/raid1/www/Hosts/bankrupt/TCR_Public/090303.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, March 3, 2009, Vol. 13, No. 61
Headlines
7240 SHAWNEE: Case Summary & 20 Largest Unsecured Creditors
AIR 2 US: Fitch Downgrades Ratings on Series C Notes to 'C/DR6'
ALERIS INT'L: TPG Aims to Keep Control by Joining DIP Lenders
ALERIS INT'L: Gets Green-light to Hire Kurtzman as Claims Agent
ALERIS INT'L: Seeks to Hire Fried Frank as Special Counsel
ALERIS INT'L: Seeks to Hire Moelis & Co. as Financial Advisors
ALLBRITTON COMMUNICATIONS: S&P Cuts Corp. Credit Rating to 'B-'
AMERICAN ACHIEVEMENT: S&P Downgrades Corp. Credit Rating to 'SD'
AMERICAN INT'L: Former CEO Sues Firm for Alleged Securities Fraud
AMERICAN INT'L: Posts $61.7 Billion Fourth Quarter 2008 Net Loss
AMERICAN MEDICAL: S&P Changes Outlook to Stable; Affirms Ratings
AMKOR TECHNOLOGY: Moody's Affirms Corporate Family Rating to 'B2'
ARMSTRONG ATLANTIC UNIV.: Moody's Keeps Ratings on Various Bonds
ARMSTRONG WORLD: Lower Earnings Guidance Won't Affect BB Ratings
ASAT HOLDINGS: Pens Forbearance Pacts with Noteholders & Lenders
ATHEROGENICS INC: Files Disclosure Statement Explaining Plan
AVENTINE ETHANOL: S&P Junks Corporate Credit Rating
BANK OF AMERICA: Pimco Hired to Advise on $118-Bil. Collateral
BAYBERRY FUNDING: Fitch Downgrades Ratings on Two Classes to 'C'
BCE INC: Fitch Upgrades Issuer Default Rating from 'BB-'
BELL MICROPRODUCTS: Amends Term Loans to Cure Potential Breach
BELL RETAIL: Case Summary & Largest Unsecured Creditors
BERNARD L. MADOFF: UBS AG Wins Ruling in Luxembourg Lawsuit
BILLION COUPONS: SEC Files Fraud Suit; Court Freezes Assets
BIOHEART INC: Receives Notice of Delisting From NASDAQ
BOMBARDIER RECREATIONAL: S&P Cuts Corporate Credit Rating to 'B-'
BYRAM RENTALS: Voluntary Chapter 11 Case Summary
CALPINE CORP: Posts $146 Million Net Loss in Fourth Quarter 2008
CARAUSTAR INDUSTRIES: Has $7.9MM Deficit, Going Concern Doubt
CARDTRONICS INC: Moody's Believes Cash Adequate for Near Term
CARITAS HEALTHCARE: Closes St. John's & Mary Immaculate Hospitals
CERTIFICHECKS INC: Will File for Chapter 7 Bankruptcy
CHALLENGER ENERGY: Obtains Court Order for CCAA Protection
CIRCUIT CITY: Bell Canada to Buy InterTan; Mum on Purchase Price
CITIGROUP INC: Fitch Cuts Rating to 'E' on Balance Sheet Stress
CITIGROUP INC: Moody's Junks Preferred Debt Ratings from 'Baa3'
CLAIRE'S STORES: Expects Q4 Net Sales to Drop 12.2%
COINMACH SERVICE: High Leverage Cues Moody's Junk Rating from B2
CUSTOM CONTRACTORS: U.S. Trustee Wants Case Converted to Chapter 7
DAMON DORSEY: Files for Chapter 7 Bankruptcy
DAVID H. HURSEY: Files for Chapter 7 Bankruptcy
DELIDDO AND ASSOCIATES: Voluntary Chapter 11 Case Summary
DELPHI CORP: Judge Drain Keeps Open Mind on Retiree Benefits
DELTA PETROLEUM: Deals Non-Compliance Raises Going Concern Doubt
DELTA PETROLEUM: Neal A. Stanley Resigns as Member of the Board
DELTA PETROLEUM: To Commence Rights Offering to Raise $175 Million
DENNY'S CORP: Dec. 31 Balance Sheet Upside-Down by $174 Million
DORNIER AVIATION: Court Okays Final Settlement With Hainan
DTE ENERGY: Moody's Cuts Bonds to 'Ba1' Due to Chrysler Ties
DYNEGY HOLDINGS: Moody's Reviews 'B1' on Downward 2009 Guidance
ELLIPSO INC.: Case Summary & Largest Unsecured Creditors
EVERYTHING BUT WATER: Files for Chapter 11 to Sell Business
FERMIN ANIEL: Case Summary & 20 Largest Unsecured Creditors
FLINTKOTE COMPANY: Plan Filing Period Extended to April 30
FOAMEX INT'L: U.S. Trustee Appoints 3 Members to Creditors Panel
FOAMEX INT'L: May Name Matlin Patterson as Lead Bidder for Assets
FOAMEX INT'L: Seeks to Adopt Incentive Plan for Senior Managers
FOOTHILLS RESOURCES: Final Hearing for $2.5-Mil. Loans Today
FREDDIE MAC: David Moffett Resigns as Chief Executive Officer
FREESCALE SEMICONDUCTOR: Receives Commitment for $2.95BB Debt Swap
FREMONT GENERAL: Court Extends Plan Filing Period to March 13
GENERAL MOTORS: Parties Favor, Reject Chapter 11 Filing
GENERAL MOTORS: To Pay Saab Automobile Bills to Suppliers
GENERAL MOTORS: Saab Works With Deutsche Bank, Seeks Buyers
GMAC LLC: Earns $1.8BB in Fiscal 2008, Continues ResCap Support
GOLDEN NUGGET: Weak Performance Prompts Moody's Junk Corp. Rating
GRAND SOLEIL: Faces Chapter 7 Bankruptcy Petition by Charles Cato
GWLS HOLDINGS: March 30 Bar Date Set for Filing Proofs of Claim
GWLS HOLDINGS: Wants Plan Filing Period Extended to May 22
HALLWOOD ENERGY: Files Petition for Bankruptcy in Dallas, Texas
HALLWOOD ENERGY: Case Summary & 20 Largest Unsecured Creditors
HANOVER CAPITAL: Has Until June 30 to Cure NYSE Non-Compliance
HARRAH'S ENTERTAINMENT: Plans Debt Exchange Offer to Cut Debt
HAWAIIAN TELCOM: Seeks June 29 Extension of Lease Decision Period
HAWAIIAN TELCOM: Seeks to Employ Deloitte as Outside Auditors
HAWAIIAN TELCOM: Panel Gets Court OK to Hire Morrison as Counsel
HAWAIIAN TELCOM: Panel Gets Court OK to Hire Moseley as Counsel
HAWAIIAN TELCOM: Panel Seeks to Hire FTI as Financial Advisors
HEALTH INSURANCE: S&P Downgrades Counterparty Rating to 'BB+'
HEALTHSOUTH CORP: Dec. 31 Balance Sheet Upside-Down by $1.16BB
HIGHLAND DEVELOPMENT: Voluntary Chapter 11 Case Summary
HSBC FINANCE: Halts Consumer Lending Unit; 5,400 Jobs Affected
HSBC HOLDINGS: U.S. Unit Loses $15BB; To Shutter HFC, Beneficial
HUNTLEY HOILET: Case Summary & 20 Largest Unsecured Creditors
HUTTON AND ROWE: Case Summary & Largest Unsecured Creditors
ILX RESORTS: Files for Chapter 11 Reorganization in Phoenix
ILX RESORTS: Voluntary Chapter 11 Case Summary
INDEPENDENCIA SA: Voluntary Chapter 15 Case Summary
INTERFACE INC: S&P Changes Outlook to Negative; Holds 'B+' Rating
INTERPUBLIC GROUP: 12.4% EBITDA Margin, Fitch May Raise Rating
ISTAR FINANCIAL: Moody's Cuts Senior Unsecured Rating to 'B2'
IVIVI TECHNOLOGIES: Receives Nasdaq Deficiency Notice
JEANNE WOLFSON: Case Summary & 12 Largest Unsecured Creditors
JEFFERY VOGT: Case Summary & 11 Largest Unsecured Creditors
JUPITER NETWORKS: S&P Withdraws 'BB' Corporate Credit Rating
KIMBALL HILL: Parties Object to Confirmation of Liquidation Plan
KIMBALL HILL: To Sell South Peoria Property for $6.4 Million
KLJ FIELD: Goes Bankrupt Due to Recession; 90 Workers Laid Off
LAKE OF THE OZARKS: Fitch Cuts Rating on $40.1MM Bonds to 'BB+'
LANDAMERICA FINANCIAL: Wins Court Nod to Sell FNF Shares
LEGACY ROCK: Case Summary & Largest Unsecured Creditors
LEHMAN BROTHERS: Nomura Sues to Recover EUR58M Paid by Mistake
LEV M. MARYAKHIN: Case Summary & Largest Unsecured Creditors
LIMITED BRANDS: Fitch Downgrades Unsecured Notes Rating to 'BB'
LIMITED BRANDS: Moody's Downgrades Rating on Senior Notes to Ba2
LIMITED BRANDS: S&P Downgrades Corporate Credit Rating to 'BB'
LYNCH ICHIDA: Files for Chapter 11 Protection; Lawyers Leave Co.
LYONDELL CHEMICAL: Value Tops Secured Debt by 19%
MERCURY COMPANIES: Panel Can Employ Baker Hostetler as Counsel
MERCURY COMPANIES: Seeks Second Extension of Exclusive Periods
MGM MIRAGE: Difficulty in Liquidity Cues Moody's Junk Rating
MGM MIRAGE: Fitch Junks Issuer Default Rating from 'B'
MGM MIRAGE: S&P Downgrades Corporate Credit Rating to 'B-'
MICHAEL STERN: Case Summary & 12 Largest Unsecured Creditors
MIDWAY GAMES: Wants to Hire Blank Rome as Bankruptcy Counsel
MIDWAY GAMES: Taps Dewey as Special Counsel to the Board
MIDWAY GAMES: Wants to Hire Lazard Freres as Investment Banker
MIGUEL S. RUIZ: Voluntary Chapter 11 Case Summary
MINISINK ESTATES: Case Summary & Largest Unsecured Creditors
MIRANT CORP: Posts $1.2 Billion in Net Income for Year 2008
NATIONAL WHOLESALE: Delaware Court Converts Case to Chapter 7
NEXTMEDIA OPERATING: Moody's Junks Corporate Rating from 'B3'
NORTEL NETWORKS: Seeks to Pay $45-Mil. In Incentives
NORTEL NETWORKS: Wins Court Nod to Auction Data-Switch Business
NORTEL NETWORKS: Law Debenture Appointed to Creditors Panel
NORTEL NETWORKS: Seeks to Hire Jackson Lewis as ERISA Counsel
NORTEL NETWORKS: Seeks to Hire Crowell as Special Counsel
NORTEL NETWORKS: Seeks to Hire Shearman as Litigation Counsel
NORTH HILLS MANAGEMENT: Faces Fraud Lawsuit; Court Freezes Assets
NEWARK GROUP: S&P Downgrades Corporate Credit Rating to 'CCC'
P&M TRANSIT: Voluntary Chapter 11 Case Summary
PACIFIC ETHANOL: Lenders Extend Forbearance Until Month's End
PANOLAM INDUSTRIES: S&P Junks Corporate Credit Rating From 'B-'
PEREGRINE SYSTEMS: Ex-Sales Executive Directed to Repay $11.2MM
POOLED COLLEGE: Moody's Withdraws 'Ba1' Rating on 1998A Bonds
PREMIER AGGREGATES: Involuntary Voluntary Chapter 11 Case Summary
QIMONDA RICHMOND: Laid-Off Workers Won't be Paid Final Paychecks
QUEBECOR WORLD: Opens New Co-Mail Facility in New Jersey
QUEBECOR WORLD: Sets Series 5 Preferred Shares Conversion Rate
REALOGY CORP: $150 Mil. Investment Won't Affect Moody's Ratings
REGAL ENTERTAINMENT: S&P Downgrades Corp. Credit Rating to 'B+'
RENAISSANCE ASSET: Ordered to Pay $21.2M for Ponzi Scheme
RESIDENTIAL CAPITAL: Posts $5.6BB Net Loss in Year ended Dec. 31
REVE SPC: Moody's Junks Ratings on 2007-33 Notes from 'B3'
ROBERT KLINE: Case Summary & 20 Largest Unsecured Creditors
SCRANTON-LACKAWANNA HEALTH: S&P Gives Stable Outlook on B- Rating
SITHE/INDEPENDENCE FUNDING: Moody's Reviews 'Ba2' Bond Rating
SIX FLAGS: Fitch Downgrades Issuer Default Rating to 'CC'
SLM CORP: Change in FFELP Program Cues Moody's Rating Reviews
SOMERSET 2002: Case Summary & Largest Unsecured Creditor
SOTHEBY COMPANY: Decline in Earnings Won't Affect Moody's Ratings
SPANSION INC: Bankruptcy Filing May Impact Fujitsu
SPORT & WELLNESS: Voluntary Chapter 11 Case Summary
STACEY AKERS: Case Summary & Largest Unsecured Creditors
STANFORD FINANCIAL: CFO James Davis Declines to Testify
STERLING MINING: to File for Bankruptcy Later Today
STERLING MINING: Van Voorhees Named New CEO and Lone Board Member
SUNRISE CONSTRUCTION: Case Summary & Largest Unsecured Creditors
SUNRISE SENIOR LIVING: Bankruptcy Warning; In Talks with Lenders
TAHERA DIAMOND: Canadian Court Extends CCAA Stay Until March 6
TARRAGON CORP: Can Employ BDO Seidman as Financial Advisors
TARRAGON CORP: Files Schedules of Assets and Liabilities
TENNECO INC: S&P Downgrades Corporate Credit Rating to 'B-'
THQ INC: May Go Bankrupt, Says Janco Partners Analyst
TOMAR ELECTRONIS: Wants Traffic Case Stayed to Avoid Bankruptcy
TOWN OF HAVERSTRAW: Moody's Assigns 'MIG 01' on $26.5 Mil. Bonds
TOWN SPORTS: S&P Downgrades Corporate Credit Rating to 'B'
TOUSA INC: Court Sends Parties to Transeastern Suit to Mediation
TRADEWINDS OF BAY: Case Summary & Three Largest Unsec. Creditors
TRIGON GROUP: CFTC Charges Founder for $40-Mil. Ponzi Scheme
TRONOX INC: Has Until March 30 to File Schedules and Statements
TRONOX INC: Seeks to Tap Alvarez & Marsal as Crisis Managers
TRONOX INC: Court to Consider Rothschild Hiring on April 7
TRONOX INC: Creditors Panel Seeks to Hire Jefferies as Advisors
TTF HELICOPTERS: Files For Bankruptcy Amid Drop in Tourism
TTF HELICOPTERS: Case Summary & 20 Largest Unsecured Creditors
TXCO RESOURCES: Violates Covenant Under Bank of Montreal Loan
TYSON FOODS: Upsizing of Sr. Notes Won't Affect S&P's BB Ratings
VEYANCE TECHNOLOGIES: Moody's Cuts Corporate Family Rating to B3
VITESSE SEMICONDUCTOR: Dec 31 Balance Sheet Upside-Down $63.7MM
W.R. AUSTIN: Case Summary & 20 Largest Unsecured Creditors
W.R. GRACE: Wants Libby Knowing Endangerment Claim Dismissed
W.R. GRACE: Government, et al., Object to Disclosure Statement
W.R. GRACE: Seeks to Contribute $8.5 Million to Pension Plan
W.R. GRACE: Trial Judge's 'Victimless' Crime Ruling Is Thrown Out
W.R. GRACE: U.S. ZAI Claimants Seek Final Approval of Settlement
WASHINGTON COUNTY: S&P Gives Stable Outlook; Affirms 'BB+' Rating
WESTGATE CAPITAL: SEC Files Suit For Fraud, Wants Assets Frozen
WESTRIDGE CAPITAL: Faces SEC Investment Fraud Suit; Assets Frozen
WESTRIDGE CAPITAL: Owners Charged by CFTC for $1.3-Bil Scam
WG TRADING: Faces SEC Investment Fraud Suit; Court Freezes Assets
WILTEC INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
WOLVERINE TUBE: Exchange Offer Won't Affect Moody's 'Caa3' Rating
YELLOWSTONE CLUB: Creditors Committee Sues Credit Suisse
* Circuit Court Issues "Handbook" on How to Sue D&Os
* Mortgage Delinquencies Increase, Says Equifax
* Treasury Working on Aid for Auto Suppliers
* Large Companies With Insolvent Balance Sheets
*********
7240 SHAWNEE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: 7240 Shawnee Mission Hospitality, LLC
d/b/a Ramada
7240 Shawnee Mission Parkway
Mission, KS 66202
Bankruptcy Case No.: 09-20418
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
7240 Shawnee Mission Holding, LLC 09-20419
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Kansas (Kansas City)
Debtor's Counsel: Erlene W Krigel, Esq.
Krigel & Krigel
4550 Belleview
Kansas City, MO 64111
Tel: (816) 756-5800
Email: ekrigel@krigelandkrigel.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/ksb09-20418.pdf
The petition was signed by Shazia Memon, member of the Company.
AIR 2 US: Fitch Downgrades Ratings on Series C Notes to 'C/DR6'
---------------------------------------------------------------
Fitch Ratings has taken these rating actions for Air 2 US Enhanced
Equipment Notes:
-- Series A downgraded to 'BB' from 'BBB-';
-- Series B affirmed at 'B-';
-- Series C downgraded to 'C/DR6' from 'CC' ;
-- Series D remain at 'C/DR6'.
The downgrade on the series A EENs represents Fitch's concern
regarding the values and potential lease rates for the leased
aircraft in the transaction in the event either American Airlines,
Inc. or United Air Lines file for bankruptcy. Airbus A300-600R
collateral leased by AMR is particularly concerning as it would be
unlikely to re-lease for a sufficient lease rate, if at all, in
the event of an AMR bankruptcy filing. These aircraft are
currently being retired by AMR and are not viewed as marketable in
the current operating environment. While these leases have
relatively short remaining terms, any reduction in payments
received on the AMR leases could affect the ability of the series
A EENs to withstand further stress. Additionally, while lease
rates similar to the existing rates could likely be achieved for
the more liquid Airbus A320 collateral leased by UAL, the
prospects for replacement leases for these aircraft in the latter
stages of the transaction are uncertain, particularly given the
age of the aircraft and the remaining tenure of the transaction.
Incorporating these factors, the series A EENs were unable to
repay principal in full when subjected to future cash flow
stresses commensurate with a rating of 'BBB-'.
The downgrade and assignment of 'DR6' to the series C EENs as well
as the series D EENs reflect the continual interest shortfalls to
these classes and the expectation that neither class will receive
full payments of principal or interest in accordance with
transaction documents.
Air 2 US is a special purpose Cayman Islands company created to
issue the EENs, hold the proceeds as Permitted Investments, and
enter into a risk transfer agreement. AIR 2 US has entered into
the risk transfer agreement, the payment recovery agreement, with
a subsidiary of Airbus. The primary provision of the PRA states
that if AMR or UAL fail to pay scheduled rentals under existing
subleases of aircraft with subsidiaries of Airbus, AIR 2 US will
pay these rental deficiencies to a subsidiary of Airbus. These
deficiency payments will come from the Permitted Investments.
ALERIS INT'L: TPG Aims to Keep Control by Joining DIP Lenders
-------------------------------------------------------------
Henny Sender of Financial Times said that Texas Pacific Group, the
private equity firm, is stirring controversy on Wall Street by
offering to provide bankruptcy financing for a company that it
owns, a strategy that could put it in the ironic position of being
paid before some other creditors.
Under the absolute priority rule of the Bankruptcy Code, secured
creditors have priority over a company's unsecured creditors to
the extent of the value of their collateral. Unsecured creditors,
on the other hand, stand ahead of investors in the receiving line
and their claims must be satisfied before any investment loss is
compensated.
In cases where equity holders are "out of the money", stockholders
will receive no recovery and their interests are cancelled, and
creditors may receive the new stock of the reorganized company, as
part of their recovery. TPG acquired Aleris International in
2006, with the acquisition financed by lenders who were granted
liens on substantially all assets of Aleris.
For example, in the Chapter 11 case of Journal Register Company,
the Company filed a plan of reorganization, based upon the product
of negotiations with lenders pre-bankruptcy. JPMorgan Chase Bank,
N.A. and lenders holding 77% of the aggregate principal amount of
the indebtedness outstanding under the January 25, 2006 secured
credit agreement have conveyed support of the Plan, which, among
other things, provides zero recovery to holders of unsecured
claims and owners of equity interests in JRC. JPMorgan and the
other secured lenders will receive, among other things, 100% of
the shares of new stock of JRC.
TPG, however, may still maintain control of Aleris not on account
of its existing equity interests, but by providing debtor-in-
possession financing to Aleris. Lenders offering debtor-in-
possession loans receive "super priority" administrative claims,
entitling them to payment over other groups of creditors.
DIP financing, Financial Times notes, is "senior" to other claims
- meaning it gets paid first, even before lenders who financed the
original buy-out deal.
According to Financial Times, TPG has conveyed its intent to join
the banks and other investors, which include Oaktree Capital and
Apollo, that have offered to provide $500 million in DIP financing
for Aleris. Members of the DIP lenders' group have opposed TPG's
decision to join, but the bankruptcy judge has yet to rule on the
development, the report said.
If successful, TPG might be able to recover some of its investment
in Aleris, although not on account of its previous investment but
because of the new loans it has offered to provide to the Company.
However, this strategy is raising questions because of the
implications it could have for buyout firms in other deals that
are going bust, according to FT. FT said that Wall Street
executives are concerned that the TPG action could herald attempts
by buy-out firms to offer DIP financing as a way of salvaging
their investments.
TPG's Acquisition of Aleris
Aleris was acquired by Texas Pacific Group mid-December 2006. A
total of $845 million in equity contributions was made in
connection with the TPG Acquisition. TPG financed the purchase of
the Company through the application of the proceeds from the
Senior Notes and Senior Subordinated Notes, initial borrowings
under the ABL Facility, the Equity Contribution, and cash on hand.
To finance the TPG Acquisition and post-acquisition operations,
Aleris and its affiliates entered into and became obligated under
a certain Amended and Restated Credit Agreement, dated as of
August 1, 2006, amended as of December 19, 2006, with various
financial institutions and Deutsche Bank AG New York Branch, as
the administrative agent. The ABL Agreements provide for two
credit facilities:
(1) A facility for use in connection with the Company's U.S.
and European operations, made up of:
Facility Amount
-------- ------------
Sr. Secured Asset-based Revolver Facility $809,000,000
Letters of Credit $75,000,000
Swingline Facilities -
(2) A sub-facility for the Company's Canadian subsidiaries in
the aggregate amount of $35,000,000.
As of February 12, 2009, Aleris' liabilities under the ABL
Agreements include approximately:
-- $201,800,000 drawn amount,
-- $228,000,000 in foreign guarantee obligations, and
-- $42,300,000 in outstanding letters of credit.
The Company granted the ABL Lenders a first-priority security
interest in, and continuing liens on, substantially all of its
current assets and related intangible assets located in the
United States -- the "ABL Collateral" -- and a second-priority
security interest in, and continuing liens on, substantially all
of Aleris' fixed assets located in the U.S. -- the Term
Collateral.
As additional financing, Aleris and its international affiliates,
including Aleris Deutschland Holding GmbH, were obligated as
borrowers or guarantors under a Term Loan Agreement, dated as of
August 1, 2006, as amended, with various lenders and Deutsche
Bank, as administrative agent. The Term Loan Agreements provide
for a term loan facility for the Debtors in the maximum aggregate
commitment of $825 million and a subfacility for EUR303 million
borrowings by Aleris Deutschland, all of which are outstanding as
of February 12, 2009. The Term Lenders were granted a first-
priority security interest in and continuing liens on the Term
Collateral and a second-priority interest in and continuing liens
on the ABL Collateral.
Aleris is also obligated, either as a direct borrower or as a
guarantor, under:
(1) a Senior Indenture, dated December 19, 2006, which
Aleris issued $600 million in aggregate original
principal amount of 9%/9.75% Senior Notes due 2014;
(2) a Senior Indenture, dated September 11, 2007, pursuant
to which Aleris issued $105,379,000 in aggregate
original principal amount of new 9% Senior Notes due
2014; and
(3) a Senior Subordinated Indenture, dated December 19,
2006, pursuant to which Aleris issued $400 million in
aggregate original principal amount of 10% Senior
Subordinated Notes due 2016.
The Notes are unsecured obligations of Aleris.
Terms of DIP Loans
According to Bankruptcy Creditors Services Inc.'s ALERIS
BANKRUPTCY NEWS, Aleris sought approval from the U.S. Bankruptcy
Court for the District of Delaware to:
-- obtain postpetition financing and borrowings up to $
1,075,000,000, with $150,000,000 available on an interim
basis;
-- grant superpriority claims, equal liens, and priority liens
to the Debtors' postpetition lenders;
-- roll up certain prepetition secured debt into postpetition
secured debt; and
-- enter into certain terms and conditions relating to
Prepetition Credit Facility Amendments and pay the
amendment fee.
The Court has granted interim approval to the DIP Loans. It will
consider final approval of the loans on March 11.
Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New
York, said that Moelis & Company, which was tapped as investment
banker, assisted the Debtors in looking for an equity sponsor.
After discussions with a number of financial institutions,
including the Debtors' prepetition lenders, the Debtors and Moelis
found out that the Prepetition ABL Lenders generally were not
interested in providing the Debtors with incremental financing.
Rather, Mr. Karotkin says, the Prepetition ABL Lenders were
focused on reducing their commitments and obtaining repayment of
their overadvance under the Prepetition ABL Facility. Some
Prepetition Term Lenders, however, seemed interested in providing
backstop funding for a postpetition financing facility. The
Debtors pursued negotiations with Oaktree Capital Management,
L.P., and Apollo ALS Holdings, L.P.
In the past six months, the borrowing base under the Prepetition
ABL Facility has declined by over 50%. As a result, the amount
outstanding under the Prepetition ABL Facility exceeded the
borrowing base. Among others, because the Debtors required
financing sufficient to repay a portion of the overadvances
required by ABL Lenders and fund operational and working capital
needs, the Debtors obtained commitments for a two-tiered
postpetition financing arrangement consisting of a $575 million
senior secured superpriority ABL Facility and a $500 million
superpriority priming Term Facility.
Specifically, the Debtors entered into these facilities after
extensive, arm's-length negotiations:
I. New Money Term Facility and Roll-Up Term Facility
New Money
Term Facility
Borrowers: Aleris International Inc.
Aleris Deutschland Holding GmbH (non-debtor)
Aleris Aluminum Duffel BVBA (non-debtor)
Guarantors: U.S. Subsidiary Debtors and each other U.S. wholly
owned subsidiary of Aleris; Foreign Borrowers and
any of its subsidiaries; other non-U.S. subsidiary
of the U.S. Borrower that is a guarantor under the
Prepetition Term Facility; and Aleris
DIP Term
Administrative
Agent: Deutsche Bank AG New York Branch
Arranger,
Bookrunner &
Syndication
Agent: Deutsche Bank Securities, Inc.
DIP Term
Facility
Lenders: Oaktree Capital Management, L.P., Apollo ALS
Holdings, L.P., and other lenders selected by the
Term Sole Arranger, beneficiaries of the Roll-Up,
and any Prepetition Term Lender
Interim &
Final Term
Commitments: $500 million superpriority priming New Money Term
Facility; $150 million in interim financing
Term: Earlier of:
-- 12 months
-- date of a reorganization plan
-- 45 days after Interim Order if no Final Order
-- loan acceleration or termination of commitments
Use of Term
Facility: * Repay an amount by which the ABL Overadvance
Obligations exceeds $40 million, but in no event
exceeding $95 million;
* Cash collateralize the ABL Overadvance
Obligations in excess of $85 million between
Interim and Final Order Entry Dates;
* Repay or cash collateralize amounts by which
applicable loans outstanding under the ABL
Facility exceed the applicable borrowing base;
* Pay costs, fees and expenses; and
* Fund operational and working capital needs.
Roll-Up Term
Facility: For any amount funded under the New Money Term
Loan by a Term Facility Lender, a dollar-for-
dollar roll-up of the principal amount of loans
under the Prepetition Term Facility beneficially
owned by that person; and for each holder of loans
under the Prepetition Term Facility that does not
commit to fund a portion of the New Money Term
Loan, but meets other conditions, the right to
make a roll-up of 5% of the principal amount of
loans.
Interest
Rates: -- U.S. Dollar Loans: LIBOR plus 1000 bps per
annum with a 3% LIBOR floor.
-- Euro Loans: EURIBOR plus 600 bps per annum with
a 3% EURIBOR floor.
-- Roll-Up Facility: 12.5% PIK; 10% cash, at
Borrower's option
Fees: Not yet disclosed
Covenants: Capital Expenditures -- American Operations
Maximum Cumulative
Date Capital Expenditures
---- --------------------
March 31, 2009 $5,357,000
June 30, 2009 $12,452,000
September 30, 2009 $19,151,000
December 31, 2009 $24,778,000
March 31, 2010 $35,623,000
June 30, 2010 $47,800,000
Capital Expenditures -- European Operations
Maximum Cumulative
Date Capital Expenditures
---- --------------------
March 31, 2009 EUR8,219,000
June 30, 2009 EUR30,315,000
September 30, 2009 EUR38,785,000
December 31, 2009 EUR45,164,000
March 31, 2010 EUR55,147,000
June 30, 2010 EUR65,129,000
EBITDA -- American Operations
Date Minimum EBITDA
---- --------------
March 31, 2009 ($30,697,000)
June 30, 2009 ($20,519,000)
September 30, 2009 ($14,797,000)
December 31, 2009 ($19,906,000)
March 31, 2010 ($2,636,000)
June 30, 2010 $34,292,000
EBITDA -- European Operations
Date Minimum EBITDA
---- --------------
March 31, 2009 (EUR29,942,000)
June 30, 2009 (EUR23,487,000)
September 30, 2009 (EUR17,267,000)
December 31, 2009 (EUR15,272,000)
March 31, 2010 (EUR862,000)
June 30, 2010 EUR19,356,000
Liens and
Priorities: Obligations under the New Money Term Facility will
be senior to obligations under the ABL Facility
and the Prepetition Term Facility in the
Prepetition Term Collateral and Postpetition
Collateral afforded certain liens and claims, and
will be junior only to the ABL Credit Facility
with respect to the Prepetition ABL Collateral and
Postpetition ABL Collateral.
Carve-Out: $10 million; The Carve-Out will be applied 50% to
the Collateral securing the ABL Facility and 50%
to the Collateral securing the Term Facility.
Events of
Default: Failure to pay, misrepresentations, default on the
covenants, bankruptcy of non-Debtors who are
credit parties or significant subsidiaries,
judgments more than $10 million, dismissal or
conversion of cases, etc.
II. ABL Facility
Borrowers: Aleris International Inc. and certain of its U.S.
subsidiaries and affiliates; Aleris Switzerland
GmbH; and Aleris Specification Alloy Products
Canada Company
Guarantors: Borrowers, U.S. Guarantors, and foreign
subsidiaries of Aleris that are obligors or
guarantors under the Prepetition ABL Facility
DIP ABL
Administrative
Agent: Deutsche Bank AG New York Branch
Joint Lead
Arrangers and
Bookrunners: Deutsche Bank Securities Inc. and Banc of America
Securities LLC
Syndication
Agents: Bank of America N.A. and General Electric Capital
Corporation
DIP ABL
Facility
Lenders: All Prepetition ABL Lenders are expected to
participate in the ABL Facility on a pro rata
basis
Commitment: A priming superpriority non-amortizing revolving
credit facility up to $575 million subject to
borrowing base limitations, and with certain
amounts available in the form of letters of
credit. The ABL Commitments will be available
upon the entry of a Final Order.
Term: Earlier of:
-- 12 months
-- date of a reorganization plan
-- 45 days after Interim Order if no Final Order
-- loan acceleration or termination of commitments
Use of the
ABL Facility: * To refinance amounts outstanding under the
Prepetition ABL Facility; and
* To provide working capital for, and for other
general corporate purposes of, the Debtors.
Roll-Up Loans: Up to $385 million of outstanding credit
extensions under the Prepetition ABL Facility will
be deemed funded upon the entry of the Final Order
and will be deemed to replace outstanding
obligations under the Prepetition ABL. Letters of
credit outstanding under the Prepetition ABL will
be deemed outstanding under the ABL Facility.
Interest
Rates: Base Rate Loans: 5.5% per annum plus the Base Rate
(4% floor)
Euro Rate Loans: 6.5% per annum plus either: the
Eurodollar Rate (3% floor) or Euro LIBOR Rate (3%
floor)
Extension Increases: 1% per annum increase per
three-month extension
Default Interest: 2% per annum
Liens and
Priorities: Obligations under the ABL Facility will be senior
to obligations under the Term Facility and the
Prepetition ABL Facility in the Prepetition ABL
Collateral and afforded certain liens and claims
on the property of the estates, and will be junior
only to the New Money Term Facility with respect
to the Prepetition Term Collateral.
A full-text copy of the DIP Term Credit Agreement is available
for free at http://bankrupt.com/misc/ALERIS_DIPAGREEMENT.pdf
A full-text copy of the DIP ABL Term Sheet is available for free
at http://bankrupt.com/misc/ALERIS_ABL_TERMSHEET.pdf
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Gets Green-light to Hire Kurtzman as Claims Agent
---------------------------------------------------------------
Aleris International Inc., and its affiliates sought and obtained
authority from the U.S. Bankruptcy Court for the District of
Delaware to employ Kurtzman Carson Consultants LLC as their claims
and noticing agent.
KCC is a nationally recognized specialist in chapter 11
administration and has vast experience in noticing and claims
administration in chapter 11 cases, including its recent
representations in the bankruptcy cases of VeraSun Energy
Corporation, Mervyn's Holdings, LLC, Washington Mutual, Inc., Sem
Crude, L.P., and LandSource Communities Development LLC, among
others.
Rule 2002-1(f) of the Local Rules of the U.S. Bankruptcy Court
for the District of Delaware requires that in all cases with more
than 200 creditors, a debtor must file a motion to retain a
noticing agent. Sean M. Stack, executive vice president for
corporate development and strategy of Aleris International, Inc.,
relate that the Debtors have about 21,000 creditors, many of whom
are expected to be filing proofs of claims in the Debtors' cases.
Moreover, Section 156(c) of the Judicial and Judiciary Code,
which governs the staffing and expenses of the Court, authorizes
the Court to use facilities other than those of the office of the
clerk of the bankruptcy court for the administration of
bankruptcy cases.
As the Debtors' claims and noticing agent, KCC will:
(a) provide consulting services regarding noticing, claims
management and reconciliation, plan solicitation,
balloting, disbursements and any other services agreed
upon by the parties;
(b) provide computer software support to educate and train the
Debtors in the use of the support software, and provide
KCC's standard reports as well as consulting and
programming support for the Debtors requested reports,
program modifications, data base modification, and other
features in accordance with the KCC fee structure;
(c) provide a communications plan, including the preparation
of communications materials, dissemination of information
and a call center staffed by KCC, as requested; and
provide confidential on-line workspaces or virtual data
rooms and publish documents to such workspaces or data
rooms; and
(d) provide copy and notice services consistent with the Local
Rules and as requested by the Debtors and the Court.
The Debtors will pay KCC for the services of its professionals
based on these rates:
Professional Hourly Rate
------------ -----------
Senior Managing Consultant $295 - $325
Senior Consultant $255 - $275
Consultant $165 - $245
Technology/Programming Consultant $145 - $195
Project Specialist $80 - $140
Clerical $45 - $65
The Debtors will also reimburse KCC for all reasonable and
necessary expenses incurred for their benefit. The Debtors will
pay KCC a $100,000 retainer.
To reduce the administrative expenses related to KCC's retention,
the Debtors ask the Court to authorize payment to KCC without KCC
having to file formal fee applications. They also ask the Court
to allow those fees and expenses as administrative expenses
pursuant to Section 503(b)(I)(A) of the Bankruptcy Code.
A full-text copy of KCC Engagement Agreement is available for
free at http://bankrupt.com/misc/Aleris_KCCAgreement.pdf
Michael J. Frishberg, director of restructuring services of
Kurtzman Carson Consultants LLC, relates that his firm does not
represent any party with adverse interests in the Debtors' cases.
He maintains that KCC is a "disinterested person" as term is
defined in Section 101(14) of the Bankruptcy Code.
According to Mr. Frishberg, the Debtors do not owe KCC any amount
for services rendered and fees incurred.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Seeks to Hire Fried Frank as Special Counsel
----------------------------------------------------------
Aleris International, Inc., and its affiliates ask Judge Brendan
Linehan Shannon of the U.S. Bankruptcy Court for the District of
Delaware for authority to employ Fried, Frank, Harris, Shriver &
Jacobson LLP, as their special financing, corporate, tax and
litigation counsel nunc pro tunc to the Petition Date.
Sean M. Stack, executive vice president for corporate development
and strategy of Aleris International, Inc., relates that prior to
the Petition Date, Fried Frank actively represented the Debtors
with respect to their prepetition financing, their debtor-in-
possession financing, general corporate matters, general business
matters, securities law matters, tax matters, litigation,
employment matters, and environmental matters. The Debtors thus
believe that Fried Frank is well qualified to act as their
special financing, corporate, tax and litigation counsel.
Moreover, Fried Frank has extensive experience and knowledge in
the fields of financing, corporate law, securities law, general
business law, tax, litigation, employment law, and environmental
law, the Debtors note. Thus, they believe that continuation of
Fried Frank's representation is in the best interests of their
estates.
As special counsel to the Debtors, Fried Frank will be:
(a) advising the Debtors, and coordinating with Weil, Gotshal
& Manges LLP, the Debtors' proposed general bankruptcy
counsel, in connection with the Debtors' postpetition
financing, cash collateral arrangements, potential exit
financing and negotiating and drafting related documents;
(b) providing advice to, and representation of, the Debtors
with respect to legal matters arising in the Debtors'
financing efforts, mergers, acquisitions, dispositions,
joint ventures, derivatives and other hedging
transactions, anti-trust matters, other general corporate
matters, general business matters, Securities and Exchange
Commission filings, other securities matters, tax matters,
litigation matters, employment matters and environmental
matters, including attendance at senior management
meetings, meetings with the Debtors' financial and
turnaround advisors, and meetings with the Board of
Directors;
(c) preparing, presenting and responding to, on behalf of the
Debtors, as debtors in possession, necessary applications,
motions, objections, orders, reports, filings and other
legal papers in connection with any of the Debtors'
postpetition financing, cash collateral arrangements, exit
financing, mergers, acquisitions, dispositions, joint
ventures, derivatives and other hedging transactions,
anti-trust matters, other general corporate matters,
general business matters, securities law matters, tax
matters, litigation matters, employment matters and
environmental matters during these cases;
(d) consulting with the Debtors' management and other advisors
in connection with potential transactions involving the
Debtors, the operations of their non-debtor affiliates,
and operating, financial and other business matters
arising in the ordinary course and relating to the
on-going activities of the Debtors;
(e) attending meetings and negotiating with representatives of
lenders and other third parties and participating in
related negotiations; and
(f) performing any other necessary legal services as the
Debtors' special financing, corporate, tax and litigation
counsel, during these cases.
The Debtors maintain that Fried Frank's services will not be
duplicative of those to be provided by Weil Gotshal. Rather,
Fried Frank's services will enhance Weil Gotshal's representation
of the Debtors. Fried Frank maintains it will work with the
other retained professionals in the Debtors' cases to avoid any
duplication of services.
For the firm's contemplated services, the Debtors will pay Fried
Frank based on these customary hourly rates:
Professional Hourly Rate
------------ -----------
Partners $735 to $1,100
Of Counsel $735 to $950
Special Counsel $665 to $690
Associates $360 to $600
Legal Assistants $180 to $265
The Debtors will also reimburse the firm for necessary and
reasonable out-of-pocket expenses incurred in connection with the
performance of those services.
Fried Frank have received an aggregate of $3,665,240 from the
Debtors, about $117,000 of which constitute advance payments for
services not yet performed and expenses not yet incurred as of
February 10, 2009.
Fried Frank will continue to represent the Non-Debtor Affiliates
to whom, before the Petition Date, the firm actively represented
with respect to financing, general corporate, business and
securities matters, tax matters, litigation matters, employment
matters and environmental matters. Consistent with past
practice, all related fees, charges and disbursements incurred in
representing the Non-Debtor Affiliates will be billed to and paid
by Non-Debtor Affiliates. The firm will not disclose or subject
to the jurisdiction of the Court its fees, charges and
disbursements with respect to its representation of Non-Debtor
Affiliates.
Bonnie Steingart, Esq., a partner at Fried, Frank, Harris,
Shriver & Jacobson LLP, in New York, relates that her firm has
represented and continues to represent these parties-in-interest
to the Debtors in matters wholly unrelated to these Chapter 11
cases:
* Deutsche Bank Securities, Inc., and certain affiliates
* Oaktree Capital
* Banc of America Securities LLC and certain affiliates
* PNC Bank
* Goldman Sachs Capital Partners L.P. and certain affiliates
* Apollo Investment Corp.
* Wachovia Bank, N.A.
* Fortis
* Texas Pacific Group
* Novelis Corp.
* affiliates of General Electric Capital Corporation
* Citigroup Global Markets Inc.
* AEA Investors LP and Houghton International Inc.
Ms. Steingart relates that the son of a Fried Frank partner is a
director and officer of Citigroup Global Markets Inc., and that
the son of one of Fried Frank's lawyers is an associate at Davis,
Polk & Wardwell, attorneys for Citigroup Global Markets Inc.
Another partner at Fried Frank was formerly employed by Davis,
Polk & Wardwell and the spouse of one Fried Frank partner is a
partner at Ernst & Young, one of the Debtors' professionals, she
adds.
Ms. Steingart assures the Court that Fried Frank does not hold or
represent any interest adverse to the Debtors or the Debtors'
estates with respect to matters on which the firm is being
retained and employed.
She notes, however, that given the size and complexity of the
Debtors' businesses and the number of parties-in-interest in the
Debtors' cases, it is possible, despite reasonable efforts
to discover connections, that the information disclosed may be
incomplete or may have changed without her knowledge and may
change during the pendency of the Debtors' Chapter 11 Cases.
Nevertheless, she avers that she is not aware of any undisclosed
connections and is confident that, should undisclosed connections
exist, they would not affect Fried Franks' representation of the
Debtors.
A full-text copy of the Steingart Declaration is available for
free at http://bankrupt.com/misc/Aleris_SteingartDeclaration.pdf
The Court will convene a hearing on March 11, 2009 to consider
the Debtors' request. Objections are due no later than March 4.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Seeks to Hire Moelis & Co. as Financial Advisors
--------------------------------------------------------------
Aleris International, Inc., and its affiliates ask Judge Brendan
Linehan Shannon of the U.S. Bankruptcy Court for the District of
Delaware for authority to employ Moelis & Company LLC as their
financial advisor nunc pro tunc to the Petition Date.
Moelis is an investment banking firm and a registered broker-
dealer with the U.S. Securities and Exchange Commission, and is a
member of the Financial Industry Regulatory Authority and the
Securities Investor Protection Corporation. The firm has
approximately 150 employees around its offices in New York, Los
Angeles, Boston, Chicago and London. Moelis has provided
advisory services to a number of clients, including Allied Waste
Industries, Inc., Anheuser-Busch Companies, Inc., Cannery Casino
Resorts, LLC, Entravision Communications Corporation, Greektown
Holdings, LLC, Hilton Hotels Corporation, Invitrogen Corporation,
NBTY, Inc., Pappas Telecasting Inc., WCI Steel, Inc., Westwood
One, Inc. and Yahoo! Inc. Moelis' senior professionals, prior to
joining the firm, have also provided chapter 11 restructuring
services to a number of companies and official committees,
including Adelphia Business Solutions, Inc., Bally Total Fitness,
Delphi Corporation, Exide Technologies, Federal Mogul
Corporation, Foamex L.P., Friedman's Inc., and Tousa, Inc.
The Debtors and Moelis memorialized the terms of the firm's
employment with the Debtors in an engagement letter dated
January 28, 2009.
As financial advisors to the Debtors, Moelis is expected to:
(a) undertake, in consultation with members of the Debtors'
management, a customary business and financial analysis of
the Debtors;
(b) review and analyze the Debtors' assets, operating and
financial strategies to the extent the firm deems
necessary, appropriate and feasible, or as the Debtors may
request;
(c) review and analyze the business plans and financial
projections prepared by the Debtors, including testing
assumptions and comparing those assumptions to historical
company and industry trends;
(d) evaluate the debt capacity of the Debtors and assist them
in determining an appropriate capital structure;
(e) advise the Debtors on the general state of the
"restructuring market";
(f) determine values or ranges of values for the Debtors and
any securities that the Debtors offer or propose to offer
in connection with a strategic transaction or capital
transaction;
(g) advise the Debtors on the risks and benefits of
considering, initiating and consummating any strategic
transaction or capital transaction and any related interim
steps; and
(h) perform other financial advisory services as may be
reasonably agreed upon by the parties.
In exchange for the contemplated services, the Debtors will pay
Moelis these fees:
* Initial Fee. An initial cash fee of $400,000 upon the
execution of the Engagement Letter. The Debtors paid the
amount to Moe1is on February 2, 2009.
* Monthly Fee. Beginning February 1, 2009 and for the
following three months, a cash fee of $200,000 per month,
payable in advance on the first day of each month. The
first monthly fee was paid on February 3, 2009.
* Strategic Transaction Fee. Upon the closing of a
Strategic Transaction, an $8 million cash fee. About 50%
of the monthly fees the Debtors actually paid Moe1is in
cash will be credited once against the Strategic
Transaction Fee.
* Capital Transaction Fee. Upon the funding of a Capital
Transaction in the form of secured debt, a fee equal to
the greater of (i) $1 million, or (ii) 75 basis points of
the aggregate amount of capital in connection with the
Capital Transaction.
Fees for Capital Transactions that are not in the form of
secured debt will be determined based on customary fees to
be mutually agreed upon in writing. No Capital
Transaction Fee will be payable in connection with a
Capital Transaction in which TPG Capital LLP or one or
more of its controlled affiliates either provides,
guarantees or otherwise backstops the funding.
* Expenses. Full reimbursement of all reasonable expenses
incurred by Moe1is under the Engagement Letter. The
Debtors reimbursed Moe1is for $3,569 on February 2, 2009
for expenses incurred prior to the Petition Date.
The parties have agreed that if at any time before the expiration
of 12 months after the expiration or termination of the Debtors
of the Engagement Letter, a Strategic Transaction or Capital
Transaction is consummated, the Debtors will pay Moelis a
Strategic Transaction Fee or Capital Transaction Fee, as
appropriate, immediately upon the closing of that transaction.
The Debtors will be obligated to pay a Capital Transaction Fee
only in the 12-month period following expiration or termination
by the Debtors' of the Engagement Letter if the Debtors commence
a bankruptcy case.
The Debtors have also agreed to indemnify Moe1is against any
losses, claims, damages or liabilities to any person in
connection with the services it provides to the Debtors in these
Chapter 11 cases.
The Debtors ask the Court to approve the terms of Moelis'
employment, including the proposed fee structure and the
indemnification provisions, provided that the U.S. Trustee for
Region 3 will review applications for payment of compensation and
reimbursement of expenses by Moelis under Section 330 of the
Bankruptcy Code.
William Derrough, a managing director of Moelis & Company LLC, in
New York, maintains that his firm is a "disinterested person"
within the meaning of Section 101 (14) of the Bankruptcy Code.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALLBRITTON COMMUNICATIONS: S&P Cuts Corp. Credit Rating to 'B-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Arlington, Virginia-based Allbritton
Communications Co. to 'B-' from 'B'. The rating outlook is
negative.
"The ratings downgrade reflects our concern about the company's
ability to maintain an appropriate cushion of compliance with its
total leverage covenant, based on our expectation that weak ad
demand will significantly undermine Allbritton's operating
performance in 2009," said Standard & Poor's credit analyst
Deborah Kinzer.
The recent amendment to the company's credit agreement loosens its
financial covenants for the next two years and places restrictions
on distributions to its parent. However, S&P believes that
despite these measures and the cost-cutting initiatives taken, the
company could be at risk of violating its bank covenants in 2009.
EBITDA declined 17.7% year over year in the three months ended
Dec. 31, 2008, notwithstanding the benefit of political ad
revenue, and S&P expects EBITDA to continue declining through
2009, despite cost savings.
The 'B-' rating on Allbritton reflects financial risk from high
leverage, covenant compliance pressure, cash flow concentration
from limited portfolio diversity, and recessionary pressure on
advertising. The company's good position in its TV markets, TV
broadcasting's good margins, and its discretionary cash flow
potential only partially offset these factors.
Allbritton's EBITDA fell 17% on a 3% revenue decline in the 12
months ended Dec. 31, 2008, because of economic weakness in a
majority of the company's markets and a significant decline in the
key automotive advertising category. The company's EBITDA margin
for the 12 months ended Dec. 31, 2008 was 29%, down from 34% for
the same period of 2007. Discretionary cash flow turned slightly
positive in the 12 months ended Dec. 31, 2008, due to lower
distributions to the parent than in the previous year. However,
S&P is concerned that contracting EBITDA could minimize
discretionary cash flow in 2009, despite the cessation of
distributions to the parent going forward.
Leverage remains a key rating concern, particularly in light of
Allbritton's concentrated EBITDA and cash flow base. Lease-
adjusted debt to EBITDA deteriorated to 8.0x as of Dec. 31, 2008,
from 6.7x as of Dec. 31, 2007, because of lower EBITDA. Using an
average trailing-eight-quarter EBITDA figure to adjust for the
variability between election and nonelection years, Allbritton's
lease-adjusted leverage ratio was 7.3x as of Dec. 31, 2008.
* * *
Standard & Poor's latest downgrade on Allbriton matches the
demotion issued in February by Moody's Investors Service,
Bloomberg's Bill Rochelle said.
AMERICAN ACHIEVEMENT: S&P Downgrades Corp. Credit Rating to 'SD'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Austin, Texas-based American Achievement Corp. to 'SD'
(selective default) from 'B'.
At the same time, S&P lowered the issue-level rating on the 12.75%
senior PIK notes of American Achievement Group Holding Corp. (the
parent company of AAC) to 'D' from 'CCC+'. The recovery rating on
this debt remains at '6', indicating S&P's expectation of
negligible (0% to 10%) recovery for debtholders in the event of a
payment default.
All other outstanding ratings on AAC and related entities remain
unchanged; the issue-level ratings are still on CreditWatch, where
they were placed with negative implications Dec. 8, 2008.
These actions follow the company's announcement that it has
repurchased $104.3 million aggregate principal amount of its
senior PIK notes at an aggregate purchase price of $24 million.
The purchase was at a substantial discount to the par amount of
the outstanding issue, and the sellers of the notes, representing
a majority in principal amount, have consented to a second
supplemental indenture which removes substantially all of the
restrictive and reporting covenants under the original indenture.
As a result, S&P views the purchase as being tantamount to default
given the distressed financial condition of the company and S&P's
concerns around AAC's ability to service its current capital
structure over the intermediate term.
Prior to the repurchase announcement, the corporate credit rating
for AAC was on CreditWatch with negative implications. Absent the
PIK notes transaction, S&P likely would have lowered the rating to
the 'CCC' category, given the failed merger with Herff Jones and
the company's highly leveraged capital structure and accreting
debt balances. While S&P recognize that the purchase of the
senior PIK notes will reduce the company's outstanding debt, S&P
remain concerned about its ability to service its debt obligations
over the intermediate term.
S&P acknowledge that the senior discount notes at AAC Group
Holding Corp., the intermediate holding company, will turn to
cash-pay in April 2009. In addition, the company's cushion
relative to its total leverage covenant at the operating company
level is currently tight and will be reduced further given the
step-downs in the covenant to 3.25x for the quarter ending
February 2009 and to 3.0x for the quarter ending August 2009.
AAC's ability to continue to service its debt obligations and
maintain covenant compliance over the intermediate term would
require growth in EBITDA and continued deleveraging at the
operating company level.
"We intend to reassess the company's capital structure and assign
a revised corporate credit rating for AAC as soon as practical,"
said Standard & Poor's credit analyst Michael Listner. "We
anticipate that the corporate credit rating will be lower than the
'B' rating prior to the purchase of the senior PIK notes, and S&P
will adjust the company's issue-level ratings accordingly based on
the respective recovery ratings for each class of debt."
AMERICAN INT'L: Former CEO Sues Firm for Alleged Securities Fraud
-----------------------------------------------------------------
Lauren Pollock at The Wall Street Journal reports that former
American International Group Inc. CEO Maurice Greenberg has filed
in New York federal court a lawsuit against the firm, accusing it
of securities fraud tied to misrepresentations of billion of
dollars in losses on the company's portfolio of credit default
swaps.
WSJ relates that Mr. Greenberg claimed misrepresentations by these
defendants led him to acquire stock in AIG at an inflated price as
part of his deferred compensation plan:
-- former Chief Executive Martin Sullivan,
-- former Chief Financial Officer Steven Bensinger,
-- the former head of AIG's financial products division,
-- Joseph Cassano, and
-- four directors.
Mr. Greenberg, says WSJ, is seeking a jury trial and a recovery of
the difference in value between the price he paid for the shares
and the "true and fair" value. Mr. Greenberg claimed that he paid
income tax on the value of the securities "many times more" than
what he should have been required to pay had the securities been
valued at their true price, WSJ states.
Citing Mr. Greenberg, WSJ reports that AIG executives made
repeated statements touting the firm's sophisticated and
conservative risk management strategies in limiting losses linked
to its credit-default-swap portfolio and "recklessly ignored"
facts indicating that AIG was facing increasing losses on the
portfolio. Mr. Greenberg, according to the report, claims that he
incurred hundreds of million of dollars in losses on the
securities when AIG's stock price dropped.
Lee S. Wolosky, one of Mr. Greenberg's lawyers at Boies, Schiller
& Flexner LLP in New York, said that his client filed a similar
lawsuit on Friday on behalf of his investment vehicle, Starr
International Co., in Panama and will file similar lawsuits in
various jurisdictions in Europe and Asia in the coming days, WSJ
relates.
About American International
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch Ratings,
which triggered additional requirements for liquidity. These and
other events severely limited AIG's access to debt and equity
markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since Sept. 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to Sept. 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
AMERICAN INT'L: Posts $61.7 Billion Fourth Quarter 2008 Net Loss
----------------------------------------------------------------
American International Group, Inc., reported that continued severe
credit market deterioration and charges related to ongoing
restructuring activities contributed to a record net loss for the
fourth quarter. For the fourth quarter of 2008, AIG reported a
net loss of $61.7 billion or $22.95 per diluted share compared to
a 2007 fourth quarter net loss of $5.3 billion or $2.08 per
diluted share. The fourth quarter 2008 adjusted net loss, as
defined below, was $37.9 billion or $14.17 per diluted share,
compared to an adjusted net loss of $3.2 billion or $1.25 per
diluted share for the fourth quarter of 2007.
AIG's results in the fourth quarter were negatively affected by
continued severe credit market deterioration, particularly in
commercial mortgage backed securities (CMBS), and charges related
to ongoing restructuring-related activities. Despite these
challenging conditions, insurance premiums and other
considerations declined only modestly by 1.9 percent for the
fourth quarter compared to the fourth quarter of 2007. For the
year, premiums and other considerations grew by 5.3 percent.
FOURTH QUARTER
(in millions, except per share data)
Per Diluted Share (a)
2008 2007 2008 2007
--------- -------- -------------- -----------
Net income
(loss) $(61,659) $(5,292) $ (22.95) $ (2.08)
Net realized
capital gains
(losses), net
of tax (b) (21,552) (2,131) (7.97) (0.84)
FAS 133 gains
(losses),
excluding net
realized
capital gains
(losses), net
of tax (c) (2,176) 37 (0.81) 0.01
------- ------ --------- -------
Adjusted net
income
(loss) $(37,931) $(3,198) $ (14.17) $ (1.25)
======= ====== ========= =======
Weighted
average
shares
outstanding
(d) 2,704 2,550
------- ------ --------- -------
Dollars in Billions, After Tax 4Q08 Result
Restructuring -- related (not likely to repeat):
Securities lending activities
including ML II $ (3.3)
AIGFP unrealized market
valuation losses (ML III) and
other wind down (3.4)
Total restructuring-related
Activities (6.7)
Market disruption-related:
AIGFP credit valuation adjustment (4.4)
AIGFP unrealized market valuation
losses and other (2.8)
Other-than-temporary impairment charges (13.0)
Foreign exchange and other realized
capital losses (1.2)
Derivative losses on economic hedges
not qualifying for hedge accounting (2.2)
Other, net (2.3)
Total market disruption-related
activities (25.9)
Accounting charges related to tax and
intangible assets:
Goodwill impairments (3.6)
Tax benefits not obtained for losses
incurred during the quarter and other
discrete period items (21.0)
Total accounting charges related to
tax and intangible assets (24.6)
Fed credit line interest and
amortization (6.9)
AIG's net loss for full year 2008 was $99.3 billion or $37.84 per
diluted share, compared to net income of $6.2 billion or $2.39 per
diluted share for full year 2007. The full year 2008 adjusted net
loss was $52.1 billion or $19.91 per diluted share, compared to
adjusted net income of $9.3 billion or $3.58 per diluted share for
full year 2007.
TWELVE MONTHS
(in millions, except per share data)
Per Diluted Share (a)
2008 2007 2008 2007
--------- -------- -------------- -----------
Net income
(loss) $(99,289) $ 6,200 $ (37.84) $ 2.39
Net realized
capital gains
(losses), Net
of tax (b) (44,590) (2,804) (16.93) (1.08)
FAS 133 gains
(losses),
excluding net
realized
capital gains
(losses), net
of tax (c) (2,646) (304) (1.00) (0.11)
------- ------ --------- -------
Adjusted net
income
(loss) $(52,053) $ 9,308 $ (19.91) $ 3.58
======= ====== ========= =======
Weighted
average
shares
outstanding
(d) 2,634 2,598
------- ------ --------- -------
(a) The net loss calculation in the fourth quarter and twelve
months 2008 both include a deduction of $400 million for
dividends on Series D Preferred Stock.
(b) Represents primarily other-than-temporary impairment charges.
Includes Capital Markets other-than-temporary impairments on
securities available for sale, net of tax, of $418 million,
reported in other income on AIG's Consolidated Statement of
Income and excluded from adjusted net income (loss) on AIG's
Statement of Segment Operations in both the fourth quarter
and twelve months of 2007.
(c) Represents the effect of hedging activities that did not
qualify for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses.
(d) As a result of the losses reported in the fourth quarter 2008
and 2007 and twelve months 2008, basic shares outstanding
were used for these periods.
AIG's fourth quarter 2008 net loss resulted primarily from a
number of restructuring and market disruption-related charges and
other significant accounting charges related to taxes and
intangible assets. AIG recorded tax expense of $21.0 billion for
tax benefits not obtained for losses incurred during the quarter
and other discrete period items.
Included in market disruption-related items were pre-tax net
realized capital losses arising from other-than-temporary
impairment charges of $18.6 billion ($13.0 billion after tax) as
well as a $6.7 billion pre-tax ($4.4 billion after tax) charge
related to AIGFP's credit valuation adjustment for mark-to-market
adjustments where counterparty spreads increased and AIG's own
credit spread decreased, causing fair value losses on both AIGFP's
assets and liabilities.
Included in the restructuring-related items were pre-tax losses of
$4.7 billion ($3.3 billion after tax) consisting of pre-tax net
realized capital losses of $2.4 billion ($1.7 billion after tax)
for certain securities lending activities which were deemed to be
sales due to insufficient levels of collateral received from
counterparties, plus pre-tax losses of $2.3 billion
($1.6 billion after tax) related to the decline in fair value of
RMBS for the month of October 2008 prior to their sale to Maiden
Lane II. Also included in restructuring-related items were
$5.2 billion of pre-tax losses ($3.4 billion after tax) related to
AIGFP mark-to-market losses for the month of October 2008 on super
senior credit default swaps terminated in connection with Maiden
Lane III.
Included in Fed credit line interest and amortization charges of
$10.6 billion pre-tax ($6.9 billion after tax) were $6.6 billion
of pre-tax accelerated amortization of the pre-paid commitment fee
due to the reduction in the credit facility from $85 billion to
$60 billion, as well as periodic interest and amortization of $4.0
billion pre-tax.
Liquidity pressures related to the Securities Lending program have
abated as a result of the Maiden Lane II transaction. At December
31, 2008, total program liabilities to third parties approximated
$2.9 billion, down from $42.8 billion at
September 30, 2008. The balance represents the foreign securities
lending program, which is expected to wind down in 2009.
At December 31, 2008, shareholders' equity was approximately $52.7
billion. Consolidated assets at December 31, 2008 were $860.4
billion.
Management has assessed that AIG's internal control over financial
reporting as of December 31, 2008 was effective. As a result of
comprehensive and substantial remediation efforts, this is the
first time since Sarbanes-Oxley became effective in 2004 that
AIG's management expressed an unqualified assessment of AIG's
internal control over financial reporting.
The fourth quarter 2008 operating loss from Other Operations,
before net realized capital gains (losses) and consolidation and
elimination adjustments, was $11.0 billion compared to a
$400 million loss in the fourth quarter of 2007. These results
include $10.6 billion of interest expense and amortization of the
prepaid commitment fee associated with the Fed Credit Facility,
including a pre-tax charge of $6.6 billion related to the
restructuring of the Facility for the accelerated amortization of
the prepaid commitment fee, $2.2 billion of amortization of
capitalized issuance cost related to prepaid commitment fee and
$1.8 billion of interest and amortization expense from borrowings
under the Facility. The fourth quarter 2008 operating loss also
includes $900 million of mark-to-market losses on the retained
equity interest in Maiden Lane III.
About American International
Based in New York, American International Group, Inc. (AIG) is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76
on Sept. 15, 2008. On that date, AIG's long-term debt ratings
were downgraded by Standard & Poor's, a division of The McGraw-
Hill Companies, Inc., Moody's Investors Service and Fitch Ratings,
which triggered additional requirements for liquidity. These and
other events severely limited AIG's access to debt and equity
markets.
On Sept. 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At Sept. 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since Sept. 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to Sept. 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through
its Troubled Asset Relief Program, $40 billion of newly issued AIG
perpetual preferred shares and warrants to purchase a number of
shares of common stock of AIG equal to 2% of the issued and
outstanding shares as of the purchase date. All of the proceeds
will be used to pay down a portion of the Federal Reserve Bank of
New York credit facility. The perpetual preferred shares will
carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated
assets and $950.9 billion in total debts. Shareholders' equity
was $71.18 billion, including the addition of $23 billion of
consideration received for preferred stock not yet issued.
AMERICAN MEDICAL: S&P Changes Outlook to Stable; Affirms Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Minnetonka, Minnesota-based American Medical Systems
Inc.'s corporate credit rating to stable from negative. All
ratings are affirmed.
As reported by the Troubled Company Reporter on August 24, 2007,
Standard & Poor's Ratings Services revised the outlook on American
Medical Systems Inc. to negative from stable. Ratings on the
company, including its 'BB-' corporate credit rating, were
affirmed.
"These actions reflect an improved financial profile that S&P
believes provides sufficient cushion for some continued drag of
laser therapy-related sales on overall operations, as well as the
recession's impact on certain business segments," said Standard &
Poor's credit analyst Cheryl Richer. Despite these pressures, S&P
expects at least modest constant currency sales growth and healthy
internal cash generation to continue in the near term.
Our speculative-grade rating reflects AMS's aggressive financial
risk profile as a result of its July 2006 debt-financed
acquisition of Laserscope, the challenge of improving the
performance of the laser therapy business, and the company's
narrow medical focus.
Significantly lower-than-expected demand for laser therapy
products has exacerbated debt leverage and reduced the company's
operating margins. The acquisition of Laserscope added the
GreenLight technology for the treatment of obstructive benign
prostatic hyperplasia, which provides a less invasive
alternative to other surgical procedures. However, AMS
encountered product and manufacturing issues with both the device
and optical fiber disposables used in the procedure, as well as
marketing difficulties. This has contributed to slower-than-
anticipated physician adoption of laser procedures from surgical
procedures, notwithstanding their more invasive nature. The
company has restructured its BHP activities from its men's health
division into a separate business unit; BHP contributed 23% of
2008 revenues, of which about 20% was laser products. Laser
therapy sales declined about 6% (in constant currency) in 2008,
partly reflecting product problems and customer reluctance to
spend on the high-ticket equipment in an uncertain economic
environment. S&P believes that AMS has largely resolved its
hardware issues, and that it has taken steps to strengthen
relationships with its mobile providers. AMS has also increased
marketing efforts to better capitalize the potential of this
business.
AMKOR TECHNOLOGY: Moody's Affirms Corporate Family Rating to 'B2'
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings on Amkor
Technology, Inc.'s corporate family (B2), senior subordinated
notes (Caa1) and speculative-grade liquidity. Simultaneously,
Moody's downgraded the rating on Amkor's senior unsecured notes to
B2 from B1 to reflect higher loss absorption and changed the
outlook to stable from positive.
The change in the rating outlook to stable reflects increasing
uncertainties in the U.S. and global economic environments,
limited revenue visibility and challenging industry fundamentals
that are expected to negatively impact earnings in calendar year
2009, delaying the improvement in Amkor's operating performance
and credit profile. The former revision of the outlook to
positive was premised on the expectation that Amkor would
"continue to benefit from a favorable business environment for
OSAT services, relatively stable pricing in leading edge packaging
solutions and continued demand for its advanced products."
However, Amkor's sharply lower capacity utilization levels
combined with weaker-than-expected forward guidance has led
Moody's to question the near-term sustainability of the
outsourcing trend for assembly, testing and packaging services and
consider the likelihood that excess industry capacity may persist
should global economic activity continue to weaken.
Despite end market demand weakness, principally in consumer and
communications segments, Moody's believes Amkor continues to
demonstrate good operating and financial discipline, which is
incorporated in the B2 corporate family rating. The rating also
acknowledges Amkor's efforts to improve its capital structure by
reducing gross debt over the past year to roughly $1.5 billion
from $1.8 billion and minimizing near-term debt maturities.
However, further de-leveraging may be limited since Moody's
expects free cash flow to be negative in the March quarter and
likely challenged for the remainder of 2009.
In response to the sharp downturn, Amkor has announced additional
cost and capex reduction efforts to align its expense structure
with the current revenue environment and preserve cash flow.
Nonetheless, it is unlikely that Amkor will be able to maintain
operating margins above 5% over the next several quarters. With
LTM debt to EBITDA of 2.5x, Moody's continues to believe that
Amkor remains strongly positioned within the B2 rating category
and that the rating can tolerate temporary financial leverage
weakness as a result of possible fluctuations in EBITDA over the
next twelve months due to end market demand weakness.
Liquidity remains good (SGL-2), with cash balances of
$424 million at December 31, 2008 plus access to an unused
$100 million secured revolving credit facility maturing November
2009, for which covenant compliance is expected through maturity.
Though Amkor also maintains full access to a new $50 million
working capital facility with China Construction Bank Co., Ltd.
(maturing January 2011), the company's ability to renew the
$100 million facility could provide additional support to the
existing SGL score. Despite positive FCF of $220 million in 2008,
Moody's expect FCF to materially weaken in 2009 even with cutbacks
in capex, limiting Amkor's financial flexibility.
In accordance with Moody's LGD (Loss Given Default) framework, the
downgrade of the senior unsecured notes to B2 from B1 reflects a
modestly higher expected loss driven by reduced junior unsecured
positions (support) in the debt capital structure relative to
senior unsecured positions. Though Amkor opportunistically
reduced senior and junior debt over the past 15 months, the ratio
of outstanding senior debt to subordinated debt is higher compared
to year end 2007. This results in higher loss absorption for the
senior unsecured creditor class.
These ratings were affirmed and assessment revised:
* Corporate Family Rating -- B2
* Probability of Default Rating -- B2
* $111 Million 2.5% Convertible Senior Subordinated Notes due
2011, currently Caa1, LGD assessment revised to (LGD-6, 92%)
from (LGD-6, 90%) Speculative Grade Liquidity Rating -- SGL-2
These ratings were downgraded and assessment revised:
-- $990 Million Senior Unsecured Notes with various maturities
to B2 (LGD-3, 47%) from B1 (LGD-3, 44%)
The last rating action was on April 21, 2008 when Moody's affirmed
the CFR at B2 and revised the outlook to positive.
Amkor's ratings were assigned by evaluating factors Moody's
believe are relevant to the credit profile of the issuer, such as:
(i) the business risk and competitive position of the company
versus others within the industry; (ii) the capital structure and
financial risk of the company; (iii) the projected performance of
the company over the near-to-intermediate term; and (iv)
management's track record and tolerance for risk. These attributes
were compared against other issuers both within and outside of
Amkor's core industry and Amkor's ratings are believed to be
comparable to those of other issuers of similar credit risk.
Chandler, Arizona-based Amkor Technology, Inc. is one of the
largest providers of contract semiconductor assembly and test
services for integrated semiconductor device manufacturers as well
as fabless semiconductor operators. Revenues and EBITDA (Moody's
adjusted) for the twelve months ended December 2008 were $2.7
billion and $649 million, respectively.
ARMSTRONG ATLANTIC UNIV.: Moody's Keeps Ratings on Various Bonds
----------------------------------------------------------------
Moody's Investors Service has affirmed the A2 and A3 ratings on
bonds issued on behalf of Armstrong Atlantic State University, a
component of the Board of Regents of the University System of
Georgia, through the Savannah Economic Development Authority. The
obligors for the rated bonds are four different Georgia Limited
Liability Corporations whose sole member is Armstrong Atlantic
State University Educational Properties Foundation, Inc. The
rating outlook on the bonds is stable.
Legal Security: Security on the bonds is provided by rental
revenues paid by the Board of Regents of the University System of
Georgia (the Board) under the terms of an annually renewable
rental agreement on behalf of Armstrong Atlantic State University.
The LLC's rent the projects to the Board of Regents through the
rental agreement. The LLC's are limited liability companies whose
sole purpose is to finance projects for the University. The sole
member of the LLC's is EPFI. The bonds are non-recourse to the
Foundation, the University, the Board of Regents, and the State of
Georgia. All outstanding rated series of bonds have cash funded
debt service reserve funds.
Moody's maintains different ratings on the bonds due to the
presence of commercial tenants in the Armstrong Atlantic Center,
the building that was financed with the Series 2005 A and B bonds.
The Rental Agreement with the Board of Regents covers the portion
of the building that is occupied by the University, not the
commercial tenants. The Rental Agreement automatically is
expanded to cover additional portions of the building as leases
with the commercial tenants expire and as the University takes
over that space.
Interest Rate Derivatives: None.
Strengths
* Annually renewable broad revenue pledge for rental payments
from the Board of Regents of the University System of Georgia,
not limited to the revenue of the projects or campus;
* Strategic importance of the facilities to AASU and project
approval by the Board of Regents;
* Favorable demographic prospects in the state of Georgia (22%
projected increase in high school graduates over the next ten
years) and expected enrollment growth (5,984 full-time
equivalent (FTE) students in fall 2008, growth of 4% since fall
2007) at AASU, particularly given its location in Savannah and
broadened program offerings.
Challenges
* Board's rental payments are annually renewable with no legal
obligation to renew and subject to construction risk;
* Relatively leveraged balance sheet with expendable financial
resources cushioning pro-forma debt 0.1 time and annual
operations 0.06 times, with the majority of total financial
resources held at the AASU Foundation ($7.2 million out of
$10.8 million total financial resources). The University is
likely to have additional capital needs that may require
borrowing over the near to medium-term as it prepares to
accommodate a growing number of students from the state of
Georgia, particularly with additional student housing.
* Restrained state funding environment with current year
reductions in state operating appropriations and political
limits on tuition price increases. To date in FY 2009, the
state has withheld approximately 9% of the University's annual
operating appropriation because of lower than expected revenues
at the state level for the year to date. Two percent of the
funding cut has been covered by higher insurance premiums for
University employees and a $70 per student charge. AASU has
reduced departmental budgets by 6% and does not expect the
cutbacks to materially impact operations in light of recent
enrollment and tuition revenue growth.
* Thin projected debt service coverage from expected revenues of
essentially 1.0 time for projects financed with bond proceeds
and escalating debt service in some cases. However, project
revenues are not pledged to bondholders.
Recent Developments
In January, $24.3 million of Series 2009 bonds were issued on
behalf of Armstrong Atlantic State University by AASU Student
Union, LLC, a limited liability corporation whose sole member is
EPFI. The bonds were issued to finance expansion of the
University's student union. Moody's assigned an A2 rating to the
bonds in September, but the pricing was delayed until January.
There were no material changes in the project cash flows or plan
of finance from the time the rating was issued until the pricing
of the bonds.
Outlook
The stable rating outlook is based primarily on the Board's
support for the projects and management of construction risk,
particularly on the currently ongoing student union expansion, the
general financial strength of the Board, expectations for
enrollment growth at AASU, and Moody's stable outlook on the State
of Georgia's Aaa general obligation rating.
What could change the rating - UP
Improvement in the Board of Regent's general credit quality
combined with enrollment and financial resource growth at the
University
What could change the rating - DOWN
Any indication by Board of Regents of lack of willingness to renew
leases on this or other financings; Significant reductions in
state support for higher education pressuring funding for Board of
Regents institutions; failure of projects to meet financial
projections
Key Indicators
* Board of Regents: (Fall 2008 enrollment; FY 2008 financial)
* Total Revenues: $5.2 billion
* Total Enrollment: 247,168 full-time equivalent students
* Total Financial Resources: $3.6 billion
* Expendable Resources to Operations: 0.4 times
* Operating Dependence on State Appropriations (% of total
operating revenues): 41.5%
* Armstrong Atlantic State University: (Fall 2008 enrollment;
FY 2008 financial)
* Total Revenues: $70.2 million
* Total Enrollment: 5,984 full-time equivalent students
* Total Financial Resources: $10.8 million
* Total pro-forma Direct Debt: $66.1 million
* Expendable Resources to pro-forma Debt: 0.1 time
* Expendable Resources to Operations: 0.06 times
* Operating Dependence on State Appropriations (% of total
operating revenues): 49.2%
* State of Georgia general obligation rating: Aaa, with stable
outlook
Rated Debt
* Revenue Bonds (Armstrong Center, LLC Project), Series 2005 A
and B: A3/insured by Syncora whose current financial strength
rating is Caa1 on watchlist with direction uncertain
* Revenue Bonds (AASU Student Recreation Center, LLC Project),
Series 2005 C: A2/insured by Syncora whose current financial
strength rating is Caa1 on watchlist with direction uncertain
* Revenue Bonds (AASU Compass Point, LLC Project), Series 2005
D: A2/insured by Syncora whose current financial strength
rating is Caa1 on watchlist with direction uncertain
* Revenue Bonds (AASU Student Union, LLC Project), Series 2009:
A2/insured by Assured whose current financial strength rating
is Aa3 with a stable outlook
ARMSTRONG WORLD: Lower Earnings Guidance Won't Affect BB Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
Armstrong World Industries Inc. (BB/Stable/--) are not affected by
the company's recent announcement of lower 2009 earnings guidance.
During its fourth-quarter earnings call, Armstrong communicated
its 2009 outlook which includes a decline in revenues of between
10% to 20%, a drop in adjusted earnings of up to 50%, and an
overall decline in free cash flow. This reflects the continuing
depressed state of residential construction, as well as expected
weakness in commercial construction in both the U.S. and in
Europe. The company also indicated that it expects to partially
offset the impact of declining sales volumes with $25 million to
$30 million in input costs savings and $50 million in reduced
selling, general, and administrative costs.
Despite the ongoing challenging construction markets and lower
earnings guidance, Armstrong's good cash flow characteristics and
position in the ceilings segment should enable it to maintain
adequate liquidity and credit measures consistent with the current
rating. Specifically, S&P expects that adjusted debt to EBITDA
will remain under 3.0x and that the company will maintain
significant cushion under its revolving credit agreement
covenants. S&P expects that Armstrong's current strong credit
metrics will provide some cushion within the rating for operating
disruptions.
ASAT HOLDINGS: Pens Forbearance Pacts with Noteholders & Lenders
----------------------------------------------------------------
ASAT Holdings Limited said certain holders of the Company's 9.25%
Senior Notes due 2011, representing more than 25% of the
outstanding principal amount of the Notes, have entered into a
forbearance agreement with the Company, which is effective through
June 1, 2009. The Company intends to seek that the remaining
Noteholders accede to the terms of the forbearance agreement.
The Company also has entered into a forbearance agreement,
effective through June 1, 2009, with respect to its Purchase Money
Loan Facility.
ASAT expects that the forbearance agreements will provide the
Company with additional time and flexibility as it continues
discussions with its Noteholders and the lenders under the
Purchase Money Loan Facility to develop an appropriate capital
structure to support the Company's long-term business objectives.
"We appreciate the confidence that the Noteholders and the
Purchase Money Loan lenders have shown by approving the
forbearance agreements. The agreements provide additional time to
prepare arrangements for a longer-term financial restructuring,"
said Kei Hong Chua, chief financial officer of ASAT Holdings
Limited. "During this process, we expect no changes in our day-
to-day operations and will remain focused on providing excellent
service to our customers."
Under terms of the forbearance agreements, the lenders agree to
forbear from exercising their rights and remedies against the
Company with respect to certain designated defaults until after
June 1, 2009, subject to certain early termination events.
Moreover, the parities agree to use their commercially reasonable
efforts to formulate, negotiate and implement a Restructuring
Plan, to the extent feasible, as soon as practicable.
The total outstanding principal amount of Tranche A Loan under the
Purchase Money Loan Agreement borrowed and due to the Lenders is
$10,000,000. The total outstanding principal amount of Tranche B
Loan borrowed and due to the Lenders is $4,835,564, such amount
representing accrued and unpaid interest that was converted into
principal amount of Tranche B Loan due to the Lenders pursuant to
an amendment to the PMLA, dated October 17, 2008. The total
amount of accrued and unpaid interest under the PMLA as of
February 1, 2009, is $672,582.
Skadden, Arps, Slate, Meagher & Flom LLP is advising ASAT. The
Noteholders are being advised by O'Melveny & Myers LLP.
About ASAT Holdings Limited
ASAT Holdings Limited (ASTTY) -- http://www.asat.com/-- is a
global provider of semiconductor package design, assembly and test
services. With 20 years of experience, the Company offers a
definitive selection of semiconductor packages and world-class
manufacturing lines. The Company has operations in the United
States, Asia and Europe. Affiliate ASAT Inc. is based in
Milpitas, California.
ATHEROGENICS INC: Files Disclosure Statement Explaining Plan
------------------------------------------------------------
Atherogenics, Inc., filed with the U.S. Bankruptcy Court for the
Northern District of Georgia on Feb. 11, 2009, a disclosure
statement explaining its Chapter 11 Plan dated Feb. 11, 2009.
The Debtor believes that the Plan, which provides for the sale of
its non-cash assets through an auction process, would best serve
the interests of creditors, and provides a substantially greater
return to holders of Claims than would a liquidation under Chapter
7 of the Bankruptcy Code.
In line with this objective, the Debtor has retained Merriman
Curhan Ford & Co. to conduct an extensive marketing effort in
order to identify potential purchasers or investors.
Plan Summary
Pursuant to the Plan, all property of the Debtor and its Estate,
including Cash, will vest automatically in the Post-Confirmation
Debtor and the Liquidating Fund on the Plan's Effective Date, free
and clear of all liens, claims, and interests. A Liquidating
Agent will be appointed to administer any assets in the
Liquidating Fund and to make distributions to holders of claims
pursuant to the terms of the Plan.
Without limiting the foregoing, the Post-Confirmation Debtor will
be vested with all of the Debtor's previously unsold assets
(including its Causes of Action), which will be administered,
liquidated, prosecuted, settled, and enforced under the direction
and control of the Liquidating Agent.
The Debtor will continue to exist after the Effective Date as a
separate corporate entity, pursuant to an Amended Certificate of
Incorporation and an Amended By Laws, pending the subsequent
dissolution of the Post-Confirmation Debtor after the Final
Distribution Date.
Classes and Treatment of Claims
The Plan segregates the various claims against and interests into
nine separate classes:
Class Description Treatment
----- --------------------- ----------------------------
1 Secured Claims Unimpaired; Deemed to Accept
2 Priority Claims Unimpaired; Deemed to Accept
3 2008 Note Holder Impaired; Entitled to Vote
Claims
4 2011 Note Holder Impaired; Entitled to Vote
Claims
5 2012 Note Holder Impaired; Entitled to Vote
Claims
6 General Unsecured Impaired; Entitled to Vote
Claims
7 Rejection Damages Impaired; Entitled to Vote
Claims
8 Unsecured Convenience Impaired; Entitled to Vote
Claims
9 Interests Impaired; Deemed to Reject
Ballots will be furnished only to holders of claims in Classes 3,
4, 5, 6, 7, and 8 for the purpose of soliciting their votes on the
Plan. Classes 1, 2, and 3 are unimpaired and are, therefore,
deemed to accept the Plan. Holders of Interests in Class 9 will
not receive or retain any property under the Plan of account of
such Interests and are, therefore, deemed to reject the Plan and
are not entitled to vote.
Pursuant to the Plan, holders of General Unsecured Claims under
Class 6, holders of 2008 Convertible Notes under Class 3, holders
of 2011 Convertible Notes under Class 4, holders of 2012
Convertible notes under Class 5, and holders of Rejection Damages
Claims under Class 7 will all receive on the Initial Distribution
Date and continuing on each subsequent Distribution Date up to and
including the Final Distribution Date a pro rata Distribution of
any available Liquidation Proceeds that remain after the payment
and satisfaction of Allowed Administrative Expense Claims, Allowed
Priority Tax Claims, Allowed Gap Period Claims, and Allowed Claims
in Classes 1, 2 and 8, subject to Retained Proceeds.
Holders of Unsecured Convenience Claims under Class 8 will
receive, on either (i) the first Distribution Date after the
applicable Claims Objection Deadline has occurred, if no objection
to such Claim has been timely filed or (ii) the first Distribution
Date after the date on which any objection to such Unsecured
Convenience Claim is settled, withdrawn or overruled pursuant to a
Final Order of the Bankruptcy Court, in full and final
satisfaction of such Holder's Allowed Class 8 Claim, a one-time
Cash payment in an amount equal to [_] percent ([_]%) of the
Holder's Allowed Class 8 Claim.
All Interests of the Debtor that are held by a person other than
the Debtor, if any, will be deemed cancelled and extinguished.
Holders of Class 9 interests will not receive any Distribution on
account of such Interests.
"Cramdown" Provision of the Bankruptcy Code
Assuming that at least one Impaired Class votes to accept the
Plan, the Debtor intends to invoke Section 1129(b) of the
Bankruptcy Code, which permits the confirmation of a plan
notwithstanding the non-acceptance by one or more impaired classes
of Claims or Interests. Under this provision of the Bankruptcy
Code, a plan may be confirmed if (a) the plan has been accepted by
at least one impaired class of claims and (b) the Court determines
that the plan does not discriminate unfairly and is "fair and
equitable" with respect to the non-accepting classes.
A full-text copy of Atherogenics, Inc.'s Disclosure Statement
explaining its Chapter 11 Plan is available at:
http://bankrupt.com/misc/Atherogenics.DisclosureStatement.pdf
Headquartered in Alpharetta, Georgia, AtheroGenics, Inc. --
http://www.atherogenics.com/-- is a research-based pharmaceutical
company focused on the discovery, development and
commercialization of drugs for the treatment of chronic
inflammatory diseases, including diabetes and coronary heart
disease. It has one late stage clinical drug development program.
On September 15, 2008, five creditors holding claims totaling
$20,413,000 pursuant to the company's 4.5% Convertible Notes Due
2008 filed an involuntary Chapter 7 petition against the Debtor
(Bankr. N.D. Georgia Case No. 08-78200). The petitioning
noteholders were:
-- AQR Absolute Return Master Account, L.P.;
-- CNH CA Master Account, L.P.;
-- Tamalpais Global Partner Master Fund, LTD;
-- Tang Capital Partners, LP; and
-- Zazove High Yield Convertible Securities Fund, L.P.
On October 6, the Debtor filed its consent to entry for order for
relief and motion to convert its Chapter 7 case to one under
Chapter 11 (Bankr. N.D. Ga. Case No. 08-78200). James A. Pardo,
Jr., Esq., and Michelle Carter, Esq., at King & Spalding, LLP,
represent the Debtor as counsel. Akin Gump, Esq., at Strauss
Hauer & Feld LLP, and Frank W. DeBorde, Esq., at Morris, Manning &
Martin, LLP, represent the Official Committee of Unsecured
Creditors as counsel. The Debtor selected Administar Services
Group LLC as Claims Agent.
As reported in the Troubled Company Reporter on Feb. 21, 2009, at
December 31, 2008, the Debtor had total assets of $51,659,219,
total liabilities of $307,171,466, and a stockholders' deficit of
$255,512,247.
AVENTINE ETHANOL: S&P Junks Corporate Credit Rating
---------------------------------------------------
Standard & Poor's has put a 'CCC+' corporate credit rating on
Aventine Renewable Energy Holdings Inc., and placed a 'CCC' senior
unsecured rating on the company with a projection that that the
debtholders would recover as much as 30 percent following payment
default, Bill Rochelle reports.
According to Bill Rochelle, S&P said in a February 27 report that
Aventine Renewable needs to see "significant improvement in crush
spreads or obtain additional financing to remain financially
viable through the rest of 2009."
The Pekin, Illinois-based ethanol producer has two new plants that
were scheduled for completion in the first half of 2009.
S&P's Rating on Aventine Renewable:
Description Rating Rating Date CreditWatch
Date
Credit Rating CCC+/Watch Neg/-- Feb. 27, 2009 Feb. 27, 2009
Issue Ratings
Instrument Class Maturity Rating Rating
CreditWatch
Date Date Date
US$300 mil 10% sr nts due 04/01/2017 April 1, 5, CCC/ Feb.
27,
2017 Watch Neg 2009
April 1, 2017 Feb 27, 5, CCC/ Feb.
27
2009 Watch Neg 2009
April 1, 2017 Feb 27, 5, CCC/ Feb.
27
2009 Watch Neg 2009
BANK OF AMERICA: Pimco Hired to Advise on $118-Bil. Collateral
--------------------------------------------------------------
Sree Vidya Bhaktavatsalam of Bloomberg reported that Pacific
Investment Management Co. was hired to advise the U.S. government
on the value of $118 billion of assets guaranteed in the bailout
of Bank of America Corp., said two people with knowledge of the
decision.
Pimco will evaluate Bank of America's holdings, including
securities backed by residential and commercial loans, to help
determine the company's losses, Bloomberg said, citing the people,
who asked not to be identified because the contract hasn't been
publicly disclosed.
Bloomberg added that the assignment from the Federal Reserve, and
a similar job tied to a federal guarantee of $80 billion of credit
union deposits, occurred after the Newport Beach, California-based
firm raised $3 billion for a distressed credit fund to invest in
mortgage-backed securities.
BlackRock Inc., the largest publicly traded U.S. asset manager,
also is investing in mortgage-linked debt and overseeing similar
troubled assets for the government, Bloomberg said.
Their dual roles increase the possibilities for conflicts of
interest, said U.S. Representative Scott Garrett, according to the
report.
About Bank of America
Bank of America is one of the world's largest financial
institutions, serving individual consumers, small and middle
market businesses and large corporations with a full range of
banking, investing, asset management and other financial and risk-
management products and services. The company provides unmatched
convenience in the United States, serving more than
59 million consumer and small business relationships with more
than 6,100 retail banking offices, nearly 18,700 ATMs and award-
winning online banking with nearly 29 million active users.
Following the acquisition of Merrill Lynch on January 1, 2009,
Bank of America is among the world's leading wealth management
companies and is a global leader in corporate and investment
banking and trading across a broad range of asset classes serving
corporations, governments, institutions and individuals around the
world. Bank of America offers industry-leading support to more
than 4 million small business owners through a suite of
innovative, easy-to-use online products and services. The company
serves clients in more than 40 countries. Bank of America
Corporation stock is a component of the Dow Jones Industrial
Average and is listed on the New York Stock Exchange.
The bank needed the government's financial help in completing its
acquisition of Merrill Lynch.
BAYBERRY FUNDING: Fitch Downgrades Ratings on Two Classes to 'C'
----------------------------------------------------------------
Fitch Ratings has downgraded two, affirmed two, and withdraws the
ratings on all classes of notes issued by Bayberry Funding,
Ltd./Corp. These rating actions are effective immediately:
-- $95,365,636 class II notes downgraded to 'C' from 'CC' and
withdrawn;
-- $85,431,715 class III notes downgraded to 'C' from 'CC' and
withdrawn;
-- $17,875,841 class IV notes affirmed at 'C' and withdrawn;
-- $42,879,803 class V notes affirmed at 'C' and withdrawn.
On Oct. 22, 2008, notice was delivered that Bayberry Funding had
triggered an event of default as a result of the adjusted senior
par value coverage ratio falling below 95%. Fitch received the
Notice of Acceleration, Disposition of the Collateral and
Suspension of Payments on Oct. 23, 2008, and the Notice of
Distribution on Dec. 15, 2008 stating that the liquidation of
collateral was completed. The final distribution was made on
Dec. 23, 2008.
The proceeds from liquidation, together with all other available
funds, were insufficient to pay the unrated supersenior swap
counterparty in full. The classes II, III, IV, and V notes did
not receive any distributions.
BCE INC: Fitch Upgrades Issuer Default Rating from 'BB-'
--------------------------------------------------------
Fitch Ratings has upgraded the Issuer Default Rating and
outstanding debt ratings of BCE Inc. and its subsidiary Bell
Canada:
BCE
-- IDR to 'BBB+' from 'BB-';
-- Senior unsecured debt to 'BBB+' from 'BB-'.
Bell Canada
-- IDR to 'BBB+' from 'BB-';
-- Senior unsecured debt to 'BBB+' from 'BB-';
-- Subordinate debt to 'BBB' from 'B+'.
The Rating Outlook is Stable. Additionally, Fitch has withdrawn
all of the existing ratings of BCE and Bell Canada.
BCE's upgrade reflects the investment grade financial policies and
capital structure that the company has established following the
termination of its planned leveraged buy-out. BCE's diversified
operations provide support to the ratings with growth from
wireless which is approximately 30% of revenue, largely offsetting
the erosion to legacy voice operations that have been pressured by
the competitive environment and service substitution. BCE remains
focused on streamlining costs, accelerating investment in
broadband services and improving customer service. Consequently,
Fitch believes the company's ability to maintain its competitive
position in a progressively more competitive environment is a key
longer-term rating issue within BCE's credit profile.
BCE's liquidity is strong due to its cash position, free cash flow
and undrawn revolver capacity allowing the company to fund its
initiatives internally. As of Dec. 31, 2008, BCE had in excess of
$3 billion of cash on its balance sheet. BCE maintains
commitments totaling $1.4 billion for their revolving credit
facility that matures in 2009. The revolver fully backstops BCE's
commercial paper program, which had no outstandings as of the end
of 2008. In addition, management expects free cash flow in the
range of $550 to $700 million for 2009. BCE is returning a
significant portion of its current liquidity to benefit
shareholders through its share repurchase and dividend programs.
In December 2008, BCE reinstated its common share dividend program
by announcing a fourth quarter dividend of C$0.365. Subsequent to
the fourth quarter, BCE announced a 5% increase to its 2009 annual
dividend. Management has stated its intention for a dividend
policy of consistent growth that targets a dividend payout ratio
in the range of 65% to 75% of adjusted EPS. BCE also announced a
Normal Course Issuer Bid to repurchase up to approximately 5% of
outstanding common shares, or about
40 million common shares. As of Feb. 10, 2009, the company had
repurchased approximately 20 million shares.
While BCE is returning a significant amount of capital to its
shareholders, the company benefits from a strong balance sheet
with material financial flexibility. BCE is in the middle of its
target leverage range of 1.5 times (x) to 2.0x with net debt (as
calculated by BCE) to EBITDA of 1.8x. Interest coverage of
adjusted EBITDA to net interest is 8.3x compared with a target of
greater than 7.5x. With expectations for BCE to repay its 2009
maturities of $1.5 billion with cash, the company's credit profile
should improve further. In 2010, with approximately
$1 billion of debt maturing, while BCE could repay with internal
cash, Fitch expects the company could refinance the debt providing
capital markets returned to normalized ranges.
BELL MICROPRODUCTS: Amends Term Loans to Cure Potential Breach
--------------------------------------------------------------
Bell Microproducts Inc. completed amendments to its term debt
agreements with The Retirement Systems of Alabama. These
amendments remove the minimum net worth requirement from the
agreements, curing any potential covenant breach through the date
of the amendments, and replace the net worth requirement with the
same reduced fixed charge coverage criteria the Company now has
with its U.S. bank group.
In addition, the amendments also extend the required delivery date
of the Company's consolidated audited financial statements for the
year ended December 31, 2007 from March 31, 2009 to June 30, 2009.
The required delivery date of the Company's 2008 consolidated
audited financial statements remains unchanged at June 30, 2009.
The Company now has secured waivers from all of its major lenders.
W. Donald Bell, President and Chief Executive Officer of Bell
Microproducts, said, "We are pleased that our lenders, including
the RSA, have established new covenants to our domestic loan
agreements, and eliminated past covenant issues. Our lenders have
also agreed to move the date for the delivery of our consolidated
audited financial statements for 2007 to June 30, 2009, to
coincide with the delivery date of our 2008 consolidated audited
financial statements, and we fully anticipate meeting that
deadline."
About Bell Microproducts
Based in San Jose, California, Bell Microproducts Inc. (Pink
Sheets:BELM) -- http://www.bellmicro.com/-- is an international,
value-added distributor of a wide range of high-tech products,
solutions and services, including storage systems, servers,
software, computer components and peripherals, as well as
maintenance and professional services.
BELL RETAIL: Case Summary & Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Bell Retail A & B, LLC
3900 S. Hualapai, Suite 100
Las Vegas, NV 89147
Bankruptcy Case No.: 09-12453
Type of Business: Single Asset Real Estate
Chapter 11 Petition Date: February 24, 2009
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Linda B. Riegle
Debtor's Counsel: Matthew L. Johnson, Esq.
Matthew L. Johnson & Associates, P.C.
8831 W. Sahara Ave.
Las Vegas, NV 89117
Tel: (702) 471-0065
Fax: (702) 471-0075
Email: bankruptcy@mjohnsonlaw.com
Total Assets: $1,525.60
Total Debts: $9,949,642.81
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-12453.pdf
The petition was signed by Jeffrey Chain, president of the
Company.
BERNARD L. MADOFF: UBS AG Wins Ruling in Luxembourg Lawsuit
-----------------------------------------------------------
According to Bloomberg's Elizabeth Amon, UBS AG won a ruling in a
Luxembourg lawsuit filed by Banca Intermobiliare SpA seeking to
force the release of EUR5.1 million ($6.5 million) from an account
belonging to a fund that had invested with Bernard Madoff.
A Luxembourg court, Bloomberg relates, said BIM's claims were
unfounded in an emergency ruling Feb. 27. BIM asserted that UBS
had a duty to pay it after sending the Italian bank a confirmation
for a redemption request from the British Virgin Islands-based
Groupement Financier fund made before Madoff was arrested Dec. 11.
Luxembourg's financial regulator on Feb. 25 faulted UBS for
inadequate due diligence in its role as a custodian bank for the
Madoff-linked LuxAlpha Sicav-American Selection fund. While the
decision was the first to deal with UBS as an account holder
rather than as custodian, it may show that the regulator's
statement has "limited" influence on the courts, Ms. Amon said.
Meanwhile, according to Bloomberg, a London judge gave the
liquidators of Bernard Madoff's U.K. and U.S. firms an order
making it easier for them to share information. Justice Kim
Lewison at the High Court in London ruled Feb. 27 that it was in
the public interest for the liquidators to share information
including personal data. Lexia Hilliard and Robin Dicker, lawyers
for the U.K. and U.S. liquidators respectively, told the judge
that, while they could share information without the order, it
would help them to stay within strict European Union data
protection laws.
BILLION COUPONS: SEC Files Fraud Suit; Court Freezes Assets
-----------------------------------------------------------
The Securities and Exchange Commission on February 19, 2009,
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., and its
CEO Marvin R. Cooper raised $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 Mr.
Cooper misappropriated at least $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 Mr. 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."
The SEC's complaint, filed in federal court in Honolulu, alleges
that BCI and Mr. Cooper represented to the investors that their
funds would be invested in the foreign exchange 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 Mr. Cooper actually used only
a net $800,000 -- cash deposits minus cash withdrawals -- of
investor funds for Forex trading, and they lost more than $750,000
from their Forex trading. The complaint further alleges that BCI
and Mr. 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 Mr. 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 Mr. Cooper from future violations of these
provisions. The SEC also obtained an order: (1) freezing the
assets of BCI and Mr. Cooper; (2) appointing a temporary receiver
over BCI; (3) preventing the destruction of documents; (4)
granting expedited discovery; and (5) requiring BCI and Mr. 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 was scheduled for March 2, 2009, at 9 a.m. HST.
The Commodity Futures Trading Commission also filed an emergency
action against BCI and Mr. 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.
BIOHEART INC: Receives Notice of Delisting From NASDAQ
------------------------------------------------------
Bioheart, Inc., received on February 25, 2009, notification from
The NASDAQ Stock Market of its determination to discontinue the
Company's NASDAQ listing effective as of the open of business on
February 27. The move follows the NASDAQ Stock Market staff's
determination that the Company did not comply with certain of
their listing requirements, including related to the market value
of its common stock, and either minimum stockholders' equity or
net income from continuing operations of $500,000 in the most
recently completed fiscal year or in two of the last three most
recently completed fiscal years.
The Company is in the process of engaging a market maker for its
common stock and causing the required application to be filed for
quotation of the Company's common stock on the OTC Bulletin Board.
Howard Leonhardt, Chief Executive Officer of Bioheart, commented:
"It is unfortunate that Bioheart's stock price has been so
adversely affected by the general decline in the securities
markets that it could not maintain its NASDAQ listing. The
Company has been current in its filings with the SEC and there are
many good things happening at Bioheart with regard to the
commercialization and sales of its products that we expect will
add value to the company's equity. We look forward to re-
establishing a robust market for our shares and having them
approved for quotation on the OTC Bulletin Board."
Based in Sunrise, Florida, Bioheart Inc. --
http://www.bioheartinc.com/-- develops intelligent devices and
biologics that help monitor, diagnose and treat heart failure and
cardiovascular diseases. Its lead product candidate, MyoCell(r),
is an innovative clinical muscle-derived stem cell therapy
designed to populate regions of scar tissue within a patient's
heart with new living cells for the purpose of improving cardiac
function in chronic heart failure patients. The Company's
pipeline includes multiple product candidates for the treatment of
heart damage, including Bioheart Acute Cell Therapy, an
autologous, adipose tissue-derived stem cell treatment for acute
heart damage, and MyoCell(r) SDF-1, a therapy utilizing autologous
cells that are genetically modified to express additional
potentially therapeutic growth proteins.
BOMBARDIER RECREATIONAL: S&P Cuts Corporate Credit Rating to 'B-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its ratings on
recreational products manufacturer Bombardier Recreational
Products Inc., including the long-term corporate credit rating to
'B-' from 'B'. At the same time, S&P lowered the rating on the
company's C$250 million senior secured revolving credit facility
due 2011 to 'B+' from 'BB-'. In addition, S&P lowered the rating
on the US$790 million senior secured term loan B due 2013 to 'B-'
from 'B'. All ratings remain on CreditWatch with negative
implications, where they were placed Nov. 24, 2008.
The recovery rating on BRP's C$250 million revolving credit
facility is unchanged at '1', indicating an expectation of very
high (90%-100%) recovery in a default scenario. However, S&P
revised the recovery rating on the company's US$790 million senior
secured term loan B to '4' from '3'. The '4' recovery rating
indicates an expectation of average (30%-50%) recovery in the
event of a payment default, in contrast to a '3' recovery rating,
which indicates the expectation of meaningful (50%-70%) recovery.
Standard & Poor's revised the recovery rating due to S&P's use of
a lower EBITDA amount in the event of default.
"The downgrade reflects our concerns that BRP's financial
flexibility will decline significantly in the near term due to
lower operating profit that has contributed to weakened credit
protection measures, resulting from the very challenging global
economic environment," said Standard & Poor's credit analyst Lori
Harris.
In addition, S&P believes BRP's balance-sheet exposure to foreign
exchange risk in a weakened Canadian dollar environment, through
its U.S. dollar-denominated term loan, is also negatively
affecting credit protection measures. While the company had
significant cushion in its 5.5x leverage covenant at quarter ended
Oct. 31, this will tighten considerably and could result in BRP's
noncompliance with covenants. Adding additional pressure to the
covenants is the step-down in the leverage covenant to 5.25x for
the first fiscal quarter ending April 30, 2009.
Consumer spending for "big ticket" discretionary items, such as
BRP's personal watercraft, marine engines, ATVs, and snowmobiles
has declined considerably in the past year, and S&P don't expect a
recovery in 2009. While BRP is reducing production in light of
lowered consumer demand, S&P believes operating profit will
continue to drop given the company's expected lower sales and
relatively high fixed-cost base, which will likely result in a
significant weakening of BRP's credit protection measures and
liquidity position.
Standard & Poor's will keep the ratings on BRP on CreditWatch
until S&P obtain better clarity regarding the company's financial
flexibility in light of what S&P views as its weakened liquidity
position and financial covenant concerns.
BYRAM RENTALS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Byram Rentals, Inc.
700 S. Parkway
El Dorado, AR
Tel: (870) 862-7923
Bankruptcy Case No.: 09-70835
Chapter 11 Petition Date: February 24, 2009
Court: United States Bankruptcy Court
Western District of Arkansas (El Dorado)
Judge: James G. Mixon
Debtor's Counsel: Robert L. Depper, Jr., Esq.
Depper Law Firm
101 West Main, Suite 200
El Dorado, AR 71730-5834
Tel: (870) 862-5505
Fax: (870) 862-7591
Email: bdepper@suddenlinkmail.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Robert Byram, president of the Company.
CALPINE CORP: Posts $146 Million Net Loss in Fourth Quarter 2008
----------------------------------------------------------------
Calpine Corporation on Friday posted a net loss of $146 million on
$1.96 billion in operating revenues for the three months ended
December 31, 2008, compared to a net loss of $90 million on
$1.92 billion in operating revenues for the same period in 2007.
For the year, Calpine posted $9.9 billion in operating revenues
compared to $7.9 billion in 2007.
As of December 31, 2008, Calpine had $20.7 billion in total assets
and $16.3 billion in total liabilities.
As of December 31, 2007, Calpine had $19.0 billion in total
assets, $14.9 billion in total liabilities not subject to
compromise, and $8.78 billion in liabilities subject to
compromise, and $4.62 billion in stockholders' deficit.
"Our full year 2008 financial performance reflects substantial
improvement compared to 2007 and exceeds our 2008 guidance,
despite the severe economic and financial conditions that surfaced
in late 2008," said Jack Fusco, Calpine's President and Chief
Executive Officer. "With 2008 successfully behind us, we now turn
our attention to 2009. We are pleased to provide Adjusted EBITDA
guidance for 2009 of $1.6 to $1.7 billion and, for the first time,
Adjusted Free Cash Flow guidance of $400 to $500 million. We have
significantly hedged our 2009 Commodity Margin, mitigating natural
gas price risk and giving us solid earnings visibility for this
year. It is noteworthy that our 2009 Adjusted EBITDA guidance is
roughly in line with our 2008 performance, despite expectations
that recessionary pressures will continue through 2009. Finally,
we are pleased to report that we have significantly hedged our
natural gas price risk for 2010."
A full-text copy of Calpine's annual report is available at no
charge at: http://ResearchArchives.com/t/s?39fb
During the third quarter of 2008, in light of turbulent economic
conditions, Calpine proactively elected to draw $725 million under
our Exit Credit Facility revolver. Management intends to maintain
this draw until it believes that financial markets have become
more stable. Meanwhile, Calpine said it has continued efforts to
improve liquidity by utilizing the first lien program, reducing
prepayments made to counterparties and negotiating more unsecured
credit to support commercial activities.
During the first quarter of 2009, Calpine recapitalized its Deer
Park Energy Center. This transaction allowed Calpine to remove a
complicated financing structure and to resolve below-market power
pricing, all while achieving an attractive interest rate under
difficult market conditions.
Founded in 1984, Calpine Corporation -- http://www.calpine.com/--
is a major U.S. power company, currently capable of delivering
over 24,000 megawatts of clean, cost-effective, reliable and fuel-
efficient electricity to customers and communities in 16 states in
the United States and Canada. Calpine owns, leases, and operates
low-carbon, natural gas-fueled, and renewable geothermal power
plants. Using advanced technologies, Calpine generates
electricity in a reliable and environmentally responsible manner
for the customers and communities it serves.
The company and its affiliates filed for chapter 11 protection on
Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard
M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq.,
and Robert G. Burns, Esq., Kirkland & Ellis LLP represented the
Debtors in their restructuring efforts. Michael S. Stamer, Esq.,
at Akin Gump Strauss Hauer & Feld LLP, represented the Official
Committee of Unsecured Creditors.
On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC,
and Silverado Geothermal Resources, Inc., filed voluntary chapter
11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198).
On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another
affiliate, also filed a voluntary chapter 11 petition (Bankr.
S.D.N.Y. Case No. 07-12967).
On June 20, 2007, the Debtors filed their Chapter 11 Plan and
Disclosure Statement. On Aug. 27, 2007, the Debtors filed their
Amended Plan and Disclosure Statement. Calpine filed a Second
Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a
Third Amended Plan. On Dec. 19, 2007, the Court confirmed the
Debtors' Plan. The Amended Plan was deemed effective Jan. 31,
2008.
Pursuant to the Plan, allowed unsecured claims are to receive a
pro rata distribution of all reorganized Calpine Corporation
common stock; holders of allowed interests in Calpine are to
receive a pro rata share of warrants to purchase roughly 48.5
million shares of reorganized Calpine common stock; and holders of
subordinated equity securities claims did not receive a
distribution and may only recover from applicable insurance
proceeds.
Under the Plan, 485 million shares of reorganized Calpine
Corporation common stock were issued. Roughly 427 million shares
have been distributed to holders of allowed unsecured claims
against the U.S. Debtors, roughly 10 million shares are being held
pending resolution of certain inter-creditor matters, and roughly
48 million shares remain in reserve for distribution to holders of
disputed claims whose claims ultimately become allowed.
Bankruptcy Creditors' Service, Inc., publishes Calpine Bankruptcy
News. The newsletter tracks the chapter 11 proceedings undertaken
by Calpine Corporation and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CARAUSTAR INDUSTRIES: Has $7.9MM Deficit, Going Concern Doubt
-------------------------------------------------------------
Caraustar Industries, Inc. had $381 million in total assets, $263
million in total current liabilities, $36.4 million in long-term
debt, $73.7 million in pension liability, and $16.3 million in
other liabilities as of December 31, 2008, resulting in a
shareholders' deficit of $7.9 million.
On Friday, Caraustar reported a $22.6 million net loss on sales of
$171.6 million for the three months ended December 31, 2008,
compared to a net loss of $6.7 million on sales of $203.9 million
for the same period in 2007. For the year, the Company posted a
net loss of $98.7 million on sales of $819.6 million, compared to
$24.5 million on sales of $854.2 million.
Michael J. Keough, president and chief executive officer of
Caraustar, commented, "Caraustar felt the impact of the global
recession in the fourth quarter as demand decreased in most of the
end use markets we serve. This decrease was particularly hard
felt by our business segments that are driven by industrial
production. While the fourth quarter is typically slow
seasonally, we experienced softness greater than historic
seasonality, which led to manufacturing inefficiencies and
extended downtime at many of our production facilities. Partially
offsetting reduced volume were dramatically lower fiber costs,
higher selling prices, and lower selling, general and
administrative costs.
"Year-to-date in 2009, volume seems more solid than in the fourth
quarter 2008 and we believe our current liquidity position is
adequate to support our day-to-day business operations. We
continue to work diligently on a resolution of the near-term
maturity of our 2009 Senior Notes, and the 2009 and 2010
noteholders have formed an ad hoc committee, which has facilitated
discussions. The company has retained legal and financial
advisors and expects that our discussions with the ad hoc
committee will be productive. We will continue to consider all
options. As developments unfold, we will communicate to all of
our constituents, as appropriate.
"Our skilled employees and the proactive steps we have taken in
the past three years have provided us with the appropriate cost
structure to meet current challenges, even given this recessionary
economy. It has taken a lot of hard work from the entire Caraustar
team to better position the business to demonstrate operational
improvement against a tough economic backdrop. We look forward to
positioning our company for a bright future.
"We have been undergoing a Strategic Transformation Plan, through
which we have rationalized our portfolio by exiting under-
performing businesses; right-sized operations through
consolidation of facilities; significantly reduced SG&A costs; and
increased financial flexibility by redeeming the 2010 Senior
Subordinated Notes, paying off the term loan and paying down all
outstanding balances on the revolving credit facility."
On December 9, 2008, Caraustar said it was finalizing and will
complete a cost take-out plan, including additional corporate
staff reductions. To date, the company has eliminated 49
positions, with projected annual pre-tax savings of approximately
$7.0 million. Caraustar will incur approximately $2.8 million in
costs associated with this restructuring activity, which costs are
comprised primarily of severance and other employee related items.
The Company expects to complete its corporate reductions on or
before the end of the first quarter of 2009. On
December 11, 2008, the Company announced the permanent closure of
its Richmond Paperboard mill. Non-cash impairment of fixed assets
of $5.3 million and cash costs, related to severance, of
approximately $435 thousand were incurred in the year ended
December 31, 2008.
The Company ended 2008 with a cash balance of $35.5 million
compared to $6.5 million at December 31, 2007. The Company
reduced its total debt by $31.8 million from December 31, 2007, to
December 31, 2008, and as of December 31, 2008; the company had
$22.0 million of availability under its Senior Credit Facility,
after giving effect to $15.7 million in letters of credit and the
$20.0 million minimum availability reserve, both of which reduce
availability.
The Company has approval from its bank group to amend its Senior
Credit Facility to defer the March 1, 2009, notification date, at
which time the company would have been required to advise the
participating lenders in the bank group of the company's plan to
refinance or defease the 7.375 percent Senior Notes, to April 30.
Going Concern Doubt
The 7.375 percent Senior Notes due on June 1, 2009, are recorded
as a current liability, which results in a working capital deficit
as of December 31, 2008. Given the turmoil in the credit markets,
it is likely that the Company will not be able to refinance its
Senior Notes. Continuing as a going concern is dependent on a
satisfactory refinancing or restructuring of the Senior Notes,
which will involve negotiations with the noteholders.
The Company expects to be able to continue to service customers'
needs and expect no disruptions to operations. The outcome of the
negotiations, however, is uncertain.
Accordingly, as of December 31, 2008, there is substantial doubt
regarding the company's ability to continue as a going concern.
The financial statements do not include any of the adjustments
that would be required to reflect possible effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of
this uncertainty.
Caraustar Industries, Inc. (CSAR) -- http://www.caraustar.com/--
is one of North America's largest integrated manufacturers of 100%
recycled paperboard and converted paperboard products. Caraustar
serves the four principal recycled boxboard product end-use
markets: tubes and cores; folding cartons; gypsum facing paper and
specialty paperboard products.
CARDTRONICS INC: Moody's Believes Cash Adequate for Near Term
-------------------------------------------------------------
Moody's Investors Service commented on the liquidity position of
Cardtronics Inc. In Moody's opinion, Cardtronics, Inc.'s (B3 CFR,
Stable outlook) liquidity is expected to remain adequate in the
near term, even after the company's recent announcement that its
board of directors has authorized a new $10 million share
repurchase program.
The previous rating action occurred on July 9, 2007 when Moody's
assigned Cardtronics' "tack-on" high yield subordinated notes
rating of Caa1, and affirmed B3 corporate family rating with a
stable outlook.
Cardtronics Inc, which is headquartered in Houston, Texas, is a
leading ATM operator with approximately 33,000 ATMs across its
portfolio, with ATMs in every major U.S. market, over 2,500 ATMs
throughout the United Kingdom, and approximately 2,100 ATMs
throughout Mexico. The company had revenues of $493 million for
the fiscal year ended December 31, 2008.
CARITAS HEALTHCARE: Closes St. John's & Mary Immaculate Hospitals
-----------------------------------------------------------------
Carolina Leid at WABC reports that Mary Immaculate Hospital and
St. John's Queens Hospital have closed.
According to WABC, Mary Immaculate and St. John's stopped
accepting patients on Saturday. About 2,500 people will lose
their jobs, WABC says, citing officials.
Caritas Health Care Inc. is the owner of Mary Immaculate
Hospital and St. John's Queens Hospital. Caritas, created by
Wyckoff Heights Medical Center, purchased the two hospitals in a
bankruptcy sale in early 2007 from St. Vincent Catholic Medical
Centers of New York. St. John's has 227 generate acute-care beds
while Mary Immaculate has 189.
Caritas and eight affiliates filed for Chapter 11 on Feb. 6, 2009
(Bankr. E.D. N.Y., Lead Case No. 09-40901). Adam T. Berkowitz,
Esq., at Proskauer Rose LLP, has been tapped as counsel. JL
Consulting LLC is the Debtors' restructuring advisors. Caritas in
its bankruptcy petition estimated assets of $50 million to $100
million, and debts of $100 million to $500 million.
CERTIFICHECKS INC: Will File for Chapter 7 Bankruptcy
-----------------------------------------------------
CertifiChecks, Inc., has ceased operations, effective immediately,
and will file for Chapter 7 bankruptcy in the U.S. Bankruptcy
Court for the Southern District of Ohio.
CertifiChecks' collapse is due to an extremely difficult economic
environment. CertifiChecks will no longer administer gift
certificate programs. The Company has stopped its gift
certificate sales.
CertifiChecks, Inc. -- http://www.certifichecks.com/-- is
headquartered in Dayton, Ohio serving consumers and merchants
nationwide. Its gift certificate offers business merchants
redemption, similar to a bank check. CertifiChecks has developed
a customizable gift certificate that processes like a check
through the national Federal Reserve banking system. Each gift
certificate is customer personalized and merchant branded.
CHALLENGER ENERGY: Obtains Court Order for CCAA Protection
----------------------------------------------------------
Challenger Energy Corp. obtained on Friday an order from the Court
of Queen's Bench of Alberta, Judicial District of Calgary for
protection under the Companies' Creditors Arrangement Act
(Canada). Alger & Associates Inc. was appointed monitor under the
order. Subject to the order, proceedings by creditors and others
cannot be continued or commenced without the consent of Challenger
and the monitor, or leave of the court.
The order permits Challenger to remain in possession and control
of its property, carry on its business, retain employees and other
service providers and continue with its process to evaluate the
various strategic alternatives available to the Company, including
a sale of Challenger or its assets. A special committee of
directors was appointed to oversee this process and Peters & Co.
Limited was retained as financial advisor.
Challenger Energy Corp. -- http://www.challenger-energy.com/-- is
a Calgary, Alberta, Canada-based oil and gas exploration company
which has spent approximately U.S. $81.4 million on exploration
Block 5(c) offshore Trinidad and Tobago.
CIRCUIT CITY: Bell Canada to Buy InterTan; Mum on Purchase Price
----------------------------------------------------------------
Circuit City Stores, Inc. said Bell Canada has agreed to acquire
the Canadian operations of Circuit City. InterTAN Canada Ltd., a
subsidiary of Circuit City, controls these operations and operates
more than 750 The Source stores across Canada.
The acquisition is subject to court approval in both the United
States and Canada and customary closing procedures.
The transaction is expected to close in Q3 2009. Due to the nature
of the sale process and at the request of The Source, Bell does
not expect to disclose the purchase price until after the
completion of the transaction.
James A. Marcum, vice chairman and acting president and chief
executive officer of Circuit City Stores, Inc., said, "The
acquisition of our Canadian operations by Bell Canada follows an
active sales process that saw considerable interest in this
business. This is a positive outcome for Circuit City, InterTAN
and its employees, suppliers and customers. I would like to
acknowledge the hard work, dedication and professionalism
exhibited by both the InterTAN team in Canada and the Circuit City
team in the United States over what has been a challenging
period."
Circuit City acquired InterTAN Canada in May 2004. InterTAN is
the subject of a court-monitored sales process following the
company's entry into creditor protection in Canada in November
2008. The sale is being managed by Rothschild and is expected to
close in the third calendar quarter of 2009.
Bell said the deal will further enhance the growth of its
wireless, digital TV, Internet and home phone services.
"The Source is a respected leader in consumer electronics
retailing right across Canada. Its acquisition supports Bell's
strategic imperatives to accelerate wireless and leverage momentum
in wireline services like Bell TV, Bell Internet and Bell Home
Phone," said George Cope, President and CEO of Bell and BCE.
"With its strong national presence, brand, and management team,
acquiring The Source represents a competitive and cost-effective
approach to ensuring Bell's leadership in delivering the best
communications products to Canadians," Mr. Cope said. "Expanding
the number of places people can buy Bell products is a core
element in the execution of Bell's strategy to achieve our goal:
To be recognized by customers as Canada's leading communications
company."
In addition to its extensive lineup of consumer electronics
products, The Source plans to carry the full array of Bell
consumer services at its more than 750 stores across Canada,
including Bell Mobility, Solo Mobile and potentially Virgin Mobile
wireless products and services, Bell TV's industry-leading High
Definition television services, high-speed Bell Internet, and Bell
Home Phone products, by January 2010.
The Source will continue to operate independently from Bell
following its acquisition and will maintain its well-known
national brand, broad range of communications, computing and audio
products, and its seasoned management team to be led by Ron
Cuthbertson, a respected 30-year retail veteran and most recently
President of The Source.
"The Source's new relationship with Bell will make the most of the
combined strengths of both organizations in terms of products,
service and national brand strength," said Mr. Cuthbertson.
"Combining Bell's industry-leading roster of communications
services with the brand, distribution presence, and consumer
retailing expertise of The Source will contribute positively to
the long-term growth of both businesses going forward."
The Source has a track record of profitability over the past seven
years. LTM (latest twelve month) revenue as of
December 31, 2008, was approximately $643 million while LTM
EBITDA(1) (earnings before interest, taxes, depreciation and
amortization) was approximately $27 million for the same period.
The acquisition of The Source and its more than 750 retail stores,
most of them in high-traffic mall locations, is a faster and more
cost-effective approach to increasing Bell's national distribution
footprint than building out new retail locations. More than 70%
of Canadians live within five kilometres of stores operated or
licensed by The Source, and more than 80 million technology-savvy
consumers shop at The Source each year.
About BCE
BCE Inc. (BCE) -- http://www.bce.caor http://www.bell.ca-- is
Canada's largest communications company, providing the most
comprehensive and innovative suite of communication services to
residential and business customers in Canada. Operating under the
Bell brand, the Company's services include Bell Home Phone local
and long distance services, Bell Mobility and Solo Mobile
wireless, high-speed Bell Internet, Bell TV direct-to-home
satellite and VDSL television, IP-broadband services and
information and communications technology (ICT) services. BCE
shares are listed in Canada and the United States.
About Circuit City Stores
Headquartered in Richmond, Virginia, Circuit City Stores Inc.
(Pink Sheets: CCTYQ) -- http://www.circuitcity.com/-- conducted
business as a specialty retailer of consumer electronics and
related services.
Circuit City and each of its wholly-owned United States and Puerto
Rican subsidiaries filed voluntary petitions for reorganization
relief under Chapter 11 of the United States Bankruptcy Code on
November 10, 2008 (Bankr. E.D. Va. Lead Case No. 08-35653).
InterTAN Canada Ltd., the Company's Canadian operating subsidiary,
received creditor protection from the Ontario Superior Court of
Justice under the Companies' Creditors Arrangement Act (Canada) on
the same day.
At December 31, 2008, the domestic segment operated 567 stores in
153 U.S. media markets and 45 states. At December 31, 2008, the
international segment operated through more than 750 retail stores
and dealer outlets in Canada. On January 16, 2009, Circuit City
began the liquidation of the assets of the Company and its
subsidiaries as part of the Chapter 11 proceedings.
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.
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: Fitch Cuts Rating to 'E' on Balance Sheet Stress
---------------------------------------------------------------
The plan announced by Citigroup Inc., and the U.S. government's
participation in it, should provide needed stability and support
to Citigroup, according to Fitch Ratings, which has affirmed
Citi's long- and short-term Issuer Default Ratings at 'A+' and
'F1+' respectively. The Rating Outlook for the long-term IDR
remains Stable.
The 'A+/F1+' affirmation reflects the magnitude of continued
support measures from the U.S. government due to Citi's systemic
importance. For this reason Fitch has affirmed its Support rating
for Citi at '1.'
However, on a standalone basis, Citi continues to be exposed to
deteriorating macro-economic conditions and significant balance
sheet stress. Greater relative credit risk and Citi's heavy
reliance on continued U.S. government support measures have
prompted Fitch to downgrade Citi's Individual rating to 'E' from
'C/D'.
In Fitch's rating criteria, a bank's standalone risk is reflected
in Fitch's individual ratings and the prospect of external support
is reflected in Fitch's support ratings. Collectively these
ratings drive Fitch's long- and short-term IDRs.
In addition, the suspension of preferred dividends warranted a
downgrade of Citi's preferred stock rating to 'C' from 'BB'.
Fitch has also removed the preferred stock and Individual ratings
from Rating Watch Negative.
The ratings on the long- and short-term debt issued by Citi under
the FDIC's guarantee program are also affirmed at 'AAA' and 'F1+.'
A complete list of Citi entities affected by the rating changes
follows the end of the press release.
Under the plan (announced this morning), Citi offers to exchange
common stock for up to $27.5 billion of its existing capital
securities, including preferred and trust preferred, at a
conversion price of $3.25 per common share. The U.S. government
will match this exchange up to a maximum of $25 billion face value
of its TARP preferred. The non-U.S. government exchange will
accommodate all preferred stock holders first. Depending on the
level of participation by preferred holders, holders of trust
preferred securities may also be able to participate.
The U.S. government's willingness to convert a substantial amount
of TARP preferred securities to common stock is instrumental
towards boosting Citi's weak level of tangible common equity.
Assuming substantial conversion takes place, the U.S. government
will become by far the largest single shareholder in Citi with a
stake in the range of 40%. If successful, this plan will
significantly reduce dividend costs on preferred instruments.
Investors in preferred stock issued by Citigroup Inc. are being
encouraged to participate through the suspension of preferred
dividends. Post conversion, remaining U.S. government TARP
capital will be exchanged for new trust preferred securities.
Other support measures by the U.S. government have included two
rounds of TARP capital injections, a loss cap guarantee on a $300
billion pool of assets, liquidity support and considerable funding
support through the FDIC's TLGP program.
Fitch believes Citi's asset quality will continue to deteriorate
considerably in 2009. Global economic difficulties will cause the
inflow of new problems ranging from U.S. and international
consumer exposures to large corporate exposures. Consequently,
loan loss provisions and chargeoffs will escalate from already
high levels in 2008.
While trust preferred holders will not face immediate suspension
of payments, Fitch believes the potential for future deferral is
increasing, which warranted Fitch's downgrade of Citi's trust
preferred stock to 'B' from 'BB'. Removing these ratings from
Rating Watch Negative will hinge on the success of this plan as
well as a return to significant operating profitability on a
sustained basis.
Fitch has taken these rating actions on Citi and subsidiaries:
Citigroup Inc.
-- Long-term IDR affirmed at 'A+'; Outlook Stable;
-- Short-term IDR affirmed at 'F1+';
-- Senior unsecured affirmed at 'A+';
-- Subordinated affirmed at 'A';
-- Support affirmed at '1';
-- Support Floor affirmed at 'A+';
-- Individual downgraded to 'E' from 'C/D' and removed from
Rating Watch Negative;
-- Preferred to 'C' from 'BB' and removed from Rating Watch
Negative;
-- Long-term FDIC guaranteed debt affirmed at 'AAA';
-- Short-term FDIC guaranteed debt affirmed at 'F1+'.
Citibank, N.A.
-- Long-term IDR affirmed at 'A+'; Outlook Stable;
-- Short-term IDR affirmed at 'F1+';
-- Long term deposits affirmed at 'AA-';
-- Short-term deposits affirmed at 'F1+';
-- Support affirmed at '1';
-- Support Floor affirmed at 'A+';
-- Individual downgraded to 'E' from 'C/D' and removed from
Rating Watch Negative.
Citibank (South Dakota)
-- Long-term IDR affirmed at 'A+'; Outlook Stable;
-- Short-term IDR affirmed at 'F1+';
-- Long-term deposits affirmed at 'AA-';
-- Short-term deposits affirmed at 'F1+';
-- Support affirmed at '1';
-- Support Floor affirmed at 'A+';
-- Individual downgraded to 'E' from 'C/D'; removed from Rating
Watch Negative.
Citibank Banamex USA
-- Long-term IDR affirmed at 'A+'; Outlook Stable;
-- Short-term IDR affirmed at 'F1+';
-- Subordinated affirmed at 'A';
-- Long-term deposits affirmed at 'AA-';
-- Short-term deposits affirmed at 'F1+';
-- Support affirmed at '1';
-- Support Floor affirmed at 'A+';
-- Individual downgraded to 'E' from 'C/D' and removed from
Rating Watch Negative.
Citigroup Capital III, IV, V, VI, VII, VIII, IX, X, XIV, XV, XVI,
XVII, XVIII, XIX, XX, XXI, XXIX, XXX, XXXI, and XXXII
-- Trust preferred downgraded to 'B' from 'BB'; remains on
Rating Watch Negative.
Adam Capital Trust II, III, Adam Statutory Trust I-V
-- Preferred downgraded to 'B' from 'BB'; remains on Rating
Watch Negative.
CITIGROUP INC: Moody's Junks Preferred Debt Ratings from 'Baa3'
---------------------------------------------------------------
Moody's Investors Service lowered the senior debt ratings of
Citigroup Inc. to A3 from A2, the senior subordinated debt to Baa1
from A3, the junior subordinated debt to Baa3 from A3 with a
negative outlook (issued by various Citigroup Capital Trust
vehicles), and the preferred debt ratings to Ca from Baa3. The
short-term rating at Citigroup Inc. was confirmed at Prime-1.
Citibank N.A.'s rating for deposits was lowered to A1 from Aa3,
and its Prime-1 short-term rating was affirmed. The Citibank's
bank financial strength rating was confirmed at C- with a negative
outlook, while its baseline credit assessment was lowered to Baa2
from Baa1.
All ratings have a stable outlook except for Citibank's bank
financial strength rating and Citigroup's junior subordinated debt
rating. These actions conclude a review that commenced on
December 18th, 2008.
These actions had no impact on the FDIC-guaranteed debt issued by
Citigroup. That debt remains rated Aaa with a stable outlook.
The downgrade of the senior and subordinated ratings is driven by
Moody's expectation that, the current level of government support
notwithstanding, Citigroup will emerge from the current economic
crisis with a different mix of core businesses and a smaller
scale, which could diminish its relative importance to the US
banking system over the long run. The confirmation of the BFSR
reflects the fact that the recapitalization announced and the
government's Eligible Asset guarantee better position the company
to face a number of near-term financial and operational pressures.
The multi-notch downgrade of the preferred stock rating
incorporates the expected loss resulting from the deferral of
dividends on these non-cumulative instruments, which Moody's
believe could last for several years.
The rating actions follow an announcement by Citigroup that it is
embarking on a major capital initiative. Investors in Citigroup
junior-subordinated securities and preferred stock will have the
option to exchange their securities into Citigroup authorized
common stock. In addition, the U.S. government will exchange up
to $25 billion of its preferred securities into common stock on a
one-to-one ratio based on the level of non-government
participation in the exchange. The U.S. government will exchange
its remaining preferred securities into a new trust preferred
securities. Depending upon the participation rate in the
exchange, holders in junior subordinated debt (TRUPS and ETRUPS)
may also be eligible to participate.
Citigroup also announced that it will suspend dividends on its
preferred securities and eliminate its remaining common dividend
while it will continue to pay distributions on its junior-
subordinated securities.
Citigroup believes that its tangible common equity could rise to
as much as $81 billion as a result of the recapitalization.
Capital injection supports C- BFSR
The confirmation of Citigroup's C- BFSR incorporates the prospect
that Citigroup's larger capital base puts it in a better position
to deal with a number of asset quality, financial and operational
challenges.
Citigroup's BFSR of C- takes into account the further financial
benefits that have been provided by the U.S. government. These
include the expected sizable increase in tangible equity resulting
in high Tier 1 and adjusted tangible common equity ratios. Prior
to this recapitalization, Citigroup's adjusted tangible equity
ratios were modest.
A further benefit of the exchange for depositors and senior
creditors is that Citigroup will not being paying preferred
dividends, which were a substantial drag on internal capital
generation.
Citigroup's BFSR also incorporates the benefit of the U.S
government's Eligible Asset Guarantee program, which covers
$306 billion of Citigroup's assets, consisting mostly of loans and
securities backed primarily by residential and commercial real
estate. These assets will remain on Citigroup's balance sheet.
Citigroup will absorb pre-tax losses of up to $39 billion netted
down to approximately $29 billion when one takes into account $10
billion of existing reserves. Any losses in excess of that amount
will be shared by the U.S. government (90%) and Citigroup (10%).
The expected increase in common equity improves Citigroup's
ability to absorb its EAG-related first-loss position and maintain
relatively high capital ratios. Importantly, the EAG program
protects Citigroup from catastrophic losses.
Moody's estimated that if all anticipated looses were to be taken
during the course of 2009, Citigroup's adjusted tangible common
equity ratio would remain near 10%, and that even under a more
stressful scenario, the ratio would remain above 9%, thanks in
part to the EAG program.
Moody's maintained its BFSR of C- on Citigroup despite its high
pro forma capital ratios for these main reasons. First, core
earnings prospects remain poor because Citigroup will need to take
sizable credit losses in response to a global recession. This is
likely to result in Citigroup utilizing a high proportion of its
first-loss position in its EAG program. In addition, earnings are
likely to be negatively impacted by credit costs not covered by
the program, such as its global credit card portfolios.
Second, Citigroup has a sizable deferred-tax asset, which on a net
basis totals $44.4 billion at year-end 2008. Poor earnings
prospects in 2009 following sizable losses in 2008 increase the
possibility that a reserve against this asset could be taken,
reducing its tangible common equity.
Third, regarding franchise, Citigroup intends to focus on global
cash management, securities servicing and global investment
banking coupled with certain consumer businesses globally, in
particular credit cards and deposit taking. Although such
emphasis will be leveraging off historical strengths, it is a
business mix that has led to periods where excessive credit risk
has resulted from efforts to obtain earnings growth.
The C- BFSR with a negative outlook also reflects the uncertainty
introduced by substantial US Government ownership. This includes
greater uncertainty with regard to future business mix, as well as
capital and credit allocation decisions.
Debt, deposit ratings balance near-term support with changing
profile
Commenting on the A1 deposit rating, Moody's said that the U.S.
government actions on Citigroup help to confirm Moody's assumption
that Citigroup has a very high level of systemic support during
the credit crisis. The long-term debt and deposit ratings also
reflect that systemic support may lessen in the long term as
Citibank's business changes in the coming years, especially as the
U.S. government seeks to sell its ownership.
Commenting on the A3 long-term and Prime-1 short-term rating
configuration at Citigroup Inc., Moody's said that, in most cases,
an A3 long-term rating results in a Prime-2 short-term rating.
"We believe the Prime-1 rating is appropriate because under
conditions of strong systemic support, short-term ratings are the
most predictable and assurance of payment of short-term
obligations is the highest," explained Moody's Senior Vice
President Sean Jones.
These rating actions are consistent with Moody's recent
announcement that it is making some recalibration of the relative
importance attached to certain rating factors within its current
bank rating methodologies.
Widening downward notching for junior subordinated debt ratings
Moody's lowered the junior-subordinated debt ratings of Citigroup
to Baa3 from A3. Moody's said that the cumulative nature of the
interest on such instruments reduces the incentive to defer on
interest, especially with the anticipation that Citigroup's equity
will increase significantly, thus improving its financial
stability. Nevertheless, if there is an unexpected need for
further government support, the risk of deferred payment on these
instruments, as well as the risk of a further potential
restructuring, warrants additional notches on the ratings of these
instruments.
Moody's last rating action was on January 16th, 2009 when it
lowered Citibank N.A.'s BFSR to C- from C and Citigroup Inc.'s
preferred rating to Baa3 from Baa2. Also, all ratings of
Citigroup were placed on review for possible downgrade except for
the Prime-1 rating at Citibank N.A.
Citigroup is headquartered in New York City and its reported
consolidated assets are $1.9 trillion.
Rating actions taken are listed below.
Downgrades:
Issuer: Associates Corporation of North America
-- Issuer Rating, Downgraded to A3 from A2
-- Subordinate Regular Bond/Debenture, Downgraded to Baa1 from
A3
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: Associates First Capital Corporation
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: CGMH Capital II
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: CGMH Capital III
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: CGMH Capital IV
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: CitiFinancial Credit Company
-- Issuer Rating, Downgraded to A3 from A2
-- Junior Subordinated Shelf, Downgraded to (P)Baa3 from (P)A3
-- Senior Unsecured Medium-Term Note Program, Downgraded to A3
from A2
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
-- Senior Unsecured Shelf, Downgraded to (P)A3 from (P)A2
Issuer: CitiFinancial Europe PLC
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of Baa1 to A3 from a range of A3 to A2
Issuer: Citibank (South Dakota), N.A.
-- Issuer Rating, Downgraded to A1 from Aa3
-- OSO Senior Unsecured OSO Rating, Downgraded to A1 from Aa3
-- Senior Unsecured Deposit Rating, Downgraded to A1 from Aa3
Issuer: Citibank Europe plc
-- Senior Unsecured Deposit Rating, Downgraded to A2 from A1
Issuer: Citibank International Plc
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of A3 to A2 from a range of A2 to A1
-- Senior Unsecured Medium-Term Note Program, Downgraded to A2
from A1
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A2
from A1
-- Senior Unsecured Deposit Rating, Downgraded to A2 from A1
Issuer: Citibank, N.A.
-- Issuer Rating, Downgraded to A1 from Aa3
-- OSO Senior Unsecured OSO Rating, Downgraded to A1 from Aa3
-- Senior Unsecured Deposit Note/Takedown, Downgraded to A1
from Aa3
-- Senior Unsecured Medium-Term Note Program, Downgraded to a
range of (P)A1 to A1 from a range of (P)Aa3 to Aa3
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A1
from Aa3
-- Senior Unsecured Deposit Rating, Downgraded to A1 from Aa3
Issuer: Citibank, N.A. (Auckland Branch)
-- Senior Unsecured Medium-Term Note Program, Downgraded to A1
from Aa3
Issuer: Citibank, N.A. (London Branch)
-- Senior Unsecured Medium-Term Note Program, Downgraded to A1
from Aa3
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A1
from Aa3
Issuer: Citibank, N.A. (Sydney Branch)
-- Senior Unsecured Medium-Term Note Program, Downgraded to A1
from Aa3
Issuer: Citicorp
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of Baa1 to A3 from a range of A3 to A2
-- Multiple Seniority Shelf, Downgraded to a range of (P)Ca to
(P)A3 from a range of (P)Baa3 to (P)A2
-- Preferred Stock Preferred Stock, Downgraded to Ca from Baa3
-- Subordinate Medium-Term Note Program, Downgraded to Baa1
from A3
-- Subordinate Regular Bond/Debenture, Downgraded to Baa1 from
A3
-- Senior Unsecured Medium-Term Note Program, Downgraded to A3
from A2
Issuer: Citicorp Capital I
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital I
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital II
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital III
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital IV
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital IX
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital V
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital VI
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital VII
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital VIII
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital X
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital XI
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital XII
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital XIII
-- Preferred Stock Shelf, Downgraded to (P)Baa3 from (P)A3
Issuer: Citigroup Capital XIV
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XIX
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XV
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XVI
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XVII
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XVIII
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XX
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Capital XXI
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Citigroup Finance Canada Inc
-- Senior Unsecured Medium-Term Note Program, Downgraded to A3
from A2
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: Citigroup Funding, Inc.
-- Issuer Rating, Downgraded to A3 from A2
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of Baa1 to A3 from a range of A3 to A2
-- Multiple Seniority Shelf, Downgraded to a range of (P)Baa1
to (P)A3 from a range of (P)A3 to (P)A2
-- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to
A3 from A2
-- Senior Unsecured Medium-Term Note Program, Downgraded to A3
from A2
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: Citigroup Global Markets Holdings Inc.
-- Issuer Rating, Downgraded to A3 from A2
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of Baa1 to A3 from a range of A3 to A2
-- Multiple Seniority Shelf, Downgraded to a range of (P)Baa1
to (P)A3 from a range of (P)A3 to (P)A2
-- Preferred Stock Preferred Stock, Downgraded to Ca from Baa3
-- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to
A3 from A2
-- Senior Unsecured Medium-Term Note Program, Downgraded to A3
from A2
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
-- Senior Unsecured Shelf, Downgraded to (P)A3 from (P)A2
Issuer: Citigroup Global Mkts Deutsch. AG&Co
-- Senior Unsecured Deposit Rating, Downgraded to A2 from A1
Issuer: Citigroup Inc.
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of Baa1 to A3 from a range of A3 to A2
-- Multiple Seniority Shelf, Downgraded to a range of (P)Ca to
(P)A3 from a range of (P)Baa3 to (P)A2
-- Preferred Stock Preferred Stock, Downgraded to Ca from Baa3
-- Subordinate Regular Bond/Debenture, Downgraded to Baa1 from
A3
-- Senior Unsecured Medium-Term Note Program, Downgraded to A3
from A2
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: Egg Banking Plc
-- Junior Subordinated Regular Bond/Debenture, Downgraded to Ca
from Baa3
-- Multiple Seniority Medium-Term Note Program, Downgraded to a
range of Baa1 to A3 from a range of A3 to A2
-- Subordinate Regular Bond/Debenture, Downgraded to Baa1 from
A3
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: SI Financing Trust I
-- Preferred Stock Preferred Stock, Downgraded to Baa3 from A3
Issuer: Source One Mortgage Services Corporation
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Issuer: Washington Mutual Finance Corp.
-- Senior Unsecured Regular Bond/Debenture, Downgraded to A3
from A2
Outlook Actions:
Issuer: Associates Corporation of North America
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Associates First Capital Corporation
-- Outlook, Changed To Stable From Rating Under Review
Issuer: CGMH Capital II
-- Outlook, Changed To Negative From Rating Under Review
Issuer: CGMH Capital III
-- Outlook, Changed To Negative From Rating Under Review
Issuer: CGMH Capital IV
-- Outlook, Changed To Negative From Rating Under Review
Issuer: CitiFinancial Credit Company
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: CitiFinancial Europe PLC
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citibank Europe plc
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: Citibank International Plc
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: Citibank, N.A.
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: Citibank, N.A. (Auckland Branch)
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citibank, N.A. (London Branch)
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citibank, N.A. (Sydney Branch)
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citicorp
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citicorp Capital I
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital I
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital II
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital III
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital IV
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital IX
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital V
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital VI
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital VII
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital VIII
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital X
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XI
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XII
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XIII
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XIV
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XIX
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XV
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XVI
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XVII
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XVIII
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XX
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Capital XXI
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Citigroup Finance Canada Inc
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citigroup Funding, Inc.
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citigroup Global Markets Holdings Inc.
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: Citigroup Global Markets Inc.
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Citigroup Global Mkts Deutsch. AG&Co
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: Citigroup Inc.
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: Egg Banking Plc
-- Outlook, Changed To Stable(m) From Rating Under Review
Issuer: SI Financing Trust I
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Source One Mortgage Services Corporation
-- Outlook, Changed To Stable From Rating Under Review
Issuer: Washington Mutual Finance Corp.
-- Outlook, Changed To Stable From Rating Under Review
Confirmations:
Issuer: CitiFinancial Europe PLC
-- Multiple Seniority Medium-Term Note Program, Confirmed at
P-1
Issuer: Citibank Europe plc
-- Bank Financial Strength Rating, Confirmed at C-
Issuer: Citibank International Plc
-- Bank Financial Strength Rating, Confirmed at C-
Issuer: Citibank, N.A.
-- Bank Financial Strength Rating, Confirmed at C-
Issuer: Citigroup Funding, Inc.
-- Issuer Rating, Confirmed at P-1
-- Senior Unsecured Commercial Paper, Confirmed at P-1
Issuer: Citigroup Global Markets Holdings Inc.
-- Multiple Seniority Medium-Term Note Program, Confirmed at
P-1
Issuer: Citigroup Global Markets Inc.
-- Commercial Paper, Confirmed at P-1
Issuer: Citigroup Global Mkts Deutsch. AG&Co
-- Bank Financial Strength Rating, Confirmed at C-
Issuer: Citigroup Inc.
-- Commercial Paper, Confirmed at P-1
-- Multiple Seniority Medium-Term Note Program, Confirmed at
P-1
CLAIRE'S STORES: Expects Q4 Net Sales to Drop 12.2%
---------------------------------------------------
Claire's Stores, Inc., on Friday disclosed selected preliminary,
unaudited financial results for the 2008 fourth quarter as well as
the fiscal year, which ended January 31, 2009.
The Company expects to hold its regular quarterly conference call
when those results are released in April. The Company plans to
file its 2008 Annual Report on Form 10-K on or before the due date
of April 30, 2009.
The Company expects to report net sales of $393 million for the
2008 fourth quarter, a 12.2% decrease from the 2007 fourth
quarter. The decrease was primarily attributable to a decline in
same store sales and the effect of foreign currency translation,
partially offset by new store sales. Sales would have declined
5.4% excluding the impact from foreign currency translation.
Consolidated same store sales declined 7.2% in the 2008 fourth
quarter. In North America, same store sales decreased 7.8%, with
sales at our Icing stores declining less than at Claire's stores.
European same store sales declined 5.9%. The Company computes
same store sales on a local currency basis, which eliminates any
impact from changes in foreign exchange rates.
While still negative, same store sales began to improve in
January. This improvement has continued into Fiscal 2009 as same
store sales to date in February are slightly positive.
During the fourth quarter, the Company continued to execute upon
its Cost Savings Initiative, achieving approximately $9 million of
savings in the quarter. After achieving approximately
$16 million of savings from CSI during fiscal 2008, the Company is
still on target to achieve in excess of $40 million savings from
CSI on an annual basis. In addition to CSI, the Company has
identified approximately another $20 million of cost reduction
opportunities which are expected to be realized during Fiscal 2009
for a total savings in excess of $60 million on an annual basis.
These savings will be offset somewhat by increases in certain
other expenses.
Adjusted EBITDA in the 2008 fourth quarter is expected to be
between $75 and $78 million compared to $115 million in the 2007
fourth quarter. The Company defines Adjusted EBITDA as earnings
before interest, income taxes, depreciation and amortization,
excluding the impact of transaction related costs incurred in
connection with its May 2007 acquisition and other non-recurring
or non-cash expenses, and normalizing occupancy costs for certain
rent-related adjustments.
During the 2008 fourth quarter the Company closed 118
underperforming North American stores. The Company will report a
modest non-cash charge associated with the write-off of these
assets. The Company continues to evaluate its entire store
portfolio and may close other stores in the future.
At January 31, 2009, cash and cash equivalents were $205 million,
and $194 million continued to be drawn on the Company's Revolving
Credit Facility. The Company drew the full available amount under
the facility during the 2008 third quarter to preserve the
availability of the commitment because a member of the facility
syndicate, Lehman Brothers, filed for bankruptcy. The agent bank
has not yet found a replacement for Lehman Brothers in the
facility syndicate, or arranged for the assumption of Lehman
Brothers' commitment by a creditworthy entity. The Company will
continue to assess whether to pay down all or a portion of this
outstanding balance based on various factors, including the
creditworthiness of other syndicate members and general economic
conditions.
Fiscal 2008 Results
The Company expects to report that net sales for fiscal 2008
declined 6.5% to $1.41 billion from $1.51 billion in the prior
fiscal year. Same store sales decreased 6.9%. For fiscal 2008,
Adjusted EBITDA is expected to be between $212 million and $215
million compared to $300 million in the prior fiscal year.
As a result of the difficult retail operating environment and the
current challenging economic conditions, the Company is currently
assessing the recoverability of its goodwill and other intangible
assets as well as its fixed assets and expects to record a
material non-cash impairment charge for the quarter ended
January 31, 2009. The size of the impairment charge will be
determined after further analysis and finalized prior to the
filing of the 2008 Annual Report on Form 10-K. Any such
impairment charge would be non-cash, would not affect any of the
terms of the Company's Credit Facility or Indenture agreements,
and would not have any effect on our liquidity or cash flow.
Based in Pembroke Pines, Florida, Claire's Stores, Inc., is a
specialty retailer of value-priced jewelry and accessories for
girls and young women through its two store concepts: Claire's(R)
and Icing(R). Icing operates only in North America; Claire's
operates worldwide. As of January 31, 2009, Claire's Stores, Inc.
operated 2,969 stores in North America and Europe. Claire's
Stores, Inc. also operates through its subsidiary, Claire's
Nippon, Co., Ltd., 214 stores in Japan as a 50:50 joint venture
with AEON, Co., Ltd. The Company also franchises 196 stores in
the Middle East, Turkey, Russia, South Africa, Poland and
Guatemala.
* * *
As reported by the Troubled Company Reporter on September 29,
2008, Moody's Investors Service confirmed Claire's Stores, Inc.,
long term ratings, including its probability of default rating, at
Caa1. In addition, Moody's affirmed Claire's speculative grade
liquidity rating at SGL-4. The rating outlook is negative. The
confirmation reflects Moody's view that the Caa1 appropriately
reflects higher-than-average probability of default over the near
to medium term, given what Moody's views as an overleveraged and
unsustainable capital structure. It also reflects the view that
the company will be able to fund its free cash flow deficits with
excess cash over the next twelve months, providing it some time in
order to improve operating performance.
COINMACH SERVICE: High Leverage Cues Moody's Junk Rating from B2
----------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of Coinmach Service Corp. to Caa2 from B2 and its speculative
grade liquidity rating to SGL-4 from SGL-3. The company's other
existing debt ratings were also downgraded. The outlook remains
negative.
The rating action reflects Moody's belief that the company's high
leverage is most likely not sustainable over the intermediate term
and will have to be addressed, raising the potential for a
default. Moody's believes the company may not be able to meet its
interest payments over the intermediate term as the PIK feature
(from 5/15/2008 through 5/15/2009) of the senior subordinated loan
expires in May 2009. Over the next twelve months, the company's
liquidity profile will be weak, primarily due to the continuing
unfavorable vacancy rate trends within the housing industry. This
is contributing to very tight financial covenant headroom. Lower
industry enterprise value multiples, declining demand and lower
than expected projected operating results triggered a $400 million
goodwill impairment charge for the quarter ended December 31,
2008. With the expectation that vacancy rate trends will not
abate in the short term, Moody's believes operating performance in
fiscal year 2010 will worsen. As a result, Coinmach may be
required to obtain waivers or amendments to its financial
covenants under its credit facilities.
The Caa2 corporate family rating and negative outlook reflects
high leverage, weak interest coverage, and relatively high capital
costs, including advanced payments. Debt increased for the
quarter ended December 31, 2008, due to the full draw down of the
company's $50 million delayed term loan, increasing the company's
cash position to $62 million from approximately
$30 million. Lastly, uncertainty exists with respect to
Coinmach's ownership structure over the intermediate term as
financial pressures exist at Babcock & Brown, the company's
financial sponsor.
The SGL-4 rating indicates weak liquidity. The company may be
required to obtain a waiver or amendment to its financial
maintenance covenant (consolidated total leverage ratio) under its
credit facility. Moody's expects the company to generate negative
free cash flow over the near term and heavily rely on its
committed facilities. Coinmach maintains a $50 million senior
secured bank credit facility that is committed until 2013. At
December 31, 2008, aggregate outstanding amounts were
$34.5 million, with availability of approximately $6.7 million
after considering outstanding letters of credit. Again, the
company currently has approximately $62 million of cash on the
balance sheet.
Ratings Downgraded:
-- Corporate Family Rating, Caa2 from B2
-- Revolving Credit Facility due 2013, Caa1 (LGD3, 34%) from B1
-- Delayed Draw Term Loan due 2014, Caa1 (LGD3, 34%) from B1
-- Term Loan B due 2014, Caa1 (LGD3, 34%) from B1
-- Senior Unsecured Loan due 2015, Caa3 (LGD5, 79%) from Caa1
-- Senior Subordinated Loan due 2015, Ca (LGD6, 92%) from Caa1
-- Speculative Grade Liquidity Rating, SGL-4 from SGL-3
Moody's last rating action occurred in July of 2008 when the B2
corporate family rating and negative outlook were first assigned.
Coinmach Service Corp., through its wholly owned subsidiaries, is
the single largest provider of outsourced laundry services for
multi-family housing properties in North America.
CUSTOM CONTRACTORS: U.S. Trustee Wants Case Converted to Chapter 7
------------------------------------------------------------------
Donald F. Walton, the United States Trustee for Region 21 asks the
U.S. Bankruptcy Court for the Southern District of Georgia to
convert Customs Contractors Associates, Inc.'s Chapter 11 case to
one under Chapter 7 of the Bankruptcy Code, or in the alternative,
to dismiss the Debtor's case.
The U.S. Trustee said the Debtor has not filed any monthly
operating reports since the commencement of its case, and has not
paid the minimum quarterly fee for the fourth quarter of 2008.
Failure to file monthly operating reports are grounds for
dismissal pursuant to Sec. 1112(b)(4)(F) and (H) of the Bankruptcy
Code. Failure to pay quarterly U.S. Trustee fees is a cause for
dismissal pursuant to Sec. 1112(b)(4)(K) of the Bankruptcy Code.
Headquartered in Martinez, Georgia, Custom Contractors and
Associates, Inc., filed for Chapter 11 relief on Aug. 28, 2008
(Bankr. S.D. Ga. Case No. 08-11806). James T. Wilson, Jr., Esq.,
at James T. Wilson, Jr., PC, represents the Debtor as counsel.
When the Debtor filed for protection from its creditors, it listed
assets and debts of between $10 million and $50 million each.
DAMON DORSEY: Files for Chapter 7 Bankruptcy
--------------------------------------------
Tom Daykin at the Journal Sentinel reports that Damon Dorsey and
his wife, Maria, have filed for Chapter 7 bankruptcy in the U.S.
Bankruptcy Court for the Eastern District of Wisconsin.
According to the Journal Sentinel, Mr. Dorsey listed $679,150 in
assets -- including a 50% interest in Roots Development and
Renaissance Food Court that Mr. Dorsey owned with partner Robert
Plevin. Mr. Dorsey also listed $1.55 million in liabilities that
include unsecured claims totaling $975,216, the report says.
The Journal Sentinel relates that the assets of Roots Development
and Renaissance Food include a 5,000-square-foot commercial
building at 3617-3633 W. North Avenue, that formerly housed
Scoopz, which closed in October 2008. Court documents say that
the building and its equipment are valued at $375,000. According
to court documents, Marshall & Ilsley Corp., which provided a loan
for Scoopz, has a $446,500 claim, of which $71,500 is unsecured.
The Sentinel Journal states that Milwaukee Economic Development
Corp., a business lending agency affiliated with the City of
Milwaukee that helped finance Scoopz, has two claims totaling
$682,000 in unsecured debt. The state Department of Commerce,
according to the Sentinel Journal, also provided a loan for Scoopz
and has a $100,000 unsecured claim.
Damon Dorsey is a Milwaukee central-city developer whose projects
included the publicly financed Scoopz frozen custard and burger
restaurant. Mr. Dorsey formerly did business under the names of
three companies: Roots Development LLC, Renaissance Food Court
LLC, and Urban Development Group LLC. He's now a teacher at
Edgewood College in Madison.
DAVID H. HURSEY: Files for Chapter 7 Bankruptcy
-----------------------------------------------
Beth Hundsdorfer at Belleville News-Democrat reports that O'Fallon
city treasurer David H. Hursey and his wife, Susan, have filed for
Chapter 7 liquidation.
According to News-Democrat, Mr. Hursey said that he has about
$12 million in debts on these assets:
-- a $250,000 O'Fallon home on Tanglewood Trace,
-- a $350,000 Lake of the Ozarks condo,
-- a $12,000 Florida vacation home,
-- five cars,
-- two jet skis, and
-- five O'Fallon office buildings worth more than $5 million,
which include:
* an office building at 3 Colony Square in O'Fallon at
$1.5 million,
* an office building at 3 Williamsburg Center in O'Fallon
at $1.2 million, and
* $2.7 million for three buildings in Eagle Center.
Court documents say that Mr. Hursey started working in January
2009 for a Phoenix transportation and logistics company, earning
about $10,250 a month. News-Democrat relates that Mr. Hursey
earns $10,900 per year for his part-time job as city treasurer.
According to News-Democrat, Mr. Hursey's monthly expenses are
listed as $19,650, including:
-- $2,000 for food,
-- $300 for satellite television service, and
-- $700 for telephone service.
News-Democrat states that Mr. Hursey's creditors will have a
meeting on May 1.
O'Fallon City Treasurer David H. Hursey is running unopposed for
re-election on April 7, 2009. He has served as city treasurer for
the past six years, but served from 1991 to 1993 under then-Mayor
Kristi Vetri. Mr. Hursey was president and CEO of The Hursey
Group, a logistics, distribution, warehousing, transportation,
technology, communications and real estate business.
DELIDDO AND ASSOCIATES: Voluntary Chapter 11 Case Summary
---------------------------------------------------------
Debtor: DeLiddo and Associates, Inc.
d/b/a DEERS
P.O. Box 187
Salida, CA 95368
Bankruptcy Case No.: 09-90452
Chapter 11 Petition Date: February 24, 2009
Court: United States Bankruptcy Court
Eastern District of California (Modesto)
Judge: Robert S. Bardwil
Debtor's Counsel: David C. Johnston, Esq.
1014 16th Street
P.O. Box 3212
Modesto, CA 95353-3212
Tel: (209) 521-6260
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Jack P. DeLiddo, president of the
Company.
DELPHI CORP: Judge Drain Keeps Open Mind on Retiree Benefits
------------------------------------------------------------
Although Judge Robert Drain of the U.S. Bankruptcy Court for the
Southern District of New York at a hearing last week tentatively
authorized Delphi Corp. to terminate medical, drug, dental and
vision benefits for the 15,000 retired salaried workers, he called
for the appointment of a special committee to take a second bite
at the apple, Bloomberg News said.
According to Bloomberg's Bill Rochelle, Judge Drain ordered the
formation of a committee representing salaried retirees and gave
them a $200,000 budget to be paid by Delphi.
According to Bloomberg, the Committee and its lawyer can search
for and present evidence to Judge Drain at a March 11 hearing on
the issue of whether the retirees already had vested health-care
benefits the Court couldn't cut off summarily. "If [Judge] Drain
decides the benefits weren't vested, his ruling from Feb. 25
indicates Delphi will be allowed to terminate the retirees' health
benefits on March 31. [Judge] Drain also authorized the committee
to negotiate a settlement with Delphi," Bloomberg said.
As reported by the Troubled Company Reporter on February 26, Judge
Drain gave tentative approval to the proposed cuts after witnesses
for General Motors Corp.'s former unit testified the cuts were
vital to its survival because its lenders demanded them.
About 1,600 objections were filed by workers. The salaried
retirees contend that their retirement was the Debtors' decision
and they had little time to prepare for retirement. The Medical
and Insurance Benefits have been reduced and the Debtors'
obligations under those programs modified over the years, thus any
further modification of the Medical and Insurance Benefits should
be denied, the Salaried Retirees assert. The Salaried Retirees
stress that with the current state of the economy, they have lost
almost 40% of their savings under the Stock Savings Plan and the
cost of living has increased significantly in the last two years.
In response to the objections, however, the official committee of
unsecured creditors said that it agrees with the Debtors' view
that their reasonable business judgment no longer permits them to
maintain discretionary benefit programs like the Salaried Other
Post-Employment Benefits that would cost hundreds of millions of
dollars. The Committee, however, pointed out that the affected
employees should be entitled to file proofs of claim against the
Debtors within a period after an order granting the OPEB
Termination Motion is entered, solely for asserting whatever
claims arising from the termination of the Salaried OPEB.
A summary of the Debtors' Omnibus Reply to the OPEB Termination
Objections is available for free at:
http://bankrupt.com/misc/Delphi_OPEBObjSummary.pdf
Delphi's counsel, John Wm. Butler, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, in Chicago, Illinois, has said that Delphi
will save $70 million a year if the identified employee programs
are eliminated. He added that $1.1 billion in balance sheet
liability would be eliminated from the Debtors' reorganization
balance sheet if insurance and medical benefits were eliminated.
Assuming an April 1, 2009 effective date, it is anticipated that
upon effectiveness of the proposed terminations there will be cash
savings to the Debtors of $200,000,000 from 2009 through 2011 as
well as the elimination of balance sheet liabilities exceeding
$1.1 billion, he notes.
In Delphi's request for approval of the termination of the
employee programs, Mr. Butler informed the Court that the total
enterprise value of the company now "may be equivalent to, or even
less than, the amount of the debtor's post-petition obligations
including" bank loans.
Delphi Corp., in May 2008, sued Appaloosa and other parties in
light of their refusal to comply with their prior agreement to
provide US$2,550,000,000 in equity exit financing to Delphi.
Appaloosa's termination of their Equity Purchase and Commitment
Agreement stalled the consummation of Delphi's Plan of
Reorganization, which was confirmed by the Court January 25,
2008, and kept Delphi in Chapter 11. Delphi, on October 3, filed
modifications to their Plan of Reorganization, which would allow
Delphi to exit Chapter 11 regardless of the outcome of their
lawsuit for specific performance by the Plan Investors. The
Modified Plan does not require equity exit financing from the Plan
Investors, and only contemplates a US$3.75 billion of funded
emergence capital through a combination of term bank debt and
rights to purchase equity in Reorganized Delphi. The Modified
Plan also requires more funding by General Motors Corp.
However, according to Mr. Butler, Delphi is engaged in discussions
with their stakeholders to formulate further plan modifications
consistent with the timetable agreed in the accommodation
agreement -- although its $4.35 billion DIP facility has expired,
the accommodation agreement allowed Delphi to retain the proceeds
of drawn amounts under the DIP facility until June 30, 2009,
subject to various conditions.
The Debtors are making further revisions to their business plan
consistent with the extremely low volume production environment in
the global automotive industry and depressed global capital and
equity markets. "Although no formal valuation of the revised
business plan has been completed, it is anticipated that the total
business enterprise value associate with the revised business plan
will be substantially below the valuation range contained in the
Plan Modification Motion and may be equivalent to or even less
than, the amount of the Debtors' postpetition obligations
including the Debtors' DIP credit facility."
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DELTA PETROLEUM: Deals Non-Compliance Raises Going Concern Doubt
----------------------------------------------------------------
KPMG LLP in Denver, Colorado, raised substantial doubt about Delta
Petroleum Corporation's ability to continue as a going concern
after auditing the Company's financial statements for the periods
ended Dec. 31, 2008, and 2007. The auditors related that the
Company has suffered recurring losses from operations, has a
working capital deficiency, and was not in compliance with its
debt covenants at Dec. 31, 2008.
At Dec. 31, 2008, the Company's balance sheet showed total assets
of $1.8 billion, total liabilities of $1.1 billion and
stockholders' equity of $747.4 million.
For the quarter ended Dec. 31, 2008, the Company reported a net
loss of $459.7 million compared with a net loss of $28.5 million,
in the year-earlier quarter. The current period results include
$327.1 million of impairments recorded due to the significant
decline in commodity prices and $100.9 million of dry hole costs.
For the year ended Dec. 31, 2008, the Company reported a net loss
of $452 million compared with a net loss of $147.2 million for the
year ended Dec. 31, 2007. Results for the year ended Dec. 31,
2008, included dry hole costs of $111.9 million compared to
$28.1 million for the comparable period a year ago. Dry hole
costs are related to Greentown and Hingeline exploratory projects
in Utah.
Liquidity and Capital Resources
The Company experienced a net loss of $452.0 million for the year
ended Dec. 31, 2008, it was not in compliance with certain of the
debt covenants under its Credit Facility, and is facing
significant immediate requirements to fund obligations in excess
of its existing sources of liquidity.
During the year ended Dec. 31, 2008, the Company has an operating
loss of $464.5 million, but generated cash from operating
activities of $140.7 million and obtained cash from financing
activities of $897.6 million. During this period it spent
$457.9 million on oil and gas development, $221.8 million on oil
and gas acquisitions or $179.8 million, net of $42.0 million
proceeds from dispositions, and $53.0 million on drilling and
trucking capital expenditures or $49.8 million, net of
$3.2 million proceeds from dispositions.
At Dec. 31, 2008, the Company has $65.5 million in cash, total
assets of $1.9 billion and a debt to capitalization ratio of
47.0%. Debt at Dec. 31, 2008, totaled $841.2 million, comprised
of $388.3 million of bank debt or $295 million of which was
classified as current at Dec. 31, 2008, $188.3 million of long-
term installments payable, $149.5 million of senior subordinated
notes and $115.0 million of senior convertible notes.
The Company related that the economic and operating condition of
the oil and gas exploration and production industry has changed
dramatically. The decline in commodity prices has resulted in a
significant decrease in the Company's liquidity position. In
August 2008, DHS closed a new $150 million credit facility with
Lehman Brothers Commercial Paper, as administrative agent. As a
result of the Lehman bankruptcy, DHS has no additional
availability under its credit facility.
On March 2, 2009, the Company entered into the First Amendment to
the Second Amended and Restated Credit Agreement with JPMorgan
Chase Bank, N.A. and certain other financial institutions in
which, among other changes, the lenders provided the Company
relief for a period ending April 15, 2009, at the earliest and no
later than June 15, 2009, dependent upon the progress of the
Company's capital raising efforts, from acting upon their rights
and remedies as a results of the Company's violation of accounts
payable and current ratio covenants. The Amendment waives the
March 31, 2009, current ratio covenant requirement, and, if the
Company successfully completes its capital raising efforts,
replaced the previous consolidated net debt to consolidated
EBITDAX covenant with a senior secured debt to consolidated
EBITDAX covenant which would require that the ratio of the
Company's senior secured debt to consolidated EBITDAX for the
preceding four consecutive fiscal quarters be less than 4.0 to
1.0.
In accordance with the Amendment, the borrowing base will be
reduced upon the successful completion of our capital raising
efforts from $295 million to $225 million, with a conforming
borrowing base of $185 million until the next scheduled
redetermination date -- Sept. 1, 2009. The Amendment requires
that the Company raise net proceeds of at least $140 million
through its capital raising efforts on or before the forbearance
termination date and that the Company reduce its amounts
outstanding under the senior credit facility to not more than
$225 million and pay accounts payable with such net proceeds. The
revised variable interest rates on the senior credit facility are
based on the ratio of outstanding credit to the conforming
borrowing base and vary between Libor plus 2.5% to Libor plus 5.0%
for Eurodollar loans and 1.625% to 4.125% for base rate loans.
The Amendment will change the maturity date of the senior credit
facility to Jan. 15, 2011, upon the successful completion of its
capital raising efforts.
The Company has obtained two judgments against the United States
in its Offshore California litigation, one in the amount of
$60 million and the other in the amount of $91.4 million. The
$60 million judgment was affirmed by the United States Court of
Appeals for the Federal Circuit on Aug. 25, 2008, and the
government's petition seeking a rehearing of the decision was
denied on Dec. 24, 2008. Payment of this judgment is currently
delayed while the government decides whether or not to seek review
by the United States Supreme Court. The government was granted an
extension until April 4, 2009 to elect to make its decision. If
review is not sought, payment is expected to be received during
the second quarter of 2009. The $91.4 million judgment was
entered by the United States Court of Federal Claims on Feb. 25,
2009.
A full-text copy of the Form 10K is available for free at:
http://ResearchArchives.com/t/s?39fc
About Delta Petroleum Corporation
Headquartered in Denver, Colorado, Delta Petroleum Corporation
(NASDAQ: DPTR) -- http://www.deltapetro.com/-- is an oil and gas
exploration and development company. The company's core areas of
operations are the Gulf Coast and Rocky Mountain Regions, which
comprise the majority of its proved reserves, production and long-
term growth prospects.
* * *
As reported in the Troubled Company Reporter on Jan. 16, 2009,
Moody's Investors Service downgraded Delta Petroleum Corporation's
senior unsecured notes due 2015 to Caa3 (LGD 5, 76%) from Caa2
(LGD 4, 69%). Moody's also downgraded Delta's Corporate Family
Rating to Caa2 from Caa1, its Probability of Default Rating to
Caa2 from Caa1, and its Speculative Grade Liquidity rating to SGL-
4 from SGL-3. The ratings have been placed on review for further
possible downgrade.
DELTA PETROLEUM: Neal A. Stanley Resigns as Member of the Board
---------------------------------------------------------------
Delta Petroleum Corporation disclosed in a regulatory filing that
Neal A. Stanley resigned as member of its board of directors,
effective Feb. 28, 2009. Mr. Stanley offered his resignation
without any conflict or disagreement with the Company's direction
or management.
"[Mr. Stanley] has been a very valuable contributor to the
Company's board for the past four years," Roger Parker, Delta's
chairman and CEO said. "His experience of over 30 years in the
industry has been a tremendous asset to our board and management
team. His insight and perspective will be missed."
The Company was also informed that its largest shareholder,
Tracinda Corporation, will be nominating two additional board
members for election at the Company's upcoming annual shareholder
meeting. Tracinda has the right to board membership proportionate
to its ownership in the Company, which is approximately 40%.
Headquartered in Denver, Colorado, Delta Petroleum Corporation
(NASDAQ: DPTR) -- http://www.deltapetro.com/-- is an oil and gas
exploration and development company. The company's core areas of
operations are the Gulf Coast and Rocky Mountain Regions, which
comprise the majority of its proved reserves, production and long-
term growth prospects.
* * *
As reported in the Troubled Company Reporter on Jan. 16, 2009,
Moody's Investors Service downgraded Delta Petroleum Corporation's
senior unsecured notes due 2015 to Caa3 (LGD 5, 76%) from Caa2
(LGD 4, 69%). Moody's also downgraded Delta's Corporate Family
Rating to Caa2 from Caa1, its Probability of Default Rating to
Caa2 from Caa1, and its Speculative Grade Liquidity rating to SGL-
4 from SGL-3. The ratings have been placed on review for further
possible downgrade.
DELTA PETROLEUM: To Commence Rights Offering to Raise $175 Million
------------------------------------------------------------------
Delta Petroleum Corporation intends to launch a convertible
preferred stock rights offering to raise up to $175 million. The
rights offering is expected to commence promptly after the date on
which Delta's shelf registration statement filed with the
Securities and Exchange Commission today is declared effective by
the Commission.
Delta entered into an amendment to its senior credit agreement
pursuant to which its lenders agreed to forbear from exercising
their rights under the credit agreement arising as a result of
Delta's non-compliance with certain covenants in the credit
agreement, if, among other things, Delta raises equity capital.
Accordingly, Delta intends to use the proceeds of the rights
offering to reduce amounts outstanding under its senior credit
facility, pay other accounts payable and for working capital and
general corporate purposes.
Under the proposed rights offering, Delta expects to distribute,
on a pro rata basis, to all stockholders of record transferable
subscription rights that would enable the rights holder to
purchase depositary shares, each representing a fractional
interest in a share of preferred stock. The preferred stock will
be convertible into shares of Delta's common stock on terms to be
determined. Holders who fully exercise their rights will be
entitled, on a pro rata basis, to subscribe for additional
convertible preferred stock depositary shares to the extent any of
the rights issued in the offering are not exercised.
A special committee of Delta's board of directors will determine
these prior to the commencement of the rights offering:
i) the record date for determining stockholders entitled to
receive the rights;
ii) the expiration date of the rights;
iii) the fractional interest in shares of the convertible
preferred stock that each depositary share entitles the
holder to acquire;
iv) the exercise price of the rights; and
v) the terms and conditions of the convertible preferred stock,
including the right to receive dividends, if any,
liquidation preference, voting rights and conversion ratio.
Delta expects that the exercise price for each right will be
higher than March 2,2009's closing price of Delta's common stock
on The NASDAQ Global Market(R).
Tracinda Corporation, which owns approximately 39% of Delta's
common stock, and another significant stockholder of Delta, have
stated to representatives of the Company that they intend to
purchase approximately their pro rata share of the securities
offered in the rights offering. However, in no event will
Tracinda purchase a number of securities that would cause its
ownership of Delta's common stock, on an as-converted basis, to
exceed 50% of Delta's outstanding common stock.
About Delta Petroleum
Headquartered in Denver, Colorado, Delta Petroleum Corporation
(NASDAQ: DPTR) -- http://www.deltapetro.com/-- is an oil and gas
exploration and development company. The company's core areas of
operations are the Gulf Coast and Rocky Mountain Regions, which
comprise the majority of its proved reserves, production and long-
term growth prospects.
* * *
As reported in the Troubled Company Reporter on Jan. 16, 2009,
Moody's Investors Service downgraded Delta Petroleum Corporation's
senior unsecured notes due 2015 to Caa3 (LGD 5, 76%) from Caa2
(LGD 4, 69%). Moody's also downgraded Delta's Corporate Family
Rating to Caa2 from Caa1, its Probability of Default Rating to
Caa2 from Caa1, and its Speculative Grade Liquidity rating to SGL-
4 from SGL-3. The ratings have been placed on review for further
possible downgrade.
DENNY'S CORP: Dec. 31 Balance Sheet Upside-Down by $174 Million
---------------------------------------------------------------
Denny's Corporation had $347.1 million in total assets and
$521.2 million in total liabilities, resulting in $174.0 million
in shareholders' deficit as of December 31, 2008.
Denny's reported a net loss of $3.2 million for the fourth
quarter, a decrease of $17.9 million compared with prior year net
income of $14.7 million. The income decline is due primarily to
lower asset sale gains and a higher impairment charge. Adjusted
income before taxes, Denny's metric for earnings guidance,
increased $3.6 million, or 107%, in the fourth quarter to
$7.0 million. This measure, which is used as an internal
profitability metric, excludes restructuring charges, exit costs,
impairment charges, asset sale gains and losses, share-based
compensation, other non-operating expenses and income taxes.
For the fourth quarter of 2008, Denny's reported total operating
revenue, including company restaurant sales and franchise revenue,
of $184.7 million compared with $220.3 million in the prior year
quarter. Company restaurant sales decreased $38.9 million due
primarily to 131 fewer equivalent company restaurants compared
with the prior year quarter resulting from the sale of company
restaurants to franchisees under FGI. During the fourth quarter,
Denny's sold 17 restaurants to franchisee operators.
Nelson Marchioli, president and chief executive officer, stated,
"In 2008, Denny's made significant progress in its strategic
initiatives including the transformation to a franchise-focused
business model and the further strengthening of our balance sheet.
Due to the success of our FGI program, we opened 34 new
restaurants across our system and reduced our debt by $25 million.
We delivered solid core earnings growth as we enhanced our
operating efficiency and improved our food cost margins. This
performance was accomplished against the backdrop of a difficult
economic environment which put significant pressure on our
consumers and our guest traffic.
"Looking ahead, we acknowledge the uncertain outlook for the
broader economy as well as the restaurant industry. To meet these
challenges, we are focused on improving sales trends and
reconnecting with Denny's lapsed users. Two weeks ago we took a
bold step in our marketing plan with Denny's first ever Super Bowl
advertisement and subsequent Grand Slam event. The offer was an
overwhelming success and drove approximately 1.5 million customers
into Denny's restaurants across the country. We will now build
off the terrific publicity this promotion generated by delivering
great food, great value and great service throughout the year,"
Mr. Marchioli concluded.
The Board of Directors of Denny's has set Wednesday, May 20, 2009,
as the date for the 2009 Annual Meeting of Denny's Shareholders to
be held in Spartanburg, South Carolina.
About Denny's Corp.
Headquartered in Spartanburg, South Carolina, Denny's
Corporation (Nasdaq: DENN) -- http://www.dennys.com/-- is one of
America's largest full-service family restaurant chains,
consisting of 315 company-owned units and 1,226 franchised and
licensed units, with operations in the United States, Canada,
Costa Rica, Guam, Mexico, New Zealand and Puerto Rico.
DORNIER AVIATION: Court Okays Final Settlement With Hainan
----------------------------------------------------------
Wiley Rein partner H. Jason Gold, the court-authorized liquidating
trustee for the bankruptcy estate of Dornier Aviation (North
America), Inc. (DANA), said that the bankruptcy court has approved
a full and final settlement of all litigation and disputes with
Hainan Airlines, a major international airline based in China.
Hainan has paid the trustee $14,950,000 in consideration of the
settlement and Mr. Gold is now moving to dismiss all legal actions
filed against Hainan. The trustee had brought suit back in
December 2003 and final judgment was obtained in August of last
year to recover unpaid accounts. U.S. Bankruptcy Judge Steven S.
Mitchell presided over the case and approved the settlement.
"We are pleased to have reached this compromise and settlement
with Hainan. The funds recently paid will now allow us to pay in
full the claims asserted by the creditors of the bankrupt company
Dornier Aviation of North America, including numerous individuals
and American companies, large and small," said Mr. Gold.
Mr. Gold is head of Wiley Rein's Bankruptcy & Financial
Restructuring Practice. The firm served as Mr. Gold's counsel in
the DANA/Hainan Airlines litigation.
Dornier Aviation (North America) is a U.S. subsidiary of German
aircraft manufacturer Fairchild Dornier GMBH. Some of the
Company's former employees filed an involuntary Chapter 7
bankruptcy petition on April 25, 2002 (Bankr. E.D.Va. Case No. 05-
1930). The case was subsequently converted to a Chapter 11
reorganization. The Debtor failed to reorganize and a liquidation
plan was proposed and confirmed in 2003.
DTE ENERGY: Moody's Cuts Bonds to 'Ba1' Due to Chrysler Ties
------------------------------------------------------------
Moody's Investors Service has downgraded the rating on DTE Energy
Center LLC's bonds to Ba1 from Baa3. The rating remains under
review for possible further downgrade. The downgrade reflects the
increased risk to bondholders resulting from the precarious state
of Chrysler, the parent of the project's sole customer,
notwithstanding the guarantee from Daimler North America Holding
Corporation of Chrysler's obligations. The rating of Chrysler
Automotive LLC was recently downgraded to Ca with a negative
outlook reflecting the severe pressure that the decline in US
automotive demand and the shift in consumer preference to smaller
vehicles have had on the company's liquidity position. The rating
action also considers the deteriorating financial condition of
Daimler AG, the parent of DNAHC. Daimler's outlook was revised to
negative on February 18, 2008.
The continuing review will consider the impact on the project's
rating if Chrysler announces plans to shutdown any of the
facilities at which the project assets are located and/or if it is
forced to seek bankruptcy protection, which Moody's currently
estimates to have 70% probability of occurring even if additional
assistance from the government is forthcoming. A bankruptcy
filing by Chrysler could occur before the end of this month, at
which time the loan from the government is scheduled to mature.
DTEEC is a special purpose company created to own and operate
various utility-related assets acquired from Utility Assets LLC, a
wholly-owned subsidiary of Chrysler Holding LLC -- the parent of
Chrysler Automotive. The assets are located within eight of
Chrysler's manufacturing facilities in the United States and
provide critical support services for vehicle, part, and component
manufacturing operations.
DTEEC entered into separate 20-year Utility Service Agreements for
each facility with UALLC. It operates the utility-related assets
with labor supplied by Chrysler. UALLC pays a fixed capacity
charge and reimburses DTEEC for O&M costs on a monthly basis. The
USAs are structured to provide the issuer with protection from
certain events outside its control, including Chrysler's decision
to close or sell any of the manufacturing facilities or extended
force majeure events. The protection takes the form of required
termination payments from UALLC, which would be lump sum payments
due within ten days in amounts at least equal to the amount of
debt associated with the affected system.
Historically, the project has demonstrated sound financial
operations, with debt service coverages in the range of 1.6x.
Following an extended holiday shutdown, most of Chrysler's plants
have resumed operations, albeit not necessarily on a full time
basis or at full capacity. Some plants are reportedly operating on
a day-to-day basis and all of them have undergone layoffs.
However, the project continues to receive payment from Chrysler in
a timely manner; according to DTEEC's management, there have been
no meaningful interruptions despite significant staff reductions
by Chrysler of plant management - payments are generally due
between 45 and 60 days in arrears and accounts receivable
typically range between $2 million to $5 million. In Moody's
view, Chrysler often makes claims for liquidated damages against
the project though Moody's understands the project is generally
successful in mitigating these claims. Furthermore, the USAs only
permit Chrysler to withhold up to $500,000 in any month and $2
million at any time pending resolution of disputes. In addition,
Chrysler has resolved a long-standing claim of force majeure made
by the project due to inadequate labor supply at the Indiana
Transmission Plants, though claims remain outstanding at two other
plants as a result of layoffs.
To-date, Chrysler has announced plans to eliminate just a few
vehicles, including the Durango, Aspen, and PT Cruiser. This is
likely to result in production cuts at the Mack Engine Plant, one
of eight plants at which project assets are located. However,
this plant also manufactures engines for a number of other trucks
and SUV models that are likely to continue to be produced. That
said, even if Chrysler avoids having to seek bankruptcy
protection, additional product eliminations are expected and
production of remaining models will probably be consolidated at a
smaller number of plants going forward. As a result, there is a
high probability that several of the other plants at which project
facilities are located will be shutdown even if Chrysler remains
in business. Due to their highly specialized nature, the assets
located at plants shut down by Chrysler are not likely to have a
high recovery value in Moody's opinion. Even if Chrysler files
for bankruptcy, however, it may continue to operate at least some
of its plants, and the project assets that remain in operation
could potentially still generate sufficient cash flows to continue
to service the debt, albeit with somewhat narrower margins,
assuming terminations payments as required by the UALLC have not
been made.
UALLC's obligations under the USAs, including its obligation to
make termination payments, remain guaranteed by DNAHC, its former
parent and a subsidiary of Daimler AG, though this guarantee does
not extend directly to DTEEC's debt itself. This guarantee is
characterized as a full recourse, senior unsecured obligation of
DNAHC, and DNAHC must make payments owed by UALLC within 10 days
of the due date of the respective obligation. DNAHC's obligations
are not contingent upon attempts by DTEEC to collect or enforce
obligations from or against UALLC or Chrysler and the guarantee is
binding and enforceable against DNAHC without regard to validity
or enforceability of USAs. In addition, the guarantee will not be
released, discharged, or in any way affected or impaired by
bankruptcy of UALLC or Chrysler and it covers any amounts paid by
UALLC and subject to clawback in bankruptcy proceedings.
DNAHC's debt is rated A3 based on a guarantee from Daimler AG.
However, this guarantee does not extend to DNAHC's obligations
under its guarantee of UALLC's obligations. Moody's notes that
when DTEEC's rating was initially assigned the essentiality of the
assets to the operations of the offtaker and parent guarantor was
a key credit consideration. Since the sale of Chrysler, however,
the assets no longer provide any direct benefit to the guarantor
except through its residual 19.9% interest in Chrysler.
As a result, Moody's believes that Daimler could potentially
dispute claims made against it under the guarantee and that any
payments ultimately made by it could be subject to delay. Though
Moody's recognize that this is a fairly remote possibility given
the seeming clarity and comprehensiveness of the guarantee
language, the increased likelihood that the guarantee will be
called upon heightens bondholders' exposure to this risk in
Moody's view. Moody's note that the project's six month debt
service reserve provides the project with the flexibility to
withstand a delay in the receipt of termination payments.
The last rating action was on December 15, 2008, when DTEEC's Baa3
rating was placed under review for possible downgrade.
DTEEC's rating was assigned by evaluating factors believed to be
relevant to the credit profile of the issuer such as i) the
business risk and competitive position of the issuer versus others
within its industry or sector, ii) the capital structure and
financial risk of the issuer, iii) the projected performance of
the issuer over the near to intermediate term, and iv) the
issuer's history of achieving consistent operating performance and
meeting budget or financial plan goals. These attributes were
compared against other issuers both within and outside of DTEEC's
core peer group and DTEEC's rating is believed to be comparable to
ratings assigned to other issuers of similar credit risk.
Headquartered in Ann Arbor, MI, DTEEC is owned by subsidiaries of
DTE Energy Company (DTE: senior unsecured Baa2, stable outlook)
and The Goldman Sachs Group, Inc. (senior unsecured A1, negative
outlook), each of which holds a 50% interest.
DYNEGY HOLDINGS: Moody's Reviews 'B1' on Downward 2009 Guidance
---------------------------------------------------------------
Moody's Investors Service placed the long-term ratings of Dynegy
Holdings, Inc. under review for possible downgrade, including its
B1 Corporate Family Rating. DHI's speculative grade liquidity
rating of SGL-3 is affirmed.
The rating action reflects a downward revision in the Company's
2009 guidance for net income, EBITDA, and free cash flow due to
lower expected power prices over the near term caused largely by
lower natural gas prices and reduced economic activity. "DHI's
material change in expected 2009 financial results highlights the
earnings and cash flow volatility associated with operating the
wholesale power business", said A.J. Sabatelle, VP and Senior
Credit Officer at Moody's.
Through year-end 2008, DHI's results showed steady improvement due
to stronger margins and substantial debt reduction resulting, for
example, in 2008 cash flow (CFO pre-W/C) to adjusted debt
approaching 10%. Moody's now estimates that DHI's cash flow to
adjusted debt is likely to decline to the mid-single digits for at
least the next two years, a level that is not consistent with a B1
CFR. Moody's observes that the company has recently implemented a
change in its hedging strategy which is intended to produce more
predictable near-term cash flows. While greater predictability in
financial results can be viewed as credit supportive, Moody's
understanding of the revised near-term financial projections which
incorporates this revised commercial strategy remain very weak for
the current rating.
The SGL-3 rating affirmation reflects Moody's belief that DHI will
maintain adequate liquidity, reflecting a substantial degree of
cash on hand and liquidity access as well as the lack of any
material debt maturities until April 2011. The SGL-3 rating also
incorporates the company continuing to raise cash from asset
sales. To that end, DHI announced this week the sale of its Heard
generating station for slightly more than $100 million and has
engaged financial advisors to monetize their interest in two
partially owned power plants, Plum Point and Sandy Creek, which
could enhance liquidity by at least $275 million. DHI's 2009
projected negative free cash flow is expected to be satisfied by
utilizing cash on hand and the available liquidity under its
credit facilities. As of February 20th, DHI had $675 million of
cash on hand and had access to a total of $1.905 billion of multi-
year credit facilities that expire in 2012 and 2013. Moody's
observes the disclosure in DHI's 2008 10-K filing which states
that based on management's current forecast of financial
performance during 2009, DHI's available liquidity capacity under
these facilities may be reduced temporarily in order to remain in
compliance with the secured debt to adjusted EBITDA ratio.
Notwithstanding this possibility and considering the recent
implementation of a revised hedging strategy which could increase
future collateral requirements, Moody's believes that DHI
maintains adequate liquidity for the next twelve months.
The review will focus on an assessment of the company's 2009
revised projections along with an evaluation of the likelihood of
DHI being able to manage their business during this lower priced
environment. The review will also consider the impact on the
company's liquidity given the revised hedging strategy implemented
by DHI.
The last rating action on DHI occurred on May 25, 2007, when a B2
rating was assigned to the company's senior unsecured notes.
DHI's ratings were assigned by evaluating factors believed to be
relevant to its credit profile, such as i) the business risk and
competitive position of DHI versus others within its industry or
sector, ii) the capital structure and financial risk of DHI, iii)
the projected performance of DHI over the near to intermediate
term, and iv) DHI's history of achieving consistent operating
performance and meeting financial plan goals. These attributes
were compared against other issuers both within and outside of
DHI's core peer group and DHI's ratings are believed to be
comparable to ratings assigned to other issuers of similar credit
risk.
On Review for Possible Downgrade:
Issuer: Dynegy Capital Trust II
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)B3
Issuer: Dynegy Capital Trust III
-- Preferred Stock Shelf, Placed on Review for Possible
Downgrade, currently (P)B3
Issuer: Dynegy Holdings Inc.
-- Probability of Default Rating, Placed on Review for Possible
Downgrade, currently B1
-- Corporate Family Rating, Placed on Review for Possible
Downgrade, currently B1
-- Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)B3 to (P)B2
-- Senior Secured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently Ba1
-- Senior Unsecured Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently B2
Issuer: Dynegy Inc.
-- Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently (P)B3
Issuer: NGC Corporation Capital Trust I
-- Preferred Stock Preferred Stock, Placed on Review for
Possible Downgrade, currently B3
Issuer: Roseton-Danskammer 2001
-- Senior Secured Pass-Through, Placed on Review for Possible
Downgrade, currently Ba3
Outlook Actions:
Issuer: Dynegy Capital Trust II
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Dynegy Capital Trust III
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Dynegy Holdings Inc.
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Dynegy Inc.
-- Outlook, Changed To Rating Under Review From Stable
Issuer: NGC Corporation Capital Trust I
-- Outlook, Changed To Rating Under Review From Stable
Issuer: Roseton-Danskammer 2001
-- Outlook, Changed To Rating Under Review From Stable
Headquartered in Houston, Texas, DHI is an independent power
producer that owns a portfolio of more than 18,000MW electric
generating assets. DHI is wholly-owned by Dynegy, Inc.
ELLIPSO INC.: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Ellipso, Inc.
4410 Massachusetts Avenue, N.W., Suite 385
Washington, DC 20016
Bankruptcy Case No.: 09-00148
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Columbia (Washington, D.C.)
Debtor's Counsel: Kermit A. Rosenberg, Esq.
Tighe Patton Armstrong Teasdale, PLLC
1747 Pennsylvania Ave., NW, Suite 300
Washington, DC 20006-4604
Tel: (202) 454-2849
Email: krosenberg@tighepatton.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/dcb09-00148.pdf
The petition was signed by David Castiel, president of the
Company.
EVERYTHING BUT WATER: Files for Chapter 11 to Sell Business
-----------------------------------------------------------
Everything But Water LLC filed a Chapter 11 petition on Feb. 25 in
the U.S. Bankruptcy Court for the District of Delaware.
Everything But Water intends to sell its business to the secured
lender D.B. Zwirn Special Opportunities Fund LP in exchange for
$19 million of secured debt, Bill Rochelle of Bloomberg said. The
sale to Zwirn is subject to higher and better offers at an
auction.
According to Mr. Rohcelle, Zwirn was authorized by the bankruptcy
court on Feb. 27 to provide $5 million in secured financing on an
interim basis until a final financing hearing on March 17, when
the loan would grow to $11 million.
The Company listed assets of $58 million and debt totaling $35
million, including $25 million in a secured term loan and
revolving credit owning to Zwirn.
Based in Orlando, Florida, Everything But Water LLC is the largest
U.S. retailer of women's swimwear with 70 stores in 26 states.
FERMIN ANIEL: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Fermin A. Aniel and Erlinda A. Aniel
75 Tobin Clark Drive
Hillsborough, CA 94010
Bankruptcy Case No.: 09-30452
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Northern District of California (San Francisco)
Debtor's Counsel: Sydney Jay Hall, Esq.
Law Offices of Sydney Jay Hall
1308 Bayshore Hwy., #220
Burlingame, CA 94010
Tel: (650) 342-1830
Email: sydneyhalllawoffice@yahoo.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/canb09-30452.pdf
The petition was signed by Fermin A. Aniel and Erlinda Aniel.
FLINTKOTE COMPANY: Plan Filing Period Extended to April 30
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
The Flintkote Company and Flinktote Mines Limited's exclusive
period to file a Chapter 11 plan of reorganization through and
including April 30, 2009, and extended the period during which
they have the exclusive right to solicit acceptances of that plan
through and including June 30, 2009.
This is the 14th order of the Court extending the Debtors'
exclusive periods to file a Chapter 11 plan and to solicit votes
on said plan. The Debtor's exclusive period to file a plan
expired on Dec. 31, 2008, while the deadline to solicit
acceptances of the plan expired on Feb. 28, 2009.
In their motion, the Debtors told the Court that terminating
exclusivity at this stage in the Debtors' cases will not result in
a "better" plan or speedier confirmation, but will only result in
increased delay, extensive litigation and escalating
administrative costs.
The Debtors related that cause exists to extend the exclusive
periods given the complexities of the Chapter 11 cases and the
current and anticipated schedule for confirming the consensual
plan. There are over 157,000 asbestos-related personal injury
claims against the Debtors pending in various jurisdictions and an
untold number of future asbestos-related personal injury claims,
with current and future liability for Asbestos personal claims
estimated to exceed $3 billion. The Debtors also submitted that
the extension sought is well within the limits of extensions of
exclusivity that have been granted in other asbestos-related cases
pending in the District.
On Sept. 2, 2008, the Court approved the disclosure statement
explaining the Debtors' amended joint plan of reorganization.
Pursuant to the Court's order dated Sept. 24, 2008, governing
discovery with respect to confirmation of the plan, the Court
established certain deadlines for the filing of objections and
responses related to the confirmation of the Debtors' plan as well
as certain procedures and deadlines related to discovery requests.
The Court has scheduled the confirmation hearing for the Debtors'
plan for Sept. 14-17, 2009.
The Debtors' plan proposes establishing a section 524(g) trust to
address Asbestos Personal Injury Claims against Flintkote Company.
The Plan also provides that the same trust will serve as a
liquidating trust for Flintkote Mines, to which Flintkote Mines
will contribute its assets under the Plan and from which Asbestos
Claims against Flintkote Mines will be satisfied in accordance
with the terms of the Plan as confirmed.
Headquartered in San Francisco, California, The Flintkote Company
is engaged in the business of manufacturing, processing and
distributing building materials. Flintkote Mines Limited is a
subsidiary of Flintkote Company and is engaged in the mining of
base-precious metals. The Flintkote Company filed for chapter 11
protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11300).
Flintkote Mines Limited filed for Chapter 11 relief of Aug. 25,
2004 (Bankr. D. Del. Case No. 04-12440). James E. O'Neill, Esq.,
Kathleen P. Makowswki, Esq., Laura Davis Jones, Esq., Sandra G.M,
Selzer, Esq., and Scotta Edelen McFarland, Esq., at Pachulski
Stang Ziehl & Jones LLP, represent the Debtors in their
restructuring efforts. Kathleen Campbell Davis, Esq., and Mark T.
Hurford, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Unsecured Creditors as counsel.
When Flintkote Company filed for protection from its creditors, it
listed assets of more than $100 million, and debts of more than
$100 million. When Flintkote Mines Limited filed for protection
from its creditors, it listed assets of $1 million to $50 million,
and debts of more than $100 million.
FOAMEX INT'L: U.S. Trustee Appoints 3 Members to Creditors Panel
----------------------------------------------------------------
Roberta A. DeAngelis, Acting United States Trustee, Region 3, has
appointed these persons to the Committee of Unsecured Creditors in
connection with the Chapter 11 cases of Foamex International,
Inc., et al.:
1. Momentive Performance Materials USA Inc.,
Attn: Jonathan S. Matheke, 260 Hudson
River Road, Waterford, NY 12188,
Phone: 518-233-3397,
Fax: 866-395-7274
2. Thomas Edward Chorman, 160 Forest Drive,
Kennett Square, PA 19348,
Phone: 610-573-8088,
Fax: 610-925-0691
3. Shell Chemical LP,
Attn: Tom C. Holder,
910 Louisiana St., Ste 1792A, Houston, TX 77002,
Phone: 713-241-1075,
Fax: 713-241-0968
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.
Foamex missed $7.3 million in interest payments due at the end of
the Jan. 21 grace periods on the Company's $325 million first-lien
term loan and the $47 million second-lien term loan.
On February 18, 2009, Foamex International Inc. and seven
affiliates filed separate voluntary Chapter 11 petitions (Bankr.
D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides
over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq.,
and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer in New
York; and Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at
Cozen O'Connor, in Wilmington, Delaware, serve as bankruptcy
counsel. Investment Banker is Houlihan Lokey; accountant is
McGladrey & Pullen LLP, and claims and noticing agent is Epiq
Bankruptcy Solutions LLC. As of September 28, 2008, the Debtors
had $363,821,000 in total assets, and $379,710,000 in total debts.
FOAMEX INT'L: May Name Matlin Patterson as Lead Bidder for Assets
-----------------------------------------------------------------
Foamex International Inc. said that its senior management is now
assisting Matlin Patterson Global Advisors LLC, a lender under its
debtor-in-possession credit facility, "with respect to MP's
efforts to serve as stalking horse bidder for the sale and to
provide a floor for other potential bidders."
Foamex disclosed the talks with MP in its request for approval of
a key employee incentive plan. Under one of the two components of
the KEIP, five executives of Foamex will receive bonuses of
$1,375,000 if emergence from chapter 11 or consummation a sale of
substantially all of the Debtors' assets is achieve by August 18,
2009. Up to $695,000 will be paid to these five execs., and nine
other senior managers if the cash budget and liquidity covenants
under the DIP facility is achieved.
In the event an agreement with MP is reached, the Debtors intend
to seek approval of bidding procedures and bidding protections for
MP within the first month of the Debtors 11 cases and seek
authority to conduct an auction within sixty days thereafter.
The U.S. Bankruptcy Court for the District of Delaware has granted
Foamex interim approval to borrow $20 million from a $95 million
credit offered by MatlinPatterson Global Advisers LLC. A hearing
at which the Company will seek final court approval for the full
amount of the DIP facility has been scheduled for March 16, 2009.
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.
Foamex missed $7.3 million in interest payments due at the end of
the Jan. 21 grace periods on the Company's $325 million first-lien
term loan and the $47 million second-lien term loan.
On February 18, 2009, Foamex International Inc. and seven
affiliates filed separate voluntary Chapter 11 petitions (Bankr.
D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides
over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq.,
and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer in New
York; and Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at
Cozen O'Connor, in Wilmington, Delaware, serve as bankruptcy
counsel. Investment Banker is Houlihan Lokey; accountant is
McGladrey & Pullen LLP, and claims and noticing agent is Epiq
Bankruptcy Solutions LLC. As of September 28, 2008, the Debtors
had $363,821,000 in total assets, and $379,710,000 in total debts.
FOAMEX INT'L: Seeks to Adopt Incentive Plan for Senior Managers
---------------------------------------------------------------
Foamex International, Inc., and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to adopt
and implement a "postpetition incentive plan for key employees."
Mark E. Felger, Esq., at Cozen O' Connor, in Wilmington, Delaware,
Relates that the KEIP is designed to maximize assets available for
distribution to creditors by providing incentives to 14 of the
Debtors' executives to ensure compliance with covenants under
their debtor-in-possession credit facility during the sale
process.
The KEIP consists of two components:
(i) an incentive compensation plan for executives with key
operational roles that have a direct impact on the course
of the Chapter 11 cases, and
(ii) an additional incentive plan for senior management to
emerge from chapter 11 or consummate a sale of
substantially all of the Debtors' assets.
Under the MIP, members of senior management are eligible to
receive at target an aggregate amount of $463,000, and should the
target be exceeded, a maximum amount of $695,000. The potential
MIP bonuses are:
MIP as a
% of Base
Salary MIP Bonus
------ ---------
President and Chief Executive Officer 20% $130,000
Executive Vice President and COO 14% 60,000
Executive Vice President and CFO 18% 60,000
All other senior managers - 213,000
The MIP will be earned and paid in two stages. First, if on
May 22, 2009, the Debtors are in compliance with the DIP Covenant
contained in the Weekly Cash Flow Projections, 50% of each Senior
Manager's MIP Bonus would be payable within 30 days. Second, upon
satisfaction of all obligations due and owing under the DIP Credit
Agreement, and if the Debtors remained in compliance with the DIP
Covenant, the remaining 50% of the MIP Bonus would be paid within
30 days.
Under the Exit Incentive Plan, five of the senior managers would
be eligible to receive additional cash awards that would (i) vest
on the date that is earlier of (a) the effective date of a
confirmed chapter 11 plan or (b) the successful consummation of a
sale of substantially all of the Debtors' assets to one or more
acquirers and (ii) be paid to key employees no later than 15 days
following the EIP vesting date. The aggregate amount to be paid
under the EIP is $1,375,000:
EIP Vesting Date Occurs Prior To:
---------------------------------
Base 08/18/09 11/18/09 01/18/10
Participant Salary (6 Months) (9 months) (11 months)
----------- ------ ---------- ---------- -----------
CEO $650,000 $625,000 $500,000 $125,000
COO 437,750 250,000 200,000 50,000
CFO 340,000 250,000 200,000 50,000
2 Others 250,000 200,000 50,000
---------- ---------- -----------
Total $1,375,000 $1,100,000 $275,000
Mr. Felger notes that as part of the Debtors' efforts to solicit,
negotiate and consummate a sale of substantially all of the
Debtors' assets, members of senior management will assume
significant additional responsibilities and burdens, as well as
providing extension assistance to the Debtors' bankruptcy counsel
and advisors with respect to issues arising in the chapter 11
cases.
Senior management is now assisting Matlin Patterson Global
Advisors LLC, a lender under the DIP Credit Agreement, with
respect to MP's efforts to serve as stalking horse bidder for the
sale and to provide a floor for other potential bidders. In the
event an agreement is reached, the Debtors intend to seek approval
of bidding procedures and bidding protections for MP within the
first month of the Debtors 11 cases and seek authority to conduct
an auction within sixty days thereafter.
Upon the consummation of the sale, the duties of senior management
will shift to the talks associated with the transfer of the
Debtors' assets, followed by the efficient wind-down of the
Debtors' affairs and these Chapter 11 cases.
The Court will convene a hearing to consider the proposal on
March 16. Objections are due March 9.
Mr. Felger adds that pre-bankruptcy, Foamex regularly implemented
an annual incentive program for all salaried employees designed to
provide incentives to motive participants to achieve a high level
of performance. The Debtors will continue the AIP postpetition
and are not seeking the Court's permission to do so because the
AIP is in the ordinary course of the Debtors' businesses.
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.
Foamex missed $7.3 million in interest payments due at the end of
the Jan. 21 grace periods on the Company's $325 million first-lien
term loan and the $47 million second-lien term loan.
On February 18, 2009, Foamex International Inc. and seven
affiliates filed separate voluntary Chapter 11 petitions (Bankr.
D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides
over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq.,
and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer in New
York; and Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at
Cozen O'Connor, in Wilmington, Delaware, serve as bankruptcy
counsel. Investment Banker is Houlihan Lokey; accountant is
McGladrey & Pullen LLP, and claims and noticing agent is Epiq
Bankruptcy Solutions LLC. As of September 28, 2008, the Debtors
had $363,821,000 in total assets, and $379,710,000 in total debts.
FOOTHILLS RESOURCES: Final Hearing for $2.5-Mil. Loans Today
------------------------------------------------------------
On February 23, 2009, Foothills Resources, Inc., entered into the
DIP Credit Agreement with the lenders who are parties thereto,
Regiment Capital Special Situations Fund III, L.P., as agent, and
Foothills' wholly-owned subsidiaries, Foothills California, Inc.,
Foothills Oklahoma, Inc., and Foothills Texas, Inc., as
guarantors, subject to final approval by the Bankruptcy Court. The
Bankruptcy Court has scheduled a hearing on March 3, 2009 to
consider entry of an order granting final approval of the DIP
Credit Agreement. The DIP Credit Agreement was approved on an
interim basis by the Bankruptcy Court on February 12, 2009.
The DIP Credit Agreement provides for term loans up to an
aggregate of $2.5 million. The proceeds of the Loans will be used
for working capital purposes, including the payment of fees,
costs, and expenses incurred in connection with the DIP Credit
Agreement and for expenditures consistent with a budget agreed
upon by the Company and the Lenders pursuant to the DIP Credit
Agreement. Interest will accrue under the DIP Credit Agreement at
12% per annum, provided however, following an event of default
under the DIP Credit Agreement, interest will accrue at an annual
rate equal to 2% above the annual rate otherwise applicable. The
Loans will mature on the earliest of:
(a) March 16, 2009, if the final order of the Bankruptcy Court
has not been entered on or prior to such date,
(b) May 19, 2009, if the final order of the Bankruptcy Court
has been entered on or prior to March 16, 2009,
(c) the date of substantial consummation of a plan or
reorganization in the Chapter 11 Cases that has been
confirmed by an order of the Bankruptcy Court,
(d) the date of a sale of substantially all of the assets of
the Company, and
(e) such earlier date on which all Loans and other obligations
for the payment of money will become due and payable in
accordance with the terms of the DIP Credit Agreement.
The obligations under the DIP Credit Agreement are secured,
subject to certain limited exceptions, by substantially all of the
assets of the Company and the Subsidiaries, including a super-
priority administrative expense claim pursuant to Bankruptcy Code
Section 364(c)(1).
A full-text copy of the DIP Credit Agreement is available for free
at: http://researcharchives.com/t/s?39fd
About Foothills Resources
Foothills Resources, Inc., is an oil and gas exploration company
engaged in the acquisition, exploration and development of oil and
natural gas properties. The Company's operations are primarily
through its wholly owned subsidiaries, Foothills California, Inc.,
Foothills Texas, Inc. and Foothills Oklahoma, Inc.
On February 11, 2009, Foothills Resources, Inc. and its wholly
owned subsidiaries, Foothills California, Inc., Foothills
Oklahoma, Inc., and Foothills Texas, Inc., filed voluntary
petitions for reorganization relief under Chapter 11 (Bankr. D.
Del. Case No. 09-10453). Judge Christopher S. Sontchi handles
the Chapter 11 cases. The Debtors have tapped Akin Gump Strauss
Hauer & Feld LLP as lead bankruptcy counsel and Cole, Schotz,
Meisel, Forman & Leonard, as local counsel. The Garden City
Group Inc. is the Company's claims agent. In its bankruptcy
petition, Foothills estimated assets and debts of $50 million
to $100 million.
FREDDIE MAC: David Moffett Resigns as Chief Executive Officer
-------------------------------------------------------------
James R. Hagerty at The Wall Street Journal reports that Freddie
Mac Chief Executive Officer David Moffett will resign, effective
March 13.
Mr. Moffett "indicated that he wants to return to a role in the
financial services sector," WSJ relates, citing Freddie Mac.
According to the report, a person close to Mr. Moffett said that
his decision to resign partly reflected "frustration" with a job
offering little freedom of maneuver, because "he's a private
sector guy." A Freddie Mac spokesperson said that Mr. Moffett's
departure was wasn't sought by the company's regulator, the
Federal Housing Finance Agency.
WSJ relates that Mr. Moffett's position as CEO is more similar to
that of a chief operating officer because the FHFA is running
Freddie Mac under conservatorship.
FHFA director James Lockhart said in a statement that the agency
will work with Freddie's board to "ensure a smooth transition and
continuation of their important role of supporting the housing
market."
Freddie Mac said that the board expects to appoint an interim CEO
before March 13, WSJ states.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $804,390 billion and total liabilities of
$818,185 billion, resulting in a stockholders' deficit of
$13,795 billion.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
FREESCALE SEMICONDUCTOR: Receives Commitment for $2.95BB Debt Swap
------------------------------------------------------------------
Freescale Semiconductor Inc., which was taken private in 2006, has
received commitments from investors holding $2.95 billion of bonds
to swap the debt at a discount for a new term loan.
Freescale Semiconductor on February 27 announced the interim
results of its pending note invitations to eligible holders of its
Senior Floating Rate Notes due 2014, 9.125%/9.875% Senior PIK-
Election Notes due 2014, 8.875% Senior Fixed Rate Notes due 2014
and 10.125% Senior Subordinated Notes due 2016 to participate as a
lender in its new incremental term loans under its senior secured
credit facility in an aggregate principal amount, together with
incremental term loans payable as compensation, of up to
$1,000,000,000.
As of 5:00 p.m., New York City time, on Thursday, February 26,
2009, the Company had received commitments with respect to
approximately $2.95 billion aggregate principal amount of the
existing notes. Based on the amount of commitments delivered and
subject to consummation of the note invitations, the Company would
incur approximately $703 million aggregate principal amount of new
incremental term loans.
In addition, the Company has announced that it has extended the
early commitment date to the previously announced termination
date, which is midnight, New York City time, on March 10, 2009,
thereby extending the payment of the early note commitment
consideration until the expiration of the note invitations.
Existing notes that are delivered prior to the termination date
and accepted by the Company will be entitled to receive the early
note commitment consideration and, consequently, there will not be
any change in the consideration offered in the note invitations to
eligible holders since the commencement of the note invitations.
Commitments may no longer be rescinded.
Maximum
Acceptance
Amount of
Principal
Principal
Outstanding Amount of
Amount of
Title of Principal Existing
Each Issue of
Existing Notes Amount Acceptance Notes
Existing Notes
To Be Delivered (in millions) Priority (in mill)
Delivered
--------------- ------------ ---------- --------- ----
----------
Senior Toggle Notes $1,500.000 1 $250.000
$926,014,000
Senior Subordinated Notes 1,510.554 2 $746.268
$963,888,000
Sr Floating Rate Notes $475.000 3 N/A
$272,890,000
Senior Fixed Rate Notes $2,287.064 4 N/A
$789,575,000
If the incremental term loans are not fully committed at the
termination date, the Company may, but is not obligated to,
increase or waive in its sole discretion the limitation with
respect to the Senior Toggle Notes.
The Company's obligation to accept any commitments, and the
existing notes delivered pursuant to such commitments, is set
forth solely in the Confidential Information Memorandum relating
to the note invitations and the related commitment letter.
About Freescale Semiconductor
Freescale Semiconductor - http://www.freescale.com/-- is a global
leader in the design and manufacture of embedded semiconductors
for the automotive, consumer, industrial, networking and wireless
markets. The privately held company is based in Austin, Texas, and
has design, research and development, manufacturing or sales
operations around the world.
As reported by the Troubled Company Reporter on February 23,
Moody's Investors Service affirmed the corporate family, long-term
debt and speculative grade liquidity ratings of Freescale.
Simultaneously, Moody's downgraded the probability of default
rating to Ca from Caa1. The rating outlook remains negative.
The downgrade of the PDR to Ca reflects Moody's view that
Freescale's recent debt exchange offer is a distressed exchange.
It also reflects the very high likelihood of the transaction
closing. While no payment default has occurred and there are no
debt maturities until 2012, in Moody's opinion the successful
closing of the transaction, which is designed to reduce debt and
interest expense, would represent the occurrence of a deemed
default.
FREMONT GENERAL: Court Extends Plan Filing Period to March 13
-------------------------------------------------------------
On February 19, 2009, the United States Bankruptcy Court for the
Central District of California, Santa Ana Division extended the
"exclusive period" in which only Fremont General Corporation may
file a plan of reorganization through March 13, 2009. Pursuant to
the United States Bankruptcy Code, a debtor-in-possession, such as
the Company, has 120 days from the date of the filing of its
Chapter 11 petition with the Bankruptcy Court in which to file a
plan of reorganization, subject to Bankruptcy Court's discretion
to grant extensions of this exclusive period. During this
exclusive period no other person or entity is permitted to file a
plan of reorganization. The Company has been granted prior
extensions of the exclusive period, and a hearing is presently
scheduled for March 12, 2009, to address the Company's further
request for an extension of its exclusive period to file a plan
through April 30, 2009.
On January 21, 2009, the Bankruptcy Court approved the engagement
of KPMG Corporate Finance LLC, a subsidiary of KPMG LLP (UK), as
the Company's financial advisor to locate potential acquirors of
the Company, which could include certain of the Company's
remaining assets and liabilities, and to act as a sponsor in a
potential plan of reorganization. In connection with this
engagement, KPMGCF distributed marketing materials informing
potential investors of the opportunity to act as the sponsor of
the Company's plan of reorganization. As a result of KPMGCF's
marketing efforts, 26 parties entered into non-disclosure
agreements and were provided access to information about the
Company and its management. Ultimately, the Company received six
non-binding letters of intent from interested third parties, each
of whom is believed to be financially qualified to serve as a
prospective plan proponent.
The Company is evaluating each of these proposals to determine
whether the implementation of any of such proposals through a plan
of reorganization is in the best interest of the Company, its
creditors and its various other constituencies. The Bankruptcy
Court's extension of the exclusivity period allows the Company,
its advisors and the various constituents to continue to pursue
negotiations with the prospective plan proponents in an attempt to
maximize the value to be received from a plan of reorganization.
The Company cannot provide assurance that any of these proposals
will be acceptable to the Company or certain of its constituents
or that any plan of reorganization will be confirmed by the
Bankruptcy Court.
Documents filed with the Bankruptcy Court in connection with the
Company's bankruptcy case (other than documents filed under seal
or otherwise subject to confidentiality protections) will be
accessible at the Bankruptcy Court's Internet site --
http://www.cacd.uscourts.gov/-- through an account obtained from
Pacer Service Center at 1-800-676-6856. Additional information
may also be found at the Company's Web site at
http://www.fremontgeneral.com/under "Restructuring Information"
where you will find the link http://www.kccllc.net/fremontgeneral
About Fremont General
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 MOTORS: Parties Favor, Reject Chapter 11 Filing
-------------------------------------------------------
Mark J. Roe, a professor at Harvard Law School, examined two big
issues General Motors Corp. is facing -- restructuring GM's
roughly $30 billion of bond debt, and the potential collapse of
the automotive supply chain -- and indicated the issues are easier
to deal with if GM is in Chapter 11. With respect to suppliers,
he said that (i) under the Bankruptcy Code, for goods delivered
post-bankruptcy, suppliers are paid ahead of other creditors, (ii)
critical vendors can still receive payment for goods delivered
pre-bankruptcy if that's what's necessary to keep the supply
conduits fluid. As for the bond debt, he noted that out-of-
bankruptcy, every bondholders gets to decide for himself whether
to take the deal or not, thus causing delays, and failures in the
debt restructuring, however, in a Chapter 11, bondholders vote on
the plan -- if a majority of GM's bondholders (those holding two
thirds of the bonds by dollar value) think the deal is good
enough, it applies to all of them.
Reuters reports that billionaire investor Wilbur Ross, on the
other hand, said an "uncontrolled" bankruptcy of General Motors
Corp would be a "disaster" and a prepackaged reorganization would
be a better solution. Speaking at the Wharton Crisis and
Opportunity conference in Philadelphia, Mr. Ross said: "It doesn't
work to do an uncontrolled bankruptcy. It would have to be
prepackaged, with the government writing a really big check."
"It would be difficult to have a bankruptcy work and it would be
impossible on a free-fall basis," Mr. Ross said, the report adds.
Jessica Hall of Reuters also reported that Mr. Ross said the auto
suppliers needed immediate support. Since automakers scaled back
vehicle production in January, the parts suppliers sold fewer
goods and would have minimal accounts receivable or money flowing
into their coffers.
GM Bankruptcy Risky, Says The NY Times
The New York Times says that letting GM go bankrupt would be very
risky. The NY Times explains that GM said it could need up to
$100 billion in financing to get through the process and
considering the state of the debt markets, the Treasury would have
to supply much of the money. GM warned that bankruptcy would
discourage potential buyers of its cars, The NY Times states.
According to The NY Times, the government should probably grant
GM's request for additional bailout to avoid a disorderly
liquidation and job losses. The NY Times says that GM, its
bondholders, and its union must first reach agreements to cut the
company's liabilities before the auto sector task force agrees to
grant the extra $16 billion that the company has requested.
The NY Times states that the government must be firm of its
March 31 deadline for the automakers to reach agreements and to
start carrying them out. The government, according to The NY
Times, should consider creating a mechanism to provide bankruptcy
financing to help GM in case it fails to meet the deadlines. This
would ensure that the bankruptcy that may then become inevitable
won't be a disorderly process and GM will emerge a better company,
The NY Times says.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
GM's common stock was considered the stock market's bellwether for
many years, hence the saying "What's good for GM is good for
America."
As reported in the Troubled Company Reporter on Nov. 10, 2008,
General Motors Corporation's balance sheet at Sept. 30, 2008,
showed total assets of US$110.425 billion, total liabilities of
$170.3 billion, resulting in a stockholders' deficit of
$59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. To 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the Company's rapidly
diminishing liquidity position. Given the current liquidity level
of US$16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. And General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. Economy.
GENERAL MOTORS: To Pay Saab Automobile Bills to Suppliers
---------------------------------------------------------
General Motors Corp. will pay the bills that its Swedish unit,
Saab Automobile, owes suppliers in order to ensure production runs
smoothly, Dagens Industri reported, citing GM's head of
procurement, Bo Andersson.
According to Bloomberg, DI said that the payments will secure the
existence of about 1,100 suppliers who depend on Saab.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
GM's common stock was considered the stock market's bellwether for
many years, hence the saying "What's good for GM is good for
America."
As reported in the Troubled Company Reporter on Nov. 10, 2008,
General Motors Corporation's balance sheet at Sept. 30, 2008,
showed total assets of US$110.425 billion, total liabilities of
$170.3 billion, resulting in a stockholders' deficit of
$59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. To 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the Company's rapidly
diminishing liquidity position. Given the current liquidity level
of US$16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. And General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. Economy.
GENERAL MOTORS: Saab Works With Deutsche Bank, Seeks Buyers
-----------------------------------------------------------
Jan Ake Jonsson, managing director of General Motors Corp.'s Saab
unit, said that the company is working with Deutsche Bank as the
firm plans to accelerate talks this week with possible buyers,
John D. Stoll at The Wall Street Journal reports.
Citing Mr. Jonsson, WSJ relates that Saab has started negotiations
with potential investors and a deal could be completed by 2010.
WSJ notes that GM has offered to give Saab about $400 million and
plants and machinery for its new models, saying that Saab still
needs outside funding to survive. According to the report, Saab
needs the Swedish government to make additional loan commitments
so that it can become independent.
Mr. Jonsson, according to WSJ, said that to survive the deep
downturn in global auto sales, Saab needs EUR500 million from the
Swedish government. Without financial help from the government,
the company could run out of money, WSJ states, citing
Mr. Jonsson. The report says that GM and Saab already asked the
Swedish government for financial aid but were turned down. Still
Mr. Jonsson is confident that Saab can attract government support
due to the company's importance to Sweden's economy, according to
the report. The report states that Saab and its suppliers employ
about 15,000 people in Sweden.
WSJ states that under Swedish law, Saab needs to be reorganized by
May 20, but it can file for delays of up to a year. The report
says that Saab recently sought to reorganize under court
protection in Sweden.
Mr. Jonsson said that Saab is committed to reaching profitability
by 2011, WSJ relates.
GM Rehires 30 People for Tonawanda Plant
Thomas Hartley at Business First of Buffalo reports that about 30
previously laid-off hourly employees at GM's Tonawanda engine
plant were called to go back to the plant on Monday.
"The 30, who are some of the 465 (at GM) who were on indefinite
layoff, were brought back to run a line. But because there is so
much uncertainty, it looks like they'll be back for only one
week," Business First says quoted United Auto Workers union
assistant director Scott Adams as saying. Mr. Adams said that
production schedules are quickly changing due to depressed new
vehicle sales, Business First states.
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.
GMAC LLC: Earns $1.8BB in Fiscal 2008, Continues ResCap Support
---------------------------------------------------------------
GMAC LLC disclosed in a regulatory filing with the Securities and
Exchange Commission its financial results for the year ended Dec.
31, 2008.
For the year ended Dec. 31, 2008, the Company reported a net
income of $1.8 billion compared with a net loss of $2.3 billion
for the same period in the previous year.
Selected financial data showed that at Dec. 31, 2008, the Company
has total assets of $189.4 billion, total debts of $126.3 billion
and equity of $21.8 million.
GMAC also disclosed there remains substantial doubt about ResCap's
ability to continue as a going concern without the support of
GMAC.
Despite GMAC's continued actions through various funding and
capital initiatives demonstrate support for ResCap, and its status
as a bank holding company and completion of its private debt
exchange and cash tender offers better positions it to be capable
of supporting ResCap, there are currently no commitments or
assurances for future funding and capital support.
If GMAC no longer continues to support the capital or liquidity
needs of ResCap or if ResCap be unable to successfully execute
other initiatives, it would have a material adverse effect on
ResCap's business, results of operations, and financial position.
A full-text copy of the 10-K filing is available for free at:
http://ResearchArchives.com/t/s?39f8
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit of
GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
On Dec. 24, 2008, GMAC Financial Services' application to
become a bank holding company under the Bank Holding Company Act
of 1956, as amended, was approved by the Board of Governors of the
Federal Reserve System. In addition, GMAC Bank received approval
from the Utah Department of Financial Institutions to convert to a
state bank. As a bank holding company, GMAC will have expanded
opportunities for funding and access to capital, which will
provide increased flexibility and stability.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
GOLDEN NUGGET: Weak Performance Prompts Moody's Junk Corp. Rating
-----------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family and
Probability of Default ratings of Golden Nugget Inc. to Caa1 from
B3. The outlook is negative.
The downgrade of Golden Nugget's CFR to Caa1 reflects Moody's view
that weak operating performance and incremental debt to finance
new projects will further pressure liquidity and debt protection
measures as deterioration in consumer spending persists. "While
Golden Nugget continues to spend and incur debt to expand its Las
Vegas property, Moody's do not believe the ultimate earnings
generation from this project will be as significant as first
believed given the difficult economic environment" said Bill Fahy
VP, Senior Analyst.
Golden Nugget's Caa1 rating is driven by its small size, limited
diversity, and weak debt protection measures and liquidity. The
ratings also incorporate the expectation of earnings contribution
from its downtown Las Vegas expansion starting in 2010.
The negative outlook reflects Moody's expectation of further
deterioration in operating performance as the persistently weak
economic environment continues to pressure customer visits. The
outlook also anticipates that higher debt levels required to
support committed expansion projects and weaker operating
performance will result in further deterioration in liquidity and
debt protection measures.
Ratings downgraded are;
-- Corporate Family rating to Caa1 from B3
-- Probability of Default rating to Caa1 from B3
-- $50 million guaranteed 1st lien revolving credit facility
rating lowered to B3 (LDG3, 34%) from B2 (LDG3, 34%)
-- $210 million guaranteed 1st lien term loan to B3 (LDG3, 34%)
from B2 (LDG3, 34%)
-- $120 million guaranteed 1st lien delayed-draw term loan to
B3 (LDG3, 34%) from B2 (LDG3, 34%)
-- $165 million guaranteed 2nd lien term loan to Caa3 (LDG 6,
96%) from Caa2 (LDG5, 86%)
The outlook is negative
Moody's last rating action for Golden Nugget occurred on
October 13, 2008, when Moody's downgraded the Corporate Family and
Probability of Default ratings to B3 from B2 and placed all
ratings on review for further possible downgrade.
Golden Nugget, Inc., headquartered in Las Vegas, Nevada, owns and
operates the Golden Nugget hotel, casino, and entertainment
resorts in downtown Las Vegas and Laughlin Nevada. Annual gaming
revenue is approximately $265 million. The Golden Nugget is a
wholly-owned unrestricted subsidiary of Landry's Restaurants, Inc.
GRAND SOLEIL: Faces Chapter 7 Bankruptcy Petition by Charles Cato
-----------------------------------------------------------------
LaRaye Brown at The Clarion-Ledger reports that Charles Cato has
filed a Chapter 7 bankruptcy petition against Grand Soleil Casino
Resort in the U.S. Bankruptcy Court for the Middle District of
Florida on behalf of three companies with which he's associated.
The companies are collectively owed about $14.5 million, The
Clarion-Ledger relates. According to The Clarion-Ledger, Mr. Cato
was part of the group developing Grand Soleil. The Clarion-Ledger
says that Mr. Cato's association with the project ended through a
confidential agreement, the report says.
The Clarion-Ledger states that Grand Soleil's gaming license comes
up for renewal in May 2009. The $80 million project would be
finished this year, the report says, citing the developers.
Kent Hudson, the attorney for Grand Soleil, said that the casino's
developers reached an agreement with Britton & Koontz bank to
avoid foreclosure, according to The Clarion-Ledger. The report
states that Britton & Koontz disclosed earlier in February plans
to foreclose on the hotel after deciding not to renew a $3.7
million, 90-day note used to finance the project. When the
foreclosure notice was filed, four companies filed liens against
the property totaling almost $1.8 million, according to the
report.
The bankruptcy petition was filed in Florida "on an emergency
basis," because there wasn't time to file it in Mississippi, but
the case could be transferred to Mississippi, The Clarion-Ledger
reports, citing Jason Ellison, an associate with the Florida law
firm that filed the bankruptcy petition.
Grand Soleil Casino Resort -- http://www.grandsoleilcasino.com/--
is a Natchez, Mississippi-based casino.
GWLS HOLDINGS: March 30 Bar Date Set for Filing Proofs of Claim
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
established March 30, 2009, at 4:00 p.m. prevailing Eastern Time,
as the deadline for all entities holding claims against the
Debtors that arose prior to or on Oct. 20, 2008, to file proofs of
claims against the Debtors.
All governmental units holding claims against the Debtors that
arose prior to or on October 20, 2008, are required to file proofs
of claim on or before 4:00 p.m., prevailing Eastern Time, on
April 20, 2009.
Original proofs of claim must be sent by mail, overnight courier
or hand delivery, on or before 4:00 p.m. prevailing Eastern Time,
on the applicable Bar Date, to:
Greatwide Claims Processing Center
c/o Kurtzman Carson Consultants LLC
2335 Alaska Avenue
El Segundo, CA 09245
About GWLS Holdings
Headquartered in Dallas, Texas, GWLS Holdings Inc. --
http://www.greatwide.com/-- operate trucking and logistics
company. The company and 50 of its affiliates filed for Chapter
11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No.
08-12430). Robert S. Brady, Esq., Matthew B. Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP, represents the Debtors'
counsel. Willkie Farr Gallagher LLP is the Debtors' co-counsel.
Miller Buckfire & Co., LLC, is the Debtors' financial advisor.
When the Debtors filed for protection from their creditors, they
listed assets and debts between $500 million and $1 billion each.
GWLS HOLDINGS: Wants Plan Filing Period Extended to May 22
----------------------------------------------------------
GWLS Holdings, Inc., et al., ask the U.S. Bankruptcy Court for the
District of Delaware to extend their exclusive periods to file a
Chapter 11 plan and to solicit acceptances of a plan through and
including May 22, 2009, and July 24, 2009, respectively.
This is the Debtors' first request for an extension of these
deadlines.
On Jan. 23, 2009, the Court approved the sale of substantially all
of the Debtors' assets to Transportation 100, LLC, f/k/a Newco
LLC, for the aggregate amount of $343,365,202 plus the assumption
of certain liabilities. The sale has not yet closed.
The Debtors say that since their petition date, they have focused
their efforts on implementing the sale, along with addressing the
many issues and Bankruptcy Code requirements attendant with a
bankruptcy filing. This, they say, is more than ample cause for
the limited extension of their exclusive periods.
Further, discussions with the Official Committee of Unsecured
Creditors regarding a joint liquidating plan have just began and
additional time is necessary to allow discussions to progress and
a consensual plan to be formulated and prepared.
About GWLS Holdings
Headquartered in Dallas, Texas, GWLS Holdings Inc. --
http://www.greatwide.com/-- operate trucking and logistics
company. The company and 50 of its affiliates filed for Chapter
11 protection on Oct. 20, 2008 (Bankr. D. Del. Lead Case No.
08-12430). Robert S. Brady, Esq., Matthew B. Lunn, Esq., at
Young, Conaway, Stargatt & Taylor LLP, represents the Debtors'
counsel. Willkie Farr Gallagher LLP is the Debtors' co-counsel.
Miller Buckfire & Co., LLC, is the Debtors' financial advisor.
When the Debtors filed for protection from their creditors, they
listed assets and debts between $500 million and $1 billion each.
HALLWOOD ENERGY: Files Petition for Bankruptcy in Dallas, Texas
---------------------------------------------------------------
The Hallwood Group Incorporated reported that on March 1, 2009,
Hallwood Energy, L.P. and certain of its affiliates, in which The
Hallwood Group Incorporated, is an investor, filed petitions for
relief under Chapter 11 of the United States Bankruptcy Code.
The cases are pending in the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division, in In re Hallwood
Energy, L.P., et al., Case No. 09-31253.
Hallwood Group recognized losses associated with the investment
through the equity method of accounting and had reduced the
carrying value of its investment in Hallwood Energy L.P. to zero
at December 31, 2007. Additional losses were recorded in 2008 to
the extent of further investments in Hallwood Energy L.P. and the
carrying value of the Company's investment remained at zero as of
September 30, 2008.
The bankruptcy filing does not include Hallwood Group. Hallwood
Group continues to own Brookwood Companies Incorporated, which
continues to operate in the normal course of business.
The Hallwood Group Incorporated (NYSE Alternext US: HWG) --
http://www.hallwood.com-- is a holding company that has a 100%
consolidated investment in its textile products subsidiary, and a
25% equity investment in its energy affiliate. The Company's
textile products subsidiary is an integrated textile company that
develops and produces innovative woven fabrics through specialized
finishing, treating and coating processes.
The Company's energy affiliate is Hallwood Energy, L.P., which is
currently involved in exploration and operation of oil and gas
properties in three identifiable areas: Central Eastern Arkansas,
South Louisiana and West Texas.
HALLWOOD ENERGY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Hallwood Energy, L.P.
3710 Rawlins, Suite 1500
Dallas, TX 75219
Bankruptcy Case No.: 09-31253
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Hallwood Energy, L.P. 09-31253
Hallwood Energy Management, LLC 09-31254
Hallwood Gathering, L.P. 09-31255
HG II Management, LLC 09-31256
Hallwood Petroleum, LLC 09-31257
Hallwood SWD, LLC 09-31258
Type of Business: The Debtors engage in exploration, development
and production of oil and gas properties.
See: http://www.hallwoodenergy.com/
Chapter 11 Petition Date: March 1, 2009
Court: Northern District of Texas (Dallas)
Judge: Stacey G. Jernigan
Debtor's Counsel: Scott Mark DeWolf, Esq.
sdewolf@romclawyers.com
Rochelle McCullough L.L.P.
101 E. Park Blvd., Suite 951
Plano, TX 75074
Tel: (972)735-9143
Fax: (972)735-9780
Business Consultant and CRO: Blackhill Partners LLC
Estimated Assets: $50 million to $100 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hallwood Group Incorporated convertible debt $13,919,074
c/o Mel Melle
3710 Rawlins, Suite 1500
Dallas, TX 75219
RLG Investments Inc. convertible debt $10,000,000
Oussama Lababedle c/o
Marlene Owens
1834 Whispering Forest DR
Kingwood, TC 77339
Hallwood Family (BVI) LP convertible debt $5,000,000
c/o Anthony Gumbiner
Le Roccabella, 24 Avenue
Princess Grace
Monte Carlo, Monaco 9800
Cimarex Energy Company trade debt $3,820,917
1700 Lincoln Street, Ste. 1800
Denver, CO 80203
Taxarkana Energy LP convertible debt $2,362,254
Parker Lee
3415 North Pines Way #13
Suite 202
Wilson, WY 83014
RCH Energy Opportunity convertible debt $1,409,636
Fund II LP
c/o Robert Raymond
200 Crescent Court, Ste. 1060
Dallas, TX 75201
WB Supply Company trade debt $1,394,323
PO Box 972856
Dallas, TX 75397-2856
Premier Pipe LLC trade debt $1,076,775
PO Box 840406
Dallas, TX 75284-0306
Chesapeake Operating trade debt $753,032
PO Box 960165
Oklahoma City, OK 73196-0165
Nicole Hollinger convertible debt $658,000
c/o Hans-Peter Hollinger
Gotthardatrasse 21
Zurich, Switzerland CH-8002
Hans-Peter Hollinger convertible debt $658,000
Gotthardatrasse 21
Zurich, Switzerland CH-8002
Jeremy M. Agace contingent debt $600,000
31 Avenue Princess Grace
Monte Carlo, Monaco 98000
Talbot Family Trust convertible debt $600,000
c/o J. Thomas Talbot
PO Box 7322
Newport Beach, CA 92658
W and K Marble Family convertible debt $500,000
Partnership
Jill Pratt convertible debt $400,000
William L. Guzzettie convertible debt $384,420
The W.F.T.G. LLP convertible debt $301,514
Barry Schochet convertible debt $270,000
Rolan Sturn convertible debt $245,127
Oil County Tubular Corp. trade debt $221,746
The petition was signed by Tony Strehlow, chief financial officer
and secretary.
HANOVER CAPITAL: Has Until June 30 to Cure NYSE Non-Compliance
--------------------------------------------------------------
The NYSE Alternext US LLC notified Hanover Capital Mortgage
Holdings, Inc., on February 24, 2009, that the Company has until
June 30, 2009, to regain compliance with the continued listing
standards of Section 1003(a)(iv) of the Exchange Company Guide.
On April 8, 2008, the Company received notice from the Exchange
Staff indicating that the Company was below certain of the
Exchange's continued listing standards. Specifically, the notice
provided that the Company was not in compliance with:
(1) Section 1003(a)(i) of the Exchange Company Guide due to
stockholders' equity of less than $2,000,000 and losses
from continuing operations and net losses in two out of
its three most recent fiscal years, and
(2) Section 1003(a)(iv) of the Exchange Company Guide in that
the Company had sustained losses which were so substantial
in relation to overall operations or its existing
financial resources, or its financial condition had become
so impaired, that it appeared questionable, in the opinion
of the Exchange, as to whether the Company would be able
to continue operations or meet its obligations as they
mature.
The Company had previously been granted an extension until
February 27, 2009, to regain compliance with the continued listing
standards of Section 1003(a)(iv) of the Exchange Company Guide and
until October 8, 2009, to regain compliance with the continued
listing standards of Section 1003(a)(i) of the Exchange
Company Guide.
Based on available information including the Company's plan to
regain compliance, as well as conversations between Exchange Staff
and representatives of HCM, the Exchange has determined that, in
accordance with Section 1009 of the Company Guide, the Company
made a reasonable demonstration of its ability to regain
compliance with Section 1003(a)(iv) of the Company Guide by the
end of the revised Plan period, which the Exchange has now
determined to be no later than June 30, 2009.
HCM's Registration Statement on Form S-4, including the proxy
statement/prospectus filed with the Securities and Exchange
Commission relating to the planned merger of Walter Investment
Management LLC, a wholly-owned subsidiary of Walter Industries,
Inc., and HCM, was declared effective on February 18, 2009, by the
Securities and Exchange Commission.
In connection with the planned merger, HCM has established a
record date of February 17, 2009, and will hold a special meeting
of shareholders on April 15, 2009, to approve the merger and
certain other transactions described in the proxy statement/
prospectus. Pending approval by HCM's shareholders and the
satisfaction of certain other conditions, the merger is expected
to be completed in the second quarter 2009. No vote of Walter
Industries shareholders is required.
The Company will be subject to periodic review by Exchange Staff
during the extension period. Failure to make progress consistent
with the Plan and to achieve certain milestones, or to regain
compliance with the continued listing standards by the end of the
extension period could result in the Company's common stock being
delisted from the Exchange.
Hanover Capital Mortgage Holdings, Inc. (NYSE Alternext: HCM) --
http://www.hanovercapitalholdings.com/-- is a mortgage REIT
staffed by seasoned mortgage capital markets professionals. HCM
invests in prime mortgage loans and mortgage securities backed by
prime mortgage loans.
HARRAH'S ENTERTAINMENT: Plans Debt Exchange Offer to Cut Debt
-------------------------------------------------------------
Harrah's Entertainment is planning a second debt-exchange offer to
reduce its $23 billion debt, Peter Lattman and Jesse Drucker at
The Wall Street Journal report, citing people familiar with the
matter.
WSJ relates that Harrah Entertainment cut last year its net debt
by about $1 billion, which was less than expected. The Company
pushed back the maturity of some bonds by several years, WSJ
states.
Citing research firm KDP Investment Advisors, WSJ reports that
Harrah's Entertainment has about $710 million of debt coming due
in 2010 and an additional $308 million due in 2011. WSJ says that
Harrah's Entertainment drew down the $740 million remaining on its
$2 billion revolving bank line to shore up its liquidity in
January.
According to WSJ, Harrah's Entertainment was one of the firms that
lobbied for the tax break. The report says that less than two
weeks ago U.S. President Barack Obama signed a law providing tax
breaks to firms that reduce their debt. Citing private-equity
executives, the report states that taking advantage of a new tax
break beats a default or bankruptcy.
WSJ, citing KDP Investment, relates that Harrah's Entertainment's
debt is trading at severely depressed prices on concerns that the
Company will default. Research firm KDP Investment Advisors said
that Harrah's Entertainment's loans are trading at 58 cents on the
dollar and high-yield bonds trading as low as six cents on the
dollar, according to WSJ.
About Harrah's Entertainment
Las Vegas, Nevada-based Harrah's Entertainment, Inc. --
http://www.harrahs.com-- operates nearly 40 casinos across the
United States, primarily under the Harrah's(R), Caesars(R) and
Horseshoe(R) brand names; Harrah's also owns the London Clubs
International family of casinos and the World Series of Poker(R).
Private equity firms Apollo Global Management and TPG Capital LP
acquired Harrah's in January for $31 billion.
At Sept. 30, 2008, the company's consolidated condensed balance
sheets showed total assets of $37.0 billion, total liabilities of
$33.4 billion and stockholders' equity of $3.6 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $129.7 million compared with net income of $244.4 million
for the same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $100.9 million compared with net income of $667.2 million for
the same period in the previous year.
The company's cash and cash equivalents, including funds borrowed
during the quarter under its credit facilities, totaled
approximately $1.0 billion at Sept. 30, 2008, compared to
$654.7 million at Sept. 30, 2007.
* * *
As reported by the Troubled Company Reporter on February 19, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Las Vegas, Nevada-based Harrah's Entertainment Inc. and
its wholly owned subsidiary, Harrah's Operating Co. Inc., to 'CCC'
from 'B-'. S&P said that the rating outlook is negative.
The TCR reported on January 6, 2009, that Moody's Investors
Service raised Harrah's Entertainment, Inc.'s Probability of
Default rating to Caa1/LD from Ca reflecting the closing of HET's
debt exchange transaction. Moody's affirmed Harrah's other
ratings and adjusted the loss given default assessments to reflect
the new post-debt exchange capital structure. Moody's' corporate
family rating on Harrah's Entertainment is at Caa1.
HAWAIIAN TELCOM: Seeks June 29 Extension of Lease Decision Period
-----------------------------------------------------------------
Hawaiian Telcom Communications Inc. and its debtor-affiliates are
party to 65 unexpired non-residential property leases, covering
numerous retail stores, offices, warehouses, holding equipment and
other facilities essential to their operations.
A complete list of the Debtors' Unexpired Leases is available for
free at: http://bankrupt.com/misc/HawTelOCPListLeases.pdf
The Debtors tell the U.S. Bankruptcy Court for the District of
Hawaii that they have taken steps to review the Leases, and are
continuing to evaluate whether to consolidate or cease operations
where appropriate. Thus, they aver that it is critical that they
be granted additional time in making careful and prudent decisions
with respect to the Unexpired Leases.
Section 365(d)(4) of the Bankruptcy Code provides that an
unexpired non-residential real property lease under which a
debtor is the lessee will be deemed rejected, and the trustee
will immediately surrender that non-residential real property to
the lessor, if the trustee does not assume or reject the
unexpired lease by the earlier of that the date:
(i) that is 120 days after the Petition Date; or
(ii) of the entry of an order confirming a Chapter 11 plan.
Pursuant to Section 365(d)(4)(B), the court may extend the lease
decision period, prior to the expiration of the 120-day period,
for 90 days on the motion of the trustee or lessor for cause.
Accordingly, the Debtors ask the Court to extend the deadline by
which they must assume or reject unexpired non-residential real
property leases, through and including June 29, 2009.
The Debtors' current Lease Decision Period deadline is set to
expire on March 31, 2009.
Nicholas C. Dreher, Esq., at Cades Schutte LLP, in New York,
asserts that without an extension, the Debtors may be compelled
to either assume substantial long-term liabilities or forfeit the
potential benefits associated with the Unexpired Leases.
Moreover, to force the Debtors to prematurely assume unexpired
leases will severely hamper their ability to optimize their
network and streamline their operations.
The Debtors say they will evaluate the economics of each
Unexpired Lease, in light of their business plan and the eventual
plan of reorganization, to determine whether the assumption or
rejection of each of the Unexpired Leases will inure to the
benefit of their estates.
The Court has set a hearing for March 12, 2009, to consider the
Debtors' request.
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)
HAWAIIAN TELCOM: Seeks to Employ Deloitte as Outside Auditors
-------------------------------------------------------------
Hawaiian Telcom Communications Inc. and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the District of
Hawaii to employ Deloitte & Touche LLP, as their independent
auditors, nunc pro tunc to January 8, 2009.
The Debtors relate that they have selected Deloitte because of
the firm's prior experience in serving as their auditors, as well
as the firm's extensive knowledge and experience in providing
auditing services in restructurings and reorganizations.
As independent auditors, Deloitte will perform financial
statement audits in accordance with the standards of the Public
Company Accounting Oversight Board. Deloitte is expected to
express an opinion on the fairness of the presentation of the
Debtors' financial statements for the year ended December 31,
2008, in conformity with the accounting principles generally
accepted in the United States of America.
At the Debtors' request, Deloitte professionals may render
additional related services appropriate and necessary for the
Debtors' benefit, in order to maximize the value of their
estates.
The services of the Deloitte professionals will be paid in
accordance with the firm's hourly rates:
Title Hourly Rate
----- -----------
Partner/Director $375 - $450
Senior Manager $300 - $375
Manager $250 - $300
Senior $200 - $250
Staff $150 - $200
The firm will also be reimbursed for actual and necessary
expenses it incurs or has incurred for the Debtors' benefit.
Paul Higo, a partner at Deloitte & Touche, assures the Court that
his firm does not hold or represent an interest adverse to the
Debtors' estates, and is a "disinterested person" as the term is
defined under Section 101(14) of the Bankruptcy Code.
U.S. Trustee Reacts
Tiffany Carroll, the Acting United States Trustee for Region 15,
argues that the Deloitte Retention Application includes a
restriction against the award of punitive or exemplary damages
under any circumstances. She asserts that a limitation on
damages is outside the bounds of public policy, thus the request
must be denied.
The U.S. Trustee also seeks additional details regarding
Deloitte's disclosed relationships, and reserves her right to
object until the receipt of the requested information.
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)
HAWAIIAN TELCOM: Panel Gets Court OK to Hire Morrison as Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in the bankruptcy
cases of Hawaiian Telcom Communications Inc. and its debtor-
affiliates sought and obtained authority from the U.S. Bankruptcy
Court for the District of Hawaii to retain Morrison & Foerster
LLP, as its counsel, effective as of December 12, 2008.
As the Committee's counsel, Morrison & Foerster will:
(a) assist and advise the Committee in its consultation with
the Debtors relative to the administration of their
Chapter 11 cases;
(b) attend meetings and negotiate with representatives of the
Debtors;
(c) assist and advise the Committee in its examination and
analysis of the conduct of the Debtors' affairs;
(d) assist the Committee in the review, analysis and
negotiation of any plan of reorganization;
(e) take all necessary action to protect and preserve the
interests of the Committee, including possible
prosecution of actions, negotiations concerning
litigation, and review and analysis of claims against
the Debtors;
(f) prepare all necessary motions, reports and other papers
on the Committee's behalf;
(g) appear before the Court, the Appellate Court, and the
United States Trustee, and protect the interests of the
Committee before those parties; and
(h) perform all necessary legal services.
The professionals of Morrison & Foerster will be paid for their
services according to the firm's standard hourly rates:
Professional Hourly Rate
------------ -----------
Brett H. Miller $795
Larren Nashelsky $850
Adam lewis $700
Lorenzo Marinuzzi $695
Todd M. Goren $600
Erica Richards $415
Samatha Martin $350
The firm will also be reimbursed for actual and necessary
expenses it incurs or has incurred for the Committee's benefit.
Brett H. Miller, Esq., a partner at Morrison & Foerster, assured
the Court that his firm does not hold or represent an interest
adverse to the Debtors' estates, and is a "disinterested person"
as the term is defined under Section 101(14) of the Bankruptcy
Code.
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)
HAWAIIAN TELCOM: Panel Gets Court OK to Hire Moseley as Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
bankruptcy cases of Hawaiian Telcom Communications Inc. and its
debtor-affiliates sought and obtained authority from the U.S.
Bankruptcy Court for the District of Hawaii to retain Moseley
Biehl Tsugawa Lau & Muzzi as its co-counsel, nunc pro tunc to
December 22, 2008.
Creditors Committee Co-chairperson Laura L. Moran of U.S. Bank ,
N.A., notes that Morrison & Foerster LLP will serve as the
Committee's lead counsel. The firms are expected to use their
best efforts to avoid duplication of services.
As the Committee's Hawaiian co-counsel, Moseley will:
(a) attend hearings pertaining to the Debtors' bankruptcy
cases, as necessary;
(b) review applications and motions, as necessary;
(c) communicate with Morrison, as necessary;
(d) communicate with and advise the Committee and attend
meetings, as necessary;
(e) provide expertise with respect to the Chapter 11
proceedings, as well as the procedural rules and
regulations; and
(f) perform all necessary legal services.
The professionals of Morrison & Foerster will be paid for their
services according to the firm's standard hourly rates:
Title Hourly Rate
----- -----------
Partners $265 to $355
Associates $180 to $225
Paralegals $115 to $155
The firm's professionals assigned to the Chapter 11 cases are
Christopher J. Muzzi, who charges $265 per hour, and Natalie F.
Wilson, who charges $180 per hour. The firm will also be
reimbursed for actual and necessary expenses it incurs or has
incurred for the Committee's benefit.
Christopher J. Muzzi, Esq., attorney at Moseley, assures the
Court that his firm does not hold or represent an interest
adverse to the Debtors' estates, and is a "disinterested person"
as the term is defined under Section 101(14) of the Bankruptcy
Code.
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)
HAWAIIAN TELCOM: Panel Seeks to Hire FTI as Financial Advisors
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the bankruptcy
cases of Hawaiian Telcom Communications Inc. and its debtor-
affiliates seeks authority from the U.S. Bankruptcy Court for the
District of Hawaii to retain FTI Consulting, Inc., as its
financial advisors, effective as of December 12, 2008.
Laura L. Moran, of the U.S. Bank, N.A., as co-chairperson of the
Committee, notes that FTI Consulting has assisted and advised
numerous committees, trustees, secured creditors, debtors, and
other constituencies in the Chapter 11 process. The firm, he
adds, is experienced in analyzing and testifying regarding
corporate and restructuring issues and measuring the economics of
any potential merger and acquisition transactions.
As the Committee's financial advisors, FTI Consulting will:
(a) assist the Committee in the review of financial-related
disclosures required by the Court;
(b) assist with a review of the Debtors' short-term cash
management procedures and cash flows;
(c) assist and advise the Committee with respect to the
Debtors' identification of core business assets, and the
disposition of assets or disposition of unprofitable
operations;
(d) assist with a review of the Debtors' performance of
cost/benefit evaluations with respect to the affirmation
or rejection of contracts and leases;
(e) assist with the evaluation of operations and
identification of areas of potential cost savings;
(f) assist in the review of financial information distributed
by the Debtors to creditors others;
(g) attend meetings and assist in discussions with the
Debtors, potential investors, banks, other secured
lenders, the Committee, and other official committees in
the Chapter 11 cases, the United States Trustee, other
parties-in-interest and their professionals;
(h) assist in the review and preparation of information, and
the analysis necessary for the confirmation of a
reorganization plan;
(i) assist in the evaluation and analysis of avoidance
actions;
(j) provide litigation advisory services with respect to
accounting and tax matter; and
(k) render other general business consulting or other
assistance, as deemed necessary by the Committee or its
counsel.
FTI Consulting will be entitled to a $200,000 monthly flat fee in
return for its services. The firm also be reimbursed for actual
and necessary expenses it incurs or has incurred for the
Committee's benefit.
Michael Eisenband, senior managing director at FTI Consulting,
assures the Court that his firm does not hold or represent an
interest adverse to the Debtors' estates, and is a "disinterested
person" as the term is defined under Section 101(14) of the
Bankruptcy Code.
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)
HEALTH INSURANCE: S&P Downgrades Counterparty Rating to 'BB+'
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
counterparty credit and financial strength ratings on Health
Insurance Plan of Greater New York to 'BB+' from 'BBB-'.
Standard & Poor's also said that it affirmed its 'BB+'
counterparty credit and financial strength ratings on ConnectiCare
Inc., a wholly owned subsidiary of HIP.
The outlook on both these companies is now stable.
"We lowered the ratings on HIP because S&P believes the plan's
earnings profile has weakened to the point that it now more than
offsets HIP's other rating strengths," explained Standard & Poor's
credit analyst Shellie Stoddard. This is the case both for HIP
itself and for the consolidated EmblemHealth Inc., which includes
HIP, ConnectiCare, and Group Health Inc. Over the past two years,
Emblem's earnings have been significantly below expectations
because of losses from its state-sponsored segment.
S&P expects that when Emblem announces full-year 2008 pretax
operating income next week, it will be well below both S&P's
expectations of $170 million-$180 million and 2007 adjusted pretax
operating income of $151 million (adjusted EBITDA of
$228 million). Emblem's state-sponsored segment, which has been
the primary drag on underwriting results, includes the company's
Medicaid, Family Health Plus, and Child Health Plus products.
Through the first nine months of 2008, this segment had an
underwriting loss of $97 million compared with a $38 million
underwriting loss through Sept. 30, 2007. Driving these
underwriting losses are reduced premium rate increases and the
Medicaid and Family Health Plus programs' generally higher-risk
member mix.
HIP's creditworthiness benefits from Emblem's good competitive
position in the New York State and Connecticut markets, supporting
provider networks of medical groups and capitated hospital
systems, good risk-adjusted capitalization, and good liquidity for
its asset/liability mix. The company's moderate geographic
concentration risk as a regional market player and significant
client concentration risk, which stems from its large share of the
City of New York employee account, offset these strengths and
constrain the rating.
S&P expects Emblem's operating performance to stabilize in 2009 to
the extent that profitability in the state-sponsored segment
responds to the phasing-in of risk-adjusted premium rates and the
implementation of targeted medical and care management strategies.
However, escalating budgetary pressures in New York State could
restrain premium rates increases.
For 2009, Standard & Poor's expects that Emblem will generate $9.0
billion in premium revenues and adjusted pretax operating income
of about $100 million, for a return on revenue of about 1%. The
earnings projections assume an improvement in underwriting results
for both the commercial and the state-sponsored business segments.
In addition, S&P assume that nonoperating charges -- such as OTTI
and conversion/integration costs -- will be less severe in 2009
versus 2008, but net investment income will also likely decrease
from historical levels. If the improvements do not happen in
2009, S&P would likely revise the outlook to negative or lower the
ratings again, depending on the magnitude of further losses.
HEALTHSOUTH CORP: Dec. 31 Balance Sheet Upside-Down by $1.16BB
--------------------------------------------------------------
HealthSouth Corporation had $1.99 billion in total assets,
$2.69 billion in total liabilities, and $1.16 billion in
shareholders' deficit.
HealthSouth reported a $181.9 million net income on $463.8 million
in net operating revenues for the three months ended December 31,
2008, compared to $45.9 million in net loss on $434.5 million in
net operating revenues for the same period in 2007.
HealthSouth posted a $252.4 million net income on $1.84 billion in
net operating revenues for the full year 2008, compared to $653.4
million in net income on $1.73 billion in net operating revenues
for 2007.
"The fourth quarter was another solid quarter for HealthSouth:
same store discharges were up an impressive 9.7%; consolidated net
operating revenues increased 6.7%; and adjusted earnings per share
increased $0.25 per diluted share compared to the same period of
last year," said Jay Grinney, President and Chief Executive
Officer of HealthSouth. "We believe these results demonstrate the
solid foundation and strength of HealthSouth's business model. We
also believe our emphasis on providing high quality patient care
and enhancing our balance sheet through continued debt repayment
will position HealthSouth to achieve its previously targeted 15%
to 20% EPS growth in 2009."
In addition, the Company continued to deleverage its balance
sheet. During 2008, the Company used approximately $254 million
of cash to reduce its total debt outstanding. Due to the addition
of two capital leases for hospitals, the Company's net total debt
reduction was approximately $228 million during the year. Total
debt outstanding approximated $1.8 billion as of December 31,
2008. Total cash and cash equivalents as of December 31, 2008
approximated $32.2 million compared to
$19.8 million as of December 31, 2007.
"Our ability to continue to generate cash from operations and non-
operating sources allowed us to reduce our leverage ratio by a
full turn in 2008," said John Workman, Executive Vice President
and Chief Financial Officer. "We will continue to be disciplined
in our use of cash in 2009 with a heavy focus towards debt
reduction. In fact, we have reduced our debt by an additional
$64 million, thereby reducing our leverage ratio by another 0.2
turn, since the end of 2008."
2009 Guidance
Adjusted Consolidated EBITDA for 2009 is expected to be in the
range of $342.0 million to $352.0 million, compared to
$341.8 million for 2008. The Company's Credit Agreement allows
all unusual noncash items or nonrecurring charges to be added to
arrive at Adjusted Consolidated EBITDA.
About HealthSouth Corp.
Headquartered in Birmingham, Alabama, HealthSouth Corp. (NYSE:
HLS) -- http://www.healthsouth.com/-- provides inpatient
rehabilitation services. Operating in 26 states across the
country and in Puerto Rico, HealthSouth serves more than 250,000
patients annually through its network of inpatient rehabilitation
hospitals, long-term acute care hospitals, outpatient
rehabilitation satellites, and home health agencies.
HIGHLAND DEVELOPMENT: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Highland Development LLC
943 Beartooth Circle
Draper, UT 84020
Bankruptcy Case No.: 09-21639
Chapter 11 Petition Date: February 27, 2009
Court: Northern District of California (Oakland)
Judge: William T. Thurman
Debtor's Counsel: Kenneth L. Cannon, II, Esq.
kcannon@djplaw.com
Durham Jones & Pinegar
111 East Broadway, Suite 900
P.O. Box 4050
Salt Lake City, UT 84110-4050
Tel: (801) 415-3000
Fax: (801) 415-3500
Estimated Assets: $10 million to $50 million
Estimated Debts: $1 million to $10 million
The Debtor has now creditors who are not insiders.
The petition was signed by Trevor Woolf, member.
HSBC FINANCE: Halts Consumer Lending Unit; 5,400 Jobs Affected
--------------------------------------------------------------
HSBC Finance Corporation yesterday announced the discontinuation
of loan originations of all products by its Consumer Lending
business. HSBC Finance said its board of directors authorized and
endorsed February 27, 2009, the discontinuation of all receivable
originations for all products by its Consumer Lending business.
HSBC will continue to service and collect the existing receivable
portfolio as it runs off, while continuing efforts to reach out
and assist mortgage customers with their loan repayments and home
preservation. The Consumer Lending branch offices, branded in the
US as HFC and Beneficial, will cease taking new loan applications
as soon as practical and substantially all branch offices will be
closed as soon as commitments to customers are satisfied.
HSBC Finance said employees supporting originations operations
will be evaluated for service elsewhere in its operations, but
expects that roughly 5,400 employees will be displaced.
In its Annual Report on Form 10-K with the U.S. Securities and
Exchange Commission, HSBC Finance noted that during 2008, mortgage
lending industry trends continued to deteriorate:
-- Loan originations from 2005 to 2008 in the mortgage lending
industry continue to perform worse than originations from
prior periods;
-- The real estate markets in a large portion of the United
States continue to be affected by a stagnation in property
values or a decline in some markets;
-- Increases in the period of time properties remain unsold in
most markets;
-- Increased loss severities on homes that are foreclosed and
remarketed due to the increasing inventory of homes for
sale and the declining property values in many markets;
-- Lower secondary market demand for subprime loans resulting
in reduced liquidity for subprime mortgages; and
-- Continued tightening of lending standards by mortgage
lenders which impacts a borrowers' ability to refinance
existing mortgage loans.
On Monday, HSBC Holdings plc Chief Executive Officer Michael
Geoghegan said the majority of the HFC and Beneficial-branded U.S.
branch network will be closed, affecting 6,100 jobs. Mr.
Geoghegan said the closure will result in a restructuring charge
of US$265 million in the first half of 2009, inclusive of closure
costs and non-cash charges, and annualized cost savings of roughly
US$700 million.
According to Bloomberg News' Jon Menon, HSBC CFO Douglas Flint
told reporters HSBC plans to close the unit's HFC and Beneficial
consumer lending units in five to seven years, cutting 6,100 jobs,
and shutter most of its 800 bank branches in the U.S.
According to HSBC Finance, concerns about the future of the U.S.
economy, including the length and depth of the current economic
recession, consumer confidence, volatility in energy prices,
adverse developments in the credit markets and mixed corporate
earnings, continue to negatively impact the U.S. economy and the
capital markets. Numerous events occurred in September and
October 2008 which have resulted in a series of government
initiatives intended to strengthen market stability and enhance
market liquidity which appear to be having an impact on the debt
markets in early 2009.
On Monday, HSBC Finance reported 2008 annual financial results.
HSBC posted a $2.78 billion net loss at the end of 2008, compared
to a $4.90 billion net loss in 2007 and a $1.44 billion net income
in 2006. As of December 31, 2008, HSBC Finance had
$130.7 billion in total assets, including $255 million in cash and
$25 million in interest-bearing deposit with banks and
$98 billion in receivables. Moreover, HSBC Finance had
$117.3 billion in total liabilities, including $113.2 billion in
total debt, $7.2 billion in accumulated deficit, and
$12.8 billion in shareholders' equity as of December 31.
HSBC Finance estimates that, as a result of its decision, net
interest income and other revenues would be reduced by roughly
$50 million and operating expenses would be reduced by roughly
$600 million on an annualized basis. HSBC also expects to incur
closure costs of roughly $180 million, predominantly related to
one-time termination and other employee benefit costs, a
substantial portion of which will be recorded in the first half of
2009.
HSBC Finance said its information technology services affiliate
expects to incur roughly $35 million of costs relating to one-time
termination benefits and asset write-downs, a portion of which may
be billed to HSBC Finance.
Moreover, HSBC Finance said the closure of the Consumer Lending
loan origination operations is likely to result in a significant
decrease in credit insurance policies sold by its Insurance
Services business. During the first quarter of 2009, HSBC will
evaluate the impact of this decision on the recoverability of the
goodwill currently allocated to the Insurance Services business of
$260 million.
In October 2008, HSBC became eligible to participate in the
Commercial Paper Funding Facility of the Federal Reserve Board in
an amount of up to $12.0 billion. At December 31, 2008, HSBC had
$520 million outstanding under the program.
In 2008, HSBC Investments (North America) Inc. made three capital
contributions to HSBC Finance totaling $3.5 billion to support
ongoing operations and to maintain capital at levels HSBC believes
are prudent in the current market.
HSBC said it remains committed to the U.S. financial services
market, including the remaining businesses in HSBC Finance, as
well as its US banking operations under HSBC Bank.
About HSBC Finance
Based in Mettawa, Illinois, HSBC Finance Corporation is a
subsidiary of HSBC North America Holdings Inc., one of the top 10
financial organizations in the United States. HSBC Finance's
subsidiaries provide middle-market consumers in the United States
with several types of loan products, including real estate secured
loans, auto loans, credit cards and private label credit cards,
personal non-credit credit cards loans, taxpayer financial
services and specialty insurance products. HSBC Finance is the
principal fund raising vehicle for the operations of its
subsidiaries. HSBC Finance generally serves non-conforming and
non-prime consumers.
HSBC Finance Corporation traces its origin to 1878 and operated as
a consumer finance company under the name Household Finance
Corporation for most of its history. In 1981, HFC shareholders
approved a restructuring that resulted in the formation of
Household International, Inc., as a publicly held holding company
and HFC became a wholly-owned subsidiary of Household. In March
2003, Household was acquired by HSBC Holdings plc by way of merger
with H2 Acquisition Corporation, an indirect wholly owned
subsidiary of HSBC. Following the merger, H2 was renamed
"Household International, Inc." Subsequently, HSBC transferred
its ownership interest in Household to a wholly owned subsidiary,
HSBC North America Holdings Inc., which subsequently contributed
Household to its wholly-owned subsidiary, HSBC Investments (North
America) Inc.
On December 15, 2004, Household merged with its wholly owned
subsidiary, HFC. By operation of law, following the merger, all
obligations of HFC became direct obligations of Household.
Following the merger, Household changed its name to HSBC Finance
Corporation.
About HSBC North America
HSBC North America is the holding company for HSBC's operations in
the United States and Canada. The principal subsidiaries of HSBC
North America are HSBC Finance Corporation, HSBC Bank Canada, a
Federal bank chartered under the laws of Canada, HSBC USA Inc., a
U.S. bank holding company, HSBC Markets (USA) Inc., a holding
company for investment banking and markets subsidiaries, and HSBC
Technology & Services (USA) Inc., a provider of information
technology and some centralized operational services, and
beginning in January 2009, human resources, corporate affairs and
other services shared among the subsidiaries of HSBC North
America. HUSI's principal U.S. banking subsidiary is HSBC Bank
USA, National Association.
HSBC HOLDINGS: U.S. Unit Loses $15BB; To Shutter HFC, Beneficial
----------------------------------------------------------------
HSBC Holdings plc, ultimate parent of HSBC North America, which is
the holding company for HSBC's operations in the United States and
Canada, on Monday reported a loss of US$15.5 billion including the
goodwill impairment charge of US$10.6 billion in its North
American Personal Financial Services business.
HSBC Holdings Chairman Stephen Green said the significant
deterioration in U.S. employment and economic outlook in the
fourth quarter of 2008 were the primary factors in causing the
bank to write off all the remaining goodwill carried on its
balance sheet in respect of its Personal Financial Services
business in North America.
Excluding the goodwill impairment on North American Personal
Financial Services business, Mr. Green said HSBC reported a pre-
tax profit for 2008 of US$19.9 billion, a decline of 18%. On a
reported basis, pre-tax profit was US$9.3 billion, down 62%.
HSBC said it made a profit before tax of US$9.3 billion, a
decrease of US$14.9 billion, or 62%, compared with 2007. The
Group's total assets at December 31, 2008, were US$2.52 trillion,
an increase of US$173 billion, or 7%, since December 31, 2007.
According to HSBC, all business lines except Personal Financial
Services, and all regions except North America, were profitable in
2008. Many of HSBC's businesses have delivered strong results,
despite very tough market conditions, and these offset the ongoing
difficulties in the U.S. business.
1) Profits in Europe were US$10.9 billion, up 26%.
2) Asia produced pre-tax profits of some US$11.9 billion, 11%
down on a reported basis from the record performance of
2007.
3) Profits in Hong Kong declined 26% to US$5.5 billion from
2007's record levels.
4) Outside Hong Kong, the Rest of Asia-Pacific (including the
Middle East), grew pre-tax profits by 27% to US$6.5 billion
on an underlying basis.
5) Pre-tax profits in Latin America were US$2 billion, down by
6%, as a result of higher impairment changes.
HSBC also reported a gain of US$6.6 billion on the fair value on
own debt.
HFC & Beneficial Brands Will Be Closed,
6,100 Jobs Affected
HSBC Holdings Chief Executive Officer Michael Geoghegan said the
majority of the HFC and Beneficial-branded U.S. branch network
will be closed, affecting 6,100 jobs. Mr. Geoghegan said the
closure will result in a restructuring charge of US$265 million in
the first half of 2009, inclusive of closure costs and non-cash
charges, and annualized cost savings of roughly
US$700 million.
According to Bloomberg News' Jon Menon, HSBC CFO Douglas Flint
told reporters HSBC plans to close the unit's HFC and Beneficial
consumer lending units in five to seven years, cutting 6,100 jobs,
and shutter most of its 800 bank branches in the U.S.
"Although it serves a large part of the population, it is clear
that the sub-prime mortgage refinance model no longer operates
effectively," Mr. Geoghegan said. "Due to the lack of home
equity, the deteriorating outlook for house price appreciation and
very limited refinancing opportunities available to this customer
segment in the near future, we will cease to write new consumer
finance business through the HFC and Beneficial brands in the US,
and will concentrate on running-off the outstanding real estate-
secured and unsecured portfolio of US$62 billion."
"With the future of subprime finance in the US uncertain, we no
longer consider sub-prime finance in the US to be a core business
to HSBC. We continue to make strenuous efforts to help customers
in financial difficulty and avoid foreclosure. We modified almost
100,000 loans in 2008 and our foreclosure rate only increased
slightly, despite the deterioration in the economy."
HSBC to Raise US$17.7 Billion
HSBC Holdings intends to raise GBP12.5 billion -- US$17.7 billion
(net of expenses) -- by way of a fully underwritten rights issue
of 5.06 billion new ordinary shares at a price of 254 pence per
share on the basis of 5 new ordinary shares for every 12 existing
ordinary shares. The proposal is subject to authorization by the
shareholders at a general meeting on March 19, 2009. The accounts
were approved by the Board of Directors on March 2 and authorized
for issue.
HSBC Execs Forgo Bonuses
Chairman Stephen Green said no performance share awards will be
made in the Group in respect of 2008.
"As Chairman I elected in 2007 to no longer receive any cash bonus
award; any variable compensation would be delivered through
performance share awards -- which would only vest if performance
hurdles are met," Mr. Green noted.
Mr. Green said Mike Geoghegan, Group Chief Executive, Stuart
Gulliver, Chief Executive of Global Banking and Markets and HSBC
Global Asset Management, and Douglas Flint, Group Finance Director
have asked the Remuneration Committee not to consider them for any
bonus award for 2008. No cash bonus award will be made to any
Executive Director for 2008.
"We at HSBC were not immune from the crisis. But we have built our
business on very strong foundations and are able to report results
which demonstrate our ability to withstand the storm," Mr. Green
said. "The coming twelve months will be difficult. We expect
parts of Asia, the Middle East and Latin America to continue to
outperform Western economies, but to be constrained by the global
downturn."
About HSBC
Headquartered in London, HSBC is one of the largest banking and
financial services organizations in the world. HSBC's
international network comprises around 9,500 offices in 86
countries and territories in Europe, the Asia-Pacific region, the
Americas, the Middle East and Africa. HSBC provides a
comprehensive range of financial services: personal financial
services; commercial banking; corporate, investment banking and
markets; private banking; and other activities.
HUNTLEY HOILET: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Huntley G. Hoilett and Juliana C. Hoilett
1122 East Elsmere Drive
Carson, CA 90746
Bankruptcy Case No.: 09-14214
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Ernest M. Robles
Debtor's Counsel: Leonard M Shulman, Esq.
Shulman Hodges & Bastian LLP
26632 Towne Ctr. Dr., Ste. 300
Foothill Ranch, CA 92610
Tel: (949) 340-3400
Fax: (949) 340-3000
Email: lshulman@shbllp.com
Total Assets: $3,171,540.00
Total Debts: $2,033,335.76
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-14214.pdf
The petition was signed by Huntley G. Hoilett and Juliana C.
Hoilett.
HUTTON AND ROWE: Case Summary & Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Hutton and Rowe, Inc.
f/d/b/a The Plumbery
15790 Jarvis Street
Elk River, MN 55330
Bankruptcy Case No.: 09-41036
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Minnesota (Minneapolis)
Judge: Nancy C. Dreher
Debtor's Counsel: Joel D. Nesset, Esq., and Thomas G. Wallrich,
Esq.
Hinshaw & Culbertson LLP
333 South Seventh Street, Suite 2000
Minneapolis, MN 55402
Tel: (612) 333-3434
Email: jnesset@hinshawlaw.com,
twallrich@hinshawlaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/mnb09-41036.pdf
The petition was signed by David L. Rowe, President of the
company.
ILX RESORTS: Files for Chapter 11 Reorganization in Phoenix
-----------------------------------------------------------
ILX Resorts Incorporated and certain of its subsidiaries and
limited liability companies have filed voluntary petitions under
Chapter 11 of the U.S. Bankruptcy Code. The petitions were filed
in the United States Bankruptcy Court for the District of Arizona.
"Dramatic challenges in the economy and recent unanticipated
reductions in our credit facilities caused by disruption and
instability in the capital markets have necessitated that we seek
reorganization protection to preserve resources for an orderly
restructuring of the Company," said Joe Martori, Chairman and CEO.
The Company expects that Chapter 11 protection will enable the
company to conduct its business operations as usual. To that end,
the Company is seeking approval from the court in order to
continue managing its operations in the ordinary course.
Based in Phoenix, Arizona, ILX Resorts Incorporated (NYSE
Alternext: ILX) -- http://www.ilxresorts.com/-- acquires,
develops, and operates premier timeshare resorts primarily in the
western United States that provide its owners with extraordinary
vacation experiences. ILX's portfolio of world-class properties
includes eight resorts in Arizona, one in Indiana, one in
Colorado, one in San Carlos, Mexico and land in Puerto Penasco,
Mexico and Sedona, Arizona, both of which are in the final
planning stages. Through Premiere Vacation Club, the Company has
acquired, and continues to acquire, inventory at the Carriage
House in Las Vegas and in addition has acquired inventory at the
Scottsdale Camelback Resort in Scottsdale, Arizona.
As of September 30, 2008, ILX Resorts had $73.6 million in total
assets and $43.2 million in total liabilities.
ILX RESORTS: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: ILX Resorts, Inc.
160 Portal Lane
Sedona, AZ 86336
Bankruptcy Case No.:
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
ILE Sedona, Inc. 09-03595
ILX Tourist Station, Inc. 09-03596
ILX-Bruno, LLC 09-03598
LOS Abrigados Partners Limited Partnership 09-03599
Genesis Investment Group, Incorporated 09-03600
Puerto Penasco Vacation Destinations, S.DE R.L.DE 09-03601
Premiere Development, Incorporated 09-03603
Sea of Cortez Premiere Vacation Club, S.DE.R.L.DE 09-03604
Rocky Point Genesis, Incorporated 09-03605
VCA Tucson, Incorporated 09-03606
VCA South Bend, Incoroprated 09-03608
VCASB Partners General Partnership 09-03609
FIRST Piggy, LLC 09-03610
Harbor Southwest Development, Incorporated 09-03612
ILX Bell Rock, Incorporated 09-03617
Type of Business: The Debtors operate resorts including Los
Abrigados in Sedona.
See: http://www.ilxresorts.com/
Chapter 11 Petition Date: March 2, 2009
Court: District of Arizona (Phoenix)
Judge: Redfield T. Baum
Debtor's Counsel: John J. Hebert, Esq.
jhebert@stklaw.com
Shughart Thomson & Kilroy, P.C.
3636 N. Central Avenue, Suite 1200
Phoenix, AZ 85012
Tel: (602) 650-2011
Fax: (602) 391-2546
Estimated Assets: $10 million to $50 million
Estimated Debts: $50 million to $100 million
The Debtors did not file a list of 20 largest unsecured creditors.
The petition was signed by Nancy J. Stone, director, vice
chairman, president, treasurer and chief executive officer.
INDEPENDENCIA SA: Voluntary Chapter 15 Case Summary
---------------------------------------------------
Chapter 15 Debtor: Independencia S.A.
Avenida Luiz A. Fayrdin
S/3 Cajamar
Sao Palo, Brazil
Chapter 15 Case No.: 09-10903
Type of Business: The Debtor engages in real property investment.
See: http://www.independencia-sa.cl/
Chapter 15 Petition Date: March 27, 2009
Court: Southern District of New York (Manhattan)
Chapter 15 Debtor's Counsel: Paul R. DeFilippo, Esq.
pdefilippo@wmd-law.com
Wollmuth Maher & Deutsch LLP
500 Fifth Avenue, 12th Floor
New York, NY 10110
Tel: (212) 382-3300
Fax: (212) 382-0050
Estimated Assets: unstated
Estimated Debts: unstated
The petition was signed by Tobias Bremer, chief financial officer.
INTERFACE INC: S&P Changes Outlook to Negative; Holds 'B+' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its long-
term rating outlook on Atlanta, Georgia-based Interface Inc. to
negative from stable. At the same time, Standard & Poor's
affirmed its ratings on the company, including the 'B+' corporate
credit rating. As of Dec. 28, 2008, Interface had about
$287.6 million of debt.
The outlook revision is based on the company's weakened operating
performance as a result of a significant deterioration in demand
from corporate office customers in the U.S. and Western Europe,
the short-term refinancing risk regarding its upcoming
$152.6 million debt maturity by February 2010, given current
credit market conditions, and S&P's expectation that credit
measures will weaken in 2009.
The ratings on Interface reflect the competitive and cyclical
market conditions in the global floor covering market, as well as
the company's narrow business focus and heavy dependence on the
corporate office segment.
The cyclical nature of the commercial carpeting sector remains a
rating concern. While Interface's revenue base is still very
concentrated in the corporate office sector, the company has
benefited from its strategy to diversify its revenue base into
other end markets, including the educational, government,
healthcare, and residential sectors.
The outlook is negative. The company currently operates in a very
challenging economic environment, and S&P expects a substantial
reduction in corporate spending to negatively affect the company's
sales and profitability.
"We could lower the ratings on Interface if liquidity becomes
constrained and/or if the current difficult operating environment
for carpet manufacturers leads to a material deterioration in
credit measures," said Standard & Poor's credit analyst Rick Joy.
S&P believes a 25% sales decline and further erosion in EBITDA
margins of 200 basis points over the next year could result in
leverage approaching 4x.
"Although less likely in the near term, S&P could revise the
outlook to stable if the company successfully refinances its
upcoming debt maturity and the operating environment improves such
that credit metrics begin to improve," he continued.
INTERPUBLIC GROUP: 12.4% EBITDA Margin, Fitch May Raise Rating
--------------------------------------------------------------
Interpublic Group of Companies (rated 'BB+'; with a Positive
Outlook by Fitch) released earnings. As expected, organic revenue
in the fourth quarter of 2008 was negative, at down 2.2% (but in-
line with its peers) while EBITDA margins were healthy at 20.8%.
On a full-year basis the company posted solid improvement in its
cost base, reflected in a stronger EBITDA margin of 12.4%,
compared to 9.6% in 2007. Free cashflow generation was also solid
at approximately $700 million reflecting better EBITDA
performance, low cash taxes and working capital improvements.
Liquidity is strong; cash and marketable securities was
$2.3 billion at Dec. 31, 2008, and the company has the capacity to
meet its near-term debt maturities without relying on external
sources.
Fitch will be meeting with management and evaluating the rating
and Outlook in the coming months. As part of this review, it is
possible the Positive Outlook could be maintained, which would
reflect Fitch's belief that the rating could be raised to
investment grade at some point in the next 12 to 18 months. The
rating may also be stabilized at 'BB+' which would reflect
uncertainty regarding the pace of further improvement in the
company's credit profile. It is also possible, but less likely,
that the rating could be raised to investment grade as part of
this review.
The evaluation will take place within the context of Fitch's
belief that there are a limited number of legitimate ad agency
networks that can compete to be the lead for the ad business of
major clients. Although not immune to some of the disruption
associated with helping clients transition toward emerging media,
the rational industry structure positions ad agencies to adapt to
the changing media landscape. Margins have proven remarkably
resilient through economic downturns, as Global Holding Companies
benefit from the ability to scale their costs to preserve margins
in down markets. Notwithstanding these mitigants, Fitch believes
agencies could experience organic revenue deterioration of 5%-10%
throughout this downturn.
Key factors in the analysis of IPG's rating and Outlook will
include evaluating the depth of the current downturn on organic
revenue growth, secular impacts including auto exposure, the
degree of reversal of recent margin improvement under a negative
growth environment, and sustainability of recent working capital
improvements under negative growth in media buying.
Also, Fitch is cognizant that while IPG has only used its
$335 million credit facility (due in 2011) and its Enhanced
Liquidity Facility capacity for letters of credit in the past five
years, the bank agreement contains some restrictive financial
covenants. Given the operating improvements achieved in 2008, the
company has created additional cushion within its covenant
thresholds, which should help the company to weather the continued
operating pressures Fitch expects in 2009. Fitch estimates that
EBITDA could decline more than 20% (assuming all else equal)
before breaching any of its financial covenants.
As of Dec. 31, 2008, IPG's liquidity position is supported by $2.3
billion in cash and marketable securities. Net of
$128 million in LOCs, the company had approximately $622 million
available under its $750 million ELF and full availability under
its $335 million credit facility. Fitch notes the $335 million
credit facility has capacity for up to $200 million in LOCs.
Near-term maturities include $250 million notes due November 2009,
$250 million in 2010, and the ELF facility, which expires in June
2009.
Fitch's currently rates IPG:
-- Issuer Default Rating 'BB+';
-- Enhanced Liquidity Facility 'BB+';
-- Credit Facility 'BB+';
-- Senior unsecured notes (including convertibles) 'BB+';
-- Cumulative convertible perpetual preferred stock 'BB-';
ISTAR FINANCIAL: Moody's Cuts Senior Unsecured Rating to 'B2'
-------------------------------------------------------------
Moody's Investors Service downgraded the senior unsecured ratings
of iStar Financial to B2 from Ba3. The outlook is negative.
The rating action was prompted by the increase in iStar's non-
performing assets to $3.5 billion (approximately 23% of total
assets) in a challenging debt capital markets environment,
especially for commercial real estate. As a result, iStar's asset
performance will continue to experience pressure, and the
resolution of its non-performing assets will be a protracted
process.
The negative outlook reflects Moody's expectation that iStar's
liquidity will be constrained in 2009 given the confluence of
peaking funding commitments, debt maturities and the risks
surrounding asset repayments and asset sales as a result of the
credit market squeeze. Moody's also expects iStar's non-
performing assets to grow further, credit metrics to continue to
weaken and believes that the REIT's secured debt levels will
likely increase with a corresponding deterioration in its
unencumbered portfolio. Moody's will continue to monitor iStar's
performance vis-…-vis its debt covenants and expects the cushion
to shrink over the course of 2009. Moody's will also monitor the
size and composition of iStar's unencumbered asset pool.
A rating downgrade would likely result if non-performing assets
grow beyond 30% of total assets and fixed charge coverage falls
below 1.6X (based on the bond covenant definition). Any breach of
the bond or bank covenants would also result in a downgrade; a
multi-notch downgrade could also be a possibility. Moody's stated
that a stable outlook would be predicated upon long-term
visibility into the resolution of iStar's non-performing assets,
stability of its performing portfolio, as well as consistent
covenant compliance and fixed charge coverage above 1.7X (based on
the bond covenant definition). Moody's notes that this is not
likely in the near-term.
These ratings were downgraded with a negative outlook:
* iStar Financial Inc. -- Senior unsecured debt to B2 from Ba3;
preferred stock to Caa1 from B2; senior debt shelf to (P)B2
from (P)Ba3; subordinated debt shelf to (P)B3 from (P)B1;
preferred stock shelf to (P)Caa1 from (P)B2.
Moody's last rating action with respect to iStar Financial Inc.
was on October 30, 2008 when Moody's downgraded the senior
unsecured ratings to Ba3 from Ba1 and left the ratings under
review for possible downgrade.
iStar Financial Inc. [NYSE: SFI] is a property finance company
that elects REIT status. iStar provides structured mortgage,
mezzanine and corporate net lease financing. iStar Financial is
headquartered in New York City, and had assets of $15.3 billion
and equity of $2.4 billion as of December 31, 2008.
iStar Financial'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 iStar's core industry and the company's ratings are
believed to be comparable to those of other issuers of similar
credit risk.
IVIVI TECHNOLOGIES: Receives Nasdaq Deficiency Notice
-----------------------------------------------------
Ivivi Technologies, Inc., received on February 26, 2009, a
deficiency notice from the staff of The Nasdaq Stock Market that
the Company does not comply with Nasdaq Marketplace Rule
4310(c)(3), which requires the Company to have a minimum of
$2,500,000 in stockholders' equity or $35,000,000 market value of
listed securities or $500,000 of net income from continuing
operations for the most recently completed fiscal year or two of
the three most recently completed fiscal years. The Nasdaq staff
is reviewing the Company's eligibility for continued listing on
The Nasdaq Capital Market.
The Nasdaq staff has requested that the Company provide it with a
specific plan to achieve and sustain compliance with all The
Nasdaq Capital Market listing requirements, including the time
frame for completion of the plan. Pursuant to Nasdaq Marketplace
Rule 4803, the Company is required to provide the staff with its
plan within 105 days of the date of the deficiency notice. The
Company intends to submit its plan to the staff within the
requisite 105-day period. If after the conclusion of its review
process, the staff determines that the Company's plan does not
adequately address the issues noted, the staff will provide
written notification that the Company's securities will be
delisted from The Nasdaq Capital Market. At that time, the
Company may appeal the staff's decision to a Nasdaq Listing
Qualification Panel.
Under the Nasdaq Marketplace Rules, the Company's common stock
will continue to be listed on The Nasdaq Capital Market, subject
to the Company's compliance with other continued listing
requirements. Although the Company intends to cure its deficiency
and return to compliance with the continued listing requirements
of the Nasdaq Marketplace Rules, there can be no assurance that it
will be able to do so.
About Ivivi Technologies
Based in Montvale, New Jersey, Ivivi Technologies, Inc. (IVVI), is
a medical technology company focusing on designing, developing and
commercializing its proprietary electrotherapeutic technology
platform, with a primary focus on developing treatments for
cardiovascular disease.
JEANNE WOLFSON: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Jeanne M. Wolfson
129 Buckner Road
Wentzville, MO 63385
Bankruptcy Case No.: 09-41647
Chapter 11 Petition Date: February 27, 2009
Court: Northern District of California (Oakland)
Judge: Charles E. Rendlen III
Debtor's Counsel: Spencer P. Desai, Esq.
desai@capessokol.com
Capes, Sokol, Goodman and Sarachan, P.C.
Pierre Laclede Center
7701 Forsyth Boulevard, 12th Floor
St. Louis, MO 63105
Tel: (314) 721-7701
Fax: (314) 721-0554
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
GMAC, L.L.C. Personal guaranty $16,000,000
c/o Nelson L. Mitten, Esq. of Feld Chevrolet
Riezman Berger, P.C.
7700 Bonhomme Avenue, 7th
Floor
Saint Louis, MO 63105
Countrywide Home Loans $525,000
P.O. Box 650070
Dallas, TX 75265
Internal Revenue Service 1040 Taxes $312,950
Cincinnati, OH 45999
State of California Taxes $53,474
Franchise Tax Board
Bank of America Credit card $33,511
purchases
John Deere Credit equipment $30,000
#JD4720
GMAC 2007 Chevrolet $26,856
Silverado
Chase Credit card $14,875
purchases
Saks Fifth Avenue Credit card $3,754
purchases
Neiman Marcus Credit card $3,345
purchases
American Express Credit card $503
purchases
Charter $91
JEFFERY VOGT: Case Summary & 11 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Jeffery David Vogt
PO Box 21611
Tampa, FL 33623
Bankruptcy Case No.: 09-03513
Chapter 11 Petition Date: February 27, 2009.
Court: Northern District of California (Oakland)
Judge: Michael G. Williamson
Debtor's Counsel: Wendy J. DePaul, Esq.
wendy@cohenanddepaul.com
Cohen and DePaul PA
4951 Adamo Drive, Suite 220
Tampa, FL 33605
Tel: (813) 247-5010
Fax: (813) 247-5075
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank Of Florida Luhrs 41'; $272,824
PO Box 6279 secured: $272,000
Fort Myers, FL 33906-1279
Bank Of Florida Luhrs 38'; $173,079
PO Box 6279 secured $170,000
Fort Myers, FL 33906-1279
Bayway Investments secured: $149,495
6100 51st Street S. $169,000; senior
Saint Petersburg, FL 33715 lien: $48,991
Ford Credit SUVs and Personal $70,700
business loans;
secured: $34,900
Bank of Tampa Visa $19,670
Innovative Construction Promissory note $18,472
Dsnb Macys Charge Account $6,286
American General Finance Charge Account $3,262
GEMB / HH Gregg Charge Account $2,931
Mcydsnb Charge Account $1,221
Visdsnb Credit Card $710
JUPITER NETWORKS: S&P Withdraws 'BB' Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's said it withdrew its `BB' corporate credit
rating on Juniper Networks Inc. at the request of the company. At
the time of the withdrawal, the rating was on CreditWatch with
positive implications, where it had been placed on Sept. 25, 2008.
Juniper's CreditWatch placement reflected S&P's view that, based
on the company's performance through the quarter ended
June 31, 2008, there was a reasonable prospect of an upgrade.
Ratings List
Ratings Withdrawn
Juniper Network Inc.
To From
-- ----
Corporate Credit Rating NR BB/Watch Pos/--
Senior Unsecured (prelim) NR BB/Watch Pos
Subordinated (prelim) NR B+/Watch Pos
KIMBALL HILL: Parties Object to Confirmation of Liquidation Plan
----------------------------------------------------------------
Several parties-in-interest have filed separate objections to the
confirmation of the Joint Plan of Liquidation of Kimball Hill,
Inc. and its 14 debtor affiliates.
* County of Denton, County of Guadalupe, County of Hays,
County of Williams, in Texas
* Local Tax Authorities of Texas, including Hays CISD, Round
Rock ISD, Dallas County, DeSoto, DeSoto ISD, Kaufman
County, Rockwall CAD, Tarrant County, McAllen, McAllen ISD,
South Texas College, South Texas ISD, Bexar County,
Cypress-Fairbanks ISD, Fort Bend County, Galveston County,
Harris County, Judson ISD, Katy ISD, and League City
* South Edge LLC
* Holdings Manager, LLC
* Focus South Group, LLC
* John Ritter
* Kyle Acquisition Group, LLC
* Honigman Miller Schwartz and Cohn, LLP
* Inland Bank and Trust Company, formerly AmeriMark Bank
* Beazer Homes Holdings Corp.
The Objectors ask the U.S. Bankruptcy Court for the Northern
District of Illinois to deny confirmation of the Plan absent
modifications to address their concerns.
Judge Susan Sonderby approved on January 21, 2009, the Disclosure
Statement explaining the Joint Plan of Reorganization of Kimball
Hill, Inc., and its debtor-affiliates and the Official Committee
of Unsecured Creditors. The Court will convene a hearing to
consider confirmation of the Plan on March 9, 2009 at 2:00 p.m.,
Central Time.
The Texas Counties of Denton, Guadalupe, Hays, and Williams
jointly contend that the Liquidation Plan fails to provide a fair
and equitable treatment to their secured claims pursuant to
Sections 1129(b)(1) and (2)(A) of the Bankruptcy Court. The
Counties are holders of Class A-2 Other Secured Claims against
the Debtors on account of ad valorem property taxes in 2007 and
2008 on the Debtors' property.
On behalf of the Counties, Jeffrey C. Dan, Esq., at McCreary,
Veselka, Bragg & Allen, P.C., in Round Rock, Texas, contends
that:
-- the Counties' claims are entitled to express retention
of all property tax liens, including those for
postpetition taxes, until all taxes, penalties and
interest secured by those liens have been paid;
-- taxes for the 2009 tax year are entitled to classification
and treatment as an administrative expense under Section
503(b) of the Bankruptcy Court, but should be expressly
designated as a post-confirmation debt, to be timely paid
when otherwise due, or be subject to state court
collection without further recourse to the Bankruptcy
Court;
-- the Claimants require that the postpetition interest be
specified to be at the statutory rate under Texas Law of
1% per month as required by Section 511 of the Bankruptcy
Code, and that it be paid through the date the claims are
paid in full.
The Local Tax Authorities of Texas, on the other hand, complain
that the payment provisions of the Plan are not acceptable. They
note that there is no date certain for payment of their claims.
The Tax Authorities maintain that the taxes already due and
billed should be paid on the effective date of the Plan, and the
taxes for 2009 and any subsequent year should be paid timely
under applicable non-bankruptcy law. All taxes should be paid
upon the sale of any property if not previously paid, they add.
The Tax Authorities also object to the various provisions of the
Plan, which purport to deem "disallowed" any late filed claims or
to limit the ability of creditors to file amendments to timely
filed claims, citing that Bankruptcy Code provides that a claim
is deemed allowed unless objected to.
On behalf of the Tax Authorities, Elizabeth Weller, Esq., at
Linebarger Goggan Blair & Sampson, LLP, in Dallas, Texas, further
argues that the Plan provision that require the Plan
Administrator or Liquidation Trust Administrator, as well as the
Bankruptcy Court, to approve every amendment, or it is deemed
disallowed, puts all the power into the hands of the debtor,
rather than subject the issue to litigation as a contested matter
as contemplated under the Bankruptcy Code.
In separate objections, South Edge LLC and Holdings Manager, LLC,
together with Focus South Group, LLC and John Ritter complain
that the Plan improperly classifies their claims, including
claims based on joint venture agreements, as general unsecured
claims rather than senior unsecured claims.
Kyle Acquisition Group, LLC, joins in the objection of South
Edge, LLC. Kyle, a party to strategic joint ventures to acquire
develop and sell land and homes with the Debtors, and to an
Operating Agreement, among others, says its claims arise from
transactions similar in nature to those entered into between the
Debtors and South Edge.
Inland Bank, a holder of a Class A-3 claim under the Plan on
account of the money it loaned to the Debtors, relates that it is
conferring with the Debtors in an attempt to clarify the
treatment of its claim. Inland believes that it can reach a
mutually agreeable understanding with the Debtors. According to
Inland Bank, the Debtors have agreed that its objection will
stand as a general objection to the classification and treatment
of its claim under the Plan and that, if circumstances warrant,
Inland may supplement its Objection to the classification and
treatment of its claim by March 3, 2009.
Beazer Homes is concerned that the Plan purports to provide an
injunction that may be interpreted to prohibit it from asserting
defenses or counterclaims in a litigation involving South Edge,
LLC. Beazer is a member of South Edge.
Beazer thus proposes that the Plan be modified to provide that no
provision in the Plan will constitute or be deemed to constitute
an impairment to Beazer's ability to assert and maintain defenses
or counterclaims against Debtor Kimball Hill Homes Nevada, Inc.,
any released parties, exculpation parties and their interest in
South Edge in any dispute or transaction involving South Edge,
Beazer and KHH Nevada.
For its part, Honigman Miller said it received a rejection notice
pertaining to a Land Acquisitions Contract dated July 23, 2007,
to which it is purportedly a party with the Debtors. Honigman,
however, argues it is unaware of being a counterparty to the
contract, and is not aware of the contract's existence.
Honigman, accordingly, maintains it has not received proper
notice or due process.
Kimball Hill Files Plan Supplements
The Debtors delivered to the Bankruptcy Court supplements to their
Chapter 11 Joint Plan of Liquidation on February 15, 2009. The
Supplements consisted of:
(1) a non-exclusive list of retained causes of action,
(2) a schedule of assumed executory contracts and unexpired
leases,
(3) a non-exclusive schedule of rejected executory contracts
and unexpired leases,
(4) a form of the post-consummation trust agreement between
the Debtors and a Plan administrator to be approved by the
Court, and
(5) a form of the Liquidation Trust Agreement.
The Debtors then filed amendments to certain of the Plan
supplements on February 27, 2009:
(a) Retained Causes of Actions, a list of which is available
at no charge:
http://bankrupt.com/misc/Kimball_AmnddCauseofAction.pdf
(b) Executory contracts and unexpired leases to be assumed, a
list of which is available for free at:
http://bankrupt.com/misc/Kimball_Amndd_AssumedLses.pdf
(c) A non-exclusive schedule of rejected executory contracts
and unexpired leases, a list of which is available for
free at :
http://bankrupt.com/misc/Kimball_Amndd_RjctdLses.pdf
(d) A copy of the post-consummation trust agreement between
the Debtors and a Plan administrator to be approved by the
Court. The pro-forma Post-Consummation Trust Agreement
contemplates, among others, the creation of a trust for
the purpose of liquidating the post-consummation trust
assets that will have been transferred from the Debtors to
the Trust.
A black-lined copy of the Post-Consummation Trust
Agreement form is available for free at:
http://bankrupt.com/misc/PostConsumtnTrust_Blckln.pdf
(e) A copy of the Liquidation Trust Agreement between the
Debtors and a trustee of the liquidation trust to be duly
approved by the Court. The Liquidation Trust Agreement
contemplates the creation of a Liquidation Trust for the
purpose of liquidating the Liquidation Trust Assets,
collecting the committee settlement payment, implementing
the Plan and the confirmation order and distributing the
cash proceeds to the Liquidation Trust beneficiaries.
A black-lined copy of the form of Liquidation Trust
Agreement is available for free at:
http://bankrupt.com/misc/LiqTrustPact_Blckln.pdf
Romelia A. Edwards, senior consultant of Kurtzman Carson
Consultants LLC, said solicitation packages have been sent to
certain holders of claims allowed to vote on the Plan. Non-Voting
Notices and Confirmation Hearing Notices have also been
distributed to holders of claims not allowed to vote on the Plan.
Jane Sullivan, executive director of Financial Balloting Group
LLC, disclosed that solicitation packages were mailed to nominees
including brokerage firms, banks and agents, who in turn will
distribute the solicitation packages to beneficial owners of the
Debtors' subordinated notes.
Plan Amendment
The Debtors amended their Chapter 11 Plan and Disclosure Statement
on January 12, 2009, to reflect that they are a party to a real
property purchase and sale contract with K. Hovnanian Homes -
DFW, L.L.C. K. Hovnanian previously opposed the Plan to the
extent it lacked disclosure of the Hovnanian Contract. It noted
that the Contract was not listed in the Debtors' Schedules of
Assets and Liabilities previously filed with the Court.
A full-text copy of the Court-approved Disclosure Statement is
available for free at http://bankrupt.com/misc/Kimball_DS.pdf
The Debtors also amended the Plan to clarify that no release
under the Plan injunction provision will be granted with respect
to claims that have been released or compromised under the Plan,
where the entities holding those released or compromised claims
are permanently enjoined from taking any actions against the
Debtor except to recover insurance proceeds against them in a
nominal capacity on condition that the Plan Administrator or
Liquidation Trust Administrator agrees.
A blacklined copy of the Kimball Hill Amended Plan is available
for free at:
http://bankrupt.com/misc/Kimball_AmendedPlan_Blackline.pdf
Any objections not otherwise settled, withdrawn or resolved are
overruled, the Court ruled.
A full-text copy of the Disclosure Statement Order is available
at for free at http://bankrupt.com/misc/Kimball_DSOrder.pdf
About Kimbal Hill
Headquartered in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Fort Worth, Houston, Las Vegas,
Sacramento and Tampa, in five regions: Florida, the Midwest,
Nevada, the Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007, reflected
total assets of $795,473,000 and total debts $631,867,000.
Kimball Hill filed a chapter 11 plan of liquidation on
December 2, 2008, which provides for the winding down of the
Debtors' business. The Plan has the support of the official
committee of unsecured creditors and the company's senior lenders.
Bankruptcy Creditors' Service, Inc., publishes Kimball Hill
Bankruptcy News. The newsletter tracks the Chapter 11
proceedings of Kimball Hill, Inc. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
KIMBALL HILL: To Sell South Peoria Property for $6.4 Million
------------------------------------------------------------
Kimball Hill, Inc. and its 14 debtor affiliates entered into a
real estate sale and purchase agreement with Chicago Province of
the Society of Jesus as stalking horse bidder for the sale of a
property located on South Peoria Street, in Chicago, Illinois, for
$6.4 million, subject to higher and better bids.
Kurtzman Carson Consultants, LLC, the Debtors' noticing agent
said it has served a notice of auction to parties-in-interest.
The Debtors subsequently disclosed that they did not receive any
timely bid by the February 11, 2009 deadline. As a result, the
auction scheduled for February 16, 2009 did not materialize and
the Debtors and the stalking horse bidder will proceed with the
sale.
A copy of the Peoria Property Sale and Purchase Agreement is
available for free at:
http://bankrupt.com/misc/Kimball_StalkingHorsePact_Peoria.pdf
Meanwhile, the U.S. Bankruptcy Court for the Northern District of
Illinois approved the sale of certain of the Debtors' de minimis
assets:
Property Buyer Purchase Price
-------- ----- --------------
Lot 2 in the Legend Michael & Dana $533,000
Lakes 8 development, Rezmer
in McHenry, Illinois
Lot 3 in the Legend Joseph & Maria $39,500
Lakes 8 development, Burrafato
in McHenry, Illinois
218 partially developed M/I Homes of Chicago $4,500,000
condominiums and LLC
townhouses, including
three completed model
homes, located in
Winfield, Illinois
Keith Mitchell, the Debtors' national director of community
development, filed a declaration in support of the property
sales. He, however, subsequently withdrew the declaration with
respect to the Debtors' intent to sell an 89-acre land in Aurora,
Illinois, to L.B. Andersen Construction, Inc. for $1 million.
Judge Susan Sonderby also has authorized the Debtors to reject the
11 executory contracts and unexpired leases effective February 2,
2009:
Counter Party Contract
------------- --------
CBS Outdoor Advertising Agreements dated
January 15 and 31, 2008
Backyard Landscapes & Landscaping and Maintenance
Maintenance, Inc. Agreement dated July 2007
Hellyer Outdoor Advertising Outdoor Advertising Contract
dated May 2007
David K. Hill Employment Agreement
dated August 2007
Jacobs Billboard Company 24-Month Outdoor Display
Contract dated March 2008
Leibson McGrath Outdoor Advertising Contract
Mankedick, LLC with The Lamar Companies
dated February 2006
Leonard & Company Two Outdoor Advertising
Agreements dated August 2007
Leonard and Company, Inc. Outdoor Advertising Contract
dated February 2008
Motivational Systems, Inc. Conditional Sales Contract
No. 00037271 for Flag
Service dated November 2007
New Homes Advertising Contracts dated
September 2008
Holders of claims have until March 12, 2009 to file rejection
claims on account of the rejected contracts, Judge Sonderby ruled.
Prior to entry of the order, Ray C. Schrock, Esq., at Kirkland &
Ellis LLP, in New York, said no timely objections were received
with respect to the Rejection Notice.
About Kimbal Hill
Headquartered in Rolling Meadow, Illinois, Kimball Hill Inc. --
http://www.kimballhillhomes.com/-- is one of the largest
privately-owned homebuilders and one of the 30 largest
homebuilders in the United States, as measured by home deliveries
and revenues. The company designs, builds and markets single-
family detached, single-family attached and multi-family homes.
The company currently operate within 12 markets, including, among
others, Chicago, Dallas, Fort Worth, Houston, Las Vegas,
Sacramento and Tampa, in five regions: Florida, the Midwest,
Nevada, the Pacific Coast and Texas.
Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11
protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08-
10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents
the Debtors in their restructuring efforts. The Debtors'
consolidated financial condition as of Dec. 31, 2007, reflected
total assets of $795,473,000 and total debts $631,867,000.
Kimball Hill filed a chapter 11 plan of liquidation on
December 2, 2008, which provides for the winding down of the
Debtors' business. The Plan has the support of the official
committee of unsecured creditors and the company's senior lenders.
Bankruptcy Creditors' Service, Inc., publishes Kimball Hill
Bankruptcy News. The newsletter tracks the Chapter 11
proceedings of Kimball Hill, Inc. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
KLJ FIELD: Goes Bankrupt Due to Recession; 90 Workers Laid Off
--------------------------------------------------------------
Bruce Erskine at The Chronicle Herald reports that the global
recession has caused KLJ Field Services Inc.'s bankruptcy, putting
about 90 people out of work.
The Chronicle Herald quoted KLJ Field Services Inc. President
Jason McGrath as saying, "We have become another unfortunate
casualty of the economic downturn, particularly in the United
States.... That market has disappeared, taking our business down
with it. We relied heavily on overflow business from U.S. clients
and that overflow has turned into a trickle." Citing Mr. McGrath,
The Chronicle Herald states that about 80% of the Company's
clients were in the U.S.
PricewaterhouseCoopers is the receiver in KLJ Field's bankruptcy
case, The Chronicle Herald says.
According to The Chronicle, KLJ Field's bankruptcy doesn't affect
Mr. McGrath's other business, KLJ Computer Solutions Inc.
Nova Scotia, Canada-based call center KLJ Field Services conducted
surveys and collected data for more than 100 organizations, mainly
North American and European research firms.
LAKE OF THE OZARKS: Fitch Cuts Rating on $40.1MM Bonds to 'BB+'
---------------------------------------------------------------
Fitch Ratings has downgraded the $40.1 million outstanding Lake of
the Ozarks Community Bridge Corporation Bridge System refunding
revenue bonds, series 1998 to 'BB+' from 'BBB-'. The Rating
Outlook is Negative. The bonds mature in December 2026 and are
secured by the net revenues of a toll bridge over the Lake of the
Ozarks in central Missouri. Fitch had placed the bonds on Rating
Watch Negative in August 2008.
The downgrade reflects management's historical reticence to raise
tolls even as pledged revenues were insufficient to pay scheduled
principal and interest. The bridge company has entered a cash
burn that will likely persist until management takes action.
Moderate to high economic ratemaking flexibility exists due to the
absence of comparable alternative routes. Additionally, the
bridge company holds cash on hand sufficient to meet debt service
requirements for five years or more depending on the severity of
the current economic downturn.
The Negative Outlook reflects uncertainty related to future
management decisions and the broader economic environment.
Traffic on the bridge is 98% cars and is highly seasonal. Camden
County, Missouri, which contains a large part of the bridge
service area, contains over 70,000 vacation homes. The
preponderance of second homes and partial-year residents in the
area may cause traffic declines on the bridge to be more severe
and persistent than traffic declines on toll facilities elsewhere.
Trailing 12-months traffic is down 13% compared with the preceding
12-month period. Traffic in November, December and January
declined 19%, 12% and 17% compared with the same months a year
earlier.
Management has historically been unwilling to raise toll rates to
a level consistent with bond covenants and investment grade
comparables. Instead management has used a defeasance program to
apply balance sheet cash in order to artificially meet the
covenant. For example, the company defeased $1.2 million of
principal in 2008, reducing the scheduled debt service payment for
2009 and allowing the corporation to artificially meet its 1.2
times (x) coverage requirement for the fiscal year ending in
April. The company's general fund balance is currently about $5
million and total current assets are approximately $11 million,
meaning that management could most likely continue its strategy
for at least five years even in a scenario where the current
year's traffic declines are repeated in fiscal 2010. Nonetheless
Fitch does not consider the use of liquidity to prop up legal
coverage for such an extended period to be consistent with an
investment grade rating.
The bridge opened in 1998 with traffic levels 30% below initial
forecasts. Car tolls in each direction were set at $2.50 in the
summer and $1.50 in the off-season. In fiscal year 2005 the
bridge company extended the summer toll period to the seven months
from April through October, but the revenue increase was
insufficient to achieve 1.2x coverage. Continuous strong traffic
growth, however, eased credit concerns. From 2001-2007 traffic
growth averaged 7% per year, leading management to adopt its
current debt defeasance strategy in anticipation of revenue
eventually increasing to its forecast level.
Lake of the Ozarks, a man-made lake created by the damming of the
Osage River, is a popular recreational destination for residents
of the St. Louis and Kansas City metropolitan areas. The half-
mile bridge provides a critical transportation link by reducing
driving time around the lake by up to one hour. The Lake of the
Ozarks Community Bridge Corporation is a not-for-profit
corporation governed by a seven-member board of directors. The
corporation oversaw construction and financing of the bridge and
manages its ongoing operations. It was the first of its type to
be created under the Missouri Transportation Corporation Act of
1990, which allowed private non-profit corporations to develop
projects as an alternative to normal bridge and highway funding
methods. The bridge, located in Lake Ozark, MO, is currently the
corporation's only facility.
LANDAMERICA FINANCIAL: Wins Court Nod to Sell FNF Shares
--------------------------------------------------------
LandAmerica Financial Group Inc. was authorized by the U.S.
Bankruptcy Court for the Eastern District of Virginia to sell
almost 3.2 million shares of Fidelity National Financial Inc. so
long as the official creditors' committee doesn't object,
Bloomberg's Bill Rochelle said.
On December 21, 2008, the Debtor entered into an amended and
restated Stock Purchase Agreement with FNF, Fidelity National
Title Insurance Company and Chicago Title Insurance Company
pursuant to which LFG sold, among other things, its capital stock
in Commonwealth Land Title Insurance Company and Lawyers Title
Insurance Corporation. The transaction closed on December 22,
2008. Pursuant to the terms of the Revised SPA, among other
consideration, FNF issued to LFG 3,176,620 shares of its common
stock.
In LandAmerica's request to sell the shares, John H. Maddock III,
Esq., at McGuirewoods LLP, in Richmond, Virginia, explained that
in early January 2009, the Debtor discussed the option of selling
the Stock (at the time the Stock was trading at prices in excess
of $16 per share) with the official committee of unsecured
creditors of LFG. At that time, the members of the LFG Creditors'
Committee, who serve as representatives of the beneficiaries of
the Stock proceeds, notified the Debtor, in writing, that the
committee did not want the Debtor to sell the Stock at that time.
While the decision to sell the Stock must rest on the Debtor's
business judgment, the LFG Creditors' Committee's view as to the
timing and method of such disposition is a significant
consideration that informs that judgment. In this regard, the
Debtor informed the LFG Creditors' Committee at that time that it
would refrain from selling the Stock and, assuming the absence of
new developments, defer in large part to the judgment of the
committee as to when and how the Stock should be sold. Since that
time, the Debtor understands that the LFG Creditors' Committee has
developed a protocol and formed a subcommittee to analyze the
disposition of the Stock.
On February 5, 2009, FNF filed a Registration Statement Under the
Securities Act of 1933 with the United States Securities and
Exchange Commission, registering the Stock for resale by the
Debtor. Pursuant to the Form S-3, the Debtor may offer and resell
from time to time any or all of the Stock.
The Debtor intends to sell the Stock in open market transactions,
by private placement, or any other means permissible under
applicable law, subject to the prior written consent of the LFG
Creditors' Committee.
Mr. Maddock explains that FNF is a holding company that is a
provider, through its subsidiaries, of title insurance, specialty
insurance, claims management services, and information services
throughout the United States. Since the Stock was acquired by LFG,
the value of FNF's stock has been increasing. On December 22,
2008, the value of the Stock was [$14.82] per share. As of
February 12, 2009, the Stock was trading at $18.24 per share.
Given the daily fluctuation in prices and the volatility of the
market, the Debtor seeks to ensure that it has the ability to act
quickly to liquidate all or a portion of the Stock when it and the
LFG Creditors' Committee agree it is advisable to do so.1
Upon consummation of a sale of the Stock, the Debtor will file a
notice with the Court informing the Court and parties in interest
of the net sale price obtained.
About LandAmerica Financial
LandAmerica Financial Group, Inc. is a leading provider of real
estate transaction services with offices nationwide and a vast
network of active agents. LandAmerica serves its agent,
residential, commercial and lender customers throughout the
United States, Mexico, Canada, the Caribbean, Latin America,
Europe and Asia.
LandAmerica Financial Group and its affiliate LandAmerica 1031
Exchange Services, Inc. filed for Chapter 11 protection Nov. 26,
2008 (Bankr. E.D. Va. Lead Case No. 08-35994).
Dion W. Hayes, Esq., and John H. Maddock III, Esq., at
McGuireWoods LLP, are the Debtors' bankruptcy counsel.
In its bankruptcy petition, LFG listed total assets of
$3,325,100,000, and total debts of $2,839,800,000 as of Sept. 30,
2008.
Bankruptcy Creditors' Service, Inc., publishes LandAmerica
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by LandAmerica Financial and its affiliate LandAmerica
1031 Exchange Services, Inc. (http://bankrupt.com/newsstand/or
215/945-7000)
LEGACY ROCK: Case Summary & Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Legacy Rock, Inc.
P.O. Box 1335
Logandale, NV 89021
Bankruptcy Case No.: 09-12422
Chapter 11 Petition Date: February 24, 2009
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Matthew L. Johnson, Esq.
Matthew L. Johnson & Associates, P.C.
8831 W. Sahara Ave.
Las Vegas, NV 89117
Tel: (702) 471-0065
Fax: (702) 471-0075
Email: bankruptcy@mjohnsonlaw.com
Total Assets: $1,769,275.00
Total Debts: $1,663,085.22
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-12422.pdf
The petition was signed by Scott Whipple, President of the
company.
LEHMAN BROTHERS: Nomura Sues to Recover EUR58M Paid by Mistake
-----------------------------------------------------------
Nomura Global Financial Products Inc., a unit of Nomura Holding
America Inc., filed a lawsuit against Lehman Brothers Special
Financing Inc. and Lehman Brothers Inc. to recover EUR$58,047,522
allegedly paid by mistake.
Nomura said that the payments were allegedly made in error as
their swap agreement providing for the payments was terminated
when LBSF's credit support provider, Lehman Brothers Holdings
Inc., filed for bankruptcy shortly before the payments were made.
Nomura pursued LBSF to correct the error but LBSF had allegedly
given the company the runaround. Upon advice from LBSF, Nomura
also approached LBI, which has served as clearing agent for LBSF
in its business dealings with the company, to demand the return of
the fund. Nomura was advised, however, by LBI's counsel to direct
instead its demand to LBSF.
Nomura is represented by Shearman & Sterling LLP, in New York.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the
fourth largest investment bank in the United States. For more
than 150 years, Lehman Brothers led in the global financial
markets by serving the financial needs of corporations,
governmental units, institutional clients and individuals
worldwide. Through its team of more than 25,000 employees, Lehman
Brothers offered a full array of financial services in equity and
fixed income sales, trading and research, investment banking,
asset management, private investment management and private
equity. Its worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by a network of
offices in North America, Europe, the Middle East, Latin America
and the Asia Pacific region. The firm, through predecessor
entities, was founded in 1850.
Lehman filed for chapter 11 bankruptcy Sept. 15, 2008 (Bankr.
S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed
$639 billion in assets and US$613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
Subsidiary LB 745 LLC, submitted a Chapter 11 petition on Sept. 16
(Case No. 08-13600). Several other affiliates followed
thereafter.
Lehman Brothers Finance AG, also known as Lehman Brothers Finance
SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code
in the U.S. Bankruptcy Court in Manhattan on February 10, 2009.
Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc.,
listed estimated assets of more than US$1 billion and estimated
liabilities of more than US$1 billion.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the
United States District Court for the Southern District of New
York, entered an order commencing liquidation of Lehman Brothers,
Inc., pursuant to the provisions of the Securities Investor
Protection Act in the case captioned Securities Investor
Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV-
8119 (GEL). James W. Giddens has been appointed as trustee for
the SIPA liquidation of the business of LBI
Barclays Bank Plc has agreed, subject to U.S. Court and relevant
regulatory approvals, to acquire Lehman Brothers' North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. These are currently the only UK incorporated
companies in administration. Tony Lomas, Steven Pearson, Dan
Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers
LLP, have been appointed as joint administrators to Lehman
Brothers International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units of Lehman Brothers Holdings, Inc., which has filed for
bankruptcy protection in the U.S. Bankruptcy Court for the
Southern District of New York, have combined liabilities of
JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc.
reported about JPY3.4 trillion ($33 billion) in liabilities in its
petition. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited have suspended
its operations with immediate effect, including ceasing to trade
on the Hong Kong Securities Exchange and Hong Kong Futures
Exchange, until further notice. The Asian units' asset management
company, Lehman Brothers Asset Management Limited, will continue
to operate on a business as usual basis. A further notice
concerning the retail structured products issued by or arranged by
any Lehman Brothers group company will be issued as soon as
possible, a press statement said.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEV M. MARYAKHIN: Case Summary & Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Lev M. Maryakhin and Barbara H. Maryakhin
310 Kitts way
Reno, NV 89521
Bankruptcy Case No.: 09-50469
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Rodney E. Sumpter, Esq.
139 Vassar St.
Reno, NV 89502
Tel: (775) 323-4934
Fax: (775) 323 6114
Email: resrnolaw@aol.com
Total Assets: $1,415,500.00
Total Debts: $1,680,438.06
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-50469.pdf
The petition was signed by Lev M. Maryakhin and Barbara H.
Maryakhin.
LIMITED BRANDS: Fitch Downgrades Unsecured Notes Rating to 'BB'
---------------------------------------------------------------
Fitch Ratings has downgraded its rating on Limited Brands, Inc.'s
unsecured notes to 'BB' from 'BB+' following the company's
announcement that it has amended its existing bank credit
agreements.
The downgrade reflects the lower priority status of the unsecured
notes relative to the secured revolving credit facility and term
loan, which are secured with guarantees from material domestic
subsidiaries. Material subsidiaries are defined as 90% of the
consolidated domestic assets (excluding real property, aircraft
and investments in subsidiaries) and 95% of consolidated domestic
inventory and receivables.
Other amendments to the credit agreement include revising the
financial covenants to include a debt/EBITDA ratio of 5.0 times
(x) before Oct. 31, 2010; 4.5x before Oct. 31, 2011; and 4.0x
thereafter and a fixed charge coverage ratio of 1.6x before
Jan. 31, 2011, and 1.75x thereafter. In addition, the credit
facility and term loan now have restricted payments and limitation
on investments covenants. The size and expiration of Limited's $1
billion revolving credit facility and $750 million term loan, both
expiring August 2012, remain unchanged.
The ratings continue to reflect Limited's leading market position
in intimate apparel and a top-five position in personal care and
beauty, strong brands and solid cash flow generation. The ratings
also consider the challenging operating environment, increasingly
competitive industry, and Limited's weaker operating performance
and credit metrics.
Fitch currently has these ratings on Limited:
-- Long-term Issuer Default Rating 'BB+';
-- Bank credit facility 'BB+';
-- Term loan 'BB+';
-- Senior unsecured notes 'BB';
-- Short-term IDR 'B';
-- Commercial Paper 'B'.
The Rating Outlook is Negative, which reflects the potential for
prolonged weakness in same store sales that would negatively
impact operating margins, worsening credit metrics, and
management's discipline with regards to share repurchases.
LIMITED BRANDS: Moody's Downgrades Rating on Senior Notes to Ba2
----------------------------------------------------------------
Moody's Investors Service downgraded Limited Brands, Inc.'s senior
unsecured notes rating to Ba2 from Ba1. In addition, all
Limited's ratings were placed on review for possible downgrade.
The downgrade of the senior unsecured notes rating to Ba2 reflects
that, following a recent amendment, Limited's bank facilities are
now guaranteed by all material domestic subsidiaries and secured
by all guarantor subsidiaries domestic assets (excluding real
estate). This results in the notes being effectively junior to
the bank facilities.
The review for possible downgrade is prompted by Moody's concern
that Limited's operating performance has materially weakened and
that credit metrics may deteriorate to levels no longer
appropriate for the current ratings. Limited announced that its
fiscal year 2009 earnings would be between $0.60 and $0.85 per
share. Moody's believe that this level of performance may well be
insufficient to maintain a credit profile consistent with the
company's existing rating.
"Limited Brands 2009 earnings guidance is a clear indication that
its debt protection measures are facing further downward
pressure," stated Maggie Taylor, Vice President and Senior Credit
Officer.
The review for possible downgrade will focus on expectations for
Limited's 2009 operating performance, including its cost savings
initiatives, capital expenditure reductions, and inventory
management. The review will also focus on Limited's liquidity and
financial policy. Finally, the review will consider the very
difficult retail environment and weak consumer confidence and the
potential impact these factors may have on Limited's future
performance. Given the material impact that the challenging
retail environment and very low consumer confidence could have on
Limited's credit profile, the possibility exists that ratings may
be downgraded by more than one notch.
These ratings were downgraded and placed on review for possible
downgrade:
-- Senior unsecured notes rating to Ba2 from Ba1
-- Senior unsecured shelf rating to (P)Ba2 from (P)Ba1
These ratings were placed on review for possible downgrade:
-- Corporate family rating at Ba1
-- Probability of default rating at Ba1
-- Senior subordinated shelf rating at (P)Ba2
-- Preferred stock shelf rating at (P)Ba3
The last rating action on Limited Brands was on November 25, 2008
when its senior unsecured rating was downgraded to Ba1 from Baa3
with a stable outlook.
Headquartered in Columbus, Ohio, Limited Brands, Inc. operates
3,014 specialty stores under the Victoria's Secret, Bath & Body
Works, C.O. Bigelow, La Senza, White Barn Candle Co., and Henri
Bendel name plates. The company's products are also available
online. Revenues are about $9.0 billion.
LIMITED BRANDS: S&P Downgrades Corporate Credit Rating to 'BB'
--------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its long-term
corporate credit rating on Columbus, Ohio-based Limited Brands to
'BB' from 'BB+'. S&P affirmed the company's 'B-1' short-term
rating. The outlook is negative.
Concurrently, S&P revised the recovery rating on Limited Brands'
unsecured notes to '4' from '3'. The recovery rating of '4'
indicates S&P's expectation for average (30%-50%) recovery in the
event of a payment default. (For the complete recovery analysis,
see the recovery report on Limited Brands, to be published later
on RatingsDirect.)
"The downgrade reflects our deepening concern about the impact of
the U.S. recession on the increasingly troubled specialty apparel
sector," said Standard & Poor's credit analyst Diane Shand, "which
felt the full brunt of the declining U.S. economy and weakening
consumer confidence in 2008." The recession is likely to worsen
through the first half of 2009 given weakening employment, the
still-poor housing market, and continuing turmoil in financial
markets. "We believe these factors will impede Limited Brands'
ability to improve credit metrics over the near term," added Ms.
Shand.
LYNCH ICHIDA: Files for Chapter 11 Protection; Lawyers Leave Co.
----------------------------------------------------------------
Linda Chiem at Pacific Business News reports Lynch Ichida Thompson
& Hirota has filed for Chapter 11 bankruptcy protection.
Lynch Ichida listed more than $500,000 in assets and more than
$300,000 in liabilities, according to Pacific Business.
Pacific Business relates that since the bankruptcy filing, Lynch
Ichida has lost six of its seven lawyers, including:
-- Wesley Ichida,
-- William F. Thompson III, and
-- Maile Hirota.
According to Pacific Business, two of the lawyers have started new
firms.
Lynch Ichida Thompson & Hirota is a Honolulu-based general
practice and civil litigation firm.
LYONDELL CHEMICAL: Value Tops Secured Debt by 19%
-------------------------------------------------
Tiffany Kary of Bloomberg reports that Lyondell Chemical Co.'s
attorneys told the U.S. Bankruptcy Court for the District of
Delaware that the Company's secured lenders have collateral worth
more than 19% of their claims.
The Company's attorney, Mark Ellenberg, made the disclosure during
the hearing on Lyondell's request to borrow $8 billion to finance
operations while in bankruptcy. Bloomberg adds that Mr. Ellenberg
told U.S. Bankruptcy Judge Robert Gerber that Lyondell should be
allowed to borrow the money under terms that give some lenders
priority over others.
According to the report, Mr. Ellenberg said that, based on
outstanding pre-bankruptcy debt of $17.4 billion, Lyondell has an
"equity cushion" of $1.75 billion. That cushion is the amount by
which secured creditors' collateral exceeds their claims, he said.
"Case law suggests that anything over 10 percent is acceptable,
and we have almost double the equity cushion. As a matter of law,
that entitles us to prime the Arco and Equistar debt",
Mr. Ellenberg added, referring to two groups of notes that would
have lower priority for repayment.
Bloomberg relates that The Bank of New York Mellon Corp., along
with some creditors, objected to the loan because of the priority
it gives the 13 participating lenders over others. The roll-up
loan would convert some pre-bankruptcy debt to new debt.
The $8 billion DIP loan, which Bloomberg said, is the highest in
history, was approved at the end of the hearing.
About Lyondell Chemical
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
MERCURY COMPANIES: Panel Can Employ Baker Hostetler as Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado granted the
Official Committee of Unsecured Creditors of Mercury Companies,
Inc., permission to retain Baker Hostetler LLP, as its counsel,
nunc pro tunc to Feb. 2, 2009. Baker Hostetler replaces the
Committee's previous counsel, Jessop & Company, P.C., which has
withdrawn as counsel for the Committee. Lars Fuller, Esq.,
previously of Jessop & Company, P.C., has jointed Baker Hostetler.
Baker Hostetler is expected to:
a. advise the Committee regarding it rights, duties and
responsibilities;
b. advise the Committee, prepare and file pleadings, and appear
in Court;
c. conduct factual and legal inquiries into such matters as may
be determined by the Committee including but not limited to
the Debtor's assets, liabilities and financial condition;
d. advise the Committee regarding any proposed sale of Debtor's
assets including the proposed bidding procedures, if any,
related thereto;
e. advise the Committee of possible alternatives to the sale of
Debtor's assets;
f. advise the Committee on any plan of reorganization proposed
by the Debtor and possible alternatives to such a plan; and
g. advise the Committee generally on this bankruptcy case and
take any actions that the Committee may direct.
As compensation for his services, Lars H. Fuller, Esq., bills at
$260 per hour. Legal assistants bill at rates varying from $70 to
$125 per hour.
Lars H. Fuller, Esq., Of Counsel to the law firm of Baker
Hostetler, assured the Court that the firm does not represent or
hold any interest adverse to the Debtor or its estate, and that
the firm is a "disinterested person" within the meaning of Sec.
101(14) of the Bankruptcy Code.
Denver, Colorado-based Mercury Companies Inc. is a holding company
primarily for subsidiaries that until recently were involved in
the settlement services industry, including title services, escrow
services, real estate services, mortgage services, mortgage
document preparation, and settlement services software
development. Mercury has since wound down or sold its operations.
The company filed for Chapter 11 protection on Aug. 28, 2008.
On Oct. 24, 2008, six direct and indirect subsidiaries of Mercury,
Arizona Title Agency, Inc., Financial Title Company, Lenders
Choice Title Company, Lenders First Choice Agency, Inc., Texas
United Title, Inc., dba United Title of Texas and Title Guaranty
Agency of Arizona, Inc., also filed voluntary Chapter 11
petitions, which cases are jointly administered with Mercury's
(Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield,
Esq., and Michael J. Pankow, Esq., at Brownstein Hyatt Farber
Schreck, represent the Debtors as counsel.
MERCURY COMPANIES: Seeks Second Extension of Exclusive Periods
--------------------------------------------------------------
Mercury Companies Inc. asks the U.S. Bankruptcy Court for the
District of Colorado to extend to April 24, 2009, its exclusive
period to propose a plan, and to extend the attendant exclusive
solicitation period to June 23, 2009.
This is the second extension of the Debtors' exclusive periods.
As reported previously, the Court extended Mercury's exclusive
period to file a plan of reorganization to Feb. 23, 2009, and its
its exclusive period to solicit acceptances of a plan to April 24,
2009.
The Debtor said that it will take some time before it completes
the review of the claims that were filed in its bankruptcy case.
Furthermore, Mercury says it has not yet received a complete
listing of all filed claims from the claims agent.
Mercury informed the Court that it has made significant progress
in its reorganization efforts, and that the requested extension
will ensure an orderly plan process.
Denver, Colorado-based Mercury Companies Inc. is a holding company
primarily for subsidiaries that until recently were involved in
the settlement services industry, including title services, escrow
services, real estate services, mortgage services, mortgage
document preparation, and settlement services software
development. Mercury has since wound down or sold its operations.
The company filed for Chapter 11 protection on Aug. 28, 2008.
On Oct. 24, 2008, six direct and indirect subsidiaries of Mercury,
Arizona Title Agency, Inc., Financial Title Company, Lenders
Choice Title Company, Lenders First Choice Agency, Inc., Texas
United Title, Inc., dba United Title of Texas and Title Guaranty
Agency of Arizona, Inc., also filed voluntary Chapter 11
petitions, which cases are jointly administered with Mercury's
(Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield,
Esq., and Michael J. Pankow, Esq., at Brownstein Hyatt Farber
Schreck, represent the Debtors as counsel. Lars H. Fuller, Esq.,
and Douglas W. Jessop, Esq., at Jessop and Company, PC represent
the Official Committee of Unsecured Creditors as counsel.
MGM MIRAGE: Difficulty in Liquidity Cues Moody's Junk Rating
------------------------------------------------------------
Moody's Investors Service downgraded MGM Mirage's Probability of
Default rating to Caa1 from B1 and its corporate family rating to
B3 from B1. The downgrade reflects the difficulty the company
faces in shoring up its liquidity profile. MGM's SGL-4
Speculative Grade Liquidity rating was affirmed. MGM filed an 8K
stating that it had drawn the remaining $842 million available
under its $4.5 billion senior revolving credit facility.
Moody's estimates that internally generated cash, net proceeds
from the pending sale of Treasure Island together with the
revolver draw and cash on hand will be barely sufficient to fund
the company's operations -- including its CityCenter obligations -
- and required bond maturities through year-end 2009. MGM faces
bond maturities of approximately $300 million and $800 million in
the second and third quarters of 2010, respectively.
Additionally, the inability of the MGM and its joint venture
partner, Dubai World, to raise the remaining $1.2 billion of the
targeted $3.0 billion debt raise for CityCenter has exacerbated
the MGM's liquidity situation.
Given the company's strong market share and solid fundamental
franchise within the gaming industry, Moody's used a fundamental
evaluation approach to estimate loss-given-default rather than the
mean family-level LGD estimate. Based on this approach, the
company's recovery estimate increased to 65%. The lower loss
estimate resulted in the probability-of-default rating (Caa1)
deviating from the Corporate Family Rating (B3) by one notch.
Ratings remain on review for further possible downgrade reflecting
the need for MGM to improve its liquidity profile in the near term
to avoid further downgrade.
Ratings downgraded and placed on review for further possible
downgrade:
MGM MIRAGE
-- Corporate Family Rating to B3 from B1
-- Probability of default rating to Caa1 from B1
-- Senior unsecured notes to B3 from B1
-- Senior subordinated notes to Caa3 from B3
-- Senior secured notes to Ba3 from Ba1
-- Mirage Resorts
-- Senior unsecured notes to B3 from B1
-- Mandalay Resort Group
-- Senior unsecured notes to B3 from B1
-- Senior subordinated notes to Caa3 from B3
Rating Affirmed:
MGM MIRAGE
-- Speculative Grade Liquidity Rating at SGL-4
Moody's latest rating action was on February 2, 2009, when the MGM
MIRAGE's corporate family rating and probability of default rating
were each downgraded to B1 from Ba3. All ratings remained on
review for further possible downgrade.
Headquartered in Las Vegas, Nevada, MGM MIRAGE owns and operates
17 properties located in Nevada, Mississippi and Michigan, and has
investments in three other properties in Nevada, New Jersey and
Illinois. MGM MIRAGE has a 50% interest in CityCenter Holdings,
Inc., a mixed-use project on the Las Vegas Strip and a 50%
interest in MGM Grand Macau, a hotel-casino resort in Macau S.A.R.
MGM MIRAGE: Fitch Junks Issuer Default Rating from 'B'
------------------------------------------------------
Fitch Ratings has downgraded MGM MIRAGE's Issuer Default Rating
and outstanding debt ratings:
-- IDR to 'CCC' from 'B';
-- Senior secured notes to 'B/RR2' from 'BB-/RR2';
-- Senior unsecured credit facility to 'B-/RR3' from 'B+/RR3';
-- Senior unsecured notes to 'B-/RR3' from 'B+/RR3';
-- Senior unsecured subordinated notes to 'C/RR6' from
'CCC/RR6'.
The Rating Outlook remains Negative. The downgrade affects MGM's
$7 billion credit facility, $6.5 billion of outstanding senior
unsecured debt, $848 million of outstanding senior subordinated
debt, and $750 million of senior secured notes.
The downgrade reflects MGM's credit facility draw in the context
of the company's strained liquidity position and the continued
expected deterioration of Las Vegas operating trends. MGM
announced this morning that it borrowed the remaining
$842 million under the $4.5 billion senior revolving portion of
its $7 billion credit facility.
Fitch previously noted that it believes that MGM is unlikely to
remain in compliance with its 7.5 times (x) leverage covenant this
year, so fully drawing on the revolver increases the likelihood of
a near-term covenant breach. Even if the company obtains waivers
or amends the terms of the credit facility and is able to secure
funding for CityCenter, Fitch believes the deterioration of Las
Vegas trends and strained forward outlook indicates that the
capital structure may be unsustainable. As such, Fitch believes
that drawing the revolver reflects increased likelihood of a
default of some kind, including the possibility of a distressed
debt exchange.
MGM has yet to report fourth-quarter 2008 (Q4'08) results, or file
its 10K with the SEC. By Monday, March 2, the company must either
file its 10K or file a Form 12b-25, which would provide for a 15-
day grace period. Results from other Las Vegas Strip operators
indicate that the reduction in demand has continued to accelerate
in 2009 from weak Q4'08 levels. Las Vegas airline passenger
traffic declined 15.7% in January, a greater decline than the 12%-
14% decline experienced from September 2008 - December 2008.
Fitch believes Las Vegas Strip trends will remain poor throughout
2009 and likely into 2010, with weak demand trends causing
significant negative operating leverage in upcoming quarters.
MGM took meaningful steps to bolster its liquidity position over
the last couple of months, which had reduced concerns about MGM's
ability to meet 2009 debt maturities. However, as previously
noted, Fitch believes MGM will have difficulty funding the
remaining CityCenter costs and meeting 2010 debt maturities of
$1.1 billion, without additional external capital. As a result,
Fitch believes that the credit facility draw may indicate that a
restructuring could occur prior to the 2009 maturities. Even if
the credit facility draw proves not to be a precursor to some sort
of near-term restructuring, and the company is able to fund
CityCenter and 2010 maturities, the company faces significant
financial challenges. In 2011 it faces the refinancing of its
$7 billion credit facility, while meeting another $532 million of
bond maturities.
In accordance with Fitch's Recovery Rating methodology, Fitch has
taken these rating actions:
-- Fitch downgraded the New York-New York secured notes to
'B/RR2' from 'BB-/RR2', reflecting a 2-notch positive
differential from MGM's 'CCC' IDR, as Fitch estimates
recovery in the 71%-90% range based on the current capital
structure.
-- Fitch downgraded MGM's unsecured debt to 'B-/RR3' from
'B+/RR3', reflecting a 1-notch positive differential from
MGM's 'CCC' IDR, as Fitch estimates recovery in the 51%-70%
range, based on the current capital structure.
-- Fitch downgraded MGM's subordinated debt to 'C/RR6' from
'CCC/RR6', reflecting a 2-notch negative differential from
MGM's 'B' IDR, as Fitch estimates little to no recovery in
the 0-10% range.
MGM MIRAGE: S&P Downgrades Corporate Credit Rating to 'B-'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Las Vegas-based MGM MIRAGE by two
notches; the corporate credit rating was lowered to 'B-' from
'B+'. These ratings remain on CreditWatch with negative
implications, where they were initially placed on Jan. 30, 2009.
"The downgrade reflects heightened concerns around MGM MIRAGE's
liquidity position and S&P's expectation for meaningful
deterioration of credit measures over the next several quarters,
given S&P's projection for substantial declines in EBITDA during
2009," said Standard & Poor's credit analyst Ben Bubeck.
In addition, the company announced this morning that it has drawn
the remaining availability under its $4.5 billion revolving credit
facility, which S&P expects to drive a covenant violation in the
current quarter. Based on S&P's projection for EBITDA declines of
25% in 2009, and assuming that proceeds from the revolver draw
will be sufficient to meet 2009 bond maturities, S&P project
leverage to exceed 10x by the end of 2009 and EBITDA interest
coverage to be less than 1.5x on a run rate basis. S&P is also
projecting only a modest rebound in cash flow generation in 2010.
Furthermore, MGM MIRAGE continues to face funding needs for the
CityCenter project. The company has been unable to secure funding
beyond the initial $1.8 billion financing put into place in
October 2008. While management has made meaningful strides to
boost liquidity over the past several months, including placing a
$750 million bond in October 2008 and announcing an agreement to
sell Treasure Island Hotel & Casino for $775 million, the company
continues to face substantial funding requirements. Given its
current liquidity position, MGM MIRAGE's ability to meet its 2010
bond maturities and continue to fund the development of CityCenter
is in doubt, absent a meaningful equity infusion or additional
asset sales. Moreover, it is unclear at this point how the bank
group will respond to a covenant violation.
It is S&P's expectation that management is taking steps to attempt
to resolve these issues. S&P could lower the rating further in
the very near term if a plan that addresses these issues is not
put in place.
In resolving the CreditWatch listing, S&P will continue to monitor
management's efforts to bolster its liquidity position to address
funding needs and its progress in addressing its bank covenants.
MICHAEL STERN: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Michael A Stern
Layne M. Harris Stern
1766 Michigan Avenue
Miami Beach, FL 33139
Bankruptcy Case No.: 09-13544
Chapter 11 Petition Date: February 28, 2009
Court: Northern District of California (Oakland)
Judge: Robert A. Mark
Debtor's Counsel: Joel M. Aresty, Esq.
aresty@mac.com
Joel M. Aresty P.A.
13499 Biscayne Blvd #T-3
No. Miami, FL 33181
Tel: (305) 899-9876
Fax: (305) 723-7893
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Colonial Bank $16,500,000
1200 Brickell avenue
MIami, FL 33131
Nicolas Brocherie $6,549,892
115 2nd Dilido Terrace
Miami Beach Florida 33139
Howtan Rahbarzadeh $6,500,000
1030 Collins Avenue M
Miami Beach, FL 33139
Countrywide Mtg $6,500,000
PO Box 5170
Simi Valley, CA 93062
College Health II GP, Inc. $5,250,000
Registered Agent
Samuel Burstyn
801 Brickell Av PH 1
Miami, FL 33131
C&A 900 Collins LLC $4,100,000
1407 broadway
NY, NY 10018
Harding Investments LLC $2,550,000
1129 71 St
Miami Beach, FL 33154
Eduardo Gonzalez $1,632,549
115 2nd Dilido terrace
Miami Beach, Florida 33139
Paul Stengel $800,000
1030 Collins Avenue
Miami Beach, FL 33139
Arlene Raijman $600,000
1111 Kane Concourse
Bay Harbor Is., Fl 33154
American Express $300,000
Eileen Avvocato $250,000
MIDWAY GAMES: Wants to Hire Blank Rome as Bankruptcy Counsel
------------------------------------------------------------
Midway Games Inc. and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
Blank Rome LLP as counsel.
Blank Rome will:
a) advise the Debtors as debtors and debtors in possession in
the continued management of their business and properties
and with respect to their powers, rights, duties and
obligations;
b) assist the Debtors regarding the administration and
prosecution of their Chapter 11 cases, including taking all
necessary actions to protect and preserve the Debtors'
estates;
c) prepare and prosecute all motions, applications, answers.
orders, reports, papers, and other pleadings or papers to
be filed with the Bankruptcy Court, and counsel the Debtors
as requested regarding the preparation of schedules,
statements of financial affairs, and operating reports in
connection with the administration of the Debtors' estates;
d) appear before the Bankruptcy Court, any other courts
including any appellate courts, and the Office of the
United States Trustee to represent and protect the interest
of the Debtors' estates at hearings and meetings concerning
the Debtors and their Chapter 11 cases;
e) attend meetings and negotiate with representatives of
creditors and other parties in interest and advise and
consult on the conduct of the cases, including all the
legal and administrative requirements of operating in
Chapter 11;
f) advise the Debtors in connection with all matters relating
to any sale or other use or disposition of assets;
g) assist the Debtors in the formulation and negotiation of a
Chapter 11 plan and related disclosure statement and
confirmation of the plan, and represent the debtors during
the confirmation process;
h) advise the Debtors as requested on compliance matters with
the Securities and Exchange Commission, tax matters with
the Internal Revenue Service, or any other matters
involving governmental agencies; and
i) render to the Debtors the legal services as may be
requested by management of the Debtors and as may be
required in furtherance of their Chapter 11 cases.
These professionals will work on these cases and their hourly
rates are:
Jeffrey N. Siegel $695
Marc E. Richards $700
Pamela E. Flaherty $600
Michael D. DeBaecke $500
Jason Staib $455
David W. Carickhoff $420
Melissa Vongtama $400
Michael Gore $275
Vistoria A. Guilfoyle $245
Tamara Moody $200
Other professionals who will work on these cases and their hourly
rates are:
Partners $425 - $785
Associates/Counsel $245 - $485
Paraprofessionals $105 - $280
Mr. Siegel tells the Court that Black Rome received a total
retainer of $650,000, prior to the filing of the Debtors'
Chapter 11 cases. As of the petition date, approximately $30,451
was held by Blank Rome, to be applied to services to be rendered
and expenses incurred in these Chapter 11 cases.
Mr. Siegel assures the Court that Blank Rome is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Mr. Siegel can be reached at:
Blank Rome LLP
The Chrysler Building, 405 Lexington Avenue
New York, NY 10174
Tel: (212) 885-5000
Fax: (212) 885-5001
About Midway Games Inc.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors' financial condition as of Sept. 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MIDWAY GAMES: Taps Dewey as Special Counsel to the Board
--------------------------------------------------------
Midway Games Inc. and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
Dewey & LeBoeuf LLP as special counsel to the board of directors.
Dewey & LeBoeuf will provide legal advice to the board in
connection with the Board's fiduciary and other duties, well as
other services upon which Dewey & LeBoeuf may mutually agree.
Dewey & LeBoeuf will not be engaged in the day-to-day prosecution
of the debtors' Chapter 11 cases.
Specifically, Dewey & LeBoeuf's representation will primarily
consist of providing creditors' rights, insolvency, and governance
advice to the board, including, without limitation, advising on
matters relating to ongoing oversight of the Debtors, on any
potential sale or restructuring of the Debtors or their
operations, and on issues relating to the duties of the board.
Timothy Q. Karcher, member of Dewey & LeBoeuf LLP, tells the Court
that approximately 223,321 was received within 90 days prior to
the petition date.
Dewey & LeBoeuf's professionals' hourly rates are:
Members/Counsel $625 - $995
Associates $385 - $625
Paraprofessionals $100 - $285
Mr. Karcher assures the Court that Dewey & LeBoeuf is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Mr. Karcher can be reached at:
1301 Avenue of the Americas
New York, NY 10019-6092
Tel: +1 212 259-8000
Fax: +1 212 259-6333
About Midway Games Inc.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors' financial condition as of Sept. 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MIDWAY GAMES: Wants to Hire Lazard Freres as Investment Banker
--------------------------------------------------------------
Midway Games Inc. and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
Lazard Freres & Co. LLC as investment banker.
Lazard will provide the Debtors with general restructuring advice
and to advise in connection with any restructuring, financing, and
sale transaction and has already provided the Debtors with certain
advice on this regard. Specifically, Lazard will:
a) review and analyze the Debtors' business, operations and
financial projections;
b) evaluate the Debtors' potential debt capacity in light of
their projected cash flows;
c) assist in the determination of a capital structure for the
Debtors;
d) assist in the determination of a range of values for the
Debtors on a going concern basis;
e) advise the Debtors on tactics and strategies for
negotiating with the Debtors' stakeholders;
f) render financial advice to the Debtors and participating in
meetings or negotiating with appropriate parties in
connection with any restructuring;
g) advise the Debtors' on the timing, nature, and terms of new
securities, other consideration or other inducements to be
offered pursuant to any restructuring
h) advise and assisting the Debtors in evaluating a potential
financing transaction by the Debtors and, subject to
Lazard's agreement to so act, and, if requested by Lazard,
to execution of customary agreements, on behalf of the
Debtors, contacting potential sources of capital as the
Debtors may designate and assisting the Debtors in
implementing a financing;
i) assist the Debtors in preparing documentation within
Lazard's area of expertise that is required in connection
with a restructuring transactions;
j) assist the Debtors in identifying and evaluating a
potential sale transaction, advising the Debtors in
connection with negotiations and aiding in the consummation
of a sale transaction;
k) attend meetings of the Debtors' with respect to matters on
which Lazard has been engaged to advise;
l) provide testimony, as necessary, with respect to matters on
which Lazard has been engaged to advise the Debtors in any
matter, proceeding, or action before the Bankruptcy Court;
and
m) provide the Debtors with other financial restructuring
advice.
The Debtors relate that the services will not duplicate the
efforts of other professionals retained by the Debtors in these
chapter 11 cases because Lazard (i) will provide unique services
to the Debtors and (ii) will coordinate efforts with the other
professionals to avoid unnecessary duplication of service.
Barry W. Ridings, managing director of Lazard Freres, tells the
Court that the Debtors propose to pay Lazard:
a) A monthly fee of $150,000, payable on the first day of each
month until the earlier of the completion of the
restructuring or the termination of Lazard's engagement.
b) A fee equal to $2,500,000, payable upon the consummation of
a Restructuring;
(c) (i) If, whether in connection with the consummation of a
Restructuring or otherwise, the Debtors consummate a
Sale Transaction incorporating all or a majority of
the assets or all or a majority or controlling
interest in the equity securities of the Debtors,
Lazard will be paid a fee equal to the greater of (A)
the fee calculated based on the Aggregate
Consideration or (B) $2.5 million.
(ii) If, whether in connection with the consummation of a
Restructuring or otherwise, Mark Thomas, Acquisition
Holdings Subsidiary I LLC, or MT Acquisition Inc., or
any company, person or other entity affiliated or
acting in concert with these persons or entities,
acquirers, directly or indirectly, through one or more
persons or entities formed or used for these purposes,
in one or a series of transactions, all or
substantially all of the Debtors' equity securities or
other interests not owned by the Controlling
Shareholders, the Debtors will pay Lazard a fee equal
to $2.5 million.
(iii) If, whether in connection with the consummation of a
Restructuring or otherwise, the Debtors consummate any
Sale Transaction not covered by clauses (i) or (ii)
above, the Debtors will pay Lazard a fee based on the
Aggregate Consideration. One-half of any fee paid
under Section 2(c)(iii) of the Engagement Agreement
will be credited against any fees subsequently payable
under Sections 2(b), 2(c)(i) or 2(c)(ii).
(iv) Any Sale Transaction Fee, Minority Buy-In Transaction
Fee or Other Sale Transaction Fee will be payable upon
consummation of the applicable Sale Transaction.
(d) A fee payable upon consummation of a Financing.
(e) For the avoidance of any doubt, more than one fee may be
payable pursuant to clauses (b), (c), and (d) above.
Mr. Ridings assures the Court that Blank Rome is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Midway Games Inc.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors' financial condition as of Sept. 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MIGUEL S. RUIZ: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Miguel S Ruiz
2317 North Milwaukee, Unit 4
Chicago, IL 60647
Tel: (773)552-9200
Bankruptcy Case No.: 09-05984
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Northern District of Illinois (Chicago)
Judge: Susan Pierson Sonderby
Debtor's Counsel: James O. Stola, Esq.
Law Office of James O. Stola
3057 North Rockwell
Chicago, IL 60618
Tel: (773) 583-1170
Fax: (773) 583-1185
Email: jstola@sbcglobal.net
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Miguel S. Ruiz, Sole Proprietor of the
company.
MINISINK ESTATES: Case Summary & Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Minisink Estates LLC
RnR Advisors, Inc.
33 West Main Street, Suite 401
Elmsford, NY 10023
Bankruptcy Case No.: 09-35369
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Southern District of New York (Poughkeepsie)
Debtor's Counsel: Howard B. Kleinberg, Esq.
Meyer, Suozzi, English & Klein, P.C.
990 Stewart Avenue, Suite 300
Garden City, NY 11530
Tel: (516) 741-6565 Ext. 5718
Fax: (516) 741-6706
Email: hkleinberg@MSEK.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/nysb09-35369.pdf
The petition was signed by Howard Lifshitz, Managing Member of the
company.
MIRANT CORP: Posts $1.2 Billion in Net Income for Year 2008
-----------------------------------------------------------
Mirant Corporation on Friday reported that net income from
continuing operations for 2008 was $1.215 billion compared to
$433 million for 2007. Results for 2008 include unrealized gains,
principally on hedges, of $786 million compared to unrealized
losses of $536 million for 2007.
For the fourth quarter of 2008, Mirant posted $593 million in net
income on $1.10 billion in operating revenues, compared to
$16 million in net income on $409 million in operating revenues
for the same period in 2007.
As of December 31, 2008, Mirant Corp. had $3.77 billion in total
assets, $15.0 million in current liabilities, and accumulated
deficit of $2.22 billion, according to a Form 10-K filed with the
Securities and Exchange Commission. In the SEC report, Mirant
disclosed $1.26 billion in net income on $18 million of operating
income for the year ended December 31.
In a news statement, Mirant said that, as of December 31, it had
cash and cash equivalents of $1.831 billion, of which
$354 million was restricted at Mirant North America and its
subsidiaries and not available for distribution to Mirant. In
addition, Mirant North America was restricted from further
distributions, beyond permitted interest payable by its parent,
Mirant Americas Generation, primarily because of the significant
capital expenditure program underway to comply with the Maryland
Healthy Air Act. Mirant does not expect the restriction on
distributions to have any effect on its operations.
As of December 31, 2008, Mirant had total outstanding debt of
$2.676 billion.
Mirant revised its 2009 adjusted EBITDA guidance from
$981 million to $897 million and provided initial 2010 adjusted
EBITDA guidance of $667 million. "Our strategy of hedging has
cushioned us in 2009 and somewhat in 2010 from the effects of
falling prices for electricity," said Edward R. Muller, chairman
and chief executive officer.
Mirant announced in November 2008 that it was resuming its program
of returning cash to stockholders and would begin open market
purchases for $200 million. The company completed these purchases
in December. Along with $3.856 billion of stock repurchases made
between November 2007 and September 2008, the company has returned
$4.056 billion to stockholders.
A full-text copy of Mirant's annual report is available at no
charge at: http://ResearchArchives.com/t/s?39fa
Mirant Corporation -- http://www.mirant.com/-- produces and sells
electricity in the United States. Mirant owns or leases
approximately 10,097 megawatts of electric generating capacity.
The company operates an asset management and energy marketing
organization from its headquarters in Atlanta, Georgia.
Mirant Corporation filed for chapter 11 protection on July 14,
2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a
confirmed Second Amended Plan on Jan. 3, 2006. Thomas E.
Lauria, Esq., at White & Case LLP, represented the Debtor in its
restructuring. When the Debtor filed for protection from its
creditors, it listed $20,574,000,000 in assets and $11,401,000,000
in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006.
On March 7, 2007, the Court entered a final decree closing 46
Mirant cases.
Mirant NY-Gen LLC, Mirant Bowline LLC, Mirant Lovett LLC, Mirant
New York Inc., and Hudson Valley Gas Corporation, were not
included in the parent's bankruptcy exit plan.
In February 2007, Mirant NY-Gen filed its Chapter 11 Plan of
Reorganization and Disclosure Statement. The Court confirmed an
amended version of the Plan on May 7, 2007. Mirant NY-Gen emerged
from Chapter 11 on May 7, 2007.
On July 13, 2007, Mirant Lovett filed its Chapter 11 Plan. The
Court confirmed Mirant Lovett's Plan on Sept. 19, 2007. Mirant
Lovett emerged from bankruptcy on Oct. 2, 2007.
Bankruptcy Creditors' Service, Inc., publishes Mirant Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Mirant Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the Troubled Company Reporter on December 19, 2008,
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Mirant Corp. and its subsidiaries, Mirant North
America LLC and Mirant Americas Generating LLC following a full
review of the company. S&P rates Mirant and all of its
subsidiaries, including Mirant Mid-Atlantic, on a consolidated
basis. Mirant has a weak business profile, reflecting exposure to
merchant power commodity markets, environmental emissions
compliance due to coal fuel use, and debt refinancing, according
to S&P. These risks are mitigated by a large, base-load coal
asset position, some geographic diversity, and solid plant
operations. The financial policy is aggressive based on S&P's
corporate benchmarks, but this posture is partially mitigated by
large cash balance that is well above industry norms. The outlook
is stable.
NATIONAL WHOLESALE: Delaware Court Converts Case to Chapter 7
-------------------------------------------------------------
American Bankruptcy Institute reports that Judge Mary Walrath of
the U.S. Bankruptcy Court for the District of Delaware approved a
bid by NWL Holdings Inc., the parent company of discount retail
chain National Wholesale Liquidators, to convert its chapter 11
case to liquidation proceedings under chapter 7.
As reported by the Troubled Company Reporter on November 13, 2008,
National Wholesale Liquidators along with 62 of its affiliates
sought protection from its creditors under Chapter 11 in the
United States Bankruptcy Court for the District of Delaware,
Bloomberg News reports. A person with knowledge of the filing
told Keiko Morris at newsday.com that the company was caught in
the credit crunch. Prior to the filing, General Electric cut off
the company's line of credit by $10 million without notice, Ms.
Morris said. Volatile economy may give the company difficulties
to restructure and emerge from bankruptcy, Ms. Morris said.
"The reason [General Electric] gave us was the environment outside
was so bad that they are trying to protect themselves," James
Covert of the New York Post National quoted the company as saying.
According to Bloomberg, the company listed assets and debts
between $100 million and $500 million each in its filing. The
company owes $12.9 million to its unsecured creditors including
Haier America Trading LLC owing $2.4 million; White Rose Grocery
owing $1.2 million; and American Color Graphics owing $1.1
million, the report says.
Headquartered in West Hempstead, New York, National Wholesale
Liquidators Inc. -- http://www.nationalwholesaleliquidators.com/
-- a family-owned discount retailer. The company was founded in
1984. The company has 55 stores located in New York, New Jersey,
Pennsylvania, Connecticut, Maryland, Washington D.C., Delaware,
Massachusetts, Virginia, Rhode Island, Michigan and Illinois.
NEXTMEDIA OPERATING: Moody's Junks Corporate Rating from 'B3'
-------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of NextMedia Operating Inc. to Caa2 from B3 and downgraded its
probability of default rating to Caa2 from Caa1. The outlook
remains negative.
The downgrade of the corporate family rating reflects Moody's
expectation that continued deterioration in macroeconomic
conditions will likely translate into meaningfully lower
advertising spending and create significant pressure on
NextMedia's revenue and credit metrics during 2009. Moody's
expect debt-to-EBITDA to reach double digits by the end of 2009,
from approximately 7 times on a pro forma basis for the twelve
months ended September 30, 2008.
The negative outlook reflects Moody's concerns that NextMedia
lacks the necessary liquidity to manage through the economic
downturn without an amendment to the financial covenants in its
credit agreements, as well as concerns about the potential costs
of an amendment (both one time and ongoing). In addition,
assuming the company achieves an amendment with terms under which
it could operate, an advertising downturn lasting beyond 2009 or
one that is deeper than anticipated could sustain NextMedia's
leverage at elevated levels.
NextMedia Operating, Inc.
-- Probability of Default Rating, Downgraded to Caa2 from Caa1
-- Corporate Family Rating, Downgraded to Caa2 from B3
Outlook, Remains Negative
-- Senior Secured First Lien Credit Facility, Downgraded to
Caa1, LGD3, 33% from B1
-- Senior Secured Second Lien Credit Facility, Downgraded to
Caa3, LGD5, 86% from Caa2
Moody's most recent rating action concerning NextMedia occurred
April 18, 2008. At that time Moody's downgraded the corporate
family rating to B3 from B2.
NextMedia Operating, Inc. owns and operates radio stations in 7
mid-sized and suburban markets and outdoor displays in 6 markets.
NORTEL NETWORKS: Seeks to Pay $45-Mil. In Incentives
----------------------------------------------------
Nortel Networks Corp. is seeking authority from the U.S.
Bankruptcy Court for the District of Delaware to pay $45 million
in incentives to 92 senior executives and other employees.
According to Bloomberg News, the Company has presented to the
Court two incentive plans, which would be tied to cost-reduction
goals. The incentive payments would go out in installments over
the next 18 months, according to the filing.
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Wins Court Nod to Auction Data-Switch Business
---------------------------------------------------------------
Steven Church and Joe Schneider of Bloomberg said that Nortel
Networks Corp., obtained approval from the U.S. Bankruptcy Court
for the District of Delaware to auction part of its data-switch
business for at least $17.7 million.
More than a dozen potential bidders attended a recent information
session, Nortel attorney James Bromley said, according to the
report.
The company won approval from courts in Canada and the U.S. to
sell the line of switches.
"The business will deteriorate in value if we don't sell it,"
Nortel attorney Derrick Tay told a judge in Ontario Superior Court
in Toronto.
According to Bloomberg, the auction is scheduled March 23, with
bids due four days before the auction.
As reported by the Troubled Company Reporter, on February 19,
Nortel said it entered into a Stalking Horse asset purchase
agreement to sell certain portions of its Application Delivery
portfolio to Radware. 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.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Law Debenture Appointed to Creditors Panel
-----------------------------------------------------------
Roberta DeAngelis, the Acting United States Trustee for Region 3,
appointed Law Debenture Trust Company of New York as additional
member to the Official Committee of Unsecured Creditors in the
Chapter 11 cases of Nortel Networks Inc. and its affiliated
debtors.
The Creditors Committee is now composed of:
(1) The Bank of New York Mellon
Attn: Martin Feig, V.P.
101 Barclay Street- 8 West
New York, NY 10286
Phone: 212-815-5383
Fax: 732-667-4756
(2) Flextronics Corporation
Attn: Terry Zale
305 Interlocken Pkwy.
Broomfield, CO 80021
Phone: 720-251-5194
(3) Airvana, Inc.
Attn: Jeffrey D. Glidden
19 Alpha Road
Chelmsford, MA 01824
Phone: 978-250-2628
Fax: 978-250-3911
(4) Pension Benefit Guaranty Corporation
Attn: Jennifer Messina
1200 K Street
N.W., Washington DC 20005
Phone: 202-326-4000 ex 3209
Fax: 202-842-2643
(5) Law Debenture Trust Company of New York
Attn: Robert L. Bice, II
400 Madison Ave., 4th Floor
New York, New York 10017
Phone: 212-750-6474
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Seeks to Hire Jackson Lewis as ERISA Counsel
-------------------------------------------------------------
Nortel Networks Corp. and its affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to employ
Jackson Lewis LLP as their ERISA counsel, nunc pro tunc to
January 14, 2009.
The Debtors want to retain Jackson Lewis as counsel because of
the firm's knowledge of their businesses and operations
particularly in Employee Retirement Income Security Act (ERISA)
litigation, labor and employment law. Moreover, Jackson Lewis
represents some of the Debtors' Canada-based affiliates and
officers in a class action pending in the Middle District of
Tennessee. "As a result of its knowledge and experience in ERISA
litigation, it is unquestionable that the employment of Jackson
Lewis is in the best interests of the Debtors," says Thomas
Driscoll III, Esq., at Morris Nichols Arsht & Tunnell LLP, in
Wilmington, Delaware. He clarifies that Jackson is not being
retained and has not been asked to provide advice with respect to
conducting the Debtors' bankruptcy cases.
Jackson will be paid for its services at these hourly rates:
Partners $485 - $525
Associates $375 - $425
Paraprofessionals $150
The Firm will also be reimbursed of necessary expenses it
incurred or will incur in the rendition of its services to the
Debtors. In addition, the Debtors will cause Chubb Insurance
Company of Canada, Jackson Lewis' insurer and which the Debtors
have policies with, to continue paying the Firm.
Rene Thorne, Esq., a partner at Jackson, assures the Court that
his firm does not hold or represent interests materially adverse
to the Debtors' estates.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Seeks to Hire Crowell as Special Counsel
-------------------------------------------------------------
Nortel Networks Corp. and its affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to employ
Crowell & Moring LLP, as their special counsel, nunc pro tunc to
January 14, 2009.
The Debtors have chosen to employ Crowell because of the firm's
familiarity of their businesses and operations. Since 1999,
Crowell has provided legal advice to some of the Debtors and
their affiliates based outside the United Stated on asset
divestiture, litigation, merger and acquisition, labor and
employment, among other things.
The Debtors clarify that Crowell is not being retained to provide
them advice with respect to conducting their bankruptcy cases
although some of the services it provides "may be ancillary to
the[ir] reorganization process."
Crowell will be paid for its services based on these hourly
rates:
Partners $480 - $895
Counsel $435 - $645
Associates $275 - $535
Paralegals $135 - $270
The Firm will also be reimbursed of the expenses it incurred in
connection with its employment with the Debtors. Crowell is
currently owed $1,052,077 by the Debtors and its affiliates for
the services it provided before the Debtors' bankruptcy filing.
James Regan, Esq., a partner at Crowell, assures the Court that
his Firm does not hold or represent interest materially adverse
to the Debtors' estates.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTEL NETWORKS: Seeks to Hire Shearman as Litigation Counsel
-------------------------------------------------------------
Nortel Networks Corp. and its affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to employ
Shearman & Sterling LLP as their special litigation counsel, nunc
pro tunc to January 14, 2009.
Shearman currently represents the Debtors, their Canada-based
parent companies, and some of their officers and directors in
various litigations in New York and Tennessee. The Firm also
represents the Debtors in proceedings and investigations before
the U.S. Securities and Exchange Commission.
Thomas Driscol III, Esq., at Morris, Nichols, Arsht & Tunnell
LLP, in Wilmington, Delaware, said that Shearman, as special
litigation counsel, will continue representing the Debtors before
the U.S. Securities and Exchange Commission. The firm will also
continue to administer class action settlements, private
securities litigation and Employee Retirement Income Security Act
litigation on behalf of the Debtors, he added.
Mr. Driscol III clarified that Shearman is not being retained to
provide advice with respect to conducting the Debtors' bankruptcy
cases.
In exchange for the services, Shearman's professionals will be
paid at these hourly rates:
Partners $740 - $995
Associates $345 - $630
Counsel $535 - $850
Legal Assistants $100 - $245
Tai Park, Esq., at Shearman, assured the Court that his firm does
not have an interest adverse to the Debtors and will not
represent any party that holds an adversarial interest in
connection with the litigations.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
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)
NORTH HILLS MANAGEMENT: Faces Fraud Lawsuit; Court Freezes Assets
-----------------------------------------------------------------
The Securities and Exchange Commission charged Mark Bloom and his
firm North Hills Management LLC with securities fraud, and
obtained an emergency court order to freeze their assets and halt
an alleged investment scheme involving the marketing of a "fund of
funds" investment vehicle.
According to the SEC's complaint, filed in federal court in
Manhattan, the SEC alleges that Mr. Bloom, through North Hills,
raised roughly $30 million from 40 to 50 investors between 2001
and 2007 by representing that the assets would be invested in a
diverse group of hedge funds. Instead, Mr. Bloom misappropriated
more than $13.2 million of investor funds to furnish a lavish
lifestyle that included the purchase of luxury homes, cars and
boats for himself and his wife, who is named as a relief
defendant. The remaining funds were invested in a single fund
which itself turned out to be fraudulent.
Scott Friestad, Deputy Director of the SEC's Division of
Enforcement, said, "We allege a blatant investment scheme, and
[the] action shows that the Commission will act decisively to
preserve assets for investors."
James Clarkson, Acting Director of the SEC's New York Regional
Office, added, "As [the] emergency action demonstrates, the SEC
will bring aggressive enforcement action against individuals who
defraud innocent investors."
The SEC alleges that the defendants solicited investments in North
Hills, L.P., which is named as a relief defendant, by making
misleading representations. Mr. Bloom and North Hills represented
that the Fund's assets would be allocated across multiple funds
and fund managers to ensure diversification and moderate risk.
They sent investors false monthly account statements that
portrayed their investments as profitable when, in reality, Mr.
Bloom was systematically looting the Fund's trading account by
making "loans" to himself and by investing in contravention of the
Fund's stated investment strategy in an investment known as the
Philadelphia Alternative Asset Fund. Mr. Bloom received
undisclosed commissions from PAAF in excess of $355,000 over a 16-
month period. PAAF itself was uncovered as a fraudulent scheme in
June 2005.
According to the SEC's complaint, beginning in November 2007, one
of the Fund's largest investors, a charitable trust that funds
children's schools began to serve Mr. Bloom with redemption
requests, which Mr. Bloom repeatedly evaded. To date, Mr. Bloom
has failed to honor the Trust's redemption requests in full and
claims that he does not have the means to do so. The Trust is
owed more than $9.5 million on its investment.
The SEC complaint charges violations of the anti-fraud provisions
of the Securities Act of 1933, the Securities Exchange Act of 1934
and the Investment Advisers Act of 1940.
Judge John G. Koeltl of the U.S. District Court for the Southern
District of New York, entered an order temporarily restraining the
defendants, freezing their assets, ordering accountings, and
approving the appointment of a receiver. The SEC's complaint also
seeks a final judgment permanently enjoining the defendants from
future violations of the federal securities laws and ordering them
to pay financial penalties and disgorge ill-gotten gains with
prejudgment interest.
The U.S. Attorney's Office for the Southern District of New York
announced parallel criminal charges against Mr. Bloom, and the
U.S. Commodity Futures Trading Commission filed related charges
against Mr. Bloom and North Hills.
The SEC's investigation is ongoing.
NEWARK GROUP: S&P Downgrades Corporate Credit Rating to 'CCC'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its ratings on
The Newark Group Inc., including its corporate credit rating to
'CCC' from 'CCC+'. All ratings remain on CreditWatch with
negative implications.
"The downgrade follows the company's recent announcement that it
has entered into a forbearance agreement with lenders under its
$85 million asset-based revolving credit facility," said Standard
& Poor's credit analyst Andy Sookram. The revolving credit
facility lenders have agreed to forbear from exercising certain
rights as a result of the occurrence of several events of default,
including the company's failure to comply with its fixed-charge
coverage ratio as well as similar defaults under a separate
credit-linked facility comprised of a $15 million term loan and
$75 million letter of credit facility.
Under the terms of the forbearance agreement with the revolver
credit facility lenders, Newark also agreed to enter into a
forbearance agreement by Feb. 24, 2009, with the lenders under the
credit-linked facility. To date, no such agreement has been
reached.
As of Feb. 20, 2009, outstanding borrowings under the asset-based
revolving credit facility were $38.7 million, and $15 million term
loan and $69 million letters of credit under the credit-linked
facility.
In resolving the CreditWatch listing, S&P will consider near-term
operating prospects for the company, its progress toward
successfully completing the necessary forbearance agreements and
obtaining longer term waivers and amendments that would restore
adequate liquidity and financial flexibility under its credit
agreements.
P&M TRANSIT: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: P&M Transit Company, Inc.
2900 Bellevue Ave.
Daytona Beach, FL 32124
Bankruptcy Case No.: 09-50469
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Orlando)
Judge: Arthur B. Briskman
Debtor's Counsel: Kevin E. Mangum, Esq.
Mangum & Associates PA
5100 Highway 17-92, Suite 200
Casselberry, FL 32707
Tel: (407) 478-1555
Fax: (407) 478-1552
Email: kevin@mangum-law.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Roby Randy Epling, President of the
company.
PACIFIC ETHANOL: Lenders Extend Forbearance Until Month's End
-------------------------------------------------------------
Pacific Ethanol, Inc. said on Friday that the forbearance
agreements with its lenders have been extended as the Company
continues attempts to negotiate new loan terms. These agreements
provide that the Company's lenders will refrain from exercising
their rights and remedies through March 31, 2009, in respect of
certain loan covenant defaults.
Negotiations are ongoing with the Company's lenders, namely
Wachovia Capital Finance Corporation (Western), with respect to
its operating line of credit for Kinergy Marketing, WestLB AG and
the other lenders under the Credit Agreement dated February 27,
2007, with respect to its term loans and working capital lines of
credit for its wholly-owned ethanol production facilities, and
Lyles United, LLC, with respect to outstanding loans.
The Company intends to file a Current Report on Form 8-K with the
Securities and Exchange Commission describing the forbearance
agreements in greater detail.
As reported by the Troubled Company Reporter on February 25, 2009,
Pacific Ethanol entered into two separate forbearance agreements
as it attempts to negotiate new loan terms with its lenders. The
agreements initially provide that the lenders would refrain from
exercising their rights and remedies through February 27 in
respect of the covenant defaults.
Wachovia Forbearance
The Amendment and Forbearance Agreement, dated February 13, 2009,
among Pacific Ethanol, its wholly owned subsidiary, Kinergy
Marketing, and Wachovia Capital Finance Corporation (Western)
relates to a $40.0 million credit facility for Kinergy under a
Loan and Security Agreement dated July 28, 2008, by and among
Kinergy, the parties thereto from time to time as the Lenders,
Wachovia and Wachovia Bank, National Association.
The Amendment and Forbearance Agreement identifies certain
existing defaults under the Loan Agreement. The Amendment and
Forbearance Agreement provides that Wachovia will forbear from
exercising its rights and remedies under the Loan Documents and
applicable law, on the terms and conditions set forth in the
Amendment and Forbearance Agreement, for a period of time
commencing on February 13, 2009, and ending on the earlier to
occur of (i) February 28, 2009, and (ii) the date that any new
default occurs under the Loan Agreement or a default occurs under
the Amendment and Forbearance Agreement. Upon Kinergy's request,
Wachovia may, in its sole and absolute discretion, extend the date
the Forbearance Period terminates to March 31, 2009.
The Amendment and Forbearance Agreement increased the interest
rates applicable to the credit facility to the default rates under
the Loan Agreement, which is (i) for eurodollar rate loans, a rate
equal to (a) the London Interbank Offered Rate, divided by 0.90 --
subject change based upon the reserve percentage in effect from
time to time under Regulation D of the Board of Governors of the
Federal Reserve System -- plus (b) 4.50%, or (ii) for prime rate
loans, a rate equal to (a) the greater of the prime rate published
by Wachovia Bank from time to time, or the federal funds rate then
in effect plus 0.50%, plus (b) 2.25%. The rate increases are
effective as of January 1, 2009 and are to continue for the
duration of the Forbearance Period. In addition, under the
Amendment and Forbearance Agreement, all loans, letters of credit
and other financial accommodations provided by Wachovia to Kinergy
during the Forbearance Period are to be made and provided in the
sole and absolute discretion of Wachovia.
The Amendment and Forbearance Agreement requires Kinergy to
provide Wachovia with certain budgets and projections on a weekly
basis during the Forbearance Period. The Amendment and
Forbearance Agreement also requires Kinergy to provide Wachovia,
on or prior to February 28, 2009, with an agreement, in form and
substance satisfactory to Wachovia, under which WestLB AG and
other lenders have agreed to forbear from exercising their rights
against the Company and certain of its subsidiaries for such
forbearance period and on such terms and conditions as will be
acceptable to Wachovia; provided, that if the Forbearance Period
is extended by Wachovia then the required date of delivery of such
agreement will be extended to March 31, 2009.
The Amendment and Forbearance Agreement also amended the Loan
Agreement in various respects, including by (i) reducing by
$500,000 amounts available for borrowing based on Kinergy's
eligible accounts receivable and inventory levels, subject to any
reserves established by Wachovia, (ii) reducing the inventory loan
limit from $20,000,000 to $5,000,000, thereby reducing the
available borrowing base related to inventory levels by
$15,000,000, (iii) reducing the letter of credit limit from
$10,000,000 to $500,000, and (iv) reducing the aggregate principal
amount of the loans outstanding at any time against eligible in-
transit inventory from $10,000,000 to $2,500,000 and against
eligible inventory consisting of biodiesel from $3,000,000 to
$200,000. In addition, the maximum available credit was reduced
from $40,000,000 to $10,000,000, representing a reduction in
available credit which is not currently being utilized by Kinergy.
The Amendment and Forbearance Agreement also amended the
definition of "Material Adverse Effect" in the Loan Agreement to
include material adverse effects occurring with respect to the
Company or any of its subsidiaries, rather than only Kinergy, and
included as an event of default under the Loan Agreement any
Material Adverse Effect with respect to Kinergy, the Company or
any of their subsidiaries.
The Amendment and Forbearance Agreement also includes a general
release in favor of Wachovia of any claims, whether known or
unknown, that Kinergy or the Company may have had against
Wachovia. Kinergy was required to pay Wachovia a forbearance fee
of $50,000, in addition to any other fees, charges, interest and
expenses payable under the Loan Documents. If the Forbearance
Period is extended to March 31, 2009, Kinergy is required to pay
an additional forbearance fee of $50,000. The Amendment and
Forbearance Agreement also includes customary representations and
warranties and other customary terms and conditions.
WestLB Forbearance
On February 17, 2009, Pacific Ethanol Holding Co. LLC, Pacific
Ethanol Madera LLC, Pacific Ethanol Columbia, LLC, Pacific Ethanol
Stockton, LLC, and Pacific Ethanol Magic Valley, LLC, each
indirect wholly-owned subsidiaries of the Company, and WestLB AG,
New York Branch, Amarillo National Bank and the senior secured
lenders entered into a Limited Waiver and Forbearance Agreement.
The Waiver and Forbearance Agreement relates to loans under a
Credit Agreement dated as of February 27, 2007, among the parties.
The Waiver and Forbearance Agreement identifies certain existing
defaults and certain anticipated defaults under the Credit
Agreement. The Waiver and Forbearance Agreement provides that
WestLB and the senior secured lenders will forbear from exercising
their rights and remedies under the Credit Agreement and related
documents and applicable law, on the terms and conditions set
forth in the Waiver and Forbearance Agreement, for a period of
time commencing on February 17, 2009, and ending on the earlier to
occur of (i) February 27, 2009, (ii) the date that any new default
occurs under the Credit Agreement or a default occurs under the
Waiver and Forbearance Agreement, and (iii) the date on which all
obligations have been paid in full and the Credit Agreement has
been terminated.
The Waiver and Forbearance Agreement provides that Borrowers may
withdraw funds otherwise required to be reserved in an account
designated solely for the Company's Stockton, California plant and
use such funds in accordance with an agreed-upon 13-week cash flow
forecast. The amount of such funds is approximately
$2.0 million.
The Amendment and Forbearance Agreement requires Kinergy to
provide WestLB with certain budgets and projections on a weekly
basis.
The Waiver and Forbearance Agreement also includes a general
release in favor of WestLB and the senior secured lenders of any
claims, whether known or unknown, that any Borrower may have had
against them. Borrowers are required to reimburse WestLB for all
fees and expenses, including reasonable and documented legal fees
and other expenses of counsel and other advisors. The Waiver and
Forbearance Agreement also includes customary representations and
warranties and other customary terms and conditions.
2 Ethanol Plants Temporarily Closed
Pacific Ethanol also said Friday that it has temporarily suspended
operations at two 60 million gallon per year ethanol facilities
located in Burley, ID and Stockton, CA due to extended unfavorable
market conditions for producing ethanol. The Company previously
announced the decision to temporarily suspend its
40 million gallon per year production facility in Madera,
California, as of January 12. The company, through its wholly-
owned ethanol marketing arm, Kinergy Marketing, intends to
continue serving its ethanol customers with production from other
Pacific Ethanol plants and Kinergy suppliers.
About Pacific Ethanol, Inc
Based in Sacramento, California, Pacific Ethanol, Inc. (NASDAQ GM:
PEIX) -- http://www.pacificethanol.net-- is the largest West
Coast-based marketer and producer of ethanol. Pacific Ethanol has
ethanol plants in Madera and Stockton, California; Boardman,
Oregon; and Burley, Idaho. Pacific Ethanol also owns a 42%
interest in Front Range Energy, LLC which owns an ethanol plant in
Windsor, Colorado.
PANOLAM INDUSTRIES: S&P Junks Corporate Credit Rating From 'B-'
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
ratings on Panolam Industries International Inc., including its
corporate credit rating to 'CCC+' from 'B-'. The ratings were
removed from CreditWatch, where they were placed with negative
implications on Sept. 10, 2008. The outlook is negative.
In addition, S&P lowered the issue-level rating on Panolam's
senior secured revolving credit facility due 2010 and senior
secured term loan due 2012, to 'B-' (one notch higher than the
'CCC+' corporate credit rating) from 'B+'. The recovery rating on
the facility was revised to '2', indicating S&P's expectation of
substantial (70% to 90%) recovery for lenders in the event of a
payment default, from '1'.
"The lower ratings reflect our expectations that Panolam's near-
term operating performance will remain highly challenged given
weakening commercial construction end-markets and continued
depressed residential construction activity," said Standard &
Poor's credit analyst Tobias Crabtree. "As a result, S&P believes
Panolam's financial profile will weaken materially during this
period, increasing S&P's concerns regarding Panolam's ability to
remain in compliance with covenants under its existing bank credit
facility, as covenants tighten as of March 31, 2009; specifically,
the company's leverage covenant steps down to 4.5x from 5x and its
interest coverage ratio steps up to 2.25x from 2x." As a result,
a waiver or amendment of its existing credit facility would be
required, which given the credit market environment, may be more
difficult to obtain, resulting in a more constrained liquidity
position.
The rating on Shelton, Conn.-based Panolam Industries
International Inc. reflects the company's highly leveraged
financial profile, exposure to the cyclicality of commercial and
residential construction and remodeling activities, volatile raw-
material costs, limited product diversity, and potential covenant
compliance issues.
The negative outlook reflects S&P's forecast for weakening
commercial construction activity that will further challenge
Panolam's earnings over the next 12 to 18 months. S&P could lower
the ratings if Panolam's liquidity is further constrained because
of a covenant violation and if EBITDA declines to a level below
annual fixed charges of about $30 million to $35 million.
Although S&P believes covenant relief via a waiver or cure would
address near-term liquidity constraints, S&P is not likely to
revise the outlook to stable in the next year given S&P's
expectations for challenging commercial construction end-markets.
Panolam is a designer, manufacturer, and distributor of decorative
laminates in the U.S. and Canada. The company derives its low-
cost position from its somewhat efficient operations and
competitive level of vertical integration. It internally produces
a significant portion of its own particleboard requirements, a
majority of its resin, and essentially all of its overlay paper
needs. However, with two-thirds of its cost of sales related to
raw materials, the company is vulnerable to higher raw-material
costs, especially for petroleum-based chemicals and resins. In
addition, price competition for certain products has increased,
and operating margins before depreciation and amortization fell to
15.5% in the third quarter of 2008 compared with 16.7% in the
comparable prior-year period. S&P expects operating margins to
remain pressured throughout 2009, as a result of lower sales
volumes related to a decrease in commercial and residential
construction activity.
PEREGRINE SYSTEMS: Ex-Sales Executive Directed to Repay $11.2MM
---------------------------------------------------------------
Thom Weidlich and Bill Callahan of Bloomberg report that former
Peregrine Systems Inc. sales vice president, Douglas Powanda, was
ordered to pay $11.2 million in restitution for his role in the
fraud that destroyed the software company, the largest amount for
any defendant in the case so far. He was ordered to pay another
$5.74 million on top of the $5.5 million he paid to settle civil
suits. Mr. Powanda had pleaded guilty.
"He clearly made way, way more money than any of the other
defendants by exercising stock options on inflated sales figures,"
U.S. District Judge Thomas Whelan said, Bloomberg news adds.
According to the report, prosecutors charged 18 people in a
multimillion-dollar accounting scam to falsely inflate profits and
boost Peregrine's stock. The conspiracy sent the company, once
valued at $4.72 billion, into bankruptcy in 2002. Fourteen pleaded
guilty, including ex-Chief Executive Officer Stephen Gardner,
former President Gary Lenz and ex-Chief Financial Officer Matt
Gless.
Mr. Powanda's lawyer, Howard B. Frank, told Judge Whelan that his
client was being punished financially far more than the other
defendants. "If you combine the amount of restitution from all the
other defendants combined it will not be as much as Mr. Powanda
has already paid," the lawyer said and adds that his client
probably won't be able to pay back all the restitution, the report
further stated.
Assistant U.S. Attorney Eric Beste told the Court that, while
Mr. Powanda deserves some credit for paying back, he "made
substantial amounts of money" illegally and his ability to repay
all the restitution is irrelevant, Bloomberg said.
Details of the report relates that in December, Judge Whelan
sentenced Mr. Powanda to six-and-a-half years in prison after he
pleaded guilty to securities fraud and conspiracy and also
directed ex-Peregrine Controller Berdj Rassam to pay $129,308 in
restitution. Mr. Rassam, who pleaded guilty to securities fraud,
was sentenced in December to two years in prison. While Mr.
Gardner would pay "about $3 million" in restitution, depending on
how the proceeds from the sale of two Gardner properties are
tabulated. Mr. Gardner was sentenced in December to eight years
and one month in prison after pleading guilty in March 2007.
Bloomberg states that the restitution paid by former Peregrine
executives involved in the fraud will go to a fund that will be
disbursed to about 15,000 former shareholders who are part of a
class-action lawsuit filed in the wake of the company's collapse.
The final defendant in the case, former General Counsel Eric
Deller, is scheduled to be tried March 3. He has pleaded not
guilty. Prosecutors dropped charges against two other former
Peregrine executives and a partner at now-defunct accounting firm
Arthur Andersen, Peregrine's outside auditor, after trials ended
with deadlocked juries.
Bloomberg news further disclosed that Peregrine sold most of its
operations to Palo Alto, California-based Hewlett-Packard Co.
after shedding about $537 million of debt and exiting bankruptcy
in 2003. That same year, Peregrine settled with the U.S.
Securities and Exchange Commission after restating $509 million in
revenue.
About Peregrine Systems
Headquartered in San Diego, Calif., Peregrine Systems, Inc. --
http://www.peregrine.com/-- was a global provider of enterprise
software to enable leading companies to optimally manage the IT
infrastructure. The Company's flagship product suites --
ServiceCenter(R) and AssetCenter(R) -- create a foundation for IT
asset and service management solutions based on industry best
practices, including ITIL (IT Infrastructure Library). In
addition, customers used Peregrine's Configuration Services suite
to gain an accurate, consolidated view of their IT assets.
Peregrine recently introduced a new vision -- Optimal IT -- to
deliver predictive analytics and decision modeling to optimize IT
performance. The Company conducted business from offices in the
Americas, Europe and Asia Pacific.
The Company filed a voluntary Chapter 11 petition on Sept. 22,
2002. On Aug. 7, 2003, Peregrine became the first public
enterprise software company to successfully restructure under
Chapter 11 protection.
In September 2005, Hewlett-Packard Co. (NYSE:HPQ; Nasdaq:HPQ) and
Peregrine Systems signed a definitive agreement pursuant to
which HP will acquire Peregrine in a cash merger for $26.08 per
share representing an aggregate equity value of $425 million.
POOLED COLLEGE: Moody's Withdraws 'Ba1' Rating on 1998A Bonds
-------------------------------------------------------------
Moody Investors Service has withdrawn the Ba1 rating on The Pooled
College and University Projects, Series 1998A Revenue Bonds issued
by the California Educational Facilities Authority. The
withdrawal is prompted due to inadequate information for the bonds
given the analysis of the security must be based on the credit
quality of Holy Names University, CA, the remaining pool
participant, which is currently unrated. Moody's believe Moody's
cannot formulate an appropriate rating based on publicly available
information.
The last rating action and report with respect to the CEFA Pooled
College and University Projects, Series 1998A was published on
June 11, 2007, when the rating and outlook were affirmed.
PREMIER AGGREGATES: Involuntary Voluntary Chapter 11 Case Summary
-----------------------------------------------------------------
Alleged Debtor: Premier Aggregates LLC
c/o Jack Singleton
1039 Lakeshore Blvd
Slidell, LA 70461
Case Number: 09-10541
Type of Business: The Debtor sells industrial and construction
materials.
Involuntary Petition Date: February 27, 2009
Court: Eastern District of Louisiana (New Orleans)
Judge: Elizabeth W. Magner
Petitioner's Counsel: Lisa Merz Hedrick, Esq.
merzld@arlaw.com
One Shell Square
701 Poydras Street, Suite 4500
New Orleans, LA 70139
Tel: (504) 581-3234
Fax: (504) 566-0210
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
Virgil Allen lease $250,000
13162 Highway 22
Pontchatoula, LA 70454
MOTAB & Company LLC contract $200,000
143 Colony Road
Belle Chasse, LA 70037
Crescent River Services LLC trucking services $44,744
1428 Ocean Drive
Metairie, LA 70005
QIMONDA RICHMOND: Laid-Off Workers Won't be Paid Final Paychecks
----------------------------------------------------------------
Emily C. Dooley at Times-Dispatch reports that Qimonda Richmond,
LLC, won't pay hundreds of laid-off workers their final paychecks
or wages for vacation days and time off they earned before being
dismissed.
Qimonda Richmond told employees that due to bankruptcy law, wages
owed before February 20 -- including final paychecks for the pay
period ending February 20 and any accrued time off -- could not be
paid, Times-Dispath relates. The report quoted Qimonda North
America President and Chief Financial Officer Miriam Martinez as
saying, "The bankruptcy court did not grant us authority to make
any payments to inactive employees."
According to Times-Dispatch, Qimonda North America spokesperson
Glen Haley confirmed that a letter was sent to workers this week,
but wouldn't discuss "severance or employee termination policies."
About Qimonda Richmond, LLC
Qimonda Richmond, LLC makes semiconductor products. The Debtor
and its debtor-affiliate filed for separate Chapter 11 protection
on Feb. 20, 2009, (Bankr. D. Del. Case Nos.: 09-10589 to 09-10590)
Simpson Thacher & Bartlett LLP and Mark D. Collins, Esq. and
Michael Joseph Merchant, Esq. at Richards Layton & Finger PA
represent the Debtors in their restructuring efforts. Alvarez &
Marsal serves as restructuring managers. Epiq Bankruptcy
Solutions LLC serves as its claims agent. The Debtors listed
estimated assets of more than $1 billion and estimated debts of
more than $1 billion.
QUEBECOR WORLD: Opens New Co-Mail Facility in New Jersey
--------------------------------------------------------
Quebecor World Inc. has further expanded its co-mail offering with
the addition of two new 30-pocket machines in the recently opened
Somerset, New Jersey consolidation facility. This new capacity
allows more publishers and catalogers to take advantage of the
benefits of co-mail. This additional co-mail capacity comes on
line several months before the USPS price increase giving our
customers an opportunity to mitigate the impact of the additional
postage costs during these challenging economic times. Quebecor
World co-mail participants achieve faster delivery, greater postal
discounts and larger, more flexible co-mail pools. Quebecor World
creates daily pools and allows participation with just 72 hours
notification, providing the most flexible schedule in the
industry.
The Somerset location was strategically selected because of its
proximity to the densely populated Northeast (about one quarter of
the U.S. population). Northeast destined mail will be addressed
and sorted at the Somerset, New Jersey facility, greatly reducing
transit to the Postal facilities. The shorter distance between
the Somerset facility and the end Postal destinations allows for a
more predictable and reliable in-home window for your mailing.
"These additional machines will allow more customers to take
advantage of the benefits that many Quebecor World customers have
grown accustomed to since the launch of our Express Collation
Mailing System (ECMS) in early 2006. It is our corporate goal to
expand our co-mail platform as rapidly as the demand for this
service grows, and we feel that our efforts are evident by our
continual investment in SIM Products 30-pocket co-mail machines.
We currently have six active co-mail machines, with three
additional machines purchased and quickly approaching activation,"
said William Glass, President of Quebecor World's logistics and
premedia group. "Now, more than ever, it is critical for our
customers to find additional ways to maximize their presort and
drop ship savings. Companies must become very lean during this
recession, and our expanding co-mail platform is just one of our
many solutions that help our customers see additional savings when
they need them most."
The Express Collation Mailing System (ECMS) works in collaboration
with Quebecor World's Mail List Technologies division to guarantee
that all co-mail participants save money through destination entry
into the Postal system. By expanding this platform, Quebecor
World adds to the size and frequency of its co-mail pools,
allowing more participants to join, more flexibility in when they
can join, and greater savings by taking advantage of the dense
population of the Northeast.
Quebecor World Logistics provides logistics and mail list services
for Quebecor World and third party customers, managing
distribution and mailing services for catalogs, direct mail,
magazines (subscriber copies and newsstand), newspaper inserts,
books and bulk printed products.
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE:
IQW) -- http://www.quebecorworldinc.com/-- provides market
solutions, including marketing and advertising activities, well
as print solutions to retailers, branded goods companies,
catalogers and to publishers of magazines, books and other
printed media. It has 127 printing and related facilities
located in North America, Europe, Latin America and Asia. In
the United States, it has 82 facilities in 30 states, and is
engaged in the printing of books, magazines, directories, retail
inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Ernst & Young, Inc., the monitor of Quebecor World Inc., and its
affiliates' reorganization proceedings under the Canadian
Companies' Creditors Arrangement Act, filed a petition under
Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court
for the Southern District of New York on September 30, 2008, on
behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The chapter 15
case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at
Allen & Overy LLP, in New York, serves as counsel to the chapter
15 petitioner.
QWI and certain of its subsidiaries commenced the CCAA proceedings
before the Quebec Superior Court (Commercial Division) on January
20, 2008. The following day, 53 of QWI's U.S. subsidiaries,
including Quebecor World (USA), Inc., filed
petitions under Chapter 11 of the U.S. Bankruptcy Code.
The Honorable Justice Robert Mongeon oversees the CCAA case.
Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the
Company in the CCAA case. Ernst & Young Inc. was appointed as
Monitor.
Quebecor World (USA) Inc., its U.S. subsidiary, along with other
U.S. affiliates, filed for chapter 11 bankruptcy before the U.S.
Bankruptcy Court for the Southern District of New York (Lead Case
No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter
LLP, represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com/-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
QWI is the only entity involved in the CCAA proceedings that is
not a Debtor in the Chapter 11 Cases.
As of June 30, 2008, Quebecor World's unaudited consolidated
balance sheet showed total assets of US$3,412,100,000 total
liabilities of US$4,326,500,000 preferred shares of US$62,000,000
and total shareholders' deficit of US$976,400,000.
The Hon. Robert Mongeon of the Quebec Superior Court has extended
until Dec. 14, 2008, the stay under the Canadian Companies'
Creditors Arrangement Act.
QUEBECOR WORLD: Sets Series 5 Preferred Shares Conversion Rate
--------------------------------------------------------------
Quebecor World Inc. on Thursday determined the final conversion
rate applicable to the 256,364 Series 5 Cumulative Redeemable
First Preferred Shares (CA:IQW.PR.C) that will be converted into
Subordinate Voting Shares effective as of March 2, 2009. Taking
into account all accrued and unpaid dividends on the Series 5
Preferred Shares up to and including March 1, 2009, Quebecor World
determined that, in accordance with the provisions governing the
Series 5 Preferred Shares, each Series 5 Preferred Share will be
converted effective as of March 2, 2009 into 13.79375 Subordinate
Voting Shares.
Registered holders of Series 5 Preferred Shares who submitted
notices of conversion on or prior to December 29, 2008, will
receive in the coming days from Quebecor World's transfer agent
and registrar, Computershare Investor Services Inc., certificates
representing their Subordinate Voting Shares resulting from the
conversion. 3,536,220 new Subordinate Voting Shares will thus be
issued by Quebecor World to holders of Series 5 Preferred Shares
effective as of March 2, 2009.
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE:
IQW) -- http://www.quebecorworldinc.com/-- provides market
solutions, including marketing and advertising activities, well
as print solutions to retailers, branded goods companies,
catalogers and to publishers of magazines, books and other
printed media. It has 127 printing and related facilities
located in North America, Europe, Latin America and Asia. In
the United States, it has 82 facilities in 30 states, and is
engaged in the printing of books, magazines, directories, retail
inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Ernst & Young, Inc., the monitor of Quebecor World Inc., and its
affiliates' reorganization proceedings under the Canadian
Companies' Creditors Arrangement Act, filed a petition under
Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court
for the Southern District of New York on September 30, 2008, on
behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The chapter 15
case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at
Allen & Overy LLP, in New York, serves as counsel to the chapter
15 petitioner.
QWI and certain of its subsidiaries commenced the CCAA proceedings
before the Quebec Superior Court (Commercial Division) on January
20, 2008. The following day, 53 of QWI's U.S. subsidiaries,
including Quebecor World (USA), Inc., filed petitions under
Chapter 11 of the U.S. Bankruptcy Code.
The Honorable Justice Robert Mongeon oversees the CCAA case.
Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the
Company in the CCAA case. Ernst & Young Inc. was appointed as
Monitor.
Quebecor World (USA) Inc., its U.S. subsidiary, along with other
U.S. affiliates, filed for chapter 11 bankruptcy before the U.S.
Bankruptcy Court for the Southern District of New York (Lead Case
No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter
LLP, represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com/-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
QWI is the only entity involved in the CCAA proceedings that is
not a Debtor in the Chapter 11 Cases.
As of June 30, 2008, Quebecor World's unaudited consolidated
balance sheet showed total assets of US$3,412,100,000 total
liabilities of US$4,326,500,000 preferred shares of US$62,000,000
and total shareholders' deficit of US$976,400,000.
The Hon. Robert Mongeon of the Quebec Superior Court has extended
until Dec. 14, 2008, the stay under the Canadian Companies'
Creditors Arrangement Act.
Bankruptcy Creditors' Service, Inc., publishes Quebecor World
Bankruptcy News. The newsletter tracks the proceedings initiated
by Quebecor World Inc. and its U.S. and Non-U.S. subsidiaries
under the U.S. Bankruptcy Code and the Companies' Creditors
Arrangement Act in Canada. (http://bankrupt.com/newsstand/or
215/945-7000)
REALOGY CORP: $150 Mil. Investment Won't Affect Moody's Ratings
---------------------------------------------------------------
Moody's Investors Service said that Realogy Corporation's
(Realogy) recent announcement that its private equity sponsor,
Apollo Management, L.P., may invest up to $150 million in the
company during fiscal 2009 will have no immediate impact on
Realogy's credit ratings, liquidity rating or the negative rating
outlook.
The last rating action on Realogy Corporation was on December 19,
2008, at which time Moody's lowered the corporate family rating to
Caa3 from Caa2 following the company's withdrawal of an exchange
offer to holders of its senior unsecured cash pay, unsecured
toggle and subordinated notes.
Realogy is one of the largest real estate service companies in the
United States with reported revenues of about $4.7 billion for the
year ended December 31, 2008.
REGAL ENTERTAINMENT: S&P Downgrades Corp. Credit Rating to 'B+'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Regal Entertainment Group. And
subsidiary Regal Cinemas Corp. (which S&P analyzes on a
consolidated basis) by one notch, and removed them from
CreditWatch, where they were placed with negative implications
Nov. 19, 2008. The corporate credit rating was lowered to 'B+'
from 'BB-', and the rating outlook is stable.
"The rating change is based on our concern that Regal's debt
leverage will remain elevated in 2009, and likely in 2010," noted
Standard & Poor's credit analyst Jeanne Mathewson. "As the
benefit of an extra week in Regal's fiscal 2008 rolls off, S&P
expects leverage to rise above our 5.75x threshold for the company
at a 'BB-' rating, and the company's cushion of compliance with
covenants to narrow."
Regal is the largest motion picture exhibitor in the U.S., with
6,801 screens in 552 theaters in 39 states and the District of
Columbia. The company's aggressive cost management and cost
advantages from its large size are the main reasons its profit
margins compare well with those of its major rivals. EBITDA
margins at approximately 20% are higher than the industry
average and have shown good stability.
Following the increase in leverage, the company cut its quarterly
dividend by 40% and has amended its senior credit facility. The
amendment provides Regal with relief from covenant step-downs
through the second quarter of 2011 and an opportunity to retire
debt at a discount for 270 days, which the company has stated it
will do opportunistically. Regal has demonstrated an aggressive
equity return orientation since late 2002. The company's large,
partially debt-financed extraordinary dividends in 2003 and 2004
weakened its leverage and liquidity.
Regal's revenue and EBITDA for the 2008 fourth quarter increased
19% and 27%, respectively, primarily due to the extra week in its
fiscal reporting period. For the year ended Jan.1, 2009, revenue
and EBITDA were up 4% and 3%, respectively, for the same reason.
Excluding the impact of the extra week, revenue was roughly flat
in 2008, while EBITDA was down 5.6%. Ticket prices and
concessions per patron were up 3% and 2%, respectively, in 2008.
Attendance per average screen was down slightly from 38 in 2007 to
roughly 37.2 for the fiscal year ended Jan. 1, 2009.
RENAISSANCE ASSET: Ordered to Pay $21.2M for Ponzi Scheme
---------------------------------------------------------
The U.S. Commodity Futures Trading Commission (CFTC) said that a
federal district court has ordered Anthony Ramunno, Jr. formerly
of Alpharetta, Georgia, to pay a $5.8 million civil monetary
penalty for operating an illegal commodity pool Ponzi scheme in
which over 90 public investors lost over $21 million. The district
court also issued a similar order against Renaissance Asset
Management LLC (Renaissance), the company through which Ramunno
operated his scheme. That order requires the company to repay
investors $21.2 million of the funds they had lost, imposes a
civil monetary penalty of $5.8 million, and bans the company from
trading commodity futures.
Both orders were entered by U.S. District Court Judge Jack T. Camp
in the Northern District of Georgia on February 13, 2009. Judge
Camp had previously entered an order of permanent injunction
against Ramunno on January 23, 2008, in which the court
permanently banned Ramunno from trading commodity futures and
banned him from registration with the CFTC.
In its February 13, 2009 order against Ramunno, the court noted
that it is not ordering Ramunno to pay restitution in his
individual capacity because Ramunno already is subject to an order
requiring him to pay $21.2 million in criminal restitution entered
in a parallel criminal proceeding, U.S. v. Ramunno, N.D. GA,
Docket No. 1:07 CR 061.
The court's orders stem from a CFTC complaint filed on January 24,
2007 (see CFTC News Release, 5281-07, January 24, 2007), which
alleged, in part, that Ramunno and Renaissance issued false
statements to investors, including annual reports that reflected
substantial profits and false representations that the reports had
been audited by an accounting firm.
Commenting on the two orders, Stephen J. Obie, the Acting Director
of Enforcement for the CFTC, stated, "Here, the civil and criminal
processes are working the way they are supposed to. Anthony
Ramunno now is serving a long prison sentence imposed by a
criminal court and is subject to orders to repay customers and to
pay a substantial civil penalty to the government."
The CFTC would like to thank the U.S. Attorney's Office for the
Northern District of Georgia for its assistance.
The following CFTC staff members are responsible for this case:
William Janulis, Michael Tallarico, Rosemary Hollinger, Richard
Wagner, Scott Williamson and Cynthia Cannon.
Anthony Ramunno, Jr., formerly of Alpharetta, Georgia, and His
Company, Renaissance Asset Management LLC, Fined and Sanctioned in
a $21 Million Ponzi Scheme
RESIDENTIAL CAPITAL: Posts $5.6BB Net Loss in Year ended Dec. 31
---------------------------------------------------------------
Residential Capital LLC disclosed in a regulatory filing with the
Securities and Exchange Commission its financial results for the
year ended Dec. 31, 2008.
At Dec. 31, 2008, ResCap's balances sheet showed total assets of
$57.9 billion, total liabilities of $55.7 billion and members'
equity of about $2.2 billion.
For the year ended Dec. 31, 2008, ResCap posted net loss of
$5.6 billion compared with net loss of $4.3 billion for the same
period in the previous year.
Liquidity and Capital Resources
Through a combination of these initiatives, GMAC has contributed
capital, including preferred interests of $3.3 billion in 2008,
and as of Dec. 31, 2008, provided ResCap $2.7 billion in
outstanding borrowings and holds $2.8 billion in par value of its
outstanding notes.
The company's liquidity needs remain significant and it relies
heavily on its parent and affiliates and its ability to access
capital markets to provide financing. Our primary liquidity
management objective remains intact and aims to maintain adequate,
reliable access to liquidity across all market cycles and in
periods of financial stress.
As of Dec. 31, 2008, the company has consolidated tangible net
worth of $350.0 million and remained in compliance with the most
restrictive consolidated tangible net worth covenant minimum of
$250.0 million. In addition, the company complied with its
consolidated liquidity requirement of $750.0 million. For the
year ended Dec. 31, 2008, GMAC contributed $1.6 billion of its
secured and unsecured notes that GMAC had purchased in open market
transactions, contributed $976.5 million of its unsecured notes in
conjunction with the ResCap Offers, and forgave outstanding debt
of $791.9 million related to the GMAC Secured MSR Facility.
The Dec. 31, 2008, consolidated tangible net worth of
$350 million resulted in declines in advance rates to certain
facilities which reduced the amount ResCap can borrow. For the
year ended Dec. 31, 2008, ResCap was required to provide cash of
$41.7 million to facility counterparties as a result of the
advance rate declines. Subsequent to the Jan. 30, 2009, sale and
deconsolidation of IB Finance, and through the date of this
filing, ResCap remains in compliance with its consolidated
tangible net worth requirement of $250.0 million.
A full-text copy of the Form 10-K is available for free at:
http://ResearchArchives.com/t/s?39f9
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
On December 24, 2008, GMAC Financial Services' application to
become a bank holding company under the Bank Holding Company Act
of 1956, as amended, was approved by the Board of Governors of the
Federal Reserve System. In addition, GMAC Bank received approval
from the Utah Department of Financial Institutions to convert to a
state bank. As a bank holding company, GMAC will have expanded
opportunities for funding and access to capital, which will
provide increased flexibility and stability.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit
of GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
* * *
As reported in the Troubled Company Reporter on Dec 3, 2008,
Dominion Bond Rating Service placed all ratings of Residential
Capital, LLC, including its Issuer and Long-Term Debt rating of C,
Under Review with Negative Implications.
REVE SPC: Moody's Junks Ratings on 2007-33 Notes from 'B3'
----------------------------------------------------------
Moody's Investors Service announced that it has downgraded its
rating of notes issued by REVE SPC TREQ Rated Equity Notes 2007-
33, a collateralized debt obligation transaction referencing a
portfolio of corporate entities.
Moody's explained that the rating action taken is the result of
(i) the application of revised and updated key modeling parameter
assumptions that Moody's uses to rate and monitor ratings of
Corporate Synthetic CDOs and (ii) the deterioration in the credit
quality of the transaction's reference portfolio. The revisions
affect key parameters in Moody's model for rating Corporate
Synthetic CDOs: default probability, asset correlation, and other
credit indicators such as ratings reviews and outlooks. Moody's
announced the changes to these assumptions in a press release.
Moody's initially analyzed and continues to monitor this
transaction using primarily the methodology for Corporate
Synthetic CDOs as described in Moody's Special Report below:
-- Moody's Approach to Rating Corporate Collateralized
Synthetic Obligations (December 2008)
-- Moody's Approach to Modeling "Exotic" Synthetic CDOs with
CDOROM (February 2007)
The rating action is:
Class Description: U.S. $20,000,000 TREQ Rated Equity Notes, 2007-
33 due 2017
-- Current Rating: Downgraded to Ca
-- Prior Rating Date: October 15, 2008
-- Prior Rating Action: Downgraded to B3
ROBERT KLINE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Robert C. Kline and Mary Kline
3845 E. Happy Road
Queen Creek, AZ 85242
Bankruptcy Case No.: 09-03228
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Randolph J. Haines
Debtor's Counsel: Harold E. Campbell, Esq.
Harold E. Campbell, PC
1811 S. Alma School Road, Suite 225
Mesa, AZ 85210
Tel: (480) 839-4828
Fax: (480) 897-1461
Email: heciii@haroldcampbell.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/azb09-03228.pdf
The petition was signed by Robert C. Kline and Mary Kline.
SCRANTON-LACKAWANNA HEALTH: S&P Gives Stable Outlook on B- Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on the
'B-' rating on Scranton-Lackawanna Health & Welfare Authority,
Pennsylvania's revenue debt, issued for Moses Taylor Hospital, to
stable from negative.
Standard & Poor's also affirmed its 'B-' rating on the authority's
bonds, issued for the hospital.
The outlook revision reflects improved operations at the hospital
and system, year to date; $10 million of grant funding received
from Blue Cross of Northeastern Pennsylvania to pay accounts
payable and employee wage increases; and revenue initiatives and
charge increases that should generate improved results.
The rating reflects the hospital's continued operating losses --
Results, however, are improved for the six months ending Dec. 31,
2008; thin liquidity highlighted by 25 days' cash on hand; and
location in a competitive, overcrowded market that is not likely
to sustain three acute-care hospitals in their current form.
"We believe any deterioration of cash or failure to improve
operating results as planned could lead to pressure on the
rating," said Standard & Poor's credit analyst Jessica Goldman.
"We also believe it will be difficult for Moses Taylor to survive
as a stand-alone hospital due to its very weak financial condition
and the stronger position of its two local competitors."
Fiscal 2008 operating results were weaker than 2007 results; but
year to date, the system is ahead of budget and the previous year.
In fiscal 2008, the system posted a $5.5 million operating loss,
excluding contributions and investment income, or a negative 3.2%
margin. The ongoing merger discussions that prevented Moses
Taylor from instituting charge increases had an effect on fiscal
2008 operating results. A significant increase in bad debt
expense also had an effect on the results. Management has
subsequently increased charges to be more in-line with the local
market and instituted revenue cycle initiatives focusing on items
such as upfront payment collections. Excess income was a negative
$1.8 million in fiscal 2008, improved from a loss of $2.6 million,
or a negative 1.7% margin, in fiscal 2007. Maximum annual debt
service coverage was a weak 1.3x in fiscal 2008 and a slightly
improved 1.7x year to date.
Year to date through Dec. 31, 2008, the hospital has posted
operating income of $1.1 million; but the system is posting a
slight loss of $256,000, or a 0.3% margin. The improved
performance over budget and the past year reflects improved
managed care and preferred provider organization contracts and
deferred revenue from the Blue Cross grant. Management is
budgeting for the system to end fiscal 2009 with a $304,000
operating loss. The system's unrestricted liquidity was an
extremely low $12.0 million as of Dec. 31, 2008, or 25 days' cash
on hand: $3.6 million of which is collateral for a loan. Another
sign of strain on the balance sheet is the high average age of
plant, which reached 17.9 years in fiscal 2008. Debt as a percent
of capital is a high 96%.
The rating action affects roughly $33.7 million of debt
outstanding.
SITHE/INDEPENDENCE FUNDING: Moody's Reviews 'Ba2' Bond Rating
-------------------------------------------------------------
Moody's Investors Service has placed the Ba2 rating of
Sithe/Independence Funding Corporation's senior secured bonds
under review for possible downgrade. Sithe Funding is a wholly
owned subsidiary of Sithe/Independence Power Partners
(Independence or the project), which owns a 1,064 MW natural gas
fired cogeneration facility located in Oswego County, New York.
The review will consider the impact of any rating action on Dynegy
on the project rating in light of the project's relationship with
Dynegy Holdings, Inc. and the degree of ring-fencing in place
between Dynegy and the project. Moody's placed Dynegy's B1
Corporate Family Rating under review for possible downgrade
earlier today. Dynegy owns Sithe; it is the sole holder of the
project's $419 million of unrated subordinated debt; and it is the
guarantor of the obligations of its affiliate, Dynegy Power
Marketing, under DPM's tolling and financial swap agreements with
the project that together account for virtually all of the
project's energy output and contribute a substantial portion of
its gross margins. Moody's notes that the majority of the
project's cash flows come from its contract with Consolidated
Edison Company of New York (A1 with a negative outlook) for 740 MW
of capacity.
The last rating action on Sithe Funding occurred on May 10, 2005,
when the Project's senior secured rating was affirmed.
SIX FLAGS: Fitch Downgrades Issuer Default Rating to 'CC'
---------------------------------------------------------
Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries:
Six Flags
-- Issuer Default Rating to 'CC' from 'CCC';
-- Senior unsecured notes (including the 4.5% convertible
notes) to 'C/RR6' from 'CC/RR6'.
Six Flags Operations Inc.
-- IDR to 'CC' from 'CCC';
-- Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'.
Six Flags Theme Park Inc.
-- IDR to 'CC' from 'CCC';
-- Secured bank credit facility to 'B-/RR2' from 'B/RR1'.
In addition, Fitch affirms Six Flags' preferred stock at 'C/RR6'.
On Nov. 11, 2008 Fitch placed Six Flags' 'CCC' IDR on Rating Watch
Negative due to the upcoming maturity of Six Flags'
$287.5 million (plus accrued dividends) mandatorily convertible
preferred stock, due in August 2009 and the company's intention to
explore alternatives to address its highly leveraged capital
structure (expressed during its last earnings call, Nov. 10,
2008). In Fitch's view, a default or restricted default of some
kind, as a result of the remedies that Six Flags may pursue to
address the PIERS maturity and/or its capital structure, appears
probable.
Six Flags does not generate sufficient internal cashflow to repay
its PIERS maturity, and given the state of the credit markets and
current pricing on Six Flags securities, Fitch believes securing
traditional external financing could be extremely challenging.
Fitch has previously stated that one remedy for the capital
structure issues could be to make a debt exchange offer. Under
Fitch's criteria, a Distressed Debt Exchange results when an
exchange offer has a material reduction in terms and is deemed to
be coercive (de facto necessary even if voluntary). Fitch deemed
Six Flags' previous debt exchange offer to be a DDE in a rating
action commentary on June 16, 2008.
Six Flags has stated that there are potential Delaware Law
restrictions on the potential redemption of the PIERS. In
addition, Fitch believes that a failure to redeem the PIERS when
due could trigger a default on the bank credit facility. Further,
a default on the senior unsecured notes could be triggered if the
banks do not agree to grant an amendment or waiver and choose to
accelerate under the bank credit agreement.
Fitch has also lowered the distressed EBITDA multiple used in its
analysis from 7 times (x) to 5.5x. The lower multiple reflects
estimated contraction in market multiples and the limited number
of strategic, well capitalized, buyers for theme park assets. The
recovery ratings and notching reflect Fitch's recovery
expectations under a distressed scenario. The 'RR2' rating for
the company's secured bank credit facility reflects Fitch's belief
that 71%-90% recovery is realistic given its priority position in
the capital structure. The 'RR6' recovery rating for the Six
Flags' and SFO's senior unsecured debt and Six Flags' PIERS
reflect 0% expected recovery.
As of Sept. 30, 2008, total debt of $2.4 billion was made up of
$1.3 billion in senior unsecured notes ($400 million at SFO), $840
million in term loan B debt and approximately $297 million in
PIERS. As of Sept. 30, 2008, the company had an interest coverage
ratio of 1.4x, and leverage of 9.1x, both an improvement over 2007
year end interest coverage of 0.9x and leverage of 13.8x. For the
purpose of calculating leverage, Fitch have not included the $435
million in liability that is attributed to the Partnership Parks'
limited partners equity put option that requires Six Flags to
purchase a percentage of their ownership interest. If the
leverage ratio is adjusted to include both the minority interest
EBITDA and partnership put liability, leverage would be slightly
higher at 9.3x.
Liquidity as of Sept. 30, 2008 consisted of $34.3 million in cash.
In October 2008, the company borrowed $244.2 million from its
revolving credit facility (there was a $0 balance as of Sept. 30,
2008) in order to ensure sufficient liquidity for its off-season.
Fitch estimates that the borrowing from the revolver will drive
leverage to approximately 10x at 2008 year end. In addition to
its August 2009 PIERS maturity, Six Flags has approximately
$130 million in notes due in February 2010. Fitch expects that
Six Flag's liquidity should be sufficient to cover operating costs
in the off-season and invest in its parks.
Six Flags has improved fundamental operating performance in 2008
and is expected to be above free cashflow breakeven for the year.
On Nov. 10, 2008, the company announced that September 2008 year-
to-date revenues grew 5% as a result of 3% per capita guest
spending growth and a slight increase in attendance. Revenue
continued to grow in the seasonally low fourth quarter, with
attendance for the quarter through Nov. 4, 2008 up 7%. Fitch
expects the 2009 season to be a challenging year for regional
theme parks as pressure on discretionary consumer spending
patterns could result in weaker attendance and reduced in-park
spending.
SLM CORP: Change in FFELP Program Cues Moody's Rating Reviews
-------------------------------------------------------------
Moody's Investors Service has placed all ratings of SLM Corp.
under review for possible downgrade.
The rating action follows the announcement of the President's
proposed budget on February 26, which calls for the replacement of
the FFELP lending program by the Federal Direct Lending Program,
with services such as loan servicing and possibly originations
being outsourced to "competitive, private providers," possibly
including SLM.
The announcement creates uncertainty regarding SLM's business plan
going forward. During the review period Moody's will seek to
clarify how a termination of the FFELP lending program would
affect the company's earnings capacity and business mix, including
potential ramifications for the company's private credit business
and operating cost reduction program.
The rating action also reflects the intensification of the funding
and operating risks faced by the company in the face of the
deepening financial and economic crises.
During the review, Moody's will evaluate SLM's plans for
generating sufficient liquidity to meet unsecured debt maturities,
as the company faces a significant maturity schedule over the next
several years.
Moody's will also review the company's ability to manage the
credit risk inherent in its $36 billion portfolio of non-
government guaranteed private education loans. With the sharp
downturn in the U.S. consumer economy, Moody's is concerned that
asset quality may be subject to further deterioration, potentially
to a material degree.
Balancing these concerns, Moody's notes that SLM benefits from a
strong franchise in the student lending industry; improved
corporate governance as reflected in a strengthened senior
management team, board, and corporate commitment to risk
management; and improved operating efficiencies via the ongoing
expense reduction program.
These ratings of SLM Corp. are on review for possible downgrade:
* Senior unsecured debt -- Baa2
* Subordinate shelf -- (P) Baa3
* Preferred stock -- Ba1
* Short-term debt -- Prime-2
The last rating action on SLM was on November 4, 2008, when
Moody's confirmed the company's ratings and assigned a negative
outlook.
Headquartered in Reston, Virginia, SLM is the nation's leading
provider of saving- and paying-for-college programs. The company
manages approximately $178 billion in education loans and serves
10 million student and parent customers.
SOMERSET 2002: Case Summary & Largest Unsecured Creditor
--------------------------------------------------------
Debtor: Somerset 2002, LLC
40800 Woodward Avenue
Bloomfield Hills, MI 48304
Bankruptcy Case No.: 09-45162
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Eastern District of Michigan (Detroit)
Judge: Thomas J. Tucker
Debtor's Counsel: Morris B. Lefkowitz, Esq.
24100 Southfield Rd., Suite 203
Southfield, MI 48075
Tel: (248) 559-0180
Email: mbl44@aol.com
Estimated Assets: $1,100,000.00
Estimated Debts: $1,174,404.48
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Wayne County Notice
c/o Joseph G. Rogalski
400 Monroe, Ste 660
Detroit, MI 48226
The petition was signed by Hana Karcho, President of the company.
SOTHEBY COMPANY: Decline in Earnings Won't Affect Moody's Ratings
-----------------------------------------------------------------
Moody's Investors Service said Sotheby's ratings are not affected
by yesterday's 2008 earnings announcement which showed a notable
decline in earnings.
Moody's last rating action for Sotheby's occurred on June 19, 2008
when its corporate family rating was affirmed at Ba2 and its
senior unsecured notes rating was affirmed at Ba3 with a stable
outlook.
Sotheby'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 Sotheby's core industry and Sotheby's ratings are
believed to be comparable to those of other issuers of similar
credit risk.
Sotheby's, headquartered in New York, is one of the two largest
auction houses in the world. Total revenues are nearly
$700 million.
SPANSION INC: Bankruptcy Filing May Impact Fujitsu
--------------------------------------------------
Fujitsu Ltd., Japan's biggest computer-services provider, is
investigating the possible impact of Spansion Inc.'s filing,
Toshiyuki Fukuoka, a company spokesman, told Bloomberg News in a
telephone interview.
A unit of Tokyo-based Fujitsu, Spansion's largest shareholder with
a stake of about 11 percent, sells the U.S. chipmaker's products
in Japan, Mr. Fukuoka said, according to the report by Bloomberg's
Jeran Wittenstein and Dawn McCarty.
Spansion's Japanese subsidiary filed for bankruptcy protection
last month.
According to Bloomberg, the Company is the world's largest
producer of NOR flash, once the most common type of memory chip
used in mobile phones before handset makers turned to cheaper NAND
flash chips manufactured by Samsung Electronics Co. and
Toshiba Corp. instead.
Bloomberg said that shares of Spansion have fallen 99% since
reaching a 52-week high of $3.70 in May. The Company lost 0.2
cent to close at 5 cents in Nasdaq Stock Market trading on
Feb. 27.
About Spansion
Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a
Flash memory solutions provider, dedicated to enabling, storing
203
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 Inc. and four affiliates filed voluntary petitions for
Chapter 11 on March 1, 2009 (Bankr. N.D. Calif., Lead Case No. 09-
10690). Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and
Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped
as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane
Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions
LLC, is the claims agent. As of Sept. 30, 2008, Spansion
disclosed total assets of $3,840,000,000, and total debts of
$2,398,000,000.
SPORT & WELLNESS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Sport & Wellness, LLC
39 Fields Lane
North Salem, NY 10560
Bankruptcy Case No.: 09-22266
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
Southern District of New York (White Plains)
Debtor's Counsel: Jonathan S. Pasternak, Esq.
Rattet, Pasternak & Gordon Oliver, LLP
550 Mamaroneck Avenue, Suite 510
Harrison, NY 10528
Tel: (914) 381-7400
Fax: (914) 381-7406
Email: jsp@rattetlaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Lex Kessler, Managing Member of the
company.
STACEY AKERS: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Stacey Akers
1793 W. Coconino Drive
Chandler, AZ 85248
Bankruptcy Case No.: 09-03208
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: George B. Nielsen Jr.
Debtor's Counsel: Arthur F. Stockton, Esq.
Law Offices of Arthur F. Stockton
177 Riverside Ave., #F601
Newport Beach, CA 92663
Tel: (480) 313-0553
Fax: (866) 207-4082
Email: art@lawafs.com
Estimated Assets: $0 to $50,000
Estimated Debts: $500,001 to $1,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/azb09-03208.pdf
The petition was signed by Stacey Akers.
STANFORD FINANCIAL: CFO James Davis Declines to Testify
-------------------------------------------------------
Laurel Brubaker Calkins and Laurence Viele Davidson report that
James M. Davis, the second-highest ranking executive at the
Stanford Financial Group of companies, has declined to provide
testimony or accounting in connection with a lawsuit filed by the
Securities and Exchange Commission in the U.S. District Court for
the Northern District of Texas.
The SEC has filed a complaint against Stanford Financial, its
founder R. Allen Stanford, Mr. Davis and Chief Investment Officer
Laura Pendergest-Holt, in federal court for the sale of $8 billion
in fraudulent certificates of deposit at Antigua-based Stanford
International Bank.
Mr. Davis, the director and chief financial officer of Stanford
financial Group and Stanford International Bank, declined to
cooperate in the suit, citing his privilege of against self-
incrimination under the Fifth Amendment of the U.S. Constitution.
Mr. Davis and Stanford have not been criminally charged for any
wrongdoing.
About SIBL
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under management
or advisement. Stanford Private Wealth Management serves more
than 70,000 clients in 140 countries.
The U.S. Securities and Exchange Commission (SEC), on Feb. 17,
charged Robert Allen Stanford and three of his companies for
orchestrating a fraudulent, multi-billion dollar investment scheme
centering on an US$8 billion Certificate of Deposit program. The
SEC also charged SIBL chief financial officer James Davis as well
as Laura Pendergest- Holt, chief investment officer of Stanford
Financial Group (SFG), in the enforcement action.
STERLING MINING: to File for Bankruptcy Later Today
---------------------------------------------------
Sterling Mining Company intends to file a voluntary petition under
the provisions of Chapter 11 of the United States Bankruptcy Code
in the United States Bankruptcy Court, Coeur d'Alene, Idaho. The
Company believes the filing will occur by the close of business on
March 3, 2009.
Sterling Mining Company has taken these actions after determining
that seeking Chapter 11 bankruptcy protection is in the best
interests of the Company, its creditors, stockholders and other
interested parties in light of ongoing financial challenges and
the inability to adequately fund operations and obligations. The
Company will be debtor-in-possession under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions
of the Code and orders of the Court.
Roger Van Voorhees, who was recently appointed as President, said,
"Unfortunately, the burden of Sterling's debt coupled with recent
legal actions against the Company, have limited our ability to
restructure using out-of-court vehicles, leaving us with no
alternative other than [to file for bankruptcy]."
As reported by the Troubled Company Reporter on February 6, 2009,
Sterling Mining said it was considering all alternatives available
to it to guard its assets and preserve value for its shareholders
including the filing of a reorganization case under the Bankruptcy
Laws and in accordance with Idaho corporate law. Sterling Mining
clarified recent news articles indicating that the Company had
"lost" the lease on the Sunshine Mine located near Kellogg, Idaho,
and the owner of the Mine, Sunshine Precious Metals intended to
repossess the property. Sterling Mining said that SPMI has in the
past and continues to claim that material defaults have occurred
in several provisions of the mining lease. These allegations,
Sterling Mining said, have been responded to in a timely manner
and the Company does not believe that any of the defaults are
material or non-curable, although these issues will ultimately
likely be determined through the judicial process. The Company
said it was maintaining a small crew at the mine on a 24-hour
basis for security and basic maintenance.
Sterling Mining has retained Elsaesser Jarzabek Anderson Marks
Elliott & McHugh as bankruptcy counsel.
About Sterling Mining
Based in Coeur d'Alene, Idaho, Sterling Mining Company (OTCBB:SRLM
and FSE:SMX) -- http://www.SterlingMining.com/-- is a mineral
resource development and exploration company. The Company has a
long term lease on the Sunshine Mine in North Idaho's Coeur
d'Alene Mining District. The Sunshine Mine is comprised of 5,930
patented and unpatented acres, and historically produced over 360
million ounces of silver from 1884 until its closure in early
2001. Sterling Mining leased the Sunshine mine in June 2003,
along with a mill, extensive mining infrastructure and equipment,
a large land package, and a database encompassing a long history
of exploration, development and production.
As of September 30, 2008, Sterling Mining had $31.9 million in
total assets, and $13.2 million in total current liabilities and
$1.6 million in total long-term liabilities.
STERLING MINING: Van Voorhees Named New CEO and Lone Board Member
-----------------------------------------------------------------
The Board of Directors of Sterling Mining Company appointed
effective February 26, 2009, Roger Van Voorhees as President and
Chief Executive Officer.
Mr. Van Voorhees will succeed John P. Ryan as President and Chief
Executive Officer, who has resigned his position with the Company
and Board of Directors but will remain as a Consultant to the
Company. The Board changed the Company's Corporate Bylaws to
allow a minimum of one Board member and Corporate Officer.
Andrew Grundman has also resigned as a member of the Board of
Directors but will remain as General Manager of Sterling Mining
Company.
Mr. Van Voorhees has been a member of the Sterling Mining Board
since June 9, 2006. Mr. Van Voorhees graduated with a Bachelors
of Science degree from Western Michigan University, and has
business and investment interests in the hospitality, real estate,
oil and gas, and mining industries.
Kenneth R. Rux also has resigned as the Company's Chief Financial
Officer and Ronald Ho as Corporate Secretary/Treasurer. Raymond
De Motte, Kevin Shiell and Carol Stephan have also resigned from
the Board of Directors effective February 26, 2009, reducing the
Board of Directors from seven to one.
All new Officers and management appointments will serve on a
voluntary basis and receive no cash compensation at this time.
About Sterling Mining
Based in Coeur d'Alene, Idaho, Sterling Mining Company (OTCBB:SRLM
and FSE:SMX) -- http://www.SterlingMining.com/-- is a mineral
resource development and exploration company. The Company has a
long term lease on the Sunshine Mine in North Idaho's Coeur
d'Alene Mining District. The Sunshine Mine is comprised of 5,930
patented and unpatented acres, and historically produced over 360
million ounces of silver from 1884 until its closure in early
2001. Sterling Mining leased the Sunshine mine in June 2003,
along with a mill, extensive mining infrastructure and equipment,
a large land package, and a database encompassing a long history
of exploration, development and production.
As of September 30, 2008, Sterling Mining had $31.9 million in
total assets, and $13.2 million in total current liabilities and
$1.6 million in total long-term liabilities.
SUNRISE CONSTRUCTION: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Sunrise Construction, Inc.
5626 S. 43rd Ave.
Phoenix, AZ 85041
Bankruptcy Case No.: 09-03188
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Robert J. Kressel
Debtor's Counsel: Thomas Flynn, Esq.
Larkin Hoffman Daly & Lindgren
7900 Xerxes Ave South, Suite 1500
Bloomington, MN 55431
Tel: (952) 896-3362
Email: tflynn@larkinhoffman.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/azb09-03188.pdf
The petition was signed by Betty Nelson, President/Director of the
company.
SUNRISE SENIOR LIVING: Bankruptcy Warning; In Talks with Lenders
----------------------------------------------------------------
Sunrise Senior Living, Inc., said it is in the process of
discussing a comprehensive restructuring plan with the lenders to
its German communities, the lender to the Fountains portfolio, the
Company's venture partner in the Fountains portfolio and certain
other lenders. Sunrise has requested that the lenders to the
German communities and the lender for the Fountains portfolio
agree not to foreclose on the communities that are collateral for
their loans, or to commence or prosecute any action or proceeding
to enforce any demand for payment by Sunrise pursuant to its
operating deficit guarantees through March 31, 2009.
In this context, the lenders to eight of Sunrise's nine German
communities have agreed not to foreclose on the communities that
are collateral for their loans or to commence or prosecute any
action or proceeding to enforce their demand for payment by
Sunrise pursuant to the Company's operating deficit agreements
until the earliest of the occurrence of certain other events
relating to the loans or March 31, 2009. Such an agreement has
not been made with the lender to Sunrise's ninth community as such
community is not currently in default on its payments.
As of February 27, 2009, the lender to Sunrise's Fountains venture
had not yet agreed to Sunrise's request for a standstill agreement
through March 31, 2009.
Sunrise is also engaged in discussions with various venture
partners and third parties regarding the sale of certain assets
with the purpose of increasing liquidity and reducing obligations
to enable Sunrise to continue operations. Sunrise said there can
be no assurance that any of these discussions will result in the
consummation of any transaction.
The Company believes it is in the best interests of all of its
creditors to grant such waivers or reach negotiated settlements
with Sunrise to enable the Company to continue operating. However,
there can be no assurance that such waivers will be received or
such settlements will be reached. If the defaults are not cured
within applicable cure periods, if any, and if waivers or other
relief are not obtained, the defaults can cause acceleration of
the Company's financial obligations under certain of its
agreements, which the Company may not be in a position to satisfy.
There can be no assurance that any of these efforts will prove
successful.
In the event of a failure to obtain necessary waivers or otherwise
achieve a restructuring of its financial obligations, Sunrise may
be forced to seek reorganization under the U.S. Bankruptcy Code.
The existence of these factors raises substantial doubt about the
Company's ability to continue as a going concern and its auditors
have modified their report with respect to the 2008 consolidated
financial statements to include a going concern reference.
Bank Facility Amendment Expires March 30,
Company Expects to Default
On January 20, 2009, Sunrise entered into the Tenth Amendment to
the Bank Credit Facility, effective as of December 31, 2008. The
Tenth Amendment suspends through March 30, 2009, unless further
extended, the Company's obligations to comply with the financial
covenants contained in the Bank Credit Facility, but the Company
cannot borrow any additional amounts or receive any new letters of
credit under the Bank Credit Facility. As of December 31, there
were $95 million of outstanding borrowings and $24.4 million of
letters of credit outstanding under the Company's Bank Credit
Facility.
Prior to the execution of the Tenth Amendment, the Company was not
in compliance with the financial covenants in the Bank Credit
Facility at December 31, 2008, and the Company currently does not
expect to be in compliance with such financial covenants
March 30, 2009, when the waiver set forth in the Tenth Amendment
is currently set to expire.
In the event that the Company is unable to revise or restructure
the Bank Credit Facility before March 30, 2009, the lenders under
the Bank Credit Facility could, among other things, exercise their
rights to accelerate the payment of all amounts then outstanding
under the Bank Credit Facility, exercise remedies against the
collateral securing the Bank Credit Facility, require the Company
to replace or provide cash collateral for the outstanding letters
of credit or pursue further modification with respect to the Bank
Credit Facility. In the event of an acceleration of the Bank
Credit Facility, the Company does not currently expect that it
would be able to fully repay its outstanding borrowings.
Sunrise currently expects that its cash balances and cash flow
will be sufficient to enable the Company to meet its obligations
only through March 30, 2009. Because of these factors and the
Company's current financial position, Sunrise is seeking to
preserve cash, reduce its financial obligations and reach
negotiated settlements with various creditors to preserve its
liquidity. The Company has also stopped funding certain projects
and other obligations, and is seeking waivers with respect to
existing defaults under many of its debt obligations to avoid
acceleration of such obligations. Specifically, Sunrise has
stopped or reduced payments associated with its German
communities, development projects and its Fountains venture.
Challenging Year
On Monday, Sunrise reported financial results for fourth-quarter
and full-year 2008. The Company reported revenues of
$435.6 million and $1.7 billion for the fourth quarter and 12
months ended December 31, 2008, respectively, as compared to
$403.0 million and $1.6 billion for the fourth quarter and 12
months ended December 31, 2007.
Net loss for the fourth quarter and 12 months ended December 31,
2008 was $305.6 million and $439.2 million, respectively, as
compared to net loss of $124.0 million and $70.3 million, for the
fourth quarter and 12 months ended December 31, 2007,
respectively.
The loss before income taxes, extraordinary loss and discontinued
operations for the fourth quarter and 12 months ended
December 31, 2008 was $261.3 million and $423.2 million,
respectively, as compared to the loss before income taxes and
discontinued operations of $96.5 million and $9.2 million for the
fourth quarter and 12 months ended December 31, 2007,
respectively.
"Our 2008 Annual Report on Form 10-K filed [] with the U.S.
Securities and Exchange Commission described a very challenging
2008 at Sunrise, while also pointing to the continued overall
strong demand for our core senior living services," said Mark
Ordan, Sunrise's chief executive officer. "Without ever
diminishing our legendary care for our residents, we are fully
engaged in a process seeking to restructure Sunrise, our
obligations and how we operate. We think all of our stakeholders
could benefit from such a restructuring but we cannot assure
anyone of the outcome of our efforts."
As of December 31, 2008, the Company had $1.38 billion in total
assets, with $29.5 million in cash and cash equivalents, and
$304.9 million in total current assets; and $1.23 billion in total
liabilities, with $735.4 million in total current liabilities.
In October 2008, the Company determined not to provide any
additional funding for ongoing operations to its Trinity
subsidiary due to the continued losses experienced by that
subsidiary. As a result, the Company wrote-off the remaining
goodwill and other intangible assets related to Trinity of
approximately $9.8 million in the fourth quarter of 2008. As of
December 31, 2008, Trinity had ceased operations.
The Company also has determined that it will not fund any new seed
capital projects of its Greystone subsidiary. Sunrise has also
informed the management of Greystone that it is exploring
strategic options for the subsidiary, and is currently working
with financial advisors to assist in this matter. The carrying
value of Greystone at December 31, 2008 is $(9.3) million, which
includes $43.6 million of goodwill and intangible assets,
$2.6 million of working capital and $62.4 million of deferred
revenue. Since the carrying value of Greystone is negative, there
is no impairment as a result of the Company's decision to sell
this business.
About Sunrise Senior Living
McLean, Virginia-based Sunrise Senior Living, Inc. (SRZ) --
http://www.sunriseseniorliving.com-- employs roughly 40,000
people. As of December 31, 2008, Sunrise operated 435 communities
in the United States, Canada, Germany and the United Kingdom, with
a combined capacity for approximately 54,000 residents. Sunrise
offers a full range of personalized senior living services,
including independent living, assisted living, care for
individuals with Alzheimer's and other forms of memory loss, as
well as nursing, rehabilitative and hospice care.
TAHERA DIAMOND: Canadian Court Extends CCAA Stay Until March 6
--------------------------------------------------------------
Tahera Diamond Corporation received an extension to the stay
period under the Companies' Creditors Arrangement Act, which was
set to expire on February 27, 2009. The court approved extension
is now in place until March 6, 2009.
During the extension of the stay period, the Company, will
continue with efforts to complete a sale of its remaining assets
in consultation with Caz Petroleum Inc., the Company's leading
secured creditor.
No value is expected to remain available to shareholders as a
result of the proceeding.
About Tahera Diamond
Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/--
is a Canadian owned diamond mining company. Tahera's wholly-owned
Jericho project, commencing commercial production in early 2006,
represents Canada's third, and Nunavut's first, diamond mine.
On Jan. 16, 2008, Tahera obtained an order from the Ontario
Superior Court of Justice granting Tahera and its subsidiary
protection pursuant to the provisions of the CCAA. Tahera sought
protection under CCAA, as its current cash flows and cash on hand
would not allow it to meet its current obligations and its
obligations with respect to the 2008 winter road resupply. The
Ontario Superior Court of Justice extended the Debtor's CCAA stay
period until Sept. 30, 2008.
TARRAGON CORP: Can Employ BDO Seidman as Financial Advisors
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey has
granted permission to Tarragon Corp., et al., to employ BDO
Seidman LLP as their financial advisors, effective as of the date
of the commencement of the Debtors' cases.
BDO is expected to:
a) develop, in conjunction with the Debtors' financial
department, a 13-week cash flow forecast and assisting in
the monitoring of a weekly budget to actual comparison;
b) develop a revised business plan reflecting changed business
and operating conditions, if any, resulting from a Chapter
11 filing, including asset sales, occupancy statistics,
rental rates, etc. on a project-by-project basis;
c) assist the Debtors with all operational, strategic,
financial and other issues during the Chapter 11 proceedings
including, but not limited to, the preparation of schedules,
statements of financial affairs and monthly operating
reports, and assist in the development of a plan of
reorganization, including, if required, negotiation with
other parties, testimony and preparation of a comprehensive
liquidation analysis;
d) evaluate the potential sales of assets and/or lines of
business;
e) assist the Debtors in addressing issues with their lenders,
creditors and other stakeholders for the purpose of
maintaining their support and developing a plan of
reorganization;
f) analyze and reconcile creditors' claims;
g) provide valuation services if requested;
h) evaluate the tax implications of possible plans of
reorganization, related debt modifications and other tax
issues that might arise during these cases; and
i) provide such other services as may be requested by the
Debtors in the administration of their bankruptcy cases and
fulfilment of their duties as debtors-in-possession.
During the ninety (90) day period before the Debtor's bankruptcy
filing, BDO received $409,243 from the Debtors for contemporaneous
services rendered to and costs incurred on behalf of the Debtors,
in accordance with the prepetition engagement agreement between
the Debtors and BDO. As a result, BDO does not have any claim for
prepetition services rendered to the Debtors.
Before the filing date, the Debtors provided BDO with a retainer
of $135,513. BDO's hourly rates are:
Partners/Managing Directors $500-$800
Directors/Senior Managers $300-$600
Managers $250-$375
Seniors $175-$275
Staff $125-$200
William K. Lenhart, a partner at BDO Seidman, assured the Court
the firm is a "disinterested person" as that term is defined in
Sec. 101(14) of the Bankruptcy Code.
About Tarragon Corporation
Based in New York City, 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 Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent. As of
Sept. 30, 2008, the Debtors had $840,688,000 in total assets
and $1,035,582,000 in total debts.
TARRAGON CORP: Files Schedules of Assets and Liabilities
--------------------------------------------------------
Tarragon Corp. filed with the U.S. Bankruptcy Court for the
District of New Jersey its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ------------ -------------
A. Real Property
B. Personal Property $577,913,026
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $6,424
E. Creditors Holding
Unsecured Priority
Claims $605,308,582
F. Creditors Holding
Unsecured Non-priority
Claims
----------- ------------
TOTAL $577,913,026 $605,315,006
A full-text copy of the Debtor's schedules of assets and
liabilities, is available at:
http://bankrupt.com/misc/TarragonCorp.Schedules.pdf
About Tarragon Corporation
Based in New York City, 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 Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent.
TENNECO INC: S&P Downgrades Corporate Credit Rating to 'B-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on auto parts maker Tenneco Inc. to 'B-'
from 'B+'. The outlook is negative. At the same time, S&P also
lowered its issue-level ratings on the company's debt.
"The downgrade reflects our view that declining light-vehicle
sales and production in North America and especially in Europe
during 2009 will lower Tenneco's profitability and reduce cash
flow generation even more than S&P previously forecast," said
Standard & Poor's credit analyst Lawrence Orlowski. S&P expects
Tenneco's sales to decline roughly 20% and the gross margin to
show some deterioration in 2009. Including its adjustments, S&P
believes debt to EBITDA could be more than 8x, funds from
operations to total debt to be a little over 1%, and EBITDA
interest coverage to be about 1.5x. Still, S&P expects Tenneco to
remain in compliance with its financial covenants.
Anticipating the strain on credit measures, Tenneco recently
amended its financial covenants to provide greater certainty about
liquidity, given the substantial downside risk regarding worldwide
auto production. The company has also engaged in a number of
restructuring initiatives that include cutting the global
workforce by 10% and decreasing expenditures to conserve cash.
Lake Forest, Illinois-based Tenneco is highly exposed to declining
vehicle production by virtually all of its large customers,
including General Motors Corp. and Ford Motor Co. The company's
geographic and business diversity will not be able to offset the
expected auto production declines in 2009. S&P expects U.S.
light-vehicle sales to fall about 22% in 2009, to about 10.3
million units, as the economy remains weak. S&P expects sales and
production declines in Europe to be significant as well.
Tenneco's liquidity is tight. As of Dec. 31, 2008, the company
had $127 million in cash and almost $400 million available under
its revolving credit facility that expires in March 2012. The
senior credit facility does not contain any rating triggers that
would accelerate repayment. Tenneco currently has approximately
$100 million available under its U.S. securitization program.
Over the next three years, debt maturities will total almost
$150 million.
Based on S&P's current revenue expectations, S&P expects the
amended financial covenants to enable Tenneco to remain in
compliance. Nevertheless, the industry is in the midst of a
particularly severe downturn, and there is a reasonable
probability that revenue could fall more than the 20% that S&P
expect, thereby eroding Tenneco's covenant cushion significantly
and limiting the availability under the credit facility.
The outlook is negative. S&P expects Tenneco to face a
challenging operating environment as demand for light and
commercial vehicles continues to fall in 2009. S&P could lower
the ratings further if S&P believed the company would use
significantly more than $100 million in cash in 2009. This could
occur if revenue declined more than 20% and the gross margin fell
below 13.5%. S&P could also lower the ratings if the company were
to pursue a debt restructuring below par, which S&P would likely
deem to be a distressed exchange.
A revision in S&P's outlook to stable is unlikely in the next year
because market conditions will likely continue to deteriorate,
preventing an improvement in credit measures. Nevertheless, when
economic conditions stabilize or improve along with auto and truck
demand, S&P could revise the outlook to positive or raise the
ratings if adjusted EBITDA came in at roughly $350 million, about
50% above S&P's current EBITDA projection for 2009.
* * *
According to Bloomberg's Bill Rochelle, Standard & Poor's two-
notch downgrade on Tenneco matches the demotion issued in February
by Moody's Investors Service.
THQ INC: May Go Bankrupt, Says Janco Partners Analyst
-----------------------------------------------------
Charles Proctor at the Los Angeles Business Journal reports that
Janco Partners Inc. analyst Michael Hickey said that THQ Inc. has
a 50-50 chance to go bankrupt.
"You [THQ] have mediocre product and you're running out of cash,"
Business Journal quoted Mr. Hickey as saying.
According to Business Journal, THQ has lost about $334 million and
burned through about half its cash in the past 10 months.
Business Journal states that THQ CEO Brian Farrell launched an
aggressive turnaround plan in February, cutting costs for 2010 by
$220 million and laying off almost 600 workers.
Mr. Farrell has dismissed talk of takeovers and bankruptcy,
describing it as "gossip," Business Journal reports. I know that
makes for good print and sells newspapers, but those aren't the
kind of things we focus on right now. When the stock price is
depressed, the naysayers can have their day in the sunshine. But
we have a plan that we're very confident will give us cash and
return the company to profitability."
THQ has started searching for a line of credit as a fallback
measure, Business Journal relates, citing Mr. Farrell. According
to the report, THQ doesn't have one, but it recently borrowed
about $26 million against auction rate securities -- a form of
long-term debt -- to boost its balance sheet.
Business Journal states that THQ would likely lose one of its
storied licenses, the Disney-Pixar agreement, which allows the
Company to publish two more games based on future Pixar films,
including the movie "Up", an animated adventure film due this
year. According to Business Journal, Mr. Farrell refused to say
whether THQ would bid on the Disney-Pixar license when it was up
for renewal.
Analysts also expect Disney to bring Pixar games to Disney
Interactive, its own video game division, Business Journal
reports. The report says that losing the Disney-Pixar license
would hurt THQ, as up to one-fifth of the Company's revenue used
to come from Disney-Pixar products.
THQ's latest Pixar titles, "Ratatouille" and "Wall-E",
underperformed, Business Journal relates, citing Wedbush Morgan
Securities Inc. analyst Michael Pachter. This shows that the
Disney-Pixar license isn't as lucrative as it once was, Business
Journal states.
Business Journal reports that THQ didn't provide guidance for
2010. THQ has to have revenue of between $750 million and
$800 million compared with the $1 billion in revenue it did in
2008 for it to stay healthy, Business Journal says, citing
analysts. Business Journal relates that the Company has started
cutting costs by scaling back its mobile games and international
divisions and closing five studios across the U.S. According to
the report, THQ will close more studios and the Company expects
that its workforce will decrease to 1,800 from 2,400 by year-end.
THQ's stock price, says Business Journal, has dropped to just
above $2 from $20. Business Journal states that if THQ's stock
price remains depressed, it could be a tempting takeover target.
According to Business Journal, publishers like Ubisoft
Entertainment SA and media companies like Disney have been
mentioned as potential buyers of THQ in the past, but the
Company's license-heavy portfolio might make any potential buyers
wary because it's unclear how many of those licenses would
transfer to a new owner.
Agoura Hills, California-based THQ Inc. --
http://www.thq.com/territory.php-- develops, publishes, and
distributes interactive entertainment software worldwide for a
variety of platforms including PC CD-ROM.
TOMAR ELECTRONIS: Wants Traffic Case Stayed to Avoid Bankruptcy
---------------------------------------------------------------
Bankruptcy Law360 reports that Tomar Electronics Inc. asked the
U.S. District Court for the District of Minnesota to stay the
enforcement of an injunction and $6.75 million damage award in a
patent suit filed by Global Traffic Technologies LLC over traffic
preemption systems for emergency vehicles. Tomar said the
judgment will send the company into bankruptcy.
TOMAR Electronics -- http://www.tomar.com/-- located in Gilbert,
Arizona, manufactures emergency warning products and optical
preemption systems. For over 30 years, TOMAR has engineered,
designed, and manufactured LED and strobe light systems.
TOWN OF HAVERSTRAW: Moody's Assigns 'MIG 01' on $26.5 Mil. Bonds
----------------------------------------------------------------
Moody's Investors Service has assigned a MIG 1 rating to the Town
of Haverstraw's, New York $26.5 million Bond Anticipation Notes,
Series 2009A. Concurrently, Moody's has affirmed the town's A2
underlying long term rating on $8.1 million of previously issued
long term, general obligation debt. The bonds and notes are
secured by the general obligation unlimited tax pledge of the
town. The A2 rating reflects the town's strong financial position
characterized by healthy reserve levels, a moderately sized tax
base with tax payer concentration and a significantly elevated
overall debt burden. Assignment of Moody's highest quality short
term rating additionally incorporates the town's favorable history
of market access. Proceeds of the current sale will redeem the
General Obligation Bond Anticipation Notes, 2008 issued initially
for the repayment of taxes owed to Rockland County (G.O. rated
A1/negative outlook) in association with the settlement of the
Mirant property tax appeal.
Demonstrated History Of Market Access
The current note issue meets Moody's standards for the MIG 1
rating as defined in the recently-updated methodology (please
refer to Moody's October 2008 publication "Temporary Criteria
Change for Bond Anticipation Note Ratings Due to Municipal Market
Disruption"). The town received five bids on its March 2008 bond
anticipation note sale. Given this history, Moody's expects the
town will be able to refinance the current notes at maturity. The
March 12, 2010 maturity date of the current issue exceeds Moody's
nine-month standard, temporarily adopted due to recent market
disruptions that have prevented more historical levels of market
access. However, Moody's notes the town does not have sufficient
liquidity to retire the notes with cash on hand should the town
encounter difficulties accessing the short or long-term capital
markets when the notes mature, posing a degree of market access
risk.
Appeal By Largest Taxpayer Settled With The Repayment Of
Approximately $26.8 Million In Taxes Owed To The County
Mirant Corporation (senior unsecured rated B2), a company that
produces and sells energy, emerged from bankruptcy in January 2006
and arrived at a settlement over disputed property taxes with
local New York municipalities in December 2006. The settlement
addressed the disputed assessed valuation of Bowline (located
within the town) and Lovett electric generating facilities from
1995 through 2003 and unpaid taxes assessed from 2003 through
2006, which were forwarded annually to the town by Rockland County
during the course of the appeal, in accordance with state law
which requires the county to make the town's levy whole. The net
outcome of the settlement was the overall reduction of the Bowline
facility to $378 from its previously assessed valuation of $974
million; accordingly, the town owed the county $26.8 million
received between 2003 and 2006. The settlement resolved the issue
of tax appeals from 1995 through 2006, and a subsequent agreement
holds the assessment consistent through the 2008 assessment.
These settlements however, do not prevent Mirant from appealing
its assessment in 2009 and going forward. It is Moody's
expectation that the town still risks some exposure to future
Mirant tax appeals given the history of appeals and the expiration
of the restriction on appeals as of 2009.
Strong Financial Position Marked By Healthy Reserve Levels
Moody's expects the town's financial position to remain strong,
despite reported future plans to utilize fund balance to offset
property tax increases, given a steady historical trend of
operating surpluses which have contributed to an ample accumulated
General Fund reserve position in excess of 50% of revenues. The
town has historically maintained a healthy financial position by
fully replenishing appropriated fund balance through positive
budgetary variation related to state aid (mortgage tax), non-
property taxes (sales tax) and interest income. The town ended
fiscal year 2007 with an operating surplus of $260,000, increasing
General Fund reserves to a strong 60.2% of adjusted revenues
(excluding $26.9 million Mirant tax certiorari settlement
financing as revenue), despite a $2 million appropriation of
reserves as a revenue source. The operating surplus was generated
primarily through revenue in excess of budget, including an
$832,000 mortgage tax surplus, overperformance of sales tax
($580,000) and a $530,000 positive variance related to interest
income. Expenditures exceeded budget by approximately $27
million, largely reflecting the conclusion of the Mirant tax
appeal and capital spending costs. Net of the $1.2 million
transfer to Capital Projects Fund, a one-time expenditure, fiscal
2007 operations demonstrated a
$1.4 million structural surplus.
On a combined basis, including the property tax supported General
Fund (Town-Outside Village) and Highway Fund, the operating funds
ended the year with a still healthy $15 million in reserves, or
62.1% of adjusted operating fund revenues. Management officials
anticipate essentially balanced fiscal 2008 financial operations,
despite a sizable $2.9 million General Fund balance appropriation.
Favorable results are projected to have been driven by surplus
mortgage tax and positive variances related to sales tax and fees
for collecting school district taxes.
The board-approved fiscal 2009 budget in the General Fund grew by
$2.3 million or 11% over the 2008 budget driven by increases in
debt service, salaries, health care and retirement costs that are
representative of a New York municipality. Favorably, the adopted
budget also includes a $2.2 million increase in property tax
revenue to support budget growth and offset anticipated revenue
declines. Additionally, the budget is supported by a $2.4 million
appropriation from reserves to balance operations (down from $2.9
million the prior year). In light of the ongoing recession,
management has conservatively projected declines in mortgage (-
27%) and sales tax revenues (-40%), from actual receipts in 2008.
Police contracts expired at the end of fiscal 2006 and the town
expects to go into binding arbitration shortly to settle the
contracts. Outcomes of the police contract and pending tax appeal
(see below) settlements could have a significant financial impact
on the town. Property taxes comprise the town's most significant
revenue source making up 72% of 2007 revenues. Taken together,
economically volatile state aid and non-property taxes (primarily
mortgage tax and sales tax) comprised a manageable 7% of revenues.
Bedroom Community For Westchester County And New York City With
Tax Base Concentration
Moody's expects growth in the town's primarily residential
$3.8 billion tax base to continue to slow over the near-term given
ongoing weakening of the regional real estate market and the
sluggish economic outlook. Over the medium term, however, the
town is expected to continue to benefit from its location north of
New York City (rated Aa3/stable outlook) and accessibility to
nearby employment centers in Westchester County (G.O. rated
Aaa/stable outlook). The tax base remains concentrated with
Mirant's power generation facilities comprising approximately 9%
of assessed valuation after a 2006 tax appeal settlement, down
significantly from a high of 37% of assessed valuation in 2001.
Assessed valuation has remained virtually flat over the past five
years, excluding a recent town-wide revaluation; however, full
valuation, which factors market value appreciation, has increased
at a five year average annual rate of 7.2% (including a 9% decline
in 2009 reflecting the housing market downturn). The town
conducted a revaluation in 2006, offsetting the impact of the
Mirant appeal, and as a result assessed valuation now equals close
to 100% of full valuation. There is currently no pending tax
appeal with regards to the Mirant facilities. However, the second
largest top taxpayer, Palisades Park Commission, has a pending tax
appeal concerning taxes raised during fiscal years 2006 through
2009. Management reports that the worst case outcome of this tax
appeal would require the town to remove the park's $291 million
(7% of total assessed value) from the tax base rolls and possibly
refund back taxes paid by New York State (G.O. rated Aa3/stable).
Given ongoing market depreciation and modest additions to housing
stock, the potential assessed value reduction could challenge the
town's revenue raising ability, debt profile, and tax base moving
forward. Partially mitigating the effect of the tax appeal, the
town expects longer-term growth due to ongoing redevelopment,
albeit at a more modest pace. Pending future development projects
include a 500 unit age-restricted housing development. Full value
per capita is strong at $108,518, compared to Moody's New York
State median of $43,007, reflecting the concentrated nature of the
tax base; and the town's income indices approximate state levels.
Debt Profile Expected To Remain Manageable Despite Significantly
High Overall Debt Burden Due To School District Issuance
Moody's expects the town's debt burden to remain manageable
despite a significantly increased overall debt burden associated
with the school district's bond issue for the Mirant settlement,
given above average principal retirement and the absence of future
debt plans. The town's direct debt burden is an affordable 1.2%
of full valuation and is mitigated by the current plan to repay
the current BAN's with proceeds from a land sale. Haverstraw
Stony Point Central School District (G.O. rated A1) issued $194.5
million in long term debt to finance its portion of the Mirant tax
settlement, which is the largest share of the town's overlapping
indebtedness. As a result of this indebtedness and the
outstanding obligations of other underling municipalities, the
overall debt burden of the town increased to a high 5.2% of full
valuation. Debt service expenditures are projected to be a still
manageable 10% of fiscal 2009 expenditures. Favorably, the town
has no exposure to variable rate debt or derivative products. The
town has no near term plans for long-term borrowing within the
next several years.
Key Statistics:
-- 2007 Census Population Estimate: 35,800 (up 5.9% from 2000)
-- 2008 Full Valuation: $3.8 billion
-- 2008 Full Valuation Per Capita: $108,518
-- Direct Debt Burden: 1.2%
-- Overlapping Debt Burden: 5.2%
-- Payout of Principal (10 years): 72%
-- FY07 General Fund Balance: $12.6 million (60.1% of adjusted
General Fund revenues)
-- FY07 Operating Funds Balance: $15 million (62.1% of adjusted
General and Highway Funds revenues)
-- 1999 Per Capita Income (as a % of State and U.S.): $22,188
(94.9% and 102.8%)
-- 1999 Median Family Income (as a % of State and U.S.):
$61,119 (118.2% and 122.1%)
-- Post-sale Parity Debt Outstanding (Bonds and Notes):
$47.5 million
The last rating action was on May 5, 2008 when the A2 rating of
the Town of Haverstraw was affirmed.
TOWN SPORTS: S&P Downgrades Corporate Credit Rating to 'B'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Town Sports International Holdings Inc.
(Town Sports) and its operating subsidiary, Town Sports
International Inc. The corporate credit rating was lowered to 'B'
from 'B+'. The rating outlook is stable.
"The ratings downgrade is based on our expectation of weak
operating performance in 2009 because of the recession and the
consequences for credit measures," said Standard & Poor's credit
analyst Tulip Lim.
The 'B' rating reflects the company's high leverage and S&P's
longer-term concerns about market saturation. Town Sports' good
competitive position in its four markets and high margins relative
to its peers' only partially offset these factors.
Town Sports owns and operates more than 160 fitness clubs in the
Northeastern U.S. About 70% of Town Sports' clubs are in the New
York metropolitan area, rendering the company vulnerable to the
city's economy. Moreover, the recession could hurt membership
enrollment. Longer term, aggressive club building by Town Sports
and its peers could saturate the market and make it significantly
more competitive for all participants.
Town Sports' revenues and EBITDA for the nine months ended
Sept. 30, 2008, both increased by 8.4% (the company has yet to
report its December quarter results) over the prior-year period,
primarily from new club openings. Comparable and mature club
growth has moderated from last year. The attrition rate increased
to 3.6% in the third quarter. The EBITDA margin was healthy, at
21.9% for the 12 months ended Sept. 30, 2008 -- largely unchanged
from the prior-year period. Margins benefit from effective
facility clustering and good club management. However, S&P is
concerned that EBITDA and EBITDA margins may decline because the
recession could impact membership enrollment and reduce high-
margin personal-training revenue.
For the last 12 months ended Sept. 30, 2008, lease-adjusted EBITDA
coverage of interest was 2.3x. Lease-adjusted leverage at Sept.
30 was 5.5x. S&P is concerned that leverage could increase if
EBITDA declines. Capital expenditures have been high, but the
company plans on reducing capital expenditures in 2009, opening
only four to six clubs, versus nine in 2008. Until recently, Town
Sports' cash flow benefited from the pay-in-kind provision of its
11% senior discount notes, but on Feb. 1, 2009, these notes began
mandatory cash interest payments. The company has authorized a
$25 million share repurchase plan, which expires on Dec. 31, 2009.
It has not repurchased any shares to date, but the combination of
debt-funded share repurchases and higher cash interest could
impede positive discretionary cash flow.
TOUSA INC: Court Sends Parties to Transeastern Suit to Mediation
----------------------------------------------------------------
Judge John K. Olson of the U.S. Bankruptcy Court for the Southern
District of Delaware directed the official committee of unsecured
creditors of Tousa Inc. and its secured lenders to participate in
mediation.
According to Bill Rochelle of Bloomberg News, the lawsuit filed by
the Creditors Committee against the secured lenders have delayed
Tousa's reorganization, and Judge Olson has already expressed
concern that lawsuit runs the risk of eating up the company's
cash, which fell to $272 million as of Jan. 31. Judge Olson
warned that he may impose sanctions on anyone who doesn't
participate in good faith in the mediation.
Bloomberg said that Judge Olson previously scheduled the trial to
begin July 13, absent settlement.
The Committee, on behalf and as representative of the Debtors'
bankruptcy estates, initiated a complaint against a number of
TOUSA, Inc.'s secured lenders, to avoid certain prepetition
fraudulent and preferential transfers of up to $800,000,000.
The Lender Defendants include:
* Citicorp North America, Inc., administrative agent under the
new revolving debt and first lien term loan;
* Wells Fargo Bank, N.A., the successor administrative agent
under the second lien term loan;
* Doe New Lenders Nos. 1-100, original lenders under the new
loans;
* Doe New Subordinated Notes Successor Trustee, successor
indenture trustee on the new subordinated notes;
* Doe New Subordinated Noteholders 101-200, original lenders
under the New Subordinated Notes;
* The CIT Group/Business Credit, Inc., administrative agent
in connection with the Transeastern Debt; and
* lenders under the Senior Credit Agreement, and signatories
to the CIT Settlement Agreement.
The Creditors Committee assert that the alleged fraudulent and
preferential transfers arose from the Debtors' secured debt
obligations to the Lender Defendants.
The Committee contends that in July 2007, TOUSA Inc. forced its
subsidiaries to take on hundreds of millions of dollars of debt,
so that it could repay a debt for which the subsidiaries were not
liable.
The Transeastern Acquisition
In 2005, TOUSA Homes LP and Falcone/Ritchie LLC created TE/TOUSA
LLC, a joint venture formed to acquire the homebuilding assets of
Transeastern Properties, Inc. TOUSA Inc. and Homes LP gave
certain guaranties as part of that transaction, and the parties
formed several subsidiaries of the Transeastern JV. In order to
fund the Transeastern Acquisition, Homes LP, TOUSA Inc., and the
Transeastern JV Subsidiaries entered into three credit agreements
with the Transeastern Lenders, totaling $675,000,000.
TOUSA Inc. and Homes LP were the only Debtors that were liable
for the Transeastern Debt, Lawrence S. Robbins, Esq, at Robbins,
Russell, Englert, Orseck, Untereiner & Sauber LLP, in Washington,
D.C., notes.
The Transeastern JV, however, floundered and the administrative
agent for the Transeastern Lenders commenced litigation
proceedings against TOUSA Inc. and Homes LP, seeking recovery
under their guarantees. After engaging in negotiations, the
Debtors consummated a global settlement of the Transeastern
Litigation and of the remaining obligations among participants in
the Transeastern JV.
In order to fund the settlement payments, TOUSA Inc. and Homes LP
urged certain of their subsidiaries to become co-borrowers and
guarantors under certain secured credit facilities of
approximately $800,000,000 or the New Loans with new lenders.
TOUSA and Homes LLP used the proceeds of the New Credit
Facilities to satisfy the Transeastern Debt and to incur certain
other liabilities.
Mr. Robbins argues that as they were not liable on the
Transeastern Debt, the Conveying Subsidiaries did not receive
reasonably equivalent value:
(a) from the New Secured Lenders in exchange for incurring
secured debt obligations of more than $800,000,000; or
(b) (i) from CIT and the Transeastern Lenders in exchange for
the transfer of more than $422,000,000 in satisfaction
of the Transeastern Debt; and
(ii) from the doe successor trustee in exchange for
incurring obligations on the new subordinated notes --
$20,000,000 of new paid-in-kind notes -- in the new
subordinated notes transfers.
Mr. Robbins contends that in July 2007, as a result of the loan
transactions, the Conveying Subsidiaries were either (1)
insolvent or rendered insolvent by the fraudulent transfers, (2)
left with unreasonably small capital, or (3) unable to pay their
debt as they were to come due.
Accordingly, the Committee seeks to avoid and recover the
transfers and payments made on behalf of the Conveying
Subsidiaries' estates, as constructively fraudulent conveyances
under applicable bankruptcy and non-bankruptcy law.
June 2008 Tax Refund
The Committee believes that the Debtors filed with the Internal
Revenue Service a consolidated 2007 federal tax return in March
2008 and received a tax refund of more than $200,000,000 in June
2008. The Debtors' entitlement to the Tax Refund arose as a
result of significant losses incurred during fiscal year 2007
resulting from the sale, disposition, and returning of
assets to various lenders.
The Committee seeks to avoid security interest allegedly granted
by any of the Debtors to the Lenders in respect of the Tax
Refund.
Mr. Robbins maintains that as a matter of law, the Tax Refund is
deemed earned as of December 31, 2007, and any interest that the
New Lenders obtained in the Tax Refund could not have arisen
until December 31, 2007. Since the Lenders' alleged interest in
the Tax Refund (i) arose during the 90-day period prior to the
commencement of the Debtors' bankruptcy cases; (ii) was a
transfer on account of an antecedent debt owed to the New Lenders
prior to the Petition Date; (iii) was made while the Debtors were
insolvent; and (iv) resulted in the Lenders receiving more than
they would in a Chapter 7 case had the transfer not occurred, the
Committee seeks to avoid as a preferential transfer the Secured
Lenders' alleged lien on the Tax Refund under Section 547 of the
Bankruptcy Code.
New Lender Claims
The New Lenders or the Lender Defendants filed claims, seeking
allowance of the full amount of the New Loans
The Committee asks the Court to disallow the New Lender Claims,
reiterating that the Conveying Subsidiaries received less than
equivalent value in exchange for incurring the New Loans and that
those Subsidiaries were rendered insolvent by the Transfers.
A full-text copy of the 32-page Committee Complaint against the
TOUSA Lenders is available for free at:
http://bankrupt.com/misc/TousaAPCommitteevsLenders.pdf
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic
U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark
Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading
homebuilder in the United States, operating in various
metropolitan markets in 10 states located in four major geographic
regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA
designs, builds, and markets high-quality detached single-family
residences, town homes, and condominiums to a diverse group of
homebuyers, such as "first-time" homebuyers, "move-up" homebuyers,
homebuyers who are relocating to a new city or state, buyers of
second or vacation homes, active-adult homebuyers, and homebuyers
with grown children who want a smaller home. It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on Jan. 29, 2008. (Bankr. S.D. Fla. Case No. 08-10928).
The Debtors have selected M. Natasha Labovitz, Esq., Brian S.
Lennon, Esq., Richard M. Cieri, Esq. and Paul M. Basta, Esq., at
Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger
Singerman, to represent them in their restructuring efforts.
Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst
& Young LLP is the Debtors' independent auditor and tax services
provider. Kurtzman Carson Consultants LLC acts as the Debtors'
Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008,
(Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
TRADEWINDS OF BAY: Case Summary & Three Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Tradewinds of Bay County Dev., Inc.
6910 East County Hwy 30-A
Panama City Beach, FL 32413
Bankruptcy Case No.: 09-50121
Chapter 11 Petition Date: February 27, 2009
Court: Northern District of California (Oakland)
Debtor's Counsel: Thomas B. Woodward, Esq.
woodylaw@embarqmail.com
Thomas B. Woodward, Atty.
P.O. Box 10058
Tallahassee, FL 32302
Tel: (850) 222-4818
Fax: (850) 561-3456
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Daughtery & Chavez Architect work $50,000
4300 Legendary Drive
Destin, FL 32541
H H Jordon Equipment, Inc. Crane rental $173,400
3221 Anton Street
Mobile, AL 36612
Mobile Mini Storage Construction $453
1709 Mound Ave. Trailer
Panama City, FL 32401
The petition was signed by Thomas B. Henry, Jr., president.
TRIGON GROUP: CFTC Charges Founder for $40-Mil. Ponzi Scheme
------------------------------------------------------------
The U.S. Commodity Futures Trading Commission has charged Daren L.
Palmer of Idaho Falls, Idaho, with operating a Ponzi scheme
involving approximately $40 million in connection with the
unregistered Trigon Group, Inc. commodity futures pool.
The CFTC's complaint, filed on February 26, 2009, charges Palmer
with solicitation fraud and misappropriation of pool funds for
personal use and for use in running a Ponzi scheme. In addition,
Palmer is charged with sending customers false account statements
and failing to register with the CFTC as a commodity pool
operator. In conjunction with the CFTC's filing, the Honorable
Edward J. Lodge of the United States District Court for the
District of Idaho issued a restraining order freezing defendants'
assets and preserving records. Judge Lodge set a hearing on the
CFTC's motion for preliminary injunction on April 23rd at 9:30
a.m.
The CFTC complaint alleges that, from at least September 2000
through present, Palmer fraudulently solicited approximately $40
million from dozens of individuals and entities to participate in
a commodity futures pool to trade commodity futures or options on
commodity futures contracts. In soliciting prospective and
existing participants, Palmer allegedly claimed that he was a
successful commodity futures trader, that his pool had a
successful track record, and that the pool achieves positive
returns of as much as 7 percent monthly and 20 percent annually.
"This is another unfortunate example of the maxim, `If it appears
too good to be true, it probably is.' Investors must carefully
scrutinize any investment opportunity that claims to be
consistently profitable. This case shows that the CFTC, working in
tandem with other federal authorities, continues to pursue corrupt
commodity professionals who treat investor's hard earned money as
their own," according to CFTC Acting Director of Enforcement
Stephen J. Obie.
The complaint alleges that, in reality, Palmer was neither
successfully trading nor making an effort to do so. As alleged,
despite taking in at least $40 million in participant funds since
September 2000, Palmer only placed $4.5 million in his trading
accounts. Moreover, Palmer admitted in sworn testimony that he
used participants' funds to pay principal and purported profitable
returns to existing pool participants in a manner typical of a
Ponzi scheme. He also admitted that he misappropriated pool funds
for his personal use for the construction of a new home, to pay
credit card bills, and purchase snowmobiles. From the outset,
Palmer also paid himself purported fees based on the falsified
earnings and increased value of the pool. Contrary to Palmer's
claim that he would be compensated only after pool participants
earned a certain rate of return, during the course of Trigon's
operation, Palmer compensated himself with monthly fees ranging
from $25,000 to $35,000 per month, regardless of the profitability
of Trigon's futures trading.
According to complaint, Palmer concealed the fraud by failing to
register with the CFTC and providing fabricated quarterly account
statements to pool participants, which showed consistently
profitable pool returns. The account statements reported that as
late as 2008, the pool had increased in value to over $65 million.
Efforts are ongoing to account for and locate pool participant
funds.
In its continuing litigation, the CFTC seeks restitution,
disgorgement of ill-gotten gains, civil monetary penalties, and
permanent injunctions against further violations of the federal
commodities laws and against further trading.
The CFTC appreciates the assistance of the Idaho Department of
Finance and the Securities and Exchange Commission (SEC). The SEC
filed a related action against Palmer and Trigon.
The CFTC Division of Enforcement staff members responsible for
this case are John W. Dunfee, Mary Kaminski, Alison Wilson, Paul
G. Hayeck, and Joan Manley.
TRONOX INC: Has Until March 30 to File Schedules and Statements
---------------------------------------------------------------
Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern
District of New York extended until March 30, 2009, the deadline
within which Tronox Incorporated and its debtor-affiliates may
file their:
(i) statements of financial affairs and schedules of assets
and liabilities;
(ii) schedules of current income and expenditures;
(iii) statements of executory contracts and unexpired leases;
and
(iv) lists of equity security holders.
The Debtors noted that the process of collecting and organizing
the information required by the Schedules and Statements was
"extraordinarily time consuming," given the (i) substantial size,
scope and complexity of their Chapter 11 cases, (ii) volume of
material that must be compiled and reviewed, (iii) number of
creditors, (iv) geographical spread of their operations, and (v)
scope and nature of their legacy liabilities. Thus, the Debtors
contended that they need additional time to complete the
Schedules and Statements.
The Schedules Filing Extension Order is without prejudice to the
Debtors' rights to seek an additional extension, which may be
sought by stipulation upon the consent of the U.S. Trustee and
the Official Committee of Unsecured Creditors, the Court ruled.
About Tronox Inc
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Seeks to Tap Alvarez & Marsal as Crisis Managers
------------------------------------------------------------
Tronox Inc. and its affiliates ask Judge Allan Gropper of the U.S.
Bankruptcy Court for the Southern District of New York for
permission, pursuant to Section 363(b) of the Bankruptcy Code, to:
(i) employ Alvarez & Marsal North America, LLC, as their as
crisis managers, nunc pro tunc to the Petition Date; and
(ii) appoint Gary Barton, a senior director at A&M, as chief
restructuring officer in the Debtors' cases.
Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York,
relates that the agents of the Debtors' debtor-in-possession
financing, which was approved by the Court on February 9, 2009,
required that, as a condition of agreeing to provide DIP
Financing to the Debtors, the Debtors tap the services of a
crisis management firm and retain a CRO by February 12, 2009.
The Debtors have engaged the services of A&M before the Petition
Date pursuant to an Engagement Letter dated July 1, 2008. A&M
has served as the Debtors' restructuring consultant to assist the
Debtors in their restructuring process, including addressing
certain financial and operational difficulties in the period
prior to the Petition Date, which had resulted in the occurrence
of defaults under certain of the Debtors' credit and other
arrangements.
Through the Petition Date, A&M and Mr. Barton have worked with
the Debtors to, among other things, assist in the development of
near-term projections, assist in short-term cash management
activities and coordinate with the Debtors in the preparation of
a Chapter 11 Petition.
Effective February 10, 2009, the Debtors and A&M entered into a
second engagement letter pursuant to which the parties have
agreed that Mr. Barton will serve as the Debtors' CRO. A&M has
also agreed to provide other A&M employees as necessary to
support Mr. Barton and the Debtors' existing management team in
their restructuring efforts.
The Debtors believe that A&M and Mr. Barton are qualified to be
their as crisis manager and CRO given A&M's extensive experience
providing restructuring services in reorganization proceedings
and its excellent reputation for the services it has rendered in
various Chapter 11 cases.
Mr. Henes adds that A&M and Mr. Barton hold in-depth knowledge
and familiarity with the Debtors' business operations. Hence,
continuing the existing relationship with A&M could minimize
disruptions to the Debtors' restructuring efforts that might
otherwise arise from the appointment of a new crisis management
firm, he tells the Court.
Pursuant to the Second A&M Engagement Letter, Mr. Barton, as CRO,
will report to the Tronox Board of Directors and assist the
Debtors' senior management team in their postpetition
restructuring efforts, including negotiating with parties in
interest and coordinating the "working group" of professionals
who will be assisting the Debtors in the restructuring process or
working for the Debtors' stakeholders.
Specifically, Mr. Barton, with the assistance of additional A&M
personnel, will:
(1) work with the senior management team, performing
financial review and ongoing monitoring efforts of the
Debtors and its near-term results, including but not
limited to review and assessment of financial information
that has been, and that will be, provided by the Debtors
to its various creditors, including its short- and long-
term projected cash flows, pro-forma financial statements
and business plan;
(2) assist the Chief Executive Officer and other senior
management in the identification of cost reduction and
operations improvement opportunities;
(3) work with the Debtors' senior management to develop
Restructuring plans or strategic alternatives for
maximizing the enterprise value of the Company's various
business lines;
(4) work with the Debtors' financial advisors and senior
management to assist with any asset sales that may be
deemed appropriate as part of the Company's enterprise
value maximization strategy;
(5) support senior management and the Debtors' counsel in
the development and preparation of the Debtors' Chapter 11
plan of reorganization, including, negotiating with the
various constituencies involved;
(6) in conjunction with the Debtors' Chief Financial Officer
and their General Counsel, act as a principal contact
with the Debtors' DIP and prepetition lenders, and the
Official Committee of Unsecured Creditors and their
professionals with respect to the Debtors' financial,
operational and Chapter 11 administrative matters;
(7) assist with the preparation of the Debtors' schedules
and statement of financial affairs, and other regular
reports filed with the Court; and
(8) assist in the claims management process, specifically
negotiating and reconciling claims filed in the Debtors'
Chapter 11 cases.
The Debtors will pay A&M $125,000 per month in consideration for
Mr. Barton serving as the CRO. Furthermore, the Debtors will pay
A&M for the services rendered by the Additional Personnel, in
accordance with these hourly rates:
Additional Personnel Hourly Rate
-------------------- -----------
Managing Director $625 to $775
Director $450 to $625
Associates $300 to $450
Analyst $225 to $300
Because A&M is not being employed as a professional under Section
327, the firm will not be submitting quarterly fee applications
pursuant to Sections 330 and 331, but the firm will submit
quarterly reports of fees that have been paid.
Jeffrey J. Stegenga, a managing director at A&M, assures the
Court that his firm is a "disinterested person" as that term is
defined by Section 101(14) of the Bankruptcy Code, and does not
represent any interest adverse to the Debtors and their estates.
Mr. Stegenga discloses that the Debtors paid a retainer of
$200,000 to A&M in July 2008. In addition, the Debtors paid A&M
about $1,767,000 prior to the Petition Date on account of monthly
prepetition fees and expenses.
As of the Petition Date, A&M continued to hold the $200,000
retainer, and intends to apply that Retainer against A&M's final
fees and expenses, subject to the Court's approval.
Under the terms of the Second A&M Engagement Letter, the Debtors
have agreed, among other things, that the Mr. Barton will be
covered as an officer under the Company's existing director and
officer liability insurance policies, Mr. Henes discloses.
Judge Gropper will convene a hearing on April 7, 2009, to
consider the Debtors' Application. Objections to the request, if
any, must be filed by March 31.
About Tronox Inc
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Court to Consider Rothschild Hiring on April 7
----------------------------------------------------------
Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern
District of New York will convene a hearing on April 7, 2009, to
consider the request of Tronox Inc. and its affiliates to employ
Rothschild, Inc., as their financial advisor and investment
banker. Objections to the employment application, if any, must be
filed by March 31.
The Debtors have told the Court that since their retention of
Rothschild in May 2008 up to the Petition Date, Rothschild has
extensively assisted the Debtors in their preparation for
restructuring efforts, including in the development of a long-
range business plan and communications plan; the conduct of
meetings and negotiations with various parties-in-interest;
arrangement and negotiations for the debtor-in-possession facility
and potential asset purchases by interested parties.
As financial advisor and investment banker, Rothschild will:
(a) identify or initiate potential transactions that (i)
affect or proposes to affect material amendments to the
Company's outstanding indebtedness, and (ii) relate to
mergers, acquisitions, consolidation, reorganization,
recapitalization or refinancing;
(b) review and analyze the Debtors' assets, and operating and
financial strategies;
(c) review and analyze the Debtors' business plans and
financial projections, including, but not limited to,
testing comparing assumptions to assumptions historical to
the Debtors and industry trends;
(d) evaluate the Debtors' debt capacity in light of its
projected cash flows and assist in the determination of an
appropriate capital structure for the Debtors;
(e) assist the Debtors and their other professionals in
reviewing the terms of any proposed Transaction or other
transaction, and in evaluating alternative proposals;
(f) determine a range of values for the Debtors and any
securities that the Debtors offer or propose to offer in
connection with a Transaction;
(g) advise the Debtors on the risks and benefits of
considering the Transaction with respect to the Debtors'
intermediate and long-term business prospects and
strategic alternatives;
(h) review and analyze any proposals the Debtors receive from
third parties in connection with transactions, including,
without limitation, any proposals for debtor-in-possession
financing, as appropriate;
(i) assist or participate in negotiations with the parties in
interest, including the former parent of Tronox and its
successor entities, regulatory agencies, current or
prospective creditors of, holders of equity in, or
claimants against the Company in connection with a
Transaction;
(j) advise the Debtors with respect to, and attend, meetings
of the Debtors' Boards of Directors, creditor groups,
or official constituencies; and
(k) at the Debtors' request, participate in hearings before
the Court and provide testimony on matters relating to any
proposed plan of reorganization.
According to the Debtors, Rothschild will carry out unique
functions and will coordinate with the Debtors' other retained
professionals to avoid the unnecessary duplication of services.
The Debtors propose to pay Rothschild in accordance with the Fee
Structure, which involves:
(1) A retainer fee equal to $400,000
(2) A monthly fee of $200,000
(3) A fee with respect to any new capital raise equal to:
-- 1.50% of the face amount of senior secured debt raised;
-- 2.50% of the face amount of junior secured debt raised;
-- 3.00% of the face amount of senior or subordinated
unsecured debt raised; and
-- 5.50% of any equity or convertible capital raised.
The New Capital Fee will be payable upon the closing of
the transaction by which the new capital is committed.
(4) A Completion Fee of $6,000,000 in cash, which is payable
upon the earlier of (i) the confirmation and effectiveness
of reorganization plan; or (ii) the closing of another
Transaction.
(5) An M&A Fee fee equal to an amount based on this Aggregate
Consideration:
Aggregate M&A Fee
Consideration Percentage
------------- ----------
<$200.0 1.40
300.0 1.30
400.0 1.20
500.0 1.075
600.0 0.975
700.0 0.875
800.0 0.825
900.0 0.775
1,000.0+ 0.725
(6) Credit against the Completion Fee:
-- 30% of the Monthly Fees paid in excess of $600,000;
-- 30% of any M&A Fees paid;
-- 50% of any New Capital Fees paid; and
-- the Retainer, provided that the sum of the Monthly Fee
Credit, the M&A Fee Credit, the New Capital Fee Credit
and the Retainer Credit will not exceed $3,500,000.
As of January 12, 2009, Rothschild is holding $175,000 on
account of the Retainer.
(7) Other Services Fees, which the Debtors and Rothschild will
mutually agree in relation additional services performed
by the firm.
Additionally, the Debtors agree to reimburse Rothschild for all
reasonable out-of-pocket expenses.
Prior to the Petition Date, the Debtors paid Rothschild (i)
$3,850,000 in fees on account of the Monthly Fees of $1,800,000,
(ii) a Retainer of $400,000 of which $225,000 has been applied,
(iii) New Capital Fee of $1,650,000 and application of $225,000
of the Retainer, and (iv) an additional $120,008 on account of
the expense reimbursement.
As of the Petition Date, Rothschild does not hold a prepetition
claim against the Debtors for services rendered.
Todd R. Snyder, a managing director of Rothschild, has assured
Judge Gropper that his firm is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
About Tronox Inc
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRONOX INC: Creditors Panel Seeks to Hire Jefferies as Advisors
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in the bankruptcy
cases of Tronox Inc. and its affiliates asks Judge Allan Gropper
of the U.S. Bankruptcy Court for the Southern District of New York
for authority to retain Jefferies & Company, Inc., as their
financial advisors, nunc pro tunc to January 23, 2009.
James H. Rich, research analyst at AEGON USA Investment
Management, LLC, and Evan Stone, general counsel of Newcastle
Capital Group, L.L.C., in their capacity co-chairs of the
Committee, assure the Court that Jefferies is qualified to act as
the Committee's financial advisor in the Debtors' cases because
of the firm's global expertise in providing investment banking
services to debtors and creditors in restructurings and
distressed situations.
Specifically, Messrs. Rich and Stone relate that Jefferies has
provided a broad range of corporate advisory services to its
clients including, without limitation, services relating to (i)
general financial advice, (ii) mergers, acquisitions, and
divestitures, (iii) special committee assignments, (iv) capital
raising, and (v) corporate restructurings.
As financial advisor to the Committee, Jefferies will:
(a) become familiar with, and analyze the business, business
plan, operations, assets, financial condition and
prospects of the Debtors;
(b) provide valuation analyses of Tronox if requested, the
form of which will be as agreed upon by Jefferies and the
Committee, and provide expert testimony relating to any
valuation;
(c) advise the Committee on the current state of the
restructuring and capital markets;
(d) assist and advise the Committee in examining and
analyzing any potential or proposed strategy for
restructuring, amending, redeeming or otherwise adjusting
the Debtors' outstanding indebtedness;
(e) assist and advise the Committee in determining an
appropriate capital structure for the Debtors;
(f) analyze strategic proposals for a restructuring,
reorganization, and other strategic alternatives,
including a potential sale of all or substantially all of
the assets or operations of the Debtors under Sections
363 and 1129 of the Bankruptcy Code, or otherwise, advise
the Committee in connection with the negotiations among
the Committee, the Debtors and the Debtors' other
creditors and parties-in-interest, and, where appropriate,
assist the Committee in developing and proposing its own
strategy for accomplishing a Restructuring;
(g) assist and advise the Committee in evaluating and
analyzing the proposed implementation of any
Restructuring, including the value of the securities, if
any, that may be issued under any plan of reorganization,
and any financing related to any Restructuring; and
(h) render other financial advisory services as may from
time to time be agreed upon by the Committee and
Jefferies, including, but not limited to, providing expert
testimony, other expert support related to any threatened,
expected, or initiated litigation, and investment banking
support related to debtor-in-possession and exit
financing, mergers and acquisitions, and asset sale
processes.
Jefferies will be paid:
* A monthly fee equal to $150,000 until the expiration or
termination of employment. The first Monthly Fee will be
payable immediately upon the Court's approval of the
Committee's Application, and each subsequent Monthly Fee
will be paid in advance on each monthly anniversary.
* A transaction fee equal to $2,000,000 upon the
consummation of a Restructuring or similar transaction
supported by the Committee. Fifty percent of any Monthly
Fees actually paid to Jefferies in excess of $450,000 will
be creditable against the Transaction Fee.
Jefferies will be reimbursed for necessary out-of-pocket expenses.
Messrs. Rich and Stone relate that the parties have agreed to
certain indemnification provisions under an Engagement Letter,
which includes qualifications and limits on the indemnification
and limitation on liability provisions that are customary in
Chapter 11 cases. A copy of the Indemnification Provisions is
available at no charge at:
http://bankrupt.com/misc/Tronox_JefferiesIndemnification.pdf
Frank Merola, a managing director at Jefferies, assures the Court
that his firm is a "disinterested person" as that term is defined
by Section 101(14) of the Bankruptcy Code, and does not represent
any interest adverse to the Committee, the Debtors, and the
Debtors' estates.
Judge Gropper will convene a hearing on April 7, 2009, to
consider approval of the application. Objections, if any, must
be filed by March 31.
About Tronox Inc
The company is the world's third largest maker of titanium dioxide
behind DuPont Co. and Saudi-owned National Titanium Dioxide Co.,
known a Cristal, according to Bloomberg.
Tronox has $1.6 billion in total assets, including $646.9 million
in current assets, as at September 30, 2008. The company has
$881.6 million in current debts and $355.9 million in total
noncurrent debts.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.
N.Y. Case No. 09-10156). The case is before Hon. Allan L.
Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and
Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York,
represent the Debtors. The Debtors also tapped Togut, Segal &
Segal LLP as conflicts counsel; Rothschild Inc. as investment
bankers; Alvarez & Marsal North America LLC, as restructuring
consultants; and Kurtzman Carson Consultants serves as notice and
claims agent.
Until September 30, 2008, Tronox Inc. was publicly traded on the
New York Stock Exchange under the symbols TRX and TRX.B. Since
then, Tronox Inc. has traded on the Over the Counter Bulletin
Board under the symbols TROX.A.PK and TROX.B.PK. As of
December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares
of class A common stock and 22,889,431 outstanding shares of
class B common stock.
Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tronox Inc. and its 14 affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TTF HELICOPTERS: Files For Bankruptcy Amid Drop in Tourism
----------------------------------------------------------
TTF Helicopters LLC has sought bankruptcy protection from
creditors before the U.S. Bankruptcy Court for the District of New
Jersey.
Bloomberg said the Company filed for Chapter 11 in the wake of an
almost 10% dropoff in visitors to Las Vegas due to the recession.
The Company sought court protection because of a "lack of cash
flow due to the unprecedented global economic downturn,
which has hindered the tourist industry, especially in Las
Vegas," Steven Trenk, the company's president, said in court
Filings, according to the report. The number of Las Vegas
visitors fell by about 10 percent in 2008, according to the Center
for Business and Economic Research at the University of Nevada-Las
Vegas.
TTF Helicopters previously cut its 157-employee workforce by 54%
in hopes of avoiding a bankruptcy filing, Mr. Trenk said,
according to Bloomberg.
TTF Helicopters listed as much as $10 million each in assets and
debts. The Company listed Textron Inc.'s Cessna Finance Corp.,
owed $1.7 million for helicopter financing, among its largest
creditors. Other creditors include the Hualapai tribe, which
contends it is owed $500,000, according to court filings.
Based in Roseland, New Jersey, TTF Helicopters LLC provides aerial
tours of the Grand Canyon. Its Las Vegas-based units, aside from
providing chopper tours of the Grand Canyon, offer boat rides on
the Colorado River.
TTF HELICOPTERS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: TTF Helicopters LLC
101 Eisenhower Parkway
Roseland, NJ 07068
Bankruptcy Case No.: 09-14852
Debtor-affiliates filing Chapter 11 petitions:
Entity Case No.
------ --------
Las Vegas Helicopters, Inc. 09-14864
King Airelines Inc. 09-14860
Type of Business: The Debtors offer airplane and helicopter
tours.
See: http://starsandstripesair.com/
Chapter 11 Petition Date: February 27, 2009
Court: Northern District of California (Oakland)
Judge: Rosemary Gambardella
Debtor's Counsel: Joseph J. DiPasquale, Esq.
jdipasquale@trenklawfirm.com
Richard D. Trenk, Esq.
rtrenk@trenklawfirm.com
Trenk, DiPasquale, Webster,
Della Fera & Sodono, P.C.
347 Mt. Pleasant Avenue, Suite 300
West Orange, NJ 07052
Tel: (973) 243-8600
Fax: (973) 243-8677
Estimated Assets: $1 million to $10 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
RP Realty Partners Retail $1,765,631
9601 Wilshire
Boulevard, Ste. 260
Beverly Hills, CA 90210
Purwin, Alan $540,000
163 Queens Garden Road
Thousand Oaks, CA 91361
First Insurance Funding Corp. $434,622
PO Box 66468
Chicago, IL 60666
TTF Helicopters LLC $365,668
Oriental Tours $257,047
Turbomeca Engine $246,420
American Europter $236,521
Westwind Aviation Inc. $173,603
The Hualapi Enterprises $112,147
Premium Assignment Corp. $95,267
TTF Aircraft LLC $95,083
Helicopter Services of Utah Inc. $70,068
American Express $51,658
Premium Assign Workers Comp. $38,796
Gold Crown $35,817
Ulanguzi $32,018
Weaver Multimedia Group $29,817
Dell Financial Services $24,044
Sprint Nextel $2,002
Tele Pacific Communications $750
The petition was signed by Steven L. Trenk, president, secretary,
and treasurer.
TXCO RESOURCES: Violates Covenant Under Bank of Montreal Loan
-------------------------------------------------------------
TXCO Resources Inc. in connection with the preparation of its 2008
financial statements, determined on February 26, 2009, that it was
in violation of the current ratio covenant in its Amended and
Restated Credit Agreement, dated April 2, 2007, and as further
amended on July 25, 2007, and Amended and Restated Term Loan
Agreement, dated July 25, 2007, each with Bank of Montreal, as
lender and administrative agent, and the other lenders party
thereto. The Company believes it is meeting all other covenant
requirements under the Credit Facilities.
The Company is continuing discussions with the Lenders regarding a
waiver of the Current Ratio Covenant and other arrangements
whereby the Lenders would refrain from exercising their rights
under the Credit Facilities as a result of the above default.
There can be no assurance that the Company will be able to obtain
a waiver of the Current Ratio Covenant or obtain other relief from
the Lenders.
Under the terms of the Company's Certificate of Designations,
Preferences and Rights of Series D Convertible Preferred Stock and
Certificate of Designations, Preferences and Rights of Series E
Convertible Preferred Stock, the default could result in the
holders of the Company's Series D and Series E Convertible
Preferred Stock having a redemption right. However, under the
terms of the Certificate of Designations, this redemption right is
suspended until all of the Company's obligations under the Credit
Facilities have been satisfied.
The Company continues its strategic alternatives review. Goldman,
Sachs & Co. serves as TXCO's financial advisor.
About TXCO Resources
Headquartered in San Antonio, Texas, TXCO Resources Inc. --
http://www.txco.com/-- is an independent oil and gas enterprise
with interests in the Maverick Basin, the onshore Gulf Coast
region and the Marfa Basin of Texas, and the Midcontinent region
of western Oklahoma. The Company's common stock trades on
Nasdaq's Global Select Market under the symbol "TXCO."
TYSON FOODS: Upsizing of Sr. Notes Won't Affect S&P's BB Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services said that Tyson Foods Inc.'s
(BB/Negative/--) upsizing of its senior unsecured note offering
due 2014 to $810 million from $500 million will not immediately
affect the ratings and outlook on the company. S&P has assigned
its 'BB' senior unsecured debt rating, with a '3' recovery rating
(indicating meaningful (50%-70%) recovery of principal in a
default scenario), to the additional $310 million of notes (the
same as the ratings S&P originally assigned to these notes on Feb.
19, 2009). S&P expects that the company will warehouse these
additional proceeds on its balance sheet to help fund future debt
maturities. S&P had expected that about $234 million of the
previous $500 million note issuance would be available to fund
$234 million of debt maturities in 2010. Credit measures remain
weak as pro forma debt leverage for the 12 months ended Dec. 27,
2008 is 6.2x (5x not inclusive of the senior note issuance).
These ratios include hedging losses that are excluded from
financial covenants under the company's current $1 billion credit
facility (to be replaced by an up to $1 billion asset-backed
credit facility which is not rated) and are adjusted for
capitalized operating leases, pension, and postretirement
obligations. S&P would consider a lower rating for Tyson if it
uses proceeds from the aggregate offering for other purposes such
as share repurchases and acquisitions. S&P would also consider a
lower rating over the next two quarters if Tyson does not improve
debt leverage from pro forma levels, so that it approaches the
mid-4x area by the end of fiscal 2009, and/or below 4x if it fully
uses proceeds from the senior unsecured note offering to repay
debt maturities in fiscal 2009.
VEYANCE TECHNOLOGIES: Moody's Cuts Corporate Family Rating to B3
----------------------------------------------------------------
Moody's Investors Service lowered the ratings of Veyance
Technologies, Inc. -- Corporate Family and Probability of Default
Ratings to B3 from B2. Veyance's ratings remain under review for
possible downgrade.
The downgrade reflects Moody's expectation of erosion in Veyance's
credit metrics due to deterioration in most of the company's end
markets. The industrial and mining sectors, the main drivers of
Veyance's revenues, are undergoing a severe contraction and
Moody's believes that these sectors will remain weak through 2009.
Even though Veyance has reduced its exposure to the automotive
industry to less than 10% of revenues, Moody's expects the company
to be negatively impacted by the declines in the sector. The
weaker business climate implies greater leverage, lower interest
coverage, and reduced funds from operations through 2009.
Moody's believes that Veyance is pursuing cost reduction
initiatives to minimize the negative impact of this downturn on
its operating margins and cash generation. The company is
reducing headcount and improving operating efficiencies. As the
company adjusts its operations to the weaker market conditions, it
could incur restructuring charges. Notwithstanding these efforts
and lower raw material costs due to the decline in the price of
oil, Veyance's operating performance is likely to produce credit
metrics that are consistent with levels which Moody's previously
identified as being potentially in-line with a lower rating.
Moody's believes that Veyance will continue to face a difficult
economic environment through 2009 and that for the foreseeable
future the company's credit metrics are unlikely to support a
rating higher than a B3 corporate family rating.
Moody's review is focusing on the outlook for Veyance's earnings
and cash flow in the current environment and the company's efforts
on its cost reduction initiatives and improvements in operating
efficiencies to enhance operating cash flow. The review will also
consider the downturn in the company's end markets and the
resulting impact on its liquidity profile, including any potential
pressures on covenant compliance.
These ratings/assessments were affected by this action:
-- Corporate family rating lowered to B3 from B2;
-- Probability of default lowered to B3 from B2;
-- 1st Lien Sr Secured Bank Credit Facility lowered to B2 (LGD3,
35%) from B1 (LGD3, 36%); and,
-- 2nd lien Term Loan due 2015 lowered to Caa2 from Caa1, buts
its loss given default remains (LGD5, 84%).
The last rating action was on September 26, 2008 at which time
Moody's changed Veyance's outlook to negative from stable.
Veyance Technologies, Inc., based in Fairlawn, Ohio, is a
manufacturer and marketer of engineered rubber products such as
hoses, conveyor belts, power transmission products, tracks and air
springs for industrial, transportation, military, and consumer end
users.
VITESSE SEMICONDUCTOR: Dec 31 Balance Sheet Upside-Down $63.7MM
---------------------------------------------------------------
Vitesse Semiconductor Corporation had $103.8 million in total
assets and $167.4 million in total liabilities, resulting in $63.7
million in shareholders' deficit as of December 31, 2008. Vitesse
had $47.4 million in cash and cash equivalents and $1.81 billion
in accumulated deficit as of December 31.
In mid-February, Vitesse reported financial results for the first
quarter of fiscal year 2009, ended December 31, 2008. Vitesse
posted a $189.9 million net loss for the three months ended
December 31, compared to net income of $1.45 million during the
same period in 2007.
"We are pleased with our operating performance this quarter,
achieved under some very challenging market conditions. We
demonstrated our second sequential quarter of operating
profitability, net of our impairment charge, and substantially
increased our cash position from last quarter," said Chris
Gardner, chief executive officer of Vitesse. "We continue to
invest in R&D, as demonstrated by the five new products released
in the quarter. We expect 2009 to be a challenging year for the
industry. Accordingly, we have taken aggressive actions to
continue to reduce operating expenses."
The Company has taken strong actions to continue to reduce its
spending for the remainder of 2009. Measures include salary
reductions for executive management and other employees, forgoing
of annual merit increases, and suspension of 401(k) employer match
contributions. Taken together, these actions are expected to
reduce wage and benefit expenses significantly by the third fiscal
quarter.
Combined with other steps, the Company expects to reduce overall
operating expenses to support the goal of achieving cash flow
neutrality for the fiscal year. These steps support management's
alignment of the Company's strategic direction with its financial
objectives while preserving critical investments in intellectual
property and engineering resources as well as its worldwide
customer support.
Based in Camarillo, California, Vitesse Semiconductor Corporation
-- http://www.vitesse.com/-- designs, develops and markets a
diverse portfolio of high-performance, cost-competitive
semiconductor solutions for Carrier and Enterprise networks
worldwide.
W.R. AUSTIN: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: The W.R. Austin & H.H. Val Verde Fndtn
2549 Sycamore Canyon Road
Santa Barbara, CA 93108
Bankruptcy Case No.: 09-10659
Chapter 11 Petition Date: February 27, 2009
Court: Northern District of California (Oakland)
Judge: Robin Riblet
Debtor's Counsel: Charles Shamash, Esq.
cs@locs.com
Caceres & Shamash LLP
8200 Wilshire Blvd., Ste. 400
Beverly Hills, CA 90211
Tel: (310) 205-3400
Fax: (310) 878-8308
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
California Capital Group Loan $13,000,000
300 Frank H. Ogawa Plaza
Suite 340
Oakland, CA 94612
First Bankcard Bank loan $23,031
P.O. Box 2818
Omaha, NE 68103-2818
Bernstein, Fox, Whitman Trade debt $14,428
Goldman, et al.
2029 Century Park East
Suite 500
Los Angeles, CA 90067-2906
Anthem Blue Cross Trade debt $7,692
Preview Productions Trade debt $6,825
Group Professionals Trade debt $6,000
ACE USA Trade debt $3,829
Preview Productions Trade debt $2,000
Verizon California Trade debt $1,773
Allied Administrators/ Trade debt $1,307
Delta Dental
Treasurer Tax Collector Trade debt $1,049
County of Santa Barbara
Carr & Ferrell, LLP Trade debt $863
Fedderson & Company, LLP Trade debt $546
Impulse Internet Services Trade debt $545
Cox Communications Trade debt $212
Beneficial Administration Trade debt $199
Company, Inc.
Treasurer Tax Collector Trade debt $158
County of Santa Barbara
Verizon California Trade debt $120
Agri-Turf Trade debt $1
The petition was signed by Gail Jansen, executive director.
W.R. GRACE: Wants Libby Knowing Endangerment Claim Dismissed
------------------------------------------------------------
W.R. Grace & Co., joined by Robert Bettacchi, former president of
Grace's Construction Products Division, and Jack Wolter, former
general manager of the Construction Products Division, asked
Judge Donald Molloy of the U.S. District Court for the District
of Montana to dismiss Counts II to IV of the indictment filed by
the U.S. Government relating to Libby, Montana.
The U.S. Government alleges that Grace and its former executives
knowingly releasing and causing the release of asbestos into the
ambient air, thereby placing another person in imminent danger of
death or serious bodily injury.
Count Two charges Grace with knowing endangerment based on having
provided and distributed asbestos-contaminated vermiculite to the
community; Count Three charges Grace, and Messrs. Wolter, and
Bettacchi with knowing endangerment based on having sold the
Screening Plant site to the Parkers; and Count Four charges
Grace, and Messrs. Wolter and Bettacchi with knowing endangerment
based on leasing the Export Plant to the Burnetts, and selling
the Export Plant to the City of Libby.
As reported by the Troubled Company Reporter, trial on the Libby
criminal case officially started on Feb. 23 before Judge Molloy.
Prior to that, the District Court has selected jurors in the jury
panel. The jury is composed of seven men and five women.
"The secret of this case, the secret the defendants kept from the
government, is that their product, even when it contains a small
amount of asbestos, released hazardous levels of asbestos into the
air when disturbed," Assistant U.S. Attorney Kris McLean told the
District Court last week, according to Bloomberg. "That is the
secret that the defendants knew but the government did not."
On Wednesday, Paul Peronard, the Environmental Protect Agency's
on-scene coordinator in Libby, described to the jury his visit to
a former Grace facility in 1999. According to Bloomberg, Mr.
Peronard said "the grounds were six inches thick with vermiculite
in some places," and noted that one of the residents'
granddaughter "was actually out playing with the decorative rocks,
taking a rock and busting it to make explode off."
"It was all very dusty," Mr. Peronard told the jury.
Grace attorney, David M. Bernick, Esq., at Kirkland & Ellis, LLP,
in Washington, D.C., recalls that Judge Molloy, in an order dated
March 3, 2006, held that the crime of knowing endangerment is not
a continuing offense. As a result, the District Court dismissed
Counts II through IV in part and held that the Government cannot
prove violations of the knowing-endangerment provision by
presenting evidence of conduct by Grace that placed another
person in imminent danger before November 3, 1999.
Judge Molloy, Mr. Bernick adds, has explained that "the crime
defined in th[e knowing endangerment provision] is complete and
may be prosecuted at the first instant that another person is
placed in imminent danger, regardless of how long the
endangerment lasts."
Mr. Bernick also notes that the Government affirmatively showed
in its opening statement that any "releases" Grace caused through
the conduct charged in Counts II through IV placed another person
imminent danger before November 3, 1999. The Government showed
that Grace cannot be convicted for those "releases" because they
allegedly occurred long before November 3, 1999, and, if they
were of sufficient duration and intensity, would have placed
another person in imminent danger at that time.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: Government, et al., Object to Disclosure Statement
--------------------------------------------------------------
The United States Government; Hon. Alexander M. Sanders, Jr., the
legal representative for future asbestos-related property damage
claimants; Anderson Memorial Hospital; UniFirst Corporation; and
Maryland Casualty Company filed separate objections to the
approval of the Disclosure Statement explaining the final First
Amended Joint Chapter 11 Plan of Reorganization of W.R. Grace &
Co. and debtor-affiliates.
(1) U.S. Government
The Government, through the U.S. Department of Justice, complains
that the Disclosure Statement failed to disclose adequate
information with respect to the pending criminal case the
Government filed against W.R. Grace & Co., and six of its former
executives on account of the Debtors' vermiculite mine in Libby,
Montana.
"Adequate information includes what contingencies there are to an
unsecured creditor getting its distribution," J. Christopher
Kohn, Esq., of the U.S. Department of Justice, Commercial
Litigation Branch, in Washington, D.C., emphasizes.
Mr. Kohn pointed out that while the Disclosure Statement
discloses the existence and procedural status of the pending
federal criminal case against Grace, it does not state that any
criminal fine or restitution ordered by the United States
District Court for the District of Montana in the criminal case
will be non-dischargeable pursuant to Section 3613(e) of the U.S.
Criminal Code. He adds that the Disclosure Statement also fails
to disclose how Debtors will pay any non-dischargeable criminal
fine and restitution.
The Government anticipates, if convictions are obtained in the
Libby criminal case against the Debtors, seeking a $280 million
corporate fine and up to $1 billion in restitution payments.
Although the Disclosure Statement unveils the possibility that
Grace, if convicted, may have to pay a criminal fine of
$280 million and restitution, Mr. Kohn asserts that creditors have
a right to be informed of the total approximate amount of
restitution and the non-dischargeable nature of these contingent,
unliquidated liabilities, and be informed of the Government's
right to obtain a lien against the Debtors' property to satisfy
these claims under the U.S. Criminal Code.
(2) PD FCR
The PD FCR points out certain inaccuracies and ambiguities in the
Disclosure Statement that he argued should be corrected and
clarified.
The FCR complains that the blanket reservation to the Plan
proponents of all rights and defenses to US ZAI Claims is
inconsistent with the ZAI Trust Distribution Procedures with
respect to Class 7B Asbestos PD Claims rendering Section 4.3.1.7
of the Disclosure Statement inaccurate.
Section 4.5.1 of the Disclosure Statement states, in effect, that
with the exception of Asbestos PI Claims, US ZAI PD Claims and
Canadian ZAI PD Claims, the Reorganized Debtors have at least 180
days to make objections to claims. A similar process is
disclosed with regard to the filing of an exhibit listed
undisputed claims, the PD FCR's counsel, Alan B. Rich, Esq., in
Dallas, Texas, points out.
That provision, however, conflicts with the description of how
non-ZAI Asbestos PD Claims are addressed under other provisions
of the Plan and the Asbestos PD CMO, the FCR complains. All
Asbestos PD Claims, therefore, were intended to be excluded from
the provisions of Section 5.1 of the Plan, Judge Sanders notes.
According to the FCR, the term "Unresolved Asbestos PD Claims" is
ambiguous with respect to how an Asbestos PD Claim filed after
the bar date but not listed in Exhibit 21 to the Plan is to be
treated under the Plan. He also points out that the Disclosure
Statement should include the Asbestos PD Trust, along with the
Asbestos PI Trust, as the parties who have the benefit of
precedence in the share issuance obligations. Otherwise, the
Disclosure Statement's description will conflict with the terms
of the Share Issuance Agreement, he said.
The FCR further complains that Section 4.11 of the Disclosure
Statement is ambiguous where Section 11.3.1 begins by excluding
Asbestos PD Trust Causes of Action from those that are retained
by the Reorganized Debtor. The last portion of Section 11.3.1,
he points out, goes on to say that the Reorganized Debtors
retains causes of action and defenses against holders of Asbestos
PD Claims. This last portion, he said, should not reference
"holders of Asbestos PD Claims".
(3) Anderson Memorial Hospital
Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington,
Delaware, on behalf of Anderson Memorial, complains that the
Disclosure Statement lack several information that are necessary
for asbestos claimants, including Anderson Memorial Hospital, to
determine the treatment of their claims.
Anderson also complains that the Disclosure Statement:
(a) contains no description of the procedures by which
unresolved PD claims will be resolved and paid, instead
only making reference to the PD CMO;
(b) refers only to the $93 million in approved PD settlements
and $19 million in preliminary settlements, without mention
or estimate of Unresolved PD Claims or a statement of how
their allowance would affect the total amount of PD Claims,
and whether if allowed the funds proposed to be designated
for the PD Trust would be sufficient to pay PD Claims in
full;
(c) fails to provide a description of the amount of the PD
litigation claims, including those filed by Speights &
Runyan firm or the consequences of reversal of either of
those decisions;
(d) did not indicate whether interest will be paid on allowed
PD Claims, although it does indicate that interest will be
paid on general unsecured claims and specifies the rate of
interest;
(e) contains no meaningful description of the transactional
documents and the provisions for payment of PD Claims,
including the Class 7 A Asbestos PD Deferred Payment
Agreement, the Grace Guaranty Agreements, the Share Issuance
Agreement, and the Asbestos PIIPD Inter-Creditor Agreement,
as well as the terms and conditions of payment under the
various agreements, the status of the Debtors' obligations
in relation to its other obligations, and the consequences
and remedies upon default by the Debtors;
(f) fails to address the treatment of the holders of US ZAI
Claims who opt out of the US ZAI Settlement, including any
opt-out mechanics under the US ZAI Settlement, the
consequences of opting out, and a description of how the
opt-out claims will be dealt with under the Plan; and
(g) fails to describe the consideration for the release of the
Reorganized Debtors, the Debtors, and several other parties
who will be exculpated under the Plan from any liability to
any entity for any act or omission in connection with these
Chapter 11 cases.
(4) UniFirst Corporation
UniFirst Corporation and the Debtors are parties to several
agreements relating to cost-sharing and joint and several
liability with respect to past and future environmental
obligations at 35 sites around the United States, including the
Wells G & H Superfund Site in Woburn, Massachusetts.
UniFirst notes that both the Debtors' Disclosure Statement and
Plan indicate that EPA's and the Debtors' rights and obligations,
with respect to the 35 sites will be governed by the Multi-Site
Settlement Agreement approved by the U.S. Bankruptcy Court for
the District of Delaware on March 2008, and that those rights and
obligations will not be affected in any way by confirmation of
the Plan.
UniFirst, however, complains that there is no explicit
acknowledgement or recognition of the broader context of those
obligations with other potentially responsible parties like as
UniFirst, under the liability provisions of the Comprehensive
Environmental Response, Compensation and Liability Act.
Accordingly, UniFirst seeks that the Disclosure Statement and
Plan be amended to clarify that the Debtors' responsibilities
with respect to the Woburn Site will be preserved regardless of
whether those responsibilities and liabilities are enforced
directly by EPA or indirectly by other potentially responsible
parties like UniFirst.
UniFirst also wants the Disclosure Statement and the Plan amended
to clarify that the Cost-Sharing Agreement is an executory
contract to be assumed by the Reorganized Debtors on the
effective date and provide that the Cost-Sharing Agreement will
not be designated subject to rejection in connection with the
Effective Date, consistent with the prior Court order
(5) Maryland Casualty Company
According to Jeffrey Wisler, Esq., at Connolly Bove Lodge & Hutz
LLP, in Wilmington, Delaware, Maryland Casualty Company has
submitted proposed revisions to the PI Trust Distribution
Procedures but the parties have not reached a resolution on MCC's
comments as of February 20, 2009.
Maryland Casualty complains that the PI TDP, as drafted, either
fails to provide treatment for all of MCC's claims or provide
ambiguous treatment of those claims. If MCC's proposed revisions
are not accepted and incorporated into the PI TDP, and if new
changes are made to the amended documents, the amended Disclosure
Statement may not satisfy Section 1125, Mr. Wisler tells the
Court.
As reported by the Troubled Company Reporter on February 26, 2009,
Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the
District of Delaware will hold a hearing on March 9 and 10, 2009,
to consider approval of the Disclosure Statement.
The Debtors, the Official Committee of Asbestos Personal Injury
Claimants, the Asbestos PI Future Claimants' Representative and
the Official Committee of Equity Security Holders filed with the
Court a final First Amended Joint Chapter 11 Plan and the
Disclosure Statement on February 3, 2009. The Amended Plan
incorporates provisions for the resolution of U.S. and Canadian
Zonolite Attic Insulation Claims, whereby all allowed Asbestos PD
Claims, other than US ZAI PD Claims and CDN ZAI PD Claims will be
paid in full by the Asbestos PD Trust. The US ZAI PD Claims will
also be paid pursuant to the ZAI Trust Distribution Procedures,
consistent with the class settlement agreement.
The First Amended Joint Plan provides the same treatment of claims
provided under the Plan filed on September 19, 2008, except for
Class 7 Asbestos Claims. Under the Amended Plan, Class 7 Asbestos
Claims is subdivided into Class 7A Asbestos Property Damage Claims
other than the U.S. ZAI Claims and Class 7B U.S. ZAI PD Claims.
The Plan, among others, increased the estimated allowable amount
of Class 7A asbestos PD Claims from $109 million to $112 million,
which amount consists of 93 million in Court-approved PD
Settlement Agreements and $19 million in preliminary PD Settlement
Agreements as of February 3, 2009. Class7A Claims will be paid in
full by the Asbestos PD Trust without deduction, set off or
discount.
The Plan also provides for Class 7B US ZAI PD Claims for an
unspecified amount that will be paid by the Asbestos PD Trust from
duly designated Asbestos PD Trust Assets pursuant to the terms of
the Asbestos PD Trust Agreement and the ZAI TDP.
Class 7A Claims are unimpaired while Class 7B Claims are impaired.
The Debtors will not solicit any votes from holders of Class 7A
Claims for purposes of Section 524(g) of the Bankruptcy Code.
Black-lined copies of the proposed Plan and Disclosure Statement,
as amended, are available for free at:
http://bankrupt.com/misc/Grace_1stAmnddPlan_Blackline.pdf
http://bankrupt.com/misc/Grace_AmnddDS_Blackline.pdf
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: Seeks to Contribute $8.5 Million to Pension Plan
------------------------------------------------------------
W.R. Grace & Co. and its affiliates seek permission from Judge
Judith Fitzgerald of the U.S. Bankruptcy Court for the District of
Delaware to contribute $8,533,803 to their defined benefit
retirement plans covering their employees in the United States.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in
Wilmington, Delaware, asserts that the contributions sought are
necessary to comply with the minimum funding requirements under
the federal law and are due on or before April 15, 2009.
The present request is a continuation of the series of requests
the Debtors made in the past to make all legally required minimum
contributions to the Grace Retirement Plans for the period
through January 2009. Ms. Jones says the management of the
Debtors discusses each request for pension contribution with
representatives of each the official committees and the future
claimants' representatives.
The Debtors have sought and obtained the Court's authority to
contribute an aggregate of $327,300,000 since 2003:
Date Contribution
---- ------------
2003 $48,500,000
2004 20,000,000
2005 24,100,000
2006 101,400,000
2007 76,000,000
2008 49,700,000
Jan. 2009 7,600,000
------------
Total $327,300,000
============
Ms. Jones relates that the total of the required quarterly
minimum contributions for the 2009 plan year due on April 15,
2009, must be the lesser of (A) 25% of the total 2008 minimum
contributions, minus available credit balances, for each of the
Debtors' individual plans, or (B) the quarterly minimum amount
calculated specifically for the 2009 plan year, which will be
included in the final 2009 valuation report. The actual amount
of the 2009 plan year contributions, Ms. Jones says, will
therefore depend on calculations in the 2009 actuarial report for
the Grace Retirement Plans.
Ms. Jones tells the Court that the actuarial report will not be
finalized until sometime May 2009, the April 2009 contributions
will be equal to the 25% of the total 2008 minimum contributions,
which translates to about $8,500,000, to assure compliance with
applicable law.
The Debtors relate that they will submit another pension funding
motion to make all required contributions for the remainder of
2009 and early 2010 after the 2009 actuarial reports are
finalized.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: Trial Judge's 'Victimless' Crime Ruling Is Thrown Out
-----------------------------------------------------------------
Bob Van Voris of Bloomberg reports that a federal appeals court
overturned a Feb. 13 decision by U.S. District Judge Donald Molloy
that barred 34 prosecution witnesses from attending the criminal
trial of W.R. Grace & Co. and five former executives charged in
connection with the asbestos contamination of Libby, Montana until
after they had testified.
Judge Molloy had ruled that the witnesses aren't "crime victims"
as the term is defined in the Crime Victims' Rights Act of 2004.
W. R. Grace, a chemical and construction materials manufacturer,
and the former executives are charged with conspiring to expose
Libby residents to asbestos-tainted vermiculite, which the company
mined and processed in and around Libby until 1990. The trial,
which is expected to take as long as five months, began with
opening statements Feb. 23.
According to Bloomberg news, the appeal was filed by Melvin and
Lerah Parker, who claim they developed asbestosis as a result of
buying a contaminated piece of land from Grace in Libby. In their
brief to the appeals court, the Parkers said Molloy had in effect
ruled the Libby case a "victimless crime."
Individual Rulings
The appeals court ruling directs Judge Molloy to make individual
determinations of whether the Crime Victims' Rights Act applies to
permit each of the 34 victims to attend the trial, according to
the report.
"It's very positive for victims, it kind of holds the district
court's feet to the fire, to not wipe away victims' rights so
quickly." said Meg Garvin, executive director of the National
Crime Victim Law Institute, a Portland, Oregon-based group that
promotes the legal rights of crime victims, Bloomberg added.
The source further stated that the Parkers were supported in
briefs filed by the government and opposed by W.R. Grace and the
other defendants. Prosecutors claim that about 200 people in and
around Libby have died from asbestos exposure. Another 1,200,
including the Parkers, were injured.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
W.R. GRACE: U.S. ZAI Claimants Seek Final Approval of Settlement
----------------------------------------------------------------
The U.S. Zonolite Attic Insulation Claimants ask Judge Judith
Fitzgerald of the U.S. Bankruptcy Court for the District of
Delaware to approve the class settlement they reached with W.R.
Grace & Co., on a final basis.
The settlement provides that all U.S. ZAI Claims will be channeled
for resolution to an asbestos property damage trust established
under Section 524(g) of the Bankruptcy Code under the Debtors'
Joint Plan of Reorganization.
The Agreement requires that these assets be paid into the PD
Trust:
-- $30 million in cash on the effective date of the Plan,
plus, if the Effective Date occurs after March 31, 2009,
interest from April 1, 2009, to the Effective Date, accrued
at the same rate applicable to Grace's senior exit
financing;
-- $30 million in cash on the third anniversary of the
Effective Date; and
-- up to 10 contingent deferred payments of $8 million per
year during the 20-year period beginning on the fifth
anniversary of the Effective Date, with each payment due
only if the ZAI Assets fall below $10 million during the
preceding year.
The deferred payments would be backed by 50.1% of Grace's common
stock to meet the requirements of Section 524(g).
A ZAI Trustee will administer the Trust funds, which will be used
for:
(1) comprehensive ZAI educational program for homeowners and
others who may encounter ZAI;
(2) reimbursement for ZAI remedial action of 55% of a
claimant's approved remediation costs up to a maximum
reimbursement of $4,125; and
(3) Trust operation expenses and attorneys' fees and costs.
To qualify for reimbursement from the Trust, a claimant will be
required to document the existence of ZAI in the structure and
the costs of remedial action undertaken. Under certain limited
circumstances, the ZAI Trustee may reimburse a Claimant above the
$7,500 expenditure ceiling.
William D. Sullivan, Esq., at Sullivan Hazeltine Allison, L.L.C.,
in Wilmington, asserts in a brief dated February 25, 2009 that
the Settlement Agreement warrants final approval.
Both Grace and the ZAI Claimants argued their positions privately
to one another, and publicly to the Court, given the complexity
of the case, their commitment to continue along this daunting,
expensive, and indeterminate litigation course was unquestioned,
Mr. Sullivan tells the Court.
Mr. Sullivan says the ZAI Claims plowed new ground in the field
of asbestos property damage litigation. The ZAI claims, which
involved a consumer product contaminated with asbestos, sold to
ordinary homeowners and promoted as "do-it-yourself" product, are
unlike "traditional" asbestos property damage claims involving
products to which asbestos was intentionally added and thereafter
sold primarily to institutions for application by professionals.
Also, ZAI was not regarded as an asbestos-containing product
pursuant to Environmental Protection Agency regulations, he
discloses.
Moreover, after seven years of effort, ZAI claimants still had
not obtained an initial determination as to whether an existing
certified ZAI class action would be recognized, let alone
determinations that would shape the likelihood of achieving the
scope of a broader ZAI class, Mr. Sullivan notes. The risk of
maintaining a class action through trial, if measured only by the
delay in achieving benefits for ZAI homeowners, warrants final
approval of the class settlement, he points out.
Mr. Sullivan further maintains that the Settlement Agreement is
fair to all creditors, notwithstanding that as of February 25,
2009, no class member has strongly disagreed with the concept of
resolving ZAI claims through the proposed facility or the funding
provided for the facility.
Accordingly, the Court should approve the Settlement Agreement on
a final basis.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice. David T. Austern, the legal representative of future
asbestos personal injury claimants, is represented by Orrick
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan
and Disclosure Statement. The hearing to consider the adequacy of
the Debtors' Disclosure Statement began on Jan. 21, 2005. The
Debtors' exclusive period to file a chapter 11 plan expired on
July 23, 2007.
Estimation of W.R. Grace's asbestos personal injury liabilities
commenced on Jan. 14, 2008.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
WASHINGTON COUNTY: S&P Gives Stable Outlook; Affirms 'BB+' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook to
stable from positive and affirmed its 'BB+' standard long-term
rating on Washington County Housing and Redevelopment Authority,
Minnesota's various series bonds and St. Paul Housing and
Redevelopment Authority, Minnesota's various series bonds issued
for HealthEast Care System. Standard & Poor's also affirmed its
'BB' standard long-term rating on Saint Paul Port Authority,
Minnesota's series 2005-3A lease bonds issued for HealthEast.
Approximately $300 million of debt is affected by this action.
The outlook revision reflects HealthEast's recent and modest
operating stress on current-year financial operations, partly due
to current unfavorable economic conditions.
Factors supporting the rating affirmation and revised outlook
include HealthEast's continuing mild financial stress and
liquidity that S&P believes is adequate for the rating, despite
days' cash on hand declining to 36.9 days on Jan. 31, 2009, from
69.2 days at fiscal year-end 2007, partly due to the unfavorable
investment markets and funding costs associated with the 401
licensed-bed St. Joseph's new $57 million patient tower project.
HealthEast boasts a solid business position, with a leading 39.1%
market share for 2008 in the competitive St. Paul-Minneapolis
marketplace. It also has a stable management team that has
enhanced the health system's position in the market and maintained
fiscal discipline during difficult economic times.
The revised outlook on HealthEast's debt reflects S&P's view that
the health system's market position and medical staff remain key
credit strengths, offsetting some of the historical concern about
the organization's constrained balance sheet," said Standard &
Poor's credit analyst Ken Rodgers. "While S&P believes liquidity
will remain under some pressure due to the capital budget and the
less-than-favorable investment climate, HealthEast is not
expecting any new debt issues in the near term so the balance
sheet shouldn't be materially diminished in the current, more
difficult operating environment," said Mr. Rodgers.
The rating could be in jeopardy if patient volumes decline
further, financial performance continues to detioriate, or
liquidity drops further.
Credit concerns include HealthEast's high debt leverage and low
cash-to-debt ratio that combine to limit upward mobility in the
rating.
HealthEast is a multihospital 527-bed health system located in St.
Paul.
WESTGATE CAPITAL: SEC Files Suit For Fraud, Wants Assets Frozen
---------------------------------------------------------------
The Securities and Exchange Commission is seeking a court order to
freeze the assets of Westgate Capital Management LLC, a Pearl
River, N.Y., investment management firm, and its managing member
James M. Nicholson. The SEC alleges that they solicited investors
with false claims of an almost unbroken eight-year string of
monthly investment successes. Neither the firm nor its principal
is registered with the SEC. The U.S. Attorney's Office for the
Southern District of New York commenced parallel criminal charges
against Mr. Nicholson.
"It's often said that if it seems too good to be true, it probably
is," said Scott W. Friestad, Deputy Director of the SEC's Division
of Enforcement. "With information obtained through a complaint
from a member of the public who was suspicious of Westgate's rosy
claims, we were able to aggressively pursue this case, assemble
evidence rapidly, and coordinate our work with criminal
authorities to allege this large-scale fraud."
Cheryl J. Scarboro, Associate Director of the SEC's Division of
Enforcement, said, "This case should be a warning to anyone trying
to hide a fraudulent scheme dressed up as a hedge fund. Investors
should always be wary when they are offered deals that pay
significantly better than the prevailing rates of return."
The SEC's complaint, filed in federal district court in Manhattan,
alleges that since at least January 2008, Mr. Nicholson and
Westgate defrauded current and prospective investors in 11 hedge
funds they managed by misrepresenting the value of the hedge funds
to investors, and soliciting new investors with sales materials
that claimed a nearly impossible record of investment success.
According to the SEC's complaint, at least one Westgate fund
claimed positive returns in 98 of 99 consecutive months.
The SEC alleges Mr. Nicholson sought to further his fraud by
creating a fictitious accounting firm and providing some of his
investors with bogus audited financial statements. Mr. Nicholson
apparently concocted this imposter firm under the name of an
actual accountant while using his own telephone number and
driver's license to set up a "virtual office."
According to the SEC's complaint, by late 2008, the funds had
sustained such losses that Mr. Nicholson and Westgate could no
longer honor redemption requests. They hid the losses from
investors with misrepresentations and false sales brochures. Mr.
Nicholson further attempted to hide losses in the Westgate fund
family by other devices. He closed one fund that was heavily
invested in the bankrupt Lehman Brothers and folded its assets
into another Westgate fund. He issued bad checks to some
investors seeking to cash out, and ultimately suspended all
investor redemptions due to what he called investors' "irrational
behavior."
The SEC alleges that Westgate and Mr. Nicholson have violated the
antifraud provisions of the federal securities laws. The SEC is
seeking an emergency court order freezing the assets of Nicholson,
Westgate, and the hedge funds; preventing the destruction of
documents; granting expedited discovery; and requiring Mr.
Nicholson and Westgate to provide accountings. Additionally, the
SEC seeks preliminary and permanent injunctions, disgorgement, and
financial penalties against both defendants.
Mr. Nicholson was barred from the brokerage industry in 2001 for
failing to reply or supplying false information in response to
inquiries from the National Association of Securities Dealers (now
known as the Financial Industry Regulatory Authority).
WESTRIDGE CAPITAL: Faces SEC Investment Fraud Suit; Assets Frozen
-----------------------------------------------------------------
The U.S. Securities and Exchange Commission obtained an emergency
court order freezing the assets of Paul Greenwood and Stephen
Walsh as well as their companies:
-- WG Trading Investors, L.P. (WGTI), which is an unregistered
investment vehicle;
-- WG Trading Company, Limited Partnership (WGTC), which is a
registered broker-dealer located in Greenwich, Conn.; and
-- Westridge Capital Management, Inc. (Westridge), which is a
registered investment adviser located in Santa Barbara,
Calif.
The Commission obtained an asset freeze against the two New York
residents and their three affiliated entities, alleging Messrs.
Greenwood and Walsh orchestrated a brazen investment fraud
involving the misappropriation of as much as $554 million in
investor assets. The SEC alleges that Messrs. Greenwood and Walsh
promised investors that their money would be invested in a stock
index arbitrage strategy. Instead, Messrs. Greenwood and Walsh
essentially treated their clients' investments as their personal
piggy bank to purchase multi-million dollar homes, a horse farm
and horses, luxury cars, and rare collectibles such as Steiff
teddy bears.
Scott Friestad, Deputy Director of the SEC's Division of
Enforcement, said, "[The] emergency action shows that the
Commission will act decisively to put a stop to ongoing fraudulent
investment schemes and preserve assets for investors."
James Clarkson, Acting Regional Director of the New York Regional
Office, added, "As [the] emergency action demonstrates,
individuals who defraud innocent investors, such as the
educational institutions and public pension and retirement plans
harmed in this case, should expect to be confronted with swift and
aggressive enforcement action from the SEC."
According to the SEC's complaint, filed in federal court in
Manhattan, the SEC alleges that Messrs. Greenwood and Walsh have
been orchestrating the fraudulent investment scheme through their
affiliated entities since at least 1996. The SEC alleges that
they solicited a number of institutional investors, including
educational institutions and public pension and retirement plans,
by promising to invest their money in an "enhanced equity index"
strategy that involves purchasing and selling equity index futures
and engaging in equity index arbitrage trading. However, Messrs.
Greenwood and Walsh have been misappropriating hundreds of
millions of dollars of investor funds for their personal use
instead of investing the money in the enhanced equity index
strategy. In fact, Messrs. Greenwood and Walsh misappropriated as
much as $554 million of the $667 million that Westridge clients
invested in WGTI. Messrs. Greenwood and Walsh have provided some
of the investors' money to their spouse and ex-spouse,
respectively, who are also named as relief defendants in the SEC's
complaint.
The SEC's complaint charges violations of the anti-fraud
provisions of the Securities Act of 1933, the Securities Exchange
Act of 1934 and the Investment Advisers Act of 1940. Judge George
B. Daniels of the U.S. District Court for the Southern District of
New York entered an order temporarily restraining the defendants,
freezing their assets, and ordering accountings and approving the
appointment of a receiver over WGTI, WGTC and Westridge. The
SEC's complaint also seeks a final judgment permanently enjoining
the defendants from future violations of the federal securities
laws and ordering them to pay financial penalties and disgorge
ill-gotten gains with prejudgment interest.
The U.S. Attorney's Office for the Southern District of New York
announced parallel criminal charges against Messrs. Greenwood and
Walsh, and the U.S. Commodity Futures Trading Commission filed
related charges against Messrs. Greenwood and Walsh, and their
affiliated entities.
The SEC's investigation is ongoing.
WESTRIDGE CAPITAL: Owners Charged by CFTC for $1.3-Bil Scam
-----------------------------------------------------------
The U.S. Commodity Futures Trading Commission charged Stephen
Walsh of Sands Point, New York, and Paul Greenwood of North Salem,
New York, with misappropriating at least $553 million from
commodity pool participants in connection with entities they owned
and controlled, such as Westridge Capital Management, Inc., WG
Trading Investors, LP, and WGIA, LLC. The defendants' alleged
misappropriation was uncovered during an audit by the National
Futures Association.
New York District Court Issues Restraining Order;
Additional Actions Filed
The CFTC's complaint charges Walsh and Greenwood with futures
fraud and misappropriation of pool funds. In conjunction with the
CFTC's filing, the United States District Court for the Southern
District of New York issued a restraining order freezing
defendants' assets and preserving records. At the same time, the
office of the United States Attorney for the Southern District of
New York filed a criminal complaint against Walsh and Greenwood,
and the Securities and Exchange Commission filed a civil action
against Walsh, Greenwood, and others.
According to CFTC Acting Director of Enforcement Stephen J. Obie,
"The coordinated efforts of multiple federal regulators resulted
in uncovering and ending this egregious fraud. Defendants treated
investor money-- some of which came from a public pension fund--
as their own piggy bank to lavish themselves with expensive gifts.
The public can rest assured that their nation's commodity futures
regulator is pursuing every avenue to locate and eliminate crooked
commodity professionals."
The CFTC complaint alleges that, from at least 1996 to the
present, Walsh and Greenwood fraudulently solicited approximately
$1.3 billion from individuals and entities through Westridge
Capital Management, WG Trading Investors, LP, and other entities.
The complaint charges that the defendants defrauded victims by
falsely depicting that all pool participants' funds would be
employed in a single investment strategy that consisted of index
arbitrage. However, pool participants' funds were transferred to
another entity from which Walsh and Greenwood siphoned funds,
according to the complaint.
According to the complaint, to cover-up their misappropriation of
pool participants' funds, Greenwood and Walsh manufactured
promissory notes to present the appearance that pool participants'
funds had been loaned to them.
Walsh and Greenwood allegedly misappropriated approximately $553
million in pool participants' funds. More than $160 million was
used for Walsh and Greenwood's personal expenses, including
purchasing rare books, horses, Steiff teddy bears for as much as
$80,000, and a $3 million residence for Walsh's ex-wife.
Efforts are ongoing to account for and locate pool participant
funds.
Five Relief Defendants Also Named
In addition, Westridge Capital Management Enhancement Funds Inc.,
WG Trading Company LP, WGI LLC, K&L Investments, and Janet Walsh
are named in the complaint as relief defendants because they
received funds as a result of defendants' fraudulent conduct and
have no legitimate entitlement to those funds.
In the continuing litigation, the CFTC seeks restitution,
disgorgement, civil monetary penalties, and permanent injunctions
against further violations of the federal commodities laws and
against further trading.
The CFTC greatly appreciates the assistance of the National
Futures Association, the office of the United States Attorney for
the Southern District of New York, the Federal Bureau of
Investigation, and the Securities and Exchange Commission.
The following CFTC Division of Enforcement staff members are
responsible for this matter: Patricia Gomersall, JonMarc Buffa,
Joseph Rosenberg, Peter Haas, Paul Hayeck, and Joan Manley
WG TRADING: Faces SEC Investment Fraud Suit; Court Freezes Assets
-----------------------------------------------------------------
The U.S. Securities and Exchange Commission obtained an emergency
court order freezing the assets of Paul Greenwood and Stephen
Walsh as well as their companies:
-- WG Trading Investors, L.P. (WGTI), which is an unregistered
investment vehicle;
-- WG Trading Company, Limited Partnership (WGTC), which is a
registered broker-dealer located in Greenwich, Conn.; and
-- Westridge Capital Management, Inc. (Westridge), which is a
registered investment adviser located in Santa Barbara,
Calif.
The Commission obtained an asset freeze against the two New York
residents and their three affiliated entities, alleging Messrs.
Greenwood and Walsh orchestrated a brazen investment fraud
involving the misappropriation of as much as $554 million in
investor assets. The SEC alleges that Messrs. Greenwood and Walsh
promised investors that their money would be invested in a stock
index arbitrage strategy. Instead, Messrs. Greenwood and Walsh
essentially treated their clients' investments as their personal
piggy bank to purchase multi-million dollar homes, a horse farm
and horses, luxury cars, and rare collectibles such as Steiff
teddy bears.
Scott Friestad, Deputy Director of the SEC's Division of
Enforcement, said, "[The] emergency action shows that the
Commission will act decisively to put a stop to ongoing fraudulent
investment schemes and preserve assets for investors."
James Clarkson, Acting Regional Director of the New York Regional
Office, added, "As [the] emergency action demonstrates,
individuals who defraud innocent investors, such as the
educational institutions and public pension and retirement plans
harmed in this case, should expect to be confronted with swift and
aggressive enforcement action from the SEC."
According to the SEC's complaint, filed in federal court in
Manhattan, the SEC alleges that Messrs. Greenwood and Walsh have
been orchestrating the fraudulent investment scheme through their
affiliated entities since at least 1996. The SEC alleges that
they solicited a number of institutional investors, including
educational institutions and public pension and retirement plans,
by promising to invest their money in an "enhanced equity index"
strategy that involves purchasing and selling equity index futures
and engaging in equity index arbitrage trading. However, Messrs.
Greenwood and Walsh have been misappropriating hundreds of
millions of dollars of investor funds for their personal use
instead of investing the money in the enhanced equity index
strategy. In fact, Messrs. Greenwood and Walsh misappropriated as
much as $554 million of the $667 million that Westridge clients
invested in WGTI. Messrs. Greenwood and Walsh have provided some
of the investors' money to their spouse and ex-spouse,
respectively, who are also named as relief defendants in the SEC's
complaint.
The SEC's complaint charges violations of the anti-fraud
provisions of the Securities Act of 1933, the Securities Exchange
Act of 1934 and the Investment Advisers Act of 1940. Judge George
B. Daniels of the U.S. District Court for the Southern District of
New York entered an order temporarily restraining the defendants,
freezing their assets, and ordering accountings and approving the
appointment of a receiver over WGTI, WGTC and Westridge. The
SEC's complaint also seeks a final judgment permanently enjoining
the defendants from future violations of the federal securities
laws and ordering them to pay financial penalties and disgorge
ill-gotten gains with prejudgment interest.
The U.S. Attorney's Office for the Southern District of New York
announced parallel criminal charges against Messrs. Greenwood and
Walsh, and the U.S. Commodity Futures Trading Commission filed
related charges against Messrs. Greenwood and Walsh, and their
affiliated entities.
The SEC's investigation is ongoing.
WILTEC INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Wiltec Industries, Inc.
730 Lund Blvd. NW
Anoka, MN 55303
Bankruptcy Case No.: 09-41030
Chapter 11 Petition Date: February 25, 2009
Court: United States Bankruptcy Court
District of Minnesota (Minneapolis)
Debtor's Counsel: Gary L. Rosser, Esq.
Boates & Crump
3701 W. Anthem Way, #202
Anthem, AZ 85086
Tel: (623) 551-5457
Fax: (623) 551-5458
Email: grosser@boatescrump.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its largest
unsecured creditors, is available for free at:
http://bankrupt.com/misc/mnb09-41030.pdf
The petition was signed by David Hart, President of the company.
WOLVERINE TUBE: Exchange Offer Won't Affect Moody's 'Caa3' Rating
-----------------------------------------------------------------
Moody's Investors Service commented that Wolverine Tube's
announcement of an exchange offer for its 10.5% senior unsecured
notes due April 2009 would not immediately impact the company's
ratings or outlook (including the Caa3 corporate family
rating/probability of default rating) though they may be affected
upon completion of the exchange.
The prior rating action for Wolverine Tube, Inc. was on December
19, 2008, when Moody's lowered the company's corporate family
rating to Caa3 and assigned a negative outlook.
Wolverine Tube, Inc.'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 Wolverine Tube, Inc.'s core industry and Wolverine Tube
Inc.'s ratings are believed to be comparable to those of other
issuers of similar credit risk.
Wolverine Tube, Inc., headquartered in Huntsville, Alabama, is a
U.S. manufacturer and distributor of copper alloy tube, fabricated
products, and metal joining products for use in refrigeration and
air conditioning. The company generated over $1.2 billion of
revenues in 2007.
YELLOWSTONE CLUB: Creditors Committee Sues Credit Suisse
--------------------------------------------------------
The creditors' committee for Yellowstone Mountain Club LLC was
given permission last week by U.S. Bankruptcy Court for the
District of Montana to sue Credit Suisse Group AG, as agent for
existing secured lenders owed $307 million, Bloomberg's Bill
Rochelle said.
According to Bloomberg, the Creditors Committee is hoping to
invalidate the lenders' mortgages while recovering $146 million
Yellowstone paid on what was originally $375 million in loans.
The complaint quotes the loan agreement itself as saying $352
million of the loan, made in September 2005, wouldn't be used for
Yellowstone itself. The complaint contends Credit Suisse knew the
loan would be used for the personal benefit of the owners, Timothy
Blixseth and his wife Edra Blixseth, or companies they controlled.
Bloomberg further reported that the U.S. Trustee, an arm of the
U.S. Justice Department, filed a motion requesting the appointment
of a Chapter 11 trustee to oust Edra Blixseth who took over
management when her husband gave her the property in August as
part of a divorce settlement. The U.S. Trustee says Ms. Blixseth
owes $35 million to the prospective buyer, CrossHarbor Capital
Partners LLC, and is distracted by a $13.3 million judgment
against her.
Private-equity investor CrossHarbor Capital Partners LLC, the
provider of $23.3 million debtor-in-financing, offered to purchase
the equity in Yellowstone Cub for $100 million, consisting of
$30 million cash and a note for $70 million. Judge Ralph B.
Kirscher, however, denied approval of the proposed auction
procedures, citing that the protocol "did not encourage third-
party bids but rather, were drafted in a fashion to ensure that
CrossHarbor, the DIP lender, will be the successful purchaser."
Aside from denying approval of the bidding procedures in its
present form, Judge Kirscher also denied an extension of
Yellowstone Club's exclusive period to file a Chapter 11 plan
About Yellowstone Club
Located near Big Sky, Montana, Yellowstone Mountain Club LLC --
http://www.theyellowstoneclub.com/-- is a private golf and ski
community with more than 350 members, including Bill Gates and Dan
Quayle. The Company was founded in 1999.
As reported in the Troubled Company Reporter on Nov. 13, 2008,
Yellowstone Club filed for Chapter 11 bankruptcy protection in the
U.S. Bankruptcy Court for the District of Montana. In its
bankruptcy petition, it listed debts of more than $360 million.
* Circuit Court Issues "Handbook" on How to Sue D&Os
-----------------------------------------------------
According to Bloomberg's Bill Rochelle, the 5th U.S. Circuit Court
of Appeals handed down an opinion last week that reads like a
handbook telling trustees of liquidating trusts how they must word
their complaints to withstand motions to dismiss when suing
bankrupt companies' former officers and directors.
The case -- Torch Liquidating Trust v. Stockstill, 08-30404,
5th U.S. Circuit Court of Appeals -- involved a company that went
through bankruptcy and created a trust at confirmation of the
Chapter 11 plan to bring lawsuits on behalf of creditors.
According to Mr. Rochelle, the opinion, written by U.S. Circuit
Judge Carolyn Dineen King, held that the trustee has standing to
sue former officers and directors alleging that they breached
their fiduciary duties to the company. The trustee, she wrote,
doesn't have the right to file claims for damages to creditors and
shareholders. To withstand dismissal, the complaint must set out
facts showing actions by managers that caused the company injury,
according to King. The complaint also must explain what the
damages were.
* Mortgage Delinquencies Increase, Says Equifax
-----------------------------------------------
Homeowners delinquent by 30 days or more on their mortgages
are up 50 percent since January 2008, according to a statement
Feb. 27 by Equifax Inc., Bloomberg's Bill Rochelle said.
Equifax said that delinquencies by 30 days on home-equity lines of
credit were up 3.39% from December to January -- the largest
increase in 10 years.
"The rapid increase in unemployment in the fourth quarter of last
year may have led to many of the economic ills that the data shows
were even more pronounced in January," said Dann Adams, president
of Equifax's U.S. Consumer Information Systems, according to
HousingWire.com.
Mr. Adams said that the continued increase in mortgage
delinquencies indicates that a housing correction has yet to take
hold. "The latest measures such as loan modification programs and
declining interest rates have yet to kick in," he said.
* Treasury Working on Aid for Auto Suppliers
--------------------------------------------
The Obama administration is looking for a way to prop up
struggling auto-parts suppliers, possibly through a lending
facility to centralize aid to hundreds of companies, Alex Ortolani
and Rebecca Christie of Bloomberg reported, citing a person
familiar with the matter.
Finding a mechanism to offer assistance is pivotal, because there
are so many partsmakers it would be difficult for the Treasury to
administer loans directly, said the person, who asked not to be
identified because the planning is private, according to the
report.
Bloomberg notes that help for unprofitable suppliers would widen
the government's role in the auto industry after lending
$17.4 billion to General Motors Corp. and Chrysler LLC.
Automaker purchasing chiefs met with the President's auto task
force Feb. 23 to discuss how to prevent partsmaker failures,
people briefed on the session have said.
"They're very actively looking at the issues and they're very
aware of the urgency of the matter," said Neil De Koker, president
of the Original Equipment Suppliers Association trade group, in an
interview yesterday.
An administration official said the Treasury, which is running
Obama's auto industry assistance efforts, hasn't made any
decisions about the partsmakers.
"A number of options" are being studied, said De Koker,
who wouldn't give details.
* Large Companies With Insolvent Balance Sheets
-----------------------------------------------
Total
Share- Total
Total holders' Working
Assets Equity Capital
Company Ticker ($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
BLOUNT INTL BLT US 485 (20) 119
BOEING CO BA US 53,779 (1,294) (4,961)
BOEING CO BAB BB 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 CQP US 2,021 (312) 179
CHENIERE ENERGY LNG US 3,049 (266) 423
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 464 (1,425) 105
DUN & BRADSTREET DNB US 1,586 (851) (213)
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 1,093 (21) (238)
HEALTHSOUTH CORP HLS US 1,998 (700) (64)
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
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 3,719 (347) (274)
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)
UNITED RENTALS URI US 4,191 (29) 276
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 6,527 (108) (771)
*********
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,
Luke Caballos, 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 ***