong), France and the United Kingdom. The company's principal direct and indirect owned subsidiaries are American Multi-Cinema Inc., Grupo Cinemex, S.A. de C.V. and AMC Entertainment International Inc. * * * AMC Entertainment Inc. still carries Fitch Ratings' 'CCC+' senior subordinate rating assigned on Jan. 12, 2006. AMERICAN INT'L: Gov't May Have to Expand Bailout Package to Co. --------------------------------------------------------------- The U.S. government might have to expand a $150 billion bailout package to American International Group Inc., as the company is expected to report a quarterly loss of over $60 billion, Liam Pleven, Serena Ng, and Matthew Karnitschnig at The Wall Street Journal report, citing people familiar with the matter. Citigroup will be releasing its fourth-quarter and full 2008 results next week, WSJ says. WSJ relates that government officials have been worried about AIG's fourth-quarter loss and about the risk that AIG's credit rating might be downgraded. WSJ states that that new rescue moves are being considered because a new credit-rating downgrade would force AIG to come up with billions of dollars to counterparties. The report says that a rating downgrade in September 2008 almost pushed AIG into bankruptcy. The government is considering measures that would let it increase support for AIG without technically giving it more cash, WSJ says. According to the report, the government would have AIG turn over ownership its business units, reducing the amount of debt AIG owes to the government. This would make it possible for the government to top up the existing AIG lending facility with fresh cash. Citigroup said in a statement that it is continuing to work with the government "to evaluate potential new alternatives for addressing AIG's financial challenges." 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. AMKOR TECHNOLOGY: S&P Affirms 'B+' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its B+ corporate credit rating and other ratings on Chandler, Arizona- based Amkor Technology Inc. At the same time, Standard & Poor's revised its outlook on Amkor's ratings to negative from positive. "The action reflects rapidly declining revenues and profitability, resulting in anticipated substantial increases in leverage and diminished liquidity, which are not likely to be reversed in the near term," said Standard & Poor's credit analyst Bruce Hyman. The ratings on Amkor continue to reflect challenging industry conditions, offset in part by the company's strong market position and adequate liquidity. Amkor is a leading provider of outsourced packaging and testing services to semiconductor makers. Total lease-adjusted debt was $1.5 billion at Dec. 31, 2008. Amkor's revenues totaled $2.7 billion in 2008. However, December quarter revenues were $549 million, down 24% sequentially on a 30% reduction in units shipped. March 2009 quarter revenues are expected to decline between 30% and 38% from December, to about $340 million-$380 million. Revenue visibility is very limited beyond that time, given intense competition and broadly depressed semiconductor market conditions. Amkor has been reducing its costs, largely through lower compensation, to address these conditions. Still, with near-breakeven gross profits expected in the March quarter, EBITDA is likely to fall significantly from the $106 million generated in the December quarter. Annualized December quarter debt to EBITDA leverage was 3.5x, but S&P expects leverage to rise sharply as profitability weakens. While Amkor generated $79 million in free cash flow in the December quarter, one-time items coupled with declining operating profitability will preclude the company generating positive free operating cash flow in the March quarter. Amkor is cutting capital expenditures sharply for 2009, about $100 million for the year, of which $40 million had been committed for the March quarter. AOT HOLDINGS: S&P Puts 'B' Corporate Rating on Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its ratings on Hoffman Estates, Illinois-based AOT Bedding Holdings Corp., including its 'B' corporate credit rating, on CreditWatch with negative implications. The CreditWatch placement means that S&P could lower or affirm the ratings following the completion of S&P's review. As of Sept. 30, 2008, AOT Bedding had about $628.6 million of total debt. "The CreditWatch listing reflects our continued concerns about the difficult operating environment facing AOT and the company's ability to improve its very weak credit metrics over the near term," said Standard & Poor's credit analyst Rick Joy. "Although the company has taken actions to reduce operating expenses and is starting to see some benefits from lower input costs, AOT still faces challenges from a weak economy, slowed consumer spending, and the overall weak retail environment and housing market," he continued. The Company has experienced substantial margin pressures in recent quarters, reflecting high raw material prices and one-time costs associated with new customers. S&P is concerned that it will be challenged to meaningfully improve credit protection measures in the near term, given the current weak retail environment and declining housing market, as well as S&P's expectation for continued weakness in the North American bedding industry. Standard & Poor's will meet with management to further discuss AOT's operating trends and forecasts to resolve the CreditWatch listing. BAKER & TAYLOR: Moody's Cuts Rating to 'B3' on Weak Performance --------------------------------------------------------------- Moody's Investors Service lowered the corporate family rating of Baker & Taylor Acquisitions Corp. to B3 from B2. Moody's also lowered the rating on the $165 million second-priority senior secured notes to B3 from B2. The ratings outlook remains negative. The ratings downgrade reflects the company's weak operating performance for the six months ended December 26, 2008, and Moody's expectation for continued pressure on the business given the weak retail environment. The downgrade also incorporates Moody's concern that substantially reduced earnings have led to weaker interest coverage metrics. Notwithstanding these concerns, the rating also considers the company's recently strong cash flows that has accommodated material debt reduction, its adequate liquidity position, and ongoing cost reduction activities. Additionally, demand in the institutional business (which primarily serves public and academic libraries) continues to hold up well despite concerns over the level of funding for public institutions. These ratings were downgraded: -- Corporate family rating to B3 from B2; -- Probability-of-default rating to B3 from B2; -- $165 million second-priority senior secured notes due 2013 to B3 (LGD3, 48%) from B2 (LGD3, 45%). The negative outlook reflects Moody's concern over the potential for a sustained contraction in the company's sales given its exposure to weak consumer end-markets. The last rating action was on November 13, 2007, when Moody's affirmed the B2 corporate family rating, but lowered the probability-of-default rating to B2 from B1. The ratings outlook was changed to negative from stable. Baker & Taylor's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Baker & Taylor's core industry and Baker & Taylor's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in Charlotte, North Carolina, Baker & Taylor Acquisitions Corp. is a leading distributor of books and entertainment products to the retail and institutional markets. The company reported sales of $1.9 billion for the twelve months ended December 26, 2008. BANKATLANTIC BANCORP: Defers Trust Pref. Stock Interest Payment --------------------------------------------------------------- BankAtlantic Bancorp, Inc., has elected to defer regularly scheduled interest payments on $294.2 million of outstanding junior subordinated debentures relating to its outstanding trust preferred securities. The terms of the securities and the underlying trust documents allow BankAtlantic to defer payments of interest for up to 20 consecutive quarterly periods without default or penalty. During the deferral period, the respective trusts will likewise suspend the declaration and payment of dividends on the trust preferred securities. "In light of the current challenging economic environment, the Company has elected to exercise its right to defer payments of interest on its trust preferred junior subordinated debt," said Alan B. Levan, Chairman and Chief Executive Officer of the Company. "This deferral election, an option that was an important factor in our initial decision to issue these Securities, will allow the Company to preserve liquidity in this environment. Of course, we can end the deferral at any time at our election," concluded Mr. Levan. BankAtlantic had $294,195,000 of junior subordinated debentures and corresponding trust preferred shares outstanding at Dec. 31, 2007: Issue Maturity Issuer Date Amount Interest Rate Date ------ ----- ------ ------------- ------- - BBX Capital Trust Trust I(A) 06/26/2007 $25,774,000 LIBOR + 1.45% 09/15/2037 BBX Capital Trust Trust II(A) 09/20/2007 5,155,000 LIBOR + 1.50% 12/15/2037 BBC Capital Trust II 03/05/2002 57,088,000 8.50% 03/31/2032 BBC Capital Trust III 06/26/2002 25,774,000 LIBOR + 3.45% 06/26/2032 BBC Capital Trust IV 09/26/2002 25,774,000 LIBOR + 3.40% 09/26/2032 BBC Capital Trust V 09/27/2002 10,310,000 LIBOR + 3.40% 09/30/2032 BBC Capital Trust VI 12/10/2002 15,450,000 LIBOR + 3.35% 12/10/2032 BBC Capital Trust VII 12/19/2002 25,774,000 LIBOR + 3.25% 12/19/2032 BBC Capital Trust VIII 12/19/2002 15,464,000 LIBOR + 3.35% 01/07/2033 BBC Capital Trust IX 12/19/2002 10,310,000 LIBOR + 3.35% 01/07/2033 BBC Capital Trust X 03/26/2003 51,548,000 6.40% [*] 03/26/2033 BBC Capital Trust XI 04/10/2003 10,310,000 6.45% [*] 04/24/2033 BBC Capital Trust XII 03/27/2003 15,464,000 6.65% [*] 04/07/2033 ------------ $294,195,000 ============ [*] The interest rate adjusts to floating three-month LIBOR plus 3.25% rate five years from the issue date. The deferral election will begin with respect to regularly scheduled quarterly interest payments that would otherwise have been made in March and April of this year. The Company will send appropriate notices to the trustees under each of the respective indentures. The Company has the ability under the Securities to continue to defer interest payments through ongoing, appropriate notices to each of the trustees. During the deferral period, the Company will not pay dividends on or repurchase its common stock. On Nov. 13, 2008, BankAtlantic Bancorp and BankAtlantic filed an application to participate in the U.S. Treasury's Capital Purchase Plan. In the application to participate in the CPP BankAtlantic Bancorp and BankAtlantic seek the maximum level of 3% of BankAtlantic's total risk-weighted assets, or approximately $124 million. To date, the Treasury Department has not acted on the application. "While the decision to defer interest payments on the Securities may adversely impact our application, given the uncertainty of continued funding under the Capital Purchase Plan, the Company determined that the prudent course of action at this time, in light of current economic conditions, would be to defer the payment of interest on the Securities pursuant to their terms," BankAtlantic said in a statement. Valerie C. Toalson, BankAtlantic's Executive Vice President and Chief Financial Officer, advises that in the event BankAtlantic receives approval to participate in the CPP and chooses to do so, it expects to end the deferral period using existing funds to pay all accrued amounts on the Trust Preferred Securities. BankAtlantic says it continues to be a "well capitalized" institution under all regulatory standards, with regulatory capital ratios essentially unchanged since December 2007. BankAtlantic Bancorp (NYSE: BBX) -- http://www.BankAtlanticBancorp.com/-- is a bank holding company and the parent company of BankAtlantic. BankAtlantic -- "Florida's Most Convenient Bank" with a Web presence at http://www.BankAtlantic.com-- has nearly $6.0 billion in assets and more than 100 stores, and is one of the largest financial institutions headquartered junior in Florida. BankAtlantic has been serving communities throughout Florida since 1952 and currently operates more than 250 conveniently located ATMs. BANKRUPTCY MANAGEMENT: High Leverage Prompts S&P's Junk Rating -------------------------------------------------------------- Standard & Poor's Rating Services said it lowered its ratings on Irvine, California-based Bankruptcy Management Solutions Inc., including the corporate credit rating, which S&P lowered to 'CCC+' from 'B-'. The outlook is negative. At the same time S&P lowered the issue rating on the Company's first-lien bank credit facilities, consisting of a $15 million revolving credit facility due in 2011 and a $220 million first- lien term loan due in 2012, to 'CCC+' from 'B'. S&P also revised the recovery rating on that debt to '4' from '2'. The '4' recovery rating indicates expectations for average (30%-50%) recovery in the event of a payment default. In addition, S&P lowered the issue ratings on the Company's $125 million second-lien notes and $150 million of floating-rate senior paid-in-kind notes issued by parent company BMS Holdings Inc. to 'CCC-' from 'CCC'. The recovery ratings on these issues remains at '6', indicating expectations for 'negligible' (0%-10%) recovery in the event of a payment default. "The downgrade reflects our concerns regarding BMS' highly leveraged financial profile, the impact of declining trustee deposit balances and a volatile interest rate environment on the company's revenue and EBITDA prospects, significant refinancing risk, and modest free cash flow generation," said Standard & Poor's credit analyst Susan Madison. Debt outstanding at Sept. 30, 2008 (including investment line borrowings and $150 million of floating-rate senior paid-in-kind notes issued by parent company BMS Holdings Inc.) totaled about $905 million. BEARINGPOINT INC: Proposes Bonuses for Directors and Managers ------------------------------------------------------------- BearingPoint, Inc. and its affiliated debtors seek approval from the U.S. Bankruptcy Court for the Southern District of New York to continue a cash retention bonus plan for 300 managing directors and managers. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in New York, explains that the Debtors' managing directors -- those who cultivate and oversee large scale client relationships, manage business operations, and lead teams of highly skilled management consulting practitioners -- are extremely valuable assets. Given the nature of the Debtors' business, a professional services firm that strives to meet the demands of its clients, those employees who manage client engagements and business operations, more than any other segment of the Debtors' employees, drive the Debtors' revenues and operations through successfully providing consulting services. The continued employment, dedication, motivation, and loyalty of these leaders are not only essential to the maintenance, preservation, and prosperity of the Debtors, but also to the success of their entire reorganization effort. There are approximately 342 managing directors in the United States. Unfortunately, however, the ability of the Debtors to successfully retain and rely on the continued services of key employees has been thrown into turmoil by recent events - particularly the precarious financial condition of the Debtors. These events have caused a considerable amount of uncertainty, instability and anxiety among key employees for several reasons, including: -- the general lack of certainty in working for a chapter 11 debtor; -- the business constraints imposed as a consequence of the chapter 11 cases; and -- the general concern about employment security arising from fears of downsizing, asset sales or a change in control which often occur in chapter 11 cases. Indeed, largely as a consequence of these factors, the Debtors have lost approximately 17 managing directors and 54 senior managers in January 2009. Along with the rapidly growing attrition rates there has been a concomitant adverse impact on operations, employee morale, and the general well-being of the business. In addition, the Debtors are deeply concerned that recent departures of managing directors and key senior managers will lead to additional departures of their colleagues. Mr. Perez adds that apart from the severely detrimental impact a decrease in managing directors and senior managers has on revenue and operations, the loss of team leaders has an additional adverse economic effect on the Debtors. Attracting and training competent new consulting managers to fill vacated positions is both difficult and extremely costly. Not only are qualified candidates scarce and require time to become effective in their role, but they too will be reluctant to join a chapter 11 debtor. In response to these factors, the Debtors instituted the Bonus Plan in January 2009, to ensure key leaders remain employed with the Debtors throughout the restructuring period and following emergence. The Debtors have allocated $23.8 million to be distributed among approximately 300 managing directors and key senior managers globally, with an average payout over a 12-month period of $80,000 per eligible employee. Approximately $16.5 million has been allocated to 186 managing directors and key senior managers within the Debtors' United States operations, and approximately $7.3 million has been allocated to 113 managing directors and key senior managers within the Debtors' foreign operations, which amounts will not be paid by the Debtors, but rather by their non-Debtor affiliates. Under the Bonus Plan, the total bonus amount awarded will be paid in four separate and equal installments, subject to standard withholdings and deductions. It is planned that payments will occur as part of the first pay cycle of the following months: April 2009, July 2009, October 2009, and January 2010. In order to receive any payment, the employee must be employed by the Debtors on the date the applicable payment is made. It is important to note, these payments are in lieu of any payments otherwise payable to participants as part of the Debtors' annual performance bonus plan for 2008, Mr. Perez points out. The Debtors assure the Court that none of the employees who receive amounts under the Bonus Plan are insiders as defined by Section 101(31) of the Bankruptcy Code. About BearingPoint Inc. BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently 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., BearingPoint -- a former consulting arm of KPMG LLP -- 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. fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D. N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal & Manges LLP, has been tapped as counsel. Greenhill & Co., LLC, and AP Services LLC, have also been tapped as advisors. Davis Polk & Wardell is special corporate counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of Sept. 30, 2008. Contemporaneous with their bankruptcy petitions, the Debtors filed a pre-packaged Joint Plan of Reorganization under Chapter to implement the terms of their agreement with the secured lenders. Under the Plan, the Debtors propose to swap general unsecured claims for equity in the reorganized company. Existing shareholders are out of the money. The Plan and the explanatory disclosure statement remain subject to approval by the Bankruptcy Court. BEARINGPOINT INC: Seeks to Keep Pacts with All Managing Directors ----------------------------------------------------------------- BearingPoint, Inc. and its affiliated debtors seek approval from the U.S. Bankruptcy Court for the Southern District of New York to assume existing employment agreements with 342 managing directors. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in New York, explains that the Debtors have determined that it is in their best interest to assume these executory contracts, to avoid excessive costs of searching for and retaining new managing directors and, even more so, a loss to their business that could destroy any chance of a successful reorganization. The Debtors employ approximately 342 managing directors. The Debtors' managing directors -- including those who cultivate and oversee large scale client relationships, manage business operations, drive revenue growth, and lead teams of highly skilled management consulting practitioners -- are extremely valuable assets. BearingPoint, as a professional services firm, is a company whose chief assets are its human resources. Mr. Perez, however, relates that the precarious financial condition of, and bankruptcy filing by, BearingPoint have caused a considerable amount of uncertainty, instability and anxiety among key employees. To ensure that the Debtors do not lose additional managing directors who are uncertain of the Debtors' future and uncertain of the Debtors' intent to honor their commitments to them, it is important that the Debtors provide them assurances, by assuming their agreements, that they will honor and abide by the contractual employment agreements they have entered into with their managing directors. Each Managing Director Agreement contains several key clauses regarding the terms of employment: * Employment / Exclusive Services: The Debtors have employed their managing directors on an exclusive basis. The managing directors agree to refrain from professional practice other than on the Debtors' behalf. * Compensation and Benefits: The Debtors pay a base salary to the managing directors, in accordance with their normal payroll practices. Managing directors are eligible to participate in employee compensation or benefit plans, including stock option plans. * Conflicts of Interest: Managing directors agree not to knowingly become involved in a conflict of interest with BearingPoint, or, upon discovery of such a conflict, permit it to continue. * Covenants: Managing directors agree to abide by certain covenants, including covenants of non-disclosure, non- competition, and nonsolicitation of the Debtors' clients and prospective clients. * Non-Disclosure: Managing directors are entrusted with special training regarding the Debtors' business methods and with business opportunities of the Debtors. Managing directors agree never to disclose this information without authorization or to otherwise use it to the Debtors' competitive disadvantage. * Non-Competition: In any geographic region where they worked for the Debtors, managing directors agree not to compete with the Debtors while employed and for a certain number of months following their termination or resignation, either for themselves or on behalf of the Debtors' competitors. The number of months is dependent upon the individual agreement, but generally is either 18 or 24. * Non-Solicitation of Clients and Prospective Clients: Managing directors agree not to solicit any of the Debtors' clients or prospective clients while employed and for a certain number of months following their termination or resignation, either for themselves or on behalf of the Debtors' competitors. The number of months is dependent upon the individual agreement, but generally is either 18 or 24. They also agree not to behave in such a manner that could be expected to result in damage to the goodwill or business reputation of the Debtors. * Non-Solicitation of Employees: Managing directors agree not to solicit any of the Debtors' other employees while employed and for a certain number of months following their termination or resignation, either for themselves or on behalf of the Debtors' competitors. The number of months is dependent upon the individual agreement, but generally is either 18 or 24. They also agree not to solicit any of the Debtors' former employees who left the Debtors within 12 months before or after their own termination or resignation. * Remedies: In addition to any remedies available in law or in equity for breach, managing directors agree to certain specific remedies, including compensation forfeiture, injunctive relief, and actual and consequential damages (including the Debtors' attorney's fees). * Termination: The Debtors' managing directors are employed at- will. Either party may terminate the employment relationship, with or without cause. Upon termination, the terminated managing director is entitled to receive any earned but unpaid base salary, and any earned and unused personal days. * Severance: If terminated without cause, the managing director is eligible to receive a severance payment in an amount equal to the difference between the earned and unused personal days, and a certain number of months of pay at the base salary. The number of months is dependent upon the individual agreement, but generally is either three (3) or six (6). * Resignation: Managing directors may voluntarily terminate their employment with a certain number of months' notice. The number of months is dependent upon the individual agreement, but generally is either three (3) or six (6). A breach of this clause entitles the Debtors to 25% or 50%, respectively, of the salary and bonus paid to the managing director in the previous year. About BearingPoint Inc. BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently 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., BearingPoint -- a former consulting arm of KPMG LLP -- 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. fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D. N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal & Manges LLP, has been tapped as counsel. Greenhill & Co., LLC, and AP Services LLC, have also been tapped as advisors. Davis Polk & Wardell is special corporate counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of Sept. 30, 2008. Contemporaneous with their bankruptcy petitions, the Debtors filed a pre-packaged Joint Plan of Reorganization under Chapter to implement the terms of their agreement with the secured lenders. Under the Plan, the Debtors propose to exchange general unsecured claims for equity in the reorganized company. Existing shareholders are out of the money. The Plan and the explanatory disclosure statement remain subject to approval by the Bankruptcy Court. BERNARD L. MADOFF: No Securities Bought for Clients, Says Trustee ----------------------------------------------------------------- Finalternatives.com reports that Bernard Madoff hadn't invested his fraud victims' money for at least 13 years. Court documents say that there are more than 10,000 active accounts at Bernard L. Madoff Investment, although many clients had multiple accounts. According to Finalternatives.com, Irving Picard, the court- appointed trustee for Bernard L. Madoff Investment Securities LLC, told investors during a meeting for investors of the alleged $50 billion Ponzi scheme at U.S. Bankruptcy Court in New York on Friday, "We have no evidence to indicate securities were purchased for customer accounts" over the past 13 years, and "this is a case where we're going to be looking at cash in and cash out." The monthly statements Mr. Madoff sent to customers had nothing in common with what was going on at his midtown Manhattan headquarters, Finalternatives.com relates, citing Mr. Picard. The report states that Mr. Picard said that Mr. Madoff's Ponzi scheme occurred on the 17th floor of the Lipstick Building on Third Avenue, where he operated his investment advisory separately from his other businesses upstairs. According to the report, Mr. Picard said, "The rooms were under lock and key." Finalternatives.com quoted Mr. Picard as saying, "We are operating out of a crime scene. There is a limit to what we can say." Finalternatives.com relates that Mr. Picard said that his staff, the regulators, and the criminal investigators are checking some 7,000 boxes of records Mr. Madoff stored at a warehouse in Queens. Mr. Picard said that he has recovered some $950 million in assets so far, according to Finalternatives.com. About 2,400 people have filed claims against Mr. Madoff, Finalternatives.com says, citing Mr. Picard. Madoff fraud victims have until July 2 to file claims, and Mr. Picard said he expects that more claims would be filed by then, Finalternatives.com states. 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. BILLION COUPONS: SEC Halts Ponzi Scheme Targeting Deaf Investors ---------------------------------------------------------------- The U.S. Securities and Exchange Commission has obtained a court order halting a Ponzi scheme that specifically targeted members of the Deaf community in the United States and Japan. The SEC alleges that Hawaii-based Billion Coupons Inc. ("BCI") and its CEO Marvin R. Cooper raised US$4.4 million from 125 investors since at least September 2007 by, among other things, holding investment seminars at Deaf community centers. The SEC also alleges that Cooper misappropriated at least US$1.4 million in investor funds to pay for a new home and other personal expenses. The order obtained by the SEC freezes the assets of BCI and Cooper. "This emergency action shows that the Commission will act quickly and decisively to help victims of affinity fraud," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "A Ponzi scheme targeting members of the Deaf community is particularly reprehensible," said Rosalind R. Tyson, Regional Director of the SEC's Los Angeles Regional Office. "This case is an example of successful coordination between federal and state agencies to protect vulnerable investors." BCI's Web site at: http://billioncoupons.com/is "currently under maintenance." The company said those who have questions may contact owner@billioncoupons.com. The SEC's complaint, filed Feb. 18 in federal court in Honolulu, alleges that BCI and Cooper represented to the investors that their funds would be invested in the foreign exchange (Forex) markets, that investors would receive returns of up to 25 percent compounded monthly from such trading, and that their investments were safe. According to the complaint, BCI and Cooper actually used only a net US$800,000 (cash deposits minus cash withdrawals) of investor funds for Forex trading, and they lost more than US$750,000 from their Forex trading. The complaint further alleges that BCI and Cooper failed to generate sufficient funds from their Forex trading to pay the promised returns, and instead operated as a Ponzi scheme by paying returns to existing investors from funds contributed by new investors. The SEC alleges that BCI and Cooper have violated the registration and antifraud provisions of the federal securities laws. In its lawsuit, the SEC obtained an order temporarily enjoining BCI and Cooper from future violations of these provisions. The SEC also obtained an order: (1) freezing the assets of BCI and Cooper; (2) appointing a temporary receiver over BCI; (3) preventing the destruction of documents; (4) granting expedited discovery; and (5) requiring BCI and Cooper to provide accountings. The Commission also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against both defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for March 2, 2009, at 9 a.m. HST. The Commodity Futures Trading Commission (CFTC) also filed an emergency action on February 18 against BCI and Cooper, alleging violations of the antifraud provisions of the Commodity Exchange Act. The State of Hawaii's Department of Commerce and Consumer Affairs (DCCA), Office of the Commissioner of Securities, issued a preliminary order to cease and desist against BCI and Cooper. The Hawaii DCCA's Office of the Commissioner of Securities and the CFTC assisted SEC in this matter. BLACK GAMING: Moody's Downgrades Default Rating to 'Ca/LD' ---------------------------------------------------------- Moody's Investors Service lowered Black Gaming LLC's probability of default rating to Ca/LD from Ca, as the company failed to make the interest payment to the holders of the 9% senior secured notes due 2012 prior to February 15, 2009, which was the expiration of the 30-day grace period provided in the indenture. The other ratings were affirmed and the outlook remains negative. The Ca/LD probability of default rating recognizes the payment default for the senior secured notes. At this junction, Black Gaming's obligations under its senior secured revolver, senior secured notes and senior subordinated notes have not been accelerated, although no forbearance agreement has been executed yet. The rating outlook is negative, reflecting the risk of a payment default or a distressed exchange affecting the senior subordinated notes, or a bankruptcy filing. In any of these events, the probability of default rating would be revised to D. Ratings lowered: -- Probability of default rating to Ca/LD from Ca Rating affirmed: -- Corporate family rating at Ca -- 9% senior secured notes rating at Caa3 (LGD 3, 38%) -- 12.75% senior subordinated notes rating at C (LGD5, 87%) -- SGL-4 speculative grade liquidity rating The last rating action was on January 16, 2009, when Moody's lowered Black Gaming's corporate family rating to Ca from Caa3. Black Gaming owns and operates the CasaBlanca, the Oasis, and the Virgin River casino hotels in Mesquite, Nevada, located approximately 80 miles north of Las Vegas, Nevada. Net revenue was approximately $141 million for the last twelve-month period ended September 30, 2008. BRUNO'S SUPERMARKETS: To Close 10 of 66 Stores ---------------------------------------------- Bruno's Supermarkets LLC, decided to close 10 of its 66 supermarkets through closing sales to end by March 31, Bloomberg's Bill Rochelle said. Mr. Rochelle says that if the U.S. Bankruptcy Court for the Northern District of Alabama approves the proposal at a Feb. 25 hearing, Bruno's will hire Hilco Merchant Resources LLC as agent to assist with the sales of inventory, furniture, fixtures, and equipment. Hilco would be paid a fee of 3% of inventory sales and 15% for fixtures and equipment. The sales, according to the report, will include four stores that Bruno's closed before bankruptcy. About Bruno's Supermarkets, LLC Bruno's Supermarkets, LLC, is the parent company of Bruno's and FOOD WORLD grocery stores, which includes 23 Bruno's locations and 43 FOOD WORLD in Alabama and the Florida Panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed voluntary Chapter 11 petitions on Feb. 5, 2009. Bruno's has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process. Burr & Forman LLP is the Debtor's lead counsel. Najjar Denaburg, P.C. is its conflicts counsel. BURLINGTON COAT: Enters Into Separation Agreement With Mark Nesci ----------------------------------------------------------------- On February 16, 2009, Burlington Coat Factory Holdings, Inc., and its indirect wholly owned subsidiary Burlington Coat Factory Warehouse Corporation entered into a Separation Agreement with Mark Nesci, the former President and Chief Executive Officer of Parent and the Company. The Agreement provides that Mr. Nesci's current salary will be paid through May 30, 2009 at which time continuation payments and other benefits payable as provided in that certain Employment Agreement by and between the Company and Mr. Nesci dated as of April 13, 2006 will commence. The Agreement also provides for these additional compensatory terms: * From and after February 16, 2009, Mr. Nesci shall serve as a senior advisor to the board of directors of Parent and shall receive an annual salary of $100,000 which shall be payable from and after May 30, 2009. Mr. Nesci and Parent may each terminate Mr. Nesci's role as senior advisor at any time and for any reason; and * 60% of the options to purchase units of Parent's common stock granted to Mr. Nesci under that certain Non-Qualified Stock Option Agreement by and between Parent and Mr. Nesci dated as of April 13, 2006 shall be vested. All such vested options shall remain vested and exercisable by Mr. Nesci until the later of (a) the fourth anniversary of February 16, 2009, or (b) the second anniversary of the Advisory Termination Date, upon which date all such options shall immediately terminate. Burlington Coat Factory Warehouse Corporation, headquartered in Burlington, New Jersey, is a nationwide off price apparel retailer that operates approximately 427 stores in 44 states under the nameplates of Burlington Coat Factory, Cohoes, MJM, and Baby Depot. Revenues for the twelve month period ended November 29, 2008 were approximately $3.5 billion. As reported by Troubled Company Reporter on Feb. 23, 2009, participations in a syndicated loan under which Burlington Coat Factory Warehouse Corp. is a borrower traded in the secondary market at 37.42 cents-on-the-dollar during the week ended February 20, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 4.92 percentage points from the previous week, the Journal relates. The loan matures May 28, 2013. Burlington Coat pays 225 basis points over LIBOR to borrow under the facility. The bank loan carries Moody's B3 rating and Standard & Poor's CCC+ rating. The TCR reported on Feb. 2, 2009, that Standard & Poor's Ratings Services said it revised the outlook on Burlington Coat Factory Warehouse Corp. to negative from stable. Concurrently, S&P affirmed the 'B-' corporate credit rating on the company. The TCR reported on Jan. 19, 2009, that Moody's Investors Service downgraded Burlington Coat Factory Warehouse, Inc.'s ratings, including its corporate family rating to B3 from B2 and its speculative grade liquidity rating to SGL-3 from SGL-2. The rating outlook remains negative. CANWEST GLOBAL: Ten Holdings Proposes Capital Equity Offering ------------------------------------------------------------- Canwest Global Communications Corp. disclosed on February 16, 2009, that Ten Network Holdings Limited has announced a potential capital equity offering of up to 120 million shares, which represents approximately 13% of the current shares outstanding, through an institutional placement. The announcement came as Ten Holdings -- which owns and operates the TEN Television Network in Australia and EYE Corp.'s multi- national out-of-home advertising business -- also provided a market update on expected earnings for the first half of fiscal 2009, in advance of its scheduled release of its results for this period in April 2009. Canwest's President and Chief Executive Officer, Leonard Asper, said the Company, which is a 56.6% shareholder in Ten Holdings, is supportive of the proposed capital equity offering and has elected not to participate in it. This means that upon a successful completion of the capital equity offering, Canwest will continue to hold a greater than 50% equity stake in Ten Holdings. "I have advised the Board of Ten Holdings that Canwest presently intends to retain its shareholding. Canwest endorses Ten Holdings' proposed equity offering, its sound strategic direction, attractive market position and, despite the prevailing market conditions, future growth prospects," Mr. Asper said. Ten Holdings' executive chairman Nick Falloon said that the Australian advertising market has continued to be negatively impacted by the prevailing economic conditions. He said revenue for TEN Television in the first half of fiscal 2009 is expected to be approximately 12% lower than the corresponding period last year. "This will result in consolidated revenue being approximately 11% behind the same period in fiscal 2008," Mr. Falloon said. "Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) for the first fiscal half is expected to be approximately A$118 million, being 28% down on the result achieved in the first fiscal half of 2008." In December, Ten Holdings advised that a comprehensive cost review had been conducted across the Group and the results of this review had been implemented, with substantial benefits being realized in operating costs. Mr. Falloon said that Ten Holdings remains committed to continually reviewing its cost base and is expected to deliver zero cost growth (excluding selling costs), consistent with its previous guidance, while continuing to deliver ONE, the all-sport digital television channel set to launch in just over a month, as well as new international and domestic program initiatives for TEN Television. Mr. Falloon said that in light of the recent sharp decline in global advertising markets, Ten Holdings has reviewed the assets and contracts in TEN Television and EYE and will recognize A$148 million in non-recurring charges including: * EYE -- A$133 million, representing asset write downs and losses on onerous contracts, largely within the USA and UK operations, and * TEN - A$15 million, relating mainly to program inventory write downs. "TEN's strong program line-up for 2009 is our best in years," Mr. Falloon said. "In the first official week of the survey period, TEN has demonstrated the strength of its line-up." He added, "TEN Television is well positioned to grow its already- competitive footing in the key 18-49 demographic and maintain its lead in 16-39s. The combination of TEN Television and ONE will provide a broader and more diverse offering for our viewers and advertisers." Ten Holdings is seeking to undertake a potential equity offering through the institutional placement of up to 120 million new shares, which represents approximately 13% of its current total outstanding shares. Trading in Ten Holdings stock has been halted while the placement is being finalized. Ten Holdings has stated that it will not proceed with the equity offering unless it is able to achieve an acceptable outcome in the share offering process. Should the placement not be completed, Ten Holdings remains well capitalized and is comfortably placed within the requirements of its lending facilities. "We believe that this is a strong asset that continues to evolve to meet the changing needs of its customers," Mr. Asper said. "By continuing to develop a strong lineup and platforms like ONE, the all-sport digital television channel set to launch in just over a month, Ten Holdings is positioning itself for the future and to take advantage of the first sign of economic recovery." About Canwest Global Communications Corp. Canwest Global Communications Corp. -- http://www.canwest.com/-- (TSX: CGS and CGS.A,) an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. * * * As reported in the Troubled Company Reporter on Jan. 16, 2009, Canwest Global Communications Corp. warned that based on current revenue and expense projections, it may not be able to comply with its existing quarterly total financial leverage ratio covenants in fiscal 2009. Continuation of negative conditions may affect the Company's ability to meet certain financial covenants in its credit facilities. The company is reviewing and implementing strategies to ensure compliance with its covenants, including strategies intended to improve profitability and reduce debt. The TCR reported on Jan. 19, 2009, that Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Winnipeg, Manitoba-based Canwest Media Inc. to 'CCC+' from 'B'. At the same time, S&P lowered the senior secured debt rating on wholly owned subsidiary Canwest Limited Partnership to 'B-' from 'BB-'. In addition, S&P lowered the senior subordinated debt ratings on Canwest Media and Canwest LP to 'CCC-' from 'CCC+'. S&P removed all ratings from CreditWatch with negative implications, where they were placed Oct. 31, 2008. The outlook is negative. The TCR reported on Feb. 16, 2009, that Wojtek Dabrowski at Reuters reported that Canwest Global Communications Corp. may go bankrupt. "They're on the verge of bankruptcy. The equity has been reflecting that for some time," Reuters quoted CIBC World Markets analyst Bob Bek as saying. According to Reuters, Canwest Global shares were trading at 49 Canadian cents each on the Toronto Stock Exchange, compared to C$6.11 each in 2008. CC MEDIA: Concern on Loan Covenants Cues S&P's Cuts to 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on San Antonio, Texas-based CC Media Holdings Inc. and its operating subsidiary, Clear Channel Communications Inc. (S&P rates both entities on a consolidated basis), by one notch. The corporate credit rating was lowered to 'B-' from 'B'. These ratings remain on CreditWatch with negative implications, where they were placed Feb. 13, 2009, reflecting S&P's concerns over financial covenant compliance. "The ratings downgrade and continued CreditWatch listing reflects our deepening concerns about the company's ability to maintain compliance with financial covenants amid the worsening recession, especially in light of extremely weak recent results reported by peer radio and outdoor companies," explained Standard & Poor's credit analyst Michael Altberg. Under S&P's baseline scenario, including its assumptions regarding possible covenant add-backs under Clear Channel's credit agreement, S&P estimate that the company could violate covenants in the second half of 2009, or sooner if EBITDA declines are greater than S&P's expectations. This scenario contemplates EBITDA declines in the 40% area over the next several quarters, with declines moderating toward the second half of the year. S&P's downside scenario contemplates EBITDA declines in the 40% to 50% range over the near term. Under S&P's baseline scenario, EBITDA coverage of net interest could decline to less than 1x. For this reason, if the company were able to obtain an amendment from bank lenders, S&P believes it would need to use cash balances to meet any potential upfront fees and increases in interest rate spreads. For the third quarter of 2008, revenue and EBITDA (excluding noncash stock compensation) dropped 4% and 16%, respectively. Declines in the outdoor segment were primarily led by decreases in higher-margin U.S. billboard revenue. S&P expects fourth-quarter results to be materially worse than the third quarter, due to continued softening at the outdoor segment and further pressure on key advertising categories such as automotive, retail, and financial services, as well as unfavorable foreign currency trends at its European outdoor business. For the first half of 2009, the company faces more difficult year-over-year comparisons at its outdoor business, as this segment didn't show the same level of comparable weakness in local advertising as other media until the third quarter of 2008. Due to the longer-term nature of contracts, S&P believes the outdoor business could show a slight lag in recovery as well, even after economic conditions improve. In addition, S&P is concerned that negative secular trends facing the radio industry could limit a rebound in 2010. Pro forma for the company's subpar tender offer completed on Dec. 23, 2008, balance sheet debt to EBITDA was very high, in S&P's view, at about 9.6x as of Sept. 30, 2008, up from 9.4x at June 30, 2008. S&P's calculation of lease-adjusted total debt (capitalizing both operating leases and minimum franchise payments associated with outdoor, and including third-party debt, guaranteed letters of credit, and acquisition-related earn-out payments) to EBITDA was still higher, at 10.6x. Pro forma for the company's full drawdown of its $2 billion revolving credit facility, fully adjusted leverage climbs to a steep 11.4x. For the 12 months ended Sept. 30, 2008, the conversion of EBITDA to discretionary cash flow was still good, in S&P's view, at 48%. For 2009, S&P believes that discretionary cash flow could turn modestly negative, eating into cash balances. CENTRAL PLAINS: Moody's Downgrades Rating on 2007A Bonds to 'Ba1' ----------------------------------------------------------------- Moody's Investors Service has downgraded the rating of Central Plains Energy Project Gas Project Revenue Bonds, Series 2007A (Project No. 1) to Ba1 from Baa1. The downgrade results from the presence of a guaranteed investment agreement provided by MBIA Inc. (Ba1) that is also insured by MBIA Insurance Corporation (B3) in which funds needed for debt service payments are invested. Moody's recently downgraded the rating of MBIA Insurance Corporation to B3. Pursuant to the recent restructuring of MBIA's portfolio of insurance policies into MBIA Insurance Corp (B3) and MBIA Illinois (Baa1 on watch for upgrade), MBIA has stated that all surety bonds issued to support investment contracts provided by MBIA Insurance Corp will remain at that entity and not be reinsured by MBIA Illinois. The GIC for this transaction is issued by MBIA Inc. (Ba1) and there is a surety bond supporting the GIC from MBIA Insurance Corporation (B3) which is available in the event MBIA Inc. fails to pay under the GIC. Therefore Moody's is relying on the higher of the two ratings (MBIA Inc. and MBIA Insurance Corporation) of the entities obligated to pay under the GIC. The rating on the bonds is based upon the credit quality of (i) Goldman Sachs Group, Inc. (A1) as guarantor under the gas purchase agreement; (ii) Metropolitan Utilities District of Omaha, NE (Aa2) as the sole participant in the transaction; (iii) Royal Bank of Scotland plc (Aa3/ P-1) as commodity swap provider; (iv) MBIA Inc. (Ba1) as GIC provider (supported by a surety bond from MBIA Insurance Corporation (B3)); and (v) Transamerica Life Insurance Co. (A1/ P-1) as GIC provider. Although the money invested in the GIC is a relatively small portion of the overall funds in the transaction, should the funds held in the GIC not be available for any reason, there could be a payment default on the bonds. Bankruptcy of a GIC provider may lead to an automatic stay on the funds in the GIC, which may also include any collateral posted pursuant to the GIC. Since a payment default on the bonds does not lead to a termination of the gas purchase agreement it would not trigger a termination payment by the guarantor and redemption of the bonds. The most recent rating action on the bonds was on January 13, 2009 when the rating was downgraded to Baa1. For more information on the transaction please see Moody's New Issue Report dated February 9, 2007. CHAD THERAPEUTICS: Files for Chapter 7; Stops Operations -------------------------------------------------------- CHAD Therapeutics, Inc., has filed a petition in the U.S. Bankruptcy Court for the Central District of California under Chapter 7 of the United States Bankruptcy Code. CHAD Therapeutics has ceased conducting business. David R. Hagen has been appointed as the bankruptcy trustee and can be contacted at 6320 Canoga Avenue, Suite 1400, Woodland Hills, California 91316. Harris L. Cohen, Esq., at 5305 Andasol Avenue, Encino, California 91316, is CHAD Therapeutics' counsel. Court documents say that CHAD Therapeutics listed less than $1 million in assets and more than $10 million in debts. California-based CHAD Therapeutics, Inc. -- http://www.chadtherapeutics.com/-- makes devices for sleeping disorders under the name Dormio Tech. The company was established to develop, produce, and market respiratory care devices designed to improve the efficiency of oxygen delivery systems for both home and hospital treatment of patients who require supplemental oxygen. On November 16, 2007, the Company entered into a definitive agreement to sell to Inovo, Inc., substantially all of the assets of the Company related to the oxygen conserver business, including accounts receivable, inventory, and certain equipment and intellectual property pursuant to an Asset Purchase Agreement. On March 6, 2008, CHAD Therapeutics entered into an Asset Purchase Agreement (the Purchase Agreement) with Respironics, Inc., (Respironics). Pursuant to the Purchase Agreement, Respironics acquired the Company's assets related to the transfilling oxygen business, the Total O2 Delivery System, including the OMNI-5 In-Home Filling System, OMNI-2 In-Home Filling System, Omni Fill technology, and the Company's Post Valve patent. CHRYSLER LLC: Beijing Automotive Denies Asset Purchase Talks ------------------------------------------------------------ Reuters reports Beijing Automotive Industry Co denied a domestic media report saying it held talks with Chrysler LLC about buying assets or technology from the U.S. Company. According to Reuters, the Chinese Business News, citing an unnamed executive at Beijing Auto, reported on Monday that the Chinese automaker had initial talks with Chrysler on buying assets and technology as it seeks to expand globally via acquisitions. Beijing Auto is interested in buying some of Chrysler's vehicle and engine manufacturing facilities as well as technology to help boost its development of its own brand of automobiles, the Chinese Business News said in a report cited by Reuters. Bloomberg News relates the Chinese Business News said Chrysler exited a venture between Beijing Auto and Daimler AG last year after Cerberus Capital Management LP took control of the U.S. carmaker. About Beijing Automotive Industry Beijing Automotive Industry Holding Co. Ltd. is one of China's major auto production bases and among the 8 largest automobile groups in China as well. It comprises tens of production factories and research institutes to produce 700,000 entire vehicles per year in 3 major categories including jeeps, light- duty trucks and travelling vans. Beijing Automotive Industry Holding is the holding company of Beijing Automotive Import & Export Corporation ("BAIEC") -- http://www.baiec.com/newEbiz1/EbizPortalFG/portal/html/index.html/ -- a supplier of automobiles in China with capabilities ranging from auto manufacturing, parts supplies to technical solutions and import and export business. About Chrysler Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CHRYSLER LLC: Protocol for Tipton Claims vs. GETRAG Okayed ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan approved on Feb. 10, 2009, procedures for the resolution of all lien claims against GETRAG Transmission Manufacturing, LLC's manufacturing facility under construction in Tipton, Indiana. With the approval of the procedures, the objections of Chryler, LLC, are resolved. As reported in the Troubled Company Reporter on Jan. 13, 2009, Chrysler raised these objections to the proposed procedures: A. The Bankruptcy Court does not have authority to order that the Debtor and/or Walbridge can join in any foreclosure proceeding or payment action without regard to federal And state rules regarding intervention. B. Any order should provide that Chrysler in not bound with respect to claims resolved in the Bankruptcy Court, because, among other things, Chrysler is not a party to the Debtor's bankruptcy proceeding nor is it in privity with the Debtor or Walbridge. C. The Court cannot restrict Chrysler's right to challenge the removal of any foreclosure or Payment Action and to seek remand of and/or abstention with respect to any such removed action. D. The automatic stay does not apply to Walbridge as it is not a debtor. Pursuant to the Procedures Order, any Project Party wanting to assert a Project Claim and/or Project Lien against the Debtor, the Project's general contractor, Walbridge Aldinger Company, another Project Party (but not a surety furnishing a bond on behalf of such parties) in connection with the Project, or against the project itself (but not against Chrysler or any other entity which is not a Project Party), for payment relating to the Project must serve a Project Demand on the Debtor, Walbridge, and the Official Committee of Unsecured Creditors no later than March 23, 2009. The Project Demand must include specific information as to the contract under which the claimant worked, as outlined in the procedures, including the total amount claimed and a copy of the recorded lien. Each creditor should also file a proof of claim by the Proof of Claim deadline of March 23, 2009. Service of a Project Demand should be sent: To Debtor: Jeffrey S. Grasl McDonald Hopkins 39533 Woodward Avenue Suite 318 Bloomfield Hills, MI 48304 Tel: (248) 646-5070 email: igrasl@mcdonaldhopkins.com To Walbridge: Judy B. Calton Honigman Miller Schwartz and Cohn LLP 2290 First National Building 660 Woodward Ave. Detroit, MI 48226 Tel: (313) 465-7344 email: jcalton@honigman.com To Committee: Matthew Wilkins Butzel Long, P.C. 150 W. Jefferson Suite 100 Detroit, MI 48226 (313) 225-7000 email: wilkins@butzel.com The plaintiff in any Payment Action will give notice of the Payment Action to Getrag, Walbridge, and the Committee within the later of five (5) days of the commencement of such action or service of the procedures order. On or before May 7, 2009, forty-five days after the deadline for filing and serving a Project Demand, Walbridge will service a notice on each party serving a Project Demand or filing a lien on the Project, to the Debtor, the Committee and all parties on the Notice Parties. The Notice will list each of the Project Demand claims, and the amounts, if any, which Walbridge deems to be valid. The Notice will also state the defenses that Walbridge chooses to reserve, if any, to the Project Demand or lien. Objections, if any, to the information in the Notice must be filed with service on the Notice parties, on or before May 27, 2009. Each Project Party will be prohibited from (i) filing or continuing a motion for relief from the stay to determine the amount or validity of its Project Claim and/or Project Lien, (ii) from commencing or continuing a Payment Action against any party, and (iii) filing or continuing a foreclosure action (the Stay) until the earlier of when the Project has been sold, so the amount of any deficiency has been determined, or Dec. 31, 2009. Notwithstanding the Stay, any party to a foreclosure action or Payment Action may seek to remove the action to federal court and seek transfer of the action to the Bankruptcy Court, subject to the right, if any, of any party in interest to object to any such removal and to seek remand or abstention under applicable law or rules. Walbridge will retain any claim it may have against Chrysler, LLC. Nothing in the Procedures Order, however, will preclude Walbridge from asserting its claim, nor the Debtor or Chrysler from objecting to such a claim. A full-text copy of the Court's order approving procedures for the resolution of all lien claims against the Debtor's Tipton Manufacturing Facility is available at: http://bankrupt.com/misc/GETRAGTransmission.ProceduresOrder.pdf About GETRAG Transmission Headquartered in Sterling Heights, Michigan, GETRAG Transmission Manufacturing LLC -- http://www.getrag.de/-- designs and makes dual clutch transmission its facility in Tipton, Indiana. The company filed for Chapter 11 relief on Nov. 17, 2008 (Bankr. E.D. Mich. Case No. 08-68112). Jayson Ruff, Esq., Jeffrey S. Grasi, Esq., and Stephen M. Gross, Esq., at McDonald Hopkins represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of $100 million to $500 million, and debts of $500 million to $1 billion. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. CHRYSLER LLC: Treasury's Advisers Talks with Banks on DIP Loans --------------------------------------------------------------- The U.S. Treasury's advisers have begun talking with banks and other lenders about an at least $40 billion in financing for General Motors Corp. and Chrysler LLC, in case the two firms have to file for bankruptcy, Jeffrey McCracken and John D. Stoll at The Wall Street Journal report, citing people familiar with the matter. WSJ relates that the sources said that the government advisers have started to aggressively ask Citigroup Inc. and J.P. Morgan Chase & Co. to participate in any bankruptcy financing. According to WSJ, administration officials involved in the auto talks said that they are trying to find a way to restructure GM and Chrysler without resorting to bankruptcy proceedings. Citing the officials, WSJ states that the latest efforts were "due diligence" on the part of the government advisers, and the bankruptcy financing may not be necessary. People involved in the talks with government officials said that the possible Chapter 11 filings by Chrysler and GM still need to be considered, WSJ relates. WSJ quoted a person familiar with the matter as saying, "Everything is on the table right now" and President Barack Obama doesn't want to see more massive job losses in the auto industry, or anger the United Auto Workers by appearing to push for bankruptcy. WSJ states that the initial discussions call for private banks to provide DIP financing, with the government guaranteeing or backstopping the loan. Chrysler and GM would use some of the money to repay the $17.4 billion the government lent the firms in 2008, WSJ relates. Lenders, WSJ notes, are reluctant to commit funding to GM or Chrysler. WSJ says that the government advisers are considering ways the Treasury could "prime" other banks making DIP loans, so that the government could receive payment before private creditors. GM Chairperson and CEO Rick Wagoner said during a news conference that the company could start talks with the government on how to fund a stay in bankruptcy court, but said that the firm hasn't "had extensive discussions yet with the government on DIP financing," WSJ reports. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CIRCUIT CITY: To Start Auctions for Last Store Leases Feb. 26 ------------------------------------------------------------- Circuit City Stores Inc., currently liquidating the last 567 of its 721 stores, received formal authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to hold an auction for the final batch of stores being closed. Circuit City and its affiliates asked the Court to: (a) approve their proposed bidding and auction procedures for the sale of unexpired leases of nonresidential real property for all of their remaining retail store and distribution centers, and other non-corporate office locations; (b) set sale hearing dates; and (c) authorize and approve: (i) the sale of the Leases free and clear of all interests, liens, claims, and encumbrances; (ii) the assumption and assignment of the Leases; and (iii) lease rejection procedures for any leases that are not sold in connection with the request. In January 2009, the Court authorized the Debtors to conduct going out of business sales at their remaining 567 stores pursuant to an agency agreement between the Debtors and a joint venture, as agent. The Agency Agreement provides that the Agent will pay occupancy expenses for the Closing Locations, including base rent, utilities, common area maintenance, real estate and use taxes, merchant's association dues and expenses, and building insurance due under the Leases on a per diem basis while the GOB Sales are conducted. According to Bloomberg, the Bankruptcy Court approved the hiring of Liquid Asset Partners LLC as agent to sell the furniture, fixtures, and equipment in the stores. The agent will receive a 3% fee. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, discloses that expenses for the Leases are approximately $28,000,000 per month, and the Debtors accordingly, intend to resolve the status of the Leases as quickly as possible following the date on which the Agent intends to vacate the Closing Location. The Agent has indicated that it plans to complete the GOB Sales for certain of the Closing Locations by February 16, 2009, and the remaining Closing Locations at various dates throughout March, but in all cases by no later than March 31, 2009. Bidding/Rejection Procedures Under the proposed bidding procedures, the Debtors will to conduct multiple sale processes for the Leases to enable them to sell, assume and assign or reject the Leases as quickly as practicable, Mr. Galardi says. According to Mr. Rochelle, the Court approved bid procedures: -- for stores closing before the end of February, bids on the leases are due by Feb. 24, followed by an auction on Feb. 26. -- for stores closing in March, the bid deadline is March 5 with the auction on March 10. Hearings to approve sales to anyone bidding on the leases will be held March 3 and March 13. To ensure that the Debtors do not unnecessarily expend estate resources on Leases that will not be assumed and assigned, and have no further value to the bankruptcy estates after completion of the GOB Sales, the Debtors also propose certain rejection procedures that would allow them to promptly reject leases in the event no bids are received for those leases. About Circuit City Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments -- domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (Bankr. E.D. Va. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc., and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. Circuit City has opted to liquidate its 721 stores. It has obtained the Court's approval to pursue going-out-of-business sales, and sell its store leases. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CITIGROUP INC: Gov't May Increase Stake in Bank ----------------------------------------------- David Enrich and Monica Langley at The Wall Street Journal report that the U.S. government could hold as much as 40% of Citigroup Inc.'s common stock. Citing people familiar with the matter, WSJ relates that Citigroup is talking with government officials on the possible further acquisition of Citigroup stock. The report says that Citigroup has proposed the plan to its regulators. According to the report, the sources said that Citigroup executives hope the stake will be closer to 25%. A substantial chunk of the $45 billion in preferred shares that the government obtained last year by injecting capital into Citigroup would convert into common stock, the report states, citing the sources. WSJ says that the government's move to take a big stake could backfire, and could spur investors to flee other banks. People familiar with the matter said that Citigroup officials hope to convince private investors that have acquired preferred shares in the firm to convert some of those stakes into common stock, which would further boost an obscure but increasingly pivotal measure of banks' capital known as "tangible common equity," or TCE, WSJ reports. Companies that acquired preferred shares in Citigroup included the Government of Singapore Investment Corp., Abu Dhabi Investment Authority, and Kuwait Investment Authority, WSJ relates. About Citigroup Based in New York, Citigroup (NYSE: C) -- http://www.citigroup.com -- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan. CONSTAR INTERNATIONAL: Amends DIP Credit Agreement -------------------------------------------------- On February 10, 2009, Constar International Inc. entered into an amendment to the Senior Secured Super-Priority Debtor in Possession and Exit Credit Agreement, dated as of December 31, 2008. The Amendment permits the Company's United Kingdom subsidiary to be indebted to, and from time to time to repay debt owed to, the Company's Dutch subsidiary; provided that the indebtedness is subordinated to the Obligations on terms satisfactory to the Administrative Agent and that the aggregate principal balance of that indebtedness is at least $4.0 million. A full-text copy of Amendment No. 1 is available for free at: http://researcharchives.com/t/s?39c4 Headquartered in Philadelphia, Pennsylvania, Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The company provides full-service packaging services. The company and five of its affiliates filed for Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Wilmer Cutler Pickering Hale and Dorr LLP represents the Debtors as their bankruptcy counsel. The Debtors proposed Bayard, P.A., as local counsel; Pricewaterhouse Coopers as auditors and accountants; Greenhill & Co. LLC as financial advisor; and Epiq Systems Inc. Claims and Balloting Agent. CONSTAR INTERNATIONAL: TCM & EagleRock Disclose Equity Stakes ------------------------------------------------------------- In a regulatory filing dated February 17, 2009, 11 entities disclosed that they no longer beneficially own shares of Constar International's common stock: -- TCM Spectrum Fund LP -- TCM Spectrum Fund (Offshore) Ltd. -- TCM Select Opportunities Fund (Offshore) Ltd. -- TCM Select Opportunities Master Fund Ltd. -- Partners Group Alternative Strategies PCC Limited -- IBS (MF) Ltd. In Respect of Troob Capital Series -- Troob Capital Management LLC -- Troob Capital Management (Offshore) LLC -- Troob Capital Advisors LLC -- Douglas M. Troob and -- Peter J. Troob In a separate regulatory filing, EagleRock Capital Management, LLC, EagleRock Institutional Partners, LP, EagleRock Master Fund, LP, and Nader Tavakoli disclosed that: (i) EagleRock Capital may be deemed to beneficially own 2,171,482 shares of the Company's Common Stock, constituting approximately 16.8% of the total outstanding shares; (ii) ERIP may be deemed to beneficially own 933,427 shares, constituting approximately 7.2% of the total outstanding shares; (iii) ERMF may be deemed to beneficially own 1,238,055 shares, constituting approximately 9.6% of the total outstanding shares; and (iv) Mr. Tavakoli may be deemed to beneficially own 2,171,482 shares, constituting approximately 16.8% of the total outstanding shares. EagleRock Capital and Mr. Tavakoli own directly no shares of Common Stock. Pursuant to an investment management agreement, EagleRock Capital maintains investment and voting power with respect to securities held by ERIP and ERMF. Mr. Tavakoli is the manager of EagleRock Capital and therefore controls its investment decisions. Headquartered in Philadelphia, Pennsylvania, Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The company provides full-service packaging services. The company and five of its affiliates filed for Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Wilmer Cutler Pickering Hale and Dorr LLP represents the Debtors as their bankruptcy counsel. The Debtors proposed Bayard, P.A., as local counsel; Pricewaterhouse Coopers as auditors and accountants; Greenhill & Co. LLC as financial advisor; and Epiq Systems Inc. Claims and Balloting Agent. DHP HOLDINGS: Files Schedules of Assets and Debts ------------------------------------------------- DHP Holdings II Corporation and its affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware their schedules of assets and liabilities and statements of financial affairs, disclosing: Total Total Assets Liabilities ------ ----------- DHP Holdings II Corporation - $53,635,409 DESA Heating LLC $41,083,654 $53,284,051 DESA LLC $21,199,657 $86,768,078 DESA IP LLC $13,087,209 $53,283,062 DESA FMI LLC $10,342,111 $53,344,536 DESA Specialty LLC $12,158,228 $53,286,398 About DHP Holdings Headquartered in Bowling Green, Kentucky, DHP Holdings II Corporation is the parent of DESA Heating, which sells and distributes heating commercial products in Europe and Mexico under brand names including ReddyHeater, Comfort Glow and Master Portable Heaters. The company has manufacturing, storage and distribution facilities in Alabama and California. DHP Holdings II and six of its affiliates filed for Chapter 11 protection on December 29, 2008 (Bankr. D. Del. Lead Case No. 08-13422). The company's international arm, HIG-DHP Barbados, has not filed for bankruptcy. HIG-DHP Barbados holds 100% of the equity of all foreign nondebtor subsidiaries, which manufacture, distribute and sell commercial and consumer goods in Europe, Mexico, and Canada. Bruce Grohsgal, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl Young & Jones LLP, represent the Debtors. The Debtor proposed AEG Partners as restructuring consultants, and Craig S. Dean as chief restructuring officer and Kevin Willis as assistant chief restructuring officer. The Debtora also proposed Epiq Bankruptcy Solutions LLC as claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. According to Reuters, as of Nov. 29, the company, along with its nondebtor subsidiaries and affiliates, had assets of $132.5 million and liabilities of $133.2 million. DESA Holdings Corporation and DESA International LLC filed voluntary petitions on June 8, 2002. HIG-DESA Acquisition nka DESA LLC acquired on Dec. 13, 2002, substantially all assets of the DESA Entities for $198 million comprised of $185 million in cash plus unsecured subordinated notes in the original aggregate amount of $13 million priced at 10% per annum due payable on Dec. 24, 2007. The sale closed on Dec. 24, 2002. The Chapter 11 cases of the form DESA Entities is still active; However, activity occurring in those cases consists of limited claims resolution, and required filing of necessary postconfirmation reports and payment of postconfirmation fees. No claims of ther issues remain open between the Debtors and the former DESA Entities. According to the Troubled Company Reporter on April 22, 2005, the Hon. Walter Shapero of the United States Bankruptcy Court for the District of Delaware confirmed the Second Amended Joint Plan of Liquidation of DESA Holdings Corporation and its debtor- affiliate -- DESA International LLC. The Court confirmed the Plan on April 1, 2005, and Plan took effect the same day. Kirkland & Ellis, LLP, and Pachulski, Stang, Ziehl Young Jones & Weintraub, P.C., represented the DESA entities. DISTRIBUTED ENERGY: Morgan Stanley Et Al. Disclose Equity Stake --------------------------------------------------------------- Morgan Stanley, Morgan Stanley Renewables Inc., and Morgan Stanley Wind LLC disclosed in a regulatory filing dated February 17, 2009, that they may be deemed to beneficially own shares of Distributed Energy Systems Corp.'s common stock. As of December 31, 2008, Morgan Stanley Renewables Inc. may be deemed to indirectly beneficially own 9,950,057 shares by virtue of its ownership interest in Morgan Stanley Wind LLC. Morgan Stanley may be deemed to have beneficial ownership of the 9,953,307 shares, including the 9,950,057 shares beneficially owned by MSW. On March 7, 2007, in connection with the execution of a joint venture agreement between Distributed Energy Systems Corp. and MSW, MSW was issued a common stock purchase warrant entitling MSW to purchase up to 8% of DESCs common stock outstanding from time to time, including shares of common stock issuable upon the exercise of stock options, warrants and other convertible or exchangeable securities. Under the terms of the Warrant, MSW and its affiliates are not permitted to exercise the Warrant if, as a result of that exercise, the beneficial ownership of MSW and its affiliates would be greater than 19.9% of the then outstanding Shares. Based on the number of shares of the Company's common stock outstanding as of March 31, 2008, as reported in its Form 10-Q that was filed on May 12, 2008 (40,050,228 shares), as of December 31, 2008, MSW may be deemed to have beneficially owned 9,950,057 shares of the reported securities. Distributed Energy Systems Corp. and its wholly owned subsidiary, Northern Power Systems Inc., filed for Chapter 11 bankruptcy protection on May 4, 2008 (Bankr. D. Del. Lead Case No. 08-11101). Robert S. Brady, Esq., Edward J. Kosmowski, Esq., and Robert F. Poppiti, Jr., at Young, Conaway, Stargatt & Taylor LLP represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems as their claims agent. The U.S. Trustee for Region 3 appointed three creditors to serve on an Official Committee of Unsecured Creditors. Schuyler G. Carroll, Esq., Robert M. Hirsh, Esq., and Karen McKinley, Esq., at Arent Fox LLP, in New York, and John V. Fiorella, Esq., Charles C. Brown, III, Esq., and "J" Jackson Shrum, Esq., at Archer & Greiner, P.C., in Wilmington, Delaware, represent the Committee. The Debtors disclosed in their schedules, assets of $19,593,387 and debts of $43,558,713. EAST CAMERON: Court Extends Plan Exclusive Period to April 3 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Louisiana extended East Cameron Partners, LP's exclusive period to file a plan to and including April 3, 2009, and its exclusive period to solicit acceptances of said plan to and including June 2, 2009. In its motion, the Debtor said it seeks the extension to negotiate and obtain a resolution of the adversary proceeding which it filed on Oct. 16, 2008, against Louisiana Offshore Holding, LLC (LOH), and to prepare and submit an appropriate disclosure statement and Plan of Reorganization. The adversary proceeding seeks a declaratory judgment that its overriding royalty interest on certain leases (which are its principal assets) is the Debtor's property and that it was not, in fact, sold to LOH. The trial on the merits is set to begin on April 13, 2009. Based in Lafayette, Louisiana, East Cameron Partners, LP -- http://www.eastcameronpartners.com/-- is an independent oil and gas exploration and production company. The company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. La. Case No. 08-51207). Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed over $100 million in assets and over $100 million in debts. EAST CAMERON: May Retain Steffes Vingiello as Bankruptcy Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of East Cameron Partners, L.P. has obtained the permission of the U.S. Bankruptcy Court for the Western District of Louisiana to retain William E. Steffes, Esq. and the law firm of Steffes, Vingiello & McKenzie, LLC, as its counsel, nunc pro tunc to Jan. 28, 2009. As the Committee's counsel, Steffes, Vingiello & McKenzie, LLC and William E. Steffes will advise the Committee with regard to its rights and duties, and to take any action necessary or required to represent its interests in the Debtor's bankruptcy case. William E. Steffes, a member of the law firm of Steffes, Vingiello & McKenzie, LLC, tells the Court that the firm has no interest adverse to the Committee in matters in which the firm is to be engaged, and that the firm is a "disinterested person" pursuant to Sec. 327 of the Bankruptcy Code. The Committee's motion did not include a schedule of the firm's professional fees. Based in Lafayette, Louisiana, East Cameron Partners, LP -- http://www.eastcameronpartners.com/-- is an independent oil and gas exploration and production company. The company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. La. Case No. 08-51207). Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed over $100 million in assets and over $100 million in debts. EAST CAMERON: Panel Wants Examiner Appointed in Debtor's Case ------------------------------------------------------------- The official committee of unsecured creditors of East Cameron Partners, L.P., asks the U.S. Bankruptcy Court for the Western District of Louisiana to direct the U.S. Trustee's office to appoint an examiner in the Debtor's bankruptcy case. The Committee tells the Court that it has serious concerns with regard to the operational and accounting practices of the Debtor. The Debtor, the Committee says, has filed three monthly operating reports for the months ending October 31, November 30, and December 31, that, on their face show: -- depletion of $1,696,965 in cash; and -- payments to companies affiliated or related to Debtor's management in the amount of $986,439, without detailed or supporting documentation as to $5428,453 of such payments. The Committee adds that the examination of the Debtor pursuant to Rule 2004 commenced on Jan. 29, 2009, and continued through Jan. 30, 2009, but the examination was not completed, because William Fanning, the person most qualifed to testify regarding the Debtor's financial and accounting records, was recovering from surgery and not available to testify. The Committee states that the examiner be specifically empowered to: (a) conduct an investigation of all transactions between the Debtor and any entities, particularly Open Choke Operating, Open Choke Energy, Open Choke Exploration, BT Operating, and BT Exloration, having any common ownership, common management, or control by a common entity with the Debtor, including transactions involving affiliates and insiders of the Debtor and the Debtor's management for the three year period prior to bankruptcy filing; and, b) review and, to the extent the examiner deems advisable or appropriate, audit Debtor's books and records with regard to each of the Debtor's monthly operating reports ending Jan. 31, 2009. Based in Lafayette, Louisiana, East Cameron Partners, LP -- http://www.eastcameronpartners.com/-- is an independent oil and gas exploration and production company. The company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. La. Case No. 08-51207). Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed over $100 million in assets and over $100 million in debts. FANNIE MAE: $200 Bil. Deal Expansion Won't Affect S&P's Ratings --------------------------------------------------------------- The U.S. Treasury announced on Feb. 18, 2009, that it is expanding its senior preferred stock purchase agreement with government- sponsored enterprises Fannie Mae and Freddie Mac to $200 billion per company -- twice the amount found in the original September 2008 agreement. This announcement will have no impact upon Standard & Poor's Ratings Services' current ratings on Fannie Mae's senior unsecured debt (AAA/Stable/A-1+), subordinated debt ('A'), or preferred stock ('C'). Nor does it impact the current ratings on Freddie Mac's senior unsecured debt (AAA/Stable/A-1+), subordinated debt ('A'), or preferred stock ('C'). The Treasury's senior preferred stock purchase agreement with the regulator of Fannie Mae and Freddie Mac -- the Federal Housing Finance Agency -- coincided with the placement of the GSEs in conservatorship, with the FHFA acting as their conservator. The increased senior preferred stock purchase agreement sends a strong signal that the U.S. government will maintain its ongoing commitment to these two institutions. S&P believes the government intends for this action to instill further investor confidence in the U.S. mortgage market, while also helping these firms to further expand their funding capacity. This should enable the GSEs to continue to carry out their public policy role of providing liquidity to the housing finance sector. The Treasury also reaffirmed its commitment to go on with its purchase of GSE mortgage-backed securities to maintain liquidity in this market. The GSEs' retained mortgage portfolio size agreement was also increased by $50 billion, allowing their respective portfolios to grow to $900 billion. The GSEs will be making their year-end announcements in the next few weeks. S&P expects Fannie Mae to announce that it will make its first draw on the senior preferred stock purchase agreement and that Freddie Mac will make its second draw (it made its first $13.8 billion draw in November 2008) after the company releases its fourth-quarter results. After its second draw, Freddie Mac's senior preferred stock outstanding could reach $48 billion. Fannie Mae has indicated that its preferred stock draw could be in the $11 billion-$16 billion range (this amount is subject to material revision as Fannie Mae finalizes its yearend financial statements). While the GSEs are in conservatorship, the FHFA has suspended its regulatory capital requirements and classifications due to the Treasury's senior preferred stock purchase agreement. While providing liquidity to the mortgage market in accordance with their public mission remains a top priority, the GSEs primary financial objective from their regulator is to manage their affairs toward a positive GAAP (generally accepted accounting principles) stockholder's equity position. FLYING J: Wants to Borrow up to $10 Million from Merrill Lynch -------------------------------------------------------------- Flying J Inc. and Longhorn Pipeline Inc. ask the U.S. Bankruptcy Court for the District of Delaware to authorize them to obtain up to $10,000,000 of secured postpetition loans on a superpriority administrative claim and first priority lien basis from Merrill Lynch. The LPI DIP Debtors' obligations under the DIP Facility will be secured by (a) a first priority lien on the (i) Pushed Product, (ii) receivables generated from the sale of such Pushed Product, including a lien on the relevant supply contracts, (iii) Purchased Product until title passes to LPI when the new Pushed Product is pushed through the pipeline, and (iv) all sales contracts for Pushed Products and proceeds thereof; and (b) a second lien on all existing collateral of LPI's prepetition secured lender. The Pushed Procuct refers to the product coming out of the pipeline in El Paso and/or Crane. Debtor LPI and its debtor subsidiaries own and operate a 700-mile common carrier pipeline with through-put capacity of over 70,000 barrels per day from the Gulf Coast to the Southwestern United States. Currently, LPI has over 900,000 barrels of refined gasoline and diesel products in the pipeline that include winter mix product, which can only be sold "as is" during certain months each year designated as the "winter season," that is, winter mix cannot be sold after early April 2009 until the next winter season. Upon receiving interim approval of the DIP Facility, the LPI DIP intend to use the proceeds from the DIP Facility to purchase newer product that will flush the pipeline of the winter mix product in order to sell the winter mix product before the end of the winter season. The significant terms of the proposed DIP Credit Agreement are summarized as follows: Facility Amount: $10 million Borrower: Flying J Inc Guarantor: Longhorn Pipeline Inc. Structure: Senior Secured Revolving Credit Facility. Borrowings that are repaid may be reborrowed through April 15, 2009 ("Maturity"). Borrower shall pay (a) L+6.5%, with L floor of 3%; and (b) pay when due all of Lender's reasonable professional fees related to the DIP Facility. Advance Rate: Borrowings under the facility are limited to 50% of the invoice value of the Purchased Product at Galena Park (the "Maximum Borrowing") Maturity: April 15, 2009 Success Fee: $50,000 payable within 1 day of the entry of an order by the Court authorizing the DIP Facility plus 20% of the borrower's profit in excess of $300,000 from the swap transactions, payalble as an increased claim on the Maturity Date. In no event shall the Success Fee exceed $200,000 Cash Collateral Motion: Lender agrees to continued use of cash collateral by LPI consistent with the current cash collateral order, including without limitation the reborrowing ability provided for in the Repayment of Loans section of the cash collateral order, until the deemed lifting of the automatic stay as provided under the Additional Conditions Applicable to the Prepetition Loan The Debtors tell the Court that the potential benefits from the LPI DIP Debtors being able to access postpetition financing are substantial and access to the DIP Facility will enable the Debtors to maximize their estates for the benefit of all the paties in interest. Merrill Lynch was the only party willing to provide debtor in possession financing on such a short lead time. The Debtor requests that the Court set a final hearing for March 4, 2009, at 3:00 p.m. ET, and set Feb. 25, 2009, at 4:00 p.m. as the deadline for parties to file objections to the Motion. About Flying J Headquartered in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com-- operate an oil company with operations in the field of exploration and refining of petroleum products. The Debtors engage in online banking, card processing truck and trailer leasing, and payroll services. The Debtors also operate about 200 travel plazas in 41 states and six Canadian provinces. The company and six of its affiliates filed for Chapter 11 protection on Dec. 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Kirkland & Ellis LLP represents the Debtors' in their restructuring efforts and Young, Conaway, Stargatt & Taylor LLP as their Delaware Counsel. The Debtors proposed The Blackstone Group LP as financial advisor and Epiq Bankruptcy Solutions LLC as claims agent. When the Debtors filed for protection from its creditors, they listed assets more than $1 billion and debts between $100 million to $500 million. FLYING J: April 20 Deadline for Filing Sec. 503(b)(9) Claims Set ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has established April 20, 2009, as the deadline for filing requests for allowance of administrative claims under Sec. 503(b)(9) in Flying J., Inc., and its debtor-affiliates' bankruptcy cases. The Debtors in these Chapter 11 cases are: Flying J Inc.; Big West of California, LLC; Big West Oil, LLC; Big West Transportation, LLC; Longhorn Partners Pipeline, L.P.; Longhorn Pipeline Holdings, LLC; and Longhorn Pipeline Inc. Parties asserting administrative expense claims for the value of any goods sold in the ordinary course of business and received by the Debtors within twenty days before Dec. 22, 2008 (the "Petition Date") must file a Sec. 503(b)(9) Claim no later than 4:00 p.m., Eastern Time, on April 20, 2009. Each Sec. 503(b)(9) Claim must include: (a) The amount of the Sec. 503(b)(9) Claim; (b) The particular Debtor against which the Sec. 503(b)(9) Claim is asserted; (c) The value of the goods the Sec. 503(b)(9) Claiman contends the Debtor received within twenty days before the Petition Date; (d) A certification that the goods with respect to which the Sec. 503(b)(9) Claim is being filed were sold in the ordinary course of the Debtor's business; (e) The Sec. 503(b)(9) Claim must also include or attach the particular invoices for which any such Sec. 503(b)(9) Claim is being asserted. Each Sec. 503(b)(9) Claim must be delivered to and received by Epiq Bankruptcy Solutions, as follows: If by first class mail: Flying J. Inc. Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5082 New York, NY 10150-5082 If by Hand Delivery or Overnight mail: Flying J. Inc. Claims Porcessing Center c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New york, NY 10017 with a copy to: Kirkland & Ellis LLP Attn: Vincente Tennerelli Aon Center 200 East Randolph Chicago, Illinois 60601 Any holder of a Sec. 503(b)(9) Claim that fails to file a Sec. 503(b)(9) Claim by the Sec. 503(b)(9) Bar Date is forever barred, estopped, and permanenly enjoined from asserting its Sec. 503(b)(9) Claim against the Debtors, their estates, or the property of any of them, and such holder shall not be entitled to receive any distribution in these bankruptcy cases on account of such Sec. 503(b)(9) Claim or receive further notices regarding such Sec. 503(b)(9) Claim absent further of the Court. About Flying J Headquartered in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com-- operates an oil company with operations in the field of exploration and refining of petroleum products. The Debtors engage in online banking, card processing, truck and trailer leasing, and payroll services. The Debtors also operate about 200 travel plazas in 41 states and six Canadian provinces. The company and six of its affiliates filed for Chapter 11 protection on Dec. 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Kirkland & Ellis LLP represents the Debtors' in their restructuring efforts and Young, Conaway, Stargatt & Taylor LLP as their Delaware Counsel. The Debtors proposed The Blackstone Group LP as financial advisor and Epiq Bankruptcy Solutions LLC as claims agent. When the Debtors filed for protection from its creditors, they listed assets more than $1 billion and debts between $100 million to $500 million. FOAMEX INTERNATIONAL: Can Access $20 Million Loan on Interim Basis ------------------------------------------------------------------ Foamex International Inc., received interim approval to borrow $20 million from a $95 million credit offered by MatlinPatterson Global Advisers LLC, Bloomberg's Bill Rochelle said. According to the report, the U.S. Bankruptcy Court for the District of Delaware at a Feb. 20 hearing approved interim financing after requiring changes in terms of the agreement to limit some of the lenders' control over the reorganization. As reported by the Troubled Company Reporter on February 19, 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. 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. 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. FONTAINEBLEAU LAS VEGAS: Cash Concerns Cue S&P's Junk Rating ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas-based Fontainebleau Las Vegas Holdings LLC to 'CCC' from 'B-'. The corporate credit rating, as well as all issue-level ratings on FLVH's related entities, was removed from CreditWatch, where it was placed with negative implications on Sept. 18, 2008. The rating outlook is negative. In addition, S&P lowered the issue-level rating on the $1.85 billion senior secured credit facility borrowed by Fontainebleau Las Vegas LLC and Fontainebleau Las Vegas II LLC, both wholly owned subsidiaries of FLVH, to 'CCC' (at the same level as the 'CCC' corporate credit rating on FLVH) from 'B'. The recovery rating on the facility was revised to '4', indicating S&P's expectation of average (30% to 50%) recovery for lenders in the event of a payment default, from '2'. S&P also lowered the issue-level rating on the $675 million second mortgage notes issued jointly by FLVH and its wholly owned subsidiary, Fontainebleau Las Vegas Capital Corp., to 'CC' (two notches lower than the 'CCC' corporate credit rating) from 'CCC'. The recovery rating on this debt remains unchanged at '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. "The ratings downgrade reflects our concern that, given the substantial pullback in consumer discretionary spending and its pronounced effect on the gaming sector in general and, more specifically, on the Las Vegas Strip, Fontainebleau Las Vegas' ability to generate sufficient cash flow to service its capital structure is in doubt," said Standard & Poor's credit analyst Ben Bubeck. Although the property is not scheduled to open until later this year, S&P's current projections for the Las Vegas Strip call for EBITDA declines similar to those observed in recent quarters through at least the first half of 2009, followed by only a modest recovery in 2010. Given the pressure that declines in visitation have placed on room rates, in addition to reduced spend per visitor, S&P has substantially lowered its expectations for EBITDA generation at Fontainebleau Las Vegas in 2010. S&P remains concerned with the property's ability to generate an adequate amount of foot traffic, given its disadvantaged location at the north end of the Strip, particularly following the delays and postponements of other projects around Fontainebleau Las Vegas. In addition, the downgrade reflects S&P's belief that FLVH is unlikely to generate any meaningful level of proceeds from condo sales over the intermediate term. Proceeds from the sales of condos are an important source of cash for the project. Though not critical to completing the project, these funds are necessary to reduce debt balances following its opening, to levels that are serviceable with cash flow. Absent any meaningful condo proceeds, Fontainebleau Las Vegas will open with a debt load of approximately $2.9 billion and an interest burden of about $200 million (including the non-recourse retail facilities). S&P's current EBITDA projection for the property would fall short of meeting the interest burden. The 'CCC' corporate credit rating on FLVH reflects S&P's expectation for cash flow generation insufficient to service the current capital structure upon the opening of Fontainebleau Las Vegas. FLVH was formed in 2006 to design, develop, construct, own, and operate the property, which will be located on the northern portion of the Strip at the site of the former El Rancho Hotel and Algiers Hotel. FORD MOTOR: Reaches Tentative Deal on Retiree Benefits With UAW --------------------------------------------------------------- Jeff Bennett at The Wall Street Journal reports that Ford Motor Co. said on Monday that it has reached a tentative deal with the United Auto Workers union over unionized retiree health benefits. UAW President Ron Gettelfinger said that the union has reached an agreement with Ford Motor on modifications to the Voluntary Employee Beneficiary Association, the union's health care trust for UAW Ford retirees. The union also reached tentative agreement with the company on other modifications to the 2007 UAW-Ford National Agreement on February 15. The proposed changes will be presented to the union's local leadership at a council meeting early this week. Any changes to the contract are subject to approval of the UAW membership at Ford Motor. In addition, proposed changes to the VEBA will require court approval. WSJ relates that Ford Motor faces $13.6 billion in legacy health costs. The Company, according to WSJ, said that up to half of its future payments to a retiree fund could be made in stock rather than cash under the terms of the pact. WSJ quoted Ford Motor as saying, "We will consider each payment when it is due and use our discretion in determining whether cash or stock makes sense at the time, balancing our liquidity needs and preserving shareholder value." About Ford Motor 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. FORTUNOFF HOLDINGS: No Longer Accepting Gift Cards -------------------------------------------------- Fortunoff Holdings LLC is no longer accepting gift cards, Bloomberg News said. According to Bloomberg's Bill Rochelle, the Company said in substance that bankruptcy law prohibits accepting gift cards. The Company said it intended to stop accepting the cards on Feb. 5 when the bankruptcy petition was filed. The stores continued accepting cards until Feb. 17 when the no-card policy was enforced. As reported February 9, 2009 by the Troubled Company Reporter, Fortunoff asked the United States Bankruptcy Court for the Southern District of New York to approve bidding procedures for the sale of substantially all of their assets as a going concern, subject to competitive bidding and auction. The hearing for approval of the highest bid will be Feb. 24. About Fortunoff Holdings New York-based Fortunoff Holdings LLC -- http://www.fortunoff.com/ -- started out as a family-owned business founded by Max and Clara Fortunoff in 1922, until it merged with M. Fortunoff of Westbury, L.L.C. and Source Financing Corporation in 2004. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff Holdings and its affiliate, Fortunoff Card Company LLC, filed for Chapter 11 protection on February 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10497). Lee Stein Attanasio, Esq., at Sidley Austin LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Zolfo Cooper LLC as their special financial advisor and The Garden City Group Inc. as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. This is the second bankruptcy filing by Fortunoff. In 2008, Fortunoff Fine Jewelry and Silverware LLC filed for Chapter 11. An entity owned by NRDC Equity Partners bought Fortunoff during its first Chapter 11 case. FORWARD FOODS: Can Access $4-Million Loan on Interim Basis ---------------------------------------------------------- Forward Foods LLC received interim approval from the U.S. Bankruptcy Court for the District of Delaware for a $4 million loan from Emigrant Capital Corp. According to Bloomberg's Bill Rochelle, the Court will convene a hearing on March 18 for final approval of the financing provided by Emigrant, the private-equity investor that bought the business in 2006 from Bluegrass Bars LLC. Mr. Rochelle adds that Forward scheduled a hearing on March 18 to approve a settlement with Bluegrass resolving disputes arising from the 2006 acquisition. Bluegrass is to 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 LLC filed a Chapter 11 petition February 17 in Delaware after recalling 75% of its products on account of using peanuts from Peanut Corp. of America. PCA had earlier filed for Chapter 7 liquidation, after closing its plants due to salmonella poisoning on its products. FREMONT GENERAL: Harbinger Et Al. Disclose Zero Equity Stake ------------------------------------------------------------ Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Offshore Manager, L.L.C., HMC Investors, L.L.C., Harbert Management Corporation, Philip Falcone, Raymond J. Harbert and Michael D. Luce disclosed in a regulatory filing dated February 17, 2009, that they no longer own any shares of Fremont General Corporation's common stock. Based in Santa Monica, Calif., Fremont General Corp. (OTC: FMNTQ) -- http://www.fremontgeneral.com/-- was a financial services holding company with $8.8 billion in total assets at Sept. 30, 2007. Fremont General ceased being a financial services holding company on July 25, 2008, when its wholly owned bank subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont Investment & Loan) completed the sale of its assets, including all of its 22 branches, and 100% of its $5.2 billion of deposits to CapitalSource Bank. Fremont General filed for Chapter 11 protection on June 18, 2008, (Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq. at Stutman Treister & Glatt, represent the Debtor as counsel. Kurtzman Carson Consultants LLC is the Debtor's Noticing Agent/Claims Processor. Lee R. Bogdanoff, Esq., Jonathan S. Shenson, Esq., and Jonathan D. Petrus, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Official Committee of Unsecured Creditors as counsel. The Debtor filed with the Court an amended schedule of its assets and liabilities on Oct. 30, 2008, disclosing $330,036,435 in total assets and $326,560,878 in total debts. GENERAL DATACOMM: Dec. 31 Balance Sheet Upside Down by $35.8MM -------------------------------------------------------------- General DataComm Industries, Inc., and its subsidiaries disclosed that their December 31, 2008, balance sheet showed total assets of $7,683,000 and total liabilities of $43,505,000, resulting in total stockholders' deficit of $35,822,000. The Company incurred a net loss of $1,493,000 and used a significant amount of cash in its operating activities for the three months ended December 31, 2008. The Company has no current ability to borrow additional funds except as may be provided pursuant to a receivable sales agreement with a related party. It must, therefore, plan on funding operations from cash balances, cash generated from operating activities and any cash that may be generated from the sale of non-core assets such as real estate and others. In addition, at December 31, 2008, the Company had a working capital deficit of approximately $34.4 million, including debentures in the principal amount of $19.5 million, together with accrued interest of $10.3 million, which matured on October 1, 2008. While a subordinated security agreement signed by the indenture trustee on behalf of the debenture holders provides that no payments may be made to debenture holders, and that no event of default may be declared under the indenture, while senior secured debt is outstanding, in the absence of those restrictions the Company does not have the ability to repay the debentures. As of December 31, 2008, senior secured debt consists of notes payable to related parties and a real estate mortgage. A failure to pay the debentures when they become due and payable could result in an event of default being declared under the indenture governing the debentures. To continue operations, management has responded in 2008 by entering into a receivable sales agreement with a related party to provide liquidity and by selling its patents for proceeds of $4,000,000 while retaining rights to use the patented technologies. In addition, management has implemented operational changes, including reducing certain salaries, restructuring the sales force, increasing factory and office shutdown time, constraining expenses and reducing the employee workforce. The Company also continues to pursue the sale or lease of its headquarters' land and building in Naugatuck, CT. In 2007 senior debt was replaced with mortgage debt on more favorable terms. Based in Naugatuck, Connecticut, General DataComm Industries Inc. (Other OTC: GNRD.PK) -- http://www.gdc.com/-- provides secure, NEBS-compliant networking for telcos, governments and businesses. GDC's solutions help customers to bridge technologies, maximize their investments in existing voice and data networks, and transition to the newest network architectures. GDC's product offerings enable legacy and DSL network access; bandwidth management, multiprotocol label switching (MPLS), voice over IP (VoIP), Ethernet, power over Ethernet (PoE), and wireless networking, and are supported by services for network installation, maintenance, operations, repair, enterprise security management and complete network outsourcing. Going Concern Doubt Eisner LLP, in New York, expressed substantial doubt about General DataComm Industries Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. GENERAL GROWTH: Amends Loan Agreement for Oakwood Shopping Center ----------------------------------------------------------------- General Growth Properties, Inc., and certain of its subsidiaries, including Oakwood Shopping Center Limited Partnership, have entered into a First Amendment to Loan Agreement with Citicorp North America, Inc., as a lender and as administrative agent for the other lenders party thereto, and certain additional lenders, to amend the Loan Agreement dated as of January 30, 2006, by and among the Company Parties and the Lenders for the mortgage loan secured by the Company's Oakwood Shopping Center located in Gretna Louisiana. Pursuant and subject to the terms of the Amendment, the maturity date of the Loan was extended to March 16, 2009. The Loan's original maturity date of February 9, 2009, had previously been extended pursuant to agreements between the Company Parties and the Lenders. The Company is currently in default under certain of its loans. As previously reported, the Company has entered into forbearance agreements with certain of its lenders pursuant to which such lenders have agreed to forbear from exercising certain of their default related rights and remedies under such loans. However, the forbearance agreements related to mortgage loans secured by the Company's Fashion Show and Palazzo shopping centers located in Las Vegas, Nevada expired on February 12, 2009. The expiration of these forbearance agreements permitted the lenders under the Company's 2006 Credit Facility and 2008 secured portfolio facility to terminate the previously announced forbearance agreements related to these loan facilities. However, the Company has not received notice of any such termination, as required by the terms of such forbearance agreements. In addition, the Company has also been unable to enter into or extend forbearance or similar agreements for its other mature secured mortgage loans, and there can be no assurance that it will be able to do so. The Company continues to work with its lenders with respect to loans under which it is in default or may be in default in the near future. Kris Hudson at The Wall Street Journal relates that General Growth's investors will be looking at how badly the Company has been hurt by bankruptcies and contractions by retailers and signs of whether operations have suffered because senior executives have been distracted by the Company's solvency crisis. WSJ says that General Growth was scheduled to release its fourth-quarter results on February 23. WSJ quoted UBS AG analyst Jeffrey Spector as saying, "It will be extremely telling if we see serious declines in fundamentals -- occupancy in particular and leasing spreads. That would be the clear evidence that their eye isn't on the ball and operations are slipping faster than they should be." WSJ notes that if the cash flow generated by General Growth's malls declines much further, it could put the Company in violation of bond covenants. General Growth, according to WSJ, must generate enough cash flow to cover 1.6 times interest payments on its debt. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner with 200-plus shopping malls in 44 states. General Growth is a self-administered and self-managed real estate investment trust. General Growth owns, manages, leases and develops retail rental property, primarily shopping centers. Substantially all of its properties are located in the United States, but the company also has retail rental property operations and property management activities -- through unconsolidated joint ventures -- in Brazil and Turkey. Its Master Planned Communities segment includes the development and sale of residential and commercial land, primarily in large-scale projects in and around Columbia, Maryland; Houston, Texas; and Summerlin, Nevada, as well as the development and sale of its one residential condominium project located in Natick (Boston), Massachusetts. General Growth said in a regulatory filing Sept. 30 that its potential inability to address its 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to its ability to continue as a going concern. General Growth had $29.6 billion in total assets and $27.3 billion in total liabilities as at Sept. 30. * * * As reported by the Troubled Company Reporter on Dec. 11, 2008, Fitch Ratings, has downgraded the Issuer Default Ratings and outstanding debt ratings of General Growth Properties to 'C' from 'B'. GEORGIA GULF: Weak Financial Performance Cues Moody's Junk Rating ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Georgia Gulf Corporation. Moody's lowered GGC's Corporate Family Rating to Caa2 from B3, senior secured revolver and term loan to B3 from Ba3, senior unsecured notes to Caa3 from Caa1 and senior subordinated notes to Ca from Caa2. These actions follow the company weak fourth quarter performance, the potential for a weaker and longer downturn in the company's primary end-markets and difficult credit environment, which will reduce the company's flexibility in refinancing or amending its senior secured facilities prior to the filing of financial statements for the second quarter of 2009. The rating outlook is negative. "As Moody's have previously stated, Georgia Gulf will need to amend or refinance its secured facility by the end of July to prevent a potential breach of its financial covenants;" stated John Rogers, Senior Vice President at Moody's "Unfortunately the weakening economic environment along with a difficult credit market have significantly reduced its options." The two notch downgrade reflects the company's weak financial performance in 2008 and the increasing likelihood that 2009 and 2010 financial metrics will not improve significantly from current levels. Hence, GGC's performance and liquidity will remain under pressure for longer than previously anticipated, thereby constraining the company's ability to obtain sufficient covenant relief under its secured facility, without incurring more onerous terms that may further limit GGC's financial flexibility or necessitate a restructuring of its debt. The negative outlook reflects uncertainties tied to the timing and terms of any further amendment to GGC's secured facilities, the effect of weak first quarter financial performance on negotiations with secured lenders, and the size of potential cash outflows in the first half of 2009 related to seasonal working capital build and on-going cost reduction initiatives. The outlook also reflects Moody's belief that the PVC and downstream product fabrication markets will decline further in 2009 and that these market will not meaningfully rebound in 2010, as previously anticipated. Changes to the company's CFR and outlook will be triggered by the terms of the any amendment with its secured lenders and any changes to its capital structure that may be required to maintain compliance with these terms over the next 12- 18 months. Ratings downgraded: Georgia Gulf Corporation -- Corporate family rating to Caa2 from B3 -- Probability of Default rating to Caa2 from B3 -- Senior Secured Revolving credit facility to B3, LGD3/31% from Ba3, LGD2/23% -- Senior Secured Term Loan to B3, LGD3/31% from Ba3, LGD2/23% -- Senior Unecured Notes to Caa3, LGD5/80% from Caa1, LGD5/71% -- Senior Subordinated Debentures to Ca, LGD6/94% from Caa2, LGD6/93% The last rating action on Georgia Gulf Corporation was on March 12, 2008, when Moody's lowered the company's rating to B3 from B1. Georgia Gulf Corporation, headquartered in Atlanta, Georgia, is a producer of commodity chemicals including chlorovinyls (chlorine, caustic soda, vinyl chloride monomer, polyvinyl chloride resins and vinyl compounds), PVC fabricated products (pipe, siding, window profiles, plastic lumber, etc.), and aromatics (cumene, phenol and acetone). GETRAG TRANSMISSION: Protocol for Resolving Tipton Claims Okayed ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern district of Michigan approved on Feb. 10, 2009, procedures for the resolution of all lien claims against GETRAG Transmission Manufacturing, LLC's manufacturing facility under construction in Tipton, Indiana. All objectionS were either resolved by the Court's order or overruled. Pursuant to the Procedures Order, any Project Party wanting to assert a Project Claim and/or Project Lien against the Debtor, the Project's general contractor, Walbridge Aldinger Company, another Project Party (but not a surety furnishing a bond on behalf of such parties) in connection with the Project, or against the project itself (but not against Chrysler or any other entity which is not a Project Party), for payment relating to the Project must serve a Project Demand on the Debtor, Walbridge, and the Official Committee of Unsecured Creditors no later than March 23, 2009. The Project Demand must include specific information as to the contract under which the claimant worked, as outlined in the procedures, including the total amount claimed and a copy of the recorded lien. Each creditor should also file a proof of claim by the Proof of Claim deadline of March 23, 2009. Service of a Project Demand should be sent: To Debtor: Jeffrey S. Grasl McDonald Hopkins 39533 Woodward Avenue Suite 318 Bloomfield Hills, MI 48304 Tel: (248) 646-5070 email: igrasl@mcdonaldhopkins.com To Walbridge: Judy B. Calton Honigman Miller Schwartz and Cohn LLP 2290 First National Building 660 Woodward Ave. Detroit, MI 48226 Tel: (313) 465-7344 email: jcalton@honigman.com To Committee: Matthew Wilkins Butzel Long, P.C. 150 W. Jefferson Suite 100 Detroit, MI 48226 (313) 225-7000 email: wilkins@butzel.com The plaintiff in any Payment Action will give notice of the Payment Action to Getrag, Walbridge, and the Committee within the later of five (5) days of the commencement of such action or service of the procedures order. On or before May 7, 2009, forty-five days after the deadline for filing and serving a Project Demand, Walbridge will service a notice on each party serving a Project Demand or filing a lien on the Project, to the Debtor, the Committee and all parties on the Notice Parties. The Notice will list each of the Project Demand claims, and the amounts, if any, which Walbridge deems to be valid. The Notice will also state the defenses that Walbridge chooses to reserve, if any, to the Project Demand or lien. Objections, if any, to the information in the Notice must be filed with service on the Notice parties, on or before May 27, 2009. Each Project Party will be prohibited from (i) filing or continuing a motion for relief from the stay to determine the amount or validity of its Project Claim and/or Project Lien, (ii) from commencing or continuing a Payment Action against any party, and (iii) filing or continuing a foreclosure action (the "Stay") until the earlier of when the Project has been sold, so the amount of any deficiency has been determined, or Dec. 31, 2009. Notwithstanding the Stay, any party to a foreclosure action or Payment Action may seek to remove the action to federal court and seek transfer of the action to the Bankruptcy Court, subject to the right, if any, of any party in interest to object to any such removal and to seek remand or abstention under applicable law or rules. Walbridge will retain any claim it may have against Chrysler, LLC. Nothing in the Procedures Order, however, will preclude Walbridge from asserting its claim, nor the Debtor or Chrysler from objecting to such a claim. As reported in the Troubled Company Reporter on Jan. 13, 2009, Chrysler raised these objections to the proposed procedures: A. The Bankruptcy Court does not have authority to order that the Debtor and/or Walbridge can join in any foreclosure proceeding or payment action without regard to federal And state rules regarding intervention. B. Any order should provide that Chrysler in not bound with respect to claims resolved in the Bankruptcy Court, because, among other things, Chrysler is not a party to the Debtor's bankruptcy proceeding nor is it in privity with the Debtor or Walbridge. C. The Court cannot restrict Chrysler's right to challenge the removal of any foreclosure or Payment Action and to seek remand of and/or abstention with respect to any such removed action. D. The automatic stay does not apply to Walbridge as it is not a debtor. A full-text copy of the Court's order approving procedures for the resolution of all lien claims against the Debtor's Tipton Manufacturing Facility is available at: http://bankrupt.com/misc/GETRAGTransmission.ProceduresOrder.pdf About GETRAG Transmission Headquartered in Sterling Heights, Michigan, GETRAG Transmission Manufacturing LLC -- http://www.getrag.de/-- designs and makes dual clutch transmission its facility in Tipton, Indiana. The company filed for Chapter 11 relief on Nov. 17, 2008 (Bankr. E.D. Mich. Case No. 08-68112). Jayson Ruff, Esq., Jeffrey S. Grasi, Esq., and Stephen M. Gross, Esq., at McDonald Hopkins represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of $100 million to $500 million, and debts of $500 million to $1 billion. * * * About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. GENERAL MOTORS: Treasury's Advisers Mulls Possible DIP Loans ------------------------------------------------------------ The U.S. Treasury's advisers have begun talking with banks and other lenders about an at least $40 billion in financing for General Motors Corp. and Chrysler LLC, in case the two firms have to file for bankruptcy, Jeffrey McCracken and John D. Stoll at The Wall Street Journal report, citing people familiar with the matter. WSJ relates that the sources said that the government advisers have started to aggressively ask Citigroup Inc. and J.P. Morgan Chase & Co. to participate in any bankruptcy financing. According to WSJ, administration officials involved in the auto talks said that they are trying to find a way to restructure GM and Chrysler without resorting to bankruptcy proceedings. Citing the officials, WSJ states that the latest efforts were "due diligence" on the part of the government advisers, and the bankruptcy financing may not be necessary. People involved in the talks with government officials said that the possible Chapter 11 filings by Chrysler and GM still need to be considered, WSJ relates. WSJ quoted a person familiar with the matter as saying, "Everything is on the table right now" and President Barack Obama doesn't want to see more massive job losses in the auto industry, or anger the United Auto Workers by appearing to push for bankruptcy. WSJ states that the initial discussions call for private banks to provide DIP financing, with the government guaranteeing or backstopping the loan. Chrysler and GM would use some of the money to repay the $17.4 billion the government lent the firms in 2008, WSJ relates. Lenders, WSJ notes, are reluctant to commit funding to GM or Chrysler. WSJ says that the government advisers are considering ways the Treasury could "prime" other banks making DIP loans, so that the government could receive payment before private creditors. GM Chairperson and CEO Rick Wagoner said during a news conference that the company could start talks with the government on how to fund a stay in bankruptcy court, but said that the firm hasn't "had extensive discussions yet with the government on DIP financing," WSJ reports. 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. GLOBAL CONSUMER: Receives Non-Compliance Notice From NYSE --------------------------------------------------------- Global Consumer Acquisition Corp. (NYSE Alternext US: GHC, GHC.U, GHC.WS) received a deficiency letter from NYSE Alternext US LLC indicating that the Company was not in compliance with the annual stockholder meeting requirements of Section 704 of the NYSE Alternext US Company Guide because the Company did not hold an annual stockholders meeting during the year ended December 31, 2008. The Company has been informed by the Exchange that a similar letter was sent to all of its listed companies, including blank check companies, that did not hold an annual meeting in 2008. The notification from the Exchange indicates that the Company has until March 10, 2009 to submit a plan advising the Exchange of action it has taken, or will take, that would bring the Company into compliance with all continued listing standards by August 11, 2009. The Company intends to submit a plan of compliance to the Exchange as soon as practicable and no later than the March 10, 2009 deadline. Upon receipt of the Company's plan, 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, in which case the plan will be accepted. If accepted, the Company will continue its listing, during which time the Company will be subject to continued periodic review by the Exchange's staff. If the Company's plan is not accepted, the Exchange could initiate delisting procedures against the Company. About Global Consumer Acquisition Global Consumer Acquisition Corp. (NYSE Alternext US: GHC, GHC.U, GHC.WS) is a blank check company organized for the purpose of effecting a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction, joint venture or other similar business combination with one or more domestic or international operating businesses. GOODYEAR TIRE: Moody's Affirms Corporate Family Rating at 'Ba3' --------------------------------------------------------------- Moody's Investors Service has lowered the Speculative Grade Liquidity Rating of Goodyear Tire & Rubber Company's, to SGL-3 from SGL-2. In a related action, the Corporate Family Rating was affirmed at Ba3. The rating outlook remains Negative. The lowering of the Speculative Grade Liquidity Rating of SGL-3 reflects Moody's expectation of Goodyear's ability to generate free cash flow over the next twelve months to be more challenged by general economic conditions, and lower passenger miles driven. While the company's current liquidity is expected to be sufficient to meet the $498 million of debt maturities due in December 2009, the company will likely have a weaker liquidity profile subsequent to this payment. As of December 31, 2008, Goodyear maintained $1.9 billion of cash and cash equivalents. Availability under the $1.5 billion revolver was about $300MM at December 31, 2008 and availability under the Euro 505MM revolver was about EUR368MM ($513MM). Based on seasonal fluctuations, the EUR450MM securitization facility was fully utilized, which had EUR346MM outstanding. The coverage ratio covenant test under the $1.5 billion revolver comes into effect when availability under the revolver, plus cash balances, goes below $150MM. Goodyear has the capacity under the indentures for its unsecured obligations to pledge additional assets (subject to the terms, limitations and exclusions provided in the respective indentures). Should the permissible basket of liens exceed the prescribed amount, Goodyear would be required to ratably secure the unsecured notes and bonds issued under the indentures. The SGL-3 reflects adequate liquidity over the next twelve months. The affirmation of Goodyear's ratings and negative outlook continues to reflect the company's prospect of deterioration in operating performance while incorporating the company's adequate liquidity profile. The global recessionary environment has depressed both replacement tire demand and automotive original equipment demand in North America and abroad which has been reflected in the company's weak fourth quarter performance. Original equipment tire demand for passenger cars and commercial vehicles, represents about 27% of Goodyear's 2008 unit volumes. However, according to the company, sales attributable to the Detroit-3 automakers on a global basis are expected to be less than 8% of 2008 revenues. Goodyear has also suffered from the impact of higher raw material prices in 2008. The negative outlook also considers the continuing deterioration in passenger miles driven, even as gasoline prices have abated from higher levels in 2008, and the global recessionary environment. Goodyear is expected to continue to be impacted by weak industry conditions and high raw material prices built into inventory through the first quarter of 2009. The severity of any continued deterioration in the company's operating performance and credit metrics will likely hasten the consideration for a ratings down grade. Further pressuring the current ratings is the depressed financial market impact of significantly increasing the company's unfunded pension obligations, increasing Moody's leverage measures. Goodyear has announced restructuring actions including, headcount and production reductions, wage freezes, and reductions in capital expenditures. Lower raw material pricing may begin to benefit the company's performance. However, competitive pricing pressures may offset the potential margin improvement. Goodyear's global scale, geographic diversification and market share are expected to support the company's competitive position in the tire business. The current global economic conditions are expected to generate pent-up demand which should drive replacement demand as economic conditions rebound. Ratings affirmed: Goodyear Tire & Rubber Company -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- $1.5 billion first lien revolving credit facility, Baa3 (LGD- 1, 7%) -- $1.2 billion second lien term loan, Ba1 (LGD-2, 20%) -- 9% senior unsecured notes due 2015, B1 (LGD-4, 64%); -- Floating rate unsecured note due 2009, B1 (LGD-4, 64%); -- 8 5/8 % senior unsecured notes due 2011, B1 (LGD-4, 64%): -- 7 6/7% senior notes, B2 (LGD-6, 95%): -- 7% senior notes, B2 (LGD-6, 95%) Goodyear Dunlop Tyres Europe B.V. and certain subsidiaries -- EUR505 million of first lien revolving credit facilities, Baa3 (LGD-1, 7%) Ratings lowered: Goodyear Tire & Rubber Company -- Speculative Grade Liquidity rating, to SGL-3 from SGL-2 The last rating action was for Goodyear was on November 21, 2008 when the company's Ba3 Corporate Family Rating was affirmed and the outlook changed to Negative. Goodyear Tire & Rubber Company, based in Akron, Ohio, is one of the world's largest tire companies with more than 90 facilities in 28 countries around the world. Revenues in 2008 were approximately $19.5 billion. HAWAIIAN TELCOM: Seeks to Cease Cash Payments to Secured Lenders ---------------------------------------------------------------- Hawaiian Telcom Communications Inc. seeks authority from the U.S. Bankruptcy Court for the District of Hawaii to continue to use cash collateral beyond February 28, 2009 with the same adequate protection currently provided to the pre-bankruptcy lenders, provided, however, that the adequate protection no longer include cash payments equal to postpetition interest. According to Bloomberg's Bill Rochelle, the Company owes $574.5 million to lenders who have liens on all of HawTel's assets. Nicholas C. Dreher, Esq., at Cades Schutte LLP, in New York, explains that it is critical that Hawaiian Telcom have adequate liquidity to maintain operations. Because the continued payment of Interest Payments results in negative cash flow for the businesses, Hawaiian Telcom has determined, in an exercise of its valid business judgment, to seek to discontinue those payments. Given the time it will take to implement a transaction that facilitates an exit from chapter 11, Hawaiian Telcom said it has no choice but to act prudently and conserve cash. Hawaiian Telcom also has to prepare for the very likely possibility that, given the turmoil in the credit markets, exit financing will not be available to fund the company post-reorganization. Hawaiian Telcom has already taken steps to cut non-essential expenditures. The Interest Payments total approximately $6.6 million per quarter. Based on current estimates, continuing to make the Interest Payments will force Hawaiian Telcom into the untenable position of choosing between cutting expenditures essential to the maintenance of the company's network and long-term success of the businesses or operating the businesses with insufficient liquidity. Mr. Dreher asserts that the Prepetition Lenders are not legally entitled to the Interest Payments as adequate protection. There is no evidence of diminution in the value of the Prepetition Lenders' collateral as a result of Hawaiian Telcom's use of the collateral. Among other things, during the course of these cases, Hawaiian Telcom's cash position has increased from $75.8 million on its bankruptcy petition date to $95.2 million as of February 13, 2009. In addition, Hawaiian Telcom is continuing to operate the businesses at levels generally comparable to the prepetition levels. Hawaiian Telcom notes that it is not proposing to leave the Prepetition Lenders without adequate protection. Importantly, the Court's final order, dated January 16, 2009, contains over 50 pages of various forms of adequate protection for the Prepetition Lenders. The Debtors still seek to continue to provide the Prepetition Lenders with the remaining panoply of adequate protection rights, including, among other things, continued payment of the Prepetition Lenders' (and their advisors') fees and expenses, perfected replacement liens on the prepetition and postpetition collateral and a superpriority administrative expense claim under Section 507(b) of the Bankruptcy Code with respect to all the adequate protection obligations. Assuming the proposed adequate protection package is approved, Hawaiian Telcom projects it will be able to meet its minimal liquidity needs for the duration of these cases and upon emergence. Moreover, Hawaiian Telcom will be able to make critical capital expenditures necessary to maintain and improve its communications network, field assets, back-office infrastructure technologies and systems. Such investments, which the Debtors estimate will total approximately $111 million, will strengthen the businesses, promote greater efficiencies and increase the value of the Prepetition Lenders' collateral. Notably, even with these significant expenditures (and assuming the Interest Payments are discontinued), Hawaiian Telcom projects to be cash flow neutral in 2009. Robert F. Reich, Senior Vice President, Chief Financial Officer and Treasurer of Hawaiian Telcom; Kevin Nystrom, Chief Operating Officer; and Suneel Mandava of Lazard Freres & Co. LLC have submitted declarations in support of the request. The Motion is scheduled for hearing on February 26. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HUNGARIAN TELEPHONE: Obtains Waiver Under Senior Credit Facilities ------------------------------------------------------------------ Hungarian Telephone and Cable Corp. obtained a waiver under its senior credit facilities agreement dated August 6, 2004, as amended, permitting a corporate reorganization to effectively change HTCC's place of incorporation from Delaware to Denmark, as approved by HTCC's Board of Directors on November 27, 2008. A special meeting of the stockholders of HTCC to adopt the merger through which the corporate reorganization will be implemented is scheduled to take place on February 24, 2009. If the merger is adopted at the special meeting and all conditions precedent to the merger are satisfied, HTCC currently anticipates being in position to consummate the reorganization on or around February 26, 2009, in accordance with the Agreement and Plan of Merger dated November 27, 2008, unless the Board of Directors of HTCC resolves to abandon the merger. HTCC is in discussions with several financing sources to refinance its senior credit facilities agreement and its EUR100 million bridge loan agreement, dated March 3, 2008. There can be no assurances regarding the outcome or the scope of these refinancing discussions. Hungarian Telephone and Cable Corp. (NYSE ALTERNEXT U.S.:HTC), operating under the Invitel brand name, is the number one alternative and the second largest fixed line telecommunications and broadband Internet Services Provider in the Republic of Hungary with more than 1 million customers in Hungary. In addition to delivering voice, data and Internet services in Hungary, it is also a leading player in the Central and Eastern European wholesale telecommunications capacity and data market. HICKS ACQUISITION: Receives Non-Compliance Notice From NYSE ----------------------------------------------------------- Hicks Acquisition Company I, Inc. (NYSE Alternext US LLC: TOH) received a notice from NYSE Alternext US LLC indicating that the Company was not in compliance with the annual stockholder meeting requirements of Section 704 of the Exchange's Company Guide, because the Company did not hold an annual stockholders meeting during the year ended December 31, 2008. The Company has been afforded the opportunity to submit a plan to the Exchange by March 10, 2009, which the Company contemplates doing, advising the Exchange of actions taken, or to be taken, to bring the Company into compliance with Section 704 of the Company Guide (the "Plan") by August 11, 2009. The Company intends to submit a Plan but if the Plan is not accepted by the Exchange, the Company may be subject to delisting procedures. 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 standings by August 11, 2009. If the Plan is accepted, the Company should be able to continue its listing during the Plan Period up to August 11, 2009. However, if the Company does not make progress consistent with the Plan during the Plan Period or is not in compliance with the listing standards at the conclusion of the Plan Period, the Exchange staff may initiate delisting procedures as appropriate. The Company intends to explain in the Plan it submits that, pursuant to the Company's amended and restated certificate of incorporation, the Company must acquire, or acquire control of, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination one or more businesses or assets by September 28, 2009 pursuant a transaction approved by its stockholders, or the Company will dissolve and liquidate. As a result, the Company must hold a stockholder meeting prior to September 28, 2009 at which such a transaction is approved, or the Company will liquidate. Accordingly, in its Plan the Company contemplates asking the Exchange to defer the required August 11, 2009 stockholder meeting until September 28, 2009. However, the Company cannot guarantee that the Exchange will accept the Company's proposal to delay the required stockholder meeting dated until September 28, 2009. In the event the Exchange does not grant the requested delayed date, the Company may be required to hold a stockholder meeting by August 11, 2009. About Hicks Acquisition Company I Hicks Acquisition Company I, Inc. (NYSE Alternext US LLC: TOH) is a special purpose acquisition company, launched in October 2007 in an initial public offering that was at the time, at $552 million of gross proceeds, the largest SPAC IPO. Founded by Thomas O. Hicks, the Company was formed for the purpose of acquiring, or acquiring control of, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, one or more businesses or assets. It currently has no operating businesses. JB POINDEXTER: Moody's Cuts Rating to B3 on Deepening Recession --------------------------------------------------------------- Moody's downgraded JB Poindexter & Co.'s corporate family rating and probability of default rating to B3 from B2. The agency also cut its $200 million senior unsecured notes to Caa1 from B3. The downgrade reflects expectations that the company's operating performance will likely further deteriorate in the next six to 12 months in the face of significant top-line challenges across all business segments as the recession deepens. Moody's believes that JB Poindexter's run-rate credit metrics such as its high leverage and low interest coverage would deteriorate further and no longer support a B2 rating over the intermediate term. Customer demand for JB Poindexter's products - truck bodies, step- vans, pickup truck caps and tonneau covers - is anticipated to be significantly pressured as a result of the low class 5-7 commercial vehicle order and substantially reduced new pick-up truck sales projection in 2009. Sales at the company's machining service unit, which generated approximately 70% to 80% of the total EBITDA in 2008, are expected to decline materially in 2009. Houston's JB Poindexter manufactures commercial truck bodies for medium-duty trucks, pickup truck caps, truck bodies for walk-in step vans, funeral coaches, limousines and specialized buses. It also provides contract manufacturing services for precision metal parts and machining and casting services. JER INVESTORS: Receives Non-Compliance Notice From NYSE ------------------------------------------------------- JER Investors Trust Inc. has received written notice from the New York Stock Exchange that JRT was not in compliance with the continued listing standards applicable to JRT requiring a listed common stock to maintain a minimum average closing price of $1.00 per share over a consecutive 30 trading day period. The NYSE requires JRT to notify it within 10 business days of its intent to cure JRT's non-compliance or else its common stock would be subject to suspension or delisting. JRT's common stock remains listed on the NYSE under the symbol JRT, but has been assigned a ".BC" on the NYSE's consolidated tape indicator by the NYSE to signify that JRT is not currently in compliance with the NYSE's continued listing standards. On February 23, 2009, JRT notified the NYSE that it intended to cure the price deficiency by effecting a 1-for-10 reverse stock split, which became effective on February 20. The per share price of JRT common stock at market close on February 23, 2009 was $2.68. The determination as to JRT's restored compliance with the continued listing standards will be made by the NYSE. Under NYSE rules, JRT has six months from the date of the NYSE notice to cure the price deficiency. If JRT is not compliant by that date, its common stock will be subject to suspension and delisting by the NYSE. Based in McLean, Virginia, JER Investors Trust Inc. (JRT) -- http://www.jer.com/-- is a New York Stock Exchange listed specialty finance company that originates and acquires commercial real estate structured finance products. JRT's target investments include CMBS, mezzanine loans, first mortgage loan participations, B-Note participations in mortgage loans, commercial mortgage loans and net leased real estate investments. JRT is organized and conducts its operations so as to qualify as a REIT for federal income tax purposes. LANGUAGE LINE: S&P Changes Outlook to Stable; Affirms 'B' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Language Line Holdings Inc. to stable from negative. At the same time, S&P affirmed all ratings on the company and its operating subsidiary, Language Line Inc. The corporate credit rating on the parent company was affirmed at 'B'. Monterey, California-based Language Line had total debt of $466.3 million as of Sept. 30, 2008. "The outlook revision reflects Language Line's good operating performance over the past 12 months, its wider cushion of covenant compliance under its credit agreement, and S&P's expectation that the company should be able to maintain a reasonable margin of compliance over at least the next two to three quarters," said Standard & Poor's credit analyst Tulip Lim. The 'B' rating reflects the company's high debt leverage and chronic pricing pressure in the over-the-phone interpretation market. The company's strong position in the OPI market and its good EBITDA margin only partially mitigate these concerns. Language Line is the leading OPI provider. Although nearly 85% of this market is served by in-house capabilities, clients typically use Language Line to supplement in-house multilingual capabilities. Spanish-language OPI accounts for slightly more than 70% of total billed minutes, reflecting growth in the Spanish-speaking population. Four sectors--insurance, financial services, health care, and government--accounted for approximately 70% of revenue, but the company's largest customer accounted for only about 4% of its sales. Language Line's strategy is to be the cost leader and to maximize its call volume by offering price- competitive services and volume discounts. Year over year, revenue and EBITDA rose 14% and 21%, respectively, for the nine months ended Sept. 30, 2008. The company's EBITDA margin rose to 49.1% for the last 12 months ended Sept. 30, 2008. EBITDA gains were based on an increase in OPI minutes, which more than offset the decline in the average rate per billed minute. However, S&P is concerned that as the recession continues, the company could face stronger pricing pressures from clients reining in costs. Lease-adjusted total debt to EBITDA improved to 4.7x for the 12 months ended Sept. 30, 2008, from 5.5x for the year ended Dec. 31, 2007, mainly due to EBITDA growth and modest debt repayment, which offset the rapid accretion of the company's 14.125% senior discount notes due 2013. EBITDA coverage of gross interest expense for the 12 months ended Sept. 30, 2008, was 2.0x. Coverage of cash interest expense was 3.0x, reflecting the accretion of the company's senior discount notes. Conversion of EBITDA into discretionary cash flow, after distributions to the parent company, was 31.9% for the 12 months ended Sept. 30, 2008. Annual cash interest payments will increase by about $15 million because the 14.125% senior discount notes due 2013 require mandatory cash interest commencing on Dec. 15, 2009, which S&P views as likely to pressure discretionary cash flow. S&P is also concerned that further distributions could reduce Language Line's capacity for debt reduction, particularly after its discount notes commence cash interest payments. LEHIGH COAL: Disagreement Over Results of Operations ---------------------------------------------------- According to Bloomberg's Bill Rochelle, Lehigh Coal & Navigation Co., disclosed: -- a $426,000 net profit in January on total revenue of $1.57 million. -- a $577,000 net loss in December on revenue of $1.78 million. -- a net loss was $2.3 million while operating revenue totaled $22.5 million for 2008. Mr. Rochelle relates that in late January the examiner issued a supplemental report analyzing the December results of operations and saying the company "again failed to meet the sale projections" contained in the budget for the financing. The examiner said he had "heightened concerns" over the company's ability to continue operations. The Company disagreed with the examiner's facts and conclusions. Mr. Rochelle adds that the creditors who filed the involuntary petition against the Company said the examiner's "generally negative tone" was "unwarranted." The Troubled Company Reporter, citing Bloomberg's Bill Rochelle, reported on Oct. 7, 2008, that the Bankruptcy Court denied a motion to replace the management of Lehigh Coal with a Chapter 11 Trustee, but ordered the appointment of an examiner. The examiner issued a preliminary report saying more study is required before deciding whether anyone acted "in a detrimental manner" toward the Debtor, according to the report. The Debtor, according to the report, consented to being in Chapter 11 on Aug. 29 after facing an involuntary petition. Pottsville, Pennsylvania-based Lehigh Coal & Navigation Co. -- http://www.lcncoal.com/-- has been mining anthracite coal since the late 1700's, with 8,000 acres of coal-producing properties. The third Chapter 11 involuntary petition was filed against the Alleged Debtor in less than four years on July 15, 2008 (Bankr. M.D. Penn. Case No. 08-51957). Jeffrey Kurtzman, Esq., at Klehr, Harrison, Harvey, Branzburg and Ellers, LLP, represents the Alleged Debtor's petitioners. MAGNA ENTERTAINMENT: Violates Nasdaq Rule as Director Quits ----------------------------------------------------------- Magna Entertainment Corp. said Jerry Campbell, lead director and a member of the Audit Committee of the Company's board of directors, has stepped down as a director of MEC, effective immediately. Frank Stronach, Chairman and Chief Executive Officer of MEC, stated, "On behalf of everyone at MEC, I would like to thank Jerry for his dedication and many years of service." As a result of Mr. Campbell's resignation, MEC is not currently in compliance with the audit committee requirements provided for in Nasdaq Marketplace Rule 4350(d), due to the fact that MEC's Audit Committee is no longer comprised of at least three independent directors. MEC presently has two qualified independent directors on its Audit Committee. MEC intends to rely on the cure period provisions of Nasdaq Marketplace Rule 4350(d)(4), under which MEC has until the earlier of MEC's next annual shareholders' meeting or February 20, 2010, to regain compliance with Nasdaq's audit committee requirements. On February 19, 2009, Magna Entertainment received a letter from The Toronto Stock Exchange indicating that the TSX is conducting an expedited review of the eligibility for continued listing on the TSX of the Class A Subordinate Voting Shares of MEC. 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. * * * 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. The TCR said on February 19, 2009, that MI Developments Inc., the Company's controlling shareholder, has determined not to proceed with its reorganization proposal, which includes the spin-off of MEC to MID's existing shareholders. 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 has been 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. MATTRESS HOLDING: Weak Consumer Spending Cues Moody's Junk Rating ----------------------------------------------------------------- Moody's Investors Service downgraded Mattress Holding Corp.'s debt ratings, including its corporate family and probability of default ratings to Caa1 from B3 and the rating on its senior secured credit facilities to B3 from B2. The ratings were also placed on review for possible further downgrade. The downgrades reflect Moody's view that weaker consumer spending will likely place further pressure on Mattress Holding's already weak operating performance and credit metrics. The declining economic conditions in the first nine months of 2008 led to significant declines in the company's comparable store sales, while revenue and EBITDA declined at a slower pace due to incremental sales from new stores and management's cost cutting efforts. Mattress Holding's free cash flow was modest due to aggressive spending on new store openings early in the fiscal year, and debt levels very high due to the January 2007 acquisition of the company by J.W. Childs Associates and higher lease expense related to store growth. The company had very limited cushion under its financial covenants going into the fourth quarter, with contractual tightening set to occur several times over the next year. Additionally, the Caa1 rating reflects Moody's expectation of further decline in profitability throughout the near term while acknowledging the possibility of free cash flow improvement as expenditures likely moderate and working capital requirements reduce commensurate with anticipated volume reduction. Mattress Holding's ratings were placed under review for possible further downgrade due to the uncertainty surrounding covenant compliance, and the likely need to obtain near-term covenant relief. The review will focus on the company's ability to address liquidity, including the ability to meet its covenants, obtain relief or change its capital structure. The review will also focus on the company's ability to stabilize revenue and earnings declines in this weak economic environment, improve its profitability mix, capture its return on capital spending, and generate positive free cash flow for debt reduction. These ratings were downgraded and placed on review for possible downgrade: -- Corporate family rating to Caa1 from B3; -- Probability of Default rating to Caa1 from B3; -- Senior secured revolving credit facilities to B3 (LGD3, 32%) from B2 (LGD3, 33%); LGD assessment is not under review, but is subject to change. Mattress Holding's Caa1 rating continues to reflect several positive qualitative characteristics such as its credible market position in the very defined specialty retail sleep channel, its regional presence, moderate seasonality, and, until recently, the general replenishment nature of bedding products. The last rating action on Mattress Holding was on July 24, 2008 when Moody's downgraded the company's corporate family rating to B3 with a negative outlook. Mattress Holding Corp., headquartered in Houston, Texas, is a leading specialty retailer of conventional and specialty mattresses, with stores in 19 states, primarily located in the South and Southwestern, and a portion of the Midwestern United States. Revenues for the LTM period ended October 28, 2008 are estimated to exceed $450 million. MCCOY 6: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------- The Dominion Post reports that McCoy 6 Apartments LLC has filed for Chapter 11 bankruptcy protection. According to The Dominion, McCoy 6 blames the city of Morgantown for its financial troubles. Kris Warner, a partner in McCoy 6, said in a statement that McCoy 6 decided to seek protection under Chapter 11 of the U.S. Bankruptcy Code because of the city's condemnation of Water Street apartment building Mountaineer Court. Mr. Warner said in a press release, "For the last several years, and with increasing frequency in recent months, we have been subjected to unprecedented pressure from municipal officials, primarily in the building and fire code enforcement departments. This has, in many instances, resulted in demands being placed on us that have been excessive, ever changing, unnecessary and very costly. When a violation is brought to our attention, we take corrective action as quickly as possible. We have, and will, never compromise the safety of any of our residents. In the decades we have been in business in Morgantown, our properties are among the most highly utilized by students and other residents." The Dominion relates that the Morgantown Fire Department and the city Code Enforcement Office first condemned Mountaineer Court in July. The report says that some upgrades had to be completed before the tenants were allowed to move back in, but the city gave McCoy 6 until March 9, 2009, to bring the building completely up to code. On Dec. 29, 2008, the city condemned the Mountaineer Court again, saying that the owners failed to follow through with scheduled repairs, the report states. The condemnation order was lifted last month, according to the report. McCoy 6 has a project schedule to show the city it could meet the March 9 deadline, but the city never said that it would hold the company to that schedule, The Dominion says, citing Mr. Warner. City officials, The Dominion relates, explained that they were ensuring McCoy 6's compliance with the city code, to keep the public safe. The Dominion states that City Manager Dan Boroff said that the city expects compliance to its code for the safety of its residents. According to Mr. Warner's statement, McCoy 6 is also blaming the Fifth Third Bank's takeover of Mountaineer Court, as the bank. Mr. Warner said that Lender Fifth Third Bank, using "the pretext of code violations," placed the property under receivership. The Dominion received Monongalia County Circuit Court Judge Russell M. Clawges' approval. "We are seeking our Constitutional rights to due process and a hearing prior to having our property taken from us. Though we regret having to take this action, the city and Fifth Third leave us no option," Mr. Warner said in a statement. McCoy 6 Apartments LLC is co-owned by Ben Warner, Kris Warner, Mac Warner, and Monty Warner. McCoy 6 owns 46 rental properties within Morgantown. MICRON TECHNOLOGY: S&P Downgrades Corporate Credit Rating to 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Service said that it removed its ratings on Boise, Idaho-based Micron Technology Inc. from CreditWatch and lowered its corporate credit and senior unsecured ratings to 'B' from 'B+'. At the same time, S&P revised its recovery rating on the senior unsecured notes to '4' from '3', indicating average (30%-50%) prospects for recovery in a payment default. The outlook is negative. The rating actions follow a review of the company's near-term operating prospects, liquidity, and debt protection measures following its partially leveraged acquisition of a 35.6% interest in Inotera Memories Inc. from Qimonda AG. The lower rating reflects highly challenging industry conditions, uncertainty around the timing and extent of any benefit from a new sourcing agreement with Inotera, and eroding liquidity. The company's good technology position and moderating capital- expenditure burden partially offset company risks. Micron develops and manufactures semiconductors for the memory industry. As of Dec. 4, 2008, the company had about $2.9 billion of debt. Significant operating challenges and uncertainty around recognizing benefits from the new sourcing agreement from Inotera will pressure ratings for the near to mid-term. "Standard & Poor's could lower the rating if pricing continues to fall, requiring additional restructuring or shuttering of capacity to restore profitable operations," said Standard & Poor's credit analyst Lucy Patricola. S&P could also lower the rating if cash levels fall below $600 million (including cash held at consolidated joint ventures). "We would consider a stable outlook once pricing and supply are better equalized, such that the company can return to profitability at the operating income line," she continued. A satisfactory resolution of refinancing risks would also be necessary for us to consider stabilizing the outlook. MUZAK HOLDINGS: Proposes Incentive Plan for 6 Executives -------------------------------------------------------- Muzak Holdings LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to implement a key employee incentive plan. The proposal, which will cost $4.65 million if senior managers exceed all targets, is scheduled for hearing March 12. "While the Debtors' operations are strong, many overwhelming challenges ahead including stabilizing operations after the chapter 11 filings in the face of the global economic crisis and a hyper-competitive industry, as well as shepparding the Debtors' through a balance sheet restructuring that will serve to shape Muzak's future - will demand the laser focus, leadership and complete dedication of the Debtors' senior management team," says Michael Yurkewicz, at Klehr, Harisson, Harvey, Branzburg & Ellers LLP. "Indeed, without the support of a chief restructuring officer or outside restructuring advisor to otherwise assume responsibility for the interface with the major creditor constituencies regarding the parameters of a global financial restructuring, the Debtors' senior management team will be charged with not only operating thc business, but serving as the driving force to bring these chapter 11 cases to their ultimate resolution." To that end, and in concert with their advisors, including the Debtors' compensation consultant Towers Perrin, the Debtors have developed the KEIP to properly incentivize six members of senior management. More specifically, the KEIP, which was approved by Muzak Holdings LLC's Board of Directors, is designed to motivate the Senior Managers instrumental to the ongoing success of the company by offering periodic incentive-based payments if, and only if, the Debtors meet certain targeted earnings before interest, taxes, depreciation, amortization, and reorganization expenses targets set by the Board for fiscal year 2009. Accordingly, the KEIP is not a "pay to stay" retention plan, Mr. Yurkewicz clarifies. Indeed, absent achievement of the specified EBITDAR targets, the senior managers will not be paid a bonus. Significantly, the EBITDAR targets included in the KEIP were determined in connection with the development of the Debtors' 2009 business plan and related budget, which preceded the filing of the chapter 11 cases and any discussions concerning the KElP or its potential implementation. The KEIP, Mr. Yurkewicz relates, only includes those senior management members most indispensable to both the Debtors' business and reorganization efforts, and is designed to maximize value for all stakeholders by incentivizing those employees who are in the best position to impact the Debtors' business. At the same time, the KEIP is by no means overly generous, asserts Mr. Yurkewicz. To the contrary, and with the support and analysis of Towers Perrin, the KEIP's financial incentives are necessary to bring overall compensation for the Key Employees in line with competitive market levels. Moreover, and as explained below, the KEIP itself is subject to defined caps as to the total amounts Senior Managers can be paid and no Senior Manager participating in the KElP will be eligible for any other incentive-related payment. Silver Point -- the Debtors' largest general unsecured creditor -- is supportive of, and has in fact consented to, the KEIP. About Muzak Holdings Fort Mill, S.C.-based Muzak Holdings LLC -- http://www.muzak.com -- creates a variety of music programming from a catalog of over 2.6 million songs and produces targeted custom in-store and on- hold messaging. Through its national service and support network, Muzak designs and installs professional sound systems, digital signage, drive-thru systems, commercial television and more. The Company and 14 affiliates filed for Chapter 11 protection on Feb. 10, 2009 (Bankr, D. Del., Lead Case No. 09-10422). Kirkland & Ellis LLP is serving as legal advisor and Moelis & Company is serving as financial advisor to the Company. Klehr Harrison Harvey Branzburg & Ellers has been tapped as local counsel. In its bankruptcy petition, the Company estimated assets and debts of $100 million to $500 million. NRDC ACQUISITION: Receives Non-Compliance Notice From NYSE ---------------------------------------------------------- NRDC Acquisition Corp. on February 10, 2009, received notice from the staff of the NYSE Alternext US LLC that the Company does not meet one of the Exchange's continued listing standards because it did not hold an annual meeting of its shareholders in 2008 as required in Section 704 of the Exchange's Company Guide. The Company has been afforded the opportunity to submit a plan of compliance to the Exchange by March 10, 2009 to demonstrate the ability to regain compliance with the requirement to hold an annual meeting by August 10, 2009. The Company is aware of its obligations under the Company Guide, and is currently consulting with its professional advisors in connection with the submission of a plan of compliance. If the Company does not submit such a plan or if the plan is not accepted by the Exchange, the Company will be subject to delisting procedures as set forth in Section 1010 and part 12 of the Company Guide. The Company intends to file a plan of compliance with the Exchange by March 10, 2009. About NRDC Acquisition NRDC Acquisition Corp. (NYSE Alternext US: NAQ) is a blank check company formed for the purpose of acquiring, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination, one or more assets or control of one or more operating businesses. Since its initial public offering, NRDC's activities have been limited to identifying and evaluating prospective acquisition targets. NEW YORK TIMES: Suspension of Dividends Won't Move Moody's Rating ----------------------------------------------------------------- Moody's Investors Service said that The New York Times Company's announcement that it is suspending its quarterly dividend does not affect the Ba3 Corporate Family rating, SGL-3 speculative-grade liquidity rating, or negative rating outlook. Moody's last rating action on NY Times was on January 23, 2009, when Moody's downgraded the senior unsecured rating to Ba3 from Baa3 and assigned a Ba3 CFR and SGL-3 speculative grade liquidity rating, which actions concluded the review for downgrade initiated on October 23, 2008. NY Times is a New York based media company with operations in newspaper publishing and information services. The company operates The New York Times, the International Herald Tribune, The Boston Globe, 15 other daily newspapers, and more than 30 Web sites including NYTimes.com and About.com. Annual revenue approximates $3 billion. NOVELIS INC: S&P Puts 'BB-' Rating on CreditWatch Negative ---------------------------------------------------------- Standard & Poor's Ratings Services said it placed its ratings, including the 'BB-' long-term corporate credit rating, on Novelis Inc. on CreditWatch with negative implications. "The CreditWatch placement follows Novelis' disclosure of a liquidity squeeze brought about by the high volatility of primary aluminum prices," said Standard & Poor's credit analyst Donald Marleau. On Feb. 17, Novelis disclosed that its liquidity had declined to US$346 million as of Jan. 31, 2009, from US$583 million at Sept. 30, 2008 (excluding US$80 million of excess liquidity as defined under its asset-based loan facility), and that it expects more cash will be consumed in the next few months as it funds timing differences between payments on derivatives contracts and collections from customers. "The liquidity required to settle the derivatives contracts is considerably greater than Standard & Poor's expected, given the extraordinary drop in aluminum prices," Mr. Marleau added. To bolster its near-term liquidity, the company received a US$100 million long-term unsecured loan from an affiliate of the India-based Aditya Birla Group (not rated), which S&P believes has increased liquidity to nearly US$450 million. Birla Group controls Novelis' parent, Hindalco Industries Inc. (not rated), and support from the parent is currently factored into the rating on Novelis. Novelis processes aluminum into products such as beverage can sheet, automotive parts, and construction materials, passing through volatile metal prices to its customers and earning a conversion margin over the cost of metal. As part of operating on a conversion margin, the company enters into derivatives contracts with third parties for customers that require fixed metal prices to lock in the aluminum price that will be paid at the time of shipment. Under normal circumstances, the settlement of derivatives before the payment from customers -- based on an average of 40-50 receivable days outstanding -- would not require much liquidity given typical swings in aluminum prices. Since mid- 2008, however, aluminum prices have dropped more than 50% from their peak, compelling Novelis to settle high-priced derivatives contracts in the next several months before receiving payment, temporarily consuming significant liquidity until mid-2009. Standard & Poor's expects to resolve the CreditWatch within 90 days, taking into account the key credit drivers of liquidity, fundamental market conditions, and parental support. The most pressing near-term rating factor for Novelis is its ability to maintain what S&P view as adequate cash resources. S&P expects that the derivatives/cash flow matching factors are transitory, and that further unexpected downside in primary aluminum prices would consume only small amounts of cash. Furthermore, S&P expects Novelis will return to what S&P view as its previously solid liquidity footing by the second half of calendar 2009, as its cash flows benefit from lower investments in working capital stemming from lower aluminum prices, weaker volumes, and seasonal factors. Volumes are a key driver of Novelis' profitability and cash flow, and these are dropping along with global economic weakness, particularly in its automotive and construction segments. The company's debt remains persistently high in S&P's opinion, and weaker profitability in 2009 will likely preclude significant debt reduction outside of working-capital reduction. The effects of large items like mark-to-market losses on derivatives and goodwill impairment charges are only a marginal consideration because neither affects cash flows nor triggers any financial covenants. Moreover, the accounting loss on derivatives does not take into account the offsetting benefit of locked-in revenue. S&P continues to believe that Novelis is a strategic investment for Hindalco. That said, S&P will assess the parent's willingness and ability to support its subsidiary amid its own weakened profitability and large capital expenditure plans. NORTEL NETWORKS: To Divest Layer 4-7 Data Portfolio --------------------------------------------------- Nortel Networks Corporation has entered into a Stalking Horse asset purchase agreement to sell certain portions of its Application Delivery portfolio to Radware (RDWR). Under the agreement, the products that are planned to be acquired by Radware include the Nortel Application Accelerators (NAA) 510 and 610; Nortel Application Switches (NAS) 3408E, 2424E, 2424 SSL E, 2216E, 2208E; and the Virtual Services Switch (VSS) 5000. "We initiated discussions with Radware in late 2008, as part of our efforts to streamline investments around our future direction to speed and simplify business communications. Moving forward, Radware and Nortel will work together to ensure the transition is seamless to our customers," said Joel Hackney, president, Enterprise Solutions, Nortel. "We remain focused on our Enterprise business to deliver our industry-leading networking infrastructure that comprises our end-to-end Unified Communications solutions, including real time and wireless networking capabilities, services, security and integrated applications." Under the terms of the purchase agreement, while Radware would assume ownership, product development and outstanding warrantees, the products would still be available and promoted by Nortel in an OEM relationship with Radware. As part of the intended acquisition, Radware would take on Nortel's application delivery products, offering them under a merged brand, Radware Alteon. From the onset, Radware plans to significantly invest in service and support for the existing Nortel [Alteon] customer base as well as augment its current global support infrastructure with all of the necessary resources to guarantee world-class support for these customers. Additionally, Radware intends to reinforce its commitment to all existing Nortel [Alteon] customers by offering a 5-year support product plan, thus securing the investment of these customers in Nortel [Alteon] technology. Radware also intends to invest in these products by continuing to sell them and invest in their development -- leveraging mutual strengths of both Radware and Nortel [Alteon] technologies and experience -- to provide customers with the next generation of more reliable, high- performance and feature-rich solutions. Nortel has filed the asset purchase agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures has been scheduled with the Ontario Superior Court of Justice. Consummation of the transaction is subject to higher or otherwise better offers, approval by the United States Bankruptcy Court for the District of Delaware, and the Ontario Superior Court of Justice and the satisfaction of other conditions. "We believe acquiring Nortel's Application Delivery Business is a strategic move that will directly benefit Radware and Nortel's [Alteon] customers. Our ultimate goal is to provide them with a stronger, integrated product backed by world-class support and a globally-focused organization," stated Roy Zisapel, CEO, Radware. "We are committed to making this transaction seamless for existing Nortel [Alteon] customers and intend to take the necessary steps to ensure zero disruption to their business when the transfer occurs." "This move is a positive one for both companies and their respective customers and partners," offered Lucinda Borovick, Research Vice President, Datacenter Networks, IDC. "It will provide a stable path forward for existing Nortel application delivery customers with an established industry provider that specializes in this space and will continue to invest in the advancement of the product line." Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NOWAUTO GROUP: Can't File Dec. 31 Form 10-Q on Time --------------------------------------------------- NowAuto Group, Inc., disclosed in a regulatory filing dated February 12, 2009, that it cannot file its Form 10-Q for the quarter ended December 31, 2008. "Unresolved issues from a recent system conversion have delayed completion of the December 2008 financial statements." Based in Tempe, Ariz., NowAuto Group Inc. (OTC BB: NAUG) -- http://www.nowauto.com/-- operates three buy-here-pay-here used vehicle dealerships in Arizona. The company manages all of its installment finance contracts and purchases installment finance contracts from a select number of other independent used vehicle dealerships. Through its subsidiary, NavicomGPS Inc., the company markets GPS tracking devices, primarily to independent used vehicle dealerships. The Company sustained a material loss in the year ended June 30, 2005. This loss continued through June 30, 2008 and at September 30, 2008. This raised substantial doubt about the Company's ability to continue as a going concern. Management has made efforts to improve its profitability by increasing the margins on cars sold. They have also hired new finance and accounting personnel to better track its profitability and negotiate selling contracts. Additionally, the Company may need to attract capital investors to continue in existence. As of September 30, 2008, the Company's balance sheet showed total assets of $7,533,162 and total liabilities of $9,634,613, resulting in total stockholders' deficit of $2,101,451. OSI RESTAURANT: Moody's Cuts Rating on $550 Mil. Notes to 'C' ------------------------------------------------------------- Moody's Investors Service downgraded OSI Restaurant Partners, LLC's Probability of Default rating to Ca from Caa1 and lowered the rating on its $550 million 10% senior unsecured notes to C from Caa3. Moody's also placed OSI's Corporate Family and senior secured ratings on review for possible downgrade. The review was prompted by the recent announcement that OSI continues to experience a substantial decline in earnings and store traffic to levels worse than Moody's previously expected. The company also announced that it will likely need to take an impairment charge of between $480 and $540 million for goodwill due to a reduction in its projected results for future periods as a result of poor overall economic conditions. "We are concerned that a persistently weak economic and consumer environment will continue to negatively impact OSI's operating performance over the intermediate term", stated Bill Fahy, Senior Analyst. "This could result in a deterioration of its already weak debt protection measures to levels inconsistent with its current ratings." Our review will focus on OSI's expected operating performance, debt protection metrics, and liquidity. It will also focus on the outcome of OSI's recently announced tender offer and the impact any resulting lower debt levels and interest costs will have on debt protections measures and financial flexibility going forward. The downgrade of the company's PD and 10% senior unsecured notes rating reflects Moody's view that OSI's recently announced cash tender offer for these notes -- if consummated -- would constitute a distressed exchange, which Moody's would classify as a Limited Default under its guidelines. OSI is offering to purchase the maximum aggregate principle amount of its 10% senior unsecured notes that its can purchase for $73 million at a price range of $225 to $275 per $1,000 -- a significant loss for noteholders. The tender is being funded with cash on hand and proceeds of an anticipated contribution of at least $47 million from OSI's parent, OSI HoldCo, Inc. The tender is scheduled to expire on March 18, 2009. Moody's reflect the very high likelihood of this event occurring through the assignment of the Ca PD rating. Moody's will classify this distressed exchange as a limited default and change the PD rating back to the appropriate level upon closing of the tender, which will most likely occur prior to the conclusion of Moody's formal rating review process. Rating downgraded are; -- Probability of default rating downgraded to Ca from Caa1 -- $550 million senior unsecured notes maturing in 2015 downgraded to C from Caa3 Ratings placed on review for possible downgrade are: -- Corporate family rating at Caa1, -- $150 million working capital revolver expiring in 2013 at B3 -- $100 million pre-funded revolver expiring in 2013 at B3 -- $1.310 billion term loan B maturing in 2014 at B3 Rating affirmed: -- SGL-3 speculative grade liquidity rating Moody's last rating action for OSI occurred on November 5, 2008, when the company's corporate family and probability of default ratings were downgraded to Caa1 from B2 with a stable outlook. OSI Restaurant Partners, Inc., headquartered in Tampa, Florida, is one of the largest casual dining restaurant companies in the world with eight concepts located throughout the United States and in 20 countries. Core concepts include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bars. OSI's annual revenues are approximately 4.0 billion. PACIFIC LIFESTYLE: Plan Filing Period Extended to July 12 --------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington has extended Pacific Lifestyle Homes, Inc.'s exclusive period to file a plan through and including July 12, 2009, and the Debtor's exclusive period to solicit acceptances of that plan through and including Sept. 11, 2009. This is the first extension of the Debtor's exclusive periods. In papers filed with the Court, the Debtors stated that until its Cash Collateral Motions are resolved, it will not have the financial ability to build new homes. In addition, significant work, the Debtors say, is still needed before a formal plan can be formulated to comprehensively address all of its debts and properties. Based in Vancouver, Washington, Pacific Lifestyle Homes, Inc. is a hombuilder throughout Southwest Washington and Northern Oregon. The company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. Wash. 08-45328). Steven M. Hedberg, Esq., at Perkins Coie LLP represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of $50 million to $100 million, and debts of $50 million to $100 million. PFF BANCORP: Luxor Capital Et Al. Disclose Zero Equity Stake ------------------------------------------------------------ Eight entities disclosed in a regulatory filing dated February 17, 2009, that they no longer own any shares of common stock of PFF Bancorp, Inc.: -- Luxor Capital Partners, LP, -- LCG Select, LLC, -- Luxor Capital Partners Offshore, Ltd., -- LCG Select Offshore, Ltd., -- Luxor Capital Group, LP, -- Luxor Management, LLC, -- LCG Holdings, LLC, and -- Christian Leone. PFF Bancorp Inc. -- https://www.pffbank.com -- operates a community bank provides an array of financial services. PFF Bancorp, Inc. and its debtor-affiliates files for Chapter 11 protection on Dec. 5, 2008, (Bankr. D. Del. Case No.: 08-13127 to 08-13131) Paul Noble Heath, Esq. at Richards, Layton & Finger PA represents the Debtor in their restructuring efforts. Kurtzman Carson Consultants LLC serves as the Debtors' Claims Agent. When they filed for protection from their creditors, the Debtors listed total assets of $7,779,964 and estimated liabilities of $131,730,000. PHILADELPHIA NEWSPAPERS: Files for Ch. 11 to Explore Alternatives ----------------------------------------------------------------- Philadelphia Newspapers, LLC, and its units filed for Chapter 11 before the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to explore various restructuring alternatives. The Debtors' businesses were formerly owned by Knight-Ridder, Inc. After Knight-Ridder's acquisition by The McClatchy Company in June 2006, McClatchy sold certain entities, business and assets, including the Inquirer and the Daily News, to Philadelphia Media Holdings, LLC. PMH was formed by a diverse group of Philadelphia investors for the purpose of establishing local ownership of Philadelphia's flagship newspapers. The local Philadephians invested over $150 million as equity into PMH. PMH, which owns 100% of the equity of the Debtors, was not included in the Chapter 11 filings. "Like many newspapers and other traditional news media, the Debtors have experienced a series of challenges stemming from a loss of advertising revenue as a result of the recession and volatile credit market, and particularly with respect to drastically lower automotive, real estate and retail sales," according to Richard R. Thayer, executive vice president for finance of Philadelphia Newspapers. "In addition, certain advertising revenue, particularly classified employment advertising, has been declining for some time as a result of increased competition from other competing forms of media, including the Internet. These negative trends have affected many media companies around the country. Indeed, many newspapers over the past year have been put up for sale or sought bankruptcy protection." Despite these challenges, the Inquirer has performed well when compared with similar metropolitan newspapers in other large media markets, Mr. Thayer points out. The Debtors generate positive EBITDA. In 2008, the Debtors generated approximately $36 million in earnings before interest, taxes, depreciation and amortization, adjusted for certain one time items. The Debtors project that 2009 Adjusted EBITDA will exceed $25 million. The Debtors, however, have determined that restructuring their balance sheet is in the best interests of their businesses and constituents. The Debtors are parties to a Credit and Guaranty Agreement dated June 29, 2006, with Citizens Bank of Pennsylvania, as administrative and collateral agent, pursuant to which the lenders extended a term loan in the original amount of $295 million and a senior secured revolving facility in the amount of $50 million. The debtors are also parties to a Note Purchase Agreement dated June 29, 2006, pursuant to which $85,000,000 in 16% senior subordinated notes were issued to various holders. As of their bankruptcy filing, the Debtors owe $296.6 million under their credit facility and $98.5 million under the unsecured notes. The Debtors are currently in payment and covenant default under the credit facility and subordinated notes. For the months leading to their bankruptcy filing, the Debtors attempted to reach agreement on a consensual out-of-court restructuring with senior lenders. The Debtors, however, were not able to do so, despite their good-faith efforts. According to Mr. Thayer, the Debtors have made proposals whereby investors would have invested tens of millions of dollars in new equity in exchange for an equity interest in the restructured enterprise. "These new money investment proposals were rejected," he said. In connection with the bankruptcy filing of Philadelphia Newspapers, two parties, one of whom was the prepetition agent, offered contrasting proposals for a debtor-in-possession financing. The prepetition agent offered $20 million, maturing in six months, while the other offered $25 million, with a nine-month maturity date. The second offer also allowed for the conversion of the DIP facility to an exit facility. The Debtors determined that the facility offered by the proposed DIP agent provided greater liquidity at a significantly lower cost, and better terms. "The Debtors intend to use cash collateral and DIP financing to operate their business while they pursue various restructuring alternatives," Mr. Thayer relates. Philadelphia Newspapers, LLC, owns and operate numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. PHILADELPHIA NEWSPAPERS: Case Summary & 30 Unsecured Creditors -------------------------------------------------------------- Debtor: Philadelphia Newspapers, LLC 400 N. Broad Street Philadelphia, PA 19130 Bankruptcy Case No.: 09-11204 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Broad Street Video, LLC 09-11205 Philadelphia Media, LLC 09-11206 PMH Acquisition, LLC 09-11207 Philadelphia Direct, LLC 09-11208 Broad Street Publishing, LLC 09-11209 Philly Online, LLC 09-11211 PMH Holdings, LLC 09-11212 Type of Business: The Debtors provide media and internet services own. The Debtors own The Inquirer, the Philadelphia Daily News, and Philly.com. See: http://www.philly.com/ Chapter 11 Petition Date: February 22, 2009 Court: Eastern District of Pennsylvania (Philadelphia) Debtors' Counsel: Proskauer Rose LLP Local-Counsel: Lawrence G. McMichael, Esq. lmcmichael@dilworthlaw.com Dilworth Paxson LLP 1500 Market Street. Suite 3500E Philadelphia, PA 19102 Tel: (215) 575-7000 Notice, Claims and Solicitation: Garden City Group, Inc. Financial Advisor: Jefferies & Company Inc. Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Royal Bank of Scotland subordinated $22,009,406 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Airlie Opportunity Master subordinated $15,059,067 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 BRU Holding Co. subordinated $11,583,897 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 MCG Capital Corp. subordinated $5,791,948 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 PNI Lender LP subordinated $4,923,156 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Post Distressed Mstr Fund subordinated $4,401,881 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Bruce Toll subordinated $3,475,169 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 CIT Group/Equip Fin. subordinated $3,475,169 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Nuveen Fl. Rt in OPP Fd subordinated $3,185,571 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 The Opportunity Fund subordinated $3,185,571 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Virginia Retirement System subordinated $2,895,974 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Post Total subordinated $2,722,216 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 DB Dist. Opp Mster Portf subordinated $2,548,457 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Metropolitan Regional subordinated $1,574,931 County notes Attn: Ben Logan O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Paragon Paper Inc. trade debt $1,145,166 Attn: Ben Logan O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 White Birch Paper Company trade debt $1,145,166 PO Box 79443 Baltimore, MD 21279-0443 HFR DS Opp Mster Trust subordinated $868,792 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 MW Postal Port Fund subordinated $752,953 Attn: Ben Logan notes O'Melveny & Myers LLP 400 South Hope Street Los Angeles, CA 90071 Attn: Michael Sage Dechert LLP 1095 Avenue of the Americas New York, NY 10036-6797 Bowater America Inc. trade debt $717,878 PO Box 100207 Atlanta, GA 30384 Western Colorprint Inc. trade debt $127,836 Delage Landen Financial trade debt $23,294 Services Bartash trade debt $16,197 Universal Press Syndicate trade debt $13,220 Cadmus Specialty Publications trade debt $12,478 Spectrum Information Systems trade debt $10,000 Distributech trade debt $8,846 Tribune Media Services trade debt $8,444 Fujifilm Graphic Systems, USA trade debt $7,583 The petition was signed by Brian P. Tierney, chief executive officer. PREFERRED VOICE: Dec. 31 Balance Sheet Upside Down by $1 Million ---------------------------------------------------------------- Preferred Voice, Inc.'s balance sheet at December 31, 2008, showed total assets of $1,268,334 and total liabilities of $2,330,687, resulting in total stockholders' deficit of $1,062,353. The Company's cash and cash equivalents at December 31, 2008, were approximately $340,897, an increase of $57,677 from $283,220 at March 31, 2008. "We have relied primarily on the issuance of stock, convertible debentures and warrants to fund our operations since January of 1997 when we sold our long-distance resale operation," Mary G. Merritt, chairman and chief executive officer, disclosed in a regulatory filing dated February 13, 2009. On March 31, 2005, pursuant to Section 4(2) of the Securities Act and Regulation D, the Company completed the sale of 97.5 units with each Unit consisting of a 3-year, 6% Convertible Debenture in the principal amount of $10,000.00, and 10,000 5-year warrants to purchase a share of Common Stock, $.001 par value per share, of the Company at an exercise price of $.60 for an aggregate of $975,000. On September 29, 2006, pursuant to Section 4(2) of the Securities Act and Regulation D, the Company completed the sale of 117 units with each Unit consisting of a 3-year, 6% Convertible Debenture in the principal amount of $10,000.00, and 14,286 5-year warrants to purchase a share of Common Stock, $.001 par value per share, of the Company at an exercise price of $.50 for an aggregate of $1,170,000. "Due to uncertainties regarding a number of new customer contracts that are in the Company's sales pipeline, it is difficult for management to project the Company's revenue performance, operating profits or loss, or cash requirements beyond the next twelve months. Even though the Company has been able to secure additional financing to provide current working capital, there is no assurance that the Company will be able to generate the required revenues to sustain its current working capital requirements or to raise additional debt or equity capital that may be required to meet its objectives in the future. The Company's challenging financial circumstances may make the terms, conditions, and cost of any available capital relatively unfavorable. If additional debt or equity capital is not readily available, the Company will be forced to further scale back its operations, including its efforts to complete new sales. The Company's short-term needs for capital may force it to consider and potentially pursue other strategic options sooner than it might otherwise have desired. These conditions raise substantial doubt about the Company's ability to continue as a going concern." About Preferred Voice Headquartered in Dallas, Preferred Voice Inc. (OTC BB: PRFV.OB) -- http://www.preferredvoice.com/-- provides a host of integrated voice-driven products and services. The company's Global Application Platform lets telecommunications providers offer enhanced services such as ring tones and games, voice-activated dialing, and conferencing. The product also includes a subscriber Web interface and supports billing and provisioning functions. PULSAR PUERTO RICO: Seeks July 7 Extension to File Plan ------------------------------------------------------- Pulsar Puerto Rico, Inc., also known as Diamond Palace Hotel & Casino, asks the U.S. Bankruptcy Court for the District of Puerto Rico (San Juan) to extend to July 7 its exclusive period to file a Chapter 11 plan. This is the first request for an extension by the Company. According to Bloomberg's Bill Rochelle, since the case began in November, Pulsar says it successfully overcame efforts to close down the casino and hired a broker to help market the property. According to Mr. Rochelle, the bankruptcy filing became necessary when a buyer pulled out of an agreement to purchase the operation for $50 million. Pulsar Puerto Rico Inc. is the owner of the Diamond Palace Hotel & Casino in Condado section of San Juan, Puerto Rico. It filed for Chapter 11 on November 7, 2008 (Bankr. D. Puerto Rico, Case No. 08-07557). Jerry L. Hall, Esq., at Pillsbury Winthrop Shaw Pittman LLP, represents the Debto in its case. The formal schedules of assets and debt show property for $52.4 million against debt totaling $20 million, including $16.4 million in secured claims. QIMONDA NA: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------ Court documents say that Qimonda Richmond, LLC, and its affiliate, Qimonda North America Corp., have filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, saying that they will seek a buyer for their assets. Emily Chasan at Reuters reports said that Qimonda North America listed assets in excess of $1 billion and liabilities in excess of $1 billion. Qimonda Richmond said in court documents that prices for DRAM products dropped sharply in 2007 and further declined in 2008. According to Reuters, Qimonda Richmond had tried to diversify its products. Reuters states that the company shut down part of its Richmond plant in October 2008, laying off more than 1,000 employees. According to court documents, the Richmond facility shutdown earlier this month because Qimonda AG was no longer buying output from the plant and it had little access to cash and could no longer fund ongoing operations. Reuters relates that 500 workers were laid off this month, while about 500 would leave in the coming days. Qimonda Richmond said that by the end of April 2009 it will idle the plant and run it with a skeleton crew of up to 60 workers while it searches for a buyer, according to Reuters. Qimonda Richmond, the report states, said that it has $10.3 million in cash and expects to generate more cash, which will be sufficient to fund its operations. The report says that Qimonda Richmond would consider bankruptcy financing if it could find terms that meet its needs. Reuters reports that Qimonda Richmond's two former workers filed sued the company on Friday, claiming that it may have failed to properly pay employee wages and benefits owed to them after a mass layoff on February 4. According to the Report, the lawsuit is seeking class action status. Sandston, Virginia-based Qimonda Richmond, LLC, and its affiliate, Qimonda North America Corp., make semiconductor products. The companies filed for Chapter 11 bankruptcy protection on February 20, 2009 (Bankr. D. Delaware Case No. 09-10589). Simpson Thacher & Bartlett LLP assists the companies in their restructuring effort. Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards Layton & Finger PA are the co-counsel in the firms' bankruptcy case. Alvarez & Marsal is the companies' restructuring managers. Epiq Bankruptcy Solutions LLC is the companies' claims agent. The companies listed more than $1 billion in assets and more than $1 billion in liabilities. QIMONDA NA: To Separate from Richmond Unit; To Sell QR Plant ------------------------------------------------------------ Qimonda North America Corp. and Qimonda Richmond LLC, U.S. subsidiaries of German semiconductor memory product maker Qimonda AG, said in papers submitted to the U.S. Bankruptcy Court for the District of Delaware that they intend to locate a purchaser for all of QR's assets and consummate a transaction. QNA and QR filed for Chapter 11 before the Delaware bankruptcy court on February 20. Their parent, Qimonda AG, filed an application with the local court in Munich, Germany, January 23, 2009, to open insolvency proceedings. The insolvency petition was a result of the massive drop in prices in the DRAM industry and dramatically decreased access to financing on the capital markets, both of which have led to the deterioration of the financial position of Qimonda in recent months. QAG and its affiliates outside the United States are not "debtors" in the bankruptcy proceedings in the United States. QNA is the North American sales and marketing subsidiary of QAG and all its subsidiaries -- "Global Company" -- and is also the parent of Qimonda Richmond LLC. QR performs part of the manufacturing of products sold by the Global Company. "The Debtors believe that QR's Richmond, Virginia operation is a state-of-the-art facility and could be a valuable asset to a strategic purchaser," says Miriam Martinez, president and chief financial officer of QNA. "In addition, the Debtors' other assets, including its customer lists and equipment, are potentially valuable properties that can be sold to a strategic purchaser." QNA, according to Ms. Martinez, may separate from QR and be included in the sale or reorganization of the Global Company. As of their bankruptcy filing, QNA has 879 employees, 790 of whom were leased to QR. This represents a reduction of approximately 1,989 employees since January 2008. The employees operate primarily at four facilities: -- Cary, North Carolina. Employees at the Cary Facility primarily perform support functions in the human resources, sales, legal, finance, IT and facilities departments. -- Sandston, Virginia. Employees at the Richmond Facility are involved in the manufacturing and production of the Debtors' products and also performs support functions. -- San Jose, California. Employees at the San Jose facility perform sales, marketing and logistica functions. -- Houston, Texas. Employees at this facility perform sales functions. On February 3, 2009, the Debtors determined that, due to the QAG insolvency, which mean QAG was not purchasing output from QR, coupled with a lack of access to cash, the Debtors could no longer fund ongoing operations in Richmond, Virginia. As a result, the Debtors unexpectedly were required to ramp down all production in QR by completing wafer testing on existing inventory but not manufacturing any additional units. On that day, due to the Debtors' inability to secure financing, approximately 500 of the Debtors' employees were laid off with another approximately 500 employees scheduled to leave over the following 30 days. By the end of April 2009, the Debtors intend to reach an idle state with a skeleton crew of 50 to 60 employees. The Debtors plan to finance their operations going forward though cash flow from operations. As of the petition date, the Debtors have approximately $10.3 million of cash. The Debtors' capital structure consists primarily of several lease transactions in which QR is the lessee; QNA does not have any debt. About Qimonda AG Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG, filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond LLC, filed for Chapter 11 before the Delaware bankruptcy court on February 20 (Bankr. D. Del., Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton & Finger PA, has been tapped as counsel. In its bankruptcy petition, Qimonda estimated assets and debts of more than $1 billion. RBS GLOBAL: Moody's Downgrades Corporate Family Ratings to 'B3' --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of RBS Global, Inc. -- Corporate Family and Probability of Default Ratings to B3 from B2. The speculative grade liquidity remains at SGL-2. The outlook is stable. The downgrade reflects the acute contraction in RBS' end markets that are negatively impacting its Water Management and Power Transmission businesses. In the third quarter ended December 27, 2008 (3Q 12/08) the company took a goodwill impairment charge of $402.5 million. Moody's believes that the charge indicates that the level of earnings and cash flow that can reasonably be expected from the business is lower than anticipated at the time of acquisitions. The non-residential construction industry, the main driver of its WM business, is likely to remain weak through at least the end of calendar year 2009. The economic downturn within the United States where RBS earns nearly 75% of its revenues is negatively impacting the cement/aggregates and mining end markets, important sources of revenues for RBS' PT business. Operating margins are likely to come under more pressure as the company takes restructuring charges to right size its businesses and experiences reduced demand. The EBITA margin for 3Q 12/08 declined to 13.4% from 15.7% for the prior quarter (adjusted per Moody's methodology) and the company's backlog declined by 11% over the same time period. Also, RBS has paid $60 million in dividends to Rexnord Holdings, Inc., its parent company, for the purpose of repurchasing at a discount to par a portion of the holding company debt issued by Rexnord. The debt, which accrues interest due to its payment-in- kind interest feature, was $480 million at 3Q 12/08. Moody's adjusts RBS' leverage, which was about 7.6x as of 3Q 12/08 to consider the holding company debt. RBS' operating performance is trending towards credit metrics that were previously identified by the rating agency as being potentially in-line with a lower rating. These metrics include EBITA/interest expense nearing 1.25x and debt/EBITDA exceeding 7.0x (all ratios adjusted per Moody's methodology). Despite the deterioration in credit metrics, the B3 rating is supported by RBS' good liquidity profile which provides flexibility for the company to contend with the current economic challenges. These ratings/assessments were affected by this action: -- Corporate Family Rating downgraded to B3 from B2; -- Probability of default rating downgraded to B3 from B2; -- Senior secured bank credit facility downgraded to Ba3 (LGD2, 13%) from Ba2 (LGD2, 17%); -- Senior unsecured notes affirmed at B3, but its loss given default assessment is changed to (LGD4, 51%) from (LGD5, 71%); -- Senior unsecured notes due 2016 affirmed at B3, but its loss given default assessment is changed to (LGD4, 51%) from (LGD5, 71%); -- $300 million senior subordinated notes due 2016 downgraded to Caa2 (LGD5, 83%) from Caa1 (LGD6, 93%). The company's speculative grade liquidity rating of SGL-2 is unchanged. The last rating action was on January 6, 2007 at which time Moody's affirmed the company's B2 corporate family rating. RBS Global, Inc., headquartered in Milwaukee, WI, is an industrial company comprised of two strategic businesses including power transmission and water management. Revenues for LTM December 27, 2008 totaled approximately $1.95 billion. READER'S DIGEST: Weak Projected EBITDA Cues Moody's Junk Rating --------------------------------------------------------------- Moody's Investors Service downgraded The Reader's Digest Association's Corporate Family rating and Probability of Default Rating to Caa3 from B3, the senior secured credit facility ratings to Caa2 from B2 and the senior subordinated note rating to Ca from Caa2. The downgrades reflect Moody's expectation that weak projected EBITDA will make it increasingly difficult to maintain covenant compliance and sustain the existing capital structure, factoring in the broadening global decline in consumer spending and the erosion in RDA's mature print-based publishing products and despite RDA's efforts to reduce costs and develop new digital and publishing revenue streams that build upon its broad food, health, home and lifestyle-related content capabilities. Moody's believes the very high leverage and negative free cash flow generation diminish the likelihood that the company would be able to obtain a credit facility amendment. RDA's ability to incorporate projected cost savings in covenant EBITDA and its current cash balance ($70.2 million at 12/31/08) provides some near term flexibility, but Moody's believes earnings erosion and covenant step downs in June 2009 and June 2010 create a high probability of a restructuring within the next 12-18 months. In Moody's opinion, a debt restructuring or exchange offer would help to alleviate some of the pressure on re-investment and operations created by the over-levered capital structure. The rating outlook is negative. Downgrades: Issuer: Reader's Digest Association, Inc. (The) -- Corporate Family Rating, Downgraded to Caa3 from B3 -- Probability of Default Rating, Downgraded to Caa3 from B3 -- Senior Secured Bank Credit Facility, Downgraded to Caa2 from B2 -- Senior Subordinated Regular Bond/Debenture, Downgraded to Ca from Caa2 Moody's last rating action on RDA was a downgrade of the CFR and PDR to B3 from B2 on December 4, 2008. RDA's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of RDA's core industry and RDA's ratings are believed to be comparable to those of other issuers of similar credit risk. RDA, headquartered in Pleasantville, New York, is a global publisher and direct marketer of products including books (40% of 2008 revenue), magazines (34%), recorded music collections and home videos (19%), and food and gifts (7%). A group of investors led by Ripplewood Holdings L.L.C. acquired the former public company The Reader's Digest Association in March 2007 in a transaction valued at approximately $2.4 billion (including refinanced debt) and merged it with Ripplewood portfolio companies WRC Media, Inc. and Direct Holdings U.S. Corp. to form the what is now RDA. Annual revenue approximates $2.4 billion pro forma for the sale of Books Are Fun, QSP and Taste of Home Entertaining. REDENVELOPE INC: Prime Logic & Cummins Disclose Zero Equity Stake ----------------------------------------------------------------- Prime Logic Capital, LLC, and Marc Cummins disclose that they no longer own shares of RedEnvelope, Inc.'s common stock. Based in San Francisco, California, RedEnvelope Inc. (OTC:REDE) -- http://www.redenvelope.com-- is an online retailer of upscale gifts. RedEnvelope offers a collection of gifts through its catalog, web store and phone store. Its in-house design team creates products and its merchants source products domestically and from various parts of the world, often commissioning artists and vendors to create gifts. It offers an assortment of products in 12 categories with core product categories that include jewelry, home, men's and women's accessories and new baby gifts. RedEnvelope has an internal database of approximately 3.4 million customer names, with approximately 514,000 new customers added during the fiscal year ended April 2, 2007. The company filed for Chapter 11 protection on April 17, 2008 (N.D. Ca. Case No. 08-30659). Doris A. Kaelin, Esq., Janice M. Murray, Esq., John Walshe Murray, Esq., Robert A. Franklin, Esq., at Murray & Murray, represents the Debtor. The U.S. Trustee for Region 17 appointed creditors to serve on an Official Committee of Unsecured Creditors. Brian Y. Lee, Esq., and John D. Fredericks, Esq., at Winston and Strawn, represent the Committee in these cases. When the Debtor filed for protection from its creditors, it listed assets of $21,781,415 and debts of $15,302,142. RITZ CAMERA: Files for Chapter 11 Bankruptcy in Delaware -------------------------------------------------------- Ritz Camera Centers Inc. made a voluntary filing under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to restructure its business and financial affairs, and continue as a going concern. According to Marc S. Weinsweig, chief restructuring officer of the company, group of lenders comprised of Wachovia Bank NA, Wachovia Capital Markets LLC, The CIT Group/Business Credit Inc. and Wells Fargo Retail Finance LLC expressed their concerned about he adverse developments of the economic recession in the United States that affected the retail sector. As a result, the lenders imposed additional reserves on the company's borrowing and, thereby, reduced the company's available credit. The company and lenders are parties to $200 million revolving credit facility agreement dated October 2007, wherein Wachovia Bank NA acted as agent for the other lenders. However, Well Fargo & Company acquired Wachovia Bank as of Dec. 31, 2008. The company owes about $54.5 million consist of a $47.7 million in revolving credit and $6.8 million in letter of credit as of its bankruptcy filing. In connection with the Chapter filling, the company is asking the Court for authority to obtain up to $85 million in postpetition financing from its lenders secured by all of the company's assets. The DIP facility will provide funds and liquidity required for the company to continue its business operations and proceed to implement its restructuring plans. The company posted assets and debts between $100 million and $500 million, court documents confirmed. The company owes $26.6 million to Nikon Inc., $13.7 million to Canon USA Inc., $8.4 million to Fuji Photo Film USA Inc., and $3.3 million to Epson America Inc. The company tapped Cole Scholtz Meisel Forman Leonard P.A. as bankruptcy counsel, Thomas & Libowitz PA as corporate counsel, FTI Consulting Inc. as financial advisor, and The Garden City Group Inc. as claims agent to assist in its restructuring efforts. About Ritz Camera Headquartered in Beltsville, Maryland, Ritz Camera Centers Inc. -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. The company operates approximately 800 Photo Stores in over 40 states throughout the country. The chain of Photo Stores include Ritz Camera, Wolf Camera, Kits Cameras, Inkley's and The Camera Shops. In addition to its Photo Stores, Ritz Camera also operates a chain of 130 boating stores, under the name "Boater's World Marine Centers, which sell fishing, boating and watersport products. RITZ CAMERA: Case Summary & 29 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Ritz Camera Centers, Inc. dba Dean's Photo dba The Camera Shop dba Camera World dba Ritz Camera aka Ray Enterprises, LLC dba Boater's World Marine Centers aka Boat House at Boaters World, LLC dba Boater's World dba Boat House at Boater's World dba Baoter's World Discount Marine Centers dba Cameras West dba Kits Camera dba Inkley's dba Boatersworld.com dba Ritz Camera and Image dba Wolf Camera dba Pro Ex dba Outer Banks Outfitters dba Boat's Unlimited at Boater's World 6711 Ritz Way Beltsville, MD 20705 Bankruptcy Case No.: 09-10617 Type of Business: The Debtor sells digital cameras and accessories, and electronic products. http://www.ritzcamera.com/ Chapter 11 Petition Date: February 22, 2009 Court: District of Delaware (Delaware) Judge: Mary F. Walrath Debtor's Counsel: Karen M. McKinley, Esq. kmckinley@coleschotz.com Norman L. Pernick, Esq. bankruptcy@coleschotz.com Cole Scholtz Meisel Forman Leonard, P.A. 1000 N. West Street, Suite 1200 Wilmington, DE 19801 Tel: (302) 295-4978 Fax: (302) 652-3117 Corporate Counsel: Thomas & Libowitz, PA 100 Light Street, Suite 100 Baltimore, MD 21202 Financial Advisor: FTI Consulting Inc. t/a FTI Palladium Partners 3 Times Square, 11th Floor New York, NY 10036 Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nikon Inc. Trade Debt $26,607,162 1300 Walt Whitman Road Melville, NY 11747 Tel: 516-547-4200 Canon USA Inc. Trade Debt $13,731,752 P.O. Box 3839 Boston, MA 02241-3839 Tel: 516-328-4961 Fax: 516-378-4964 Fuji Photo Film USA Inc. Paper, Chemicals $8,422,651 P.O. Box 200232 and Trade Debt Pittsburgh, PA 1525I-0232 Tel: 800-755-3854 Fax: 914-592-1325 Epson America Inc. Trade Debt $3,315,574 P.O. Box 7247 Philadelphia, PA 19170-7503 Tel: 800-338-2349 Tocad America Inc. Trade Debt $1,357,354 P.O. Box 95000 Philadelphia, PA 19195-1365 Tel: 973-627-9600 xII 19 Fax: 973-664-2438 Helgeson Enterprises Inc. Processing $1,150,047 4461 White Bear Parkway Services White Bear Lake, MN 55110 Tel: 651-762-9700 Fax: 651-762-9701 Vertis Inc. Advertising $1,006,847 P.O. Box 40455 Atlanta, GA 30384-4555 Tel: 410-528-9800 Sandisk Corporation Trade Debt $968,898 601 McCarthy Boulevard Milpitas, CA 95035 United Parcel Service Delivery $924,754 P.O. Box 7247 0244 Service Philadelphia, PA 19170-0001 Tamrac Trade Debt $898,811 9240 Jordan Ave. Chatsworth, CA 91311 Tel: 800-662-0171 Tamron USA Inc. Trade Debt $618,609 P.O. Box 512545 Philadelphia, PA 19175-2545 Tel: 631-858-8400 Fax: 631-543-3963 Yesvideo Inc. Repair $565,993 3281 Scott Blvd. Service Santa Clara, CA 95054 Tel: 408-907-7628 Fax: 408-988-6501 C R I S Camera Services Repair $560,576 250 N. 54 Street Service Chandler, AZ 85226 Tel: 480-940-1103 Icon International Inc. Advertising $468,834 IPT Holding Company Repair $451,837 Service Soda-Club USA Inc. Trade Debt $448,411 Celestron International Trade Debt $426,765 Eastman Kodak Trade Debt $426,530 LifePics Inc Website $423,626 Moeller Marine Products Trade Debt $331,805 Pure Fishing Trade Debt $321,531 General Binding Corp. Lab supplies $294,309 & equipment J H Construction Inc. Store $285,990 Raymarine Inc. Trade Debt $283,982 The Washington Post Advertising $273,860 GE Capital Solutions Corporate $267,690 Airplane Lease Datavantage Corporation IT Software $255,636 Service Colorado Department of Sales Audit $250,110 Tax Revenue Aftermarket Division Trade Debt $223,881 The petition was signed by David Ritz, chairman and chief executive officer. ROUGE INDUSTRIES: Ct. Sends Plan for Voting; April 7 Deadline Set ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved the adequacy of the disclosure statement describing the Joint Plan of Liquidation of Rouge Industries, et al., and the Official Committee of Unsecured Creditors, dated Dec. 18, 2008 (as amended, supplemented or modified) under Chapter 11 of the Bankruptcy Code. As authorized by the Court, ballots will be sent to holders of Unsecured Claims under Class 3, the PBGC Unsecured Claim under Class 4, and the UAW Unsecured Rejection Claim under Class 5, which are all impaired under the Plan. Ballots will not be provided to Claims in Classes 1, 2, 6, 7 and 8. Claims is Classes 1 and 2 are unimpaired and are conclusively presumed to accept the Plan, while holders of claims and equity interests in Classes 6, 7 and 8, are conclusively presumed to reject the Plan. To be counted, ballots will be completed and delivered to Rust Consulting, Inc., the Debtors' solicitation and noticing agent, either (a) by mail or (b) by hand, courier or overnight service no later than 4:00 p.m. (ET), on April 7, 2009. Even if a class of claims or equity interests rejects the Plan, the Court may nonetheless confirm the Plan under the "cramdown" provisions of the Bankruptcy Code. The Court has set the confirmation hearing for April 21, 2009, at 10:00 a.m. (ET). Objections to confirmation of the Plan, if any, must be in writing and served on each of the Notice Parties so as to be received no later than April 7, 2009, at 4:00 p.m. (ET). As reported in the Troubled Company Reporter on Dec. 23, 2008, on the Plan's Effective Date, A Liquidation Trust will be established to liquidate the Debtors' assets. Any Cash or property whenever received by the Liquidating Trust from third parties will constitute Liquidation Trust Assets. Cash payments to be made pursuant to the plan will be made by the Disbursing Agent. Pursuant to the Joint Plan, each Holder of an Allowed Unsecured Claim under Class 3 will receive its Pro Rata share of the Initial Class 3 Distribution Amount. On each Periodic Distribution Date, each Holder of an Allowed Unsecured Claim will receive its Pro Rata share of the periodic Class 3 Distribution Amount. The PBGC Unsecured Claims under Class 4 will receive its Pro Rata Share of the Initial Class 4 Distribution Amount. On each Periodic Distribution Date, the PBGC, or its designee, in whole or in part, will receive its Pro Rata share of the Periodic Class 4 Distribution Amount. The UAW Unsecured Rejection Claim under Class 5 will receive its Pro Rata share of the Initial Class 5 Distribution Amount. On each Periodic Distribution Date, the UAW will receive its Pro Rata share of the Periodic Class 5 Distribution Amount. Intercompany Claims under Class 6 will be cancelled and Holders of Intecompany Claims will not receive any distribution under the Plan. Subordinated 510 Claims under Class 7 will be deemed eliminated, cancelled or extinguished and Holders will not receive or retain any property under the Plan. Equity Interests under Class 8 will be cancelled and the Holders of Equity Interests will not receive or retain any distribution or property under the Plan. About Rouge Industries Based in Dearborn, Michigan, Rouge Industries, Inc., is an integrated producer of flat-rolled steel. Rouge Industries, together with Rouge Steel Company, QS Steel Inc., and Eveleth Taconite Company, filed for chapter 11 protection on Oct. 23, 2003 (Bankr. D. Del. Lead Case No. 03-13272). Adam G. Landis, Esq., Kerri K. Mumford, Esq., Rebecca L. Butcher, Esq., at Landis, Rath & Cobb, LLP, Alicia Beth Davis, Esq., Daniel B. Butz, Esq., Donna L. Culver, Esq., Donna L. Harris, Esq., Eric D. Schwartz, Esq., Gregory Thomas Donilon, Esq., Gregory W. Werkheiser, Esq., Robert J. Dehney, Esq., Thomas F. Driscoll, Esq., William H. Sudell, Jr., at Morris, Nichols, Arsht & Tunnell LLP, and Joanna Flynn, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Debtors. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors. Gaston Plantiff Loomis, II, Esq., Kurt F. Gwynne, Esq., Richard Allen Keuler, Jr., Esq., at Reed Smith LLP, and Thomas Joseph Francella, Jr., Esq., at Whiteford Taylor Preston LLC, serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $558,131,000 in total assets and $558,131,000 in total debts. SALT VERDE: Moody's Downgrades Rating on 2007 Gas Bonds to 'Ba1' ---------------------------------------------------------------- Moody's has downgraded the rating of Salt Verde Financial Corporation, Subordinate Gas Revenue Bonds, Series 2007 to Ba1 from Baa1. The downgrade results from the presence of a guaranteed investment agreement provided by MBIA Inc. (Ba1) that is also insured by MBIA Insurance Corporation (B3). Moody's recently downgraded the rating of MBIA Insurance Corporation to B3. The rating of the Senior Gas Revenue Bond, Series 2007 is currently A2 (on watch for downgrade). Pursuant to the recent restructuring of MBIA's portfolio of insurance policies into MBIA Insurance Corp (B3) and MBIA Illinois (Baa1 on watch for upgrade), MBIA has stated that all surety bonds issued to support investment contracts provided by MBIA Insurance Corp will remain at that entity and not be reinsured by MBIA Illinois. The GIC for this transaction is issued by MBIA Inc. (Ba1) and there is a surety bond supporting the GIC from MBIA Insurance Corporation (B3) which is available in the event MBIA Inc. fails to pay under the GIC. Therefore, Moody's utilizes the higher of the two ratings (MBIA Inc. and MBIA Insurance Corporation) in assessing the risks to the transaction as a result of non-performance under the GIC. The rating on the Subordinate Lien Bonds takes into account these factors; (i) the credit quality of Citigroup Inc (A2) as guarantor of the payments due under the Agreement for Purchase and Sale of Natural Gas, (ii) the credit quality of Royal Bank of Canada (Aaa) as provider of the commodity swap, (iii) the credit quality of Salt River Agricultural Improvement & Power District, AZ (Aa1) as the sole participant in the transaction, (iv) the credit quality of American International Group, Inc. (A3/ P-1 both ratings on watch for downgrade) as provider of a guaranteed investment agreement for the debt service fund and (v) the credit quality of MBIA Inc. (Ba1) as provider of a guaranteed investment agreement for the Senior Lien Bond debt service reserve fund. If there is any loss or use of funds from the Senior Lien Bond debt service reserve fund, there could be insufficient funds to pay the Subordinate Lien bondholders. Therefore the MBIA Inc. GIC on the Senior Lien Bond debt service reserve fund is a rating factor for the Subordinate Lien Bonds. The rating on the Senior Lien Bonds takes into account these factors; (i) the credit quality of Citigroup Inc (A2) as guarantor of the payments due under the Agreement for Purchase and Sale of Natural Gas, (ii) the credit quality of Royal Bank of Canada (Aaa) as provider of the commodity swap, (iii) the credit quality of Salt River Agricultural Improvement & Power District, AZ (Aa1) as the sole participant in the transaction, and (iv) the credit quality of American International Group, Inc. (A3/ P-1 both ratings on watch for downgrade) as provider of a guaranteed investment agreement for the debt service fund. The Senior Lien Bond debt service reserve fund is part cash (invested in a GIC with MBIA Inc. (Ba1)) and part surety bond provided by MBIA Insurance Corporation which is reinsured by MBIA Illinois (Baa1 on watch for upgrade). This debt service reserve fund (including the GIC provider) is not a factor in the rating of the Senior Lien Bonds since the debt service reserve fund covers non-payment by the participant, Salt River Agricultural Improvement & Power District, AZ which is rated Aa1. Therefore, the Senior Lien Bonds current rating of A2 (on watch for downgrade) remains unchanged. The most recent rating action on the Subordinate Lien Bonds was on January 14, 2009 when the rating was downgraded to Baa1 SHEARIN FAMILY: Wins Final OK of RBC Loan for Nautical Club ----------------------------------------------------------- Shearin Family Investments, LLC, obtained final approval from the U.S. Bankruptcy Court for the Eastern District of North Carolina to access postpetition financing from RBC Real Estate Finance Inc., to fund the completion of the Debtor's Nautical Club project. As reported by the Trouble Company Reporter on February 17, RBC has agreed to advance $8,000,000 to the Debtor in connection with the Project, in accordance with a DIP Budget, subject to these terms: Borrower: Shearin Family Investments, LLC Lender: RBC Real Estate Finance, Inc. Charlotte NC Amount/Type of Facility: A DIP loan in the amount $8,000,000. Purpose: To provide funding of the amounts included in the DIP Budget, including all prepetition protective advances, over a six month period. Term: Payable in full 18 months from the effective date of the DIP Facility. Fees and Interest Rate: (a) Libor plus an Interest Margin of 6%, with a minimum all-interest rate; including the Base Rate and Interest Margin, of 10%, payable monthly in arrears. (b) Arrangement Fee = $150,000 payable with the first advance under the DIP Loan. Default Interest Rate: Upon any event of default, the interest rate margin above Libor will be increased by 5%. Security: Senior Secured Lien on the Debtor's Nautical Club project and Junior liens of the Debtor's unimproved real property. Collateral assignment of all construction contracts. Guarantors: Joint and several guarantees of James M. Shearin, II and Audrey Locke Shearin. The Debtor is already indebted to RBC, through a loan participation agreement with other lenders, pursuant to five promissory notes relating to financing for the project for the original total principal amount of $32,300,000. This facility is secured by: a. Deed of Trust on the Debtor's waterfront, high-rise condominium project in Indian Beach, Carteret County, North Carolina known as the Nautical Club in the amount of $29,300,000; and b. Deed of Trust on the Project property in the amount of $3,000,000. As of the petition date, the Debtor owed RBC approximately $29,978,053 in principal, interest, and late fees. Based in Rocky Mount, North Carolina, Shearin Family Investments, LLC owns and operates a condominium resort in Carteret County, in North Carolina. The company filed for Chapter 11 relief on Oct. 13, 2008 (Bankr. E.D. N.C. Case No. 08-07082). Amy M. Faber, Esq., at Stubbs & Perdue, P.A., and Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of $46,327,546 and debts of $49,260,007. SIRIUS XM: Tax Losses Could Benefit Liberty Media, Says WSJ ----------------------------------------------------------- Jesse Drucker and Matthew Karnitschnig at The Wall Street Journal report that John Malone's Liberty Media Corp. could take advantage of Sirius XM Radio Inc.'s tax losses. Citing people familiar with the matter, WSJ relates that Sirius XM's tax losses are considered a key part of the company's appeal to Liberty Media. As reported by the Troubled Company Reporter on February 18, 2009, Sirius XM and Liberty Media entered into agreements pursuant to which Liberty will invest an aggregate of $530 million in the form of loans to Sirius XM and its subsidiaries and receive an equity interest in Sirius XM. The agreement thwarted and Charles Ergen's EchoStar Communications Corp.'s plan to acquire Sirius XM. Sirius XM had been adamant at giving in to Mr. Ergen's unsolicited offer. According to WSJ, the tax losses were considered less significant to Mr. Ergen. Some investors, says WSJ, are confused why Liberty Media and EchoStar are competing for Sirius XM Radio Inc. According to WSJ, Sirius XM said in security filings that it has at least $6 billion of tax losses, which means that the losses it has accumulated over the years can be used as deductions to cut taxes on future profits. WSJ relates that those losses have little value as long as they stay with Sirius XM, because the firm's future prospects for significant profits are still slim. In the hands of another company, those tax losses could become valuable, helping to wipe more than $6 billion in taxable income off of income tax returns, which could someday cut corporate income-tax bill by more than $2 billion, WSJ notes. WSJ states that for Liberty Media must navigate Internal Revenue Service rules intended to prevent companies from acquiring others solely for their losses, for it to maximize the use of Sirius XM's tax losses. WSJ reports that the Treasury Department lifted those tax-loss restrictions for some firms in September 2008 to encourage a spate of bank mergers. The report says that the Congress repealed the Treasury's move for future bank deals through the stimulus package. For the first five years that the tax losses could be used, Sirius XM is limited to $580 million a year in deductions stemming from the losses, WSJ relates, citing Robert Willens, who runs a corporate tax advisory firm. WSJ says that the deductions drops lower, to about $250 million per year for the next 15 years. IRS rules state that if ownership of a company changes again, the use of the tax losses would become more limited. WSJ says that this is because the restrictions are calculated based in part on the market value of the firm. According to the IRS rules, the restrictions on the use of the tax losses would start if the firm's major shareowners increase their ownership stakes by more than 50 percentage points. WSJ relates that Liberty Media's current 40% investment is restricted to at a maximum of 49.9% for the next three years, preventing its deal with Sirius XM from causing another ownership change. WSJ notes that if another investor acquired enough stock to give it a stake of 5% or more during the next three years, that could combine with Liberty Media's stake to trigger restrictions. According to the report, Sirius XM can implement trading restrictions to prevent that. Citing Mr. Willens, WSJ states that a new restriction on the losses could cause Sirius XM to lose 80% of its tax losses over the next 20 years. Without changes, Liberty Media could acquire the rest of Sirius XM in three years and use the losses to shelter taxable profits elsewhere, WSJ reports. About Liberty Media Liberty Media Corporation owns interests in electronic retailing, media, communications and entertainment businesses. Those interests are attributed to three tracking stock groups: (1) the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, Backcountry.com, BUYSEASONS, Bodybuilding.com, IAC/InterActiveCorp, and Expedia, (2) the Liberty Entertainment group, which includes Liberty's interests in The DIRECTV Group, Inc., Starz Entertainment, FUN Technologies, Inc., GSN, LLC, WildBlue Communications, Inc., and Liberty Sports Holdings LLC, and (3) the Liberty Capital group, which includes all businesses, assets and liabilities not attributed to the Interactive group or the Entertainment group including its subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc., and TruePosition, Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation. About Sirius XM Radio Headquartered in New York, Sirius XM Radio Inc. (SIRI) -- http://www.sirius.com/-- formerly Sirius Satellite Radio Inc., is a satellite radio provider. The company offers over 130 channels to its subscribers, 69 channels of 100% commercial-free music and 65 channels of sports, news, talk, entertainment, traffic, weather, and data content. Its primary source of revenue is subscription fees, with most of its customers subscribing to SIRIUS on either an annual, semi-annual, quarterly or monthly basis. The company derives revenue from activation fees, the sale of advertising on its non-music channels, and the direct sale of SIRIUS radios and accessories. Various brands of SIRIUS radios are Best Buy, Circuit City, Costco, Crutchfield, Sam's Club, Target and Wal-Mart. * * * As reported by the Troubled Company Reporter on February 19, 2009, 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. SMURFIT-STONE: Receives Final Court Approval for $750MM DIP Loan ---------------------------------------------------------------- Smurfit-Stone Container Corporation said the U.S. Bankruptcy Court in Wilmington, Delaware, has granted final approval of its $750 million debtor-in-possession (DIP) credit facility, which provides the company with access to the full amount of the facility. The court had previously granted the company interim authority to access $550 million of the DIP facility. The court also granted final approval to various other interim orders that had been entered at the commencement of the bankruptcy case. Patrick J. Moore, Chairman and Chief Executive Officer, said, "We believe that the DIP facility will provide the company with ample liquidity to operate throughout the restructuring process. We are pleased to have completed this initial phase of the process, and remain focused on providing our customers with an uninterrupted supply of quality goods and services, and strengthening our partnerships with our vendors. We are moving forward to restructure our debt and develop a capital structure more suited to support our long-term growth and profitability." As reported by the Troubled Company Reporter on February 2, 2009, the Court granted the Debtors interim authority to borrow up to $550,000,000 under the JPMorgan facility. The $750,000,000 DIP Facility consists of: -- a $400,000,000 U.S. term loan, -- a $35,000,000 Canadian term loan, -- a $250,000,000 U.S. revolving loan, and -- a $65,000,000 Canadian revolving loan. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, the Debtors' counsel, said the DIP Loan proceeds -- in a manner substantially consistent with a 13-week cash flow projection prepared by the Debtors -- will be used for, among other things, working capital, letters of credit and capital expenditures, general corporate purposes of the Debtors, the refinancing in full or defeasance of Indebtedness outstanding under the Securitization Facilities, and payment of related costs, fees and expenses, including the costs of administration of the Cases. A full-text copy of the Debtors' preliminary 13-week cash flow projections is available for free at: http://bankrupt.com/misc/SmurfCashFlowForecast.pdf "The DIP Facility constitutes a new money financing arrangement and does not involve any roll-up of the Debtors' prepetition obligations under the Pre-Petition Financing Agreements," Mr. Conlan said. Terms of JPMorgan Facility The salient terms of the $750,000,000 DIP Credit facility are: A. Borrowers Smurfit-Stone Container Enterprises, Inc. as the U.S. Borrower. Smurfit-Stone Container Canada Inc. as the Canadian Borrower. B. Guarantors Obligations of U.S. Borrower: Smurfit-Stone Container Corporation, each of the other U.S. Debtors -- other than SMBI, Inc. -- and SSC Canada. Obligations of Canadian Borrower: SSCC, each of the other U.S. Debtors and each of the Canadian Debtors. C. Administrative Agent and Lenders: JPMorgan Chase Bank, N.A. will serve as U.S. administrative agent and U.S. collateral agent, and through its Toronto Branch, as Canadian administrative agent and Canadian collateral agent under the DIP Facility, in each case for a syndicate of financial institutions and other lenders selected by the CoLead Arrangers in consultation with the Borrowers. D. Co-Lead Arrangers; Joint Bookrunners; and Co-Documentation Agents: J.P. Morgan Securities Inc., and Deutsche Bank Securities Inc. will act as co-lead arrangers. J.P. Morgan, DBSI, GE Capital Markets, Inc. and Banc of America Securities LLC will act as joint bookrunners. General Electric Capital Corporation and Bank of America, N.A. will act as co-documentation agents. E. Syndication Agent: DBSI F. Commitment and Availability: A total commitment of up to U.S. $750 million, including: -- a senior secured asset-based revolving credit facility in an aggregate principal amount of $250 million made available to the U.S. Borrower and the Canadian Borrower -- of which amount $100 million will be available during the Interim Period; -- a senior secured asset-based term loan facility in an aggregate principal amount of $400 million made available to the U.S. Borrower, a senior secured asset-based revolving credit facility in an aggregate principal amount of $65 million -- of which amount $15 million will be available during the Interim Period, made available to the Canadian Borrower and the U.S. Borrower; and -- a senior secured asset-based term loan facility in an aggregate principal amount of $35 million made available to the Canadian Borrower. Borrowings, both revolving and term, will be repaid in full. G. Termination Date The Commitments will terminate, at the earliest of: (a) the date that is (i) 12 months after commencement of the Chapter 11 cases, (ii) 15 months after commencement of the Cases upon effectiveness of the Fifteen Month Facility Extension Option, and (iii) 18 months after commencement of the Cases upon effectiveness of the Eighteen Month Facility Extension Option -- the Maturity Date; (b) 45 days after the entry of the Interim Order if the Final Order has not been entered prior to the expiration of the 45-day period -- the Prepayment Date; (c) the effective date of a Reorganization Plan that is confirmed or sanctioned pursuant to an order of the Bankruptcy Court or the Canadian Court, as the case may be, in the Cases; and (d) the acceleration of the Loans and the termination of the Commitments in accordance with the Credit Agreement. H. Interest Rate For borrowings in U.S. dollars: (a) 5.5% plus the greater of (i) 4.5% and (ii) the Alternate Base Rate or, (b) at the Borrower's option, 6.5% plus the greater of (i) 3.5% and (ii) the Adjusted LIBOR rate for interest periods of 1, 3 or 6 months; interest will be payable monthly in arrears, at the end of any interest period and on the Termination Date. For borrowings in Canadian dollars: (a) 5.5% plus the greater of (i) 4.5% and (ii) the Canadian Prime Rate or, (b) at the Canadian Borrower's option, 6.5% plus the greater of (i) 3.5% and (ii) the BI A Rate for terms of approximately 1, 3 or, subject to availability, 6 months. A customary acceptance fee will be payable at the outset of any fixed rate Canadian dollar borrowing. If the Fifteen Month Facility Extension Option is exercised, interest will accrue on the outstanding amount of the obligations under the Credit Agreement at 1.0% above the rate applicable immediately prior to the extension. If the Eighteen Month Facility Extension Option is exercised, interest will accrue on the outstanding amount of the obligations under the Credit Agreement at 1.0% above the rate applicable immediately prior to the extension. I. Default Interest Upon the occurrence and during the continuance of any Event of Default, interest will accrue on the outstanding amount of the obligations and will be payable on demand at 2.0% above the then applicable rate. J. Commitment Fee 1% per annum on the unused portion of the Revolving Facility commitments. The issuance of Letters of Credit will be treated as usage of the applicable Revolving Facility. The fees will be payable monthly in arrears during the term of the Facility. K. Letter of Credit Fees 6.5% per annum on the outstanding face amount of each Letter of Credit, plus customary fees for fronting, issuance, amendments and processing. A full-text copy of the DIP Credit Facility is available for free at http://bankrupt.com/misc/SmurfDIPCreditAgmt.pdf 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) SNOQUALMIE ENTERTAINMENT: Moody's Junks Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service lowered Snoqualmie Entertainment Authority's corporate family rating, probability of default rating and senior notes rating to Caa1 from B3. The outlook is negative. The rating action is based on Moody's expectation of a weak ramp- up for Snoqualmie Casino, which opened in November 2008, due to bad weather conditions that negatively impacted two months of operations and deteriorating economic conditions in the first half of 2009. Snoqualmie Casino's visitation was likely hurt by severe snowstorms and flooding during the months of December and January. Additionally, while recognizing Snoqualmie Casino's favorable location and the strong demographics within its primary market, which tend to support visitation, Moody's believes that mid-week traffic and spend/visit could be negatively affected by the aggravating economic pressures in the Seattle metropolitan area. The housing correction, which started locally in the second half of 2008, could be a significant weight through 2009. The dominant commercial aircraft and software sectors in the region have recently experienced significant layoffs. As a result of these challenges, Moody's believe that EBITDA could be significantly lower than expected at the time of the rating assignment. EBITDA might not fully cover interest expense, Furniture, Furnishings and Equipment loan amortization, maintenance capex and tribal distributions in 2009. The outlook is negative, reflecting the risk of tight liquidity in the near term. Although a residual interest reserve is expected to cover approximately half of the next senior interest payment on August 1, 2009, the current unrestricted cash balance does not fully cover the remainder in Moody's view. Additionally, Snoqualmie does not have any revolving credit facility. Snoqualmie's ability to meet its near-term debt service obligations is fully reliant on its free cash flow generation, itself dependent on the adequacy of revenues and efficient cost management. There are also uncertainties regarding Snoqualmie's ability to meet the financial covenants of the FF&E loan in the near term. For further detail, please refer to Moody's credit opinion on moodys.com. These ratings have been lowered to Caa1 from B3: -- Corporate Family Rating -- Probability of Default Rating -- $130 million floating rate senior notes due 2014 (LGD3, 48%) -- $200 million 9.125% senior notes due 2015 (LGD3, 48%) The last rating action was on January 16, 2007 when Moody's assigned a B3 corporate family rating to Snoqualmie. Snoqualmie is an unincorporated instrumentality of the Snoqualmie Indian Tribe, formed in September 2006 to develop and operate all gaming and related businesses of the Tribe, including Snoqualmie Casino. Snoqualmie Casino is located 26 miles east of downtown Seattle, Washington. ST LAWRENCE HOMES: Schedules $115.9M in Assets, $107.7M in Debts ---------------------------------------------------------------- According to Bloomberg's Bill Rochelle, St. Lawrence Homes Inc., filed its formal lists of assets and debt showing property on the books for $158.2 million against liabilities totaling $115.9 million, including $107.7 million in secured claims. Nearly all of the property value is in real estate. St. Lawrence Homes has said it intends to continue its operations through this financial restructuring. St. Lawrence Homes, Inc. -- http://www.stlh.com/-- is a North Carolina based homebuilder with additional operations in Ohio. Founded in 1987 St. Lawrence Homes has received accolades for quality, design and has been recognized as one of the largest privately held builders in the country. For more information please contact 919-676-8980, ext. 114. It filed for Chapter 11 on Feb. 2 (Bankr. E.D. N.C., Case No. 09- 00775). The Company, in its bankruptcy petition, listed assets of $158.2 million against debt totaling $116.4 million as of Oct. 31. SPANSION INC: To Slash 35% of Global Work Force ----------------------------------------------- Spansion Inc. is reducing its global work force by roughly 3,000 employees, or 35%. The majority of the positions affected are at Spansion's global manufacturing sites, as the company resizes the organization due to current market conditions. This action is taken in an effort to further reduce costs as Spansion continues its restructuring efforts and explores various strategic alternatives. "The global recession is forcing us to make this very difficult decision in order to bring our costs in line with the current expectations for significantly reduced revenues," said John Kispert, Spansion president and CEO. "This action was not undertaken lightly given its impact on our employees and their families. However, we have a responsibility to preserve the value of the enterprise as we pursue our goal of positioning Spansion for a recovery through a restructuring and/or sale." The company expects that when complete, this reduction in force will result in approximately $25 million in cash charges, during the first half of 2009. The company believes this reduction in force will provide it with annual cash cost savings of approximately $225 million. About Spansion Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a 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. * * * Spansion let a 30-day grace period elapse without making the interest payment it missed in January on the $250 million 11.25% senior notes of 2016. The Troubled Company Reporter said February 20, 2009, that 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 various debt instruments of Spansion LLC and Spansion Japan. Spansion is in active discussions with an ad hoc committee representing holders of its US$625 million Senior Secured Floating Rate Notes due 2013 about restructuring the company's balance sheet as well as potential strategic transactions. As reported by the TCR on Jan. 19, 2009, Fitch Ratings downgraded these ratings for Spansion Inc.: -- Issuer Default Rating to 'C' from 'CCC'; -- US$175 million senior secured revolving credit facility (RCF) due 2010 to 'CC/RR3' from 'CCC+/RR3'; -- US$625 million senior secured floating rating notes due 2013 to 'CC/RR3' from 'CCC+/RR3'; -- US$225 million of 11.25% senior unsecured notes due 2016 to 'C/RR6' from 'CC/RR6'; -- US$207 million of 2.25% convertible senior subordinated debentures due 2016 to 'C/RR6' from 'CC/RR6'. 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. 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'. STANDARD STEEL: S&P Downgrades Corporate Credit Rating to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Standard Steel LLC, including the long-term corporate credit rating to 'B-' from 'B+'. The outlook is negative. "The downgrade reflects our concerns regarding the railcar- equipment manufacturer's upcoming operating performance due to deteriorating conditions in the railcar-equipment industry," said Standard & Poor's credit analyst Robyn Shapiro. S&P expects new railcar production to decline significantly in 2009 compared to 2008 and, as a result, Standard Steel's credit metrics are likely to worsen to levels outside our expectations for the 'B+' rating. Given the company's thin margin of financial covenant compliance and approaching covenant step-downs, weakening operating performance could pressure covenants in the near term. The ratings on Pittsburgh-based Standard Steel LLC reflect the company's highly leveraged financial profile and vulnerable business risk profile as an integrated manufacturer of steel wheels and axles. The company manufactures wheels and axles for railcar manufacturers, Class 1 railroads, and aftermarket maintenance providers. With annual sales of roughly $200 million, Standard Steel is a small participant in the cyclical railcar-equipment manufacturing industry. Cyclicality may be tempered somewhat by the company's aftermarket repair and maintenance business. The company expects to derive roughly 75% of its revenue from the wheel segment, with the remainder coming from axle production. The company manufactures its products from forged steel instead of using a casting process, differentiating itself from its competitors with respect to wheel production. As a result, Standard Steel has a strong position in the smaller passenger rail market and in certain locomotive markets, which require the use of forged steel wheels instead of cast wheels. Nevertheless, the passenger and locomotive markets are only expected to account for a combined 20% of sales, with the remaining 80% from freight-car-related sales. Standard Steel has a highly leveraged financial risk profile. Equity sponsor Trimaran Capital Partners LLC has owned the company since June 2006. As of Sept. 30, 2008, the ratio of funds from operations to total debt (adjusted for capitalized operating leases and postretirement benefits) was about 10% and total debt to EBITDA roughly 4x. However, due to weakening end markets in 2009, Standard & Poor's Ratings Services expects these metrics to worsen. Leverage is higher when the sponsor equity, which S&P view as having the potential to be recapitalized into debt, is treated as debt. For the current rating, S&P expects FFO to debt of about 10%. S&P has not factored potential acquisitions into the rating. The outlook is negative, reflecting the company's thin margin of financial covenant compliance. S&P could lower the ratings further if the company violates its financial covenants and appears unlikely to obtain satisfactory relief. S&P could revise the outlook to stable if the company establishes a track record of free cash flow generation and maintains at least 15% headroom under financial covenants. STAR TRIBUNE: Asks Court to Cancel Contract With Union ------------------------------------------------------ The Star Tribune has asked the U.S. Bankruptcy Court for the Southern District of New York to cancel the labor contract for its 116-member pressmen's union and impose a measure that would save the newspaper about $3.5 million per year, David Phelps at the Star Tribune reports. "The Star Tribune's financial situation is dire," financial consultant Paul Huffard of Blackstone Advisory Services said in court documents. Mr. Phelps relates that revenue this year is projected to drop to about $203.3 million, from $303.8 million in 2007, while operating expenses would total $200.2 million -- assuming no savings on union contracts -- and would be too small a margin to guarantee Star Tribune's viability during the recession and restructuring. Mr. Phelps states that the pressmen union, a member of the International Brotherhood of Teamsters, has a 10-year contract that expires November 30, 2010, with Star Tribune. Mr. Phelps says that Star Tribune wants the group to take a salary reduction that ranges from $5.90 an hour to $12.25 an hour, about 17% and 40% respectively. Star Tribune also wants the group to forgo small pay increases at year-end, Mr. Phelps relates. According to Mr. Phelps, Star Tribune said that the pressmen union has failed to enter talks for concessions needed because of a sharp drop in advertising revenue and debt from the $530 million acquisition of Avista Capital Partners in 2007. Mr. Phelps reports that Star Tribune wants the pressmen to accept lower wages and new work rules that would decrease staffing and overtime requirements on the presses. Mr. Phelps quoted Andrew Staab, the attorney for the pressmen, as saying, "We haven't had meaningful negotiations yet [on the company's January proposal]. We don't want this filing to get in the way of meaningful negotiations." The union has retained a bankruptcy counsel in New York and a financial consultant in the Twin Cities to help it understand Star Tribune's position on labor issues, Mr. Phelps reports, citing Mr. Staab. Mr. Phelps states that Star Tribune is seeking about $20 million in cost reductions from its unionized workers and about $10 million from non-union employees. Star Tribune, according to Mr. Phelps, said that it has already cut costs by $50 million through reduced news pages, attrition, layoffs, and voluntary buyouts since 2007. Payroll makes up 55% of the newspaper's operational expenses and unions make up more than half of that, Mr. Phelps says, citing Star Tribune. Positive cash flow is achievable if Star Tribune can restructure its debt and secure cost savings "significantly in excess of $30 million," Mr. Phelps relates, citing Mr. Huffard. According to Mr. Phelps, Mr. Huffard said that the union contract savings are important because Star Tribune's revenues are declining faster than its expenses, it pays above-market wages and benefits, and "restrictive" work rules result in substantial overtime and a larger workforce than necessary. About Star Tribune Headquartered in Minneapolis, Minnesota, The Star Tribune Company -- http://www.startribune.com-- operate the largest newspaper in the U.S. state of Minnesota and published seven days each week in an edition for the Minneapolis-Saint Paul metropolitan area. The company and its affiliate, Star Tribune Holdings Corporation, filed for Chapter 11 protection on January 15, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10245). Marshall Scott Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. The Debtors proposed Blackstone Group LP as their financial advisor; and Curtis, Mallet-Prevost, Colt & Mosle LLP as conflict counsel; and Garden City Group Inc. as claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. STATION CASINOS: Boyd Offers $950 Million for OpCo Assets --------------------------------------------------------- Boyd Gaming Corporation delivered a non-binding preliminary indication of interest to Frank J. Fertitta III, Station Casino's Chairman, President and Chief Executive Officer, and the Company's Board of Directors. In a letter dated February 23, 2009, Keith E. Smith, Boyd Gaming's president and CEO, and William S. Boyd, the Executive Chairman of Boyd Gaming's Board, said Boyd is interested in exploring an acquisition of 100% of Station Casino's OpCo Assets. In addition, should Station Casinos determine to pursue sale transactions with respect to its PropCo Assets, Boyd would consider an acquisition that includes those assets as well. "We believe that Boyd is uniquely qualified to operate the assets of Station. We are dedicated to operating first class casino entertainment facilities and have demonstrated this commitment within the Las Vegas market for over thirty years," Messrs. Smith and Boyd said. Key Assumptions and Value Drivers The letter is based on publicly available information. Messrs. Smith and Boyd said they have made numerous assumptions concerning the OpCo Assets, the PropCo Assets and Station Casinos' Land Loan. The assumptions include continued operation of the business in the ordinary course. "There are certain key drivers and assumptions that may change our views, either positively or negatively, which we plan to further investigate during a formal due diligence process," Messrs. Smith and Boyd said. Valuation Based on available public information, Boyd estimates that the enterprise value of the OpCo Assets is approximately $950 million. Subject to the completion of a due diligence review to Boyd's satisfaction, including confirmation of the estimated enterprise value of the OpCo Assets, Boyd would be prepared to offer this amount in cash to existing stakeholders to acquire the OpCo Assets following, or as part of, the reorganization of Station. Messrs. Smith and Boyd said this value would present a superior recovery to the unsecured creditors of Station versus an exchange offer proposed by Station Casinos early this month. Messrs. Smith and Boyd said they would be interested in pursing a transaction to acquire the Station assets as either a "stalking horse bidder" pursuant to Section 363 of the Bankruptcy Code or, as a co-sponsor or plan proponent (with Station or other applicable debtor) in a consensual plan of reorganization or, in the alternative, as a competing plan proponent, in each case pursuant to Chapter 11 of the Bankruptcy Code. Financing As of December 31, 2008, Boyd had approximately $2 billion in available liquidity under its Revolving Credit Facility. Messrs. Smith and Boyd said Boyd has sufficient liquidity to finance a cash transaction consistent with the terms outlined in this Proposal. Conditions and Approvals Boyd considers the publicly available information to be very limited, and completion of detailed due diligence may lead Boyd to substantially modify this Proposal or to decide not to make a binding offer. Boyd envisions that any binding offer would be subject to the satisfaction or waiver of customary conditions, including, the completion of a due diligence review to Boyd's satisfaction; the negotiation and execution of definitive agreements containing terms and conditions satisfactory to Boyd; obtaining all required governmental, regulatory and third-party approvals or consents; and confirmation of the Plan of Reorganization by the Bankruptcy Court pursuant to the provisions of the Bankruptcy Code, or approval of a purchase of the OpCo Assets pursuant to an order of the Bankruptcy Court, among other conditions. Due Diligence To be in a position to deliver a binding offer, Messrs. Smith and Boyd said they will need to meet with Station's key managers and visit Station's casino properties. "In addition, we and our advisors will need to complete customary commercial, operating, equipment condition, financial, tax, business integration, environmental and legal due diligence. We are confident that we will be able to complete our due diligence expeditiously once detailed due diligence information is made available to us. In doing so, we will seek to minimize any disruption to the business of the Company," Messrs. Smith and Boyd said. Timing According to Messrs. Smith and Boyd, "The submission of this Proposal has been approved by Boyd's Board of Directors, and the Proposal has the full attention of Boyd management. We are prepared to commit the necessary resources to complete a transaction as quickly as possible. Boyd's financial and legal advisors are prepared to immediately commence the due diligence process and proceed expeditiously. Following execution of a definitive purchase agreement, we anticipate consummating a transaction promptly following receipt of all required consents and approvals, including those approvals required by the Bankruptcy Court and the Nevada Gaming Commission, Nevada Gaming Control Board and other regulatory bodies." Financial Advisor Boyd has retained UBS Securities LLC as its financial advisor in connection with its evaluation of Station. Responses to or questions regarding this non-binding Proposal should be directed to: James Stewart Soren Reynertson Managing Director Managing Director UBS Securities LLC UBS Securities LLC Tel: (310) 556-6720 Tel: (212) 821-3467 General For purposes of this Proposal, "OpCo Assets" means all of Station's assets other than (i) the assets that secure the CMBS mortgage loan and related mezzanine financings, due November 12, 2009 -- PropCo Assets -- and (ii) the assets that secure Station's $250 million delay-draw term loan due February 7, 2011. Solicitation of Plan Acceptances; Plan Votes Due March 2 As reported by the Troubled Company Reporter on February 5, 2009, Station Casinos elected not to make a scheduled $14.6 million interest payment that was due to holders of its $450 million 6-1/2% Senior Subordinated Notes due February 1, 2014, as it launched the proposed restructuring plan to its bondholders. The Old 2014 Subordinated Notes provide for a 30-day grace period which ends March 3, 2009. Station Casinos also has elected not to make a scheduled $15.5 million interest payment that was due on February 15, 2009, to holders of the Company's $400 million 7-3/4% Senior Notes due August 15, 2016. The grace period with respect to the payment of interest on the 2016 Senior Notes ends on March 17, 2009. The Company has started votes from its bondholders in favor of the restructuring plan that the Company's equity sponsors and lead senior secured lenders have already agreed to support. The Company said it is soliciting from eligible institutional holders of its outstanding: -- 6% Senior Notes due 2012, -- 7-3/4% Senior Notes due 2016, -- 6-1/2% Senior Subordinated Notes due 2014, -- 6-7/8% Senior Subordinated Notes due 2016, and -- 6-5/8% Senior Subordinated Notes due 2018, ballots for a vote in favor of a plan of reorganization for the resolution of outstanding claims against the Company. The Company is offering the bondholders a combination of secured notes and cash in exchange for their outstanding bonds. Under the plan, senior bondholders would get 50 cents on the dollar while subordinate bondholders would receive 7 cents on the dollar in new notes and 3 cents on the dollar in cash, Las Vegas Review states. The Company said that affiliates of the Fertitta family and Colony Capital have committed, as part of the restructuring plan, to contribute in the aggregate up to $244 million in cash if an acceptable agreement is reached with all of the Company's lending constituents. Members of the Fertitta family that would be participating in this contribution of additional capital include Frank J. Fertitta III, Chairman and Chief Executive Officer of the Company, and Lorenzo J. Fertitta, Vice Chairman of the Company. If the Company obtains sufficient acceptances of the Plan, the Company may determine to implement the Plan by commencing a voluntary case under chapter 11 of the U.S. Bankruptcy Code. About Station Casinos Station Casinos, Inc. is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. STELLA LEVEA: Files for Chapter 11 Bankruptcy Protection -------------------------------------------------------- Jeniffer Berry at 9news.com reports that Stella Levea has filed for Chapter 11 bankruptcy protection, listing $1 to $10 million in debts and over $500,000 in assets. The Associated Press relates that Ms. Levea, as one of the principals of bankrupt First Americans Insurance Service, is under state and federal investigation. The AP relates that the investigators are trying to find out how more than $100 million disappeared from First Americans. Court documents say that Ms. Levea's top three creditors are also listed as First Americans' creditors. According to The AP, Ms. Levea owes the three men from Nebraska, Kansas, and Colorado a combined $950,000. The AP relates that other debts include: -- $117,698 to American Express, -- $13,025 to Bank of America, and -- $10,000 to QVC. According to The AP, Ms. Levea and First Americans' other principals -- James Masat and Kenneth Mottin -- had their insurance licenses revoked in January 2009, not admitting or denying any accusations they face. TARRAGON CORP: Common Stock Delisted From Nasdaq ------------------------------------------------ Amy Horton, associate general counsel of Tarragon Corp. disclosed in a regulatory filing dated February 17, 2009, that the Company's common stock has been delisted from NASDAQ Stock Market LLC. New York-based Tarragon Corporation (NasdaqGS:TARR) -- http://www.tarragoncorp.com/-- is a leading developer of multifamily housing for rent and for sale. Tarragon's operations are concentrated in the Northeast, Florida, Texas, and Tennessee. Tarragon and its affiliates filed for Chapter 11 protection on January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon. Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R. Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A., represent the Debtors as bankruptcy counsel. Daniel A. Lowenthal, Esq., at Patterson Belknap Webb & Tyler, LLP, is the proposed counsel to the Official Committee of Unsecured Creditors. Kurztman Carson Consultants LLC serves as notice and claims agent. As of September 30, 2008, the Debtors had $840,688,000 in total assets and $1,035,582,000 in total debts. TIMBERLINE RESOURCES: Receives Non-Compliance Notice From NYSE -------------------------------------------------------------- Timberline Resources Corporation on February 13, 2009, received notice from the NYSE Alternext US LLC indicating that as of September 30, 2008 Timberline was below certain of the Exchange's continued listing standards due to Timberline's stockholders' equity not meeting certain minimum requirements. Timberline has been afforded the opportunity to submit a plan of compliance to the Exchange by March 13, 2009 that demonstrates the Company's ability to regain compliance with the listing standards of the Exchange by August 2010. If Timberline does not submit a plan, or submits a plan that is not accepted by the Exchange then it will be subject to delisting procedures in accordance with the Exchange's guidelines. The Exchange based their analysis on Timberline's September 30, 2008 financial statements which report stockholders' equity of $3.55 million. As of Timberline's interim financial statements for the three months ended December 31, 2008, Timberline's stockholders' equity had already increased to $4.62 million and Timberline's management believes that it will continue to make significant progress in the rest of the fiscal year towards meeting the requisite standards to ensure its continued listing on the Exchange. Timberline intends to submit a plan to the Exchange by March 13, 2009 outlining the steps the Company expects to take in order to bring stockholders' equity into compliance with the continued listing standards of the Exchange. Timberline Resources Corporation (NYSE Alternext US:TLR) has taken the complementary businesses of mining services and mineral exploration and combined them into a unique, forward-thinking investment vehicle that provides investors exposure to both the "picks and shovels" and "blue sky" aspects of the mining industry. Timberline has contract drilling subsidiaries in the western United States and Mexico and an exploration division focused on district-scale gold projects with the potential for near-term, low-cost development. The Company is forming a 50/50 joint venture with Small Mine Development, LLC at Timberline's 100- percent owned, royalty-free Butte Highlands Gold Project which is scheduled for development beginning in 2009. Timberline is listed on the NYSE Alternext US and trades under the symbol "TLR". TRUMP ENTERTAINMENT: Gets Court Nod to Pay Critical Vendors ----------------------------------------------------------- Trump Entertainment Resorts Inc., and its affiliates were given permission by the U.S. Bankruptcy Court for the District of New Jersey to use cash alongside interim authority eventually to pay up to $17.55 million in pre-bankruptcy claims to providers of goods and services deemed to be critical to the survival of the business, Bloomberg's Bill Rochelle reported. The Debtors have reviewed their accounts payable and prepetition vendor lists to identify those creditors most essential to the Debtors' operations pursuant to the following criteria: (a) whether certain quality specifications or other requirements of the Debtors' customers prevent the Debtors from obtaining a vendor's products or services from alternative sources within a reasonable timeframe; (b) whether, if a vendor is not a single source supplier, the Debtors have sufficient product in inventory to continue their operations while a replacement vendor is put in place; and (c) whether a vendor meeting the foregoing criteria is able or likely to refuse to ship product to the Debtors postpetition if its prepetition balances are not paid. As of February 13, 2009, the Debtors have $12,000,000 (estimated $11,918,452) in accounts payable due and owing to Critical Vendors. In addition, the Debtors estimate that an additional $5,545,000 is due and owing for critical vendor services that have already been provided to the Debtors, but which have not yet been processed into the accounts payable system. Such amounts will nonetheless be considered prepetition claims by the Critical Vendors deciding whether or not to discontinue essential services. In return for payment of all or a portion of the outstanding prepetition claims of the Debtors' Critical Vendors, the Debtors will use their best efforts to obtain favorable trade terms for the postpetition delivery of goods and services. The Debtors propose to condition payment to Critical Vendors upon each Critical Vendor's agreement to continue supplying goods and services to the Debtors on terms that are acceptable to the Debtors in light of historical practices between the parties. The Debtors owe $488.8 million to lenders who are backed by first priority liens on Trump Entertainment and its affiliates' assets, and $1.2 billion to lenders who have second liens on Trump's assets. The Debtors have said that they won't be needing DIP financing to fund their operations while in bankruptcy. According to Mr. Rochelle, before filing, Trump had an agreement with the first lien lenders to use their cash collateral to finance operations. About Trump Entertainment Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the company and, as its non- executive Chairman, is not involved in the daily operations of the company. The company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC and other affiliates filed for Chapter 11 on Feb. 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of Dec. 31, 2008. TRW AUTOMOTIVE: S&P Downgrades Corporate Credit Rating to 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services said it has lowered its ratings on Livonia, Michigan-based TRW Automotive Inc., including the corporate credit rating, which S&P lowered to 'B+' from 'BB'. The outlook is negative. "The downgrade reflects our view that the deteriorating automotive production in most markets globally will cause significant worsening in TRW's credit profile during 2009," said Standard & Poor's credit analyst Nancy Messer. S&P expects light-vehicle sales to decline about 22% in North America this year, to 10.3 million units, and TRW now expects auto production to decline 20% in Europe during 2009. Vehicle sales in Latin America and Asia have also begun to deteriorate. These declines will put pressure on TRW's revenues and profitability, making it unlikely that the company would have been able to maintain credit measures appropriate for the previous rating. In addition, TRW may need to enter into discussions with its bank lenders for covenant relief in the second quarter of this year. S&P's opinion that the light-vehicle market will remain difficult in the year ahead is based on the absence of any visible, material upturn in global demand. In addition to lower production levels, volatility in automaker production schedules continues to disrupt profitability for auto suppliers. Consequently, S&P expects TRW's EBITDA to decline significantly in fiscal 2009, given the outlook for lower production volumes in all of TRW's geographic markets. S&P now view the company's business risk profile as vulnerable, compared to weak under the previous rating. TRW manufactures active and passive safety products for the automotive industry. Nearly 70% of its sales come from outside North America; its largest customer, Volkswagen AG, accounted for about 17% of 2007 sales. Combined sales to the Michigan-based automakers account for about 22% of TRW's consolidated revenues. Auto suppliers in the U.S. and Europe, including TRW, are exposed to cost increases for steel and other raw materials, which they can rarely recover in full from customers. In addition, automakers' product mixes remain unfavorable, as U.S. consumers have shifted their preference to sedans from SUVs and even crossover utility vehicles, which typically carry more supplier content. TRW's financial results for the year ended Dec. 31, 2008, fell short of S&P's expectations because of an operating loss in the fourth quarter. Reported EBITDA (adjusted for special items) fell 16%, year over year, to $1.0 billion, and gross margin declined to 6.8% in 2008, from 8.2% year over year. European sales, which had helped TRW's financial performance in the first half of the year, declined significantly in the second half. S&P expects TRW's financial performance to remain under pressure into 2010. S&P believes TRW's total leverage and interest coverage covenants could both be breached midyear. In addition, the leverage (net debt to EBITDA) covenant tightens for the trailing 12 months ending Dec. 31, 2009. At this time, S&P expects the company to be able to negotiate an amendment to its credit facility to relax these covenants, but credit markets remain very difficult, and failure to secure an amendment that supports liquidity would cause S&P to lower the ratings. The outlook on TRW is negative. S&P could lower the rating if the company is not able in 2009 to negotiate a satisfactory amendment to its revolving credit facility that preserves liquidity. Even if the company obtains an amendment, S&P expects the outcome to include higher borrowing costs and/or lower borrowing limits because of the currently difficult credit markets. S&P could also lower the ratings if S&P believed the company's free cash flow generation would fail to exceed $100 million for 2009. S&P could revise the outlook to stable if TRW can generate sufficient free cash to allow for permanent debt reduction, although this outcome is less likely in the year ahead because of difficult global market conditions. TENNESSEE ENERGY: Moody's Cuts Rating on 2006A Bonds to 'Ba1' ------------------------------------------------------------- Moody's Investors Service has downgraded the rating of Tennessee Energy Acquisition Corporation Gas Project Revenue Bonds, Series 2006A to Ba1 from Baa1. The downgrade results from the presence of a guaranteed investment agreement provided by MBIA Inc. (Ba1) that is also insured by MBIA Insurance Corporation (B3) in which funds needed for debt service payments are invested. Moody's recently downgraded the rating of MBIA Insurance Corporation to B3. Pursuant to the recent restructuring of MBIA's portfolio of insurance policies into MBIA Insurance Corp (B3) and MBIA Illinois (Baa1 on watch for upgrade), MBIA has stated that all surety bonds issued to support investment contracts provided by MBIA Insurance Corp will remain at that entity and not be reinsured by MBIA Illinois. The GIC for this transaction is issued by MBIA Inc. (Ba1) and there is a surety bond supporting the GIC from MBIA Insurance Corporation (B3) which is available in the event MBIA Inc. fails to pay under the GIC. Therefore Moody's is relying on the higher of the two ratings (MBIA Inc. and MBIA Insurance Corporation) of the entities obligated to pay under the GIC. The rating on the Bonds is based upon the credit quality of : (i) Goldman Sachs Group, Inc. (A1) as gas purchase contract guarantor; (ii) Royal Bank of Canada (Aaa) as commodity swap guarantor; (iii) MBIA Inc. (Ba1) as GIC provider (supported by a surety bond from MBIA Insurance Corporation (B3)); (iv) Depfa Bank plc (A3/ P-1) as GIC provider; (v) Transamerica Life Insurance Co. (A1/ P-1) as GIC provider; and (vi) Citigroup, Inc. (A2/ P-1) as GIC provider. Although the money invested in the GIC is a relatively small portion of the overall funds in the transaction, should the funds held in the GIC not be available for any reason, there could be a payment default on the bonds. Bankruptcy of a GIC provider may lead to an automatic stay on the funds in the GIC, which may also include any collateral posted pursuant to the GIC. Since a payment default on the bonds does not lead to a termination of the gas purchase agreement it would not trigger a termination payment by the guarantor and redemption of the bonds. The most recent rating action on the bonds was on January 13, 2009 when the rating was downgraded to Baa1. TEXTRON FINANCIAL: Moody's Downgrades Rating on Class B to 'Ba2' ---------------------------------------------------------------- Moody's Investors Service has taken these rating actions on dealer floorplan asset-backed notes issued by Textron Financial Floorplan Master Note Trust, Series 2007-A: -- Class A Notes, Downgraded to Aa3 from Aaa -- Class B Notes, Downgraded to Ba2 from A1 Rationale The rating actions were prompted by the trend and level of increasing losses incurred by the trust and the potential for losses to continue to increase in the future. Monthly annualized losses have exceeded 2.00% since November 2008. Historically, annualized losses have ranged from 0.25% to 1.00%. The current loss trend is higher than the historical range as a result of deteriorating macroeconomic conditions. The transaction features revolving receivables payable by dealers and secured by the dealers' related inventory of mixed collateral. The dealers' accounts are originated and serviced by Textron Financial Corporation. On December 22, 2008, TFC's parent, Textron Inc., announced that its Board of Directors approved a plan to exit all of TFC's commercial finance business through a combination of orderly liquidation and selected sales, other than that portion of the business supporting the financing of customer purchases of Textron-manufactured products. The plan applies to approximately $7.9 billion of TFC's $11.4 billion managed receivable portfolio, including the floorplan activity of Textron Financial Floorplan Master Note Trust. Uncertainty regarding the impact of Textron's decision to exit activity relating to Textron Financial Floorplan Master Note Trust was taken into consideration by Moody's in determining its rating action. Rating Methodology Moody's conducted two primary analytical methods in evaluating this transaction. The first method evaluated an expected loss estimate for the floorplan collateral and variability around the loss estimate, contemplating more stressful environments. The judgment of a rating committee was used to determine the variability around the loss estimate at a level consistent with a Aaa rating, also referred to as a Aaa Proxy, for the given trust. After determining an expected loss and Aaa Proxy, Moody's employed an expected loss framework to evaluate the related bond ratings, using a lognormal probability distribution for the asset pool's expected loss. Within that framework, the ratings on the securities were assigned based on a table that shows the relationship between the Notes' probability-weighted expected loss and a Moody's rating. This approach is comparable to the methodology for retail auto loan transactions. The second analytical method utilized, Moody's floorplan loan model, is based on a joint-default probability analysis of both the manufacturers and dealers. Loss given default is determined by analyzing the collateral at risk net of recoveries. The total collateral at risk upon a joint-default of manufacturer and dealer is the remaining unpaid floorplan loan balance. The balance is calculated based on total payments as determined by a monthly payment rate prior to dealer default. The analysis is implemented through a simulation model, which simulates losses during a two year amortization period following an event of default based on a set of key modeled assumptions such as manufacturer bankruptcy scenarios, dealer default rates, recovery rates, payment rates, the impact of macroeconomic activity on manufacturer and dealer default probability, the correlation of default between manufacturer and dealer, and the frequency of diversion of product sale proceeds by the dealership ("sold out of trust"). Manufacturer and dealer default probabilities are simulated based on committee assessment. Each simulation run simulates a total loss and corresponding internal rate of return reduction for each class of Notes. In addition to the analytical methods described above, Moody's also evaluates qualitative factors such as the quality of provided information and the strength of the servicer. Combining the qualitative factors and both quantitative analyses, a final rating level is determined. Servicer The receivables and associated dealers' accounts for the Textron Financial Floorplan Master Note Trust are serviced by TFC. On February 4, 2009, Moody's placed all the ratings of TFC and its parent Textron under review for possible downgrade, including the Baa2 senior unsecured ratings and the Prime-2 short term ratings of both entities. TRAILER BRIDGE: Moody's Affirms Corporate Family Rating at 'B3' --------------------------------------------------------------- Moody's Investors Service has affirmed the B3 corporate family and the SGL-3 speculative grade liquidity rating of Trailer Bridge, Inc. The rating outlook remains negative. The B3 affirmation reflects progress Trailer Bridge has made redeploying its fleet to minimize the cost of ramping up the Florida / Dominican Republic service, an adequate liquidity profile balanced against Trailer Bridge's small size, high leverage and the likely 2009 economic contraction in Puerto Rico which could impact freight volumes. The SGL-3 speculative grade liquidity affirmation reflects the company's adequate liquidity profile stemming from an unutilized $10 million accounts receivable backed revolver that has covenant tests which activate when availability declines below $3 million. Currently, the eligible collateral supporting the revolver exceeds the commitment level and potential for covenant activation appears to be low in the next 12 months. The negative outlook acknowledges that Trailer Bridge's high leverage, small size and the likely 2009 Puerto Rico economic contraction could challenge the ability to improve leverage metrics, and expose the rating to pressure. As well, incorporated in the negative outlook is potential for added costs from the U.S. Department of Justice's investigation regarding anti-competitive practices in the Puerto Rico / U.S. trade lane. Additional rating affirmations: * Probability of default -- B3 * $85 million 9.25% senior secured notes due November 2011 -- B3, LGD 3, 44% becomes LGD 4, 51% Moody's last rating action occurred February 27, 2008 when the outlook was changed to negative from stable and the B3 corporate family rating was affirmed. Trailer Bridge, Inc., headquartered in Jacksonville, Florida is an integrated trucking and marine freight carrier that provides truckload freight transportation primarily between the continental U.S., Puerto Rico and Dominican Republic. Last twelve months ended September 30, 2008 revenues were $131 million. VALASSIS COMMUNICATIONS: Receives NYSE Non-compliance Notice ------------------------------------------------------------ Valassis Communications, Inc. received notice from the New York Stock Exchange on Feb. 20, 2009, that it was not in compliance with certain continued listing standards applicable to its common stock. Specifically, the notice indicates that Valassis is below criteria because both the average market capitalization of its common stock over a consecutive 30 trading-day period was less than $75 million and its stockholder equity was less than $75 million. As of Feb. 18, 2009, Valassis' 30 trading-day average market capitalization was approximately $70.2 million. As of Dec. 31, 2008, its stockholders' equity was $5.4 million, down from $241.2 million as of Sept. 30, 2008, due primarily to a $245.7 million pre-tax, non-cash impairment charge related to goodwill and other intangible assets that Valassis recorded during the fourth quarter of 2008. Under NYSE regulations, Valassis has 45 days from the receipt of the notice to submit a business plan that demonstrates its ability to return to compliance with the continued listing standard within 18 months of receipt of the notice. Valassis intends to submit such a plan, which may include among other things, elements from our previously released 2009 Profit Maximization Plan (designed to reduce costs, increase production efficiencies and place focus on its greatest growth and profit opportunities) and a positive impact from both a potential asset sale as well as any repurchase of its outstanding term loans through one or more "modified Dutch" auctions during 2009. Upon receipt of the business plan, the NYSE has 45 days to review and determine whether Valassis has made a reasonable demonstration of its ability to come into conformity with the relevant standard within the 18-month period. The NYSE will either accept the business plan, at which time Valassis will be subject to ongoing monitoring for compliance with the business plan, or the NYSE will not accept the business plan and Valassis will be subject to suspension and delisting procedures. As required by the NYSE's rules, Valassis intends to notify the NYSE within 10 business days of receipt of the non-compliance notice of its intent to submit a plan to remedy its non- compliance. Valassis also disclosed that on Feb. 17, 2009, Wayne County Circuit Court Judge Michael Sapala formally scheduled Valassis' state law action against News America Incorporated for May 27, 2009. The trial had been tentatively scheduled to start March 10, 2009. Another case also on Judge Sapala's calendar previously scheduled to start trial that same date has not resolved, and therefore, he is unavailable on that date. Valassis originally filed the action in the State of Michigan Wayne County Circuit Court on March 9, 2007 raising common law and statutory causes of action. In addition to the Michigan state law claims, Valassis has lawsuits pending against News America in the United States District Court, Eastern District of Michigan, for alleged violations of the Sherman Act, and in the Supreme Court of the State of California for the County of Los Angeles raising claims under California's Cartwright, Unfair Competition and Unfair Practices Acts. These two cases are currently scheduled for trial in April and August of 2009, respectively. About Valassis Communications Valassis Communications, Inc. -- http://www.valassis.comor http://www.redplum.com-- is a media and marketing services company, serving more than 15,000 advertisers. Its RedPlum media portfolio delivers value on a weekly basis to over 100 million shoppers across a multi-media platform - in-home, in-store and in- motion. Headquartered in Livonia, Michigan with approximately 7,000 associates in 28 states and nine countries, Valassis is recognized for its associate and corporate citizenship programs, including its America's Looking for Its Missing Children(R) program. Valassis companies include Valassis Direct Mail, Inc., Valassis Canada, Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH Marketing Services, Inc. Safe Harbor and Forward-Looking Statements VERASUN ENERGY: Plants Set for March 16 Auction ------------------------------------------------ Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware scheduled a March 16, 2009 auction of all 16 facilities of VeraSun Energy Corp. The Court will hold a hearing March 18 to approve the sales. VeraSun and its 24 debtor-affiliates have inked an agreement to sell substantially all of their assets to Valero Energy Corporation, free and clear of all liens, for $280,000,000 plus the fair market value at closing of the VSE Debtors' inventory. The "VSE Assets" consist of substantially all of the assets of: * VeraSun Aurora, LLC, * VeraSun Charles City, LLC, * VeraSun Fort Dodge, LLC, * VeraSun Hartley, LLC, * VeraSun Welcome, LLC, * VeraSun Reynolds, LLC, and * VeraSun Marketing, LLC. To memorialize their agreement, the Debtors entered into an asset purchase agreement, dated February 6, 2009, with Valero Renewable Fuels Company, LLC and Valero Energy Corporation. Under the APA, Valero is required to deposit $10,000,000, which would be applied toward the purchase price at closing. Valero is also required to offer employment to all the active employees on substantially similar terms as those under which the employees were employed by the Debtors. The Acquired Assets are: (a) the Aurora, Charles City, Fort Dodge, Hartley, Reynolds and Welcome production facilities and related equipment and inventory, including inventory held by VeraSun Marketing, as well as substantially all of the other assets associated exclusively with those facilities; (b) intellectual property consisting of the trademarks and service marks "VERASUN," the VeraSun logo, and the slogan "AMERICA'S SOURCE FOR RENEWABLE FUELS"; (c) certain other intellectual property, including the VE85 trademarks and patents relating to corn oil extraction; and (d) specified other assets as set forth in the APA, including VeraSun Energy Corp.'s former headquarters building in Brookings, South Dakota. The APA requires the Debtors to pay Valero a $10,000,000 break-up fee and reimbursement of up to $1,000,000 if the Debtors terminate the APA to consummate a competing sale transaction. A full-text copy of the Valero APA is available for free at http://bankrupt.com/misc/verasun_valeroapa.pdf Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware, has said offering a Break-Up Fee and Expense Reimbursement to the Valero will benefit the Debtors' estates by establishing a floor and promoting more competitive bidding. Without a fee, bidding on the VSE Assets would likely by reduced, Mr. Chehi said. Valero, according to Mr. Chehi, has indicated to the Debtors during the negotiations of the APA that a relatively expedited sale process with respect to the VSE Assets was critical to their decision to provide a stalking horse bid. In addition, Mr. Chehi said the AgStar and ASA DIP Facilities are likewise conditioned on the Debtors' pursuit of a sale process within a specified time frame. Specifically, the Debtors' failure to hold an auction with respect to the assets of the U.S. BioEnergy Segment on or before March 16, 2009, and close any sale on or before March 31, will constitute an event of default under the AgStar DIP Facility. The ASA DIP Facility also requires the Debtors to hold an auction with respect to the Assets of the ASA Segment on or before March 31, and close a sale on or before April 15. Mr. Chehi said the postpetition financing at the VSE Segment is not projected to last through 2009. Mr. Chehi said the Debtors have marked and solicited offers for the sale of all or any portion of the Assets for the last five months. Although the Debtors have not yet received a binding offer for any of the non-VSE Segment Assets, the Debtors are optimistic that the Sale process will maximize the value of the Assets. Bidding Procedures Through the sale process, the Debtors are offering for sale substantially all of its assets, which are characterized as four distinct operating groups: (1) the "VSE Group" consisting of production facilities subject to the Valero bid; (2) the "US BioEnergy Group" consisting of production facilities in Central City and Ord, Nebraska; Albert City and Dyersville, Iowa; Hankinson, North Dakota; Janesville, Minnesota, and Woodbury, Michigan; (3) the "ASA Group" consisting of production facilities in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana; and (4) the "Marion Group" consists of the production facility in Marion, South Dakota. Production has been discontinued at 12 plants. Bloomberg notes that VeraSun's plants in eight states theoretically are capable of producing 1.64 billion gallons of ethanol annually. To become a Qualified Bidder, interested parties must deliver to the Debtors no later than March 2, 2009, an executed confidentiality agreement and a letter of intent to buy the VSE Assets, among others. A Qualified Bidder that desires to make a bid must deliver written copies of its bid to the Debtors and their counsel, the Official Committee of Unsecured Creditors and its counsel, and Valero and its counsel on or before March 13, 2009. The Debtors have proposed that all bids, other than the Stalking Horse Bid, must include: (a) for bids that cover the VSE Assets, a purchase price equal to or greater than $291,000,000 plus the fair market value at closing of the VSE Assets' Inventory; (b) for certain of the Assets, the purchase price must be equal to or greater than the sum of (i) the purchase price set forth in any Additional Stalking Horse Agreement, (ii) any Break-Up Fee, if any, (iii) the Expense Reimbursement, if any, and (iv) the Overbid Amount, as applicable; (c) in the event no Additional Stalking Horse Bidder is designated for all or a portion of the Assets, the purchase price proposed by the Qualified Bidder for the Assets for which they are submitting a bid; (d) a letter stating that the bidder's offer is irrevocable until two business days after the Assets on which the Qualified Bidder is submitting a bid have been sold pursuant to the closing of the sale or sales approved by the Court; (e) in the event an Additional Stalking Horse Bidder is designated for a given package of Assets, an executed copy of a purchase agreement and a redline of a Qualified Bidder's proposed purchase agreement over that of the VSE Stalking Horse Bidder or the applicable Additional Stalking Horse Bidder designated for those Assets; (f) in the event no Additional Stalking Horse Bidder is designated for a package of Assets, a copy of the proposed form of asset purchase agreement for the applicable package of Assets; (g) a deposit in the amount of 5% of the proposed purchase price, unless otherwise specified in the VSE Asset Purchase Agreement or any Additional Stalking Horse Agreement, as applicable; provided that with respect to bids that cover the VSE Assets, $11,000,000 out of that deposit will be placed in a segregated account; and (h) written evidence of a commitment for financing or other evidence of proposed purchaser's ability to consummate the proposed transaction and which the Debtors believe to be sufficient to satisfy the standards to provide adequate assurance of future performance under Section 365 of the Bankruptcy Code. The Secured Lenders may make one or more credit bids for some or all of the collateral securing their claims to the full extent permitted by Section 363(k). The Secured Lenders are permitted to credit bid for all or a portion of their collateral at any Auction, and will not be required to post a cash deposit, except that any Secured Lender who wishes to credit bid for the VSE Assets must post a deposit of $11,000,000. To be a Qualified Bid, a credit bid must provide for payment in cash at closing and the assumption of the administrative expense claims of the Debtors that own the Assets to be acquired, as well as cash sufficient to pay any bid protections afforded to a stalking horse bidder. In the event a Secured Lender submits a credit bid for all or a portion of their collateral pursuant to these Bidding Procedures at any Auction, the Debtors reserve their rights to not consult with that Secured Lender as to whether a Potential Bidder is a Qualified Bidder with respect to the Assets. If a Qualified Bid, other than that submitted by the VSE Stalking Horse Bidder or any Additional Stalking Horse Bidder, has been received by the Debtors, the Debtors propose to conduct an auction with respect to all or some of the Assets at One Rodney Square, P.O. Box 636, in Wilmington, Delaware, on March 16, 2009, at 11:00 a.m. According to Bloomberg, the Debtors' secured debt includes $81.7 million on a revolving credit and $210 million in secured senior notes. The so-called ASA facilities, acquired in August 2007, have a $267 million senior secured credit facility, while the plants from last year's US BioEnergy purchase have $555 million in secured obligations, Bloomberg said. Unsecured debt includes $450 million in senior unsecured notes, Bloomberg added. About VeraSun Energy Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -- http://www.verasun.comor http://www.VE85.com/-- produces and markets ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WORLDSPACE INC: Highbridge Discloses 9.99% Equity Stake ------------------------------------------------------- Highbridge International, LLC, Highbridge Capital Management, LLC, Glenn Dubin and Henry Swieca disclosed in a regulatory filing dated February 17, 2009, that they may be deemed to beneficially own shares of Class A Common Stock of WorldSpace, Inc. As of February 17, 2009, each may be deemed the beneficial owner of 379 shares of Class A Common Stock, 3,778,046 shares of Class A Common Stock issuable to Highbridge International LLC upon exercise of Warrants and 9,911,000 shares of Class A Common Stock issuable to Highbridge International LLC upon conversion of the $19,822,000 principal amount of convertible notes. Highbridge Capital Management, LLC is the trading manager of Highbridge International LLC. Glenn Dubin is the Chief Executive Officer of Highbridge Capital Management, LLC. Henry Swieca is the Chief Investment Officer of Highbridge Capital Management, LLC. 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. * Stimulus Package Restricts Banks' Hiring of Foreign Workers ------------------------------------------------------------- John D. Mckinnon at The Wall Street Journal reports that a provision in the stimulus package discourages bailed out banks from hiring skilled foreign workers. WSJ relates that the provision would indicate broader efforts to restrict work-related visa programs in 2009. According to WSJ, the provision imposes higher government examination on banks and other businesses receiving government financial assistance if they use the H-1B visa program -- a non- immigrant visa that allows U.S. employers to temporarily employ foreign workers in specialty occupations -- to hire skilled employees. The report says that the program started in 1990 and generally grants temporary visas to at least 85,000 workers per year. The visas, according to the report, are for three years but can be extended to six. The report states that Iowa Sen. Charles Grassley wants to tighten the H-1B visa program. The H-1B program would help firms obtain the most qualified workers, particularly in fields like engineering, WSJ says, citing supporters of the program. According to the report, the supporters said that the program has stringent protections, requiring employers to attest that they aren't replacing U.S. employees and to pay prevailing wages to foreign workers. WSJ, citing critics, reports that the program encourages firms to hire temporary workers and that many of the protections built into the H-1B law don't work as intended, letting U.S. employers to pass over American workers and hire cheaper foreign ones. WSJ quoted Sen. Bernie Sanders as saying, "While we are suffering through the worst economic crisis since the Great Depression, the very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labor from overseas while they are throwing American workers out on the street." Sen. Sanders' office, according to WSJ, said that major U.S. banks hired at least 1,200 foreign workers under the program in 2006. Other critics say the total number hired in recent years is likely several times higher. The report says that these firms received H-1B visa approvals in 2007: -- J.P. Morgan Chase & Co. (236 workers), -- Goldman Sachs & Co. (224 workers), -- Lehman Brothers Inc. (135 workers), -- Merrill Lynch & Co. (131 workers), and -- Morgan Stanley & Co. (119 workers). WSJ relates that Sen. Charles Grassley, working with Sen. Richard Durbin, is planning further legislation to tighten up the H-1B visa program and other visa programs for temporary workers. Stimulus Plan Ineffective, Governors Say Leslie Eaton at WSJ reports that the National Governors Association blasted the stimulus plan on Sunday, saying that it would be ineffective and add too much to the federal debt. WSJ states that in the stimulus plan, much of the money will flow through state governments, including $144 billion they can use to protect education programs from cuts and pay for health care for the uninsured. According to the report, the states will also get billions of dollars for "shovel ready" infrastructure projects, and can apply for grants to pay for efforts such as weatherizing buildings. WSJ relates that Mississippi's Gov. Haley Barbour said that he would join Gov. Bobby Jindal of Louisiana, in turning down federal incentives to expand unemployment insurance coverage. The report quoted Gov. Barbour as saying, "It would require us in the future to raise the unemployment tax. We're looking to create more jobs. It's a practical matter." Federal Stimulus Money for NY Wouldn't Stave Off Budget Cuts Suzanne Sataline at WSJ notes that the estimated $4.5 billion of federal stimulus money that the New York City expects to get over the next two years wouldn't fend off sharp budget cuts on social services and cultural institutions like parks and libraries. According to the report, a source said that the city expects getting $2.2 billion in local school aid, which should stop the need to cut $770 million from the budget, including 13,000 education jobs. The report says that the city expects to get $2 billion over two years to help cover Medicaid costs, and $35 million for crime-fighting programs, while an estimated $295 million would be received to cover social services, including child-care and food-stamp assistance. Personal income, business, and sales taxes would continue to decline by a total of 28% or almost $7 billion in the 2010 fiscal year from two fiscal years before, WSJ states, citing a source. Citing sources, WSJ relates that due to steep revenue losses and an estimated $1.6 billion in proposed cuts in state grants, Mayor Michael Bloomberg would have to cut the city's budget, as he anticipates a $4 billion deficit in the coming year's almost $60 billion budget. According to WSJ, stimulus aid must be used in areas like federal education programs, Medicaid payments, and construction projects, and not to cover the cost of paying the city's large work force. Mr. Bloomberg, to balance the budget, proposed increasing the city's sales tax to 8.75% from 8.375% and asking labor unions to pay 10% of health-care premiums, WSJ notes. WSJ quoted Maria Doulis of the Citizens Budget Commission as saying, "The stimulus money will help cushion the blow for the current year, maybe the next year, but it's a short-term pause in what has to be a long-term solution." Gov't to Provide Subsidy for Cobra Health Insurance M.P. McQueen at WSJ reports that the government, as part of the economic-stimulus package, will provide a nine-month subsidy covering 65% of the Cobra premium -- which lets many workers to continue group health insurance when they leave a job -- for people who qualify. Citing New York benefits lawyer Richard G. Schwartz, WSJ relates that eligible employees who initially chose not to take Cobra but who now want the subsidized version have 60 days after they receive notice from their employers to sign up. WSJ notes that under the law, employees have to pay the entire premium and a 2% administrative fee even though employers picked up the most of the share of the cost. According to the report, the yearly average cost of Cobra coverage for a family is $13,000. The report states that the stimulus package makes it easier to afford extended health coverage after losing a job because: -- it provides a federal subsidy for 65% of the premium for nine months for workers who qualify; -- subsidy applies to employees who lose their jobs between Sept. 1, 2008, and Dec. 31, 2009; and -- workers who may have pre-existing conditions must maintain coverage to protect insurability. According to WSJ, the new subsidy applies to employees who were laid off between Sept. 1, 2008, and Dec. 31, 2009, and phases out for individuals with an adjusted gross income of $125,000, and $250,000 for married couples filing jointly. * More Troubles Ahead for Newspapers; 4 Large Publishers in Ch. 11 ------------------------------------------------------------------ Philadelphia Newspapers LLC, publisher of the Daily News and the Inquirer, sought bankruptcy protection on February 22. A day before that, the Journal Register Company, publisher of the New Haven (Conn.) Register and 19 other dailies, filed for Chapter 11. In recent years, the newspaper industry and [JRC] have battled declining readership and circulation, declining advertising revenues due to alternative choices for advertisers, ongoing margin pressure and an ongoing free cash flow decline as print media pricing adapts to a more digitally-oriented and highly- competitive marketplace," James W. Hall, chairman of the board of directors and chief executive officer of JRC, said. In addition, certain advertising revenue, particularly classified employment advertising, has been declining for some time as a result of increased competition from other competing forms of media, including the Internet, Richard R. Thayer, executive vice president of Philadelphia Newspapers, said. Star Tribune Company, which has the highest daily circulation in the State of Minnesota, and 15th largest daily newspaper in the United States, filed for bankruptcy January 15 as its declining revenues couldn't keep up with its debt load. Tribune Co., which own leading papers, including the Los Angeles Times and Chicago Tribune, etc., having collective paid circulation totaling 2.2 million copies daily, petitioned for bankruptcy in December, noting that newspaper advertising revenue generally is in significant decline, down industry-wide 15% to 20% in 2007 in major metropolitan markets, and down industry-wide nearly $2 billion, or 18%, in the third quarter of 2008. The "Great Recession" Further Hits Revenues While newspaper print circulation and revenues have generally declined in the past three years, the current recession, which has caused the collapse of banks, and bankruptcy filings of retailers, have further contributed to the revenue decline of newspapers. "The recent global recession has placed an even greater burden on an already distressed industry, leading to unprecedented industry- wide revenue declines," JRC's Mr. Hall said. "The slumping retail market has reduced demand for retail advertising, and the rise in the national unemployment rate, coupled with the decline in the real estate and auto sectors, has led to a significant decline in classified advertising." Bankruptcy filings by these Pennsylvania-based publishers are the latest sign the persistent decline in advertising may push newspapers to consider more job cuts, shutdowns or restructurings, Bloomberg News said. More newspaper companies are in danger, Fitch Ratings analyst Mike Simonton, said, noting that many publishers are struggling to meet lending covenants and debt payments. "Fitch expects there to be more publishers and lenders that will face this decision in 2009 and 2010." More Troubled Publishers Due to the industry-wide woes in the newspaper industry, other companies are struggling to maintain liquidity. New York Times Co., McClatchy Co. and Media General Inc., Bloomberg pointed out, halted payment of their quarterly dividend this year in response to dwindling ad sales. Lee Enterprises Incorporated (NYSE: LEE), American Media, Inc., The New York Times, and McClatchy Co. (MNI.N) and other publishers have written down billions of dollars in the past several years. In fiscal 2008, Lee Enterprises recorded after-tax non-cash charges totaling $893.7 million to reduce the carrying value of goodwill, other assets and the company's investment in TNI Partners. American Media Operations, Inc., operating subsidiary of American Media Inc., leading publisher of celebrity journalism and health and fitness magazines in the U.S., on February 1 completed a restructuring of approximately $570 million of its outstanding senior subordinated notes. The restructuring, which gave 95% of the company to bondholders and reduced debt by $227.2 million, saved the defaulting under its debts. GateHouse Media, Inc., which has 92 daily newspapers with total paid circulation of approximately 834,000, announced Jan. 28 that it is seeking to amend its $1.2 billion senior secured credit facility. * Billion Dollar Filers in February Now Total Five -------------------------------------------------- Three more companies that have assets exceeding $1 billion -- Trump Entertainment Resorts, Inc., BearingPoint Inc. and Qimonda Richmond -- have filed for bankruptcy in February, raising the total to nine this year. PETITION (In Millions) COMPANY DATE ASSETS DEBTS ------- -------- ------ ----- Lyondell Chemical Co. 1/06/09 $27,177 $27,345 Tronox 1/12/09 $1,614 $1,237 Nortel Networks 1/14/09 $11,609 $11,793 Smurfit-Stone Container Corp. 1/26/09 $7,450 $5,582 Spectrum Brands Inc. 2/03/09 $2,247 $3,275 Aleris International, Inc. 2/12/09 $4,168 $3,978 Trump Entertainment Resorts 2/17/09 $2,056 $1,738 BearingPoint Inc. 2/18/09 $1,763 $2,232 Qimonda Richmond LLC 2/20/09 >$1,000 >$1,000 Qimonda Richmond LLC, a unit of Munich, Germany-based Qimonda AG, one of the largest suppliers of semiconductor memory products, filed for bankruptcy after the prices of its key products fell precipitously, driven, by, among other things, seasonal demand weakness, and the effects of an earlier build-up of inventories. Trump Entertainment Resorts Inc., which owns three casinos, filed for bankruptcy due to a decline in gambling revenues in the Atlantic City that required it to miss interest payments to noteholders. BearingPoint, a former consulting arm of KPMG LLP, and one of the world's largest providers of management and technology consulting services, filed for Chapter 11 as its cash resources were not sufficient to meet its debt obligations. BearingPoint had significant debt load after embarking on a massive global expansion since its spin-off from KPMG. There have been 33 public companies file bankruptcy under either Chapter 11 or Chapter 7 so far this year, compared with 14 during the same period in 2008 and 11 over a comparable time in 2007, Bloomberg's Bill Rochelle said, citing BankruptcyData.com. According to Mr. Rochelle, the public companies in bankruptcy so far this year listed assets totaling $65.7 billion, compared with $9 billion in 2008's period and $692 million in 2007. So far this year there were five companies filing in Chapter 11 for a second time. Bankruptcy Creditors' Service, Inc., recorded 16 billion-dollar cases in 2008, led by Lehman Brothers Holdings Inc., which had 639-billion in assets and 613-billion in debts. Bankruptcy Attorneys Various reports have pointed out that the hourly fees of some of the top bankruptcy lawyers in the U.S. have broken through the $1,000-per-hour barrier, as the current recession have increased bankruptcy filings and demand for bankruptcy lawyers. The attorneys hired by the largest bankruptcy filers for 2009 are: COMPANY Counsel Hourly Rates ------- ------- ------------ Lyondell Chemical Cadwalader, Wickersham & Taft LLP (Lead Counsel) Partners $650 to $1,050 Counsel $335 to $930 Legal Assistants $170 to $385 Tronox Inc. Kirkland & Ellis LLP (Counsel) Partners $550 to $1,110 Associates $320 to $705 Nortel Networks Cleary Gottlieb Steen & Hamilton LLP (Lead Counsel) Partners $725 to $980 Associates $375 to $670 Morris, Nichols, Arsht & Tunnell LLP (Delaware counsel) Partners $525 to $725 Associates $265 to $415 Smurfit-Stone Sidley Austin LLP $90 to $925 Container Corp. (Lead counsel) Spectrum Brands Skadden Arps Slate Meagher & Flom LLP (Lead Counsel) Partners $730 to $1,050 Associates $360 to $680 Vinson & Elkins LLP (Co-Counsel) Senior Partner $850 Aleris Int'l Weil Gotshal & Manges LLP (Lead Counsel) Members and Counsel $650 to $950 Associates $355 to $640 Richards, Layton & Finger (Local Counsel) Director $475 Associates $230 to $275 Trump Ent. McCarter & English LLP (Bankruptcy Counsel) Partners $375 to $680 Associates $205 to $395 Weil Gotshal (Co-Counsel) Partners $650 to $950 Counsel $650 to $950 Associates $355 to $640 BearingPoint Weil Gotshal & Manges LLP (Counsel) Partners $650 to $950 Counsel $650 to $950 Associates $355 to $640 Davis Polk & Wardell N/A (Special Counsel) Qimonda Richmond Simpson Thacher & Bartlett LLP (Counsel) Partners $785 to $1,000 Senior Counsel $765 Counsel $740 Associates $385 to $690 Richards, Layton & Finger P.A. (Co-Counsel) Select Attorneys $175 to $610 Simpson Thacher said that its hourly rates were effective as of Sept. 1, 2008, and noted that "these hourly rates are subject to periodic adjustments to reflect economic and other conditions and are consistent with the rates charged elsewhere." Weil Gotshal, which is lead counsel to Lehman Brothers Holdings Inc., the largest bankruptcy filer in history, charges $650 to $950 for members and counsel. It already charged those rates when it was engaged by Lehman in September 2008. Tribune Co., the second largest newspaper publisher in the U.S., filed for bankruptcy in December. In its request to hire Sidley Austin as lead counsel, it said that it intends to pay Sidley for its legal services on an hourly basis in accordance with its "ordinary customary rates": Professional Rate per Hour ------------ ------------- Partners $575 - $1,100 Counsel and senior counsel $400 - $875 Associates $240 - $650 Para-professionals $95 - 385 According to Bloomberg News, Judge Kevin Cary in Delaware said at a February 20 hearing that he won't allow Sidley lawyers to charge more than $925. Judge Cary said if anyone wants $1,000 or more, he will demand there be a hearing where the lawyer must produce evidence showing he or she is worth it. Lyondell, et al. -- in their request to retain bankruptcy professionals under Section 327 and 328 of the Bankruptcy Code -- indicated that the rates charged by their attorneys are reasonable. Pursuant to Section 328(a) of the Bankruptcy Code, debtors may, pursuant to Section 327, hire counsel on any "reasonable" terms and conditions. The provision goes on to provide, "Notwithstanding such terms and conditions, the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions." While a final order under Sec. 327 approves the retention of the professional, an order under Sec. 330 is necessary to approve compensation. Collier on Bankruptcy at par. 330.04[3][c][i] indicates that the bankruptcy court's determination of appropriate hourly billing rates is done when reviewing fee applications. According to Section 330(a)(3), in determining the amount of reasonable compensation to be awarded to a professional person, the court will consider the nature, the extent, and the value of the services, taking into account all relevant factors, including, but not limited to, the rates charged for such services; whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of the Chapter 11 case; and whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title. The compensation procedures presented to debtors to the Court, generally provide that: -- After each month for which compensation is sought, each professional is required to serve a monthly statement to the debtors, their counsel, the statutory committee's counsel, and the U.S. Trustee, a monthly statement containing a list of individuals who provided services during the statement period, their billing rates, and the aggregate hours spent per individual. The monthly statements need not be filed with the court. -- Every 120 days, but no more than 150 days, each professional will serve and file with the court an application for interim or final Court approval pursuant to Sections 330 and 331. Weil Gotshal, in its first monthly statement filed in December for services rendered to Washington Mutual Inc., which filed for bankruptcy in September, did not receive objections to its monthly statement, which charged hourly rates of up to $950. Lawyers to Chapter 11 filers for 2009, and those who are charging $1,000 an hour, have not yet filed their fee applications with the court. For Lehman, for example, professionals are required to file their first interim fee applications by March 15, 2009, covering the period from the bankruptcy filing to January 31, 2009. * Firms Expand Bankruptcy Practice As Demand Rises -------------------------------------------------- Bankruptcy and restructuring specialists find themselves amidst an increase in business, as the global economy sours and credit markets remain frozen, The New York Times reports. Moreover, the news source states that with tight credit markets making bankruptcy refinancing or loans expensive, more troubled companies will be seeking legal solutions to their problems. As a result, a majority of law firms across the U.S. have endeavored to establish bankruptcy and restructuring departments in their operations -- and firms that already have this division continuously seek ways of enhancing their services in this particular field. According to Marites Ho of the Troubled Company Prospector, for the past three months, there have been increasing numbers of bankruptcy specialists who have made moves from one law firm to another, including: (1) New York based law firm Hahn & Hessen LLP disclosed that Christopher Andrew Jarvinen has been made a partner in the Firm, effective February 1, 2009. Mr. Jarvinen's practice focuses on bankruptcy, reorganization and creditors' rights. For the past nine years, he has represented debtors, official and unofficial committees and creditors in complex Chapter 11 restructurings and non-bankruptcy workouts. Mr. Jarvinen possesses particular expertise with cross-border insolvency matters as well as Chapter 15. Prior to joining Hahn & Hessen, Mr. Jarvinen practiced as an associate in the bankruptcy and restructuring groups of the former Kronish Lieb Weiner & Hellman LLP, and later with Paul, Weiss, Rifkind, Wharton & Garrison LLP. (2) The global law firm of Thompson & Knight LLP has expanded its Corporate Reorganization and Creditors' Rights Practice Group with the addition of Lois R. Lupica and Millie Aponte Sall as Counsel, and Matthew R. Reed as an Associate. These additions strengthen Thompson & Knight's thriving and rapidly expanding Corporate Reorganization and Creditors' Rights Practice Group. Ms. Lupica brings to the Firm more than 20 years of experience in bankruptcy law matters. She is a frequent speaker and writer on corporate reorganization and creditors' rights, and is on the Advisory Board for the American Bankruptcy Institute Law Review. Ms. Sall has approximately 20 years of legal experience and focuses her practice on corporate reorganization and creditors' rights, corporate crisis management, and restructuring. Her practice includes national and regional representation of Chapter 11 corporations in the oil and gas, manufacturing, retail, food and beverage, construction, and hotel industries. She has represented secured lenders, purchasers of estate assets, claims traders, unsecured creditors, shareholders, and non-debtor entities in Chapter 7 and 11 proceedings. Prior to joining the Firm, Ms. Sall maintained a private practice in Houston, where she provided legal and business strategic solutions to companies seeking claims management, business restructuring, and asset recovery alternatives. Ms. Sall started her legal career at Sheinfeld, Maley and Kay, P.C. where she was a shareholder. Mr. Reed is re-joining Thompson & Knight's Corporate Reorganization and Creditors' Rights Practice Group and focuses his practice on corporate reorganization and creditors' rights, bankruptcy litigation, and general litigation. He has represented debtors, creditors, trustees, and committees in Chapter 7 and 11 bankruptcy cases in a broad range of contested matters and adversary proceedings. Mr. Reed is resident in the Firm's Houston office. (3) The international law firm of Dorsey & Whitney LLP stated that it has added five new partners in its Salt Lake City office practicing in the areas of bankruptcy, workouts and restructurings and commercial litigation. The new partners are Annette W. Jarvis, Steven T. Waterman, Steven C. Strong, Peggy Hunt, and Cameron M. Hancock, all of whom had previously been shareholders with the firm of Ray Quinney & Nebeker in Salt Lake City. Prior to that, Ms. Jarvis was a partner and Ms. Hunt and Mr. Strong were associates in the bankruptcy practice at LeBoeuf, Lamb, Greene & MacRae, LLP (now Dewey & LeBoeuf, LLP). Their practice includes advising debtors and creditors on bankruptcy and debt restructuring matters and offering creative solutions to complex financing and reorganization issues. In addition, the group has extensive experience with insolvency- related litigation and appeals. They also have represented debtors and creditors, bankruptcy trustees, and receivers under both Federal and State laws; indenture trustees and insurance company liquidators under State laws; and stock brokerage trustees under the Securities Investor Protection Act. The group brings strong litigation skills and experience in trying cases in State and Federal courts. (4) Baltimore-based law firm Rosenberg, Martin, Greenberg, LLP disclosed the addition of partners Louis J. Ebert and William L. Hallam and associate Bob Van Galoubandi to the firm, the citybizlist reports. The three attorneys will expand RMG's commercial practice and provide clients with greater breadth and depth in bankruptcy and creditors' rights matters, the news source elaborates. Mr. Ebert joins the firm with more than 30 years' experience representing creditors in bankruptcy, commercial litigation, foreclosure and workout matters, citybizlist states. He also represents secured lenders in bankruptcy proceedings. Mr. Ebert also represents lenders in commercial loan restructures, commercial litigation, foreclosure proceedings and secured creditor sales, the report discloses. Additionally, he has represented financial services institutions in a number of lender liability and fraudulent conveyance actions, the news source relates. Mr. Hallam represents creditors in bankruptcies and workouts of troubled commercial loan, lease, and other transactions, according to the report. He has represented many financial services institutions in complex Chapter 11 reorganizations throughout the United States. He regularly represents landlords in commercial lease disputes and defends suits brought by trustees, debtors-in- possession, and liquidating agents to recover preferential transfers and fraudulent conveyances in bankruptcy cases, as well as purchasers of businesses sold through the bankruptcy process, citybizlist notes. Mr. Galoubandi represents secured and unsecured lenders, financial institutions, landlords and trade creditors in all aspects of commercial litigation and collections, the report states. His practice also includes business litigation, including construction and mechanics lien litigation, contract disputes and partnership and real property disputes, citybizlist relates. (5) Proskauer Rose LLP, a global law firm with 800 lawyers worldwide, said that it is expanding its Chicago office and Bankruptcy & Restructuring Practice Group with the addition of partners Jeff J. Marwil, Mark K. Thomas and Paul V. Possinger. Formerly partners in Winston & Strawn's Restructuring and Insolvency Group, which Mr. Marwil co-chaired, they comprise one of the country's leading bankruptcy and workout teams. Mr. Marwil brings over 20 years of experience in the bankruptcy, workout and corporate restructuring areas. He currently serves as sole managing member of the Bayou Group in its Chapter 11 cases. He also represents hedge funds, managers/advisers and sophisticated fund-of-fund and pension plan investors in hedge fund restructurings, wind-downs and complex litigation matters. Mr. Thomas represents lenders, debtors and borrowers in Chapter 11 bankruptcy cases and out-of-court workouts and restructurings. He has handled workouts and bankruptcies involving both public and private companies and represents secured lenders and syndicated loan agents in workouts, restructurings and bankruptcies as well as assisting bank groups in providing debtor-in-possession financing facilities and bankruptcy exit financing. Mr. Possinger's practice focuses on corporate reorganizations, creditors' rights and bankruptcy matters. He primarily represents financially troubled entities and senior, second-lien and mezzanine lenders in and out of bankruptcy in debt restructuring and reorganization, workouts, asset and going concern sales and litigation. (6) Smith Gambrell & Russell LLP added two partners to its New York office, BusinessWeek reports. Heidi Sorvino, former co-chair of Katten, Muchin & Rosenman LLP's New York bankruptcy and creditors' rights practice, will head SGR's New York bankruptcy practice, according to the report. Mark Neville Jr., formerly of DLA Piper, will join the firm's customs and international trade practice, BusinessWeek relates. (7) Jeffrey Schlerf and Eric Sutty joined Fox Rothschild LLP's financial restructuring and bankruptcy practice, resident in Wilmington, Del., the Deal Magazine discloses. Mr. Schlerf was chairman of Bayard LLP, which he joined in 1995, becoming a director in 1999, the report states. Mr. Sutty was an associate at Bayard, The Deal Magazine relates. (8) In New York, Kelley Drye & Warren LLP hired Benjamin Feder as special counsel in the bankruptcy and restructuring practice group, The Deal Magazine states. Mr. Feder was a partner at Thompson Hine LLP, the news source elaborates. * Three Large Companies Emerged, Issue New Stock in February ------------------------------------------------------------ From Jan. 15, 2009 to February 15, 2009, two companies emerged from bankruptcy and issued new common stock as part of their plans of reorganization -- Sea Containers, Ltd., PRB Energy, and Interstate Bakeries corp. SeaCon's Reorganization Plan was declared effective February 11, 2009. The Plan contemplates the transfer of SeaCon's interests to a new entity named, SeaCo, Ltd. The Plan also contemplates the issuance of a Newco Repatriation Note to Newco and resolution of the outstanding claims against and interests in the Debtors. The major shareholders in the new company will be the former Sea Containers Ltd bondholders and two of the group's UK pension funds. SeaCo Ltd. owns a 50% share in the maritime leasing company GE SeaCo with the other 50% owned by GE Capital, and a container fleet of about 105,000 TEU, which is managed for SeaCo Ltd by GE SeaCo. SeaCo Ltd. has raised a $127 million five year exit financing facility via a senior secured term loan from Fortis Bank Nederland and DVB Bank. The proceeds, less retained working capital of $5 million and financing costs of $5 million, have been used to repay the DIP loan provided to Sea Containers Ltd. by Mariner and Dune, two of its former bondholders. The $24 million balance of the DIP loan of $141 million was repaid from SCL's own cash resources. SeaCo Ltd paid total consideration of $462.3 million for the container assets of SCL including cash of $77.7 million and equity of $384.6 million. In addition, SeaCo Ltd has advanced $40 million to SCL as a senior, secured loan, to be repaid in due course from cash generated from the wind down and liquidation of the Sea Containers group. PRB Energy had its Second Amended Joint Plan of Reorganization confirmed on January 16, 2009. The Company emerged from bankruptcy on February 2. The Plan intends to cancel all 8,721,994 shares of PRB Energy's currently outstanding common stock and provides for the issuance of 15.0 million shares of new PRB Energy common stock (new equity). The new equity will be issued to: * West Coast Opportunity Fund with 13.5 million shares, * unsecured creditors with 1.425MM shares, and * unsecured creditors against PRB Oil & Gas, Inc. with 75,000 shares. Holders of the PRB Energy new equity will have preemptive rights on any additional offerings of new equity by the company until December 30, 2011. Holders of unsecured claims will acquire the 1.5 million shares of new equity at an exercise price of $2.50 per share. The Plan provides for PRB Energy to continue as a public company following its emergence from bankruptcy and also that that WCOF will loan PRB Energy $1.5 million in exit financing to pay certain postpetition claims and administrative fees. The Plan further provides that WCOF will hold a secured claim against PRB Energy in the amount of $16.95 million consisting of pre-confirmation principal, interest, attorney's fees and a prepayment premium relating to debentures held by WCOF. This claim will be secured by a first lien on the assets of PRB Energy and will bear interest at 10% per annum. The maturity date for the first $3.75 million is December 31, 2009 with the remainder due on December 31, 2010. PRB Energy's new board of directors will consist of Gus Blass, William Hayworth and Atticus Lowe. Following the effective date of the Plan, PRB Energy will change its corporate name to Black Raven Energy. Interstate Bakeries Corp. emerged from Bankruptcy February 3. Reorganized IBC has issued 8,840,000 shares of the New Common Stock with (i) 4,420,000 shares of New Common Stock to be issued to Equity Investors for $44,200,000 in cash, and (ii) 4,420,000 shares of New Common Stock to be issued to the Term Loan Facility lenders on pro rata in accordance with the relative amounts of their loans funded under the Term Loan Facility. Silver Point Finance, LLC and Monarch Master Funding, Ltd. financed the $344 million term loan credit facility for IBC. IBC Investors I, LLC, an affiliate of Ripplewood Holdings L.L.C., committed to invest $130 million of equity in reorganized IBC. * Unemployment Benefits Make Another Record ------------------------------------------- Americans receiving unemployment benefits increased to 4.99 million for the week ended Feb. 7, making a record for a fourth time in a row, Bill Rochelle of Bloomberg News reported. According to the Department of Labor, the advance seasonally adjusted insured unemployment rate was 3.7 percent for the week ending Feb. 7, an increase of 0.1 percentage point from the prior week's unrevised rate of 3.6 percent. The advance number for seasonally adjusted insured unemployment during the week ending Feb. 7 was 4,987,000, an increase of 170,000 from the preceding week's revised level of 4,817,000. The 4-week moving average was 4,839,500, an increase of 92,500 from the preceding week's revised average of 4,747,000. The advance unadjusted insured unemployment rate was 4.5 percent during the week ending Feb. 7, an increase of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,959,930, an increase of 10,719 from the preceding week. A year earlier, the rate was 2.5 percent and the volume was 3,315,409. In the week ending Feb. 14, the advance figure for seasonally adjusted initial claims was 627,000, unchanged from the previous week's revised figure of 627,000. The 4-week moving average was 619,000, an increase of 10,500 from the previous week's revised average of 608,500. The advance number of actual initial claims under state programs, unadjusted, totaled 615,232 in the week ending Feb. 14, a decrease of 94,921 from the previous week. There were 325,754 initial claims in the comparable week in 2008. States reported 1,551,146 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Jan. 31, an increase of 61,727 from the prior week. The highest insured unemployment rates in the week ending Jan. 31 were in Michigan (8.1 percent), Idaho (7.0), Oregon (7.0), Pennsylvania (6.4), Wisconsin (6.3), Nevada (5.9), Alaska (5.8), Montana (5.6), Rhode Island (5.6), and Indiana (5.5). The largest increases in initial claims for the week ending Feb. 7 were in Kentucky (+8,419), Arkansas (+4,142), Illinois (+3,630), Texas (+3,392), and Missouri (+3,217), while the largest decreases were in California (-5,249), Tennessee (-1,718), Iowa (-1,413), Connecticut (-1,267), and South Carolina (-1,059). * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- ABSOLUTE SOFTWRE ABT CN 107 (7) 24 AMR CORP AMR US 25,175 (2,935) (3,439) APP PHARMACEUTIC APPX US 1,105 (42) 260 ARBITRON INC ARB US 200 (14) (39) ARRAY BIOPHARMA ARRY US 136 (27) 54 BARE ESCENTUALS BARE US 272 (25) 125 BLOUNT INTL BLT US 485 (20) 119 BOEING CO BAB BB 53,779 (1,294) (4,961) BOEING CO BA US 53,779 (1,294) (4,961) BOEING CO-CED BA AR 53,779 (1,294) (4,961) CABLEVISION SYS CVC US 9,717 (4,966) (1,583) CENTENNIAL COMM CYCL US 1,432 (1,021) 101 CHENIERE ENERGY LNG US 3,049 (266) 423 CHENIERE ENERGY CQP US 2,021 (312) 179 CHOICE HOTELS CHH US 328 (138) (15) CLOROX CO CLX US 4,398 (403) (389) COCA-COLA ENTER CCE US 15,589 (31) (491) CROWN HOLDINGS I CCK US 6,749 (317) 385 CV THERAPEUTICS CVTX US 364 (222) 246 DELTEK INC PROJ US 193 (54) 35 DEXCOM DXCM US 43 (27) 22 DISH NETWORK-A DISH US 7,177 (2,129) (1,318) DOMINO'S PIZZA DPZ US 441 (1,437) 84 DUN & BRADSTREET DNB US 1,642 (554) (206) EMBARQ CORP EQ US 8,371 (608) (6) ENERGY SAV INCOM SIF-U CN 552 (423) (162) EXELIXIS INC EXEL US 255 (23) (1) EXTENDICARE REAL EXE-U CN 1,806 (30) 95 FERRELLGAS-LP FGP US 1,510 (12) (114) GARTNER INC IT US 1,115 (15) (253) HEALTHSOUTH CORP HLS US 1,980 (874) (218) IMAX CORP IMX CN 238 (91) 41 IMAX CORP IMAX US 238 (91) 41 INDEVUS PHARMACE IDEV US 256 (136) 8 INTERMUNE INC ITMN US 206 (92) 134 ION MEDIA NETWOR IION US 1,137 (1,621) 96 KNOLOGY INC KNOL US 643 (56) 26 LINEAR TECH CORP LLTC US 1,494 (310) 992 MEAD JOHNSON-A MJN US 1,372 (1,346) (1,870) MEDIACOM COMM-A MCCC US 3,688 (279) (311) MOODY'S CORP MCO US 1,772 (996) (576) NATIONAL CINEMED NCMI US 569 (476) 86 NAVISTAR INTL NAV US 10,390 (1,495) 1,660 NPS PHARM INC NPSP US 202 (208) 90 OCH-ZIFF CAPIT-A OZM US 2,224 (173) N.A. OSIRIS THERAPEUT OSIR US 29 (8) (14) OVERSTOCK.COM OSTK US 172 (3) 40 PALM INC PALM US 661 (151) (40) QWEST COMMUNICAT Q US 20,182 (1,449) (883) REGAL ENTERTAI-A RGC US 2,557 (224) (112) RENAISSANCE LEA RLRN US 57 (5) (15) ROTHMANS INC ROC CN 545 (213) 102 SALLY BEAUTY HOL SBH US 1,489 (720) 365 SONIC CORP SONC US 818 (55) (9) SUCCESSFACTORS I SFSF US 170 (5) 3 SUN COMMUNITIES SUI US 1,222 (28) N.A. SYNTA PHARMACEUT SNTA US 91 (35) 58 TAUBMAN CENTERS TCO US 3,072 (161) N.A. TEAL EXPLORATION TEL SJ 50 (72) (105) THERAVANCE THRX US 236 (135) 190 UAL CORP UAUA US 20,731 (1,282) (1,583) US AIRWAYS GROUP LCC US 7,214 (505) (626) UST INC UST US 1,402 (326) 237 WEIGHT WATCHERS WTW US 1,110 (901) (270) WESTERN UNION WU US 5,578 (8) 528 WR GRACE & CO GRA US 3,876 (354) 965 YUM! BRANDS INC YUM US 6,506 (112) (778) ********* 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 ***